Trilogy owns 99.5% .Check out excerpt from S-1
RELATIONSHIP WITH TRILOGY
The Company was established as a separate business unit within Trilogy on
July 1, 1993, and was incorporated on July 18, 1994. As of June 30, 1998,
Trilogy owned 99.5% of the outstanding shares of Common Stock of the Company.
Mr. Liemandt, a director of the Company, is Chairman and Chief Executive
Officer and a substantial stockholder of Trilogy. Upon completion of this
offering, Trilogy will beneficially own approximately % of the outstanding
shares of Common Stock ( % if the Underwriters' over-allotment option is
exercised in full). For as long as Trilogy continues to beneficially own more
than 50% of the outstanding shares of the Company's Common Stock, Trilogy will
be able to direct the election of all of the members of the Company's Board of
Directors and exercise a controlling influence over the business and affairs
of the Company, including any determinations with respect to mergers or other
business combinations involving the Company, the acquisition or disposition of
assets by the Company, the incurrence of indebtedness by the Company, the
issuance of any additional Common Stock or other equity securities of the
Company, and the payment of dividends with respect to the Common Stock.
Similarly, Trilogy will have the power to determine matters submitted to a
vote of the Company's stockholders without the consent of the Company's other
stockholders, will have the power to prevent a change in control of the
Company and could take other actions that might be favorable to Trilogy. See
"Risk Factors-- Control By and Relationship with Trilogy".
Trilogy has advised the Company that its current intent is to continue to
hold all of the Common Stock beneficially owned by it following this offering.
However, Trilogy is not subject to any contractual obligation to retain its
controlling interest, except that Trilogy has agreed not to sell or otherwise
dispose of any shares of Common Stock of the Company for a period of days
after the date of this Prospectus without the prior written consent of
Goldman, Sachs & Co. See "Underwriting". As a result, there can be no
assurance concerning the period of time during which Trilogy will maintain its
beneficial ownership of Common Stock owned by it following this offering. Any
disposition by Trilogy of any of the shares of Common Stock it owns following
this offering may be effected in one or more transactions, including a public
offering, a distribution by Trilogy of such Common Stock to its stockholders,
an offer by Trilogy to exchange such Common Stock for outstanding Trilogy
common stock, or other transaction. Beneficial ownership of at least 80% of
the total voting power of the Company and 80% of each class of nonvoting
capital stock of the Company is required in order for Trilogy to be able to
effect a tax free spin off of the shares of Common Stock or certain other tax
free transactions. See "Risk Factors--Risks Associated with Dependence on
Trilogy; Limited Independent Operating History; Potential Conflicts of
Interest" and "Risk Factors--Possible Future Sales of Common Stock byTrilogy".
In June 1996, the Company and Trilogy entered into certain agreements for
the purpose of clarifying the ongoing relationship with between the two
companies. Because these agreements were entered into at a time when the
Company was a wholly-owned subsidiary of Trilogy, they may not be the result
of arms'-length negotiations between the parties. Pursuant to the terms of an
Asset Transfer Agreement, Trilogy transferred the assets and liabilities
comprising Trilogy's pc.Order.com division to the Company in exchange for 900
shares of the Company's Common Stock (which shares were subsequently split in
September 1996 into 11,520,000 shares of the Company's Common Stock) (the
"Transferred Shares"). Pursuant to the Asset Transfer Agreement, the Company
also granted Trilogy certain piggyback and demand registration rights, which
rights Trilogy may transfer to any transferee of the Transferred Shares,
subject to certain limitations. See "Description of Capital Stock--
Registration Rights". These registration rights have been specifically waived
by Trilogy in connection with this offering.
The Technology, Services and License Agreement, the Master Services
Agreement and the Tax Allocation Agreement described below, have each been
filed as exhibits to the Registration Statement
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of which this Prospectus forms a part and such summaries are qualified in
their entirety by this reference to the full text of such agreements. Because
the Company was greater than a 95% subsidiary of Trilogy at the time these
agreements were entered into, they may not be the result of arms'-length
negotiations between the parties. |
