-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MqILdbZBNTuFj9Mbg1JlkxRoA0WHNF59zQke1F/TQVeaktS8p39+QNkT76XBEcDH Vpmx/0NwGW2O08Dezr/7zQ== 0001012870-01-000423.txt : 20010209 0001012870-01-000423.hdr.sgml : 20010209 ACCESSION NUMBER: 0001012870-01-000423 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20010208 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ARIBA INC CENTRAL INDEX KEY: 0001084755 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 770439730 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-56465 FILM NUMBER: 1528862 BUSINESS ADDRESS: STREET 1: 1565 CHARLESTON RD CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 BUSINESS PHONE: 6509306200 MAIL ADDRESS: STREET 1: 1565 CHARLESTON RD CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: AGILE SOFTWARE CORP CENTRAL INDEX KEY: 0001088653 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 770397905 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: ONE ALMADEN BOULEVARD CITY: SAN JOSE STATE: CA ZIP: 95113 BUSINESS PHONE: 4089753900 MAIL ADDRESS: STREET 1: ONE ALMADEN BOULEVARD CITY: SAN JOSE STATE: CA ZIP: 95113 SC 13D 1 0001.txt SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 ARIBA, INC. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) 04033V104 - -------------------------------------------------------------------------------- (CUSIP Number) Thomas P. Shanahan Chief Financial Officer Agile Software Corporation One Almaden Boulevard, 12th Floor San Jose, CA 95113 Copy to: Gregory M. Gallo and Bruce E. Schaeffer Gray Cary Ware & Freidenrich LLP 400 Hamilton Avenue Palo Alto, CA 94301-1809 (650) 833-2000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) January 29, 2001 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), (f) or (g), check the following box.[_] NOTE. Schedules filed in paper format shall include a signed original and five copies of the Schedule, including all exhibits. See Rule 13d-1(A) for other parties to whom copies are to be sent. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D - ----------------------- CUSIP NO.0433V104 - ----------------------- - ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 Agile Software Corporation I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Tax ID Number: 77-0397905 - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [_] (b) [_] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS* 4 OO - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF NONE SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 29,366,384 (pursuant to the Company Voting Agreement OWNED BY dated January 29, 2001 and incorporated by reference as Exhibit 2 to this Schedule 13D) ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING NONE PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 NONE - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 REPORTING PERSON 29,366,384 - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) 12 EXCLUDES CERTAIN SHARES* [_] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 11.7% 13 - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON* CO 14 - ------------------------------------------------------------------------------ Neither the filing of this Schedule 13D nor any of its contents shall be deemed to constitute an admission by Agile Software Corporation that it is the beneficial owner of any of the Common Stock of Ariba, Inc. referred to herein for the purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or for any other purpose, and such beneficial ownership is expressly disclaimed. SCHEDULE 13D Item 1. Security and Issuer. ------------------- This statement on Schedule 13D relates to the Common Stock, par value $0.002 per share (the "Common Stock") of Ariba, Inc., a Delaware corporation (the "Issuer"). The principal offices of the Issuer are located at 1565 Charleston Road, Mountain View, CA 94043. Item 2. Identity and Background. ----------------------- (a) The name of the person filing this statement is Agile Software Corporation, a Delaware corporation ("Agile"). (b) The address of the principal office and principal business of Agile is One Almaden Boulevard, San Jose, CA 95113. The business address of each of Agile's directors and executive officers (other than Klaus-Dieter Laidig, James L. Patterson and Nancy J. Schoendorf), as of the date hereof is c/o Agile Software Corporation, One Almaden Boulevard, San Jose, CA 95113. The business addresses as of the date hereof of Klaus-Dreter Laidig (director) is Taunusstrassee 8, Bobligen, Germany D-71032; James L. Patterson (director) is 356 Bachman Court, Los Gatos, California 95030; and Nancy J. Schoendorf (director) is c/o Mohr, Davidow Ventures, 2775 Sand Hill Road, Building 1, Suite 240, Menlo Park, California 94025. (c) Agile provides business-to-business manufacturing commerce solutions and products that enable supply chain partners to communicate and collaborate over the Internet. Set forth on Schedule A is the name and present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted, of each of Agile's directors and executive officers, as of the date hereof. (d) and (e) During the last five years neither Agile, nor to Agile's knowledge, any person named in Schedule A have been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to any civil proceeding of a judicial or administrative body of competent jurisdiction, and is or was, as a result of such proceeding, subject to a judgement, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or finding any violation with respect to such laws. (f) Agile is a Delaware corporation. The citizenship of each person named in Schedule A is set forth thereon. Item 3. Source and Amount of Funds or Other Consideration. - ------- ------------------------------------------------- Pursuant to an Agreement and Plan of Merger and Reorganization dated as of January 29, 2001, (the "Merger Agreement"), by and among Issuer, Silver Merger Corporation, a Delaware corporation and wholly owned subsidiary of Issuer ("Merger Sub"), and Agile, and subject to the conditions set forth therein, Merger Sub will be merged with and into Agile (the "Merger") with each share of Agile Common Stock being converted into the right to receive that number of shares equal to 1.35 shares of Issuer Common Stock (the "Exchange Ratio"). The Merger is subject to the approval of the Merger Agreement by the stockholders of Agile, the approval by the Issuer stockholders of the issuance of Issuer Common Stock in the Merger, termination or expiration of any waiting period under any U.S. or foreign antitrust laws and the satisfaction or waiver of certain other conditions as more fully described in the Merger Agreement. The foregoing summary of the Merger is qualified in its entirety by reference to the copy of the Merger Agreement included as Exhibit 1 to this Schedule 13D and incorporated herein in its entirety by reference. This statement on Schedule 13D relates to a voting agreement between the Agile and certain stockholders of the Issuer whereby such stockholders have agreed to vote their shares of Issuer Common Stock in favor of approval of the Merger and the Merger Agreement. Item 4. Purpose of Transaction. ---------------------- (a) - (b) As described in Item 3 above, this statement relates to the merger of Merger Sub, a wholly owned subsidiary of the Issuer, with and into Agile in a merger in accordance with Delaware General Corporation Law. At the effective time of the Merger, the separate existence of Merger Sub will cease to exist and Agile will continue as the surviving corporation and as a wholly owned subsidiary of the Issuer (the "Surviving Corporation"). Holders of outstanding Agile Common Stock will receive, in exchange for each share of Agile Common Stock held by them immediately prior to the Merger, 1.35 shares of the Issuer Common Stock. The Issuer will assume Agile's Stock Option Plans (as defined in the Merger Agreement), each as amended, as well as the outstanding options issued under such plans. The Merger Agreement contains customary representations and warranties on the part of the Issuer, Agile and Merger Sub, and the consummation of the Merger is subject to customary closing conditions, including, without limitation, approval by the stockholders of the Issuer and Agile. The Merger Agreement also contains covenants regarding the activities of the parties pending consummation of the Merger. Generally, each of the parties must conduct its business in the ordinary course consistent with past practice. In certain circumstances, upon a termination of the Merger Agreement, a cash termination fee is required to be paid by Agile. As an inducement to Agile to enter into the Merger Agreement, certain stockholders (collectively, the "Voting Agreement Stockholders") of the Issuer have entered into a Parent Voting Agreement and Irrevocable Proxy, dated as of January 29, 2001 (the "Voting Agreement"), with Agile and have, by executing the Voting Agreement, irrevocably appointed the members of the Board of Directors of Agile, and each of them, as his or her lawful attorney and proxy. Such proxy gives Agile the limited right to vote each of the 29,366,384 shares (including any shares of Issuer Common Stock purchased or with respect to which beneficial ownership is acquired prior to the termination of the Voting Agreement) of Issuer Common Stock beneficially and collectively owned by the Voting Agreement Stockholders (the "Shares") in all matters related to the Merger. The Voting Agreement Stockholders and the number of Shares beneficially owned by each of them is set forth in Schedule B hereto which is hereby incorporated herein by reference. The foregoing summary of the Voting Agreement is qualified in its entirety by reference to the copy of the form of Voting Agreement included as Exhibit 2 to this Schedule 13D and incorporated herein in its entirety by reference. As lawful attorney and proxy of the Voting Agreement Stockholders, Agile (or any nominee of Agile) may exercise all voting, consent and similar rights of a stockholder with respect to the Shares (including, without limitation, the power to execute and deliver written consents) at every annual, special or adjourned meeting of the stockholders the Issuer and in every written consent in lieu of such meeting in favor of approval of the Merger, the execution and delivery by the Issuer of the Merger Agreement and the adoption and approval of the terms of the Merger Agreement and any action required in furtherance of the consummation of the Merger and against any Competing Transaction or any other matter that could be reasonably expected to delay or not to facilitate approval of the Merger. Agile (or any nominee of Agile) may not exercise the proxy on any other matter except as provided in the Voting Agreement. The Voting Agreement terminates upon the earlier to occur of (i) the effective time of the Merger, and (ii) the date of the termination of the Merger Agreement pursuant to the terms set forth in the Merger Agreement. (c) Not applicable. (d) The directors of the Merger Sub immediately prior to the effective time of the Merger shall be the directors of the Surviving Corporation. (e) Other than as a result of the Merger described in Item 3 above, not applicable. (f) - (i) Not applicable. (j) Other than described above, Agile currently has no plan or proposals which relate to, or may result in, any of the matters listed in Items 4(a) - (i) of Schedule 13D (although Agile reserves the right to develop such plans). Item 5. Interest in Securities of the Issuer. ------------------------------------ (a) - (b) As a result of the Voting Agreement, Agile may be deemed to be the beneficial owner of all 29,366,384 shares of the Issuer Common Stock disclosed in this 13D. To the knowledge of Agile, such Issuer Common Stock constitutes approximately 11.7% of the issued and outstanding shares of Issuer Common Stock as of January 29, 2001. (c) Neither Agile nor, to the knowledge of Agile, any person named in Schedule A, has effected any transaction in the Issuer Common Stock during the past 60 days. (d) - (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect --------------------------------------------------------------------- to Securities of the Issuer. - --------------------------- As described in Item 4 above, as an inducement to Agile to enter into the Merger Agreement, the Voting Agreement Stockholders of the Issuer have entered into the Voting Agreement with Agile and have, by executing the Voting Agreement, irrevocably appointed the members of the Board of Directors of Agile, and each of them, as his or her lawful attorney and proxy. Such proxy gives Agile the limited right to vote each of the 29,366,384 Shares in all matters related to the Merger. The Voting Agreement Stockholders and the number of Shares beneficially owned by each of them is set forth in Schedule B hereto which is hereby incorporated herein by reference. The foregoing summary of the Voting Agreement is qualified in its entirety by reference to the copy of the form of Voting Agreement included as Exhibit 2 to this Schedule 13D and incorporated herein in its entirety by reference Item 7. Materials to be Filed as Exhibits. --------------------------------- The following documents are exhibits: 1. Agreement and Plan of Merger and Reorganization, dated as of January 29, 2001, by and among Ariba, Inc., a Delaware corporation, Silver Merger Corporation, a Delaware corporation and wholly owned subsidiary of Ariba and Agile Software Corporation, a Delaware corporation. (The schedules and exhibits which are referenced in the table of contents and elsewhere in the Merger Agreement are hereby incorporated by reference. Such schedules and exhibits which are not included as exhibits to this Schedule 13D will be furnished supplementally to the Commission upon request.) 2. Form of Company Voting Agreement, dated as of January 29, 2001, by and among Ariba, Inc., a Delaware corporation and certain stockholders of Agile Software Corporation, a Delaware corporation. 3. Form of Parent Voting Agreement, dated as of January 29, 2001, by and among Agile Software Corporation, a Delaware corporation and certain stockholders of Ariba, Inc., a Delaware corporation. 4. Stock Option Agreement, dated as of January 29, 2001, by and between Ariba, Inc., a Delaware corporation and Agile Software Corporation, a Delaware corporation. SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. February 8, 2001 AGILE SOFTWARE CORPORATION By: /s/ Thomas P. Shanahan ---------------------------- Thomas P. Shanahan SCHEDULE A EXECUTIVE OFFICERS AND OUTSIDE DIRECTORS OF AGILE SOFTWARE CORPORATION.
NAME TITLE PRESENT PRINCIPAL OCCUPATION OF CITIZENSHIP EMPLOYMENT, INCLUDING NAME AND ADDRESS OF EMPLOYER Executive Officers: Bryan D. Stolle Chairman of the Board, Chief * U.S.A. Executive Officer, President Thomas Shanahan Executive Vice President, * U.S.A. Chief Financial Officer D. Kenneth Coulter Senior Vice President, * U.S.A. Worldwide Field Operations Scott R. Hammond Vice President, e-Procurement * U.S.A. and e-Services Gregory G. Schott Vice President, Business * U.S.A. Development Carol B. Schrader Vice President, Marketing * U.S.A. Dorothy V. Wise Vice President, Development * U.S.A. and Support David Hartzband Chief Technology Officer * U.S.A William Jamaca Vice President, Customer * U.S.A. Services Outside Directors: Klaus-Dieter Laidig Director Management Consultant Germany Laidig Business Consulting GmbH Taunusstrassee 8, Bobligen, Germany D-71032 James L. Patterson Director Independent Consultant U.S.A. 356 Bachman Court, Los Gatos California 95030 Nancy J. Schoendorf Director General Partner U.S.A. Mohr, Davidow Ventures, 2775 Sand Hill Road, Building 1, Suite 240, Menlo Park, California 94025
SCHEDULE B VOTING AGREEMENT STOCKHOLDERS NAME NUMBER OF SHARES ---- ---------------- Keith Krach 18,631,164 Lawrence Mueller 3,325,271 Karl C. Kleissner 1,885,004 Eileen Basho 200,370 Robert M. Calderoni 0 Paul Hegarty 2,746,593 Robert C. Kagle 1,091,540 Robert E. Knowling 25,000 John B. Mumford 484,078 Hatim A. Tyabji 977,364 EXHIBIT INDEX ------------- Exhibit - ------- 1. Agreement and Plan of Merger and Reorganization, dated as of January 29, 2001, by and among Ariba, Inc., a Delaware corporation, Silver Merger Corporation, a Delaware corporation and wholly owned subsidiary of Ariba and Agile Software Corporation, a Delaware corporation. (The schedules and exhibits which are referenced in the table of contents and elsewhere in the Merger Agreement are hereby incorporated by reference. Such schedules and exhibits which are not included as exhibits to this Schedule 13D will be furnished supplementally to the Commission upon request.) 2. Form of Company Voting Agreement, dated as of January 29, 2001, by and among Ariba, Inc., a Delaware corporation and certain stockholders of Agile Software Corporation, a Delaware corporation. 3. Form of Parent Voting Agreement, dated as of January 29, 2001, by and among Agile Software Corporation, a Delaware corporation and certain stockholders of Ariba, Inc., a Delaware corporation. 4. Stock Option Agreement, dated as of January 29, 2001, by and between Ariba, Inc., a Delaware corporation and Agile Software Corporation, a Delaware corporation. EX-99.1 2 0002.txt AGREEMENT & PLAN OF MERGER EXHIBIT 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER AND REORGANIZATION among ARIBA, INC., SILVER MERGER CORPORATION and AGILE SOFTWARE CORPORATION Dated as of January 29, 2001 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS
Page ---- ARTICLE I THE MERGER.................................................. A-2 1.01. The Merger.................................................. A-2 1.02. Effective Time; Closing..................................... A-2 1.03. Effect of the Merger........................................ A-2 1.04. Certificate of Incorporation; Bylaws........................ A-2 1.05. Directors and Officers...................................... A-2 ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES.......... A-3 2.01. Conversion of Securities.................................... A-3 2.02. Exchange of Certificates.................................... A-3 2.03. Stock Transfer Books........................................ A-5 2.04. Company Stock Options....................................... A-6 2.05. Warrants.................................................... A-6 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY............... A-7 3.01. Organization and Qualification; Subsidiaries................ A-7 3.02. Charters and Bylaws......................................... A-8 3.03. Capitalization.............................................. A-8 3.04. Authority Relative to This Agreement........................ A-9 3.05. No Conflict; Required Filings and Consents.................. A-10 3.06. Permits; Compliance......................................... A-10 3.07. SEC Filings; Financial Statements........................... A-11 3.08. Undisclosed Liabilities..................................... A-11 3.09. Absence of Certain Changes or Events........................ A-12 3.10. Absence of Litigation....................................... A-13 3.11. Employee Benefit Plans; Labor Matters....................... A-14 3.12. Contracts................................................... A-17 3.13. Environmental Matters....................................... A-18 3.14. Title to Properties; Absence of Liens and Encumbrances...... A-19 3.15. Intellectual Property....................................... A-19 3.16. Taxes....................................................... A-21 3.17. Status as a Reorganization.................................. A-23 3.18. Affiliate Transactions...................................... A-23 3.19. Insurance................................................... A-23 3.20. Board Approval; Vote Required............................... A-23 3.21. State Takeover Statutes..................................... A-23 3.22. Opinion of Financial Advisor................................ A-23 3.23. Brokers..................................................... A-23 3.24. Customers; Suppliers........................................ A-24 3.25. Restrictions on Business Activities......................... A-24 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..... A-24 4.01. Organization and Qualification; Subsidiaries................ A-24 4.02. Certificate of Incorporation and Bylaws..................... A-25 4.03. Capitalization.............................................. A-25 4.04. Authority Relative to This Agreement........................ A-26 4.05. No Conflict; Required Filings and Consents.................. A-26 4.06. SEC Filings; Financial Statements........................... A-27 4.07. Tax Matters................................................. A-27 4.08. Operations of Merger Sub.................................... A-27
Page ---- 4.09. Brokers................................................... A-27 4.10. Board Approval; Vote Required............................. A-27 4.11. Undisclosed Liabilities................................... A-28 4.12. Absence of Certain Changes or Events...................... A-28 4.13. Absence of Litigation..................................... A-28 4.14. Intellectual Property..................................... A-28 4.15. Opinion of Financial Advisor.............................. A-29 4.16. Taxes..................................................... A-29 ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER.................... A-29 5.01. Conduct of Business by the Company Pending the Merger..... A-29 5.02. Conduct of Business by Parent............................. A-30 5.03. Notification of Certain Matters........................... A-30 ARTICLE VI ADDITIONAL AGREEMENTS..................................... A-31 6.01. Registration Statement; Joint Proxy Statement............. A-31 6.02. Company Stockholders' Meeting............................. A-33 6.03. Parent Stockholders' Meeting.............................. A-33 6.04. Access to Information; Confidentiality.................... A-33 6.05. No Solicitation of Transactions........................... A-33 6.06. Directors' and Officers' Indemnification and Insurance.... A-34 6.07. Obligations of Merger Sub................................. A-35 6.08. Affiliates................................................ A-35 6.09. Further Action; Consents; Filings......................... A-36 6.10. Plan of Reorganization.................................... A-36 6.11. Public Announcements...................................... A-37 6.12. Listing................................................... A-37 6.13. Commercially Reasonable Efforts and Further Assurances.... A-37 6.14. Employee Benefits......................................... A-37 ARTICLE VII CONDITIONS TO THE MERGER.................................. A-37 7.01. Conditions to the Obligations of Each Party............... A-37 7.02. Conditions to the Obligations of Parent and Merger Sub.... A-38 7.03. Conditions to the Obligations of the Company.............. A-39 ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER......................... A-40 8.01. Termination............................................... A-40 8.02. Effect of Termination..................................... A-41 8.03. Amendment................................................. A-41 8.04. Waiver.................................................... A-41 8.05. Expenses.................................................. A-41 ARTICLE IX GENERAL PROVISIONS........................................ A-42 Non-Survival of Representations, Warranties and 9.01. Agreements................................................ A-42 9.02. Notices................................................... A-42 9.03. Certain Definitions....................................... A-43 9.04. Severability.............................................. A-44 9.05. Assignment; Binding Effect; Benefit....................... A-44 9.06. Specific Performance...................................... A-44 9.07. Governing Law; Forum...................................... A-44 9.08. Waiver of Jury Trial...................................... A-44 9.09. Headings.................................................. A-44 9.10. Counterparts.............................................. A-44
Page ---- 9.11. Mutual Drafting................................................. A-45 9.12. Entire Agreement................................................ A-45
Exhibit A Form of Company Voting Agreement Exhibit B Form of Parent Voting Agreement Exhibit C Form of Company Stock Option Agreement Exhibit D Form of Affiliate
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION AGREEMENT AND PLAN OF MERGER AND REORGANIZATION dated as of January 29, 2001 (this "Agreement") among ARIBA, INC., a Delaware corporation ("Parent"), SILVER MERGER CORPORATION, a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and AGILE SOFTWARE CORPORATION, a Delaware corporation (the "Company"). WITNESSETH WHEREAS, upon the terms and subject to the conditions of this Agreement and in accordance with the Delaware General Corporation Law (the "DGCL"), Parent will combine with the Company through the merger of Merger Sub with and into the Company with the Company being the surviving corporation (the "Merger"); WHEREAS, the Board of Directors of the Company (i) has approved, and deems it advisable and in the best interests of the Company and its stockholders to consummate, the Merger, upon the terms and subject to the conditions set forth in this Agreement and (ii) has recommended the approval of the Merger and the adoption of this Agreement by the stockholders of the Company; WHEREAS, the Boards of Directors of each of Parent and Merger Sub have (i) determined that the Merger is consistent with and in furtherance of the long- term business strategy of Parent, (ii) approved this Agreement, the Merger and the other transactions contemplated by this Agreement and (iii) recommended the approval of the issuance of Parent Common Shares (as defined in Section 2.01(a) below) pursuant to the Merger by the Stockholders of Parent; WHEREAS, concurrently with the execution of this Agreement, and as a condition and inducement to Parent's willingness to enter into this Agreement, certain stockholders of the Company are entering into voting agreements (the "Company Voting Agreements") with Parent in substantially the form attached as Exhibit A hereto; WHEREAS, concurrently with the execution of this Agreement, and as a condition and inducement to the Company's willingness to enter into this Agreement, certain stockholders of Parent are entering into voting agreements (the "Parent Voting Agreements") with the Company in substantially the form attached as Exhibit B hereto; WHEREAS, concurrently with the execution of this Agreement, and as a condition and inducement to Parent's willingness to enter into this Agreement, the Company shall execute and deliver a stock option agreement (the "Company Stock Option Agreement") in substantially the form attached as Exhibit C hereto in favor of Parent, and the Board of Directors of the Company will have approved such Company Stock Option Agreement; WHEREAS, as a condition and inducement to Parent's willingness to enter into this Agreement, certain employees of the Company are entering into employment and non-competition agreements with Parent; WHEREAS, for United States federal income tax purposes, the Merger is intended to qualify as a reorganization under the provisions of section 368(a) of the United States Internal Revenue Code of 1986, as amended (the "Code"); WHEREAS, the parties intend that the Merger shall be accounted for as a "purchase" for financial reporting purposes; and WHEREAS, pursuant to the Merger, (i) each outstanding share of Common Stock of the Company and all outstanding options or other rights to acquire or receive shares of Common Stock of the Company and (ii) each outstanding warrant that does not by its terms terminate at or prior to the Effective Time (as defined in Section 1.02 below) shall be converted into the right to receive shares of Parent's authorized Common Stock at the rate determined in this Agreement; A-1 NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, Parent, Merger Sub and the Company hereby agree as follows: ARTICLE I The Merger SECTION 1.01 The Merger. Upon the terms of this Agreement and subject to the conditions set forth in Article VII, and in accordance with the DGCL, at the Effective Time (as defined below), Merger Sub shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation of the Merger (the "Surviving Corporation"). SECTION 1.02 Effective Time; Closing. As promptly as practicable and in no event later than the second business day following the satisfaction or, if permissible, waiver of the conditions set forth in Article VII (or such other date as may be agreed in writing by each of the parties hereto), the parties hereto shall cause the Merger to be consummated by filing a certificate of merger (the "Certificate of Merger") with the Secretary of State of the State of Delaware in such form as is required by, and executed in accordance with, the relevant provisions of the DGCL. The term "Effective Time" means the date and time of the filing with, and the acceptance by, the Secretary of State of the State of Delaware of the Certificate of Merger (or such later time, not to exceed 30 days after such acceptance for record, as may be agreed in writing by each of the parties hereto and specified in the Certificate of Merger). Immediately prior to the filing of the Certificate of Merger, a closing (the "Closing") will be held at the offices of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP ("Gunderson Dettmer"), 155 Constitution Drive, Menlo Park, California 94025 (or such other place as the parties hereto may agree). The date on which the Closing shall occur is referred to herein as the "Closing Date." SECTION 1.03 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions, disabilities and duties of each of the Company and Merger Sub shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Corporation. SECTION 1.04 Certificate of Incorporation; Bylaws. (a) At the Effective Time the Certificate of Incorporation of the Company as the Surviving Corporation shall be amended and restated to read the same as the Certificate of Incorporation of Merger Sub, as in effect immediately prior to the Effective Time, except that Article I of the amended and restated Certificate of Incorporation of the Company, instead of reading the same as the Certificate of Incorporation of Merger Sub shall read as follows: The name of the corporation is Agile Software Corporation. (b) At the Effective Time, the Bylaws of Merger Sub, as in effect immediately prior to the Effective Time, shall, subject to Section 6.06(a) of this Agreement, be the Bylaws of the Surviving Corporation until thereafter amended as provided by law, the Certificate of Incorporation of the Surviving Corporation and such Bylaws. SECTION 1.05 Directors and Officers. The directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation, each to hold office in accordance with the Certificate of Incorporation and Bylaws of the Surviving Corporation, and the officers of Merger Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified. A-2 ARTICLE II Conversion of Securities; Exchange of Certificates SECTION 2.01 Conversion of Securities. (a) At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holders of any of the following securities: (i) Each share of Common Stock of the Company, par value $0.001 per share (the "Company Common Stock") (all issued and outstanding shares of Company Common Stock being hereinafter collectively referred to as the "Shares"), issued and outstanding immediately prior to the Effective Time (other than any Shares to be canceled pursuant to Section 2.01(a)(ii)) shall be converted, subject to Section 2.02(e), into the right to receive that number of shares of Common Stock of Parent, par value $0.002 per share ("Parent Common Shares") equal to 1.35 (the "Exchange Ratio"). At the Effective Time, each such Share shall be canceled, cease to be outstanding and cease to exist and each holder of Shares shall thereafter cease to have any rights with respect to such Shares, except the right to receive, without interest, Parent Common Shares in accordance with this Section 2.01(a)(i) and cash for fractional Parent Common Shares in accordance with Section 2.02(e). (ii) Each Share held in the treasury of the Company and each Share owned by Parent or any direct or indirect wholly owned subsidiary of Parent or of the Company immediately prior to the Effective Time shall be canceled and extinguished without any conversion thereof and no payment or distribution shall be made with respect thereto. (iii) Each share of Common Stock, par value $0.001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for one duly authorized, validly issued, fully paid and nonassessable share of common stock, par value $0.001 per share, of the Surviving Corporation. (b) If between the date of this Agreement and the Effective Time, the outstanding Parent Common Shares or outstanding shares of Company Common Stock shall have been changed into a different number of shares or a different class, by reason of any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares or any similar event, the Exchange Ratio shall be correspondingly adjusted to the extent appropriate to reflect such stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares or similar event. (c) If any shares of Company Common Stock outstanding immediately prior to the Effective Time are unvested or are subject to a repurchase option, risk of forfeiture or other condition under any applicable restricted stock purchase agreement or other agreement with the Company, then (i) the Parent Common Shares issued in exchange for such shares of Company Common Stock will also be unvested and/or subject to the same repurchase option, risk of forfeiture or other condition, (ii) the certificates representing such Parent Common Shares may accordingly be marked with appropriate legends and (iii) the Company shall take all action that may be necessary to ensure that, from and after the Effective Time, Parent is entitled to exercise any such repurchase option or other right set forth in any such restricted stock purchase agreement or other agreement. SECTION 2.02 Exchange of Certificates. (a) Exchange Agent. Parent shall deposit, or shall cause to be deposited, with Bank Boston, N.A., or such other bank or trust company that may be designated by Parent and is reasonably satisfactory to the Company (the "Exchange Agent"), for the benefit of the holders of Shares, for exchange in accordance with this Article II through the Exchange Agent, certificates representing Parent Common Shares issuable pursuant to Section 2.01 as of the Effective Time and cash, from time to time as required to make payments in lieu of A-3 any fractional shares pursuant to Section 2.02(e) (such cash and certificates for Parent Common Shares, together with any dividends or distributions with respect thereto, being hereinafter referred to as the "Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable instructions, deliver the Parent Common Shares contemplated to be issued pursuant to Section 2.01 out of the Exchange Fund. Except as contemplated by Section 2.02(f) hereof, the Exchange Fund shall not be used for any other purpose. (b) Exchange Procedures. As promptly as practicable after the Effective Time, Parent shall cause the Exchange Agent to mail to each holder of record of a certificate or certificates which immediately prior to the Effective Time represented outstanding Shares (the "Certificates") (i) a letter of transmittal (which shall be in customary form and shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Exchange Agent) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for certificates representing Parent Common Shares and cash in lieu of any fractional shares. Upon surrender to the Exchange Agent of a Certificate for cancellation, together with such letter of transmittal, duly executed and completed in accordance with the instructions thereto, and such other documents as may be reasonably required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in exchange therefor a certificate representing that number of whole Parent Common Shares that such holder has the right to receive in respect of the Shares formerly represented by such Certificate (after taking into account all Shares then held by such holder), cash in lieu of any fractional Parent Common Shares to which such holder is entitled pursuant to Section 2.02(e) and any dividends or other distributions to which such holder is entitled pursuant to Section 2.02(c), and the Certificate so surrendered shall forthwith be canceled. In the event of a transfer of ownership of Shares that is not registered in the transfer records of the Company, a certificate representing the proper number of Parent Common Shares, cash in lieu of any fractional Parent Common Shares to which such holder is entitled pursuant to Section 2.02(e) and any dividends or other distributions to which such holder is entitled pursuant to Section 2.02(c) may be issued to a transferee if the Certificate representing such Shares is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and by evidence satisfactory to the Surviving Corporation that any applicable share transfer taxes have been paid. Until surrendered as contemplated by this Section 2.02, each Certificate shall be deemed at all times after the Effective Time to represent only the right to receive upon such surrender the certificate representing Parent Common Shares, cash in lieu of any fractional Parent Common Shares to which such holder is entitled pursuant to Section 2.02(e) and any dividends or other distributions to which such holder is entitled pursuant to Section 2.02(c). (c) Distributions with Respect to Unexchanged Parent Common Shares. No dividends or other distributions declared or made after the Effective Time with respect to the Parent Common Shares with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate with respect to the Parent Common Shares represented thereby, and no cash payment in lieu of any fractional shares shall be paid to any such holder pursuant to Section 2.02(e), until the holder of such Certificate shall surrender such Certificate as provided in Section 2.02(b). Subject to the effect of escheat, tax or other applicable Laws (as defined in Section 3.05(a)), following surrender of any such Certificate, there shall be paid to the holder of the certificates representing whole Parent Common Shares issued in exchange therefor, without interest, (i) the amount of any cash payable with respect to a fractional Parent Common Share to which such holder is entitled pursuant to Section 2.02(e) and the amount of dividends or other distributions with a record date after the Effective Time and theretofore payable with respect to such whole Parent Common Shares and (ii) at the appropriate payment date, the amount of dividends or other distributions, with a record date after the Effective Time but prior to surrender and a payment date occurring after surrender, payable with respect to such whole Parent Common Shares. (d) No Further Rights in Company Common Stock. All Parent Common Shares issued upon conversion of the Shares in accordance with the terms hereof and any cash paid pursuant to Sections 2.02(c) or (e) shall be deemed to have been issued or paid in full satisfaction of all rights pertaining to such Shares. (e) No Fractional Shares. No certificates or scrip representing fractional Parent Common Shares shall be issued upon the surrender for exchange of Certificates, and such fractional share interests will not entitle the A-4 owner thereof to vote or to any other rights of a stockholder of Parent. Each holder of a fractional share interest shall be paid an amount in cash (without interest) equal to the product obtained by multiplying (i) such fractional share interest to which such holder (after taking into account all fractional share interests then held by such holder) would otherwise be entitled by (ii) the average closing price per share of Parent Common Shares for the ten most recent days that Parent Common Shares have traded ending on (and including) the trading day immediately prior to the Effective Time, as reported on The Nasdaq National Market. As promptly as practicable after the determination of the amount of cash, if any, to be paid to holders of fractional share interests, the Exchange Agent shall so notify Parent, and Parent shall deposit such amount with the Exchange Agent and shall cause the Exchange Agent to forward payments to such holders of fractional share interests subject to and in accordance with the terms of Sections 2.02(b) and (c). (f) Termination of Exchange Fund. Any portion of the Exchange Fund that remains undistributed to the holders of Shares for twelve months after the Effective Time shall be delivered to Parent, upon demand, and any holders of Shares who have not theretofore complied with this Article II shall thereafter look only to Parent for the Parent Common Shares, any cash in lieu of fractional Parent Common Shares to which they are entitled pursuant to Section 2.02(e) and any dividends or other distributions with respect to the Parent Common Shares to which they are entitled pursuant to Section 2.02(c). Any portion of the Exchange Fund remaining unclaimed by holders of Shares as of a date that is immediately prior to such time as such amounts would otherwise escheat to or become property of any government entity shall, to the extent permitted by applicable Law, become the property of Parent free and clear of any claims or interest of any person previously entitled thereto. (g) No Liability. Neither Parent nor the Surviving Corporation shall be liable to any holder of Shares for any Parent Common Shares (or dividends or distributions with respect thereto) or cash delivered to a public official pursuant to any abandoned property, escheat or similar Law. (h) Withholding Rights. Each of the Surviving Corporation, Parent and the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Shares such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign tax Law. To the extent that amounts are so withheld by the Surviving Corporation, Parent or the Exchange Agent, as the case may be, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares in respect of which such deduction and withholding was made by the Surviving Corporation, Parent or the Exchange Agent, as the case may be. (i) Lost, Stolen or Destroyed Certificates. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed, and, if required by the Surviving Corporation or the Exchange Agent, the posting by such person of a bond, in such reasonable amount as the Surviving Corporation or Exchange Agent may direct, as indemnity against any claim that may be made against it with respect to such Certificate and the payment of any fee charged by the Exchange Agent for such service, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Certificate the Parent Common Shares, any cash in lieu of fractional Parent Common Shares to which the holder thereof is entitled pursuant to Section 2.02(e) and any dividends or other distributions to which the holder thereof is entitled pursuant to Section 2.02(c). SECTION 2.03 Stock Transfer Books. (a) At the Effective Time, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers of Shares thereafter on the records of the Company. From and after the Effective Time, the holders of Certificates representing Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares, except as otherwise provided in this Agreement or by Law. On or after the Effective Time, any Certificates presented to the Exchange Agent or Parent for any reason shall be converted into Parent Common Shares, any cash in lieu of fractional Parent Common Shares to which the holders thereof are entitled pursuant to Section 2.02(e) and any dividends or other distributions to which the holders thereof are entitled pursuant to Section 2.02(c). A-5 (b) Notwithstanding anything herein to the contrary, Certificates surrendered for exchange by any person constituting an Affiliate (as defined in Section 6.08 below) shall not be exchanged until Parent shall have received from such person an affiliate letter as provided in Section 6.08. SECTION 2.04 Company Stock Options. (a) At the Effective Time, Parent shall assume (i) all options to acquire Company Common Stock (the "Company Stock Options") outstanding immediately prior to the Effective Time, whether or not exercisable and whether or not vested, under the Company's 1995 Stock Option Plan (the "Company 1995 Plan"), the 1995 Stock Plan of Digital Market, Inc. (the "DMI 1995 Plan"), the Company's 2000 Nonstatutory Stock Option Plan (the "2000 Plan" and together with the Company 1995 Plan and the DMI 1995 Plan, the "Company Stock Option Plans"), and (ii) each Company Stock Option Plan, and the Company's repurchase right with respect to any unvested shares acquired by the exercise of Company Stock Options shall be assigned to Parent by virtue of the Merger and without any further action on the part of the Company or the holders of such unvested shares. Each Company Stock Option so assumed by Parent under this Agreement will continue to have, and be subject to, the same terms and conditions of such option immediately prior to the Effective Time (including, without limitation, any repurchase rights or vesting provisions), except that (i) each Company Stock Option will be exercisable (or will become exercisable in accordance with its terms) for that number of whole Parent Common Shares (rounded down to the nearest whole share) equal to the number of shares of Company Common Stock subject to such Company Stock Option multiplied by the Exchange Ratio and (ii) the per share exercise price for the Parent Common Shares issuable upon exercise of such assumed Company Stock Option will be equal to the exercise price per share of such Company Stock Option in effect immediately prior to the Effective Time divided by the Exchange Ratio (the exercise price per share, as so determined, being rounded upward to the nearest full cent). It is the intention of the parties that each Company Stock Option assumed by Parent shall qualify following the Effective Time as an incentive stock option as defined in section 422 of the Code to the extent permitted under section 422 of the Code and to the extent such option qualified as an incentive stock option prior to the Effective Time. Outstanding purchase rights under the Company's 1999 Employee Stock Purchase Plan (the "Company Purchase Plan") shall be exercised upon the earlier of (i) the next scheduled purchase date under the Company Purchase Plan or (ii) immediately prior to the Effective Time, and each participant in the Company Purchase Plan shall accordingly be issued shares of Company Common Stock at that time pursuant to the terms of the Company Purchase Plan and each share of Company Common Stock so issued shall by virtue of the Merger, and without any action on the part of the holder thereof, be converted into the right to receive Parent Common Shares in accordance with Section 2.01(a)(i) and cash for fractional Parent Common Shares in accordance with Section 2.02(e). The Company Purchase Plan shall be terminated as of the Effective Time. (b) As soon as practicable after the Effective Time, Parent shall deliver to each person who, immediately prior to the Effective Time, was a holder of an outstanding Company Stock Option an appropriate notice setting forth such holder's rights pursuant thereto. As soon as practicable after the Effective Time (but in any event not later than 20 business days following the Effective Time), Parent shall file a registration statement on Form S-8 (or any successor or other appropriate forms) that will register the Parent Common Shares subject to Company Stock Options to the extent permitted by federal securities laws and shall use its reasonable efforts to maintain the effectiveness of such registration statement or registration statements for so long as such options remain outstanding. In addition, Parent shall use all reasonable efforts to cause the Parent Common Shares subject to Company Stock Options to be listed on The Nasdaq National Market and such exchanges as Parent shall determine. SECTION 2.05 Warrants. At the Effective Time, each warrant to acquire Company Common Stock (the "Warrants") granted and outstanding immediately prior to the Effective Time, whether contingent or earned, that does not terminate by its terms at or prior to the Effective Time shall be converted into a warrant to acquire Parent Common Shares, and each Warrant so converted will continue to have, and be subject to, the same terms and conditions of such Warrant immediately prior to the Effective Time, except that (i) each Warrant will be exercisable (or will become exercisable in accordance with its terms) for that number of whole A-6 Parent Common Shares (rounded down to the nearest whole share) equal to the number of shares of Company Common Stock issuable upon exercise of such Warrant prior to the Effective Time multiplied by the Exchange Ratio and (ii) the per share exercise price for the Parent Common Shares issuable upon exercise of such assumed Warrant will be equal to the exercise price per share of Company Common Stock at which such Warrant was exercisable immediately prior to the Effective Time divided by the Exchange Ratio (the exercise price per share, as so determined, being rounded upward to the nearest whole cent). ARTICLE III Representations and Warranties of the Company The Company hereby represents and warrants to Parent and Merger Sub that the statements contained in this Article III are true and correct except as set forth in the disclosure schedule delivered by the Company to Parent and Merger Sub concurrently with the execution of this Agreement (the "Company Disclosure Schedule"). The Company Disclosure Schedule shall be arranged according to specific sections in this Article III and shall provide exceptions to, or otherwise qualify in reasonable detail, only the corresponding section in this Article III and any other section in this Article III where it is reasonably clear, upon a reading of such disclosure without any independent knowledge on the part of the reader regarding the matter disclosed, that the disclosure is intended to apply to such other section. SECTION 3.01 Organization and Qualification; Subsidiaries. (a) Section 3.01(a) of the Company Disclosure Schedule sets forth the jurisdiction of incorporation or organization of each of the Company and each subsidiary of the Company (collectively, the "Company Subsidiaries"). Each of the Company and the Company Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of such incorporation and has all requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the failure to have such governmental approvals have not had, and could not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect (as defined below). Each of the Company and the Company Subsidiaries is duly qualified or licensed as a foreign corporation or organization to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified or licensed and in good standing that have not had, and could not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Section 3.01(a) of the Company Disclosure Schedule sets forth each jurisdiction in which the Company or a Company Subsidiary is qualified or licensed to do business as a foreign corporation or organization. The term "Company Material Adverse Effect" means any changes in or effects on the business of the Company or any Company Subsidiary that, individually or in the aggregate, are or are substantially likely to be materially adverse to the business, financial condition, assets (tangible or intangible), liabilities (including contingent liabilities) or results of operations of the Company and the Company Subsidiaries taken as a whole, except for any such changes or effects principally resulting from or principally arising in connection with (i) any changes affecting the respective industries in which the Company and the Company Subsidiaries operate that do not have a disproportionate impact on the Company and the Company Subsidiaries, taken as a whole, (ii) any changes in general economic conditions that do not disproportionately impact the Company and the Company Subsidiaries, taken as a whole, (iii) in and of itself, any change in the trading price of Company Common Stock, (iv) in and of itself, a failure by Company to meet the revenue or earnings predictions of equity analysts for any period ending (or for which earnings are released) on or after the date of this Agreement and prior to the Closing Date, (v) the taking of any action expressly required by the terms of this Agreement or (vi) any adverse change, effect, event, occurrence, state of facts or development to the extent primarily attributable to the announcement or pendency of the Merger; provided, however, that the Company shall bear the burden of showing that such change, effect, event, occurrence, state of fact or development which the Company claims does not constitute a Company Material Adverse Effect is primarily attributable to the announcement or pendency of the Merger. A-7 (b) Neither the Company nor any Company Subsidiary directly or indirectly owns any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for, any corporation, partnership, joint venture or other business association or entity that is or could reasonably be expected to be material to the Company and the Company Subsidiaries, taken as a whole. SECTION 3.02 Certificate of Incorporation and Bylaws. The Company has heretofore made available to Parent a complete and correct copy of the Certificates of Incorporation, Bylaws (or equivalent organizational documents) and minute books of the Company and each of the Company Subsidiaries, each as amended to the date of this Agreement. Such Certificates of Incorporation and Bylaws (or equivalent organizational documents) are in full force and effect. Neither the Company nor any Company Subsidiary is in violation of any of the provisions of its Certificate of Incorporation or Bylaws (or equivalent organizational documents). The minute books of the Company and the Company Subsidiaries are complete and accurate and have been duly maintained in accordance with all applicable legal requirements, and all signatures appearing on all documents contained therein are the true signatures of the persons purported to have signed the same. SECTION 3.03 Capitalization. (a) The authorized capital stock of the Company consists of 100,000,000 shares of Company Common Stock and 10,000,000 shares of preferred stock, par value $0.001 per share (the "Company Preferred Stock"). As of the date hereof, (i) 47,220,810 shares of Company Common Stock are issued and outstanding, all of which are duly authorized, validly issued, fully paid and nonassessable, (ii) no shares of Company Common Stock or Company Preferred Stock are held in the treasury of the Company, (iii) no shares of Company Common Stock or Company Preferred Stock are held by Company Subsidiaries and (iv) no shares of Company Preferred Stock are issued and outstanding. Each outstanding share of stock or other equity interest of each Company Subsidiary is duly authorized, validly issued, fully paid and nonassessable and each such share or other equity interest owned by the Company or another Company Subsidiary is free and clear of all liens, security interests, claims, pledges, options, rights of first refusal, agreements, limitations on voting rights, charges and other encumbrances of any nature whatsoever. The Company directly owns 100% of the issued and outstanding capital stock, and all options or other rights to acquire such capital stock, of each Company Subsidiary. (b) The Company has duly reserved 11,750,000 shares of Company Common Stock for future issuance pursuant to the Company 1995 Plan, of which options to purchase 4,605,895 shares of Company Common Stock are outstanding as of the date of this Agreement, 111,986 shares of Company Common Stock for future issuance pursuant to the DMI 1995 Plan, of which options to purchase 43,069 shares of Company Common Stock are outstanding as of the date of this Agreement, 9,500,000 shares of Company Common Stock for future issuance pursuant to the 2000 Plan, of which options to purchase 8,151,816 shares of Company Common Stock are outstanding as of the date of this Agreement, and 2,000,000 shares of Company Common Stock for issuance to employees pursuant to the Company Purchase Plan, of which 1,809,875 shares are available for issuance. Section 3.03(b) of the Company Disclosure Schedule accurately sets forth with respect to each Company Stock Option that is outstanding as of the date of this Agreement: (i) the name of the holder of such Company Stock Option; (ii) the total number of shares of Company Common Stock that was originally subject to such Company Stock Option, (iii) the number of shares of Company Common Stock that remain subject to such Company Stock Option; (iv) the date on which such Company Stock Option was granted, (v) the term of such Company Stock Option; (vi) the vesting schedule for such Company Stock Option; (vii) the vesting commencement date for such Company Stock Option; (viii) the exercise price per share of Company Common Stock purchasable under such Company Stock Option; (ix) whether such Company Stock Option has been designated an "incentive stock option" as defined in section 422 of the Code; and (x) the current employee or independent contractor status of the holder of such Company Stock Option. No Company Stock Option will by its terms require an adjustment in connection with the Merger, except as contemplated by this Agreement. Neither the consummation of the transactions contemplated by this Agreement, nor any action taken or to be taken by Company in connection with such transactions, will result in (i) any acceleration of exercisability or vesting (including, without limiting the foregoing, any right to acceleration of vesting that is contingent upon A-8 the occurrence of a subsequent event) in favor of any optionee under any Company Stock Option; (ii) any additional benefits for any optionee under any Company Stock Option; or (iii) the inability of Parent after the Effective Time to exercise any right or benefit held by the Company prior to the Effective Time with respect to any Company Stock Option assumed by Parent or any shares of Company Common Stock previously issued upon exercise of a Company Stock Option, including, without limitation, the right to repurchase an optionee's unvested shares on termination of such optionee's employment. The assumption by Parent of the Company Stock Option Plans and the Company Stock Options in accordance with Section 2.04 hereunder will not give rise to any event described in clauses (i) through (iii) of the immediately preceding sentence. (c) The Company has duly reserved 50,000 shares of Company Common Stock for future issuance pursuant to the exercise of Warrants. Section 3.03(c) of the Company Disclosure Schedule sets forth, with respect to each Warrant issued to any person: (i) the name of the holder of such Warrant; (ii) the total number of shares of Company Common Stock that are subject to such Warrant; (iii) the total number of shares of Company Common Stock with respect to which such Warrant is immediately exercisable; (iv) the exercise price per share of Company Common Stock issuable under such Warrant; (v) whether such Warrant is subject to vesting and, if so, the conditions of such vesting; and (vi) the term of such Warrant. (d) Except (i) as set forth in Sections 3.03(b) and 3.03(c) of the Company Disclosure Schedule, (ii) for shares of Company Common Stock reserved for issuance under the Company Purchase Plan and (iii) as provided in the Company Stock Option Agreement, there are no options, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Company or any Company Subsidiary or obligating the Company or any Company Subsidiary to issue or sell any shares of its capital stock or other equity interests. All shares of Company Common Stock so subject to issuance, upon issuance in accordance with the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. There are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any shares of capital stock or other equity interests of the Company or any Company Subsidiary. Each holder of a Company Stock Option or Warrant has been or will be given, or shall have properly waived, any required notice of the Merger prior thereto, and all such rights of notice will terminate at or prior to the Effective Time. (e) All of the securities sold or issued by the Company and each Company Subsidiary have been sold or issued in compliance with the requirements of the federal securities laws and any other applicable securities laws. (f) The Company has never repurchased, redeemed or otherwise reacquired any shares of capital stock or other securities of the Company or any Subsidiary, other than unvested securities upon termination of employment or consultancy. (g) There are no stockholder agreements, voting trusts or other agreements or understandings to which the Company or any Company Subsidiary is a party, or of which the Company or any Company Subsidiary is aware, (i) relating to voting, registration or disposition of any shares of capital stock of the Company or any Company Subsidiary; (ii) granting to any person or group of persons the right to elect, or to designate or nominate for election, a director to the board of directors of the Company or any Company Subsidiary; or (iii) granting to any person or group of persons information rights. (h) The Company has duly reserved 9,396,941 shares of Company Common Stock for issuance pursuant to the Company Stock Option Agreement. SECTION 3.04 Authority Relative to This Agreement. The Company has all necessary corporate power and authority to execute and deliver this Agreement and the Company Stock Option Agreement, and, subject to obtaining the necessary approvals of the Company's stockholders, to perform its obligations hereunder and thereunder and to consummate the Merger and the other transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Company Stock Option Agreement by the Company and the A-9 consummation by the Company of the Merger and the other transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement and the Company Stock Option Agreement or to consummate the Merger and the other transactions so contemplated (other than with respect to approval of the Merger and adoption of this Agreement by the Company's stockholders by the affirmative vote of a majority of all the votes entitled to vote on the matter (the "Company Stockholders' Vote"), and the filing and acceptance of the Certificate of Merger as required by the DGCL). This Agreement and the Company Stock Option Agreement have been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Merger Sub, constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors' rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). SECTION 3.05 No Conflict; Required Filings and Consents. (a) The execution and delivery of this Agreement and the Company Stock Option Agreement by the Company do not, and the performance of this Agreement and the Company Stock Option Agreement by the Company will not, (i) conflict with or violate the Certificate of Incorporation or Bylaws of the Company or any equivalent organizational documents of any Company Subsidiary, (ii) assuming that all consents, approvals, authorizations and other actions described in Section 3.05(b) have been obtained and all filings and obligations described in Section 3.05(b) have been made or complied with, conflict with or violate any foreign or domestic (federal, state or local) law, statute, ordinance, writ, rule, regulation, order, injunction, judgment or decree ("Law") applicable to the Company or any Company Subsidiary or by which any material property or asset of the Company or any Company Subsidiary is bound or affected, or (iii) conflict with, result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or require any payment under, or result in the creation of a lien, claim, security interest or other charge or encumbrance on any material property or asset of the Company or any Company Subsidiary pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or any Company Subsidiary is a party or by which any material asset of the Company or any Company Subsidiary is bound or affected. (b) The execution and delivery of this Agreement and the Company Stock Option Agreement by the Company do not, and the performance of this Agreement and the Company Stock Option Agreement by the Company will not, require any consent, approval, order, authorization, registration or permit of, or filing with or notification to, any domestic, foreign or supranational governmental, regulatory or administrative authority, agency or commission, any court, tribunal, or arbitral body, or any quasi-governmental or private body exercising regulatory, taxing, importing or other governmental authority (a "Governmental Entity"), except (i) for applicable requirements, if any, of the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the "Exchange Act"), state securities or "blue sky" laws ("Blue Sky Laws"), The Nasdaq National Market, Delaware state takeover laws, the pre-merger notification requirements of the Hart-Scott- Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder (the "HSR Act") and the filing and recordation of appropriate merger documents as required by the DGCL, and (ii) for such other consents, approvals, orders, authorizations, registrations, permits, filings or notifications, which if not obtained or made could not be material to the Company or Parent or prevent or materially delay the consummation of the transactions contemplated by this Agreement. SECTION 3.06 Permits; Compliance. (a) Each of the Company and the Company Subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any Governmental Entity necessary for the Company or any Company Subsidiary to own, lease and operate A-10 its material properties or to carry on its business as it is now being conducted (the "Company Permits"). All Company Permits are in full force and effect in all material respects and will remain so after the Closing and no suspension or cancellation of any of the Company Permits is pending or, to the knowledge of the Company, threatened. (b) Neither the Company nor any Company Subsidiary is in conflict in any material respect with, or in default or violation in any material respect of, (i) any Law applicable to the Company or any Company Subsidiary or by which any material property or asset of the Company or any Company Subsidiary is bound or affected, (ii) any material note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or any Company Subsidiary is a party or by which the Company or any Company Subsidiary or any material property or asset of the Company or any Company Subsidiary is bound or affected or (iii) any Company Permits. SECTION 3.07 SEC Filings; Financial Statements. (a) The Company has filed all forms, reports and documents required to be filed by it with the Securities and Exchange Commission (the "SEC") since June 23, 1999 (collectively, the "Company SEC Reports"), and the Company has made available to Parent correct and complete copies of each Company SEC Report, including all exhibits thereto. As of the respective dates they were filed (and if amended or superseded by a filing prior to the date of this Agreement then on the date of such filing), (i) each Company SEC Report complied in all material respects with the requirements of the Securities Act of 1933, as amended (together with the rules and regulations promulgated thereunder, the "Securities Act") or the Exchange Act, as the case may be, and (ii) none of the Company SEC Reports 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 made therein, in the light of the circumstances under which they were made, not misleading. No Company Subsidiary is required to file any form, report or other document with the SEC or any similar foreign agency or governmental entity. (b) Each of the consolidated financial statements (including, in each case, any notes thereto) contained in the Company SEC Reports (the "Company Financial Statements") was prepared in accordance with generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q or 8-K promulgated by the SEC) and each presents fairly, in all material respects, the consolidated financial position, results of operations and cash flows of the Company and the consolidated Company Subsidiaries as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments that could not be reasonably expected to, individually or in the aggregate, have a Company Material Adverse Effect). The most recent balance sheet of the Company contained in the Company SEC Reports as of October 31, 2000 is hereinafter referred to as the "Company Balance Sheet". (c) The Company has heretofore furnished to Parent a complete and correct copy of any amendments or modifications, which have not yet been filed with the SEC but which are required to be filed, to agreements, documents or other instruments that previously had been filed by the Company with the SEC pursuant to the Securities Act or the Exchange Act. SECTION 3.08 Undisclosed Liabilities. Except for (a) liabilities that are fully reflected or reserved against on the Company Balance Sheet, or in the notes thereto, (b) liabilities incurred in the ordinary course of business consistent with past practice, since the date of the Company Balance Sheet and (c) liabilities for fees and expenses of professional advisors arising out of the transactions contemplated hereby, neither the Company nor any Company Subsidiary has incurred any liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due) that would be material to the business, results of operations or financial condition of the Company and the Company Subsidiaries taken as a whole. A-11 SECTION 3.09 Absence of Certain Changes or Events. Since April 30, 2000, each of the Company and the Company Subsidiaries has conducted its business only in the ordinary course and in a manner consistent with past practice and, since such date, there has not been any: (a) Company Material Adverse Effect; (b) amendment or any other change to the Certificate of Incorporation or Bylaws or equivalent organizational documents of the Company or any Company Subsidiary; (c) issuance, sale, pledge, lease, license, disposition, grant, encumbrance, or authorization for any issuance, sale, pledge, lease, license, disposition, grant or encumbrance, of (i) any shares of capital stock of any class of the Company or any Company Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such stock, or any other ownership interest (including, without limitation, any phantom interest) of the Company or any Company Subsidiary (except for (x) the issuance of shares of Company Common Stock pursuant to the exercise of Company Stock Options and in accordance with the terms of the Company Stock Option Plan, (y) the grant in the ordinary course of business and consistent with past practice of Company Stock Options pursuant to a Company Stock Option Plan and (z) the issuance of shares of Company Common Stock pursuant to the Company Purchase Plan) or (ii) any material assets of the Company or any Company Subsidiary, except in the ordinary course of business and in a manner consistent with past practice, including, without limitation, any Intellectual Property (as defined below) of the Company or any Company Subsidiary; (d) authorization, declaration, set aside, dividend payment or other distribution, payable in cash, stock, property or otherwise, with respect to any of the capital stock of the Company or any Company Subsidiary; (e) reclassification, combination, split, subdivision or redemption, purchase or other acquisition, directly or indirectly, of any of the capital stock of the Company or any Company Subsidiary; (f) acquisition (including, without limitation, by merger, consolidation, or acquisition of stock or assets) of any interest in any corporation, partnership, other business organization or any division thereof or any assets, other than acquisitions of assets for consideration which is not, in the aggregate, in excess of $5,000,000; (g) incurrence of any indebtedness for borrowed money or issuance of any debt securities or assumption, guarantee or endorsement of the obligations of any person, or any loans or advances made, except for indebtedness incurred in the ordinary course of business and consistent with past practice and for other indebtedness with a maturity of not more than one year in a principal amount not, in the aggregate, in excess of $250,000; (h) contracts or agreements entered into requiring the payment, or receipt of payment, of consideration in excess of $100,000, or the modification, amendment or termination of any such existing contract or agreement, except, in each case, for contracts or agreements relating to the sale of products entered into in the ordinary course of business; (i) making or authorization of any capital expenditures individually in excess of $100,000 and in the aggregate in excess of $500,000, other than capital expenditures reflected in the capital expenditure budget for the fiscal year ending April 30, 2001 (which is set forth in Section 3.09(i) of the Company Disclosure Schedule); (j) waiver of any stock repurchase rights, acceleration, amendment or change in the period of exercisability of options or restricted stock, or the repricing of options granted under the Company Stock Option Plans or authorization of cash payments in exchange for any options granted under any such plans; (k) increase in, or agreement to increase, the compensation payable or to become payable to its officers or employees, except for increases in accordance with past practices in salaries or wages of A-12 employees of the Company or any Company Subsidiary who are not officers of the Company, or the grant of any rights to severance or termination pay to, or the entering into of any employment, consulting, termination, indemnification or severance agreement with, any director, officer or other employee of the Company or any Company Subsidiary, or the establishment, adoption, entering into or amendment of any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee; provided, however, that the foregoing provisions of this subsection shall not apply to any amendments to employee benefits plans described in section 3(3) of the Employee Retirement Security Act of 1974, as amended ("ERISA") that may be required by law; (l) action to make or change any material Tax (as defined in Section 3.16 below) or accounting election, change any annual accounting period, adopt or change any accounting method, file any amended Tax Return (as defined in Section 3.16 below), enter into any closing agreement, settle any Tax claim or assessment relating to the Company or any Company Subsidiary, surrender any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the Company or any Company Subsidiary, or take any other action or omit to take any action that would have the effect of increasing the Tax liability of the Company or any Company Subsidiary or Parent; (m) action taken, other than as required by GAAP or by the SEC, with respect to accounting principles or procedures, including, without limitation, any revaluation of assets; (n) initiation or settlement of any Legal Proceeding (as defined in Section 3.10 below); (o) acceleration (or grant of any right to acceleration, whether or not contingent), amendment or change in the period of exercisability or the vesting schedule of restricted stock or options granted under any option plan, employee stock plan or agreements or authorization of cash payments in exchange for any Company Stock Options granted under any of such plans, except as specifically required by the terms of such plans or any such agreements or any related agreements in effect as of the date of this Agreement and disclosed in the Company Disclosure Schedule; (p) action to cause, or failure to take any action to prevent, the accelerated vesting and exercisability of any Company Stock Options or Warrants; (q) (i) sale, assignment, lease, termination, abandonment, transfer, authorization to encumber or to otherwise dispose of or grant of any security interest in and to any item of the Company Intellectual Property, in whole or in part, (ii) grant of any license with respect to any Company Intellectual Property, other than license of Company software to customers of the Company or any Company Subsidiary to whom the Company or any Company Subsidiary licenses such Company software in the ordinary course of business, (iii) development, creation or invention of any Intellectual Property jointly with any third party, or (iv) disclosure, or authorization for disclosure, of any confidential Company Intellectual Property, unless such Company Intellectual Property is subject to a confidentiality or non- disclosure covenant protecting against disclosure thereof; or (r) any authorization, agreement or commitment by the Company or any Company Subsidiary to do any of the things described in this Section 3.09. SECTION 3.10 Absence of Litigation. There is no litigation, suit, claim, action, proceeding or investigation pending or, to the knowledge of the Company, threatened against the Company or any Company Subsidiary, or any property or asset of the Company or any Company Subsidiary, before any court, arbitrator or Governmental Entity, domestic or foreign ("Legal Proceeding"), that (i) could reasonably be expected to, individually or in the aggregate, materially affect the operations of the Company as currently conducted or result in damages or an award in excess of $500,000 or (ii) seeks to delay or prevent the consummation of the A-13 Merger or any other material transaction contemplated by this Agreement. None of the Company, the Company Subsidiaries, or the directors and officers of the Company and the Company Subsidiaries in their capacity as such, nor any material property or asset of the Company or any Company Subsidiary is subject to any continuing order of, consent decree, settlement agreement or other similar written agreement with, or, to the knowledge of the Company, continuing investigation by, any Governmental Entity, or any order, writ, judgment, injunction, decree, determination or award of any Governmental Entity or arbitrator. The Company does not have any plans to initiate any litigation, arbitration or other proceeding against any third party. SECTION 3.11 Employee Benefit Plans; Labor Matters. (a) Schedule 3.11(a) of the Company Disclosure Schedule lists (i) all employee benefit plans (as defined in section 3(3) of ERISA) and all bonus, stock option, stock purchase, stock appreciation right, restricted stock, phantom stock, incentive, deferred compensation, executive compensation, cafeteria benefit, dependent care, director or employee loan, fringe benefit, sabbatical, retiree medical or life insurance, disability, supplemental retirement, employment, severance, termination pay or other benefit plans, programs or arrangements, including (without limitation) any arrangements that contain change of control or vesting acceleration provisions, whether legally enforceable or not, to which the Company or any Company Subsidiary is a party, with respect to which the Company or any Company Subsidiary has any obligation or which are maintained, contributed to or sponsored by the Company or any Company Subsidiary for the benefit of any current or former employee, officer or director of the Company or any Company Subsidiary, (ii) each employee benefit plan for which the Company or any Company Subsidiary could incur liability under section 4069 of ERISA in the event such plan has been or were to be terminated, (iii) any plan in respect of which the Company or any Company Subsidiary could incur liability under section 4212(c) of ERISA, and (iv) any contracts or arrangements between the Company or any Company Subsidiary and any employee or former employee of the Company or any Company Subsidiary including, without limitation, any contracts, arrangements or understandings relating to a sale of the Company (collectively, the "Company Benefit Plans"). (b) Each Company Benefit Plan is in writing and the Company has made available to Parent a true and complete copy of each Company Benefit Plan and a true and complete copy of each material document, if any, prepared in connection with each such Company Benefit Plan, including, without limitation, (i) a copy of each trust or other funding arrangement, (ii) each summary plan description and summary of material modifications, (iii) the three (3) most recent annual reports (Form 5500 series and all schedules and financial statements attached thereto), if any, required under ERISA or the Code in connection with each Company Benefit Plan, (iv) the most recently received IRS determination letter for each such Company Benefit Plan, if such plan is intended to qualify under Section 401 of the Code, (v) any actuarial report and financial statement in connection with each such Company Benefit Plan for the three most recent plan years, (vi) any correspondence with the IRS or the Department of Labor with respect to each such Company Benefit Plan and (vii) each form of notice of grant or stock option agreement used to document Company Stock Options. Except as disclosed on Schedule 3.11(a) of the Company Disclosure Schedule, there are no other employee benefit plans, programs, arrangements or agreements, whether formal or informal, whether in writing or not, to which the Company or any Company Subsidiary is a party, with respect to which the Company or any Company Subsidiary has any obligation or which are maintained, contributed to or sponsored by the Company or any Company Subsidiary for the benefit of any current or former employee, officer or director of the Company or any Company Subsidiary. Neither the Company nor any Company Subsidiary has express or implied commitment, whether legally enforceable or not, (x) to create, incur liability with respect to, or cause to exist, any other employee benefit plan, program or arrangement, (y) to enter into any contract or agreement to provide compensation or benefits to any individual, or (z) to modify, change or terminate any Company Benefit Plan, other than with respect to a modification, change or termination required by ERISA or the Code. (c) None of the Company Benefit Plans is a multiemployer plan (within the meaning of section 3(37) or 4001(a)(3) of ERISA) (a "Multiemployer Plan") or a single employer pension plan (within the meaning of section 4001(a)(15) of ERISA) for which the Company or any Company Subsidiary could incur liability under section 4063 or 4064 of ERISA (a "Multiple Employer Plan"). None of the Company Benefit Plans provides A-14 for or promises retiree medical, disability or life insurance benefits to any current or former employee, officer or director of the Company or any Company Subsidiary other than procedures intended to comply with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"). Each of the Company Benefit Plans is subject only to the Laws of the United States or a political subdivision thereof. (d) None of the Company Benefit Plans provides for the payment of separation, severance, termination or similar-type benefits to any person or obligates the Company or any Company Subsidiary to pay separation, severance, termination or similar benefits solely or partially as a result of any transaction contemplated by this Agreement or as a result of a "change in ownership or control," within the meaning of such term under section 280G of the Code. No amounts payable under the Company Benefit Plans solely as a result of the consummation of the transactions contemplated by this Agreement will fail to be deductible for federal income tax purposes by virtue of section 280G of the Code. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby, either alone or together with another event, will (i) result in any payment (including, without limitation, severance, unemployment compensation, golden parachute, forgiveness of indebtedness or otherwise) becoming due under any Company Benefit Plan, (ii) increase any benefits otherwise payable under any Company Benefit Plan or other arrangement, (iii) result in the acceleration of the time of payment, vesting or funding of any benefits including, but not limited to, the acceleration of the vesting and exercisability of any Company Stock Options, or (iv) affect in any material respects any Company Benefit Plan's current treatment under any Laws including any tax or social contribution law. No Company Benefit Plan provides or reflects or represents any liability to provide retiree health to any person for any reason, except as may be required by COBRA or other applicable statute, and neither the Company nor any Company Subsidiary has represented, promised or contracted (whether in oral or written form) to any employee (either individually or to employees as a group) or any other person that such employee(s) or other person would be provided with retiree health, except to the extent required by statute. (e) Each Company Benefit Plan is now and always has been operated in accordance in all material respects with its terms and the requirements of all applicable Laws, regulations and rules promulgated thereunder including, without limitation, ERISA, COBRA, the Family Medical Leave Act of 1993, as amended ("FMLA"), and the Code. The Company and each Company Subsidiary has performed in all material respects all obligations required to be performed by it under, is not in any material respect in default under or in violation of, and has no knowledge of any default or violation by any party to, any Company Benefit Plan. No action, claim or proceeding is pending or, to the knowledge of the Company, threatened with respect to any Company Benefit Plan (other than claims for benefits in the ordinary course) and no fact or event exists that could give rise to any such action, claim or proceeding. Neither the Company nor any person that is a member of the same controlled group as the Company or under common control with the Company within the meaning of section 414 of the Code (each, an "ERISA Affiliate") is subject to any penalty or tax with respect to any Company Benefit Plan under section 402(i) of ERISA or sections 4975 through 4980 of the Code. Each Company Benefit Plan can be amended, terminated or otherwise discontinued as of or after the Effective Time, without material liability to the Parent, Company or any of its ERISA Affiliates (other than ordinary administration expenses). Neither the Company nor any Company Subsidiary nor any affiliate has, prior to the Effective Time and in any material respect, violated any of the health care continuation requirements of COBRA, the requirements of FMLA, the requirements of the Health Insurance Portability and Accountability Act of 1996, the requirements of the Women's Health and Cancer Rights Act of 1998, the requirements of the Newborns' and Mothers' Health Protection Act of 1996, or any amendment to each such act, or any similar provisions of state Law applicable to its employees. (f) Each Company Benefit Plan intended to qualify under section 401(a) or section 401(k) of the Code and each trust intended to qualify under section 501(a) of the Code has either received a favorable determination, opinion, notification or advisory letter from the IRS with respect to each such Company Benefit Plan as to its qualified status under the Code, including all amendments to the Code effected by the Tax Reform Act of 1986 and subsequent legislation, and no fact or event has occurred since the date of such determination letter or letters from the IRS to adversely affect the qualified status of any such Company Benefit Plan or the exempt A-15 status of any such trust, or has remaining a period of time under applicable Treasury regulations or IRS pronouncements in which to apply for such a letter and make any amendments necessary to obtain a favorable determination as to the qualified status of each such Company Benefit Plan. (g) Neither the Company nor any Company Subsidiary or ERISA Affiliate has any accumulated funding deficiency under section 412 of the Code or has incurred any liability under, arising out of or by operation of Title IV of ERISA (other than liability for premiums to the Pension Benefit Guaranty Corporation arising in the ordinary course), including, without limitation, any liability in connection with (i) the termination or reorganization of any employee benefit plan subject to Title IV of ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple Employer Plan, and no fact or event exists which could give rise to any such liability. (h) Neither the Company nor any Subsidiary has, since January 1, 1995, terminated, suspended, discontinued contributions to or withdrawn from any employee pension benefit plan, as defined in section 3(2) of ERISA, including, without limitation, any multiemployer plan, as defined in section 3(37) of ERISA. All contributions, premiums or payments required to be made or accrued with respect to any Company Benefit Plan have been made on or before their due dates. All such contributions have been fully deducted for income tax purposes and no such deduction has been challenged or disallowed by any Governmental Entity and, to the knowledge of the Company, no fact or event exists which could give rise to any such challenge or disallowance. (i) Except as set forth in Section 3.11(i) of the Company Disclosure Schedule, (i) neither the Company nor any Company Subsidiary is a party to any collective bargaining agreement or other labor union contract applicable to persons employed by the Company or any Company Subsidiary or in the Company's or any Company Subsidiary's business, and currently there are no organizational campaigns, petitions or other unionization activities seeking recognition of a collective bargaining unit which could affect the Company or any Company Subsidiary; (ii) there are no controversies, strikes, slowdowns or work stoppages pending or, to the best knowledge of the Company after reasonable due inquiry, threatened between the Company or any Company Subsidiary and any of its employees, and neither the Company nor any Company Subsidiary has experienced any such controversy, strike, slowdown or work stoppage within the past three years; (iii) neither the Company nor any Company Subsidiary has breached or otherwise failed to comply with the provisions of any collective bargaining or union contract and there are no grievances outstanding against the Company or any Company Subsidiary under any such agreement or; (iv) there are no unfair labor practice complaints pending against the Company or any Company Subsidiary before the National Labor Relations Board or any other Governmental Entity or any current union representation questions involving employees of the Company or any Company Subsidiary; (v) the Company and each Company Subsidiary is currently in compliance in all material respects with all applicable Laws relating to the employment of labor, including, without limitation, those related to wages, hours, worker classification, collective bargaining and the payment and withholding of Taxes and other sums as required by the appropriate Governmental Entity and has withheld and paid to the appropriate Governmental Entity or is holding for payment not yet due to such Governmental Entity all amounts required to be withheld from employees of the Company or any Company Subsidiary and is not liable for any arrears of wages, Taxes, penalties or other sums for failure to comply with any of the foregoing; (vi) the Company and each Company Subsidiary has paid in full to all employees or adequately accrued for in accordance with GAAP consistently applied all wages, salaries, commissions, bonuses, benefits and other compensation due to or on behalf of such employees; (vii) there is no claim with respect to payment of wages, salary or overtime pay that has been asserted or is now pending or threatened before any Governmental Entity with respect to any persons currently or formerly employed by the Company or any Company Subsidiary; (viii) neither the Company nor any Company Subsidiary is a party to, or otherwise bound by, any consent decree with, or citation by, any Governmental Entity relating to employees or employment practices; (ix) there is no charge or proceeding with respect to a violation of any occupational safety or health standards that has been asserted or is now pending or threatened with respect to the Company or any Company Subsidiary; and (x) there is no charge of discrimination in employment or employment practices, for any reason, including, A-16 without limitation, age, gender, race, religion or other legally protected category, which has been asserted or is now pending or threatened before the United States Equal Employment Opportunity Commission, or any other Governmental Entity with respect to the Company or any Company Subsidiary. (j) Section 3.11(j) of the Company Disclosure Schedule accurately sets forth the name and title of each employee of the Company with the title of vice president or higher. SECTION 3.12 Contracts. Neither the Company nor any Company Subsidiary is a party to, or is bound by, any: (a) employment, consulting, termination or severance agreement, contract or commitment with any officer, director or higher level employee, or member of the Company's Board of Directors; (b) agreement, contract or commitment containing any covenant limiting the right of the Company or any Company Subsidiary to engage in any line of business, acquire any property, distribute any product or provide any service (including geographic restrictions) or to compete with any person or granting any exclusive distribution rights; (c) agreement, contract or commitment (i) relating to the disposition or acquisition by the Company or any Company Subsidiary of assets not in the ordinary course of business, (ii) relating to the acquisition by the Company or any Company Subsidiary of any other entity, whether by means of merger, consolidation, purchase of assets or otherwise, or (iii) pursuant to which the Company or any Company Subsidiary has any ownership interest in any corporation, partnership, joint venture or other business enterprise (other than the Company Subsidiaries) that is material to the Company's business as currently conducted; (d) joint venture, stockholder, partnership or other agreement relating to any equity ownership or profit interest; (e) distributor, reseller or dealer agreement; (f) contract relating to any outstanding commitment for capital expenditures in excess of $500,000; (g) indenture, mortgage, promissory note, loan agreement, credit agreement, security agreement, guarantee of borrowed money or other agreement or instrument relating to the borrowing of money or extension of credit in excess of $250,000; (h) contract providing for an "earn-out" or other contingent payment by the Company or any Company Subsidiary involving more than $500,000 over the term of the contract; (i) contract or agreement which is terminable upon or prohibits a change of ownership or control of the Company or any Company Subsidiary; (j) contract providing for the indemnification of any officer, director, employee or agent; (k) contract providing for any obligation of the Company or any Company Subsidiary to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any Company Subsidiary or any other person; or (l) any other agreement, contract, license or commitment that is material to the business of the Company and the Company Subsidiaries, taken as a whole, as currently conducted or proposed to be conducted. Neither the Company nor any Company Subsidiary, nor to the Company's knowledge any other party to a Company Contract (as defined below), is in breach or violation of or default under in any material respect (nor does there exist any condition which with the passage of time or giving of notice or both would result in such a breach, violation or default), and neither the Company nor any Company Subsidiary has received written notice that it has breached, violated or defaulted under in any material respect, any of the material terms or conditions A-17 of any of the agreements, contracts or commitments to which the Company or any Company Subsidiary is a party or by which it is bound that (A) are required to be disclosed in the Company Disclosure Schedule pursuant to clauses (a) through (l) above, (B) are set forth in Section 3.14(a) of the Company Disclosure Schedule or (C) are required to be filed with any Company SEC Report (any such agreement, contract or commitment, a "Company Contract"), in each case, in such a manner as would permit any other party to cancel or terminate any such Company Contract, or would permit any other party to seek damages or other remedies (for any or all of such breaches, violations or defaults, in the aggregate). Each Company Contract (i) is valid and binding in all material respects on the Company or Company Subsidiary and, to the knowledge of the Company, on the other parties thereto and is in full force and effect and (ii) upon consummation of the transactions contemplated by this Agreement, shall continue in full force and effect without penalty or other consequence. The Company has delivered or made available to Parent accurate and complete copies of all Company Contracts, including all amendments thereto. SECTION 3.13 Environmental Matters. (a) The Company and the Company Subsidiaries (i) are in compliance in all material respects with all applicable Environmental Laws (as defined below), (ii) hold all material Environmental Permits (as defined below) and (iii) are in compliance in all material respects with their respective Environmental Permits. (b) Neither the Company nor any of the Company Subsidiaries has released, and to their knowledge no other person has released, in any material amount Hazardous Materials (as defined below) on any real property owned or leased by the Company or the Company Subsidiaries or, during their ownership or occupancy of such property, on any property formerly owned or leased by the Company or any Company Subsidiary. (c) Neither the Company nor any Company Subsidiary has received any written request for information, or been notified that it is a potentially responsible party, under CERCLA (as defined below), or any similar Law of any state, locality or any other jurisdiction. (d) Neither the Company nor any Company Subsidiary has entered into or agreed to any consent decree or order or is subject to any judgment, decree or judicial order relating to compliance with Environmental Laws, Environmental Permits or the investigation, sampling, monitoring, treatment, remediation, removal or cleanup of Hazardous Materials and, to the knowledge of Company, no investigation, litigation or other proceeding is pending or threatened in writing with respect thereto. (e) None of the real property currently or formerly owned or leased by the Company or any Company Subsidiary is listed or, to the knowledge of the Company, proposed for listing on the "National Priorities List" under CERCLA, as updated through the date of this Agreement, or any similar list of sites in the United States or any other jurisdiction requiring investigation or cleanup. For purposes of this Agreement: "CERCLA" means the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended as of the date hereof. "Environmental Laws" means any federal, state or local statute, law, ordinance, regulation, rule, code or order of the United States, or any other foreign or domestic or supranational jurisdiction and any enforceable judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to pollution or protection of the environment or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials, as in effect as of the date of this Agreement. "Environmental Permits" means any permit, approval, identification number, license and other authorization required under any applicable Environmental Law. A-18 "Hazardous Materials" means (i) any petroleum, petroleum products, by- products or breakdown products, radioactive materials, asbestos-containing materials or polychlorinated biphenyls or (ii) any chemical, material or substance defined or regulated as toxic or hazardous or as a pollutant or contaminant under any applicable Environmental Law. SECTION 3.14 Title to Properties; Absence of Liens and Encumbrances. (a) Neither the Company nor any of the Company Subsidiaries owns any real property. Section 3.14(a) of the Company Disclosure Schedule lists all real property leases to which the Company or any Company Subsidiary is a party and each amendment thereto. All such current leases are in full force and effect, are valid and effective in accordance with their respective terms, and, to the Company's knowledge, there is not, under any of such leases, any existing default or event of default (or event which with notice or lapse of time, or both, would constitute a default) that would give rise to a material claim. Other than leaseholds created under the real property leases identified in Section 3.14(a) of the Company Disclosure Schedule, the Company and the Company Subsidiaries have no leasehold interest in any real property. (b) Each of the Company and the Company Subsidiaries has good and valid title to personal property, used or held for use in its business, free and clear of any liens, pledges, charges, claims, security interests or other encumbrances of any sort ("Liens") except for Liens (i) imposed by Law in respect of obligations not yet due that are owed in respect of taxes or which otherwise are owed to carriers, warehouse persons or laborers, (ii) reflected in the financial statements contained in the Company SEC Reports and (iii) which are not material in character, amount or extent, and which do not materially detract from the value, or materially interfere with the present or currently contemplated use, of the property subject thereto or affected thereby. SECTION 3.15 Intellectual Property. (a) The Company and the Company Subsidiaries each own or are licensed for, and in any event possess sufficient and legally enforceable rights with respect to, all Company Intellectual Property (as defined below) relevant to their respective businesses, as conducted or as currently proposed to be conducted, without any conflict with or infringement or misappropriation of any rights or property of any person ("Infringement"). Such ownership, licenses and rights are exclusive except with respect to standard, generally commercially available, "off-the-shelf" third party products that are not part of any product, service or Intellectual Property offering of the Company or any Company Subsidiary that is currently available or currently in actual development. "Intellectual Property" means (i) inventions (whether or not patentable); trade names, trade and service marks, logos, domains, URLs, website addresses and other similar designations ("Marks"); works of authorship; mask works; data; technology, know-how, trade secrets, ideas and information; designs; formulas; algorithms; processes; schematics; computer software (in source code and/or object code form); and all other intellectual property of any sort ("Inventions") and (ii) patent rights; Mark rights; copyrights; mask work rights; sui generis database rights; trade secret rights; moral rights; and all other intellectual and industrial property rights of any sort throughout the world, and all applications, registrations, issuances and the like with respect thereto ("IP Rights"). "Company Intellectual Property" means all Intellectual Property that is used, exercised, or exploited ("Used") or proposed to be Used in any business of the Company or any Company Subsidiary, or that may be necessary to conduct any such businesses as conducted or proposed to be conducted. All copyrightable matter within Company Intellectual Property that is relevant to the Company or any Company Subsidiary has been created by persons who were employees of the Company or that Company Subsidiary at the time of creation and no third party has or will have "moral rights" or rights to terminate any assignment or license with respect thereto. (b) To the extent included in Company Intellectual Property (but excluding Intellectual Property licensed to the Company and the Company Subsidiaries only on a nonexclusive basis), Section 3.15(b) of the Company Disclosure Schedule lists (by name, number, jurisdiction and owner) all patents and patent applications; all registered and unregistered Marks; and all registered and material unregistered copyrights and mask works; and all other issuances, registrations, applications and the like with respect to those or any other IP Rights. All the foregoing (i) are valid, enforceable and subsisting, and (ii) along with all related filings, registrations and A-19 correspondence, have been provided to Parent. No cancellation, termination, expiration or abandonment of any of the foregoing (except natural expiration or termination at the end of the full possible term, including extensions and renewals) is anticipated by the Company or any Company Subsidiary. Neither the Company nor any Company Subsidiary is aware of any questions or challenges (or any potential basis therefor) with respect to the patentability or validity of any claims of any of the foregoing patents or patent applications or the validity (or any other aspect or status) of any such IP Rights. (c) Section 3.15(c) of the Company Disclosure Schedule lists: (i) all licenses, sublicenses and other agreements to which the Company or a Company Subsidiary is a party (or by which it or any Company Intellectual Property is bound or subject) and pursuant to which any person has been or may be assigned, authorized to Use, granted a Lien on, or given access to, any Company Intellectual Property (ii) all licenses, sublicenses and other agreements pursuant to which the Company or a Company Subsidiary has been or may be assigned or authorized to Use, or has or may incurred any obligation in connection with, (A) any third party Intellectual Property that may be influential in the development of, require payment with respect to, be incorporated or embodied in, or form all or any part of any product, service or Intellectual Property offering of the Company or any Company Subsidiary that is currently available or currently in actual development or (B) any Company Intellectual Property and (iii) each agreement pursuant to which the Company or a Company Subsidiary has deposited or is required to deposit with an escrowholder or any other person, all or part of the source code (or any algorithm or documentation contained in or relating to any source code) of any Company Intellectual Property ("Source Materials"). Neither the Company nor any of the Company Subsidiaries has entered into any agreement to indemnify, hold harmless or defend any other person with respect to any assertion of Infringement or warranting the lack thereof. (d) No event or circumstance has occurred, exists or is currently contemplated (including, without limitation, authorization, execution or delivery of this Agreement or the consummation of any of the transactions contemplated hereby) that (with or without notice or the lapse of time) could reasonably be expected to, result in (i) the breach or violation of any license, sublicense or other agreement required to be listed in Section 3.15(d) of the Company Disclosure Schedule or (ii) the loss or expiration of any right or option by the Company or any of its Subsidiaries (or the gain thereof by any third party) under any such license, sublicense or other agreement or (iii) the release, disclosure or delivery to any third party of any part of the Source Materials. Further, the Company and each of the Company Subsidiaries make all the same representations and warranties with respect to each license, sublicense and agreement listed on Section 3.15 of the Company Disclosure Schedule as are made with respect to Company Contracts elsewhere in this Agreement. (e) There is, to the knowledge of the Company and the Company Subsidiaries, no unauthorized Use, disclosure, or Infringement of any Company Intellectual Property by any third party, including, without limitation, any employee or former employee of the Company or any of the Company Subsidiaries. Neither the Company nor any Company Subsidiary has brought or threatened any action, suit or proceeding against any third party for any Infringement of any Company Intellectual Property or any breach of any license, sublicense or agreement involving Company Intellectual Property. (f) The Company and the Company Subsidiaries have taken all commercially reasonable and appropriate steps to protect and preserve the confidentiality of all Company Intellectual Property not otherwise disclosed in published patents or patent applications or registered copyrights ("Company Confidential Information"). All use by and disclosure to employees or others of Company Confidential Information has been pursuant to the terms of valid and binding written confidentiality and nonuse/restricted-use agreements or agreements that contain similar obligations. Except as set forth in Section 3.15(f) of the Company Disclosure Schedule, none of the Company or any of the Company Subsidiaries has disclosed or delivered to any third party, or permitted the disclosure or delivery to any escrow agent or other person any part of the Source Materials. (g) Each current and former employee and contractor of the Company or any Company Subsidiary has executed and delivered (and to the Company's and the Company Subsidiaries' knowledge, is in compliance A-20 with) an agreement in substantially the form of the Company's standard Proprietary Information and Inventions Agreement (in the case of an employee) or Consulting Agreement (in the case of a contractor) (which agreement provides valid written assignments to the Company or such Company Subsidiary of all title and rights to any Company Intellectual Property conceived or developed thereunder but not already owned by the Company or a Company Subsidiary by operation of Law). (h) None of the Company or any of the Company Subsidiaries has received any communication alleging or suggesting that or questioning whether the Company or any Company Subsidiary has been or may be engaged in, liable for or contributing to any Infringement, nor does the Company or any Company Subsidiary have any reason to expect that any such communication will be forthcoming. (i) None of the Company or the Company Subsidiaries is aware that any of its employees or contractors is obligated under any agreement, commitments, judgment, decree, order or otherwise (an "Employee Obligation") that could reasonably be expected to interfere with the use of his or her best efforts to promote the interests of the Company and the Company Subsidiaries or that could reasonably be expected to conflict with any of their businesses as conduct or currently proposed to be conducted. Neither the execution nor delivery of this Agreement nor the conduct of the Company's business as conducted or currently proposed to be conducted, will, to the Company's or any Company Subsidiary's knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any Employee Obligation. To each of the Company's and the Company Subsidiaries' knowledge, none of the Company or any of the Company Subsidiaries is Using (i) any Inventions of any of their past or present employees or contractors (or people currently intended to be hired) made prior to or outside the scope of their employment by the Company or such Company Subsidiary or (ii) any confidential information or trade secrets of any former employer of any such person. (j) All Software is free of viruses, worms, trojan horses and other infections or harmful routines and does not contain any bugs, errors, or problems that, to the Company's or any Company Subsidiary's knowledge, could reasonably be expected to disrupt its operation or have an adverse impact on the operation of other software programs or operating systems. "Software" means software, programs, databases and related documentation, in any form (including Internet sites, Internet content and links) that is (i) material to the operation of the business of the Company or any Company Subsidiary, including, but not limited to, that operated by the Company or any Company Subsidiary on its web sites or used by the Company or any Company Subsidiary in connection with processing customer orders, storing customer information, or storing or archiving data, or (ii) manufactured, distributed, sold, licensed or marketed by the Company or any Company Subsidiary. (k) The Company and the Company Subsidiaries have obtained all approvals and agreements necessary or appropriate (including, without limitation, assurances from customers regarding further export) for exporting any Company Intellectual Property outside the United States and importing any Company Intellectual Property into any country in which they are or have been disclosed, sold or licensed for Use, and all such export and import approvals in the United States and throughout the world are valid, current, outstanding and in full force and effect. SECTION 3.16 Taxes. (a) All Tax (as defined below) returns, statements, reports, declarations and other forms and documents (including, without limitation, estimated Tax returns and reports and material information returns and reports) required to be filed with any Tax Authority (as defined below) with respect to any Taxable (as defined below) period ending on or before the Closing, by or on behalf of the Company (collectively, "Company Tax Returns" and individually a "Company Tax Return"), have been or will be completed and filed when due (including any extensions of such due date) and all amounts shown due on such Company Tax Returns on or before the Effective Time have been or will be paid on or before such date. The Company Financial Statements (i) fully accrue all actual and contingent liabilities for Taxes (as defined below) with respect to all periods through the A-21 date of the Company Balance Sheet, and the Company has not and will not incur any Tax liability in excess of the amount reflected (excluding any amount thereof that reflects timing differences between the recognition of income for purposes of GAAP and for Tax purposes) on the Company Balance Sheet with respect to such periods, and (ii) properly accrues in accordance with GAAP all material liabilities for Taxes payable after the date of the Company Balance Sheet, with respect to all transactions and events occurring on or prior to such date. All information set forth in the notes to the Company Financial Statements relating to Tax matters is true, complete and accurate in all material respects. No material Tax liability since the date of the Company Balance Sheet has been incurred by the Company other than in the ordinary course of business and adequate provision has been made by the Company for all Taxes since that date in accordance with GAAP on at least a quarterly basis. (b) The Company has withheld and paid to the applicable financial institution or Tax Authority all amounts required to be withheld. The Company (or any member of any affiliated or combined group of which the Company has been a member) has not granted any extension or waiver of the limitation period applicable to any Company Tax Returns that is still in effect and there is no material claim, audit, action, suit, proceeding, or (to the knowledge of the Company) investigation now pending or threatened against or with respect to the Company in respect of any Tax or assessment. There are no liens for Taxes (other than for current Taxes not yet due and payable) upon the assets of the Company. The Company has never been a member of an affiliated group of corporations, within the meaning of section 1504 of the Code other than the affiliated group of corporations of which the Company is the common parent corporation. Neither the Company nor any person on behalf of the Company has entered into or will enter into any agreement or consent pursuant to the collapsible corporation provisions of section 341(f) of the Code (or any corresponding provision of state, local or foreign income tax Law) or agreed to have section 341(f)(2) of the Code (or any corresponding provision of state, local or foreign income tax Law) apply to any disposition of any asset owned by the Company. There is no agreement, contract or arrangement to which the Company is a party that could, individually or collectively, result in the payment of any amount that would not be deductible by reason of sections 280G (as determined without regard to section 280G(b)(4)), 162 (other than 162(a)) or 404 of the Code. The Company is not a party to or bound by any Tax indemnity, Tax sharing or Tax allocation agreement (whether written or unwritten or arising under operation of federal Law as a result of being a member of a group filing consolidated Company Tax Returns, under operation of certain state Laws as a result of being a member of a unitary group, or under comparable Laws of other states or foreign jurisdictions) which includes a party other than the Company nor does the Company owe any amount under any such agreement. The Company is not, and has not been, a United States real property holding corporation (as defined in section 897(c)(2) of the Code) during the applicable period specified in section 897(c)(1)(A)(ii) of the Code. Other than by reason of the Merger, the Company has not been and will not be required to include any material adjustment in Taxable income for any Tax period (or portion thereof) pursuant to section 481 or 263A of the Code or any comparable provision under state or foreign Tax Laws as a result of transactions, events or accounting methods employed prior to the Merger. (c) For purposes of this Agreement, the following terms have the following meanings: "Tax" (and, with correlative meaning, "Taxes" and "Taxable") means any and all taxes including, without limitation, (i) any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, value added, net worth, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or any penalty, addition to tax or additional amount imposed by any Governmental Entity responsible for the imposition of any such tax (domestic or foreign) (a "Tax Authority"), (ii) any liability for the payment of any amounts of the type described in (i) as a result of being a member of an affiliated, consolidated, combined or unitary group for any Taxable period or as the result of being a transferee or successor thereof and (iii) any liability for the payment of any amounts of the type described in (i) or (ii) as a result of any express or implied obligation to indemnify any other person. As used in this Section 3.16, the term "the Company" means the Company and any entity included in, or required under GAAP to be included in, any of the Company Financial Statements. A-22 SECTION 3.17 Status as a Reorganization. Neither the Company nor any of its affiliates has taken or agreed to take any action that would prevent the Merger from constituting a reorganization within the meaning of section 368(a) of the Code. The Company is not aware of any agreement, plan or other circumstance that would prevent the Merger from qualifying as a reorganization within the meaning of section 368(a) of the Code. SECTION 3.18 Affiliate Transactions. Except as disclosed in the Company SEC Reports, no event has occurred that would be required to be reported currently by the Company as a Certain Relationship or Related Transaction pursuant to Item 404 of Regulation S-K promulgated under the Securities Act. SECTION 3.19 Insurance. The Company has provided or made available to Parent true, correct and complete copies of all policies of insurance to which each of the Company and the Company Subsidiaries are a party or are a beneficiary or named insured. There is no material claim pending under any of such policies as to which coverage has been questioned, denied or disputed by the underwriters of such policies. All premiums due and payable under all such policies have been paid and the Company is otherwise in compliance in all material respects with the terms of such policies. The Company has no knowledge of any threatened termination of, or material premium increase with respect to, any of such policies. SECTION 3.20 Board Approval; Vote Required. (a) The Board of Directors of the Company, by resolutions duly adopted by unanimous vote of those voting (who constituted all of the directors then in office) at a meeting duly called and held and not subsequently rescinded or modified in any way (the "Company Board Approval"), has duly (i) determined that this Agreement, the Company Stock Option Agreement and the Merger are advisable, fair to and in the best interests of the Company and its stockholders, (ii) approved this Agreement and the Merger, (iii) recommended that the stockholders of the Company adopt and approve this Agreement and approve the Merger and (iv) confirmed that the Company Stock Options will not accelerate as a result of the Merger. The Company has no stockholders' rights plan or similar plan in effect. (b) The only vote of the holders of any class or series of stock of the Company necessary to approve the Merger, and adopt this Agreement and the other transactions contemplated by this Agreement is the Company Stockholders' Vote. SECTION 3.21 State Takeover Statutes. The Board of Directors of the Company has taken all actions so that the restrictions contained in Section 203 of the DGCL applicable to a "business combination" (as defined in Section 203) will not apply to the execution, delivery or performance of this Agreement, the Company Stock Option Agreement and the Company Voting Agreements or the consummation of the Merger or the other transactions contemplated by this Agreement. No other state takeover statute is applicable to this Agreement, the Company Stock Option Agreement, the Company Voting Agreements, the Merger or the other transactions contemplated by this Agreement. SECTION 3.22 Opinion of Financial Advisor. The Company has been advised in writing by its financial advisor, Morgan Stanley & Co. Incorporated (the "Company Financial Advisor"), that in its opinion, as of the date of this Agreement, the Exchange Ratio is fair to the holders of shares of Company Common Stock from a financial point of view, and the Company shall provide to Parent a copy of such opinion promptly after the date of this Agreement. SECTION 3.23 Brokers. No broker, finder or investment banker (other than the Company Financial Advisor) is entitled to any brokerage, finder's or other fee or commission in connection with the Merger or the other transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company. The Company has delivered to Parent true and complete copies of all agreements under which any such fees or expenses payable and all indemnification and other agreements related to the engagement of the persons to whom such fees are payable. A-23 SECTION 3.24 Customers; Suppliers. (a) No customer that individually accounted for more than five percent (5%) of the Company's consolidated gross revenues during the 12 month period preceding the date of this Agreement has, within the last 12 months, canceled or otherwise terminated, or made any written threat to the Company or any Company Subsidiary to cancel or otherwise terminate, its relationship with the Company or such Company Subsidiary, or decreased materially its usage of the services or products of the Company or such Company Subsidiary. (b) No supplier of the Company or any of the Company Subsidiaries that individually accounted for more than five percent (5%) of the Company's consolidated expenditures during the 12 month period preceding the date of this Agreement has, within the last 12 months, canceled or otherwise terminated, or made any written threat to the Company or such Company Subsidiary to cancel or otherwise terminate, its relationship with the Company or such Company Subsidiary, or has decreased materially its services or supplies to the Company or such Company Subsidiary. SECTION 3.25 Restrictions on Business Activities. There is no agreement, commitment, judgment, injunction, order or decree binding upon the Company or any Company Subsidiary or to which the Company or any Company Subsidiary is a party which has or could reasonably be expected to have the effect of prohibiting or materially impairing any business practice material to the Company or any Company Subsidiary, any acquisition of property by the Company or any Company Subsidiary or the conduct of business by the Company or any Company Subsidiary as currently conducted. ARTICLE IV Representations and Warranties of Parent and Merger Sub Parent and Merger Sub hereby represent and warrant to the Company that the statements contained in this Article IV are true and correct except as set forth in the disclosure schedule delivered by Parent to the Company concurrently with the execution of this Agreement (the "Parent Disclosure Schedule"). The Parent Disclosure Schedule shall be arranged according to specific sections in this Article IV and shall provide exceptions to, or otherwise qualify in reasonable detail, only the corresponding section in this Article IV and any other section in this Article IV where it is reasonably clear, upon a reading of such disclosure without any independent knowledge on the part of the reader regarding the matter disclosed, that the disclosure is intended to apply to such other section. SECTION 4.01 Organization and Qualification; Subsidiaries. Section 4.01 of the Parent Disclosure Schedule sets forth the jurisdiction of incorporation of Parent and each subsidiary of Parent required to be disclosed in the Parent SEC Reports (as defined in Section 4.06(a) below) (the "Parent Subsidiaries"). Each of Parent and the Parent Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of such jurisdiction and has all requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the failure to obtain such governmental approvals has not had, and could not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect (as defined below). Each of Parent and the Parent Subsidiaries is duly qualified or licensed as a foreign corporation or organization to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified or licensed and in good standing that have not had, and could not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. The term "Parent Material Adverse Effect" means any changes in or effects on the business of Parent or any Parent Subsidiary that, individually or in the aggregate, are or are substantially likely to be materially adverse to the business, financial condition, assets (tangible or intangible), liabilities (including contingent liabilities), or results of operations of Parent and the Parent Subsidiaries, taken as a whole, except for any such changes or effects principally resulting from or principally arising in connection with (i) any changes affecting the respective A-24 industries in which Parent and the Parent Subsidiaries operate that do not have a disproportionate impact on Parent and the Parent Subsidiaries, taken as a whole, (ii) any changes in general economic conditions that do not disproportionately impact Parent and the Parent Subsidiaries, taken as a whole, (iii) in and of itself, any change in the trading price of the Parent Common Shares, (iv) in and of itself, a failure by Parent to meet the revenue or earnings predictions of equity analysts for any period ending (or for which earnings are released) on or after the date of this Agreement and prior to the Closing Date, (v) the taking of any action expressly required by the terms of this Agreement or (vi) any adverse change, effect, event, occurrence, state of facts or development to the extent primarily attributable to the announcement or pendency of the Merger; provided, however, that Parent shall bear the burden of showing that such change, effect, event, occurrence, state of fact or development which Parent claims does not constitute a Parent Material Adverse Effect is primarily attributable to the announcement or pendency of the Merger. SECTION 4.02 Certificate of Incorporation and Bylaws. Parent has heretofore made available to the Company a complete and correct copy of the Certificate of Incorporation and Bylaws, each as amended to date, of Parent and Merger Sub. Such Certificates of Incorporation and Bylaws are in full force and effect. Neither Parent nor Merger Sub is in violation of any of the provisions of its Certificate of Incorporation or Bylaws. SECTION 4.03 Capitalization. (a) The authorized capital stock of Parent consists of (i) 600,000,000 Parent Common Shares, and (ii) 20,000,000 shares of Preferred Stock, par value $0.002 per share (the "Parent Preferred Shares"). (b) As of January 25, 2001, (i) 251,449,558 Parent Common Shares were issued and outstanding, all of which are duly authorized, validly issued, fully paid and non-assessable, (ii) no Parent Common Shares are held in the treasury of Parent or by Parent Subsidiaries, (iii) an aggregate of 52,397,269 Parent Common Shares are reserved for issuance pursuant to Parent's 1999 Equity Incentive Plan, 1999 Directors' Stock Option Plan, Trading Dynamics 1998 Stock Plan, Trading Dynamics 1999 Stock Plan, Tradex Technologies, Inc. 1997 Employee Stock Option Plan, Tradex Technologies, Inc. 1999 Employee Stock Option/Stock Issuance Plan and SupplierMarket 1999 Stock Option Plan (collectively, the "Parent Stock Option Plans"), of which an aggregate of 45,609,005 shares are subject to outstanding, unexercised options, and (iv) 17,484,977 Parent Common Shares are reserved for issuance pursuant to Parent's 1999 Employee Stock Purchase Plan (the "Parent Purchase Plan"), of which 17,484,977 shares are available for issuance, (v) 13,068,572 shares were reserved for issuance and subject to outstanding, unexercised warrants and (vi) no Parent Preferred Shares were issued or outstanding. (c) Except for (i) options granted pursuant to the Parent Stock Option Plans, (ii) options assumed by Parent in previous acquisitions, (iii) warrants disclosed in the Parent SEC Reports that have not been subsequently cancelled and (iv) Parent Common Shares reserved for issuance under the Parent Purchase Plan, there are no options, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of Parent or any Parent Subsidiary, or conditionally or absolutely obligating Parent or any Parent Subsidiary to issue or sell any shares of capital stock of, or other equity interests in, Parent or any Parent Subsidiary. All Parent Common Shares subject to issuance as aforesaid, upon issuance on the terms and conditions (whether conditional or absolute) specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. There are no outstanding obligations of Parent or any Parent Subsidiary to repurchase, redeem or otherwise acquire any Parent Common Shares or any capital stock or other equity interest of any Parent Subsidiary. Each outstanding share of capital stock or other equity interest of each Parent Subsidiary is duly authorized, validly issued, fully paid and non-assessable, and each such share or other equity interest owned by Parent or another Parent Subsidiary is free and clear of all security interests, liens, claims, pledges, options, rights of first refusal, agreements, limitations on Parent's or such other Parent Subsidiary's voting rights, charges and other encumbrances of any nature whatsoever, except where failure to own such shares free and clear would not, individually or in the aggregate, have a Parent Material Adverse Effect. A-25 (d) The authorized stock of Merger Sub consists of 1,000 shares of common stock, par value $0.001 per share, all of which are duly authorized, validly issued, fully paid and nonassessable and free of any preemptive rights in respect thereof, and all of which are owned by Parent. The Parent Common Shares to be issued pursuant to the Merger in accordance with Section 2.01(a)(i) will be duly authorized, validly issued, fully paid and non-assessable and not subject to preemptive rights created by statute, Parent's Certificate of Incorporation or Bylaws or any agreement to which Parent is a party or is bound and (ii) will, when issued, be registered under the Securities Act and the Exchange Act and registered or exempt from registration under applicable Blue Sky Laws. SECTION 4.04 Authority Relative to This Agreement. Each of Parent and Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement and the Company Stock Option Agreement, and, subject to the Parent Stockholder Approval (as defined in Section 4.10 below), to perform its obligations hereunder and thereunder and to consummate the Merger and the other transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Company Stock Option Agreement by each of Parent and Merger Sub and the consummation by each of Parent and Merger Sub of the Merger and the other transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of Parent or Merger Sub are necessary to authorize this Agreement and the Company Stock Option Agreement or to consummate the Merger and the other transactions so contemplated (other than, with respect to the Merger and this Agreement, the Parent Stockholder Approval, the Merger Sub Stockholder Approval (as each is defined in Section 4.10 below) and the filing and recordation of appropriate merger documents as required by the DGCL). This Agreement and the Company Stock Option Agreement have been duly and validly executed and delivered by each of Parent and Merger Sub and, assuming the due authorization, execution and delivery by the Company, constitute legal, valid and binding obligations of each of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors' rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). SECTION 4.05 No Conflict; Required Filings and Consents. (a) The execution and delivery of this Agreement and the Company Stock Option Agreement by each of Parent and Merger Sub do not, and the performance of this Agreement and the Company Stock Option Agreement by each of Parent and Merger Sub will not, (i) conflict with or violate the Certificate of Incorporation or Bylaws of Parent or any equivalent organizational documents of any Parent Subsidiary, (ii) assuming that all consents, approvals, authorizations and other actions described in Section 4.05(b) have been obtained and all filings and obligations described in Section 4.05(b) have been made or complied with, conflict with or violate any Law applicable to Parent or any Parent Subsidiary or by which any property or asset of Parent or any Parent Subsidiary is bound or affected, or (iii) conflict with, result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or require any payment under, or result in the creation of a lien, claim, security interest or other charge or encumbrance on any property or asset of Parent or any Parent Subsidiary pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Parent or any Parent Subsidiary is a party or by which any asset of Parent or any Parent Subsidiary is bound or affected except, with respect to clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences that could not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. (b) The execution and delivery of this Agreement by each of Parent and Merger Sub do not, and the performance of this Agreement by each of Parent and Merger Sub will not, require any consent, approval, order, authorization, registration or permit of, or filing with or notification to, any Governmental Entity, except A-26 (i) for applicable requirements, if any, of the Exchange Act, Blue Sky Laws, the Securities Act, The Nasdaq National Market, state takeover laws, the pre- merger notification requirements of the HSR Act, the filing and recordation of appropriate merger documents as required by the DGCL, and as set forth in Section 4.05(b) of the Parent Disclosure Schedule and (ii) for such other consents, approvals, orders, authorizations, registrations, permits, filings or notifications which if not obtained or made could not be material to the Company or Parent or prevent or materially delay the consummation of the transactions contemplated by this Agreement. SECTION 4.06 SEC Filings; Financial Statements. (a) Parent has filed all forms, reports and documents required to be filed by it with the SEC since April 23, 1999 (collectively, the "Parent SEC Reports"). As of the respective dates they were filed (and if amended or superseded by a filing prior to the date of this Agreement then on the date of such filing), (i) the Parent SEC Reports complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and (ii) none of the Parent SEC Reports 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 made therein, in the light of the circumstances under which they were made, not misleading. No Parent Subsidiary is required to file any form, report or other document with the SEC. (b) Each of the consolidated financial statements (including, in each case, any notes thereto) contained in the Parent SEC Reports was prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q or 8-K promulgated by the SEC) and each presents fairly, in all material respects, the consolidated financial position, results of operations and cash flows of Parent and the consolidated Parent Subsidiaries as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments which could not reasonably be expected to, individually or in the aggregate, have a Parent Material Adverse Effect). The balance sheet of Parent contained in the Parent SEC Reports as of September 30, 2000 is hereinafter referred to as the "Parent Balance Sheet." (c) Parent has heretofore furnished to the Company a complete and correct copy of any amendments or modifications, which have not yet been filed with the SEC but which are required to be filed, to agreements, documents or other instruments which previously had been filed by Parent with the SEC pursuant to the Securities Act or the Exchange Act. SECTION 4.07 Tax Matters. To the knowledge of Parent, neither Parent nor any of its affiliates has taken or agreed to take any action that would prevent the Merger from qualifying as a reorganization within the meaning of section 368(a) of the Code. Parent is not aware of any agreement, plan or other circumstance that would prevent the Merger from qualifying as a reorganization within the meaning of section 368(a) of the Code. SECTION 4.08 Operations of Merger Sub. Merger Sub is a direct, wholly owned subsidiary of Parent, was formed solely for the purpose of engaging in the transactions contemplated by this Agreement, has engaged in no other business activities and has conducted its operations only as contemplated by this Agreement. SECTION 4.09 Brokers. No broker, finder or investment banker (other than Thomas Weisel Partners) is entitled to any brokerage, finder's or other fee or commission in connection with the Merger or the other transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent. SECTION 4.10 Board Approval; Vote Required. (a) The Board of Directors of Parent, by resolutions duly adopted at a meeting duly called and held and not subsequently rescinded or modified in any way (the "Parent Board Approval"), has duly (i) approved this Agreement and the Merger and (ii) recommended that the stockholders of Parent approve the issuance of Parent Common Shares in connection with the Merger. A-27 (b) The affirmative vote at the Parent Stockholders' Meeting (as defined in Section 6.01(a) below) of a majority of the total votes cast in person or by proxy on the proposal to approve the issuance of Parent Common Shares pursuant to the Merger (the "Parent Stockholder Approval") is the only vote of the holders of any class or series of Parent's capital stock necessary to approve the transactions contemplated by this Agreement. (c) The Board of Directors of Merger Sub, pursuant to resolutions duly adopted by written consent of the sole director and not subsequently rescinded or modified in any way, has duly approved this Agreement and the Merger. (d) Parent, as sole stockholder of Merger Sub, pursuant to resolutions duly adopted by written consent and not subsequently rescinded or modified in any way, has duly approved this Agreement and the Merger (the "Merger Sub Stockholder Approval"). SECTION 4.11 Undisclosed Liabilities. Except for (a) liabilities that are fully reflected or reserved against on the Parent Balance Sheet, or in the notes thereto, and (b) liabilities incurred in the ordinary course of business consistent with past practice that could not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect, since the date of the Parent Balance Sheet, Parent has not incurred any liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due). SECTION 4.12 Absence of Certain Changes or Events. Since September 30, 2000, there has not been any Parent Material Adverse Effect. SECTION 4.13 Absence of Litigation. There is no litigation, suit, claim, action, proceeding or investigation pending or, to the knowledge of Parent or Merger Sub, threatened against Parent or Merger Sub, or any property or asset of Parent or Merger Sub, before any court, arbitrator or Governmental Entity, domestic or foreign, that (i) could reasonably be expected to, individually or in the aggregate, have a Parent Material Adverse Effect or (ii) seeks to delay or prevent the consummation of the Merger or any other material transaction contemplated by this Agreement. Neither Parent nor Merger Sub nor any material property or asset of Parent or Merger Sub is subject to any continuing order of, consent decree, settlement agreement or other similar written agreement with, or, to the knowledge of Parent, continuing investigation by, any Governmental Entity, or any order, writ, judgment, injunction, decree, determination or award of any Governmental Entity or arbitrator that in any case could reasonably be expected to have a Parent Material Adverse Effect. SECTION 4.14 Intellectual Property. (a) Parent and the Parent Subsidiaries each own or are licensed for, and in any event possess sufficient and legally enforceable rights with respect to, all Parent Intellectual Property (as defined below) relevant to their respective businesses as currently conducted without any Infringement, except to the extent that the failure to have such rights has not had and could not reasonably be expected to have a Parent Material Adverse Effect and except for such items as have yet to be conceived or developed or that may reasonably be expected to be available for licensing on reasonable terms from third parties. With respect to patent rights, moral rights and Mark rights, the representations and warranties of this Section 4.14(a) are made only to Parent's and the Parent Subsidiaries' knowledge. (b) Since the date of the Parent Balance Sheet, and prior the date of this Agreement, there has been no sale, assignment, lease, termination, abandonment, transfer, authorization to encumber or to otherwise dispose of or grant of any security interest in and to any item of Parent Intellectual Property (as defined below), in whole or in part, except for such sales, assignments, leases, terminations, abandonment, transfers, authorizations to encumber or dispose of or grants of security interests that could not reasonably be expected to have a Parent Material Adverse Effect. (c) For purposes of this Agreement, "Parent Intellectual Property" means all Intellectual Property that is Used in any business of Parent or any Parent Subsidiary, or that may be necessary to conduct any such businesses. A-28 SECTION 4.15 Opinion of Financial Advisor. Parent's Board of Directors has received an opinion from Thomas Weisel Partners, dated as of the date hereof, to the effect that as of the date hereof, the Exchange Ratio is fair to Parent from a financial point of view. SECTION 4.16 Taxes. All Tax (as defined in Section 3.16) returns, statements, reports, declarations and other forms and documents (including, without limitation, estimated Tax returns and reports and material information returns and reports) required to be filed with any Tax Authority (as defined in Section 3.16) with respect to any Taxable (as defined in Section 3.16) period ending on or before the Closing, by or on behalf of the Parent (collectively, "Parent Tax Returns" and individually a "Parent Tax Return"), have been or will be completed and filed when due (including any extensions of such due date) and all amounts shown due on such Parent Tax Returns on or before the Effective Time have been or will be paid on or before such date, except where the failure to complete and file such Parent Tax Returns or to pay such amounts shown would not have a Parent Material Adverse Effect. Except as would not have a Parent Material Adverse Effect, the consolidated financial statements of Parent contained in the Parent SEC Reports (i) fully accrue all actual and contingent liabilities for Taxes (as defined in Section 3.16) with respect to all periods through the date of the Parent Balance Sheet. All information set forth in the notes to the consolidated financial statements of Parent contained in the Parent SEC Reports relating to Tax matters is correct and complete in all material respects. Parent has withheld and paid to the applicable financial institution or Tax Authority all amounts required to be withheld. As used in this Section 4.16, the term "Parent" means Parent and any entity included in, or required under GAAP to be included in, any of the consolidated financial statements of Parent contained in the Parent SEC Reports. ARTICLE V Conduct of Business Pending the Merger SECTION 5.01 Conduct of Business by the Company Pending the Merger. Conduct of Business by the Company Pending the Merger. The Company agrees that, between the date of this Agreement and the Effective Time, except as set forth in Section 5.01 of the Company Disclosure Schedule or as specifically contemplated by any other provision of this Agreement, unless Parent shall otherwise consent in writing: (a) the businesses of the Company and the Company Subsidiaries shall be conducted only in, and the Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and (b) the Company shall use its commercially reasonable efforts to preserve substantially intact the business organization of the Company and the Company Subsidiaries, to keep available the services of the current officers, employees and consultants of the Company and the Company Subsidiaries and to preserve the current relationships of the Company and the Company Subsidiaries with customers, suppliers, licensors, licensees, alliance partners and other persons with which the Company or any Company Subsidiary has business relations. By way of amplification and not limitation, except as contemplated by this Agreement or as set forth in Section 5.01 of the Company Disclosure Schedule, the Company shall not, and shall not permit any Company Subsidiary to, between the date of this Agreement and the Effective Time, directly or indirectly do, any of the following without the prior written consent of Parent: (1) issue, deliver or sell, or authorize or propose the issuance, delivery or sale of, any shares of capital stock of any class or any securities convertible into, or any right, warrants, calls, subscriptions or options to acquire, any such shares or convertible securities, or any other ownership interest other than (i) the issuance of shares of Company Common Stock upon the exercise of Company Stock Options outstanding on the date of this Agreement under the Company Stock Option Plan or pursuant to the Company Purchase Plan, (ii) the issuance of shares of Company Common Stock upon the exercise of Warrants outstanding on the date of this Agreement or (iii) the grant of options to purchase up to A-29 1,200,000 shares of Company Common Stock in the aggregate, but not to exceed 100,000 shares of Company Common Stock to any individual optionee, to newly hired officers, employees and consultants in the ordinary course of business consistent with past practice, in each case at an exercise price no less than fair market value; provided, however, that such 1,200,000 share limitation shall not apply to shares of Company Common Stock returned to any Company Stock Option Plan as a result of option terminations or repurchases of unvested shares; (2) take any of the actions described in clauses (b) through (q) of Section 3.09 hereof; (3) intentionally take any action (or intentionally fail to take any action) to cause the Company's representations and warranties set forth in Article III to be untrue in any respect; or (4) agree in writing or otherwise to take any of the actions described in Section 5.01(b)(1) through (3) above. SECTION 5.02 Conduct of Business by Parent. Parent agrees that, between the date of this Agreement and the Effective Time, except as set forth in Section 5.02 of the Parent Disclosure Schedule or as specifically contemplated by any other provision of this Agreement, unless the Company shall otherwise consent in writing, Parent shall not: (a) intentionally take any action that could reasonably be expected to cause the Merger to fail to qualify as a "reorganization" under Section 368(a) of the Code, whether or not otherwise permitted by the provisions of this Article V or fail to take any action reasonably necessary to cause the Merger to so qualify; (b) declare, set aside or pay any dividends on or make any other distributions in cash in respect of any capital stock; (c) cause, permit or propose any amendments to its Certificate of Incorporation or Bylaws (or similar governing instruments of any of its subsidiaries), except as contemplated by this Agreement, that would have an adverse effect on the rights of the holders of Parent Shares (including Parent Shares to be issued in the Merger); (d) intentionally take any action (or intentionally fail to take any action) to cause Parent's representations and warranties in Article IV to be untrue in any material respect; or (e) agree in writing or otherwise to take any of the actions described in Section 5.02(a) through (d) above. SECTION 5.03 Notification of Certain Matters. Parent shall give prompt notice to the Company, and the Company shall give prompt notice to Parent, of (a) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of which would be likely to cause (i) any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect or (ii) any covenant, condition or agreement contained in this Agreement not to be complied with or satisfied in any material respect and (b) any failure or inability of Parent or the Company, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 5.03 shall not limit or otherwise affect the representations, warranties, covenants or agreements of the Parent or the Company, as the case may be, the conditions to the obligations of the parties hereto to consummate the Merger or the remedies available hereunder to Parent or the Company, as the case may be. A-30 ARTICLE VI Additional Agreements SECTION 6.01 Registration Statement; Joint Proxy Statement. (a) As promptly as practicable after the execution of this Agreement, (i) Parent and the Company shall prepare and file with the SEC a joint proxy statement (together with any amendments thereof or supplements thereto, the "Joint Proxy Statement") relating to the respective meetings of the Company's stockholders (the "Company Stockholders' Meeting") to be held to consider approval of the Merger and adoption of this Agreement and of the Parent stockholders (the "Parent Stockholders' Meeting") to be held to obtain the Parent Stockholder Approval and (ii) Parent shall prepare and file with the SEC a registration statement on Form S-4 (together with all amendments thereto, the "Registration Statement") in which the Joint Proxy Statement shall be included as a prospectus, in connection with the registration under the Securities Act of the Parent Common Shares to be issued to the stockholders of the Company pursuant to the Merger. Each of Parent and the Company shall use its commercially reasonable efforts to cause the Registration Statement to become effective as promptly as practicable, and prior to the effective date of the Registration Statement, Parent shall use its commercially reasonable efforts to take all or any action required under any applicable federal or state securities laws in connection with the issuance of Parent Common Shares pursuant to the Merger. Each of Parent and the Company shall furnish all information concerning itself as the other may reasonably request in connection with such actions and the preparation of the Registration Statement and Joint Proxy Statement. As promptly as practicable after the Registration Statement shall have become effective, each of Parent and the Company shall mail the Joint Proxy Statement to their respective stockholders. (b) Subject to paragraph (c) of this Section 6.01, the Joint Proxy Statement shall include the unanimous recommendation of the Board of Directors of the Company to the stockholders of the Company to vote in favor of approving the Merger and adoption of this Agreement and neither the Board of Directors of the Company nor any committee thereof shall withhold, withdraw, amend, modify or change, or propose or resolve to withhold, withdraw, amend, modify or change, in each case in a manner adverse to Parent, the unanimous recommendation of the Board of Directors of the Company that the Company's stockholders vote in favor of and adopt and approve this Agreement and approve the Merger. For purposes of this Agreement, such recommendation of the Board of Directors shall be deemed to have been modified in a manner adverse to Parent if such recommendation shall no longer be unanimous. (c) Prior to the adoption and approval of this Agreement and the approval of the Merger by the requisite vote of the stockholders of the Company, nothing in this Agreement shall prevent the Company's Board of Directors from withholding, withdrawing, amending, modifying or changing its unanimous recommendation in favor of the Merger if (i) a Superior Proposal (as defined in Section 6.05 below) is made to the Company and is not withdrawn, (ii) the Company shall have as promptly as practicable provided written notice to Parent advising Parent that the Company has received a Superior Proposal, specifying the material terms and conditions of such Superior Proposal in reasonable detail and identifying the person or entity making such Superior Proposal (a "Notice of Superior Proposal"), (iii) Parent shall not have, within three business days of Parent's receipt of the Notice of Superior Proposal, made an offer that the Company's Board of Directors by a majority vote determines in its good faith judgment (after consultation with its financial advisor) to be at least as favorable to the Company and its stockholders as such Superior Proposal (it being agreed that the Company's Board of Directors shall convene a meeting to consider any such offer by Parent as promptly as practicable following the receipt thereof), (iv) the Board of Directors of the Company concludes in good faith, after consultation with its outside legal counsel, that, in light of such Superior Proposal, the withholding, withdrawal, amendment, modification or change of such recommendation is required in order for the Board of Directors of the Company to comply with its fiduciary obligations to the Company and its stockholders under applicable Law and (v) the Company shall not have violated any of the restrictions set forth in Section 6.05 or this Section 6.01(c). The Company shall provide Parent with at least two business days' notice of any meeting of the Company's Board of Directors at which the Company's Board of Directors is reasonably expected to A-31 consider any Competing Transaction (as defined in Section 6.05 below). Subject to applicable laws, nothing contained in this Section 6.01(c) shall limit the Company's obligation to convene and hold the Company Stockholders' Meeting (regardless of whether the unanimous recommendation of the Board of Directors of the Company shall have been withheld, withdrawn, amended, modified or changed). (d) The Joint Proxy Statement shall include the unanimous recommendation of the Board of Directors of Parent to the stockholders of Parent to vote in favor of approving the issuance of the Parent Common Shares pursuant to the Merger and neither the Board of Directors Parent nor any committee thereof shall withhold, withdraw, amend, modify or change, or propose or resolve to withhold, withdraw, amend, modify or change, in each case in a manner adverse to the Company, the unanimous recommendation of the Board of Directors of Parent that the Company's stockholders vote in favor of and approve the issuance of the Parent Common Shares pursuant to the Merger. For purposes of this Agreement, such recommendation of the Board of Directors shall be deemed to have been modified in a manner adverse to the Company if such recommendation shall no longer be unanimous. (e) Subject to Section 6.01(c), no amendment or supplement to the Joint Proxy Statement or the Registration Statement will be made by Parent or the Company without the approval of the other party (such approval not to be unreasonably withheld or delayed). Each of Parent and the Company will advise the other, promptly after it receives notice thereof, of the time at which the Registration Statement has become effective or any supplement or amendment has been filed, of the issuance of any stop order, of the suspension of the qualification of the Parent Common Shares issuable in connection with the Merger for offering or sale in any jurisdiction, or of any request by the SEC for amendment of the Joint Proxy Statement or the Registration Statement or comments thereon and responses thereto or requests by the SEC for additional information. (f) The information supplied by Parent for inclusion in the Registration Statement and the Joint Proxy Statement shall not, at (i) the time the Registration Statement is declared effective, (ii) the time the Joint Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to the stockholders of the Company, (iii) the time the Joint Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to the stockholders of Parent, (iv) the time of the Company Stockholders' Meeting, (v) the time of the Parent Stockholders' Meeting and (vi) the Effective Time, contain any untrue statement of a material fact or fail to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. If, at any time prior to the Effective Time, any event or circumstance relating to Parent or any Parent Subsidiary, or their respective officers or directors, that should be set forth in an amendment or a supplement to the Registration Statement or Joint Proxy Statement should be discovered by Parent, Parent shall promptly inform the Company. All documents that Parent is responsible for filing with the SEC in connection with the Merger or the other transactions contemplated by this Agreement will comply as to form and substance in all material respects with the applicable requirements of the Securities Act and the Exchange Act. (g) The information supplied by the Company for inclusion in the Registration Statement and the Joint Proxy Statement shall not, at (i) the time the Registration Statement is declared effective, (ii) the time the Joint Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to the stockholders of the Company, (iii) the time the Joint Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to the stockholders of Parent, (iv) the time of the Company Stockholders' Meeting, (v) the time of the Parent Stockholders' Meeting and (vi) the Effective Time, contain any untrue statement of a material fact or fail to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. If, at any time prior to the Effective Time, any event or circumstance relating to the Company or any Company Subsidiary, or their respective officers or directors, that should be set forth in an amendment or a supplement to the Registration Statement or Joint Proxy Statement should be discovered by the Company, the Company shall promptly inform Parent. All documents that the Company is responsible for filing with the SEC in connection with the Merger or the other transactions contemplated by this Agreement will comply as to form and substance in all material respects with the applicable requirements of the Securities Act and the Exchange Act. A-32 SECTION 6.02 Company Stockholders' Meeting. The Company shall (i) call and hold the Company Stockholders' Meeting as promptly as practicable for the purpose of voting upon the approval of the Merger and adoption of this Agreement, (ii) use its commercially reasonable efforts to hold the Company Stockholders' Meeting as soon as practicable after the date on which the Registration Statement becomes effective and (iii) shall in any event hold such Company Stockholders' Meeting within 45 days after the date on which the Registration Statement becomes effective. The Company shall use its commercially reasonable efforts to solicit from its stockholders proxies in favor of the approval of the Merger and adoption of this Agreement, and shall take all other commercially reasonable action necessary or advisable to secure the vote or consent of stockholders required by the rules of The Nasdaq National Market and the DGCL, to obtain such approvals. SECTION 6.03 Parent Stockholders' Meeting. Parent shall (i) call and hold the Parent Stockholders' Meeting as promptly as practicable for the purpose of voting upon the issuance of Parent Common Shares pursuant to the Merger, (ii) use its commercially reasonable efforts to hold the Parent Stockholders' Meeting as soon as practicable after the date on which the Registration Statement becomes effective and (iii) shall in any event hold such Parent Stockholders' Meeting within 45 days after the date on which the Registration Statement becomes effective. Parent shall use its commercially reasonable efforts to solicit from its stockholders proxies in favor of the issuance of Parent Common Shares pursuant to the Merger, and shall take all other commercially reasonable action necessary or advisable to secure the vote or consent of stockholders required by the rules of The Nasdaq National Market and the DGCL, to obtain such approvals. SECTION 6.04 Access to Information; Confidentiality. (a) Except as required pursuant to any confidentiality agreement or similar agreement or arrangement to which Parent or the Company or any of their subsidiaries is a party or pursuant to applicable Law, from the date of this Agreement to the Effective Time, Parent and the Company shall (and shall cause their respective subsidiaries to): (i) provide to the other (and its officers, directors, employees, subsidiaries, accountants, consultants, legal counsel, investment bankers, advisors, agents and other representatives, collectively, "Representatives") access at reasonable times upon prior notice to the officers, employees, agents, properties, offices and other facilities of it and its subsidiaries and to the books and records thereof and (ii) furnish promptly such information concerning the business, properties, contracts, assets, liabilities, personnel and other aspects of it and its subsidiaries as the other party or its Representatives may reasonably request. (b) The parties shall comply with, and shall cause their respective Representatives to comply with, all of their obligations under the Non- Disclosure Agreement dated January 22, 2001 (the "Non-Disclosure Agreement"), between the Company and Parent. All information obtained by the parties pursuant to (a) above shall be subject to the Non-Disclosure Agreement. (c) No investigation pursuant to this Section 6.04 shall affect any representation or warranty in this Agreement or any condition to the obligations of the parties hereto to consummate the Merger. SECTION 6.05 No Solicitation of Transactions. (a) The Company will not, directly or indirectly, and will instruct its Representatives not to, directly or indirectly, solicit, initiate or encourage (including by means of furnishing nonpublic information), or take any other action to facilitate, any inquiries or the making of any proposal or offer (including, without limitation, any proposal or offer to its stockholders) that constitutes, or may reasonably be expected to lead to, any Competing Transaction (as defined below), or enter into or maintain or continue discussions or negotiate with any person or entity in furtherance of such inquiries or to obtain a Competing Transaction, or agree to or endorse any Competing Transaction, or authorize or permit any of its Representatives to take any such action. The Company shall immediately notify Parent if any proposal or offer, or any inquiry or contact with any person with respect thereto, regarding a Competing Transaction is made, and the Company shall immediately inform Parent as to the material details of any such proposal, offer, inquiry or contact, including, without limitation, the identity of the party making any such proposal, offer, inquiry or contact, and, if in writing, promptly deliver or cause to be delivered to Parent a copy of such proposal, offer, inquiry or contact and any A-33 other written material relating thereto that contains the principal terms of such proposal or offer. The Company immediately shall cease and cause to be terminated all existing discussions or negotiations with any parties conducted heretofore with respect to a Competing Transaction. The Company shall not release any third party from, or waive any provision of, any confidentiality or standstill agreement to which it is a party. Notwithstanding anything to the contrary in this Section 6.05, the Company's Board of Directors may furnish information to, and enter into discussions and negotiate with, a person who has made an unsolicited, written, bona fide proposal or offer regarding a Competing Transaction if the Company's Board of Directors has (i) reasonably concluded after consultation with its financial advisor that such proposal or offer constitutes a Superior Proposal (as defined below), (ii) reasonably concluded, after consultation with its outside legal counsel, that, in light of such Superior Proposal, the furnishing of such information or entering into discussions is required to comply with its fiduciary obligations to the Company and its stockholders under applicable Law, (iii) provided written notice to Parent of its intent to furnish information or enter into discussions with such person at least three business days prior to taking any such action and (iv) obtained from such person an executed confidentiality agreement on terms no less favorable to the Company than those contained in the Non-Disclosure Agreement; provided, however, that no information may be furnished and no discussions or negotiations may be entered into in the event that the Company has taken any actions inconsistent with this Section 6.05(a); provided further, however, that the Company's Board of Directors shall furnish to Parent all information provided to the person who has made the Superior Proposal to the extent that such information has not been previously provided to Parent and shall keep Parent promptly and reasonably informed as to the status of any discussions regarding such Superior Proposal. (b) A "Competing Transaction" means any of the following involving the Company (other than the Merger and the other transactions contemplated by this Agreement): (i) a merger, consolidation, share exchange, business combination or other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 15% or more of the assets of the Company and the Company Subsidiaries, taken as a whole; (iii) a tender offer or exchange offer for, or an offer to purchase directly from the Company, 15% or more of the outstanding voting securities of the Company; or (iv) any solicitation in opposition to adoption by the Company's stockholders of this Agreement. (c) A "Superior Proposal" means an unsolicited written bona fide offer or proposal made by a third party to consummate an "Acquisition Transaction" (as defined below) (i) that is not attributable to a material breach by the Company of Section 6.05(a) hereof and (ii) on terms (including conditions to consummation of the contemplated transaction) that the Board of Directors of the Company determines, in its good faith reasonable judgment (after consultation with the Company's financial advisor), to be more favorable to the Company stockholders from a financial point of view than the terms of the Merger and with any financing required to consummate the transaction contemplated by such offer committed or likely, in the reasonable good faith judgment of the Company's Board of Directors (after consultation with the Company's financial advisor), to be obtained by such third party on a timely basis. For purposes of this Agreement, an "Acquisition Transaction" shall mean a merger, consolidation, business combination, recapitalization, liquidation, dissolution, sale or disposition or similar transaction involving the Company pursuant to which a person (or its stockholders) would own, if consummated, all or substantially all of the outstanding capital stock of the Company (or of the surviving entity in a merger or the direct or indirect parent of the surviving entity in a merger) or all or substantially all the assets of the Company and the Company Subsidiaries taken as a whole. (d) Nothing contained in this Agreement shall prohibit the Company or its Board of Directors from taking and disclosing to its stockholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act. SECTION 6.06 Directors' and Officers' Indemnification and Insurance. (a) The Certificate of Incorporation and Bylaws of the Surviving Corporation shall contain the same provisions with respect to indemnification, advancement and director exculpation as are set forth in the Certificate of Incorporation and Bylaws of the Company on the date of this Agreement, which provisions shall A-34 not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would affect adversely the rights thereunder of persons who at any time prior to the Effective Time were entitled to indemnification, advancement or exculpation under the Certificate of Incorporation or Bylaws of the Company in respect of actions or omissions occurring at or prior to the Effective Time (including, without limitation, the transactions contemplated by this Agreement), unless such modification is required by Law. (b) The Company shall, to the fullest extent permitted under applicable Law and regardless of whether the Merger becomes effective, indemnify and hold harmless, and, after the Effective Time, Parent and the Surviving Corporation shall, to the fullest extent permitted under applicable Law, indemnify and hold harmless, each present and former director or officer of the Company and each Company Subsidiary and each such person that served at the request of the Company or any Company Subsidiary as a director, officer, trustee, partner, fiduciary, employee or agent of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise (collectively, the "Indemnified Parties") against all costs and expenses (including reasonable attorneys' fees), judgments, fines, losses, claims, damages, liabilities and settlement amounts paid in connection with any claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), whether civil, administrative or investigative, arising out of or pertaining to any action or omission in their capacities as officers or directors, in each case occurring before the Effective Time (including the transactions contemplated by this Agreement). Without limiting the foregoing, in the event of any such claim, action, suit, proceeding or investigation, (i) the Company or Parent and the Surviving Corporation, as the case may be, shall pay the reasonable fees and expenses of counsel selected by any Indemnified Party, which counsel shall be reasonably satisfactory to the Company or to Parent and the Surviving Corporation, as the case may be, promptly after statements therefor are received (unless the Surviving Corporation shall elect to defend such action) and (ii) the Company and Parent and the Surviving Corporation shall cooperate in the defense of any such matter; provided, however, that neither the Company, Parent nor the Surviving Corporation shall be liable for any settlement effected without its written consent (which consent shall not be unreasonably withheld or delayed). (c) For a period of six years after the Effective Time, Parent shall cause to be maintained in effect the current directors' and officers' liability insurance policies maintained by the Company (provided that Parent may substitute therefor policies of at least the same coverage containing terms and conditions, taken as a whole, that are no less advantageous) with respect to claims arising from facts or events that occurred prior to the Effective Time; provided, however, that in no event shall Parent be required to expend pursuant to this Section 6.06(c) more than an amount per year equal to 150% of current annual premiums paid by the Company for such insurance (which premiums the Company represents and warrants to be approximately $750,000 per year in the aggregate). (d) This Section 6.06 is intended to be for the benefit of, and shall be enforceable by, the Indemnified Parties and their heirs and personal representatives and shall be binding on the Surviving Corporation and its successors and assigns. In the event the Company or the Surviving Corporation or any of their respective successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity in such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any person, then, and in each case, proper provision shall be made so that the successors and assigns of the Company or the Surviving Corporation, as the case may be, honor the indemnification obligations set forth in this Section 6.06. SECTION 6.07 Obligations of Merger Sub. Obligations of Merger Sub. Parent shall take all action necessary to cause Merger Sub to perform its obligations under this Agreement and to consummate the Merger on the terms and subject to the conditions set forth in this Agreement. SECTION 6.08 Affiliates Agreements. As soon as practicable after the date of this Agreement, the Company shall deliver to Parent a list of names and addresses of those persons who were, in the Company's reasonable judgment, on such date, affiliates (within the meaning of Rule 145 of the rules and regulations A-35 promulgated under the Securities Act (each such person being an "Affiliate")) of the Company. The Company shall provide Parent with such information and documents as Parent shall reasonably request for purposes of reviewing such list. The Company shall use its commercially reasonable efforts to deliver or cause to be delivered to Parent, no later than at least 30 days prior to the Effective Time, an affiliate agreement in the form attached hereto as Exhibit D (an "Affiliate Agreement"), executed by each of the Affiliates of the Company identified in the foregoing list and any person who shall, to the knowledge of the Company, have become an Affiliate of the Company subsequent to the delivery of such list. SECTION 6.09 Further Action; Consents; Filings. (a) Upon the terms and subject to the conditions hereof, each of the parties hereto shall use its commercially reasonable efforts to (i) take, or cause to be taken, all appropriate action and do, or cause to be done, all things necessary, proper or advisable under applicable Law or otherwise to consummate and make effective the Merger and the other transactions contemplated by this Agreement, (ii) obtain from Governmental Entities any consents, licenses, permits, waivers, approvals, authorizations or orders required to be obtained or made by Parent or the Company or any of their subsidiaries in connection with the authorization, execution and delivery of this Agreement and the consummation of the Merger and the other transactions contemplated by this Agreement and (iii) make all necessary filings, and thereafter make any other reasonably required submissions, with respect to this Agreement, the Merger and the other transactions contemplated by this Agreement that are required under (A) the Exchange Act and the Securities Act and any other applicable federal or state securities laws, (B) the HSR Act and foreign antitrust regulations, if any, applicable to the Merger and the other transactions contemplated hereunder and (C) any other applicable Law. The parties hereto shall cooperate with each other in connection with the making of all such filings. (b) Parent and the Company shall file as soon as practicable after the date of this Agreement notifications under the HSR Act and shall respond as promptly as practicable to all reasonable inquiries or reasonable requests received from the Federal Trade Commission or the Antitrust Division of the Department of Justice for additional information or documentation and shall respond as promptly as practicable to all reasonable inquiries and reasonable requests received from any State Attorney General or other Governmental Entity in connection with antitrust matters. The parties shall cooperate with each other in connection with the making of all such filings or responses. Notwithstanding anything to the contrary in this Section 6.09, Parent shall not be required to agree to (i) the divestiture (including, without limitation, through a licensing arrangement) by Parent, any Parent Subsidiary, the Company or any Company Subsidiary of any of their respective businesses, product lines or assets, or (ii) the imposition of any material limitation on the ability of any of them to conduct their business or to own or exercise control of such assets, properties and stock. SECTION 6.10 Plan of Reorganization. (a) This Agreement is intended to constitute a "plan of reorganization" within the meaning of section 1.368-2(g) of the income tax regulations promulgated under the Code. From and after the date of this Agreement and until the Effective Time, each party hereto shall use its commercially reasonable efforts to cause the Merger to qualify, and will not knowingly take any action, cause any action to be taken, fail to take any action or cause any action to fail to be taken which action or failure to act could prevent the Merger from qualifying as a reorganization under the provisions of section 368(a) of the Code. Following the Effective Time, neither the Surviving Corporation, Parent nor any of their affiliates shall knowingly take any action, cause any action to be taken, fail to take any action or cause any action to fail to be taken, which action or failure to act could cause the Merger to fail to qualify as a reorganization under section 368(a) of the Code. (b) As of the date of this Agreement, the Company does not know of any reason why it would not be able to deliver to Gunderson Dettmer or Gray Cary Ware & Freidenrich LLP ("Gray Cary"), at the date of the legal opinions referred to below, certificates substantially in compliance with IRS published advance ruling guidelines, with customary exceptions and modifications thereto, to enable such firms to deliver the legal opinions contemplated by Sections 7.02(d) and 7.03(c), and the Company hereby agrees to deliver such certificates effective as of the date of such opinions. A-36 (c) As of the date of this Agreement, Parent and Merger Sub do not know of any reason why they would not be able to deliver to Gunderson Dettmer or Gray Cary, at the date of the legal opinions referred to below, certificates substantially in compliance with IRS published advance ruling guidelines, with customary exceptions and modifications thereto, to enable such firms to deliver the legal opinions contemplated by Sections 7.02(d) and 7.03(c), and Parent hereby agrees to deliver such certificates effective as of the date of such opinions. SECTION 6.11 Public Announcements. The initial press release relating to this Agreement shall be a joint press release the text of which has been agreed to by each of Parent and the Company. Thereafter, unless otherwise required by applicable Law or the requirements of The Nasdaq National Market, each of Parent and the Company shall use commercially reasonable efforts to consult with the other before issuing any press release or otherwise making any public statements with respect to this Agreement, the Merger or any of the other transactions contemplated by this Agreement. SECTION 6.12 Listing. Prior to the Effective Time, to the extent required under the applicable listing agreement, Parent shall file with The Nasdaq National Market a Notification Form for Listing of Additional Shares with respect to the Parent Common Shares referred to in Section 2.01. SECTION 6.13 Commercially Reasonable Efforts and Further Assurances. Subject to the terms and conditions hereof, each of the parties to this Agreement shall use commercially reasonable efforts to effect the transactions contemplated hereby and to fulfill and cause to be fulfilled the conditions to the Merger under this Agreement. Subject to the terms and conditions hereof, each party hereto, at the reasonable request of another party hereto, shall execute and deliver such other instruments and do and perform such other acts and things as may be necessary or desirable for effecting completely the consummation of this Agreement and the transactions contemplated hereby. SECTION 6.14 Employee Benefits. Following the Effective Time, all Company and Company Subsidiary employees shall continue in their existing benefit plans until such time as, in Parent's sole discretion, an orderly transition can be accomplished and such employees may be transferred to employee benefit plans and programs maintained by Parent for its and its affiliates' employees in the United States. Parent shall take such reasonable actions, to the extent permitted by Parent's benefit programs, as are necessary to allow eligible employees of the Company and the Company Subsidiaries to participate in the health, welfare and other employee benefits programs of Parent or alternative benefits programs in the aggregate substantially equivalent to those applicable to employees of Parent in similar functions and positions on similar terms (it being understood that equity incentive plans, including, without limitation, the Company Stock Option Plans and the Company Purchase Plan, are not considered employee benefits). Pending such action, Parent shall maintain the effectiveness of the Company's and the Company Subsidiaries' benefit plans. Each continuing employee shall be given credit, for purposes of any service requirements for participation or vesting, for his or her period of service with the Company credited under a similar benefit plan or program prior to the Closing Date. If requested by Parent no later than three business days prior to the Closing Date, at its sole discretion, the Company shall take all corporate action required to terminate its 401(k) plan effective as of the day immediately preceding the Closing Date. ARTICLE VII Conditions To The Merger SECTION 7.01 Conditions to the Obligations of Each Party. Conditions to the Obligations of Each Party. The obligations of the Company, Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver (where permissible) of the following conditions: (a) Registration Statement Effective. The Registration Statement shall have been declared effective by the SEC under the Securities Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued by the SEC and no proceeding for that purpose shall have been initiated by the SEC. A-37 (b) Company Stockholder Approval. The Merger, this Agreement and the transactions contemplated hereby shall have been approved and adopted by the requisite affirmative vote of the stockholders of the Company in accordance with the DGCL and the Company's Certificate of Incorporation and Bylaws. (c) Parent Stockholder Approval. The Parent Stockholder Approval shall have been obtained. (d) No Order. No Governmental Entity or court of competent jurisdiction shall have enacted, threatened, issued, promulgated, enforced or entered any law, rule, regulation, judgment, decree, injunction, executive order or award, whether temporary, preliminary or permanent (an "Order"), that is then in effect, pending or threatened and has, or would have, the effect of making the Merger illegal or otherwise prohibiting consummation of the Merger. (e) Antitrust Waiting Periods. Any waiting period (and any extension thereof) applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated and any waiting period (and any extension thereof) applicable to the consummation of the Merger under any foreign antitrust Law (or any approval thereunder) shall have expired or been terminated or obtained. (f) Listing of Additional Shares. The filing with The Nasdaq National Market of a Notification Form for Listing of Additional Shares with respect to the Parent Common Shares issuable (i) upon conversion of the Company Common Stock in the Merger, and (ii) upon exercise of the options under the Company Stock Option Plans assumed by Parent and (iii) upon exercise of the Warrants assumed by Parent shall have been made. SECTION 7.02 Conditions to the Obligations of Parent and Merger Sub. The obligations of Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver (where permissible) of the following additional conditions: (a) Representations and Warranties. Each of the representations and warranties of the Company contained in this Agreement shall be true and correct in all respects (i) as of the date of this Agreement and (ii) as of the Effective Time, as though made at and as of the Effective Time, except, in the case of clauses (i) and (ii), (A) for such failures to be true and correct that do not individually or in the aggregate constitute a Company Material Adverse Effect; provided, however, that with respect to representations and warranties contained in Sections 3.03, 3.20, 3.21, 3.22 and 3.23, such representations and warranties shall be true and correct in all material respects, and (B) for those representations and warranties that address matters only as of a particular date shall remain true and correct in all respects as of such date (subject to the qualifications set forth in clause (A)) (it being understood that, for purposes of determining the accuracy of such representations and warranties, (i) all "Material Adverse Effect" qualifications and other qualifications based on the word "material" or similar phrases contained in such representations and warranties shall be disregarded and (ii) any update of or modification to the Company Disclosure Schedule made or purported to have been made after the date of this Agreement shall be disregarded). Parent shall have received a certificate of the Chief Executive Officer or Chief Financial Officer of the Company with respect to the foregoing. (b) Agreements and Covenants. The Company shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time, and Parent shall have received a certificate of the Chief Executive Officer or Chief Financial Officer of the Company to that effect. (c) Consents. All consents, approvals and authorizations legally required to be obtained to consummate the Merger shall have been obtained from and made with all Governmental Entities, and all consents from third parties under any agreement, contract, license, lease or other instrument set forth on Section 7.02(c) of the Company Disclosure Schedule shall have been obtained. (d) Tax Opinion. Parent shall have received the opinion of Gunderson Dettmer, counsel to Parent, based upon representations of Parent, Merger Sub and the Company and normal assumptions, to the effect that the Merger will be treated for federal income tax purposes as a reorganization qualifying under the A-38 provisions of section 368(a) of the Code and that each of Parent, Merger Sub and the Company will be a party to the reorganization within the meaning of section 368(b) of the Code, which opinion shall not have been withdrawn or modified in any material respect. The issuance of such opinion shall be conditioned on receipt by Gunderson Dettmer of representation letters from each of Parent and Company as contemplated in Section 6.10 of this Agreement. Each such representation letter shall be dated on or before the date of such opinion and shall not have been withdrawn or modified in any material respect as of the Effective Time. Notwithstanding the foregoing, if Parent's counsel does not render such opinion, this condition shall nevertheless be deemed satisfied if Gray Cary, counsel to the Company, renders such opinion in form reasonably satisfactory to Parent. (e) Employment Agreements. Each of the Employment Agreements among Parent, the Company and the individuals listed in Section 7.02(e)(i) of the Company Disclosure Schedule shall be in full force and effect and shall not have been anticipatorially breached or repudiated by the Company or any of such individuals. (f) Company Stock Option Agreement. The Company Stock Option Agreement shall be in full force and effect and shall not have been anticipatorially breached or repudiated by the Company. (g) Material Adverse Effect. No Company Material Adverse Effect shall have occurred since the date of this Agreement, including, without limitation, any Company Material Adverse Effect resulting from the failure by the Company to obtain any required consents or approvals from any third party under any agreement, contract, license, lease or other instrument. SECTION 7.03 Conditions to the Obligations of the Company. The obligations of the Company to consummate the Merger are subject to the satisfaction or waiver (where permissible) of the following additional conditions: (a) Representations and Warranties. Each of the representations and warranties of Parent and Merger Sub contained in this Agreement shall be true and correct in all respects (i) as of the date of this Agreement and (ii) as of the Effective Time, as though made at and as of the Effective Time, except, in the case of clauses (i) and (ii), (A) for such failures to be true and correct that do not individually or in the aggregate constitute a Parent Material Adverse Effect; provided, however, that with respect to representations and warranties contained in Sections 4.03, 4.09, 4.10 and 4.15, such representations and warranties shall be true and correct in all material respects, and (B) for those representations and warranties that address matters only as of a particular date shall remain true and correct in all respects as of such date (subject to the qualifications set forth in clause (A)) (it being understood that, for purposes of determining the accuracy of such representations and warranties, (i) all "Material Adverse Effect" qualifications and other qualifications based on the word "material" or similar phrases contained in such representations and warranties shall be disregarded and (ii) any update of or modification to the Parent Disclosure Schedule made or purported to have been made after the date of this Agreement shall be disregarded. The Company shall have received a certificate of the Chief Executive Officer or Chief Financial Officer of Parent with respect to the foregoing. (b) Agreements and Covenants. Parent and Merger Sub shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time, and the Company shall have received a certificate of the Chief Executive Officer or Chief Financial Officer of Parent to that effect. (c) Tax Opinion. The Company shall have received the opinion of Gray Cary, counsel to the Company, based upon representations of Parent, Merger Sub and the Company, and normal assumptions, to the effect that the Merger will be treated for federal income tax purposes as a reorganization qualifying under the provisions of section 368(a) of the Code and that each of Parent, Merger Sub and the Company will be a party to the reorganization within the meaning of section 368(b) of the Code, which opinion shall not have been withdrawn or modified in any material respect. The issuance of such opinion shall be conditioned on receipt by Gray Cary of representation letters from each of Parent and Company as A-39 contemplated in Section 6.10 of this Agreement. Each such representation letter shall be dated on or before the date of such opinion and shall not have been withdrawn or modified in any material respect as of the Effective Time. Notwithstanding the foregoing, if counsel to the Company does not render such opinion, this condition shall nevertheless be deemed satisfied if Gunderson Dettmer, counsel to Parent, renders such opinion in form reasonably satisfactory to the Company. (d) Material Adverse Effect. No Parent Material Adverse Effect shall have occurred since the date of this Agreement. ARTICLE VIII Termination, Amendment And Waiver SECTION 8.01 Termination. This Agreement may be terminated and the Merger and the other transactions contemplated by this Agreement may be abandoned at any time prior to the Effective Time, notwithstanding any requisite approval and adoption of this Agreement and the transactions contemplated by this Agreement, as follows: (a) by mutual written consent duly authorized by the Boards of Directors of each of Parent and the Company; (b) by either Parent or the Company if the Effective Time shall not have occurred on or before July 31, 2001; provided however, however that the right to terminate this Agreement under this Section 8.01(b) shall not be available to any party whose action or failure to act has caused the failure of the Merger to occur on or before such date; (c) there shall be any Order which is final and nonappealable preventing the consummation of the Merger; (d) by Parent if (i) the Board of Directors of the Company withholds, withdraws, amends, modifies or changes its unanimous recommendation of the adoption of this Agreement or the approval of the Merger or the other transactions contemplated hereby in a manner adverse to Parent or shall have resolved to do so, (ii) the Board of Directors of the Company shall have recommended to the stockholders of the Company a Competing Transaction or shall have resolved to do so or shall have entered into any letter of intent or similar document or any agreement, contract or commitment accepting any Competing Transaction, (iii) the Board of Directors of the Company fails to reject a Competing Transaction within ten business days following receipt by the Company of the written proposal for such Competing Transaction, (iv) the Company shall have failed to include in the Joint Proxy Statement the unanimous recommendation of the Company's Board of Directors in favor of the approval of the Merger or this Agreement, (v) the Company's Board of Directors fails to reaffirm its unanimous recommendation in favor of the approval of the Merger and this Agreement within five business days after Parent requests in writing that such recommendation be reaffirmed, (vi) the Company shall have materially breached its obligations under Section 6.05 or (vii) a tender offer or exchange offer for 5% or more of the outstanding shares of stock of the Company is commenced, and the Board of Directors of the Company fails to recommend against acceptance of such tender offer or exchange offer by its stockholders (including by taking no position with respect to the acceptance of such tender offer or exchange offer by its stockholders); (e) by either Parent or the Company if this Agreement shall fail to receive the requisite vote for approval and adoption at the Company Stockholders' Meeting, or any adjournment or postponement thereof; (f) by Parent upon a breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement, or if any representation or warranty of the Company shall have become untrue, in either case such (and only such) that the conditions set forth either in Section 7.02(a) or (b) would not be satisfied ("Terminating Company Breach"); provided, however, that if such Terminating A-40 Company Breach is curable by the Company within 30 days of the occurrence of such Terminating Company Breach through the exercise of its best efforts and for as long as the Company continues to exercise such best efforts, Parent may not terminate this Agreement under this Section 8.01(f) until the expiration of such 30-day period; (g) by the Company upon a breach of any representation, warranty, covenant or agreement on the part of Parent and Merger Sub set forth in this Agreement, or if any representation or warranty of Parent and Merger Sub shall have become untrue, in either case such (and only such) that the conditions set forth either in Section 7.03(a) or (b) would not be satisfied ("Terminating Parent Breach"); provided, however, that if such Terminating Parent Breach is curable by Parent and Merger Sub within 30 days of the occurrence of such Terminating Parent Breach through the exercise of their respective best efforts and for as long as Parent and Merger Sub continue to exercise such best efforts, the Company may not terminate this Agreement under this Section 8.01(g) until the expiration of such 30-day period; or (h) by either Parent or the Company if the Parent Stockholder Approval shall not have been obtained at the Parent Stockholders' Meeting, or any adjournment or postponement thereof. SECTION 8.02 Effect of Termination. Except as provided in Sections 8.05 and 9.01, in the event of termination of this Agreement pursuant to Section 8.01, this Agreement shall forthwith become void, there shall be no liability under this Agreement on the part of Parent, Merger Sub or the Company or any of their respective officers or directors, and all rights and obligations of each party hereto shall cease; provided, however, that nothing herein shall relieve any party from liability for the willful breach of any of its representations and warranties, or breach of its covenants or agreements set forth in this Agreement. SECTION 8.03 Amendment. This Agreement may be amended by the parties hereto by action taken by or on behalf of their respective Boards of Directors at any time prior to the Effective Time; provided, however, that, after the approval of the Merger and adoption of this Agreement by the stockholders of the Company, no amendment may be made that would reduce the amount or change the type of consideration into which each Share shall be converted upon consummation of the Merger. This Agreement may not be amended, except by an instrument in writing signed by each of the parties hereto. SECTION 8.04 Waiver. At any time prior to the Effective Time, any party hereto may (a) extend the time for the performance of any obligation or other act of any other party hereto, (b) waive any inaccuracy in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) waive compliance with any agreement or condition contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby. SECTION 8.05 Expenses. (a) Except as set forth in this Section 8.05, all Expenses (as defined below) incurred in connection with this Agreement, the Merger and the other transactions contemplated by this Agreement shall be paid by the party incurring such expenses, whether or not the Merger or any other transaction is consummated, except that the Company and Parent each shall pay one-half of all Expenses relating to printing, filing and mailing the Registration Statement and the Joint Proxy Statement and all SEC and other regulatory filing fees incurred in connection with the Registration Statement and the Joint Proxy Statement. "Expenses" as used in this Agreement shall include all reasonable out-of-pocket expenses (including, without limitation, all fees and expenses of counsel, accountants, investment bankers, experts and consultants to a party hereto and its affiliates) incurred by a party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement, the preparation, printing, filing and mailing of the Registration Statement and the Joint Proxy Statement, the solicitation of stockholder approval, the filing of any required notices under the HSR Act or other similar regulations and all other matters related to the closing of the Merger and the other transactions contemplated by this Agreement. A-41 (b) The Company agrees that the Company shall pay to Parent an amount equal to the sum of $100 million (the "Termination Fee") and all of Parent's Expenses up to $10,000,000: (i) if Parent shall terminate this Agreement pursuant to Section 8.01(d); or (ii) if the Company or Parent shall terminate this Agreement pursuant to Section 8.01(e) hereof, and at or prior to such termination there shall exist or have been publicly proposed or widely known a Competing Transaction, and within 12 months of the date of the termination of this Agreement pursuant to Section 8.01(e), a Competing Transaction shall have been consummated or the Company shall have entered into an agreement, letter of intent or similar arrangement relating to a Competing Transaction. (c) Any payment required to be made pursuant to Section 8.05(b) shall be made to Parent not later than five business days after delivery to the Company of notice of demand for payment and an itemization setting forth in reasonable detail all Expenses of Parent (which itemization may be supplemented and updated from time to time by Parent until the 60th day after Parent delivers such notice of demand for payment), and shall be made by wire transfer of immediately available funds to an account designated by Parent. Payment of the Termination Fee and Expenses described in Section 8.05(b) shall be the sole and exclusive remedy of Parent upon termination of this Agreement pursuant to Section 8.01(d) hereof; provided, however, that payment of such fee and expenses shall not be in lieu of damages incurred in the event of willful breach of the representations and warranties set forth in this Agreement or the breach of any of the covenants or agreements set forth in this Agreement. (d) In the event that the Company shall fail to pay the Termination Fee or the Expenses when due, the term "Expenses" shall be deemed to include the costs and expenses actually incurred or accrued by Parent (including, without limitation, fees and expenses of counsel) in connection with the collection under and enforcement of this Section 8.05, together with interest on such Termination Fee and unpaid Expenses, commencing on the date that such Termination Fee and Expenses became due, at a rate equal to the rate of interest publicly announced by Citibank, N.A., from time to time, in The City of New York, as such bank's Prime Rate plus 1.00%. ARTICLE IX General Provisions SECTION 9.01 Non-Survival of Representations, Warranties and Agreements. The representations, warranties and agreements in this Agreement and in any certificate delivered pursuant hereto shall terminate at the Effective Time or upon the termination of this Agreement pursuant to Section 8.01, as the case may be, except that the agreements set forth in Articles I and II and Sections 6.04(b), 6.06, 6.07, 6.10, 6.13 and this Article IX shall survive the Effective Time and those set forth in Sections 6.04(b), 8.02 and 8.05 and this Article IX shall survive termination of this Agreement. SECTION 9.02 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by cable, telecopy, facsimile, telegram or telex or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 9.02): if to Parent or Merger Sub: ARIBA, INC. 1565 Charleston Rd. Mountain View, CA 94043 Facsimile No.: (650) 930-8188 Attention: Robert M. Calderoni A-42 with a copy to: Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP 155 Constitution Drive Menlo Park, CA 94025 Facsimile No.: (650) 321-2800 Attention: Christopher D. Dillon Brooks Stough if to the Company: AGILE SOFTWARE CORPORATION One Almaden Blvd. San Jose, CA 95113 Facsimile No.: (650) 271-4862 Attention: Bryan D. Stolle with a copy to: Gray Cary Ware & Freidenrich LLP 400 Hamilton Avenue Palo Alto, CA 94301 Facsimile No.: (650) 833-2001 Attention: Bruce E. Schaeffer SECTION 9.03 Certain Definitions. For purposes of this Agreement, the term: (a) "affiliate" of a specified person means a person who directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with such specified person; (b) "beneficial owner" with respect to any shares means a person who shall be deemed to be the beneficial owner of such shares (i) that such person or any of its affiliates or associates (as such term is defined in Rule 12b-2 promulgated under the Exchange Act) beneficially owns, directly or indirectly, (ii) that such person or any of its affiliates or associates has, directly or indirectly, (A) the right to acquire (whether such right is exercisable immediately or subject only to the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of consideration rights, exchange rights, warrants or options, or otherwise, or (B) the right to vote pursuant to any agreement, arrangement or understanding, or (iii) that are beneficially owned, directly or indirectly, by any other persons with whom such person or any of its affiliates or associates or person with whom such person or any of its affiliates or associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any Shares; (c) "business day" means any day on which the principal offices of the SEC in Washington, D.C. are open to accept filings, or, in the case of determining a date when any payment is due, any day on which banks are not required or authorized to close in The City of San Francisco; (d) "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, as trustee or executor, by contract or credit arrangement or otherwise; (e) "knowledge" or "known" means, with respect to any matter in question, if any of the executive officers of the Company or Parent, as the case may be, has knowledge of such matter or would have knowledge after reasonable due inquiry; (f) "person" means an individual, corporation, partnership, limited partnership, syndicate, person (including, without limitation, a "person" as defined in section 13(d)(3) of the Exchange Act), trust, association or entity or government, political subdivision, agency or instrumentality of a government; and A-43 (g) "subsidiary" or "subsidiaries" of any person means any corporation, partnership, joint venture or other legal entity of which such person (either alone or through or together with any other subsidiary) owns, directly or indirectly, more than 50% of the stock or other equity interests, the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity. SECTION 9.04 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect as long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the fullest extent possible. SECTION 9.05 Assignment; Binding Effect; Benefit. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, other than as provided in Section 6.06. SECTION 9.06 Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or in equity. SECTION 9.07 Governing Law; Forum. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. (b) Each party hereby irrevocably submits to the exclusive jurisdiction of the Court of Chancery in the State of Delaware in any action, suit or proceeding arising in connection with this Agreement, and agrees that any such action, suit or proceeding shall be brought only in such court (and waives any objection based on forum non conveniens or any other objection to venue therein); provided, however, that such consent to jurisdiction is solely for the purpose referred to in this Section 9.07(b) and shall not be deemed to be a general submission to the jurisdiction of such court or in the State of Delaware other than for such purposes. SECTION 9.08 Waiver of Jury Trial. EACH OF PARENT, THE COMPANY AND MERGER SUB HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, THE COMPANY OR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. SECTION 9.09 Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 9.10 Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. A-44 SECTION 9.11 Mutual Drafting. Each party hereto has participated in the drafting of this Agreement, which each party acknowledges is the result of extensive negotiations between the parties. SECTION 9.12 Entire Agreement. This Agreement (including the Exhibits, the Company Disclosure Schedule and the Parent Disclosure Schedule), the Company Stock Option Agreement, the Company Voting Agreements, the Parent Voting Agreements, the Employment Agreements, the Affiliate Agreements and the Non- Disclosure Agreement constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings among the parties with respect thereto. No addition to or modification of any provision of this Agreement shall be binding upon any party hereto unless made in writing and signed by all parties hereto. Except as explicitly stated in the Agreement, this Agreement is not intended to confer upon any Person, other than the parties hereto, any rights or remedies hereunder. A-45 SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. ARIBA, INC. By: _________________________________ Name: Title: SILVER MERGER CORPORATION By: _________________________________ Name: Title: AGILE SOFTWARE CORPORATION By: _________________________________ Name: Title: A-46 EXHIBIT A FORM OF COMPANY VOTING AGREEMENT A-47 EXHIBIT B FORM OF PARENT VOTING AGREEMENT A-48 EXHIBIT C FORM OF COMPANY STOCK OPTION AGREEMENT A-49 EXHIBIT D FORM OF AFFILIATE AGREEMENT A-50 EX-99.2 3 0003.txt FORM OF COMPANY VOTING AGREEMENT EXHIBIT 2 COMPANY VOTING AGREEMENT VOTING AGREEMENT, dated as of January 29, 2001 (this "Agreement"), between Ariba, Inc., a Delaware corporation ("Parent"), and ("Stockholder") of Agile Software Corporation, a Delaware corporation (the "Company"). WITNESSETH : WHEREAS, Parent, Silver Merger Corporation, a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub") and the Company propose to enter into, simultaneously herewith, an Agreement and Plan of Merger and Reorganization (the "Merger Agreement") pursuant to which the Merger Sub will merge with and into the Company (the "Merger"); WHEREAS, as of the date hereof, Stockholder owns beneficially or of record or has the power to vote, or direct the vote of, the number of shares of common stock, par value $0.001 per share, of the Company (the "Company Common Stock"), as set forth on the signature page hereto (all such Company Common Stock and any shares of Company Common Stock of which ownership of record or beneficially or the power to vote is hereafter acquired by Stockholder prior to the termination of this Agreement being referred to herein as the "Shares") (capitalized terms not otherwise defined in this Agreement shall have the same meaning as in the Merger Agreement); and WHEREAS, as a condition of and inducement to Parent's execution of the Merger Agreement, Stockholder has agreed to enter into this Agreement; NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement and in the Merger Agreement, the parties hereto agree as follows: ARTICLE I Transfer and Voting of Shares SECTION 1.01 Transfer of Shares. Stockholder shall not, directly or indirectly, (a) sell, pledge, encumber, transfer or otherwise dispose of any or all of Stockholder's Shares or any interest in such Shares, except pursuant to the Merger Agreement, (b) deposit any Shares or any interest in such Shares into a voting trust or enter into a voting agreement or arrangement with respect to any Shares or grant any proxy with respect thereto (other than as contemplated hereunder), or (c) enter into any contract, commitment, option or other arrangement or undertaking (other than the Merger Agreement) with respect to the direct or indirect acquisition or sale, assignment, pledge, encumbrance, transfer or other disposition of any Shares (each of the above, a "Transfer"). SECTION 1.02 Vote in Favor of Merger. During the period commencing on the date hereof and terminating at the Effective Time, Stockholder, solely in Stockholder's capacity as a Stockholder of the Company and without limiting any action that the Stockholder might take as a director of the Company or a member of any committee of the Board of Directors of the Company, agrees to vote (or cause to be voted) all of the Shares at any meeting of the stockholders of the Company or any adjournment thereof, and in any action by written consent of the stockholders of the Company, (i) in favor of the adoption of the Merger Agreement by the Company and approval of the Merger, and in favor of the other transactions contemplated by the Merger Agreement, (ii) against any merger, consolidation, sale of assets, recapitalization or other business combination involving the Company (other than the Merger) or any other action or agreement that would result in a breach C-1 of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or which would result in any of the conditions to the Company's obligations under the Merger Agreement not being fulfilled, and (iii) in favor of any other matter relating to consummation of the transactions contemplated by the Merger Agreement. SECTION 1.03 Grant of Irrevocable Proxy. Concurrently with the execution of this Agreement, Stockholder agrees to deliver to Parent a proxy with respect to the Shares in the form attached hereto as Exhibit A (the "Proxy"), which shall be irrevocable to the fullest extent permissible by law. SECTION 1.04 Termination. The obligations of Stockholder pursuant to this Article I shall terminate upon the earlier of (i) the Effective Time and (ii) the date of the termination of the Merger Agreement pursuant to Section 8.01 thereof. ARTICLE II Representations and Warranties of Stockholder Stockholder hereby represents and warrants to Parent as follows: SECTION 2.01 Authorization; Binding Agreement. Stockholder has all legal right, power, authority and capacity to execute and deliver this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly authorized, executed and delivered by or on behalf of Stockholder and constitutes a legal, valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms, subject to (i) the effect of any applicable bankruptcy, insolvency, moratorium or similar law affecting creditors' rights generally and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies. SECTION 2.02 No Conflict; Required Filings and Consents. (a) The execution and delivery of this Agreement and the grant of the Proxy to Parent by Stockholder does not, and the performance of this Agreement and the grant of the Proxy to Parent by Stockholder will not, (i) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Stockholder or by which Stockholder or any of Stockholder's properties is bound or affected, (ii) if Stockholder is not a natural person, violate or conflict with the Certificate of Incorporation, Bylaws or other equivalent organizational documents of Stockholder (if any), or (iii) result in or constitute (with or without notice or lapse of time or both) any breach of or default under, or give to another party any right of termination, amendment, acceleration or cancellation of, or result in the creation of any lien or encumbrance or restriction on any of the property or assets of Stockholder pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Stockholder is a party or by which Stockholder or any of Stockholder's properties is bound or affected. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which Stockholder is a trustee whose consent is required for the execution and delivery of this Agreement or the consummation by Stockholder of the transactions contemplated by this Agreement. (b) The execution and delivery of this Agreement and the grant of the Proxy to Parent by Stockholder does not, and the performance of this Agreement and the grant of the Proxy to Parent by Stockholder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any third party or any governmental or regulatory authority, domestic or foreign, except (i) for applicable requirements, if any, of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and (ii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, could not prevent or materially delay the performance by Stockholder of Stockholder's obligations under this Agreement. Stockholder does not have any understanding in effect with respect to the voting or transfer of any Shares. Stockholder is not required to C-2 make any filing with or notify any governmental or regulatory authority in connection with this Agreement, the Merger Agreement or the transaction contemplated hereby or thereby pursuant to the requirements of the Hart- Scott-Rodino Antitrust Improvement Act of 1976, as amended, and the rules and regulations promulgated thereunder (the "HSR Act"). SECTION 2.03 Title to Shares. Stockholder is the record or beneficial owner of the Shares free and clear of all encumbrances, proxies or voting restrictions other than pursuant to this Agreement. The shares of Company Common Stock, including options, warrants or other rights to acquire such stock, set forth on the signature page hereto, are all the securities of the Company owned, directly or indirectly, of record or beneficially by Stockholder on the date of this Agreement. SECTION 2.04 Accuracy of Representations. The representations and warranties contained in this Agreement are accurate in all respects as of the date of this Agreement, will be accurate in all respects at all times until termination of this Agreement and will be accurate in all respects as of the date of the consummation of the Merger as if made on that date. ARTICLE III Covenants of Stockholder SECTION 3.01 Further Assurances. From time to time and without additional consideration, Stockholder shall (at Stockholder's sole expense) execute and deliver, or cause to be executed and delivered, such additional transfers, assignments, endorsements, proxies, consents, waivers and other instruments, and shall (at Stockholder's sole expense) take such further actions, as Parent may reasonably request for the purpose of consummating the Merger. SECTION 3.02 Legending of Shares. If so requested by Parent, Stockholder agrees that the Shares shall bear a legend stating that they are subject to this Agreement and to the Proxy. Subject to the terms of Section 1.01 hereof, Stockholder agrees that Stockholder shall not Transfer any of the Shares without first having the aforementioned legend affixed to the certificates representing such Shares. ARTICLE IV General Provisions SECTION 4.01 Entire Agreement. This Agreement, the Merger Agreement and the other agreements referred to herein and therein constitute the entire agreement of the parties and supersedes all prior agreements and undertakings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof. This Agreement may not be amended or modified except in an instrument in writing signed by, or on behalf of, the parties hereto. SECTION 4.02 Survival of Representations and Warranties. All representations and warranties made by Stockholder in this Agreement shall survive any termination of the Merger Agreement or this Agreement. SECTION 4.03 Assignment. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided that any assignment, delegation or attempted transfer any of rights, interests or obligations under this Agreement by Stockholder without the prior written consent of Parent shall be void. SECTION 4.04 Fees and Expenses. Except as otherwise provided herein, all costs and expenses (including, without limitation, all fees and disbursements of counsel, accountants, investment bankers, experts and consultants to a party) incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses. C-3 SECTION 4.05 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at the following addresses (or at such other addresses as shall be specified by notice given in accordance with this Section 4.05): (a) if to Parent: Ariba, Inc. 1565 Charleston Rd. Mountain View, CA 94043 Attention: General Counsel Facsimile No.: (650) 930-8188 with a copy to: Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP 155 Constitution Drive Menlo Park, California 94025 Attention: Brooks Stough and Christopher D. Dillon Facsimile No.: (650) 321-2800 (b) If to the Stockholder to: ______________________________________ ______________________________________ ______________________________________ Facsimile No.: with a copy to: Gray Cary Ware & Freidenrich LLP 400 Hamilton Avenue Palo Alto, CA 94301 Attention: Bruce E. Schaeffer Facsimile No.: (650) 327-3699 SECTION 4.06 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 4.07 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner. SECTION 4.08 Specific Performance. The parties agree that irreparable damage would occur if any of the provisions of this Agreement is not performed in accordance with its specific terms or is otherwise breached. Stockholder agrees that, following any breach or threatened breach by Stockholder of any covenant or obligation contained in this Agreement, Parent shall be entitled (in addition to any other remedy that may be available to it, including monetary damages) to seek and obtain (a) a decree or order of specific performance to enforce the observance and performance of such covenant or obligation and (b) an injunction restraining such breach or threatened breach. Stockholder further agrees that neither Parent nor any other party shall be required to obtain, C-4 furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 4.08, and Stockholder irrevocably waives any right he may have to require the obtaining, furnishing or posting of any such bond or similar instrument. SECTION 4.09 Governing Law. This Agreement shall be construed in accordance with, and governed in all respects by, the laws of the State of Delaware, without giving effect to principles of conflicts of laws. Each party hereby irrevocably submits to the exclusive jurisdiction of the Court of Chancery in the State of Delaware in any action, suit or proceeding arising in connection with this Agreement, and agrees that any such action, suit or proceeding shall be brought only in such court (and waives any objection based on forum non conveniens or any other objection to venue therein); provided, however, that such consent to jurisdiction is solely for the purpose referred to in this Section 4.09 and shall not be deemed to be a general submission to the jurisdiction of such court or in the State of Delaware other than for such purposes. SECTION 4.10 No Waiver. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. Parent shall not be deemed to have waived any claim available to it arising out of this Agreement, or any right, power or privilege hereunder, unless the waiver is expressly set forth in writing duly executed and delivered on behalf of Parent. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. SECTION 4.11 Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. IN WITNESS WHEREOF, each of Parent and Stockholder has executed or has caused this Agreement to be executed by their duly authorized officer as of the date first written above. ARIBA, INC. By: ____________________________________ Name: Title: STOCKHOLDER ________________________________________ Print Name of Stockholder: _____________ Shares beneficially owned: shares of Agile Software Corporation Common Stock shares of Agile Software Corporation Common Stock issuable upon exercise of outstanding options or warrants Signature Page to Company Voting Agreement C-5 EXHIBIT A IRREVOCABLE PROXY The undersigned stockholder ("Stockholder") of Agile Software Corporation, a Delaware corporation (the "Company"), hereby irrevocably (to the fullest extent permitted by law) appoints the directors on the Board of Directors of Ariba, Inc., a Delaware corporation ("Parent"), and each of them, as the sole and exclusive attorneys and proxies of the undersigned, with full power of substitution and resubstitution, to vote and exercise all voting and related rights (to the full extent that the undersigned is entitled to do so) with respect to all of the shares of capital stock of the Company that now are or hereafter may be beneficially owned by the undersigned, and any and all other shares or securities of the Company issued or issuable in respect thereof on or after the date hereof (collectively, the "Shares") in accordance with the terms of this Proxy. The Shares beneficially owned by the undersigned stockholder of the Company as of the date of this Proxy are listed on the final page of this Proxy. Upon the undersigned's execution of this Proxy, any and all prior proxies given by the undersigned with respect to any Shares are hereby revoked and the undersigned agrees not to grant any subsequent proxies with respect to the Shares until after the Expiration Date (as defined below). This Proxy is irrevocable (to the fullest extent permitted by law), is coupled with an interest and is granted pursuant to that certain Voting Agreement of even date herewith by and among Parent and Stockholder (the "Voting Agreement"), and is granted in consideration of Parent entering into that certain Agreement and Plan of Merger and Reorganization (the "Merger Agreement"), among Parent, Silver Merger Corporation, a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and the Company. The Merger Agreement provides for the merger of Merger Sub with and into the Company in accordance with its terms (the "Merger"). As used herein, the term "Expiration Date" shall mean the earlier to occur of (i) such date and time as the Merger Agreement shall have been validly terminated pursuant to Article VIII thereof or (ii) such date and time as the Merger shall become effective in accordance with the terms and provisions of the Merger Agreement. The attorneys and proxies named above, and each of them, are hereby authorized and empowered by the undersigned, at any time prior to the Expiration Date, to act as the undersigned's attorney and proxy to vote the Shares, and to exercise all voting, consent and similar rights of the undersigned with respect to the Shares (including, without limitation, the power to execute and deliver written consents) at every annual, special or adjourned meeting of stockholders of the Company and in every written consent in lieu of such meeting in favor of approval of the Merger, the execution and delivery by the Company of the Merger Agreement and the adoption and approval of the terms thereof and in favor of each of the other actions contemplated by the Merger Agreement and any action required in furtherance hereof and thereof, and against any Competing Transaction (as defined in the Merger Agreement) or any other matter that could be reasonably be expected to delay or not to facilitate approval of the Merger. The attorneys and proxies named above may not exercise this Proxy on any other matter except as provided above. Stockholder may vote the Shares on all other matters. Any obligation of Stockholder hereunder shall be binding upon the successors and assigns of Stockholder. C-6 This Proxy is irrevocable (to the fullest extent permitted by law). This Proxy shall terminate, and be of no further force and effect, automatically upon the Expiration Date. Dated: January , 2001 Signature of Stockholder:_______________ Print Name of Stockholder:______________ Shares beneficially owned:______________ shares of Agile Software Corporation Common Stock shares of Agile Software Corporation Common Stock issuable upon exercise of outstanding options or warrants Signature Page to Irrevocable Proxy C-7 EX-99.3 4 0004.txt FORM OF PARENT VOTING AGREEMENT EXHIBIT 3 PARENT VOTING AGREEMENT VOTING AGREEMENT (this "Agreement") dated as of January 29, 2001, between Agile Software Corporation, a Delaware corporation ("Company"), and (the "Stockholder") of Ariba, Inc., a Delaware corporation ("Parent"). WITNESSETH : WHEREAS, Parent, Silver Merger Corporation, a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub") and Company propose to enter into, simultaneously herewith, an Agreement and Plan of Merger and Reorganization (the "Merger Agreement") pursuant to which the Merger Sub will merge with and into the Company (the "Merger"); WHEREAS, as of the date hereof, Stockholder owns beneficially or of record or has the power to vote, or direct the vote of, the number of shares of common stock, par value $0.002 per share, of Parent (the "Parent Common Stock"), as set forth on the signature page hereto (all such Parent Common Stock and any shares of Parent Common Stock of which ownership of record or beneficially or the power to vote is hereafter acquired by Stockholder prior to the termination of this Agreement being referred to herein as the "Shares") (capitalized terms not otherwise defined in this Agreement shall have the same meaning as in the Merger Agreement); and WHEREAS, as a condition of and inducement to Company's execution of the Merger Agreement, Stockholder has agreed to enter into this Agreement; NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement and in the Merger Agreement, the parties hereto agree as follows: ARTICLE I Transfer and Voting of Shares SECTION 1.01 Transfer of Shares. Stockholder shall not, directly or indirectly, (a) sell, pledge, encumber, transfer or otherwise dispose of any or all of Stockholder's Shares or any interest in such Shares (b) deposit any Shares or any interest in such Shares into a voting trust or enter into a voting agreement or arrangement with respect to any Shares or grant any proxy with respect thereto (other than as contemplated hereunder), or (c) enter into any contract, commitment, option or other arrangement or undertaking (other than the Merger Agreement) with respect to the direct or indirect acquisition or sale, assignment, pledge, encumbrance, transfer or other disposition of any Shares (each of the above, a "Transfer"). SECTION 1.02 Vote in Favor of Merger. During the period commencing on the date hereof and terminating at the Effective Time, Stockholder, solely in Stockholder's capacity as a Stockholder of Parent and without limiting any action that the Stockholder might take as a director of Parent or a member of any committee of the Board of Directors of Parent, agrees to vote (or cause to be voted) all of the Shares at any meeting of the stockholders of Parent or any adjournment thereof, and in any action by written consent of the stockholders of Parent, (i) in favor of the approval of the issuance of Parent Common Shares pursuant to the Merger and (ii) in favor of any other matter relating to consummation of the transactions contemplated by the Merger Agreement. (a) Grant of Irrevocable Proxy. Concurrently with the execution of this Agreement, Stockholder agrees to deliver to Company a proxy with respect to the Shares in the form attached hereto as Exhibit A (the "Proxy"), which shall be irrevocable to the fullest extent permissible by law. SECTION 1.03 Termination. The obligations of Stockholder pursuant to this Article I shall terminate upon the earlier of (i) the Effective Time, and (ii) the date of the termination of the Merger Agreement pursuant to Section 8.01 thereof. B-1 ARTICLE II Representations and Warranties of Stockholder SECTION 2.01 Authorization; Binding Agreement. Stockholder has all legal right, power, authority and capacity to execute and deliver this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly authorized, executed and delivered by or on behalf of Stockholder and constitutes a legal, valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms, subject to (i) the effect of any applicable bankruptcy, insolvency, moratorium or similar law affecting creditors' rights generally and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies. SECTION 2.02 No Conflict; Required Filings and Consents. (a) The execution and delivery of this Agreement and the grant of the Proxy to Company by Stockholder does not, and the performance of this Agreement and the grant of the Proxy to the Company will not (i) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Stockholder or by which Stockholder or any of Stockholder's properties is bound or affected, (ii) if Stockholder is not a natural person, violate or conflict with the Certificate of Incorporation, Bylaws or other equivalent organizational documents of Stockholder (if any), or (iii) result in or constitute (with or without notice or lapse of time or both) any breach of or default under, or give to another party any right of termination, amendment, acceleration or cancellation of, or result in the creation of any lien or encumbrance or restriction on any of the property or assets of Stockholder pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Stockholder is a party or by which Stockholder or any of Stockholder's properties is bound or affected. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which Stockholder is a trustee whose consent is required for the execution and delivery of this Agreement or the consummation by Stockholder of the transactions contemplated by this Agreement. (b) The execution and delivery of this Agreement and the grant of the Proxy to the Company by Stockholder does not, and the performance of this Agreement and the grant of the Proxy to the Company by Stockholder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any third party or any governmental or regulatory authority, domestic or foreign, except (i) for applicable requirements, if any, of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and (ii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, could not prevent or materially delay the performance by Stockholder of Stockholder's obligations under this Agreement. Stockholder does not have any understanding in effect with respect to the voting or transfer of any Shares. Stockholder is not required to make any filing with or notify any governmental or regulatory authority in connection with this Agreement, the Merger Agreement or the transaction contemplated hereby or thereby pursuant to the requirements of the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, and the rules and regulations promulgated thereunder (the "HSR Act"). SECTION 2.03 Title to Shares. Stockholder is the record or beneficial owner of the Shares free and clear of all encumbrances proxies or voting restrictions other than pursuant to this Agreement. The shares of Parent Common Stock, including options, warrants or other rights to acquire such stock, set forth on the signature page hereto, are all the securities of the Company owned, directly or indirectly, of record or beneficially by Stockholder on the date of this Agreement. SECTION 2.04 Accuracy of Representations. The representations and warranties contained in this Agreement are accurate in all respects as of the date of this Agreement, will be accurate in all respects at all times until termination of this Agreement and will be accurate in all respects as of the date of the consummation of the Merger as if made on that date. B-2 ARTICLE III Covenants SECTION 3.01 Further Assurances. From time to time and without additional consideration, Stockholder shall (at Stockholder's sole expense) execute and deliver, or cause to be executed and delivered, such additional transfers, assignments, endorsements, proxies, consents, waivers and other instruments, and shall (at Stockholder's sole expense) take such further actions, as the Company may reasonably request for the purpose of consummating the Merger. ARTICLE IV General Provisions SECTION 4.01 Entire Agreement. This Agreement, the Merger Agreement and the other agreements referred to herein and therein constitute the entire agreement of the parties and supersedes all prior agreements and undertakings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof. This Agreement may not be amended or modified except in an instrument in writing signed by, or on behalf of, the parties hereto. SECTION 4.02 Survival of Representations and Warranties. All representations and warranties made by Stockholder in this Agreement shall survive any termination of the Merger Agreement or this Agreement. SECTION 4.03 Assignment. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided that any assignment, delegation or attempted transfer any of rights, interests or obligations under this Agreement by Stockholder without the prior written consent of the Company shall be void. SECTION 4.04 Fees and Expenses. Except as otherwise provided herein, all costs and expenses (including, without limitation, all fees and disbursements of counsel, accountants, investment bankers, experts and consultants to a party) incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses. SECTION 4.05 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at the following addresses (or at such other addresses as shall be specified by notice given in accordance with this Section 4.05: (a) If to the Stockholder to: ______________________________________ ______________________________________ ______________________________________ Facsimile No.: with a copy to: Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP 155 Constitution Drive Menlo Park, California 94025 Attention: Brooks Stough and Christopher D. Dillon Facsimile No.: (650) 321-2800 B-3 If to the Company to: Agile Software Corporation One Almaden Blvd. San Jose, CA 95113-2253 Attention: General Counsel Facsimile No.: 408.271.4862 with a copy to: Gray Cary Ware & Freidenrich LLP 400 Hamilton Avenue Palo Alto, CA 94301 Attention: Bruce E. Schaeffer Facsimile No.: (650) 327-3699 SECTION 4.06 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 4.07 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner. SECTION 4.08 Specific Performance. The parties agree that irreparable damage would occur if any of the provisions of this Agreement is not performed in accordance with its specific terms or is otherwise breached. Stockholder agrees that, following any breach or threatened breach by Stockholder of any covenant or obligation contained in this Agreement, Parent shall be entitled (in addition to any other remedy that may be available to it, including monetary damages) to seek and obtain (a) a decree or order of specific performance to enforce the observance and performance of such covenant or obligation and (b) an injunction restraining such breach or threatened breach. Stockholder further agrees that neither Parent nor any other party shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 4.08, and Stockholder irrevocably waives any right he may have to require the obtaining, furnishing or posting of any such bond or similar instrument. SECTION 4.09 Governing Law. This Agreement shall be construed in accordance with, and governed in all respects by, the laws of the State of Delaware without giving effect to principles of conflicts of laws. Each party hereby irrevocably submits to the exclusive jurisdiction of the Court of Chancery in the State of Delaware in any action, suit or proceeding arising in connection with this Agreement, and agrees that any such action, suit or proceeding shall be brought only in such court (and waives any objection based on forum non conveniens or any other objection to venue therein); provided, however, that such consent to jurisdiction is solely for the purpose referred to in this Section 4.09 and shall not be deemed to be a general submission to the jurisdiction of such court or in the State of Delaware other than for such purposes. SECTION 4.10 No Waiver. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The Company shall not be deemed to have waived any claim available to it arising out of this Agreement, or any right, power or privilege hereunder, unless the waiver is expressly set forth in writing duly executed and delivered on behalf of the Company. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. B-4 SECTION 4.11 Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. IN WITNESS WHEREOF, each of the Company and Stockholder has executed or has caused this Agreement to be executed by their duly authorized officer as of the date first written above. AGILE SOFTWARE CORPORATION By: ____________________________________ Name: Title: STOCKHOLDER ________________________________________ Print Name of Stockholder: _____________ Shares beneficially owned: ____________ shares of Ariba Common Stock shares of Ariba Common Stock issuable upon exercise of outstanding options or warrants Signature Page to Parent Voting Agreement B-5 EXHIBIT A IRREVOCABLE PROXY The undersigned stockholder ("Stockholder") of Ariba, Inc., a Delaware corporation (the "Parent"), hereby irrevocably (to the fullest extent permitted by law) appoints the directors on the Board of Directors of Agile Software Corporation, a Delaware corporation (the "Company"), and each of them, as the sole and exclusive attorneys and proxies of the undersigned, with full power of substitution and resubstitution, to vote and exercise all voting and related rights (to the full extent that the undersigned is entitled to do so) with respect to all of the shares of capital stock of Parent that now are or hereafter may be beneficially owned by the undersigned, and any and all other shares or securities of Parent issued or issuable in respect thereof on or after the date hereof (collectively, the "Shares") in accordance with the terms of this Proxy. The Shares beneficially owned by the undersigned stockholder of Parent as of the date of this Proxy are listed on the final page of this Proxy. Upon the undersigned's execution of this Proxy, any and all prior proxies given by the undersigned with respect to any Shares are hereby revoked and the undersigned agrees not to grant any subsequent proxies with respect to the Shares until after the Expiration Date (as defined below). This Proxy is irrevocable (to the fullest extent permitted by law), is coupled with an interest and is granted pursuant to that certain Voting Agreement of even date herewith by and among the Company and Stockholder (the "Voting Agreement"), and is granted in consideration of the Company entering into that certain Agreement and Plan of Merger and Reorganization (the "Merger Agreement"), among Parent, Silver Merger Corporation, a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and the Company. The Merger Agreement provides for the merger of Merger Sub with and into the Company in accordance with its terms (the "Merger"). As used herein, the term "Expiration Date" shall mean the earlier to occur of (i) such date and time as the Merger Agreement shall have been validly terminated pursuant to Article VIII thereof or (ii) such date and time as the Merger shall become effective in accordance with the terms and provisions of the Merger Agreement. The attorneys and proxies named above, and each of them, are hereby authorized and empowered by the undersigned, at any time prior to the Expiration Date, to act as the undersigned's attorney and proxy to vote the Shares, and to exercise all voting, consent and similar rights of the undersigned with respect to the Shares (including, without limitation, the power to execute and deliver written consents) at every annual, special or adjourned meeting of stockholders of Parent and in every written consent in lieu of such meeting (i) in favor of the approval of the issuance of Parent Common Shares pursuant to the Merger and (ii) in favor of any other matter relating to consummation of the transactions contemplated by the Merger Agreement. The attorneys and proxies named above may not exercise this Proxy on any other matter except as provided above. Stockholder may vote the Shares on all other matters. Any obligation of Stockholder hereunder shall be binding upon the successors and assigns of Stockholder. This Proxy is irrevocable (to the fullest extent permitted by law). This Proxy shall terminate, and be of no further force and effect, automatically upon the Expiration Date. Dated: January , 2001 Signature of Stockholder: _______________ Print Name of Stockholder: ______________ Shares beneficially owned: shares of Ariba Common Stock shares of Ariba Common Stock issuable upon exercise of outstanding options or warrants Signature Page to Irrevocable Proxy B-6 EX-99.4 5 0005.txt STOCK OPTION AGREEMENT EXHIBIT 4 STOCK OPTION AGREEMENT STOCK OPTION AGREEMENT (this "Agreement"), is dated as of January 29, 2001, between Ariba, Inc., a Delaware corporation ("Grantee"), and Agile Software Corporation, a Delaware corporation ("Issuer"). WITNESSETH: WHEREAS, Grantee, Issuer and Silver Merger Corporation, a Delaware corporation and a wholly owned subsidiary of Grantee ("Merger Sub"), propose to enter into, simultaneously herewith, an Agreement and Plan of Merger and Reorganization (the "Merger Agreement") pursuant to which Merger Sub will merge with and into Issuer (the "Merger"); WHEREAS, as a condition of and inducement to Grantee's execution of the Merger Agreement, Issuer has agreed to grant Grantee an option to purchase unissued shares of the common stock of Issuer ("Issuer Common Stock") in accordance with the terms of this Agreement; and WHEREAS, capitalized terms not otherwise defined in this Agreement shall have the same meaning ascribed to them in the Merger Agreement; NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement and in the Merger Agreement, the parties hereto agree as follows: ARTICLE I The Stock Option SECTION 1.01 Grant of Stock Option. Issuer hereby grants to Grantee an irrevocable option (the "Stock Option") to purchase 9,396,941 shares of Issuer Common Stock (the "Option Shares") at a cash purchase price per Option Share equal to $54.00 (the "Purchase Price"), subject to the terms and conditions set forth herein. SECTION 1.02 Exercise of Stock Option. (a) Subject to the conditions set forth in Section 1.03 and any additional requirements of any applicable laws, statutes, ordinances, regulations, rules, codes, orders or other requirement or rule of law ("Laws"), the Stock Option may be exercised by Grantee, in whole or in part, at any time or from time to time after the occurrence of an Exercise Event (as defined in Section 1.02(b)); provided, however, that the Stock Option shall terminate and be of no further force and effect upon the earliest to occur of (i) the Effective Time, (ii) twelve (12) months after the occurrence of an Exercise Event (unless prior thereto the Stock Option shall have been exercised in respect of all Option Shares) and (iii) the termination of the Merger Agreement other than as a result of a termination that gives rise to an Exercise Event. Notwithstanding the termination of the Stock Option, Grantee shall be entitled to purchase those Option Shares with respect to which it has exercised the Stock Option in accordance with the terms hereof prior to the termination of the Stock Option. The termination of the Stock Option shall not affect any rights hereunder which by their terms extend beyond the date of such termination. The periods related to the exercise of the Stock Option and the other rights of Grantee hereunder shall be extended (i) to the extent necessary to obtain all regulatory approvals for the exercise of such rights, and for the expiration of all statutory waiting periods, and (ii) to the extent necessary to avoid liability for the Grantee under Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), by reason of such exercise. (b) An "Exercise Event" shall occur for purposes of this Agreement upon the occurrence of any event that would entitle Grantee to the payment of the Termination Fee in accordance with Section 8.05(b) of the Merger Agreement. E-1 (c) In order to exercise the Stock Option, Grantee shall send a written notice (the "Stock Exercise Notice") to Issuer specifying (i) the total number of Option Shares Grantee wishes to purchase, (ii) the denominations of the certificate or certificates evidencing such Option Shares that Grantee wishes to receive and (iii) a date (subject to the earlier satisfaction or waiver of the conditions set forth in Section 1.03) (a "Closing Date"), which shall be a business day which is not later than five (5) business days and not earlier than two (2) business days after delivery of the Stock Exercise Notice, and place for the closing of such purchase (a "Closing"). (d) Any time the Stock Option is exercisable pursuant to the terms of Section 1.02(a), Grantee may elect, in lieu of exercising the Stock Option to purchase Option Shares as provided in Section 1.02(a), to send a written notice to Issuer (the "Cash Exercise Notice") specifying a date not later than fifteen (15) business days and not earlier than five (5) business days after delivery of the Cash Exercise Notice, on which date Issuer shall pay to Grantee an amount in cash (the "Cash Exercise Amount") equal to the Spread (as defined below) multiplied by such number of Option Shares as Grantee shall specify in the Cash Exercise Notice (a "Cash Exercise"). As used in this Agreement, "Spread" shall mean the excess, if any, over the Purchase Price of the higher of (x) if applicable, the highest price per share of Issuer Common Stock paid or to be paid by any person in a Competing Transaction (the "Competing Purchase Price") and (y) the closing price of the shares of Issuer Common Stock on the Nasdaq National Market ("Nasdaq") on the last trading day immediately prior to the date of the Cash Exercise Notice (for purposes of this Section 1.02) or the Repurchase Notice (for purposes of Section 6.01) (the "Closing Price"). If the Competing Purchase Price includes any property other than cash, the Competing Purchase Price shall be the sum of (i) the fixed cash amount, if any, included in the Competing Purchase Price plus (ii) the fair market value of such other property. If such other property consists of securities with an existing public trading market, the average of the closing prices (or the average of the closing bid and asked prices if closing prices are unavailable) for such securities in their principal public trading market on the thirty trading days ending five days prior to the date of the Cash Exercise Notice (for purposes of this Section 1.02) or the Repurchase Notice (for purposes of Section 6.01) shall be deemed to equal the fair market value of such property. If such other property consists of something other than cash or securities with an existing public trading market and, as of the payment date for the Spread, agreement on the value of such other property has not been reached, the Competing Purchase Price shall be deemed to be the amount of any cash included in the Competing Purchase Price plus the fair market value of such other property (as determined by a nationally recognized investment banking firm jointly selected by Grantee and Issuer). The parties shall use their reasonable commercial efforts to cause any determination of the fair market value of such other property to be made within three (3) business days after the date of delivery of the Cash Exercise Notice (for purposes of this Section 1.02) or the Repurchase Notice (for purposes of Section 6.01). Upon a Cash Exercise by Grantee pursuant to this Section 1.02(d), the obligations of Issuer to deliver Option Shares pursuant to Section 1.03 shall be terminated with respect to such number of Option Shares subject to the Cash Exercise Notice. SECTION 1.03 Conditions to Closing. The obligation of Issuer to deliver Option Shares or pay the Cash Exercise Amount, as applicable, upon any exercise of the Stock Option is subject to the conditions that: (a) all waiting periods, if any, under the HSR Act applicable to the issuance of Option Shares shall have expired or have been terminated, and all consents, approvals, orders or authorizations of, or registrations, declarations or filings with, any governmental body, agency, official or authority, if any, required in connection with the issuance of Option Shares, the failure of which to have obtained or made would have the effect of making the issuance of Option Shares illegal, shall have been obtained or made, as the case may be; and (b) there shall be no preliminary or permanent injunction or other final, non-appealable judgment by a court of competent jurisdiction preventing or prohibiting such exercise of the Stock Option, the delivery of the Option Shares or payment of the Cash Exercise Amount in respect of such exercise. E-2 SECTION 1.04 Closings. At each Closing pursuant to Section 1.02(c), Issuer shall deliver to Grantee a certificate or certificates evidencing the applicable number of Option Shares (in the denominations specified in the Stock Exercise Notice), and Grantee shall purchase each such Option Share from Issuer at the Purchase Price. At each Closing pursuant to Section 1.02(d), Issuer shall deliver to Grantee cash in an amount determined pursuant to Section 1.02(d). All payments made pursuant to this Agreement shall be made by wire transfer of immediately available funds to an account designated in writing by Grantee to Issuer. Upon delivery by Grantee to Issuer of the Stock Exercise Notice and the tender of the applicable cash as described above in this Section 1.04, Grantee shall be deemed to be the holder of record of the shares of Issuer Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of Issuer shall then be closed or that certificates representing such shares of Issuer Common Stock shall not then be actually delivered to Grantee or that Issuer shall have failed to designate the bank account described above in this Section 1.04. Certificates evidencing Option Shares delivered hereunder may, at Issuer's election, contain the following legend: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 OR AN EXEMPTION THEREFROM. THE SHARES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF JANUARY 29, 2001 BETWEEN ARIBA, INC. AND AGILE SOFTWARE CORPORATION, A COPY OF WHICH MAY BE OBTAINED FROM ISSUER UPON REQUEST. In addition, the certificates shall bear any other legend as may be required by applicable law. Issuer shall, upon the written request of the holder thereof, issue such holder a new certificate evidencing such Option Shares without such legend in the event (i) such Option Shares have been registered pursuant to the Securities Act of 1933, as amended (the "Securities Act"), (ii) such Option Shares have been sold in reliance on and in accordance with Rule 144 under the Securities Act or (iii) such holder shall have delivered to Issuer an opinion of counsel, which opinion shall, in Issuer's reasonable judgment, be satisfactory in form and substance to Issuer, to the effect that subsequent transfers of such Option Shares may be effected without registration under the Securities Act. SECTION 1.05 Adjustments upon Share Issuances, Changes in Capitalization, Etc. (a) In the event of any change in Issuer Common Stock or in the number of outstanding shares of Issuer Common Stock by reason of a stock dividend, split-up, recapitalization, combination, exchange of shares or similar transaction or any other extraordinary change in the corporate or capital structure of Issuer (including, without limitation, the declaration or payment of an extraordinary dividend of cash, securities or other property), the type and number of shares or securities to be issued by Issuer upon exercise of the Stock Option shall be adjusted appropriately, and proper provision shall be made in the agreements governing such transaction, so that Grantee shall receive upon exercise of the Stock Option the number and class of shares or other securities or property that Grantee would have received in respect of Issuer Common Stock if Grantee had exercised the Stock Option immediately prior to such event or the record date therefor, as applicable, and had elected (to the fullest extent it would have been permitted to elect) to receive such securities, cash or other property. (b) If, during the term of this Agreement, the Issuer enters into an agreement (other than the Merger Agreement) (i) to consolidate with or merge into any person other than Grantee or any Grantee subsidiary, and Issuer shall not be the continuing or surviving corporation of such consolidation or merger, (ii) to permit any person, other than Grantee or any Grantee subsidiary, to merge into Issuer and Issuer shall be the continuing or surviving corporation, but, in connection with such merger, the then outstanding shares of Issuer Common Stock shall be changed into or exchanged for stock or other securities of Issuer or any other person or cash or any other property or then outstanding shares of Issuer Common Stock shall after such merger represent less than 50% of the outstanding shares and share equivalents of the surviving corporation or (iii) to sell or otherwise transfer all or substantially all of Issuer's assets to any person, E-3 other than Grantee or any Grantee subsidiary, then, and in each such case, proper provision shall be made in the agreements governing such transaction so that Grantee shall receive upon exercise of the Stock Option the number and class of shares or other securities or property that Grantee would have received in respect of Issuer Common Stock if Grantee had exercised the Stock Option immediately prior to such transaction or the record date therefor, as applicable, and had elected (to the fullest extent it would have been permitted to elect) to receive such securities, cash or other property. (c) Notwithstanding any other provision of this Agreement, in no event shall the total number of Option Shares exceed nineteen and nine-tenths percent (19.9%) of the total number of shares of Issuer Common Stock issued and outstanding as of the date of this Agreement. (d) The provisions of this Agreement, including, without limitation, Sections 1.01, 1.02, 1.04, 4.01, 4.02, 6.01, 6.04, 7.01 and 7.03, shall apply with appropriate adjustments to any securities for which the Stock Option becomes exercisable pursuant to this Section 1.05. ARTICLE II Representations and Warranties of Issuer Issuer hereby represents and warrants to Grantee as follows: SECTION 2.01 Authority Relative to this Agreement. Issuer is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. The execution, delivery and performance by Issuer of this Agreement and the consummation by Issuer of the transactions contemplated hereby are within Issuer's corporate powers and have been duly authorized by all necessary corporate action. This Agreement has been duly and validly executed and delivered by Issuer and, assuming the due authorization, execution and delivery by Grantee, constitutes a valid and binding agreement of Issuer enforceable against Issuer in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). SECTION 2.02 Authority to Issue Shares. Issuer has taken all necessary corporate action to authorize and reserve and permit it to issue, and at all times from the date hereof until its obligation to deliver shares of Issuer Common Stock upon the exercise of the Stock Option terminates, shall have reserved, all the Option Shares issuable pursuant to this Agreement, and Issuer shall take all necessary corporate action to authorize and reserve and permit it to issue all additional shares of Issuer Common Stock or other securities which may be issued pursuant to Section 1.05, all of which, upon their issuance and delivery in accordance with the terms of this Agreement, shall be duly authorized, validly issued, fully paid and non-assessable and free of preemptive rights. SECTION 2.03 No Conflict; Required Filings and Consents. (a) The execution, delivery and performance by Issuer of this Agreement and the consummation by Issuer of the transactions contemplated hereby require no action by or in respect of, or filing with, any governmental body, agency, official or authority (insofar as such action or filing relates to Issuer) other than (i) compliance with any applicable requirements of the HSR Act, (ii) compliance with any applicable requirements of the Exchange Act, (iii) approvals and authorizations of self-regulatory organizations in the securities field, (iv) as contemplated by Sections 4.02(e) and (f) and (v) such other consents, approvals and filings which, if not obtained or made, would not, individually or in the aggregate, have a material adverse effect on Issuer or materially impair the ability of Issuer to consummate the transactions contemplated hereby. E-4 (b) The execution, delivery and performance by Issuer of this Agreement and the consummation by Issuer of the transactions contemplated hereby do not and will not (i) contravene or conflict with the Certificate of Incorporation or Bylaws (or equivalent organizational documents) of Issuer or any Issuer subsidiary, (ii) assuming receipt of or compliance with all matters referred to in Section 2.03(a), contravene or conflict with or constitute a violation of any provision of any law, regulation, judgment, injunction, order or decree binding upon or applicable to Issuer or any Issuer subsidiary, (iii) constitute a breach of or a default under or give rise to a right of termination, cancellation or acceleration of any right or obligation of Issuer or any Issuer subsidiary or to a loss of any benefit to which Issuer or any Issuer subsidiary is entitled under any provision of any agreement, contract or other instrument binding upon Issuer or any Issuer subsidiary or any license, franchise, permit or other similar authorization held by Issuer or any Issuer subsidiary or (iv) result in the creation or imposition of any Lien on any asset of Issuer or any Issuer subsidiary other than, in the case of each of (ii) and (iii), any such items that, individually or in the aggregate, would not have a material adverse effect on Issuer or materially impair the ability of Issuer to consummate the transactions contemplated by this Agreement. ARTICLE III Representations and Warranties of Grantee Grantee hereby represents and warrants to Issuer as follows: SECTION 3.01 Authority Relative to this Agreement. Grantee is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. The execution, delivery and performance by Grantee of this Agreement and the consummation by Grantee of the transactions contemplated hereby are within Grantee's corporate powers and have been duly authorized by all necessary corporate action. This Agreement has been duly and validly executed and delivered by Grantee and, assuming the due authorization, execution and delivery by Issuer, constitutes a valid and binding agreement of Grantee enforceable against Issuer in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors' rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). SECTION 3.02 No Conflict; Required Filings and Consents. (a) The execution, delivery and performance by Grantee of this Agreement and the consummation by Grantee of the transactions contemplated hereby require no action by or in respect of, or filing with, any governmental body, agency, official or authority (insofar as such action or filing relates to Grantee) other than (i) compliance with any applicable requirements of the HSR Act, (ii) compliance with any applicable requirements of the Exchange Act, (iii) approvals and authorizations of self-regulatory and governmental organizations in the securities and commodities field and (iv) such other consents, approvals and filings which, if not obtained or made, would not, individually or in the aggregate, have a material adverse effect on Grantee or materially impair the ability of Grantee to consummate the transactions contemplated hereby. (b) The execution, delivery and performance by Grantee of this Agreement and the consummation by Grantee of the transactions contemplated hereby do not and will not (i) contravene or conflict with the Certificate of Incorporation or Bylaws (or equivalent organizational documents) of Grantee, Merger Sub or any Grantee subsidiary, (ii) assuming receipt of or compliance with all matters referred to in Section 3.02(a), contravene or conflict with or constitute a violation of any provision of any law, regulation, judgment, injunction, order or decree binding upon or applicable to Grantee, Merger Sub or any Grantee subsidiary, (iii) constitute a breach of or a default under or give rise to a right of termination, cancellation or acceleration of any right or obligation of Grantee, Merger Sub or any Grantee subsidiary or E-5 to a loss of any benefit to which Grantee, Merger Sub or any Grantee subsidiary is entitled under any provision of any agreement, contract or other instrument binding upon Grantee, Merger Sub or any Grantee subsidiary or any license, franchise, permit or other similar authorization held by Grantee, Merger Sub or any Grantee subsidiary or (iv) result in the creation or imposition of any Lien on any asset of Grantee, Merger Sub or any Grantee subsidiary other than, in the case of each of (ii) and (iii), any such items that, individually or in the aggregate, would not materially impair the ability of Grantee to consummate the transactions contemplated by this Agreement. ARTICLE IV Covenants of Issuer SECTION 4.01 Listing; Other Action. (a) Issuer shall, at its expense, use its commercially reasonable efforts to cause the Option Shares to be approved for listing on Nasdaq, subject to notice of issuance, as promptly as practicable following an Exercise Event, and shall provide prompt notice to Nasdaq of the issuance of each Option Share, except to the extent the delivery of the Option Shares can be satisfied with previously listed but unissued shares of Issuer Common Stock. (b) Subject to the other provisions hereof, Issuer shall use its commercially reasonable efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated hereunder, including, without limitation, using its commercially reasonable efforts to obtain all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Entities. Without limiting the generality of the foregoing, Issuer shall, when required in order to effect the transactions contemplated hereunder, make all necessary filings, and thereafter make any other required or appropriate submissions, under the HSR Act and shall supply as promptly as practicable to the appropriate Governmental Entity any additional information and documentary material that may be requested pursuant to the HSR Act. (c) Issuer has taken, and will in the future take, all actions necessary to irrevocably exempt the transactions contemplated by this Agreement from any applicable state takeover law and from any applicable Certificate of Incorporation or Bylaw provisions relating to changes of control or takeovers. (d) Issuer agrees (i) that it shall at all times maintain, free from preemptive rights, sufficient authorized but unissued shares of Issuer Common Stock (which may include previously listed shares) that are issuable pursuant to this Agreement so that the Stock Option may be exercised without additional authorization of Issuer Common Stock after giving effect to all other options, warrants, convertible securities and other rights to purchase Issuer Common Stock; (ii) that it will not, by charter amendment or through reorganization, consolidation, merger, dissolution or sale of assets, or by any other voluntary act, avoid or seek to avoid the observance or performance of any of the covenants to be observed or performed hereunder by Issuer and (iii) that it shall promptly take all action as may from time to time be required in order to permit Grantee to exercise the Stock Option and Issuer to duly and effectively issue shares of Issuer Common Stock pursuant hereto. SECTION 4.02 Registration. (a) Following the exercise of the Stock Option, Grantee may by written notice (the "Registration Notice") to Issuer request the Grantee to register under the Securities Act all or any part of the Option Shares beneficially owned by such Grantee (such Option Shares to be registered being the "Requested Shares") pursuant to a bona fide firm commitment underwritten public offering, in which the Grantee and the underwriters shall effect as wide a distribution of such Option Shares as is reasonably practicable and shall use their commercially reasonable efforts to prevent any person (including any "group" as used in Rule 13d-5 under the Exchange Act)) and its affiliates from purchasing through such offering Restricted E-6 Shares representing more than five percent (5%) of the outstanding shares of Issuer Common Stock on a fully diluted basis (a "Permitted Offering"). (b) The Registration Notice shall include a certificate executed by the Grantee and its proposed managing underwriter, which underwriter shall be an investment banking firm of nationally recognized standing (the "Manager"), stating that (i) they have a good faith intention to commence promptly a Permitted Offering, and (ii) the manager in good faith believes that, based on the then-prevailing market conditions, it is reasonably likely to be able to sell the Requested Shares to the public in a Permitted Offering within one hundred twenty (120) days at a per share price equal to at least eighty percent (80%) of the average of the last sale prices per share of the Issuer Common Stock on The Nasdaq National Market for the ten (10) trading days immediately preceding the date of the Registration Notice (such ten-day average price being the "Fair Market Value"). (c) The Issuer (and/or any person designated by the Issuer) shall thereupon have the option exercisable by written notice delivered to the Grantee within five (5) business days after the receipt of the Registration Notice, irrevocably to agree to purchase all of the Requested Shares proposed to be so sold for cash at a price equal to the product of (i) the number of Requested Shares and (ii) the then Fair Market Value of such shares. (d) Any purchase of Requested Shares by the Issuer (or its designee) under Section 4.02(c) shall take place at a closing to be held at the principal executive offices of the Issuer or at the offices of its counsel as promptly as practicable but in any event at within ten (10) business days after delivery of such notice, and any payment for the shares to be so purchased shall be made by delivery at the time of such closing in immediately available funds. (e) If the Issuer does not elect to exercise its option pursuant to Section 4.02(c) with respect to all Requested Shares, it shall use its best efforts to effect, as promptly as practicable, the registration under the Securities Act of the Requested Shares; provided, however, that (i) neither party shall be entitled to demand more than an aggregate of two (2) effective registration statements hereunder, and (ii) the Issuer will not be required to file any such registration statement during any period of time (not to exceed forty (40) days) when (A) the Issuer is required under the Securities Act to include audited financial statements for any period in such registration statement and such financial statements are not yet available for inclusion in such registration statement; or (B) the Issuer determines, in its reasonable judgment, that such registration would interfere with any financing, acquisition or other transaction involving the Issuer or any of its material subsidiaries and that such transaction is material to the Issuer and its subsidiaries taken as a whole. If consummation of the sale of any Option Shares pursuant to a registration hereunder does not occur within one hundred twenty (120) days after the effectiveness of the initial registration statement, the provisions of this Section 4.02 shall again be applicable to any proposed registration. (f) The Issuer shall use its best efforts to cause any Option Shares registered pursuant to this Section 4.02 to be qualified for sale under the securities or Blue Sky laws of such jurisdictions as the Grantee may reasonably request and shall continue such registration or qualification in effect in such jurisdiction; provided, however, that the Issuer shall not be required to qualify to do business in, or consent to general service of process in, any jurisdiction by reason of this provision. (g) If Issuer at any time after the exercise of the Stock Option proposes to register any shares of Issuer Common Stock under the Securities Act in connection with an underwritten public offering of such Issuer Common Stock, Issuer will promptly give written notice to Grantee of its intention to do so and, upon the written request of Grantee given within twenty (20) days after receipt of any such notice (which request shall specify the number of shares of Issuer Common Stock intended to be included in such underwritten public offering by Grantee), Issuer will cause all such shares for which Grantee requests participation in such registration, to be so registered and included in such underwritten public offering; provided, however, that Issuer may elect (i) not to cause any such shares to be so registered in the case of a registration solely to implement an employee benefit plan or a registration statement filed on Form S-4 of the Securities Act (or any successor form thereto) or (ii) to reduce the number of shares to be registered E-7 if the underwriters in good faith object for valid business reasons; provided further, that the Issuer may make an election pursuant to clause (ii) no more than two times. Grantee shall not be entitled to exercise any right provided for in this Section 4.02(g) after five (5) years following the first exercise of the Stock Option or such earlier time at which all Option Shares held by Grantee can be sold in any three (3)-month period without registration in compliance with Rule 144 of the Securities Act. (h) The registration rights set forth in this Section 4.02 are subject to the condition that the Grantee shall provide the Issuer with such information with respect to its Option Shares, the plans for the distribution thereof, and such other information with respect to the Grantee as, in the reasonable judgment of counsel for the Issuer, is necessary to enable the Issuer to include in such registration statement all material facts required to be disclosed with respect to a registration thereunder. (i) If the Issuer Common Stock is registered pursuant to the provisions of this Section 4.02, Issuer agrees (i) to furnish copies of the registration statement and prospectus relating to the Option Shares covered thereby in such numbers as Grantee may from time to time reasonably request and (ii) if any event shall occur as a result of which it becomes necessary to amend or supplement any registration statement or prospectus, to prepare and file under the applicable securities laws such amendments and supplements as may be necessary to keep available for such time as the distribution contemplated by such registration statement is complete a prospectus covering the Issuer Common Stock meeting the requirements of such securities laws, and to furnish Grantee such numbers of copies of the registration statement and prospectus as amended or supplemented as may reasonably be requested by Grantee. (j) A registration effected under this Section 4.02 shall be effected at the Issuer's expense, except for underwriting discounts and commissions and the fees and the expenses of counsel to the Grantee, and the Issuer shall provide to the underwriters such documentation (including certificates, opinions of counsel and "comfort" letters from auditors) as is customary in connection with underwritten public offerings as such underwriters may reasonably require. (k) In connection with any registration effected under this Section 4.02, the parties agree (i) to indemnify each other and the underwriters in the customary manner, (ii) to enter into an underwriting agreement in form and substance customary for transactions of such type with the Manager and the other underwriters participating in such offering, and (iii) to take all further actions which shall be reasonably necessary to effect such registration and sale (including if the Manager deems it necessary, participating in road-show presentations). (l) The Issuer shall be entitled to include (at its expense) additional shares of its common stock in a registration effected pursuant to Section 4.02(a) only if and to the extent the Manager determines that such inclusion will not adversely affect the prospects for success of such offering. ARTICLE V Investment Intent SECTION 5.01 Grantee shall acquire the Option Shares for investment purposes only and not with a view to any distribution thereof in violation of the Securities Act, and shall not sell any Option Shares purchased pursuant to this Agreement except in compliance with the Securities Act and applicable state securities and "blue sky" laws. ARTICLE VI Repurchase Election SECTION 6.01 Repurchase. At the request of and upon notice to Issuer ("Repurchase Notice"), at any time during the period during which the Stock Option is exercisable pursuant to Section 1.02(b), Issuer (or any successor entity thereof) must pay to Grantee the Repurchase Fee (as defined below) upon delivery by E-8 Grantee of the shares of Issuer Common Stock acquired hereunder in accordance with Section 1.02 with respect to which Grantee then has beneficial ownership. The date on which Grantee delivers the Repurchase Notice under this Section 6 is referred to as the "Repurchase Request Date". The "Repurchase Fee" shall be equal to the sum of the following: (a) the aggregate Purchase Price paid by Grantee to Issuer in accordance with Section 1.02 for any shares of Issuer Common Stock acquired pursuant to the Stock Option with respect to which Grantee then has beneficial ownership; and (b) the Spread, multiplied by the number of shares of Issuer Common Stock with respect to which the Stock Option has been exercised and with respect to which Grantee then has beneficial ownership. SECTION 6.02 Repurchase Payment. Subject to Section 6.03, if Grantee exercises its rights under this Section 6, within five (5) Business Days after the Repurchase Request Date, (i) Issuer shall pay by wire transfer to Grantee the Repurchase Fee in immediately available funds to an account designated in writing by Grantee to Issuer, and (ii) Grantee shall surrender to Issuer certificates representing the shares of Issuer Common Stock acquired hereunder with respect to which Grantee then has beneficial ownership, and Grantee shall warrant that it has sole record and beneficial ownership of such shares and that the same are then free and clear of all liens, claims, charges and encumbrances of any kind whatsoever. SECTION 6.03 Limitation on Repurchase. Issuer shall use its best efforts to ensure that it can fully perform all of its obligations under this Section 6 under applicable Law. If Issuer is prohibited under applicable law or regulation from repurchasing the Option Shares contemplated by this Section 6 in full, Issuer will promptly so notify Grantee, repurchase the maximum possible number of Option Shares allowed under applicable law and as soon as practicable thereafter deliver or cause to be delivered, from time to time, to Grantee the portion of the Repurchase Fee that it is no longer prohibited from delivering. SECTION 6.04 Repurchase at the Election of Issuer. (a) Except to the extent that Grantee shall have previously exercised its rights under Section 6.01, at the request of the Issuer during the six- month period immediately following the Repurchase Period, the Issuer may repurchase from Grantee, and Grantee shall sell to the Issuer, all (but not less than all) the shares of the Issuer Common Stock acquired by Grantee pursuant to Section 1.02 with respect to which Grantee then has beneficial ownership, at a price equal to the greater of (I) one hundred ten percent (110%) of the Current Market Price (as defined in Section 6.04(c)) or (II) the sum of (X) the Purchase Price in respect of the shares so acquired plus (Y) Grantee's Pre-Tax Carrying Cost (as defined in Section 6.04(c)), multiplied in either case by the number of shares so acquired (the "Section 6.04 Repurchase Fee"); provided, that the Issuer's rights under this Section 6.04 shall be suspended (with any such rights being extended accordingly) during any period when the exercise of such rights would subject Grantee to liability or disgorgement of profits pursuant to Section 16(b) of the Exchange Act. (b) If the Issuer exercises its rights under this Section 6.04, the Issuer shall, within ten (10) business days pay the Section 6.04 Repurchase Fee in immediately available funds and Grantee shall surrender to the Issuer certificates evidencing the shares of the Issuer Common Stock purchased hereunder with respect to which Grantee then has beneficial ownership, and Grantee shall warrant that it has sole beneficial ownership of such shares and that all such shares are then free and clear of all claims, liens, charges and encumbrances of any kind whatsoever. (c) As used in Section 6.04(a), (A) "Current Market Price" shall mean the average of the last sale prices per share of the Issuer Common Stock on The Nasdaq National Market for the ten (10) trading days immediately preceding the date of the Issuer's request for repurchase pursuant to this Section 6.04, and (B) "Pre-Tax Carrying Cost" shall mean an amount equal to the interest on the aggregate purchase price paid by Grantee for the shares of the Issuer Common Stock purchased pursuant to the Stock Option from the date of purchase to the date of repurchase at the rate of interest announced by Citibank, N.A. as its prime or base lending or reference rate during such period, less any dividends received on the shares so purchased, divided by the number of shares so purchased. E-9 SECTION 6.05 Profit Cap. Notwithstanding anything to the contrary in Sections 6.01, 6.04 and 1.02(d) of this Agreement, Issuer will not be required to pay Grantee pursuant to any such provisions in excess of an aggregate of (x) $115,000,000 plus (y) the Exercise Price paid by Grantee for Issuer Common Stock acquired pursuant to the Stock Option minus (z) any amounts paid to Grantee by the Issuer pursuant to (i) Section 8.05(b) of the Merger Agreement, (ii) any cash paid pursuant to Section 6.01 or Section 6.04 and (iii) any cash paid pursuant to Section 1.02(d) (the "Profit Cap"). If the total amount that would otherwise be received by Grantee would exceed the Profit Cap, Grantee, at its election, shall either (i) reduce the number of shares of Issuer Common Stock subject to the Option, (ii) deliver to Company for cancellation shares of Issuer Common Stock previously purchased by Grantee, (iii) pay cash to Issuer, (iv) reduce the amount paid pursuant to Section 6.01, Section 6.04 or Section 1.02(d), or (v) any combination of the foregoing so Grantee's actually realized total profit, when aggregated with the Termination Fee actually paid to Grantee, shall not exceed the Profit Cap after taking into account the foregoing actions. ARTICLE VII Restrictions on Transfer SECTION 7.01 Restrictions on Transfer. Prior to the Expiration Date (as defined in Section 7.03 below), Grantee shall not, directly or indirectly, by operation of law or otherwise, sell, assign, pledge, or otherwise dispose of or transfer any shares of Issuer Common Stock acquired by Grantee pursuant to Section 1.02 (for purposes of this Article VII, "Restricted Shares") beneficially owned by Grantee, other than (i) pursuant to Section 1.02(d) or (ii) in accordance with Sections 4.02, 6.01, 6.04, 7.02 or 7.03. SECTION 7.02 Permitted Sales. Grantee shall be permitted to sell any Restricted Shares beneficially owned by it if such sale is made pursuant to a tender or exchange offer that has been approved or recommended, or otherwise determined to be fair to and in the best interests of the Grantees of common stock of Issuer, by a majority of the members of the Board of Directors of Issuer. SECTION 7.03 The Issuer's Right of First Refusal. At any time after the first occurrence of an Exercise Event and prior to the expiration of twenty- four (24) months immediately following the first purchase of shares of the Issuer Common Stock pursuant to the Stock Option ("Expiration Date"), if Grantee shall desire to sell, assign, transfer or otherwise dispose of all or any of the shares of the Issuer Common Stock acquired by it pursuant to the Stock Option, it shall give the Issuer written notice of the proposed transaction (a "Grantee Offer Notice"), identifying the proposed transferee, accompanied by a copy of a bona fide written offer to purchase such shares signed by such transferee and setting forth the terms of the proposed transaction. A Grantee Offer Notice shall be deemed an offer by Grantee to the Issuer, which may be accepted within five (5) business days of the receipt of such Grantee Offer Notice, on the same terms and conditions and at the same price at which Grantee is proposing to transfer such shares to such transferee. If Issuer's written acceptance is not received by Grantee within such five (5) business day period, such offer shall be deemed to be rejected. The purchase of any such shares or other securities by the Issuer shall be settled within five (5) business days of the date of the written acceptance of the offer and the purchase price shall be paid to Grantee in immediately available funds. In the event of the failure or refusal of the Issuer to purchase all the shares covered by a Grantee Offer Notice, Grantee may sell all, but not less than all, of such shares to the proposed transferee at no less than the price specified and on terms that are not materially more favorable to the transferee than those set forth in the Grantee Offer Notice; provided that the provisions of this sentence shall not limit the rights Grantee may otherwise have in the event the Issuer has accepted the offer contained in the Grantee Offer Notice and wrongfully refuses to purchase the shares or other securities subject thereto. The requirements of this Section 7.03 shall not apply to (i) any disposition as a result of which the proposed transferee would own beneficially not more than five percent (5%) of the outstanding voting power of the Issuer, (ii) any disposition of the Issuer Common Stock by a person to whom Grantee has assigned its rights under the Stock Option with the consent of the Issuer, (iii) any sale by means of a public offering registered under the Securities Act, or (iv) any transfer to a wholly-owned subsidiary of Grantee which agrees in writing E-10 to be bound by the terms hereof. All notices required to be delivered pursuant to this Section 7.03 shall be delivered in accordance with Section 8.03 hereof. ARTICLE VIII Miscellaneous SECTION 8.01 Amendment; Waiver. (a) This Agreement may be amended by the parties hereto by action taken by or on behalf of their respective Boards of Directors at any time prior to the Effective Time. This Agreement may not be amended, except by an instrument in writing signed by each of the parties hereto. (b) At any time prior to the Effective Time, any party hereto may (i) extend the time for the performance of any obligation or other act of any other party hereto and (ii) waive compliance with any agreement or condition contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby. SECTION 8.02 Fees and Expenses. Except as otherwise set for the in the Merger Agreement, all Expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party incurring such expenses, whether or not the Merger or any other transaction is consummated. SECTION 8.03 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by cable, telecopy, facsimile, telegram or telex or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 8.03): if to Parent or Merger Sub: Ariba, Inc. 1565 Charleston Rd. Mountain View, CA 94043 Attention: General Counsel Facsimile No.: (650) 930-8188 with a copy to: Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP 155 Constitution Drive Menlo Park, CA 94025 Attention: Brooks Stough and Christopher D. Dillon Facsimile No.: (650) 321-2800 if to the Company: Agile Software Corporation One Almaden Blvd. San Jose, CA 95113-2253 Attention: General Counsel Facsimile No.: (408) 271-4862 with a copy to: Gray Cary Ware & Freidenrich LLP 400 Hamilton Avenue Palo Alto, CA 94301 Attention: Bruce E. Schaeffer Facsimile No.: (650) 327-3699 E-11 SECTION 8.04 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect as long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the fullest extent possible. SECTION 8.05 Assignment; Binding Effect; Benefit. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement. SECTION 8.06 Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or in equity. SECTION 8.07 Governing Law; Forum. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. (b) Each party hereby irrevocably submits to the exclusive jurisdiction of the Court of Chancery in the State of Delaware in any action, suit or proceeding arising in connection with this Agreement, and agrees that any such action, suit or proceeding shall be brought only in such court (and waives any objection based on forum non conveniens or any other objection to venue therein); provided, however, that such consent to jurisdiction is solely for the purpose referred to in this Section 8.07(b) and shall not be deemed to be a general submission to the jurisdiction of such court or in the State of Delaware other than for such purposes. SECTION 8.08 Waiver of Jury Trial. EACH OF GRANTEE AND ISSUER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF GRANTEE OR ISSUER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. SECTION 8.09 Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 8.10 Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. SECTION 8.11 Mutual Drafting. Each party hereto has participated in the drafting of this Agreement, which each party acknowledges is the result of extensive negotiations between the parties. SECTION 8.12 Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings among the parties with respect thereto. No addition to or modification of any provision of this Agreement shall be binding upon any party hereto unless made in writing and signed by all parties hereto. E-12 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. ISSUER: AGILE SOFTWARE CORPORATION By: _________________________________ Name: Title: GRANTEE: ARIBA, INC. By: _________________________________ Name: Title: Signature Page to Stock Option Agreement E-13 -----END PRIVACY-ENHANCED MESSAGE-----