AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
September 24, 1998, by and among Charlotte Acquisition Corp., a Delaware
corporation ("Charlotte"), BEA Systems, Inc., a Delaware corporation ("BEA"),
and WebLogic, Inc., a Delaware corporation ("Seller").
RECITALS
A. BEA and Seller desire to merge (the "Merger") Charlotte with and into
Seller with Seller being the surviving corporation (the "Surviving Corporation")
of the Merger.
B. For federal income tax purposes, it is intended that the Merger shall
qualify as a reorganization within the meaning of Section 368(a)(2)(E) of the
Internal Revenue Code of 1986, as amended (the "Code"), and for financial
accounting purposes, shall be accounted for as a pooling of interests.
NOW, THEREFORE, the parties hereto hereby agree as follows:
AGREEMENT
ARTICLE 1
MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement and
in accordance with the Delaware General Corporation Law (the "DGCL"), at the
Effective Time (as defined hereinafter), Charlotte will be merged with and into
Seller, with Seller being the Surviving Corporation of the Merger and becoming a
wholly-owned subsidiary of BEA and the separate corporate existence of Charlotte
shall cease.
1.2 THE CLOSING. Subject to the terms and conditions of this Agreement,
the consummation of the Merger and the other transactions contemplated hereby
(the "Closing") shall take place on September 30, 1998, at the offices of
Morrison & Foerster LLP, 755 Page Mill Road, Palo Alto, California 94304, or
such other place and time as the parties may otherwise agree, and the date of
the Closing is referred to herein as the "Closing Date."
1.3 FILING OF MERGER DOCUMENTS; EFFECTIVE TIME. At the Closing, the
parties shall cause the Merger to be consummated by executing and filing a duly
executed Agreement of Merger and duly executed Certificates of Merger
(collectively the "Merger Documents") with respect to the Merger with the
Secretary of State of the State of Delaware, in such form as BEA and Seller
reasonably determine is required by and in accordance with the relevant
provisions of the DGCL. The time upon which such filing becomes effective in
accordance with the DGCL is referred to herein as the "Effective Time."
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1.4 EFFECT OF MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the DGCL. Without limiting the generality of the
foregoing, at the Effective Time:
(a) The Certificate of Incorporation and the Bylaws of Charlotte, as
in effect immediately prior to the Closing Date, shall become the Certificate of
Incorporation of the Surviving Corporation, unless and until amended in
accordance with their terms and as provided by law.
(b) The directors of the Charlotte shall become the directors of the
Surviving Corporation, each to hold a directorship in accordance with the
Certificate of Incorporation and Bylaws of the Surviving Corporation until his
successor is duly elected and qualified, and the parties listed on Schedule
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1.4 delivered by Seller to BEA concurrent with the execution and delivery
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of the Agreement shall be the respective officers of the Surviving Corporation
as identified on such Schedule 1.4.
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1.5 TAX AND ACCOUNTING TREATMENT. The parties hereto acknowledge and agree
that the Merger contemplated hereby is intended to be treated for accounting
purposes as a pooling of interests. The parties also acknowledge and agree that
the Merger is intended to be a tax-free reorganization under Section
368(a)(2)(E) of the Code. The parties to this Agreement hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Sections 1.368-
2(g) and 1.368-3(a) of the United States Treasury Regulations. Notwithstanding
the foregoing or anything else to the contrary contained in this Agreement, the
parties acknowledge and agree that no party is making any representation or
warranty as to the status of the Merger as a tax-free reorganization under
Section 368 of the Code or as to the effect, if any, that any transaction
consummated prior to the Effective Time has or may have on any such tax-free
status.
ARTICLE 2
CONVERSION OF STOCK
2.1 CONSIDERATION; CONVERSION OF STOCK.
2.1.1 For the purposes of the Agreement "Consideration" means
7,606,122 shares of Common Stock $.001 par value per share of BEA ("BEA Common
Stock"), subject to adjustment to account for exercises of any Seller Options or
Warrants (as defined) subsequent to the date hereof and prior to the Effective
Time. At the Effective Time, by virtue of the Merger, and without further action
by any person or entity, all of the shares of Seller Stock (as hereinafter
defined) issued and outstanding immediately prior to the Effective Time shall be
converted into and become the right to receive (subject to the payment of cash
for fractional shares as provided in Section 2.2.3) the Consideration in
accordance with Section 2 hereof. All shares of Seller Stock held by Seller as
treasury stock shall be canceled and no payment shall be made with respect
thereto. Each issued and outstanding share of capital stock of Charlotte shall,
at the Effective Time, be automatically converted into one share of Seller
Common Stock (as hereinafter defined). For the purposes hereof, the term "Seller
Stock" shall mean all issued and outstanding shares of Seller's common stock
("Seller Common Stock") as of the Effective Time,
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and all issued and outstanding shares of Seller's preferred stock ("Seller
Preferred Stock"), as of the Effective Time.
2.1.2 The Consideration shall be allocated among the holders of
shares of Seller Stock outstanding immediately prior to the Effective Time by
allocating among the holders of Seller's Common Stock outstanding at the
Effective Time that number of shares of BEA Common Stock determined by,
multiplying the number of shares of Seller Common Stock held by each such holder
by 0.612750 (the "Conversion Factor"). To the extent that any Seller Preferred
Stock is not converted into Common Stock prior to the Effective Time and the
condition to Closing set forth at Section 7.1.15 shall have been waived by BEA,
appropriate allocation of the Consideration shall be made, as Seller shall
designate in writing, to the holders of any such unconverted Seller Preferred
Stock, and the Conversion Factor and the remaining Consideration allocable to
Seller Common Stock shall be adjusted as BEA and Seller shall mutually agree.
2.2 PAYMENT OF CONSIDERATION. On the Closing Date:
2.2.1 Subject to Section 2.2.1, BEA shall issue and deliver to the
holders of Seller Stock certificates representing the number of shares of Common
Stock comprising the Consideration (other than the Escrowed Shares (as
hereinafter defined)) allocated to such stockholders in accordance with Schedule
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2.2.1 delivered by Seller to BEA concurrent with the execution and delivery of
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this Agreement.
2.2.2 BEA shall authorize one or more persons to act as Exchange Agent
hereunder (the "Exchange Agent"). As soon as practicable after the Effective
Time, BEA shall cause the Exchange Agent to mail to all former holders of record
Seller Stock instructions for surrendering their certificates representing
Seller Stock in exchange for a certificate or certificates representing shares
of BEA Common Stock. Upon surrender of a Seller Stock certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by BEA, the holder of such certificate shall be entitled to receive in
exchange therefore (subject to Section 2.2.4) a certificate representing that
number of whole shares of BEA Common Stock into which the shares of Seller Stock
theretofore represented by such certificate so surrendered shall have been
converted pursuant to the provisions of this Agreement, and the certificate so
surrendered shall forthwith be canceled. Until surrendered in accordance with
the provisions of this Section, each Seller Stock certificate shall represent
for all purposes shares of BEA Common Stock. BEA Common Stock into which Seller
Stock shall be converted in the Merger shall be deemed to have been issued at
the Effective Time. If any BEA Common Stock certificates are to be issued in a
name other than that in which the Seller Stock certificate surrendered is
registered, it shall be a condition of such exchange that the person requesting
such exchange shall deliver to the Exchange Agent any transfer or other taxes
required by reason of the issuance of certificates for such shares of BEA Common
Stock in a name other than that of the registered holder of the certificate
surrendered or establish to the reasonable satisfaction of the Exchange Agent
that such tax has been paid or is not applicable.
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2.2.3 No certificates representing fractional shares of BEA Common
Stock shall be issued upon the surrender or exchange of Seller Stock
certificates. No fractional interest shall entitle the owner to vote or to any
rights of a security holder. In lieu of fractional shares, each holder of shares
of Seller Stock who would otherwise have been entitled to a fractional share of
BEA Common Stock, will receive upon surrender of a Seller Stock certificate or
certificates, as the case may be, an amount in cash (without interest)
determined by multiplying such fraction by the Closing Market Value. BEA shall
not be liable to any holder of shares of Seller Stock for any cash in lieu of
fractional interests delivered to a public official pursuant to applicable
escheat or abandoned property laws. For purposes of this Agreement, "Closing
Market Value" of BEA Common Stock means the average of the closing prices of
Common Stock as reported by the Nasdaq National Market for the five trading days
ending on the trading day prior to the Closing Date.
2.2.4 BEA shall deposit 10% of the aggregate number of shares of BEA
Common Stock comprising the Consideration (the "Escrowed Shares") with State
Street Bank and Trust Company of California, N.A. (the "Escrow Agent") to be
held and disbursed by the Escrow Agent in accordance with the form of escrow
agreement (the "Escrow Agreement") attached hereto as Exhibit 2.2.4.
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2.3 OPTIONS.
2.3.1 At the Effective Time, any and all outstanding and unexercised
Employee Options (as hereinafter defined) shall cease to represent a right to
acquire shares of Seller Common Stock and shall be converted automatically into
an option to purchase shares of BEA Common Stock in an amount and at an exercise
price determined as provided below:
(a) The number of shares of BEA Common Stock subject to the new
option shall be equal to the product of the number of shares of Seller Common
Stock subject to the original option and the Conversion Factor, provided that
any fractional shares of BEA Common Stock resulting from such multiplication
shall be rounded down to the nearest share; and
(b) The exercise price per share of BEA Common Stock under the
new option shall be equal to the quotient obtained by dividing the exercise
price per share of Seller Common Stock under the original option by the
Conversion Factor, provided that such exercise price shall be rounded up to the
nearest cent.
2.3.2 The adjustment provided herein with respect to any options that
are "incentive stock options" (as defined in the Code) shall be and is intended
to be effected in a manner consistent with Section 424(b) of the Code. The
duration and other terms of the new option shall be the same as the original
option as modified by Section 2.3.1 except that all references to Seller shall
be deemed to be references to BEA.
2.3.3 Prior to the Closing Date and except for any Employee Options
and Assumed Warrants (as hereinafter defined), Seller shall cause all
outstanding Warrants and Options (as hereinafter defined), to be exercised (and
all shares of Seller Common Stock required
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to be issued pursuant to such exercise to be validly and fully issued as fully
paid, nonassessable shares) or terminated, such that, as of the Effective Time,
(a) no options, warrants or other rights to acquire any shares of Seller's
capital stock or any securities convertible into shares of Seller's capital
stock are outstanding, and (b) no person or entity other than the holders of
Seller Stock shall have any right, title or interest in or to the ownership of
Seller or any securities issued by Seller, all of which holders shall have no
such, right, title or interest in or to Seller, other than their ownership of
Seller Stock.
2.4 WARRANTS. At the Effective Time, BEA shall assume each of the Assumed
Warrants and be subject to and bound by the conditions and obligations of Seller
set forth therein, whereby the Assumed Warrants shall cease to represent a right
to acquire shares of Seller Common Stock and shall be converted into warrants to
purchase shares of BEA Common Stock in an amount and at an exercise price in
accordance with the terms thereof.
2.5 APPRAISAL RIGHTS. If holders of any shares of Seller Stock (i) are
entitled to dissent from the Merger and demand appraisal of any such Seller
Stock in accordance with the provisions of the DGCL concerning the right of such
holders to dissent from the Merger and demand appraisal of their Seller Stock or
(ii) have properly exercised dissenters rights with respect to their Seller
Stock in accordance with Section 1300 of the California General Corporation Law
("CGCL") ("Dissenting Holders"), any Seller Stock held by a Dissenting Holder as
to which appraisal has been so demanded or for which such dissenter's rights
have been properly exercised ("Excluded Shares") shall not be converted as
described in Section 2.1, but shall, from and after the Closing, represent only
the right to receive such consideration as may be determined to be due to such
Dissenting Holder pursuant to the DGCL or CGCL, as applicable; provided,
however, that each share of Seller Stock held by a Dissenting Holder who shall,
after the Closing, withdraw his demand for appraisal or lose his right of
appraisal with respect to such shares of Seller Stock, in either case pursuant
to the DGCL or CGCL, as applicable, shall not be deemed Excluded Shares but
shall be deemed to be converted, as of the Effective Time, into the right to
receive BEA Common Stock in accordance with Section 2.1 hereof. Seller shall
give BEA (i) prompt notice of any written demands under Section 1300 of the CGCL
with respect to any shares of capital stock of Seller, any withdrawal of any
such demands and any other instruments served pursuant to the CGCL and received
by Seller and (ii) the right to participate in all negotiations and proceedings
with respect to any demands under Section 1300 of the CGCL with respect to any
shares of capital stock of Seller. Seller shall cooperate with BEA concerning,
and shall not, except with the prior written consent of BEA, voluntarily make
any payments with respect to, or offer to settle or settle, any such demands.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to BEA and Charlotte that the
following facts and circumstances are true and correct, as of the date of this
Agreement, subject to the limitations and exceptions set forth on Schedule 3
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delivered by Seller to BEA concurrent with the execution and delivery of this
Agreement (the "Seller Disclosure Schedule"). Whenever the term "to Seller's
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knowledge" or similar expression appears in any representation or warranty in
this Article 3, it means to the actual knowledge of Seller's directors and
executive officers, after reasonable inquiry and investigation where specified.
Whenever the term "Seller has received no notice" or like expression appears in
any representation or warranty in this Article 3, it means that none of Seller's
directors and executive officers has received actual oral or written notice of
the matter to which such term is applied, after having made reasonable inquiry
as to whether notice has been received where specified.
3.1 ORGANIZATION. Seller: (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware; (ii) has
all necessary corporate power to own and lease its properties, to carry on its
business as now being conducted and to enter into and perform this Agreement and
all of the other documents and agreements contemplated hereby; and (iii) is
qualified to do business in all jurisdictions in which the failure to so qualify
would have a material adverse effect on the business, operations or financial
condition of Seller. Seller has no Subsidiaries (as hereinafter defined) and
holds no right, title or interest in or to any other corporation, company,
partnership, trust, limited liability company or other entity.
3.2 AUTHORITY AND CONSENTS. The execution and performance of this
Agreement and the other documents to be executed by Seller pursuant to the terms
hereof will not result in a violation of Seller's Certificate of Incorporation
or Bylaws. Seller has full power and authority (corporate and otherwise) to
enter into this Agreement and the other documents to be executed by Seller
pursuant to the terms hereof and to carry out the transactions contemplated by
this Agreement and such other documents. This Agreement and the other documents
to be executed by Seller pursuant to the terms hereof and their execution and
delivery to Charlotte and BEA have been duly authorized by the Board of
Directors of Seller, and, subject to Section 5.4, no further corporate action
prior to the Closing shall be necessary on the part of Seller or its
stockholders to effect the Merger. This Agreement and the other documents to be
executed by Seller pursuant to the terms hereof do and will constitute legal,
valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms, subject as to enforcement only: (i) to
bankruptcy, insolvency, reorganization, arrangement, moratorium and other
similar laws of general applicability relating to or affecting creditors' rights
generally; and (ii) to general principles of equity.
Seller has delivered to BEA true, complete and correct copies of (i) its
Certificate of Incorporation, as amended to date, certified by the appropriate
official of the jurisdiction of incorporation, (ii) its Bylaws, as amended to
date, and (iii) its stock ledger, in each case, certified by Seller's corporate
secretary. The Certificate of Incorporation and Bylaws of Seller are in full
force and effect and Seller is in material compliance with the provisions
thereof.
3.3 CAPITALIZATION AND TITLE TO SHARES.
3.3.1 Seller is authorized to issue eighteen million (18,000,000)
shares of Seller Common Stock, of which five million five hundred eight-five
thousand three hundred seventy-three (5,585,373) shares are issued and
outstanding, and seven million (7,000,000) shares of Seller Preferred Stock are
issuable in series. Of such Seller Preferred Stock, four
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hundred thousand (400,000) shares have been designated Series A Stock, of which
four hundred thousand (400,000) shares are issued and outstanding; six hundred
thousand (600,000) shares have been designated as Series B Stock, of which five
hundred eighty-one thousand eight hundred (581,800) shares are issued and
outstanding; and six million (6,000,000) shares have been designated as Series C
Stock, of which five million eight hundred forty-five thousand nine hundred
twenty (5,845,920) shares are issued and outstanding. Such shares are owned of
record by the persons and in the amounts set forth on Section 3.3.1 of the
Seller Disclosure Schedule. No other class of capital stock of Seller is
authorized or outstanding. All of the issued and outstanding shares of Seller's
capital stock are duly authorized and are validly issued, fully paid,
nonassessable and free of pre-emptive rights. None of the issued and outstanding
shares of Seller have been issued in violation of any federal or state law or
any preemptive rights or rights to subscribe for or purchase securities.
3.3.2 Section 3.3.2 of the Seller Disclosure Schedule includes a true
and complete list of all outstanding rights, subscriptions, warrants, calls,
preemptive rights, options or other agreements of any kind to purchase or
otherwise receive from Seller any shares of the capital stock or any other
security of Seller, and all outstanding securities of any kind convertible into
or exchangeable for such securities (all such rights, subscriptions, warrants,
calls, options, agreements and convertible securities, collectively, "Warrants
and Options"). True and complete copies of all instruments (or the form of such
instruments) referred to in this Section 3.3.2 have been previously furnished to
BEA. There are no stockholder agreements, voting trusts, proxies or other
agreements or understandings with respect to the outstanding shares of capital
stock of Seller to which Seller is a party. Except for options granted pursuant
to the Company's 1996 Stock Plan ("Employee Options") and the Warrants set forth
in Section 3.3 of the Seller Disclosure Schedule defined therein as Assumed
Warrants (the "Assumed Warrants"), all outstanding unexercised Warrants and
Options shall terminate at the Effective Time.
3.3.3 Seller does not own beneficially any shares of capital stock of
BEA.
3.4 TITLE TO ASSETS. Seller has good and marketable title to all of its
tangible and intangible assets and properties reflected as owned on the Audited
Financial Statements (as defined hereinafter), except for assets sold in the
ordinary course of business since the date of the Audited Financial Statements,
and all such assets and properties are free and clear of all liens, charges,
encumbrances and security interests, except for (w) any lien for current taxes
not yet due and payable, (y) any statutory liens and (z) minor liens that have
arisen in the ordinary course of business that do not (in any case or in the
aggregate) materially detract from the value of the assets subject thereto or
materially impair the operations of Seller (collectively, "Liens").
3.5 PROPERTIES. Seller does not own any real property and does not have
any options or contractual obligations to purchase or acquire any interest in
real property other than leasehold interests. Seller has a valid leasehold
interest in all of the buildings, structures and leasehold improvements, and
owns or has a valid leasehold interest in all equipment and other tangible
property used in the conduct of its business, all of which are in good and
sufficient operating condition and repair, ordinary wear and tear excepted.
There is no equipment located on the premises of Seller that is on loan from
another party.
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3.6 CONSENTS AND APPROVALS OF GOVERNMENT AUTHORITIES. Except for the
filing of the Merger Documents and the consent of Seller's stockholders, no
consent, approval or authorization of, or declaration, filing, notice or
registration with, any governmental agency, regulatory authority or other Person
(as defined hereinafter) is required in connection with the execution, delivery
and performance of this Agreement or any of the other documents contemplated
hereby by Seller or the consummation of the transactions contemplated herein and
therein.
3.7 ACCOUNTS RECEIVABLE/PREPAYABLE. Subject to the allowances with respect
to accounts receivable set forth on the August 31, 1998 balance sheet included
in the Interim Financial Statement (as such allowances shall have changed since
August 31, 1998 in a manner consistent with past practices to reflect activity
since that date), all accounts receivable reflected on such balance sheet and
all accounts receivable arising subsequent thereto on or prior to the Closing
Date and not yet collected, have arisen in the ordinary course of business of
Seller, represent valid and enforceable obligations due to Seller, have been and
are fully collectible in the ordinary course of business in the aggregate
recorded amounts thereof in accordance with their terms and are, to the
knowledge of the Seller, subject to no set-off, counterclaim or future
performance obligation on the part of Seller.
3.8 CONTRACTS AND OTHER AGREEMENTS. The Seller Disclosure Schedule sets
forth a list of the following contracts and other agreements to which Seller is
a party or by or to which Seller or Seller's assets or properties are bound or
subject:
(a) any agreement or series of related agreements requiring aggregate
payments after the date hereof by or to Seller of more than $100,000;
(b) any agreement with or for the benefit of any current or former
officer, director, stockholder, employee or consultant of Seller;
(c) any agreement with any labor union or association representing any
employee of Seller;
(d) any agreement for the purchase or sale of materials, supplies,
equipment, merchandise or services that contain an escalation, renegotiation or
redetermination clause or that obligate Seller to purchase all or substantially
all of its requirements of a particular product from a supplier, or for periodic
minimum purchases of a particular product from a supplier;
(e) any agreement for sale of any of the assets or properties of
Seller other than in the ordinary course of business or for the grant to any
person of any options, rights of first refusal, or preferential or similar
rights to purchase any such assets or properties;
(f) any partnership or joint venture agreement;
(g) any agreement of surety, guarantee or indemnification, other than
agreements in the ordinary course of business with respect to obligations in an
aggregate amount not in excess of $50,000;
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(h) any agreement containing covenants of Seller not to compete in any
line of business, in any geographic area or with any person or covenants of any
other person not to compete with Seller or in any line of business of Seller;
(i) any agreement granting or restricting the right of Seller to use
any Intellectual Property (as defined hereinafter), except for any Intellectual
Property that is licensed to Seller under any third party software license
generally available to the public at a cost of less than $50,000;
(j) any agreement with customers or suppliers for the sharing of fees,
the rebating of charges or other similar arrangements;
(k) any agreement with any holder of securities of Seller as such
(including, without limitation, any agreement containing an obligation to
register any of such securities under any federal or state securities laws);
(l) any agreement obligating Seller to deliver services or product
enhancements or containing a "most favored nation" pricing clause;
(m) any agreement relating to the acquisition by Seller of any
operating business or the capital stock of any other person;
(n) any agreement requiring the payment to any person of a brokerage
or sales commission or a finder's or referral fee in connection with the
transactions contemplated by this Agreement (other than arrangements to pay
commission or fees to employees in the ordinary course of business);
(o) any agreement or note relating to or evidencing outstanding
indebtedness for borrowed money, other than agreements entered into in the
ordinary course of business for amounts not exceeding $50,000;
(p) any lease, sublease or other agreement under which Seller is
lessor or lessee of any real property or equipment or other tangible property
with respect to obligations in excess of $50,000; and
(q) Except for agreements to provide maintenance, upgrades, bug fixes,
error corrections or similar work product that are ordinary and customary for
the software industry and that are related to the Seller products which have
been delivered as of the date hereof, any agreement that requires Seller to
deliver, or undertake the development of, any new product, customized product,
substantial upgrade, new version or similar work product where such delivery or
development requires Seller to utilize substantial personnel or financial
resources.
(r) any other material agreement not made in the ordinary course of
business.
True and complete copies of all the contracts and other agreements
(and all amendments, waivers or other modifications thereto) set forth on the
Seller Disclosure Schedule
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have been made available to BEA. Each of such contracts is valid, subsisting, in
full force and effect, binding upon Seller, and to the knowledge of Seller,
binding upon the other parties thereto in accordance with their terms, and
Seller is not in default under any of them, nor, to the best knowledge of
Seller, is any other party to any such contract or other agreement in default
thereunder, nor does any condition exist that with notice or lapse of time or
both, would constitute a default thereunder, except, in each case, such defaults
as would not, individually or in the aggregate, have a material adverse effect
on the business of Seller.
3.9 COMPLIANCE WITH LAWS.
3.9.1 Seller has all licenses, permits, franchises, orders or
approvals of any federal, state, local or foreign governmental or regulatory
body required for the conduct of the business of Seller, except where not having
such license, permit, franchise, order or approval would not result in a
material adverse effect on business, operations or financial condition of Seller
(collectively, "Permits"); such Permits are in full force and effect; and no
proceeding is pending or, to the knowledge of Seller, threatened to revoke or
limit any Permit.
3.9.2 Except where such violation would not have a material adverse
effect on the business, operations or financial condition of Seller, Seller is
not in violation of any applicable law, ordinance or regulation or any order,
judgment, injunction, decree or other requirement of any court, arbitrator or
governmental or regulatory body. Seller has not received notice of, and there
has not been any citation, fine or penalty imposed against Seller for, any such
violation or alleged violation.
3.10 BANK ACCOUNTS AND POWERS OF ATTORNEY. Section 3.10 of the Seller
Disclosure Schedule identifies all bank and brokerage accounts of Seller,
whether or not such accounts are held in the name of Seller, lists the
respective signatories therefor and lists the names of all persons holding a
power of attorney from Seller and a summary of the terms thereof.
3.11 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION. Neither the execution
nor delivery of this Agreement or the other documents contemplated hereby by
Seller, nor performance by Seller of the terms and provisions of this Agreement
or such other documents will (a) conflict with or result in a breach or
violation of any of the terms, conditions or provisions of any Permit or any
judgment, order, injunction, decree, regulation or ruling of any court or
governmental authority to which Seller or any assets of Seller are subject or of
any contract to which Seller is a party or any agreement, contract, or
commitment to which Seller is a party or by which it is bound, except where such
conflict, breach or violation would not have a material adverse effect on the
business, operations or financial condition of Seller, or (b) give any person or
entity the right to terminate or modify any material contract to which Seller is
a party, or accelerate any material obligation or indebtedness of Seller
thereunder.
3.12 FINANCIAL STATEMENTS. Seller has previously delivered to BEA (i) the
audited consolidated financial statements of Seller at December 31, 1997
(including the footnotes thereto) (the "Audited Financial Statements"), and (ii)
the unaudited balance sheet of Seller (the "Interim Balance Sheet") at August
31, 1998, and related statement of operations and cash flows for the period then
ended (the "Interim Financial Statements"). Such financial statements
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referred to in this section are collectively referred to herein as the
"Financial Statements." The Interim Financial Statements have been prepared
from, and are in accordance with, the books and records of Seller and present
fairly, in all material respects, the financial position and the results of
operations of Seller as of the dates and for the periods indicated, in each case
in accordance with generally accepted accounting principles ("GAAP")
consistently applied throughout the periods involved except as otherwise stated
therein, and subject, in the case of the Interim Financial Statements, to normal
year end audit adjustments, which are not, in the aggregate, material and to the
absence of notes as may be required by GAAP.
3.13 NO UNDISCLOSED LIABILITIES. Seller has no liabilities or obligations
of any nature required to be disclosed as liabilities on a balance sheet
prepared in accordance with GAAP except (a) liabilities which are fully
reflected or reserved against in the Financial Statements, and (b) liabilities
incurred in the ordinary course of operation of the business of Seller since the
date of the Audited Financial Statements.
3.14 CUSTOMERS. Section 3.14 of the Seller Disclosure Schedule sets forth
the ten (10) customers who accounted for the largest sales of Seller, for each
of Seller's 1996 and 1997 fiscal years (the "Customers"). No Customer has
canceled or otherwise terminated its relationship with Seller, or has during
fiscal year 1998 to date decreased materially its purchase of the services of
Seller. Seller does not know of any plan or intention of any Customer, and has
not received any written threat or notice from any Customer, to terminate,
cancel or otherwise materially and adversely modify its relationship with Seller
or to decrease materially or limit its purchase of the services or products of
Seller.
3.15 TRANSACTIONS WITH MANAGEMENT. No officer of Seller has (whether
directly or indirectly through another entity in which such person has an
interest, other than as the holder of less than 1% of a class of securities of a
publicly traded company) any interest in (a) any property or assets of Seller
(except as a stockholder) or (b) to Seller's knowledge, any current competitor,
customer or supplier of Seller or (c) to Seller's knowledge, any person which is
currently a party to any contract with Seller involving any amount in excess of
$50,000.
3.16 ABSENCE OF CERTAIN CHANGES. Since August 31, 1998, there have been no
material changes in the condition, financial or otherwise, of any of the assets
or any of the liabilities, business, prospects or operations of Seller or the
business of Seller, other than changes which in the aggregate have not been
materially adverse to the business, finances or operations of Seller. Without
limiting the foregoing, since August 31, 1998 other than in the ordinary course
of business:
(a) Seller has not materially altered the nature of the business of
Seller as carried on or made any material change in the products and services it
supplies;
(b) Seller has not borrowed or agreed to borrow any funds or
incurred, or assumed or become subject to, whether directly or by way of
guarantee or otherwise, any material obligation or liability for borrowed money,
except payables incurred in the ordinary course of business and consistent with
past practice;
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(c) Seller has not paid, discharged or satisfied any claim, liability
or obligation other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of liabilities or
obligations reflected or reserved against in the Interim Balance Sheet or trade
payables incurred in the ordinary course of business and consistent with past
practice;
(d) Seller has not permitted or allowed any of its property or assets
(real, personal or mixed, tangible or intangible) to be subjected to any Lien of
any kind;
(e) Seller has not written down the value of any inventory or written
off as uncollectible any notes or accounts receivable, except for write-downs
and write-offs in the ordinary course of business and consistent with past
practice, none of which is material;
(f) Seller has not cancelled any debts or waived any claims or rights
of substantial value, waived any statute of limitation or sold, transferred, or
otherwise disposed of any of its properties or assets (real, personal or mixed,
tangible or intangible), except sales of immaterial assets in the ordinary
course of business and consistent with past practice;
(g) Seller has not licensed or disposed of or permitted to lapse any
rights to the use of any Seller Intellectual Property;
(h) Seller has not granted any increase in the compensation of
officers or employees (including any such increase pursuant to any bonus,
pension, profit-sharing or other plan or commitment) or any increase in the
compensation payable or to become payable to any officer or employee;
(i) Seller has not made any capital expenditure or commitment
therefor in excess of $50,000 individually or in the aggregate;
(j) Seller has not paid, loaned or advanced any amount to, or sold,
transferred or leased any properties or assets (real, personal or mixed,
tangible or intangible) to, or entered into any agreement or arrangement with,
any of its officers, directors or any Affiliate (as defined hereinafter) or
associate of any of its officers, directors or stockholders;
(k) Seller has not made any change in the accounting policies or
practices of Seller;
(l) Seller has not issued any shares of its capital stock or any
other securities or made any redemption or other acquisition of any capital
stock of Seller or any declaration, setting aside, or payment of any dividend or
distribution of any kind with respect to any shares of capital stock of Seller
except pursuant to the exercise of any outstanding Warrants and Options;
(m) there have been no losses or damage to any of Seller's assets due
to fire or other casualty, whether or not insured, amounting to more than
$50,000, in the aggregate; and
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(n) Seller has not agreed, whether in writing or otherwise, to do any
of the foregoing.
3.17 INTELLECTUAL PROPERTY.
3.17.1 Section 3.17.1 of the Seller Disclosure Schedule contains a
list of all patents, patent applications, trademarks (whether registered or
unregistered), trademark applications, service marks (whether registered or
unregistered), service mark applications, copyrights (whether registered or
unregistered) and copyright applications owned by or filed in the name of the
Seller (the "Owned Intellectual Property"), specifying as to each, as
applicable: (i) the nature of such Intellectual Property; (ii) the other
owner(s) of such Intellectual Property, for any Intellectual Property that is
jointly owned by the Seller and any other Person that is not an Affiliate of the
Seller; (iii) the jurisdictions by or in which such Intellectual Property has
been issued or registered or in which an application for such issuance or
registration has been filed, including the respective registration or
application numbers; and (iv) licenses, sublicenses and other agreements to
which the Seller is a party and pursuant to which any Person is authorized to
use such Intellectual Property, including the identity of all parties thereto, a
description of the nature and subject matter thereof, the applicable royalty and
the term thereof.
3.17.2 The Seller owns or licenses all Intellectual Property necessary
to conduct business to the same extent and in substantially the same manner as
presently conducted and as presently proposed by the Seller to be conducted (the
"Seller Intellectual Property"). The Seller Intellectual Property will be owned
by the Seller, or the Seller will have right for use thereof on identical terms
and conditions immediately subsequent to the Closing. No Owned Intellectual
Property is involved in any interference or re-examination or cancellation or
opposition proceeding and the Seller has not been notified or alerted that any
such proceeding will hereafter be commenced. Except as set forth in Section
3.17.2 of the Seller Disclosure Schedule, to the Seller's knowledge, after
reasonable inquiry, the Seller has no reasonable legal basis for provoking or
initiating an interference or opposition proceeding with respect to any
Intellectual Property held or used by others, and has no reasonable basis for
believing that any of Seller Intellectual Property, owned exclusively or jointly
by Seller, is being infringed by others.
3.17.3 The Seller has not been notified (after having made reasonable
inquiry as to whether notice has been received) that it is a defendant in any
action, suit, investigation or proceeding relating to, any alleged claim of
infringement by the Seller Intellectual Property, and no Seller Intellectual
Property infringes or misappropriates Intellectual Property of any other Person.
Seller has no knowledge, after reasonable inquiry, of any continuing
infringement by any other Person of any Seller Intellectual Property owned,
exclusively or jointly, by Seller. Except as set forth on Section 3.17.3 of the
Seller Disclosure Schedule, the Seller has not entered into any agreement to
indemnify any other Person against any charge of infringement, misappropriation
or other conflict with respect to any Intellectual Property.
3.17.4 The Seller has delivered to BEA correct and complete copies of
any Seller patents, registrations, applications, licenses, agreements, and
permissions (as amended to date) relating to Owned Intellectual Property and has
made available to BEA correct and complete
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copies of all other written documentation evidencing ownership and prosecution
(if applicable) of each such Owned Intellectual Property. With respect to all
Seller Intellectual Property, to Seller's knowledge, after reasonable inquiry:
(a) all patents, copyrights and trademarks included in the Owned
Intellectual Property are valid and in full force and all applications listed on
Section 3.17.1 of the Seller Disclosure Schedule as pending have been prosecuted
in good faith as required by law and are in good standing;
(b) Seller possesses all right, title and interest in the Owned
Intellectual Property and any other Seller Intellectual Property not jointly
owned or licensed from any other Person and, except as set forth in Section
3.17.4 of the Seller Disclosure Schedule, no Person that is not party to a non-
disclosure agreement with Seller, a copy of which has been provided to BEA, has
been provided by Seller access to or has any rights to, contingent or otherwise
(including without limitation any rights under any source code escrow or similar
agreement), any portion of the Seller Intellectual Property that is source code
and is owned by Seller;
(c) the Owned Intellectual Property, and the other Seller Intellectual
Property owned by Seller either exclusively or jointly with others, or licensed
exclusively from any other Person, is not subject to any outstanding Lien,
judgment, order, decree, stipulation, injunction, or charge; and
(d) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand is pending or to the knowledge of the Seller
(and Seller employees with responsibility for intellectual property matters) is
threatened which challenges the legality, validity, enforceability, use, or
ownership of the Owned Intellectual Property or the other Seller Intellectual
Property owned by Seller, either exclusively or jointly with any other Person,
or licensed exclusively from any other Person.
3.17.5 To the Seller's knowledge, after reasonable inquiry, no
employee of the Seller is subject to any secrecy or noncompetition agreement or
any agreement or restriction of any kind that would impede in any material way
the ability of such employee to carry out fully all activities of such employee
in furtherance of the business of the Seller as currently operated and as
presently proposed to be operated by the Seller. To the Seller's knowledge,
after reasonable inquiry, no third party has claimed that any person employed by
or affiliated with the Seller has violated or may be violating any of the terms
or conditions of his past employment, noncompetition or nondisclosure agreement
with such third party, or disclosed or may be disclosing or utilized or may be
utilizing any trade secret or proprietary information or documentation of such
third party or interfered or may be interfering in the employment relationship
between such third party and any of its present or former employees. Each
current employee, officer and consultant of the Seller has executed a
proprietary information and inventions agreement substantially in the form
provided to BEA. The Seller, after reasonable investigation, is not aware that
any of its employees are in violation of any such agreement.
3.17.6 To the knowledge of the Seller, after reasonable inquiry, the
Software is free from significant programming errors and operates in substantial
conformity with its user
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documentation and other descriptions and standards applicable thereto provided
by the Seller, and except as set forth on Section 3.17.6 of the Seller
Disclosure Schedule, the Software does not contain any known virus, timer,
clock, counter, or other limiting design, instruction or routine, that would,
without the user's knowledge and consent, erase data or programming code or
become inoperable or otherwise incapable of being used in the full manner for
which it was designed and created ("Harmful Code").
3.18 PRODUCT WARRANTIES AND RETURNS. Except as set forth on Section 3.18 of
the Seller Disclosure Schedule Seller has not made any express warranties or
guarantees relating to its products that will be in effect as of the Closing
Date. During the twelve (12) month period ended on August 31, 1998, Seller has
received no customer complaints pursuant to which Seller gave a credit or
accepted a product return for a refund in either case in excess of $10,000.
3.19 LITIGATION. Seller is not a party to any pending or, to Seller's
knowledge after reasonable inquiry, threatened action, suit, arbitration,
mediation, proceeding or investigation, at law or in equity or otherwise in, for
or by any court or other governmental body or any arbitration, mediation or
similar forum (collectively, "Litigation"); nor, to Seller's knowledge, does any
basis exist for any such Litigation. Seller is not subject to any decree,
judgment or order of any court or other governmental body which could have a
material adverse effect on the condition, financial or otherwise, of any of
Seller's assets or the business of Seller or which could prevent the
transactions contemplated by this Agreement.
3.20 PERSONNEL. Section 3.20 of the Seller Disclosure Schedule lists: (i)
all Employee Plans (as defined below) and all contracts or agreements with
directors, officers, employees or unions, or consulting agreements, to which
Seller is a party or it or its assets are subject as of the date of this
Agreement; (ii) the names, salary rates, bonuses paid during the last fiscal
year, and accrued vacation and sick leave for all the employees of Seller as of
August 31, 1998; and (iii) all group insurance programs in effect for employees
of Seller. Seller is not in default with respect to any of the obligations so
listed, except where such default would not have a material adverse effect on
the business, operations or financial condition of Seller. Seller has delivered
to BEA true, complete and correct copies of all Employee Plans. Seller has no
union contracts or collective bargaining agreements with, or any other
obligations to, employee organizations or groups, nor is Seller currently
engaged in any labor negotiations except in minor grievances not involving any
employee organization or group, nor, to the knowledge of Seller, is Seller the
subject of any union organization. There is no pending or, to Seller's
knowledge, threatened labor dispute, strike or work stoppage affecting the
business of Seller. All plans described on Section 3.20 of the Seller Disclosure
Schedule are in full compliance with applicable provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA") and regulations issued under
ERISA, except where such noncompliance would not have a material adverse effect
on the business, operations or financial condition of Seller, and there is no
unfunded liability with respect to such plans. Section 3.20 of the Seller
Disclosure Schedule also lists the amount payable to employees of Seller under
other fringe benefit plans. The term "Employee Plan" shall mean all present and
prior (including terminated and transferred) plans, programs, agreements,
arrangements and methods of contributions or compensation (including all
amendments to and components of the same, such as a trust with respect to a
plan) providing any remuneration or
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benefits, other than current cash compensation, to any current or former
employee of Seller or to any other person who provides services to Seller,
including, without limitation, pension, retirement, profit sharing, percentage
compensation, stock purchase, stock option, bonus and non-qualified deferred
compensation plans, disability plans, medical plans, dental plans, workers
compensation, health insurance, life insurance or other death benefits,
incentive plans, severance plans, vacation benefits and fringe benefits.
3.21 OSHA. Without limiting Section 3.9, Seller and the business of Seller
have at all times been in compliance with and have not violated any federal,
state or local statutes, laws, regulations or rules relating to occupational
health or safety, including, without limitation, the rules and regulations of
the Occupational Safety and Health Administration ("OSHA"), except where such
noncompliance would not have a material adverse effect on the business,
operations or financial condition of Seller. No investigation or claim has at
any time been commenced or pending against Seller or the business of Seller by
OSHA or any similar state or local agency. To the knowledge of Seller no claim
has at any time been made by any current or former employee of Seller relating
to occupational health or safety.
3.22 TAXES. All tax returns required to be filed prior to the date hereof
with respect to the Seller and the business of Seller have been timely filed,
each such tax return is true, accurate and complete in all material respects.
Seller has timely paid all taxes due on such returns and any subsequent
assessments with respect thereto. All taxes due and payable prior to the Closing
Date by or with respect to Seller or the business of Seller for the periods
prior to the Closing Date have been or will be paid by Seller prior to the
Closing or reserves have been established therefore in the Interim Financial
Statements. With respect to each taxable period of Seller, (i) no deficiency or
proposed adjustment which has not been settled or otherwise resolved for any
amount of taxes has been asserted or assessed by any taxing authority against
Seller; (ii) Seller has no pending consent to extend the time in which any taxes
may be assessed or collected by any taxing authority; (iii) Seller has not
requested or been granted an extension of the time for filing any tax return to
a date later than the Closing; (iv) there is no action, suit, taxing authority
proceeding, or audit or claim for refund now in progress, pending or, to the
knowledge of Seller threatened against Seller with respect to taxes; (v) there
are no Liens for taxes (other than for current taxes not yet due and payable)
upon any of Seller's assets; and (vi) true, correct and complete copies of all
income and sales tax returns filed by or with respect to Seller for the past
three years have been furnished or made available to BEA. Seller has not agreed
to, or is not required to, make any adjustments under Section 481(a) of the Code
by reason of a change in accounting method or otherwise.
3.23 INSURANCE. Section 3.23 of the Seller Disclosure Schedule constitutes
a list of all insurance policies and bonds in force with respect to Seller or
Seller's assets showing for each such policy or bond: (i) the owner and loss-
payee; (ii) the coverage of such policy or bond; (iii) the amount of premium
properly allocable to such policy or bond; (iv) the name of the insurer; and (v)
the termination date of the policy or bond. Copies of all such insurance
policies and bonds have been made available to BEA. All such insurance policies
and bonds are in full force and effect. The insurance coverage provided by such
policies and bonds is of the type and
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in the amounts customarily carried by Persons conducting businesses similar to
the business of Seller as presently conducted and in accordance with good
business practices.
3.24 ENVIRONMENTAL LIABILITY. Without limiting Section 3.9, at all times
Seller has complied with all applicable environmental and hazardous waste laws,
orders, regulations, rules and ordinances adopted, imposed or promulgated by any
governmental or regulatory entity having jurisdiction over any property owned or
leased by Seller, except where such noncompliance would not have a material
adverse effect on the business, operations or financial condition of Seller.
Neither Seller, to the knowledge of Seller, nor any portion of any property
owned or leased by Seller is in violation of any federal, state or local law,
ordinance or regulation relating to industrial hygiene, worker safety,
environmental protection, hazardous materials or waste or toxic materials,
except where such violation would not have a material adverse effect on the
business, operations or financial condition of Seller. To the knowledge of
Seller, prior to the date hereof, there has been no spill, release or discharge
of any Hazardous Materials (as defined below) by Seller on, under or about any
property owned or leased by Seller and no current use by Seller of any property
owned or leased by Seller constitutes a public or private nuisance. All material
environmental licenses, permits, clearances, covenants and authorizations
required for the business of Seller have been obtained by Seller and are in full
force and effect. Any handling, generation, transportation, storage, treatment
or use of Hazardous Material by Seller that has occurred on or about any
property owned or leased by Seller has been in compliance with all laws,
regulations and orders relating to Hazardous Materials, except where such
noncompliance would not have a material adverse effect on the business,
operations or financial condition of Seller. As used herein, the term "Hazardous
Materials" means any hazardous or toxic substance, material or waste which is or
becomes regulated by any local government authority, the State of Delaware, any
other state or the United States Government. To the knowledge of Seller, all
property owned or leased by Seller, including, without limitation, the soil and
groundwater on or under such property, is free of Hazardous Materials. No
notification of release of Hazardous Materials pursuant to applicable law has
been received by Seller as to any of such property. No wastes generated by
Seller have ever been sent directly or indirectly to any site listed or formally
proposed for listing federal or state list of hazardous substances sites
requiring investigation or clean-up. Seller has not received from any
governmental authority or third party any requests for information, notices of
claim, demand letters, or other notification that they or it are or is or may be
potentially responsible with respect to any investigation or clean-up of
Hazardous Materials. Seller has no knowledge of any fact or circumstance that
could involve Seller or BEA in any environmental litigation or proceeding or
impose any environmental liability upon Seller or BEA.
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3.25 PRODUCTS.
3.25.1 Except where such noncompliance or nonconformance would not
have a material adverse effect on the business, operations or financial
condition of Seller, each of the products produced, developed or sold by the
Seller is, and at all times up to and including the sale thereof by the Seller
has been (a) in compliance in all material respects with all applicable federal,
state, and local laws and regulations and (b) conforms in all material respects
to any promises or affirmations of fact made on the container or label for such
product or in connection with its sale, subject to returns, repairs, defects and
allowances consistent with past practice.
3.25.2 Section 3.25.2 of the Seller Disclosure Schedule contains a
list of all proprietary software developed by the Seller and currently sold,
licensed or otherwise used by the Seller in its business (the "Software"). When
used on a compatible, Year 2000 Compliant operating system platform with
compatible, Year 2000 Compliant database software, the Software containing or
calling on a calendar function (including, without limitation, any function
indexed to the CPU clock) and any function providing specific dates or days is
Year 2000 Compliant, except where any inaccurate dates and calculations would
not have a material adverse effect on the business, operations or financial
condition of Seller.
3.26 REPRESENTATIONS COMPLETE. The representations and warranties of Seller
contained in this Article 3 do not contain any untrue statement of a material
fact and do not omit to state any material fact necessary to make such
representations and warranties, in light of the circumstances under which they
were made, not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CHARLOTTE AND BEA
Charlotte and BEA hereby, jointly and severally, represent and warrant to
Seller and for the benefit of holders of Seller's Stock that the following facts
and circumstances are true and correct:
4.1 AUTHORIZATION; ETC. Each of Charlotte and BEA: (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware; (ii) has all necessary corporate power to own and lease its
properties, to carry on its business as now being conducted and to enter into
and perform this Agreement and all of the other documents and agreements
contemplated hereby; and (iii) is qualified to do business in all jurisdictions
in which the failure to so qualify would have a material adverse effect on the
business, operations or financial condition of Charlotte or BEA, as applicable.
Each of Charlotte and BEA has full power and authority (corporate or otherwise)
to enter into this Agreement and the other documents contemplated hereby and to
carry out the transactions contemplated hereby and thereby. Each of Charlotte
and BEA has taken all required action by law to authorize the execution and
delivery of this Agreement and the other documents contemplated hereby and the
transactions contemplated hereby and thereby, and this Agreement and the other
documents contemplated hereby is or will be a valid and binding obligation of
Charlotte and/or BEA, as applicable, enforceable against Charlotte and/or BEA,
as applicable in accordance with its terms,
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subject as to enforcement only: (i) to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general applicability relating
to or affecting creditors' rights generally; and (ii) to general principles of
equity. BEA and Charlotte have delivered or made available to Seller complete
and correct copies of their Certificates of Incorporation, as amended to date,
certified by the appropriate official of the jurisdiction of incorporation and
their Bylaws, as amended to date. The Certificates of Incorporation of BEA and
Charlotte are in full force and effect.
4.2 NO VIOLATION. Neither the execution and delivery of this Agreement or
other documents contemplated herein nor the consummation of the transactions
contemplated hereby or thereby will violate any provisions of the Certificate of
Incorporation or Bylaws of Charlotte or BEA, violate, or be in conflict with, or
constitute a default, conflict or breach under or cause the acceleration of the
maturity of any debt or obligation pursuant to, any agreement or commitment to
which Charlotte or BEA is a party or by which Charlotte or bea is bound, or
violate any Permit, statute or law or any judgment, decree, order, regulation,
or rule of any court or governmental authority.
4.3 CAPITALIZATION. As of September 9, 1998, the authorized capital stock
of BEA consists of 80,000,000 shares of BEA Common Stock and 5,000,000 shares of
preferred stock. As of September 9, 1998 (a) approximately 67,359,000 shares of
BEA Common Stock were validly issued and outstanding, and (b) no shares of
preferred stock were issued or outstanding. As of September 9, 1998: (x)
9,958,345 shares of BEA Common Stock are subject to issuance pursuant to
outstanding options to purchase shares of BEA Common Stock; and (y) 2,533,847
shares of BEA Common Stock are reserved for future issuance pursuant to BEA's
1997 Employee Stock Purchase Plan. (Stock options granted by BEA pursuant to
BEA's stock option plans are referred to in this Agreement as "BEA Options.").
In addition, BEA has issued $250,000,000 in 4% Convertible Subordinated Notes
Due June 15, 2005 (the "Notes"), the terms of which are set forth in the
Offering Circular dated June 8, 1998, which Offering Circular has been provided
to Seller. Except for the Notes, BEA Options and BEA's 1997 Employee Stock
Purchase Plan (and rights related thereto), as of the date of this Agreement,
there is no: (1) outstanding subscription, option, call, warrant or right
(whether or not currently exercisable) to acquire any shares of capital stock or
other securities of BEA; or (2) outstanding security, instrument or obligation
that is or may become convertible into or exchangeable for any shares of capital
stock or other securities of BEA. All of the issued and outstanding shares of
BEA's capital stock are duly authorized and are validly issued, fully paid,
nonassessable and free of pre-emptive rights. All outstanding shares of BEA
Common Stock, the Notes and all outstanding BEA Options have been, and all
shares of BEA Common Stock to be issued in connection with the transactions
contemplated hereby will be, issued and granted in compliance with all
applicable securities laws and other applicable legal requirements.
4.4 SEC FILINGS; FINANCIAL STATEMENTS. BEA has delivered to Seller accurate
and complete copies of any report, registration statement and definitive proxy
statement filed by BEA with the Securities and Exchange Commission (the "SEC")
since January 1, 1998 and will make available to Seller accurate and complete
copies of all such registration statements, proxy statements and other
statements, reports, schedules, forms and other documents filed after the
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date of this Agreement and prior to the Effective Time (the "BEA SEC
Documents"). All statements, reports, schedules, forms and other documents
required to have been filed with the SEC have been so filed. As of the time it
was filed with the SEC (or, if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing): (x) each of the BEA
SEC Documents complied in all material respects with the applicable requirements
of the Securities Act of 1933, as amended (the "Securities Act") or the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (as the case
may be); and (y) none of the BEA SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The consolidated
financial statements contained in the BEA SEC Documents: (x) complied as to form
in all material respects with the published rules and regulations of the SEC
applicable thereto; (y) were prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered (except as may be indicated in
the notes to such financial statements and, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC, and except that unaudited financial
statements may not contain footnotes and are subject to normal and recurring
year-end audit adjustments which will not, individually or in the aggregate, be
material in amount); and (z) fairly present, in all material respects, the
consolidated financial position of BEA and its subsidiaries as of the respective
dates thereof and the consolidated results of operations of BEA and its
subsidiaries for the periods covered thereby. BEA has recognized revenues in
accordance with GAAP and Statement of Position 91-1 entitled "Software Revenue
Recognition," dated December 12, 1991, issued by the American Institute of
Certified Public Accountants. For fiscal 1999, BEA has recognized revenue in
accordance with GAAP and Statement of Position 97-2, as amended, ("SOP 97-2")
and the adoption of SOP 97-2 will not have a material adverse impact on BEA's
financial condition.
4.5 VALID ISSUANCE. The BEA Common Stock to be issued by BEA pursuant to
the transactions contemplated hereby will, when issued in accordance with the
provisions of this Agreement, be duly authorized, validly issued, fully paid and
nonassessable.
4.6 CONSENTS AND APPROVALS OF GOVERNMENT AUTHORITIES. No consent, approval
or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority is required in connection with the
execution, delivery and performance of this Agreement or the other documents
contemplated hereby by BEA or Charlotte and the consummation of the transactions
contemplated hereby or thereby.
4.7 CUSTOMERS. BEA does not know of any plan or intention of any of its
customers and has not received any written threat or notice from any customer,
that it intends to terminate or cancel its relationship with BEA or to decrease
or limit its purchase of the services or products of BEA, except for such
terminations, cancellations, or decreases or limitations that would not,
individually or in the aggregate, have a material adverse effect on the
business, financial condition or results of operations of BEA.
4.8 INTELLECTUAL PROPERTY. To BEA's knowledge, after reasonable inquiry,
and except for matters that would not have a material adverse effect on the
business, operations or
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financial condition of BEA, neither BEA TUXEDO nor any Intellectual Property
owned by BEA exclusively or jointly with others infringes or misappropriates the
Intellectual Property of any other Person.
4.9 LITIGATION. BEA is not a party to any pending or, to BEA's knowledge
after reasonable inquiry, threatened action, suit, arbitration, mediation,
proceeding or investigation, at law or in equity or otherwise in, for or by any
court or other governmental body or any arbitration, mediation or similar forum
which if determined adversely to BEA would have a material adverse effect on its
business, financial condition or results of operations.
4.10 REPRESENTATIONS COMPLETE. The representations and warranties of
Charlotte and BEA contained in this Article 4 do not contain any untrue
statement of a material fact and do not omit to state any material fact
necessary to make such representations and warranties, in light of the
circumstances under which they were made, not misleading.
ARTICLE 5
SELLERS' COVENANTS
5.1 ACCESS TO PROPERTIES AND RECORDS. Throughout the period between the
date of this Agreement and the Closing Date, Seller shall give to BEA and BEA's
authorized representatives reasonable access, during business hours, to its
facilities, and shall provide BEA and its representatives with all records,
documents and information reasonably required by BEA relating to Seller and/or
the business of Seller. Without limiting the foregoing, BEA shall be permitted
to interview during regular business hours such employees of Seller as BEA shall
reasonably request of Seller, including any officers of Seller and any employees
with substantial responsibility for any Seller Intellectual Property material to
the business of Seller. BEA and BEA's authorized representatives shall not,
without Seller's prior written consent contact any of Seller's customers, which
consent shall not be unreasonably withheld.
5.2 CONDUCT OF THE BUSINESS OF SELLER PRIOR TO CLOSING DATE. Between the
date of this Agreement and the Closing, and except as otherwise required by this
Agreement:
5.2.1 The business of Seller shall be operated in the ordinary course
consistent with past practices and in a normal businesslike fashion (including,
without limitation, its normal accounts receivable practice), and Seller shall
take such actions as are in its business judgment reasonably necessary to
facilitate a smooth transition of the control of operation of the business of
Seller from Seller to BEA at the Closing. Seller shall use all commercially
reasonable efforts to preserve and maintain the business of Seller and Seller's
goodwill, including relationships with employees, suppliers and customers. In
addition, Seller shall maintain records and books of account for the business of
Seller consistent with past practices and in a normal businesslike fashion, and
shall continue to carry all of the insurance for the business of Seller
consistent with past practice.
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5.2.2 Seller shall not take (or permit to be taken) any action which
would cause any material change in any of the items and matters covered by the
representations and warranties set forth in Article 3, including, without
limitation :
(a) incurring or becoming subject to, or agreeing to incur or become
subject to, any obligation or liability (absolute or contingent), except current
liabilities incurred, and obligations under contracts entered into, in the
ordinary course of business consistent with past practices;
(b) mortgaging, pledging or assuming any Lien, or agreeing to do so,
in respect to any of its assets;
(c) waiving or compromising any material rights or any material debt
owed to Seller;
(d) entering into any material transactions, other than in the
ordinary course of bu siness consistent with past practices;
(e) increasing the rate of compensation payable or to become payable
to any employees;
(f) terminating or amending any contract to which it is a party,
unless terminated or amended in the ordinary course of business consistent with
past practices and not material to the business of Seller;
(g) introducing any new method of accounting with respect to the
business of Seller or any of the assets or liabilities of Seller (assumed or not
assumed) (including, without limitation, any change in depreciation or
amortization policies or rates);
(h) making any capital expenditures or entering into commitments for
capital expenditures exceeding, in the aggregate, Fifty Thousand Dollars
($50,000);
(i) without BEA's prior consent (which consent BEA shall not
unreasonably withhold or delay), hiring or terminating employees;
(j) issuing any shares of its capital stock or other securities or
making any redemption or other acquisition of any capital stock of Seller or any
declaration, setting aside, or payment of any dividend or distribution of any
kind with respect to any shares of capital stock of Seller, except pursuant to
the exercise of any outstanding Warrants and Options; or
(k) commencing, settling or compromising any litigation, except those
related to insured claims or arising in the ordinary course of business
consistent with past practices.
5.3 NO SOLICITATION. Seller will not (i) solicit or initiate discussions
with any person, other than BEA, relating to the possible acquisition of Seller
or all or a material portion of the assets or capital stock of Seller or any
merger or other business combination with Seller or (ii) except to the extent
reasonably required by fiduciary obligations under applicable law as
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advised in writing by independent legal counsel, participate in any negotiations
regarding, or furnish to any other person information with respect to, any
effort or attempt by any other person to do or to seek any such transaction.
Seller agrees to inform BEA in reasonable detail within one business day of
their receipt of any offer, proposal or inquiry relating to any such
transaction.
5.4 STOCKHOLDER CONSENT. Seller shall, in accordance with applicable law,
solicit within 10 days after the date hereof, the approval of the holders of the
requisite number of shares of Seller's capital stock required to approve this
Agreement and the transactions contemplated hereby under applicable law. Without
limiting the generality of the preceding sentence, the board of directors of
Seller will recommend to Seller's stockholders a vote in favor of the adoption
of this Agreement and the Merger unless the board of directors shall determine,
based on the written opinion of counsel, that such recommendation will not be
consistent with its fiduciary duty.
5.5 SATISFACTION OF CONDITIONS Seller shall take or cause to be taken all
actions within its power necessary to satisfy all conditions to BEA's
obligations to close and consummate the transactions contemplated by this
Agreement.
5.6 CONSENTS. On or prior to the Closing Date, except with regard to any
consents, which if not obtained by Seller would not have a material adverse
effect on the business, operations or financial condition of Seller, Seller
shall (a) notify all persons required to be notified pursuant to applicable law
or any of the Permits or contracts to which Seller is a party of the
transactions contemplated hereunder, in the form and manner required thereunder,
and (b) use all commercially reasonable efforts to obtain the consent of all
persons whose consent is required pursuant to applicable law or any of the
Permits or contracts to which Seller is a party in connection with the
consummation of the transactions contemplated hereby, in the form and manner
required thereunder.
5.7 NOTIFICATION OF CERTAIN MATTERS. Seller and BEA shall give prompt
notice to the other party of the discovery of the occurrence or non-occurrence
of any event which causes or is likely to cause any representation or warranty
made by Seller herein to be untrue or inaccurate or any covenant, condition or
agreement contained herein not to be complied with or satisfied (provided,
however, that if such disclosure is made and the transactions contemplated
hereby shall be consummated, such disclosure shall be deemed to (a) amend and
modify the representations, warranties and covenants made by the disclosing
party in or pursuant to this Agreement and (b) the recipient party shall be
deemed to have waived all rights with respect to the breach thereof).
5.8 AFFILIATE AGREEMENTS. Schedule 5 delivered by Seller to BEA concurrent
----------
with the execution and delivery of the Agreement sets forth those persons who
may be deemed "Affiliates" of Seller within the meaning of Rule 145 promulgated
under the Securities Act. Seller shall provide BEA such information and
documents as BEA shall reasonably request for purposes of reviewing such list.
Seller shall use its best efforts to deliver or cause to be delivered to BEA,
concurrently with the execution of this Agreement (and in each case prior to the
Effective Time) from each of the Affiliates of Seller, an executed Affiliate
Agreement in the
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form attached hereto as Exhibit 5.8. BEA and Charlotte shall be entitled to
-----------
place appropriate legends on the certificates evidencing any BEA Common Stock to
be received by such Affiliates of Seller pursuant to the terms of such
Affiliates Agreement, and to issue appropriate stop transfer instructions to the
transfer agent for BEA Common Stock, consistent with the terms of such
Affiliates Agreements.
5.9 POOLING LETTERS. Seller shall use all reasonable efforts to cause to be
delivered to BEA a letter dated the Closing Date of PricewaterhouseCoopers
L.L.P., Seller's independent auditors, in substantially the form of such letter
as delivered to BEA within two business days before the date of this Agreement
to the effect that PricewaterhouseCoopers LLP agrees with the assertion of the
management of Seller that the Merger qualifies for pooling of interest
accounting treatment if consummated in accordance with this Agreement and in a
form reasonably satisfactory to BEA and customary in scope and substance for
letters delivered by independent public accountants in connection with
transactions of this type.
ARTICLE 6
BEA'S COVENANTS
6.1 REGISTRATION STATEMENT.
6.1.1 BEA shall use its best efforts to file or cause to be filed with
the Commission on or prior to thirty (30) days from the Closing Date, a
registration statement on Form S-3 (the "Registration Statement") to cover
resales of the shares of BEA's Common Stock to be issued to the holders of
Seller Stock pursuant hereto (the "Registered Shares"). BEA shall use all
reasonable efforts to cause such Registration Statement to be declared effective
as soon as practicable thereafter. BEA shall use all reasonable efforts to keep
such Registration Statement continuously effective, supplemented and amended to
the extent necessary to ensure that it is available for resales of the
Registered Shares for a period ending one year from the Closing Date.
6.1.2 BEA will bear the costs of all Registration Expenses. For the
purposes hereof, "Registration Expenses" shall mean all expenses incident to
BEA's preparation and filing of the Registration Statement, including, without
limitation, all registration and filing fees, fees and expenses of compliance
with federal securities laws or state blue sky laws, printing expenses,
messenger and delivery expenses, fees and disbursements of custodians and fees
and disbursements of counsel for BEA and all independent certified public
accountants, and other persons retained by BEA.
6.1.3 In connection with the registration and sale of the Registered
Shares BEA will:
(a) prepare and file with the SEC the Registration Statement as
set forth above;
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(b) provide to each holder of Seller Stock a copy of the
Registration Statement and related Prospectus, including each preliminary
Prospectus, and each amendment and supplement thereto and any additional copies
as such holder may reasonably request;
(c) use its best efforts to register or qualify the Registered
Shares under such other securities or blue sky laws of such jurisdictions as
each holder of Seller Stock may reasonably request and do any and all other acts
and things which may be reasonably necessary or advisable to enable each holder
of Seller Stock to consummate the disposition in such jurisdictions of the
Registered Shares owned by such holder; provided, however, that BEA will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subparagraph, (ii)
subject itself to taxation in any such jurisdiction, or (iii) consent to general
service of process in any such jurisdiction;
(d) upon the occurrence of any event that would cause the
Registration Statement (i) to contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading or (ii) to be not effective and useable
for resale of the Registered Shares during the period that such Registration
Statement is required to be effective and useable, BEA upon knowledge of such an
event, shall as promptly as practicable file an amendment to the Registration
Statement, in the case of clause (i), correcting any such misstatement or
omission, and, in the case of either clause (i) or (ii), use its best efforts to
cause such amendment to be declared effective and such Registration Statement to
become useable as soon as practicable thereafter;
(e) notwithstanding anything to the contrary in Section 6.1.3,
BEA may prohibit offers and sales of the Registered Shares pursuant to the
Registration Statement at any time if (i) it is in possession of material non-
public information, (ii) the Board of Directors of BEA determines based on
advice of counsel that such prohibition is necessary in order to avoid a
requirement to disclose such material non-public information, (iii) the Board of
Directors of BEA determines in good faith that disclosure of such material non-
public information would not be in the best interests of BEA and its
stockholders, and (iv) BEA imposes similar restrictions on the sale or purchase
of any capital stock of BEA on any officer and director of BEA (the period
during which any such prohibition of offers and sales of Registered Shares
pursuant to the Registration Statement is in effect pursuant to this
subparagraph (e) is referred to herein as a "Suspension Period"). A Suspension
Period shall commence on and include the date on which BEA provides written
notice to holders of Seller Stock covered by the Registration Statement that
offers and sales of Registered Shares cannot be made thereunder in accordance
with this Section 6.1.3 and shall end two business days after the earlier to
occur of (x) the date on which such material information is disclosed to the
public or ceases to be material or BEA is able to so comply with its disclosure
obligations and SEC requirements, or (y) 43 days after written notice is
provided by BEA to the holders of Seller Stock of such Suspension Period. Each
notice shall state to the extent, if any, as is practicable, an estimate of the
expected duration of the Suspension Period;
(f) each holder of Seller Stock shall furnish to BEA such
information regarding the distribution of its Registered Shares as is required
by law to be disclosed in the
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Registration Statement (the "Requisite Information") prior to effecting any sale
pursuant to such Registration Statement. Each holder of Seller Stock as to which
any Registration Statement is being effected agrees prior to effecting any sale
of the Registered Shares thereunder to furnish promptly to BEA all information
required to be disclosed in order to make any Requisite Information previously
furnished to BEA by such holder of Seller Stock not materially misleading or
necessary to cause such Registration Statement not to omit a material fact with
respect to such holder of Seller Stock necessary in order to make the statements
therein not misleading;
(g) each holder of Seller Stock agrees that, upon receipt of any
notice from BEA of the existence of any fact of the kind described in
subparagraphs 6.1.3(d) or 6.1.3(e) hereof (an "Amendment Notice"), such holder
of Seller Stock will forthwith discontinue disposition of Registered Shares
pursuant to the Registration Statement until such holder's receipt of (i) copies
of the supplemented or amended Prospectus contemplated by subparagraphs 6.1.3(b)
and 6.1.3.(d) hereof, or until counsel for BEA shall have determined that such
disclosure is not required due to subsequent events, (ii) notice in writing from
BEA that the use of the Prospectus may be resumed or (iii) copies of any
additional or supplemental filings with respect to the Prospectus, or until the
expiration of the Suspension Period. In the event BEA shall give any such
notice, the time period regarding the filing of the Registration Statement set
forth in subparagraph 6.1.1 hereof shall be extended by the number of days
during the period from and including the date of the giving of such notice
pursuant to subparagraph 6.1.3(e) hereof to and including the date when each
holder of Seller Stock covered by such Registration Statement shall have
received the copies of the supplemented or amended Prospectus contemplated by
this subparagraph 6.1.3(g); and
(h) BEA agrees to use its best efforts to cause the Registered
Shares covered by the Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to enable
the holders of Seller Stock to consummate the disposition of such Registered
Shares, subject to the proviso contained in subparagraph 6.1.3.(c) above, and
cause all Registered Shares to be listed on each securities exchange or national
quotation system on which BEA's Common Stock is then listed.
6.1.4 INDEMNIFICATION.
(a) BEA agrees to indemnify, to the extent permitted by law,
each holder of Seller Stock and their underwriter, if any, their directors,
officers and each Person who controls such holder or such underwriter (within
the meaning of the Security Act) against all losses, claims, damages,
liabilities and expenses including, without limitation, reasonable attorneys'
fees, caused by any untrue or alleged untrue statement of material fact
contained in the Registration Statement, any prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as the same are
caused by or contained in any information furnished in writing to BEA by such
holder expressly for use therein or failure to deliver a copy of the
Registration Statement or prospectus or any amendments or supplements thereto.
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(b) In connection with the Registration Statement, each holder
of Registered Shares will furnish to BEA in writing such information and
affidavits as BEA reasonably requests for use in connection with the
Registration Statement or prospectus contained therein and, to the extent
permitted by law, will indemnify BEA, its directors and officers, such holders'
underwriters, if any, and each person who controls BEA or such underwriter
(within the meaning of the Securities Act) against any and all losses, claims,
damages, liabilities and expenses, including, without limitation, reasonable
attorneys' fees, caused by any untrue or alleged untrue statement of material
fact contained in the Registration Statement, any prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, insofar as such losses, claims,
damages, liabilities and expenses are caused by any such untrue statement or
omission or alleged untrue statement or omission furnished in writing to BEA for
use therein by such holder or such holder's failure to provide the prospective
purchaser with a copy of the current prospectus (a "Holder's Error"); provided,
however, that the obligation to indemnify will be several, not joint and several
among the holders of Seller Stock, and the liability of each holder for any
Holder's Error will be limited to the net amount received by such holder of
Seller Stock from the sale of Registered Shares pursuant to the Registration
Statement.
6.2 CONSENTS. On or prior to the Closing Date, Charlotte and BEA shall (a)
notify all persons required to be notified by Charlotte or BEA pursuant to
applicable law of the transactions contemplated hereby, in the form and manner
required thereunder, and (b) use all commercially reasonable efforts to obtain
the consent of all persons whose consent is required to be obtained by Charlotte
or BEA pursuant to applicable law in connection with the consummation of the
transactions contemplated hereby, in the form and manner required thereunder.
6.3 ADVICE OF DEVELOPMENTS. BEA shall have continuing obligations after the
date of this Agreement through the Closing Date to advise Seller of any event,
fact or circumstance which has a material adverse effect on the business,
operations or financial condition of BEA.
6.4 POOLING LETTERS. BEA shall use all reasonable efforts to cause to be
delivered to BEA a letter dated the Closing Date of Ernst & Young LLP, BEA's
independent auditors, in substantially the form of such letter as delivered to
BEA within two business days before the date of this Agreement regarding such
firm's concurrence with BEA's management's conclusions as to the appropriateness
of pooling of interest accounting for the Merger under APB 16, if consummated in
accordance with this Agreement. Such letter is to be in a form reasonably
satisfactory to Seller and customary in scope and substance for letters
delivered by independent public accountants in connection with transactions of
this type.
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6.5 AFFILIATE AGREEMENTS. Schedule 6.5 delivered by BEA to Seller
------------
concurrent with the execution and delivery of the Agreement sets forth those
persons who may be deemed "Affiliates" of BEA within the meaning of Rule 145.
BEA shall provide Seller such information and documents as Seller shall
reasonably request for purposes of reviewing such list. BEA shall use its best
efforts to deliver or cause to be delivered to Seller, concurrently with the
execution of this Agreement (and in each case prior to the Effective Time) from
each of the Affiliates of BEA, an executed Affiliate Agreement in the form
attached hereto as Exhibit 6.5.
-----------
6.6 S-8 REGISTRATION STATEMENT. BEA agrees that within thirty (30) days
after the Closing Date it will cause to be filed one or more registration
statements on Form S-8 under the Securities Act, or amendments to its existing
registration statements on Form S-8 or amendments to such other registration
statements as may be available, in order to register the Common Stock of BEA
issuable upon exercise of the converted Employee Options.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 CONDITIONS TO BEA'S OBLIGATION TO CLOSE. BEA's obligations to
consummate the transactions contemplated by this Agreement shall be subject to
the full satisfaction of the following conditions, each of which conditions may
be waived in writing by BEA:
7.1.1 INSTRUMENTS. Seller and Seller's Representative (as defined in
the Escrow Agreement) (in the case of the Escrow Agreement) shall have executed
and delivered to BEA the Merger Documents, the Escrow Agreement, if applicable,
and any and all other documents reasonably required by BEA to effect the
transactions contemplated hereby.
7.1.2 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Seller contained in this Agreement shall be true in all material
respects at the Closing as though made at such time except for any changes in
the ordinary course of business.
7.1.3 PERFORMANCE OF COVENANTS. Seller shall have performed all
obligations and complied with all covenants and conditions required by this
Agreement to be performed or complied with by it on or prior to the Closing Date
in all material respects.
7.1.4 CERTIFICATE. Seller shall have delivered to BEA a certificate
executed by its chief executive officer certifying as to (a) Seller's
satisfaction of the conditions set forth in Sections 7.1.2 and 7.1.3 above and
(b) the results of the vote by Seller's stockholders to approve the transactions
contemplated hereby pursuant to Section 5.4.
7.1.5 NO MATERIAL CHANGES. There shall not have been any material
adverse change in the assets, liabilities, business, operations or financial
condition of Seller from the date hereof to the Closing Date, nor shall there
exist any condition which could reasonably be expected to result in such a
material adverse change, provided, however, that any material adverse change
-----------------
that results from general economic, business or industry conditions or the
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announcement of the transaction contemplated hereby shall be disregarded for the
purposes of this Section 7.1.5.
7.1.6 CONSENTS. All consents or approvals required for the
consummation of the transactions contemplated hereby, including any required
consents of the parties to any contract to which Seller is a party, shall have
been obtained, except any consents, which if not obtained by Seller would not
have a material adverse effect on the business, operations or financial
condition of Seller.
7.1.7 OPINION. Seller shall have delivered to BEA an opinion of its
counsel in form attached hereto as Exhibit 7.1.7.
7.1.8 STOCKHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been duly approved and adopted by the requisite
vote of the stockholders of Seller pursuant to the DGCL.
7.1.9 LETTER FROM ACCOUNTANTS. Seller shall have received a letter
from PricewaterhouseCoopers L.L.P., independent auditors, in substantially the
form previously delivered pursuant to Section 5.9
7.1.10 NON-COMPETITION AND NON-SOLICITATION AGREEMENTS. The employees
of Seller set forth on Schedule 7.1.10 shall have entered into non-competition
---------------
and non-solicitation agreements substantially in the respective forms attached
hereto as Exhibit 7.1.10.
--------------
7.1.11 OFFER LETTERS. Each of the persons listed on Schedule 7.1.11
and not less than ninety percent (90%) of the employees of Seller listed on
Annex B of the Seller Disclosure Schedule and who received offer letters on
September 24, 1998 shall have accepted employment with BEA in accordance with
the terms of such offer letters.
7.1.12 LESS THAN TEN PERCENT (10%) EXCLUDED SHARES. The aggregate
amount of cash required to be paid on account of all Excluded Shares and with
respect to any cash payments for fractional Seller shares of BEA in accordance
with this Agreement plus the value of any treasury stock of Seller, shall not
exceed ten percent (10%) of the value (determined in accordance with APB Opinion
No. 16) of the Consideration.
7.1.13 CONVERSION OF PREFERRED STOCK. All holders of outstanding
shares of Seller Preferred Stock shall have elected to convert all such shares
held thereby into shares of Seller Common Stock and all outstanding shares of
Seller Preferred Stock shall have been converted into Seller Common Stock,
effective immediately prior to the Closing in accordance with the terms of
Seller's Certificate of Incorporation.
7.2 CONDITIONS TO SELLER'S OBLIGATIONS AT THE CLOSING. Seller's obligations
to consummate the transactions contemplated by this Agreement shall be subject
to the following conditions, each of which conditions may be waived in writing
by Seller:
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7.2.1 INSTRUMENTS. BEA and/or Charlotte, as applicable, shall have
executed and delivered to Seller the Merger Documents, the Escrow Agreement and
any and all other documents reasonably required by Seller to effect the
transactions contemplated hereby.
7.2.2 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Charlotte and BEA contained in this Agreement shall be true in all
material respects at the Closing as though made at such time, except for any
changes in the ordinary course of business.
7.2.3 PERFORMANCE OF COVENANTS. Charlotte and BEA shall have performed
all obligations and complied with all covenants and conditions required by this
Agreement to be performed or complied with by them at or prior to the Closing
Date in all material respects.
7.2.4 CERTIFICATE. BEA shall have delivered to Seller a certificate
executed by an officer of BEA certifying as to BEA's and Charlotte's
satisfaction of the conditions set forth in Sections 7.2.2 and 7.2.3.
7.2.5 OPINION. BEA shall have delivered to Seller an opinion of its
counsel in form attached hereto as Exhibit 7.2.5.
7.2.6 LETTER FROM ACCOUNTANTS. BEA shall have received a letter from
Ernst & Young LLP, independent auditors, in substantially the form previously
delivered pursuant to Section 6.4.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
8.1 SURVIVAL. The representations and warranties of Seller contained in
this Agreement or in any document, certificate or schedule or instrument
contemplated hereby or delivered pursuant hereto, shall survive the Closing Date
until the date (the "Expiration Date") that is the earlier of (i) one (1) year
from the Effective Time or (ii) the date upon which the financial statements for
BEA's fiscal year ended January 31, 1999 are publicly issued by BEA. The
representations and warranties of Charlotte and BEA contained in this Agreement
or in any document, certificate or instrument contemplated hereby or delivered
pursuant hereto, shall survive the Closing Date until the Expiration Date.
8.2 SELLER'S INDEMNITY. Seller shall indemnify, defend, protect and hold
harmless BEA (and BEA's Subsidiaries and Affiliates and their respective
officers, directors, stockholders, employees and agents) from and against any
and all losses, costs, expenses, liabilities, obligations, claims, demands,
causes of action, suits, settlements and judgments of every nature, including
the costs and expenses associated therewith and reasonable attorneys',
consultants' and witness fees incurred in connection therewith ("BEA's
Damages"), which arise out of: (i) the breach by Seller prior to the Closing
Date of any representation or warranty made by Seller under this Agreement or
any schedule, exhibit or certificate delivered by Seller pursuant to this
Agreement; (ii) the non-performance by Seller, partial or total, prior to the
Closing Date of any
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covenant made by Seller pursuant to this Agreement or schedule, exhibit or
certificate delivered by Seller pursuant to this Agreement; or (iii) [the
conduct of the business of Seller prior to the Closing Date in breach of any
covenant set forth in Article 5 hereof].
8.3 BEA'S INDEMNITY. Charlotte and BEA shall, jointly and severally,
indemnify, defend, protect and hold harmless Seller (and Seller's Affiliates and
their respective officers, directors, stockholders, employees and agents) from
and against any and all losses, costs, expenses, liabilities, obligations,
claims, demands, causes of action, suits, settlements and judgments of every
nature, including the costs and expenses associated therewith and reasonable
attorneys', consultants' and witness fees incurred in connection therewith
("Seller's Damages"; and when used together with or in the alternative to BEA's
Damages, "Damages"), which arise out of: (i) the breach by Charlotte or BEA of
any certification, representation or warranty made by Charlotte or BEA pursuant
to this Agreement or any schedule, exhibit or certificate delivered by Charlotte
or BEA pursuant to this Agreement or (ii) the non-performance, partial or total,
of any covenant made by Charlotte or BEA pursuant to this Agreement required to
be performed prior to the Closing or any document or certificate delivered by
Charlotte or BEA pursuant to this Agreement.
8.4 OTHER REMEDIES. The rights of indemnification of an Indemnitee shall be
limited to the provisions of this Article, and the provisions of this Article
shall be exclusive of any other indemnification provided for under this
Agreement and any other rights or remedies at law or in equity which may accrue
to an Indemnitee.
8.5 LIMITATIONS ON INDEMNIFICATION. Notwithstanding the foregoing, the
right to indemnification under this Section 8 shall be subject to the following
terms:
(a) Subject to Section 10.5, no indemnification shall be payable
pursuant to Section 8.2 or Section 8.3 unless and until the amount of all claims
for indemnification pursuant to the applicable Section exceeds $200,000 in the
aggregate and such indemnification shall be payable only to the extent such
claims exceed such amount as determined in the Escrow Agreement.
(b) No indemnification shall be payable pursuant to Section 8.2 or
Section 8.3 after the Expiration Date, except with respect to claims made prior
to the Expiration Date, but not resolved by the Expiration Date. Subject to the
foregoing, the representations and warranties contained herein or in any
certificate delivered pursuant hereto shall expire at the close of business on
the Expiration Date.
(c) All indemnification claims under Section 8.2 shall be satisfied in
full from the shares or cash held pursuant to the Escrow Agreement and no person
shall have any right to recovery from any person who was a holder of Seller
Stock immediately prior to the Effective Time. Without limitation of the
foregoing, the maximum liability of any former holder of Seller Stock for any
breach of a representation, warranty or covenant of Seller shall be limited to
those shares in which such holder has an interest that are held pursuant to the
Escrow Agreement.
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(d) The limitations of Section 8.5(a), (b) and (c) shall not apply in
the case of a fraudulent or intentional misrepresentation or breach by any
party, but no person shall be liable for any such misrepresentation or breach by
any other person (except to the extent of its share of the shares held under the
Escrow Agreement if such misrepresentation or breach is by Seller).
(e) In determining the amount of any indemnity, there shall be taken
into account any tax benefit, insurance proceeds or other similar recovery or
offset realized, directly or indirectly, by the party to be indemnified.
ARTICLE 9
TERMINATION
9.1 GROUNDS FOR TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
9.1.1 by mutual written agreement of Seller and BEA; or
9.1.2 by either Seller or BEA if the Merger shall not have been
consummated on or before September 30, 1998 (other than as a result of a failure
by such party to comply with its obligations under this Agreement); or
9.1.3 by BEA in the event of the Seller's material breach of any of
its covenants, representations or warranties under this Agreement; or
9.1.4 by Seller in the event of BEA's or Charlotte's material breach
of any of their respective covenants, representations or warranties under this
Agreement.
9.2 EFFECT OF TERMINATION. If this Agreement is terminated as permitted by
Section 9.1, except as set forth in the next sentence, the parties hereto shall
have no further obligations to each other, provided that no such termination
shall impair, limit or affect, in any manner, any liability of any party hereto
for any breach of any covenant, representation or warranty set forth in this
Agreement, accrued as of the date of such termination. The provisions of
Sections 8, 10.1, 10.2, 10.5, 10.7, 10.8, 10.11, 10.12 and 10.18 shall survive
any termination hereof pursuant to Section 9.1.
ARTICLE 10
MISCELLANEOUS
10.1 ANNOUNCEMENTS. Each of Seller, BEA and Charlotte agree not to make any
press release or other public announcements regarding this Agreement without the
other party's prior consent, unless reasonably required by applicable law, in
which case prompt notice of such announcement shall be given to the other party.
10.2 FINDERS AND BROKERS. Each party hereby represents and warrants to the
others that neither it nor its representatives have taken, nor will they take,
any action that would cause
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the other parties hereto to have any obligation or liability to any person for
or made any arrangements for the payment of any finders' fees, brokerage fees,
agents' commissions, or like payments in connection with the transactions
contemplated hereby. Each party shall indemnify and hold harmless the others
from any claim that is asserted by any person for a finder's fee or like payment
with respect to this Agreement arising from any act, representation or promise
of the indemnifying party or its representative.
10.3 AMENDMENT. Subject to applicable law, this Agreement may only be
amended or supplemented by written agreement of Seller, Charlotte and BEA.
10.4 WAIVER OF COMPLIANCE. Except as set forth in Section 5.7, any failure
of Seller, on the one hand, or BEA, on the other, to comply with any provision
of this Agreement may be expressly waived in writing by BEA or Seller,
respectively, but such waiver or failure to insist upon strict compliance with
such provision shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure. No failure to exercise and no delay in
exercising any right, remedy, or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, or power
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, or power provided herein or by law or in equity. The waiver
by any party of the time for performance of any act or condition hereunder does
not constitute a waiver of the act or condition itself.
10.5 EXPENSES. At Closing, each of the parties hereto shall pay its own
fees and expenses (including the fees of any attorneys, accountants, appraisers
or others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated; provided, however, that if the Merger is consummated
such fees and expenses billed to or incurred by Seller in connection with this
Agreement and the transactions contemplated hereby shall be borne by BEA
provided however, that to the extent that such fees and expenses of Seller
exceed $100,000, BEA shall be entitled to deduct the full amount of such excess
from the Escrowed Shares that number of shares with a value equal to such amount
as calculated pursuant to the terms of the Escrow Agreement, notwithstanding any
other provision therein and herein, including Section 8.5 hereof.
10.6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of each party contained herein shall not be
deemed waived or otherwise affected by any investigation made by or on behalf of
the other party and such representations and warranties shall survive the
Closing and the consummation of the Merger contemplated hereby as provided in
Article 8. All statements contained in this Agreement or in any schedule,
exhibit, certificate, list, or other document delivered pursuant hereto shall be
deemed representations or warranties, as the case may be (as such terms are used
in this Agreement), of the party making such statements.
10.7 NOTICES. All notices, demands, and other communications required or
permitted hereunder shall be made in writing and shall be deemed to have been
duly given if delivered by hand, against receipt, or mailed, postage prepaid,
certified or registered mail, return receipt requested, and addressed as
follows:
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To Seller at:
WebLogic, Inc.
550 California Street
Suite 900
San Francisco, CA 94104
Attn: Ali R. Kutay
With a copy to:
Cooley Godward LLP
One Maritime Plaza
20th Floor
San Francisco, CA 94111
Attn: Jeffrey S. Zimman
To BEA at:
BEA Systems, Inc.
2315 North First Street
San Jose, CA 95131
Attn: Steve L. Brown
With a copy to:
Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, California 94304-1018
Attn.: Michael C. Phillips
Notice of change of address shall be effective only when done in accordance
with this Section. All notices complying with this Section shall be deemed to
have been received on the date of delivery or on the third business day after
mailing.
10.8 ASSIGNMENT; SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, each party agrees that it will not assign, sell, transfer, delegate, or
otherwise dispose of, whether voluntarily or involuntarily, or by operation of
law, any right or obligation under this Agreement. Any purported assignment,
transfer, or delegation in violation of this Section shall be null and void.
Subject to the foregoing limits on assignment and delegation, this Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective successors and assigns. Except for those enumerated above, this
Agreement does not create, and shall not be
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construed as creating, any rights or claims enforceable by any person or entity
not a party to this Agreement.
10.9 GOVERNING LAW. The validity, interpretation, enforceability, and
performance of this Agreement shall be governed by and construed in accordance
with the law of the State of Delaware.
10.10 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
10.11 HEADINGS. The headings of the Sections and Articles of this Agreement
and Table of Contents are for reference purposes only and shall not constitute a
part hereof or affect the meaning or interpretation of this Agreement.
10.12 ENTIRE AGREEMENT. The parties intend that the terms of this
Agreement, including the Seller Disclosure Schedule and other documents referred
to herein, shall be the final expression of their agreement with respect to the
subject matter hereof and may not be contradicted by evidence of any prior or
contemporaneous agreement. The parties further intend that this Agreement shall
constitute the complete and exclusive statement of its terms and that no
extrinsic evidence whatsoever may be introduced in any judicial, administrative,
or other legal proceeding involving this Agreement.
10.13 SELLER DISCLOSURE SCHEDULE. The Seller Disclosure Schedule shall be
divided into sections corresponding to the sections of this Agreement.
Disclosure in any section of the Seller Disclosure Schedule shall constitute
disclosure for purposes of all sections of the Agreement.
10.14 PERFORMANCE BY BEA. BEA shall cause Charlotte to perform all of its
covenants and obligations hereunder.
10.15 SEVERABILITY. If any provision of this Agreement, or the application
thereof to any Person, place, or circumstance, shall be held by a court of
competent jurisdiction to be invalid, unenforceable, or void, the remainder of
this Agreement and such provisions as applied to other Persons, places, and
circumstances shall remain in full force and effect.
10.16 RULES OF CONSTRUCTION. The parties acknowledge that each party has
read and negotiated the language used in this Agreement. The parties agree that,
because all parties participated in negotiating and drafting this Agreement, no
rule of construction shall apply to this Agreement which construes ambiguous
language in favor of or against any party by reason of that party's role in
drafting this Agreement.
10.17 ADDITIONAL DOCUMENTS. Each of the parties agree, without further
consideration, to execute and deliver such other documents and take such further
action as may be reasonably required to effectuate the provisions of this
Agreement.
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10.18 ATTORNEY'S FEES. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorney's fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
10.19 EXHIBITS. All Exhibits attached hereto shall be deemed to be a part
of this Agreement and are fully incorporated in this Agreement by this
reference.
10.20 CERTAIN DEFINITIONS.
"Affiliate" or "Associate" shall have the meaning assigned thereto in Rule
--------- ---------
405, as presently promulgated under the Securities Act of 1933, as amended.
"Intellectual Property" shall mean any trademark, copyright, service mark,
---------------------
trade name, patent, maskworks, inventions, trade secrets, know-how, processes,
manufacturing or marketing procedures, net lists, documentation, schematics,
technology, algorithms, computer software programs or applications (in both
source code and object code form), and tangible and intangible proprietary
information or material (including any registrations or applications for
registration of any of the foregoing).
"Person" shall include any individual, partnership, joint venture,
------
corporation, trust, unincorporated organization, any other entity and any
government or any department or agency thereof, whether acting in an individual,
fiduciary, or other capacity.
"Year 2000 Compliant" means that the software containing or calling on a
-------------------
calendar function (including, without limitation, any function indexed to the
CPU clock and any function providing specific dates or days, or calculating
spans of dates or days), records, stores, processes provides, and, where
appropriate, inserts true and accurate dates and calculations for dates and
spans including January 1, 2000 (provided that any date data supplied by the
user or by another system is in the proper format).
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
and Plan of Reorganization as of the date first written above.
WEBLOGIC, INC. CHARLOTTE ACQUISITION CORP.
By ___________________________ By ___________________________
Title ________________________ Title ________________________
BEA SYSTEMS, INC.
By ___________________________
Title ________________________
The schedules and exhibits to the Agreement listed below have been omitted
from this Exhibit 2.1. The Registrant agrees to furnish supplementally a copy
of any omitted schedule or exhibit to the Securities and Exchange Commission
upon request.
LIST OF SCHEDULES AND EXHIBITS
Agreement and Plan of Reorganization - BEA Systems Inc. and WebLogic Inc.
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