----------------------------------
OMB APPROVAL
----------------------------------
OMB Number: 3235-0145
----------------------------------
Expires: August 31, 1999
Estimated average burden
Hours per response.: 14.90
----------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ______)
TRUEVISION, INC.
- --------------------------------------------------------------------------------
(NAME OF ISSUER)
COMMON STOCK
- --------------------------------------------------------------------------------
(Title of Class of Securities)
897872107
- --------------------------------------------------------------------------------
(CUSIP Number)
ARTHUR D. CHADWICK
CHIEF FINANCIAL OFFICER AND VICE PRESIDENT, FINANCE AND ADMINISTRATION
PINNACLE SYSTEMS, INC.
280 NORTH BERNARDO AVENUE
MOUNTAIN VIEW, CALIFORNIA 94043
(650) 237-1600
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
December 16, 1998
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
- --------------------------------------------------------------------------------
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D,
and is filing this schedule because of Rule 13d.l(b)(3) or (4), check
the following box.
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-l(a) for other parties to whom
copies are to be sent.
The remainder of this cover page shall be filled out for a reporting
Person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
Potential persons who are to respond to the collection of information
contained in this form are not required to respond unless the form
displays a currently valid OMB control number.
<PAGE>
<TABLE>
<CAPTION>
CUSIP No. ........................897872107 Page 2 of 2
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Names of Reporting Persons--Pinnacle Systems, Inc.
I.R.S. Identification Nos. of above persons (entities only)--94-3003809
- ------------------------- -----------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) N/A
(b) N/A
- ------------------------- -----------------------------------------------------------------------------------------------------
3. SEC Use Only .................................................................................
- ------------------------- -----------------------------------------------------------------------------------------------------
4. Source of Funds (See Instructions) WC
- ------------------------- -----------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ...............
- ------------------------- -----------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization - STATE OF CALIFORNIA
- ------------------------- -----------------------------------------------------------------------------------------------------
- ------------------------- -----------------------------------------------------------------------------------------------------
Number of 7. Sole Voting Power: Approximately 831,709. (All of such shares are subject to the restrictions
Shares set forth in those certain Voting Agreements dated December 16, 1998, which are filed as
Beneficially Exhibit 2 to this Schedule 13D)
Owned by -----------------------------------------------------------------------------------------------------
Each Reporting
Person With 8. Shared Voting Power: 0
-----------------------------------------------------------------------------------------------------
9. Sole Dispositive Power : 0
- ------------------------- -----------------------------------------------------------------------------------------------------
10. Shared Dispositive Power: 0
-----------------------------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person. Approximately 831,709
- ------------------------- -----------------------------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)...............
- ------------------------- -----------------------------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11). 6.3%..........................................
- ------------------------- -----------------------------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions) - CO
....................................................................................................
....................................................................................................
....................................................................................................
</TABLE>
-2-
<PAGE>
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
This Statement on Schedule 13D (the "Schedule 13D") relates to
the Common Stock, par value $0.001 per share, of Truevision,
Inc. ("Truevision Common Stock"), a Delaware corporation
("Truevision" or "Issuer"). The principal executive offices of
Truevision are located at 2500 Walsh Avenue, Santa Clara,
California 95051.
ITEM 2. IDENTITY AND BACKGROUND.
The name of the corporation filing this statement is Pinnacle
Systems, Inc., a California corporation ("Pinnacle" or the
"Reporting Person"). The Reporting Person's principal business
is as a developer of computer-based video editing products.
The address of the principal executive offices of the
Reporting Person is 280 North Bernardo Avenue, Mountain View,
California 94043. Set forth in Schedule A is a list of each of
the Reporting Person's directors and executive officers as of
the date hereof, along with the present principal occupation
or employment of such directors and executive officers, their
respective citizenship and the name, principal business and
address of any corporation or other organization other than
the Reporting Person in which such employment is conducted.
During the last five years neither the Reporting Person nor,
to the Reporting Person's knowledge, any person named in
Schedule A to this statement, has been convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors). Also during the last five years neither the
Reporting Person nor, to the Reporting Person's knowledge, any
person named in Schedule A to this statement, was a party to a
civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person was or
is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activity
subject to, federal or state securities laws or finding any
violation with respect to such laws. Consequently, neither the
Reporting Person nor, to the Reporting Person's best
knowledge, any person named on Schedule A hereto is required
to disclose legal proceedings pursuant to Item 2(d) or 2(e) of
Schedule 13D.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On December 16, 1998, the Reporting Person, through its
wholly-owned subsidiaries Bernardo Merger Corporation, a
Delaware corporation ("Level One Merger Sub"), and Walsh
Merger Corporation, a Delaware corporation ("Merger Sub" and,
together with Level One Merger Sub the "Merger Subs"), agreed
to acquire Issuer by means of a merger (the "Merger") pursuant
to the terms of the Agreement and Plan of
-3-
<PAGE>
SCHEDULE 13D
Reorganization, dated as of December 16, 1998, (the "Merger
Agreement"), by and among the Reporting Person, Merger Subs
and Issuer, and subject to the conditions set forth therein
(including approval by shareholders of Issuer). Pursuant to
the Merger Agreement, Merger Sub will merge with and into
Issuer and Issuer will become a wholly-owned subsidiary of
Level One Merger Sub. A copy of the Merger Agreement is
attached hereto as Exhibit 1 and is incorporated herein by
this reference. The Merger is subject to the approval of the
Merger Agreement by the stockholders of Issuer, the expiration
of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the
satisfaction or waiver of certain other conditions as more
fully described in the Merger Agreement.
As an inducement to the Reporting Person's entering into the
Merger Agreement, certain shareholders of Issuer entered into
voting agreements with the Reporting Person, which agreements
are described in more detail in Item 6 below. Pursuant to each
voting agreement, the shareholder entering into the voting
agreement has granted the Reporting Person an irrevocable
proxy to vote the shareholder's shares of Truevision Common
Stock in favor of the Merger (the "Irrevocable Proxy"). No
capital of the Reporting Person is expected to be expended by
the Reporting Person in connection with the exercise of its
rights with respect to the approximately 831,709 shares of
Truevision Common Stock covered by the Voting Agreements
described in Item 6 below. The Voting Agreement and the
Irrevocable Proxy are attached hereto as Exhibit 2 and are
incorporated herein by this reference.
ITEM 4. PURPOSE OF TRANSACTION.
(a) - (b) As further described in Item 3 above and Item 6
below, this statement relates to the Merger of Merger Sub, a
wholly-owned subsidiary of the Reporting Person, with and into
Issuer in a statutory merger pursuant to the provisions of the
Delaware General Corporation Law. At the effective time of the
Merger, the separate existence of Merger Sub will cease and
Issuer will continue as the Surviving Corporation and as a
wholly-owned subsidiary of Level One Merger Sub, a
wholly-owned subsidiary of the Reporting Person. Holders of
outstanding Truevision Common Stock will receive, in exchange
for each share of Truevision Common Stock held by them, 0.0313
shares of Common Stock of the Reporting Person (the "Exchange
Ratio"). Outstanding options to purchase shares of Truevision
Common Stock will be treated as set forth in the Merger
Agreement. A copy of the Merger Agreement is attached hereto
as Exhibit 1 and is incorporated herein by this reference.
As an inducement to the Reporting Person's entering into the
Merger Agreement, and as further described in Item 3 above and
Item 6 below, each shareholder of Truevision who is a party to
a voting agreement, dated as of December 16, 1998 (each a
"Voting Agreement," and collectively, the "Voting
Agreements"), among the parties thereto (each a "Voting
Agreement Shareholder," and collectively, the "Voting
Agreement
-4-
<PAGE>
SCHEDULE 13D
Shareholders") with the Reporting Person, has, by executing a
Voting Agreement, irrevocably appointed the Reporting Person
(or any nominee of the Reporting Person) as his, hers or its
lawful attorney and proxy. Such proxies give the Reporting
Person the limited right to vote the shares of Truevision
Common Stock beneficially owned by the Voting Agreement
Shareholders (including any shares of Truevision Common Stock
that such shareholders acquire after the time they entered
into the Voting Agreements) (collectively, the "Shares"). The
names of the Voting Agreement Shareholders, the number of
shares of Truevision Common Stock beneficially owned by each
such shareholder and the percentage ownership of Truevision
Common Stock by each such shareholder is set forth in Schedule
B hereto which is hereby incorporated by this reference. A
copy of the form of Voting Agreement is attached hereto as
Exhibit 2 and is incorporated herein by this reference.
The descriptions herein of the Merger Agreement and the Voting
Agreements are qualified in their entirety by reference to
such agreements, copies of which are attached hereto as
Exhibits 1 and 2 respectively.
(c) Not applicable.
(d) It is anticipated that, upon consummation of the Merger,
the directors and the initial officers of the Surviving
Corporation shall generally be the current directors and
officers of Merger Sub (each of whom is an executive officer
of the Reporting Person), until their respective successors
are duly elected or appointed and qualified.
(e) See the discussion of Merger in Item 3 above.
(f) Other than as a result of the Merger described in Item 3
above, not applicable.
(g) Upon consummation of the Merger, the Certificate of
Incorporation of Merger Sub, as in effect immediately prior to
the Merger, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended as provided by
Delaware Law and such Articles of Incorporation, except the
name of the Surviving Corporation shall be "Truevision, Inc."
Upon consummation of the Merger, the Bylaws of Merger Sub, as
in effect immediately prior to the Merger, shall be the Bylaws
of the Surviving Corporation until thereafter amended.
(h) Upon consummation of the Merger, Truevision Common Stock
will be de-listed from The Nasdaq Stock Market.
(i) Upon consummation of the Merger, Truevision Common Stock
will become eligible for termination of registration under the
Securities Exchange Act of 1934, as amended (the "Act"),
pursuant to Section 12(g)(4) of the Act.
-5-
<PAGE>
SCHEDULE 13D
(j) Other than described above, the Reporting Person currently
has no plan or proposal which relate to, or may result in, any
of the matters listed in Items 4(a) - (j) of Schedule 13D
(although the Reporting Person reserves the right to develop
such plans or proposals).
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) - (b) As a result and subject to the terms of the Voting
Agreements and the irrevocable proxies granted pursuant
thereto, the Reporting Person has the sole power to vote an
aggregate of approximately 831,709 shares of Truevision Common
Stock for the limited purposes described in Item 4 above. Such
shares constitute approximately 6.3% of the issued and
outstanding shares of Truevision Common Stock as of November
21, 1998. Other than with respect to the provisions of the
Voting Agreements, the Reporting Person does not have the
right to vote the Shares on any other matters. The Reporting
Person does not share voting power of any additional shares of
Truevision Common Stock with regard to the limited purposes
set forth in Item 4 above or otherwise. The Reporting Person
does not have the power to dispose or direct the disposition
of any shares of Truevision Common Stock. To the knowledge of
the Reporting Person, no shares of Truevision Common Stock are
beneficially owned by any of the persons named in Schedule A.
(c) Except as described herein, the Reporting Person has not
effected any transaction in Truevision Common Stock during the
past 60 days and, to the Reporting Person's knowledge, none of
the persons named in Schedule A has effected any transaction
in Truevision Common Stock during the past 60 days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Pursuant to the Merger Agreement and subject to the conditions
set forth therein (including approval by shareholders of
Issuer), Merger Sub will merge with and into Issuer and Issuer
will become a wholly-owned subsidiary of Level One Merger Sub,
a wholly-owned subsidiary of the Reporting Person. Upon
consummation of the Merger, Merger Sub will cease to exist as
a corporation and all of the business, assets, liabilities and
obligations of Merger Sub will be merged into Issuer with
Issuer remaining as the surviving corporation (the "Surviving
Corporation"). As a result of the Merger, each outstanding
share of Truevision Common Stock, other than shares owned by
Issuer (i.e. Issuer treasury shares), Merger Subs, the
Reporting Person or any wholly-owned subsidiary of Issuer or
the Reporting Person, will be converted into the right to
receive
-6-
<PAGE>
SCHEDULE 13D
0.0313 of a share (the "Exchange Ratio") of the Reporting
Person Common Stock. Outstanding options or warrants to
purchase Truevision Common Stock will be treated in the manner
described in the Merger Agreement. The foregoing summary of
the Merger is qualified in its entirety by reference to the
copy of the Merger Agreement attached hereto as Exhibit 1 and
incorporated herein in its entirety by reference.
Truevision will be obligated to make immediate payment to the
Reporting Person of a breakup fee equal to $500,000 (the
"Breakup Fee") if: (i) the Board of Directors of Truevision or
any committee thereof shall for any reason have withdrawn or
shall have amended or modified in a manner adverse to
Reporting Person its unanimous recommendation in favor of, the
adoption and approval of the Agreement or the approval of the
Merger; (ii) Truevision shall have failed to include in the
Proxy Statement/Prospectus the unanimous recommendation of the
Board of Directors in favor of the adoption and approval of
the Merger Agreement and the approval of the Merger; (iii)
Board of Directors fails to reaffirm its unanimous
recommendation in favor of the adoption and approval of the
Merger Agreement and the approval of the Merger within five
(5) business days after Reporting Person requests in writing
that such recommendation be reaffirmed; (iv) the Board of
Directors or any committee thereof shall have approved or
recommended any Acquisition Proposal (as defined in the Merger
Agreement); (v) Truevision or any of its officers, directors,
or employees or any investment banker, attorney or other
advisor or representative retained by any of them shall
participate in any discussions or negotiations in breach of
Section 5.4 of the Merger Agreement; (vi) Truevision shall
have entered into any letter of intent or similar document or
any agreement, contract or commitment accepting any
Acquisition Proposal; (vii) a tender or exchange offer
relating to securities of Truevision shall have been commenced
by a Person unaffiliated with the Reporting Person and
Truevision shall not have sent to its security holders
pursuant to Rule 14e-2 promulgated under the Securities Act,
within ten (10) business days after such tender or exchange
offer is first published sent or given, a statement disclosing
that Truevision recommends rejection of such tender or
exchange offer or (viii) if the Issuer stockholders do not
approve the Merger and the Merger Agreement. Payment of the
Breakup Fee will not be in lieu of damages in the event of a
breach by Truevision of the Merger Agreement.
The Voting Agreement Shareholders have agreed pursuant to the
Voting Agreement, and have granted the Reporting Person (or
any nominee thereof) an irrevocable proxy the right, at every
Issuer shareholders meeting and every written consent in lieu
of such meeting, to vote the shares (i) in favor of approval
of the Merger and the Merger Agreement and any matter that
could reasonably be expected to facilitate the Merger and (ii)
against any proposal made in opposition to or in competition
with the consummation of the Merger and against any merger,
consolidation, sale of assets, reorganization or
recapitalization with any party other than the Reporting
Person and any liquidation or winding up of Issuer. The Voting
Agreement Shareholders may vote their own shares
-7-
<PAGE>
SCHEDULE 13D
themselves on all other matters. The Voting Agreements
terminate upon the earlier to occur of (i) such date and time
as the Merger shall become effective in accordance with the
terms and provisions of the Merger Agreement or (ii) such date
as the Merger Agreement shall be terminated in accordance with
its terms (the "Expiration Date"). Each Voting Agreement
Shareholder has agreed not to transfer his or her Shares prior
to the Expiration Date. The terms of the Voting Agreements are
more fully described in the Voting Agreement and the
Irrevocable Proxy, attached hereto as Exhibit 2. Each of the
Voting Agreement and the Irrevocable Proxy is incorporated
herein by this reference.
Other than the Merger Agreement and the Voting Agreements, to
the best knowledge of the Reporting Person, there are no
contracts, arrangements, understandings or relationships
(legal or otherwise) among the persons named in Item 2 and
between such persons and any person with respect to any
securities of Issuer, including but not limited to transfer or
voting of any of the securities, finder's fees, joint
ventures, loan or option arrangement, puts or calls,
guarantees of profits, division of profits or loss, or the
giving or withholding of proxies.
The descriptions herein of the Merger Agreement and the Voting
Agreements are qualified in their entirety by reference to
such agreements, copies of which are attached hereto as
Exhibits 1 and 2, respectively.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
The following documents are filed as exhibits:
1. Agreement and Plan of Reorganization, dated December
16, 1998, by and among Pinnacle Systems, Inc.,
Bernardo Merger Corporation, Walsh Merger
Corporation, and Truevision, Inc.
2. Voting Agreement, dated December 16, 1998, between
Pinnacle Systems, Inc. and each of William W.
Bregman, Louis J. Doctor, Kieth E. Sorenson, Conrad
Wredberg, R. John Curson, and William H.
McAleer.
-8-
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: December 23, 1998
PINNACLE SYSTEMS, INC.
By: /s/ ARTHUR D. CHADWICK
___________________________________________________
Arthur D. Chadwick, Chief Executive Officer and
Vice President, Finance and Administration
<PAGE>
SCHEDULE A
----------
<TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF
PINNACLE SYSTEMS, INC.
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Present Principal Occupation
Name and Title * and Name of Employer Citizenship
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mark L. Sanders Pinnacle Systems, Inc. U.S.
President, Chief Executive Officer and Director
Ajay Chopra, Chairman of The Board and Vice Pinnacle Systems, Inc. U.S.
President, General Manager, Desktop Products
L. Gregory Ballard President and U.S.
Director Chief Executive Officer,
3Dfx Interactive, Inc.
John Lewis Retired Chairman of The Board and U.S.
Director Chief Executive Officer, Amdahl
Corporation
Nyal McMullin Special Limited Partner, U.S.
Director El Dorado Ventures
Glenn E. Penisten General Partner U.S.
Director Alpha Venture Partners
Charles J. Vaughan Partner U.S.
Director VLCO Investments
Arthur D. Chadwick Pinnacle Systems, Inc. U.S.
Vice President, Finance and Administration and
Chief Financial Officer
Georg Blinn Pinnacle Systems GmbH Germany
Vice President, General Manager,
Pinnacle Systems GmbH
Pat Burns Pinnacle Systems, Inc. U.S.
Vice President, Corporate Marketing
Tavy A. Hughes Pinnacle Systems, Inc. U.S.
Vice President, Operations
- --------------------------------------------------------------------------------------------------------------------------
- ---------------------------
*The address for each executive officer or director is c/o Pinnacle Systems,
Inc., 280 North Bernardo Avenue, Mountain View, California 94043.
<PAGE>
SCHEDULE A
----------
(Continued)
- --------------------------------------------------------------------------------------------------------------------------
Present Principal Occupation
Name and Title * and Name of Employer Citizenship
- --------------------------------------------------------------------------------------------------------------------------
Kevin Hunt Pinnacle Systems, Inc. U.S.
Vice President, Sales North America
William Loesch Pinnacle Systems, Inc. U.S.
Vice President, General Manager,
Consumer Products
Robert Wilson Pinnacle Systems, Inc. U.S.
Vice President, General Manager,
Broadcast Products
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE>
SCHEDULE B
----------
<TABLE>
TRUEVISION, INC.
VOTING AGREEMENT SHAREHOLDERS
<CAPTION>
Shares of Truevision Beneficially
Owned by Voting Percentage of Truevision Common
Voting Agreement Shareholder Agreement Shareholder Stock Beneficially Owned (1)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Walter W. Bregman (2) 63,850 *
Louis J. Doctor (3) 547,768 4.0%
William H. McAleer (4) 17,025 *
Kieth E. Sorenson (5) 17,325 *
Conrad Wredberg (6) 22,125 *
R. John Curson (7) 163,616 1.2%
<FN>
- ---------------------------
*Less that 1%
(1) Applicable percentage ownership is based on 13,104,398 shares of
Truevision Common Stock outstanding as of November 21, 1998, which
figure was represented to the Reporting Person by Issuer in the Merger
Agreement. Beneficial ownership is determined in accordance with the
rules of the Commission and generally includes voting or investment
power with respect to securities, subject to community property laws,
where applicable. Shares of Truevision Common Stock subject to options
that are presently exercisable or exercisable within 60 days of
December 16, 1998 are deemed to be beneficially owned by the person
holding such options for the purpose of computing the percentage of
ownership of such person but are not treated as outstanding for the
purpose of computing the percentage of any other person.
(2) Includes 47,875 shares of Truevision Common Stock issuable upon
exercise of outstanding options which are presently exercisable or will
become exercisable within 60 days of December 16, 1998.
(3) Includes 59,717 shares of Truevision Common Stock issuable upon
exercise of outstanding options which are presently exercisable or will
become exercisable within 60 days of December 16, 1998. Also includes
400,000 shares subject to a warrant to purchase Truevision Common
Stock.
(4) Includes 14,625 shares of Truevision Common Stock issuable upon
exercise of outstanding options which are presently exercisable or will
become exercisable within 60 days of December 16, 1998.
(5) Includes 17,125 shares of Truevision Common Stock issuable upon
exercise of outstanding options which are presently exercisable or will
become exercisable with 60 days of December 16, 1998.
(6) Includes 19,625 shares of Truevision Common Stock issuable upon
exercise of outstanding options which are presently exercisable or will
be exercisable within 60 days of December 16, 1998.
(7) All of such shares of Truevision Common Stock are issuable upon
exercise of outstanding options which are presently exercisable or will
be exercisable within 60 days of December 16, 1998.
</FN>
</TABLE>
<PAGE>
EXHIBIT 1
---------
AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
PINNACLE SYSTEMS, INC.
BERNARDO MERGER CORPORATION
WALSH MERGER CORPORATION
AND
TRUEVISION, INC.
Dated as of December 16, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER....................................................1
1.1 The Merger....................................................1
1.2 Effective Time; Closing.......................................2
1.3 Effect of the Merger..........................................2
1.4 Certificate of Incorporation; Bylaws..........................2
1.5 Directors and Officers........................................2
1.6 Effect on Capital Stock.......................................2
1.7 Surrender of Certificates.....................................4
1.8 No Further Ownership Rights in Company Common Stock...........6
1.9 Lost, Stolen or Destroyed Certificates........................6
1.10 Tax and Accounting Consequences...............................6
1.11 Taking of Necessary Action; Further Action....................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY.....................7
2.1 Organization and Qualification; Subsidiaries..................7
2.2 Certificate of Incorporation and Bylaws.......................7
2.3 Capitalization................................................7
2.4 Authority Relative to this Agreement..........................9
2.5 No Conflict; Required Filings and Consents....................9
2.6 Compliance; Permits; Restrictions............................10
2.7 SEC Filings; Company Financial Statements....................11
2.8 No Undisclosed Liabilities...................................11
2.9 Absence of Certain Changes or Events.........................12
2.10 Absence of Litigation........................................12
2.11 Employee Benefit Plans.......................................12
2.12 Labor Matters................................................16
2.13 S-4; Proxy Statement.........................................16
2.14 Restrictions on Business Activities..........................17
2.15 Title to Property............................................17
2.16 Taxes........................................................17
2.17 Environmental Matters........................................19
2.18 Brokers......................................................20
2.19 Intellectual Property........................................20
2.20 Agreements, Contracts and Commitments........................22
2.21 Insurance....................................................23
2.22 Opinion of Financial Advisor.................................23
2.23 Board Approval...............................................23
2.24 Vote Required................................................23
2.25 State Takeover Statutes......................................24
-i-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
----
2.26 Year 2000 Compliance.........................................24
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBS.....24
3.1 Organization and Qualification; Subsidiaries.................25
3.2 Articles and Certificates of Incorporation and Bylaws........25
3.3 Capitalization...............................................25
3.4 Authority Relative to this Agreement.........................26
3.5 No Conflict; Required Filings and Consents...................26
3.6 SEC Filings; Parent Financial Statements.....................27
3.7 S-4; Proxy Statement.........................................27
3.8 Board Approval...............................................28
3.9 Interim Operations of Merger Subs............................28
3.10 No Ownership of Company Common Stock.........................28
3.11 No Undisclosed Liabilities...................................28
3.12 Absence of Certain Changes or Events.........................28
3.13 Absence of Litigation........................................28
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME..........................29
4.1 Conduct of Business by Company...............................29
4.2 Conduct of Business by Parent................................31
ARTICLE V ADDITIONAL AGREEMENTS........................................32
5.1 Proxy Statement/Prospectus; S-4; Other Filings...............32
5.2 Meeting of Company Stockholders..............................33
5.3 Confidentiality; Access to Information.......................35
5.4 No Solicitation..............................................35
5.5 Public Disclosure............................................37
5.6 Reasonable Efforts; Notification.............................37
5.7 Third Party Consents.........................................38
5.8 Stock Options and ESPP.......................................38
5.9 Form S-8.....................................................39
5.10 Indemnification..............................................39
5.11 Nasdaq Listing...............................................40
5.12 Company Affiliate Agreement..................................40
5.13 Regulatory Filings; Reasonable Efforts.......................40
5.14 Noncompetition Agreements. ..................................41
5.15 Executive Employment Agreements..............................41
-ii-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
----
5.16 Open Market Purchases by Level One Merger Sub................41
5.17 Company 401(k) Plan..........................................41
5.18 Options and Doctor Warrant...................................42
5.19 Scitex Voting Agreement......................................42
ARTICLE VI CONDITIONS TO THE MERGER.....................................42
6.1 Conditions to Obligations of Each Party to Effect
the Merger.................................................42
6.2 Additional Conditions to Obligations of Company..............43
6.3 Additional Conditions to the Obligations of Parent
and Merger Subs............................................43
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............................45
7.1 Termination..................................................45
7.2 Notice of Termination; Effect of Termination.................47
7.3 Fees and Expenses............................................47
7.4 Amendment....................................................48
7.5 Extension; Waiver............................................48
ARTICLE VIII GENERAL PROVISIONS...........................................48
8.1 Non-Survival of Representations and Warranties...............48
8.2 Notices......................................................48
8.3 Interpretation; Knowledge....................................49
8.4 Counterparts.................................................50
8.5 Entire Agreement; Third Party Beneficiaries..................50
8.6 Severability.................................................50
8.7 Other Remedies; Specific Performance.........................51
8.8 Governing Law................................................51
8.9 Rules of Construction........................................51
8.10 Assignment...................................................51
8.11 Waiver of Jury Trial.........................................51
-iii-
<PAGE>
INDEX OF EXHIBITS
Exhibit A Persons Entering Into Voting Agreements
Exhibit A-1 Form of Voting Agreement
Exhibit B Form of Affiliate Agreement
Exhibit C Form of Noncompetition Agreement
-iv-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of December 16, 1998, among Pinnacle Systems, Inc., a California
corporation ("Parent"), Bernardo Merger Corporation, a Delaware corporation and
a wholly-owned subsidiary of Parent ("Level One Merger Sub"), Walsh Merger
Corporation, a Delaware corporation and a wholly-owned subsidiary of Level One
Merger Sub ("Merger Sub" and together with Level One Merger Sub, "Merger Subs")
and Truevision, Inc., a Delaware corporation ("Company").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement (as
defined in Section 1.2 below) and in accordance with the Delaware General
Corporation Law ("Delaware Law"), Parent and Company intend to enter into a
business combination transaction.
B. The Board of Directors of Company (i) has determined that the Merger
(as defined in Section 1.1) is consistent with and in furtherance of the
long-term business strategy of Company and fair to, and in the best interests
of, Company and its stockholders, (ii) has approved this Agreement, the Merger
and the other transactions contemplated by this Agreement and (iii) has
determined to recommend that the stockholders of Company adopt and approve this
Agreement and approve the Merger.
C. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
certain affiliates of Company, who are identified on Exhibit A hereto, are
entering into Voting Agreements in substantially the form attached hereto as
Exhibit A-1 (the "Company Voting Agreements").
D. The parties intend that the Merger shall constitute a taxable
transaction and not a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware Law, Merger Sub shall be merged with and into
Company (the "Merger"), the separate corporate existence of Merger Sub shall
cease and Company shall continue as the surviving corporation (the "Surviving
Corporation").
<PAGE>
1.2 Effective Time; Closing. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of Delaware Law (the "Certificate of
Merger") (the time of such filing (or such later time as may be agreed in
writing by Company and Parent and specified in the Certificate of Merger) being
the "Effective Time") as soon as practicable on or after the Closing Date (as
herein defined). Unless the context otherwise requires, the term "Agreement" as
used herein refers collectively to this Agreement and Plan of Reorganization and
the Certificate of Merger. The closing of the Merger (the "Closing") shall take
place at the offices of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, at a time and date to be specified by the parties, which shall be
no later than the second business day after the satisfaction or waiver of the
conditions set forth in Article VI, or at such other time, date and location as
the parties hereto agree in writing (the "Closing Date").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of Company and Merger Sub shall vest in the Surviving Corporation,
and all debts, liabilities and duties of Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
1.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation of the
Surviving Corporation; provided, however, that at the Effective Time the
Certificate of Incorporation of the Surviving Corporation shall be amended so
that the name of the Surviving Corporation shall be "Truevision, Inc."
(b) The Bylaws of Merger Sub, as in effect immediately prior
to the Effective Time, shall be, at the Effective Time, the Bylaws of the
Surviving Corporation until thereafter amended.
1.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Merger Sub immediately prior to the Effective Time, until their
respective successors are duly appointed.
1.6 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, Company or the holders
of any of the following securities:
(a) Conversion of Company Common Stock. Each share of Common
Stock, $0.001 par value per share, of Company (the "Company Common Stock")
issued and outstanding immediately
-2-
<PAGE>
prior to the Effective Time, other than any shares of Company Common Stock to be
canceled pursuant to Section 1.6(b), will be canceled and extinguished and
automatically converted (subject to Sections 1.6(f) and (g)) into the right to
receive the number of shares of Common Stock of Parent, together with the
associated rights issued pursuant to a Preferred Shares Rights Agreement between
Parent and ChaseMellon Shareholder Services, L.L.C., dated December 12, 1996, as
amended (the "Parent Common Stock") equal to 0.0313 (the "Exchange Ratio") upon
surrender of the certificate representing such share of Company Common Stock in
the manner provided in Section 1.7 (or in the case of a lost, stolen or
destroyed certificate, upon delivery of an affidavit (and bond, if required) in
the manner provided in Section 1.9).
(b) Cancellation of Parent-Owned and Company-Held Stock. Each
share of Company Common Stock held by Company or owned by Merger Sub, Level One
Merger Sub, Parent or any direct or indirect wholly-owned subsidiary of Company
or of Parent immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.
(c) Stock Options; Employee Stock Purchase Plans. At the
Effective Time, all options to purchase Company Common Stock then outstanding
under Company's Amended and Restated 1991 Director Option Plan (the "Directors'
Plan") and Company's 1997 Equity Incentive Plan (the "1997 Option Plan" shall be
assumed by Parent in accordance with Section 5.8 hereof. At the Effective Time,
Parent, as sole stockholder of Company, shall execute a stockholder's consent
approving all amendments made by Company's Board of Directors to the 1988
Incentive Stock Plan (the "1988 Option Plan" and together with the 1997 Option
Plan and the Directors' Plan, the "Company Stock Option Plans") and to the
options granted thereunder to Company's directors and to Mr. Louis J. Doctor and
Mr. R. John Curson, if any such stock options are outstanding at that time.
Immediately after Parent's execution of the stockholder's consent referenced in
the preceding sentence, Parent shall assume all options to purchase Company
Common Stock then outstanding under the 1988 Option Plan, including those
granted to Company's directors and to Mr. Louis J. Doctor and Mr. R. John
Curson, if any such options are outstanding at that time, in accordance with
Section 5.8 hereof. Rights outstanding under Company's 1990 Employee Stock
Purchase Plan (the "1990 ESPP") and under the 1998 Employee Stock Purchase Plan
(the "1998 ESPP" and together with the 1990 ESPP, the "ESPP") shall be treated
as set forth in Section 5.8.
(d) Warrants. At the Effective Time, warrants to purchase
500,000 shares of Common Stock, (the "Financing Warrants") and a warrant to
purchase 400,000 shares of Common Stock (the "Doctor Warrant" and together with
the Financing Warrants, the "Company Warrants"), all of which are fully
exercisable, shall be assumed by Parent in accordance with the terms thereof. In
this regard, Company agrees to provide the holders of Company Warrants with any
and all notices required as a result of the Merger and the transactions
contemplated thereby.
(e) Capital Stock of Merger Sub. Each share of Common Stock,
$0.001 par value per share, of Merger Sub (the "Merger Sub Common Stock") issued
and outstanding immediately prior to the Effective Time shall be converted into
one validly issued, fully paid and nonassessable share of Common Stock, $0.001
par value per share, of the Surviving Corporation. Each certificate evidencing
-3-
<PAGE>
ownership of shares of Merger Sub Common Stock shall evidence ownership of such
shares of capital stock of the Surviving Corporation.
(f) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Common Stock), reorganization,
recapitalization, reclassification or other like change with respect to Parent
Common Stock or Company Common Stock occurring on or after the date hereof and
prior to the Effective Time.
(g) Fractional Shares. No fraction of a share of Parent Common
Stock will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Company Common Stock who would otherwise be entitled to a fraction of
a share of Parent Common Stock (after aggregating all fractional shares of
Parent Common Stock that otherwise would be received by such holder) shall
receive from Parent an amount of cash (rounded to the nearest whole cent) equal
to the product of (i) such fraction, multiplied by (ii) the average closing
price of one share of Parent Common Stock for the five (5) most recent days that
Parent Common Stock has traded ending on the trading day immediately prior to
the Effective Time, as reported on the Nasdaq National Market ("Nasdaq") or, if
Parent Common Stock is not authorized for trading on Nasdaq at such time, then
on the primary exchange or quotation system on which Parent Common Stock is then
quoted or traded.
1.7 Surrender of Certificates.
(a) Exchange Agent. Parent shall select a bank or trust
company reasonably acceptable to Company to act as the exchange agent (the
"Exchange Agent") in the Merger.
(b) Parent to Provide Common Stock. Promptly after the
Effective Time, Parent shall make available to the Exchange Agent for exchange
in accordance with this Article I, the shares of Parent Common Stock issuable
pursuant to Section 1.6 in exchange for outstanding shares of Company Common
Stock, and cash in an amount sufficient for payment in lieu of fractional shares
pursuant to Section 1.6(g) and any dividends or distributions to which holders
of shares of Company Common Stock may be entitled pursuant to Section 1.7(d).
(c) Exchange Procedures. Promptly after the Effective Time,
Parent shall cause the Exchange Agent to mail to each holder of record (as of
the Effective Time) of a certificate or certificates (the "Certificates"), which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock whose shares were converted into shares of Parent Common
Stock pursuant to Section 1.6, cash in lieu of any fractional shares pursuant to
Section 1.6(g) and any dividends or other distributions pursuant to Section
1.7(d), (i) a letter of transmittal in customary form (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and shall
contain such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Parent Common Stock, cash in lieu of any
fractional shares pursuant to Section 1.6(g) and any dividends or other
distributions pursuant to Section 1.7(d). Upon surrender
-4-
<PAGE>
of Certificates for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
the holders of such Certificates shall be entitled to receive in exchange
therefor certificates representing the number of whole shares of Parent Common
Stock into which their shares of Company Common Stock were converted at the
Effective Time, payment in lieu of fractional shares which such holders have the
right to receive pursuant to Section 1.6(g) and any dividends or distributions
payable pursuant to Section 1.7(d), and the Certificates so surrendered shall
forthwith be canceled. Until so surrendered, outstanding Certificates will be
deemed from and after the Effective Time, for all corporate purposes, subject to
Section 1.7(d) as to the payment of dividends, to evidence only the ownership of
the number of full shares of Parent Common Stock into which such shares of
Company Common Stock shall have been so converted and the right to receive an
amount in cash in lieu of the issuance of any fractional shares in accordance
with Section 1.6(g) and any dividends or distributions payable pursuant to
Section 1.7(d).
(d) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the date of this
Agreement with respect to Parent Common Stock with a record date after the
Effective Time will be paid to the holders of any unsurrendered Certificates
with respect to the shares of Parent Common Stock represented thereby until the
holders of record of such Certificates shall surrender such Certificates.
Subject to applicable law, following surrender of any such Certificates, the
Exchange Agent shall deliver to the record holders thereof, without interest,
certificates representing whole shares of Parent Common Stock issued in exchange
therefor along with payment in lieu of fractional shares pursuant to Section
1.6(g) hereof and the amount of any such dividends or other distributions with a
record date after the Effective Time payable with respect to such whole shares
of Parent Common Stock.
(e) Transfers of Ownership. If certificates representing
shares of Parent Common Stock are to be issued in a name other than that in
which the Certificates surrendered in exchange therefor are registered, it will
be a condition of the issuance thereof that the Certificates so surrendered will
be properly endorsed and otherwise in proper form for transfer and that the
persons requesting such exchange will have paid to Parent or any agent
designated by it any transfer or other taxes required by reason of the issuance
of certificates representing shares of Parent Common Stock in any name other
than that of the registered holder of the Certificates surrendered, or
established to the satisfaction of Parent or any agent designated by it that
such tax has been paid or is not payable.
(f) No Liability. Notwithstanding anything to the contrary in
this Section 1.7, neither the Exchange Agent, Parent, the Surviving Corporation
nor any party hereto shall be liable to a holder of shares of Parent Common
Stock or Company Common Stock for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
1.8 No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued in accordance with the terms hereof (including any
cash paid in respect thereof pursuant to Section 1.6(g) and 1.7(d)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Company Common Stock, and there shall be no further registration of
transfers on the
-5-
<PAGE>
records of the Surviving Corporation of shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If after the Effective
Time Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
1.9 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Parent Common Stock into which the shares of Company
Common Stock represented by such Certificates were converted pursuant to Section
1.6, cash for fractional shares, if any, as may be required pursuant to Section
1.6(g) and any dividends or distributions payable pursuant to Section 1.7(d);
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance of such certificates representing shares of Parent
Common Stock, cash and other distributions, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
1.10 Tax and Accounting Consequences.
(a) It is intended by the parties hereto that the Merger shall
constitute a taxable transaction for federal income tax purposes and not a
reorganization within the meaning of Section 368 of the Code.
(b) It is intended by the parties hereto that the Merger shall
be treated as a purchase for accounting purposes.
1.11 Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Company and Merger Sub, the officers and directors of Company
and Merger Sub will take all such lawful and necessary action. Parent shall
cause Merger Sub to perform all of its obligations relating to this Agreement
and the transactions contemplated thereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Parent and Merger Subs, subject to
such exceptions as are specifically disclosed in writing in the disclosure
letter (referencing the appropriate section and paragraph numbers) delivered by
Company to Parent on or prior to the date of this Agreement and certified by a
duly authorized officer of Company (the "Company Disclosure Letter"), as
follows:
2.1 Organization and Qualification; Subsidiaries. Each of Company and
its subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
-6-
<PAGE>
incorporation and has the requisite corporate power and authority to own, lease
and operate its assets and properties and to carry on its business as it is now
being conducted. Company has delivered to Parent a complete and correct list of
all of Company's direct and indirect subsidiaries as of the date of this
Agreement, indicating the jurisdiction of organization of each subsidiary and
Company's equity interest therein. Each of Company and its subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders ("Approvals") necessary
to own, lease and operate the properties it purports to own, operate or lease
and to carry on its business as it is now being conducted, except where the
failure to have such Approvals would not, individually or in the aggregate, have
a Material Adverse Effect (as defined in Section 8.3(c)) on Company. Each of
Company and its subsidiaries is duly qualified or licensed as a foreign
corporation 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 necessary, except for such
failures to be so duly qualified or licensed and in good standing that would
not, either individually or in the aggregate, have a Material Adverse Effect on
Company. Other than wholly-owned subsidiaries, Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business, association or
entity.
2.2 Certificate of Incorporation and Bylaws. Company has previously
furnished to Parent a complete and correct copy of the Certificate of
Incorporation and Bylaws of Company and equivalent organizational documents of
each of its subsidiaries, as amended to date. Such Certificate of Incorporation,
Bylaws and equivalent organizational documents of each of its subsidiaries are
in full force and effect. Neither Company nor any of its subsidiaries is in
violation of any of the provisions of its Certificate of Incorporation or Bylaws
or equivalent organizational documents.
2.3 Capitalization. The authorized capital stock of Company consists of
25,000,000 shares of Company Common Stock, $0.001 par value per share, and
2,000,000 shares of Preferred Stock, no par value per share ("Company Preferred
Stock"). At the close of business on November 21, 1998, (i) 13,104,398 shares of
Company Common Stock were issued and outstanding, (ii) no shares of Company
Common Stock were held in treasury by Company or by subsidiaries of Company,
(iii) 215,908 shares of Company Common Stock were available for future issuance
pursuant to the ESPP, (iv) 1,688,203 shares of Company Common Stock were
reserved for issuance upon the exercise of outstanding options to purchase
Company Common Stock under the 1988 Option Plan, (v) no shares of Company Common
Stock were available for future grant under the 1988 Option Plan, (vi) 529,400
shares of Company Common Stock were reserved for issuance upon exercise of
outstanding options to purchase Company Common Stock under the 1997 Option Plan,
(vii) 520,600 shares of Company Common Stock were available for future grant
under the 1997 Option Plan; (viii) 120,000 shares of Company Common Stock were
reserved for issuance upon the exercise of outstanding options to purchase
Company Common Stock under the Directors' Plan, (ix) 130,000 shares of Company
Common Stock were available for future grant under the Directors' Plan and (x)
900,000 shares of Company Common Stock were reserved for issuance upon
conversion of Company Warrants (as described in Section 1.6(d)). As of the date
hereof, no shares of Company Preferred Stock were issued or outstanding. No
change in such capitalization has occurred between November 21, 1998 and the
date hereof except (x) the issuance of
-7-
<PAGE>
shares of Company Common Stock pursuant to the exercise of outstanding options
or warrants or (y) the cancellation of unvested options for Common Stock held
by, or the repurchase of unvested shares of Common Stock from, directors,
employees, consultants or other service providers of Company pursuant to the
terms of their stock option, stock purchase or stock restriction agreements. All
outstanding shares of Company Common Stock are duly authorized, validly issued,
fully paid and nonassessable and are not subject to preemptive rights created by
statute, the Certificate of Incorporation or Bylaws of Company or any agreement
or document to which Company is a party or by which it is bound. Except as set
forth in this Section 2.3, as of the date of this Agreement, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of Company or any
of its subsidiaries that obligate Company or any of its subsidiaries to issue or
sell any shares of capital stock of, or other equity interests in, Company or
any of its subsidiaries or obligating Company or any of its subsidiaries to
grant, extend, accelerate the vesting of or enter into any such option, warrant
or other right, agreement, arrangement or commitment. All shares of 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,
shall be duly authorized, validly issued, fully paid and nonassessable. There
are no obligations, contingent or otherwise, of Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares of Company
Common Stock or the capital stock of any subsidiary, except the repurchase of
unvested shares of Company Common Stock from directors, employees, consultants
or other service providers of Company pursuant to the terms of their stock
option, stock purchase or stock restriction agreements, or to provide funds to
or make any investment (in the form of a loan, capital contribution or
otherwise) in any such subsidiary or any other entity. All of the outstanding
shares of capital stock (other than directors' qualifying shares) of each of
Company's subsidiaries are duly authorized, validly issued, fully paid and
nonassessable and all such shares (other than directors' qualifying shares) are
owned by Company or another subsidiary free and clear of all security interests,
liens, claims, pledges, agreements, limitations in Company's voting rights,
charges or other encumbrances of any nature whatsoever. The Company Disclosure
Letter lists for each person who held options or warrants to acquire shares of
Company Common Stock as of November 21, 1998, the name of the holder of such
option or warrant, the exercise price of such option or warrant, the number of
shares as to which such option or warrant had vested as of November 21, 1998 for
such option or warrant and whether the exercisability of such option or warrant
will be accelerated in any way by the transactions contemplated by this
Agreement, and indicates the extent of acceleration, if any. Except as
contemplated by this Agreement, there are no registration rights and, to the
knowledge of Company, there are no voting trusts, proxies, rights plans,
antitakeover plans or other agreements or understandings to which Company is a
party or by which it is bound with respect to any equity security of any class
of Company or with respect to any equity security, partnership interest or
similar ownership interest of any class of any of its subsidiaries. Stockholders
of Company will not be entitled to dissenters' rights under applicable state law
in connection with the Merger. The Doctor Warrant is treated by the Company as a
nonstatutory stock option for tax and accounting purposes.
2.4 Authority Relative to this Agreement. Company has all necessary
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and, subject to obtaining the approval of the
stockholders of Company of the Merger, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Company and
the consummation
-8-
<PAGE>
by Company of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Company and no other
corporate proceedings on the part of Company are necessary to authorize this
Agreement or to consummate the transactions so contemplated (other than, with
respect to the Merger, the approval and adoption of this Agreement and the
approval of the Merger by holders of a majority of the outstanding shares of
Company Common Stock in accordance with Delaware Law and Company's Certificate
of Incorporation and Bylaws). This Agreement has been duly and validly executed
and delivered by Company and, assuming the due authorization, execution and
delivery by Parent and Merger Subs, constitutes a legal and binding obligation
of Company, enforceable against Company in accordance with its terms.
2.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Company do
not, and the performance of this Agreement by Company will not, (i) conflict
with or violate the Certificate of Incorporation, Bylaws or equivalent
organizational documents of Company or any of its subsidiaries, (ii) subject to
obtaining the approval and adoption of Company's stockholders of this Agreement
and the approval of Company's stockholders of the Merger and compliance with the
requirements set forth in Section 2.5(b) below, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Company or any of
its subsidiaries or by which Company or any of its subsidiaries or any of their
respective properties are 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 Company's or any such subsidiaries'
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 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 Company or any of its
subsidiaries is a party or by which Company or any of its subsidiaries or its or
any of their respective properties are bound or affected, except in the case of
clauses (ii) and (iii) above as would not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect on Company. The Company
Disclosure Letter lists all material consents, waivers and approvals under any
of 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) The execution and delivery of this Agreement by Company do
not, and the performance of this Agreement by Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any court, administrative agency, commission, governmental or regulatory
authority, domestic or foreign (a "Governmental Entity"), except (A) for
applicable requirements, if any, of the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), state securities laws ("Blue Sky Laws"), the pre-merger
notification requirements (the "HSR Approval") of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") and of foreign
Governmental Entities and the rules and regulations thereunder, the rules and
regulations of Nasdaq, and the filing and recordation of the Certificate of
Merger as required by Delaware Law and (B) where the failure to obtain such
consents,
-9-
<PAGE>
approvals, authorizations or permits, or to make such filings or notifications,
(i) would not prevent consummation of the Merger or otherwise prevent Company
from performing its obligations under this Agreement or (ii) would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Company.
2.6 Compliance; Permits; Restrictions.
(a) Neither Company nor any of its subsidiaries is in conflict
with, or in default or violation of, (i) any law, rule, regulation, order,
judgment or decree applicable to Company or any of its subsidiaries or by which
Company or any of its subsidiaries or any of their respective properties is
bound or affected, or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Company or any of its subsidiaries is a party or by which Company or
any of its subsidiaries or its or any of their respective properties is bound or
affected, except for any conflicts, defaults or violations which would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company. To the knowledge of Company, no investigation or
review by any governmental or regulatory body or authority is pending or
threatened against Company or its subsidiaries, nor has any governmental or
regulatory body or authority indicated an intention to conduct the same.
(b) Company and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities which
are necessary for the operation of the business of Company and its subsidiaries
taken as a whole (collectively, the "Company Permits"), except for those Company
Permits, the absence of which would not, individually or in the aggregate, have
a Material Adverse Effect on Company. Company and its subsidiaries are in
compliance with the terms of the Company Permits, except where the failure to be
in compliance with the terms of the Company Permits would not, individually or
in the aggregate, have a Material Adverse Effect on Company.
2.7 SEC Filings; Company Financial Statements.
(a) Company has made available to Parent a correct and
complete copy of each material form, report, schedule, registration statement
and definitive proxy statement filed by Company with the Securities and Exchange
Commission ("SEC") since January 1, 1995 (the "Company SEC Reports"), which are
all the material forms, reports and documents required to be filed by Company
with the SEC since January 1, 1995 and prior to the date of this Agreement. The
Company SEC Reports (A) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Company SEC Reports, and
(B) 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 light of the circumstances under which they were made, not
misleading. None of Company's subsidiaries is required to file any forms,
reports or other documents with the SEC.
-10-
<PAGE>
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Company SEC Reports,
including each Company SEC Report filed after the date hereof until the Closing,
(i) complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, (ii) was prepared in accordance
with United States 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 under the Exchange Act) and (iii)
fairly presented the consolidated financial position of Company and its
subsidiaries as of the respective dates thereof and the consolidated results of
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
Company contained in Company SEC Reports as of September 26, 1998 is hereinafter
referred to as the "Company Balance Sheet."
(c) Company has previously 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 Company with the SEC
pursuant to the Securities Act or the Exchange Act.
2.8 No Undisclosed Liabilities. Neither 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 Company and its subsidiaries taken as a
whole, except (i) liabilities provided for in Company Balance Sheet, (ii)
liabilities incurred since September 26, 1998 in the ordinary course of business
consistent with past practices or (iii) banking, accounting, legal and printing
fees and expenses associated with the Merger.
2.9 Absence of Certain Changes or Events. Since September 26, 1998,
there has not been: (i) any Material Adverse Effect on Company, (ii) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash, stock or property) in respect of, any of Company's or any of
its subsidiaries' capital stock, or any purchase, redemption or other
acquisition by Company of any of Company's capital stock or any other securities
of Company or its subsidiaries or issuances of any options, warrants, calls or
rights to acquire any such shares or other securities except for repurchases
from employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements, (iii) any split, combination
or reclassification of any of Company's or any of its subsidiaries' capital
stock, (iv) any granting by Company or any of its subsidiaries of any increase
in compensation or fringe benefits, except for normal increases of cash
compensation in the ordinary course of business consistent with past practice,
or any payment by Company or any of its subsidiaries of any bonus, except for
bonuses made in the ordinary course of business consistent with past practice,
or any granting by Company or any of its subsidiaries of any increase in
severance or termination pay or any entry by Company or any of its subsidiaries
into any currently effective employment, severance, termination or
indemnification agreement or any agreement the benefits of which are contingent
or the terms of which are materially altered upon the occurrence of a
transaction involving Company of the
-11-
<PAGE>
nature contemplated hereby, (v) entry by Company or any of its subsidiaries into
any licensing or other agreement with regard to the acquisition or disposition
of any material Intellectual Property (as defined in Section 2.19) other than
licenses in the ordinary course of business consistent with past practice or any
amendment or consent with respect to any licensing agreement filed or required
to be filed by Company with the SEC, (vi) any material change by Company in its
accounting methods, principles or practices, except as required by concurrent
changes in GAAP, or (vii) any revaluation by 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.
2.10 Absence of Litigation. There are no claims, actions, suits or
proceedings pending or, to the knowledge of Company, threatened against Company
or any of its subsidiaries or any properties or rights of Company or any of its
subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign. No Governmental Entity has at
any time since January 1, 1997 challenged or questioned in a writing delivered
to Company the legal right of Company to design, manufacture, offer or sell any
of its products in the present manner or style thereof.
2.11 Employee Benefit Plans.
(a) Definitions. With the exception of the definition of
"Affiliate" set forth in Section 2.11(a)(i) below (which definition shall apply
only to this Section 2.11), for purposes of this Agreement, the following terms
shall have the meanings set forth below:
(i) "Affiliate" shall mean any other person or entity
under common control with Company within the meaning of Section 414(b), (c), (m)
or (o) of the Code and the regulations issued thereunder;
(ii) "Company Employee Plan" shall mean any plan,
program, policy, practice, contract, agreement or other arrangement providing
for compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written or unwritten or otherwise, funded or unfunded,
including without limitation, each "employee benefit plan," within the meaning
of Section 3(3) of ERISA which is or has been maintained, contributed to, or
required to be contributed to, by Company or any Affiliate for the benefit of
any Employee;
(iii) "COBRA" shall mean the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended;
(iv) "DOL" shall mean the Department of Labor;
(v) "Employee" shall mean any current, former, or
retired employee, officer, or director of Company or any Affiliate;
-12-
<PAGE>
(vi) "Employee Agreement" shall mean each management,
employment, severance, consulting, relocation, repatriation, expatriation,
visas, work permit or similar written agreement or contract between Company or
any Affiliate and any Employee or consultant;
(vii) "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act
of 1993, as amended;
(ix) "International Employee Plan" shall mean each
Company Employee Plan that has been adopted or maintained by Company, whether
informally or formally, for the benefit of Employees outside the United States;
(x) "IRS" shall mean the Internal Revenue Service;
(xi) "Multiemployer Plan" shall mean any "Pension
Plan" (as defined below) which is a "multiemployer plan," as defined in Section
3(37) of ERISA;
(xii) "Pension Plan" shall mean each Company Employee
Plan which is an "employee pension benefit plan," within the meaning of Section
3(2) of ERISA.
(b) Disclosure Letter. The Company Disclosure Letter contains
an accurate and complete list of each Company Employee Plan and each Employee
Agreement. Company does not have any plan or commitment to establish any new
Company Employee Plan, to materially modify any Company Employee Plan or
Employee Agreement (except to the extent required by law or to conform any such
Company Employee Plan or Employee Agreement to the requirements of any
applicable law, in each case as previously disclosed to Parent in writing, or as
required by this Agreement), or to enter into any Company Employee Plan or
material Employee Agreement, nor does it have any intention or commitment to do
any of the foregoing.
(c) Documents. Company has provided or made reasonably
available to Parent: (i) correct and complete copies of all documents embodying
or relating to each Company Employee Plan and each written Employee Agreement
including all amendments thereto which are currently effective and written
interpretations thereof; (ii) the three (3) most recent annual reports (Form
Series 5500 and all schedules and financial statements attached thereto), if
any, required under ERISA or the Code in connection with each Company Employee
Plan or related trust; (iii) if the Company Employee Plan is funded, the most
recent annual and periodic accounting of Company Employee Plan assets; (iv) the
most recent summary plan description together with the summary of material
modifications thereto, if any, required under ERISA with respect to each Company
Employee Plan; (v) all IRS determination, opinion, notification and advisory
letters, and rulings relating to Company Employee Plans and copies of all
applications and correspondence to or from the IRS or the DOL with respect to
any Company Employee Plan; (vi) all material written agreements and contracts
relating to each currently effective Company
-13-
<PAGE>
Employee Plan, including, but not limited to, administrative service agreements,
group annuity contracts and group insurance contracts; (vii) all communications
material to any Employee or Employees relating to any Company Employee Plan and
any proposed Company Employee Plans, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits, acceleration
of payments or vesting schedules or other events which would result in any
material liability to Company; (viii) all standard COBRA forms and related
notices; and (ix) all registration statements prepared in connection with each
Company Employee Plan and all documents comprising a prospectus prepared since
January 1, 1995 in connection with each Company Employee Plan.
(d) Employee Plan Compliance. (i) Company has performed in all
material respects all obligations required to be performed by it under, is not
in material default or material violation of, and has no knowledge of any
material default or material violation by any other party to each Company
Employee Plan, and each Company Employee Plan has been established and
maintained in all material respects in accordance with its terms and in
compliance with all applicable laws, statutes, orders, rules and regulations,
including but not limited to ERISA or the Code; (ii) each Company Employee Plan
intended to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code has either received a favorable
determination letter, or comparable letter, from the IRS with respect to each
such Company Employee Plan as to its qualified status under the Code, including
all amendments to the Code effected by the Tax Reform Act of 1986 and subsequent
legislation, or has remaining a period of time under applicable Treasury
regulations or IRS pronouncements in which to apply for or receive such a
determination letter, or comparable letter, and make any amendments necessary to
obtain a favorable determination; (iii) no "prohibited transaction," within the
meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not
otherwise exempt under Section 408 of ERISA, has occurred with respect to any
Company Employee Plan; (iv) there are no material actions, suits or claims
pending, or, to the knowledge of Company, threatened or reasonably anticipated
(other than routine claims for benefits) against any Company Employee Plan or
against the assets of any Company Employee Plan; (v) each Company Employee Plan
can be amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to Parent, Company or any of its
Affiliates (other than ordinary administration expenses typically incurred in a
termination event); (vi) there are no audits, inquiries or proceedings pending
or, to the knowledge of Company or any Affiliates, threatened by the IRS or DOL
with respect to any Company Employee Plan; and (vii) neither Company nor any
Affiliate is subject to any material penalty or material tax with respect to any
Company Employee Plan under Section 402(i) of ERISA or Sections 4975 through
4980 of the Code.
(e) Pension Plans. Company does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has Company contributed to
or been requested to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Company Employee Plan
provides, or has any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to
-14-
<PAGE>
any person for any reason, except as may be required by COBRA or other
applicable statute, and Company has never represented, promised or contracted
(whether in oral or written form) to any Employee (either individually or to
Employees as a group) or any other person that such Employee(s) or other person
would be provided with retiree life insurance, retiree health or other retiree
employee welfare benefit, except to the extent required by statute.
(h) Neither Company nor any Affiliate has, prior to the
Effective Time, and in any material respect, violated any of the health care
continuation requirements of COBRA, the requirements of FMLA or any similar
provisions of state law applicable to its Employees.
(i) Effect of Transaction
(i) The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Company Employee Plan, Employee Agreement, trust or loan that will or
may result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any Employee.
(ii) No payment or benefit which will or may be made
by Company or its Affiliates with respect to any Employee as a result of the
transactions contemplated by this Agreement will be characterized as an "excess
parachute payment," within the meaning of Section 280G(b)(1) of the Code.
(j) Employment Matters. Company: (i) is in compliance in all
material respects with all applicable foreign, federal, state and local laws,
rules and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to Employees, except for
amounts that are not material individually or in the aggregate; (iii) is not
liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing; and (iv) is not liable for any material
payment to any trust or other fund or to any governmental or administrative
authority, with respect to unemployment compensation benefits, social security
or other benefits or obligations for Employees (other than routine payments to
be made in the normal course of business and consistent with past practice).
There are no pending, or to Company's knowledge threatened or reasonably
anticipated claims or actions against Company under any worker's compensation
policy or long-term disability policy. To Company's knowledge, no employee of
Company has violated any employment contract, nondisclosure agreement or
noncompetition agreement by which such employee is bound due to such employee
being employed by Company and disclosing to Company or using trade secrets or
proprietary information of any other person or entity.
(k) International Employee Plan. Each International Employee
Plan has been established, maintained and administered in material compliance
with its terms and conditions and with
-15-
<PAGE>
the requirements prescribed by any and all statutory or regulatory laws that are
applicable to such International Employee Plan. Furthermore, no International
Employee Plan has unfunded liabilities, that as of the Effective Time, will not
be offset by insurance or fully accrued. Except as required by law, no condition
exists that would prevent Company or Parent from terminating or amending any
International Employee Plan at any time for any reason.
2.12 Labor Matters. (i) There is no litigation pending or, to the
knowledge of each of Company and its respective subsidiaries, threatened,
between Company or any of its subsidiaries and any of their respective
employees; (ii) as of the date of this Agreement, neither Company nor any of
subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by Company or its subsidiaries nor
does Company or its subsidiaries know of any activities or proceedings of any
labor union to organize any such employees; and (iii) as of the date of this
Agreement, neither Company nor any of its subsidiaries has any knowledge of any
strikes, slowdowns, work stoppages or lockouts, or threats thereof, by or with
respect to any employees of Company or any of its subsidiaries. Neither Company
nor any of its subsidiaries has engaged in any unfair labor practices within the
meaning of the National Labor Relations Act.
2.13 S-4; Proxy Statement. None of the information supplied or to be
supplied by Company for inclusion or incorporation by reference in (i) the
registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of the Parent Common Stock in or as a result of the
Merger (the "S-4") will, at the time the S-4 is filed with the SEC and at the
time it becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading; and (ii) the Proxy
Statement/Prospectus (the "Proxy Statement/Prospectus") to be filed with the SEC
by Company pursuant to Section 5.1 hereof will, at the dates mailed to the
stockholders of Company, at the times of the stockholder meeting of Company (the
"Company Stockholders' Meeting") in connection with the transactions
contemplated hereby and as of 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 therein, in light of the
circumstances under which they are made, not misleading. The Proxy
Statement/Prospectus will comply as to form in all material respects with the
provisions of the Securities Act, Exchange Act and the rules and regulations
promulgated by the SEC thereunder. If at any time prior to the Effective Time
any event relating to Company or any of its affiliates, officers or directors
should be discovered by Company which is required to be set forth in an
amendment to the S-4 or a supplement to the Proxy Statement/Prospectus, Company
shall promptly inform Parent. Notwithstanding the foregoing, Company makes no
representation or warranty with respect to any information supplied by Parent or
Merger Subs which is contained in any of the foregoing documents.
2.14 Restrictions on Business Activities. There is no material
agreement, judgment, injunction, order or decree binding upon 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 Company or any of
its subsidiaries, any acquisition of property by Company or any of its
subsidiaries or the conduct of business by Company or any of its subsidiaries as
currently conducted.
-16-
<PAGE>
2.15 Title to Property. Company owns no material real property. Company
and each of its subsidiaries have good and defensible title to all of their
material properties and assets, free and clear of all liens, charges and
encumbrances except liens for taxes not yet due and payable and such liens or
other imperfections of title, if any, as do not materially detract from the
value of or interfere with the present use of the property affected thereby. The
Company Disclosure Letter lists all material real property leases to which
Company or any of its subsidiaries is a party as of the date of this Agreement
and each amendment thereto that is in effect as of the date of this Agreement.
All material real or personal property leases pursuant to which Company or any
of its subsidiaries lease from others are in good standing, valid and effective
in accordance with their respective terms, and there is not, under any of such
leases, any existing material default or event of default (or any event which
with notice or lapse of time, or both, would constitute a material default). All
the plants, structures and equipment of Company and its subsidiaries, except
such as may be under construction, are in good operating condition and repair,
in all material respects.
2.16 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.
(b) Tax Returns and Audits.
(i) Company and each of its subsidiaries have timely
filed (taking into account applicable extensions) all federal and state, local
and foreign returns, estimates, information statements and reports ("Returns")
relating to Taxes required to be filed by Company and each of its subsidiaries
with any Tax authority and are true and correct in all material respects on such
Returns.
(ii) 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, Taxes pursuant to the Federal Insurance Contribution Act
("FICA"), Taxes pursuant to the Federal Unemployment Tax Act ("FUTA") and other
Taxes required to be withheld.
(iii) There is no Tax deficiency outstanding which
has been proposed or assessed in writing against Company or any of its
subsidiaries, nor has Company or any of its subsidiaries executed any unexpired
waiver of any statute of limitations on or extending the period for the
assessment or collection of any Tax other than the automatic extension arising
from the filing of a Return after its due date.
-17-
<PAGE>
(iv) No audit or other examination of any Return of
Company or any of its subsidiaries by any Tax authority is presently in
progress, nor has Company or any of its subsidiaries been notified of any
request for such an audit or other examination.
(v) No adjustment relating to any Returns filed by
Company or any of its subsidiaries has been proposed in writing formally or
informally by any Tax authority to Company or any of its subsidiaries or any
representative thereof.
(vi) Neither 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,
which is material to Company, other than any liability for unpaid Taxes that may
have accrued since the date of the Company Balance Sheet in connection with the
operation of the business of Company and its subsidiaries in the ordinary course
of business.
(vii) There is no contract, agreement, plan or
arrangement to which Company is a party as of the date of this Agreement,
including but not limited to the provisions of this Agreement, covering any
employee or former employee of 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.
(viii) Neither 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 Company.
(ix) Except for any such agreement or arrangement
solely between Company and its subsidiaries, neither Company nor any of its
subsidiaries is party to or has any obligation under any tax-sharing, tax
indemnity or tax allocation agreement or arrangement.
(x) Company and its subsidiaries have not been and
will not be required to include any material adjustment in Taxable income for
any Tax period (or portion thereof) pursuant to Section 481 or Section 263A of
the Code or any comparable provision under state or foreign Tax laws as a result
of transactions, events or accounting methods employed prior to the Closing.
(xi) None of Company's or its subsidiaries' assets
are tax exempt use property within the meaning of Section 168(h) of the Code.
(xii) The Company Disclosure Letter lists (A) any
foreign Tax holidays, (B) any intercompany transfer pricing agreements, or other
arrangements that have been established by Company or any of its subsidiaries
with any Tax authority and (C) any expatriate programs or policies affecting
Company or any of its subsidiaries.
-18-
<PAGE>
2.17 Environmental Matters.
(a) Hazardous Material. Except as would not be reasonably
expected to have a Material Adverse Effect on Company (in any individual case or
in the aggregate), 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, but excluding office and
janitorial supplies, (a "Hazardous Material") are present, as a result of the
actions of Company or any of its subsidiaries or any affiliate of Company, or,
to Company's knowledge, as a result of any actions of any third party or
otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water thereof, that Company or any of its
subsidiaries has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as would not be
reasonably expected to have a Material Adverse Effect on Company (in any
individual case or in the aggregate) (i) neither 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, and (ii) neither Company nor any of
its subsidiaries has 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.
(c) Permits. Company and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the
"Company Environmental Permits") necessary for the conduct of Company's and its
subsidiaries' Hazardous Material Activities and other businesses of Company and
its subsidiaries as such activities and businesses are currently being
conducted, except for those Company Environmental Permits the absence of which
would not have, individually or in the aggregate, a Material Adverse Effect on
Company.
(d) Environmental Liabilities. No action, proceeding,
revocation proceeding, amendment procedure, writ or injunction is pending, and
to Company's knowledge, no action, proceeding, revocation proceeding, amendment
procedure, writ or injunction has been threatened by any Governmental Entity
against Company or any of its subsidiaries in a writing delivered to Company
concerning any Company Environmental Permit Hazardous Material or any Hazardous
Materials Activity of Company or any of its subsidiaries. Company is not aware
of any fact or circumstance which could involve Company or any of its
subsidiaries in any environmental litigation or impose upon Company any material
environmental liability.
-19-
<PAGE>
2.18 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Company.
2.19 Intellectual Property.
(a) Each of Company and its subsidiaries owns, or is licensed
or otherwise possesses legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights, and any applications for
such patents, trademarks, trade names, service marks and copyrights, and all
patent rights, trade secrets, schematics, technology, know-how, computer
software and tangible or intangible proprietary information or material or other
intellectual property or proprietary rights that are used to conduct its
business as currently conducted (collectively, "Intellectual Property") except
where the failure to own, license or possess legally enforceable rights to use
such Intellectual Property would not, individually or in the aggregate, be
expected to result in a material loss of benefits or material loss to Company's
business. Each of Company and its subsidiaries has taken reasonable measures to
protect the proprietary nature of each material item of Intellectual Property
that it considers confidential, and to maintain in confidence all material trade
secrets and confidential information that it presently owns or uses.
(b) With respect to each material item of Intellectual
Property that Company or any of its subsidiaries owns: (i) other than common law
trademarks, and subject to such rights as have been granted by Company or any of
its subsidiaries under non-exclusive license agreements and joint development
agreements entered into by Company or any of its subsidiaries (copies of which
have previously been made available or disclosed in writing to Parent), Company
or its subsidiaries possesses all right, title, interest in and to such item;
and (ii) such item is not subject to any outstanding judgment, order, decree,
stipulation or injunction that materially interferes with the conduct of
Company's or any of its subsidiaries' business as currently conducted. With
respect to each item of third party Intellectual Property used by Company or any
of its subsidiaries or incorporated in any existing product or service of
Company or any of its subsidiaries ("Third Party Intellectual Property Rights")
that is material to the business of Company or any of its subsidiaries: (i) the
license, sublicense or other agreement covering such item is legal, valid,
binding, enforceable and in full force and effect with respect to Company or its
subsidiaries, and, to Company's knowledge, is legal, valid, binding, enforceable
and in full force and effect with respect to each other party thereto; (ii)
neither Company nor any of its subsidiaries is in material breach or default
thereunder, and to Company's knowledge no other party to such license,
sublicense or other agreement is in material breach or default thereunder, and
no event has occurred which with notice or lapse of time would constitute a
material breach or default by Company or any of its subsidiaries or permit
termination, modification or acceleration thereunder by the other party thereto;
and (iii) the underlying item of Third Party Intellectual Property is not
subject to any outstanding judgment, order, decree, stipulation or injunction to
which Company or any of its subsidiaries is a party or has been specifically
named that materially interferes with the conduct of Company's or any of its
subsidiaries' business as currently conducted.
-20-
<PAGE>
(c) Neither Company nor any of its subsidiaries (i) has
received notice that it has been named in any suit, action or proceeding which
involves a claim of infringement or misappropriation of any Intellectual
Property right of any third party or (ii) has received any written notice
alleging any such claim of infringement or misappropriation. To Company's
knowledge, the manufacturing, marketing, licensing or sale of the products or
performance of the service offerings of Company and its subsidiaries do not
currently infringe, and have not infringed, any Intellectual Property right of
any third party or to Company's knowledge any patent rights of third parties;
and to the knowledge of Company, the Intellectual Property rights of Company and
its subsidiaries are not being infringed by activities, products or services of
any third party.
(d) The execution and delivery of this Agreement by Company,
and the consummation of the transactions contemplated hereby, will neither cause
Company nor any of its subsidiaries to be in violation or default under any
material license, sublicense or agreement, nor terminate nor modify nor entitle
any other party to any such license, sublicense or agreement to terminate or
modify such license, sublicense or agreement, nor limit in any way Company's or
any of its subsidiaries' ability to conduct its business or use or provide the
use of the Intellectual Property or Third Party Intellectual Property Rights.
(e) All officers, employees and consultants of Company or any
of its subsidiaries who have access to Intellectual Property have executed and
delivered to Company or any of its subsidiaries an agreement regarding the
protection of Intellectual Property and the assignment to Company or any of its
subsidiaries of all Intellectual Property arising from the services performed
for Company or any of its subsidiaries by such persons. To the knowledge of
Company, no current or prior officers, employees or consultants of Company or
any of its subsidiaries claim any ownership interest in any Intellectual
Property as a result of having been involved in the development of such property
while employed by or consulting to Company or any of its subsidiaries, or
otherwise. All of the Intellectual Property developed by Company employees has
been developed by such employees of Company or any of its subsidiaries within
the scope of their employment.
2.20 Agreements, Contracts and Commitments. Neither Company nor any of
its subsidiaries is a party to or is bound by:
(a) any employment or consulting agreement, contract or
commitment with any officer, director or member of Company's Board of Directors,
other than those that are terminable by Company or any of its subsidiaries on no
more than thirty days notice and which do so with no express (whether by
contract or by policy) liability or financial obligation to Company;
(b) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of 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;
-21-
<PAGE>
(c) any agreement of indemnification or any guaranty currently
in force other than any agreement of indemnification entered into in connection
with the sale or license or distribution or marketing of products or services in
the ordinary course of business;
(d) any agreement, contract or commitment containing any
covenant limiting in any respect the right of Company or any of its subsidiaries
to engage in any line of business or to compete with any person or granting any
exclusive distribution rights;
(e) any agreement, contract or commitment currently in force
relating to the disposition or acquisition by Company or any of its subsidiaries
after the date of this Agreement of a material amount of assets not in the
ordinary course of business or pursuant to which Company has any material
ownership interest in any corporation, partnership, joint venture or other
business enterprise other than Company's subsidiaries;
(f) any material joint marketing or development agreement
currently in force under which Company or any of its subsidiaries have
continuing material obligations to jointly market any product, technology or
service and which may not be canceled without penalty upon notice of 90 days or
less, or any material agreement pursuant to which Company or any of its
subsidiaries have continuing material obligations to jointly develop any
intellectual property that will not be owned, in whole or in part, by Company or
any of its subsidiaries and which may not be canceled without penalty upon
notice of 90 days or less;
(g) any agreement, contract or commitment currently in force
to provide source code to any third party for any product or technology that is
material to Company and its subsidiaries taken as a whole; or
(h) any agreement, contract or commitment currently in force
to license any third party to manufacture or reproduce any Company product,
service or technology except as a distributor in the normal course of business.
Neither Company nor any of its subsidiaries, nor to Company's knowledge
any other party to a Company Contract (as defined below), is in breach,
violation or default under, and neither Company nor any of its subsidiaries has
received written notice that it has breached, violated or defaulted under, any
of the material terms or conditions of any of the agreements, contracts or
commitments to which Company or any of its subsidiaries is a party or by which
it is bound that are required to be disclosed in the Company Disclosure Letter
pursuant to this Section 2.20 (any such agreement, contract or commitment, 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
material damages or other remedies (for any or all of such breaches, violations
or defaults, in the aggregate).
2.21 Insurance. Company maintains insurance policies and fidelity bonds
covering the assets, business, equipment, properties, operations, employees,
officers and directors of Company and its subsidiaries (collectively, the
"Insurance Policies") which are of the type and in amounts customarily
-22-
<PAGE>
carried by persons conducting businesses similar to those of Company and its
subsidiaries. There is no material claim by Company or any of its subsidiaries
pending under any of the Insurance Policies as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds.
2.22 Opinion of Financial Advisor. Company has been advised in writing
by its financial advisor, BancBoston Robertson Stephens, that in its opinion, as
of the date of this Agreement, the aggregate merger consideration is fair to the
stockholders of Company from a financial point of view.
2.23 Board Approval. The Board of Directors of Company has, as of the
date of this Agreement, (i) approved this Agreement and the transactions
contemplated hereby, (ii) determined that the Merger is in the best interests of
the stockholders of Company and is on terms that are fair to such stockholders
and (iii) recommended that the stockholders of Company approve this Agreement
and the Merger.
2.24 Vote Required. The affirmative vote of a majority of the votes
that holders of the outstanding shares of Company Common Stock are entitled to
vote thereon is the only vote of the holders of any class or series of Company's
capital stock necessary to approve this Agreement and the transactions
contemplated hereby.
2.25 State Takeover Statutes. The Board of Directors of Company has
approved the Merger, this Agreement, the Company Affiliate Agreements (as
defined in Section 5.12) and the Company Voting Agreements, and such approval is
sufficient to render inapplicable to the Merger, this Agreement, the Company
Affiliate Agreements and the Company Voting Agreements and the transactions
contemplated hereby and thereby, the provisions of Section 203 of Delaware Law
to the extent, if any, such Section is applicable to the Merger, this Agreement,
the Company Affiliate Agreements and the Company Voting Agreements and the
transactions contemplated hereby and thereby. No other state takeover statute or
similar statute or regulation applies to or purports to apply to the Merger,
this Agreement, the Company Affiliate Agreements and the Company Voting
Agreements or the transactions contemplated hereby and thereby.
2.26 Year 2000 Compliance. All of Company's products (including
products currently under development) (i) 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 dependent on or relating to such dates (collectively,
"Year 2000 Compliant"), (ii) will lose no functionality with respect to the
introduction of records containing dates falling on or after January 1, 2000,
and (iii) will be interoperable with other products used and distributed by
Parent (as long as such products are Year 2000 Compliant) that may reasonably
deliver records to Company's products or receive records from Company's
products, or interact with Company's products, including but not limited to
back-up and archived data. Except as would not reasonably be expected to have a
Material Adverse Effect on Company, all of Company's Information Technology (as
defined below) is Year 2000 Compliant, and will not cause an interruption in the
ongoing
-23-
<PAGE>
operations of Company's business on or after January 1, 2000. For purposes of
the foregoing, the term "Information Technology" shall mean and include all
software, hardware, firmware, telecommunications systems, network systems,
embedded systems and other systems, components and/or services that are owned or
used by Company in the conduct of its business, or purchased by Company from
third party suppliers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBS
Parent and Merger Subs jointly and severally represent and warrant to
Company, subject to such exceptions as are specifically disclosed in writing in
the disclosure letter (referencing the appropriate section and paragraph number)
delivered by Parent and Merger Subs to Company on or prior to the date of this
Agreement and certified by a duly authorized officer of Parent and Merger Subs
(the "Parent Disclosure Letter"), as follows:
3.1 Organization and Qualification; Subsidiaries. Each of Parent and
its subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. Each of
Parent and its subsidiaries is in possession of all Approvals necessary to own,
lease and operate the properties it purports to own, operate or lease and to
carry on its business as it is now being conducted, except where the failure to
have such Approvals would not, individually or in the aggregate, have a Material
Adverse Effect on Parent. Each of Parent and its subsidiaries is duly qualified
or licensed as a foreign corporation 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 necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not, either individually or in the
aggregate, have a Material Adverse Effect on Parent.
3.2 Articles and Certificates of Incorporation and Bylaws. Parent has
previously furnished to Company a complete and correct copy of its Articles of
Incorporation and Bylaws as amended to date and each of Merger Subs has
previously furnished to Company a complete and correct copy of its Certificate
of Incorporation and Bylaws as amended to date. Such Articles of Incorporation
and Bylaws are in full force and effect. Neither Parent nor any of its
subsidiaries is in violation of any of the provisions of its Articles of
Incorporation or Bylaws or equivalent organizational documents.
3.3 Capitalization. The authorized capital stock of Parent consists of
(i) 15,000,000 shares of Parent Common Stock , no par value, and of (ii)
5,000,000 shares of Preferred Stock, no par value per share ("Parent Preferred
Stock"), 25,000 of which have been designated as Series A Participating
Preferred Stock. At the close of business on November 30, 1998, (i) 10,565,332
shares of Parent Common Stock were issued and outstanding, (ii) no shares of
Parent Common Stock were held in treasury by Parent or by subsidiaries of
Parent, (iii) 354,098 shares of Parent Common Stock were reserved for future
issuance pursuant to Parent's employee stock purchase plan, (iv) 2,251,929
shares of
-24-
<PAGE>
Parent Common Stock were reserved for issuance upon the exercise of outstanding
options ("Parent Options") to purchase Parent Common Stock and (v) 576,553
shares of Parent Common Stock were available for future grant under Parent's
stock option plans. As of the date hereof, no shares of Parent Preferred Stock
were issued or outstanding. The Parent Common Stock has certain associated
rights issued pursuant to a Preferred Shares Rights Agreement between Parent and
ChaseMellon Shareholder Services, L.L.C., dated December 12, 1996, as amended,
which rights will not become detached from the Parent Common Stock or
exercisable or otherwise be affected by the Merger, this Agreement or the other
transactions contemplated by this Agreement. The authorized capital stock of
each Level One Merger Sub and Merger Sub consists of 1,000 shares of common
stock, par value $0.001 per share, all of which, as of the date hereof, are
issued and outstanding. All of the outstanding shares of Parent's and Merger
Subs' respective capital stock have been duly authorized and validly issued and
are fully paid and nonassessable. All shares of Parent Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, shall, and the shares of
Parent Common Stock to be issued pursuant to the Merger will be, duly
authorized, validly issued, fully paid and nonassessable. All of the outstanding
shares of capital stock (other than directors' qualifying shares) of each of
Parent's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and all such shares (other than directors' qualifying shares) are
owned by Parent or another of Parent's subsidiary free and clear of all security
interests, liens, claims, pledges, agreements, limitations in Parent's voting
rights, charges or other encumbrances of any nature whatsoever. Except as set
forth above, there are no other options, warrants or other rights to purchase
any of the Parent's authorized and unissued capital stock.
3.4 Authority Relative to this Agreement. Each of Parent and Merger
Subs has all necessary corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Merger Subs and the consummation by Parent and Merger Subs of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Parent and Merger Subs and no other
corporate proceedings on the part of Parent or Merger Subs are necessary to
authorize this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Parent and Merger
Subs and, assuming the due authorization, execution and delivery by Company,
constitutes a legal and binding obligation of Parent and Merger Subs,
enforceable against Parent and Merger Subs in accordance with its terms.
3.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and
Merger Subs do not, and the performance of this Agreement by Parent and Merger
Subs will not, (i) conflict with or violate the Articles of Incorporation,
Bylaws or equivalent organizational documents of Parent or any of its
subsidiaries, (ii) subject to compliance with the requirements set forth in
Section 3.5(b) below, conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or any of its subsidiaries or by which
Parent or any of its subsidiaries or any of their respective properties are
bound or affected, or (iii) result in any breach of or constitute a default (or
an event that with notice or lapse of
-25-
<PAGE>
time or both would become a default) under, or impair Parent's or any such
subsidiary'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 Parent 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 Parent or any of
its subsidiaries is a party or by which Parent or any of its subsidiaries or its
or any of their respective properties are bound or affected, except in the case
of clauses (ii) and (iii) above as would not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect on Parent.
(b) The execution and delivery of this Agreement by Parent and
Merger Subs do not, and the performance of this Agreement by Parent and Merger
Subs will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity except (A) for
applicable requirements, if any, of the Securities Act, the Exchange Act, Blue
Sky Laws, the pre-merger notification requirements of the HSR Act and of foreign
Governmental Entities and the rules and regulations thereunder, the rules and
regulations of Nasdaq, and the filing and recordation of the Certificate or
Merger as required by Delaware Law and (B) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, (i) would not prevent consummation of the Merger or otherwise
prevent Parent or Merger Subs from performing their respective obligations under
this Agreement or (ii) could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Parent.
3.6 SEC Filings; Parent Financial Statements.
(a) Parent has made available to Company a correct and
complete copy of each material form, report, schedule, registration statement
and definitive proxy statement filed by Parent with the SEC on or after January
1, 1997 (the "Parent SEC Reports"), which are all the material forms, reports
and documents required to be filed by Parent with the SEC since January 1, 1997
and prior to the date of this Agreement. The Parent SEC Reports (A) were
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Parent SEC Reports, and (B) 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 light of the
circumstances under which they were made, not misleading. None of Parent's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each set of consolidated financial statements (including,
in each case, any related notes thereto) contained in the Parent SEC Reports,
including each Parent SEC Report filed after the date hereof until the Closing,
(i) complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, (ii) was prepared in accordance
with 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 under the
Exchange Act) and (iii) fairly presented the consolidated financial position of
Parent and its
-26-
<PAGE>
subsidiaries as of the respective dates thereof and the consolidated results of
Parent'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
contained in the Parent SEC Reports as of September 30, 1998 is hereinafter
referred to as the "Parent Balance Sheet."
(c) Parent has previously furnished to Company a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Parent with the SEC
pursuant to the Securities Act or the Exchange Act.
3.7 S-4; Proxy Statement. None of the information supplied or to be
supplied by Parent for inclusion or incorporation by reference in (i) the S-4
will, at the time the S-4 is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading; and (ii) the Proxy
Statement/Prospectus will, at the dates mailed to the stockholders of Company,
at the time of the Company Stockholders' Meeting and as of 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
therein, in light of the circumstances under which they are made, not
misleading. The S-4 will comply as to form in all material respects with the
provisions of the Securities Act and the rules and regulations promulgated by
the SEC thereunder. If at any time prior to the Effective Time any event
relating to Parent or any of its affiliates, officers or directors should be
discovered by Parent which is required to be set forth in an amendment to the
S-4 or a supplement to the Proxy Statement/Prospectus, Parent shall promptly
inform Company. Notwithstanding the foregoing, Parent makes no representation or
warranty with respect to any information supplied by Company which is contained
in any of the foregoing documents.
3.8 Board Approval. The Board of Directors of Parent has, as of the
date hereof, (i) approved this Agreement and the transactions contemplated
hereby and (ii) determined that the Merger is in the best interests of the
stockholders of Parent and is on terms that are fair to such stockholders.
3.9 Interim Operations of Merger Subs. Merger Subs were formed solely
for the purpose of engaging in the transactions contemplated hereby, have
engaged in no other business activities and have conducted their respective
operations only as contemplated hereby.
3.10 No Ownership of Company Common Stock. As of the date hereof,
Parent does not own, beneficially or of record, any shares of Company Common
Stock.
3.11 No Undisclosed Liabilities. As of the date hereof, neither Parent
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
-27-
<PAGE>
GAAP which are, individually or in the aggregate, material to the business,
results of operations or financial condition of Company and its subsidiaries
taken as a whole, except (i) liabilities provided for in Parent Balance Sheet,
(ii) liabilities incurred since September 30, 1998 in the ordinary course of
business consistent with past practices or (iii) banking, accounting, legal and
printing fees and expenses associated with the Merger.
3.12 Absence of Certain Changes or Events. Since September 30, 1998,
there has not been any Material Adverse Effect on Parent.
3.13 Absence of Litigation. As of the date hereof, there are no
material claims, actions, suits or proceedings pending or, to the knowledge of
Parent, threatened against Parent or any of its subsidiaries or any properties
or rights of Parent or any of its subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by 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 or the Effective Time, Company and each of its
subsidiaries shall, except to the extent that Parent shall otherwise consent in
writing, carry on its business, in all material respects, in the usual, regular
and ordinary course, in substantially the same manner as heretofore conducted
and in compliance with all applicable laws and regulations, pay its debts and
taxes when due subject to good faith disputes over such debts or taxes, pay or
perform other material obligations when due, and use its commercially reasonable
efforts consistent with past practices and policies to (i) preserve intact its
present business organization, (ii) keep available the services of its present
officers and employees and (iii) preserve its relationships with customers,
suppliers, distributors, licensors, licensees, and others with which it has
business dealings. In addition, unless otherwise required by law or contract,
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, and
except as provided in Section 4.1 of the Company Disclosure Letter, without the
prior written consent of Parent, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Company shall not do any of the
following and shall not permit its subsidiaries to do any of the following:
(a) 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, director or other stock plans or
authorize cash payments in exchange for any options granted under any of such
plans, except for completion of the option repricing program authorized by the
Board of Directors of Company prior to the date hereof;
-28-
<PAGE>
(b) Grant any severance or termination pay to any officer or
employee except pursuant to written agreements outstanding, or policies
existing, on the date hereof and as previously disclosed in writing or made
available to Parent, or adopt any new severance plan;
(c) Transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to the Company
Intellectual Property, or enter into grants to transfer or license to any person
future patent rights, other than non-exclusive licenses in the ordinary course
of business and consistent with past practice;
(d) Declare, set aside or pay any dividends on or make any
other distributions (whether in cash, stock, equity securities 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;
(e) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Company or its subsidiaries, except
repurchases of unvested shares at cost in connection with the termination of the
service relationship with any employee or consultant pursuant to stock option or
purchase agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise
encumber or propose any of the foregoing 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 (x) the issuance, delivery and/or sale of (i)
shares of Company Common Stock pursuant to the exercise of stock options or
warrants therefor outstanding as of the date of this Agreement, and (ii) shares
of Company Common Stock issuable to participants in the ESPP consistent with the
terms thereof and (y) the granting of stock options (and the issuance of Common
Stock upon exercise thereof), in the ordinary course and consistent with past
practices, in an amount not to exceed options to purchase (and the issuance of
Common Stock upon exercise thereof) 50,000 shares in the aggregate;
(g) Cause, permit or propose any amendments to its Certificate
of Incorporation, Bylaws or other charter documents (or similar governing
instruments of any of its subsidiaries);
(h) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any equity interest in or a portion of the assets of, or
by any other manner, any business or any corporation, partnership, 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 Company or enter into any material joint ventures,
strategic partnerships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of Company, except sales or licenses of product or inventory in the
ordinary course of business consistent with past practice;
-29-
<PAGE>
(j) Incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
Company, enter into any "keep well" or other agreement to maintain any financial
statement condition or enter into any arrangement having the economic effect of
any of the foregoing other than (i) in connection with the financing of ordinary
course trade payables consistent with past practice or (ii) pursuant to existing
credit facilities in the ordinary course of business;
(k) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan, or enter into any employment contract or
collective bargaining agreement (other than offer letters and letter agreements
entered into in the ordinary course of business consistent with past practice
with employees who are terminable "at will,"), pay any special bonus or special
remuneration to any director or employee, or increase the salaries or wage rates
or fringe benefits (including rights to severance or indemnification) of its
directors, officers, employees or consultants other than in the ordinary course
of business, consistent with past practice, or change in any material respect
any management policies or procedures;
(l) Make any individual or series of related payments outside
of the ordinary course of business in excess of $100,000;
(m) except in the ordinary course of business, modify, amend
or terminate any material contract or agreement to which Company or any
subsidiary thereof is a party or waive, release or assign any material rights or
claims thereunder;
(n) enter into any contracts, agreements or obligations
relating to the distribution, sale, license or marketing by third parties of
Company's products or products licensed by Company other than non-exclusive
contracts, agreements or obligations entered into in the ordinary course of
business consistent with past practice;
(o) materially revalue any of its assets or, except as
required by GAAP, make any change in accounting methods, principles or
practices;
(p) Subject to Section 5.2(c) and Section 5.4, engage in any
action with the intent to directly or indirectly adversely impact any of the
transactions contemplated by this Agreement; or
(q) Agree in writing or otherwise to take any of the actions
described in Section 4.1 (a) through (p) above.
4.2 Conduct of Business by Parent. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, except as permitted by
the terms of this Agreement and except as provided in Section 4.2 of the Parent
Disclosure Letter, without the prior written consent of 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 or the Effective Time,
Parent shall not do any of the following:
-30-
<PAGE>
(a) Declare, set aside or pay any dividends on or make any
other distributions (whether in cash, stock, equity securities 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;
(b) Engage in any action with the intent to directly or
indirectly adversely impact any of the transactions contemplated by this
Agreement;
(c) Except as contemplated by this Agreement (including
Section 5.16 hereof), make, effect, initiate, cause or participate in (i) any
acquisition of beneficial ownership of any securities of Company or any of its
subsidiaries, (ii) any acquisition of any assets of Company or any of its
subsidiaries, (iii) any tender offer, exchange offer, merger, business
combination, recapitalization, restructuring, liquidation, dissolution or other
extraordinary transaction involving Company or any of its securities, assets or
subsidiaries, or (iv) any "solicitation" of "proxies" (as those terms are used
in the proxy rules of the SEC) with respect to any securities of Company; or
(d) Agree in writing or otherwise to take any of the actions
described in Section 4.2 (a) through 4.2 (c) above.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; S-4; Other Filings. As promptly as
practicable after the execution of this Agreement, Company and Parent will
prepare and file with the SEC the Proxy Statement/Prospectus and Parent will
prepare and file with the SEC the S-4 in which the Proxy Statement/Prospectus
will be included as a prospectus. Each of Company and Parent will respond to any
comments of the SEC, will use its respective commercially reasonable efforts to
have the S-4 declared effective under the Securities Act as promptly as
practicable after such filing and Company will cause the Proxy
Statement/Prospectus to be mailed to its stockholders at the earliest
practicable time after the S-4 is declared effective by the SEC. As promptly as
practicable after the date of this Agreement, each of Company and Parent will
prepare and file any other filings required to be filed by it under the Exchange
Act, the Securities Act or any other Federal, foreign or Blue Sky or related
laws relating to the Merger and the transactions contemplated by this Agreement
(the "Other Filings"). Each of Company and Parent will notify the other promptly
upon the receipt of any comments from the SEC or its staff or any other
government officials and of any request by the SEC or its staff or any other
government officials for amendments or supplements to the S-4, the Proxy
Statement/Prospectus or any Other Filing or for additional information and will
supply the other with copies of all correspondence between such party or any of
its representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the S-4, the Proxy
Statement/Prospectus, the Merger or any Other Filing. Each of Company and Parent
will cause all documents that it is responsible for filing with the SEC or other
regulatory authorities under this Section 5.1 to comply in all material respects
with all applicable requirements of law and the rules and regulations
promulgated thereunder. Whenever any event occurs
-31-
<PAGE>
which is required to be set forth in an amendment or supplement to the Proxy
Statement/Prospectus, the S-4 or any Other Filing, Company or Parent, as the
case may be, will promptly inform the other of such occurrence and cooperate in
filing with the SEC or its staff or any other government officials, and/or
mailing to stockholders of Company, such amendment or supplement.
5.2 Meeting of Company Stockholders.
(a) Promptly after the date hereof, Company will take all
action necessary in accordance with Delaware Law and its Certificate of
Incorporation and Bylaws to convene the Company Stockholders' Meeting to be held
as promptly as practicable, and in any event (to the extent permissible under
applicable law and Company's Certificate of Incorporation and Bylaws) within 45
days after the declaration of effectiveness of the S-4, for the purpose of
voting upon this Agreement and the Merger. Subject to Section 5.2(c), Company
will use its commercially reasonable efforts to solicit from its stockholders
proxies in favor of the adoption and approval of this Agreement and the approval
of the Merger and will take all other action necessary or advisable to secure
the vote or consent of its stockholders required by the rules of Nasdaq or
Delaware Law to obtain such approvals ("Company Stockholder Vote").
Notwithstanding the anything to the contrary contained in this Agreement,
Company may adjourn or postpone the Company Stockholders' Meeting to the extent
necessary to ensure that any necessary supplement or amendment to the
Prospectus/Proxy Statement is provided to Company's stockholders in advance of a
vote on the Merger and this Agreement or, if as of the time for which Company
Stockholders' Meeting is originally scheduled (as set forth in the
Prospectus/Proxy Statement) there are insufficient shares of Company Common
Stock represented (either in person or by proxy) to constitute a quorum
necessary to conduct the business of the Company's Stockholders' Meeting.
Company shall ensure that the Company Stockholders' Meeting is called, noticed,
convened, held and conducted, and subject to Section 5.2(c) that all proxies
solicited by Company in connection with the Company Stockholders' Meeting are
solicited, in compliance with Delaware Law, its Certificate of Incorporation and
Bylaws, the rules of Nasdaq and all other applicable legal requirements.
Company's obligation to call, give notice of, convene and hold the Company
Stockholders' Meeting in accordance with this Section 5.2(a) shall not be
limited to or otherwise affected by the commencement, disclosure, announcement
or submission to Company of any Acquisition Proposal, or by any withdrawal,
amendment or modification of the recommendation of the Board of Directors of
Company with respect to the Merger.
(b) Subject to Section 5.2(c): (i) the Board of Directors of
Company shall unanimously recommend that Company's stockholders vote in favor of
and adopt and approve this Agreement and the Merger at the Company Stockholders'
Meeting; (ii) the Prospectus/Proxy Statement shall include a statement to the
effect that the Board of Directors of Company has unanimously recommended that
Company's stockholders vote in favor of and adopt and approve this Agreement and
the Merger at the Company Stockholders' Meeting; and (iii) neither the Board of
Directors of Company nor any committee thereof shall withdraw, amend or modify,
or propose or resolve to withdraw, amend or modify in a manner adverse to
Parent, the unanimous recommendation of the Board of Directors of Company that
Company's stockholders vote in favor of and adopt and approve this Agreement and
the Merger. For
-32-
<PAGE>
purposes of this Agreement, said recommendation of the Board of Directors shall
be deemed to have been modified in a manner adverse to Parent if said
recommendation shall no longer be unanimous.
(c) Nothing in this Agreement shall prevent the Board of
Directors of Company from withholding, withdrawing, amending or modifying its
unanimous recommendation in favor of the Merger, ceasing to solicit from its
stockholders proxies in favor of the adoption and approval of this Agreement and
the approval of the Merger, or from endorsing or recommending to its
stockholders a Superior Offer (as defined below) if (i) a Superior Offer is made
to Company and is not withdrawn, (ii) neither Company nor any of its
representatives shall have violated any of the restrictions set forth in Section
5.4 with respect to such Superior Offer or the party making such offer (or any
affiliate or associate of such party), and (iii) the Board of Directors of
Company or any committee thereof concludes in good faith, after consultation
with its outside counsel, that, in light of such Superior Offer, the
withholding, withdrawal, amendment or modification of such recommendation, the
ceasing to solicit from its stockholders proxies in favor of the adoption and
approval of this Agreement and the approval of the Merger, and the endorsement
or recommendation of such Superior Offer, is required in order for the Board of
Directors of Company or any committee thereof to comply with its fiduciary
obligations to Company's stockholders under applicable law; provided, that the
Board of Directors of Company may withhold, withdraw, amend or modify its
recommendation in favor of the Merger or cease to solicit from its stockholders
proxies in favor of adoption and approval of this Agreement and the approval of
the Merger if failure to do so would violate applicable Delaware law. Subject to
applicable laws, nothing contained in this Section 5.2 shall limit Company's
obligation to hold and convene the Company Stockholders' Meeting (regardless of
whether the unanimous recommendation of the Board of Directors of Company shall
have been withdrawn, amended or modified). For purposes of this Agreement
"Superior Offer" shall mean an unsolicited, bona fide written offer made by a
third party to consummate any of the following transactions: (i) a merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving Company pursuant to which the stockholders of
Company immediately preceding such transaction hold less than 50% of the equity
interest in the surviving or resulting entity of such transaction; (ii) a sale
or other disposition by Company of assets (excluding inventory and used
equipment sold in the ordinary course of business) representing in excess of 50%
of the fair market value of Company's business immediately prior to such sale,
or (iii) the acquisition by any person or group (including by way of a tender
offer or an exchange offer or issuance by Company), directly or indirectly, of
beneficial ownership or a right to acquire beneficial ownership of shares
representing in excess of 50% of the voting power of the then outstanding shares
of capital stock of Company, on terms that the Board of Directors of Company
determines, in its reasonable judgment, after consultation with its financial
advisor, to be more favorable to Company stockholders than the terms of the
Merger; provided, however, that any such offer shall not be deemed to be a
"Superior Offer" if any financing required to consummate the transaction
contemplated by such offer is not committed or is not likely in the judgment of
Company's Board of Directors to be obtained by such third party on a timely
basis.
-33-
<PAGE>
5.3 Confidentiality; Access to Information.
(a) The parties acknowledge that Company and Parent have
previously executed a Confidentiality Agreement, dated as of June 9, 1998 (the
"Confidentiality Agreement"), which Confidentiality Agreement will continue in
full force and effect in accordance with its terms.
(b) Access to Information. Company will afford Parent and its
accountants, counsel and other representatives reasonable access during normal
business hours to the properties, books, records and personnel of Company during
the period prior to the Effective Time to obtain all information concerning the
business, including the status of product development efforts, properties,
results of operations and personnel of Company, as Parent may reasonably
request. No information or knowledge obtained by Parent in any investigation
pursuant to this Section 5.3 will affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Merger.
5.4 No Solicitation.
(a) From and after the date of this Agreement until the
Effective Time or termination of this Agreement pursuant to Article VII, Company
and its subsidiaries will not, nor will they authorize or permit any of their
respective officers, directors, affiliates or employees or any investment
banker, attorney or other advisor or representative retained by any of them to,
directly or indirectly, (i) solicit, initiate, encourage or induce the making,
submission or announcement of any Acquisition Proposal (as hereinafter defined),
(ii) participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes or may
reasonably be expected to lead to, any Acquisition Proposal, (iii) subject to
Section 5.2(c), approve, endorse or recommend any Acquisition Proposal or (iv)
enter into any letter of intent or similar document or any contract, agreement
or commitment contemplating or otherwise relating to any Acquisition
Transaction; provided, however, that prior to the approval of this Agreement by
the required Company Stockholder Vote, this Agreement shall not prohibit Company
from (A) furnishing nonpublic information regarding Company and its subsidiaries
to, entering into a confidentiality agreement with or entering into discussions
or negotiations with, any person or group in response to a Superior Offer
submitted by such person or group (and not withdrawn) if (1) neither Company nor
any representative of Company and its subsidiaries shall have violated any of
the restrictions set forth in this Section 5.4 with respect to such person or
group making such Superior Offer (or any affiliate or associate of such person
or group), (2) the Board of Directors of Company concludes in good faith, after
consultation with its outside legal counsel, that such action is required in
order for the Board of Directors of Company to comply with its fiduciary
obligations to Company's stockholders under applicable law, (3) prior to
furnishing any such nonpublic information to, or entering into discussions or
negotiations with, such person or group, Company gives Parent written notice of
the identity of such person or group and of Company's intention to furnish
nonpublic information to, or enter into discussions or negotiations with, such
person or group and Company receives from such person or group an executed
confidentiality agreement containing customary limitations on the use and
disclosure of all nonpublic written and oral information furnished to such
person or group by or on behalf of Company, and
-34-
<PAGE>
(4) contemporaneously with furnishing any such nonpublic information to such
person or group, Company furnishes such nonpublic information to Parent (to the
extent such nonpublic information has not been previously furnished by Company
to Parent) or (B) complying with Rules 14d- 9 and 14e-2 promulgated under the
Exchange Act or other applicable law with regard to an Acquisition Proposal.
Company and its subsidiaries will immediately cease any and all existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any Acquisition Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding two
sentences by any officer or director of Company or any of its subsidiaries or
any investment banker, attorney or other advisor or representative (excluding
non-officer employees) of Company or any of its subsidiaries shall be deemed to
be a breach of this Section 5.4 by Company. In addition to the foregoing,
Company shall provide Parent with at least 24 hours prior notice (or such lesser
prior notice as provided to the members of Company's Board of Directors but in
no event less than eight hours) of any meeting of Company's Board of Directors
at which Company's Board of Directors is reasonably expected to consider a
Superior Offer.
For purposes of this Agreement, "Acquisition Proposal" shall mean any
inquiry, offer or proposal (other than an inquiry, offer or proposal by Parent)
relating to any Acquisition Transaction. For the purposes of this Agreement,
"Acquisition Transaction" shall mean any transaction or series of related
transactions other than the transactions contemplated by this Agreement
involving: (A) any acquisition or purchase from Company by any person or "group"
(as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) of more than a 15% interest in the total outstanding
voting securities of Company or any of its subsidiaries or any tender offer or
exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 15% or more of the total outstanding voting
securities of Company or any of its subsidiaries or any merger, consolidation,
business combination or similar transaction involving Company pursuant to which
the stockholders of Company immediately preceding such transaction hold less
than 85% of the equity interests in the surviving or resulting entity of such
transaction; (B) any sale, lease (other than in the ordinary course of
business), exchange, transfer, license (other than in the ordinary course of
business), acquisition or disposition of more than 50% of the assets of Company;
or (C) any liquidation or dissolution of Company.
(b) In addition to the obligations of Company set forth in
paragraph (a) of this Section 5.4, Company as promptly as practicable shall
advise Parent orally and in writing of any request for non-public information
which Company reasonably believes would lead to an Acquisition Proposal or of
any Acquisition Proposal, or any inquiry with respect to or which Company
reasonably should believe would lead to any Acquisition Proposal, the material
terms and conditions of such request, Acquisition Proposal or inquiry, and the
identity of the person or group making any such request, Acquisition Proposal or
inquiry. Company will keep Parent informed in all material respects of the
status and details (including material amendments or proposed amendments) of any
such request, Acquisition Proposal or inquiry.
-35-
<PAGE>
5.5 Public Disclosure. Parent and Company will consult with each other,
and to the extent practicable, agree, before issuing any press release or
otherwise making any public statement with respect to the Merger, this Agreement
or an Acquisition Proposal and will not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
law or any listing agreement with a national securities exchange or Nasdaq. The
parties have agreed to the text of the joint press release announcing the
signing of this Agreement.
5.6 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including using reasonable efforts to accomplish the following: (i)
the taking of all reasonable acts necessary to cause the conditions precedent
set forth in Article VI to be satisfied, (ii) the obtaining of all necessary
actions or nonactions, waivers, consents, approvals, orders and authorizations
from Governmental Entities and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity, (iii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iv) the defending of any suits, claims, actions,
investigations or proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the transactions contemplated hereby,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed and (v) the execution or
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing, Company and its Board of
Directors shall, if any state takeover statute or similar statute or regulation
is or becomes applicable to the Merger, this Agreement or any of the
transactions contemplated by this Agreement, use all reasonable efforts to
ensure that the Merger and the other transactions contemplated by this Agreement
may be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Merger, this Agreement and the transactions contemplated hereby.
Notwithstanding anything herein to the contrary, nothing in this Agreement shall
be deemed to require Parent or Company or any subsidiary or affiliate thereof to
agree to any divestiture by itself or any of its affiliates of shares of capital
stock or of any business, assets or property, or the imposition of any material
limitation on the ability of any of them to conduct their businesses or to own
or exercise control of such assets, properties and stock.
(b) Company shall give prompt notice to Parent of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate in any material respect, or any failure of Company to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement, in each
case, such that the conditions set forth in Section 6.3(a) or 6.3(b) could not
be satisfied, provided, however, that no such
-36-
<PAGE>
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
(c) Parent shall give prompt notice to Company of any
representation or warranty made by it or Merger Subs contained in this Agreement
becoming untrue or inaccurate in any material respect, or any failure of Parent
or Merger Subs to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement, in each case, such that the conditions set forth in Section 6.2(a) or
6.2(b) could not be satisfied, provided, however, that no such notification
shall affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
5.7 Third Party Consents. As soon as practicable following the date
hereof, Parent and Company will each use all reasonable efforts to obtain any
consents, waivers and approvals under any of its or its subsidiaries' respective
agreements, contracts, licenses or leases required to be obtained in connection
with the consummation of the transactions contemplated hereby or necessary to
enable the surviving corporation to conduct and operate the business of Company
and its subsidiaries substantially as presently conducted and as contemplated to
be conducted.
5.8 Stock Options and ESPP.
(a) At the Effective Time, Parent, as sole stockholder of
Company, shall execute a stockholder's consent approving all amendments made by
Company's Board of Directors to the 1988 Option Plan and options granted
thereunder to Company's directors and to Mr. Louis J. Doctor and Mr. R. John
Curson, if any such stock options are then outstanding. At the Effective Time,
each outstanding option to purchase shares of Company Common Stock under
Company's Directors' Plan and 1997 Option Plan, whether or not exercisable and
whether or not vested, shall by virtue of the Merger and without any further
action on the part of Company or the holder thereof, be assumed by Parent, and
immediately after Parent's execution of the stockholder's consent, all options
under the 1988 Option Plan (together with the options under the Directors' Plan
and 1997 Option Plan each, a "Company Stock Option"), whether or not exercisable
and whether or not vested, shall by virtue of the execution of the stockholder's
consent by Parent, and without any further action on the part of the Company or
the holder thereof, be assumed by Parent, in such manner (with respect to all
such option assumptions) that Parent (i) is "assuming a stock option in a
transaction to which Section 424(a) applied" within the meaning of Section 424
of the Code, or (ii) to the extent that Section 424 of the Code does not apply
to any such Company Stock Options, would be a transaction within Section 424 of
the Code. Each Company Stock Option so assumed by Parent under this Agreement
will continue to have, and be subject to, the same terms and conditions set
forth in the applicable Company Stock Option Plan immediately prior to the
Effective Time (including, without limitation, any repurchase rights or vesting
provisions), except that (1) each Company Stock Option will be exercisable (or
will become exercisable in accordance with its terms) for the number of whole
shares of Parent Common Stock equal to the product of the number of shares of
Company Common Stock that were issuable upon exercise of such Company Stock
Option immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounded down to the nearest whole number of shares of Parent Common Stock, (2)
the per share exercise price for the shares of Parent Common Stock
-37-
<PAGE>
issuable upon exercise of such assumed Company Stock Option will be equal to the
quotient determined by dividing the exercise price per share of Company Common
Stock at which such Company Stock Option was exercisable immediately prior to
the Effective Time by the Exchange Ratio, rounded up to the nearest whole cent,
and (3) except as necessary to give effect to amendments made to the 1988 Option
Plan prior to the Effective Time, but approved by Company's stockholders at the
Effective Time. In addition, each Restricted Stock Purchase Agreement between
Company or an Affiliate and an employee of such entity shall be assumed by
Parent, and the number of shares subject to such Restricted Stock Purchase
Agreement will be adjusted as described above.
(b) It is intended that Company Stock Options assumed by
Parent shall qualify following the Effective Time as incentive stock options as
defined in Section 422 of the Code to the extent such Company Stock Options
qualified as incentive stock options immediately prior to the Effective Time and
the provisions of this Section 5.8 shall be applied consistent with such intent.
(c) Company shall take actions as are necessary to cause the
"Purchase Date" (as such term is used in the ESPP) applicable to the then
current Offering (as such term is used in the ESPP) to be the last trading day
on which the Company Common Stock is traded on Nasdaq immediately prior to the
Effective Time (the "Final Company Purchase Date"); provided, that such change
in the Purchase Date shall be conditioned upon the consummation of the Merger.
On the Final Company Purchase Date, Company shall apply the funds credited as of
such date under the ESPP within each participant's payroll withholdings account
to the purchase of whole shares of Company Common Stock in accordance with the
terms of the ESPP. Any such shares purchased under the ESPP shall be
automatically converted on the same basis as all other shares of Company Common
Stock (other than shares canceled pursuant to Section 1.6 (b), except that such
shares shall be converted automatically into shares of Parent Common Stock
without the issuance of certificates representing issued and outstanding shares
of Company Common Stock to ESPP participants.
(d) Notwithstanding anything to the contrary contained herein,
Company shall not incur any obligations under the 1990 ESPP after February 1,
1999.
5.9 Form S-8. Parent agrees to file a registration statement on Form
S-8 for the shares of Parent Common Stock issuable with respect to assumed
Company Stock Options and Doctor Warrant within five (5) business days of the
Effective Time and to maintain the effectiveness of such registration statement
thereafter for so long as any of such options or other rights remain
outstanding.
5.10 Indemnification.
(a) From and after the Effective Time, Parent will cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
Company pursuant to any indemnification agreements between Company and its
present and former directors and officers in effect immediately prior to the
Effective Time (the "Indemnified Parties") and any indemnification provisions
under Company's Certificate of Incorporation or Bylaws as in effect on the date
hereof. The Certificate of Incorporation and Bylaws of the Surviving Corporation
will contain provisions with respect to exculpation and
-38-
<PAGE>
indemnification that are at least as favorable to the Indemnified Parties as
those contained in the Certificate of Incorporation and Bylaws of Company as in
effect on the date hereof, which provisions will not be amended, repealed or
otherwise modified for a period of six 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 Company, unless such modification is required by law.
(b) For a period of six years after the Effective Time, Parent
will cause the Surviving Corporation to use all commercially reasonable efforts
to maintain in effect, if available, directors' and officers' liability
insurance covering those persons who are currently covered by Company's
directors' and officers' liability insurance policy on terms substantially
similar to those applicable to the current directors and officers of 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
Company for such coverage (or such coverage as is available for such 150% of
such annual premium).
(c) The provisions of this Section 5.10 are intended to be in
addition to the rights otherwise available to the Indemnified Parties by law,
charter, statute, bylaw, resolution of the Board of Directors of Company or
agreement, and shall operate for the benefit of, and shall be enforceable by,
each of the Indemnified Parties, their heirs and their representatives.
5.11 Nasdaq Listing. Parent agrees to authorize for listing on Nasdaq
the shares of Parent Common Stock issuable, and those required to be reserved
for issuance, in connection with the Merger, upon official notice of issuance.
5.12 Company Affiliate Agreement. Set forth in the Company Disclosure
Letter is a list of those persons who may be deemed to be, in Company's
reasonable judgment, affiliates of Company within the meaning of Rule 145
promulgated under the Securities Act (each a "Company Affiliate"). Company will
provide Parent with such information and documents as Parent reasonably requests
for purposes of reviewing and validating such list. Company will use its
commercially reasonable efforts to deliver or cause to be delivered to Parent,
as promptly as practicable on or following the date hereof, from each Company
Affiliate an executed affiliate agreement in substantially the form attached
hereto as Exhibit B (the "Company Affiliate Agreement"), each of which will be
in full force and effect as of the Effective Time. Parent will be entitled to
place appropriate legends on the certificates evidencing any Parent Common Stock
to be received by a Company Affiliate pursuant to the terms of this Agreement,
and to issue appropriate stop transfer instructions to the transfer agent for
the Parent Common Stock, consistent with the terms of the Company Affiliate
Agreement.
5.13 Regulatory Filings; Reasonable Efforts. As soon as may be
reasonably practicable, Company and Parent each shall file with the United
States Federal Trade Commission (the "FTC") and the Antitrust Division of the
United States Department of Justice ("DOJ") Notification and Report Forms
relating to the transactions contemplated herein as required by the HSR Act, as
well as comparable pre-merger notification forms required by the merger
notification or control laws and regulations of any applicable jurisdiction, as
agreed to by the parties. Company and Parent each shall promptly (a) supply
-39-
<PAGE>
the other with any information which may be required in order to effectuate such
filings and (b) supply any additional information which reasonably may be
required by the FTC, the DOJ or the competition or merger control authorities of
any other jurisdiction and which the parties may reasonably deem appropriate.
5.14 Noncompetition Agreements. Company will use all reasonable efforts
to ensure that Louis Doctor enters into a Noncompetition Agreement substantially
in the form attached hereto as Exhibit C.
5.15 Executive Employment Agreements. Pursuant to those certain
Employment Agreements between Company and Mr. Louis J. Doctor and between
Company and Mr. R. John Curson, both dated July 28, 1998 and effective August 4,
1998 (the "Executive Employment Agreements") and on the Closing Date, Company
shall provide written notice of termination of employment to Mr. Louis J. Doctor
and Mr. R. John Curson, that is not for Cause or Disability (as those terms are
defined in the Executive Employment Agreements), and that is effective on the
Closing Date. Commencing on the day after the last day of full-time employment
with Company of Mr. Louis J. Doctor and Mr. R. John Curson, respectively,
Company shall retain each as a part-time employee of Company, and shall make the
required payments of Base Compensation (as defined in the Executive Employment
Agreements) for the required period, continue vesting of options for the
required period, continue in effect for the required period one hundred percent
Company-paid coverage under Company's health insurance and group term life
insurance policies (including coverage of dependents already covered), and cause
the last day of such Company-paid health insurance coverage to be a "qualifying
event" under Section 4980B of the Code for purposes of commencing the
continuation health insurance coverage election period, all as provided under
the terms of the respective Executive Employment Agreements of Mr. Louis J.
Doctor and Mr. R. John Curson. At the Closing, Company or Parent shall also pay,
in cash (including by check), to Mr. Louis J. Doctor and to Mr. R. John Curson,
the respective amounts of bonus provided for under the applicable provisions of
the Executive Employment Agreements. Parent and Company shall take such
additional steps (after giving effect to Section 1.3) as may be necessary to
bind themselves under the Executive Employment Agreements.
5.16 Open Market Purchases by Level One Merger Sub. Between the date of
execution of this Agreement and the Effective Time, Level One Merger Sub will
purchase at least an aggregate of $10,000 but not more that $25,000 worth of
shares of Company Common Stock in the open market.
5.17 Company 401(k) Plan. At the request of Parent, Company shall take
all necessary corporate action to terminate, or cause its subsidiaries to
terminate, as the case may be, all 401(k) plans maintained by Company and any of
its subsidiaries.
5.18 Options and Doctor Warrant. In the event that holders of options
to purchase Company Common Stock or the Doctor Warrant are required to pay
federal income taxes as a result of the consummation of the Merger being treated
as a taxable transaction for federal income tax purposes, Parent shall indemnify
such holders for the amount of such tax; provided, however, that Parent shall
only be liable for the difference between the amount of the tax paid and the
amount of tax that would have been payable if the Merger had been a tax-free
reorganization within the meaning of Section 368 of the
-40-
<PAGE>
Code; and provided, further, that the indemnity contained in this section shall
only apply to the extent that such options and Doctor Warrant are unexercised as
of the Effective Time and are assumed by Parent as a result of and in connection
with the Merger
5.19 Scitex Voting Agreement. Company shall use best efforts to have
Scitex Corporation Ltd. enter into a Company Voting Agreement prior to the
mailing of the Proxy Statement/Prospectus.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) Company Stockholder Approval. This Agreement shall have
been approved and adopted, and the Merger shall have been duly approved, by the
requisite vote under applicable law, by the stockholders of Company.
(b) S-4 Effective; Proxy Statement. The SEC shall have
declared the S-4 effective. No stop order suspending the effectiveness of the
S-4 or any part thereof shall have been issued and no proceeding for that
purpose, and no similar proceeding in respect of the Proxy Statement/Prospectus,
shall have been initiated or threatened in writing by the SEC.
(c) No Order; HSR Act. No Governmental Entity shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger. All
waiting periods, if any, under the HSR Act relating to the transactions
contemplated hereby will have expired or terminated early and all material
foreign antitrust approvals required to be obtained prior to the Merger in
connection with the transactions contemplated hereby shall have been obtained.
(d) Nasdaq Listing. The shares of Parent Common Stock issuable
to stockholders of Company pursuant to this Agreement and such other shares
required to be reserved for issuance in connection with the Merger shall have
been authorized for listing on Nasdaq upon official notice of issuance.
6.2 Additional Conditions to Obligations of Company. The obligation of
Company to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Company:
-41-
<PAGE>
(a) Representations and Warranties. Each representation and
warranty of Parent and Merger Subs contained in this Agreement (i) shall have
been true and correct as of the date of this Agreement and (ii) shall be true
and correct on and as of the Closing Date with the same force and effect as if
made on the Closing Date except, (A) in each case, or in the aggregate, as does
not constitute a Material Adverse Effect on Parent and Merger Subs, (B) for
changes contemplated by this Agreement and (C) for those representations and
warranties which address matters only as of a particular date (which
representations shall have been true and correct except as does not constitute a
Material Adverse Effect on Parent and Merger Subs as of such particular date)
(it being understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all "Material Adverse Effect" qualifications
and other qualifications based on the word "material" or similar phrases
contained in such representations and warranties shall be disregarded and (ii)
any update of or modification to the Parent Disclosure Letter made or purported
to have been made after the date of this Agreement shall be disregarded).
Company shall have received a certificate with respect to the foregoing signed
on behalf of Parent by an authorized officer of Parent.
(b) Agreements and Covenants. Parent and Merger Subs shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by them on
or prior to the Closing Date, and Company shall have received a certificate to
such effect signed on behalf of Parent by an authorized officer of Parent.
(c) Material Adverse Effect. No Material Adverse Effect with
respect to Parent shall have occurred since the date of this Agreement.
6.3 Additional Conditions to the Obligations of Parent and Merger Subs.
The obligations of Parent and Merger Subs to consummate and effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of each of
the following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) Representations and Warranties. Each representation and
warranty of Company contained in this Agreement (i) shall have been true and
correct as of the date of this Agreement and (ii) shall be true and correct on
and as of the Closing Date with the same force and effect as if made on and as
of the Closing Date except (A) in each case, or in the aggregate, as does not
constitute a Material Adverse Effect on Company (B) for changes contemplated by
this Agreement and (C) for those representations and warranties which address
matters only as of a particular date (which representations shall have been true
and correct except as does not constitute a Material Adverse Effect on Company
as of such particular date) (it being understood that, for purposes of
determining the accuracy of such representations and warranties, (i) all
"Material Adverse Effect" qualifications and other qualifications based on the
word "material" or similar phrases contained in such representations and
warranties shall be disregarded and (ii) any update of or modification to the
Company Disclosure Letter made or purported to have been made after the date of
this Agreement shall be disregarded). Parent shall have received a certificate
with respect to the foregoing signed on behalf of Company by an authorized
officer of Company.
-42-
<PAGE>
(b) Agreements and Covenants. Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of Company by the Chief Executive Officer and the Chief Financial Officer
of Company.
(c) Material Adverse Effect. No Material Adverse Effect with
respect to Company and its subsidiaries shall have occurred since the date of
this Agreement.
(d) Affiliate Agreements. Each of the Company Affiliates shall
have entered into the Company Affiliate Agreement and each of such agreements
will be in full force and effect as of the Effective Time.
(e) Noncompetition Agreements. Louis Doctor shall have entered
into a Noncompetition Agreement substantially in the form attached hereto as
Exhibit C and such agreement shall be in full force and effect.
(f) Consents. Company shall have obtained all consents,
waivers and approvals contemplated by this Agreement or the Company Disclosure
Letter in connection with the material agreements, contracts, licenses or leases
of Company or its subsidiaries.
(g) Fee Limitation. Company and its subsidiaries shall not
have incurred in connection with the Merger or this Agreement expenses of more
than $850,000 for fees and expenses of any investment banker, broker or finder.
(h) Termination of Agreement. Company and Scitex Corporation
Ltd. shall have amended or terminated that certain Private Placement Agreement
between RasterOps and Scitex Corporation Ltd. dated as of June 7, 1993;
provided, that any amendment shall be reasonably satisfactory to Parent.
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 the requisite approval of the
stockholders of Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and Company;
(b) by either Company or Parent if the Merger shall not have
been consummated by May 31, 1999 for any reason; provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose action or failure to act has been a principal cause
-43-
<PAGE>
of or resulted in the failure of the Merger to occur on or before such date and
such action or failure to act constitutes a breach of this Agreement;
(c) by either Company or Parent if a Governmental Entity shall
have issued an order, decree or ruling or taken any other action, in any case
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger, which order, decree, ruling or other action is final and
nonappealable;
(d) by either Company or Parent if the required approval of
the stockholders of Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
Company stockholders duly convened therefor or at any adjournment thereof
(provided that the right to terminate this Agreement under this Section 7.1(d)
shall not be available to Company where the failure to obtain Company
stockholder approval shall have been caused by the action or failure to act of
Company and such action or failure to act constitutes a breach by Company of
this Agreement);
(e) by Parent if a Triggering Event (as defined below) shall
have occurred;
(f) by Parent (at any time prior to the adoption and approval
of this Agreement and the Merger by the required vote of the stockholders of
Company) if a Termination Event (as defined below) shall have occurred;
(g) by Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement, or if
any representation or warranty of Parent shall have become untrue, in either
case such that the conditions set forth in Section 6.2(a) or Section 6.2(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided that if such
inaccuracy in Parent's representations and warranties or breach by Parent is
curable by Parent through the exercise of its commercially reasonable efforts,
then Company may not terminate this Agreement under this Section 7.1(g) for
thirty days after delivery of written notice from Company to Parent of such
breach, provided Parent continues to exercise commercially reasonable efforts to
cure such breach (it being understood that Company may not terminate this
Agreement pursuant to this paragraph (g) if it shall have materially breached
this Agreement or if such breach by Parent is cured during such thirty day
period); or
(h) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of Company set forth in this Agreement, or if
any representation or warranty of Company shall have become untrue, in either
case such that the conditions set forth in Section 6.3(a) or Section 6.3(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided, that if such
inaccuracy in Company's representations and warranties or breach by Company is
curable by Company through the exercise of its commercially reasonable efforts,
then Parent may not terminate this Agreement under this Section 7.1(h) for
thirty days after delivery of written notice from Parent to Company of such
breach, provided Company continues to exercise commercially reasonable efforts
to cure such breach (it being understood that Parent may not
-44-
<PAGE>
terminate this Agreement pursuant to this paragraph (h) if it shall have
materially breached this Agreement or if such breach by Company is cured during
such thirty day period).
For the purposes of this Agreement, a "Termination Event" shall be
deemed to occur if Company shall not have used commercially reasonable efforts
to hold the Company Stockholders' Meeting as promptly as practicable and in any
event within sixty (60) days after the S-4 is declared effective under the
Securities Act.
For the purposes of this Agreement, a "Triggering Event" shall be
deemed to have occurred if: (i) the Board of Directors of Company or any
committee thereof shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Parent its unanimous recommendation in favor of,
the adoption and approval of the Agreement or the approval of the Merger; (ii)
Company shall have failed to include in the Proxy Statement/Prospectus the
unanimous recommendation of the Board of Directors of Company in favor of the
adoption and approval of the Agreement and the approval of the Merger; (iii)
Board of Directors of Company fails to reaffirm its unanimous recommendation in
favor of the adoption and approval of the Agreement and the approval of the
Merger within five (5) business days after Parent requests in writing that such
recommendation be reaffirmed; (iv) the Board of Directors of Company or any
committee thereof shall have approved or recommended any Acquisition Proposal;
(v) Company or any of its officers, directors, or employees or any investment
banker, attorney or other advisor or representative retained by any of them
shall participate in any discussions or negotiations in breach of Section 5.4;
(vi) Company shall have entered into any letter of intent or similar document or
any agreement, contract or commitment accepting any Acquisition Proposal; or
(vii) a tender or exchange offer relating to securities of Company shall have
been commenced by a Person unaffiliated with Parent and Company shall not have
sent to its security holders pursuant to Rule 14e-2 promulgated under the
Securities Act, within ten (10) business days after such tender or exchange
offer is first published sent or given, a statement disclosing that Company
recommends rejection of such tender or exchange offer.
7.2 Notice of Termination; Effect of Termination. Any termination of
this Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 7.2, Section 7.3 and Article 8, each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from liability for any willful breach of this Agreement. No termination of this
Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreement, all of which obligations shall survive termination of
this Agreement in accordance with their terms.
7.3 Fees and Expenses.
(a) General. Except as set forth in this Section 7.3, all fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated; provided, however, that Parent and Company
shall share equally all fees and expenses, other than attorneys' and accountants
fees and
-45-
<PAGE>
expenses, incurred in relation to the printing and filing (with the SEC) of the
Proxy Statement/Prospectus (including any preliminary materials related thereto)
and the S-4 (including financial statements and exhibits) and any amendments or
supplements thereto.
(b) Company Payments. Company shall pay Parent a cash
termination fee of $500,000 (the "Termination Fee") upon the earlier to occur of
the following events:
(i) the termination of this Agreement by Parent
pursuant to Section 7.1(e);
(ii) the termination of this Agreement by Parent
pursuant to Section 7.1(d) as a result of the failure to receive the requisite
vote for the approval of this Agreement and the Merger by the stockholders of
Company at the Company Stockholders Meeting if, at the time of such failure,
there shall have been announced or commenced an Acquisition Proposal or Company
shall have executed an agreement to engage in the same and the Company Board of
Directors shall not have affirmatively recommended against such Acquisition
Proposal or, if the Company Board of Directors has recommended against such
Acquisition Proposal, the Company Board of Directors shall have withdrawn such
recommendation against such Acquisition Proposal or modified such recommendation
in a manner adverse to Parent.
(c) The Termination Fee shall be paid no later than three
business days after the date of such termination. Company acknowledges that the
agreements contained in this Section 7.3(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Parent would not enter into this Agreement; accordingly, if Company fails
promptly to pay the amounts due pursuant to this Section 7.3(b) , and, in order
to obtain such payment, Parent commences a suit which results in a judgment
against Company for the amounts set forth in this Section 7.3(b), Company shall
pay to Parent its reasonable costs and expenses (including attorneys' fees and
expenses) in connection with such suit, together with interest on the amounts
set forth in this Section 7.3(b) at the prime rate of Wells Fargo Bank N.A. in
effect on the date such payment was required to be made.
(d) Payment of the fee described in Section 7.3(b) shall not
be in lieu of damages incurred in the event of breach of this Agreement.
7.4 Amendment. Subject to applicable law, this Agreement may be amended
by the parties hereto at any time by execution of an instrument in writing
signed on behalf of each of Parent and Company.
7.5 Extension; Waiver. At any time prior to the Effective Time any
party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. 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
-46-
<PAGE>
signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. The representations
and warranties of Company, Parent and Merger Subs contained in this Agreement
shall terminate at the Effective Time, and only the covenants that by their
terms survive the Effective Time shall survive the Effective Time.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to Parent or Merger Subs, to:
Pinnacle Systems, Inc.
280 North Bernardo Avenue
Mountain View, CA 94043
Attention: Chief Financial Officer
Telephone No.: (650) 237-1600
Telecopy No.: (650) 237-1601
with a copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Robert P. Latta, Esq./
Chris F. Fennell, Esq.
Telephone No.: (650) 493-9300
Telecopy No.: (650) 845-5000
(b) if to Company, to:
Truevision, Inc.
2500 Walsh Avenue
Santa Clara, CA 95051
Attention: Chief Financial Officer
Telephone No.: (408) 562-4200
Telecopy No.: (408) 562-4066
-47-
<PAGE>
with a copy to:
Cooley Godward LLP
975 Page Mill Road
Palo Alto, CA 94306-2155
Attention: Lee F. Benton, Esq./
Julia L. Davidson, Esq.
Telephone No.: (650) 843-5000
Telecopy No.: (650) 849-7400
8.3 Interpretation; Knowledge.
(a) When a reference is made in this Agreement to Exhibits,
such reference shall be to an Exhibit to this Agreement unless otherwise
indicated. When a reference is made in this Agreement to Sections, such
reference shall be to a Section of 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.
(b) For purposes of this Agreement the term "knowledge" means
with respect to a party hereto, with respect to any matter in question, that any
of the Chief Executive Officer, Chief Financial Officer, General Counsel or
Controller of such party, has actual knowledge of such matter.
(c) For purposes of this Agreement, the term "Material Adverse
Effect" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect that is materially adverse to the
business, assets (including intangible assets), capitalization, financial
condition, results of operations or prospects of such entity and its parent (if
applicable) or subsidiaries taken as a whole (provided, however, that none of
the following shall be deemed, in and of itself, to be a Material Adverse
Effect: (A) a change that results from conditions affecting the U.S. economy or
the world economy; (B) a change that results from conditions affecting the
digital video editing industry; and (C) a delay in customer orders directly
related to the announcement of the transactions contemplated by this Agreement).
(d) For purposes of this Agreement, the term "person" shall
mean any individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
8.4 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
-48-
<PAGE>
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.
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Disclosure Letter
and the Parent Disclosure Letter (a) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, it being understood that the
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as specifically provided in Section 5.10 and 5.15.
8.6 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
8.7 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 seek 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.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of 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.
-49-
<PAGE>
8.9 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.
8.10 Assignment. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
8.11 Waiver of Jury Trial. EACH OF PARENT, COMPANY AND MERGER SUBS
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY OR MERGER SUBS IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
*****
-50-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
PINNACLE SYSTEMS, INC.
By: /s/ MARK L. SANDERS
-----------------------------------------
Name: Mark L. Sanders
Title: President and Chief Executive Officer
BERNARDO MERGER CORPORATION
By: /s/ MARK L. SANDERS
-----------------------------------------
Name: Mark L. Sanders
Title: President and Chief Executive Officer
WALSH MERGER CORPORATION
By: /s/ MARK L. SANDERS
-----------------------------------------
Name: Mark L. Sanders
Title: President and Chief Executive Officer
TRUEVISION, INC.
By: /s/ LOUIS J. DOCTOR
-----------------------------------------
Name: Louis J. Doctor
Title: President and Chief Executive Officer
**** MERGER AGREEMENT ****
<PAGE>
EXHIBIT A
Persons Entering Into Voting Agreements
Directors
Walter W. Bregman
Louis J. Doctor
William H. McAleer
Kieth E. Sorenson
Conrad J. Wredberg
Executive Officers
R. John Curson
Other Affiliates
Scitex Corporation Ltd. (subject to Section 5.19)
<PAGE>
EXHIBIT A-1
Form of Voting Agreement
<PAGE>
EXHIBIT A-1
VOTING AGREEMENT
This Voting Agreement ("Agreement") is made and entered into as of
December 16, 1998 between Pinnacle Systems, Inc., a California corporation
("Parent"), and the undersigned stockholder ("Stockholder") of Truevision, Inc.,
a Delaware corporation (the "Company").
Recitals
A. Concurrently with the execution of this Agreement, Parent, the
Company, Bernardo Merger Corporation, a Delaware corporation and a wholly owned
subsidiary of Parent ("Level One Merger Sub") and Walsh Merger Corporation, a
Delaware corporation and a wholly owned subsidiary of Level One Merger Sub
("Merger Sub", and together with Level One Merger Sub, "Merger Subs") have
entered into an Agreement and Plan of Reorganization of even date herewith (the
"Merger Agreement") which provides for the merger (the "Merger") of Merger Sub
with and into the Company. Pursuant to the Merger, shares of Common Stock of the
Company will be converted into Common Stock of Parent in the manner set forth in
the Merger Agreement.
B. The Stockholder is the record holder and beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of such number of shares of the outstanding Common Stock of the
Company as is indicated on the final page of this Agreement (the "Shares").
C. Parent desires the Stockholder to agree, and the Stockholder is
willing to agree, not to transfer or otherwise dispose of any of the Shares, or
any other shares of capital stock of the Company acquired hereafter and prior to
the Expiration Date (as defined in Section 1.1 below, except as otherwise
permitted hereby), and to vote the Shares and any other such shares of capital
stock of the Company so as to facilitate consummation of the Merger.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, the parties agree as follows:
1. Agreement to Retain Shares.
1.1 Transfer and Encumbrance. Stockholder agrees not to
transfer (except as may be specifically required by court order), sell,
exchange, pledge or otherwise dispose of or encumber any of the Shares or any
New Shares as defined in Section 1.2 below, or to make any offer or agreement
relating thereto, at any time prior to the Expiration Date. As used herein, the
term "Expiration Date" shall mean the earlier to occur of (i) such date and time
as the Merger shall become effective in accordance with the terms and provisions
of the Merger Agreement and (ii) such date as the Merger Agreement shall be
terminated pursuant to Article VII thereof.
<PAGE>
1.2 Additional Purchases. Stockholder agrees that any shares
of capital stock of the Company that Stockholder purchases or with respect to
which Stockholder otherwise acquires beneficial ownership (as such term is
defined in Rule 13d-3 under the Exchange Act) after the execution of this
Agreement and prior to the Expiration Date ("New Shares") shall be subject to
the terms and conditions of this Agreement to the same extent as if they
constituted Shares.
2. Agreement to Vote Shares. At every meeting of the stockholders of
the Company called with respect to any of the following, and at every
adjournment thereof, and on every action or approval by written consent of the
Stockholders of the Company with respect to any of the following, Stockholder
shall vote the Shares and any New Shares: (i) in favor of approval of the Merger
Agreement and the Merger and any matter that could reasonably be expected to
facilitate the Merger; and (ii) against approval of any proposal made in
opposition to or competition with consummation of the Merger and against any
merger, consolidation, sale of assets, reorganization or recapitalization, with
any party other than with Parent and its affiliates and against any liquidation
or winding up of the Company (each of the foregoing is hereinafter referred to
as an "Opposing Proposal"). Stockholder agrees not to take any actions contrary
to Stockholder's obligations under this Agreement.
3. Irrevocable Proxy. Concurrently with the execution of this
Agreement, Stockholder agrees to deliver to Parent a proxy in the form attached
hereto as Exhibit A (the "Proxy"), which shall be irrevocable, with the total
number of shares of capital stock of the Company beneficially owned (as such
term is defined in Rule 13d-3 under the Exchange Act) by Stockholder set forth
therein.
4. Representations, Warranties and Covenants of the Stockholder.
Stockholder hereby represents, warrants and covenants to Parent as follows:
4.1 Ownership of Shares. Stockholder (i) is the beneficial
owner of the Shares, which at the date hereof and at all times up until the
Expiration Date will be free and clear of any liens, claims, options, charges or
other encumbrances; (ii) does not beneficially own any shares of capital stock
of the Company other than the Shares (excluding shares as to which Stockholder
currently disclaims beneficial ownership in accordance with applicable law); and
(iii) has full power and authority to make, enter into and carry out the terms
of this Agreement and the Proxy.
4.2 No Proxy Solicitations. Stockholder will not, and will not
permit any entity under Stockholder's control to: (i) solicit proxies or become
a "participant" in a "solicitation" (as such terms are defined in Regulation 14A
under the Exchange Act) with respect to an Opposing Proposal or otherwise
encourage or assist any party in taking or planning any action that would
compete with, restrain or otherwise serve to interfere with or inhibit the
timely consummation of the Merger in accordance with the terms of the Merger
Agreement, except as permitted in accordance with Article V of the Merger
Agreement; (ii) initiate a Stockholders' vote or action by written consent of
the Company Stockholders with respect to an Opposing Proposal; or (iii) become a
member of a "group" (as such term is used in Section 13(d) of the Exchange Act)
with respect to any voting securities of the Company with respect to an Opposing
Proposal.
2
<PAGE>
5. Additional Documents. Stockholder hereby covenants and agrees to
execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Parent and Stockholder, as the case may be, to carry out
the intent of this Agreement.
6. Termination. This Agreement and the Proxy delivered in connection
herewith shall terminate and shall have no further force or effect as of the
Expiration Date.
7. Miscellaneous.
7.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
7.2 Binding Effect and Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, either this Agreement nor any
of the rights, interests or obligations of the parties hereto may be assigned by
either of the parties without prior written consent of the other.
7.3 Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
7.4 Specific Performance; Injunctive Relief. The parties
hereto acknowledge that Parent will be irreparably harmed and that there will be
no adequate remedy at law for a violation of any of the covenants or agreements
of Stockholder set forth herein. Therefore, it is agreed that, in addition to
any other remedies that may be available to Parent upon any such violation,
Parent shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to Parent at law
or in equity.
7.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if delivered in
person, by cable, telegram or telex, fascimile, or sent by mail (registered or
certified mail, postage prepaid, return receipt requested) or overnight courier
(prepaid) to the respective parties as follows:
3
<PAGE>
If to Parent: Pinnacle Systems, Inc.
280 N. Bernardo Avenue
Mountain View, CA 94043
Attention: Chief Financial Officer
Facsimile Number: (650) 237-1601
With a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attn: Robert P. Latta, Esq./
Chris F. Fennell, Esq.
If to the Stockholder: At the address provided on Signature
Page
With a copy to: Cooley Godward LLP
Five Palo Alto Square
Palo Alto, CA 94306
Attn: Lee F. Benton, Esq./
Julia L. Davidson, Esq.
or to such other address or facsimile numbers as any party may have furnished to
the other in writing in accordance herewith, except that notices of change of
address or facsimile number shall only be effective upon receipt.
7.6 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of
California.
7.7 Entire Agreement. This Agreement contains the entire
understanding of the parties in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings between the parties with
respect to such subject matter.
7.8 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
7.9 Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction of interpretation of this
Agreement.
[Balance of Page Left Intentionally Blank]
4
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be
duly executed on the date and year first above written.
PINNACLE SYSTEMS, INC.
By: ________________________________________
Name: Mark L. Sanders
Title: President and Chief Executive Officer
STOCKHOLDER
____________________________________________
Name:
Stockholder's Address for Notice:
____________________________________________
____________________________________________
____________________________________________
Facsimile Number:
Shares beneficially owned:
_________________ shares of Common Stock
***SIGNATURE PAGE FOR VOTING AGREEMENT***
5
<PAGE>
Exhibit A
IRREVOCABLE PROXY
The undersigned Stockholder of Truevision, Inc., a Delaware corporation
("Company"), hereby irrevocably appoints the directors on the Board of Directors
of Pinnacle Systems, Inc., a California corporation ("Parent"), and each of
them, as the sole and exclusive attorneys and proxies of the undersigned, with
full power of substitution and resubstitution, to the full extent of the
undersigned's rights with respect to (i) the shares of capital stock of Company
beneficially owned by the undersigned, which shares are listed on the final page
of this Proxy, and (ii) any and all other shares or securities issued or
issuable in respect thereof on or after the date hereof, until such time as that
certain Agreement and Plan of Reorganization dated as of December 16, 1998 (the
"Merger Agreement"), among Parent, Bernardo Merger Corporation, a Delaware
corporation and a wholly-owned subsidiary of Parent ("Level One Merger Sub"),
Walsh Merger Corporation, a Delaware corporation and a wholly-owned subisidary
of Level One Merger Sub ("Merger Sub" and together with Level One Merger Sub,
"Merger Subs") and Company, shall be terminated in accordance with its terms or
the Merger (as defined in the Merger Agreement) is effective. (The shares of
capital stock of Company referred to in clauses (i) and (ii) above are
collectively referred to as the "Shares"). Upon the execution hereof, all prior
proxies given by the undersigned with respect to the Shares are hereby revoked
and no subsequent proxies will be given.
This Proxy is irrevocable, is granted pursuant to the Voting Agreement
dated as of December 16, 1998 between Parent and the undersigned Stockholder
(the "Voting Agreement"), and is granted in consideration of Parent entering
into the Merger Agreement. The attorneys and proxies named above will be
empowered at any time prior to termination of the Merger Agreement to exercise
all voting and other rights (including, without limitation, the power to execute
and deliver written consents with respect to the Shares) of the undersigned at
every annual, special or adjourned meeting of Company stockholders, and in every
written consent in lieu of such a meeting, or otherwise, in favor of approval of
the Merger and the Merger Agreement and any matter that could reasonably be
expected to facilitate the Merger, and against any proposal made in opposition
to or competition with the consummation of the Merger and against any merger,
consolidation, sale of assets, reorganization or recapitalization of Company
with any party other than Parent and its affiliates and against any liquidation
or winding up of Company.
The attorneys and proxies named above may only exercise this Proxy to
vote the Shares subject hereto at any time prior to termination of the Merger
Agreement at every annual, special or adjourned meeting of the Stockholders of
Company and in every written consent in lieu of such meeting, in favor of
approval of the Merger and the Merger Agreement and any matter that could
reasonably be expected to facilitate the Merger, and against any merger,
consolidation, sale of assets, reorganization or recapitalization of Company
with any party other than Parent and its affiliates, and against any liquidation
or winding up of Company, and may not exercise this Proxy on any other matter.
The undersigned Stockholder may vote the Shares on all other matters.
6
<PAGE>
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
This Proxy is irrevocable.
Dated: December __, 1998
Signature of Stockholder: _____________________________________________
Print Name of Stockholder: ____________________________________________
Shares beneficially owned:
___________________ shares of Common Stock
***PROXY***
<PAGE>
EXHIBIT B
Form of Affiliate Agreement
<PAGE>
EXHIBIT B
TRUEVISION, INC.
AFFILIATE AGREEMENT
This AFFILIATE AGREEMENT (the "Agreement") is made and entered into as
of December 16,1998, between Pinnacle Systems, Inc., a California corporation
(the "Parent"), and the undersigned stockholder (the "Affiliate") of Truevision,
Inc., a Delaware corporation (the "Company").
Recitals
A. The Parent, the Company, Bernardo Merger Corporation, a Delaware
corporation ("Level One Sub") and Walsh Merger Corporation, a Delaware
corporation and a wholly owned subsidiary of Level One Merger Sub ("Merger Sub",
and together with Level One Merger Sub, "Merger Subs"), have entered into an
Agreement and Plan of Reorganization (the "Merger Agreement") dated as of
December 16, 1998 pursuant to which Merger Sub will merge with and into the
Company (the "Merger"), and the Company will become a subsidiary of Parent
(capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Merger Agreement);
B. Pursuant to the Merger, at the Effective Time, outstanding shares of
Company Common Stock, including any shares owned by Affiliate, will be converted
into the right to receive shares of Parent Common Stock;
C. The execution and delivery of this Agreement by the Affiliate is a
material inducement to Parent to enter into the Merger Agreement;
D. The Affiliate has been advised that Affiliate may be deemed to be an
"affiliate" of the Company, as the term "affiliate" is used for purposes of
paragraphs (c) and (d) of Rule 145 of the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission"), as
amended, although nothing contained herein shall be construed as an admission by
Affiliate that Affiliate is in fact an "affiliate" of the Company.
<PAGE>
Agreement
NOW, THEREFORE, intending to be legally bound, the parties hereby agree
as follows:
1. Compliance with Rule 145 and the Securities Act.
(a) The Affiliate has been advised that (i) the issuance of
shares of Parent Common Stock in connection with the Merger is expected to be
effected pursuant to a Registration Statement on Form S-4 to be filed with the
Commission to register the shares of Parent Common Stock under the Securities
Act of 1933, as amended (the "Securities Act"), and as such will not be deemed
"restricted securities" within the meaning of Rule 144 promulgated under the
Securities Act, and resale of such shares will not be subject to any
restrictions other than as set forth in Rule 145 under the Securities Act (which
will not apply if such shares are otherwise transferred pursuant to an effective
registration statement under the Securities Act or an appropriate exemption from
registration), and (ii) the Affiliate may be deemed to be an "affiliate" of the
Company within the meaning of the Securities Act and, in particular, Rule 145
promulgated thereunder. Affiliate accordingly agrees not to sell, transfer, or
otherwise dispose of any Parent Common Stock issued to the Affiliate in the
Merger unless (i) such sale, transfer or other disposition is made in conformity
with the requirements of Rule 145(d) promulgated under the Securities Act; (ii)
such sale, transfer or other disposition is made pursuant to an effective
registration statement under the Securities Act; or (iii) the Affiliate delivers
to Parent a written opinion of counsel, reasonably acceptable to Parent in form
and substance, that such sale, transfer, or other disposition is otherwise
exempt from registration under the Securities Act. In connection with the
obligations of the Affiliate hereunder, Parent agrees to file all reports
required under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") to satisfy the requirements of Rule 144(c) as long as the Affiliate shall
be subject to the requirements of Rule 145.
(b) Parent will give stop transfer instructions to its
transfer agent with respect to any Parent Common Stock received by Affiliate
pursuant to the Merger, and there will be placed on the certificates
representing such Common Stock, or any substitutions therefor, a legend stating
in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 applies and may only be transferred in
conformity with Rule 145(d), pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or in
accordance with a written opinion of counsel, reasonably acceptable to
the issuer in form and substance, that such transfer is exempt from
registration under the Securities Act of 1933, as amended."
The foregoing legend shall be removed (by delivery of a substitute
certificate without such legend) if the Affiliate delivers to Parent (i)
satisfactory written evidence that the shares have been sold in compliance with
Rule 145 (in which case, the substitute certificate will be issued in the name
of the transferee) or (ii) an opinion of counsel, in form and substance
reasonably satisfactory to Parent, to the effect that public sale of the shares
by the holder thereof is no longer subject to Rule 145.
-2-
<PAGE>
2. Share Ownership. The Affiliate is the beneficial owner of that
number of shares of Company Common Stock (including shares issuable upon
exercise of stock options and warrants) as set forth on the signature page
hereto (the "Company Securities"). Except for the Company Securities, the
Affiliate does not beneficially own any shares of Company Common Stock or any
other equity securities of the Company or any options, warrants, or other rights
to acquire any equity securities of the Company.
3. Miscellaneous.
(a) For the convenience of the parties hereto, this Agreement
may be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
(b) This Agreement shall be enforceable by, and shall inure to
the benefit of and be binding upon, the parties hereto and their respective
successors and assigns. As used herein, the term "successors and assigns" shall
mean, where the context so permits, heirs, executors, administrators, trustees
and successor trustees, and personal and other representatives.
(c) This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the internal laws of the State of
California.
(d) If a court of competent jurisdiction determines that any
provision of this Agreement is not enforceable or enforceable only if limited in
time or scope, this Agreement shall continue in full force and effect with such
provision stricken or so limited.
(e) Counsel to the parties to the Merger Agreement shall be
entitled to rely upon this Agreement as appropriate.
(f) This Agreement shall not be modified or amended, or any
right hereunder waived or any obligation excused, except by a written agreement
signed by both parties.
[Remainder of this page intentionally left blank]
-3-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Affiliate Agreement
as of the date set forth on the first page of this Affiliate Agreement.
PINNACLE SYSTEMS, INC.
By: ________________________________________
Name: Mark L. Sanders
Title: President and Chief Executive Officer
AFFILIATE
____________________________________________
Name:
Title:
Company shares beneficially owned:
_______________ shares of Common Stock
Company shares subject to outstanding options:
_______________ shares of Common Stock
Company shares subject to outstanding warrants:
_______________ shares of Common Stock
***SIGNATURE PAGE TO AFFILIATE AGREEMENT***
-4-
<PAGE>
EXHIBIT C
Form of Noncompetition Agreement
<PAGE>
EXHIBIT C
NONCOMPETITION AGREEMENT
This NONCOMPETITION AGREEMENT is being executed and delivered as of
December 16, 1998 by Louis J. Doctor ("Stockholder") in favor of and for the
benefit of Pinnacle Systems, Inc., a California corporation ("Parent"), and
Truevision, Inc., a Delaware corporation (the "Company").
Recitals
A. As an employee and stockholder and/or optionholder of the Company,
Stockholder has obtained and will obtain extensive and valuable knowledge and
information concerning the business of the Company (including confidential
information relating to the Company and its operations, assets, contracts,
customers, personnel, plans and prospects).
B. Contemporaneously with the execution and delivery of this
Noncompetition Agreement, the Parent, the Company, Bernardo Merger Corporation,
a Delaware corporation ("Level One Sub") and Walsh Merger Corporation, a
Delaware corporation and a wholly owned subsidiary of Level One Merger Sub
("Merger Sub", and together with Level One Merger Sub, "Merger Subs"), will
enter into an Agreement and Plan of Reorganization (the "Merger Agreement")
dated as of December 16, 1998 pursuant to which Merger Sub will merge with and
into the Company (the "Merger"), and the Company will become a subsidiary of
Parent (capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Merger Agreement)
C. In connection with the Merger (and as a condition to entering into
the Reorganization Agreement and consummating the Merger), and to more fully
secure unto Parent the benefits of the Merger, Parent has requested that
Stockholder enter into this Noncompetition Agreement; and Stockholder is
entering into this Noncompetition Agreement in order to induce Parent to enter
into the Reorganization Agreement and consummate the Merger.
D. The Company has conducted, is conducting and will continue to
conduct its businesses on a worldwide basis.
Agreement
In order to induce Parent to enter into the Reorganization Agreement
and consummate the Merger, and in consideration of the issuance and delivery to
Stockholder of shares of common stock of Parent pursuant to the Reorganization
Agreement, Stockholder agrees as follows:
1. ACKNOWLEDGMENTS BY STOCKHOLDER. Stockholder acknowledges that the
promises and restrictive covenants that Stockholder is providing in this
Noncompetition Agreement are reasonable and necessary to the protection of
Parent's legitimate interests in its acquisition of the Company (including the
Company's goodwill) pursuant to the Reorganization Agreement. Stockholder
<PAGE>
acknowledges that, in connection with the consummation of the Merger, all of the
Stockholder's shares of stock of the Company will be exchanged for shares of
common stock of Parent.
2. NONCOMPETITION. During the Restriction Period (as defined below),
Stockholder shall not (other than in connection with employment with the
Company, Parent, their successors, or assigns):
(a) engage in the development, design, manufacture or
marketing in the market of computer-based digital video products for or on
behalf of Avid Technology, Inc., Digital Processing Systems, Inc., Fast
Multimedia, Inc., Matrox, Inc., Media 100 Inc., Radius Inc., Chyron Corporation,
Matsushita Electric Industrial Co. Ltd., Quantel Ltd. (a division of Carlton
Communications Plc), Scitex Video (a division of Carlton Corporation Ltd.), Sony
Corporation, and any entity that engages in the market of computer-based digital
video products.
(b) be or become an officer, director, stockholder, owner,
affiliate, salesperson, co-owner, partner, trustee, promoter, technician,
engineer, analyst, employee, agent, representative, supplier, consultant,
advisor or manager of or to, or otherwise acquire or hold any interest in, any
person or entity that competes in the market for computer-based digital video
products for or on behalf of Avid Technology, Inc., Digital Processing Systems,
Inc., Fast Multimedia, Inc., Matrox, Inc., Media 100 Inc., Radius Inc., Chyron
Corporation, Matsushita Electric Industrial Co. Ltd., Quantel Ltd. (a division
of Carlton Communications Plc), Scitex Video (a division of Carlton Corporation
Ltd.), Sony Corporation, and any entity that engages in the market of
computer-based digital video products; or
(c) provide any service (as an employee, consultant or
otherwise), support, product or technology to any person or entity, if such
service, support, product or technology involves or relates to computer-based
digital video products for or on behalf of Avid Technology, Inc., Digital
Processing Systems, Inc., Fast Multimedia, Inc., Matrox, Inc., Media 100 Inc.,
Radius Inc., Chyron Corporation, Matsushita Electric Industrial Co. Ltd.,
Quantel Ltd. (a division of Carlton Communications Plc), Scitex Video (a
division of Carlton Corporation Ltd.), Sony Corporation and any entity that
engages in the market of computer-based digital video products.
provided, however, that nothing in this Section 2 shall prevent Stockholder from
owning as a passive investment less than 1% of the outstanding shares of the
capital stock of a publicly-held Company if (A) such shares are actively traded
on an established national securities market in the United States and (B)
Stockholder is not otherwise associated directly or indirectly with such
corporation or any affiliate of such corporation.
"Restriction Period" as used herein shall mean the period commencing on
the Effective Date (as defined in Section 16 below) and ending on the date that
is 12 months from the Effective Date.
3. NONSOLICITATION. Stockholder further agrees that Stockholder will
not:
-2-
<PAGE>
(a) personally or through others, encourage, induce, attempt
to induce, solicit or attempt to solicit (on Stockholder's own behalf or on
behalf of any other person or entity) during the Restriction Period any employee
of the Company, Parent or any of Parent's subsidiaries to leave his or her
employment with the Company, Parent or any of Parent's subsidiaries;
(b) employ, or permit any entity over which Stockholder
exercises voting control to employ, during the Restriction Period any person who
shall have voluntarily terminated his or her employment with the Company, Parent
or any of Parent's subsidiaries; or
(c) personally or through others, interfere or attempt to
interfere with the relationship of the Company, Parent or any of Parent's
subsidiaries with any person or entity that is a customer or client of the
Company, Parent or any of Parent's subsidiaries.
4. SPECIFIC PERFORMANCE. Stockholder agrees that in the event of any
breach by Stockholder of any covenant, obligation or other provision contained
in this Noncompetition Agreement, Parent and the Company shall be entitled (in
addition to any other remedy that may be available to them including but not
limited to a claim for damages based on the stock and cash consideration paid to
Stockholder by Parent) to the extent permitted by applicable law (a) a decree or
order of specific performance to enforce the observance and performance of such
covenant, obligation or other provision, and (b) an injunction restraining such
breach or threatened breach.
5. NON-EXCLUSIVITY. The rights and remedies of Parent and the Company
hereunder are not exclusive of or limited by any other rights or remedies which
Parent or the Company may have, whether at law, in equity, by contract or
otherwise, all of which shall be cumulative (and not alternative). Without
limiting the generality of the foregoing, the rights and remedies of Parent and
the Company hereunder, and the obligations and liabilities of Stockholder
hereunder, are in addition to their respective rights, remedies, obligations and
liabilities under the law of unfair competition, misappropriation of trade
secrets and the like.
This Noncompetition Agreement does not limit Stockholder's obligations
or the rights of Parent or the Company (or any affiliate or Parent or the
Company) under the terms of any other agreement between Stockholder and Parent
or the Company or any affiliate of Parent or the Company.
6. NOTICES. Any notice or other communication required or permitted to
be delivered to Stockholder, the Company or Parent under this Noncompetition
Agreement shall be in writing and shall be deemed properly delivered, given and
received when delivered (by hand, by registered mail, by courier or express
delivery service or by facsimile) to the address or facsimile telephone number
set forth beneath the name of such party below (or to such other address or
facsimile telephone number as such party shall have specified in a written
notice delivered in accordance with this Section 6):
-3-
<PAGE>
if to Parent: Pinnacle Systems, Inc.
280 N. Bernardo Ave.
Mountain View, CA 94043
Attention: Chief Financial Officer
Facsimile No.: (650) 237-1601
With a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attn: Robert P. Latta, Esq./
Chris F. Fennell, Esq.
if to Stockholder: At the address provided on Signature Page.
With a copy to: Cooley Godward LLP
Five Palo Alto Square
Palo Alto, CA 94306
Attn: Lee F. Benton, Esq./
Julia L. Davison, Esq.
7. SEVERABILITY. If any provision of this Noncompetition Agreement or
any part of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) such
invalidity of enforceability of such provision or part thereof shall not affect
the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Noncompetition
Agreement. Each provision of this Noncompetition Agreement is separable from
every other provision of this Noncompetition Agreement, and each part of each
provision of this Noncompetition Agreement is separable from every other part of
such provision.
8. GOVERNING LAW. This Noncompetition Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
9. WAIVER. No failure on the part of Parent or the Company to exercise
any power, right, privilege or remedy under this Noncompetition Agreement, and
no delay on the part of Parent or the Company in exercising any power, right,
privilege or remedy under this Noncompetition Agreement, shall operate as a
waiver of such power, right, privilege or remedy; and no single or partial
exercise of any such power, right, privilege or remedy shall preclude any other
or further exercise thereof or of any other power, right, privilege or remedy.
Neither Parent nor the Company shall be deemed to have waived any claim arising
out of this Noncompetition Agreement, or any power, right, privilege or remedy
under this Noncompetition Agreement, unless the waiver of such claim, power,
right, privilege or remedy is expressly set forth in a written instrument duly
executed and delivered on behalf of such
-4-
<PAGE>
party; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
10. CAPTIONS. The captions contained in this Noncompetition Agreement
are for convenience of reference only, shall not be deemed to be a part of this
Noncompetition Agreement and shall not be referred to in connection with the
construction or interpretation of this Noncompetition Agreement.
11. FURTHER ASSURANCES. Stockholder shall execute and/or cause to be
delivered to the Company and Parent such instruments and other documents and
shall take such other actions as Company and Parent may reasonably request to
effectuate the intent and purposes of this Noncompetition Agreement.
12. ENTIRE AGREEMENT. This Noncompetition Agreement, the Merger
Agreement, and the other agreements referred to herein and therein set forth the
entire understanding of Stockholder, the Company and Parent relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings between any of such parties relating to the subject matter hereof
and thereof.
13. AMENDMENTS. This Noncompetition Agreement may not be amended,
modified, altered, or supplemented other than by means of a written instrument
duly executed and delivered on behalf of Parent and Stockholder.
14. ASSIGNMENT. This Noncompetition Agreement and all obligations
hereunder are personal to Stockholder and may not be transferred or assigned by
Stockholder at any time. Parent may assign its rights under this Noncompetition
Agreement to any entity in connection with any sale or transfer of all or
substantially all of Parent's assets to such entity.
15. BINDING NATURE. This Noncompetition Agreement will be binding upon
Stockholder and Stockholder's representatives, executors, administrators,
estate, heirs, successors and assigns, and will inure to the benefit of Parent
and the Company and their respective successors and assigns.
16. EFFECTIVENESS. This Noncompetition Agreement shall become effective
upon the Closing, as defined in the Merger Agreement (the "Effective Date"),
and, if the Closing does not occur prior to May 31, 1999, this Agreement shall
immediately terminate and be of no further force or effect.
-5-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Noncompetition
Agreement as of the date first above written.
____________________________________
Louis J. Doctor
Address:
Facsimile Number:
Signature Page to Noncompetition Agreement
-6-
<PAGE>
EXHIBIT 2
---------
VOTING AGREEMENTS
<PAGE>
VOTING AGREEMENT
This Voting Agreement ("Agreement") is made and entered into as of
December 16, 1998 between Pinnacle Systems, Inc., a California corporation
("Parent"), and the undersigned stockholder ("Stockholder") of Truevision, Inc.,
a Delaware corporation (the "Company").
Recitals
A. Concurrently with the execution of this Agreement, Parent, the
Company, Bernardo Merger Corporation, a Delaware corporation and a wholly owned
subsidiary of Parent ("Level One Merger Sub") and Walsh Merger Corporation, a
Delaware corporation and a wholly owned subsidiary of Level One Merger Sub
("Merger Sub", and together with Level One Merger Sub, "Merger Subs") have
entered into an Agreement and Plan of Reorganization of even date herewith (the
"Merger Agreement") which provides for the merger (the "Merger") of Merger Sub
with and into the Company. Pursuant to the Merger, shares of Common Stock of the
Company will be converted into Common Stock of Parent in the manner set forth in
the Merger Agreement.
B. The Stockholder is the record holder and beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of such number of shares of the outstanding Common Stock of the
Company as is indicated on the final page of this Agreement (the "Shares").
C. Parent desires the Stockholder to agree, and the Stockholder is
willing to agree, not to transfer or otherwise dispose of any of the Shares, or
any other shares of capital stock of the Company acquired hereafter and prior to
the Expiration Date (as defined in Section 1.1 below, except as otherwise
permitted hereby), and to vote the Shares and any other such shares of capital
stock of the Company so as to facilitate consummation of the Merger.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, the parties agree as follows:
1. Agreement to Retain Shares.
1.1 Transfer and Encumbrance. Stockholder agrees not to
transfer (except as may be specifically required by court order), sell,
exchange, pledge or otherwise dispose of or encumber any of the Shares or any
New Shares as defined in Section 1.2 below, or to make any offer or agreement
relating thereto, at any time prior to the Expiration Date. As used herein, the
term "Expiration Date" shall mean the earlier to occur of (i) such date and time
as the Merger shall become effective in accordance with the terms and provisions
of the Merger Agreement and (ii) such date as the Merger Agreement shall be
terminated pursuant to Article VII thereof.
<PAGE>
1.2 Additional Purchases. Stockholder agrees that any shares
of capital stock of the Company that Stockholder purchases or with respect to
which Stockholder otherwise acquires beneficial ownership (as such term is
defined in Rule 13d-3 under the Exchange Act) after the execution of this
Agreement and prior to the Expiration Date ("New Shares") shall be subject to
the terms and conditions of this Agreement to the same extent as if they
constituted Shares.
2. Agreement to Vote Shares. At every meeting of the stockholders of
the Company called with respect to any of the following, and at every
adjournment thereof, and on every action or approval by written consent of the
Stockholders of the Company with respect to any of the following, Stockholder
shall vote the Shares and any New Shares: (i) in favor of approval of the Merger
Agreement and the Merger and any matter that could reasonably be expected to
facilitate the Merger; and (ii) against approval of any proposal made in
opposition to or competition with consummation of the Merger and against any
merger, consolidation, sale of assets, reorganization or recapitalization, with
any party other than with Parent and its affiliates and against any liquidation
or winding up of the Company (each of the foregoing is hereinafter referred to
as an "Opposing Proposal"). Stockholder agrees not to take any actions contrary
to Stockholder's obligations under this Agreement.
3. Irrevocable Proxy. Concurrently with the execution of this
Agreement, Stockholder agrees to deliver to Parent a proxy in the form attached
hereto as Exhibit A (the "Proxy"), which shall be irrevocable, with the total
number of shares of capital stock of the Company beneficially owned (as such
term is defined in Rule 13d-3 under the Exchange Act) by Stockholder set forth
therein.
4. Representations, Warranties and Covenants of the Stockholder.
Stockholder hereby represents, warrants and covenants to Parent as follows:
4.1 Ownership of Shares. Stockholder (i) is the beneficial
owner of the Shares, which at the date hereof and at all times up until the
Expiration Date will be free and clear of any liens, claims, options, charges or
other encumbrances; (ii) does not beneficially own any shares of capital stock
of the Company other than the Shares (excluding shares as to which Stockholder
currently disclaims beneficial ownership in accordance with applicable law); and
(iii) has full power and authority to make, enter into and carry out the terms
of this Agreement and the Proxy.
4.2 No Proxy Solicitations. Stockholder will not, and will not
permit any entity under Stockholder's control to: (i) solicit proxies or become
a "participant" in a "solicitation" (as such terms are defined in Regulation 14A
under the Exchange Act) with respect to an Opposing Proposal or otherwise
encourage or assist any party in taking or planning any action that would
compete with, restrain or otherwise serve to interfere with or inhibit the
timely consummation of the Merger in accordance with the terms of the Merger
Agreement, except as permitted in accordance with Article V of the Merger
Agreement; (ii) initiate a Stockholders' vote or action by written consent of
the Company Stockholders with respect to an Opposing Proposal; or (iii) become a
member of a "group" (as such term is used in Section 13(d) of the Exchange Act)
with respect to any voting securities of the Company with respect to an Opposing
Proposal.
2
<PAGE>
5. Additional Documents. Stockholder hereby covenants and agrees to
execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Parent and Stockholder, as the case may be, to carry out
the intent of this Agreement.
7. Termination. This Agreement and the Proxy delivered in connection
herewith shall terminate and shall have no further force or effect as of the
Expiration Date.
8. Miscellaneous.
7.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
7.2 Binding Effect and Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, either this Agreement nor any
of the rights, interests or obligations of the parties hereto may be assigned by
either of the parties without prior written consent of the other.
7.3 Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
7.4 Specific Performance; Injunctive Relief. The parties
hereto acknowledge that Parent will be irreparably harmed and that there will be
no adequate remedy at law for a violation of any of the covenants or agreements
of Stockholder set forth herein. Therefore, it is agreed that, in addition to
any other remedies that may be available to Parent upon any such violation,
Parent shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to Parent at law
or in equity.
7.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if delivered in
person, by cable, telegram or telex, fascimile, or sent by mail (registered or
certified mail, postage prepaid, return receipt requested) or overnight courier
(prepaid) to the respective parties as follows:
3
<PAGE>
If to Parent: Pinnacle Systems, Inc.
280 N. Bernardo Avenue
Mountain View, CA 94043
Attention: Chief Financial Officer
Facsimile Number: (650) 237-1601
With a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attn: Robert P. Latta, Esq./Chris F. Fennell, Esq.
If to the Stockholder: At the address provided on Signature Page
With a copy to: Cooley Godward LLP
Five Palo Alto Square
Palo Alto, CA 94306
Attn: Lee F. Benton, Esq./Julia L. Davidson, Esq.
or to such other address or facsimile numbers as any party may have furnished to
the other in writing in accordance herewith, except that notices of change of
address or facsimile number shall only be effective upon receipt.
7.6 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of
California.
7.7 Entire Agreement. This Agreement contains the entire
understanding of the parties in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings between the parties with
respect to such subject matter.
7.8 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
7.9 Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction of interpretation of this
Agreement.
[Balance of Page Left Intentionally Blank]
4
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be duly
executed on the date and year first above written.
PINNACLE SYSTEMS, INC.
By: /S/ MARK L. SANDERS
---------------------------------------
Name: Mark L. Sanders
Title: President and Chief Executive Officer
STOCKHOLDER
/S/ WALTER W. BREGMAN
----------------------------------------------
Name: Walter W. Bregman
Stockholder's Address for Notice:
----------------------------------------------
----------------------------------------------
----------------------------------------------
Facsimile Number:
Shares beneficially owned:
63,850 shares of Common Stock
-----------------
***SIGNATURE PAGE FOR VOTING AGREEMENT***
5
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be
duly executed on the date and year first above written.
PINNACLE SYSTEMS, INC.
By: /S/ MARK L. SANDERS
---------------------------------------
Name: Mark L. Sanders
Title: President and Chief Executive Officer
STOCKHOLDER
/S/ LOUIS J. DOCTOR
----------------------------------------------
Name: Louis J. Doctor
Stockholder's Address for Notice:
----------------------------------------------
----------------------------------------------
----------------------------------------------
Facsimile Number:
Shares beneficially owned:
547,768 shares of Common Stock
-----------------
***SIGNATURE PAGE FOR VOTING AGREEMENT***
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be
duly executed on the date and year first above written.
PINNACLE SYSTEMS, INC.
By: /S/ MARK L. SANDERS
-------------------------------------------
Name: Mark L. Sanders
Title: President and Chief Executive Officer
STOCKHOLDER
/S/ WILLIAM H. MCALEER
----------------------------------------------
Name: William H. McAleer
Stockholder's Address for Notice:
----------------------------------------------
----------------------------------------------
----------------------------------------------
Facsimile Number:
Shares beneficially owned:
17,025 shares of Common Stock
-----------------
***SIGNATURE PAGE FOR VOTING AGREEMENT***
7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be
duly executed on the date and year first above written.
PINNACLE SYSTEMS, INC.
By: /S/ MARK L. SANDERS
--------------------------------------
Name: Mark L. Sanders
Title: President and Chief Executive Officer
STOCKHOLDER
/S/ KIETH E. SORENSON
---------------------------------------------
Name: Kieth E. Sorenson
Stockholder's Address for Notice:
---------------------------------------------
---------------------------------------------
---------------------------------------------
Facsimile Number:
Shares beneficially owned:
17,325 shares of Common Stock
----------------------
***SIGNATURE PAGE FOR VOTING AGREEMENT***
8
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be
duly executed on the date and year first above written.
PINNACLE SYSTEMS, INC.
By: /S/ MARK L. SANDERS
----------------------------------------
Name: Mark L. Sanders
Title: President and Chief Executive Officer
STOCKHOLDER
/S/ CONRAD WREDBERG
-----------------------------------------------
Name: Conrad Wredberg
Stockholder's Address for Notice:
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
Facsimile Number:
Shares beneficially owned:
22,125 shares of Common Stock
----------------------
***SIGNATURE PAGE FOR VOTING AGREEMENT***
9
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be
duly executed on the date and year first above written.
PINNACLE SYSTEMS, INC.
By: /S/ MARK L. SANDERS
----------------------------------------
Name: Mark L. Sanders
Title: President and Chief Executive Officer
STOCKHOLDER
/S/ R. JOHN CURSON
-----------------------------------------------
Name: R. John Curson
Stockholder's Address for Notice:
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
Facsimile Number:
Shares beneficially owned:
163,616 shares of Common Stock
------------------------
***SIGNATURE PAGE FOR VOTING AGREEMENT***
10
<PAGE>
Exhibit A
IRREVOCABLE PROXY
The undersigned Stockholder of Truevision, Inc., a Delaware corporation
("Company"), hereby irrevocably appoints the directors on the Board of Directors
of Pinnacle Systems, Inc., a California corporation ("Parent"), and each of
them, as the sole and exclusive attorneys and proxies of the undersigned, with
full power of substitution and resubstitution, to the full extent of the
undersigned's rights with respect to (i) the shares of capital stock of Company
beneficially owned by the undersigned, which shares are listed on the final page
of this Proxy, and (ii) any and all other shares or securities issued or
issuable in respect thereof on or after the date hereof, until such time as that
certain Agreement and Plan of Reorganization dated as of December 16, 1998 (the
"Merger Agreement"), among Parent, Bernardo Merger Corporation, a Delaware
corporation and a wholly-owned subsidiary of Parent ("Level One Merger Sub"),
Walsh Merger Corporation, a Delaware corporation and a wholly-owned subisidary
of Level One Merger Sub ("Merger Sub" and together with Level One Merger Sub,
"Merger Subs") and Company, shall be terminated in accordance with its terms or
the Merger (as defined in the Merger Agreement) is effective. (The shares of
capital stock of Company referred to in clauses (i) and (ii) above are
collectively referred to as the "Shares"). Upon the execution hereof, all prior
proxies given by the undersigned with respect to the Shares are hereby revoked
and no subsequent proxies will be given.
This Proxy is irrevocable, is granted pursuant to the Voting Agreement
dated as of December 16, 1998 between Parent and the undersigned Stockholder
(the "Voting Agreement"), and is granted in consideration of Parent entering
into the Merger Agreement. The attorneys and proxies named above will be
empowered at any time prior to termination of the Merger Agreement to exercise
all voting and other rights (including, without limitation, the power to execute
and deliver written consents with respect to the Shares) of the undersigned at
every annual, special or adjourned meeting of Company stockholders, and in every
written consent in lieu of such a meeting, or otherwise, in favor of approval of
the Merger and the Merger Agreement and any matter that could reasonably be
expected to facilitate the Merger, and against any proposal made in opposition
to or competition with the consummation of the Merger and against any merger,
consolidation, sale of assets, reorganization or recapitalization of Company
with any party other than Parent and its affiliates and against any liquidation
or winding up of Company.
The attorneys and proxies named above may only exercise this Proxy to
vote the Shares subject hereto at any time prior to termination of the Merger
Agreement at every annual, special or adjourned meeting of the Stockholders of
Company and in every written consent in lieu of such meeting, in favor of
approval of the Merger and the Merger Agreement and any matter that could
reasonably be expected to facilitate the Merger, and against any merger,
consolidation, sale of assets, reorganization or recapitalization of Company
with any party other than Parent and its affiliates, and against any liquidation
or winding up of Company, and may not exercise this Proxy on any other matter.
The undersigned Stockholder may vote the Shares on all other matters.
<PAGE>
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
This Proxy is irrevocable.
Dated: December 16, 1998
Signature of Stockholder: /S/ WALTER W. BREGMAN
--------------------------------------------
Print Name of Stockholder: Walter W. Bregman
------------------------------------------
Shares beneficially owned:
63,850 shares of Common Stock
------------------------------------------
***PROXY***
<PAGE>
Any obligation of the undersigned hereunder shall be binding upon the successors
and assigns of the undersigned.
This Proxy is irrevocable.
Dated: December 16, 1998
Signature of Stockholder: /S/ LOUIS J. DOCTOR
--------------------------------------------
Print Name of Stockholder: Louis J. Doctor
------------------------------------------
Shares beneficially owned:
547,768 shares of Common Stock
------------------------------------------
***PROXY***
<PAGE>
Any obligation of the undersigned hereunder shall be binding upon the successors
and assigns of the undersigned.
This Proxy is irrevocable.
Dated: December 16, 1998
Signature of Stockholder: /S/ WILLIAM H. MCALEER
--------------------------------------------
Print Name of Stockholder: William H. McAleer
------------------------------------------
Shares beneficially owned:
17,025 shares of Common Stock
-----------------------------------------
***PROXY***
<PAGE>
Any obligation of the undersigned hereunder shall be binding upon the successors
and assigns of the undersigned.
This Proxy is irrevocable.
Dated: December 16, 1998
Signature of Stockholder: /S/ KIETH E. SORENSON
--------------------------------------------
Print Name of Stockholder: Kieth E. Sorenson
------------------------------------------
Shares beneficially owned:
17,325 shares of Common Stock
---------------------------------------
***PROXY***
<PAGE>
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
This Proxy is irrevocable.
Dated: December 16, 1998
Signature of Stockholder: /S/ CONRAD WREDBERG
--------------------------------------------
Print Name of Stockholder: Conrad Wredberg
------------------------------------------
Shares beneficially owned:
22,125 shares of Common Stock
----------------------------------------
***PROXY***
<PAGE>
Any obligation of the undersigned hereunder shall be binding upon the successors
and assigns of the undersigned.
This Proxy is irrevocable.
Dated: December 16, 1998
Signature of Stockholder: /S/ R. JOHN CURSON
--------------------------------------------
Print Name of Stockholder: R. John Curson
------------------------------------------
Shares beneficially owned:
163,616 shares of Common Stock
-------------------------------------------
***PROXY***
