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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
QUARTERDECK CORPORATION
(NAME OF SUBJECT COMPANY)
OAK ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
SYMANTEC CORPORATION
(BIDDER)
COMMON STOCK, PAR VALUE $0.001 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
747712 10 7
(CUSIP NUMBER OF CLASS OF SECURITIES)
DEREK P. WITTE, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
SYMANTEC CORPORATION
10201 TORRE AVENUE
CUPERTINO, CALIFORNIA 95014-2132
(408) 253-9600
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF BIDDER)
COPIES TO:
GORDON K. DAVIDSON, ESQ.
DAVID K. MICHAELS, ESQ.
TRAM T. PHI, ESQ.
FENWICK & WEST LLP
TWO PALO ALTO SQUARE
PALO ALTO, CALIFORNIA 94036
(650) 494-0600
CALCULATION OF FILING FEE
<TABLE>
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
$48,071,337 $14,181.04
</TABLE>
* For purposes of calculating the filing fee only. This calculation assumes the
purchase of 92,444,879 shares of Common Stock, par value $0.001 per share
(including the associated Preferred Stock purchase rights), of Quarterdeck
Corporation at $0.52 per share in cash. Such number of shares represents, as
of October 15, 1998, (a) 73,531,703 shares of Common Stock outstanding, (b)
16,030,188 shares of Common Stock issuable upon conversion of 4,248 shares of
Series C Convertible Preferred Stock that are outstanding or are subject to
purchase upon exercise of outstanding warrants and (c) 2,882,988 shares of
Common Stock that are subject to purchase upon exercise of outstanding
options having an exercise price of less than $0.52 per share.
** The amount of the filing fee was calculated in accordance with Rule 0-11(d)
of the Securities Exchange Act of 1934, as amended.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: None
Form of Registration No.: Not Applicable
Filing Party: Not Applicable
Date Filed: Not Applicable
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The item number and responses thereto below are in accordance with the
requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Quarterdeck Corporation, a Delaware
corporation, which has its principal executive offices at 13160 Mindanao Way,
Marina del Rey, California 90292.
(b) This Tender Offer Statement on Schedule 14D-1 (this "Statement")
relates to the offer by Oak Acquisition Corporation ("Purchaser"), a Delaware
corporation and a wholly owned subsidiary of Symantec Corporation ("Symantec"),
a Delaware corporation, to purchase all outstanding shares of Common Stock, par
value $0.001 per share (the "Company Common Stock") of Quarterdeck Corporation
(the "Company"), a Delaware corporation, including the associated Preferred
Stock purchase rights issued pursuant to the Rights Agreement dated August 11,
1992, as amended, between the Company and American Stock Transfer & Trust (the
"Rights" and, together with the Company Common Stock, the "Shares") at a price
of $0.52 per Share, net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in the Offer to Purchase dated
October 19, 1998 (the "Offer to Purchase") and in the related Letter of
Transmittal (the "Letter of Transmittal" which, together with the Offer to
Purchase, as each may be amended or supplemented from time to time, constitute
the "Offer"), copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively.
The information set forth in the Introduction and Section 1 ("Terms of the
Offer; Expiration Date") of the Offer to Purchase is incorporated herein by
reference.
(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer
to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (g) This Statement is being filed by Purchaser and Symantec. The
information concerning the name, state or other place of organization, principal
business and address of the principal office of each of Purchaser and Symantec,
and the information concerning the name, business address, present principal
occupation or employment and the name, principal business and address of any
corporation or other organization in which such employment or occupation is
conducted, material occupations, positions, offices or employments during the
last five years and citizenship of each of the executive officers and directors
of Purchaser and Symantec are set forth in the Introduction, Section 8 ("Certain
Information Concerning Purchaser and Symantec") and Schedule I of the Offer to
Purchase and are incorporated herein by reference.
(e)-(f) During the last five years, none of Purchaser or Symantec and, to
the knowledge of Purchaser and Symantec, none of the persons listed in Schedule
I of the Offer to Purchase has been (i) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 8 ("Certain Information Concerning
Purchaser and Symantec") and Section 10 ("Background of the Offer; Contacts with
the Company; the Transaction Documents") of the Offer to Purchase is
incorporated herein by reference.
(b) The information set forth in the Introduction, Section 7 ("Certain
Information Concerning the Company"), Section 8 ("Certain Information Concerning
Purchaser and Symantec"), Section 10 ("Background of the Offer, Contacts with
the Company; the Transaction Documents") and Section 11 ("Purpose of the Offer;
Plans for the Company After the Offer and the Merger; Stockholder Approval and
Appraisal") of the Offer to Purchase is incorporated herein by reference.
2
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ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in Section 9 ("Source and Amount of Funds")
of the Offer to Purchase is incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction, Section 10
("Background of the Offer; Contacts with the Company; the Transaction
Documents") and Section 11 ("Purpose of the Offer; Plans for the Company After
the Offer and the Merger; Stockholder Approval and Appraisal") of the Offer to
Purchase is incorporated herein by reference.
(f)-(g) The information set forth in Section 13 ("Effect of the Offer on
the Market for the Shares, Quotation and Exchange Act Registration") of the
Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introduction and Section 8
("Certain Information Concerning Purchaser and Symantec") of the Offer to
Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction and Section 8 ("Certain
Information Concerning Purchaser and Symantec"), Section 10 ("Background of the
Offer, Contacts with the Company; the Transaction Documents") and Section 11
("Purpose of the Offer; Plans for the Company After the Offer and the Merger;
and Stockholder Approval and Appraisal") of the Offer to Purchase is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning
Purchaser and Symantec") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(c) The information set forth in Section 16 ("Certain Legal Matters and
Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth in Section 13 ("Effect of the Offer on the
Market for the Shares, Quotation and Exchange Act Registration") is incorporated
herein by reference.
(e) The information set forth in Section 16 ("Certain Legal Matters and
Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference.
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ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
(a)(1) Form of Offer to Purchase dated October 19, 1998.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.
(a)(5) Form of Letter to Clients.
(a)(6) Form of Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Summary Advertisement as published in the New York Times on October
19, 1998.
(a)(8) Text of Press Release by Symantec and the Company dated October 15,
1998.
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of October 15, 1998, among
Symantec, Purchaser and the Company.
(c)(2) License Agreement, dated October 15, 1998, between the Company and
Symantec.
(c)(3) Form of Stockholder Agreements, dated as of October 15, 1998 between
Symantec and each of Frank W.T. LaHaye, William H. Lane III, King R.
Lee, Howard Morgan, Frank R. Greico, John Strosahl, Cheri
Kaplan-Smith, Joyce Wrenn, Suzanne Dickson and Gadi Navon.
(c)(4) Non-Disclosure Agreement, dated October 1, 1998, between the Company
and Symantec, as amended on October 13, 1998.
(d) None.
(e) Not applicable.
(f) None.
4
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SIGNATURE
After due 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.
October 19, 1998
OAK ACQUISITION CORPORATION
By: /s/ DEREK WITTE
------------------------------------
Name: Derek Witte
Title: President
SYMANTEC CORPORATION
By: /s/ DEREK WITTE
------------------------------------
Name: Derek Witte
Title: Vice President, General
Counsel
and Secretary
5
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EXHIBIT INDEX
(a)(1) Form of Offer to Purchase dated October 19, 1998.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.
(a)(5) Form of Letter to Clients.
(a)(6) Form of Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Summary Advertisement as published in the New York Times on October
19, 1998.
(a)(8) Text of Press Release by Symantec and the Company dated October 15,
1998.
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of October 15, 1998, among
Symantec, Purchaser and the Company.
(c)(2) License Agreement, dated October 15, 1998, between the Company and
Symantec.
(c)(3) Form of Stockholder Agreements, dated as of October 15, 1998 between
Symantec and each of Frank W.T. LaHaye, William H. Lane III, King R.
Lee, Howard Morgan, Frank R. Greico, John Strosahl, Cheri
Kaplan-Smith, Joyce Wrenn, Suzanne Dickson and Gadi Navon.
(c)(4) Non-Disclosure Agreement, dated October 1, 1998, between the Company
and Symantec, as amended on October 13, 1998.
(d) None.
(e) Not applicable.
(f) None.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
QUARTERDECK CORPORATION
AT
$0.52 NET PER SHARE
BY
OAK ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
SYMANTEC CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, NOVEMBER 16, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THAT
NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.001 PER SHARE (THE "COMPANY
COMMON STOCK") OF QUARTERDECK CORPORATION (THE "COMPANY"), INCLUDING THE
ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS ISSUED PURSUANT TO THE RIGHTS
AGREEMENT DATED AUGUST 11, 1992, AS AMENDED, BETWEEN THE COMPANY AND AMERICAN
STOCK TRANSFER & TRUST AS RIGHTS AGENT (THE "RIGHTS" AND, TOGETHER WITH THE
COMPANY COMMON STOCK, THE "SHARES") THAT SHALL CONSTITUTE AT LEAST A MAJORITY OF
THE THEN OUTSTANDING SHARES ON A FULLY DILUTED BASIS (AS DEFINED HEREIN) AND (2)
THE EXPIRATION OR TERMINATION OF ALL WAITING PERIODS IMPOSED UPON CONSUMMATION
OF THE OFFER BY THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED (THE "HSR ACT"), AND THE REGULATIONS THEREUNDER, AS WELL AS THE OTHER
CONDITIONS DESCRIBED HEREIN.
THE BOARD OF DIRECTORS OF QUARTERDECK CORPORATION HAS DETERMINED UNANIMOUSLY
THAT EACH OF THE OFFER (AS DEFINED HEREIN) AND THE MERGER (AS DEFINED HEREIN) IS
FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF QUARTERDECK
CORPORATION AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
BROADVIEW INTERNATIONAL LLC ("BROADVIEW"), FINANCIAL ADVISOR TO THE COMPANY,
HAS DELIVERED TO THE BOARD OF DIRECTORS OF THE COMPANY ITS WRITTEN OPINION TO
THE EFFECT THAT, AS OF OCTOBER 15, 1998, THE DATE OF THE MERGER AGREEMENT (AS
DEFINED BELOW) AND SUBJECT TO THE VARIOUS ASSUMPTIONS AND LIMITATIONS STATED
THEREIN, THE $0.52 IN CASH TO BE RECEIVED BY THE HOLDERS OF SHARES IN THE OFFER
AND THE MERGER IS FAIR TO SUCH HOLDERS FROM A FINANCIAL POINT OF VIEW. THE FULL
TEXT OF THE WRITTEN OPINION OF BROADVIEW CONTAINING THE ASSUMPTIONS MADE, THE
MATTERS CONSIDERED AND THE SCOPE OF THE REVIEW UNDERTAKEN IN RENDERING SUCH
OPINION AS WELL AS THE LIMITATIONS OF SUCH OPINION IS INCLUDED WITH THE
COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9, WHICH IS
BEING MAILED TO STOCKHOLDERS OF THE COMPANY CONCURRENTLY HEREWITH.
IMPORTANT
Any stockholder of the Company desiring to tender all or any portion of such
stockholder's Shares should either: (i) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal and mail or deliver it together with the certificate(s)
evidencing tendered Shares (and, if separate, the certificates representing the
Rights) and any other required documents to the Depositary or tender such Shares
pursuant to the procedure for book-entry transfer set forth in Section 3 of this
Offer to Purchase, or (ii) request such stockholder's broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for such
stockholder. Any stockholder whose Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact
such broker, dealer, commercial bank, trust company or other nominee if such
stockholder desires to tender such shares.
A stockholder who desires to tender Shares and cannot deliver such Shares
and all other required documents to the Depositary by the expiration of the
Offer, or who cannot comply with the procedure for book-entry transfer on a
timely basis, may tender such Shares by following the procedure for guaranteed
delivery procedure set forth in Section 3 of this Offer to Purchase.
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may also be obtained from the Information Agent or from brokers,
dealers, commercial banks or trust companies.
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
October 19, 1998
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TABLE OF CONTENTS
<TABLE>
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PAGE
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INTRODUCTION..................................................... 1
1. Terms of the Offer; Expiration Date......................... 4
2. Acceptance for Payment and Payment for Shares............... 5
3. Procedures for Accepting the Offer and Tendering Shares..... 6
4. Withdrawal Rights........................................... 8
5. Certain Federal Income Tax Consequences..................... 9
6. Price Range of Shares....................................... 10
7. Certain Information Concerning the Company.................. 10
8. Certain Information Concerning Purchaser and Symantec....... 12
9. Source and Amount of Funds.................................. 13
10. Background of the Offer; Contacts with the Company; the
Transaction Documents....................................... 14
11. Purpose of the Offer; Plans for the Company After the Offer
and the Merger; Stockholder Approval and Appraisal.......... 24
12. Dividends and Distributions................................. 26
13. Effect of the Offer on the Market for the Shares, Quotation
and Exchange Act Registration............................... 26
14. Extension of Tender Period; Termination; Amendment.......... 27
15. Certain Conditions of the Offer............................. 27
16. Certain Legal Matters and Regulatory Approvals.............. 29
17. Fees and Expenses........................................... 31
18. Miscellaneous............................................... 32
Schedule I -- Directors and Executive Officers of Purchaser
and Symantec
</TABLE>
i
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To the Holders of Common Stock
(including the Associated Preferred Stock Purchase Rights)
of QUARTERDECK CORPORATION:
INTRODUCTION
The Offer. Oak Acquisition Corporation ("Purchaser"), a Delaware
corporation and a wholly owned subsidiary of Symantec Corporation ("Symantec"),
a Delaware corporation, hereby offers to purchase all outstanding shares of
Common Stock, par value $0.001 per share (the "Company Common Stock"), of
Quarterdeck Corporation (the "Company"), a Delaware corporation, including the
associated Preferred Stock purchase rights (the "Rights" and, together with the
Company Common Stock, the "Shares") issued pursuant to the Rights Agreement
dated August 11, 1992, as amended, between the Company and American Stock
Transfer & Trust, as Rights Agent at a price of $0.52 per Share, net to the
seller in cash, without interest thereon (the "Offer Price"), subject to
reduction for any applicable federal backup or other withholding taxes, upon the
terms and subject to the conditions set forth in this Offer to Purchase ("Offer
to Purchase") and in the related Letter of Transmittal (the "Letter of
Transmittal" which, together with the Offer to Purchase, and any amendments or
supplements thereto, constitute the "Offer").
Fees and Expenses. Tendering stockholders will not be obligated to pay
brokerage fees or commissions or, except as otherwise provided in Instruction 6
of the Letter of Transmittal, stock transfer taxes with respect to the purchase
of Shares by Purchaser pursuant to the Offer. However, any tendering stockholder
or other payee who fails to complete and sign the Substitute Form W-9 that is
included in the Letter of Transmittal may be subject to a required backup
federal income tax withholding of 31% of the gross proceeds payable to such
stockholder or other payee pursuant to the Offer. Purchaser will pay all charges
and expenses of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
which is acting as Dealer Manager for the Offer (in such capacity, the "Dealer
Manager"), State Street Bank and Trust Company (the "Depositary") and D.F. King
& Co., Inc. (the "Information Agent") incurred in connection with the Offer. See
"Section 17. Fees and Expenses."
THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED UNANIMOUSLY THAT EACH
OF THE OFFER AND THE MERGER (AS DEFINED BELOW) IS FAIR TO, AND IN THE BEST
INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, AND RECOMMENDS THAT STOCKHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WOULD BE MADE ONLY PURSUANT TO
SEPARATE PROXY MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF THE
SECURITIES EXCHANGE OF 1934, AS AMENDED (THE "EXCHANGE ACT").
Fairness Option. Broadview International LLC, the Company's financial
advisor ("Broadview"), has delivered to the Company Board its written opinion
dated October 15, 1998 to the effect that, as of the date of such opinion, and
subject to the various assumptions and limitations stated therein, the
consideration to be received by holders of Common Stock pursuant to the Offer
and related Merger (as defined below) is fair to the stockholders of the Company
from a financial point of view. Such opinion is set forth in full as an exhibit
to the Company's Solicitation/Recommendation Statement on Schedule 14D-9, which
is being mailed to stockholders of the Company herewith, and stockholders are
urged to read the opinion in its entirety.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH SHALL CONSTITUTE AT LEAST A MAJORITY OF THE THEN OUTSTANDING SHARES
ON A FULLY DILUTED BASIS (AFTER GIVING EFFECT TO THE EXERCISE OR CONVERSION OF
ALL OPTIONS, RIGHTS AND SECURITIES EXERCISABLE OR CONVERTIBLE INTO SHARES, BUT
ONLY TO THE EXTENT THAT ANY SUCH OPTIONS, RIGHTS OR SECURITIES ARE EXERCISABLE
OR CONVERTIBLE INTO SUCH
1
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SHARES AT A PER SHARE PRICE LESS THAN $0.52) (THE "MINIMUM CONDITION"), AND (2)
THE EXPIRATION OR TERMINATION OF ANY WAITING PERIODS IMPOSED UPON CONSUMMATION
OF THE OFFER BY THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED (THE "HSR ACT"), AS WELL AS THE OTHER CONDITIONS DESCRIBED HEREIN. SEE
SECTION 15 WHICH SETS FORTH IN FULL THE CONDITIONS TO THE OFFER.
Shares, Warrants and Options Outstanding. The Company has advised Purchaser
that as of October 15, 1998, 73,531,703 Shares were issued and outstanding, and
4,248 shares of Series C Convertible Preferred Stock were issued and outstanding
(including 1,379 shares issuable upon exercise of outstanding warrants to
purchase Company Preferred Stock). The Company has advised Purchaser that, as of
October 15, 1998, the outstanding shares of Company's Series C Convertible
Preferred Stock, together with all shares of such Preferred Stock issuable upon
exercise of outstanding warrants, are convertible into 16,030,188 Shares. The
Company has advised Purchaser that as of October 15, 1998, the Company has duly
reserved a total of 7,335,227 Shares for issuance upon exercise of outstanding
Options granted pursuant to the Company's 1990 Directors Stock Options Plan, its
Amended and Restated 1990 Stock Plan, its 1996 Acquisition Stock Option Plan
(the "Stock Option Plans") or outside of such Stock Option Plans, of which
options to purchase 2,882,988 shares have an exercise price of not in excess of
$0.52. Based on the foregoing and assuming all such options and warrants are
exercised, Purchaser believes that approximately 46,222,440 Shares must be
validly tendered and not withdrawn prior to the expiration of the Offer in order
for the Minimum Condition to be satisfied. See "Section 1. Terms of the Offer;
Expiration Date."
Merger Agreement. The Offer is being made pursuant to an Agreement and Plan
of Merger, dated as of October 15, 1998 (the "Merger Agreement"), among
Purchaser, Symantec and the Company. The Merger Agreement provides that, among
other things, as soon as practicable after the purchase of Shares pursuant to
the Offer and the satisfaction of the other conditions set forth in the Merger
Agreement and in accordance with the Delaware General Corporation Law ("Delaware
Law"), Purchaser will be merged with and into the Company (the "Merger").
Following consummation of the Merger, the surviving corporation (the "Surviving
Corporation") will become a wholly owned subsidiary of Symantec. As of the
effective time of the Merger (the "Effective Time"), each Share issued and
outstanding immediately prior to the Effective Time (other than Shares owned by
the Company or by any subsidiary of the Company, or owned by Purchaser, Symantec
or any other subsidiary of Symantec and any Shares which are held by
stockholders who have not voted in favor of the Merger or consented thereto in
writing and who shall have demanded appraisal for such Shares in accordance with
Delaware Law) will be canceled and converted automatically into the right to
receive $0.52 in cash, or any higher price that may be paid per Share in the
Offer, without interest (the "Merger Consideration"). As of the Effective Time,
each issued and outstanding share of any class or series of preferred stock
issued by the Company (the "Company Preferred Stock"), other than shares held by
stockholders who demand appraisal therefor in accordance with Delaware Law, will
be converted automatically into the right to receive in cash, without interest,
the product obtained by multiplying the Merger Consideration by the number of
shares of Company Common Stock into which such share of Company Preferred Stock
is convertible at the Effective Time under the Company's Certificate of
Incorporation. The Merger Agreement is more fully described in Section 10.
Board Representation. The Merger Agreement provides that, effective upon
the purchase by Purchaser of any Shares, Purchaser shall be entitled to
designate the number of members, rounded up to the next whole number, of the
Company's Board of Directors that equals the product of the total number of
members on the Company's Board of Directors (giving effect to the election of
any additional directors pursuant to this paragraph) multiplied by the
percentage that the number of shares of Company Common Stock accepted for
payment by Purchaser bears to the total number of Shares outstanding, subject to
compliance with Section 14(f) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). In the Merger Agreement, the Company has agreed to take
all actions necessary to cause Symantec's designees to be elected or appointed
to the Company's Board of Directors, including increasing the number of
directors and seeking and accepting resignations of incumbent directors.
2
<PAGE> 5
The Merger. The consummation of the Merger is subject to the satisfaction
or waiver of certain conditions, including the approval and adoption of the
Merger by the requisite vote of the stockholders of the Company, if such vote is
required under Delaware Law. See "Section 10. Background of the Offer; Contracts
with the Company; the Transaction Documents." Except as described below, under
the Company's Certificate of Incorporation and Delaware Law, the affirmative
vote of the holders of at least a majority of the outstanding Shares is required
to approve and adopt the Merger Agreement and the Merger. Consequently, if
Purchaser acquires (pursuant to the Offer or otherwise) at least a majority of
the outstanding Shares, Purchaser will have sufficient voting power to approve
and adopt the Merger Agreement and the Merger without the vote of any other
stockholder. Under Delaware Law, if Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the then outstanding Shares, Purchaser will be able
to approve and adopt the Merger Agreement and approve the Merger, without a vote
of the Company's stockholders. If Purchaser does not acquire at least 90% of the
then outstanding Shares pursuant to the Offer or otherwise and a vote of the
Company's stockholders is required under Delaware Law, a significantly longer
period of time will be required to effect the Merger. Subject to satisfaction of
the conditions to the Merger, Purchaser, Symantec and the Company have agreed to
use all reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to use all reasonable efforts to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in an expeditious manner, the Offer,
the Merger and the other transactions contemplated by the Merger Agreement, and
the Certificate of Merger and the License Agreement (the "License Agreement")
dated October 15, 1998 between the Company and Symantec (together, the
"Ancillary Agreements"). See "Section 10. Background of the Offer; Contacts with
the Company; the Transaction Documents."
License Agreement. Concurrently with the execution of the Merger Agreement,
the Company entered into the License Agreement. Pursuant to the License
Agreement, the Company granted to Symantec a non-exclusive development license
and a non-exclusive distribution license to the Company's CleanSweep(TM) product
and related technology in consideration for the payment by Symantec of certain
royalties. Upon execution of the License Agreement, the Company deposited in
escrow the source code for its CleanSweep product and related technology to be
released to Symantec upon commencement of the distribution license. The
distribution license will not commence until the earlier of consummation of the
Offer or the occurrence of certain events that would obligate the Company to pay
Symantec a break-up fee under the Merger Agreement. See "Section 10. Background
of the Offer; Contracts with the Company; the Transaction Documents -- The
License Agreement."
Stockholder Agreements. Also concurrently with the execution of the Merger
Agreement, Symantec entered into stockholder agreements (the "Stockholder
Agreements") with each member of the Company's Board of Directors and its
executive officers who are not directors. Pursuant to the Stockholder
Agreements, such directors and executive officers have agreed, among other
things, to tender, in accordance with the terms of the Offer, all of the Shares
beneficially owned by them. In the aggregate, these stockholders beneficially
own 2,707,049 Shares, including 316,004 Shares issued and outstanding or 0.43%
of the total Shares issued and outstanding, and 1,500,000 Options to purchase
Shares with an exercise price of less than $0.52 per share, which, when combined
with those Shares beneficially owned that are issued and outstanding, comprise
approximately 2.0% of the outstanding Shares on a fully diluted basis (i.e.,
treating all options having an exercise price of less than $0.52 per share as if
exercised) as of October 15, 1998. See "Section 10. Background of the Offer;
Contracts with the Company; the Transaction Documents -- The Stockholder
Agreements."
The Securities and Exchange Commission (the "Commission") has adopted Rule
13e-3 under the Exchange Act, which is applicable to certain "going private"
transactions. Rule 13e-3 requires, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such transaction be filed with the Commission and disclosed to
stockholders prior to consummation of the transaction. Purchaser believes that
Rule 13e-3 will not be applicable to the Offer or the Merger. However, no
assurances can be given that the Commission will not take the position that Rule
13e-3 is applicable to the Offer or the Merger.
3
<PAGE> 6
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of such extension or amendment), Purchaser will accept for
payment and pay for all Shares validly tendered prior to the Expiration Date (as
defined below) and not withdrawn as permitted by Section 4 as soon as
practicable after the Expiration Date. The term "Expiration Date" means 12:00
Midnight, New York City time, on Monday, November 16, 1998, unless the period
during which the Offer is open shall have been extended pursuant and subject to
the terms and conditions of the Merger Agreement, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended, shall expire.
Subject to the applicable rules and regulations of the Commission,
Purchaser also expressly reserves the right unilaterally to waive any conditions
to the Offer (other than, without the Company's prior written consent, the
Minimum Condition), to increase the price per share payable in the Offer, to
extend the duration of the Offer, or to make any other changes in the terms and
conditions of the Offer (subject to the limitations described below), by giving
oral or written notice of such waiver, increase, extension or amendment to the
Depositary and by making a public announcement thereof. However, the Merger
Agreement provides that Purchaser will not decrease the price per Share payable
in to the Offer, reduce the maximum number of Shares to be purchased in the
Offer, impose conditions to the Offer in addition to those set forth in Section
15 hereof, change the form of consideration payable in the Offer, or amend any
other material terms of the Offer in a manner materially adverse to the
Company's stockholders. In addition, at the Expiration Date (as the same may be
extended pursuant to this sentence), if any condition (other than the Minimum
Condition) shall not have been satisfied which could reasonably be expected to
be satisfied within the next succeeding ten business days, then the Offer shall
be extended an additional ten business days (but in no event beyond the date 45
days after the date on which the Offer shall have been first commenced).
Purchaser acknowledges that Rule 14e-1(c) under the Exchange Act requires
Purchaser to pay the consideration offered or return the Shares tendered
promptly after the termination or withdrawal of the Offer and that Purchaser may
not delay acceptance for payment of, or payment for (except as provided in this
paragraph), any Shares upon the occurrence of any of the conditions specified in
"Section 15. Certain Conditions of the Offer" without extending the period of
time during which the Offer is open.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act. See "Section 14. Extension of Tender
Period; Termination; Amendment."
Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Purchaser should decide to increase the consideration being offered in the
Offer, such increase in the consideration being offered will be applicable to
all stockholders whose Shares are accepted for payment pursuant to the Offer
(whether or not such Shares were tendered prior to such increase in
consideration) and, if at the time notice of any such increase in the
consideration being offered is first published, sent or given to holders of such
Shares, the Offer is scheduled to expire at any time earlier than the period
ending on the tenth business day from and including the date that such notice is
first so published, sent or given, the Offer will be extended at least until the
expiration of such ten business day period. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or federal holiday
and consists of the time period from 12:01 a.m. through 12:00 Midnight, New York
City time.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of Shares whose names appear on the Company's stockholder list
and will be furnished, for subsequent transmittal to beneficial owners of
Shares, to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list, or, if applicable, who are listed as participants in a clearing agency's
security position listing.
4
<PAGE> 7
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. On the terms and subject
to the conditions of the Offer (including, if the Offer is extended or amended,
the terms and conditions of any such extension or amendment), Purchaser will
accept for payment, and will pay for, all Shares validly tendered and not
properly withdrawn promptly after the Expiration Date.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Certificates") or timely confirmation
of a book-entry transfer (a "Book-Entry") of such Shares into the Depositary's
account at The Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in "Section 3. Procedures for Accepting the
Offer and Tendering Shares," (ii) the Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and duly executed, with any
required signature guarantees, or an Agent's Message (as defined below) in
connection with a book-entry transfer and (iii) any other documents required by
the Letter of Transmittal. The term "Agent's Message" means a message,
transmitted by the Book-Entry Transfer Facility to, and received by, the
Depositary and forming a part of a Book-Entry Confirmation, which states that
the Book-Entry Transfer Facility has received an express acknowledgment from the
participant in the Book-Entry Transfer Facility tendering the Shares, that such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that the Purchaser may enforce such agreement against such
participant.
On October 19, 1998, Symantec filed with the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "Antitrust
Division") a Pre-merger Notification and Report Form under the HSR Act with
respect to the Offer. Accordingly, it is anticipated that the waiting period
under the HSR Act applicable to the Offer will expire at 11:59 p.m., New York
City time on November 3, 1998. Prior to the expiration or termination of such
waiting period, the FTC or the Antitrust Division may extend such waiting period
by requesting additional information from Symantec with respect to the Offer. If
such a request is made, the waiting period will expire at 11:59 P.M., New York
City time, on the tenth calendar day after the additional information is
supplied by Symantec or the request is otherwise complied with. Thereafter, the
waiting period may only be extended by court order. Upon request, the waiting
period under the HSR Act may be terminated prior to its expiration by the FTC
and the Antitrust Division. Symantec has requested early termination of the
waiting period, although there can be no assurance that this request will be
granted. See "Section 16. Certain Legal Matters and Regulatory Approvals."
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to the
Offer. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering stockholders whose Shares have been
accepted for payment. Under no circumstances will interest on the purchase price
for Shares be paid, regardless of any delay in making such payment.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Certificates are submitted
evidencing more Shares than are tendered or accepted for payment, Certificates
evidencing unpurchased Shares will be returned, without expense to the tendering
stockholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedure set forth in "Section 3. Procedures for Accepting the Offer and
Tendering Shares," such Shares will be credited to an account maintained at the
Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to Symantec or any direct or indirect wholly owned subsidiary
of Symantec, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but any such assignment will not relieve Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
5
<PAGE> 8
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
Valid Tender of Shares. In order for a holder of Shares validly to tender
Shares pursuant to the Offer, the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message in connection with a
book-entry tender of Shares, and any other documents required by the Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase on or prior to the Expiration
Date and either (i) the Certificates evidencing tendered Shares must be received
by the Depositary at such address or such Shares must be tendered pursuant to
the procedure for book-entry transfer described below and a Book-Entry
Confirmation must be received by the Depositary, in each case on or prior to the
Expiration Date, or (ii) the tendering stockholder must comply with the
guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS,
INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION
AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Depositary will establish accounts with respect to
the Shares at the Book-Entry Transfer Facility for purposes of the Offer within
two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of the Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing the Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at the Book-Entry Transfer Facility,
the Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, together with any required signature guarantees, or
an Agent's Message in connection with a book-entry transfer, and any other
required documents, must, in any case, be received by the Depositary at one of
its addresses set forth on the back cover of this Offer to Purchase on or prior
to the Expiration Date, or the tendering stockholder must comply with the
guaranteed delivery procedure described below. DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered holder
(which term, for purposes of this Section 3, includes any participant in the
Book-Entry Transfer Facility's systems whose name appears on a security position
listing as the owner of the Shares) of Shares tendered therewith and such
registered holder has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of Transmittal or (ii) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program (an "Eligible Institution"). In all other
cases, all signatures on the Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal. If
Certificates are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made or Certificates for Shares
not tendered or not accepted for payment are to be returned to a person other
than the registered holder of the Certificates surrendered, the tendered
Certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders appear
on the Certificates, with the signatures on the Certificates or stock powers
guaranteed as described above. See Instructions 1 and 5 to the Letter of
Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Certificates evidencing such Shares are not
immediately available or such stockholder cannot deliver the Certificates and
all other required documents to the Depositary prior to the Expiration Date, or
6
<PAGE> 9
such stockholder cannot complete the procedure for delivery by book-entry
transfer on a timely basis, such Shares may nevertheless be tendered, provided
that all the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is
received prior to the Expiration Date by the Depositary as provided below;
and
(iii) the Certificates (or a Book-Entry Confirmation) evidencing all
tendered Shares, in proper form for transfer, in each case together with
the Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message),
and any other documents required by the Letter of Transmittal are received
by the Depositary within three National Association of Securities Dealers
Automated Quotation System ("Nasdaq") trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day
on which the Nasdaq is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram, telex or facsimile transmission to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in the
form of Notice of Guaranteed Delivery made available by Purchaser.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message), and any other documents required by the Letter of Transmittal.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. Purchaser also reserves the absolute right to waive any
condition of the Offer or any defect or irregularity in the tender of any Shares
of any particular stockholder, whether or not similar defects or irregularities
are waived in the case of other stockholders. No tender of Shares will be deemed
to have been validly made until all defects and irregularities have been cured
or waived. None of Purchaser, Symantec, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
Other Requirements. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's proxies, each with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment by Purchaser (and with respect to any and all other shares or other
securities issued or issuable in respect of such Shares on or after October 19,
1998). All such proxies shall be considered coupled with an interest in the
tendered Shares. Such appointment will be effective when, and only to the extent
that, Purchaser deposits the payment for such Shares with the Depositary. Upon
such acceptance for payment, all prior proxies given by such stockholder with
respect to such Shares (and such other Shares and securities) will be revoked
without further action, and no subsequent proxies may be given nor any
subsequent written consent executed by such stockholder (and, if given or
executed, will not be deemed to be effective) with respect thereto. The
designees of Purchaser will, with respect to the Shares (and such other Shares
and securities) for which the appointment is effective, be empowered to exercise
all voting and other rights of such stockholder as they in their sole discretion
may deem proper at any annual or special meeting of the Company's stockholders
or any adjournment or postponement thereof, by written consent in lieu of any
such meeting or otherwise. Purchaser reserves the right to require that, in
order for Shares to be deemed validly tendered, immediately upon Purchaser's
payment for such
7
<PAGE> 10
Shares, Purchaser must be able to exercise full voting rights with respect to
such Shares (and such other Shares and securities).
The tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer as well as the tendering stockholder's representation
and warranty that (i) such stockholder has a net long position in the Shares
being tendered within the meaning of Rule 14e-4 under the Exchange Act and (ii)
the tender of such Shares complies with Rule 14e-4. It is a violation of Rule
14e-4 for a person, directly or indirectly, to tender Shares for such person's
own account unless, at the time of tender, the person so tendering (a) has a net
long position equal to or greater than the amount of (x) Shares tendered or (y)
other securities immediately convertible into or exchangeable or exercisable for
the Shares tendered and such person will acquire such Shares for tender by
conversion, exchange or exercise and (b) will cause such Shares to be delivered
in accordance with the terms of the Offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person.
The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
Backup Federal Income Tax Withholding.
UNDER THE FEDERAL INCOME TAX LAWS, UNLESS AN EXCEPTION APPLIES UNDER THE
APPLICABLE RULES AND REGULATIONS, THE DEPOSITORY WILL BE REQUIRED TO WITHHOLD
31% OF THE AMOUNT OF ANY PAYMENTS MADE TO STOCKHOLDERS PURSUANT TO THE OFFER. TO
PREVENT SUCH BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO THE PAYMENT
OF THE OFFER PRICE FOR SHARES PURCHASED PURSUANT TO THE OFFER, EACH TENDERING
STOCKHOLDER GENERALLY MUST PROVIDE THE DEPOSITARY WITH SUCH STOCKHOLDER'S
CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH STOCKHOLDER IS NOT
SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE
FORM W-9 IN THE LETTER OF TRANSMITTAL. SEE "SECTION 5. CERTAIN FEDERAL INCOME
TAX CONSEQUENCES" AND INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL. IF THE
STOCKHOLDER IS A NONRESIDENT ALIEN OR FOREIGN ENTITY NOT SUBJECT TO BACK-UP
WITHHOLDING, THE STOCKHOLDER MUST GIVE THE DEPOSITARY A COMPLETED FORM W-8
CERTIFICATE OF FOREIGN STATUS PRIOR TO THE RECEIPT OF ANY PAYMENTS.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer may be
withdrawn by the tendering stockholder at any time prior to 12:00 Midnight, New
York City time, on Monday, November 16, 1998. Thereafter, such tenders are
irrevocable, except that they may be withdrawn after December 18, 1998, unless
previously accepted for payment by Purchaser pursuant to the Offer. If Purchaser
extends the Offer, is delayed in its acceptance for payment of Shares or is
unable to accept Shares for payment pursuant to the Offer for any reason, then,
without prejudice to Purchaser's rights under the Offer, the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares
may not be withdrawn except to the extent that tendering stockholders are
entitled to withdrawal rights as described in this Section 4. Any such delay
will be by an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover page of this
Offer to Purchase. Any such notice of withdrawal must specify the name of the
person who tendered the Shares to be withdrawn, the number of shares to be
withdrawn and the name of the registered holder of such Shares, if different
from that of the person who tendered such Shares. If Certificates evidencing
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such Certificates, the serial
numbers shown on such Certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution, unless such Shares have been tendered for the account of an
Eligible Institution. If Shares have been tendered
8
<PAGE> 11
pursuant to the procedure for book-entry transfer as set forth in "Section 3.
Procedures for Accepting the Offer and Tendering Shares," any notice of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Shares, in which case a
notice of withdrawal will be effective if delivered to the Depositary by any
method of delivery described in the first sentence of this paragraph.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination will be final and binding. None of Purchaser,
Symantec, the Dealer Manager, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered at any time prior to the Expiration Date by following one of the
procedures described in "Section 3. Procedures for Accepting the Offer and
Tendering Shares."
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following discussion,
subject to the limitations set forth herein, describes the material federal
income tax consequences of the Offer and the Merger to holders of Shares who
hold their Shares as capital assets and exchange their Shares for cash pursuant
to the Offer or the Merger. The tax consequences to a specific stockholder may
vary depending upon such stockholder's particular tax situation, and the
discussion set forth below may not apply to certain categories of holders of
Shares subject to special treatment under the Internal Revenue Code of 1986, as
amended (the "Code"), such as foreign stockholders, securities dealers,
broker-dealers, insurance companies, financial institutions, tax-exempt entities
and stockholders who acquired their Shares pursuant to an exercise of an
employee stock option or otherwise as compensation or who hold restricted stock.
The discussion is based on the Code as in effect on the date of this Offer to
Purchase, as well as the rules and regulations thereunder, existing
administrative interpretations and court decisions currently in effect, all of
which are subject to change, retroactively or prospectively, and to possible
differing interpretations and does not address state, local or foreign tax laws.
The receipt of cash for Shares pursuant to the Offer or in the Merger will
be a taxable transaction for federal income tax purposes and may also be a
taxable transaction under applicable state, local or foreign tax laws. In
general, a stockholder will recognize gain or loss for federal income tax
purposes equal to the difference between the amount of cash received in exchange
for the Shares sold and such stockholder's adjusted tax basis in such Shares.
Assuming the Shares constitute capital assets in the hands of the stockholder,
such gain or loss will be capital gain or loss. If, at the time of the Offer or
the Merger, the Shares then exchanged have been held for more than one year,
such gain or loss will be a long-term capital gain or loss. Under current law,
long-term capital gains of individuals are, under certain circumstances, taxed
at lower rates than items of ordinary income.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals and entities) that
tenders Shares may be subject to a 31% backup withholding unless the stockholder
provides its Taxpayer Identification Number, or unless an exemption applies.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
STOCKHOLDERS SUBJECT TO SPECIAL TREATMENT UNDER THE CODE, INCLUDING STOCKHOLDERS
WHO ACQUIRED SHARES PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR
OTHERWISE AS COMPENSATION, INDIVIDUALS WHO ARE NOT CITI-
9
<PAGE> 12
ZENS OR RESIDENTS OF THE UNITED STATES AND FOREIGN CORPORATIONS, OR WHO
HOLD RESTRICTED STOCK.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF
THE OFFER AND THE MERGER AND THE APPLICATION AND EFFECT OF THE ALTERNATIVE
MINIMUM TAX, AND STATE, LOCAL AND FOREIGN TAX LAWS.
6. PRICE RANGE OF SHARES. Until October 15, 1998, the Shares were listed
and principally traded on the Nasdaq National Market under the symbol "QDEK" and
the Shares are now traded on the OTC Bulletin Board. See Section 13 "Effect of
the Offer on the Market for the Shares, Quotation and Exchange Act
Registration." The following table sets forth, for the quarters indicated, the
high and low sales prices per Share on the Nasdaq National Market:
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Fiscal Year ended September 30, 1997:
First Quarter........................................ $ 7 1/4 $ 3 15/16
Second Quarter....................................... 6 5/16 2
Third Quarter........................................ 3 9/16 2 1/8
Fourth Quarter....................................... 3 11/16 2 3/8
Fiscal Year ended September 30, 1998:
First Quarter........................................ $ 3 1/8 $ 1 3/16
Second Quarter....................................... 2 25/32 1 9/16
Third Quarter........................................ 3 5/8
Fourth Quarter....................................... 1 1/32 1/4
Fiscal Year ending September 30, 1999
First Quarter (through October 15, 1998)............. $ 22/32 $ 9/32
</TABLE>
The Company has never declared or paid cash dividends on its capital stock.
On October 15, 1998, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of Purchaser's intention to commence
the Offer (which occurred after the close of trading on October 15, 1998), the
closing price per Share as reported on the Nasdaq National Market was $0.4375.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise set
forth herein, the information concerning the Company contained in this Offer to
Purchase, including financial information, has been furnished by the Company or
has been taken from or based upon publicly available documents and records on
file with the Commission and other public sources. Neither Purchaser, Symantec,
nor any of their respective affiliates assumes any responsibility for the
accuracy or completeness of the information concerning the Company furnished by
the Company or contained in such documents and records or for any failure by the
Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to
Purchaser, Symantec or their respective affiliates.
General. The Company is a Delaware corporation with its principal executive
offices located at 13160 Mindanao Way, Marina del Rey, California 90292. The
Company develops and markets software products that help personal computer users
manage information and communications. The Company markets its products
worldwide through retail distribution, corporate resellers, original equipment
manufacturers, direct marketing, and the Internet, focusing in particular on
customers in "low support" environments, such as small offices/home offices,
small businesses and work groups, and remote/mobile users.
The Company was incorporated in California in 1982 as Quarterdeck Office
Systems. In June 1991, the Company changed its state of incorporation from
California to Delaware and in February 1995 changed its name to Quarterdeck
Corporation.
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<PAGE> 13
Financial Information. The following summary consolidated financial
information relating to the Company and its subsidiaries has been excerpted or
derived from the audited financial statements contained in the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1997 (the "Form
10-K") and the unaudited financial statements contained in the Company's
Quarterly Reports on Form 10-Q for the quarters ended June 30, 1998 and June 30,
1997 (the "10-Qs"), in each case filed by the Company with the Commission. More
comprehensive financial information is included in the Form 10-K, the 10-Qs and
other documents filed by the Company with the Commission. The financial
information that follows is qualified in its entirety by reference to such
reports and other documents, including the financial statements and related
notes contained therein. Such reports and other documents may be examined and
copies may be obtained from the offices of the Commission in the manner set
forth at the end of this Section 7.
QUARTERDECK CORPORATION
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED SEPTEMBER 30, JUNE 30,
-------------------------------- -------------------
1997 1996 1995 1998 1997
-------- -------- -------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues....................... $ 83,787 $133,100 $117,606 $ 42,009 $68,538
Gross profit....................... 62,516 83,500 82,722 29,665 51,033
Total operating expenses........... 76,569 157,586 73,023 51,524 47,898
Operating income (loss)............ (14,053) (74,086) 9,699 (21,859) 3,135
Income (loss) before income
taxes........................... (18,268) (74,153) 11,583 (21,398) 244
Net income (loss).................. (18,398) (74,959) 11,252 (21,414) 241
Net income (loss) per share:
Primary......................... $ (0.43) $ (2.15) $ 0.32 $ (0.45) $ 0.01
Fully diluted................... $ (0.43) $ (2.15) $ 0.31 $ (0.45) $ 0.01
Shares used to compute net income
(loss) per share:
Primary......................... 43,168 34,894 35,557 47,490 47,644
Fully diluted................... 43,168 34,894 36,499 47,490 47,644
BALANCE SHEET DATA:
Working capital (deficiency)....... $ 6,917 $ (4,684) $ 29,490 $ 3,050 $ 1,842
Total assets....................... 55,881 76,781 76,699 26,832 56,008
Long-term obligations.............. 25,114 25,108 164 25,057 25,067
Stockholders' equity............... 1,173 4,425 44,270 (15,546) 5,345
</TABLE>
Certain Company Estimates. During the course of discussions between
Symantec and the Company that led to execution of the Merger Agreement, the
Company provided Symantec with certain preliminary estimates of the Company's
future performance that are not available to the public. The information
provided included summary preliminary estimates of the Company's income
statement for the quarter ending September 30, 1998 and for each of the four
quarters thereafter during the Company's 1999 fiscal year (from October 1, 1998
through September 30, 1999). These preliminary estimates forecast net revenues
of $11.2 million for the quarter ending on September 30, 1998 (compared to $8.0
million for the prior quarter) with net revenues then generally rising over the
next four quarters to $12.3 million for the last of the four quarters. These
preliminary estimates forecast that gross profit would grow from $8.3 million to
$9.4 million per quarter over the five-quarter period, with total operating
expenses remaining relatively constant (ranging from $7.9 million to $8.1
million). Therefore, total operating income was preliminarily estimated to rise
over the five-quarter period from $230,000 (before interest expense and taxes)
for the quarter ending September 30, 1998 to $1.3 million for the quarter ending
September 30, 1999. The Company's actual results for the first of such quarters
(the quarter and fiscal year ended September 30, 1998) have not yet been
released and are not yet finalized or available, but net revenues and total
operating income
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<PAGE> 14
are not expected by the Company to differ substantially from the preliminary
estimates reflected above. The foregoing preliminary estimates constitute
forward-looking statements subject to material risks and uncertainties that
could cause actual results to differ substantially from those estimated, such as
the Company's ability to retain market share in an environment of increasing
competition, the ability to improve its products and introduce new products on a
timely basis, the ability to retain employees and customers and other business
and competitive factors, as well as the effects on the Company's business of the
Offer and the Merger.
The Company does not as a matter of course make public any estimates as to
future performance or earnings, and the preliminary estimates set forth above
are included in this Offer to Purchase only because the information was made
available to Symantec and Purchaser by the Company. The Company has informed
Symantec that the preliminary estimates were not prepared with a view to public
disclosure or compliance with the published guidelines of the Commission or the
guidelines established by the American Institute of Certified Public Accountants
regarding estimates or forecasts. The Company has also informed Symantec that
its internal financial estimates (upon which the preliminary estimates provided
to Symantec were based in part) are, in general, prepared solely for internal
use and capital budgeting and other management decision-making purposes, are
subjective in many respects and thus susceptible to various interpretations and
periodic revision based on actual experience and business developments.
Projected information of this type is based on estimates and assumptions that
are inherently subject to significant economic and competitive uncertainties and
contingencies, all of which are difficult to predict and many of which are
beyond the control of the Company, Purchaser or Symantec or their respective
financial advisors. Many of the assumptions upon which the estimates were based,
none of which were approved by Symantec or Purchaser, are dependent upon
economic forecasting (both general and specific to the Company's business),
which is inherently uncertain and subjective.
The inclusion of the foregoing preliminary estimates should not be regarded
as an indication that the Company, Purchaser, Symantec or any other person who
received such information considers them accurate predictions of future events,
and neither Purchaser nor Symantec has relied on these estimates or given them
significant weight in assessing the value of the Shares or evaluating the
business or prospects of the Company. None of Purchaser or Symantec or their
financial advisors assumes any responsibility for the accuracy or validity of
any of the preliminary estimates.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's stockholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities maintained by the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, and also should be available for
inspection at the Commission's regional offices located at Seven World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials
may also be obtained (i) by mail, upon payment of the Commission's customary
fees, by writing to its principal office at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, or (ii) at the Commission's worldwide web site at
http://www.sec.gov.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND SYMANTEC.
Purchaser. Purchaser is a direct wholly owned subsidiary of Symantec, a
newly incorporated Delaware corporation organized in connection with the Offer
and the Merger and has not carried on any activities other than in connection
with the Offer and the Merger. The principal offices of Purchaser are located at
10201 Torre Avenue, Cupertino, California 95014-2132.
Until immediately prior to the time that Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Because Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial
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<PAGE> 15
information regarding Purchaser is available. Purchaser is not subject to the
informational filing requirements of the Exchange Act. Purchaser does not file
reports or other information with the Commission relating to its business,
financial condition or other matters.
Symantec. Symantec is a Delaware corporation, with its principal office at
10201 Torre Avenue, Cupertino, California 95014-2132. Symantec is a leading
producer of utility software for business and personal computing. Symantec's
business strategy is to satisfy customer needs by developing and marketing
products across multiple operating platforms (currently those of Microsoft
Corporation and Apple Computer, Inc.) that enable customers to increase
productivity and help to assure the reliability, security and performance of
computers.
The name, citizenship, business address, principal occupation or
employment, and five-year employment history for each of the directors and
executive officers of Purchaser and Symantec and certain other information are
set forth in Schedule I hereto.
Other Information. To the knowledge of Purchaser and Symantec, neither
Purchaser nor Symantec, nor any of the persons listed in Schedule I to this
Offer to Purchase, nor any associate or majority-owned subsidiary of Purchaser,
Symantec or any of the persons so listed, beneficially owns or has any right to
acquire, directly or indirectly, any Shares and neither Purchaser nor Symantec,
nor any of the persons or entities referred to above nor any director, executive
officer or subsidiary of Purchaser nor Symantec has effected any transaction in
the Shares during the past sixty days.
Except as provided in the Merger Agreement and as otherwise described in
this Offer to Purchase, to the knowledge of Purchaser and Symantec, (i) neither
Purchaser nor Symantec, nor any of their respective subsidiaries or any of the
persons listed in Schedule I to this Offer to Purchase, has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, finder's fees, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss, guarantees of
profits, division of profits or loss or the giving or withholding of proxies;
and (ii) neither Purchaser nor Symantec, nor any of the persons listed on
Schedule I hereto, has had any business relationship or transaction with the
Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Set forth below in Section 10 of this Offer to Purchase
and elsewhere herein is a summary description of the mutual contacts,
negotiations and transactions between any of Purchaser and Symantec, or any of
their respective subsidiaries or any of the persons listed in Schedule I to this
Offer to Purchase, on the one hand, and the Company or its affiliates, on the
other hand, concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, an election of directors or a sale or other
transfer of material assets.
9. SOURCE AND AMOUNT OF FUNDS. The amount payable by Purchaser to acquire
all Shares outstanding as of October 15, 1998, and all Shares issuable upon
exercise of all warrants for the purchase of the Company's Preferred Stock and
conversion of all such stock to Company Common Stock, plus amounts payable with
respect to Options, totals approximately $48 million. Purchaser will obtain all
such funds from Symantec through a capital contribution or loan, which Symantec
will provide from its working capital. Neither the Offer nor the Merger is
contingent upon obtaining financing. At September 30, 1998, Symantec had cash
and cash equivalents of $175.4 million and working capital (total current assets
minus total current liabilities) of approximately $122.7 million.
10.BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY; THE TRANSACTION
DOCUMENTS.
Background of the Offer; Contacts with the Company.
In August 1998, the Company's financial advisors contacted Symantec
concerning the possible acquisition of the Company by Symantec, and
representatives of Broadview and Symantec held several telephone calls and
discussed possible transaction alternatives.
On September 4, 1998, Enrique T. Salem, Chief Technical Officer of
Symantec, met with representatives of Broadview to obtain additional information
regarding the Company's products and technology and to
13
<PAGE> 16
discuss a possible strategic relationship between the two companies. At this
meeting, Mr. Salem and representatives of Broadview proposed a meeting at the
Company's offices on September 15, 1998.
On September 11, 1998, the United States Northern District Court of
California issued a temporary restraining order against Symantec prohibiting
Symantec from selling or developing Norton Uninstall Deluxe, a software product
designed to add and remove programs and files from a user's hard disk drive. In
order to eliminate any uncertainty caused by the ongoing legal proceedings,
Symantec removed the current version of Norton Uninstall Deluxe from Norton
SystemWorks, and discontinued shipping Norton Uninstall Deluxe.
On September 11, 1998, Mr. Salem contacted Suzanne Dickson, Vice President
of Product Management of the Company, to discuss the possibility of the Company
entering into a technology licensing agreement with Symantec with respect to the
Company's CleanSweep uninstaller product, which has capabilities similar to
those of Norton Uninstall Deluxe. On September 13, 1998, the Company replied
that it was not interested in licensing its CleanSweep product and instead
proposed a license of its RemoveIt uninstaller product, which also has some of
the capabilities of the Norton Uninstall Deluxe product. On September 18, 1998,
Symantec and the Company entered into a license agreement under which the
Company licensed Symantec to distribute the Company's RemoveIt uninstaller.
On September 15, 1998, Symantec and the Company entered into a
confidentiality agreement under which Symantec agreed to maintain the
confidentiality of certain material provided to it by the Company, and Mr.
Salem, Dave Daetz, Senior Director of Corporate Business Development of Symantec
and Stephen Cullen, Senior Director of Product Management for Norton Consumer
Products of Symantec, met with representatives of the Company and their
financial advisors at the offices of the Company for a presentation by the
Company to the Symantec representatives of the Company's business plan and
operations.
On September 17, 1998, Mr. Daetz had a telephone conversation with Ms.
Dickson and Rima Hochman of the Company to discuss financial and product
information in order to evaluate the possibility of Symantec acquiring the
Company.
On September 18, 1998, Symantec's Board of Directors authorized Symantec's
management to proceed with negotiations with the Company concerning a possible
acquisition of the Company. On September 18, 1998, Gordon E. Eubanks, Jr., Chief
Executive Officer of Symantec, contacted Fenwick & West LLP to serve as
Symantec's legal counsel in a possible acquisition of the Company.
Representatives of Fenwick & West LLP then contacted counsel for the Company to
commence legal due diligence, which began on September 19, 1998, and continued
over the next several weeks.
On September 21, 1998, Cynthia Harrington, Senior Director of Finance of
Symantec, and Troy Mitchell, Director of Accounting of Symantec, met with Frank
R. Greico, Chief Financial Officer of the Company, to further discuss financial
information in order to evaluate the possibility of Symantec's acquisition of
the Company.
On September 23, 1998, Mr. Eubanks requested DLJ to provide advice in
connection with a possible acquisition of the Company.
During the week of September 21, 1998, several meetings of executives of
Symantec and its advisors were held to further consider a variety of possible
strategic transactions with the Company, including a possible asset acquisition
of the Company or its CleanSweep product or a potential acquisition of the
Company through a tender offer and merger. At the beginning of this week,
representatives of Symantec suggested to representatives of the Company that
Symantec would prefer that any transaction take the form of an acquisition of
the Company's assets or the purchase of the CleanSweep product, but the parties
could not reach agreement on the price or other terms of such a transaction.
On September 23, 1998, representatives of DLJ indicated to representatives
of Broadview that Symantec might be willing to proceed with a transaction
structured as a cash tender offer and subsequent merger, with a grant by the
Company of a license to the Company's CleanSweep product and related technology.
14
<PAGE> 17
During the week of September 28, 1998, numerous conversations were held
among Symantec's senior management and legal and financial advisors and the
Company's senior management and legal and financial advisors concerning the
status of due diligence, negotiations and the structure of the proposed
acquisition.
On October 3, 1998, the Company and Symantec entered into a Non-Disclosure
Agreement (the "Non-Disclosure Agreement") dated October 1, 1998, which included
an agreement by the Company not to solicit competing acquisition proposals until
October 13, 1998.
During the week of October 5, 1998, representatives of Symantec and the
Company, together with their respective legal and financial advisors, began
negotiating the definitive agreements providing for the tender offer and the
license.
On October 6, 1998, Derek Witte, Vice President, General Counsel and
Secretary of Symantec, and an attorney from Fenwick & West LLP, met at the
principal office of the Company with Gadi Navon, the General Counsel of the
Company, and a number of other senior executives of the Company, to further
discuss the status of due diligence and the Company's products and operations.
On October 12, 1998, Symantec's Board of Directors authorized Symantec's
management to proceed with negotiations of an all cash tender offer for the
Company's Common Stock and assumption of the Company's net indebtedness for a
total purchase price of $65.0 million and to enter into a technology licensing
agreement with respect to the Company's CleanSweep product.
During the week of October 12, 1998, representatives of Symantec and the
Company, together with their respective legal and financial advisors, further
negotiated the definitive agreements providing for the tender offer and the
license.
On October 13, 1998, the Company and Symantec amended the Non-Disclosure
Agreement to extend the period during which the Company agreed not to solicit
competing acquisition proposals until October 16, 1998.
On October 15, 1998, Symantec and the Company agreed on a price of $0.52
for the tender offer for the Shares and agreed on the terms of the definitive
Merger Agreement and License Agreement, and the Board of Directors of the
Company approved the terms of the proposed Offer and Merger. Thereafter,
Symantec and the Company executed the Merger Agreement, the License Agreement
and the Stockholder Agreements on such date. Later that day, Symantec and the
Company issued a press release announcing the transaction.
The Merger Agreement
The following is a summary of the Merger Agreement, a copy of which is
filed as an Exhibit to the Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") filed by Purchaser and Symantec with the Commission in
connection with the Offer. Such summary is qualified in its entirety by
reference to the Merger Agreement. Capitalized terms not otherwise defined in
the following description of the Merger Agreement have the respective meanings
ascribed to them in the Merger Agreement.
The Merger Agreement provides for the commencement of the Offer within five
business days after the public announcement of the execution of the Merger
Agreement. The obligation of Purchaser to accept for payment Shares tendered
pursuant to the Offer is subject to the satisfaction of the Minimum Condition
and certain other conditions that are described in Section 15 hereof. Purchaser
and Symantec have agreed that no change in the Offer may be made which decreases
the price per Share payable in the Offer, reduces the maximum number of Shares
to be purchased in the Offer, imposes conditions to the Offer in addition to
those set forth in Section 15 hereof, changes the form of consideration payable
in the Offer or amends any other material terms of the Offer in a manner
materially adverse to the Company's stockholders.
The Merger Agreement provides that, following consummation of the Offer and
upon the terms and subject to the conditions in the Merger Agreement and in
accordance with Delaware Law, at the Effective Time, Purchaser will be merged
with and into the Company. As a result of the Merger, the separate corporate
existence of Purchaser will cease and the Company will continue as the Surviving
Corporation (the "Surviving Corporation") and will become a direct or indirect
wholly owned subsidiary of Symantec. Upon consumma-
15
<PAGE> 18
tion of the Merger, each issued and outstanding Share (other than any Shares
owned by the Company or by any subsidiary of the Company, or owned by Purchaser,
Symantec or any other subsidiary of Symantec and any Shares which are held by
stockholders who have not voted in favor of the Merger or consented thereto in
writing and who shall have demanded appraisal for such Shares in accordance with
Delaware Law) shall be automatically converted into, and exchanged for, the
right to receive the Merger Consideration.
Pursuant to the Merger Agreement, each share of capital stock of Purchaser
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one share of common stock, par value $0.001 per share,
of the Surviving Corporation, which will thereby become a wholly owned
subsidiary of Symantec.
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and that the officers of Purchaser immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation. The
Merger Agreement further provides that the Certificate of Incorporation and
by-laws of Purchaser as in effect at the Effective Time shall be the Certificate
of Incorporation and by-laws of the Surviving Corporation.
Pursuant to and subject to the conditions in the Merger Agreement, if
stockholder approval is required by law, the Company will, at the request of
Symantec, as soon as practicable following the consummation of the Offer, duly
call, give notice of, convene and hold a meeting of its stockholders for the
purpose of obtaining stockholder approval of the Merger (the "Stockholders
Meeting"). If Purchaser acquires a majority of the outstanding Shares pursuant
to the Offer, Purchaser will have sufficient voting power to approve the Merger,
even if no other stockholder votes in favor of the Merger.
The Merger Agreement provides that, if stockholder approval is required by
law, the Company will, at Symantec's request, as soon as practicable following
the expiration of the Offer, prepare and file a preliminary proxy statement and
related proxy materials (the "Proxy Statement") with the Commission under the
Exchange Act, and will use all reasonable efforts to respond to any comments of
the Commission or its staff and to cause the Proxy Statement to be mailed to
stockholders of the Company as promptly as practicable after responding to all
such comments to the satisfaction of the staff of the Commission. The Company
has agreed, subject to certain fiduciary duties under applicable law as
described below, to include in the Proxy Statement the recommendation of the
Board of Directors that the stockholders of the Company approve and adopt the
Merger. The Merger Agreement provides that, in the event that Purchaser or any
other subsidiary of Symantec acquires at least 90% of the outstanding Shares,
Symantec, Purchaser and the Company agree, at the request of Symantec, to take
all necessary and appropriate action to cause the Merger to become effective as
soon as practicable after expiration of the Offer without a meeting of the
Company's stockholders, in accordance with Delaware Law.
Pursuant to the Merger Agreement, the Company has covenanted and agreed to
carry on the businesses of the Company and its subsidiaries in the ordinary
course of business consistent with past practices and to use all reasonable
efforts to preserve intact their current business organizations, to keep
available the services of their current officers and employees and to preserve
relationships with distributors, licensors, contractors, customers, suppliers,
lenders, employees and others having business dealings with any of them. The
Merger Agreement provides that, except as expressly permitted by the other
provisions of the Merger Agreement and the Ancillary Agreements, or as may be
agreed to in writing by Symantec, neither the Company nor any subsidiary will do
any of the following: (i) declare, set aside or pay any dividends on or make any
other distributions in respect of any of its capital stock, other than by any
wholly owned subsidiary of the Company to its parent or, in the case of less
than wholly owned subsidiaries, as required by agreements existing on the date
of the Merger Agreement, or split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for Shares of its capital stock or purchase,
redeem or otherwise acquire any shares of its capital stock or any of its
subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities; (ii) issue, deliver, sell,
pledge or otherwise encumber any shares of its or of any subsidiary's capital
stock, any other voting securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting securities or
convertible securities (other than the issuance of Company Common Stock upon
16
<PAGE> 19
the exercise of Options and warrants outstanding on the date of the Merger
Agreement and disclosed in the Company's disclosure schedule and the issuance of
Company Common Stock upon conversion of the Convertible Notes or Company
Preferred Stock); (iii) amend its Certificate of Incorporation, by-laws or other
comparable charter or organizational documents; (iv) acquire or agree to acquire
by merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
joint venture, association or other business organization or division thereof,
or any assets that individually or in the aggregate are material to the business
of the Company and its subsidiaries taken as a whole; (v) sell, lease, license,
mortgage or otherwise encumber or subject to any pledge, claim, lien, charge,
title retention, mortgage, security interest or encumbrance or otherwise dispose
of any of its properties or assets (including intellectual property) except for
sales, leases or encumbrances of immaterial or obsolete properties or assets,
and non-exclusive licenses of intellectual property rights, in each case in the
ordinary course of business consistent with past practices; (vi) transfer or
license to any person or entity or otherwise extend, amend or modify in any
material respect any rights to any of the Company's intellectual property rights
or the Company's intellectual property, other than non-exclusive licenses in the
ordinary course of business, or assign or grant any exclusive license to any of
the Company's intellectual property rights; (vii) incur any indebtedness for
borrowed money or draw down on any credit facility or arrangement or guarantee
any such indebtedness of another person, issue or sell any debt securities or
warrants or rights to acquire debt securities of the Company or any subsidiary
of the Company, or guarantee any debt securities of any person, enter into any
"keep well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect of any
of the foregoing (other than borrowings of not more than $2.0 million in any
calendar month, not to exceed $3.0 million in the aggregate outstanding at any
time after the date of the Merger Agreement);(viii) make any loans, advances or
capital contributions to, or investments in, any other person, other than to the
Company or any subsidiary of the Company; (ix) make or agree to make any new
capital expenditure(s) which individually is in excess of $100,000 or which in
the aggregate are in excess of $200,000; (x) make any material tax election or
settle or compromise any income or franchise tax liability; (xi) pay, discharge,
settle or satisfy any claims (accrued, asserted or unasserted, contingent or
otherwise) for an amount greater than $100,000; (xii) enter into, amend, modify
or terminate any agreement, transaction, commitment or other right or obligation
that, if in effect on the date of the Merger Agreement, would be a material
agreement, or that requires or contemplates a current and/or future financial
commitment, expense or obligation on the part of the Company or any of its
subsidiaries in excess of $100,000, other than in the ordinary course of
business consistent with past practices, or waive, release or assign any
material rights or claims thereunder, other than discounting of accounts
receivable to obtain prompt collection; (xiii) terminate or lay off any material
numbers of employees, other than for cause consistent with past practice and
Company policy; (xiv) other than as disclosed by the Company in its Disclosure
Schedule (as defined in the Merger Agreement) delivered to Symantec, adopt or
amend in any material respect any employee benefit or employee stock purchase or
employee option plan, or enter into any employment contract, pay any special
bonus or special remuneration to any director or employee, or increase the
salaries, wage rates or other compensation payable to its officers or employees
other than in the ordinary course of business consistent with past practices, or
commit or agree to do any of the foregoing, or otherwise alter or commit to any
compensation, benefit or severance or change of control arrangement for or with
any officer or employee of the Company; (xv) grant or provide any severance or
termination pay to any officer or employee except payments that are in amounts
consistent with the Company's policies and past practices, are made pursuant to
written plans or agreements outstanding or policies existing on the date of the
Merger Agreement; (xvi) voluntarily take actions to liquidate or dissolve the
Company or to take advantage of bankruptcy or other creditor protection laws;
(xvii) take any action that would cause or constitute a breach of any
representation or warranty made by the Company in the Merger Agreement or any
Ancillary Agreement or (xviii) authorize any of, or commit or agree to take any
of, the foregoing actions.
Pursuant to the Merger Agreement, from the date of the Merger Agreement
until the Effective Time, the Company shall, and shall cause its subsidiaries
to, afford Symantec and its officers, employees, accountants, counsel, financial
advisors and other representatives, reasonable access during normal business
hours to all their respective properties, books, contracts, commitments,
personnel and records and to furnish or make
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available promptly to Symantec a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws, and all other information
concerning its business, properties and personnel as Symantec may reasonably
request.
The Company has agreed that until the earlier of the Effective Time or
termination of the Merger Agreement, the Company shall not, nor shall it permit
any of its subsidiaries, nor shall it authorize or permit any of their
respective officers, directors, employees, investment bankers, attorneys or
other advisors or representatives, directly or indirectly, to (i) solicit,
initiate or encourage the submission of any "takeover proposals" (as defined
below), (ii) participate in any discussions or negotiations with, or furnish any
information to any person or group (other than Symantec) in connection with any
takeover proposal or (iii) take any other action to facilitate any inquiries or
the making of any proposal that constitutes, or may reasonably be expected to
lead to, any takeover proposal. Under the Merger Agreement, a "takeover
proposal" means any proposal for a merger or other business combination
involving the Company or any of its subsidiaries, any proposal, offer or tender
offer to acquire (including by license) in any manner, directly or indirectly,
an equity interest in, not less than 35% of the outstanding voting securities of
the Company or any of its subsidiaries, or any proposal to acquire assets
representing not less than 25% of the annual revenues of the Company or any of
its subsidiaries in the fiscal year ended September 30, 1998 or to obtain a
license to the Company's ProComm or CleanSweep products or to any of the
Company's intellectual property that is incorporated, embodied or used therein
and that is material to such product, other than the transactions contemplated
by the Merger Agreement or the Ancillary Agreements. The Company has also agreed
that it, its subsidiaries, officers, directors, employees, investment bankers,
attorneys and other agents and representatives will immediately cease any and
all existing activities, discussions or negotiations with any parties conducted
previously regarding a takeover proposal. Pursuant to the Merger Agreement, the
Company will promptly advise Symantec orally and in writing of any request for
information or of any takeover proposal, or any inquiry with respect to, or
which could reasonably be expected to lead to, any takeover proposal, the
material terms and conditions of such request, takeover proposal or inquiry, and
the identity of the person making any such takeover proposal or inquiry. The
Company has also agreed to keep Symantec informed of the status and material
terms of any such request, takeover proposal or inquiry.
Notwithstanding the foregoing, the Merger Agreement provides that, prior to
the Effective Time the Company may, to the extent the Board of Directors of the
Company determines in good faith, after consultation with outside counsel, that
the Board of Director's fiduciary duty under applicable law requires it to do
so, participate in discussions or negotiations with, or furnish information to,
any person, entity or group in response to an unsolicited bona fide takeover
proposal which the Company's Board of Directors in its good faith reasonable
judgment determines, after consultation with its independent financial advisors,
would result in a transaction more favorable to the Company's stockholders from
a financial point of view than the Offer and the Merger and after reasonable
inquiry by the Company that the party making such takeover proposal is
financially capable of consummating such takeover proposal (a "Superior
Proposal"). In the event the Company receives a Superior Proposal, nothing
contained in the Merger Agreement (subject to the provisions set forth in this
paragraph) will prevent the Company's Board of Directors from recommending such
Superior Proposal to the Company's stockholders, subject to the payment of a
break-up fee discussed below, if the Board determines, in good faith after
consultation with outside legal counsel, that such action is required by its
fiduciary duties under applicable law, and, in connection therewith, withdraw,
modify or refrain from making its recommendation of the Offer; provided,
however, that the Company shall not recommend to the Company's stockholders a
Superior Proposal for a period of not less than 48 hours after the Company's
receipt of such Superior Proposal. The Company further agrees that it will not
provide any non-public information to a third party unless such information is
provided pursuant to a nondisclosure agreement with terms regarding the
protection of confidential information at least as restrictive as such terms in
the mutual nondisclosure agreement between the Company and Symantec. The
provisions described in this paragraph shall not prohibit the Company's Board of
Directors from taking and disclosing to the Company's stockholders a position
with respect to a takeover proposal pursuant to Rules 14d-9 and 14e-2
promulgated under the Exchange Act.
Pursuant to the Merger Agreement, the Company will give written notice to
each holder of a Company Option stating that such Option will terminate at the
Effective Time and that all outstanding Options, whether
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<PAGE> 21
or not vested, will be exercisable during the thirty (30) day period preceding
the Effective Date. All Options that are outstanding immediately prior to the
Effective Time will be terminated and canceled at the Effective Time and the
holders of cancelled Options having an exercise price that is less than the
Offer Price, other than members of the Company's Board of Directors or the
Company's Chief Executive Officer, will be entitled to receive an amount in cash
equal to the product of the difference between the Offer Price and the exercise
price of such Option, multiplied by the number of Shares issuable upon exercise
of such Option immediately prior to the Effective Time.
The Company has entered into an agreement with the holder of the
Convertible Notes providing that, immediately after the Effective Time, the
Surviving Corporation shall be entitled to repay all then-outstanding
Convertible Notes in their original principal amount and accrued interest
without premium or penalty and that the Merger Agreement would provide that
Surviving Corporation will repay the Notes in full within five business days
after consummation of the Merger.
Symantec has agreed to fulfill and honor and cause the Surviving
Corporation to fulfill and honor in all respects the obligations of the Company
pursuant to its Certificate of Incorporation, by-laws and any indemnification
agreements between the Company and its directors and officers in their capacity
as such existing prior to the date of the Merger Agreement. From and after the
Effective Time, such obligations will be the joint and several obligations of
Symantec and the Surviving Corporation, and Symantec has assumed such
obligations. The Certificate of Incorporation and by-laws of the Surviving
Corporation will contain provisions with respect to indemnification and
elimination of liability for monetary damages set forth in the Certificate of
Incorporation and by-laws of the Company, which provisions will not be amended,
repealed or otherwise modified from the Effective Time in any manner that would
adversely affect the rights of the individuals who, immediately prior to the
Effective Time, were directors, officers, employees or agents of the Company or
its subsidiaries, unless required by law.
For at least three years from the Effective Time, Symantec shall maintain
in effect the Company's current directors' and officers' insurance and
indemnification policy to the extent that it provides coverage for events
occurring prior to the Effective Time for those persons who are directors and
officers as of the date of the Merger Agreement (and, to the extent covered by
the existing policy, persons who were directors or officers prior to the date of
the Merger Agreement) in their capacity as such, so long as the annual premium
would not be in excess of 150% of the last annual premium paid prior to the date
of the Merger Agreement (the "Maximum Premium") and, to the extent the annual
premium would exceed the Maximum Premium, Symantec will cause to be maintained
the maximum amount of insurance that can be procured for the Maximum Premium. If
the existing insurance expires, is terminated or is canceled during such three
year period, Symantec will use all reasonable efforts to cause to be obtained as
much insurance as can be obtained for the remainder of the period for an
annualized premium not in excess of the amount indicated above, on terms and
conditions no less advantageous than the existing insurance. In lieu of
maintaining the Company's current insurance, Symantec may elect to add the
directors and officers of the Company on the date of the Merger Agreement to its
own insurance policy, provided that such election does not diminish the rights
provided to such persons under the Company's existing insurance.
The Merger Agreement provides that, upon the terms and subject to the
conditions set forth in the Merger Agreement and the Ancillary Agreements, each
of the parties thereto agrees to use all reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and to use all reasonable
efforts to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in an
expeditious manner, the Offer, the Merger and the transactions contemplated by
the Merger Agreement and the Ancillary Agreements. Among other things, the
Merger Agreement specifies the following actions: (i) obtaining all necessary
actions and no actions, waivers, consents and approvals from any federal, state
or local government or any court, administrative or regulatory agency or
commission or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), and making all necessary registrations and filings and
taking all reasonable steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Entity, (ii)
obtaining all necessary consents, approvals and waivers from third parties,
(iii) defending any lawsuits or other legal proceedings challenging the Merger
Agreement or any Ancillary Agreement or the consummation of any of the
transactions
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contemplated thereby and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and fully
to carry out the purposes of, the Merger Agreement and the Ancillary Agreements.
In particular, the Company and the Board of Directors have agreed to take all
action necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Offer, the Merger, the Merger
Agreement, the Ancillary Agreements or any other transaction contemplated
thereby. Further, the Company has agreed that if any state takeover statute or
similar statute or regulation becomes applicable to the Offer, the Merger, the
Merger Agreement or the Ancillary Agreements or any other transaction
contemplated thereby, it will take all action necessary to ensure that the
Offer, the Merger and the other transactions contemplated thereby may be
consummated as promptly as practicable on the terms contemplated by the Merger
Agreement and the Ancillary Agreements and otherwise to minimize the effect of
such statute or regulation on the Offer, the Merger and the other transactions
contemplated thereby.
The Company and Symantec are obligated to give prompt notice to the other
party of any material breach of any representation or warranty made by it in the
Merger Agreement or any Ancillary Agreement. Further, such parties are obligated
to give prompt notice of the failure to comply with or satisfy in any material
respect any covenant, condition or agreement under the Merger Agreement or any
Ancillary Agreement.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including
representations by the Company as to its organization, standing and corporate
power, the absence of certain changes or events concerning the Company's
business, litigation, employee benefit plans, taxes, compliance with laws,
environmental matters, intellectual property, and material contracts.
Conditions to the Merger. Under the Merger Agreement, the respective
obligation of each party to effect the Merger is subject to the satisfaction or
waiver on or prior to the Effective Time of the following conditions: (i) if
required by applicable law, the approval of the Company's stockholders shall
have been obtained; (ii) Purchaser shall have purchased Shares pursuant to the
Offer; and (iii) no statute, rule, regulation, executive order, decree,
injunction, judgment or other order or ruling issued by any court or other
Governmental Entity or other legal restraint or prohibition shall be in effect
which would (a) make the acquisition or holding by Symantec or its affiliates of
Shares or shares of Common Stock of the Surviving Corporation illegal or
otherwise prevent the consummation of the Merger, (b) prohibit Symantec's or
Purchaser's ownership or operation of, or compel Symantec or Purchaser to
dispose of or hold separate, all or a material portion of the business or assets
of Symantec or its subsidiaries taken as a whole, or the Company or its
subsidiaries taken as a whole, (c) compel Symantec, Purchaser or the Company to
dispose of or hold separate all or a material portion of the business or assets
of Symantec or its subsidiaries taken as a whole or the Company or any of its
subsidiaries taken as a whole, (d) impose material limitations on the ability of
Symantec or Purchaser or their affiliates effectively to exercise full ownership
and financial benefits of the Surviving Corporation, or (e) impose any material
condition to the Merger Agreement, any Ancillary Agreements or the Merger which
would be materially adverse to Symantec.
Termination; Fees and Expenses. The Merger Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval of
matters presented in connection with the Merger by the stockholders of the
Company (provided, however, that if Shares are purchased pursuant to the Offer,
Symantec may not terminate the Merger Agreement):
(i) by mutual written consent of Symantec and the Company;
(ii) by Symantec or the Company (a) if, as a result of the failure of
any of the conditions to the Offer, the Purchaser fails to commence the
Offer in the time required by the Merger Agreement, or as a result of the
failure of any of the conditions to the Offer the Offer has terminated or
expired in accordance with its terms (as extended, if applicable) without
the Purchaser having accepted for payment any Shares pursuant to the Offer,
or the Purchaser has not accepted for payment any Shares pursuant to the
Offer by December 31, 1998 as a result of the failure of any of the
conditions to the Offer, provided that the ability to terminate in the
above circumstances is not available to a party whose failure to perform in
any material respect any of its obligations under the Merger Agreement
results in a failure of such condition
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or if the failure of such condition results from facts or circumstances
that constitute a material breach of a representation or warranty under the
Merger Agreement by such party; or (b) if any Governmental Entity has
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the acceptance for payment
of, or payment for, the Shares pursuant to the Offer or the Merger and such
order, decree or ruling or other action has become final and nonappealable;
(iii) by the Company, if prior to the purchase of any Shares by the
Purchaser pursuant to the Offer the Company has received any Superior
Proposal;
(iv) by Symantec in the event that (a) the Company's Board of
Directors or any committee thereof has failed to recommend the Offer, the
Merger, or the Merger Agreement, or shall have so resolved; (b) the
Company's Board of Directors or any committee thereof has withdrawn or
modified in a manner adverse to Symantec or Purchaser its approval or
recommendation of the Offer, the Merger, the Merger Agreement and the
Ancillary Agreements, has approved or recommended any takeover proposal,
has authorized the redemption or amendment of the Rights Agreement after
the Company has received a takeover proposal (other than the amendment to
the Rights Agreement required by the Merger Agreement) or shall have so
resolved (provided that a statement that states that a takeover proposal is
under consideration by the Company's Board of Directors or management and
states that the Company will, at a future date, take a position with
respect to such takeover proposal, without making any adverse statements
with respect to the Offer, shall not be deemed to constitute such a
withdrawal, modification, approval or recommendation); or (c) the Company
has entered into any letter of intent, acquisition agreement or similar
agreement with respect to any Superior Proposal or the Company's Board of
Directors or any committee thereof shall have resolved to do so;
(v) by Symantec in the event that (a) any person entity or "group" (as
defined in Section 13(d)(3) of the Exchange Act) other than Symantec or
Purchaser acquires beneficial ownership of 35% or more of the outstanding
Shares; or (b) the Board of Directors of the Company or any committee
thereof upon a request to reaffirm the Company's approval of recommendation
of the Offer, the Merger or the Merger Agreement and the Ancillary
Agreements, shall have failed to do so within three business days after
such request is made or shall have so resolved;
(vi) by Symantec if any of the Company's representations and
warranties set forth in the Merger Agreement are not true and correct in
any manner that either represents or results from a Willful Breach (as
defined below) or has or represents a Material Adverse Effect (as defined
below) or the Company has committed a material breach of any of the
Company's covenants under the Merger Agreement and such breach either
represents or results from a Willful Breach or has a Material Adverse
Effect, and the Company has not cured such material breach within thirty
days after Symantec has given to the Company written notice of the material
breach and its intention to terminate the Merger Agreement; or
(vii) by the Company if the Purchaser has not accepted for payment any
Shares pursuant to the Offer on or prior to December 31, 1998 and (a) any
of Symantec's representations and warranties set forth in Section 4.2 of
the Merger Agreement are not true and correct in any manner that has or
represents a material adverse effect on Symantec or materially adversely
affects the exercise by the Company of its rights under the Merger
Agreement or the License Agreement, or (b) Symantec has committed a
material breach of any of its covenants under the Merger Agreement, which
breach has a Material Adverse Effect or materially adversely affects the
Company's exercise of its rights under the Merger Agreement or the License
Agreement and Symantec has not cured such material breach within thirty
days after the Company has given Symantec written notice of the material
breach and its intention to terminate the Merger Agreement.
"Material Adverse Change" or "Material Adverse Effect" means any change or
effect that (i) materially adversely affects, or is highly likely to materially
adversely affect, the ability of the Company and its subsidiaries to market and
license either its ProComm product or its CleanSweep product (or both), or to
use any of the Company's intellectual property rights or its intellectual
property that is incorporated, embodied or used therein and that is material to
such product or the ownership by the Company and its subsidiaries of any such
intellectual property right or intellectual property, (ii) materially adversely
affects, or is highly likely to
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materially adversely affect, the exercise by Symantec of its material rights
under the Merger Agreement or the License Agreement or (iii) represents or
results in, or is highly likely to result in, a liability, cost or expense of
more than $3.0 million, or the reduction of the fair value of any assets by more
than $3.0 million (in each case after giving effect to the availability of
payments under any insurance policy). For purposes of clause (iii), no change,
event or effect that is demonstrated by the Company to result from any of the
following shall be deemed by itself to constitute a Material Adverse Change or
be taken into account in determining whether there has been or would be a
Material Adverse Change: (a) conditions affecting the U.S. economy generally or
the economy of any nation or region in which the Company or any of its
subsidiaries conducts business that is material to the Company and its
subsidiaries, taken as a whole; (b) conditions generally affecting the utility
software industry or (c) the announcement or pendency of the Offer or the Merger
or the execution of the Merger Agreement or the License Agreement. "Willful
Breach" by the Company means (i) the failure of a representation or warranty of
the Company in this Agreement to be true and correct in all material respects as
a result of any fact or condition of which any of the Company's executive
officers or directors had actual knowledge as of the date of the Merger
Agreement or (ii) a material breach or failure to perform in any material
respect any obligation or to comply in any material respect with any agreement
or covenant to be performed or complied with by it pursuant to the Merger
Agreement, where performance of such obligation, or compliance with such
agreement or covenant was not impossible and (a) in the case of a breach that
can not readily be cured by the Company within thirty days after written notice
of such breach, the action or inaction constituting such breach was taken by or
at the request of or with the express permission of any of the Company's
executive officers or directors and (b) in the case of a breach that can readily
be cured by the Company within thirty days after written notice of such breach,
such period shall expire without the cure of such breach.
The Merger Agreement provides that the Company shall pay to Symantec the
sum of $2.0 million (the "Break-up Fee"), if: (i) the Merger Agreement is
terminated as set forth in subsection (ii)(a) in the first paragraph of this
section as a result of the failure of the following conditions to the Offer: the
Board of Directors of the Company or any committee thereof shall have failed to
recommend the Offer, the Merger or the Merger Agreement, including any failure
to include such recommendation in the Schedule 14D-9, or shall have so resolved,
the Board of Directors of the Company or any committee thereof shall have
withdrawn or modified (including without limitation by amendment of the Schedule
14D-9) in a manner adverse to Symantec or Purchaser its approval or
recommendation of the Offer, the Merger or the Merger Agreement and the
Ancillary Agreements, shall have approved or recommended any takeover proposal,
shall have authorized the redemption or amendment of the Rights Agreement after
the Company has received any takeover proposal (except as described below under
"Rights Agreement") or shall have resolved to do any of the foregoing; (ii) the
Merger Agreement is terminated as set forth in subsections (iii) and (iv) in the
first paragraph of this section or (iii) the Merger Agreement is terminated by
Symantec as set forth in subsection (ii)(a) or (vi) as a result of a Willful
Breach by the Company of its nonsolicitation covenants. The Break-Up Fee may be
applied by the Company dollar for dollar to reduce any royalty obligations of
Symantec to the Company pursuant to the License Agreement (and shall not be
payable to the extent the Break-Up Fee exceeds the amount of such royalties
required to be paid over the term of the License Agreement), except that if,
pursuant to the terms of the License Agreement, Symantec would not be required
at any time after the date of termination of the Merger Agreement to pay any
royalties, the Break-Up Fee shall be payable in cash. In each case described in
subsection (iii), payments of the foregoing amount, together with the exercise
by Parent of its rights under the License Agreement, shall constitute the sole
remedy for Symantec.
Post Merger Employment Benefits. Employees of the Company who become
employed by Symantec or any controlled subsidiary thereof after the Effective
Time will either, at Symantec's election, to the extent permitted under the
terms of the Company's employee benefit plans, continue to be eligible to
participate in such plans, if and for so long as continued, or become eligible
to participate in the same standard employee benefit plans as are generally
available to similarly situated Symantec employees.
Rights Agreement. The Company has entered into an amendment to the Rights
Agreement to (i) exclude Symantec and the Purchaser and their respective
Affiliates and Associates (as such terms are defined in the Rights Agreement)
from the definition of "Acquiring Person" therein, with respect to the
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beneficial ownership of the Shares which Symantec, Purchaser and/or any of their
respective Affiliates and Associates have obtained the right to acquire, or will
acquire, as a result of the transactions contemplated by the Merger Agreement or
any Ancillary Agreement, (ii) provide that no Distribution Date (as such term is
defined in the Rights Agreement) shall result from the Offer and (iii) provide
for the expiration of the Rights Agreement upon the Effective Date.
The License Agreement
The Company has granted to Symantec, pursuant to the License Agreement
entered into concurrently with the Merger Agreement, a non-exclusive license
(the "Distribution License") to use, copy, distribute, display and perform all
of the Company's CleanSweep product and related technology (the "Licensed
Product") and a non-exclusive license (the "Development License") under all of
the Company's intellectual property rights to use, copy and create derivative
works during the term of the License Agreement from the source code of the
Licensed Product or materials and information provided by the Company relating
thereto. In consideration of this grant, Symantec has agreed to pay the Company
royalties equal to 8% of net revenue from the distribution or other revenue
producing exploitation of the Licensed Product, provided that the royalty rate
shall be 6% if the Company is obligated to pay a Break-up Fee as a result of a
Willful Breach of the Company's covenant not to solicit or negotiate a takeover
proposal. The parties have further agreed that, for copies of the Licensed
Products, the royalty per seat shall not be less than $1.25 for stand-alone
sales of the Licensed Product, $0.75 for bundles of the Licensed Product as part
of Norton Systemworks and $0.20 for original equipment manufacturer
transactions. The Development License commences on October 15, 1998 and the
Distribution License commences upon the earlier of either (i) the consummation
of the Offer or (ii) an event giving rise to the Company's obligation to pay the
Break-up Fee under the Merger Agreement. If neither of these events occur, no
right to distribute the CleanSweep product will arise. The Company has deposited
in escrow the source code for its CleanSweep product and related technology to
be released to Symantec upon commencement of the Distribution License. The
License Agreement terminates immediately if, after consummation of the Offer,
Symantec fails to close the Merger in accordance with the Merger Agreement or
the Merger has not occurred by January 31, 1999 and the Company has not been
obligated to pay the Break-up Fee. The License Agreement also terminates for a
material breach of any term of the License Agreement unless such breach is cured
within thirty days of notice of such breach.
The Stockholder Agreements
Concurrently with the execution of the Merger Agreement, Symantec entered
into the Stockholder Agreements with each of the directors and executive
officers of the Company, namely Suzanne Dickson, Frank Greico, Cheri
Kaplan-Smith, Frank W.T. LaHaye, William H. Lane III, King R. Lee, Howard
Morgan, Gadi Navon, John Strosahl and Joyce Wrenn. In the aggregate, these
stockholders beneficially own 2,707,049 Shares, including 316,004 Shares issued
and outstanding or 0.43% of the total Shares issued and outstanding, and
1,500,000 options to purchase Shares with an exercise price of less than $0.52
per share, which, when combined with those Shares beneficially owned that are
issued and outstanding, comprise approximately 2.0% of the outstanding Shares on
a fully diluted basis (i.e., treating all options having an exercise price of
less than $0.52 per share as if exercised) as of October 15, 1998. The following
is a summary of the Stockholder Agreements, a copy of which has been filed with
the Commission as an exhibit to the Schedule 14D-1. Such summary is qualified in
its entirety by reference to the full text of the Stockholder Agreements.
Pursuant to the Stockholder Agreements, each of these stockholders agreed
to validly tender (or cause the record owner of such Shares to validly tender)
and not withdraw, pursuant to and in accordance with the terms of the Offer, as
soon as practicable after commencement of the Offer, all Shares beneficially
owned by such stockholder. Each of such stockholders also has agreed, at any
meeting of the stockholders of the Company, however called, to vote in favor of
the Merger, and against any proposal relating to a takeover proposal and against
any action or agreement that would impede, frustrate, prevent or nullify the
Stockholder Agreement or result in a breach in any respect 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
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conditions to the Offer described in Section 15 of the Offer to Purchase or set
forth in Article VII of the Merger Agreement not being fulfilled.
In addition, each of such stockholders covenanted and agreed not to
transfer or consent to any transfer of any or all of his Shares, enter into any
contract, option or other agreement or understanding with respect to any
transfer of any or all of his Shares, grant any proxy, power-of-attorney or
other authorization in or with respect to his Shares, deposit his Shares into a
voting trust or enter into a voting agreement or arrangement with respect to his
Shares or take any other action that would in any way restrict, limit or
interfere with the performance of his obligations under the Stockholder
Agreements or the Merger Agreement. Each of the stockholders also granted
representatives of Symantec an irrevocable proxy to vote his Shares in favor of
the various transactions contemplated by the Merger Agreement and against any
takeover proposal. Each stockholder agreed, in the capacity as a stockholder of
the Company, that neither the stockholder nor any affiliates, representatives or
agents shall, directly or indirectly, encourage, solicit, participate in or
initiate discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Symantec,
the Purchaser or any of their respective affiliates or representatives)
concerning any proposal relating to a takeover proposal and to immediately cease
any existing activities, discussions or negotiations with any parties conducted
since before the date of the Stockholder Agreements with respect to any proposal
relating to a takeover proposal.
The agreements and obligations contained in each Stockholder Agreement will
terminate on the earlier of payment for the Shares pursuant to the Offer and the
termination of the Merger Agreement in accordance with its terms.
Conversion and/or Repurchase of Series C Convertible Preferred Stock.
The Company has also entered into an agreement, dated October 9, 1998, with
the holders of the Company's Series C Convertible Preferred Stock. Pursuant to
the agreement, the holders of the Series C Convertible Preferred Stock agreed
not to convert any such shares at a conversion price of less than $0.2650 for a
period of six months after October 9, 1998, the date of the Agreement and that,
during the first sixty calendar days following such date, upon conversion of any
shares of the Series C Convertible Preferred Stock in accordance with their
terms, the Company will issue shares of Common Stock at a conversion price of
$0.2650 notwithstanding the actual conversion price then in effect. At a
conversion price of $0.2650, each share of Series C Convertible Preferred Stock
is convertible into 3,774 shares of Common Stock. The Company has agreed to
issue additional shares of Common Stock (or, at the Company's election, cash) to
each holder of the Series C Convertible Preferred Stock, up to an amount equal
to five percent of the original purchase price of such shares of Series C
Convertible Preferred Stock, but only to the extent that such holder does not
realize at least a 50% gross aggregate return upon resale of the shares of
Common Stock received upon conversion of such shares of Series C Convertible
Preferred Stock. During the six months following October 9, 1998, the Company
has the right to repurchase all of the shares of Series C Convertible Preferred
Stock owned by the holders thereof at a price equal to 110% of the original
purchase price. The Company may exercise this repurchase right upon ten (10)
days notice (which may be by press release), during which time period the
holders of the Series C Convertible Preferred Stock will remain entitled to
convert such shares into shares of Common Stock. The holders of the Series C
Convertible Preferred Stock also agreed that upon a "sales event" (as defined
below), the Company may, at its option, repurchase the shares of Series C
Convertible Preferred Stock at a price equal to 110% of the original price or
require such holders to convert their shares of Series C Convertible Preferred
Stock into shares of Common Stock, or to effect a combination of the foregoing.
A "sales event" means the sale of all or substantially all of the assets of the
Company, a consolidation or merger of the Company in which the stockholders of
the Company immediately prior to such event do not retain a majority of the
voting power of the surviving corporation or the sale of more than 50% of the
stock of the Company.
11.PURPOSE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER AND THE
MERGER; STOCKHOLDER APPROVAL AND APPRAISAL.
Purpose of the Offer. The purpose of the Offer and the Merger is for
Symantec to acquire control of, and a majority of the entire equity interest in,
the Company. The purpose of the Merger is for Symantec to acquire
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all Shares not purchased pursuant to the Offer. Upon consummation of the Merger,
the Company will become a wholly owned subsidiary of Symantec. The Offer is
being made pursuant to the Merger Agreement.
Plans for the Company. As discussed above in Section 10, and subject to
more detailed discussion therein, the Merger Agreement and related agreements
contemplate each of the following: (i) a non-exclusive license pursuant to the
License Agreement related to the Company's CleanSweep product and related
technology in exchange for the payment of certain royalties; and (ii)
restructuring of the Company's Board of Directors following consummation of the
Offer by increasing the size of the board or resignation of incumbent directors
to cause Symantec nominees to hold a number of seats equal to the product of (a)
the total number of members of the Company's Board of Directors and (b) the
percentage that the number of shares of the Company's Common Stock accepted for
payment by Purchaser bears to the total number of shares of Company Common Stock
outstanding, subject to retention of all members of the Company's Board of
Directors who are not employees of the Company until such time as Symantec
acquires a majority of such outstanding shares of the Company's Common Stock on
a fully diluted basis; and (iii) the consummation of the Merger following
satisfaction or waiver of the conditions precedent thereto specified in the
Merger Agreement (including obtaining any necessary shareholder approvals). See
"Section 10. Background of the Offer; Contacts with the Company; the Transaction
Documents." In addition to the foregoing, Symantec intends as soon as
practicable to commence integrating certain manufacturing, marketing, sales and
purchasing functions of Symantec and the Company in order to reduce expenses and
achieve other financial and operational synergies. The Company Common Stock
ceased to be traded on the Nasdaq National Market on October 15, 1998 by reason
of the Company's failure to meet certain quantitative listing criteria therefor.
The Shares currently trade in the OTC Bulletin Board.
Except as indicated in this Offer to Purchase, Symantec does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or its subsidiaries, a sale or transfer of a material
amount of assets of the Company or its subsidiaries or any material change in
the Company's capitalization or dividend policy or any other material changes in
the Company's corporate structure or (except as indicated above in this "Plans
for the Company" section) business, or the composition of the Board of Directors
or the Company's management.
Stockholder Approval and Appraisal. Under Delaware Law, the approval of the
Company Board and, except as described below, the affirmative vote of the
holders of a majority of the outstanding Shares is required to approve and adopt
the Merger Agreement and the transactions contemplated thereby, including the
Merger. The Company Board has unanimously approved and adopted the Merger
Agreement and the transactions contemplated thereby, and, unless the Merger is
consummated pursuant to the short-form merger provisions under Delaware Law
described below, the only remaining required corporate action of the Company is
the approval and adoption of the Merger Agreement and the transactions
contemplated thereby by the affirmative vote of the holders of a majority of the
Shares. Accordingly, if the Minimum Condition is satisfied, Purchaser will have
sufficient voting power to cause the approval and adoption of the Merger
Agreement and the transactions contemplated thereby without the affirmative vote
of any other stockholder.
In the Merger Agreement, the Company has agreed to take all action
necessary to convene a meeting of its stockholders as soon as practicable after
the expiration of the Offer for the purpose of considering and taking action on
the Merger Agreement and the transactions contemplated thereby, if such action
is required. Symantec and Purchaser have agreed that all Shares owned by them
and their subsidiaries will be voted in favor of the Merger Agreement and the
transactions contemplated thereby at any such meeting.
If Purchaser purchases Shares sufficient to satisfy the Minimum Condition
to the Offer, the Merger Agreement provides that Purchaser will be entitled to
designate representatives to serve on the Board in proportion to Purchaser's
ownership of Shares following such purchase. See "Section 10. Background of the
Offer; Contacts with the Company; the Transaction Documents." Purchaser expects
that such representation would permit Purchaser to exercise control over the
Company's conduct of its business and operations.
Under Delaware Law, if Purchaser acquires, pursuant to the Offer or
otherwise, such number of Shares which, when added to the Shares owned of record
by Purchaser on such date, if any, constitutes at least 90% of the then
outstanding Shares, Purchaser will be able to approve and adopt the Merger
Agreement and the
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transactions contemplated thereby, and effect the Merger pursuant to the
short-form merger provisions of Delaware Law, without a vote of the Company's
stockholders. Symantec, Purchaser and the Company have agreed to use their
reasonable best efforts to take, or cause to be taken, all actions necessary,
proper or advisable to consummate and make effective in the most expeditious
manner possible the Merger and the transactions contemplated by the Merger
Agreement. If Purchaser does not acquire such number of Shares which, when added
to the Shares owned of record by Purchaser on such date, constitutes at least
90% of the then outstanding Shares pursuant to the Offer or otherwise and a vote
of the Company's stockholders is required under Delaware Law, a significantly
longer period of time will be required to effect the Merger.
No appraisal rights are available in connection with the Offer. However, if
the Merger is consummated, stockholders will have certain rights under Delaware
Law to dissent and demand appraisal of, and to receive payment in cash of the
fair value of, their Shares. Such rights to dissent, if the statutory procedures
are complied with, could lead to a judicial determination of the fair value of
the Shares, as of the day prior to the date on which the stockholders' vote was
taken approving the Merger or similar business combination (excluding any
element of value arising from the accomplishment or expectation of the Merger),
required to be paid in cash to such dissenting holders for their Shares. In
addition, such dissenting stockholders would be entitled to receive payment of a
fair rate of interest from the date of consummation of the Merger on the amount
determined to be the fair value of their Shares. In determining the fair value
of the Shares, the court is required to take into account all relevant factors.
12. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement provides that the
Company will not, between the date of the Merger Agreement and the Effective
Time, without the prior written consent of Symantec, declare or pay any
dividends on or make any other distributions in respect of any capital stock or
split, combine or reclassify any capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for any capital stock.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, QUOTATION AND
EXCHANGE ACT REGISTRATION. The purchase of Shares pursuant to the Offer will
reduce the number of Shares that might otherwise trade publicly and will reduce
the number of holders of Shares, which could adversely affect the liquidity and
market value of the remaining Shares held by the public.
On October 15, 1998, representatives of the Company informed Symantec that
after the close of trading and after the announcement by the Company and
Symantec of the Offer and the execution of the Merger Agreement, Nasdaq notified
the Company that its Shares were delisted from trading on the Nasdaq National
Market by reason of the Company's failure to meet certain quantitative criteria
therefor. The Shares currently trade on the OTC Bulletin Board. As a result of
this delisting, the Shares are no longer "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System, and,
accordingly, can no longer be used as collateral for loans made by brokers. In
addition, as a result of this delisting, information as to the price and volume
of transactions in the Shares may become more difficult to obtain.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are not listed on a national securities
exchange or Nasdaq and there are fewer than 300 record holders of the Shares.
Termination of registration of the Shares under the Exchange Act would reduce
substantially the information required to be furnished by the Company to its
stockholders and to the Commission and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy statement in connection with
stockholders' meetings pursuant to Section 14(a) and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions no
longer applicable to the Company. Furthermore, if the Purchaser acquires a
substantial number of Shares or the registration of the Shares under the
Exchange Act were to be terminated, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 under the Securities Act of 1933 may be impaired
or eliminated. If registration of the Shares under the Exchange Act were
terminated prior to the consummation of the Merger, the Shares also would no
longer be "margin securities" or be eligible for reporting on Nasdaq National
Market or the Nasdaq SmallCap Market.
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14. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT. Purchaser reserves
the right, at any time or from time to time, in its sole discretion and
regardless of whether or not any of the conditions specified in Section 15 shall
have been satisfied, to extend the period of time during which the Offer is open
by giving oral or written notice of such extension to the Depositary and by
making a public announcement of such extension or to amend the Offer in any
respect by making a public announcement of such amendment. There can be no
assurance that Purchaser will exercise its right to extend or amend the Offer.
If Purchaser decreases the percentage of Shares being sought or increases
or decreases the consideration to be paid for Shares pursuant to the Offer and
the Offer is scheduled to expire at any time before the expiration of a period
of ten business days from, and including, the date that notice of such increase
or decrease is first published, sent or given in the manner specified below, the
Offer will be extended until the expiration of such period of ten business days.
If Purchaser makes a material change in the terms of the Offer (other than a
change in price or percentage of securities sought) or in the information
concerning the Offer, or waives a material condition of the Offer, Purchaser
will extend the Offer if and to the extent required by Rules 14d-4(c), 14d-6(d)
and 14e-1 under the Exchange Act. The minimum period during which a tender offer
must remain open following material changes in the terms thereof or the
information concerning such tender offer, other than a change in price or a
change in the percentage of securities sought, will depend upon the facts and
circumstances, including the relatively materiality of the terms or information
changes. In a published release, the Commission has stated that in its view an
offer should remain open for a minimum of five business days from the date the
material change is first published, sent or given to securityholders, and that
if material changes are made with respect to information that approaches the
significance of price and share levels, a minimum of ten business days may be
required to allow adequate dissemination and investor response. The term
"business day" shall mean any day other than Saturday, Sunday or a federal
holiday and shall consist of the time period from 12:01 a.m. through 12:00
Midnight, New York City time.
Purchaser also reserves the right, in its sole discretion, in the event any
of the conditions specified in Section 15 shall not have been satisfied and so
long as Shares have not previously been accepted for payment, to delay (except
as otherwise required by applicable law) acceptance for payment of or payment
for Shares or to terminate the Offer and not accept for payment or pay for
Shares.
If Purchaser extends the period of time during which the Offer is open, is
delayed in accepting for payment or paying for Shares or is unable to accept for
payment or pay for Shares pursuant to the Offer for any reason, then, without
prejudice to Purchaser's rights under the Offer, the Depositary may, on behalf
of Purchaser, retain all Shares tendered, and such Shares may not be withdrawn
except as otherwise provided in Section 4. The reservation by Purchaser of the
right to delay acceptance for payment of or payment for Shares is subject to
applicable law, which requires that Purchaser pay the consideration offered or
return the Shares deposited by or on behalf of shareholders promptly after the
termination or withdrawal of the Offer.
Any extension, termination or amendment of the Offer will be followed as
promptly as practicable by a public announcement thereof. Without limiting the
manner in which Purchaser may choose to make any public announcement, Purchaser
will have no obligation (except as otherwise required by applicable law) to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service. In the case of an
extension of the Offer, Purchaser will make a public announcement of such
extension no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date.
15. CERTAIN CONDITIONS OF THE OFFER. The Merger Agreement provides that,
notwithstanding any other provision of the Offer or the Merger Agreement, and in
addition to (and not in limitation of) Purchaser's rights to extend and amend
the Offer (subject to certain limitations), Purchaser shall not be required to
accept for payment, purchase or pay for, subject to Rule 14e-1(c) under the
Exchange Act, any Shares tendered pursuant to the Offer and may terminate the
Offer as to any Shares not then paid for unless (i) the Minimum Condition is
satisfied and (ii) any waiting period (and any extension thereof) under the HSR
Act applicable to the purchase of Shares pursuant to the Offer shall have
expired or been terminated. Furthermore, the Merger Agreement provides that
Purchaser shall not be required to commence the Offer or accept for payment,
purchase or pay for any Shares not previously accepted for payment or paid for
and may terminate or
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amend the Offer, if at any time before acceptance of the Shares any of the
following events shall occur or shall be determined by Symantec in good faith to
have occurred which, in the reasonable good faith judgment of Symantec or
Purchaser, and regardless of the circumstances giving rise to any such condition
(other than action or inaction by Symantec or any of its subsidiaries which
constitutes a breach of the Merger Agreement), makes it inadvisable to proceed
with such acceptance for payment or payment:
(a) there shall be pending any suit, action or proceeding brought by
or on behalf of any Governmental Entity (or the staff of the Federal Trade
Commission or the staff of the Antitrust Division of the Department of
Justice shall have recommended the commencement of such), any shareholder
of the Company or any other person or party, directly or indirectly,
(1) challenging the acquisition by Symantec or Purchaser of any of
the Shares, seeking to restrain or prohibit the making or consummation
of the Offer or the Merger or the performance of any of the other
transactions contemplated by the Merger Agreement, or alleging (on
grounds that Purchaser reasonably and in good faith determines are
reasonably likely to result in financial exposure to the Company in
excess of $3 million taking into account available insurance coverage
and/or proceeds) that any such acquisition or other transaction relates
to, involves or constitutes a violation by the Company or its directors
of federal securities law or applicable corporate statutes or
principles,
(2) seeking to prohibit or limit the ownership or operation by the
Company, Symantec or any of their respective subsidiaries of a material
portion of the business or assets of the Company and its subsidiaries,
taken as a whole, or Symantec and its subsidiaries, taken as a whole, or
to compel the Company or Symantec to dispose of or hold separate any
material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Symantec and its subsidiaries, taken
as a whole, as a result of the Offer or any of the other transactions
contemplated by the Merger Agreement,
(3) seeking to impose material limitations on the ability of
Symantec or Purchaser to acquire or hold, or exercise full rights of
ownership of, any of the Shares accepted for payment pursuant to the
Offer, including the right to vote any such Shares accepted for payment
by it on all matters properly presented to the stockholders of the
Company,
(4) seeking to prohibit Symantec or any of its subsidiaries from
effectively managing or controlling in any material respect the business
or operations of the Company and its subsidiaries taken as a whole,
(5) which is likely to result in a Material Adverse Effect or
(6) seeking to impose a material condition to the Offer, the Merger
or the Merger Agreement which would be materially adverse to Symantec;
provided that in case of any such suit, action or proceeding by any
person other than a Governmental Entity, such suit, action or proceeding
could reasonably be expected to result in a Material Adverse Effect; or
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
Governmental Entity or court, other than the application to the Offer or
the Merger of applicable waiting periods under the HSR Act, that is
reasonably likely to result, in any of the consequences referred to in
clauses (a)(1) through (a)(6) above;
(c) there shall have occurred since June 30, 1998, any Material
Adverse Change;
(d) either (1) the Board of Directors of the Company or any committee
thereof shall have failed to recommend the Offer, the Merger or the Merger
Agreement, including any failure to include such recommendation in the
Schedule 14D-9, or shall have so resolved, or (2) the Board of Directors of
the Company or any committee thereof shall have withdrawn or modified
(including without limitation by amendment of the Schedule 14D-9) in a
manner adverse to Symantec or Purchaser its approval or recommendation of
the Offer, the Merger or the Merger Agreement and Ancillary Agreements,
shall have approved or recommended any takeover proposal (provided that a
statement that states that a
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takeover proposal is under consideration by the Company's Board of
Directors or management and states that the Company will, at a future date,
take a position with respect to such takeover proposal, without making any
adverse statements with respect to the Offer, shall not be deemed to
constitute such a withdrawal, modification, approval or recommendation), or
shall have authorized the redemption or amendment of the Rights Agreement
after the Company has received any takeover proposal (other than the Rights
Amendment in accordance with the Merger Agreement) or shall have resolved
to do any of the foregoing;
(e) either (1) any person, entity or "group" (as defined in Section
13(d)(3) of the Exchange Act) other than Symantec and Purchaser acquired
beneficial ownership of 35% or more of the outstanding Shares or (2) the
Board of Directors of the Company or any committee thereof upon request to
reaffirm the Company's approval or recommendation of the Offer, the Merger
or the Merger Agreement, shall have failed to do so within three business
days after such request is made or shall have so resolved;
(f) the representations and warranties of the Company in the Merger
Agreement shall not be true and correct in all material respects (without
regard to any qualification therein as to the Company's knowledge) as a
result of any facts or circumstances that have a Material Adverse Effect;
(g) the Company shall have breached or failed to perform in any
material respect any obligation or to comply in any material respect with
any agreement or covenant of the Company to be performed or complied with
by it pursuant to the Merger Agreement and the same shall have a Material
Adverse Effect;
(h) the Merger Agreement shall have been terminated in accordance with
its terms; or
(i) any voluntary, involuntary or ancillary petition in bankruptcy
shall have been instituted under Title 11 to the United States Code with
respect to the Company as a debtor or alleged debtor and not dismissed. The
Merger Agreement provides that the foregoing conditions are for the sole
benefit of Symantec and Purchaser and their respective affiliates and may
be asserted by Symantec or Purchaser regardless of the circumstances giving
rise to such condition (other than any action or inaction by Symantec or
any of its subsidiaries which constitutes a breach of the Merger Agreement)
or may be waived (except for the Minimum Condition, which can only be
waived with the consent of the Company) by Symantec and the Purchaser in
whole or in part at any time and from time to time in their sole
discretion. The failure by Symantec, Purchaser or any other affiliate of
Symantec at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, the waiver of any such right with
respect to particular facts and circumstances shall not be deemed a waiver
of any such rights with respect to any other facts and circumstances and
each such right shall be deemed an ongoing right that may asserted at any
time and from time to time prior to expiration of the Offer.
16. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
General. Based upon its examination of publicly available information with
respect to the Company and the review of certain information furnished by the
Company to Symantec and discussions of representatives of Symantec with
representatives of the Company during Symantec's investigation of the Company,
neither Purchaser nor Symantec is aware of any governmental permit that appears
to be material to the business of the Company and the subsidiaries, taken as a
whole, which might be adversely affected by the acquisition of Shares by
Purchaser pursuant to the Offer or, except as set forth below, of any approval
or other action by any domestic (federal or state) or foreign governmental,
administrative or regulatory authority or agency which would be required prior
to the acquisition of Shares by Purchaser pursuant to the Offer, other than
pursuant to the HSR Act. Should any such approval or other action be required,
it is Purchaser's present intention to seek such approval or action. Purchaser
does not currently intend, however, to delay the purchase of Shares tendered
pursuant to the Offer pending the outcome of any such action or the receipt of
any such approval (subject to Purchaser's right to decline to purchase Shares if
any of the conditions in Section 15 shall have occurred). There can be no
assurance that any such approval or other action, if needed, would be obtained
without substantial conditions or that adverse consequences might not result to
the business of the Company, Purchaser or Symantec or that certain parts of the
businesses of the Company, Purchaser or Symantec might
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not have to be disposed of or held separate or other substantial conditions
complied with in order to obtain such approval or other action or in the event
that such approval was not obtained or such other action was not taken.
Purchaser's obligation under the Offer to accept for payment and pay for Shares
is subject to certain conditions, including conditions relating to the legal
matters discussed in this Section 16. See "Section 15. Certain Conditions of the
Offer."
State Takeover Laws. The Company is incorporated under the law of the State
of Delaware. In general, Section 203 of Delaware Law prevents an "interested
stockholder" (generally a person who owns or has the right to acquire 15% or
more of a corporation's outstanding voting stock, or an affiliate or associate
thereof) from engaging in a "business combination" (defined to include mergers
and certain other transactions) with a Delaware corporation for a period of
three years following the date such person became an interested stockholder
unless, among other things, prior to such date the board of directors of the
corporation approved either the business combination or the transaction in which
the interested stockholder became an interested stockholder. On October 15,
1998, prior to the execution of the Merger Agreement, the Board of Directors of
the Company, by unanimous vote of all directors present at a meeting held on
such date, (i) approved and adopted the Merger Agreement and the transactions
contemplated thereby, (ii) determined that the Merger Agreement and the
transactions contemplated thereby, including each of the Offer and the Merger,
is fair to and in the best interests of, the Stockholders and (iii) recommended
that the Stockholders accept the Offer and tender their Shares and approve and
adopt the Merger Agreement and the transactions contemplated thereby.
Accordingly, Section 203 is inapplicable to the Offer or the Merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987 in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of stockholders in the state and were incorporated
there.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. Purchaser does not know whether any of these laws will, by their
terms, apply to the Offer or the Merger and has not complied with any such laws.
Should any person seek to apply any state takeover law, Purchaser will take such
action as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is asserted that one or more state takeover laws is applicable to the Offer
or the Merger, and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Purchaser might be unable to accept for
payment any Shares tendered pursuant to the Offer, or be delayed in continuing
or consummating the Offer, and the Merger. In such case, Purchaser may not be
obligated to accept for payment any Shares tendered. See "Section 15. Certain
Conditions of the Offer."
Except as described herein, Purchaser has not attempted to comply with any
state takeover statutes in connection with the Offer. Purchaser reserves the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer to Purchase nor any action
taken in connection herewith is intended as a waiver of that right. In the event
that any state takeover statute is found applicable to the Offer, Purchaser
might be unable to accept for payment or purchase Shares tendered pursuant to
the Offer or be delayed in continuing or consummating the Offer. In such case,
Purchaser may not be obligated to accept for purchase, or pay for any Shares
tendered. See "Section 15. Certain Conditions of the Offer."
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
until certain information has been furnished to the
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"Antitrust Division and the FTC and certain waiting period requirements have
been satisfied. The acquisition of Shares by Purchaser pursuant to the Offer is
subject to such requirements. See "Section 2. Acceptance for Payment and Payment
for Shares."
Pursuant to the HSR Act, on October 19, 1998, Symantec filed a Pre-merger
Notification and Report Form in connection with the purchase of Shares pursuant
to the Offer with the "Antitrust Division and the FTC. Under the provision of
the HSR Act applicable to the Offer, the purchase of Shares pursuant to the
Offer may not be consummated until the expiration of a 15-calendar day waiting
period following the filing by Symantec. Accordingly, the waiting period under
the HSR Act applicable to the purchase of Shares pursuant to the Offer will
expire at 11:59 p.m., New York City time, on November 3, 1998, unless such
waiting period is terminated by the FTC and the Antitrust Division or extended
by a request from the FTC or the Antitrust Division for additional information
or documentary material prior to the expiration of the waiting period. If either
the FTC or the Antitrust Division were to request additional information or
documentary material from Symantec and/or the Company with respect to the Offer,
the waiting period with respect to the Offer would expire at 11:59 p.m., New
York City time, on the tenth calendar day after the date of substantial
compliance by Symantec and the Company with such request. Thereafter, the
waiting period could be extended only by court order. If the acquisition of
Shares is delayed pursuant to a request by the FTC or the Antitrust Division for
additional information or documentary material pursuant to the HSR Act, the
Offer may, but need not, be extended and, in any event, the purchase of and
payment for Shares will be deferred until 10 days after the request is
substantially complied with, unless the extended period expires on or before the
date when the initial 15-day period would otherwise have expired, or unless the
waiting period is sooner terminated by the FTC and the Antitrust Division. Only
one extension of such waiting period pursuant to a request for additional
information is authorized by the HSR Act and the rules promulgated thereunder,
except by court order. Any such extension of the waiting period will not give
rise to any withdrawal rights not otherwise provided for by applicable law. See
"Section 4. Withdrawal Rights." It is a condition to the Offer that the waiting
period applicable under the HSR Act to the Offer expire or be terminated. See
"Section 2. Acceptance for Payment and Payment for Shares" and "Section 15.
Certain Conditions of the Offer."
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase of
Shares pursuant to the Offer by Purchaser, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Symantec, the Company or
their respective subsidiaries. Private parties and state attorneys general may
also bring legal action under federal or state antitrust laws under certain
circumstances. Based upon an examination of information available to Symantec
relating to the businesses in which Symantec, the Company and their respective
subsidiaries are engaged, Symantec and Purchaser believe that the Offer and the
Merger will not violate the antitrust laws. Nevertheless, there can be no
assurance that a challenge to the Offer on antitrust grounds will not be made
or, if such a challenge is made, what the result would be. See "Section 15.
Certain Conditions of the Offer."
17. FEES AND EXPENSES. Except as set forth below, Purchaser will not pay
any fees or commissions to any broker, dealer or other person for soliciting
tenders of Shares pursuant to the Offer.
DLJ has been retained on an exclusive basis to render financial advisory
services in connection with the Offer and the Merger. In addition, DLJ has been
engaged to act as Dealer Manager in connection with the Offer. DLJ will be paid
$850,000 in connection with such engagements upon successful completion of the
Offer. DLJ will also be reimbursed for its reasonable fees and expenses and has
been granted customary indemnity for certain liabilities and expenses.
D.F. King & Co., Inc. has been retained to serve as the Information Agent
in connection with the Offer. The Information Agent will be paid a fee of
$10,000 plus certain additional fees for its services, will be reimbursed for
reasonable out-of-pocket expenses and has been provided with customary indemnity
for certain liabilities and expenses. The Information Agent may contact holders
of Shares by mail, telephone, telex,
31
<PAGE> 34
telecopy, telegraph or personal interview and may request banks, brokers,
dealers and other nominee stockholders to forward materials relating to the
Offer to beneficial owners.
State Street Bank and Trust Company has been retained as the Depositary in
connection with the Offer. The Depositary will be paid reasonable and customary
compensation for its services in connection with the Offer, will be reimbursed
for its reasonable out-of-pocket expenses in connection therewith and has been
provided with customary indemnity for certain liabilities and expenses. In
addition, brokers, dealers, commercial banks and trust companies will be
reimbursed for customary handling and mailing expenses incurred by them in
forwarding material to their customers.
18. MISCELLANEOUS. Purchaser is not aware of any jurisdiction where the
making of the Offer is prohibited by any administrative or judicial action
pursuant to any valid state statute. If Purchaser becomes aware of any valid
state statute prohibiting the making of the Offer or the acceptance of Shares
pursuant thereto, Purchaser will make a good faith effort to comply with any
such state statute. If, after such good faith effort, Purchaser cannot comply
with any such state statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by the Dealer Manager or by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF SYMANTEC, PURCHASER OR THE COMPANY NOT CONTAINED IN
THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Symantec and Purchaser have filed with the Commission the Schedule
14D-1, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments thereto, including
Exhibits, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in Section 7 with respect to the Company
(except that they will not be available at the regional offices of the
Commission).
OAK ACQUISITION CORPORATION
October 19, 1998
32
<PAGE> 35
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PURCHASER AND SYMANTEC
The following tables set forth the name, present principal occupation or
employment and material occupation, positions, offices or employment for the
past five years of each director and executive officer of Purchaser and
Symantec. The business address of each such person is 10201 Torre Avenue,
Cupertino, California 95014-2132.
Unless otherwise indicated, each person listed below (i) has held his
principal occupation for the past five years, (ii) has not been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors) and
has not been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction where, as a result of such proceeding, such person
was, or is, subject to a judgment, decree or final order enjoining future
violations of or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws or is involved in any other legal
proceeding which is required to be disclosed under Item 401(f) of Regulation S-K
promulgated by the SEC, and (iii) is a citizen of the United States, except
Dieter Giesbrecht, who is a citizen of Germany, Enrique Salem, who is a citizen
of Colombia, and Robert Dykes, who is a citizen of New Zealand.
1. Director and Executive Officer of Purchaser:
<TABLE>
<CAPTION>
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
---- ---------------------------------------------------------------------------
<S> <C>
Derek Witte Vice President, General Counsel and Secretary. Mr. Witte joined Symantec in
October 1990.
</TABLE>
2. Directors and Executive Officers of Symantec:
<TABLE>
<CAPTION>
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
---- ---------------------------------------------------------------------------
<S> <C>
Gordon E. Eubanks, Jr. President and Chief Executive Officer since October 1986 and a member of
the Board of Directors since November 1983.
Howard A. Bain III Vice President, Worldwide Operations and Chief Financial Officer. Mr. Bain
jointed Symantec in October 1991 as its Vice President, Finance.
Christopher Calisi Vice President, Remote Productivity Solutions Business Unit. From 1992 to
1996, Mr. Calisi held several positions within Symantec's Remote Access
Business Unit, including Development Manager, Director of Development,
General Manager and most recently, Vice President, Communication Products.
Dieter Giesbrecht Vice President, Europe, Middle East and Africa ("EMEA") since September
1996. From 1995 until joining Symantec, he was Vice President of Attachmate
Europe based in Paris, France and was responsible for the EMEA region. From
1991 to 1995, he held several executive functions within Lotus Development
Europe including Managing Director UK and Managing Director Central Europe
Enrique T. Salem Vice President, Security and Assistance Business Unit and Chief Technical
Officer. Mr. Salem joined Symantec in April 1990 and has held numerous
positions including Director of Development and General Manager of Advanced
Utilities Group.
Dana E. Siebert Executive Vice President, Worldwide Sales. Previously, Mr. Siebert served
as Vice President, Americas and prior to that, Vice President, Worldwide
Services of Symantec. Mr. Siebert joined Symantec in September 1987.
Derek Witte Vice President, General Counsel and Secretary. Mr. Witte joined Symantec in
October 1990.
</TABLE>
<PAGE> 36
<TABLE>
<CAPTION>
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
---- ---------------------------------------------------------------------------
<S> <C>
Carl D. Carman Director since May 1984, and Chairman of the Board since January 1993. Mr.
Carman has been a partner in Hill, Carman Ventures, a venture capital firm,
since April 1989.
Walter W. Bregman Director since October 1988. Mr. Bregman has been Chairman and co-CEO of
S&B Enterprises, a consulting firm, since March 1988, and since December
1992 has been President and CEO of Golf Scientific, Inc., a company which
produces and sells golf instructional equipment.
Robert S. Miller Director since September 1994. Mr. Miller has been Chairman and CEO of
Waste Management, Inc. since October 1997. He was Chairman of the Board of
Morrison-Knudsen Corporation from April 1995 until September 1996, and is
now Vice Chairman of the Board. From April 1992 until February 1993, he was
a senior partner at James D. Wolfensohn, Inc., a New York investment
banking firm.
Charles M. Boesenberg Director since June 1994, and provided certain consulting services to
Symantec from January 1995 through December 1995. Mr. Boesenberg is
currently the President and Chief Executive Officer of Magellan
Corporation, which was the surviving corporation of a merger with Ashtech,
Inc., a position that he assumed in January 1995 with Ashtech. Mr.
Boesenberg was an Executive Vice President of Symantec from June 1, 1994,
when Symantec acquired Central Point Software, Inc. and continued in that
capacity until December 1994. In February 1992, Mr. Boesenberg joined
Central Point as its President and Chief Operating Officer, and was elected
as its Chief Executive Officer and Chairman in March 1992, and continued in
those positions until the acquisition of Central Point by Symantec.
Robert R.B. Dykes Director since March 1997. Robert R.B. Dykes is the Senior Vice President
of Finance and Administration of Flextronics International Ltd. since
February 1997. Mr. Dykes was Symantec's Executive Vice President of
Worldwide Operations and Chief Financial Officer from October 1988 until
February 1997.
Tania Amochaev Director since October 1997. Ms. Amochaev was Chief Executive Officer of
QRS Corporation, a provider of electronic commerce solutions to the retail
industry, from May 1993 until February 1997. She was President of QRS prior
to her promotion as that company's Chief Executive Officer and has also
been Chairman of the Executive Committee of the QRS Board of Directors
since February 1997.
</TABLE>
2
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
QUARTERDECK CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED OCTOBER 19, 1998
AT
$0.52 NET PER SHARE
BY
OAK ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
SYMANTEC CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON MONDAY, NOVEMBER 16, 1998, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
STATE STREET BANK AND TRUST COMPANY
<TABLE>
<S> <C> <C>
By First Class Mail: By Overnight, Certified By Hand:
or Express Delivery:
State Street Bank Securities Transfer &
and Trust Company State Street Bank Reporting Services, Inc.
Corporate Reorganization and Trust Company c/o Boston EquiServe
P.O. Box 9061 Corporate Reorganization 100 Williams Street, Galleria
Boston, MA 02205-8686 40 Campanelli Drive New York, NY 10038
Braintree, MA 02184
By Facsimile Transmission:
(for Eligible Institutions Only)
(781) 794-6352
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND
COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
- ----------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S)
APPEAR(S) ON CERTIFICATE(S) AND SHARE(S) TENDERED
CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF
CERTIFICATE SHARES EVIDENCED BY NUMBER OF SHARES
NUMBER(S) CERTIFICATE(S)* TENDERED**
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
TOTAL SHARES
</TABLE>
- --------------------------------------------------------------------------------
* Need not be completed by stockholders delivering Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced
by each Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
- --------------------------------------------------------------------------------
<PAGE> 2
This Letter of Transmittal is to be completed by holders of Shares (as
defined below) of Quarterdeck Corporation ("Stockholders") if certificates
evidencing Shares ("Certificates") are to be forwarded with this Letter of
Transmittal or, unless an Agent's Message (as defined in the Offer to Purchase)
is utilized, if delivery of Shares is to be made by book-entry transfer to an
account maintained by the Depositary at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the book-entry transfer procedure
described in Section 3 of the Offer to Purchase (as defined below). DELIVERY OF
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY. See Instruction 2.
Stockholders whose Certificates are not immediately available or who cannot
deliver their Certificates for, or a Book Entry Confirmation (as defined in
Section 2 of the Offer to Purchase) with respect to, their Shares and all other
documents required hereby to the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase) must tender their Shares
according to the guaranteed delivery procedures described in Section 3 of the
Offer to Purchase. See Instruction 2.
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution:
-----------------------------------------------------------------------------
Account Number:
-----------------------------------------------------------------------------
Transaction Code Number:
-----------------------------------------------------------------------------
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
Name(s) of Tendering Holder(s):
-----------------------------------------------------------------------------
Window Ticket No. (if any):
-----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-------------------------------------------------------------------
Name of Institution which Guaranteed Delivery:
------------------------------------------------------------------------
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF
TRANSMITTAL CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Oak Acquisition Corporation
("Purchaser"), a Delaware corporation and a wholly owned subsidiary of Symantec
Corporation, a Delaware corporation, the above-described shares of common stock,
par value $0.001 per share (together with the associated Preferred Stock
purchase rights, the "Shares"), of Quarterdeck Corporation (the "Company"), a
Delaware corporation, pursuant to Purchaser's offer to purchase all Shares at
$0.52 per Share, net to the seller in cash, without interest thereon, subject to
reduction for any applicable federal back up or other withholding taxes, upon
the terms and subject to the conditions set forth in the Offer to Purchase,
dated October 19, 1998 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal ("Letter of Transmittal" which,
together with the Offer to Purchase, constitute the "Offer"). The undersigned
understands that Purchaser reserves the right to transfer or assign, in whole
or, from time to time, in part, to one or more of its affiliates, the right to
purchase all or any portion of the Shares tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby and all dividends, distributions (including, without limitation,
distributions of additional Shares) and rights declared, paid or distributed in
respect of such Shares on or after the date of the Offer (collectively,
"Distributions"), and irrevocably appoints the Depositary the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares and
all Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Certificates evidencing such Shares and all Distributions, or transfer ownership
of such Shares and all Distributions on the account books maintained by the
Book-Entry Transfer Facility, together, in either case, with all accompanying
evidences of transfer and authenticity, to or upon the order of Purchaser, (ii)
present such Shares and all Distributions for transfer on the books of the
Company and (iii) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares and all Distributions, all in accordance
with the terms of the Offer.
The undersigned hereby irrevocably appoints Gordon E. Eubanks, Jr. and
Howard A. Bain III and each of them, as the attorneys and proxies of the
undersigned, each with full power of substitution, to vote in such manner as
each such attorney and proxy or his or her substitute shall, in his or her sole
discretion, deem proper and otherwise act (by written consent or otherwise) with
respect to all the Shares tendered hereby which have been accepted for payment
by Purchaser prior to the time of such vote or other action and all Shares and
other securities issued in Distributions in respect of such Shares, which the
undersigned is entitled to vote at any meeting of stockholders of the Company
(whether annual or special and whether or not an adjourned or postponed meeting)
or consent in lieu of any such meeting or otherwise. This proxy and power of
attorney is coupled with an interest in the Shares tendered hereby, is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by Purchaser in accordance with other
terms of the Offer. Such acceptance for payment shall revoke all other proxies
and powers of attorney granted by the undersigned at any time with respect to
such Shares (and all Shares and other securities issued in Distributions in
respect of such Shares), and no subsequent proxy or power of attorney shall be
given or written consent executed (and if given or executed, shall not be
effective) by the undersigned with respect thereto. The undersigned understands
that, in order for Shares to be deemed validly tendered, immediately upon
Purchaser's acceptance of such Shares for payment, Purchaser must be able to
exercise full voting and other rights with respect to such Shares and all
Distributions, including, without limitation, voting at any meeting of the
Company's stockholders then scheduled.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, that when such Shares are accepted for
payment by Purchaser, Purchaser will acquire good, marketable and unencumbered
title thereto and to all Distributions, free and clear of all liens,
restriction, charges and encumbrances, and that none of such Shares and
Distributions will be subject to any adverse claim. The undersigned, upon
request, shall execute and deliver all additional documents deemed to be
necessary or advisable to complete the sale, the assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby, or deduct from such purchase
price, the amount or value of such Distribution as determined by Purchaser in
its sole discretion.
<PAGE> 4
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Certificates evidencing Shares not purchased or not
tendered in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Certificates evidencing Shares
not tendered or not purchased (and accompanying documents, as appropriate) to
the address(es) of the registered holder(s) appearing above under "Description
of Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Shares purchased and return all
Certificates evidencing Shares not purchased or not tendered in the name(s) of,
and mail such check and Certificates to, the person(s) so indicated. Unless
otherwise indicated herein in the box entitled "Special Payment Instructions,"
please credit any Shares tendered hereby and delivered by book-entry transfer,
but which are not purchased, by crediting the account at the Book-Entry Transfer
Facility designated above. The undersigned recognizes that Purchaser has no
obligation, pursuant to the Special Payment Instructions, to transfer any Shares
from the name of the registered holder(s) thereof if Purchaser does not purchase
any of the Shares tendered hereby.
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7) (INSTRUCTIONS 1, 5, 6, AND 7)
To be completed ONLY if the check for the To be completed ONLY if the check for the
purchase price of Shares or Certificates purchase price of Shares purchased or
evidencing Shares not tendered or not Certificates evidencing Shares not tendered or
purchased to be issued in the name of someone not purchased are to be mailed to someone
other than the undersigned, or if Shares other than the undersigned, or to the
tendered hereby and delivered by book-entry undersigned at an address other than that
transfer which are not purchased are to be shown under "Description of Shares Tendered."
returned by credit to an account at the
Book-Entry Transfer Facility other than the
account designated above.
Issue [ ] Check [ ] Certificate(s) to: Mail: [ ] Check [ ] Certificate(s) to:
Name: Name:
(PLEASE PRINT) (PLEASE PRINT)
Address: Address:
- ---------------------------------------------- ----------------------------------------------
(ZIP CODE) (ZIP CODE)
- ---------------------------------------------- ----------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY TAXPAYER IDENTIFICATION OR SOCIAL SECURITY
NUMBER NUMBER
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE) (SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
[ ] Credit shares delivered by book-entry
transfer and not purchased to the account
at the Book-Entry Transfer Facility set
forth below:
Account Number:
</TABLE>
- ------------------------------------------------------------
- ------------------------------------------------------------
<PAGE> 5
IMPORTANT
STOCKHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 FOLLOWING INSTRUCTIONS)
__
__
SIGNATURE(S) OF HOLDER(S)
DATED: , 1998
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Certificates or on a security position listing or by a person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information and see
Instruction 5).
Name(s):
__
(PLEASE PRINT)
Capacity (full title): __
Address: __
__
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.:
(SEE SUBSTITUTE FORM W-9 FOLLOWING INSTRUCTIONS)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
Name:
(PLEASE TYPE OR PRINT)
Title:
Name of Firm:
Address:
__
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
Dated:
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this document, shall include
any participant in the Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) of Shares tendered herewith,
unless such holder(s) has completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" above, or (b)
if such Shares are tendered for the account of a firm which is a bank, broker,
dealer, credit union, savings association or other entity which is a member in
good standing of a recognized Medallion Signature Guarantee Program (each of the
foregoing being referred to as an "Eligible Institution"). In all other cases,
all signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if Certificates are to be forwarded herewith
or, unless an Agent's Message is utilized, if Shares are to be delivered by
book-entry transfer pursuant to the procedure set forth in Section 3 of the
Offer to Purchase. Certificates evidencing all physically tendered Shares, or a
confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of all Shares delivered by book-entry transfer as
well as a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees, or an Agent's
message in the case of a book-entry delivery, and any other documents required
by this Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth on the reverse hereof prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase). If Certificates are forwarded to
the Depositary in multiple deliveries, a properly completed and duly executed
Letter of Transmittal must accompany each such delivery. Stockholders whose
Certificates are not immediately available, who cannot deliver their
Certificates and all other required documents to the Depositary prior to the
Expiration Date or who cannot complete the procedure for delivery by book-entry
transfer on a timely basis may tender their Shares pursuant to the guaranteed
delivery procedure described in Section 3 of the Offer to Purchase. Pursuant to
such procedure: (i) such tender must be made by or through an Eligible
Institution; (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, must be
received by the Depositary prior to the Expiration Date; and (iii) the
Certificates evidencing all physically delivered Shares in proper form for
transfer by delivery, or a confirmation of a book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility of all Shares delivered
by book-entry transfer, in each case together with a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of book-entry delivery, an Agent's
Message), and any other documents required by this Letter of Transmittal, must
be received by the Depositary within three National Association of Securities
Dealers Automated Quotation-National Market System trading days after the date
of execution of such Notice of Guaranteed Delivery, all as described in Section
3 of the Offer to Purchase.
The method of delivery of this Letter of Transmittal, Certificates and all
other required documents, including delivery through the Book-Entry Transfer
Facility, is at the option and risk of the tendering stockholder, and the
delivery will be deemed made only when actually received by the Depositary. If
delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to
ensure timely delivery.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering stockholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Certificate numbers, the number of Shares
evidenced by such Certificates and the number of Shares tendered should be
listed on a separate schedule and attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Certificate delivered
to the Depositary herewith are to be tendered hereby, fill in the number of
Shares which are to be tendered in the box entitled "Number of Shares Tendered."
In such cases, new Certificate(s) evidencing the remainder of the Shares that
were evidenced by the Certificates delivered to the Depositary herewith will be
sent to the person(s) signing this Letter of Transmittal, unless otherwise
provided in the box entitled "Special Delivery Instructions" on the reverse
hereof, as soon as practicable after the expiration or termination of the Offer.
All Shares evidenced by Certificates delivered to the Depositary will be deemed
to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
<PAGE> 7
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Certificates or separate stock powers
are required, unless payment is to be made to, or Certificates evidencing Shares
not tendered or not purchased are to be issued in the name of, a person other
than the registered holder(s), in which case, the Certificate(s) evidencing the
Shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered holder(s)
appear(s) on such Certificate(s). Signatures on such Certificate(s) and stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Certificate(s). Signatures on such
Certificate(s) and stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any Certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
Purchaser of such person's authority so to act must be submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted. Except as provided in this Instruction 6, it will not
be necessary for transfer tax stamps to be affixed to the Certificates
evidencing the Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Certificate is to be sent to someone other than the person(s)
signing this Letter of Transmittal or to the person(s) signing this Letter of
Transmittal but at an address other than that shown in the box entitled
"Description of Shares Tendered" on the reverse hereof, the appropriate boxes on
the reverse of this Letter of Transmittal must be completed. Stockholders
delivering Shares tendered hereby by book-entry transfer may request that Shares
not purchased be credited to such account maintained at a Book-Entry Transfer
Facility as such stockholder may designate in the box entitled "Special Payment
Instructions" on the reverse hereof. If no such instructions are given, all such
Shares not purchased will be returned by crediting the account at the Book-Entry
Transfer Facility designated on the reverse hereof as the account from which
such Shares were delivered.
8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent at its
address or telephone numbers set forth below or to the Dealer Manager at its
address or telephone number set forth below. Additional copies of the Offer to
Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.
9. SUBSTITUTE FORM W-9. Under the federal income tax law, a stockholder
whose tendered Shares are accepted for payment is required by law to provide the
Depositary (as Payer) with such stockholder's correct TIN on Substitute Form W-9
below. If such stockholder is an individual, the TIN is such stockholder's
social security number. If the Depositary is not provided with the correct TIN,
the stockholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to such stockholder with respect to
Shares purchased pursuant to the Offer may be subject to backup withholding. If
backup withholding applies, the Depositary is required to withhold 31% of any
payments made to the stockholder. Backup withholding is not an additional tax.
Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit an Internal Revenue Service Form W-8,
signed under penalties of perjury, attesting to such
<PAGE> 8
individual's exempt status. A form W-8 can be obtained from the Depositary. See
the enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying that the TIN provided on Substitute Form
W-9 is correct (or that such stockholder is awaiting a TIN), and that (i) such
stockholder has not been notified by the Internal Revenue Service that he is
subject to backup withholding as a result of a failure to report all interest or
dividends or (ii) the Internal Revenue Service has notified such stockholder
that such stockholder is no longer subject to backup withholding.
See the enclosed "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9" for additional instructions.
- --------------------------------------------------------------------------------
PAYER'S NAME:
- --------------------------------------------------------------------------------
-----------------------------------------------------
- --------------------------------------------------------------------------------
SUBSTITUTE
FORM W-9
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN)
PART II -- For Payees Exempt From Backup Withholding, see the enclosed
Guidelines and complete as instructed therein.
PART III -- Social Security
Number OR
Employer Identification
Number
----------------------------
(If awaiting TIN write
"Applied For")
CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (the "IRS") that I am subject to
backup withholding as a result of failure to report all interest or
dividends, or the IRS has notified me that I am no longer subject to
backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have
been notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the
enclosed Guidelines.)
- --------------------------------------------------------------------------------
SIGNATURE DATE , 1998
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. FOR ADDITIONAL
DETAILS, PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9.
PART I -- Taxpayer Identification Number--For all
accounts, enter
taxpayer identification
number in the box at
right. (For most
individuals, this is
your social security
number. If you do not
have a number, see
OBTAINING A NUMBER in
the enclosed
Guidelines.) Certify by
signing and dating
below.
NOTE: If the account is in more than one name, see
the chart in the
enclosed Guidelines to
determine which number
to give the payer.
<PAGE> 9
IMPORTANT: THE LETTER OF TRANSMITTAL OR FACSIMILE THEREOF, PROPERLY
COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY
DELIVERY (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND CERTIFICATES OR
CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER
TO PURCHASE).
The Depositary for the Offer is:
STATE STREET BANK AND TRUST COMPANY
<TABLE>
<S> <C>
By First Class Mail: By Overnight, Certified or Express Delivery:
State Street Bank and Trust Company c/o Boston EquiServe
Corporate Reorganization Corporate Reorganization
P.O. Box 9061 40 Campanelli Drive
Boston, MA 02205-8686 Braintree, MA 02184
</TABLE>
By Hand:
Securities Transfer &
Reporting Services, Inc.
c/o Boston EquiServe
100 William Street,
Galleria
New York, NY 10038
By Facsimile Transmission:
(for Eligible Institutions Only)
(781) 794-6352
Questions and requests for assistance may be directed to the Information Agent
at its address and telephone number listed below. Additional copies of the Offer
to Purchase, the Letter of Transmittal and other tender offer materials may be
obtained from the Information Agent as set forth below and will be furnished
promptly at Purchaser's expense. You may also contact your broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005
Call Toll Free (800) 488-8095
Call Collect (212) 269-5550
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
277 Park Avenue
New York, NY 10172
Call Collect (212) 892-7700
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
QUARTERDECK CORPORATION
AT
$0.52 NET PER SHARE
BY
OAK ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
SYMANTEC CORPORATION
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) (i) if certificates
("Certificates") evidencing shares of common stock, par value $0.001 per share
(together with the associated Preferred Stock purchase rights, the "Shares"), of
Quarterdeck Corporation, a Delaware corporation (the "Company"), are not
immediately available, (ii) if Certificates and all other required documents
cannot be delivered to State Street Bank and Trust Company, as Depositary (the
"Depositary"), prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase (as defined below)) or (iii) if the procedure for delivery by
book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram,
telex or facsimile transmission to the Depositary. See Section 3 of the Offer to
Purchase.
THE DEPOSITARY FOR THE OFFER IS:
STATE STREET BANK AND TRUST COMPANY
<TABLE>
<S> <C> <C>
By First Class Mail: By Overnight, Certified By Hand:
or Express Delivery:
State Street Bank Securities Transfer &
and Trust Company c/o Boston EquiServe Reporting Services, Inc.
Corporate Reorganization Corporate Reorganization c/o Boston EquiServe
P.O. Box 9061 40 Campanelli Drive 100 William Street, Galleria
Boston, MA 02205-8686 Braintree, MA 02184 New York, NY 10038
By Facsimile Transmission:
(for Eligible Institutions Only)
(781) 794-6352
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Oak Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Symantec Corporation, a Delaware
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated October 19, 1998 (the "Offer to Purchase"), and the related
Letter of Transmittal (which together constitute the "Offer"), receipt of each
of which is hereby acknowledged, the number of Shares specified below pursuant
to the guaranteed delivery procedure described in Section 3 of the Offer to
Purchase.
<TABLE>
<S> <C>
SIGNATURE(S) OF HOLDER(S)
Number of Shares: Dated: , 1998
Certificate Nos. Name(s) of Holder(s):
(If Available)
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
Check box if Shares will be
delivered by book-entry transfer PLEASE TYPE OR PRINT
[ ] The Depository Trust Company Address
Account No.: --------------------------------------------------------
Zip Code
Area Code and Telephone No.:
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or which is a commercial bank or trust company having an office or correspondent
in the United States that is a member in good standing of the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program, guarantees
to deliver to the Depositary, at one of its addresses set forth above,
Certificates evidencing the Shares tendered hereby, in proper form for transfer,
or confirmation of book-entry transfer of such Shares, into the Depositary's
account at The Depository Trust Company, with delivery of a Letter of
Transmittal (or facsimile thereof) properly completed and duly executed, with
any required signature guarantees or an Agent's Message (as defined in the Offer
to Purchase) in the case of a book-entry delivery, and any other required
documents, all within three National Association of Securities Dealers Automated
Quotation-National Market System trading days of the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depository and must deliver the Letter of Transmittal and the
certificates for Shares to the Depository within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
<TABLE>
<S> <C>
Name of Firm: Authorized Signature:
Address: Name:
(PLEASE TYPE OR PRINT)
Zip Code: Title:
Area Code and Telephone No.: Dated:
</TABLE>
NOTE: DO NOT SEND CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD BE
SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
QUARTERDECK CORPORATION
AT
$0.52 NET PER SHARE
BY
OAK ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
SYMANTEC CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON MONDAY, NOVEMBER 16, 1998, UNLESS THE OFFER IS EXTENDED.
OCTOBER 19, 1998
TO BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
We have been appointed by Oak Acquisition Corporation ("Purchaser"), a
Delaware corporation and a wholly owned subsidiary of Symantec Corporation, a
Delaware corporation, to act as Dealer Manager in connection with Purchaser's
offer to purchase all outstanding shares of Common Stock, par value $0.001 per
share (together with the associated Preferred Stock purchase rights, the
"Shares"), of Quarterdeck Corporation (the "Company"), a Delaware corporation,
at a price of $0.52 per Share, net to the seller in cash without interest
thereon and subject to reduction for any applicable federal backup or other
withholding taxes, upon the terms and subject to the conditions set forth in
Purchaser's Offer to Purchase, dated October 19, 1998 (the "Offer to Purchase"),
and the related Letter of Transmittal ("Letter of Transmittal" which, together
with the Offer to Purchase, constitute the "Offer") enclosed herewith. Please
furnish copies of the enclosed materials to those of your clients for whose
accounts you hold Shares registered in your name or in the name of your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THAT
NUMBER OF SHARES THAT CONSTITUTE A MAJORITY OF THE THEN OUTSTANDING SHARES ON A
FULLY DILUTED BASIS (AS DEFINED IN THE OFFER TO PURCHASE), AND (2) THE
EXPIRATION OR TERMINATION OF ALL WAITING PERIODS IMPOSED UPON CONSUMMATION OF
THE OFFER BY THE HART-SCOTT-RODINO ANTI-TRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED, AND THE REGULATIONS THEREUNDER, AS WELL AS THE OTHER CONDITIONS
DESCRIBED HEREIN.
Enclosed for your information and use are copies of the following
documents:
1. Offer to Purchase, dated October 19, 1998;
2. Letter of Transmittal to be used by holders of Shares in accepting
the Offer and tendering Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents are not immediately available
or cannot be delivered to State Street Bank and Trust Company (the
"Depositary") by the Expiration Date (as defined in the Offer to
Purchase) or if the procedure for book-entry transfer cannot be
completed by the Expiration Date;
4. A letter to stockholders of the Company from King R. Lee, Interim
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with
the Securities and Exchange Commission by the Company;
<PAGE> 2
5. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee,
with space provided for obtaining such clients' instructions with
regard to the Offer;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, NOVEMBER 16, 1998, UNLESS THE OFFER IS EXTENDED.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
evidencing such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at the Book-Entry Transfer Facility (as
defined in the Offer to Purchase)), (ii) a Letter of Transmittal (or facsimile
thereof) properly completed and duly executed or an Agent's Message (as defined
in the Offer to Purchase) in connection with a book-entry delivery of Shares and
(iii) any other required documents.
If a holder of Shares wishes to tender, but cannot deliver such holder's
certificates or other required documents, or cannot comply with the procedure
for book-entry transfer, prior to the expiration of the Offer, a tender of
Shares may be effected by following the guaranteed delivery procedure described
in Section 3 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Dealer Manager, the Depositary and the Information
Agent as described in the Offer to Purchase) in connection with the solicitation
of tenders of Shares pursuant to the Offer. However, Purchaser will reimburse
you for customary mailing and handling expenses incurred by you in forwarding
any of the enclosed materials to your clients. Purchaser will pay or cause to be
paid any stock transfer taxes payable with respect to the transfer of Shares to
it, except as otherwise provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed material may be obtained by contacting
D.F. King & Co., Inc. (the "Information Agent") at its address and telephone
numbers set forth on the back cover page of the Offer to Purchase.
Inquiries with respect to the Offer may also be addressed to D.F. King &
Co., Inc. at the address and telephone numbers set forth on the back cover page
of the Offer to Purchase.
VERY TRULY YOURS,
DONALDSON, LUFKIN & JENRETTE
SECURITIES
CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL AUTHORIZE YOU
OR ANY OTHER PERSON TO ACT ON BEHALF OF OR AS THE AGENT OF SYMANTEC, PURCHASER,
THE COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF
ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED
THEREIN.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
QUARTERDECK CORPORATION
AT
$0.52 NET PER SHARE
BY
OAK ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
SYMANTEC CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON MONDAY, NOVEMBER 16, 1998, UNLESS THE OFFER IS EXTENDED.
October 19, 1998
To Our Clients:
Enclosed for your consideration are an Offer to Purchase dated October 19,
1998 (the "Offer to Purchase") and a related Letter of Transmittal ("Letter of
Transmittal" which, together with the Offer to Purchase, constitute the "Offer")
in connection with the offer by Oak Acquisition Corporation ("Purchaser"), a
Delaware corporation and a wholly owned subsidiary of Symantec Corporation, a
Delaware Corporation, to purchase all outstanding shares of Common Stock, par
value $0.001 per share (together with the associated Preferred Stock purchase
rights, the "Shares"), of Quarterdeck Corporation (the "Company"), a Delaware
corporation, at a price of $0.52 per Share, net to the seller in cash and
without interest thereon, subject to reduction for any applicable federal back
up or other withholding or stock transfer taxes, upon the terms and subject to
the conditions set forth in the Offer. Also enclosed is the letter to
stockholders of the Company from King R. Lee, Interim President and Chief
Executive Officer of the Company, together with a Solicitation/ Recommendation
Statement on Schedule 14D-9 filed with the Securities and Exchange Commission by
the Company.
We are (or our nominee is) the holder of record of Shares held by us for
your account. A tender of such Shares can be made only by us as the holder of
record and pursuant to your instructions. The Letter of Transmittal is furnished
to you for your information only and cannot be used by you to tender Shares held
by us for your account.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is $0.52 per Share, net to the seller in cash
without interest thereon and subject to reduction for any applicable
federal backup or other withholding taxes.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company unanimously has determined that
each of the Offer and the Merger (as defined in the Offer to
Purchase), is fair to, and in the best interests of, the stockholders
of the Company, and recommends that stockholders accept the Offer and
tender their Shares pursuant to the Offer.
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Monday, November 16, 1998, unless the Offer is
extended.
5. The Offer is conditioned upon, among other things, there being
validly tendered and not properly withdrawn prior to the expiration
of the Offer at least that number of Shares that shall constitute a
majority of the then
<PAGE> 2
outstanding Shares on a fully diluted basis (including, without
limitation, all Shares issuable upon the exercise of any options,
warrants or rights). The Offer is also conditioned upon, among other
things, the expiration or termination of all waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
Stockholders are urged to read the Offer to Purchase in its entirety
for a description of all conditions to the Offer and the other items
set forth therein.
6. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes with respect to the
purchase of Shares by Purchaser pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. Your instructions
should be forwarded to us in ample time to permit us to submit a tender on your
behalf prior to the expiration of the Offer.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares. Purchaser is not aware
of any jurisdiction where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good
faith effort to comply with any such state statute. If, after such good faith
effort, Purchaser cannot comply with any such state statute, the Offer will not
be made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by Donaldson, Lufkin &
Jenrette Securities Corporation, or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING
SHARES OF COMMON STOCK OF QUARTERDECK CORPORATION BY OAK ACQUISITION
CORPORATION.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated October 19, 1998 and the related Letter of Transmittal
(which together constitute the "Offer"), in connection with the offer by Oak
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
Symantec Corporation, a Delaware corporation, to purchase all outstanding Shares
of Common Stock, par value $0.001 per share, including the associated Preferred
Stock purchase rights (together, the "Shares"), of Quarterdeck Corporation, a
Delaware corporation.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
- --------------------------------------------------------------------------------
Number of Shares to be Tendered: Shares*
Dated:
------------------------------------, 1998
- --------------------------------------------------------------------------------
SIGN HERE
Signature(s):
- --------------------------------------------------------------------------------
Please type or print name(s):
- --------------------------------------------------------------------------------
Please type or print address:
- --------------------------------------------------------------------------------
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number:
- --------------------------------------------------------------------------------
* Unless otherwise indicated, it will be assumed that all Shares held
by us for your account are to be tendered.
- --------------------------------------------------------------------------------
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ----------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE NAME AND
SOCIAL SECURITY
NUMBER OF --
- ----------------------------------------------------------------
- ----------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE NAME AND
EMPLOYER
IDENTIFICATION
NUMBER OF --
- ----------------------------------------------------------------
1. Individual The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account(1)
3. Custodian account of a minor The Minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-trustee(1)
trust (grantor is also trustee)
b. So-called trust account that
is not a legal or valid trust
under state law
5. Sole proprietorship The owner(3)
6. Sole proprietorship The owner(3)
7. A valid trust, estate or pension The legal entity
trust (Do not furnish the
identifying number of
the
personal representative
or
trustee unless the
legal
entity itself is not
designated in the
account
title.)(4)
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational, or other
tax-exempt
organization
10. Partnership The partnership
11. A broker or registered nominee The broker or nominee
12. Account with the Department of The public entity
Agriculture in the name of a
public
entity (such as a State or local
government, school district, or
prison)
that receives agricultural
program
payments
</TABLE>
- -------------------------------------------------------------
- -------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a SSN, that person's number must be
furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
employment identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempt from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), or an individual
retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
- - Payments described in Section 6049(b)(5) to nonresident aliens.
- - Payments of tax-free covenant bonds under Section 1451.
- - Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, interest
or other payments to give taxpayer identification numbers to payers who must
report the payments to IRS. IRS uses the numbers for identification purposes.
Payors must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividend
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payor, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase dated
October 19, 1998 and the related Letter of Transmittal, and any amendments or
supplements thereto, and is being made to all holders of Shares. Purchaser is
not aware of any State where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good
faith effort to comply with such state statute. If, after such good faith
effort, Purchaser cannot comply with such state statute, the Offer will not be
made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by the Dealer Manager or
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
QUARTERDECK CORPORATION
AT
$0.52 NET PER SHARE
BY
OAK ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
SYMANTEC CORPORATION
Oak Acquisition Corporation, a Delaware corporation (the "Purchaser"), a
wholly owned subsidiary of Symantec Corporation, a Delaware corporation (the
"Parent"), is offering to purchase all outstanding shares of Common Stock, par
value $0.001 per share (the "Company Common Stock"), of Quarterdeck Corporation,
a Delaware corporation (the "Company"), including the associated Preferred Stock
purchase rights (the "Rights") issued pursuant to that certain Rights Agreement
between the Company and American Stock Transfer & Trust dated August 11, 1992,
as amended (the Company Common Stock and the Rights are collectively referred to
as the "Shares"), at a price of $0.52 per Share, net to the seller in cash and
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated October 19, 1998 (the "Offer to Purchase") and in
the related Letter of Transmittal (which together constitute the "Offer").
Following the Offer, Purchaser intends to effect the Merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON MONDAY, NOVEMBER 16, 1998, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer at least that
number of Shares that, when added to the Shares owned of record by Parent or any
of its subsidiaries on the date hereof, if any, shall constitute at least a
majority of the then outstanding Shares on a fully diluted basis (as defined in
the Offer to Purchase). The Offer is also conditioned upon, among other things,
the expiration or termination of all waiting periods imposed upon consummation
of the Offer by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the regulations thereunder as well as the other conditions
described in the Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of October 15, 1998 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides that, among other things, as soon as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with relevant provisions of the General Corporation law of the State
of Delaware ("Delaware Law"), Purchaser will be
<PAGE> 2
merged with and into the Company (the "Merger"). Following consummation of the
Merger (the "Effective Time"), each Share issued and outstanding immediately
prior to the Effective Time (other than Shares held in the treasury of the
Company and any Shares owned by Purchaser, Parent or any direct or indirect
wholly owned subsidiary of Parent or of the Company, if any, and other than
Shares held by stockholders who shall have demanded and perfected appraisal
rights, if any, under Delaware Law) will be canceled and converted automatically
into the right to receive $0.52 in cash, or any higher price that may be paid
per Share in the Offer, without interest.
THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT EACH OF THE OFFER
AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY ITS
STOCKHOLDERS, AND HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT INCLUDING THE OFFER AND THE
MERGER, AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES, PURSUANT TO THE OFFER.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to State Street
Bank and Trust Company (the "Depositary") of Purchaser's acceptance for payment
of such Shares pursuant to the Offer. Upon the terms and subject to the
conditions of the Offer, payment for Shares accepted for payment pursuant to the
Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders whose Shares have
been accepted for payment. In all cases, payment for Shares tendered and
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) the certificates evidencing such Shares (the
"Certificates") or timely confirmation of a book-entry transfer of such Shares
into the Depositary's account at the Book-Entry Transfer Facility (as defined in
the Offer to Purchase) pursuant to the procedures set forth in the Offer to
Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees (or, in the
case of a book-entry transfer, an Agent's Message (as defined in the Offer to
Purchase)) and (iii) any other documents required under the Letter of
Transmittal. Under no circumstances will interest on the purchase price for
Shares be paid, regardless of any extension of the Offer or any delay in making
such payment.
Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms and conditions of the Merger Agreement), at any time and from time
to time, to extend for any reason the period of time during which the Offer is
open by giving oral or written notice of such extension to the Depositary. Any
such extension will be followed as promptly as practicable by public
announcement thereof, such announcement to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
expiration date of the Offer. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
rights of a tendering stockholder to withdraw such stockholder's Shares.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to 12:00 Midnight, New York City
time, on Monday, November 16, 1998 (or the latest time and date at which the
Offer, if extended by Purchaser, shall expire) and, unless previously accepted
for payment by Purchaser pursuant to the Offer, may also be withdrawn at any
time after December 18, 1998. For the withdrawal to be effective, a written,
telegraphic, telex or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
page of the Offer to Purchase. Any such notice of withdrawal must specify the
name of the person who tendered the Shares to be withdrawn, the number of Shares
to be withdrawn and the name of the registered holder of such Shares, if
different from that of the person who tendered such Shares. If Certificates
evidencing Shares to be withdrawn have been delivered or otherwise identified to
the Depositary, then, prior to the physical release of such Certificates, the
serial numbers shown on such Certificates must be submitted to the Depositary
and the signature(s) on the notice of withdrawal must be guaranteed by an
Eligible Institution (as defined in the Offer to Purchase), unless such Shares
have been tendered for the account of an Eligible Institution. If Shares have
been tendered pursuant to the procedure for book-entry transfer as set forth in
the Offer to Purchase, any notice of withdrawal must specify the name and number
of the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares. All questions as to the form and validity (including the time
of
<PAGE> 3
receipt) of any notice of withdrawal will be determined by Purchaser, in its
sole discretion, whose determination will be final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of Shares whose names appear on the Company's stockholder list
and will be furnished to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance or for additional copies of the Offer
to Purchase and the related Letter of Transmittal and other tender offer
materials may be directed to the Information Agent or the Dealer Manager as set
forth below, and copies will be furnished promptly at Purchaser's expense. No
fees or commissions will be paid to brokers, dealers or other persons (other
than the Information Agent and the Dealer Manager) for soliciting tenders of
Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005
Call Toll Free (800) 488-8095
Call Collect (212) 269-5550
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
277 Park Avenue
New York, NY 10172
Call Collect (212) 892-7700
October 19, 1998
<PAGE> 1
EXHIBIT (a)(8)
FOR IMMEDIATE RELEASE
FINAL - FOR APPROVAL
<TABLE>
<S> <C>
QUARTERDECK MEDIA CONTACTS: SYMANTEC MEDIA CONTACTS:
King R. Lee Amy Savage
(310) 309-4264 (408) 725-2702
[email protected]
Frank Greico
(310) 309-4232 Eric DeRitis
(650) 596-5800
[email protected]
INVESTOR RELATIONS CONTACT:
Shelley Wilson
(408) 446-8891
[email protected]
</TABLE>
SYMANTEC TO ACQUIRE QUARTERDECK
CUPERTINO, CALIF. - OCTOBER 15, 1998 - Symantec Corporation (Nasdaq: SYMC), the
world leader in utility software for business and personal computing, today
announced it has signed a definitive merger agreement to acquire Quarterdeck
Corporation (Nasdaq: QDEK). Under the terms of the agreement, Symantec will
commence a cash tender offer for all outstanding shares of Quarterdeck common
stock at a net price of $0.52 per share. The purchase price is approximately $65
million, including the assumption of Quarterdeck's outstanding debt. The Boards
of Directors of both companies have approved this transaction.
Completion of the tender offer is subject to certain conditions, including the
tender of a majority of the Quarterdeck shares, receipt of necessary government
approvals and the expiration of applicable waiting periods under the
Hart-Scott-Rodino Act. Quarterdeck's revenue for the 12
-more-
<PAGE> 2
Symantec to Acquire Quarterdeck
Page 2 of 3
months ended June 1998 was approximately $57 million. Symantec expects the
tender offer to be completed by the end of November 1998, and expects the
transaction to be non-dilutive.
Quarterdeck is a recognized technology leader in the software utilities and
communications markets. Symantec's acquisition of Quarterdeck will provide
leading edge technologies to complement Symantec's suite of software utilities,
remote productivity solutions, and Java development tools.
"This deal will allow us to serve our customers best with Symantec's strong
market and channel presence," said King R. Lee, interim president of
Quarterdeck. "With Symantec's competitive positioning, strong geographic
presence and market leadership, Quarterdeck's leading technologies can be
leveraged and offered on a world-class level. We believe our shareholders
achieve the best value with this deal."
"Quarterdeck is an industry pioneer that has developed many market-leading
technologies," said Gordon Eubanks, Symantec President and CEO. "We expect to
further increase our technical leadership in desktop and enterprise utilities by
integrating Quarterdeck's technology with ours, and continuing to deliver
superior products to customers under the Norton brand."
ABOUT QUARTERDECK
Quarterdeck Corporation, incorporated in 1982, is a global leader in the
development and marketing of PC helpware - software designed to prevent and
solve PC performance problems. Quarterdeck's product line addresses storage
management, system conflict resolution, virus protection, system updating, and
enhanced access to networked information and communications resources. Further
information about Quarterdeck can be found at http://www.quarterdeck.com/.
- -more -
<PAGE> 3
Symantec to Acquire Quarterdeck
Page 3 of 3
ABOUT SYMANTEC
Symantec is the world leader in utility software for business and personal
computing. Symantec products and solutions help make users productive and keep
their computers safe and reliable anywhere and anytime. Symantec offers a broad
range of solutions and is acclaimed as a leader in both customer satisfaction
and product brand recognition. Symantec is traded on Nasdaq under the symbol
SYMC. More information on the company and its products can be obtained at
http://www.symantec.com.
FORWARD LOOKING STATEMENT
This press release contains forward-looking statements. There are certain
important factors that could cause Symantec and/or Quarterdeck's future
development efforts to differ materially from those anticipated by some of the
statements made above. Among these are the anticipation of the growth of certain
market segments, the positioning of each company's products in those segments,
the competitive environment in the software industry, dependence on other
products, changes to operating systems and product strategy by vendors of
operating systems, and the importance of new Symantec and/or Quarterdeck
products. Additional information concerning those and other factors is contained
in the "Risk Factors" section of the each company's respective annual report on
Form 10-K and their quarterly reports on Form 10-Q for the most recent quarter.
# # #
NOTE TO EDITORS: If you would like additional information on Symantec
Corporation and its products, please view the Symantec Press Center at Error!
Bookmark not defined. on Symantec's Web site.
<PAGE> 1
EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of October 15, 1998 (the
"AGREEMENT DATE"), among SYMANTEC CORPORATION, a Delaware corporation
("PARENT"), OAK ACQUISITION CORPORATION, a Delaware corporation and a
wholly-owned Subsidiary of Parent ("SUB"), and QUARTERDECK CORPORATION, a
Delaware corporation (the "COMPANY"). Certain defined terms used in this
Agreement shall have the meaning ascribed to them in Section 9.3.
WHEREAS, in furtherance of the acquisition of all of the capital stock
of the Company by Parent on the terms and subject to the conditions set forth in
this Agreement, Parent proposes to cause Sub to make a tender offer (as it may
be amended from time to time as permitted under this Agreement, the "OFFER") to
purchase all the issued and outstanding shares of Common Stock, par value $0.001
per share, of the Company and all associated rights (the "COMPANY COMMON
STOCK"), at a price per share of the Company Common Stock of not less than $0.52
net to the seller in cash and without interest thereon (such price, as may
hereafter be increased, the "OFFER PRICE"), subject to reduction for any
applicable federal backup or other applicable withholding or stock transfer
taxes, upon the terms and subject to the conditions set forth in Exhibit A, and
the Board of Directors of the Company has approved the Offer and has resolved to
recommend that the Company's stockholders accept the Offer;
WHEREAS, Sub has been formed for the sole purpose of enabling Parent to
acquire all of the capital stock of the Company and Sub has not conducted any
operations that were not related to, and for the purpose of, such acquisition;
WHEREAS, concurrently with the execution of this Agreement, the Company
and Parent have entered into the Technology License Agreement in the form
attached hereto as Exhibit B (the "LICENSE AGREEMENT") pursuant to which the
Company has granted Parent a worldwide, perpetual, non-exclusive license
(including a license to create and distribute derivative works) to the Company's
software product "CleanSweep" and has deposited in escrow the source code to
such product, and the Parent has agreed to pay certain royalties to the Company;
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the Offer and the merger of Sub into the Company, as set
forth below (the "MERGER"), upon the terms and subject to the conditions set
forth in this Agreement, whereby each issued and outstanding share of the
Company Common Stock, other than shares owned directly or indirectly by Parent
or the Company and Dissenting Shares (as defined in Section 3.1(e)), will be
converted into the right to receive the Offer Price;
WHEREAS, each of the directors and executive officers of the Company
have entered into Stockholder Agreements with the Parent in the form attached
hereto as Exhibit C (the "Stockholder Agreements") in which each such person has
agreed to tender all shares of the Company Common Stock held by such person
pursuant to the Offer and to vote in favor of the Merger and against any
competing proposals;
<PAGE> 2
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger; and
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE OFFER
1.1 The Offer.
(a) Subject to the provisions of this Agreement, Sub shall, and
Parent shall cause Sub to, within five business days of the public announcement
(on the Agreement Date or the following day) of the execution of this Agreement,
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT")) the Offer. The obligation of Sub to, and
of Parent to cause Sub to, commence the Offer and accept for payment, and pay
for, any shares of the Company Common Stock tendered pursuant to the Offer shall
be subject to the conditions set forth in Exhibit A and to the terms and
conditions of this Agreement. Sub expressly reserves the right unilaterally to
waive any conditions to the Offer (other than (without the Company's prior
written consent) the Minimum Tender Condition, as defined in Exhibit A), to
increase the price per Share payable in the Offer, to extend the duration of the
Offer or to make any other changes in the terms and conditions of the Offer;
provided, however, that no such change may be made which decreases the price per
Share payable in the Offer, reduces the maximum number of Shares to be purchased
in the Offer, imposes conditions to the Offer in addition to those set forth in
Exhibit A, changes the form of consideration payable in the Offer or amends any
other material terms of the Offer in a manner materially adverse to the
Company's stockholders; and provided further that if, at the expiration of the
Offer (as the same may be extended pursuant to this proviso), any condition
(other than the Minimum Tender Condition) shall not have been satisfied which
could reasonably be expected to be satisfied within the next succeeding ten (10)
business days, then the Offer shall be extended an additional ten (10) business
days (but in no event beyond the date forty-five (45) business days after the
date on which the Offer shall have been first commenced). Subject to the terms
and conditions of this Agreement and the Offer (including, if the Offer is
extended or amended, the terms and conditions of any such extension or
amendment), Sub shall, and Parent shall cause Sub to, accept for payment, and
pay for, all shares of the Company Common Stock validly tendered and not
withdrawn pursuant to the Offer as soon as practicable after the expiration of
the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the Securities and Exchange Commission (the "SEC") a Tender Offer
Statement on Schedule 14D-1 with respect to the Offer, which shall contain an
offer to purchase and a related letter of transmittal and summary advertisement
(such Schedule 14D-1 and the documents included therein pursuant to which the
Offer will be made, together with any supplements or amendments thereto, the
"OFFER DOCUMENTS"). Parent and Sub represent and agree that the Offer Documents
shall comply as to form in all material respects with the Exchange Act, and the
rules and
2
<PAGE> 3
regulations promulgated thereunder and that the Offer Documents, on the date
first published, sent or given to the Company's stockholders, shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by Parent or Sub with respect
to information supplied by the Company specifically for inclusion in the Offer
Documents. Each of Parent, Sub and the Company agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that such information shall become false or misleading in any material respect,
and each of Parent and Sub further agrees to take all steps necessary to amend
or supplement the Offer Documents and to cause the Offer Documents as so amended
or supplemented to be filed with the SEC and to be disseminated to the Company's
stockholders, in each case as and to the extent required by applicable Federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review the Offer Documents and all amendments and supplements
thereto prior to their filing with the SEC or dissemination to stockholders of
the Company. Parent and Sub agree to provide the Company and its counsel any
comments which Parent, Sub or their respective counsel may receive from the SEC
or its staff with respect to the Offer Documents promptly after the receipt of
such comments including a copy of any such comments that are made in writing.
(c) Parent shall provide or cause to be provided to Sub on a timely
basis the funds necessary to accept for payment, and pay for, any shares of the
Company Common Stock that Sub becomes obligated to accept for payment, and pay
for, pursuant to the Offer.
1.2 Company Actions.
(a) The Company hereby approves of and consents to the Offer and
represents that the Board of Directors of the Company, at a meeting duly called
and held, duly and unanimously adopted resolutions approving this Agreement and
each Company Ancillary Agreement, the Offer and the Merger, determining that the
terms of the Offer and the Merger are fair to, and in the best interests of, the
Company's stockholders and recommending that the Company's stockholders accept
the Offer and tender their shares pursuant to the Offer and approve and adopt
this Agreement and the Company Ancillary Agreements and the Merger. The Company
represents that its Board of Directors has received the opinion of Broadview
Associates LLC that the proposed consideration to be received by the holders of
shares of the Company Common Stock pursuant to the Offer and the Merger is fair
to such holders from a financial point of view, and a complete and correct
signed copy of such opinion will be promptly delivered by the Company to Parent.
The Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Company's Board of Directors described in the first
sentence of this Section 1.2(a) (subject to Section 5.2) and will use all
reasonable efforts to obtain the consent of Broadview Associates LLC to the
inclusion in the Schedule 14D-9 of a copy of the written opinion referred to in
the preceding sentence.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, together with all
3
<PAGE> 4
exhibits, amendments and supplements thereto as well as the Information
Statement required pursuant to Section 14(f) under the Exchange Act,
collectively the "SCHEDULE 14D-9") containing the recommendation described in
paragraph (a) (subject to Section 5.2) and shall mail the Schedule 14D-9 to the
stockholders of the Company. The Company agrees that the Schedule 14D-9 shall
comply as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations promulgated thereunder and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by the Company
with respect to information supplied by Parent or Sub specifically for inclusion
in the Schedule 14D-9. Each of the Company, Parent and Sub agrees promptly to
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that such information shall have become false or misleading in any
material respect, and the Company further agrees to take all steps necessary to
amend or supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so
amended or supplemented to be filed with the SEC and disseminated to the
Company's stockholders, in each case as and to the extent required by applicable
Federal securities laws. Parent and its counsel shall be given a reasonable
opportunity to review the Schedule 14D-9 and all amendments and supplements
thereto prior to their filing with the SEC or dissemination to stockholders of
the Company. The Company agrees to provide Parent and its counsel any comments
which the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments
including a copy of any such comments that are made in writing.
(c) In connection with the Offer, the Company shall cause its
transfer agent promptly to furnish Sub with mailing labels containing the names
and addresses of the record holders of the Company Common Stock as of a record
date and of those persons becoming record holders subsequent to such date,
together with copies of all lists of stockholders, security position listings
and, to the extent reasonably requested, computer files and other information in
the Company's possession or control regarding the record and beneficial owners
of the Company Common Stock, and shall furnish to Sub such information and
assistance (including updated lists of stockholders, mailing labels, security
position listings and computer files) as Parent may reasonably request in
communicating the Offer to the Company's stockholders. The Company represents
that the information provided to Parent pursuant to this paragraph shall be true
and correct as of its respective dates.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Delaware General Corporation Law
(the "DGCL"), Sub shall be merged with and into the Company at the Effective
Time (as defined in Section 2.3). Following the Effective Time, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "SURVIVING CORPORATION") and shall
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succeed to and assume all the rights and obligations of Sub in accordance with
the DGCL. Notwithstanding the foregoing, Parent may elect at any time prior to
the Merger to merge the Company with and into Sub instead of merging Sub into
the Company as provided above; provided, however, that the Company shall not be
deemed to have breached any of its representations, warranties, covenants or
agreements set forth in this Agreement and the Company Ancillary Agreements
solely by reason of such election. In such event, the parties agree to execute
an appropriate amendment to this Agreement and the Company Ancillary Agreements
in order to reflect the foregoing. At the election of Parent, any direct or
indirect subsidiary of Parent may be substituted for Sub as a constituent
corporation in the Merger. In such event, the parties agree to execute an
appropriate amendment to this Agreement and the Company Ancillary Agreements in
order to reflect the foregoing.
2.2 Closing. The closing of the Merger will take place at 10:00 a.m. on
the second business day after satisfaction or waiver of the conditions set forth
in Article VII (the "CLOSING DATE"), at the Palo Alto, California offices of
Fenwick & West LLP, counsel to Parent and Sub, unless another date or place is
agreed to in writing by the parties hereto. Parent and the Company agree to use
all reasonable efforts to close the Merger as soon as practicable following
consummation of the Offer, subject to Section 7.1 hereof.
2.3 Effective Time. Subject to the provisions of this Agreement, as soon
as practicable on or after the Closing Date, the parties shall execute and file
a certificate of merger or other appropriate documents (in any such case, the
"CERTIFICATE OF MERGER") in accordance with the relevant provisions of the DGCL
and shall make all other filings or recordings required under the DGCL. The
Merger shall become effective at such time as the Certificate of Merger is duly
filed with the Delaware Secretary of State, or at such other time as Sub and the
Company shall agree should be specified in the Certificate of Merger (the time
the Merger becomes effective being hereinafter referred to as the "EFFECTIVE
TIME").
2.4 Effects of the Merger. The Merger shall have the effects set forth
in Section 259 of the DGCL.
2.5 Certificate of Incorporation and By-laws. The certificate of
incorporation and by-laws of the Surviving Corporation shall be amended and
restated, effective as of the Effective Time, to be identical to the certificate
of incorporation and by-laws of Sub until thereafter changed or amended as
provided therein or by applicable law.
2.6 Directors. The directors of Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
2.7 Officers. The officers of the Sub immediately prior to the Effective
Time shall be the officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
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ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of the
Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock, par value $0.001 per share, of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock. Each
share of the Company Common Stock that is owned by the Company or by any
Subsidiary of the Company and each share of the Company Common Stock that is
owned by Parent, Sub or any other Subsidiary of Parent shall automatically be
canceled and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
(c) Conversion of the Company Common Stock. Subject to Section
3.1(e), each issued and outstanding share of the Company Common Stock (other
than shares to be canceled in accordance with Section 3.1(b)) shall be converted
into the right to receive from the Surviving Corporation in cash, without
interest, the Offer Price. As of the Effective Time, all such shares of the
Company Common Stock shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any such shares of the Company Common Stock shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration as provided in this Section 3.1(c), without interest.
(d) Conversion of the Preferred Stock. Subject to Section 3.1(e),
each issued and outstanding share of any class or series of preferred stock
issued by the Company (such stock, collectively, the "COMPANY PREFERRED STOCK")
shall be converted into the right to receive from the Surviving Corporation in
cash, without interest, the product obtained by multiplying (i) the Offer Price
by (ii) the number of shares of the Company Common Stock into which such share
of the Company Preferred Stock is convertible at the Effective Time under the
Certificate of Incorporation of the Company. As of the Effective Time, all such
shares of the Company Preferred Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares of the Company Preferred Stock
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration as provided in this Section 3.1(d), without interest.
(e) Shares of Dissenting Stockholders. Notwithstanding anything in
this Agreement to the contrary, any shares of the Company Common Stock or
Company Preferred Stock outstanding immediately prior to the Effective Time and,
in the case of Company Common Stock, held by a holder who has not voted in favor
of the Merger or consented thereto in writing,
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and, in the case of either Company Common Stock or Company Preferred Stock, who
has demanded appraisal (a "DISSENTING STOCKHOLDER") for such shares of Company
Common Stock or Company Preferred Stock in accordance with DGCL ("DISSENTING
SHARES") shall, to the extent provided in the DGCL, not be converted into the
right to receive Merger Consideration, unless such holder fails to perfect or
withdraws or otherwise loses his right to appraisal, but instead shall become
the right to receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to the DGCL. If, after the Effective Time, such
Dissenting Stockholder withdraws his demand for appraisal or fails to perfect or
otherwise loses his right of appraisal, in any case pursuant to the DGCL, his
shares of the Company Common Stock or Company Preferred Stock, as the case may
be, shall be treated as if they had been converted as of the Effective Time into
the right to receive the Merger Consideration. The Company shall give Parent (i)
prompt notice of any demands for appraisal of shares of the Company Common Stock
or Company Preferred Stock received by the Company and (ii) the opportunity to
participate in and direct all negotiations and proceedings with respect to any
such demands. The Company shall not, without the prior written consent of
Parent, make any payment with respect to, or enter into a binding settlement
agreement or make a written offer to settle, any demand for appraisal of
Dissenting Shares.
(f) Treatment of Options. At the Effective Time, each outstanding
Company Option shall be terminated and canceled. The Company agrees to give
written notice to each holder of a Company Option as soon as practicable (and in
any event within five (5) business days of the commencement of the Offer)
stating that such Company Option will terminate at the Effective Time, and
permitting the exercise of such Company Option (including any portion not yet
otherwise exercisable pursuant to the terms of such Company Option) during the
thirty (30) day period preceding the Effective Time. At the Effective Time, all
holders of cancelled Company Options having an exercise price that is less than
the Offer Price, other than directors, or the Chief Executive Officer, of the
Company, shall be entitled to receive an amount in cash equal to product of (i)
the difference between the Offer Price and the exercise price of such option,
multiplied by the number of shares of Company Common Stock issuable upon
exercise of such Company Option immediately prior to the Effective Time.
(g) Treatment of Convertible Debt Securities. Prior to the Effective
Time, the Company shall have entered into an agreement with each holder of a 6%
Convertible Senior Subordinated Note issued by the Company under the Note
Agreement, dated as of March 1, 1996, between the Company and The Northwestern
Mutual Life Insurance Company (all such securities, collectively, the
"CONVERTIBLE NOTES") providing that, immediately after the Effective Time, the
Surviving Corporation shall be entitled to repay all then-outstanding
Convertible Notes in their original principal amount and accrued interest
without premium or penalty, and within five (5) business days after the
Effective Time, the Parent shall cause the Surviving Corporation to repay in
full the then-outstanding principal of, and accrued interest on, such
Convertible Notes (unless the holder or holders thereof shall otherwise agree in
writing).
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3.2 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall select a
bank or trust company to act as paying agent (the "PAYING AGENT") for the
payment of the Merger Consideration upon surrender of certificates representing
the Company Common Stock or Preferred Stock.
(b) Parent To Provide Funds. Parent shall make available to the
Paying Agent on a timely basis, as and when needed after the Effective Time,
funds necessary to pay for the shares of the Company Common Stock and Preferred
Stock pursuant to Section 3.1.
(c) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of the Company Common Stock and Company Preferred
Stock (in each case, the "CERTIFICATES") whose shares were converted into the
right to receive the Merger Consideration pursuant to Section 3.1, (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate shall
be entitled to receive in exchange therefor the Merger Consideration, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of the Company Common Stock or the Company Preferred
Stock, as the case may be, which is not registered in the transfer records of
the Company, payment may be made to a person other than the person in whose name
the Certificate so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other taxes required by reason
of the payment to a person other than the registered holder of such Certificate
or establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered as contemplated by this
Section 3.2, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender thereof the
Merger Consideration, without interest (other than Certificates representing
Dissenting Shares).
(d) No Further Ownership Rights in the Company Capital Stock. All
cash paid upon the surrender of Certificates in accordance with the terms of
this Article III shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of the Company Common Stock and the Company
Preferred Stock theretofore represented by such Certificates. After the
Effective Time, there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of the Company Common
Stock and the Company Preferred Stock which were outstanding immediately prior
to the Effective Time. If,
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after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for any reason, they shall be canceled and
exchanged as provided in this Article III.
(e) Failure to Timely Surrender; No Liability. Promptly following
the date that is six (6) months after the Effective Time, the Paying Agent shall
return to the Surviving Corporation all Merger Consideration and other cash,
property and instruments in its possession relating to the transactions
described in this Agreement, and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Certificate may surrender such Certificate to the
Surviving Corporation and (subject to applicable abandoned property, escheat and
similar laws) receive in exchange therefor the Merger Consideration (without
interest thereon). Notwithstanding the foregoing, the Surviving Corporation
shall be entitled to receive from time to time all interest or other amounts
earned with respect to any cash deposited with the Paying Agent as such amounts
accrue or become available. If any Certificates shall not have been surrendered
prior to such date on which any payment pursuant to this Article III would
otherwise escheat to or become the property of any Governmental Entity (as
defined in Section 4.1(e)), the cash payment in respect of such Certificate
shall, to the extent permitted by applicable law, become the property of the
Surviving Corporation, free and clear of all claims or interests of any person
previously entitled thereto. None of Parent, Sub, the Company or the Paying
Agent shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(f) Withholding Taxes. The right of any person to receive any
payment or consideration pursuant to this Agreement and the Company Ancillary
Agreements and the transactions contemplated herein and therein shall be subject
to any applicable requirements with respect to the withholding of Taxes.
(g) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, the Paying Agent shall
pay to such holder the Merger Consideration required pursuant to Section 3.1, in
exchange for each such lost, stolen or destroyed Certificate, upon the making of
an affidavit of that fact by the holder thereof with such assurances (including,
without limitation, the posting of a bond in an amount reasonably sufficient to
indemnify the Parent against any claim that may be made against it on account of
such Certificate) as the Paying Agent and the Parent, in their discretion and as
a condition precedent to the payment of the Merger Consideration, may each
reasonably require of the holder of such lost, stolen or destroyed Certificate.
(h) Return of Merger Consideration for Dissenting Shares. Any
portion of the Merger Consideration made available to the Paying Agent pursuant
to Section 3.2(b) for shares of the Company Common Stock or the Company
Preferred Stock for which appraisal rights have been perfected shall be returned
to Parent, upon demand.
(i) Supplementary Action. If at any time after the Effective Time,
any further assignments or assurances in law or any other things are necessary
or desirable to vest or to perfect or confirm of record in the Surviving
Corporation the title to any property or rights of either the Company or Sub, or
otherwise to carry out the provision of this Agreement and the
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Company Ancillary Agreements, the officers and directors of the Surviving
Corporation are hereby authorized and empowered, in the name of and on behalf of
the Company and Sub, to execute and deliver any and all things necessary or
proper to vest or perfect or confirm title to such property or rights in the
Surviving Corporation, and otherwise to carry out the purposes and provisions of
this Agreement and the Company Ancillary Agreements.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. The Company
represents and warrants to Parent and Sub that the statements contained in this
Article IV are true and correct except as expressly set forth herein and in the
disclosure schedule delivered by the Company to Parent and Sub prior to the
execution and delivery of this Agreement (the "COMPANY DISCLOSURE SCHEDULE").
The Company Disclosure Schedule shall be arranged in sections and paragraphs
corresponding to the numbered and lettered sections and paragraphs contained in
this Article IV and the disclosure in any section or paragraph shall qualify
other sections and paragraphs in this Article IV only to the extent that it is
reasonably apparent from a reading of such disclosure that it also qualifies or
applies to such other sections and paragraphs.
(a) Organization, Standing and Corporate Power. The Company and each
of its Subsidiaries (other than inactive Subsidiaries that do not own any
material assets, do not have any material liabilities and do not conduct any
material operations) is a corporation or partnership duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized and has the requisite corporate or partnership power and authority to
carry on its business as now being conducted. The Company and each of its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed individually or in the aggregate would not have a Material Adverse
Effect on the Company. The Company has provided to Parent complete and correct
copies of its certificate of incorporation and by-laws, in each case as amended
to the Agreement Date.
(b) Subsidiaries. All Subsidiaries of the Company and their
respective jurisdictions of incorporation or organization (other than inactive
Subsidiaries that do not own any material assets and do not conduct any material
operations) are identified in Section 4.1(b) of the Company Disclosure Schedule.
The outstanding shares of capital stock of each Subsidiary have been validly
issued and are fully paid and nonassessable and (except as may be required by
foreign jurisdictions as set forth in the Company Disclosure Schedule) are owned
by the Company, by another Subsidiary of the Company or by the Company and
another such Subsidiary, free and clear of all pledges, claims, liens, charges,
title retentions, mortgages, security interests and encumbrances of any kind or
nature whatsoever, other than liens for taxes that are not yet due and payable
(collectively, "LIENS") other than Liens disclosed in the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1997 (the "1997
10-K") or the Company Disclosure Schedule. Except for the capital stock of its
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Subsidiaries and investments identified in the Company Disclosure Schedule, the
Company does not own, directly or indirectly, any capital stock or other
ownership interest in any corporation, partnership, joint venture or other
entity.
(c) Capital Structure.
(i) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock, per value $0.001 per share, and
2,000,000 shares of Company Preferred Stock, par value $0.001 per share,
1,000,000 shares of which are designated Series A Junior Participating Preferred
Stock, 200,000 of which are designated Series B Convertible Preferred Stock and
40,000 of which are designated Series C Convertible Preferred Stock, of which
73,531,703 shares of Company Common Stock are issued and outstanding, 1,143
shares of Company Common Stock are held by the Company in its treasury, no
shares of the Company Series A Junior Participating Preferred Stock are issued
and outstanding, no shares of the Company's Series B Preferred Stock are issued
and outstanding, and 4,248 shares of the Company's Series C Convertible
Preferred Stock (including 1,379 shares issuable upon exercise of outstanding
warrants to purchase Series C Convertible Preferred Stock) are issued and
outstanding (subject to any changes in the outstanding Common Stock after the
Agreement Date solely as a result of the issuance of any shares of Company
Common Stock after the Agreement Date pursuant to the exercise of Company
Options, or the conversion of Convertible Notes or Company Preferred Stock, that
were outstanding on the Agreement Date). As of the Agreement Date, the
outstanding shares of Series C Convertible Preferred Stock, together with all
shares of Series C Convertible Preferred Stock issuable upon exercise of
outstanding warrants to purchase Series C Convertible Preferred Stock, are
convertible into 16,030,188 shares of Company Common Stock.
(ii) Not more than 7,335,227 shares of the Company Common Stock
are reserved for issuance upon exercise of outstanding Company Options
(1,380,686 of which are issuable pursuant to options having an exercise price of
less than $0.52), assuming a net, or "cashless," exercise of such options, and,
except as set forth in Section 4.1(c) of the Company Disclosure Schedule, there
are no options, warrants or rights to acquire any shares of the Company's
capital stock or any other securities of the Company outstanding other than such
Company Options, the Convertible Notes and the outstanding Series C Preferred
Stock. Section 4.1(c) of the Company Disclosure Schedule sets forth a true and
complete list of the outstanding Company Options as of the Agreement Date,
setting forth in each case the issue date of such Company Option, the number of
shares of Company Common Stock subject to such Company Option, the exercise
price and vesting schedule of such Company Option, and a description of any
acceleration of such option which will be triggered by the Offer, the execution
of this Agreement and the Company Ancillary Agreements or the Closing of the
Merger.
(iii) Except as set forth in this Section 4.1(c), at the close
of business on the Agreement Date, no shares of capital stock, stock
appreciation rights or other equity or voting securities of the Company were
issued, reserved for issuance or outstanding. All outstanding shares of capital
stock of the Company are, and all shares which may be issued will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to
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preemptive rights. Except for the $25,000,000 principal amount of Convertible
Notes which are presently convertible into 1,180,359 shares of Company Common
Stock at a conversion price of in excess of $20.00, there are no bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which stockholders of the Company may vote. Except as set
forth in this Section 4.1(c), there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the Company or any of its Subsidiaries is a party or by
which any of them is bound obligating the Company or any of its Subsidiaries to
issue, deliver or sell additional shares of capital stock or other equity or
voting securities of the Company or of any of its Subsidiaries or obligating the
Company or any of its Subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking. As of the Agreement Date, there are no outstanding contractual
obligations (i) of the Company or any of its Subsidiaries to repurchase, redeem
or otherwise acquire any shares of capital stock or other equity securities of
the Company or any of its Subsidiaries or (ii) of the Company to vote or to
dispose of any shares of the capital stock of any of its Subsidiaries.
(d) Authority. The Company has all the requisite corporate power and
authority to enter into this Agreement and the Company Ancillary Agreements and,
subject to, if required by law, approval of the Merger by an affirmative vote of
the holders of a majority of the outstanding shares of the Company Common Stock
(the "COMPANY STOCKHOLDER APPROVAL"), to consummate the transactions
contemplated by this Agreement and the Company Ancillary Agreements. The
execution and delivery of this Agreement and the Company Ancillary Agreements by
the Company and the consummation by the Company of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of the Company (subject, in the case of the consummation of the
Merger, to the Company Stockholder Approval if such approval is required by the
DGCL). This Agreement and the Company Ancillary Agreements have each been duly
executed and delivered by the Company and constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms (except as enforcement hereof and thereof may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium and similar laws, both
state and federal, affecting the enforcement of creditors' rights or remedies in
general as from time to time in effect or (ii) the exercise by courts of equity
powers).
(e) Noncontravention. Except as set forth in the Company Disclosure
Schedule, the execution and delivery of this Agreement and the Company Ancillary
Agreements do not, and the consummation of the transactions contemplated hereby
and thereby and compliance with the provisions of hereof and thereof will not,
conflict with, or result in any violation of, or default (with or without notice
or lapse of time or both) under, give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, require the consent or approval of any party under, or result in the
creation of any Lien upon any of the properties or assets of the Company or any
of its Subsidiaries under (i) the certificate of incorporation or by-laws of the
Company or the comparable charter or organizational documents of any of its
Subsidiaries, (ii) any Company Material Agreement (as defined in Section 4.1(x))
or (iii) any governmental filings and other matters referred to in the
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following sentence, any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to the Company or any of its Subsidiaries or their
respective properties or assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) have a Material Adverse Effect on
the Company, (y) materially impair the ability of the Company to perform its
obligations under this Agreement or any Company Ancillary Agreement or (z)
prevent the consummation of any of the transactions contemplated by this
Agreement and the Company Ancillary Agreements. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Federal,
state or local government or any court, administrative or regulatory agency or
commission or other governmental authority or agency, domestic or foreign (a
"GOVERNMENTAL ENTITY"), is required by or with respect to the Company or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
and the Company Ancillary Agreements by the Company or the consummation by the
Company of the transactions contemplated hereby and thereby, except for (1) the
filing of a pre-merger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT"), (2) the
filing with the SEC and the National Association of Securities Dealers, Inc. of
(A) the Schedule 14D-9, (B) a proxy statement relating to the Company
Stockholder Approval, if such approval is required by law (as amended or
supplemented from time to time, the "PROXY STATEMENT"), and (C) such reports
under Section 13(a) of the Exchange Act as may be required in connection with
this Agreement and the Company Ancillary Agreements and the transactions
contemplated hereby and thereby, (3) the filing of the Certificate of Merger
with the Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business and
(4) such other consents, approvals, orders, authorizations, registrations,
declarations and filings as would not individually or in the aggregate (A) have
a Material Adverse Effect on the Company, (B) materially impair the ability of
the Company to perform its obligations under this Agreement and the Company
Ancillary Agreements or (C) prevent or have a material adverse effect on the
ability of the parties to consummate any of the transactions contemplated by
this Agreement and the Company Ancillary Agreements.
(f) SEC Documents; Financial Statements.
(i) The Company has filed in a timely manner all required
reports, schedules, forms, statements and other documents with the SEC since
October 1, 1997. All such required reports, schedules, forms, statements and
other documents filed by the Company with the SEC (including those that the
Company may file subsequent to the date hereof) are referred to herein as the
"SEC DOCUMENTS." As of their respective filing dates, the SEC Documents complied
with the requirements of the Securities Act of 1933, as amended (the "SECURITIES
ACT") or the Exchange Act, as the case may be, and the rules and regulations of
the SEC promulgated thereunder applicable to such SEC Documents, and none of the
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Company does not have knowledge of any material fact
or information concerning the Company and existing on the Agreement Date which
is required to be made generally available to the public and which has not been,
or will not prior to or concurrently with the commencement of the Offer be, made
generally available to the public.
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(ii) The financial statements of the Company included in the SEC
Documents, including those filed after the date hereof until the Closing, (A)
are derived from and in accordance with the books and records of the Company and
its Subsidiaries; (B) comply or will comply with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, (C) have been prepared or will be prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case of unaudited
statements, with respect to footnote disclosure) applied on a basis consistent
with prior periods (except as otherwise stated in the notes thereto) and (D)
fairly present or will fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal recurring year-end audit adjustments). The quarterly financial statements
included in the SEC Documents are prepared on a basis consistent with those
employed in the audited financial statements of the Company included in the 1997
10-K.
(iii) Neither the Company nor any of its Subsidiaries has any
liabilities of any nature (whether accrued, absolute, contingent, determined,
determinable or otherwise and whether due or to become due) which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of the Company and its Subsidiaries taken as a
whole, except liabilities (i) provided for in the consolidated balance sheet
included in the Company's Form 10-Q for the quarter ended June 30, 1998 (the
"BALANCE SHEET"), (ii) disclosed in an SEC Document or the Disclosure Schedule,
or (iii) incurred since June 30, 1998 (the "BALANCE SHEET DATE") in the ordinary
course of business consistent with past practices. All reserves established by
the Company and set forth in or reflected in the Balance Sheet are reasonably
sufficient and were established in accordance with generally accepted accounting
principles consistently applied. At the Balance Sheet Date, there were no
material loss contingencies (as such term is used in Statement of Financial
Accounting Standards No. 5 issued by the Financial Accounting Standards Board in
March 1975) which are not adequately provided for in the Balance Sheet as
required by said Statement No. 5. On the day preceding the Agreement Date, the
Company has (i) total consolidated cash of at least $7,167,000 and (ii)
indebtedness for borrowed money not in excess of $25,000,000 (in each case
determined on a consolidated basis in accordance with GAAP on a basis consistent
with the Balance Sheet).
(g) Information Supplied. None of (i) the information supplied or to
be supplied by the Company specifically for inclusion or incorporation by
reference in the Offer Documents, (ii) the Schedule 14D-9, (iii) the information
to be filed by the Company in connection with the offer pursuant to Rule 14f-1
promulgated under the Exchange Act (the "INFORMATION STATEMENT") or (iv) the
Proxy Statement, will, in the case of the Offer Documents, the Schedule 14D-9
and the Information Statement, at the respective times the Offer Documents, the
Schedule 14D-9 and the Information Statement are filed with the SEC or first
published, sent or given to the Company's stockholders, or, in the case of the
Proxy Statement, at the time the Proxy Statement is first mailed to the
Company's stockholders or at the time of the Stockholders Meeting (as defined in
Section 6.1(a)), contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Schedule
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14D-9, the Information Statement and the Proxy Statement will comply as to form
in all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder, except that no representation or warranty is made by
the Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Sub in writing specifically for
inclusion or incorporation by reference therein.
(h) Absence of Certain Changes or Events. Except as disclosed in the
Company Disclosure Schedule or in the SEC Documents filed and publicly available
prior to the Agreement Date (the "FILED SEC DOCUMENTS"), since June 30, 1998 the
Company and its Subsidiaries have conducted their respective business only in
the ordinary course of business consistent with past practices, and up to the
Agreement Date, there has not been with respect to the Company or any of its
Subsidiaries any:
(i) Material Adverse Change;
(ii) amendment or change in the Certificate of Incorporation or
Bylaws of the Company;
(iii) purchase, license, sale, assignment or other disposition
or transfer (or any agreement or other arrangement for the purchase, license,
sale, assignment or other disposition or transfer), of any of the assets or
properties of the Company or any of its Subsidiaries (including any Intellectual
Property Rights), other than (a) non-exclusive licenses of any product or
products of the Company or any of its Subsidiaries made in the ordinary course
of the Company's business consistent with its past practices, (b) purchases and
sales of assets (other than Intellectual Property Rights (as defined in Section
4.1(i)) in the ordinary course of business consistent with its past practices,
and (c) purchases and sales of assets (other than Intellectual Property Rights)
having a purchase price of less than $100,000 on an individual basis and less
than $250,000 in aggregate;
(iv) damage, destruction or loss of any property or asset,
whether or not covered by insurance, having (or reasonably likely with the
passage of time to have) a Material Adverse Effect on the Company;
(v) declaration, setting aside or payment of any dividend on, or
the making of any other distribution in respect of, any shares of the capital
stock of the Company, any split, combination or recapitalization of the capital
stock of the Company or any direct or indirect redemption, purchase or other
acquisition of any shares of the capital stock of the Company or any change in
any rights, preferences, privileges or restrictions of any outstanding stock or
other security of the Company;
(vi) obligation or liability incurred by the Company or any of
its Subsidiaries to any of its officers or directors except for normal and
customary compensation and expense allowances payable to officers in the
ordinary course of the Company's business consistent with past practices;
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<PAGE> 16
(vii) making by the Company or any of its Subsidiaries of any
loan, advance or capital contribution to, or any investment in, any officer or
director of the Company or, to the knowledge of the Company, any firm or
business enterprise in which any such person had a direct or indirect material
interest at the time of such loan, advance, capital contribution or investment;
(viii) material adverse development in any litigation described
in any Filed SEC Document or in any litigation or proceeding required to be
disclosed in Section 4.1(j) of the Company Disclosure Schedule;
(ix) material increase in the volume or dollar amount of returns
(or claims therefor) of any of the Company's products by distributors,
customers, value added resellers, original equipment manufacturers or other
resellers of such product, or any claims for price adjustments by any such
parties with respect to any products of the Company that have been delivered to
such party, or any reason to believe that any such increases or claims are
likely;
(x) material change in the manner in which, or terms on which,
the Company or any of its Subsidiaries extends discounts or credits or rights to
return products or receive price adjustments to customers or distributors or
otherwise deals with its customers or distributors;
(xi) change in accounting methods, principles or practices by
the Company (other than as required by GAAP) or any material revaluation of any
of the assets of the Company or any of its Subsidiaries, or any material
write-offs of accounts receivable or write-downs of the value of capitalized
inventory not in the ordinary course of business consistent with past practices;
or
(xii) license, transfer or grant of a right under any Company IP
Rights (as defined in Section 4.1(i), other than non-exclusive licenses granted
in the ordinary course of the Company's business consistent with its past
practices.
(i) Intellectual Property.
(i) The Company and its Subsidiaries own, or have the valid
right or license to use, possess, sell or license, all Intellectual Property
Rights (as defined below) necessary or required for the conduct of the business
of the Company and its Subsidiaries as presently conducted, and such rights to
use, possess, sell or license are sufficient for such conduct of such business,
except as disclosed in Section 4.1(i) of the Company Disclosure Schedule (except
that as to patents and trademarks, such representation is made only to the
Company's knowledge). As used herein: (i) the term "INTELLECTUAL PROPERTY
RIGHTS" means, collectively, all worldwide intellectual property rights,
including, without limitation, patents, patent applications, patent rights,
trademark rights, service mark rights, trademark and service mark registrations
and applications therefor, trade dress rights, trade name rights, copyrights,
copyright registrations and applications therefor, mask work rights, mask work
registrations and applications therefor, franchises, licenses and trade secrets,
(ii) the term "COMPANY IP RIGHTS" means the Intellectual Property Rights that
the Company or any of its Subsidiaries own or have
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<PAGE> 17
the right or license to use, possess, sell or license and (iii) the term
"COMPANY INTELLECTUAL PROPERTY" means all trademarks, service marks, inventions,
trade secrets, know how, customer lists, supplier lists, proprietary processes
and formulae, software source and object code, algorithms, architectures,
structures, screen displays, layouts, inventions, development tools, designs,
blueprints, specifications, technical drawings (or similar information in
electronic format), and all documentation and media constituting, describing or
relating to the above, including without limitation manuals, programmers' notes,
memoranda and records used or owned by the Company.
(ii) The execution, delivery and performance of this Agreement
and the Company Ancillary Agreements and the consummation of the Offer, the
Merger and the other transactions contemplated hereby and thereby will not
constitute a material breach of or default under any instrument, contract,
license or other agreement governing any Company IP Right or Company
Intellectual Property, to which the Company or any of its Subsidiaries is a
party that (i) is material to the Company or (ii) that materially affects any
material Company IP Rights or Company Intellectual Property that is
incorporated, embodied or used in the Company's ProComm or CleanSweep products,
or licensing or assigning such rights to the Company or any of its Subsidiaries
(collectively, the "COMPANY IP RIGHTS AGREEMENTS"), will not cause the
forfeiture or termination of, or give rise to a right of forfeiture or
termination of, any material Company IP Right or materially impair the right of
the Company or any of its Subsidiaries or the Surviving Corporation to use,
possess, sell or license any material Company IP Right or portion thereof. There
are no royalties, honoraria, fees or other payments payable by the Company to
any third person by reason of the ownership, use, possession, license, sale or
disposition of any Company IP Rights or Company Intellectual Property by the
Company or any of its Subsidiaries other than (i) as disclosed in Section 4.1(i)
of the Company Disclosure Schedule and (ii) pursuant to agreements that did not
require the payment in the fiscal year ended September 30, 1998 of more than
$100,000 in the aggregate, and are not expected to require the payment in the
fiscal year ended September 30, 1999 of more than $150,000 in the aggregate by
the Company and its Subsidiaries.
(iii) Neither the development, manufacture, marketing, license,
sale, furnishing or intended use of either the Company's ProComm or CleanSweep
product or, to the Company's knowledge, any other product or service currently
licensed, marketed, utilized, sold, provided or furnished by the Company or any
of its Subsidiaries or currently under development by the Company or any of its
Subsidiaries, violates any license or agreement between the Company (or any
Subsidiary thereof) and any third party or, to the Company's knowledge,
infringes any patent or trademark, or infringes or misappropriates any other
Intellectual Property Right of any other party, except where the same could not
reasonably be expected to have a Material Adverse Effect. Except as expressly
disclosed in the Filed SEC Documents, there is, to the Company, no pending or,
threatened claim or litigation contesting the validity, ownership or right of
the Company or any of its Subsidiaries to use, possess, sell, license or dispose
of any Company IP Right or Company Intellectual Property or any other
Intellectual Property Rights used or embodied in either the Company's ProComm
product or its CleanSweep product, or to the Company's knowledge, any other
product marketed or licensed, or under development, by the Company or any of its
Subsidiaries, nor, to the knowledge of the
17
<PAGE> 18
Company, is there any basis for any such claim, nor has the Company received any
notice asserting that any Company IP Right or Company Intellectual Property or
the proposed use, sale, license or disposition thereof, or of any other
Intellectual Property Rights used or embodied in any product marketed or
licensed, or under development, by the Company, conflicts or will conflict with
the rights of any other party, nor, to the knowledge of the Company, is there
any basis for any such assertion, in each case except where the same would not
reasonably be expected to have a Material Adverse Effect.
(iv) The Company has taken such measures as are customary and
standard in its industry to protect, preserve and maintain all the Company's
(and its Subsidiaries') proprietary rights in the Company IP Rights and Company
Intellectual Property. All officers, employees and consultants of the Company
and any of its Subsidiaries who had access to proprietary information and who
either (a) were first employed or engaged by the Company within the two year
period ending on the Agreement Date or (b) were or are involved in the
development of any aspect of the Company's CleanSweep or ProComm product, or any
Company IP Rights or Company Intellectual Property that is incorporated,
embodied or used therein, have executed and delivered to the Company or its
predecessor in interest, or a Subsidiary of the Company, an agreement regarding
the protection of such proprietary information and the assignment of inventions
to the Company; and copies of the current standard form of such agreements have
been provided to Parent's counsel. The Company or its predecessor in interest,
or a Subsidiary of the Company, has secured valid written assignments or
licenses from all consultants, employees and entities who the Company directly
hired or engaged and were involved in, or who contributed to, the creation or
development of any Company IP Rights, Company Intellectual Property or other
Intellectual Property Rights that are incorporated, embodied or used in the
Company's CleanSweep or ProComm products or any other material Company IP Rights
or any Intellectual Property Rights, of the rights to such contributions that
the Company does not already own by operation of law. No current or former
employee, officer, director, consultant or independent contractor of the Company
or any Subsidiary of the Company has any right, license, claim or interest
whatsoever in or with respect to any material Company IP Rights or Company
Intellectual Property.
(v) Section 4.1(i) of the Company Disclosure Schedule contains a
complete list of all worldwide registrations of any patents with any
governmental authority, and all patent applications, made or held by, or
assigned to, the Company or any of its Subsidiaries. To the Company's knowledge,
all patents and all material registered trademarks, service marks and copyrights
held by the Company and its Subsidiaries are valid, enforceable and subsisting.
(vi) Section 4.1(i) of the Company Disclosure Schedule contains
a complete list of: (A) all licenses, sublicenses and other agreements as to
which the Company or any of its Subsidiaries is a party and pursuant to which
any person is authorized to use any Company IP Rights or Company Intellectual
Property (other than non-exclusive licenses granted in the ordinary course of
business) and (B) all licenses, sublicenses and other agreements to which the
Company or any of its Subsidiaries is a party and pursuant to which the Company
or any of its Subsidiaries is authorized to use any third party Intellectual
Property Rights, including software ("THIRD PARTY IP RIGHTS") which would be
infringed by, embody or are incorporated in,
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<PAGE> 19
or form a part of, any product or service sold, licensed, distributed or
marketed by the Company or any of its Subsidiaries, in each case other than (a)
non-exclusive licenses in the ordinary course of business and (b) licenses of
Third Party IP Rights to the Company or any of its Subsidiaries that are not
material to any product currently being marketed or under development by the
Company.
(vii) To the Company's knowledge, there is no material
unauthorized use, disclosure, infringement or misappropriation of any Company IP
Rights or any Intellectual Property Right of the Company or any of its
Subsidiaries by any third party, including any employee or former employee of
the Company or any of its Subsidiaries.
(viii) Neither the Company nor any of its Subsidiaries, nor, to
the knowledge of the Company, any other party acting on its or their behalf, has
disclosed or delivered to any party, or permitted the disclosure or delivery to
any escrow agent or other party, of any Company Source Code (as defined below).
No event has occurred, and no circumstance or condition exists, that (with or
without notice or lapse of time) will, or would reasonably be expected to,
result in the disclosure or delivery to any party of any Company Source Code
owned by the Company or, to the Company's knowledge, licensed to the Company
except, in the case of such licensed Company Source Code, where such disclosure
or delivery would not result in a breach of an obligation by the Company.
Section 4.1(i) of the Company Disclosure Schedule identifies each contract,
agreement and instrument (written or oral) pursuant to which the Company or any
of its Subsidiaries has deposited, or is or may be required to deposit, with an
escrow holder or any other party, any Company Source Code and further describes
whether the execution of this Agreement or the Company Ancillary Agreements, the
consummation of the Merger or any of the other transactions contemplated hereby
or thereby, in and of themselves, would reasonably be expected to result in the
release from escrow of any Company Source Code. As used in this Section 4.1(i),
"COMPANY SOURCE CODE" means any source code, or any material proprietary or
confidential portion of any source code, or any material algorithm contained in
any source code, of any product marketed or licensed, or under development, by
the Company or any of its Subsidiaries.
(ix) To the Company's knowledge, the Company's ProComm and
CleanSweep products (as currently being distributed by the Company and its
Subsidiaries) do not contain any defects or "bugs" that could reasonably be
expected to lead to data loss or system failure on the part of end-users that
use such product on the hardware and operating system platforms specified in the
product specifications and documentation provided to end-users with such
products.
(x) The Company's CleanSweep and ProComm products (as currently
being distributed by the Company and its subsidiaries) are each Year 2000
Compliant (as defined below), except as disclosed in Section 4.1(i) of the
Company Disclosure Letter. "YEAR 2000 COMPLIANT" means, as applied to such
products, that: (a) all dates received by the program require a century
indicator and all dates produced by the program include a century indicator, (b)
date calculations involving either a single century or multiple centuries
neither cause an abnormal ending nor generate incorrect results, (c) when
sorting by date, all records sort in
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accurate sequence, (d) the year 2000 is considered a leap year, (e) hard-coding
in century fields and date fields has been removed, and (f) no date fields are
used for other than date purposes. To the Company's knowledge, the Company and
its Subsidiaries will not be required to incur any material expense to make any
one or more of its products, or any software owned by it or licensed to it (and
used by it), Year 2000 Complaint, or any material liability as a result of the
failure of any of its products to be Year 2000 Compliant, except where the same
could not reasonably be expected to have a Material Adverse Effect, and except
for any expense incurred to correct items disclosed in Section 4.1(i) of the
Company Disclosure Schedule.
(j) Litigation. Except as disclosed in the Filed SEC Documents or
the Company Disclosure Schedule, there is no suit, action, arbitration,
proceeding, claim or investigation pending or, to the Company's knowledge,
threatened against the Company or any of its Subsidiaries (or any of their
respective officers, directors or employees in their capacity as such), that
individually or in the aggregate, if determined or resolved adversely to the
Company or such Subsidiary in accordance with the plaintiff's (or other adverse
party's) demand, could reasonably be expected to (i) have a Material Adverse
Effect on the Company, (ii) challenge or seek to enjoin or seek damages with
respect to the Company's entering into and performing this Agreement and the
Company Ancillary Agreements or impair the ability of the Company to perform its
obligations under this Agreement and the Company Ancillary Agreements or (iii)
prevent the consummation of any of the transactions contemplated by this
Agreement and the Company Ancillary Agreements, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any of its Subsidiaries having, or which is
reasonably likely to have, any effect referred to in the foregoing clause (i),
(ii) or (iii) above. A suit or action which has been filed with a state or local
court outside of California but which has not been served upon an employee or
director of the Company shall be deemed to have been threatened but not pending
for purposes of this paragraph.
(k) Employees, ERISA and Other Compliance.
(i) A list of all employees and officers of the Company and its
Subsidiaries as of the Agreement Date and their then-current compensation and
title and/or job description is set forth in Section 4.1(k) of the Company
Disclosure Schedule. The Company and its Subsidiaries do not have any employment
contracts currently in effect that by their terms, may not be terminated at will
without severance or other payment obligations in excess of those disclosed in
Section 4.1(k) of the Company Disclosure Schedule (other than oral agreements,
or agreements with persons that are not employed in the United States if both
(i) such agreement is not with an officer of the Company and (ii) the Company
does not have knowledge of such agreement). To the Company's knowledge, the
Company and its Subsidiaries do not utilize the services of a material number of
persons who should be but are not properly classified as employees for the
purposes of federal and applicable state tax laws, laws applicable to employee
benefits and other applicable law.
(ii) Neither the Company nor any of its Subsidiaries: (i) now
is, nor has ever been, subject to a union organizing effort; (ii) is subject to
any collective bargaining
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agreement with respect to any of its employees; (iii) is subject to any other
contract, written or oral, with any trade or labor union, employees' association
or similar organization or (iv) has any current labor disputes. There are no
controversies pending or, to the knowledge of the Company or any of its
Subsidiaries, threatened, between the Company or any of its Subsidiaries (on the
one hand) and any of their respective employees (on the other hand), which
controversies have or could reasonably be expected to have a Material Adverse
Effect. To the Company's knowledge, all of the employees of the Company and its
Subsidiaries that are employed by the Company or any of its Subsidiaries in the
United States of America are legally permitted to be employed by the Company or
its Subsidiaries in the United States of America.
(iii) Section 4.1(k) of the Company Disclosure Schedule lists each
"employee benefit plan" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"); and each plan or arrangement
providing for insurance coverage (including any self-insured arrangements),
workers' benefits, vacation benefits, severance benefits, disability benefits,
death benefits, hospitalization benefits, retirement benefits, deferred
compensation, profit-sharing, bonuses, stock options, stock purchase, phantom
stock, stock appreciation or other forms of incentive compensation or
post-retirement insurance, compensation or benefits for employees, consultants
or directors which is entered into, maintained or contributed to by the Company
or any of its Subsidiaries and covers any employee or former employee of the
Company or any of its Subsidiaries. Such contracts, plans and arrangements as
are described in this Section 4.1(k) are hereinafter collectively referred to as
"COMPANY BENEFIT ARRANGEMENTS." Each Company Benefit Arrangement has been
maintained in compliance in all material respects with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations
that are applicable to such Company Benefit Arrangement, and each such Company
Benefit Arrangement that is an "employee pension benefit plan" as defined in
Section 3(2) of ERISA which is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter that such plan satisfied the
requirements of the Internal Revenue Code of 1986, as amended (the "CODE") (a
copy of which letter(s), if any, have been provided to Parent and its counsel).
The Company has provided to Parent or its counsel a correct copy and description
of each Company Benefit Arrangement. The Company has never been a participant in
any "prohibited transaction", within the meaning of Section 406 of ERISA with
respect to any employee pension benefit plan (as defined in Section 3(2) of
ERISA) which the Company sponsors as employer or in which Company participates
as an employer, which was not otherwise exempt pursuant to Section 408 of ERISA
(including any individual exemption granted under Section 408(a) of ERISA), or
which could result in an excise tax under the Code. All contributions due from
the Company or any of its Subsidiaries as of the Balance Sheet Date with respect
to any of the Company Benefit Arrangements have been made or have been accrued
on the Balance Sheet and no further contributions will be due or will have
accrued thereunder as of the Closing Date other than amounts consistent with the
amounts paid or accrued in the periods reflected on the Company Financial
Statements.
(iv) The group health plans (as defined in Section 4980B(g) of the
Code) that benefit employees of the Company and its Subsidiaries are in
compliance, in all material respects, with the continuation coverage
requirements of Section 4980B of the Code as such requirements affect the
Company and its employees. As of the Closing Date, there will be
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<PAGE> 22
no material outstanding, uncorrected violations under the Consolidation Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"), with respect to any of
the Company Benefit Arrangements, covered employees, or qualified beneficiaries
that could result in a Material Adverse Effect on the Company, or in a Material
Adverse Effect on Parent after the Effective Time.
(v) No benefit payable or which may become payable by the Company
pursuant to any Company Benefit Arrangement or as a result of or arising under
this Agreement, the Company Ancillary Agreements or the Agreement of Merger will
constitute an "excess parachute payment" (as defined in Section 280G(b)(1) of
the Code) which is subject to the imposition of an excise tax under Section 4999
of the Code or which would not be deductible by reason of Section 280G of the
Code. Except as disclosed in Section 4.1(k) of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries is a party to any: (a) agreement
with any executive officer or other key employee thereof, (i) the benefits of
which are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company in the nature of the Offer or
the Merger or any of the other transactions contemplated by this Agreement or
any Company Ancillary Agreement or (ii) providing severance benefits or other
benefits after the termination of employment of such employee regardless of the
reason for such termination of employment; or (b) agreement or plan, including,
without limitation, any stock option plan, stock appreciation rights plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of benefits of which will be accelerated, by the occurrence or
consummation of the Offer or the Merger or any of the other transactions
contemplated by this Agreement or any Company Ancillary Agreement, or the value
of any of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement or any Company Ancillary Agreement.
All outstanding Company Options will terminate at the Effective Time.
(vi) To the Company's knowledge, no employee, consultant or
independent contractor of the Company or any Subsidiary: (a) is in material
violation of any term or covenant of any employment contract, patent disclosure
agreement, noncompetition agreement or any other contract or agreement with, or
obligation to, any other party by virtue of such employee's, consultant's, or
independent contractor's being employed by, or performing services for, the
Company or such Subsidiary or using trade secrets or proprietary information of
others, or that would be likely to have a Material Adverse Effect; or (b) has
developed any technology, software or other copyrightable, patentable, or
otherwise proprietary work for the Company or any of its Subsidiaries that is
subject to any agreement under which such employee, consultant or independent
contractor has assigned or otherwise granted to any third party any rights
(including without limitation Intellectual Property Rights) in such technology,
software or other copyrightable, patentable or otherwise proprietary work. To
the Company's knowledge, the employment of any employee of the Company or any of
its Subsidiaries does not subject the Company or any such Subsidiary to any
liability to any third party.
(vii) Except as set forth in Section 4.1(l) of the Company
Disclosure Schedule, (a) the Company and its Subsidiaries are operating and have
operated the business in compliance in all material respects with all applicable
laws relating to the business respecting
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<PAGE> 23
employment and employment practices; (b) no Governmental Entity has given the
Company or any of its Subsidiaries written notice regarding any pending charge,
audit, claim, complaint, investigation or review by or before any Governmental
Entity concerning or requesting in writing to explain any possible conflicts
with or violations of any such laws by the Company or such Subsidiary, nor, to
the knowledge of the Company, is any such investigation threatened or pending;
(c) the Company and its Subsidiaries are not delinquent in payments to any
employees for any material wages, salaries, commissions, bonuses or other
compensation for any services performed by them relating to the business or
amounts required to be reimbursed to such employees.
(m) Taxes.
(i) The Company and each of its Subsidiaries have timely filed
all federal, state, local and foreign tax returns required to be filed by it,
has timely paid all taxes required to be paid by it in respect of all periods
for which returns have been filed, has established an adequate accrual or
reserve for the payment of all taxes payable in respect of the periods
subsequent to the periods covered by the most recent applicable tax returns
(which accrual or reserve as of the Balance Sheet Date is fully reflected on the
Balance Sheet), has made all necessary estimated tax payments, and has no
material liability for taxes in excess of the amount so paid or accruals or
reserves so established. Except as disclosed in Section 4.1(m) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is
delinquent in the payment of any tax or in the filing of any tax returns, and no
deficiencies for any tax of the Company or any of its Subsidiaries have been
claimed or assessed (or, to the Company's knowledge, threatened or proposed)
against the Company or any of its Subsidiaries or any of their respective
officers, employees or agents in their capacity as such that remain outstanding.
Except as disclosed in Section 4.1(m) of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries has received any notification
that any material issues have been raised by (and are currently pending before)
the Internal Revenue Service or any other taxing authority (including but not
limited to any sales or use tax authority) regarding the Company or any of its
Subsidiaries, and no tax return of the Company or any of its Subsidiaries has
been audited for any taxable period beginning on or after October 1, 1993 by the
Internal Revenue Service or any foreign, state or local taxing agency or
authority other than audits which have been completed and resolved without the
assessment of any material taxes or penalties against the Company or any of its
Subsidiaries. Except as disclosed in Section 4.1(m) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to any
agreement waiving or extending any statute of limitations with respect to any
taxes. No Liens have been filed against any assets of the Company or any of its
Subsidiaries with regard to any tax. The Company and its Subsidiaries have each
withheld with respect to each of its employees and independent contractors all
taxes, including but not limited to federal and state income taxes, FICA,
Medicare, FUTA and other taxes, required to be withheld, and paid (or will pay)
such withheld amounts to the appropriate tax authority within the time
prescribed by law.
(ii) The Company has made available to Parent true and complete
copies of all tax returns, including foreign, federal and state income or
franchise tax returns and
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state sales and use tax returns with respect to the Company or any of its
Subsidiaries or any of their respective assets or operations, for all periods
since (or beginning on) October 1, 1994.
(iii) For the purposes of this Section 4.1(m), (a) the terms
"TAX" and "TAXES" include all federal, state, local and foreign income,
alternative or add-on minimum income, gains, franchise, excise, property,
property transfer, sales, use, employment, license, payroll, ad valorem,
payroll, documentary, stamp, occupation, recording, value added or transfer
taxes, and other governmental charges, fees, customs duties, levies or
assessments of a nature similar to taxes (whether payable directly or by
withholding) and, with respect to any such taxes, any estimated tax, interest,
fines and penalties or additions to tax and interest on such fines, penalties
and additions to tax and (b) the term "RETURNS" shall mean all reports,
estimates, declarations of estimated tax, information statements and returns
relating to, or required to be filed with connection with, any taxes, including
information returns or reports with respect to backup withholding and other
payments to third parties.
(n) Compliance with Laws. The Company and each of its Subsidiaries
has complied, and is and will be in compliance, in all material respects with
all applicable federal, state, local or foreign laws, ordinances, regulations,
and rules, and all orders, writs, injunctions, awards, judgments, and decrees
applicable to it or to its assets, properties, and business. The Company and
each of its Subsidiaries of the Company holds all permits, licenses and
approvals from, and has made all filings with, government agencies and
authorities, that are necessary in connection with its present business
("GOVERNMENTAL PERMITS") and all such Governmental Permits are in full force and
effect, except where the failure to hold any such Governmental Permit or make
such filings has not had, and could not reasonably be expected to have, a
Material Adverse Effect on the Company. The Company is in compliance in all
material respects with the terms of such Governmental Permits. Neither the
Company nor any of its Subsidiaries has received any notice or other
communication from any Governmental Entity regarding (a) any actual or possible
violation of law or any Governmental Permit or any failure to comply with any
term or requirement of any Governmental Permit, or any investigation or audit
(or proposed investigation or audit relating thereto) or (b) any actual or
possible revocation, withdrawal, suspension, cancellation, termination or
modification of any Governmental Permit. Neither the Company nor any of its
Subsidiaries, nor any director, officer, agent or employee of the Company and/or
any of its Subsidiaries, has, for or on behalf of the Company or any of its
Subsidiaries, (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (iii)
made any other unlawful payment.
(o) Certain Transactions and Agreements. Except as disclosed in
Section 4.1(o) of the Company Disclosure Schedule, to the knowledge of the
Company, (i) none of the officers or directors of the Company, nor any member of
their immediate families, is directly or indirectly a party to, or otherwise
interested in, any contract or informal arrangement with the Company or any of
its Subsidiaries that is or would be required to be disclosed in an annual
report on Form 10-K or in a proxy statement relating to a meeting of
stockholders at
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which directors were to be elected, except for normal compensation for services
as an officer or director thereof that have been disclosed in the 1997 10-K (or
the proxy statement incorporated by reference therein) and except for option
agreements related to Company Options granted to such persons and disclosed in
Section 4.1(c) of the Company Disclosure Schedule; and (ii) none of such
officers or directors or family members has any interest in any property, real
or personal, tangible or intangible (including but not limited to any the
Company IP Rights or any other Intellectual Property Rights) that is used in or
that pertains to the business of the Company, except for the normal rights of a
stockholder.
(p) Books and Records.
(i) The books, records and accounts of the Company and its
Subsidiaries (a) are in all material respects true, complete and correct, (b)
have been maintained in accordance with good business practices on a basis
consistent with prior years, (c) are stated in reasonable detail and accurately
and fairly reflect the transactions and dispositions of the assets of the
Company and its Subsidiaries, and (d) accurately and fairly reflect the basis
for the Company Financial Statements.
(ii) The Company has devised and maintains a system of internal
accounting controls sufficient to provide reasonable assurances that: (a)
transactions are executed in accordance with management's general or specific
authorization; (b) transactions are recorded as necessary (i) to permit
preparation of financial statements in conformity with generally accepted
accounting principles or any other criteria applicable to such statements and
(ii) to maintain accountability for assets and (c) the amount recorded for
assets on the books and records of the Company is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences.
(q) Insurance. During the two years prior to the Agreement Date, the
Company and its Subsidiaries have maintained, and now maintain, policies of
insurance and bonds of the type and in amounts that the Company reasonably
believes to be adequate for its business. Except as disclosed in Section 4.1(q)
of the Company Disclosure Schedule, there is no material claim pending under any
of such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid and the Company and its
Subsidiaries are otherwise in compliance in all material respects with the terms
of such policies and bonds.
(r) Environmental Matters.
(i) The Company and its Subsidiaries are in compliance in all
material respects with all applicable Environmental Laws (as defined below),
which compliance includes the possession by the Company and its Subsidiaries of
all permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof. As of
the Agreement Date, neither the Company nor any of its Subsidiaries has received
any notice or other communication (in writing or otherwise) from a Governmental
Entity that alleges that the Company or any of its Subsidiaries is not in
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compliance with any Environmental Law. To the Company's Knowledge, no Materials
of Environmental Concern (as defined below) are located in, on or about, or in
the subsoil or groundwater of, any property owned, leased, occupied, operated,
or controlled by the Company or any Subsidiary or any improvements situated
thereon in violation of any Environmental Law.
(ii) For purposes of this Section 4.1(r): (i) "ENVIRONMENTAL
LAW" means any federal, state, local or foreign statute, law regulation or other
legal requirement relating to pollution or protection of human health or the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata), including any law or regulation relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; and (ii) "MATERIAL OF ENVIRONMENTAL CONCERN" means
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products and any other substance that is currently regulated by an
Environmental Law or that is otherwise a danger to health, reproduction or the
environment.
(s) Accounts Receivable. As of the Balance Sheet Date, and in each
case subject to any reserves set forth in the Balance Sheet, the accounts
receivable shown on the Balance Sheet represented bona fide claims against
debtors for sales and other charges, and were not subject to any right of offset
or to any discount except for normal cash and immaterial trade discounts.
(t) Stockholder Agreements. All of the directors and executive
officers of the Company have agreed in writing to tender their shares of Company
Common Stock in the Offer pursuant to Stockholder Agreements in the form
attached hereto as Exhibit C.
(u) State Takeover Statutes. The Board of Directors of the Company
has approved this Agreement, the Company Ancillary Agreements, the Offer and the
Merger and such approval is sufficient to render the provisions of Section 203
of the DGCL inapplicable to the Offer, the Merger and the transactions
contemplated by this Agreement and the Company Ancillary Agreements. To the
Company's knowledge, no other state takeover statute or similar statute or
regulation applies or purports to apply to this Agreement, the Company Ancillary
Agreements, the Offer or the Merger, or any of the transactions contemplated by
this Agreement and the Company Ancillary Agreements. The Company is not subject
to any provision of the California General Corporation Law by operation of
Section 2115 thereof.
(v) Brokers; Schedule of Fees and Expenses. No broker, investment
banker, financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission, nor to any fee that is
contingent on closing of the transactions contemplated hereby or that is based
on a percentage of the transaction value, in connection with the transactions
contemplated by this Agreement and the Company Ancillary Agreements based upon
arrangements made by or on behalf of the Company, other than the fees payable to
Broadview Associates LLC and Software Syndicate, Inc. upon the Effective Time,
the amounts
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of which are set forth on Section 4.1(v) of the Company Disclosure Schedule,
which will be paid by the Company.
(w) Opinion of Financial Advisor. The Company has received the
opinion of Broadview Associates LLC, dated the Agreement Date, to the effect
that, as of such date, the consideration to be received in the Offer and the
Merger by the Company's stockholders is fair to the Company's stockholders from
a financial point of view, and a signed copy of such opinion will promptly be
delivered to Parent.
(x) Contracts and Commitments. Section 4.1(x) of the Company
Disclosure Schedule sets forth a list of each of the following written or oral
contracts, agreements, commitments or other instruments to which the Company or
any of its Subsidiaries is a party or to which the Company or any of its
Subsidiaries or any of their respective assets or properties is bound:
(i) any distributor, OEM (Original Equipment Manufacturer), VAR
(Value Added Reseller), sales representative or similar agreement under which
any third party is authorized to sell, sublicense, lease, distribute, market or
take orders for, any product or technology of the Company or any of its
Subsidiaries or marketed by the Company or any of its Subsidiaries, in each case
that is material or of which the Company has knowledge (other than non-exclusive
agreements that are terminable by the Company on not more than thirty (30) days
notice without cost or liability);
(ii) any joint venture or partnership contract or agreement or
other agreement which has involved or is reasonably expected to involve a
sharing of profits or losses with any other party;
(iii) any agreement of which the Company has knowledge with any
independent contractor or consultant involved in the development of the
Company's CleanSweep product or ProComm product (or any material feature or
component thereof or any material Company IP Rights or Company Intellectual
Property incorporated, embodied or used therein), by or for the Company or any
of its Subsidiaries;
(iv) any indenture, mortgage, trust deed, promissory note, loan
agreement, security agreement, guarantee or other agreement or commitment for
the borrowing of money, for a line of credit or for a leasing transaction of a
type required to be capitalized in accordance with Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board;
(v) any lease or other agreement under which the Company or any
of its Subsidiaries is lessee of or holds or operates any items of tangible
personal property or real property owned by any third party and under which
payments to such third party exceed $100,000 per annum;
(vi) any agreement or arrangement for the sale or disposition of
any assets, properties, services or rights by the Company or any of its
Subsidiaries having a value in
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excess of $100,000, other than in the ordinary course of the Company's business
consistent with its past practices;
(vii) any agreement that restricts or prohibits the Company or
any of its Subsidiaries from freely engaging in any aspect of its business, from
participating or competing in any line of business or that restricts the Company
or any of its Subsidiaries from engaging in any business in any geographic area
or grants any exclusive licenses to any Intellectual Property Rights or which,
to the Company's knowledge, grants most favored customer pricing;
(viii) any Company IP Rights Agreements (as defined in Section
4.1(i));
(ix) any agreement relating to the sale, issuance, grant,
exercise, award, purchase, repurchase or redemption of any shares of capital
stock or other securities of the Company or any options, warrants or other
rights to purchase or otherwise acquire any such shares of stock, other
securities or options, warrants or other rights therefor;
(x) any employment or severance agreement required to be
disclosed in Section 4.1(k) of the Company Disclosure Schedule, and any
agreement or plan, including, without limitation, any stock option plan, stock
appreciation right plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of benefits of which will be accelerated, by
the occurrence of the Offer, the Merger, the execution of License Agreement or
any of the other transactions contemplated by this Agreement or any Company
Ancillary Agreement or the value of any of the benefits of which will be
calculated on the basis of the Offer, the Merger, the License Agreement or any
of the other transactions contemplated by this Agreement;
(xi) any contract with or commitment to any labor union; or
(xii) any contract or arrangement under which the Company or any
of its Subsidiaries has made any commitment to develop any new technology, to
deliver any software currently under development or to enhance or customize any
software (other than agreements to deliver updates or upgrades on terms and
conditions described in Section 4.1(x) of the Company Disclosure Schedule);
A copy of each agreement or document required by this Section to be listed on
Section 4.1(x) of the Company Disclosure Schedule (such agreements and documents
being hereinafter collectively referred to as the "COMPANY MATERIAL AGREEMENTS")
has been provided to Parent.
(y) No Default. Except as disclosed in Section 4.1(y) of the
Company Disclosure Schedule, no event has occurred, and no circumstance or
condition exists, that (with or without notice or lapse of time) does or will,
or would reasonably be expected to, (i) represent, constitute or result in a
violation or breach by the Company or any of its Subsidiaries or, to the
Company's knowledge, any other party, of any of the provisions of any Company
Material Agreement, or (ii) give any third party (A) the right to declare a
default or exercise any remedy under any Company Material Agreement, (B) the
right to a rebate, chargeback, damages or penalty, or material increase in rent
or other payments, under any Company Material Agreement,
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(C) the right to accelerate the maturity or performance of any obligation of the
Company or any of its Subsidiaries under any Company Material Agreement, or (D)
the right to cancel, terminate or modify any Company Material Agreement, except
in each such case for violations, breaches, defaults, acceleration rights,
termination rights and other rights that in the aggregate have not had, and
could not reasonably be expected to have, a Material Adverse Effect on the
Company. Since September 30, 1997 and prior to the Agreement Date, neither the
Company nor any Subsidiary of the Company has received any communication or
notice from any other party to any Company Material Agreement regarding any
actual or claimed material violation or material breach of, or default under,
such Company Material Agreement or communication or notice by such party of
problems of a material nature with the Company's products, services or
performance under such Company Material Agreement or its desire to amend,
relinquish, terminate or not renew any such Company Material Agreement, in each
case which would have a Material Adverse Effect.
(z) Title to Properties.
(i) The Company and each of its Subsidiaries has good and
marketable title to, or valid leasehold interests in, all its material
properties and assets except for such as are no longer used or useful in the
conduct of its businesses or as have been disposed of in the ordinary course of
business and except for defects in title, easements, restrictive covenants and
similar encumbrances or impediments that individually or in the aggregate would
not materially interfere with its ability to conduct its business as currently
conducted. All such material properties and assets, other than properties and
assets in which the Company or any of its Subsidiaries has leasehold interests,
are free and clear of all Liens, except for (a) Liens that individually or in
the aggregate would not materially interfere with the ability of the Company and
its Subsidiaries to conduct business as currently conducted and (b) Liens
disclosed in the Company SEC Documents or the Company Disclosure Schedule.
(ii) The Company and each of its Subsidiaries has complied in
all material respects with the terms of all material leases to which it is a
party and under which it is in occupancy, and all such leases are in full force
and effect. The Company and each of its Subsidiaries enjoys peaceful and
undisturbed possession under all such material leases.
(aa) Board Approval. The Board of Directors of the Company has
unanimously and without qualification (i) authorized and approved this
Agreement, all Company Ancillary Agreements, the Offer and the Merger, (ii)
recommended that the Company's stockholders tender their shares in the Offer,
and (iii) determined that such agreements, the Offer and the Merger are fair to
and in the best interests of the Company's stockholders and are on terms that
are fair to such stockholders.
(ab) No Existing Discussions. Neither the Company, nor any director
or officer of the Company, nor any other person acting on behalf of the Company,
is engaged, directly or indirectly, in any discussions or negotiations with any
third party relating to any takeover proposal (as defined in Section 5.2).
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(ac) Preferred Share Rights Agreement. The Company's Board of
Directors has duly authorized and approved an amendment as provided in this
Section 4.1(ac) (THE "RIGHTS AMENDMENT") to that certain Preferred Share Rights
Agreement between the Company and American Stock Transfer & Trust (the "RIGHTS
AGENT") dated as of August 11, 1992, as amended (the "RIGHTS AGREEMENT") to: (i)
exclude Parent and Sub and their respective Affiliates and Associates (as such
terms are defined under the Rights Agreement) from the definition of "Acquiring
Person" in the Rights Agreement, with respect to the beneficial ownership of
shares of the Company Common Stock which Parent, Sub and/or any of their
respective Affiliates and Associates have hereby obtained the right to acquire,
or will acquire, as a result of the transactions contemplated by this Agreement
or any of the Company Ancillary Agreements, including but not limited to the
Offer or the Merger, or any other agreement or transaction involving Parent, Sub
and/or any of their respective Affiliates and Associates that has been approved
by the Board of Directors of the Company prior to such acquisition, (ii) provide
that no Distribution Date (as such term is defined under the Rights Agreement)
shall result from the Offer, including without limitation, in connection with
any announcement of the Offer, the commencement of the Offer, the acquisition by
Parent of any amount of Company Common Stock or Company Preferred Stock pursuant
to the Offer, or the consummation of the Merger, and (iii) provide for the
expiration of the Rights Agreement upon the Effective Time. The Rights Amendment
has been duly executed and delivered by the Company and the Rights Agent, and is
in full force and effect. The Company's Board of Directors has determined that
the terms of the Offer and of the Merger as well as the transactions
contemplated hereby and thereby meets the criteria specified in the Rights
Agreement for a Permitted Offer (as such term is defined under the Rights
Agreement).
4.2 Representations and Warranties of Parent and Sub. Parent and Sub
represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent and
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the requisite corporate power and
authority to carry on its business as now being conducted. Each of Parent and
Sub is duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed individually
or in the aggregate would not have a material adverse effect on Parent.
(b) Authority. Parent and Sub have all the requisite corporate power
and authority to enter into this Agreement and the Parent Ancillary Agreements
and to consummate the transactions contemplated by this Agreement and the Parent
Ancillary Agreements. The execution and delivery of this Agreement and the
Parent Ancillary Agreements by the Parent and Sub and the consummation by the
Parent and Sub of the transactions contemplated by hereby and thereby have been
duly authorized by all necessary corporate action on the part of the Parent and
Sub. This Agreement and the Parent Ancillary Agreements have been duly executed
and delivered by the Parent and the Sub and constitute valid and binding
obligations of the Parent and the Sub (as applicable), enforceable against the
Parent and the Sub (as applicable) in
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accordance with their terms (except as enforcement hereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium and similar laws, both state
and federal, affecting the enforcement of creditors' rights or remedies in
general as from time to time in effect or (ii) the exercise by courts of equity
powers).
(c) Noncontravention. The execution and delivery of this Agreement
and the Parent Ancillary Agreements do not, and the consummation of the
transactions contemplated hereby and thereby and compliance with the provisions
of hereof and thereof will not, conflict with or result in a violation of or
default (with or without notice or lapse of time or both) under (i) the
certificate of incorporation or by-laws of Parent or Sub, (ii) any instrument,
agreement or contract to which Parent or Sub is a party or by which either of
them is bound that has been or is required to have been, filed by the Parent
with the SEC as an exhibit (whether incorporated by reference of filed
separately) to the Parent's annual report on Form 10-K for its fiscal year ended
April 3, 1998 or in any other document filed by Parent with the SEC under the
1993 Act or the Exchange Act after April 3, 1998 and prior to the Agreement Date
(the "PARENT SEC DOCUMENTS"), or (iii) any governmental filings and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or Sub or their
respective properties or assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) have a Material Adverse Effect on
Parent or Sub, (y) materially impair the ability of Parent or Sub to perform its
obligations under this Agreement and the Parent Ancillary Agreements or (z)
prevent the consummation of any of the transactions contemplated by this
Agreement and the Parent Ancillary Agreements. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Parent or Sub in connection with its
execution and delivery of this Agreement and the Parent Ancillary Agreements or
the consummation of the transactions contemplated by hereby and thereby, except
for (1) the filing of a pre-merger notification and report form by the Company
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT"),
(2) the filing with the SEC and the National Association of Securities Dealers,
Inc. of (A) the Schedule 14D-1 and (B) such reports under Section 13(a) and
16(a) of the Exchange Act of the Exchange Act as may be required in connection
with this Agreement and the Parent Ancillary Agreements and the transactions
contemplated hereby and thereby and (3) the filing of the Certificate of Merger
with the Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business.
(d) Information Supplied. None of (i) the Offer Documents or (ii)
the information supplied or to be supplied by Parent or Sub specifically for
inclusion or incorporation by reference in the Schedule 14D-9, the Information
Statement or the Proxy Statement will, in the case of the Offer Documents, the
Schedule 14D-9 and the Information Statement, at the respective times the Offer
Documents, the Schedule 14D-9 and the Information Statement are filed with the
SEC or first published, sent or given to the Company's stockholders, or, in the
case of the Proxy Statement, at the date the Proxy Statement is first mailed to
the Company's stockholders or at the time of the Stockholders Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or
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necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Offer Documents will comply as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder, except that no representation or
warranty is made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information supplied by the Company
in writing specifically for inclusion or incorporation by reference therein.
(e) Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement and the Parent Ancillary Agreements based upon arrangements made
by or on behalf of Parent or Sub other than Donaldson, Lufkin & Jenrette
Incorporated, the fees and expenses of which will be paid by Parent.
(f) Financing. Parent has funds sufficient to consummate the Offer
and the Merger on the terms contemplated by this Agreement and the Company
Ancillary Agreements, and at the expiration of the Offer and the Effective Time,
Parent and Sub will have available funds sufficient to acquire to perform their
respective obligations under this Agreement and the Parent Ancillary Agreements,
including without limitation payment in full for all shares of Company Common
Stock validly tendered in the Offer and all shares of Company Common Stock and
Company Preferred Stock outstanding at the Effective Time.
(g) Litigation. As of the Agreement Date, there is no suit, action,
arbitration, proceeding, claim or investigation pending or threatened against
the Parent or Sub, nor is their any reasonable basis therefor, that individually
or in the aggregate could reasonably be expected to (i) except as disclosed in
the Parent SEC Documents, have a Material Adverse Effect on the Parent, (ii)
challenge or seek to enjoin or seek damages with respect to the Parent's or
Sub's entering into and performing this Agreement and the Parent Ancillary
Agreements or impair the ability of the Parent or Sub to perform their
respective obligations under this Agreement and the Parent Ancillary Agreements
or (iii) prevent the consummation of any of the transactions contemplated by
this Agreement and the Company Ancillary Agreements, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Parent or Sub having, or which is reasonably likely to
have, any effect referred to in the foregoing clause (i), (ii) or (iii) above.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Business. The Company shall, and shall cause its
Subsidiaries to, carry on its and their respective businesses in the ordinary
course of business consistent with its past practices and use all reasonable
efforts to preserve intact their current business organizations, to keep
available the services of their current officers and employees and to preserve
relationships with distributors, licensors, contractors, customers, suppliers,
lenders, employees and others having business dealings with any of them. Without
limiting the generality of the foregoing, except as may be expressly permitted
by other provisions of this
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Agreement and the Company Ancillary Agreements, or as may be agreed to in
writing by Parent, the Company shall not, and shall not permit any of its
Subsidiaries to:
(i) either (x) declare, set aside or pay any dividends on, or
make any other distributions in respect of, any of its capital stock, other than
dividends and distributions by any direct or indirect wholly owned Subsidiary of
the Company to its parent, in the case of less than wholly owned Subsidiaries,
as required by agreements existing on the Agreement Date, (y) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (z) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its Subsidiaries or any other securities
thereof or any rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its or of any Subsidiary's capital stock, any other voting securities
or any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities (other
than (x) the issuance of the Company Common Stock upon the exercise of Company
Options and warrants outstanding on the Agreement Date and disclosed in the
Company Disclosure Schedule, in accordance with their present terms), and (y)
the issuance of Company Common Stock upon the conversion of Convertible Notes or
Series C Preferred Stock);
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire (x) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture, association
or other business organization or division thereof or (y) any assets that
individually or in the aggregate are material to the Company and its
Subsidiaries taken as a whole;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or assets
(including Intellectual Property Rights), except for (a) sales, leases, or
encumbrances of immaterial or obsolete properties or assets, and non-exclusive
licenses of Intellectual Property Rights, in each case in the ordinary course of
business consistent with past practices and (b) sales or dispositions of assets,
or subleases of facilities, specifically described in Section 5.1 of the Company
Disclosure Schedule.
(vi) transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to any Company IP
Rights or Company Intellectual Property, other than non-exclusive licenses in
the ordinary course of business, or assign or grant any exclusive license to any
Intellectual Property Rights;
(vii) incur any indebtedness for borrowed money or draw down on
any credit facility or arrangement or guarantee any such indebtedness of another
person, issue or sell any debt securities or warrants or other rights to acquire
any debt securities of the Company or
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any of its Subsidiaries, guarantee any debt securities of another person, enter
into any "keep well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the economic
effect of any of the foregoing (other than borrowings of not more than $2.0
million in any calendar month (not to exceed $3.0 million in the aggregate
outstanding at any time after the Agreement Date);
(viii) make any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or Subsidiary of the
Company;
(ix) make or agree to make any new capital expenditure or
expenditures which individually is in excess of $100,000 or which in the
aggregate are in excess of $200,000;
(x) make any material Tax election or settle or compromise any
income or franchise Tax liability;
(xi) pay, discharge, settle or satisfy any claims (accrued,
asserted or unasserted, contingent or otherwise) for an amount greater than
$100,000, except discharges or payments of claims existing on the Balance Sheet
Date in an amount not in excess of the amount shown or reserved therefor on the
Balance Sheet;
(xii) enter into, amend, modify or terminate any agreement,
transaction, commitment or other right or obligation that, if in effect on the
Agreement Date, would be a Company Material Agreement, or that by its terms
requires or contemplates a current and/or future financial commitment, expense
or obligation on the part of the Company or any of its Subsidiaries involving in
excess of $100,000, other than in the ordinary course of business consistent
with past practices, or waive, release or assign any material rights or claims
thereunder, other than discounting of accounts receivable to obtain prompt
collection;
(xiii) terminate or lay off any material numbers of employees,
other than for cause consistent with past practice and Company policy;
(xiv) adopt or amend in any material respect any employee
benefit or employee stock purchase or employee option plan, or enter into any
employment contract, pay any special bonus or special remuneration to any
director or employee, or increase the salaries, wage rates or other compensation
payable to its officers or employees other than in the ordinary course of
business consistent with past practices, or commit or agree to do any of the
foregoing, or otherwise alter or commit to any compensation, benefit or
severance or change of control arrangement for or with any officer or employee
of the Company except compensation increases, severance payments or bonuses
specifically disclosed in Section 5.1 of the Company Disclosure Schedule.
(xv) grant or provide any severance or termination pay to any
officer or employee except payments that (x) are in amounts consistent with the
Company's policies and past practices and are made pursuant to written plans or
agreements outstanding, or policies existing, on the Agreement Date that are
disclosed in the Company Disclosure Schedule, or
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(y) are made pursuant to arrangements, and in amounts, specifically disclosed in
Section 5.1 of the Company Disclosure Schedule;
(xvi) voluntarily take actions to liquidate or dissolve the
Company or to take advantage of bankruptcy or other creditor protection laws;
(xvii) institute any litigation or other proceeding other than
in connection with a breach of this Agreement or any of the Parent Ancillary
Agreements by Parent or Sub;
(xviii) take any action that would cause or constitute a breach
of any representation or warranty made by the Company in this Agreement or any
of the Company Ancillary Agreements; or
(xix) authorize any of, or commit or agree to take any of, the
foregoing actions.
5.2 No Solicitation.
(a) From and after the Agreement Date until the earlier of the
Effective Time or termination of this Agreement in accordance with its terms,
the Company shall not, nor shall it permit any of its Subsidiaries to, nor shall
it authorize or permit any officer, director or employee of, or any investment
banker, attorney or other advisor or representative of, the Company or any of
its Subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage
the submission of any takeover proposal (as defined below), (ii) participate in
any discussions or negotiations with, or furnish any information to, or provide
access to the Company's properties, books and records to, or enter into any
agreement with to, any person or group (other than Parent) in connection with
any takeover proposal or (iii) take any other action to facilitate any inquiries
or the making of any proposal that constitutes, or may reasonably be expected to
lead to, any takeover proposal. The Company, its Subsidiaries, officers,
directors, employees, investment bankers, attorneys and other agents and
representatives will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted previously regarding a
takeover proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding two sentences by any
officer or director of the Company or any investment banker or attorney of the
Company or any of its Subsidiaries, shall be deemed to be a breach of this
Section 5.2(a) by the Company. In addition, subject to the other provisions of
this Section 5.2(a), from and after the Agreement Date until the earlier of the
Effective Time and termination of this Agreement pursuant to its terms, the
Company and its Subsidiaries will not, and will instruct their respective
directors, officers, employees, representatives, investment bankers, agents and
affiliates not to, directly or indirectly, make or authorize any public
statement, recommendation or solicitation in support of any takeover proposal
made by any person, entity or group (other than Parent); provided, however, that
nothing herein shall prohibit the Company's Board of Directors from taking and
disclosing to the Company's stockholders a position with respect to a tender
offer pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act. For
purposes of this Agreement, "TAKEOVER PROPOSAL" means any (x) proposal for a
merger or other business combination involving the Company or any of its
Subsidiaries (y) proposal, offer or tender offer to acquire (including without
limitation by license) in any manner, directly or
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indirectly, an equity interest in, not less than 35% of the outstanding voting
securities of the Company or any of its Subsidiaries, or (z) proposal to acquire
assets representing not less than 25% of the annual revenues of the Company or
any of its Subsidiaries in the fiscal year ending September 30, 1998 or to
obtain a license to the Company's ProComm or CleanSweep product or to any
Company IP Right or Company Intellectual Property that is incorporated, embodied
or used therein and that is material to such product (except as permitted by
Section 5.1), in each case in clauses (x), (y) or (z) of this subsection, other
than the transactions contemplated by this Agreement and the Company Ancillary
Agreements.
(b) Notwithstanding any other provision of this Agreement, prior to
the Effective Time, the Company may, to the extent the Board of Directors of the
Company determines, in good faith, after consultation with outside legal
counsel, that the Board's fiduciary duties under applicable law require it to do
so, participate in discussions or negotiations with, and, subject to the
requirements of Section 5.02(c) paragraph (c), below, furnish information to any
person, entity or group after such person, entity or group has delivered to the
Company an unsolicited bona fide takeover proposal which the Board of Directors
of the Company in its good faith reasonable judgment determines, (i) after
consultation with its independent financial advisors, would result in a
transaction more favorable to the stockholders of the Company from a financial
point of view than the Offer and the Merger and (ii) after reasonable inquiry by
the Company that the party making such takeover proposal is financially capable
of consummating such takeover proposal (a "SUPERIOR PROPOSAL"). In addition,
notwithstanding any other provision of this Agreement, in connection with a
possible takeover proposal, the Company may refer any third party to this
Section 5.2 or make a copy of this Section 5.2 available to any third party. In
the event the Company receives a Superior Proposal, nothing contained in this
Agreement (but subject to the terms of this Section 5.2(b)) will prevent the
Board of Directors of the Company from recommending such Superior Proposal to
its stockholders, if the Board determines, in good faith, after consultation
with outside legal counsel, that such action is required by its fiduciary duties
under applicable law; in such case, the Board of Directors of the Company may
withdraw, modify or refrain from making its recommendation of the Offer,
provided, however, that the Company shall not recommend to its stockholders a
Superior Proposal for a period of not less than 48 hours after Parent's receipt
of a copy of such Superior Proposal (or a description of the significant terms
and conditions thereof, if such Superior Proposal is not in writing).
(c) Notwithstanding anything to the contrary in this Section 5.2,
the Company will not provide any non-public information to a third party unless
(x) the Company provides such non-public information pursuant to a nondisclosure
agreement with terms regarding the protection of confidential information at
least as restrictive as such terms in the Confidentiality Agreement (as defined
in Section 6.2) and (y) such non-public information has been previously
delivered to the Parent or will simultaneously be furnished to Parent.
(d) In addition to the obligations of the Company set forth in
paragraph 5.2(b) above, the Company shall promptly advise Parent orally and in
writing of any request for information or of any takeover proposal, or any
inquiry with respect to, or which could reasonably be expected to lead to, any
takeover proposal, the material terms and conditions of
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such request, takeover proposal or inquiry, and the identity of the person
making any such takeover proposal or inquiry. The Company will keep Parent
informed of the status and material terms of any such request, takeover proposal
or inquiry.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Stockholder Approval; Preparation of Proxy Statement.
(a) If Company Stockholder Approval is required by law, the Company
will, at Parent's request, as soon as practicable following the consummation of
the Offer, duly call, give notice of, convene and hold a meeting of its
stockholders (the "STOCKHOLDERS MEETING") for the purpose of obtaining the
Company Stockholder Approval. If able to do so, Parent shall cause the Company
to comply with its obligations under this Section 6.1(a) and Section 6.1(b).
Subject to the provisions of Section 5.2(b), the Company will, through its Board
of Directors, recommend to its stockholders that the Company Stockholder
Approval be given. Notwithstanding the foregoing, if Sub or any other subsidiary
of Parent shall acquire at least 90% of the outstanding shares of the Company
Common Stock, the parties shall, at the request of Parent, take all necessary
and appropriate action to cause the Merger to become effective as soon as
practicable after the expiration of the Offer without a Stockholders Meeting in
accordance with Section 253 of the DGCL. Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant to the first
sentence of this Section 6.1(a) shall not be affected by (i) the commencement,
public proposal, public disclosure or communication to the Company of any
takeover proposal or (ii) the withdrawal or modification by the Board of
Directors of the Company of its approval or recommendation of the Offer, this
Agreement, any of the Company Ancillary Agreements or the Merger, except that
such obligations shall terminate if this Agreement is terminated.
(b) If the Company Stockholder Approval is required by law, the
Company will, at Parent's request, as soon as practicable following the
expiration of the Offer, prepare and file a preliminary Proxy Statement with the
SEC and will use all reasonable efforts to respond to any comments of the SEC or
its staff and to cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable after responding to all such comments to
the satisfaction of the staff. The Company will notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement or the
Merger. If at any time prior to the Stockholders Meeting there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company will promptly prepare and mail to its stockholders such
an amendment or supplement. The Company will not mail any Proxy Statement, or
any amendment or supplement thereto, to which Parent reasonably objects.
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(c) Parent agrees to cause all shares of the Company Common Stock
purchased pursuant to the Offer and all other shares of the Company Common Stock
owned by Sub or any other subsidiary of Parent to be voted in favor of the
Company Stockholder Approval.
6.2 Access to Information; Confidentiality. The Company shall, and shall
cause each of its Subsidiaries to, afford to Parent, and to Parent's officers,
employees, accountants, counsel, financial advisers and other representatives,
reasonable access during normal business hours during the period prior to the
Effective Time to all their respective properties, books, contracts,
commitments, personnel and records and, during such period, the Company shall,
and shall cause each of its Subsidiaries to, furnish or make available promptly
to Parent (a) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of Federal
or state securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Except as required by
law, Parent will hold, and will cause its officers, employees, accountants,
counsel, financial advisers and other representatives and affiliates to hold,
any confidential information in accordance with the Mutual Non-Disclosure
Agreement between Parent and the Company (THE "CONFIDENTIALITY AGREEMENT").
6.3 All Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement and the Company Ancillary Agreements, each of the parties agrees to
use all reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to use all reasonable efforts to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in an expeditious manner, the Offer,
the Merger and the other transactions contemplated by this Agreement and the
Company Ancillary Agreements, including (i) the obtaining of all necessary
actions or non actions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings (including
filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, including but not
limited to those set forth in Section 4.1(e) of the Company Disclosure Schedule,
(iii) the defending of any lawsuits or other legal proceedings, whether judicial
or administrative, challenging this Agreement or any of the Company Ancillary
Agreements or the consummation of any of the transactions contemplated by this
Agreement and the Company Ancillary Agreements, including seeking to have any
stay or temporary restraining order entered by any court or other Governmental
Entity vacated or reversed and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and fully
to carry out the purposes of, this Agreement and the Company Ancillary
Agreements. In connection with and without limiting the foregoing, the Company
and its Board of Directors shall (A) take all action necessary to ensure that no
state takeover statute or similar statute or regulation is or becomes applicable
to the Offer, the Merger, this Agreement, any Company Ancillary Agreement or any
of the other transactions contemplated hereby or thereby and (B) if any state
takeover statute or similar statute or regulation becomes applicable to the
Offer, the Merger, this Agreement, any Company Ancillary Agreement or any other
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transaction contemplated hereby or thereby, take all action within its power and
authority necessary to ensure that the Offer, the Merger, each Company Ancillary
Agreement and the other transactions contemplated by hereby and thereby may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and the Company Ancillary Agreements and otherwise to minimize the
effect of such statute or regulation on the Offer, the Merger and the other
transactions contemplated hereby and thereby. Notwithstanding anything to the
contrary set forth in this Section 6.3(a), the Board of Directors of the Company
shall not be prohibited from taking any action consistent with Section 5.2(a) or
5.2(b), subject to Parent's rights set forth in Section 5.2(b) and in Section
5.2(c).
(b) As soon as may be reasonably practicable, the Company and Parent
each shall file with the United States Federal Trade Commission (the "FTC") and
the Antitrust Division of the United States Department of Justice ("DOJ")
Notification and Report Forms relating to the transactions contemplated herein
as required by the HSR Act, as well as comparable pre-merger notification forms
required by the merger notification or control laws and regulations of any
applicable jurisdiction, as agreed to by the parties. The Company and Parent
each shall promptly (a) supply the other with any information which may be
required in order to effectuate such filings and (b) supply any additional
information which reasonably may be required by the FTC, the DOJ or the
competition or merger control authorities of any other jurisdiction and which
the parties may reasonably deem appropriate.
(c) The Company shall give prompt notice to Parent, and Parent shall
give prompt notice to the Company, of (i) any material breach of any
representation or warranty made by it in this Agreement or any Company Ancillary
Agreement (in the case of the Company) or in this Agreement or any Parent
Ancillary Agreement (in the case of Parent) or (ii) the failure by it to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement or under any Company
Ancillary Agreement (in the case of the Company) or in this Agreement or any
Parent Ancillary Agreement (in the case of Parent); provided, however, that no
such notification shall affect the representations, warranties, covenants, or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement, the Company Ancillary Agreements and the Parent Ancillary
Agreements.
(d) In the event that the Company or, following consummation of the
Offer, the Parent, shall determine to effect a reduction or cessation of
operations or workforce, or to terminate the employment of any employees, of the
Company or any Subsidiary thereof, the Company shall (when and if requested by
Parent, and not before the consummation of the Offer, in the case of such a
determination by Parent) perform and take all acts that may be required to
comply with the applicable provisions of the Worker Adjustment and Retraining
Act (the "WARN ACT"), and, in the case of such a determination by Parent, shall
give notice in such form, at such time, and to such employees as may be
reasonably requested by Parent in connection therewith.
6.4 Post Merger Employment Benefits. Employees of the Company who become
employed by Parent or any controlled subsidiary thereof after the Effective Time
will, at Parent's
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election, either to the extent permitted under the terms of such Company Benefit
Arrangements continue to be eligible to participate in Company Benefit
Arrangements, if and for so long as continued, or become eligible to participate
in the same standard employee benefit plans as are generally available to
similarly situated employees of Parent. Upon the request of the Parent,
following the consummation of the Offer, the Company shall (and shall cause its
Subsidiaries to), effective immediately prior to the Effective Time, terminate
such of its Company Benefit Arrangements as may be specified by Parent, provided
that following the Effective Time, the affected employees of the Company and
such Subsidiaries will be eligible to participate in the same standard employee
benefit plans as are generally available to similarly situated employees of
Parent, and such employee's time served with the Company or any Subsidiary
thereof shall be credited to such employee for purposes of determining such
employee's eligibility or level of benefits under the terms of Parent's employee
benefit plans.
6.5 Indemnification, Exculpation and Insurance.
(a) From and after the Effective Time, the Parent will fulfill and
honor and will cause the Surviving Corporation to fulfill and honor in all
respects the obligations of the Company pursuant to its certificate of
incorporation, its bylaws and any indemnification agreements between the Company
and its directors and officers in their capacity as such (the "INDEMNIFIED
PARTIES") existing prior to the date hereof. From and after the Effective Time,
such obligations shall be the joint and several obligations of Parent and the
Surviving Corporation and, by executing this Agreement, Parent hereby assumes
such obligations. The Certificate of Incorporation and Bylaws of the Surviving
Corporation will contain the provisions with respect to indemnification and
elimination of liability for monetary damages set forth in the Certificate of
Incorporation and Bylaws of the Company, which provisions will not be amended,
repealed or otherwise modified from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who, immediately prior to
the Effective Time, were directors, officers, employees or agents of the Company
or its Subsidiaries, unless such modification is required by law.
(b) Parent will cause to be maintained for a period of not less than
three years from the Effective Time the Company's current directors' and
officers' insurance and indemnification policy to the extent that it provides
coverage for events occurring prior to the Effective Time (the "D&O INSURANCE")
for all persons who are directors and officers of the Company on the Agreement
Date (and to the extent covered by the D&O Insurance as of the Agreement Date,
persons who were directors and officers of the Company prior to the Agreement
Date), in their capacity as such, so long as the annual premium therefor would
not be in excess of 150% of the last annual premium paid prior to the Agreement
Date (the "MAXIMUM PREMIUM") and, to the extent the annual premium would exceed
the Maximum Premium, Parent will cause to be maintained for such period the
maximum amount of such D&O Insurance that can readily be procured for the
Maximum Premium. If the existing D&O Insurance expires, is terminated or
canceled during such two year period, Parent will use all reasonable efforts to
cause to be obtained as much D&O Insurance as can be obtained for the remainder
of such period for an annualized premium not in excess of the Maximum Premium,
on terms and conditions no less advantageous than the existing D&O insurance. In
lieu of maintaining the Company's
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current D&O insurance, Parent may elect to add the directors and officers of the
Company on the Agreement Date (and to the extent covered by the D&O Insurance as
of the Agreement Date, persons who were directors and officers of the Company
prior to the Agreement Date) to its own insurance policy, provided that such
election does not diminish the rights provided to such persons under the
Company's existing D&O Insurance.
(c) This Section 6.5 will survive any termination of this Agreement
and the consummation of the Merger at the Effective Time is intended to benefit
the Company, the Surviving Corporation and the persons who are or were directors
or officers of the Company on or prior to the Effective Time, and will be
binding on all successors and assigns of the Parent or the Surviving
Corporation.
(d) In the event that Parent or the Surviving Corporation or any of
their successors or assigns consolidates with or merges into any other Person
and shall not be the continuing or surviving corporations or entities of such
consolidation or merger, then and in each such case, proper provisions shall be
made so that the successors and assigns of the Parent or the Surviving
Corporation shall assume the obligations of the Parent or the Surviving
Corporation, as the case may be, set forth in this Section 6.5.
(e) The provisions of this Section 6.5 are intended to be for the
benefit of, and shall be enforceable by, each indemnified party and such party's
heirs and representatives.
6.6 Directors.
(a) Effective upon the acceptance for payment by Sub of any shares
of Company Common Stock, Parent shall be entitled to designate the number of
members, rounded up to the next whole number, on the Company's Board of
Directors that equals the product of (i) the total number of members of the
Company's Board of Directors (giving effect to the election of any additional
directors pursuant to this Section 6.6) and (ii) the percentage that the number
of shares of Company Common Stock accepted for payment by Purchaser bears to the
total number of shares of Company Common Stock outstanding, and the Company
shall take all action necessary to cause Parent's designees to be elected or
appointed to the Company's Board of Directors, including, without limitation,
increasing the number of directors, and seeking and accepting resignations of
incumbent directors. At such times, the Company will use all reasonable efforts
to cause individuals designated by Parent to constitute the same percentage as
such individuals represent on the Company's Board of Directors or each committee
of the Board (other than any committee of the Board established to take action
under this Agreement), and, if requested by Parent, each board of directors of
each Subsidiary and each committee of each such board. Notwithstanding the
foregoing, until such time as Parent acquires a majority of such outstanding
shares of Company Common Stock on a fully-diluted basis (determined as set forth
in Exhibit A to this Agreement), the Company shall use all reasonable efforts to
ensure that all of the members of the Board of Directors and such boards and
committees as of the date hereof who are not employees of the Company shall
remain members of the Board of Directors and such boards and committees.
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(b) The Company's obligations to appoint designees to the Board of
Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions required
pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 6.6 and shall include in the Schedule 14D-9 such information
with respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1 to fulfill its obligations under this Section 6.6.
Parent will supply to the Company in writing and be solely responsible for any
information with respect to itself and its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
6.7 Fees and Expenses.
(a) Except as provided below in this Section 6.7, all fees and
expenses incurred in connection with the Offer, the Merger, this Agreement, the
Company Ancillary Agreements and the transactions contemplated hereby and
thereby shall be paid by the party incurring such fees or expenses, whether or
not the Offer or the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in same or next day
funds to Parent, $2 million (the "COMPANY FEE") (i) if this Agreement is
terminated pursuant to Section 8.1(b)(i) as a result of the failure of the
condition set forth in paragraph (d) of Exhibit A to this Agreement, or pursuant
to Section 8.1(c) or Section 8.1(d), or (ii) if this Agreement is terminated by
Parent pursuant to Section 8.1(f), or pursuant to Section 8.1(b)(i) as a result
of the failure of the condition set forth in paragraph (g) of Exhibit A to this
Agreement, in each case in this clause (ii) where the breach or failure to
perform or comply that permits such termination results from, or represents, a
Willful Breach of Section 5.2(a), (b) or (c) of this Agreement. The Company Fee
may be applied by the Company dollar for dollar to reduce any royalty
obligations of Parent to the Company pursuant to the License Agreement (and
shall not be payable to the extent that the Company Fee exceeds the amount of
such royalties required to be paid over the term of the License Agreement),
except that if, pursuant to the terms of the License Agreement, Parent would not
be required at any time after the date of termination of this Agreement to pay
any royalties, the Company Fee shall be payable in cash on demand by Parent.
(c) Payment of the amounts described in this Section 6.7 and the
exercise by Parent of its rights under the License Agreement shall constitute
the sole remedy of Parent for a Willful Breach of Section 5.2(a), (b) or (c) of
this Agreement.
6.8 Public Announcements. Parent and Sub, on the one hand, and the
Company, on the other hand, will consult with each other before issuing, and
provide each other the opportunity to review, comment upon and concur with, any
press release or other public statements with respect to the transactions
contemplated by this Agreement and the Company Ancillary Agreements, including
the Offer and the Merger, and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
applicable law, court process or by obligations pursuant to any listing
agreement with any national market system. The parties agree that the initial
press release to be issued with respect to the transactions contemplated by this
Agreement and the Company Ancillary Agreements shall be in the form heretofore
agreed to by the parties.
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6.9 Rights Agreement. As soon as possible, and in no event later
than two business days after the Agreement Date, the Company shall file a
Current Report Form 8-K to reflect the Rights Amendment, and the Company shall
take all additional action necessary to effect the changes in the Rights
Agreement to provide for the exclusions therefrom set forth in Section 4.1(ac)
hereof. After the effectiveness of the Rights Amendment until the Effective
Time, or until this Agreement is terminated, the Company shall not (i) redeem
the Rights, (ii) exchange the Rights, (iii) terminate the Rights Agreement or
(iv) further amend the Rights Agreement, in each case without the prior written
consent of Parent.
6.10 Technology License Agreement. Concurrently with the execution of
this Agreement, the Company and Parent shall enter into the License Agreement.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Effective Time of the following
conditions:
(a) Company Stockholder Approval. If required by applicable law, the
Company Stockholder Approval shall have been obtained.
(b) Consummation of the Offer. Sub shall have purchased Shares
pursuant to the Offer.
(c) No Injunctions or Restraints. No statute, rule, regulation,
executive order, decree, injunction, judgment or other order or ruling issued by
any court or other Governmental Entity or other legal restraint or prohibition
shall be in effect which would (i) make the acquisition or holding by Parent or
its affiliates of Company Common Stock or Common Stock of the Surviving
Corporation illegal or otherwise prevent the consummation of the Merger, (ii)
prohibit Parent's or Sub's ownership or operation of, or compel Parent or Sub to
dispose of or hold separate, all or a material portion of the business or assets
of Parent and its Subsidiaries taken as a whole, or the Company and its
Subsidiaries taken as a whole (iii) compel Parent, Sub or the Company to dispose
of or hold separate all or a material portion of the business or assets of
Parent and its Subsidiaries taken as a whole or the Company and its Subsidiaries
taken as a whole, (iv) impose material limitations on the ability of Parent or
Sub or their affiliates effectively to exercise full ownership and financial
benefits of the Surviving Corporation or impose any material condition to this
Agreement, any of the Company Ancillary Agreements or the Merger which would be
materially adverse to Parent.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of matters presented in
connection with the Merger by the stockholders of the Company (provided,
however, that if Shares are purchased by Sub pursuant to the Offer, Parent may
not in any event terminate this Agreement):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (w) as the result of the failure of any of the conditions
set forth in Exhibit A to this Agreement, Sub shall have failed to commence the
Offer in the time required by this Agreement, (x) as a result of the failure of
any of the conditions set forth in Exhibit A to this Agreement the Offer shall
have terminated or expired in accordance with its terms (as extended, if Sub so
elects or as may be required pursuant to Section 1.1(a)) without Sub having
accepted for payment any shares of Company Common Stock pursuant to the Offer
or (y) Sub shall not have accepted for payment any shares of Company Common
Stock pursuant to the Offer by December 31, 1998 as a result of the failure of
any of the conditions set forth in Exhibit A to this Agreement; provided,
however, that the right to terminate this Agreement pursuant to clauses (w), (x)
or (y) above of this Section 8.1(b)(i) shall not be available to any party whose
failure to perform in any material respect any of its obligations under this
Agreement results in the failure of any such condition or if the failure of such
condition results from facts or circumstances that constitute a material breach
of a representation or warranty under this Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the acceptance for payment of, or payment for, shares of
the Company Common Stock pursuant to the Offer or the Merger and such order,
decree or ruling or other action shall have become final and nonappealable;
(c) by the Company, if prior to the purchase of any shares of
Company Common Stock by Sub pursuant to the Offer, the Company shall have
received any Superior Proposal;
(d) by Parent in the event that (i) the Board of Directors of the
Company or any committee thereof shall have failed to recommend the Offer, the
Merger or this Agreement, including any failure to include such recommendation
in the Schedule 14D-9, or shall have so resolved, (ii) the Board of Directors of
the Company or any committee thereof shall have withdrawn or modified (including
without limitation by amendment of the Company's Schedule 14D-9) in a manner
adverse to Parent or Sub its approval or recommendation of the Offer, the Merger
or this Agreement and the Company Ancillary Agreements, shall have approved or
recommended any takeover proposal, shall have authorized the redemption or
amendment of the
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Rights Agreement after the Company has received a takeover proposal (other than
the Rights Amendment in accordance with Section 6.9 of this Agreement) or shall
have resolved to do any of the foregoing (provided that a statement that states
that a takeover proposal is under consideration by the Company's board of
directors or management and states that the Company will, at a future date, take
a position with respect to such takeover proposal, without making any adverse
statements with respect to the Offer, shall not be deemed to constitute such a
withdrawal, modification, approval or recommendation), or (iii) the Company
shall have entered into any letter of intent, acquisition agreement or similar
agreement with respect to any Superior Proposal in accordance with Section
5.2(b) of this Agreement or the Board of Directors or any committee thereof
shall have resolved to do so;
(e) by Parent in the event that (i) any person entity or "group" (as
defined in Section 13(d)(3) of the Exchange Act) other than Parent and Sub
acquires beneficial ownership of 35% or more of the outstanding shares of Common
Stock of the Company; or (ii) the Board of Directors of the Company or any
committee thereof upon a request to reaffirm the Company's approval or
recommendation of the Offer, the Merger or this Agreement and the Company
Ancillary Agreements, shall have failed to do so within three (3) business days
after such request is made or shall have so resolved;
(f) by Parent if (i) any of the representations and warranties of
the Company set forth in Section 4.1 shall not be true and correct in any manner
that either (A) represents or results from a Willful Breach or (B) has or
represents a Material Adverse Effect or (ii) the Company has committed a breach
of any of the Company's covenants under Article 5 and Article 6 of this
Agreement, which breach either (A) represents or results from a Willful Breach
or (B) has a Material Adverse Effect, and has not cured such material breach
within thirty (30) days after the Parent has given the Company written notice of
the breach and its intention to terminate this Agreement pursuant to this
Section 8.1(f); and
(g) by the Company if Sub shall not have accepted for payment any
shares of Company Common Stock pursuant to the Offer on or prior to December 31,
1998 and (i) any of the representations and warranties of Parent set forth in
Section 4.2 hereof shall not be true and correct in any manner that has or
represents a material adverse effect on the Parent or on the exercise by the
Company of its rights under this Agreement or the License Agreement; or (ii)
Parent has committed a material breach of any of Parent's covenants under this
Agreement, which breach has a Material Adverse Effect or materially adversely
affects the Company's exercise of its rights under this Agreement or the License
Agreement and has not cured such material breach within thirty (30) days after
the Company has given the Parent written notice of the material breach and its
intention to terminate this Agreement pursuant to this Section 8.1(g).
8.2 Effect of Termination. In the event of termination of this Agreement
by either the Company or Parent as provided in Section 8.1, this Agreement shall
forthwith become void and have no effect, without any liability or obligation on
the part of Parent, Sub or the Company, other than pursuant to the last sentence
of Section 6.2, Section 6.7, this Section 8.2 and Article IX, other than
liability for damages incurred in the event of a breach by a party of any of
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<PAGE> 46
its representations, warranties, covenants or agreements set forth in this
Agreement or any of the Company Ancillary Agreements except as provided in
Section 6.7(c).
8.3 Amendment. This Agreement may be amended by the parties at any time
before or after obtaining the Company Stockholder Approval (if the Company
Stockholder Approval shall be required by law), subject to Section 8.5;
provided, however, that after any such approval, there shall not be made any
amendment that by law requires further approval by such stockholders without the
further approval of such stockholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
8.3, waive compliance with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
8.5 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 8.1, an amendment of this
Agreement pursuant to Section 8.3 or an extension or waiver pursuant to Section
8.4 shall, in order to be effective, require in the case of Parent, Sub or the
Company, action by its Board of Directors or the duly authorized designee of its
Board of Directors; provided, however, that in the event that Sub's designees
are appointed or elected to the Board of Directors of the Company as provided in
Section 6.7, after the acceptance for payment of shares of the Company Common
Stock pursuant to the Offer and prior to the Effective Time, the affirmative
vote of a majority of the members of the Company's Board of Directors (if any)
who were members of the Company's Board of Directors on the Agreement Date shall
be required by the Company to (i) amend or terminate this Agreement by the
Company, (ii) exercise or waive any of the Company's rights or remedies under
this Agreement or (iii) extend the time for performance of Parent's and Sub's
respective obligations under this Agreement.
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time or, in the case of
the Company, shall survive the acceptance for payment of, and payment for,
shares of the Company Common Stock by Sub pursuant to the Offer. This Section
9.1 shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
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9.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(A) if to Parent or Sub, to
Symantec Corporation
10201 Torre Ave.
Cupertino, CA 95014
Attention: General Counsel
with copies to its counsel:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
Fax: (415) 494-1417
Attention: Gordon K. Davidson, Esq.
(b) if to the Company, to
Quarterdeck Corporation
13160 Mindanao Way
Marina del Rey, CA 90292
Attention: Chief Executive Officer
with copies to its counsel:
Bradley D. Schwartz, Esq.
Schwartz & Associates
333 South Grand Avenue, #3950
Los Angeles, CA 90071
9.3 Definitions. For purposes of this Agreement:
(a) an "AFFILIATE" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;
(b) "COMPANY ANCILLARY AGREEMENTS" means, collectively, the
Certificate of Merger and the License Agreement.
(c) "COMPANY OPTIONS" means any option to purchase Company Common
Stock granted under the Company's 1990 Directors Stock Option Plan, the
Company's Amended and Restated 1990 Stock Plan or the Company's 1996 Acquisition
Stock Option Plan, and any
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<PAGE> 48
other option to purchase Company Common Stock disclosed in Section 4.1(c) of the
Company Disclosure Schedule not granted under any such plan.
(d) "EXECUTIVE OFFICERS" of the Company means any one of the
following persons: King R. Lee, Frank Greico, John Strosahl, Cheri Kaplan-Smith,
Suzanne Dickson and Gadi Navon, for so long as they may serve, and if any of
such persons shall cease to serve in their current capacity with the Company,
then such persons' successor
(d) "KNOWLEDGE" of a party means, with respect to a matter, the
actual knowledge of the executive officers and directors of such party.
(e) "MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means any
change or effect that (i) materially adversely affects, or is highly likely to
materially adversely affect, the ability of the Company and its Subsidiaries to
market and license either its ProComm product or its CleanSweep product (or
both), or to use any Company IP Right or Company Intellectual Property that is
incorporated, embodied or used therein and that is material to such product or
the ownership by the Company and its Subsidiaries of any such Company IP Right
or Company Intellectual Property, (ii) materially adversely affects, or is
highly likely to materially adversely affect, the exercise by Parent of its
material rights under this Agreement or the License Agreement or (iii)
represents or results in, or is highly likely to result in, a liability
(contingent or otherwise), cost or expense of more than $3.0 million, or the
reduction of the fair value of any assets by more than $3.0 million (in each
case after giving effect to the availability of payments under any insurance
policy); provided, however, that none of the following shall be deemed, by
itself, to constitute a Material Adverse Change or be taken into account in
determining whether there has been or would be a Material Adverse Effect as a
result of this clause (iii): (A) any adverse change, event or effect that is
demonstrated by the Company to be caused by conditions affecting the United
States economy generally or the economy of any nation or region in which the
Company or any of its Subsidiaries conducts business that is material to the
business of the Company and its Subsidiaries, taken as a whole, (B) any adverse
change, event or effect that is demonstrated by the Company to be caused by
conditions generally affecting the utility software industry and (C) any adverse
change, event or effect that is demonstrated by the Company to be caused by the
announcement or pendency of the Offer or the Merger or the execution of this
Agreement or the License Agreement.
(f) "MERGER CONSIDERATION" means the consideration in money paid by
the Parent, in the applicable case, on account of each share of Company Common
Stock, or each share of Company Preferred Stock or each option in the Merger in
accordance with Section 3.1 of this Agreement.
(g) "PARENT ANCILLARY AGREEMENTS" means the Certificate of Merger
and the License Agreement.
(h) "PERSON" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity;
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<PAGE> 49
(i) a "SUBSIDIARY" of any person means a corporation, partnership or
other entity in which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other individuals
performing similar functions for such corporation, partnership or other entity
are directly or indirectly owned by such person;
(j) "SUPERIOR PROPOSAL" has the meaning assigned thereto in Section
5.2(b);
(k) "TAKEOVER PROPOSAL" has the meaning assigned thereto in Section
5.2(a); and
(l) "WILLFUL BREACH" by the Company means (1) the failure of
a representation or warranty of such party in this Agreement to be true and
correct in all material respects as a result of any fact or condition of which
any executive officer or director of such party had actual knowledge as of the
Agreement Date, or (2) a material breach or failure to perform in any material
respect any obligation or to comply in any material respect with any agreement
or covenant to be performed or complied with by it pursuant to this Agreement,
where both (A) performance of such obligation, or compliance with such agreement
or covenant was not impossible (taking into consideration the financial and
other resources of the breaching or non-performing party) and (B) (i) in the
case of a breach that can not readily be cured by the breaching party within 30
days after written notice of such breach, the action or inaction constituting
such breach was taken by or at the request of, or with the express permission
of, any executive officer or director of the breaching party, and (ii) in the
case of a breach that can readily be cured by the breaching party within 30 days
after written notice of such breach, such period shall expire without the cure
of such breach .
9.4 Interpretation. When a reference is made in this Agreement to an
Article, a Section, Exhibit or Schedule, such reference shall be to an Article
or a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
only for reference purposes and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The words "hereof," "herein" and "thereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. References to a person
are also to its permitted successors and assigns.
9.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
9.6 Entire Agreement; No Third-Party Beneficiaries. This Agreement and
the Confidentiality Agreement constitute the entire agreement, and supersede all
prior agreements
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<PAGE> 50
and understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and except for the provisions of Sections 6.4
and 6.5, are not intended to confer upon any person other than the parties and
the Company's stockholders any rights or remedies hereunder.
9.7 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
9.8 Assignment. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Sub and Parent of any of its
obligations under this Agreement. This Agreement will be binding upon, inure to
the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
9.9 Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, or seek without the agreement of the
other parties hereto to change the venue of such action or to obtain dismissal
thereof on ground of forum non conveniens or similar doctrines and (c) agrees
that it will not bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court other than a Federal or
state court sitting in the State of Delaware.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
PARENT: SYMANTEC CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
SUB: OAK ACQUISITION CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
THE COMPANY: QUARTERDECK CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
***AGREEMENT AND PLAN OF MERGER SIGNATURE PAGE***
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EXHIBIT A
Offer
Notwithstanding any other term of the Offer or this Agreement, Sub shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating
to Sub's obligation to pay for or return tendered shares of the Company Common
Stock after the termination or withdrawal of the Offer), to accept for payment
or pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered shares, and may
terminate the Offer as to any shares not then paid for unless (i) there shall
have been validly tendered and not withdrawn prior to the expiration of the
Offer that number of shares of the Company Common Stock which would, upon
consummation of the Offer, then represent at least a majority of the Fully
Diluted Shares (the "MINIMUM TENDER CONDITION") and (ii) any waiting period
under the HSR Act applicable to the purchase of shares of the Company Common
Stock pursuant to the Offer shall have expired or been terminated. The term
"FULLY DILUTED SHARES" means all outstanding securities entitled generally to
vote in the election of directors of the Company on a fully diluted basis, after
giving effect to the exercise or conversion of all options, rights and
securities exercisable or convertible into such voting securities, including all
Company Options (whether or not then vested or exercisable), but only to the
extent that any such options, rights or securities are exercisable or
convertible into such voting securities at a per share price not in excess of
the Offer Price. Furthermore, notwithstanding any other term of the Offer or
this Agreement, Sub shall not be required to commence the Offer or to accept for
payment or, subject as aforesaid, to pay for any shares of the Company Common
Stock not theretofore accepted for payment or paid for, and may terminate or
amend the Offer, if, at any time after the Agreement Date and before the time of
acceptance of such shares for payment or the payment therefor, any of the
following events shall occur (or shall be determined by Parent in good faith to
have occurred):
(a) there shall be pending any suit, action or proceeding brought by
or on behalf of any Governmental Entity (or the staff of the Federal Trade
Commission or the staff of the Antitrust Division of the Department of Justice
shall have recommended the commencement of such), any shareholder of Company or
any other person or party directly or indirectly (i) challenging the acquisition
by Parent or Sub of any shares of the Company Common Stock, seeking to restrain
or prohibit the making or consummation of the Offer or the Merger or the
performance of any of the other transactions contemplated by this Agreement, or
alleging, (on grounds that Sub reasonably and in good faith determines are
reasonably likely to result in financial exposure to the Company in excess of
available insurance coverage and/or proceeds), that any such acquisition or
other transaction relates to, involves or constitutes a violation by the Company
or its directors of federal securities law or applicable corporate statutes or
principles, (ii) seeking to prohibit or limit the ownership or operation by the
Company, Parent or any of their respective Subsidiaries of a material portion of
the business or assets of the Company and its Subsidiaries, taken as a whole, or
Parent and its Subsidiaries, taken as a whole, or to compel the Company or
Parent to dispose of or hold separate any material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or Parent and its
Subsidiaries, taken
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<PAGE> 53
as a whole, as a result of the Offer or any of the other transactions
contemplated by this Agreement, (iii) seeking to impose material limitations on
the ability of Parent or Sub to acquire or hold, or exercise full rights of
ownership of, any shares of the Company Common Stock accepted for payment
pursuant to the Offer including without limitation the right to vote the Company
Common Stock accepted for payment by it on all matters properly presented to the
stockholders of the Company, (iv) seeking to prohibit Parent or any of its
Subsidiaries from effectively managing or controlling in any material respect
the business or operations of the Company and its Subsidiaries taken as a whole,
(v) which is reasonably likely to result in a Material Adverse Effect or (vi)
seeking to impose a material condition to the Offer, the Merger or this
Agreement which would be materially adverse to Parent; provided that in the case
of any such suit, action or proceeding by any person other than a Governmental
Entity, such suit, action or proceeding could reasonably be expected to result
in a Material Adverse Effect;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to the
Offer or the Merger, or any other action shall be taken by any Governmental
Entity or court, other than the application to the Offer or the Merger of
applicable waiting periods under the HSR Act, that is reasonably likely to
result in any of the consequences referred to in clauses (i) through (vi) of
paragraph (a) above;
(c) there shall have occurred since June 30, 1998 any Material
Adverse Change;
(d) either (i) the Board of Directors of the Company or any
committee thereof shall have failed to recommend the Offer, the Merger or this
Agreement, including any failure to include such recommendation in the Schedule
14D-9, or shall have so resolved; or (ii) the Board of Directors of the Company
or any committee thereof shall have withdrawn or modified (including without
limitation by amendment of the Company's Schedule 14D-9) in a manner adverse to
Parent or Sub its approval or recommendation of the Offer, the Merger or this
Agreement and the Company Ancillary Agreements, shall have approved or
recommended any takeover proposal (provided that a statement that states that a
takeover proposal is under consideration by the Company's board of directors or
management and states that the Company will, at a future date, take a position
with respect to such takeover proposal, without making any adverse statements
with respect to the Offer, shall not be deemed to constitute such a withdrawal,
modification, approval or recommendation); or shall have authorized the
redemption or amendment of the Rights Agreement after the Company has received
any takeover proposal (other than the Rights Amendment in accordance with
Section 6.9 of this Agreement) or shall have resolved to do any of the
foregoing;
(e) either (i) any person, entity or "group" (as defined in Section
13(d)(3) of the Exchange Act) other than Parent and Sub acquired beneficial
ownership of 35% or more of the outstanding Shares; or (ii) the Board of
Directors of the Company or any committee thereof upon a request to reaffirm the
Company's approval or recommendation of the Offer, the Merger or this Agreement,
shall have failed to do so within three business days after such request is made
or shall have so resolved;
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(f) any of the representations and warranties of the Company set
forth in Section 4.1 shall not be true and correct in all material respects
(without regard to any qualification therein as to the Company's knowledge) as a
result of any facts or circumstances that have a Material Adverse Effect;
(g) the Company shall have breached or failed to perform in any
material respect any obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with by it
pursuant to this Agreement and the same shall have a Material Adverse Effect;
(h) this Agreement shall have been terminated in accordance with its
terms; or
(i) any voluntary, involuntary or ancillary petition in bankruptcy
shall have been instituted under Title 11 to the United States Code with respect
to the Company as a debtor or alleged debtor and not dismissed;
which, in the reasonable good faith judgment of Sub or Parent, in any such case,
and regardless of the circumstances giving rise to any such condition (other
than any action or inaction by Parent or any of its Subsidiaries which
constitutes a breach of this Agreement), makes it inadvisable to proceed with
such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and Parent and
their respective affiliates and may be asserted by Sub or Parent regardless of
the circumstances giving rise to such condition (other than any action or
inaction by Parent or any of its Subsidiaries which constitutes a breach of this
Agreement) or may be waived (except for the Minimum Tender Condition, which can
only be waived with the consent of the Company) by Sub and Parent in whole or in
part at any time and from time to time in their sole discretion. The failure by
Parent, Sub or any other affiliate of Parent at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time prior to the expiration of the Offer.
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EXHIBIT (c)(2)
LICENSE AGREEMENT
This License Agreement (the "Agreement") is entered into as of October 15,
1998 (the "Effective Date") by and between Symantec Corporation, a Delaware
corporation, Symantec Limited, an Ireland corporation (collectively,
"Symantec"), and Quarterdeck Corporation, a Delaware corporation
("Quarterdeck").
RECITALS
Quarterdeck is the creator and owner of, or otherwise has the right to
license, the product known as CleanSweep, as described in more detail in Exhibit
A (the "Quarterdeck Software"). Symantec and Quarterdeck have entered into an
Agreement and Plan of Merger (the "Merger Agreement") that contemplates the
acquisition of Quarterdeck by Symantec. Symantec wishes to license the
Quarterdeck Software for distribution as a stand-alone product and as part of a
suite of other products. In connection with the Merger Agreement, Quarterdeck
has agreed to grant such licenses, subject to the terms and conditions set forth
below.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have the
following meanings:
"AFFILIATE" means, as to any legal entity, any other legal entity that is
directly or indirectly controlling, controlled by, or under common control with,
such legal entity. In this context, control means ownership of 100% of the
voting stock or the equivalent.
"AGREEMENT" shall have the meaning ascribed thereto in the first paragraph
to this Agreement.
"BUSINESS DAY" means any day other than a Saturday, Sunday or federal or
California state holiday.
"CONSUMMATION" means the purchase of Shares pursuant to the Offer (as those
terms are defined in the Merger Agreement) in accordance with the terms of the
Merger Agreement.
"DELIVERABLES" shall mean the items relating to the Quarterdeck Software
described in Exhibit B.
"DERIVATIVE WORK" shall mean any modification, translation, port,
adaptation, modification, extension, improvement, compilation, abridgment or
other form in which the Quarterdeck Software may be recast, transformed or
adapted for use on computer systems, including, but not limited to, any form
which would infringe any copyright to the Quarterdeck Software.
<PAGE> 2
"EFFECTIVE DATE" shall have the meaning ascribed thereto in the
introductory paragraph to this Agreement.
"INTELLECTUAL PROPERTY RIGHTS" means all of Quarterdeck's intellectual
property rights worldwide arising under statutory or common law, and whether or
not perfected, including, without limitation, all rights relating to patents,
copyrights, trade secrets and any rights analogous thereto.
"LICENSES" shall mean the licenses granted in Section 2 below.
"NET REVENUE" means Symantec's actual gross revenues (invoiced amounts, net
of actual returns) from marketing, distribution or other revenue-generating use
of the Quarterdeck Licensed Products. No royalties will be earned on sales, use,
excise and similar taxes, currency exchange fees, and shipping costs (including,
but not limited to, insurance and transportation costs and duties) to the extent
such amounts are invoiced separately. If the Quarterdeck Licensed Products are
distributed with other titles in a package for a single price, which other
titles are distributed by Symantec stand-alone through the retail channel, the
Net Revenue attributable to the Quarterdeck Licensed Products will be determined
by prorating the revenues from the sale or license of the package according to
the distribution prices to Ingram Micro for the separate works contained in the
package. Notwithstanding the foregoing, any Symantec product other than Norton
Utilities, Norton Antivirus, Crashguard, Norton Web Services, pcANYWHERE, Norton
Mobil Essentials or Winfax (and follow-on versions of such products) will not be
considered for purposes of prorating the revenues from the sale or license of
any such package unless it is the first or second top selling title in its
category. Further, the Licensed Quarterdeck Product shall be deemed to be sold,
licensed or otherwise distributed as part of a bundle with another product(s) if
it is sold, licensed or otherwise distributed for a discounted price (or a zero
price), conditioned in whole or part on the customer's purchase, license or
other acquisition of such other product(s). Amounts received by Symantec as
deposits or advances will not be deemed to be revenue until shipment or other
revenue-generating use of the Quarterdeck Licensed Products to the party making
the deposits or advances have been made against such deposits or advances or
Symantec recognizes such amounts as revenue on any other basis. For purposes of
calculating Royalties, revenues in foreign currencies will be deemed converted
into United States Dollars at the average monthly exchange rates used generally
by Symantec in its financial statements.
"ROYALTIES" shall mean the royalties payable with respect to distribution
of the Quarterdeck Licensed Products, as described in Section 4.1 below.
"QUARTERDECK DEVELOPMENT LICENSE" means the license granted in Section 2.2.
"QUARTERDECK DISTRIBUTION LICENSE" shall have the meaning described in
Section 2.1 below.
"QUARTERDECK LICENSED PRODUCTS" shall mean binary executable versions of
the Quarterdeck Software and Derivative Works of the Quarterdeck Software that
Symantec may create if it receives the Source Code for the Quarterdeck Software
from the escrow agent referenced in Section 7.
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"QUARTERDECK LICENSES" shall mean the Quarterdeck Distribution License and
the Quarterdeck Development License.
"QUARTERDECK SOFTWARE" shall have the meaning described in the recitals
above and Exhibit A to this Agreement.
"QUARTERDECK TRADEMARKS" shall mean the "CleanSweep" mark and such other
related marks owned by Quarterdeck as the parties may agree.
"SOURCE CODE" shall mean the human readable form of computer software,
including any corresponding comments and annotations.
"UPDATES" shall mean bug fixes, modifications, variations, or enhancements
made to a product without a significant change in the functionality of the
product, the packaging (other than to indicate a change in the version number to
the right of the decimal point), or the version number to the left of the
decimal point.
"UPGRADES" shall mean new releases and versions which include significant
changes to functionality, new packaging or a change in the version number to the
left of the decimal point.
2. GRANT OF RIGHTS.
2.1 DISTRIBUTION LICENSE FOR QUARTERDECK LICENSED PRODUCTS. Subject to the
provisions of this Agreement, Quarterdeck hereby grants to Symantec a
nonexclusive, world-wide, non-transferable, license under all Quarterdeck
Intellectual Property Rights to use, copy, distribute, display and perform the
Quarterdeck Licensed Products during the term of such license specified in
Section 6, except that no right is granted to distribute Japanese language
versions of the Quarterdeck Licensed Products in Japan except to the extent that
Symantec may do so without giving rise to a violation of any of the rights
granted to Marubeni Corporation under the agreement between Marubeni Corporation
and Quarterdeck dated September 29, 1997, and except for any other distribution
arrangement to which Symantec secures Marubeni Corporation's written consent
(the "Quarterdeck Distribution License"). Symantec may sublicense the
Quarterdeck Licensed Products by permitting bona fide distributors and resellers
to sell end-user licenses to Quarterdeck Licensed Products, by permitting
duplication and distribution of the Quarterdeck Licensed Products by OEMs, and
by permitting end-users to duplicate the Quarterdeck Licensed Products in
connection with site licenses and similar transactions provided that such
transactions are consistent with Symantec's normal business practices Symantec
will be responsible for manufacturing all Quarterdeck Licensed Products
distributed by it pursuant to this Agreement. Notwithstanding the foregoing,
Symantec will not enter into site licenses, OEM agreements or other arrangements
or agreements that provide for unlimited numbers of seats of the Quarterdeck
Licensed Products to be distributed or used for a single price or otherwise
allow any third party to create copies of the Quarterdeck Products without
reporting the number of copies made, distributed and used to Symantec. Symantec
will be entitled to modify the documentation for the Quarterdeck Licensed
Products and distribute such modified documentation with the Quarterdeck
Licensed Products, provided that Symantec will retain all Quarterdeck copyright,
trademark and similar notices in such documentation. The
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Quarterdeck Licensed Products will be distributed by Symantec or its OEMs with
an end-user license in substantially the form of the license set forth in
Exhibit C or such other form of license that provides substantially the same
protections to Quarterdeck.
2.2 DEVELOPMENT LICENSE FOR QUARTERDECK SOFTWARE. Subject to the
provisions of this Agreement, Quarterdeck hereby grants to Symantec a
nonexclusive, world-wide, non-transferable, license under all Quarterdeck
Intellectual Property Rights to use, copy, and create Derivative Works during
the term of this Agreement from the materials and information provided to
Symantec pursuant to Section 5.3 or from any Source Code of the Quarterdeck
Software (the Quarterdeck Source Code) that Symantec may obtain from the escrow
established pursuant to Section 7 solely for the purpose of developing,
localizing, compiling to binary form and supporting Derivative Works of the
Quarterdeck Software. Symantec may not distribute, sublicense or make available
to any third party the materials provided to Symantec pursuant to Section 5.3,
the Quarterdeck Source Code, or the Source Code for Derivative Works of the
Quarterdeck Source Code.
2.3 LICENSES TO AFFILIATES. Symantec's Affiliates shall have the benefit
of the Quarterdeck Licenses, provided that any such Affiliate shall also be
bound by the applicable obligations, limitations and covenants set forth in this
Agreement.
2.4 NO OTHER LICENSES. Neither party grants any other licenses or rights,
except as specifically set forth above. Without limiting the foregoing, Symantec
acknowledges that (i) it is not authorized and agrees not to decompile,
disassemble or otherwise reverse engineer the Quarterdeck Software unless and
until Symantec rightfully receives the Source Code therefor from the escrow
seferenced in Section 7, and (ii) it is granted no right to use or refer to
"CleanSweep" or any other Ouarterdeck trademark, trade name, trade dress or
other designation. Further, Symantec agrees not to advertise the expected
availabilily of the Quarterdeck Licensed Product from Symantec, except that
Symantec may disclose its intentions to incorporate the Quarterdeck Licensed
Product into its Norton Systemworks products after Consummation in response to
customer and media inquiries, may make disclosures that have been approved by
Quarterdeck and may also disclose the terms of this Agreement only in the manner
and to the extent required by applicable law.
3. DELIVERABLES. Promptly upon completion thereof, Quarterdeck will
deliver to Symantec the Object Code Deliverables relating to the enhancements of
the Quarterdeck Software created pursuant to Section 5.3. Quarterdeck shall
subsequently deliver each revision to such enhancements promptly after
completion thereof. Quarterdeck shall deposit the Source Code Deliverables for
the current version of the Quarterdeck Software with the escrow agent referenced
in Section 7 upon the establishment of such escrow and shall thereafter deposit
the Source Code Deliverables relating to enhancements of the Quarterdeck
Software created pursuant to Section 5.3 promptly after the creation thereof so
long as this Agreement and such escrow remain in force.
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4. PAYMENTS.
4.1 ROYALTIES. Symantec shall pay to Quarterdeck Royalties equal to 8% of
Net Revenue from the distribution or other revenue producing exploitation of
Quarterdeck Licensed Products, provided that the Royalty rate shall be 6% if the
Quarterdeck Distribution License commences because Quarterdeck is obligated to
pay a Company Fee (as defined in the Merger Agreement) as a result of a Willful
Breach (as defined in the Merger Agreement) of Section 5.2(a), (b) or (c) of the
Merger Agreement, and provided further that for copies of the Quarterdeck
Licensed Products the royalty per seat shall not be less than: (i) $1.25 in the
case of stand-alone sales of the Quarterdecks Software, (ii) $0.75 in the case
of bundles of the Quarterdeck software as part of Norton Systemworks and (iii)
$0.20 for OEM transactions (the number of seats in any transaction being equal
to the total number of users authorized to use the Quarterdeck Licensed Products
under such transaction) provided however, all such OEM transactions will allow
the Quarterdeck Licensed Products to be distributed only as part of a bundle
with other products that are marketed stand-alone in the retail channel, where
the Quarterdeck Licensed Products comprise less than 35% of the value of the
bundle as a whole (based on the retail prices of the components of the bundle
sold separately) and acquiring the Quarterdeck Software is not a primary reason
that customers typically acquire the bundle. No Royalties will be payable with
respect to copies of the Quarterdeck Licensed Products that are used internally
by Symantec or its Affiliates for non-revenue generating activities.
4.2 REPORTS AND ACCOUNTING. Royalties payable pursuant to this Section
shall be calculated and paid, on a quarterly basis, not more than 30 days after
the last day of the fiscal quarter in which the Net Revenue giving rise to such
Royalties are recognized by Symantec. Symantec shall deliver to Quarterdeck,
along with its payment of Royalties due for each quarter, a written report
showing, in detail, its calculation of Royalties payable with respect to such
quarter. At Quarterdeck's request, Symantec will also provide to Quarterdeck a
report of the number of Not-For-Resale copies distributed by Symantec for the
quarter. Symantec shall maintain such books and records as are necessary to
properly calculate the amounts of Royalties to be paid pursuant to this
Agreement. An independent certified public accountant selected by Quarterdeck
from any major accounting firm may, upon reasonable notice and during normal
business hours, but no more often than once each year, inspect the records of
Symantec. Any information revealed in such inspection shall be kept confidential
and not disclosed to anyone, except to the extent necessary to identify to
Quarterdeck, Symantec or any factfinder in any action instituted to enforce the
terms of this Agreement, any inaccuracy which may be found in the amount of
Royalties due to Quarterdeck. Quarterdeck shall bear the cost of any such audit,
except that if the audit reveals shortfall in payment of Royalties of 5% or
more, but not less than $10,000, Symantec shall pay for the reasonable cost of
such audit, and Quarterdeck may thereafter conduct a follow up audit at any time
at Symantec's expense. Symantec's determination of the payments due Quarterdeck
under this Agreement will be deemed conclusive unless, within 24 months from the
termination of the Agreement, Quarterdeck notifies Symantec in writing of any
error in such payments.
5. SUPPORT.
5.1. TECHNICAL SUPPORT. Symantec will be responsible for answering the
questions of and supporting the needs of its own customers. Quarterdeck will
provide Symantec with
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reasonable support by telephone and/or electronic mail, to answer Symantec's
questions and to assist Symantec in supporting Symantec's customers with respect
to the Quarterdeck Software. Quarterdeck will also provide Symantec, and its
customers, with support in person on a time and materials basis at Quarterdeck's
then standard published rates therefor.
5.2. TRAINING. Quarterdeck will make available at Symantec's facilities in
Santa Monica, California, on a mutually agreed date no later than November 15,
1998, qualified members of its staff to provide training of employees of
Symantec relating to the Quarterdeck Software, in sufficient detail as to
provide Symantec's technical support, marketing and sales people with sufficient
knowledge to permit proper marketing and distribution of the Quarterdeck
Software. The training contemplated by this Section shall not exceed a total of
sixteen (16) hours.
5.3 CUSTOMIZATION. Within one business day after the Effective Date,
Quarterdeck shall provide Symantec or a third party engaged by Symantec and
acceptable to Quarterdeck such information as Symantec shall reasonably require
to (i) modify graphical elements of the user interface (such as icons or splash
screens) of the Quarterdeck Licensed Product (but not modify the structure or
sequences associated with such user interface), (ii) reasonably integrate the
Quarterdeck Licensed Product with the Symantec products included in Symantec's
Norton SystemWorks bundle with respect to installation, automatic updating,
changing all of the registry keys to place them under the Symantec software
registry key and on-line registration, as well as by making changes to the About
Box and to graphical elements (bit maps) of the user interface as provided in
clause (i) above, and (iii) translate the Quarterdeck Licensed Product into
foreign languages. Additionally, commencing upon the Effective Date, a
reasonable number of Symantec's personnel or a third party engaged by Symantec
and acceptable to Quarterdeck may be resident at Quarterdeck's facility and work
with Quarterdeck personnel to integrate the Quarterdeck Licensed Product with
Symantec's Norton SystemWorks products as provided above. To the extent that
Quarterdeck's personnel are unable or unwilling to timely make the changes
required hereunder, such Symantec personnel will be given reasonable access to
those parts of the Source Code, if any, for the Quarterdeck Licensed Products
required for the sole purpose of creating the modifications authorized by this
Section 5.3. Promptly after completion of such modifications, Quarterdeck will
compile a version or versions of such modified Quarterdeck Licensed Products and
provide the executable form of such modified Quarterdeck Licensed Products to
Symantec for testing. Quarterdeck will use commercially reasonable efforts to
make or, at its option, will allow Symantec to make such corrections as are
required to repair errors in such modified Quarterdeck Licensed Products that
were introduced by any of the work done pursuant to this Section 5.3 and will
promptly provide such corrected versions of the Quarterdeck Licensed Products
upon completion to Symantec for further testing. This process will be repeated
until Symantec is reasonably satisfied with the work performed pursuant to this
Section 5.3. Quarterdeck shall establish and notify Symantec of rules for
Symantec's personnel intended to ensure that such personnel do not receive
sensitive or confidential information of Quarterdeck. Within two days after the
Effective Date, Quarterdeck shall provide Symantec with the entire help system,
the related FrameMaker files and those things necessary to incorporate the
foregoing into Symantec's products. Provided that Symantec's personnel abide in
all respects by such rules and that Symantec does not breach its obligations to
complete Consummation and
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acquire Quarterdeck under the Merger Agreement, Quarterdeck covenants not to sue
Symantec for misappropriation of trade secret information based solely on
Symantec's use of information obtained by such personnel while at Quarterdeck's
facility pursuant to this Section 5.3. In addition to the changes described
above, Quarterdeck will, subject to Section 11, make such changes as are
required to substitute Symantec's trademarks for Quarterdeck's trademarks, trade
names or trade dress from the Quarterdeck Products. The parties understand and
agree that Symantec is granted no right to distribute or otherwise exploit any
of the software, materials or information provided to it under this Section 5.3
unless and until the Quarterdeck Distribution License commences.
6. TERM AND TERMINATION.
6.1 TERM. The Quarterdeck Development License will commence upon the
Effective Date. The Quarterdeck Distribution License will commence upon the
earliest to occur of (i) Consummation or (ii) an event giving rise to an
obligation on the part of Quarterdeck to pay a Company Fee (as defined in the
Merger Agreement). If the Merger Agreement terminates before the Consummation
for any reason other than the occurrence of such an event, then Symantec shall
neither have nor exercise any rights under the Quarterdeck Licenses, and this
Agreement shall immediately terminate upon such termination of the Merger
Agreement.
6.2 TERMINATION OF THE LICENSE FOR BREACH. The term of this Agreement
shall begin on the Effective Date and will terminate immediately if after the
Consummation, Symantec fails to close the Merger (as defined in the Merger
Agreement) in accordance with the terms of the Merger Agreement or if the Merger
has not occurred by January 31, 1999 and the Merger Agreement has not been
terminated as a result of an event giving rise to an obligation on the part of
Quarterdeck to pay a Company Fee. The term of this Agreement will terminate 30
days after the receipt by either party of written notice that it is in material
breach of any terms of this Agreement, unless such party cures such breach
within such 30-day period. For purposes of this Agreement, a material breach
will be a breach or series or pattern or breaches that lead to loss or damage of
no less than $350,000 in the aggregate to the non-breaching party. Any such
notice shall provide, in reasonable detail, a description of the alleged breach
and the requested cure of that breach. Provided however, that if Symantec
disputes the right of Quarterdeck to terminate this Agreement for the reasons
specified in such notice and notifies Quarterdeck thereof promptly after
receiving the notice of breach, then the parties agree that the licenses granted
to Symantec hereunder shall continue to remain in full force and effect until
Symantec is found to have committed and not timely cured a material breach under
the dispute resolution process provided for in Section 6.4.
6.3 POST TERMINATION RIGHTS. Any termination of this Agreement shall not
affect the rights of any distributor, dealer, reseller or end-user that has
received the Quarterdeck Licensed Products from a party in accordance with the
terms of this Agreement prior to its termination, provided that after notice of
termination of this Agreement, Symantec shall not have the right to distribute
quantities of the Quarterdeck Licensed Products that are disproportionate to the
quantities distributed prior to that time. Upon termination of this Agreement,
Symantec will return to Quarterdeck all of the Quarterdeck Source Code, if any,
in its possession or control, and
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Symantec shall immediately cease any sale, license or other distribution of
Quarterdeck Licensed Products. Further, notwithstanding the foregoing, if such
termination was after Consummation and Symantec fails to close the Merger in
accordance with the terms of the Merger Agreement or if the Merger has not
occurred by January 31, 1999, then the rights of distributors, dealers and
resellers to distribute the Quarterdeck Products shall immediately terminate..
The provisions of this Agreement that, by their sense and context, are intended
to survive termination of this Agreement (including without limitation all
obligations of confidentiality) shall survive termination and remain fully
enforceable thereafter.
6.4 DISPUTE RESOLUTION PROCEDURE. If an alleged breach is not cured to the
non-breaching party's satisfaction, or if the breaching party disputes the
allegation of breach, the determination of whether a breach occurred and whether
the breach was cured will be resolved by a single arbitrator in Los Angeles,
California, in accordance with the Expedited Procedures of the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA") then in
force. Such arbitrator shall be an attorney with substantial experience
representing retail software companies. The arbitration shall be governed by the
United States Arbitration Act, and judgment upon the award rendered by the
arbitrator may be entered by any court having jurisdiction thereof.
Notwithstanding the Expedited Procedures of the Commercial Arbitration Rules of
the AAA, the parties agree that the AAA shall appoint the arbitrator without the
parties submitting lists of requested arbitrators. In addition, the arbitrator
shall be instructed to complete any hearings and render his or her award within
thirty (30) days after his or her appointment or as soon thereafter as is
reasonably possible consistent with providing each party a meaningful
opportunity to conduct such discovery as is reasonably necessary and otherwise
prepare and present its arguments. The arbitrator shall grant such orders and
impose such sanctions as are reasonably required to conform to the foregoing
schedule.
7. SOURCE CODE ESCROW. Upon the execution of this Agreement Symantec and
Quarterdeck shall enter into an agreement with an escrow in the form attached as
Exhibit D hereto pursuant to which such escrow agent shall hold a copy of the
Source Code Deliverables for the Quarterdeck Software. The escrow agreement
shall require the escrow agent to release such Source Code Deliverables to
Symantec upon commencement of the Quarterdeck Distribution License. Symantec
shall pay the fees of the escrow agent. Prior to the execution hereof,
Quarterdeck has delivered the Source Code Deliverables described on Exhibit B to
the escrow agent.
8. REPRESENTATIONS AND WARRANTIES; LIMITATIONS
8.1 REPRESENTATIONS AND WARRANTIES OF QUARTERDECK. Quarterdeck hereby
represents and warrants that:
(a) Quarterdeck has authorized the person who has signed this
Agreement for Quarterdeck to execute and deliver this Agreement to Symantec on
behalf of Quarterdeck, and Quarterdeck has the full power and authority to enter
into this Agreement and grant the rights and fulfill the obligations set forth
herein, provided that nothing in this Section 8.1(a) is intended or should be
construed to grant any representation or warranty regarding non-infringement of
any
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third party intellectual property right by the Quarterdeck Software or any use,
distribution or other exploitation thereof;
(b) Quarterdeck has not previously granted and will not grant any
rights in the Quarterdeck Software to any third party that conflict with the
rights granted to Symantec herein, provided that Symantec acknowledges that
Quarterdeck has granted to a third party certain exclusive right to distribute
Japanese language versions of the Quarterdeck Licensed Products in Japan and has
granted such other rights with respect to the Quarterdeck Software as are
disclosed in the Merger Agreement or the schedules, exhibits or other
attachments thereto; and
(c) Quarterdeck warrants that, the Quarterdeck Software does not
violate the, copyrights, trade secret rights, or other similar proprietary or
contractual rights of any third party, and Quarterdeck has not received any
claim to that effect. Symantec acknowledges and understands that Quarterdeck has
not performed any patent search or otherwise undertaken to determine whether the
Quarterdeck Software infringes any patent.
8.2 REPRESENTATIONS AND WARRANTIES OF SYMANTEC. Symantec hereby represents
and warrants that it has authorized the person who has signed this Agreement for
Symantec to execute and deliver this Agreement to Quarterdeck on behalf of
Symantec, and Symantec has the full power and authority to enter into this
Agreement and fulfill the obligations set forth herein.
8.3 GENERAL DISCLAIMER. EXCEPT AS SPECIFIED IN THIS AGREEMENT ALL EXPRESS
OR IMPLIED REPRESENTATIONS AND WARRANTIES, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT, ARE
HEREBY DISCLAIMED.
9. LIMITATION OF LIABILITY. IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY
INDIRECT, INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT (INCLUDING LOSS OF PROFITS, USE, DATA, OR OTHER
ECONOMIC ADVANTAGE), NO MATTER WHAT THEORY OF LIABILITY, EVEN IF THE REMEDIES
PROVIDED FOR IN THIS AGREEMENT FAIL OF THEIR ESSENTIAL PURPOSE AND EVEN IF
EITHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OR PROBABILITY OF SUCH DAMAGES.
Nothing herein shall preclude a party from seeking equitable remedies in an
appropriate case. Except for the indemnity provisions of Section 10 and the
confidentiality provisions in Section 12(a), (i) the liability of Quarterdeck
under this Agreement shall be limited to the amounts paid to it by Symantec
hereunder during the one year period ending upon accrual of such liability, and
Symantec's liability shall be limited to the same amount, except that Symantec's
obligation to make the payments described in this Agreement shall be in addition
to such amount. FURTHER, THE EXCLUSIONS OF DAMAGES AND LIMITATIONS OF LIABILITY
STATED ABOVE SHALL REMAIN IN EFFECT, EVEN IF THE EXCLUSIVE REMEDIES PROVIDED FOR
IN THIS AGREEMENT FAIL OF THEIR ESSENTIAL PURPOSE. Nothing in this Section 9
shall in any way limit any right or remedy available to either party for any
infringement or misappropriation of such party's copyrights, patents,
trademarks, trade secrets, or other intellectual property rights.
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10. INDEMNIFICATION.
10.1 BY QUARTERDECK. Quarterdeck shall, at its expense and Symantec's
request, defend any claim brought against Symantec and Symantec's affiliates,
directors, officers, employees, agents and independent contractors, (a) that the
Quarterdeck Software infringes any United States copyrights or trade secrets; or
(b) which, if true, would constitute a breach of a warranty by Quarterdeck in
Section 8.1, and Quarterdeck will pay any damages awarded by a court of
competent jurisdiction in a final, unappealable judgment for such claim or any
amount owing in settlement of such claim, provided that Symantec tenders sole
control of the defense and settlement of such claim to Quarterdeck and
reasonably cooperates in the defense thereof.
10.2 BY SYMANTEC. Symantec shall, at its expense and Quarterdeck's request,
defend any claim brought against Quarterdeck and Quarterdeck's affiliates,
directors, officers, employees, agents and independent contractors, based on any
allegation that Symantec's business practices with respect to the Software are
unlawful or unethical, on allegations of Symantec's negligence, recklessness,
willful misconduct, on allegations by Marubeni Corporation that Symantec's
distribution of Japanese language versions of the Quarterdeck Products violated
Marubeni Corporation's rights under the agreement between Quarterdeck and
Marubeni dated September 29, 1997, or on allegations that, if true, would
constitute a breach of this Agreement, and Symantec will pay any damages awarded
by a court of competent jurisdiction in a final, unappealable judgment for such
claim or any amount owing in settlement of such claim, provided that Symantec
tenders sole control of the defense and settlement of such claim to Quarterdeck
and reasonably cooperates in the defense thereof.
11. PROTECTION OF RIGHTS. As an express condition of this Agreement, each party
will apply to any works created, copied or distributed under the Licenses
applicable copyright and other proprietary rights notices sufficient to protect
each party's rights in such works. Each party will retain the ownership to its
trademarks and tradenames and, except as expressly provided in this Agreement,
neither party will have any right to use the trademarks or tradenames of the
other party.
12. GENERAL.
(a) CONFIDENTIALITY. Each party acknowledges that in the course of the
relationship contemplated by this Agreement it will receive information which is
confidential and proprietary to the other. Each party agrees not to use such
information except in performance of this Agreement and not to disclose such
information to third parties. Such confidential and proprietary information
includes, without limitation, the parties' current and future business plans,
and other information which is stamped or marked as confidential by such party
and any other information disclosed by such party if, within 30 days of
disclosure, whether orally or by way of written documents, such party identifies
by written notice to the other the confidential nature of such information.
Without limiting the foregoing, any Source Code shall be deemed confidential
information regardless of whether so marked or identified. The foregoing
restrictions will not apply to information that (a) has been independently
developed other than pursuant to this Agreement and without reference to the
disclosing party's information, (b) has
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become publicly known through no wrongful act of the party wishing to make use
of such information, (c) has been rightfully received from a third party
authorized to make such disclosure without restriction, (d) has been approved
for release in writing, or (e) is required to be disclosed by law, provided that
the party required to make such disclosure shall be required to make reasonable
efforts, consistent with applicable law, to limit the scope and nature of such
required disclosure.
(b) EQUITABLE RELIEF. Each party acknowledges that any breach of its
obligations under this Agreement with respect to the proprietary rights or
confidential information of the other will cause the other irreparable injury
for which there are inadequate remedies at law, and that the injured party will
be entitled to equitable relief with respect to any such breach in addition to
all other remedies provided by this Agreement or available at law.
(c) GOVERNING LAW. This Agreement will be governed and interpreted in
accordance with the laws of the State of California, except for that body of law
pertaining to conflicts of law. Venue for any legal action shall be proper in
the state and federal courts of California, and Symantec and Quarterdeck each
expressly consent to venue and jurisdiction therein.
(d) RELATIONSHIP OF PARTIES. Quarterdeck's relationship with Symantec
during the term of this Agreement will be that of an independent contractor.
Neither party will have, and neither party will represent that it has, any
power, right or authority to bind the other party, or to assume or create any
obligation or responsibility, express or implied, on behalf of the other party
or in the other party's name, except as herein expressly provided. Nothing
stated in this Agreement shall be construed as constituting Quarterdeck and
Symantec as partners or as creating the relationships of employer/employee,
franchiser/franchisee, or principal/agent between the parties; provided that
nothing herein shall limit the parties respective rights and obligations under
the Merger Agreement.
(e) ATTORNEYS' FEES. In the event that any legal action is required
in order to enforce or interpret any of the provisions of this Agreement, the
prevailing party in such action shall recover all reasonable costs and expenses,
including attorney's fees, incurred in connection therewith.
(f) WAIVER. The failure of either party to enforce any provision of
this Agreement shall not be deemed a waiver of that or any other provision of
this Agreement.
(g) HEADINGS; INTERPRETATION. The headings of the Sections of this
Agreement are for convenience only and will not be of any effect in construing
the meanings of the Sections. Because both parties have participated in the
drafting of this Agreement, there shall be no presumption that the terms of the
Agreement should be interpreted against the drafting party.
(h) SEVERABILITY. If any of the provisions of this Agreement are
found or deemed by a court of competent jurisdiction to be invalid or
unenforceable, they shall be severable from the remainder of the Agreement and
shall not cause the invalidity or unenforceability of the Agreement.
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(i) NOTICES. Notices to either party shall be in writing and shall be
deemed delivered when served in person or three Business Days after being
deposited in the United States mail, first-class certified mail, postage
prepaid, return receipt requested, or one Business Day after being dispatched by
a nationally recognized one-day express courier service addressed as follows:
if to Symantec, to Symantec Corporation
10201 Torre Ave.
Cupertino, CA 95014
Attention: General Counsel
if to Quarterdeck, to
Quarterdeck Corporation
13160 Mindanao Way
Marina del Rey, CA 90292
Attention: Chief Executive Officer with a copy to Quarterdeck's General Counsel
at the same address and to Quarterdeck's outside counsel:
Schwartz and Associates
333 South Grand Avenue, Suite 3950
Los Angeles, California 90071
Attention: Brad Schwartz
(j) ENTIRE AGREEMENT. This Agreement (and, to the extent referenced
herein, the Merger Agreement) constitutes the entire agreement between the
parties pertaining to the subject matter hereof, and supersedes in their
entirety any and all written or oral agreements previously existing between the
parties with respect to such subject matter (provided that this Agreement shall
not supercede the Merger Agreement or any agreement ancillary or entered into
pursuant thereto). Any modifications of this Agreement must be in writing and
signed by duly authorized officers of each party hereto.
(k) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which when so executed shall be deemed an original, and
all of which together shall constitute one and the same instrument.
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(l) This Agreement shall be binding upon and inure to the benefit of
each of the parties hereto and, except as otherwise provided herein, their
respective legal successors and permitted assigns, provided however that neither
party shall assign, voluntarily or involuntarily or by operation of law, or
otherwise, any part of this Agreement unless in connection with such party's
assignment to an entity which it then controls, is under the control of, or is
under common control with or in connection with a transfer of substantially all
assets of such party, or with the prior written consent of the other party.
Notwithstanding the foregoing, Quarterdeck may assign this Agreement, including
without limitation all of Quarterdeck's rights, remedies, obligations and duties
of performance, in connection with a sale or assignment of the Intellectual
Property Rights in the Quarterdeck Licensed Products.
The parties have executed this Agreement on the Effective Date.
SYMANTEC CORPORATION QUARTERDECK CORPORATION
By: By:
------------------------------ ------------------------------
Printed Name: Printed Name:
-------------------- -------------------
Title: Title:
-------------------------- --------------------------
SYMANTEC LIMITED
By:
------------------------------
Printed Name:
-------------------
Title:
--------------------------
<PAGE> 14
EXHIBIT A
QUARTERDECK SOFTWARE
Quarterdeck Software means (a) the product distributed by Quarterdeck under the
name "CleanSweep," and (b) any updates, upgrades or other revisions to
CleanSweep.
<PAGE> 15
EXHIBIT B
DELIVERABLES
The Source Code Deliverables with respect to Quarterdeck Software shall include
the following:
Copies of machine-readable Source Code for the then current versions of the
Quarterdeck Software.
Copies of system build instructions such that Symantec can rebuild the
Quarterdeck Software from the Source Code provided.
Copies of existing Quarterdeck technical documentation for those
maintaining and supporting the Quarterdeck Software.
Copies of any tools written by Quarterdeck for the development of the
Quarterdeck Software and the instructions for their operation.
Copies of existing testing materials developed by Quarterdeck for the
Quarterdeck Software.
User manual source files
Any technical specs, design docs, etc. that exist for the code
Test cases, tools and plans, including DBCS and Hi-ASCII cases/plans -any
in-house localization tools written for the product
Bug database and top known issues (i.e, were they planning any inlines to
fix bugs causing major support issues?)
Any techsupport documents or databases
List of scripts and script-creation documentation
The Object Code Deliverables for the Quarterdeck Software shall include the
following:
Electronic masters for all associated end-user documentation for the
Software.
Golden master disks of the binary executable form of the then current
version of the Quarterdeck Software, electronic masters for all associated
end-user documentation for the Quarterdeck Software, and copies of all
available technical support and customer support materials, provided that
Quarterdeck shall have no obligation to identify or disclose any
information regarding its customers.
<PAGE> 16
EXHIBIT C
END USER LICENSE
SYMANTEC END-USER LICENSE
NOTICE: SYMANTEC LICENSES THE ENCLOSED SOFTWARE TO YOU ONLY UPON THE CONDITION
THAT YOU ACCEPT ALL OF THE TERMS CONTAINED IN THIS LICENSE AGREEMENT. PLEASE
READ THE TERMS CAREFULLY BEFORE OPENING THIS PACKAGE, AS OPENING THE PACKAGE
WILL INDICATE YOUR ASSENT TO THEM. IF YOU DO NOT AGREE TO THESE TERMS, THEN
SYMANTEC IS UNWILLING TO LICENSE THE SOFTWARE TO YOU, IN WHICH EVENT YOU SHOULD
RETURN THE FULL PRODUCT WITH PROOF OF PURCHASE TO THE DEALER FROM WHOM IT WAS
ACQUIRED WITHIN SIXTY DAYS OF PURCHASE, AND YOUR MONEY WILL BE REFUNDED.
LICENSE AND WARRANTY:
The software which accompanies this license (the "Software") is the property of
Symantec or its licensors and is protected by copyright law. While Symantec
continues to own the Software, you will have certain rights to use the Software
after your acceptance of this license. Except as may be modified by a license
addendum which accompanies this license, your rights and obligations with
respect to the use of this Software are as follows:
o You may:
(i) use one copy of the Software on a single computer;
(ii) make one copy of the Software for archival purposes, or copy the software
onto the hard disk of your computer and retain the original for archival
purposes;
(iii) use the Software on a network, provided that you have a licensed copy of
the Software for each computer that can access the Software over that network;
(iv) after written notice to Symantec, transfer the Software on a permanent
basis to another person or entity, provided that you retain no copies of the
Software and the transferee agrees to the terms of this agreement; and
(v) if a single person uses the computer on which the Software is installed at
least 80% of the time, then after returning the completed product registration
card which accompanies the Software, that person may also use the Software on a
single home computer.
o You may not:
<PAGE> 17
(i) copy the documentation which accompanies the Software;
(ii) sublicense, rent or lease any portion of the Software;
(iii) reverse engineer, decompile, disassemble, modify, translate, make any
attempt to discover the source code of the Software, or create derivative works
from the Software; or
(iv) use a previous version of the Software after you have received an upgraded
version as a replacement of the prior version. Upon upgrading the Software, all
copies of the prior version must be destroyed.
o Sixty Day Customer Satisfaction Guarantee:
If you are the original licensee of this copy of the Software and are
dissatisfied with it for any reason, you may return the complete product,
together with your receipt, to Symantec or an authorized dealer, postage
prepaid, for a full refund at any time during the sixty day period following the
delivery to you of the Software.
o Limited Warranty:
Symantec warrants that the media on which the Software is distributed will be
free from defects for a period of sixty (60) days from the date of delivery of
the Software to you. Your sole remedy in the event of a breach of this warranty
will be that Symantec will, at its option, replace any defective media returned
to Symantec within the warranty period or refund the money you paid for the
Software. Symantec does not warrant that the Software will meet your
requirements or that operation of the Software will be uninterrupted or that the
Software will be error-free.
THE ABOVE WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES,
WHETHER EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT. THIS WARRANTY GIVES YOU
SPECIFIC LEGAL RIGHTS. YOU MAY HAVE OTHER RIGHTS, WHICH VARY FROM STATE TO
STATE.
o Disclaimer of Damages:
REGARDLESS OF WHETHER ANY REMEDY SET FORTH HEREIN FAILS OF ITS ESSENTIAL
PURPOSE, IN NO EVENT WILL SYMANTEC OR ITS LICENSORS BE LIABLE TO YOU FOR ANY
SPECIAL, CONSEQUENTIAL, INDIRECT OR SIMILAR DAMAGES, INCLUDING ANY LOST PROFITS
OR LOST DATA ARISING OUT OF THE USE OR INABILITY TO USE THE SOFTWARE EVEN IF
SYMANTEC HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
SOME STATES DO NOT ALLOW THE LIMITATION OR EXCLUSION OF LIABILITY
2
<PAGE> 18
FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES SO THE ABOVE LIMITATION OR EXCLUSION MAY
NOT APPLY TO YOU.
IN NO CASE SHALL THE LIABILITY OF SYMANTEC OR ITS LICENSORS EXCEED THE
PURCHASE PRICE FOR THE SOFTWARE. The disclaimers and limitations set forth above
will apply regardless of whether you accept the Software.
o U.S. Government Restricted Rights:
RESTRICTED RIGHTS LEGEND. Use, duplication, or disclosure by the Government is
subject to restrictions as set forth in subparagraph (c) (1) (ii) of the Rights
in Technical Data and Computer Software clause at DFARS 252.227-7013 or
subparagraphs (c) (1) and (2) of the Commercial Computer Software-Restricted
Rights clause at 48 CFR 52.227-19, as applicable, Symantec Corporation,
[Address].
o General:
This Agreement will be governed by the laws of the State of California. This
Agreement may only be modified by a license addendum which accompanies this
license or by a written document which has been signed by both you and Symantec.
Should you have any questions concerning this Agreement, or if you desire to
contact Symantec for any reason, please write: Symantec Customer Sales and
Service, [address.]
3
<PAGE> 19
EXHIBIT D
FORM OF SOURCE CODE ESCROW AGREEMENT
ESCROW AGREEMENT
Account Number:
This Escrow Agreement (this "Agreement") is effective October 15, 1998 (the
"Effective Date") by and among Data Securities International, Inc., a Delaware
corporation with offices at 425 California Street, Suite 1450, San Francisco,
California 94104 ("Escrow Agent"), Quarterdeck Corporation, a Delaware
corporation with principal offices at 13160 Mindanao Way, Marina del Rey,
California 90292 ("Quarterdeck") and Symantec Corporation, a Delaware
corporation with principal offices at 10201 Torre Avenue, Cupertino, California
95014 ("Symantec").
Recitals
This Agreement is entered into in furtherance of the provisions and
objectives of that certain Agreement and Plan of Merger (the "Merger Agreement")
among Quarterdeck, Symantec, and McGuire Acquisition Corporation, dated October
15, 1998 , and a License Agreement (the "License Agreement") between Symantec
and Quarterdeck. The License Agreement provides that under certain conditions
Symantec shall have the right to receive a license to the Quarterdeck Software,
as defined in Exhibit A, and that Quarterdeck shall place in escrow the
Deliverables identified in Exhibit B.
Agreement
For valuable consideration, the parties agree as follows:
1. Deposit. Quarterdeck has heretofore deposited with Escrow Agent the
Source Code Deliverables (as defined in the License Agreement) (the "Deposit").
Symantec has verified that the initial Deposit includes the appropriate
Deliverables. If there are changes to the Quarterdeck Software that are released
to the public, Quarterdeck shall keep the Deposit current by adding or
substituting materials within two business days after such changes are released
to the public. Upon any such additional or replacement Deposit, Escrow Agent
will, if requested by Symantec, build the binary version of the Quarterdeck
Software from the materials included in the Deposit and deliver the resulting
executable program to Symantec. Symantec may then verify that the Deposit is
complete by comparing the executable program delivered by the Escrow Agent to
the then current
4
<PAGE> 20
version of the Quarterdeck Software.
2. Retention of Replaced Deposit. Escrow Agent will retain any replaced
Deposit (including any replacement of a portion of the Deposit) unless Escrow
Agent has been instructed by Symantec within 10 business days of notice from
Escrow Agent to destroy it. Retention of the replaced Deposit may result in an
additional fee, as specified in Escrow Agent's fee schedule, to be paid by
Symantec.
3. Verification and Delivery of Deposit to Escrow Agent. Risk of loss or
damage during shipment of the Deposit or any replacement Deposit to Quarterdeck
or Escrow Agent shall rest with Quarterdeck. Accordingly, Escrow Agent shall
follow any instructions provided by Quarterdeck regarding transport or shipment
of the Deposit. The Deposit shall be packaged for storage as reasonably
determined by Escrow Agent and accompanied by a cover sheet identifying the
contents as indicated in Exhibit A. Escrow Agent shall give written notice to
Symantec of any replacement Deposit or other addition or substitution of
materials in the Deposit within three business days after such replacement
Deposit.
4. Obligations of Escrow Agent. Escrow Agent shall safekeep the Deposit
in a security vault and exercise the same high standard of care to protect the
Deposit which Escrow Agent would use to protect items of this nature which
Escrow Agent might own, but in no event less than that standard of care
customary in the industry.
5. Term of Agreement. This Agreement shall have an initial term of six
months, renewable upon receipt by Escrow Agent of the specified renewal fee. If
Escrow Agent does not receive the renewal fee by the expiration date, Escrow
Agent shall give notice to Symantec. If the fee is not received from Symantec
within thirty days of such notice, this Agreement shall expire. Upon expiration
of this Agreement, Escrow Agent will return the Deposit to Quarterdeck. All
obligations of Escrow Agent under this Agreement shall terminate thereafter,
except for those obligations set forth in Section 9 below. In no event shall
this Agreement be renewed after expiration or termination of the Merger
Agreement or the License Agreement.
6. Delivery of Deposit to Symantec. If Symantec notifies Escrow Agent of
the occurrence of a release condition as defined in Exhibit C, Escrow Agent
shall immediately notify Quarterdeck in writing and provide Quarterdeck with a
copy of the notice from Symantec. Quarterdeck shall have ten business days from
the date of receipt of such written notice from Escrow Agent to notify Escrow
Agent, with a copy to Symantec, that the release condition has not occurred.
Failing such timely notice from Quarterdeck, Escrow Agent shall release the
Deposit to Symantec. Upon release of the deposit, Symantec shall have the
license to use the Deposit as set forth in the License Agreement (the
"Development License"). However, if Escrow Agent receives timely notice from
Quarterdeck, Escrow Agent shall not release the Deposit but shall instead notify
the parties that there is a dispute, and subject to Section 5, Escrow Agent will
continue to hold the Deposit until such dispute is resolved.
5
<PAGE> 21
Symantec shall in no event use the Deposit except to the extent
permitted under the Development License. Further, Symantec shall not disclose
the Deposit or any part thereof to any person or entity, except that, after
rightful receipt of the Deposit hereunder, Symantec may disclose the Deposit to
its employees who require access to the Deposit to allow Symantec to exercise
its rights under the Development License, provided that such employees have
first agreed in writing to refrain from disclosing the Deposit except as
permitted under this Agreement. Symantec shall protect the Deposit using the
same standard of care it uses to protect its own most valuable source code, but
in no event less care than is prudent and customary under the circumstances.
Symantec's obligations under this paragraph shall survive any termination or
expiration of this Agreement.
7. Dispute Resolution Process. Escrow Agent shall first notify
Quarterdeck and Symantec in writing of contrary instructions from Symantec and
Quarterdeck for release of the Deposit (the "Dispute Notice"). Within five
business days after the Dispute Notice is sent by Escrow Agent, Symantec and
Quarterdeck shall each appoint a referee, and the referees so appointed shall
jointly appoint a third referee (the "Neutral Referee"). Quarterdeck and
Symantec shall each notify the other parties of its referee's identity within
such five-day period.
Within ten business days after the Dispute Notice, Symantec and
Quarterdeck shall use their respective best efforts to cause the referees to
meet at a mutually acceptable location and to hear testimony and other evidence
that Quarterdeck and Symantec may wish to present with respect to the dispute.
The meetings shall proceed with all referees present, and shall be conducted
from 9:30 a.m. to 5:00 p.m. on no more than three consecutive business days .
Symantec shall present up to one day of evidence followed by up to one day of
presentation from Quarterdeck, followed by a final day reserved for rebuttal by
each party, concluding with Quarterdeck's rebuttal. Quarterdeck, Symantec and
Escrow Agent agree that the evidence presented at the hearings which is
designated as confidential shall not be disclosed to other third parties except
as required by law. Within two business days after the close of the
presentations, the referees shall resolve the dispute by majority vote. Any
refusal to vote by one of the referees appointed by a party shall be deemed an
abstention by that referee. If the there is no majority vote and the Neutral
Referee refuses to vote, then the referees appointed by the parties shall
appoint a replacement Neutral Referee as soon as possible, and the process
described in this paragraph shall be repeated.
This dispute resolution process shall be the exclusive means for
resolving disputes to which it applies, and the decision of the referees shall
be final, conclusive and enforceable by a court of competent jurisdiction. All
costs of the referees shall be borne by the unsuccessful party.
8. Joint Instructions. Symantec and Quarterdeck may, by joint written
instruction to Escrow Agent, authorize the delivery of the Deposit to the party
named in the instruction; provided that Escrow Agent shall not comply with any
such instructions unless it notifies
6
<PAGE> 22
Quarterdeck of such instructions and Escrow Agent's intention to release the
Deposit to Symantec and Quarterdeck confirms such instructions in writing.
Escrow Agent shall in any event wait not less than five business days after
sending such notice before releasing the Deposit, even if it earlier receives
such confirmation.
9. Use and Nondisclosure. Except as provided in this Agreement, Escrow
Agent shall not copy, disclose or make any use whatsoever of the Deposit. Escrow
Agent shall not disclose or make use of any confidential information provided to
Escrow Agent by Quarterdeck in connection with this Agreement without the prior
written consent of Quarterdeck. Escrow Agent shall not disclose or make use of
any confidential information provided to Escrow Agent by Symantec in connection
with this Agreement without the prior written consent of Symantec. These
obligations shall continue indefinitely notwithstanding termination of this
Agreement.
10. Records and Audit Rights. Escrow Agent shall keep complete written
records of the activities undertaken and materials prepared pursuant to this
Agreement. Upon reasonable notice to Escrow Agent during the term of this
Agreement, each of Quarterdeck and Symantec shall be entitled at reasonable
times during normal business hours at Escrow Agent's facilities to inspect the
records of Escrow Agent with respect to this Agreement.
11. Designated Representative. Quarterdeck, Symantec and Escrow Agent
shall each designate an authorized individual to receive notices and otherwise
act on behalf of each such party in connection with this Agreement. Failing
designation, notices shall be sent to the signatories to this Agreement.
12. Notices. All notices in connection with this Agreement shall be in
writing given to the parties at their respective addresses shown above (or such
other address as may be designated by a party in writing to the other parties)
by being personally delivered, sent by overnight, pre-paid air freight, or sent
by registered or certified mail, return receipt requested, and shall be
effective upon receipt if personally delivered, upon two business days after
deposit if sent by air freight, or upon five business days after deposit if sent
with the U.S. Postal Service.
13. Fees. All fees shall be due in full within thirty (30) days of the
date of Escrow Agent's invoice. Symantec shall pay the fees due. Fees shall be
those specified in Escrow Agent's schedule of fees in effect for the term of
this Agreement plus applicable taxes. Escrow Agent shall notify Symantec at
least ninety days prior to expiration of the term (or any renewal term) of this
Agreement of any scheduled increase of the fees payable for succeeding renewal
terms.
14. Authenticity. Subject to Section 8, Escrow Agent may act in reliance
upon any instruction, instrument or signature believed to be genuine and may
assume that it has been duly authorized.
15. Indemnification. Escrow Agent shall be responsible to perform its
7
<PAGE> 23
obligations under this Agreement and to act in a reasonable and prudent manner
with regard to this escrow arrangement. Provided Escrow Agent has acted in the
manner stated in the preceding sentence, Symantec and Quarterdeck each agree to
indemnify, defend and hold harmless Escrow Agent from any and all claims,
actions, damages, arbitration fees and expenses, costs, attorney's fees and
other liabilities incurred by Escrow Agent relating in any way to this escrow
arrangement.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
17. Complete Agreement. This Agreement, including the Exhibits,
constitutes the entire agreement between the parties concerning the subject
matter and shall supersede all previous communications, representations,
understandings, and agreements, either oral or written, between the parties.
Without limiting the generality of the foregoing sentence, this Agreement shall
specifically supplant and replace the Interim Escrow Agreement among the parties
dated as of October 13, 1998 (the "Interim Agreement"). The parties acknowledge
and agree that the Interim Agreement shall terminate as of the date hereof, and
that the deposit under the Interim Agreement shall hereafter be governed by this
Agreement.
18. Severability. If any provision of this Agreement is held by any court
to be invalid or unenforceable, then that provision will be severed from this
Agreement and the remaining provisions shall continue in force.
19. Exhibits. The following Exhibit is made a part of this Agreement by
this reference:
Exhibit A: Quarterdeck Software
Exhibit B: Deliverables
Exhibit C: Release Conditions
QUARTERDECK CORPORATION SYMANTEC CORPORATION
- ---------------------------- ----------------------------
By: By:
Its: Its:
8
<PAGE> 24
DATA SECURITIES INTERNATIONAL, INC.
- ----------------------------
By:
Its:
9
<PAGE> 25
EXHIBIT A
QUARTERDECK SOFTWARE
Quarterdeck Software means (a) the product distributed by Quarterdeck under the
name "CleanSweep," and (b) any updates or upgrades to CleanSweep.
<PAGE> 26
EXHIBIT B
DELIVERABLES
The Deliverables with respect to Quarterdeck Software shall include the
following:
Copies of machine-readable Source Code for the then current versions of the
Quarterdeck Software.
Copies of system build instructions such that Symantec can rebuild the
Quarterdeck Software from the Source Code provided.
Copies of existing Quarterdeck technical documentation for those
maintaining and supporting the Quarterdeck Software.
Copies of any tools written by Quarterdeck for the development of the
Quarterdeck Software and the instructions for their operation.
Copies of existing testing materials developed by Quarterdeck for the
Quarterdeck Software.
Electronic masters for all associated end-user documentation for the
Software.
Any technical specs, design docs, etc. that exist for the code
Test cases, tools and plans, including DBCS and Hi-ASCII cases/plans -any
in-house localization tools written for the product
Bug database and top known issues (i.e, were they planning any inlines to
fix bugs causing major support issues?)
Any techsupport documents or databases
List of scripts and script-creation documentation
BINARY EXECUTABLES
Golden master disks of the binary executable form of the then current
version of the Quarterdeck Software, electronic masters for all associated
end-user documentation for the Quarterdeck Software, and copies of all
available technical support and customer support materials.
<PAGE> 27
EXHIBIT C
RELEASE CONDITIONS
Any of the following shall be deemed to be a Release Condition:
1) Consummation (as that term is defined in the License Agreement) in
accordance with the terms of the License Agreement.
2) The occurrence of an event giving rise to an obligation on the part of
Quarterdeck to pay a Company Fee (as that term is defined in the Merger
Agreement) in accordance with the terms of the Merger Agreement
<PAGE> 1
Exhibit (c)(3)
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT dated October ___, 1998, among SYMANTEC CORPORATION,
a Delaware corporation ("PARENT"), QUARTERDECK ACQUISITION CORPORATION, a
Delaware corporation and a wholly owned Subsidiary of Parent ("SUB"), and
___________________ (the "STOCKHOLDER").
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, Sub and QUARTERDECK CORPORATION, a Delaware corporation (the "COMPANY"),
have entered into an Agreement and Plan of Merger (as such agreement may
hereafter be amended from time to time, the "MERGER AGREEMENT"), pursuant to
which Sub will be merged with and into the Company (the "MERGER");
WHEREAS, in furtherance of the Merger, Parent and the Company desire that
as soon as practicable (and not later than five (5) business days) after the
announcement of the execution of the Merger Agreement, Sub shall commence a cash
tender offer (the "OFFER") to purchase at the Offer Price all outstanding shares
of Common Stock (each as defined in Section 1 hereof), including all of the
Securities (as defined in Section 2 hereof) Beneficially Owned by the
Stockholder; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholder agree, and the Stockholder
has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "BENEFICIALLY OWNED" or "BENEFICIAL OWNERSHIP" with respect to
any securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities Beneficially Owned by a Person
(as hereinafter defined) shall include securities Beneficially Owned by all
other Persons with whom such Person would constitute a "group" within the
meaning of Section 13(d)(3) of the Exchange Act.
(b) "COMMON STOCK" shall mean the Common Stock, $0.001 par value per
share, of the Company.
(c) "OFFER PRICE" shall mean cash in the amount of $_____ per share
of Common Stock or, if greater, the price per share paid by Sub in the Offer.
<PAGE> 2
(d) "PERSON" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
(e) "SECURITIES" shall mean any shares of Common Stock Beneficially
Owned by the Stockholder on the date hereof, as reflected on Exhibit I hereto
(the "Existing Securities") or acquired by the Stockholder in any capacity after
the date hereof and prior to the termination of this Agreement by means of
purchase, dividend, distribution, exercise of options or other rights to acquire
Common Stock or in any other way.
(f) Capitalized terms used and not defined herein shall have the
respective meanings ascribed to them in the Merger Agreement.
2. Tender of Shares.
(a) In order to induce Parent and Sub to enter into the Merger
Agreement, the Stockholder hereby agrees to validly tender the Securities (or
cause the record owner of such Securities to validly tender such Securities),
and not to withdraw such Securities (except following termination of this
Agreement pursuant to Section 7 hereof), pursuant to and in accordance with the
terms of the Offer, as soon as practicable after commencement of the Offer
pursuant to Section 1.1 of the Merger Agreement and Rule 14d-2 under the
Exchange Act (but in the case of Securities acquired after the date hereof, in
no event later than two business days after such acquisition). The Stockholder
hereby acknowledges and agrees that Parent's and Sub's obligation to accept for
payment and pay for the Securities in the Offer, including the Securities
Beneficially Owned by the Stockholder, is subject to the terms and conditions of
the Offer.
(b) The Stockholder hereby permits Parent and Sub to publish and
disclose in the Offer Documents and, if approval of the Company's stockholders
is required under applicable law, the Proxy Statement (including all documents
and schedules filed with the SEC) its identity and ownership of the Securities
and the nature of its commitments, arrangements and understandings under this
Agreement.
3. Additional Agreements.
(a) Voting Agreement. Until the termination of this Agreement
pursuant to Section 7 hereof, the Stockholder shall, at any meeting of the
stockholders of the Company, however called, or in connection with any written
consent of the stockholders of the Company, vote (or cause to be voted) all
Securities then held of record or Beneficially Owned by the Stockholder, (i) in
favor of the Merger, the execution and delivery by the Company of the Merger
Agreement and the approval of the terms thereof and each of the other actions
contemplated by the Merger Agreement and this Agreement and any actions required
in furtherance thereof and hereof; and (ii) against any proposal relating to a
takeover proposal and against any action or agreement that would impede,
frustrate, prevent or nullify this Agreement, or result in a breach in any
respect 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 set forth in Exhibit A to the Merger Agreement or set forth in
Article VII of the Merger Agreement not being fulfilled.
2
<PAGE> 3
(b) No Inconsistent Arrangements. The Stockholder hereby covenants
and agrees that, except as contemplated by this Agreement and the Merger
Agreement, it shall not (i) transfer (which term shall include, without
limitation, any sale, gift, pledge (other than a pledge which does not impair
the Stockholder's ability to perform under this Agreement) or other
disposition), or consent to any transfer of, any or all of the Securities or any
interest therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of the Securities or
any interest therein, (iii) grant any proxy, power-of-attorney or other
authorization in or with respect to the Securities, (iv) deposit the Securities
into a voting trust or enter into a voting agreement or arrangement with respect
to the Securities or (v) take any other action that would in any way restrict,
limit or interfere with the performance of its obligations hereunder or the
transactions contemplated hereby or by the Merger Agreement
(c) Grant of Irrevocable Proxy; Appointment or Proxy.
(i) The Stockholder hereby irrevocably grants to, and
appoints, Parent and ___________________________ and
______________________________, or either of them, in their respective
capacities as officers or directors of Parent, and any individual who shall
hereafter succeed to any such office or directorship of Parent, and each of them
individually, the Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of the Stockholder, to vote
the Securities, or grant a consent or approval in respect of the Securities, in
favor of the various transactions contemplated by the Merger Agreement (the
"TRANSACTIONS") and against any proposal relating to a takeover proposal.
(ii) The Stockholder represents that any proxies heretofore
given in respect of the Stockholder's Securities are not irrevocable, and that
any such proxies are hereby revoked.
(iii) The Stockholder understands and acknowledges that Parent
is entering into the Merger Agreement in reliance upon the Stockholder's
execution and delivery of this Agreement. The Stockholder hereby affirms that
the irrevocable proxy set forth in this Section 3(c) is given in connection with
the execution of the Merger Agreement, and that such irrevocable proxy is given
to secure the performance of the duties of the Stockholder under this Agreement.
The Stockholder hereby further affirms that the irrevocable proxy is coupled
with an interest and may under no circumstances be revoked. The Stockholder
hereby ratifies and confirms all that such irrevocable proxy may lawfully do or
cause to be done by virtue hereof. Such irrevocable proxy is executed and
intended to be irrevocable in accordance with the provisions of Section 212(e)
of the DGCL.
(d) No Solicitation. The Stockholder hereby agrees, in the capacity
as a stockholder of the Company, that neither the Stockholder nor any
affiliates, representatives or agents shall, directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with, or provide
any information to, any corporation, partnership, person or other entity or
group (other than Parent, Sub or any of their respective affiliates or
representatives) concerning any proposal relating to a takeover proposal. The
Stockholder will immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with
3
<PAGE> 4
respect to any proposal relating to a takeover proposal. The Stockholder will
immediately communicate to Parent the terms of any proposal, discussion,
negotiation or inquiry (and will disclose any written materials received by the
Stockholder in connection with such proposal, discussion, negotiation or
inquiry) and the identity of the party making such proposal or inquiry which it
may receive in respect of any such takeover proposal. Any action taken by the
Company or any member of the Board of Directors of the Company in accordance
with Section 5.2(b) of the Merger Agreement shall be deemed not to violate this
Section 4(d).
(e) Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all actions, 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 by this Agreement. Each party shall
promptly consult with the other and provide any necessary information and
material with respect to all filings made by such party with any Governmental
Entity in connection with this Agreement and the transactions contemplated
hereby.
(f) Waiver of Appraisal Rights. The Stockholder hereby waives any
rights of appraisal or rights to dissent from the Merger that it may have.
4. Representations and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to Parent and Sub as follows:
(a) Ownership of Securities. The Stockholder is the record and
Beneficial Owner of the Existing Securities, as set forth on Schedule I. On the
date hereof, the Existing Securities constitute all of the Securities owned of
record or Beneficially Owned by the Stockholder. The Stockholder has sole voting
power and sole power to issue instructions with respect to the matters set forth
in Sections 2 and 3 hereof, sole power of disposition, sole power to demand
appraisal rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Existing Securities with no
limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the power and
authority to enter into and perform all of the Stockholder's obligations under
this Agreement. The execution, delivery and performance of this Agreement by the
Stockholder will not violate any other agreement to which the Stockholder is a
party including, without limitation, any voting agreement, proxy arrangement,
pledge agreement, shareholders agreement or voting trust. This Agreement has
been duly and validly executed and delivered by the Stockholder and constitutes
a valid and binding agreement of the Stockholder, enforceable against the
Stockholder in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and (ii)
is subject to general principles of equity. There is no beneficiary or holder of
a voting trust certificate or other interest of any trust of which the
Stockholder is a trustee, or any party to any other agreement or arrangement,
whose consent is required for the
4
<PAGE> 5
execution and delivery of this Agreement or the consummation by the Stockholder
of the transactions contemplated hereby.
(c) No Conflicts. Except for filings under the HSR Act, other
applicable Antitrust Laws and the Exchange Act (i) no filing with, and no
permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution and delivery of this Agreement by the Stockholder,
the consummation by the Stockholder of the transactions contemplated hereby and
the compliance by the Stockholder with the provisions hereof and (ii) none of
the execution and delivery of this Agreement by the Stockholder, the
consummation by the Stockholder of the transactions contemplated hereby or
compliance by the Stockholder with any of the provisions hereof, except in cases
in which any conflict, breach, default or violation described below would not
interfere with the ability of such Stockholder to perform such Stockholder's
obligations hereunder, shall (A) conflict with or result in any breach of any
organizational documents applicable to the Stockholder, (B) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, modification or acceleration) under, any of the terms, conditions
or provisions of any note, loan agreement, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which the Stockholder is a party or by which the
Stockholder or any of its properties or assets may be bound, or (C) violate any
order, writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to the Stockholder or any of such Stockholder's properties or assets.
(d) No Liens. Except as permitted by this Agreement, the Existing
Securities and the certificates representing such securities are now, and at all
times during the term hereof will be, held by the Stockholder, or by a nominee
or custodian for the benefit of the Stockholder, free and clear of all Liens,
proxies, voting trusts or agreements, understandings or arrangements or any
other rights whatsoever, except for any such Liens or proxies arising hereunder.
(e) No Finder's Fees. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the
Stockholder.
(f) Reliance by Parent. The Stockholder understands and acknowledges
that Parent is entering into, and causing Sub to enter into, the Merger
Agreement in reliance upon the Stockholder's execution and delivery of this
Agreement.
5. Further Assurances. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further lawful action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
6. Stop Transfer. The Stockholder shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of
5
<PAGE> 6
the Securities, unless such transfer is made in compliance with this Agreement.
In the event of a stock dividend or distribution, or any change in the Common
Stock by reason of any stock dividend, split-up, recapitalization, combination,
exchange of shares or the like, the term "Securities" shall refer to and include
the Securities as well as all such stock dividends and distributions and any
shares into which or for which any and all of the Securities may be changed or
exchanged.
7. Termination. This Agreement and Stockholder's obligation to tender
provided herein shall terminate on the earlier of the payment for the Securities
pursuant to the Offer and the termination of the Merger Agreement in accordance
with its terms.
8. No Limitation. Nothing in this Agreement shall be construed to prohibit
any officer or affiliate of the Stockholder who is or has designated a member of
the Board of Directors of the Company from taking any action solely in his
capacity as a member of the Board of Directors of the Company or from exercising
his fiduciary duties as a member of such Board of Directors.
9. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) Binding Agreement. This Agreement and the obligations hereunder
shall attach to the Securities and shall be binding upon any person or entity to
which legal or beneficial ownership of the Securities shall pass, whether by
operation of law or otherwise, including, without limitation, the Stockholder's
administrators or successors. Notwithstanding any transfer of Securities, the
transferor shall remain liable for the performance of all obligations of the
transferor under this Agreement.
(c) Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Sub and Parent of any of its
obligations under this Agreement. This Agreement will be binding upon, inure to
the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
(d) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(e) Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
6
<PAGE> 7
given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(i) if to Parent or Sub, to
Symantec Corporation
10201 Torre Ave.
Cupertino, CA 95014
Attention: Chief Financial Officer
with copies to its counsel:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
Fax: (415) 494-1417
Attention: Gordon K. Davidson, Esq.
(ii) if to the Stockholder, to
Quarterdeck Corporation
13160 Mindanao Way
Marina del Rey, CA 90292
Attention: Chief Financial Officer
with copies to its counsel:
Schwartz & Associates
Suite 3950
333 South Grand Avenue
Los Angeles, California 90071
Facsimile: 213-621-0982
(f) Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at
7
<PAGE> 8
law for money damages, and therefore in the event of any such breach the
aggrieved party shall be entitled to the remedy of specific performance of such
covenants and agreements and injunctive and other equitable relief in addition
to any other remedy to which it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any
rights, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
(l) Waiver of Jury Trial. Each party hereto hereby waives any right
to a trial by jury in connection with any action, suit or proceeding brought in
connection with this Agreement.
(m) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same agreement.
8
<PAGE> 9
IN WITNESS WHEREOF, Parent, Sub and Stockholder have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
PARENT: SYMANTEC CORPORATION
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
SUB: QUARTERDECK ACQUISITION CORPORATION
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
STOCKHOLDER:
-----------------------------------
9
<PAGE> 10
EXHIBIT I
<TABLE>
<CAPTION>
SHARES OWNED OPTIONS HELD
------------ ------------
<S> <C>
</TABLE>
<PAGE> 1
EXHIBIT (c)(4)
October 1, 1998
Quarterdeck Corporation
13160 Mindanao Way
Marina del Rey, California 90292
Ladies & Gentlemen:
In connection with your consideration of a possible negotiated transaction
(the "Transaction") between Symantec Corporation (the "COMPANY") and Quarterdeck
Corporation ("Quarterdeck"), the Company and Quarterdeck expect to make
available to one another certain information concerning our respective business,
financial condition, operations, assets and liabilities. As a condition to such
information being furnished to each party and its directors, officers,
employees, agents or advisors (including, without limitation, attorneys,
accountants, consultants, bankers and financial advisors) (collectively,
"REPRESENTATIVES"), each party agrees to treat any information concerning the
other party (whether prepared by the disclosing party, its advisors or otherwise
and irrespective of the form of communication) which is furnished hereunder or
furnished prior hereto in connection with our discussions to a party or to its
Representatives now or in the future by or on behalf of the disclosing party
(herein collectively referred to as the "EVALUATION MATERIAL") in accordance
with the provisions of this letter agreement, and to take or abstain from taking
certain other actions hereinafter set forth.
1. Evaluation Material. The term "Evaluation Material" also shall be
deemed to include all notes, analyses, compilations, studies, interpretations or
other documents prepared by each party or its Representatives which contain,
reflect or are based upon, in whole or in part, the information furnished to
such party or its Representatives pursuant hereto. The term "Evaluation
Material" does not include information which (a) is or becomes generally
available to the public other than as a result of a disclosure by the receiving
party or its Representatives, (b) was within the receiving party's possession
prior to its being furnished to the receiving party by or on behalf of the
disclosing party pursuant hereto or prior hereto in connection with our
discussions; provided that the source of such information was not known by the
receiving party to be bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of confidentiality to the disclosing
party or any other party with respect to such information, (c) becomes available
to the receiving party on a non-confidential basis from a source other than the
disclosing party or any of its Representatives; provided that such source is not
bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to the disclosing party or any other
party with respect to such information, (d) is not clearly identified as
confidential or was not clearly understood by the parties to have been disclosed
on a confidential basis, or (e) is independently developed by the receiving
party without use of or reference to the Evaluation Material.
2. Purpose of Disclosure of Evaluation Material. It is understood and
agreed to by each party that any exchange of information under this letter
agreement shall be solely for the purpose of
<PAGE> 2
evaluating a potential business transaction between the parties and not to
affect, in any way, each party's relative competitive position to each party or
to other entities. It is further agreed that the information to be disclosed to
each other shall only be that information which is reasonably necessary to
evaluate a proposed transaction and that information which is not reasonably
necessary for such purposes shall not be disclosed or exchanged.
3. Use and Disclosure of Evaluation Material. Each party hereby agrees
that it and its Representatives shall use the other's Evaluation Material solely
for the purpose of evaluating a possible transaction between the parties, and
that the disclosing party's Evaluation Material will be kept confidential and
each party and its Representatives will not copy or disclose any of the other's
Evaluation Material in any manner whatsoever; provided, however, that the
receiving party may make any use or disclosure of such information to which the
disclosing party gives its prior written consent.
4. Non-Disclosure of Transaction. In addition, each party agrees that,
without the prior written consent of the other party, it and its Representatives
will not disclose to any other person the fact that any Evaluation Material has
been made available hereunder, that discussions or negotiations are taking place
concerning a possible transaction involving the parties or any of the terms,
conditions or other facts with respect thereto (including the status thereof);
provided that Quarterdeck may make such disclosure to Northwestern Mutual Life
Insurance Company under appropriate confidentiality arrangements provided that a
party may make such disclosure if, in the reasonable opinion of outside counsel
for such party, such disclosure is required by law, regulation or exchange or
Nasdaq National Market System requirements.
5. Required Disclosure. In the event that a party or any of its
Representatives is requested or required (by government authorities by oral
questions, interrogations, requests for information or documents in legally
required government filings, legal proceedings, subpoena, civil investigative
demand or other similar process) to disclose any of the other party's Evaluation
Material, the party requested or required to make the disclosure shall provide
the other party with prompt written notice of any such request or requirement so
that the other party may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this letter agreement. If, in the
absence of a protective order or other remedy or the receipt of a waiver by such
other party, the party requested or required to make the disclosure or any of
its Representatives is nonetheless in the written opinion of counsel, legally
compelled to disclose the other party's Evaluation Material to any government
agency or tribunal or else stand liable for contempt or suffer other censure or
penalty, the party requested or required to make the disclosure or its
Representative may, without liability hereunder, disclose to such government
agency or tribunal only that portion of the other party's Evaluation Material
which such counsel advises is legally required to be disclosed; provided that
the party requested or required to make the disclosure exercises its best
efforts to preserve the confidentiality of the other party's Evaluation
material, including, without limitation, by cooperating with the other party to
obtain confidential treatment or an appropriate protective order or other
reliable assurance that confidential treatment will be accorded the other
party's Evaluation Material by such government agency or tribunal.
6. Termination of Discussion. If either party decides that it does not
wish to proceed with a transaction with the other party, the party so deciding
will promptly inform the other party by the way of a notice of termination of
that decision. In that case, or at any time upon the request of the disclosing
party for any reason, each receiving party will promptly deliver to the
disclosing party all Evaluation Material (and all copies thereof) furnished to
the receiving party or its Representatives
2
<PAGE> 3
by or on behalf of the disclosing party pursuant hereto. In the event of such a
decision or request, all other Evaluation Material incorporated into materials
prepared by the receiving party shall be destroyed and no copy thereof shall be
retained, and in no event shall either party be obligated to disclose or provide
the material prepared by it or its Representatives to the other party.
Notwithstanding the return or destruction of the Evaluation Material, each party
and its Representatives will continue to be bound by its obligations of
confidentiality and other obligations hereunder.
7. No Representation of Accuracy. Each party understands and acknowledges
that neither party nor any of its Representatives makes any representation or
warranty, express or implied, as to the accuracy or completeness of the
Evaluation Material made available to it. Each party agrees that neither party
nor any of its Representatives shall have any liability to the other party or to
any of its Representatives relating to or resulting from the use of such other
party's Evaluation Material or any errors therein or omissions therefrom. Only
those representations or warranties which are made in a final definitive
agreement regarding any transaction contemplated hereby, when, as and if
executed, and subject to such limitations and restrictions as may be specified
therein, will have any legal effect.
8. Definitive Agreements. Each party understands and agrees that no
contract or agreement providing for any transaction of the type contemplated by
this letter agreement involving the parties shall be deemed to exist between the
parties unless and until a final definitive agreement has been executed and
delivered. Each party also agrees that unless and until a final definitive
agreement regarding a transaction between the parties has been executed and
delivered, neither party will be under any legal obligation of any kind
whatsoever with respect to such a transaction by virtue of this letter agreement
except for the matters specifically agreed to herein. Both parties further
acknowledge and agree that each party reserves the right, in its sole
discretion, to reject any and all proposals made by the other party or any of
its Representatives with regard to a transaction between the parties, and to
terminate discussions and negotiations at any time.
9. Waiver. It is understood and agreed that no failure or delay by either
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 future exercise thereof or the exercise of any other right, power or
privilege hereunder.
10. Nonsolicitation of Employees. Beginning on the date of this letter and
continuing until 3 months after the date of a notice of termination under
Section 6 above, neither party will, either for itself or for any other person
or entity, directly or indirectly, solicit, induce or attempt to induce any
employee of the other to terminate his or her employment with the other party.
The parties agree that general solicitation through newspaper advertising or job
fairs shall not be deemed a violation of this provision.
11. No-Shop Provision. Until the close of business on October 13, 1998,
Quarterdeck will not, and will not permit its officers, directors, employees,
agents or Representatives, or any other person acting on its behalf, to (a)
solicit, encourage, negotiate with or accept any offer from any party concerning
the possible disposition of all or any substantial portion of Quarterdeck's
business, assets
3
<PAGE> 4
or capital stock by merger, sale or any other means or any other transaction
that would involve a change in control of Quarterdeck, (b) hold or participate
in discussions or negotiations with any party (other than the Company) with
respect to any such transaction, or (c) enter into any agreement with any party
(other than the Company) with respect to any such transaction. Quarterdeck also
agrees that it will notify the Company immediately if Quarterdeck receives any
inquiry after the date hereof from any third party with respect to any such
transaction, or any possible acquisition of any of its capital stock or assets.
12. No Trading in Securities. Both parties agree to take all reasonable
precautions to prevent any trading in their respective securities by their
respective officers, directors, employees and agents having knowledge of the
proposed transaction between the parties until the proposed transaction has been
sufficiently publicly disclosed. The parties understand and agree that until a
press release is issued regarding a proposed transaction between the parties,
neither party will disclose the fact that negotiations are taking place, except
to professional advisors and to employees of the parties on a confidential,
need-to-know basis and by Quarterdeck to Northwestern.
13. Injunctive Relief. It is further understood and agreed that money
damages would not be a sufficient remedy for any breach of this letter agreement
by either party or any of its Representatives and that the non-breaching party
shall be entitled to equitable relief, including injunction and specific
performance, as a remedy for any such breach. Such remedies shall not be deemed
to be the exclusive remedies for a breach of this letter agreement but shall be
in addition to all other remedies available at law or equity. In the event of
litigation relating to this letter agreement, if a court of competent
jurisdiction determines that either party or any of its Representatives have
breached this letter agreement, then the breaching party shall be liable and pay
to the non-breaching party the reasonable legal fees incurred in connection with
such litigation.
14. Governing Law. This Agreement shall be governed by the internal laws
of the State of California.
4
<PAGE> 5
Please confirm your agreement with the foregoing by signing and returning
one copy of this letter to the undersigned, whereupon this letter agreement
shall become a binding agreement between Quarterdeck and the Company.
Very truly yours,
Symantec Corporation
By:
----------------------------------
Accepted and Agreed as of the
date first written above:
Quarterdeck Corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
5
<PAGE> 6
October 13, 1998
Sossa Corporation
10201 Torre Avenue
Cupertino, California 95014
Ladies & Gentlemen:
In reference to paragraph 11 of the letter agreement dated October 1,
1998, between Sossa Corporation and McGwire Corporation, this letter will
confirm our agreement to extend the term of the "No Shop Provision" until the
close of business on Friday, October 16, 1998. Please sign below to indicate
your consent.
Very truly yours,
McGwire Corporation
/s/ King R. Lee
------------------------------
King R. Lee
Interim CEO
Accepted and Agreed as of
the date first written above:
Sossa Corporation
By: /s/ Derek Witte
----------------
Name:
--------------
Title: VP
-------------
