<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 29, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
HARBINGER CORPORATION
(Exact name of registrant as specified in its charter)
---------------------
<TABLE>
<S> <C> <C>
GEORGIA 7372 58-1817306
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
1055 LENOX PARK BOULEVARD
ATLANTA, GEORGIA 30319
(404) 467-3000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
LOREN B. WIMPFHEIMER
DIRECTOR OF LEGAL AFFAIRS
HARBINGER CORPORATION
1055 LENOX PARK BOULEVARD
ATLANTA, GEORGIA 30319
(404) 467-3000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
<TABLE>
<S> <C>
WILLIAM R. SPALDING STEPHAN J. MALLENBAUM
KING & SPALDING BRYAN CAVE LLP
191 PEACHTREE STREET 245 PARK AVENUE
ATLANTA, GEORGIA 30303 NEW YORK, NEW YORK 10167
(404) 572-4600 (212) 692-1800
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable following the effectiveness of the Merger.
If any securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act Registration Statement number of the earlier effective
Registration Statement for the same offering. [ ]
---------------
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective Registration Statement
for the same offering. [ ]
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE(1)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.0001 par value per
share........................... 5,335,160 $29.31 $156,373,540 $47,386
- ----------------------------------------------------------------------------------------------------------------------
Options to purchase Common
Stock(2)........................ 827,136 $29.31 $24,243,356 $7,346
======================================================================================================================
</TABLE>
(1) Calculated in accordance with Rule 457(f)(1) under the Securities Act of
1933, as amended, based on the average of the high and low sales prices of
Premenos Common Stock as reported on the Nasdaq National Market on October
27, 1997.
(2) Represents options to purchase Harbinger Common Stock to be issued under the
Harbinger 1996 Stock Option Plan in connection with the assumption of
options to purchase Premenos Common Stock pursuant to Section 2.3 of the
Merger Agreement.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE AS OF SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
================================================================================
<PAGE> 2
HARBINGER CORPORATION
CROSS-REFERENCE TABLE
LOCATION IN JOINT PROXY STATEMENT/PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF FORM S-4
ITEM LOCATION IN JOINT PROXY STATEMENT/PROSPECTUS
<TABLE>
<CAPTION>
NUMBER CAPTION
- ------ -------
<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus... Outside Front Cover of Joint Proxy
Statement/Prospectus; Facing Page of the
Registration Statement
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Available Information; Incorporation of
Certain Documents by Reference; Table of
Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............ Summary
4. Terms of the Transaction................... Summary; The Merger
5. Pro Forma Financial Information............ Summary; Pro Forma Combined Financial
Statements (Unaudited)
6. Material Contacts with the Company Being
Acquired................................. Summary; The Merger
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters....................... Not Applicable
8. Interests of Named Experts and Counsel..... Summary; The Merger; Legal Matters
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. Not Applicable
10. Information With Respect to S-3
Registrants.............................. Summary; Pro Forma Combined Financial
Statements (Unaudited); The Merger;
Business of Harbinger
11. Incorporation of Certain Information by
Reference................................ Incorporation of Certain Documents by
Reference
12. Information With Respect to S-2 or S-3
Registrants.............................. Not Applicable
13. Incorporation of Certain Information by
Reference................................ Not Applicable
14. Information With Respect to Registrants
Other Than S-3 or S-2 Registrants........ Not Applicable
15. Information With Respect to S-3
Companies................................ Summary; Pro Forma Combined Financial
Statements (Unaudited); The Merger;
Business of Premenos Incorporation of
Certain Documents by Reference
16. Information With Respect to S-2 or S-3
Companies................................ Not Applicable
17. Information With Respect to Companies Other
Than S-3 or S-2 Companies................ Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited....... Summary; The Merger; The Harbinger Special
Meeting; The Premenos Special Meeting;
Shareholder Proposals; Harbinger
Executive Compensation; Security
Ownership of Certain Beneficial Owners
and Management; Incorporation of Certain
Documents by Reference
19. Information if Proxies, Consents or
Authorizations are not to be Solicited,
or in an Exchange Offer.................. Not Applicable
</TABLE>
<PAGE> 3
[LETTERHEAD OF HARBINGER CORPORATION]
, 1997
Dear Shareholder:
You are cordially invited to attend an important Special Meeting of the
shareholders of Harbinger Corporation ("Harbinger") to be held on ,
1997, at a.m., local time, at the offices of King & Spalding, 191
Peachtree Street, 50th Floor, Atlanta, Georgia 30303.
At the Special Meeting, you will be asked to consider and vote upon (i) a
proposal to approve the Merger Agreement (the "Merger Agreement") dated as of
October 23, 1997 among Harbinger, Premenos Technology Corp. ("Premenos") and
Olympic Subsidiary Corporation, a wholly owned subsidiary of Harbinger ("Merger
Sub"), which provides for the acquisition of Premenos by Harbinger (the
"Merger"), the Merger and the issuance of shares of common stock, par value
$.0001 per share, of Harbinger (the "Harbinger Common Stock") in connection
therewith (the "Stock Issuance"), and (ii) a proposal to approve and adopt an
amendment (the "Amendment") to the Harbinger 1996 Stock Option Plan (the "Stock
Plan"). Pursuant to the Merger Agreement, Merger Sub would be merged with and
into Premenos. If the Merger is consummated, each outstanding share of common
stock, par value $.01 per share, of Premenos ("Premenos Common Stock"), will be
converted into the right to receive .45 shares (the "Conversion Ratio") of
Harbinger Common Stock, with cash being paid in lieu of fractional shares of
Harbinger Common Stock. The accompanying Joint Proxy Statement/Prospectus
contains additional information regarding the proposed acquisition of Premenos
by Harbinger.
The Merger Agreement has been unanimously approved and adopted by the Board
of Directors of Harbinger. The Merger Agreement, the Merger the Stock Issuance
and the Amendment are subject to approval by the holders of Harbinger Common
Stock. Approval of the proposals being presented at the Special Meeting requires
that a majority of the total votes cast vote in favor of each matter.
Harbinger's Board of Directors has received an opinion of its financial advisor,
BT Alex. Brown Incorporated to the effect that, as of October 23, 1997, the
Conversion Ratio is fair, from a financial point of view, to Harbinger.
AFTER CAREFUL CONSIDERATION, THE BOARD OF DIRECTORS HAS DETERMINED THAT THE
PROPOSED MERGER AND THE AMENDMENT ARE IN THE BEST INTERESTS OF HARBINGER AND ITS
SHAREHOLDERS, HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE MERGER THE
STOCK ISSUANCE AND THE AMENDMENT AND RECOMMENDS THAT YOU VOTE FOR THE PROPOSALS
TO APPROVE THE MERGER AGREEMENT, THE MERGER THE STOCK ISSUANCE AND THE
AMENDMENT.
Details of the background and reasons for the proposed Merger and the
Amendment appear in and are explained in the accompanying Joint Proxy
Statement/Prospectus. Additional information regarding Premenos and Harbinger
also is set forth in the Joint Proxy Statement/Prospectus and incorporated
therein by reference to other documents.
It is important that your shares be represented at the Special Meeting
either in person or by proxy. Whether or not you plan to attend the Special
Meeting, please complete, sign and date the enclosed proxy card and return it in
the enclosed postage prepaid envelope. If you attend the Special Meeting, you
may vote in person if you wish, even if you have previously returned your proxy
card. Your prompt cooperation will be greatly appreciated.
Sincerely,
David T. Leach
Chief Executive Officer
<PAGE> 4
HARBINGER CORPORATION
1055 LENOX PARK BOULEVARD
ATLANTA, GEORGIA 30319
---------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 1997
---------------------
Notice is hereby given that a Special Meeting of Shareholders of Harbinger
Corporation ("Harbinger") will be held on , 1997, at
a.m., local time, at the offices of King & Spalding, 191 Peachtree Street, 50th
Floor, Atlanta, Georgia 30303, for the following purposes:
(1) To consider and vote upon a proposal to approve (a) the Merger
Agreement dated as of October 23, 1997 among Harbinger, Premenos Technology
Corp. ("Premenos") and Olympic Subsidiary Corporation, a wholly owned
subsidiary of Harbinger ("Merger Sub"), pursuant to which Merger Sub would
be merged with and into Premenos (the "Merger") (b) the Merger and (c) the
issuance (the "Stock Issuance") of shares of common stock, par value $.0001
per share, of Harbinger ("Harbinger Common Stock") pursuant to the Merger.
The terms of the Merger are described in the accompanying Joint Proxy
Statement/Prospectus.
(2) To consider and vote upon a proposal to amend Harbinger's 1996
Stock Option Plan (the "Stock Plan") to increase the number of shares of
Harbinger Common Stock reserved for issuance thereunder from 4,125,000 to
5,125,000 shares.
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on November 17, 1997
as the record date for the determination of shareholders entitled to receive
notice of and to vote at the Special Meeting and any adjournment thereof. A list
of shareholders entitled to vote at the Special Meeting will be available at the
Special Meeting for examination by any shareholder, his agent or his attorney.
Your attention is directed to the Joint Proxy Statement/Prospectus
submitted with this Notice.
By Order of the Board of Directors
Joel G. Katz
Chief Financial Officer and Secretary
Atlanta, Georgia
, 1997
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF
YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE> 5
[LETTERHEAD OF PREMENOS TECHNOLOGY CORP.]
, 1997
Dear Stockholder:
You are cordially invited to attend an important Special Meeting of the
stockholders of Premenos Technology Corp. ("Premenos") to be held on
, 1997, at a.m., local time, at the Hilton Hotel, located at 1970 Diamond
Boulevard, Concord, California 94520.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve (i) the Merger Agreement dated as of October 23, 1997 (the
"Merger Agreement") among Premenos, Harbinger Corporation ("Harbinger"), and
Olympic Subsidiary Corporation, a wholly owned subsidiary of Harbinger ("Merger
Sub"), which provides for the merger of Merger Sub with and into Premenos (the
"Merger") and (ii) the Merger. If the Merger is consummated, each outstanding
share of common stock, par value $.01 per share, of Premenos ("Premenos Common
Stock") will be converted into the right to receive .45 shares of common stock,
par value $.0001 per share, of Harbinger (the "Harbinger Common Stock"), with
cash being paid in lieu of fractional shares of Harbinger Common Stock. The
accompanying Joint Proxy Statement/Prospectus contains additional information
regarding the proposed acquisition of Premenos by Harbinger.
The Merger Agreement has been unanimously approved by the Board of
Directors of Premenos and the Merger and the Merger Agreement are subject to
approval by the holders of a majority of the outstanding shares of Premenos
Common Stock. The Board of Directors of Premenos has received an opinion of its
financial advisor, Hambrecht & Quist LLC, to the effect that, as of October 23,
1997, the consideration to be received by stockholders of Premenos in the Merger
is fair, from a financial point of view, to the stockholders of Premenos.
AFTER CAREFUL CONSIDERATION, THE BOARD OF DIRECTORS HAS DETERMINED THAT THE
PROPOSED MERGER IS IN THE BEST INTERESTS OF PREMENOS AND ITS STOCKHOLDERS, HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE MERGER AND RECOMMENDS THAT YOU
VOTE FOR THE PROPOSAL TO APPROVE THE MERGER AGREEMENT AND THE MERGER.
Details of the background and reasons for the proposed Merger appear in and
are explained in the accompanying Joint Proxy Statement/Prospectus. Additional
information regarding Premenos and Harbinger also is set forth in the Joint
Proxy Statement/Prospectus and incorporated therein by reference to other
documents.
It is important that your shares be represented at the Special Meeting
either in person or by proxy. Whether or not you plan to attend the Special
Meeting, please complete, sign and date the enclosed proxy card and return it in
the enclosed postage prepaid envelope. If you attend the Special Meeting, you
may vote in person if you wish, even if you have previously returned your proxy
card. Your prompt cooperation will be greatly appreciated.
Sincerely,
Lew Jenkins
Chairman of the Board of Directors
<PAGE> 6
PREMENOS TECHNOLOGY CORP.
1000 BURNETT AVENUE
CONCORD, CALIFORNIA 94520
---------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON , 1997
---------------------
Notice is hereby given that a Special Meeting of Stockholders of Premenos
Technology Corp. ("Premenos") will be held on , 1997, at a.m.,
local time, at the Hilton Hotel, located at 1970 Diamond Boulevard, Concord,
California 94520, for the following purposes:
(1) To consider and vote upon a proposal to approve (i) the Merger
Agreement dated as of October 23, 1997 among Premenos, Harbinger
Corporation ("Harbinger") and Olympic Subsidiary Corporation, a wholly
owned subsidiary of Harbinger ("Merger Sub"), pursuant to which (x) Merger
Sub would be merged with and into Premenos (the "Merger") and (y) each
outstanding share of common stock, par value $.01 per share, of Premenos
would be converted into the right to receive .45 of a share of common
stock, par value $.0001 per share, of Harbinger, with cash being paid in
lieu of fractional shares, and (ii) the Merger. The terms of the Merger are
described in the accompanying Joint Proxy Statement/Prospectus.
(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on November 17, 1997
as the record date for the determination of stockholders entitled to receive
notice of and to vote at the Special Meeting and at any adjournment thereof.
From , 1997 until the Special Meeting, a list of stockholders
entitled to vote at the Special Meeting will be available at the offices of
Premenos for examination during normal business hours by any stockholder, his
agent or his attorney.
Your attention is directed to the Joint Proxy Statement/Prospectus
submitted with this Notice.
By Order of the Board of Directors
David Hildes
Secretary
Concord, California
, 1997
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH,
EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE> 7
JOINT PROXY STATEMENT
HARBINGER CORPORATION PREMENOS TECHNOLOGY CORP.
SPECIAL MEETING TO BE HELD SPECIAL MEETING TO BE HELD
ON , 1997 ON , 1997
PROSPECTUS
HARBINGER CORPORATION
COMMON STOCK, PAR VALUE $.0001 PER SHARE
---------------------
This Joint Proxy Statement/Prospectus is being furnished to shareholders
(the "Harbinger Shareholders") of Harbinger Corporation, a Georgia corporation
("Harbinger"), and stockholders (the "Premenos Stockholders") of Premenos
Technology Corp., a Delaware corporation ("Premenos"), in connection with the
solicitation of proxies by the Board of Directors of Harbinger (the "Harbinger
Board") for use at the Special Meeting of Harbinger Shareholders (including any
adjournments or postponements thereof) (the "Harbinger Special Meeting") and by
the Board of Directors of Premenos (the "Premenos Board") for use at the Special
Meeting of Premenos Stockholders (including any adjournments or postponements
thereof) (the "Premenos Special Meeting" and, together with the Harbinger
Special Meeting, the "Special Meetings"), each to be held on , 1997 at
the time and place set forth in the accompanying notices.
The purpose of the Special Meetings is to consider and vote upon proposals
to approve the Merger Agreement, dated as of October 23, 1997 (the "Merger
Agreement"), by and among Harbinger, Olympic Subsidiary Corporation ("Merger
Sub"), a Delaware corporation and a wholly owned subsidiary of Harbinger, and
Premenos and the merger (the "Merger") of Merger Sub with and into Premenos. The
Merger Agreement is attached to the Joint Proxy Statement/Prospectus as Annex A.
Upon consummation of the Merger (the "Effective Time"), each share of common
stock, par value $.01 per share, of Premenos (the "Premenos Common Stock") will
be converted into the right to receive .45 (the "Conversion Ratio") of a share
of common stock, par value $.0001 per share, of Harbinger (the "Harbinger Common
Stock"), with cash being paid in lieu of fractional shares of Harbinger Common
Stock. The Conversion Ratio is fixed and will not increase or decrease by reason
of fluctuations in the market price of Harbinger Common Stock or Premenos Common
Stock.
At the Harbinger Special Meeting and in connection with the Merger,
Harbinger Shareholders will also be asked to consider and vote upon a proposal
to approve and adopt an amendment (the "Amendment") to the Harbinger 1996 Stock
Option Plan (the "Stock Plan") to increase the number of shares of Harbinger
Common Stock reserved for issuance thereunder from 4,125,000 to 5,125,000
shares. Approval of the Amendment by Harbinger Shareholders is a condition of
the obligations of the parties to the Merger Agreement.
This Joint Proxy Statement/Prospectus also constitutes a prospectus of
Harbinger relating to the issuance of shares of Harbinger Common Stock to
Premenos Stockholders pursuant to the terms of the Merger Agreement. Harbinger
has filed a Registration Statement on Form S-4 (the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"), with the
Securities and Exchange Commission (the "Commission") covering the shares of
Harbinger Common Stock and Harbinger stock options to be issued in connection
with the Merger.
This Joint Proxy Statement/Prospectus and the accompanying proxy cards are
first being mailed to Harbinger Shareholders and Premenos Stockholders on or
about , 1997.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN AS CONTAINED HEREIN IN CONNECTION WITH THE OFFER OF
HARBINGER COMMON STOCK OR HARBINGER STOCK OPTIONS TO BE ISSUED IN CONNECTION
WITH THE MERGER AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY HARBINGER, PREMENOS OR ANY OTHER
PERSON. THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO PURCHASE HARBINGER COMMON STOCK OR
HARBINGER STOCK OPTIONS IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT WOULD BE UNLAWFUL. NEITHER
THE DELIVERY OF THIS JOINT PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF
SUCH HARBINGER COMMON STOCK OR HARBINGER STOCK OPTIONS SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
FOR CERTAIN FACTORS WHICH SHOULD BE CONSIDERED IN EVALUATING THE MERGER
AGREEMENT AND THE MERGER, SEE "RISK FACTORS" BEGINNING ON PAGE .
THE SHARES OF HARBINGER COMMON STOCK AND HARBINGER STOCK OPTIONS TO BE ISSUED IN
THE MERGER HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS IS , 1997.
<PAGE> 8
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Joint Proxy Statement/Prospectus contains statements which constitute
"forward-looking statements" within the meaning of the Securities Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as amended by
the Private Securities Litigation Reform Act of 1995. "Forward-looking
statements" contained or incorporated by reference in this Joint Proxy
Statement/Prospectus include the intent, belief or current expectations of
Harbinger and Premenos and members of their senior management teams with respect
to future operating results of Harbinger and Premenos, certain synergies
expected to be realized in connection with the Merger, certain charges expected
to be incurred in future periods, the integration of acquired businesses,
possible fluctuations in operating results and the ability to manage the growth
of Harbinger as well as the assumptions upon which such statements are based.
Prospective investors are cautioned that any such forward-looking statements are
not guarantees of future performance, and involve risks and uncertainties, and
that actual results may differ materially from those contemplated by such
forward-looking statements. Important factors currently known to management that
could cause actual results to differ materially from those contemplated by the
forward-looking statements in this Joint Proxy Statement/Prospectus include, but
are not limited to, difficulties encountered in the integration of recently
acquired businesses and adverse developments with respect to the combined
company's domestic or foreign operations. Additional factors that would cause
actual results to differ materially from those contemplated within this Joint
Proxy Statement/Prospectus also can be found under the caption "Risk Factors"
herein and in the reports filed with the Commission by Harbinger and Premenos,
including the reports filed on Form 10-K for the year ended December 31, 1996.
AVAILABLE INFORMATION
Both Harbinger and Premenos are subject to the informational requirements
of the Exchange Act, and, in accordance therewith, file reports, proxy and
information statements and other information with the Commission. Such reports,
proxy and information statements and other information filed with the Commission
by Harbinger and Premenos can be inspected and copied at the office of the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, or at
its Regional Offices located at 7 World Trade Center, Suite 1300, New York, New
York 10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois, 60661,
and copies of such materials can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains a Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of the Commission's
Web site is http://www.sec.gov.
Harbinger has filed with the Commission the Registration Statement under
the Securities Act. This Joint Proxy Statement/Prospectus does not contain all
of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information relating to Harbinger and the shares of
Harbinger Common Stock offered hereby, reference is hereby made to the
Registration Statement, including the exhibits and schedules thereto, which may
be inspected without charge at the office of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies of which may be obtained from the
Commission at prescribed rates. Statements contained in this Joint Proxy
Statement/Prospectus as to the contents of any contract or other document
referred to are not necessarily complete and in each instance reference is made
to the copy of such contract or document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. Shares of Harbinger Common Stock and Premenos Common Stock are listed
on the Nasdaq National Market and the reports, proxy statements and other
information filed by both Harbinger and Premenos also can be inspected at the
offices of the National Association of Securities Dealers, Inc. (the "NASD"), at
1735 K Street, N.W., Washington, D.C. 20006. Upon completion of the Merger,
application (on Form 15) to the Commission promptly will be made to deregister
the Premenos Common Stock under the Exchange Act. As a result of such
deregistration, Premenos no longer will be obligated to file periodic reports
with the Commission.
i
<PAGE> 9
All information contained in this Joint Proxy Statement/Prospectus with
respect to Harbinger and its subsidiaries has been supplied by Harbinger, and
all information with respect to Premenos and its subsidiaries has been supplied
by Premenos.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by Harbinger
are incorporated by reference into this Joint Proxy Statement/Prospectus:
(i) Harbinger's Annual Report on Form 10-K for the year ended December
31, 1996, filed with the Commission on March 31, 1997 (the "Harbinger 1996
Annual Report");
(ii) Harbinger's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997, and September 30, 1997, filed with the
Commission on May 13, 1997, August 12, 1997, and October 29, 1997,
respectively;
(iii) Harbinger's Current Reports on Form 8-K filed with the
Commission on April 18, 1996 (as amended by Form 8-K/A filed with the
Commission on June 17, 1996); on May 2, 1996 (as amended by Form 8-K/A
filed with the Commission on June 17, 1996); on May 2, 1996 (as amended by
Form 8-K/A filed with the Commission on July 1, 1996); on May 3, 1996 (as
amended by Form 8-K/A filed with the Commission on July 2, 1996); on
January 15, 1997 (as amended by Form 8-K/A filed with the Commission on
March 14, 1997); on January 16, 1997 (as amended by Form 8-K/A filed with
the Commission on March 18, 1997); on April 28, 1997; on July 1, 1997; on
July 16, 1997; on September 2, 1997 (as amended by Form 8-K/A filed with
the Commission on October 29, 1997); and on October 29, 1997; and
(iv) The description of the Harbinger Common Stock included in
Harbinger's Registration Statement on Form 8-A filed with the Commission on
June 22, 1995 (as amended by Form 8-A/A filed with the Commission on August
21, 1995).
The following documents previously filed with the Commission by Premenos
are incorporated by reference into this Joint Proxy Statement/Prospectus:
(i) Premenos' Annual Report on Form 10-K for the year ended December
31, 1996, filed with the Commission on March 27, 1997 (the "Premenos 1996
Annual Report");
(ii) Premenos' Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997, and September 30, 1997, filed with the
Commission on May 15, 1997, August 14, 1997, and October 29, 1997,
respectively; and
(iii) The description of the Premenos Common Stock included in
Premenos' Registration Statement on Form 8-A filed with the Commission on
August 1, 1995 (as amended by Form 8-A/A filed with the Commission on
September 18, 1995).
All documents filed by Harbinger or Premenos pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Joint
Proxy Statement/Prospectus and prior to the date of the Special Meetings shall
be deemed to be incorporated by reference into this Joint Proxy
Statement/Prospectus and to be a part hereof from the date of filing of such
documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Joint Proxy
Statement/Prospectus to the extent that a statement contained in this Joint
Proxy Statement/Prospectus, or in any other subsequently filed document which is
also incorporated herein by reference, modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed to constitute a
part of this Joint Proxy Statement/Prospectus except as so modified or
superseded.
ii
<PAGE> 10
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF THESE DOCUMENTS
(OTHER THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS) ARE AVAILABLE WITHOUT CHARGE,
UPON WRITTEN OR ORAL REQUEST, FROM, IN THE CASE OF HARBINGER, JOEL G. KATZ,
SECRETARY, HARBINGER CORPORATION, 1055 LENOX PARK BOULEVARD, ATLANTA, GEORGIA
30319; TELEPHONE NUMBER (404) 467-3000 AND, IN THE CASE OF PREMENOS, H. WARD
WOLFF, SENIOR VICE PRESIDENT OF FINANCE AND ADMINISTRATION AND CHIEF FINANCIAL
OFFICER, PREMENOS TECHNOLOGY CORP., 1000 BURNETT AVENUE, CONCORD, CALIFORNIA
94520; TELEPHONE NUMBER (510) 688-2700. IN ORDER TO ENSURE TIMELY DELIVERY OF
THE DOCUMENTS PRIOR TO THE SPECIAL MEETINGS, ANY SUCH REQUEST SHOULD BE MADE BY
, 1997.
iii
<PAGE> 11
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Special Note Regarding Forward-Looking Statements........... i
Available Information....................................... i
Incorporation of Certain Documents by Reference............. ii
Summary..................................................... 1
The Parties............................................... 1
The Harbinger Special Meeting............................. 2
The Premenos Special Meeting.............................. 3
The Merger................................................ 4
Amendment of 1996 Stock Option Plan....................... 12
Recent Developments....................................... 12
Markets and Market Prices................................... 13
Comparative Per Share Information........................... 14
Summary Historical and Pro Forma Financial Data............. 16
Risk Factors................................................ 21
The Harbinger Special Meeting............................... 29
The Premenos Special Meeting................................ 30
The Merger.................................................. 31
Background and Reasons for the Merger..................... 31
Terms of the Merger Agreement............................. 37
Effective Time of the Merger.............................. 40
Opinion of Harbinger's Financial Advisor.................. 40
Opinion of Premenos' Financial Advisor.................... 45
Interests of Certain Persons in the Merger................ 49
Certain Agreements in Connection with the Merger.......... 50
Accounting Treatment...................................... 52
Certain Federal Income Tax Consequences................... 52
Resale of Harbinger Common Stock.......................... 53
Dissenters' Rights........................................ 53
Comparative Rights of Shareholders.......................... 54
Business of Harbinger....................................... 60
General................................................... 60
Recent Acquisitions....................................... 60
Business of Premenos........................................ 62
Product Overview.......................................... 62
Recent Acquisitions....................................... 62
Pro Forma Combined Financial Statements (Unaudited)......... 63
Amendment to 1996 Stock Option Plan......................... 70
Premenos 1995 Incentive Program............................. 71
Harbinger Executive Compensation............................ 73
Security Ownership of Certain Beneficial Owners and
Management................................................ 77
Experts..................................................... 78
Legal Matters............................................... 79
Shareholder Proposals....................................... 79
Annex A: Merger Agreement
Annex B: Amendment to 1996 Stock Option Plan
Annex C: Fairness Opinion of BT Alex. Brown Incorporated
Annex D: Fairness Opinion of Hambrecht & Quist LLC
</TABLE>
iv
<PAGE> 12
SUMMARY
The following summary is not intended to be a complete description of all
material facts regarding Harbinger and Premenos and the matters considered at
the Special Meetings and is qualified in all respects by the information
appearing elsewhere or incorporated by reference in this Joint Proxy
Statement/Prospectus, the annexes hereto and the documents referred to herein.
Except as otherwise noted, all information contained in this Joint Proxy
Statement/Prospectus reflects a 3-for-2 stock split paid in the form of a stock
dividend to Harbinger Shareholders of record on January 17, 1997.
THE PARTIES
HARBINGER
Harbinger is a leading worldwide provider of electronic commerce products
and services to businesses and offers comprehensive, customizable,
standards-based electronic commerce solutions. Harbinger develops, markets and
supports software products and provides computer communications network and
consulting services which enable businesses to engage in electronic commerce.
These electronic commerce solutions are provided over the Harbinger value-added
network ("VAN") or Harbinger's Internet Value-Added Server ("IVAS"), or directly
over standard telephone lines, the Internet, or private internal computer
networks known as Intranets. Harbinger offers software products that operate on
multiple computer platforms, secure and reliable computer networks to facilitate
the transmission of business information and transactions, and value-added
products and services to enable businesses of all sizes to maximize the number
and value of their electronic trading relationships ("mass deployment
services"). Harbinger's products and services facilitate electronic commerce and
electronic data interchange ("EDI") by businesses and financial institutions by
providing the ability to electronically transmit and receive routine business
information and documents in a standard format. The Harbinger VAN and IVAS serve
as electronic communications links for computer systems by receiving, storing
and forwarding electronically transmitted business documents and data for re-
transmission in a form that can be received and interpreted by the computer of
another commercial business. The method of document exchange is user
configurable by trading partner and by document type (such as purchase order,
invoice, quote and similar business documents). Both the Harbinger VAN and IVAS
provide encryption and other document management and security methods to allow
documents to be exchanged securely and reliably. Harbinger facilitates the
electronic link to its computer communications network through its electronic
commerce software packages for use in a broad range of computing environments,
including DOS, Windows (3.x, 95 and NT), UNIX, IBM AS/400 midrange and IBM MVS
mainframe platforms. Harbinger also provides professional services to assist
businesses in the installation and customization, operation and maintenance of
their electronic trading relationships.
Harbinger is incorporated under the laws of the State of Georgia. Harbinger
Common Stock is traded on the Nasdaq National Market under the symbol "HRBC."
Unless the context otherwise requires, references to Harbinger include Harbinger
Corporation and its subsidiaries. Harbinger's principal executive offices are
located at 1055 Lenox Park Boulevard, Atlanta, Georgia 30319, and its telephone
number is (404) 467-3000.
PREMENOS
Premenos develops, markets and supports a broad range of electronic
commerce software products and services that enable businesses to engage in
secure and reliable business-to-business electronic transactions and
communications. Premenos is a leading provider of EDI translation software for
use on a broad range of computing platforms, including PC, Windows NT, UNIX and
AS/400. Premenos is a market leader for EDI software in the mid-range computer
market. Premenos also offers its Templar suite of products and services which
enable businesses to engage in secure and verifiable electronic commerce
transactions over the Internet and other TCP/IP networks. By using Premenos'
software and services, businesses are able to transfer electronic information
over proprietary networks such as VANs or the Internet and other TCP/IP
networks. Premenos' products and services are designed to provide for the
timely, accurate, cost-effective and secure
<PAGE> 13
electronic exchange of information between a business and its trading partners,
including suppliers, customers and financial institutions.
Premenos is incorporated under the laws of the State of Delaware. Premenos
Common Stock is traded on the Nasdaq National Market under the symbol "PRMO."
Unless the context otherwise requires, references to Premenos include Premenos
Technology Corp. and its subsidiaries. Premenos' principal executive offices are
located at 1000 Burnett Avenue, Concord, California 94520, and its telephone
number is (510) 688-2700.
THE HARBINGER SPECIAL MEETING
TIME, DATE, PLACE AND PURPOSE
The Harbinger Special Meeting will be held on , 1997 at
a.m. local time, at the offices of King & Spalding, 191 Peachtree
Street, 50th Floor, Atlanta, Georgia 30303. At the Harbinger Special Meeting,
holders of Harbinger Common Stock will be asked to consider and vote upon
proposals to (i) approve the Merger Agreement, the Merger and the Stock Issuance
and (ii) approve and adopt the Amendment. A copy of the Merger Agreement and the
Amendment are attached hereto as Annex A and Annex B, respectively, and are
incorporated herein by reference.
RECORD DATE AND SHARES ENTITLED TO VOTE
Only holders of record of shares of Harbinger Common Stock at the close of
business on November 17, 1997 (the "Harbinger Record Date") are entitled to
notice of and to vote at the Harbinger Special Meeting and any adjournment or
postponement thereof. As of such date, there were shares of
Harbinger Common Stock issued and outstanding held by approximately
holders of record. Holders of record of Harbinger Common Stock on
the Harbinger Record Date are entitled to one vote per share on any matter that
may properly come before the Harbinger Special Meeting.
VOTE REQUIRED; SECURITY OWNERSHIP OF MANAGEMENT
The presence in person or by proxy of the holders of a majority of the
shares of Harbinger Common Stock issued and outstanding as of the Harbinger
Record Date and entitled to vote at the Harbinger Special Meeting will
constitute a quorum at the Harbinger Special Meeting or any adjournment thereof.
The affirmative vote of a majority of the total votes cast by holders of shares
of Harbinger Common Stock present (in person or by proxy) and entitled to vote
at the Harbinger Special Meeting is necessary to approve the Merger Agreement,
the Merger, the Stock Issuance and the Amendment. As of the Harbinger Record
Date, the executive officers and directors of Harbinger and their affiliates
beneficially owned an aggregate of shares of Harbinger Common
Stock (not including shares of Harbinger Common Stock issuable upon
the exercise of Harbinger options held by such persons), or approximately %
of the shares of Harbinger Common Stock then outstanding. Each of the executive
officers and directors of Harbinger has advised Harbinger that he intends to
vote his shares of Harbinger Common Stock in favor of each of the proposals to
approve the Merger Agreement, the Stock Issuance and the Amendment.
SOLICITATION AND REVOCATION OF PROXIES
A form of proxy for the Harbinger Special Meeting is enclosed with the
copies of this Joint Proxy Statement/Prospectus being sent to Harbinger
Shareholders. All shares of Harbinger Common Stock held of record as of the
Harbinger Record Date represented by properly executed proxies will, unless such
proxies have been previously revoked, be voted in accordance with the
instructions indicated on such proxies. If no instructions are indicated, such
shares will be voted FOR each of the proposals to approve the Merger Agreement,
the Merger, the Stock Issuance and the Amendment and, in the discretion of the
proxy holder, as to any other matter which may properly come before the
Harbinger Special Meeting.
The Harbinger Board is unaware of any matters to be presented for action at
the Harbinger Special Meeting other than the proposals to approve the Merger
Agreement, the Merger, the Stock Issuance and the
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<PAGE> 14
Amendment, but if other matters do come properly before the Harbinger Special
Meeting it is intended that shares represented by proxies in the accompanying
form will be voted by the persons named in the proxy in accordance with their
best judgment. Any proxy given pursuant to this solicitation may be revoked in
writing by the person giving it at any time before the proxy is exercised by
giving notice to the Harbinger Secretary or by submitting a proxy having a later
date or by such person appearing at the Harbinger Special Meeting and electing
to vote in person.
THE PREMENOS SPECIAL MEETING
TIME, DATE, PLACE AND PURPOSE
The Premenos Special Meeting will be held on , 1997 at
a.m. local time, at the Hilton Hotel, located at 1970 Diamond
Boulevard, Concord, California 94520. At the Premenos Special Meeting, holders
of Premenos Common Stock will be asked to consider and vote upon a proposal to
approve the Merger Agreement and the Merger. A copy of the Merger Agreement is
attached hereto as Annex A and is incorporated herein by reference.
RECORD DATE AND SHARES ENTITLED TO VOTE
Only holders of record of Premenos Common Stock at the close of business on
November 17, 1997 (the "Premenos Record Date") are entitled to notice of and to
vote at the Premenos Special Meeting. As of such date, there were
shares of Premenos Common Stock issued and outstanding held by
approximately holders of record. Holders of record of Premenos
Common Stock on the Premenos Record Date are entitled to one vote per share on
any matter that may properly come before the Premenos Special Meeting.
VOTE REQUIRED; SECURITY OWNERSHIP OF MANAGEMENT
The presence in person or by proxy of the holders of a majority of the
shares of Premenos Common Stock issued and outstanding as of the Premenos Record
Date and entitled to vote at the Premenos Special Meeting will constitute a
quorum at the Premenos Special Meeting or any adjournment thereof. The
affirmative vote of the holders of a majority of the shares of Premenos Common
Stock outstanding and entitled to vote at the Premenos Special Meeting is
necessary to approve the Merger and the Merger Agreement. Accordingly, a failure
to vote or an abstention will have the same effect as a negative vote. As of the
Premenos Record Date, the executive officers and directors of Premenos and their
affiliates beneficially owned an aggregate of shares of Premenos
Common Stock (not including shares of Premenos Common Stock issuable upon
the exercise of options held by such persons), or approximately % of the
shares of Premenos Common Stock then outstanding. Lew Jenkins, Chairman of
Premenos, and David Hildes, Vice Chairman and Secretary of Premenos, who as of
the Premenos Record Date owned in the aggregate approximately % of the
outstanding Premenos Common Stock, have entered into Irrevocable Proxy
Agreements with Harbinger (the "Proxy Agreements") pursuant to which they have
granted to Harbinger an irrevocable proxy to vote the shares of Premenos Common
Stock held by them in favor of the Merger and the Merger Agreement at the
Premenos Special Meeting. Each of the executive officers and directors of
Premenos has advised Premenos that he intends to vote his shares of Premenos
Common Stock to approve the Merger and the Merger Agreement.
SOLICITATION AND REVOCATION OF PROXIES
A form of proxy for the Premenos Special Meeting is enclosed with the
copies of this Joint Proxy Statement/Prospectus being sent to Premenos
Stockholders. All shares of Premenos Common Stock held of record as of the
Premenos Record Date and represented by properly executed proxies will, unless
such proxies have been previously revoked, be voted in accordance with the
instructions indicated on such proxies. If no instructions are indicated, such
shares will be voted FOR approval of the Merger and the Merger Agreement
3
<PAGE> 15
and, in the discretion of the proxy holder, as to any other matter which may
properly come before the Premenos Special Meeting.
The Premenos Board is unaware of any matters to be presented for action at
the Premenos Special Meeting other than the proposal to approve the Merger and
the Merger Agreement, but if other matters do come properly before the Premenos
Special Meeting it is intended that shares of Premenos Common Stock represented
by proxies in the accompanying form will be voted by the persons named in the
proxy in accordance with their best judgment. Any proxy given pursuant to this
solicitation may be revoked in writing by the person giving it at any time
before the proxy is exercised by giving notice to the Premenos Secretary or by
submitting a proxy having a later date or by such person appearing at the
Premenos Special Meeting and electing to vote in person.
THE MERGER
BACKGROUND OF THE MERGER
In June 1996, Harbinger and Premenos began discussions regarding a possible
business combination. These preliminary discussions did not result in an
agreement between the parties and were terminated. Although there were contacts
between Harbinger and Premenos between June 1996 and January 1997, there were no
substantive discussions and no agreement was reached regarding a business
combination. Substantive discussions regarding a business combination were
renewed in September 1997. A definitive Merger Agreement was negotiated in
October 1997 and executed on October 23, 1997. Prior to June 1996, there had
been no transactions between the parties. See "The Merger -- Background of and
Reasons for the Merger."
TERMS OF THE MERGER AGREEMENT
General. The Merger Agreement provides that, following approval of the
Merger Agreement and the Merger by the Harbinger Shareholders and Premenos
Stockholders and the satisfaction or waiver of the other conditions to the
consummation of the Merger, at the Effective Time, Merger Sub will be merged
with and into Premenos in accordance with the provisions of the Delaware General
Corporation Law ("DGCL"). Premenos will be the surviving corporation in the
Merger. As a result of the Merger, the separate corporate existence of Merger
Sub will cease, and Premenos will become a wholly owned subsidiary of Harbinger.
Conversion Ratio. Each share of Premenos Common Stock issued and
outstanding at the time of the Merger (other than treasury shares and shares
held by Harbinger and its direct and indirect subsidiaries) will be converted
into the right to receive .45 of a share of Harbinger Common Stock (the
"Conversion Ratio"). The Conversion Ratio was determined in arm's-length
negotiations between representatives of Harbinger and Premenos. See "The
Merger -- Background of and Reasons for the Merger."
Cash will be paid in lieu of issuing fractional shares of Harbinger Common
Stock in an amount equal to the average closing price of Harbinger Common Stock,
as reported on the Nasdaq National Market, for the ten consecutive trading days
ending on the fifth trading day immediately prior to the Premenos Special
Meeting (the "Average Closing Price"), multiplied by the fraction of a share
which the holder of Premenos Common Stock would otherwise be entitled to
receive. See "The Merger -- Terms of the Merger Agreement -- Conversion Ratio."
Harbinger Board of Directors. Under the terms of the Merger Agreement,
Harbinger has agreed to take all actions reasonably necessary to elect David
Hildes, Vice Chairman and Secretary of Premenos, to the Harbinger Board as of
the Effective Time. The Merger Agreement further provides that if the unexpired
term of the class of directors to which David Hildes is elected is less than one
year then Harbinger agrees to use its reasonable, best efforts to nominate and
recommend David Hildes for election as a director at the next annual meeting of
Harbinger Shareholders. See "The Merger -- Terms of the Merger
Agreement -- Harbinger Board of Directors."
Conditions to the Merger. In addition to certain customary conditions,
consummation of the Merger is subject to the satisfaction or waiver of, among
others, the following conditions: (i) that the Merger, the
4
<PAGE> 16
Merger Agreement and the transactions contemplated thereunder, including, in the
case of Harbinger, the Amendment, shall have been approved by the Harbinger
Shareholders and the Premenos Stockholders; (ii) that Harbinger and Premenos
shall have received the written opinion of King & Spalding concerning certain
federal income tax consequences of the Merger; (iii) that the Registration
Statement of which this Joint Proxy Statement/Prospectus forms a part shall be
effective under the Securities Act; (iv) that Harbinger shall have been advised
in writing by KPMG Peat Marwick LLP that, in accordance with generally accepted
accounting principles ("GAAP"), the Merger qualifies to be treated as a pooling
of interests for accounting purposes and Premenos shall have been advised in
writing by Coopers & Lybrand L.L.P. that they believe the criteria for pooling
accounting treatment relative to Premenos have been satisfied; (v) that the
Harbinger Common Stock to be issued in the Merger shall have been approved for
listing on the Nasdaq National Market; and (vi) that the applicable waiting
periods shall have terminated or expired under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"). See "The Merger -- Terms
of the Merger Agreement -- Conditions to the Merger."
Amendment. The Merger Agreement may be amended only by written agreement
of the parties thereto.
Termination. The Merger Agreement may be terminated (i) by mutual
agreement of the Harbinger Board and the Premenos Board; (ii) by Harbinger or
Premenos, if any of the conditions to such party's obligations to consummate the
Merger have not been complied with or performed, and such noncompliance or
nonperformance has not been cured or eliminated on or before March 31, 1998;
(iii) by Harbinger or Premenos, if the Merger and the Merger Agreement have not
been approved by the requisite vote of the Harbinger Shareholders and the
Premenos Stockholders; (iv) by Harbinger if (a) the Premenos Board shall have
withdrawn or modified its recommendation of the Merger Agreement or the Merger
in a manner adverse to Harbinger, (b) an Alternative Transaction (as defined in
the Merger Agreement) involving Premenos shall have occurred or the Premenos
Board shall have recommended, consummated or announced an intent to engage in an
Alternative Transaction or (c) a tender offer or exchange offer for twenty
percent (20%) or more of the outstanding shares of Premenos Common Stock (a
"Tender Offer") shall have been commenced and the Premenos Board shall have (x)
recommended to the Premenos Stockholders to tender their shares in such Tender
Offer or (y) resolved or publicly announced or disclosed to any third party its
intention to take no position with respect to such Tender Offer (collectively a
"Competing Tender Offer"); (v) by Premenos, if the Harbinger Board shall have
withdrawn or modified its recommendation of the Merger Agreement or the Merger
in a manner adverse to Premenos or shall have resolved or publicly announced or
disclosed its intention to do so; (vi) by Harbinger, if the Harbinger Board
shall have determined to withdraw its recommendation of the Merger Agreement or
the Merger because it determines in good faith that its fiduciary duties to its
shareholders under applicable law require it to withdraw its recommendation;
(vii) by Premenos, if the Premenos Board shall have withdrawn its recommendation
of the Merger Agreement or the Merger because it determines in good faith that
its fiduciary duties to its stockholders under applicable law require it to
withdraw its recommendation; (viii) by Premenos, if Harbinger breaches its
covenant relating to issuances of capital stock prior to the Effective Time; and
(ix) by Harbinger, if David Hildes or Lew Jenkins sells any shares of Premenos
Common Stock on or prior to the closing date of the Merger (the "Closing Date").
Fees and Expenses. Harbinger and Premenos will each pay their own fees,
costs and expenses incurred in connection with the Merger Agreement and the
transactions contemplated thereby (other than printing and filing fees and
expenses relating to the Registration Statement and this Joint Proxy
Statement/Prospectus and the filing fees relating to filings under the HSR Act,
which will be borne equally). Premenos has agreed that its fees, costs and
expenses incurred in connection with the Merger Agreement and the transactions
contemplated thereby shall not exceed $2.3 million, which amount includes,
without limitation, the anticipated fees, costs and expenses of Premenos'
financial advisors, accountants and counsel. If the Merger Agreement is
terminated (i) by Harbinger (a) because the Premenos Board withdraws or modifies
its recommendation of the Merger Agreement or the Merger in a manner adverse to
Harbinger, (b) because of an Alternative Transaction or (c) because of a
Competing Tender Offer; (ii) by Premenos, because the Premenos Board withdraws
its recommendation of the Merger Agreement or the Merger; (iii) by Harbinger, as
a result of the failure of the Premenos Stockholders to approve the Merger
Agreement and the Merger and at the time of the Premenos Special Meeting an
Alternative Transaction shall have been announced which
5
<PAGE> 17
shall not have been absolutely and unconditionally withdrawn and abandoned; or
(iv) by Harbinger, because David Hildes or Lew Jenkins sells any shares of
Premenos Common Stock on or prior to the Closing Date, then Premenos has agreed
to pay Harbinger a termination fee of $4,000,000 (the "Harbinger Termination
Fee"). In addition, if Premenos enters into a definitive agreement to consummate
an Alternative Transaction within one year of the payment of the Harbinger
Termination Fee, then Premenos shall pay a topping fee equal to 25% of the
amount by which the value of the Alternative Transaction exceeds the value of
the Merger as of the date of the termination of the Merger Agreement, subject to
a minimum topping fee of $4,000,000.
If the Merger Agreement is terminated (i) by Premenos, because the
Harbinger Board shall have withdrawn or modified its recommendation of the
Merger Agreement or the Merger in a manner adverse to Premenos or (ii) by
Harbinger, because the Harbinger Board withdraws its recommendation because it
determines in good faith that its fiduciary duties to its shareholders under
applicable law require it to withdraw its recommendation, then Harbinger shall
pay Premenos a termination fee of $4,000,000.
No Solicitation; Board Action. The Merger Agreement provides that Premenos
will not, directly or indirectly, solicit or, with certain exceptions,
facilitate mergers, sales of significant assets, tender offers or similar
transactions with other persons prior to the Effective Time. See "The
Merger -- Terms of the Merger Agreement -- No Solicitation; Board Action."
Conduct of Business Pending the Merger. Each of Harbinger and Premenos has
agreed in the Merger Agreement to operate its business in the ordinary course
and to refrain from taking certain actions relating to the operation of its
business pending consummation of the Merger without the prior approval of the
other party, except as otherwise permitted by the Merger Agreement. See "The
Merger -- Terms of the Merger Agreement -- Conduct of Business Pending the
Merger."
EFFECTIVE TIME OF THE MERGER, EXCHANGE OF SHARES AND ASSUMPTION OF STOCK OPTIONS
Effective Time of the Merger. The Merger will become effective by filing a
certificate of merger with the Secretary of State of the State of Delaware in
such form as required by, and executed in accordance with the relevant
provisions of, the DGCL. The Merger Agreement provides that the parties thereto
will cause such certificate of merger to be filed after each of the conditions
to consummation of the Merger has been satisfied or, if permissible, waived. The
Merger cannot become effective until the Harbinger Shareholders have approved
the Merger Agreement, the Merger, the Stock Issuance and the Amendment, and the
Premenos Stockholders have approved the Merger and the Merger Agreement, and all
required regulatory approvals and actions have been obtained and taken. Thus,
there can be no assurance as to whether or when the Merger will become
effective.
Exchange of Stock Certificates. Promptly following the Effective Time,
instructions and a letter of transmittal will be furnished to all Premenos
Stockholders for use in exchanging their stock certificates for certificates
evidencing the shares of Harbinger Common Stock they will be entitled to receive
as a result of the Merger. PREMENOS STOCKHOLDERS SHOULD NOT SUBMIT THEIR STOCK
CERTIFICATES FOR EXCHANGE UNTIL INSTRUCTIONS AND THE LETTER OF TRANSMITTAL ARE
RECEIVED.
Assumption of Stock Options. Under the terms of the Merger Agreement, at
the Effective Time, Harbinger shall assume all of Premenos' rights and
obligations with respect to the stock options issued and outstanding as of such
time under the Premenos 1995 Incentive Program, as amended (the "Premenos Stock
Plan"), whether or not such options (the "Premenos Options") are then
exercisable. The Merger Agreement further provides that promptly following such
assumption Harbinger shall substitute for the Premenos Options options to be
granted under the Stock Plan, which Harbinger stock options will contain vesting
terms and conditions matching those contained in the Premenos Options. Harbinger
has further agreed in the Merger Agreement to issue incentive stock options
under the Stock Plan in substitution for each Premenos Option that qualified as
an incentive stock option prior to the Effective Time and to issue non-qualified
stock options under the Stock Plan in substitution for each Premenos Option that
constituted a non-qualified stock option prior to the Effective Time. In
connection with the assumption and substitution of the Premenos Options, the
number of shares of Harbinger Common Stock and the exercise price for such
shares under the Stock Plan will be appropriately adjusted based upon the
Conversion Ratio. Employees and non-employee directors of
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<PAGE> 18
Premenos will receive on or prior to the Closing Date documentation to
effectuate such assumption and substitution. PREMENOS OPTION HOLDERS SHOULD NOT
SUBMIT THEIR OPTION AGREEMENTS FOR ASSUMPTION AND SUBSTITUTION UNTIL
DOCUMENTATION TO EFFECT SUCH ASSUMPTION AND SUBSTITUTION IS RECEIVED. See "The
Merger -- Terms of the Merger Agreement -- Assumption of Stock Options."
RECOMMENDATION OF HARBINGER BOARD
THE HARBINGER BOARD HAS DETERMINED THAT THE MERGER IS IN THE BEST INTERESTS
OF HARBINGER AND ITS SHAREHOLDERS, HAS APPROVED THE MERGER AGREEMENT, THE MERGER
AND THE STOCK ISSUANCE AND RECOMMENDS THAT THE HARBINGER SHAREHOLDERS VOTE FOR
THE PROPOSAL TO APPROVE THE MERGER AGREEMENT, THE MERGER AND THE STOCK ISSUANCE.
OPINION OF HARBINGER'S FINANCIAL ADVISOR
BT Alex. Brown Incorporated ("BT Alex. Brown") has delivered a written
opinion, dated October 23, 1997, to the Harbinger Board that, as of the date of
such opinion and based upon and subject to certain matters stated therein, the
Conversion Ratio is fair, from a financial point of view, to Harbinger. The full
text of the written opinion of BT Alex. Brown, which sets forth the assumptions
made, matters considered and limitations on the review undertaken, is attached
as Annex C to this Joint Proxy Statement/Prospectus and should be read carefully
in its entirety. See "The Merger -- Opinion of Harbinger's Financial Advisor."
RECOMMENDATION OF PREMENOS BOARD
THE PREMENOS BOARD HAS DETERMINED THAT THE MERGER IS IN THE BEST INTERESTS
OF PREMENOS AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER AND THE MERGER
AGREEMENT, AND RECOMMENDS THAT THE PREMENOS STOCKHOLDERS VOTE FOR THE PROPOSAL
TO APPROVE THE MERGER AND THE MERGER AGREEMENT.
OPINION OF PREMENOS' FINANCIAL ADVISOR
Hambrecht & Quist LLC ("Hambrecht & Quist") has delivered a written
opinion, dated October 23, 1997, to the Premenos Board that, as of the date of
such opinion and based upon and subject to certain matters stated therein, the
consideration to be received by Premenos Stockholders in the Merger is fair,
from a financial point of view, to the Premenos Stockholders. The full text of
the written opinion of Hambrecht & Quist, which sets forth the assumptions made,
matters considered and limitations on the review undertaken, is attached as
Annex D to this Joint Proxy Statement/Prospectus and should be read carefully in
its entirety. See "The Merger -- Opinion of Premenos' Financial Advisor."
REASONS FOR THE MERGER
Harbinger's Reasons for the Merger
In determining to recommend that the Harbinger Shareholders approve the
Merger Agreement, the Merger and the Stock Issuance, the Harbinger Board
considered a number of factors, including, without limitation, the following:
Further Strategic Mission. Harbinger's primary mission is the mass
deployment of electronic commerce products and services for routine
business-to-business transactions to worldwide trading communities. Management
of Harbinger believes that the Merger will enhance Harbinger's ability to
execute on its business strategy by expanding the suite of products and services
that Harbinger may offer its customers, expanding Harbinger's customer base and
enhancing and expanding the base of electronic commerce professionals employed
by Harbinger who are skilled in developing electronic commerce solutions for its
customers. The Premenos products and services will add EDI/400 (Premenos'
leading EDI solution for the AS/400 platform) and EDI/Open V2 (Premenos' EDI
solution for the UNIX and NT platforms) to the Harbinger solutions. In addition,
Premenos' Templar product (Premenos' leading Internet security product) should
7
<PAGE> 19
further enhance Harbinger's ability to deliver secure Internet-based solutions
to its customers. The Merger also will expand Harbinger's customer base to
include Premenos' base of over 5,000 customers. Moreover, the Merger will expand
and enhance Harbinger's employee base. Premenos employs approximately 270
electronic commerce professionals who are skilled in the design and development
of electronic commerce solutions. In addition, Premenos is headquartered in the
San Francisco Bay Area, and its location should provide Harbinger with an
enhanced ability to recruit electronic commerce professionals from the Bay Area
to the combined company in the future.
Enhanced Market Position. The Merger will further enhance Harbinger's
market position as a leading provider of electronic commerce software. Premenos
currently is a leading provider of electronic commerce software for the AS/400
platform. In addition, Premenos also provides electronic commerce software for
the UNIX and NT platforms that should complement Harbinger's existing products
and services for these platforms. Management of Harbinger believes that the
Merger will establish the combined company as a leader in the market for low-end
PC EDI translation software and Internet and Web-based EDI solutions, the
mid-range market for AS/400, UNIX and NT translation software and services and
the market for high-end, enterprise MVS, VSE, UNIX and NT translation and
communications software and services. Harbinger also believes that the Merger
will enhance its ability to develop, market and support Internet-based commerce
solutions in various vertical markets.
Leverage Combined Software Development Teams and Technologies. By
combining the Harbinger and Premenos technologies and development teams,
Harbinger management believes that they will be able to embed the best features
in the next generation of the combined company's products serving identical
platforms. The combined company will be able to integrate product lines to
provide a more comprehensive suite of products more efficiently than if either
company were to attempt to expand its product line without the assistance of the
other. Management of Harbinger also believes that Premenos possesses skilled
software development teams that are experienced in the development of electronic
commerce products and services for the AS/400, UNIX and NT platforms and the
Internet. Management of Harbinger intends to leverage such software development
expertise and technology in developing electronic commerce solutions for the
customers of the combined enterprise.
Additional Sales Channels. Management of Harbinger believes that the
Merger will further enhance Harbinger's and Premenos' ability to market and sell
their respective products. Harbinger expects to continue relationships with
Premenos' channel partners, such as Baan, Computer Associates, Coopers &
Lybrand, Daily & Walcott, Ernst & Young, IBM, JBA, JD Edwards, Marcam, Oracle,
Price Waterhouse, SAP and Vanstar for distribution of its products worldwide.
Likewise, Harbinger intends to use its sales channels to promote and sell
Premenos products worldwide.
Administrative and Operational Expenses. Management of Harbinger believes
that the Merger should result in long-term business synergies through, among
other matters, the sharing of certain administrative, operational, research and
development, marketing and public company expenses, which will permit cost
savings through the elimination of duplicate costs. Although near-term costs are
expected to increase as a result of the Merger and integration-related expenses,
Harbinger expects that these costs will decrease over time and be offset by
long-term economies of scale resulting from the Merger.
The foregoing discussion is not intended to be exhaustive, but is believed
to include the principal factors considered by the Harbinger Board in
determining to approve the Merger. In reaching its determination, the Harbinger
Board did not assign any relative or specific weights to the foregoing factors.
Premenos' Reasons for the Merger
In the course of reaching its decision to approve the Merger Agreement and
each of the transactions and arrangements contemplated thereby, the Premenos
Board consulted with Premenos' legal and financial advisors as well as with
Premenos' management, and considered a number of factors, including the
following:
Strategic Fit. The Merger will combine Premenos' technological leadership
in EDI software, EDI standards and Internet electronic commerce solutions and
its position as a market leader for EDI software for
8
<PAGE> 20
mid-range computers with Harbinger's strengths in product diversity, VAN
services, management, EDI roll-out within trading communities and vertical
markets. The Premenos Board believes that these strengths are complementary and
can be leveraged to create a combined company that has product market leadership
across multiple platforms and that can efficiently respond to market and
technological demands. Further, Premenos' strength in facilitating electronic
commerce over the Internet, particularly through its Templar product, is
complementary with Harbinger's VAN and IVAS offerings and will give the combined
company the ability to address the drawbacks and capitalize on the benefits of
each of these diverse delivery systems.
Product and Platform Diversification. Currently, Premenos is a market
leader in the midrange EDI software market and derives a majority of its revenue
from sales of its EDI/400 product for the AS/400. The Premenos Board believes
that Premenos' continued future success would be dependent, in part, on its
ability to develop or acquire new products, increase market penetration of
existing offerings and expand its service offerings. The Merger will allow
Premenos to offer to new and existing customers fully integrated EDI solutions
by combining its EDI/Open, EDI/400 and Templar products with Harbinger's
software products, VAN and consulting services. The Merger will enable Premenos
to offer a range of electronic commerce products and services across all
enterprise computing platforms, i.e., PC, NT and UNIX, midrange (including the
AS/400) and mainframe as well as VAN services and consulting. The combined
entity will be in a position to offer "one-stop" complete solutions for entire
trading communities with delivery over both the Internet and Harbinger's VAN.
Harbinger Customer Base and Vertical Market Expertise. Harbinger currently
services over 46,000 software and network customers, and has developed
relationships with many hubs or mini-hubs. Further, Harbinger has developed
electronic commerce expertise in numerous vertical markets including aerospace,
automotive, electronics, government, health care, manufacturing,
petroleum/chemical, retail and utilities. The Premenos Board believes that
Harbinger's existing customer base, its focus on vertical markets and its skill
in penetrating new vertical markets should provide new opportunities to market
Premenos' existing products. The vertical market channels which Harbinger brings
to the combined company also provide a base for the introduction of new versions
of Premenos' product offerings tailored to the specific needs of these markets.
The Premenos Board also believes that it will be able to increase market
penetration for its products by utilizing Harbinger's sales force.
Competitive Position and Growth. The Premenos Board believes that the
combination of the companies will improve visibility with customers, attract
more experienced management and increase market place visibility. The Premenos
Board believes that the electronic commerce industry will undergo strategic
realignment and as a result there will be a competitive advantage to companies
such as the combined entity which have the financial and managerial resources to
pursue that strategic realignment. The combination of the two companies should
enhance further growth and technology development, particularly in light of the
cash resources that will be available to the combined entity for future
acquisitions, as well as internal product development.
Management. The Premenos Board believes that Harbinger has assembled a
strong management team equipped to lead the combined company ahead as the market
for electronic commerce solutions becomes increasingly competitive. The combined
management team will be larger and better positioned through depth and
experience than the current Premenos team to effectively manage capital
resources, growth, acquisitions and the resulting integration processes and
customer development. The Premenos Board believes that the combination will
result in minimal management level redundancy and greater overall management
depth. See "Risk Factors -- Integration of Recent Acquisitions; Future
Acquisitions."
Compatibilities of the Companies and Potential Synergies. Certain aspects
of Premenos' and Harbinger's businesses considered by the Premenos Board in
concluding that a combination of Premenos and Harbinger could offer Premenos and
its stockholders unique opportunities include: the compatibility of the
respective corporate cultures of Premenos and Harbinger; the integration of each
company's technology pool and research and development teams; the expansion of
Premenos' geographic presence; and the potential synergy of the combined
companies in terms of cost savings from sharing certain operating,
administrative, research and development, marketing and public company expenses.
9
<PAGE> 21
Additional Information, Factors and Risks Considered by the Premenos
Board. In addition to the factors outlined above, the Premenos Board made its
determination after careful consideration of, and based on, certain additional
factors, information and reports, including:
(i) the terms and conditions of the proposed Merger, including the
premium to be paid relative to recent closing prices for Premenos Common
Stock, as well as the tax-free nature of the transaction to the Premenos
Stockholders and the willingness of Messrs. Jenkins and Hildes to vote in
favor of the Merger without receiving a control premium;
(ii) information regarding historical market prices and other
information with respect to Premenos Common Stock and Harbinger Common
Stock;
(iii) the prospects for positive long-term performance of Harbinger
Common Stock, plus the potential for more limited volatility in such stock
(reflecting the combined companies) in comparison to Premenos Common Stock;
(iv) the presentation of Premenos' financial advisors, The Great
Circle Group LLC and Hambrecht & Quist, and the opinion of Hambrecht &
Quist as to the fairness of the consideration to be received in the Merger,
from a financial point of view, as of the date of such opinion, by the
Premenos Stockholders; and
(v) the Premenos Board's assessment of Premenos' alternatives to the
Merger, including remaining an independent company, particularly in light
of the current and anticipated future consolidation within the electronic
commerce industry and the impact it may have on Premenos's competitive
position on a stand-alone basis.
The Premenos Board also considered a variety of potentially negative
factors concerning the Merger, including: (i) the difficulty of integrating,
reorganizing and effectively managing the operations of Premenos and Harbinger
as a combined company particularly in light of their separate geographic
locations and separate corporate cultures which may be compounded by the recent
and anticipated additional acquisitions of Harbinger; (ii) the risk that the
Merger may cause a higher than ordinary rate of personnel and management
turnover which would deprive the combined company of the continuity of
management and pool of technical resources necessary to effectively obtain many
of the benefits sought to be obtained by the Merger; (iii) the risk that one of
Premenos' key international distributors or one or more of its several U.S.
distributors determine to alter or terminate their relationships with Premenos
particularly in the case of the international distributor, since such
distributor could view Harbinger as a competitor in light of Harbinger's VAN
business; (iv) the risk that Harbinger's international distribution channels
will not have the capacity and resources to distribute Premenos' products
overseas; (v) the potential disruption of Premenos' business that might result
from employee uncertainty and lack of focus following announcement of the Merger
and during the integration of the operations of Harbinger and Premenos; (vi) the
risk that the combined company might not achieve revenues equal to the sum of
the separate companies' anticipated revenues; (vii) the risk that as a result of
the transaction customers might face uncertainty that could lead to business
disruptions, delays in customer orders or increased difficulty in obtaining
customer orders; (viii) the risk that the combined company might not achieve
sufficient operating efficiencies to ensure that the Merger would not have a
negative effect on Harbinger's earnings per share or that such efficiencies
might not be realized as rapidly as anticipated; (ix) the risk that other
benefits sought to be obtained by the Merger would not be obtained; and (x)
other risks described above under "Risk Factors."
The foregoing discussion of the information and factors considered by the
Premenos Board is not intended to be exhaustive but is believed to include the
material information and factors considered by the Premenos Board. In reaching a
determination whether to approve the Merger, in view of the wide variety of
factors considered, the Premenos Board did not find it practicable to, and did
not, quantify or otherwise attempt to assign relative or specific weights to the
information and factors considered in reaching its determinations, and
individual directors may have given differing weights to different factors.
10
<PAGE> 22
CERTAIN AGREEMENTS IN CONNECTION WITH THE MERGER
Certain additional agreements have been and will be entered into in
connection with the consummation of the Merger, including the Proxy Agreements
and a registration rights agreement. The Proxy Agreements grant to Harbinger an
irrevocable proxy to vote the shares of Premenos Common Stock held by Lew
Jenkins, Chairman of Premenos, and David Hildes, Vice Chairman and Secretary of
Premenos, in their individual capacity in favor of the Merger and the Merger
Agreement at the Premenos Special Meeting. The registration rights agreement
provides affiliates of Premenos with certain limited registration rights with
respect to the shares of Harbinger Common Stock received in the Merger. In
addition, the registration rights agreement provides that Harbinger will
publicly release a 30-day interim financial statement covering the first full
calendar month of combined operations of Harbinger and Premenos following the
Effective Time as promptly as practicable, but no later than 25 days after the
end of such calendar month, and to deliver such interim financial statement to
Messrs. Jenkins and Hildes at least five days prior to public release. See "The
Merger -- Certain Agreements in Connection with the Merger."
REGULATORY APPROVALS REQUIRED
Under the Merger Agreement, the obligations of both Harbinger and Premenos
to consummate the Merger are conditioned upon receipt of all required regulatory
approvals. Under the HSR Act and the rules promulgated thereunder by the Federal
Trade Commission ("FTC"), the Merger may not be consummated unless notification
has been given and certain information has been furnished to the FTC and the
Antitrust Division of the U.S. Department of Justice (the "Antitrust Division")
and the waiting period has expired or been terminated. Pursuant to the HSR Act,
on October 27 and October 28, 1997, Harbinger and Premenos, respectively, each
filed a Notification and Report Form with the FTC and the Antitrust Division for
review in connection with the Merger. The 30-day waiting period under the HSR
Act applicable to the Merger will expire on November 28, 1997, unless the Merger
is investigated or opposed by the FTC or the Antitrust Division. There can be no
assurance that the Merger will not be investigated or opposed by the FTC or the
Antitrust Division.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the Merger, holders of Harbinger Common Stock and Premenos
Common Stock should be aware that certain executive officers and directors of
Harbinger and Premenos have certain interests that may present them with
potential conflicts of interest with respect to the Merger. See "The
Merger -- Interests of Certain Persons in the Merger."
ACCOUNTING TREATMENT
The Merger is expected to qualify as a "pooling of interests" for
accounting purposes. The obligations of each of Harbinger and Premenos,
respectively, to consummate the Merger are conditioned upon the receipt of
written advice from KPMG Peat Marwick LLP to the effect that, in accordance with
GAAP, the Merger qualifies to be treated as a pooling of interests for
accounting purposes and from Coopers & Lybrand L.L.P. that the pooling criteria
with respect to Premenos have been satisfied. See "The Merger -- Accounting
Treatment."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Harbinger and Premenos expect the Merger to be a tax-free reorganization
for federal income tax purposes so that no gain or loss will be recognized by
the Premenos Stockholders, except in respect of cash received in lieu of
fractional shares. The obligations of Harbinger and Premenos to consummate the
Merger are conditioned upon the receipt of an opinion of King & Spalding,
counsel to Harbinger, to the effect that, subject to the assumptions,
qualifications and limitations set forth therein, the Merger will qualify as a
tax-free reorganization for federal income tax purposes under Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"). Each Premenos
Stockholder should consult his own tax advisor as to the tax
11
<PAGE> 23
consequences of the Merger to him under applicable tax law. See "The
Merger -- Certain Federal Income Tax Consequences."
RESALE OF HARBINGER COMMON STOCK
Shares of Harbinger Common Stock to be issued to Premenos Stockholders in
connection with the Merger will be freely transferable under the Securities Act,
except for shares issued to any person or entity who, at the time of the Merger,
may be deemed an "affiliate" of Premenos within the meaning of Rule 145. In
general, affiliates of Premenos include its executive officers and directors and
any other person or entity who controls, is controlled by or is under common
control with Premenos. Rule 145, among other things, imposes certain
restrictions upon the resale of securities received by affiliates in connection
with certain reclassifications, mergers, consolidations or asset transfers.
These restrictions will consist of volume and manner of sale restrictions on the
resale of shares of Harbinger Common Stock issued to such persons and entities.
Harbinger may place legends on certificates representing shares of Harbinger
Common Stock that are issued to Premenos Stockholders in the Merger to restrict
such transfers. Harbinger has agreed to provide affiliates of Premenos with
certain limited registration rights with respect to the shares of Harbinger
Common Stock received in the Merger. See "The Merger -- Certain Agreements in
Connection with the Merger."
DIFFERENCES IN THE RIGHTS OF SECURITY HOLDERS
Harbinger is incorporated under the laws of the State of Georgia ("Georgia
Law"), and Premenos is incorporated under the laws of the State of Delaware
("Delaware Law"). Premenos Stockholders will, upon consummation of the Merger,
become Harbinger Shareholders, and their rights as such will be governed by
Georgia Law and Harbinger's Amended and Restated Articles of Incorporation (the
"Harbinger Charter") and Amended and Restated Bylaws (the "Harbinger Bylaws").
See "Comparative Rights of Shareholders."
DISSENTERS' RIGHTS
Premenos Stockholders will not have appraisal rights under the DGCL with
respect to the Merger, and Harbinger Shareholders will not have dissenters'
rights under the GBCC with respect to the Merger. See "The Merger -- Dissenters'
Rights."
AMENDMENT OF 1996 STOCK OPTION PLAN
If the Merger Agreement and the Merger are approved by the Harbinger
Shareholders and the Premenos Stockholders and the Merger is consummated, the
stock options held by employees and directors of Premenos will be converted into
stock options of Harbinger issued under the Stock Plan. See "The Merger -- Terms
of the Merger Agreement -- Assumption of Stock Options." It is currently
anticipated that Harbinger will issue Harbinger options to acquire an aggregated
of approximately 827,136 shares of Harbinger Common Stock in connection with the
conversion of Premenos stock options in the Merger. At the Harbinger Special
Meeting, Harbinger Shareholders will be asked to consider and vote upon a
proposal to approve the Amendment to increase the number of shares of Harbinger
Common Stock reserved for issuance under the Stock Plan from 4,125,000 to
5,125,000 shares. Approval of the Amendment by Harbinger Shareholders is a
condition of the obligations of the parties to the Merger Agreement. The
Harbinger Board has approved the Amendment and recommends a vote FOR approval of
the Amendment. See "Amendment of 1996 Stock Option Plan."
RECENT DEVELOPMENTS
Atlas Products International, Limited. On October 23, 1997, Harbinger
acquired all of the outstanding capital shares of Atlas Products International,
Limited and its affiliate (collectively, "Atlas"), a Manchester, England-based
provider of EDI translation software. Atlas has an installed base of over 2,500
customers on PC, Unix, NT and DEC/VMS platforms. Atlas products are used
principally by small and mid-sized businesses and are distributed directly and
through third party channels in the U.K., Europe and other markets around the
world. Atlas provides to Harbinger an enhanced customer base, relationships in
key industries
12
<PAGE> 24
including retail, finance, manufacturing and distribution, and extensive
EDI/electronic commerce standards support for the European and in particular
U.K., theaters. Harbinger issued approximately 311,000 shares of Harbinger
Common Stock in the acquisition of Atlas. The acquisition is being accounted for
as a pooling of interests. In connection with this acquisition, Harbinger
expects to take a charge of between $3.0 to $5.0 million relating to integration
and acquisition related expenses during the fourth quarter of 1997. None of
these integration and acquisition related expenses have been reflected in any of
the financial or other information herein.
ACQUION, Inc. On August 22, 1997, Harbinger acquired ACQUION, Inc.
("Acquion"), based in Greenville, S.C. Acquion provides electronic catalog and
procurement solutions for business-to-business electronic commerce. Acquion
provides to Harbinger a component of its supply chain management offering,
including MRO supplier content and electronic catalog software, and is an
extension of Harbinger's core EDI/electronic commerce offerings. Harbinger
acquired all of the outstanding shares of Acquion for $13.6 million, consisting
of $12 million in cash and the assumption of $1.6 million in liabilities
including transaction costs. The Company recorded the acquisition using the
purchase method of accounting. Harbinger incurred a $14.9 million charge for
acquired research and development and other acquisition-related charges during
the three months ended September 30, 1997, $10.9 million of which was related to
an in-process product development charge for the Acquion purchase.
Anticipated Future Period Charges. Harbinger currently anticipates that it
will incur total charges in the range of $20.0 to $30.0 million in the fourth
quarter of 1997 and the first quarter of 1998 relating primarily to the Merger
and certain costs and charges associated therewith. To the extent that the
Merger is not consummated in the fourth quarter of 1997, approximately $2.0 to
$3.0 million of integration activity costs will be incurred in the fourth
quarter, with the remaining Merger-related costs expected to occur in the
quarter in which the Merger closes. In connection with the Atlas acquisition,
Harbinger expects to take a charge of between $3.0 to $5.0 million relating to
integration and acquisition related expenses during the fourth quarter of 1997.
MARKETS AND MARKET PRICES
HARBINGER COMMON STOCK
Harbinger Common Stock is listed on the Nasdaq National Market under the
symbol "HRBC." As of the Harbinger Record Date, there were approximately
holders of record of Harbinger Common Stock. The following table sets
forth for the calendar quarter indicated the high and low closing prices per
share of Harbinger Common Stock as reported on the Nasdaq National Market during
the periods indicated commencing August 22, 1995, the date of Harbinger's
initial public offering, adjusted to reflect a 3-for-2 state split paid in the
form of a stock dividend to Harbinger Shareholders of record on January 17,
1997.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1995:
Third Quarter............................................... $11.625 $ 8.625
Fourth Quarter.............................................. 19.625 8.125
1996:
First Quarter............................................... $15.625 $10.125
Second Quarter.............................................. 18.500 10.000
Third Quarter............................................... 18.625 13.250
Fourth Quarter.............................................. 19.250 16.625
1997:
First Quarter............................................... $29.000 $17.625
Second Quarter.............................................. 31.500 19.250
Third Quarter............................................... 39.250 26.000
Fourth Quarter (through October 28)......................... 42.250 28.500
</TABLE>
13
<PAGE> 25
On October 23, 1997, the last trading date prior to the public announcement
of the Merger, the closing sale price of Harbinger Common Stock, as reported on
the Nasdaq National Market, was $40.375 per share. On , 1997, the last
trading day before mailing this Joint Proxy Statement/Prospectus, the closing
sale price of Harbinger Common Stock, as reported on the Nasdaq National Market
was $ . Harbinger Shareholders and Premenos Stockholders are urged to
obtain current market quotations for shares of Harbinger Common Stock.
Harbinger has never paid cash dividends on its capital stock. Harbinger
currently intends to retain any earnings for use in its business and does not
anticipate paying any cash dividends in the foreseeable future. In addition,
Harbinger's bank line of credit prohibits payments of cash dividends without
prior bank approval. Harbinger declared a 3-for-2 stock split paid in the form
of a stock dividend which was paid on January 31, 1997 to shareholders of record
as of January 17, 1997.
PREMENOS COMMON STOCK
Premenos Common Stock is listed on the Nasdaq National Market under the
symbol "PRMO." As of the Premenos Record Date, there were approximately
holders of record of Premenos Common Stock. The following table sets
forth for the calendar quarter indicated the high and low closing prices per
share of Premenos Common Stock as reported on the Nasdaq National Market during
the periods indicated commencing September 20, 1995, the date of Premenos'
initial public offering.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1995:
Third Quarter............................................... $33.000 $26.500
Fourth Quarter.............................................. 45.250 24.875
1996:
First Quarter............................................... 23.625 15.750
Second Quarter.............................................. 24.500 16.000
Third Quarter............................................... 21.250 9.250
Fourth Quarter.............................................. 21.625 7.625
1997:
First Quarter............................................... 10.125 5.875
Second Quarter.............................................. 8.625 5.500
Third Quarter............................................... 15.375 8.1875
Fourth Quarter (through October 28)......................... 15.313 11.1875
</TABLE>
On October 23, 1997, the last trading date prior to the public announcement
of the Merger, the closing price of Premenos Common Stock, as reported on the
Nasdaq National Market, was $11.625 per share. If the Merger had occurred on
October 22, 1997, the value of the .45 shares of Harbinger Common Stock that
each share of Premenos Common Stock would have been entitled to the right to
receive would have had a value of $18.17 based upon the closing price of
Harbinger Common Stock as of such date. On , 1997, the last trading day
before mailing this Joint Proxy Statement/Prospectus, the closing sale price of
Premenos Common Stock as reported on the Nasdaq National Market was $ .
Premenos has never paid cash dividends on its capital stock. Premenos
Stockholders are urged to obtain current market quotations for shares of
Harbinger Common Stock.
COMPARATIVE PER SHARE INFORMATION
The following summary presents selected comparative unaudited per share
information for Harbinger and Premenos on a historical basis and Harbinger and
Premenos on a pro forma combined basis (giving effect to the Merger using the
pooling-of-interests method of accounting) and does not include any of the $20.0
to $30.0 million of merger and integration costs expected to be incurred in
connection with the Merger. Premenos pro forma equivalent per share amounts are
presented with respect to pro forma information. Such per share amounts allow
comparison of historical information with respect to the income (loss) and book
value per one share of Premenos Common Stock to the corresponding information
with respect to the
14
<PAGE> 26
projected value of one share of Premenos Common Stock as a result of the Merger
and are computed by multiplying the pro forma amounts by the Conversion Ratio.
No cash dividends have ever been declared or paid on Harbinger Common Stock or
Premenos Common Stock.
For each of Harbinger and Premenos, income statement information for the
years ended December 31, 1994, 1995 and 1996 are based on, and should be read in
conjunction with, the consolidated audited financial statements of Harbinger and
Premenos incorporated herein by reference. See "Incorporation of Certain
Documents by Reference." The remaining financial information is based on the
respective historical consolidated unaudited financial statements of Harbinger
and Premenos and the notes thereto. In the opinion of the respective managements
of Harbinger and Premenos, all adjustments necessary to present a fair statement
of results of interim periods of Harbinger and Premenos (which adjustments were
of a normal recurring nature) have been included. Results for Harbinger and
Premenos for the nine months ended September 30, 1997 are not necessarily
indicative of results to be expected for the entire year, nor are pro forma
amounts necessarily indicative of results that will be obtained on a combined
basis.
<TABLE>
<CAPTION>
PER SHARE OF COMMON STOCK
---------------------------------------
INCOME CASH BOOK VALUE
(LOSS) DIVIDENDS (END OF PERIOD)
------- --------- ---------------
<S> <C> <C> <C>
Harbinger -- Historical
Year ended December 31, 1994........................... $ (0.16) -- $ 0.50
Year ended December 31, 1995........................... $ (0.13) -- $ 1.62
Year ended December 31, 1996........................... $ (0.71) -- $ 1.33
Nine months ended September 30, 1997................... $ (1.19) -- $ 3.45
Premenos -- Historical
Year ended December 31, 1994........................... $ 0.28 -- $ (0.57)
Year ended December 31, 1995........................... $ 0.16 -- $ 6.23
Year ended December 31, 1996........................... $ (0.27) -- $ 6.02
Nine months ended September 30, 1997................... $ 0.05 -- $ 6.06
Harbinger and Premenos -- Pro Forma Combined
Year ended December 31, 1994........................... $ (0.02) -- $ 0.62
Year ended December 31, 1995........................... $ (0.02) -- $ 4.30
Year ended December 31, 1996........................... $ (0.67)(2) -- $ 3.94
Nine months ended September 30, 1997................... $ (0.48)(3) -- $ 5.06
Premenos -- Pro Forma Equivalent(1)
Year ended December 31, 1994........................... $ (0.01) -- $ 0.28
Year ended December 31, 1995........................... $ (0.01) -- $ 1.94
Year ended December 31, 1996........................... $ (0.30)(2) -- $ 1.77
Nine months ended September 30, 1997................... $ (0.22)(3) -- $ 2.28
</TABLE>
- ---------------
(1) Determined by multiplying the Conversion Ratio (.45) by the Harbinger and
Premenos pro forma combined per share amounts so that the per share amounts
are equated to the comparative values for each share of Premenos Common
Stock.
(2) Excludes charges for in-process product development of $8.2 million for
significant acquisitions, which charges were incurred in the first quarter
of 1996.
(3) Excludes charges for in-process product development of $13.6 million for
significant acquisitions and loss on debt extinguishment of $2.4 million,
which charges were incurred in the first and third quarters of 1997.
15
<PAGE> 27
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following tables set forth (i) selected financial information for
Harbinger for and as of each of the five years in the period ended December 31,
1996, for the nine months ended September 30, 1996 and 1997, and as of September
30, 1997, (ii) selected financial information for Premenos for and as of each of
the five years in the period ended December 31, 1996, for the nine months ended
September 30, 1996 and 1997, and as of September 30, 1997, and (iii) selected
pro forma combined financial information giving effect to the Merger using the
pooling of interests method of accounting for the three years in the period
ended December 31, 1996, for the nine months ended September 30, 1997 and as of
September 30, 1997. The selected consolidated financial information of Harbinger
for and as of each of the five years in the period ended December 31, 1996 has
been derived from the audited consolidated financial statements of Harbinger.
The unaudited selected consolidated financial information of Harbinger for the
nine months ended September 30, 1996 and 1997 and as of September 30, 1997 has
been derived from the unaudited consolidated financial statements of Harbinger
and, in the opinion of the management of Harbinger, includes all adjustments
(consisting only of normal recurring adjustments) that are necessary for a fair
presentation of the financial position and results of operations for such
interim periods. The selected consolidated financial information of Premenos for
and as of the five years ended December 31, 1996 has been derived from the
audited consolidated financial statements of Premenos. The unaudited selected
consolidated financial information of Premenos for the nine months ended
September 30, 1996 and 1997 and as of September 30, 1997 has been derived from
the unaudited consolidated financial statements of Premenos and in the opinion
of management of Premenos, includes all adjustments (consisting only of normal
recurring adjustments) that are necessary for a fair presentation of the
financial position and results of operations for such interim periods. Results
of operations for the interim periods are not necessarily indicative of results
for the full year. The pro forma information is provided for informational
purposes only and is not necessarily indicative of actual results that would
have been achieved had the Merger been consummated at the beginning of the
periods presented or of future results. The selected pro forma combined
financial information is derived from the Unaudited Pro Forma Combined Financial
Information appearing elsewhere herein.
The information set forth below should be read in conjunction with (i) the
historical consolidated financial statements of Harbinger and the historical
consolidated financial statements of Premenos and in each case the notes thereto
which are incorporated herein by reference, (ii) the Unaudited Pro Forma
Combined Financial Information and notes thereto appearing elsewhere herein and
(iii) Management's Discussion and Analysis of Financial Condition and Results of
Operations of Harbinger and Premenos, which are incorporated herein by
reference.
HARBINGER -- SUMMARY HISTORICAL FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
-------- ------- ------- ------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Services............................ $ 8,721 $12,502 $17,481 $24,494 $ 37,822 $ 26,718 $ 37,892
Software............................ 8,061 10,098 10,412 13,336 21,441 15,269 20,307
-------- ------- ------- ------- -------- -------- --------
Total revenues............... 16,782 22,600 27,893 37,830 59,263 41,987 58,199
-------- ------- ------- ------- -------- -------- --------
Direct Costs:
Services............................ 3,833 5,179 6,321 8,334 13,625 9,522 12,921
Software............................ 609 837 1,097 1,951 2,912 1,925 2,520
-------- ------- ------- ------- -------- -------- --------
Total direct costs........... 4,442 6,016 7,418 10,285 16,537 11,447 15,441
-------- ------- ------- ------- -------- -------- --------
Gross margin.......................... 12,340 16,584 20,475 27,545 42,726 30,540 42,758
-------- ------- ------- ------- -------- -------- --------
</TABLE>
16
<PAGE> 28
HARBINGER -- SUMMARY HISTORICAL FINANCIAL DATA -- (CONTINUED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
-------- ------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Harbinger-Summary Historical Financial Data (Continued)
Operating costs:
Selling and marketing............... 5,008 6,802 7,995 9,791 15,057 10,947 11,614
General and administrative.......... 4,418 5,302 5,884 8,647 12,664 9,691 10,999
Depreciation and amortization....... 656 841 1,046 1,361 2,966 2,022 3,033
Product development................. 1,893 2,827 3,900 5,927 9,000 6,305 5,700
Charge for purchased in-process
product development and
acquisition related charges....... -- -- 4,317 1,160 8,775 8,350 31,185
-------- ------- ------- ------- -------- -------- --------
Total operating costs........ 11,975 15,772 23,142 26,886 48,462 37,315 62,531
-------- ------- ------- ------- -------- -------- --------
Operating income (loss)............... 365 812 (2,667) 659 (5,736) (6,775) (19,773)
Reorganization costs.................. 194 -- -- -- --
Interest expense (income), net........ 128 4 27 (68) (7) (95) (426)
Equity in losses of joint ventures.... -- 41 227 1,266 7,192 5,005 38
-------- ------- ------- ------- -------- -------- --------
Income (loss) before income tax
expense (benefit) and
extraordinary item.............. 43 767 (2,921) (539) (12,921) (11,685) (19,385)
Income tax expense (benefit).......... 65 (2,631) (1,033) 1,203 146 38 1,419
-------- ------- ------- ------- -------- -------- --------
Income (loss) before extraordinary
item............................ (22) 3,398 (1,888) (1,742) (13,067) (11,723) (20,804)
Extraordinary loss on debt
extinguishment...................... -- -- -- -- -- -- 2,419
-------- ------- ------- ------- -------- -------- --------
Net income (loss)..................... (22) 3,398 (1,888) (1,742) (13,067) (11,723) (23,223)
Preferred stock dividends............. (200) (327) (200) (199) (28) (28) --
-------- ------- ------- ------- -------- -------- --------
Net income (loss) applicable to common
shareholders........................ $ (222) $ 3,071 $(2,088) $(1,941) $(13,095) $(11,751) $(23,223)
======== ======= ======= ======= ======== ======== ========
Net income (loss) per share of common
stock:
Income (loss) before extraordinary
item applicable to common
shareholders...................... $ (0.02) $ 0.25 $ (0.16) $ (0.13) $ (0.71) $ (0.64) $ (1.07)
Extraordinary loss on debt
extinguishment.................... -- -- -- -- -- -- (0.12)
-------- ------- ------- ------- -------- -------- --------
Net income (loss) per share applicable
to common shareholders.............. $ (0.02) $ 0.25 $ (0.16) $ (0.13) $ (0.71) $ (0.64) $ (1.19)
======== ======= ======= ======= ======== ======== ========
Weighted average common and common
equivalent shares outstanding....... 10,867 12,515 12,693 15,007 18,465 18,396 19,587
======== ======= ======= ======= ======== ======== ========
Pro forma net loss data(1):
Pro forma net loss applicable to
common shareholders............... $(1,425) $(13,095)
Pro forma net loss per common
share............................. $ (0.10) $ (0.71)
Weighted average common and common
equivalent shares outstanding..... 15,007 18,465
SUPPLEMENTAL DATA:
Adjusted operating income(2)........ $ 365 $ 812 $ 1,650 $ 1,819 $ 3,039 $ 1,575 $ 11,412
Adjusted net income (loss)
applicable to common
shareholders(3)................... $ (222) $ 3,071 $ 652 $ 762 $ 1,715 $ 929 $ 7,264
Adjusted net income (loss) per
common share(3)................... $ (0.02) $ 0.25 $ 0.05 $ 0.05 $ 0.09 $ 0.05 $ 0.34
</TABLE>
17
<PAGE> 29
HARBINGER -- SUMMARY HISTORICAL FINANCIAL DATA -- (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------- SEPTEMBER 30,
1992 1993 1994 1995 1996 1997
------- ------- ------- ------- ------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital................................ $ 590 $ 3,964 $ 2,838 $11,564 $ 3,190 $ 46,237
Total assets................................... 9,038 16,923 21,347 46,404 48,793 100,724
Long-term obligations, redeemable preferred
stock and puttable common stock.............. 7,331 5,146 3,016 6,347 1,449 --
Shareholders' equity........................... (2,973) 5,649 6,734 27,509 24,842 74,197
</TABLE>
- ---------------
(1) The pro forma net loss reflects the income tax expense that would have been
reported if SupplyTech, Inc. (an S corporation for income tax reporting
purposes) and SupplyTech International, LLC (a limited liability corporation
for income tax reporting purposes) had been C corporations during these
periods. SupplyTech, Inc. and affiliates merged with Harbinger in a business
combination consummated on January 3, 1997 accounted for as pooling of
interest.
(2) Excludes purchased in-process product development and acquisition related
charges. See "Risk Factors -- Acquisition-Related and Other Charges;
Expected Loss in Year Ending December 31, 1997."
(3) Excludes equity in loss of Harbinger NET Services, LLC (HNS) which was
accounted for by the equity method of accounting through December 31, 1996,
expected to recur, of $954,000, $7.0 million, and $4.9 million for 1995,
1996, and the nine months ended September 30, 1996, respectively, and $4.3
million, $1.2 million, $8.8 million, $8.4 million and $31.2 million in
charges for 1994, 1995, 1996, and the nine months ended September 30, 1996,
and 1997, respectively, for purchased in-process product development and
acquisition related charges. The nine months ended September 30, 1997 also
excludes the $2.4 million extraordinary loss on debt extinguishment. All
amounts are net of related income taxes. See "Risk
Factors -- Acquisition-Related and Other Charges; Expected Loss in Year
Ending December 31, 1997."
18
<PAGE> 30
PREMENOS -- SUMMARY HISTORICAL FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS
DATA:
Revenues:
Software licenses....................... $ 7,841 $ 9,007 $13,311 $17,783 $21,674 $14,089 $16,260
Services................................ 2,516 4,059 6,694 7,736 11,797 8,493 11,546
------- ------- ------- ------- ------- ------- -------
Total revenues................... 10,357 13,066 20,005 25,519 33,471 22,582 27,806
------- ------- ------- ------- ------- ------- -------
Cost of revenues:
Software licenses....................... 1,371 1,811 2,340 3,361 3,916 2,490 3,346
Services................................ 1,515 1,725 2,592 3,382 5,386 3,745 5,429
------- ------- ------- ------- ------- ------- -------
Total cost of revenues........... 2,886 3,536 4,932 6,743 9,302 6,235 8,775
------- ------- ------- ------- ------- ------- -------
Gross margin.............................. 7,471 9,530 15,073 18,776 24,169 16,347 19,031
------- ------- ------- ------- ------- ------- -------
Operating expenses:
Product development..................... 3,179 3,577 4,702 7,049 8,925 6,036 7,487
Sales and marketing..................... 2,789 4,202 5,804 8,495 11,625 7,821 9,417
General and administrative.............. 1,502 1,441 1,695 2,249 3,880 2,682 3,068
Acquisition-related costs............... -- -- -- -- 4,700 4,700 --
------- ------- ------- ------- ------- ------- -------
Total operating costs............ 7,470 9,220 12,201 17,793 29,130 21,239 19,972
------- ------- ------- ------- ------- ------- -------
Income (loss) from operations............. 1 310 2,872 983 (4,961) (4,892) (941)
Other income (expense), net............... (74) (91) (102) 732 2,819 2,141 1,943
------- ------- ------- ------- ------- ------- -------
Income (loss) before provision for income
taxes and minority interest............. (73) 219 2,770 1,715 (2,142) (2,751) 1,002
Provision for income taxes................ 3 5 645 238 850 780 380
Minority interest......................... (3) 71 310 (20) 4 1 (2)
------- ------- ------- ------- ------- ------- -------
Net income (loss)......................... $ (73) $ 143 1,815 $ 1,497 $(2,996) $(3,532) $ 624
======= ======= ======= ======= ======= ======= =======
Net income (loss) per share...... $ (0.01) $ 0.03 $ 0.28 $ 0.16 $ (0.27) $ (0.33) $ 0.05
======= ======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, AS OF
----------------------------------------------- SEPTEMBER 30,
1992 1993 1994 1995 1996 1997
------- ------- ------- ------- ------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital (deficit)...................... $ 427 $ (102) $ 1,841 $61,603 $57,587 $59,570
Total assets................................... 5,730 7,900 13,404 79,463 83,690 85,442
Long-term debt, less current portion........... 482 445 730 769 240 35
Stockholders' equity........................... 1,080 1,413 3,318 65,686 69,276 71,556
</TABLE>
19
<PAGE> 31
SUMMARY PRO FORMA COMBINED FINANCIAL DATA
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED
DECEMBER 31, 1994 DECEMBER 31, 1995 DECEMBER 31, 1996 SEPTEMBER 30, 1997
----------------- ----------------- ----------------- ------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues.............. $ 47,898 $ 63,349 $ 95,203 $ 86,489
Gross margin................ 35,884 46,843 67,919 61,933
Charge for purchased in-
process product
development and
acquisition related
charges................... 4,317 1,160 5,326 17,568
Operating income (loss)..... 205 1,642 (16,296) (11,718)
Income (loss) before income
taxes..................... (151) 1,176 (14,623) (10,107)
Net loss.................... (73) (245) (15,645) (11,904)
Preferred stock dividends... (200) (199) (28) --
Net loss applicable to
common shareholders....... $ (273) $ (444) $(15,673) $(11,904)
======== ======== ======== ========
Net loss per share of common
stock..................... $ (0.02) $ (0.02) $ (0.67) $ (0.48)
======== ======== ======== ========
Weighted average common and
common equivalent shares
outstanding............... 16,075 19,049 23,387 24,939
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1997
------------------
<S> <C>
BALANCE SHEET DATA:
Working capital........................ $105,807
Total assets........................... 186,166
Long-term debt, less current portion... 35
Shareholders' equity................... 145,753
</TABLE>
20
<PAGE> 32
RISK FACTORS
In considering whether to approve the Merger and the Merger Agreement, the
Harbinger Stockholders and the Premenos Shareholders should carefully consider,
in addition to the other information in this Joint Proxy Statement/Prospectus,
the following matters.
Integration of Recent Acquisitions; Future Acquisitions. Harbinger has
completed a number of acquisitions since January 1, 1996, including the
acquisitions of Atlas, Acquion, SupplyTech, Inc. and its affiliated entities
(collectively, "SupplyTech"), and the minority interests of Harbinger NET
Services, LLC ("HNS"). Acquion, SupplyTech and HNS historically have reported
significant operating losses. In addition, the proposed acquisition of Premenos
represents Harbinger's largest acquisition to date and will require significant
management time and attention to successfully integrate its business and
operations with that of Harbinger. Harbinger's acquisitions present a number of
risks and challenges, including the historical operating losses of Acquion,
SupplyTech and HNS, the integration of the software products of the acquired
companies into Harbinger's current suite of products, the integration of the
sales forces of acquired companies into Harbinger's existing sales operations,
the coordination of customer support services, the integration of international
operations of acquired companies with Harbinger's international affiliates, and
the diversion of management's attention from other business concerns. Moreover,
several of the products of newly acquired business address the same markets as,
and may therefore be competitive with, or redundant with, existing Harbinger
products. In connection with its prior acquisitions, Harbinger has experienced
the following effects during the periods subsequent to such acquisitions:
integration costs and expenses associated with such acquisition transactions;
refinement of the acquired companies business operations to conform to
Harbinger's mission and strategy; the discontinuance of the non-core business
operations of the acquired company; and elimination of certain revenue
opportunities as a result of product overlap, channel conflict, or other
competitive overlap. Management of Harbinger currently anticipates that all or
certain of the foregoing factors may impact future operating results of
Harbinger following consummation of the Merger, including, but not limited to,
the rate of growth in revenue and operating income (before special charges) of
the combined company in future periods. There can be no assurance that Harbinger
can successfully assimilate its operations and integrate its software products
with these recently acquired operations, software products and technologies,
that Harbinger will be successful in repositioning its products on a timely
basis to achieve market acceptance or that the integration efforts associated
with recent acquisitions will not have a material adverse effect upon
Harbinger's business or results of operations in future periods. Any delay in
such integration efforts or adverse developments associated therewith could have
a material adverse effect on Harbinger.
Harbinger's growth has been significantly enhanced through acquisitions of
other businesses, products and licenses. There can be no assurance that in the
future Harbinger will be able to identify suitable acquisition candidates
available for sale at reasonable prices, consummate any acquisition or
successfully integrate any acquired business into Harbinger's operations.
Operational and software integration problems may arise if Harbinger undertakes
future acquisitions of complementary products, technologies or businesses.
Future acquisitions may also result in potentially dilutive issuances of equity
securities, the incurrence of debt, the write-off of in-process product
development and capitalized product costs, integration costs, and the
amortization of expenses related to goodwill and other intangible assets, all of
which could have a material adverse effect on Harbinger. Acquisitions involve
numerous additional risks, including difficulties in the assimilation of the
operations, products and personnel of the acquired company, differing company
cultures, the diversion of management's attention from other business concerns,
risks of entering markets in which Harbinger has little or no direct prior
experience, and the potential loss of key employees of the acquired company.
Customer satisfaction or performance problems at a single acquired firm could
have a material adverse impact on the reputation of Harbinger as a whole.
Although Harbinger expects to have cash resources of approximately $100 million
upon conclusion of the proposed transactions, to the extent Harbinger desires to
finance a future acquisition, there can be no assurance that Harbinger will be
able to secure financing for such a transaction on reasonable terms or at all.
See "Ability to Manage Growth."
Factors Affecting Operating Results; Potential Fluctuations in Quarterly
Results. Although Harbinger has been able to grow its revenue and operating
income (before special charges) in the past, there can be no assurance that
Harbinger will be able to continue to grow its revenue and operating income at
historical levels
21
<PAGE> 33
in the future or that fluctuations in revenue or operating income growth will
not occur in future periods. Factors currently known to management that could
impact the rate of growth in revenue or operating income in future periods
include, but are not limited to, the management time and effort currently
anticipated in connection with the integration of recently acquired businesses
and a slowdown in the rate of growth of AS/400 EDI sales. In addition,
Harbinger's quarterly operating results have in the past and may in the future
vary or decrease significantly depending on factors such as revenue from
software sales, the timing of new product and service announcements, changes in
pricing policies by Harbinger and its competitors, market acceptance of new and
enhanced versions of Harbinger's products, the size and timing of significant
orders, changes in operating expenses, changes in Harbinger's strategy,
personnel changes, government regulation, the introduction of alternative
technologies, the effect of acquisitions and general economic factors. Harbinger
has limited or no control over many of these factors. Harbinger has experienced
losses in the past, and at September 30, 1997, Harbinger had an accumulated
deficit of approximately $44.3 million. Harbinger operates with virtually no
software product order backlog because its software products typically are
shipped shortly after orders are received. As a result, revenues in any quarter
are substantially dependent on the quantity of purchases of services requested
and product orders received in that quarter. Quarterly revenues also are
difficult to forecast because the market for electronic commerce and EDI
software products is rapidly evolving and Harbinger's revenues in any period may
be significantly affected by the announcements and product offerings of
Harbinger's competitors as well as alternative technologies. Harbinger's IVAS
product is more complex and expensive compared to Harbinger's other electronic
commerce and Internet products introduced to date, and will generally involve
significant investment decisions by prospective customers. Accordingly,
Harbinger expects that in selling its IVAS product it will encounter risks
typical of companies that rely on large dollar purchase decisions, including the
reluctance of purchasers to commit to major investments in new products and
protracted sales cycles, both of which add to the difficulty of predicting
future revenues and may result in quarterly fluctuations. Harbinger's expense
levels are based, in part, on its expectations as to future revenues. If revenue
levels are below expectations, Harbinger may be unable or unwilling to reduce
expenses proportionately and operating results are likely to be adversely
affected. As a result, Harbinger believes that period-to-period comparisons of
its results of operations are not necessarily meaningful and should not be
relied upon as indications of future performance. Due to all of the foregoing
factors, it is likely that in some future quarter or quarters Harbinger's
operating results will be below the expectations of public market analysts and
investors. In such event, the price of the Harbinger Common Stock will likely be
adversely affected in a material manner.
Harbinger recognizes revenues for software license fees upon shipment, net
of estimated returns. Customers using Harbinger's PC products are permitted to
return products after delivery for a specified period, generally 60 days.
Harbinger generally has experienced returns of approximately 20% to 30% of the
PC product license fees, and Harbinger records revenues after a deduction for
estimated returns. Any material increase in Harbinger's return experience could
have an adverse effect on its operating results. See "Integration of Recent
Acquisitions; Future Acquisitions."
Acquisition-Related and Other Charges; Expected Loss in Year Ending
December 31, 1997. In the first quarter of 1997, Harbinger incurred
approximately $16.3 million in acquisition related charges and $2.4 million in
losses on early debt extinguishment. In the third quarter, Harbinger incurred
aggregate charges of approximately $14.9 million. Harbinger currently
anticipates that it will incur total charges in the range of $20.0 to $30.0
million in the fourth quarter of 1997 and the first quarter of 1998 relating
primarily to the Merger and certain costs and charges associated therewith. To
the extent that the Merger is not consummated in the fourth quarter of 1997,
approximately $2.0 to $3.0 million of integration activity costs associated with
such acquisition will be incurred in the fourth quarter of 1997, with the
remaining Merger-related costs expected to occur in the quarter in which the
transaction closes. As a result of these charges, Harbinger incurred a net loss
for the first and third quarters of 1997 and expects to incur a net loss for the
year ending December 31, 1997. Of the charges incurred in the first and third
quarters of 1997, $17.6 million consisted of charges for integration activities
associated with acquisitions consummated in such periods. Certain of the costs
and expenses incurred in connection with these integration activities and
reflected in such charges included internal expense allocations which may recur
in other expense categories in the future and may result in an increase in some
expense categories in Harbinger's results of operations in future periods.
22
<PAGE> 34
Ability to Manage Growth. Harbinger has recently experienced significant
growth in revenue, operations and personnel as it has made strategic
acquisitions, added subscribers to the Harbinger VAN and IVAS and increased the
number of licensees of its software products. This growth may increase as a
result of the contemplated transactions with Premenos. This growth could
continue to place a significant strain on Harbinger's management and operations,
including its sales, marketing, customer support, research and development,
finance and administrative operations. Achieving and maintaining profitability
during a period of expansion will depend, among other things, on Harbinger's
ability to successfully expand its products, services and markets and to manage
its operations and acquisitions effectively. Difficulties in managing growth,
including difficulties in obtaining and retaining talented management and
product development personnel, especially following an acquisition, could have a
material adverse effect on Harbinger. See "Integration of Recent Acquisitions;
Future Acquisitions."
Ability to Respond to Rapid Change. Harbinger's future success will depend
significantly on its ability to enhance its current products and develop or
acquire and market new products which keep pace with technological developments
and evolving industry standards as well as respond to changes in customer needs.
The market for EDI products and services, VAN services and Internet software
products and services is characterized by rapidly changing technology, evolving
industry standards and customer demands, and frequent new product introductions
and enhancements. There can be no assurance that Harbinger will be successful in
developing or acquiring product enhancements or new products to address changing
technologies and customer requirements adequately, that it will introduce such
products on a timely basis, or that any such products or enhancements will be
successful in the marketplace. Harbinger's delay or failure to develop or
acquire technological improvements or to adapt its products to technological
change would have a material adverse effect on Harbinger's business, results of
operations and financial condition. In addition, there is no assurance that
Harbinger products and services will not undergo diminished market acceptance
due to the rapidly evolving technologies and the development of technological
enhancements by competing products and services and that, as a result, the
combined company's position in the marketplace will decline. The failure of
Harbinger's management team to respond effectively to and manage rapidly
changing technological and business conditions as well as the growth of its own
business, should it occur, could have a material adverse impact on Harbinger's
business, results of operations and prospects.
Intense Competition. The electronic commerce, EDI and network services and
products businesses are intensely competitive, and Harbinger has many
competitors with substantially greater financial, marketing, personnel and
technological resources than Harbinger. Other companies offer products and
services that may be considered by customers to be acceptable alternatives to
Harbinger's products and services. Certain companies also operate private
computer networks for transacting business with their trading partners and
Harbinger expects other companies to offer products and services competitive
with the Templar, TrustedLink Guardian and IVAS products and services. It is
expected that other companies may develop and implement similar
computer-to-computer networks, some of which may be "public" networks such as
Harbinger's and others may be "private," providing services only to a specific
group of trading partners, thereby reducing Harbinger's ability to increase
sales of its network services. In addition, several companies offer PC-based,
midrange NT and UNIX, and mainframe and Internet computer software products
which compete with Harbinger's software products. Advanced operating systems and
applications software from Microsoft and other vendors also may offer electronic
commerce functions that limit Harbinger's ability to sell its software products.
Harbinger believes that the continuing acceptance of electronic commerce and EDI
will attract new competitors, including software applications and operating
systems companies that may bundle electronic commerce solutions with their
programs, and alternative technologies that may be more sophisticated and cost
effective than Harbinger's products and services. Competitive companies may
offer certain electronic commerce products or services, such as communications
software or network transactional services, at no charge or a deeply discounted
charge, in order to obtain the sale of other products or services. Since
Harbinger's agreements with its network subscribers are terminable upon 30 days'
notice, Harbinger does not have the contractual right to prevent its customers
from changing to a competing network. See "Dependence on New Products; Industry
Standards." Competitors that offer products and/or services that compete with
various of Harbinger's products and services include, among others, Advantis
Systems, Inc.; AT&T; Computer Associates International, Inc.; EDS; General
Electric Information Systems; QuickResponse
23
<PAGE> 35
Services, Inc.; Sterling Commerce, Inc. and a joint venture between British
Telecommunications Plc and MCI Communications Corporation; as well as the
internal programming staffs of various businesses engaging in electronic
commerce.
Emergence of Electronic Commerce Over the Internet. The Internet provides
an alternative means of providing electronic commerce to business trading
partners. The market for Internet software and services is both emerging and
highly competitive, ranging from small companies with limited resources to large
companies with substantially greater financial, technical and marketing
resources than Harbinger. In addition to Harbinger's Internet related products
and services, several existing competitors of Harbinger have introduced their
own Internet electronic commerce products and services. Moreover, new
competitors, which may include telephone companies and media companies, are
likely to increase the provision of business-to-business data transmission
services using the Internet. There is no assurance that the Internet will become
an accepted method of electronic commerce. There is no assurance that
Harbinger's TrustedLink Guardian end user software and IVAS or that Premenos'
Templar product, which enable electronic commerce over the Internet, will be
accepted in the Internet market or can be competitive with other products based
on evolving technologies. If the Internet becomes an accepted method of
electronic commerce, Harbinger could lose network customers from its VAN which
would reduce recurring revenue from network services and have a material adverse
effect on Harbinger. Even if customers choose Harbinger's Internet solutions,
the revenue gained from the sale of these solutions may not offset the loss of
revenue from the sale of Harbinger's traditional EDI solutions.
The use of Harbinger's and Premenos' Internet electronic commerce products
and services will depend in large part upon the continued development of the
infrastructure for providing Internet access and services. Use of the Internet
for business-to-business electronic commerce services raises numerous issues
that greatly impact the development of this market. These issues include
reliability, data security and data integrity, timely transmission, and pricing
of products and services. Because global commerce and online exchange of
information on the Internet is new and evolving, it is difficult to predict with
any assurance whether the Internet will prove to be a viable commercial
marketplace. The Internet has experienced, and is expected to continue to
experience, substantial growth in the number of users and the amount of traffic.
There can be no assurance that the Internet will continue to be able to support
the demands placed on it by this continued growth. In addition, the Internet
could lose its viability due to delays in the adoption of new standards and
protocols to handle increased levels of Internet activity, or due to increased
governmental regulation. There can be no assurance that the infrastructure or
complementary services necessary to make the Internet a viable commercial
marketplace will be developed, or, if developed, that the Internet will become a
viable commercial marketplace for products and services such as those offered by
Harbinger and Premenos. If the necessary infrastructure or complementary
services or facilities are not developed, or if the Internet does not become a
viable commercial marketplace, Harbinger's business, operating results or
financial condition will be materially adversely affected. See "Dependence on
New Products; Industry Standards."
Dependence on New Products; Industry Standards. The electronic commerce
industry is characterized by rapid technological change, frequent new product
and service introductions and evolving industry standards. Harbinger's future
success will depend in significant part on its ability to anticipate industry
standards, continue to apply advances in electronic commerce product and service
technologies, enhance existing products and services and introduce and acquire
new products and services on a timely basis to keep pace with technological
developments. There can be no assurance that Harbinger will be successful in
developing,acquiring or marketing new or enhanced products or services that
respond to technological change or evolving industry standards, that Harbinger
will not experience difficulties that could delay or prevent the successful
development, acquisition or marketing of such products or services or that its
new or enhanced products and services will adequately meet the requirements of
the marketplace and achieve market acceptance. In the past, Harbinger has
experienced delays in the commencement of commercial shipments of new products
and enhancements, resulting in delays or losses of product revenues. Such delays
or failure in the introduction of new or enhanced products or services, or the
failure of such products or services to achieve market acceptance, could have a
material adverse effect on the business, results of operations and financial
condition of Harbinger.
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Investment in International Subsidiaries; International Growth and
Operations. Harbinger believes that its continued growth and profitability will
require expansion of its international operations through its international
subsidiaries, including Atlas, NTEX Holding, B.V. ("NTEX") and INOVIS GmbH & Co.
("INOVIS") in Germany as well as the international operations of SupplyTech in
the United Kingdom, Italy and Mexico (collectively, the "International
Subsidiaries"). The combined company will also have an office in Paris, France.
This expansion will require financial resources and significant management
attention, particularly by certain members of the management of Harbinger.
Harbinger's ability to successfully expand its business internationally will
also depend upon its ability to attract and retain both talented and qualified
managerial, technical and sales personnel and electronic commerce services
customers outside the United States and its ability to continue to effectively
manage its domestic operations while focusing on international expansion.
Certain of the International Subsidiaries have experienced operating losses in
their recent histories and some have experienced significant operating losses in
their recent histories. To the extent that the International Subsidiaries are
unable to penetrate international markets in a timely and profitable manner,
Harbinger's growth, if any, in international sales will be limited, and
Harbinger could be materially adversely affected. During the third quarter of
1997, Harbinger's growth in revenue was adversely affected by a fluctuation in
currency exchange rates, management issues associated with its European
operations, and general softness in demand in the European markets. There can be
no assurance that such matters will not affect Harbinger's results of operation
in future periods. Moreover, Harbinger's ability to successfully implement its
international strategy may require installation and operation of a value-added
network and implementation of its IVAS software in other countries, as well as
additional improvements to its infrastructure and management information
systems, including its international customer support systems. In addition,
there can be no assurance that Harbinger will be able to maintain or increase
international market demand for Harbinger's products or services. See
"Integration of Recent Acquisitions; Future Acquisitions."
International operations are subject to certain inherent risks, including
unexpected changes in regulatory requirements and tariffs, longer payment
cycles, increased difficulties in collecting accounts receivable and potentially
adverse tax consequences. To the extent international sales are denominated in
foreign currencies, gains and losses on the conversion to U.S. dollars of
revenues, operating expenses, accounts receivable and accounts payable arising
from international operations may contribute to fluctuations in Harbinger's
results of operations. Harbinger has not entered into any hedging or other
arrangements for the purpose of guarding against the risk of currency
fluctuation. In addition, sales in Europe and certain other parts of the world
typically are adversely affected in the third calendar quarter of each year
because many customers reduce their business activities in the summer months.
Dependence on Key Management and Personnel; Ability to Attract and Retain
Qualified Personnel. Harbinger's success is largely dependent upon its executive
officers and key sales and technical personnel, the loss of one or more of whom
could have a material adverse effect on Harbinger. The future success of
Harbinger will depend in large part upon its ability to attract and retain
talented and qualified personnel. In particular, Harbinger believes that it will
be important for Harbinger to hire experienced product development and sales
personnel. Competition in the recruitment of highly-qualified personnel in the
computer software and electronic commerce industries is intense. The inability
of Harbinger to locate and retain such personnel may have a material adverse
effect on Harbinger. No assurance can be given that Harbinger can retain its key
employees or that it can attract qualified personnel in the future. Harbinger
currently carries key-person life insurance policies on the lives of Messrs.
Howle, Leach and Davis.
Dependence on Alliance Partners. Harbinger has various agreements with
alliance partners for the distribution and marketing of certain software
products of Harbinger. These alliance partners pay Harbinger royalties
representing a percentage of fees generated from the sale of software licensed
from Harbinger. For the years ended December 31, 1995 and 1996, revenues from
one of these alliance partners were approximately $1.4 million and $5.7 million,
respectively, which equaled the contractual minimum royalty during those years.
There is no minimum royalty obligation after 1996, and Harbinger has experienced
and believes that revenues from this alliance partner will substantially decline
in 1997 as compared to 1996. Further, based on recent amendments to the
arrangement, Harbinger has experienced and believes that the average collection
period related to cash flows derived from royalty revenues earned from this
alliance partner will lengthen
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substantially. In addition, Premenos is dependent on a distribution partner for
approximately 6% of its revenues, arising principally from this partner's
distribution efforts in Europe and other overseas locations. There can be no
assurance that this partner will continue to distribute Premenos products after
the Merger, or that such distribution efforts, if continued, will achieve the
same degree of results.
Risks of Product Development. Software products as complex as those
offered by Harbinger may contain undetected errors or failures when first
introduced or when new versions are released. If software errors are discovered
after introduction, Harbinger could experience delays or lost revenues during
the period required to correct these errors. There can be no assurance that,
despite testing by Harbinger and by current and potential customers, errors will
not be found in new products or releases after commencement of commercial
shipments, resulting in loss of or delay in market acceptance, additional and
unexpected expenses to fund further product development or to add programming
personnel to complete a development project, and loss of revenue because of the
inability to sell the new product on a timely basis, any one or more of which
could have a material adverse effect on Harbinger.
Dependence on Data Centers. The network service operations of Harbinger
are dependent upon the ability to protect computer equipment and the information
stored in Harbinger's data centers against damage that may be caused by fire,
power loss, telecommunication failures, unauthorized intrusion, computer viruses
and disabling devices and other similar events. Notwithstanding precautions
Harbinger has taken, there can be no assurance that a fire or other natural
disaster, including national, regional or local telecommunications outages,
would not result in a prolonged outage of Harbinger's network services. In the
event of a disaster, and depending on the nature of the disaster, it may take
from several hours to several days before Harbinger's off-site computer system
can become operational for all of Harbinger's customers, and use of the
alternative off-site computer would result in substantial additional cost to
Harbinger. In the event that an outage of Harbinger's network extends for more
than several hours, Harbinger will experience a reduction in revenues by reason
of such outage. In the event that such outage extends for one or more days,
Harbinger could potentially lose many of its customers, which may have a
material adverse effect on Harbinger.
Dependence upon Certain Licenses. Harbinger relies on certain technology
that it licenses from third parties and other products that are integrated with
internally developed software and used in Harbinger's products to perform key
functions or to add important features. There can be no assurance that Harbinger
will be successful in negotiating third-party technology licenses on suitable
terms or that such licenses will not be terminated in the future. Moreover, any
delay or product problems experienced by such third party suppliers could result
in delays in introduction of Harbinger's products and services until equivalent
technology, if available, is identified, licensed and integrated, which could
have a material adverse effect on Harbinger's business, operating results and
financial condition.
Limited Protection of Proprietary Technology; Risks of
Infringement. Harbinger relies primarily on a combination of copyright, patent
and trademark laws, trade secrets, confidentiality procedures and contractual
provisions to protect its proprietary rights. Harbinger seeks to protect its
software, documentation and other written materials principally under trade
secret and copyright laws, which afford only limited protection. Harbinger
presently has one patent for an electronic document interchange test facility
and a patent application pending for an EDI communication system. Despite
Harbinger's efforts to protect its proprietary rights, unauthorized parties may
attempt to copy aspects of Harbinger's products or to obtain and use information
that Harbinger regards as proprietary. There can be no assurance that
Harbinger's means of protecting its proprietary rights will be adequate or that
Harbinger's competitors will not independently develop similar technology. In
distributing many of its products, Harbinger relies primarily on "shrink wrap"
licenses that are not signed by licensees and, therefore, may be unenforceable
under the laws of certain jurisdictions. In addition, Harbinger has licensed it
products to users and distributors in other countries, and the laws of some
foreign countries do not protect Harbinger's proprietary rights to as great an
extent as the laws of the United States. Harbinger does not believe that any of
its products infringe the proprietary rights of third parties. There can be no
assurance, however, that third parties will not claim infringement by Harbinger
with respect to current or future products, and Harbinger has agreed to
indemnify many of its customers against such claims. Harbinger expects that
software product developers will increasingly be subject to infringement claims
as the number of products and competitors in electronic commerce grows and the
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functionality of products in different industry segments overlaps. Any such
claims, with or without merit, could be time-consuming, result in costly
litigation, cause product shipment delays or require Harbinger to enter into
royalty or licensing agreements and indemnify its customers against resulting
liability, if any. Such royalty or licensing agreements, if required, may not be
available on terms acceptable to Harbinger or at all, which could have a
material adverse effect on Harbinger.
Government Regulatory and Industrial Policy Risks. Harbinger's network
services are transmitted to its customers over dedicated and public telephone
lines. These lines are governed by Federal and state regulations establishing
the rates, terms and conditions for their use. Changes in the legislative and
regulatory environment relating to online services, EDI or the Internet access
industry, including regulatory or legislative changes which directly or
indirectly affect telecommunication costs, restrict content or increase the
likelihood of competition from regional telephone companies or others, could
have a material adverse effect on Harbinger's business. The Telecommunications
Act of 1996 ("Act") amended the federal telecommunications laws by lifting
restrictions on regional telephone companies and others competing with Harbinger
and imposed certain restrictions regarding obscene and indecent content
communicated to minors over the Internet or through interactive computer
services. The Act set in motion certain events that will lead to the elimination
of restrictions on regional telephone companies providing transport between
defined geographic boundaries associated with the provision of their own
information services. This will enable regional telephone companies to more
readily compete with Harbinger by packaging information service offerings with
other services and providing them on a wider geographic scale. While provisions
of the Act prohibiting the use of a telecommunications device or interactive
computer service to send or display indecent material to minors have been held
by the U.S. Supreme Court to be unconstitutional, there can be no assurance that
future legislative or regulatory efforts to limit use of the Internet in a
manner harmful to Harbinger will not be successful. The Clinton administration
has announced an initiative to establish a framework for global electronic
commerce. Also, some countries such as Germany have adopted laws regulating
aspects of the Internet, and there are a number of bills currently being
considered in the United States at the federal and state levels involving
encryption and digital signatures, all of which may impact Harbinger. Harbinger
cannot predict the impact, if any, that the Act and future court opinions,
legislation, regulations or regulatory changes in the United States or other
countries may have on its business. Management believes that Harbinger is in
compliance with all material applicable regulations. Harbinger's Trusted Link
Guardian product and the Templar product both incorporate encryption technology
which is subject to U.S. export control regulations. Although both products are
currently exportable under licenses granted by the Commerce Department,
government regulation in this area is subject to frequent change and there can
be no assurance that these products will remain exportable.
Shares Eligible for Future Sale; Possible Adverse Effect on Future Market
Prices. Sales of substantial numbers of shares of Harbinger Common Stock in the
public market could adversely affect the market price of the Harbinger Common
Stock and make it more difficult for Harbinger to raise funds through equity
offerings in the future. Two of Premenos' principal stockholders will each hold,
and several current Harbinger shareholders do each hold, in excess of 1 million
shares of the outstanding Harbinger Common Stock and a sale by one or more of
these stockholders of a substantial portion of their shares could adversely
affect the market price of the Harbinger Common Stock.
Anti-Takeover Provisions. The Harbinger Board has authority to issue up to
20,000,000 shares of preferred stock and to fix the rights, preferences,
privileges and restrictions, including voting rights, of the preferred stock
without further vote or action by Harbinger Shareholders. The rights of the
holders of Harbinger Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of any preferred stock that may be issued
in the future. While Harbinger has no present intention to issue additional
shares of preferred stock, such issuance, while providing desired flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire a majority
of the outstanding voting stock of Harbinger. In addition, the Harbinger Charter
and the Harbinger Bylaws contain provisions that may discourage proposals or
bids to acquire Harbinger. This could limit the price that certain investors
might be willing to pay in the future for shares of Harbinger Common Stock. The
Harbinger Charter provides for a classified board of directors with three-year,
staggered terms for
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its members. The classification of the Harbinger Board could have the effect of
making it more difficult for a third party to acquire control of Harbinger.
Loss of Rights by Premenos Shareholders. The rights of the holders of
Premenos Common Stock are presently governed by Delaware Law, the Premenos
Charter and the Premenos Bylaws. After consummation of the Merger, the rights of
the holders of Premenos Common Shares that are converted into Harbinger Common
Stock will be governed by Georgia Law, the Harbinger Charter and the Harbinger
Bylaws. Certain differences may reduce certain existing rights of Premenos
Stockholders. See "Comparative Rights of Shareholders."
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THE HARBINGER SPECIAL MEETING
TIME, DATE, PLACE AND PURPOSE
The Harbinger Special Meeting will be held on , 1997 at
.m. local time, at the offices of King & Spalding, 191 Peachtree Street,
50th Floor, Atlanta, Georgia 30303. At the Harbinger Special Meeting, holders of
Harbinger Common Stock will be asked to consider and vote upon proposals to (i)
approve the Merger Agreement, the Merger and the Stock Issuance and (ii) approve
the Amendment. Copies of the Merger Agreement and the Amendment are attached
hereto as Annex A and Annex B, respectively and are incorporated herein by
reference.
RECORD DATE AND SHARES ENTITLED TO VOTE
Only holders of record of shares of Harbinger Common Stock at the close of
business on November 17, 1997 are entitled to notice of and to vote at the
Harbinger Special Meeting and any adjournment or postponement thereof. As of
such date, there were shares of Harbinger Common Stock issued and
outstanding held by approximately holders of record. Holders of record of
Harbinger Common Stock on the Harbinger Record Date are entitled to one vote per
share on any matter that may properly come before the Harbinger Special Meeting.
VOTE REQUIRED; SECURITY OWNERSHIP OF MANAGEMENT
The presence in person or by proxy of the holders of a majority of the
shares of Harbinger Common Stock issued and outstanding as of the Harbinger
Record Date will constitute a quorum for the transaction of business at the
Harbinger Special Meeting or any adjournment thereof. The affirmative vote of a
majority of the total votes cast by holders of shares of Harbinger Common Stock
present (in person or by proxy) and entitled to vote at the Harbinger Special
Meeting is necessary to approve the Merger Agreement, the Merger, the Stock
Issuance and the Amendment. Shares of Harbinger Common Stock held by nominees
for beneficial owners will be counted for purposes of determining whether a
quorum is present if the nominee has the discretion to vote on at least one of
the matters presented even if the nominee may not exercise discretionary voting
power with respect to other matters and voting instructions have not been
received from the beneficial owner (a "broker non-vote"). Broker non-votes will
not be counted as votes for or against matters presented for shareholder
consideration. Abstentions with respect to the proposals to approve the Merger
Agreement, the Merger, the Stock Issuance and the Amendment are counted for
purposes of establishing a quorum, but will not be counted as affirmative votes
for the approval of the Merger Agreement, the Merger, the Stock Issuance and the
Amendment.
As of the Harbinger Record Date, the executive officers and directors of
Harbinger and their affiliates beneficially owned an aggregate of shares
of Harbinger Common Stock (not including shares of Harbinger Common Stock
issuable upon the exercise of Harbinger options held by such persons), or
approximately of the shares of Harbinger Common Stock then outstanding.
Each of the executive officers and directors of Harbinger has advised Harbinger
that he intends to vote his shares of Harbinger Common Stock in favor of each of
the proposals to approve the Merger Agreement, the Merger, the Stock Issuance
and the Amendment.
SOLICITATION AND REVOCATION OF PROXIES
A form of proxy for the Harbinger Special Meeting is enclosed with the
copies of Joint Proxy Statement/Prospectus being sent to Harbinger Shareholders.
All shares of Harbinger Common Stock held of record as of the Harbinger Record
Date represented by properly executed proxies will, unless such proxies have
been previously revoked, be voted in accordance with the instructions indicated
on such proxies. If no instructions are indicated, such shares will be voted FOR
each of the proposals to approve the Merger Agreement, the Merger, the Stock
Issuance and the Amendment and, in the discretion of the proxy holder, as to any
other matter which may properly come before the Harbinger Special Meeting.
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Any proxy given pursuant to this solicitation may be revoked in writing by
the person giving it at any time before the proxy is exercised by giving notice
to the Harbinger Secretary or by submitting a proxy having a later date or by
such person appearing at the Harbinger Special Meeting and electing to vote in
person. Presence at the Harbinger Special Meeting will not revoke a
shareholder's proxy unless such shareholder votes in person.
Harbinger has retained to aid in the solicitation of proxies. It
is estimated that the cost of these services will be approximately $
plus expenses. The cost of soliciting proxies will be borne by Harbinger.
Proxies may be solicited by personal interview, mail and telephone. In addition,
Harbinger may reimburse brokerage firms and other persons representing
beneficial owners of shares of Harbinger Common Stock for their expenses in
forwarding solicitation materials to beneficial owners. Proxies may also be
solicited by certain of Harbinger's executive officers, directors and regular
employees, without additional compensation, personally or by telephone or
facsimile transmission.
The Harbinger Board is unaware of any matters to be presented at the
Harbinger Special Meeting other than the proposal to approve the Merger
Agreement, the Merger, the Stock Issuance and the Amendment, but if other
matters do come properly before the Harbinger Special Meeting it is intended
that shares represented by proxies in the accompanying form will be voted by the
persons named in the proxy in accordance with their best judgment.
THE PREMENOS SPECIAL MEETING
The Premenos Special Meeting will be held on , 1997 at
a.m. local time, at the Hilton Hotel, located at 1970 Diamond Boulevard,
Concord, California 94520. At the Premenos Special Meeting, holders of Premenos
Common Stock will be asked to consider and vote upon a proposal to approve the
Merger Agreement and the Merger. A copy of the Merger Agreement is attached
hereto as Annex A and is incorporated herein by reference.
RECORD DATE AND SHARES ENTITLED TO VOTE
Only holders of record of Premenos Common Stock at the close of business on
November 17, 1997 are entitled to notice of and to vote at the Premenos Special
Meeting. As of such date, there were shares of Premenos Common Stock
issued and outstanding held by approximately holders of record. Holders of
record of Premenos Common Stock on the Premenos Record Date are entitled to one
vote per share on any matter that may properly come before the Premenos Special
Meeting.
VOTE REQUIRED; SECURITY OWNERSHIP OF MANAGEMENT
The presence in person or by proxy of the holders of a majority of the
shares of Premenos Common Stock issued and outstanding as of the Premenos Record
Date and entitled to vote at the Premenos Special Meeting will constitute a
quorum at the Premenos Special Meeting or any adjournment thereof. The
affirmative vote of the holders of a majority of the shares of Premenos Common
Stock outstanding and entitled to vote at the Premenos Special Meeting is
necessary to approve the Merger and the Merger Agreement. Abstentions and broker
non-votes will be included in the determination of the number of shares of
Premenos Common Stock present at the Premenos Special Meeting for quorum
purposes, and abstentions will have the same effect as a negative vote.
As of the Premenos Record Date, the executive officers and directors of
Premenos and their affiliates beneficially owned an aggregate of shares
of Premenos Common Stock (not including shares of Premenos Common Stock
issuable upon the exercise of options held by such persons), or approximately
% of the shares of Premenos Common Stock then outstanding. Lew Jenkins,
Chairman of Premenos, and David Hildes, Vice Chairman and Secretary of Premenos,
who as of the Premenos Record Date owned in the aggregate approximately %
of the outstanding Premenos Common Stock, have entered into Proxy Agreements
with Harbinger pursuant to which they have granted to Harbinger an irrevocable
proxy to vote the shares of Premenos Common Stock held by them in favor of the
Merger and the Merger Agreement at the
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Premenos Special Meeting. Each of the executive officers and directors of
Premenos has advised Premenos that he intends to vote his shares of Premenos
Common Stock to approve the Merger and the Merger Agreement.
SOLICITATION AND REVOCATION OF PROXIES
A form of proxy for the Premenos Special Meeting is enclosed with the
copies of this Joint Proxy Statement/Prospectus being sent to Premenos
Stockholders. All shares of Premenos Common Stock held of record as of the
Premenos Record Date and represented by properly executed proxies will, unless
such proxies have been previously revoked, be voted in accordance with the
instructions indicated on such proxies. If no instructions are indicated, such
shares will be voted FOR approval of the Merger Agreement, the Merger and the
Stock Issuance and, in the discretion of the proxy holder, as to any other
matter which may properly come before the Premenos Special Meeting.
Any proxy given pursuant to this solicitation may be revoked in writing by
the person giving it at any time before the proxy is exercised by giving notice
to the Premenos Secretary or by submitting a proxy having a later date or by
such person appearing at the Premenos Special Meeting and electing to vote in
person. Presence at the Premenos Special Meeting will not revoke a stockholder's
proxy unless such shareholder votes in person.
Premenos has retained to aid in the solicitation of proxies. It
is estimated that the cost of these services will be approximately $ plus
expenses. The cost of soliciting proxies will be borne by Premenos. Proxies may
be solicited by personal interview, mail and telephone. In addition, Premenos
may reimburse brokerage firms and other persons representing beneficial owners
of shares of Premenos Common Stock for their expenses in forwarding solicitation
materials to beneficial owners. Proxies may also be solicited by certain of
Premenos' executive officers, trust managers and regular employees, without
additional compensation, personally or by telephone or facsimile transmission.
The Premenos Board is unaware of any matters to be presented for action at
the Premenos Special Meeting other than the proposal to approve the Merger and
the Merger Agreement, but if other matters do come properly before the Premenos
Special Meeting it is intended that shares of Premenos Common Stock represented
by proxies in the accompanying form will be voted by the persons named in the
proxy in accordance with their best judgment.
THE MERGER
THE DETAILED TERMS OF THE MERGER ARE CONTAINED IN THE MERGER AGREEMENT
ATTACHED AS ANNEX A TO THIS JOINT PROXY STATEMENT/PROSPECTUS. THE FOLLOWING
DISCUSSION DESCRIBES CERTAIN ASPECTS OF THE MERGER AND THE TERMS OF THE MERGER
AGREEMENT. THIS DESCRIPTION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
MERGER AGREEMENT, WHICH IS INCORPORATED BY REFERENCE HEREIN AND WHICH THE
HARBINGER SHAREHOLDERS AND THE PREMENOS STOCKHOLDERS ARE URGED TO READ
CAREFULLY.
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger. From time to time following its initial public
offering in September 1995, the Premenos Board discussed various potential
strategic transactions, including business combinations in which the business of
Premenos would be acquired or in which Premenos would acquire other businesses.
From time to time following its initial public offering, Lew Jenkins, the
Chairman of Premenos, also received unsolicited proposals from various entities
suggesting a business combination with Premenos. Although several of these
business combinations were the subject of discussions by management or the
Premenos Board, the primary focus of Premenos was to pursue a business strategy
of internal growth, product diversification, acquisitions and recruiting
appropriate management personnel with the strategic objective of becoming a
leading provider of electronic commerce software and services.
In June 1996, Harbinger and Premenos began discussions regarding a possible
business combination. Lew Jenkins, the Chairman of Premenos, and Tycho Howle,
the Chairman of Harbinger, as well as senior
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management from both Harbinger and Premenos, participated in those preliminary
discussions and the Board of Premenos was advised of such preliminary
discussions. However, those preliminary discussions did not result in an
agreement between the parties and were terminated. Discussions between Harbinger
and Premenos were renewed in October 1996, but the parties determined at that
time not to proceed with a business combination.
Beginning in April 1997, representatives of Harbinger's investment advisor
and a representative of Premenos' investment advisor conducted preliminary
discussions as to a possible business combination between Harbinger and
Premenos. On May 28, 1997 Harbinger delivered a letter to Premenos expressing
the interest of Harbinger in pursuing a merger with Premenos. The letter
included a range of possible prices and a preliminary structure for a potential
business combination. After informal consultation between the Chairman of
Premenos and members of the Premenos Board, a meeting was held on June 10, 1997
concerning possible business synergies, strategic considerations to both parties
arising from such a business combination and possible timing and valuation
matters. No agreements were reached at that meeting.
In early July 1997, a meeting was held in San Francisco, California between
representatives of Premenos and its investment advisor and representatives of
Harbinger and its investment advisor to discuss business strategies. No
agreement was reached at that meeting, and no further discussions were held
between the parties until September 4, 1997.
After further informal consultations between the Chairman of Premenos and
members of the Premenos Board, a meeting was held on September 4, 1997 to
discuss sources of Premenos value, potential synergies, strategic
considerations, selected financial and operating data and various financial
considerations. On September 25, 1997, an additional meeting attended by counsel
to Premenos and Premenos' and Harbinger's investment advisors was held to
discuss the possible terms of a transaction, including its possible structure,
timing and financial terms.
On September 29, 1997, Harbinger delivered a proposed term sheet to
Premenos which outlined a specific financial and structural proposal for a
business combination between Harbinger and Premenos. Between September 29 and
October 10, 1997, the term sheet proposed by Harbinger was the subject of
extensive negotiation between representatives of Harbinger and Premenos. On
October 8, 1997, the Chairman of Premenos consulted with members of the Premenos
Board informally by telephone conference call to consider the proposal made by
Harbinger, the potential business synergies and potential risks arising from a
business combination between Premenos and Harbinger and to give general
guidelines as to negotiating strategy and objectives.
On October 12, 1997, the Premenos Board met by conference telephone call
and considered at length the proposal by Harbinger, the synergies and risks
inherent in a business combination with Harbinger and the merits and risks of a
business combination with Harbinger as compared with the merits and risks of
other alternatives, including the continued execution by Premenos of its
business strategy. The Premenos Board was advised at that meeting by
representatives of Bryan Cave LLP and Cooley Godward, L.L.P. The Premenos Board
unanimously concluded that it was advisable to pursue the proposed business
combination with Harbinger and authorized continued negotiations with Harbinger.
During the week of October 13, 1997 through October 17, 1997,
representatives of Premenos and its investment advisors met with representatives
of Harbinger and its investment advisors to discuss and negotiate various
aspects of the business combination, including integration issues, product
issues, business strategy issues, potential acquisitions, financial matters and
various matters related to the proposed business combination and to conduct
mutual due diligence. Similar meetings were held from October 19, 1997 through
October 21, 1997.
On October 17, 1997, the Premenos Board met by conference telephone call to
further consider the business combination with Harbinger and related matters.
The Premenos Board was advised at that meeting by representatives of Cooley
Godward, L.L.P. and Bryan Cave LLP, and a representative of each of its
investment advisors.
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The Premenos Board met again on October 22, 1997 to further consider the
proposed transaction with Harbinger, to receive reports from various members of
Premenos management with regard to their business assessments and investigations
and to consider the specific terms of a merger agreement which had been the
subject of substantial negotiations between representatives of Harbinger and
representatives of Premenos. Prior to the meeting, the directors had been
provided with near final versions of the Merger Agreement and related
agreements, as well as a detailed written report from Hambrecht & Quist relating
to the transaction and its potential consequences. At the meeting, the Premenos
Board received a detailed oral report from Hambrecht & Quist regarding the
proposed transaction, including its opinion that the consideration to be
received by Premenos Stockholders was fair, from a financial point of view, to
the Premenos Stockholders (such oral opinion was subsequently confirmed by
delivery of the written opinion of Hambrecht & Quist). The Premenos Board
concluded that the proposed transaction was in the best interest of Premenos and
its stockholders and that, in order to maximize the likelihood and benefit of
the proposed transaction, that the definitive Merger Agreement which had been
negotiated and discussed should be executed expeditiously.
On October 23, 1997, the Premenos Board met to consider the status of final
negotiations of the Merger Agreement, to review and consider updated due
diligence reports and to review and consider the benefits of the transaction to
Premenos Stockholders. Following a discussion, the Premenos Board unanimously
(i) determined that the terms of the Merger Agreement and the transactions
contemplated thereby were fair to, and in the best interest of, Premenos and its
stockholders, (ii) approved the Merger Agreement, the Merger and all related
arrangements contemplated thereby, and (iii) resolved to recommend that the
Premenos Stockholders vote for the approval of the Merger and the Merger
Agreement at a special meeting of the Premenos Stockholders to be held for such
purpose.
On October 22, 1997, the Harbinger Board met to review and consider the
Merger. During this meeting, the Harbinger Board received, among other things,
reports from senior management of Harbinger concerning the business reasons for
the Merger and their due diligence findings with respect to Premenos, a report
from BT Alex. Brown on the financial terms of the Merger and a report from legal
counsel on the terms of the Merger Agreement and other significant documentation
proposed to be executed in conjunction with the Merger. On October 23, 1997, the
Harbinger Board convened a telephone meeting and received an update of the terms
of the definitive Merger Agreement and other documentation to be executed in
connection with the Merger, a report on the proposed accounting treatment for
the Merger and an oral report (subsequently confirmed in writing) of BT Alex.
Brown that the Conversion Ratio is fair, from a financial point of view, to
Harbinger. The Harbinger Board approved the Merger Agreement, the Merger and the
Amendment by unanimous vote of the directors present. The Merger Agreement was
executed on October 23, 1997, immediately following the Premenos Board meeting.
Public announcement of the Merger was made at the close of the market on October
23, 1997.
Harbinger's Reasons for the Merger
In determining to recommend that the Harbinger Shareholders approve the
Merger Agreement, the Merger and the Stock Issuance, the Harbinger Board
considered a number of factors, including, without limitation, the following:
Further Strategic Mission. Harbinger's primary mission is the mass
deployment of electronic commerce products and services for routine
business-to-business transactions to worldwide trading communities. Management
of Harbinger believes that the Merger will enhance Harbinger's ability to
execute on its business strategy by expanding the suite of products and services
that Harbinger may offer its customers, expanding Harbinger's customer base and
enhancing and expanding the base of electronic commerce professionals employed
by Harbinger who are skilled in developing electronic commerce solutions for its
customers. The Premenos products and services will add EDI/400 (Premenos'
leading EDI solution for the AS/400 platform) and EDI/Open V2 (Premenos' EDI
solution for the UNIX and NT platforms) to the Harbinger solutions. In addition,
Premenos' Templar product (Premenos' leading Internet security product) should
further enhance Harbinger's ability to deliver secure Internet-based solutions
to its customers. The Merger also will expand Harbinger's customer base to
include Premenos' base of over 5,000 customers. Moreover, the Merger will expand
and enhance Harbinger's employee base. Premenos employs approximately 270
electronic commerce professionals who are skilled in the design and development
of electronic commerce solutions. In
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addition, Premenos is headquartered in the San Francisco Bay Area, and its
location should provide Harbinger with an enhanced ability to recruit electronic
commerce professionals from the Bay Area to the combined company in the future.
Enhanced Market Position. The Merger will further enhance Harbinger's
market position as a leading provider of electronic commerce software. Premenos
currently is a leading provider of electronic commerce software for the AS/400
platform. In addition, Premenos also provides electronic commerce software for
the UNIX and NT platforms that should complement Harbinger's existing products
and services for these platforms. Management of Harbinger believes that the
Merger will establish the combined company as a leader in the market for low-end
PC EDI translation software and Internet and Web-based EDI solutions, the
mid-range market for AS/400, UNIX and NT translation software and services and
the market for high-end, enterprise MVS, VSE, UNIX and NT translation and
communications software and services. Harbinger also believes that the Merger
will enhance its ability to develop, market and support Internet-based commerce
solutions in various vertical markets.
Leverage Combined Software Development Teams and Technologies. By
combining the Harbinger and Premenos technologies and development teams,
Harbinger management believes that they will be able to embed the best features
in the next generation of the combined companies' products serving identical
platforms. The combined company will be able to integrate product lines to
provide a more comprehensive suite of products more efficiently than if either
company were to attempt to expand its product line without the assistance of the
other. Management of Harbinger also believes that Premenos possesses skilled
software development teams that are experienced in the development of electronic
commerce products and services for the AS/400, UNIX and NT platforms and the
Internet. Management of Harbinger intends to leverage such software development
expertise and technology in developing electronic commerce solutions for the
customers of the combined enterprise.
Additional Sales Channels. Management of Harbinger believes that the
Merger will further enhance Harbinger's and Premenos' ability to market and sell
their respective products. Harbinger expects to continue relationships with
Premenos' channel partners, such as Baan, Computer Associates, Coopers &
Lybrand, Daily & Walcott, Ernst & Young, IBM, JBA, JD Edwards, Marcam, Oracle,
Price Waterhouse, SAP and Vanstar for distribution of its products worldwide.
Likewise, Harbinger intends to use its sales channels to promote and sell
Premenos products worldwide.
Administrative and Operational Expenses. Management of Harbinger believes
that the Merger should result in long-term business synergies through, among
other matters, the sharing of certain administrative, operational, research and
development, marketing and public company expenses, which will permit cost
savings through the elimination of duplicate costs. Although near-term costs are
expected to increase as a result of the Merger and integration-related expenses,
Harbinger expects that these costs will decrease over time and be offset by
long-term economies of scale resulting from the Merger.
The foregoing discussion is not intended to be exhaustive, but is believed
to include the principal factors considered by the Harbinger Board in
determining to approve the Merger. In reaching is determination, the Harbinger
Board did not assign any relative or specific weights to the foregoing factors.
THE HARBINGER BOARD BELIEVES THAT THE MERGER, INCLUDING THE CONVERSION
RATIO, IS FAIR AND IN THE BEST INTERESTS OF THE HARBINGER SHAREHOLDERS AND HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE MERGER AND THE STOCK ISSUANCE AND
RECOMMENDS THAT THE HARBINGER SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER
AGREEMENT, THE MERGER AND THE STOCK ISSUANCE.
Premenos' Reasons for the Merger
In the course of reaching its decision to approve the Merger Agreement and
each of the transactions and arrangements contemplated thereby, the Premenos
Board consulted with Premenos' legal and financial advisors as well as with
Premenos' management, and considered a number of factors, including the
following:
Strategic Fit. The Merger will combine Premenos' technological leadership
in EDI software, EDI standards and Internet electronic commerce solutions and
its position as a market leader for EDI software for
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mid-range computers with Harbinger's strengths in product diversity, VAN
services, management, EDI roll-out within trading communities and vertical
markets. The Premenos Board believes that these strengths are complementary and
can be leveraged to create a combined company that has product market leadership
across multiple platforms and that can efficiently respond to market and
technological demands. Further, Premenos' strength in facilitating electronic
commerce over the Internet, namely through its Templar product, is complementary
with Harbinger's VAN and IVAS offerings and will give the combined company the
ability to address the drawbacks and capitalize on the benefits of each of these
diverse delivery systems.
Product and Platform Diversification. Currently, Premenos is a market
leader in the midrange EDI software market and derives a majority of its revenue
from sales of its EDI/400 product for the AS/400. The Premenos Board believes
that Premenos' continued future success would be dependent, in part, on its
ability to develop or acquire new products, increase market penetration of
existing offerings and expand its service offerings. The Merger will allow
Premenos to offer to new and existing customers fully integrated EDI solutions
by combining its EDI/Open, EDI/400 and Templar products with Harbinger's
software products, VAN and consulting services. The Merger will enable Premenos
to offer a range of electronic commerce products and services across all
enterprise computing platforms, i.e., PC, NT and UNIX, midrange (including the
AS/400) and mainframe as well as VAN services and consulting. The combined
entity will be in a position to offer "one-stop" complete solutions for entire
trading communities with delivery over both the Internet and Harbinger's VAN.
Harbinger Customer Base and Vertical Market Expertise. Harbinger currently
services over 46,000 software and network customers, and has developed
relationships with many hubs or mini-hubs. Further, Harbinger has developed
electronic commerce expertise in numerous vertical markets including aerospace,
automotive, chemical, electronics, government, health care, manufacturing,
petroleum, retail and utilities. Premenos' Board believes that Harbinger's
existing customer base, its focus on vertical markets and its skill in
penetrating new vertical markets should provide new opportunities to market
Premenos' existing products. The vertical market channels which Harbinger brings
to the combined company also provide a base for the introduction of new versions
of Premenos' product offerings tailored to the specific needs of these markets.
The Premenos Board also believes that it will be able to increase market
penetration for its products by utilizing Harbinger's sales force.
Competitive Position and Growth. The Premenos Board believes that the
combination of the companies will improve visibility with customers, attract
more experienced management and increase its market place visibility. The
Premenos Board believes that the electronic commerce industry will undergo
strategic realignment and as a result there will be a competitive advantage to
companies such as the combined entity which have the financial and managerial
resources to pursue that strategic realignment. The combination of the two
companies should enhance further growth and technology development, particularly
in light of the cash resources that will be available to the combined entity for
future acquisitions, as well as internal product development.
Management. The Premenos Board believes that Harbinger has assembled a
strong management team equipped to lead the combined company ahead as the market
for electronic commerce solutions becomes increasingly competitive. The
Harbinger combined team will be larger and better positioned through depth and
experience than the current Premenos team to effectively manage capital
resources, growth, acquisitions and the resulting integration processes and
customer development. The Premenos Board believes that the combination will
result in minimal management level redundancy and greater overall management
depth. See "Risk Factors -- Integration of Recent Acquisitions; Future
Acquisitions."
Compatibilities of the Companies and Potential Synergies. Certain aspects
of Premenos' and Harbinger's businesses considered by the Premenos Board in
concluding that a combination of Premenos and Harbinger could offer Premenos and
its stockholders unique opportunities include: the compatibility of the
respective corporate cultures of Premenos and Harbinger; the integration of each
company's technology pool and research and development teams; the expansion of
Premenos' geographic presence; and the potential synergy of the combined
companies in terms of cost savings from sharing certain operating,
administrative, research and development, marketing and public company expenses.
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Additional Information, Factors and Risks Considered by the Premenos
Board. In addition to the factors outlined above, the Premenos Board made its
determination after careful consideration of, and based on, certain additional
factors, information and reports, including:
(i) the terms and conditions of the proposed Merger, including the
premium to be paid relative to recent closing prices for Premenos Common
Stock, as well as the tax-free nature of the transaction to the Premenos
stockholders and the willingness of Messrs. Jenkins and Hildes to vote in
favor of the Merger without receiving a control premium;
(ii) information regarding historical market prices and other
information with respect to Premenos Common Stock and Harbinger Common
Stock;
(iii) the prospects for positive long-term performance of Harbinger
Common Stock, plus the potential for more limited volatility in such stock
(reflecting the combined companies) in comparison to Premenos Common Stock;
(iv) the presentation of Premenos' financial advisors, The Great
Circle Group LLC and Hambrecht & Quist, and the opinion of Hambrecht &
Quist as to the fairness of the consideration to be received in the Merger,
from a financial point of view, as of the date of such opinion, by the
Premenos Stockholders; and
(v) the Premenos Board's assessment of Premenos' alternatives to the
Merger, including remaining an independent company, particularly in light
of the current and anticipated future consolidation within the electronic
commerce industry and the impact it may have on Premenos' competitive
position on a stand-alone basis.
The Premenos Board also considered a variety of potentially negative
factors concerning the Merger, including: (i) the difficulty of integrating,
reorganizing and effectively managing the operations of Premenos and Harbinger
as a combined company particularly in light of their separate geographic
locations and separate corporate cultures which may be compounded by the recent
and anticipated additional acquisitions of Harbinger; (ii) the risk that the
Merger may cause a higher than ordinary rate of personnel and management
turnover which would deprive the combined company of the continuity of
management and pool of technical resources necessary to effectively obtain many
of the benefits sought to be obtained by the Merger; (iii) the risk that one of
Premenos' key international distributors and one or more of its several U.S.
distributors may determine to alter or terminate its relationship with Premenos,
particularly in the case of the international distributor, since such
distributor may view Harbinger as a competitor in light of Harbinger's VAN
business; (iv) the risk that Harbinger's international distribution channels
will not have the capacity and resources to distribute Premenos' products
overseas; (v) the potential disruption of Premenos' business that might result
from employee uncertainty and lack of focus following announcement of the Merger
and during the integration of the operations of Harbinger and Premenos; (vi) the
risk that the combined company might not achieve revenues equal to the sum of
the separate companies' anticipated revenues; (vii) the risk that as a result of
the transaction customers might face uncertainty that could lead to business
disruptions, delays in customer orders or increased difficulty in obtaining
customer orders; (viii) the risk that the combined company might not achieve
sufficient operating efficiencies to ensure that the Merger would not have a
negative effect on the combined company's results of operations or that such
efficiencies might not be realized as rapidly as anticipated; (ix) the risk that
other benefits sought to be obtained by the Merger would not be obtained; and
(x) other risks described above under "Risk Factors."
The foregoing discussion of the information and factors considered by the
Premenos Board is not intended to be exhaustive but is believed to include the
material information and factors considered by the Premenos Board. In reaching a
determination whether to approve the Merger, in view of the wide variety of
factors considered, the Premenos Board did not find it practicable to, and did
not, quantify or otherwise attempt to assign relative or specific weights to the
information and factors considered in reaching its determinations, and
individual directors may have given differing weights to different factors.
THE PREMENOS BOARD BELIEVES THAT THE MERGER, INCLUDING THE CONVERSION
RATIO, IS FAIR AND IN THE BEST INTERESTS OF THE PREMENOS STOCKHOLDERS AND HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND RECOMMENDS THAT THE PREMENOS
STOCKHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
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TERMS OF THE MERGER AGREEMENT
General. The Merger Agreement provides that, following approval of the
Merger Agreement and the Merger by the Harbinger Shareholders and Premenos
Stockholders and the satisfaction or waiver of the other conditions to the
consummation of the Merger, Merger Sub will be merged with and into Premenos at
the Effective Time in accordance with the DGCL. Premenos will be the surviving
corporation in the Merger. As a result of the Merger, the separate corporate
existence of Merger Sub will cease, and Premenos will become a wholly-owned
subsidiary of Harbinger.
Conversion Ratio. Each share of Premenos Common Stock issued and
outstanding at the time of the Merger (other than treasury shares and any shares
held by Harbinger or a direct or indirect subsidiary of Harbinger) will be
converted into the right to receive .45 of a share of Harbinger Common Stock.
Cash will be paid in lieu of issuing fractional shares of Harbinger Common Stock
in an amount equal to the Average Closing Price of Harbinger Common Stock
multiplied by the fraction of a share which the holder of Premenos Common Stock
would otherwise be entitled to receive.
Harbinger Board of Directors. Under the terms of the Merger Agreement,
Harbinger has agreed to take all actions reasonably necessary to elect David
Hildes, Vice Chairman and Secretary of Premenos, to the Harbinger Board as of
the Effective Time. The Merger Agreement further provides that if the unexpired
term of the class of directors to which David Hildes is elected is less than one
year, then Harbinger agrees to use its reasonable, best efforts to: (i) nominate
David Hildes for election as a director at the next annual meeting of Harbinger
Shareholders; and (ii) recommend his election to Harbinger Shareholders.
Conditions to the Merger. The obligations of both Harbinger and Premenos
to consummate the Merger are subject to the satisfaction of certain conditions,
including, among others: (i) the approval of the Merger, the Merger Agreement
and the transactions contemplated thereunder, including, in the case of
Harbinger, the Amendment, by the requisite vote of the Harbinger Shareholders
and the Premenos Stockholders; (ii) the absence of any injunction, writ or
preliminary restraining order or any order of any nature issued by a court or
governmental agency of competent jurisdiction to the effect that the Merger may
not be consummated as provided in the Merger Agreement and the absence of any
lawsuit or proceeding (actual or as to which written notice has been received)
by any governmental or regulatory agency for the purpose of obtaining any such
injunction, writ or preliminary restraining order; (iii) the receipt by
Harbinger and Premenos of a written opinion of King & Spalding concerning
certain federal income tax consequences of the Merger; (iv) the effectiveness of
the Registration Statement under the Securities Act and the absence of (a) any
stop order suspending the effectiveness of the Registration Statement or any
proceedings by the Commission (actual or threatened) for such purpose and (b)
the absence of any stop order suspending the effectiveness of any qualification
or registration of the Harbinger Common Stock under the state securities laws or
any proceeding by authorities of any such state (actual or threatened) for such
purpose; (v) the receipt by Harbinger of written advice from KPMG Peat Marwick
LLP that, in accordance with GAAP, the Merger qualifies to be treated as a
pooling of interests for accounting purposes and the receipt by Premenos of
written advice from Coopers & Lybrand L.L.P. that they believe the criteria for
pooling accounting treatment relative to Premenos have been satisfied; (vi) the
shares of Harbinger Common Stock to be issued pursuant to the Merger Agreement
shall have been listed on the Nasdaq National Market; and (vii) the applicable
waiting periods shall have terminated under the HSR Act.
The obligation of Harbinger to consummate the Merger is subject to certain
additional conditions, including, among other things, that: (i) Premenos's
representations and warranties contained in the Merger Agreement shall be true
and correct as of the date of the Merger Agreement and as of the Effective Time;
(ii) Premenos shall have performed in all material respects all covenants and
agreements required to be performed by it under the Merger Agreement; (iii)
Harbinger shall have received legal opinions and accountants' letters with
respect to various matters; (iv) all corporate action necessary by Premenos to
authorize the execution, delivery and performance of the Merger Agreement and
the consummation of the transactions contemplated thereby shall have been duly
and validly taken; (v) all consents, authorizations, orders and approvals of (or
filings or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of the Merger
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Agreement shall have been made (with certain limited exceptions); (vi) Harbinger
shall have received certificates from certain officers of Premenos as to
compliance with certain conditions of the Merger Agreement; (vii) Harbinger
shall have received consents to assignment of certain material contracts of
Premenos or written waivers of the provisions under any such contracts requiring
the consents of third parties; and (viii) each of the directors of Premenos
shall have tendered resignation letters to Harbinger.
The obligation of Premenos to consummate the Merger is also subject to
certain additional conditions, including, among others, that: (i) Harbinger's
representations and warranties contained in the Merger Agreement shall be true
and correct as of the date of the Merger Agreement and as of the Effective Time;
(ii) Harbinger shall have performed in all material respects all covenants and
agreements required to be performed by it under the Merger Agreement; (viii)
Premenos shall have received legal opinions with respect to various matters;
(iv) all corporate action necessary by Harbinger to authorize the execution,
delivery and performance of the Merger Agreement and the consummation of the
transactions contemplated thereby shall have been duly and validly taken; (v)
all consents, authorizations, orders and approvals of (or filings or
registrations with) any governmental commission, board or other regulatory body
required in connection with the execution, delivery and performance of the
Merger Agreement shall have been obtained (with certain limited exceptions);
(vi) Harbinger shall have furnished Premenos with a certificate of certain
officers of Harbinger as to compliance with certain conditions of the Merger
Agreement; and (vii) Harbinger shall have executed and delivered the
Registration Rights Agreement.
Amendment. The Merger Agreement may be amended only by the written
agreement of the parties thereto.
Termination. The Merger Agreement may be terminated (i) by mutual
agreement of the Harbinger Board and the Premenos Board; (ii) by Harbinger or
Premenos if any of the conditions to such party's obligations to consummate the
Merger have not been complied with or performed, and such noncompliance or
nonperformance has not been cured or eliminated on or before March 31, 1998;
(iii) by Harbinger or Premenos, if the Merger and the Merger Agreement has not
been approved by the requisite vote of the Harbinger Shareholders and the
Premenos Stockholders; (iv) by Harbinger, if (a) the Premenos Board shall have
withdrawn or modified its recommendation of the Merger Agreement or the Merger
in a manner adverse to Harbinger, (b) an Alternative Transaction involving
Premenos shall have occurred or the Premenos Board shall have recommended,
consummated or announced an intent to engage in an Alternative Transaction or
(c) a Tender Offer shall have been commenced and the Premenos Board shall have
(i) recommended to the Premenos Stockholders to tender their shares in such
tender or exchange offer or (ii) resolved or publicly announced or disclosed to
any third party its intention to take no position with respect to such Tender
Offer (collectively, a "Competing Tender Offer"); (v) by Premenos, if the
Harbinger Board shall have withdrawn or modified its recommendation of the
Merger Agreement or the Merger in a manner adverse to Premenos; (vi) by
Harbinger, if the Harbinger Board shall have determined to withdraw its
recommendation of the Merger Agreement or the Merger because it determines in
good faith that its fiduciary duties to its shareholders under applicable law
require it to withdraw its recommendation; (vii) by Premenos, if the Premenos
Board shall have withdrawn its recommendation of the Merger Agreement or the
Merger because it determines in good faith that its fiduciary duties to its
stockholders under applicable law require it to withdraw its recommendation;
(viii) by Premenos, if Harbinger breaches its covenant relating to issuances of
capital stock prior to the Effective Time; and (ix) by Harbinger, if David
Hildes or Lew Jenkins sells any shares of Premenos Common Stock on or prior to
the Closing Date.
Fees and Expenses. Harbinger and Premenos will each pay its own fees,
costs and expenses incurred in connection with the Merger Agreement and the
transactions contemplated thereby (other than printing and filing fees and
expenses relating to the Registration Statement and this Joint Proxy
Statement/Prospectus and the filing fees relating to filings under the HSR Act,
which will be borne equally by Olympic and Pyramid). Premenos has agreed that
its fees, costs and expenses incurred in connection with the Merger Agreement
and the transactions contemplated thereby but such fees, costs and expenses
shall not exceed $2.3 million, which amount includes, without limitation, the
anticipated fees, costs and expenses of Premenos' financial advisors,
accountants and counsel. If the Merger Agreement is terminated (i) by Harbinger
(a) because the Premenos Board withdraws its recommendation of the Merger
Agreement and the Merger in a manner adverse to
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Harbinger, (b) because of an Alternative Transaction or (c) because of a
Competing Tender Offer; (ii) by Premenos, because the Premenos Board withdraws
its recommendation of the Merger Agreement and the Merger; (iii) by Harbinger,
as a result of the failure of the Premenos Stockholders to approve the Merger
Agreement and the Merger and at the time of the Premenos Special Meeting an
Alternative Transaction shall have been announced which shall not have been
absolutely and unconditionally withdrawn and abandoned; or (iv) by Harbinger,
because David Hildes or Lew Jenkins sells any shares of Premenos Common Stock on
or prior to the Closing Date, then Premenos has agreed to pay Harbinger the
Harbinger Termination Fee of $4,000,000. In addition, if Premenos enters into a
definitive agreement to consummate an Alternative Transaction within one year of
the payment of the Harbinger Termination Fee, then Premenos shall pay Harbinger
a topping fee (the "Topping Fee").The Topping Fee is equal to 25% of (i) the
amount by which the aggregate value of the Alternative Transactions to Premenos
Stockholders on the date of the definitive agreement relating to such
Alternative Transaction exceeds (ii) the aggregate value of the Merger to
Premenos Stockholders on the date the Merger Agreement is terminated; provided,
however, that in no event shall the Topping Fee be less than $4,000,000. If,
after negotiating in good faith for a ten-day period, the parties do not agree
on the value of the Merger or the Alternative Transaction, each party shall, at
its own expense, employ a nationally recognized investment banking firm to
determine the value of the Merger, the value of the Alternative Transaction, or
both, as applicable, in accordance with generally recognized and accepted
valuation methodologies. If the investment banking firms do not agree as to the
disputed valuation(s) after 30 days, the parties shall appoint a third
nationally-recognized investment banking firm to resolve the dispute, the fees
of which shall be borne equally by Harbinger and Premenos.
No Solicitation; Board Action. The Merger Agreement provides that Premenos
will not, directly or indirectly, through any officer, director, employee,
representative or agent (i) solicit, initiate or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, business combination, sale of
substantial assets, sale of shares of capital stock (including by way of a
tender offer) or similar transactions involving Premenos or any of its
subsidiaries, other than transactions contemplated by the Merger Agreement (any
of the foregoing inquiries or proposals being referred to as a "Competing
Offer"), (ii) engage in negotiations or discussions concerning, or provide any
non-public information to any person or entity relating to, any Competing Offer,
or (iii) agree to, approve or recommend any Competing Offer; the Merger
Agreement provides, however, that the Premenos Board may furnish non-public
information to, or enter into discussions or negotiations with, any person in
connection with an unsolicited bona fide written Competing Offer or recommending
such an unsolicited bona fide written Competing Offer to Premenos Stockholders,
if and only to the extent that (a) the Premenos Board determines in good faith
(after consultation with and based upon the written advice of its investment
advisor) that the Competing Offer is more favorable to Premenos Stockholders
than the transactions contemplated by the Merger Agreement and the person making
such proposal has the financial means or ability to obtain necessary financing
to conclude such transaction, (b) the Premenos Board determines in good faith
(after consultation with and based upon the advice of counsel) that its
fiduciary duties to stockholders under applicable law require such action and
(c) prior to furnishing such information or entering into such discussions or
negotiations, the Premenos Board receives an executed confidentiality agreement
from such person. Premenos must notify Harbinger within 24 hours after receipt
of a Competing Offer or a request for information or access by any person that
informs Premenos it is considering making, or has made, a Competing Offer.
Conduct of Business Pending the Merger. Each of Harbinger and Premenos has
agreed in the Merger Agreement to operate its business in the ordinary course
and to refrain from taking certain actions relating to the operation of its
business pending consummation of the Merger without the prior approval of the
other party, except as otherwise permitted by the Merger Agreement.
Assumption of Stock Options and Severance Policies. Under the terms of the
Merger Agreement, at the Effective Time, Harbinger shall assume all of Premenos'
rights and obligations with respect to Premenos Options issued and outstanding
as of such time under the Premenos Stock Plan, whether or not such Premenos
Options are then exerciseable. The Merger Agreement further provides that
promptly following such assumption Harbinger shall substitute for the Premenos
Options Harbinger stock options to be granted under the Stock Plan, which
Harbinger stock options will contain vesting terms and conditions matching those
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contained in the Premenos Options. Each such Harbinger stock option shall
thereafter evidence the right to purchase the number of shares of Harbinger
Common Stock equal to the product (rounded up or down as appropriate to a whole
share) of (i) the number of shares of Premenos Common Stock covered by such
Premenos Option immediately prior to the Effective Time multiplied by (ii) the
Conversion Ratio, and the exercise price of each such Harbinger option shall be
equal to the quotient (rounded up or down as appropriate to a whole cent)
obtained by dividing (x) the per share exercise price for shares of Premenos
Common Stock subject to such Premenos Option immediately prior to the Effective
Time, by (y) the Conversion Ratio. Harbinger has agreed in the Merger Agreement
to issue incentive stock options under the Stock Plan in substitution for each
Premenos Option that qualified as an incentive stock option prior to the
Effective Time and to issue non-qualified stock options under the Stock Plan in
substitution for each Premenos Options that constituted a non-qualified stock
option prior to the Effective Time. Employees and non-employee directors of
Premenos will receive on or prior to the Effective Time documentation to
effectuate the assumption of the Premenos Options and the substitution of
Harbinger Options therefor in accordance with the terms of the Merger Agreement.
PREMENOS OPTION HOLDERS SHOULD NOT SUBMIT THEIR OPTION AGREEMENTS FOR ASSUMPTION
AND SUBSTITUTION UNTIL DOCUMENTATION TO EFFECT SUCH ASSUMPTION AND SUBSTITUTION
IS RECEIVED. For a description of the Premenos Stock Plan, see "Premenos 1995
Incentive Program" and for a description of the Stock Plan, see "Amendment of
1996 Stock Option Plan." Further, Harbinger has agreed to honor the severance
policies of Premenos currently applicable to Premenos employees for a period of
one year following the Closing Date.
EFFECTIVE TIME OF THE MERGER
The Merger will become effective upon the filing of a certificate of merger
relating thereto with the Secretary of State of the State of Delaware. The
Merger Agreement provides that the parties thereto will cause such certificate
of merger to be filed after each of the conditions to consummation of the Merger
has been satisfied or waived. The Merger cannot become effective until the
Harbinger Shareholders and Premenos Stockholders have approved the Merger
Agreement. Thus, there can be no assurance as to whether or when the Merger will
become effective. Prior to the Effective Time, instructions and a letter of
transmittal will be furnished to all Premenos Stockholders for use in exchanging
their stock certificates for certificates evidencing the shares of Harbinger
Common Stock they will be entitled to receive as a result of the Merger. Holders
of options to purchase Premenos Common Stock will be given instructions as to
the procedures to exchange their option certificates for certificates
representing options to purchase Harbinger Common Stock. STOCKHOLDERS OF
PREMENOS SHOULD NOT SUBMIT THEIR STOCK CERTIFICATES FOR EXCHANGE UNTIL
INSTRUCTIONS AND THE LETTER OF TRANSMITTAL ARE RECEIVED.
OPINION OF HARBINGER'S FINANCIAL ADVISOR
Harbinger retained BT Alex. Brown on October 17, 1997 to act as Harbinger's
financial advisor in connection with the Merger, solely for the purpose of
rendering its opinion to the Harbinger Board as to the fairness, from a
financial point of view, of the Conversion Ratio to Harbinger.
At the October 22, 1997 meeting of the Harbinger Board, representatives of
BT Alex. Brown made a presentation with respect to the Merger and thereafter
rendered to the Harbinger Board at its meeting on October 23, 1997, its oral
opinion, subsequently confirmed in writing, that, as of such date, and subject
to the assumptions made, matters considered and limitations set forth in such
opinion and summarized below, the Conversion Ratio was fair, from a financial
point of view, to Harbinger. No limitations were imposed by the Harbinger Board
upon BT Alex. Brown with respect to the investigations made or procedures
followed by it in rendering its opinion.
The full text of BT Alex. Brown's written opinion dated October 23, 1997
(the "BT Alex. Brown Opinion"), which sets forth, among other things,
assumptions made, matters considered and limitations on the review undertaken,
is attached hereto as Annex C and is incorporated herein by reference. Harbinger
Shareholders are urged to read the BT Alex. Brown Opinion in its entirety. The
BT Alex. Brown Opinion is directed to the Harbinger Board, addresses only the
fairness of the Conversion Ratio to Harbinger from a financial point of view and
does not constitute a recommendation to any Harbinger Shareholder as to how
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such shareholder should vote at the Harbinger Meeting. The BT Alex. Brown
Opinion was rendered to the Harbinger Board for its consideration in determining
whether to approve the Merger Agreement and the Merger. The discussion of the BT
Alex. Brown Opinion in this Joint Proxy Statement/Prospectus is qualified in its
entirety by reference to the full text of the BT Alex. Brown Opinion.
In connection with the BT Alex. Brown Opinion, BT Alex. Brown reviewed
certain publicly available financial information and other information
concerning Harbinger and Premenos and certain internal analyses and other
information furnished to it by Harbinger and Premenos. BT Alex. Brown also held
discussions with the members of the senior managements of Harbinger and Premenos
regarding the businesses and prospects of their respective companies and the
joint prospects of a combined company. In addition, BT Alex. Brown (i) reviewed
the reported prices and trading activity for the common stock of both Harbinger
and Premenos, (ii) compared certain financial and stock market information for
Harbinger and Premenos with similar information for certain other companies
whose securities are publicly traded, (iii) reviewed the financial terms of
certain recent business combinations, (iv) reviewed the terms of the Merger
Agreement, and (v) performed such other studies and analyses and considered such
other factors as it deemed appropriate.
In conducting its review and arriving at its opinion, BT Alex. Brown
assumed and relied upon, without independent verification, the accuracy,
completeness and fairness of the information furnished to or otherwise reviewed
by or discussed with it for purposes of rendering its opinion. With respect to
the financial projections and other information relating to the prospects of
Harbinger and Premenos provided to BT Alex. Brown by each company, BT Alex.
Brown assumed that such projections and other information were reasonably
prepared and reflected the best currently available judgments and estimates of
the respective managements of Harbinger and Premenos as to the likely future
financial performances of their respective companies and of the combined entity.
The financial projections of Premenos that were provided to BT Alex. Brown were
utilized and relied upon by BT Alex. Brown in the Contribution Analysis,
Discounted Cash Flow Analysis and the Pro Forma Earnings Analysis summarized
below. BT Alex. Brown did not receive projections prepared by the management of
Harbinger; however, Harbinger's management confirmed that the publicly available
financial estimates were generally consistent with expectations of Harbinger's
management. BT Alex. Brown assumed, with the consent of Harbinger, that the
Merger will qualify for pooling of interests accounting treatment and as a
tax-free transaction for the Premenos Stockholders. BT Alex. Brown did not make
an independent evaluation or appraisal of the assets of Premenos and Harbinger,
nor has BT Alex. Brown been furnished with any such evaluations or appraisals.
The BT Alex. Brown Opinion is based on market, economic and other conditions as
they existed and could be evaluated as of the date of the opinion letter.
In arriving at its opinion, BT Alex. Brown did not participate in
negotiations with any parties in connection with the Merger.
The following is a summary of the analyses performed and factors considered
by BT Alex. Brown in connection with the rendering of the BT Alex. Brown
Opinion.
Historical Financial Position. In rendering its opinion, BT Alex. Brown
reviewed and analyzed the historical and current financial condition of Premenos
which included (i) an assessment of Premenos' recent financial statements; (ii)
an analysis of Premenos' revenue, growth and operating performance trends; and
(iii) an assessment of Premenos' margin changes and access to markets.
Historical Stock Price Performance. BT Alex. Brown reviewed and analyzed
the daily closing per share market prices and trading volume, for Premenos
Common Stock, from September 20, 1995 to October 22, 1997 and, for Harbinger
Common Stock, from August 22, 1995 to October 22, 1997. BT Alex. Brown also
reviewed the daily closing per share market prices of the Premenos Common Stock
and Harbinger Common Stock and compared the movement of such daily closing
prices with the movement of the Nasdaq Composite Average and the S&P 500 index
over the periods from September 20, 1995 and October 22, 1996 through October
22, 1997. BT Alex. Brown noted that, on a relative basis, Premenos and Harbinger
underperformed and outperformed, respectively, the Nasdaq Composite Average and
the S&P 500 Index and that Harbinger outperformed Premenos in each of the
periods above. BT Alex. Brown also reviewed the daily closing per share market
prices of Premenos Common Stock and Harbinger Common Stock and compared the
movement of such closing prices with the movement of an Electronic Commerce
composite average (consisting of
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Sterling Commerce, Inc., QuickResponse Services, Inc. and TSI International
Software Ltd.) over the period from October 1996 through October 1997. On a
relative basis the Premenos Common Stock price and Harbinger Common Stock price
underperformed and outperformed, respectively, the Electronic Commerce composite
average. This information was presented to give the Harbinger Board background
information regarding the respective stock prices of Premenos and Harbinger over
the periods indicated.
Analysis of Certain Other Publicly Traded Companies. This analysis examines
a company's valuation in the public market as compared to the valuation in the
public market of other selected publicly traded companies. BT Alex. Brown
compared certain financial information (based on the commonly used valuation
measurements described below) relating to Premenos and Harbinger to certain
corresponding information from a group of three publicly traded Electronic
Commerce-related companies (consisting of Sterling Commerce, Inc., QuickResponse
Services, Inc. and TSI International Software Ltd. (collectively, the "Selected
Companies")). Such financial information included, among other things, (i)
common equity market valuation; (ii) capitalization ratios; (iii) operating
performance; (iv) ratios of common equity market value as adjusted for debt and
cash ("Adjusted Value") to revenues for the latest reported period as derived
from publicly available information and as estimated for calendar year 1998 by
BT Alex. Brown research and Oppenheimer & Co. research for Harbinger and
Premenos, respectively, and earnings before interest expense and income taxes
("EBIT") for the latest reported period as derived from publicly available
information; and (v) ratios of common equity market prices per share ("Equity
Value") to earnings per share ("EPS"). The financial information used in
connection with the multiples provided below with respect to Premenos, Harbinger
and the Selected Companies was based on the latest reported period as derived
from publicly available information, and on estimated EPS for calendar years
1997 and 1998 as reported by the Institutional Brokers Estimating System
("IBES"). BT Alex. Brown noted that, on a trailing twelve month basis, the
multiple of Adjusted Value to revenues was 2.4x for Premenos and 11.9x for
Harbinger, compared to a range of 4.2x to 8.8x, with a mean of 5.9x, for the
Selected Companies; on an estimated calendar 1998 basis, the multiple of
Adjusted Value to revenues was 1.7x for Premenos and 6.6x for Harbinger,
compared to a range of 3.1x to 5.3x, with a mean of 4.2x, for the Selected
Companies; the multiple of Adjusted Value to EBIT was not meaningful for
Premenos and 48.3x for Harbinger, compared to a range of 25.5x to 54.2x, with a
mean of 35.5x, for the Selected Companies. BT Alex. Brown further noted that the
multiple of Equity Value to trailing twelve months EPS was 136.2x for Premenos
and 151.3x for Harbinger, compared to a range of 40.6x to 53.6x, with a mean of
45.6x, for the Selected Companies; the multiple of Equity Value to calendar year
1997 EPS was 122.5x for Premenos and 74.1x for Harbinger, compared to a range of
35.1x to 78.9x, with a mean of 50.5x, for the Selected Companies; and the
multiple of Equity Value to calendar year 1998 EPS was 49.0x for Premenos and
48.6x for Harbinger, compared to a range of 27.4x to 42.1x, with a mean of
33.0x, for the Selected Companies. As a result of the foregoing procedures, BT
Alex. Brown noted that the multiples for Premenos and Harbinger were, in the
case of revenue multiples, generally lower than and higher than, respectively,
the range of the multiples for the Selected Companies. BT Alex. Brown also noted
that the multiples for Premenos and Harbinger were, in the case of earnings
multiples, generally higher than or within the range of the multiples for the
Selected Companies. BT Alex. Brown noted that the multiple of Adjusted Value to
trailing twelve months EBIT was not applicable for comparison purposes due to
Premenos' historical lack of operating profitability. EPS projections for the
Selected Companies, Premenos and Harbinger were based on IBES estimates. The
IBES mean EPS estimate, as of October 20, 1997 for the calendar year 1997 for
Premenos was $0.10 and for Harbinger was $0.57 and for the calendar year 1998
for Premenos was $0.25 and for Harbinger was $0.87.
Analysis of Selected Merger and Acquisitions. BT Alex. Brown reviewed the
financial terms, to the extent publicly available, of 16 proposed, pending or
completed mergers and acquisitions since November 1995 in the Software and
Electronic Commerce industries (the "Selected Transactions"). BT Alex. Brown
calculated various financial multiples based on certain publicly available
information for each of the Selected Transactions. The 16 Software and
Electronic Commerce transactions reviewed, in reverse chronological order of
public announcement, were: Envoy Corporation/Healthcare Data Interchange
Corporation (6/16/97), Sterling Commerce, Inc./Automated Catalog Services
(4/17/97), SunGard Data Systems, Inc./Premier Solutions Ltd. (3/24/97), Sterling
Commerce, Inc./Comfirst SA (3/4/97), Open Market, Inc./Folio Corp. (2/21/97),
Harbinger Corp./Supply Tech Inc. (1/6/97), HBO & Co./GMIS Inc. (9/24/96),
CheckFree
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Corp./Intuit Services Corp. (9/16/96), Secure Computing Corp./Enigma Logic Inc.
(6/26/96), Secure Computing Corp./Border Network Technologic (5/29/96), HBO &
Co./CyCare Systems, Inc. (5/10/96), Quarterdeck Corp./Datastorm Technologies
Inc. (3/28/96), Astea International, Inc./Bendata, Inc. (2/26/96), Cisco
Systems, Inc./TGV Software, Inc. (1/26/96), CheckFree Corp./Servantis Systems
(1/15/96), and ENVOY Corp./National Electronic Information Corp. (11/30/95).
These transactions involved the acquisition of Software and Electronic Commerce
companies. BT Alex. Brown noted that the multiple of adjusted purchase price
(value of consideration paid for common equity adjusted for debt, preferred
stock and cash) to trailing twelve months revenues was 4.7x for the Merger
versus a range of 0.9x to 34.7x, with a mean of 8.4x, for the Selected
Transactions. BT Alex. Brown noted that the multiple of Adjusted Value to
trailing twelve months EBIT was not applicable for comparison purposes to
Premenos' historical lack of operating profitability. BT Alex. Brown further
noted that the multiple of aggregate purchase price to trailing twelve months
net income was 190.1x for the Merger versus a range of 9.4x to 656.7x, with a
mean of 154.4x, for the Selected Transactions. All multiples for the Selected
Transactions were based on public information available at the time of
announcement of such transaction, without taking into account differing market
and other conditions during the period during which the Selected Transactions
occurred.
Analysis of Selected Transaction Premiums. BT Alex. Brown reviewed premiums
paid in selected broad market and technology market mergers and acquisition
transactions valued at between $100 million and $600 million completed between
January 2, 1996 and October 7, 1997 ("Selected Premiums"). This analysis was
based on data provided by Securities Data Corporation. BT Alex. Brown also noted
that these transactions were effected at a range of premiums to the targets' per
share market price four weeks prior to announcement, one week prior to
announcement and one day prior to announcement of -36.0% to 540.0% with a mean
of 38.0%, -41.1% to 169.8% with a mean of 30.2% and -42.6% to 196.5% with a mean
of 24.8% for broad market transactions, respectively; and, -6.8% to 160.0% with
a mean of 44.8%, -8.6% to 168.3% with a mean of 35.8% and -10.6% to 196.5% with
a mean of 29.8% for technology market transactions, respectively, versus
transaction premiums of 26.8%, 39.5% and 55.2%, respectively, for the Merger
(based on the per share market price four weeks prior to, one week prior to and
one day prior to the October 23, 1997 announcement of the proposed Premenos and
Harbinger transaction).
Historical Exchange Ratio Analysis. BT Alex. Brown reviewed and analyzed
the historical ratio of the daily per share market closing prices of Harbinger
Common Stock divided by the corresponding prices of the Premenos Common Stock
over the twelve-month, six-month, three-month, one-month, one-week and one-day
prior periods to October 22, 1997 (the last business day prior to announcement
of the transaction). Such average exchange ratios for the aforementioned time
periods and as of such date were 0.390, 0.326, 0.369, 0.373, 0.310 and 0.290,
respectively. BT Alex. Brown then calculated the respective premiums over such
average daily exchange ratios represented by the Conversion Ratio, which for the
same time periods and as of such date were 95.9%, 84.7%, 46.7%, 36.3%, 55.4% and
55.2%, respectively. BT Alex Brown noted that the premiums over the average
daily exchange ratios, for such periods, represented by the Conversion Ratio
generally decreased over the same periods prior to October 22, 1997, except for
the one-week and one-day periods prior to announcement during which the premium
increased. This reflects that the price of the Premenos Common Stock
outperformed that of Harbinger Common Stock over these periods, except for the
one-week and one-day periods prior to announcement during which the Premenos
Common Stock underperformed that of Harbinger Common Stock.
Contribution Analysis. BT Alex. Brown analyzed the relative contributions
of Premenos and Harbinger, as compared to Premenos' relative ownership of
approximately 19.2% of the outstanding capital of the combined company, to the
pro forma income statement of the combined company, based on management's
projections for Premenos and BT Alex. Brown Research estimates for Harbinger.
This analysis showed that on a pro forma combined basis (excluding (i) the
effect of any synergies that may be realized as a result of the Merger and (ii)
non-recurring expenses relating to the Merger), based on the twelve-month period
ended September 30, 1997 for Premenos and Harbinger, Premenos and Harbinger
would account for approximately 33.9% and 66.1% respectively, of the combined
company's pro forma revenue and approximately 12.8% and 87.2% respectively, of
the combined company's pro forma net income after backing out acquisition
related charges and certain equity in losses of joint venture.
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The contribution analysis also indicated that Premenos and Harbinger would
contribute approximately 31.9% and 68.1% respectively, of revenue in Harbinger's
fiscal year ending December 31, 1997, and approximately 29.5% and 70.5%,
respectively, of revenue in Harbinger's fiscal year ending December 31, 1998;
and that, excluding potential synergies and non-recurring expenses related to
acquisitions, Premenos and Harbinger would, if results were as projected,
contribute approximately 13.2% and 86.8%, respectively, of the combined
company's net income in Premenos' fiscal year ending December 31, 1997, and
approximately 17.0% and 83.0%, respectively, of the combined company's net
income in Premenos' fiscal year ending December 31, 1998. Actual operating
results or financial performance achieved by the combined company may vary from
the projected results and the variations may be material.
Discounted Cash Flow Analysis. BT Alex. Brown performed discounted cash
flow analyses of Premenos. The discounted cash flow approach values a business
based on the current value of the future cash flow that the business will
generate. To establish a current value under this approach, future cash flow
must be estimated and an appropriate discount rate determined. BT Alex. Brown
used estimates of projected financial performance for Premenos for the years
1998 through 2002 reviewed by and agreed to by Premenos' and Harbinger's
management. BT Alex. Brown aggregated the present value of the cash flows
through 2002 with the present value of a range of terminal values. BT Alex.
Brown discounted these cash flows at discount rates ranging from 16.0% to 20.0%.
The terminal value was computed based on projected revenues and projected net
income in calendar years 2002 and 2003, respectively, and a range of terminal
multiples of 3.0x to 4.0x and 25.0x to 35.0x, respectively. This analysis
indicated a range of values for the Premenos Common Stock of $16.70 to $23.13
per share. BT Alex. Brown arrived at such discount rates based on its judgment
of the weighted average cost of capital of publicly traded Electronic Commerce
companies, and arrived at such terminal values based on its review of the
trading characteristics of the common stock of the Selected Companies.
Pro Forma Combined Earnings Analysis. BT Alex. Brown analyzed certain pro
forma effects of the Merger. Based on such analysis, BT Alex. Brown computed the
resulting dilution/accretion to the combined company's EPS estimates for the
fiscal years ending December 31, 1997 and December 31, 1998, pursuant to the
Merger before taking into account any potential cost savings and other synergies
that Premenos and Harbinger could achieve if the Merger were consummated and
before nonrecurring costs relating to the Merger. BT Alex. Brown noted that
before taking into account any potential cost savings and other synergies and
before certain nonrecurring costs relating to the Merger, the Merger would be
approximately 8.8% dilutive and 3.8% dilutive to the combined company's EPS for
the fiscal years ending December 31, 1997 and December 31, 1998, respectively.
BT Alex. Brown also noted that after taking into account a range of possible
cost savings and other synergies of $3.0 million to $9.0 million for the fiscal
year ending December 31, 1998, and before nonrecurring costs relating to the
Merger, the Merger would be approximately 3.9% to 19.1% accretive to the
combined company's EPS for the fiscal year ending December 31, 1998,
respectively. There can be no assurance that the combined company will be able
to realize savings and synergies in the amounts identified, or at all, following
the Merger.
Relevant Market and Economic Factors. In rendering its opinion, BT Alex.
Brown considered, among other factors, the condition of the U.S. stock markets,
particularly in the Software and Electronic Commerce sector, and the current
level of economic activity.
No company used in the analysis of other publicly traded companies nor any
transaction used in the analysis of selected mergers and acquisitions summarized
above is identical to Harbinger, Premenos or the Merger. Accordingly, such
analyses must take into account differences in the financial and operating
characteristics of the Selected Companies and the companies in the Selected
Transactions and the Selected Premiums and other factors that would affect the
public trading value, acquisition value and premiums paid of the Selected
Companies, the Selected Transactions and the Selected Premiums, respectively.
While the foregoing summary describes all analyses and factors that BT
Alex. Brown deemed material in its presentation to the Harbinger Board, it is
not a comprehensive description of all analyses and factors considered by BT
Alex. Brown. The preparation of a fairness opinion is a complex process
involving various determinations as to the most appropriate and relevant methods
of financial analysis and the applications of
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these methods to the particular circumstances, and therefore such an opinion is
not readily susceptible to summary description. BT Alex. Brown believes that its
analyses must be considered as a whole and that selecting portions of its
analyses and of the factors considered by it, without considering all analyses
and factors, would create an incomplete view of the evaluation process
underlying the BT Alex. Brown Opinion. In performing its analyses, BT Alex.
Brown considered general economic, market and financial conditions and other
matters, many of which are beyond the control of Premenos and Harbinger. The
analyses performed by BT Alex. Brown are not necessarily indicative of actual
values or future results, which may be significantly more or less favorable than
those suggested by such analyses. Accordingly, such analyses and estimates are
inherently subject to substantial uncertainty. Additionally, analyses relating
to the value of a business do not purport to be appraisals to reflect the prices
at which the business actually may be sold. Furthermore, no opinion is being
expressed as to the prices at which shares of Harbinger Common Stock may trade
at any future time.
Pursuant to a letter agreement dated October 17, 1997 between Harbinger and
BT Alex. Brown, the fees to date payable to BT Alex. Brown for rendering the BT
Alex. Brown Opinion have been $500,000. In addition, Harbinger has agreed to
reimburse BT Alex. Brown for its reasonable out-of-pocket expenses incurred in
connection with rendering financial advisory services, including fees and
disbursements of its legal counsel. Harbinger has agreed to indemnify BT Alex.
Brown and its directors, officers, agents, employees and controlling persons,
for certain costs, expenses, losses, claims, damages and liabilities related to
or arising out of its rendering of services under its engagement as financial
advisor.
The Board of Directors of Harbinger retained BT Alex. Brown to act as its
advisor, solely for the purpose of rendering its opinion as to the fairness,
from a financial point of view, of the Conversion Ratio to Harbinger, based upon
BT Alex. Brown having served as the lead-managing underwriter in Harbinger's
August 1995 initial public offering and July 1997 follow-on offering, and based
upon BT Alex. Brown's qualifications, reputation, experience and expertise. BT
Alex. Brown is an internationally recognized investment banking firm and, as a
customary part of its investment banking business, is engaged in the valuation
of businesses and their securities in connection with mergers and acquisitions,
negotiated underwriting, private placements and valuations for corporate and
other purposes. BT Alex. Brown may actively trade the equity securities of
Premenos and Harbinger for its own account and for the account of its customers
and accordingly may at any time hold a long or short position in such
securities. BT Alex. Brown maintains a market in Harbinger Common Stock and
regularly publishes research reports regarding the Electronic Commerce industry
and the businesses and securities of Harbinger and other publicly traded
companies in the Electronic Commerce industry.
OPINION OF PREMENOS' FINANCIAL ADVISOR
Premenos engaged Hambrecht & Quist to act as its financial advisor in
connection with the Merger and to render an opinion as to the fairness from a
financial point of view to Premenos Stockholders of the consideration to be
received by such holders in the Merger. Hambrecht & Quist was selected by the
Premenos Board based on Hambrecht & Quist's qualifications, expertise and
reputation, as well as Hambrecht & Quist's investment banking relationship and
familiarity with Premenos. Hambrecht & Quist rendered its oral opinion
(subsequently confirmed in writing) on October 22, 1997 to the Premenos Board
that, as of such date, the consideration to be received by the Premenos
Stockholders in the Merger is fair to the Premenos Stockholders from a financial
point of view. A COPY OF HAMBRECHT & QUIST'S OPINION DATED OCTOBER 22, 1997,
WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED, THE SCOPE AND
LIMITATIONS OF THE REVIEW UNDERTAKEN AND THE PROCEDURES FOLLOWED BY HAMBRECHT &
QUIST IS ATTACHED AS ANNEX D TO THIS JOINT PROXY STATEMENT/ PROSPECTUS. PREMENOS
STOCKHOLDERS ARE ADVISED TO READ THE OPINION IN ITS ENTIRETY. The assumptions
made, matters considered and limits of review contained in Hambrecht & Quist's
written opinion delivered on October 22, 1997 were substantially the same as
those contained in the opinion attached hereto. No limitations were placed on
Hambrecht & Quist by the Premenos Board with respect to the investigation made
or the procedures followed in preparing and rendering its opinion.
In its review of the Merger, and in arriving at its opinion, Hambrecht &
Quist, among other things: (i) reviewed the publicly available financial
statements of Harbinger for recent years and interim periods to
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date and certain other relevant financial and operating data of Harbinger
(including its capital structure) made available to Hambrecht & Quist from
published sources and from internal records of Harbinger; (ii) reviewed certain
internal financial and operating information, including certain projections,
relating to Harbinger prepared by the management of Harbinger; (iii) discussed
the business, financial condition and prospects of Harbinger with certain of its
officers; (iv) reviewed the publicly available financial statements of Premenos
for recent years and interim periods to date and certain other relevant
financial and operating data of Premenos made available to Hambrecht & Quist
from published sources and from the internal records of Premenos; (v) reviewed
certain internal financial and operating information, including certain
projections, relating to Premenos prepared by the management of Premenos; (vi)
discussed the business, financial condition and prospects of Premenos with
certain of its officers; (vii) reviewed the recent reported prices and trading
activity for the common stock of Harbinger and Premenos and compared such
information and certain financial information for Harbinger and Premenos with
similar information for certain other companies engaged in businesses Hambrecht
& Quist considered comparable; (viii) reviewed the financial terms, to the
extent publicly available, of certain comparable merger and acquisition
transactions; (ix) reviewed an unsigned draft of the Merger Agreement dated
October 20, 1997; and (x) performed such other analyses and examinations and
considered such other information, financial studies, analyses and
investigations and financial, economic and market data as Hambrecht & Quist
deemed relevant.
Hambrecht & Quist did not independently verify any of the information
concerning Premenos or Harbinger considered in connection with their review of
the Merger and, for purposes of its opinion, Hambrecht & Quist assumed and
relied upon the accuracy and completeness of all such information. In connection
with its opinion, Hambrecht & Quist did not prepare or obtain any independent
evaluation or appraisal of any of the assets or liabilities of Premenos or
Harbinger, nor did they conduct a physical inspection of the properties and
facilities of Premenos or Harbinger. With respect to the financial forecasts and
projections used in their analysis, Hambrecht & Quist assumed that they
reflected the best currently available estimates and judgments of the expected
future financial performance of Harbinger and Premenos. Hambrecht & Quist also
assumed that neither Premenos nor Harbinger was a party to any pending
transactions, including external financings, recapitalizations or merger
discussions, other than the Merger, certain other potential transactions, and
those in the ordinary course of conducting their respective businesses. For
purposes of their opinion, Hambrecht & Quist assumed that the Merger will
qualify as a tax-free reorganization under the Code for the Premenos
Stockholders and that the Merger will be accounted for as a pooling of
interests. Hambrecht & Quist's opinion is necessarily based upon market,
economic, financial and other conditions as they existed and can be evaluated as
of the date of the opinion and any subsequent change in such conditions would
require a reevaluation of such opinion.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. The summary
of the Hambrecht & Quist analyses set forth below does not purport to be a
complete description of the presentation by Hambrecht & Quist to the Premenos
Board. In arriving at its opinion, Hambrecht & Quist did not attribute any
particular weight to any analyses or factor considered by it, but rather made
qualitative judgments as to the significance and relevance of each analysis and
factor. Accordingly, Hambrecht & Quist believes that its analyses and the
summary set forth below must be considered as a whole and that selecting
portions of its analyses, without considering all analyses, or of the following
summary, without considering all factors and analyses, could create an
incomplete view of the processes underlying the analyses set forth in the
Hambrecht & Quist presentation to the Premenos Board and its opinion. In
performing its analyses, Hambrecht & Quist made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Premenos and Harbinger.
The analyses performed by Hambrecht & Quist (and summarized below) are not
necessarily indicative of actual values or actual future results, which may be
significantly more or less favorable than suggested by such analyses.
Additionally, analyses relating to the values of businesses do not purport to be
appraisals or to reflect the prices at which businesses actually may be
acquired.
In performing its analyses, Hambrecht & Quist made use of information
derived from Wall Street's consensus estimates, as adjusted by Hambrecht &
Quist, for both Premenos and Harbinger.
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The following is a brief summary of certain financial analyses performed by
Hambrecht & Quist in connection with providing its written opinion to the
Premenos Board on October 22, 1997:
Contribution Analysis: Hambrecht & Quist analyzed the contribution of each
of Premenos and Harbinger to certain financial statement categories of the pro
forma combined company with no revenue or expense adjustments, including
revenue, gross profit, operating income, net income, cash, and book value. This
contribution analysis was then compared to the pro forma ownership percentage of
Premenos and Harbinger stockholders in the pro forma post-Merger combined
company (the "Combined Company") on a fully diluted basis in the pro forma
consolidated organization based on the treasury stock method.
Hambrecht & Quist observed that Premenos stockholders are expected to own
approximately 19% of the Combined Company equity at the close of the Merger and
Harbinger Shareholders are expected to own approximately 81% of the Combined
Company equity at the close of the Merger. At the close of the Merger, it was
estimated that Premenos and Harbinger would have contributed approximately 55%
and 45%, respectively, of the combined cash and approximately 49% and 51%,
respectively, of the combined book value. Hambrecht & Quist examined the
expected contributions to the Combined Company's revenues, gross profit,
operating income, and pro forma net income by Premenos for calendar years 1997,
1998 and 1999 (i.e., the four quarters ending December 31), derived from Wall
Street's consensus estimates, as adjusted by Hambrecht & Quist, and by Harbinger
for calendar years 1997, 1998 and 1999 (i.e., the four quarters ending December
31), derived from Wall Street's consensus estimates, as adjusted by Hambrecht &
Quist. In calendar year 1997, assuming no revenue or expense adjustment to the
Combined Company, it was estimated that Premenos and Harbinger would have
contributed approximately 32% and 68%, respectively, of the combined revenues;
approximately 30% and 70%, respectively, of the combined gross profit;
approximately 1% and 99%, respectively, of the combined operating income; and
approximately 13% and 87%, respectively, of the combined pro forma net income.
With respect to calendar year 1998 financial performance, assuming no revenue or
expense adjustment to the Combined Company, it was estimated that Premenos and
Harbinger would have contributed approximately 29% and 71%, respectively, of the
combined revenues; approximately 28% and 72%, respectively, of the combined
gross profit; approximately 8% and 92%, respectively, of the combined operating
income; and approximately 14% and 86%, respectively, of the combined pro forma
net income. In calendar year 1999, assuming no revenue or expense adjustment to
the Combined Company, it was estimated that Premenos and Harbinger would have
contributed approximately 26% and 74%, respectively, of the combined revenues;
approximately 25% and 75%, respectively, of the combined gross profit;
approximately 9% and 91%, respectively, of the combined operating income; and
approximately 14% and 86%, respectively, of the combined pro forma net income.
Pro Forma Merger Analysis: Hambrecht & Quist analyzed the pro forma impact
of the Merger, assuming no revenue or expense adjustment to the Combined
Company, using Wall Street's consensus estimates of EPS, as adjusted by
Hambrecht & Quist, for Harbinger in calendar years 1998 and 1999 of $0.87 and
$1.23, respectively, and for Premenos in calendar years 1998 and 1999 of $0.26
and $0.36, respectively. The analysis indicated that the earnings per share of
the pro forma Combined Company would be lower for the subsequent quarters than
for Harbinger as a stand-alone company. The actual results and savings achieved
by the Combined Company resulting from the Merger may vary from the projected
results and variations may be material.
Premium Analysis: Hambrecht & Quist compared the implied price per share
of the offer as of October 20, 1997 to similar premiums for certain transactions
involving technology companies announced since 1994. Hambrecht & Quist analyzed
13 such transactions in the EDI and enterprise software sectors. Hambrecht &
Quist observed that the average one-day premium and 20 trading-day premium paid
in the selected public company technology transactions were 37% and 56%,
respectively. This compared with the proposed acquisition in which, as of
October 20, 1997, the premium offered over the closing price for Premenos common
stock was 43%.
Discounted Cash Flow Analysis: Hambrecht & Quist analyzed the theoretical
valuation of Premenos based on the unleveraged discounted cash flow of the
projected financial performance estimates of Premenos. However, because of the
nature of Premenos' business, the difficulty of creating meaningful multi-year
cash
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flow projections and terminal values over a five-year time span, and the current
market valuations for technology companies, Hambrecht & Quist determined that
this analysis did not provide meaningful information in the context of analyzing
the fairness from a financial point of view of the Merger.
Analysis of Publicly Traded Comparable Companies: Hambrecht & Quist
compared selected historical and projected financial information of Premenos to
publicly traded companies Hambrecht & Quist deemed to be comparable to Premenos.
Such data and ratios included the ratio of market value to historical net income
and price per share to projected earnings per share. Hambrecht & Quist also
examined the ratio of the enterprise value (market value plus debt less cash and
marketable securities) to historical revenue, historical EBIT, historical
EBITDA, and projected revenues. Companies used as comparables included selected
EDI and enterprise software companies such as Harbinger, QuickResponse Services,
Inc., Sterling Commerce, Inc., TSI International Software Ltd., Baan Company
N.V., Great Plains Software, Inc., i2 Technologies, Inc., J.D. Edwards &
Company, Manugistics Group, Inc., PeopleSoft, Inc., Platinum Software Corp., QAD
Inc., and System Software Associates, Inc. The foregoing multiples were applied
to historical financial results of Premenos for the twelve month period ended
June 30, 1997 and projected financial results of Premenos derived from Wall
Street's consensus estimates, as adjusted by Hambrecht & Quist. Hambrecht &
Quist determined for the comparable companies that (i) the average multiple of
trailing twelve months' revenues was 7.4; (ii) the average multiple of trailing
twelve months' EBITDA was 45.5; (iii) the average multiple of trailing twelve
months' EBIT was 58.8; (iv) the average multiple of trailing twelve months' net
income was 89.8; (v) the average multiple for calendar 1997 revenues was 5.9;
(vi) the average multiple for calendar 1998 revenues was 4.1; (vii) the average
multiple for calendar 1997 EPS was 63.5; and (viii) the average multiple for
calendar 1998 EPS was 40.4. Based on the analysis of publicly traded comparable
companies, Premenos' implied equity value using historical financial results of
Premenos for the trailing twelve months' period ended June 30, 1997 and
projected financial results of Premenos derived from Wall Street's consensus
estimates, as adjusted by Hambrecht & Quist, ranged from approximately $96
million to approximately $329 million. This compared with an implied equity
value of approximately $218 million of Premenos in the Merger, based on the
closing price of Harbinger common stock on October 20, 1997.
Analysis of Selected Merger and Acquisition Transactions: Hambrecht &
Quist compared the proposed merger with selected comparable merger and
acquisition transactions. This analysis included over 40 such transactions
involving companies in the technology sector. In examining these transactions,
Hambrecht & Quist analyzed certain income statement and balance sheet statistics
of the acquired company relative to the consideration offered. The foregoing
multiples were applied to historical financial results of Premenos for the
twelve-month period ended June 30, 1997. Multiples analyzed included
consideration offered to historical revenues, historical EBIT, historical EBITDA
and historical earnings, as well as premiums applied to recent share prices.
Selected technology transactions analyzed included, but were not limited to:
Unison Software, Inc./International Business Machines Corp., Aurum Software,
Inc./Baan Company N.V., Inc., OpenVision Technologies, Inc./Veritas Software
Corp., Cheyenne Software, Inc./Computer Associates International, Inc., Open
Environment, Inc./Borland International, Inc., The Continuum Company,
Inc./Computer Sciences Corp., Tivoli Systems, Inc./International Business
Machines Corp., Technalysis Corp./Compuware Corp., Hogan Systems, Inc./The
Continuum Company, Inc., Lotus Development Corp./International Business Machines
Corp., Saber Software Corp./McAfee Associates, Inc., Legent Corp./Computer
Associates International, Inc., and The Ask Group, Inc./Computer Associates
International, Inc. The consideration offered in the transactions was an average
multiple of 4.3 times trailing twelve months' revenue, 26.1 times trailing
twelve months' EBITDA, 40.1 times trailing twelve months' EBIT, and 52.7 times
trailing twelve months' earnings. Based on the analysis of selected merger and
acquisition transactions, Premenos' implied equity value ranged from
approximately $96 million to $228 million. This compared with an implied value
of approximately $218 million of Premenos in the Merger, based on the closing
price of Harbinger common stock on October 20, 1997.
No company or transaction used in the above analyses is identical to
Premenos or Harbinger or the Merger. Accordingly, an analysis of the results of
the foregoing is not mathematical; rather it involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the
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companies and other factors that could affect the public trading values of the
companies or company to which they are compared.
The foregoing description of Hambrecht & Quist's opinion is qualified in
its entirety by reference to the full text of such opinion which is attached as
Annex D to this Joint Proxy Statement/Prospectus.
Hambrecht & Quist, as part of its investment banking services, is regularly
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, corporate restructurings, strategic alliances,
negotiated underwriting, secondary distributions of listed and unlisted
securities, private placements and valuations for corporate and other purposes.
In the ordinary course of business, Hambrecht & Quist acts as a market maker and
broker in the publicly traded securities of Premenos and receives customary
compensation in connection therewith, and also provides research coverage for
Premenos. In the ordinary course of business, Hambrecht & Quist actively trades
in the equity and derivative securities of Premenos for its own account and for
the accounts of its customers and, accordingly, may at any time hold a long or
short position in such securities. Hambrecht & Quist may in the future provide
additional investment banking or other financial advisory services to Harbinger.
Pursuant to an engagement letter dated October 13, 1997, Premenos has
agreed to pay Hambrecht & Quist a fee (a "Fairness Opinion Fee") of $500,000 in
connection with the delivery of a fairness opinion. Premenos also has agreed to
reimburse Hambrecht & Quist for its reasonable out-of-pocket expenses and to
indemnify Hambrecht & Quist against certain liabilities, including liabilities
under the federal securities laws or relating to or arising out of Hambrecht &
Quist's engagement as financial advisor.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the Merger, the Harbinger Shareholders and the Premenos
Stockholders should be aware that certain executive officers of Premenos have
certain interests in the Merger that may present them with potential conflicts
of interests with respect to the Merger.
Change in Control Provisions. In 1995 Premenos entered into a compensation
agreement (the "Jenkins Agreement") with Lew Jenkins, Chairman of the Premenos
Board. The Jenkins Agreement provides among other things that, in the event Mr.
Jenkins' employment with Premenos terminates for any reason within 90 days of a
Change in Control (as defined in the Jenkins Agreement and which would include
consummation of the Merger), Premenos shall pay Mr. Jenkins an amount equal to
Mr. Jenkins' base salary in effect on the date of such termination. Mr. Jenkins
intends to terminate his employment with Premenos at the Effective Time, upon
which Mr. Jenkins will be entitled to receive a lump sum payment of $200,000
pursuant to such Change in Control provision.
Premenos has also entered into a compensation agreement dated January 6,
1997 (the "Dreisbach Agreement") with Timothy Dreisbach, Premenos' President and
Chief Executive Officer, which provides that, if Mr. Dreisbach's employment with
Premenos terminates for any reason within 90 days prior to or 180 days after the
occurrence of a Change in Control (as defined in the Dreisbach Agreement and
which would include consummation of the Merger), all unvested options granted to
Mr. Dreisbach pursuant to the Dreisbach Agreement, up to the number of options
that, if Mr. Dreisbach exercised them and immediately sold the underlying stock,
would net a dollar amount realizable to Mr. Dreisbach with a present value equal
to 2.99 times Mr. Dreisbach's base salary plus bonus in the prior calendar year.
Further, the Dreisbach Agreement provides that in the event Premenos terminates
Mr. Dreisbach's employment other than for Cause (as defined in the Dreisbach
Agreement) or Mr. Dreisbach voluntarily terminates his employment within 90 days
prior to or 180 days after the occurrence of a Change in Control, Premenos shall
continue to pay Mr. Dreisbach the base salary and health benefits enjoyed by Mr.
Dreisbach on the date of termination for a period of twelve months from the date
of such termination, and if such termination occurs prior to January 6, 1998,
Premenos shall pay Mr. Dreisbach the bonus in the amount of $125,000 that would
have been payable to him at the end of 1997. The aggregate maximum amount
realizable by Mr. Dreisbach under such provisions in the event his employment
terminates in connection with the Merger, including the realizable value of
stock options, is $1,396,500 plus the value of continued health benefits, based
on Mr. Dreisbach's current salary level.
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In 1994 Premenos and H. Ward Wolff, Premenos' Senior Vice President of
Finance and Administration and Chief Financial Officer, entered into a special
bonus agreement. Pursuant to this agreement, Mr. Wolff is entitled to a special
bonus in the event his employment with Premenos terminates under certain
specified circumstances relating to a Change in Control (as defined in such
agreement and which would include consummation of the Merger). The amount of the
special bonus is $75,000 plus a discretionary amount, greater or lesser than, or
equal to $25,000, as such amount may be determined by Lew Jenkins and David
Hildes in their sole and absolute discretion.
Voting Agreement. Lew Jenkins and David Hildes are parties to a voting
agreement (the "Voting Agreement") pursuant to which Mr. Jenkins exercises
effective control over the Premenos Common Stock owned by Mr. Hildes. The Voting
Agreement is superseded by the Proxy Agreements during the term of the Proxy
Agreements. Further, Messrs. Jenkins and Hildes have agreed to terminate the
Voting Agreement effective as of the Effective Time.
Employment and Non-competition Arrangements. Lew Jenkins has agreed to
enter into a non-disclosure, non-solicitation and non-competition agreement with
Harbinger. The non-disclosure, non-solicitation and non-competitive agreement
will contain provisions restricting Mr. Jenkins from participating or engaging
in the EDI and VAN businesses. Pursuant to the Merger Agreement, Harbinger has
agreed to identify those key senior managers of Premenos that Harbinger desires
to have enter into two-year employment agreements containing compensation,
non-competition, non-solicitation and non-disclosure provisions customary in the
software industry. Harbinger has not as of the date of this Joint Proxy
Statement/Prospectus disclosed the identity of such persons to Premenos. In
addition, Harbinger has indicated that it presently intends to continue the
employment of all or substantially all of the employees of Premenos following
the Effective Time.
Election of Hildes to Harbinger Board. Pursuant to the Merger Agreement,
Harbinger has agreed to take all actions necessary to cause David Hildes to be
elected a director of Harbinger at the Effective Time. The Merger Agreement
further provides that if the unexpired term of the class of directors to which
David Hildes is elected is less than one year, then Harbinger agrees to use its
reasonable, best efforts to nominate and recommend David Hildes for election as
a director at the next annual meeting of Harbinger Shareholders. See "The
Merger -- Terms of the Merger Agreement."
Indemnification. Pursuant to the Merger Agreement, Harbinger agreed that
after the Effective Time, it and Premenos, as the surviving corporation will, to
the fullest extent permitted under applicable law, indemnify and hold harmless,
each present and former officer or director of Premenos and each of its
subsidiaries and each person who served at the request of Premenos or any of its
subsidiaries as a director, officer, trustee, partner, fiduciary, employee or
agent of Premenos or any of its subsidiaries or of another entity, trust,
pension or other employee benefit plan against any loss in connection with any
claim arising out of or pertaining to any action or omission in its capacity as
a director, officer, trustee, partner, fiduciary, employee or agent, in each
case occurring before the Effective Time, including actions arising out of or in
connection with the Merger. Additionally, Harbinger has agreed to cause the
indemnification obligations contained in the Premenos Charter and the Premenos
Bylaws to survive the Merger and not be amended, repealed or otherwise modified
for a period of six years after the Effective Time in any manner that would
adversely affect the rights thereunder of any persons who were officers,
directors, employees or agents of Premenos prior to the Effective Time.
CERTAIN AGREEMENTS IN CONNECTION WITH THE MERGER
Proxy Agreements. Concurrently with the execution of the Merger Agreement,
Harbinger entered into the Proxy Agreements with Lew Jenkins and David Hildes,
who collectively hold in the aggregate approximately 43% of the outstanding
Premenos Common Stock, pursuant to which each such Premenos Stockholder granted
to Harbinger an irrevocable proxy to vote the shares of Premenos Common Stock
held by such Premenos Stockholder for approval of the Merger and the Merger
Agreement at any meeting of Premenos Stockholders or by written action of
Premenos Stockholders. Each such Premenos Stockholder also agreed in his Proxy
Agreement not to solicit or engage in negotiations concerning a Competing
Transaction. In
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the Proxy Agreements, Harbinger agreed to publicly release a 30-day interim
financial statement covering the first full calendar month of combined
operations of Harbinger and Premenos following the Effective Time as promptly as
practicable, but no later that 25 days after the end of such calendar month, and
to deliver such interim financial statement to Messrs. Jenkins and Hildes at
least five days prior to public release. The Proxy Agreements terminate upon the
termination of the Merger Agreement in accordance with its terms. Harbinger has
indicated its intention to exercise the proxy and vote such shares at the
Premenos Special Meeting in favor of the proposal to approve the Merger
Agreement and the Merger.
Registration Rights Agreement. In connection with the Merger, Harbinger
and each affiliate of Premenos as of the date of the Premenos Special Meeting
(the "Premenos Affiliates") will enter into a Registration Rights Agreement (the
"Registration Rights Agreement"). Pursuant to such Registration Rights
Agreement, the Premenos Affiliates will be entitled to certain demand and
piggyback registration rights with respect to the shares of Harbinger Common
Stock issued to each of them pursuant to the Merger Agreement (the "Registration
Shares").
At any time after the Pooling Period (as hereinafter defined) through the
first anniversary of the Effective Time, Lew Jenkins, as representative of the
Premenos Affiliates, may request on one occasion only that Harbinger register
not less than 250,000 of the Registration Shares under the Securities Act (the
"Demand Right"). For purposes of the Registration Rights Agreement, the Pooling
Period is the period beginning at the Effective Time and continuing through such
time as financial results covering at least 30 days of combined operations at
Harbinger and Premenos have been published by Harbinger. In connection with the
exercise of the Demand Right, Harbinger would not be obligated to maintain the
effectiveness of any registration statement filed in connection with a firm
commitment underwriting for a period of time beyond such time as each
underwriter has completed the distribution of all securities purchased by it or
seven (7) days for a registration other than an underwritten offering.
Notwithstanding the foregoing, the Harbinger Board shall have the right to defer
the exercise of the Demand Right for a period of up to 90 days if it determines
that such deferral is in the best interests of Harbinger and its shareholders.
In addition to the demand registration rights, the Premenos Affiliates will
have piggyback registration rights. If Harbinger at any time (with limited
exceptions) prior to the termination of the Registration Rights Agreement
proposes to register any shares of Harbinger Common Stock under the Securities
Act in connection with the proposed offer or sale for cash for its own account
or on behalf of any holder of Harbinger Common Stock, the Premenos Affiliates
will have the option to include any of the Registration Shares in such offering.
If any such registration involves a firm commitment underwritten public
offering, then the managing underwriters for such offering will have the
authority to reduce the number of Registration Shares to be included in such
registration if they are of the opinion that inclusion of such Registration
Shares will adversely affect the marketing of the Premenos Affiliates Common
Stock to be sold thereunder. Any such reduction in the number of Registration
Shares will be in accordance with the following priorities: (i) first, the
managing underwriter will exclude shares of Premenos Common Stock included in
such registration by Premenos Stockholders by virtue of piggyback registration
rights (but not demand registration rights) granted to Premenos Stockholders on
a pro rata basis in accordance with the number of shares of Harbinger Common
Stock requested to be registered, subject to piggyback registration rights
granted prior to the date of the Registration Rights Agreement that are superior
to the rights under the Registration Rights Agreement (ii) second, and only to
the extent necessary and after the exclusion of shares referred to in clause (i)
above, the managing underwriters will exclude shares of Harbinger Common Stock
included in such registration by Harbinger and any shareholder of Harbinger who
has exercised a demand registration right in connection with such offering on a
pro rata basis in accordance with the number of shares to be registered by
Harbinger and requested to be registered by such stockholder. If there is a firm
commitment underwritten public offering of securities of Harbinger pursuant to
which a Premenos Affiliates has piggyback registration rights and such Premenos
Affiliates elects to sell Registration Shares in connection therewith, such
Premenos Affiliates will agree to refrain from selling any Registration Shares
owned by such Premenos Affiliate (except pursuant to such registration) during
the period of distribution of Harbinger securities by such underwriters and for
a period of 90 days following the effective date of such registration.
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In accordance with the terms of the Registration Rights Agreement, Premenos
Affiliates will pay all of the expenses related to the registration of
Registration Shares by each participating Premenos Affiliates in connection with
the exercise of their piggyback rights and all underwriting discounts, selling
commissions and brokerage fee and expenses; provided, however, that the Premenos
Affiliates shall only be obligated to pay their pro rata portion of such
expenses based on the number of Registration Shares sold or proposed to be sold
in such registration. The Premenos Affiliates participating in the registered
offering will pay all registration expenses in connection with the exercise of
the Demand Right.
The registration rights granted to the Premenos Affiliates under the
Registration Rights Agreement are non-transferrable and cannot be assigned or
transferred to any third party without the prior written consent of Harbinger.
REGULATORY APPROVALS REQUIRED
Under the Merger Agreement, the obligations of both Harbinger and Premenos
to consummate the Merger are conditioned upon receipt of all required regulatory
approvals. Under the HSR Act and the rules promulgated thereunder by the Federal
Trade Commission ("FTC"), the Merger may not be consummated unless notification
has been given and certain information has been furnished to the FTC and the
Antitrust Division of the U.S. Department of Justice (the "Antitrust Division")
and the waiting period has expired or been terminated. Pursuant to the HSR Act,
on October 27 and October 28, 1997, Harbinger and Premenos, respectively, each
filed a Notification and Report Form with the FTC and the Antitrust Division for
review in connection with the Merger. The 30-day waiting period under the HSR
Act applicable to the Merger will expire on November 28, 1997, unless the Merger
is investigated or opposed by the FTC or the Antitrust Division. There can be no
assurance that the Merger will not be investigated or opposed by the FTC or the
Antitrust Division.
ACCOUNTING TREATMENT
The Merger is expected to qualify as a "pooling of interests" for financial
accounting purposes. The obligations of each of Harbinger and Premenos to
consummate the Merger are conditioned upon the receipt of written advice from
KPMG Peat Marwick LLP to the effect that the Merger will qualify as a pooling of
interests for accounting purposes and from Coopers & Lybrand L.L.P. that they
believe the pooling criteria with respect to Premenos have been satisfied.
Accordingly, under the pooling of interests method of accounting, the Merger
will be accounted for by combining the historical balances and results of
Harbinger and Premenos. The assets and liabilities of Premenos will be combined
with those of Harbinger and carried forward on the books of Harbinger at their
previously recorded amounts. Net income of Harbinger after the Merger will
include the net income of Harbinger and Premenos for the entire fiscal period in
which the Merger occurs. The reported net income of Harbinger for prior periods
will be combined with that of Premenos and restated as income of the combined
company.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General. The following summary has been included in reliance upon the
opinion of King & Spalding, counsel to Harbinger, as to the material federal
income tax consequences of the Merger to the stockholders of Premenos. The
summary is based on the provisions of the Code, the Treasury Regulations
promulgated thereunder, and administrative and judicial interpretations thereof,
all as in effect as of the date hereof. Such laws or interpretations may differ
at the Effective Time, and relevant facts also may differ.
Tax Consequences to Stockholders of Premenos. Premenos and Harbinger
expect that the Merger will be treated as a tax-free reorganization for federal
income tax purposes so that no gain or loss will be recognized by stockholders
of Premenos, except in respect of cash received in lieu of fractional shares of
Harbinger Common Stock. The obligations of Harbinger and of Premenos to
consummate the Merger are conditioned upon the receipt of an opinion of King &
Spalding to the effect that the Merger will qualify as a tax-free reorganization
for federal income tax purposes under the Code. The opinion of King & Spalding,
however, will not be binding upon the Internal Revenue Service or the courts and
will be subject to a number of
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assumptions, qualifications and limitations. If the Merger is consummated, and
it is later determined that the Merger did not qualify as a tax-free
reorganization under the Code, Premenos Stockholders would recognize taxable
gain or loss upon the receipt of Harbinger Common Stock in the Merger.
Cash received in the Merger by a stockholder of Premenos in lieu of a
fractional share of Harbinger Common Stock will be treated under Section 302 of
the Code as having been received by such stockholder in exchange for such
fractional share, and such stockholder generally will recognize capital gain or
loss in such exchange equal to the difference between the cash received and such
stockholder's tax basis allocable to the fractional share.
Tax Consequences to Premenos Option Holders. The assumption of the
Premenos Options by Harbinger and the substitution of Harbinger stock options
for the Premenos Options will not give rise to any taxable income to the holders
of the Premenos Options. The Harbinger stock options substituted for Premenos
Options that constitute incentive stock options under Section 422 of the Code at
the Effective Time should continue to qualify as incentive stock options after
the Merger.
THE DISCUSSION SET FORTH ABOVE DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN
TAX ASPECTS OF THE MERGER. THE DISCUSSION DOES NOT ADDRESS THE TREATMENT OF
CERTAIN STOCKHOLDERS WHO MAY BE SUBJECT TO SPECIAL TAX RULES, SUCH AS
INDIVIDUALS WHO ACQUIRED THEIR SHARES PURSUANT TO EMPLOYEE STOCK OPTIONS OR
OTHERWISE AS COMPENSATION. THE DISCUSSION IS BASED ON CURRENTLY EXISTING
PROVISIONS OF THE CODE, EXISTING AND PROPOSED TREASURY REGULATIONS THEREUNDER
AND CURRENT ADMINISTRATIVE RULINGS AND COURT DECISIONS. ALL OF THE FOREGOING ARE
SUBJECT TO CHANGE AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY OF
THIS DISCUSSION. EACH STOCKHOLDER AND OPTION HOLDER OF PREMENOS SHOULD CONSULT
HIS OWN TAX ADVISOR WITH RESPECT TO THE SPECIFIED TAX CONSEQUENCES OF THE MERGER
TO HIM, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN TAX
LAWS.
RESALE OF HARBINGER COMMON STOCK
Shares of Harbinger Common Stock to be issued to Premenos Stockholders in
connection with the Merger will be freely transferable under the Securities Act,
except for shares issued to any person or entity who, at the time of the Merger,
may be deemed an "affiliate" of Premenos within the meaning of Rule 145. In
general, affiliates of Premenos include its executive officers and directors and
any other person or entity who controls, is controlled by or is under common
control with Premenos. Rule 145, among other things, imposes certain
restrictions upon the resale of securities received by affiliates in connection
with certain reclassifications, mergers, consolidations or asset transfers.
These restrictions will consist of volume and manner of sale restrictions on the
resale of shares of Harbinger Common Stock issued to such persons and entities.
Harbinger may place legends on certificates representing shares of Harbinger
Common Stock that are issued to Premenos Stockholders in the Merger to restrict
such transfers.
DISSENTERS' RIGHTS
Premenos Stockholders will not have appraisal rights under the DGCL with
respect to the Merger, and Harbinger Shareholders will not have dissenters'
rights under the GBCC with respect to the Merger.
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COMPARATIVE RIGHTS OF SHAREHOLDERS
CAPITALIZATION
Harbinger. Harbinger is authorized to issue 100,000,000 shares of
Harbinger Common Stock, of which shares were issued and outstanding as
of the Harbinger Record Date. Harbinger also is authorized to issue 4,000,000
shares, no par value, of redeemable zero coupon preferred stock (of which all
are outstanding) which are redeemable by Harbinger upon the occurrence of
certain conditions for the equivalent of approximately $1.00 per share, and an
aggregate of 20,000,000 shares of Preferred Stock, par value $10.00 per share
(the "Harbinger Preferred Stock").
The Harbinger Charter authorizes the Harbinger Board, without further
action by the Harbinger Shareholders, to provide for the issuance of Harbinger
Preferred Stock in one or more series and to fix the voting powers,
designations, preferences, exchange or conversion rights, options, restrictions,
special rights or relations, dividend rights or limitations, qualifications or
terms, or conditions of redemption thereof, by adopting a resolution or
resolutions creating and designating such series. The rights of the holders of
Harbinger Common Stock are subject to the rights and preferences of the holders
of any Harbinger Preferred Stock or series thereof that the Harbinger Board may
issue. See "-- Anti-Takeover Provisions."
Premenos. Premenos is authorized to issue 25,000,000 shares of Premenos
Common Stock and 1,000,000 shares of Preferred Stock, par value $0.01 per share
("Premenos Preferred Stock"). Premenos had shares of Premenos Common
Stock issued and outstanding as of the Premenos Record Date and no shares of
Premenos Preferred Stock issued and outstanding.
The Premenos Charter authorizes the Premenos Board, without stockholder
approval, to provide for the issuance of Premenos Preferred Stock in one or more
series and to fix the preferences, conversion and other rights, voting rights,
restrictions and limitations as to dividends, qualifications and terms and
conditions of redemption as the Premenos Board may determine. The rights of the
holders of Premenos Common Stock are subject to the rights and preferences of
the holders of any Premenos Preferred Stock or series thereof that the Premenos
Board may issue. See "-- Anti-Takeover Provisions."
VOTING RIGHTS
Harbinger. Each holder of Harbinger Common Stock is entitled to one vote
per share and to the same and identical voting rights as other holders of
Harbinger Common Stock. Holders of Harbinger Common Stock do not have cumulative
voting rights. Except as may otherwise be provided in a designation of a series
of Harbinger Preferred Stock or as otherwise expressly required by law, holders
of Harbinger Preferred Stock do not have any voting rights.
Premenos. Each holder of Premenos Common Stock is entitled to one vote per
share and to the same and identical voting rights as other holders of Premenos
Common Stock. Holders of Premenos Common Stock do not have cumulative voting
rights. Holders of Premenos Preferred Stock have such voting rights, if any, as
established by the Premenos Board in the designation of a series of Premenos
Preferred Stock or as otherwise expressly required by law.
DIRECTORS
Harbinger. The number of persons constituting the Harbinger Board is nine.
The Harbinger Bylaws provide that the Harbinger Board shall have between one and
fifteen directors. The directors of Harbinger are divided into three classes,
with approximately one-third of the directors elected by the shareholders
annually. Consequently, members of the Harbinger Board serve staggered
three-year terms.
Vacancies and newly created directorships may be filled by the vote of the
holders or the remaining directors (even though less than a quorum of directors
remains). A member of the Harbinger Board may be removed with cause by the
affirmative vote of 75% of all classes of stock of Harbinger entitled to vote in
the election of such director.
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Premenos. The number of persons constituting the Premenos Board is six.
The Premenos Bylaws provide that the Premenos Board shall have not less than
three and not more than nine directors. The directors of Premenos are divided
into three classes, with approximately one-third of the directors elected by the
stockholders annually. Consequently, members of the Premenos Board serve
staggered three-year terms.
Vacancies and newly created directorships may be filled by the vote of a
majority of the remaining directors (even though less than a quorum of directors
remains). A member of the Premenos Board may be removed by the Premenos
Stockholders with or without cause.
ANTI-TAKEOVER PROVISIONS
Certain provisions of the GBCC and the Harbinger Charter and the DGCL and
the Premenos Charter may discourage an attempt to acquire control of Harbinger
or Premenos, respectively, even when a majority of either corporation's
shareholders determined that such acquisition was in their best interests. These
provisions also may render the removal of one or all directors more difficult or
deter or delay a change of control that the Harbinger Board or Premenos Board,
respectively, did not approve.
Harbinger
Authorized Preferred Stock. The rights of holders of Harbinger Common
Stock will be subject to, and may be adversely affected by, the rights of
holders of any Harbinger Preferred Stock that may be issued in the future. Any
such issuance may adversely affect the interests of holders of Harbinger Common
Stock by limiting the control that such holders may exert by exercise of their
voting rights, by subordinating their rights in liquidation to the rights of the
holders of such Harbinger Preferred Stock, and otherwise. In addition, the
issuance of Harbinger Preferred Stock, in some circumstances, may deter or
discourage takeover attempts and other changes in control of Harbinger by making
it more difficult for a person who has gained a substantial equity interest in
Harbinger to obtain control or to exercise control effectively. Harbinger has no
current plans or agreements with respect to the issuance of any Harbinger
Preferred Stock.
Certain Business Combinations. Both Delaware Law and Georgia Law include
business combination statutes which are generally designed to deter hostile
takeovers by protecting minority shareholders in the second stage of freeze-out
mergers. Freeze-out mergers occur when controlling shareholders prevent minority
shareholders from receiving any direct or indirect financial return from the
corporation to persuade them to liquidate their investment in the corporation on
terms favorable to the controlling shareholders. As defined under Delaware Law
and Georgia Law, "business combinations" encompass, among other types of
combinations, a merger of a corporation with any "interested shareholder" or a
corporation associated or affiliated with an "interested shareholder" who was an
"interested shareholder" prior to the transaction. Under Georgia Law, an
"Interested Shareholder" is any person who owns at least ten percent (10%) of
the outstanding voting shares or an affiliate of the corporation owning at least
ten percent (10%) of the outstanding voting shares within the prior two years.
Under the GBCC, certain "business combinations" (including a merger,
consolidation, asset transfer or reclassification of equity securities) between
a Georgia corporation and an Interested Shareholder, are prohibited for five
years from the time that such Interested Shareholder becomes an Interested
Shareholder unless (i) prior to such time the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the shareholder becoming an Interested Shareholder; (ii) in the
transaction which resulted in the shareholder becoming an Interested
Shareholder, the Interested Shareholder became the beneficial owner of at least
90% of the corporation outstanding at the time the transaction commenced,
excluding shares owned by directors and officers of the corporation,
subsidiaries of the corporation, and certain employee stock plans of the
corporation; or (iii) subsequent to becoming an Interested Shareholder, such
shareholder acquired additional shares resulting in the Interested Shareholder
being the beneficial owner of at lest 90% of the outstanding voting stock of the
corporation, excluding shares owned by directors and officers of the
corporation, subsidiaries of the corporation, and certain employee stock plans
of the corporation.
Furthermore, the GBCC provides that a business combination must be either
(i) unanimously approved by the continuing directors provided that the
continuing directors constitute at least three members of the
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board of directors at the time of such approval; or (ii) recommended by at least
two-thirds of the continuing directors and approved by a majority of the votes
entitled to be cast by holders of voting shares, other than voting shares
beneficially owned by the Interested Shareholder unless, among other conditions,
the Georgia corporation's common shareholders receive a minimum price (as
defined in the GBCC) for their shares and the consideration is received in cash
or in the same form as previously paid by the Interested Shareholder for its
shares.
The Harbinger Bylaws provide that these GBCC provisions apply to business
combinations with Interested Shareholders with respect to Harbinger.
Premenos
Authorized Preferred Stock. The Premenos Board may authorize the issuance
of Premenos Preferred Stock at such times, for such purposes and for such
consideration as it may deem advisable without further stockholder approval. The
issuance of Premenos Preferred Stock under certain circumstances may have the
effect of discouraging an attempt by a third party to acquire control of
Premenos by, for example, authorizing the issuance of a series of Premenos
Preferred Stock with rights and preferences designed to impede the proposed
transaction, or by making it more difficult for a person who has gained a
substantial equity interest in Premenos to obtain control or to exercise control
effectively.
Certain Business Combinations. Both Delaware Law and Georgia Law include
business combination statutes which are generally designed to deter hostile
takeovers by protecting minority shareholders in the second stage of freeze-out
mergers. Freeze-out mergers occur when controlling shareholders prevent minority
shareholders from receiving any direct or indirect financial return from the
corporation to persuade them to liquidate their investment in the corporation on
terms favorable to the controlling shareholders. As defined under Delaware Law
and Georgia Law, "business combinations" encompass, among other types of
combinations, a merger of a corporation with any Interested Shareholder (under
Georgia Law) or Interested Stockholder (under Delaware Law) or a corporation
associated or affiliated with an Interested Shareholder or Interested
Stockholder who was an Interested Shareholder or Interested Stockholder prior to
the transaction.
Delaware Law defines an "Interested Stockholder" as (i) any person who is
the direct or indirect beneficial owner of at least fifteen percent (15%) of the
voting power of any class or series of the then outstanding stock of the
corporation or (ii) an affiliate or associate of the corporation and within
three (3) years of the date in question was the direct or indirect owner of at
least fifteen percent (15%) of the voting power of any class or series of the
then outstanding stock of the corporation.
Delaware Law prohibits a corporation from engaging in any business
combination with any Interested Stockholder for a period of three (3) years
following the date that such stockholder became an interested Stockholder unless
sixty-six and two-thirds percent (66 2/3%) of the voting stock not beneficially
owned by the Interested Stockholder or any affiliate or associate of the
Interested Stockholder is cast in favor of the merger.
PREEMPTIVE RIGHTS
Under the DGCL, no stockholder has any preemptive right to subscribe to an
additional issue of stock or to any security convertible into such stock except
to the extent the certificate of incorporation so provides. Under Georgia Law,
no shareholder has any preemptive rights except to the extent the articles of
incorporation so provide. Accordingly, neither the Harbinger Shareholders nor
the Premenos Stockholders have preemptive rights. Thus, if additional shares of
Harbinger Common Stock or shares of Premenos Common Stock were issued, the
proportions of capital stock ownership of the holders thereof would be reduced,
to the extent they did not participate in such additional issuance of shares.
ASSESSMENT
All outstanding shares of Harbinger Common Stock are, and those to be
issued pursuant to the Merger Agreement will be, fully paid and nonassessable.
The shares of Premenos Common Stock presently outstanding are fully paid and
nonassessable.
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CONVERSION; REDEMPTION; SINKING FUND
Neither Harbinger Common Stock nor Premenos Common Stock is convertible,
redeemable or entitled to any sinking fund.
LIQUIDATION RIGHTS
Harbinger. In the event of the liquidation, dissolution or winding-up of
the affairs of Harbinger, holders of outstanding Harbinger Common Stock are
entitled to share, in proportion to their respective interests, in Harbinger's
assets and funds remaining after payment, or provision for payment, of all debts
and other liabilities of Harbinger. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of Harbinger, the holders of Harbinger
Preferred Stock will be entitled to receive out of the assets of Harbinger
available for distribution to Harbinger Shareholders, before any distribution is
made to holders of Harbinger Common Stock, liquidation preferences in the
amounts prescribed by the applicable series designation. The holders of any
series of Harbinger Preferred Stock will not be entitled to receive the
liquidation preference of such series until the liquidation preference of any
other series of Harbinger Preferred Stock ranking senior to such series with
respect to rights upon liquidation, dissolution or winding up shall have been
paid (or a sum set aside therefor sufficient to provide for payment) in full.
If upon any voluntary or involuntary liquidation, dissolution or winding up
of Harbinger, the assets of Harbinger shall be insufficient to make such full
payments to holders of Harbinger Preferred Stock, then such assets shall be
distributed pro rata among any holders of Harbinger Preferred Stock. After
payment of the full amount of the liquidating distribution, plus any dividend
arrearages, to which they are entitled, the holders of Harbinger Preferred Stock
will not be entitled to any further participation in any distribution of assets
by Harbinger. Neither a consolidation or merger of Harbinger with or into
another corporation nor a merger of another corporation with or into Harbinger
nor a sale, lease or conveyance of all or any part of Harbinger's property or
business shall be considered a liquidation, dissolution or winding up of
Harbinger.
Premenos. In the event of liquidation, dissolution or winding up of
Premenos, whether voluntary or involuntary, the holders of Premenos Common Stock
will be entitled to share ratably in any of its net assets or funds which are
available for distribution to its stockholders after the satisfaction of its
liabilities or after adequate provision is made therefor, subject to the rights
of the holders of any Premenos Preferred Stock outstanding at the time.
DIVIDENDS AND OTHER DISTRIBUTIONS
Harbinger. Holders of Harbinger Common Stock are entitled to dividends
when, if and as declared by the Harbinger Board. There can be no assurance as to
the payment of dividends on Harbinger Common Stock in the future because such
payment will depend upon the earnings and financial condition of Harbinger, as
well as other related factors. The GBCC provides that Harbinger may not pay
dividends if after giving effect to such dividends, Harbinger would not be able
to pay its debts as they become due in the usual course of business or
Harbinger's total assets would be less than the sum of its total liabilities
plus the amount that would be needed, if Harbinger were to be dissolved at such
time, to satisfy any preferential rights upon dissolution held by its
shareholders whose preferential rights are superior to those receiving the
dividend.
Premenos. The DGCL permits a corporation, subject to restrictions in its
certificate of incorporation, to declare and pay dividends to its stockholders
out of surplus (defined as net assets minus capital) or, if there is no surplus,
out of net profits for the fiscal year in which the dividend is declared and/or
for the preceding fiscal year as long as the amount of capital of the
corporation following the declaration and payment of the dividend is not less
than the aggregate amount of the capital represented by the issued and
outstanding stock of any classes which may have a preference upon the
distribution of assets.
SHAREHOLDER MEETINGS
Harbinger. Under Harbinger's Bylaws, special meetings of the Harbinger
Shareholders may be called by the Chief Executive Officer of Harbinger, a
majority of the Harbinger Board or, if Harbinger has more than
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100 shareholders, by the written request of the holders of at least 75% of all
of the shares entitled to vote at such meeting.
Premenos. Under Premenos' Bylaws, special meetings of the Pyramid
Stockholders may be called at any time by the Premenos Board, the Chairman or
the President of Premenos, or by the holders of at least 25% of all the shares
entitled to vote at such meeting.
SHAREHOLDER NOMINATIONS
Harbinger. Harbinger Shareholders are entitled to nominate persons for
election to the Harbinger Board only if a timely notice in writing is sent to
the Secretary of Harbinger. To be timely, a shareholder's notice must be
received at the principal executive offices of Harbinger not less than 30 days
prior to the date of the meeting at which directors are to be elected (subject
to limited exceptions). Such notice must set forth certain information,
including, among other things, (i) with respect to each person whom the
shareholder proposes to nominate for election as a director, all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors pursuant to Regulation 14(a) under the
Exchange Act, and (ii) with respect to such shareholder giving such notice, (a)
the name and address of such shareholder and (b) the class and number of shares
of Harbinger beneficially owned by such shareholder.
Premenos. The Premenos Bylaws contain no restrictions on the ability of
Premenos Stockholders to nominate persons for election as a director of
Premenos.
SHAREHOLDER PROPOSALS
Harbinger. Under the Harbinger Bylaws, at an annual meeting of
shareholders, only business properly brought before the meeting may be
conducted. For business to be properly brought before an annual meeting by a
shareholder, the shareholder must have given timely notice thereof in writing to
the Secretary of Harbinger. To be timely, a shareholder's notice must be
received at the principal executive offices of Harbinger not less than 30 days
prior to the annual meeting (with limited exceptions). Such notice must set
forth as to each matter the shareholder proposes to bring before the annual
meeting (i) a brief description of the business to be brought, (ii) the name and
address of such shareholder, (iii) the class and number of shares of Harbinger
beneficially owned by such shareholder and (iv) any material interest of the
shareholder in such business.
Premenos. The Premenos Charter and the Premenos Bylaws contain no such
restrictions on the ability of Premenos Stockholders to make stockholder
proposals.
INDEMNIFICATION
Harbinger. Under the GBCC, a corporation may indemnify a director,
officer, employee or agent, acting in his capacity as such, for judgments,
settlements, penalties, fines or reasonable expenses incurred with respect to a
threatened, pending or completed action, suit or proceeding if he acted in a
manner he believed in good faith to be in or not opposed to the best interests
of the corporation and, in the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful. Indemnification in
connection with a proceeding by or in the right of the corporation is limited to
reasonable expenses incurred in connection with the proceeding. A corporation
may pay for or reimburse the reasonable expenses incurred by a party to a
proceeding in advance of final disposition of the proceeding if (i) he furnishes
the corporation a written affirmation of his good faith belief that he has met
the required standard of conduct and (ii) he furnishes the corporation a written
undertaking to repay any advances if it is ultimately determined that he is not
entitled to indemnification under the GBCC. Under the Harbinger Bylaws,
Harbinger is required to indemnify, to the fullest extent permitted by the GBCC,
any individual made a party to a proceeding because he is or was a director or
officer against liability incurred in the proceeding, if he acted in a manner he
believed in good faith to be in or not opposed to the best interests of
Harbinger and, in the case of any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful. However, under the Harbinger Bylaws,
Harbinger is not required to indemnify such an individual in the case of a
proceeding by or in the right of Harbinger in which such individual was judged
liable to Harbinger, or in any other proceeding in which such individual was
judged
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liable on the grounds that personal benefit was improperly received by him,
unless a court of competent jurisdiction finds him to be fairly entitled to
indemnification. Under the Harbinger Bylaws, an individual entitled to
indemnification in connection with a proceeding by or in the right of Harbinger
is entitled to reimbursement of reasonable expenses incurred in connection with
the proceeding.
Premenos. The DGCL gives a corporation the power to indemnify an agent
against expenses, judgments, fines and settlements incurred in a proceeding,
other than an action by or in the right of the corporation, if the agent acted
in good faith and reasonably believed that the act was in the best interests, or
at least not opposed to the best interests, of the corporation, and, with
respect to a criminal proceeding, the agent had no reasonable cause to believe
the agent's conduct was unlawful. In the case of an action by or in the right of
the corporation, the corporation has the power to indemnify any agent against
expenses incurred in defending or settling the action if the agent acted in good
faith and reasonably believed that the act was in, or at least not opposed to,
the best interests of the corporation; provided, however, that no
indemnification may be given where the agent is adjudged liable to the
corporation with respect to any claim, issue or matter, unless a court shall
deem such indemnification proper and then such indemnification may be made only
to the extent that such court shall determine. The DGCL requires a corporation
to indemnify an agent of the corporation to the extent the agent was successful
in the defense of any proceeding, on the merits or otherwise, to which the agent
was a party because the agent is or was an agent of the corporation or is or was
serving at the corporation's request as an agent of another foreign or domestic
corporation or other entity.
The DGCL permits a corporation to adopt a provision in its certificate of
incorporation eliminating or limiting the personal liability of a director to
the corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that such provision may not eliminate or
limit director monetary liability for (i) breaches of the director's duty of
loyalty to the corporation or its shareholders; (ii) acts or omissions not in
good faith or involving intentional misconduct or knowing violations of law;
(iii) the payment of unlawful dividends, stock repurchases or redemptions; or
(iv) transactions in which the director received an improper personal benefit.
The Premenos Charter requires Premenos to indemnify, to the fullest extent
permitted by the DGCL, any individual made a party to a proceeding because he
was a director, officer or legal representative of Premenos against liability
and expenses incurred in the proceeding, with the individual to return all
amounts to Premenos if it is ultimately determined that he was not entitled to
such indemnification and the law so requires.
Under the Merger Agreement, the parties have agreed that this provision of
the Premenos Charter will not be amended or repealed for a period of six years
from the Effective Time in a manner that would adversely affect the rights of
the persons who were directors, officers, employees or agents of Premenos or its
subsidiaries on or prior to the Effective Time.
DIRECTOR LIABILITY
As permitted by the GBCC and the DGCL, respectively, the Harbinger Charter
and the Premenos Charter eliminate the liability of directors and officers of
Harbinger and Premenos, respectively, for monetary damages in a shareholder or
derivative proceeding, except for cases involving acts or omissions which
involved intentional misconduct or a knowing violation of law, or involving
transactions from which the director derived an improper personal benefit, or
involving certain other violations of the duties of a director.
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BUSINESS OF HARBINGER
GENERAL
Harbinger is a leading worldwide provider of electronic commerce products
and services to businesses and offers comprehensive, customizable,
standards-based electronic commerce solutions. Harbinger develops, markets and
supports software products and provides computer, communications, network and
consulting services which enable businesses to engage in electronic commerce.
These electronic commerce solutions are provided over the Harbinger VAN or IVAS,
or directly over standard telephone lines, the Internet, or private internal
computer networks known as intranets. Harbinger offers software products that
operate on multiple computer platforms, secure and reliable computer networks
and secure Internet communications to facilitate the transmission of business
information and transactions, and value-added products and services to enable
businesses of all sizes to maximize the number and value of their electronic
trading relationships. As of September 30, 1997, Harbinger's customers included
leading U.S. and international corporations and government agencies, including
Northrop, Compaq Computer, Digital Equipment Corporation, Hewlett-Packard,
Westinghouse Electric, Baxter Healthcare, Johnson & Johnson, Amoco, Chevron,
Mobil, Pacific Gas & Electric, Southern California Edison, Bank of America and
Barnett Banks.
Harbinger's products and services facilitate electronic commerce and EDI by
businesses and financial institutions by providing the ability to electronically
transmit and receive routine business information and documents in a standard
format. The Harbinger VAN and IVAS serve as electronic communications links for
computer systems by receiving, storing and forwarding electronically transmitted
business documents and data for re-transmission in a form that can be received
and interpreted by the computer of another commercial business. The method of
document exchange is user configurable by trading partner and by document type
(such as purchase order, invoice, quote or bid request). Both the Harbinger VAN
and IVAS provide encryption and other document management and security methods
to allow documents to be exchanged securely and reliably. Harbinger facilitates
the electronic link to its computer communications network through its
electronic commerce software packages for use in a broad range of computing
environments, including PC-based solutions for DOS and Windows (3.x, 95 and NT
Workstation), and client-server solutions for Windows NT Server, UNIX, IBM
AS/400 midrange and IBM MVS mainframe platforms. Harbinger also provides
professional services to assist businesses in the installation, customization,
operation and maintenance of their electronic trading relationships.
RECENT ACQUISITIONS
An important part of Harbinger's strategy is to enhance its suite of
electronic commerce products and services and to address new electronic trading
communities. Harbinger believes that the addition of new products and markets
from its recent acquisitions enhance Harbinger's ability to provide a
comprehensive range of solutions for trading partners to conduct business
electronically over the Harbinger VAN, IVAS, the Internet or private intranets.
Harbinger has made the following significant acquisitions since January 1, 1997:
SupplyTech, Inc. On January 3, 1997, Harbinger completed a merger with
SupplyTech, with operations in the U.S., United Kingdom, Italy and Mexico.
SupplyTech, one of the largest providers of PC-based EDI software in the United
States, provides its STX family of electronic commerce software products and
services to, and allows Harbinger to expand into, trading communities in the
automotive, retail, aerospace and heavy manufacturing markets.
Harbinger NET Services, LLC. On January 1, 1997, Harbinger purchased the
remaining equity interest in HNS and the related $3.0 million Subordinated
Convertible Debenture (the "Debenture") held by BellSouth, thereby obtaining
direct ownership of products designed to facilitate electronic commerce over the
Internet. These products include IVAS, Harbinger's Internet value added server,
TrustedLink Guardian, a security and encryption document management program,
Harbinger Express, designed to permit EDI over the World Wide Web using a
browser, and TrustedLink INP, a web site development tool. HNS was capitalized
by Harbinger and certain other investors in 1995 to develop EDI products and
services for the Internet, and
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prior to 1997 operated as a joint venture with BellSouth in which the Company
held a 66.1% fully-diluted equity interest.
Atlas Products International, Limited. On October 23, 1997, Harbinger
acquired all of the outstanding capital shares of Atlas, a Manchester,
England-based provider of EDI translation software. Atlas has an installed base
of over 2,500 customers on PC, Unix, NT and DEC/VMS platforms. Atlas products
are used principally by small and mid-sized businesses and are distributed
directly and through third party channels in the U.K., Europe and other markets
around the world. Atlas provides to Harbinger an enhanced customer base,
relationships in key industries including retail, finance, manufacturing and
distribution, and extensive EC/EDI standards support for the European and in
particular U.K., theaters. Harbinger issued approximately 311,000 shares of
Harbinger common stock in the acquisition of Atlas. The acquisition is being
accounted for as a pooling of interests.
ACQUION, Inc. On August 22, 1997, Harbinger acquired ACQUION, Inc.
("Acquion"), based in Greenville, S.C. Acquion provides electronic catalog and
procurement solutions for business-to-business electronic commerce. Acquion
provides to Harbinger a component of its supply chain management offering,
including MRO supplier content and electronic catalog software, and is an
extension of Harbinger's core EDI/EC offerings. Harbinger acquired all of the
outstanding shares of Acquion for $13.6 million, consisting of $12 million in
cash and the assumption of $1.6 million in liabilities including transaction
costs. The Company recorded the acquisition using the purchase method of
accounting.
Acquisition-Related Charges. In connection with the SupplyTech
transaction, Harbinger incurred in the first quarter of 1997 a $7.1 million
charge related to merger expenses and $4.8 million of integration costs. In
connection with the HNS transactions, Harbinger incurred in the first quarter of
1997 a $2.4 million loss on the extinguishment of the Debenture, a $2.7 million
charge for in-process product development, and $1.6 million of integration
costs. Harbinger incurred a $14.9 million charge for acquired research and
development and other acquisition-related charges during the three months ended
September 30, 1997, $10.9 million related to an in-process product development
charge for the Acquion purchase. Harbinger currently anticipates that it will
incur total charges in the range of $20.0 to $30.0 million in the fourth quarter
of 1997 and the first quarter of 1998 relating primarily to the Merger and
certain costs and charges associated therewith. To the extent that the Merger is
not consummated in the fourth quarter of 1997, approximately $2.0 to $3.0
million of integration activity costs will be incurred in the fourth quarter,
with the remaining Merger-related costs expected to be incurred in the quarter
in which the Merger closes. In connection with the Atlas acquisition, Harbinger
expects to take a charge of between $3 to $5 million relating to integration and
acquisition related expenses during the fourth quarter of 1997.
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BUSINESS OF PREMENOS
PRODUCT OVERVIEW
Premenos develops, markets and supports a broad range of electronic
commerce software products and services that enable businesses to engage in
secure and reliable business-to-business electronic transactions and
communications. Premenos is a leading provider EDI translation software and a
market leader for EDI software in the mid-range computer market. By using
Premenos' software and services, businesses are able to transfer electronic
information over proprietary networks or the Internet and other TCP/IP networks.
Premenos' products and services are designed to provide for the timely,
accurate, cost-effective and secure electronic exchange of information between a
business and its trading partners, including suppliers, customers and financial
institutions. Currently, Premenos' software applications enable businesses to
electronically execute over 150 types of business transactions, including
essential commercial functions such as purchasing, invoicing, shipping and
notification. Within electronic commerce, Premenos has developed software
products and services for businesses conducting EDI transactions and
communications. Premenos' EDI/400 product has been for the past six years and is
currently the leading EDI translation software product in the mid-range computer
market. EDI/400 operates on the IBM AS/400, which is the predominant computer in
the mid-range computer market.
Premenos' EDI/Open software is an EDI translator for the client-server
market. EDI/Open is written in the C language and supports IBM RISC System/6000,
Hewlett Packard HP 9000, Sun SPARC and Windows NT platforms. EDI/Open
incorporates a true client-server architecture -- a graphical client running on
a variety of workstations, connected directly or remotely to a UNIX or NT
server. EDI/Open also supports parallel translation across multiple central
processing units. Premenos' Templar software and services enable businesses to
engage in secure and verifiable electronic commerce transactions over the
Internet and other TCP/IP networks at significantly reduced costs as compared
with traditional proprietary networks. Templar is an integrated solution
designed to overcome concerns associated with the use of open networks by
providing businesses with the ability to transmit secure, digitally-signed
documents, including EDI documents. In addition to security, Templar
automatically enables an electronic document recipient to authenticate the
sender of the document and a sender to verify receipt of a document by the
intended recipient and offers both parties the ability to verify document
integrity. Furthermore, Templar enables automated tracking and auditing of
business transactions.
In addition to its software products, Premenos provides extensive technical
support, consulting services and education services to aid customers in the
implementation and administration of electronic commerce solutions.
RECENT ACQUISITIONS
In 1996, Premenos acquired Don Valley Technology Corporation ("Don
Valley"), a forms-based EDI software maker. As a result, Premenos has added the
PowerDox and WebDox electronic commerce programs to its product offering mix.
PowerDox is a structured electronic commerce trading system that enables large,
"hub" companies to trade easily with small, "spoke" trading partners who have
been reluctant to implement full-scale EDI. It consists of PowerDox Central,
software that resides on a server at the hub location, and PowerDox Remote,
client software that is installed at a spoke trading partner. WebDox operates in
the same way as PowerDox, but enables transmission of electronic forms over the
World Wide Web instead of a closed communications medium.
Also in 1996, Premenos acquired Prime Factors, Inc. ("Prime Factors"), an
encryption software maker. The Prime Factors products include a comprehensive
range of encryption products that enable banks and other businesses to secure
financial and other information transmitted over internal and external networks.
The Prime Factors products, including Descrypt/EDI+, Psypher/EDI+, Fdesmact, PIN
Management System and others operate on computer platforms ranging from PCs to
UNIX and AS/400, to MVS mainframes.
62
<PAGE> 74
PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited pro forma combined financial statements assume a
business combination between Harbinger and Premenos accounted for on a pooling
of interests basis. The pro forma combined condensed financial statements are
based on the historical consolidated financial statements and the notes thereto
of Harbinger and Premenos, and should be read in conjunction with the financial
statements incorporated by reference into this Joint Proxy Statement/Prospectus.
Harbinger and Premenos historical consolidated financial statement data as of
September 30, 1997, and for the nine months ended September 30, 1997, have been
prepared on the same basis as the historical information derived from audited
financial statements, and, in the opinion of their respective management,
contain all adjustments, consisting only of normal recurring accruals, necessary
for the fair presentation of the results of operations for such periods. The pro
forma combined balance sheet combines Harbinger's September 30, 1997
consolidated balance sheet with Premenos' September 30, 1997 consolidated
balance sheet giving effect to the Merger as if it had occurred on September 30,
1997. The pro forma combined statements of operations combine Harbinger's
historical consolidated statements of operations for the three fiscal years
ended December 31, 1994, 1995 and 1996, and the unaudited nine months ended
September 30, 1997, with the corresponding Premenos historical consolidated
statements of operations for the three years ended December 31, 1994, 1995 and
1996, and the unaudited nine months ended September 30, 1997, respectively,
giving effect to the Merger as if it had occurred on January 1, 1994.
The unaudited pro forma statements of operations for Harbinger for the year
ended December 31, 1996 and for the nine months ended September 30, 1997 have
been taken from Harbinger's Form 8-K/A filed with the Commission on October 29,
1997, which gives effect to Harbinger's acquisitions of (i) Acquion, Inc.,
effective August 22, 1997, (ii) Harbinger Net Services, LLC effective January 1,
1997, and (iii) Harbinger N.V., INOVIS GmbH, and NTEX Holding B.V. effective
March 31, 1996, which have all been accounted for using the purchase method of
accounting as if each acquisition occurred on January 1, 1996.
During 1996, Harbinger recorded the operating results of HNS under the
equity method of accounting. The results of HNS were excluded from Harbinger's
core earnings results, which are shown on Harbinger's historical operating
statements under Supplemental Data.
The unaudited pro forma statements of operations included for Premenos
reflect certain reclassifications of direct and operating costs to conform to
Harbinger's basis of presentation.
The pro forma information is presented for illustrative purposes only and
is not necessarily indicative of the operating results or financial position
that would have occurred if the Merger had been consummated at the dates
presented, nor is it necessarily indicative of future operating results or
financial position. The unaudited pro forma combined financial statements do not
incorporate any benefits from cost savings or synergies of operations of the
combined companies that may occur. Harbinger and Premenos anticipate incurring
direct transaction costs, other acquisition related costs and write-offs of
duplicative assets of approximately $10.0 million which will be recorded at the
closing of the Merger and integration costs of approximately $10.0 to $20.0
million related to the Merger which will be recorded as incurred and have not
been reflected in the pro forma combined financial statements herein.
These pro forma combined financial statements should be read in conjunction
with the historical consolidated financial statements and the related notes
thereto of Harbinger and Premenos incorporated by reference into this Joint
Proxy Statement/Prospectus.
63
<PAGE> 75
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
HARBINGER PREMENOS ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................ $ 48,066 $24,777 $ 72,843
Short-term investments........................... -- 34,470 34,470
Accounts receivable, less allowances for doubtful
accounts...................................... 21,163 8,703 29,866
Income taxes receivable.......................... -- 409 409
Deferred income taxes............................ 1,627 2,516 4,143
Other current assets............................. 1,908 1,054 2,962
-------- ------- --------
Total current assets..................... 72,764 71,929 144,693
Property and equipment, net........................ 11,949 6,873 18,822
Intangible assets, less accumulated amortization... 16,011 6,437 (2,000)(3) 20,448
Other assets....................................... -- 203 203
-------- ------- --------
Total assets............................. $100,724 $85,442 $184,166
======== ======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable................................. $ 3,236 $ 1,038 $ 4,274
Accrued expenses................................. 13,632 3,321 8,000(3) 24,953
Deferred revenue................................. 9,288 7,654 16,942
Current portion of long-term debt................ 371 346 717
-------- ------- --------
Total current liabilities................ $ 26,527 $12,359 $ 46,886
Long-term debt, net................................ -- 35 35
Deferred revenue................................... -- 219 219
Deferred income taxes.............................. -- 1,273 1,273
-------- ------- --------
Total liabilities........................ 26,527 13,886 48,413
Shareholders' equity:
Common stock..................................... 2 118 120
Additional paid-in capital....................... 118,537 70,114 188,651
Retained earnings (Accumulated deficit).......... (44,342) 1,324 (10,000)(3) (53,018)
-------- ------- --------
Total shareholders' equity............... 74,197 71,556 135,753
-------- ------- --------
Total liabilities and shareholders'
equity................................. $100,724 $85,442 $184,166
======== ======= ========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements
64
<PAGE> 76
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
PRO FORMA HISTORICAL PRO FORMA
HARBINGER(1) PREMENOS(4) COMBINED
------------ ----------- ---------
(IN THOUSANDS, EXCEPT FOR
PER SHARE DATA)
<S> <C> <C> <C>
Revenue:
Services.............................................. $ 38,352 $11,546 $ 49,898
Software licenses..................................... 20,331 16,260 36,591
-------- ------- --------
Total revenues................................ 58,683 27,806 86,489
-------- ------- --------
Direct costs:
Services.............................................. 14,369 4,321 18,690
Software licenses..................................... 2,520 3,346 5,866
-------- ------- --------
Total direct costs............................ 16,889 7,667 24,556
-------- ------- --------
Gross margin............................................ 41,794 20,139 61,933
Operating costs:
Selling and marketing................................. 13,151 7,681 20,832
General and administrative............................ 11,648 5,491 17,139
Depreciation and amortization......................... 6,026 1,971 7,997
Product development................................... 4,178 5,937 10,115
Charge for purchased in-process product development,
write-off of software development costs and
acquisition related charges........................ 17,568 -- 17,568
-------- ------- --------
Total operating costs......................... 52,571 21,080 73,651
-------- ------- --------
Operating loss................................ (10,777) (941) (11,718)
Interest (income) expense, net.......................... 294 (2,206) (1,912)
Equity in losses of joint ventures...................... 38 263 301
-------- ------- --------
Income (loss) before income taxes,...................... (11,109) 1,002 (10,107)
Income tax expense...................................... 1,419 380 1,799
Minority interest....................................... -- (2) (2)
-------- ------- --------
Net income (loss) applicable to common
shareholders................................ $(12,528) $ 624 $(11,904)
======== ======= ========
Net income (loss) per share applicable to common
shareholders.......................................... $ (0.64) $ 0.12(2) $ (0.48)(2)
======== ======= ========
Weighted average common and common equivalent shares
outstanding........................................... 19,587 5,352(2) 24,939(2)
======== ======= ========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements
65
<PAGE> 77
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRO FORMA HISTORICAL PRO FORMA
HARBINGER(1) PREMENOS(4) COMBINED
------------- ----------- ---------
(IN THOUSANDS, EXCEPT FOR
PER SHARE DATA)
<S> <C> <C> <C>
Revenues:
Services........................................... $ 39,209 $11,797 $ 51,006
Software licenses.................................. 22,523 21,674 44,197
-------- ------- --------
Total revenues............................. 61,732 33,471 95,203
-------- ------- --------
Direct costs:
Services........................................... 15,777 4,240 20,017
Software licenses.................................. 3,351 3,916 7,267
-------- ------- --------
Total direct costs......................... 19,128 8,156 27,284
-------- ------- --------
Gross margin......................................... 42,604 25,315 67,919
Operating costs:
Selling and marketing.............................. 17,761 9,975 27,736
General and administrative......................... 16,365 6,554 22,919
Depreciation and amortization...................... 4,409 1,742 6,151
Product development................................ 14,778 7,305 22,083
Charge for purchased in-process product
development, write-off of software development
costs and acquisition related charges........... 626 4,700 5,326
-------- ------- --------
Total operating costs...................... 53,939 30,276 84,215
-------- ------- --------
Operating loss............................. (11,335) (4,961) (16,296)
Interest (income) expense, net....................... 1,027 (2,831) (1,804)
Equity in losses of joint ventures................... 119 12 131
-------- ------- --------
Loss before income taxes,............................ (12,481) (2,142) (14,623)
Income tax expense (benefit)......................... 168 850 1,018
Minority interest.................................... -- 4 4
-------- ------- --------
Net loss............................................. (12,649) (2,996) (15,645)
Preferred stock dividends............................ (28) -- (28)
-------- ------- --------
Net loss applicable to common
shareholders............................. $(12,677) $(2,996) $(15,673)
======== ======= ========
Net loss per share applicable to common
shareholders....................................... $ (0.69) $ (0.61)(2) $ (0.67)(2)
======== ======= ========
Weighted average common and common equivalent shares
outstanding........................................ 18,465 4,922(2) 23,387(2)
======== ======= ========
</TABLE>
- ---------------
During 1996, Harbinger recorded the operating results of HNS under the equity
method of accounting. The results of HNS were excluded from Harbinger's core
earnings results, which are shown in this document under "Summary Historical and
Pro Forma Financial Data" under Supplemental Data.
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements.
66
<PAGE> 78
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA
HARBINGER PREMENOS(4) COMBINED
---------- ----------- ---------
(IN THOUSANDS, EXCEPT FOR
PER SHARE DATA)
<S> <C> <C> <C>
Revenues:
Services.................................................. $24,494 $ 7,736 $32,230
Software licenses......................................... 13,336 17,783 31,119
------- ------- -------
Total revenues.................................... 37,830 25,519 63,349
------- ------- -------
Direct costs:
Services.................................................. 8,334 2,860 11,194
Software licenses......................................... 1,951 3,361 5,312
------- ------- -------
Total direct costs................................ 10,285 6,221 16,506
------- ------- -------
Gross margin................................................ 27,545 19,298 46,843
Operating costs:
Selling and marketing..................................... 9,791 7,725 17,516
General and administrative................................ 8,647 4,304 12,951
Depreciation and amortization............................. 1,361 866 2,227
Product development....................................... 5,927 5,420 11,347
Charge for purchased in-process product development,
write-off of software development costs and acquisition
related charges........................................ 1,160 -- 1,160
------- ------- -------
Total operating costs............................. 26,886 18,315 45,201
------- ------- -------
Operating income.................................. 659 983 1,642
Interest (income) expense, net.............................. (68) (732) (800)
Equity in losses of joint ventures.......................... 1,266 -- 1,266
------- ------- -------
Income (loss) before income taxes........................... (539) 1,715 1,176
Income tax expense.......................................... 1,203 238 1,441
Minority interest........................................... -- (20) (20)
------- ------- -------
Net income (loss)........................................... (1,742) 1,497 (245)
Preferred stock dividends................................... (199) -- (199)
------- ------- -------
Net income (loss) applicable to common
shareholders.................................... $(1,941) $ 1,497 $ (444)
======= ======= =======
Net income (loss) per share applicable to common
shareholders.............................................. $ (0.13) $ 0.37(2) $ (0.02)(2)
======= ======= =======
Weighted average common and common equivalent shares
outstanding............................................... 15,007 4,042(2) 19,049(2)
======= ======= =======
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements
67
<PAGE> 79
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA
HARBINGER PREMENOS(4) COMBINED
---------- ----------- ---------
(IN THOUSANDS, EXCEPT FOR
PER SHARE DATA)
<S> <C> <C> <C>
Revenues:
Services................................................. $17,481 $ 6,694 $24,175
Software licenses........................................ 10,412 13,311 23,723
------- ------- -------
Total revenues................................... 27,893 20,005 47,898
------- ------- -------
Direct costs:
Services................................................. 6,321 2,256 8,577
Software licenses........................................ 1,097 2,340 3,437
------- ------- -------
Total direct costs............................... 7,418 4,596 12,014
------- ------- -------
Gross margin............................................... 20,475 15,409 35,884
Operating costs:
Selling and marketing.................................... 7,995 5,203 13,198
General and administrative............................... 5,884 3,378 9,262
Depreciation and amortization............................ 1,046 549 1,595
Product development...................................... 3,900 3,407 7,307
Charge for purchased in-process product development,
write-off of software development costs and
acquisition related charges........................... 4,317 -- 4,317
------- ------- -------
Total operating costs............................ 23,142 12,537 35,679
------- ------- -------
Operating income (loss).......................... (2,667) 2,872 205
Interest (income) expense, net............................. 27 102 129
Equity in losses of joint ventures......................... 227 -- 227
------- ------- -------
Income (loss) before income taxes.......................... (2,921) 2,770 (151)
Income tax expense (benefit)............................... (1,033) 645 (388)
Minority interest.......................................... -- 310 310
------- ------- -------
Net income (loss).......................................... (1,888) 1,815 (73)
Preferred stock dividends.................................. (200) -- (200)
------- ------- -------
Net income (loss) applicable to common
shareholders................................... $(2,088) $ 1,815 $ (273)
======= ======= =======
Net income (loss) per share applicable to common
shareholders............................................. $ (0.16) $ 0.54(2) $ (0.02)(2)
======= ======= =======
Weighted average common and common equivalent shares
outstanding.............................................. 12,693 3,382(2) 16,075(2)
======= ======= =======
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements.
68
<PAGE> 80
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(1) The Harbinger balance sheet as of September 30, 1997 has been combined
with the Premenos balance sheet as of September 30, 1997, giving effect to the
Merger as a pooling of interests.
The Harbinger statements of operations for each of the years in the
three-year period ended December 31, 1996, and the nine months ended September
30, 1997, have been combined with the Premenos statements of operations for each
of the years in the three-year period ended December 31, 1996, and the nine
months ended September 30, 1997.
The unaudited pro forma statements of operations for Harbinger for the year
ended December 31, 1996 and for the nine months ended September 30, 1997 have
been taken from Harbinger's Form 8-K/A filed with the Commission on October 29,
1997, which gives effect to the Company's acquisitions of (i) Acquion, Inc.,
effective August 22, 1997, (ii) Harbinger Net Services, LLC effective January 1,
1997, and (iii) Harbinger N.V., INOVIS GmbH, and NTEX Holding B.V. effective
March 31, 1996, which have all been accounted for using the purchase method of
accounting, as if each acquisition occurred on January 1, 1996. The December 31,
1996 Unaudited Pro Forma Harbinger statement of operations excludes in-process
product development charges of $8.2 million for significant acquisitions. The
September 30, 1997 Unaudited Pro Forma Harbinger statement of operations
excludes in-process product development charges of $13.6 million for significant
acquisitions and loss on debt extinguishment of $2.4 million.
(2) The pro forma combined statements of operations for Harbinger and
Premenos have been prepared as if the Merger was completed on January 1, 1994.
The pro forma combined net income (loss) per share is based on the combined
weighted average number of common and common equivalent shares of Harbinger
Common Stock and Premenos Common Stock for each period, based on the Conversion
Ratio of .45 shares of Harbinger Common Stock for each share of Premenos Common
Stock.
(3) Harbinger estimates that it will incur direct transaction costs of
approximately $2.7 million associated with the Merger consisting of transaction
fees for investment bankers, attorneys, accountants, financial printing, and
other related charges. Premenos estimates that it will incur direct transaction
costs of approximately $2.3 million associated with the Merger consisting of
transaction fees for investment bankers, attorneys, accountants, and other
related charges. Harbinger estimates that it will incur other acquisition
related costs of approximately $3.0 million and write-off's of duplicative
assets of approximately $2.0 million. These nonrecurring transaction fees, other
acquisition related costs and duplicative asset write-offs will be charged to
operations by Harbinger at the closing of the Merger, which is expected to be
during the quarter ending December 31, 1997. In addition, the Harbinger
estimates that it will incur costs of approximately $10.0 million to $20.0
million related to the integration of Harbinger's and Premenos' operations which
will be charged to operations as these costs are incurred.
The pro forma combined balance sheet gives effect to estimated direct
transaction costs of $5.0 million, other acquisition related costs of
approximately $3.0 million and write-off's of duplicative assets of $2.0 million
as if such costs had been incurred as of September 30, 1997, but the effects
have not been reflected in the pro forma combined statements of operations. The
estimated integration costs of $10.0 to $20.0 million have not been reflected in
the pro forma combined financial statements.
(4) The unaudited pro forma statements of operations included for Premenos
reflect certain reclassifications of direct and operating costs to conform to
Harbinger's basis of presentation.
69
<PAGE> 81
AMENDMENT OF 1996 STOCK OPTION PLAN
If the Merger Agreement is approved by the Harbinger Shareholders and the
Premenos Stockholders and the Merger is consummated, the stock options held by
employees and directors of Premenos will be converted into stock options of
Harbinger issued under the Stock Plan. To accommodate the issuance of such
options, the Stock Plan will be amended to increase the shares of Harbinger
Common Stock that are reserved for issuance thereunder. It is currently
anticipated that Harbinger will issue Harbinger options to acquire an aggregate
of approximately 827,136 shares of Harbinger Common Stock in connection with the
conversion of Premenos stock options in the Merger.
The proposed Amendment would increase the number of shares of Harbinger
Common Stock reserved for issuance thereunder from 4,125,000 shares to 5,125,000
shares. The additional shares reserved under the Stock Plan would be available
for issuance to employees and directors of Premenos in the Merger, and for
future issuance by Harbinger. As of October 27, 1997, (i) 1,621,752 shares of
Harbinger Common Stock were reserved for issuance pursuant to options not yet
granted under the Stock Plan and (ii) 2,449,787 shares of Harbinger Common Stock
were issuable upon the exercise of outstanding options under the Stock Plan.
The proposed Amendment will be adopted upon receiving the affirmative vote
of holders of a majority of the shares present or represented by proxy at the
Harbinger Special Meeting. Proxies will be voted in accordance with the
specifications marked thereon, and if no specifications are made, will be voted
"FOR" adoption of the proposed Amendment. The Harbinger Board has determined
that the Amendment is in the best interests of Harbinger and its shareholders.
The proposed Amendment would provide additional shares for grant to officers,
directors, consultants and key employees of Harbinger. The Harbinger Board
believes that grants of stock options are an effective method to attract and
retain officers, directors, consultants and key employees and that the
availability of shares for future grants under the Stock Plan is important to
Harbinger's business prospects and operations.
Options granted under the Stock Plan may be either (i) options intended to
qualify as "incentive stock options" under Section 422 of the Code, or (ii)
non-qualified stock options. The Stock Plan also permits the grant of stock
appreciation rights in connection with the grant of stock options. Stock options
may be granted under the Stock Plan for all employees and consultants of
Harbinger, or of any present or future subsidiary or parent of Harbinger, who
are considered "key employees" or "key consultants." The Stock Plan is
administered by the Compensation Committee of the Harbinger Board. The
Compensation Committee has the authority to determine exercise prices applicable
to the options, the eligible officers, directors, consultants or employees to
whom options may be granted, the number of shares of Harbinger Common Stock
subject to each option, and the extent to which options may be exercisable. The
Compensation Committee is empowered to interpret the Stock Plan and to
prescribe, amend and rescind the rules and regulations pertaining to the Stock
Plan. Options granted under the Stock Plan generally vest ratably over four
years. No option is transferable by the optionee other than by will or the laws
of descent and distribution, and each option is exercisable, during the lifetime
of the optionee, only by such optionee, unless otherwise approved by the
Compensation Committee.
Any incentive stock option that is granted under the Stock Plan may not be
granted at a price less than the fair market value of Harbinger Common Stock on
the date of grant (or less than 110% of fair market value in the case of holders
of 10% or more of the total combined voting power of all classes of stock of
Harbinger or a subsidiary or parent of Harbinger). Non-qualified stock options
may be granted at the exercise price established by the Compensation Committee,
which may be less than the fair market value of Harbinger Common Stock on the
date of grant.
Each option granted the Stock Plan is exercisable for a period determined
by the Compensation Committee, which period may not exceed ten years from the
date of grant (or five years in the case of holders of 10% or more of the total
combined voting power of all classes of stock of Harbinger or of a subsidiary or
parent of Harbinger) and shall lapse upon expiration of such period, or earlier
upon termination of the recipient's employment with Harbinger, or as determined
by the Compensation Committee.
70
<PAGE> 82
Under the Stock Plan, payment of the purchase price for shares of Harbinger
Common Stock purchased upon exercise of an option may be made in any of the
following forms: (i) in cash; (ii) by delivery to Harbinger of a number of
shares of Harbinger Common Stock which have been owned by the optionee for at
least six months prior to the date of exercise of the option having an aggregate
fair market value on the date of delivery of not less than the total purchase
price for the shares being purchased upon exercise of the option; (iii) by
delivery of a promissory note executed by the optionee to Harbinger which shall
include such terms and conditions as approved by the Harbinger Board, including
without limitation, that: (a) the balance equal to the aggregate purchase price
for the shares being purchased shall be payable in equal installments over such
period as approved by the Harbinger Board; (b) interest shall accrue at a per
annum rate equal to the prime rate as announced from time to time by Harbinger's
principal bank or, if Harbinger has no principal bank, that rate announced by
The Wall Street Journal as the prevailing "prime rate" of interest per annum;
and (c) the optionee shall be personally liable for the repayment of the unpaid
principal balance of the loan and any and all accrued but unpaid interest on the
loan; (iv) by surrender of a number of shares of Harbinger Common Stock
otherwise issuable upon exercise of the option having an aggregate fair market
value on the date of exercise of not less than the total purchase price for all
shares being purchased upon exercise of the option, including the shares being
surrendered; or (v) in any combination of the forms described above as approved
by the Harbinger Board.
THE HARBINGER BOARD HAS UNANIMOUSLY APPROVED THE AMENDMENT AND HAS
DETERMINED THAT SUCH AMENDMENT IS IN THE BEST INTERESTS OF HARBINGER AND THE
HARBINGER SHAREHOLDERS. ACCORDINGLY, THE HARBINGER BOARD UNANIMOUSLY RECOMMENDS
THAT THE HARBINGER SHAREHOLDERS VOTE FOR APPROVAL OF THE AMENDMENT. APPROVAL OF
THE AMENDMENT BY THE HARBINGER SHAREHOLDERS IS A CONDITION OF THE OBLIGATIONS OF
THE PARTIES UNDER THE MERGER AGREEMENT.
PREMENOS 1995 INCENTIVE PROGRAM
The Premenos Stock Plan was adopted by the Premenos Board in 1995 and was
approved by the Premenos Stockholders at the same time. There are currently a
total of 4,630,000 shares of Premenos Common Stock reserved for issuance under
the Premenos Stock Plan. The Premenos Stock Plan is currently administered by
the Compensation and Options Committee of the Premenos Board (the "Premenos
Committee"). Subject to the terms of the Premenos Stock Plan, the Committee
determines the persons who are to receive awards, the number of shares subject
to each award, the terms and conditions of such awards and the dates of grants.
All officers, directors, employees, advisors and consultants of Premenos
(or any subsidiary or affiliate of Premenos) are eligible to receive awards
under the Premenos Stock Plan. Both incentive stock options ("ISOs"), as defined
in Section 422(b) of the Code, and nonqualified stock options ("NQSOs"), may be
granted under the Premenos Stock Plan. The Premenos Stock Plan limits the
aggregate fair market value (determined as of the time the option is granted) of
the shares with respect to which ISOs are exercisable for the first time by the
optionee during any calendar year to not more than $100,000. There is no similar
limit on NQSOs granted under the Premenos Stock Plan.
In addition to stock options, certain other awards may be granted under the
Premenos Stock Plan, although no such rights or awards have been granted to date
under the Premenos Stock Plan. The Premenos Committee may grant Stock
Appreciation Rights ("SARs") together with related options, entitling the holder
upon exercise to receive an amount in any combination of cash or Premenos Common
Stock (as determined by the Premenos Committee) equal in value to the excess of
the fair market value of the shares covered by such SAR on the date of exercise
over the aggregate exercise price or the related option for such shares. The
Premenos Committee may also grant rights to purchase stock, including Restricted
Stock Grants, under such terms and conditions as it may determine. In addition,
the Premenos Committee may grant stock bonus awards payable in cash or Premenos
Common Stock based upon reasonable performance criteria the Premenos Committee
deems appropriate.
Pursuant to the Premenos Stock Plan, on January 2 (or the next succeeding
business day) of each year, each non-employee director of Premenos is
automatically awarded a grant of 5,260 stock options at an exercise
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<PAGE> 83
price per share equal to the fair market value per share of Premenos Common
Stock on such date (the "Director Options"). All Director Options are NQSOs, and
all vest immediately upon the date of grant. The Director Options expire ten
years from the date of grant and terminate automatically two years after the
grantee ceases to be a director of Premenos, unless the director is removed for
cause, in which case the Director Options terminate ten days after such removal.
Subject to the provisions of the Premenos Stock Plan, the Premenos
Committee may determine the vesting schedule of each option and other terms and
conditions of exercisability. Options granted under the Premenos Stock Plan
typically vest as to one-quarter of the grant total at the first anniversary of
the grant, and then in equal monthly installments thereafter, although vesting
of an option is set by and may be accelerated by the Premenos Committee.
Generally, ISOs and NQSOs granted under the Premenos Stock Plan must be
exercised within ten years of the option grant date. Any ISO granted to a person
owning 10% or more of the total combined voting power of all classes of stock of
Premenos (a "Ten Percent Stockholder") must be exercised within five years of
the option grant date.
The Premenos Committee determines the exercise price of each option
granted. Under the Premenos Stock Plan, the exercise price of a NQSO granted to
an employee may be less than the fair market value per share of Premenos Common
Stock on the date the option is granted. In the case of an ISO, or in the case
of an NQSO granted to a person other than an employee, the price shall be no
less than 100% of the fair market value of the Premenos Common Stock at the time
such option is granted, subject to certain conditions set forth in the Premenos
Stock Plan; provided that, in the case of an ISO granted to a Ten Percent
Stockholder, the price shall be no less than 110% of the fair market value of
the Premenos Common Stock on the date the option is granted. The exercise price
of options granted under the Premenos Stock Plan, including all applicable
withholding taxes, must be paid: (1) in cash; or (2) by surrender of shares of
the Premenos Common Stock owned by the optionee for at least six months (or, in
the case of payment of withholding taxes, by having Premenos withhold from the
shares to be issued upon exercise) having a fair market value on the date of
surrender equal to the exercise price of the option (or the amount of the
withholding obligation).
If the number of outstanding shares of the Premenos Common Stock is changed
by a stock dividend, stock split, reverse stock split, combination,
reclassification or similar change in the capital structure of Premenos without
consideration, the number of shares of Premenos Common Stock available for
option grants under the Premenos Stock Plan, the number of shares and the
exercise price per share for each outstanding option and the annual limitation
noted above will be proportionately adjusted, subject to any required action by
the Premenos Board or Premenos Stockholders.
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<PAGE> 84
HARBINGER EXECUTIVE COMPENSATION
The following table presents certain summary information concerning
compensation earned for services rendered to Harbinger by Harbinger's Chief
Executive Officer and each of the other four most highly compensated executive
officers of Harbinger during 1996 (collectively the "Named Executive Officers")
for the fiscal years ended December 31, 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS(#) COMPENSATION
- --------------------------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
C. Tycho Howle 1996 $187,555 110,500 150,000 $ 800
Chairman and Director 1995 157,134 65,920 -- 800
1994 149,375 23,721 -- 662
David T. Leach 1996 $151,569 83,520 120,000 $ 800
Chief Executive 1995 127,634 52,602 -- 800
Officer and Director 1994 116,125 28,028 45,000 495
James C. Davis 1996 $141,758 105,465 157,500 $ 771
President and Chief Operating 1995 106,727 29,094 60,000 800
Officer and Director 1994 77,239 -- -- --
James M. Travers 1996 $126,675 79,300 -- $ 745
President, Harbinger Software 1995 106,673 89,200 75,000 4,238
Division 1994 -- -- -- --
David A. Meeker 1996 $140,922 58,279 -- $ 704
Senior Vice President, Sales 1995 95,740 50,000 67,500 500
1994 -- -- -- --
</TABLE>
OPTION GRANT TABLE
The following table contains information concerning options granted during
the year ended December 31, 1996 to the Named Executive Officers:
<TABLE>
<CAPTION>
% OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM(2)
OPTIONS FISCAL PRICE EXPIRATION ---------------------
GRANTED(1) YEAR ($/SH) DATE 5% 10%
---------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
C. Tycho Howle............... 150,000 13.3% $11.67 04/1/03 $712,629 $1,660,729
David T. Leach............... 120,000 10.6 11.67 04/1/03 570,103 1,328,583
James C. Davis............... 157,500 13.9 11.67 04/1/03 748,261 1,743,766
James M. Travers............. -- -- -- -- -- --
David A. Meeker.............. -- -- -- -- -- --
</TABLE>
- ---------------
(1) The options granted to the named executive officers were awarded under the
Stock Plan. The options granted under the Stock Plan are exercisable for a
period not to exceed seven years from the date of grant. Options generally
vest over four years of continuous employment with Harbinger. The exercise
price of each option granted was not less than 100% of the fair market value
of a share of Harbinger Common Stock on the date of grant.
(2) Amounts represent the hypothetical gains that could be achieved for the
respective options at the end of the seven year option term. The assumed 5%
and 10% rates of stock appreciation are mandated by the rules of the
Commission and may not accurately reflect the appreciation of the price of
Harbinger
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<PAGE> 85
Common Stock from the grant date until the expiration of the option term.
These assumptions are not intended to represent a forecast of future stock
appreciation of Harbinger Common Stock. No assurance can be given that
Harbinger Common Stock will appreciate at all.
OPTIONS EXERCISED AND YEAR-END VALUES OF UNEXERCISED OPTIONS
The following table sets forth information, as of December 31, 1996,
regarding the number of shares received and the value realized upon exercise of
the stock options, and the number and value of exercisable and unexercisable
options to purchase Harbinger Common Stock held by the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN 1996 AND 1996 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED DECEMBER 31, 1996 DECEMBER 31, 1996(2)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
C. Tycho Howle..................... -- -- -- 150,000 -- $ 874,500
David T. Leach..................... -- -- 135,000 168,750 $1,962,375 $1,345,538
James C. Davis..................... -- -- 15,000 202,500 $ 198,750 $1,514,475
James M. Travers................... 10,500 $133,875 8,250 56,250 $ 109,285 $ 745,127
David A. Meeker.................... 6,000 $ 78,020 10,875 50,625 $ 144,050 $ 670,614
</TABLE>
- ---------------
(1) Calculated by multiplying the number of shares underlying options by the
difference between the closing sale price of the Harbinger Common Stock as
reported by the Nasdaq National Market on the date of exercise and the
exercise price of the options.
(2) Calculated by multiplying the number of shares underlying options by the
difference between the closing sale price for the Harbinger Common Stock of
$17.50 as reported by the Nasdaq National Market on December 31, 1996 and
the exercise price of the options.
AGREEMENTS WITH EMPLOYEES
Employees of Harbinger, including executive officers, are required to sign
an agreement with Harbinger defining the employee's responsibilities,
restricting the ability of the employee to compete with Harbinger during his
employment and for a designated period thereafter, restricting solicitation of
customers and employees following employment with Harbinger, and providing for
ownership and assignment of intellectual property rights to Harbinger. The
agreements have an indefinite term, but the employee may terminate employment
with Harbinger at any time. In connection with Harbinger's merger with
SupplyTech, Inc. on January 3, 1997, Harbinger entered into employment,
non-competition and non-disclosure agreements with Theodore C. Annis and A. Gail
Jackson. In addition to the terms of Harbinger's standard employment agreements
described in the preceding paragraph, the agreements with Mr. Annis and Ms.
Jackson generally provide for a minimum term of employment of two years. Under
the terms of these agreements, Harbinger has the right to terminate each of the
employees' employment by notice for "cause" or due to "disability" of such
employee. "Cause" means any of the following reasons: (a) Harbinger reasonably
determines that such employee's job performance is unsatisfactory; (b) such
employee violates any provision of the employment agreement; (c) such employee
is convicted of a felony or misdemeanor involving moral turpitude; or (d) such
employee engages in misconduct in the course and scope of his or her employment
with Harbinger. "Disability" means the illness or disability of such employee
that prevents the performance of the employee's material obligations under the
employment agreement, and which continues for consecutive period of 120 days or
longer or an average of 180 days or longer in any one year period.
On March 4, 1997, Harbinger entered into an employment agreement with C.
Tycho Howle effective as of January 4, 1997 in order to insure Mr. Howle's
continued services as Chairman of the Harbinger Board. The employment agreement
provides for a four year term at an initial base salary of $220,000, with bonus
opportunity of 50% of base salary if certain performance criteria are met. In
addition to the terms of
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<PAGE> 86
Harbinger's standard employment agreement described above, Mr. Howle's
employment agreement provides for: (i) an option grant under the Stock Plan to
purchase 150,000 shares of Harbinger Common Stock at a price equal to the Fair
Market Value of Harbinger Common Stock on the date of the grant (the "Option"),
(ii) termination for cause by Harbinger without payment of severance, (iii)
voluntary departure by Mr. Howle without severance, and (iv) termination without
cause by Harbinger with payment of severance.
Harbinger may terminate Mr. Howle for cause if Mr. Howle: (i) knowingly and
willfully engages in misconduct with respect to the business and affairs of
Harbinger, (ii) violates any policy of Harbinger in a material way relating to
ethical business conduct, practices, or fiduciary duties of a senior executive,
(iii) knowingly and willfully breaches any material provision of his employment
agreement which is not remedied within thirty (30) days after receipt of notice,
(iv) commits a felony or an illegal act involving moral turpitude or fraud or
dishonesty which may reasonably be expected to have a material adverse effect on
Harbinger, or (v) fails to comply with reasonable directives of the Board, if
not remedied within thirty (30) days after receipt of notice. If Harbinger
terminates Mr. Howle without cause, then Harbinger will be obligated to pay Mr.
Howle the net present value of the compensation that would be payable to Mr.
Howle during the remaining term of his employment agreement.
Mr. Howle's Option vests ratably over four years. In the event Harbinger
terminates Mr. Howle without cause, the Option will continue to vest as if he
were still employed by Harbinger. Further, in the event of a "Change in Control"
of Harbinger, Mr. Howle's Option shall immediately vest in its entirety. A
"Change in Control" shall be deemed to have occurred if (and only if) any of the
following shall have taken place: (i) a change in control is reported by
Harbinger in response to either Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act, or Item 1 of Form 8-K promulgated under the
Exchange Act; (ii) any person (as such term is used in Section 13(d) and
14(d)(2) of the Exchange Act) is or becomes the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) directly or indirectly, of securities of
Harbinger representing forty percent (40%) or more of the combined voting power
of Harbinger's then outstanding securities; or (iii) following the election or
removal of directors, a majority of the Harbinger Board consists of individuals
who were not members of the Harbinger Board two years before such election or
removal, unless the election of each director who was not a director at the
beginning of such two-year period has been approved in advance by directors
representing at least a majority of the directors then in office who were
directors at the beginning of the two-year period. In July 1997, Mr. Howle's
employment agreement was amended to provide that any options granted to Mr.
Howle in the future will be subject to immediate vesting upon a Change of
Control.
On July 1, 1997, Harbinger entered into employment agreements with David T.
Leach and James C. Davis, effective as of January 2, 1997, in order to insure
their continued services as Chief Executive Officer and President and Chief
Operating Officer of Harbinger, respectively, on substantially the same terms as
Mr. Howle's agreement (except that neither Mr. Leach nor Mr. Davis received a
stock option grant in connection with his employment agreement). The employment
agreements provide for a four-year term at an initial base salary of $200,000
for Mr. Leach and $175,000 for Mr. Davis, with a bonus opportunity of 50% of
base salary if certain performance criteria are met. The agreements provide that
stock options previously granted to Messrs. Leach and Davis will vest
immediately upon a Change of Control.
401(K) PROFIT SHARING PLAN
Harbinger maintains a 401(k) Profit Sharing Plan (the "401(k) Plan") which
is intended to be a tax-qualified defined contribution plan under Section 401(k)
of the Code. In general, all employees of Harbinger who have completed one year
of service and have attained age 21 are eligible to participate. The 401(k) Plan
includes a salary deferral arrangement pursuant to which participants may
contribute, subject to certain Code limitations, a minimum of 3% and a maximum
of 15% of their salary on a pre-tax basis. Subject to certain Code limitations,
Harbinger may make a matching contribution of up to $300 of the salary deferral
contributions of participants at a rate determined by the Harbinger Board each
year. Harbinger may also make an additional contribution to the 401(k) Plan each
year at the discretion of the Harbinger Board. The Harbinger Board approved the
contribution by Harbinger of $35,000 to the 401(k) Plan for 1996. A separate
account is maintained for each participant in the 401(k) Plan. The portion of a
participant's account
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<PAGE> 87
attributable to his or her own contributions is always 100% vested. The portion
of the account attributable to Harbinger contributions (including matching
contributions) vests at a rate of 20% per year commencing after the first year
of service. Distributions from the 401(k) Plan may be made in the form of a lump
sum cash payment or in installment payments. In connection with Harbinger's
merger with SupplyTech, Inc. on January 3, 1997, Harbinger assumed the
obligations under the SupplyTech 401(k) Profit Sharing and Retirement Savings
Plan and Trust (the "SupplyTech Plan"). The SupplyTech Plan operates in a manner
substantially similar to the Plan, except for the following: (i) participants in
the SupplyTech Plan may contribute, subject to certain Code limitations, a
minimum of 1% of the participants salary on a pre-tax basis; (ii) subject to
certain Code limitations, Harbinger may make a matching contribution of 25% up
to 6% of each participant's contribution; and (iii) all portions attributable to
Harbinger contributions vest only after the participant completes five years of
service.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Pursuant to its Alliance Agreement with System Software Associates, Inc.
("SSA"), Harbinger agreed to nominate a designee of SSA to the Harbinger Board.
At the 1996 Annual Meeting of Shareholders, Roger E. Covey, as SSA's designee,
was elected to Harbinger Board. Mr. Covey resigned from the Harbinger Board in
October 1996. See "Certain Transactions."
William Savoy is a member of the Compensation Committee and is President of
Vulcan Northwest. Vulcan Ventures was a shareholder in Harbinger NV, the equity
interest of which were acquired by Harbinger in March 1996.
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<PAGE> 88
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the amount and percent of shares of
Harbinger Common Stock which, as of October 27, 1997, are deemed under the rules
of the Commission to be "beneficially owned" by each member of the Harbinger
Board, by each executive officer and director of Harbinger (including David
Hildes, who will be added to the Harbinger Board at the Effective Time), by all
directors and executive officers of Harbinger as a group, and by any person or
"group" (as that term is used in the Exchange Act) known to Harbinger as of that
date to be a "beneficial owner" of more than 5% of the outstanding shares of
Harbinger Common Stock. Harbinger effected a three-for-two stock split paid in
the form of a stock dividend on January 31, 1997 to shareholders of record as of
January 17, 1997.
<TABLE>
<CAPTION>
HARBINGER COMMON STOCK
BENEFICIALLY OWNED(1)
-------------------------
NUMBER OF PERCENTAGE OF
SHARES CLASS(%)
--------- -------------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
C. Tycho Howle(2)........................................... 1,143,423 5.3
David T. Leach(3)........................................... 422,106 *
James C. Davis(4)........................................... 298,333 1.4
Joel G. Katz(5)............................................. 44,498 *
William B. King(6).......................................... 60,066 *
Stuart L. Bell(7)........................................... 38,625 *
William D. Savoy(8)......................................... 1,884,237 8.7
Benn R. Konsynski(9)........................................ 13,426 *
Klaus Neugebauer(10)........................................ 4,500 --
Ad Nederlof(11)............................................. 29,500 --
David A. Meeker(12)......................................... 9,700 *
James M. Travers(13)........................................ 8,400 *
Theodore C. Annis........................................... 520,776 2.4
A. Gail Jackson............................................. 908,552 4.2
Willem Van Nieuwenhuyzen(14)................................ 50,000 *
David Hildes(15)............................................ 1,048,390 4.9
All executive officers and directors as a group (16
persons)(16).............................................. 6,484,532 29.3
5% SHAREHOLDERS
Vulcan Ventures, Inc./Paul G. Allen(17)..................... 1,827,237 8.5
110 110th Avenue, NE, Suite 550, Bellevue, WA 98004
Warburg, Pincus Counselors, LLC(18)......................... 1,276,350 5.9
466 Lexington Avenue New York, NY
</TABLE>
- ---------------
* Less than 1% of the outstanding Harbinger Common Stock.
(1) Information with respect to "beneficial ownership" shown in the table above
is based on information supplied by the directors, executive officers of
Harbinger and filings made with the Commission or furnished to Harbinger by
other shareholders.
(2) Includes 812,510 shares held of record by Mr. Howle, 50,800 shares held of
record by Mr. Howle's wife, an aggregate of 14,391 shares held by Mr.
Howle's children, 145,200 shares held in a family limited partnership for
the benefit of Mr. Howle, his wife and children, 75,000 shares held by a
charitable remainder unitrust for the benefit of Mr. Howle, his wife and
certain designated charities, 8,022 shares held in a foundation created by
Mr. Howle, and 37,500 shares subject to options exercisable within 60 days.
Mr. Howle disclaims beneficial ownership of all such shares, other than the
shares held of record by Mr. Howle or for his benefit. Mr. Howle's address
is 1055 Lenox Park Boulevard, Atlanta, GA 30319.
(3) Includes 213,317 shares held of record by Mr. Leach and 3,475 shares held
jointly by Mr. Leach and his wife, and 205,312 shares subject to options
exercisable within 60 days.
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<PAGE> 89
(4) Includes 214,896 shares held jointly by Mr. Davis and his wife, and 83,437
shares subject to options exercisable within 60 days.
(5) Includes 40,000 shares subject to options exercisable within 60 days.
(6) Includes 40,500 shares subject to options exercisable within 60 days.
(7) Includes 16,125 shares subject to options exercisable within 60 days.
(8) Includes 36,375 shares subject to options exercisable within 60 days. Also
includes 1,770,987 shares beneficially owned by Vulcan Ventures, Inc. and
Paul G. Allen, as to which Mr. Savoy disclaims beneficial ownership.
(9) Includes 10,126 shares subject to options exercisable within 60 days.
(10) Includes 4,500 shares subject to options exercisable within 60 days.
(11) Includes 29,500 shares subject to options exercisable within 60 days.
(12) Includes 8,950 shares subject to options exercisable within 60 days.
(13) Includes 8,400 shares subject to options exercisable within 60 days.
(14) Includes 50,000 shares subject to options exercisable within 60 days.
(15) Represents 2,298,827 shares of Premenos Common Stock, including 159,300
shares of Premenos Common Stock held by a charitable remainder unitrust,
and options to purchase 30,874 shares of Premenos Common Stock exercisable
within 60 days, which will be converted into 1,034,472 shares of Harbinger
Common Stock and assigned and substituted for Harbinger stock options for
13,893 shares of Harbinger Common Stock, respectively, pursuant to the
Merger Agreement, and 25 shares of Harbinger Common Stock (collectively,
the "Hildes Shares").
(16) Includes 570,725 shares subject to options exercisable within 60 days and
the Hildes Shares.
(17) Includes 1,770,987 shares and 56,250 shares subject to warrants exercisable
within 60 days beneficially owned by Paul G. Allen. Excludes 36,375 shares
held beneficially by Mr. Savoy, as to which Mr. Allen disclaims beneficial
ownership.
(18) According to a Schedule 13G filed by Warburg, Pincus Counselors, Inc.
("Warburg, Pincus") dated January 9, 1997, Warburg, Pincus, a registered
investment advisor, beneficially owns 1,276,350 shares of Harbinger Common
Stock. According to the Schedule 13G, Warburg, Pincus has sole voting power
to 868,050 shares, shared voting power as to 197,850 shares and sole
despositive power as to 1,272,300 shares.
EXPERTS
The consolidated financial statements and financial statement schedule of
Harbinger as of December 31, 1996 and 1995, and for each of the years in the
two-year period ended December 31, 1996, have been incorporated by reference
herein from Harbinger's Current Report on Form 8-K filed on July 1, 1997 in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein and upon the authority of said
firm as experts in accounting and auditing. The report of KPMG Peat Marwick LLP
expressed reliance on the report of other auditors as it relates to the amounts
included for SupplyTech, Inc. and SupplyTech International, LLC for 1995.
The financial statements of Harbinger NET Services, LLC as of December 31,
1996 and 1995 and for the periods ended December 31, 1996 and 1995 have been
incorporated by reference herein from Harbinger's Current Report on Form 8-K/A
Amendment No. 1 filed on March 14, 1997 in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by reference
herein and upon the authority of said firm or experts in accounting and
auditing.
The combined financial statements of SupplyTech, Inc. and SupplyTech
International, LLC as of December 31, 1996 and for the year then ended have been
incorporated by reference herein from Harbinger's Current Report on Form 8-K/A
Amendment No. 1 filed on March 18, 1997 in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by reference
herein and upon the authority of said firm as experts in accounting and
auditing.
The financial statements of Acquion, Inc. as of October 31, 1996 and for
the year ended October 31, 1996 have been incorporated by reference herein from
Harbinger's Current Report on Form 8-K/A Amendment
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<PAGE> 90
No. 1 filed on October 29, 1997 in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference herein
and upon the authority of said firm as experts in accounting and auditing.
The financial statements and schedule of Harbinger for the year ended
December 31, 1994, which have been incorporated by reference herein from
Harbinger's Current Report on Form 8-K filed on July 1, 1997 have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
The combined financial statements of SupplyTech, Inc. and SupplyTech
International, LLC as of December 31, 1995 and for each of the years in the
two-year period ended December 31, 1995 have been incorporated by reference
herein from Harbinger's Current Report on Form 8-K/A Amendment No. 1 filed on
March 18, 1997 in reliance upon the report of Ciulla, Smith & Dale, LLP,
independent certified public accountants, incorporated by reference herein and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of NTEX Holding, B.V. as of December
31, 1995 and for the year then ended, have been incorporated by reference herein
from Harbinger's Current Report on Form 8-K/A Amendment No. 1 filed on June 17,
1996 in reliance upon the report of Moret Ernst & Young Accountants, independent
certified public accountants, incorporated by reference herein and upon the
authority of said firm as experts in accounting and auditing.
The financial statements of INOVIS GmbH & Co. computergestuzte
Informationssysteme as of December 31, 1995, and for the year then ended have
been incorporated by reference herein from Harbinger's Current Report of Form
8-K/A Amendment No. 1 filed on July 1, 1996 in reliance upon the report of KPMG
Deutsche TreuhandGesellschaft AG, independent certified public accountants,
incorporated by reference herein and upon the authority of said firm as experts
in accounting and auditing.
The consolidated financial statements of Harbinger N.V. and subsidiaries as
of December 31, 1995, 1994, and 1993, and for the two years ended December 31,
1995, and 1994, and the one month ended December 31, 1993, have been
incorporated by reference herein from Harbinger's Current Report on Form 8-K/A
Amendment No. 1 filed on July 2, 1996 in reliance upon the report of KPMG
Accountants N.V., independent certified public accountants, incorporated by
reference herein and upon the authority of said firm as experts in accounting
and auditing.
The consolidated balance sheets of Premenos Technology Corp. and
subsidiaries as of December 31, 1995 and 1996, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1996, incorporated by reference
herein from the Premenos Technology Corp. 1996 Annual Report on Form 10-K, have
been incorporated by reference herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
LEGAL MATTERS
The legality of the shares of Harbinger Common Stock to be issued pursuant
to the terms of the Merger Agreement will be passed upon for Harbinger by King &
Spalding, Atlanta, Georgia. Certain legal matters in connection with the Merger
will be passed upon for Premenos by Bryan Cave LLP, New York, New York. Stephan
Mallenbaum, a director of Premenos, is a member of Byan Cave LLP and owns
options to purchase 29,794 shares of Premenos Common Stock.
SHAREHOLDER PROPOSALS
Any proposals by Harbinger Shareholders to be presented at Harbinger's 1998
Annual Meeting of Shareholders must be received by Harbinger no later than
, 1998 in order to be included in Harbinger's proxy materials
relating to the meeting. Any proposals by Premenos Stockholders to be presented
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<PAGE> 91
at Premenos's 1998 Annual Meeting of Stockholders, assuming that the Merger is
not consummated by March 31, 1998, must be received by Premenos no later than
, 1998 in order to be included in Premenos's proxy materials
relating to the meeting.
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Exhibit 2.2
ANNEX A
MERGER AGREEMENT
BY AND AMONG
HARBINGER CORPORATION,
OLYMPIC SUBSIDIARY CORPORATION
AND
PREMENOS TECHNOLOGY CORP.
AS OF OCTOBER 23, 1997
A-1
<PAGE> 93
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1. THE MERGER...................................................... A-9
Section 1.1. Surviving Corporation....................................... A-9
Section 1.2. Certificate of Incorporation................................ A-9
Section 1.3. Bylaws...................................................... A-9
Section 1.4. Directors................................................... A-9
Section 1.5. Officers.................................................... A-10
Section 1.6. Effective Time.............................................. A-10
Section 1.7. Tax-Free Reorganization..................................... A-10
Section 1.8. Pooling of Interests Accounting............................. A-10
ARTICLE 2. CONVERSION OF SHARES; TREATMENT OF OPTIONS
AND DERIVATIVES............................................ A-10
Section 2.1. Premenos Common Stock....................................... A-10
Section 2.2. Fractional Shares........................................... A-10
Section 2.3. Treatment of Premenos Employee Stock Options and Derivative
Securities.................................................. A-10
Section 2.4. Exchange Agent.............................................. A-12
Section 2.5. Conversion Ratio and Adjustment Event....................... A-13
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF PREMENOS...................... A-13
Section 3.1. Organization................................................ A-13
Section 3.2. Authorization............................................... A-13
Section 3.3. Absence of Restrictions and Conflicts....................... A-14
Section 3.4. Capitalization.............................................. A-14
Section 3.5. Capital Stock of Premenos Subsidiaries...................... A-14
Section 3.6. SEC Reports................................................. A-14
Section 3.7. Financial Statements........................................ A-15
Section 3.8. Absence of Certain Changes.................................. A-15
Section 3.9. Legal Proceedings........................................... A-16
Section 3.10. Compliance with Law......................................... A-16
Section 3.11. Material Contracts.......................................... A-16
Section 3.12. Tax Returns; Taxes.......................................... A-17
Section 3.13. Employee Benefit Plans...................................... A-17
Section 3.14. Labor Relations............................................. A-20
Section 3.15. Insurance................................................... A-20
Section 3.16. Title to Properties and Related Matters..................... A-20
Section 3.17. Environmental Matters....................................... A-21
Section 3.18. Patents, Trademarks, Trade Names............................ A-21
Section 3.19. Licensed Software........................................... A-21
Section 3.20. Trade Secrets............................................... A-23
Section 3.21. Proxy Statement and Registration Statement.................. A-23
Section 3.22. Pooling..................................................... A-23
Section 3.23. Transactions with Affiliates................................ A-23
Section 3.24. Brokers, Finders and Investment Bankers..................... A-23
Section 3.25. Disclosure.................................................. A-23
Section 3.26. Opinion of Financial Advisor................................ A-24
Section 3.27. No Existing Discussions..................................... A-24
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF HARBINGER..................... A-24
Section 4.1. Organization................................................ A-24
Section 4.2. Authorization............................................... A-24
Section 4.3. Absence of Restrictions and Conflicts....................... A-24
</TABLE>
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<TABLE>
<S> <C> <C>
Section 4.4. Capitalization.............................................. A-25
Section 4.5. Capital Stock of Harbinger Subsidiaries..................... A-25
Section 4.6. SEC Reports................................................. A-25
Section 4.7. Financial Statements........................................ A-26
Section 4.8. Absence of Certain Changes.................................. A-26
Section 4.9. Legal Proceedings........................................... A-27
Section 4.10. Compliance with Law......................................... A-27
Section 4.11. Patents, Trademarks, Trade Names............................ A-27
Section 4.12. Licensed Software........................................... A-28
Section 4.13. Trade Secrets............................................... A-29
Section 4.14. Proxy Statement and Registration Statement.................. A-29
Section 4.15. Pooling..................................................... A-29
Section 4.16. Brokers, Finders and Investment Bankers..................... A-29
Section 4.17. Disclosure.................................................. A-29
Section 4.18. Opinion of Financial Advisor................................ A-30
Section 4.19. Interim Operations of HarbingerSub.......................... A-30
ARTICLE 5. CERTAIN COVENANTS AND AGREEMENTS................................ A-30
Section 5.1. Conduct of Business by Premenos............................. A-30
Section 5.2. Conduct of Business by Harbinger............................ A-32
Section 5.3. Inspection and Access to Information........................ A-32
Section 5.4. Proxy Statement and Registration Statement.................. A-32
Section 5.5. Harbinger and Premenos Stockholders Meetings................ A-32
Section 5.6. The Nasdaq National Market Additional Shares Notification... A-33
Section 5.7. Premenos Affiliates......................................... A-33
Section 5.8. No Solicitation............................................. A-33
Section 5.9. Reasonable Efforts; Further Assurances; Cooperation......... A-35
Section 5.10. Public Announcements........................................ A-35
Section 5.11. Financial Statements and SEC Reports........................ A-35
Section 5.12. Supplements to Disclosure Letters........................... A-35
Section 5.13. Pooling of Interests Accounting............................. A-35
Section 5.14. Accountant's Review Report.................................. A-35
Section 5.15. Indemnification of Premenos Directors and Officers.......... A-36
Section 5.16. Harbinger Board of Directors................................ A-36
Section 5.17. Employment Agreements....................................... A-36
Section 5.18. Premenos Transactional Expenses............................. A-37
Section 5.19. Severance................................................... A-37
Section 5.20. Premenos Stock Options...................................... A-37
Section 5.21. Minority Interest........................................... A-37
ARTICLE 6. CONDITIONS...................................................... A-37
Section 6.1. Conditions to Each Party's Obligations...................... A-37
Section 6.2. Conditions to Obligations of Harbinger...................... A-38
Section 6.3. Conditions to Obligations of Premenos....................... A-39
ARTICLE 7. CLOSING......................................................... A-39
ARTICLE 8. TERMINATION..................................................... A-40
Section 8.1. Termination and Abandonment................................. A-40
Section 8.2. Specific Performance and Other Remedies..................... A-40
Section 8.3. Effect of Termination....................................... A-41
Section 8.4. Fees and Expenses........................................... A-41
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE 9. MISCELLANEOUS PROVISIONS........................................ A-42
Section 9.1. Notices..................................................... A-42
Section 9.2. Disclosure Letters and Exhibits............................. A-43
Section 9.3. Assignment; Successors in Interest.......................... A-43
Section 9.4. Investigations; Representations and Warranties.............. A-43
Section 9.5. Number; Gender.............................................. A-43
Section 9.6. Captions.................................................... A-43
Section 9.7. Controlling Law; Integration; Amendment..................... A-43
Section 9.8. Premenos and Harbinger Knowledge............................ A-44
Section 9.9. Severability................................................ A-44
Section 9.10. Counterparts................................................ A-44
Section 9.11. Enforcement of Certain Rights............................... A-44
Section 9.12. Waiver...................................................... A-44
Section 9.13. Merger...................................................... A-44
</TABLE>
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DEFINED TERMS
<TABLE>
<CAPTION>
TERM SECTION
---- ----------
<S> <C>
1997 Balance Sheet.......................................... 3.7
Adjustment Event............................................ 2.5(b)
Agreement................................................... Page 1
Alternative Transaction..................................... 8.4(d)
Alternative Transaction Value............................... 8.4(b)
Anticipated Merger Transaction Value........................ 2.5(a)
Anticipated Premenos Transactional Expenses................. 5.18
Average Closing Price....................................... 2.2
Certificate................................................. 2.4(b)
Certificate of Merger....................................... Page 1
Closing..................................................... Page 39
Closing Date................................................ Page 39
Code........................................................ Page 1
Competing Offer............................................. 5.8(a)
Confidentiality Agreement................................... 5.8(a)
Conversion Ratio............................................ 2.5(a)
Coopers & Lybrand........................................... 3.7
Coopers & Lybrand Review Report............................. 5.14
DGCL........................................................ Page 1
EEOC........................................................ 3.14
Effective Time.............................................. 1.6
Employee Benefit Plan....................................... 3.13(a)(ii)
ERISA....................................................... 3.13(a)(ii)
Excess Parachute Payment.................................... 3.13(k)
Exchange Act................................................ 3.3
Exchange Fund............................................... 2.4(a)
Expense Cap................................................. 2.5(a)
Exchange Agent.............................................. 2.4(a)
GBCC........................................................ 6.1(b)
Harbinger Executives........................................ 9.8
Harbinger Licensed Intellectual Property.................... 4.9
Harbinger Disclosure Letter................................. Page 24
Harbinger Proprietary Intellectual Property................. 4.9
Harbinger Intellectual Property............................. 4.9
Harbinger Proprietary Software.............................. 4.10(a)
Harbinger Hardware.......................................... 4.10(a)
Harbinger Licensed Software................................. 4.10(b)
Harbinger Software.......................................... 4.10(b)
Harbinger License Agreements................................ 4.10(b)
Harbinger Shareholders Meeting.............................. 5.5(b)
Harbinger Subsidiaries...................................... 4.5
Harbinger SEC Reports....................................... 4.6
Harbinger Preferred Stock................................... 4.4
Harbinger Financial Statements.............................. 4.7
Harbinger................................................... Page 1
Harbinger Balance Sheet..................................... 4.7
Harbinger Capital Stock..................................... 4.4
Harbinger Common Stock...................................... 2.1(a)
HarbingerSub................................................ Page 1
</TABLE>
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<TABLE>
<CAPTION>
TERM SECTION
---- ----------
<S> <C>
Harbinger Termination Fee................................... 8.4(b)
Harbinger Topping Fee....................................... 8.4(b)
HSR Act..................................................... 3.3
Incremental Value........................................... 8.4(b)
Indemnified Parties......................................... 5.15(b)
Interim Statement........................................... 5.18
IRS......................................................... 3.13(f)
KPMG Peat Marwick........................................... 4.7
Leased Employees............................................ 3.13(n)
Merger...................................................... Page 1
Merger Transaction Value.................................... 8.4(b)
Nasdaq Additional Shares Notification....................... 5.6
NLRB........................................................ 3.14
Non-Qualified Options....................................... 2.3(a)
Old Options................................................. 2.3(a)
PBGC........................................................ 3.13(f)
Pension Benefit Plan........................................ 3.13(n)
Premises.................................................... 3.17
Proxy Agreement............................................. Page 1
Proxy Statement............................................. 3.21
Premenos.................................................... Page 1
Premenos Intellectual Property.............................. 3.18
Premenos ERISA Affiliate.................................... 3.13(b)
Premenos Disclosure Letter.................................. Page 13
Premenos Common Stock....................................... 2.1(a)
Premenos Financial Statements............................... 3.7
Premenos Licensed Intellectual Property..................... 3.18
Premenos Proprietary Intellectual Property.................. 3.18
Premenos Executives......................................... 9.8
Premenos Hardware........................................... 3.19(a)
Premenos License Agreements................................. 3.19(b)
Premenos Licensed Software.................................. 3.19(a)
Premenos Material Contracts................................. 3.11
Premenos Preferred Stock.................................... 3.4
Premenos Proprietary Software............................... 3.19(a)
Premenos SEC Reports........................................ 3.6
Premenos Software........................................... 3.19(a)
Premenos Stockholders....................................... 2.2
Premenos Subsidiaries....................................... 3.5
Premenos Benefit Plan....................................... 3.13(a)
Premenos Stockholders Meeting............................... 5.5(c)
Premenos Termination Fee.................................... 8.4(c)
</TABLE>
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<TABLE>
<CAPTION>
TERM SECTION
---- ----------
<S> <C>
Registration Statement...................................... 3.21
Reportable Event............................................ 3.13(o)
Scheduled Leases............................................ 3.16(b)
SEC......................................................... 2.3(e)
Securities Act.............................................. 3.3
SO Plan..................................................... 2.3(a)
Superior Proposal........................................... 5.8(a)
Surviving Corporation....................................... 1.1
The Best Knowledge of Premenos.............................. 9.8
The Best Knowledge of Harbinger............................. 9.8
</TABLE>
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EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER
- ------- --------
<S> <C>
Certificate of Merger -- Delaware........................... 1.1
Proxy Agreement............................................. 1.2
Form of King & Spalding Tax Opinion......................... 6.1(d)
Form of Bryan Cave LLP Opinion.............................. 6.2(c)
Form of King & Spalding Opinion............................. 6.3(c)
Form of Registration Rights Agreement....................... 6.3(g)
</TABLE>
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<PAGE> 100
MERGER AGREEMENT
THIS MERGER AGREEMENT, dated as of October 23, 1997 (the "Agreement"), by
and among HARBINGER CORPORATION, a Georgia corporation ("Harbinger"), OLYMPIC
SUBSIDIARY CORPORATION, a Delaware corporation and a wholly owned subsidiary of
Harbinger ("HarbingerSub"), and PREMENOS TECHNOLOGY CORP., a Delaware
corporation ("Premenos").
WHEREAS, the Board of Directors of Harbinger, HarbingerSub and Premenos
deem it advisable and in the best interests of each corporation and its
respective shareholders or stockholders, as applicable, that Harbinger and
Premenos combine in order to advance the long-term business strategies, goals
and interests of Harbinger and Premenos;
WHEREAS, the Board of Directors of Harbinger, HarbingerSub and Premenos
each have approved this Agreement and the merger (the "Merger"), pursuant to
this Agreement and the certificate of merger in the form attached hereto as
Exhibit 1.1 (the "Certificate of Merger") of HarbingerSub with and into Premenos
on the terms and conditions contained in this Agreement and in accordance with
the Delaware General Corporation law (the "DGCL");
WHEREAS, Harbinger, as the sole stockholder of HarbingerSub, has approved
this Agreement, the Merger and the transactions contemplated by this Agreement
pursuant to action taken by unanimous written consent in accordance with the
requirements of the DGCL and the Certificate of Incorporation and Bylaws of
HarbingerSub;
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to Harbinger's willingness to enter into this
Agreement, David Hildes and Lew Jenkins have each duly executed and delivered to
Harbinger an irrevocable proxy agreement in the form attached hereto as Exhibit
1.2 (the "Proxy Agreements");
WHEREAS, the parties to this Agreement intend that the Merger qualify as a
"reorganization" within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code"); and
WHEREAS, the parties to this Agreement intend that the Merger be accounted
for as a pooling of interests pursuant to APB Opinion No. 16 and related
pronouncements thereunder.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, the parties agree as follows:
ARTICLE 1
THE MERGER
Section 1.1. Surviving Corporation. Subject to the provisions of this
Agreement and the DGCL, at the Effective Time, HarbingerSub shall be merged with
and into Premenos, and the separate corporate existence of HarbingerSub shall
cease. Premenos shall be the surviving corporation in the Merger (sometimes
called the "Surviving Corporation") and shall continue its corporate existence
under the laws of the State of Delaware. The Merger shall have the effects set
forth in Section 259 of the DGCL.
Section 1.2. Certificate of Incorporation. The Certificate of
Incorporation of Premenos shall be the Certificate of Incorporation of the
Surviving Corporation until amended after the Effective Time.
Section 1.3. Bylaws. The Bylaws of Premenos shall be the Bylaws of the
Surviving Corporation until amended after the Effective Time.
Section 1.4. Directors. The directors of the Surviving Corporation shall
consist of the directors of HarbingerSub immediately prior to the Effective
Time, such directors to hold office from the Effective Time until their
respective successors are duly elected and qualify.
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<PAGE> 101
Section 1.5. Officers. The officers of the Surviving Corporation shall
consist of the officers of HarbingerSub immediately prior to the Effective Time,
such officers to hold office from the Effective Time until their respective
successors are duly elected and qualify.
Section 1.6. Effective Time. If all of the conditions set forth in
Article 6 have been fulfilled or waived in accordance with the terms of this
Agreement and this Agreement has not been terminated in accordance with Article
8, the parties shall cause the Certificate of Merger to be properly executed and
filed on the Closing Date with the Secretary of State of the State of Delaware.
The Merger shall become effective as of the time of filing of a properly
executed Certificate of Merger. The date and time when the Merger becomes
effective is referred to as the Effective Time.
Section 1.7. Tax-Free Reorganization. The Merger is intended to be a
reorganization within the meaning of Section 368 of the Code, and this Agreement
is intended to be a "plan of reorganization" within the meaning of the
regulations promulgated under Section 368 of the Code.
Section 1.8. Pooling of Interests Accounting. The Merger is intended to
be accounted for as a pooling of interests within the meaning of APB Opinion No.
16 and related pronouncements thereunder.
ARTICLE 2
CONVERSION OF SHARES; TREATMENT OF OPTIONS
AND DERIVATIVES
Section 2.1. Premenos Common Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of any Premenos Stockholder:
(a) Subject to Section 2.2, each share of common stock, par value $.01
per share, of Premenos ("Premenos Common Stock") issued and outstanding
immediately prior to the Effective Time (except for treasury shares and any
shares held by Harbinger or a direct or indirect subsidiary of Harbinger)
shall be converted, without any further action, into the right to receive
such fraction of a share of Common Stock, par value $.0001 per share, of
Harbinger ("Harbinger Common Stock") as is equal to the Conversion Ratio.
(b) Each share of Premenos Common Stock issued immediately prior to
the Effective Time that is then held in Premenos's treasury shall be
canceled and retired and all rights in respect of such stock shall cease to
exist, without any conversion thereof or payment of any consideration
therefor.
(c) Each share of common stock, par value $.0001 per share, of
HarbingerSub that is issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock, par value
$.0001 per share, of the Surviving Corporation.
Section 2.2. Fractional Shares. No scrip or fractional shares of
Harbinger Common Stock shall be issued in the Merger. All fractional shares of
Harbinger Common Stock to which a holder of Premenos Common Stock (each a
"Premenos Stockholder") immediately prior to the Effective Time would otherwise
be entitled at the Effective Time shall be aggregated. If a fractional share
results from such aggregation, a Premenos Stockholder shall be entitled, after
the later of (a) the Effective Time or (b) the surrender of such Premenos
Stockholder's Certificate(s) that represent such shares of Premenos Common
Stock, to receive from Harbinger an amount in cash in lieu of such fractional
share, based on the Average Closing Price. For purposes of this Agreement, the
"Average Closing Price" shall be the arithmetic average of the closing price per
share of Harbinger Common Stock, as reported on the Nasdaq National Market, for
each of the ten consecutive trading days ending on the fifth trading day
immediately prior to the date of the Premenos Stockholders Meeting.
Section 2.3. Treatment of Premenos Employee Stock Options and Derivative
Securities. (a) At the Effective Time, Harbinger shall assume all of Premenos's
rights and obligations with respect to the outstanding stock options held by
certain employees and non-employee directors of Premenos pursuant to Premenos's
1995 Incentive Program, as amended (the "SO Plan"), as set forth in the Premenos
Disclosure
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<PAGE> 102
Letter, which are outstanding and unexercised at the Effective Time (the "Old
Options"), whether or not the Old Options are then exercisable. Promptly
following such assumption, Harbinger shall substitute for the Old Options
options to be granted under the Harbinger 1996 Stock Option Plan (the "Harbinger
Options"), which Harbinger Options will contain vesting terms and conditions
matching those contained in the Old Options. Harbinger agrees to issue incentive
stock options under the Harbinger 1996 Stock Option Plan in substitution for
each Old Option that qualified as an incentive stock option prior to the
Effective Time and to issue non-qualified stock options under the Harbinger 1996
Stock Option Plan in substitution for each Old Option that constituted a
non-qualified stock option prior to the Effective Time. Each Harbinger Option
shall thereafter evidence the right to purchase the number of shares of
Harbinger Common Stock equal to the product (rounded up or down as appropriate
to a whole share) of (i) the number of shares of Premenos Common Stock covered
by such Old Option immediately prior to the Effective Time, multiplied by (ii)
the Conversion Ratio. The exercise price of such Harbinger Options for each
share of Harbinger Common Stock subject to such options shall be equal to the
quotient (rounded up or down as appropriate to a whole cent) obtained by
dividing (i) the per-share exercise price for shares of Premenos Common Stock
subject to such Old Option immediately prior to the Effective Time, by (ii) the
Conversion Ratio. It is intended that the assumption and substitution of the
Harbinger Options for the Old Options, as set forth herein, shall (i) not give
to any holder thereof any benefits in addition to those which any such holder
had prior to such assumption and substitution so that the assumption and
substitution by Harbinger of the Old Options will comply with the requirements
of Section 424(a) of the Code and (ii) be undertaken in a manner that will not
constitute a "Modification" as defined in Section 424(b) of the Code as to any
Old Option which is an incentive stock option.
(b) At the Effective Time, Harbinger shall assume all of Premenos's rights
and obligations with respect to certain outstanding warrants and other rights to
acquire Premenos Common Stock as set forth in the Premenos Disclosure Letter
(which description in the Premenos Disclosure Letter shall include the number of
shares of Premenos Common Stock obtainable upon exercise and the strike price of
each such warrant or right) which are outstanding and unexercised at the
Effective Time (the "Premenos Derivative Securities"), whether or not the
Premenos Derivative Securities are then exercisable. Immediately following such
assumption and in accordance with the terms and conditions of the Premenos
Derivative Securities, each such Premenos Derivative Security shall thereafter
evidence the right to purchase: (i) the number of shares of Harbinger Common
Stock equal to the product (rounded up or down as appropriate to the next whole
share) of (W) the number of shares of Premenos Common Stock covered by such
Premenos Derivative Security immediately prior to the Effective Time multiplied
by (X) the Conversion Ratio; and (ii) the exercise price of such assumed
Premenos Derivative Security shall thereafter be equal to the quotient obtained
by dividing (Y) the per share exercise price for shares of Premenos Common Stock
subject to such Premenos Derivative Security immediately prior to the Effective
Time, by (Z) the Conversion Ratio. From and after the Effective Time, the number
of shares of Harbinger Common Stock subject to such Premenos Derivative
Securities and the exercise price for such shares shall be subject to further
adjustment in accordance with the provisions of such Premenos Derivative
Securities.
(c) As soon as practicable after the Effective Time, Harbinger shall
deliver to each holder of an Old Option an appropriate written notice and option
agreement setting forth Harbinger's assumption of the Old Option and
substitution of the Harbinger Option in accordance with the terms of this
Section 2.3. The form of such notice and option agreement shall be delivered to
Premenos prior to the Effective Time and shall be subject to its reasonable
approval. Premenos shall not grant any options under the SO Plan or otherwise
after the date of this Agreement.
(d) As soon as practicable after the Effective Time, Harbinger shall
deliver to each holder of a Premenos Derivative Security such additional
documentation as may be required pursuant to the express terms of such Premenos
Derivative Security to properly evidence Harbinger's assumption of Premenos's
rights and obligations thereunder.
(e) Harbinger agrees to cause the shares of Harbinger Common Stock issuable
upon exercise of the Harbinger Options to be registered with the Securities and
Exchange Commission (the "SEC") on a Form S-8 Registration Statement as promptly
following the Effective Time as is reasonably practicable.
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<PAGE> 103
(f) Approval by the Premenos Stockholders of this Agreement shall
constitute authorization and approval of any and all of the actions described in
this Section 2.3.
(g) The offering period under Premenos's 1995 Employee Stock Purchase Plan
(the "Stock Plan") which ends December 31, 1997, shall be the final offering
period under the Stock Plan, and the Board of Directors of Premenos shall
terminate the Stock Plan as of the earlier to occur of the Effective Time or
December 31, 1997, in accordance with its terms. Employees of Premenos who
participate in the final offering period of the Stock Plan shall have shares of
Premenos purchased on their behalf prior to the termination of the Stock Plan in
accordance with its terms.
Section 2.4. Exchange Agent. (a) Harbinger shall authorize First Union
National Bank of North Carolina to serve as exchange agent hereunder (the
"Exchange Agent"). Promptly after the Effective Time, Harbinger shall deposit or
shall cause to be deposited in trust with the Exchange Agent certificates
representing the number of whole shares of Harbinger Common Stock to which the
holders of Premenos Common Stock (other than treasury shares and other than
Harbinger or a direct or indirect subsidiary of Harbinger) are entitled pursuant
to Section 2.1, together with cash sufficient to pay for fractional shares then
known to Harbinger pursuant to Section 2.2 (such cash amounts and certificates
being hereinafter referred to as the "Exchange Fund"). The Exchange Agent shall,
pursuant to irrevocable instructions received from Harbinger, deliver the number
of shares and pay the amounts of cash provided for in Sections 2.1 and 2.2 out
of the Exchange Fund. Additional amounts of cash, if any, needed from time to
time by the Exchange Agent to make payments for fractional shares shall be
provided by Harbinger and shall become part of the Exchange Fund.
(b) As soon as is reasonably practicable after the Effective Time, the
Exchange Agent shall make available to each record holder (other than treasury
shares and other than Harbinger or a direct or indirect subsidiary of Harbinger)
who, as of the Effective Time, was a holder of an outstanding certificate or
certificates which immediately prior to the Effective Time represented shares of
Premenos Common Stock (the "Certificate" or "Certificates"), a form of letter of
transmittal and instructions for use in effecting the surrender of the
Certificates for payment therefor and conversion thereof. Delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent and the form of letter
of transmittal shall so reflect. Upon surrender to the Exchange Agent of a
Certificate, together with such letter of transmittal duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor (i) one or
more certificates as requested by the holder (properly issued, executed and
countersigned, as appropriate) representing that number of whole shares of
Harbinger Common Stock to which such holder of Premenos Common Stock shall have
become entitled pursuant to the provisions of Section 2.1, and (ii) as to any
fractional share, a check representing the cash consideration to which such
holder shall have become entitled pursuant to Section 2.1, and the Certificate
so surrendered shall forthwith be canceled. No interest will be paid or accrued
on the cash payable upon the surrender of the Certificates. If any portion of
the consideration to be received pursuant to Sections 2.1 and 2.2 upon exchange
of a Certificate (whether a certificate representing shares of Harbinger Common
Stock or a check representing cash for a fractional share) is to be issued or
paid to a person other than the person in whose name the Certificate surrendered
in exchange therefor is registered, it shall be a condition of such issuance and
payment that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
exchange shall pay in advance any transfer or other taxes required by reason of
the issuance of a certificate representing shares of Harbinger Common Stock or a
check representing cash for a fractional share to such other person, or
establish to the satisfaction of the Exchange Agent that such tax has been paid
or that no such tax is applicable. From the Effective Time until surrender in
accordance with the provisions of this Section 2.4, each Certificate shall
represent for all purposes only the right to receive the consideration provided
in Sections 2.1 and 2.2. All payments in respect of shares of Premenos Common
Stock that are made in accordance with the terms hereof shall be deemed to have
been made in full satisfaction of all rights pertaining to such securities.
(c) In the case of any lost, mislaid, stolen or destroyed Certificate, the
holder may be required, as a condition precedent to delivery to such holder of
the consideration described in Sections 2.1 and 2.2, to deliver to Harbinger a
bond in such reasonable sum or a reasonably satisfactory indemnity agreement as
Harbinger
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may direct as indemnity against any claim that may be made against Harbinger or
the Surviving Corporation with respect to the Certificate alleged to have been
lost, mislaid, stolen or destroyed.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of the shares of Premenos Common
Stock that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
transfer, they shall be canceled and exchanged for the consideration described
in Sections 2.1 and 2.2.
(e) Any shares of Harbinger Common Stock or cash due former Premenos
Stockholders pursuant to Sections 2.1 and 2.2 that remains unclaimed by such
former Premenos Stockholder for six months after the Effective Time shall be
held by Harbinger; and any former Premenos Stockholder who has not prior to
those dates complied with Section 2.4(b) can thereafter look only to Harbinger
for issuance of the number of shares of Harbinger Common Stock and other
consideration to which such holder has become entitled pursuant to the
provisions of Sections 2.1 and 2.2; except that neither Harbinger nor any other
party to this Agreement shall be liable to a former Premenos Stockholder for any
amount required to be paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
Section 2.5. Conversion Ratio and Adjustment Event. (a) The "Conversion
Ratio" shall be equal to .45.
(b) In the event of any change in Harbinger Common Stock or Premenos Common
Stock between the date of this Agreement and the Effective Time by reason of any
stock dividend, subdivision, reclassification, recapitalization, combination,
exchange of shares or the like (an "Adjustment Event"), the Conversion Ratio
shall be appropriately adjusted so each holder of Premenos Common Stock will
receive in the Merger the amount of Harbinger Common Stock such holder would
have been entitled to receive if the Effective Time had been immediately prior
to such Adjustment Event.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PREMENOS
With such exceptions as are set forth in a letter (the "Premenos Disclosure
Letter") delivered by Premenos to Harbinger prior to the date of this Agreement,
Premenos represents and warrants to Harbinger as follows:
Section 3.1. Organization. Premenos and each of its subsidiaries are each
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and have all requisite corporate power and
authority to own, lease and operate their respective properties and to carry on
their respective businesses as now being conducted. Premenos and its
subsidiaries are each qualified to transact business, and are in good standing,
as a foreign corporation in each jurisdiction where the character of their
activities requires such qualification, except where the failure to so qualify
would not have a material adverse effect on the assets, liabilities, results of
operations, financial condition, business or prospects of Premenos. Premenos has
made available to Harbinger accurate and complete copies of the Certificate of
Incorporation and Bylaws, as currently in effect, of Premenos, the minute books
and stock records of Premenos and the same documents of each subsidiary. The
Premenos Disclosure Letter contains a true and correct list of the jurisdictions
in which Premenos or its subsidiaries is qualified to do business as a foreign
corporation.
Section 3.2. Authorization. Premenos has full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement and to consummate the Merger and the other transactions
contemplated by this Agreement. The execution and delivery of this Agreement by
Premenos and the performance by Premenos of its obligations under this Agreement
and the consummation of the Merger and the other transactions provided for by
this Agreement have been duly and validly authorized by all necessary corporate
action on the part of Premenos. The Board of Directors of Premenos has approved
the execution, delivery and performance of this Agreement and the consummation
of the Merger and the other transactions contemplated by this Agreement. This
Agreement has been duly executed and delivered by Premenos and constitutes the
legal, valid and binding agreement of Premenos, enforceable against it in
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accordance with its terms, subject to applicable bankruptcy, insolvency and
other similar laws affecting the enforceability of creditors' rights generally,
general equitable principles and the discretion of courts in granting equitable
remedies.
Section 3.3. Absence of Restrictions and Conflicts. The execution,
delivery and performance of this Agreement, the consummation of the Merger and
the other transactions contemplated by this Agreement and the fulfillment of and
compliance with the terms and conditions of this Agreement do not and will not,
with the passing of time or the giving of notice or both, violate or conflict
with, constitute a breach of or default under, result in the loss of any
material benefit under, or permit the acceleration of any obligation under, (i)
any term or provision of the Certificate of Incorporation or Bylaws of Premenos,
(ii) any Premenos Material Contract, (iii) any judgment, decree or order of any
court or governmental authority or agency to which Premenos or any of its
subsidiaries is a party or by which Premenos or its subsidiaries or any of their
respective properties is bound, or (iv) any statute, law, regulation or rule
applicable to Premenos or its subsidiaries, so as to have in the case of
subsections (ii) through (iv) above, a material adverse effect on the assets,
liabilities, results of operations or financial condition, of Premenos. Except
for compliance with the applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the Securities
Act of 1933, as amended (the "Securities Act"), the Securities Exchange Act of
1934, as amended (the "Exchange Act"), applicable state securities laws and the
filing and recordation of the Certificate of Merger as required by the DGCL, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any governmental agency or public or regulatory unit, agency, body
or authority with respect to Premenos or its subsidiaries is required in
connection with the execution, delivery or performance of this Agreement by
Premenos or the consummation of the transactions contemplated by this Agreement
by Premenos, the failure to obtain which would have a material adverse effect
upon the assets, liabilities, results of operations or financial condition of
Premenos.
Section 3.4. Capitalization. The authorized capital stock of Premenos
consists of 25,000,000 shares of common stock, $.01 par value per share and
1,000,000 shares of preferred stock, $.01 par value per share (the "Premenos
Preferred Stock"). As of October 23, 1997, there were 11,784,615 shares of
Premenos Common Stock issued and outstanding, 1,838,079 shares of Premenos
Common Stock reserved for issuance upon exercise of outstanding stock options,
472,101 shares of Premenos Common Stock reserved for issuance under the Premenos
Employee Stock Purchase Plan and no shares of Premenos Preferred Stock issued
and outstanding. Each share of Premenos Common Stock outstanding as of the date
of this Agreement is duly authorized, validly issued, fully paid and
nonassessable and free of pre-emptive rights. Except as set forth in this
Section 3.4, there are no shares of Premenos Common Stock outstanding, and there
are no subscriptions, options, convertible securities, calls, puts, rights,
warrants or other agreements, claims or commitments of any nature whatsoever
obligating Premenos or any of its Subsidiaries to purchase, redeem, issue,
transfer, deliver or sell, or cause to be purchased, redeemed, issued,
transferred, delivered or sold, additional shares of the capital stock or other
securities of Premenos or obligating Premenos to grant, extend or enter into any
such agreement or commitment.
Section 3.5. Capital Stock of Premenos Subsidiaries. The Premenos
Disclosure Letter sets forth a true and complete list of all corporations,
partnerships and other entities in which Premenos owns an equity interest (such
corporations, partnerships and other entities being hereinafter referred to as
the "Premenos Subsidiaries"), the jurisdiction in which each Premenos Subsidiary
is incorporated or organized, and all shares of capital stock or other ownership
interests authorized, issued and outstanding of each Premenos Subsidiary. The
outstanding shares of capital stock or other equity interests of each Premenos
Subsidiary have been duly authorized and are validly issued, fully paid and
nonassessable. All shares of capital stock or other equity interests of each
Premenos Subsidiary owned by Premenos or any of its subsidiaries are set forth
in the Premenos Disclosure Letter and are owned by Premenos, either directly or
indirectly, free and clear of all liens, encumbrances, equities or claims
(except for applicable restrictions under the securities laws).
Section 3.6. SEC Reports. Premenos has made available to Harbinger (i)
Premenos's Annual Report on Form 10-K for the year ended December 31, 1996,
including all exhibits and items incorporated by reference, (ii) Premenos's
Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30,
1997, including all exhibits and items incorporated by reference, (iii) the
proxy statement relating to
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Premenos's Annual Meeting of Stockholders on May 29, 1997 and (iv) all Current
Reports on Form 8-K filed by Premenos with the SEC since January 1, 1997,
including all exhibits and items incorporated by reference (items (i) through
(iv) in this sentence being referred to collectively as the "Premenos SEC
Reports"). As of their respective dates, the Premenos SEC Reports did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. Since
December 31, 1995, Premenos has filed all forms, reports and documents with the
SEC required to be filed by it pursuant to the Securities Act and the Exchange
Act and the rules and regulations promulgated under such acts, each of which
complied as to form, at the time such form, document or report was filed, in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act and the applicable rules and regulations promulgated under such
acts.
Section 3.7. Financial Statements. Premenos has made available to
Harbinger: (i) the audited balance sheets of Premenos as of December 31, 1995
and 1996, and the related audited statements of income, changes in stockholders'
equity and cash flows for the respective fiscal years then ended, including the
notes to such financial statements, examined by and accompanied by the report of
Coopers & Lybrand LLP ("Coopers & Lybrand"), independent public accountants; and
(ii) the unaudited balance sheet of Premenos as of September 30, 1997 (the "1997
Balance Sheet") and the unaudited statements of income and cash flows for the
9-month period then ended and unaudited statement of changes in stockholders'
equity for the 6-month period ended June 30, 1997. All of the foregoing
financial statements are collectively referred to as the "Premenos Financial
Statements." The Premenos Financial Statements have been prepared from, and are
in accordance with, the books and records of Premenos and its consolidated
subsidiaries and, as applicable, present fairly the consolidated financial
position, consolidated results of operations, changes in stockholders' equity
and consolidated cash flows of Premenos and its subsidiaries as of the date and
for the periods indicated in conformity with generally accepted accounting
principles, consistently applied. The Premenos Disclosure Letter sets forth a
true and complete list of all loss contingencies (within the meaning of
Statement of Financial Accounting Standards No. 5) of Premenos recorded during
the period covered by the Premenos Financial Statements and exceeding $25,000 in
the case of any single loss contingency or $50,000 in the case of all loss
contingencies.
Section 3.8. Absence of Certain Changes. (a) Since December 31, 1996 and
except for items specifically disclosed in the Premenos SEC Reports filed
subsequent to December 31, 1996, there has not been (i) any material adverse
change in the assets, liabilities, results of operations, financial condition,
business or prospects of Premenos, (ii) any damage, destruction, loss or
casualty to property or assets of Premenos, whether or not covered by insurance,
which property or assets are material to the operations or business of Premenos,
(iii) any declaration, setting aside or payment of any dividend or distribution
(whether in cash, stock or property) in respect of the capital stock of
Premenos, any redemption or other acquisition by Premenos of any of the capital
stock of Premenos or any split, combination or reclassification of shares of
capital stock declared or made by Premenos or (iv) any agreement to do any of
the foregoing.
(b) Since December 31, 1996 and except for items specifically disclosed in
the Premenos SEC Reports filed subsequent to December 31, 1996, there have not
been (i) any extraordinary losses suffered, (ii) any material assets mortgaged,
pledged or made subject to any lien, charge or other encumbrance, (iii) any
material liability or obligation (absolute, accrued or contingent) incurred or
any material bad debt, contingency or other reserve increase suffered, except,
in each such case, in the ordinary course of business and consistent with past
practice, (iv) any claims, liabilities or obligations (absolute, accrued or
contingent) paid, discharged or satisfied, other than the payment, discharge or
satisfaction, in the ordinary course of business and consistent with past
practice, of claims, liabilities and obligations reflected or reserved against
in the Premenos Financial Statements or incurred in the ordinary course of
business and consistent with past practice, (v) any material guaranteed checks,
notes or accounts receivable written off as uncollectible, except write-offs in
the ordinary course of business and consistent with past practice, (vi) any
write down (under Statement of Financial Accounting Standards No. 121 or
otherwise) of the value of any material asset or investment on Premenos's books
or records, except for depreciation and amortization taken in the ordinary
course of business and consistent with past practice, (vii) any cancellation of
any material debts or waiver of
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any material claims or rights of substantial value, or sale, transfer or other
disposition of any material properties or assets (real, personal or mixed,
tangible or intangible) of substantial value, except, in each such case, in
transactions in the ordinary course of business and consistent with past
practice and which in any event do not exceed $50,000 in the aggregate, (viii)
any single capital expenditure or commitment in excess of $50,000 for additions
to property or equipment, or aggregate capital expenditures and commitments in
excess of $250,000 (on a consolidated basis) for additions to property or
equipment or for capitalized research and development, (ix) any transactions
entered into other than in the ordinary course of business, (x) any agreements
to do any of the foregoing, or (xi) any other events, developments or conditions
of any character that have had or are reasonably likely to have a material
adverse effect on the assets, liabilities, results of operations, financial
condition, business or prospects of Premenos.
Section 3.9. Legal Proceedings. There are no suits, actions, claims,
proceedings or investigations pending, or, to the best knowledge of Premenos,
threatened against, relating to or involving Premenos or any of its subsidiaries
(or any of their officers or directors) before any court, arbitrator or
administrative or governmental body, which, if finally determined adversely, are
reasonably likely, individually or in the aggregate, to have a material adverse
effect on the assets, liabilities, results of operations or financial condition
of Premenos. All pending suits, actions, claims, proceedings or investigations
relating to or involving Premenos or its subsidiaries (or any of their officers
or directors) before any court, arbitrator or administrative or governmental
body are adequately provided for in the 1997 Balance Sheet if and to the extent
such a provision is required by generally accepted accounting principles.
Neither Premenos nor any of its subsidiaries is subject to any judgment, decree,
injunction, rule or order of any court, and, to the best knowledge of Premenos,
neither Premenos nor any of its subsidiaries is subject to any governmental
restriction applicable to Premenos, which is reasonably likely (i) to have a
material adverse effect on the assets, liabilities, results of operations or
financial condition of Premenos or any of its subsidiaries or (ii) to cause a
material limitation on Harbinger's ability to operate the business of Premenos
or any of its subsidiaries after the Closing.
Section 3.10. Compliance with Law. Premenos and each of its subsidiaries
have all material authorizations, approvals, licenses and orders of and from all
governmental and regulatory offices and bodies necessary to carry on their
businesses as they are currently being conducted, to own or hold under lease the
properties and assets they own or hold under lease and to perform all of their
obligations under the agreements to which they are a party, and each has been
and is in compliance with all applicable laws, regulations and administrative
orders of any country, state or municipality or of any subdivision of any
thereof to which its business and its employment of labor or its use or
occupancy of properties or any part thereof are subject, the failure to obtain
or the violation of which would have a material adverse effect upon the assets,
liabilities, results of operations or financial condition of Premenos.
Section 3.11. Material Contracts. The Premenos Disclosure Letter contains
a correct and complete list of the following (the "Premenos Material
Contracts"):
(a) all bonds, debentures, notes, loans, mortgages, indentures or
guarantees to which Premenos or its subsidiaries is a party or by which any
of its properties or assets (real, personal or mixed, tangible or
intangible) is bound;
(b) all leases to which Premenos or its subsidiaries is a party or by
which any of its properties or assets (real, personal or mixed, tangible or
intangible) is bound involving an annual rental payment in excess of
$25,000 individually;
(c) all credit or loan commitments to Premenos or its subsidiaries
which are outstanding, together with a brief description of such
commitments and the name of each financial institution granting the same;
(d) all contracts or agreements which limit or restrict Premenos, its
subsidiaries or any of the Premenos Executives from engaging in any
business in any jurisdiction and all contracts or agreements that limit or
restrict others from competing with Premenos or its subsidiaries in any
jurisdiction;
(e) all contracts or agreements requiring Premenos or its subsidiaries
to register its capital stock or securities under federal or state
securities law; and
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(f) all existing contracts and commitments (other than those described
in subparagraphs (a), (b), (c), (d) or (e) of this Section 3.11 and the
Premenos Benefit Plans) to which Premenos or any of its subsidiaries is a
party or by which its properties or assets may be bound involving an annual
commitment or annual payment by any party to such contract or commitment of
more than $50,000 individually.
True and complete copies of all Premenos Material Contracts, including all
amendments, have been made available to Harbinger. The Premenos Material
Contracts are valid and enforceable in accordance with their respective terms
with respect to Premenos and valid and, to the best knowledge of Premenos,
enforceable in accordance with their respective terms with respect to any other
party to a Premenos Material Contract, in each case to the extent material to
the business and operations of Premenos and subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforceability of creditors'
rights generally, general equitable principles and the discretion of courts in
granting equitable remedies. To the best knowledge of Premenos and except for
events or occurrences, the consequences of which, individually or in the
aggregate, would not have a material adverse effect on the assets, liabilities,
results of operations or financial condition of Premenos, there is not under any
of the Premenos Material Contracts any existing breach, default or event of
default by Premenos or its subsidiaries or event that with notice or lapse of
time or both would constitute a breach, default or event of default by Premenos
or its subsidiaries, nor has Premenos received notice of, or made a claim with
respect to, any breach or default by any other party to a Premenos Material
Contract.
Section 3.12. Tax Returns; Taxes. Premenos and each of its subsidiaries
have duly filed all federal, state, local and foreign tax returns required to be
filed by them and have duly paid or made adequate provision for the payment of
all taxes which are due and payable pursuant to such returns or pursuant to any
assessment with respect to taxes in such jurisdictions, whether or not in
connection with such returns. The liability for taxes reflected in the 1997
Balance Sheet is sufficient for the payment of all unpaid taxes, whether or not
disputed, that are accrued or applicable for the period ended September 30, 1997
and for all years and periods ended prior to that date. All deficiencies
asserted as a result of any examinations by the Internal Revenue Service or any
other taxing authority have been paid, fully settled or adequately provided for
in the 1997 Balance Sheet. There are no pending claims asserted for taxes of
Premenos or its subsidiaries or outstanding agreements or waivers extending the
statutory period of limitation applicable to any tax return of Premenos or its
subsidiaries for any period. Each of Premenos and its subsidiaries has made all
estimated income tax deposits and all other required tax payments or deposits
and has complied for all prior periods in all material respects with the tax
withholding provisions of all applicable federal, state, local, foreign and
other laws. Premenos has made available to Harbinger true, complete and correct
copies of its federal income tax returns for the last three taxable years and
made available all other tax returns requested by Harbinger.
Section 3.13. Employee Benefit Plans. (a) Definition of Benefit Plans.
For purposes of this Section 3.13, the term "Premenos Benefit Plan" means any
plan, program, arrangement, fund, policy, practice or contract which, through
which or under which Premenos or any Premenos ERISA Affiliate provides or has an
obligation to provide benefits or compensation to or on behalf of employees or
former employees of Premenos or any Premenos ERISA Affiliate, whether formal or
informal, whether or not written, including but not limited to the following:
(i) Arrangements -- any bonus, incentive compensation, stock option,
deferred compensation, commission, severance pay, golden parachute or other
compensation plan or rabbi trust;
(ii) ERISA Plans -- any "employee benefit plan" (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), including, but not limited to, any multiemployer plan (as
defined in Section 3(37) and Section 4001(a) (3) of ERISA), defined benefit
plan, profit sharing plan, money purchase pension plan, 401(k) plan,
savings or thrift plan, or any plan, fund, program, arrangement or practice
providing for medical (including post-retirement medical), hospitalization,
accident, sickness, disability, or life insurance benefits; and
(iii) Other Employee Fringe Benefits -- any stock purchase, vacation,
scholarship, sick days, day care, prepaid legal services, dependent care or
other fringe benefits plans, programs, arrangements, contracts or
practices.
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(b) Premenos ERISA Affiliate. For purposes of this Section 3.13, the term
"Premenos ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with Premenos is treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code.
(c) Identification of Benefits Plans. Except as set forth in the Premenos
Disclosure Letter and except for Premenos Benefit Plans which have been
terminated and with respect to which neither Premenos nor any Premenos ERISA
Affiliate has any financial, administrative or other liability, obligation or
responsibility, Premenos does not maintain, nor has it at any time established
or maintained, nor has it at any time been obligated to make, or otherwise made,
contributions to or under or otherwise participated in any Premenos Benefit
Plan.
(d) Compliance With All Statutes, Orders and Rules. Premenos and each
Premenos ERISA Affiliate is in compliance with the requirements prescribed by
and all statutes, orders and governmental rules and regulations applicable to
Premenos Benefit Plans and all reports and disclosures relating to Premenos
Benefit Plans required to be filed with or furnished to any governmental entity,
participants or beneficiaries prior to the Closing Date have been or will be
properly completed and filed or furnished in a timely manner and in accordance
with applicable laws. Each Premenos Benefit Plan has been administered according
to its terms (except for those terms which are inconsistent with the changes
required by statutes, regulations, and rulings for which changes are not yet
required to be made, in which case the plan has been administered in accordance
with the provisions of those statutes, regulations and rulings) and applicable
law.
(e) MEPPA Liability/Post-Retirement Medical Benefits. Neither Premenos nor
any Premenos ERISA Affiliate maintains, or has at anytime established or
maintained, or has at any time been obligated to make, or made, contributions to
or under any multiemployer plan (as defined in Section 3(37) and Section
4001(a)(3) of ERISA). Premenos does not maintain, nor has at any time
established or maintained, nor has at any time been obligated to make, or made,
contributions to or under any plan which provides post-retirement medical or
health benefits with respect to former employees of Premenos. There is no lien
upon any property of Premenos or any Premenos ERISA Affiliate outstanding
pursuant to Section 412(n) of the Code in favor of any Premenos Benefit Plan. No
assets of Premenos or any Premenos ERISA Affiliate have been provided as
security for any Premenos Benefit Plan pursuant to Section 401(a) (29) of the
Code.
(f) Documentation. Premenos has made available to Harbinger a true and
complete copy of the following documents, if applicable, with respect to each
Premenos Benefit Plan identified in Premenos Disclosure Letter: (1) all
documents, including any insurance contracts and trust agreements, setting forth
the terms of Premenos Benefit Plan, or if there are no such documents evidencing
Premenos Benefit Plan, a full (in all material respects) description of Premenos
Benefit Plan, (2) any required ERISA summary plan description and any other
summary of plan provisions provided to participants or beneficiaries for each
such Premenos Benefit Plan, (3) any required annual reports filed for the most
recent three plan years and most recent financial statements or periodic
accounting or related plan assets with respect to each Premenos Benefit Plan,
(4) each favorable determination letter, opinion or ruling from the Internal
Revenue Service ("IRS") for each Premenos Benefit Plan, the assets of which are
held in trust, to the effect that such trust is exempt from federal income tax,
including any outstanding request for a determination letter and (5) each
opinion or ruling from the Department of Labor or the Pension Benefit Guaranty
Corporation ("PBGC") with respect to any such Premenos Benefit Plan.
(g) Qualified Status. Each Premenos Benefit Plan identified in the
Premenos Disclosure Letter that is funded through a trust or insurance contract
has at all times satisfied in all material respects, by its terms and in its
operation, all applicable requirements for an exemption from federal income
taxation under Section 501(a) of the Code. Except for the Premenos 401(k)
Savings & Retirement Plan (the "Premenos 401(k) Plan") neither Premenos nor any
Premenos ERISA Affiliate maintains or previously maintained a Premenos Benefit
Plan which meets or was intended to meet the requirements of Section 401(a) of
the Code. Any determination letter issued by the IRS to the effect that the
Premenos 401(k) Plan qualifies under Section 401(a) of the Code and that the
related trust is exempt from taxation under Section 501(a) of the Code remains
in effect and has not been revoked.
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The Premenos 401(k) Plan has been tested for compliance with, and has
satisfied the requirements of, Section 401(k)(3), 401(m)(2) and 415 of the Code
for each plan year ending prior to the Closing Date.
(h) Legal Actions. There are no actions, audits, suits or claims known to
Premenos which are pending or threatened against any Premenos Benefit Plan, any
fiduciary of any of the Premenos Benefit Plans with respect to the Premenos
Benefit Plans or against the assets of any of the Premenos Benefit Plans, except
claims for benefits made in the ordinary course of the operation of such plans.
(i) Funding. Premenos and each Premenos ERISA Affiliate has made
fully and timely payment of all amounts required to be contributed under
the terms of each Premenos Benefit Plan and applicable law or required to
be paid as expenses under such Premenos Benefit Plan and no excise taxes
are assessable as a result of any nondeductible or other contributions made
or not made to a Premenos Benefit Plan. The assets of all Premenos Benefit
Plans which are required under applicable laws to be held in trust are in
fact held in trust, and the assets of each such Premenos Benefit Plan equal
or exceed the liabilities of each such plan. The liabilities of each other
Premenos Benefit Plan are properly and accurately reported on the financial
statements and records of Premenos. The assets of each Premenos Benefit
Plan are reported at their fair market value on the books and records of
each plan.
(ii) Liabilities. Neither Premenos nor any Premenos ERISA Affiliate
is subject to any material liability, tax or penalty whatsoever to any
person whomsoever as a result of Premenos's or any Premenos ERISA
Affiliate's engaging in a breach of fiduciary duty or a prohibited
transaction under ERISA or the Code, and Premenos has no knowledge of any
circumstances which reasonably might result in any such material liability,
tax or penalty as a result of any breach of fiduciary duty under ERISA or
in any duty to indemnify any other person for any such liability.
(i) Excess Parachute Payments. No payment required to be made to any
employee associated with Premenos as a result of the transactions contemplated
hereby under any contract or otherwise will, if made, constitute an "excess
parachute payment" within the meaning of Section 280G of the Code.
(j) COBRA. Premenos and each Premenos ERISA Affiliate have complied in all
material respects with the continuation coverage requirements of Section 4980B
of the Code and ERISA Sections 601 through 608.
(k) No Acceleration of Liability Under Benefit Plans. The consummation of
the transactions contemplated hereby will not accelerate or increase any
liability under any Premenos Benefit Plan because of an acceleration or increase
of any of the rights or benefits to which employees of Premenos or any Premenos
ERISA Affiliate may be entitled thereunder.
(l) Leased Employees. Premenos has made no representations or warranties
(whether written or oral, express or implied) contractually or otherwise to any
client or customer of Premenos that Premenos employees rendering services to
such client or customer cannot be treated as "leased employees" (within the
meaning of Section 414(n) of the Code) of such client or customer or that such
employees would not be required to participate under any pension benefit plan
(within the meaning of Section 3(2) of ERISA) (a "Pension Benefit Plan") of such
client or customer of Premenos.
(m) Defined Benefit Plans/Money Purchase Plans. With respect to any
Premenos Benefit Plan, no termination liability to the PBGC has been or is
expected to be incurred or would be incurred if such Premenos Benefit Plan were
terminated on the Closing Date and the current present value of all projected
benefit liabilities under each of the Premenos Benefit Plans subject to Title IV
of ERISA would not, as of the Closing Date, exceed the then current value of the
assets of such Premenos Benefit Plan. No Premenos Benefit Plan which is subject
to Section 302 of ERISA or Section 412 of the Code has suffered any accumulated
funding deficiency within the meaning of Section 302 of ERISA and Section 412 of
the Code. Neither Premenos nor any Premenos ERISA Affiliate has any outstanding
liability under Section 4971 of the Code. As of the Closing Date, all required
premium payments for Premenos Benefit Plans have been made, when due, to the
PBGC, and all required premium payments for the Premenos Benefit Plans for plan
years commencing in the plan year which would include the Closing Date have been
made to the PBGC. No event or condition exists with respect to any Premenos
Benefit Plan which could be deemed a "reportable event" as
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defined in Section 4043 of ERISA, with respect to which the 30-day notice
requirement has not been waived and which could result in a liability to
Harbinger, and no condition exists which would subject Harbinger to a fine under
Section 4071 of ERISA. There is no lien upon any property of Premenos or any
Premenos ERISA Affiliate outstanding pursuant to Section 4068 of ERISA in favor
of the PBGC.
Section 3.14. Labor Relations. Each of Premenos and its subsidiaries is
in compliance in all material respects with all federal and state laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours, and is not engaged in any unfair labor or unlawful
employment practice. There is no unlawful employment practice discrimination
charge involving Premenos or its subsidiaries pending before the Equal
Employment Opportunity Commission ("EEOC"), EEOC recognized state "referral
agency" or any other governmental agency. There is no unfair labor practice or
similar charge or complaint against Premenos or its subsidiaries pending before
the National Labor Relations Board ("NLRB") or any other governmental agency.
There is no labor strike, dispute, slowdown or stoppage actually pending or, to
the best knowledge of the executive officers of Premenos, threatened against or
involving or affecting Premenos or its subsidiaries and no NLRB or other labor
union representation question exists respecting any employees of Premenos or its
subsidiaries. No grievance or arbitration proceeding is pending against Premenos
or its subsidiaries and no written claim therefor exists. There is no collective
bargaining agreement that is binding on Premenos or its subsidiaries.
Section 3.15. Insurance. Premenos has provided to Harbinger a true and
complete list of its current insurance coverages for Premenos and its
subsidiaries, including names of carriers, amounts of coverage and premiums
therefor. Each of Premenos and its subsidiaries believes that such corporation
has been and is insured with respect to its properties and the conduct of its
business in such amounts and against such risks as are reasonable in relation to
its business and will use its reasonable efforts to maintain such insurance at
least through the Effective Time. Premenos has made available to Harbinger true
and complete copies of all insurance policies covering Premenos or its
subsidiaries, their properties, assets, employees or operations.
Section 3.16. Title to Properties and Related Matters. (a) Premenos and
its subsidiaries have good and valid title to or valid leasehold interests in
its properties reflected in the 1997 Balance Sheet or acquired after the date of
the 1997 Balance Sheet (other than properties sold or otherwise disposed of in
the ordinary course of business), and all of such properties are held free and
clear of all title defects, liens, encumbrances and restrictions, except, with
respect to all such properties, (a) mortgages and liens securing debt reflected
as liabilities on the 1997 Balance Sheet and (b) (i) liens for current taxes and
assessments not in default, (ii) mechanics', carriers', workmen's, repairmen's,
statutory or common law liens either not delinquent or being contested in good
faith, and (iii) liens, mortgages, encumbrances, covenants, rights of way,
building or use restrictions, easements, exceptions, variances, reservations and
other matters or limitations of any kind, if any, which either individually or
in the aggregate do not have a material adverse effect on Premenos's or any of
its subsidiaries' use of the property affected. The provisions of this Section
3.16 do not apply to intellectual property rights.
(b) The Premenos Disclosure Letter sets forth a true and complete list of
all leases and agreements of Premenos or its subsidiaries granting possession of
or rights to real or personal property and involving an annual commitment or
annual payment of more than $10,000 individually in the case of any real
property and $25,000 individually in the case of any personal property (the
"Scheduled Leases"). All such Scheduled Leases are in full force and effect and
constitute the legal, valid, binding and enforceable obligations of Premenos or
its subsidiaries, and, to the best knowledge of Premenos, are legal, valid,
binding and enforceable in accordance with their respective terms with respect
to each other party to a Scheduled Lease, in each case to the extent material to
the business and operations of Premenos taken as a whole and subject in each
case to applicable bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors' rights generally, general equitable principles and the
discretion of courts in granting equitable remedies. Premenos or one of its
subsidiaries has physical possession of all real property, equipment and other
assets which are covered by Scheduled Leases. Except for events and occurrences,
the consequences of which, individually or in the aggregate, would not have a
material adverse effect on the assets, liabilities, results of operations or
financial position of Premenos, there are no existing defaults of Premenos or
its subsidiaries with respect to
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such Scheduled Leases or, to the best knowledge of Premenos, any of the other
parties to such Scheduled Leases (or events or conditions which, with notice or
lapse of time, or both, would constitute a default).
Section 3.17. Environmental Matters. To the best knowledge of Premenos,
Premenos is in compliance in all material respects with all statutes,
regulations and ordinances relating to the protection of human health and the
environment including, without limitation, the Clean Water Act, 33 U.S.C.
sec. 1251 et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
sec. 6901 et seq., the Clean Air Act, 42 U.S.C. sec. 7401 et seq., the Toxic
Substances Control Act, 15 U.S.C. sec. 2601 et seq., the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. sec. 11001 et seq., the regulations
developed pursuant to these statutes and the corresponding state and local
statutes, ordinances and regulations. There has been no release by Premenos, its
subsidiaries or, to the best knowledge of Premenos, by any other person of a
hazardous substance as that term is defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. sec. 9601(14), into
the environment at any property owned or leased by Premenos or its subsidiaries
(the "Premises") including, without limitation, any such release in the soil or
groundwater underlying the Premises the liability for which could have a
material adverse effect on the assets, liabilities, results of operations or
financial position of Premenos and its subsidiaries. To the best knowledge of
Premenos, there is no asbestos, polychlorinated biphenyls or underground storage
tanks located on the Premises and there have been no releases of asbestos,
polychlorinated biphenyls or materials stored in underground storage tanks,
including, without limitation, petroleum or petroleum-based materials. Neither
Premenos nor any of its subsidiaries has received notice of any violation of any
environmental statute or regulation nor has it been advised of any claim or
liability pursuant to any environmental statute or regulation brought by any
governmental agency or private party.
Section 3.18. Patents, Trademarks, Trade Names. The Premenos Disclosure
Letter sets forth a true and complete list of (i) all patents, trademarks, trade
names (including all U.S. federal and state registrations and foreign
registrations and applications pertaining thereto) and registered copyrights
owned by Premenos or its subsidiaries (collectively, the "Premenos Proprietary
Intellectual Property") and (ii) all patents, trademarks, trade names,
copyrights, technology and processes used by Premenos or its subsidiaries in its
business which are material to its business and are used pursuant to a license
or other right granted by a third party (collectively, the "Premenos Licensed
Intellectual Property", and together with the Premenos Proprietary Intellectual
Property referred to as "Premenos Intellectual Property"). A true and complete
list of all such licenses with respect to Premenos Licensed Intellectual
Property is set forth in the Premenos Disclosure Letter. Neither Premenos nor
any of its subsidiaries has granted any right, license or other interest in the
Premenos Proprietary Intellectual Property to any third party, except for
enduser licenses granted by Premenos to its customers in the ordinary course.
Each of the federal, state and foreign registrations pertaining to the Premenos
Proprietary Intellectual Property is valid and in full force and effect. All
required filings in association with such registrations have been properly made
and all required fees have been paid. Premenos and its subsidiaries own, or have
the right to use pursuant to valid and effective agreements, all Premenos
Intellectual Property, free and clear of any lien, claim or encumbrance, and the
consummation of the transactions contemplated by this Agreement will not alter
or impair any such rights. No claims are pending against Premenos or any of its
subsidiaries by any person with respect to the use of any Premenos Intellectual
Property or challenging or questioning the validity or effectiveness of any
license or agreement relating to the same, and the current use by Premenos and
its subsidiaries of the Premenos Intellectual Property does not, to the best
knowledge of Premenos, infringe on the rights of any third party. The conduct by
Premenos and its subsidiaries of their respective business, including the
provision of services to customers, as currently conducted and as proposed to be
conducted by Premenos, does not and will not conflict with or infringe upon any
patent, copyright, trade secret, trademark or other intellectual property right
of any third party, and Premenos has not received notice of any such alleged
infringement. The Premenos Disclosure Letter sets forth a list of all
jurisdictions in which Premenos or any of its subsidiaries is operating under a
trade name, and each jurisdiction in which any such trade name is registered.
Section 3.19. Licensed Software. (a) The Premenos Disclosure Letter sets
forth a true and complete list of: (i) all software owned by Premenos and each
of its subsidiaries and used in connection with the business of Premenos and its
subsidiaries or licensed to third parties (the "Premenos Proprietary Software");
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and (ii) all software (other than the Premenos Proprietary Software) used in
connection with the business of Premenos and its subsidiaries (the "Premenos
Licensed Software" and together with the Premenos Proprietary Software, the
"Premenos Software"). Premenos's proprietary software products may incorporate
Premenos Proprietary Software (that is, software owned by Premenos and
identified as such in the Premenos Disclosure Letter) and code software that is
owned by third parties and licensed to Premenos (all of such third party
software is included in the Premenos Licensed Software and identified as such in
the Premenos Disclosure Letter). The Premenos Proprietary Software consists of:
(i) source and object code embodied in magnetic media; and (ii) all development
and procedural tools necessary to maintain the Premenos Proprietary Software,
including licenses to use compilers, assemblers, libraries and other aids.
Premenos and each of its subsidiaries employ individuals who are qualified to
maintain the Premenos Software and the related computer hardware used by such
corporation in its operations (the "Premenos Hardware").
(b) Premenos and each of its subsidiaries have all right, title and
interest in and to all intellectual property rights in the Premenos Proprietary
Software (other than any defects in title which are not, individually or in the
aggregate, material), and subject to the rights of end-user licensees under
licenses granted by Premenos to its customers in the ordinary course of
business. The Premenos Proprietary Software is free and clear of all liens,
claims and encumbrances (other than any liens, claims or encumbrances which are
not, individually or in the aggregate, material). The use of the Premenos
Licensed Software and the use and distribution of the Premenos Proprietary
Software does not breach any material terms of any material contract between
Premenos and any of its subsidiaries and any third party. The Premenos
Disclosure Letter sets forth a true and complete list of all license agreements
in favor of Premenos or any of its subsidiaries relating to the Premenos
Licensed Software (the "Premenos License Agreements"). To the best knowledge of
Premenos, Premenos and each of its subsidiaries have been granted under the
Premenos License Agreements valid and subsisting license rights with respect to
all software comprising the Premenos Licensed Software. Premenos and each of its
subsidiaries are in compliance in all material respects with each of the terms
and conditions of each of the Premenos License Agreements. In the case of any
commercially available "shrink-wrap" software programs (such as Lotus 1-2-3),
Premenos and its subsidiaries have not made and are not using any unauthorized
copies of any such software programs and none of the employees, agents or
representatives of Premenos or its subsidiaries have made or are using any such
unauthorized copies.
(c) To the best knowledge of Premenos, the Premenos Proprietary Software
and the Premenos Licensed Software does not infringe any patent, copyright, or
trade secret or any other intellectual property right of any third party. The
source code for the Premenos Proprietary Software has been maintained in
confidence.
(d) The Premenos Proprietary Software was developed by Premenos entirely
for its own account, and the Premenos Proprietary Software was: (i) developed by
Premenos's employees working within the scope of their employment at the time of
such development; (ii) developed by agents, consultants, contractors or others
who have executed appropriate instruments of assignment in favor of Premenos as
assignee that have conveyed to Premenos ownership of all of their intellectual
property rights in the Premenos Proprietary Software; or (iii) acquired by
Premenos in connection with acquisitions in which Premenos obtained appropriate
representations and warranties from the transferring party relating to the title
to such Premenos Proprietary Software. Neither Premenos nor any of its
subsidiaries has received notice from any third party claiming any right, title
or interest in the Premenos Proprietary Software.
(e) There are no agreements or arrangements in effect with respect to the
marketing, distribution, licensing or promotion of the Premenos Proprietary
Software by any independent sales person, distributor, sublicensee or other
remarketer or sales organization.
(f) Neither Premenos nor any of its subsidiaries has granted any rights or
licenses in or to the Premenos Software to any third party, except for end-user
license agreements granted by Premenos to its customers in the ordinary course
of business.
(g) The Premenos Software and the Premenos Hardware are adequate in all
material respects with the other assets of Premenos and its subsidiaries to run
the business of Premenos and its subsidiaries in the same manner as such
business has operated since September 30, 1996. The Premenos Disclosure Letter
contains a summary description of any problems experienced by Premenos or its
subsidiaries in the past twelve months
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with respect to the Premenos Software or Premenos Hardware and the provision of
services to Premenos clients which resulted, or reasonably could be expected to
result, in a material disruption of the provision of services by Premenos or its
subsidiaries to clients generally for a period equal to or exceeding five days.
(h) All Premenos Software is year 2000 compliant (that is, (i) the Premenos
Software is capable of correctly processing, providing and receiving data within
and between the 20th and 21st centuries (including accounting for all required
leap year calculations) and (ii) all date fields in the Premenos Software used
for (4) digit year fields).
Section 3.20. Trade Secrets. To the best knowledge of Premenos, no third
party has claimed that any officer, director or former or present employee of
Premenos or any of its subsidiaries has, in respect of his or its activities on
behalf of Premenos or any of its subsidiaries to date, violated any of the terms
or conditions of his or her employment contract with such third party, or
disclosed or utilized any trade secrets or proprietary information or
documentation of such third party, or interfered in the employment relationship
between such third party and any of his or her or its employees nor has any such
violation, disclosure or utilization occurred. Neither Premenos or any of its
subsidiaries nor, to the best knowledge of Premenos, any of their officers,
directors or employees have wrongfully utilized any trade secrets or any
information or documentation proprietary to any other person or entity,
including, but not limited to, confidential business information, and neither
Premenos or its subsidiaries nor, to the best knowledge of Premenos, any of its
officers, directors or employees has violated any obligations of confidentiality
with any third party in connection with the development, manufacture and sale of
any products or services of Premenos or any of its subsidiaries.
Section 3.21. Proxy Statement and Registration Statement. The information
with respect to Premenos, its officers, directors and affiliates in the
definitive proxy statement to be furnished to the stockholders of Premenos and
Harbinger (the "Proxy Statement") that will form a part of the Registration
Statement on Form S-4 relating to the shares of Harbinger Common Stock to be
issued in the Merger (the "Registration Statement") or in the Registration
Statement will not, in the case of the Proxy Statement, on the date the Proxy
Statement is first mailed to stockholders of Premenos or on the date of the
stockholders meetings referred to in Section 5.5, or, in the case of the
Registration Statement, at the time it becomes effective and at the Effective
Time, as such Proxy Statement or Registration Statement is then amended or
supplemented, contain any untrue statement of a material fact, or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 3.22. Pooling. Coopers & Lybrand has advised Premenos that based
upon inquiries and their examination of the financial statements of Premenos
they believe that the criteria for pooling accounting treatment relative to
Premenos has been satisfied.
Section 3.23. Transactions with Affiliates. No stockholder, officer or
director of Premenos or its subsidiaries, or any person with whom any such
stockholder, officer or director has any direct or indirect relation by blood,
marriage or adoption, or any entity in which any such person, owns any
beneficial interest (other than a publicly held corporation whose stock is
traded on a national securities exchange or in the over-the-counter market and
less than 1% of the stock of which is beneficially owned by all such persons)
has any interest in: (i) any contract, arrangement or understanding with, or
relating to, the business or operations of Premenos or its subsidiaries; (ii)
any loan, arrangement, understanding, agreement or contract for or relating to
indebtedness of Premenos or its subsidiaries; or (iii) any property (real,
personal or mixed), tangible or intangible, used or currently intended to be
used in, the business or operations of Premenos or its subsidiaries.
Section 3.24. Brokers, Finders and Investment Bankers. Neither Premenos
nor any of its officers, directors or employees has employed any broker, finder
or investment banker or incurred any liability for any investment banking fees,
financial advisory fees, brokerage fees or finders' fees in connection with the
transactions contemplated by this Agreement, other than Premenos employing
Hambrecht & Quist LLC and The Great Circle Group LLC, the fees and expenses of
which will be paid by Premenos.
Section 3.25. Disclosure. No representation, warranty or covenant made by
Premenos in this Agreement, the Premenos Disclosure Letter or the Exhibits
attached to this Agreement contains an untrue
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statement of a material fact or omits to state a material fact required to be
stated herein or therein or necessary to make the statements contained herein or
therein not misleading.
Section 3.26. Opinion of Financial Advisor. The financial advisor of
Premenos, Hambrecht & Quist LLC, has delivered to Premenos an opinion dated the
date of this Agreement to the effect that the consideration to be received by
the holders of Premenos Common Stock in the Merger is fair to Premenos from a
financial point of view.
Section 3.27. No Existing Discussions. As of the date hereof, Premenos is
not engaged, directly or indirectly, in any negotiations or discussions with any
other party with respect to a Competing Offer (as defined in Section 5.8).
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF HARBINGER
With such exceptions as are set forth in a letter (the "Harbinger
Disclosure Letter") delivered by Harbinger to Premenos prior to the execution of
this Agreement, Harbinger represents and warrants to Premenos as follows:
Section 4.1. Organization. Each of Harbinger and its two material
operating subsidiaries identified in the Harbinger Disclosure Letter (the
"Harbinger Subsidiaries") is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Each of
Harbinger and the Harbinger Subsidiaries is duly qualified to transact business,
and is in good standing, as a foreign corporation in each jurisdiction where the
character of its activities requires such qualification, except where the
failure to so qualify would not have a material adverse effect on the assets,
liabilities, results of operations or financial condition of Harbinger and the
Harbinger Subsidiaries taken as a whole. Harbinger has delivered to Premenos
accurate and complete copies of the Articles or Certificate of Incorporation and
Bylaws, as currently in effect, of Harbinger and the Harbinger Subsidiaries, and
has made available to Premenos the minute books and stock records of Harbinger
and the Harbinger Subsidiaries. The Harbinger Disclosure Letter contains a true
and correct list of all of the jurisdictions in which each of Harbinger or the
Harbinger Subsidiaries is qualified to do business as a foreign corporation.
Section 4.2. Authorization. Each of Harbinger and HarbingerSub has full
corporate power and authority to execute and deliver this Agreement and to
perform its obligations under this Agreement and to consummate the Merger and
the other transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Harbinger and HarbingerSub, the performance by
each of Harbinger and HarbingerSub of its respective obligations under this
Agreement and the consummation of the Merger and the other transactions provided
for in this Agreement have been duly and validly authorized by all necessary
corporate action on the part of Harbinger and HarbingerSub. The Boards of
Directors of Harbinger and HarbingerSub have approved the execution, delivery
and performance of this Agreement and the consummation of the Merger and the
other transactions provided for in this Agreement. This Agreement has been duly
executed and delivered by each of Harbinger and HarbingerSub and constitutes the
valid and binding agreement of each of Harbinger and HarbingerSub, enforceable
against each of Harbinger and HarbingerSub in accordance with its terms, subject
to applicable bankruptcy, insolvency and other similar laws affecting the
enforceability of creditors' rights generally, general equitable principles and
the discretion of courts in granting equitable remedies.
Section 4.3. Absence of Restrictions and Conflicts. The execution,
delivery and performance of this Agreement, the consummation of the Merger and
the other transactions contemplated by this Agreement, and the fulfillment of
and compliance with the terms and conditions of this Agreement do not violate or
conflict with, constitute a breach of or default under, result in the loss of
any material benefit under, or permit the acceleration of any obligation under,
(i) any term or provision of the Articles or Certificate of Incorporation or
Bylaws of Harbinger or the Harbinger Subsidiaries, (ii) any material Harbinger
contract, (iii) any judgment, decree or order of any court or governmental
authority or agency to which Harbinger or any of the Harbinger
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Subsidiaries is a party or by which Harbinger, the Harbinger Subsidiaries or any
of their respective properties is bound, or (iv) any statute, law, regulation or
rule applicable to Harbinger, the Harbinger Subsidiaries, so as to have, in the
case of subsections (ii) through (iv) above, a material adverse effect on the
assets, liabilities, results of operations or financial condition of Harbinger
and the Harbinger Subsidiaries taken as a whole. Except for compliance with the
applicable requirements of the HSR Act, the Securities Act, the Exchange Act,
applicable Canadian law, applicable state securities laws and filing and
recordation of the Certificate of Merger as required by the DGCL no consent,
approval, order or authorization of, or registration, declaration or filing
with, any government agency or public or regulatory unit, agency, body or
authority with respect to Harbinger and the Harbinger Subsidiaries is required
in connection with the execution, delivery or performance of this Agreement by
Harbinger or HarbingerSub or the consummation of the transactions contemplated
by this Agreement by Harbinger or HarbingerSub , the failure to obtain which
would have a material adverse effect upon the assets, liabilities, results of
operations or financial condition of Harbinger and the Harbinger Subsidiaries
taken as a whole.
Section 4.4. Capitalization. The authorized capital stock of Harbinger
consists of (i) 100,000,000 shares of common stock, $.0001 par value per share,
(ii) 20,000,000 shares of preferred stock, $.0001 par value per share
("Harbinger Preferred Stock"), 4,000,000 shares of which have been designated
Zero Coupon Preferred Stock, (iii) 395,000 shares of Preferred Stock, Series B,
$10.00 par value per share (the "Series B Preferred Stock"), and (iv) 250,000
shares of Preferred Stock, Series C, par value $10.00 per share (the "Series C
Preferred Stock" and, together with Harbinger Common Stock, Harbinger Preferred
Stock and Series B Preferred Stock "Harbinger Capital Stock"). At September 30,
1997, there were 21,500,070 shares of Harbinger Common Stock issued and
outstanding, 4,000,000 shares of Zero Coupon Preferred Stock issued and
outstanding, no shares of Series B preferred stock issued and outstanding and no
shares of Series C Preferred Stock issued and outstanding. All shares of
Harbinger Capital Stock outstanding as of the date hereof are duly authorized,
validly issued, fully paid, nonassessable and free of pre-emptive rights. The
shares of Harbinger Common Stock to be issued in the Merger will be validly
issued, fully paid, nonassessable and free of pre-emptive rights. Except as set
forth in this Section 4.4, there are no shares of capital stock of Harbinger
outstanding, and there are no subscriptions, options, convertible securities,
calls, rights, warrants or other agreements, claims or commitments of any nature
whatsoever obligating Harbinger or the Harbinger Subsidiaries to issue,
transfer, deliver or sell, or cause to be issued, transferred, delivered or
sold, additional shares of the capital stock or obligating Harbinger or the
Harbinger Subsidiaries to grant, extend or enter into any such agreement or
commitment.
Section 4.5. Capital Stock of Harbinger Subsidiaries. The Harbinger
Disclosure Letter sets forth a true and complete list of the Harbinger
Subsidiaries, the jurisdiction in which each Harbinger Subsidiary is
incorporated or organized, and all shares of capital stock or other ownership
interests authorized, issued and outstanding of each Harbinger Subsidiary. The
outstanding shares of capital stock or other equity interests of each Harbinger
Subsidiary have been duly authorized and are validly issued, fully paid and
nonassessable. All shares of capital stock or other equity interests of each
Harbinger Subsidiary owned by Harbinger or the Harbinger Subsidiaries are owned
by Harbinger, either directly or indirectly, free and clear of all liens,
encumbrances, equities or claims.
Section 4.6. SEC Reports. Harbinger has made available to Premenos (i)
Harbinger's Annual Report on Form 10-K for the year ended December 31, 1996,
including all exhibits and items incorporated by reference, (ii) Harbinger's
Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30,
1997, including all exhibits and items incorporated by reference, (iii) the
proxy statement relating to Harbinger's Annual Meeting of Shareholders held on
April 25, 1997 and (iv) all Current Reports on Form 8-K filed by Harbinger with
the SEC since January 1, 1997, including all exhibits and items incorporated by
reference (items (i) through (iv) in this sentence being referred to
collectively as the "Harbinger SEC Reports"). As of their respective dates, the
Harbinger SEC Reports did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Since December 31, 1995, Harbinger has filed all forms,
reports and documents with the SEC required to be filed by it pursuant to the
Securities Act and the Exchange Act and the rules and regulations promulgated
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under such acts, each of which complied as to form, at the time such form,
document or report was filed, in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and the applicable rules
and regulations promulgated under such acts.
Section 4.7. Financial Statements. Harbinger has delivered to Premenos
(i) the audited consolidated balance sheets of Harbinger and its subsidiaries as
of December 31, 1996 and its audited consolidated statements of operations,
changes in shareholders' equity and cash flows for the fiscal years then ended,
including the notes thereto, examined by and accompanied by the report of KPMG
Peat Marwick LLP ("KPMG Peat Marwick"), independent public accountants and (ii)
the unaudited consolidated balance sheet of Harbinger and its subsidiaries as of
September 30, 1997, (the "Harbinger Balance Sheet") and its unaudited
consolidated statements of operations, stockholders' equity and cash flows for
the nine-month period then ended (all of the financial statements referred to in
this Section 4.7 are collectively referred to as the "Harbinger Financial
Statements"). The Harbinger Financial Statements have been prepared from, and
are in accordance with, the books and records of Harbinger and its consolidated
subsidiaries and, as applicable, present fairly the consolidated financial
position, consolidated results of operations, changes in stockholders' equity
and consolidated cash flows of Harbinger and its consolidated subsidiaries as of
the dates and for the periods indicated, in each case in conformity with
generally accepted accounting principles, consistently applied. The Harbinger
Disclosure Letter sets forth a true and complete list of all loss contingencies
(within the meaning of Statement of Financial Accounting Standards No. 5) of
Harbinger recorded during the period covered by the Harbinger Financial
Statements and exceeding $100,000 in the case of any single loss contingency or
$250,000 in the case of all loss contingencies.
Section 4.8. Absence of Certain Changes. (a) Since December 31, 1996 and
except for items specifically disclosed in the Harbinger SEC Reports filed
subsequent to December 31, 1996, there has not been (i) any material adverse
change in the assets, liabilities, results of operations, financial condition
or, to the best knowledge of Harbinger, business or prospects of Harbinger and
the Harbinger Subsidiaries taken as a whole, (ii) any damage, destruction, loss
or casualty to property or assets of Harbinger or the Harbinger Subsidiaries,
whether or not covered by insurance, which property or assets are material to
the operations or business of Harbinger and the Harbinger Subsidiaries taken as
a whole, (iii) any declaration, setting aside or payment of any dividend or
distribution (whether in cash, stock or property) in respect of the capital
stock of Harbinger or any redemption or other acquisition of any of the capital
stock of Harbinger or the Harbinger Subsidiaries (except for the acquisition of
Harbinger Common Stock in payment of the purchase price and related taxes upon
the exercise of stock options) or any split, combination or reclassification of
shares of capital stock declared or made by Harbinger, or (iv) any agreement to
do any of the foregoing.
(b) Since December 31, 1996 and except for items specifically disclosed in
the Harbinger SEC Reports filed subsequent to December 31, 1996, there have not
been (i) any extraordinary losses suffered, (ii) any material assets mortgaged,
pledged or made subject to any lien, charge or other encumbrance, (iii) any
material liability or obligation (absolute, accrued or contingent) incurred or
any material bad debt, contingency or other reserve increase suffered, except,
in each such case, in the ordinary course of business and consistent with past
practice, (iv) any material claims, liabilities or obligations (absolute,
accrued or contingent) paid, discharged or satisfied, other than the payment,
discharge or satisfaction, in the ordinary course of business and consistent
with past practice, of claims, liabilities and obligations reflected or reserved
against in Harbinger Financial Statements or incurred in the ordinary course of
business and consistent with past practice, (v) any material guaranteed checks,
notes or accounts receivable written off as uncollectible, except write-offs in
the ordinary course of business and consistent with past practice, (vi) any
write down of the value of any material asset or investment on Harbinger's books
or records, except for depreciation and amortization taken in the ordinary
course of business and consistent with past practice, (vii) any cancellation of
any material debts or waiver of any material claims or rights of substantial
value, or sale, transfer or other disposition of any properties or assets (real,
personal or mixed, tangible or intangible) of substantial value, except, in each
such case, in transactions in the ordinary course of business and consistent
with past practice and which in any event do not exceed $250,000 in the
aggregate, (viii) any single capital expenditure or commitment in excess of
$500,000 for additions to property or equipment, or aggregate capital
expenditures and commitments in excess of $10,000,000 (on a consolidated basis)
for additions to property or equipment,
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(ix) any transactions entered into other than in the ordinary course of
business, (x) any agreements to do any of the foregoing, or (xi) any other
events, developments or conditions of any character that has had or is
reasonably likely to have a material adverse effect on the assets, liabilities,
results of operations, financial condition or the business or prospects of
Harbinger and the Harbinger Subsidiaries taken as a whole.
Section 4.9. Legal Proceedings. There are no suits, actions, claims,
proceedings or investigations pending, or, to the best knowledge of Harbinger,
threatened against, relating to or involving Harbinger or the Harbinger
Subsidiaries (or any of their officers or directors) before any court,
arbitrator or administrative or governmental body, which, if finally determined
adversely, are reasonably likely, individually or in the aggregate, to have a
material adverse effect on the assets, liabilities, results of operations or
financial condition of Harbinger. All pending suits, actions, claims,
proceedings or investigations relating to or involving Harbinger or the
Harbinger Subsidiaries (or any of their officers or directors) before any court,
arbitrator or administrative or governmental body are adequately provided for in
the Harbinger Balance Sheet if and to the extent such a provision is required by
generally accepted accounting principles. Neither Harbinger nor the Harbinger
Subsidiaries is subject to any judgment, decree, injunction, rule or order of
any court, and, to the best knowledge of Harbinger, neither Harbinger nor the
Harbinger Subsidiaries is subject to any governmental restriction applicable to
Harbinger, which is reasonably likely (i) to have a material adverse effect on
the assets, liabilities, results of operations or financial condition of
Harbinger or the Harbinger Subsidiaries or (ii) to cause a material limitation
on Harbinger's ability to operate the business of Harbinger or the Harbinger
Subsidiaries after the Closing.
Section 4.10. Compliance with Law. Harbinger and the Harbinger
Subsidiaries have all material authorizations, approvals, licenses and orders of
and from all governmental and regulatory offices and bodies necessary to carry
on their businesses as they are currently being conducted, to own or hold under
lease the properties and assets they own or hold under lease and to perform all
of their obligations under the agreements to which they are a party, and each
has been and is in compliance with all applicable laws, regulations and
administrative orders of any country, state or municipality or of any
subdivision of any thereof to which its business and its employment of labor or
its use or occupancy of properties or any part thereof are subject, the failure
to obtain or the violation of which would have a material adverse effect upon
the assets, liabilities, results of operations or financial condition of
Harbinger.
Section 4.11. Patents, Trademarks, Trade Names. The Harbinger Disclosure
Letter sets forth a true and complete list of (i) all patents, trademarks, trade
names (including all U.S. federal and state registrations and foreign
registrations and applications pertaining thereto) and registered copyrights
owned by Harbinger or the Harbinger Subsidiaries (collectively, the "Harbinger
Proprietary Intellectual Property") and (ii) all patents, trademarks, trade
names, copyrights, technology and processes used by Harbinger or the Harbinger
Subsidiaries in their respective businesses which are material to their
respective businesses and are used pursuant to a license or other right granted
by a third party (collectively, the "Harbinger Licensed Intellectual Property",
and together with the Harbinger Proprietary Intellectual Property referred to as
"Harbinger Intellectual Property"). A true and complete list of all such
licenses with respect to Harbinger Licensed Intellectual Property is set forth
in the Harbinger Disclosure Letter. Neither Harbinger nor any of the Harbinger
Subsidiaries has granted any right, license or other interest in the Harbinger
Proprietary Intellectual Property to any third party, except for end-user
licenses granted by Harbinger to its customers in the ordinary course. Each of
the federal, state and foreign registrations pertaining to the Harbinger
Proprietary Intellectual Property is valid and in full force and effect. All
required filings in association with such registrations have been properly made
and all required fees have been paid. Harbinger and each of the Harbinger
Subsidiaries own, or have the right to use pursuant to valid and effective
agreements, all Harbinger Intellectual Property, free and clear of any lien,
claim or encumbrance, and the consummation of the transactions contemplated by
this Agreement will not alter or impair any such rights. No claims are pending
against Harbinger or the Harbinger Subsidiaries by any person with respect to
the use of any Harbinger Intellectual Property or challenging or questioning the
validity or effectiveness of any license or agreement relating to the same, and
to the best knowledge of Harbinger, the current use by Harbinger and the
Harbinger Subsidiaries of the Harbinger Intellectual Property does not infringe
on the rights of any third party. The conduct by Harbinger and the Harbinger
Subsidiaries of their respective businesses, including the provision of
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services to customers, as currently conducted and as proposed to be conducted,
does not and will not conflict with or infringe, to the best knowledge of
Harbinger, upon any patent, copyright, trade secret, trademark or other
intellectual property right of any third party, and Harbinger has not received
notice of any such alleged infringement. The Harbinger Disclosure Letter sets
forth a list of all jurisdictions in which Harbinger or the Harbinger
Subsidiaries is operating under a trade name, and each jurisdiction in which any
such trade name is registered.
Section 4.12. Licensed Software. (a) The software owned by Harbinger for
license to or use in connection with the business of Harbinger (the "Harbinger
Proprietary Software") consists of: (i) source and object code embodied in
magnetic media; and (ii) all development and procedural tools necessary to
maintain the Harbinger Proprietary Software, including licenses to use
compilers, assemblers, libraries and other aids. Harbinger employs individuals
who are familiar with the business of Harbinger and who are qualified to
maintain the Harbinger Proprietary Software and the related computer hardware
used by Harbinger in its operations (the "Harbinger Hardware").
(b) Harbinger has all right, title and interest in and to all intellectual
property rights in the Harbinger Proprietary Software (other than any defects in
title which are not, individually or in the aggregate, material), and subject to
the rights of end-user licensees under licenses granted by Harbinger to its
customers in the ordinary course of business). The Harbinger Proprietary
Software is free and clear of all liens, claims and encumbrances (other than any
liens, claims or encumbrances which are not, individually or in the aggregate,
material). The use of the software (other than the Harbinger Proprietary
Software) used by Harbinger in connection with the business of Harbinger (the
"Harbinger Licensed Software" and together with the Harbinger Proprietary
Software, the "Harbinger Software") and the use and distribution of the
Harbinger Proprietary Software does not breach any material terms of any
material contract between Harbinger and any third party. Harbinger proprietary
software products may incorporate Harbinger Proprietary Software (that is,
software owned by Harbinger) and code software that is owned by third parties
and licensed to Harbinger (all of which such third party software is included in
the Harbinger Licensed Software). To the best knowledge of Harbinger, Harbinger
has been granted under the license agreements relating to the Harbinger Licensed
Software (the "Harbinger License Agreements") valid and subsisting license
rights with respect to all software comprising the Harbinger Licensed Software.
Harbinger is in compliance in all respects with each of the terms and conditions
of each of the Harbinger License Agreements. In the case of any commercially
available "shrink-wrap" software programs (such as Lotus 1-2-3), Harbinger has
not made and is not using any unauthorized copies of any such software programs
and none of the employees, agents or representatives of Harbinger have made or
are using any such unauthorized copies.
(c) To the best knowledge of Harbinger, the Harbinger Proprietary Software
and the Harbinger Licensed Software do not infringe any United States patent,
copyright, or trade secret or any other intellectual property right of any third
party. The source code for the Harbinger Proprietary Software has been
maintained in confidence.
(d) The Harbinger Proprietary Software was developed by Harbinger for its
own account, and the Harbinger Proprietary Software was: (i) developed by
Harbinger employees working within the scope of their employment at the time of
such development; (ii) developed by agents, consultants, contractors or others
who have executed appropriate instruments of assignment in favor of Harbinger as
assignee that have conveyed to Harbinger ownership of all of their intellectual
property rights in the Harbinger Proprietary Software; or (iii) acquired by
Harbinger in connection with acquisitions in which Harbinger obtained
appropriate representations and warranties from the transferring party relating
to the title to such Harbinger Proprietary Software. Harbinger has not received
notice from any third-party claiming any right, title or interest in the
Harbinger Proprietary Software.
(e) There are no agreements or arrangements in effect with respect to the
marketing, distribution, licensing or promotion of the Harbinger Proprietary
Software by any independent sales person, distributor, sublicensee or other
remarketer or sales organization.
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(f) Harbinger has not granted any rights or licenses in or to the Harbinger
Software to any third party, except for end-user license agreements granted by
Harbinger to its customers in the ordinary course of business.
(g) The Harbinger Software and the Harbinger Hardware are adequate in all
material respects with the other assets of Harbinger to run the business of
Harbinger in the same manner as such business has operated since September 30,
1996. The Harbinger Disclosure Letter contains a summary description of any
problems experienced by Harbinger in the past twelve months with respect to the
Harbinger Software or Harbinger Hardware and the provision of services to
Harbinger's clients which resulted, or reasonably could be expected to result,
in any material disruption of the provision of services by Harbinger to clients
generally for a period equal to or exceeding five days.
(h) All Harbinger Software is year 2000 compliant (that is, (i) the
Harbinger Software is capable of correctly processing, providing and receiving
data within and between the 20th and 21st centuries (including accounting for
all required leap year calculations) and (ii) all date fields in the Harbinger
Software used for (4) digit year fields).
Section 4.13. Trade Secrets. To the best knowledge of Harbinger, no third
party has claimed that any officer, director or former or present employee of
Harbinger or the Harbinger Subsidiaries has, in respect of his or its activities
on behalf of Harbinger or the Harbinger Subsidiaries to date, violated any of
the terms or conditions of his or her employment contract with such third party,
or disclosed or utilized any trade secrets or proprietary information or
documentation of such third party, or interfered in the employment relationship
between such third party and any of his or her or its employees nor has any such
violation, disclosure or utilization occurred. Neither Harbinger or the
Harbinger Subsidiaries nor, to the best knowledge of Harbinger, any of their
officers, directors or employees have wrongfully utilized any trade secrets or
any information or documentation proprietary to any other person or entity,
including, but not limited to, confidential business information, and neither
Harbinger or the Harbinger Subsidiaries nor, to the best knowledge of Harbinger,
any of its officers, directors or employees has violated any obligations of
confidentiality with any third party in connection with the development,
manufacture and sale of any products or services of Harbinger or the Harbinger
Subsidiaries.
Section 4.14. Proxy Statement and Registration Statement. The information
with respect to Harbinger and the Harbinger Subsidiaries and each of their
respective officers, directors and affiliates in the Proxy Statement or in the
Registration Statement, will not, in the case of the Proxy Statement, on the
date the Proxy Statement is first mailed to stockholders of Premenos or on the
date of the stockholders' meetings referred to in Section 5.5, or, in the case
of the Registration Statement, at the time it becomes effective and at the
Effective Time, as such Proxy Statement or Registration Statement is then
amended or supplemented, contain any untrue statement of a material fact, or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Registration Statement and the Proxy
Statement will comply as to form with the applicable provisions of the
Securities Act and the Exchange Act.
Section 4.15. Pooling. KPMG Peat Marwick has advised Harbinger that, in
accordance with generally accepted accounting principles, the Merger qualifies
to be treated as a "pooling of interests" for accounting purposes.
Section 4.16. Brokers, Finders and Investment Bankers. Neither Harbinger
nor any of the Harbinger Subsidiaries, nor any of their respective officers,
directors or employees, has employed any broker, finder or investment banker or
incurred any liability for any investment banking fees, financial advisory fees,
brokerage fees or finders' fees in connection with the transactions contemplated
by this Agreement, other than Harbinger employing BT Alex. Brown Incorporated
and Endeavor Capital Management, the fees and expenses of which will be paid by
Harbinger.
Section 4.17. Disclosure. No representation, warranty or covenant made by
Harbinger in this Agreement, the Harbinger Disclosure Letter or the Exhibits
hereto contains any untrue statement of a material fact
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or omits to state a material fact required to be stated herein or therein or
necessary to make the statements contained herein or therein not misleading.
Section 4.18. Opinion of Financial Advisor. The financial advisor of
Harbinger, BT Alex. Brown Incorporated, has delivered to Harbinger an opinion
dated the date of this Agreement to the effect that the Conversion Ratio is fair
to Harbinger from a financial point of view.
Section 4.19. Interim Operations of HarbingerSub. HarbingerSub was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement, has engaged in no other business activities and has conducted its
operations only as contemplated by this Agreement.
ARTICLE 5
CERTAIN COVENANTS AND AGREEMENTS
Section 5.1. Conduct of Business by Premenos. From the date of this
Agreement to the Effective Time, Premenos will and will cause each of its
subsidiaries to, except as required in connection with the Merger and the other
transactions contemplated by this Agreement and except as otherwise specifically
permitted hereunder or disclosed in the Premenos Disclosure Letter or consented
to in writing by Harbinger:
(a) Carry on its businesses in the ordinary course in substantially
the same manner as previously conducted and not engage in any new line of
business or enter into any agreement, transaction or activity or make any
commitment except those in the ordinary course of business and not
otherwise prohibited under this Section 5.1;
(b) Neither change nor amend its Certificate of Incorporation or
Bylaws;
(c) Other than pursuant to the exercise of employee stock options,
warrants and other convertible securities outstanding on the date hereof
and set forth in the Premenos Disclosure Letter, not issue, sell or grant
options, warrants or rights to purchase or subscribe to, or enter into any
arrangement or contract with respect to the issuance or sale of any of the
capital stock of Premenos or any of its subsidiaries or rights or
obligations convertible into or exchangeable for any shares of the capital
stock of Premenos or any of its subsidiaries and not make any changes (by
split-up, stock dividend, combination, reorganization or otherwise) in the
capital structure of Premenos or any of its subsidiaries;
(d) Not declare, pay or set aside for payment any dividend or other
distribution in respect of the capital stock or other equity securities of
Premenos or any of its subsidiaries and not redeem, purchase or otherwise
acquire any shares of the capital stock or other securities of Premenos or
any of its subsidiaries or rights or obligations convertible into or
exchangeable for any shares of the capital stock or other securities of
Premenos or any of its subsidiaries or obligations convertible into such,
or any options, warrants or other rights to purchase or subscribe to any of
the foregoing;
(e) Not acquire or enter into an agreement to acquire, by merger,
consolidation or purchase of stock or assets, any business or entity;
(f) Use its reasonable efforts to preserve intact the corporate
existence, goodwill and business organization of Premenos and its
subsidiaries, to keep the officers and employees of Premenos and its
subsidiaries available to Harbinger and to preserve the relationships of
Premenos and its subsidiaries with customers, suppliers and others having
business relations with Premenos or any of its subsidiaries;
(g) Not (i) create, incur or assume any long-term debt (including
obligations in respect of capital leases which individually involve annual
payments in excess of $10,000) or, except in the ordinary course of
business under existing lines of credit, create, incur or assume any
short-term debt for borrowed money, (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person, except in the ordinary
course of business and consistent with past practice, (iii) make any loans
or advances to any other person, except in the ordinary course of business
and consistent with past practice, (iv) make any capital contributions to,
or investments in, any person, except in the ordinary course of business
and consistent with past practices
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with respect to investments, or (v) make any capital expenditure involving
in excess of $50,000 in the case of any single expenditure or $250,000 in
the case of all capital expenditures;
(h) Not enter into, modify or extend in any manner the terms of any
employment, severance or similar agreements with officers or directors or
grant any increase in the compensation of officers or directors, whether
now or in the future payable, including any increase pursuant to any
option, bonus, stock purchase, pension, profit-sharing, deferred
compensation, retirement or other plan, arrangement, contract or
commitment;
(i) Perform in all material respects all of its obligations under all
Premenos Material Contracts (except those being contested in good faith),
not enter into, assume or amend any contract or commitment that would be a
Premenos Material Contract other than contracts to provide products and
services entered into in the ordinary course of business;
(j) Use its reasonable efforts to maintain in full force and effect
and in the same amounts policies of insurance comparable in amount and
scope of coverage to that now maintained by Premenos;
(k) Use its reasonable efforts to continue to collect its accounts
receivable and pay its accounts payable in the ordinary course of business
and consistent with past practices;
(l) Prepare and file all federal, state, local and foreign returns for
taxes and other tax reports, filings and amendments thereto required to be
filed by it, and allow Harbinger, at its request, to review all such
returns, reports, filings and amendments at Premenos's offices prior to the
filing thereof, which review shall not interfere with the timely filing of
such returns;
(m) Not take any action the effect of which would be to cause the
Merger to be treated as a taxable transaction; and
(n) Not take any action the effect of which would be to cause the
Merger to be accounted for on a basis other than a pooling of interests.
In connection with the continued operation of the business of Premenos and
its subsidiaries between the date of this Agreement and the Effective Time,
Premenos shall confer in good faith on a regular and frequent basis with one or
more representatives of Harbinger designated in writing with respect to the
ongoing operations of Premenos. Premenos acknowledges that Harbinger does not
and will not waive any rights it may have under this Agreement as a result of
such consultations.
Section 5.2. Conduct of Business by Harbinger. From the date of this
Agreement to the Effective Time, Harbinger will, and will cause each of its
subsidiaries to, except as required in connection with the Merger and the other
transactions contemplated by this Agreement and except as otherwise specifically
permitted hereunder or disclosed in the Harbinger Disclosure Letter or consented
to in writing by Premenos:
(a) Carry on its businesses in the ordinary course in substantially
the same manner as heretofore conducted;
(b) Neither change nor amend its Articles or Certificate of
Incorporation or Bylaws;
(c) Other than pursuant to the exercise of employee stock options or
warrants outstanding on the date of this Agreement, not issue, sell or
grant options, warrants or rights to purchase or subscribe to, or enter
into any arrangement or contract with respect to the issuance or sale of
any of the capital stock of Harbinger or any of its subsidiaries or rights
or obligations convertible into or exchangeable for any shares of the
capital stock of Harbinger or any of its subsidiaries and not alter the
terms of any presently outstanding options or make any changes (by
split-up, combination, reorganization or otherwise) in the capital
structure of Harbinger or any of its subsidiaries; provided, however, that
Harbinger shall have the right to: (i) issue Harbinger Common Stock and
options, warrants or rights to acquire Harbinger Common Stock to employees
and consultants in transactions approved in good faith by the Board of
Directors of Harbinger or a committee thereof; and (ii) issue Harbinger
Common Stock or options or rights to acquire Harbinger Common Stock in any
Specified Acquisition as defined in the Harbinger Disclosure Letter;
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(d) Not take any action the effect of which would be to cause the
Merger to be treated as a taxable transaction;
(e) Not take any action the effect of which would be to cause the
Merger to be accounted for on a basis other than a pooling of interests;
and
(f) Use its reasonable efforts to preserve intact the corporate
existence, goodwill and business organization of Harbinger and the
Harbinger Subsidiaries.
In connection with the continued operation of the business of Harbinger and
the Harbinger Subsidiaries between the date of this Agreement and the Effective
Time, Harbinger shall confer in good faith on a regular and frequent basis with
one or more representatives of Premenos designated in writing with respect to
the ongoing operations and acquisition activity of Harbinger. Harbinger
acknowledges that Premenos does not and will not waive any rights it may have
under this Agreement as a result of such consultations.
Section 5.3. Inspection and Access to Information. (a) Between the date
of this Agreement and the Effective Time, each party to this Agreement will
provide each other party and its accountants, counsel and other authorized
representatives full access, during reasonable business hours and under
reasonable circumstances to any and all of its premises, properties, contracts,
commitments, books, records and other information (including tax returns filed
and those in preparation) and will cause their respective officers to furnish to
the other party and its authorized representatives any and all financial,
technical and operating data and other information pertaining to its business,
as each other party shall from time to time reasonably request.
(b) All non-public information obtained by Harbinger or Premenos or any of
their representatives pursuant to this Agreement or in connection with the
matters contemplated by this Agreement concerning the business, operations or
affairs of the other will be kept confidential and will not be used for any
purpose other than the consummation of the transactions contemplated by this
Agreement, or be disclosed to any other person or entity, except for disclosure
to its employees, agents and representatives who have a need to know the same,
who have been advised of the confidential nature of such information and who
agree to abide by the terms of this Section 5.3(b) and except for such
disclosure as may be required by applicable law, court order or governmental
agency request. In the event Harbinger or Premenos is required by law to
disclose information of a confidential nature, the disclosing party shall
provide the non-disclosing party with prompt notice of any such request or
requirement (written if practical) so that the nondisclosing party may have the
opportunity to seek an appropriate protective order, otherwise contest the
disclosure, or waive compliance with this Section 5.3(b). If this Agreement is
terminated in accordance with its terms, any non-public information furnished by
any party to any other party to this Agreement will be promptly returned.
Section 5.4. Proxy Statement and Registration Statement. Harbinger shall
prepare and file with the SEC as soon as is reasonably practicable the
Registration Statement and shall use all reasonable, best efforts to have the
Registration Statement declared effective by the SEC as promptly as is
practicable. Harbinger also shall take any action required to be taken under
state Blue Sky or securities laws in connection with the issuance of the
Harbinger Common Stock pursuant to the Merger. Harbinger and Premenos will
furnish each other with all information concerning themselves, their
subsidiaries, directors, officers and stockholders and such other matters as may
be necessary or advisable for the Registration Statement, the Proxy Statement,
the Nasdaq Additional Shares Notification, filings under the Blue Sky laws, and
any other statement or application made by or on behalf of Harbinger or Premenos
to any governmental body in connection with the Merger and the other
transactions contemplated by this Agreement.
Section 5.5. Harbinger and Premenos Stockholders Meetings. (a) Each of
Harbinger and Premenos shall call a meeting of its shareholders or stockholders,
as applicable, to be held as soon as practicable after the date hereof for the
purpose of voting upon the matters relating to this Agreement. The meeting of
Harbinger's shareholders shall be held prior to or contemporaneously with the
meeting of Premenos's stockholders.
(b) Harbinger will use its reasonable, best efforts to hold its
shareholders meeting as promptly as practicable and will, through its Board of
Directors, recommend to its shareholders approval of the Merger and this
Agreement at such shareholders meeting (the "Harbinger Shareholders Meeting");
provided, however,
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that the Board of Directors of Harbinger may withdraw such recommendation if the
Harbinger Board of Directors determines in good faith (after consultation with
and based upon the advice of its outside legal counsel and after providing
notice to Premenos and giving Premenos the opportunity to consult with Harbinger
with regard to such withdrawal) that the fiduciary duties of the Harbinger Board
of Directors to its shareholders under applicable law require that the Harbinger
Board of Directors withdraw such recommendation. Unless otherwise required to
comply with the fiduciary duties of the Board of Directors of Harbinger, as
determined by the Harbinger Board of Directors in good faith (after consultation
with and based upon the advice of its outside legal counsel), Harbinger shall
use reasonable, best efforts to solicit from its shareholders proxies in favor
of all matters to be voted upon at the Harbinger Shareholders Meeting.
(c) Premenos will use its reasonable, best efforts to hold its stockholders
meeting as promptly as practicable and will, through its Board of Directors,
recommend to its stockholders approval of the Merger and this Agreement at such
stockholders meeting (the "Premenos Stockholders Meeting"); provided, however,
that the Board of Directors of Premenos may withdraw such recommendation if the
Premenos Board of Directors determines in good faith (after consultation with
and based upon the advice of its outside legal counsel and after providing
notice to Harbinger and giving Harbinger the opportunity to consult with
Premenos with regard to such withdrawal) that the fiduciary duties of the
Premenos Board of Directors to its stockholders under applicable law require
that the Premenos Board of Directors withdraw such recommendation. Unless
otherwise required to comply with the fiduciary duties of the Board of Directors
of Premenos, as determined by the Board of Directors of Premenos in good faith
(after consultation with and based upon the advice of its outside legal
counsel), Premenos shall use its reasonable, best efforts to solicit from its
stockholders' proxies in favor of all matters to be acted upon at the Premenos
Stockholders Meeting.
Section 5.6. The Nasdaq National Market Additional Shares
Notification. Harbinger will file an additional shares notification with The
Nasdaq National Market (the "Nasdaq Additional Shares Notification") to approve
for listing, subject to official notice of its issuance, the shares of Harbinger
Common Stock to be issued in connection with the Merger. Harbinger shall
exercise reasonable good faith efforts to cause the shares of Harbinger Common
Stock to be issued in the Merger to be approved for listing on The Nasdaq
National Market, subject to official notice of issuance, prior to the Effective
Time.
Section 5.7. Premenos Affiliates. (a) Premenos shall deliver to Harbinger
a letter identifying all persons who are, at the time the Merger is submitted to
a vote to the stockholders of Premenos, "affiliates" of Premenos for purposes of
Rule 145 under the Securities Act. Premenos shall cause each person who is
identified as an "affiliate" in such letter to deliver to Harbinger on or prior
to the Effective Time a written statement, in form satisfactory to Harbinger and
Premenos, that such person will not offer to sell, transfer or otherwise dispose
of any of the shares of Harbinger Common Stock issued to such person pursuant to
the Merger, except (i) in accordance with the applicable provisions of the
Securities Act and the rules and regulations thereunder and (ii) until such time
as financial results covering at least thirty (30) days of combined operations
of Harbinger and Premenos have been published within the meaning of Section
201.01 of the SEC's Codification of Financial Reporting Policies. Harbinger
shall be entitled to place legends on any certificates of Harbinger Common Stock
issued to such affiliates to restrict transfer of such shares as set forth
above.
(b) Harbinger shall identify all persons who are, at the time the Merger is
submitted to a vote to the shareholders of Harbinger, "affiliates" of Harbinger
for purposes of Rule 145 under the Securities Act. Harbinger shall cause each
person who is identified as an "affiliate" to deliver to Harbinger on or prior
to the Effective Time a written statement that such person will not offer to
sell, transfer or otherwise dispose of any shares of Harbinger Common Stock
owned by such affiliate, except (i) in accordance with the applicable provisions
of the Securities Act and the rules and regulations thereunder and (ii) until
such time as financial results covering at least thirty (30) days of combined
operations of Harbinger and Premenos have been published within the meaning of
Section 201.01 of the SEC's Codification of Financial Reporting Policies.
Section 5.8. No Solicitation. (a) Premenos agrees that it shall not,
directly or indirectly, through any officer, director, employee, representative
or agent (i) solicit, initiate, or encourage any inquiries or proposals that
constitute, or could reasonably be expected to lead to, a proposal or offer for
a merger, consolidation,
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business combination, sale of substantial assets, sale of shares of capital
stock (including, without limitation, by way of a tender offer) or similar
transactions involving Premenos or any of its subsidiaries, other than the
transactions contemplated or permitted by this Agreement (any of the foregoing
inquiries or proposals being referred to in this Agreement as a "Competing
Offer"), (ii) engage in negotiations or discussions concerning, or provide any
non-public information to any person or entity relating to, any Competing Offer,
or (iii) agree to, approve or recommend any Competing Offer; provided, however,
that nothing contained in this Agreement shall prevent Premenos or its Board of
Directors from furnishing non-public information to, or entering into
discussions or negotiations with, any person or entity in connection with an
unsolicited bona fide written Competing Offer by such person or entity or
recommending such an unsolicited bona fide written Competing Offer to the
stockholders of Premenos, if and only to the extent that (1) the Board of
Directors of Premenos determines in good faith (after consultation with and
based upon the written advice of its financial advisor) that such Competing
Offer would, if consummated, result in a transaction more favorable to Premenos
stockholders than the transaction contemplated by this Agreement (and any such
more favorable Competing Offer being referred to in this Agreement as a
"Superior Proposal") and that the person or entity making such Superior Proposal
has the financial means, or the ability to obtain the necessary financing, to
conclude such transaction, (2) the Board of Directors of Premenos determines in
good faith (after consultation with and based upon the advice of its outside
legal counsel), that the fiduciary duties of the Premenos Board of Directors to
its stockholders under applicable law require that Premenos take such action,
and (3) prior to furnishing such non-public information to, or entering into
discussions or negotiations with, such person or entity, the Premenos Board of
Directors receives from such person or entity an executed confidentiality
agreement with confidentiality covenants not materially less favorable to
Premenos than those contained in the Confidentiality Agreement by and between
Harbinger and Premenos dated June 27, 1996.
(b) Premenos shall notify Harbinger no later than twenty-four (24) hours
after receipt by Premenos (or its agents or advisors) of any Competing Offer or
any requests for non-public information in connection with a Competing Offer or
for access to the properties, books or records of Premenos by any person or
entity that informs Premenos that it is considering making, or has made, a
Competing Offer. Such notice to Harbinger shall be made orally and in writing
and shall indicate in reasonable detail the identity of the person or entity
making such proposal, inquiry or contact and the terms and conditions thereof;
provided, however, to the extent Premenos's outside legal counsel shall advise
Premenos's Board of Directors that complying with such notification requirements
will result in a breach of the terms of any confidentiality agreement executed
by Premenos on or prior to the date hereof, then Premenos shall be entitled to
comply with such notice requirement to the maximum extent possible without
breaching the terms of such confidentiality agreement.
Section 5.9. Reasonable Efforts; Further Assurances; Cooperation. Subject
to the other provisions of this Agreement, the parties hereto shall each use
their reasonable, good faith efforts to perform their obligations herein and to
take, or cause to be taken or do, or cause to be done, all things necessary,
proper or advisable under applicable law to obtain all regulatory approvals and
satisfy all conditions to the obligations of the parties under this Agreement
and to cause the Merger and the other transactions contemplated by this
Agreement to be effected on or prior to December 31, 1997 in accordance with the
terms of this Agreement and shall cooperate fully with each other and their
respective officers, directors, employees, agents, counsel, accountants and
other designees in connection with any steps required to be taken as a part of
their respective obligations under this Agreement, including without limitation:
(a) Premenos and Harbinger shall promptly make their respective
filings and submissions and shall take, or cause to be taken, all actions
and do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to obtain any required approval of
any other federal, state or local governmental agency or regulatory body
with jurisdiction over the transactions contemplated by this Agreement.
(b) If any claim, action, suit, investigation or other proceeding by
any governmental body or other person is commenced which questions the
validity or legality of the Merger or any of the other transactions
contemplated by this Agreement or seeks damages in connection with this
Agreement, the parties agree to cooperate and use all reasonable efforts to
defend against such claim, action, suit, investigation or other proceeding
and, if an injunction or other order is issued in any such action, suit or
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other proceeding, to use all reasonable efforts to have such injunction or
other order lifted, and to cooperate reasonably regarding any other
impediment to the consummation of the transactions contemplated by this
Agreement.
(c) Each party shall give prompt written notice to the other of (i)
the occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any representation or warranty of Premenos
or Harbinger, whether such occurrence or failure is with respect to its own
representations or warranties, or with respect to the other party's
representations and warranties, contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date of this
Agreement to the Effective Time or that will or may result in the failure
to satisfy any of the conditions specified in Article 6 and (ii) any
failure of Premenos or Harbinger, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement.
(d) Without the prior written consent of Harbinger and except as set
forth in the Premenos Disclosure Letter, Premenos will not terminate any
employee if such termination would result in the payment of any amounts
pursuant to "change in control" provisions of any employment agreement or
arrangement.
Section 5.10. Public Announcements. The timing and content of all
announcements regarding any aspect of this Agreement or the Merger to the
financial community, government agencies, employees or the general public shall
be mutually agreed upon in advance (unless Harbinger or Premenos is advised by
counsel that any such announcement or other disclosure not mutually agreed upon
in advance is required to be made by law or applicable rule of The Nasdaq
National Market and then only after making a reasonable attempt to comply with
the provisions of this Section 5.10 and providing notice to the non-disclosing
party simultaneously with such disclosure). This Section 5.10 shall not apply to
disclosures made to senior managers prior to the date of this Agreement in
accordance with the understanding of Harbinger and Premenos.
Section 5.11. Financial Statements and SEC Reports. Prior to the
Effective Time, each party to this Agreement shall deliver to the other, as soon
as available but in no event later than 45 days after the end of each fiscal
quarter (or 90 days after the end of a fiscal year), a consolidated balance
sheet as of the last day of such fiscal period and the consolidated statements
of income, stockholders' equity and cash flows of such party and its
subsidiaries for the fiscal period then ended prepared in accordance with
generally accepted accounting principles and the requirements of Form 10-Q (or
Form 10-K as the case may be) under the Exchange Act. Prior to the Effective
Time, each party to this Agreement shall deliver to the other, as soon as
available, a copy of each form, report and other document filed by such party
with the SEC.
Section 5.12. Supplements to Disclosure Letters. From time to time prior
to the Effective Time, Premenos and Harbinger will each promptly supplement or
amend the respective disclosure letters which they have delivered pursuant to
this Agreement with respect to any matter arising after the date of this
Agreement which, if existing or occurring at the date of this Agreement, would
have been required to be set forth or described in any such disclosure letter or
which is necessary to correct any information in any such disclosure letter
which has been rendered inaccurate by such matter. No supplement or amendment to
any such disclosure letter shall have any effect for the purpose of determining
satisfaction of the conditions set forth in Sections 6.2(a) or 6.3(a).
Section 5.13. Pooling of Interests Accounting. Except for other actions
specifically permitted to be taken hereunder and from and after the date of this
Agreement and until the Effective Time, neither Harbinger nor Premenos nor any
of their respective subsidiaries or other affiliates shall take, or fail to
take, any action that would jeopardize the treatment of Harbinger's acquisition
of Premenos as a "pooling of interests" for accounting purposes. Following the
Effective Time, Harbinger shall use its reasonable efforts to conduct the
business of Harbinger in a manner that would not jeopardize the characterization
of the Merger as a "pooling of interests" for accounting purposes.
Section 5.14. Accountant's Review Report. Premenos agrees to exercise
reasonable efforts to cause Coopers & Lybrand to deliver to Harbinger prior to
the filing of the Registration Statement a limited review
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report covering the unaudited financial statements of Premenos included in the
Registration Statement in form and substance reasonably acceptable to Harbinger
(the "Coopers & Lybrand Review Report").
Section 5.15. Indemnification of Premenos Directors and
Officers. (a) Harbinger and the Surviving Corporation agree that the
indemnification obligations set forth in Premenos's Certificate of Incorporation
and Bylaws, in each case as of the date hereof, shall survive the Merger and
shall not be amended, repealed or otherwise modified for a period of six (6)
years after the Effective Time in any manner that would adversely affect the
rights thereunder of the individuals who on or prior to the Effective Time, were
directors, officers, employees or agents of Premenos or any of its subsidiaries.
(b) After the Effective Time, Harbinger and the Surviving Corporation
shall, to the fullest extent permitted under applicable law, indemnify and hold
harmless, each present and former director or officer of Premenos and each of
its subsidiaries and each such person who served at the request of Premenos or
any of its subsidiaries as a director, officer, trustee, partner, fiduciary,
employee or agent of Premenos or any of its subsidiaries or of another
corporation, partnership, joint venture, trust, pension or other employee
benefit plan or enterprise (collectively, the "Indemnified Parties") against all
costs and expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages, liabilities and settlement amounts paid in connection
with any claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), whether civil, administrative or
investigative, arising out of or pertaining to any action or omission in their
capacity as an officer, director, employee, agent or other person to whom this
Section 5.15 applies, in each case occurring before the Effective Time
(including the transactions contemplated by this Agreement).
(c) In the event Harbinger or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity in
such consolidation or merger, or (ii) transfers all or substantially all of its
properties to any person, then, and in each case, proper provision shall be made
so that the successors and assigns of Harbinger or the Surviving Corporation, as
the case may be, honor the indemnification obligations set forth in this Section
5.15.
(d) The obligations of Harbinger and the Surviving Corporation under this
Section 5.15 shall not be terminated or modified in such a manner as to
adversely affect any director, officer, employee, agent or other person to whom
this Section 5.15 applies without the consent of such affected director,
officer, employee, agent or other person (it being expressly agreed that each
such director, officer, employee, agent or other person to whom this Section
5.15 applies shall be a third-party beneficiary of this Section 5.15).
Section 5.16. Harbinger Board of Directors. Harbinger shall take all
actions reasonably necessary to elect David Hildes to Harbinger's Board of
Directors in the class of directors with the longest unexpired term at the time
of his election, such election to be effective as of the Effective Time. If the
unexpired term of the class of directors to which David Hildes is elected is
less than one year, then Harbinger agrees to use its reasonable, best efforts to
(i) nominate David Hildes for election as a director at the next annual meeting
of Harbinger's shareholders and (ii) recommend his election to Harbinger's
shareholders.
Section 5.17. Employment Agreements. As promptly as reasonably
practicable after the date of this Agreement, Harbinger shall deliver to
Premenos a list of names of key senior managers of Premenos that Harbinger
requests to sign two-year employment agreements on terms which shall include
customary compensation, non-competition, non-solicitation and non-disclosure
provisions. Harbinger and Premenos agree to cooperate in using their reasonable
best efforts to cause such key senior managers to enter into such agreements at
the Effective Time. Harbinger further agrees to engage in discussions with the
Chairman of Premenos regarding establishing an appropriate transition role for
the Chairman of Premenos after the Effective Time and future business
relationships between Harbinger and the Chairman of Premenos on terms which will
include non-competition provisions prohibiting competition by the Chairman in
the electronic data interchange ("EDI") and value-added networks ("VAN")
businesses and non-solicitation and non-disclosure provisions as are customary
in the business of Harbinger; provided that such roles or relationships shall
not include full-time employment. The Chairman of Premenos shall execute and
deliver to Harbinger an agreement containing such non-competition,
non-solicitation and non-disclosure provisions in a form reasonably satisfactory
to Harbinger on or prior to the Closing Date.
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Section 5.18. Premenos Transactional Expenses. Premenos agrees that the
aggregate amount of fees, costs and expenses to be incurred by Premenos in
connection with this Agreement and transactions contemplated hereby, including,
without limitation, the fees, costs and expenses of financial advisors,
accountants and counsel shall not exceed Two Million Three Hundred Thousand
Dollars ($2,300,000). Premenos further agrees to periodically apprise Harbinger
of the aggregate amount of the transaction fees and expenses incurred and
anticipated to be incurred in connection with this Agreement and the matters
contemplated hereby.
Section 5.19. Severance. Harbinger agrees to honor the severance policy
of Premenos set forth in the Premenos Disclosure Letter with respect to any
Premenos employees whose employment is terminated during the twelve (12) month
period following the Effective Time.
Section 5.20. Premenos Stock Options. Premenos will cause holders of Old
Options representing at least 95% of the shares of Premenos Common Stock
issuable pursuant to Old Options to execute and deliver to Harbinger prior to
the Closing option assumption agreements in form mutually satisfactory to
Harbinger and Premenos to effect the conversion of such Old Options to Harbinger
Options as contemplated in Section 2.3.
Section 5.21. Minority Interest. Premenos shall use its reasonable best
efforts to effectuate the share exchanges with the stockholders of Premenos
Corp. as set forth in the Premenos Disclosure Letter as quickly as reasonably
practicable, and such share exchanges shall become effective and there shall be
no further minority interests in Premenos Corp. on the Closing Date.
ARTICLE 6
CONDITIONS
Section 6.1. Conditions to Each Party's Obligations. The respective
obligations of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing of each of the following conditions:
(a) Premenos Stockholder Approval. The Merger, this Agreement and the
transactions contemplated by this Agreement shall have been approved at the
meeting of Premenos Stockholders duly called and held in accordance with
the DGCL by the holders of a majority of the outstanding shares of Premenos
Common Stock having the right to vote on such matters.
(b) Harbinger Shareholder Approval. The Merger, this Agreement and
the transactions contemplated by this Agreement, including the issuance of
shares of Harbinger Common Stock pursuant to the Merger and the amendment
of the Harbinger 1996 Stock Option Plan increasing the number of shares of
Harbinger Common Stock available for grant thereunder to facilitate the
conversion of the Old Options as contemplated in Section 2.3 shall have
been approved at the Harbinger Shareholders Meeting duly called and held in
accordance with the Georgia Business Corporation Code ("GBCC") by the
holders of a majority of the outstanding shares of Harbinger Common Stock
having the right to vote on such matters.
(c) Injunction. At the Effective Time there shall be no effective
injunction, writ or preliminary restraining order or any order of any
nature issued by a court or governmental agency of competent jurisdiction
to the effect that the Merger may not be consummated as provided in this
Agreement, no proceeding or lawsuit shall have been commenced by any
governmental or regulatory agency for the purpose of obtaining any such
injunction, writ or preliminary restraining order and no written notice
shall have been received from any such agency indicating an intent to
restrain, prevent, materially delay or restructure the transactions
contemplated by this Agreement.
(d) Tax Opinion. Premenos and Harbinger shall each have received a
written opinion of King & Spalding concerning certain federal income tax
consequences of the Merger, substantially in the form attached as Exhibit
6.1(d).
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(e) Registration Statement. The Registration Statement shall be
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall be in effect and no
proceedings for such purpose, or under the proxy rules of the SEC pursuant
to the Exchange Act and with respect to the transactions contemplated by
this Agreement, shall be pending before or threatened by the SEC. All
applicable state securities laws shall have been complied with in
connection with the issuance of Harbinger Common Stock to be issued
pursuant to the Merger, and no stop order suspending the effectiveness of
any qualification or registration of such Harbinger Common Stock under such
state securities laws shall have been issued and pending or threatened by
the authorities of any such state. The joint proxy statement/prospectus
that comprises part of the Registration Statement shall have been mailed or
sent to Premenos Stockholders and Harbinger shareholders not less than
twenty business days prior to the meetings described in Section 6.1(a) and
Section 6.1(b), respectively, as the term "business days" is defined for
purposes of Form S-4 under the Securities Act.
(f) Pooling. Harbinger shall have been advised in writing, as of the
Effective Time, by KPMG Peat Marwick that, in accordance with generally
accepted accounting principles, the Merger qualifies to be treated as a
"pooling of interests" for accounting purposes. Premenos shall have been
advised in writing, as of the Effective Time, by Coopers & Lybrand that,
based on inquiries and their examination of the financial statements of
Premenos, they believe that the criteria for pooling accounting treatment
relative to Premenos has been satisfied.
(g) The Nasdaq National Market Additional Shares Notification. The
Harbinger Common Stock to be issued pursuant to this Agreement shall have
been approved for listing on The Nasdaq National Market, subject only to
official notice of issuance by Harbinger.
(h) HSR Act. The applicable waiting periods shall have expired or
been terminated early under the HSR Act.
Section 6.2. Conditions to Obligations of Harbinger. The obligation of
Harbinger to effect the Merger shall be subject to the fulfillment at or prior
to the Closing of each of the following additional conditions:
(a) Representations and Warranties. The representations and
warranties of Premenos set forth in Article 3 of this Agreement shall be
true and correct as of the date of this Agreement and as of the Effective
Time as though made on and as of the Effective Time.
(b) Performance of Obligations of Premenos. Premenos shall have
performed in all material respects all covenants and agreements required to
be performed by it under this Agreement.
(c) Opinion of Premenos Counsel. Harbinger shall have received an
opinion of Bryan Cave LLP, dated the Closing Date, substantially in the
form attached as Exhibit 6.2(c).
(d) Authorization of Merger. All corporate action necessary by
Premenos to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement shall have been duly and validly taken.
(e) Consents. All consents, authorizations, orders and approvals of
(or filings or registrations with) any governmental commission, board or
other regulatory body required in connection with the execution, delivery
and performance of this Agreement shall have been obtained or made, except
for filing of the Delaware Certificate of Merger and any other documents
required to be filed after the Effective Time and except where the failure
to have obtained or made any such consent, authorization, order, approval,
filing or registration would not have a material adverse effect on the
business of Harbinger and Premenos following the Effective Time.
(f) Certificates. Premenos shall have furnished Harbinger with a
certificate of its appropriate officers as to compliance with the
conditions set forth in Sections 6.2(a), (b) and (d).
(g) Accountant's Review Report and Letter. Harbinger shall have
received: (i) the Coopers & Lybrand Review Report in accordance with
Section 5.14 and (ii) a letter from Coopers & Lybrand dated the effective
date of the Registration Statement under the Securities Act, with respect
to certain financial
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and statistical information concerning Premenos included in the
Registration Statement in form and substance customary in transactions of
the nature of the Merger.
(h) Material and Client Contracts. Harbinger shall have received
consents to assignment of all Premenos Material Contracts or written
waivers of the provisions of any Premenos Material Contracts requiring the
consents of third parties as set forth in the Premenos Disclosure Letter
except where the failure to have received any such consent would not have a
material adverse effect on the business of Harbinger and Premenos following
the Effective Time.
(i) Resignation Letters. Each of the directors of Premenos shall have
tendered to Harbinger resignation letters in form and substance reasonably
acceptable to Harbinger on or prior to the Closing Date, such resignations
to be effective immediately following the Closing Date.
Section 6.3. Conditions to Obligations of Premenos. The obligation of
Premenos to effect the Merger shall be subject to the fulfillment at or prior to
the Closing of each of the following additional conditions:
(a) Representations and Warranties. The representations and
warranties of Harbinger set forth in Article 4 of this Agreement shall be
true and correct as of the date of this Agreement and as of the Effective
Time as though made on and as of the Effective Time.
(b) Performance of Obligations by Harbinger. Harbinger shall have
performed in all material respects all covenants and agreements required to
be performed by it under this Agreement.
(c) Opinion of Harbinger Counsel. Premenos shall have received an
opinion of King & Spalding, counsel to Harbinger, substantially in the form
of Exhibit 6.3(c).
(d) Authorization of Merger. All corporate action necessary by
Harbinger to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement shall have been duly and validly taken.
(e) Consents. All consents, authorizations, orders and approvals of
(or filings or registrations with) any governmental commission, board or
other regulatory body required in connection with the execution, delivery
and performance of this Agreement shall have been obtained or made, except
for filing of the Delaware Certificate of Merger and any other documents
required to be filed after the Effective Time and except where the failure
to have obtained or made any such consent, authorization, order, approval,
filing or registration would not have a material adverse effect on the
business of Harbinger and Premenos following the Effective Time.
(f) Certificates. Harbinger shall have furnished Premenos with a
certificate of its appropriate officers as to compliance with the
conditions set forth in Sections 6.3(a), (b) and (d).
(g) Harbinger shall have executed and delivered the registration
rights agreement substantially in the form of Exhibit 6.3(g).
ARTICLE 7
CLOSING
The consummation of the transactions contemplated by this Agreement is
referred to as the "Closing." The "Closing Date" is the date on which the
Closing occurs. The Closing shall occur as soon as possible following the
Harbinger and Premenos stockholders meetings described in Section 5.5 as is
reasonably practicable and in any event within three business days of the
satisfaction or waiver of the other conditions set forth in Article 6. The
Closing shall take place at the offices of King & Spalding, 191 Peachtree
Street, Atlanta, Georgia, or at such other place as Premenos and Harbinger may
mutually agree.
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ARTICLE 8
TERMINATION
Section 8.1. Termination and Abandonment. This Agreement may be
terminated at any time prior to the Closing Date, whether before or after
approval by the shareholders and stockholders of Harbinger and Premenos,
respectively:
(a) by mutual agreement of the Boards of Directors of Harbinger and
Premenos;
(b) by Harbinger, if the conditions set forth in Sections 6.1 and 6.2
are not complied with or performed and such noncompliance or nonperformance
has not been cured or eliminated (or by its nature cannot be cured or
eliminated) by Premenos on or before March 31, 1998; and
(c) by Premenos, if the conditions set forth in Sections 6.1 and 6.3
are not complied with or performed and such noncompliance or nonperformance
has not been cured or eliminated (or by its nature cannot be cured or
eliminated) by Harbinger on or before March 31, 1998;
(d) by Harbinger or Premenos if, at the Harbinger Shareholders Meeting
or the Premenos Stockholders Meeting (including any adjournment or
postponement thereof), the requisite vote of the stockholders in favor of
this Agreement and the Merger shall not have been obtained; provided,
however, that the right to terminate this Agreement under this Section
8.1(d) shall not be available to any party which has not complied with its
obligations under Section 5.5;
(e) by Harbinger if, (i) the Board of Directors of Premenos shall have
withdrawn or modified its recommendation of this Agreement or the Merger in
a manner adverse to Harbinger or shall have resolved or publicly announced
or disclosed to any third party its intention to do so, (ii) an Alternative
Transaction involving Premenos shall have taken place or the Board of
Directors of Premenos shall have recommended such an Alternative
Transaction (or a proposal or offer therefor) to the stockholders of
Premenos or shall have resolved or publicly announced or disclosed to any
third party its intention to recommend or engage in such an Alternative
Transaction, or (iii) a tender offer or exchange offer for twenty percent
(20%) or more of the outstanding shares of Premenos Common Stock shall have
been commenced or a registration statement with respect thereto shall have
been filed (other than by Harbinger or an affiliate thereof), and the Board
of Directors of Premenos shall have (A) recommended (or shall have resolved
or publicly announced or disclosed to any third party its intention to
recommend) that the stockholders of Premenos tender their shares in such
tender or exchange offer or (B) resolved or publicly announced or disclosed
to any third party its intention to take no position with respect to such
tender or exchange offer;
(f) by Premenos if, the Board of Directors of Harbinger shall have
withdrawn or modified its recommendation of this Agreement or the Merger in
a manner adverse to Premenos or shall have resolved or publicly announced
or disclosed to any third party its intention to do so;
(g) by Harbinger, if the Board of Directors of Harbinger shall have
determined to withdraw its recommendation of this Agreement or the Merger
in accordance with Section 5.5(b) hereof;
(h) by Premenos, if the Board of Directors of Premenos shall have
withdrawn its recommendation of this Agreement or the Merger in accordance
with Section 5.5(c);
(i) by Premenos, if Harbinger breaches the covenant set forth in
Section 5.2(c) hereof; and
(j) by Harbinger if either David Hildes or Lew Jenkins sells any
shares of Premenos Common Stock subject to the Proxy Agreements on or prior
to the Closing Date.
Section 8.2. Specific Performance and Other Remedies. The parties each
acknowledge that the rights of each party to consummate the transactions
contemplated by this Agreement are special, unique and of extraordinary
character, and that, if any party violates or fails or refuses to perform any
covenant or agreement made by it in this Agreement, the non-breaching party may
be without an adequate remedy at law. The parties each agree, therefore, that if
either party violates or fails or refuses to perform any covenant or agreement
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made by such party in this Agreement, the nonbreaching party or parties may,
subject to the terms of this Agreement and in addition to any remedies at law
for damages or other relief, institute and prosecute an action in any court of
competent jurisdiction to enforce specific performance of such covenant or
agreement or seek any other equitable relief.
Section 8.3. Effect of Termination. In the event of termination of this
Agreement pursuant to this Article 8, this Agreement shall forthwith become void
and there shall be no liability on the part of any party or its respective
officers, directors or shareholders or stockholders, as applicable, except for
obligations under Section 5.3(b), Section 5.10, Section 8.4, and this Section,
all of which shall survive the termination. Notwithstanding the foregoing,
nothing contained in this Section 8.3 shall relieve any party from liability for
any breach of any covenant or agreement in this Agreement.
Section 8.4. Fees and Expenses. (a) Except as set forth in this Section
8.4 and in Section 2.5(a), 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 Harbinger and Premenos shall share equally all fees and
expenses, other than attorneys' and accounting fees and expenses, incurred in
relation to the printing and filing of the Proxy Statement and the Registration
Statement and any amendments or supplements thereto and the fees required to be
paid in connection with filing(s) required under the HSR Act in connection with
the transactions contemplated by this Agreement.
(b) If this Agreement is terminated (i) by Harbinger pursuant to Section
8.1(e), (ii) by Premenos pursuant to Section 8.1(h), (iii) by Harbinger pursuant
to Section 8.1(d) as a result of the failure to receive the requisite vote for
approval of this Agreement and the Merger at the Premenos Stockholders Meeting
and at the time of the Premenos Stockholders Meeting an Alternative Transaction
involving Premenos shall have been announced which shall not have been
absolutely and unconditionally withdrawn and abandoned, or (iv) by Harbinger
pursuant to Section 8.1(j), then Premenos shall pay to Harbinger a termination
fee of Four Million Dollars ($4,000,000) in cash (the "Harbinger Termination
Fee") to reimburse and compensate Harbinger for its time, expenses and lost
opportunity costs of pursuing the Merger, which Harbinger Termination Fee shall
be paid to Harbinger within two (2) days of the termination of this Agreement
pursuant to such Sections. If Premenos shall enter into a definitive agreement
to consummate an Alternative Transaction within one (1) year of the payment of
the Harbinger Termination Fee, then Premenos shall pay to Harbinger the
Harbinger Topping Fee, which fee shall be payable in cash and shall be paid
within two (2) days of Premenos's having entered into such definitive agreement
to consummate an Alternative Transaction. The Harbinger Topping Fee shall be
equal to the product obtained by multiplying (a) twenty five percent (25%), by
(b) the Incremental Value, but in no case shall the Harbinger Topping Fee be
less than Four Million Dollars ($4,000,000). The Incremental Value shall be
equal to the amount by which the Alternative Transaction Value shall exceed the
Merger Transaction Value. The Alternative Transaction Value shall mean the
aggregate value of the Alternative Transaction to the stockholders of Premenos,
valued as of the date of the definitive agreement relating to such Alternative
Transaction and calculated in accordance with generally recognized and accepted
valuation methodologies employed by nationally recognized investment banking
firms for valuing comparable transactions. The Merger Transaction Value shall
mean the aggregate value of the Merger to the stockholders of Premenos, valued
as of the date of the termination of this Agreement and calculated in accordance
with generally recognized and accepted valuation methodologies employed by
nationally recognized investment banking firms for valuing comparable
transactions. In the event that the parties do not agree as to the Alternative
Transaction Value or the Merger Transaction Value, Harbinger and Premenos shall
negotiate with one another in good faith for a period of ten days to resolve
such dispute. If, after the expiration of such ten-day period, the parties do
not agree as to the Alternative Transaction Value or the Merger Transaction
Value, Harbinger and Premenos shall each engage a nationally-recognized
investment banking firm to calculate the Alternative Transaction Value or the
Merger Transaction Value, or both, as the case may be. In the event that such
investment banking firms do not agree as to such disputed valuation(s) after 30
days, such firms shall together appoint a third nationally-recognized investment
banking firm to resolve such dispute by calculating the disputed valuation(s).
The calculation of such third investment banking firm shall be conclusive as to
the disputed valuation(s). Each party shall bear the fees and expenses of
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the investment banking firm engaged by it pursuant to this Section, and the fees
and expenses of a third investment banking firm, if necessary, shall be borne
equally by Harbinger and Premenos.
(c) If this Agreement is terminated (i) by Premenos pursuant to Section
8.1(f) or (ii) by Harbinger pursuant to 8.1(g), then Harbinger shall pay to
Premenos a termination fee of Four Million Dollars ($4,000,000) in cash (the
"Premenos Termination Fee") to reimburse and compensate Premenos for its time,
expenses and lost opportunity costs of pursuing the Merger, which Premenos
Termination Fee shall be paid to Premenos within two (2) days of the termination
of this Agreement pursuant to such Sections.
(d) As used in this Agreement, an "Alternative Transaction" shall mean (i)
a transaction or series of transactions pursuant to which any person or group
(as such term is defined under the Exchange Act) other than Harbinger, Premenos
or any affiliate thereof as of the date hereof (a "Third Party") acquires or
would acquire (upon completion of such transaction or series of transactions)
shares (or securities exercisable for or convertible into shares) representing
more than fifty percent (50%) of the outstanding shares of Premenos Common
Stock, pursuant to a tender offer or exchange offer or otherwise, (ii) a merger,
consolidation, share exchange or other business combination involving Premenos
or any of its subsidiaries, upon completion of such merger, consolidation, share
exchange or other business combination such Third Party owns or would own more
than fifty percent (50%) of the outstanding equity securities of Premenos or any
of its subsidiaries or the entity surviving such merger or business combination
or resulting from such consolidation, (iii) any other transaction or series of
transactions pursuant to which any Third Party acquires or would acquire (upon
completion of such transaction or series of transactions) control of assets of
Premenos or any of its subsidiaries (including, for this purpose, outstanding
equities securities of Premenos's subsidiaries) having a fair market value equal
to or more than fifty percent (50%) of the fair market value of all consolidated
assets of Premenos and its subsidiaries immediately prior to such transaction or
series of transactions, or (iv) any transaction or series of transactions
pursuant to which any Third Party acquires or would acquire (upon completion of
such transaction or series of transactions) control of the Board of Directors of
Premenos or by which nominees of any Third Party are (or would be) elected or
appointed to a majority of the seats on the Board of Directors of Premenos.
(e) In no event shall Harbinger or Premenos, as the case may be, be
required to pay any fee pursuant to this Section 8.4 if, immediately prior to
the applicable termination of this Agreement, the party that otherwise would be
entitled to receive such fee pursuant to this Section 8.4 was in material breach
of any of its obligations under this Agreement.
(f) If one party fails to promptly pay to the other any fee or expense due
hereunder, the defaulting party shall pay the costs and expenses (including
reasonable attorneys' fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on any unpaid fee at the publicly announced
prime rate of First Union National Bank of North Carolina from the date such fee
was required to be paid.
ARTICLE 9
MISCELLANEOUS PROVISIONS
Section 9.1. Notices. Each notice, communication and delivery under this
Agreement must be made in writing signed by the party making the same, must
specify the Section pursuant to which it is given or being made, and must be
delivered personally or by telecopy transmission, by recognized overnight
courier or sent by registered or certified mail or by any express mail service
(with postage and other fees prepaid) as follows:
To Harbinger:
Harbinger Corporation
1055 Lenox Park Boulevard
Atlanta, Georgia 30319-5309
Attn: C. Tycho Howle
Telecopy No.: (404) 848-2861
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<PAGE> 134
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
Attn: William R. Spalding, Esq.
Telecopy No.: (404) 572-5145
To Premenos:Premenos Technology Corp.
1000 Burnett Avenue
Concord, California 94520
Attn: Lew Jenkins
Telecopy No.: (510) 825-9184
with a copy to:
Bryan Cave LLP
245 Park Avenue
New York, New York 10167
Attn: Stephan Mallenbaum, Esq.
Telecopy No.: (212) 692-1900
or to such other representative or at such other address of a party as such
party may furnish to the other parties in writing.
Section 9.2. Disclosure Letters and Exhibits. The Premenos Disclosure
Letter and the Harbinger Disclosure Letter and all Exhibits are hereby
incorporated into this Agreement and are made a part of this Agreement as if set
out in full in this Agreement.
Section 9.3. Assignment; Successors in Interest. No assignment or
transfer by Harbinger, HarbingerSub or Premenos of their respective rights and
obligations under this Agreement prior to the Closing shall be made except with
the prior written consent of the other parties. This Agreement shall be binding
upon and shall inure to the benefit of the parties and their permitted
successors and assigns, and any reference to a party shall also be a reference
to a permitted successor or assign.
Section 9.4. Investigations; Representations and Warranties. The
representations and warranties of Harbinger and Premenos set forth in this
Agreement shall terminate immediately after Closing. The covenants and
agreements of each of Harbinger, HarbingerSub and Premenos set forth in this
Agreement and the exhibits to this Agreement shall survive the Closing and shall
remain in full force and effect until performed or satisfied by the applicable
party responsible for the same in this Agreement or the exhibits to this
Agreement. The respective representations and warranties of Harbinger,
HarbingerSub and Premenos contained in this Agreement or in any certificate, or
other document delivered by any party prior to Closing shall not be deemed
waived or otherwise affected by any investigation made by a party.
Section 9.5. Number; Gender. Whenever this Agreement so requires, the
singular number shall include the plural and the plural shall include the
singular, and the gender of any pronoun shall include the other genders.
Section 9.6. Captions. The titles, captions and table of contents
contained in this Agreement are inserted herein only as a matter of convenience
and for reference and in no way define, limit, extend or describe the scope of
this Agreement or the intent of any provision of this Agreement. Unless
otherwise specified to the contrary, all references to Articles and Sections are
references to Articles and Sections of this Agreement and all references to
Exhibits are references to Exhibits to this Agreement and the Premenos
Disclosure Letter and the Harbinger Disclosure Letter.
Section 9.7. Controlling Law; Integration; Amendment. (a) This Agreement
shall be governed by and construed and enforced in accordance with the internal
laws of the State of Delaware without reference to Delaware's choice of law
rules and the parties agree that any legal proceeding instituted with respect to
this Agreement shall be brought exclusively in any state or federal court in the
State of Delaware and the parties submit to personal jurisdiction therein and
agree that venue properly lies in any such court in the State of
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Delaware. This Agreement supersedes all negotiations, agreements and
understandings among the parties with respect to the subject matter of this
Agreement and constitutes the entire agreement among the parties.
(b) This Agreement may not be amended, modified or supplemented except by
written agreement of the parties.
Section 9.8. Premenos and Harbinger Knowledge. As used in this Agreement,
the terms "the best knowledge of Premenos," "known to Premenos" or words of
similar import used herein with respect to Premenos shall mean the actual
knowledge of any Premenos Executive, together with the knowledge a reasonable
business person would have obtained after making reasonable inquiry and after
exercising reasonable diligence with respect to the matters at hand. The
"Premenos Executives" shall consist of Messrs. Lew Jenkins, David Hildes,
Timothy A. Dreisbach, and H. Ward Wolff. As used in this Agreement, the terms
"the best knowledge of Harbinger," "known to Harbinger" or words of similar
import used herein with respect to Harbinger shall mean the actual knowledge of
any Harbinger Executive, together with the knowledge a reasonable business
person would have obtained after making reasonable inquiry and after exercising
reasonable diligence with respect to the matters at hand. The "Harbinger
Executives" shall consist of Messrs. C. Tycho Howle, David T. Leach, James C.
Davis and Joel G. Katz.
Section 9.9. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction will, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction will not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by law, the parties waive any provision of law which renders any such
provision prohibited or unenforceable in any respect.
Section 9.10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement or the terms hereof to produce or
account for more than one of such counterparts.
Section 9.11. Enforcement of Certain Rights. Nothing expressed or implied
in this Agreement is intended, or shall be construed, to confer upon or give any
person, firm or corporation other than the parties, and their permitted
successors or assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement, or result in such person, firm or corporation being
deemed a third party beneficiary of this Agreement.
Section 9.12. Waiver. At any time prior to the Effective Time, the
parties, by or pursuant to action taken by their respective Boards of Directors,
may, to the extent legally permitted: (i) extend the time for the performance of
any of the obligations or other acts of any other party; (ii) waive any
inaccuracies in the representations or warranties of any other party contained
in this Agreement or in any document or certificate delivered pursuant to this
Agreement; (iii) waive compliance or performance by any other party with any of
the covenants, agreements or obligations of such party contained in this
Agreement; and (iv) waive the satisfaction of any condition that is precedent to
the performance by the party so waiving of any of its obligations under this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. A waiver by one party of the performance of any covenant, agreement,
obligation, condition, representation or warranty shall not be construed as a
waiver of any other covenant, agreement, obligation, condition, representation
or warranty. A waiver by any party of the performance of any act shall not
constitute a waiver of the performance of any other act or an identical act
required to be performed at a later time.
Section 9.13. Merger. Harbinger, HarbingerSub and Premenos each
acknowledges and agrees that it has not relied on, or been induced to enter into
this Agreement on account of, any representation or warranty of any kind,
whether oral or written, express or implied, except for such representations and
warranties of Harbinger, HarbingerSub and Premenos as are set forth in this
Agreement.
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<PAGE> 136
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, as of the date first above written.
<TABLE>
<S> <C>
HARBINGER CORPORATION
[Corporate Seal]
Attest: By: JAMES C. DAVIS
-------------------------------------------------
Title: President and Chief Operating Officer
-------------------------------------------
By: /s/ JOEL G. KATZ
---------------------------------------------------
Title: Secretary
---------------------------------------------
OLYMPIC SUBSIDIARY CORPORATION
[Corporate Seal]
Attest: By: JAMES C. DAVIS
-------------------------------------------------
Title: President and Chief Operating Officer
-------------------------------------------
By: /s/ JOEL G. KATZ
---------------------------------------------------
Title: Secretary
---------------------------------------------
PREMENOS TECHNOLOGY CORP.
[Corporate Seal]
Attest: By: LEW JENKINS
-------------------------------------------------
Title: Chairman
-------------------------------------------
By: /s/ H. WARD WOLFF
---------------------------------------------------
Title: Secretary
---------------------------------------------
</TABLE>
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<PAGE> 137
ANNEX B
AMENDMENT TO 1996 STOCK OPTION PLAN
SECOND AMENDMENT TO THE HARBINGER CORPORATION
1996 STOCK OPTION PLAN
THIS SECOND AMENDMENT TO HARBINGER CORPORATION 1996 STOCK OPTION PLAN (the
"Amendment") is made effective as of the day of , 1997 (the
"Effective Date"), by HARBINGER CORPORATION, a corporation organized and doing
business under the laws of the State of Georgia (the "Company"). All capitalized
terms in this Amendment have the meaning ascribed to such term as in the
Harbinger Corporation 1996 Stock Option Plan (the "Plan"), unless otherwise
stated herein.
WITNESSETH:
WHEREAS, First Amendment to the Plan was approved by the shareholders of
the Company at the 1997 Annual Meeting of Shareholders; and
WHEREAS, the Board of Directors of the Company desires to amend the Plan to
increase the number of shares that may be granted under the Plan;
NOW THEREFORE, in consideration of the premises and mutual promises
contained herein, the Plan is hereby amended as follows:
SECTION 1. Section 3.1 of the Plan is hereby amended by deleting the
first sentence of Section 3.1 of the Plan in its entirety and substituting
in lieu thereof the following:
"3.1 SHARES RESERVED FOR ISSUANCE. Subject to any antidilution
adjustment pursuant to Section 3.2, the maximum number of Shares that
may be subject to Options granted hereunder shall not exceed 5,125,000,
plus the number of Prior Plan Shares."
SECTION 2. Except as specifically amended by this Second Amendment,
the Plan shall remain in full force and effect as prior to this First
Amendment.
IN WITNESS WHEREOF, the Company has caused this SECOND AMENDMENT TO THE
HARBINGER CORPORATION 1996 STOCK OPTION PLAN to be executed on the Effective
Date.
HARBINGER CORPORATION
By:
------------------------------------
David T. Leach, CEO
ATTEST:
By:
----------------------------------
Joel G. Katz, Secretary
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<PAGE> 138
ANNEX C
FAIRNESS OPINION OF BT ALEX. BROWN INCORPORATED
October 23, 1997
Harbinger Corporation
1055 Lenox Park Blvd.
Atlanta, GA 30319
Dear Sirs:
Premenos Technology Corp. ("Target" or the "Company"), Harbinger
Corporation ("Buyer") and Olympic Subsidiary Corporation, a Delaware Corporation
and a wholly-owned subsidiary of Buyer (the "Merger Sub"), have entered into the
Merger Agreement dated as of October 23, 1997 (the "Agreement"). Pursuant to the
Agreement, the implementation of which is contingent on stockholder approval by
Target's stockholders and Buyer's shareholders, Merger Sub shall be merged with
and into Target and the separate corporate existence of Merger Sub shall cease
and Target shall continue as the surviving corporation (the "Merger"), and each
share of Target common stock issued and outstanding immediately prior to the
effective time of the Merger will be converted into .45 shares (the "Conversion
Ratio") of common stock of Buyer. We have assumed, with your consent, that the
Merger will qualify for pooling-of-interests accounting treatment and as a
tax-free reorganization for the stockholders of the Company. You have requested
our opinion as to whether the Conversion Ratio is fair, from a financial point
of view, to Buyer.
BT Alex. Brown Incorporated ("BT Alex. Brown"), as a customary part of its
investment banking business, is engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, private placements and valuations for estate, corporate and other
purposes. We have served as the lead-managing underwriter in Buyer's August 1995
initial public offering and in Buyer's July 1997 follow-on offering. BT Alex.
Brown maintains a market in the Common Stock of Buyer and regularly publishes
research reports regarding the electronic commerce industry and the businesses
and securities of Buyer and other publicly owned companies in the electronic
commerce industry. In the ordinary course of business, BT Alex. Brown may
actively trade the securities of both the Company and the Buyer for our own
account and the account of our customers and, accordingly, may at any time hold
a long or short position in securities of the Company and the Buyer.
In connection with this opinion, we have reviewed certain publicly
available financial information and other information concerning Target and
Buyer and certain internal analyses and other information furnished to us by
Target and Buyer. We have also held discussions with the members of the senior
managements of Target and Buyer regarding the businesses and prospects of their
respective companies and the joint prospects of a combined company. In addition,
we have (i) reviewed the reported prices and trading activity for the common
stock of both Target and Buyer, (ii) compared certain financial and stock market
information for Target and Buyer with similar information for certain other
companies whose securities are publicly traded, (iii) reviewed the financial
terms of certain recent business combinations which we deemed comparable in
whole or in part, (iv) reviewed the terms of the Agreement, and (v) performed
such other studies and analyses and considered such other factors as we deemed
appropriate.
We have not independently verified the information described above and for
purposes of this opinion have assumed the accuracy, completeness and fairness
thereof. With respect to the information relating to the prospects of Target and
Buyer, we have assumed that such information reflects the best currently
available judgments and estimates of the managements of Target and Buyer as to
the likely future financial performances of their respective companies and of
the combined entity. In addition, we have not made nor been provided with an
independent evaluation or appraisal of the assets of Target and Buyer, nor have
we been furnished with any such evaluations or appraisals. Our opinion is based
on market, economic and other conditions as they exist and can be evaluated as
of the date of this letter.
C-1
<PAGE> 139
In arriving at our opinion, BT Alex. Brown did not participate in
negotiations with any parties in connection with the Merger.
We have been retained by the Board of Directors of Buyer as financial
advisor solely for the purpose of rendering this opinion, and accordingly we
have not been requested to and have not provided any other services in
connection with the Merger.
Our opinion expressed herein was prepared for the use of the Board of
Directors of Buyer and does not constitute a recommendation to Buyer's
stockholders as to how they should vote at the stockholders' meeting in
connection with the Merger. We hereby consent, however, to the inclusion of this
opinion as an exhibit to any proxy or registration statement distributed in
connection with the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the
date of this letter, the Conversion Ratio is fair, from a financial point of
view, to Buyer.
Very truly yours,
BT ALEX. BROWN INCORPORATED
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<PAGE> 140
ANNEX D
FAIRNESS OPINION OF HAMBRECHT & QUIST LLC
October 22, 1997
Confidential
The Board of Directors
Premenos
Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of common stock (the "Common
Stock") of Premenos Corporation ("Premenos" or the "Company") of the
consideration to be received by such stockholders in connection with the
proposed merger of Olympic Subsidiary Corporation ("Merger Sub"), a wholly owned
subsidiary of Harbinger, Inc. ("Harbinger"), with and into Premenos (the
"Proposed Transaction") pursuant to the Merger Agreement to be dated as of
October 23, 1997 among Harbinger, Merger Sub, and Premenos (the "Agreement").
We understand that the terms of the Agreement provide, among other things,
that each issued and outstanding share of Common Stock shall be converted into
the right to receive 0.45 shares of common stock of Harbinger, as more fully set
forth in the Agreement. We also understand that the Agreement provides that the
Proposed Transaction will take place whether or not certain other prospective
acquisitions by Harbinger occur, and for the purposes of this opinion we have
reviewed and analyzed the Proposed Transaction both with and without such
prospective acquisitions. For purposes of this opinion, we have assumed that the
Proposed Transaction will qualify as a tax-free reorganization under the United
States Internal Revenue Code for the stockholders of the Company and that the
Proposed Transaction will be accounted for as a pooling of interests.
Hambrecht & Quist LLC ("Hambrecht & Quist"), as part of its investment
banking services, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, strategic transactions,
corporate restructurings, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements and valuations for corporate
and other purposes. We have acted as a financial advisor to the Board of
Directors of Premenos in connection with the Proposed Transaction, and we will
receive a fee for our services, which include the rendering of this opinion.
In the ordinary course of business, Hambrecht & Quist acts as a market
maker and broker in the publicly traded securities of both Premenos and
Harbinger and receives customary compensation in connection therewith, and also
provides research coverage for Premenos and Harbinger. In the ordinary course of
business, Hambrecht & Quist actively trades in the equity and derivative
securities of Premenos and Harbinger for its own account and for the accounts of
its customers and, accordingly, may at any time hold a long or short position in
such securities. Hambrecht & Quist may in the future provide investment banking
or other financial advisory services to Harbinger.
In connection with our review of the Proposed Transaction, and in arriving
at our opinion, we have, among other things;
(i) reviewed the publicly available financial statements of Harbinger for
recent years and interim periods to date and certain other relevant financial
and operating data of Harbinger (including its capital structure) made available
to us from published sources and from the internal records of Harbinger;
(ii) reviewed certain internal financial and operating information,
including certain projections, relating to Harbinger prepared by the management
of Harbinger;
(iii) discussed the business, financial condition and prospects of
Harbinger with certain of its officers;
(iv) reviewed the publicly available financial statements of Premenos for
recent years and interim periods to date and certain other relevant financial
and operating data of Premenos made available to us from published sources and
from the internal records of Premenos;
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<PAGE> 141
(v) reviewed certain internal financial and operating information,
including certain projections, relating to Premenos prepared by the management
of Premenos;
(vi) discussed the business, financial condition and prospects of Premenos
with certain of its officers;
(vii) reviewed the recent reported prices and trading activity for the
common stocks of Harbinger and Premenos and compared such information and
certain financial information for Harbinger and Premenos with similar
information for certain other companies engaged in businesses we consider
comparable;
(viii) reviewed the financial terms, to the extent publicly available, of
certain comparable merger and acquisition transactions;
(ix) reviewed an unsigned draft of the Agreement dated October 20, 1997
and;
(x) performed such other analyses and examinations and considered such
other information, financial studies, analyses and investigations and financial,
economic and market data as we deemed relevant.
In rendering our opinion, we have assumed and relied upon the accuracy and
completeness of all of the information concerning Harbinger or Premenos
considered in connection with our review of the Proposed Transaction, and we
have not assumed any responsibility for independent verification of such
information. We have not prepared any independent valuation or appraisal of any
of the assets or liabilities of Harbinger or Premenos, nor have we conducted a
physical inspection of the properties and facilities of either company. With
respect to the financial forecasts and projections made available to us and used
in our analysis, we have assumed that they reflect the best currently available
estimates and judgments of the expected future financial performance of
Harbinger and Premenos.
For purposes of this opinion, we have assumed that neither Harbinger nor
Premenos is a party to any material pending transactions, including external
financings, recapitalizations or material merger discussions, other than the
Proposed Transaction and other prospective acquisitions of which we are aware,
and those activities undertaken in the ordinary course of conducting their
respective businesses. Our opinion is necessarily based upon market, economic,
financial and other conditions as they exist and can be evaluated as of the date
of this letter and any change in such conditions would require a reevaluation of
this opinion. We express no opinion as to the price at which Harbinger common
stock will trade subsequent to the Effective Time (as defined in the Agreement).
We were not requested to, and did not, solicit indications of interest from any
other parties in connection with a possible acquisition of, or business
combination with, Premenos.
It is understood that this letter is for the information of the Board of
Directors only and may not be used for any other purpose without our prior
written consent; provided, however, that this letter may be reproduced in full
in the Proxy Statement/Prospectus relating to the Proposed Transaction. This
letter does not constitute a recommendation to any stockholder as to how such
stockholder should vote on the Proposed Transaction.
Based upon and subject to the foregoing and after considering such other
matters as we deem relevant, we are of the opinion that as of the date hereof
the consideration to be received by the holders of the Common Stock in the
Proposed Transaction is fair to such holders from a financial point of view. We
express no opinion, however, as to the adequacy of any consideration received in
the Proposed Transaction by Harbinger or any of its affiliates.
Very truly yours,
By
------------------------------------
Paul B. Cleveland
Managing Director
D-2
<PAGE> 142
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Georgia Business Corporation Code permits a corporation to eliminate or
limit the personal liability of a director to the corporation or its
shareholders for monetary damages for breach of duty of care of other duty as a
director, provided that no provision shall eliminate or limit the liability of a
director: (A) for an appropriation, in violation of his duties, of any business
opportunity of the corporation; (B) for acts or omissions which involve
intentional misconduct or a knowing violation of law; (C) for unlawful corporate
distributions; or (D) for any transaction from which the director received an
improper personal benefit. This provision pertains only to breaches of duty by
directors in their capacity as directors (and not in any other corporate
capacity, such as officers) and limits liability only for breaches of fiduciary
duties under Georgia corporate law (and not for violation of other laws, such as
the federal securities laws). Harbinger's Amended and Restated Articles of
Incorporation (the "Restated Articles") exonerate Harbinger's directors from
monetary liability to the extent permitted by this statutory provision.
Harbinger's Restated Articles and Amended and Restated Bylaws (the
"Restated Bylaws") also provide that Harbinger shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (including any action by or in the right of Harbinger), by
reason of the fact that such person is or was a director or officer of
Harbinger, or is or was serving at the request of Harbinger as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including reasonable attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding, if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of Harbinger (and with respect to any criminal
action or proceeding, if such person had no reasonable cause to believe such
person's conduct was unlawful), to the maximum extent permitted by, and in the
manner provided by, the Georgia Business Corporation Code.
Notwithstanding any provisions of Harbinger's Restated Articles and Bylaws
to the contrary, the Georgia Business Corporation Code provides that Harbinger
shall not indemnify a director or officer for any liability incurred in a
proceeding in which the director is adjudged liable to Harbinger or is subjected
to injunctive relief in favor of Harbinger: (1) for any appropriation, in
violation of his duties, of any business opportunity of Harbinger; (2) for acts
or omissions which involve intentional misconduct or a knowing violation of law;
(3) for unlawful corporate distributions; or (4) for any transaction from which
the director or officer received an improper personal benefit.
The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in Article
IX of Harbinger's Bylaws are not exclusive of any other right which any person
may have under any statute, provision of the Harbinger Charter, provision of
Harbinger's Bylaws.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
a. Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
2.1 -- Merger Agreement, dated as of October 23, 1997, by and
between Harbinger Corporation, Olympic Subsidiary
Corporation and Premenos Technology Corporation (attached as
Annex A to the Joint Proxy Statement/Prospectus forming a
part of this Registration Statement).
2.2 -- Share Purchase Agreement by and among Harbinger Corporation,
Allan Gray, Philip Bird, Tom Reynolds, C.G. Summers and
Lancashire Enterprises Venture Fund, dated as of October 23,
1997 (incorporated by reference to Exhibit 2.1 of
Harbinger's Current Report on Form 8-K dated October 23,
1997 and filed with the Commission on October 29, 1997).
</TABLE>
II-1
<PAGE> 143
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
4.1 -- Provisions of the Amended and Restated Articles of
Incorporation and Amended and Restated Bylaws of Harbinger
defining rights of the holders of Harbinger Common Stock
(incorporated by reference to Exhibits 3.1 through 3.4 to
Harbinger's Registration Statement on Form S-1 (File No.
33-93804) declared effective on August 22, 1995).
4.2 -- Specimen Stock Certificate (incorporated by reference to
Exhibit 4.3 to Harbinger's Registration Statement on Form
S-1 (File No. 33-93804)).
4.3 -- Form of Registration Rights Agreement effective March 29,
1996 between each of the Harbinger N.V. Shareholders and
Harbinger (incorporated by reference to Exhibit 2(a) filed
with Harbinger's Current Report on Form 8-K dated May 3,
1996).
4.4 -- Form of Warrant issued to former Harbinger N.V. Shareholders
on July 18, 1996 (incorporated by reference to Exhibit 4.5
to Harbinger's Annual Report on Form 10-K for the year ended
December 31, 1996).
4.5 -- Registration Rights Agreement among the former shareholders
of SupplyTech, Inc. and Harbinger effective January 3, 1997
(incorporated by reference to Exhibit 4.1 filed with
Harbinger's Current Report on Form 8-K dated January 16,
1997).
4.6 -- Form of Warrant issued to former INOVIS Shareholders on
April 19, 1996 (incorporated by reference to Exhibit 2(a)
filed with Harbinger's Current Report on Form 8-K dated July
1, 1996).
4.7 -- Registration Rights Agreement between Harbinger Corporation,
Allan Gray, Philip Bird, Tom Reynolds, C. G. Summers, and
Lancashire Enterprises Venture Fund, dated as of October 23,
1997 (incorporated by reference to Exhibit 4.1 of
Harbinger's Current Report on Form 8-K dated October 23,
1997 and filed with the Commission on October 29, 1997).
5.1 -- Opinion of King & Spalding regarding the legality of the
securities being registered.
8.1 -- Opinion of King & Spalding regarding certain tax matters.
23.1 -- Consent of King & Spalding (included as part of its opinions
filed as Exhibits 5.1 and 8.1).
23.2 -- Consent of Coopers & Lybrand LLP.
23.3 -- Consents of KPMG Peat Marwick LLP.
23.4 -- Consent of Arthur Andersen LLP.
23.5 -- Consent of Ciulla, Smith & Dale, LLP.
23.6 -- Consent of KPMG Deutsche Treuhand -- Gesellschaft AG.
23.7 -- Consent of KPMG Accountants N.V.
23.8 -- Consent of BT Alex. Brown Incorporated.
23.9 -- Consent of Hambrecht & Quist LLC.
23.10 -- Consent of David Hildes.
23.11 -- Consent of Moret Ernst & Young Accountants.
24.1 -- Power of Attorney (included on page II-4).
99.1 -- Form of Harbinger Corporation Proxy.
99.2 -- Form of Premenos Technology Corp. Proxy.
99.3 -- Opinion of BT Alex. Brown Incorporated (attached as Annex C
to the Joint Proxy Statement/Prospectus forming a part of
this Registration Statement).
99.4 -- Opinion of Hambrecht & Quist LLC (included as Exhibit D to
the Joint Proxy Statement/Prospectus forming a part of this
Registration Statement).
</TABLE>
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d)
II-2
<PAGE> 144
of the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The registrant undertakes that every prospectus (i) that is filed pursuant
to the immediately preceding paragraph, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Securities Act of 1933 and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE> 145
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Atlanta,
State of Georgia on the 29th day of October, 1997.
HARBINGER CORPORATION
By: /s/ DAVID T. LEACH
------------------------------------
David T. Leach
Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Harbinger Corporation, do
hereby constitute and appoint C. Tycho Howle, David T. Leach and Joel G. Katz,
and each and any of them, our true and lawful attorneys-in-fact and agents, to
do any and all acts and things in our names and on our behalf in our capacities
as directors and officers and to execute any and all instruments for us and in
our name in the capacities indicated below, which said attorneys and agents, or
any of them, may deem necessary or advisable to enable said corporation to
comply with the Securities Act of 1933 and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
registration statement, or any registration statement for this offering that is
to be effective upon filing pursuant to Rule 462(b) under the Securities Act of
1933, including specifically, but without limitation, power and authority to
sign for us or any of us in our names in the capacities indicated below, any and
all amendments (including post-effective amendments) hereto; and we do hereby
ratify and confirm all that said attorneys and agents, or any of them, shall do
or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated below on October 29, 1997:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ C. TYCHO HOWLE Chairman of the Board of Directors
- --------------------------------------------
C. Tycho Howle
/s/ DAVID T. LEACH Chief Executive Officer and Director
- -------------------------------------------- (Principal Executive Officer)
David T. Leach
/s/ JAMES C. DAVIS President and Chief Operating Officer and
- -------------------------------------------- Director
James C. Davis
/s/ JOEL G. KATZ Chief Financial Officer; Secretary
- -------------------------------------------- (Principal Financial and Accounting
Joel G. Katz Officer)
/s/ WILLIAM D. SAVOY Director
- --------------------------------------------
William D. Savoy
/s/ WILLAIM B. KING Director
- --------------------------------------------
William B. King
/s/ STUART L. BELL Director
- --------------------------------------------
Stuart L. Bell
/s/ BENN R. KONSYNSKI Director
- --------------------------------------------
Benn R. Konsynski
/s/ KLAUS NEUGEBAUER Director
- --------------------------------------------
Klaus Neugebauer
/s/ AD NEDERLOF Director
- --------------------------------------------
Ad Nederlof
</TABLE>
II-4
<PAGE> 146
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<C> <C> <S> <C>
2.1 -- Merger Agreement, dated as of October 23, 1997, by and
between Harbinger Corporation, Olympic Subsidiary
Corporation and Premenos Technology Corporation (attached as
Annex A to the Joint Proxy Statement/Prospectus forming a
part of this Registration Statement).
2.2 -- Share Purchase Agreement by and among Harbinger Corporation,
Allan Gray, Philip Bird, Tom Reynolds, C.G. Summers and
Lancashire Enterprises Venture Fund, dated as of October 23,
1997 (incorporated by reference to Exhibit 2.1 of
Harbinger's Current Report on Form 8-K dated October 23,
1997 and filed with the Commission on October 29, 1997).
4.1 -- Provisions of the Amended and Restated Articles of
Incorporation and Amended and Restated Bylaws of Harbinger
defining rights of the holders of Harbinger Common Stock
(incorporated by reference to Exhibits 3.1 through 3.4 to
Harbinger's Registration Statement on Form S-1 (File No.
33-93804) declared effective on August 22, 1995).
4.2 -- Specimen Stock Certificate (incorporated by reference to
Exhibit 4.3 to Harbinger's Registration Statement on Form
S-1 (File No. 33-93804)).
4.3 -- Form of Registration Rights Agreement effective March 29,
1996 between each of the Harbinger N.V. Shareholders and
Harbinger (incorporated by reference to Exhibit 2(a) filed
with Harbinger's Current Report on Form 8-K dated May 3,
1996).
4.4 -- Form of Warrant issued to former Harbinger N.V. Shareholders
on July 18, 1996 (incorporated by reference to Exhibit 4.5
to Harbinger's Annual Report on Form 10-K for the year ended
December 31, 1996).
4.5 -- Registration Rights Agreement among the former shareholders
of SupplyTech, Inc. and Harbinger effective January 3, 1997
(incorporated by reference to Exhibit 4.1 filed with
Harbinger's Current Report on Form 8-K dated January 16,
1997).
4.6 -- Form of Warrant issued to former INOVIS Shareholders on
April 19, 1996 (incorporated by reference to Exhibit 2(a)
filed with Harbinger's Current Report on Form 8-K dated July
1, 1996).
4.7 -- Registration Rights Agreement between Harbinger Corporation,
Allan Gray, Philip Bird, Tom Reynolds, C. G. Summers, and
Lancashire Enterprises Venture Fund, dated as of October 23,
1997 (incorporated by reference to Exhibit 4.1 of
Harbinger's Current Report on Form 8-K dated October 23,
1997 and filed with the Commission on October 29, 1997).
5.1 -- Opinion of King & Spalding regarding the legality of the
securities being registered.
8.1 -- Opinion of King & Spalding regarding certain tax matters.
23.1 -- Consent of King & Spalding (included as part of its opinions
filed as Exhibits 5.1 and 8.1).
23.2 -- Consent of Coopers & Lybrand LLP.
23.3 -- Consents of KPMG Peat Marwick LLP.
23.4 -- Consent of Arthur Andersen LLP.
23.5 -- Consent of Ciulla, Smith & Dale, LLP.
23.6 -- Consent of KPMG Deutsche Treuhand -- Gesellschaft AG.
23.7 -- Consent of KPMG Accountants N.V.
23.8 -- Consent of BT Alex. Brown Incorporated.
</TABLE>
<PAGE> 147
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<C> <C> <S> <C>
23.9 -- Consent of Hambrecht & Quist LLC.
23.10 -- Consent of David Hildes.
23.11 -- Consent of Moret Ernst & Young Accountants.
24.1 -- Power of Attorney (included on page II-4).
99.1 -- Form of Harbinger Corporation Proxy.
99.2 -- Form of Premenos Technology Corp. Proxy.
99.3 -- Opinion of BT Alex. Brown Incorporated (attached as Annex C
to the Joint Proxy Statement/Prospectus forming a part of
this Registration Statement).
99.4 -- Opinion of Hambrecht & Quist LLC (included as Exhibit D to
the Joint Proxy Statement/Prospectus forming a part of this
Registration Statement).
</TABLE>
<PAGE> 1
EXHIBIT 5.1
October 28, 1997
Harbinger Corporation
1055 Lenox Park Boulevard
Atlanta, Georgia 30319
Re: Harbinger Corporation -- Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as counsel for Harbinger Corporation, a Georgia
corporation (the "Company") in connection with the preparation of a
Registration Statement on Form S-4 (the "Registration Statement") filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, relating to the merger (the "Merger") of Olympic Subsidiary
Corporation ("Merger Sub") with and into Premenos Technology Corp., a Delaware
corporation ("Premenos"), as set forth in the Joint Proxy Statement/Prospectus
contained in the Registration Statement and in accordance with the Merger
Agrement (the "Merger Agreement"), dated as of October 23, 1997, among the
Company, Merger Sub, and Premenos, attached as Annex A to the Joint Proxy
Statement/Prospectus.
In our capacity as such counsel, we have reviewed (i) the
Registration Statement and (ii) the Merger Agreement. We also have reviewed
such matters of law and examined original, certified, conformed or photostatic
copies of such other documents, records, agreements and certificates as in our
judgment are necessary or appropriate to form the basis for the opinions
hereinafter set forth. In all such examinations, we have assumed the
genuineness of signatures on original documents and the conformity to such
original documents of all copies submitted to us as certified, conformed or
photographic copies, and as to certificates of public officials, we have
assumed the same to have been properly given and to be accurate. As to matters
of fact material to this opinion, we have relied upon statements and
representations of representatives of the Company and of public officials and
have assumed the same to have been properly given and to be accurate.
This opinion is limited in all respects to the laws of the
State of Georgia, and no opinion is expressed with respect to the laws of any
other jurisdiction or any effect which such laws may have on the opinions
expressed herein. This opinion is limited to the matters stated herein, and no
opinion is implied or may be inferred beyond the matters expressly stated
herein.
<PAGE> 2
Harbinger Corporation
October 28, 1997
Page 2
Based upon and subject to the foregoing, we are of the opinion that
the shares of common stock, $.0001 par value per share, of the Company to
be issued in connection with the Merger have been duly authorized and, when
issued in accordance with the terms of the Merger Agreement, will be validly
issued, fully paid and nonassessable.
This opinion is given as of the date hereof, and we assume no
obligation to advise you after the date hereof of facts or circumstances that
come to our attention or changes in law that occur which could affect the
opinions contained herein. This letter is being rendered solely for the benefit
of the Company in connection with the matters addressed herein. This opinion
may not be furnished to or relied upon by any person or entity for any purpose
without prior written consent.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters" in the Joint Proxy Statement/Prospectus that is included in the
Registration Statement.
Very truly yours,
KING & SPALDING
<PAGE> 1
EXHIBIT 8.1
[LETTERHEAD OF KING & SPALDING]
October 29 , 1997
Harbinger Corporation
1055 Lenox Park Boulevard
Atlanta, Georgia 30319-5309
Premenos Technology Corp.
1000 Burnett Avenue
Concord, California 94520
Re: Federal Income Tax Consequences of Merger of Olympic Subsidiary
Corporation, a Wholly Owned Subsidiary of Harbinger Corporation,
with and into Premenos Technology Corp.
Ladies and Gentlemen:
We have acted as tax counsel to Harbinger Corporation ("Harbinger") in
connection with the merger (the "Merger") of Olympic Subsidiary Corporation
("Newco"), a wholly owned subsidiary of Harbinger, with and into Premenos
Technology Corp. ("Premenos"), pursuant to the Merger Agreement dated as of
October 23, 1997 (the "Agreement") by and between Harbinger, Newco, and
Premenos. You have requested our opinion, in our capacity as tax counsel to
Harbinger, regarding certain of the federal income tax consequences of the
Merger.
We understand that our opinion will be referred to in the Joint Proxy
Statement/Prospectus that forms part of the Registration Statement on Form S-4
filed with the Securities and Exchange Commission in connection with the Merger.
We hereby consent to such use of our opinion.
All capitalized terms used herein without definition have the respective
meanings specified in the Agreement.
INFORMATION RELIED ON
In rendering the opinion expressed herein, we have examined such documents
as we have deemed appropriate, including the Agreement and the Joint Proxy
Statement/Prospectus. In our examination of documents, we have assumed, with
your consent, that all documents submitted to us as photocopies or telecopies
faithfully reproduce the
<PAGE> 2
Harbinger Corporation
Premenos Technology Corp.
October 29, 1997
Page 2
originals thereof, that such originals are authentic, that all such documents
have been or will be duly executed to the extent required, and that all
statements set forth in such documents are accurate. We also have obtained
such additional information and representations as we have deemed relevant and
necessary. However, we have not yet obtained written certificates from
Harbinger, Premenos or any stockholders of Premenos to verify certain facts
that we have assumed in rendering this opinion. Before rendering our opinion
in connection with the closing of the Merger, we intend to obtain appropriate
written certificates to confirm certain material facts that we have assumed
herein.
In view of the foregoing, we have assumed that the following statements are
true on the date hereof and will be true at the time of the Merger:
(1) The Merger will be consummated in compliance with the
material terms of the Agreement and none of the material terms and conditions
therein have been waived or modified and neither Harbinger nor Premenos has any
plan or intention to waive or modify any such material term or condition.
(2) The fair market value of the Harbinger Common Stock and other
consideration received by each Premenos stockholder will be approximately equal
to the fair market value of the Premenos Common Stock surrendered in the
Merger.
(3) There is no plan or intention by the stockholders of Premenos
who own five percent or more of the Premenos Common Stock, and to the best of
the knowledge of the management of Premenos, there is no plan or intention on
the part of the remaining stockholders of Premenos, to sell, exchange, or
otherwise dispose of a number of shares of Harbinger Common Stock received in
the Merger that would reduce the Premenos stockholders' ownership of Harbinger
Common Stock to a number of shares having a value, as of the date of the
Merger, of less than 50 percent of the value of all of the formerly outstanding
Premenos Common Stock as of the same date. For purposes of this
representation, shares of Premenos Common Stock exchanged for cash or other
property, surrendered by dissenters, or exchanged for cash in lieu of
fractional shares of Harbinger Common Stock will be treated as outstanding
Premenos Common Stock on the date of the Merger. Moreover, shares of Premenos
Common Stock and shares of Harbinger Common Stock held by Premenos stockholders
and otherwise sold, redeemed, or disposed of prior or subsequent to the Merger
will be considered in making this representation.
(4) Following the Merger, Premenos will hold at least 90 percent
of the fair market value of its net assets and at least 70 percent of the fair
market value of its gross assets and at least 90 percent of the fair market
value of Newco's net assets and at least 70 percent of the fair market value of
Newco's gross assets held immediately prior to the Merger. For the purposes of
this representation, amounts paid by Premenos or Newco to dissenters, amounts
paid by Premenos or
<PAGE> 3
Harbinger Corporation
Premenos Technology Corp.
October 29, 1997
Page 3
Newco to stockholders who receive cash or other property, amounts used by
Premenos or Newco to pay reorganization expenses, and all redemptions and
distributions (except for regular, normal dividends) made by Premenos or Newco
will be included as assets of Premenos or Newco, respectively, held immediately
prior to the Merger.
(5) Prior to the Merger, Harbinger will directly own all of the
outstanding shares of stock of Newco.
(6) Premenos has no plan or intention to issue additional shares of
its stock that would result in Harbinger acquiring or owning after the Merger
less than 80 percent of the total combined voting power of all classes of
Premenos stock entitled to vote and at least 80 percent of the total number of
shares of all other classes of Premenos stock.
(7) Harbinger has no plan or intention to cause Premenos to issue
additional shares of Premenos stock that would result in Harbinger (or a wholly
owned subsidiary of Harbinger) owning after the Merger less than 80 percent of
the total combined voting power of all classes of Premenos stock entitled to
vote and at least 80 percent of the total number of shares of all other classes
of Premenos stock.
(8) Harbinger has no plan or intention to reacquire any of the shares
of Harbinger Common Stock issued in the Merger.
(9) Harbinger has no plan or intention to liquidate Premenos; to
merge Premenos with or into another corporation; to sell or otherwise dispose
of any of the Premenos Common Stock, except for transfers of stock to
corporations controlled by Harbinger; or to cause Premenos to sell or otherwise
dispose of any of its assets or any of the assets acquired from Newco, except
for disposition made in the ordinary course of business.
(10) Newco will have no liabilities at the time of the Merger, and will
not transfer to Premenos any assets subject to liabilities in the transaction.
(11) Following the Merger, Premenos will continue its historic
business or use a significant portion of its historic business assets in a
business.
(12) Harbinger, Newco, Premenos, and the stockholders of Premenos will
pay their respective expenses, if any, incurred in connection with the Merger.
<PAGE> 4
Harbinger Corporation
Premenos Technology Corp.
October 29, 1997
Page 4
(13) There is no intercorporate indebtedness existing between
Harbinger and Premenos or between Newco and Premenos that was or will be issued,
acquired, or settled at discount.
(14) In the Merger, Harbinger will acquire shares of Premenos Common
Stock representing at least 80 percent of the total combined voting power of all
classes of Premenos stock entitled to vote and at least 80 percent of the total
number of shares of all other classes of Premenos stock, solely in exchange for
voting stock of Harbinger. For purposes of this representation, shares of
Premenos Common Stock exchanged for cash or other property originating with
Harbinger will be treated as outstanding Premenos Common Stock on the date of
Merger.
(15) At the time of the Merger, Premenos will not have outstanding any
warrants, options, convertible securities, or any other type of right pursuant
to which any person could acquire stock in Premenos that, if exercised or
converted, would affect Harbinger's acquisition or retention of Premenos Common
Stock representing at least 80 percent of the total combined voting power of all
classes of Premenos stock entitled to vote and at least 80 percent of the total
number of shares of all other classes of Premenos stock.
(16) Neither Harbinger nor any subsidiary of Harbinger owned, directly
or indirectly, nor has any such corporation owned during the past five years,
directly or indirectly, any capital stock of Premenos.
(17) Neither Premenos, Harbinger, nor Newco is a regulated investment
company, a real estate investment trust, or a corporation 50 percent or more of
the value of whose total assets (excluding cash, cash items, receivables and
U.S. government securities) are stock or securities and 80 percent or more of
the value of whose total assets are assets held for investment. For purpose of
the 50 percent and 80 percent determinations under the preceding sentence, stock
and securities in any subsidiary corporation shall be disregarded, and the
parent corporation shall be deemed to own its ratable share of the subsidiary's
assets. A corporation shall be considered a subsidiary for purposes of this
paragraph if the parent owns 50 percent or more of the combined voting power of
all classes of stock entitled to vote, or 50 percent or more of the total value
of shares of all classes of stock outstanding.
(18) On the date of the Merger, the fair market value of the assets of
Premenos will exceed the sum of its liabilities, plus the amount of liabilities,
if any, to which assets are subject.
(19) Premenos is not under the jurisdiction of a court in a case under
Title 11 of the United States Code or a receivership, foreclosure, or similar
proceeding in a federal or state court.
<PAGE> 5
Harbinger Corporation
Premenos Technology Corp.
October 29, 1997
Page 5
(20) None of the compensation received by any stockholder-employees
of Premenos in contemplation of or as a result of the Merger will be separate
consideration for, or allocable to, any of their shares of Premenos Common
Stock; none of the shares of Harbinger Common Stock received by any
stockholder-employees of Premenos in exchange for Premenos Common Stock in the
Merger will be separate consideration for, or allocable to, any employment
agreement; and the compensation paid to any stockholder-employees pursuant to
the Merger will be for services actually rendered and will be commensurate
with amounts paid to third parties bargaining at arm's length for similar
services.
(21) The payment of cash in lieu of fractional shares of Harbinger
Common Stock is solely for the purpose of avoiding the expense and
inconvenience to Harbinger of issuing fractional shares and does not represent
separately bargained-for consideration. The total cash consideration that will
be paid in the Merger to the Premenos stockholders instead of issuing
fractional shares of Harbinger Common Stock will not exceed one percent of the
total consideration that will be issued in the Merger to the Premenos
stockholders in exchange for their shares of Premenos Common Stock. The
fractional share interests of each Premenos stockholder will be aggregated and
no Premenos stockholder will receive cash in an amount equal to or greater than
the value of one full share of Harbinger Common Stock.
OPINION
Based upon the foregoing, it is our opinion that:
(1) The Merger will constitute a "reorganization" within the
meaning of Sections 368(a)(1)(A) and (a)(2)(E) of the Code;
(2) The exchange in the Merger of Premenos Common Stock for
Harbinger Common Stock will not give rise to gain or loss to the Premenos
stockholders;
(3) The tax basis of the Harbinger Common Stock received in the
Merger by a Premenos stockholder (including any fractional share interest) will
be the same as the tax basis of the Premenos Common Stock exchanged for such
Harbinger Common Stock;
(4) The holding period for the Harbinger Common Stock received in
the Merger by a Premenos stockholder will include the holding period of such
stockholder in the Premenos Common Stock exchanged for such Harbinger Common
Stock, provided that the Premenos Common Stock is held as a capital asset at the
Effective Time of the Merger; and
<PAGE> 6
Harbinger Corporation
Premenos Technology Corp.
October 29, 1997
Page 6
(5) A Premenos stockholder who receives cash in lieu of a
fractional share of Harbinger Common Stock will recognize gain or loss equal to
the difference between such cash amount and the stockholder's basis in the
fractional share interest.
The option expressed herein is based upon existing statutory,
regulatory, and judicial authority, any of which may be changed at any time with
retroactive effect. In addition, our opinion is based solely on the documents
that we have examined, the additional information that we have obtained, and the
statements set out herein that we have assumed to be true on the day hereof and
at the time of the Merger. Our opinion cannot be relied upon if any of the
material facts contained in such documents or in any such additional information
is, or later becomes, or if any of the material statements set out herein is, or
later becomes, inaccurate. Finally, our opinion is limited to the tax matters
specifically covered thereby, and we have not been asked to address herein, nor
have we addressed herein, any other tax consequences of the Merger.
Very truly yours,
KING & SPALDING
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
of Harbinger Corporation on Form S-4 of our report dated January 31, 1997,
except for Paragraph 3 of Note 16 as to which the date is March 16, 1997, on our
audits of the consolidated financial statements and financial statement schedule
of Premenos Technology Corp. and subsidiaries as of December 31, 1996 and 1995,
and for the years ended December 31, 1996, 1995 and 1994, which report is
included in the Premenos Technology Corp. 1996 Annual Report on Form 10-K.
Coopers & Lybrand L.L.P.
San Francisco, California
October 29, 1997
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Harbinger Corporation
We consent to the use of our report dated October 1, 1997 relating to the
balance sheet of Acquion, Inc. as of October 31, 1996, and the related
statements of operations, shareholder's deficit, and cash flows for the year
then ended included in Harbinger Corporation's Current Report on Form 8-K/A
Amendment No. 1 filed on October 29, 1997 and incorporated by reference in the
Form S-4 registration statement of Harbinger Corporation and to the reference
to our firm under the heading "Experts" in the Prospectus.
KPMG Peat Marwick LLP
Atlanta, Georgia
October 29, 1997
<PAGE> 2
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Harbinger Corporation
We consent to the use of our report dated February 7, 1997 relating to the
balance sheets of Harbinger Net Services, LLC as of December 31, 1996 and 1995,
and the related statements of operations, shareholders' equity, and cash flows
for the periods ended December 31, 1996 and 1995 included in Harbinger
Corporation's Current Report on Form 8-K/A Amendment No. 1 filed on March 14,
1997 and incorporated by reference in the Form S-4 registration statement of
Harbinger Corporation and to the reference to our firm under the heading
"Experts" in the Prospectus.
KPMG Peat Marwick LLP
Atlanta, Georgia
October 28, 1997
<PAGE> 3
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Harbinger Corporation
We consent to the use of our reports dated May 13, 1997 relating to the
consolidated balance sheets of Harbinger Corporation as of December 31, 1996
and 1995, and the related consolidated statements of operations, shareholders'
equity, and cash flows for each of the years in the two-year period ended
December 31, 1996, and the related financial statement schedule, which reports
appear in Harbinger Corporation's Current Report on Form 8-K filed on July 1,
1997 and are incorporated by reference in the Form S-4 registration statement
of Harbinger Corporation and to the reference to our firm under the heading
"Experts" in the Prospectus.
Our reports dated May 13, 1997, included a reference to other auditors with
respect to 1995, as those reports, as they relate to the 1995 combined
financial statements for Supply Tech, Inc. and Supply Tech International, LLC
which are included in the consolidated financial statements of Harbinger
Corporation, are based solely on the report of the other auditors as it relates
to the amounts included for Supply Tech, Inc. and Supply Tech International,
LLC. Our reports dated May 13, 1997 also indicated that the financial
statements of Harbinger Corporation and Supply Tech, Inc. and Supply Tech
International, LLC for 1994 were audited by other auditors, although the
reports also indicated that we audited the combination of the accompanying
financial statements and financial statement schedule for 1994.
KPMG Peat Marwick LLP
Atlanta, Georgia
October 28, 1997
<PAGE> 4
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Harbinger Corporation
We consent to the use of our report dated February 19, 1997 relating to the
combined balance sheet of Supply Tech, Inc. and Supply Tech International, LLC
as of December 31, 1996, and the related combined statements of operations,
shareholders' equity (deficit), and cash flows for the year then ended included
in Harbinger Corporation's Current Report on Form 8-K/A Amendment No. 1 filed
on March 18, 1997 and incorporated by reference in the Form S-4 registration
statement of Harbinger Corporation and to the reference to our firm under the
heading "Experts" in the Prospectus.
KPMG Peat Marwick LLP
Atlanta, Georgia
October 28, 1997
<PAGE> 1
EXHIBIT 23.4
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference to this Form S-4 Registration Statement of our report dated March 14,
1995 included in Harbinger Corporation's Current Report on Form 8-K filed on
July 1, 1997 and to all references to our firm included in this registration
statement.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
October 24, 1997
<PAGE> 1
EXHIBIT 23.5
Independent Auditors' Consent
The Board of Directors
Harbinger Corporation:
We consent to the use of our report dated February 19, 1997 related to the
combined balance sheet of Supply Tech, Inc. and Supply Tech International, LLC
as of December 31, 1995 and the related combined statements of operations,
shareholders' equity (deficit), and cash flows for each of the years in the
two-year period ended December 31, 1995 included in Harbinger Corporation's
Current Report on Form 8-K/A Amendment No. 2 filed on March 18, 1997 and
Harbinger Corporation's Current Report on Form 8-K filed on July 1, 1997 and
incorporated by reference in the Form S-4 registration statement of Harbinger
Corporation.
Ciulla, Smith & Dale, LLP
Southfield, Michigan
October 24, 1997
<PAGE> 1
EXHIBIT 23.6
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Harbinger Corporation:
We consent to the use of our report dated June 11, 1996 relating to the balance
sheet of INOVIS GmbH & Co. computergestuzte Informationssysteme as of December
31, 1995 and the related statements of operations and accumulated deficit,
partners' equity, and cash flows for the year then ended included in Harbinger
Corporation's Form 8-K/A Amendment No. 1 filed on July 1, 1996 and incorporated
by reference in the Form S-4 registration statement of Harbinger Corporation
and to the reference to our firm under the heading "Experts" in the Prospectus.
KPMG Deutsche Treuhand-Gesellschaft AG
Germany
October 28, 1997
<PAGE> 1
EXHIBIT 23.7
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Harbinger Corporation:
We consent to the use of our report dated June 5, 1996 relating to the
consolidated balance sheets of Harbinger N.V. and subsidiaries as of December
31, 1995, 1994, and 1993 and the related consolidated statements of operations,
shareholders' equity, and cash flows for the two years ended December 31, 1995
and 1994 and the one month ended December 31, 1993 included in Harbinger
Corporation's Current Report on Form 8-K/A Amendment No. 1 filed on July 2,
1996 and incorporated by reference in the Form S-4 registration statement of
Harbinger Corporation and to the reference to our firm under the heading
"Experts" in the Prospectus.
KPMG Accountants N.V.
The Hague
October 28, 1997
<PAGE> 1
EXHIBIT 23.8
CONSENT OF FINANCIAL ADVISOR
We hereby consent to the use of our opinion letter dated October 23, 1997
to the Board of Directors of Harbinger Corporation included as "Annex C" to the
Joint Proxy Statement/Prospectus which forms a part of the Registration
Statement on Form S-4 relating to the proposed merger of Olympic Subsidiary
Corporation, a wholly owned subsidiary of Harbinger Corporation, with Premenos
Technology Corp. and to the references to such opinion in such Joint Proxy
Statement/Prospectus under the captions "Summary -- Opinion of Harbinger's
Financial Advisor," "The Merger -- Opinion of Harbinger's Financial Advisor,"
and "The Merger -- Background of and Reasons for the Merger" and to the
inclusion of the foregoing opinion as "Annex C" to the Joint Proxy
Statement/Prospectus. In giving such consent, we do not admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended (the "Securities Act") or the rules and
regulations of the Securities and Exchange Commission ("SEC") thereunder, nor do
we thereby admit that we are experts with respect to any part of such
Registration Statement within the meaning of the term "experts" as used in the
Securities Act or the rules and regulations of the SEC thereunder.
BT ALEX. BROWN INCORPORATED
Baltimore, Maryland
October 29, 1997
<PAGE> 1
EXHIBIT 23.9
CONSENT OF FINANCIAL ADVISOR
We hereby consent to the use of our opinion letter dated October 22, 1997
to the Board of Directors of Premenos Technology Corp. included as "Annex D" to
the Joint Proxy Statement/Prospectus which forms a part of the Registration
Statement on Form S-4 relating to the proposed merger of Olympic Subsidiary
Corporation, a wholly owned subsidiary of Harbinger Corporation, with Premenos
Technology Corp. and to the references to such opinion in such Joint Proxy
Statement/Prospectus under the captions "Summary -- Opinions of Premenos'
Financial Advisor," "The Merger -- Opinion of Premenos' Financial Advisor," "The
Merger -- Background of and Reasons for the Merger" and "The Merger -- Premenos'
Reasons for the Merger" and to the inclusion of the foregoing opinion as "Annex
D" to the Joint Proxy Statement/Prospectus. In giving such consent, we do not
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended (the "Securities Act")
or the rules and regulations of the Securities and Exchange Commission ("SEC")
thereunder, nor do we thereby admit that we are experts with respect to any part
of such Registration Statement within the meaning of the term "experts" as used
in the Securities Act or the rules and regulations of the SEC thereunder.
HAMBRECHT & QUIST LLC
San Francisco, California
October 29, 1997
<PAGE> 1
EXHIBIT 23.10
CONSENT TO BE NAMED AS
DIRECTOR NOMINEE
The undersigned hereby consents to be named in the Registration Statement
on Form S-4 to which this Consent has been filed as an exhibit as a person who
shall become a Director of Harbinger Corporation following the completion of the
Merger to which said Registration Statement pertains.
/s/ DAVID HILDES
--------------------------------------
David Hildes
Date: October 29, 1997
<PAGE> 1
EXHIBIT 23.11
Independent Auditors' Consent
The Board of Directors
Harbinger Corporation
We consent to the use of our report dated June 14, 1996 relating to the
consolidated balance sheets of NTEX Holding B.V. as of December 31, 1995, and
the related consolidated statements of operations, shareholders' equity
(deficit), and cash flows for the year then ended included in Harbinger
Corporation's Current Report on Form 8-K/A Amendment No. 1 filed on June 17,
1996 and incorporated by reference in the Form S-4 registration statement of
Harbinger Corporation.
Moret Ernst & Young Accountants
The Hague, October 24, 1997
<PAGE> 1
EXHIBIT 99.1
PROXY HARBINGER CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF SHAREHOLDERS
ON , 1997
The undersigned hereby appoints C. Tycho Howle, David T. Leach and Joel G.
Katz, and each of them, proxies, with full power of substitution and
resubstitution, for and in the name of the undersigned, to vote all shares of
common stock of Harbinger Corporation ("Harbinger") which the undersigned would
be entitled to vote if personally present at the Special Meeting of Shareholders
to be held on , 1997, at a.m., local time, at the offices of King &
Spalding, 191 Peachtree Street, 50th Floor, Atlanta, Georgia 30303, or at any
adjournment thereof, upon the matters described in the accompanying Notice of
Special Meeting of Shareholders and Joint Proxy Statement/Prospectus, receipt of
which is hereby acknowledged, and upon any other business that may properly come
before the Special Meeting of Shareholders or any adjournment thereof. Said
proxies are directed to vote on the matters described in the Notice of Special
Meeting of Shareholders and Joint Proxy Statement/Prospectus as follows, and
otherwise in their discretion upon such other business as may properly come
before the Special Meeting of Shareholders or any adjournment thereof.
1. To approve (a) the Merger Agreement dated as of October 23, 1997 by and among
Harbinger Corporation, Olympic Subsidiary Corporation and Premenos Technology
Corp. (the "Merger Agreement"), (b) the merger of Olympic Subsidiary
Corporation with and into Premenos Technology Corp. in accordance with the
Merger Agreement, and (c) the issuance of shares of Harbinger common stock
under the Merger Agreement.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
2. To approve an amendment to the Harbinger Corporation 1996 Stock Option Plan
to increase the number of shares of Harbinger common stock reserved for
issuance thereunder from 4,125,000 to 5,125,000 shares.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
(continued and to be signed on reverse side)
(continued from other side)
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THIS
PROXY WILL BE VOTED FOR THE ABOVE-STATED PROPOSALS.
Date: , 1997
--------------------
-------------------------------
-------------------------------
Please sign exactly as your
name or names appear hereon.
For more than one owner as
shown above, each should sign.
When signing in a fiduciary or
representative capacity, please
give full title. If this proxy
is submitted by a corporation,
it should be executed in the
full corporate name by a duly
authorized officer, if a
partnership, please sign in the
partnership name by an
authorized person.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING ON ,
1997. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH,
EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY.
<PAGE> 1
PROXY EXHIBIT 99.2
PREMENOS TECHNOLOGY CORP.
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
, 1997
The undersigned hereby appoints LEW JENKINS, H. WARD WOLFF, or either of
them, each with power of substitution, as proxies to represent the undersigned
at the Special Meeting of Stockholders of PREMENOS TECHNOLOGY CORP., to be held
on , , 1997, at , at the Hilton Hotel, located at 1970
Diamond Boulevard, Concord, California, and any adjournment thereof, and to vote
the number of shares the undersigned would be entitled to vote if personally
present on the following matters set forth on the reverse side.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL
BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED FOR
THE MERGER AND THE MERGER AGREEMENT.
TO (A) APPROVE THE MERGER AGREEMENT DATED AS OF OCTOBER 23, 1997 AMONG
PREMENOS, HARBINGER CORPORATION AND OLYMPIC SUBSIDIARY CORPORATION, A WHOLLY
OWNED SUBSIDIARY OF HARBINGER ("MERGER SUB"), PURSUANT TO WHICH (I) MERGER SUB
WOULD BE MERGED WITH AND INTO PREMENOS (THE "MERGER") AND (II) EACH OUTSTANDING
SHARE OF COMMON STOCK, PAR VALUE $.01 PER SHARE, OF PREMENOS WOULD BE CONVERTED
INTO THE RIGHT TO RECEIVE .45 OF A SHARE OF COMMON STOCK, PAR VALUE $.0001 PER
SHARE, OF HARBINGER, WITH CASH BEING PAID IN LIEU OF FRACTIONAL SHARES, AND (B)
THE MERGER.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Special Meeting or any adjournment
thereof.
(Continued and to be signed on reverse side)
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN, AND RETURN THIS PROXY IN THE
ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
Please sign exactly as the name
or names appear on stock
certificate (as indicated
hereon). If the shares are
issued in the names of two or
more persons, all such persons
should sign the proxy. A proxy
executed by a corporation
should be signed in its name by
its authorized officers.
Executors, administrators,
trustees, and partners should
indicate their positions when
signing.
Signature:
-------------------------------
Date:
-------------------------------
Signature:
-------------------------------
Date:
-------------------------------
