<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
FEBRUARY 6, 1995
Date of Report (Date of earliest event reported)
SILICON GRAPHICS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-10441 94-2789662
(State or other (Commission (IRS Employer
jurisdiction of incorporation) File No.) Identification No.)
2011 NORTH SHORELINE BOULEVARD
MOUNTAIN VIEW, CALIFORNIA 94043-1389
(Address of principal executive offices)
(415) 960-1980
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
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ITEM 5: OTHER EVENTS.
On February 6, 1995, Registrant entered into an Agreement and Plan of
Merger and Reorganization (the "Merger Agreement") among the Registrant, S
Acquisition Corporation, a California corporation and a wholly owned subsidiary
of the Registrant ("Merger Sub"), and Wavefront Technologies, Inc., a California
corporation ("Wavefront"). At the effective time of the merger, and subject to
and upon the terms and conditions of the Merger Agreement and California Law
(including, without limitation, approval by the stockholders of Wavefront),
Merger Sub will be merged with and into Wavefront. As a result of the merger,
Wavefront will become a wholly owned subsidiary of the Registrant. Subject to
the terms and conditions of the Merger Agreement, upon the effective time of the
merger, each outstanding share of common stock of Wavefront will be converted
into the right to receive 0.49 shares of common stock of the Registrant.
Also on February 6, 1995, Registrant entered into an Agreement and
Plan of Acquisition and Arrangement (the "Acquisition Agreement") by and among
the Registrant, Silicon Graphics Manufacturing S.A., a Swiss corporation and
subsidiary of the Registrant ("Swissco"), 1103707 Ontario Inc., an Ontario
corporation and subsidiary of Swissco ("Amalgamation Sub") and Alias Research
Inc., an Ontario corporation ("Alias"). Subject to the terms and provisions of
the Acquisition Agreement and the Ontario Business Corporation Act, the
Acquisition Agreement provides for (i) the amalgamation of Amalgamation Sub and
Alias into one company (the "Continuing Corporation"), whereupon each
outstanding share of the common stock of Alias will be converted into one Class
A Share or one Class B Share (at the option of the holder and subject to
proration and certain other restrictions) of the Continuing Corporation, and
(ii) the exchange of each such Class A Share into 0.90 shares of common stock of
the Registrant and of each such Class B Share into 0.90 shares of exchangeable
non-voting shares of the Continuing Corporation (such exchangeable non-voting
shares of the Continuing Corporation to be exchangeable at the option of the
holder into shares of common stock of the Registrant on a one-for-one basis)
(the transactions specified in subclauses (i) and (ii) above being collectively
referred to herein as the "Arrangement"). As a result of the Arrangement, the
Continuing Corporation will become a subsidiary of the Registrant.
The consummation of the Merger and the Arrangement are also each
conditioned on the concurrent closing of the other.
The foregoing descriptions are qualified in their entirety by
reference to the full texts of the Merger Agreement and the Acquisition
Agreement, which are attached hereto as Exhibits 2.1 and 2.2, respectively, and
are incorporated herein by reference.
Additional information concerning this event is set forth in the
Registrant's press release dated February 7, 1995, a copy of which is attached
hereto as Exhibit 99.1.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
2.1 Agreement and Plan of Merger and Reorganization, dated as of
February 6, 1995, among Silicon Graphics, Inc., S Acquisition
Corporation and Wavefront Technologies, Inc.
2.2 Agreement and Plan of Acquisition and Arrangement, dated as of
February 6, 1995 by and among Silicon Graphics, Inc., 1103707
Ontario Inc., Silicon Graphics Manufacturing S.A. and Alias
Research, Inc.
99.1 Press Release, dated February 7, 1995.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SILICON GRAPHICS, INC.
Dated: February 13, 1995 _______________________
William M. Kelly
Vice President, Business
Development, General Counsel and
Secretary
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<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
2.1 Agreement and Plan of Merger and Reorganization, dated as of
February 6, 1995, among Silicon Graphics, Inc., S Acquisition
Corporation and Wavefront Technologies, Inc.
2.2 Agreement and Plan of Acquisition and Arrangement, dated as of
February 6, 1995 by and among Silicon Graphics, Inc., 1103707
Ontario Inc., Silicon Graphics Manufacturing S.A. and Alias
Research Inc.
99.1 Press Release dated February 7, 1995.
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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
SILICON GRAPHICS, INC.,
S ACQUISITION CORPORATION
and
WAVEFRONT TECHNOLOGIES, INC.
Dated as of February 6, 1995
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TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGERS
SECTION 1.01. THE MERGERS. . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. EFFECTIVE TIME . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.03. EFFECT OF THE MERGER . . . . . . . . . . . . . . . . . . 3
SECTION 1.04. ARTICLES OF INCORPORATION; BY-LAWS . . . . . . . . . . . 3
SECTION 1.05. DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . 3
SECTION 1.06. EFFECT ON CAPITAL STOCK. . . . . . . . . . . . . . . . . 3
SECTION 1.07. EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . 4
SECTION 1.08. STOCK TRANSFER BOOKS . . . . . . . . . . . . . . . . . . 6
SECTION 1.09. DISSENTING SHARES. . . . . . . . . . . . . . . . . . . . 6
SECTION 1.10. NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. . . 7
SECTION 1.11. LOST, STOLEN OR DESTROYED CERTIFICATES . . . . . . . . . 7
SECTION 1.12. TAX AND ACCOUNTING CONSEQUENCES. . . . . . . . . . . . . 8
SECTION 1.13. TAKING OF NECESSARY ACTION; FURTHER ACTION . . . . . . . 8
SECTION 1.14. MATERIAL ADVERSE EFFECT. . . . . . . . . . . . . . . . . 8
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 2.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES . . . . . . 9
SECTION 2.02. ARTICLES OF INCORPORATION AND BY-LAWS. . . . . . . . . . 9
SECTION 2.03. CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.04. AUTHORITY RELATIVE TO THIS AGREEMENT . . . . . . . . . . 10
SECTION 2.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS . . . . . . . 11
SECTION 2.06. COMPLIANCE; PERMITS. . . . . . . . . . . . . . . . . . . 12
SECTION 2.07. SEC FILINGS; FINANCIAL STATEMENTS. . . . . . . . . . . . 12
SECTION 2.08. ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . . . . 13
SECTION 2.09. NO UNDISCLOSED LIABILITIES . . . . . . . . . . . . . . . 13
SECTION 2.10. ABSENCE OF LITIGATION. . . . . . . . . . . . . . . . . . 13
SECTION 2.11. EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS. . . . . . 14
SECTION 2.12. LABOR MATTERS. . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.13. REGISTRATION STATEMENT; PROXY STATEMENT. . . . . . . . . 16
SECTION 2.14. RESTRICTIONS ON BUSINESS ACTIVITIES. . . . . . . . . . . 17
SECTION 2.15. TITLE TO PROPERTY. . . . . . . . . . . . . . . . . . . . 17
SECTION 2.16. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.17. ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . 19
SECTION 2.18. BROKERS. . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.19. FULL DISCLOSURE. . . . . . . . . . . . . . . . . . . . . 20
<PAGE>
SECTION 2.20. INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . 20
SECTION 2.21. INTERESTED PARTY TRANSACTIONS. . . . . . . . . . . . . . 22
SECTION 2.22. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.23. OPTION PLAN. . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.24. VOTE REQUIRED. . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.25. POOLING MATTERS. . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.26. OPINION OF FINANCIAL ADVISOR . . . . . . . . . . . . . . 23
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 3.01. ORGANIZATION AND QUALIFICATION . . . . . . . . . . . . . 23
SECTION 3.02. AUTHORITY RELATIVE TO THIS AGREEMENT . . . . . . . . . . 24
SECTION 3.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS . . . . . . . 24
SECTION 3.04. CERTIFICATE OF INCORPORATION AND BY-LAWS . . . . . . . . 25
SECTION 3.05. CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.06. COMPLIANCE; PERMITS. . . . . . . . . . . . . . . . . . . 25
SECTION 3.07. SEC FILINGS; FINANCIAL STATEMENTS. . . . . . . . . . . . 26
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . . . . 27
SECTION 3.09. RESTRICTIONS ON BUSINESS ACTIVITIES. . . . . . . . . . . 27
SECTION 3.10. TITLE TO PROPERTY. . . . . . . . . . . . . . . . . . . . 27
SECTION 3.11. FULL DISCLOSURE. . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.12. NO UNDISCLOSED LIABILITIES . . . . . . . . . . . . . . . 28
SECTION 3.13. ABSENCE OF LITIGATION. . . . . . . . . . . . . . . . . . 28
SECTION 3.14. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.15. REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS . . . 28
SECTION 3.16. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.17. BROKERS. . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.18. OPINION OF FINANCIAL ADVISOR . . . . . . . . . . . . . . 29
SECTION 3.19. POOLING MATTERS. . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.20. NO STOCKHOLDER VOTE. . . . . . . . . . . . . . . . . . . 30
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. . 30
SECTION 4.02. NO SOLICITATION. . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.03. CONDUCT OF BUSINESS BY PARENT PENDING THE MERGER . . . . 34
ii
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ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT . . . 35
SECTION 5.02. STOCKHOLDERS' MEETING. . . . . . . . . . . . . . . . . . 35
SECTION 5.03. ACCESS TO INFORMATION; CONFIDENTIALITY . . . . . . . . . 35
SECTION 5.04. CONSENTS; APPROVALS. . . . . . . . . . . . . . . . . . . 36
SECTION 5.05. STOCK OPTIONS. . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.06. COMPANY EMPLOYEE STOCK PURCHASE PLAN . . . . . . . . . . 37
SECTION 5.07. AGREEMENTS OF AFFILIATES . . . . . . . . . . . . . . . . 37
SECTION 5.08. INDEMNIFICATION AND INSURANCE. . . . . . . . . . . . . . 38
SECTION 5.09. NOTIFICATION OF CERTAIN MATTERS. . . . . . . . . . . . . 38
SECTION 5.10. FURTHER ACTION/TAX TREATMENT . . . . . . . . . . . . . . 39
SECTION 5.11. PUBLIC ANNOUNCEMENTS . . . . . . . . . . . . . . . . . . 39
SECTION 5.12. LISTING OF PARENT COMMON SHARES. . . . . . . . . . . . . 39
SECTION 5.13. CONVEYANCE TAXES . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.14. ACCOUNTANTS' LETTERS . . . . . . . . . . . . . . . . . . 40
SECTION 5.15. POOLING ACCOUNTING TREATMENT . . . . . . . . . . . . . . 40
SECTION 5.16. OTHER MERGER . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.17. OTHER MERGER EXCHANGE RATIO. . . . . . . . . . . . . . . 40
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
MERGER. . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.02. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND
MERGER SUB. . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.03. ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY . . . 42
ARTICLE VII
TERMINATION
SECTION 7.01. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.02. EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . 45
SECTION 7.03. FEES AND EXPENSES. . . . . . . . . . . . . . . . . . . . 45
iii
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ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.02. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.03. CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . 48
SECTION 8.04. AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.05. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.06. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.07. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.08. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.09. ASSIGNMENT, MERGER SUB . . . . . . . . . . . . . . . . . 49
SECTION 8.10. PARTIES IN INTEREST. . . . . . . . . . . . . . . . . . . 50
SECTION 8.11. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. . 50
SECTION 8.12. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.13. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.14. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . 50
Exhibits:
Exhibit A: Form of Affiliate Agreement
iv
<PAGE>
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of
February 6, 1995 (this "Agreement"), among SILICON GRAPHICS, INC., a Delaware
corporation ("Parent"), S ACQUISITION CORPORATION, a California corporation and
a wholly owned subsidiary of Parent ("Merger Sub"), and WAVEFRONT TECHNOLOGIES,
INC., a California corporation (the "Company"),
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent, Merger Sub and the
Company have each determined that it is advisable and in the best interests of
their respective stockholders for Parent to enter into a business combination
with the Company upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, the Boards of Directors
of Parent, Merger Sub and the Company have each approved the merger (the
"Merger") of Merger Sub with and into the Company in accordance with the
applicable provisions of the Delaware General Corporation Law ("Delaware Law")
and the California Corporations Code ("California Law"), and upon the terms and
subject to the conditions set forth herein;
WHEREAS, pursuant to the Merger, each outstanding share (a "Share")
of the Company's common stock, no par value (the "Company Common Stock"), shall
be converted into the right to receive the Merger Consideration (as defined in
Section 1.07(b)), upon the terms and subject to the conditions set forth herein;
WHEREAS, Parent, Merger Sub and the Company intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and the regulations thereunder, and to cause
the Merger and the Upstream Merger (as defined in Section 1.01(b)) to qualify as
a reorganization under the provisions of Section 368(a) of the Code;
WHEREAS, for accounting purposes, it is intended that the
transactions contemplated hereby shall be accounted for as a pooling of
interests under United States generally accepted accounting principles ("GAAP");
WHEREAS, concurrently herewith, Parent, Silicon Graphics
Manufacturing S.A., a subsidiary of Parent, 1103707 Ontario Inc., an Ontario
corporation and a wholly owned subsidiary of Parent, and Alias Research Inc., an
Ontario corporation ("Alias"), have executed an Agreement and Plan of
Arrangement, dated as of February 6, 1995 (the "Other
<PAGE>
2
Merger Agreement"), pursuant to which Parent will acquire Alias as provided for
therein the "Other Merger"); and
WHEREAS, the exchange ratio set forth in the Other Merger Agreement
is 0.90 (the "Other Exchange Ratio");
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGERS
SECTION 1.01. THE MERGERS. (a) EFFECTIVE TIME. At the
Effective Time (as defined in Section 1.02), and subject to and upon the terms
and conditions of this Agreement and California Law, Merger Sub shall be merged
with and into the Company, the separate corporate existence of Merger Sub shall
cease, and the Company shall continue as the surviving corporation. The Company
as the surviving corporation after the Merger is hereinafter sometimes referred
to as the "Surviving Corporation."
(b) UPSTREAM MERGER. As soon as reasonably practicable after
the Effective Time (as defined in Section 1.02), Parent shall cause the
Surviving Corporation to be merged with and into Parent (the "Upstream Merger"
and, together with the Merger, the "Mergers"), and Parent shall continue as the
surviving corporation after the Upstream Merger.
(c) CLOSING. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 7.01 and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the consummation of the Merger will take place as
promptly as practicable (and in any event within two business days) after
satisfaction or waiver of the conditions set forth in Article VI, at the offices
of Shearman & Sterling, 555 California Street, Suite 2000, San Francisco,
California, unless another date, time or place is agreed to in writing by the
parties hereto.
SECTION 1.02. EFFECTIVE TIME. As promptly as practicable after
the satisfaction or waiver of the conditions set forth in Article VI, the
parties hereto shall cause the Merger to be consummated by filing articles of
merger as contemplated by Section 1103 of California Law (the "Articles of
Merger"), together with any required related certificates, with the Secretary of
State of the State of California, in such form as required by, and
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3
executed in accordance with the relevant provisions of, California Law (the time
of such filing being the "Effective Time").
SECTION 1.03. EFFECT OF THE MERGER. At the Effective Time, the
effect of the Merger shall be as provided in this Agreement, the Articles of
Merger and the applicable provisions of California Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
SECTION 1.04. ARTICLES OF INCORPORATION; BY-LAWS. (a) ARTICLES
OF INCORPORATION. Unless otherwise determined by Parent prior to the Effective
Time, at the Effective Time the Articles of Incorporation of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended as provided
by California Law and such Articles of Incorporation; PROVIDED, HOWEVER,
that Article I of the Articles of Incorporation of the Surviving Corporation
shall be amended to read as follows: "FIRST: The name of the corporation is
Wavefront Technologies, Inc."
(b) BY-LAWS. The By-Laws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended as provided by California Law, the Articles
of Incorporation of the Surviving Corporation and such By-Laws.
SECTION 1.05. DIRECTORS AND OFFICERS. The directors of Merger
Sub immediately prior to the Effective Time shall be the initial directors of
the Surviving Corporation, each to hold office in accordance with the Articles
of Incorporation and By-Laws of the Surviving Corporation, and the officers of
the Company immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified.
SECTION 1.06. EFFECT ON CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Merger Sub,
the Company or the holders of any of the following securities:
(a) CONVERSION OF SECURITIES. Each Share issued and outstanding
immediately prior to the Effective Time (excluding any Shares to be canceled
pursuant to Section 1.06(b) and any Dissenting Shares (as defined in Section
1.09)) shall be converted, subject to Section 1.06(f), into the right to receive
0.49 shares (the "Exchange Ratio") of validly issued, fully paid and
nonassessable shares of common stock of Parent, $0.001 par value ("Parent Common
Shares").
<PAGE>
4
(b) CANCELLATION. Each Share held in the treasury of the
Company and each Share owned by Parent, Merger Sub or any direct or indirect
wholly owned subsidiary of the Company or Parent immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, cease to be outstanding, be canceled and retired without
payment of any consideration therefor and cease to exist.
(c) ASSUMPTION OF STOCK OPTIONS AND STOCK PURCHASE RIGHTS. All
options to purchase Company Common Stock then outstanding under the Company's
1990 Stock Option Plan shall be assumed by Parent in accordance with
Section 5.05. Immediately prior to the Effective Time, all rights to purchase
Company Common Stock then outstanding under the Company's Employee Stock
Purchase Plan shall be converted into shares of Company Common Stock in
accordance with Section 5.06.
(d) CAPITAL STOCK OF MERGER SUB. Each share of common stock,
par value $0.001 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into and exchanged for one
validly issued, fully paid and nonassessable share of common stock, no par
value, of the Surviving Corporation. Each stock certificate of Merger Sub
evidencing ownership of any such shares shall continue to evidence ownership of
such shares of capital stock of the Surviving Corporation.
(e) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible into
Parent Common Shares or Company Common Stock), reorganization, recapitalization
or other like change with respect to Parent Common Shares or Company Common
Stock occurring after the date hereof and prior to the Effective Time.
(f) FRACTIONAL SHARES. No fraction of a share of Parent Common
Shares will be issued, but in lieu thereof each holder of Company Common Stock
who would otherwise be entitled to a fraction of a share of Parent Common Shares
(after aggregating all fractional shares of Parent Common Shares to be received
by such holder) shall receive from Parent an amount of cash (rounded to the
nearest whole cent), without interest, equal to the product of (i) such
fraction, multiplied by (ii) the average of the closing price for trades of
Parent Common Shares as of each of the thirty (30) consecutive trading days
immediately preceding the Effective Time as quoted in the Wall Street Journal or
other reliable financial newspaper or publication. For the purposes of the
preceding sentence, a "trading day" means a day on which trading generally takes
place on the New York Stock Exchange (the "NYSE") and on which trading in Parent
Common Shares has occurred.
SECTION 1.07. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT.
Parent shall supply, or shall cause to be supplied, to or for the account of a
bank or trust company designated by Parent (the "Exchange Agent"), in trust for
the benefit of the holders of
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5
Company Common Stock (other than Dissenting Shares), for exchange in accordance
with this Section 1.07, through the Exchange Agent, certificates evidencing the
Parent Common Shares issuable pursuant to Section 1.06 in exchange for
outstanding Shares.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, Parent will instruct the Exchange Agent to mail to
each holder of record of a certificate or certificates which immediately prior
to the Effective Time evidenced outstanding Shares (other than Dissenting
Shares) (the "Certificates") (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange Agent
and shall be in such form and have such other provisions as Parent may
reasonably specify) and (ii) instructions to effect the surrender of the
Certificates in exchange for the certificates evidencing shares of Parent Common
Shares and, in lieu of any fractional shares thereof, cash. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor (A) certificates evidencing that number
of whole Parent Common Shares which such holder has the right to receive in
accordance with the Exchange Ratio in respect of the Shares formerly evidenced
by such Certificate, (B) any dividends or other distributions to which such
holder is entitled pursuant to Section 1.07(c), and (C) cash in lieu of
fractional Parent Common Shares to which such holder is entitled pursuant to
Section 1.06(f) (the Parent Common Shares, dividends, distributions and cash
described in this clause (C) being, collectively, the "Merger Consideration"),
and the Certificate so surrendered shall forthwith be canceled. In the event of
a transfer of ownership of Shares which is not registered in the transfer
records of the Company as of the Effective Time, Parent Common Shares and cash
may be issued and paid in accordance with this Article I to a transferee if the
Certificate evidencing such Shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer
pursuant to this Section 1.07(b) and by evidence that any applicable stock
transfer taxes have been paid. Until so surrendered, each outstanding
Certificate that, prior to the Effective Time, represented shares of the Company
Common Stock will be deemed from and after the Effective Time, for all corporate
purposes, other than the payment of dividends, to evidence the ownership of the
number of full shares of Parent Common Shares into which such shares of the
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 1.06.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Shares with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate until the holder of
such Certificate shall surrender such Certificate. Subject to applicable law,
following surrender of any such Certificate, there shall be paid to
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6
the record holder of the certificates representing whole shares of Parent Common
Shares issued in exchange therefor, without interest, at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole shares of
Parent Common Shares.
(d) TRANSFERS OF OWNERSHIP. If any certificate for shares of
Parent Common Shares is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Parent or any person designated by it
any transfer or other taxes required by reason of the issuance of a certificate
for shares of Parent Common Shares in any name other than that of the registered
holder of the certificate surrendered, or established to the satisfaction of
Parent or any agent designated by it that such tax has been paid or is not
payable.
(e) NO LIABILITY. Neither Parent, Merger Sub nor the Company
shall be liable to any holder of Company Common Stock for any Merger
Consideration (or dividends or distributions with respect thereto) delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
(f) WITHHOLDING RIGHTS. Parent, the Surviving Corporation and
the Exchange Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
Company Common Stock such amounts as Parent, the Surviving Corporation or the
Exchange Agent is required to deduct and withhold with respect to the making of
such payment under the Code or any provision of state, local, provincial or
foreign tax law. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Shares in respect of which such deduction and withholding
was made.
SECTION 1.08. STOCK TRANSFER BOOKS. At the Effective Time, the
stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers of the Company Common Stock thereafter on the
records of the Company.
SECTION 1.09. DISSENTING SHARES. (a) Notwithstanding any
provision of this Agreement to the contrary, any shares of capital stock of the
Company held by a holder who has exercised dissenters' rights for such shares in
accordance with California Law and who, as of the Effective Time, has not
effectively withdrawn or lost such dissenters' rights ("Dissenting Shares"),
shall not be converted into or represent a right to receive Merger Consideration
pursuant to Section 1.06, but the holder thereof shall only be entitled to such
rights as are granted by California Law.
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7
(b) Notwithstanding the provisions of subsection (a), if any
holder of Dissenting Shares shall effectively withdraw or lose (through failure
to perfect or otherwise) such holder's dissenters' rights, then, as of the later
of the Effective Time or the occurrence of such event, such holder's shares
shall automatically be converted into and represent only the right to receive
the Merger Consideration, without interest thereon, upon surrender of the
certificate or certificates representing such Dissenting Shares.
(c) The Company shall give Parent (i) prompt notice of any written
demands received by the Company to require the Company to purchase shares of
capital stock of the Company pursuant to Chapter 13 of California Law,
withdrawals of such demands, and any other instruments served pursuant to
California Law and received by the Company and (ii) the opportunity to
participate in all negotiations and proceedings with respect to such demands.
The Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any such demands or offer to settle
or settle any such demands.
(d) Prior to the consummation of the Upstream Merger, the Company
shall establish an escrow account with a financial institution selected by the
Company and reasonably satisfactory to Parent and shall fund such escrow account
with cash or cash equivalents in an amount sufficient to make all payments to
holders of Dissenting Shares. Such escrow account shall survive the Mergers.
All payments to holders of Dissenting Shares shall be made out of such escrow
account, and no such payments shall be made or otherwise funded by Parent.
SECTION 1.10. NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON
STOCK. The Merger Consideration delivered upon the surrender for exchange of
Shares in accordance with the terms hereof shall be deemed to have been issued
in full satisfaction of all rights pertaining to such Shares, and there shall be
no further registration of transfers on the records of the Surviving Corporation
of Shares 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.
SECTION 1.11. LOST, STOLEN OR DESTROYED CERTIFICATES. In the
event 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, such Parent
Common Shares as may be required pursuant to Section 1.06; PROVIDED,
HOWEVER, that Parent may, in its discretion and as a condition precedent to
the issuance thereof, 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 or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
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8
SECTION 1.12. TAX AND ACCOUNTING CONSEQUENCES. It is intended by
the parties hereto that the Mergers shall (i) constitute a reorganization within
the meaning of Section 368 of the Code and (ii) qualify for accounting treatment
as a pooling of interests under GAAP. The parties hereto hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
SECTION 1.13. TAKING OF NECESSARY ACTION; FURTHER ACTION. Each
of Parent, Merger Sub and the Company in good faith will take all such
commercially reasonable and lawful action as may be necessary or appropriate in
order to effectuate the Merger in accordance with this Agreement as promptly as
possible. If, at any time after the Effective Time, any such 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 the Company and Merger
Sub, the officers and directors of the Company and Merger Sub are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.
SECTION 1.14. MATERIAL ADVERSE EFFECT. When used in connection
with the Company or any of its subsidiaries, or Parent or any of its
subsidiaries, as the case may be, the term "Material Adverse Effect" means any
change or effect that, individually or when taken together with all other such
changes or effects that have occurred prior to the date of determination of the
occurrence of the Material Adverse Effect, is or is reasonably likely to be
materially adverse to the business, assets (including intangible assets),
financial condition or results of operations of the Company and its subsidiaries
or Parent and its subsidiaries, as the case may be, in each case taken as a
whole. For the purposes of determining whether a Material Adverse Effect has
occurred with respect to the Company under Sections 6.02(a) and 6.02(e), any
material decline in the Company's consolidated gross sales revenues after the
date hereof shall not be considered a Material Adverse Effect with respect to
the Company, if (i) such decline can most reasonably be directly attributable to
(a) a decrease in sales associated with customers delaying orders or purchases
pending completion of the Merger and the Other Merger or (b) a significant price
reduction by any major competitor of the Company, (ii) the Company has complied
with its obligations under Section 4.01 hereof and (iii) the Company has
continued to develop, market, supply and service its products in accordance with
past practice.
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9
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub
that:
SECTION 2.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each
of the Company 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 and 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 be so organized, existing and in good standing or to have such power,
authority and Approvals would not have a Material Adverse Effect. Each of the
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 its 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
have a Material Adverse Effect. A true and complete list of all of the
Company's subsidiaries, together with the jurisdiction of incorporation of each
subsidiary and the percentage of each subsidiary's outstanding capital stock
owned by the Company or another subsidiary, is set forth in Section 2.01 of the
written disclosure schedule previously delivered by the Company to Parent (the
"Company Disclosure Schedule"), except as is noted therein. Except as set forth
in Section 2.01 of the Company Disclosure Schedule, the Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.
SECTION 2.02. ARTICLES OF INCORPORATION AND BY-LAWS. The Company
has heretofore furnished to Parent a complete and correct copy of its Articles
of Incorporation and By-Laws, as amended to date, and, except as is set forth in
Section 2.02 of the Company Disclosure Schedule, equivalent organizational
documents of each of its subsidiaries. Such Articles of Incorporation, By-Laws
and equivalent organizational documents of each of its subsidiaries are in full
force and effect. Neither the Company nor any of its subsidiaries is in
violation of any of the provisions of its Articles of Incorporation or By-Laws
or equivalent organizational documents.
SECTION 2.03. CAPITALIZATION. The authorized capital stock of
the Company consists of 25,000,000 shares of Company Common Stock and 5,000,000
shares of the Company's preferred stock, no par value (the "Company Preferred
Stock"), none of which
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10
have been designated. As of February 1, 1995, (i) 8,431,542 shares of
Company Common Stock were issued and outstanding, all of which are validly
issued, fully paid and nonassessable, (ii) no shares of Company Common Stock
were held by subsidiaries of the Company, (iii) 1,300,000 shares of Company
Common Stock were reserved for future issuance pursuant to option grants under
the Company's 1990 Stock Option Plan, (iv) 200,000 shares of Company Common
Stock were reserved for future issuance pursuant to option grants under the
Company's Employee Stock Purchase Plan, and (v) no shares of Company Preferred
Stock were issued and outstanding. No material change in such capitalization
has occurred between February 1, 1995 and the date hereof. Except as set forth
in this Section 2.03 or Section 2.11 hereof or in Section 2.03 or Section 2.11
of the Company Disclosure Schedule, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of the Company or any of its subsidiaries or
obligating the Company or any of its subsidiaries to issue or sell any shares of
capital stock of, or other equity interests in, the Company or any of its
subsidiaries. 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 the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of Company capital stock or
the capital stock of any subsidiary 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 other than guarantees of bank obligations of
subsidiaries entered into in the ordinary course of business. All of the
outstanding shares of capital stock of each of the Company's subsidiaries are
duly authorized, validly issued, fully paid and nonassessable, and, other than
directors' qualifying shares, all such shares are owned by the Company or
another subsidiary free and clear of all security interests, liens, claims,
pledges, agreements, limitations in the Company's voting rights, charges or
other encumbrances of any nature whatsoever.
SECTION 2.04. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company
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 the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than the approval and adoption of the Merger by the holders
of at least a majority of the outstanding shares of the Company Common Stock
entitled to vote in accordance with California Law and the Company's Articles of
Incorporation and By-Laws). The Board of Directors of the Company has
determined that it is advisable and in the best interest of the Company's
stockholders for the Company to enter into a business combination with Parent
upon the terms and subject to the conditions of this Agreement. This Agreement
has been duly and validly executed and delivered by the Company and, assuming
the due
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11
authorization, execution and delivery by Parent and Merger Sub, as applicable,
constitutes the legal, valid and binding obligation of the Company.
SECTION 2.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a)
Section 2.05(a) of the Company Disclosure Schedule includes a list of (i) all
material contracts of the Company and its subsidiaries and (ii) all agreements
which, as of the date hereof, will be required to be filed with the Securities
and Exchange Commission (the "SEC") pursuant to the requirements of the
Securities Exchange Act of 1934, as amended, and the SEC's rules thereunder
(collectively, the "Exchange Act") as "material contracts" ((i) and (ii) being,
collectively, the "Material Contracts") of the Company and its subsidiaries.
(b) Except as set forth in Section 2.05(b) of the Company
Disclosure Schedule, the execution and delivery of this Agreement by the Company
do not, and the performance of this Agreement by the Company will not, (i)
conflict with or violate the Articles of Incorporation or By-Laws or equivalent
organizational documents of the Company or any of its subsidiaries, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to the Company or any of its subsidiaries or by which its or any of
their respective properties is bound or affected, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default), or impair the Company's or any of its
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, any Material Contract, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or its or any of their respective properties
is bound or affected.
(c) The execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign,
except (i) for applicable requirements, if any, of the Securities Act of 1933,
as amended (the "Securities Act"), the Exchange Act, state securities laws
("Blue Sky Laws") and the pre-merger notification requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the filing and recordation of appropriate merger or other documents
as required by California Law and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Merger, or
otherwise prevent or delay the Company from performing its obligations under
this Agreement, or would not otherwise have a Material Adverse Effect.
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12
SECTION 2.06. COMPLIANCE; PERMITS. (a) Neither the 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 the Company
or any of its subsidiaries or by which its 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 the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or its or any of their respective properties
is bound or affected, except for any such conflicts, defaults or violations
which would not have a Material Adverse Effect.
(b) The Company and its subsidiaries hold all permits, licenses,
easements, variances, exemptions, consents, certificates, orders and approvals
from governmental authorities which are material to the operation of the
business of the Company and its subsidiaries taken as a whole (collectively, the
"Company Permits"). The Company and its subsidiaries are in compliance with the
terms of the Company Permits, except where the failure to so comply would not
have a Material Adverse Effect.
SECTION 2.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) The
Company has filed all forms, reports and documents required to be filed with the
SEC since June 2, 1994 and has made available to Parent (i) its Quarterly
Reports on Form 10-Q for the periods June 30, 1994 and September 30, 1994,
respectively, (ii) all proxy statements relating to the Company's meetings of
stockholders (whether annual or special) held since June 2, 1994, (iii) all
other reports or registration statements filed by the Company with the SEC
(other than Reports on Form 10-Q, Reports on Forms 3, 4 or 5 and Schedule 13G
filed on behalf of affiliates of the Company) since June 2, 1994, and (iv) all
amendments and supplements to all such reports and registration statements filed
by the Company with the SEC (collectively, the "Company SEC Reports"). The
Company SEC Reports (i) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. Section 2.07 of
the Company Disclosure Schedule sets forth certain discrepancies known by the
Company in the SEC Reports. None of the Company's subsidiaries is required to
file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated therein or in the notes thereto)
and each fairly presented the consolidated financial position of the Company and
its subsidiaries as at the respective dates thereof and the consolidated results
of its operations and cash flows for the periods indicated, except that
<PAGE>
13
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
(c) The Company has heretofore furnished to Parent a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by the Company with the SEC
pursuant to the Securities Act or the Exchange Act.
(d) The unaudited balance sheet of the Company as of December 31,
1994 and the related unaudited consolidated income statement of the Company for
the fiscal year ended December 31, 1994 previously provided by the Company to
Parent will not deviate in any material respect from the audited balance sheet
of the Company as of December 31, 1994 and the related audited consolidated
income statement of the Company for the fiscal year ended December 31, 1994.
SECTION 2.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
set forth in Section 2.08 of the Company Disclosure Schedule and the Company SEC
Reports, since December 31, 1993, the Company has conducted its business in the
ordinary course and there has not occurred: (i) any amendments or changes in
the Articles of Incorporation or Bylaws of the Company; (ii) any damage to,
destruction or loss of any assets of the Company (whether or not covered by
insurance) that had a Material Adverse Effect; (iii) any change by the Company
in its accounting methods, principles or practices; (iv) any revaluation by the
Company of any of its assets, including, without limitation, writing down the
value of capitalized software or inventory, or writing off notes or accounts
receivable other than in the ordinary course of business; or (v) any sale of a
material amount of property of the Company, except for the sale of inventory in
the ordinary course of business.
SECTION 2.09. NO UNDISCLOSED LIABILITIES. Except as is disclosed
in Section 2.09 of the Company Disclosure Schedule, neither the Company nor any
of its subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise) which are, in the aggregate, material to the business, operations or
financial condition of the Company and its subsidiaries taken as a whole, except
liabilities (a) adequately provided for in the Company's audited balance sheet
(including any related notes thereto) for the fiscal year ended December 31,
1993 included in the Company SEC Reports (the "1993 Balance Sheet"), (b)
incurred in the ordinary course of business and not required under GAAP to be
reflected on the Balance Sheet, or (c) incurred since December 31, 1993 in the
ordinary course of business and consistent with past practice, and liabilities
incurred in connection with this Agreement.
SECTION 2.10. ABSENCE OF LITIGATION. Except as set forth in the
Company SEC Reports, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries, or
<PAGE>
14
any properties or rights of the Company or any of its subsidiaries, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, that could have a Material Adverse Effect.
SECTION 2.11. EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS. (a)
Section 2.11(a) of the Company Disclosure Schedule lists all employee benefit
plans (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), regardless of whether ERISA is applicable
thereto, all other bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance or termination pay, medical or
life insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plans, agreements or arrangements and other similar fringe or
employee benefit plans, programs or arrangements, and any current or former
employment or executive compensation or severance agreements, written or
otherwise, for the benefit of, or relating to, any employee of the Company, any
trade or business (whether or not incorporated) which is a member of a
controlled group including the Company or which is under common control with the
Company (an "ERISA Affiliate") within the meaning of Section 414 of the Code, or
any subsidiary of the Company, to which the Company, an ERISA Affiliate, or any
Subsidiary is a party, with respect to which the Company, an ERISA Affiliate, or
any Subsidiary has or could have any obligation, as well as each plan with
respect to which the Company or an ERISA Affiliate could incur liability if such
plan has been or were terminated (together, the "Employee Plans"), and a copy of
each such written Employee Plan has been made available to Parent.
(b) Except as set forth in Section 2.11(b) of the Company
Disclosure Schedule, (i) none of the Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person and none of the Employee
Plans is a "multiemployer plan" as such term is defined in Section 3(37) of
ERISA; (ii) there has been no transaction or failure to act with respect to any
Employee Plan, which could result in any material liability of the Company or
any of its subsidiaries; (iii) all Employee Plans are in compliance in all
material respects with the requirements prescribed by any and all statutes,
orders, or governmental rules and regulations currently in effect with respect
thereto, and the Company and each of its subsidiaries have performed all
material obligations required to be performed by them under, are not in any
material respect in default under or violation of, and have no knowledge of any
default or violation by any other party to, any of the Employee Plans except as
to which such non-compliance, non-performance or default would not result in a
Material Adverse Effect; (iv) each Employee Plan intended to qualify under
Section 401(a) of the Code is the subject of a favorable determination letter
from the IRS, and nothing has occurred which may reasonably be expected to
impair such determination; (v) all contributions required to be made to any
Employee Plan, or the terms of the Employee Plan or any collective bargaining
agreement, have been made on or before their due dates and a reasonable amount
has been accrued for contributions to each Employee Plan for the current plan
years; (vi) with respect to each Employee Plan, no "reportable event" within the
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15
meaning of Section 4043 of ERISA (excluding any such event for which the thirty
(30) day notice requirement has been waived under the regulations to Section
4043 of ERISA) nor any event described in Section 4062, 4063 or 4041 of ERISA
has occurred; and (vii) neither the Company nor any ERISA Affiliate has
incurred, nor reasonably expects to incur, any liability under Title IV of ERISA
(other than liability for premium payments to the Pension Benefit Guaranty
Corporation arising in the ordinary course).
(c) Each Employee Plan that is required or intended to be
qualified under applicable law or registered or approved by a governmental
agency or authority, has been so qualified, registered or approved by the
appropriate governmental agency or authority, and nothing has occurred since the
date of the last qualification, registration or approval to adversely affect, or
cause the appropriate governmental agency or authority to revoke, such
qualification, registration or approval.
(d) All contributions (including premiums) required by law or
contract to have been made or approved by the Company under or with respect to
Employee Plans have been paid or accrued by the Company. Except as disclosed in
Section 2.11(d) of the Company Disclosure Schedule, without limiting the
foregoing, there are no material unfunded liabilities under any Employee Plan.
(e) There are no pending or, to the knowledge of the Company,
threatened investigations, litigation or other enforcement actions against the
Company with respect to any of the Employee Plans.
(f) There are no actions, suits or claims pending or, to the best
knowledge of the Company, threatened by former or present employees of the
Company (or their beneficiaries) with respect to Employee Plans or the assets or
fiduciaries thereof (other than routine claims for benefits).
(g) No condition or event has occurred with respect to the
Employee Plans which has or could reasonably be expected to result in a material
liability to the Company.
(h) Section 2.11(h) of the Company Disclosure Schedule sets forth
a true and complete list of each current or former employee, officer or director
of the Company or any of its subsidiaries who holds any option to purchase
Company Common Stock as of the date hereof, together with the number of shares
of Company Common Stock subject to such option, the date of grant of such
option, the extent to which such option is vested, the option price of such
option (to the extent determined as of the date hereof), whether such option is
intended to qualify as an incentive stock option within the meaning of Section
422(b) of the Code (an "ISO"), and the expiration date of such option. Section
2.11(h) of the Company Disclosure Schedule also sets forth the total number of
such ISOs and such nonqualified options.
<PAGE>
16
(i) The Company has made available to Parent (i) copies of all
employment agreements with officers of the Company; (ii) copies of all
agreements with consultants who are individuals obligating the Company to make
annual cash payments in an amount exceeding $100,000; (iii) a schedule listing
all officers of the Company who have executed a non-competition agreement with
the Company; (iv) copies of all plans, programs, agreements and other
arrangements of the Company with or relating to its employees which contain
change in control provisions; and (vi) the form of standard employment
agreement, if any, of the Company for its non-executive employees.
SECTION 2.12. LABOR MATTERS. There are no controversies pending
or, to the knowledge of the Company or any of its subsidiaries, threatened,
between the Company or any of its subsidiaries and any of their respective
employees, which controversies have or may have a Material Adverse Effect;
neither the Company nor any of its subsidiaries is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or its subsidiaries nor does the Company or any of its
subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and neither the Company nor any of its subsidiaries
has any knowledge of any strikes, slowdowns, work stoppages, lockouts, or
threats thereof, by or with respect to any employees of the Company or any of
its subsidiaries.
SECTION 2.13. REGISTRATION STATEMENT; PROXY STATEMENT. None of
the information supplied or to be supplied by the Company in writing 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
Parent Common Shares in the Merger (the "Registration Statement") or (ii) the
proxy statement relating to the meeting of the Company's stockholders (the
"Company Stockholders' Meeting") to be held in connection with the Merger (the
"Proxy Statement" and, together with the Registration Statement, the "Proxy
Statement/Prospectus") will, at the respective times filed with the SEC or other
regulatory agency and, in addition, (A) in the case of the Proxy
Statement/Prospectus, at the date it or any amendments or supplements thereto
are mailed to stockholders, at the time of the Company Stockholders' Meeting and
at the Effective Time and (B) in the case of the Registration Statement, when it
becomes effective under the Securities Act and at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply as to form in all material respects
with the applicable provisions of the Exchange Act and the rules and regulations
thereunder, and the Registration Statement will comply as to form in all
material respects with the applicable provisions of the Securities Act and the
rules and regulations promulgated thereunder. If at any time prior to the
Effective Time any event relating to the Company or any of its respective
affiliates, officers or directors should be discovered by the Company which
should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement/Prospectus, the Company shall promptly
<PAGE>
17
inform Parent and Merger Sub. Notwithstanding the foregoing, the Company makes
no representation or warranty with respect to any information supplied by Parent
or Merger Sub which is contained in any of the foregoing documents.
SECTION 2.14. RESTRICTIONS ON BUSINESS ACTIVITIES. Except for
this Agreement, there is no material agreement, judgment, injunction, order or
decree binding upon the Company or any of its subsidiaries which has or could
reasonably be expected to have the effect of prohibiting or impairing any
material business practice of the Company or any of its subsidiaries,
acquisition of property by the Company or any of its subsidiaries or the conduct
of business by the Company or any of its subsidiaries as currently conducted or
as proposed to be conducted by the Company.
SECTION 2.15. TITLE TO PROPERTY. The Company owns no real
property. Section 2.15(b) of the Company Disclosure Statement sets forth a true
and complete list of all real property leased by the Company or any of its
subsidiaries requiring annual lease payments of more than $50,000, and the
aggregate monthly rental or other fee payable under such lease. The Company and
each of its subsidiaries have good, marketable and defensible title to all of
their 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 or
which would not have a Material Adverse Effect; and all leases pursuant to which
the Company or any of its subsidiaries lease from others material amounts of
real or personal property 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 event which with
notice or lapse of time, or both, would constitute a material default and in
respect of which the Company or such subsidiary has not taken adequate steps to
prevent such a default from occurring) except where the lack of such good
standing, validity and effectiveness or the existence of such default or event
of default would not have a Material Adverse Effect. All the facilities of the
Company and its subsidiaries, except such as may be under construction, are in
good operating condition and repair, except where the failure of such plants,
structures and equipment to be in such good operating condition and repair would
not, individually or in the aggregate, have a Material Adverse Effect.
SECTION 2.16. TAXES. (a) For purposes of this Agreement, "Tax"
or "Taxes" shall mean taxes, fees, levies, duties, tariffs, imposts and
governmental impositions or charges of any kind in the nature of (or similar to)
taxes, payable to any federal, state, provincial, local or foreign taxing
authority, including (without limitation) (i) income, franchise, profits, gross
receipts, AD VALOREM, net worth, value added, sales, use, service, real or
personal property, special assessments, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and
<PAGE>
18
gains taxes and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto; and "Tax Returns" shall mean returns, reports and
information statements with respect to Taxes required to be filed with the
United States Internal Revenue Service (the "IRS") or any other taxing
authority, domestic or foreign, including, without limitation, consolidated,
combined and unitary tax returns.
(b) Other than as disclosed on Section 2.16(b) of the Company
Disclosure Schedule, the Company and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax purposes of which the
Company or any of its subsidiaries is or has been a member, have filed all
United States federal income Tax Returns and all other material Tax Returns
required to be filed by them or any of them, and have paid and discharged all
Taxes shown therein to be due and there are no other Taxes that would be due if
asserted by a taxing authority, except such as are being contested in good faith
by appropriate proceedings (to the extent that any such proceedings are
required) or with respect to which the Company is maintaining reserves in
accordance with GAAP in its financial statements to the extent currently
required in all material respects adequate for their payment, except, in each
instance, to the extent the failure to do so would not have a Material Adverse
Effect. Neither the IRS nor any other taxing authority or agency is now
asserting or, to the best of the Company's knowledge, threatening to assert
against the Company or any of its subsidiaries any deficiency or claim for
additional Taxes other than additional Taxes with respect to which the Company
is maintaining reserves in accordance with GAAP in its financial statements
which are in all material respects adequate for their payment, except, in each
instance, to the extent the failure to do so would not have a Material Adverse
Effect. No Tax Return of either the Company or any of its subsidiaries is
currently being audited by any taxing authority. No material tax claim has
become a lien on any assets of the Company or any subsidiary thereof and neither
the Company nor any of its subsidiaries has granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any Tax. Neither the Company nor any of its subsidiaries is required to include
in income (i) any material items in respect of any change in accounting
principles or any deferred intercompany transactions, or (ii) any installment
sale gain where, in each case, the inclusion in income would result in a tax
liability materially in excess of the reserves therefor.
(c) The Company on behalf of itself and all its subsidiaries
hereby represents that, other than as disclosed on Section 2.16(c) of the
Company Disclosure Schedule, and other than with respect to items the inaccuracy
of which would not have a Material Adverse Effect: (i) neither the Company nor
any of its subsidiaries is a party to any agreement, contract or arrangement
that may result, separately or in the aggregate, in the payment of any "excess
parachute payment" within the meaning of Section 280G of the Code, determined
without regard to Section 280G(b)(4) of the Code; (ii) neither the Company nor
any of its subsidiaries has been subject to any accumulated earning tax or
personal holding company tax; neither the Company nor any of its subsidiaries
owns stock in
<PAGE>
19
a passive foreign investment company within the meaning of Section 1296 of the
Code; (iv) neither the Company nor any of its subsidiaries is obligated under
any agreement with respect to industrial development bonds or other obligations
with respect to which the excludability from gross income of the holder for
United States federal or state income tax purposes could be affected by the
transactions contemplated hereunder; (v) neither the Company nor any of its
subsidiaries has entered into any deferred intercompany transaction within the
meaning of section 1.1502-13(a)(2) of the United States Treasury Regulations as
to which material items of deferred gain or loss have not been restored; and
(vi) no material excess loss account within the meaning of section
1.1502-31T(a)(2)(v) of the United States Treasury Regulations exists with
respect to the stock of any of the Company's subsidiaries.
(d) No power of attorney has been granted by the Company or any of
its subsidiaries with respect to any matter relating to Taxes which is currently
in force.
(e) Except as set forth in Section 2.16(e) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is a party
to any agreement or arrangement (written or oral) providing for the allocation
or sharing of Taxes.
(f) The Company and each of its subsidiaries have withheld from
each payment made to any of their respective past or present employees, officers
or directors the amount of all Taxes and other deductions required to be
withheld therefrom and paid the same to the proper tax or other receiving
officers within the time required by law, except to the extent that any failure
to do so would not have a Material Adverse Effect.
(g) Except as set forth in Section 2.16(g) of the Company
Disclosure Schedule, the Company has remitted to the appropriate Tax authority
when required by law to do so all amounts collected by it on account of all
retail sales Tax.
(h) Except as disclosed in Section 2.16(b) of the Company
Disclosure Schedule, there has been no material debt to a third party of the
Company or any of its subsidiaries which has been forgiven and which has given
rise to (or is expected to give rise to) "cancellation of indebtedness income"
under the provisions of the Code.
SECTION 2.17. ENVIRONMENTAL MATTERS. Except in all cases, in the
aggregate, as have not had and could not reasonably be expected to have a
Material Adverse Effect, the Company and each of its subsidiaries to the best of
the Company's knowledge (i) have obtained all applicable permits, licenses and
other authorizations which are required under federal, state, provincial or
local laws relating to pollution or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants or hazardous or toxic materials or wastes into ambient
air, surface water, ground water or land or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants,
<PAGE>
20
contaminants or hazardous or toxic materials or wastes by the Company or its
subsidiaries (or their respective agents); (ii) are in compliance with all terms
and conditions of such required permits, licenses and authorization, and also
are in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in such laws or contained in any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder; (iii) as of the date hereof, are not aware of nor have
received notice of any event, condition, circumstance, activity, practice,
incident, action or plan which is reasonably likely to interfere with or prevent
continued compliance with or which would give rise to any common law or
statutory liability, or otherwise form the basis of any claim, action, suit or
proceeding, based on or resulting from the Company's or any of its subsidiary's
(or any of their respective agent's) manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling, or the emission, discharge
or release into the environment, of any pollutant, contaminant or hazardous or
toxic material or waste; and (iv) have taken all actions necessary under
applicable requirements of federal, state or local laws, rules or regulations to
register any products or materials required to be registered by the Company or
its subsidiaries (or any of their respective agents) thereunder.
SECTION 2.18. BROKERS. No broker, finder or investment banker
(other than Volpe, Welty & Company) 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 the Company. The
Company has heretofore furnished to Parent a complete and correct copy of all
agreements between the Company and Volpe, Welty & Company pursuant to which such
firm would be entitled to any payment relating to the transactions contemplated
hereunder.
SECTION 2.19. FULL DISCLOSURE. No statement contained in any
certificate or schedule furnished or to be furnished by the Company or its
subsidiaries to Parent or Merger Sub in, or pursuant to the provisions of, this
Agreement contains or shall contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary, in the light of the
circumstances under which it was made, to make the statements herein or therein
not misleading.
SECTION 2.20. INTELLECTUAL PROPERTY. (a) The Company owns, or
is licensed or otherwise possesses legally sufficient rights to use, all
patents, trademarks, trade names, service marks, copyrights and any applications
therefor, technology, know-how, computer software programs or applications (in
both source code and object code form) and tangible or intangible proprietary
information or material that are used or proposed to be used in the business of
the Company as currently conducted in any material respect. Section 2.20(a) of
the Company Disclosure Schedule lists all current and past (lapsed, expired,
abandoned or cancelled) patents, registered and material unregistered trademarks
and service marks, registered and material unregistered copyrights, trade names
and any
<PAGE>
21
applications therefor owned by the Company (the "Company Intellectual Property
Rights"), and specifies the jurisdictions in which each such Company
Intellectual Property Right has been issued or registered or in which an
application for such issuance and registration has been filed, including the
respective registration or application numbers and the names of all registered
owners, together with a list of all of the Company's currently marketed software
products and an indication as to which, if any, of such software products have
been registered for copyright protection with the United States Copyright Office
and any foreign offices and by whom such items have been registered.
Section 2.20(a) of the Company Disclosure Schedule includes and specifically
identifies all third-party patents, trademarks or copyrights (including
software) (the "Third Party Intellectual Property Rights"), to the knowledge of
the Company, which are incorporated in, are, or form a part of, any Company
product. Section 2.20(a) of the Company Disclosure Schedule lists (i) any
requests the Company has received to make any registration of the type referred
to in the penultimate sentence prior hereto, including the identity of the
requestor and the item requested to be so registered, and the jurisdiction for
which such request has been made; (ii) except for object code license agreements
for the Company's products executed in the ordinary course of business and in
accordance with the Company's past practices, all material licenses, sublicenses
and other agreements as to which the Company is a party and pursuant to which
any person is authorized to use any Company Intellectual Property Right, or any
trade secret material to the Company; and (iii) all material licenses,
sublicenses and other agreements as to which the Company is a party and pursuant
to which the Company is authorized to use any Third Party Intellectual Property
Rights, or other trade secret of a third party in or as any product, and
includes the identity of all parties thereto, a description of the nature and
subject matter thereof, the applicable royalty and the term thereof.
(b) Except as set forth in Section 2.20(b) of the Company
Disclosure Schedule, the Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
hereunder, in violation of any license, sublicense or agreement described in
Section 2.20(a) of the Company Disclosure Schedule. No claims with respect to
the Company Intellectual Property Rights, any trade secret material to the
Company, or Third Party Intellectual Property Rights to the extent arising out
of any use, reproduction or distribution of such Third Party Intellectual
Property Rights by or through the Company, are currently pending or, to the
knowledge of the Company, are threatened by any person, nor does the Company
know of any valid grounds for any bona fide claims (i) to the effect that the
manufacture, sale, licensing or use of any product as now used, sold or licensed
or proposed for use, sale or license by the Company infringes on any copyright,
patent, trademark, service mark or trade secret; (ii) against the use by the
Company of any trademarks, trade names, trade secrets, copyrights, patents,
technology, know-how or computer software programs and applications used in the
Company's business as currently conducted or as proposed to be conducted by the
Company; (iii) challenging the ownership, validity or effectiveness of any of
the Company Intellectual Property Rights or other trade secret material to the
Company; or (iv) challenging the Company's license or
<PAGE>
22
legally enforceable right to use of the Third Party Intellectual Rights. To the
Company's knowledge, after reasonable investigation, all patents, registered
trademarks, maskworks and copyrights held by the Company are valid and
subsisting. Except as set forth in Section 2.20(b) of the Company Disclosure
Schedule, to the Company's knowledge, there is no material unauthorized use,
infringement or misappropriation of any of the Company Intellectual Property by
any third party, including any employee or former employee of the Company or any
of its subsidiaries. Except as set forth in Section 2.20(b) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries (i) has
been sued or charged in writing as a defendant in any claim, suit, action or
proceeding which involves a claim or infringement of trade secrets, any patents,
trademarks, service marks, maskworks or copyrights and which has not been
finally terminated prior to the date hereof or been informed or notified by any
third party that the Company may be engaged in such infringement or (ii) has
knowledge of any infringement liability with respect to, or infringement by, the
Company or any of its subsidiaries of any trade secret, patent, trademark,
service mark, maskwork or copyright of another.
(c) Each employee of the Company has executed a confidentiality
and invention agreement in the forms previously delivered to Parent.
SECTION 2.21. INTERESTED PARTY TRANSACTIONS. Except as set forth
in Section 2.21 of the Company Disclosure Schedule or in the Company SEC
Reports, since December 5, 1994, no event has occurred that would be required to
be reported as a Certain Relationship or Related Transaction, pursuant to Item
404 of Regulation S-K promulgated by the SEC.
SECTION 2.22. INSURANCE. Section 2.22 of the Company Disclosure
Schedule lists all material insurance policies and fidelity bonds covering the
assets, business, equipment, properties, operations, employees, officers and
directors of the Company and its subsidiaries. There is no claim by the Company
or any of its subsidiaries pending under any of such policies or bonds as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds. All premiums payable under all such policies and bonds
have been paid and the Company and its subsidiaries are otherwise in full
compliance with the terms of such policies and bonds (or other policies and
bonds providing substantially similar insurance coverage). Such policies of
insurance and bonds are of the type and in amounts customarily carried by
persons conducting businesses similar to those of the Company and its
subsidiaries. The Company does not know of any threatened termination of, or
material premium increase with respect to, any of such policies.
SECTION 2.23. OPTION PLANS. Except as set forth in Section
2.23 of the Company Disclosure Schedule, the Board of Directors of the Company
has taken all necessary action (or refrained from taking action, where
appropriate) under the Company Stock Option Plan (as defined in Section 5.05) so
that no Stock Options (or any portion
<PAGE>
23
thereof) will be accelerated or entitled to receive cash or other property as
a result of the consummation of the transactions contemplated hereby, but
instead shall be assumed as provided in Section 1.06(c) hereof.
SECTION 2.24. VOTE REQUIRED. The affirmative vote of the holders
of at least a majority of the outstanding shares of the Company Common Stock is
the only vote of the holders of any class or series of the Company's capital
stock necessary to approve the Merger.
SECTION 2.25. POOLING MATTERS. Neither the Company nor any of
its affiliates, to the Company's knowledge and based upon consultation with its
independent accountants, is aware of any facts or has taken or agreed to take
any action that (without giving effect to any action taken or agreed to be taken
by Parent or any of its affiliates) would affect the ability of Parent to
account for the business combination to be effected by the Mergers as a pooling
of interests.
SECTION 2.26. OPINION OF FINANCIAL ADVISOR. The Company has been
advised by its financial advisor, Volpe, Welty & Company, that in its opinion,
as of the date hereof, the terms of the Merger are fair to the stockholders of
the Company from a financial point of view, and has delivered a written copy of
such opinion to Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and
warrant to the Company that:
SECTION 3.01. ORGANIZATION AND QUALIFICATION. Parent and each
of its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority and 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 be so organized, existing and in good standing or to
have such power, authority and Approvals would not have a Material Adverse
Effect. Parent and each of 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 its 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 have a Material Adverse Effect.
<PAGE>
24
SECTION 3.02. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of
Parent and Merger Sub has all necessary corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. The Board of Directors of Parent has determined that it is
advisable and in the best interest of Parent's stockholders for Parent to enter
into a business combination with the Company upon the terms and subject to the
conditions of this Agreement. This Agreement has been duly and validly executed
and delivered by Parent and Merger Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of Parent and Merger Sub.
SECTION 3.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a)
Section 3.03(a) of the written disclosure schedule previously delivered by
Parent and Merger Sub to the Company (the "Parent Disclosure Schedule") includes
a list of all Material Contracts of Parent and its subsidiaries.
(b) Except as set forth in Section 3.03(b) of the Parent
Disclosure Schedule, the execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance of this Agreement by Parent and Merger
Sub shall not, (i) conflict with or violate the Certificate of Incorporation or
By-Laws of Parent or the Articles of Incorporation or By-Laws of Merger Sub,
(ii) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Parent or any of it subsidiaries or by which its or their
respective properties are bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or impair Parent'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, any Material Contract
or result in the creation of a lien or encumbrance on any of the properties or
assets of Parent or any of it 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 any such case for any
such breaches, defaults or other occurrences that would not have a Material
Adverse Effect.
(c) The execution and delivery of this Agreement by Parent and
Merger Sub will not require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except (i) for applicable requirements, if any, of the
Securities Act, the Exchange Act, the Blue Sky Laws
<PAGE>
25
and the pre-merger notification requirements of the HSR Act and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or delay consummation of
the Merger, or otherwise prevent Parent or Merger Sub from performing their
respective obligations under this Agreement, and would not have a Material
Adverse Effect.
SECTION 3.04. CERTIFICATE OF INCORPORATION AND BY-LAWS. Parent
has heretofore furnished to the Company a complete and correct copy of its
Certificate of Incorporation and the By-Laws, as amended to date. Such
Certificate of Incorporation and By-Laws are in full force and effect. Neither
Parent nor Merger Sub is in violation of any of the provisions of its
Certificate of Incorporation or By-Laws.
SECTION 3.05. CAPITALIZATION. As of January 31, 1995, the
authorized capital stock of Parent consisted of (i) 500,000,000 shares of Parent
Common Shares of which: 143,485,318 shares were issued and outstanding, no
shares were held in treasury, 28,839,039 shares were reserved for issuance
pursuant to outstanding options under Parent's stock option plans, 3,202,649
were reserved for future issuance under Parent's employee purchase plan,
7,402,395 shares were reserved for future issuance with respect to Parent's
outstanding Zero Coupon Convertible Subordinated Debentures due 2013, and an
indefinite number of shares were reserved for future issuance with respect to
Parent's outstanding Series A Convertible Preferred Stock; and (ii) 2,000,000
shares of Preferred Stock, $0.001 par value ("Parent Preferred Stock"), 35,000
shares of Series A Convertible Preferred Stock of which were issued and
outstanding. Other than the grant by Parent on February 1, 1995 of options to
purchase 2,230,600 shares of Parent Common Shares, no material change in such
capitalization has occurred between January 31, 1995 and the date hereof. The
authorized capital stock of Merger Sub consists of 1,000 shares of common stock,
par value $0.001 per share, 100 shares of which, as of the date hereof, are
issued and outstanding. All of the outstanding shares of Parent's and Merger
Sub's respective capital stock have been duly authorized and validly existing
and are fully paid and nonassessable. Parent owns all of the capital stock of
Merger Sub.
SECTION 3.06. COMPLIANCE; PERMITS. (a) Neither Parent nor any
of its subsidiaries is in conflict with, in default with respect to or in
violation of (i) any law, rule, regulation, order, judgment or decree applicable
to Parent or any of its subsidiaries or by which its 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 Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries is or any of their respective properties is
bound or affected, except for any such conflicts, defaults or violations which
would not have a Material Adverse Effect.
<PAGE>
26
(b) Parent and its subsidiaries hold all permits, licenses,
easements, variances, exemptions, consents, certificates, orders and approvals
from governmental authorities which are material to the operation of the
business of the Company and its subsidiaries taken as a whole as it is now being
conducted (collectively, the "Parent Permits"). Parent and its subsidiaries are
in compliance with the terms of the Parent Permits, except where the failure to
so comply would not have a Material Adverse Effect.
SECTION 3.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) Parent has
filed all forms, reports and documents required to be filed with the SEC since
June 30, 1992, and has heretofore delivered to the Company, in the form filed
with the SEC, (i) its Annual Reports on Form 10-K for the fiscal years ended
June 30, 1994, 1993 and 1992, and its quarterly report on Form 10-Q for the
fiscal quarter ended September 30, 1994, (ii) all proxy statements relating to
Parent's meetings of stockholders (whether annual or special) held since June
30, 1992, (iii) all other reports or registration statements (other than Reports
on Form 10-Q and Reports on Form 3, 4 or 5 filed on behalf of affiliates of the
Parent) filed by Parent with the SEC since June 30, 1992 and (iv) all amendments
and supplements to all such reports and registration statements filed by Parent
with the SEC (collectively, the "Parent SEC Reports"). The Parent SEC Reports
(i) were prepared in accordance with the requirements of the Securities Act or
the Exchange Act, as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of Parent's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Parent SEC Reports has
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto) and each
fairly presents the consolidated financial position of Parent and its
subsidiaries as at the respective dates thereof and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
(c) Parent has heretofore furnished to the Company a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Parent with the SEC
pursuant to the Securities Act or the Exchange Act.
<PAGE>
27
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
set forth in Section 3.08 of the Parent Disclosure Schedule, since June 30,
1994, Parent has conducted its business in the ordinary course and there has not
occurred: (i) any Material Adverse Effect; (ii) any amendments or changes in
the Certificate of Incorporation or By-Laws of Parent; (iii) any damage to,
destruction or loss of any assets of the Parent (whether or not covered by
insurance) that could have a Material Adverse Effect; (iv) any revaluation by
Parent of any of its assets, including, without limitation, writing down the
value of capitalized software or inventory or writing off notes or accounts
receivable other than in the ordinary course of business; or (v) except as
disclosed in Section 3.08 of the Parent Disclosure Schedule, any other action or
event that would have required the consent of the Company pursuant to Section
4.03 had such action or event occurred after the date of this Agreement.
SECTION 3.09. RESTRICTIONS ON BUSINESS ACTIVITIES. Except for
this Agreement, there is no material agreement, judgment, injunction, order or
decree binding upon Parent 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 Parent or any of its subsidiaries, any acquisition of
property by Parent or any of its subsidiaries or the conduct of business by
Parent or any of its subsidiaries as currently conducted or as proposed to be
conducted by Parent.
SECTION 3.10. TITLE TO PROPERTY. Parent and each of its
subsidiaries have good, marketable and defensible title to all of their
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 or which
would not have a Material Adverse Effect; and, to Parent's knowledge, all leases
pursuant to which Parent or any of its subsidiaries lease from others material
amounts of real or personal property are in good standing, valid and effective
in accordance with their respective terms, and there is not, to the knowledge of
Parent, under any of such leases, any existing material default or event of
default (or event which, with notice or lapse of time, or both, would constitute
a material default and in respect of which Parent or such subsidiary has not
taken adequate steps to prevent such a default from occurring) except where the
lack of such good standing, validity and effectiveness, or the existence of such
default or event of default would not have a Material Adverse Effect.
SECTION 3.11. FULL DISCLOSURE. No statement contained in any
certificate or schedule furnished or to be furnished by Parent or Merger Sub to
the Company in, or pursuant to the provisions of, this Agreement contains or
will contain any untrue statement of a material fact or omits or shall omit to
state any material fact necessary, in the light of the circumstances under which
it was made, to make the statements herein or therein not misleading.
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SECTION 3.12. NO UNDISCLOSED LIABILITIES. (a) Except as is
disclosed in Section 3.12 of the Parent Disclosure Schedule or the Parent SEC
Reports, neither Parent nor any of its subsidiaries has any liabilities
(absolute, accrued, contingent or otherwise) which are, in the aggregate,
material to the business, operations or financial condition of Parent and its
subsidiaries taken as a whole, except liabilities (i) adequately provided for in
Parent's balance sheet (including any related notes thereto) as of June 30, 1994
included in the Parent SEC Reports (the "June 30 Balance Sheet"), (ii) incurred
in the ordinary course of business and not required under GAAP to be reflected
on the June 30 Balance Sheet, or (iii) incurred since June 30, 1994 in the
ordinary course of business and consistent with past practice, and liabilities
incurred in connection with this Agreement.
(b) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and except for
this Agreement and any other agreements or arrangements contemplated by this
Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or liabilities
or engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person.
SECTION 3.13. ABSENCE OF LITIGATION. Except as set forth in
Section 3.13 of the Parent Disclosure Schedule or as reflected in the Parent SEC
Reports, there are no claims, actions, suits, proceedings or investigations
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, that could have a Material Adverse
Effect.
SECTION 3.14. INSURANCE. Parent and its subsidiaries maintain
fire and casualty, general liability, business interruption, product liability
and sprinkler and water damage insurance that Parent believes to be reasonably
prudent for its business.
SECTION 3.15. REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS.
Subject to the accuracy of the representations of the Company in Section 2.13,
the Registration Statement pursuant to which the Parent Common Shares to be
issued in the Merger will be registered with the SEC shall not, at the time the
Registration Statement (including any amendments or supplements thereto) is
declared effective by the SEC, contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
included therein, in light of the circumstances under which they were made, not
misleading. Subject to the accuracy of the representations of the Company in
Section 2.13, the information supplied by Parent for inclusion in the Proxy
Statement/Prospectus will not, on the date the Proxy Statement/Prospectus is
first mailed to stockholders, at the time of the Company Stockholders' Meeting
and at the Effective Time, contain any statement which, at such time and in
light of the circumstances under which it shall be made, is false or
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29
misleading with respect to any material fact, or will omit to state any material
fact necessary in order to make the statements therein not false or misleading.
If at any time prior to the Effective Time any event relating to Parent, Merger
Sub or any of their respective affiliates, officers or directors should be
discovered by Parent or Merger Sub which should be set forth in an amendment to
the Registration Statement or a supplement to the Proxy Statement/ Prospectus,
Parent or Merger Sub will promptly inform the Company. Notwithstanding the
foregoing, Parent makes no representation or warranty with respect to any
information supplied by the Company which is contained in, or furnished in
connection with the preparation of, any of the foregoing.
SECTION 3.16. TAXES. Other than as disclosed on Section 3.16 of
the Parent Disclosure Schedule, Parent and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax purposes of which
Parent or any of its subsidiaries is or has been a member, have filed all United
States federal income Tax Returns and all other material Tax Returns required to
be filed by them or any of them, and have paid and discharged all Taxes shown
therein to be due and there are no other Taxes that would be due if asserted by
a taxing authority, except such as are being contested in good faith by
appropriate proceedings (to the extent that any such proceedings are required)
or with respect to which Parent is maintaining reserves in accordance with GAAP
in its financial statements to the extent currently required in all material
respects adequate for their payment, except, in each instance, to the extent the
failure to do so would not have a Material Adverse Effect. Neither the IRS nor
any other taxing authority or agency is now asserting or, to the best of
Parent's knowledge, threatening to assert against Parent or any of its
subsidiaries any deficiency or claim for additional Taxes other than additional
Taxes with respect to which Parent is maintaining reserves in accordance with
GAAP in its financial statements which are in all material respects adequate for
their payment, except, in each instance, to the extent that the failure to do so
would not have a Material Adverse Effect. Except as set forth in Section 3.16
of the Parent Disclosure Schedule, no Tax Return of either Parent or any of its
subsidiaries is currently being audited by any taxing authority except as would
not have a Material Adverse Effect. Except as set forth in Section 3.16 of the
Parent Disclosure Schedule, no material tax claim has become a lien on any
assets of Parent or any subsidiary thereof and neither Parent nor any of its
subsidiaries has, except as would not have a Material Adverse Effect, granted
any waiver of any statute of limitations with respect to, or any extension of a
period for the assessment of, any Tax.
SECTION 3.17. BROKERS. No broker, finder or investment banker
(other than Morgan Stanley & Co. Incorporated and Unterberg Harris L.P.) 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 Parent or Merger Sub.
SECTION 3.18. OPINION OF FINANCIAL ADVISOR. Parent has been
advised by its financial advisor, Morgan Stanley & Co. Incorporated, that in its
opinion, as of the date
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30
hereof, the Exchange Ratio is fair from a financial point of view to Parent, and
has delivered a copy of such opinion to the Company.
SECTION 3.19. POOLING MATTERS. Neither Parent nor any of its
affiliates, to its knowledge and based upon consultation with its independent
accountants, is aware of any fact or has taken or agreed to take any action that
(without giving effect to any action taken or agreed to be taken by the Company
or any of its affiliates) would affect the ability of Parent to account for the
business combination to be effected by the Mergers as a pooling of interests.
SECTION 3.20. NO STOCKHOLDER VOTE. No vote of the stockholders
of Parent is necessary to approve the Merger or the issuance of Parent Common
Shares therein.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
MERGER. During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, the
Company covenants and agrees that, unless Parent shall otherwise agree in
writing, the Company shall conduct its business and shall cause the businesses
of its subsidiaries to be conducted only in, and the Company and its
subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use reasonable commercial efforts to preserve substantially intact the business
organization of the Company and its subsidiaries, to keep available the services
of the present officers, employees and consultants of the Company and its
subsidiaries, to take all reasonable action in the ordinary course of business
and in a manner consistent with past practice necessary to prevent the loss,
cancellation, abandonment, forfeiture or expiration of any Company Intellectual
Property, and to preserve the present relationships of the Company and its
subsidiaries with customers, suppliers and other persons with which the Company
or any of its subsidiaries has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement,
neither the Company nor any of its subsidiaries shall, during the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Time, directly or indirectly do, or propose
to do, any of the following without the prior written consent of Parent:
(a) amend or otherwise change the Company's Articles of
Incorporation or By-Laws;
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31
(b) issue, sell, pledge, dispose of or encumber, or authorize
the issuance, sale, pledge, disposition or encumbrance of, any shares of
capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital
stock, or any other ownership interest (including, without limitation, any
phantom interest) of the Company, any of its subsidiaries or affiliates
(except for the issuance of shares of the Company Common Stock issuable
pursuant to employee stock options under the Company Stock Option Plans (as
defined in Section 5.05) or pursuant to rights to purchase such shares
under the Company Stock Purchase Plan (as defined in Section 5.06), which
options or rights, as the case may be, are outstanding on the date hereof);
(c) sell, pledge, dispose of or encumber any assets of the Company
or any of its subsidiaries (except for (i) sales of assets in the ordinary
course of business and in a manner consistent with past practice and (ii)
dispositions of obsolete or worthless assets);
(d) amend or change the period (or permit any acceleration,
amendment or change) of exercisability of options granted under the
Employee Plans (including the Company Stock Option Plan) or authorize cash
payments in exchange for any options granted under any of such plans;
(e) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly owned
subsidiary of the Company may declare and pay a dividend to its parent,
(ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock or (iii) amend
the terms of, repurchase, redeem or otherwise acquire, or permit any
subsidiary to repurchase, redeem or otherwise acquire, any of its
securities or any securities of its subsidiaries, or propose to do any of
the foregoing;
(f) sell, transfer, license, sublicense or otherwise dispose of
any Company Intellectual Property, or amend or modify any existing
agreements with respect to any Company Intellectual Property or Third Party
Intellectual Property Rights, other than nonexclusive object and source
code licenses in the ordinary course of business consistent with past
practice;
(g) (i) acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee (other than guarantees of bank
debt of the Company's subsidiaries entered into in the ordinary course of
business) or endorse or otherwise as an
<PAGE>
32
accommodation become responsible for, the obligations of any person, or
make any loans or advances, except in the ordinary course of business
consistent with past practice; (iii) enter into or amend any contract or
agreement other than in the ordinary course of business; (iv) authorize any
capital expenditures or purchase of fixed assets which are, in the
aggregate, in excess of $1,000,000 for the Company and its subsidiaries,
taken as a whole; or (v) enter into or amend any contract, agreement,
commitment or arrangement to effect any of the matters prohibited by this
Section 4.01(g);
(h) increase the compensation payable or to become payable to its
officers or employees, except for increases in salary or wages of employees
of the Company or its subsidiaries who are not officers of the Company in
accordance with past practices, or grant any severance or termination pay
to, or enter into any employment or severance agreement with any director,
officer (except for officers who are terminated on an involuntary basis) or
other employee of the Company or any of its subsidiaries, or establish,
adopt, enter into or amend any Employee Plan;
(i) take any action, other than as required by GAAP, to change
accounting policies or procedures (including, without limitation,
procedures with respect to revenue recognition, capitalization of software
development costs, payments of accounts payable and collection of accounts
receivable);
(j) make any material Tax election inconsistent with past
practices or settle or compromise any material federal, state, local or
foreign tax liability or agree to an extension of a statute of limitations
for any assessment of any Tax, except to the extent the amount of any such
settlement has been reserved for on the Company's most recent SEC Report;
(k) pay, discharge or satisfy any claims, liabilities or
obligjations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the financial statements of
the Company or incurred in the ordinary course of business and consistent
with past practice;
(l) except as may be required by law, take any action to terminate
or amend any of its Employee Plan other than in connection with the Merger;
(m) take or allow to be taken or fail to take any act or omission
which would jeopardize the treatment of the Mergers as a pooling of
interests for accounting purposes under GAAP; or
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33
(n) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.01(a) through (m) above, or any action
which would make any of the representations or warranties of the Company
contained in this Agreement untrue or incorrect or prevent the Company from
performing or cause the Company not to perform its covenants hereunder or
result in any of the conditions to the Merger set forth herein not being
satisfied.
SECTION 4.02. NO SOLICITATION. (a) The Company shall not,
directly or indirectly, through any officer, director, employee, representative
or agent of the Company or any of its subsidiaries, solicit or encourage
(including by way of furnishing information) the initiation of any inquiries or
proposals regarding any merger, amalgamation, take-over bid, sale of substantial
assets, sale of shares of capital stock (including without limitation by way of
a tender offer) or similar transactions involving the Company or any
subsidiaries of the Company (any of the foregoing inquiries or proposals being
referred to herein as an "Acquisition Proposal"); PROVIDED, HOWEVER, that
nothing contained in this Agreement shall prevent the Board of Directors of the
Company from referring any third party to this Section 4.02(a). Nothing
contained in this Section 4.02(a) or any other provision of this Agreement shall
prevent the Board of Directors of the Company from considering, negotiating,
approving and recommending to the stockholders of the Company an unsolicited
bona fide written Acquisition Proposal which the Board of Directors of the
Company determines in good faith (after consultation with its financial
advisors, and after receiving a written opinion of outside counsel, or the
advice of outside counsel that is reflected in the minutes of the Board of
Directors of the Company, to the effect that the Board of Directors is required
to do so in order to discharge properly its fiduciary duties) would result in a
transaction more favorable to the Company's stockholders than the transaction
contemplated by this Agreement (any such Acquisition Proposal being referred to
herein as a "Superior Proposal").
(b) The Company shall immediately notify Parent after receipt of
any Acquisition Proposal or any request for nonpublic information relating to
the Company or any of its subsidiaries in connection with an Acquisition
Proposal or for access to the properties, books or records of the Company or any
subsidiary by any person or entity that informs the Board of Directors of the
Company or such subsidiary that it is considering making, or has made, an
Acquisition Proposal. Such notice to Parent shall be made orally and in writing
and shall indicate in reasonable detail the identity of the offeror and the
terms and conditions of such proposal, inquiry or contact.
(c) If the Board of Directors of the Company receives a request
for material nonpublic information by a party who makes a bone fide Acquisition
Proposal and the Board of Directors of the Company determines that such
proposal, if consummated pursuant to its terms, would be a Superior Proposal,
then, and only in such case, the Company may, subject to the execution of a
confidentiality and standstill agreement
<PAGE>
34
substantially similar to that then in effect between the Company and Parent,
provide such party with access to information regarding the Company.
(d) The Company shall immediately cease and cause to be terminated
any existing discussions or negotiations with any parties (other than Parent and
Merger Sub) conducted heretofore with respect to any of the foregoing. The
Company agrees not to release any third party from any confidentiality or
standstill agreement to which the Company is a party.
(e) The Company shall ensure that the officers, directors and
employees of the Company and its subsidiaries and any investment banker or other
advisor or representative retained by the Company are aware of the restrictions
described in this Section, and shall be responsible for any breach of this
Section 4.02 by such bankers, advisors and representatives.
SECTION 4.03. CONDUCT OF BUSINESS BY PARENT PENDING THE MERGER.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, Parent
covenants and agrees that, unless the Company shall otherwise agree in writing,
Parent shall conduct its business, and cause the businesses of its subsidiaries
to be conducted, in the ordinary course of business and consistent with past
practice, other than actions taken by Parent or its subsidiaries in
contemplation of the Merger and the Other Merger, and shall not directly or
indirectly do, or propose to do, any of the following without the prior written
consent of the Company:
(a) amend or otherwise change Parent's Articles of Incorporation, or
amend the terms of the Parent Common Shares, except for the filing of the
certificate of designation referred to in the Other Merger Agreement;
(b) except for the Other Merger, acquire or agree to acquire, by
merging or consolidating with, by purchasing an 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 of
any other person, which, in each case, would materially delay or prevent
the consummation of the transactions contemplated by this Agreement;
(c) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly owned
subsidiary of Parent may declare and pay a dividend to its parent;
(d) sell, transfer, license, sublicense or otherwise dispose of
any material assets; or
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35
(e) take or agree in writing or otherwise to take any action which
would make any of the representations or warranties of Parent contained in
this Agreement untrue or incorrect or prevent Parent from performing or
cause Parent not to perform its covenants hereunder.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT.
As promptly as practicable after the execution of this Agreement, the Company
and Parent shall prepare and file with the SEC preliminary proxy materials which
shall constitute the Proxy Statement of the Company and the Registration
Statement of Parent with respect to the Parent Common Shares to be issued in
connection with the Merger. As promptly as practicable after comments are
received from the SEC thereon and after the furnishing by the Company and Parent
of all information required to be contained therein, the Company and Parent
shall file with the SEC a combined proxy and registration statement on Form S-4
(or on such other form as shall be appropriate) relating to the approval of the
Merger and the transactions contemplated hereby by the stockholders of the
Company and shall use all reasonable efforts to cause the Registration Statement
to become effective as soon thereafter as practicable. The Proxy Statement
shall include the recommendation of the Board of Directors of the Company in
favor of the Merger, subject to the second sentence of Section 4.02.
SECTION 5.02. STOCKHOLDERS' MEETING. The Company shall in
accordance with California Law and the Company's Articles of Incorporation and
Bylaws call and hold the Company Stockholders' Meeting as promptly as
practicable for the purpose of voting upon the approval of the Merger. The
Company shall use its reasonable best efforts to hold the Company Stockholders'
Meeting as soon as practicable after the date on which the Registration
Statement becomes effective or, if requested by Parent, the date on which the
Other Merger is consummated provided the Other Merger is consummated after the
effective date of the Registration Statement. The Company shall use its
reasonable best efforts to solicit from their respective stockholders proxies in
favor of the approval of the Merger, and shall take all other action necessary
or advisable to secure the vote or consent of stockholders required by
California Law to obtain such approvals.
SECTION 5.03. ACCESS TO INFORMATION; CONFIDENTIALITY. (a)
Upon reasonable notice and subject to restrictions contained in confidentiality
agreements to which such party is subject, the Company and Parent shall each
(and shall cause each of their subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of the other,
reasonable access, during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records and, during such period,
the
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36
Company and Parent each shall (and shall cause each of their subsidiaries to)
furnish promptly to the other all information concerning its business,
properties and personnel as such other party may reasonably request, and each
shall make available to the other the appropriate individuals (including
attorneys, accountants and other professionals) for discussion of the other's
business, properties and personnel as either party may reasonably request. Each
party shall keep such information confidential in accordance with the terms of
the currently effective confidentiality agreement (the "Confidentiality
Agreement") between Parent and the Company.
(b) The Company shall provide to Parent promptly as available
drafts and printers' proofs of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 and the Company's proxy statement related to
its 1995 annual meeting of shareholders, and Parent shall provide to the
Company, promptly as available, drafts and printers' proofs of Parent's Form
10-Q for the quarter ended December 31, 1994.
SECTION 5.04. CONSENTS; APPROVALS. The Company and Parent shall
each use their best efforts to obtain all consents, waivers, approvals,
authorizations or orders (including, without limitation, all United States and
foreign governmental and regulatory rulings and approvals), and the Company and
Parent shall make all filings (including, without limitation, all filings with
United States and foreign governmental or regulatory agencies) required in
connection with the authorization, execution and delivery of this Agreement by
the Company and Parent and the consummation by them of the transactions
contemplated hereby. The Company and Parent shall furnish all information
required to be included in the Proxy Statement and the Registration Statement,
or for any application or other filing to be made pursuant to the rules and
regulations of any United States, Canadian or foreign governmental body in
connection with the transactions contemplated by this Agreement.
SECTION 5.05. STOCK OPTIONS. (a) At the Effective Time, the
Company's obligations with respect to each outstanding option to purchase shares
of Company Common Stock (each, a "Company Option") under the Company's 1990
Stock Option Plan (the "Company Stock Option Plan"), whether vested or unvested,
will be assumed by Parent. Each Company Option so assumed by Parent under this
Agreement shall continue to have, and be subject to, the same terms and
conditions set forth in the Company Stock Option Plan and agreement pursuant to
which such Company Option was issued as in effect immediately prior to the
Effective Time, except that (i) such Company Option will be exercisable for that
number of Parent Common Shares equal to the product of the number of shares of
Company Common Stock that were purchasable under such Company Option immediately
prior to the Effective Time multiplied by the Exchange Ratio, rounded up to the
nearest whole number of shares of Parent Common Shares, and (ii) the per share
exercise price for the shares of Parent Common Shares issuable upon exercise of
such assumed Company Option will be equal to the quotient determined by dividing
the exercise price per share of Company
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37
Common Stock at which such Company Option was exercisable immediately prior to
the Effective Time by the Exchange Ratio, and rounding the resulting exercise
price up to the nearest whole cent.
(b) It is the intention of the parties that the Company Options
assumed by Parent qualify following the Effective Time as incentive stock
options as defined in the Code ("ISO's") to the extent the Company Options
qualified as ISO's prior to the Effective Time.
(c) After the Effective Time, Parent will issue to each holder of
an outstanding Company Option a document evidencing the foregoing assumption by
Parent.
SECTION 5.06. COMPANY EMPLOYEE STOCK PURCHASE PLAN. (a) The
Company shall take such actions as are necessary to cause the exercise date (as
such term is used in the Company's Employee Stock Purchase Plan (the "Company
Stock Purchase Plan")) applicable to the then current offering period (as such
term is used in the Company Stock Purchase Plan) to be the last trading day on
which the Parent Common Shares are traded on the New York Stock Exchange
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, the Company
shall apply the funds credited as of such date under the Company Stock Purchase
Plan within each participant's payroll withholdings account to the purchase of
whole shares of Company Common Stock in accordance with the terms of the Company
Stock Purchase Plan. The cost to each participant in the Company Stock Purchase
Plan for shares of Company Common Stock shall be the lower of 85% of the closing
sale price of Company Common Stock on the Nasdaq National Market on (i) the
first day of the then current offering period or (ii) the Final Company Purchase
Date.
(b) Employees of the Company as of the Effective Time shall be
permitted to participate in Parent's Employee Stock Purchase Plan commencing on
the first enrollment date following the Effective Time, subject to compliance
with the eligibility provisions of such plan (with employees receiving credit,
for purposes of such eligibility provisions, for service with the Company).
SECTION 5.07. AGREEMENTS OF AFFILIATES. The Company shall
deliver to Parent, prior to the date the Registration Statement becomes
effective under the Securities Act, a letter (the "Affiliate Letter")
identifying all persons who are, or may deemed to be, at the time of the Company
Stockholders' Meetings, "affiliates" of the Company for purposes of Rule 145
under the Securities Act. The Company shall use its best efforts to cause each
person who is identified as an "affiliate" in the Affiliate Letter to deliver to
Parent, prior to the Effective Time, a written agreement (an "Affiliate
Agreement") in substantially the form of Exhibit A hereto.
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SECTION 5.08. INDEMNIFICATION AND INSURANCE. (a) The Articles
of Incorporation of the Surviving Corporation shall contain the provisions with
respect to indemnification set forth in the By-Laws of the Company, which
provisions shall 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 at the Effective Time were directors,
officers, employees or agents of the Company, unless such modification is
required by law.
(b) The Company shall, to the fullest extent permitted under
applicable law or under the Company's Articles of Incorporation or By-Laws and
regardless of whether the Merger becomes effective, indemnify and hold harmless,
and after the Effective Time, the Surviving Corporation and Parent shall, to the
fullest extent permitted under applicable law or under the Surviving
Corporation's and Parent's, as the case may be, Articles of Incorporation or
By-Laws, indemnify and hold harmless, each present and former director, officer,
employee, fiduciary and agent of the Company or any of its subsidiaries
(collectively, the "Indemnified Parties") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission occurring
at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) for a period of six years after the
Effective Time. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) any
counsel retained by the Indemnified Parties for any period after the Effective
Time shall be reasonably satisfactory to the Surviving Corporation and Parent,
(ii) after the Effective Time, the Surviving Corporation and Parent shall pay
the reasonable fees and expenses of such counsel, and (iii) the Surviving
Corporation and Parent will cooperate in the defense of any such matter;
PROVIDED, HOWEVER, that neither the Surviving Corporation nor Parent shall
be liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld); and PROVIDED, FURTHER, that in the
event that any claim or claims for indemnification are asserted or made within
such six-year period, all rights to indemnification in respect of any such claim
or claims shall continue until the disposition of any and all such claims. The
Indemnified Parties as a group may retain only one law firm to represent them
with respect to any single action unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two or more Indemnified Parties.
SECTION 5.09. NOTIFICATION OF CERTAIN MATTERS. The Company shall
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate, (ii) any
failure of the Company, Parent or Merger Sub, as the case may be, materially to
comply with or satisfy any covenant, condition or agreement to be complied
<PAGE>
39
with or satisfied by it hereunder and (iii) any termination of the Other
Agreement; PROVIDED, HOWEVER, that the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice; and PROVIDED, FURTHER, that
failure to give such notice shall not be treated as a breach of covenant for the
purposes of Sections 6.02(a) and 6.03(a) unless the failure to give such notice
results in material prejudice to the other party.
SECTION 5.10. FURTHER ACTION/TAX TREATMENT. Upon the terms and
subject to the conditions hereof, each of the parties hereto in good faith shall
use all commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, to obtain in a timely manner all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings, and to otherwise satisfy or cause to be satisfied all
conditions precedent to its obligations under this Agreement. Each of Parent,
Merger Sub and the Company shall use its best efforts to cause the Mergers to
qualify, and will not (both before and after consummation of the Mergers) take
any actions which could prevent the Mergers from qualifying as a reorganization
under the provisions of Section 368 of the Code. Each of Parent, Merger Sub and
the Company shall report the Mergers as a reorganization under the provisions of
Section 368 of the Code and, to the extent permitted, on all state and local Tax
returns, filed after the Effective Time of the Mergers.
SECTION 5.11. PUBLIC ANNOUNCEMENTS. Parent and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Merger or this Agreement and shall not
issue any such press release or make any such public statement without the prior
consent of the other party, which shall not be unreasonably withheld;
PROVIDED, HOWEVER, that a party may, without the prior consent of the other
party, issue such press release or make such public statement as may upon the
advice of counsel be required by law, the National Association of Securities
Dealers or the NYSE if it has used all reasonable efforts to consult with the
other party.
SECTION 5.12. LISTING OF PARENT COMMON SHARES. Parent shall use
its reasonable best efforts to cause the shares of Parent Common Shares to be
issued in the Merger to be approved for listing on the New York Stock Exchange.
SECTION 5.13. CONVEYANCE TAXES. Parent and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereby that are required or permitted to be filed on or before the Effective
Time.
<PAGE>
40
SECTION 5.14. ACCOUNTANTS' LETTERS. Upon reasonable notice from
Parent, the Company shall use its best efforts to cause Arthur Andersen &
Company LLP to deliver to Parent a letter covering such matters as are requested
by Parent and as are customarily addressed in accountant's "comfort" letters.
SECTION 5.15. POOLING ACCOUNTING TREATMENT. Each of Parent and
the Company agree not to take any action that would adversely affect the ability
of Parent to treat the Mergers as a pooling of interests under GAAP.
SECTION 5.16. OTHER MERGER. Parent will not close the Other
Merger unless the Merger closes substantially contemporaneously therewith.
SECTION 5.17. OTHER MERGER EXCHANGE RATIO. Parent shall not
increase the Other Merger Exchange Ratio, other than increasing such ratio in
response to an Acquisition Proposal with respect to Alias, without
proportionately increasing the Exchange Ratio.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) EFFECTIVENESS OF THE REGISTRATION STATEMENT. The
Registration Statement shall have been declared effective by the SEC under
the Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no proceedings
for that purpose and no similar proceeding in respect of the Proxy
Statement shall have been initiated or, to the knowledge of Parent or the
Company, threatened by the SEC;
(b) STOCKHOLDER APPROVAL. This Agreement and the Merger shall
have been approved and adopted by the requisite vote of the shareholders of
the Company;
(c) HSR ACT. The waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated;
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of
<PAGE>
41
competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in effect,
nor shall any proceeding brought by any administrative agency or commission
or other governmental authority or instrumentality, domestic or foreign,
seeking any of the foregoing be pending; and there shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced
or deemed applicable to the Merger, which makes the consummation of the
Merger illegal;
(e) TAX OPINIONS. Parent and the Company shall have received
substantially identical written opinions of Shearman & Sterling and Wilson,
Sonsini, Goodrich & Rosati, respectively, in form and substance reasonably
satisfactory to them to the effect that the Mergers will constitute a
reorganization within the meaning of Section 368 of the Code, and such
opinions shall not have been withdrawn. In rendering such opinions,
counsel shall be entitled to rely upon representations of Parent, Merger
Sub and the Company and certain affiliates and shareholders of the Company;
(f) NYSE LISTING. The Parent Common Shares shall have been approved
for listing, subject to notice of issuance, on the NYSE; and
(g) OTHER MERGER. The Other Merger shall have been closed.
SECTION 6.02. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND
MERGER SUB. The obligations of Parent and Merger Sub to effect the Merger are
also subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in this Agreement (together with the
Company Disclosure Schedule) shall be true and correct in all respects on
and as of the Effective Time, except for (i) changes contemplated by this
Agreement, (ii) those representations and warranties which address matters
only as of a particular date (which shall remain true and correct as of
such date) and (iii) instances where the failure to be true and correct
would not have a Material Adverse Effect on the Company, with the same
force and effect as if made on and as of the Effective Time, and Parent and
Merger Sub shall have received a certificate to such effect signed by the
President and Vice President - Finance and Administration of the Company;
(b) AGREEMENTS AND COVENANTS. The Company shall have performed
or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time, and Parent and Merger Sub shall have received
a certificate to such effect signed by the President and Vice President -
Finance and Administration of the Company;
<PAGE>
42
(c) CONSENTS OBTAINED. All material consents, waivers,
approvals, authorizations or orders required to be obtained, and all
filings required to be made, by the Company for the authorization,
execution and delivery of this Agreement and the consummation by it of the
transactions contemplated hereby shall have been obtained and made by the
Company;
(d) GOVERNMENTAL ACTIONS. There shall not have been instituted,
pending or threatened any action or proceeding (or any investigation or
other inquiry that might result in such an action or proceeding) by any
governmental authority or administrative agency before any governmental
authority, administrative agency or court of competent jurisdiction, nor
shall there be in effect any judgment, decree or order of any governmental
authority, administrative agency or court of competent jurisdiction, in
either case, seeking to prohibit or limit Parent from exercising all
material rights and privileges pertaining to its ownership of the Surviving
Corporation or the ownership or operation by Parent or any of its
subsidiaries of all or a material portion of the business or assets of
Parent or any of its subsidiaries, or seeking to compel Parent or any of
its subsidiaries to dispose of or hold separate all or any material portion
of the business or assets of Parent or any of its subsidiaries, as a result
of the Merger or the transactions contemplated by this Agreement;
(e) MATERIAL ADVERSE CHANGE. Since the date of this Agreement,
there shall have been no change, occurrence or circumstance in the
business, results of operations or financial condition of the Company or
any subsidiary of the Company having or reasonably likely to have a
Material Adverse Effect;
(f) ACCOUNTANTS' POOLING LETTERS. Each of the parties to the
Agreement shall have received letters dated as of the Effective Date, from
Ernst & Young LLP and Arthur Andersen & Company LLP regarding the
appropriateness of pooling of interests accounting treatment for the Merger
under Accounting Principles Board Opinion No. 16 if closed and consummated
in accordance with this Agreement; and
(g) AFFILIATE AGREEMENTS. Parent shall have received from each
person who is identified in the Affiliate Letter as an "affiliate" of the
Company an Affiliate Agreement, and each such Affiliate Agreement shall be
in full force and effect.
SECTION 6.03. ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY.
The obligation of the Company to effect the Merger is also subject to the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Merger Sub contained in this Agreement (together
with the Parent Disclosure Schedule) shall be true and correct in all
respects on and as of the Effective Time, except for (i) changes
contemplated by this Agreement, (ii) those
<PAGE>
43
representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such date) and
(iii) failures to be true and correct that would not have a Material
Adverse Effect on Parent and Merger Sub, with the same force and effect as
if made on and as of the Effective Time, and the Company shall have
received a certificate to such effect signed by the President and Chief
Executive Officer of Parent;
(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
them on or prior to the Effective Time, and the Company shall have received
a certificate to such effect signed by the President and Chief Financial
Officer of Parent;
(c) CONSENTS OBTAINED. All material consents, waivers,
approvals, authorizations or orders required to be obtained, and all
filings required to be made, by Parent and Merger Sub for the
authorization, execution and delivery of this Agreement and the
consummation by them of the transactions contemplated hereby shall have
been obtained and made by Parent and Merger Sub; and
(d) MATERIAL ADVERSE CHANGE. Since the date of this Agreement,
there shall have been no change, occurrence or circumstance in the
business, results of operations or financial condition of Parent or any
subsidiary of Parent having or reasonably likely to have a Material Adverse
Effect.
ARTICLE VII
TERMINATION
SECTION 7.01. TERMINATION. This Agreement may be terminated at
any time prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall not have
been consummated by August 31, 1995 (PROVIDED that the right to terminate
this Agreement under this Section 7.01(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Merger to occur on or before
such date); or
<PAGE>
44
(c) by either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a non-appealable final order, decree or ruling
or taken any other action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger; or
(d) by Parent or the Company, if, at the Company Stockholders'
Meeting (including any adjournment or postponement thereof), the requisite
vote of the stockholders of the Company shall not have been obtained; or
(e) by Parent, if (i) the Board of Directors of the Company shall
withdraw, modify or change its recommendation of this Agreement or the
Merger in a manner adverse to Parent or shall have resolved to do so; or
(ii) the Board of Directors of the Company shall have taken a "neutral"
position with respect to (or shall have failed to reject as inadequate or
failed to have reaffirmed its recommendation of this Agreement and the
Merger within 10 business days after the public announcement or
commencement of) an Alternative Transaction (as defined in
Section 7.03(d)); or
(f) by Parent or the Company, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company or Parent and
Merger Sub, respectively, set forth in this Agreement or if any
representation or warranty of the Company or Parent and Merger Sub,
respectively, shall have become untrue, in either case, such that the
conditions set forth in Section 6.02(a) or 6.02(b), or Section 6.03(a) or
6.03(b), would not be satisfied (a "Terminating Breach"), PROVIDED that, if
such Terminating Breach is curable prior to the expiration of 30 days from
its occurrence (but in no event later than August 31, 1995) by Parent or
the Company, as the case may be, through the exercise of its reasonable
best efforts and for so long as Parent or the Company, as the case may be,
continues to exercise such reasonable best efforts, neither the Company nor
Parent, respectively, may terminate this Agreement under this Section
7.01(f) unless such 30-day period expires without such Terminating Breach
having been cured; or
(g) by the Company or Parent, if the Board of Directors of the
Company shall have resolved to accept, or accepted, a Superior Proposal; or
(h) by the Company, at any time after the tenth business day
following termination of the Other Merger Agreement; or
(i) by the Parent, at any time after the tenth business day
following termination of the Other Merger Agreement.
<PAGE>
45
SECTION 7.02. EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to Section 7.01, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto or any of its affiliates, directors, officers or stockholders except (i)
as set forth in Section 7.03 and Section 8.01 hereof, and (ii) nothing herein
shall relieve any party from liability for any willful breach hereof (provided
that any fee paid pursuant to Section 7.03(b) or (c) shall be credited towards
any such liability of the paying party). If the Board of Directors of the
Company, in good faith, after receiving the advice of outside counsel, concludes
that it would be in violation of its fiduciary duties if it did not take or omit
to take the actions enumerated in Section 7.01(e) as giving rise to a right of
termination by Parent, then any such action or omission shall not be considered
a breach of this Agreement.
SECTION 7.03. FEES AND EXPENSES. (a) Except as set forth in
this Section 7.03, 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.
(b) The Company shall pay Parent a fee of $6,000,000 upon the
earliest to occur of the following events:
(i) the termination of this Agreement by Parent pursuant to
Section 7.01(e); or
(ii) the termination of this Agreement by Parent pursuant to
Section 7.01(f) after a willful and material breach by the Company of this
Agreement; or
(iii) the termination of this Agreement by Parent or the
Company pursuant to Section 7.01(g); or
(iv) the termination of this Agreement by the Company or
Parent pursuant to Section 7.01(d) if, at the time of termination (and on
the day of the vote referred to in Section 7.01(d)), an Alternative
Transaction shall be outstanding or a proxy statement recommending the
implementation of such Alternative Transaction shall have been published or
sent or given to the holders of the Shares.
(c) (i) The Company shall pay Parent a fee of $5,000,000 upon the
Company's termination of this Agreement pursuant to Section 7.01(h); PROVIDED,
THAT, no such fee shall be payable unless (A) the Other Merger Agreement has
been terminated as a result of a Third Party (as defined in Section 7.03(d))
having engaged in, or having entered into a contract to engage in, an
Alternative Transaction (as defined in the Other Merger Agreement) with Alias,
(B) prior to the expiration of the ten business day period referred to in
Section 7.01(h), Parent has delivered to the Company Parent's written waiver of
the
<PAGE>
46
condition specified in Section 6.01(g) and (C) prior to the expiration of the
ten business day period referred to in Section 7.01(h), the Company has not
delivered to Parent the Company's written waiver of the condition specified in
Section 6.01(g).
(ii) Parent shall pay the Company a fee of $5,000,000 upon
Parent's termination of this Agreement pursuant to Section 7.01(i); PROVIDED,
THAT, no such fee shall be payable unless (A) the Other Merger Agreement has
been terminated as a result of a Third Party having engaged in, or having
entered into a contract to engage in, an Alternative Transaction (as defined in
the Other Merger Agreement) with Alias, (B) prior to the expiration of the ten
business day period referred to in Section 7.01(i), the Company has delivered to
Parent the Company's written waiver of the condition specified in Section
6.01(g) and (C) prior to the expiration of the ten business day period referred
to in Section 7.01(i), Parent has not delivered to the Company Parent's written
waiver of the condition specified in Section 6.01(g).
(d) As used herein, "Alternative Transaction" means (i) a
transaction pursuant to which any person (or group of persons) other than Parent
or its affiliates (a "Third Party") acquires (or publicly proposes to acquire)
more than 50 percent of the outstanding Shares, whether from the Company or
pursuant to a tender offer or exchange offer or otherwise, (ii) a merger or
other business combination involving the Company pursuant to which any Third
Party acquires (or publicly proposes to acquire) more than 50 percent of the
outstanding equity securities of the Company or the entity surviving such merger
or business combination or (iii) any other transaction pursuant to which any
Third Party acquires (or publicly proposes to acquire) control of assets
(including for this purpose the outstanding equity securities of subsidiaries of
the Company, and the entity surviving any merger or business combination
including any of them) of the Company and its subsidiaries having a fair market
value equal to more than 50 percent of the fair market value of all the assets
of the Company and its subsidiaries, taken as a whole, immediately prior to such
transaction (or proposal).
(e) The fee payable pursuant to Section 7.03(b)(i), (ii) and (iii)
shall be paid within one business day after the first to occur of the events
described in Section 7.03(b)(i), (ii) and (iii). The fee payable pursuant to
Section 7.03(c)(i) and (ii) shall be paid within one business day after the
dates of termination referred to therein. The fee payable pursuant to Section
7.03(b)(iv) shall be paid on the date of the closing of the Alternative
Transaction giving rise to such termination, PROVIDED, HOWEVER, that if such
Alternative Transaction is not closed within twelve months of such termination,
the fee shall not be payable. In no event shall the Company or Parent be
required to pay any fee pursuant to Section 7.03(b) or (c) if, immediately prior
to the termination of the Agreement, the party to whom the fee is due was in
material breach of its obligations under this Agreement.
<PAGE>
47
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. Except as otherwise provided in this Section 8.01, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. Any disclosure made with reference to one or more sections of
the Company Disclosure Schedule or the Parent Disclosure Schedule shall be
deemed disclosed with respect to each other section therein as to which such
disclosure is relevant provided such relevance is reasonably apparent. The
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Section
7.01, as the case may be, except that the agreements set forth in Sections 5.05
and 5.06 shall survive the Effective Time indefinitely and those set forth in
Sections 5.03 and 7.03 shall survive termination indefinitely. The
Confidentiality Agreement shall survive termination of this Agreement as
provided therein.
SECTION 8.02. NOTICES. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made as of the date delivered if delivered personally, three
days after being sent by registered or certified mail (postage prepaid, return
receipt requested), one day after dispatch by recognized overnight courier
(provided delivery is confirmed by the carrier) and upon transmission by
telecopy, confirmed received, to the parties at the following addresses (or at
such other address for a party as shall be specified by like changes of
address):
(a) If to Parent or Merger Sub:
Silicon Graphics, Inc.
2011 N. Shoreline Blvd.
Mail Stop 710
Mountain View, CA 94043-1389
Telecopier No.: (415) 965-1586
Attention: Legal Services
With a copy to:
Shearman & Sterling
555 California Street, Suite 2000
San Francisco, CA 94104
Telecopier No.: (415) 616-1199
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48
Attention: Michael J. Kennedy, Esq.
(b) If to the Company:
Wavefront Technologies, Inc.
530 East Montecito Street
Santa Barbara, CA 93103
Telecopier No.: (805) 963-0410
Attention: Michael S. Noling
With a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Telecopier No: (415) 493-6811
Attention: Alan K. Austin, Esq.
SECTION 8.03. CERTAIN DEFINITIONS. For purposes of this
Agreement, the term:
(a) "affiliates" means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person, including, without
limitation, any partnership or joint venture in which the Company (either
alone, or through or together with any other subsidiary) has, directly or
indirectly, an interest of 10 percent or more;
(b) "business day" means any day other than a day on which banks
in San Francisco are required or authorized to be closed;
(c) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(d) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means any corporation, partnership,
joint venture or other legal entity of which the Company, the Surviving
Corporation, Parent or such other person, as the case may be (either alone
or through or together with any other subsidiary), owns, directly or
indirectly, more than 50% of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other
legal entity.
<PAGE>
49
SECTION 8.04. AMENDMENT. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; PROVIDED, HOWEVER, that,
after approval of the Merger by the stockholders of the Company, no amendment
may be made which by law requires further approval by such stockholders without
such further approval. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto; PROVIDED, HOWEVER, that,
prior to the Effective Time, Parent may, by an instrument signed only by Parent,
amend this Agreement solely to cause the Mergers to be effected as a forward
merger of the Company with and into Parent.
SECTION 8.05. WAIVER. At any time prior to the Effective Time,
any party hereto may with respect to any other party hereto (a) extend the time
for the performance of any of the obligations or other acts, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall
be valid if set forth in an instrument in writing signed by the party or parties
to be bound thereby.
SECTION 8.06. HEADINGS. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.07. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 8.08. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement and supersedes all prior agreements and undertakings (other
than the Confidentiality Agreement), both written and oral, among the parties,
or any of them, with respect to the subject matter hereof and, except as
otherwise expressly provided herein, are not intended to confer upon any other
person any rights or remedies hereunder.
SECTION 8.09. ASSIGNMENT, MERGER SUB. This Agreement shall not
be assigned by operation of law or otherwise, except that Parent and Merger Sub
may assign all or any of their rights hereunder to any affiliate provided that
no such assignment shall relieve
<PAGE>
50
the assigning party of its obligations hereunder. Parent guarantees the full
and punctual performance by Merger Sub of all of the obligations hereunder of
Merger Sub.
SECTION 8.10. PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, other than Section 5.08 (which is intended to be for
the benefit of the Indemnified Parties and may be enforced by such Indemnified
Parties).
SECTION 8.11. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of any party hereto in the
exercise of any right hereunder shall impair such right or be construed to be a
waiver of, or acquiescence in, any breach of any representation, warranty or
agreement herein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 8.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO CONTRACTS EXECUTED AND FULLY PERFORMED WITHIN THE STATE
OF CALIFORNIA.
SECTION 8.13. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 8.14. WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB
AND THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
<PAGE>
51
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
SILICON GRAPHICS, INC.
By /S/ Thomas A. Jermoluk
----------------------------------
Name: Thomas A. Jermoluk
Title: President and Chief
Operating Officer
S ACQUISITION CORPORATION
By /S/ William M. Kelly
----------------------------------
Name: William M. Kelly
Title: President
WAVEFRONT TECHNOLOGIES, INC.
By /S/ Michael S. Noling
----------------------------------
Name: Michael S. Noling
Title: President and Chief
Executive Officer
<PAGE>
Exhibit A
FORM OF AFFILIATE AGREEMENT
____________, 1995
Silicon Graphics, Inc.
2011 N. Shoreline Blvd.
Mail Stop 710
Mountain View, CA 94043-1389
Attention: Legal Services
Ladies and Gentlemen:
Pursuant to the terms of the Agreement and Plan of Merger dated as
of February 6, 1995 (the "Agreement"), among Silicon Graphics, Inc., a Delaware
corporation ("Parent"), S Acquisition Corporation, a California corporation and
wholly owned subsidiary of Parent ("Merger Sub"), and Wavefront Technologies,
Inc., a California corporation (the "Company"), Parent will acquire the Company
through the merger of Merger Sub with and into the Company (the "Merger").
Subject to the terms and conditions of the Agreement, at the Effective Time (as
defined in the Agreement), outstanding shares of the common stock, no par value,
of the Company (the "Company Common Stock") will be converted into the right to
receive shares of the common stock, par value $0.001 per share, of Parent (the
"Parent Common Stock"), on the basis described in the Agreement.
The undersigned has been advised that as of the date hereof it may
be deemed to be an "affiliate" of the Company, as the term "affiliate" is (i)
defined 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") under the Securities Act of 1933, as amended (the
"Act"), and/or (ii) used in and for purposes of Accounting Series Releases 130
and 135, as amended, and Staff Accounting Bulletins 65 and 76 of the Commission.
The undersigned understands that the representations, warranties and
covenants set forth herein will be relied upon by Parent, stockholders of
Parent, the Company, other shareholders of the Company and their respective
counsel and accountants.
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2
The undersigned represents and warrants to and agrees with Parent
that:
1. The undersigned has full power to execute and deliver this
Affiliate Agreement and to make the representations and warranties herein and to
perform its obligations hereunder.
2. The undersigned has carefully read this letter and the
Agreement and discussed its requirements and other applicable limitations upon
its ability to sell, transfer or otherwise dispose of Parent Common Stock to the
extent the undersigned felt necessary, with its counsel or counsel for the
Company.
3. The undersigned shall not make any sale, transfer or other
disposition of Parent Common Stock in violation of the Act or the Rules and
Regulations.
4. The undersigned has been advised that the issuance of shares
of Parent Common Stock to the undersigned in connection with the Merger has been
or will be registered with the Commission under the Act on a Registration
Statement on Form S-4. However, the undersigned has also been advised that,
since at the time the Merger was submitted for a vote of the shareholders of the
Company the undersigned may be deemed to have been an affiliate of the Company
and the distribution by the undersigned of any Parent Common Stock has not been
registered, and is not exempt, under the Act, the undersigned may not sell,
transfer or otherwise dispose of Parent Common Stock issued to the undersigned
in the Merger unless (i) such sale, transfer or other disposition has been
registered under the Act, (ii) such sale, transfer or other disposition is made
in conformity with the requirements of Rule 145 promulgated by the Commission
under the Act, or (iii) in the opinion of counsel reasonably acceptable to
Parent, such sale, transfer or other disposition is otherwise exempt from
registration under the Act.
5. Parent is under no obligation to register the sale, transfer
or other disposition of Parent Common Stock by the undersigned or on its behalf
under the Act or to take any other action necessary in order to make compliance
with an exemption from such registration available.
6. Stop transfer instructions will be given to Parent's transfer
agent with respect to the Parent Common Stock and that there will be placed on
the certificates for the Parent Common Stock issued to the undersigned, or any
substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH THE
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3
TERMS OF AN AGREEMENT DATED __________, 1995 BETWEEN THE REGISTERED HOLDER
HEREOF AND SILICON GRAPHICS, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF SILICON GRAPHICS, INC."
7. Unless the transfer by the undersigned of its Parent Common
Stock has been registered under the Act or is a sale made in conformity with the
provisions of Rule 145, Parent reserves the right to put the following legend on
the certificates issued any transferee of the undersigned:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE
HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THEMEANING OF THE SECURITIES ACT OF 1933 AND
MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
8. The legends set forth in paragraphs 6 and 7 above shall be
removed by delivery of substitute certificates without such legend if the
undersigned shall have delivered to Parent a copy of a letter from the staff of
the Commission, or an opinion of counsel in form and substance reasonably
satisfactory to Parent, to the effect that such legend is not required for
purposes of the Act.
9. The undersigned is the beneficial owner of (i.e. has sole or
shared voting or investment power with respect to) all the shares of Company
Common Stock and options to purchase Company Common Stock indicated on the last
page hereof (the "Company Securities"). Except for the Company Securities, the
undersigned 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.
10. Notwithstanding any other provision hereof to the contrary,
the undersigned has not at any time since February 6, 1995 or in contemplation
of the Merger engaged, and will not, after the Effective Time (as defined in the
Agreement) and until such time as results covering at least 30 days of combined
operations of the Company and Parent have been published by Parent, in the form
of a quarterly earnings report, an effective registration statement filed with
the Commission, a report to the Commission on Form 10-K,
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4
10-Q or 8-K, or any other public filing or announcement which includes the
combined results of operations, engage, in any sale, exchange, transfer, pledge,
disposition of or grant of any option, the establishment of any "short" or
put-equivalent position with respect to or the entry into any similar
transaction intended to reduce the risk of the undersigned's risk of ownership
of or investment in, any of the following (other then sales of shares of Company
Common Stock in the Company's registered offering pursuant to its final
prospectus dated December 5, 1994):
(a) any shares of Parent Common Stock which the undersigned may
acquire in connection with the Merger, or any securities which may be paid
as a dividend or otherwise distributed thereon or with respect thereto or
issued or delivered in exchange or substitution therefor (all such shares
and other securities being referred to herein, collectively, as "Restricted
Securities"), or any option, right or other interest with respect to any
Restricted Securities;
(b) any Company Securities; or
(c) any shares of Company Common Stock or other Company equity
securities which the undersigned purchases or otherwise acquires after the
execution of this Affiliate Agreement.
11. As promptly as practicable following the Merger, Parent shall
publish results covering at least 30 days of combined operations of the Company
and Parent in the form of a quarterly earnings report, an effective registration
statement filed with the Commission, a report to the Commission on Form 10-K,
10-Q or 8-K, or any other public filing or announcement which includes the
combined results of operations; PROVIDED, HOWEVER, that Parent shall be
under no obligation to publish any such financial information other than with
respect to a fiscal quarter of Parent.
12. The undersigned intends to vote all Company Common Stock held
by him in favor of the Merger.
13. The undersigned will not exercise dissenters' rights in
connection with the Merger.
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5
NUMBER OF SHARES OF COMPANY COMMON STOCK
BENEFICIALLY OWNED BY THE UNDERSIGNED:
-------------------
NUMBER OF SHARES OF COMPANY COMMON STOCK
SUBJECT TO OPTIONS
BENEFICIALLY OWNED BY THE UNDERSIGNED:
-------------------
Very truly yours,
-----------------------------
(print name of shareholder above)
By:
----------------------
Name:
Title:
(if applicable)
Accepted this ___ day of
______, 1995, by
SILICON GRAPHICS, INC.
By:
-------------------------------------------------
Name:
Title:
<PAGE>
EXECUTION COPY
AGREEMENT AND PLAN OF ACQUISITION AND ARRANGEMENT
BY AND AMONG
SILICON GRAPHICS, INC.,
1103707 ONTARIO INC.,
SILICON GRAPHICS MANUFACTURING S.A.
and
ALIAS RESEARCH INC.
Dated as of February 6, 1995
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
THE ARRANGEMENT
SECTION 1.01. THE ARRANGEMENT . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.03. ACCOUNTING CONSEQUENCES . . . . . . . . . . . . . . . . 3
SECTION 1.04. MATERIAL ADVERSE EFFECT . . . . . . . . . . . . . . . . 3
SECTION 1.05. ADJUSTMENTS TO EXCHANGE RATIO. . . . . . . . . . . . . 3
SECTION 1.06. CANCELLATION . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.07. CAPITAL STOCK OF AMALGAMATION SUB . . . . . . . . . . . 4
SECTION 1.08. DISSENTERS' RIGHTS . . . . . . . . . . . . . . . . . . 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 2.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES . . . . . 4
SECTION 2.02. ARTICLES OF INCORPORATION AND BY-LAWS . . . . . . . . . 5
SECTION 2.03. CAPITALIZATION . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.04. AUTHORITY RELATIVE TO THIS AGREEMENT . . . . . . . . . 6
SECTION 2.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS . . . . . . 6
SECTION 2.06. COMPLIANCE; PERMITS . . . . . . . . . . . . . . . . . . 7
SECTION 2.07. SEC FILINGS; FINANCIAL STATEMENTS . . . . . . . . . . . 8
SECTION 2.08. ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . . . 9
SECTION 2.09. NO UNDISCLOSED LIABILITIES . . . . . . . . . . . . . . 9
SECTION 2.10. ABSENCE OF LITIGATION . . . . . . . . . . . . . . . . . 9
SECTION 2.11. EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS . . . . . 9
SECTION 2.12. LABOR MATTERS . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.13. REGISTRATION STATEMENT; PROXY STATEMENT . . . . . . . . 12
SECTION 2.14. RESTRICTIONS ON BUSINESS ACTIVITIES . . . . . . . . . . 13
SECTION 2.15. TITLE TO PROPERTY . . . . . . . . . . . . . . . . . . . 13
SECTION 2.16. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.17. ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . 15
SECTION 2.18. BROKERS . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.19. FULL DISCLOSURE . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.20. INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . 16
SECTION 2.21. INTERESTED PARTY TRANSACTIONS . . . . . . . . . . . . . 18
SECTION 2.22. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.23. OPTION PLANS . . . . . . . . . . . . . . . . . . . . . 19
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ii
SECTION 2.24. VOTE REQUIRED . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.25. POOLING MATTERS . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.26. OPINION OF FINANCIAL ADVISOR . . . . . . . . . . . . . 19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT, SWISSCO AND
AMALGAMATION SUB
SECTION 3.01. ORGANIZATION AND QUALIFICATION . . . . . . . . . . . . 19
SECTION 3.02. AUTHORITY RELATIVE TO THIS AGREEMENT . . . . . . . . . 20
SECTION 3.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS . . . . . . 20
SECTION 3.04. CERTIFICATE OF INCORPORATION AND BY-LAWS . . . . . . . 21
SECTION 3.05. CAPITALIZATION . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.06. COMPLIANCE; PERMITS . . . . . . . . . . . . . . . . . . 22
SECTION 3.07. SEC FILINGS; FINANCIAL STATEMENTS. . . . . . . . . . . 22
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . . . 23
SECTION 3.09. RESTRICTIONS ON BUSINESS ACTIVITIES . . . . . . . . . . 23
SECTION 3.10. TITLE TO PROPERTY . . . . . . . . . . . . . . . . . . . 23
SECTION 3.11. FULL DISCLOSURE . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.12. NO UNDISCLOSED LIABILITIES . . . . . . . . . . . . . . 24
SECTION 3.13. ABSENCE OF LITIGATION . . . . . . . . . . . . . . . . . 24
SECTION 3.14. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.15. REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS . . 24
SECTION 3.16. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.17. BROKERS . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.18. OPINION OF FINANCIAL ADVISOR . . . . . . . . . . . . . 26
SECTION 3.19. POOLING MATTERS . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.20. NO STOCKHOLDER VOTE . . . . . . . . . . . . . . . . . . 26
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE ARRANGEMENT
SECTION 4.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
ARRANGEMENT . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.02. NO SOLICITATION . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.03. CONDUCT OF BUSINESS BY PARENT PENDING THE ARRANGEMENT . 30
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iii
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT . . 31
SECTION 5.02. STOCKHOLDERS' MEETING . . . . . . . . . . . . . . . . . 32
SECTION 5.03. ACCESS TO INFORMATION; CONFIDENTIALITY . . . . . . . . 32
SECTION 5.04. CONSENTS; APPROVALS . . . . . . . . . . . . . . . . . . 33
SECTION 5.05. STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.06. COMPANY EMPLOYEE STOCK PURCHASE PLAN . . . . . . . . . 34
SECTION 5.07. AGREEMENTS OF AFFILIATES . . . . . . . . . . . . . . . 35
SECTION 5.08. INDEMNIFICATION AND INSURANCE . . . . . . . . . . . . . 35
SECTION 5.09. NOTIFICATION OF CERTAIN MATTERS . . . . . . . . . . . . 36
SECTION 5.10. FURTHER ACTION . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.11. PUBLIC ANNOUNCEMENTS . . . . . . . . . . . . . . . . . 36
SECTION 5.12. LISTING OF PARENT COMMON SHARES . . . . . . . . . . . . 37
SECTION 5.13. CONVEYANCE TAXES . . . . . . . . . . . . . . . . . . . 37
SECTION 5.14. ACCOUNTANTS' LETTERS . . . . . . . . . . . . . . . . . 37
SECTION 5.15. POOLING ACCOUNTING TREATMENT . . . . . . . . . . . . . 37
SECTION 5.16. ANCILLARY DOCUMENTS/RESERVATION OF SHARES . . . . . . . 37
SECTION 5.17. OTHER MERGER . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VI
CONDITIONS TO THE ARRANGEMENT
SECTION 6.01. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
ARRANGEMENT . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.02. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT, SWISSCO
AND AMALGAMATION SUB . . . . . . . . . . . . . . . . 40
SECTION 6.03. ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY . . 41
ARTICLE VII
TERMINATION
SECTION 7.01. TERMINATION . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.02. EFFECT OF TERMINATION . . . . . . . . . . . . . . . . . 44
SECTION 7.03. FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . 44
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iv
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.02. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.03. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . 47
SECTION 8.04. AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.05. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.06. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.07. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.08. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . 49
SECTION 8.09. ASSIGNMENT; AMALGAMATION SUB/SWISSCO . . . . . . . . . 49
SECTION 8.10. PARTIES IN INTEREST . . . . . . . . . . . . . . . . . . 49
SECTION 8.11. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE . 50
SECTION 8.12. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.13. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.14. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . 51
Exhibits:
Exhibit A: Form of Plan of Arrangement
Exhibit B: Form of Affiliate Agreement
Exhibit C: Form of Support Agreement
Exhibit D: Form of Voting and Exchange Trust Agreement
Exhibit E: Form of Certificate of Designation
<PAGE>
EXECUTION COPY
AGREEMENT AND PLAN OF ACQUISITION AND ARRANGEMENT
AGREEMENT AND PLAN OF ACQUISITION AND ARRANGEMENT, dated as of
February 6, 1995 (this "Agreement"), by and among SILICON GRAPHICS, INC., a
Delaware corporation ("Parent"), 1103707 ONTARIO INC., an Ontario corporation
and a wholly owned subsidiary of Parent ("Amalgamation Sub"), SILICON GRAPHICS
MANUFACTURING S.A., a Swiss corporation and subsidiary of Parent ("Swissco"),
and ALIAS RESEARCH INC., an Ontario corporation (the "Company"),
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent and the Company have each
determined that it is advisable and in the best interests of their respective
stockholders for Parent to acquire shares in the capital stock of the Company
upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, the Boards of Directors
of Parent, Amalgamation Sub, Swissco and the Company have each approved the
execution and delivery of this Agreement in order to provide for (i) the
amalgamation (the "Amalgama- tion") of Amalgamation Sub and the Company
whereupon each outstanding share (a "Share") of the Company's common shares (the
"Company Common Stock") shall be converted into Class A Shares or Class B Shares
(each as defined in the Plan of Arrangement), as the case may be, of the
continuing corporation in the Amalgamation (the "Continuing Corporation") and
(ii) the exchange of such Class A Shares and Class B Shares of the Continuing
Corporation for Parent Common Shares and/or Exchangeable Shares (each as defined
in the Plan of Arrangement) (the transactions specified in subclauses (i) and
(ii) being collectively referred to herein as the "Arrangement");
WHEREAS, the Arrangement shall be effectuated under Section 182 of the
Business Corporations Act (Ontario) (the "OBCA") pursuant to the terms hereof
and a plan of arrangement (the "Plan of Arrangement") substantially in the form
of Exhibit A hereto;
WHEREAS, in connection with the Arrangement, and after giving effect
thereto, holders of Company Common Stock will receive, at their election, in
respect of each share of Company Common Stock held by them immediately before
the implementation of the Arrangement, 0.90 (the "Exchange Ratio") shares of
Parent Common Stock from Swissco, or Exchangeable Shares from the Continuing
Corporation subject to proration in certain instances;
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2
WHEREAS, the Exchangeable Shares are exchangeable by the holders for
Parent Common Shares on a one-for-one basis at any time;
WHEREAS, for accounting purposes, it is intended that the transactions
contemplated hereby shall be accounted for as a pooling of interests under
United States generally accepted accounting principles ("GAAP");
WHEREAS, concurrently herewith, Parent, S Acquisition Corporation, a
California corporation and a wholly owned subsidiary of Parent, and Wavefront
Technologies, Inc., a California corporation ("Wavefront"), have executed an
Agreement and Plan of Merger and Reorganization, dated as of February 6, 1995
(the "Other Merger Agreement"), pursuant to which Parent will acquire Wavefront
as provided for therein (the "Other Merger"); and
WHEREAS, the exchange ratio set forth in the Other Merger Agreement is
0.49 (the "Other Exchange Ratio");
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Swissco, Amalgamation Sub and the Company hereby agree as
follows:
ARTICLE I
THE ARRANGEMENT
SECTION 1.01. THE ARRANGEMENT. (a) EFFECTIVE DATE. On the
Effective Date (as defined in Section 1.02 hereof), and subject to and upon the
terms and conditions of the Arrangement, this Agreement and the OBCA, (i)
Amalgamation Sub shall be amalgamated with the Company and (ii) the share
exchanges and conversions contemplated by Article 2 of the Plan of Arrangement
shall be completed in the manner set forth in the Plan of Arrangement.
(b) CLOSING. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 7.01 hereof, and subject to the satisfaction or waiver of the conditions
set forth in Article VI hereof, the consummation of the Arrangement will take
place as promptly as practicable after satisfaction or waiver of the conditions
set forth in Article VI hereof, at the offices of Shearman & Sterling, 555
California Street, Suite 2000, San Francisco, California, unless another date,
time or place is agreed to in writing by the parties hereto. At the closing,
the parties hereto shall deliver the documents contemplated hereby together with
such other customary documents as may be reasonably requested by the parties.
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SECTION 1.02. EFFECTIVE DATE. As promptly as practicable after the
satisfaction or waiver of the other conditions set forth in Article VI, the
parties hereto shall cause the Arrangement to be consummated by obtaining final
court approval of the Plan of Arrangement and by filing articles of arrangement
as contemplated by Section 182 of the OBCA (the "Articles of Arrangement"),
together with any required related certificates, with the Ministry of Consumer
and Commercial Relations of the Province of Ontario, in such form as required
by, and executed in accordance with the relevant provisions of, the OBCA (the
day of such filing being the "Effective Date").
SECTION 1.03. ACCOUNTING CONSEQUENCES. It is intended by the parties
hereto that the Arrangement shall qualify for accounting treatment as a pooling
of interests under GAAP.
SECTION 1.04. MATERIAL ADVERSE EFFECT. When used in connection with
the Company or any of its subsidiaries, or Parent or any of its subsidiaries, as
the case may be, the term "Material Adverse Effect" means any change or effect
that, individually or when taken together with all other such changes or effects
that have occurred prior to the date of determination of the occurrence of the
Material Adverse Effect, is or is reasonably likely to be materially adverse to
the business, assets (including intangible assets), financial condition or
results of operations of the Company and its subsidiaries or Parent and its
subsidiaries, as the case may be, in each case taken as a whole. For the
purposes of determining whether a Material Adverse Effect has occurred with
respect to the Company under Section 6.02(a) and (e), any material decline in
the Company's consolidated gross sales revenues after the date hereof shall not
be considered a Material Adverse Effect with respect to the Company if (i) such
decline in sales is directly attributable to (A) a decrease in sales associated
with customers delaying orders or purchases pending completion of the
Arrangement or (B) a significant price reduction by any major competitor of the
Company, (ii) the Company has complied with its respective obligations under
Section 4.01 hereof and (iii) the Company has continued to develop, market,
supply and service its products.
SECTION 1.05. ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio
shall be adjusted to reflect fully the effect of any stock split, reverse split,
stock dividend (including any dividend or distribution of securities convertible
into Parent Common Shares or Company Common Stock), reorganization,
recapitalization or other like change with respect to Parent Common Shares or
Company Common Stock occurring after the date hereof and prior to the Effective
Date.
SECTION 1.06. CANCELLATION. Prior to the Effective Date, each Share
owned by Parent, Swissco, Amalgamation Sub or any direct or indirect wholly
owned subsidiary of the Company or Parent shall be purchased for cancellation by
the Company for nominal consideration.
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4
SECTION 1.07. CAPITAL STOCK OF AMALGAMATION SUB. Each stock
certificate of Amalgamation Sub evidencing ownership of any common shares of
Amalgamation Sub shall continue to evidence ownership of Class A Shares of
capital stock of the Continuing Corporation.
SECTION 1.08. DISSENTERS' RIGHTS. The Company shall give Parent (i)
prompt notice of any written demand of a right of dissent, withdrawals of such
demands, and any other instruments served pursuant to the OBCA and received by
the Company and (ii) the opportunity to participate in all negotiations and
proceedings with respect to such rights. The Company shall not, except with the
prior written consent of Parent, voluntarily make any payment with respect to
any such rights or offer to settle or settle any such rights.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent, Swissco and
Amalgamation Sub that:
SECTION 2.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a)
The Company and each of its subsidiaries is a corporation or limited liability
company duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization and has the requisite
corporate power and authority and 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 be so organized, existing and in
good standing or to have such power, authority and Approvals would not have a
Material Adverse Effect. Each of the Company and each of its subsidiaries is
duly qualified or licensed as a foreign corporation or limited liability company
to do business, and is in good standing, in each jurisdiction where the
character of its 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
have a Material Adverse Effect. A true and complete list of all of the
Company's subsidiaries, together with the jurisdiction of incorporation or
organization of each subsidiary and the percentage of each subsidiary's
outstanding capital stock owned by the Company or another subsidiary, is set
forth in Section 2.01 of the written disclosure schedule previously delivered by
the Company to Parent (the "Company Disclosure Schedule"). Except as set forth
in Section 2.01 of the Company Disclosure Schedule, the Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any
<PAGE>
5
equity or similar interest in, any corporation, partnership, joint venture or
other business association or entity.
SECTION 2.02. ARTICLES OF INCORPORATION AND BY-LAWS. The Company has
heretofore furnished to Parent a complete and correct copy of its Restated
Articles of Incorporation and By-Laws, as amended to date, and equivalent
organizational documents of each of its subsidiaries. Such Restated Articles of
Incorporation, By-Laws and equivalent organizational documents of each of its
subsidiaries are in full force and effect. Neither the Company nor any of its
subsidiaries is in violation of any of the provisions of its Articles of
Incorporation or By-Laws or equivalent organizational documents.
SECTION 2.03. CAPITALIZATION. The authorized capital stock of the
Company consists of an unlimited number of shares of Company Common Stock and an
unlimited number of shares of special shares, no par value (the "Company Special
Shares"). As of January 31, 1995, (i) 10,960,745 shares of Company Common Stock
were issued and outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) no shares of Company Common Stock were held by subsidiaries
of the Company, (iii) 159 shares of Company Common Stock were reserved for
future issuance pursuant to option grants under the Company's 1988 Employee
Share Ownership Plan, (iv) 4,533 shares of Company Common Stock were reserved
for future issuance pursuant to option grants under the Company's 1989 Employee
Share Ownership Plan, (v) 1,209,371 shares of Company Common Stock were reserved
for future issuance pursuant to option grants under the Company's 1990 Employee
Share Ownership Plan, (vi) 1,000,000 shares of Company Common Stock were
reserved for future issuance pursuant to option grants under the Company's 1993
Employee Stock Purchase Plan, (vii) 813,101 shares of Company Common Stock were
reserved for future issuance pursuant to option grants under the Company's 1994
Stock Plan, (viii) 55,172 shares of Company Common Stock were reserved for
issuance with respect to the $400,000 Convertible Debenture of the Company
issued to Robert Burgess as of February 2, 1993 and (ix) no shares of Company
Special Shares were issued or outstanding. No material change in such
capitalization has occurred between January 31, 1995 and the date hereof, except
for the issuance of shares under the exercise of options, warrants or other
rights outstanding prior to January 31, 1995. Except as is provided by the
Company's 1993 Stock Purchase Plan or as set forth in this Section 2.03 or
Section 2.11 hereof or in Section 2.03 or Section 2.11 of the Company Disclosure
Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any of its subsidiaries obligating the Company
or any of its subsidiaries to issue or sell any shares of capital stock of, or
other equity interests in, the Company or any of its subsidiaries. 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 the
Company or any of its subsidiaries to repurchase, redeem or otherwise
<PAGE>
6
acquire any shares of Company capital stock or the capital stock of any
subsidiary 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
other than guarantees of bank and capital or other lease obligations of
subsidiaries entered into in the ordinary course of business. All of the
outstanding shares of capital stock of each of the Company's subsidiaries are
duly authorized, validly issued, fully paid and nonassessable, and all such
shares are owned by the Company or another subsidiary free and clear of all
security interests, liens, claims, pledges, agreements, limitations in the
Company's voting rights, charges or other encumbrances of any nature whatsoever.
SECTION 2.04. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company 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 the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than the approval and adoption of the Arrangement by the
holders of at least two-thirds of the outstanding shares of Company Common Stock
who are permitted to, and who, vote in accordance with the OBCA, the Securities
Act (Ontario) (the "OSA") and the Company's Articles of Incorporation and By-
Laws and the approval of the court in accordance with the OBCA). The Board of
Directors of the Company has determined that it is advisable and in the best
interest of the Company's stockholders for the Company to enter into a business
combination with Parent upon the terms and subject to the conditions of this
Agreement. This Agreement has been duly and validly executed and delivered by
the Company and, assuming the due authorization, execution and delivery by
Parent, Swissco and Amalgamation Sub, as applicable, constitutes a legal, valid
and binding obligation of the Company.
SECTION 2.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Section 2.05(a) of the Company Disclosure Schedule includes a list of (i)
all material contracts of the Company and its subsidiaries and (ii) all
agreements which, as of the date hereof, will be required to be filed with the
Securities and Exchange Commission ("SEC") pursuant to the requirements of the
Securities Exchange Act of 1934, as amended, and the SEC's rules thereunder
(collectively, the "Exchange Act") as "material contracts" ((i) and (ii) being,
collectively, the "Material Contracts") of the Company and its subsidiaries.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, (i) conflict
with or violate the Articles of Incorporation or By-Laws or equivalent
organizational documents of the Company or any of its subsidiaries,
(ii) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which
<PAGE>
7
its or any of their respective properties is bound or affected, or (iii) result
in any breach of or constitute a default (or an event that with notice or lapse
of time or both would become a default), or impair the Company's or any of its
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, any Material Contract, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company or any of its
subsidiaries pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or its or any of their respective properties
is bound or affected.
(c) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except
(i) for applicable requirements, if any, of the Securities Act of 1933, as
amended, (the "Securities Act"), the Exchange Act, state securities laws ("Blue
Sky Laws"), the pre-merger notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the OSA and
other relevant Canadian securities statutes, filings with the agency under the
Investment Canada Act and filings under the Competition Act (Canada) and the
filing and recordation of appropriate amalgamation, arrangement or other
documents as required by the OBCA and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Arrangement, or
otherwise prevent or delay the Company from performing its obligations under
this Agreement, or would not otherwise have a Material Adverse Effect.
SECTION 2.06. COMPLIANCE; PERMITS. (a) Neither the 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 the Company or
any of its subsidiaries or by which its 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 the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or its or any of their respective properties
is bound or affected, except for any such conflicts, defaults or violations
which would not have a Material Adverse Effect.
(b) The Company and its subsidiaries hold all permits, licenses,
easements, variances, exemptions, consents, certificates, orders and approvals
from governmental authorities that are material to the operation of the business
of the Company and its subsidiaries (collectively, the "Company Permits"). The
Company and its subsidiaries are in compliance with the terms of the Company
Permits, except where the failure to so comply would not have a Material Adverse
Effect.
<PAGE>
8
SECTION 2.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) The Company
has filed all forms, reports and documents required to be filed with the SEC
since January 31, 1991 and has made available to Parent (i) its Annual Reports
on Form 10-K for the fiscal years ended January 31, 1992, 1993 and 1994,
respectively, (ii) its Quarterly Reports on Form 10-Q for the periods ended
April 31, July 31 and October 31, 1994, respectively, (iii) all proxy statements
relating to the Company's meetings of stockholders (whether annual or special)
held since January 31, 1992, (iv) all other reports or registration statements
(other than Reports on Form 10-Q not referred to in clause (ii) above) filed by
the Company with the SEC since January 31, 1992, and (v) all amendments and
supplements to all such reports and registration statements filed by the Company
with the SEC (collectively, the "Company SEC Reports"). The Company SEC Reports
(i) were prepared in accordance with the requirements of the Securities Act or
the Exchange Act, as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such amending or superseding filing) contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. None of
the Company's subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports was
prepared in accordance with Canadian generally accepted accounting principles
("Canadian GAAP") applied on a consistent basis throughout the periods involved
(except as may be indicated therein or in the notes thereto) and each fairly
presented the consolidated financial position of the Company and its
subsidiaries as at the respective dates thereof and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount. The audited financial statements of the Company for its fiscal year
ended January 31, 1995, will not, when delivered, be materially and adversely
different from the financial information for such fiscal year previously
delivered by the Company to Parent in connection with this Agreement.
(c) Since January 31, 1992, the Company has filed all forms, reports
and documents with the Ontario Securities Commission (the "OSC") required to be
filed by it pursuant to the OSA and the regulations promulgated thereunder and
the applicable policies of the OSC (collectively, the "Company OSC Reports"),
all of which have complied in all material respects with all applicable
requirements of such statute, regulations and policies. None of the Company OSC
Reports, at the time filed or as subsequently amended, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading. The
Company has furnished to Parent all Company OSC Reports. The Company has
complied in all material respects with
<PAGE>
9
any applicable disclosure obligations under other Canadian provincial securities
legislation, regulations and policy statements.
SECTION 2.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in Section 2.08 of the Company Disclosure Schedule and the Company SEC
Reports, since October 31, 1994, the Company has conducted its business in the
ordinary course and there has not occurred: (i) any Material Adverse Effect,
(ii) any amendments or changes in the Articles of Incorporation or Bylaws of the
Company, (iii) any damage to, destruction or loss of any assets of the Company
(whether or not covered by insurance) that could have a Material Adverse Effect,
(iv) any change by the Company in its accounting methods, principles or
practices, (v) any revaluation by the Company of any of its assets, including,
without limitation, writing down the value of capitalized software or inventory
or writing off notes or accounts receivable other than in the ordinary course of
business, (vi) except as disclosed in Section 2.08 of the Company Disclosure
Schedule, any other action or event that would have required the consent of
Parent pursuant to Section 4.01 hereof had such action or event occurred after
the date of this Agreement or (vii) any sale of a material amount of property of
the Company, except for the sale of inventory in the ordinary course of
business.
SECTION 2.09. NO UNDISCLOSED LIABILITIES. Except as is disclosed in
Section 2.09 of the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise) which are, in the aggregate, material to the business, operations or
financial condition of the Company and its subsidiaries on a consolidated basis,
except liabilities (a) adequately provided for in the Company's audited balance
sheet (including any related notes thereto) for the fiscal year ended
January 31, 1994 included in the Company SEC Reports (the "1994 Balance Sheet"),
(b) incurred in the ordinary course of business and not required under Canadian
GAAP to be reflected on the 1994 Balance Sheet, (c) disclosed in the Company SEC
Reports or (d) incurred since January 31, 1994 in the ordinary course of
business and consistent with past practice, and liabilities incurred in
connection with this Agreement.
SECTION 2.10. ABSENCE OF LITIGATION. Except as set forth in
Section 2.10 of the Company Disclosure Schedule or the Company SEC Reports,
there are no claims, actions, suits, proceedings or investigations pending or,
to the knowledge of the Company, threatened against the Company or any of its
subsidiaries, or any properties or rights of the Company or any of its
subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, that could have a Material
Adverse Effect.
SECTION 2.11. EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS.
(a) Section 2.11(a) of the Company Disclosure Schedule lists all employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), regardless of whether ERISA is
applicable thereto, all other bonus,
<PAGE>
10
stock option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance or termination pay, or medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension or retirement plans,
agreements or arrangements and other similar fringe or employee benefit plans,
programs or arrangements (including those sponsored by the federal or any
provincial government of Canada, collectively "Government Sponsored or Mandated
Plans") and any current or former employment or executive compensation or
severance agreements, written or otherwise, for the benefit of, or relating to,
any employee of the Company, any trade or business (whether or not incorporated)
which is a member of a controlled group including the Company or which is under
common control with the Company (an "ERISA Affiliate") within the meaning of
Section 414 of the Internal Revenue Code of 1986, as amended (the "Code"), or
any subsidiary of the Company, as well as each plan with respect to which the
Company or an ERISA Affiliate could incur liability if such plan has been or
were terminated (together, the "Employee Plans"), and a copy of each such
written Employee Plan has been made available to Parent.
(b) (i) Except as set forth in Section 2.11(b) of the Company
Disclosure Schedule, none of the Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person and none of the Employee
Plans is a "multiemployer plan" as such term is defined in Section 3(37) of
ERISA; (ii) there has been no transaction or failure to act with respect to any
Employee Plan, which could result in any material liability of the Company or
any of its subsidiaries; (iii) all Employee Plans are in compliance in all
material respects with the requirements prescribed by any and all statutes,
orders, or governmental rules and regulations currently in effect with respect
thereto, and the Company and each of its subsidiaries have performed all
material obligations required to be performed by them under, are not in any
material respect in default under or in violation of, and have no knowledge of
any default or violation by any other party to, any of the Employee Plans; (iv)
each 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 is the subject of a
favorable determination letter from the Internal Revenue Service (the "IRS"),
and so far as the Company is aware nothing has occurred which may reasonably be
expected to impair such determination; (v) all contributions required to be made
to any Employee Plan, under the terms of the Employee Plan or any collective
bargaining agreement, have been made on or before their due dates and a
reasonable amount has been accrued for contributions to each Employee Plan for
the current plan years; (vi) with respect to each Employee Plan subject to Title
IV of ERISA, no "reportable event" within the meaning of Section 4043 of ERISA
(excluding any such event for which the thirty (30) day notice requirement has
been waived under the regulations to Section 4043 of ERISA) nor any event
described in Section 4062, 4063 or 4041 of ERISA has occurred; and (vii) neither
the Company nor any ERISA Affiliate has incurred, nor reasonably expects to
incur, any liability under Title IV of ERISA (other than liability for premium
payments to the Pension Benefit Guaranty Corporation arising in the ordinary
course).
<PAGE>
11
(c) Each Employee Plan that is required or intended to be qualified
under applicable law or registered or approved by a governmental agency or
authority has been so qualified, registered or approved by the appropriate
governmental agency or authority, and nothing has occurred since the date of the
last qualification, registration or approval to adversely affect, or cause, the
appropriate governmental agency or authority to revoke such qualification,
registration or approval.
(d) All contributions (including premiums) required by law or
contract to have been made or approved by the Company under or with respect to
the Employee Plans have been paid or accrued by the Company. Without limiting
the foregoing, there are no material unfunded liabilities under any Employee
Plan.
(e) There are no pending threatened investigations, litigation or
other enforcement actions against the Company with respect to any of the
Employee Plans.
(f) There are no actions, suits or claims pending or, to the best
knowledge of the Company, threatened by former or present employees of the
Company (or their beneficiaries) with respect to the Employee Plans or the
assets or fiduciaries thereof (other than routine claims for benefits).
(g) Neither the Company nor any of its subsidiaries maintains any
401(k) or other type of pension plan subject to Section 401(a) of the Code in
the United States.
(h) No condition or event has occurred with respect to the Employee
Plans which has or could reasonably be expected to result in a material
liability to the Company.
(i) Section 2.11(i) of the Company Disclosure Schedule sets forth a
true and complete list of each current or former employee, officer or director
of the Company or any of its subsidiaries who holds any option to purchase
Company Common Stock as of the date hereof, together with the number of shares
of Company Common Stock subject to such option, the date of grant of such
option, the extent to which such option is vested, the option price of such
option (to the extent determined as of the date hereof), whether such option is
intended to qualify as an incentive stock option within the meaning of Section
422(b) of the Code (an "ISO"), and the expiration date of such option. Section
2.11(i) of the Company Disclosure Schedule also sets forth the total number of
such ISOs and such nonqualified options.
(j) The Company has made available to Parent (i) copies of all
employment agreements with officers of the Company; (ii) copies of all
agreements with consultants who are individuals obligating the Company to make
annual cash payments in an amount exceeding $100,000; (iii) a schedule listing
all officers of the Company who have executed a non-competition agreement with
the Company; (iv) copies of all severance
<PAGE>
12
agreements, programs and policies of the Company with or relating to its
employees; (v) copies of all plans, programs, agreements and other arrangements
of the Company with or relating to its employees which contain change in control
provisions; and (vi) the form of standard employment agreement of the Company
for its non-executive employees.
SECTION 2.12. LABOR MATTERS. (i) There are no actions or proceedings
pending or, to the knowledge of the Company or any of its subsidiaries,
threatened, between the Company or any of its subsidiaries and any of their
respective employees, which have or may have a Material Adverse Effect; (ii)
neither the Company nor any of its subsidiaries is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or any of its subsidiaries nor does the Company or any
of its subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and (iii) neither the Company nor any of its
subsidiaries has any knowledge of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of the Company
or any of its subsidiaries.
SECTION 2.13. REGISTRATION STATEMENT; PROXY STATEMENT. None of the
information supplied or to be supplied by the Company in writing for inclusion
or incorporation by reference in (i) the Registration Statement, if any, on Form
S-4 to be filed with the SEC by Parent in connection with the issuance of Parent
Common Shares in the Arrangement (the "Registration Statement"), (ii) the proxy
statement and offering circular relating to the meeting of the Company's
stockholders (the "Company Stockholders' Meeting") to be held in connection with
the Arrangement (the "Proxy Statement" and, together with the Registration
Statement, if any, the "Proxy Statement/Prospectus") and (iii) any other
document to be filed with the SEC, OSC or any regulatory agency by Parent,
Amalgamation Sub or the Company in connection with the transactions contemplated
by this Agreement (the "Other Filings") will, at the respective times filed with
the SEC, OSC or other regulatory agency and, in addition, (A) in the case of the
Proxy Statement/Prospectus, at the date it or any amendments or supplements
thereto are mailed to stockholders, at the time of the Company Stockholders'
Meeting and at the Effective Date and (B) in the case of the Registration
Statement, if any, when it becomes effective under the Securities Act and at the
Effective Date, 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 will comply as to form in all material
respects with the applicable provisions of the OSC and the Exchange Act and the
rules and regulations thereunder and the Registration Statement, if any, will
comply as to form in all material respects and the provisions of the Securities
Act and the rules and regulations promulgated thereunder. If at any time prior
to the Effective Date any event relating to the Company or any of its respective
affiliates, officers or directors should be discovered by the Company which
should be set forth in an amendment to the Registration Statement, if any, or a
supplement to the Proxy Statement/Prospectus, the Company shall promptly inform
Parent and Amalgamation Sub.
<PAGE>
13
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information supplied by Parent or Amalgamation Sub which is
contained in any of the foregoing documents.
SECTION 2.14. RESTRICTIONS ON BUSINESS ACTIVITIES. Except for this
Agreement, there is no material agreement, judgment, injunction, order or decree
binding upon the Company or any of its subsidiaries which has or could
reasonably be expected to have the effect of prohibiting or impairing any
material business practice of the Company or any of its subsidiaries, the
acquisition of property by the Company or any of its subsidiaries or the conduct
of business by the Company or any of its subsidiaries as currently conducted or
as proposed to be conducted by the Company.
SECTION 2.15. TITLE TO PROPERTY. The Company owns no real property.
Section 2.15(b) of the Company Disclosure Statement sets forth a true and
complete list of all real property leased by the Company or any of its
subsidiaries requiring annual lease payments of more than $50,000, and the
aggregate monthly rental or other fee payable under such lease. The Company and
each of its subsidiaries have good, marketable and defensible title to all of
their 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 or
which would not have a Material Adverse Effect; and all leases pursuant to which
the Company or any of its subsidiaries lease from others material amounts of
real or personal property, 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 event which with
notice or lapse of time, or both, would constitute a material default and in
respect of which the Company or such subsidiary has not taken adequate steps to
prevent such a default from occurring) except where the lack of such good
standing, validity and effectiveness or the existence of such default or event
of default would not have a Material Adverse Effect. All the facilities of the
Company and its subsidiaries, except such as may be under construction, are in
good operating condition and repair, except where the failure of such plants,
structures and equipment to be in such good operating condition and repair would
not, individually or in the aggregate, have a Material Adverse Effect.
SECTION 2.16. TAXES. (a) For purposes of this Agreement, "Tax" or
"Taxes" shall mean taxes, fees, levies, duties, tariffs, imposts, premiums and
governmental impositions or charges of any kind in the nature of (or similar to)
taxes, payable to any federal, state, provincial, local or foreign taxing
authority, including (without limitation) (i) income, capital, business,
franchise, profits, gross receipts, AD VALOREM, goods and services, customs, net
worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment, social
security, workers' compensation, unemployment insurance or compensation,
utility, severance,
<PAGE>
14
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes, fees, levies, duties, tariffs, imposts, premiums and governmental
impositions and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto; and "Tax Returns" shall mean returns, reports and
information statements with respect to Taxes required to be filed with Revenue
Canada, the IRS or any other taxing authority, domestic or foreign, including,
without limitation, consolidated, combined and unitary tax returns.
(b) The Company and its subsidiaries have filed all Canadian and
United States federal income Tax Returns and all other material Tax Returns
required to be filed by them, and the Company and its subsidiaries have paid and
discharged all Taxes due in connection with or with respect to the filing of all
Tax Returns and have paid all other Taxes as are due, and there are no other
Taxes that would be due if asserted by a taxing authority, except such as are
being contested in good faith by appropriate proceedings (to the extent that any
such proceedings are required) and with respect to which the Company is
maintaining reserves to the extent currently required in all material respects
adequate for their payment except to the extent the failure to do so would not
have a Material Adverse Effect. Neither Revenue Canada, the IRS nor any other
taxing authority or agency is now asserting or, to the best of the Company's
knowledge, threatening to assert against the Company or any of its subsidiaries
any deficiency or claim for additional Taxes other than additional Taxes with
respect to which the Company is maintaining reserves in all material respects
adequate for their payment, and there are no requests for information currently
outstanding that could affect the Taxes of the Company or any of its
subsidiaries. Except as disclosed in Section 2.16(b) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is currently being
audited by any taxing authority except as would not have a Material Adverse
Effect. There are no tax liens on any assets of the Company or any subsidiary
thereof and neither the Company nor any of its subsidiaries has, except as would
not have a Material Adverse Effect, granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any Tax. The accruals and reserves for Taxes reflected in the 1994 Balance
Sheet are in all material respects adequate to cover all Taxes accruable through
the date thereof (including interest and penalties, if any, thereon and Taxes
being contested) in accordance with generally accepted accounting principles.
Except as disclosed in Section 2.16(b) of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries is required to include in income
(i) items in respect of any change in accounting principles or deferred
intercompany transactions or (ii) any installment sale gain, where the inclusion
in income would result in a tax liability materially in excess of the reserves
therefor.
(c) The Company on behalf of itself and all its subsidiaries hereby
represents that, other than as disclosed on Section 2.16(c) of the Company
Disclosure Schedule, and other than with respect to items the inaccuracy of
which would not have a Material Adverse Effect: (i) neither the Company nor any
of its subsidiaries is a party to any agreement, contract or arrangement that
may result, separately or in the aggregate, in the
<PAGE>
15
payment of any "excess parachute payment" within the meaning of Section 280G of
the Code, determined without regard to Section 280G(b)(4) of the Code, (ii)
neither the Company or any of its subsidiaries has been subject to any
accumulated earning tax or personal holding company tax, (iii) neither the
Company nor any of its subsidiaries owns stock in a passive foreign investment
company within the meaning of Section 1296 of the Code, and (iv) neither the
Company nor any of its subsidiaries is obligated under any agreement with
respect to industrial development bonds or other obligations with respect to
which the excludability from gross income of the holder for United States
federal or state income tax purposes could be affected by the transactions
contemplated hereunder.
(d) No power of attorney has been granted by the Company or any of
its subsidiaries with respect to any matter relating to Taxes which is currently
in force.
(e) Neither the Company nor any of its subsidiaries is a party to any
agreement or arrangement (written or oral) providing for the allocation or
sharing of Taxes.
(f) The Company and each of its subsidiaries have withheld all
material amounts from each payment made to any of their respective past or
present employees, officers or directors the amount of all Taxes and other
material deductions required to be withheld therefrom and have paid the same to
the proper tax or other receiving officers within the time required under any
applicable legislation.
(g) The Company has remitted to the appropriate tax authority when
required by law to do so all amounts collected by it on account of all GST and
retail sales tax.
(h) The Company has withheld from each payment made to any employee
or non-resident of Canada the amount of all material Taxes, contributions,
premiums and other deductions required to be withheld therefrom and has paid the
same to the proper tax or other receiving officers within the time required
under any applicable legislation.
(i) The Company has not deducted any material amounts in computing
its income in a taxation year which will be included in a subsequent taxation
year under section 78 of the Income Tax Act (Canada).
(j) All of the subsidiaries of the Company have taxation years ending
on January 31 of each year except for the U.S. and Italian subsidiaries of the
Company, the taxation years of which each end on December 31 of each year.
SECTION 2.17. ENVIRONMENTAL MATTERS. Except in all cases as have not
had and could not reasonably be expected to have a Material Adverse Effect, the
Company and each of its subsidiaries to the best of the Company's knowledge
(i) have obtained all
<PAGE>
16
applicable permits, licenses and other authorization which are required under
federal, state, provincial or local laws relating to pollution or protection of
the environment, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous or toxic materials
or wastes into ambient air, surface water, ground water or land or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants or hazardous or
toxic materials or wastes by the Company or its subsidiaries (or their
respective agents); (ii) are in compliance with all terms and conditions of such
required permits, licenses and authorization, and also are in compliance with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in such laws or
contained in any regulation, code, plan, order, decree, judgment, notice or
demand letter issued, entered, promulgated or approved thereunder; (iii) as of
the date hereof, are not aware of nor have received notice of any event,
condition, circumstance, activity, practice, incident, action or plan which is
reasonably likely to interfere with or prevent continued compliance with or
which would give rise to any common law or statutory liability, or otherwise
form the basis of any claim, action, suit or proceeding, based on or resulting
from the Company's or any of its subsidiary's (or any of their respective
agent's) manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge or release into the
environment, of any pollutant, contaminant or hazardous or toxic material or
waste; and (iv) have taken all actions reasonably necessary under applicable
requirements of federal, state or local laws, rules or regulations to register
any products or materials required to be registered by the Company or its
subsidiaries (or any of their respective agents) thereunder.
SECTION 2.18. BROKERS. No broker, finder or investment banker (other
than Robertson, Stephens & Company, L.P.) 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 the Company. The
Company has heretofore furnished to Parent a complete and correct copy of all
agreements between the Company and Robertson, Stephens & Company, L.P. pursuant
to which such firm would be entitled to any payment relating to the transactions
contemplated hereunder.
SECTION 2.19. FULL DISCLOSURE. No statement contained in any
certificate or schedule furnished or to be furnished by the Company or any of
its subsidiaries to Parent or Amalgamation Sub in, or pursuant to the provisions
of, this Agreement contains or shall contain any untrue statement of a material
fact or omits or will omit to state any material fact necessary, in the light of
the circumstances under which it was made, in order to make the statements
herein or therein not misleading.
SECTION 2.20. INTELLECTUAL PROPERTY. (a) The Company owns, or is
licensed or otherwise possesses legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights and any applications
therefor, technology, know-how,
<PAGE>
17
computer software programs or applications (in both source code and object code
form) and tangible or intangible proprietary information or material that are
used or proposed to be used in the business of the Company as currently
conducted. Section 2.20(a) of the Company Disclosure Schedule lists all current
and past (lapsed, expired, abandoned or canceled) patents, registered and
material unregistered trademarks and service marks, registered and material
unregistered copyrights, trade names and any applications therefor owned by the
Company (the "Company Intellectual Property Rights"), and specifies the
jurisdictions in which each such Company Intellectual Property Right has been
issued or registered or in which an application for such issuance and
registration has been filed, including the respective registration or
application numbers and the names of all registered owners, together with a list
of all of the Company's currently marketed software products and an indication
as to which, if any, of such software products have been registered for
copyright protection with the United States or Canadian Copyright Office and any
other foreign offices and by whom such items have been registered. Section
2.20(b) of the Company Disclosure Schedule includes and specifically identifies
all third-party patents, trademarks or copyrights (including software) (the
"Third Party Intellectual Property Rights"), to the knowledge of the Company,
which are incorporated in, are, or form a part of, any Company product. Section
2.20(b) of the Company Disclosure Schedule lists (i) any requests the Company
has received to make any such registration, including the identity of the
requestor and the item requested to be so registered, and the jurisdiction for
which such request has been made; (ii) except for object code license agreements
for the Company's products executed in the ordinary course of business and in
accordance with the Company's past practices, all material licenses, sublicenses
and other agreements as to which the Company is a party and pursuant to which
any person is authorized to use any Company Intellectual Property Right, or any
trade secret material to the Company; and (iii) all material licenses,
sublicenses and other agreements as to which the Company is a party and pursuant
to which the Company is authorized to use any Third Party Intellectual Property
Rights, or other trade secret of a third party in or as any product, and
includes the identity of all parties thereto, a description of the nature and
subject matter thereof, the applicable royalty and the term thereof.
(b) The Company is not, nor will it be as a result of the execution
and delivery of this Agreement or the performance of its obligations hereunder,
in violation in any material respect of any license, sublicense or agreement
described in Section 2.20(a) of the Company Disclosure Schedule. No claims with
respect to the Company Intellectual Property Rights, any trade secret material
to the Company, or Third Party Intellectual Property Rights to the extent
arising out of any use, reproduction or distribution of such Third Party
Intellectual Property Rights by or through the Company, are currently pending
or, to the knowledge of the Company, are threatened by any person, nor does the
Company know of any valid grounds for any bona fide claims (i) to the effect
that the manufacture, sale, licensing or use of any product as now used, sold or
licensed or proposed for use, sale or license by the Company infringes on any
copyright, patent, trademark, service mark or
<PAGE>
18
trade secret; (ii) against the use by the Company of any trademarks, trade
names, trade secrets, copyrights, patents, technology, know-how or computer
software programs and applications used in the Company's business as currently
conducted or as proposed to be conducted by the Company; (iii) challenging the
ownership, validity or effectiveness of any of the Company Intellectual Property
Rights or other trade secret material to the Company; or (iv) challenging the
Company's license or legally enforceable right to use of the Third Party
Intellectual Property Rights. To the Company's knowledge, after reasonable
investigation, all patents, registered trademarks, maskworks and copyrights held
by the Company are valid and subsisting. Except as set forth in Section 2.20 of
the Company Disclosure Schedule, to the Company's knowledge, there is no
material unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property by any third party, including any employee or
former employee of the Company or any of its subsidiaries. Except as set forth
in Section 2.20 of the Company Disclosure Schedule, neither the Company nor any
of its subsidiaries (i) has been sued or charged in writing as a defendant in
any claim, suit, action or proceeding which involves a claim or infringement of
trade secrets, any patents, trademarks, service marks, maskworks or copyrights
and which has not been finally terminated prior to the date hereof, or been
informed or notified by any third party that the Company may be engaged in such
infringement, or (ii) has knowledge of any infringement liability with respect
to, or infringement by, the Company or any of its subsidiaries of any trade
secret, patent, trademark, service mark, maskwork or copyright of another.
(c) Each employee of the Company has executed a confidentiality and
invention agreement substantially in the form previously delivered to Parent.
SECTION 2.21. INTERESTED PARTY TRANSACTIONS. Since the date of the
Company's proxy statement dated April 18, 1994, no event has occurred that would
be required to be reported as a Certain Relationship or Related Transaction,
pursuant to Item 404 of Regulation S-K promulgated by the SEC or that is a
related party transaction for the purposes of OSC Policy 9.1.
SECTION 2.22. INSURANCE. Section 2.22 of the Company Disclosure
Schedule lists all material insurance policies and fidelity bonds covering the
assets, business, equipment, properties, operations, employees, officers and
directors of the Company and its subsidiaries. Except as is set forth in
Section 2.22 of the Company Disclosure Schedule, there is no claim by the
Company or any of its subsidiaries pending under any of such policies or bonds
as to which coverage has been questioned, denied or disputed by the underwriters
of such policies or bonds. All premiums payable under all such policies and
bonds have been paid and the Company and its subsidiaries are otherwise in
compliance in all material respects with the terms of such policies and bonds
(or other policies and bonds providing substantially similar insurance
coverage). Such policies of insurance and bonds are of the type and in amounts
customarily carried by persons conducting businesses similar to
<PAGE>
19
those of the Company and its subsidiaries. The Company does not know of any
threatened termination of, or material premium increase with respect to, any of
such policies.
SECTION 2.23. OPTION PLANS. Except as set forth in Section 2.23 of
the Company Disclosure Schedule, the Board of Directors of the Company has taken
all necessary action (or refrained from taking action, where appropriate) under
the Company Stock Option Plans (as defined in Section 5.05) so that none of the
Stock Options (or any portion thereof) will be entitled to receive cash or other
property as a result of the consummation of the transactions contemplated
hereby, but instead shall be assumed as provided in Section 5.05 hereof
SECTION 2.24. VOTE REQUIRED. Subject to the approval of the court in
accordance with the OBCA, the affirmative vote of the holders of at least two-
thirds of the outstanding shares of the Company Common Stock who are permitted
to, and who vote thereon, is the only vote of the holders of any class or series
accordance with the OBCA.
SECTION 2.25. POOLING MATTERS. Neither the Company nor any of its
affiliates has, to the Company's knowledge and based upon consultation with its
independent accountants, taken or agreed to take any action that (without giving
effect to any action taken or agreed to be taken by Parent or any of its
affiliates) would affect the ability of Parent to account for the business
combination to be effected by the Arrangement as a pooling of interests.
SECTION 2.26. OPINION OF FINANCIAL ADVISOR. The Company has been
advised by its financial advisor, Robertson, Stephens & Company, L.P., that in
its opinion, as of the date hereof, the terms of the Arrangement are fair to the
stockholders of the Company from a financial point of view, and has delivered a
written copy of such opinion to Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT, SWISSCO AND
AMALGAMATION SUB
Parent, Swissco, and Amalgamation Sub hereby, jointly and severally,
represent and warrant to the Company that:
SECTION 3.01. ORGANIZATION AND QUALIFICATION. Each of Parent and
each of its subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority and is in possession of all
Approvals necessary to own, lease and operate the
<PAGE>
20
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 be so organized, existing
and in good standing or to have such power, authority and Approvals would not
have a Material Adverse Effect. Each of Parent and each of 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 its 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 have a Material
Adverse Effect.
SECTION 3.02. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent,
Swissco and Amalgamation Sub 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, Swissco and Amalgamation Sub and the consummation
by Parent, Swissco and Amalgamation Sub of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action on the
part of Parent, Swissco and Amalgamation Sub, and no other corporate proceedings
on the part of Parent, Swissco or Amalgamation Sub are necessary to authorize
this Agreement or to consummate the transactions so contemplated. The Board of
Directors of Parent has determined that it is advisable and in the best interest
of Parent's stockholders for Parent to enter into a business combination with
the Company upon the terms and subject to the conditions of this Agreement.
This Agreement has been duly and validly executed and delivered by Parent,
Swissco and Amalgamation Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
Parent, Swissco and Amalgamation Sub.
SECTION 3.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a)
Section 3.03(a) of the written disclosure schedule previously delivered by
Parent and Amalgamation Sub to the Company (the "Parent Disclosure Schedule")
includes a list of all Material Contracts of Parent and its subsidiaries.
(b) Except as set forth in Section 3.03(b) of the Parent Disclosure
Schedule, the execution and delivery of this Agreement by Parent, Swissco and
Amalgamation Sub do not, and the performance of this Agreement by Parent,
Swissco and Amalgamation Sub shall not, (i) conflict with or violate the
Articles of Incorporation or By-Laws of Parent, Swissco or Amalgamation Sub,
(ii) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Parent or any of it subsidiaries or by which its or their
respective properties are bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or impair Parent'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, any Material Contract
or result in the creation of a lien or encumbrance on any of the
<PAGE>
21
properties or assets of Parent or any of it 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 any such
case for any such breaches, defaults or other occurrences that would not have a
Material Adverse Effect.
(c) The execution and delivery of this Agreement and the Ancillary
Documents (as defined in Section 5.16 hereof) by Parent, Swissco and
Amalgamation Sub (to the extent they are parties thereto) will not require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Securities Act, the Exchange Act,
the Blue Sky Laws, the pre-merger notification requirements of the HSR Act, the
OSA and other relevant Canadian Securities statutes, filing with the agency
under the Investment Canada Act and the Competition Act (Canada) and the filing
and recordation of appropriate merger or other documents as required by the OBCA
or the OSA and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Arrangement, or otherwise prevent Parent or
Amalgamation Sub from performing their respective obligations under this
Agreement and the Ancillary Documents, and would not have a Material Adverse
Effect.
SECTION 3.04. CERTIFICATE OF INCORPORATION AND BY-LAWS. Parent has
heretofore furnished to the Company a complete and correct copy of its
Certificate of Incorporation and the By-Laws, as amended to date. Such
Certificate of Incorporation and By-Laws are in full force and effect. Neither
Parent, Swissco nor Amalgamation Sub is in violation of any of the provisions of
its Certificate of Incorporation or By-Laws.
SECTION 3.05. CAPITALIZATION. As of January 31, 1995, the authorized
capital stock of Parent consisted of (i) 500,000,000 shares of Parent Common
Stock of which: 143,485,318 shares were issued and outstanding, no shares were
held in treasury, 28,839,039 shares were reserved for issuance pursuant to
outstanding options under Parent's stock option plans, 3,202,649 shares were
reserved for future issuance under Parent's employee purchase plan, 7,402,395
shares were reserved for future issuance with respect to Parent's outstanding
Zero Coupon Convertible Subordinated Debentures due 2013, and an indefinite
number of shares were reserved for future issuance with respect to Parent's
outstanding Series A Convertible Preferred Stock; and (ii) 2,000,000 shares of
Preferred Stock, $0.001 par value ("Parent Preferred Stock"), 35,000 shares of
Series A Convertible Preferred Stock of which were issued and outstanding.
Other than the grant by Parent on February 1, 1995 of options to purchase
2,230,600 shares of Parent Common Stock, no material change in such
capitalization has occurred between January 31, 1995 and the date hereof. The
authorized capital stock of Amalgamation Sub consists of an unlimited number
<PAGE>
22
of shares of common stock, no par value, one share of which, as of the date
hereof, is issued and outstanding. All of the outstanding shares of Parent's,
Swissco's and Amalgamation Sub's respective capital stock have been duly
authorized and validly issued and are fully paid and nonassessable.
SECTION 3.06. COMPLIANCE; PERMITS. (a) Neither Parent, 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 Parent or any of
its subsidiaries or by which its 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
parent or any of its subsidiaries is a party or by which Parent or any of its
subsidiaries or is or any of their respective properties is bound or affected,
except for any such conflicts, defaults or violations which would not have a
Material Adverse Effect.
(b) Parent and its subsidiaries hold all permits, licenses,
easements, variances, exemptions, consents, certificates, orders and approvals
from governmental or other regulatory authorities which are material to the
operation of the business of the Company and its subsidiaries taken as a whole
as it is now being conducted (collectively, the "Parent Permits"). Parent and
its subsidiaries are in compliance with the terms of Parent Permits, except
where the failure to so comply would not have a Material Adverse Effect.
SECTION 3.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) Parent has
filed all forms, reports and documents required to be filed with the SEC since
June 30, 1992, and has heretofore delivered to the Company, in the form filed
with the SEC, (i) its Annual Reports on Form 10-K for the fiscal years ended
June 30, 1994, 1993 and 1992, and its quarterly report on Form 10-Q for the
fiscal quarter ended September 30, 1994, (ii) all proxy statements relating to
Parent's meetings of stockholders (whether annual or special) held since
June 30, 1992, (iii) all other reports or registration statements (other than
Reports on Form 10-Q and Reports on Form 3, 4 or 5 filed on behalf of affiliates
of the Parent) filed by Parent with the SEC since June 30, 1992 and (iv) all
amendments and supplements to all such reports and registration statements filed
by Parent with the SEC (collectively, the "Parent SEC Reports"). The Parent SEC
Reports (i) were prepared in accordance with the requirements of the Securities
Act or the Exchange Act, as the case may be, and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of Parent's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Reports has been
prepared in
<PAGE>
23
accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and each
fairly presents the consolidated financial position of Parent and its
subsidiaries as at the respective dates thereof and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
(c) Parent has heretofore furnished to the Company a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Parent with the SEC
pursuant to the Securities Act or the Exchange Act.
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth on Section 3.08 of the Parent Disclosure Schedule, since June 30, 1994,
Parent has conducted its business in the ordinary course and there has not
occurred: (i) any Material Adverse Effect; (ii) any amendments or changes in
the Certificate of Incorporation or Bylaws of Parent; (iii) any damage to,
destruction or loss of any assets of the Parent, (whether or not covered by
insurance) that could have a Material Adverse Effect; (iv) any revaluation by
Parent of any of its assets, including without limitation, writing down the
value of capitalized software or inventory or writing off notes or accounts
receivable other than in the ordinary course of business, or (v) except as
disclosed in Section 3.08 of the Parent Disclosure Schedule, any other action or
event that would have required the consent of the Company pursuant to Section
4.03 had such action or event occurred after the date of this Agreement.
SECTION 3.09. RESTRICTIONS ON BUSINESS ACTIVITIES. Except for this
Agreement, there is no material agreement, judgment, injunction, order or decree
binding upon Parent 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 Parent or any of its subsidiaries, any acquisition of property by
Parent or any of its subsidiaries or the conduct of business by Parent or any of
its subsidiaries as currently conducted or as proposed to be conducted by
Parent.
SECTION 3.10. TITLE TO PROPERTY. Parent and each of its subsidiaries
have good, marketable and defensible title to all of their 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 or which would not have a Material
Adverse Effect; and, to Parent's knowledge, all leases pursuant to which Parent
or any of its subsidiaries lease from others material amounts of real or
personal property are in good standing, valid and effective in accordance with
their respective terms, and there is not, to the knowledge of Parent, under any
of such leases, any existing material default or event
<PAGE>
24
of default (or event which with notice or lapse of time, or both, would
constitute a material default and in respect of which Parent or such subsidiary
has not taken adequate steps to prevent such a default from occurring) except
where the lack of such good standing, validity and effectiveness, or the
existence of such default or event of default would not have a Material Adverse
Effect.
SECTION 3.11. FULL DISCLOSURE. No statement contained in any
certificate or schedule furnished or to be furnished by Parent, Swissco or
Amalgamation Sub to the Company in, or pursuant to the provisions of, this
Agreement contains or will contain any untrue statement of a material fact or
omits or shall omit to state any material fact necessary, in the light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
SECTION 3.12. NO UNDISCLOSED LIABILITIES. Except as is disclosed in
Section 3.12 of the Parent Disclosure Schedule or the Parent SEC Reports,
neither the Parent nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise) which are, in the aggregate, material to the
business, operations or financial condition of the Parent and its subsidiaries
taken as a whole, except liabilities (a) adequately provided for in the Parent's
balance sheet (including any related notes thereto) as of June 30, 1994 included
in the Parent SEC Reports (the "June 30 Balance Sheet"), (b) incurred in the
ordinary course of business and not required under GAAP to be reflected on the
June 30 Balance Sheet, or (c) incurred since June 30, 1994 in the ordinary
course of business and consistent with past practice, and liabilities incurred
in connection with this Agreement.
SECTION 3.13. ABSENCE OF LITIGATION. Except as set forth in Section
3.13 of the Parent Disclosure Schedule or as reflected in the Parent SEC
Reports, there are no claims, actions, suits, proceedings or investigations
pending or, to the knowledge of the Parent, threatened against the Parent or any
of its subsidiaries, or any properties or rights of the Parent or any of its
subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, that could have a Material
Adverse Effect.
SECTION 3.14. INSURANCE. Parent and its subsidiaries maintain fire
and casualty, general liability, business interruption, product liability and
sprinkler and water damage insurance that Parent believes to be reasonably
prudent for its business.
SECTION 3.15. REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS.
Subject to the accuracy of the representations of the Company in Section 2.13
hereof, the Registration Statement, if any, pursuant to which the Parent Common
Shares to be issued in the Arrangement will be registered with the SEC shall
not, at the time the Registration Statement (including any amendments or
supplements thereto) is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact
<PAGE>
25
necessary in order to make the statements included therein, in light of the
circumstances under which they were made, not misleading. Subject to the
accuracy of the representations of the Company in Section 2.13, the information
supplied by Parent for inclusion in the Proxy Statement/Prospectus will not, on
the date the Proxy Statement/Prospectus is first mailed to stockholders, at the
time of the Company Stockholders' Meeting and at the Effective Date, contain any
statement which, at such time and in light of the circumstances under which it
shall be made, is false or misleading with respect to any material fact, or will
omit to state any material fact necessary in order to make the statements
therein not false or misleading. If at any time prior to the Effective Date any
event relating to Parent, Swissco, Amalgamation Sub or any of their respective
affiliates, officers or directors should be discovered by Parent, Swissco or
Amalgamation Sub which should be set forth in an amendment to the Registration
Statement, if any, or a supplement to the Proxy Statement/Prospectus, Parent,
Swissco or Amalgamation Sub will promptly inform the Company. Notwithstanding
the foregoing, Parent makes no representation or warranty with respect to any
information supplied by the Company which is contained in, or furnished in
connection with the preparation of, any of the foregoing.
(b) As of the date hereof and the Effective Date, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and except for
this Agreement and any other agreements or arrangements contemplated by this
Agreement, Amalgamation Sub has not and will not have incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or liabilities
or engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person.
SECTION 3.16. TAXES. Other than as disclosed on Section 3.16 of the
Parent Disclosure Schedule, the Parent and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax purposes of which
Parent or any of its subsidiaries is or has been a member, have filed all United
States federal income Tax Returns and all other material Tax Returns required to
be filed by them or any of them, and have paid and discharged all Taxes shown
therein to be due and there are no other Taxes that would be due if asserted by
a taxing authority, except such as are being contested in good faith by
appropriate proceedings (to the extent that any such proceedings are required)
or with respect to which Parent is maintaining reserves in accordance with GAAP
in its financial statements to the extent currently required in all material
respects adequate for their payment, except, in each instance, to the extent the
failure to do so would not have a Material Adverse Effect. Neither the IRS nor
any other taxing authority or agency is now asserting or, to the best of
Parent's knowledge, threatening to assert against Parent or any of its
subsidiaries any deficiency or claim for additional Taxes other than additional
Taxes with respect to which the Parent is maintaining reserves in accordance
with GAAP in its financial statements which are in all material respects
adequate for their payment. Other than as disclosed on Section 3.16 of the
Parent Disclosure Schedule, no Tax Return of either Parent or any of its
subsidiaries
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26
is currently being audited by any taxing authority except as would not have a
Material Adverse Effect. Other than as disclosed on Section 3.16 of the Parent
Disclosure Schedule, no material tax claim has become a lien on any assets of
the Parent or any subsidiary thereof and neither Parent nor any of its
subsidiaries has, except as would not have a Material Adverse Effect, granted
any waiver of any statute of limitations with respect to, or any extension of a
period for the assessment of, any Tax.
SECTION 3.17. BROKERS. No broker, finder or investment banker (other
than Morgan Stanley & Co. Incorporated and Unterberg Harris, L.P.) 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 Parent, Swissco or Amalgamation Sub.
SECTION 3.18. OPINION OF FINANCIAL ADVISOR. Parent has been advised
by its financial advisor, Morgan Stanley & Co. Incorporated, that in its
opinion, as of the date hereof, the Exchange Ratio is fair from a financial
point of view to Parent, and has delivered a copy of such opinion to the
Company.
SECTION 3.19. POOLING MATTERS. Neither Parent nor any of its
affiliates has, to its knowledge and based upon consultation with its
independent accountants, taken or agreed to take any action that (without giving
effect to any action taken or agreed to be taken by the Company or any of its
affiliates) would affect the ability of Parent to account for the business
combination to be effected by the Arrangement as a pooling of interests.
SECTION 3.20. NO STOCKHOLDER VOTE. No vote of the stockholders of
Parent or Swissco is necessary to approve the Arrangement or the issuance of
Parent Common Shares pursuant thereto.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE ARRANGEMENT
SECTION 4.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
ARRANGEMENT. During the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective Date,
the Company covenants and agrees that, unless Parent shall otherwise agree in
writing, the Company shall conduct its business and shall cause the businesses
of its subsidiaries to be conducted only in, and the Company and its
subsidiaries shall not take any action except in, the ordinary course of
business or in accordance with the provisions of this Agreement and in a manner
consistent with past practice; and the Company shall use reasonable commercial
efforts to preserve substantially intact the business organization of the
Company and its subsidiaries, to keep available the services of the present
officers, employees and consultants of the Company and
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27
its subsidiaries, to take all action reasonably necessary to prevent the loss,
cancellation, abandonment, forfeiture or expiration of any Company Intellectual
Property and to preserve the present relationships of the Company and its
subsidiaries with customers, suppliers and other persons with which the Company
or any of its subsidiaries has significant business relations; PROVIDED,
HOWEVER, that the provisions of this Section 4.01 shall not prevent the Company
from taking action to cause the Exchangeable Shares and/or the Shares to be
listed, posted or quoted for trading on a Canadian stock exchange. By way of
amplification and not limitation, except as contemplated by this Agreement,
neither the Company nor any of its subsidiaries shall, during the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Date, directly or indirectly do, or agree to
do, any of the following without the prior written consent of Parent:
(a) amend or otherwise change the Company's Articles of Incorporation
or By-Laws;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of
capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital
stock, or any other ownership interest (including, without limitation, any
phantom interest) of the Company, any of its subsidiaries or affiliates
(except for the issuance of shares of Company Common Stock issuable
pursuant to employee stock options under the Company Stock Option Plans (as
defined in Section 5.05) or pursuant to rights to purchase such shares
under the Company Stock Purchase Plan (as defined in Section 5.06), which
options or rights, as the case may be, are outstanding on the date hereof);
(c) sell, pledge, dispose of or encumber any assets of the Company or
any of its subsidiaries (except for (i) sales of assets in the ordinary
course of business and in a manner consistent with past practice and (ii)
dispositions of obsolete or worthless assets);
(d) amend or change the period (or permit any acceleration, amendment
or change) of exercisability of options or restricted stock granted under
the Employee Plans (including the Company Stock Option Plans) or authorize
cash payments in exchange for any options granted under any of such plans
except with regard to options set forth in Section 2.23 of the Company
Disclosure Schedule;
(e) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly owned
subsidiary of the Company may declare and pay a dividend to its parent,
(ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect
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28
of, in lieu of or in substitution for shares of its capital stock or (iii)
amend the terms of, repurchase, redeem or otherwise acquire, or permit any
subsidiary to repurchase, redeem or otherwise acquire, any of its
securities or any securities of its subsidiaries, or propose to do any of
the foregoing;
(f) sell, transfer, license, sublicense or otherwise dispose of any
Company Intellectual Property, or amend or modify any existing agreements
with respect to any Company Intellectual Property or Third Party
Intellectual Property Rights, other than nonexclusive object and source
code licenses in the ordinary course of business consistent with past
practice;
(g) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee (other than guarantees of bank
debt of the Company's subsidiaries entered into in the ordinary course of
business), endorse or otherwise as an accommodation become responsible for,
the obligations of any person, or make any loans or advances, except in the
ordinary course of business consistent with past practice; (iii) authorize
any capital expenditures or purchase of fixed assets which are, in the
aggregate, in excess of $2,000,000 for the Company and its subsidiaries
taken as a whole; or (iv) enter into or amend any contract, agreement,
commitment or arrangement to effect any of the matters prohibited by this
Section 4.01(g);
(h) increase the compensation payable or to become payable to its
officers or employees, except for increases in salary or wages of employees
of the Company or its subsidiaries who are not officers of the Company in
accordance with past practices, or grant any severance or termination pay
to, or enter into any employment or severance agreement with, any director,
officer (except for officers who are terminated on an involuntary basis) or
other employee of the Company or any of its subsidiaries, or establish,
adopt, enter into or amend any Employee Plan;
(i) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue
recognition, capitalization of software development costs, payments of
accounts payable and collection of accounts receivable) other than as may
be required by generally accepted accounting principles;
(j) make any material Tax election inconsistent with past practices
or settle or compromise any material federal, state, local or foreign Tax
liability or agree to an extension of a statute of limitations except to
the extent the amount of any such settlement has been reserved for on the
Company's most recent SEC Report;
<PAGE>
29
(k) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the financial statements of
the Company or incurred in the ordinary course of business and consistent
with past practice;
(l) except as may be required by law, take any action to terminate or
amend any of its Employee Plans;
(m) modify, amend or terminate any contracts, waive, release,
relinquish or assign any contract or other rights or claims or cancel or
forgive any indebtedness owed to it, other than in the ordinary course of
business consistent with past practice with respect to contracts which are
not material to the Company and its subsidiaries taken as a whole;
(n) take or allow to be taken or fail to take any act or omission
which would jeopardize the treatment of the Arrangement as a pooling of
interests for accounting purposes under GAAP; or
(o) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.01(a) through (n) above, or any action
which would make any of the representations or warranties of the Company
contained in this Agreement untrue or incorrect in any material respect or
prevent the Company from performing or cause the Company not to perform its
covenants hereunder or result in any of the conditions to the Arrangement
set forth herein not being satisfied.
SECTION 4.02. NO SOLICITATION. (a) The Company shall not, directly
or indirectly, through any officer, director, employee, representative or agent
of the Company or any of its subsidiaries, solicit or encourage (including by
way of furnishing information other than a copy of this Agreement or any portion
thereof) the initiation of any inquiries or proposals regarding any merger,
amalgamation, take-over bid, sale of substantial assets, sale of shares of
capital stock (including without limitation by way of a tender offer) or similar
transactions involving the Company or any subsidiaries of the Company (any of
the foregoing inquiries or proposals being referred to herein as an "ACQUISITION
PROPOSAL"); PROVIDED, HOWEVER, that nothing contained in this Agreement shall
prevent the Board of Directors of the Company from referring any third party to
this Section 4.02(a) or providing such party with a copy of this Section
4.02(a). Nothing contained in this Section 4.02(a) or other provision of this
Agreement shall prevent the Board of Directors of the Company from considering,
negotiating, approving and recommending to the stockholders of the Company an
unsolicited bona fide written Acquisition Proposal which the Board of Directors
of the Company determines in good faith (after consultation with its financial
advisors, and after receiving a
<PAGE>
30
written opinion of outside counsel, or advice of outside counsel that is
reflected in the minutes of the Board of Directors of the Company, to the effect
that the Board of Directors is required to do so in order to discharge properly
its fiduciary duties) would, if consummated in accordance with its terms, result
in a transaction more favorable to the Company's stockholders than the
transaction contemplated by this Agreement (any such Acquisition Proposal being
referred to herein as a "SUPERIOR PROPOSAL").
(b) The Company shall immediately notify Parent after receipt of any
written Acquisition Proposal or any request for nonpublic information relating
to the Company or any of its subsidiaries in connection with an Acquisition
Proposal or for access to the properties, books or records of the Company or any
subsidiary by any person or entity that informs the Board of Directors of the
Company or such subsidiary that it is considering making, or has made, an
Acquisition Proposal. Such notice to Parent shall be made orally and in writing
and shall indicate in reasonable detail the terms and conditions of such
proposal, inquiry or contact.
(c) If the Board of Directors of the Company receives a request for
material nonpublic information by a party who makes a bona fide Acquisition
Proposal and the Board of Directors of the Company determines that such proposal
is a Superior Proposal, then, and only in such case, the Company may, subject to
the execution of a confidentiality agreement substantially similar to that then
in effect between the Company and Parent, provide such party with access to
information regarding the Company.
(d) The Company shall immediately cease and cause to be terminated
any existing discussions or negotiations with any parties (other than Parent and
Amalgamation Sub) conducted heretofore with respect to any of the foregoing.
The Company agrees not to release any third party from any confidentiality or
standstill agreement to which the Company is a party.
(e) The Company shall ensure that the officers, directors and
employees of the Company and its subsidiaries and any investment bankers or
other advisors or representatives retained by the Company are aware of the
restrictions described in this Section, and shall be responsible for any breach
of this Section 4.02 by such bankers, advisors or representatives.
SECTION 4.03. CONDUCT OF BUSINESS BY PARENT PENDING THE ARRANGEMENT.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Date, Parent
covenants and agrees that, unless the Company shall otherwise agree in writing,
Parent shall conduct its business, and cause the businesses of its subsidiaries
to be conducted, in the ordinary course of business and consistent with past
practice, other than actions taken by Parent or its subsidiaries in
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31
contemplation of the Arrangement and the Other Merger, and shall not directly or
indirectly do, or propose to do, any of the following without the prior written
consent of the Company:
(a) amend or otherwise change Parent's Articles of Incorporation, or
amend the terms of the Parent Common Stock, except for the filing of the
certificate of designation referred to in Section 5.16 hereof;
(b) except for the Other Merger, acquire or agree to acquire, by
merging or consolidating with, by purchasing an 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 of
any other person, which, in each case, would materially delay or prevent
the consummation of the transactions contemplated by this Agreement;
(c) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly owned
subsidiary of Parent may declare and pay a dividend to its parent;
(d) sell, transfer, license, sublicense or otherwise dispose of any
material assets; or
(e) take or agree in writing or otherwise to take any action which
would make any of the representations or warranties of Parent, Swissco or
Amalgamation Sub contained in this Agreement untrue or incorrect or prevent
Parent, Swissco or Amalgamation Sub from performing or cause Parent,
Swissco or Amalgamation Sub not to perform its respective covenants
hereunder.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT.
(a) As promptly as practicable after the execution of this Agreement, the
Company and Parent shall, if so required, prepare and file with the SEC
preliminary proxy materials which shall constitute the Proxy Statement of the
Company and the Registration Statement and/or offering circular of the Parent
with respect to the Parent Common Shares to be issued in connection with the
Arrangement. As promptly as practicable after comments are received from the
SEC thereon and after the furnishing by the Company and Parent of all
information required to be contained therein, the Company and Parent shall file
with the SEC a combined proxy and registration statement and/or offering
circular on Form S-4 (or on such other form
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32
as shall be appropriate) relating to the approval of the Arrangement and the
transactions contemplated hereby by the stockholders of the Company and shall
use all reasonable efforts to cause the Registration Statement to become
effective as soon thereafter as practicable. The Proxy Statement shall include
the recommendation of the Board of Directors of the Company in favor of the
Arrangement, subject to the second sentence of Section 4.02(a). Notwithstanding
anything herein to the contrary, Parent shall be under no obligation to file the
Registration Statement if it shall have determined on the advice of outside
counsel that the issuance of the Exchangeable Shares, Parent Common Stock and
preferred stock covered by the certificate of designation referred to in Section
5.16 hereof are exempt from the registration requirements of Section 5 of the
Securities Act by virtue of Section 3(a)(10) hereof.
(b) As promptly as practicable after the execution of this Agreement,
the Company agrees that it will apply to the Ontario Court of Justice (General
Division) (the "Court") pursuant to Section 182 of the OBCA for an interim order
in form and substance satisfactory to Parent (such approval not to be
unreasonably withheld or delayed) (the "Interim Order") providing for, among
other things, the calling and holding of the Company Stockholders' Meeting for
the purpose of considering and, if deemed advisable, approving the Arrangement
under Section 182 of the OBCA. If the approval by the shareholders of the
Company of the Arrangement is obtained, thereafter the Company will take the
necessary steps to submit the Arrangement to the Court and apply for a final
order of the Court approving such Arrangement in such fashion as the Court may
direct.
SECTION 5.02. STOCKHOLDERS' MEETING. The Company shall call and hold
the Company Stockholders' Meeting as promptly as practicable for the purpose of
voting upon the approval of the Arrangement. The Company shall use its
reasonable best efforts to hold the Company Stockholders' Meeting as soon as
practicable after the later of the dates on which the Registration Statement, if
any, becomes effective and the Interim order is granted. Subject to the second
sentence of Section 4.02(a), the Company shall use its reasonable best efforts
to solicit from its stockholders proxies in favor of the approval of the
Arrangement, and to take all other action as may be reasonably necessary or
advisable to secure the vote or consent of stockholders required by the OBCA or
the OSA to obtain such approvals.
SECTION 5.03. ACCESS TO INFORMATION; CONFIDENTIALITY. Upon
reasonable notice and subject to restrictions contained in confidentiality
agreements to which such party is subject, the Company and Parent shall each
(and shall cause each of their subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of the other,
reasonable access, during the period prior to the Effective Date, to all its
properties, books, contracts, commitments and records and, during such period,
the Company and Parent each shall (and shall cause each of their subsidiaries
to) furnish promptly to the other all information concerning its business,
properties and personnel as such other party may reasonably request, and each
shall make available to the other the appropriate individuals
<PAGE>
33
(including attorneys, accountants and other professionals) for discussion of the
other's business, properties and personnel as either party may reasonably
request. Each party shall keep such information confidential in accordance with
the terms of the existing confidentiality agreement (the "Confidentiality
Agreement") between Parent and the Company.
SECTION 5.04. CONSENTS; APPROVALS. The Company and Parent shall each
use all reasonable efforts to obtain all consents, waivers, approvals,
authorizations or orders (including, without limitation, all United States,
Canadian federal and provincial and foreign governmental and regulatory rulings
and approvals), and the Company and Parent shall make all filings (including,
without limitation, all filings with United States, Canadian federal and
provincial and foreign governmental or regulatory agencies) required in
connection with the authorization, execution and delivery of this Agreement by
the Company, Swissco, Amalgamation Sub and Parent and the consummation by them
of the transactions contemplated hereby. The Company and Parent (with respect
to themselves and their respective subsidiaries) shall furnish all information
required to be included in the Proxy Statement and the Registration Statement,
or for any application or other filing to be made pursuant to the rules and
regulations of any United States, Canadian federal or provincial or foreign
governmental body in connection with the transactions contemplated by this
Agreement.
SECTION 5.05. STOCK OPTIONS. (a) On the Effective Date, the
Company's obligations with respect to each outstanding option to purchase shares
of Company Common Stock (each a "Company Option") under the Company's 1988
Employee Share Ownership Plan, 1989 Employee Share Ownership Plan, 1990 Employee
Share Ownership Plan and 1994 Stock Plan (individually, a "Company Stock Option
Plan," and, collectively, the "Company Stock Option Plans"), whether vested or
unvested, will be assumed by Parent and, on such assumption, the rights to
acquire Company Common Shares under the Common Stock Option Plans shall be
exchanged for rights to acquire Parent Common Shares under such plans. Each
Company Option so assumed by Parent under this Agreement shall continue to have,
and be subject to, the same terms and conditions set forth in the Company Stock
Option Plan and agreement pursuant to which such Company Option was issued as in
effect immediately prior to the Effective Date, except that (i) such Company
Option will be deemed to constitute an option to purchase that number of Parent
Common Shares equal to the product of the number of shares of Company Common
Stock that the holder of such option would have been entitled to receive
pursuant to the Arrangement had such holder exercised such options immediately
prior to the Effective Date (not taking into account whether such option was in
fact exercisable) multiplied by the Exchange Ratio, rounded up to the nearest
whole number of shares of Parent Common Shares, and (ii) the per share exercise
price for the shares of Parent Common Stock issuable upon exercise of such
assumed Company Option will be equal to the quotient determined by dividing the
exercise price per share of Company Common Stock at which such Company Option
was exercisable
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34
immediately prior to the Effective Date by the Exchange Ratio, and rounding the
resulting exercise price up to the nearest whole cent.
(b) It is the intention of the parties that the Company Options
assumed by Parent qualify following the Effective Date as incentive stock
options as defined in the Code ("ISO's"), to the extent the Company Options
qualified as ISO's prior to the Effective Date.
(c) The Company shall ensure that any required consents of holders of
such options or rights to such assumptions are obtained prior to the Effective
Date.
(d) As soon as practicable after the Effective Date, Parent shall
deliver to each holder of an outstanding Company Option, an appropriate notice
setting forth such holder's rights pursuant thereto and such Company Option
shall continue in effect on the same terms and conditions (including further
anti-dilution provisions, and subject to the adjustments required by this
Section 5.05 after giving effect to the Arrangement). Parent shall comply with
the terms of all such Company Options. Parent shall take all corporate action
necessary to reserve for issuance a sufficient number of Parent Common Shares
for delivery pursuant to the terms set forth in this Section 5.05.
(e) Parent shall file and cause to become effective not later than
the Effective Date a registration statement under the Securities Act of 1933
with respect to the assumption by Parent of the Company Options referred to in
Section 5.05 and with respect to the issuance of Parent Common Shares upon
exercise of those options and to keep such registration statement effective
throughout the term of such options.
SECTION 5.06. COMPANY EMPLOYEE STOCK PURCHASE PLAN. (a) The Company
shall take such actions as are necessary to cause the "purchase date" (as such
term is used in the Company's 1993 Employee Stock Purchase Plan (the "Company
Stock Purchase Plan")) applicable to the then current offering period (as such
term is used in the Company Stock Purchase Plan) to be the last trading day on
which the Parent Common Shares are traded on the New York Stock Exchange
immediately prior to the Effective Date (the "Final Company Purchase Date");
PROVIDED, THAT, such change in the Purchase Date shall be conditioned upon the
consummation of the Arrangement. On the Final Company Purchase Date, the
Company shall apply the funds credited as of such date under the Company Stock
Purchase Plan within each participant's payroll withholdings account to the
purchase of whole shares of Company Common Stock in accordance with the terms of
the Company Stock Purchase Plan. The cost to each participant in the Company
Stock Purchase Plan for shares of Company Common Stock shall be the lower of 85%
of the closing sale price of Company Common Stock on the Nasdaq National Market
on (i) the first day of the then current offering period or (ii) the last
trading day on or prior to the Final Company Purchase Date.
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35
(b) Employees of the Company as of the Effective Date shall be
permitted to participate in Parent's Employee Stock Purchase Plan commencing on
the first enrollment date following the Effective Date, subject to compliance
with the eligibility provisions of such plan (with employees receiving credit,
for purposes of such eligibility provisions, for service with the Company).
SECTION 5.07. AGREEMENTS OF AFFILIATES. The Company shall deliver to
Parent, prior to the date the Registration Statement becomes effective under the
Securities Act, a letter (the "Affiliate Letter") identifying all persons who
are, or may be deemed to be, at the time of the Company Stockholders' Meetings,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use its best efforts to cause each person who is identified as
an "affiliate" in the Affiliate Letter to deliver to Parent, prior to the
Effective Date, a written agreement (an "Affiliate Agreement") in substantially
the form of Exhibit B hereto.
SECTION 5.08. INDEMNIFICATION AND INSURANCE. (a) The Articles of
Incorporation of the Continuing Corporation shall contain the provisions with
respect to indemnification set forth in the By-Laws of the Company, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective Date in any manner that would adversely affect the
rights thereunder of individuals who at the Effective Date were directors,
officers, employees or agents of the Company, unless such modification is
required by law.
(b) The Company shall, to the fullest extent permitted under
applicable law or under the Company's Articles of Incorporation or By-Laws and
regardless of whether the Arrangement becomes effective, indemnify and hold
harmless, and after the Effective Date, the Continuing Corporation and Parent
shall, to the fullest extent permitted under applicable law or under the
Continuing Corporation's and Parent's, as the case may be, Articles of
Incorporation or By-Laws, indemnify and hold harmless, each present and former
director, officer, employee, fiduciary and agent of the Company or any of its
subsidiaries (collectively, the "Indemnified Parties") against any costs or
expenses (including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission occurring
at or prior to the Effective Date (including, without limitation, the
transactions contemplated by this Agreement) for a period of six years after the
Effective Date; PROVIDED, HOWEVER, that in the event that any claim or claims
for indemnification are asserted or made within such six-year period, all rights
to indemnification in respect of any such claim or claims shall continue until
the disposition of any and all such claims. The Indemnified Parties as a group
may retain only one law firm to represent them with respect to any single action
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any two or more Indemnified
Parties. Any counsel
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36
retained by the Indemnified Parties shall be reasonably satisfactory to Parent
and Parent shall not be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld).
SECTION 5.09. NOTIFICATION OF CERTAIN MATTERS. The Company shall
give prompt notice to Parent (in the case of subclauses (i) and (ii)), and
Parent shall give prompt notice to the Company, of (i) the occurrence, or non-
occurrence, of any event the occurrence, or non-occurrence, of which would be
likely to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate, (ii) any failure of the Company, Parent, Swissco or
Amalgamation Sub, as the case may be, materially to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder and (iii) any termination of the Other Merger Agreement; PROVIDED,
HOWEVER, that the delivery of any notice pursuant to this Section shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice; and PROVIDED, FURTHER, that failure to give such notice
shall not be treated as a breach of covenant for the purposes of Sections
6.02(a) or 6.03(a) unless the failure to give such notice results in material
prejudice to the other party.
SECTION 5.10. FURTHER ACTION. Upon the terms and subject to the
conditions hereof, each of the parties hereto shall use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, to
obtain in a timely manner all necessary waivers, consents and approvals and to
effect all necessary registrations and filings, and to otherwise satisfy or
cause to be satisfied all conditions precedent to its obligations under this
Agreement. In addition, the Company and Parent shall provide each other with
such cooperation and information as either of them reasonably may request of the
other in filing any Tax Return, amended Tax Return or claim for refund,
determining a liability for Taxes or a right to a refund of Taxes, participating
in or conducting any audit or other proceeding in respect of Taxes or making
representations to or furnishing information to parties subsequently desiring to
purchase any of the Company Common Stock. Such cooperation and information
shall include providing copies of relevant Tax Returns or portions thereof,
together with accompanying schedules, related work papers and documents relating
to rulings or other determinations by Tax authorities. Each of Parent, Swissco,
Amalgamation Sub and the Company shall use its best efforts to cause the
exchanges provided for in the Plan of Arrangement to fail to qualify, will take
any actions (that do not materially adversely affect such party) to cause such
exchanges to fail to qualify, and will not (both before and after consummation
of the Arrangement) take any actions which cause such exchanges to qualify, as a
reorganization under the provisions of Section 368 of the Code.
SECTION 5.11. PUBLIC ANNOUNCEMENTS. Parent (on behalf of itself,
Swissco and Amalgamation Sub) and the Company shall consult with each other
before issuing any
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37
press release or otherwise making any public statements with respect to the
Arrangement or this Agreement and shall not issue any such press release or make
any such public statement without the prior consent of the other party, which
shall not be unreasonably withheld; PROVIDED, HOWEVER, that a party may, without
the prior consent of the other party, issue such press release or make such
public statement as may upon the advice of counsel be required by law, the
National Association of Securities Dealers or the New York Stock Exchange
(the "NYSE") or any other regulatory body to which such party is subject if it
has used all reasonable efforts to consult with the other party as to the timing
and content of such release or statement.
SECTION 5.12. LISTING OF PARENT COMMON SHARES. Parent shall use its
reasonable best efforts to cause the shares of Parent Common Stock to be issued
in the Arrangement (including shares of Parent Common Stock issued as a result
of rights attaching to the Exchangeable Shares) to be approved for listing on
the NYSE.
SECTION 5.13. CONVEYANCE TAXES. Parent and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereby that are required or permitted to be filed on or before the Effective
Date.
SECTION 5.14. ACCOUNTANTS' LETTERS. Upon reasonable notice from
Parent, the Company shall use its reasonable efforts to cause KPMG Peat Marwick
Thorne to deliver to Parent a letter covering such matters as are customarily
addressed in accountant's "comfort" letters.
SECTION 5.15. POOLING ACCOUNTING TREATMENT. Each of Parent and the
Company agree not to take any action that would adversely affect the ability of
Parent to treat the Arrangement as a pooling of interests under GAAP.
SECTION 5.16. ANCILLARY DOCUMENTS/RESERVATION OF SHARES. (a)
Provided all other conditions of this Agreement have been satisfied or waived,
the Company and Amalgamation Sub shall, as promptly as practicable thereafter,
jointly file Articles of Arrangement pursuant to Section 182(1) of the OBCA to
give effect to the Plan of Arrangement, such Articles of Arrangement to contain
share conditions for the Continuing Corporation substantially in the form of
those contained in Exhibit A hereto.
(b) On the Effective Date:
(i) Parent, Swissco and the Continuing Corporation shall execute
and deliver a Support Agreement between Parent, Swissco and
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38
the Continuing Corporation containing the terms and
conditions set forth in Exhibit C hereto (the "Support
Agreement"), together with such other terms and conditions
as may be agreed to by the parties hereto acting reasonably;
(ii) Parent, Swissco the Continuing Corporation and a Canadian
trust company to be selected by Parent shall execute and
deliver a Voting and Exchange Trust Agreement containing the
terms and conditions set forth in Exhibit D hereto (the
"Voting Trust and Exchange Agreement"), together with such
other terms and conditions as may be agreed to by the
parties hereto acting reasonably; and
(iii)Parent shall file with the Secretary of State of the
State of Delaware a certificate of designation which
shall be in substantially the form set forth in Exhibit
E hereto.
On and after the Effective Date, Parent and Swissco shall duly and timely
perform all of their respective obligations expressed in the Plan of
Arrangement. The Plan of Arrangement and the other documents referred to in
this Section 5.16(b) are referred to herein as the "Ancillary Documents."
(c) On or prior to the Effective Date, Parent will reserve for
issuance such number of shares of Parent Common Stock as shall be necessary to
give effect to the exchanges, conversions and assumptions of options
contemplated hereby. On or prior to the Effective Date, Parent and Swissco
shall enter into a stock purchase agreement pursuant to which Swissco will
purchase from Parent the Parent Common Shares to be delivered pursuant hereto
and the Plan of Arrangement to holders of shares at the Effective Date and from
time to time thereafter upon exercise of the Exchangeable Shares. Upon request
of Parent prior to submission of the Plan of Arrangement for approval of the
Company's stockholders, the Company agrees that the Plan of Arrangement will be
modified to provide for a special class of preferred shares in the capital of
the Continuing Corporation to be purchased for cash by a person or persons
identified by Parent. Such shares shall have a liquidation preference equal to
the cash purchase price paid therefor, be subordinated, in all other respects,
to all other classes of capital stock of the Continuing Corporation, be non-
voting and have a cumulative dividend rate.
SECTION 5.17. OTHER MERGER. Parent will not close the Other Merger
unless the Arrangement closes substantially contemporaneously therewith, and
will not increase the Other Exchange Ratio, other than increasing such ratio in
response to an Acquisition Proposal (as defined in the Other Merger Agreement)
with respect to Wavefront, without proportionately increasing the Exchange
Ratio.
<PAGE>
39
ARTICLE VI
CONDITIONS TO THE ARRANGEMENT
SECTION 6.01. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
ARRANGEMENT. The respective obligations of each party to effect the Arrangement
shall be subject to the satisfaction at or prior to the Effective Date of the
following conditions:
(a) EFFECTIVENESS OF THE REGISTRATION STATEMENT/COURT APPROVAL. The
Registration Statement, if any, shall have been declared effective by the
SEC under the Securities Act and shall cover both the Parent Common Shares
issued at or immediately after the Effective Date and, if no exemption from
registration under the Securities Act is available, to be issued upon the
exchange of Exchangeable Shares. No stop order suspending the
effectiveness of the Registration Statement, if any, shall have been issued
by the SEC and no proceedings for that purpose and no similar proceeding in
respect of the Proxy Statement shall have been initiated or threatened by
the SEC or the OSC. The Court shall have issued its final order approving
the Arrangement in form and substance satisfactory to Parent and the
Company (such approvals not to be unreasonably withheld or delayed) and
reflecting the terms hereof;
(b) STOCKHOLDER APPROVAL. This Agreement and the Arrangement shall
have been approved and adopted by the affirmative requisite vote of the
stockholders of the Company;
(c) HSR ACT. The waiting period applicable to the consummation of
the Arrangement under the HSR Act shall have expired or been terminated;
(d) OSC, ETC. All necessary orders shall have been obtained from
the OSC and other relevant Canadian securities regulatory authorities in
connection with the Arrangement. The Company and Parent each have filed
all notices and information (if any) required under Part IX of the
Competition Act (Canada) and the applicable waiting periods and any
extensions thereof shall have expired or the parties shall have received an
Advance Ruling Certificate ("ARC") pursuant to section 102 of the
Competition Act (Canada) setting out that the Director under such Act is
satisfied he would not have sufficient grounds on which to apply for an
order in respect of the Arrangement;
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition (an "Injunction") preventing the consummation of the
Arrangement shall be in effect, nor shall any proceeding brought by any
administrative agency or commission or other
<PAGE>
40
governmental authority or instrumentality, domestic or foreign, seeking any
of the foregoing be pending; and there shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Arrangement, which makes the consummation of the
Arrangement illegal;
(f) NYSE LISTING. The Parent Common Shares and any additional shares
issued as a result of the exercise of rights attaching to the Exchangeable
Shares shall have been approved for listing, subject to notice of issuance,
on the NYSE;
(g) TAX OPINION. Parent and the Company shall have received
substantially identical written opinions of Blake, Cassels & Graydon and
Stikeman, Elliott, respectively, in form and substance reasonably
satisfactory to them, to the effect that the Exchangeable Shares will be
generally received by shareholders of the Company without recognition of
any gain or loss pursuant to the Canadian Code;
(h) OTHER MERGER. The Other Merger shall have been closed; and
(i) PUBLIC CORPORATION. Upon the Amalgamation, the Continuing
Corporation will be a "public corporation" under the Income Tax Act
(Canada);
SECTION 6.02. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT, SWISSCO
AND AMALGAMATION SUB. The obligations of Parent, Swissco and Amalgamation Sub
to effect the Arrangement are also subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in this Agreement shall be true and
correct in all respects on and as of the Effective Date, except for (i)
changes contemplated by this Agreement, (ii) those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such date) or (iii) where the failure to be
true and correct would not have a Material Adverse Effect on the Company,
with the same force and effect as if made on and as of the Effective Date,
and Parent and Amalgamation Sub shall have received a certificate to such
effect signed on behalf of the Company by the President and Chief Financial
Officer of the Company;
(b) AGREEMENTS AND COVENANTS. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Date, and Parent and Amalgamation Sub shall have
received a certificate to such effect signed on behalf of the Company by
the President and Chief Financial Officer of the Company;
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41
(c) CONSENTS OBTAINED. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all material filings
required to be made, by the Company for the authorization, execution and
delivery of this Agreement and the consummation by it of the transactions
contemplated hereby shall have been obtained and made by the Company;
(d) GOVERNMENTAL ACTIONS. There shall not have been instituted,
pending or threatened any action or proceeding (or any investigation or
other inquiry that might result in such an action or proceeding) by any
governmental authority or administrative agency before any governmental
authority, administrative agency or court of competent jurisdiction, nor
shall there be in effect any judgment, decree or order of any governmental
authority, administrative agency or court of competent jurisdiction, in
either case, seeking to prohibit or limit Parent from exercising all
material rights and privileges pertaining to its ownership of the
Continuing Corporation or the ownership or operation by Parent or any of
its subsidiaries of all or a material portion of the business or assets of
Parent or any of its subsidiaries, or seeking to compel Parent or any of
its subsidiaries to dispose of or hold separate all or any material portion
of the business or assets of Parent or any of its subsidiaries, as a result
of the Arrangement or the transactions contemplated by this Agreement;
(e) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall have been no change, occurrence or circumstance in the business,
results of operations or financial condition of the Company or any
subsidiary of the Company having or reasonably likely to have a Material
Adverse Effect;
(f) ACCOUNTANTS' POOLING LETTERS. Each of the parties to this
Agreement shall have received letters, dated as of the Effective Date, from
Ernst & Young LLP and KPMG Peat Marwick Thorne Chartered Accountants
regarding the appropriateness of pooling of interests accounting treatment
for the Arrangement under Accounting Principles Board Opinion No. 16 if the
Arrangement is closed and consummated in accordance with this Agreement;
and
(g) AFFILIATE AGREEMENTS. Parent shall have received from each
person who is identified in the Affiliate Letter as an "affiliate" of the
Company an Affiliate Agreement, and each such Affiliate Agreement shall be
in full force and effect.
SECTION 6.03. ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY.
The obligation of the Company to effect the Arrangement is also subject to the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent, Swissco and Amalgamation Sub contained in this
Agreement shall be true and
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42
correct in all respects on and as of the Effective Date, except for (i)
changes contemplated by this Agreement, (ii) those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such date) or (iii) where the failure to be
true and correct would not have a Material Adverse Effect on the Company,
with the same force and effect as if made on and as of the Effective Date,
and the Company shall have received a certificate to such effect signed by
the President and Chief Executive Officer of Parent;
(b) AGREEMENTS AND COVENANTS. Parent, Swissco and Amalgamation Sub
shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or
complied with by them on or prior to the Effective Date, and the Company
shall have received a certificate to such effect signed by the President
and Chief Financial Officer of Parent;
(c) CONSENTS OBTAINED. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required
to be made, by Parent, Swissco and Amalgamation Sub for the authorization,
execution and delivery of this Agreement and the consummation by them of
the transactions contemplated hereby shall have been obtained and made by
Parent, Swissco and Amalgamation Sub; and
(d) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall have been no change, occurrence or circumstance in the business,
results of operations or financial condition of Parent or any subsidiary of
Parent having or reasonably likely to have a Material Adverse Effect.
ARTICLE VII
TERMINATION
SECTION 7.01. TERMINATION. This Agreement may be terminated at any
time prior to the Effective Date, notwithstanding approval thereof by the
stockholders of the Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company; or
(b) by either Parent or the Company if the Arrangement shall not have
been consummated by August 31, 1995 (PROVIDED, THAT, the right to terminate
this Agreement under this Section 7.01(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Arrangement to occur on or
before such date); or
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43
(c) by either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a non-appealable final order, decree or ruling
or taken any other action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Arrangement; or
(d) by either Parent or the Company, if, at the Company Stockholders'
Meeting (including any adjournment or postponement thereof), the requisite
affirmative vote of the stockholders of the Company shall not have been
obtained; or
(e) by Parent, if (i) the Board of Directors of the Company shall
withdraw, modify or change its recommendation of this Agreement or the
Arrangement in a manner adverse to Parent or shall have resolved to do so;
or (ii) the Board of Directors of the Company shall have taken a "neutral"
position with respect to (or shall have failed to reject as inadequate, or
shall have failed to reaffirm its recommendation of this Agreement and the
Arrangement within 10 business days after the public announcement or
commencement of) an Alternative Transaction (as defined in Section
7.03(d)); or
(f) by either Parent or the Company, upon a breach of any
representation, warranty, covenant or agreement on the part of the Company
or Parent, Swissco and/or Amalgamation Sub, respectively, set forth in this
Agreement or if any representation or warranty of the Company or Parent,
Swissco and/or Amalgamation Sub, respectively, shall have become untrue, in
either case, such that the conditions set forth in Section 6.02(a) or
6.02(b), or Section 6.03(a) or 6.03(b), would not be satisfied (a
"Terminating Breach"), PROVIDED, THAT, if such Terminating Breach is
curable prior to the expiration of 30 days from its occurrence (but in no
event later than August 31, 1995) by Parent, Swissco and/or Amalgamation
Sub or the Company, as the case may be, through the exercise of its
reasonable best efforts and for so long as Parent, Swissco and/or
Amalgamation Sub or the Company, as the case may be, continues to exercise
such reasonable best efforts, neither the Company nor Parent and/or
Amalgamation Sub, respectively, may terminate this Agreement under this
Section 7.01(f) until the earlier of August 31, 1995 or the expiration of
such 30-day period without such Terminating Breach having been cured; or
(g) by either Parent or the Company, if the Board of Directors of the
Company shall have resolved to accept, or accepted, a Superior Proposal; or
(h) by the Company, at any time after the tenth business day
following termination of the Other Merger Agreement; or
<PAGE>
44
(i) by Parent, at any time after the tenth business day following
termination of the Other Merger Agreement.
SECTION 7.02. EFFECT OF TERMINATION. In the event of the termination
of this Agreement pursuant to Section 7.01, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto or
any of its affiliates, directors, officers or stockholders except (i) as set
forth in Section 7.03 and the last sentence of Section 8.01 hereof, and
(ii) nothing herein shall relieve any party from liability for any willful
breach hereof.
SECTION 7.03. FEES AND EXPENSES. (a) Except as set forth in this
Section 7.03, 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 Arrangement is consummated.
(b) The Company shall pay Parent a fee of $10,000,000 (the "Fee")
upon the earliest to occur of the following events:
(i) the termination of this Agreement by Parent pursuant to
Section 7.01(e); or
(ii) the termination of this Agreement by Parent pursuant to
Section 7.01(f) after a willful breach by the Company of this Agreement; or
(iii) the termination of this Agreement by Parent or the
Company pursuant to Section 7.01(g); or
(iv) the termination of this Agreement by the Company or Parent
pursuant to Section 7.01(d) if, at the time of termination (and on the day
of the vote referred to in Section 7.01(d)), an Alternative Transaction
shall be outstanding or a proxy statement recommending the implementation
of such Alternative Transaction shall have been published or sent or given
to the holders of the Shares.
(c) (i) The Company shall pay Parent a fee of $5,000,000 upon the
Company's termination of this Agreement pursuant to Section 7.01(h); PROVIDED,
THAT, no such fee shall be payable unless (A) the Other Merger Agreement has
been terminated as a result of a Third Party (as defined in Section 7.03(d))
having engaged in, or having entered into a contract to engage in, an
Alternative Transaction (as defined in the Other Merger Agreement) with
Wavefront, (B) prior to the expiration of the ten business day period referred
to in Section 7.01(h), Parent has delivered to the Company Parent's written
waiver of the condition specified in Section 6.01(h) and (C) prior to the
expiration of the ten
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45
business day period referred to in Section 7.01(h), the Company has not
delivered to Parent the Company's written waiver of the condition specified in
Section 6.01(h).
(ii) Parent shall pay the Company a fee of $5,000,000 upon
Parent's termination of this Agreement pursuant to Section 7.01(i); PROVIDED,
THAT, no such fee shall be payable unless (A) the Other Merger Agreement has
been terminated as a result of a Third Party having engaged in, or having
entered into a contract to engage in, an Alternative Transaction (as defined in
the Other Merger Agreement) with Wavefront, (B) prior to the expiration of the
ten business day period referred to in Section 7.01(i), the Company has
delivered to Parent the Company's written waiver of the condition specified in
Section 6.01(h) and (C) prior to the expiration of the ten business day period
referred to in Section 7.01(i), Parent has not delivered to the Company Parent's
written waiver of the condition specified in Section 6.01(h).
(d) As used herein, "Alternative Transaction" means (i) a transaction
pursuant to which any person (or group of persons) other than Parent or its
affiliates (a "Third Party") acquires (or publicly proposes to acquire) more
than 50 percent of the outstanding Shares, whether from the Company or pursuant
to a tender offer or exchange offer or otherwise, (ii) a merger or other
business combination involving the Company pursuant to which any Third Party
acquires (or publicly proposes to acquire) more than 50 percent of the
outstanding equity securities of the Company or the entity surviving such merger
or business combination or (iii) any other transaction pursuant to which any
Third Party acquires (or publicly proposes to acquire) control of assets
(including for this purpose the outstanding equity securities of subsidiaries of
the Company, and the entity surviving any merger or business combination
including any of them) of the Company and its subsidiaries having a fair market
value equal to more than 50 percent of the fair market value of all the assets
of the Company and its subsidiaries, taken as a whole, immediately prior to such
transaction (or proposal).
(e) The fee payable pursuant to Section 7.03(b)(i), (ii) and (iii)
shall be paid within one business day after the first to occur of the events
described in Section 7.03(b)(i), (ii) and (iii). The fee payable pursuant to
Section 7.03(c)(i) and (ii) shall be paid within one business day after the
dates of termination referred to therein. The fee payable pursuant to Section
7.03(b)(iv) shall be paid on the date of the closing of the Alternative
Transaction giving rise to such termination; PROVIDED, HOWEVER, that if such
Alternative Transaction is not closed within twelve months of such termination,
the fee shall not be payable. In no event shall the Company or Parent be
required to pay any fee under Section 7.03(b) or (c) if immediately prior to the
termination of this Agreement the party to whom the fee is due was in material
breach of its obligations under this Agreement.
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46
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. Except as otherwise provided in this Section 8.01, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. The representations, warranties and agreements in this
Agreement shall terminate at the Effective Date or upon the termination of this
Agreement pursuant to Section 7.01, as the case may be, except that the
agreements set forth in Sections 5.05, 5.06 and 5.08 shall survive the Effective
Date indefinitely and those set forth in Sections 5.03 and 7.03 shall survive
termination indefinitely. The Confidentiality Agreement(s) shall survive
termination of this Agreement as provided therein. Any disclosure made with
reference to one or more sections of the Company Disclosure Schedule or the
Parent Disclosure Schedule shall be deemed disclosed with respect to each other
section therein as to which such disclosure is relevant.
SECTION 8.02. NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered, if delivered personally, three days
after being sent by registered or certified mail (postage prepaid, return
receipt requested), one day after dispatch by recognized overnight courier
(provided delivery is confirmed by the courier), and upon transmission by
telecopy, confirmed received, to the parties at the following addresses (or at
such other address for a party as shall be specified by like changes of address
shall be effective upon receipt) or sent by electronic transmission, with
confirmation received, to the telecopy number specified below:
(a) If to Parent, Swissco or Amalgamation Sub:
Silicon Graphics, Inc.
2011 North Shoreline Boulevard
Mail Stop 710
Mountain View, CA 94043-1389
Telecopier No.: (415) 965-1586
Attention: Legal Services
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47
With a copy to:
Shearman & Sterling
555 California Street, Suite 2000
San Francisco, CA 94104
Telecopier No.: (415) 616-1199
Attention: Michael J. Kennedy, Esq.
(b) If to the Company:
Alias Research Inc.
110 Richmond Street E.
Toronto, Ontario
Canada M5C 1P1
Telecopier No.: (416) 861-8805
Attention: David Lewis, Esq.
With a copy to:
Robin Wigdor
110 Richmond Street E.
Toronto, Ontario
Canada M5C 1P1
Telecopier No.: (416) 368-0669
and to:
Stikeman, Elliott
Commerce Court West
53rd Floor
P.O. Box 85
Toronto, Ontario
Canada M5L 1B9
Telecopier No.: (416) 947-0866
Attention: John M. Stransman, Esq.
SECTION 8.03. CERTAIN DEFINITIONS. For purposes of this Agreement,
the term:
(a) "affiliates" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first-mentioned person; including, without limitation,
any partnership or joint venture
<PAGE>
48
in which the Company (either alone, or through or together with any other
subsidiary) has, directly or indirectly, an interest of 10 percent or more;
(b) "business day" means any day other than a Saturday, Sunday or a
day when banks are not open for business in either or both of San
Francisco, California and Toronto, Ontario;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock,
as trustee or executor, by contract or credit arrangement or otherwise;
(d) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(e) "subsidiary" or "subsidiaries" of the Company, the Continuing
Corporation, Parent or any other person means any corporation, partnership,
joint venture or other legal entity of which the Company, the Continuing
Corporation, Parent or such other person, as the case may be (either alone
or through or together with any other subsidiary), owns, directly or
indirectly, more than 50% of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other
legal entity.
SECTION 8.04. AMENDMENT. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Date; PROVIDED, HOWEVER, that,
after approval of the Arrangement by the stockholders of the Company, no
amendment may be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 8.05. WAIVER. At any time prior to the Effective Date, any
party hereto may with respect to any other party hereto (a) extend the time for
the performance of any of the obligations or other acts, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
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49
SECTION 8.06. HEADINGS. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.07. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 8.08. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement and supersedes all prior agreements and undertakings (other
than the Confidentiality Agreement), both written and oral, among the parties,
or any of them, with respect to the subject matter hereof and, except as
otherwise expressly provided herein, are not intended to confer upon any other
person any rights or remedies hereunder.
SECTION 8.09. ASSIGNMENT; AMALGAMATION SUB/SWISSCO. (a) This
Agreement shall not be assigned by operation of law or otherwise, except that
Parent, Swissco and Amalgamation Sub may assign all or any of their rights
hereunder to any subsidiary provided that no such assignment shall relieve the
assigning party of its obligations hereunder. The Company agrees that prior to
the Effective Date, it may amend the Plan of Arrangement to provide for the
amalgamation of one or more of Parent's Canadian subsidiaries with the Company;
PROVIDED, THAT, such amalgamation does not, in any respect, affect the economic
terms of the transactions contemplated hereby to the holders of the Shares,
including, without limitation, the tax treatment to holders who elect to receive
Exchangeable Shares.
(b) Parent undertakes to the Company that Parent shall cause Swissco
to perform in a due and timely manner all of its obligations hereunder and to be
performed by it under the Plan of Arrangement and the Ancillary Documents and in
connection with the implementation of the Arrangement and that Parent shall
cause Swissco to refrain from taking or omitting to take any action which would
have an adverse economic effect on the implementation of the Arrangement as
contemplated herein.
SECTION 8.10. PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 5.08
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50
(which is intended to be for the benefit of the Indemnified Parties and may be
enforced by such Indemnified Parties).
SECTION 8.11. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
SECTION 8.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS EXECUTED AND FULLY PERFORMED WITHIN THE STATE OF NEW
YORK. EXCEPT TO THE EXTENT MANDATORILY GOVERNED BY ONTARIO LAW, PARENT,
SWISSCO, AMALGAMATION SUB AND THE COMPANY EACH HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN THE CITY OF NEW
YORK, NEW YORK COUNTY, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, AND PARENT, SWISSCO, AMALGAMATION SUB, AND THE COMPANY EACH
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR SUCH
FEDERAL COURT. PARENT, SWISSCO, AMALGAMATION SUB AND THE COMPANY EACH HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
PARENT, SWISSCO, AMALGAMATION SUB AND THE COMPANY EACH HEREBY IRREVOCABLY
CONSENTS TO THE SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER
PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING BY CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, OR BY DELIVERING OF A COPY OF SUCH PROCESS TO THE
COMPANY OR PARENT, AS THE CASE MAY BE, AT ITS ADDRESS SPECIFIED IN SECTION 8.02
OR BY ANY OTHER METHOD PERMITTED BY LAW. PARENT, SWISSCO, AMALGAMATION SUB AND
THE COMPANY EACH AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR BY ANY OTHER MANNER PROVIDED BY LAW. THE COMPANY HEREBY APPOINTS CT
CORPORATION SYSTEM WITH AN ADDRESS ON THE DATE HEREOF AT 1633 BROADWAY, N.Y.
10019 AS ITS
<PAGE>
51
AGENT TO RECEIVE PROCESS IN ALL ACTIONS OR PROCEEDINGS RELATED HERETO.
SECTION 8.13. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 8.14. WAIVER OF JURY TRIAL. EACH OF PARENT, SWISSCO,
AMALGAMATION SUB AND THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING,
OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
[This space intentionally left blank.]
<PAGE>
52
IN WITNESS WHEREOF, Parent, Swissco, Amalgamation Sub and the Company
have caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
SILICON GRAPHICS, INC.
By /s/ Thomas A. Jermoluk
-----------------------------------------------
Name: Thomas A. Jermoluk
Title: President and Chief Operating Officer
SILICON GRAPHICS MANUFACTURING S.A.
By /s/ Tom Oswold
-----------------------------------------------
Name: Tom Oswold
Title: Chairman
1103707 ONTARIO INC.
By /s/ William M. Kelly
-----------------------------------------------
Name: William M. Kelly
Title: President
ALIAS RESEARCH INC.
By /S/ James D. Fleck
-----------------------------------------------
Name: James D. Fleck
Title: Chairman of the Board
<PAGE>
Exhibit A
PLAN OF ARRANGEMENT
UNDER SECTION 182
OF THE BUSINESS CORPORATIONS ACT (ONTARIO)
ARTICLE I--INTERPRETATION
1.1 Definitions
In this Plan of Arrangement unless there is something in the subject
matter or context inconsistent therewith, the following terms shall have the
respective meanings set out below and grammatical variations of such terms shall
have corresponding meanings:
(a) "AMALGAMATION" means the amalgamation of Amalgamation Sub
and the Company pursuant to subsection 2.1(a);
(b) "AMALGAMATION SUB" means 1103707 Ontario Inc., a corporation
incorporated under the OBCA;
(c) "ARRANGEMENT" means the arrangement under section 182 of the
OBCA on the terms and subject to the conditions set out in this Plan of
Arrangement, subject to any amendments thereto made in accordance with
section 8.04 of the Combination Agreement, section 6.1 of this Plan of
Arrangement or made at the direction of the Court in the Final Order;
(d) "ARRANGEMENT RESOLUTION" means the special resolution passed
by the holders of the Company Common Shares at the Meeting;
(e) "AUTOMATIC REDEMPTION" has the meaning ascribed thereto in
the Exchangeable Share Provisions;
(f) "AUTOMATIC REDEMPTION DATE" has the meaning ascribed thereto
in the Exchangeable Share Provisions;
(g) "BUSINESS DAY" means any day other than a Saturday, Sunday
or a day when banks are not open for business in either or both of San
Francisco, California and Toronto, Ontario;
(h) "CLASS A SHARES" has the meaning ascribed thereto in clause
2.1(a)(iv)(A);
(i) "CLASS B SHARES" has the meaning ascribed thereto in clause
2.1(a)(iv)(B);
A-1
<PAGE>
(j) "COMBINATION AGREEMENT" means the Agreement and Plan of
Acquisition and Arrangement by and among Parent, Swissco, the Company and
1103707 Ontario Inc. dated as of February 6, 1995, providing for, among
other things, the Arrangement;
(k) "COMPANY" means Alias Research Inc., a corporation
subsisting under the OBCA;
(l) "COMPANY COMMON SHARES" means the common shares in the
capital of the Company;
(m) "CORPORATION" means the corporation continuing from the
Amalgamation;
(n) "COURT" means the Ontario Court of Justice (General
Division);
(o) "DEPOSITARY" means at its principal offices in
Toronto, Ontario and at its principal office in , ;
(p) "DISSENT PROCEDURES" has the meaning set out in section 3.1;
(q) "DISSENTING SHAREHOLDER" means a holder of Company Common
Shares ("Dissenting Shares") who dissents in respect of the Arrangement in
strict compliance with the Dissent Procedures;
(r) "EFFECTIVE DATE" means the date shown on the certificate of
arrangement issued by the Director under the OBCA giving effect to the
Arrangement;
(s) "ELECTED COMPANY COMMON SHARE" means any Company Common
Share which the holder shall have indicated pursuant to the terms of
section 4.7 is to be converted on the Amalgamation into Class B Shares;
(t) "EXCHANGEABLE SHARE PROVISIONS" means the rights,
privileges, restrictions and conditions attaching to the Exchangeable
Shares;
(u) "EXCHANGEABLE SHARES" has the meaning ascribed thereto in
clause 2.1(a)(iv)(C);
(v) "FINAL ORDER" means the final order of the Court approving
the Arrangement;
(w) "LETTER OF TRANSMITTAL AND ELECTION FORM" means a Letter of
Transmittal and Election Form in the form accompanying the Proxy Statement;
A-2
<PAGE>
(x) "LIQUIDATION CALL RIGHT" has the meaning ascribed thereto in
section 5.1;
(y) "LIQUIDATION DATE" has the meaning ascribed thereto in the
Exchangeable Share Provisions;
(z) "MAXIMUM NUMBER" means the number that is equal to 49% of
the number of all Class A Shares and Class B Shares issued to holders of
Company Common Shares pursuant to paragraphs 2.1(c), 2.1(d) and 2.1(k) and
Dissenting Shares;
(aa) "MEETING" means the Special Meeting of the shareholders of
the Company to be held to consider the Arrangement;
(bb) "NYSE" means the New York Stock Exchange;
(cc) "OBCA" means the BUSINESS CORPORATIONS ACT (Ontario), as
amended;
(dd) "PARENT" means Silicon Graphics, Inc., a body corporate
existing under the laws of the State of Delaware;
(ee) "PARENT COMMON SHARES" means the common shares in the
capital of Parent;
(ff) "PROXY STATEMENT" means the Information Circular and Proxy
Statement of the Company prepared and circulated in connection with this
Plan of Arrangement;
(gg) "REDEMPTION CALL RIGHT" has the meaning ascribed thereto in
section 5.2;
(hh) "RECORD HOLDERS" has the meaning ascribed thereto in the
Exchangeable Share Provisions;
(ii) "REDEMPTION DATE" has the meaning ascribed thereto in the
Exchangeable Share Provisions;
(jj) "SECTION 12(G) REDEMPTION" has the meaning ascribed thereto
in the Exchangeable Share Provisions; and
(kk) "SECTION 12(G) REDEMPTION DATE" has the meaning ascribed
thereto in the Exchangeable Share Provisions.
A-3
<PAGE>
(ll) "SWISSCO" means Silicon Graphics Manufacturing S.A., a Swiss
corporation.
1.2 SECTIONS AND HEADINGS
The division of this Plan of Arrangement into sections and the
insertion of headings are for reference purposes only and shall not affect the
interpretation of this Plan of Arrangement. Unless otherwise indicated, any
reference in this Plan of Arrangement to a section or an Appendix refers to the
specified section of or Appendix to this Plan of Arrangement.
1.3 NUMBER, GENDER AND PERSONS
In this Plan of Arrangement, unless the context otherwise requires,
words importing the singular number include the plural and vice versa, words
importing any gender include all genders and words importing persons include
individuals, corporations, partnerships, associations, trusts, unincorporated
organizations, governmental bodies and other legal or business entities of any
kind.
1.4 INTERPRETATION NOT AFFECTED BY HEADINGS
The division of this Plan of Arrangement into Articles, sections and
other parts and the insertion of headings are for convenience of reference only
and shall not affect the construction or interpretation of this Plan of
Arrangement.
1.5 DATE FOR ANY ACTION
In the event that any date on or by which any action is required or
permitted to be taken hereunder is not a Business Day, such action shall be
required or permitted to be taken on or by the next succeeding day which is a
Business Day.
1.6 TIME
All times expressed herein or in any Letters of Transmittal and
Election Forms are local time (Toronto, Ontario) unless otherwise stipulated
herein or therein.
1.7 CURRENCY
Unless otherwise expressly stated herein, all references to currency
in this Plan of Arrangement are to Canadian dollars, being lawful money of
Canada, and the sign "$" without more shall mean Canadian dollars.
A-4
<PAGE>
1.8 STATUTORY REFERENCES
Any reference in this Plan of Arrangement to a statute includes all
regulations made thereunder, all amendments to such statute or regulations in
force from time to time, and any statute or regulation that supplements or
supersedes such statute or regulations.
ARTICLE 2--ARRANGEMENT
2.1 ARRANGEMENT
On the Effective Date, the following shall occur and shall be deemed
to occur in the following order without any further act or formality:
(a) Amalgamation Sub and the Company shall amalgamate to form
the Corporation and shall continue as one corporation under the OBCA and,
unless and until otherwise determined in the manner required by law, by the
Corporation, its directors or shareholders, the following provisions shall
apply to the Corporation:
(i) NAME. The name of the Corporation shall be Alias
Research Inc.;
(ii) REGISTERED OFFICE. The registered office of the
Corporation shall be located in the City of Toronto in the Province of
Ontario. The address of the registered office of the Corporation
shall be ;
(iii) BUSINESS AND POWERS. There shall be no
restrictions on the business the Corporation may carry on or on the
powers it may exercise;
(iv) AUTHORIZED SHARE CAPITAL. The Corporation shall be
authorized to issue:
(A) an unlimited number of Class A voting common
shares (the "Class A Shares");
(B) an unlimited number of Class B non-voting common
shares (the "Class B Shares");
(C) an unlimited number of Exchangeable Non-Voting
Shares (the "Exchangeable Shares");
(v) SHARE PROVISIONS. The Class A Shares, the Class B
Shares and the Exchangeable Shares shall have attached thereto the
rights, privileges, restrictions and conditions respectively set out
in Appendix A hereto;
A-5
<PAGE>
(vi) SHARE RESTRICTIONS. There shall be no restrictions on
the issue, transfer or ownership of shares of the Corporation;
(vii) NUMBER OF DIRECTORS. The number of directors of
the Corporation shall be such number not less than _____ and not more
than _____ as the shareholders of the Corporation may from time to
time determine by special resolution or, if empowered to do so by
special resolution, as the directors of the Corporation may from time
to time determine;
(viii) INITIAL DIRECTORS AND OFFICERS. The directors and
officers of the Corporation shall be:
Canadian
Name Residence Address Resident
---- ----------------- --------
(ix) BY-LAWS. The by-laws of the Corporation shall be the
by-laws of Amalgamation Sub in effect immediately prior to the
Amalgamation.
(x) FISCAL YEAR. The fiscal year of the Corporation shall
end on June 30 of each year.
(xi) EFFECT. The effect of the Amalgamation shall be as
provided in section 179 of the OBCA.
(b) Upon the Amalgamation each common share of Amalgamation Sub
outstanding immediately prior to the Amalgamation shall be converted into
one Class A Share and each certificate representing such common shares
shall continue to evidence ownership of Class A Shares.
(c) Upon the Amalgamation, each Company Common Share outstanding
immediately prior to the Amalgamation, other than those held by Dissenting
Shareholders and Elected Company Common Shares, shall be converted into one
Class A Share and the name of each holder thereof shall be added to the
register of holders of Class A Shares accordingly.
A-6
<PAGE>
(d) Subject to paragraph (k), upon the Amalgamation, each
Elected Company Common Share outstanding immediately prior to the
Amalgamation, other than shares held by Dissenting Shareholders, shall be
converted into one Class B Share and the name of each holder thereof shall
be added to the register of holders of Class B Shares accordingly.
(e) Immediately following the Amalgamation, each issued and
outstanding Class B Share shall be converted into 0.90 (the "Exchange
Ratio") fully paid and nonassessable Exchangeable Shares.
(f) Upon the conversion referred to in subsection 2.1(e), each
holder of Class B Shares shall cease to be such a holder, shall have his
name removed from the register of holders of Class B Shares and shall
become a holder of the number of fully paid and non-assessable Exchangeable
Shares to which he is entitled as a result of the conversion referred to in
subsection 2.1(e) and such holder's name shall be added to the register of
holders of Exchangeable Shares accordingly.
(g) Immediately following the Amalgamation, each issued and
outstanding Class A Share, other than those held by Parent, Swissco and
affiliates of Parent, shall be exchanged by the holder thereof with Swissco
or, if Parent elects in its sole discretion, a subsidiary of Parent, for
0.90 Parent Common Shares.
(h) In connection with the exchange referred to in subsection
2.1(g), each holder of Class A Shares, other than Swissco, Parent, and
affiliates of Parent, shall be deemed to have transferred each issued and
outstanding Class A Share held by him to Swissco and Swissco shall deliver
or cause to be delivered to each such holder, or cause its affiliate to
deliver to each such holder, that number of fully paid and non-assessable
Parent Common Shares equal to the Exchange Ratio in exchange for each Class
A Share so transferred.
(i) Upon the exchange referred to in paragraph 2.1(g), each
holder of Class A Shares, other than Swissco, Parent, and affiliates of
Parent, shall cease to be such a holder, shall have his name removed from
the register of holders of Class A Shares and shall become a holder of the
number of Parent Common Shares to which he is entitled as a result of the
exchange referred to in subsection 2.1(g) and such holder's name shall be
added to the register of holders of Parent Common Shares accordingly.
(j) Upon the exchange referred to in paragraph 2.1(g), Swissco
(or a subsidiary of Parent) shall become the holder of all the issued and
outstanding Class A Shares, and Swissco's (or such subsidiary's) name shall
be added to the register of holders of Class A Shares accordingly.
A-7
<PAGE>
(k) In the event the number of Class B Shares issuable pursuant
to paragraph (d) exceeds the Maximum Number, such holders of Elected
Company Common Shares shall receive Class A Shares, pro rata, in respect of
such excess.
(l) The Exchange Ratio shall be adjusted to reflect fully the
effect of any stock split, reverse split, stock dividend (including any
dividend or distribution of securities convertible into Parent Common
Shares or Company Common Shares), reorganization, recapitalization or other
like change with respect to Parent Common Shares or Company Common Shares
occurring after the date of the Combination Agreement and prior to the
Effective Date.
2.2 STATED CAPITAL
For purposes of the OBCA:
(a) the stated capital attributable to the Class A Shares issued
on the Amalgamation will be equal to the product obtained when the stated
capital of all of the outstanding Company Common Shares (other than Company
Common Shares held by Dissenting Shareholders) determined immediately
before the Amalgamation is multiplied by a fraction the numerator of which
is the total number of Class A Shares issued on the Amalgamation and the
denominator of which is the total number of Class A Shares and Class B
Shares issued or in issue on the Amalgamation;
(b) the stated capital attributable to the Class B Shares issued
on the Amalgamation will be equal to the balance, if any, of the stated
capital of all of the outstanding Company Common Shares (other than
Company Common Shares held by Dissenting Shareholders) determined
immediately before the Amalgamation after the application of subsection
2.2(a); and
(c) the aggregate stated capital of all Exchangeable Shares
issued on the conversion described in subsection 2.1(e) will be the
aggregate stated capital immediately after the Amalgamation attributable to
the Class B Shares converted into Exchangeable Shares.
ARTICLE 3--RIGHTS OF DISSENT
3.1 RIGHTS OF DISSENT
(a) Holders of Company Common Shares may exercise rights of dissent
with respect to such shares pursuant to and in the manner set forth in section
185 of the OBCA and this section 3.1 (the "Dissent Procedures") in connection
with the Arrangement and holders who duly exercise such rights of dissent and
who:
A-8
<PAGE>
(i) are ultimately entitled to be paid fair value for their
Company Common Shares shall be deemed to have transferred such Company
Common Shares to the Corporation for cancellation on the Effective Date; or
(ii) are ultimately not entitled, for any reason, to be paid fair
value for their Company Common Shares shall be deemed to have participated
in the Arrangement on the same basis as any non-dissenting holder of
Company Common Shares other than a holder of Elected Company Common Shares,
and shall receive Class A Shares on the basis determined in accordance with
subsection 2.1(c) and thereafter Parent Common Shares on the basis
determined in accordance with subsection 2.1(g) of this Plan of
Arrangement,
but in no case shall the Corporation be required to recognize such holders as
holders of Company Common Shares on and after the Effective Date, and the names
of such holders of Company Common Shares shall be deleted from the registers of
holders of Company Common Shares on the Effective Date.
(b) The Corporation shall give Parent (i) prompt notice of any
written demand of a right of dissent, withdrawals of such demands, and any other
instruments served pursuant to the OBCA and received by the Corporation and (ii)
the opportunity to participate in all negotiations and proceedings with respect
to such rights. The Corporation shall not, except with the prior written
consent of Parent, voluntarily make any payment with respect to any such rights
or offer to settle or settle any such rights. An amount equal to the amount of
all payments to be made by the Corporation pursuant to the exercise of such
dissenters' rights shall be advanced or contributed by Parent to the Corporation
in such manner as Parent may determine.
ARTICLE 4--CERTIFICATES AND FRACTIONAL SHARES
4.1 ISSUANCE OF CERTIFICATES REPRESENTING EXCHANGEABLE SHARES
On or promptly after the Effective Date, the Corporation shall deposit
with the Depositary, for the benefit of the holders of Class B Shares converted
pursuant to subsection 2.1(e), certificates representing the Exchangeable
Shares issued pursuant to subsection 2.1(e) upon the conversion of outstanding
Class B Shares. Upon surrender to the Depositary for cancellation of a
certificate which immediately prior to the Effective Date represented
outstanding Company Common Shares that were converted into Class B Shares on the
Amalgamation and thereafter converted into Exchangeable Shares, together with
such other documents and instruments as would have been required to effect the
transfer of the shares formerly represented by such certificate under the OBCA
and the by-laws of the Company and such additional documents and instruments as
the Depositary may reasonably require, the holder of such surrendered
certificate shall be entitled to receive in exchange therefor, and the
Depositary shall deliver to such holder, a certificate representing that number
(rounded down to the nearest whole number) of Exchangeable Shares which such
holder has the right to receive (together with any dividends or distributions
with respect thereto pursuant to section 4.3 and any cash in lieu of fractional
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<PAGE>
Exchangeable Shares pursuant to section 4.4), and the certificate so surrendered
shall forthwith be cancelled. Certificates representing Class B Shares shall
not be issued. In the event of a transfer of ownership of Company Common Shares
which is not registered in the transfer records of the Company, a certificate
representing the proper number of Exchangeable Shares may be issued to a
transferee if the certificate representing such Company Common Shares is
presented to the Depositary, accompanied by all documents required to evidence
and effect such transfer. Until surrendered as contemplated by this section
4.1, each certificate which immediately prior to the Effective Date represented
outstanding Company Common Shares that were converted into Class B Shares on the
Amalgamation and thereafter into Exchangeable Shares shall be deemed at any time
after the Effective Date to represent only the right to receive upon such
surrender (i) the certificate representing Exchangeable Shares as contemplated
by this section 4.1, (ii) a cash payment in lieu of any fractional Exchangeable
Shares as contemplated by section 4.4 and (iii) any dividends or distributions
with a record date after the Effective Date theretofore paid or payable with
respect to Exchangeable Shares as contemplated by section 4.3.
4.2 EXCHANGE OF CERTIFICATES FOR HOLDERS OF COMPANY COMMON SHARES
On or promptly after the Effective Date, Swissco shall deposit with
the Depositary, for the benefit of the holders of Company Common Shares
converted into Class A Shares pursuant to section 2.1(c) or (k) and thereafter
exchanged for Parent Common Shares pursuant to subsection 2.1(g), certificates
representing the Parent Common Shares issued pursuant to subsection 2.1(g) in
exchange for outstanding Class A Shares. Upon surrender to the Depositary for
cancellation of a certificate which immediately prior to the Effective Date
represented outstanding Company Common Shares that were converted into Class A
Shares and thereafter exchanged for Parent Common Shares, together with such
other documents and instruments as would have been required to effect the
transfer of the shares formerly represented by such certificate under the OBCA
and the by-laws of the Company and such additional documents and instruments as
the Depositary may reasonably require, the holder of such surrendered
certificate shall be entitled to receive in exchange therefor, and the
Depositary shall deliver to such holder, a certificate representing that number
(rounded down to the nearest whole number) of Parent Common Shares which such
holder has the right to receive (together with any dividends or distributions
with respect thereto pursuant to section 4.3 and any cash in lieu of fractional
Parent Common Shares pursuant to section 4.4), and the certificate so
surrendered shall forthwith be cancelled. No certificates representing Class A
Shares shall be issued to the holders of Company Common Shares which are
converted into Class A Shares on the Amalgamation. In the event of a transfer
of ownership of Company Common Shares which is not registered in the transfer
records of the Company, a certificate representing the proper number of Parent
Common Shares may be issued to a transferee if the certificate representing such
Company Common Shares is presented to the Depositary, accompanied by all
documents required to evidence and effect such transfer. Until surrendered as
contemplated by this section 4.2, each certificate which immediately prior to
the Effective Date represented outstanding Company Common Shares that were
converted into Class A Shares on the Amalgamation and thereafter exchanged for
Parent Common Shares shall be deemed at any time after the Effective Date to
represent only the right to receive upon such surrender (i) the certificate
representing
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<PAGE>
Parent Common Shares as contemplated by this section 4.2, (ii) a cash payment in
lieu of any fractional Parent Common Shares as contemplated by section 4.4 and
(iii) any dividends or distributions with a record date after the Effective Date
theretofore paid or payable with respect to Parent Common Shares as contemplated
by section 4.3.
4.3 DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES
No dividends or other distributions declared or made after the
Effective Date with respect to Exchangeable Shares or Parent Common Shares with
a record date after the Effective Date shall be paid to the holder of any
unsurrendered certificate which immediately prior to the Effective Date
represented outstanding Company Common Shares that were converted or exchanged
pursuant to section 2.1, and no cash payment in lieu of fractional shares shall
be paid to any such holder pursuant to section 4.4, unless and until the holder
of record of such certificate shall surrender such certificate in accordance
with section 4.1 or section 4.2. Subject to applicable law, at the time of such
surrender of any such certificate (or, in the case of clause (iii) below, at the
appropriate payment date), there shall be paid to the record holder of the
certificates representing whole Exchangeable Shares or Parent Common Shares, as
the case may be, without interest (i) the amount of any cash payable in lieu of
a fractional Exchangeable Share or Parent Common Share to which such holder is
entitled pursuant to section 4.4, (ii) the amount of dividends or other
distributions with a record date after the Effective Date theretofore paid with
respect to such whole Exchangeable Share or Parent Common Share, as the case may
be, and (iii) the amount of dividends or other distributions with a record date
after the Effective Date but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole Exchangeable Share or Parent Common
Share, as the case may be.
4.4 NO FRACTIONAL SHARES
No certificates or scrip representing fractional Exchangeable Shares
or Parent Common Shares shall be issued upon the surrender for exchange of
certificates pursuant to section 4.1 or section 4.2 and, subject to the last
sentence of this section 4.4, no dividend, stock split or other change in the
capital structure of the Corporation or Parent shall relate to any such
fractional security and such fractional interests shall not entitle the owner
thereof to vote or to exercise any rights as a security holder of the
Corporation or Parent. In lieu of any such fractional securities, each person
entitled to a fractional interest in an Exchangeable Share or a fractional
interest in a Parent Common Share will receive from the Corporation (in the case
of fractional interests in Exchangeable Shares) or from Swissco (in the case of
fractional interests in Parent Common Shares) an amount of cash (rounded to the
nearest whole cent), without interest, equal to the product of (i) such
fraction, multiplied by (ii) the average of the closing price for Parent Common
Shares on the NYSE as of each of the thirty (30) consecutive trading days
immediately preceding the Effective Date as quoted in the Wall Street Journal or
other reliable financial newspaper or publication. For the purposes of the
preceding sentence, a "trading day" means a day on which trading generally takes
place on the NYSE and on which trading in Parent Common Shares has occurred.
- -11
<PAGE>
The determination as to whether any former holder of Class A Shares
would, apart from this section 4.4, be entitled to receive a fractional interest
in a Parent Common Share shall be made once only, and the determination as to
whether any former holder of Class B Shares would, apart from this section 4.4,
be entitled to receive a fractional interest in an Exchangeable Share shall be
made once only.
4.5 LOST CERTIFICATES
In the event any certificate which immediately prior to the Effective
Date represented outstanding Company Common Shares that were converted or
exchanged pursuant to section 2.1 shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
certificate to be lost, stolen or destroyed, the Depositary will issue in
exchange for such lost, stolen or destroyed certificate, certificates
representing Exchangeable Shares or Parent Common Shares (and any dividends or
distributions with respect thereto and any cash pursuant to section 4.4)
deliverable in respect thereof as determined in accordance with section 2.1.
When authorizing such payment in exchange for any lost, stolen or destroyed
certificate, the person to whom certificates representing Exchangeable Shares or
Parent Common Shares are to be issued shall, at the discretion of Swissco, as a
condition precedent to the issuance thereof, give a bond satisfactory to the
Corporation or Swissco, as the case may be, in such sum as the Corporation or
Swissco may direct or otherwise indemnify the Corporation or Swissco in a manner
satisfactory to the Corporation or Swissco against any claim that may be made
against the Corporation or Swissco with respect to the certificate alleged to
have been lost, stolen or destroyed.
4.6 EXTINGUISHMENT OF RIGHTS
Any certificate which immediately prior to the Effective Date
represented outstanding Company Common Shares that were converted or exchanged
pursuant to section 2.1 and not deposited, with all other instruments required
by section 4.1 or section 4.2, on or prior to the tenth anniversary of the
Effective Date shall cease to represent a claim or interest of any kind or
nature as a shareholder of the Company, the Corporation or Parent. On such
date, the Exchangeable Shares or Parent Common Shares to which the former
registered holder of the certificate referred to in the preceding sentence was
ultimately entitled shall be deemed to have been surrendered to the Corporation
or Swissco, as the case may be, together with all entitlements to dividends,
distributions and interests thereon held for such former registered holder.
4.7 ELECTIONS
(a) Subject to section 2.1(k), each record holder immediately prior
to the Effective Date of Company Common Shares will be entitled to elect to
receive Class B Shares for all of such shares (an "Election"). All such
elections shall be made on a Letter of Transmittal and Election Form. Record
holders of Company Common Shares who hold Company Common Shares as nominees,
trustees or in other representative capacities (a
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"Representative") may submit multiple Letters of Transmittal and Election Forms;
PROVIDED, THAT, such Representative certifies that each such Letter of
Transmittal and Election Form covers all the Company Common Shares held by each
Representative for a particular beneficial owner.
(b) TIMELY ELECTIONS, ETC. Elections shall be made by holders of
Company Common Shares by mailing to the Depositary a Letter of Transmittal and
Election Form. To be effective, a Letter of Transmittal and Election Form must
be properly completed, signed and submitted to the Depositary. Parent will have
the discretion, which it may delegate in whole or in part to the Depositary, to
determine whether Letters of Transmittal and Election Forms have been properly
completed, signed and submitted or revoked and to disregard immaterial defects
in Letters of Transmittal and Election Forms. The decision of Parent (or the
Depositary) in such matters shall be conclusive and binding. Neither Parent nor
the Depositary will be under any obligation to notify any person of any defect
in a Letter of Transmittal and Election Form submitted to the Depositary.
(c) DEEMED NON-ELECTION. For the purposes hereof, a holder of
Company Common Shares who does not submit a Letter of Transmittal and Election
Form which is received by the Depositary prior to the Election Deadline (as
hereinafter defined) shall be deemed not to have made an election, and shall
receive Class A Shares. If Parent or the Depositary shall determine that any
purported election was not properly made, such purported election shall be
deemed to be of no force and effect.
(d) MAILING. Parent and the Company shall each use their best
efforts to mail the Letter of Transmittal and Election Form to all persons who
become holders of Company Common Shares during the period between the record
date for the Meeting and 10:00 a.m. Toronto time, on the date seven calendar
days prior to the anticipated Effective Date and to make the Letter of
Transmittal and Election Form available to all persons who become holders of
Company Common Shares subsequent to such day and no later than the close of
business on the business day prior to the Effective Date. A Letter of
Transmittal and Election Form must be received by the Depositary by the close of
business on the last business day prior to the Effective Date (the "Election
Deadline") in order to be effective. A Letter of Transmittal and Election Form
may not be revoked after receipt thereof by the Depositary.
ARTICLE 5--CERTAIN RIGHTS OF
SWISSCO TO ACQUIRE EXCHANGEABLE SHARES
5.1 SWISSCO LIQUIDATION CALL RIGHT
(a) Swissco shall have the overriding right (the "Liquidation Call
Right"), in the event of and notwithstanding the proposed liquidation,
dissolution or winding-up of the Corporation pursuant to Article 5 of the
Exchangeable Share Provisions, to purchase from all but not less than all of the
holders of Exchangeable Shares on the Liquidation Date all but not
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less than all of the Exchangeable Shares held by each such holder on payment by
Swissco of an amount per share equal to (a) the Current Market Price (as defined
in the Exchangeable Share Provisions) of a Parent Common Share on the last
Business Day prior to the Liquidation Date, which shall be satisfied in full by
causing to be delivered to such holder one Parent Common Share, plus (b) an
additional amount equivalent to the full amount of all dividends declared and
unpaid on such Exchangeable Share and all dividends declared on Parent Common
Shares which have not been declared on such Exchangeable Shares in accordance
with section 3.1 of the Exchangeable Share Provisions (collectively the
"Liquidation Call Purchase Price," provided that if the record date for any such
declared and unpaid dividends occurs on or after the Liquidation Date, the
Liquidation Call Purchase Price shall not include such additional amount
equivalent to such dividends). In the event of the exercise of the Liquidation
Call Right by Swissco, each holder shall be obligated to sell all the
Exchangeable Shares held by the holder to Swissco on the Liquidation Date on
payment by Swissco to the holder of the Liquidation Call Purchase Price for each
such share.
(b) To exercise the Liquidation Call Right, Swissco must notify the
Corporation's transfer agent (the "Transfer Agent"), as agent for the holders of
Exchangeable Shares, and the Corporation of Swissco's intention to exercise such
right at least 55 days before the Liquidation Date in the case of a voluntary
liquidation, dissolution or winding up of the Corporation and at least five
Business Days before the Liquidation Date in the case of an involuntary
liquidation, dissolution or winding up of the Corporation. The Transfer Agent
will notify the holders of Exchangeable Shares as to whether or not Swissco has
exercised the Liquidation Call Right forthwith after the expiry of the period
during which the same may be exercised by Swissco. If Swissco exercises the
Liquidation Call Right, on the Liquidation Date Swissco will purchase and the
holders will sell all of the Exchangeable Shares then outstanding for a price
per share equal to the Liquidation Call Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Liquidation Call Right, Swissco shall deposit with the
Transfer Agent, on or before the Liquidation Date, certificates representing the
aggregate number of Parent Common Shares deliverable by Swissco in payment of
the total Liquidation Call Purchase Price and a cheque or cheques in the amount
of the remaining portion, if any, of the total Liquidation Call Purchase Price.
Provided that the total Liquidation Call Purchase Price has been so deposited
with the Transfer Agent, on and after the Liquidation Date the rights of each
holder of Exchangeable Shares will be limited to receiving such holder's
proportionate part of the total Liquidation Call Purchase Price payable by
Swissco upon presentation and surrender by the holder of certificates
representing the Exchangeable Shares held by such holder and the holder shall on
and after the Liquidation Date be considered and deemed for all purposes to be
the holder of the Parent Common Shares delivered to it. Upon surrender to the
Transfer Agent of a certificate or certificates representing Exchangeable
Shares, together with such other documents and instruments as may be required to
effect a transfer of Exchangeable Shares under the OBCA and the by-laws of the
Corporation and such additional documents and instruments as the Transfer Agent
may reasonably require, the holder of such surrendered certificate or
certificates shall be entitled to receive in exchange therefor, and the Transfer
Agent on behalf
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of Swissco shall deliver to such holder, certificates representing the Parent
Common Shares to which the holder is entitled and a cheque or cheques of Swissco
payable at par and in Canadian dollars at any branch of the bankers of Swissco
or of the Corporation in Canada in payment of the remaining portion, if any, of
the total Liquidation Call Purchase Price. If Swissco does not exercise the
liquidation Call Right in the manner described above, on the Liquidation Date
the holders of the Exchangeable Shares will be entitled to receive in exchange
therefor the liquidation price otherwise payable by the Corporation in
connection with the liquidation, dissolution or winding-up of the Corporation
pursuant to Article 5 of the Exchangeable Share Provisions.
5.2 SWISSCO REDEMPTION CALL RIGHT
(a) Swissco shall have the overriding right (the "Redemption Call
Right"), notwithstanding the proposed redemption of Exchangeable Shares by the
Corporation pursuant to Article 7 of the Exchangeable Share Provisions, to
purchase from all but not less than all of the holders of Exchangeable Shares to
be redeemed on the Redemption Date all but not less than all of the Exchangeable
Shares held by each such holder on payment by Swissco to the holder of an amount
per share equal to (a) the Current Market Price (as defined in the Exchangeable
Share Provisions) of a Parent Common Share on the last Business Day prior to the
Redemption Date which shall be satisfied in full by causing to be delivered to
such holder one Parent Common Share plus (b) an additional amount equivalent to
the full amount of all dividends declared and unpaid on such Exchangeable Share
and all dividends declared on Parent Common Shares that have not been declared
on such Exchangeable Share in accordance with section 3.1 of the Exchangeable
Share Provisions (collectively the "Redemption Call Purchase Price," provided
that if the record date for any such declared and unpaid dividends occurs on or
after the Redemption Date, the Redemption Call Purchase Price shall not include
such additional amount equivalent to such dividends). In the event of the
exercise of the Redemption Call Right by Swissco, each holder shall be obligated
to sell all the Exchangeable Shares held by the holder and otherwise to be
redeemed to Swissco on the Redemption Date on payment by Swissco to the holder
of the Redemption Call Purchase Price for each such share.
(b) To exercise the Redemption Call Right, Swissco must notify the
Transfer Agent, as agent for the holders of Exchangeable Shares, and the
Corporation of Swissco's intention to exercise such right at least 125 days
before the Automatic Redemption Date (in the case of the Automatic Redemption)
or at least 35 days before the Section 12(g) Redemption Date (in the case of
Section 12(g) Redemption). The Transfer Agent will notify the holders of the
Exchangeable Shares as to whether or not Swissco has exercised the Redemption
Call Right forthwith after the expiry of the period during which the same may be
exercised by Swissco. If Swissco exercises the Redemption Call Right, on the
Redemption Date Swissco will purchase and the holders will sell all of the
Exchangeable Shares to be redeemed for a price per share equal to the Redemption
Call Purchase Price.
(c) For the purposes of completing the purchase of Exchangeable
Shares pursuant to the Redemption Call Right, Swissco shall deposit with the
Transfer Agent, on or
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before the Redemption Date, certificates representing the aggregate number of
Parent Common Shares deliverable by Swissco in payment of the total Redemption
Call Purchase Price and a cheque or cheques in the amount of the remaining
portion, if any, of the total Redemption Call Purchase Price. Provided that the
total Redemption Call Purchase Price has been so deposited with the Transfer
Agent, on and after the Redemption Date the rights of each holder of
Exchangeable Shares so purchased will be limited to receiving such holder's
proportionate part of the total Redemption Call Purchase Price payable by
Swissco upon presentation and surrender by the holder of certificates
representing the Exchangeable Shares purchased by Swissco from such holder and
the holder shall on and after the Redemption Date be considered and deemed for
all purposes to be the holder of the Parent Common Shares delivered to such
holder. Upon surrender to the Transfer Agent of a certificate or certificates
representing Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares under
the OBCA and the by-laws of the Corporation and such additional documents and
instruments as the Transfer Agent may reasonably require, the holder of such
surrendered certificate or certificates shall be entitled to receive in exchange
therefor, and the Transfer Agent on behalf of Swissco shall deliver to such
holder, certificates representing the Parent Common Shares to which the holder
is entitled and a cheque or cheques of Swissco payable at par and in Canadian
dollars at any branch of the bankers of Swissco or of the Corporation in Canada
in payment of the remaining portion, if any, of the total Redemption Call
Purchase Price. If Swissco does not exercise the Redemption Call Right in the
manner described above, on the Redemption Date the holders of the Exchangeable
Shares will be entitled to receive in exchange therefor the redemption price
otherwise payable by the Corporation in connection with the redemption of
Exchangeable Shares pursuant to Article 7 of the Exchangeable Share Provisions.
5.3 WITHHOLDING RIGHTS.
Parent, Swissco and the Depositary shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Plan of
Arrangement to any holder of Company Common Shares, Class A Shares, Class B
Shares, or Exchangeable Shares such amounts as Parent, Swissco or the Depositary
is required or permitted to deduct and withhold with respect to such payment
under the United States Internal Revenue Code of 1986, as amended, the INCOME
TAX ACT (Canada) or any provision of state, local, provincial or foreign tax
law. To the extent that amounts are so withheld, such withheld amounts shall be
treated for all purposes hereof as having been paid to the holder of shares in
respect of which such deduction and withholding was made, provided that such
withheld amounts are actually remitted to the appropriate taxing authority. To
the extent that the amount so required or permitted to be deducted or withheld
from any payment to a holder exceeds the cash portion of the consideration
otherwise payable to the holder, the Parent, Swissco and the Depositary are
hereby authorized to sell or otherwise dispose of at fair market value such
portion of such consideration as is necessary to provide sufficient funds to the
Parent, Swissco or the Depositary, as the case may be, in order to enable it to
comply with such deduction or withholding requirement and Parent or the
Depositary shall give an accounting to the holder with respect thereto and any
balance of such proceeds of sale.
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ARTICLE 6 - AMENDMENT
6.1 PLAN OF ARRANGEMENT AMENDMENT
The Company reserves the right to amend, modify and/or supplement this
Plan at any time and from time to time provided that any such amendment,
modification, or supplement must be contained in a written document which is (i)
agreed to by Parent and Swissco pursuant to the Combination Agreement, (ii)
filed with the Court and, if made following the Meeting, approved by the Court
and (iii) communicated to holders of Company Common Shares in the manner
required by the Court (if so required).
Any amendment modification or supplement to this Plan may be proposed
by the Company at any time prior to or at the Meeting (provided that Parent and
Swissco shall have consented thereto) with or without any other prior notice or
communication, and if so proposed and accepted by the persons voting at the
Meeting (other than as may be required under the Interim Order), shall become
part of this Plan for all purposes.
Any amendment, modification or supplement to this Plan which is
approved by the Court following the Meeting shall be effective only (i) if it is
consented to by the Company and (ii) if it is agreed to by Parent and Swissco
pursuant to the Combination Agreement.
Any amendment, modification or supplement to this Plan may be made
following the Effective Date unilaterally by the Corporation, provided that (i)
it is agreed to by Parent pursuant to the Combination Agreement and (ii) it
concerns a matter which, in the reasonable opinion of the Corporation, is of an
administrative nature required to better give effect to the implementation of
this Plan of Arrangement and is not adverse to the financial or economic
interests of the holders of Exchangeable Shares.
ARTICLE 7 - GUARANTY
7.1 GUARANTY
Parent hereby unconditionally and irrevocably guarantees the full and
punctual performance of all of Swissco's obligations hereunder. Swissco may
assign all or a portion of its rights and obligations hereunder to Parent
without the consent of the Corporation or holders of Exchangeable Shares.
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APPENDIX TO PLAN OF ARRANGEMENT
OF ALIAS RESEARCH INC.
PROVISIONS ATTACHING TO CLASS A SHARES
The Class A common shares in the capital of the Corporation shall have
attached thereto the following rights, privileges, restrictions and conditions:
DIVIDENDS
Subject to the prior rights of the holders of any shares ranking
senior to the Class A common shares with respect to priority in the payment of
dividends, the holders of Class A common shares shall be entitled to receive
dividends and the Corporation shall pay dividends thereon, as and when declared
by the board of directors of the Corporation out of moneys properly applicable
to the payment of dividends, in such amount and in such form as the board of
directors may from time to time determine and all dividends which the directors
may declare on the Class A common shares shall be declared and paid in equal
amounts per share on all Class A common shares at the time outstanding.
DISSOLUTION
In the event of the dissolution, liquidation or winding-up of the
Corporation, whether voluntary or involuntary, or any other distribution of
assets of the Corporation among its shareholders for the purpose of winding up
its affairs, subject to the prior rights of the holders of the Exchangeable
Non-Voting Shares and to any other shares ranking senior to the Class A common
shares with respect to priority in the distribution of assets upon dissolution,
liquidation or winding-up, the holders of the Class A common shares shall be
entitled to receive the remaining property and assets of the Corporation
rateably with the holders of the Class B common shares.
VOTING RIGHTS
The holders of the Class A common shares shall be entitled to receive
notice of and to attend all meetings of the shareholders of the Corporation and
shall have one vote for each common share held at all meetings of the
shareholders of the Corporation, except for meetings at which only holders of
another specified class or series of shares of the Corporation are entitled to
vote separately as a class or series.
PROVISIONS ATTACHING TO CLASS B SHARES
The Class B common shares in the capital of the Corporation shall have
attached thereto the following rights, privileges, restrictions and conditions:
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DIVIDENDS
Subject to the prior rights of the holders of any shares ranking
senior to the Class B common shares with respect to priority in the payment of
dividends, the holders of Class B common shares shall be entitled to receive
dividends and the Corporation shall pay dividends thereon, as and when declared
by the board of directors of the Corporation out of moneys properly applicable
to the payment of dividends, in such amount and in such form as the board of
directors may from time to time determine and all dividends which the directors
may declare on the Class B common shares shall be declared and paid in equal
amounts per share on all Class B common shares at the time outstanding.
DISSOLUTION
In the event of the dissolution, liquidation or winding-up of the
Corporation, whether voluntary or involuntary, or any other distribution of
assets of the Corporation among its shareholders for the purpose of winding up
its affairs, subject to the prior rights of the holders of the Exchangeable
Non-Voting Shares and to any other shares ranking senior to the Class B common
shares with respect to priority in the distribution of assets upon dissolution,
liquidation or winding-up, the holders of the Class B common shares shall be
entitled to receive the remaining property and assets of the Corporation
rateably with the holders of the Class A common shares.
VOTING RIGHTS
Except where specifically provided by the BUSINESS CORPORATION ACT
(Ontario), the holders of the Class B common shares shall not be entitled to
receive notice of or to attend meetings of the shareholders of the Corporation
and shall not be entitled to vote at any meeting of shareholders of the
Corporation.
PROVISIONS ATTACHING TO EXCHANGEABLE SHARES
The Exchangeable Non-Voting Shares in the capital of the Corporation
shall have the following rights, privileges, restrictions and conditions:
ARTICLE 1
INTERPRETATION
For the purposes of these share provisions:
1.1 "AFFILIATE" of any person means any other person directly or
indirectly controlled by, or under common control of, that person. For the
purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control of"), as
applied to any person, means the possession by another person, directly or
indirectly, of the power to direct or cause
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the direction of the management and policies of that first mentioned
person, whether through the ownership of voting securities, by contract or
otherwise.
"AUTOMATIC REDEMPTION DATE" means the date for the automatic
redemption by the Corporation of Exchangeable Shares pursuant to Article 7
of these share provisions, which date shall be , 2006, unless
(a) such date shall be extended at any time or from time to time to a
specified later date by the Board of Directors or (b) such date shall be
accelerated at any time to a specified earlier date by the Board of
Directors if at such time there are less than 500,000 Exchangeable Shares
outstanding (other than Exchangeable Shares held by Parent and its
Affiliates and as such number of shares may be adjusted as deemed
appropriate by the Board of Directors to give effect to any subdivision or
consolidation of or stock dividend on the Exchangeable Shares, any issue or
distribution of rights to acquire Exchangeable Shares or securities
exchangeable for or convertible into Exchangeable Shares, any issue or
distribution of other securities or rights or evidences of indebtedness or
assets, or any other capital reorganization or other transaction affecting
the Exchangeable Shares), in each case upon at least 60 days' prior written
notice of any such extension or acceleration, as the case may be, to the
registered holders of the Exchangeable Shares, in which case the Automatic
Redemption Date shall be such later or earlier date; provided, however,
that the accidental failure or omission to give any such notice of
extension or acceleration, as the case may be, to less than 10% of such
holders of Exchangeable Shares shall not affect the validity of such
extension or acceleration.
"BOARD OF DIRECTORS" means the Board of Directors of the
Corporation.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a
day when banks are not open for business in either or both of San
Francisco, California and Toronto, Ontario.
"CANADIAN DOLLAR EQUIVALENT" means in respect of an amount
expressed in a foreign currency (the "Foreign Currency Amount") at any date
the product obtained by multiplying (a) the Foreign Currency Amount by (b)
the noon spot exchange rate on such date for such foreign currency
expressed in Canadian dollars as reported by the Bank of Canada or, in the
event such spot exchange rate is not available, such exchange rate on such
date for such foreign currency expressed in Canadian dollars as may be
deemed by the Board of Directors to be appropriate for such purpose.
"CLASS A SHARES" mean the Class A voting common shares of the
Corporation.
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"CLASS B SHARES" means the Class B non-voting common shares of
the Corporation.
"CORPORATION" means Alias Research Inc., a corporation
amalgamated under the laws of the Province of Ontario.
"CURRENT MARKET PRICE" means, in respect of a Parent Common Share
on any date, the Canadian Dollar Equivalent of the average of the closing
prices of Parent Common Shares on the New York Stock Exchange on each of
the thirty (30) consecutive trading days ending not more than five trading
days before such date, or, if the Parent Common Shares are not then listed,
on such other stock exchange or automated quotation system on which the
Parent Common Shares are listed or quoted, as the case may be, as may be
selected by the Board of Directors for such purpose; PROVIDED, HOWEVER,
that if there is no public distribution or trading activity of Parent
Common Shares during such period, then the Current Market Price of a Parent
Common Share shall be determined by the Board of Directors based upon the
advice of such qualified independent financial advisors as the Board of
Directors may deem to be appropriate, and PROVIDED, FURTHER that any such
selection, opinion or determination by the Board of Directors shall be
conclusive and binding.
"EXCHANGEABLE SHARES" mean the Exchangeable Non-Voting Shares of
the Corporation having the rights, privileges, restrictions and conditions
set forth herein.
"LIQUIDATION AMOUNT" has the meaning ascribed thereto in Section
5.1 of these share provisions.
"LIQUIDATION CALL RIGHT" has the meaning ascribed thereto in the
Plan of Arrangement.
"LIQUIDATION DATE" has the meaning ascribed thereto in Section
5.1 of these share provisions.
"PARENT" means Silicon Graphics, Inc., a corporation organized
and existing under the laws of the State of Delaware, and any successor
corporation.
"PARENT (SWISSCO) CALL NOTICE" has the meaning ascribed thereto
in Section 6.3 of these share provisions.
"PARENT COMMON SHARES" mean the shares of common stock of Parent
with a par value of U.S. $0.001 per share, having voting rights of one vote
per share, and any other securities into which such shares may be changed.
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"PARENT DIVIDEND DECLARATION DATE" means the date on which the
Board of Directors of Parent declares any dividend on the Parent Common
Shares.
"PARENT SPECIAL SHARE" means the one share of Series E Preferred
Stock of Parent with a par value of U.S.$0.001 and having voting rights at
meetings of holders of Parent Common Shares equal to the number of
Exchangeable Shares outstanding from time to time (other than Exchangeable
Shares held by Parent and its Affiliates) to be issued to and voted by, the
Trustee pursuant to the Voting and Exchange Trust Agreement.
"PLAN OF ARRANGEMENT" means the plan of arrangement relating to
the arrangement of the Corporation under section 182 of the Business
Corporations Act (Ontario), to which plan these share provisions are
attached.
"PURCHASE PRICE" has the meaning ascribed thereto in Section 6.3
of these share provisions.
"REDEMPTION CALL RIGHT" has the meaning ascribed thereto in the
Plan of Arrangement.
"REDEMPTION PRICE" has the meaning ascribed thereto in Section
7.1 of these share provisions.
"RETRACTED SHARES" has the meaning ascribed thereto in Section
6.1 of these share provisions.
"RETRACTION CALL RIGHT" has the meaning ascribed thereto in
Section 6.1 of these share provisions.
"RETRACTION DATE" has the meaning ascribed thereto in Section
6.1(b) of these share provisions.
"RETRACTION PRICE" has the meaning ascribed thereto in Section
6.1 of these share provisions.
"RETRACTION REQUEST" has the meaning ascribed thereto in Section
6.1 of these share provisions.
"SUPPORT AGREEMENT" means the Support Agreement between Parent,
Swissco and the Corporation, made as of _____ __, 1995.
"SWISSCO" means Silicon Graphics Manufacturing S.A.
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"TRANSFER AGENT" means _______, or such other person as may from
time to time be the registrar and transfer agent for the Exchangeable
Shares.
"TRUSTEE" means _______, a corporation organized and existing
under the laws of Canada and any successor trustee appointed under the
Voting and Exchange Trust Agreement.
"VOTING AND EXCHANGE TRUST AGREEMENT" means the Voting and
Exchange Trust Agreement between the Corporation, Parent, Swissco and the
Trustee, made as of _________, 1995.
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
2.1 The Exchangeable Shares shall be entitled to a preference over
the Class A Shares, the Class B Shares and any other shares ranking junior to
the Exchangeable Shares with respect to the payment of dividends and the
distribution of assets in the event of the liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary, or any other
distribution of the assets of the Corporation among its shareholders for the
purpose of winding up its affairs.
ARTICLE 3
DIVIDENDS
3.1 A holder of an Exchangeable Share shall be entitled to receive
and the Board of Directors shall, subject to applicable law, on each Parent
Dividend Declaration Date, declare a dividend on each Exchangeable Share (a) in
the case of a cash dividend declared on the Parent Common Shares, in an amount
in cash for each Exchangeable Share equal to the Canadian Dollar Equivalent on
the Parent Dividend Declaration Date of the cash dividend declared on each
Parent Common Share or (b) in the case of a stock dividend declared on the
Parent Common Shares to be paid in Parent Common Shares, in such number of
Exchangeable Shares for each Exchangeable Share as is equal to the number of
Parent Common Shares to be paid on each Parent Common Share or (c) in the case
of a dividend declared on the Parent Common Shares in property other than cash
or Parent Common Shares, in such type and amount of property for each
Exchangeable Share as is the same as or economically equivalent to (to be
determined by the Board of Directors as contemplated by Section 2.7 of the
Support Agreement) the type and amount of property declared as a dividend on
each Parent Common Share. Such dividends shall be paid out of money, assets or
property of the Corporation properly applicable to the payment of dividends, or
out of authorized but unissued shares of the Corporation. Any dividend which
should have been declared on the Exchangeable Shares pursuant to this section
3.1 but was not so declared due to the provisions of applicable law shall be
declared and paid by the Corporation on a subsequent date or dates determined by
the Board of Directors.
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3.2 Cheques of the Corporation payable at par at any branch of the
bankers of the Corporation shall be issued in respect of any cash dividends
contemplated by Section 3. 1(a) hereof and the sending of such a cheque to each
holder of an Exchangeable Share shall satisfy the cash dividend represented
thereby unless the cheque is not paid on presentation. Certificates registered
in the name of the registered holder of Exchangeable Shares shall be issued or
transferred in respect of any stock dividends contemplated by Section 3.1(b)
hereof and the sending of such a certificate to each holder of an Exchangeable
Share shall satisfy the stock dividend represented thereby. Such other type and
amount of property in respect of any dividends contemplated by Section 3.1(c)
hereof shall be issued, distributed or transferred by the Corporation in such
manner as it shall determine and the issuance, distribution or transfer thereof
by the Corporation to each holder of an Exchangeable Share shall satisfy the
dividend represented thereby. No holder of an Exchangeable Share shall be
entitled to recover by action or other legal process against the Corporation any
dividend that is represented by a cheque that has not been duly presented to the
Corporation's bankers for payment or that otherwise remains unclaimed for a
period of six years from the date on which such dividend was payable.
3.3 The record date for the determination of the holders of
Exchangeable Shares entitled to receive payment of, and the payment date for,
any dividend declared on the Exchangeable Shares under Section 3.1 hereof shall
be the same dates as the record date and payment date, respectively, for the
corresponding dividend declared on the Parent Common Shares.
3.4 If on any payment date for any dividends declared on the
Exchangeable Shares under Section 3.1 hereof the dividends are not paid in full
on all of the Exchangeable Shares then outstanding, any such dividends that
remain unpaid shall be paid on a subsequent date or dates determined by the
Board of Directors on which the Corporation shall have sufficient moneys, assets
or property properly applicable to the payment of such dividends.
ARTICLE 4
CERTAIN RESTRICTIONS
4.1 So long as any of the Exchangeable Shares are outstanding, the
Corporation shall not at any time without, but may at any time with, the
approval of the holders of the Exchangeable Shares given as specified in Section
10.2 of these share provisions:
(a) pay any dividends on the Class A Shares, the Class B Shares
or any other shares ranking junior to the Exchangeable Shares, other than
stock dividends payable in Class A Shares, Class B Shares or any such other
shares ranking junior to the Exchangeable Shares, as the case may be;
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(b) redeem or purchase or make any capital distribution in
respect of Class A Shares, Class B Shares or any other shares ranking
junior to the Exchangeable Shares;
(c) redeem or purchase any other shares of the Corporation
ranking equally with the Exchangeable Shares with respect to the payment of
dividends or on any liquidation distribution; or
(d) issue any Exchangeable Shares or any other shares of the
Corporation ranking equally with respect to the payment of dividends or on
any liquidation distribution, or superior to, the Exchangeable Shares other
than by way of stock dividends to the holders of such Exchangeable Shares
or as contemplated by the Support Agreement.
The restrictions in Sections 4.1(a), 4.1(b) and 4.1(c) above shall not apply if
all dividends on the outstanding Exchangeable Shares corresponding to dividends
declared to date on the Parent Common Shares shall have been declared on the
Exchangeable Shares and paid in full.
ARTICLE 5
DISTRIBUTION ON LIQUIDATION
5.1 In the event of the liquidation, dissolution or winding-up of the
Corporation or any other distribution of the assets of the Corporation among its
shareholders for the purpose of winding up its affairs, a holder of Exchangeable
Shares shall be entitled, subject to applicable law, to receive from the assets
of the Corporation in respect of each Exchangeable Share held by such holder on
the effective date (the "Liquidation Date") of such liquidation, dissolution or
winding-up, before any distribution of any part of the assets of the Corporation
among the holders of the Class A Shares, the Class B Shares or any other shares
ranking junior to the Exchangeable Shares, an amount per share equal to (a) the
Current Market Price of a Parent Common Share on the last Business Day prior to
the Liquidation Date, which shall be satisfied in full by the Corporation
causing to be delivered to such holder one Parent Common Share, plus (b) an
additional amount equivalent to the full amount of all declared and unpaid
dividends on each such Exchangeable Share and all dividends declared on Parent
Common Shares which have not been declared on such Exchangeable Shares in
accordance with section 3.1 of the Exchangeable Share Provisions (collectively
the "Liquidation Amount," provided that if the record date for any such declared
and unpaid dividends occurs on or after the Liquidation Date the Liquidation
Amount shall not include such additional amount equivalent to such dividends).
5.2 On or promptly after the Liquidation Date, and subject to the
exercise by Swissco of the Liquidation Call Right, the Corporation shall cause
to be delivered to the holders of the Exchangeable Shares the Liquidation Amount
(less any tax required to be deducted and withheld therefrom by the Corporation)
for each such Exchangeable Share upon
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presentation and surrender of the certificates representing such Exchangeable
Shares together with such other documents and instruments as may be required to
effect a transfer of Exchangeable Shares under the BUSINESS CORPORATIONS ACT
(Ontario) and the by-laws of the Corporation and such additional documents and
instruments as the Transfer Agent may be specified by the Corporation by notice
to the holders of the Exchangeable Shares. Payment of the total Liquidation
Amount for such Exchangeable Shares shall be made by delivery to each holder, at
the address of the holder recorded in the securities register of the Corporation
for the Exchangeable Shares or by holding for pick up by the holder at the
registered office of the Corporation or at any office of the Transfer Agent as
may be specified by the Corporation by notice to the holders of Exchangeable
Shares, on behalf of the Corporation of certificates representing Parent Common
Shares (which shares shall be duly issued as fully paid and non-assessable and
shall be free and clear of any lien, claim or encumbrance) and a cheque of the
Corporation payable at par at any branch of the bankers of the Corporation in
respect of the amount equivalent to the full amount of all declared and unpaid
dividends and all dividends declared on Parent Common Shares which have not been
declared on such Exchangeable Shares in accordance with section 3.1 of the
Exchangeable Share Provisions, comprising part of the total Liquidation Amount
(less any tax required to be deducted and withheld therefrom by the
Corporation). On and after the Liquidation Date, the holders of the
Exchangeable Shares shall cease to be holders of such Exchangeable Shares and
shall not be entitled to exercise any of the rights of holders in respect
thereof, other than the right to receive their proportionate part of the total
Liquidation Amount, unless payment of the total Liquidation Amount for such
Exchangeable Shares shall not be made upon presentation and surrender of share
certificates in accordance with the foregoing provisions, in which case the
rights of the holders shall remain unaffected until the total Liquidation Amount
has been paid in the manner hereinbefore provided. The Corporation shall have
the right at any time after the Liquidation Date to deposit or cause to be
deposited the total Liquidation Amount in respect of the Exchangeable Shares
represented by certificates that have not at the Liquidation Date been
surrendered by the holders thereof in a custodial account with any chartered
bank or trust company in Canada. Upon such deposit being made, the rights of the
holders of Exchangeable Shares after such deposit shall be limited to receiving
their proportionate part of the total Liquidation Amount (less any tax required
to be deducted and withheld therefrom) for such Exchangeable Shares so
deposited, against presentation and surrender of the said certificates held by
them, respectively, in accordance with the foregoing provisions. Upon such
payment or deposit of the total Liquidation Amount, the holders of the
Exchangeable Shares shall thereafter be considered and deemed for all purposes
to be the holders of the Parent Common Shares delivered to them. To the extent
that the amount of tax required to be deducted or withheld from any payment to a
holder of Exchangeable Shares exceeds the cash portion of such payment, the
Corporation is hereby authorized to sell or otherwise dispose of at fair market
value such portion of the property then payable to the holder as is necessary to
provide sufficient funds to the Corporation in order to enable it to comply with
such deduction or withholding requirement and the Corporation shall give an
accounting to the holder with respect thereto and any balance of such proceeds
of sale.
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5.3 After the Corporation has satisfied its obligations to pay the
holders of the Exchangeable Shares the Liquidation Amount per Exchangeable Share
pursuant to Section 5.1 of these share provisions, such holders shall not be
entitled to share in any further distribution of the assets of the Corporation.
ARTICLE 6
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
6.1 A holder of Exchangeable Shares shall be entitled at any time,
subject to applicable law and the exercise by Swissco of the Retraction Call
Right and otherwise upon compliance with the provisions of this Article 6, to
require the Corporation to redeem any or all of the Exchangeable Shares
registered in the name of such holder for an amount per share equal to (a) the
Current Market Price of a Parent Common Share on the last Business Day prior to
the Retraction Date, which shall be satisfied in full by the Corporation causing
to be delivered to such holder one Parent Common Share for each Exchangeable
Share presented and surrendered by the holder, plus (b) an additional amount
equivalent to the full amount of all dividends declared and unpaid thereon and
all dividends declared on Parent Common Shares which have not been declared on
such Exchangeable Shares in accordance with section 3.1 of the Exchangeable
Share Provisions (collectively the "Retraction Price," provided that if the
record date for any such declared and unpaid dividends occurs on or after the
Retraction Date the Retraction Price shall not include such additional amount
equivalent to such dividends). To effect such redemption, the holder shall
present and surrender at the registered office of the Corporation or at any
office of the Transfer Agent as may be specified by the Corporation by notice to
the holders of Exchangeable Shares the certificate or certificates representing
the Exchangeable Shares which the holder desires to have the Corporation redeem,
together with such other documents and instruments as may be required to effect
a transfer of Exchangeable Shares under the BUSINESS CORPORATIONS ACT (Ontario)
and the by-laws of the Corporation and such additional documents and instruments
as the transfer Agent may reasonably require, and together with a duly executed
statement (the "Retraction Request") in such form as may be acceptable to the
Corporation:
(a) specifying that the holder desires to have all or any number
specified therein of the Exchangeable Shares represented by such
certificate or certificates (the "Retracted Shares") redeemed by the
Corporation;
(b) stating the Business Day on which the holder desires to have
the Corporation redeem the Retracted Shares (the "Retraction Date"),
provided that the Retraction Date shall be not less than five Business Days
nor more than 10 Business Days after the date on which the Retraction
Request is received by the Corporation and further provided that, in the
event that no such Business Day is specified by the holder in the
Retraction Request, the Retraction Date shall be deemed to be the tenth
Business Day after the date on which the Retraction Request is received by
the Corporation; and
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(c) acknowledging the overriding right (the "Retraction Call
Right") of Swissco to purchase all but not less than all the Retracted
Shares directly from the holder and that the Retraction Request shall be
deemed to be a revocable offer by the holder to sell the Retracted Shares
to Swissco in accordance with the Retraction Call Right on the terms and
conditions set out in Section 6.3 below.
6.2 Subject to the exercise by Swissco of the Retraction Call Right,
upon receipt by the Corporation or the Transfer Agent in the manner specified in
Section 6.1 hereof of a certificate or certificates representing the number of
Exchangeable Shares which the holder desires to have the Corporation redeem,
together with a Retraction Request, and provided that the Retraction Request is
not revoked by the holder in the manner specified in Section 6.7, the
Corporation shall redeem the Retracted Shares effective at the close of business
on the Retraction Date and shall cause to be delivered to such holder the total
Retraction Price with respect to such shares. If only a part of the Exchangeable
Shares represented by any certificate are redeemed (or purchased by Swissco
pursuant to the Retraction Call Right), a new certificate for the balance of
such Exchangeable Shares shall be issued to the holder at the expense of the
Corporation.
6.3 Upon receipt by the Corporation of a Retraction Request, the
Corporation shall immediately notify Swissco and Parent thereof. In order to
exercise the Retraction Call Right, Parent or Swissco must notify the
Corporation in writing of Swissco's determination to do so (the "Parent
(Swissco) Call Notice") within two Business Days of notification to Parent and
Swissco by the Corporation of the receipt by the Corporation of the Retraction
Request. If Parent or Swissco does not so notify the Corporation within such
two Business Day period, the Corporation will notify the holder as soon as
possible thereafter that Swissco will not exercise the Retraction Call Right.
If Parent or Swissco delivers the Parent (Swissco) Call Notice within such two
Business Day time period, and provided that the Retraction Request is not
revoked by the holder in the manner specified in Section 6.7, the Retraction
Request shall thereupon be considered only to be an offer by the holder to sell
the Retracted Shares to Swissco in accordance with the Retraction Call Right. In
such event, the Corporation shall not redeem the Retracted Shares and Swissco
shall purchase from such holder and such holder shall sell to Swissco on the
Retraction Date the Retracted Shares for a purchase price (the "Purchase Price")
per share equal to the Retraction Price per share. For the purposes of
completing a purchase pursuant to the Retraction Call Right, Swissco shall
deposit with the Transfer Agent, on or before the Retraction Date, certificates
representing Parent Common Shares and a cheque in the amount of the remaining
portion, if any, of the total Purchase Price. Provided that the total Purchase
Price has been so deposited with the Transfer Agent, the closing of the purchase
and sale of the Retracted Shares pursuant to the Retraction Call Right shall be
deemed to have occurred as at the close of business on the Retraction Date and,
for greater certainty, no redemption by the Corporation of such Retracted Shares
shall take place on the Retraction Date. In the event that neither Parent nor
Swissco delivers a Parent (Swissco) Call Notice within such two Business Day
period, and provided that Retraction Request is not revoked by the holder in the
manner specified in
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Section 6.7, the Corporation shall redeem the Retracted Shares on the Retraction
Date and in the manner otherwise contemplated in this Article 6.
6.4 The Corporation or Swissco, as the case may be, shall deliver or
cause the Transfer Agent to deliver to the relevant holder, at the address of
the holder recorded in the securities register of the Corporation for the
Exchangeable Shares or at the address specified in the holder's Retraction
Request or by holding for pick up by the holder at the registered office of the
Corporation or at any office of the Transfer Agent as may be specified by the
Corporation by notice to the holders of Exchangeable Shares, certificates
representing the Parent Common Shares (which shares shall be duly issued as
fully paid and non-assessable and shall be free and clear of any lien, claim or
encumbrance) registered in the name of the holder or in such other name as the
holder may request in payment of the total Retraction Price or the total
Purchase Price, as the case may be, and a cheque of the Corporation payable at
par at any branch of the bankers of the Corporation in payment of the remaining
portion, if any, of the total Retraction Price (less any tax required to be
deducted and withheld therefrom by the Corporation) or a cheque of Swissco
payable at par and in Canadian dollars at any branch of the bankers of Swissco
or of the Corporation in Canada in payment of the remaining portion, if any, of
the total Purchase Price, as the case may be, and such delivery of such
certificates and cheque on behalf of the Corporation or by Swissco, as the case
may be, or by the Transfer Agent shall be deemed to be payment of and shall
satisfy and discharge all liability for the total Retraction Price or total
Purchase Price, as the case may be, to the extent that the same is represented
by such share certificates and cheque (less any tax required and in fact
deducted and withheld therefrom and remitted to the proper tax authority),
unless such cheque is not paid on due presentation. To the extent that the
amount of tax required to be deducted or withheld from any payment to a holder
of Exchangeable Shares exceeds the cash portion of such payment, the Corporation
or Swissco, as the case may be, is hereby authorized to sell or otherwise
dispose of at fair market value such portion of the property then payable to the
holder as is necessary to provide sufficient funds to the Corporation in order
to enable it to comply with such deduction or withholding requirement and shall
give an accounting to the holder with respect thereto and any balance of such
proceeds of sale.
6.5 On and after the close of business on the Retraction Date, the
holder of the Retracted Shares shall cease to be a holder of such Retracted
Shares and shall not be entitled to exercise any of the rights of a holder in
respect thereof, other than the right to receive his proportionate part of the
total Retraction Price or total Purchase Price, as the case may be, unless upon
presentation and surrender of certificates in accordance with the foregoing
provisions, payment of the total Retraction Price or the total Purchase Price,
as the case may be, shall not be made, in which case the rights of such holder
shall remain unaffected until the total Retraction Price or the total Purchase
Price, as the case may be, has been paid in the manner hereinbefore provided.
On and after the close of business on the Retraction Date, provided that
presentation and surrender of certificates and payment of the total Retraction
Price or the total Purchase Price, as the case may be, has been made in
accordance with the foregoing provisions, the holder of the Retracted Shares so
redeemed by
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the Corporation or purchased by Swissco shall thereafter be considered and
deemed for all purposes to be a holder of the Parent Common Shares delivered to
it.
6.6 Notwithstanding any other provision of this Article 6, the
Corporation shall not be obligated to redeem Retracted Shares specified by a
holder in a Retraction Request to the extent that such redemption of Retracted
Shares would be contrary to solvency requirements or other provisions of
applicable law. If the Corporation believes that on any Retraction Date it
would not be permitted by any of such provisions to redeem the Retracted Shares
tendered for redemption on such date, and provided that Swissco shall not have
exercised the Retraction Call Right with respect to the Retracted Shares, the
Corporation shall only be obligated to redeem Retracted Shares specified by a
holder in a Retraction Request to the extent of the maximum number that may be
so redeemed (rounded down to a whole number of shares) as would not be contrary
to such provisions and shall notify the holder at least two Business Days prior
to the Retraction Date as to the number of Retracted Shares which will not be
redeemed by the Corporation. In any case in which the redemption by the
Corporation of Retracted Shares would be contrary to solvency requirements or
other provisions of applicable law, the Corporation shall redeem Retracted
Shares in accordance with Section 6.2 of these share provisions on a pro rata
basis and shall issue to each holder of Retracted Shares a new certificate, at
the expense of the Corporation, representing the Retracted Shares not redeemed
by the Corporation pursuant to Section 6.2 hereof. Provided that the Retraction
Request is not revoked by the holder in the manner specified in Section 6.7, the
holder of any such Retracted Shares not redeemed by the Corporation pursuant to
Section 6.2 of these share provisions as a result of solvency requirements of
applicable law shall be deemed by giving the Retraction Request to require
Swissco to purchase such Retracted Shares from such holder on the Retraction
Date or as soon as practicable thereafter on payment by Swissco to such holder
of the Purchase Price for each such Retracted Share, all as more specifically
provided in the Voting and Exchange Trust Agreement.
6.7 A holder of Retracted Shares may, by notice in writing given by
the holder to the Corporation before the close of business on the Business Day
immediately preceding the Retraction Date, withdraw its Retraction Request in
which event such Retraction Request shall be null and void and, for greater
certainty, the revocable offer constituted by the Retraction Request to sell the
Retracted Shares to Swissco shall be deemed to have been revoked.
ARTICLE 7
REDEMPTION OF EXCHANGEABLE SHARES BY THE CORPORATION
7.1 Subject to applicable law, and subject to the exercise by Swissco
of the Redemption Call Right, (a) the Corporation shall on the Automatic
Redemption Date redeem (the "Automatic Redemption") the whole of the then
outstanding Exchangeable Shares for an amount per share equal to (i) the Current
Market Price of a Parent Common Share on the last Business Day prior to the
Automatic Redemption Date, which shall be satisfied in full by the Corporation
causing to be delivered to each holder of Exchangeable Shares one Parent
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Common Share for each Exchangeable Share held by such holder, plus (ii) an
additional amount equivalent to the full amount of all declared and unpaid
dividends thereon and all dividends declared on Parent Common Shares which have
not been declared on such Exchangeable Shares in accordance with section 3.1 of
the Exchangeable Share Provisions (collectively the "Redemption Price," provided
that if the record date for any such declared and unpaid dividends occurs on or
after the Redemption Date the Redemption Price shall not include such additional
amount equivalent to such dividends), and (b) the Corporation may, at any time
when the Corporation reasonably determines that Exchangeable Shares are "held of
record" (as such term is defined in Rule 12g5-1 promulgated under the United
States Securities Exchange Act of 1934, as amended (the "Exchange Act")) by 500
or more persons ("Record Holders"), redeem (a "Section 12(g) Redemption") that
portion of the then outstanding Exchangeable Shares held by that number of
Record Holders equal to the difference of (A) the total number of Record Holders
and (B) 499, or such smaller number that the Corporation reasonably determines
is necessary to take the position that it need not register the Exchangeable
Shares pursuant to Section 12(g) of the Exchange Act, the identity of such
Record Holders to be determined by the Corporation by lot or other fair method
of random determination, for an amount per share equal to the Redemption Price.
7.2 In any case of any redemption of Exchangeable Shares under this
Article 7, the Corporation shall, at least 120 days before the Automatic
Redemption Date (in the case of the Automatic Redemption), or at least 30 days
before the date of a Section 12(g) Redemption (a "Section 12(g) Redemption
Date"; the Automatic Redemption Date or a Section 12(g) Redemption Date, as
applicable, being referred to as a "Redemption Date"), send or cause to be sent
to each holder of Exchangeable Shares to be redeemed a notice in writing of the
redemption by the Corporation or the purchase by Swissco under the Redemption
Call Right, as the case may be, of the Exchangeable Shares held by such holder.
Such notice shall set out the formula for determining the Redemption Price or
the Redemption Call Purchase Price, as the case may be, the Redemption Date and,
if applicable, particulars of the Redemption Call Right. On or after the
Redemption Date and subject to the exercise by Swissco of the Redemption Call
Right, the Corporation shall cause to be delivered to the holders of the
Exchangeable Shares to be redeemed the Redemption Price (less any tax required
to be deducted and withheld therefrom by the Corporation) for each such
Exchangeable Share upon presentation and surrender at the registered office of
the Corporation or at any office of the Transfer Agent as may be specified by
the Corporation in such notice of the certificates representing such
Exchangeable Shares, together with such other documents and instruments as may
be required to effect a transfer of Exchangeable Shares under the BUSINESS
CORPORATIONS ACT (Ontario) and the by-laws of the Corporation and such
additional documents and instruments as the Transfer Agent may reasonably
require. Payment of the total Redemption Price for such Exchangeable Shares
shall be made by delivery to each holder, at the address of the holder recorded
in the securities register of the Corporation or by holding for pick up by the
holder at the registered office of the Corporation or at any office of the
Transfer Agent as may be specified by the Corporation in such notice, on behalf
of the Corporation of certificates representing Parent Common Shares (which
shares shall be duly issued as fully paid and non-assessable and shall be free
and clear
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of any lien, claim or encumbrance) and a cheque of the Corporation payable at
par at any branch of the bankers of the Corporation in respect of the additional
amount equivalent to the full amount of all declared and unpaid dividends and
all dividends declared on Parent Common Shares which have not been declared on
such Exchangeable Shares in accordance with section 3.1 of the Exchangeable
Share Provisions comprising part of the total Redemption Price (less any tax
required to be deducted and withheld therefrom by the Corporation). On and
after the Redemption Date, the holders of the Exchangeable Shares called for
redemption shall cease to be holders of such Exchangeable Shares and shall not
be entitled to exercise any of the rights of holders in respect thereof, other
than the right to receive their proportionate part of the total Redemption
Price, unless payment of the total Redemption Price for such Exchangeable Shares
shall not be made upon presentation and surrender of certificates in accordance
with the foregoing provisions, in which case the rights of the holders shall
remain unaffected until the total Redemption Price has been paid in the manner
hereinbefore provided. The Corporation shall have the right at any time after
the sending of notice of its intention to redeem Exchangeable Shares as
aforesaid to deposit or cause to be deposited the total Redemption Price of the
Exchangeable Shares so called for redemption, or of such of the said
Exchangeable Shares represented by certificates that have not at the
date of such deposit been surrendered by the holders thereof in connection with
such redemption, in a custodial account with any chartered bank or trust company
in Canada named in such notice. Upon the later of such deposit being made and
the Redemption Date, the Exchangeable Shares in respect whereof such deposit
shall have been made shall be redeemed and the rights of the holders thereof
after such deposit or Redemption Date, as the case may be, shall be limited to
receiving their proportionate part of the total Redemption Price (less any tax
required to be deducted and withheld therefrom by the Corporation) for such
Exchangeable Shares so deposited, against presentation and surrender of the said
certificates held by them, respectively, in accordance with the foregoing
provisions upon such payment or deposit of the total Redemption Price, the
holders of the Exchangeable Shares shall thereafter be considered and deemed for
all purposes to be holders of the Parent Common Shares delivered to them. To
the extent that the amount of tax required to be deducted or withheld from any
payment to a holder of Exchangeable Shares exceeds the cash portion of such
payment, the Corporation is hereby authorized to sell or otherwise dispose of at
fair market value such portion of the property then payable to the holder as is
necessary to provide sufficient funds to the Corporation in order to enable it
to comply with such deduction or withholding requirement and shall give an
accounting to the holder with respect thereto and any balance of such proceeds
of sale.
ARTICLE 8
PURCHASE FOR CANCELLATION
8.1 Subject to applicable law and the articles of the Corporation,
the Corporation may at any time and from time to time purchase for cancellation
all or any part of the outstanding Exchangeable Shares at any price by tender to
all the holders of record of Exchangeable Shares then outstanding or through the
facilities of any stock exchange on which the Exchangeable Shares are listed or
quoted at any price per share together with an
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amount equal to all declared and unpaid dividends thereon. If in response to an
invitation for tenders under the provisions of this Section 8.1, more
Exchangeable Shares are tendered at a price or prices acceptable to the
Corporation than the Corporation is prepared to purchase, the Exchangeable
Shares to be purchased by the Corporation shall be purchased as nearly as may be
pro rata according to the number of shares tendered by each holder who submits a
tender to the Corporation, provided that when shares are tendered at different
prices, the pro rating shall be effected (disregarding fractions) only with
respect to the shares tendered at the price at which more shares were tendered
than the Corporation is prepared to purchase after the Corporation has purchased
all the shares tendered at lower prices. If part only of the Exchangeable Shares
represented by any certificate shall be purchased, a new certificate for the
balance of such shares shall be issued at the expense of the Corporation.
ARTICLE 9
VOTING RIGHTS
9.1 Except as required by applicable law, the holders of the
Exchangeable Shares shall not be entitled as such to receive notice of or to
attend any meeting of the shareholders of the Corporation or to vote at any such
meeting.
9.2 Pursuant to the Voting and Exchange Trust Agreement (which by
this reference is incorporated into the rights, privileges, restrictions and
conditions attaching to the Exchangeable Shares as if set forth herein in its
entirety) the holders of Exchangeable Shares (other than the Parent, its
subsidiaries and Affiliates) shall be entitled to receive notice of and instruct
the Trustee under the Voting and Exchange Trust Agreement to exercise voting
rights at meetings of holders of Parent Common Shares, all as provided for in
the Voting and Exchange Trust Agreement.
ARTICLE 10
AMENDMENT AND APPROVAL
10.1 The rights, privileges, restrictions and conditions attaching to
the Exchangeable Shares may be added to, changed or removed but only with the
approval of the holders of the Exchangeable Shares given as hereinafter
specified.
10.2 Any approval given by the holders of the Exchangeable Shares to
add to, change or remove any right, privilege, restriction or condition
attaching to the Exchangeable Shares or any other matter requiring the approval
or consent of the holders of the Exchangeable Shares shall be deemed to have
been sufficiently given if it shall have been given in accordance with
applicable law subject to a minimum requirement that such approval be evidenced
by resolution passed by not less than two-thirds of the votes cast on such
resolution at a meeting of holders of Exchangeable Shares duly called and held
at which the holders of at least 50% of the outstanding Exchangeable Shares at
that time are present or represented by proxy; provided that if at any such
meeting the holders of at least 50% of the
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outstanding Exchangeable Shares at that time are not present or represented by
proxy within one-half hour after the time appointed for such meeting then the
meeting shall be adjourned to such date not less than 10 days thereafter and to
such time and place as may be designated by the Chairman of such meeting. At
such adjourned meeting the holders of Exchangeable Shares present or represented
by proxy thereat may transact the business for which the meeting was originally
called and a resolution passed thereat by the affirmative vote of not less than
two-thirds of the votes cast on such resolution at such meeting shall constitute
the approval or consent of the holders of the Exchangeable Shares.
10.3 Exchangeable Shares held by Parent, Swissco or their Affiliates
shall not be included for the purposes of determining a quorum, and shall not
vote, in connection with any approval contemplated by Section 10.2 of these
share provisions.
ARTICLE 11
RECIPROCAL CHANGES, ETC. IN RESPECT OF PARENT COMMON SHARES
11.1 (a) Pursuant to the Support Agreement, Parent will not without
the prior approval of the Corporation and the prior approval of the holders of
the Exchangeable Shares given in accordance with Section 10.2 of these share
provisions:
(i) issue or distribute Parent Common Shares (or securities
exchangeable for or convertible into or carrying rights to acquire Parent
Common Shares) to the holders of all or substantially all of the then
outstanding Parent Common Shares by way of stock dividend or other
distribution, other than an issue of Parent Common Shares (or securities
exchangeable for or convertible into or carrying rights to acquire Parent
Common Shares) to holders of Parent Common Shares who exercise an option to
receive dividends in Parent Common Shares (or securities exchangeable for
or convertible into or carrying rights to acquire Parent Common Shares) in
lieu of receiving cash dividends; or
(ii) issue or distribute rights, options or warrants to the
holders of all or substantially all of the then outstanding Parent Common
Shares entitling them to subscribe for or to purchase Parent Common Shares
(or securities exchangeable for or convertible into or carrying rights to
acquire Parent Common Shares); or
(iii) issue or distribute to the holders of all or
substantially all of the then outstanding Parent Common Shares (A) shares
or securities of Parent of any class other than Parent Common Shares (other
than shares convertible into or exchangeable for or carrying rights to
acquire Parent Common Shares), (B) rights, options or warrants other than
those referred to in Section 11.1(a)(ii) above, (C) evidences of
indebtedness of Parent or (D) assets of Parent;
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unless the economic equivalent on a per share basis of such
rights, options, securities, shares, evidences of indebtedness or other
assets is issued or distributed simultaneously to holders of the
Exchangeable Shares.
(b) Pursuant to the Support Agreement, Parent will not without the
prior approval of the Corporation and the prior approval of the holders of the
Exchangeable Shares given in accordance with Section 10.2 of these share
provisions:
(i) subdivide, redivide or change the then outstanding Parent
Common Shares into a greater number of Parent Common Shares; or
(ii) reduce, combine or consolidate or change the then
outstanding Parent Common Shares into a lesser number of Parent Common
Shares; or
(iii) reclassify or otherwise change the Parent Common Shares
or effect an amalgamation, merger, reorganization or other transaction
affecting the Parent Common Shares;
unless the same or an economically equivalent change shall
simultaneously be made to, or in the rights of the holders of, the
Exchangeable Shares.
The Support Agreement shall not be changed without the approval of the holders
of the Exchangeable Shares given in accordance with Section 10.2 of these share
provisions.
11.2 Pursuant to the Voting and Exchange Trust Agreement, the holders
of Exchangeable Shares (other than the Parent, its subsidiaries and Affiliates)
are given certain rights to exchange their Exchangeable Shares for Parent Common
Shares.
ARTICLE 12
ACTIONS BY THE CORPORATION UNDER SUPPORT AGREEMENT
AND UNDER VOTING AND EXCHANGE TRUST AGREEMENT
12.1 The Corporation will take all such actions and do all such things
as shall be necessary or advisable to perform and comply with and to ensure
performance and compliance by Parent and Swissco with all provisions of the
Support Agreement and the Voting and Exchange Trust Agreement applicable to the
Corporation, Swissco and Parent, respectively, in accordance with the respective
terms thereof including, without limitation, taking all such actions and doing
all such things as shall be necessary or advisable to enforce to the fullest
extent possible for the direct benefit of the Corporation and the holders of
Exchangeable Shares all rights and benefits in favor of the Corporation and such
holders under or pursuant to such agreements.
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12.2 The Corporation shall not propose, agree to or otherwise give
effect to any amendment to, or waiver or forgiveness of its rights or
obligations under, the Support Agreement and the Voting and Exchange Trust
Agreement without the approval of the holders or the Exchangeable Shares given
in accordance with Section 10.2 of these share provisions other than such
amendments, waivers and/or forgiveness as may be necessary or advisable for the
purposes of:
(a) adding to the covenants of the other party or parties to
such agreement for the protection of the Corporation or the holders of
Exchangeable Shares thereunder; or
(b) making such provisions or modifications not inconsistent
with such agreement as may be necessary or desirable with respect to
matters or questions arising thereunder which, in the opinion of the Board
of Directors, it may be expedient to make, provided that the Board of
Directors shall be of the opinion, after consultation with counsel, that
such provisions and modifications will not be prejudicial to the interests
of the holders of the Exchangeable Shares; or
(c) making such changes in or corrections to such agreement
which, on the advice of counsel to the Corporation, are required for the
purpose of curing or correcting any ambiguity or defect or inconsistent
provision or clerical omission or mistake or manifest error contained
therein, provided that the Board of Directors shall be of the opinion,
after consultation with counsel, that such changes or corrections will not
be prejudicial to the interests of the holders of the Exchangeable Shares.
ARTICLE 13
LEGEND
13.1 The certificates evidencing the Exchangeable Shares shall contain
or have affixed thereto a legend, in form and on terms approved by the Board of
Directors, with respect to the Support Agreement, the provisions of the Plan of
Arrangement relating to the Liquidation Call Right and the Redemption Call
Right, and the Voting and Exchange Trust Agreement (including the provisions
with respect to the voting rights, exchange right and automatic exchange
thereunder).
ARTICLE 14
NOTICES
14.1 Any notice, request or other communication to be given to the
Corporation by a holder of Exchangeable Shares shall be in writing and shall be
valid and effective if given by mail (postage prepaid) or by telecopy or by
delivery to the registered office of the Corporation and addressed to the
attention of the President. Any such notice, request or other communication, if
given by mail, telecopy or delivery, shall only be deemed to have been given and
received upon actual receipt thereof by the Corporation.
A-36
<PAGE>
14.2 Any presentation and surrender by a holder of Exchangeable Shares
to the Corporation or the Transfer Agent of certificates representing
Exchangeable Shares in connection with the liquidation, dissolution or winding
up of the Corporation or the retraction or redemption of Exchangeable Shares
shall be made by registered mail (postage prepaid) or by delivery to the
registered office of the Corporation or to such office of the Transfer Agent as
may be specified by the Corporation, in each case addressed to the attention of
the President of the Corporation. Any such presentation and surrender of
certificates shall only be deemed to have been made and to be effective upon
actual receipt thereof by the Corporation or the Transfer Agent, as the case may
be. Any such presentation and surrender of certificates made by registered mail
shall be at the sole risk of the holder mailing the same.
14.3 Any notice, request or other communication to be given to a
holder of Exchangeable Shares by or on behalf of the Corporation shall be in
writing and shall be valid and effective if given by mail (postage prepaid) or
by delivery to the address of the holder recorded in the securities register of
the Corporation or, in the event of the address of any such holder not being so
recorded, then at the last known address of such holder. Any such notice,
request or other communication, if given by mail, shall be deemed to have been
given and received on the third Business Day following the date of mailing and,
if given by delivery, shall be deemed to have been given and received on the
date of delivery. Accidental failure or omission to give any notice, request or
other communication to one or more holders of Exchangeable Shares shall not
invalidate or otherwise alter or affect any action or proceeding to be taken by
the Corporation pursuant thereto.
ARTICLE 15
GUARANTY/ASSIGNMENT
15.1 PARENT GUARANTY/ASSIGNMENT
Parent hereby unconditionally and irrevocably guarantees the full and
punctual performance of all of Swissco's obligations hereunder. Swissco may
assign all or a portion of its rights and obligations hereunder to Parent
without the consent of the Corporation or holders of Exchangeable Shares.
A-37
<PAGE>
Exhibit B
FORM OF AFFILIATE AGREEMENT
____________, 1995
Silicon Graphics, Inc.
2011 North Shoreline Boulevard
P.O. Box 7311
Mountain View, CA 94039-7311
Attention: Legal Services
Ladies and Gentlemen:
Pursuant to the terms of the Agreement and Plan of Acquisition and
Arrangement, dated as of February 6, 1995 (the "Agreement"), among Silicon
Graphics, Inc., a Delaware corporation ("Parent"), Silicon Graphics
Manufacturing, S.A., a Swiss corporation and wholly owned subsidiary of Parent,
1103707 Ontario Inc., an Ontario corporation and wholly owned subsidiary of
Parent ("Amalgamation Sub"), and Alias Research Inc., an Ontario corporation
(the "Company"), Parent will acquire all of the voting shares of the Company
upon the amalgamation of Amalgamation Sub and the Company and through the share
exchanges of the Company's capital stock contemplated by the Agreement. Subject
to the terms and conditions of the Agreement, on the Effective Date, outstanding
shares of the common stock, no par value, of the Company (the "Company Common
Stock") will, through a series of steps, ultimately be exchanged for or
converted into shares of the common stock, par value $0.001 per share, of Parent
(the "Parent Common Stock"), or, if elected pursuant to the Agreement,
exchangeable shares, no par value, of Company exchangeable shares (the
"Exchangeable Shares"), in each case on the basis described in the Agreement.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Agreement.
The undersigned has been advised that as of the date hereof it may be
deemed to be an "affiliate" of the Company, as the term "affiliate" is
(i) defined for purposes of paragraphs (c) and (d) of Rule 145 of the Rules and
Regulations (the "Rules and
<PAGE>
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"), and/or (ii) used in and for
purposes of Accounting Series Releases 130 and 135, as amended, and Staff
Accounting Bulletins 65 and 76 of the Commission.
The undersigned understands that the representations, warranties and
covenants set forth herein will be relied upon by Parent, shareholders of
Parent, the Company, other shareholders of the Company and their respective
counsel and accountants.
The undersigned represents and warrants to and agrees with Parent
that:
1. The undersigned has full power to execute and deliver this
Affiliate Agreement and to make the representations and warranties herein and to
perform its obligations hereunder.
2. The undersigned has carefully read this letter and the Agreement
and discussed its requirements and other applicable limitations upon its ability
to sell, transfer or otherwise dispose of Parent Common Stock and Exchangeable
Shares to the extent the undersigned felt necessary, with its counsel or counsel
for the Company.
3. The undersigned shall not make any sale, transfer or other
disposition of Parent Common Stock or Exchangeable Shares in violation of the
Act or the Rules and Regulations.
4. The undersigned has been advised that the issuance of shares of
Parent Common Stock and the Exchangeable Shares to the undersigned in connection
with the Arrangement has been or will be registered with the Commission under
the Act on a Registration Statement on Form S-4 or will be exempt from
registration under the Act pursuant to Section 3(a)(10) thereunder. However,
the undersigned has also been advised that, since at the time the Arrangement
was submitted for a vote of the shareholders of the Company the undersigned may
be deemed to have been an affiliate of the Company and the distribution by the
undersigned of any Parent Common Stock or Exchangeable Shares has not been
registered, and is not exempt, under the Act, the undersigned may not sell,
transfer or otherwise dispose of Parent Common Stock or Exchangeable Shares
issued to the undersigned in the Arrangement (or obtained upon exchange or
conversion of the Exchangeable Shares for Parent Common Stock) unless (i) such
sale, transfer or other disposition has been registered under the Act, (ii) such
sale, transfer or other disposition is made in conformity with the requirements
of Rule 145 promulgated by the Commission under the Act, or (iii) in the opinion
of counsel reasonably acceptable to Parent, such sale, transfer or other
disposition is otherwise exempt from registration under the Act.
5. Parent or the amalgamated corporation, as the case may be, is
under no obligation to register the sale, transfer or other disposition of
Parent Common Stock or Exchangeable Shares by the undersigned or on its behalf
under the Act or to take any other
B-2
<PAGE>
action necessary in order to make compliance with an exemption from such
registration available.
6. The undersigned acknowledges and agrees that stop transfer
instructions will be given to Parent's and the Company's transfer agents with
respect to the Parent Common Stock and the Exchangeable Shares and there will be
placed on the certificates for the Parent Common Stock and the Exchangeable
Shares issued to the undersigned, or any substitutions therefor, a legend
stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE OR INTO WHICH THESE
SHARES ARE EXCHANGEABLE MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE
TERMS OF AN AGREEMENT DATED __________, 1995 BETWEEN THE REGISTERED HOLDER
HEREOF AND SILICON GRAPHICS, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT
THE PRINCIPAL OFFICES OF SILICON GRAPHICS, INC."
7. Unless the transfer by the undersigned of its Parent Common Stock
or Exchangeable Shares has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, Parent and the amalgamated
corporation reserve the right to put the following legend on the certificates
issued any transferee of the undersigned:
"THE SHARES REPRESENTED BY THIS CERTIFICATE OR INTO WHICH THESE SHARES
ARE EXCHANGEABLE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION
TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES.
THE SHARES AND ANY SHARES INTO WHICH THIS CERTIFICATE IS EXCHANGEABLE HAVE
BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION
WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF
1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
8. The legends set forth in paragraphs 6 and 7 above shall be
removed by delivery of substitute certificates without such legend if the
undersigned shall have delivered to Parent and the amalgamated corporation a
copy of a letter from the staff of the Commission, or an opinion of counsel in
form and substance reasonably satisfactory to
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<PAGE>
Parent and the amalgamated corporation, to the effect that such legend is not
required for purposes of the Act.
9. The undersigned is the beneficial owner of (has sole or shared
voting or investment power with respect to) all the shares of Company Common
Stock and options to purchase Company Common Stock indicated on the last page
hereof (the "Company Securities"). Except for the Company Securities, the
undersigned 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.
10. Notwithstanding any other provision hereof to the contrary, the
undersigned has not (i) at any time since September 30, 1994 or (ii) in
contemplation of the Arrangement, engaged, and will not, after the Effective
Date (as defined in the Agreement) until such time as results covering at least
30 days of combined operations of the Company and Parent have been published by
Parent, in the form of a quarterly earnings report, an effective registration
statement filed with the Commission, a report to the Commission on Form 10-K,
10-Q or 8-K, or any other public filing or announcement which includes the
combined results of operations, engage, in any sale, exchange, transfer, pledge,
disposition of or grant of any option, the establishment of any "short" or put-
equivalent position with respect to or the entry into any similar transaction
intended to reduce the risk of the undersigned's risk of ownership of or
investment in, any of the following:
(a) any shares of Parent Common Stock or Exchangeable Shares which
the undersigned may acquire in connection with the Arrangement, or any
securities which may be paid as a dividend or otherwise distributed thereon
or with respect thereto or issued or delivered in exchange or substitution
therefor (all such shares and other securities being referred to herein,
collectively, as "Restricted Securities"), or any option, right or other
interest with respect to any Restricted Securities;
(b) any Company Securities; or
(c) any shares of Company Common Stock or other Company equity
securities which the undersigned purchases or otherwise acquires after the
execution of this Affiliate Agreement.
11. As promptly as practicable following the Effective Date, Parent
shall publish results covering at least 30 days of combined operations of the
Company and Parent in the form of a quarterly earnings report, an effective
registration statement filed with the Commission, a report to the Commission on
Form 10-K, 10-Q or 8-K, or any other public filing or announcement which
includes the combined results of operations; PROVIDED, HOWEVER, that Parent
shall be under no obligation to publish any such financial information other
than with respect to a fiscal quarter of Parent.
12. The undersigned intends to vote all Company Common stock held by
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<PAGE>
him, her or it in favor of the Arrangement.
13. The undersigned will not exercise dissenters' rights in
connection with the Arrangement.
[INTENTIONALLY LEFT BLANK]
B-5
<PAGE>
NUMBER OF SHARES OF COMPANY COMMON STOCK
BENEFICIALLY OWNED BY THE UNDERSIGNED:
----------------------
NUMBER OF SHARES OF COMPANY COMMON STOCK
SUBJECT TO OPTIONS
BENEFICIALLY OWNED BY THE UNDERSIGNED:
----------------------
Very truly yours,
----------------------
(print name of shareholder above)
By:
-------------------
Title:
(if applicable)
Accepted this day of
, 1995, by
SILICON GRAPHICS, INC.
By:
-------------------------
Name:
Title:
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<PAGE>
Exhibit C
SUPPORT AGREEMENT
MEMORANDUM OF AGREEMENT made as of the ___ day of __________, 1995.
B E T W E E N:
SILICON GRAPHICS, INC.,
a corporation subsisting under the laws
of the State of Delaware,
(hereinafter referred to as the "Parent"),
OF THE FIRST PART,
SILICON GRAPHICS MANUFACTURING S.A.,
a corporation subsisting under the laws
of the country of Switzerland,
(hereinafter referred to as "Swissco"),
OF THE SECOND PART,
-and-
ALIAS RESEARCH INC.,
a corporation subsisting under the laws
of the Province of Ontario,
(hereinafter referred to as the "Corporation"),
OF THE THIRD PART.
WHEREAS pursuant to an Agreement and Plan of Acquisition and Arrangement
dated as of February 6, 1995, by and among Parent, Swissco, Alias Research Inc.
(a predecessor to the Corporation), and 1103707 Ontario Inc. (such agreement is
hereinafter referred to as the "Combination Agreement"), the parties agreed that
on the Effective Date (as such term is defined in the Combination Agreement),
Parent, Swissco and the Corporation would execute and deliver a Support
Agreement containing the terms and conditions set forth in Exhibit C to the
Combination Agreement together with such other terms and conditions as may be
agreed to by the parties to the Combination Agreement acting reasonably;
AND WHEREAS pursuant to the Arrangement effected by articles of arrangement
dated __________, 1995 filed pursuant to the BUSINESS CORPORATIONS ACT
(Ontario), Alias Research Inc. and 1103707 Ontario Inc. amalgamated to continue
as the Corporation;
AND WHEREAS pursuant to the Arrangement and immediately following the
above-mentioned amalgamation each issued and outstanding Class A voting common
share of the Corporation, other than those
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<PAGE>
held by the Parent or Swissco was exchanged by the holder thereof with Swissco
for 0.90 issued and outstanding shares of Common Stock of the Parent ("Parent
Common Shares") and each issued and outstanding Class B non-voting common share
of the Corporation was converted into 0.90 issued and outstanding Exchangeable
Non-Voting Shares of the Corporation (the "Exchangeable Shares");
AND WHEREAS the above-mentioned articles of arrangement set forth the
rights, privileges, restrictions and conditions (collectively the "Share
Provisions") attaching to the Exchangeable Shares;
AND WHEREAS Swissco is the registered and beneficial owner of all of the
issued and outstanding Class A voting common shares of the Corporation, and
Swissco is a subsidiary of Parent;
AND WHEREAS the parties hereto desire to make appropriate provision and to
establish a procedure whereby the Parent and Swissco will take certain actions
and make certain payments and deliveries necessary to ensure that the
Corporation will be able to make certain payments and to deliver or cause to be
delivered Parent Common Shares in satisfaction of the obligations of the
Corporation under the Share Provisions with respect to the payment and
satisfaction of Liquidation Amounts, Retraction Prices and Redemption Prices,
all in accordance with the Share Provisions;
NOW THEREFORE in consideration of the respective covenants and agreements
provided in this agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINED TERMS. Each term denoted herein by initial capital letters and
not otherwise defined herein shall have the meaning ascribed thereto in the
Share Provisions, unless the context requires otherwise.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this
agreement into articles, sections and paragraphs and the insertion of headings
are for convenience of reference only and shall not affect the construction or
interpretation of this agreement.
1.3 NUMBER, GENDER, ETC. Words importing the singular number only shall
include the plural and vice versa. Words importing the use of any gender shall
include all genders.
1.4 DATE FOR ANY ACTION. In the event that any date on or by which any
action is required or permitted to be taken under this agreement is not a
Business Day, such action shall be required or permitted to be taken on or by
the next succeeding Business Day. For the purposes of this agreement, a
"Business Day" means any day other than a Saturday, Sunday or a day when banks
are not open for business in either or both of San Francisco, California or
Toronto, Ontario.
ARTICLE 2
COVENANTS OF THE PARENT, SWISSCO AND THE CORPORATION
2.1 FUNDING OF THE CORPORATION. So long as any Exchangeable Shares are
outstanding, the Parent (and Swissco in the case of subclauses (b), (e) and (f))
will:
(a) not declare or pay any dividend on the Parent Common Shares unless
(i) the Corporation
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<PAGE>
will have sufficient assets, funds and other property available to enable
the due declaration and the due and punctual payment in accordance with
applicable law, of an equivalent dividend on the Exchangeable Shares and
(ii) the Corporation shall simultaneously declare or pay, as the case may
be, an equivalent dividend on the Exchangeable Shares, in each case in
accordance with the Share Provisions;
(b) cause the Corporation to declare simultaneously with the
declaration of any dividend on the Parent Common Shares an equivalent
dividend on the Exchangeable Shares and, when such dividend is paid on the
Parent Common Shares, cause the Corporation to pay simultaneously therewith
such equivalent dividend on the Exchangeable Shares, in each case in
accordance with the Share Provisions;
(c) advise the Corporation sufficiently in advance of the declaration
by the Parent of any dividend on the Parent Common Shares and take all such
other actions as are necessary, in cooperation with the Corporation, to
ensure that the respective declaration date, record date and payment date
for a dividend on the Exchangeable Shares shall be the same as the record
date, declaration date and payment date for the corresponding dividend on
the Parent Common Shares;
(d) ensure that the record date for any dividend declared on the
Parent Common Shares is not less than 10 Business Days after the
declaration date for such dividend;
(e) take all such actions and do all such things as are necessary or
desirable to enable and permit the Corporation, in accordance with
applicable law, to pay and otherwise perform its obligations with respect
to the satisfaction of the Liquidation Amount in respect of each issued and
outstanding Exchangeable Share upon the liquidation, dissolution or
winding-up of the Corporation, including without limitation all such
actions and all such things as are necessary or desirable to enable and
permit the Corporation to cause to be delivered Parent Common Shares to the
holders of Exchangeable Shares in accordance with the provisions of Article
5 of the Share Provisions; and
(f) take all such actions and do all such things as are necessary or
desirable to enable and permit the Corporation, in accordance with
applicable law, to pay and otherwise perform its obligations with respect
to the satisfaction of the Retraction Price and the Redemption Price,
including without limitation all such actions and all such things as are
necessary or desirable to enable and permit the Corporation to cause to be
delivered Parent Common Shares to the holders of Exchangeable Shares, upon
the redemption of the Exchangeable Shares in accordance with the provisions
of Article 6 or Article 7 of the Share Provisions, as the case may be.
2.2 SEGREGATION OF FUNDS. The Corporation will deposit a sufficient amount
of such funds in a separate account and segregate a sufficient amount of such
assets and other property as is necessary to enable the Corporation to pay or
otherwise satisfy the applicable Liquidation Amount, Retraction Price or
Redemption Price, in each case for the benefit of holders from time to time of
the Exchangeable Shares, and will use such funds, assets and other property so
segregated exclusively for the payment or other satisfaction of the Liquidation
Amount, the Retraction Price or the Redemption Price, as applicable.
2.3 RESERVATION OF PARENT COMMON SHARES. The Parent hereby represents,
warrants and covenants that it has irrevocably reserved for issuance and will at
all times keep available, free from preemptive and other rights, out of its
authorized and unissued capital stock such number of Parent Common Shares (or
other shares or securities into which the Parent Common Shares may be
reclassified or changed as contemplated by section 2.7 hereof) (a) as is equal
to the sum of (i) the number of Exchangeable Shares issued and outstanding from
time to time and (ii) the number of Exchangeable Shares issuable upon the
exercise of all rights to acquire Exchangeable Shares outstanding from time to
time and (b) as are now and may hereafter be required to enable and permit the
Corporation to meet its obligations hereunder, under the Voting and Exchange
Trust Agreement,
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<PAGE>
under the Share Provisions and under any other security or commitment pursuant
to which the Parent may now or hereafter be required to issue Parent Common
Shares.
2.4 NOTIFICATION OF CERTAIN EVENTS. In order to assist the Parent and
Swissco to comply with their obligations hereunder, the Corporation will give
the Parent and Swissco notice of each of the following events at the time set
forth below:
(a) in the event of any determination by the Board of Directors of the
Corporation to institute voluntary liquidation, dissolution or winding up
proceedings with respect to the Corporation or to effect any other
distribution of the assets of the Corporation among its shareholders for
the purpose of winding up its affairs, at least 60 days prior to the
proposed effective date of such liquidation, dissolution, winding up or
other distribution;
(b) immediately, upon the earlier of receipt by the Corporation of
notice of and the Corporation otherwise becoming aware of any threatened or
instituted claim, suit, petition or other proceedings with respect to the
involuntary liquidation, dissolution or winding up of the Corporation or to
effect any other distribution of the assets of the Corporation among its
shareholders for the purpose of winding up its affairs;
(c) immediately, upon receipt by the Corporation of a Retraction
Request (as defined in the Share Provisions);
(d) at least 130 days prior to any accelerated Automatic Redemption
Date determined by the Board of Directors of the Corporation in accordance
with the Share Provisions; and
(e) as soon as practicable upon the issuance by the Corporation of any
Exchangeable Shares or rights to acquire Exchangeable Shares (other than
the issuance of Exchangeable Shares upon the conversion of outstanding
Class B non-voting common shares pursuant to the Arrangement).
2.5 DELIVERY OF PARENT COMMON SHARES. In furtherance of its obligations
under sections 2.1(e) and 2.1(f) hereof, upon notice from the Corporation of any
event which requires the Corporation to cause to be delivered Parent Common
Shares to any holder of Exchangeable Shares, Swissco shall forthwith deliver the
requisite Parent Common Shares to or to the order of the former holder of the
surrendered Exchangeable Shares, as the Corporation shall direct. All such
Parent Common Shares shall be duly issued as fully paid and non-assessable and
shall be free and clear of any lien, claim or encumbrance. In consideration of
the delivery of each such Parent Common Share by Swissco, the Corporation shall
issue to Swissco, or as Swissco shall direct, such number of Class A Common
Shares of the Corporation as is equal to the fair value of such Parent Common
Share.
2.6 QUALIFICATION OF PARENT COMMON SHARES. The Parent represents and
warrants that it has taken all actions and done all things as are necessary or
desirable to cause the Parent Common Shares to be issued and delivered pursuant
to the Share Provisions, the Exchange Right or the Automatic Exchange Rights to
be freely tradeable thereafter (other than any restrictions on transfers by
reason of a holder being a "control person" of the Parent for purposes of
Canadian federal or provincial securities law or an "affiliate" of the Parent
or, prior to the Effective Date, Alias Research Inc. for purposes of United
States federal or state securities law). The Parent will in good faith
expeditiously take all such actions and do all such things as are necessary or
desirable to cause all Parent Common Shares to be delivered pursuant to the
Share Provisions, the Exchange Right or the Automatic Exchange Rights (as
defined in the Voting and Exchange Trust Agreement) to be listed, quoted or
posted for trading on all stock exchanges and quotation systems on which
outstanding Parent Common Shares are listed, quoted or posted for trading at
such time.
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<PAGE>
2.7 ECONOMIC EQUIVALENCE.
(a) The Parent will not without the prior approval of the Corporation
and the prior approval of the holders of the Exchangeable Shares given
in accordance with Section 10.2 of the Share Provisions:
(i) issue or distribute Parent Common Shares (or securities
exchangeable for or convertible into or carrying rights to acquire Parent
Common Shares) to the holders of all or substantially all of the then
outstanding Parent Common Shares by way of stock dividend or other
distribution, other than an issue of Parent Common Shares (or securities
exchangeable for or convertible into or carrying rights to acquire Parent
Common Shares) to holders of Parent Common Shares who exercise an option to
receive dividends in Parent Common Shares (or securities exchangeable for
or convertible into or carrying rights to acquire Parent Common Shares) in
lieu of receiving cash dividends; or
(ii) issue or distribute rights, options or warrants to the holders of
all or substantially all of the then outstanding Parent Common Shares
entitling them to subscribe for or to purchase Parent Common Shares (or
securities exchangeable for or convertible into or carrying rights to
acquire Parent Common Shares); or
(iii) issue or distribute to the holders of all or substantially all
of the then outstanding Parent Common Shares (A) shares or securities of
the Parent of any class other than Parent Common Shares (other than
shares convertible into or exchangeable for or carrying rights to
acquire Parent Common Shares), (B) rights, options or warrants other
than those referred to in section 2.7(a)(ii) above, (C) evidences of
indebtedness of the Parent or (D) assets of the Parent;
unless (i) the Corporation is able under applicable law to issue or distribute
the economic equivalent on a per share basis of such rights, options,
securities, shares, evidences of indebtedness or other assets simultaneously to
holders of the Exchangeable Shares, and (ii) the Corporation shall issue or
distribute such rights, options, securities, shares, evidences of indebtedness
or other assets simultaneously to holders of the Exchangeable Shares.
(b) The Parent will not without the prior approval of the Corporation and
the prior approval of the holders of the Exchangeable Shares given in accordance
with Section 10.2 of the Share Provisions:
(i) subdivide, redivide or change the then outstanding Parent Common
Shares into a greater number of Parent Common Shares; or
(ii) reduce, combine or consolidate or change the then outstanding
Parent Common Shares into a lesser number of Parent Common Shares; or
(iii) reclassify or otherwise change the Parent Common Shares or effect
an amalgamation, merger, reorganization or other transaction affecting the
Parent Common Shares;
unless (i) the Corporation is able under applicable law to simultaneously make
the same or an economically equivalent change to, or in the rights of the
holders of, the Exchangeable Shares, and (ii) the Corporation simultaneously
does make the same or an economically equivalent change to, or in the rights of
the holders of, the Exchangeable Shares; provided that, for greater certainty,
the above restrictions shall not apply to any action taken by the Parent in
order to give effect to and to consummate the Other Merger Agreement, in the
manner contemplated by, and in accordance with, the Other Merger Agreement.
(c) The Parent will ensure that the record date for any event referred to
in section 2.7(a) or 2.7(b)
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above, or (if no record date is applicable for such event) the effective date
for any such event, is not less than 20 Business Days after the date on which
such event is declared or announced by the Parent (with simultaneous notice
thereof to be given by the Parent to the Corporation).
(d) The Board of Directors of the Corporation shall determine, in good
faith and in its sole discretion (with the assistance of such reputable and
qualified independent financial advisors and/or other experts as the board may
require), economic equivalence for the purposes of any event referred to in
section 2.7(a) or 2.7(b) above and each such determination shall be conclusive
and binding on Swissco and the Parent. In making each such determination, the
following factors shall, without excluding other factors determined by the board
to be relevant, be considered by the Board of Directors of the Corporation:
(i) in the case of any stock dividend or other distribution payable in
Parent Common Shares, the number of such shares issued in proportion to
the number of Parent Common Shares previously outstanding;
(ii) in the case of the issuance or distribution of any rights, options
or warrants to subscribe for or purchase Parent Common Shares (or
securities exchangeable for or convertible into or carrying rights to
acquire Parent Common Shares), the relationship between the exercise
price of each such right, option or warrant and the current market value
(as determined by the Board of Directors of the Corporation in the manner
above contemplated) of a Parent Common Share;
(iii) in the case of the issuance or distribution of any other form of
property (including without limitation any shares or securities of the
Parent of any class other than Parent Common Shares, any rights, options
or warrants other than those referred to in section 2.7(d)(ii) above, any
evidences of indebtedness of the Parent or any assets of the Parent), the
relationship between the fair market value (as determined by the Board of
Directors of the Corporation in the manner above contemplated) of such
property to be issued or distributed with respect to each outstanding
Parent Common Share and the current market value (as determined by the
Board of Directors of the Corporation in the manner above contemplated)
of a Parent Common Share; and
(iv) in the case of any subdivision, redivision or change of the then
outstanding Parent Common Shares into a greater number of Parent Common
Shares or the reduction, combination or consolidation or change of the
then outstanding Parent Common Shares into a lesser number of Parent
Common Shares or any amalgamation, merger, reorganization or other
transaction affecting the Parent Common Shares, the effect thereof upon
the then outstanding Parent Common Shares.
For purposes of the foregoing determinations, the current market value of
any security listed and traded or quoted on a securities exchange shall be the
average of the closing prices of such security during the 3 consecutive trading
days ending not more than five trading days before the date of determination on
the principal securities exchange on which such securities are listed and traded
or quoted; provided, however, that if there is no public distribution or trading
activity of such securities during such period, then the current market value
thereof shall be determined by the Board of Directors of the Corporation, in
good faith and in its sole discretion (with the assistance of such reputable and
qualified independent financial advisors and/or other experts as the board may
require), and provided further that any such determination by the board shall be
conclusive and binding on the Parent.
2.8 TENDER OFFERS, ETC. In the event that a tender offer, share exchange
offer, issuer bid, take-over bid or similar transaction with respect to Parent
Common Shares (an "Offer") is proposed by the Parent or is proposed to the
Parent or its shareholders and is recommended by the Board of Directors of the
Parent, or is otherwise effected or to be effected with the consent or approval
of the Board of Directors of the Parent, the Parent will use its best efforts
expeditiously and in good faith to take all such actions and do all such things
as
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are necessary or desirable to enable and permit holders of Exchangeable
Shares to participate in such Offer to the same extent and on an economically
equivalent basis as the holders of Parent Common Shares, without discrimination.
Without limiting the generality of the foregoing, the Parent will use its best
efforts expeditiously and in good faith to ensure that holders of Exchangeable
Shares may participate in all such Offers without being required to retract
Exchangeable Shares as against the Corporation (or, if so required, to ensure
that any such retraction shall be effective only upon, and shall be conditional
upon, the closing of the Offer and only to the extent necessary to tender or
deposit to the Offer).
2.9 OWNERSHIP OF OUTSTANDING SHARES. Without the prior approval of the
Corporation and the prior approval of the holders of the Exchangeable Shares
given in accordance with Section 10.2 of the Share Provisions, the Parent
covenants and agrees in favour of the Corporation that, as long as any
outstanding Exchangeable Shares are owned by any person or entity other than the
Parent or any of its Affiliates, Parent will be and remain the direct or
indirect beneficial owner of all issued and outstanding shares in the capital of
the Corporation and all outstanding securities of the Corporation carrying or
otherwise entitled to voting rights in any circumstances, in each case other
than the Exchangeable Shares.
2.10 PARENT NOT TO VOTE EXCHANGEABLE SHARES. The Parent covenants and
agrees that it will appoint and cause to be appointed proxyholders with respect
to all Exchangeable Shares held by the Parent and its subsidiaries and
Affiliates for the sole purpose of attending each meeting of holders of
Exchangeable Shares in order to be counted as part of the quorum for each such
meeting. The Parent further covenants and agrees that it will not, and will
cause its subsidiaries and Affiliates not to, exercise any voting rights which
may be exercisable by holders of Exchangeable Shares from time to time pursuant
to the Share Provisions or pursuant to the provisions of the BUSINESS
CORPORATIONS ACT (Ontario) (or any successor or other corporate statute by which
the Corporation may in the future be governed) with respect to any Exchangeable
Shares held by it or by its subsidiaries or Affiliates in respect of any matter
considered at any meeting of holders of Exchangeable Shares.
2.11 DUE PERFORMANCE. On and after the Effective Date, Parent and Swissco
shall duly and timely perform all of their respective obligations expressed in
the Plan of Arrangement.
ARTICLE 3
GENERAL
3.1 TERM. This agreement shall come into force and be effective upon the
issue by the Corporation of Exchangeable Shares under the Agreement and shall
terminate and be of no further force and effect at such time as no Exchangeable
Shares (or securities or rights convertible into or exchangeable for or carrying
rights to acquire Exchangeable Shares) are held by any party other than the
Parent and any of its Affiliates.
3.2 CHANGES IN CAPITAL OF PARENT AND THE CORPORATION. Notwithstanding the
provisions of section 3.4, at all times after the occurrence of any event
effected pursuant to section 2.7 or 2.8 hereof, as a result of which either the
Parent Common Shares or the Exchangeable Shares or both are in any way changed,
this agreement shall forthwith be amended and modified as necessary in order
that it shall apply with full force and effect, MUTATIS MUTANDIS, to all new
securities into which the Parent Common Shares or the Exchangeable Shares or
both are so changed and the parties hereto shall execute and deliver an
agreement in writing giving effect to and evidencing such necessary amendments
and modifications.
3.3 SEVERABILITY. If any provision of this agreement is held to be invalid,
illegal or unenforceable, the validity, legality or enforceability of the
remainder of this agreement shall not in any way be affected or impaired thereby
and this agreement shall be carried out as nearly as possible in accordance with
its original terms and conditions.
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3.4 AMENDMENTS, MODIFICATIONS, ETC. This agreement may not be amended or
modified except by an agreement in writing executed by the Corporation, Swissco
and the Parent and approved by the holders of the Exchangeable Shares in
accordance with section 10.2 of the Share Provisions.
3.5 MINISTERIAL AMENDMENTS. Notwithstanding the provisions of section 3.4,
the parties to this agreement may in writing, at any time and from time to time,
without the approval of the holders of the Exchangeable Shares, amend or modify
this agreement for the purposes of:
(a) adding to the covenants of any of the parties for the protection of
the holders of the Exchangeable Shares;
(b) making such amendments or modifications not inconsistent with this
agreement as may be necessary or desirable with respect to matters or
questions which, in the opinion of the Boards of Directors of each of the
Corporation, Swissco and the Parent, it may be expedient to make, provided
that each such board of directors shall be of the opinion that such
amendments or modifications will not be prejudicial to the interests of the
holders of the Exchangeable Shares; or
(c) making such changes or corrections which, on the advice of counsel
to the Corporation, Swissco and the Parent, are required for the purpose of
curing or correcting any ambiguity or defect or inconsistent provision or
clerical omission or mistake or manifest error, provided that the boards of
directors of each of the Corporation, Swissco and the Parent shall be of
the opinion that such changes or corrections will not be prejudicial to the
interests of the holders of the Exchangeable Shares.
3.6 MEETING TO CONSIDER AMENDMENTS. The Corporation, at the request of the
Parent or Swissco, shall call a meeting or meetings of the holders of the
Exchangeable Shares for the purpose of considering any proposed amendment or
modification requiring approval pursuant to section 3.4 hereof. Any such meeting
or meetings shall be called and held in accordance with the by-laws of the
Corporation, the Share Provisions and all applicable laws.
3.7 AMENDMENTS ONLY IN WRITING. No amendment to or modification or waiver
of any of the provisions of this agreement otherwise permitted hereunder shall
be effective unless made in writing and signed by all of the parties hereto.
3.8 ENUREMENT. This agreement shall be binding upon and enure to the
benefit of the parties hereto and their respective successors and assigns.
3.9 NOTICES TO PARTIES. All notices and other communications between the
parties shall be in writing and shall be deemed to have been given if delivered
personally or by confirmed telecopy to the parties at the following addresses
(or at such other address for either such party as shall be specified in like
notice):
(a) if to the Parent or Swissco at:
Silicon Graphics, Inc.
2011 North Shoreline Boulevard
Mail Stop 710
Mountain View, CA 94043-1389
Attention: Legal Services
Telecopy: (415) 965-1586
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(b) if to the Corporation at:
Alias Research Inc.
110 Richmond Street E.
Toronto, Ontario
Canada M5C 1P1
Attention: President
Telecopy: (416) 861-8805
Any notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of confirmed receipt thereof
unless such day is not a Business Day in which case it shall be deemed to have
been given and received upon the immediately following Business Day.
3.10 COUNTERPARTS. This agreement may be executed in counterparts, each of
which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.
3.11 JURISDICTION. This agreement shall be construed and enforced in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
3.12 ATTORNMENT. The Parent and Swissco agree that any action or
proceeding arising out of or relating to this agreement may be instituted in the
courts of Ontario, waive any objection which they may have now or hereafter to
the venue of any such action or proceeding, irrevocably submits to the
jurisdiction of the said courts in any such action or proceeding, agrees to be
bound by any judgment of the said courts and not to seek, and hereby waives, any
review of the merits of any such judgment by the courts of any other
jurisdiction and hereby appoints the Corporation at its registered office in the
Province of Ontario as the Parent's and Swissco's attorney for service of
process.
3.13 GUARANTY/ASSIGNMENT. Parent hereby unconditionally and irrevocably
guarantees the prompt and full performance by Swissco of its obligations
hereunder. Swissco may assign all or a portion of its rights and obligations
hereunder to Parent without the consent of the Corporation whereupon the
Corporation and Parent shall enter into a supplemental agreement reflecting such
assignment.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
SILICON GRAPHICS, INC.
By
--------------------------------
Name:
Title:
SILICON GRAPHICS MANUFACTURING S.A.
By
--------------------------------
Name:
Title:
ALIAS RESEARCH INC.
By
--------------------------------
Name:
Title:
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<PAGE>
Exhibit D
VOTING AND EXCHANGE TRUST AGREEMENT
MEMORANDUM OF AGREEMENT made as of the ___ day of __________, 1995.
BETWEEN:
SILICON GRAPHICS, INC.,
a corporation subsisting under the laws
of the State of Delaware,
(hereinafter referred to as the "Parent"),
OF THE FIRST PART,
-and-
ALIAS RESEARCH INC.,
a corporation subsisting under the laws
of the Province of Ontario,
(hereinafter referred to as the "Corporation"),
OF THE SECOND PART,
-and-
SILICON GRAPHICS MANUFACTURING S.A.
a corporation subsisting under the laws
of Switzerland,
(hereinafter referred to as "Swissco"),
OF THE THIRD PART,
-and-
_________________________________ ,
a trust company incorporated under the
laws of Canada,
(hereinafter referred to as the "Trustee"),
OF THE FOURTH PART.
WHEREAS pursuant to an agreement and plan of acquisition and arrangement
dated as of February 6, 1995, by and among the Parent, Alias Research Inc. (a
predecessor to the Corporation) and 1103707 Ontario Inc. (such agreement is
hereinafter referred to as the "Combination Agreement"), the parties agreed that
on the Effective Date (as such term is defined in the Combination Agreement),
the Parent, Swissco, the Corporation and a Canadian trust company would execute
and deliver a Voting and Exchange Trust Agreement containing the terms and
conditions set forth in Exhibit D to the Combination Agreement together with
such other terms and conditions as may be agreed to by the parties to the
Combination Agreement acting reasonably;
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<PAGE>
AND WHEREAS pursuant to the arrangement effected by articles of arrangement
dated__________ __, 1995 (the "Arrangement") filed pursuant to the BUSINESS
CORPORATIONS ACT (Ontario), Alias Research Inc. and 1103707 Ontario Inc.
amalgamated to continue as the Corporation;
AND WHEREAS pursuant to the Arrangement and immediately following the
above-mentioned amalgamation each issued and outstanding Class A voting common
share of the Corporation, other than those held by the Parent, Swissco and
affiliates of the Parent was exchanged by the holder thereof with Swissco for
0.90 issued and outstanding shares of Common Stock of the Parent (the "Parent
Common Shares") and each issued and outstanding Class B non-voting common share
of the Corporation was converted into 0.90 issued and outstanding Exchangeable
Non-Voting Shares of the Corporation (the "Exchangeable Shares");
AND WHEREAS the above-mentioned articles of arrangement set forth the
rights, privileges, restrictions and conditions (collectively the "Exchangeable
Share Provisions") attaching to the Exchangeable Shares;
AND WHEREAS Swissco is the registered and beneficial owner of all of the
issued and outstanding Class A voting common shares of the Corporation;
AND WHEREAS pursuant to the Arrangement and the terms and conditions of the
Exchangeable Shares the Parent is to provide voting rights in the Parent to each
holder (other than the Parent, its subsidiaries and Affiliates) from time to
time of Exchangeable Shares, such voting rights per Exchangeable Share to be
equivalent to the voting rights per Parent Common Share;
AND WHEREAS pursuant to the Arrangement and the terms and conditions of the
Exchangeable Shares Swissco is to grant to and in favour of the holders (other
than the Parent, its subsidiaries and Affiliates) from time to time of
Exchangeable Shares the right, in the circumstances set forth herein, to require
Swissco to purchase from each such holder all or any part of the Exchangeable
Shares held by the holder;
AND WHEREAS the parties desire to make appropriate provision and to
establish a procedure whereby voting rights in the Parent shall be exercisable
by holders (other than the Parent, its subsidiaries and Affiliates) from time to
time of Exchangeable Shares by and through the Trustee, which will hold legal
title to one share of Parent Series E Preferred Stock to which voting rights
attach for the benefit of such holders, and whereby the right to require Swissco
to purchase Exchangeable Shares from the holders thereof (other than the Parent,
its subsidiaries and Affiliates) shall be exercisable by such holders from time
to time of Exchangeable Shares by and through the Trustee, which will hold legal
title to such right for the benefit of such holders;
AND WHEREAS these recitals and any statements of fact in this trust
agreement are made by the Parent, Swissco and the Corporation and not by the
Trustee;
Now THEREFORE in consideration of the respective covenants and agreements
provided in this trust agreement and for other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged), the parties
agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS. In this trust agreement, the following terms shall have the
following meanings:
"AFFILIATE" of any person means any other person directly or
indirectly controlled by, or under common control of, that person. For the
purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control of"), as
applied to any person, means the possession by another person, directly or
indirectly, of the power to direct or cause
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<PAGE>
the direction of the management and policies of that first mentioned
person, whether through the ownership of voting securities, by contract or
otherwise.
"AUTOMATIC EXCHANGE RIGHTS" means the benefit of the obligation of
Swissco to effect the automatic exchange of Parent Common Shares for
Exchangeable Shares pursuant to section 5.12.
"BENEFICIARIES" means the registered holders from time to time of
Exchangeable Shares, other than the Parent, its subsidiaries and
Affiliates.
"BENEFICIARY VOTES" has the meaning ascribed thereto in section 4.2.
"BOARD OF DIRECTORS" means the Board of Directors of the Corporation.
"BUSINESS DAY" means a day other than a Saturday, Sunday or a day when
banks are not open for business in either or both of San Francisco,
California or Toronto, Ontario.
"CANADIAN DOLLAR EQUIVALENT" means in respect of an amount expressed
in a foreign currency (the "Foreign Currency Amount") at any date the
product obtained by multiplying (a) the Foreign Currency Amount by (b) the
noon spot exchange rate on such date for such foreign currency expressed in
Canadian dollars as reported by the Bank of Canada or, in the event such
spot exchange rate is not available, such exchange rate on such date for
such foreign currency expressed in Canadian dollars as may be deemed by the
Board of Directors to be appropriate for such purpose.
"CURRENT MARKET PRICE" means, in respect of a Parent Common Share on
any date, the Canadian Dollar Equivalent of the average of the closing
prices of Parent Common Shares on the New York Stock Exchange on each of
the thirty (30) consecutive trading days ending not more than five trading
days before such date, or, if the Parent Common Shares are not then quoted
on the New York Stock Exchange, on such other stock exchange or automated
quotation system on which the Parent Common Shares are listed or quoted, as
the case may be, as may be selected by the Board of Directors for such
purpose; provided, however, that if there is no public distribution or
trading activity of Parent Common Shares during such period then the
Current Market Price of a Parent Common Share shall be determined by the
Board of Directors based upon the advice of such qualified independent
financial advisors as the Board of Directors may deem to be appropriate,
and provided further that any such selection, opinion or determination by
the Board of Directors shall be conclusive and binding.
"EXCHANGE RIGHT" has the meaning ascribed thereto in Section 5.1.
"INSOLVENCY EVENT" means the institution by the Corporation of any
proceeding to be adjudicated a bankrupt or insolvent or to be dissolved or
wound up, or the consent of the Corporation to the institution of
bankruptcy, insolvency, dissolution or winding up proceedings against it,
or the filing of a petition, answer or consent seeking dissolution or
winding up under any bankruptcy, insolvency or analogous laws, including
without limitation the Companies Creditors' Arrangement Act (Canada) and
the Bankruptcy and Insolvency Act (Canada), and the failure by the
Corporation to contest in good faith any such proceedings commenced in
respect of the Corporation within 15 days of becoming aware thereof, or the
consent by the Corporation to the filing of any such petition or to the
appointment of a receiver, or the making by the Corporation of a general
assignment for the benefit of creditors, or the admission in writing by the
Corporation of its inability to pay its debts generally as they become due,
or the Corporation not being permitted, pursuant to solvency requirements
of applicable law, to redeem any Retracted Shares pursuant to Section 6.6
of the Exchangeable Share Provisions.
"LIQUIDATION CALL RIGHT" has the meaning ascribed thereto in the Plan
of Arrangement.
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"LIQUIDATION EVENT" has the meaning ascribed thereto in section
5.13(b).
"LIQUIDATION EVENT EFFECTIVE DATE" has the meaning ascribed thereto in
section 5.13(c).
"LIST" has the meaning ascribed thereto in section 4.6.
"OFFICER'S CERTIFICATE" means, with respect to the Parent, Swissco or
the Corporation, as the case may be, a certificate signed by any one of the
Chairman of the Board, the Vice-Chairman of the Board, the President, any
Vice-President or any other senior officer of the Parent, Swissco or the
Corporation, as the case may be.
"PARENT CONSENT" has the meaning ascribed thereto in section 4.2.
"PARENT MEETING" has the meaning ascribed thereto in section 4.2.
"PARENT SUCCESSOR" has the meaning ascribed thereto in section
11.1(a).
"PERSON" includes an individual, partnership, corporation, company,
unincorporated syndicate or organization, trust, trustee, executor,
administrator and other legal representative.
"PLAN OF ARRANGEMENT" means the plan of arrangement of Alias Research
Inc. (a predecessor to the Corporation) providing for the Arrangement.
"REDEMPTION CALL RIGHT" has the meaning ascribed thereto in the Plan
of Arrangement.
"RETRACTED SHARES" has the meaning ascribed thereto in section 5.7.
"RETRACTION CALL RIGHT" has the meaning ascribed thereto in the
Exchangeable Share Provisions.
"SUPPORT AGREEMENT" means that certain support agreement made as of
even date hereof between the Corporation, Swissco and the Parent.
"TRUST" means the trust created by this agreement.
"TRUST ESTATE" means the Voting Share, any other securities, the
Exchange Right, the Automatic Exchange Rights and any money or other
property which may be held by the Trustee from time to time pursuant to
this trust agreement.
"TRUSTEE" means ______________ and, subject to the provisions of
Article 10, includes any successor trustee.
"VOTING RIGHTS" means the voting rights attached to the Voting Share.
"VOTING SHARE" means the one share of Parent Series E Preferred Stock,
U.S.$0.001 par value, issued by the Parent to and deposited with the
Trustee, which entitles the holder of record to a number of votes at
meetings of holders of Parent Common Shares equal to the number of
Exchangeable Shares outstanding from time to time other than Exchangeable
Shares held by the Parent, its subsidiaries and Affiliates.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this
trust agreement into articles, sections and paragraphs and the insertion of
headings are for convenience of reference only and shall not affect
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<PAGE>
the construction or interpretation of this trust agreement.
1.3 NUMBER, GENDER, ETC. Words importing the singular number only shall
include the plural and vice versa. Words importing the use of any gender shall
include all genders.
1.4 DATE FOR ANY ACTION. If any date on which any action is required to
be taken under this trust agreement is not a Business Day, such action shall be
required to be taken on the next succeeding Business Day.
ARTICLE 2
PURPOSE OF AGREEMENT
2.1 ESTABLISHMENT OF TRUST. The purpose of this trust agreement is to
create the Trust for the benefit of the Beneficiaries, as herein provided. The
Trustee will hold the Voting Share in order to enable the Trustee to exercise
the Voting Rights and will hold the Exchange Right and the Automatic Exchange
Rights in order to enable the Trustee to exercise such rights, in each case as
trustee for and on behalf of the Beneficiaries as provided in this trust
agreement.
ARTICLE 3
VOTING SHARE
3.1 ISSUE AND OWNERSHIP OF THE VOTING SHARE. The Parent hereby issues to
and deposits with the Trustee the Voting Share to be hereafter held of record by
the Trustee as trustee for and on behalf of, and for the use and benefit of, the
Beneficiaries and in accordance with the provisions of this trust agreement.
During the term of the Trust and subject to the terms and conditions of this
trust agreement, the Trustee shall possess and be vested with full legal
ownership of the Voting Share and shall be entitled to exercise all of the
rights and powers of an owner with respect to the Voting Share, provided that
the Trustee shall:
(a) hold the Voting Share and the legal title thereto as trustee
solely for the use and benefit of the Beneficiaries in accordance with the
provisions of this trust agreement; and
(b) except as specifically authorized by this trust agreement, have
no power or authority to sell, transfer, vote or otherwise deal in or with
the Voting Share and the Voting Share shall not be used or disposed of by
the Trustee for any purpose other than the purposes for which this Trust is
created pursuant to this trust agreement.
3.2 LEGENDED SHARE CERTIFICATES. The Corporation will cause each
certificate representing Exchangeable Shares to bear an appropriate legend
notifying the Beneficiaries of their right to instruct the Trustee with respect
to the exercise of the Beneficiary Votes.
3.3 SAFE KEEPING OF CERTIFICATE. The certificate representing the Voting
Share shall at all times be held in safe keeping by the Trustee.
ARTICLE 4
EXERCISE OF VOTING SHARE
4.1 VOTING SHARE. The Trustee, as the holder of record of the Voting
Share, shall be entitled to all of the Voting Rights, including the right to
consent to or to vote in person or by proxy the Voting Share, on any matter,
question or proposition whatsoever that may properly come before the
shareholders of the Parent at a Parent Meeting or in connection with a Parent
Consent (in each case, as hereinafter defined). The Voting Rights shall be and
remain vested in and exercised by the Trustee. Subject to section 7.15 hereof,
the Trustee shall
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<PAGE>
exercise the Voting Rights only:
(a) on the basis of instructions received pursuant to this Article 4
from Beneficiaries entitled to instruct the Trustee as to the voting
thereof at the time at which the Parent Consent is effective or the Parent
Meeting is held; or
(b) to the extent that no instructions are received from a Beneficiary
with respect to the Voting Rights to which such Beneficiary is entitled,
the Trustee shall not exercise or permit the exercise of such Voting
Rights.
4.2 NUMBER OF VOTES. With respect to all meetings of shareholders of the
Parent at which holders of Parent Common Shares are entitled to vote (a "Parent
Meeting") and with respect to all written consents sought by the Parent from its
shareholders including the holders of Parent Common Shares (a "Parent Consent"),
each Beneficiary shall be entitled to instruct the Trustee to cast and exercise
one of the votes comprised in the Voting Rights for each Exchangeable Share
owned of record by such Beneficiary on the record date established by the Parent
or by applicable law for such Parent Meeting or Parent Consent, as the case may
be (the "Beneficiary Votes") in respect of each matter, question or proposition
to be voted on at such Parent Meeting or to be consented to in connection with
such Parent Consent.
4.3 MAILINGS TO SHAREHOLDERS. With respect to each Parent Meeting and
Parent Consent, the Trustee will mail or cause to be mailed (or otherwise
communicate in the same manner as the Parent utilizes in communications to
holders of Parent Common Shares) to each of the Beneficiaries named in the List
on the same day as the initial mailing or notice (or other communication) with
respect thereto is given by the Parent to its shareholders:
(a) a copy of such notice, together with any related materials to be
provided to shareholders of the Parent;
(b) a statement that such Beneficiary is entitled to instruct the
Trustee as to the exercise of the Beneficiary Votes with respect to such
Parent Meeting or Parent Consent, as the case may be, or, pursuant to
section 4.7, to attend such Parent Meeting and to exercise personally the
Beneficiary Votes thereat;
(c) a statement as to the manner in which such instructions may be
given to the Trustee, including an express indication that instructions may
be given to the Trustee to give:
(i) a proxy to such Beneficiary or his designee to exercise
personally the Beneficiary Votes; or
(ii) a proxy to a designated agent or other representative of the
management of the Parent to exercise such Beneficiary Votes;
(d) a statement that if no such instructions are received from the
Beneficiary, the Beneficiary Votes to which such Beneficiary is entitled
will not be exercised;
(e) a form of direction whereby the Beneficiary may so direct and
instruct the Trustee as contemplated herein; and
(f) a statement of the time and date by which such instructions must
be received by the Trustee in order to be binding upon it, which in the
case of a Parent Meeting shall not be earlier than the close of business on
the second Business Day prior to such meeting, and of the method for
revoking or amending such instructions.
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For the purpose of determining the Beneficiary Votes to which a Beneficiary
is entitled in respect of any such Parent Meeting or Parent Consent, the number
of Exchangeable Shares owned of record by the Beneficiary shall be determined at
the close of business on the record date established by the Parent or by
applicable law for purposes of determining shareholders entitled to vote at such
Parent Meeting or to give written consent in connection with such Parent
Consent. The Parent will notify the Trustee of any decision of the Board of
Directors of the Parent with respect to the calling of any such Parent Meeting
or the seeking of any such Parent Consent and shall provide all necessary
information and materials to the Trustee in each case promptly and in any event
in sufficient time to enable the Trustee to perform its obligations contemplated
by this section 4.3.
4.4 COPIES OF SHAREHOLDER INFORMATION. The Parent will deliver to the
Trustee copies of all proxy materials, (including notices of Parent Meetings but
excluding proxies to vote Parent Common Shares), information statements, reports
(including without limitation all interim and annual financial statements) and
other written communications that are to be distributed from time to time to
holders of Parent Common Shares in sufficient quantities and in sufficient time
so as to enable the Trustee to send those materials to each Beneficiary at the
same time as such materials are first sent to holders of Parent Common Shares.
The Trustee will mail or otherwise send to each Beneficiary, at the expense of
the Parent, copies of all such materials (and all materials specifically
directed to the Beneficiaries or to the Trustee for the benefit of the
Beneficiaries by the Parent) received by the Trustee from the Parent at the same
time as such materials are first sent to holders of Parent Common Shares. The
Trustee will also make available for inspection by any Beneficiary at the
Trustee's principal corporate trust office in the cities of Montreal, Toronto
and Vancouver all proxy materials, information statements, reports and other
written communications that are:
(a) received by the Trustee as the registered holder of the Voting
Share and made available by the Parent to the holders of Parent Common
Shares; or
(b) specifically directed to the Beneficiaries or to the Trustee for
the benefit of the Beneficiaries by the Parent.
4.5 OTHER MATERIALS. Immediately after receipt by the Parent or any
shareholder of the Parent of any material sent or given to the holders of Parent
Common Shares by or on behalf of a third party, including without limitation
dissident proxy and information circulars (and related information and material)
and tender and exchange offer circulars (and related information and material),
the Parent shall use its best efforts to obtain and deliver to the Trustee
copies thereof in sufficient quantities so as to enable the Trustee to forward
such material (unless the same has been provided directly to Beneficiaries
by such third party) to each Beneficiary as soon as possible thereafter. As soon
as practicable after receipt thereof, the Trustee will mail or otherwise send
to each Beneficiary, at the expense of the Parent, copies of all such materials
received by the Trustee from the Parent. The Trustee will also make
available for inspection by any Beneficiary at the Trustee's
principal corporate trust office in the cities of Montreal, Toronto and
Vancouver copies of all such materials.
4.6 LIST OF PERSONS ENTITLED TO VOTE. The Corporation shall, (a) prior to
each annual, general and special Parent Meeting or the seeking of any Parent
Consent and (b) forthwith upon each request made at any time by the Trustee in
writing, prepare or cause to be prepared a list (a "List ) of the names and
addresses of the Beneficiaries arranged in alphabetical order and showing the
number of Exchangeable Shares held of record by each such Beneficiary, in each
case at the close of business on the date specified by the Trustee in such
request or, in the case of a List prepared in connection with a Parent Meeting
or a Parent Consent, at the close of business on the record date established by
the Parent or pursuant to applicable law for determining the holders of Parent
Common Shares entitled to receive notice of and/or to vote at such Parent
Meeting or to give consent in connection with such Parent Consent. Each such
List shall be delivered to the Trustee promptly after receipt by the Corporation
of such request or the record date for such meeting or seeking of consent, as
the case may be, and in any event within sufficient time as to enable the
Trustee to perform its obligations under this Agreement. The Parent agrees to
give the Corporation notice (with a copy to the Trustee) of the calling of any
Parent Meeting or the seeking of any Parent Consent, together with the record
dates therefor,
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sufficiently prior to the date of the calling of such meeting or seeking of such
consent so as to enable the Corporation to perform its obligations under this
section 4.6.
4.7 ENTITLEMENT TO DIRECT VOTES. Any Beneficiary named in a List prepared
in connection with any Parent Meeting or any Parent Consent will be entitled
(a) to instruct the Trustee in the manner described in section 4.3 with respect
to the exercise of the Beneficiary Votes to which such Beneficiary is entitled
or (b) to attend such meeting and personally to exercise thereat (or to exercise
with respect to any written consent), as the proxy of the Trustee, the
Beneficiary Votes to which such Beneficiary is entitled except, in each case, to
the extent that such Beneficiary has transferred the ownership of any
Exchangeable Shares in respect of which such Beneficiary is entitled to
Beneficiary Votes after the close of business on the record date for such
meeting or seeking of consent.
4.8 VOTING BY TRUSTEE, AND ATTENDANCE OF TRUSTEE REPRESENTATIVE, AT
MEETING.
(a) In connection with each Parent Meeting and Parent Consent, the
Trustee shall exercise, either in person or by proxy, in accordance with
the instructions received from a Beneficiary pursuant to section 4.3, the
Beneficiary Votes as to which such Beneficiary is entitled to direct the
vote (or any lesser number thereof as may be set forth in the
instructions); provided, however, that such written instructions are
received by the Trustee from the Beneficiary prior to the time and date
fixed by it for receipt of such instructions in the notice given by the
Trustee to the Beneficiary pursuant to section 4.3.
(b) The Trustee shall cause such representatives as are empowered by
it to sign and deliver, on behalf of the Trustee, proxies for Voting Rights
to attend each Parent Meeting. Upon submission by a Beneficiary (or its
designee) of identification satisfactory to the Trustee's representatives,
and at the Beneficiary's request, such representatives shall sign and
deliver to such Beneficiary (or its designee) a proxy to exercise
personally the Beneficiary Votes as to which such Beneficiary is otherwise
entitled hereunder to direct the vote, if such Beneficiary either (i) has
not previously given the Trustee instructions pursuant to section 4.3 in
respect of such meeting, or (ii) submits to the Trustee's representatives
written revocation of any such previous instructions. At such meeting, the
Beneficiary exercising such Beneficiary Votes shall have the same rights
as the Trustee to speak at the meeting in respect of any matter,
question or proposition, to vote by way of ballot at the meeting in respect
of any matter, question or proposition and to vote at such meeting by way
of a show of hands in respect of any matter, question or proposition.
4.9 DISTRIBUTION OF WRITTEN MATERIALS. Any written materials distributed
by the Trustee pursuant to this trust agreement shall be delivered or sent by
mail (or otherwise communicated in the same manner as the Parent utilizes in
communications to holders of Parent Common Share) to each Beneficiary at its
address as shown on the books of the Corporation. The Corporation shall provide
or cause to be provided to the Trustee for this purpose, on a timely basis and
without charge or other expense:
(a) current lists of the Beneficiaries and the registered holders of
Exchangeable Shares; and
(b) upon the request of the Trustee, mailing labels to enable the
Trustee to carry out its duties under this trust agreement.
4.10 TERMINATION OF VOTING RIGHTS. All of the rights of a Beneficiary with
respect to the Beneficiary Votes exercisable in respect of the Exchangeable
Shares held by such Beneficiary, including the right to instruct the Trustee as
to the voting of or to vote personally such Beneficiary Votes, shall be deemed
to be surrendered by the Beneficiary to the Parent and such Beneficiary Votes
and the Voting Rights represented thereby shall cease immediately upon the
delivery by such holder to the Trustee of the certificates representing such
Exchangeable Shares in connection with the exercise by the Beneficiary of the
Exchange Right or the occurrence of the automatic exchange of Exchangeable
Shares for Parent Common Shares, as specified in Article 5 hereof (unless in
either case Swissco shall not have delivered the requisite Parent Common Shares
issuable in exchange
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therefor to the Trustee for delivery to the Beneficiaries), or upon the
redemption of Exchangeable Shares pursuant to Article 6 or Article 7
of the Exchangeable Share Provisions, or upon the effective date of the
liquidation, dissolution or winding-up of the Corporation pursuant to Article 5
of the Exchangeable Share Provisions, or upon the purchase of Exchangeable
Shares from the holder thereof by Swissco pursuant to the exercise by Swissco of
the Retraction Call Right, the Redemption Call Right or the Liquidation Call
Right.
ARTICLE 5
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
5.1 GRANT AND OWNERSHIP OF THE EXCHANGE RIGHT. Swissco hereby grants to
the Trustee as trustee for and on behalf of, and for the use and benefit of, the
Beneficiaries the right (the "Exchange Right"), upon the occurrence and during
the continuance of an Insolvency Event, to require Swissco to purchase from each
or any Beneficiary all or any part of the Exchangeable Shares held by the
Beneficiary and the Automatic Exchange Rights, all in accordance with the
provisions of this agreement. During the term of the Trust and subject to the
terms and conditions of this trust agreement, the Trustee shall possess and be
vested with full legal ownership of the Exchange Right and the Automatic
Exchange Rights and shall be entitled to exercise all of the rights and powers
of an owner with respect to the Exchange Right and the Automatic Exchange
Rights, provided that the Trustee shall:
(a) hold the Exchange Right and the Automatic Exchange Rights and the
legal title thereto as trustee solely for the use and benefit of the
Beneficiaries in accordance with the provisions of this trust agreement;
and
(b) except as specifically authorized by this trust agreement, have
no power or authority to exercise or otherwise deal in or with the Exchange
Right or the Automatic Exchange Rights, and the Trustee shall not exercise
any such rights for any purpose other than the purposes for which this
Trust is created pursuant to this trust agreement.
5.2 LEGENDED SHARE CERTIFICATES. The Corporation will cause each
certificate representing Exchangeable Shares to bear an appropriate legend
notifying the Beneficiaries of:
(a) their right to instruct the Trustee with respect to the exercise
of the Exchange Right in respect of the Exchangeable Shares held by a
Beneficiary; and
(b) the Automatic Exchange Rights.
5.3 GENERAL EXERCISE OF EXCHANGE RIGHT. The Exchange Right shall be and
remain vested in and exercised by the Trustee. Subject to section 7.15, the
Trustee shall exercise the Exchange Right only:
(a) on the basis of instructions received pursuant to this Article 5
from Beneficiaries entitled to instruct the Trustee as to the exercise
thereof; or
(b) to the extent that no instructions are received from a
Beneficiary with respect to the Exchange Right, the Trustee shall not
exercise or permit the exercise of the Exchange Right.
5.4 PURCHASE PRICE. The purchase price payable by Swissco for each
Exchangeable Share to be purchased by Swissco under the Exchange Right shall be
an amount per share equal to (a) the Current Market Price of a Parent Common
Share on the last Business Day prior to the day of closing of the purchase and
sale of such Exchangeable Share under the Exchange Right plus (b) an additional
amount equivalent to the full amount of all dividends declared and unpaid on
each such Exchangeable Share and all dividends declared on Parent Common Shares
which have not been declared on such Exchangeable Shares in accordance with
Section 3.1 of the Exchangeable Share Provisions (provided that if the record
date for any such declared and unpaid
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dividends occurs on or after the day of closing of such purchase and sale the
purchase price shall not include such additional amount equivalent to such
declared and unpaid dividends). In connection with each exercise of the
Exchange Right, Swissco will provide to the Trustee an Officer's Certificate
setting forth the calculation of the purchase price for each Exchangeable Share.
The purchase price for each such Exchangeable Share so purchased may be
satisfied only by Swissco delivering or causing to be delivered to the Trustee,
on behalf of the relevant Beneficiary, one Parent Common Share and a cheque for
the balance, if any, of the purchase price.
5.5 EXERCISE INSTRUCTIONS. Subject to the terms and conditions herein set
forth, a Beneficiary shall be entitled, upon the occurrence and during the
continuance of an Insolvency Event, to instruct the Trustee to exercise the
Exchange Right with respect to all or any part of the Exchangeable Shares
registered in the name of such Beneficiary on the books of the Corporation. To
cause the exercise of the Exchange Right by the Trustee, the Beneficiary shall
deliver to the Trustee, in person or by certified or registered mail, at its
principal corporate trust office in Toronto, Ontario or at such other places in
Canada as the Trustee may from time to time designate by written notice to the
Beneficiaries, the certificates representing the Exchangeable Shares which such
Beneficiary desires Swissco to purchase, duly endorsed in blank, and accompanied
by such other documents and instruments as may be required to effect a transfer
of Exchangeable Shares under the Business Corporations Act (Ontario) and the
by-laws of the Corporation and such additional documents and instruments as the
Trustee may reasonably require together with (a) a duly completed form of notice
of exercise of the Exchange Right, contained on the reverse of or attached to
the Exchangeable Share certificates, stating (i) that the Beneficiary thereby
instructs the Trustee to exercise the Exchange Right so as to require Swissco to
purchase from the Beneficiary the number of Exchangeable Shares specified
therein, (ii) that such Beneficiary has good title to and owns all such
Exchangeable Shares to be acquired by Swissco free and clear of all liens,
claims and encumbrances, (iii) the names in which the certificates representing
the Parent Common Shares deliverable in connection with the exercise of the
Exchange Right are to be issued and (iv) the names and addresses of the persons
to whom such new certificates should be delivered and (b) payment (or evidence
satisfactory to the Trustee, the Corporation and Swissco of payment) of the
taxes (if any) payable as contemplated by section 5.8 of this trust agreement.
If only a part of the Exchangeable Shares represented by any certificate or
certificates delivered to the Trustee are to be purchased by Swissco under the
Exchange Right, a new certificate for the balance of such Exchangeable Shares
shall be issued to the holder at the expense of the Corporation.
5.6 DELIVERY OF PARENT COMMON SHARES; EFFECT OF EXERCISE. Promptly after
receipt of the certificates representing the Exchangeable Shares which the
Beneficiary desires Swissco to purchase under the Exchange Right together with
such documents and instruments of transfer and a duly completed form of notice
of exercise of the Exchange Right (and payment of taxes, if any, or evidence
thereof), duly endorsed for transfer to Swissco, the Trustee shall notify the
Parent, Swissco and the Corporation of its receipt of the same, which notice to
the Parent, Swissco and the Corporation shall constitute exercise of the
Exchange Right by the Trustee on behalf of the holder of such Exchangeable
Shares, and Swissco shall immediately thereafter deliver or cause to be
delivered to the Trustee, for delivery to the Beneficiary of such Exchangeable
Shares (or to such other persons. if any, properly designated by such
Beneficiary), the certificates for the number of Parent Common Shares
deliverable in connection with the exercise of the Exchange Right, which shares
shall be duly issued as fully paid and non-assessable and shall be free and
clear of any lien, claim or encumbrance, and cheques for the balance, if any, of
the total purchase price therefor. Immediately upon the giving of notice by the
Trustee to the Parent, Swissco and the Corporation of the exercise of the
Exchange Right, as provided in this section 5.6, the closing of the transaction
of purchase and sale contemplated by the Exchange Right shall be deemed to have
occurred, and the Beneficiary of such Exchangeable Shares shall be deemed to
have transferred to Swissco all of its right, title and interest in and to such
Exchangeable Shares and in the related interest in the Trust Estate and shall
cease to be a holder of such Exchangeable Shares and shall not be entitled to
exercise any of the rights of a holder in respect thereof, other than the right
to receive his proportionate part of the total purchase price therefor, unless
the requisite number of Parent Common Shares (together with a cheque for the
balance, if any, of the total purchase price therefor) is not allotted, issued
and delivered by Swissco to the Trustee, for delivery to such Beneficiary (or to
such other persons, if any, properly designated by such Beneficiary), within
five Business Days of the date of the giving of such notice by the Trustee, in
which case
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the rights of the Beneficiary shall remain unaffected until such Parent Common
Shares are so allotted, issued and delivered by Swissco and any such cheque is
so delivered and paid. Concurrently with such Beneficiary ceasing to be a holder
of Exchangeable Shares, the Beneficiary shall be considered and deemed for all
purposes to be the holder of the Parent Common Shares delivered to it pursuant
to the Exchange Right.
5.7 EXERCISE OF EXCHANGE RIGHT SUBSEQUENT TO RETRACTION. In the event
that a Beneficiary has exercised its right under Article 6 of the Exchangeable
Share Provisions to require the Corporation to redeem any or all of the
Exchangeable Shares held by the Beneficiary (the "Retracted Shares") and is
notified by the Corporation pursuant to Section 6.6 of the Exchangeable Shares
Provisions that the Corporation will not be permitted as a result of solvency
requirements of applicable law to redeem all such Retracted Shares, and provided
that Swissco shall not have exercised the Retraction Call Right with respect to
the Retracted Shares and that the Beneficiary has not revoked the retraction
request delivered by the Beneficiary to the Corporation pursuant to Section 6.1
of the Exchangeable Share Provisions, the retraction request will constitute and
will be deemed to constitute notice from the Beneficiary to the Trustee
instructing the Trustee to exercise the Exchange Right with respect to those
Retracted Shares which the Corporation is unable to redeem. In any such event,
the Corporation hereby agrees with the Trustee and in favour of the Beneficiary
immediately to notify the Trustee of such prohibition against the Corporation
redeeming all of the Retracted Shares and immediately to forward or cause to be
forwarded to the Trustee all relevant materials delivered by the Beneficiary to
the Corporation or to the transfer agent of the Exchangeable Shares (including
without limitation a copy of the retraction request delivered pursuant to
Section 6.1 of the Exchangeable Share Provisions) in connection with such
proposed redemption of the Retracted Shares and the Trustee will thereupon
exercise the Exchange Right with respect to the Retracted Shares that the
Corporation is not permitted to redeem and will require the Parent to purchase
such shares in accordance with the provisions of this Article 5.
5.8 STAMP OR OTHER TRANSFER TAXES. Upon any sale of Exchangeable Shares
to Swissco pursuant to the Exchange Right or the Automatic Exchange Rights, the
share certificate or certificates representing the Parent Common Shares to be
delivered in connection with the payment of the total purchase price therefor
shall be issued in the name of the Beneficiary of the Exchangeable Shares so
sold or in such names as such Beneficiary may otherwise direct in writing
without charge to the holder of the Exchangeable Shares so sold; provided,
however, that such Beneficiary (a) shall pay (and neither the Parent, Swissco,
the Corporation nor the Trustee shall be required to pay) any documentary,
stamp, transfer or other taxes that may be payable in respect of any transfer
involved in the issuance or delivery of such shares to a person other than such
Beneficiary or (b) shall have established to the satisfaction of the Trustee,
the Parent, Swissco and the Corporation that such taxes, if any, have been paid.
5.9 NOTICE OF INSOLVENCY EVENT. Immediately upon the occurrence of an
Insolvency Event or any event which with the giving of notice or the passage of
time or both would be an Insolvency Event, the Corporation, Swissco and the
Parent shall give written notice thereof to the Trustee. As soon as practicable
after receiving notice from the Corporation, Swissco and the Parent or from any
other person of the occurrence of an Insolvency Event, the Trustee will mail to
each Beneficiary, at the expense of Swissco, a notice of such Insolvency Event,
which notice shall contain a brief statement of the right of the Beneficiaries
with respect to the Exchange Right.
5.10 QUALIFICATION OF PARENT COMMON SHARES. The Parent represents and
warrants that it has taken all actions and done all things as are necessary or
desirable to cause the Parent Common Shares to be issued and delivered pursuant
to the Exchangeable Share Provisions, the Exchange Right or the Automatic
Exchange Rights to be freely tradeable thereafter (other than any restrictions
on transfers by reason of a holder being a "control person" of the Parent for
purposes of Canadian federal or provincial securities law or an "affiliate" of
the Parent or, prior to the Effective Date, Alias Research Inc. for purposes of
United States federal or state securities law). The Parent will in good faith
expeditiously take all such actions and do all such things as are necessary or
desirable to cause all Parent Common Shares to be delivered pursuant to the
Exchangeable Share Provisions, the Exchange Right or the Automatic Exchange
Rights to be listed, quoted or posted for trading on all stock exchanges and
quotation systems on which outstanding Parent
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Common Shares are listed, quoted or posted for trading at such time.
5.11 RESERVATION OF PARENT COMMON SHARES.
The Parent hereby represents, warrants and covenants that it has
irrevocably reserved for issuance and will at all times keep available, free
from preemptive and other rights, out of its authorized and unissued capital
stock such number of Parent Common Shares (a) as is equal to the sum of (i) the
number of Exchangeable Shares issued and outstanding from time to time and (ii)
the number of Exchangeable Shares issuable upon the exercise of all rights to
acquire Exchangeable Shares outstanding from time to time and (b) as are now and
may hereafter be required to enable and permit the Corporation and Swissco to
meet their respective obligations hereunder, under the Support Agreement, under
the Exchangeable Share Provisions and under any other security or commitment
pursuant to which the Parent may now or hereafter be required to issue Parent
Common Shares.
5.12 AUTOMATIC EXCHANGE ON LIQUIDATION OF PARENT.
(a) The Parent will give the Trustee notice of each of the following
events at the time set forth below:
(i) in the event of any determination by the Board of Directors
of the Parent to institute voluntary liquidation, dissolution or
winding-up proceedings with respect to the Parent or to effect any
other distribution of assets of the Parent among its shareholders for
the purpose of winding up its affairs, at least 60 days prior to the
proposed effective date of such liquidation, dissolution, winding-up
or other distribution; and
(ii) immediately, upon the earlier of (A) receipt by the Parent
of notice of and (B) the Parent otherwise becoming aware of any
threatened or instituted claim, suit, petition or other proceedings
with respect to the involuntary liquidation, dissolution or winding-up
of the Parent or to effect any other distribution of assets of the
Parent among its shareholders for the purpose of winding up its
affairs.
(b) immediately following receipt by the Trustee from the Parent of
notice of any event (a "Liquidation Event") contemplated by section
5.12(a)(i) or 5.12(a)(ii) above, the Trustee will give notice thereof to
the Beneficiaries. Such notice shall include a brief description of the
automatic exchange of Exchangeable Shares for Parent Common Shares provided
for in section 5.12(c).
(c) In order that the Beneficiaries will be able to participate on a
pro rata basis with the holders of Parent Common Shares in the distribution
of assets of the Parent in connection with a Liquidation Event, on the
fifth Business Day prior to the effective date (the "Liquidation Event
Effective Date") of a Liquidation Event all of the then outstanding
Exchangeable Shares shall be automatically exchanged for Parent Common
Shares. To effect such automatic exchange, Swissco shall purchase each
Exchangeable Share outstanding on the fifth Business Day prior to the
Liquidation Event Effective Date and held by Beneficiaries, and each
Beneficiary shall sell the Exchangeable Shares held by it at such time, for
a purchase price per share equal to (a) the Current Market Price of a
Parent Common Share on the fifth Business Day prior to the Liquidation
Event Effective Date, which shall be satisfied in full by Swissco
delivering or causing to be delivered to the Beneficiary one Parent Common
Share, plus (b) an additional amount equivalent to the full amount of all
dividends declared and unpaid on each such Exchangeable Share and all
dividends declared on Parent Common Shares which have not been declared on
such Exchangeable Shares in accordance with Section 3.1 of the Exchangeable
Share Provisions (provided that if the record date for any such declared
and unpaid dividends occurs on or after the day of closing of such purchase
and sale the purchase price shall not include such additional amount
equivalent to such declared and unpaid dividends). In connection with such
automatic exchange, the Parent will provide to the Trustee an Officer's
Certificate setting forth the
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calculation of the purchase price for each Exchangeable Share.
(d) On the fifth Business Day prior to the Liquidation Event Effective
Date, the closing of the transaction of purchase and sale contemplated by
the automatic exchange of Exchangeable Shares for Parent Common Shares
shall be deemed to have occurred, and each Beneficiary shall be deemed to
have transferred to Swissco all of the Beneficiary's right, title and
interest in and to its Exchangeable Shares and the related interest in the
Trust Estate and shall cease to be a holder of such Exchangeable Shares and
Swissco shall deliver or cause to be delivered to the Beneficiary the
Parent Common Shares deliverable upon the automatic exchange of
Exchangeable Shares for Parent Common Shares and shall deliver to the
Trustee for delivery to the Beneficiary a cheque for the balance, if any,
of the total purchase price for such Exchangeable Shares. Concurrently with
such Beneficiary ceasing to be a holder of Exchangeable Shares, the
Beneficiary shall be considered and deemed for all purposes to be the
holder of the Parent Common Shares issued to it pursuant to the automatic
exchange of Exchangeable Shares for Parent Common Shares and the
certificates held by the Beneficiary previously representing the
Exchangeable Shares exchanged by the Beneficiary with Swissco pursuant to
such automatic exchange shall thereafter be deemed to represent the Parent
Common Shares delivered to the Beneficiary by Swissco pursuant to such
automatic exchange. Upon the request of a Beneficiary and the surrender by
the Beneficiary of Exchangeable Share certificates deemed to represent
Parent Common Shares, duly endorsed in blank and accompanied by such
instruments of transfer as Swissco may reasonably require, Swissco shall
deliver or cause to be delivered to the Beneficiary certificates
representing the Parent Common Shares of which the Beneficiary is the
holder.
5.13 WITHHOLDING RIGHTS. Parent, Swissco and the Trustee shall be entitled
to deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Exchangeable Shares such amounts as Parent, Swissco
or the Trustee is required or permitted to deduct and withhold with respect to
the making of such payment under the United States Internal Revenue Code of
1986, as amended (the "Code"), the Income Tax Act (Canada) (the "Canadian Code")
or any provision of state, local, provincial or foreign tax law. To the extent
that amounts are so withheld, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares in
respect of which such deduction and withholding was made, provided that such
withheld amounts are actually remitted to the appropriate taxing authority. To
the extent that the amount so required or permitted to be deducted or withheld
from any payment to a holder exceeds the cash portion of the consideration
otherwise payable to the holder, the Parent, Swissco or the Trustee is hereby
authorized to sell or otherwise dispose of at fair market value such portion of
the consideration as is necessary to provide sufficient funds to the Parent,
Swissco or the Trustee, as the case may be, in order to enable it to comply with
such deduction or withholding requirement and shall account to the relevant
holder for any balance of such sale proceeds.
ARTICLE 6
RESTRICTIONS ON ISSUE OF PARENT SPECIAL VOTING STOCK
6.1 ISSUE OF ADDITIONAL SHARES. During the term of this trust agreement,
the Parent will not issue any shares of Parent Series E Preferred Stock in
addition to the Voting Share.
ARTICLE 7
CONCERNING THE TRUSTEE
7.1 POWERS AND DUTIES OF THE TRUSTEE. The rights, powers and authorities
of the Trustee under this trust agreement, in its capacity as trustee of the
Trust, shall include:
(a) purchasing the Voting Share from the Parent as trustee for and on
behalf of the Beneficiaries in accordance with the provisions of this
agreement;
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(b) granting proxies and distributing materials to Beneficiaries as
provided in this trust agreement;
(c) voting the Beneficiary Votes in accordance with the provisions of
this trust agreement;
(d) receiving the grant of the Exchange Right and the Automatic
Exchange Rights from Swissco as trustee for and on behalf of the
Beneficiaries in accordance with the provisions of this trust agreement;
(e) exercising the Exchange Right and enforcing the benefit of the
Automatic Exchange Rights, in each case in accordance with the provisions
of this trust agreement, and in connection therewith receiving from
Beneficiaries Exchangeable Shares and other requisite documents and
distributing to such Beneficiaries the Parent Common Shares and cheques, if
any, to which such Beneficiaries are entitled upon the exercise of the
Exchange Right or pursuant to the Automatic Exchange Rights, as the case
may be;
(f) holding title to the Trust Estate;
(g) investing any moneys forming, from time to time, a part of the
Trust Estate as provided in this trust agreement;
(h) taking action on its own initiative or at the direction of a
Beneficiary or Beneficiaries to enforce the obligations of the Parent and
Swissco under this trust agreement; and
(i) taking such other actions and doing such other things as are
specifically provided in this trust agreement.
In the exercise of such rights, powers and authorities the Trustee shall
have (and is granted) such incidental and additional rights, powers and
authority not in conflict with any of the provisions of this trust agreement as
the Trustee, acting in good faith and in the reasonable exercise of its
discretion, may deem necessary, appropriate or desirable to effect the purpose
of the Trust. Any exercise of such discretionary rights, powers and authorities
by the Trustee shall be final, conclusive and binding upon all persons. For
greater certainty, the Trustee shall have only those duties as are set out
specifically in this trust agreement.
The Trustee in exercising its rights, powers, duties and authorities
hereunder shall act honestly and in good faith with a view to the best interests
of the Beneficiaries and shall exercise the care, diligence and skill that a
reasonably prudent trustee would exercise in comparable circumstances.
7.2 NO CONFLICT OF INTEREST. The Trustee represents to the Corporation,
Swissco and the Parent that at the date of execution and delivery of this trust
agreement there exists no material conflict of interest in the role of the
Trustee as a fiduciary hereunder and the role of the Trustee in any other
capacity. The Trustee shall, within 90 days after it becomes aware that such a
material conflict of interest exists, either eliminate such material conflict of
interest or resign in the manner and with the effect specified in Article 10.
If, notwithstanding the foregoing provisions of this section 7.2, the Trustee
has such a material conflict of interest, the validity and enforceability of
this trust agreement shall not be affected in any manner whatsoever by reason
only of the existence of such material conflict of interest. If the Trustee
contravenes the foregoing provisions of this section 7.2, any interested party
may apply to the Ontario Court of Justice (General Division) for an order that
the Trustee be replaced as trustee hereunder.
7.3 DEALINGS WITH TRANSFER AGENTS, REGISTRARS, ETC. The Corporation,
Swissco and the Parent irrevocably authorize the Trustee, from time to time, to:
(a) consult, communicate and otherwise deal with the respective
registrars and transfer agents,
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and with any such subsequent registrar or transfer agent, of the
Exchangeable Shares and the Parent Common Shares; and
(b) requisition, from time to time, (i) from any such registrar or
transfer agent any information readily available from the records
maintained by it which the Trustee may reasonably require for the discharge
of its duties and responsibilities under this trust agreement and (ii) from
the transfer agent of the Parent Common Shares, and any subsequent transfer
agent of such shares, the share certificates issuable upon the exercise
from time to time of the Exchange Right and pursuant to the automatic
exchange of Exchangeable Shares for Parent Common Shares in the manner
specified in Article 5 hereof.
The Corporation, Swissco and the Parent irrevocably authorize their respective
registrars and transfer agents to comply with all such requests. The Parent and
Swissco covenant that they will supply the Parent's transfer agent with duly
executed share certificates for the purpose of completing the exercise from time
to time of the Exchange Right and the automatic exchange of Exchangeable Shares
for Parent Common Shares, in each case pursuant to Article 5 hereof.
7.4 BOOKS AND RECORDS. The Trustee shall keep available for inspection by
the Parent, Swissco and the Corporation, at the Trustee's principal corporate
trust office in Toronto, Ontario, correct and complete books and records of
account relating to the Trustee's actions under this trust agreement, including
without limitation all information relating to mailings and instructions to and
from Beneficiaries and all transactions pursuant to the Exchange Right and the
Automatic Exchange Rights. On or before March 31, 1996, and on or before March
31 in every year thereafter, so long as the Voting Share is on deposit with the
Trustee, the Trustee shall transmit to the Parent, Swissco and the Corporation a
brief report, dated as of the preceding December 31, with respect to:
(a) the property and funds comprising the Trust Estate as of that
date;
(b) the number of exercises of the Exchange Right, if any, and the
aggregate number of Exchangeable Shares received by the Trustee on behalf
of Beneficiaries in consideration of delivery by Swissco of Parent Common
Shares in connection with the Exchange Right, during the calendar year
ended on such date; and
(c) all other actions taken by the Trustee in the performance of its
duties under this trust agreement which it had not previously reported.
7.5 INCOME TAX RETURNS AND REPORTS. The Trustee shall, to the extent
necessary, prepare and file on behalf of the Trust appropriate United States and
Canadian income tax returns and any other returns or reports as may be required
by applicable law or pursuant to the rules and regulations of any securities
exchange and without limiting the generality of section 7.10 hereof or other
trading system through which the Exchangeable Shares are traded and, in
connection therewith, may obtain the advice and assistance of such experts as
the Trustee may consider necessary or advisable.
7.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE. The Trustee
shall exercise any or all of the rights, duties, powers or authorities vested in
it by this trust agreement at the request, order or direction of any Beneficiary
upon such Beneficiary furnishing to the Trustee reasonable funding, security and
indemnity against the costs, expenses and liabilities which may be incurred by
the Trustee therein or thereby, provided that no Beneficiary shall be obligated
to furnish to the Trustee any such funding, security or indemnity in connection
with the exercise by the Trustee of any of its rights, duties, powers and
authorities with respect to the Voting Share pursuant to Article 4 hereof,
subject to section 7. l 5, and with respect to the Exchange Right pursuant to
Article 5 hereof, subject to section 7.15, and with respect to the Automatic
Exchange Rights pursuant to Article 5 hereof.
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None of the provisions contained in this trust agreement shall require the
Trustee to expend or risk its own funds or otherwise incur financial liability
in the exercise of any of its rights, powers, duties or authorities unless
funded, given security and indemnified as aforesaid.
7.7 ACTIONS BY BENEFICIARIES. No Beneficiary shall have the right to
institute any action, suit or proceeding or to exercise any other remedy
authorized by this trust agreement for the purpose of enforcing any of its
rights or for the execution of any trust or power hereunder unless the
Beneficiary has requested the Trustee to take or institute such action, suit or
proceeding and furnished the Trustee with the funding, security and indemnity
referred to in section 7.6 and the Trustee shall have failed to act within a
reasonable time thereafter. In such case, but not otherwise, the Beneficiary
shall be entitled to take proceedings in any court of competent jurisdiction
such as the Trustee might have taken; it being understood and intended that no
one or more Beneficiaries shall have any right in any manner whatsoever to
affect, disturb or prejudice the rights hereby created by any such action, or to
enforce any right hereunder or under the Voting Rights, the Exchange Rights or
the Automatic Exchange Rights except subject to the conditions and in the manner
herein provided, and that all powers and trusts hereunder shall be exercised and
all proceedings at law shall be instituted, had and maintained by the Trustee,
except only as herein provided, and in any event for the equal benefit of all
Beneficiaries.
7.8 RELIANCE UPON DECLARATIONS. The Trustee shall not be considered to be
in contravention of any of its rights, powers, duties and authorities hereunder
if, when required, it acts and relies in good faith upon lists, mailing labels,
notices, statutory declarations, certificates, opinions, reports or other papers
or documents furnished pursuant to the provisions hereof or required by the
Trustee to be furnished to it in the exercise of its rights, powers, duties and
authorities hereunder if such lists, mailing labels, notices, statutory
declarations, certificates, opinions, reports or other papers or documents
comply with the provisions of section 7.9 hereof, if applicable, and with any
other applicable provisions of this trust agreement.
7.9 EVIDENCE AND AUTHORITY TO TRUSTEE. The Corporation, Swissco and/or
the Parent shall furnish to the Trustee evidence of compliance with the
conditions provided for in this trust agreement relating to any action or step
required or permitted to be taken by the Corporation, Swissco and/or the Parent
or the Trustee under this trust agreement or as a result of any obligation
imposed under this trust agreement, including, without limitation, in respect of
the Voting Rights or the Exchange Right or the Automatic Exchange Rights and the
taking of any other action to be taken by the Trustee at the request of or on
the application of the Corporation, Swissco and/or the Parent forthwith if and
when:
(a) such evidence is required by any other section of this trust
agreement to be furnished to the Trustee in accordance with the terms of
this section 7.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this trust agreement, gives the Corporation, Swissco
and/or the Parent written notice requiring it to furnish such evidence in
relation to any particular action or obligation specified in such notice.
Such evidence shall consist of an Officer's Certificate of the Corporation,
Swissco and/or the Parent or a statutory declaration or a certificate made by
persons entitled to sign an Officer's Certificate stating that any such
condition has been complied with in accordance with the terms of this trust
agreement.
Whenever such evidence relates to a matter other than the Voting Rights or
the Exchange Right or the automatic exchange of Exchangeable Shares for Parent
Common Shares pursuant to section 5.12, and except as otherwise specifically
provided herein, such evidence may consist of a report or opinion of any
solicitor, auditor, accountant, appraiser, valuer, engineer or other expert or
any other person whose qualifications give authority to a statement made by him,
provided that if such report or opinion is furnished by a director, officer or
employee of the Corporation, Swissco and/or the Parent it shall be in the form
of an Officer's Certificate or a statutory declaration.
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Each statutory declaration, certificate, opinion or report furnished to the
Trustee as evidence of compliance with a condition provided for in this trust
agreement shall include a statement by the person giving the evidence:
(a) declaring that he has read and understands the provisions of this
trust agreement relating to the condition in question;
(b) describing the nature and scope of the examination or
investigation upon which he based the statutory declaration, certificate,
statement or opinion; and
(c) declaring that he has made such examination or investigation as he
believes is necessary to enable him to make the statements or give the
opinions contained or expressed therein.
7.10 EXPERTS, ADVISERS AND AGENTS. The Trustee may:
(a) in relation to these presents act and rely on the opinion or
advice of or information obtained from any solicitor, auditor, accountant,
appraiser, valuer, engineer or other expert, whether retained by the
Trustee or by the Corporation, Swissco and/or the Parent or otherwise, and
may employ such assistants as may be necessary to the proper discharge of
its powers and duties and determination of its rights hereunder and may pay
proper and reasonable compensation for all such legal and other advice or
assistance as aforesaid; and
(b) employ such agents and other assistants as it may reasonably
require for the proper discharge of its powers and duties hereunder, and
may pay reasonable remuneration for all services performed for it (and
shall be entitled to receive reasonable remuneration for all services
performed by it) in the discharge of the trusts hereof and compensation for
all disbursements, costs and expenses made or incurred by it in the
discharge of its duties hereunder and in the management of the Trust.
7.11 INVESTMENT OF MONEYS HELD BY TRUSTEE. Unless otherwise provided in
this trust agreement, any moneys held by or on behalf of the Trustee which under
the terms of this trust agreement may or ought to be invested or which may be on
deposit with the Trustee or which may be in the hands of the Trustee may be
invested and reinvested in the name or under the control of the Trustee in
securities in which, under the laws of the Province of Ontario, trustees are
authorized to invest trust moneys, provided that such securities are stated to
mature within two years after their purchase by the Trustee, and the Trustee
shall so invest such moneys on the written direction of the Corporation. Pending
the investment of any moneys as hereinbefore provided, such moneys may be
deposited in the name of the Trustee in any chartered bank in Canada or, with
the consent of the Corporation, in the deposit department of the Trustee or any
other loan or trust company authorized to accept deposits under the laws of
Canada or any province thereof at the rate of interest then current on similar
deposits.
7.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY. The Trustee shall not be
required to give any bond or security in respect of the execution of the trusts,
rights, duties, powers and authorities of this trust agreement or otherwise in
respect of the premises.
7.13 TRUSTEE NOT BOUND TO ACT ON CORPORATION'S REQUEST. Except as in this
trust agreement otherwise specifically provided, the Trustee shall not be bound
to act in accordance with any direction or request of the Corporation and/or the
Parent or of the directors thereof until a duly authenticated copy of the
instrument or resolution containing such direction or request shall have been
delivered to the Trustee, and the Trustee shall be empowered to act and rely
upon any such copy purporting to be authenticated and believed by the Trustee to
be genuine.
7.14 AUTHORITY TO CARRY ON BUSINESS. The Trustee represents to the
Corporation, Swissco and the Parent that at the date of execution and delivery
by it of this trust agreement it is authorized to carry on the
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business of a trust company in the Province of Ontario but if, notwithstanding
the provisions of this section 7.14, it ceases to be so authorized to carry on
business, the validly and enforceability of this trust agreement and the Voting
Rights, the Exchange Right and the Automatic Exchange Rights shall not be
affected in any manner whatsoever by reason only of such event but the Trustee
shall, within 90 days after ceasing to be authorized to carry on the business of
a trust company in the Province of Ontario, either become so authorized or
resign in the manner and with the effect specified in Article 10.
7.15 CONFLICTING CLAIMS. If conflicting claims or demands are made or
asserted with respect to any interest of any Beneficiary in any Exchangeable
Shares, including any disagreement between the heirs, representatives,
successors or assigns succeeding to all or any part of the interest of any
Beneficiary in any Exchangeable Shares resulting in conflicting claims or
demands being made in connection with such interest, then the Trustee shall be
entitled, at its sole discretion, to refuse to recognize or to comply with any
such claim or demand. In so refusing, the Trustee may elect not to exercise any
Voting Rights, Exchange Right or Automatic Exchange Rights subject to such
conflicting claims or demands and, in so doing, the Trustee shall not be or
become liable to any person on account of such election or its failure or
refusal to comply with any such conflicting claims or demands. The Trustee shall
be entitled to continue to refrain from acting and to refuse to act until:
(a) the rights of all adverse claimants with respect to the Voting
Rights, Exchange Right or Automatic Exchange Rights subject to such
conflicting claims or demands have been adjudicated by a final judgment of
a court of competent jurisdiction; or
(b) all differences with respect to the Voting Rights, Exchange Right
or Automatic Exchange Rights subject to such conflicting claims or demands
have been conclusively settled by a valid written agreement binding on all
such adverse claimants, and the Trustee shall have been furnished with an
executed copy of such agreement.
If the Trustee elects to recognize any claim or comply with any demand made by
any such adverse claimant, it may in its discretion require such claimant to
furnish such surety bond or other security satisfactory to the Trustee as it
shall deem appropriate fully to indemnify it as between all conflicting claims
or demands.
7.16 ACCEPTANCE OF TRUST. The Trustee hereby accepts the Trust created
and provided for by and in this trust agreement and agrees to perform the same
upon the terms and conditions herein set forth and to hold all rights,
privileges and benefits conferred hereby and by law in trust for the various
persons who shall from time to time be Beneficiaries, subject to all the terms
and conditions herein set forth.
ARTICLE 8
COMPENSATION
8.1 FEES AND EXPENSES OF THE TRUSTEE. The Parent, Swissco and the
Corporation jointly and severally agree to pay to the Trustee reasonable
compensation for all of the services rendered by it under this trust agreement
and will reimburse the Trustee for all reasonable expenses (including taxes) and
disbursements, including the cost and expense of any suit or litigation of any
character and any proceedings before any governmental agency reasonably incurred
by the Trustee in connection with its rights and duties under this trust
agreement; provided that the Parent, Swissco and the Corporation shall have no
obligation to reimburse the Trustee for any expenses or disbursements paid,
incurred or suffered by the Trustee in any suit or litigation in which the
Trustee is determined to have acted in bad faith or with negligence or wilful
misconduct.
ARTICLE 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
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9.1 INDEMNIFICATION OF THE TRUSTEE. The Parent, Swissco and the
Corporation jointly and severally agree to indemnify and hold harmless the
Trustee and each of its directors, officers, employees and agents appointed and
acting in accordance with this trust agreement (collectively, the "Indemnified
Parties") against all claims, losses, damages, costs, penalties, fines and
reasonable expenses (including reasonable expenses of the Trustee's legal
counsel) which, without fraud, negligence, wilful misconduct or bad faith on the
part of such Indemnified Party, may be paid, incurred or suffered by the
Indemnified Party by reason of or as a result of the Trustee's acceptance or
administration of the Trust, its compliance with its duties set forth in this
trust agreement, or any written or oral instructions delivered to the Trustee by
the Parent, Swissco or the Corporation pursuant hereto. In no case shall the
Parent, Swissco or the Corporation be liable under this indemnity for any claim
against any of the Indemnified Parties unless the Parent, Swissco and the
Corporation shall be notified by the Trustee of the written assertion of a claim
or of any action commenced against the Indemnified Parties, promptly after any
of the Indemnified Parties shall have received any such written assertion of a
claim or shall have been served with a summons or other first legal process
giving information as to the nature and basis of the claim. Subject to (ii),
below, the Parent, Swissco and the Corporation shall be entitled to participate
at their own expense in the defence and, if the Parent, Swissco or the
Corporation so elect at any time after receipt of such notice, either of them
may assume the defence of any suit brought to enforce any such claim. The
Trustee shall have the right to employ separate counsel in any such suit and
participate in the defence thereof but the fees and expenses of such counsel
shall be at the expense of the Trustee unless: (i) the employment of such
counsel has been authorized by the Parent, Swissco or the Corporation; or (ii)
the named parties to any such suit include both the Trustee and the Parent,
Swissco or the Corporation and the Trustee shall have been advised by counsel
acceptable to the Parent or the Corporation that there may be one or more legal
defenses available to the Trustee which are different from or in addition to
those available to the Parent or the Corporation (in which case the Parent,
Swissco and the Corporation shall not have the right to assume the defence of
such suit on behalf of the Trustee but shall be liable to pay the reasonable
fees and expenses of counsel for the Trustee).
9.2 LIMITATION OF LIABILITY. The Trustee shall not be held liable for any
loss which may occur by reason of depreciation of the value of any part of the
Trust Estate or any loss incurred on any investment of funds pursuant to this
trust agreement, except to the extent that such loss is attributable to the
fraud, negligence, wilful misconduct or bad faith on the part of the Trustee.
ARTICLE 10
CHANGE OF TRUSTEE
10.1 RESIGNATION. The Trustee, or any trustee hereafter appointed, may at
any time resign by giving written notice of such resignation to the Parent,
Swissco and the Corporation specifying the date on which it desires to resign,
provided that such notice shall never be given less than 30 days before such
desired resignation date unless the Parent, Swissco and the Corporation
otherwise agree and provided further that such resignation shall not take effect
until the date of the appointment of a successor trustee and the acceptance of
such appointment by the successor trustee. Upon receiving such notice of
resignation, the Parent, Swissco and the Corporation shall promptly appoint a
successor trustee by written instrument in duplicate, one copy of which shall be
delivered to the resigning trustee and one copy to the successor trustee.
10.2 REMOVAL. The Trustee, or any trustee hereafter appointed, may be
removed at any time on 30 days' prior notice by written instrument executed by
the Parent, Swissco and the Corporation, in duplicate, one copy of which shall
be delivered to the trustee so removed and one copy to the successor trustee.
10.3 SUCCESSOR TRUSTEE. Any successor trustee appointed as provided under
this trust agreement shall execute, acknowledge and deliver to the Parent,
Swissco and the Corporation and to its predecessor trustee an instrument
accepting such appointment. Thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor under this trust agreement,
with like effect
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<PAGE>
as if originally named as trustee in this trust agreement. However, on the
written request of the Parent, Swissco and the Corporation or of the successor
trustee, the trustee ceasing to act shall, upon payment of any amounts then due
it pursuant to the provisions of this trust agreement, execute and deliver an
instrument transferring to such successor trustee all the rights and powers of
the trustee so ceasing to act. Upon the request of any such successor trustee,
the Parent, Swissco, the Corporation and such predecessor trustee shall execute
any and all instruments in writing for more fully and certainly vesting in and
confirming to such successor trustee all such rights and powers.
10.4 NOTICE OF SUCCESSOR TRUSTEE. Upon acceptance of appointment by a
successor trustee as provided herein, the Parent, Swissco and the Corporation
shall cause to be mailed notice of the succession of such trustee hereunder to
each Beneficiary specified in a List. If the Parent, Swissco or the Corporation
shall fail to cause such notice to be mailed within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Parent, Swissco and the Corporation.
ARTICLE 11
PARENT SUCCESSORS
11.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC. The Parent shall
not enter into any transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale, lease or otherwise)
whereby all or substantially all of its undertaking, property and assets would
become the property of any other person or, in the case of a merger, of the
continuing corporation resulting therefrom unless, but may do so if:
(a) such other person or continuing corporation is a corporation
(herein called the "Parent Successor") incorporated under the laws of any
state of the United States or the laws of Canada or any province thereof;
(b) the Parent Successor, by operation of law, becomes, without more,
bound by the terms and provisions of this trust agreement or, if not so
bound, executes, prior to or contemporaneously with the consummation of
such transaction a trust agreement supplemental hereto and such other
instruments (if any) as are satisfactory to the Trustee and in the opinion
of legal counsel to the Trustee are necessary or advisable to evidence the
assumption by the Parent Successor of liability for all moneys payable and
property deliverable hereunder and the covenant of such Parent Successor to
pay and deliver or cause to be delivered the same and its agreement to
observe and perform all the covenants and obligations of the Parent under
this trust agreement; and
(c) such transaction shall, to the satisfaction of the Trustee and in
the opinion of legal counsel to the Trustee, be upon such terms as
substantially to preserve and not to impair in any material respect any of
the rights, duties, powers and authorities of the Trustee or of the
Beneficiaries hereunder
11.2 VESTING OF POWERS IN SUCCESSOR. Whenever the conditions of section
11.1 hereof have been duly observed and performed, the Trustee, if required, by
section 11.1 hereof, the Parent Successor and the Corporation shall execute and
deliver the supplemental trust agreement provided for in Article 12 and
thereupon the Parent Successor shall possess and from time to time may exercise
each and every right and power of the Parent under this trust agreement in the
name of the Parent or otherwise and any act or proceeding by any provision of
this trust agreement required to be done or performed by the Board of Directors
of the Parent or any officers of the Parent may be done and performed with like
force and effect by the directors or officers of such Parent Successor
11.3. WHOLLY-OWNED SUBSIDIARIES. Nothing herein shall be construed as
preventing the amalgamation
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or merger of any wholly-owned subsidiary of the Parent with or into the Parent
or the winding-up, liquidation or dissolution of any wholly-owned subsidiary of
the Parent provided that all of the assets of such subsidiary are transferred to
the Parent or another wholly-owned subsidiary of the Parent and any such
transactions are expressly permitted by this Article 11.
ARTICLE 12
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
12.1 AMENDMENTS, MODIFICATIONS, ETC. This trust agreement may not be
amended or modified except by an agreement in writing executed by the
Corporation, the Parent, Swissco and the Trustee and approved by the
Beneficiaries in accordance with Section 10.2 of the Exchangeable Share
Provisions
12.2 MINISTERIAL AMENDMENTS. Notwithstanding the provisions of section
12.1 hereof, the parties to this trust agreement may in writing, at any time and
from time to time, without the approval of the Beneficiaries, amend or modify
this trust agreement for the purposes of:
(a) adding to the covenants of either or both parties hereto for the
protection of the Beneficiaries hereunder;
(b) making such amendments or modifications not inconsistent with this
trust agreement as may be necessary or desirable with respect to matters or
questions which, in the opinion of the Board of Directors of each of the
Parent, Swissco and Corporation and in the opinion of the Trustee and its
counsel, having in mind the best interests of the Beneficiaries as a whole,
it may be expedient to make, provided that such boards of directors and the
Trustee and its counsel shall be of the opinion that such amendments and
modifications will not be prejudicial to the interests of the Beneficiaries
as a whole; or
(c) making such changes or corrections which, on the advice of counsel
to the Corporation, the Parent, Swissco and the Trustee, are required for
the purpose of curing or correcting any ambiguity or defect or inconsistent
provision or clerical omission or mistake or manifest error, provided that
the Trustee and its counsel and the Board of Directors of each of the
Corporation, Swissco and the Parent shall be of the opinion that such
changes or corrections will not be prejudicial to the interests of the
Beneficiaries as a whole.
12.3 MEETING TO CONSIDER AMENDMENTS. The Corporation, at the request of
the Parent, shall call a meeting or meetings of the Beneficiaries for the
purpose of considering any proposed amendment or modification requiring approval
pursuant hereto. Any such meeting or meetings shall be called and held in
accordance with the by-laws of the Corporation, the Exchangeable Share
Provisions and all applicable laws.
12.4 CHANGES IN CAPITAL OF PARENT AND THE CORPORATION. At all times after
the occurrence of any event effected pursuant to section 2.7 or section 2.8 of
the Support Agreement, as a result of which either the Parent Common Shares or
the Exchangeable Shares or both are in any way changed, this trust agreement
shall forthwith be amended and modified as necessary in order that it shall
apply with full force and effect, mutatis mutandis, to all new securities into
which the Parent Common Shares or the Exchangeable Shares or both are so changed
and the parties hereto shall execute and deliver a supplemental trust agreement
giving effect to and evidencing such necessary amendments and modifications.
12.5 EXECUTION OF SUPPLEMENTAL TRUST AGREEMENTS. No amendment to or
modification or waiver of any of the provisions of this trust agreement
otherwise permitted hereunder shall be effective unless made in writing and
signed by all of the parties hereto. From time to time the Corporation (when
authorized by a resolution of the Board of Directors), Swissco (when authorized
by a resolution of its Board of Directors) the Parent (when authorized by a
resolution of its Board of Directors) and the Trustee may, subject to the
provisions of these presents, and they shall, when so directed by these
presents, execute and deliver by their
D-21
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proper officers, trust agreements or other instruments supplemental hereto,
which thereafter shall form part hereof, for any one or more of the following
purposes:
(a) evidencing the succession of Parent Successors to the Parent and
the covenants of and obligations assumed by each such Parent Successor in
accordance with the provisions of Article 11 and the successor of any
successor trustee in accordance with the provisions of Article 10;
(b) making any additions to, deletions from or alterations of the
provisions of this trust agreement or the Voting Rights, the Exchange Right
or the Automatic Exchange Rights which, in the opinion of the Trustee and
its counsel, will not be prejudicial to the interests of the Beneficiaries
as a whole or are in the opinion of counsel to the Trustee necessary or
advisable in order to incorporate, reflect or comply with any legislation
the provisions of which apply to the Parent, Swissco, the Corporation, the
Trustee or this trust agreement; and
(c) for any other purposes not inconsistent with the provisions of
this trust agreement, including without limitation to make or evidence any
amendment or modification to this agreement as contemplated hereby,
provided that, in the opinion of the Trustee and its counsel, the rights of
the Trustee and the Beneficiaries as a whole will not be prejudiced
thereby.
ARTICLE 13
TERMINATION
13.1 TERM. The Trust created by this trust agreement shall be effective
upon the issuance by the Corporation of Exchangeable Shares under the
Arrangement and shall continue until the earliest to occur of the following
events:
(a) no outstanding Exchangeable Shares are held by a Beneficiary;
(b) each of the Corporation, Swissco and the Parent elects in writing
to terminate the Trust and such termination is approved by the
Beneficiaries of the Exchangeable Shares in accordance with Section 10.2 of
the Exchangeable Share Provisions; and
(c) 21 years after the death of the last survivor of the descendants
of His Majesty King George VI of the United Kingdom of Great Britain and
Northern Ireland living on the date of the creation of the Trust.
13.2 SURVIVAL OF AGREEMENT. This trust agreement shall be effective upon
the issuance by the Corporation of Exchangeable Shares under the Arrangement and
shall survive any termination of the Trust and shall continue until there are no
Exchangeable Shares outstanding held by a Beneficiary; provided, however, that
the provisions of Articles 8 and 9 shall survive any such termination of this
trust agreement.
ARTICLE 14
GENERAL
14.1 SEVERABILITY. If any provision of this trust agreement is held to be
invalid, illegal or unenforceable, the validity, legality or enforceability of
the remainder of this trust agreement shall not in any way be affected or
impaired thereby and the agreement shall be carried out as nearly as possible in
accordance with its original terms and conditions.
14.2 ENUREMENT. This trust agreement shall be binding upon and enure to
the benefit of the parties hereto and their respective successors and permitted
assigns and to the benefit of the Beneficiaries.
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<PAGE>
14.3 NOTICES TO PARTIES. All notices and other communications between the
parties hereunder shall be in writing and shall be deemed to have been given if
delivered personally or by confirmed telecopy to the parties at the following
addresses (or at such other address for such party as shall be specified in like
notice):
(a) if to the Parent or Swissco at:
Silicon Graphics, Inc.
2011 North Shoreline Boulevard
Mail Stop 710
Mountain View, CA 94043-1389
Attention: Legal Services
Telecopy: (415) 965-1586
(b) if to the Corporation at:
Alias Research Inc.
110 Richmond Street E.
Toronto, Ontario
Canada M5C 1P1
Attention: President
Telecopy: (416) 861-8805
(c) if to the Trustee at:
Attention:
Telecopy:
Any notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of receipt thereof unless
such day is not a Business Day in which case it shall be deemed to have been
given and received upon the immediately following Business Day.
14.4 NOTICE OF BENEFICIARIES. Any and all notices to be given and any
documents to be sent to any Beneficiaries may be given or sent to the address of
such Beneficiary shown on the register of holders of Exchangeable Shares in any
manner permitted by the by-laws of the Corporation from time to time in force in
respect of notices to shareholders and shall be deemed to be received (if given
or sent in such manner) at the time specified in such by-laws, the provisions of
which by-laws shall apply mutatis mutandis to notices or documents as aforesaid
sent to such holders.
14.5 RISK OF PAYMENTS BY POST. Whenever payments are to be made or
documents are to be sent to any Beneficiary by the Trustee or by the
Corporation, or by such Beneficiary to the Trustee or to the Parent, Swissco or
the Corporation, the making of such payment or sending of such document sent
through the post shall be at the risk of the Corporation, in the case of
payments made or documents sent by the Trustee or the Corporation, and the
Beneficiary, in the case of payments made or documents sent by the Beneficiary.
14.6 COUNTERPARTS. This trust agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
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<PAGE>
14.7 JURISDICTION. This trust agreement shall be construed and enforced in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
14.8 ATTORNMENT. Each of the Parent and Swissco agree that any action or
proceeding arising out of or relating to this trust agreement may be instituted
in the courts of Ontario, waive any objection which it may have now or hereafter
to the venue of any such action or proceeding, irrevocably submits to the
jurisdiction of the said courts in any such action or proceeding, agrees to be
bound by any judgment of the said courts and not to seek, and hereby waives, any
review of the merits of any such judgment by the courts of any other
jurisdiction and hereby appoints the Corporation at its registered office in the
Province of Ontario as the Parent's and Swissco's attorney for service of
process.
14.9 GUARANTY/ASSIGNMENT. Parent hereby unconditionally and irrevocably
guarantees the prompt and full performance by Swissco of its obligations
hereunder. Swissco, upon prior notice to the Trustee, may assign all or a
portion of its rights and obligations hereunder to Parent without the consent of
the Trustee, the Beneficiary, or the Corporation whereupon the Trustee, the
Corporation and the Parent shall enter into a supplemental trust agreement
pursuant to section 12.5(c) reflecting such assignment.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this trust agreement to
be duly executed as of the date first above written.
SILICON GRAPHICS, INC.
By
-----------------------------------
Name:
Title:
SILICON GRAPHICS MANUFACTURING S.A.
By
-----------------------------------
Name:
Title:
ALIAS RESEARCH INC.
By
-----------------------------------
Name:
Title:
[TRUSTEE]
By
-----------------------------------
Name:
Title:
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<PAGE>
Exhibit E
CERTIFICATE OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
SERIES E PREFERRED STOCK
($.001 Par Value)
OF
SILICON GRAPHICS, INC.
------------------
Pursuant to Section 151(g) of the General Corporation Law
of the State of Delaware
--------------------
THE UNDERSIGNED, being, respectively, the ________ and the ________ of
Silicon Graphics, Inc. a Delaware corporation (the "Company"), DO HEREBY CERTIFY
that, pursuant to the provisions of Section 151(g) of the General Corporation
Law of the State of Delaware the following resolutions were duly adopted by the
Board of Directors of the Company and pursuant to authority conferred upon the
Board of Directors by the provisions of the Restated Certificate of
Incorporation of the Company (the "Certificate of Incorporation"), the Board of
Directors of the Company, at a meeting duly held on __________, 1995, adopted
resolutions providing for the issuance of a series of its preferred stock and
fixing the relative powers, preferences, rights, qualifications, limitations and
restrictions of such stock. These resolutions are as follows:
"RESOLVED, that pursuant to authority expressly granted to and vested
in the Board of Directors of the Company by the provisions of the Certificate of
Incorporation, the issuance of a series of preferred stock, par value $.001 per
share, which shall consist of one of the 2,000,000 shares of preferred stock
which the Company now has authority to issue, be, and the same hereby is,
authorized, and the Board hereby fixes the powers, designations, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions thereof, of the share of such
series (in addition to the powers, designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, set forth in the Certificate of
Incorporation which may be applicable to the preferred stock of this series) as
follows:
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I. AUTHORIZED NUMBER AND DESIGNATION. One share of the preferred
stock, $.00l par value per share, of the Company is hereby constituted as a
series of the preferred stock designated Series E Preferred Stock, $0.001 par
value (the "Series E Preferred").
II. DIVIDENDS. The holder of Series E Preferred shall not be
entitled to receive any dividends declared and paid by the Company.
III. VOTING RIGHTS. Except as otherwise required by law or the
Certificate of Incorporation, (i) the holder of record of the share of Series E
Preferred shall have a number of votes equal to the number of outstanding
Exchangeable Non-Voting Shares ("Exchangeable Shares") of Alias Research Inc.
from time to time which are not owned by the Company, any of its subsidiaries or
any person directly or indirectly controlled by or under common control of the
Company, in each case for the election of directors and on all matters submitted
to a vote of the Stockholders of the Company, and (ii) in respect of all matters
concerning the voting of shares, the Series E Preferred and the common stock of
the Company shall vote as a single class.
IV. LIQUIDATION PREFERENCE. Upon any liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary, and subject to any
prior rights of holders of shares of preferred stock ranking senior to the
Series E Preferred, the holder of the share of Series E Preferred shall be paid
an amount equal to $1.00, together with payment to any class of stock ranking
equally with the Series E Preferred, and before payment shall be made to holders
of any stock ranking on liquidation junior to the Series E Preferred (such
amount payable with respect to the Series E Preferred being referred to as the
"Series E Preferred Liquidation Preference Payment").
V. RANKING. The Series E Preferred shall rank junior to the Series
A Preferred Stock of the Company in all respects.
VI. OTHER PROVISIONS. (a) Pursuant to the terms of that certain
Agreement and Plan of Acquisition and Arrangement, dated as of February 6, 1995,
by and among the Company, Silicon Graphics Manufacturing S.A., a Swiss
corporation and subsidiary of the Company ("Swissco"), 1103707 Ontario Inc., an
Ontario corporation and a wholly owned subsidiary of Swissco, and Alias Research
Inc., an Ontario corporation ("Alias"), one share of Series E Preferred is being
issued to the trustee (the "Trustee") under the Voting and Exchange Trust
Agreement, dated as of __________, 1995 by and between the Company, Swissco,
Alias and the Trustee.
(b) The holder of the share of Series E Preferred is entitled to
exercise the voting rights attendant thereto in such manner as such holder
desires.
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(c) At such time as the Series E Preferred has no votes attached to
it because there are no Exchangeable Shares of Alias outstanding which are not
owned by the Company, any of its subsidiaries or any person directly or
indirectly controlled by or under common control of the Company, and there are
no shares of stock, debt, options or other agreements of Alias which could give
rise to the issuance of any Exchangeable Shares of Alias to any person (other
than the Company, any of its subsidiaries or any person directly or indirectly
controlled by or under common control of the Company), the Series E Preferred
shall be cancelled."
IN WITNESS WHEREOF, this Certificate has been signed by __________,
and attested to by __________, of the Company, all as of the day of
__________, 1995.
SILICON GRAPHICS, INC.
By: ______________________________
Name:
Title:
Attest:
By: ____________________________
Name:
Title:
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[Silicon Graphics Letterhead]
FOR IMMEDIATE RELEASE
CONTACT:
Jill Grossman (Silicon Graphics - Media), 415-390-1516
Marilyn Lattin (Silicon Graphics - Financial), 415-390-5070
Franca Miraglia (Alias - Media), 416-362-9181, ext. 259
Lorraine McAlpine (Alias - Financial), 416-362-9181, ext. 398
Jonathan Hirshon (Wavefront - Media), 408-559-6090
Carmine Napolitano (Wavefront - Financial), 805-962-8117, ext. 143
SILICON GRAPHICS AND 3D SOFTWARE INNOVATORS
ALIAS RESEARCH AND WAVEFRONT TECHNOLOGIES ANNOUNCE
MERGER AGREEMENTS
COMBINED COMPANY TO PROVIDE KEY TOOLS TO EMERGING DIGITAL MEDIA INDUSTRY
NEW YORK, NY (Feb. 7, 1995) -- Silicon Graphics, Inc. (NYSE: SGI), Alias
Research, Inc. (NASDAQ: ADDDF), and Wavefront Technologies, Inc. (NASDAQ: WAVE)
today announced that they have entered into definitive merger agreements. The
combined organizations bolster Silicon Graphics' commitment to the entertainment
and creative design markets, and allow the company to architect the foundation
necessary for software partners and customers to build the digital studio of the
21st Century.
As a result of the mergers, Silicon Graphics will form a wholly owned,
independent software subsidiary that will focus on developing the world's most
advanced tools for the creation of digital content. Rob Burgess, currently
president and CEO of Alias, will become president of the new company, and Mike
Noling, currently president and CEO of Wavefront, will report to Burgess as vice
president of operations. Martin Plaehn, currently Wavefront's executive vice
president of corporate and product development, will also report to Burgess to
lead the technical team.
Under terms of the agreements, which were approved by the boards of directors of
the respective companies, Alias stockholders will receive the equivalent of 0.90
shares of Silicon Graphics' common stock for each share of Alias common stock
owned. Wavefront stockholders will receive 0.49 shares of Silicon Graphics'
common stock for each share of Wavefront common stock owned. The closing prices
for Silicon Graphics, Alias and Wavefront common stock on Friday, February 3,
1995, the last trading day prior to the board meetings to approve the
transaction, were $31.25, $20.875 and $12.625, respectively. The shares to be
issued by Silicon Graphics have a current market value of approximately $500
million.
The merger will be accounted for on a pooling of interest basis and is expected
to be non-dilutive to Silicon Graphics' fiscal year 1996 earnings. The
transaction is expected to be tax-free for U.S. purposes for Wavefront
shareholders. In the case of Alias, which is an Ontario, Canada
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corporation, the share exchange will be tax-free for Canadian resident
shareholders but taxable for U.S. shareholders. The combined entities will
receive approximately 9 percent of Silicon Graphics' resulting outstanding
common stock. The merger is expected to close by June 30, 1995.
"With the creation of this new subsidiary, Silicon Graphics extends its reach in
defining the standard for visual realism and interactivity in the world's most
demanding computing environments: entertainment and industrial design," said
Edward R. McCracken, chairman and CEO of Silicon Graphics. "Leading-edge
products from Alias and Wavefront are unique and immensely valuable. Embracing
these assets will enable us to design the power tools that artists and
innovators need to create the digital studio of the 21st Century."
"The applications that will result from this merger will revolutionize the way
our customers will work," said Rob Burgess, president and CEO of Alias.
"Entertainment and creative design users will see amazing things happen to the
software they're using today, and even greater capabilities emerge from our
engineering labs tomorrow."
"Over a decade ago, Wavefront Technologies and Silicon Graphics literally lit
the fuse of the digital explosion in entertainment, and this merger is a natural
next step," said Mike Noling, president and CEO of Wavefront. "By merging our
talents and resources, collectively we will create products and solutions that
articulate a powerful, exciting future for customers."
The new subsidiary will continue to develop, market, sell and support existing
product lines to a wide range of creative professionals, including 3D animators
for film and video, game and multimedia developers, automotive stylists,
industrial designers and graphic artists. Silicon Graphics' enhanced ability to
provide sales, support and training services to customers will fuel growth in
these markets.
This new subsidiary will team with Silicon Studio, a subsidiary Silicon Graphics
formed last year to focus on the entertainment market, to develop the world's
most advanced system-level tools for creating digital content. This
collaboration is expected to result in an open architecture that will
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provide significant benefits to customers who use multiple applications. The
two organizations will also work together to accelerate development and delivery
of FireWalker, a set of tools from Silicon Studio that will allow filmmakers and
other entertainment authors to take original digital source materials and use
them to create interactive titles. Through a dramatically new approach called
Multimastering, these source materials can not only be used for the initial
project--such as a film or game title--but can be redeployed to other
interactive media, including CD-ROM, location-based entertainment and
interactive television programming.
The mergers follow Silicon Graphics' announcement last month that a total of 22
software companies and production studios have joined its Keystone-TM- software
initiative. Pioneered by Silicon Graphics, with Alias and Wavefront as charter
members, this new initiative provides the entertainment community with common
application standards that greatly streamline the creative and production
process with minimal data administration.
Completion of the transactions are subject to customary conditions, including
approval of Alias' and Wavefront's stockholders, and required governmental
approvals.
Alias Research, Inc. is a world-leading developer of software for digital media
creation, providing strategic technology for markets such as design (automotive
styling, product and packaging design), entertainment (film & video production,
advertising, video games, and corporate communications), and graphic design
(digital image compositing and 3D illustration).
Alias was recently chosen as the authorized graphics development system for
Nintendo Ultra64 developers. The company's software has been used throughout
the entertainment industry by innovators such as Industrial Light & Magic, The
Walt Disney Company, Sony Pictures Imageworks, Digital Domain, Crystal Dynamics,
Electronic Arts, US West, Spectrum Holobyte, Virgin Interactive Entertainment,
Telezign and CNN. High-end industrial design and automotive styling customers
include BMW, Caterpillar, Fiat, Ford, Honda, Apple Computer, Motorola,
Rollerblade, Inc., Mattel, Black & Decker, Timex Corporation, and Hamilton
Beach/Proctor-Silex. Alias is based in Toronto, Canada and has sales offices
across North America, Europe and Asia with worldwide distribution.
Wavefront, founded in 1984, is a leading innovator in 2D and 3D computer
graphics imaging and animation software products. Wavefront software is in
widespread use by professionals in the entertainment market, including
electronic games development, location-based entertainment, and
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premier special effects feature films such as STARGATE, STARTREK GENERATIONS,
TRUE LIES, SPEED, DROP ZONE, and CLEAR AND PRESENT DANGER. Industrial
applications include engineering illustration, visualization, and computer-based
training. Scientists use Wavefront to render complex data into easily
interpreted visual images.
Innovative entertainment companies worldwide are maximizing their creative
impact with Wavefront software to communicate, educate, and entertain. These
companies include all major TV networks, Acclaim Entertainment, Columbia
Pictures, Kleiser-Walczak Construction Company, SOHO 601, Sony Pictures, Walt
Disney, and Warner Bros. Industrial clients include 3M, Boeing, Ford Motor
Company, Kodak, Mattel, McDonnell Douglas, Mercedes-Benz, Renault, and
Rubbermaid, as well as government and research-oriented customers such as NASA,
the Lawrence Livermore National Laboratory, and the National Center for
Atmospheric Research (NCAR). Wavefront markets its product line globally
through sales offices in North America, Europe, and Asia, as well as through a
network of over 150 resellers, systems integrators, and country distributors.
Silicon Graphics, Inc. is the leading manufacturer of high-performance visual
computing systems. The company delivers interactive three-dimensional graphics,
digital media and multiprocessing supercomputing technologies to technical,
scientific and creative professionals. Its subsidiary, MIPS Technologies, Inc.,
designs and licenses the industry's leading RISC processor technology for the
computer systems and embedded control markets. Silicon Graphics has offices
worldwide and headquarters in Mountain View, California.
-end-
Silicon Graphics is a registered trademark, and Silicon Studio, and Keystone
are trademarks, of Silicon Graphics, Inc. MIPS is a registered trademark of
MIPS Technologies, Inc.
