<PAGE> 1
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
WALL DATA INCORPORATED
(NAME OF SUBJECT COMPANY)
NETMANAGE ACQUISITION CORPORATION
NETMANAGE, INC.
(BIDDERS)
COMMON STOCK, NO PAR VALUE
(TITLE OF CLASS OF SECURITIES)
932045107
(CUSIP NUMBER OF CLASS OF SECURITIES)
CLIFF MOORE
NETMANAGE, INC.
10725 N. DEANZA BLVD.
CUPERTINO, CALIFORNIA 95014
(408) 973-7171
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPY TO:
MICHAEL J. DANAHER
WILSON SONSINI GOODRICH & ROSATI
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
(650) 493-9300
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
TRANSACTION VALUATION(1) AMOUNT OF FILING FEE(2)
- ---------------------------------------------------------------------------------------------
$98,236,935 $19,670
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) Note: The Transaction Value is calculated by multiplying $9.00, the per
share tender offer price, by 10,915,215, which is the sum of (i) the number
of shares of common stock outstanding, (ii) the 635,400 shares of common
stock subject to options outstanding and which are exercisable at a price
less than the per share tender offer price and (iii) the 89,846 shares of
common stock reserved for issuance under Wall Data Incorporated's Employee
Share Purchase Plan.
(2) 1/50 of 1% of Transaction Value.
[ ] 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.
<TABLE>
<S> <C>
Amount Previously Paid: Filing Party:
Form or Registration No.: Date Filed:
</TABLE>
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<PAGE> 2
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Wall Data Incorporated, a Washington
corporation (the "Company"), and the address of its principal executive offices
is 11332 N.E. 122nd Way, Kirkland, Washington 98034.
(b) This Tender Offer Statement on Schedule 14D-1 relates to the offer by
NetManage Acquisition Corporation ("Purchaser"), a Washington corporation which
is a wholly-owned subsidiary of NetManage, Inc., a Delaware corporation
("Parent") to purchase all outstanding shares of common stock (the "Shares") of
the Company at a price of $9.00 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 27, 1999 (the "Offer to Purchase") and in the
related Letter of Transmittal (which, together with any amendments and
supplements thereto, collectively constitute the "Offer"), copies of which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively. 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) Information concerning the principal market in which the Shares are
traded and the high and low sales prices for the Shares in such principal market
for each quarterly period for the fiscal year ended December 31, 1997; the four
month period ended April 30, 1998; each quarterly period for the fiscal year
ended April 30, 1999; and the interim period ended October 20, 1999 is set forth
in Section 6 ("Price Range of Shares; Dividends") of the Offer to Purchase and
is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (d) and (g) This Schedule 14D-1 is filed by Purchaser and Parent.
Information concerning the name, state or other place of organization, principal
business and address of the principal office of each of Purchaser and Parent and
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
Parent is set forth in the Introduction, Section 9 ("Certain Information
Concerning Purchaser and Parent") and Schedule I of the Offer to Purchase and is
incorporated herein by reference.
(e) and (f) During the last five years, none of Purchaser and Parent or, to
the best knowledge of Purchaser and Parent, any of their respective executive
officers or directors, has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors), nor has any of them been 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 9 ("Certain Information Concerning
Purchaser and Parent") and Section 12 ("Background of the Offer; Contacts with
the Company; the Merger Agreement") of the Offer to Purchase is incorporated
herein by reference.
(b) The information set forth in the Introduction, Section 8 ("Certain
Information Concerning the Company"), Section 9 ("Certain Information Concerning
Purchaser and Parent"), Section 12 ("Background of the Offer; Contacts with the
Company; the Merger Agreement") and Section 13 ("Purpose of the Offer; Plans for
the Company After the Offer") of the Offer to Purchase is incorporated herein by
reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 10 ("Financing of the
Offer") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
2
<PAGE> 3
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS.
(a) - (e) The information set forth in the Introduction, Section 12
("Background of the Offer; Contacts with the Company; the Merger Agreement") and
Section 13 ("Purpose of the Offer; Plans for the Company After the Offer") of
the Offer to Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Shares, Exchange Listing and Exchange Act Registration") of
the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) Not applicable.
ITEM 7.CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 9 ("Certain
Information Concerning Purchaser and Parent"), Section 12 ("Background of the
Offer; Contacts with the Company; the Merger Agreement") and Section 13
("Purpose of the Offer; Plans for the Company After the Offer") 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 9 ("Certain Information Concerning
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 13 ("Purpose of the Offer; Plans
for the Company after the Offer") of the Offer to Purchase is incorporated
herein by reference.
(b) and (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) Not applicable.
(e) None.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal and the Merger Agreement dated as of October 20, 1999 among
Purchaser and Parent and the Company, copies of which are attached hereto as
Exhibits (a)(1), (a)(2) and (c)(1), respectively, is incorporated herein by
reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification
number on Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated October 27, 1999.
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C>
(a)(8) Text of Press Release issued by Parent and the Company on
October 21, 1999.
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of October 20, 1999,
by and among Parent, Purchaser and the Company.
(c)(2) Employment Agreement, dated as of October 20, 1999, by and
among the Company, Parent and Kevin B. Vitale.
(c)(3) Employment Agreement, dated as of October 20, 1999, by and
among the Company, Parent and Richard P. Fox.
(c)(4) Employment Agreement, dated as of October 20, 1999, by and
among the Company, Parent and Craig E. Shank.
(c)(5) Employment Agreement, dated as of October 20, 1999, by and
among the Company, Parent and Kerry D. Palmer.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
4
<PAGE> 5
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 27, 1999
NETMANAGE ACQUISITION CORPORATION
By: /s/ GARY ANDERSON
-------------------------------------------
Name: Gary Anderson
-----------------------------------------
Title: Chief Financial Officer
------------------------------------------
NETMANAGE, INC.
By: /s/ GARY ANDERSON
-------------------------------------------
Name: Gary Anderson
-----------------------------------------
Title: Chief Financial Officer
------------------------------------------
5
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- ------------------------------------------------------------
<S> <C>
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification
number on Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated October 27, 1999.
(a)(8) Text of Press Release issued by Parent and the Company on
October 21, 1999.
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of October 20, 1999,
by and among Parent, Purchaser and the Company.
(c)(2) Employment Agreement, dated as of October 20, 1999, by and
among the Company, Parent and Kevin B. Vitale.
(c)(3) Employment Agreement, dated as of October 20, 1999, by and
among the Company, Parent and Richard P. Fox.
(c)(4) Employment Agreement, dated as of October 20, 1999, by and
among the Company, Parent and Craig E. Shank.
(c)(5) Employment Agreement, dated as of October 20, 1999, by and
among the Company, Parent and Kerry D. Palmer.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
WALL DATA INCORPORATED
AT
$9.00 NET PER SHARE
BY
NETMANAGE ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
NETMANAGE, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, NOVEMBER 24, 1999, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF WALL DATA INCORPORATED HAS UNANIMOUSLY APPROVED
THE OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS
OF WALL DATA INCORPORATED AND RECOMMENDS THAT THE SHAREHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
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 OF WALL DATA INCORPORATED COMMON STOCK THAT SHALL CONSTITUTE
NOT LESS THAN FIFTY-ONE PERCENT (51%) OF THE THEN OUTSTANDING SHARES ON A FULLY
DILUTED BASIS. SEE SECTION 15 OF THE OFFER TO PURCHASE.
------------------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
shares of Wall Data Incorporated common stock (the "Shares") should either (1)
complete and sign the accompanying 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 any other required documents, to the Depositary listed in the Letter of
Transmittal or tender such Shares pursuant to the procedure for book-entry
transfer set forth in Section 3 or (2) request such shareholder's broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for such shareholder. Any shareholder 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 shareholder desires to tender such Shares.
A shareholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, 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 set forth in Section 3.
Questions or requests for assistance may be directed to the Information
Agent or 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:
[CIBC WORLD MARKETS LOGO]
October 27, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
INTRODUCTION..................................................... 1
THE TENDER OFFER................................................. 2
1. Terms of the Offer; Expiration Date......................... 2
2. Acceptance for Payment and Payment of Shares................ 4
3. Procedures for Accepting the Offer and Tendering Shares..... 5
4. Withdrawal Rights........................................... 8
5. Certain U.S. Federal Income Tax Consequences................ 8
6. Price Range of Shares; Dividends............................ 9
7. Effect of the Offer on the Market for the Shares; Exchange
Listing and Exchange Act Registration....................... 10
8. Certain Information Concerning the Company.................. 11
9. Certain Information Concerning Purchaser and Parent......... 13
10. Financing of the Offer...................................... 15
11. Material Changes and Other Information...................... 15
12. Background of the Offer; Contacts with the Company; the
Merger Agreement............................................ 15
13. Purpose of the Offer; Plans for the Company After the
Offer....................................................... 24
14. Dividends and Distributions................................. 26
15. Conditions of the Offer..................................... 26
16. Certain Legal Matters and Regulatory Approvals.............. 27
17. Fees and Expenses........................................... 29
18. Miscellaneous............................................... 29
SCHEDULE I -- Directors and Executive Officers................... I-1
</TABLE>
<PAGE> 3
TO THE HOLDERS OF COMMON STOCK OF
WALL DATA INCORPORATED:
INTRODUCTION
NetManage Acquisition Corporation, a Washington corporation ("Purchaser")
which is a wholly-owned subsidiary of NetManage, Inc. ("Parent"), a Delaware
corporation, hereby offers to purchase all outstanding shares of common stock
(the "Shares") of Wall Data Incorporated, a Washington corporation (the
"Company"), at a price of $9.00 per Share (the "Offer Price"), net to the seller
in cash, without interest thereon, upon the terms and subject to the conditions
set forth in the Offer to Purchase and in the related Letter of Transmittal
(which, together with any amendments or supplements hereto or thereto,
collectively constitute the "Offer").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, transfer taxes with respect to the purchase of Shares pursuant to
the Offer. Parent will pay all charges and expenses of ChaseMellon Shareholder
Services, L.L.C. (the "Depositary"), CIBC World Markets Corp. (the "Dealer
Manager") and MacKenzie Partners, Inc. (the "Information Agent") incurred in
connection with the Offer. See Section 17.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
APPROVED THE OFFER AND THE MERGER AND DETERMINED THAT THE OFFER IS FAIR TO, AND
IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY AND RECOMMENDS THAT
SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. SEE
THE ACCOMPANYING SCHEDULE 14D-9 (AS DEFINED BELOW).
Bear Stearns & Co. Inc. ("Bear Stearns"), the Company's financial advisor,
has delivered to the Board its written opinion to the effect that, as of the
date of such opinion, the consideration to be received by the shareholders of
the Company pursuant to the Offer and the Merger is fair from a financial point
of view. A copy of the opinion of Bear Stearns is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being mailed to shareholders herewith.
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 SHALL CONSTITUTE NOT LESS THAN FIFTY-ONE PERCENT (51%) OF
THE THEN OUTSTANDING SHARES ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION").
FOR PURPOSES HEREOF, SHARES ON A FULLY DILUTED BASIS 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 OF ALL
OPTIONS EXERCISABLE INTO SUCH SHARES WITH AN EXERCISE PRICE LESS THAN $9.00 PER
SHARE. THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
WEDNESDAY, NOVEMBER 24, 1999, UNLESS EXTENDED. SEE SECTIONS 1 AND 15.
The Company has advised the Purchaser that the authorized capital of the
Company consists of 45,000,000 shares of common stock and 5,000,000 shares of
preferred stock. As of October 25, 1999, (i) 10,189,969 shares of common stock
and no shares of preferred stock were issued and outstanding; (ii) an aggregate
of 5,226,789 Shares were reserved for issuance upon the exercise of stock
options pursuant to the Company's 1983 Stock Option Plan, the Restated 1993
Stock Option Plan, Restated 1993 Stock Option Plan for Non-Employee Directors
and the 1994 Non-Officer Stock Option Plan (collectively, the "Option Plans")
pursuant to which options for the purchase of an aggregate of 2,477,892 Shares
were issued and outstanding; and (iii) 89,846 Shares were reserved for issuance
pursuant to the Company's Employee Share Purchase Plan.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of October 20, 1999 (the "Merger Agreement"), among Parent, Purchaser and the
Company pursuant to which, as soon as practicable following the consummation of
the Offer and the satisfaction or waiver of certain conditions of the Agreement,
the Purchaser will be merged with and into the Company (the "Merger"), with the
Company surviving the Merger as a wholly-owned subsidiary of Parent, (the
"Surviving Corporation") and the separate
1
<PAGE> 4
corporate existence of Purchaser shall cease. The Merger is subject to a number
of conditions, including the adoption of the Merger Agreement by shareholders of
the Company, if required by applicable law. In the event Purchaser acquires at
least ninety percent (90%) of the outstanding Shares pursuant to the Offer or
otherwise, the Purchaser may, and intends to, effect the Merger pursuant to the
short-form merger provisions of the Washington Business Corporation Act (the
"WBCA"), without a meeting of the Company's shareholders.
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of Shares satisfying the Minimum Condition, Parent shall be entitled to
designate a majority of the members of the Company's Board of Directors subject
to compliance with Section 14(f) of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"). The Merger Agreement also provides that the
Company has agreed to cause Parent's designees to be elected as directors of the
Company, including increasing the size of the Board or securing the resignations
of incumbent directors or both. The Merger Agreement is more fully described in
Section 12.
No dissenters' rights are available in connection with the Offer. However,
shareholders will have dissenters' rights in connection with the Merger
regardless of whether the Merger is consummated with or without a vote of the
Company's stockholders. See Section 13.
Certain United States federal income tax consequences of the sale of Shares
pursuant to the Offer are described in Section 5.
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.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ IN ITS ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
THE TENDER 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 hereby offers to
purchase all of the Shares at a price of $9.00 per Share, net to the seller in
cash, and will pay for all Shares validly tendered prior to the Expiration Date
(as hereinafter defined) and not withdrawn as permitted by Section 4. The term
"Expiration Date" means 12:00 midnight, New York City time, on Wednesday,
November 24, 1999, unless and until Purchaser, in its sole discretion, shall
have extended the period during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by Purchaser, shall expire.
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, including the occurrence of any of the conditions specified in Section 15,
by giving oral or written notice of such extension to the Depositary. During any
such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the rights of a tendering shareholder to
withdraw his, her or its Shares. See Section 4.
Subject to applicable securities legislation and the terms and conditions
of the Merger Agreement, Purchaser also expressly reserves the right (i) to
increase the price per Share payable in the Offer, (ii) to terminate the Offer
and not accept for payment any Shares if the conditions to the Offer shall not
be satisfied
2
<PAGE> 5
and (iii) to waive any condition or otherwise amend the Offer in any respect
(subject to the limitations described below), by giving oral or written notice
of such delay, termination, waiver or amendment to the Depositary and by making
a public announcement thereof. However, the Merger Agreement provides that
Purchaser will not (i) decrease the price per Share payable pursuant to the
Offer, (ii) reduce the maximum number of Shares to be purchased in the Offer,
(iii) impose conditions to the Offer in addition to those set forth in Section
15, or (iv) amend any other material terms of the Offer in a manner materially
adverse to the Company's shareholders. Purchaser acknowledges that (i) 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 (ii) Purchaser may not delay acceptance for payment
of, or payment for (except as specified in Section 15), any Shares upon the
occurrence of any of the conditions specified in Section 15 without extending
the period of time during which the Offer is open.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, extend the expiration date of the Offer (a) as required to comply with
any rule, regulation or interpretation of the Commission, (b) if at the
scheduled or extended expiration date of the Offer any of the conditions to the
Offer have not been satisfied or waived, until such time as all such conditions
are satisfied or waived, or (c) provided that at least 90% of the Shares have
not been tendered, for one or more times for a total number of days in the
aggregate pursuant to this clause (c) not to exceed 20 days for any reason other
than those specified in the immediately preceding clauses (a) and (b). In
addition, if all of the conditions to the Offer are not satisfied on any
scheduled expiration date of the Offer then, provided that all such conditions
are reasonably capable of being satisfied by the commercially reasonable best
efforts of Parent, Purchaser and the Company, Purchaser shall extend the Offer
from time to time until such conditions are satisfied or waived, provided that
Purchaser shall not be required by the Company to extend the Offer for a total
of 20 days beyond the initial expiration date of the Offer.
Subject to the terms of the Merger Agreement and applicable rules and
regulations of the Commission, Purchaser reserves the right, in its sole
discretion, at any time and from time to time, and regardless of whether or not
any of the events or facts set forth in Section 15 hereof shall have occurred,
to (a) extend the period of time during which the Offer is open and thereby
delay acceptance for payment of and the payment for any Shares, by giving oral
or written notice of such extension to the Depositary and (b) except as set
forth above, amend the Offer in any other respect by giving oral or written
notice of such amendment to the Depositary. UNDER NO CIRCUMSTANCES WILL ANY
INTEREST BE PAID ON THE PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR NOT THE
PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER.
If by 12:00 midnight, New York City time, on Wednesday, November 24, 1999
(or any date or time then set as the Expiration Date), any of or all the
conditions to the Offer have not been satisfied or waived, Purchaser reserves
the right (but shall not be obligated), subject to the terms and conditions
contained in the Merger Agreement and to the applicable rules and regulations of
the Commission, to (a) terminate the Offer and not accept for payment or pay for
any Shares and return all tendered Shares to tendering shareholders, (b) except
as set forth above with respect to the Minimum Condition, waive all the
unsatisfied conditions and accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not theretofore withdrawn, (c) extend
the Offer and, subject to the right of shareholders to withdraw shares until the
Expiration Date, retain the Shares that have been tendered during the period or
periods for which the Offer is extended or (d) amend the Offer.
There can be no assurance that Purchaser will exercise its right to extend
the Offer. Any extension, amendment or termination will be followed as promptly
as practicable by public announcement. In the case of an extension, Rule
14e-1(d) under the Exchange Act requires that the announcement be issued no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
shareholders in connection with the Offer be promptly disseminated to
shareholders in a manner reasonably designed to inform shareholders of such
3
<PAGE> 6
announcement, Purchaser will not have any obligation to publish, advertise or
otherwise communicate any such public announcement other than by making a
release to the Dow Jones News Service.
If Purchaser extends the Offer or if Purchaser is delayed in its acceptance
for payment of or payment for Shares (whether before or after its acceptance for
payment of Shares) or its 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 (but subject to compliance with Rule 14e-1(c) under the
Exchange Act, which requires that a tender offeror pay the consideration offered
or return the tendered securities promptly after termination or withdrawal of a
tender offer, and the terms of the Merger Agreement), the Depositary may
nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares
may not be withdrawn except to the extent tendering shareholders are entitled to
exercise, and duly exercise, withdrawal rights as described in Section 4.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. With
respect to a change in price or a change in the percentage of securities sought,
a minimum period of 10 business days is generally required to allow for adequate
dissemination to shareholders.
The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer and other relevant materials will be mailed by Purchaser to
record holders of Shares whose names appear on the Company's shareholder 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 shareholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT OF SHARES. Upon 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 prior to
the Expiration Date and not properly withdrawn promptly after the Expiration
Date. Subject to applicable rules of the Commission, Purchaser expressly
reserves the right to delay acceptance for payment of, or payment for, Shares
pending receipt of any regulatory approvals specified in Section 16 or in order
to comply in whole or in part with any other applicable law.
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 "Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer 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, (ii) the Letter of Transmittal (or a 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.
Shareholders who cannot comply on a timely basis with the foregoing
procedures for acceptance of the Offer may deposit Share Certificates pursuant
to the procedures set forth below for guaranteed delivery.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn if and when Purchaser gives written notice to
4
<PAGE> 7
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 shareholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering shareholders whose Shares have been
accepted for payment. UNDER NO CIRCUMSTANCES WILL ANY INTEREST BE PAID ON THE
PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR 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 the Share Certificates are
submitted evidencing more Shares than are tendered, the Share Certificates
evidencing unpurchased Shares will be returned, without expense to the tendering
shareholder (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, 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.
HOLDERS OF OPTIONS. Holders of options to acquire Shares may participate
in this Offer by exercising such options in accordance with and subject to their
terms and, after such exercises, deposit the Shares received as provided for in
this Offer. Reference should be made to the terms of the Merger Agreement
dealing with the Option Plans as described in Section 12 of the Offer to
Purchase.
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, but any such transfer
or assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering shareholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES. In order for a
holder of Shares to validly tender Shares pursuant to the Offer, the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
together with any required signature guarantees, or an Agent's Message in
connection with a book-entry delivery 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 and
either (i) the Share 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 prior to the Expiration Date,
or (ii) the tendering shareholder must comply with the guaranteed delivery
procedures described below. Purchaser reserves the right to permit the Offer to
be accepted in any manner other than that set out herein.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, 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 an account 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 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 prior to the Expiration
5
<PAGE> 8
Date, or the tendering shareholder 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 (a) if the Letter of Transmittal is signed by the registered holder
(which term, for purposes of this Section 3, includes any participant in any of
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 (b) if such Shares are tendered for the account of a
firm which is a member of a national securities exchange in the United States or
the National Association of Securities Dealers, Inc. (an "Eligible
Institution"). In all other cases, all signatures on the Letter of Transmittal
must be medallion guaranteed by an Eligible Institution. See Instructions 1 and
5 to the Letter of Transmittal. If the Share 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 Share Certificates not tendered or not accepted for
payment are to be returned to a person other than the registered holder of the
Share Certificates surrendered, the tendered Share 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 Share Certificates, with
the signatures on the Share Certificates or stock powers guaranteed in the
manner described above. See Instructions 1 and 5 to the Letter of Transmittal.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates evidencing such Shares are
not immediately available or such shareholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such shareholder 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 Share 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 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 trading days of The Nasdaq Stock Market's National Market System (the
"Nasdaq") after the date of execution of such Notice of Guaranteed
Delivery.
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 signature medallion guaranteed 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
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and 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), and any other
documents required by the Letter of Transmittal. UNDER NO CIRCUMSTANCES WILL ANY
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of the 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 or all tenders determined by it not to be in proper
form or when the acceptance of payment may, in the
6
<PAGE> 9
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 shareholder, whether or not similar defects or
irregularities are waived in the case of other shareholders. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
relating thereto have been cured or waived. None of Purchaser, Parent, the
Depositary, the Information Agent, the Dealer Manager 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. The execution of the Letter of Transmittal by a
tendering shareholder irrevocably appoints each of the Depositary, any officer
of Purchaser and any other person designated by Purchaser in writing as the true
and lawful agent, attorney and attorney-in-fact and proxy of that shareholder
with respect to Shares tendered by such shareholders and accepted for payment by
Purchaser (the "Purchased Securities") and with respect to any and all
dividends, distributions, payments, securities, rights, warrants, assets or
other interests (collectively, "Other Securities") accrued, declared, paid,
issued, transferred, made or distributed on or in respect of the Purchased
Securities on or after the date of the Offer to Purchase, effective from the
date that Purchaser accepts the Purchased Securities for payment (the "Effective
Date"), with full power of substitution, in the name of and on behalf of such
shareholder (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to: (a) register or record, transfer and enter the
transfer of the Purchased Securities and any Other Securities on the appropriate
register of holders maintained by the Company; (b) vote, execute and deliver any
and all instruments of proxy, authorizations or consents in respect of any and
all such Purchased Securities and Other Securities, revoke any such instruments,
authorizations or consents given prior to or after the Effective Date and
designate in any such instruments of proxy any person or persons as the proxy or
the proxy nominee of the shareholder in respect of such Purchased Securities and
Other Securities including, without limiting the generality of the foregoing, in
connection with any meeting (whether annual, special or otherwise) of holders of
securities of the Company (or any adjournments thereof); (c) execute, endorse
and negotiate, for and in the name of and on behalf of the registered
shareholder of the Purchased Securities and Other Securities, any and all checks
or other instruments representing any distribution payable to or to the order of
such registered shareholder; and (d) exercise any and all rights of the
shareholder in respect of such Purchased Securities and Other Securities; all as
set forth in the Letter of Transmittal.
The acceptance for payment by Purchaser of the Shares pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering shareholder and Purchaser upon the terms and subject to the conditions
of the Offer.
BACKUP WITHHOLDING. Shareholders may be subject to a 31% backup
withholding tax under United States tax law when they receive payments of cash
pursuant to the Offer or the Merger. To avoid the imposition of the backup
withholding tax, U.S. Shareholders should submit the attached Substitute Form
W-8 and Non-U.S. Shareholders should submit the attached Substitute Form W-8.
For purposes of this Offer to Purchase, the Letter of Transmittal, and other
documents included in this tender offer package, "U.S. Shareholder" and
"Non-U.S. Shareholder" have the meanings indicated below.
"U.S. Shareholder" means one of (1) a citizen or resident of the United
States, including an alien individual (such as a citizen of another country) who
is a lawful permanent resident of the United States or meets the "substantial
presence test" under Section 7701(b) of the Code (for example, because the alien
individual is present in the United States for 183 days or more in the current
calendar year), (2) a corporation or partnership created or organized in the
United States or under the laws of the United States or any political
subdivision, or (3) an estate or trust which is not a foreign estate or trust
under Section 7701(a)(31) of the Code. "Non-U.S. Shareholder" means any
shareholder that is not a U.S. Shareholder, except for Non-U.S. Shareholders, if
any, who are subject to United States federal income tax on payments received
pursuant to the Offer or the Merger because such payments are effectively
connected with their conduct of a U.S. trade or business. Any such shareholder
receiving payments that are effectively connected with the conduct of a U.S.
trade or business should contact an independent tax advisor with respect to the
backup withholding and other U.S. tax consequences of receiving payments
pursuant to the Offer or the Merger.
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<PAGE> 10
U.S. SHAREHOLDERS. In order to avoid "backup withholding" on payments of
cash pursuant to the Offer or the Merger (including any cash paid pursuant to
the exercise of dissenters' rights), a U.S. Shareholder surrendering Shares in
the Offer or the Merger must, unless an exemption applies, provide the
Depositary with such shareholder's correct taxpayer identification number
("TIN") on a Substitute Form W-9 and certify under penalties of perjury that
such TIN is correct and that such shareholder is not subject to backup
withholding. If a U.S. Shareholder does not provide such shareholder's correct
TIN or fails to provide the certifications described above, the Internal Revenue
Service (the "IRS") may impose a penalty on such shareholder and payment of cash
to such shareholder pursuant to the Offer or the Merger may be subject to backup
withholding of 31%. All U.S. Shareholders surrendering Shares pursuant to the
Offer should complete and sign the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary to
avoid backup withholding.
NON-U.S. SHAREHOLDERS. In order to avoid 31% "backup withholding,"
Non-U.S. Shareholders should properly complete and provide to the Depositary the
enclosed Substitute Form W-8 included as part of the Letter of Transmittal.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are
irrevocable except that tendered Shares may be withdrawn by or on behalf of the
tendering shareholder at any time prior to the Expiration Date and, unless
theretofore accepted for payment by Purchaser pursuant to the Offer, may also be
withdrawn by such shareholder at any time after December 25, 1999. If Purchaser
extends the Offer, is delayed in the acceptance for payment of the Shares or is
unable to accept the 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 shareholders 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 and 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 Share Certificates have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such Share
Certificates, the serial numbers shown on such Share 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 pursuant to the procedure for book-entry transfer as set forth in
Section 3, 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. 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.
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, Parent, the
Depositary, the Information Agent, Dealer Manager 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.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.
U.S. SHAREHOLDERS. The receipt of cash for Shares by a U.S. Shareholder
pursuant to the Offer or in the Merger (including by reason of exercise of
dissenters' rights) will be a taxable transaction for U.S. federal income tax
purposes and may also be a taxable transaction under applicable state, local or
foreign tax laws. In general, a U.S. Shareholder will recognize gain or loss for
U.S. federal income tax purposes equal to the difference between the amount
received in exchange for the Shares sold and such shareholder's adjusted tax
basis in such Shares. Assuming the Shares constitute capital assets in the hands
of the shareholder, such gain
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<PAGE> 11
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 by such
shareholder, such gain or loss will be long-term capital gain or loss. Under
current law, long-term capital gains of individuals are generally taxed at lower
rates than items of ordinary income and short-term capital gains. Capital losses
are only deductible to the extent of capital gains plus, in the case of
taxpayers other than corporations, $3,000 of ordinary income. In the case of
individuals and other non-corporate taxpayers, capital losses that are not
currently deductible may be carried forward to other years, subject to certain
limitations.
NON-U.S. SHAREHOLDERS. Non-U.S. Shareholders generally will not be subject
to U.S. federal income tax on the receipt of cash for Shares pursuant to the
Offer or in the Merger, unless such Non-U.S. Shareholder's gain is effectively
connected with a U.S. trade or business; or, in the case of gain recognized by
an individual Non-U.S. Shareholder, such individual is present in the U.S. for
183 days or more during the taxable year and certain other conditions are
satisfied.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN SHAREHOLDERS,
DEPENDING ON THEIR CIRCUMSTANCES, INCLUDING SHAREHOLDERS WHO ACQUIRED SHARES
PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. SHAREHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX
CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION AND
EFFECT OF THE ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND FOREIGN TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are listed and principally
traded on the Nasdaq under the symbol "WALL". The following table sets forth,
for the periods indicated, the aggregate volume and the high and low sales
prices per Share on the Nasdaq as reported by the Dow Jones News Service.
<TABLE>
<CAPTION>
HIGH LOW VOLUME(1)
------- ------- ----------
<S> <C> <C> <C>
Fiscal Year ending December 31, 1997:
First Quarter............................................. $19.625 $15.000 2,294,000
Second Quarter............................................ 29.125 15.125 10,762,900
Third Quarter............................................. 28.250 17.000 11,487,100
Fourth Quarter............................................ 20.500 11.313 4,113,400
Four Month Period ending April 30, 1998(2).................. 18.250 13.500 3,956,200
Fiscal Year ending April 30, 1999:
First Quarter............................................. $16.000 $10.125 5,192,200
Second Quarter............................................ 15.500 10.625 3,485,000
Third Quarter............................................. 24.250 13.250 5,191,400
Fourth Quarter............................................ 22.313 13.500 6,359,500
Fiscal Year ending April 30, 2000:
First Quarter............................................. $15.625 $ 9.500 4,970,600
Second Quarter (through October 20, 1999)................. 10.000 5.000 6,148,300
</TABLE>
- ---------------
(1) Aggregate trading volume per period.
(2) In April 1998, the Company changed its fiscal year-end from December 31 to
April 30, beginning with the four months ended April 30, 1998 (the "Four
Month Period").
The Purchaser has been advised by the Company that the Company historically
has not declared dividends.
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<PAGE> 12
On October 20, 1999, 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, the closing price per Share as reported on the Nasdaq was $5.75.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION.
MARKET FOR THE SHARES. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public.
STOCK QUOTATION. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the National
Association of Securities Dealers (the "NASD") for continued inclusion in the
Nasdaq. The Shares might nevertheless continue to be included in the Nasdaq with
quotations published in the Nasdaq "additional list" or in one of the "local
lists," but if the number of holders of the Shares were to fall below 300, or if
the number of publicly held Shares were to fall below 100,000 or there were not
at least two registered and active market makers for the Shares, the NASD's
rules provide that the shares would no longer be "qualified" for the Nasdaq
reporting and the Nasdaq would cease to provide any quotations. Shares held
directly or indirectly by directors, officers or beneficial owners of more than
10% of the Shares are not considered as being publicly held for this purpose.
If, as a result of the purchase of Shares pursuant to the Offer or otherwise,
the Shares no longer meet the requirements of the NASD for continued inclusion
in the Nasdaq or in any other tier of the Nasdaq and the Shares are no longer
included in the Nasdaq or in any other tier of the Nasdaq, as the case may be,
the market for Shares could be adversely affected.
In the event that the Shares no longer meet the requirements of the NASD
for continued inclusion in any tier of the Nasdaq, it is possible that the
shares would continue to trade in the over-the-counter market and that price
quotations would be reported by other sources. The extent of the public market
for the Shares and the availability of such quotations would, however, depend
upon the number of holders of Shares remaining at such time, the interest in
maintaining a market in Shares on the part of securities firms, the possible
termination of registration of the Shares under the Exchange Act, as described
below, and other factors.
EXCHANGE ACT REGISTRATION. 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, quoted on an automated
inter-dealer quotation system or held by 300 or more holders of record.
Termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
its shareholders and to the Commission and would make certain provisions of the
Exchange Act no longer applicable to the Company, such as the short-swing profit
recovery provisions of Section 16(b) of the Exchange Act, the requirement of
furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in
connection with shareholders' meetings and the related requirement of furnishing
an annual report to shareholders and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions. Furthermore, the
ability of "affiliates" of the Company and persons holding "restricted
securities" of the Company to dispose of such securities pursuant to Rule 144 or
144A promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), may be impaired or eliminated. Purchaser intends to seek to cause the
Company to apply for termination of registration of the Shares under the
Exchange act as soon after the completion of the Offer and the Merger as the
requirements for such termination are met.
If public quotation and registration of the Shares is not terminated prior
to the Merger, then the Shares will no longer be quoted and the registration of
the Shares under the Exchange Act will be terminated following the consummation
of the Merger.
MARGIN REGULATIONS. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the
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<PAGE> 13
Shares would no longer constitute "margin securities" for the purposes of the
margin regulations of the Federal Reserve Board and therefor could no longer be
used as collateral for loans made by brokers. In any event, the Shares will
cease to be "margin securities" if registration of the Shares under the Exchange
Act is terminated.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
GENERAL. The Company is a Washington corporation with its principal
executive offices located at 11332 N.E. 122(nd) Way, Kirkland, Washington. The
Company develops, markets and supports enterprise and Internet software products
and associated application tools and provides comprehensive support and service
for its products.
CAPITALIZATION OF THE COMPANY. The Company has advised the Purchaser that
the authorized capital of the Company consists of 45,000,000 shares of Common
Stock and 5,000,000 shares of preferred stock. As of October 25, 1999, (i)
10,189,969 shares of common stock and no shares of preferred stock were issued
and outstanding; (ii) an aggregate of 5,226,789 Shares were reserved for
issuance upon the exercise of stock options pursuant to the Company's 1983 Stock
Option Plan, the Restated 1993 Stock Option Plan, Restated 1993 Stock Option
Plan for Non-Employee Directors and the 1994 Non-officer Stock Option Plan
(collectively, the "Option Plans") pursuant to which options for the purchase of
an aggregate of 2,477,892 Shares were issued and outstanding; and (iii) 89,846
Shares were reserved for issuance pursuant to the Company's Employee Share
Purchase Plan.
FINANCIAL INFORMATION. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which 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 April 30, 1999
(the "Form 10-K"). More comprehensive financial information is included in the
Form 10-K 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 8.
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<PAGE> 14
WALL DATA INCORPORATED
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
FIVE YEAR FINANCIAL SUMMARY(1)
<TABLE>
<CAPTION>
FOUR MONTHS ENDED
YEAR ENDED APRIL 30, YEAR ENDED DECEMBER 31,
APRIL 30, ---------------------- -----------------------------------------
1999 1998 1997 1997 1996 1995 1994
---------- -------- ----------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
Net revenues.................... $139,729 $ 39,106 $ 46,386 $140,851 $139,364 $110,741 $101,240
Gross margin.................... 111,614 30,899 37,906 115,925 112,766 88,653 86,610
Operating expenses.............. 122,322 36,675 34,214 116,234 107,705 93,868 65,582
Income (loss) from operations... (10,708) (5,776) 3,692 (309) 5,061 (5,215) 21,028
Net income (loss)............... (8,924) (4,648) 2,673 2,251 4,193 7,251 14,184
Earnings (loss) per share --
assuming dilution, as
applicable.................... (0.89) (0.47) 0.27 0.23 0.43 0.72 1.40
Pro forma net income
(loss)(2)..................... (6,519) (4,648) 2,673 9,581 6,145 2,766 16,664
Pro forma earnings (loss) per
share -- assuming dilution, as
applicable.................... (0.65) (0.47) 0.27 0.97 0.63 0.28 1.65
Average shares outstanding --
assuming dilution, as
applicable.................... 9,999 9,805 9,780 9,886 9,721 10,027 10,124
BALANCE SHEET
Cash and cash equivalents and
marketable securities......... $ 65,464 $ 57,490 $ 82,384 $ 70,814 $ 62,483 $ 51,969 $ 48,927
Working capital................. 56,580 56,477 74,874 72,849 71,798 60,720 56,308
Total assets.................... 126,795 140,205 130,585 136,576 127,154 109,339 105,626
Shareholder's equity............ 86,401 92,768 92,951 94,887 90,803 83,702 81,206
KEY RATIOS
Current ratio................... 2.5 2.3 3.0 2.7 3.0 3.3 3.3
Pro forma return on net
revenues(2)................... (4.7)% (11.9)% 5.8% 6.8% 4.4% 2.5% 16.5%
Pro forma return on average
total assets(2)............... (4.9)% (3.4)% 2.2% 7.3% 5.2% 2.6% 18.5%
Pro forma return on average
stockholders' equity(2)....... (7.3)% (5.0)% 3.0% 10.3% 7.0% 3.4% 23.2%
</TABLE>
- ---------------
(1) In April 1998, the Company changed its fiscal year-end from December 31 to
April 30, beginning with the four months ended April 30, 1998.
(2) Excludes non recurring gain in 1995 of $14.0 million ($8.7 million, or $0.87
per share on a diluted basis, after income taxes) and restructuring and
other non recurring charges in 1999, 1997, 1996, 1995, and 1994 of $2.4
million ($0.24 per share), $11.5 million ($7.3 million, or $0.74 per share
on a diluted basis, after income taxes), $3.1 million ($2.0 million, or
$0.20 per share on a diluted basis, after income taxes), $6.8 million ($4.2
million, or $0.42 per share on a diluted basis, after income taxes) and $4.0
million ($2.5 million, or $0.25 per share on a diluted basis, after income
taxes), respectively. See Notes 7 and 12 of Notes to Consolidated Financial
Statements which are incorporated in the Company's periodic reports on Form
10-K for the year ended April 30, 1999, filed with the Commission on July
29, 1999.
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
12
<PAGE> 15
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 shareholders and filed with the Commission. Such
reports 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. Such material should also be available for inspection at the offices of
the Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006, or (ii) at
the Commission's world wide web site at http://www.sec.gov.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although the Purchaser and Parent do not have any
knowledge that any such information is untrue, neither Purchaser nor Parent
takes any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
OTHER FINANCIAL INFORMATION. In connection with Purchaser's and Parent's
review of the Company and in the course of the negotiations between the Company
and Purchaser and Parent, the Company provided those parties with certain
business and financial information about the Company which Parent and Purchaser
believe is not publicly available. This information included forecasts of
potential financial performance of the Company (without regard to the impact on
the Company of a transaction with Parent). The Company advised Parent that:
(i) Company's estimated revenues and net loss (exclusive of nonrecurring
items) for the twelve months ended January 31, 2000, could be
approximately $83,000,000 and $26,000,000, respectively;
(ii) Company's estimated revenues and net income for the twelve months
ended January 31, 2001, could be approximately $90,000,000 and
$6,000,000, respectively; and
(iii) Company's estimated revenues and net income for the twelve months
ended January 31, 2002, could be approximately $98,000,000 and
$8,000,000, respectively.
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 COMPANY'S CONTROL. ACCORDINGLY, THERE CAN BE NO
ASSURANCE THAT THE PROJECTED RESULTS WOULD BE REALIZED OR THAT ACTUAL RESULTS
WOULD NOT BE SIGNIFICANTLY HIGHER OR LOWER THAN THOSE SET FORTH ABOVE. IN
ADDITION, THESE PROJECTIONS 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
PROJECTIONS AND FORECASTS AND ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY
BECAUSE SUCH INFORMATION WAS MADE AVAILABLE TO THE PURCHASER AND PARENT BY THE
COMPANY. NONE OF PARENT, PURCHASER, THE COMPANY, ANY OF THEIR RESPECTIVE
AFFILIATES OR ANY OTHER PARTY ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OR
VALIDITY OF THE FOREGOING PROJECTIONS.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT. Purchaser is a
newly formed Washington corporation organized in connection with the Offer and
has not carried on any activities other than in connection with the Offer. The
principal offices of Purchaser are located at 10725 N. DeAnza Boulevard,
Cupertino, California 95014. Purchaser is a wholly-owned subsidiary of Parent.
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<PAGE> 16
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. Because Purchaser is newly formed and has minimal assets and
capitalization, no meaningful financial information regarding Purchaser is
available.
Parent is a Delaware corporation, with its principal office at 10725 N.
DeAnza Boulevard, Cupertino, California 95014. Parent's principal business is
developing, marketing and supporting software applications for connecting
personal computers to UNIX, AS/400, midrange and corporate mainframe computers
and software that increases the productivity of corporate call centers, and
allows real-time application sharing on corporate networks and across the
Internet.
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 Parent and certain other information are set
forth in Schedule I hereto.
Neither Parent nor Purchaser or, to the best knowledge of Purchaser and
Parent, any of the persons listed in Schedule I to this Offer to Purchase or any
associate or majority-owned subsidiary of Purchaser or Parent or any of the
persons so listed beneficially owns, exercises control or direction over or has
any right to acquire, directly or indirectly, any Shares and neither Parent or
Purchaser nor, to the best knowledge of Purchaser and Parent, any of the persons
or entities referred to above nor any director, executive officer or subsidiary
of Parent or Purchaser has effected any transaction in the Shares during the
past 60 days. To the knowledge of the Purchaser, after reasonable enquiry, there
is no person or company who beneficially owns, directly or indirectly, more than
10% of any class of equity securities of the Company or any person or company
acting jointly or in concert with the Purchaser that owns any securities of the
Company.
Except as provided in the Merger Agreement and as otherwise described in
this Offer to Purchase, to the best of their knowledge, none of Parent,
Purchaser or any of their respective subsidiaries or any of the persons listed
in Schedule I to this Offer to Purchase, or any associate of the persons so
listed on Schedule I hereto, has any contract, arrangement, commitment,
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. To
the best of their knowledge and except as set forth in this Offer to Purchase,
none of Purchaser, Parent, 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 12 of this Offer to Purchase, "Background of the Offer;
Contacts with the Company; the Merger Agreement", and elsewhere herein is a
summary description of the mutual contacts, negotiations and transactions
between any of Purchaser, Parent 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 a material amount of
assets.
Except as disclosed in this Offer to Purchase, there are no contracts,
arrangements or agreements made or proposed to be made between the Purchaser and
any of the directors or officers of the Company, and no payments or other
benefits have been proposed to be made or given by way of compensation for loss
of office or as to their remaining in or retiring from office if the Offer is
successful.
Purchaser will not acquire Shares while the Offer is outstanding, other
than as described in this Offer to Purchase.
The audited balance sheets of Parent and the related statements of income,
total recognized gains and losses, changes in combined shareholders' equity and
cash flows for the year ended December 31, 1998 are contained in Item 8 of the
annual report of Parent filed with the Commission on March 31, 1999 (the "Annual
Report") and are hereby incorporated by reference. A copy of the Annual Report
may be obtained by:
14
<PAGE> 17
(i) writing to Parent at 10725 N. DeAnza Boulevard, Cupertino, California 95014,
attention: Corporate Secretary, (ii) 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 (iii) downloading such report from the
Commission's worldwide web site at http://www.sec.gov. Additionally, the Annual
Report may be inspected at the Commission's offices or the office of the Nasdaq
Operations, 1735 K Street, N.W. Washington, D.C. 20006.
10. FINANCING OF THE OFFER. Purchaser estimates that the amount of funds
required to purchase all outstanding Shares on a fully diluted basis pursuant to
the Offer and to pay fees and expenses related to the Offer will be
approximately $99.1 million. Purchaser will obtain all of such funds from Parent
or one of its affiliates. Parent and its affiliates will provide such funds from
working capital.
11. MATERIAL CHANGES AND OTHER INFORMATION. Purchaser is not aware of any
information which indicates that a material change has occurred in the affairs
of the Company since the date of the last published financial statements of the
Company other than as has been publicly disclosed by the Company. The Purchaser
has no knowledge of any other matter that has not previously been generally
disclosed but which would reasonably be expected to affect the decision of
shareholders to accept or reject the Offer.
12. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY; THE MERGER
AGREEMENT.
BACKGROUND OF THE OFFER.
In 1996, James Simpson, the Company's then Chairman and Chief Executive
Officer, John Wall, the Company's then President and Kevin Vitale, then Chief
Operating Officer met with Zvi Alon, President and Chief Executive Officer of
NetManage and other members of the then NetManage management team and held
preliminary discussions about a possible business combination of NetManage and
the Company. No further discussions were held in response to the call.
In the late summer of 1998, Mr. Alon contacted Mr. Wall by telephone to
find out whether the Company was interested in pursuing discussions regarding a
possible business combination. No further discussions were held in response to
the call.
On March 12, 1999, John Wall, President and Chief Executive Officer of
Company, contacted Zvi Alon, Chief Executive Officer of Parent, by telephone.
Messrs. Alon and Wall engaged in preliminary discussions about the Company's
RUMBA business unit. Both parties expressed an interest in having Parent be
among the potential partners that the Company was evaluating in its analysis of
strategic alternatives with the assistance of Bear Stearns & Co. Inc. ("Bear
Stearns").
On April 26, 1999, at Parent's board of directors meeting, Mr. Alon briefed
the Board on the potential business opportunity with the Company.
On April 29, 1999, Parent entered into a nondisclosure agreement with the
Company.
In May and June 1999, Mr. Alon and Mr. Wall spoke by telephone regarding
Parent's interest in acquiring the Company's RUMBA business unit and the
schedule for Parent to deliver an expression of interest to Bear Stearns.
On July 1, 1999, members of Parent's senior management team, including Mr.
Alon, Gary Anderson, Senior Vice-President and Chief Financial Officer, Patrick
Linehan, Senior Vice-President of Sales, Peter Havart-Simkin, Senior
Vice-President of Marketing, and Judy Somerville, Director of Human Resources,
met with the Company's Mr. Wall, Kevin Vitale, Chief Operating Officer at that
time, Richard Fox, Vice-President and Chief Financial Officer, and Craig Shank,
Vice President, General Counsel and Secretary in Bellevue, Washington to discuss
the Company's business and a possible fit between the Company and Parent.
On July 3, 1999, Mr. Alon sent a letter to the Company, which expressed
Parent's interest in conducting a transaction with the Company and also
described Parent's preliminary valuation of Company.
15
<PAGE> 18
On July 14, 1999, Mr. Alon and Mr. Anderson met with Mr. Vitale and Mr. Fox
in Cupertino, California, to discuss potential organizational structures in a
merger of Parent and the Company.
On July 16, 1999, Parent presented the Company with a written acquisition
proposal in which Parent would acquire all of the Company's outstanding capital
stock in exchange for Parent stock. Mr. Alon and Mr. Vitale spoke by telephone
several times to review the terms and valuation described in the letter.
On July 19, 1999, Parent submitted a revised proposal in which Parent would
acquire all of the Company's outstanding capital stock in exchange for Parent
stock. Mr. Alon and Mr. Vitale followed up by telephone to review the terms.
Prior to the July 22, 1999 Parent board of directors meeting, Mr. Alon
updated individual directors on developments concerning a potential transaction
with the Company. At Parent's board of directors meeting, Mr. Alon updated the
directors as to the status of a potential transaction with the Company. Board
Members approved the current activity.
From July 28, 1999 through August 4, 1999, members of the Company's senior
management traveled to Cupertino, California to meet with Parent senior
management to conduct mutual due diligence, review operational issues and
negotiate merger agreement issues. At the same time, legal counsel for the
Parent traveled to the Company's offices in Kirkland, Washington to conduct due
diligence investigations.
On August 4, 1999, after failing to reach agreement on valuation, Parent
and the Company decided to suspend any further discussions in order to give the
parties an opportunity to review valuation with their respective advisors.
In the month of August 1999, Mr. Alon and Mr. Vitale spoke by telephone to
determine whether there was continued interest in a potential transaction. In a
telephone conversation late in the month, Parent delivered a new proposal for a
potential acquisition of the Company. Mr. Alon and Mr. Vitale held several
discussions by telephone to review the proposal.
On August 27, 1999, Mr. Alon received a telephone call from Mr. Vitale
confirming that based on the proposed valuations, the Company was no longer
interested in Parent's merger proposal.
In early September 1999, Mr. Alon and Mr. Vitale spoke by telephone
regarding the parties' differences in valuation. Mr. Alon had similar
conversations with representatives of Bear Stearns.
On October 5, 1999, the Company contacted Parent and asked whether Parent
would be interested in proposing a cash offer for the Company's shares.
On October 11, 1999, the Parent made a letter proposal to the Company to
purchase the Company at $8.50 per share.
On October 14, 1999, Mr. Vitale telephoned Parent to notify it that the
Company had received a higher offer.
On October 15, 1999, Parent delivered an offer to the Company to purchase
the Company for $9.00 per share. In the afternoon of October 15th, the Company
and Parent agreed to enter into exclusive negotiations until October 20, 1999.
This agreement was later extended to October 21, 1999.
On October 16, 1999, Messrs. Alon, Anderson, Havart-Simkin, Linehan and Ms.
Somerville and George Moore, Vice-President of Marketing met with Messrs.
Vitale, Fox and Shank to conduct a review of the Company's current and
prospective business and of operational issues.
From October 17 through October 20, the Company, Parent and their
respective counsel conducted negotiations on the Merger Agreement.
On October 20, 1999, Parent held a board of directors meeting to consider
the proposed merger. Prior to the board meeting, Mr. Alon kept individual
directors updated as to the status of the potential transaction with Company.
Copies of the draft Merger Agreement had been circulated to Board Members on the
day before the meeting. At the meeting, management and legal counsel briefed the
board on the results of their due diligence investigations and of the
negotiations. The Board of Directors approved the offer submitted by
16
<PAGE> 19
Parent and authorized management to complete the Merger Agreement. The parties
concluded negotiations and executed the Merger Agreement that night.
On the morning of October 21, 1999, the parties publicly announced 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 Parent 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 OFFER. The Merger Agreement provides for the commencement of the Offer
as promptly as reasonably practicable, but in no event later than five business
days after the initial public announcement of Purchaser's intention to commence
the Offer. 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 Parent 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 or amends any other material terms of the
Offer in a manner materially adverse to the Company's shareholders.
COMPANY COVENANTS. Pursuant to the Merger Agreement, the Company has
covenanted and agreed, between the date of the Merger Agreement and continuing
until the earlier of the termination of the Merger Agreement pursuant to its
terms and the Effective Time, unless Parent shall otherwise consent in writing,
to carry on the businesses of the Company and its subsidiaries (the
"Subsidiaries" and, individually, a "Subsidiary") diligently and in accordance
with good commercial practice and in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted and in compliance with all
applicable laws and regulations, to pay its debts and taxes when due subject to
good faith disputes over such debts or taxes, to pay or perform other material
obligations when due, and use its commercially reasonable efforts consistent
with past practices and policies to preserve intact its present business
organization, keep available the services of its present officers and employees
and preserve its relationships with customers, suppliers, distributors,
licensors, licensees, and others with which it has business dealings. In
addition, the Company will promptly notify Parent of any material event
involving its business or operations. The Merger Agreement provides that, except
as permitted by the terms of the Merger Agreement, neither the Company nor any
Subsidiary will do any of the following, without the prior written consent of
Parent: (i) waive any stock repurchase rights, accelerate, amend or change the
period of exercisability of options or restricted stock, or reprice options
granted under any employee, consultant or director stock plans or authorize cash
payments in exchange for any options granted under any of such plans; (ii) grant
any severance or termination pay to any officer or employee except payments in
amounts consistent with policies and past practices or pursuant to written
agreements outstanding, or policies existing, on the date of the Merger
Agreement and as previously disclosed in writing to the other, or adopt any new
severance plan; (iii) transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to the Company's
intellectual property or other proprietary rights, or enter into grants to
future patent rights, other than in the ordinary course of business, consistent
with past practice; (iv) buy any Intellectual Property of a third party or enter
into any license agreement with respect to the Intellectual Property of any
third party for an acquisition or license, the price for which exceeds $50,000
individually (or in the aggregate for a single third party) other than "shrink
wrap," "click wrap," and similar widely available commercial end-user licenses;
(v) declare or pay any dividends on or make any other distributions (whether in
cash, stock or property) 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;
(vi) repurchase or otherwise acquire, directly or indirectly, any shares of
capital stock except pursuant to rights of repurchase of any such shares under
any employee, consultant or director stock plan existing on the date of the
Merger Agreement (which repurchase rights the Company shall be obligated to
exercise if the repurchase price is less than the Merger Consideration); (vii)
issue, deliver, sell, authorize or propose the issuance, delivery or sale of,
any shares
17
<PAGE> 20
of capital stock or any securities convertible into shares of capital stock, or
subscriptions, rights, warrants or options to acquire any shares of capital
stock or any securities convertible into shares of capital stock, or enter into
other agreements or commitments of any character obligating it to issue any such
shares or convertible securities, other than the issuance of Shares, pursuant to
the exercise of stock options therefor outstanding as of the date of the Merger
Agreement, and Shares issuable pursuant to the Option Plans; (viii) cause,
permit or propose any amendments to any charter document or Bylaw (or similar
governing instruments of any subsidiaries); (ix) acquire or agree to acquire by
merging or consolidating with, or by purchasing any equity interest in or a
material portion of the assets of, or by any other manner, any business or any
corporation, partnership interest, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any assets which are
material, individually or in the aggregate, to the business of the Company, or
enter into any joint ventures, strategic partnerships or alliances; (x) sell,
lease, license, encumber or otherwise dispose of any properties or assets which
are material, individually or in the aggregate, to the business of the Company,
except in the ordinary course of business consistent with past practice; (xi)
incur any indebtedness for borrowed money (other than ordinary course trade
payables or pursuant to existing credit facilities in the ordinary course of
business) or guarantee any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire debt securities, or guarantee any
debt securities of others; (xii) adopt or amend any employee benefit or employee
stock purchase or employee option plan (other than is necessary to comply with
law), or enter into any employment contract, pay any special bonus or special
remuneration to any director or employee, or increase the salaries or wage rates
of its officers or employees other than in the ordinary course of business,
consistent with past practice, or change in any material respect any management
policies or procedures; (xiii) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business; (xiv) make any grant of exclusive rights to any third party; (xv)
except in the ordinary course of business, modify, amend or terminate any
material contract or agreement involving payments of $50,000 or more to which
the Company or any subsidiary thereof is a party or waive, release or assign any
material rights or claims thereunder; (xvi) materially revalue any of its assets
or, except as required by GAAP, make any change in accounting methods,
principles or practices; (xvii) make or change any material election in respect
of Taxes, adopt or change any accounting method in respect of Taxes, enter into
any closing agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes in an amount in excess of $50,000 in the
aggregate; (xviii) commence any litigation or settle any litigation for an
amount in excess of the greater of $100,000 in the aggregate or the amount
reserved in respect thereof in the Company Balance Sheet; or (xix) agree in
writing or otherwise to take any of the actions described in (i) through (xviii)
above.
BOARD OF DIRECTORS. The Merger Agreement provides that, promptly upon the
purchase by Purchaser of Shares satisfying the Minimum Condition, Parent shall
be entitled to designate a majority of the members of the Company's Board of
Directors, subject to compliance with Section 14(f) of the Exchange Act. The
Merger Agreement also provides that the Company has agreed to cause Parent's
designees to be elected as directors of the Company, including increasing the
size of the Board of Directors to the extent permitted by its Restated Articles
of Incorporation and/or secure the resignations of such number of directors as
is necessary to cause Parent's designees to be elected as directors of the
Company.
The Merger Agreement provides that following the election or appointment of
Purchaser's designees in accordance with the immediately preceding paragraph,
any amendment or termination of the Merger Agreement by the Company or any
extension by the Company of the time for the performance of any of the
obligations or other acts of Parent or Purchaser or waiver of any of the
Company's rights thereunder, will require the concurrence of a majority of those
directors of the Company then in office who were not designated by Parent.
CONFIDENTIALITY. The Merger Agreement provides that subject to and in
accordance with the terms and conditions of that certain letter dated April 29,
1999 between Parent and the Company (the "Confidentiality Agreement"), from the
date of the Merger Agreement to the Effective Time, the Company shall, and shall
cause its subsidiaries, officers, directors, employees and agents to, afford the
officers, employees and agents of Parent, Purchaser and their affiliates and the
attorneys, accountants, banks, other financial institutions and investment banks
working with Parent or Purchaser, and their respective officers, employees and
agents,
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reasonable access at all reasonable times to its officers, employees, agents,
properties, books, records and contracts, and shall furnish Parent, Purchaser
and their affiliates and the attorneys, banks, other financial institutions and
investment banks working with Parent or Purchaser, all financial, operating and
other data and information as they reasonably request. Subject to the
requirements of law, Parent and Purchaser shall, and shall use their reasonable
efforts to cause their officers, employees and agents, and the attorneys, banks,
other financial institutions and investment banks who obtain such information
to, hold all information obtained pursuant to the Merger Agreement or the
Confidentiality Agreement in accordance with the terms and conditions of the
Confidentiality Agreement.
PROXY MATERIALS; SHAREHOLDER MEETING. The Merger Agreement provides that
the Company and each of Parent and Purchaser shall prepare and file, or shall
cause to be prepared and filed, with the Commission those documents, schedules
and amendments and supplements thereto required to be filed with respect to the
transactions contemplated by the Merger Agreement. The Company, acting through
its Board of Directors, shall, if necessary, cause the Company Shareholders'
Meeting to be duly called (including establishing the record date, if requested,
to be a date immediately after the date the Purchaser first purchases any Shares
pursuant to the Offer) and shall give notice of, convene and hold the Company
Shareholders' Meeting as soon as practicable, and at such time and place
designated by Parent or Purchaser, for the purpose of approving the Merger, the
Merger Agreement and any other actions contemplated hereby which require the
approval of the Company's shareholders. The Company shall recommend to its
shareholders approval of the Merger and take all reasonable actions necessary to
solicit such approval. The Company shall use its best efforts to obtain and
furnish the information required to be included by it in the Proxy Statement
and, after consultation with Parent and Purchaser, shall respond promptly to any
comments of the Commission relating to any preliminary proxy statement regarding
the Merger and the other transactions contemplated by the Merger Agreement and
to cause the Proxy Statement to be mailed to its shareholders, all at the
earliest practicable time. Whenever any event occurs which should be set forth
in an amendment or supplement to the Proxy Statement or any other filing
required to be made with the Commission with respect to the Proxy Statement or
the Company Shareholders' Meeting, each party shall promptly inform the other of
such occurrence and cooperate in filing with the Commission and/or mailing to
the Company's shareholders such amendment or supplement. The Proxy Statement and
all amendments and supplements thereto shall comply with applicable law and be
in form and substance satisfactory to each of Parent and Purchaser and the
Company. The Company, acting through its Board of Directors, shall include in
the Proxy Statement the recommendation of its Board of Directors that
shareholders of the Company vote in favor of the approval and adoption of the
Merger Agreement and the Merger and shall disclose that each of the Company's
directors and executive officers and Banker and its affiliates intend to tender
all outstanding shares beneficially owned by such persons to Purchaser pursuant
to the Offer unless to do so would subject such person to liability under
Section 16(b) of the Exchange Act. The Company shall use its best efforts to
solicit from shareholders of the Company proxies in favor of such approval and
adoption and shall take all other actions necessary or, in the reasonable
judgment of Parent and Purchaser, advisable to secure the vote or consent of the
Company's shareholders required by the WBCA to effect the Merger.
Notwithstanding the foregoing, in the event that Purchaser shall acquire at
least ninety percent (90%) of the outstanding Shares, the parties thereto agree,
at the request of Purchaser, subject to any conditions to the obligations of
each party to effect the Merger, to take all necessary and appropriate action to
cause the Merger to become effective as soon as reasonably practicable after
such acquisition, without a meeting and without a vote of the Company's
shareholders, in accordance with the WBCA.
THE NO SHOP PROVISION. The Merger Agreement provides that until the
earlier of Effective Time or termination of the Merger Agreement, 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, (i) solicit or encourage submission of, any
proposals or offers by any person, entity or group (other than Parent and its
affiliates, agents and representatives), or (ii) participate in any discussions
or negotiations with, or disclose any non-public information concerning the
Company or any of its subsidiaries to, or afford any access to the properties,
books or records of the Company or any of its subsidiaries to, or otherwise
assist or facilitate, or enter into any agreement or understanding with, any
person, entity or group (other than Parent and its affiliates, agents and
representatives), in connection with any Acquisition Proposal
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with respect to the Company. Under the Merger Agreement, an "Acquisition
Proposal" with respect to an entity means any proposal or offer relating to (i)
any merger, consolidation, sale of substantial assets, reorganization,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transactions involving the entity or any subsidiaries of the entity
(other than sales of assets or inventory in the ordinary course of business or
as permitted under the terms of the Merger Agreement), (ii) sale of outstanding
shares of capital stock of the entity (including without limitation by way of a
tender offer or an exchange offer), (iii) the Acquisition by any person of
beneficial ownership or a right to acquire beneficial ownership of, or the
formation of any "group" (as defined under Section 13(d) of the Exchange Act and
the rules and regulations thereunder) which beneficially owns, or has the right
to acquire beneficial ownership of, 10% or more of the then outstanding shares
of capital stock of the entity (except for acquisitions for passive investment
purposes only in circumstances where the person or group qualifies for and files
a Schedule 13G with respect thereto); or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing. The Company will immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. Pursuant to the Merger
Agreement, the Company will (i) notify Parent as promptly as practicable if any
inquiry or proposal is made or any information or access is requested in
connection with an Acquisition Proposal or potential Acquisition Proposal and
(ii) as promptly as practicable notify Parent of the terms and conditions of any
such Acquisition Proposal. In addition, subject to other provisions of this
paragraph, from and after the date of the Merger Agreement until the earlier of
the Effective Time and termination of the Merger 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 Acquisition
Proposal made by any person, entity or group (other than Parent).
Notwithstanding the foregoing, the Merger Agreement provides that, prior to
consummation of the Offer, 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 furnish information to
any person, entity or group after such person, entity or group has delivered to
the Company in writing, an unsolicited bona fide Acquisition Proposal which the
Board of Directors of the Company in its good faith reasonable judgment
determines, after consultation with its independent financial advisors, would
result in a transaction more favorable than the Offer and the Merger to the
shareholders of the Company from a financial point of view and for which
financing, to the extent required, is then committed or which, in the good faith
reasonable judgment of the Board of Directors of the Company (based upon the
advice of independent financial advisors), is reasonably capable of being
financed by such person, entity or group and which is likely to be consummated
(a "Superior Proposal"). In the event the Company receives a Superior Proposal,
nothing contained in the Merger Agreement (but subject to the terms thereof)
will prevent the Board of Directors of the Company from recommending such
Superior Proposal to the Company's shareholders, provided that (i) the Board
determines in good faith, after consultation with outside legal counsel, that
such action is required by its fiduciary duties under applicable law; (ii) the
Company shall not recommend to its shareholders a Superior Proposal until at
least 48 hours after Parent's receipt of a copy of such Superior Proposal (or a
description of the terms and conditions thereof, if not in writing), and (iii)
the Company shall not recommend to its shareholders a Superior Proposal unless
the Company shall have terminated the Merger Agreement and paid the Break-up
Fee. Notwithstanding anything to the contrary in the Merger Agreement, the
Company will not provide any non-public information to a third party unless 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 and such
non-public information has been previously delivered to Parent. Nothing
contained in this paragraph shall prohibit the Company from at any time taking
and disclosing to its shareholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any disclosure to the
Company's shareholders if, in the good faith judgment of the Company's Board of
Directors, after consultation with outside counsel, failure so to disclose would
constitute a breach of its fiduciary duties to the Company's shareholders under
applicable law; provided, however, that neither the Company nor its Board of
Directors nor any committee thereof shall, except as
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permitted by this paragraph, withdraw or modify, or propose to withdraw or
modify, its position with respect to the Merger or the Merger Agreement or
approve or recommend, or propose to approve or recommend, an Acquisition
Proposal; provided, further, that the taking of a position by the Company
pursuant to Rule 14e-2(a)(2) or (3) of the Exchange Act in respect of an
Acquisition Proposal shall not be deemed a withdrawal, a modification or a
proposal to withdraw or modify its position with respect to the Acquisition for
purposes of the Merger Agreement.
PUBLIC ANNOUNCEMENTS. Pursuant to the Merger Agreement, Parent and
Purchaser on the one hand and the Company on the other hand will consult with
each other before issuing any press release or otherwise making any public
statements with respect to the Merger Agreement or the Merger or the other
transactions contemplated thereby, and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by law. This paragraph shall supersede any conflicting provisions in
the Confidentiality Agreement.
FAILURES TO COMPLY. Pursuant to the Merger Agreement, the Company shall
give prompt notice in writing to Parent, and Parent and Purchaser shall give
prompt notice in writing to the Company, of (i) the occurrence, or failure to
occur, of any event which occurrence or failure would be likely to cause any
representation or warranty contained in the Merger Agreement to be untrue or
inaccurate in any material respect at any time from the date of the Merger
Agreement through the Effective Time and (ii) any failure of the Company, Parent
or Purchaser, as the case may be, or of any officer, director, employee or agent
thereof, to comply with or satisfy in all material respects any covenant,
condition or agreement to be complied with or satisfied by it under the Merger
Agreement; provided, however, no such notification shall affect the
representations or warranties of the parties or the conditions to the
obligations of the parties thereunder. The Merger Agreement provides that the
Company shall give prompt notice in writing to Parent of (i) any act, omission
to act, event or occurrence which, with the passage of time or otherwise, would
likely have a Material Adverse Effect on the Company and (ii) any material
contingent liability of the Company or any of its subsidiaries for which such
party reasonably believes it will, with the passage of time or otherwise, become
liable; provided, however, that no such notification shall affect the
representations or warranties of the parties or the conditions to the
obligations of the parties thereunder.
ACTIONS BY THE COMPANY. Pursuant to the Merger Agreement, subject to the
terms and conditions therein, the Company shall, and shall cause its
Subsidiaries to, cooperate with Parent and Purchaser and take all such actions
as may be reasonably requested by Parent and Purchaser to accomplish the Merger.
OPTION PLANS; PURCHASE PLAN; SAVINGS PLAN. The Merger Agreement provides
that, the Company agrees to take all necessary actions to ensure that all
outstanding compensatory options to purchase common stock of the Company
terminate and become without further force and effect immediately prior to the
Effective Time. The Company agrees to take all necessary actions to ensure that
all offering periods outstanding under the Company's Restated Employee Stock
Purchase Plan (the "ESPP") terminate immediately prior to the Effective Time,
and to ensure that the ESPP terminates immediately prior to the Effective Time.
The Company and its ERISA Affiliates, as applicable, each agrees to terminate
its Retirement Savings Plan immediately prior to Effective Time, unless the
Parent, in its sole and absolute discretion, agrees to sponsor and maintain such
plans by providing the Company with written notice of such election at least
three (3) days before the Effective Time. Unless the Parent provides such notice
to the Company, the Parent shall receive from the Company evidence that the
Company's and each ERISA Affiliate's (as applicable) 401(k) plan has been
terminated pursuant to resolutions of each such entity's Board of Directors (the
form and substance of which resolutions shall be subject to review and approval
of the Parent), effective as of the day immediately preceding the Effective
Time.
INDEMNIFICATION; LITIGATION. Pursuant to the Merger Agreement, from and
after the Effective Time, Parent will cause the Surviving Corporation to fulfill
and honor in all respects the obligations of the Company pursuant to any
indemnification agreements between the Company and its directors and officers as
of the Effective Time (the "Indemnified Parties"). The Restated Articles of
Incorporation and Bylaws of the Surviving Corporation will contain provisions
with respect to exculpation and indemnification that are at least as favorable
to the Indemnified Parties as those contained in the Restated Articles of
Incorporation and
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Bylaws of the Company as in effect on the date hereof, which provisions will not
be amended, repealed or otherwise modified for a period of three years 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, unless such modification is
required by law. For a period of three years after the Effective Time, Parent
will cause the Surviving Corporation to use its commercially reasonable efforts
to maintain in effect, if available, directors' and officers' liability
insurance covering those persons who are currently covered by the Company's
directors' and officers' liability insurance policy on terms comparable to those
applicable to the current directors and officers of the Company; provided,
however, that in no event will Parent or the Surviving Corporation be required
to expend in excess of 150% of the annual premium currently paid by the Company
for such coverage (or such coverage as is available for such 150% of such annual
premium).
The Merger Agreement provides that the Company shall give Parent the
opportunity to participate in the defense or settlement of any shareholder
litigation against the Company and its directors relating to any of the
transactions contemplated by the Merger Agreement until the purchase of the
Shares pursuant to the Offer, and thereafter, shall give Parent the opportunity
to direct the defense of such litigation and, if Parent so chooses to direct
such litigation, Parent shall give the Company and its directors an opportunity
to participate in such litigation; provided, however, that no settlement of such
litigation shall be agreed to without Parent's consent; and provided further
that no settlement requiring a payment by a director shall be agreed to without
such director's consent.
EMPLOYMENT AGREEMENTS. The Merger Agreement provides that, prior to
commencement of the Offer, the Company shall offer to enter into employment
agreements (the "Employment Agreements") with each of Kevin B. Vitale, Richard
P. Fox, Craig E. Shank and Kerry D. Palmer, which Employment Agreements shall be
substantially in the form annexed to the Merger Agreement as Exhibit A or such
other terms as may be accepted in writing by Parent.
ADDITIONAL AGREEMENTS. The Merger Agreement provides that, subject to its
terms and conditions, 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, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the transactions contemplated by the Merger Agreement
(including consummation of the Offer and Merger) and to cooperate with each
other in connection with the foregoing. In addition the Merger Agreement
provides that, subject to its terms and conditions, each of the parties to the
Merger Agreement agrees to use (i) all reasonable efforts to obtain all
necessary waivers, consents and approvals from other parties to loan agreements,
leases, licenses and other contracts, and (ii) all reasonable efforts to obtain
all necessary consents, approvals and authorizations as required to be obtained
under any federal, state or foreign law or regulations, including, but not
limited to, those required under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), to defend all lawsuits or other legal
proceedings challenging the Merger Agreement or the consummation of the
transactions contemplated thereby, to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated thereby, to effect all necessary
registrations and filings, including, but not limited to, filings under the HSR
Act and submissions of information requested by Governmental Entities, and to
fulfill all conditions to the Merger Agreement.
ANTI-TAKEOVER PROVISIONS. Pursuant to the Merger Agreement, if any "fair
price," "moratorium," "control share acquisition," "shareholder protection" or
other form of anti-takeover statute, regulation or charter provision or contract
is or shall become applicable to the Offer or the transactions contemplated by
the Merger Agreement, the Company and the Board of Directors of the Company
shall grant such approvals and take such actions as are necessary under such
laws and provisions so that the transactions contemplated by the Merger
Agreement may be consummated as promptly as practicable on the terms
contemplated thereby and otherwise act to eliminate or minimize the effects of
such statute, regulation, provision or contract on the transactions contemplated
thereby.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties thereto including, but
not limited to, representations by the Company and each of
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its Subsidiaries as to the absence of certain changes or events concerning the
Company's business since the date of the Company Balance Sheet, compliance with
law, litigation, employee benefit plans, real property and leases, trademarks,
intellectual property, environmental matters, Year 2000 compliance and material
agreements, contracts and commitments.
TERMINATION; FEES AND EXPENSES. The Merger Agreement provides that it may
be terminated and the transactions contemplated thereby may be abandoned at any
time prior to the Effective Time, whether before or after approval by the
shareholders of the Company: (i) by mutual written agreement of the Boards of
Directors of Parent and the Company; (ii) by either Parent or the Company if (A)
the Offer shall be terminated or expire without any Shares having been purchased
pursuant to the Offer; provided, however, that a party shall not be entitled to
terminate the Merger Agreement if it is in material breach of its
representations and warranties, covenants or other obligations thereunder or (B)
any court of competent jurisdiction in the United States or any United States
governmental body shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the Offer and such
order, decree, ruling or other action shall have become final and nonappealable;
(iii) by Parent if (A) if the Board of Directors of the Company or any committee
thereof shall have approved, or recommended that shareholders of the Company
accept or approve, an Merger Proposal by a third party, or shall have resolved
to do any of the foregoing; (B) if the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified its approval of, or
recommendation that the shareholders of the Company accept the Offer or shall
have resolved to do any of the foregoing; (C) if the Company shall have failed
to include in Schedule 14D-9 the recommendation of the Board of Directors of the
Company that the shareholders of the Company accept the Offer; (D) prior to the
purchase of Shares pursuant to the Offer, in the event that any of the
conditions to the Offer set forth in the Merger Agreement (see Section 15,
"Conditions of the Offer") shall not be satisfied; or at any time on or after
the date of the Merger Agreement, any of the following events shall have
occurred: (1) there shall have been any action taken or threatened, or any
statute, rule, regulation, judgment, temporary restraining order, preliminary or
permanent injunction or other order, decree or ruling proposed, sought,
promulgated, enacted, entered, enforced or deemed applicable to the Offer by any
Governmental Entity or arbitration panel that could reasonably be expected to,
directly or indirectly, (a) make the acceptance for payment or the payment for,
or the purchase of some or all of the Shares pursuant to the Offer illegal or
otherwise delay, restrict or prohibit consummation of the Offer, (b) result in a
delay in or restrict the ability of Purchaser, or render Purchaser unable, to
accept for payment, pay for or purchase some or all of the Shares, (c) require
the divestiture by Parent, Purchaser, the Company or any of their respective
subsidiaries or affiliates of all or any portion of the business, assets or
property of any of them or any Shares or impose any material limitation on the
ability of any of them to conduct their business and own such assets, properties
or Shares, (d) impose any material limitation on the ability of Parent,
Purchaser or their affiliates to acquire or hold or to exercise effectively all
rights of ownership of the Shares, including the right to vote any Shares
purchased by any of them on all matters properly presented to the shareholders
of the Company, (e) result in a material diminution in the benefits expected to
be derived by Parent or Purchaser as a result of the transactions contemplated
by the Offer or the Agreement, or (f) impose any material condition to the Offer
or the Agreement unacceptable to Parent or Purchaser; or (2) the Company shall
have failed to obtain by the Expiration Date all of the consents of third
parties required to be obtained by the Company by such date under the Merger
Agreement; or (3) the Company shall have breached, or failed to comply with, in
any material respect, any of its covenants or obligations under the Merger
Agreement or any representation or warranty of the Company in the Merger
Agreement shall have been incorrect, in any material respect, when made or shall
have since ceased to be true and correct in any material respect; or (4) the
Board of Directors of the Company or any committee thereof shall have (a)
withdrawn or modified (including without limitation, by amendment of the
Schedule 14D-9) in a manner adverse to Parent or Purchaser its approval or
recommendation of the Offer, (b) approved or recommended any Merger Proposal by
a third party other than the Offer, (c) publicly resolved to do any of the
foregoing, or (d) upon a request to reaffirm the Company's approval or
recommendation of the Offer, the Board of Directors of the Company shall fail to
do so within two business days after such request is made; or (5) the Merger
Agreement shall have been terminated in accordance with its terms, or the Offer
shall have been terminated with the consent of the Company; or (6) there shall
have occurred any Material Adverse Effect on the Company, or any event, fact or
change which could reasonably
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be expected to result in a Material Adverse Effect on the Company, or any event,
fact or change which could reasonably be expected to result in a Material
Adverse Effect on the Company; or (7) any of the Employment Agreements shall not
have been executed and delivered or any Employment Agreement is not in full
force and effect; or (E) if the Company is in material breach of any of its
covenants or obligations under the Merger Agreement, or any representation or
warranty of the Company contained in the Merger Agreement shall have been
incorrect, in any material respect, when made or shall have since ceased to be
true and correct in any material respect; or (iv) by the Company (A) if the
Offer shall not have been commenced in accordance with the terms of the Merger
Agreement, or Parent or Purchaser shall have failed to purchase validly tendered
Shares in violation of the terms of the Offer within ten business days after
expiration of the Offer; provided, however, that the Company shall not be
entitled to terminate the Merger Agreement if it is in material breach of its
representations and warranties, covenants or other obligations under the Merger
Agreement; (B) if the Board of Directors of the Company has resolved to, and in
fact does, recommend to the Company's shareholders that they accept a Superior
Proposal, provided that all the provisions of the Merger Agreement with respect
to a Superior Proposal have been fully complied with, and provided further that
the Company shall have paid to Parent the entire Break-up Fee; or (C) prior to
the purchase of Shares pursuant to the Offer, if Parent or Purchaser is in
material breach of any of its covenants or obligations under the Merger
Agreement, or any representation or warranty of Parent or Purchaser contained in
the Merger Agreement shall have been incorrect, in any material respect, when
made or shall have since ceased to be true and correct in any material respect.
The Merger Agreement provides that the Company shall pay to Parent, in same
day funds, upon demand, a fee of U.S. $5,000,000 (the "Break-up Fee") in the
event that any of the following shall occur: (i) the Board of Directors of the
Company or any committee thereof shall have approved, or recommended that
shareholders of the Company accept or approve, an Merger Proposal by a third
party, or shall have resolved to do any of the foregoing; (ii) the Board of
Directors of the Company or any committee thereof shall have withdrawn or
modified its approval of, or recommendation that the shareholders of the Company
accept or approve (as the case may be), the Offer or shall have resolved to do
any of the foregoing; or (iii) the Company shall have failed to include in
Schedule 14D-9 the recommendation of the Board of Directors of the Company that
the shareholders of the Company accept the Offer.
Pursuant to the Merger Agreement the Break-up Fee shall not be deemed to be
liquidated damages, and the right to the payment of the Break-up Fee shall be in
addition to (and not a maximum payment in respect of) any other damages or
remedies at law or in equity to which Parent or Purchaser may be entitled as a
result of the Company's violation or breach of any term or provision of the
Merger Agreement. The Merger Agreement provides that except as otherwise
provided in the Merger Agreement and whether or not the transactions
contemplated by the Offer and the Merger Agreement are consummated, all costs
and expenses incurred in connection with the transactions contemplated by the
Offer and the Merger Agreement shall be paid by the party incurring such
expenses.
13. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER.
PURPOSE OF THE OFFER. The purpose of the Offer is for Parent to acquire
control of, and the entire equity interest in, the Company.
The Offer is being made pursuant to the Merger Agreement among Parent,
Purchaser and the Company pursuant to which, as soon as practicable following
the consummation of the Offer and the satisfaction or waiver of certain
conditions of the Merger Agreement, the Purchaser will be merged with and into
the Company, with the Company, with the Company surviving the Merger as a
wholly-owned subsidiary of Parent (the "Surviving Corporation") and the separate
corporate existence of Purchaser shall cease.
CHANGE OF CONTROL AGREEMENTS. In January 1999, the Company entered into
change of control agreements with each of Kevin B. Vitale, Richard P. Fox, Craig
E. Shank and Kerry D. Palmer (collectively, the "Change of Control Agreements").
The Change of Control Agreements provide for severance benefits in the event of
a termination of employment or constructive termination following a change of
control transaction. The severance benefits equal, in the case of Mr. Vitale, 30
months salary plus an incentive bonus equal to the percentage of his base salary
paid to him as bonus compensation for the prior fiscal year, and, in
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the case of Messrs. Fox, Shank and Palmer, 18 months salary plus an incentive
bonus equal to the percentage of their respective base salaries paid to them as
bonus compensation for the prior fiscal year. The total severance amounts are
$812,500 in the case of Mr. Vitale, $360,000 in the case of Mr. Fox, $330,000 in
the case of Mr. Shank, and $192,750 in the case of Mr. Palmer. The parties have
agreed that the change in each officer's status following the Merger would
constitute a constructive termination entitling each officer to resign and claim
the specified severance benefits.
At the request of Parent and Purchaser, each of these four individuals has
entered into a new agreement superceding the Change of Control Agreements and
any other employment or severance agreements. The new agreements in each case
provide that the officer agrees to the termination of all options that would
otherwise accelerate on consummation of the Merger and agrees not to claim a
constructive termination, and instead, to continue his position as an officer of
the Company following the conclusion of the Offer. In exchange, Parent has
agreed to pay each officer the severance amounts specified above over a
six-month period, plus an amount equal to (x) $9.00 minus (y) the exercise
price, multiplied by (z) the number of shares subject to accelerated option
vesting. The payments terminate if the officer resigns other than for a valid
reason or is terminated for cause. All remaining scheduled payments will be paid
in full if the officer is terminated without cause or in the event of a future
constructive termination. The new agreements also provide that the officer's
base pay will not be reduced and that he will be eligible to participate in the
Parent's bonus plan at levels comparable to those of senior officers of other
divisions of the Parent.
RETENTION PLANS. The Company provides for three different retention
payment plans for employees of different levels. The Company Retention Payment
Plan provides that general employees terminated or constructively terminated as
a result of a sale of the Company are entitled to payment of three months' base
salary upon satisfaction of certain other conditions. The Company Retention
Payment Plan for Management-Level Employees provides that management-level
employees terminated or constructively terminated as a result of a sale of the
Company are entitled to payment of six months' base salary upon satisfaction of
certain other conditions. The Company Retention Payment Plan for Executive-Level
Employees provides that executive-level employees terminated or constructively
terminated as a result of a sale of the Company are entitled to payment of
twelve months' base salary upon satisfaction of certain other conditions.
STOCK OPTIONS. Pursuant to the Merger Agreement, the Company has agreed to
take all necessary actions to ensure (i) that all outstanding compensatory
options to purchase common stock of the Company terminate and become without
further force and effect immediately prior to the Effective Time, (ii) that all
offering periods outstanding under the ESPP terminate immediately prior to the
Effective Time, and (iii) that the ESPP terminates immediately prior to the
Effective Time.
DISSENTERS' RIGHTS. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the approval of the Company's shareholders is
required for the consummation of the Merger, holders of Shares will have certain
dissenters' rights pursuant to the provisions of Chapter 23B.13 of the WBCA to
dissent and demand payment in cash of the fair value of their Shares. If the
statutory procedures were complied with, such rights could lead to a judicial
determination of the fair value required to be paid in cash to such dissenting
holders for their Shares. Any such judicial determination of the fair value of
Shares could be based upon considerations other than or in addition to the Offer
Price or the market value of the Shares, including asset values and the
investment value of the Shares. The fair value so determined could be more or
less than the Offer Price.
If any holder of Shares who demands appraisal under Chapter 23B.13 of the
WBCA fails to perfect, or effectively withdraws or loses his right to demand
payment in cash of the fair value of his or her Shares, as provided in the WBCA,
the Shares of such holder will be converted into the right to receive the Offer
Price for such Shares in accordance with the Merger Agreement.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the WBCA and is qualified in its entirety by the full
text of Chapter 23B.13 of the WBCA.
FAILURE TO FOLLOW THE STEPS REQUIRED BY CHAPTER 23B.13 OF THE WBCA FOR
PERFECTING DISSENTERS' RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
25
<PAGE> 28
GOING PRIVATE TRANSACTIONS. The Merger would have to comply with any
applicable Federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act is applicable to certain "going private" transactions.
The Purchaser does not believe that Rule 13e-3 will be applicable to the Merger
unless the Merger is consummated more than one year after the termination of the
Offer. If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the Merger and the consideration offered to minority
shareholders be filed with the Commission and disclosed to minority shareholders
prior to consummation of the Merger.
PLANS FOR THE COMPANY. Parent intends to conduct a detailed review of the
Company and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and to consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of the circumstances then existing, and reserves the right to
take such actions or effect such changes as it deems desirable. Such changes
could include changes in the Company's business, corporate structure,
capitalization, management or dividend policy.
Except as otherwise described in this Offer to Purchase, neither Purchaser
nor Parent has any current plans or proposals that would relate to, or result
in, any extraordinary corporate transaction involving the Company or any of its
subsidiaries, such as a merger, reorganization or liquidation involving the
Company, a sale or transfer of a material amount of assets of the Company or any
of its subsidiaries, any change in the Company's capitalization or dividend
policy or any other material change in the Company's business, corporate
structure or personnel.
14. 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 Parent, declare or pay any dividends
on or make any other distributions (whether in cash, stock or property) 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.
Shares acquired pursuant to the Offer shall be acquired by Purchaser free
and clear of all security interests, liens, charges, restrictions, encumbrances,
claims and equities and together with all rights and benefits arising therefrom
including the right to any and all cash and stock dividends, distributions,
payments, securities, rights, warrants, assets or other interests which may be
accrued, declared, paid, issued, distributed, made or transferred on or in
respect of such Shares and which are made payable or distributable to
shareholders of record on a date on or after the date of the Offer. If the
Company declares or pays any cash or stock dividend or declares, makes or pays
any other distribution or payment on, or declares, allots, reserves or issues
any securities, rights, warrants or other interests or distributions in respect
of the Shares which is or are payable or distributable to the shareholders of
record on a record date which is on or after the date of this Offer, then such
dividends, distributions, payments or rights will be received and held by the
depositing shareholder for the account of Purchaser and (i) to the extent that
cash dividends, distributions or payments do not exceed the amount payable in
cash to the depositing shareholder by Purchaser pursuant to the Offer, the
amount payable to the depositing shareholder will be reduced by the amount of
any such dividends, distributions or payments; and (ii) the amount by which any
cash dividends, distributions or payments exceed the amount payable in cash and
the whole of any non-cash dividends, distributions, payments, or rights shall be
remitted promptly and transferred by the depositing shareholder to the
Depositary, or any other person designated by Purchaser, for the account of the
Purchaser, accompanied by appropriate documentation of transfer. Pending such
remittance, Purchaser shall be entitled to all rights and privileges as owner of
any such dividends, distributions, payments, rights or other interests and may
withhold the entire purchase price payable by Purchaser pursuant to the Offer or
deduct from the amount payable in cash by Purchaser pursuant to the Offer to the
depositing shareholder, the value thereof as determined by Purchaser in its sole
discretion.
15. CONDITIONS OF THE OFFER. The Merger Agreement provides that,
notwithstanding any other provision of the Offer, and in addition to (and not in
limitation of) Purchaser's rights to extend and amend the Offer at any time in
accordance with the terms of the Merger Agreement, Purchaser shall not be
required to accept for payment, purchase or pay for and Purchaser may elect to
terminate or amend the Offer and to postpone the acceptance of, and payment for,
subject to compliance with Rule 14e-1(c) under the Exchange Act (whether
26
<PAGE> 29
or not any Shares have theretofore been accepted for payment or paid for
pursuant to the Offer), any Shares tendered pursuant to the Offer if (i) any
waiting period (and any extension thereof) under the HSR Act applicable to the
purchase of Shares pursuant to the Offer shall not have expired or been
terminated; (ii) the Minimum Condition is not satisfied; or (iii) at any time on
or after the date of the Merger Agreement, any of the following events shall
have occurred: (a) there shall have been any action taken or threatened, or any
statute, rule, regulation, judgment, temporary restraining order, preliminary or
permanent injunction or other order, decree or ruling proposed, sought,
promulgated, enacted, entered, enforced or deemed applicable to the Offer by any
Governmental Entity or arbitration panel that could reasonably be expected to,
directly or indirectly, (1) make the acceptance for payment or the payment for,
or the purchase of some or all of the Shares pursuant to the Offer illegal or
otherwise delay, restrict or prohibit consummation of the Offer or the Merger or
the consummation of any transaction contemplated by the Merger, (2) result in a
delay in or restrict the ability of Purchaser, or render Purchaser unable, to
accept for payment, pay for or purchase some or all of the Shares, (3) require
the divestiture by Parent, Purchaser, the Company or any of their respective
subsidiaries or affiliates of all or any portion of the business, assets or
property of any of them or any Shares or impose any material limitation on the
ability of any of them to conduct their business and own such assets, properties
or Shares, (4) impose any material limitation on the ability of Parent,
Purchaser or their affiliates to acquire or hold or to exercise effectively all
rights of ownership of the Shares, including the right to vote any Shares
purchased by any of them on all matters properly presented to the shareholders
of the Company, including, without limitation, the adoption and approval of the
Merger Agreement and the Merger, (5) result in a material diminution in the
benefits expected to be derived by Parent or Purchaser as a result of the
transactions contemplated by the Offer or the Merger Agreement (other than
legislation or rule-making affecting the industry as a whole), or (6) impose any
material condition to the Offer, the Merger Agreement or the Merger unacceptable
to Parent or Purchaser; (b) the Company shall have failed to obtain all of the
consents of third parties as required pursuant to the terms of the Merger
Agreement; or (c) the Company shall have breached, or failed to comply with, in
any material respect, any of its covenants or obligations under the Merger
Agreement or any representation or warranty of the Company in the Merger
Agreement shall have been incorrect, in any material respect, when made or shall
have since ceased to be true and correct in any material respect; or (d) the
Board of Directors of the Company or any committee thereof shall have (1)
withdrawn or modified (including without limitation, by amendment of the
Schedule 14D-9) in a manner adverse to Parent or Purchaser its approval or
recommendation of the Offer, (2) approved or recommended any Merger Proposal by
a third party other than the Offer, (3) publicly resolved to do any of the
foregoing, or (4) upon a request to reaffirm the Company's approval or
recommendation of the Offer, the Board of Directors of the Company shall fail to
do so within two business days after such request is made; or (e) the Merger
Agreement shall have been terminated in accordance with its terms; or (f) there
shall have occurred any Material Adverse Effect on the Company, or any event,
fact or change which could reasonably be expected to result in a Material
Adverse Effect on the Company; (g) any of the Employment Agreements shall not
have been executed and delivered or any Employment Agreement is not in full
force and effect.
The Merger Agreement provides that the foregoing conditions are for the
sole benefit of Parent, Purchaser and their affiliates and may be asserted by
Parent or Purchaser regardless of the circumstances giving rise to such
condition, or may be waived by Parent or Purchaser in whole or in part at any
time and from time to time in the sole discretion of Parent or Purchaser. The
failure by Parent or Purchaser at any time to exercise its rights with respect
to the foregoing conditions shall not be deemed a waiver of any such condition,
and each condition shall be deemed an ongoing condition with respect to which
Parent or Purchaser may assert its rights at any time and from time to time.
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 Parent and discussions of representatives of Parent with
representatives of the Company during Parent's investigation of the Company,
neither Purchaser nor Parent is aware of any license or other regulatory 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 Merger of Shares by
Purchaser pursuant to the Offer or, except as set forth below, of any approval
or other action by any
27
<PAGE> 30
domestic (federal or state) or foreign governmental, administrative or
regulatory authority or agency which would be required prior to the purchase of
Shares by Purchaser pursuant to the Offer. 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 Parent or that
certain parts of the businesses of the Company, Purchaser or Parent might 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. See Section 15.
STATE TAKEOVER LAWS. A number of states throughout the United States have
adopted laws and regulations applicable to attempts to acquire securities of
corporations which are incorporated, or have substantial assets, shareholders,
principal executive offices or principal places of business, or whose business
operations otherwise have substantial economic effects, in such states.
The Washington Takeover Act (Chapter 19 of the WBCA) provides that if a
target corporation has an "acquiring person" as a shareholder, the target
corporation may not engage in any of the "significant business transactions" for
a period of five years following the time of the acquiring person's share
acquisition unless the significant business transaction or the purchase of
shares by the acquiring person is approved prior to the acquiring person's share
acquisition by a majority of the members of the board of directors of the target
corporation. An "acquiring person" is a person who beneficially owns 10% or more
of the outstanding voting shares of the target corporation. After the Washington
Takeover Act's five-year moratorium, a "significant business transaction" may
proceed only if (i) it compiles with the "fair price" provisions of the statute
requiring that holders of common stock receive value per share at least equal to
the higher of two specified formulas, or (ii) such transaction is approved at a
shareholders meeting (by the majority of shares entitled to vote excluding those
shares held by the acquiring person) held at least five years after the
acquiring person purchased its shares. Therefore, unless the board of directors
(as it was composed before the acquiring person acquired its shares) approves of
either the transaction or the acquisition by the acquiror of its shares, the
Washington Takeover Act imposes a five-year moratorium prohibiting the
corporation from effecting any of the enumerated significant business
transactions even if its current board wants to do so.
The "significant business transactions" covered by the Washington Takeover
Act include:
(i) a merger, share exchange or consolidation of the target
corporation with an acquiring person;
(ii) the sale, lease, exchange, mortgage, pledge, transfer or other
disposition or encumbrance of the target's assets to or with an acquiring
person over a threshold aggregate market value;
(iii) the termination, as a result of the acquiring person's
acquisition of at least 10% of the shares of the target corporation, of at
least 5% of the target corporations' (or subsidiary's) employees employed
in Washington State over the five-year period following the share
acquisition time;
(iv) the issuance or transfer of shares, options, warrants or rights
to acquire its shares to, or the redemption from, an acquiring person by
the target corporation, except under limited circumstances;
(v) the liquidation or dissolution of the target proposed by or
pursuant to an agreement with an acquiring person;
(vi) the reclassification of securities of the target proposed by or
pursuant to an agreement with an acquiring person that increases the
proportionate share of the outstanding shares of a class or series of
voting shares or securities convertible into voting shares of a target
corporation that is directly or indirectly owned by an acquiring person,
except as the result of immaterial changes due to fractional shares
adjustments; or
28
<PAGE> 31
(vii) receipt by an acquiring person of the direct or indirect
benefit, except proportionately as a shareholder of the target corporation,
of loans, advances, guarantees, pledges or other financial assistance or
tax credits or other tax advantages.
However, it is unlikely that the Washington Takeover Act applies to the
Offer or the Merger because the Board of Directors of the Company has approved
the Offer and is unanimously recommending acceptance of the Offer and approval
of the Merger by the holders of Shares.
In Edgar v. MITE Corp., the Supreme Court of the United States invalidated
on constitutional grounds the Illinois Business Takeover Act, 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 of the United States held that a state 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 shareholders provided that such laws were
applicable only under certain circumstances.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. With the exception of the WBCA, purchaser does not know whether
any of these laws will, by their terms, apply to the Offer or to 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.
ANTITRUST. Under the HSR Act applicable to the Offer and the rules that
have been promulgated thereunder by the Federal Trade Commission (the "FTC"),
certain acquisition transactions may not be consummated unless certain
information has been furnished to the Antitrust Division and the FTC and certain
waiting period requirements have been satisfied. The Merger of Shares by
Purchaser pursuant to the Offer is not subject to such requirements.
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.
Parent has engaged CIBC to act as Dealer Manager for the Offer and as
Parent's exclusive financial advisor in connection with Parent's proposed
acquisition of the Company, for which services CIBC will receive customary
compensation. Parent also has agreed to reimburse CIBC for reasonable
out-of-pocket expenses (including reasonable fees and expenses of its legal
counsel), and to indemnify CIBC and certain related parties against certain
liabilities, including liabilities under the federal securities laws, arising
out of its engagement. In the ordinary course of business, CIBC and its
affiliates may actively trade or hold the securities of Parent and the Company
for their own account or for the account of customers and, accordingly, may at
any time hold a long or short position in such securities.
Parent has also engaged MacKenzie Partners, Inc. to serve as the
Information Agent in connection with the Offer. Purchaser will pay customary
fees for the Information Agent's services, will reimburse the Information Agent
for reasonable out of pocket expenses and will provide customary indemnity to
the Information Agent.
18. MISCELLANEOUS
PROHIBITIONS ON THE OFFER. 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 statute. If Purchaser becomes aware of any valid
statute prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto,
29
<PAGE> 32
Purchaser will make a good faith effort to comply with any such statute. If,
after such good faith effort, Purchaser cannot comply with any such statute, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
the holders of Shares in such jurisdiction. 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
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 PURCHASER OR THE COMPANY NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE ACCOMPANYING 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, Parent 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 8 (except that they will not be
available at the regional offices of the Commission).
October 27, 1999 NetManage Acquisition Corporation
30
<PAGE> 33
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years, of each
member of the Board of Directors and executive officer of Parent. Unless
otherwise indicated each such person (i) has held his principal occupation for
the past five years, (ii) is a citizen of the United States and (iii) has not
been convicted in a criminal proceeding and has not been party to a proceeding
related to state and federal securities laws.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY BUSINESS ADDRESS
---- ------------------------------------------ -------------------------------
<S> <C> <C>
Zvi Alon.......................... Chairman, President and Chief Executive 10725 N. DeAnza Blvd.
Officer Cupertino, CA 95014
Gary R. Anderson.................. Senior Vice President of Finance, Chief 10725 N. DeAnza Blvd.
Financial Officer, and Secretary Cupertino, CA 95014
Richard French(1)................. Senior Vice President and General Manager 10725 N. DeAnza Blvd.
of Emerging Technology (Visual Cupertino, CA 95014
Connectivity)
Peter R. Havart-Simkin(1)......... Senior Vice President of Marketing 10725 N. DeAnza Blvd.
Cupertino, CA 95014
D. Patrick Linehan................ Senior Vice President, Worldwide Sales and 10725 N. DeAnza Blvd.
Support Cupertino, CA 95014
John Bosch........................ Director (1991-present); General Partner, 14241 Worden Way Saratoga, CA
Bay Partners (1981-1998) 95070
Uzia Galil(2)..................... Director (1990-present); Chairman and 850 Third Avenue New York, NY
Chief Executive Officer, Elron Electronics 10022
Industries, Ltd. (1981-present)
Dr. Shelly Harrison............... Director (1996-present); Chief Executive 300 D Street, SW Suite 814
Officer, Spacehab, Inc. (1996-present); Washington, DC 20024
Chairman, Spacehab, Inc. (1993-present)
Darrell Miller.................... Director (1994-present); Executive Vice 195 Loma Alta Los Gatos, CA
President, Corporate Strategic Marketing 95032
(1994-1996)
Abraham Ostrovsky................. Director (1998-present); Chief Executive 200 Sheridan Avenue #404 Palo
Officer, Compressent Corporation Alto, CA 94306
(1996-1997); Chairman, Jetform
Corporation, (1995-present); Chairman and
Chief Executive Officer, Jetform
Corporation (1991-1995)
</TABLE>
- ---------------
(1) Citizen of the United Kingdom
(2) Citizen of Israel
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years, of each
member of the Board of Directors and executive officer of Purchaser. Unless
otherwise indicated each such person (i) has held his principal occupation for
the past five years, (ii) is a citizen of the United States and (iii) has not
been
I-1
<PAGE> 34
convicted in a criminal proceeding and has not been party to a proceeding
related to state and federal securities laws.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY BUSINESS ADDRESS
---- ------------------------------------------ -------------------------------
<S> <C> <C>
Zvi Alon....................... Chairman and Chief Executive Officer of 10725 N. DeAnza Blvd.
Parent Cupertino, CA 95014
Gary R. Anderson............... Senior Vice President of Finance, Chief 10725 N. DeAnza Blvd.
Financial Officer, and Secretary of Parent Cupertino, CA 95014
</TABLE>
I-2
<PAGE> 35
The Depositary for the Offer is:
CHASEMELLON
SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Carrier: By Hand:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Reorganization Department Reorganization Department Reorganization Department
PO Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ 07606 Mail Stop -- Reorg 13th Floor
Ridgefield Park, NJ 07660 New York, NY 10271
</TABLE>
Facsimile (for Eligible Institutions only): (201) 296-4293
To confirm by telephone: (201) 296-4860
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent. A shareholder may also contact brokers, dealers, commercial
banks or trust companies for assistance concerning the Offer.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC. LOGO
156 Fifth Avenue, New York, NY 10010
(212) 929-5500 (Call collect)
or
Call Toll Free (800) 322-2885
The Dealer Manager for the Offer is:
[CIBC WORLD MARKETS LOGO]
One World Financial Center
New York, New York 10281
(212) 856-4181
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
WALL DATA INCORPORATED
AT
$9.00 NET PER SHARE
BY
NETMANAGE ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
NETMANAGE, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, NOVEMBER 24, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
CHASEMELLON
SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Carrier: By Hand:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Reorganization Department Reorganization Department Reorganization Department
PO Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ 07606 Mail Stop -- Reorg 13th Floor
Ridgefield Park, NJ 07660 New York, NY 10271
</TABLE>
Facsimile (for Eligible Institutions only): (201) 296-4293
To confirm by telephone: (201) 296-4860
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. THE INSTRUCTIONS
ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
PLEASE REFER TO INSTRUCTION 9 OF THIS LETTER OF TRANSMITTAL FOR IMPORTANT
INFORMATION REGARDING BACKUP WITHHOLDING REQUIRED BY THE INTERNAL REVENUE
SERVICE AND THE SUBMISSION OF SUBSTITUTE FORM W-9 TO THE DEPOSITARY.
The undersigned delivers to you the enclosed certificate(s) representing
Shares, details of which are as follows:
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
SHARE OF SHARES NUMBER OF
CERTIFICATE EVIDENCED BY SHARES
NUMBER(S)* SHARE CERTIFICATE(S)* TENDERED**
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total Shares
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by shareholders delivering Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares delivered to
the Depositary are being tendered hereby. See Instruction 4.
- --------------------------------------------------------------------------------
<PAGE> 2
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF
TRANSMITTAL CAREFULLY
This Letter of Transmittal is to be completed by shareholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
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 Book-Entry Transfer Facility (as defined in
and pursuant to the book-entry transfer procedure described in Section 3 of the
Offer to Purchase (as defined below). Shareholders whose certificates evidencing
Shares ("Share Certificates") are not immediately available or who cannot
deliver their Share Certificates and all other documents required hereby to the
Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase) or who cannot complete the procedure for delivery by book-entry
transfer on a timely basis and who wish to tender their Shares must do so
pursuant to the guaranteed delivery procedure described in Section 3 of the
Offer to Purchase. See Instruction 2.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
The terms and conditions of the Offer are incorporated by reference in this
Letter of Transmittal. Capitalized terms used herein but not defined in this
Letter of Transmittal which are defined in the Offer to Purchase dated October
27, 1999 shall have the meanings set out in the Offer to Purchase.
[ ] 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 Registered Holder(s):
Window Ticket No. (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to NetManage Acquisition Corporation, a
Washington corporation ("Purchaser"), which is a wholly-owned subsidiary of
NetManage, Inc., a Delaware corporation, the above-described shares of common
stock (the "Shares") of Wall Data Incorporated, a Washington corporation (the
"Company"), pursuant to Purchaser's offer to purchase all Shares at $9.00 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated October 27, 1999 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which together 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 and subject to each
shareholder's withdrawal rights, the undersigned hereby irrevocably deposits and
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), payments, securities, rights, warrants, assets or other
interests which may be accrued, declared, paid, issued, distributed, made or
transferred on or in respect of such Shares on or after October 20, 1999
(collectively, "Distributions"), and irrevocably constitutes and appoints
ChaseMellon Shareholder Services, L.L.C. (the "Depositary") the true and lawful
agent and attorney-in-fact of the undersigned, with full power of substitution
(such power of attorney being deemed to be an irrevocable power coupled with an
interest), to (i) deliver Share Certificates evidencing such Shares and all
Distributions, or transfer ownership of such Shares and all Distributions on the
account books maintained by a Book-Entry Transfer Facility, together, in either
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of Purchaser, (ii) register or record, transfer and enter the transfer
of such Shares and all Distributions on the appropriate register of holders
maintained by the Company, (iii) vote, execute and deliver any and all
instruments of proxy, authorizations or consents in respect of any and all such
Shares and Distributions, revoke any such instruments, authorizations or
consents given prior to, on, or after the Effective Date, designate in any such
instruments of proxy any person or persons as the proxy or proxy nominee of the
undersigned in respect of such Shares and Distributions for all purposes
including, without limitation, in connection with any meeting (whether annual,
special or otherwise or any adjournment or adjournments thereof) of holders of
securities of the Company, (iv) execute, endorse and negotiate, for and in the
name of and on behalf of the undersigned with respect to Shares and
Distributions, any and all checks or other instruments respecting any
distribution payable to or to the order of the undersigned and (v) exercise any
and all rights of the undersigned with respect to such Shares and Distributions.
The undersigned acknowledges that, if the Company should declare or pay any
cash dividend or stock dividend or declare, make or pay any other distribution
or payment on, or declare, allot, reserve or issue any securities, rights,
warrants or other interests or distributions with respect to the Shares tendered
herewith, payable or distributable to the shareholders of record on a record
date which is on or after the date of the Offer, then, without prejudice to
Purchaser's rights under Section 15 of the Offer "Conditions of the Offer", (i)
in the case of any such cash dividend, distribution or payment that does not
exceed the purchase price per Share, the purchase price per Share payable by
Purchaser pursuant to the Offer will be reduced by the amount of any such cash
dividend, distribution or payment received in respect of that Share and (ii) in
the case of any such non-cash dividend, distribution, payment or right, the
whole of any such non-cash dividend, distribution or payment or right, and in
the case of any cash dividend, distribution or payment in an amount that exceeds
the purchase price per Share, the whole of any such cash dividend, distribution
or payment, will be received and held by the depositing shareholder for the
account of Purchaser and shall be required to be promptly remitted and
transferred by the depositing shareholder to the Depositary for the account of
Purchaser, accompanied by appropriate documentation of transfer. The undersigned
also acknowledges that pending such remittance, Purchaser will be entitled to
all rights and privileges as the owner of any such dividend, distribution,
payment or right, and may withhold the entire purchase price payable by
Purchaser pursuant to the Offer or deduct from the purchase price payable by
Purchaser pursuant to the Offer the amount or value thereof, as determined by
Purchaser in its sole discretion.
The undersigned hereby irrevocably appoints Zvi Alon and Gary Anderson, and
each of them, as the designees of the Purchaser, attorneys-in-fact and proxies
of the undersigned, each with full power of substitution, to vote in such manner
as each such attorney-in-fact 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 shareholders
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
<PAGE> 4
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
shareholders 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 security
interests, liens, restrictions, 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.
To the extent permitted by law, no authority herein conferred or agreed to
be conferred shall be affected by, and all such authority shall survive, the
death, incapacity, bankruptcy or insolvency of the undersigned. All obligations
of the undersigned hereunder shall be binding upon the heirs, personal
representatives, successors, executors and assigns of the undersigned. Except as
stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that the valid tender 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/or return all Share 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/or all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing 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/or
return all Share Certificates evidencing Shares not purchased or not tendered in
the name(s) of, and mail such check and/or Share 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.
<PAGE> 5
[ ] CHECK HERE IF ANY OF THE SHARE CERTIFICATES REPRESENTING SHARES THAT YOU OWN
HAVE BEEN LOST OR DESTROYED AND SEE INSTRUCTION 10.
Number, class and series of Shares represented by the lost or destroyed
certificates:
<TABLE>
<S> <C> <C>
- ------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7)
To be completed ONLY if the check for the
purchase price of Shares or Share Certificates
evidencing Shares not tendered or not
purchased are to be issued in the name of
someone other than the undersigned.
Issue [ ] Check [ ] Share Certificate(s) to:
Name:
(PLEASE PRINT)
Address:
(ZIP OR POSTAL CODE)
(TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER IF U.S. RESIDENT)
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
- ------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7)
To be completed ONLY if the check for the
purchase price of Shares purchased or Share
Certificates evidencing Shares not tendered or
not purchased are to be mailed to someone
other than the undersigned, or to the
undersigned at an address other than that
shown under "Description of Shares Tendered."
Mail [ ] Check [ ] Share Certificate(s) to:
Name:
(PLEASE PRINT)
Address:
(ZIP OR POSTAL CODE)
(TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER IF U.S. RESIDENT)
- ------------------------------------------------------
</TABLE>
<PAGE> 6
IMPORTANT
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 OR W-8. SEE INSTRUCTION 9)
SIGNATURE(S) OF HOLDER(S)
Dated: , 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
Certificates or on a security position listing or by 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 OR POSTAL CODE)
Area Code and Telephone No.:
Taxpayer Identification or
Social Security No. if U.S. resident:
(SEE SUBSTITUTE FORM W-9 OR W-8)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
Name:
(PLEASE PRINT)
Title:
Name of Firm:
Address:
(INCLUDE ZIP OR POSTAL CODE)
Area Code and Telephone Number:
Date:
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member of a registered national
securities exchange in the United States, 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 (each of the foregoing being referred to
as an "Eligible Institution"), unless (i) this Letter of Transmittal is signed
by the registered holder(s) of the Shares (which term, for purposes of this
document, shall include any participant in a Book-Entry Transfer Facility whose
name appears on a security position listing as the owner of Shares) tendered
hereby and such holder(s) has (have) completed neither the box entitled "Special
Payment Instructions" nor the box entitled "Special Delivery Instructions" on
the reverse hereof or (ii) such Shares are tendered for the account of an
Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter of
Transmittal is to be used either if Share 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. Share Certificates evidencing all physically
tendered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at a 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 this Letter of Transmittal
hereof prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase). If Share Certificates are forwarded to the Depositary in multiple
deliveries, a properly completed and duly executed Letter of Transmittal must
accompany each such delivery. Shareholders whose Share Certificates are not
immediately available, who cannot deliver their Share 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 Share 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 of
The Nasdaq Stock Market's 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, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, 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 shareholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the Share
Certificate numbers, the number of Shares evidenced by such Share Certificates
and the number of Shares tendered should be listed on a separate schedule and
attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
which are to be tendered in the box entitled "Number of Shares Tendered". In
such cases, new Share Certificate(s) evidencing the remainder of the Shares that
were evidenced by the Share Certificates delivered to the Depositary 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 acceptance for payment of, and payment
for, the Shares tendered. All Shares evidenced by Share Certificates delivered
to the Depositary will be deemed to have been tendered unless otherwise
indicated.
<PAGE> 8
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 Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
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 Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share 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 Share
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 Share Certificate(s).
Signatures on such Share 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 Share 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 Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share 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 any 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 Share
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 SHARE 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 Share 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 Share 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.
Shareholders delivering Shares tendered hereby by book-entry transfer may
request that Shares not purchased be credited to such account maintained at the
Book-Entry Transfer Facility as such shareholder 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.
8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent or the
Dealer Manager at their respective addresses or telephone numbers 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 FORMS W-9 AND W-8. U.S. shareholders must submit Substitute
Form W-9 to the Depositary and non-U.S. shareholders must generally submit
Substitute Form W-8 to avoid 31% backup withholding.
U.S. Shareholders. Under United States federal income tax law, each U.S.
Shareholder (as defined in Section 3 "Procedures for Accepting the Offer and
Tendering Shares" of Offer to Purchase) whose tendered Shares are accepted for
payment is required by law to provide the Depositary (as payer) with such
shareholder's correct TIN on Substitute Form W-9 below. If such shareholder is
an individual, the TIN is such shareholder's social security number. If the
<PAGE> 9
Depositary is not provided with the correct TIN, the shareholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such shareholder 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
shareholder. 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 shareholders (including,
among others, all corporations and certain foreign persons) are not subject to
these backup withholding and reporting requirements.
For a U.S. shareholder to prevent backup withholding on payments that are
made to a shareholder with respect to Shares purchased pursuant to the Offer,
the shareholder is required to notify the Depositary of such U.S. shareholder's
correct TIN by completing the form below certifying that the TIN provided on
Substitute Form W-9 is correct (or that such shareholder is awaiting a TIN), and
that (i) such shareholder 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
shareholder that such shareholder 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.
Non-U.S. Shareholders. To avoid backup withholding, Non-U.S. shareholders,
(as defined in Section 3 "Procedures for Accepting the Offer and Tendering
Shares" of Offer to Purchase) including individuals, must generally submit a
Substitute Form W-8 to the Depositary, signed under penalties of perjury,
attesting to such shareholder's exempt status. To prevent backup withholding on
payments made to a shareholder with respect to shares purchased pursuant to the
Offer, the Substitute Form W-8 requires a Non-U.S. Shareholder to certify, under
penalties of perjury, that the shareholder (1) is a nonresident alien individual
or a foreign corporation, partnership or trust, and (2) is not an individual who
has been, or who plans to be, present in the United States for a total of 183
days or more during the calendar year, and (3) is not engaged and does not plan
to be engaged during the year, in a United States trade or business that has
effectively connected gains from transactions with a broker or barter exchange.
Substitute Form W-8 is attached to this Letter of Transmittal.
10. LOST CERTIFICATES. If a Share Certificate has been lost or destroyed,
this Letter of Transmittal should be completed as fully as possible and
forwarded, together with a letter describing the loss, to the Depositary. The
Depositary will assist in making arrangements for the replacement of such share
certificates. Please ensure that you provide your telephone number to the
Depositary so that the Depositary may contact you if required.
IMPORTANT: THIS 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 SHARE 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.
<PAGE> 10
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- ------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
- ------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- Please provide your Taxpayer Social Security Number(s)
FORM W-9 Identification Number in the box at right ------------------------------
DEPARTMENT OF THE TREASURY and certify by signing and dating below.
INTERNAL REVENUE SERVICE or
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN) Employer Identification Number(s)
------------------------------
- ------------------------------------------------------------------------------------------------------------------------
PART 2 -- 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.
- ------------------------------------------------------------------------------------------------------------------------
PART 3 -- AWAITING TIN [ ] PART 4 -- EXEMPT [
]
- ------------------------------------------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) in Part 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 were no longer subject to backup withholding, do not cross out item (2). If you are exempt from backup
withholding, check the box in Part 4 above.
- ------------------------------------------------------------------------------------------------------------------------
SIGNATURE DATE
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(b) I intend to mail or deliver an application in the near future. I
understand that, if I do not provide a taxpayer identification number to the
Depositary, 31% of all reportable payments made to me will be withheld, but
will be refunded if I provide a certified taxpayer identification number
within 60 days.
Signature: Date:
- --------------------------------------------------------------------------------
NOTE: IF YOU ARE A U.S. SHAREHOLDER, 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.
<PAGE> 11
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
- ------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE Please provide your U.S. taxpayer Social Security Number(s)
FORM W-8 identification number, if any, in the or
DEPARTMENT OF THE TREASURY box at right. Employer Identification
INTERNAL REVENUE SERVICE Number(s)
CERTIFICATE OF FOREIGN STATUS ------------------------------
- ------------------------------------------------------------------------------------------------------------------------
CERTIFICATION.--
Under penalties of perjury, I certify that: (please check applicable box(es))
[ ] For INTEREST PAYMENTS and DIVIDENDS, I am not a U.S. citizen or resident (or I am filing for a foreign
corporation, partnership, estate or trust).
[ ] For BROKER TRANSACTIONS or BARTER EXCHANGES, I (1) am a nonresident alien individual or a foreign corporation,
partnership or trust, and (2) am not an individual who has been, or who plans to be, present in the United States for a
total of 183 days or more during the calendar year, and (3) am not engaged and do not plan to be engaged during the
year, in a United States trade or business that has effectively connected gains from transactions with a broker or
barter exchange.
- ------------------------------------------------------------------------------------------------------------------------
SIGNATURE DATE ____________________ , 199____
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: IF YOU ARE A NON-U.S. SHAREHOLDER, FAILURE TO COMPLETE AND RETURN THIS
FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU
PURSUANT TO THE OFFER. THIS FORM MUST BE COMPLETED IN ACCORDANCE WITH
APPLICABLE INSTRUCTIONS AND OTHER REQUIREMENTS. ADDITIONAL INFORMATION MAY
BE FOUND IN THE INSTRUCTIONS TO FORM W-8 AND IN IRS PUBLICATION 515, BOTH
OF WHICH ARE AVAILABLE FROM THE DEPOSITARY ON REQUEST.
<PAGE> 12
The Information Agent for the Offer is:
[MACKENZIE LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
The Dealer Manager for the Offer is:
[CIBC WORLD MARKETS LOGO]
One World Financial Center
New York, New York 10281
(212) 856-4181
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
WALL DATA INCORPORATED
(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
("Share Certificates") evidencing shares of common stock (the "Shares") of Wall
Data Incorporated, a Washington corporation (the "Company"), are not immediately
available, (ii) if Share Certificates and all other required documents cannot be
delivered to ChaseMellon Shareholder Services, L.L.C., 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 and must include guarantee by
an Eligible Institution. See Section 3 of the Offer to Purchase (as defined
below).
The Depositary for the Offer is:
CHASEMELLON
SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Carrier: By Hand:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ 07606 Mail Stop -- Reorg 13th Floor
Ridgefield Park, NJ 07660 New York, NY 10271
</TABLE>
Facsimile (for Eligible Institutions only): (201) 296-4293
To confirm by telephone: (201) 296-4860
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 NetManage Acquisition Corporation, a
Washington corporation which is a wholly-owned subsidiary of NetManage, Inc., a
Delaware Corporation, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated October 27, 1999 (the "Offer to Purchase"), and in
the related Letter of Transmittal (which together with any amendments or
supplements thereto, collectively constitute the "Offer"), receipt of each of
which is hereby acknowledged, the number of Shares specified below pursuant to
the guaranteed delivery procedures described in Section 3 of the Offer to
Purchase.
<TABLE>
<S> <C>
Number of Shares:
SIGNATURE(S) OF HOLDERS(S)
Dated: , 1999
Certificate Nos. (If Available): Name(s) of Holders:
PLEASE PRINT
[ ] Check box if Shares will be delivered by
book-entry transfer ADDRESS
ZIP OR POSTAL CODE
AREA CODE AND TELEPHONE NO.
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a firm which is a member of a registered national
securities exchange in the United States, 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 or the New York Stock Exchange
Guarantee Program or the Stock Exchange Medallion Program or an "Eligible
Institution" as that term is defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended, hereby, guarantees to deliver to the
Depositary, Share Certificates evidencing the Shares tendered hereby, in proper
form for transfer, or confirmation of book-entry transfer of such Shares, in
each case 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 trading
days of The Nasdaq Stock Market's National Market after 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
Share Certificates to the Depository within the time period shown herein and
otherwise in accordance with Instruction 2 of the Letter of Transmittal. Failure
to do so could result in a financial loss to such Eligible Institution.
NAME OF FIRM
ADDRESS
ZIP OR POSTAL CODE
AREA CODE AND TELEPHONE NO.
AUTHORIZED SIGNATURE
Name:
(PLEASE TYPE OR PRINT)
TITLE
Dated: , 1999
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
ONE WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10281
[CIBC WORLD MARKETS LOGO]
OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
WALL DATA INCORPORATED
AT
$9.00 NET PER SHARE
BY
NETMANAGE ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
NETMANAGE, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, NOVEMBER 24, 1999, UNLESS THE OFFER IS EXTENDED.
October 27, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged to act as Dealer Manager in connection with the offer
by NetManage Acquisition Corporation, a Washington corporation ("Purchaser"),
which is a wholly-owned subsidiary of NetManage, Inc., a Delaware corporation
("Parent") to purchase all outstanding shares of common stock (the "Shares") of
Wall Data Incorporated, a Washington corporation (the "Company"), at a price of
$9.00 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in Purchaser's Offer to Purchase dated October 27, 1999
(the "Offer to Purchase"), and the related Letter of Transmittal (which together
with any amendments and supplements thereto, 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, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THAT
NUMBER OF SHARES THAT SHALL CONSTITUTE NOT LESS THAN FIFTY-ONE PERCENT (51%) OF
THE THEN OUTSTANDING SHARES ON A FULLY DILUTED BASIS. 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.
Enclosed for your information and use are copies of the following
documents:
1. Offer to Purchase, dated October 27, 1999;
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 ChaseMellon Shareholder Services, L.L.C. (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 printed form of letter to shareholders of the Company from Robert
Frankenberg, Chairman of the Board of the Company and Kevin B. Vitale,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9, dated October 27,
1999, 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 or Substitute Form W-8; 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 WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, NOVEMBER 24, 1999, 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 Facilities (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 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
either CIBC World Markets Corp., as the Dealer Manager, or MacKenzie Partners,
Inc., as the Information Agent, at their respective addresses and telephone
numbers set forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed materials may be obtained from the
Information Agent at (800) 322-2885.
Very truly yours,
CIBC WORLD MARKETS CORP.
Enclosures
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 PARENT, PURCHASER,
THE COMPANY, THE DEALER MANAGER, THE DEPOSITARY OR THE INFORMATION AGENT, 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
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
WALL DATA INCORPORATED
AT
$9.00 NET PER SHARE
BY
NETMANAGE ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
NETMANAGE, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, NOVEMBER 24, 1999, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are an Offer to Purchase dated October 27,
1999 (the "Offer to Purchase") and a related Letter of Transmittal (which
together constitute the "Offer") in connection with the offer by NetManage
Acquisition Corporation, a Washington corporation ("Purchaser"), which is a
wholly-owned subsidiary of NetManage, Inc., a Delaware corporation ("Parent"),
to purchase all outstanding shares of common stock (the "Shares") of Wall Data
Incorporated, a Washington corporation (the "Company"), at a price of $9.00 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer. Also enclosed is the letter to shareholders of the
Company from Robert Frankenberg, Chairman of the Board of the Company and Kevin
B. Vitale, 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 $9.00 per Share, net to the seller in cash.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company unanimously has determined
that the Offer is fair to, and in the best interests of, the shareholders
of the Company, and recommends that shareholders 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 Wednesday, November 24, 1999, 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 not less than
fifty-one percent (51%) of the then outstanding Shares on a fully diluted
basis. 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. Shareholders
are urged to read the Offer
2
<PAGE> 2
to Purchase in its entirety for a description of all conditions to the
Offer and the other items set forth therein.
6. Tendering shareholders 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 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 statute. If, after such good faith effort,
Purchaser cannot comply with any such 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 one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
3
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
WALL DATA INCORPORATED
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated October 27, 1999 and the related Letter of Transmittal
(which together constitute the "Offer"), in connection with the offer by
NetManage Acquisition Corporation, a Washington corporation which is a
wholly-owned subsidiary of NetManage, Inc., a Delaware corporation, to purchase
all outstanding shares of common stock (the "Shares") of Wall Data Incorporated,
a Washington 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: ________________________ , 1999
SIGN HERE
Account #:
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.
4
<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>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
GIVE THE GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY FOR THIS TYPE OF IDENTIFICATION
NUMBER OF -- ACCOUNT: NUMBER OF --
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. An individual's The individual 8. Sole The Owner4
account proprietorship
The actual owner account Legal entity (Do not
2. Two or more of the account or, furnish the identifying
individuals if combined funds, 9. A valid number of the personal
(joint account) any one of the trust, representative or
3. Husband and wife individuals1 estate, or trustee unless the legal
(joint account) pension entity itself is not
4. Custodian account of The actual owner trust designated in the
a minor (Uniform of the account or, account title)5
Gift to Minors Act) if joint funds, 10. Corporate
either person1 account The corporation
5. Adult and minor
(joint account) The minor2 11. Religious, The organization
charitable,
6. Account in the name The adult or, if or The partnership
of guardian or the minor is the educational
committee for a only contributor, organization The organization
designated ward, the minor1 account
minor, or The broker or nominee
incompetent person The ward, minor, 12. Partnership
7. a. The usual or incompetent account held The public entity
revocable savings person3 in the name
trust account of the
(grantor is also The business
trustee) grantor-trustee1
b. So-called trust 13. Association,
account that is The actual owner1 club, or
not a legal or other
valid trust under tax-exempt
organization
State law
14. A broker or
registered
nominee
15. Account with
the
Department
of
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.
2 Circle the minor's name and furnish the minor's social security number.
3 Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
4 Show the name of the owner.
5 List first and circle the name of the valid 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 exempted 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 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 made to a nominee.
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 on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
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. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning with January 1, 1984, payers must
generally withhold 20% 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 payer, 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) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an under
payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) 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.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
<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
27, 1999 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
statute. If Purchaser becomes aware of any valid 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 statute. If, after such good faith effort,
Purchaser cannot comply with such statute, the Offer will not be made to (nor
will tenders be accepted from or on behalf of) the holders of Shares in such
jurisdiction. 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 CIBC World Markets Corp. 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
of
Wall Data Incorporated
at
$9.00 Net Per Share
by
NetManage Acquisition Corporation
a wholly-owned subsidiary of
NetManage, Inc.
NetManage Acquisition Corporation, a Washington corporation
("Purchaser") which is a wholly-owned subsidiary of NetManage, Inc., a Delaware
corporation ("Parent"), is offering to purchase all outstanding shares of common
stock (the "Shares") of Wall Data Incorporated, a Washington corporation (the
"Company"), at a price of $9.00 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 27, 1999 (the "Offer to Purchase") and in the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively 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 WEDNESDAY, NOVEMBER 24, 1999, 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 shall constitute not less than fifty-one percent (51%) of
the then outstanding Shares on a fully diluted basis.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of October 20, 1999 (the "Merger Agreement"), among Parent, Purchaser
and the Company. The Merger Agreement provides that, among other things, if at
least 90% of the outstanding Shares are tendered in the Offer, Purchaser will
utilize the applicable provisions of the Washington Business Corporation Act
("WBCA") to acquire any remaining Shares that were not deposited under the Offer
(the "Short-Form Merger"). If such Short-Form Merger is not available, then,
subject to shareholder approval, Purchaser will be merged with and into the
Company (the "Merger") with Company surviving as a wholly-owned subsidiary of
Parent (the "Surviving Corporation") and the separate corporate existence of
Purchaser shall cease. At the effective time 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 or Shares held by
shareholders who shall have demanded and perfected dissenters' rights), in
accordance with the provisions of the WBCA, will be automatically cancelled and
extinguished and shall be converted into the right to receive $9.00 per Share,
payable in cash (the "Merger Consideration").
The Board of Directors of the Company has unanimously approved the Offer
and the Merger and determined that the terms of the Offer and the Merger are
fair to, and in the best interests of, the shareholders of the Company, and
recommends that shareholders of the Company accept the Offer and tender their
Shares.
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 ChaseMellon
Shareholder Services, L.L.C. (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 shareholders for the purpose
of receiving payments from Purchaser and transmitting such payments to tendering
shareholders 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. 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 "Share
Certificates") or timely confirmation of a book-entry transfer of such Shares
into the Depositary's account at one of the Book-Entry Transfer Facilities (as
defined in Section 2 of the Offer to Purchase) pursuant to the procedure set
forth in Section 3 of 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 by the Letter of Transmittal.
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 shareholder to withdraw such shareholder's Shares.
There can be no assurance that Purchaser will exercise its right to extend the
Offer.
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 Wednesday, November 24, 1999 (or the latest time and date at which the
Offer, if extended by Purchaser, shall expire) and, unless theretofore accepted
for payment by Purchaser pursuant to the Offer, may also be withdrawn at any
time after December 25, 1999. 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 Share
Certificates evidencing Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such Share
Certificates, the serial numbers shown on such Share 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 Section 3 of 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 Section 3 of 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 and
otherwise comply with the Book-Entry Transfer Facility's procedures. All
questions as to the form and validity (including the time of 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 Company has provided Purchaser with the Company's shareholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. 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
shareholder 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 shareholder 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 IN ITS ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager as set forth below. Requests 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 and copies will be
furnished promptly at Purchaser's expense. No fees or commissions will be paid
to brokers, dealers or other persons for soliciting tenders of Shares pursuant
to the Offer.
The Information Agent for the Offer is:
Mackenzie Logo
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
The Dealer Manager for the Offer is:
CIBC World Markets LOGO
One World Financial Center
New York, New York 10281
(212) 885-4181
October 27, 1999
<PAGE> 1
ACQUISITION OF WALL DATA KEY COMPONENT OF NETMANAGE EBUSINESS STRATEGY
Purchase Opens New Opportunities in the eBusiness Segment. Furthers
Consolidation of PC-to-Host Connectivity Market and Grows NetManage User Base.
Adds Product Strength to eN2000 Enterprise Connectivity Strategy.
CUPERTINO, Calif., Oct. 21/PRNewswire/ - NetManage, Inc. (Nasdaq: NETM), a
leader in complete PC Connectivity solutions, has announced that it has entered
into a definitive agreement to acquire all outstanding shares of Wall Data,
Incorporated (Nasdaq: WALL), a leader in PC-to-Host communications software.
This is the next step in NetManage's strategy of providing a portfolio of
products that allow customers to evolve and migrate to eBusiness and eCommerce
solutions. It is also the next step in consolidating the PC-to-Host connectivity
market and acquiring technology that will allow the company to offer a full
spectrum of host connectivity solutions to a larger customer base.
Wall Data is known for its market leading RUMBA brand PC-to-Host connectivity
solutions primarily for the IBM marketplace. RUMBA complements NetManage's new
ViewNow host connectivity product line, and the acquisition strengthens the
company's ability to offer a full range of desktop solutions to the combined
customer base. With over 10,000 users of RUMBA technology, Wall Data brings a
worldwide portfolio of customers consisting of household names and the world's
major corporations. The product lines and technology of both companies are very
synergistic so customers can have the assurance that the value of current and
future purchases from either company will be preserved.
The NetManage eN2000 strategy, announced in April 1999, moved the company
towards server-based connectivity, web-to-host solutions and application
integration servers. The recent announcement of the acquisition of Simware
moves NetManage into the integration server-based eCommerce and eBusiness
markets. Simware's powerful and proven product line, under the Salvo brand
name, allows customers to build new applications for internet and
extranet-based users utilizing existing host systems and legacy application
platforms unchanged. The Wall Data acquisition contributes product and
technology to the server-based and web-to-host markets, as well as the desktop
market, and thus helps to further the NetManage strategy.
With recently announced products in the web access market based on Java and
ActiveX technology, Wall Data is addressing customers' needs to migrate
existing desktops to server and web-based solutions. NetManage, through
existing products and its eN2000 strategy, is already addressing these needs
and thus the combined company will have a greater presence and strength in the
market.
"Acquiring Wall Data gives NetManage the double benefit of an increased user
base in a consolidating market and a set of products and technologies that are
directly on NetManage's strategic roadmap towards eCommerce and eBusiness
solutions," said Peter Havart-Simkin, senior vice president of strategic
development and new businesses at NetManage. "We expect to be able to
capitalize on the combined user base and the resulting combined server,
web-to-host and
<PAGE> 2
communications management products to position ourselves very well in these
growing market segments. The combination of Wall Data and Simware will give us
an immediate and very strong presence in the eBusiness market."
In addition to the above, the acquisition of Wall Data accelerates every
component of NetManage's core strategy. This includes increased market share
with the opportunity to cross-sell additional products, continuation of the
plan to build the strongest single-source for PC-to-Host, Web-to-Host and Web
Integration solutions, continued expansion of the core product line in the
UNIX, IBM Midrange and IBM Mainframe connectivity spaces, expansion of the
worldwide distribution network and an increase in the opportunities for further
partnerships and alliances.
About NetManage
NetManage, Inc., founded in 1990, is the leading single source for web-to-host
connections via Java or ActiveX, and for server-based thin-client and
thick-client software, connecting desktop PCs to UNIX, IBM AS/400 and
mainframe computers. The company's emerging product line includes a new
standard in application sharing and remote access over the Internet as well as
a real-time, Internet-based customer support tool that dramatically reduces the
time required to solve problems. NetManage sells and services products
worldwide through its direct sales force, international subsidiaries and
authorized channel partners. For more information, connect to
www.netmanage.com, send e-mail to [email protected], or call 978-946-5000
(Eastern Time) or 408-973-7171 (Pacific Time).
This press release may contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements with respect
to the completion of the acquisition by NetManage, Inc. Completion of the
acquisition is subject to shareholder acceptance. Actual results concerning the
performance of the combined companies following a merger and market acceptance
of the products of the combined companies may differ materially from those
projected in the forward-looking statements.
NOTE: NetManage, ViewNow, eN2000, the NetManage logo and the lizard-in-the-box
logo are either trademarks or registered trademarks of NetManage, Inc. and/or
its subsidiaries in the United States and other countries. All other trademarks
are the property of their respective owners.
SOURCE NetManage, Inc.
CONTACT: media, Holly Hagerman of Connect Public Relations, 415-222-9691, or
[email protected], for NetManage, Inc.; or investors, Gary Anderson, Chief
Financial Officer of NetManage, Inc., [email protected]
Quote for referenced ticker symbols: WALL, NETM
(c) 1999, PR Newswire
<PAGE> 1
===============================================================================
PROJECT PANAMA
AGREEMENT AND PLAN OF MERGER
By and Among
NETMANAGE, INC.
NETMANAGE ACQUISITION CORPORATION
and
WALL DATA INCORPORATED
Dated as of October 20, 1999
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE I THE TENDER OFFER.......................................................................1
1.1 The Offer.........................................................................1
1.2 Company Action....................................................................3
1.3 Directors.........................................................................4
ARTICLE II THE MERGER............................................................................4
2.1 The Merger........................................................................4
2.2 Effective Time....................................................................5
2.3 Effects of the Merger.............................................................5
2.4 Restated Articles of Incorporation................................................5
2.5 Bylaws............................................................................5
2.6 Directors.........................................................................5
2.7 Officers..........................................................................5
2.8 Conversion of Shares..............................................................5
2.9 Dissenting Shares.................................................................6
2.10 Payment For Shares................................................................6
2.11 No Further Rights or Transfers....................................................7
2.12 Supplementary Action..............................................................8
2.13 Closing...........................................................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................8
3.1 Organization of the Company.......................................................8
3.2 Company Capital Structure.........................................................9
3.3 Obligations With Respect to Capital Stock........................................10
3.4 Authority........................................................................10
3.5 SEC Filings; the Company Financial Statements....................................11
3.6 Absence of Certain Changes or Events.............................................12
3.7 Taxes............................................................................12
3.8 Title to Properties; Absence of Liens and Encumbrances...........................14
3.9 Intellectual Property............................................................14
3.10 Compliance; Permits; Restrictions................................................17
3.11 Litigation.......................................................................17
3.12 Brokers' and Finders' Fees.......................................................18
3.13 Employee Benefit Plans...........................................................18
3.14 Employees; Labor Matters.........................................................18
3.15 Environmental Matters............................................................19
3.16 Year 2000 Compliance.............................................................19
3.17 Agreements, Contracts and Commitments............................................20
3.18 Change of Control Payments.......................................................21
3.19 Board Approval...................................................................21
3.20 Fairness Opinion.................................................................21
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
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3.21 Chapter 23B.19 of the Washington Business Corporation Act Not Applicable.........21
3.22 Offer Documents; Proxy Statement.................................................21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER...............................22
4.1 Organization and Qualification...................................................22
4.2 Corporate Power, Authorization and Enforceability................................22
4.3 No Conflict; Required Filings and Consents.......................................22
4.4 Schedule 14D-1...................................................................23
4.5 Available Funds..................................................................23
ARTICLE V COVENANTS.............................................................................24
5.1 Conduct of Business by the Company...............................................24
5.2 Access to Information; Confidentiality...........................................26
5.3 Proxy Material; Shareholders' Meeting............................................27
5.4 No Solicitation; Break-up Fee....................................................28
5.5 Public Announcements.............................................................29
5.6 Notification of Certain Matters..................................................30
5.7 Actions by Company...............................................................30
5.8 Officers' and Directors' Indemnification.........................................30
5.9 Employment Agreements............................................................31
5.10 Additional Agreements............................................................31
5.11 Other Actions by the Company.....................................................31
5.12 Company Options..................................................................31
5.13 Restated Employee Stock Purchase Plan............................................31
5.14 Retirement Savings Plan Termination..............................................32
5.14 the Effective Time...............................................................32
5.15 Stockholder Litigation...........................................................32
ARTICLE VI CONDITIONS OF MERGER.................................................................32
6.1 Conditions to the Obligations of Each Party to Effect the Merger.................32
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER...................................................33
7.1 Termination......................................................................33
7.2 Procedure and Effect of Termination..............................................34
7.3 Fees and Expenses................................................................34
7.4 Amendment........................................................................35
7.5 Waiver...........................................................................35
ARTICLE VIII MISCELLANEOUS......................................................................36
8.1 Severability.....................................................................36
8.2 Notices..........................................................................36
</TABLE>
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<PAGE> 4
TABLE OF CONTENTS
(continued)
<TABLE>
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8.3 Entire Agreement; No Third Party Beneficiaries; No Assignment....................37
8.4 Interpretation; Knowledge........................................................37
8.5 Counterparts.....................................................................38
8.6 Other Remedies; Specific Performance.............................................38
8.7 Governing Law....................................................................38
8.8 Rules of Construction............................................................38
8.9 WAIVER OF JURY TRIAL.............................................................38
</TABLE>
EXHIBIT A Employment Agreements
EXHIBIT B Required Third Party Consents
-iii-
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") is made and entered
into as of this 20th day of October, 1999, by and among NetManage, Inc., a
Delaware corporation ("PARENT"), NetManage Acquisition Corporation, a Washington
corporation and a wholly-owned subsidiary of Parent ("PURCHASER"), and Wall Data
Incorporated, a Washington corporation (the "COMPANY").
RECITALS
A. The Boards of Directors of Parent, Purchaser and the Company have
each unanimously approved the terms and conditions of a merger of Purchaser with
and into the Company (the "MERGER") upon the terms and subject to the conditions
set forth herein.
B. Pursuant to the Merger, Purchaser will acquire each issued and
outstanding share of Common Stock of the Company at a price of $9.00 net per
Share to the seller in cash and without interest thereon (the "OFFER PRICE"). In
order to accomplish the Merger, Purchaser shall first commence a tender offer
(the "OFFER") by Purchaser under Section 14(d)(1) of the Securities and Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), to purchase all outstanding shares
of the Common Stock, no par value, of the Company (shares of the Common Stock
are referred to herein as the "SHARES").
C. The Board of Directors of the Company has unanimously resolved to
recommend the acceptance of the Offer and approval of the Merger to the holders
of Shares and determined that the consideration to be paid for each Share in the
Offer and the Merger is fair to the holders of such Shares and that the Offer
and the Merger are in the best interests of the holders of such Shares.
NOW, THEREFORE, intending to be legally bound hereby, the parties agree
as follows:
ARTICLE I
THE TENDER OFFER
1.1. THE OFFER.
(a) Provided that this Agreement shall not have been
terminated pursuant to Section 7.1 and none of the events set forth in clause
(iii) of Annex I shall have occurred or be existing, Purchaser shall, and Parent
shall cause Purchaser to, within five business days after the public
announcement of the execution of this Agreement commence the Offer (within the
meaning of Rule 14d-2 under the Exchange Act) at the Offer Price.
(b) The obligations of Purchaser to consummate the Offer and
to accept for payment and pay for any of the Shares tendered shall be subject to
the conditions set forth on Annex I, including that a minimum of not less than
fifty-one percent (51%) of the Shares
<PAGE> 6
outstanding on a fully-diluted basis (including for purposes of such calculation
all Shares issuable upon exercise of all vested and unvested stock options, and
conversion of convertible securities or other rights to purchase or acquire
Shares) being validly tendered and not withdrawn prior to the expiration of the
Offer (the "MINIMUM CONDITION"). The per Share amount shall be net to the seller
in cash, upon the terms and subject to the conditions of the Offer and subject
to reduction for any applicable federal back-up or other applicable withholding
or stock transfer taxes. The Offer shall remain open until 12:00 Midnight, New
York City time, on November 24, 1999 (twenty (20) business days following the
commencement of the Offer). As used in this Agreement, the "EXPIRATION DATE"
means 12:00 Midnight, New York City time, on November 24, 1999, unless Purchaser
extends the Offer as permitted by this Agreement, in which case the "Expiration
Date" means the latest time and date to which the Offer is extended.
(c) Purchaser expressly reserves the right in its sole
discretion to waive any conditions to the Offer (other than the condition set
forth in clause (ii) or (iii)(E) of Annex I), 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 Annex I or
amends any other material terms of the Offer in a manner materially adverse to
the Company's shareholders, and provided, further, that the Offer may not,
without the Company's prior written consent, be extended beyond December 8, 1999
except as necessary to provide time to satisfy the conditions set forth in Annex
I, and except that Purchaser may extend the Offer for up to 10 additional
business days, if as of such date, there shall not have been tendered at least
ninety percent (90%) of the outstanding Shares so that the Merger could be
effected without a meeting of the Company's shareholders in accordance with
applicable provisions of the Washington Business Corporation Act (the "WBCA").
(d) The Offer shall be made by means of an offer to purchase
(the "OFFER TO PURCHASE") containing the terms set forth in this Agreement and
the conditions set forth in Annex I. Concurrently with the commencement of the
Offer, Parent and Purchaser shall file with the Securities and Exchange
Commission (the "SEC") a tender offer statement on Schedule 14D-1 reflecting the
Offer (together with all exhibits, amendments and supplements thereto, the
"SCHEDULE 14D-1"). The Company and its counsel shall be given an opportunity to
review the Offer to Purchase and the Schedule 14D-1. Parent and Purchaser agree
to provide the Company and its counsel with any comments which Parent, Purchaser
or their counsel may receive from the SEC or the staff of the SEC with respect
to such documents promptly after receipt thereof. Upon 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
purchase by accepting for payment and will pay for Shares validly tendered and
not properly withdrawn, as promptly as practicable after the Expiration Date.
The Schedule 14D-1 will contain or will incorporate by reference the Offer to
Purchase (or portions thereof) and forms of the related letter of transmittal
and summary advertisements (which Schedule 14D-1, Offer to Purchase and other
documents, together with any supplements or amendments thereto, are referred to
herein collectively as the "OFFER DOCUMENTS"). Parent, Purchaser and the Company
agree promptly to correct any information
-2-
<PAGE> 7
provided by any of them for use in the Offer Documents that shall have become
false or misleading, and Parent and Purchaser further agree to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC
and the other Offer Documents as so corrected to be disseminated to the holders
of Shares, in each case as and to the extent required by applicable federal
securities laws. The Offer Documents will, on the date filed, comply in all
material respects with all provisions of applicable federal securities laws.
1.2 COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer
and represents and warrants that (i) its Board of Directors has unanimously (A)
determined that this Agreement and the transactions contemplated hereby,
including each of the Offer and the Merger, are fair to and in the best
interests of the holders of the Shares, (B) approved and adopted this Agreement
and the transactions contemplated hereby and (C) resolved to recommend that the
shareholders of the Company accept the Offer and approve and adopt this
Agreement and the transactions contemplated hereby and thereby (provided,
however, that subject to the provisions of Section 5.4 such recommendation may
be withdrawn, modified or amended in connection with a Superior Proposal (as
defined in Section 5.4)) and (ii) Bear, Stearns & Co. Inc. ("BANKER") has
rendered to the Board of Directors of the Company its written opinion (which
opinion is permitted to be included in writing in the Schedule 14D-9 (as defined
in Section 1.2(b)), to the effect that the consideration to be received by the
holders of Shares pursuant to each of the Offer and the Merger is fair to the
holders of Shares from a financial point of view. 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), and
has obtained the consent of Banker to the inclusion in the Schedule 14D-9 of a
copy of the written opinion referred to in clause (ii) above.
(b) The Company shall file with the SEC, concurrently with the
filing by Parent and Purchaser of the Schedule 14D-1, a
Solicitation/Recommendation Statement on Schedule 14D-9 under the Exchange Act
relating to the Offer (together with all 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"), which shall contain
the recommendation of the Company's Board of Directors described in Section
1.2(a), and shall disseminate the Schedule 14D-9 as required by Rule 14d-9
promulgated under the Exchange Act. The Schedule 14D-9, and each amendment
thereto, will, on the date filed, comply in all material respects with the
provisions of applicable federal securities laws. The Company, Parent and
Purchaser agree promptly to correct any information provided by any of them for
use in the Schedule 14D-9 that shall have become false or misleading, and the
Company further agrees to take all steps necessary to cause the Schedule 14D-9
as so corrected to be filed with the SEC and the Schedule 14D-9 as so corrected
to be disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. Parent and its counsel shall be
given the opportunity to review and shall be reasonably satisfied with the
Schedule 14D-9 in the form in which such document is originally filed with the
SEC, and all amendments and supplements thereto, prior to the time at which such
documents and all documents related thereto are filed with the SEC. The Company
shall
-3-
<PAGE> 8
provide Purchaser and its counsel with any comments the Company or its counsel
may receive from the SEC with respect to the Schedule 14D-9 promptly after
receipt of such comments.
(c) The Company has been advised by all of its directors and
executive officers, as of the date of this Agreement, each intends to tender all
outstanding Shares beneficially owned by such person to Purchaser pursuant to
the Offer unless to do so would subject such person to liability under Section
16(b) of the Exchange Act.
(d) The Company shall promptly furnish Purchaser with mailing
labels containing the names and addresses of all record holders of Shares and
security position listings of Shares held in stock depositories, each of a
recent date, and shall promptly furnish Purchaser with such additional
information, including updated lists of shareholders, mailing labels and
security position listings, and such other assistance as Parent, Purchaser or
their agents may reasonably request in connection with communicating the Offer
and any amendments or supplements thereto to the Company's shareholders. Subject
to the requirements of applicable laws and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent and Purchaser shall hold in confidence the
information contained in any of such labels and lists.
1.3. DIRECTORS. Promptly upon the acquisition by Purchaser pursuant to
the Offer of such number of Shares which satisfies the Minimum Condition and
from time to time thereafter, Parent shall be entitled to designate a majority
of the members of the Company's Board of Directors, subject to compliance with
Section 14(f) of the Exchange Act. The Company shall, upon request by Parent,
promptly increase the size of the Board of Directors to the extent permitted by
its Restated Articles of Incorporation and/or secure the resignations of such
number of directors as is necessary to enable Parent's designees to be elected
to the Board of Directors and shall cause Parent's designees to be so elected.
The Company shall take, at its expense, all action necessary to effect any such
election, including mailing to its shareholders the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in form
and substance reasonably satisfactory to Parent and its counsel. Following the
election or appointment of Parent's designees pursuant to this Section 1.3 and
prior to the Effective Time, any amendment or termination of this Agreement,
extension for the performance or waiver of the obligations or other acts of
Parent or Purchaser or waiver of the Company's rights hereunder, shall require
the concurrence of a majority of the Company's directors (or the concurrence of
the director, if there is only one remaining) then in office who are directors
on the date hereof, or are directors (other than directors designated by Parent
in accordance with this Section 1.3) designated by such persons to fill any
vacancy (the "CONTINUING DIRECTORS").
ARTICLE II
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions hereof
and in accordance with the WBCA, Purchaser shall be merged with and into the
Company as soon as practicable following the satisfaction or waiver, if
permissible, of the conditions set forth in Article VI of this
-4-
<PAGE> 9
Agreement. Following the Merger, the Company shall continue as the surviving
corporation (the "SURVIVING CORPORATION") and the separate corporate existence
of Purchaser shall cease. At the election of Parent or Purchaser, any direct or
indirect wholly-owned subsidiary of Parent incorporated under the laws of
Washington may be substituted for Purchaser as a constituent corporation in the
Merger. As used herein, the term "PURCHASER" shall, upon such substitution,
refer to any such substituted corporation.
2.2 EFFECTIVE TIME. The Merger shall be consummated by and shall be
effective at the time there has been filed as provided by Section 2.13 with the
Secretary of State of the State of Washington the articles of merger in such
form as is required by, and executed in accordance with, the relevant provisions
of the WBCA, and such other documents as may be required by the provisions of
the WBCA. The time of such filing is referred to as the "EFFECTIVE TIME."
2.3 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in applicable sections of the WBCA. As of the Effective Time, the Company
shall be a wholly-owned subsidiary of Parent.
2.4 RESTATED ARTICLES OF INCORPORATION. The Restated Articles of
Incorporation of the Surviving Corporation shall be amended to contain the
substantive provisions of the Articles of Incorporation of the Purchaser as in
effect at the Effective Time.
2.5 BYLAWS. The Bylaws of Purchaser, as in effect immediately prior
to the Effective Time, shall be the Bylaws of the Surviving Corporation, until
thereafter duly amended in accordance with applicable law.
2.6 DIRECTORS. The directors of Purchaser immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation and
will hold office from the Effective Time until their respective successors are
duly elected or appointed and qualified in the manner provided in the Restated
Articles of Incorporation and Bylaws of the Surviving Corporation, as such
instruments may be amended from time to time, either before or after the
Effective Time, or as otherwise provided by law.
2.7 OFFICERS. The officers of the Purchaser immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation. Such
officers of the Surviving Corporation will hold office from the Effective Time
until their respective successors are duly elected or appointed and qualified in
the manner provided in the Restated Articles of Incorporation and Bylaws of the
Surviving Corporation, as such instruments may be amended from time to time,
either before or after the Effective Time, or as otherwise provided by law.
2.8 CONVERSION OF SHARES.
(a) At the Effective Time, by virtue of the Merger and without
any action on the part of Parent, Purchaser, the Company or the holders of the
Shares:
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(i) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares held, directly or indirectly, by Parent,
Purchaser, the Company or any of their majority-owned subsidiaries, and any
Dissenting Shares (as defined in Section 2.9)) shall automatically be canceled
and extinguished and be converted into the right to receive $9.00, or such
higher amount per Share as is paid pursuant to the Offer (the "MERGER
CONSIDERATION"), in cash, without interest thereon.
(ii) Each Share issued and outstanding immediately prior to the
Effective Time which is owned or held, directly or indirectly, by Parent,
Purchaser, the Company or any of their majority-owned subsidiaries shall be
canceled and extinguished and cease to exist, without any conversion thereof,
and no payment shall be made with respect thereto.
(iii) Each holder (other than holders referred to in Section
2.8(a)(ii)) of a certificate representing any Shares shall after the Effective
Time cease to have any rights with respect to such Shares, except either to
receive the Merger Consideration upon surrender of such certificate, or to
exercise such holder's appraisal rights as provided in Section 2.9 and the WBCA.
(iv) Each share of Common Stock of Purchaser issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and thereafter represent one validly issued, fully paid and nonassessable
share of Common Stock of the Surviving Corporation.
2.9 DISSENTING SHARES. Notwithstanding anything in this Agreement to
the contrary, Shares which are outstanding immediately prior to the Effective
Time and which are held by a holder who dissents from the Merger in the manner
provided under the WBCA and becomes entitled to obtain payment for the fair
value of such Shares pursuant to the applicable provisions of the WBCA
("DISSENTING SHARES") shall not be converted into a right to receive the Merger
Consideration pursuant to Section 2.8, but the holders of Dissenting Shares
shall instead be entitled to receive such consideration as shall be determined
pursuant to the WBCA; provided, however, that Section 2.8 shall apply to Shares
held by a dissenting shareholder who subsequently withdraws his or her demand
for payment in the manner provided under the WBCA, fails to comply fully with
the requirements of applicable provisions of the WBCA, or otherwise fails to
establish the fair value of such holder's Shares under the WBCA, in which event
such Shares shall be deemed to be converted into the right to receive the Merger
Consideration pursuant to Section 2.8. The Company shall give Parent and
Purchaser prompt notice of any written objection to the Merger and demand for
payment of the fair value of Shares. Prior to the Effective Time, the Company
shall not, except with the prior written consent of Purchaser, make any payment
with respect to, or settle or offer to settle, any such demand for payment of
the fair value of Shares. Each holder of Dissenting Shares shall have only such
rights and remedies as are granted to such holder under the WBCA.
2.10 PAYMENT FOR SHARES.
(a) Prior to the Effective Time, Purchaser shall select and
appoint a bank to act as agent for the holders of Shares (the "PAYING AGENT") to
receive and disburse the Merger Consideration to which holders of Shares shall
become entitled pursuant to Section 2.8. At the
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Effective Time, Purchaser or Parent shall provide the Paying Agent with
sufficient cash to allow the Merger Consideration to be paid by the Paying Agent
for each Share then entitled to receive the Merger Consideration.
(b) As soon as practicable after the Effective Time, Purchaser
or Parent shall cause the Paying Agent to mail to each record holder a
certificate or certificates representing Shares which as of the Effective Time
represents the right to receive the Merger Consideration (the "CERTIFICATES"), a
form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent) and instructions for
use in effecting the surrender of the Certificates for payment therefor. Upon
surrender to the Paying Agent of a Certificate, together with such letter of
transmittal duly executed and completed in accordance with the instructions
thereto, and such other documents as may be requested, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration and such Certificate shall forthwith be canceled. No interest
shall be paid or accrued on the Merger Consideration upon the surrender of the
Certificates. Until surrendered in accordance with the provisions of this
Section, each Certificate shall be deemed for all purposes to evidence only the
right to receive the Merger Consideration (without interest thereon), and shall,
subject to Section 2.9, have no other right.
(c) If the Merger Consideration (or any portion thereof) is to
be delivered to a person other than the person in whose name the Certificates
surrendered in exchange therefor are registered, it shall be a condition to the
payment that the Certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the person requesting such
payment or delivery shall pay any transfer or other taxes payable by reason of
the foregoing or establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. Notwithstanding the foregoing,
neither the Paying Agent nor any party hereto shall be liable to a holder of
Shares for any Merger Consideration delivered to a public official pursuant to
applicable abandoned property, escheat and similar laws.
(d) Promptly following the date that is six months after the
Effective Date, 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 formerly
representing a Share 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.
2.11 NO FURTHER RIGHTS OR TRANSFERS. At and after the Effective Time
the holders of Certificates to be exchanged for the Merger Consideration
pursuant to this Agreement shall cease to have any rights as to shareholders of
the Company except for the right to surrender such holder's Certificates in
exchange for payment of the Merger Consideration, and after the Effective Time
there shall be no transfers on the stock transfer books of the Surviving
Corporation of the Shares which
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were outstanding immediately prior to the Effective Time. Any Certificates
formerly representing Shares presented to the Surviving Corporation or Paying
Agent shall be canceled and exchanged for the Merger Consideration, as provided
in this Article II, subject to applicable law in the case of Dissenting Shares.
2.12 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
Purchaser, or otherwise to carry out the provisions of this Agreement, the
officers and directors of the Surviving Corporation are hereby authorized and
empowered, in the name of and on behalf of the Company and Purchaser, to execute
and deliver any and all things necessary or proper to vest or to 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.
2.13 CLOSING. Upon the terms and subject to the conditions of this
Agreement, as soon as practicable after all the conditions to the obligations of
the parties hereto to effect the Merger under Article VI of this Agreement shall
have been satisfied or waived, the Company and Purchaser shall (i) file with the
Delaware Secretary of State a certificate or agreement of merger or a
certificate of ownership and merger in such form as may be required by, and
executed in accordance with, the relevant provisions of the WBCA and (ii) take
all such other and further actions as may be required by law to make the Merger
effective. Contemporaneous with the filing referred to in this Section, a
closing (the "CLOSING") will be held at the offices of Wilson Sonsini Goodrich &
Rosati, P.C., 650 Page Mill Road, Palo Alto, California 94304 or at such other
location as the parties may establish for the purpose of confirming all the
foregoing. The date and the time of such Closing are referred to as the "CLOSING
DATE."
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company (which for purposes of this Article III shall include the
Company and each of its subsidiaries unless the context otherwise requires)
represents and warrants to Parent and Purchaser, subject to the exceptions
specifically disclosed in writing in the disclosure letter supplied by the
Company to Parent and Purchaser dated as of the date hereof and certified by a
duly authorized officer of the Company (the "Company Schedules"), as follows:
3.1 ORGANIZATION OF THE COMPANY.
(a) The Company and each of its subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; has the corporate power and authority to own,
lease and operate its assets and property and to carry on its business as now
being conducted and as proposed to be conducted; and is duly qualified or
licensed to do business and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
activities makes such qualification or licensing
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necessary, except where the failure to be so qualified would not have a
Material Adverse Effect (as defined below) on the Company.
(b) The Company has delivered to Parent a true and complete
list of all of the Company's subsidiaries, indicating the jurisdiction of
incorporation of each subsidiary, the jurisdictions in which such subsidiary is
qualified or licensed, and the Company's and any other person's equity interest
therein. All shares of subsidiaries owned of record by persons other than the
Company are owned beneficially (or the substantive equivalent) by the Company.
(c) The Company has delivered or made available to Parent a
true and correct copy of the Restated Articles of Incorporation and Bylaws of
the Company and similar governing instruments of each of its subsidiaries, each
as amended to date, and each such instrument is in full force and effect.
Neither the Company nor any of its subsidiaries is in violation of any of the
provisions of its Restated Articles of Incorporation or Bylaws or equivalent
governing instruments.
(d) When used in connection with the Company, the term
"MATERIAL ADVERSE EFFECT" means, for purposes of this Agreement, any change,
event or effect that is materially adverse to the business, assets (including
intangible assets), financial condition or results of operations of Company and
its subsidiaries taken as a whole.
3.2 COMPANY CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 45,000,000 shares of Common Stock, no par value, of which
there are 10,189,969 shares were issued and outstanding as of September 30,
1999, and 5,000,000 shares of Preferred Stock, no par value, of which no shares
are issued or outstanding. No shares of capital stock have been issued since
September 30, 1999 except pursuant to option exercises. All outstanding shares
of the Company Common Stock are duly authorized, validly issued, fully paid and
nonassessable and are not subject to preemptive rights created by statute, the
Restated Articles of Incorporation or Bylaws of the Company or any agreement or
document to which the Company is a party or by which it is bound. As of the date
of this Agreement, the Company had reserved an aggregate of 5,226,789 shares of
the Company Common Stock, net of exercises, for issuance to employees,
consultants and non-employee directors pursuant to the Amended and Restated 1983
Stock Option Plan, Restated 1993 Stock Option Plan and Restated 1993 Stock
Option Plan for Non-Employee Directors and 1994 Non-Officer Stock Option Plan
("the Option Plans"). (Stock options granted by the Company pursuant to the
Option Plans or otherwise are referred to in this Agreement as "Company
Options.") As of September 30, 1999, there were Company Options outstanding to
purchase an aggregate of 2,477,892 shares of Common Stock, issued to employees,
consultants and non-employee directors pursuant to the Option Plans. No Company
Options have been granted since September 30, 1999. All shares of the Company
Common Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
would be duly authorized, validly issued, fully paid and nonassessable. The
Company Schedules list for each person who held restricted stock or options, the
name of the holder of such shares or option, the exercise price of such option,
the number of shares which will have vested at such date, the vesting schedule
for such shares or option and whether the lapsing of the Company's repurchase
rights or exercisability of such option will be
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accelerated in any way by the transactions contemplated by this Agreement, and
indicate the extent of acceleration, if any.
3.3 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set forth in
Section 3.2, there are no equity securities, partnership interests or similar
ownership interests of any class of the Company, or any securities exchangeable
or convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests, issued, reserved for issuance or
outstanding. Except for securities the Company owns, directly or indirectly
through one or more subsidiaries, there are no equity securities, partnership
interests or similar ownership interests of any class of any subsidiary of the
Company, or any security exchangeable or convertible into or exercisable for
such equity securities, partnership interests or similar ownership interests,
issued, reserved for issuance or outstanding. Except as set forth in Section
3.2, there are no options, warrants, equity securities, partnership interests or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which the Company or any of its
subsidiaries is a party or by which it is bound obligating the Company or any of
its subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, or repurchase, redeem or otherwise acquire, or cause the repurchase,
redemption or acquisition, of any shares of capital stock, partnership interests
or similar ownership interests of the Company or any of its subsidiaries or
obligating the Company or any of its subsidiaries to grant, extend, accelerate
the vesting of or enter into any such option, warrant, equity security, call,
right, commitment or agreement. There are no registration rights and, to the
knowledge of the Company, as of the date of this Agreement, there are no voting
trusts, proxies or other agreements or understandings with respect to any equity
security of any class of the Company or with respect to any equity security,
partnership interest or similar ownership interest of any class of any of its
subsidiaries.
3.4 AUTHORITY.
(a) The Company has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, subject only to
the approval and adoption of this Agreement and the approval of the Merger by
the Company's shareholders and the filing and recordation of the Restated
Articles of Merger pursuant to the WBCA. A vote of the holders of fifty-one
percent (51%) of the outstanding Shares is required for the Company's
shareholders to approve and adopt this Agreement and approve the Merger. This
Agreement has been duly executed and delivered by the Company and, assuming the
due authorization, execution and delivery by Parent and, if applicable,
Purchaser, constitutes valid and binding obligations of the Company, enforceable
in accordance with its terms, except as enforceability may be limited by
bankruptcy and other similar laws and general principles of equity. The
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Restated Articles of Incorporation or Bylaws of the Company or the
equivalent organizational documents of any of its subsidiaries, (ii) subject to
obtaining the approval and adoption of this Agreement and the approval of the
Merger by the Company's shareholders, conflict with or violate any law, rule,
regulation, order, judgment or decree applicable
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to the Company or any of its subsidiaries or by which its or any of their
respective properties is bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair the Company's rights or alter the
rights or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Company or any of its subsidiaries pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or its or any of
their respective properties are bound or affected. The Company Schedules list
all consents, waivers and approvals under any of the Company's or any of its
subsidiaries' material agreements, contracts, licenses or leases required to be
obtained in connection with the consummation of the transactions contemplated
hereby.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any court, administrative agency or
commission or other governmental authority or instrumentality, foreign or
domestic ("GOVERNMENTAL ENTITY"), is required by or with respect to the Company
in connection with the execution and delivery of this Agreement or the
consummation of the Merger, except for (i) the filing of the Certificate of
Merger with the Delaware Secretary of State, (ii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal and state securities laws and the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), and the securities or antitrust laws of any foreign country, and (iii)
such other consents, authorizations, filings, approvals and registrations which
if not obtained or made would not be material to the Company, Parent or
Purchaser or have a material adverse effect on the ability of the parties to
consummate the Offer or the Merger.
3.5 SEC FILINGS; THE COMPANY FINANCIAL STATEMENTS.
(a) The Company has filed in a timely manner all forms,
reports and documents required to be filed with the SEC since January 1, 1997,
and has made available to Parent all such forms, reports and documents. All such
required forms, reports and documents (including those that the Company may file
subsequent to the date hereof) are referred to herein as the "COMPANY SEC
REPORTS." As of their respective dates, the Company SEC Reports (i) were
prepared in accordance 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 thereunder applicable to such the Company SEC
Reports, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of the Company's subsidiaries is required to file any
forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Company SEC Reports
(the "COMPANY FINANCIALS"),
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including any of the Company SEC Reports filed after the date hereof until the
Closing, (x) complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, (y) was prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited interim financial statements, as
may be permitted by the SEC on Form 10-Q, 8-K or any successor form under the
Exchange Act) and (z) fairly presented the consolidated financial position of
the Company and its subsidiaries as at the respective dates thereof and the
consolidated results of the Company's operations and cash flows for the periods
indicated, except that the unaudited interim financial statements may not
contain footnotes and were or are subject to normal and recurring year-end
adjustments. The balance sheet of the Company contained in the Company SEC
Reports as of July 31, 1999 is hereinafter referred to as the "COMPANY BALANCE
SHEET." Except as disclosed in the Company Financials, since the date of the
Company Balance Sheet neither the Company nor any of its subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise) of a nature required to
be disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP 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 Company Balance Sheet, or (ii) incurred
since the date of the Company Balance Sheet in the ordinary course of business
consistent with past practices and immaterial in the aggregate and liabilities
incurred in connection with this Agreement.
(c) The Company has heretofore furnished to Parent a complete
and correct copy of any amendments or modifications, which have not yet been
filed with the SEC but which are required to be filed, to agreements, documents
or other instruments which previously had been filed by the Company with the SEC
pursuant to the Securities Act or the Exchange Act.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
Company Balance Sheet there has not been: (i) any Material Adverse Effect, (ii)
any material change by the Company in its accounting methods, principles or
practices, except as required by concurrent changes in GAAP, or (iii) any
material revaluation by the Company of any of its assets, including, without
limitation, writing down the value of capitalized inventory or writing off notes
or accounts receivable other than in the ordinary course of business.
3.7 TAXES.
(a) Definition of Taxes. For the purposes of this Agreement,
"TAX" or "TAXES" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
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(b) Tax Returns and Audits.
The Company and each of its subsidiaries have timely filed all
federal, state, local and foreign returns, estimates, information statements and
reports ("RETURNS") relating to Taxes required to be filed by the Company and
each of its subsidiaries, except such Returns which are not material to the
Company, and have timely paid all Taxes shown to be due on such Returns. Such
Returns are true and correct and have been completed in accordance with
applicable law.
Except as is not material to the Company, the Company and each of
its subsidiaries as of the Effective Time will have withheld with respect to its
employees all federal and state income taxes, the Federal Insurance Contribution
Act ("FICA"), the Federal Unemployment Tax Act ("FUTA") and other Taxes required
to be withheld and have timely paid to the proper government authorities all
amounts required to be withheld and paid.
Except as is not material to the Company, neither the Company nor
any of its subsidiaries has been delinquent in the payment of any Tax nor is
there any Tax deficiency outstanding, proposed or assessed against the Company
or any of its subsidiaries, nor has the Company or any of its subsidiaries
executed any waiver of any statute of limitations on or extending the period for
the assessment or collection of any Tax.
Except as is not material to the Company, no audit or other
examination of any Return of the Company or any of its subsidiaries is presently
in progress, nor has the Company or any of its subsidiaries been notified of any
request for such an audit or other examination.
Except as is not material to the Company, no adjustment relating
to any Returns filed by the Company or any of its subsidiaries has been proposed
formally or informally by any Tax authority to the Company or any of its
subsidiaries or any representative thereof.
Except as is not material to the Company, neither the Company nor
any of its subsidiaries has any liability for unpaid Taxes which has not been
accrued for or reserved on the Company Balance Sheet, whether asserted or
unasserted, contingent or otherwise.
There is no contract, agreement, plan or arrangement, including
but not limited to the provisions of this Agreement, covering any employee or
former employee of the Company or any of its subsidiaries that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162(m) of the Code.
Neither the Company nor any of its subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by the Company.
Neither the Company nor any of its subsidiaries (i) has ever been
a member of an affiliated group filing a consolidated federal income Tax Return
(other than a consolidated group the common parent of which is the Company),
(ii) is a party to any Tax sharing or Tax allocation
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agreement, arrangement or understanding, (iii) is liable for the Taxes of any
other person under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract or otherwise, and (iv) is a party to any joint venture, partnership or
other arrangement that could be treated as a partnership for income Tax
purposes.
Neither the Company nor any of its subsidiaries is and has never
been at any time, a "United States Real Property Holding Corporation" within the
meaning of Section 897(c)(2) of the Code.
3.8 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES.
(a) The Company Schedules list the real property owned by the
Company. The Company Schedules list all real property leases to which the
Company is a party and each amendment thereto. All such current leases are in
full force and effect, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default) that would give rise to a claim in an amount
greater than $100,000.
(b) The Company has good and valid title to, or, in the case
of leased properties and assets, valid leasehold interests in, all of its
tangible properties and assets, real, personal and mixed, used or held for use
in its business, free and clear of any liens, pledges, charges, claims, security
interests or other encumbrances of any sort ("LIENS"), except as reflected in
the Company Financials or in the Company Schedules and except for liens for
taxes not yet due and payable and such imperfections of title and encumbrances,
if any, which are not material in character, amount or extent, and which do not
materially detract from the value, or materially interfere with the present use,
of the property subject thereto or affected thereby.
3.9 INTELLECTUAL PROPERTY.
For the purposes of this Agreement, the following terms have the
following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following
and all rights in, arising out of, or associated therewith: (i)
all United States, international and foreign patents and
applications therefor and all reissues, divisions, renewals,
extensions, provisionals, continuations and continuations-in-part
thereof; (ii) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer
lists, and all documentation relating to any of the foregoing;
(iii) all copyrights, copyrights registrations and applications
therefor, and all other rights corresponding thereto throughout
the world; (iv) all industrial designs and any registrations and
applications therefor throughout the world; (v) all trade names,
logos, common law trademarks and service marks, trademark and
service mark registrations and applications therefor throughout
the world; (vi) all databases and data collections and all rights
therein throughout the world; and (vii) any similar or equivalent
rights to any of the foregoing anywhere in the world.
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"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is owned by, or exclusively licensed to, the
Company.
"REGISTERED INTELLECTUAL PROPERTY" means all United States,
international and foreign: (i) patents and patent applications
(including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent-to-use applications,
or other registrations or applications related to trademarks;
(iii) registered copyrights and applications for copyright
registration; and (iv) any other Intellectual Property that is
the subject of an application, certificate, filing, registration
or other document issued, filed with, or recorded by any state,
government or other public legal authority.
(a) The Company has made available to Parent, a list of the
Registered Intellectual Property owned by, or filed in the name of, the Company
(the "COMPANY REGISTERED INTELLECTUAL PROPERTY").
(b) The Company has made available to Parent, a list of all
proceedings or actions before any court, tribunal (including the United States
Patent and Trademark Office ("PTO") or equivalent authority anywhere in the
world) related to any Company Intellectual Property.
(c) No Company Intellectual Property or product or service of
the Company is subject to any proceeding or outstanding decree, order, judgment,
agreement, or stipulation restricting in any manner the use, transfer, or
licensing thereof by the Company, or which may affect the validity, use or
enforceability of such Company Intellectual Property.
(d) Each item of Company Registered Intellectual Property is
valid and subsisting, all necessary registration, maintenance and renewal fees
in connection with such Registered Intellectual Property have been made and all
necessary documents and certificates in connection with such Registered
Intellectual Property have been filed with the relevant patent, copyright,
trademark or other authorities in the United States or foreign jurisdictions, as
the case may be, for the purposes of maintaining such Registered Intellectual
Property.
(e) Except as set forth in Schedule 3.9: (i) the Company owns
and has good and exclusive title to each item of Company Intellectual Property,
including all Company Registered Intellectual Property listed on Schedule 3.9,
free and clear of any lien or encumbrance; and (ii) the Company is the exclusive
owner of all trademarks and trade names used in connection with the operation or
conduct of the business of the Company, including the sale of any products or
the provision of any services by the Company.
(f) The Company owns exclusively, and has good title to, all
copyrighted works that are Company products or which the Company otherwise
purports to own.
(g) To the extent that any work, invention, or material has
been developed or created by a third party for the Company, the Company has a
written agreement with such third party with respect thereto and the Company
thereby has obtained ownership of, and is the exclusive owner
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of, all Intellectual Property in such work, material or invention by operation
of law or by valid assignment.
(h) Except as set forth in Schedule 3.9, the Company has not
transferred ownership of, or granted any exclusive license with respect to, any
Intellectual Property that is material Company Intellectual Property, to any
third party.
(i) Schedule 3.9 lists all material contracts, licenses and
agreements to which the Company is a party (i) with respect to Company
Intellectual Property licensed or transferred to any third party; or (ii)
pursuant to which a third party has licensed or transferred any Intellectual
Property to the Company, with a cost or royalty value in excess of $50,000.
Schedule 3.9 lists any material agreements pursuant to which the Company has
licensed any Company Intellectual Property or products to any third party that
differs in any material respect from its standard form.
(j) The contracts, licenses and agreements listed on Schedule
3.9 are in full force and effect. The consummation of the transactions
contemplated by this Agreement will neither violate nor result in the breach,
modification, cancellation, termination, or suspension of such contracts,
licenses and agreements. The Company is in compliance with, and has not breached
any term any of such contracts, licenses and agreements and, to the knowledge of
the Company, all other parties to such contracts, licenses and agreements are in
compliance with, and have not breached any term of, such contracts, licenses and
agreements. Following the Closing Date, Purchaser will be permitted to exercise
all of the Company's rights under the contracts, licenses and agreements listed
on Schedule 3.9 to the same extent the Company would have been able to had the
transactions contemplated by this Agreement not occurred and without the payment
of any additional amounts or consideration other than ongoing fees, royalties or
payments which the Company would otherwise be required to pay.
(k) Schedule 3.9 lists all contracts, licenses and agreements
between the Company and any third party wherein or whereby the Company has
agreed to, or assumed, any obligation or duty to warrant, indemnify, hold
harmless or otherwise assume or incur any obligation or liability with respect
to the infringement or misappropriation by the Company or such third party of
the Intellectual Property of any third party.
(l) The operation of the business of the Company as such
business currently is conducted, or is reasonably is contemplated to be
conducted, including the Company's design, development, manufacture, marketing
and sale of the products or services of the Company (including with respect to
products currently under development) has not, does not and will not infringe or
misappropriate the Intellectual Property of any third party or constitute unfair
competition or trade practices under the laws of any jurisdiction.
(m) The Company has not received notice from any third party
that the operation of the business of the Company or any act, product or service
of the Company, infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the laws
of any jurisdiction. To the knowledge of the Company, there is no current
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claim asserted against any customer of the Company which alleges that the
customer's use or distribution of the Company's products violates any
Intellectual Property of any third party.
(n) Except as set forth in Schedule 3.9, to the knowledge of
the Company, no Person has or is infringing or misappropriating any Company
Intellectual Property.
(o) The Company has taken all steps that are reasonably
required to protect the Company's rights in the Company's confidential
information and trade secrets or any trade secrets or confidential information
of third parties provided to the Company, and, without limiting the foregoing,
the Company has and enforces a policy requiring each employee and contractor to
execute a proprietary information/confidentiality agreement substantially in
the Company's standard form and all current and former employees and contractors
of the Company have executed such an agreement.
3.10 COMPLIANCE; PERMITS; RESTRICTIONS.
(a) Neither the Company nor any of its subsidiaries is, in any
material respect, in conflict with, or in default or violation of (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which the Company or any of its subsidiaries or any of
their respective properties is bound or affected, or (ii) any material note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other material instrument or obligation to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties is bound or affected.
To the knowledge of the Company, no investigation or review by any Governmental
Entity is pending or threatened against the Company or any of its subsidiaries,
nor has any Governmental Entity indicated an intention to conduct the same.
There is no material agreement, judgment, injunction, order or decree binding
upon the Company or any of its subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of the Company or any of its subsidiaries, any acquisition of material
property by the Company or any of its subsidiaries or the conduct of business by
the Company as currently conducted.
(b) The Company and its subsidiaries hold all permits,
licenses, variances, exemptions, orders and approvals from governmental
authorities that are material to the operation of the business of the Company
(collectively, the "COMPANY PERMITS"). The Company and its subsidiaries are in
compliance in all material respects with the terms of the Company Permits.
3.11 LITIGATION. There is no action, suit, proceeding, claim,
arbitration or investigation pending, or as to which the Company or any of its
subsidiaries has received any notice of assertion nor, to the knowledge of the
Company, is there a threatened action, suit, proceeding, claim, arbitration or
investigation against the Company or any of its subsidiaries which reasonably
would be likely to be material to the Company. To the knowledge of the Company,
no Governmental Entity has at any time challenged or questioned in writing the
legal right of the Company to manufacture, offer or sell any of its products in
the present manner or style thereof.
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3.12 BROKERS' AND FINDERS' FEES. Except for fees payable to Banker
pursuant to an engagement letter dated December 18, 1999, as amended a copy of
which has been provided to Parent, the Company has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
3.13 EMPLOYEE BENEFIT PLANS.
(i) With respect to each material employee benefit plan, program,
arrangement and contract (including, without limitation, any "EMPLOYEE BENEFIT
PLAN" as defined in Section 3(3) of ERISA) maintained or contributed to by the
Company or any trade or business which is under common control with the Company
within the meaning of Section 414 of the Code (the "COMPANY EMPLOYEE PLANS"),
the Company has made available to Parent a true and complete copy of, to the
extent applicable, (i) such Company Employee Plan, (ii) the most recent annual
report (Form 5500), (iii) each trust agreement related to such Company Employee
Plan, (iv) the most recent summary plan description for each Company Employee
Plan for which such a description is required, (v) the most recent actuarial
report relating to any Company Employee Plan subject to Title IV of ERISA and
(vi) the most recent IRS determination letter issued with respect to any Company
Employee Plan.
(ii) Each Company Employee Plan which is intended to be qualified
under Section 401(a) of the Code is the subject of a favorable determination
from the IRS covering the provisions of the Tax Reform Act of 1986 and, to the
knowledge of the Company, nothing has occurred since the date of such letter
that could reasonably be expected to affect the qualified status of such plan so
as to result in a Material Adverse Effect on the Company other than changes in
applicable law for which the remedial amendment period has not expired. Each
Company Employee Plan has been operated in all material respects in accordance
with its terms and the requirements of applicable law. Neither the Company nor,
to the knowledge of the Company, any ERISA Affiliate of the Company has incurred
or expects to incur any material liability under Title IV of ERISA in connection
with any Company Employee Plan.
3.14 EMPLOYEES; LABOR MATTERS. To the Company's knowledge, no employee
of the Company (i) is in violation of any term of any employment contract,
patent disclosure agreement, non-competition agreement, or any restrictive
covenant to a former employer relating to the right of any such employee to be
employed by the Company because of the nature of the business conducted or
presently proposed to be conducted by the Company or to the use of trade secrets
or proprietary information of others and (ii) has given notice to the Company,
nor is the Company otherwise aware, that any employee intends to terminate his
or her employment with the Company except for terminations of a nature and
number that are consistent with the Company's prior experience. To the Company's
knowledge, there are no activities or proceedings of any labor union to organize
any employees of the Company or any of its subsidiaries and there are no
strikes, or material slowdowns, work stoppages or lockouts, or threats thereof
by or with respect to any employees of the Company or any of its subsidiaries.
The Company and its subsidiaries are and have been in compliance in all material
respects with all applicable laws regarding employment practices, terms and
conditions of
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employment, and wages and hours (including, without limitation, OSHA, ERISA,
WARN or any similar state or local law).
3.15 ENVIRONMENTAL MATTERS.
(i) Hazardous Material. No underground storage tanks and no
amount of any substance that has been designated by any Governmental Entity or
by applicable federal, state or local law to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including, without limitation,
PCBs, asbestos, petroleum, urea-formaldehyde and all substances listed as
hazardous substances pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or defined as a hazardous
waste pursuant to the United States Resource Conservation and Recovery Act of
1976, as amended, and the regulations promulgated pursuant to said laws, (a
"HAZARDOUS MATERIAL"), but excluding office and janitorial supplies, are present
in, on or under any property, including the land and the improvements, ground
water and surface water thereof, that the Company or any of its subsidiaries has
at any time owned, operated, occupied or leased.
(ii) Hazardous Materials Activities. Neither the Company nor any
of its subsidiaries has transported, stored, used, manufactured, disposed of,
released or exposed its employees or others to Hazardous Materials in violation
of any law in effect on or before the Closing Date, nor has the Company or any
of its subsidiaries disposed of, transported, sold, used, released, exposed its
employees or others to or manufactured any product containing a Hazardous
Material (collectively "HAZARDOUS MATERIALS ACTIVITIES") in violation of any
rule, regulation, treaty or statute promulgated by any Governmental Entity in
effect prior to or as of the date hereof to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity.
(iii) Permits. The Company and its subsidiaries currently hold
all environmental approvals, permits, licenses, clearances and consents (the
"COMPANY ENVIRONMENTAL PERMITS") necessary for the conduct of the Company's and
its subsidiaries' Hazardous Material Activities and other businesses of the
Company and its subsidiaries as such activities and businesses are currently
being conducted.
(iv) Environmental Liabilities. No material action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or to the Company's knowledge, threatened concerning any Company
Environmental Permit, Hazardous Material or any Hazardous Materials Activity of
the Company or any of its subsidiaries. The Company is not aware of any fact or
circumstance which could involve the Company or any of its subsidiaries in any
material environmental litigation or impose upon the Company any material
environmental liability.
3.16 YEAR 2000 COMPLIANCE. All of the current versions of the
Company's products (including products currently under development) will record,
store, process, calculate and present calendar dates falling on and after (and
if applicable, spans of time including) January 1, 2000, and will calculate any
information dependent on or relating to such dates in the same manner, and with
the same functionality, data integrity and performance, as the products record,
store, process, calculate and present calendar dates on or before December 31,
1999, or calculate any information
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dependent on or relating to such dates (collectively, "Year 2000 Compliant").
The Company's material internal computer and technology products and systems are
Year 2000 Compliant, except for upgrades or replacements which may be made
without disruption to the Company's operations and for which the cost to the
Company is estimated to be less than $300,000 in aggregate.
3.17 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as set forth in the
Company Schedules, neither the Company nor any of its subsidiaries is a party to
or is bound by:
(i) any employment or consulting agreement, contract or
commitment with any officer or director level employee or member of the
Company's Board of Directors, other than those that are terminable by the
Company or any of its subsidiaries on no more than thirty days notice without
liability or financial obligation, except to the extent general principles of
wrongful termination law may limit the Company's or any of its subsidiaries'
ability to terminate employees at will;
(ii) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan, stock purchase plan or
restricted stock purchase agreement, any of the benefits of which will be
increased, or the vesting of benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this 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;
(iii) any agreement of indemnification or guaranty not entered
into in the ordinary course of business other than indemnification agreements
between the Company or any of its subsidiaries and any of its officers or
directors;
(iv) any agreement, contract or commitment currently in force
containing any covenant limiting the freedom of the Company or any of its
subsidiaries to engage in any line of business or compete with any person or
granting any exclusive distribution rights;
(v) any agreement, contract or commitment currently in force
relating to the disposition or acquisition of assets not in the ordinary course
of business or any ownership interest in any corporation, partnership, joint
venture or other business enterprise;
(vi) any material joint marketing or development agreement; or
(vii) any agreement, contract or commitment currently in force to
provide source code to any party for any product or technology that is material
to the Company and its subsidiaries taken as a whole.
Neither the Company nor any of its subsidiaries, nor to the Company's
knowledge any other party to a Company Contract (as defined below), has
breached, violated or defaulted under, or received notice that it has breached
violated or defaulted under, any of the material terms or conditions of any
agreement, contract or commitment to which the Company or any of its
subsidiaries is a party of the type described above or any other material
agreement, contract or
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commitment (any such agreement, contract or commitment, as well as any
agreement, contract or commitment that is an exhibit to any Company SEC Report,
a "COMPANY CONTRACT") in such a manner as would permit any other party to cancel
or terminate any such Company Contract, or would permit any other party to seek
damages, which would be reasonably likely to be material to the Company.
3.18 CHANGE OF CONTROL PAYMENTS. The Company Schedules set forth each
plan or agreement pursuant to which any amounts may become payable (whether
currently or in the future) to current or former officers and directors of the
Company as a result of or in connection with the Offer and/or the Merger, and
the nature and amount of any such obligation.
3.19 BOARD APPROVAL. The Board of Directors of the Company has, as of
the date of this Agreement (A) determined that this Agreement and the
transactions contemplated hereby, including each of the Offer and the Merger,
are fair to and in the best interests of the holders of the Shares, (B) approved
and adopted this Agreement and the transactions contemplated hereby and (C)
resolved to recommend that the shareholders of the Company accept the Offer and
approve and adopt this Agreement and the transactions contemplated hereby and
thereby.
3.20 FAIRNESS OPINION. The Company's Board of Directors has received a
written opinion from Banker to the effect that the consideration to be received
by the holders of Shares pursuant to each of the Offer and the Merger is fair to
the holders of Shares from a financial point of view, and the Company has
delivered to Parent a copy of such opinion.
3.21 CHAPTER 23B.19 OF THE WASHINGTON BUSINESS CORPORATION ACT NOT
APPLICABLE. The Board of Directors of Company has taken all actions so that (a)
the restrictions contained in Chapter 23B.19 of the WBCA will not apply to the
execution, delivery or performance of this Agreement or to the consummation of
the Merger or the other transactions contemplated by this Agreement, (b)
approval of shareholders holding fifty-one percent (51%) of the outstanding
shares will be sufficient under the WBCA to approve the Merger, and (c) the
execution, delivery and performance of this Agreement and the consummation of
the Merger will not cause any change, effect or result under the Company Rights
Plan which is adverse to the interests of Parent. Without limiting the
generality of the foregoing, if necessary to accomplish the foregoing, the
Company Rights Plan has been (or will be within five business days of the date
hereof) amended to (i) render the Company Rights Plan inapplicable to the Merger
and the other transactions contemplated by this Agreement, (ii) ensure that (x)
neither Parent nor Purchaser is an Acquiring Person (as defined in the Company
Rights Plan) pursuant to the Company Rights Plan by virtue of the Offer or the
consummation of the Merger or the other transactions contemplated hereby and
thereby and (y) a Distribution Date or Shares Acquisition Date (as such terms
are defined in the Company Rights Plan) does not occur by reason of the
execution of this Agreement, the consummation of the Merger, or the consummation
of the transactions contemplated hereby or thereby, and such amendment may not
be further amended by Company without the prior consent of Parent in its sole
discretion.
3.22 OFFER DOCUMENTS; PROXY STATEMENT. Neither the Schedule 14D-9, nor
any of the information supplied by the Company for inclusion in the Offer
Documents, shall, at the respective times that the Schedule 14D-9, the Offer
Documents or any amendments or supplements thereto are
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filed with the SEC or are first published, sent or given to shareholders, as the
case may be, 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 the light of the circumstances under which they were
made, not misleading. Neither the proxy statement to be sent to the shareholders
of the Company in connection with the meeting of the Company's shareholders to
consider the Merger (the "Company Shareholders' Meeting") or the information
statement to be sent to such shareholders, as appropriate (such proxy statement
or information statement, as amended or supplemented, is referred to as the
"Proxy Statement"), shall, at the date the Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed to shareholders, at the time of
the Company Shareholders' Meeting and at the Effective Time, 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 made therein, in the
light of the circumstances under which they are made, not misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Company Shareholders' Meeting which has
become false or misleading. The Schedule 14D-9 and the Proxy Statement will
comply in all material respects as to form and substance with the requirements
of the Exchange Act and the rules and regulations thereunder. Notwithstanding
the foregoing, the Company makes no representation or warranty with respect to
any information supplied to the Company by Parent or Purchaser which is
contained in the foregoing document.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser, jointly and severally, represent and warrant to
the Company that:
4.1 ORGANIZATION AND QUALIFICATION. Each of Parent and Purchaser is a
corporation duly organized validly existing and in good standing under the laws
of the jurisdiction of its incorporation, and has all requisite corporate power
and authority to own, operate and lease its properties and to carry on its
business as it is now being conducted.
4.2 CORPORATE POWER, AUTHORIZATION AND ENFORCEABILITY. Each of Parent
and Purchaser has full corporate power and authority to enter into this
Agreement and to perform its obligations hereunder and to consummate all the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Purchaser, the performance by each of Parent and Purchaser of
their respective obligations hereunder and the consummation by Parent and
Purchaser of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of each of Parent and Purchaser and no
other corporate action on the part of Parent or Purchaser are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
(other than the filing and recordation of appropriate merger documents as
required by the WBCA). This Agreement has been duly executed and delivered by
each of Parent and Purchaser and is a legal, valid and binding obligation of
each of Parent and Purchaser, enforceable against Parent and Purchaser in
accordance with its terms.
4.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
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(a) Assuming satisfaction of all applicable requirements
referred to in Section 4.3 (b) below, the execution and delivery of this
Agreement by Parent and Purchaser, the compliance by Parent and Purchaser with
the provisions hereof and the consummation by Parent and Purchaser of the
transactions contemplated hereby will not conflict with or violate (i) any
statute, law, ordinance, rule, regulation, order, writ, judgment, award,
injunction, decree or ruling applicable to Parent or Purchaser or any of their
properties, other than such conflicts or violations which individually or in the
aggregate do not and will not have a material adverse effect on the business,
properties, assets, results of operations or financial condition of Parent and
Purchaser, taken as a whole, or (ii) conflict with or violate the Restated
Articles of Incorporation or Bylaws of Parent or Purchaser.
(b) Other than in connection with or in compliance with the
provisions of the WBCA, the Exchange Act, the "takeover" or "blue sky" laws of
various states and the HSR Act, (i) neither Parent nor Purchaser is required to
submit any notice, report, registration, declaration or other filing with any
Governmental Entity in connection with the execution or delivery of this
Agreement by Parent and Purchaser or the performance by Parent and Purchaser of
their obligations hereunder or the consummation by Parent and Purchaser of the
transactions contemplated by this Agreement and (ii) no waiver, consent,
approval, order or authorization of any Governmental Entity is required to be
obtained by Parent or Purchaser in connection with the execution or delivery of
this Agreement by Parent and Purchaser or the performance by Parent and
Purchaser of their obligations hereunder or the consummation by Parent and
Purchaser of the transactions contemplated by this Agreement. None of the
information supplied by Parent or Purchaser for inclusion in the Proxy Statement
shall, at the date the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to shareholders or at the time of the Company
Shareholders' Meeting, contain any untrue statement of a material fact required
to be stated therein or necessary in order to make the statements made therein
in light of the circumstances under which they were made, not misleading.
4.4 SCHEDULE 14D-1. Neither the Schedule 14D-1 nor the Offer
Documents, nor any of the information supplied by Parent and Purchaser for
inclusion in the Schedule 14D-9, shall at the respective times the Schedule
14D-1 or the Offer Documents or any amendments or supplements thereto are filed
with the SEC or are first published, sent or given to shareholders or upon the
expiration of the Offer, as the case may be, 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 the light of the
circumstances under which they were made not misleading (except for information
supplied by the Company for inclusion in the Schedule 14D-1 and the Offer
Documents, as to which Parent and Purchaser make no representation). None of the
information supplied by Parent or Purchaser for inclusion in the Proxy Statement
shall, at the date the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to shareholders, at the time of the Company
Shareholders' Meeting and at the Effective Time, contain any untrue statement of
a material fact required to be stated therein or necessary in order to make the
statements made therein in light of the circumstances under which they were
made, not misleading.
4.5 AVAILABLE FUNDS. Parent has or has available to it, and will make
available to Purchaser, all funds necessary to satisfy all of Parent's and
Purchaser's obligations under this
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Agreement and in connection with the transaction contemplated hereby, including,
without limitation, the obligation to purchase all outstanding Shares pursuant
to the Offer and the Merger and to pay all related fees and expenses in
connection with the Offer and the Merger.
ARTICLE V
COVENANTS
5.1 CONDUCT OF BUSINESS BY THE COMPANY. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement pursuant to its terms and the Effective Time, the Company (which
for the purposes of this Article V shall include the Company and each of its
subsidiaries) agrees, except to the extent that Parent shall otherwise consent
in writing, to carry on its business diligently and in accordance with good
commercial practice and to carry on its business in the usual, regular and
ordinary course, in substantially the same manner as heretofore conducted and in
compliance with all applicable laws and regulations, to pay its debts and taxes
when due subject to good faith disputes over such debts or taxes, to pay or
perform other material obligations when due, and use its commercially reasonable
efforts consistent with past practices and policies to preserve intact its
present business organization, keep available the services of its present
officers and employees and preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others with which it has business
dealings. In addition, the Company will promptly notify Parent of any material
event involving its business or operations.
In addition, except as permitted by the terms of this Agreement (other
than as provided in Article 5.1 of the Company Schedules), without the prior
written consent of Parent, the Company shall not do any of the following, and
shall not permit any of its subsidiaries to do any of the following:
(i) Waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of options or restricted stock, or reprice
options granted under any employee, consultant or director stock plans or
authorize cash payments in exchange for any options granted under any of such
plans;
(ii) Grant any severance or termination pay to any officer or
employee except payments in amounts consistent with policies and past practices
or pursuant to written agreements outstanding, or policies existing, on the date
hereof and as previously disclosed in writing to the other, or adopt any new
severance plan;
(iii) Transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to the Company's
intellectual property or other proprietary rights, or enter into grants to
future patent rights, other than in the ordinary course of business, consistent
with past practice;
(iv) Buy any Intellectual Property of a third party or enter into
any license agreement with respect to the Intellectual Property of any third
party for an acquisition or license,
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the price for which exceeds $50,000 individually (or in the aggregate for a
single third party), other than "shrink wrap," "click wrap," and similar widely
available commercial end-user licenses;
(v) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) 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.
(vi) Repurchase or otherwise acquire, directly or indirectly, any
shares of capital stock except pursuant to rights of repurchase of any such
shares under any employee, consultant or director stock plan existing on the
date hereof (which repurchase rights the Company shall be obligated to exercise
if the repurchase price is less than the Merger Consideration).
(vii) Issue, deliver, sell, authorize or propose the issuance,
delivery or sale of, any shares of capital stock or any securities convertible
into shares of capital stock, or subscriptions, rights, warrants or options to
acquire any shares of capital stock or any securities convertible into shares of
capital stock, or enter into other agreements or commitments of any character
obligating it to issue any such shares or convertible securities, other than (i)
the issuance of Shares, pursuant to the exercise of stock options therefor
outstanding as of the date of this Agreement, (ii) Shares issuable pursuant to
the Option Plans;
(viii) Cause, permit or propose any amendments to any charter
document or Bylaw (or similar governing instruments of any subsidiaries);
(ix) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any equity interest in or a material portion of the
assets of, or by any other manner, any business or any corporation, partnership
interest, association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to the business of the Company, or enter into
any joint ventures, strategic partnerships or alliances;
(x) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of the Company, except in the ordinary course of business
consistent with past practice;
(xi) Incur any indebtedness for borrowed money (other than
ordinary course trade payables or pursuant to existing credit facilities in the
ordinary course of business) or guarantee any such indebtedness or issue or sell
any debt securities or warrants or rights to acquire debt securities, or
guarantee any debt securities of others;
(xii) Adopt or amend any employee benefit or employee stock
purchase or employee option plan (other than is necessary to comply with law),
or enter into any employment contract, pay any special bonus or special
remuneration to any director or employee, or increase the salaries or wage rates
of its officers or employees other than in the ordinary course of business,
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consistent with past practice, or change in any material respect any management
policies or procedures;
(xiii) Pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than in the ordinary course of business;
(xiv) Make any grant of exclusive rights to any third party; or
(xv) Except in the ordinary course of business, modify, amend or
terminate any material contract or agreement involving payments of $50,000 or
more to which the Company or any Subsidiary thereof is a party or waive, release
or assign any material rights or claims thereunder;
(xvi) Materially revalue any of its assets or, except as required
by GAAP, make any change in accounting methods, principles or practices;
(xvii) Make or change any material election in respect of Taxes,
adopt or change any accounting method in respect of Taxes, enter into any
closing agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes in an amount in excess of $50,000 in the
aggregate;
(xviii) Commence any litigation or settle any litigation for an
amount in excess of the greater of $100,000 in the aggregate or the amount
reserved in respect thereof in the Company Balance Sheet, as set forth in
Section 5.1 of the Company Schedules;
(xix) Agree in writing or otherwise to take any of the actions
described in (i) through (xviii) above.
5.2 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Subject to and in accordance with the terms and conditions of
that certain letter dated April 29, 1999 between Parent and the Company (the
"CONFIDENTIALITY AGREEMENT"), from the date of this Agreement to the Effective
Time, the Company shall, and shall cause its subsidiaries, officers, directors,
employees and agents to, afford the officers, employees and agents of Parent,
Purchaser and their affiliates and the attorneys, accountants, banks, other
financial institutions and investment banks working with Parent or Purchaser,
and their respective officers, employees and agents, reasonable access at all
reasonable times to its officers, employees, agents, properties, books, records
and contracts, and shall furnish Parent, Purchaser and their affiliates and the
attorneys, banks, other financial institutions and investment banks working with
Parent or Purchaser, all financial, operating and other data and information as
they reasonably request.
(b) Subject to the requirements of law, Parent and Purchaser
shall, and shall use their reasonable efforts to cause their officers, employees
and agents, and the attorneys, banks, other financial institutions and
investment banks who obtain such information to, hold all information
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obtained pursuant to this Agreement or the Confidentiality Agreement in
accordance with the terms and conditions of the Confidentiality Agreement.
(c) No investigation pursuant to this Section 5.2 shall affect
any representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
5.3 PROXY MATERIAL; SHAREHOLDERS' MEETING.
(a) The Company and each of Parent and Purchaser shall prepare
and file, or shall cause to be prepared and filed, with the SEC those documents,
schedules and amendments and supplements thereto required to be filed with
respect to the transactions contemplated by this Agreement. The Company, acting
through its Board of Directors, shall, if necessary, cause the Company
Shareholders' Meeting to be duly called (including establishing the record date,
if requested, to be a date immediately after the date the Purchaser first
purchases any Shares pursuant to the Offer) and shall give notice of, convene
and hold the Company Shareholders' Meeting as soon as practicable, and at such
time and place designated by Parent or Purchaser, for the purpose of approving
the Merger, this Agreement and any other actions contemplated hereby which
require the approval of the Company's shareholders. The Company shall recommend
to its shareholders approval of the Merger and take all reasonable actions
necessary to solicit such approval. The Company shall use its best efforts to
obtain and furnish the information required to be included by it in the Proxy
Statement and, after consultation with Parent and Purchaser, shall respond
promptly to any comments of the SEC relating to any preliminary proxy statement
regarding the Merger and the other transactions contemplated by this Agreement
and to cause the Proxy Statement to be mailed to its shareholders, all at the
earliest practicable time. Whenever any event occurs which should be set forth
in an amendment or supplement to the Proxy Statement or any other filing
required to be made with the SEC with respect to the Proxy Statement or the
Company Shareholders' Meeting, each party shall promptly inform the other of
such occurrence and cooperate in filing with the SEC and/or mailing to the
Company's shareholders such amendment or supplement. The Proxy Statement and all
amendments and supplements thereto shall comply with applicable law and be in
form and substance satisfactory to each of Parent and Purchaser and the Company.
The Company, acting through its Board of Directors, shall include in the Proxy
Statement the recommendation of its Board of Directors that shareholders of the
Company vote in favor of the approval and adoption of this Agreement and the
Merger and shall disclose that each of the Company's directors and executive
officers and Banker and its affiliates intend to tender all outstanding shares
beneficially owned by such persons to Purchaser pursuant to the offer unless to
do so would subject such person to liability under Section 16(b) of the Exchange
Act. The Company shall use its best efforts to solicit from shareholders of the
Company proxies in favor of such approval and adoption and shall take all other
actions necessary or, in the reasonable judgment of Parent and Purchaser,
advisable to secure the vote or consent of the Company's shareholders required
by the WBCA to effect the Merger.
(b) Notwithstanding the foregoing, in the event that Purchaser
shall acquire at least ninety percent (90%) of the outstanding Shares, the
parties hereto agree, at the request of Purchaser, subject to Article VI, to
take all necessary and appropriate action to cause the Merger to
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become effective as soon as reasonably practicable after such acquisition,
without a meeting and without a vote of the Company's shareholders, in
accordance with the WBCA.
5.4 NO SOLICITATION; BREAK-UP FEE.
(a) From and after the date of this Agreement until the earlier
of the Effective Time or termination of this Agreement pursuant to its terms,
the Company and its subsidiaries shall not, and will instruct their respective
directors, officers, employees, representatives, investment bankers, agents and
affiliates not to, directly or indirectly, (i) solicit or encourage submission
of, any proposals or offers by any person, entity or group (other than Parent
and its affiliates, agents and representatives), or (ii) participate in any
discussions or negotiations with, or disclose any non-public information
concerning the Company or any of its subsidiaries to, or afford any access to
the properties, books or records of the Company or any of its subsidiaries to,
or otherwise assist or facilitate, or enter into any agreement or understanding
with, any person, entity or group (other than Parent and its affiliates, agents
and representatives), in connection with any Acquisition Proposal with respect
to the Company. For the purposes of this Agreement, an "ACQUISITION PROPOSAL"
with respect to an entity means any proposal or offer relating to (i) any
merger, consolidation, sale of substantial assets or similar transactions
involving the entity or any subsidiaries of the entity (other than sales of
assets or inventory in the ordinary course of business or as permitted under the
terms of this Agreement), (ii) sale of outstanding shares of capital stock of
the entity (including without limitation by way of a tender offer or an exchange
offer), (iii) the acquisition by any person of beneficial ownership or a right
to acquire beneficial ownership of, or the formation of any "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) which beneficially owns, or has the right to acquire beneficial
ownership of, 10% or more of the then outstanding shares of capital stock of the
entity (except for acquisitions for passive investment purposes only in
circumstances where the person or group qualifies for and files a Schedule 13G
with respect thereto); or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing. The Company will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. The Company will (i) notify Parent as promptly as
practicable if any inquiry or proposal is made or any information or access is
requested in connection with an Acquisition Proposal or potential Acquisition
Proposal and (ii) as promptly as practicable notify Parent of the terms and
conditions of any such Acquisition Proposal. In addition, subject to the other
provisions of this Section 5.4(a), from and after the date of this Agreement
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 Acquisition Proposal made by any person, entity or group (other than
Parent).
(b) Notwithstanding the provisions of paragraph (a) above, prior
to consummation of the Offer, 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
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requirements of paragraph (c), below, furnish information to any person, entity
or group after such person, entity or group has delivered to the Company in
writing, an unsolicited bona fide Acquisition Proposal which the Board of
Directors of the Company in its good faith reasonable judgment determines, after
consultation with its independent financial advisors, would result in a
transaction more favorable than the Offer and the Merger to the shareholders of
the Company from a financial point of view and for which financing, to the
extent required, is then committed or which, in the good faith reasonable
judgment of the Board of Directors of the Company (based upon the advice of
independent financial advisors), is reasonably capable of being financed by such
person, entity or group and which is likely to be consummated (a "SUPERIOR
PROPOSAL"). In the event the Company receives a Superior Proposal, nothing
contained in this Agreement (but subject to the terms hereof) will prevent the
Board of Directors of the Company from recommending such Superior Proposal to
the Company's shareholders, provided that (i) the Board determines in good
faith, after consultation with outside legal counsel, that such action is
required by its fiduciary duties under applicable law; (ii) the Company shall
not recommend to its shareholders a Superior Proposal until at least 48 hours
after Parent's receipt of a copy of such Superior Proposal (or a description of
its terms and conditions, if not in writing), and (iii) the Company shall not
recommend to its shareholders a Superior Proposal unless the Company shall have
terminated this Agreement and paid the Break-up Fee pursuant to Section
7.1(d)(ii).
(c) Notwithstanding anything to the contrary herein, 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; and (y)
such non-public information has been previously delivered to Parent.
(d) Nothing contained in this Section 5.4 shall prohibit the
Company from at any time taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's shareholders if, in the good faith judgment of
the Company Board, after consultation with outside counsel, failure so to
disclose would constitute a breach of its fiduciary duties to the Company's
shareholders under applicable law; provided, however, that neither the Company
nor its Board of Directors nor any committee thereof shall, except as permitted
by Section 5.4(b), withdraw or modify, or propose to withdraw or modify, its
position with respect to the Merger or this Agreement or approve or recommend,
or propose to approve or recommend, an Acquisition Proposal. The taking of a
position by the Company pursuant to Rule 14e-2(a)(2) or (3) of the Exchange Act
in respect of an Acquisition Proposal shall not be deemed a withdrawal, a
modification or a proposal to withdraw or modify its position with respect to
the Acquisition for purposes hereof.
5.5. PUBLIC ANNOUNCEMENTS. Parent and Purchaser on the one hand and
the Company on the other hand will consult with each other before issuing any
press release or otherwise making any public statements with respect to this
Agreement or the Merger or the other transactions contemplated hereby, and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by law. This Section 5.5 shall supersede
any conflicting provisions in the Confidentiality Agreement.
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5.6 NOTIFICATION OF CERTAIN MATTERS.
(a) The Company shall give prompt notice (which notice shall
state that it is delivered pursuant to Section 5.6(a) of this Agreement) in
writing to Parent, and Parent and Purchaser shall give prompt notice in writing
to the Company, of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date of this Agreement through the Effective Time and (ii)
any failure of the Company, Parent or Purchaser, as the case may be, or of any
officer, director, employee or agent thereof, to comply with or satisfy in all
material respects any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement; provided, however, no such notification
shall affect the representations or warranties of the parties or the conditions
to the obligations of the parties hereunder.
(b) The Company shall give prompt notice in writing (which notice
shall state that it is delivered pursuant to Section 5.6(b) of this Agreement)
to Parent of (i) any act, omission to act, event or occurrence which, with the
passage of time or otherwise, would likely have a Material Adverse Effect on the
Company and (ii) any material contingent liability of the Company or any of its
subsidiaries for which such party reasonably believes it will, with the passage
of time or otherwise, become liable; provided, however, that no such
notification shall affect the representations or warranties of the parties or
the conditions to the obligations of the parties hereunder.
5.7 ACTIONS BY COMPANY. Subject to the terms and conditions hereof,
the Company shall, and shall cause its Subsidiaries to, cooperate with Parent
and Purchaser and take all such actions as may be reasonably requested by Parent
and Purchaser to accomplish the Merger.
5.8 OFFICERS' AND DIRECTORS' INDEMNIFICATION.
(a) From and after the Effective Time, Parent will cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
the Company pursuant to any indemnification agreements between the Company and
its directors and officers as of the Effective Time (the "Indemnified Parties").
The Restated Articles of Incorporation and Bylaws of the Surviving Corporation
will contain provisions with respect to exculpation and indemnification that are
at least as favorable to the Indemnified Parties as those contained in the
Restated Articles of Incorporation and Bylaws of the Company as in effect on the
date hereof, which provisions will not be amended, repealed or otherwise
modified for a period of three years 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, unless such modification is required by law.
(b) For a period of three years after the Effective Time, Parent
will cause the Surviving Corporation to use its commercially reasonable efforts
to maintain in effect, if available, directors' and officers' liability
insurance covering those persons who are currently covered by the Company's
directors' and officers' liability insurance policy on terms comparable to those
applicable
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to the current directors and officers of the Company; provided, however, that in
no event will Parent or the Surviving Corporation be required to expend in
excess of 150% of the annual premium currently paid by the Company for such
coverage (or such coverage as is available for such 150% of such annual
premium).
5.9 EMPLOYMENT AGREEMENTS. Prior to commencement of the Offer, the
Company shall offer to enter into employment agreements (the "EMPLOYMENT
AGREEMENTS") with the persons set forth in Exhibit A, which Employment
Agreements shall be substantially in the form of Exhibit A hereto or such other
terms as may be accepted in writing by Parent.
5.10 ADDITIONAL AGREEMENTS.
(a) Subject to the terms and conditions hereof, each of the
parties to this Agreement 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 to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement (including consummation of the
Offer and the Merger) and to cooperate with each other in connection with the
foregoing.
(b) Subject to the terms and conditions hereof, each of the
parties to this Agreement agrees to use (i) all reasonable efforts to obtain all
necessary waivers, consents and approvals from other parties to loan agreements,
leases, licenses and other contracts, and (ii) all reasonable efforts to obtain
all necessary consents, approvals and authorizations as required to be obtained
under any federal, state or foreign law or regulations, including, but not
limited to, those required under the HSR Act, to defend all lawsuits or other
legal proceedings challenging this Agreement or the consummation of the
transactions contemplated hereby, to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby, to effect all necessary
registrations and filings, including, but not limited to, filings under the HSR
Act and submissions of information requested by Governmental Entities, and to
fulfill all conditions to this Agreement.
5.11 OTHER ACTIONS BY THE COMPANY. If any "fair price," "moratorium,"
"control share acquisition," "shareholder protection" or other form of
anti-takeover statute, regulation or charter provision or contract is or shall
become applicable to the Offer or the Merger or the transactions contemplated
hereby, the Company and the Board of Directors of the Company shall grant such
approvals and take such actions as are necessary under such laws and provisions
so that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of such statute, regulation, provision or contract on the
transactions contemplated hereby.
5.12 COMPANY OPTIONS. The Company agrees to take all necessary actions
to ensure that all outstanding compensatory options to purchase common stock of
the Company terminate and become without further force and effect immediately
prior to the Effective Time.
5.13 RESTATED EMPLOYEE STOCK PURCHASE PLAN. The Company agrees to take
all necessary actions to ensure that all offering periods outstanding under the
Company's Restated
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Employee Stock Purchase Plan (the "ESPP") terminate immediately prior to the
Effective Time, and to ensure that the ESPP terminates immediately prior to the
Effective Time.
5.14 RETIREMENT SAVINGS PLAN TERMINATION. The Company and its ERISA
Affiliates, as applicable, each agrees to terminate its Retirement Savings Plan
immediately prior to Effective Time, unless the Parent, in its sole and absolute
discretion, agrees to sponsor and maintain such plans by providing the Company
with written notice of such election at least three (3) days before the
Effective Time. Unless the Parent provides such notice to the Company, the
Parent shall receive from the Company evidence that the Company's and each ERISA
Affiliate's (as applicable) 401(k) plan has been terminated pursuant to
resolutions of each such entity's Board of Directors (the form and substance of
which resolutions shall be subject to review and approval of the Parent),
effective as of the day immediately preceding the Effective Time.
5.15 STOCKHOLDER LITIGATION. The Company shall give Parent the
opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and its directors relating to any of the
transactions contemplated by this Agreement until the purchase of Company Common
Stock pursuant to the Offer, and thereafter, shall give Parent the opportunity
to direct the defense of such litigation and, if Parent so chooses to direct
such litigation, Parent shall give the Company and its directors an opportunity
to participate in such litigation; provided, however, that no settlement of such
litigation shall be agreed to without Parent's consent; and provided further
that no settlement requiring a payment by a director shall be agreed to without
such director's consent.
ARTICLE VI
CONDITIONS OF MERGER
6.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of each of the following
conditions:
(a) If required by the WBCA, this Agreement and the Merger
shall have been approved and adopted by the requisite vote of the shareholders
of the Company.
(b) Any waiting period (and any extension thereof) applicable
to the consummation of the Merger under the HSR Act shall have expired or been
terminated.
(c) Shares shall have been purchased pursuant to the Offer.
(d) No temporary restraining order, preliminary or permanent
injunction, judgment or other order, decree or ruling nor any statute, rule,
regulation or order shall be in effect which would (i) make the acquisition or
holding by Parent or its affiliates of Shares or shares of Common Stock of the
Surviving Corporation illegal or otherwise prevent the consummation of the
Merger, (ii) prohibit Parent's or Purchaser's ownership or operation of, or
compel Parent or Purchaser to dispose of or hold separate, all or a material
portion of the business or assets
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of Purchaser, the Company or any Significant Subsidiary thereof, (iii) compel
Parent, Purchaser or the Company to dispose of or hold separate all or a
material portion of the business or assets of Parent or any of its Subsidiaries
or the Company or any of its Significant Subsidiaries, (iv) impose material
limitations on the ability of Parent or Purchaser or their affiliates
effectively to exercise full ownership and financial benefits of the Surviving
Corporation, or (v) impose any material condition to the Offer, this Agreement
or the Merger.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1. TERMINATION. This Agreement may be terminated, at any time prior
to the Effective Time, whether before or after approval by the shareholders of
the Company:
(a) by mutual written agreement of the Boards of Directors of
Parent and the Company;
(b) by either Parent or the Company:
(i) if the Offer shall be terminated or expire without any
Shares having been purchased pursuant to the Offer; provided, however,
that a party shall not be entitled to terminate this Agreement pursuant to this
Section 7.1(b)(i) if it is in material breach of its representations and
warranties, covenants or other obligations under this Agreement; or
(ii) if any court of competent jurisdiction in the United
States or other United States governmental body shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Offer or the Merger and such order, decree, ruling or
other action shall have become final and nonappealable;
(c) by Parent:
(i) if the Board of Directors of the Company or any
committee thereof shall have approved, or recommended that shareholders
of the Company accept or approve, an Acquisition Proposal by a third party, or
shall have resolved to do any of the foregoing;
(ii) if the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified its approval of, or
recommendation that the shareholders of the Company accept or approve (as the
case may be), the Offer, this Agreement and the Merger, or shall have resolved
to do any of the foregoing;
(iii) if the Company shall have failed to include in the
Schedule 14D-9 the recommendation of the Board of Directors of the
Company that the shareholders of the Company accept the Offer;
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(iv) prior to the purchase of Shares pursuant to the Offer, in
the event that the conditions to the Offer set forth in clause (i) or (ii) of
Annex I shall not be satisfied or if any of the events set forth in clause (iii)
thereof shall have occurred; or
(v)if the Company is in material breach of any of its
covenants or obligations under this Agreement, or if there shall have
been or be any material inaccuracy in the representations and warranties of the
Company contained in this Agreement, either as of the date of this Agreement or
subsequently;
(d) by the Company:
(i) if the Offer shall not have been commenced in accordance
with Section 1.1, or Parent or Purchaser shall have failed to purchase
validly tendered Shares in violation of the terms of the Offer within ten
business days after the expiration of the Offer; provided, however, that the
Company shall not be entitled to terminate this Agreement pursuant to this
Section 7.1(d)(i) if it is in material breach of its representations and
warranties, covenants or other obligations under this Agreement;
(ii) if the Board of Directors of the Company has resolved to,
and in fact does, recommend to the Company's Shareholders that they accept a
Superior Proposal, provided that all the provisions of Section 5.4 have been
fully complied with, and provided further that the Company shall have paid to
Parent the entire Break-up Fee as provided in Section 7.3(b); or
(iii) prior to the purchase of Shares pursuant to the Offer,
if Parent or Purchaser is in material breach of any of its covenants or
obligations under this Agreement, or any representation or warranty of Parent
or Purchaser contained in this Agreement shall have been incorrect, in any
material respect, when made or shall have since ceased to be true and correct
in any material respect.
7.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of the
termination of this Agreement by the Company or Parent or both of them pursuant
to Section 7.1, the terminating party shall provide written notice of such
termination to the other party and this Agreement shall forthwith become void
and there shall be no liability on the part of Parent, Purchaser or the Company,
except as set forth in this Section 7.2 and in Sections 5.2(b) and 7.3. The
foregoing shall not relieve any party for liability for damages actually
incurred as a result of any breach of this Agreement. Sections 5.2(b), 7.2, 7.3
and Article VIII shall survive the termination of this Agreement.
7.3 FEES AND EXPENSES.
(a) Except as otherwise provided in this Agreement and whether
or not the transactions contemplated by the Offer and this Agreement are
consummated, all costs and expenses incurred in connection with the transactions
contemplated by the Offer and this Agreement shall be paid by the party
incurring such expenses.
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(b) The Company shall pay to Parent, in same day funds, upon
demand, a fee of U.S. $5,000,000 (the "BREAK-UP FEE"), if any of the following
shall occur:
(i) if the Board of Directors of the Company or any committee
thereof shall have approved, or recommended that shareholders of the Company
accept or approve, an Acquisition Proposal by a third party, or shall have
resolved to do any of the foregoing;
(ii) if the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified its approval of, or recommendation that
the shareholders of the Company accept or approve (as the case may be), the
Offer, this Agreement and the Merger, or shall have resolved to do any of the
foregoing; or
(iii) if the Company shall have failed to include in the
Schedule 14D-9 the recommendation of the Board of Directors of the
Company that the shareholders of the Company accept the Offer.
(c) The Break-up Fee shall not be deemed to be liquidated
damages, and the right to the payment of the Break-up Fee shall be in addition
to (and not a maximum payment in respect of) any other damages or remedies at
law or in equity to which Parent or Purchaser may be entitled as a result of the
Company's violation or breach of any term or provision of this Agreement.
7.4 AMENDMENT. This Agreement may be amended by each of the parties
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that (i) such amendment
shall be in writing signed by all of the parties, (ii) any such waiver,
amendment or supplement by the Company shall be effective as against the Company
only if approved by a majority of the Continuing Directors and (iii) after
adoption of this Agreement and the Merger by the shareholders of the Company, no
amendment may be made without the further approval of the shareholders of the
Company which reduces the Merger Consideration or changes the form thereof or
changes any other terms and conditions of this Agreement if the changes, alone
or in the aggregate, would materially adversely affect the shareholders of the
Company.
7.5 WAIVER. At any time prior to the Effective Time, whether before
or after the Company's Shareholders Meeting, any party hereto, by action taken
by its Board of Directors, may (i) extend the time for the performance of any of
the obligations or other acts of any other party hereto or (ii) subject to the
provisions of Section 7.4, waive compliance with any of the agreements of any
other party or with any conditions to its own obligations. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party by a duly
authorized officer of such party. Notwithstanding the above, any waiver given
shall not apply to any subsequent failure of compliance with agreements of the
other party or conditions to its own obligations.
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ARTICLE VIII
MISCELLANEOUS
8.1 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by rule of law or public policy,
all other conditions and provisions of this Agreement shall nevertheless remain
in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
8.2 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given,
or made as of the date delivered if sent via telecopier or delivered personally
(including, without limitation, delivery by commercial carrier warranting
next-day delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by similar notice, except that notices
of changes of address shall be effective upon receipt):
(a) If to Parent or Purchaser:
NetManage, Inc.
10725 N. DeAnza Blvd.
Cupertino, CA 95014
Attention: Gary Anderson, Chief Financial Officer
Telecopier No.: (408) 342-7880
With copies to:
Wilson, Sonsini, Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: Michael J. Danaher
Telecopier No.: (415) 493-6811
and to:
NetManage Acquisition Corporation
10725 N. DeAnza Blvd.
Cupertino, CA 95014
Attention: Gary Anderson, Chief Financial Officer
Telecopier No.: (408) 342-7880
-36-
<PAGE> 41
(b) If to the Company:
Wall Data Incorporated
11332 N.E. 122nd Way
Kirkland, WA 98034
Attention: Richard P. Fox, Chief Financial Officer
Telecopier No.: (425) 814-4372
With copies to:
Perkins Coie LLP
1201 Third Avenue, Suite 4800
Seattle, WA 98101-3099
Attention: Andrew Bor
Telecopier No.: (206) 583-8500
8.3 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; NO ASSIGNMENT.
This Agreement, Annex I, the documents delivered pursuant hereto or in
connection herewith and the Confidentiality Agreement (i) constitute the entire
agreement and supersede all other prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof, (ii) are not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder (except as expressly set forth
in Section 5.9 with respect to present officers and directors of the Company),
and (iii) may not be assigned, except that Parent or Purchaser may assign their
rights hereunder in whole or in part to one or more direct or indirect
subsidiaries or affiliates of Parent which, in written instruments reasonably
satisfactory to the Company, shall agree to make all representations and
warranties of Purchaser set forth herein and shall agree to assume all of such
party's obligations hereunder and be bound by all of the terms and conditions of
this Agreement; provided, however, that no such assignment shall relieve the
assignor of its obligations hereunder.
8.4 INTERPRETATION; KNOWLEDGE.
(i) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
The words "INCLUDE," "INCLUDES" and "INCLUDING" when used herein shall be deemed
in each case to be followed by the words "without limitation." The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. When reference is made herein to "THE BUSINESS OF" an entity, such
reference shall be deemed to include the business of all direct and indirect
subsidiaries of such entity. Reference to the subsidiaries of an entity shall be
deemed to include all direct and indirect subsidiaries of such entity.
(ii) For purposes of this Agreement, the term "KNOWLEDGE" means,
with respect to any matter in question, that any of the Chief Executive Officer,
Chief Operating Officer, Chief Financial Officer or Controller (or principal
accounting officer if different from the foregoing) of the parties, as the case
may be, have knowledge of such matter.
-37-
<PAGE> 42
8.5 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 party, it being understood that all
parties need not sign the same counterpart.
8.6 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy. The parties
hereto 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 hereof in
any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
8.7 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof; provided that issues involving the corporate governance of any of the
parties hereto shall be governed by their respective jurisdictions of
incorporation. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction of any state or federal court within the Northern District of
California, in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, other than issues involving the
corporate governance of any of the parties hereto, agrees that process may be
served upon them in any manner authorized by the laws of the State of California
for such persons and waives and covenants not to assert or plead any objection
which they might otherwise have to such jurisdiction and such process.
8.8 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
8.9 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
*****
-38-
<PAGE> 43
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
NETMANAGE, INC.
By: /s/ ZVI ALON
--------------------------------------------
Zvi Alon, Chief Executive Officer
NETMANAGE ACQUISITION CORPORATION
By: /s/ ZVI ALON
--------------------------------------------
Zvi Alon, Chief Executive Officer
WALL DATA INCORPORATED
By: /s/ KEVIN B. VITALE
--------------------------------------------
Kevin B. Vitale, President and
Chief Executive Officer
*****SIGNATURE PAGE -- AGREEMENT AND PLAN OF MERGER*****
-39-
<PAGE> 44
ANNEX I
CONDITIONS OF THE OFFER
The term "AGREEMENT" as used in this Annex I shall mean the Agreement
and Plan of Merger to which this Annex I is attached, and all capitalized terms
used in this Annex I and not defined in this Annex I shall have the respective
meanings set forth in the Agreement.
Notwithstanding any other provision of the Offer, and in addition to
(and not in limitation of) Purchaser's rights to extend and amend the Offer at
any time, Purchaser shall not be required to accept for payment, purchase or pay
for, or may terminate or amend the Offer and may postpone the acceptance of, and
payment for, subject to Rule 14e-1(c) under the Exchange Act (whether or not any
Shares have theretofore been accepted for payment or paid for pursuant to the
Offer), any Shares tendered pursuant to the Offer if:
(i) any waiting period (and any extension thereof) under the
HSR Act applicable to the purchase of Shares pursuant to the Offer shall
not have expired or been terminated;
(ii) the Minimum Condition is not satisfied;
(iii) at any time on or after the date of the Agreement, any
of the following events shall be determined by Parent or Purchaser to
have occurred:
(A) there shall have been any action taken or threatened,
or any statute, rule, regulation, judgment, temporary restraining order,
preliminary or permanent injunction or other order, decree or ruling proposed,
sought, promulgated, enacted, entered, enforced or deemed applicable to the
Offer or the Merger by any Governmental Entity or arbitration panel that could
reasonably be expected to, directly or indirectly, (1) make the acceptance for
payment or the payment for, or the purchase of some or all of the Shares
pursuant to the Offer illegal or otherwise delay, restrict or prohibit
consummation of the Offer or the Merger or the consummation of any transaction
contemplated by the Merger Agreement, (2) result in a delay in or restrict the
ability of Purchaser, or render Purchaser unable, to accept for payment, pay for
or purchase some or all of the Shares, (3) require the divestiture by Parent,
Purchaser, the Company or any of their respective Subsidiaries or affiliates of
all or any portion of the business, assets or property of any of them or any
Shares or impose any material limitation on the ability of any of them to
conduct their business and own such assets, properties or Shares, (4) impose any
material limitation on the ability of Parent, Purchaser or their affiliates to
acquire or hold or to exercise effectively all rights of ownership of the
Shares, including the right to vote any Shares purchased by any of them on all
matters properly presented to the shareholders of the Company, including,
without limitation, the adoption and approval of the Agreement and the Merger,
(5) result in a material diminution in the benefits expected to be derived by
Parent or Purchaser as a result of the transactions contemplated by the Offer or
the Agreement (other than legislation or rule-making affecting the industry as a
whole), or (6) impose any material condition to the Offer, the Agreement or the
Merger unacceptable to Parent or Purchaser; or
<PAGE> 45
(B) the Company shall have failed to obtain all of the
consents of third parties set forth in Exhibit B by the Expiration Date; or
(C) the Company shall have breached, or failed to comply
with, in any material respect, any of its covenants or obligations under the
Agreement or if there shall have been or be any material inaccuracy in the
representations and warranties of the Company contained in the Agreement, either
as of the date of this Agreement or subsequently; or
(D) the Board of Directors of the Company or any committee
thereof shall have (1) withdrawn or modified (including without limitation, by
amendment of the Company's Schedule 14D-9) in a manner adverse to Parent or
Purchaser its approval or recommendation of the Offer, the Merger or the
Agreement, (2) approved or recommended any Acquisition Proposal by a third party
other than the Offer and the Merger, (3) publicly resolved to do any of the
foregoing, or (4) upon a request to reaffirm the Company's approval or
recommendation of the Offer, the Agreement or the Merger, the Board of Directors
of the Company shall fail to do so within two business days after such request
is made; or
(E) the Agreement shall have been terminated in accordance
with its terms; or
(F) there shall have occurred any Material Adverse Effect
on the Company, or any event, fact or change which could reasonably be expected
to result in a Material Adverse Effect on the Company; or
(G) any of the Employment Agreements shall not have been
executed and delivered or any Employment Agreement is not in full force and
effect.
The foregoing conditions are for the sole benefit of Parent, Purchaser
and their affiliates and may be asserted by Parent or Purchaser regardless of
the circumstances giving rise to such condition. All the foregoing conditions
may be waived by Parent or Purchaser in whole or in part at any time and from
time to time in the sole discretion of Parent or Purchaser. The failure by
Parent or Purchaser at any time to exercise its rights with respect to the
foregoing conditions shall not be deemed a waiver of any such condition, and
each condition shall be deemed an ongoing condition with respect to which Parent
or Purchaser may assert its rights at any time and from time to time.
-2-
<PAGE> 1
EXHIBIT A
NETMANAGE, INC.
KEVIN B. VITALE EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made between and among
NetManage, Inc., Wall Data Incorporated and Kevin B. Vitale ("Employee"),
effective as of October 20, 1999, pursuant to the Agreement and Plan of Merger
(the "Merger Agreement") entered into by and among NetManage, Inc. (together
with its subsidiaries and affiliates, "NetManage"), Bogota, Inc. and Wall Data
Incorporated ("Wall Data").
WHEREAS, Employee has previously entered into an employment agreement
and a change of control agreement, both dated January 21, 1999, with Wall Data
(respectively, the "Employment Agreement" and the "Change of Control
Agreement"); and
WHEREAS, Employee has previously entered into stock option agreements
with Wall Data (the "Stock Option Agreements"); and
WHEREAS, the parties hereto desire to amend the Employment Agreement,
Change of Control Agreement and Stock Option Agreements in exchange for the
consideration set forth herein;
NOW, THEREFORE, the parties hereto agree that the Employment Agreement,
Change of Control Agreement and Stock Option Agreements are hereby amended as
follows:
1. Stock Option Cancellation & Waiver of Severance Benefits and
Payments in Exchange for New Benefits and Payments.
(a) Stock Option Cancellation. In exchange for the consideration
specified in Section 1(c) of this Agreement, Employee agrees that his unvested
Stock Options which otherwise would have accelerated their vesting (the
"Accelerated Options"), will not have their vesting accelerated either by the
consummation of the tender offer contemplated by the Merger Agreement (the
"Tender Offer") or by the merger contemplated by the Merger Agreement (the
"Merger") and shall be cancelled and become without further force and effect
upon the date on which they otherwise would have had their vesting accelerate.
(b) Waiver of Severance Benefits and Payments. Employee agrees
that in exchange for the consideration specified in Section 1(c) of this
Agreement, subject to the consummation of the Tender Offer, he shall no longer
be entitled to receive any retention or severance benefits or payments pursuant
to Section 8 of the Change of Control Agreement, pursuant to Section 7 of the
Employment Agreement or pursuant to any other plans, policies or arrangements of
Wall Data, whether written or oral, formal or informal.
(c) New Benefits and Payments. Subject to Section 8.8 of the
Change of Control Agreement, and, with respect to payments and benefits not
already made or provided, subject to
<PAGE> 2
Employee entering into a standard form of mutual release of claims upon the
termination of his employment, Employee shall be entitled to the following
benefits and payments:
(i) Retention Payment. In the event Employee remains
employed by NetManage for the period commencing on the "Effective Time," (as
such term is defined in the Merger Agreement) and ending six months later (the
"Retention Period"), Employee shall be entitled to receive twelve substantially
equal semi-monthly payments equal, in the aggregate, to the sum of $812,500 (the
"Change of Control Agreement Payment"), plus an amount equal to $9 minus the
exercise price times the number of shares subject to Employee's Accelerated
Options, (the "Accelerated Stock Option Payment") less applicable withholding
(the sum of the Change of Control Agreement Payment and the Accelerated Stock
Option Payment, less applicable withholding, is referred to herein as the
"Retention Payment"). Notwithstanding the foregoing, the balance of any unpaid
Retention Payment shall be paid within five days of the date of Employee's
termination, in a lump-sum, in the event that, prior to the end of the Retention
Period, Employee (i) has his employment terminated by NetManage other than for
"Cause" (as defined herein), (ii) terminates his employment with NetManage for
"Good Reason" (as defined herein), or (iii) dies or terminates employment with
NetManage due to his "Total Disability" (as such term is defined in Section 7.2
of the Change of Control Agreement).
For the purposes of this Agreement, "Cause" shall have the meaning set
forth in Section 8.6 of the Change of Control Agreement; provided, however, that
Section 8.6(d) of the Change of Control Agreement shall be amended to include a
material violation by Employee of any provision of this Agreement, subject to
the notice and opportunity to cure requirements of Section 10 of the Change of
Control Agreement.
For the purposes of this Agreement, "Good Reason" shall have the meaning
set forth in Section 8.7 of the Change of Control Agreement; provided, however,
(A) that "Good Reason" shall not include a reduction in title, position,
authority, duties or responsibilities solely by virtue of the consummation of
the transactions contemplated by the Merger Agreement (for example, if the
Company becomes a division of NetManage and the Chief Executive Officer and
President of Wall Data remains the Chief Executive Officer and President of the
division and does not serve on the Board of Directors of NetManage, this shall
not constitute "Good Reason"), and (B) Section 8.7(e) shall be amended to
include a material violation by the Company of any provision of this Agreement,
and that any such violation or a material violation of the Change of Control
Agreement shall be subject to the notice and opportunity to cure requirements of
Section 10 of the Change of Control Agreement.
(ii) Accrued Obligations. Upon Employee's termination of
employment for any reason, Employee shall be entitled to receive the "Accrued
Obligations" as such term is defined in Section 8.1 of the Change of Control
Agreement.
(iii) COBRA. In the event Employee (A) remains employed by
NetManage through the Retention Period, or (B) prior to the end of the Retention
Period Employee is terminated other than for Cause, voluntarily resigns for Good
Reason, terminates employment due
-2-
<PAGE> 3
to becoming Totally Disabled or dies, then Employee and his family members
shall be entitled to receive the COBRA benefits set forth in Section 8.1(b) of
the Change of Control Agreement, commencing upon the date of Employee's
termination of employment.
(iv) Bonus. Employee agrees that, on and after the
Effective Time, he shall not be entitled to any further payments pursuant to the
Wall Data Executive Incentive Plan, but instead shall be eligible for a
quarterly bonus pursuant to the NetManage bonus plan, with a target bonus level
comparable to those of similar senior officers of NetManage.
2. Other Change of Control and Employment Agreement Provisions. To the
extent not amended hereby, the Employment Agreement and Change of Control
Agreement remain in full force and effect, including with respect to Section 8.8
of the Change of Control Agreement.
3. Entire Agreement. This Amendment, taken together with the Employment
Agreement and Change of Control Agreement (to the extent not amended hereby),
represents the entire agreement of the parties and shall supersede any and all
previous contracts, arrangements or understandings between the parties with
respect to the Executive's employment (the "Agreement"). The Agreement may be
amended at any time only by mutual written agreement of the parties hereto.
IN WITNESS WHEREOF, each of the parties has executed this Agreement.
NETMANAGE, INC.
By:
----------------------------------------
Title:
--------------------------------------
WALL DATA INCORPORATED
By:
----------------------------------------
Title:
--------------------------------------
EMPLOYEE:
--------------------------------------------
Kevin B. Vitale
-3-
<PAGE> 1
EXHIBIT A
NETMANAGE, INC.
RICHARD P. FOX EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made between and among
NetManage, Inc., Wall Data Incorporated and Richard P. Fox ("Employee"),
effective as of October 20, 1999, pursuant to the Agreement and Plan of Merger
(the "Merger Agreement") entered into by and among NetManage, Inc. (together
with its subsidiaries and affiliates, "NetManage"), Bogota, Inc. and Wall Data
Incorporated ("Wall Data").
WHEREAS, Employee has previously entered into an employment agreement
and a change of control agreement, both dated January 21, 1999, with Wall Data
(respectively, the "Employment Agreement" and the "Change of Control
Agreement"); and
WHEREAS, Employee has previously entered into stock option agreements
with Wall Data (the "Stock Option Agreements"); and
WHEREAS, the parties hereto desire to amend the Employment Agreement,
Change of Control Agreement and Stock Option Agreements in exchange for the
consideration set forth herein;
NOW, THEREFORE, the parties hereto agree that the Employment Agreement,
Change of Control Agreement and Stock Option Agreements are hereby amended as
follows:
1. Stock Option Cancellation & Waiver of Severance Benefits and
Payments in Exchange for New Benefits and Payments.
(a) Stock Option Cancellation. In exchange for the consideration
specified in Section 1(c) of this Agreement, Employee agrees that his unvested
Stock Options which otherwise would have accelerated their vesting (the
"Accelerated Options"), will not have their vesting accelerated either by the
consummation of the tender offer contemplated by the Merger Agreement (the
"Tender Offer") or by the merger contemplated by the Merger Agreement (the
"Merger") and shall be cancelled and become without further force and effect
upon the date on which they otherwise would have had their vesting accelerate.
(b) Waiver of Severance Benefits and Payments. Employee agrees
that in exchange for the consideration specified in Section 1(c) of this
Agreement, subject to the consummation of the Tender Offer, he shall no longer
be entitled to receive any retention or severance benefits or payments pursuant
to Section 8 of the Change of Control Agreement, pursuant to Section 7 of the
Employment Agreement or pursuant to any other plans, policies or arrangements of
Wall Data, whether written or oral, formal or informal.
<PAGE> 2
(c) New Benefits and Payments. Subject to Section 8.8 of the
Change of Control Agreement, and, with respect to payments and benefits not
already made or provided, subject to Employee entering into a standard form of
mutual release of claims upon the termination of his employment, Employee shall
be entitled to the following benefits and payments:
(i) Retention Payment. In the event Employee remains
employed by NetManage for the period commencing on the "Effective Time," (as
such term is defined in the Merger Agreement) and ending six months later (the
"Retention Period"), Employee shall be entitled to receive twelve substantially
equal semi-monthly payments equal, in the aggregate, to the sum of $360,000 (the
"Change of Control Agreement Payment"), plus an amount equal to $9 minus the
exercise price times the number of shares subject to Employee's Accelerated
Options, (the "Accelerated Stock Option Payment") less applicable withholding
(the sum of the Change of Control Agreement Payment and the Accelerated Stock
Option Payment, less applicable withholding, is referred to herein as the
"Retention Payment"). Notwithstanding the foregoing, the balance of any unpaid
Retention Payment shall be paid within five days of the date of Employee's
termination, in a lump-sum, in the event that, prior to the end of the Retention
Period, Employee (i) has his employment terminated by NetManage other than for
"Cause" (as defined herein), (ii) terminates his employment with NetManage for
"Good Reason" (as defined herein), or (iii) dies or terminates employment with
NetManage due to his "Total Disability" (as such term is defined in Section 7.2
of the Change of Control Agreement).
For the purposes of this Agreement, "Cause" shall have the meaning set
forth in Section 8.6 of the Change of Control Agreement; provided, however, that
Section 8.6(d) of the Change of Control Agreement shall be amended to include a
material violation by Employee of any provision of this Agreement, subject to
the notice and opportunity to cure requirements of Section 10 of the Change of
Control Agreement.
For the purposes of this Agreement, "Good Reason" shall have the meaning
set forth in Section 8.7 of the Change of Control Agreement; provided, however,
(A) that "Good Reason" shall not include a reduction in title, position,
authority, duties or responsibilities solely by virtue of the consummation of
the transactions contemplated by the Merger Agreement (for example, if the
Company becomes a division of NetManage and the Chief Financial Officer of Wall
Data remains the Chief Financial Officer of the division and does not serve on
the Board of Directors of NetManage, this shall not constitute "Good Reason"),
and (B) Section 8.7(e) shall be amended to include a material violation by the
Company of any provision of this Agreement, and that any such violation or a
material violation of the Change of Control Agreement shall be subject to the
notice and opportunity to cure requirements of Section 10 of the Change of
Control Agreement.
(ii) Accrued Obligations. Upon Employee's termination of
employment for any reason, Employee shall be entitled to receive the "Accrued
Obligations" as such term is defined in Section 8.1 of the Change of Control
Agreement.
-2-
<PAGE> 3
(iii) COBRA. In the event Employee (A) remains employed by
NetManage through the Retention Period, or (B) prior to the end of the Retention
Period Employee is terminated other than for Cause, voluntarily resigns for Good
Reason, terminates employment due to becoming Totally Disabled or dies, then
Employee and his family members shall be entitled to receive the COBRA benefits
set forth in Section 8.1(b) of the Change of Control Agreement, commencing upon
the date of Employee's termination of employment.
(iv) Bonus. Employee agrees that, on and after the
Effective Time, he shall not be entitled to any further payments pursuant to the
Wall Data Executive Incentive Plan, but instead shall be eligible for a
quarterly bonus pursuant to the NetManage bonus plan, with a target bonus level
comparable to those of similar senior officers of NetManage.
2. Other Change of Control and Employment Agreement Provisions. To the
extent not amended hereby, the Employment Agreement and Change of Control
Agreement remain in full force and effect, including with respect to Section 8.8
of the Change of Control Agreement.
3. Entire Agreement. This Amendment, taken together with the Employment
Agreement and Change of Control Agreement (to the extent not amended hereby),
represents the entire agreement of the parties and shall supersede any and all
previous contracts, arrangements or understandings between the parties with
respect to the Executive's employment (the "Agreement"). The Agreement may be
amended at any time only by mutual written agreement of the parties hereto.
IN WITNESS WHEREOF, each of the parties has executed this Agreement.
NETMANAGE, INC.
By:
----------------------------------------
Title:
--------------------------------------
WALL DATA INCORPORATED
By:
----------------------------------------
Title:
--------------------------------------
EMPLOYEE:
--------------------------------------------
Richard P. Fox
-3-
<PAGE> 1
EXHIBIT A
NETMANAGE, INC.
CRAIG E. SHANK EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made between and among
NetManage, Inc., Wall Data Incorporated and Craig E. Shank ("Employee"),
effective as of October 20, 1999, pursuant to the Agreement and Plan of Merger
(the "Merger Agreement") entered into by and among NetManage, Inc. (together
with its subsidiaries and affiliates, "NetManage"), Bogota, Inc. and Wall Data
Incorporated ("Wall Data").
WHEREAS, Employee has previously entered into an employment agreement
and a change of control agreement, both dated January 21, 1999, with Wall Data
(respectively, the "Employment Agreement" and the "Change of Control
Agreement"); and
WHEREAS, Employee has previously entered into stock option agreements
with Wall Data (the "Stock Option Agreements"); and
WHEREAS, the parties hereto desire to amend the Employment Agreement,
Change of Control Agreement and Stock Option Agreements in exchange for the
consideration set forth herein;
NOW, THEREFORE, the parties hereto agree that the Employment Agreement,
Change of Control Agreement and Stock Option Agreements are hereby amended as
follows:
1. Stock Option Cancellation & Waiver of Severance Benefits and
Payments in Exchange for New Benefits and Payments.
(a) Stock Option Cancellation. In exchange for the consideration
specified in Section 1(c) of this Agreement, Employee agrees that his unvested
Stock Options which otherwise would have accelerated their vesting (the
"Accelerated Options"), will not have their vesting accelerated either by the
consummation of the tender offer contemplated by the Merger Agreement (the
"Tender Offer") or by the merger contemplated by the Merger Agreement (the
"Merger") and shall be cancelled and become without further force and effect
upon the date on which they otherwise would have had their vesting accelerate.
(b) Waiver of Severance Benefits and Payments. Employee agrees
that in exchange for the consideration specified in Section 1(c) of this
Agreement, subject to the consummation of the Tender Offer, he shall no longer
be entitled to receive any retention or severance benefits or payments pursuant
to Section 8 of the Change of Control Agreement, pursuant to Section 7 of the
Employment Agreement or pursuant to any other plans, policies or arrangements of
Wall Data, whether written or oral, formal or informal.
<PAGE> 2
(c) New Benefits and Payments. Subject to Section 8.8 of the
Change of Control Agreement, and, with respect to payments and benefits not
already made or provided, subject to Employee entering into a standard form of
mutual release of claims upon the termination of his employment, Employee shall
be entitled to the following benefits and payments:
(i)Retention Payment. In the event Employee remains
employed by NetManage for the period commencing on the "Effective Time," (as
such term is defined in the Merger Agreement) and ending six months later (the
"Retention Period"), Employee shall be entitled to receive twelve substantially
equal semi-monthly payments equal, in the aggregate, to the sum of $330,000 (the
"Change of Control Agreement Payment"), plus an amount equal to $9 minus the
exercise price times the number of shares subject to Employee's Accelerated
Options, (the "Accelerated Stock Option Payment") less applicable withholding
(the sum of the Change of Control Agreement Payment and the Accelerated Stock
Option Payment, less applicable withholding, is referred to herein as the
"Retention Payment"). Notwithstanding the foregoing, the balance of any unpaid
Retention Payment shall be paid within five days of the date of Employee's
termination, in a lump-sum, in the event that, prior to the end of the Retention
Period, Employee (i) has his employment terminated by NetManage other than for
"Cause" (as defined herein), (ii) terminates his employment with NetManage for
"Good Reason" (as defined herein), or (iii) dies or terminates employment with
NetManage due to his "Total Disability" (as such term is defined in Section 7.2
of the Change of Control Agreement).
For the purposes of this Agreement, "Cause" shall have the meaning set
forth in Section 8.6 of the Change of Control Agreement; provided, however, that
Section 8.6(d) of the Change of Control Agreement shall be amended to include a
material violation by Employee of any provision of this Agreement, subject to
the notice and opportunity to cure requirements of Section 10 of the Change of
Control Agreement.
For the purposes of this Agreement, "Good Reason" shall have the meaning
set forth in Section 8.7 of the Change of Control Agreement; provided, however,
(A) that "Good Reason" shall not include a reduction in title, position,
authority, duties or responsibilities solely by virtue of the consummation of
the transactions contemplated by the Merger Agreement (for example, if the
Company becomes a division of NetManage and the Vice-President and General
Counsel of Wall Data remains the Vice-President and General Counsel of the
division, this shall not constitute "Good Reason"), and (B) Section 8.7(e) shall
be amended to include a material violation by the Company of any provision of
this Agreement, and that any such violation or a material violation of the
Change of Control Agreement shall be subject to the notice and opportunity to
cure requirements of Section 10 of the Change of Control Agreement.
(ii) Accrued Obligations. Upon Employee's termination of
employment for any reason, Employee shall be entitled to receive the "Accrued
Obligations" as such term is defined in Section 8.1 of the Change of Control
Agreement.
-2-
<PAGE> 3
(iii) COBRA. In the event Employee (A) remains employed by
NetManage through the Retention Period, or (B) prior to the end of the Retention
Period Employee is terminated other than for Cause, voluntarily resigns for Good
Reason, terminates employment due to becoming Totally Disabled or dies, then
Employee and his family members shall be entitled to receive the COBRA benefits
set forth in Section 8.1(b) of the Change of Control Agreement, commencing upon
the date of Employee's termination of employment.
(iv) Bonus. Employee agrees that, on and after the
Effective Time, he shall not be entitled to any further payments pursuant to the
Wall Data Executive Incentive Plan, but instead shall be eligible for a
quarterly bonus pursuant to the NetManage bonus plan, with a target bonus level
comparable to those of similar senior officers of NetManage.
2. Other Change of Control and Employment Agreement Provisions. To the
extent not amended hereby, the Employment Agreement and Change of Control
Agreement remain in full force and effect, including with respect to Section 8.8
of the Change of Control Agreement.
3. Entire Agreement. This Amendment, taken together with the Employment
Agreement and Change of Control Agreement (to the extent not amended hereby),
represents the entire agreement of the parties and shall supersede any and all
previous contracts, arrangements or understandings between the parties with
respect to the Executive's employment (the "Agreement"). The Agreement may be
amended at any time only by mutual written agreement of the parties hereto.
IN WITNESS WHEREOF, each of the parties has executed this Agreement.
NETMANAGE, INC.
By:
---------------------------------------
Title:
---------------------------------------
WALL DATA INCORPORATED
By:
---------------------------------------
Title:
---------------------------------------
EMPLOYEE:
-------------------------------------------
Craig E. Shank
-3-
<PAGE> 1
EXHIBIT A
NETMANAGE, INC.
KERRY D. PALMER EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made between and among
NetManage, Inc., Wall Data Incorporated and Kerry D. Palmer ("Employee"),
effective as of October 20, 1999, pursuant to the Agreement and Plan of Merger
(the "Merger Agreement") entered into by and among NetManage, Inc. (together
with its subsidiaries and affiliates, "NetManage"), Bogota, Inc. and Wall Data
Incorporated ("Wall Data").
WHEREAS, Employee has previously entered into an employment agreement and a
change of control agreement, both dated January 21, 1999, with Wall Data
(respectively, the "Employment Agreement" and the "Change of Control
Agreement"); and
WHEREAS, Employee has previously entered into stock option agreements with
Wall Data (the "Stock Option Agreements"); and
WHEREAS, the parties hereto desire to amend the Employment Agreement,
Change of Control Agreement and Stock Option Agreements in exchange for the
consideration set forth herein;
NOW, THEREFORE, the parties hereto agree that the Employment Agreement,
Change of Control Agreement and Stock Option Agreements are hereby amended as
follows:
1. Stock Option Cancellation & Waiver of Severance Benefits and Payments
in Exchange for New Benefits and Payments.
(a) Stock Option Cancellation. In exchange for the consideration
specified in Section 1(c) of this Agreement, Employee agrees that his unvested
Stock Options which otherwise would have accelerated their vesting (the
"Accelerated Options"), will not have their vesting accelerated either by the
consummation of the tender offer contemplated by the Merger Agreement (the
"Tender Offer") or by the merger contemplated by the Merger Agreement (the
"Merger") and shall be cancelled and become without further force and effect
upon the date on which they otherwise would have had their vesting accelerate.
(b) Waiver of Severance Benefits and Payments. Employee agrees that in
exchange for the consideration specified in Section 1(c) of this Agreement,
subject to the consummation of the Tender Offer, he shall no longer be entitled
to receive any retention or severance benefits or payments pursuant to Section 8
of the Change of Control Agreement, pursuant to Section 7 of the Employment
Agreement or pursuant to any other plans, policies or arrangements of Wall Data,
whether written or oral, formal or informal.
<PAGE> 2
(c) New Benefits and Payments. Subject to Section 8.8 of the Change of
Control Agreement, and, with respect to payments and benefits not already made
or provided, subject to Employee entering into a standard form of mutual release
of claims upon the termination of his employment, Employee shall be entitled to
the following benefits and payments:
(i) Retention Payment. In the event Employee remains employed by
NetManage for the period commencing on the "Effective Time," (as such term is
defined in the Merger Agreement) and ending six months later (the "Retention
Period"), Employee shall be entitled to receive twelve substantially equal
semi-monthly payments equal, in the aggregate, to the sum of $192,750 (the
"Change of Control Agreement Payment"), plus an amount equal to $9 minus the
exercise price times the number of shares subject to Employee's Accelerated
Options, (the "Accelerated Stock Option Payment") less applicable withholding
(the sum of the Change of Control Agreement Payment and the Accelerated Stock
Option Payment, less applicable withholding, is referred to herein as the
"Retention Payment"). Notwithstanding the foregoing, the balance of any unpaid
Retention Payment shall be paid within five days of the date of Employee's
termination, in a lump-sum, in the event that, prior to the end of the Retention
Period, Employee (i) has his employment terminated by NetManage other than for
"Cause" (as defined herein), (ii) terminates his employment with NetManage for
"Good Reason" (as defined herein), or (iii) dies or terminates employment with
NetManage due to his "Total Disability" (as such term is defined in Section 7.2
of the Change of Control Agreement).
For the purposes of this Agreement, "Cause" shall have the meaning set
forth in Section 8.6 of the Change of Control Agreement; provided, however, that
Section 8.6(d) of the Change of Control Agreement shall be amended to include a
material violation by Employee of any provision of this Agreement, subject to
the notice and opportunity to cure requirements of Section 10 of the Change of
Control Agreement.
For the purposes of this Agreement, "Good Reason" shall have the meaning
set forth in Section 8.7 of the Change of Control Agreement; provided, however,
(A) that "Good Reason" shall not include a reduction in title, position,
authority, duties or responsibilities solely by virtue of the consummation of
the transactions contemplated by the Merger Agreement (for example, if the
Company becomes a division of NetManage and the Controller of Wall Data remains
the Controller of the division, this shall not constitute "Good Reason"), and
(B) Section 8.7(e) shall be amended to include a material violation by the
Company of any provision of this Agreement, and that any such violation or a
material violation of the Change of Control Agreement shall be subject to the
notice and opportunity to cure requirements of Section 10 of the Change of
Control Agreement.
(ii) Accrued Obligations. Upon Employee's termination of
employment for any reason, Employee shall be entitled to receive the "Accrued
Obligations" as such term is defined in Section 8.1 of the Change of Control
Agreement.
(iii) COBRA. In the event Employee (A) remains employed by
NetManage through the Retention Period, or (B) prior to the end of the Retention
Period Employee
<PAGE> 3
is terminated other than for Cause, voluntarily resigns for Good Reason,
terminates employment due to becoming Totally Disabled or dies, then Employee
and his family members shall be entitled to receive the COBRA benefits set forth
in Section 8.1(b) of the Change of Control Agreement, commencing upon the date
of Employee's termination of employment.
(iv) Bonus. Employee agrees that, on and after the Effective
Time, he shall not be entitled to any further payments pursuant to the Wall Data
Executive Incentive Plan, but instead shall be eligible for a quarterly bonus
pursuant to the NetManage bonus plan, with a target bonus level comparable to
those of similar senior officers of NetManage.
2. Other Change of Control and Employment Agreement Provisions. To the
extent not amended hereby, the Employment Agreement and Change of Control
Agreement remain in full force and effect, including with respect to Section 8.8
of the Change of Control Agreement.
3. Entire Agreement. This Amendment, taken together with the Employment
Agreement and Change of Control Agreement (to the extent not amended hereby),
represents the entire agreement of the parties and shall supersede any and all
previous contracts, arrangements or understandings between the parties with
respect to the Executive's employment (the "Agreement"). The Agreement may be
amended at any time only by mutual written agreement of the parties hereto.
IN WITNESS WHEREOF, each of the parties has executed this Agreement.
NetManage, Inc.
By:
-----------------------------------------
Title:
-----------------------------------------
Wall Data Incorporated
By:
------------------------------------------
Title:
------------------------------------------
EMPLOYEE:
----------------------------------------------
Kerry D. Palmer
