<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
/x/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
_____ Exchange Act of 1934 for the Quarterly Period Ended June 30, 1995.
OR
_____ Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Transition Period from _______ to _____ .
Commission File Number 0-17781
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SYMANTEC CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 77-0181864
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
10201 Torre Avenue, Cupertino, California 95014-2132
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (408) 253-9600
--------------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports 1
required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES x NO
----- -----
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of July 28, 1995:
COMMON STOCK, PAR VALUE $0.01 PER SHARE 38,620,712 SHARES
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<PAGE>
SYMANTEC CORPORATION
FORM 10-Q
Quarterly Period Ended June 30, 1995
Table of Contents
PART I. Financial Information
Page
----
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets
as of June 30, 1995 and March 31, 1995.................... 3
Consolidated Statements of Income
for the three months ended June 30, 1995 and 1994......... 4
Consolidated Statements of Cash Flow
for the three months ended June 30, 1995 and 1994......... 5
Notes to Consolidated Financial Statements.................. 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OEPRATIONS
Condition and Results of Operations......................... 10
PART II. Other Information
Item 1. Legal Proceedings........................................... 20
Item 5. Other Information........................................... 20
Item 6. Exhibits and Reports on Form 8-K............................ 20
Signatures........................................................... 21
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SYMANTEC CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, March 31,
(In thousands) 1995 1995
------------------------------------------- ----------- ----------
ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and short-term investments $113,725 $105,188
Trade accounts receivable 49,525 53,986
Inventories 3,313 4,177
Deferred income taxes 8,172 9,939
Other 5,858 6,339
-------- --------
Total current assets 180,593 179,629
Equipment and leasehold improvements 31,703 28,880
Purchased intangibles 7,684 8,274
Other 4,785 4,532
-------- --------
$224,765 $221,315
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $16,225 $17,919
Accrued compensation and benefits 10,840 12,347
Other accrued expenses 40,208 51,789
Income taxes payable 2,886 2,006
Current portion of long-term obligations 464 524
-------- --------
Total current liabilities 70,623 84,585
Convertible subordinated debentures 15,000 25,000
Long-term obligations 293 408
Commitments and contingencies
Stockholders' equity:
Preferred stock (authorized: 1,000 shares;
issued and outstanding: none) -- --
Common stock (authorized: 70,000; issued and
outstanding: 38,599 and 37,175 shares) 386 372
Capital in excess of par value 193,772 177,418
Notes receivable from stockholders (144) (144)
Cumulative translation adjustment (3,401) (2,860)
Accumulated deficit (51,764) (63,464)
-------- --------
Total stockholders' equity 138,849 111,322
-------- --------
$224,765 $221,315
-------- --------
-------- --------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
3
<PAGE>
SYMANTEC CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
June 30
---------------------
(In thousands, except per share data; unaudited) 1995 1994
------------------------------------------------ ---------------------
<S> <C> <C>
Net revenues $90,109 $83,113
Cost of revenues 14,915 16,653
------- --------
Gross margin 75,194 66,460
Operating expenses:
Research and development 18,576 14,883
Sales and marketing 38,366 35,990
General and administrative 4,849 4,437
Acquisition and restructuring expenses (71) 9,545
------ -------
Total operating expenses 61,720 64,855
------ -------
Operating income 13,474 1,605
Interest income 1,625 553
Interest expense (439) (558)
Other income (expense), net (36) (125)
------- -------
Income before income taxes 14,624 1,475
Provision for income taxes 2,924 428
------- -------
Net income $11,700 $ 1,047
-------- --------
-------- --------
Net income per share - primary $ 0.29 $ 0.03
-------- --------
-------- --------
Net income per share - fully diluted $ 0.28 $ 0.03
-------- --------
-------- --------
Shares used to compute net income per share - primary 40,603 35,941
-------- --------
-------- --------
Shares used to compute net income per share - fully
diluted 42,381 35,941
-------- --------
-------- --------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
4
<PAGE>
SYMANTEC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Three Months Ended
June 30
-------------------
(In thousands; unaudited) 1995 1994
-------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $11,700 $ 1,047
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of equipment and
leasehold improvements 3,914 3,381
Amortization and write-off of capitalized software costs 935 2,151
Deferred income taxes 1,767 156
Net change in assets and liabilities:
Trade accounts receivable 4,463 7,851
Inventories 868 2,461
Other current assets 449 (1,088)
Other assets 52 55
Accounts payable (1,645) (10,920)
Accrued compensation and benefits (1,485) (2,727)
Accrued other expenses (11,566) 3,675
Income taxes payable 908 139
-------- --------
Net cash provided by operating activities 10,360 6,181
-------- --------
INVESTING ACTIVITIES:
Capital expenditures (6,809) (2,595)
Purchased intangibles (655) (1,286)
Purchases of short-term investments (31,000) (22,320)
Proceeds from sales of short-term investments 25,158 10,800
-------- --------
Net cash used in investing activities (13,306) (15,401)
-------- --------
FINANCING ACTIVITIES:
Principal payments on long-term obligations (173) (238)
Net proceeds from sales of common stock and other 6,368 3,068
-------- -------
Net cash provided by financing activities 6,195 2,830
-------- -------
Effect of exchange rate fluctuations on cash and cash
equivalents (554) (948)
--------- -------
Increase (decrease) in cash and cash equivalents 2,695 (7,338)
Beginning cash and cash equivalents 22,772 32,911
--------- -------
Ending cash and cash equivalents $25,467 $25,573
--------- --------
--------- --------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
5
<PAGE>
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The consolidated financial statements of Symantec Corporation ("Symantec" or
the "Company") as of June 30, 1995 and for the three months ended June 30,
1995 and 1994 are unaudited and, in the opinion of management, contain all
adjustments, consisting of only normal recurring items necessary for the fair
presentation of the financial position and results of operations for the
interim periods. These consolidated financial statements should be read in
conjunction with the Consolidated Financial Statements and notes thereto
included in Symantec's Annual Report on Form 10-K, as amended, for the year
ended March 31, 1995. The results of operations for the three months ended
June 30, 1995 are not necessarily indicative of the results to be expected
for the entire year.
Symantec has a 52/53-week fiscal accounting year. Accordingly, all references
as of and for the periods ended June 30, 1995 and 1994 reflect amounts as of
and for the periods ended June 30, 1995 and July 1, 1994, respectively.
NOTE 2. BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
June 30, March 31,
(In thousands; unaudited) 1995 1995
------------------------------------------------------- ----------------------
<S> <C> <C>
Cash and short-term investments:
Cash $13,090 $12,325
Cash equivalents 12,377 10,447
Short-term investments 88,258 82,416
--------- ---------
$113,725 $105,188
--------- ---------
--------- ---------
Trade accounts receivable:
Receivables $53,726 $58,188
Less: allowance for doubtful accounts (4,201) (4,202)
--------- ---------
$49,525 $53,986
--------- ---------
Inventories:
Raw materials $ 1,392 $ 904
Finished goods 1,921 3,273
--------- ---------
$ 3,313 $ 4,177
--------- ---------
--------- ---------
Equipment and leasehold improvements:
Computer equipment $55,535 $49,983
Office furniture and equipment 20,080 19,659
Leasehold improvements 8,923 8,236
--------- ---------
84,538 77,878
Less: accumulated depreciation and amortization (52,835) (48,998)
--------- ---------
$31,703 $28,880
--------- ---------
--------- ---------
Purchased intangibles:
Product rights $30,692 $29,583
Less: accumulated amortization (23,008) (21,309)
--------- ---------
$ 7,684 $ 8,274
--------- ---------
--------- ---------
</TABLE>
6
<PAGE>
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
June 30, March 31,
(In thousands; unaudited) 1995 1995
-------------------------------------------------------- -------- -------
<S> <C> <C>
Other accrued expenses:
Acquisition and restructuring expenses . . . . . . . . $ 5,182 $ 8,614
Deferred revenue . . . . . . . . . . . . . . . . . . . 14,728 22,556
Marketing development funds. . . . . . . . . . . . . . 8,347 7,706
Other. . . . . . . . . . . . . . . . . . . . . . . . . 11,951 12,913
-------- ------
$40,208 $51,789
-------- -------
-------- --------
</TABLE>
NOTE 3. LINE OF CREDIT
The Company has a $10.0 million bank line of credit that expires in October
1995. The line of credit is available for general corporate purposes and bears
interest at the banks' reference (prime) interest rate (9.0% at June 30, 1995),
the U.S. offshore rate plus 1.5%, a CD rate plus 1.5% or LIBOR plus 1.5%, at the
Company's discretion. The line of credit requires bank approval for the payment
of cash dividends. Borrowings under this line are unsecured and are subject to
the Company maintaining certain financial ratios and profits. The Company was
in compliance with the line of credit covenants as of June 30, 1995. At
June 30, 1995, there was approximately $0.5 million of standby letters of credit
outstanding under this line of credit. There were no borrowings outstanding
under this line at June 30, 1995.
NOTE 4. ACQUISITION AND RESTRUCTURING EXPENSES
Acquisition and restructuring expenses consist of the following:
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-----------------------
(In thousands) 1995 1994
------------------------------------------------------------ -------- ------
<S> <C> <C>
Relocation of certain research and development activities $ 2,229 $ --
Central Point acquisition (2,300) 9,000
SLR acquisition -- 545
-------- ------
Total acquisition and restructuring expenses $ (71) $9,545
-------- ------
-------- ------
</TABLE>
During February 1995, Symantec announced a plan to consolidate certain research
and development activities. This plan is designed to gain greater synergy
between the Company's Third Generation Language and Fourth Generation Language
development groups. During the quarter ended June 30, 1995, the Company
incurred $2.2 million for the relocation costs of moving equipment and
personnel. The Company expects to incur remaining costs of $1.8 to $2.8 million
for the relocation of the Company's existing research and development
activities, equipment and personnel from Shelton, Connecticut to Cupertino,
California. The Company expects to complete this relocation by December 1995.
In connection with the acquisitions of Central Point Software, Inc. ("Central
Point") and SLR Systems, Inc. ("SLR"), Symantec recorded total acquisition
charges of $9.5 million in the quarter ended June 30, 1994. The charges
included $3.2 million for legal, accounting and financial advisory services,
$1.0 million for the write-off of duplicative product-related expenses and
modification of certain development contracts, $0.9 million for the elimination
of duplicative and excess facilities, $3.1 million for personnel severance and
outplacement expenses, and $1.3 million for the consolidation and discontinuance
of certain operational activities and other acquisition related expenses.
During fiscal 1994, Central Point incurred $16.0 million of expenses related to
the restucturing of its operations. In the quarter ended June 30, 1994,
Symantec incurred $9.0 million of expenses related to the acquisition of Central
Point. In the quarter ended June 30, 1995, the Company recognized a reduction
in accrued acquisition and
7
<PAGE>
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
restructuring expenses of $2.3 million as actual costs incurred were less
than costs previously accrued by the companies.
As of June 30, 1995, total remaining accrued acquisition and restructuring
expenses were $5.2 million and included $1.0 million for the modification of
certain development contracts, $1.3 million for the elimination of
duplicative and excess facilities and $2.9 million for the consolidation and
discontinuance of certain operational activities and other acquisition
related expenses.
NOTE 5. INCOME TAXES
Income taxes are computed in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". Symantec
provides for income taxes during interim reporting periods based upon an
estimate of its annual effective tax rate. This estimate reflects U.S.
federal, state and foreign income taxes.
NOTE 6. NET INCOME PER SHARE
Net income per share is calculated using the treasury stock or the modified
treasury stock method, as applicable. Common stock equivalents are
attributable to outstanding stock options. Fully diluted earnings per share
includes the assumed conversion of all of the outstanding convertible
subordinated debentures.
NOTE 7. LITIGATION
On May 19, 1995, Personal Computer Peripherals Corporation ("PCPC") filed a
lawsuit in the U.S. District Court for the District of Delaware against
Symantec and five other companies, alleging that the defendants' products for
backing up data on a computer network infringe a patent held by PCPC. The
complaint seeks unspecified damages and an injunction preventing the sale of
infringing products. Symantec believes that the complaint has no merit.
On December 30, 1994, Software Engineering Carmel ("Carmel") filed a lawsuit
in the U.S. District Court for the District of Oregon against Central Point,
a wholly owned subsidiary of the Company. Carmel developed and maintains the
anti-virus program distributed by Central Point. The complaint alleges that
Central Point breached its contract with Carmel by not fulfilling an implied
obligation under the contract to use its best efforts or, alternatively, its
reasonable efforts to market the anti-virus program developed by Carmel. The
complaint also alleges that Central Point violated the non-competition
provision in its agreement by selling a competing anti-virus program,
apparently based on Symantec's sale of its own anti-virus product. The
complaint seeks damages in the amount of $6.75 million and a release of
Carmel from its obligation not to sell competing products. Symantec believes
the complaint has no merit.
On September 3, 1992, Borland International, Inc. ("Borland") filed a lawsuit
in the Superior Court for Santa Cruz County, California against Symantec,
Gordon E. Eubanks, Jr. (Symantec's President and Chief Executive Officer) and
Eugene Wang (an Executive Vice President of Symantec who is a former employee
of Borland). The complaint, as amended, alleges misappropriation of trade
secrets, unfair competition, inducing breach of contract, interference with
prospective economic advantage and unjust enrichment. Borland alleged that
prior to joining Symantec, Mr. Wang transmitted to Mr. Eubanks confidential
information concerning Borland's product and marketing plans. Borland claims
damages in an unspecified amount. Symantec has denied the allegations of
Borland's complaint and contends that Borland has suffered no damages from
the alleged actions. Borland obtained a temporary restraining order and a
preliminary injunction prohibiting the defendants from using, disseminating
or destroying any Borland proprietary information or trade secrets. Symantec
filed a cross complaint against Borland alleging that Borland had committed
abuse of process and defamation in publishing statements that Symantec had
acted in contempt of a temporary restraining order. The case is not being
actively prosecuted at this time pending the outcome of the criminal
proceedings, discussed below. Symantec believes that Borland's claims have
no merit.
On September 2, 1992, the Scotts Valley, California police department,
operating with search warrants for Borland proprietary and trade secret
information, searched Symantec's offices and the homes of Messrs. Eubanks and
Wang
8
<PAGE>
SYMANTEC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
and removed documents and other materials. On February 26, 1993, criminal
indictments were filed against Messrs. Eubanks and Wang for allegedly
violating various California Penal Code Sections relating to the
misappropriation of trade secrets and unauthorized access to a computer
system. On August 23, 1993, the Court recused the District Attorney's Office
from prosecution of the action. On October 5, 1993, the State Attorney
General and the District Attorney's Office filed a Notice of Appeal of the
Order, and that appeal was argued on July 11, 1995. The parties are awaiting
a decision on that appeal. Symantec believes the criminal charges against
Messrs. Eubanks and Wang have no merit.
On June 11, 1992, Dynamic Microprocessor Associates, Inc. ("DMA"), a
wholly-owned subsidiary of Symantec, commenced an action against EKD Computer
Sales & Supplies Corporation ("EKD"), a former licensee of DMA and Thomas
Green, a principal of EKD, for copyright infringement, violations of the
Lanham Act, trademark infringement, misappropriation, deceptive acts and
practices and unfair competition and breach of contract. On July 14, 1992,
the Suffolk County sheriff's department conducted a search of EKD's premises
and seized and impounded thousands of infringing articles. On July 21, 1992,
the Court issued a preliminary injunction against EKD and Mr. Green,
enjoining them from manufacturing, marketing, distributing, copying or
purporting to license DMA's pcANYWHERE III or using DMA's marks.
On July 20, 1992 and in a subsequent amendment, EKD and Mr. Green answered
Symantec's complaint denying all liability and asserting counterclaims
against Symantec and Lee Rautenberg, a former principal of DMA. In May 1993,
EKD and Mr. Green were granted permission to file a Second Amended Answer and
counterclaims that dropped every previously raised claim and now allege that
DMA obtained the temporary restraining order and preliminary injunction in
bad faith and that DMA, Symantec and Mr. Rautenberg breached certain license
agreements and violated certain federal and New York State antitrust laws.
In February 1995, DMA was granted leave to file an Amended Complaint, which
EKD subsequently responded to by a Third Amended Answer and Counterclaims
virtually identical to EKD's Second Amended pleading. Symantec believes that
the claims asserted by EKD and Mr. Green have no merit.
Subsequent to the acquisition of DMA by Symantec, Peter Byer, a former sales
and marketing employee of DMA, filed a lawsuit in the Supreme Court of the
State of New York against DMA, Symantec and Lee Rautenberg (who was formerly
President of DMA). The lawsuit alleges that Peter Byer was orally promised
an 8% equity interest in DMA in connection with his performance of services,
that he was underpaid commissions under DMA's commission plan, and that DMA
was unjustly enriched because it paid Mr. Byer less than the fair value of
his services. The lawsuit seeks damages of at least $5.3 million. Symantec
believes the claims have no merit. Furthermore, Mr. Rautenberg and the other
stockholders of DMA have an obligation to indemnify Symantec for any
liabilities resulting from this action.
Symantec is involved in a number of other judicial and administrative
proceedings incidental to its business. The Company intends to defend all of
the aforementioned pending lawsuits vigorously and although an adverse
decisions (or settlements) may occur in one or more of the cases, the final
resolution of these lawsuits, individually or in the aggregate, is not
expected to have a material adverse effect on the financial position of the
Company. However, depending on the amount and timing of an unfavorable
resolution of these lawsuits, it is possible that the Company's future
results of operations or cash flows could be materially adversely affected in
a particular period.
NOTE 8. SUBSEQUENT EVENT
On July 6, 1995, Symantec announced a definitive agreement to acquire Delrina
Corporation ("Delrina") for approximately 15 million shares of Symantec
common stock. The Company expects to complete the acquisition in the quarter
ending December 31, 1995 and expects to incur acquisition expenses related to
the combination of the companies of approximately $25 to $30 million. The
acquisition is expected to be accounted for as a pooling of interests.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
OVERVIEW
The following discussion should be read in conjunction with the unaudited
consolidated financial statements included elsewhere herein. Due to a number
of factors and risks, including the rapid change in hardware and software
technology, market conditions, seasonality in the retail software market, the
timing of product announcements, the release of new or enhanced products, the
introduction of competitive products by existing or new competitors and the
significant risks associated with acquisitions of companies, technology and
software product rights, historical results and percentage relationships will
not necessarily be indicative of the operating results of any future period.
The pending release of a new operating system ("Windows 95") by Microsoft is
a particularly important event that increases the uncertainty and will likely
increase the volatility of Symantec's operating results over the next year.
The Company's earnings and stock price have been and may continue to be
subject to significant volatility, particularly on a quarterly basis.
Symantec has previously experienced shortfalls in revenue and earnings from
levels expected by securities analysts, which had an immediate and
significant adverse effect on the trading price of the Company's common
stock. This may occur again in the future. Additionally, as a growing
percentage of the Company's revenues are generated from enterprise software
products which are frequently sold through site licenses and which often
occur late in the quarter, the Company may not learn of revenue shortfalls
until late in the fiscal quarter, which could result in an even more
immediate and adverse effect on the trading price of the Company's common
stock.
Furthermore, the Company participates in a highly dynamic industry, which
often results in significant volatility of the Company's common stock price.
In particular, investors' assessment of the impact of Microsoft's new
operating system on Symantec's business may result in a significant increase
in the volatility of Symantec's stock price during the first year after the
introduction of Microsoft's new operating system.
Net income per share is calculated using the treasury stock or the modified
treasury stock method (see Note 6 of Notes to Consolidated Financial
Statements), as applicable. Increases in the price of the Company's common
stock can have an adverse impact on the calculation of net income per share
in that period.
During the quarter ended June 30, 1994, Symantec completed acquisitions of
the following companies which were accounted for as poolings of interest:
<TABLE>
<CAPTION>
Acquired
Shares of Company
Symantec Stock
Common Options
Companies Acquired Date Acquired Stock Issued Assumed
---------------------------------------------- ------------- ------------ --------
<S> <C> <C> <C>
Central Point Software, Inc. ("Central Point") June 1, 1994 4,029,429 707,452
SLR Systems, Inc. ("SLR") May 31, 1994 170,093 --
</TABLE>
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
RESULTS OF OPERATIONS
The following table sets forth each item from the consolidated statements of
income as a percentage of net revenues and the percentage change in the total
amount of each item for the periods indicated.
<TABLE>
<CAPTION>
Three Months Percent
Ended Change
June 30, in Dollar
-------------
1995 1994 Amounts
----- ---- ---------
<S> <C> <C> <C>
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . 100% 100% 8%
Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . 17 20 (10)
---- ----
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . 83 80 13
Operating expenses:
Research and development . . . . . . . . . . . . . . . . . . . 21 18 25
Sales and marketing. . . . . . . . . . . . . . . . . . . . . . 42 43 7
General and administrative . . . . . . . . . . . . . . . . . . 5 5 9
Acquisition and restructuring expenses . . . . . . . . . . . . 0 12 *
---- ----
Total operating expenses . . . . . . . . . . . . . . . . . . . 68 78 (5)
---- ----
Operating income . . . . . . . . . . . . . . . . . . . . . . . . 15 2 740
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . 2 1 194
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . (1) (1) (21)
Other income (expense), net. . . . . . . . . . . . . . . . . . . 0 0 (71)
---- ----
Income before income taxes . . . . . . . . . . . . . . . . . . . 16 2 891
Provision for income taxes . . . . . . . . . . . . . . . . . . . 3 1 583
---- ----
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . 13% 1% 1,017
---- ----
---- ----
<FN>
* percentage change is not meaningful.
</TABLE>
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
NET REVENUES.
Net revenues increased 8% from $83.1 million in the quarter ended June 30, 1994
to $90.1 million in the current year's comparable quarter principally due to an
increase in site license and international revenues which was partially offset
by a decrease in upgrade and OEM product revenues. The increase in site license
revenues during the quarter ended June 30, 1995, is primarily due to new
enterprise products which are generally offered through site licenses. The
decrease in upgrade revenues is primarily due to the Company's decision not to
upgrade several software products prior to the release of the Windows 95
operating systems. During the June 1995 quarter, Symantec released The Norton
Utilities for Windows 95 Preview and The Norton pcANYWHERE Access Server v. 2.0.
In March 1994, due to the market's concerns regarding Central Point's long-term
viability and the announced acquisition of Central Point by Symantec, Central
Point was unable to reasonably estimate future product returns from its
distributors and resellers. In addition, there were high levels of inventory in
the distribution channel which had been shipped into the channel prior to the
acquisition. Central Point believed that there was a high risk of this
inventory being returned. In accordance with Statement of Financial Accounting
Standards No. 48, Central Point revenue and the related cost of revenue for
fiscal 1994 for software shipments to Central Point's distributors and resellers
was deferred until sold by the distributors or resellers to the end user. Since
the acquisition, Symantec has analyzed sell-through and product return
information related to the Central Point products to determine when such
products were being sold through and Symantec believes it's marketing and sales
programs were successful in moving the remaining deferred channel inventory
through to end users, accordingly, in the quarter ended June 30, 1995, Symantec
was able to assess the remaining Central Point product returns in the
international distribution channel and as a result recognized approximately $7.2
million of international net revenue and $1.7 million of international cost of
revenues previously deferred by Central Point.
The Company's products include enterprise products, which are frequently offered
through site licenses where a license for multiple workstations is provided to a
customer at a negotiated price, and desktop software products, which are
generally offered through the distribution channel or directly to end-users.
Enterprise product revenues are typically comprised of lower volume, high dollar
site license transactions compared to desktop product revenues which are
typically comprised of higher volume, low dollar pre-packaged product sales.
The prices of site licenses tend to vary based upon the individual products
licensed, the number of units licensed and the number of workstations at the
customer's site. There was no material impact to net revenues resulting from
changes in product pricing in the quarter ended June 30, 1995 as compared to the
quarter ended June 30, 1994.
Price competition is significant in the microcomputer business software market
and may continue to increase and become even more significant in the future,
resulting in reduced profit margins. Should competitive pressures in the
industry continue to increase, Symantec may be required to reduce software
prices and/or increase its spending on sales, marketing and research and
development as a percentage of net revenues, resulting in lower profit margins.
In addition, aggressive pricing strategies of competitors in other software
markets, some of whom have significantly more financial resources than Symantec,
may further cause the Company to reduce software prices and/or increase sales
and marketing expenses on a number of the Company's products.
Net revenues from international sales increased from approximately $29.6 million
to $41.2 million and represented 36% and 46% of total net revenues in the
quarters ended June 30, 1994 and 1995, respectively. The increase in
international sales is due primarily to the recognition of Central Point
international net revenues previously deferred as mentioned above and, to a
lesser degree, to increased sales of Symantec products in international markets.
Enhanced product releases typically result in net revenue increases during the
first three to six months following their introduction due to upgrade purchases
by existing users, usually at discounted prices, and initial inventory purchases
by the Company's distributors. In addition, between the date the Company
announces a new version or
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
new product and the date of release, distributors, dealers and end users often
delay purchases, cancel orders or return products in anticipation of the
availability of the new version or new product.
The Company's pattern of revenues and earnings may also be affected by a
phenomenon known as "channel fill". Channel fill occurs following the
introduction of a new product or a new version of a product as distributors buy
significant quantities of the new product or new version in anticipation of
sales of such product or version. Following such purchases, the rate of
distributors' purchases often declines in a material amount, depending on the
rates of purchases by end users or "sell-through". The phenomenon of channel
fill may also occur in anticipation of price increases or in response to sales
promotions or incentives, some of which may be designed to encourage customers
to accelerate purchases that might otherwise occur in later periods. Channels
may also become filled simply because the distributors are unable to, or do not,
sell their inventories to retail distribution or end users as anticipated. If
sell-through does not occur at a sufficient rate, distributors will delay
purchases or cancel orders in later periods or return prior purchases in order
to reduce their inventories. Such order delays or cancellations can cause
material fluctuations in revenues from one quarter to the next. The impact is
somewhat mitigated by the Company's deferral of revenue associated with
inventories estimated to be in excess of levels deemed appropriate in the
distribution channel; however, net revenues may still be materially affected
favorably or adversely by the effects of channel fill. Channel fill did not
have a material impact on the Company's revenues in the three months ended
June 30, 1995 and 1994 but may have a material impact in future periods,
especially in periods where a large number of new products are introduced. The
Company expects to release a large number of new products in the September 1995
and December 1995 quarters in connection with Microsoft's release of Windows 95.
Symantec believes that many of its customers are moving toward an enterprise-
wide computing oriented environment where more desktop personal computers will
be interconnected into large local-area and wide-area networks administered by
corporate MIS departments. Symantec's entry into the enterprise software market
is relatively new and as a result, Symantec is beginning to compete with
companies with which it has not previously competed. As a result, there is
uncertainty regarding customer acceptance of the Company's products as Symantec
has not been a major supplier in the enterprise market. These factors increase
the uncertainty of forecasting financial results. While the Company expects the
market's shift toward enterprise products to continue, there can be no assurance
that the Company's enterprise products will be successful or will gain customer
acceptance.
With the expansion to enterprise-wide computing systems markets, Symantec
believes that it must continue to develop relationships with and rely on systems
integrators and other third-party vendors that provide consulting and
integration services to customers and deliver products developed for this market
segment. Furthermore, the length of the sales cycle with respect to enterprise
products is longer and customers of enterprise products may take delivery of a
product subject to integration and acceptance by the customer. In addition, a
very high proportion of enterprise product sales are completed in the last few
days of each quarter, in part because customers are able, or believe that they
are able, to negotiate lower prices and more favorable terms. Each of these
factors increase the risk that forecasts of quarterly financial results will not
be achieved.
The Company's net revenues in the quarters ended June 30, 1995 and 1994 include
sales to two large distributors. These customers tend to make the great
majority of their purchases at the end of the fiscal quarter, in part because
they are able, or believe that they are able, to negotiate lower prices and more
favorable terms. This end-of-period buying pattern means that forecasts of
quarterly and annual financial results are particularly vulnerable to the risk
that they will not be achieved, either because expected sales do not occur or
because they occur at lower prices or on less favorable terms to the Company.
The Company's distribution customers also carry the products of the Company's
competitors, some of which have greater financial resources than the Company.
The distributors have limited capital to invest in inventory and their decisions
to purchase the Company's products is partly a function of pricing, terms and
special promotions offered by the Company as well as by its competitors over
which the Company has no control and which it cannot predict.
13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
While Symantec's diverse product line has tended to lessen fluctuations in
quarterly net revenues, these fluctuations have occurred recently and are likely
to occur in the future. These fluctuations may be caused by a number of
factors, including the timing of announcements and releases of new or enhanced
versions of its products and product upgrades, the introduction of competitive
products by existing or new competitors, reduced demand for any given product,
the market's transition between operating systems, and the transition from a
desktop PC environment to an enterprise-wide environment and may cause
significant fluctuations in revenues and, accordingly, operating results.
The Company is devoting substantial efforts to the development of software
products that are designed to operate on Microsoft's new operating system, which
is currently scheduled for release in August 1995. Microsoft may incorporate
advanced utilities, including telecommunications, facsimile and data recovery
utilities, in Windows 95, or in future releases of Windows 95, that may decrease
the demand for certain of the Company's products, including those currently
under development. Further, should Windows 95 not achieve market acceptance, or
should Symantec be unable to successfully or timely develop products that
operate under Windows 95, Symantec's future revenues and, accordingly,
profitability would be immediately and significantly adversely affected. In
addition, as the timing of delivery and adoption of many products is dependent
on Microsoft's delivery of Windows 95 and the adoption rate of Windows 95, which
the Company and securities analysts are unable to predict, the Company's and
securities analysts' ability to forecast the Company's revenues is being
adversely impacted. Furthermore, the Company expects that demand for certain of
its existing utility products will decline in advance of the Windows 95 release.
It is difficult for the Company or securities analysts to forecast the extent of
this decline. For all of the preceding reasons, there is a heightened risk that
revenues and profits will not be in line with analysts' expectations in the
periods following the introduction of Windows 95.
In the quarter ending September 30, 1995, there is a substantial degree of
uncertainty regarding analysts' revenue forecasts. Net revenues could be
significantly less than expectations if market focus on Windows 95 by Symantec
employees, software distributors, channel sales personnel, and software
customers, generates a substantial adverse decline in the sales of products that
are not specifically designed for Windows 95. Symantec expects a major share of
its revenue in the September 1995 quarter may come from such products and so
their continued market strength is important to attaining anticipated revenue
levels. As Symantec does not have an experience base to estimate the sales of
its Windows 95 products under the volatile market conditions that are expected
after the new operating system is launched, including an unprecedented emphasis
on marketing and channel sales, Symantec believes it is therefore not able to
quantify the sales of its Windows 95 products with the degree of accuracy it
normally achieves. Actual sales could be substantially higher than, or lower
than, those included in analyst forecasts. As the Company defers net revenues
associated with distribution inventories estimated to be in excess of levels
deemed appropriate in the distribution channel, and is unlikely to see
established channel sell-through levels until the end of the September 1995
quarter, Symantec believes it will be unable to reasonably predict net revenues
from Windows 95 products until the end of the September 1995 quarter.
The Company currently anticipates that during the September 1995 quarter it will
release several new products which are designed to operate on the Windows 95
operating system. Should Microsoft incur a delay in the introduction of
Windows 95, including a delay caused by a threatened or actual injunction by the
Justice Department of the U. S. Government, or should acceptance of Windows 95
be slower than expected, there would be a material and substantial adverse
impact on the revenues and profitability of Symantec.
The length of Symantec's product development cycle has generally been greater
than Symantec originally expected. Although such delays have undoubtedly had a
material adverse effect on Symantec's business, Symantec is not able to quantify
the magnitude of revenues that were deferred or lost as a result of any
particular delay because Symantec is not able to predict the amount of revenues
that would have been obtained had the original development expectations been
met. Delays in product development, including products being developed for
Windows 95, are likely to occur in the future and could have a material adverse
effect on the amount and timing of future revenues.
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Due to the inherent uncertainties of software development projects, Symantec
does not generally disclose or announce the specific expected shipment date of
the Company's product introductions. Any such dates that are disclosed or
announced are necessarily subject to delays for the reasons discussed above.
In addition, there can be no assurance that any products currently being
developed by Symantec, including products being developed for Windows 95, will
be technologically successful, that any resulting products will achieve market
acceptance or that the Company's products will be effective in competing with
products either currently in the market or introduced in the future.
During fiscal 1993, Symantec believes that its' revenues were adversely affected
by an unexpected substantial price reduction in 486-based personal computers
that caused a shift in customer spending from software to personal computer
hardware. Symantec also believes that the shift was caused by the introduction
of Windows 3.1, which requires more computing capability and computer memory.
If the next class of personal computers, including those based on Intel's
Pentium or P6 microprocessor or Motorola's Power-PC, are also rapidly reduced in
price, there may be another unexpected shift in customer buying away from
software and Symantec's products. In addition, Windows 95 requires
significantly more computer memory than Windows 3.1 and if a shortage of
computer memory components were to occur, there could be an adverse effect on
the sales of computer hardware and software. Either of these events could
result in significantly reduced revenues and a material adverse effect on
Symantec's operating results. Symantec has noted that Pentium processors are
being marketed aggressively by Intel. The introduction of Windows 95 and a
decline in the price of Pentium processors could cause a shift in customer
spending from software to personal computer hardware and could adversely impact
the Company's net revenues.
The Company estimates and maintains reserves for product returns. Increased
product returns occur when the Company introduces product upgrades and new
products and discontinues certain software products. In addition, competitive
factors require the Company to offer increased rights of return for products
that distributors or retail stores are unable to sell. The Company has set its
reserves for returns in accordance with historical product return experience.
Setting reserves involves making significant judgments about future competitive
conditions and product life cycles. Those judgments involve evaluating
information that often is incomplete, unclear and in conflict. Symantec
prepares detailed analyses of historical return rate experiences in its
estimation of reserves for product returns. In addition to detailed historical
return rates, the Company's estimation of return reserves takes into
consideration upcoming product upgrades, current market conditions, distributor
and "superstore" inventory balances and sell-through volume and any other known
factors that may impact anticipated product returns. Based upon returns
experienced, the Company's estimates have been materially accurate. However,
there can be no assurance that historical experience will be an accurate guide
for the future because the rate of returns is primarily a function of the
competitive state of the market in the future and thus, in large part, is a
function of the actions of the Company's competitors, which the Company cannot
accurately anticipate.
The Company's product return reserve balances typically fluctuate from period to
period based upon the level and timing of product upgrade releases. Product
return reserve balances at June 30, 1995 were lower than reserve balances at
June 30, 1994. The decrease in the product return reserve balance is primarily
due to a reduction in upgrade revenues as a result of the Company's decision not
to upgrade several software products prior to the release of the Windows 95
operating systems. The level of actual product returns and related product
return reserves is largely a factor of the level of product sell-in (gross
revenue) from normal sales activity and the replacement of obsolete quantities
with the current version of the Company's product. As a result, gross revenues
generally move in the same direction as product returns. Changes in the levels
of product returns and related product return reserves are generally offset by
changing levels of gross revenue and, therefore, do not typically have a
material impact on reported net revenues.
15
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
The Company operates with relatively little backlog; therefore, if near-term
demand for the Company's products weakens in a given quarter, there could be a
material adverse effect on revenues and on the Company's operating results.
Symantec maintains a research and development facility in Santa Monica,
California that was damaged during the January 1994 earthquake in Southern
California. Much of the Company's administration, sales and marketing,
manufacturing facilities and research and development efforts are located on the
west coast of the United States. Future earthquakes or other natural disasters
could cause a significant disruption to the Company's operations and may cause
delays in product development that could adversely impact future revenues of the
Company.
Also, Symantec's order entry department is located in Oregon, with shipments
being made from a warehouse in California. Order entry and shipping is
similarly physically separated in Europe. A disruption in communications
between these facilities, particularly at the end of a fiscal quarter, would
likely result in an unexpected shortfall in revenues and could result in
unexpected losses.
During the March 1994 quarter, Symantec introduced a new product support program
that provides a wide variety of free and fee-based technical support services to
its customers. Symantec provides its customers with free support via electronic
and automated services as well as 90 days free telephone start-up support for
certain of the Company's products. In addition, Symantec offers both individual
users and corporate customers a variety of fee-based support options for certain
of the Company's products, designed to meet their individual technical support
requirements. Fee-based technical support services did not generate significant
revenues in the three months ended June 30, 1995 and 1994 and are not expected
to generate material revenues in the near future.
GROSS MARGIN.
Gross margin represents net revenues less cost of revenues. Cost of revenues
consists primarily of manufacturing expenses, manuals, packaging, royalties paid
to third parties under publishing contracts and amortization and write-off of
capitalized software. Amortization of capitalized software, including
amortization and the write-off of both purchased product rights and capitalized
software development expenses, totaled $0.9 million and $1.1 million for the
quarters ended June 30, 1995 and 1994, respectively.
Gross margins increased to 83% of net revenues in the quarter ended
June 30, 1995 from 80% in the quarter ended June 30, 1994. The increase in the
gross margin percentage was largely due to the growth in higher margin
enterprise products which are typically offered through site licenses and is
also due to Symantec's ability to manufacture Central Point products with a
lower cost structure than Central Point was able to prior to the merger.
Symantec believes that the gross margin percentage will remain near the current
level unless there is a significant change in Symantec's net revenues.
The microcomputer business software market has been subject to rapid changes
that can be expected to continue. Future technology or market changes,
including the release of Windows 95, may cause certain products to become
obsolete more quickly than expected and thus may result in capitalized software
write-offs and an increase in required inventory reserves and, therefore,
reduced gross margins and net income. In addition, the modifications to
computer software, including the correction of software bugs, may result in
significant inventory rework costs, including the cost of replacing inventory in
the distribution channel.
RESEARCH AND DEVELOPMENT EXPENSES.
Research and development expenses increased 25% to $18.6 million or 21% of net
revenues in the quarter ended June 30, 1995 from $14.9 million or 18% of net
revenues in the quarter ended June 30, 1994. The increase in research and
development expenses is principally due to increased product development efforts
in the network/communication utility, security utility and contact management
product groups. The Company has incurred significant research and development
expenses on various software products designed to operate on the Windows 95
operating system. Symantec believes increased research and development
expenditures will be
16
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
necessary in order to remain competitive and expects future research and
development expenses to increase in dollar amount.
Research and development expenditures are charged to operations as incurred.
Financial accounting rules requiring capitalization of certain internal software
development costs did not materially affect the Company in the periods
presented.
SALES AND MARKETING EXPENSES.
Sales and marketing expenses increased 7% to $38.4 million or 42% of net
revenues in the quarter ended June 30, 1995 from $36.0 million or 43% of net
revenues in the prior year's comparable quarter. The increase in sales and
marketing expenses was principally due to an increase in marketing development
expenses and commissions associated with higher revenues and also an increase in
sales and marketing expenses associated with the expected release of Windows 95
in August 1995.
Symantec believes substantial sales and marketing efforts are essential to
achieve revenue growth and to maintain and enhance Symantec's competitive
position. Accordingly, with the continued expansion of its international
operations, as well as the introduction of new and upgraded products, including
products currently being developed for Windows 95, Symantec expects the expenses
associated with these efforts to increase in dollar amount and to continue to
constitute its most significant operating expense. There can be no assurance
that these increased sales and marketing efforts will be successful. Symantec
believes that the Company's sales and marketing expenses may increase
significantly in the September 1995 quarter to support the introduction of
Windows 95 products. These sales and marketing expenses may become committed,
and may be unable to be reduced, even if Microsoft announces a delay in
Windows 95. Such a delay would have a material adverse impact on profitability.
GENERAL AND ADMINISTRATIVE EXPENSES.
General and administrative expenses increased 9% from $4.4 million or 5% of net
revenues in the quarter ended June 30, 1994 to $4.8 million or 5% of net
revenues in the quarter ended June 30, 1995. The increase in general and
administrative expenses was principally due to growth of the Company's business
and increased headcount. Future growth of the Company is expected to result in
an increase in the dollar amount of general and administrative spending from
current levels.
ACQUISITION AND RESTRUCTURING EXPENSES.
ACQUISITION EXPENSES. In connection with company acquisitions completed in the
quarter ended June 30, 1994 (see Note 4 of Notes to Consolidated Financial
Statements), significant acquisition expenses were incurred. These acquisition
expenses principally included fees for legal, accounting and financial advisory
services, the write-off of duplicative capitalized technology, the modification
of certain development contracts and expenses related to the combination of the
companies, including the elimination of duplicative and excess facilities and
personnel.
In connection with the acquisitions of Central Point and SLR, Symantec recorded
total acquisition charges of $9.5 million in fiscal 1995. The charges included
$3.2 million for legal, accounting and financial advisory services, $1.0 million
for the write-off of duplicative product-related expenses and modification of
certain development contracts, $0.9 million for the elimination of duplicative
and excess facilities, $3.1 million for personnel severance and outplacement
expenses, and $1.3 million for the consolidation and discontinuance of certain
operational activities and other acquisition related expenses.
During fiscal 1994, Central Point incurred $16.0 million of expenses related to
the restucturing of its operations. In the quarter ended June 30, 1994,
Symantec incurred $9.0 million of expenses related to the acquisition of Central
Point. In the quarter ended June 30, 1995, the Company recognized a reduction
in accrued acquisition and restructuring expenses of $2.3 million as actual
costs incurred were less than costs previously accrued by the Companies.
17
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
On July 6, 1995, Symantec announced a definitive agreement to acquire Delrina
Corporation ("Delrina") for approximately 15 million shares of Symantec common
stock. The Company expects to complete the acquisition in the quarter ending
December 31, 1995 and expects to incur acquisition expenses related to the
combination of the companies of approximately $25 to $30 million. The
acquisition is expected to be accounted for as a pooling of interests.
Symantec has completed a number of acquisitions and expects to acquire other
companies in the future. In addition to the significant business risks
associated with acquisitions, including the successful combination of the
companies in an efficient and timely manner, the coordination of research and
development and sales efforts, the retention of key personnel and the
integration of the acquired products, Symantec typically incurs significant
acquisition expenses for legal, accounting and financial advisory services, the
write-off of duplicative technology and other expenses related to the
combination of the companies. These expenses may have a significant adverse
impact on the Company's future profitability and financial resources.
RESTRUCTURING EXPENSES. During February 1995, Symantec announced a plan to
consolidate certain research and development activities. This plan is designed
to gain greater synergy between the Company's Third Generation Language and
Fourth Generation Language development groups. As of the end of the June 1995
quarter the Company has incurred $2.2 million of the relocation costs for moving
equipment and personnel. The Company expects to incur remaining costs of $1.8
to $2.8 million for the relocation of the remaining activities, equipment and
personnel from this consolidation. The Company expects to complete this
relocation by December 1995 with the bulk of the remaining costs occurring in
the September 1995 quarter.
As of June 30, 1995, total accrued acquisition and restructuring expenses were
$5.2 million and included $1.0 million for the modification of certain
development contracts, $1.3 million for the elimination of duplicative and
excess facilities and $2.9 million for the consolidation and discontinuance of
certain operational activities and other acquisition related expenses.
INTEREST INCOME, INTEREST EXPENSE AND OTHER INCOME (EXPENSE).
Interest income was $1.6 million and $0.6 million in the quarters ended
June 30, 1995 and 1994, respectively. The increase in interest income is due to
higher average invested cash balances and higher average interest rates on
invested cash. Interest expense was $0.4 million and $0.6 million in the
quarters ended June 30, 1995 and 1994, respectively. The decrease in interest
expenses is principally due to the conversion of $10.0 million of convertible
subordinated debentures into 833,333 shares of Symantec common stock on
April 26, 1995. Other expense is primarily comprised of foreign currency
exchange losses from fluctuations in foreign currency exchange rates.
The Company conducts business in various foreign currencies and is therefore
subject to the transaction exposures that arise from foreign exchange rate
movements between the dates that foreign currency transactions are recorded and
the date that they are settled. Symantec utilizes some natural hedging to
mitigate the Company's transaction exposures and, effective December 31, 1993,
the Company commenced hedging some residual transaction exposures through the
use of 30-day forward contracts. At June 30, 1995, there was a total of
approximately $27.4 million of outstanding forward exchange contracts. The net
liability of forward contracts was approximately $10.8 million at June 30, 1995.
There have been no significant gains or losses to date with respect to these
activities. Gains or losses would occur on 30-day forward contracts held by the
Company when changes in foreign currency exchange rates occur. These gains and
losses have been largely offset by the transaction gains and losses resulting
from foreign currency denominated cash, accounts receivable, intercompany
balances and trade payables. There can be no assurance that these strategies
will continue to be effective or that transaction gains or losses can be
minimized or forecasted accurately. The Company does not hedge its translation
risk.
INCOME TAX PROVISION.
18
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
The effective income tax provision for the three months ended June 30, 1995 was
20% which compared to an effective income tax provision of 29% in the prior
year's comparable period. The low provision rate for the three months ended
June 30, 1995 was primarily attributable to unbenefitted prior year losses from
Central Point and certain foreign earnings taxed at lower rates.
LIQUIDITY AND CAPITAL RESOURCES
Cash and short-term investments increased $8.5 million from $105.2 million at
March 31, 1995 to $113.7 million at June 30, 1995, largely due to cash provided
by operating activities, net proceeds from the sales of common stock and the
exercise of stock options which was partially offset by cash expenditures for
capital equipment. Net cash provided by operating activities was $10.4 million
and was comprised of the Company's net income of $11.7 million and an increase
in non-cash related expenses of $6.6 million which was partially offset by a
decrease in net assets and liabilities of $7.9 million.
Trade accounts receivable decreased $4.5 million from $54.0 million at March 31,
1995 to $49.5 million at June 30, 1995 primarily due to improved cash
collections. The large decline in other accrued expenses from $51.8 million at
March 31, 1995 to $40.2 million at June 30, 1995 was principally due to the
recognition of international net revenues previously deferred by Central Point.
The Company has a $10.0 million line of credit that expires in October 1995.
The line of credit is available for general corporate purposes and bears
interest at the banks' reference (prime) interest rate (9.0% at June 30, 1995),
the U.S. offshore rate plus 1.5%, a CD rate plus 1.5% or LIBOR plus 1.5%, at the
Company's discretion. The line of credit requires bank approval for the payment
of cash dividends. Borrowings under this line are unsecured and are subject to
the Company maintaining certain financial ratios and profits. At June 30, 1995,
there was approximately $ 0.5 million of outstanding standby letters of credit
under this line of credit. There were no borrowings outstanding under this line
at June 30, 1995. The Company was in compliance with the debt covenants at
June 30, 1995. Company acquisitions in the future, including the pending
acquisition of Delrina, may cause the Company to be in violation of the line of
credit covenants; however, Symantec believes that if the line of credit were
canceled or amounts were not available under the line, there would not be a
material adverse impact on the financial results, liquidity or capital resources
of the Company.
The Company may utilize significant amounts of cash in connection with the
potential acquisition of additional companies, including the pending acquisition
of Delrina, and software product rights in the future. Should the Company
sustain significant losses, there can be no assurances that the bank line of
credit, which is available through October 1995, would remain available.
Additionally, the Company could be required to reduce operating expenses, which
could result in further product delays; reassess acquisition opportunities,
which could negatively impact the Company's growth objectives; and/or pursue
further financing options. The Company believes existing cash and short-term
investments will be sufficient to fund operations for the next year.
19
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Information with respect to this item is incorporated by reference to
Note 7 of Notes to Consolidated Financial Statements included herein
on page 8 of this Form 10-Q.
ITEM 5. OTHER INFORMATION
On June 9, 1995, the Company's registration statement on Form S-8
covering the "1994 Patent Incentive Plan" became effective. This
registration statement registered 400,000 shares.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibits are filed as part of, or incorporated by
reference into, this Form 10-Q:
10.01 Combination Agreement between Symantec Corporation and Delrina
Corporation dated July 5, 1995.
11.01 Computation of Net Income Per Share.
27.01 Financial Data Schedule.
(b) Reports on Form 8-K
None
ITEMS 2, 3 AND 4 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
20
<PAGE>
SIGNATURES
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, thereunto duly authorized.
Date: August 3, 1995 SYMANTEC CORPORATION
By /s/ Robert R. B. Dykes
---------------------------------------------
Robert R. B. Dykes
Executive Vice President/Worldwide
Operations and Chief Financial Officer
(duly authorized officer)
/s/ Howard A. Bain III
----------------------------------------------
Howard A. Bain III
Vice President Finance and
Chief Accounting Officer
21
<PAGE>
COMBINATION AGREEMENT
BETWEEN
SYMANTEC CORPORATION
AND
DELRINA CORPORATION
JULY 5, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. THE ARRANGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 The Arrangement . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Adjustments for Capital Changes . . . . . . . . . . . . . . . . .2
1.3 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . .3
1.4 Delrina Options . . . . . . . . . . . . . . . . . . . . . . . . .3
1.5 Other Effects of the Arrangement. . . . . . . . . . . . . . . . .4
1.6 Joint Management Information Circular/Proxy Statement;
Registration Statement. . . . . . . . . . . . . . . . . . . . . .4
1.7 Reorganization. . . . . . . . . . . . . . . . . . . . . . . . . .5
1.8 Pooling of Interests. . . . . . . . . . . . . . . . . . . . . . .5
1.9 Material Adverse Effect . . . . . . . . . . . . . . . . . . . . .5
1.10 Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2. REPRESENTATIONS AND WARRANTIES OF DELRINA . . . . . . . . . . . . . . .6
2.1 Organization; Good Standing; Qualification and Power. . . . . . .6
2.2 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . .6
2.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.4 Securities Regulatory Authority Reports and Financial Statements.9
2.5 Information Supplied. . . . . . . . . . . . . . . . . . . . . . .9
2.6 Compliance with Applicable Laws . . . . . . . . . . . . . . . . 10
2.7 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.8 ERISA and Other Compliance. . . . . . . . . . . . . . . . . . . 10
2.9 Absence of Undisclosed Liabilities. . . . . . . . . . . . . . . 13
2.10 Absence of Certain Changes or Events. . . . . . . . . . . . . . 13
2.11 Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.12 No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.13 Certain Agreements. . . . . . . . . . . . . . . . . . . . . . . 17
2.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.15 Intellectual Property . . . . . . . . . . . . . . . . . . . . . 18
2.16 Products and Distribution . . . . . . . . . . . . . . . . . . . 19
2.17 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . 19
2.18 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.19 Ownership of Property . . . . . . . . . . . . . . . . . . . . . 20
2.20 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 20
2.21 Interested Party Transactions . . . . . . . . . . . . . . . . . 21
2.22 Board Approval. . . . . . . . . . . . . . . . . . . . . . . . . 21
2.23 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.24 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.25 Fairness Opinion. . . . . . . . . . . . . . . . . . . . . . . . 21
2.26 Restrictions on Business Activities . . . . . . . . . . . . . . 22
2.27 Pooling Matters . . . . . . . . . . . . . . . . . . . . . . . . 22
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2.28 Books and Records . . . . . . . . . . . . . . . . . . . . . . . 22
2.29 Government Contracts. . . . . . . . . . . . . . . . . . . . . . 22
3. REPRESENTATIONS AND WARRANTIES OF SYMANTEC. . . . . . . . . . . . . . 23
3.1 Organization; Good Standing; Qualification and Power. . . . . . 23
3.2 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . 23
3.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.4 SEC Reports and Financial Statements. . . . . . . . . . . . . . 25
3.5 Information Supplied. . . . . . . . . . . . . . . . . . . . . . 26
3.6 Compliance with Applicable Laws . . . . . . . . . . . . . . . . 26
3.7 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.8 ERISA and Other Compliance. . . . . . . . . . . . . . . . . . . 27
3.9 Absence of Undisclosed Liabilities. . . . . . . . . . . . . . . 29
3.10 Absence of Certain Changes or Events. . . . . . . . . . . . . . 29
3.11 Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.12 No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.13 Certain Agreements. . . . . . . . . . . . . . . . . . . . . . . 32
3.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.15 Intellectual Property . . . . . . . . . . . . . . . . . . . . . 33
3.16 Products and Distribution . . . . . . . . . . . . . . . . . . . 34
3.17 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . 34
3.18 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.19 Ownership of Property . . . . . . . . . . . . . . . . . . . . . 34
3.20 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 35
3.21 Interested Party Transactions . . . . . . . . . . . . . . . . . 35
3.22 Board Approval. . . . . . . . . . . . . . . . . . . . . . . . . 35
3.23 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.24 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.25 Fairness Opinion. . . . . . . . . . . . . . . . . . . . . . . . 36
3.26 Restrictions on Business Activities . . . . . . . . . . . . . . 36
3.27 Pooling Matters . . . . . . . . . . . . . . . . . . . . . . . . 36
3.28 Books and Records . . . . . . . . . . . . . . . . . . . . . . . 36
3.29 Government Contracts. . . . . . . . . . . . . . . . . . . . . . 36
4. DELRINA COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.1 Advice of Changes . . . . . . . . . . . . . . . . . . . . . . . 37
4.2 Maintenance of Business . . . . . . . . . . . . . . . . . . . . 37
4.3 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . 38
4.4 Shareholder Approval. . . . . . . . . . . . . . . . . . . . . . 40
4.5 Delrina Affiliate Agreements. . . . . . . . . . . . . . . . . . 40
4.6 Joint Proxy Statement . . . . . . . . . . . . . . . . . . . . . 40
4.7 Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . 40
4.8 Necessary Consents. . . . . . . . . . . . . . . . . . . . . . . 41
4.9 Access to Information . . . . . . . . . . . . . . . . . . . . . 41
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4.10 Satisfaction of Conditions Precedent. . . . . . . . . . . . . . 41
4.11 No Other Negotiations . . . . . . . . . . . . . . . . . . . . . 41
4.12 Representations of Shareholders . . . . . . . . . . . . . . . . 42
4.13 Employment and Noncompetition Agreements. . . . . . . . . . . . 42
5. SYMANTEC COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.1 Advice of Changes . . . . . . . . . . . . . . . . . . . . . . . 42
5.2 Maintenance of Business . . . . . . . . . . . . . . . . . . . . 43
5.3 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . 43
5.4 Stockholder Approval. . . . . . . . . . . . . . . . . . . . . . 44
5.5 Symantec Affiliate Agreements . . . . . . . . . . . . . . . . . 44
5.6 Joint Proxy Statement . . . . . . . . . . . . . . . . . . . . . 45
5.7 Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . 45
5.8 Necessary Consents. . . . . . . . . . . . . . . . . . . . . . . 45
5.9 Access to Information . . . . . . . . . . . . . . . . . . . . . 45
5.10 Satisfaction of Conditions Precedent. . . . . . . . . . . . . . 45
5.11 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 46
5.12 Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.13 Employment and Employee Benefits After the Closing. . . . . . . 46
5.14 Reorganization Procedures . . . . . . . . . . . . . . . . . . . 47
6. CLOSING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.1 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.2 Ancillary Documents/Reservation of Shares . . . . . . . . . . . 47
6.3 Exchange of Options . . . . . . . . . . . . . . . . . . . . . . 48
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF DELRINA. . . . . . . . . . . . 48
7.1 Accuracy of Representations and Warranties. . . . . . . . . . . 48
7.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.3 Absence of Material Adverse Change. . . . . . . . . . . . . . . 48
7.4 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . 48
7.5 Government Consents . . . . . . . . . . . . . . . . . . . . . . 48
7.6 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.7 Opinion of Symantec's Counsel . . . . . . . . . . . . . . . . . 49
7.8 Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.9 Shareholder Approval. . . . . . . . . . . . . . . . . . . . . . 49
7.10 Symantec Approvals. . . . . . . . . . . . . . . . . . . . . . . 49
7.11 No Legal Action . . . . . . . . . . . . . . . . . . . . . . . . 49
7.12 Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.13 Pooling Opinion . . . . . . . . . . . . . . . . . . . . . . . . 49
7.14 Court Approval. . . . . . . . . . . . . . . . . . . . . . . . . 49
7.15 OSC, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.16 Election to Symantec Board. . . . . . . . . . . . . . . . . . . 50
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8. CONDITIONS PRECEDENT TO OBLIGATIONS OF SYMANTEC . . . . . . . . . . . 50
8.1 Accuracy of Representations and Warranties. . . . . . . . . . . 50
8.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.3 Absence of Material Adverse Change. . . . . . . . . . . . . . . 50
8.4 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . 50
8.5 Government Consents . . . . . . . . . . . . . . . . . . . . . . 50
8.6 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.7 Opinion of Delrina's Counsel. . . . . . . . . . . . . . . . . . 51
8.8 Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.9 Stockholder Approval. . . . . . . . . . . . . . . . . . . . . . 51
8.10 Delrina Approvals . . . . . . . . . . . . . . . . . . . . . . . 51
8.11 No Legal Action . . . . . . . . . . . . . . . . . . . . . . . . 51
8.12 Delrina Option Agreements . . . . . . . . . . . . . . . . . . . 51
8.13 Pooling Opinion . . . . . . . . . . . . . . . . . . . . . . . . 51
8.14 Affiliate Agreements. . . . . . . . . . . . . . . . . . . . . . 51
8.15 Court Approval. . . . . . . . . . . . . . . . . . . . . . . . . 52
8.16 OSC, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.17 Shipment of WinFax 95 . . . . . . . . . . . . . . . . . . . . . 52
9. TERMINATION OF AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . 52
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.2 Notice of Termination . . . . . . . . . . . . . . . . . . . . . 54
9.3 Effect of Termination . . . . . . . . . . . . . . . . . . . . . 54
9.4 Termination Fees. . . . . . . . . . . . . . . . . . . . . . . . 54
10.SURVIVAL OF REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . 55
11.MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.1 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.2 Assignment; Binding Upon Successors and Assigns . . . . . . . . 55
11.3 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.5 Other Remedies. . . . . . . . . . . . . . . . . . . . . . . . . 56
11.6 Amendment and Waivers . . . . . . . . . . . . . . . . . . . . . 55
11.7 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.8 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . 56
11.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.10 Construction of Agreement . . . . . . . . . . . . . . . . . . . 57
11.11 No Joint Venture. . . . . . . . . . . . . . . . . . . . . . . . 57
11.12 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . 57
11.13 Absence of Third Party Beneficiary Rights . . . . . . . . . . . 58
11.14 Public Announcement . . . . . . . . . . . . . . . . . . . . . . 58
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11.15 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 58
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EXHIBITS
Exhibit 1.1 Plan of Arrangement
Exhibit 2.9 Delrina Balance Sheet
Exhibit 3.9 Symantec Balance Sheet
Exhibit 4.4 Form of Stock Option Agreement
Exhibit 4.5 Delrina Affiliates Agreement
Exhibit 4.13 Employment and Noncompetition Agreements
Exhibit 5.5 Symantec Affiliates Agreements
Exhibit 5.11(c) Form of Indemnity Agreement
Exhibit 6.2(a) Exchangeable Share Provisions
Exhibit 6.2(b)(i) Support Agreement
Exhibit 6.2(b)(ii) Voting and Exchange Trust Agreement
Exhibit 6.2(b)(iii) Restated Certificate of Incorporation
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COMBINATION AGREEMENT
THIS COMBINATION AGREEMENT (this "AGREEMENT") is entered into as of July
5, 1995, by and between Symantec Corporation, a Delaware corporation
("SYMANTEC") and Delrina Corporation, an Ontario corporation ("DELRINA").
RECITALS
A. The respective Boards of Directors of Delrina and Symantec have
approved the transactions contemplated by this Agreement, and the Board of
Directors of Delrina has agreed to submit the Plan of Arrangement (as defined in
Section 1.1) and other transactions contemplated hereby to its shareholders for
approval.
B. The Arrangement is intended to be treated as (i) a reorganization
pursuant to the provisions of section 368(a)(1) of the Internal Revenue Code of
1986, as amended (the "CODE"), (ii) a "pooling of interests" under United States
generally accepted accounting principles ("US GAAP") and (iii) a reorganization
of capital for purposes of section 86 of the Income Tax Act (Canada) (the
"ITA").
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. THE ARRANGEMENT
1.1 THE ARRANGEMENT. As promptly as practicable after the execution
of this Agreement, Delrina will apply to the Ontario Court of Justice (General
Division) (the "COURT") pursuant to section 182 of the Business Corporations Act
(Ontario) (the "OBCA") for an interim order in form and substance satisfactory
to Symantec (such approval not to be unreasonably withheld or delayed) (the
"INTERIM ORDER") providing for, among other things, the calling and holding of
the Delrina Shareholders Meeting (as defined below) for the purpose of
considering and, if deemed advisable, approving the arrangement (the
"ARRANGEMENT") under section 182 of the OBCA and pursuant to the Agreement and
Plan of Arrangement substantially in the form of EXHIBIT 1.1 hereto (the "PLAN
OF ARRANGEMENT"). If the Delrina shareholders approve the Arrangement,
thereafter Delrina will take the necessary steps to submit the Arrangement to
the Court and apply for a final order of the Court approving the Arrangement in
such fashion as the Court may direct (the "FINAL ORDER"). At 12:01 a.m. (the
"EFFECTIVE TIME") on the date (the "EFFECTIVE DATE") shown on the certificate of
arrangement issued by the Director under the OBCA giving effect to the
Arrangement, the following reorganization of capital shall occur and shall be
deemed to occur in the following order without any further act or formality:
(a) The articles of incorporation of Delrina shall be amended to
authorize a class of exchangeable shares (the "EXCHANGEABLE SHARES") and
one Series A Preferred Share of Delrina (the "SERIES A PREFERRED SHARE").
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(b) Delrina shall issue to Symantec one Series A Preferred Share in
consideration of the issuance to Delrina of one share of the common stock,
$.01 par value, of Symantec (the "SYMANTEC COMMON STOCK"). The stated
capital of the Series A Preferred Share shall be equal to the fair market
value, as determined by the board of directors of Delrina, of a share of
Symantec Common Stock. No certificate shall be issued in respect of the
Series A Preferred Share.
(c) Each of the common shares of Delrina (the "DELRINA COMMON
SHARES") (other than Delrina Common Shares held by holders who have
exercised their rights of dissent in accordance with the Plan of
Arrangement and who are ultimately entitled to be paid full value for such
shares) will be exchanged for a number of Exchangeable Shares at an
exchange ratio equal to 0.61 of an Exchangeable Share per Delrina Common
Share (the "EXCHANGE RATIO"). Each holder of Delrina Common Shares (other
than Delrina Common Shares held by holders who have exercised their rights
of dissent in accordance with the Plan of Arrangement and who are
ultimately entitled to be paid full value for such shares) will receive
that whole number of Exchangeable Shares resulting from the exchange of
such holder's Delrina Common Shares. In lieu of fractional Exchangeable
Shares, each holder of a Delrina Common Share who otherwise would be
entitled to receive a fraction of an Exchangeable Share shall be paid by
Delrina an amount determined in accordance with the Plan of Arrangement.
(d) Upon the exchange referred to in paragraph (c) above, each holder
of a Delrina Common Share shall cease to be such a holder, shall have his
name removed from the register of holders of Delrina Common Shares and
shall become a holder of the number of fully paid Exchangeable Shares to
which he is entitled as a result of the exchange referred to in paragraph
(c) and such holder's name shall be added to the register of holders of
Exchangeable Shares accordingly.
(e) The stated capital of the Exchangeable Shares will be equal to
the stated capital of the Delrina Common Shares immediately prior to the
Arrangement.
(f) The one outstanding Series A Preferred Share will be exchanged
for one Delrina Common Share and the holder thereof shall cease to be a
holder of the Series A Preferred Share, shall have its name removed from
the register of holders of Series A Preferred Shares and shall become a
holder of the one fully paid and non-assessable Delrina Common Share to
which it is entitled as a result of the exchange referred to in this
paragraph (f) and such holder's name shall be added to the register of
holders of Delrina Common Shares accordingly.
(g) The stated capital of the one Delrina Common Share shall be equal
to the stated capital of the one Series A Preferred Share prior to the
Arrangement.
1.2 ADJUSTMENTS FOR CAPITAL CHANGES. If, prior to the Effective
Time, Symantec or Delrina recapitalizes through a subdivision of its outstanding
shares into a greater number of shares, or a combination of its outstanding
shares into a lesser number of shares, or reorganizes, reclassifies or otherwise
changes its outstanding shares into the same or a different
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number of shares of other classes, or declares a dividend on its outstanding
shares payable in shares of its capital stock or securities convertible into
shares of its capital stock, then the Exchange Ratio will be adjusted
appropriately so as to maintain the relative proportionate interests of the
holders of Delrina Common Shares and the holders of the shares of Symantec
Common Stock.
1.3 DISSENTING SHARES. Holders of Delrina Common Shares may exercise
rights of dissent with respect to such shares in connection with the Arrangement
pursuant to and in the manner set forth in section 185 of the OBCA and section
3.1 of the Plan of Arrangement (such holders referred to as "DISSENTING
SHAREHOLDERS"). Delrina shall give Symantec (i) prompt notice of any written
demands of a right of dissent, withdrawals of such demands, and any other
instruments served pursuant to the OBCA and received by Delrina and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
such rights. Delrina shall not, except with the prior written consent of
Symantec, voluntarily make any payment with respect to any such rights or offer
to settle or settle any such rights. All payments to Dissenting Shareholders
shall be the sole responsibility of Delrina, and Symantec will not directly or
indirectly provide any funds for the purposes of making payments to Dissenting
Shareholders. In the event that Delrina does not have sufficient funds to make
payments to Dissenting Shareholders, Delrina will undertake to borrow the funds
necessary to make such payments from sources other than Symantec or any
affiliate of Symantec.
1.4 DELRINA OPTIONS.
(a) EXCHANGE. At the Effective Time, after the actions
described in Sections 1.1(a) through (g), each of the then outstanding options
to purchase Delrina Common Shares (collectively, the "DELRINA OPTIONS")
(including all outstanding options granted under Delrina's 1994 Stock Option
Plan and the Delrina Stock Option Plan (the "DELRINA OPTION PLANS")) will, at
the Effective Time, and without any further action on the part of any holder
thereof, be exchanged for an option to purchase that number of shares of
Symantec Common Stock determined by multiplying the number of Delrina Common
Shares subject to such Delrina Option at the Effective Time by the Exchange
Ratio, at an exercise price per share of Symantec Common Stock equal to the
exercise price per share of such Delrina Option immediately prior to the
Effective Time divided by the Exchange Ratio. If the foregoing calculation
results in an exchanged Delrina Option being exercisable for a fraction of a
share of Symantec Common Stock, then the number of shares of Symantec Common
Stock subject to such option will be rounded down to the nearest whole number of
shares and the total exercise price for the option will be reduced by the
exercise price of the fractional share. The term, exercisability, vesting
schedule, status as an "incentive stock option" under section 422 of the Code,
if applicable, and all other terms and conditions of the Delrina Options will
otherwise be unchanged. Continuous employment with Delrina or any of the
Delrina Subsidiaries (as hereinafter defined) will be credited to an optionee of
Delrina for purposes of determining the number of shares of Symantec Common
Stock subject to exercise under an exchanged Delrina Option after the Effective
Time.
(b) REGISTRATION. Symantec will cause the Symantec Common Stock
issuable upon exercise of the assumed Delrina Options to be registered on Form
S-8 promulgated
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by the Securities and Exchange Commission (the "SEC") as soon as reasonably
practicable after the Effective Time and will use its best efforts to maintain
the effectiveness of such registration statement or registration statements for
so long as such converted Delrina Options shall remain outstanding. With
respect to those individuals who subsequent to the Arrangement will be subject
to the reporting requirements under section 16(a) of the Exchange Act (as
defined below), Symantec shall administer the Delrina Option Plans assumed
pursuant to this Section in a manner that complies with Rule 16b-3 promulgated
by the SEC under the Exchange Act. Symantec will reserve a sufficient number of
shares of Symantec Common Stock for issuance upon exercise of the Delrina
Options assumed by Symantec pursuant to this Section.
1.5 OTHER EFFECTS OF THE ARRANGEMENT. At the Effective Time: (a)
the bylaws of Delrina immediately prior to the Effective Time will continue as
the bylaws of Delrina, subject to later amendment; (b) the directors of Delrina
will be as designated by Symantec prior to the Effective Time; (c) the officers
of Delrina will be as designated by Symantec prior to the Effective Time; (d)
each Delrina Common Share and each Delrina Option outstanding immediately prior
to the Effective Time will be exchanged as provided in Sections 1.1 and 1.4; and
(e) the Arrangement will, from and after the Effective Time, have all of the
effects provided by applicable law, including, without limitation, the OBCA.
1.6 JOINT MANAGEMENT INFORMATION CIRCULAR/PROXY STATEMENT;
REGISTRATION STATEMENT. (a) As promptly as practicable after execution of this
Agreement, Symantec and Delrina shall, if so required, prepare and file with the
SEC a preliminary joint management information circular and proxy statement (the
"JOINT PROXY STATEMENT"), together with any other documents required by the
Securities Act of 1933, as amended (the "SECURITIES ACT") or the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), in connection with the
Arrangement. The Joint Proxy Statement shall constitute (i) the management
information circular of Delrina with respect to the Delrina Shareholders Meeting
relating to the Arrangement, (ii) the proxy statement of Symantec with respect
to the meeting of stockholders of Symantec to be held with respect to the
approval by Symantec's stockholders of the issuance of the Symantec Common Stock
in connection with the issuance of Symantec Common Stock from time to time upon
exchange of the Exchangeable Shares (the "SYMANTEC STOCKHOLDERS MEETING") and
(iii) the prospectus with respect to the issuance by Delrina of the Exchangeable
Shares in connection with the Arrangement, which prospectus may, if Symantec's
counsel or Delrina's counsel determines it is required by the Securities Act, be
included in a registration statement filed by Delrina on Form F-4 or such other
registration form as may be applicable (collectively, the "FORM F-4"). As
promptly as practicable after comments are received from the SEC thereon and
after the furnishing by Symantec and Delrina of all information required to be
contained therein, Symantec and Delrina shall cause the Joint Proxy Statement to
be mailed to each company's shareholders. Notwithstanding anything in this
Agreement to the contrary, Delrina shall be under no obligation to file the Form
F-4 if Symantec shall have determined on the advice of its counsel that the
issuance of the Exchangeable Shares pursuant to the Arrangement is exempt from
the registration requirements of section 5 of the Securities Act by virtue of
section 3(a)(10) thereof. If Symantec determines on the advice of its counsel
that it is necessary to file a registration statement on Form S-3 (the "FORM
S-3") in order to register the Symantec Common Stock to be issued from time to
time after the Effective Time upon exchange of the Exchangeable
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Shares, then Symantec shall file the Form S-3 with the SEC and use its best
efforts to maintain the effectiveness of such registration for 7 years or for
such shorter period as such Exchangeable Shares remain outstanding, and Symantec
and Delrina shall use all reasonable efforts to cause the Form S-3 to become
effective. Notwithstanding anything herein to the contrary, Symantec shall be
under no obligation to file the Form S-3 if it shall have determined on the
advice of its outside counsel that the issuance of shares of Symantec Common
Stock upon exchange of the Exchangeable Shares after the Effective Time is
exempt from the registration requirements of section 5 of the Securities Act by
virtue of section 3(a)(9) thereof.
(b) Each party shall promptly furnish to the other party all
information concerning such party and its shareholders as may be reasonably
required in connection with any action contemplated by this Section 1.6. The
Joint Proxy Statement and, if required, the Form F-4 and Form S-3, shall comply
in all material respects with all applicable requirements of law. Each of
Symantec and Delrina will notify the other promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Joint Proxy Statement or the Form F-4 or
Form S-3 or for additional information, and will supply the other with copies of
all correspondence with the SEC or its staff with respect to the Joint Proxy
Statement or the Form F-4 or Form S-3. Whenever any event occurs which should
be set forth in an amendment or supplement to the Joint Proxy Statement or the
Form F-4 or Form S-3, Symantec or Delrina, as the case may be, shall promptly
inform the other of such occurrence and cooperate in filing with the SEC or its
staff, and/or mailing to stockholders of Symantec and Delrina, such amendment or
supplement.
1.7 REORGANIZATION. The parties intend to adopt this Agreement and
the Plan of Arrangement as a plan of reorganization under section 368(a)(1) of
the Code, and the parties intend to adopt the Arrangement as a reorganization of
capital of Delrina under section 86 of the ITA.
1.8 POOLING OF INTERESTS. The parties intend that the Arrangement be
treated as a "pooling of interests" under US GAAP. Promptly following the
execution of this Agreement, Symantec and Delrina shall use their respective
best efforts to obtain and deliver Affiliates Agreements from their respective
affiliates, as contemplated by Section 4.5 and Section 5.5.
1.9 MATERIAL ADVERSE EFFECT. In this Agreement, any reference to any
event, change or effect being "MATERIAL" with respect to any entity or group of
entities means any material event, change or effect related to the condition
(financial or otherwise), properties, assets, liabilities, businesses,
operations, results of operations or prospects of such entity or group of
entities. In this Agreement, the term "MATERIAL ADVERSE EFFECT" used with
respect to a party means any event, change or effect that is materially adverse
to the condition (financial or otherwise), properties, assets, liabilities,
businesses, operations, results of operations or prospects of such party and its
subsidiaries, taken as a whole; provided that a Material Adverse Effect shall
not include any adverse effect resulting from (i) changes in general economic
conditions or conditions generally affecting the personal computer application
software industry or (ii) a decline in Delrina's consolidated gross sales
revenues for the fiscal quarter ending September 30, 1995 to the extent that
such decline is reasonably attributable to the failure of Delrina to have
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made the first customer shipment in commercial volumes to retail sales channels
of its WinFax for Windows 95 product and its other Windows 95-compatible
products prior to September 30, 1995.
1.10 CURRENCY. Unless otherwise specified, all references in this
Agreement to "dollars" or "$" shall mean United States dollars.
2. REPRESENTATIONS AND WARRANTIES OF DELRINA
Except as set forth in a letter dated the date of this Agreement and
delivered by Delrina to Symantec concurrently herewith (the "DELRINA DISCLOSURE
LETTER"), Delrina hereby represents and warrants to Symantec that:
2.1 ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER. Delrina
and each of its subsidiaries (the "DELRINA SUBSIDIARIES") is a corporation (or,
in the case of Delrina (Wyoming) Limited Liability Company, is a limited
liability company) duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified and in good standing to
do business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary, other
than in such jurisdictions where the failure so to qualify would not have a
Material Adverse Effect on Delrina. Section 2.1 of the Delrina Disclosure
Letter sets forth a correct and complete list of the Delrina Subsidiaries, the
number of each subsidiary's outstanding capital stock owned by Delrina or
another Delrina Subsidiary and a correct and complete list of each jurisdiction
in which each of Delrina and each Delrina Subsidiary is duly qualified and in
good standing to do business. Delrina has delivered to Symantec's counsel
complete and correct copies of the certificate or articles of incorporation (or
similar document) and bylaws of Delrina, in each case as amended to the date of
this Agreement. Unless otherwise specified, all references in this Agreement to
deliveries to Symantec or its counsel shall mean delivery to Symantec's internal
General Counsel.
2.2 CAPITAL STRUCTURE.
(a) STOCK AND OPTIONS. The authorized capital stock of Delrina
consists of an unlimited number of Delrina Common Shares, no par value, and an
unlimited number of Preference Shares, no par value (the "DELRINA PREFERRED
SHARES"). At the close of business on June 30, 1995, 22,320,716 Delrina Common
Shares were issued and outstanding and no Delrina Common Shares were held by
Delrina in its treasury. An aggregate of 2,927,773 Delrina Common Shares are
reserved and authorized for issuance pursuant to the Delrina Option Plans in
respect of which Delrina Options granted pursuant to the Delrina Option Plans to
purchase a total of 2,374,035 Delrina Common Shares were outstanding as of June
30, 1995. An aggregate of 40,000 Delrina Common Shares are reserved and
authorized for issuance pursuant to Delrina's Canadian and U.S. Employee Stock
Purchase Plans. There are no outstanding Delrina Options that have not been
granted under these plans. No Delrina Preferred Shares are issued or
outstanding. All outstanding Delrina Common Shares have been duly authorized,
validly issued, are fully paid and nonassessable and not subject to preemptive
rights. All issued
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and outstanding shares of the capital stock of each of the Delrina Subsidiaries
have been duly authorized and validly issued, are fully paid and nonassessable,
are not subject to any right of rescission, and have been offered, issued, sold
and delivered by Delrina in compliance with all registration, qualification and
prospectus requirements (or applicable exemptions therefrom) of applicable
federal, provincial and state securities laws. Except as set forth in Section
2.1 of the Delrina Disclosure Letter, Delrina does not have any subsidiaries or
any equity interest, direct or indirect, in any corporation, partnership, joint
venture or other business entity. With respect to each such Delrina Subsidiary,
the Delrina Disclosure Letter lists all shareholders, the number of shares held
by each shareholder, the number of directors (or local law equivalent) of such
Delrina Subsidiary and the officers (or local law equivalent) of such Delrina
Subsidiary. Delrina has provided to Symantec's counsel a correct and complete
list of each Delrina Option outstanding as of the date hereof, including the
name of the holder of such Delrina Option, the grant date of each Delrina
Option, the Delrina Option Plan pursuant to which such Delrina Option was
issued, the number of shares covered by such Delrina Option, the per share
exercise price of such Delrina Option and the vesting schedule applicable to
each such Delrina Option.
(b) NO OTHER COMMITMENTS. Except for the Delrina Options
disclosed in Section 2.2(a) above and listed in the Delrina Disclosure Letter,
there are no options, warrants, calls, rights, commitments, conversion rights or
agreements of any character to which Delrina or any of the Delrina Subsidiaries
is a party or by which Delrina or any of the Delrina Subsidiaries is bound
obligating Delrina or any of the Delrina Subsidiaries to issue, deliver or sell,
or cause to be issued, delivered or sold, any shares of capital stock of Delrina
or any of the Delrina Subsidiaries or securities convertible into or
exchangeable for shares of capital stock of Delrina or any of the Delrina
Subsidiaries, or obligating Delrina or any of the Delrina Subsidiaries to grant,
extend or enter into any such option, warrant, call, right, commitment,
conversion right or agreement. There are no voting trusts or other agreements
or understandings to which Delrina is a party with respect to the voting of the
capital stock of Delrina or any of the Delrina Subsidiaries.
(c) REGISTRATION RIGHTS. Delrina is not under any obligation to
register under the Securities Act any of its presently outstanding securities or
any securities that may be subsequently issued.
2.3 AUTHORITY.
(a) CORPORATE ACTION. Delrina has all requisite corporate power
and authority to enter into this Agreement and, subject to approval of this
Agreement and the Arrangement by the shareholders of Delrina and approval by the
Court, to perform its obligations hereunder and to consummate the Arrangement
and the other transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Delrina and, subject to approval of this Agreement
and the Arrangement by the shareholders of Delrina and approval by the Court,
the consummation by Delrina of the Arrangement and the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Delrina. This Agreement has been duly executed and delivered by
Delrina and this Agreement is the valid and binding obligation of Delrina,
enforceable in accordance with its terms, except that such
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enforceability may be subject to (i) bankruptcy, insolvency, reorganization or
other similar laws affecting or relating to enforcement of creditors' rights
generally and (ii) general equitable principles.
(b) NO CONFLICT. Neither the execution, delivery and
performance of this Agreement or the Plan of Arrangement by Delrina, nor the
consummation of the transactions contemplated hereby or thereby by Delrina nor
compliance with the provisions hereof or thereof by Delrina will: (i) conflict
with, or result in any violations of, the articles of incorporation or bylaws of
Delrina or any equivalent document of any of the Delrina Subsidiaries, or (ii)
result in any breach of or cause a default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, amendment,
cancellation or acceleration of any obligation contained in, or the loss of any
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the material properties or assets of
Delrina or any of the Delrina Subsidiaries under, any term, condition or
provision of any loan or credit agreement, note, bond, mortgage, indenture,
lease or other material agreement, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Delrina or any of the Delrina
Subsidiaries or their respective properties or assets, other than any such
breaches, defaults, losses, liens, security interests, charges or encumbrances
which, individually or in the aggregate, would not have a Material Adverse
Effect on Delrina; or (iii) except for the requirement under the OBCA that the
Arrangement be approved by the holders of at least two-thirds (or such other
proportion as may be set out in the Interim Order) of the outstanding Delrina
Common Shares who are permitted to, and who, vote in accordance with the OBCA at
the Delrina Shareholders Meeting, require the affirmative vote of the holders of
greater than a majority of the issued and outstanding Delrina Common Shares.
(c) GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (each a "GOVERNMENTAL ENTITY"), is required
to be obtained by Delrina or any of the Delrina Subsidiaries in connection with
the execution and delivery of this Agreement or the Plan of Arrangement or the
consummation of the transactions contemplated hereby or thereby, except for:
(i) the filing with the Ontario Securities Commission (the "OSC") and the Court
and the mailing to shareholders of Delrina of the Joint Proxy Statement relating
to the meeting of the shareholders of Delrina (the "DELRINA SHAREHOLDERS
MEETING") to be held with respect to the approval by Delrina's shareholders of
this Agreement and the Arrangement, (ii) the filing of the Form F-4 or the
furnishing to the SEC of such reports and information under the Exchange Act and
the rules and regulations promulgated by the SEC thereunder, as may be required
in connection with this Agreement and the transactions contemplated hereby (the
"SEC FILINGS"); (iii) approval of the Court to the Arrangement and the filings
of the Articles of Arrangement and any other required amalgamation, arrangement
or other documents as required by the OBCA; (iv) such filings, authorizations,
orders and approvals as may be required under state "control share acquisition,"
"anti-takeover" or other similar statutes and regulations (collectively, "STATE
TAKEOVER LAWS"); (v) such filings, authorizations, orders and approvals as may
be required under the Securities Act (Ontario) and other relevant Canadian
securities statutes, any other applicable federal, provincial or state
securities laws and the rules of the National Association of Securities Dealers,
Inc. (the
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"NASD") or The Toronto Stock Exchange (the "TSE"); (vi) such filings and
notifications as may be necessary under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"); (vii) required notices and
filings under the Investment Canada Act and under the Competition Act (Canada);
and (viii) where the failure to obtain such consents, approvals, etc., would not
prevent or delay the consummation of the Arrangement or otherwise prevent
Delrina from performing its obligations under this Agreement and would not
reasonably be expected to have a Material Adverse Effect on Delrina.
2.4 SECURITIES REGULATORY AUTHORITY REPORTS AND FINANCIAL STATEMENTS.
(a) CANADIAN COMPLIANCE. Since June 30, 1993, Delrina has filed
all forms, reports and documents with the OSC required to be filed by it
pursuant to the Securities Act (Ontario) and the regulations promulgated
thereunder and the applicable policies and rules of the OSC (collectively, the
"DELRINA OSC REPORTS"), all of which have complied in all material respects with
all applicable requirements of such statute, regulations, policies and rules.
None of the Delrina 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. Delrina has delivered to Symantec's outside counsel correct and
complete copies of each Delrina OSC Report.
(b) SEC REPORTS. Delrina has delivered to Symantec's counsel
correct and complete copies of each report, schedule, registration statement and
definitive proxy statement (other than preliminary material) filed by Delrina
with the SEC on or after June 30, 1993 (the "DELRINA SEC DOCUMENTS"), which are
all the documents that Delrina was required to file with the SEC on or after
such date. As of their respective dates or, in the case of registration
statements, their effective dates (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing), none of the
Delrina SEC Documents (including all exhibits and schedules thereto and
documents incorporated by reference therein) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the Delrina SEC
Documents complied when filed in all material respects with the then applicable
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations promulgated by the SEC thereunder. Delrina has filed
all material documents and agreements which were required to be filed as
exhibits to the Delrina SEC Documents.
(c) FINANCIAL STATEMENTS. The consolidated balance sheets and
the consolidated statements of operations, retained earnings and cash flows
(including the related notes thereto) of Delrina contained in the Delrina OSC
Reports present fairly the consolidated financial position and the consolidated
results of operations and cash flows of Delrina and its consolidated Delrina
Subsidiaries as of the dates or for the periods presented therein in conformity
with Canadian generally accepted accounting principles applied on a consistent
basis during the periods involved, except as otherwise noted therein and subject
in the case of quarterly financial statements to normal and recurring year-end
audit adjustments.
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2.5 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Delrina for inclusion or incorporation by reference in the Joint
Proxy Statement (and, if filed, the Form F-4) will, at the time the Joint Proxy
Statement is mailed to the shareholders of Delrina and at the time of the
Delrina Shareholders Meeting (and, if filed, at the time the Form F-4 is
declared effective), contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Joint Proxy Statement will comply as to form in all material
respects with the provisions of the OBCA and applicable Canadian securities laws
and the rules and regulations promulgated thereunder.
2.6 COMPLIANCE WITH APPLICABLE LAWS. Except as disclosed in the
Delrina OSC Reports filed prior to the date of this Agreement, the businesses of
Delrina and the Delrina Subsidiaries are not being conducted in violation of any
law, ordinance, regulation, rule or order of any Governmental Entity where such
violation would have a Material Adverse Effect. Except as disclosed in the
Delrina OSC Reports filed prior to the date of this Agreement, Delrina has not
been notified by any Governmental Entity that any investigation or review with
respect to Delrina or any of the Delrina Subsidiaries is pending or threatened,
nor has any Governmental Entity notified Delrina of its intention to conduct the
same. Delrina and the Delrina Subsidiaries have all material permits, licenses
and franchises from Governmental Entities required to conduct their businesses
as now being conducted, and are in material compliance with all such permits,
licenses and franchises, except for those whose absence would not have a
Material Adverse Effect on Delrina.
2.7 LITIGATION. Except as disclosed in the Delrina OSC Reports filed
prior to the date of this Agreement, there is no suit, action, arbitration,
demand, claim or proceeding pending or, to the best knowledge of Delrina,
threatened against Delrina or any of the Delrina Subsidiaries that could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Delrina; nor is there any judgment, decree, injunction, rule
or order of any Governmental Entity or arbitrator outstanding against Delrina or
any of the Delrina Subsidiaries that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on Delrina. Delrina
has made available to Symantec correct and complete copies of all correspondence
prepared by its counsel for Delrina's auditors in connection with the last two
completed audits of Delrina's financial statements and any such correspondence
since the date of the last such audit.
2.8 ERISA AND OTHER COMPLIANCE.
(a) Delrina shall deliver to Symantec prior to Closing a list of
all employees of Delrina and of any Delrina Subsidiary ("EMPLOYEES"), their
salaries and the date and amount of their most recent salary increase. The
Delrina Disclosure Letter identifies (i) each "employee benefit plan," 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, and
(ii) all other Delrina Benefit Arrangements (as defined below) (including those
sponsored by the federal or any provincial government of Canada), and all other
material written or formal plans or agreements, if any, which currently provides
compensation or benefits to any Employee or
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former employee of Delrina or any of the Delrina Subsidiaries (including any
employment agreements entered into between Delrina or any of the Delrina
Subsidiaries and any Employee and workers' compensation, unemployment
compensation and other government-mandated programs) and which is currently or
previously was maintained, contributed to or entered into by Delrina or any of
the Delrina Subsidiaries under which Delrina or any of the Delrina Subsidiaries
or any ERISA Affiliate (as defined below) thereof has any present obligation or
liability (collectively, the "DELRINA EMPLOYEE PLANS"). For purposes of this
Section 2.8, "ERISA AFFILIATE" shall mean any entity which is a member of (A) a
"controlled group of corporations," as defined in section 414(b) of the Code,
(B) a group of entities under "common control," as defined in section 414(c) of
the Code, or (C) an "affiliated service group," as defined in section 414(m) of
the Code, or treasury regulations promulgated under section 414(o) of the Code,
any of which includes Delrina or any of the Delrina Subsidiaries. Copies of all
Delrina Employee Plans (and, if applicable, related trust agreements) and all
amendments thereto and any summary plan descriptions shall have been delivered
to Symantec or its counsel prior to Closing (as defined in Section 6.1),
together with the three most recent annual reports (Form 5500, including, if
applicable, schedule B thereto) prepared in connection with any such Delrina
Employee Plan. All Delrina Employee Plans which individually or collectively
would constitute an "employee pension benefit plan," as defined in section 3(2)
of ERISA (collectively, the "DELRINA PENSION PLANS"), are identified as such in
the Delrina Disclosure Letter. All contributions due from Delrina or any of the
Delrina Subsidiaries through the Effective Time with respect to any of the
Delrina Employee Plans has been or will be timely made as required under ERISA
or any other applicable legislation or have been accrued on Delrina's or any
such Delrina Subsidiary's financial statements as of March 31, 1995. Each
Delrina Employee Plan is in compliance in all material respects with, and has
been maintained in material compliance with its terms and with the requirements
prescribed by, any and all statutes, orders, rules and regulations, including,
without limitation, ERISA and the Code, which are applicable to such Delrina
Employee Plans. Each Delrina 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.
(b) No Delrina Pension Plan constitutes, or has since the
enactment of ERISA constituted, a "multiemployer plan," as defined in section
3(37) of ERISA. No Delrina Pension Plans are subject to Title IV of ERISA. No
"prohibited transaction," as defined in section 406 of ERISA or section 4975 of
the Code, has occurred with respect to any Delrina Employee Plan which is
covered by Title I of ERISA which would result in a material liability to
Delrina and the Delrina Subsidiaries taken as a whole, excluding transactions
effected pursuant to a statutory or administrative exemption. Nothing done or
omitted to be done and no transaction or holding of any asset under or in
connection with any Delrina Employee Plan has or will make Delrina or any
officer or director of Delrina subject to any material liability under Title I
of ERISA or liable for any material Tax (as defined in Section 2.14) or penalty
pursuant to sections 4972, 4975, 4976 or 4979 of the Code or section 502 of
ERISA.
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(c) Any Delrina Pension Plan which is intended to be qualified
under section 401(a) of the Code (a "DELRINA 401(A) PLAN") is so qualified and
has been so qualified during the period from its adoption to date, and the trust
forming a part thereof is exempt from tax pursuant to section 501(a) of the
Code. Delrina has delivered to Symantec or its counsel a complete and correct
copy of the most recent Internal Revenue Service determination letter with
respect to each Delrina 401(a) Plan.
(d) Except for those Delrina Benefit Arrangements (as defined
below) regarding severance benefits or employment termination which exist under
the employment laws, regulations or judicial decisions relating to employers in
Canada and other jurisdictions in which Delrina or any Delrina Subsidiary has
employees ("EMPLOYER LAWS"), the Delrina Disclosure Letter identifies each
employment, consulting, severance or other similar contract, arrangement or
policy and each plan or arrangement (written or oral) providing for insurance
coverage (including any self-insured arrangements), workers' benefits, vacation
benefits, severance benefits, disability benefits, death benefits,
hospitalization benefits, retirement benefits, deferred compensation, profit-
sharing, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits for employees, consultants or directors
which (A) is not a Delrina Employee Plan, (B) is entered into, maintained or
contributed to, as the case may be, by Delrina or any of the Delrina
Subsidiaries and (C) covers any Employee or former employee of Delrina or any of
the Delrina Subsidiaries. Such contracts, plans and arrangements as are
described in this Section 2.8(d) are herein referred to collectively as the
"DELRINA BENEFIT ARRANGEMENTS." Each Delrina Benefit Arrangement has been
maintained in substantial compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations which are
applicable to such Delrina Benefit Arrangement. Delrina has delivered to
Symantec or its counsel a complete and correct copy or description of each
Delrina Benefit Arrangement. None of the Delrina Benefits Arrangements or
Delrina Employee Plans promises or provides retiree medical or retiree insurance
benefits to any person.
(e) There has been no amendment to, written interpretation or
announcement by Delrina or any of the Delrina Subsidiaries relating to, or
change in employee participation or coverage under, any Delrina Employee Plan or
Delrina Benefit Arrangement that would increase materially the expense of
maintaining such Delrina Employee Plan or Delrina Benefit Arrangement above the
level of the expense incurred in respect thereof for the fiscal year ended June
30, 1995.
(f) Delrina has provided, or will have provided prior to the
Closing, to individuals entitled thereto all required notices and coverage
pursuant to section 4980B of the Code and the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), with respect to any
"qualifying event" (as defined in section 4980B(f)(3) of the Code) occurring
prior to and including the Closing Date (as defined in Section 6.1), and no
material Tax payable on account of section 4980B of the Code has been incurred
with respect to any Employee or former employees (or their beneficiaries) of
Delrina or any of the Delrina Subsidiaries.
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(g) No benefit payable or which may become payable by Delrina or
any of the Delrina Subsidiaries pursuant to any Delrina Employee Plan or any
Delrina Benefit Arrangement or as a result of or arising under this Agreement
shall constitute an "excess parachute payment" (as defined in section 280G(b)(1)
of the Code) which is subject to the imposition of an excise Tax under section
4999 of the Code or which would not be deductible by reason of section 280G of
the Code.
(h) Delrina and each Delrina Subsidiary is in compliance in all
material respects with all applicable laws, agreements and contracts relating to
employment, employment practices, wages, hours, and terms and conditions of
employment, including, but not limited to, employee compensation matters, but
not including ERISA.
(i) Delrina and each Delrina Subsidiary believes it has good
labor relations; nothing has come to Delrina's attention as a result of the
negotiation or entering into of this Agreement that would lead Delrina to
believe that the consummation of the transactions contemplated hereby will have
a Material Adverse Effect on labor relations; and neither Delrina nor any
Delrina Subsidiary has any knowledge that any of its or their key employees
intends to leave its or their employ except to the extent such knowledge is
obtained by Delrina through Symantec.
(j) Neither Delrina or any of its Subsidiaries has an employment
contract or material consulting agreement currently in effect that is not
terminable at will (other than agreements with the sole purpose of providing for
the confidentiality of proprietary information or assignment of inventions),
except as such termination rights are limited under Employer Laws. All
Employees and all officers and consultants of Delrina and the Delrina
Subsidiaries having access to proprietary information of Delrina have executed
and delivered to Delrina an agreement regarding the protection of such
proprietary information and the assignment of inventions to Delrina; copies of
the forms of all such agreements have been delivered or made available to
Symantec's counsel.
2.9 ABSENCE OF UNDISCLOSED LIABILITIES. At March 31, 1995 (the
"DELRINA BALANCE SHEET DATE"), (i) neither Delrina nor any of the Delrina
Subsidiaries had any liabilities or obligations of any nature (matured or
unmatured, fixed or contingent) which were material to Delrina and the Delrina
Subsidiaries, taken as a whole, and were not provided for in the consolidated
balance sheet of Delrina at the Delrina Balance Sheet Date, a copy of which is
attached hereto as EXHIBIT 2.9 (the "DELRINA BALANCE SHEET"); and (ii) all
reserves established by Delrina and set forth in the Delrina Balance Sheet were
reasonably adequate.
2.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Delrina OSC Reports filed prior to the date of this Agreement, since the Delrina
Balance Sheet Date there has not occurred:
(a) any change in the condition (financial or otherwise),
properties, assets, liabilities, businesses, operations, results of operations
or prospects of Delrina and the Delrina Subsidiaries, that could reasonably be
expected to have a Material Adverse Effect on Delrina;
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(b) any amendments or changes in the articles of incorporation
or bylaws of Delrina;
(c) any damage, destruction or loss, whether covered by
insurance or not, that could reasonably be expected to have a Material Adverse
Effect on Delrina;
(d) any redemption, repurchase or other acquisition of Delrina
Common Shares by Delrina (other than the repurchase of unvested shares at cost
pursuant to arrangements with terminated employees or consultants), or any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to Delrina Common Shares;
(e) any material increase in or material modification of the
compensation or benefits payable or to become payable by Delrina to any of its
directors or employees, except in the ordinary course of business consistent
with past practice;
(f) any material increase in or material modification of any
bonus, pension, insurance or Delrina Employee Plan or Delrina Benefit
Arrangement (including, but not limited to, the granting of stock options,
restricted stock awards or stock appreciation rights) made to, for or with any
of its employees, other than in the ordinary course of business consistent with
past practice;
(g) any acquisition or sale of a material amount of property or
assets of Delrina, other than in the ordinary course of business consistent with
past practice;
(h) any alteration in any term of any outstanding security of
Delrina;
(i) (A) other than in the ordinary course of business consistent
with past practice or other nonmaterial amounts, any incurrence, assumption or
guarantee by Delrina of any debt for borrowed money; (B) any issuance or sale of
any securities convertible into or exchangeable for debt securities of Delrina;
or (C) any issuance or sale of options or other rights to acquire from Delrina,
directly or indirectly, debt securities of Delrina or any securities convertible
into or exchangeable for any such debt securities;
(j) other than in the ordinary course of business consistent
with past practice or other nonmaterial amounts, any creation or assumption by
Delrina of any mortgage, pledge, security interest or lien or other encumbrance
on any asset;
(k) other than in the ordinary course of business consistent
with past practice, any making of any loan, advance or capital contribution to
or investment in any person other than (i) travel loans or advances made in the
ordinary course of business of Delrina, (ii) other loans and advances in an
aggregate amount which does not exceed $100,000 outstanding at any time and
(iii) purchases on the open market of liquid, publicly traded securities;
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(l) any entering into, amendment of, relinquishment, termination
or non-renewal by Delrina of any material contract, lease transaction,
commitment or other right or obligation other than in the ordinary course of
business;
(m) any transfer or grant of a material right under the Delrina
Intellectual Property Rights (as defined in Section 2.15 below), other than
those transferred or granted in the ordinary course of business;
(n) any labor dispute or charge of unfair labor practice (other
than routine individual grievances), any activity or proceeding by a labor union
or representative thereof to organize any employees of Delrina or any campaign
being conducted to solicit authorization from employees to be represented by
such labor union; or
(o) any agreement or arrangement made by Delrina to take any
action which, if taken prior to the date hereof, would have made any
representation or warranty set forth in this Agreement materially untrue or
incorrect as of the date when made unless otherwise disclosed.
2.11 AGREEMENTS. Section 2.11 of the Delrina Disclosure Letter sets
forth a list of any of the following written or oral contracts, agreements and
other instruments, copies of each of which written contracts, agreements or
instruments have been delivered to Symantec's counsel:
(a) contract with or commitment to any labor union;
(b) continuing contract for the future purchase, sale or
manufacture of products, material, supplies, equipment or services requiring
payment to or from Delrina or any Delrina Subsidiary in an amount in excess of
$500,000 per annum (i) which is not terminable on 120 days' or less notice
without cost or other liability at or at any time after the Effective Time or
(ii) in which Delrina or such Delrina Subsidiary has granted or received
manufacturing rights, most favored nations pricing provisions or exclusive
marketing rights relating to any product, group of products or territory;
(c) contract providing for the development of software for, or
license of software to, Delrina, or other Intellectual Property Rights used or
incorporated in one or more of the products referred to in Section 2.16 of the
Delrina Disclosure Letter (other than software licensed to Delrina from a third
party as to which Delrina has a fully-paid perpetual license to use and
distribute as Delrina is currently doing without any restrictions or
requirements as to how the Delrina Published Product is marketed, or that is
generally available to the public from such third party at a per copy license
fee of less than $5,000, but including any site or corporate license and each
agreement providing for either the delivery of source code or the escrow of
source code for the benefit of the licensee or any OEM, distribution or other
agreement that requires Delrina to perform any ongoing development of software
including updates and error corrections);
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(d) joint venture contract or other agreement which has involved
or is reasonably expected to involve a sharing of profits or losses in excess of
$25,000 per annum with any other party;
(e) indenture, mortgage, promissory note, loan agreement,
guarantee or other agreement or commitment for the borrowing of money, for a
line of credit or for a leasing transaction of a type required to be capitalized
in accordance with Statement of Financial Accounting Standards No. 13 of the
Financial Accounting Standards Board;
(f) lease or other agreement under which Delrina or any Delrina
Subsidiary is lessee of or holds or operates any items of tangible personal
property or real property owned by any third party and under which payments to
such third party exceed $100,000 per annum;
(g) agreement or arrangement for the sale of any assets,
properties or rights having a value in excess of $25,000, other than in the
ordinary course of business consistent with past practice;
(h) agreement which restricts Delrina or any Delrina Subsidiary
from engaging in any aspect of its business or competing in any line of business
in any geographic area or in any functional area or that requires Delrina or any
Delrina Subsidiary to distribute or use exclusively a third party technology or
product;
(i) agreement between or among Delrina or any Delrina Subsidiary
regarding intercompany loans, revenue or cost sharing, ownership or license of
Delrina IP Rights, intercompany royalties or dividends or similar matters;
(j) written dealer, distributor, sales representative, original
equipment manufacturer, value added remarketer or other agreement for the
ongoing distribution of the Delrina Products (as defined in Section 2.16);
(k) to the extent not identified in Section 2.8 of the Delrina
Disclosure Letter, contract or commitment for the employment of any officer,
employee or consultant or any other type of contract or understanding with any
officer, employee or consultant which is not immediately terminable without cost
or other liability (except for normal severance benefits available to employees
generally as set forth in any Delrina Benefit Plan and except for limitations on
such termination rights as exist under applicable Employer Laws;
(l) any other loan or credit agreement, note, bond, mortgage,
indenture, lease or other material agreement which is not otherwise disclosed
elsewhere in the Delrina Disclosure Letter, the breach or termination of which
would have a Material Adverse Effect on Delrina; and
(m) Delrina IP Rights Agreement (as defined in Section 2.15
below) or other material agreements relating to Delrina Products (as defined in
Section 2.16 below) other
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than any Delrina IP Rights Agreement or other such material agreement already
identified in response to Section 2.11(c) above or elsewhere in the Delrina
Disclosure Letter.
2.12 NO DEFAULTS. Except as disclosed in the Delrina OSC Reports
filed prior to the date of this Agreement, to Delrina's knowledge, neither it
nor any of the Delrina Subsidiaries is in default under, and there exists no
event, condition or occurrence which, after notice or lapse of time, or both,
would constitute such a default by Delrina or any of the Delrina Subsidiaries
under, any contract or agreement to which Delrina or any of the Delrina
Subsidiaries is a party and which would, if terminated due to such default,
have, insofar as can reasonably be foreseen, a Material Adverse Effect on
Delrina.
2.13 CERTAIN AGREEMENTS. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
result in any payment (including, without limitation, severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due to any director
or employee of Delrina or any of the Delrina Subsidiaries from Delrina or any of
the Delrina Subsidiaries, under any Delrina Employee Plan, Delrina Benefit
Arrangement or otherwise, (ii) materially increase any benefits otherwise
payable under any Delrina Employee Plan or Delrina Benefit Arrangement or (iii)
result in the acceleration of the time of payment or vesting of any such
benefits, including but not limited to the time of exercise of stock options.
2.14 TAXES. Delrina and each of the Delrina Subsidiaries have timely
filed, or caused to be filed, all Tax Returns (as defined below) required to be
filed by them (all of which returns were correct and complete in all material
respects) and have paid or withheld, or caused to be paid or withheld, all Taxes
(as defined below) that are due and payable, and Blue has provided adequate
accruals in accordance with Canadian generally accepted accounting principles in
its Financial Statements for any Taxes that have not been paid, whether or not
shown as being due on any returns. Since the Delrina Balance Sheet Date, no
material Tax liability has been assessed, proposed to be assessed, incurred or
accrued other than in the ordinary course of business. Neither Delrina nor any
Delrina Subsidiary has received any written notification that any material
issues have been raised (and are currently pending) by Revenue Canada, the
Internal Revenue Service or any other taxing authority, including, without
limitation, any sales tax authority, in connection with any of the Tax Returns
referred to above, and no waivers of statutes of limitations have been given or
requested with respect to Delrina or any of the Delrina Subsidiaries, in each
case except for any such written notices or waivers which have not had and could
not reasonably be expected to have a Material Adverse Effect. There are no
material proposed (but unassessed) additional Taxes, none have been asserted and
no Tax liens have been filed other than for Taxes not yet due and payable. None
of Delrina or any of the Delrina Subsidiaries (i) has made an election to be
treated as a "consenting corporation" under section 341(f) of the Code or (ii)
is a "personal holding company" within the meaning of section 542 of the Code.
As used in this Agreement, "TAX" and "TAXES" means, with respect to
any entity, (A) all income taxes (including any tax on or based upon net income,
gross income, income as specially defined, earnings, profits or selected items
of income, earnings or profits) and all
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capital, gross receipts, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, utility, compensation,
social security, workers' compensation, unemployment insurance or compensation,
stamp, occupation, premium, property or windfall profits taxes, alternative or
add-on minimum taxes, customs duties or other taxes, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties or
additional amounts imposed by any taxing authority (domestic or foreign) on such
entity, and any interest, penalties, additional taxes and additions to tax
imposed with respect to the foregoing, and (B) any liability for the payment of
any amount of the type described in the immediately preceding clause (A) as a
result of being a "transferee" (within the meaning of section 6901 of the Code
or any other applicable law) of another entity or a member of an affiliated or
combined group. As used in this Agreement, "TAX RETURNS" means all returns
relating to Taxes.
2.15 INTELLECTUAL PROPERTY. Except in each case as disclosed in the
Delrina OSC Reports filed prior to the date of this Agreement and subject to the
matters disclosed in Section 2.7 of the Delrina Disclosure Letter:
(a) Delrina and the Delrina Subsidiaries own, or have the right
to use, sell or license all material Intellectual Property Rights (as defined
below) necessary or required for the conduct of their respective businesses as
presently conducted and as proposed to be conducted by Delrina as of the date
hereof (such Intellectual Property Rights being hereinafter collectively
referred to as the "DELRINA IP RIGHTS") and such rights to use, sell or license
are reasonably sufficient for such conduct of their respective businesses;
(b) the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not constitute
a material breach of any assignment, conveyance or agreement governing any
Delrina IP Right significant to a product that accounted for more than 5% of
Delrina's gross revenues for the nine months ended March 31, 1995 (the "DELRINA
IP RIGHTS AGREEMENTS"), will not cause the forfeiture or termination or give
rise to a right of forfeiture or termination of any Delrina IP Right or
materially impair the right of Delrina and/or the Delrina Subsidiaries to use,
sell or license any Delrina IP Right or portion thereof (except where such
breach, forfeiture or termination would not have a Material Adverse Effect on
Delrina);
(c) there are no royalties, honoraria, fees or other payments in
excess of $100,000 payable by Delrina to any person by reason of the publication
or distribution of the Delrina Published Products (as defined in Section 2.16
below) other than as set forth in the Delrina IP Rights Agreements listed in the
Delrina Disclosure Letter;
(d) neither the manufacture, marketing, license, sale or lawful
use of any product currently licensed or sold by Delrina or any of the Delrina
Subsidiaries or currently under development by Delrina or any of the Delrina
Subsidiaries violates any license or agreement between Delrina or any of the
Delrina Subsidiaries and any third party or infringes any Intellectual Property
Right of any other party; and there is no pending or, to the best knowledge of
Delrina, threatened claim or litigation contesting the validity, ownership or
right to
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use, sell, license or dispose of any Delrina IP Right nor, to the best knowledge
of Delrina, is there any basis for any such claim, nor has Delrina received any
notice asserting that any Delrina IP Right or the proposed use, sale, license or
disposition thereof conflicts or will conflict with the rights of any other
party, nor, to the best knowledge of Delrina, is there any basis for any such
assertion, except to the extent that such violation(s), or notice or basis
therefor, have not had and could not reasonably be expected to have a Material
Adverse Effect on Delrina; and
(e) Delrina has taken reasonable and practicable steps designed
to safeguard and maintain the secrecy and confidentiality of, and its
proprietary rights in, all material Delrina IP Rights. All officers, employees
involved in the development of products or product documentation and consultants
of Delrina or any of the Delrina Subsidiaries have executed and delivered to
Delrina or the Delrina Subsidiary an agreement regarding the protection of
proprietary information and the assignment to Delrina or the Delrina Subsidiary
of all Intellectual Property Rights arising from the services performed for
Delrina or the Delrina Subsidiary by such persons; and copies of the forms of
all such agreements have been delivered to Symantec's counsel. No current or
prior officers, employees or consultants of Delrina claim an ownership interest
in any Delrina IP Rights as a result of having been involved in the development
of such property while employed by or consulting to Delrina, or otherwise.
Delrina will deliver prior to Closing a list of all applications,
registrations, filings and other formal actions made or taken pursuant to United
States, Canadian, provincial, federal, state and foreign laws by Delrina to
perfect or protect its interest in Delrina IP Rights, including, without
limitation, all patents, patent applications, trademarks and service marks,
trademark and service mark applications, copyrights and copyright applications
and to the knowledge of Delrina, there is no cancellation, termination or
expiration of any such registration or patent that is reasonably foreseeable and
is not intended to be renewed or extended by Delrina, except where the failure
to renew or extend would not have a Material Adverse Effect on Delrina. To the
best of Delrina's knowledge, it is not using any confidential information or
trade secrets of any former employer of any past or present employees.
As used herein, the term "INTELLECTUAL PROPERTY RIGHTS" shall mean
all worldwide industrial and intellectual property rights, including, without
limitation, patents, patent applications, patent rights, trademarks, trademark
applications, trade names, service marks, service mark applications, copyright,
copyright applications, mask works, franchises, licenses, know-how, trade
secrets, customer lists, proprietary processes and formulae, all source and
object code, algorithms, architecture, structure, display screens, layouts,
inventions, development tools and all documentation and media constituting,
describing or relating to the above, including, without limitation, manuals,
memoranda and records.
2.16 PRODUCTS AND DISTRIBUTION. Section 2.16 of the Delrina
Disclosure Letter contains a complete list of all of the top five software
products (by title, determined by aggregate sales receipts by Delrina or any of
the Delrina Subsidiaries in fiscal 1994 and fiscal 1995 through March 31, 1995
from such title) published and/or distributed by Delrina or the Delrina
Subsidiaries (the "DELRINA PUBLISHED PRODUCTS") and all material products under
development or consideration by Delrina or with an estimated public availability
date on or prior to March 31,
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1996 (the "DELRINA PRODUCTS UNDER DEVELOPMENT" and, collectively with the
Delrina Published Products, the "DELRINA PRODUCTS"). The Delrina Disclosure
Letter sets forth, for each Delrina Product Under Development, the currently
estimated public availability date (which Delrina believes to be reasonable).
2.17 FEES AND EXPENSES. Except for the fees and expenses set forth in
the Delrina Disclosure Letter payable to Broadview Associates, L.P., neither
Delrina or any of the Delrina Subsidiaries has paid or become obligated to pay
any fee or commission to any broker, finder or intermediary in connection with
the transactions contemplated by this Agreement.
2.18 INSURANCE. Delrina and the Delrina Subsidiaries maintain and at
all times since January 1, 1993 have maintained fire and casualty, general
liability, business interruption, product liability and sprinkler and water
damage insurance that Delrina believes to be reasonably prudent for its
business. Delrina will deliver prior to Closing a list of all such insurance
policies presently in effect, and correct and complete copies of all such
policies along with a history of claims made under such policies will have been
provided to Symantec or its counsel prior to Closing.
2.19 OWNERSHIP OF PROPERTY. Except (a) as disclosed in the Delrina
OSC Reports filed prior to the date of this Agreement, (b) for liens for current
Taxes not yet delinquent or (c) for liens imposed by law and incurred in the
ordinary course of business for obligations not yet due to carriers,
warehousemen, laborers, materialmen and the like, Delrina and each of the
Delrina Subsidiaries owns its real and personal property free and clear of all
security interests, mortgages, liens, charges, claims, options and encumbrances.
All real and tangible personal property of Delrina and each of the Delrina
Subsidiaries is generally in good repair and is operational and usable in the
operations of Delrina, subject to ordinary wear and tear and subject to
technical obsolescence. Neither Delrina nor any Delrina Subsidiary is in
violation of any zoning, building or safety ordinance, regulation or requirement
or other law or regulation applicable to the operation of owned or leased
properties (the violation of which would have a Material Adverse Effect on its
business or financial condition), or has received any notice of violation with
which it has not complied, except where such violation would not have a Material
Adverse Effect on Delrina.
2.20 ENVIRONMENTAL MATTERS.
(a) To Delrina's knowledge, during the period that Delrina and
the Delrina Subsidiaries have leased or owned their respective properties or
owned or operated any facilities, there have been no disposals, releases,
emissions, spills, discharges or threatened releases of Hazardous Materials (as
defined below) on, from or under such properties or facilities. Delrina has no
actual knowledge of any presence, disposals, releases, emissions, spills,
discharges or threatened releases of Hazardous Materials on, from or under any
of such properties or facilities, which may have occurred prior to Delrina or
any of the Delrina Subsidiaries having taken possession of any of such
properties and facilities. For the purposes of this Agreement, insofar as
properties and facilities in Canada are concerned, "HAZARDOUS MATERIALS" shall
mean any pollutant, contaminant, chemical, deleterious substance or industrial,
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toxic or hazardous waste or substance and, insofar as properties and facilities
in the United States are concerned, shall mean any hazardous or toxic substance,
material or waste which is or becomes prior to the Closing regulated under, or
defined as a "hazardous substance," "pollutant," "contaminant," "toxic
chemical," "hazardous chemical" under, (1) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et
seq., as amended ("CERCLA"); (2) any similar federal, state or local law; or (3)
regulations promulgated under any of the above laws or statutes. Insofar as
properties and facilities in the United States are concerned, the terms
"disposal," "release" and "threatened release" shall have the definitions
assigned thereto by CERCLA.
(b) To Delrina's knowledge, none of the properties, facilities
and operations of Delrina and the Delrina Subsidiaries is in violation of any
federal, provincial, state, municipal and local laws, statutes, bylaws,
ordinances, regulations and orders ("ENVIRONMENTAL LAWS") relating to protection
of the environment, occupational health and safety, industrial hygiene or
Hazardous Materials. During the time that Delrina or the Delrina Subsidiaries
have owned or leased their respective properties and facilities, neither Delrina
nor any of the Delrina Subsidiaries nor, to Delrina's knowledge, any third
party, has used, generated, manufactured, processed, treated, disposed of,
handled or stored on, under or about such properties or facilities or
transported to or from such properties or facilities any Hazardous Materials.
(c) There has been no litigation brought or threatened against
Delrina or any of the Delrina Subsidiaries by, or any settlement reached by
Delrina or any of the Delrina Subsidiaries with, any party or parties alleging
the presence, disposal, emission, spill, discharge, release or threatened
release of any Hazardous Materials on, from or under any properties or
facilities.
2.21 INTERESTED PARTY TRANSACTIONS. Except as disclosed in the
Delrina OSC Reports filed prior to the date of this Agreement, no officer or
director of Delrina or any "affiliate" or "associate" (as those terms are
defined in Rule 405 promulgated under the Securities Act) of any such person has
had, either directly or indirectly, a material interest in: (i) any person or
entity which purchases from or sells, licenses or furnishes to Delrina or any of
the Delrina Subsidiaries any goods, property, technology or intellectual or
other property rights or services; or (ii) any contract or agreement to which
Delrina or any of the Delrina Subsidiaries is a party or by which it may be
bound or affected.
2.22 BOARD APPROVAL. The Board of Directors of Delrina has, as of the
date hereof, (i) unanimously approved this Agreement and the Arrangement, (ii)
determined that the Arrangement is in the best interests of the shareholders of
Delrina and is on terms that are fair to such shareholders and (iii) recommended
that the shareholders of Delrina approve this Agreement and the Arrangement.
2.23 VOTE REQUIRED. The affirmative vote of two-thirds of the votes
cast by the holders of the outstanding Delrina Common Shares entitled to be cast
(or such other vote as may be set out in the Interim Order) is the only vote of
the holders of any class or series of Delrina's capital stock necessary to
approve this Agreement and the Arrangement.
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2.24 DISCLOSURE. No representation or warranty made by Delrina in
this Agreement, nor any document, written information, statement, financial
statement, certificate or exhibit prepared and furnished or to be prepared and
furnished by Delrina or its representatives pursuant hereto or in connection
with the transactions contemplated hereby, when taken together, contained any
untrue statement of a material fact when made, or omitted to state a material
fact necessary to make the statements or facts contained herein or therein not
misleading in light of the circumstances under which they were furnished.
2.25 FAIRNESS OPINION. Delrina's Board of Directors has received a
written opinion from Broadview Associates, L.P. that the Exchange Ratio is fair
to Delrina's shareholders from a financial point of view.
2.26 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material
agreement, judgment, injunction, order or decree binding upon Delrina or any
Delrina Subsidiary that has or could reasonably be expected to have the effect
of prohibiting or materially impairing any business practice of Delrina or any
Delrina Subsidiary, any acquisition of property by Delrina or any Delrina
Subsidiary or the conduct of business by Delrina or any Delrina Subsidiary as
currently conducted.
2.27 POOLING MATTERS. Neither Delrina nor any of its affiliates has,
to Delrina's knowledge and based upon consultation with its independent
auditors, taken or agreed to take any action that (without giving effect to this
Agreement, the transactions contemplated hereby or actions related thereto, or
any action taken or agreed to be taken by Symantec or any of its affiliates)
would adversely affect the ability of Symantec to account for the business
combination to be effected by the Arrangement as a pooling of interests under US
GAAP.
2.28 BOOKS AND RECORDS. The books, records and accounts of Delrina
and its Subsidiaries (a) have been maintained in accordance with good business
practices on a basis consistent with prior years, (b) are stated in reasonable
detail and accurately and fairly reflect the transactions and dispositions of
the assets of Delrina and (c) accurately and fairly reflect the basis for the
Delrina Financial Statements. Delrina has devised and maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with management's general or
specific authorization; and (b) transactions are recorded as necessary (i) to
permit preparation of financial statements in conformity with Canadian generally
accepted accounting principles, US GAAP or any other criteria applicable to such
statements and (ii) to maintain accountability for assets.
2.29 GOVERNMENT CONTRACTS. All representations, certifications and
disclosures made by Delrina to any Government Contract Party (as defined below)
have been in all material respects current, complete and accurate at the times
they were made. Delrina has no knowledge of, and has no reason to know of, any
acts, omissions or noncompliance with regard to any applicable public
contracting statute, regulation or contract requirement (whether express or
incorporated by reference) relating to any of Delrina's contracts with any
Government Contract Party (as defined below) in either case that have led to or
could lead to, either before or after the Closing Date, (a) any claim or dispute
involving Delrina and/or Symantec as successor in interest
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to Delrina and any Government Contract Party or (b) any suspension, debarment or
contract termination, or proceeding related thereto. Delrina has no knowledge
of, and has no reason to know of, any act or omission that relates to the
marketing, licensing or selling to any Government Contract Party (as defined
below) of any of Delrina technical data and computer software and that has led
to or could lead to, either before or after the Closing Date (as defined in
Section 6.1 below), any material cloud on any of Delrina's rights in and to its
technical data and computer software. Except for (i) Canadian or provincial
government incentives for certain nonmaterial employees, and (ii) research tax
credits, all of Delrina's development of technical data and computer software
was developed exclusively at private expense. For purposes of this Agreement,
the term "GOVERNMENT CONTRACT PARTY" means any independent or executive agency,
division, subdivision, audit group or procuring office of the Canadian or United
States federal government, including any prime contractor of the federal
government and any higher level subcontractor of a prime contractor of the
federal government, and including any employees or agents thereof, in each case
acting in such capacity.
3. REPRESENTATIONS AND WARRANTIES OF SYMANTEC
Except as set forth in a letter dated the date of this Agreement and
delivered by Symantec to Delrina concurrently herewith (the "SYMANTEC DISCLOSURE
LETTER"), Symantec hereby represents and warrants to Delrina that:
3.1 ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER. Symantec
and each of its subsidiaries (the "SYMANTEC SUBSIDIARIES") is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary, other
than in such jurisdictions where the failure so to qualify would not have a
Material Adverse Effect on Symantec. The Symantec Disclosure Letter sets forth
a correct and complete list of the Symantec Subsidiaries, the percentage of each
such subsidiary's outstanding capital stock owned by Symantec or another
subsidiary of Symantec and a correct and complete list of each jurisdiction in
which each of Symantec and each Symantec Subsidiary is duly qualified and in
good standing to do business. Symantec has delivered to Delrina's counsel
complete and correct copies of the certificate of incorporation and bylaws of
Symantec as amended to the date of this Agreement. Unless otherwise specified,
all references in this Agreement to deliveries to Delrina or its counsel shall
mean delivery to its outside counsel, Skadden, Arps, Slate, Meagher & Flom.
3.2 CAPITAL STRUCTURE.
(a) The authorized capital stock of Symantec consists of
70,000,000 shares of Symantec Common Stock, of which 38,599,353 shares were
issued and outstanding as of June 30, 1995 (the "MEASUREMENT DATE") and
1,000,000 shares of Symantec Preferred Stock, of which there were no shares
outstanding as of the Measurement Date. An aggregate of 12,700,000 shares of
Symantec Common Stock are reserved and authorized for issuance pursuant
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to the Symantec 1988 Employees Stock Option Plan (the "SYMANTEC OPTION PLAN"),
in respect of which options ("SYMANTEC OPTIONS") to purchase a total of
6,456,418 shares of Symantec Common Stock were outstanding as of the Measurement
Date. Options or warrants to purchase an aggregate of 460,577 shares of
Symantec Common Stock were outstanding on the Measurement Date to former
employees or warrant holders of companies that have been acquired by Symantec.
An aggregate of 600,000 shares of Symantec Common Stock are reserved and
authorized for issuance pursuant to the Symantec 1988 Directors Stock Option
Plan, of which options to purchase a total of 167,500 shares of Symantec Common
Stock were outstanding as of the Measurement Date and an aggregate of 450,000
shares of Symantec Common Stock are reserved and authorized for issuance
pursuant to the Symantec 1993 Directors Stock Option Plan (collectively, the
"SYMANTEC DIRECTORS PLANS"), under which options to purchase 127,250 shares were
outstanding as of the Measurement Date. An aggregate of 1,500,000 shares of
Symantec Common Stock are reserved and authorized for issuance pursuant to the
Symantec 1989 Employee Stock Purchase Plan (the "423 PLAN"), of which 1,207,529
have been issued as of the Measurement Date. As of the Measurement Date, there
was $15,000,000 of debt outstanding, convertible at the option of the holders
into a maximum of 1,250,000 shares of Symantec Common Stock. All issued and
outstanding shares of Symantec Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable, are not subject to any
preemptive rights or right of rescission, and have been offered, issued, sold
and delivered by Symantec in compliance with all registration, qualification and
prospectus requirements (or applicable exemptions therefrom) of applicable
federal and state securities laws. Except as set forth in Section 3.2 of the
Symantec Disclosure Letter, Symantec does not have any material subsidiaries or
any material equity interest, direct or indirect, in any corporation,
partnership, joint venture or other business entity. Except as set forth in
Section 3.2 of the Symantec Disclosure Letter, all of the shares of capital
stock of the Symantec Subsidiaries are owned by Symantec or a Symantec
Subsidiary free and clear of all security interests, liens, claims, pledges,
agreements, limitations in Symantec's voting rights, charges or other
encumbrances of any nature whatsoever.
(b) NO OTHER COMMITMENTS. Except for the Symantec Options and
warrants disclosed in Section 3.2(a) above, there are no options, warrants,
calls, rights, commitments, conversion rights or agreements of any character to
which Symantec or any of the Symantec Subsidiaries is a party or by which
Symantec or any of the Symantec Subsidiaries is bound obligating Symantec or any
of the Symantec Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, any shares of capital stock of Symantec or any of the
Symantec Subsidiaries or securities convertible into or exchangeable for shares
of capital stock of Symantec or any of the Symantec Subsidiaries, or obligating
Symantec or any of the Symantec Subsidiaries to grant, extend or enter into any
such option, warrant, call, right, commitment, conversion right or agreement.
There are no voting trusts or other agreements or understandings to which
Symantec is a party with respect to the voting of the capital stock of Symantec
or any of the Symantec Subsidiaries.
(c) REGISTRATION RIGHTS. Except as set forth in the Symantec
Disclosure Letter, Symantec is not under any obligation to register under the
Securities Act any of its presently outstanding securities or any securities
that may be subsequently issued.
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3.3 AUTHORITY.
(a) CORPORATE ACTION. Symantec has all requisite corporate
power and authority to enter into this Agreement and, subject to approval by the
stockholders of Symantec of the issuance of Symantec Common Stock in connection
with the Arrangement and upon exchange of the Exchangeable Shares and to
approval of the Arrangement by the Court, to perform its obligations hereunder
and to consummate the Arrangement and the other transactions contemplated by
this Agreement. The execution and delivery of this Agreement by Symantec and,
subject to approval by the stockholders of Symantec of the issuance of Symantec
Common Stock in connection with the Arrangement and upon exchange of the
Exchangeable Shares and to approval of the Arrangement by the Court, the
consummation by Symantec of the Arrangement and the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Symantec. This Agreement has been duly executed and delivered by
Symantec and this Agreement is the valid and binding obligation of Symantec,
enforceable in accordance with its terms, except that such enforceability may be
subject to (i) bankruptcy, insolvency, reorganization or other similar laws
affecting or relating to enforcement of creditors' rights generally and (ii)
general equitable principles.
(b) NO CONFLICT. Neither the execution, delivery and
performance of this Agreement or the Plan of Arrangement by Symantec, nor the
consummation of the transactions contemplated hereby or thereby by Symantec nor
compliance with the provisions hereof or thereof by Symantec will: (i) conflict
with, or result in any violations of the certificate of incorporation or bylaws
of Symantec or any of the Symantec Subsidiaries; or (ii) result in any breach or
cause a default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, amendment, cancellation or acceleration of
any obligation contained in, or the loss of any material benefit under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the material properties or assets of Symantec or any of the Symantec
Subsidiaries under, any term, condition or provision of any loan or credit
agreement, note, bond, mortgage, indenture, lease or other material agreement,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Symantec or any of the Symantec Subsidiaries or their respective properties
or assets, other than any such breaches, defaults, losses, liens, security
interests, charges or encumbrances which, individually or in the aggregate,
would not have a Material Adverse Effect on Symantec; or (iii) require the
affirmative vote of the holders of greater than a majority of the issued and
outstanding shares of Symantec Common Stock.
(c) GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained by Symantec or any of the Symantec
Subsidiaries in connection with the execution and delivery of this Agreement or
the Plan of Arrangement or the consummation of the transactions contemplated
hereby or thereby, except for: (i) the filing with the SEC of (A) the Form F-4
or the Form S-3 (if applicable) or (B) the Joint Proxy Statement relating to the
Symantec Stockholders Meeting, and (C) such reports and information under the
Exchange Act and the rules and regulations promulgated by the SEC thereunder, as
may be required in connection with this Agreement and the transactions
contemplated hereby; (ii) the filing of the
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Plan of Arrangement with the Ministry of Consumer and Commercial Relations of
the Province of Ontario and appropriate documents with the relevant authorities
of other states in which Symantec is qualified to do business; (iii) such
filings, authorizations, orders and approvals as may be required under State
Takeover Laws; (iv) such filings, authorizations, orders and approvals as may be
required under foreign laws, state securities laws and the Bylaws of the NASD;
(v) such filings and notifications as may be necessary under the HSR Act; and
(vi) where the failure to obtain such consents, approvals, etc., would not
prevent or delay the consummation of the Arrangement or otherwise prevent
Symantec from performing its obligations under this Agreement and would not
reasonably be expected to have a Material Adverse Effect on Symantec.
3.4 SEC REPORTS AND FINANCIAL STATEMENTS.
(a) SEC REPORTS. Symantec has delivered to Delrina's counsel
correct and complete copies of each report, schedule, registration statement and
definitive proxy statement (other than preliminary material) filed by Symantec
with the SEC on or after March 31, 1993 (the "SYMANTEC SEC DOCUMENTS"), which
are all the documents that Symantec was required to file with the SEC on or
after such date. As of their respective dates or, in the case of registration
statements, their effective dates (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing), none of the
Symantec SEC Documents (including all exhibits and schedules thereto and
documents incorporated by reference therein) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the Symantec SEC
Documents complied when filed in all material respects with the then applicable
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations promulgated by the SEC thereunder. Symantec has filed
all documents and agreements which were required to be filed as exhibits to the
Symantec SEC Documents.
(b) FINANCIAL STATEMENTS. The financial statements of Symantec
included in the Symantec SEC Documents complied as to form in all material
respects with the then applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with US GAAP applied on a consistent basis during the periods
involved (except as may have been indicated in the notes thereto or, in the case
of the unaudited statements, as permitted by Form 10-Q promulgated by the SEC)
and fairly present (subject, in the case of the unaudited statements, to normal,
year-end audit adjustments) the consolidated financial position of Symantec and
its consolidated Symantec Subsidiaries as at the respective dates thereof and
the consolidated results of their operations and cash flows (or changes in
financial position prior to the approval of Statement of Financial Accounting
Standards Number 95) for the respective periods then ended.
3.5 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Symantec for inclusion or incorporation by reference in the Joint
Proxy Statement (and, if filed, the Form F-4 and Form S-3) will, at the date the
Joint Proxy Statement is mailed to the stockholders of Symantec and at the time
of the Symantec Stockholders Meeting (and, if filed, at
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the time the Form F-4 and Form S-3 are declared effective), contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Joint Proxy
Statement will comply as to form in all material respects with the provisions of
the Securities Act and the Exchange Act and the rules and regulations
promulgated by the SEC thereunder.
3.6 COMPLIANCE WITH APPLICABLE LAWS. Except as disclosed in the
Symantec SEC Documents filed prior to the date of this Agreement, the businesses
of Symantec and the Symantec Subsidiaries are not being conducted in violation
of any law, ordinance, regulation, rule or order of any Governmental Entity
where such violation would have a Material Adverse Effect. Except as disclosed
in the Symantec SEC Documents filed prior to the date of this Agreement,
Symantec has not been notified by any Governmental Entity that any investigation
or review with respect to Symantec or any of the Symantec Subsidiaries is
pending or threatened, nor has any Governmental Entity notified Symantec of its
intention to conduct the same. Symantec and the Symantec Subsidiaries have all
material permits, licenses and franchises from Governmental Entities required to
conduct their businesses as now being conducted, and are in material compliance
with all such permits, licenses and franchises, except for those whose absence
would not have a Material Adverse Effect on Symantec.
3.7 LITIGATION. Except as disclosed in the Symantec SEC Documents
filed prior to the date of this Agreement, there is no suit, action,
arbitration, demand, claim or proceeding pending or, to the best knowledge of
Symantec, threatened against Symantec or any of the Symantec Subsidiaries that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on Symantec; nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Symantec or any of the Symantec Subsidiaries that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect on
Symantec. Symantec has made available to Delrina correct and complete copies of
all correspondence prepared by its counsel for Symantec's auditors in connection
with the last two completed audits of Symantec's financial statements and any
such correspondence since the date of the last such audit.
3.8 ERISA AND OTHER COMPLIANCE.
(a) The Symantec Disclosure Letter identifies (i) each "employee
benefit plan," as defined in section 3(3) of ERISA, and (ii) all other written
or formal plans or agreements involving direct or indirect compensation or
benefits in excess of $60,000 per person per annum (including any employment
agreements entered into between Symantec or any of the Symantec Subsidiaries and
any employee of Symantec or any of the Symantec Subsidiaries, but excluding
workers' compensation, unemployment compensation and other government-mandated
programs) currently or previously maintained, contributed to or entered into by
Symantec or any of the Symantec Subsidiaries under which Symantec or any of the
Symantec Subsidiaries or any ERISA Affiliate thereof has any present or future
obligation or liability (collectively, the "SYMANTEC EMPLOYEE PLANS"). All
Symantec Employee Plans which individually or collectively would constitute an
"employee pension benefit plan," as defined in section 3(2) of ERISA
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(collectively, the "SYMANTEC PENSION PLANS"), are identified as such in the
Symantec Disclosure Letter. All contributions due from Symantec or any of the
Symantec Subsidiaries through the Effective Time with respect to any of the
Symantec Employee Plans has been or will be timely made as required under ERISA
or any other applicable legislation or have been accrued on Symantec's or any
such Symantec Subsidiary's financial statements as of March 31, 1995. Each
Symantec Employee Plan has been maintained in material compliance with its terms
and with the requirements prescribed by any and all statutes, orders, rules and
regulations, including, without limitation, ERISA and the Code, which are
applicable to such Symantec Employee Plans.
(b) No Symantec Pension Plan constitutes, or has since the
enactment of ERISA constituted, a "multiemployer plan," as defined in section
3(37) of ERISA. No Symantec Pension Plans are subject to Title IV of ERISA. No
"prohibited transaction," as defined in section 406 of ERISA or section 4975 of
the Code, has occurred with respect to any Symantec Employee Plan which is
covered by Title I of ERISA which would result in a material liability to
Symantec and the Symantec Subsidiaries taken as a whole, excluding transactions
effected pursuant to a statutory or administrative exemption. Nothing done or
omitted to be done and no transaction or holding of any asset under or in
connection with any Symantec Employee Plan has or will make Symantec or any
officer or director of Symantec subject to any material liability under Title I
of ERISA or liable for any material Tax or penalty pursuant to sections 4972,
4975, 4976 or 4979 of the Code or section 502 of ERISA.
(c) Any Symantec Pension Plan which is intended to be qualified
under section 401(a) of the Code (a "SYMANTEC 401(a) PLAN") is so qualified and
has been so qualified during the period from its adoption to date, and the trust
forming a part thereof is exempt from tax pursuant to section 501(a) of the
Code. Symantec has delivered to Delrina or its counsel a complete and correct
copy of the most recent Internal Revenue Service determination letter with
respect to each Symantec 401(a) Plan.
(d) Each Symantec plan or arrangement (written or oral)
providing for insurance coverage (including any self-insured arrangements),
workers' benefits, vacation benefits, severance benefits, disability benefits,
death benefits, hospitalization benefits, retirement benefits, deferred
compensation, profit-sharing, bonuses, stock options, stock purchase, phantom
stock, stock appreciation or other forms of incentive compensation or post-
retirement insurance, compensation or benefits for employees, consultants or
directors (collectively "SYMANTEC BENEFIT ARRANGEMENTS") has been maintained in
substantial compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations which are applicable to such
Symantec Benefit Arrangement.
(e) There has been no amendment to, written interpretation or
announcement (whether or not written) by Symantec or any of the Symantec
Subsidiaries relating to, or change in employee participation or coverage under,
any Symantec Employee Plan or Symantec Benefit Arrangement that would increase
materially the expense of maintaining such Symantec Employee Plan or Symantec
Benefit Arrangement above the level of the expense incurred in respect thereof
for the fiscal year ended March 31, 1995.
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(f) Symantec has provided, or will have provided prior to the
Closing (as defined in Section 6.1), to individuals entitled thereto all
required notices and coverage pursuant to section 4980B of COBRA, with respect
to any "qualifying event" (as defined in section 4980B(f)(3) of the Code)
occurring prior to and including the Closing Date, and no material Tax payable
on account of section 4980B of the Code has been incurred with respect to any
current or former employees (or their beneficiaries) of Symantec or any of the
Symantec Subsidiaries.
(g) No benefit payable or which may become payable by Symantec
or any of the Symantec Subsidiaries pursuant to any Symantec Employee Plan or
any Symantec Benefit Arrangement or as a result of or arising under this
Agreement shall constitute an "excess parachute payment" (as defined in section
280G(b)(1) of the Code) which is subject to the imposition of an excise Tax
under section 4999 of the Code or which would not be deductible by reason of
section 280G of the Code.
(h) Symantec and each Symantec Subsidiary is in compliance in
all material respects with all applicable laws, agreements and contracts
relating to employment, employment practices, wages, hours, and terms and
conditions of employment, including, but not limited to, employee compensation
matters, but not including ERISA.
(i) Symantec and each Symantec Subsidiary believes it has good
labor relations; nothing has come to Symantec's attention as a result of the
negotiation or entering into this Agreement that would lead Symantec to believe
that the consummation of the transactions contemplated hereby will have a
material adverse effect on labor relations; and neither Symantec nor any
Symantec Subsidiary has any knowledge that any of its or their key employees
intends to leave its or their employ.
3.9 ABSENCE OF UNDISCLOSED LIABILITIES. At March 31, 1995 (the
"SYMANTEC BALANCE SHEET DATE"), (i) neither Symantec nor any of the Symantec
Subsidiaries had any liabilities or obligations of any nature (matured or
unmatured, fixed or contingent) which were material to Symantec and the Symantec
Subsidiaries, taken as a whole, and were not provided for in the consolidated
balance sheet of Symantec at the Symantec Balance Sheet Date, a copy of which is
attached hereto as EXHIBIT 3.9 (the "SYMANTEC BALANCE SHEET"); and (ii) all
reserves established by Symantec and set forth in the Symantec Balance Sheet
were reasonably adequate.
3.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Symantec SEC Documents filed prior to the date of this Agreement, since the
Symantec Balance Sheet Date there has not occurred:
(a) any change in the condition (financial or otherwise),
properties, assets, liabilities, businesses, operations, results of operations
or prospects of Symantec and the Symantec Subsidiaries, taken as a whole that
could reasonably be expected to have a Material Adverse Effect on Symantec;
(b) any amendments or changes in the certificate of
incorporation or bylaws of Symantec;
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(c) any damage, destruction or loss, whether covered by
insurance or not, that could reasonably be expected to have a Material Adverse
Effect on Symantec;
(d) any redemption, repurchase or other acquisition of shares of
Symantec Common Stock by Symantec (other than the repurchase of unvested shares
at cost pursuant to arrangements with terminated employees or consultants), or
any declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to Symantec Common Stock;
(e) any material increase in or material modification of the
compensation or benefits payable or to become payable by Symantec to any of its
directors or employees, except in the ordinary course of business consistent
with past practice;
(f) any material increase in or material modification of any
bonus, pension, insurance or Symantec Employee Plan or Symantec Benefit
Arrangement (including, but not limited to, the granting of stock options,
restricted stock awards or stock appreciation rights) made to, for or with any
of its employees, other than in the ordinary course of business consistent with
past practice;
(g) any acquisition or sale of a material amount of property or
assets of Symantec, other than in the ordinary course of business consistent
with past practice;
(h) any alteration in any term of any outstanding security of
Symantec;
(i) (A) other than in the ordinary course of business
consistent with past practice or other nonmaterial amounts, any incurrence,
assumption or guarantee by Symantec of any debt for borrowed money; (B) any
issuance or sale of any securities convertible into or exchangeable for debt
securities of Symantec; or (C) any issuance or sale of options or other rights
to acquire from Symantec, directly or indirectly, debt securities of Symantec or
any securities convertible into or exchangeable for any such debt securities;
(j) other than in the ordinary course of business consistent
with past practice or other nonmaterial amounts, any creation or assumption by
Symantec of any mortgage, pledge, security interest or lien or other encumbrance
on any asset;
(k) other than in the ordinary course of business consistent
with past practice, any making of any loan, advance or capital contribution to
or investment in any person other than (i) travel loans or advances made in the
ordinary course of business of Symantec, (ii) other loans and advances in an
aggregate amount which does not exceed $100,000 outstanding at any time and
(iii) purchases on the open market of liquid, publicly traded securities;
(l) any entering into, amendment of, relinquishment, termination
or non-renewal by Symantec of any material contract, lease transaction,
commitment or other right or obligation other than in the ordinary course of
business;
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(m) any transfer or grant of a material right under the Symantec
IP Rights (as defined in Section 3.15 below), other than those transferred or
granted in the ordinary course of business consistent with past practices;
(n) any labor dispute or charge of unfair labor practice (other
than routine individual grievances), any activity or proceeding by a labor union
or representative thereof to organize any employees of Symantec or any campaign
being conducted to solicit authorization from employees to be represented by
such labor union; or
(o) any agreement or arrangement made by Symantec to take any
action which, if taken prior to the date hereof, would have made any
representation or warranty set forth in this Agreement materially untrue or
incorrect as of the date when made unless otherwise disclosed.
3.11 AGREEMENTS. Section 3.11 of the Symantec Disclosure Letter sets
forth a list of any of the following written or oral contracts, agreements and
other instruments, copies of each of which written contracts, agreements or
instruments have been delivered to Delrina's counsel:
(a) contract with or commitment to any labor union;
(b) continuing contract for the future purchase, sale or
manufacture of products, material, supplies, equipment or services requiring
payment to or from Symantec or any Symantec Subsidiary in an amount in excess of
$500,000 per annum (i) which is not terminable on 120 days' or less notice
without cost or other liability at or at any time after the Effective Time or
(ii) in which Symantec or such Symantec Subsidiary has granted or received
manufacturing rights, most favored nations pricing provisions or exclusive
marketing rights relating to any product, group of products or territory;
(c) contract providing for the development of software for, or
license of software to, Symantec, or other Intellectual Property Rights used or
incorporated in one or more of the products referred in Section 3.16 of the
Symantec Disclosure Letter in (other than software licensed to Symantec from a
third party as to which Symantec has a fully-paid perpetual license to use and
distribute as Symantec is currently doing without any restriction or
requirements as to how the Symantec Published Product is marketed, or that is
generally available to the public from such third party at a per copy license
fee of less than $5,000, but including any site or corporate license and each
agreement providing for either the delivery of source code or the escrow of
source code for the benefit of the licensee or any OEM, distribution or other
agreement that requires Symantec to perform any ongoing development of software
including updates and error corrections);
(d) joint venture contract or other agreement which has involved
or is reasonably expected to involve a sharing of profits or losses in excess of
$25,000 per annum with any other party;
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(e) contract or commitment for the employment of any officer,
employee or consultant or any other type of contract or understanding with any
officer which is not immediately terminable without cost or other liability
(except for normal severance benefits available to employees generally as set
forth in any Symantec Benefit Arrangement);
(f) indenture, mortgage, promissory note, loan agreement,
guarantee or other agreement or commitment for the borrowing of money, for a
line of credit or for a leasing transaction of a type required to be capitalized
in accordance with Statement of Financial Accounting Standards No. 13 of the
Financial Accounting Standards Board;
(g) lease or other agreement under which Symantec or any
Symantec Subsidiary is lessee of or holds or operates any items of tangible
personal property or real property owned by any third party and under which
payments to such third party exceed $100,000 per annum;
(h) agreement or arrangement for the sale of any assets,
properties or rights having a value in excess of $25,000 other than in the
ordinary course of business consistent with past practice;
(i) agreement which restricts Symantec or any Symantec
Subsidiary from engaging in any aspect of its business or competing in any line
of business in any geographic area;
(j) agreement between or among Symantec or any Symantec
Subsidiary regarding intercompany loans, revenue or cost sharing, ownership or
license of Symantec IP Rights, intercompany royalties or dividends or similar
matters; or
(k) Symantec IP Rights Agreement (as defined in Section 3.15
below) or other material agreements relating to Symantec Products (as defined in
Section 3.16 below) other than any Symantec IP Rights Agreement or other such
material agreement already identified in response to Section 3.11(c) above or
elsewhere in the Symantec Disclosure Letter.
3.12 NO DEFAULTS. Except as disclosed in the Symantec SEC Documents
filed prior to the date of this Agreement, to Symantec's knowledge, neither it
nor any of the Symantec Subsidiaries is in default under, and there exists no
event, condition or occurrence which, after notice or lapse of time, or both,
would constitute such a default by Symantec or any of the Symantec Subsidiaries
under, any contract or agreement to which Symantec or any of the Symantec
Subsidiaries is a party and which would, if terminated or modified, have,
insofar as can reasonably be foreseen, a Material Adverse Effect on Symantec.
3.13 CERTAIN AGREEMENTS. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
result in any payment (including, without limitation, severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due to any director
or employee of Symantec or any of the Symantec Subsidiaries from Symantec or any
of the Symantec Subsidiaries, under any Symantec Employee Plan, Symantec Benefit
Arrangement or otherwise, (ii) materially increase
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any benefits otherwise payable under any Symantec Employee Plan or Symantec
Benefit Arrangement or (iii) result in the acceleration of the time of payment
or vesting of any such benefits, including but not limited to the time of
exercise of stock options.
3.14 TAXES. Symantec and each of the Symantec Subsidiaries have
timely filed, or caused to be filed, all Tax Returns required to be filed by
them (all of which returns were correct and complete in all material respects)
and have paid or withheld, or caused to be paid or withheld, all Taxes that are
due and payable, and has provided adequate accruals in accordance with US GAAP
in its Financial Statements for any Taxes that have not been paid, whether or
not shown as being due on any returns. Since the Symantec Balance Sheet Date,
no material Tax liability has been assessed, proposed to be assessed, incurred
or accrued other than in the ordinary course of business. Neither Symantec nor
any Symantec Subsidiary has received any written notification that any material
issues have been raised (and are currently pending) by the United States
Internal Revenue Service, Revenue Canada or any other taxing authority,
including, without limitation, any sales tax authority, in connection with any
of the Tax returns referred to above, and no waivers of statutes of limitations
have been given or requested with respect to Symantec or any of the Symantec
Subsidiaries, in each case except for any such written notices or waivers which
have not had and could not reasonably be expected to have a Material Adverse
Effect. There are no material proposed (but unassessed) additional Taxes, none
have been asserted and no Tax liens have been filed other than for Taxes not yet
due and payable. None of Symantec or any of the Symantec Subsidiaries (i) has
made an election to be treated as a "consenting corporation" under section
341(f) of the Code or (ii) is a "personal holding company" within the meaning of
section 542 of the Code. Symantec is not a "specified financial institution" or
specified person in relation to any such institution for purposes of subsection
112(2.2) of the Income Tax Act (Canada).
3.15 INTELLECTUAL PROPERTY. Except in each case as disclosed in the
Symantec SEC Documents filed prior to the date of this Agreement:
(a) Symantec and the Symantec Subsidiaries own, or have the
right to use, sell or license all material Intellectual Property Rights
necessary or required for the conduct of their respective businesses as
presently conducted (such Intellectual Property Rights being hereinafter
collectively referred to as the "SYMANTEC IP RIGHTS") and such rights to use,
sell or license are reasonably sufficient for such conduct of their respective
businesses;
(b) the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not constitute
a material breach of any assignment, conveyance or agreement governing any
Symantec IP Right significant to a product that accounted for more than 5% of
Symantec's gross revenues for the twelve months ended March 31, 1995 (the
"SYMANTEC IP RIGHTS AGREEMENTS"), will not cause the forfeiture or termination
or give rise to a right of forfeiture or termination of any Symantec IP Right or
materially impair the right of Symantec and/or the Symantec Subsidiaries to use,
sell or license any Symantec IP Right or portion thereof (except where such
breach, forfeiture or termination would not have a Material Adverse Effect on
Symantec);
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(c) there are no royalties, honoraria, fees or other payments in
excess of $100,000 payable by Symantec to any person by reason of the
publication or distribution of the Symantec Published Products (as defined in
Section 3.16 below) other than as set forth in the Symantec IP Rights Agreements
listed in the Symantec Disclosure Letter;
(d) neither the manufacture, marketing, license, sale or lawful
use of any product currently licensed or sold by Symantec or any of the Symantec
Subsidiaries or currently under development by Symantec or any of the Symantec
Subsidiaries violates any license or agreement between Symantec or any of the
Symantec Subsidiaries and any third party or infringes any Intellectual Property
Right of any other party; and there is no pending or, to the best knowledge of
Symantec, threatened claim or litigation contesting the validity, ownership or
right to use, sell, license or dispose of any Symantec IP Right nor, to the best
knowledge of Symantec, is there any basis for any such claim, nor has Symantec
received any notice asserting that any Symantec IP Right or the proposed use,
sale, license or disposition thereof conflicts or will conflict with the rights
of any other party, nor, to the best knowledge of Symantec, is there any basis
for any such assertion, except to the extent that such violation(s), or notice
or basis therefor, have not had and could not reasonably be expected to have, a
Material Adverse Effect on Symantec; and
(e) Symantec has taken reasonable and practicable steps designed
to safeguard and maintain the secrecy and confidentiality of, and its
proprietary rights in, all material Symantec IP Rights. All officers, employees
and consultants of Symantec or any of the Symantec Subsidiaries have executed
and delivered to Symantec or the Symantec Subsidiary an agreement regarding the
protection of proprietary information and the assignment to Symantec or the
Symantec Subsidiary of all Intellectual Property Rights arising from the
services performed for Symantec or the Symantec Subsidiary by such persons. No
current or prior officers, employees or consultants of Symantec claim an
ownership interest in any Symantec IP Rights as a result of having been involved
in the development of such property while employed by or consulting to Symantec,
or otherwise.
3.16 PRODUCTS AND DISTRIBUTION. The Symantec Disclosure Letter
contains a complete list of all of the top five software products (by title,
determined by aggregate sales receipts by Symantec or any of the Symantec
Subsidiaries in fiscal 1995 from such title) published and/or distributed by
Symantec or the Symantec Subsidiaries (the "SYMANTEC PUBLISHED PRODUCTS") and
the top five material products under development or consideration by Symantec or
the Symantec Subsidiaries with a scheduled public availability date on or prior
to March 31, 1996 (the "SYMANTEC PRODUCTS UNDER DEVELOPMENT" and, collectively
with the Symantec Published Products, the "SYMANTEC PRODUCTS"). The Symantec
Disclosure Letter sets forth, for each Symantec Product Under Development, the
currently scheduled public availability date (which Symantec believes to be
reasonable).
3.17 FEES AND EXPENSES. Except for the fees and expenses set forth in
the Symantec Disclosure Letter payable to Donaldson, Lufkin & Jenrette
Securities Corporation, neither Symantec or any of the Symantec Subsidiaries has
paid or become obligated to pay any
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fee or commission to any broker, finder or intermediary in connection with the
transactions contemplated by this Agreement.
3.18 INSURANCE. Symantec and the Symantec Subsidiaries maintain and
at all times since January 1, 1993 have maintained fire and casualty, general
liability, business interruption, product liability and sprinkler and water
damage insurance that Symantec believes to be reasonably prudent for its
business.
3.19 OWNERSHIP OF PROPERTY. Except (a) as disclosed in the Symantec
SEC Documents filed prior to the date of this Agreement, (b) for liens for
current Taxes not yet delinquent or (c) for liens imposed by law and incurred in
the ordinary course of business for obligations not yet due to carriers,
warehousemen, laborers, materialmen and the like, Symantec and each of the
Symantec Subsidiaries owns its real and personal property free and clear of all
security interests, mortgages, liens, charges, claims, options and encumbrances.
All real and tangible personal property of Symantec and each of the Symantec
Subsidiaries is generally in good repair and is operational and usable in the
operations of Symantec, subject to ordinary wear and tear and subject to
technical obsolescence. Neither Symantec nor any Symantec Subsidiary is in
violation of any zoning, building or safety ordinance, regulation or requirement
or other law or regulation applicable to the operation of owned or leased
properties (the violation of which would have a Material Adverse Effect on its
business or financial condition), or has received any notice of violation with
which it has not complied, except where such violation would not have a Material
Adverse Effect on Symantec.
3.20 ENVIRONMENTAL MATTERS.
(a) To Symantec's knowledge, during the period that Symantec and
the Symantec Subsidiaries have leased or owned their respective properties or
owned or operated any facilities, there have been no disposals, releases or
threatened releases of Hazardous Materials on, from or under such properties or
facilities. Symantec has no actual knowledge of any presence, disposals,
releases or threatened releases of Hazardous Materials on, from or under any of
such properties or facilities, which may have occurred prior to Symantec or any
of the Symantec Subsidiaries having taken possession of any of such properties
or facilities.
(b) To Symantec's knowledge, none of the properties or
facilities of Symantec or the Symantec Subsidiaries is in violation of any
federal, state or local law, ordinance, regulation or order relating to
industrial hygiene or to the environmental conditions on, under or about such
properties or facilities, including, but not limited to, soil and ground water
condition. During the time that Symantec or the Symantec Subsidiaries have
owned or leased their respective properties and facilities, neither Symantec nor
any of the Symantec Subsidiaries nor, to Symantec's knowledge, any third party,
has used, generated, manufactured or stored on, under or about such properties
or facilities or transported to or from such properties or facilities any
Hazardous Materials.
(c) During the time that Symantec or the Symantec Subsidiaries
have owned or leased their respective properties and facilities, there has been
no litigation brought or threatened against Symantec or any of the Symantec
Subsidiaries by, or any settlement reached
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by Symantec or any of the Symantec Subsidiaries with, any party or parties
alleging the presence, disposal, release or threatened release of any Hazardous
Materials on, from or under any of such properties or facilities.
3.21 INTERESTED PARTY TRANSACTIONS. Except as disclosed in the
Symantec SEC Documents filed prior to the date of this Agreement, no officer or
director of Symantec or any "affiliate" or "associate" (as those terms are
defined in Rule 405 promulgated under the Securities Act) of any such person has
had, either directly or indirectly, a material interest in: (i) any person or
entity which purchases from or sells, licenses or furnishes to Symantec or any
of the Symantec Subsidiaries any goods, property, technology or intellectual or
other property rights or services; or (ii) any contract or agreement to which
Symantec or any of the Symantec Subsidiaries is a party or by which it may be
bound or affected.
3.22 BOARD APPROVAL. The Board of Directors of Symantec has, as of
the date hereof, unanimously (i) approved this Agreement and the Arrangement,
(ii) determined that the Arrangement is in the best interests of the
stockholders of Symantec and is on terms that are fair to such stockholders and
(iii) recommended that the stockholders of Symantec approve this Agreement and
the Arrangement.
3.23 VOTE REQUIRED. The affirmative vote of a majority of the votes
that holders of the outstanding shares of Symantec Common Stock are entitled to
cast is the only vote of the holders of any class or series of Symantec's
capital stock necessary to approve the issuance of the Symantec Common Stock
issuable upon consummation of the Arrangement and the exchange of the
Exchangeable Shares pursuant to this Agreement and the Arrangement.
3.24 DISCLOSURE. No representation or warranty made by Symantec in
this Agreement, nor any document, written information, statement, financial
statement, certificate or exhibit prepared and furnished or to be prepared and
furnished by Symantec or its representatives pursuant hereto or in connection
with the transactions contemplated hereby, when taken together, contained any
untrue statement of a material fact when made, or omitted to state a material
fact necessary to make the statements or facts contained herein or therein not
misleading in light of the circumstances under which they were furnished.
3.25 FAIRNESS OPINION. Symantec's Board of Directors has received a
written opinion from Donaldson, Lufkin & Jenrette Securities Corporation that
the Exchange Ratio is fair to Symantec's stockholders from a financial point of
view.
3.26 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material
agreement, judgment, injunction, order or decree binding upon Symantec of any of
its Subsidiaries that has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of Symantec or any of
its Subsidiaries, any acquisition of property by Symantec or any of its
Subsidiaries or the conduct of business by Symantec or any of its Subsidiaries
as currently conducted.
3.27 POOLING MATTERS. Neither Symantec nor any of its affiliates has,
to Symantec's knowledge and based upon consultation with its independent
auditors, taken or
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agreed to take any action that (without giving effect to this Agreement, the
transactions contemplated hereby or actions related thereto, or any action taken
or agreed to be taken by Delrina or any of its affiliates) would affect the
ability of Symantec to account for the business combination to be effected by
the Arrangement as a pooling of interests.
3.28 BOOKS AND RECORDS. The books, records and accounts of Symantec
and its Subsidiaries (a) have been maintained in accordance with good business
practices on a basis consistent with prior years, (b) are stated in reasonable
detail and accurately and fairly reflect the transactions and dispositions of
the assets of Symantec and (c) accurately and fairly reflect the basis for the
Symantec Financial Statements. Symantec has devised and maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with management's general or
specific authorization; and (b) transactions are recorded as necessary (i) to
permit preparation of financial statements in conformity with US GAAP or any
other criteria applicable to such statements and (ii) to maintain accountability
for assets.
3.29 GOVERNMENT CONTRACTS. All representations, certifications and
disclosures made by Symantec to any Government Contract Party have been in all
material respects current, complete and accurate at the times they were made.
Symantec has no knowledge of, and has no reason to know of, any acts, omissions
or noncompliance with regard to any applicable public contracting statute,
regulation or contract requirement (whether express or incorporated by
reference) relating to any of Symantec's contracts with any Government Contract
Party in either case that have led to or could lead to, either before or after
the Closing Date, (a) any claim or dispute involving Symantec and/or Delrina as
successor in interest to Symantec and any Government Contract Party or (b) any
suspension, debarment or contract termination, or proceeding related thereto.
Symantec has no knowledge of, and has no reason to know of, any act or omission
that relates to the marketing, licensing or selling to any Government Contract
Party of any of Symantec technical data and computer software and that has led
to or could lead to, either before or after the Closing Date (as defined in
Section 6.1 below), any material cloud on any of Symantec's rights in and to its
technical data and computer software. All of Symantec's development of
technical data and computer software was developed exclusively at private
expense.
4. DELRINA COVENANTS
4.1 ADVICE OF CHANGES. During the period from the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, Delrina will promptly advise Symantec in
writing (a) of any event occurring subsequent to the date of this Agreement that
would render any representation or warranty of Delrina or Symantec contained in
this Agreement, if made on or as of the date of such event or the Closing Date,
untrue or inaccurate in any material respect, (b) of any Material Adverse Effect
on Delrina and (c) of any breach by Delrina or Symantec of any covenant or
agreement contained in this Agreement. To ensure compliance with this Section
4.1, Delrina shall deliver to Symantec as soon as practicable after the end of
each monthly and quarterly accounting period ending after the date of this
Agreement and before the earlier of the Effective Time or the termination of
this
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Agreement in accordance with its terms, (i) within thirty days after the end of
each monthly accounting period, an unaudited statement of consolidated worldwide
revenues for Delrina and the Delrina Subsidiaries and an unaudited
unconsolidated balance sheet, statement of operations and statement of cash
flows for Delrina and each of the Delrina Subsidiaries and (ii) within forty-
five days after the end of each quarterly accounting period, an unaudited
consolidated balance sheet, statement of operations and statement of cash flows
for Delrina, all of which financial statements shall be prepared in the ordinary
course of business, in accordance with Delrina's books and records and Canadian
generally accepted accounting principles and shall fairly present the
consolidated financial position of Delrina and the Delrina Subsidiaries as of
their respective dates and the results of Delrina's and the Delrina
Subsidiaries' operations for the periods then ended.
4.2 MAINTENANCE OF BUSINESS. During the period from the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, Delrina will use its diligent commercial
efforts to carry on and preserve its business and its relationships with
customers, suppliers, employees and others in substantially the same manner as
it has prior to the date hereof. If Delrina becomes aware of any material
deterioration in the relationship with any material customer, supplier or key
employee, Delrina will promptly bring such information to the attention of
Symantec in writing and, if requested by Symantec, Delrina will exert its best
efforts to restore the relationship.
4.3 CONDUCT OF BUSINESS. During the period from the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, Delrina will continue to conduct its
business and maintain its business relationships in the ordinary and usual
course and will not (other than as contemplated in Article 1 of this Agreement),
without the prior consent of Symantec, which will not be unreasonably withheld:
(a) borrow any money except for amounts that are not in the
aggregate material to the financial condition of Delrina and the Delrina
Subsidiaries, taken as a whole;
(b) enter into any material transaction not in the ordinary
course of its business;
(c) encumber or permit to be encumbered any of its assets except
in the ordinary course of its business consistent with past practice;
(d) dispose of any material portion of its assets except in the
ordinary course of business consistent with past practice;
(e) enter into (except as disclosed in the Delrina Disclosure
Letter) any material lease or contract for the purchase or sale or license of
any property, real or personal, except in the ordinary course of business
consistent with past practice;
(f) fail to maintain its equipment and other assets in good
working condition and repair according to the standards it has maintained to the
date of this Agreement, subject only to ordinary wear and tear;
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(g) pay (or make any oral or written commitments or
representations to pay) any bonus, increased salary or special remuneration to
any officer, employee or consultant (except for normal salary increases
consistent with past practices not to exceed 10% per year and except pursuant to
existing arrangements previously disclosed to Symantec) or enter into or vary
the terms of any employment, consulting or severance agreement with any such
person, pay any severance or termination pay (other than payments made in
accordance with plans or agreements existing on the date hereof and disclosed in
the Delrina Disclosure Letter), grant any stock option (except for normal grants
to newly hired employees, consultants and directors and "evergreen" or incentive
grants to existing employees, consultants and directors pursuant to Delrina's
existing option plans or policies consistent with past practice of options to
purchase up to an aggregate of 250,000 Delrina Common Shares) or issue any
restricted stock, or enter into or modify any agreement or plan or increase
benefits of the type described in Section 2.8;
(h) change accounting methods;
(i) declare, set aside or pay any cash or stock dividend or
other distribution in respect of capital stock, or redeem or otherwise acquire
any of its capital stock (other than the repurchase of unvested shares at cost
pursuant to arrangements with terminated employees or consultants in the
ordinary course of business consistent with Delrina's past practice);
(j) amend or terminate any material contract, agreement or
license to which it is a party except for those amendments or terminations in
the ordinary course of its business, consistent with past practice, which are
not material in amount or effect;
(k) lend any amount to any person or entity, other than (i)
advances for travel and expenses which are incurred in the ordinary course of
business consistent with past practice and documented by receipts for the
claimed amounts, (ii) any loans pursuant to any Delrina 401(a) Plan, or (iii)
loans to employees of Delrina not exceeding $30,000 in any individual case or
$150,000 in the aggregate, which loans shall not be made for the purpose of
exercising Delrina Options;
(l) guarantee or act as a surety for any obligation except for
obligations in amounts that are not material in the aggregate;
(m) waive or release any right or claim except for the waiver or
release of non-material claims in the ordinary course of business, consistent
with past practice or the waiver or release of rights or claims set forth in the
Delrina Disclosure Letter;
(n) issue or sell any shares of its capital stock of any class
(except upon the exercise of a bona fide option or warrant currently outstanding
or permitted to be granted under Section 4.3(g)), or any other of its
securities, or issue or create any warrants, obligations, subscriptions, options
(except as expressly permitted under Section 4.3(g)), convertible securities or
other commitments to issue shares of capital stock, or accelerate the vesting of
any outstanding option or other security;
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(o) split or combine the outstanding shares of its capital stock
of any class or enter into any recapitalization or agreement affecting the
number or rights of outstanding shares of its capital stock of any class or
affecting any other of its securities;
(p) subject to Section 9.1(h), merge, consolidate or reorganize
with, or acquire any entity, or enter into any agreement to do any of the
foregoing, except as set forth in the Delrina Disclosure Letter;
(q) amend its articles of incorporation or bylaws except as
contemplated by this Agreement;
(r) license any Delrina IP Rights except in the ordinary course
of business consistent with past practice;
(s) agree to any audit assessments by any Tax authority in
excess of $200,000 in the aggregate;
(t) change any insurance coverage or issue any certificates of
insurance except in the ordinary course of business consistent with past
practice; or
(u) agree to do, or permit any Delrina Subsidiary to do or agree
to do, or enter into negotiations with respect to, any of the things described
in the preceding clauses in this Section 4.3.
4.4 SHAREHOLDER APPROVAL. Delrina will call the Delrina Shareholders
Meeting to be held within 45 days after the SEC has indicated that it has no
further comments on the Joint Proxy Statement (or, if the Form F-4 is filed, the
date on which the Form F-4 is declared effective by the SEC) to submit this
Agreement, the Arrangement and related matters for the consideration and
approval of the Delrina Shareholders. Such approval will be recommended by
Delrina's Board of Directors and management, subject to the fiduciary
obligations of its directors and officers. Such meeting will be called, held
and conducted, and any proxies will be solicited, in compliance with applicable
law. Concurrently with the execution of this Agreement, Dennis Bennie, Mark
Skapinker and Bert Amato (collectively, the "DELRINA PRINCIPAL SHAREHOLDERS")
have executed Delrina Affiliate Agreements (as defined in Section 4.5), agreeing
among other things to vote in favor of the Arrangement, and have executed Stock
Option Agreements in the form of EXHIBIT 4.4 (the "OPTION AGREEMENTS") granting
Symantec the option to purchase their Delrina Common Shares under certain
circumstances.
4.5 DELRINA AFFILIATE AGREEMENTS. To ensure that the Arrangement
will be accounted for as a "pooling of interests" and to ensure compliance with
Rule 145 of the rules and regulations promulgated by the SEC under the
Securities Act, Delrina's Affiliates have concurrently signed and delivered to
Symantec the Delrina Affiliates Agreements in the form of EXHIBIT 4.5 (the
"DELRINA AFFILIATE AGREEMENTS") agreeing that such persons will make no
disposition of Delrina Common Shares from the date 30 days prior to the
Effective Time until Symantec shall have publicly released its first report of
quarterly financial statements that include the combined financial results of
Delrina and Symantec for a period of at least 30 days of
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combined operations, and agreeing to certain other restrictions as set forth in
such Delrina Affiliate Agreements. For purposes of this Agreement, an
"AFFILIATE" shall have the meaning referred to in Rule 145 under the Securities
Act.
4.6 JOINT PROXY STATEMENT. Delrina will mail the Joint Proxy
Statement to its shareholders in a timely manner for the purpose of considering
and voting upon the Arrangement at the Delrina Shareholders Meeting. Delrina
will promptly provide all information relating to its business or operations
necessary for inclusion in the Joint Proxy Statement to satisfy all requirements
of applicable U. S. and Canadian state, provincial and federal corporate and
securities laws. Delrina shall be solely responsible for any statement,
information or omission in the Joint Proxy Statement relating to it or its
Affiliates based upon written information furnished by it. Delrina will not
provide to its shareholders or publish any material concerning it or its
Affiliates that violates applicable Canadian law, the Securities Act or the
Exchange Act with respect to the transactions contemplated hereby.
4.7 REGULATORY APPROVALS. Delrina will promptly execute and file, or
join in the execution and filing, of any application or other document that may
be necessary in order to obtain the authorization, approval or consent of any
Governmental Entity, which may be reasonably required, or which Symantec may
reasonably request, in connection with the consummation of the transactions
contemplated by this Agreement. Delrina will use its best efforts to promptly
obtain all such authorizations, approvals and consents. Without limiting the
generality of the foregoing, as promptly as practicable after the execution of
this Agreement, Delrina shall file with the Federal Trade Commission (the "FTC")
and the Antitrust Division of the Department of Justice (the "DOJ"), a pre-
Arrangement notification report under the HSR Act and shall make such filings as
are necessary under the Investment Canada Act and the Competition Act (Canada).
4.8 NECESSARY CONSENTS. During the term of this Agreement, Delrina
will use its best efforts to obtain such written consents and take such other
actions as may be necessary or appropriate in addition to those set forth in
Section 4.7 to allow the consummation of the transactions contemplated hereby
and to allow Delrina to carry on its business after the Effective Time.
4.9 ACCESS TO INFORMATION. Delrina will allow Symantec and its
agents reasonable access to the files, books, records and offices of Delrina and
each Delrina Subsidiary, including, without limitation, any and all information
relating to Delrina's Taxes, commitments, contracts, leases, licenses and real,
personal and intangible property and financial condition. Delrina will cause
its accountants to cooperate with Symantec and its agents in making available to
Symantec all financial information reasonably requested, including, without
limitation, the right to examine all working papers pertaining to all Tax
Returns and financial statements prepared or audited by such accountants.
4.10 SATISFACTION OF CONDITIONS PRECEDENT. During the term of this
Agreement, Delrina will use its best efforts to satisfy or cause to be satisfied
all the conditions precedent that
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are set forth in Article 8, and Delrina will use its best efforts to cause the
Arrangement and the other transactions contemplated by this Agreement to be
consummated.
4.11 NO OTHER NEGOTIATIONS. (a) From and after the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, Delrina and the Delrina Subsidiaries
shall not, and shall use their best efforts to see that their respective
directors do not, and shall not permit their respective officers, employees,
representatives, investment bankers, agents and affiliates to, directly or
indirectly, (i) solicit, initiate or engage in discussions or negotiations with
any person, encourage submission of any inquiries, proposals or offers by, or
take any other action intended or designed to facilitate the efforts of any
person, other than Symantec, relating to the possible acquisition of Delrina or
any of its Subsidiaries (whether by way of Arrangement, amalgamation, take-over
bid, tender offer, purchase of capital stock, purchase of assets or otherwise)
or any material portion of its or their capital stock or assets (with any such
efforts by any such person, including a firm proposal to make such an
acquisition, to be referred to as an "ACQUISITION PROPOSAL"), (ii) provide non-
public information with respect to Delrina or any of its Subsidiaries, or afford
any access to the properties, books or records of Delrina or its Subsidiaries,
to any person, other than Symantec, relating to a possible Acquisition Proposal
by any person other than Symantec, (iii) make or authorize any statement,
recommendation or solicitation in support of any possible Acquisition Proposal
by any person, other than by Symantec, `or (iv) enter into an agreement with any
person, other than Symantec, providing for a possible Acquisition Proposal.
Delrina, its Subsidiaries, and their respective directors, officers, employees,
representatives, investment bankers, agents and affiliates, shall immediately
cease any and all existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
(b) Notwithstanding the foregoing, prior to the approval of this
Agreement and the Arrangement by the Delrina Shareholders at the Delrina
Shareholders Meeting, nothing contained in this Agreement shall prevent the
Board of Directors of Delrina (or its agents pursuant to its instructions) from
(i) engaging in discussions or negotiations with (but not soliciting or
initiating such discussions or negotiations or encouraging inquiries from) a
party concerning an unsolicited Acquisition Proposal, (ii) providing non-public
information with respect to Delrina or the Delrina Subsidiaries that has
previously been provided to Symantec or (iii) making any statement or
recommendation in support of any Acquisition Proposal, in each case if the
Delrina Board of Directors first determines in good faith, based on the advice
of outside legal counsel, that such action is required by reason of the
fiduciary duties of the members of the Board to Delrina's shareholders under
applicable law; provided that in each such event Delrina first notifies Symantec
of such determination by the Delrina Board of Directors and provides Symantec
with a true and complete copy of any Acquisition Proposal or other written
communication concerning a possible Acquisition Proposal received from such
third party and of all documents containing or referring to non-public
information of Delrina that are supplied to such third party. Except to the
extent expressly referenced in this Section 4.11, nothing in such Section
however, shall relieve Delrina from complying with the other terms of this
Agreement. If Delrina or any of its Subsidiaries receives any unsolicited offer
or proposal to enter negotiations relating to an Acquisition Proposal, Delrina
shall immediately notify Symantec thereof, including information as to the
identity of the party making any such offer or
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proposal and the specific terms of such offer or proposal, as the case may be.
Delrina shall be responsible for any breach of this Section by any of its (or
its Subsidiaries') directors, officers, employees, representatives, investment
bankers, agents and affiliates.
4.12 REPRESENTATIONS OF SHAREHOLDERS. Delrina will use its best
efforts to cause the Delrina Principal Shareholders to cooperate with counsel to
Delrina to assist them in providing the tax opinions called for by Section 7.12.
4.13 EMPLOYMENT AND NONCOMPETITION AGREEMENTS. Concurrently with the
execution of this Agreement, Dennis Bennie, Mark Skapinker, and Bert Amato will
have entered into Employment and Noncompetition Agreements in the form attached
hereto as EXHIBIT 4.13 (the "NONCOMPETITION AGREEMENTS"), to take effect at the
Closing.
5. SYMANTEC COVENANTS
5.1 ADVICE OF CHANGES. During the period from the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, Symantec will promptly advise Delrina in
writing (a) of any event occurring subsequent to the date of this Agreement that
would render any representation or warranty of Symantec or Delrina contained in
this Agreement, if made on or as of the date of such event or the Closing Date,
untrue or inaccurate in any material respect, (b) of any Material Adverse Effect
on Symantec and (c) of any breach by Delrina or Symantec of any covenant or
agreement contained in this Agreement. To ensure compliance with this Section
5.1, Symantec shall deliver to Delrina as soon as practicable but in any event
within thirty days after the end of each monthly accounting period ending after
the date of this Agreement and before the earlier of the Effective Time or the
termination of this Agreement in accordance with its terms terminated, an
unaudited consolidated balance sheet, statement of operations and statement of
cash flows for Symantec, which financial statements shall be prepared in the
ordinary course of business, in accordance with Symantec's books and records and
US GAAP and shall fairly present the consolidated financial position of Symantec
as of their respective dates and the results of Symantec's operations for the
periods then ended.
5.2 MAINTENANCE OF BUSINESS. During the period from the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, Symantec will use its diligent
commercial efforts to carry on and preserve its business and its relationships
with customers, suppliers, employees and others in substantially the same manner
as it has prior to the date hereof. If Symantec becomes aware of any material
deterioration in the relationship with any customer, supplier or key employee,
it will promptly bring such information to the attention of Delrina in writing
and, if requested by Delrina, will exert its best efforts to restore the
relationship.
5.3 CONDUCT OF BUSINESS. During the period from the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, Symantec will continue to conduct its
business and maintain its business relationships in the ordinary and usual
course and will not, without the prior consent of Delrina, which will not be
unreasonably withheld:
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(a) solicit any proposal from any third party for the
acquisition of all or substantially all of the business of Symantec (whether by
way of take-over bid, tender offer, purchase of capital stock, purchase of
assets or otherwise).
(b) dispose of any material portion of its assets except in the
ordinary course of business consistent with past practice;
(c) grant any stock option (except for (A) grants pursuant to
transactions permitted under Section 5.3(i) and (B) normal grants to newly hired
employees, consultants and directors and "evergreen" or incentive grants to
existing employees, consultants and directors pursuant to Symantec's existing
option plans or policies consistent with past practice of options to purchase up
to an aggregate of 850,000 shares of Symantec Common Stock) or issue any
restricted stock, or enter into or modify any agreement or plan or increase
benefits of the type described in Section 3.8;
(d) change accounting methods;
(e) declare, set aside or pay any cash or stock dividend or
other distribution in respect of capital stock, or redeem or otherwise acquire
any of its capital stock (other than the repurchase of unvested shares at cost
pursuant to arrangements with terminated employees or consultants in the
ordinary course of business consistent with Symantec's past practice);
(f) amend or terminate any material contract, agreement or
license to which it is a party except for those amendments or terminations in
the ordinary course of business consistent with past practice, which are not
material in amount or effect;
(g) issue or sell any shares of its capital stock of any class
(except pursuant to transactions described in Section 5.3(i) and except upon the
exercise of a bona fide option or warrant currently outstanding or permitted to
be granted under Section 5.3(c)), or any other of its securities, or issue or
create any warrants, obligations, subscriptions, options (except as expressly
permitted under Section 5.3(e)), convertible securities or other commitments to
issue shares of capital stock, or accelerate the vesting of any outstanding
option or other security;
(h) split or combine the outstanding shares of its capital stock
of any class or enter into any recapitalization or agreement affecting the
number or rights of outstanding shares of its capital stock of any class or
affecting any other of its securities;
(i) acquire any entity, enter into, or publicly announce any
intention to enter into, any agreement to acquire any entity, except as set
forth in the Symantec Disclosure Letter and except for any transactions that
would not involve the issuance of Symantec Common Stock or payment by Symantec
of other consideration having a value in excess of $300 million;
(j) amend its certificate of incorporation or bylaws except as
contemplated by this Agreement;
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(k) license any Symantec IP Rights except in the ordinary course
of business consistent with past practice; or
(l) agree to any audit assessment by any Tax authority in excess
of $200,000 in the aggregate.
5.4 STOCKHOLDER APPROVAL. Symantec will call the Symantec
Stockholders Meeting to be held within 45 days after the SEC has indicated that
it has no further comments on the Joint Proxy Statement (or, if the Form F-4 is
filed, the date on which the Form F-4 is declared effective by the SEC) to
submit the issuance of Symantec Common Stock from time to time upon exchange of
the Exchangeable Shares for the consideration and approval of the Symantec
Stockholders. Such approval will be recommended by Symantec's Board of
Directors and management, subject to the fiduciary obligations of its directors
and officers. Such meeting will be called, held and conducted, and any proxies
will be solicited, in compliance with applicable law.
5.5 SYMANTEC AFFILIATE AGREEMENTS. To ensure that the Arrangement
will be accounted for as a "pooling of interests," Symantec's Affiliates have
concurrently signed and delivered to Symantec the Symantec Affiliates Agreements
in the form of EXHIBIT 5.5 (the "SYMANTEC AFFILIATE AGREEMENTS") agreeing that
such persons will make no disposition of Symantec Common Stock from the date 30
days prior to the Effective Time until Symantec shall have publicly released its
first report of quarterly financial statements that include the combined
financial results of Delrina and Symantec for a period of at least 30 days of
combined operations, except as set forth in such agreements.
5.6 JOINT PROXY STATEMENT. Symantec will mail the Joint Proxy
Statement to its stockholders in a timely manner, for the purpose of considering
and voting at the Symantec Stockholders Meeting upon the issuance of Symantec
Common Stock in connection with the Arrangement and the exchange of the
Exchangeable Shares. Symantec will promptly provide all information relating to
its business or operations necessary for inclusion in the Joint Proxy Statement
to satisfy all requirements of applicable U. S. state and federal corporate and
securities laws. Symantec shall be solely responsible for any statement,
information or omission in the Joint Proxy Statement relating to it or its
affiliates based upon written information furnished by it. Symantec will not
provide or publish to its stockholders any material concerning it or its
affiliates that violates the Securities Act or the Exchange Act with respect to
the transactions contemplated hereby.
5.7 REGULATORY APPROVALS. Symantec will promptly execute and file,
or join in the execution and filing, of any application or other document that
may be necessary in order to obtain the authorization, approval or consent of
any governmental body, federal, state, local or foreign which may be reasonably
required, or which Delrina may reasonably request, in connection with the
consummation of the transactions contemplated by this Agreement. Symantec will
use its best efforts to promptly obtain all such authorizations, approvals and
consents. Without limiting the generality of the foregoing, as promptly as
practicable after the execution of this Agreement, Symantec shall file with the
FTC and the DOJ a pre-Arrangement
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notification report under the HSR Act and shall make such filings as are
necessary under the Investment Canada Act and the Competition Act (Canada).
5.8 NECESSARY CONSENTS. During the term of this Agreement, Symantec
will use its best efforts to obtain such written consents and take such other
actions as may be necessary or appropriate in addition to those set forth in
Section 5.7 to allow the consummation of the transactions contemplated hereby.
5.9 ACCESS TO INFORMATION. Symantec will allow Delrina and its
agents reasonable access to the files, books, records and offices of Symantec
and each Symantec Subsidiary, including, without limitation, any and all
information relating to Symantec's Taxes, commitments, contracts, leases,
licenses and real, personal and intangible property and financial condition.
Symantec will cause its accountants to cooperate with Delrina and its agents in
making available to Delrina all financial information reasonably requested,
including, without limitation, the right to examine all working papers
pertaining to all Tax Returns and financial statements prepared or audited by
such accountants.
5.10 SATISFACTION OF CONDITIONS PRECEDENT. During the term of this
Agreement, Symantec will use its best efforts to satisfy or cause to be
satisfied all the conditions precedent that are set forth in Article 7, and
Symantec will use its best efforts to cause the Arrangement and the other
transactions contemplated by this Agreement to be consummated.
5.11 INDEMNIFICATION.
(a) In addition to the rights granted under the Indemnity
Agreements, Symantec agrees that all rights to indemnification or exculpation
now existing in favor of the employees, agents, directors or officers (the
"INDEMNIFIED PARTIES") of Delrina and its subsidiaries as provided in its
articles of incorporation or bylaws, or in any agreement between an Indemnified
Party and Delrina or any of the Delrina Subsidiaries a copy of which has been
provided to Symantec's counsel prior to the date of the execution of this
Agreement (an "INDEMNIFICATION AGREEMENT"), in effect on the date hereof shall
survive the Arrangement and shall continue in full force and effect for a period
of not less than six years from the Effective Time and Symantec hereby assumes,
effective upon consummation of the Arrangement, all such liability.
(b) There shall be maintained in effect for not less than six years
from the Effective Time the current policies of the directors' and officers'
liability insurance maintained by Delrina in the amounts and with the coverages
that can be obtained with no material increase in premiums from the premiums in
effect on the date of this Agreement (other than adjustments for the general
rate of inflation); Symantec may, however, substitute therefor policies of at
least the same coverage containing terms and conditions which are no less
advantageous, provided that such substitution shall not result in any gaps or
lapses in coverages with respect to matters occurring prior to the Effective
Time to the extent currently available, and provided that in no event shall
Symantec be required pursuant to this Section 5.11 to pay premiums in excess of
those in effect on the date of this Agreement.
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(c) Upon the Closing, Symantec will enter into indemnity agreements
in the form attached hereto as EXHIBIT 5.11(c) (the "INDEMNITY AGREEMENTS") with
those individuals who become members of the Board of Directors of Symantec
pursuant to Section 7.16 and those individuals who are appointed to serve as
executive officers of Delrina immediately after the Closing.
5.12 LISTING. Symantec will cause the shares of Symantec Common Stock
to be issued from time to time upon exchange of the Exchangeable Shares to be
listed upon the Closing on the Nasdaq National Market. Symantec will cause the
Exchangeable Shares to be listed upon the Closing on the TSE or other Canadian
securities exchange approved by Symantec and Delrina.
5.13 EMPLOYMENT AND EMPLOYEE BENEFITS AFTER THE CLOSING. Symantec
hereby agrees that from and after the Closing, and for a period of at least 12
months thereafter, Symantec will provide to the Employees who immediately prior
to the Closing were in the employ of Delrina and any of the Delrina Subsidiaries
and who after the Closing become employees of Symantec and remain Symantec
employees during such 12 month period (the "TRANSFERRED EMPLOYEES"), benefits
either (i) under Symantec's employee benefit plans on substantially similar
terms as Symantec employees generally, or (ii) under the Delrina Employee Plans
substantially similar in the aggregate to those currently provided to the
Transferred Employees under the Delrina Employee Plans.
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5.14 REORGANIZATION PROCEDURES.
(a) Following the Effective Date, Symantec will cause Delrina to
continue the historic business of Delrina or to use a significant portion of
Delrina's historic business assets in a business.
(b) Symantec does not presently have any plan or intention to
liquidate Delrina, to merge Delrina with or into another corporation, or to sell
or otherwise dispose of any of the stock of Delrina (whether acquired pursuant
to the Arrangement or pursuant to the exchange of any shares of Delrina stock
for shares of Symantec stock).
(c) Symantec does not presently have any plan or intention to
cause Delrina to issue additional shares of Delrina stock to any persons other
than Symantec.
6. CLOSING MATTERS
6.1 THE CLOSING. Subject to the termination of this Agreement as
provided in Article 9 below, the Closing of the transactions contemplated by
this Agreement (the "CLOSING") will take place at the offices of Fenwick & West,
Two Palo Alto Square, Palo Alto, California 94306 on a date (the "CLOSING DATE")
and at a time to be mutually agreed upon by the parties, which date shall be no
later than the third business day after all conditions to Closing set forth
herein shall have been satisfied or waived, unless another place, time and date
is mutually selected by Delrina and Symantec. Concurrently with the Closing,
the Plan of Arrangement will be filed with the Ministry of Consumer and
Commercial Relations of the Province of Ontario.
6.2 ANCILLARY DOCUMENTS/RESERVATION OF SHARES. (a) Provided all
other conditions of this Agreement have been satisfied or waived, Delrina shall,
on the Closing Date, file Articles of Arrangement pursuant to section 183(1) of
the OBCA to give effect to the Plan of Arrangement, such Articles of Arrangement
to contain share conditions for Exchangeable Shares substantially in the form of
those contained in Exhibit 6.2(a) hereto.
(b) On the Effective Date:
(i) Symantec shall execute and deliver a Support Agreement
containing the terms and conditions set forth in Exhibit 6.2(b)(i) hereto (the
"SUPPORT AGREEMENT"), together with such other terms and conditions as may be
agreed to by the parties hereto acting reasonably;
(ii) Symantec and a Canadian trust company to be selected by
Symantec, which shall be satisfactory to Delrina, acting reasonably, shall
execute and deliver a Voting and Exchange Trust Agreement containing the terms
and conditions set forth in Exhibit 6.2(b)(ii) hereto (the "VOTING AND EXCHANGE
TRUST AGREEMENT"), together with such other terms and conditions as may be
agreed to by the parties hereto acting reasonably; and
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(iii) Symantec shall file with the Secretary of State of
Delaware a Restated Certificate of Incorporation which shall be in substantially
the form set forth in Exhibit 6.2(b)(iii) hereto.
(c) On or before the Effective Date, Symantec will reserve for
issuance such number of shares of Symantec Common Stock as shall be necessary to
give effect to the exchanges and assumptions of options contemplated hereby.
6.3 EXCHANGE OF OPTIONS. Promptly after the Effective Time, Symantec
will notify in writing each holder of a Delrina Option of the exchange of such
Delrina Option for a Symantec option, the number of shares of Symantec Common
Stock that are then subject to such option, and the exercise price of such
option, as determined pursuant to Section 1.4.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF DELRINA
The obligations of Delrina hereunder are subject to the fulfillment or
satisfaction on or before the Closing, of each of the following conditions (any
one or more of which may be waived by Delrina, but only in a writing signed by
Delrina):
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Symantec set forth in Section 3 (as qualified by the Symantec
Disclosure Letter) shall be true and accurate in all material respects on and as
of the Closing Date with the same force and effect as if they had been made at
the Closing except to the extent the failure of such representations and
warranties to be true and accurate in such respects has not had and could not
reasonably be expected to have a Material Adverse Effect on Symantec, and
Delrina shall receive a certificate to such effect executed by Symantec's Chief
Executive Officer and Chief Financial Officer.
7.2 COVENANTS. Symantec shall have performed and complied in all
material respects with all of its covenants required to be performed by it under
this Agreement or the Plan of Arrangement on or before the Closing, and Delrina
shall receive a certificate to such effect signed by Symantec's Chief Executive
Officer and Chief Financial Officer.
7.3 ABSENCE OF MATERIAL ADVERSE CHANGE. There shall not have been
any event or change that has a Material Adverse Effect on Symantec.
7.4 COMPLIANCE WITH LAW. There shall be no order, decree or ruling
by any governmental agency or threat thereof, or any statute, rule, regulation
or order enacted, entered, enforced or deemed applicable to the Arrangement,
which would prohibit or render illegal the transactions contemplated by this
Agreement.
7.5 GOVERNMENT CONSENTS. There shall have been obtained on or before
the Closing such material permits or authorizations, and there shall have been
taken such other action, as may be required to consummate the Arrangement by any
regulatory authority having jurisdiction over the parties and the actions herein
proposed to be taken, including but not limited to requirements under applicable
federal, provincial and state securities laws and the compliance
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with, and expiration or termination of any applicable waiting period under, the
HSR Act or the Investment Canada Act.
7.6 SEC FILINGS. The Form F-4 and Form S-3, if filed, shall have
been declared effective under the Securities Act and shall not be the subject of
any stop-order or proceedings seeking a stop-order, and the Joint Proxy
Statement shall on the Closing not be subject to any similar proceedings
commenced or threatened by the SEC or the OSC.
7.7 OPINION OF SYMANTEC'S COUNSEL. Delrina shall have received from
Fenwick & West and from Davies, Ward & Beck, counsel to Symantec, opinions in
customary form in connection with transactions such as the Arrangement that is
reasonably satisfactory to Delrina and its counsel.
7.8 DOCUMENTS. Delrina shall have received all written consents,
assignments, waivers, authorizations or other certificates necessary to provide
for the continuation in full force and effect of any and all material contracts
and leases of Symantec and for Symantec to consummate the transactions
contemplated hereby, except when the failure to receive such consents or other
certificates would not have a Material Adverse Effect on Symantec.
7.9 SHAREHOLDER APPROVAL. The principal terms of this Agreement and
the Arrangement shall have been approved and adopted by the Delrina shareholders
in accordance with applicable law and Delrina's articles of incorporation and
bylaws.
7.10 SYMANTEC APPROVALS. The issuance of Symantec Common Stock from
time to time upon the exchange of the Exchangeable Shares shall have been
approved by the Symantec stockholders in accordance with the rules of the NASD,
and with applicable law and Symantec's certificate of incorporation and bylaws.
7.11 NO LEGAL ACTION. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation of
the Arrangement shall have been issued by any Canadian or U.S. federal,
provincial or state court and remain in effect, nor shall any proceeding seeking
any of the foregoing be pending.
7.12 TAX OPINION. Delrina shall have received an opinion in form and
substance satisfactory to Delrina of Osler, Hoskin & Harcourt, counsel for
Delrina, to the effect that the Arrangement will be generally treated for
Canadian federal income tax purposes as a reorganization of capital for those
Delrina Shareholders who hold their Delrina Common Shares as capital property
for purposes of the ITA and an opinion in form and substance satisfactory to
Delrina from Skadden, Arps, Slate, Meagher & Flom, counsel for Delrina, to the
effect that the Arrangement should be treated for U.S. federal income tax
purposes as a tax-free reorganization under section 368(a) of the Code.
7.13 POOLING OPINION. Symantec shall have received from Ernst & Young
an opinion, in form and substance satisfactory to Delrina and Symantec, that the
Arrangement will be treated as a "pooling of interests" for accounting purposes.
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7.14 COURT APPROVAL. The Court shall have issued its final order
approving the Arrangement in form and substance satisfactory to Symantec and
Delrina (such approvals not to be unreasonably withheld or delayed by Symantec
or Delrina) and reflecting the terms hereof.
7.15 OSC, ETC. All necessary orders shall have been obtained from the
OSC and other relevant Canadian securities regulatory authorities in connection
with the Arrangement. Symantec and Delrina shall 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 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. The Arrangement shall have received the
allowance or approval or deemed allowance or approval by the responsible
Minister under the Investment Canada Act in respect of the Arrangement, to the
extent such allowance or approval is required, on terms and conditions
satisfactory to the parties.
7.16 ELECTION TO SYMANTEC BOARD. Dennis Bennie and Mark Skapinker
shall have been elected to the Board of Directors of Symantec. In addition,
Symantec will nominate such individuals and solicit proxies for their re-
election to the Board of Directors of Symantec at the annual meeting of
Symantec's stockholders held following its fiscal year ending March 31, 1996.
This obligation shall be a covenant of Symantec that shall survive the Closing.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF SYMANTEC
The obligations of Symantec hereunder are subject to the fulfillment
or satisfaction on or before the Closing, of each of the following conditions
(any one or more of which may be waived by Symantec, but only in a writing
signed by Symantec):
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Delrina set forth in Section 2 (as qualified by the Delrina
Disclosure Letter) shall be true and accurate in all material respects on and as
of the Closing Date with the same force and effect as if they had been made at
the Closing except to the extent the failure of such representations and
warranties to be true and accurate in such respects has not had and could not
reasonably be expected to have a Material Adverse Effect on Delrina, and
Symantec shall receive a certificate to such effect executed by Delrina's Chief
Executive Officer and Chief Financial Officer.
8.2 COVENANTS. Delrina shall have performed and complied in all
material respects with all of its covenants required to be performed by it under
this Agreement or the Plan of Arrangement on or before the Closing, and Symantec
shall receive a certificate to such effect signed by Delrina's Chief Executive
Officer and Chief Financial Officer.
8.3 ABSENCE OF MATERIAL ADVERSE CHANGE. There shall not have been
any event or change that has a Material Adverse Effect on Delrina.
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8.4 COMPLIANCE WITH LAW. There shall be no order, decree or ruling
by any governmental agency or threat thereof, or any statute, rule, regulation
or order enacted, entered, enforced or deemed applicable to the Arrangement,
which would prohibit or render illegal the transactions contemplated by this
Agreement.
8.5 GOVERNMENT CONSENTS. There shall have been obtained on or before
the Closing such material permits or authorizations, and there shall have been
taken such other action, as may be required to consummate the Arrangement by any
regulatory authority having jurisdiction over the parties and the actions herein
proposed to be taken, including but not limited to requirements under applicable
federal and state securities laws and the compliance with, and expiration or
termination of any applicable waiting period under, the HSR Act.
8.6 SEC FILINGS. The Form F-4 and Form S-3, if filed, shall have
been declared effective under the Securities Act and shall not be the subject of
any stop order or proceedings seeking a stop-order and the Joint Proxy Statement
shall on the Closing not be subject to any similar proceedings commenced or
threatened by the SEC or the OSC.
8.7 OPINION OF DELRINA'S COUNSEL. Symantec shall have received from
Skadden, Arps, Slate, Meagher & Flom and from Osler, Hoskin & Harcourt, counsel
to Delrina, opinions in customary form in connection with transactions such as
the Arrangement that are reasonably satisfactory to Symantec and its counsel.
8.8 DOCUMENTS. Symantec shall have received all written consents,
assignments, waivers, authorizations or other certificates necessary to provide
for the continuation in full force and effect of any and all material contracts
and leases of Delrina and for Delrina to consummate the transactions
contemplated hereby, except when the failure to receive such consents, or other
certificates would not have a Material Adverse Effect on Delrina.
8.9 STOCKHOLDER APPROVAL. The issuance of Symantec Common Stock from
time to time upon the exchange of the Exchangeable Shares shall have been
approved by the Symantec stockholders in accordance with the rules of the NASD
and applicable law and Symantec's certificate of incorporation and bylaws.
8.10 DELRINA APPROVALS. The principal terms of this Agreement and the
Arrangement shall have been approved and adopted by the Delrina shareholders in
accordance with applicable law and Delrina's articles of incorporation and
bylaws, and Delrina shall not have received on or prior to the Effective Time
notice from the holders of more than 3.5% of the Delrina Common Shares of their
intention to exercise their rights of dissent under section 185 of the OBCA.
8.11 NO LEGAL ACTION. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation of
the Arrangement shall have been issued by any U.S. or Canadian federal,
provincial or state court and remain in effect, nor shall any proceeding seeking
any of the foregoing be pending.
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8.12 DELRINA OPTION AGREEMENTS. Symantec shall have received from
each of the Delrina Principal Shareholders an executed original Option
Agreement.
8.13 POOLING OPINION. Symantec shall have received from Ernst & Young
an opinion, in form and substance satisfactory to Symantec, that the Arrangement
will be treated as a "pooling of interests" for accounting purposes.
8.14 AFFILIATE AGREEMENTS. Symantec shall have received executed
originals of all of the Delrina Affiliate Agreements.
8.15 COURT APPROVAL. The Court shall have issued its final order
approving the Arrangement in form and substance satisfactory to Symantec and
Delrina (such approvals not to be unreasonably withheld or delayed by Symantec
or Delrina) and reflecting the terms hereof.
8.16 OSC, ETC. All necessary orders shall have been obtained from the
OSC and other relevant Canadian securities regulatory authorities in connection
with the Arrangement. Symantec and Delrina shall 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 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. The Arrangement shall have received the
allowance or approval or deemed allowance or approval by the responsible
Minister under the Investment Canada Act in respect of the Arrangement, to the
extent such allowance or approval is required, on terms and conditions
satisfactory to the parties.
8.17 SHIPMENT OF WINFAX 95. On or before November 15, 1995, Delrina
shall have made the first customer shipment in commercial volumes to retail
sales channels of an enhanced-functionality version of WinFax (to be called
WinFax 7.0), which is Windows 95-compatible and which is a logical upgrade from
WinFax 4.0, in conformance with Delrina's customary quality standards and
procedures for the release of new products.
9. TERMINATION OF AGREEMENT
9.1 TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of the Arrangement by
the stockholders of Symantec or Delrina:
(a) by mutual agreement of Delrina and Symantec;
(b) by Delrina, if there has been a breach by Symantec of any
representation, warranty, covenant or agreement set forth in this Agreement on
the part of Symantec, or if any representation of Symantec shall have become
untrue, in either case which has or can reasonably be expected to have a
Material Adverse Effect on Symantec and which Symantec fails to cure within 15
business days after written notice thereof from Delrina (except
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that no cure period shall be provided for a breach by Symantec which by its
nature cannot be cured);
(c) by Symantec, if there has been a breach by Delrina of any
representation, warranty, covenant or agreement set forth in this Agreement on
the part of Delrina, or if any representation of Delrina shall have become
untrue, in either case which has or can reasonably be expected to have a
Material Adverse Effect on Delrina and which Delrina fails to cure within 15
business days after written notice thereof from Symantec (except that no cure
period shall be provided for a breach by Delrina which by its nature cannot be
cured);
(d) by either party (provided that such party is not then in
breach of this Agreement) if the shareholders of Delrina do not approve the
Arrangement at the Delrina Shareholders Meeting or the stockholders of Symantec
do not approve at the Symantec Stockholders Meeting the issuance of Symantec
Common Stock issuable upon the exchange of the Exchangeable Shares;
(e) by either party, if all the conditions for Closing the
Arrangement shall not have been satisfied or waived on or before 5:00 p.m.,
Toronto time on November 30, 1995, other than as a result of a breach of this
Agreement by the terminating party, or in the case of termination by Delrina, a
breach by any of the Principal Shareholders of Delrina of the Delrina Affiliate
Agreements or Option Agreements referred to in Section 4.4, or, in the case of
either party, a breach by any of its Affiliates of the Affiliate Agreements
referred to in Section 4.5 or Section 5.5;
(f) by either party, if a permanent injunction or other order by
any U.S. or Canadian federal, provincial or state court shall have been issued
and shall have become final and nonappealable which would (i) make illegal or
otherwise restrain or prohibit the consummation of the Arrangement, (ii)
prohibit Symantec's ownership or operation of all or any material portion of the
business or assets of Delrina or (iii) compel Symantec to dispose of or hold
separate all or any material portion of the business or assets of Delrina;
(g) by Symantec, if the Delrina Board of Directors shall have
exercised its right, pursuant to Section 4.11(b) to engage in discussions or
negotiations with or furnish information to a third party in connection with an
Acquisition Proposal, or shall have made any recommendation to the shareholders
of Delrina against the Arrangement or in support of an Acquisition Proposal (an
"ACQUISITION PROPOSAL TERMINATION");
(h) by Delrina, if the Delrina Board of Directors determines in
good faith, based on the advice of outside legal counsel, that it is required by
its fiduciary duties to recommend to the Delrina Shareholders that they vote
against the Arrangement and approve instead an Acquisition Proposal that the
Delrina Board of Directors has determined in good faith, based on the advice of
its outside financial advisors, is financially more favorable to the Delrina
Shareholders than the Arrangement and is the subject of a firm written offer
from a third party that is capable of consummating such Acquisition Proposal (a
"SUPERIOR PROPOSAL TERMINATION"); or
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(i) by Symantec, if the Symantec Board of Directors determines
in good faith, based on the advice of outside legal counsel, that it is required
by its fiduciary duties to recommend to the Symantec Stockholders that they vote
against the issuance of Symantec Common Stock issuable upon exchange of the
Exchangeable Shares as contemplated by this Agreement and in favor of an
alternative transaction (A) in which a third party is to acquire (whether by way
of take-over bid, tender offer, purchase of capital stock, merger, purchase of
assets or otherwise) all or substantially all of the business of Symantec and
which requires that Symantec terminate this Agreement as a condition of the
consummation of such transaction or (B) which the Board of Directors states to
the Symantec stockholders prior to the Symantec Stockholders Meeting is mutually
exclusive with respect to the Arrangement contemplated by this Agreement,
provided that the consideration for such transaction is in excess of $150
million (each an "INCONSISTENT TRANSACTION" and the termination of this
Agreement under such circumstances an "INCONSISTENT TRANSACTION TERMINATION").
9.2 NOTICE OF TERMINATION. Any termination of this Agreement under
Section 9.1 above will be effective by the delivery of written notice by the
terminating party to the other party hereto.
9.3 EFFECT OF TERMINATION. In the case of any termination of this
Agreement as provided in this Article 9, this Agreement shall be of no further
force and effect (except as provided in Section 9.4 and Article 11) and nothing
herein shall relieve any party from liability for any breach of this Agreement.
No termination of this Agreement shall affect the obligations contained in the
separate Nondisclosure Agreement between Delrina and Symantec (the
"NONDISCLOSURE AGREEMENT").
9.4 TERMINATION FEES.
(a) If this Agreement is terminated (A) by either party pursuant
to Section 9.1(d) as a result of the failure of Delrina's shareholders to
approve the Arrangement, (B) by Symantec pursuant to an Acquisition Proposal
Termination under Section 9.1(g) or (C) by Delrina pursuant to a Superior
Proposal Termination under Section 9.1(h), then Delrina shall pay to Symantec
(by wire transfer or cashier's check) a fee of $12 million within two business
days of the delivery of the notice of termination pursuant to Section 9.2. If
this Agreement is terminated as described in the previous sentence, and Delrina
enters into an agreement regarding an Acquisition Proposal or consummates an
Acquisition Proposal before the later of twelve months after the public
announcement of this Agreement or six months after the date of a termination
described in the previous sentence, Delrina shall, within two business days
after the consummation of any such Acquisition Proposal, pay to Symantec the
additional sum of $8 million. Symantec shall not be entitled to receive any
payment under this Section 9.4(a) if, at the time of delivery of the applicable
notice of termination pursuant to Section 9.2, Symantec is in breach of this
Agreement or Symantec's stockholders have disapproved the issuance of the
Symantec Common Stock issuable upon the exchange of the Exchangeable Shares.
(b) If this Agreement is terminated (A) by either party pursuant
to Section 9.1(d) as a result of the failure of Symantec stockholders to approve
the issuance of the
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Symantec Common Stock issuable upon the exchange of the Exchangeable Shares, or
(B) by Symantec pursuant to an Inconsistent Transaction Termination under
Section 9.1(i), then Symantec shall pay to Delrina (by wire transfer or
cashier's check) a fee of $12 million within two business days of the delivery
of the notice of termination pursuant to Section 9.2. If Symantec terminates
this Agreement pursuant to an Inconsistent Transaction Termination and before
the later of twelve months after the public announcement of this Agreement or
six months after such termination Symantec consummates such an Inconsistent
Transaction, Symantec shall, within two business days after consummation of any
such Inconsistent Transaction, pay Delrina the additional sum of $8 million.
Delrina shall not be entitled to receive any payment under this Section 9.4(b)
if, at the time of delivery of the applicable notice of termination pursuant to
Section 9.2, Delrina is in breach of this Agreement or Delrina's shareholders
have disapproved the Arrangement.
(c) The parties' obligations to pay the termination fees set
forth in Section 9.4 are in lieu of any damages or any other payment which such
party might otherwise be obligated to pay the other party as a result of any
termination for which payment is due under Section 9.4. Symantec and Delrina
agree that, in view of the nature of the issues likely to arise in the event of
such a termination, it would be impracticable or extremely difficult to fix the
actual damages resulting from such termination and proving actual damages,
causation and foreseeability in the case of such termination would be costly,
inconvenient and difficulty. In requiring a party to pay a termination fee as
set forth herein, it is the intent of the parties to provide, as of the date of
this Agreement, for a liquidated amount of damages to be paid by such party to
other party. Such liquidated amount shall be deemed full and adequate damages
of such termination and is not intended by either party to be a penalty.
10. SURVIVAL OF REPRESENTATIONS
All representations, warranties and covenants of the parties contained
in this Agreement will remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the parties to this Agreement,
until the earlier of the termination of this Agreement or the Closing Date,
whereupon such representations, warranties and covenants will expire (except for
covenants that by their terms survive for a longer period).
11. MISCELLANEOUS
11.1 GOVERNING LAW. The internal laws of the State of Delaware
(irrespective of its choice of law principles) will govern the validity of this
Agreement, the construction of its terms and the interpretation and enforcement
of the rights and duties of the parties hereto, except to the extent mandatorily
governed by the laws of Ontario.
11.2 ASSIGNMENT; BINDING UPON SUCCESSORS AND ASSIGNS. Neither party
hereto may assign any of its rights or obligations hereunder without the prior
written consent of the other party hereto. This Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
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11.3 SEVERABILITY. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the greatest extent possible, the economic,
business and other purposes of the void or unenforceable provision.
11.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, will bear the signatures of
all the parties reflected hereon as signatories.
11.5 OTHER REMEDIES. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law on such party,
and the exercise of any one remedy will not preclude the exercise of any other.
11.6 AMENDMENT AND WAIVERS. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof will
not be deemed to constitute a waiver of any other default or any succeeding
breach or default. The Agreement may be amended by the parties hereto at any
time before or after approval of the Delrina Shareholders or the Symantec
Stockholders, but, after such approval, no amendment will be made which by
applicable law requires the further approval of the Delrina Shareholders or the
Symantec Stockholders without obtaining such further approval.
11.7 EXPENSES. Each party will bear its respective expenses and legal
fees incurred with respect to this Agreement, and the transactions contemplated
hereby. If the Arrangement is consummated, Symantec will pay the reasonable
accounting fees and expenses, investment banking fees and expenses not to exceed
the amounts specified in the Delrina Disclosure Letter, and reasonable
attorneys' fees and expenses incurred by Delrina in connection with the
Arrangement.
11.8 ATTORNEYS' FEES. Should suit be brought to enforce or interpret
any part of this Agreement, the prevailing party will be entitled to recover, as
an element of the costs of suit and not as damages, reasonable attorneys' fees
to be fixed by the court (including, without limitation, costs, expenses and
fees on any appeal). The prevailing party will be entitled to recover its costs
of suit, regardless of whether such suit proceeds to final judgment.
11.9 NOTICES. All notices and other communications pursuant to this
Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized
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overnight courier or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following address (or at such
other address for a party as shall be specified by like notice):
If to Delrina to: Delrina Corporation
895 Don Mills Road, 500-2 Park Centre
Toronto, Canada M3C 1W3
Attention: Chief Executive Officer
Telecopier: 416-446-8233
With a copy to: Osler, Hoskin & Harcourt
1 First Canadian Place
Toronto, Canada M5X 1B8
Attention: James E. Kofman
Telecopier: 416-862-6666
If to Symantec to: Symantec Corporation
10201 Torre Avenue
Cupertino, California 95014
U.S.A.
Attention: General Counsel
Telecopier: 408-252-5101
With a copy to: Fenwick & West
Two Palo Alto Square
Palo Alto, California 94306
U.S.A.
Attention: Gordon K. Davidson
Telecopier: 415-857-0361
All such notices and other communications shall be deemed to have been
received (a) in the case of personal delivery, on the date of such delivery, (b)
in the case of a telecopy, when the party receiving such copy shall have
confirmed receipt of the communication, (c) in the case of delivery by
nationally-recognized overnight courier, on the business day following dispatch,
and (d) in the case of mailing, on the tenth business day following such
mailing.
11.10 CONSTRUCTION OF AGREEMENT. This Agreement has been
negotiated by the respective parties hereto and their attorneys and the language
hereof will not be construed for or against either party. A reference to a
Section or an exhibit will mean a Section in, or exhibit to, this Agreement
unless otherwise explicitly set forth. The titles and headings herein are for
reference purposes only and will not in any manner limit the construction of
this Agreement which will be considered as a whole.
11.11 NO JOINT VENTURE. Nothing contained in this Agreement will
be deemed or construed as creating a joint venture or partnership between any of
the parties. No party is by virtue of this Agreement authorized as an agent,
employee or legal representative of any other
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party. No party will have the power to control the activities and operations of
any other and their status is, and at all times, will continue to be, that of
independent contractors with respect to each other. No party will have any
power or authority to bind or commit any other. No party will hold itself out
as having any authority or relationship in contravention of this Section.
11.12 FURTHER ASSURANCES. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and purposes
of this Agreement.
11.13 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provisions of
this Agreement are intended, nor will be interpreted, to provide or create any
third party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, stockholder or partner of any party or any other person or
entity unless specifically provided otherwise herein, and, except as so
provided, all provisions hereof will be personal solely between the parties to
this Agreement. Anything contained herein to the contrary notwithstanding, (a)
the holders of Delrina Options are intended beneficiaries of Section 1.4; and
(b) the officers and directors of Delrina are intended beneficiaries of Section
5.11.
11.14 PUBLIC ANNOUNCEMENT. Upon execution of this Agreement,
Symantec and Delrina promptly will issue a joint press release approved by both
parties announcing the Arrangement. Thereafter, Symantec or Delrina may issue
such press releases, and make such other disclosures regarding the Arrangement,
as it determines (after consultation with legal counsel) are required under
applicable securities laws or by the NASD or the TSE rules.
11.15 ENTIRE AGREEMENT. This Agreement and the exhibits hereto
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements or understandings, inducements or conditions, express or implied,
written or oral, between the parties with respect hereto other than the
Nondisclosure Agreement, which shall remain in full force and effect. The
express terms hereof control and supersede any course of performance or usage of
the trade inconsistent with any of the terms hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Combination
Agreement as of the date first above written.
SYMANTEC CORPORATION DELRINA CORPORATION
By: __________________________ By: ________________________
Chief Executive Officer Chief Executive Officer
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EXHIBIT 1.1
PLAN OF ARRANGEMENT
PLAN OF ARRANGEMENT
UNDER SECTION 182
OF THE BUSINESS CORPORATIONS ACT (ONTARIO)
ARTICLE 1--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) "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 6.1 hereof or made at the direction of the Court in the Final
Order;
(b) "ARRANGEMENT RESOLUTION" means the special resolution passed by
the holders of the Delrina Common Shares at the Meeting;
(c) "AUTOMATIC REDEMPTION DATE" has the meaning ascribed thereto in
the Exchangeable Share Provisions;
(d) "AVERAGE CLOSING PRICE" means the average closing price (computed
and rounded to the third decimal point) of Symantec Common Shares on NASDAQ
as of 4:00 p.m. eastern standard time as published by the National
Association of Securities Dealers, Inc. during the 10 trading days ending
on the last trading day prior to the Effective Date.
(e) "DELRINA" means Delrina Corporation, a corporation existing under
the OBCA;
(f) "DELRINA COMMON SHARES" means the common shares in the capital of
Delrina;
(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 PREFERRED SHARES" means the Class A Preferred Shares of
Delrina having the rights, privileges, restrictions and conditions set out
in Appendix A annexed hereto.
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(i) "COMBINATION AGREEMENT" means the agreement by and among Symantec
and Delrina, dated as of July 5, 1995, as the same may be amended and
restated, providing for, among other things, the Arrangement;
(j) "CORPORATION" means Delrina;
(k) "COURT" means the Ontario Court of Justice (General Division);
(l) "DEPOSITARY" means The R-M Trust Company at its principal office
in Toronto, Ontario;
(m) "DISSENT PROCEDURES" has the meaning set out in section 3.1;
(n) "EFFECTIVE DATE" means the date shown on the certificate of
arrangement issued by the Director under the OBCA giving effect to the
Arrangement;
(o) "EFFECTIVE TIME" means 12:01 a.m. on the Effective Date;
(p) "EXCHANGE RATIO" is equal to 0.61;
(q) "EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares, which are
set forth in Appendix A hereto;
(r) "EXCHANGEABLE SHARES" means the Exchangeable Shares in the
capital of Delrina;
(s) "FINAL ORDER" means the final order of the Court approving the
Arrangement as such order may be amended by the Court at any time prior to
the Effective Time;
(t) "SYMANTEC" means Symantec Corporation, a corporation existing
under the laws of the State of Delaware;
(u) "SYMANTEC COMMON SHARES" means the common stock of the capital of
Symantec;
(v) "LIQUIDATION CALL RIGHT" has the meaning ascribed thereto in
section 5.1;
(w) "LIQUIDATION DATE" has the meaning ascribed thereto in the
Exchangeable Share Provisions;
(x) "MEETING" means the Special Meeting of the shareholders of
Delrina to be held to consider the Arrangement;
(y) "NASDAQ" means the Nasdaq National Market;
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(z) "OBCA" means the BUSINESS CORPORATIONS ACT (Ontario), as amended;
(aa) "PROXY STATEMENT" means the Joint Management Information Circular
and Proxy Statement of Delrina and Symantec dated _______________________,
1995;
(bb) "REDEMPTION CALL PURCHASE PRICE" has the meaning ascribed thereto
in Section 5.2; and
(cc) "REDEMPTION CALL RIGHT" has the meaning ascribed thereto in
section 5.2.
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.
ARTICLE 2--ARRANGEMENT
2.1 ARRANGEMENT
At the Effective Time on the Effective Date, the following reorganization
of capital shall occur and shall be deemed to occur in the following order
without any further act or formality:
(a) The articles of incorporation of Delrina shall be amended to (i)
delete the Preference Shares from the authorized share capital, (ii)
replace the rights, privileges, restrictions and conditions attaching to
the common shares with those set forth in Appendix A and (iii) authorize an
unlimited number of Exchangeable Shares and one Class A Preferred Share.
(b) Delrina shall issue to Symantec one Class A Preferred Share in
consideration of the issuance to Delrina of one Symantec Common Share. The
stated capital of the Class A Preferred Share shall be equal to the fair
market value, as determined by the board of directors of Delrina, of a
Symantec Common Share. No certificate shall be issued in respect of the
Class A Preferred Share.
(c) Each Delrina Common Share (other than Delrina Common Shares held
by holders who have exercised their rights of dissent in accordance with
section 3.1 hereof
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and who are ultimately entitled to be paid full value for such shares)
will be exchanged at the Exchange Ratio for a number of Exchangeable
Shares. Each holder of Delrina Common Shares (other than holders of
Delrina Common Shares who have exercised their rights of dissent in
accordance with section 3.1 hereof and who are ultimately entitled to be
paid full value for such shares) will receive that whole number of
Exchangeable Shares resulting from the exchange of all such holder's
Delrina Common Shares for Exchangeable Shares. In lieu of fractional
Exchangeable Shares, each holder of a Delrina Common Share who otherwise
would be entitled to receive a fraction of an Exchangeable Share on the
exchange of all such holder's Delrina Common Shares shall be paid by
Delrina an amount determined as set forth in section 4.3 hereto.
(d) Upon the exchange referred to in subsection (c) above, each such
holder of a Delrina Common Share shall cease to be such a holder, shall
have his name removed from the register of holders of Delrina Common Shares
and shall become a holder of the number of fully paid Exchangeable Shares
to which he is entitled as a result of the exchange referred to in
subsection (c) and such holder's name shall be added to the register of
holders of Exchangeable Shares accordingly.
(e) The aggregate stated capital of the Exchangeable Shares will be
equal to the aggregate stated capital of the Delrina Common Shares
immediately prior to the Arrangement that are exchanged pursuant to such
Subsection 2.1(c) above.
(f) The one outstanding Class A Preferred Share will be exchanged for
one Delrina Common Share and the holder thereof shall cease to be a holder
of the Class A Preferred Share, shall have his name removed from the
register of holders of Class A Preferred Shares and shall become a holder
of one fully paid and non-assessable Delrina Common Share to which he is
entitled as a result of the exchange referred to in this subsection (f) and
such holder's name shall be added to the register of holders of Delrina
Common Shares accordingly.
(g) The stated capital of the one Delrina Common Share shall be equal
to the stated capital of the one Class A Preferred Share immediately prior
to the exchange of such Class A Preferred Share pursuant to subsection (f).
ARTICLE 3--RIGHTS OF DISSENT
3.1 RIGHTS OF DISSENT
Holders of Delrina 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:
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(a) are ultimately entitled to be paid fair value for their Delrina
Common Shares shall be deemed to have transferred such Delrina Common
Shares to Delrina for cancellation on the Effective Date; or
(b) are ultimately not entitled, for any reason, to be paid fair value
for their Delrina Common Shares shall be deemed to have participated in the
Arrangement on the same basis as any non-dissenting holder of Delrina
Common Shares, and shall receive Exchangeable Shares on the basis
determined in accordance with subsection 2.1(c) of this Plan of
Arrangement,
but in no case shall Delrina be required to recognize such holders as holders of
Delrina Common Shares on and after the Effective Date, and the names of such
holders of Delrina Common Shares shall be deleted from the register of holders
of Delrina Common Shares on the Effective Date.
ARTICLE 4--CERTIFICATES AND FRACTIONAL SHARES
4.1 ISSUANCE OF CERTIFICATES REPRESENTING EXCHANGEABLE SHARES
At or promptly after the Effective Time, the Corporation shall deposit with
the Depositary, for the benefit of the holders of Delrina Common Shares
exchanged pursuant to subsection 2.1(c), certificates representing the
Exchangeable Shares issued pursuant to subsection 2.1(c) upon the exchange of
outstanding Delrina Common Shares. Upon surrender to the Depositary for
cancellation of a certificate which immediately prior to the Effective Time
represented outstanding Delrina Common Shares that were exchanged for
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 Delrina 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 4.2 and
any cash in lieu of fractional Exchangeable Shares pursuant to section 4.3), and
the certificate so surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of Delrina Common Shares which is not registered in the
transfer records of Delrina, a certificate representing the proper number of
Exchangeable Shares may be issued to a transferee if the certificate
representing such Delrina 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 Time represented outstanding Delrina Common
Shares that were exchanged for Exchangeable Shares shall be deemed at any time
after the Effective Time 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 4.3 and (iii) any dividends or distributions
with a record date after the Effective Time theretofore paid or payable with
respect to Exchangeable Shares as contemplated by section 4.2.
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4.2 DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES
No dividends or other distributions declared or made after the Effective
Time with respect to Exchangeable Shares with a record date after the Effective
Time shall be paid to the holder of any unsurrendered certificate which,
immediately prior to the Effective Time, represented outstanding Delrina Common
Shares that were 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 4.3,
unless and until such certificate shall be surrendered in accordance with
section 4.1. Subject to applicable law and to Section 4.5, 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 without interest, (i) the
amount of any cash payable in lieu of a fractional Exchangeable Share to which
such holder is entitled pursuant to section 4.3, (ii) the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole Exchangeable Share, and (iii) the amount of dividends
or other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole Exchangeable Share.
4.3 NO FRACTIONAL SHARES
No certificates or scrip representing fractional Exchangeable Shares shall
be issued upon the surrender for exchange of certificates pursuant to section
4.1 and no dividend, stock split or other change in the capital structure of
Delrina 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 Delrina. In lieu of any such fractional securities,
each person entitled to a fractional interest in an Exchangeable Share will
receive an amount of cash (rounded to the nearest whole cent), without interest,
equal to the Canadian Dollar Equivalent (as defined in the Exchangeable Share
Provisions) of the product of (i) such fraction, multiplied by (ii) the Average
Closing Price of the Symantec Common Shares.
4.4 LOST CERTIFICATES
If any certificate which immediately prior to the Effective Time
represented outstanding Delrina Common Shares that were exchanged pursuant to
section 2.1 has 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 (and any
dividends or distributions with respect thereto and any cash pursuant to section
4.3) 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 are to be issued shall, as a condition precedent to the issuance thereof,
give a bond satisfactory to the Corporation or Symantec, as the case may be, in
such sum as the Corporation may direct or otherwise indemnify the Corporation or
Symantec in a manner satisfactory to the Corporation against any claim that may
be made against the Corporation or Symantec with respect to the certificate
alleged to have been lost, stolen or destroyed.
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4.5 EXTINGUISHMENT OF RIGHTS
Any certificate which immediately prior to the Effective Time represented
outstanding Delrina Common Shares that were exchanged pursuant to section 2.1
and has not been deposited, with all other instruments required by section 4.1,
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
Corporation. On such date, the Exchangeable 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
together with all entitlements to dividends, distributions and interests thereon
held for such former registered holder for no consideration.
ARTICLE 5--CERTAIN RIGHTS OF
SYMANTEC TO ACQUIRE EXCHANGEABLE SHARES
5.1 SYMANTEC LIQUIDATION CALL RIGHT
(a) Symantec shall have the overriding right (the "Liquidation Call
Right"), in the event of and notwithstanding the proposed liquidation,
dissolution or winding-up of Delrina pursuant to Article 5 of the Exchangeable
Share Provisions, to purchase from all but not less than all of the holders
(other than Symantec) of Exchangeable Shares on the Liquidation Date all but not
less than all of the Exchangeable Shares held by each such holder on payment by
Symantec of an amount per share equal to (a) the Current Market Price (as
defined in the Exchangeable Share Provisions) of a Symantec 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 Symantec Common Share, plus
(b) an additional amount equivalent to the full amount of all dividends declared
and unpaid on such Exchangeable Share (collectively the "Liquidation Call
Purchase Price"). In the event of the exercise of the Liquidation Call Right by
Symantec, each holder shall be obligated to sell all the Exchangeable Shares
held by the holder to Symantec on the Liquidation Date on payment by Symantec to
the holder of the Liquidation Call Purchase Price for each such share.
(b) To exercise the Liquidation Call Right, Symantec must notify the
Corporation's transfer agent (the "Transfer Agent"), as agent for the holders of
Exchangeable Shares, and the Corporation of Symantec'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 Symantec has
exercised the Liquidation Call Right forthwith after the expiry of the date by
which the same may be exercised by Symantec. If Symantec exercises the
Liquidation Call Right, on the Liquidation Date Symantec 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, Symantec shall deposit with the Transfer
Agent, on or before the Liquidation Date, certificates representing the
aggregate number of Symantec Common Shares
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deliverable by Symantec (which shares shall be duly issued as fully paid and
non-assessable and shall be free and clear of any lien, claim, encumbrance,
security interest or adverse claim) 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 Symantec 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 Symantec 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 of
Symantec shall deliver to such holder, certificates representing the Symantec
Common Shares to which the holder is entitled and a cheque or cheques of
Symantec payable at par and in Canadian dollars at any branch of the bankers of
Symantec or of the Corporation in Canada in payment of the remaining portion, if
any, of the total Liquidation Call Purchase Price. If Symantec 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 SYMANTEC REDEMPTION CALL RIGHT
(a) Symantec shall have the overriding right (the "Redemption Call Right"),
notwithstanding the proposed redemption of the 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 (other than Symantec) of
Exchangeable Shares on the Automatic Redemption Date all but not less than all
of the Exchangeable Shares held by each such holder on payment by Symantec to
the holder of an amount per share equal to (a) the Current Market Price (as
defined in the Exchangeable Share Provisions) of a Symantec Common Share on the
last Business Day prior to the Automatic Redemption Date which shall be
satisfied in full by causing to be delivered to such holder one Symantec Common
Share plus (b) an additional amount equivalent to the full amount of all
dividends declared and unpaid on such Exchangeable Share (collectively the
"Redemption Call Purchase Price"). In the event of the exercise of the
Redemption Call Right by Symantec, each holder shall be obligated to sell all
the Exchangeable Shares held by the holder to Symantec on the Automatic
Redemption Date on payment by Symantec to the holder of the Redemption Call
Purchase Price for each such share.
(b) To exercise the Redemption Call Right, Symantec must notify the
Transfer Agent, as agent for the holders of Exchangeable Shares, and the
Corporation of Symantec's intention to exercise such right at least 125 days
before the Automatic Redemption Date. The Transfer Agent
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will notify the holders of the Exchangeable Shares as to whether or not Symantec
has exercised the Redemption Call Right forthwith after the date by which the
same may be exercised by Symantec. If Symantec exercises the Redemption Call
Right, on the Automatic Redemption Date Symantec will purchase and the holders
will sell all of the Exchangeable Shares then outstanding for a price per share
equal to the Redemption Call Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable Shares
pursuant to the Redemption Call Right, Symantec shall deposit with the Transfer
Agent, on or before the Automatic Redemption Date, certificates representing the
aggregate number of Symantec Common Shares deliverable by Symantec (which shares
shall be duly issued as fully paid and non-assessable and shall be free and
clear of any lien, claim, encumbrance, security interest or adverse claim) 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 Automatic Redemption Date
the rights of each holder of Exchangeable Shares will be limited to receiving
such holder's proportionate part of the total Redemption Call Purchase Price
payable by Symantec 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 Symantec 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 Symantec shall deliver to such
holder, certificates representing the Symantec Common Shares to which the holder
is entitled and a cheque or cheques of Symantec payable at par and in Canadian
dollars at any branch of the bankers of Symantec or of the Corporation in Canada
in payment of the remaining portion, if any, of the total Redemption Call
Purchase Price. If Symantec does not exercise the Redemption Call Right in the
manner described above, on the Automatic 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 the Exchangeable Shares pursuant to Article 7 of the Exchangeable
Share Provisions.
ARTICLE 6--AMENDMENT
6.1 PLAN OF ARRANGEMENT AMENDMENT
The Corporation reserves the right to amend, modify and/or supplement this
Plan of Arrangement at any time and from time to time provided that any such
amendment, modification, or supplement must be contained in a written document
that is (i) agreed to by Symantec, (ii) filed with the Court and, if made
following the Meeting, approved by the Court and (iii) communicated to holders
of Delrina Common Shares in the manner required by the Court (if so required).
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Any amendment, modification or supplement to this Plan of Arrangement may
be proposed by the Corporation at any time prior to or at the Meeting (provided
that Symantec 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 Court's interim order),
shall become part of this Plan of Arrangement for all purposes.
Any amendment, modification or supplement to this Plan of Arrangement that
is approved by the Court following the Meeting shall be effective only (i) if it
is consented to by the Corporation, (ii) if it is agreed to by Symantec and
(iii) if required by applicable law, it is consented to by the holders of the
Exchangeable Shares.
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APPENDIX A TO PLAN OF ARRANGEMENT
OF DELRINA CORPORATION
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PROVISIONS ATTACHING TO THE COMMON SHARES
The 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 the Exchangeable Shares, the
Class A Preferred Share and any other shares ranking senior to the common shares
with respect to priority in the payment of dividends, the holders of 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 common shares
shall be declared and paid in equal amounts per share on all 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 Shares and the
Class A Preferred Share and to any other shares ranking senior to the common
shares with respect to priority in the distribution of assets upon dissolution,
liquidation or winding-up, the holders of the common shares shall be entitled to
receive the remaining property and assets of the Corporation ratably with the
holders of the common shares.
VOTING RIGHTS
The holders of the 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 A PREFERRED SHARES
The Class A Preferred 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 Preferred Shares with respect to priority in the payment of dividends,
the holders of Class A Preferred Shares shall be entitled to receive dividends
and the Corporation shall pay dividends thereon, as
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and when declared by the board of directors of the Corporation as cumulative
dividends in the amount of $1.00 per share per annum payable annually on
December 31 in each year in arrears. Such dividends shall accrue from the date
of issue to and including the date to which the computation of dividends is to
be made. A cheque for the amount of the dividend less any required deduction
shall be mailed by first class mail to the address of the registered holder
thereof.
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 any shares ranking
senior to the Class A Preferred Shares with respect to priority in the
distribution of assets upon dissolution, liquidation or winding-up, the holders
of the Class A Preferred Shares shall be entitled to receive the stated capital
in respect of the Class A Preferred Shares and dividends remaining unpaid,
including all cumulative dividends, whether or not declared. After payment to
the holders of the Class A Preferred Shares of such amounts, such holders shall
not be entitled to share in any further distribution of the assets of the
Corporation.
VOTING RIGHTS
Except where specifically provided by the BUSINESS CORPORATIONS ACT
(Ontario), the holders of the Class A Preferred 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 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 with, that person. For the purposes of
this definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as applied to any person,
means the possession by another person, directly or indirectly, of the power to
direct or cause the direction of the management and policies of that first
mentioned person, whether through the ownership of voting securities, by
contract or otherwise.
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"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______________________, 2002 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 Symantec 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.
"CORPORATION" means Delrina Corporation, a corporation incorporated under
the laws of the Province of Ontario.
"CURRENT MARKET PRICE" means, in respect of a Symantec Common Share on any
date, the Canadian Dollar Equivalent of the average of the closing bid and asked
prices of Symantec Common Shares during a period of 20 consecutive trading days
ending not more than five trading days before such date on the Nasdaq National
Market, or, if the Symantec Common Shares are not then quoted on the Nasdaq
National Market, on such other stock exchange or automated quotation system on
which the Symantec 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 in the opinion of the Board of Directors the public distribution or
trading activity of Symantec Common Shares during such period does not create a
market which reflects the fair market value of a Symantec Common Share, then the
Current Market Price of a Symantec Common Share shall be determined by the Board
of Directors based upon the advice of such
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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.
"SYMANTEC" means Symantec Corporation, a corporation organized and existing
under the laws of the State of Delaware, and any successor corporation.
"SYMANTEC CALL NOTICE" has the meaning ascribed thereto in Section 6.3 of
these share provisions.
"SYMANTEC COMMON SHARES" mean the shares of common stock of Symantec, with
a par value of U.S. $0.01 per share, having voting rights of one vote per share,
and any other securities into which such shares may be changed.
"SYMANTEC DIVIDEND DECLARATION DATE" means the date on which the Board of
Directors of Symantec declares any dividend on the Symantec Common Shares.
"SYMANTEC SPECIAL SHARE" means the one share of Special Voting Stock of
Symantec with a par value of U.S. $1.00 and having voting rights at meetings of
holders of Symantec Common Shares equal to the number of Exchangeable Shares
outstanding from time to time (other than Exchangeable Shares held by Symantec
and its Affiliates) to be issued to, and voted by, the Trustee pursuant to the
Voting Trust Agreement.
"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.
"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 PURCHASE PRICE" has the meaning ascribed thereto in the
Plan of Arrangement.
"REDEMPTION CALL RIGHT" has the meaning ascribed thereto in the Plan of
Arrangement.
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"REDEMPTION PRICE" has the meaning ascribed thereto in Section 7.1 of these
share provisions.
"RETRACTED SHARES" has the meaning ascribed thereto in Subsection 6.1(a) of
these share provisions.
"RETRACTION CALL RIGHT" has the meaning ascribed thereto in Subsection
6.1(c) of these share provisions.
"RETRACTION DATE" has the meaning ascribed thereto in Subsection 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 Symantec and the
Corporation, made as of _________________________________________, 1995.
"TRANSFER AGENT" means The R-M Trust Company or such other person as may
from time to time be the registrar and transfer agent for the Exchangeable
Shares.
"TRUSTEE" means The R-M Trust Company, a corporation organized and existing
under the laws of Canada, and any successor trustee appointed under the Voting
Trust Agreement.
"VOTING AND EXCHANGE TRUST AGREEMENT" means the Voting and Exchange Trust
Agreement between the Corporation, Symantec and the Trustee, made as of
_____________________, 1995.
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
2.1 The Exchangeable Shares shall rank junior to the Class A Preferred
Shares, and shall be entitled to a preference over the Common 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.
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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 Symantec Dividend
Declaration Date, declare a dividend on each Exchangeable Share (a) in the case
of a cash dividend declared on the Symantec Common Shares, in an amount in cash
for each Exchangeable Share equal to the Canadian Dollar Equivalent on the
Symantec Dividend Declaration Date of the cash dividend declared on each
Symantec Common Share or (b) in the case of a stock dividend declared on the
Symantec Common Shares to be paid in Symantec Common Shares, in such number of
Exchangeable Shares for each Exchangeable Share as is equal to the number of
Symantec Common Shares to be paid on each Symantec Common Share or (c) in the
case of a dividend declared on the Symantec Common Shares in property other than
cash or Symantec 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 Symantec 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.
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 Subsection 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 Subsection 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 Subsection 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 Symantec 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
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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
9.2 of these share provisions:
(a) pay any dividends on the Common Shares, or any other shares
ranking junior to the Exchangeable Shares, other than stock dividends
payable in Common Shares or any such other shares ranking junior to the
Exchangeable Shares, as the case may be;
(b) redeem or purchase or make any capital distribution in respect of
Common 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, 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 Subsections 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 Symantec 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 Common Shares or any other shares ranking junior to the
Exchangeable Shares, an amount per share equal to (a) the Current Market Price
of a Symantec 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 Symantec Common Share, plus (b) an additional
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amount equivalent to the full amount of all declared and unpaid dividends on
each such Exchangeable Share (collectively the "Liquidation Amount").
5.2 On or promptly after the Liquidation Date, and subject to the exercise
by Symantec of the Liquidation Call Right, the Corporation shall cause to be
delivered to the holders of the Exchangeable Shares the Liquidation Amount for
each such Exchangeable Share upon 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 reasonably
require, 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 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 Symantec Common Shares
(which shares shall be duly issued as fully paid and non-assessable and shall be
free and clear of any lien, claim, encumbrance, security interest or adverse
claim) 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 comprising part of the total
Liquidation Amount (less any tax required to be deducted and withheld from the
total Liquidation Amount 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 on or 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 Symantec Common Shares delivered to them.
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
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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 the exercise by Symantec 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
Symantec 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 Symantec 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 (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 the declared and unpaid
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 the form of Schedule A hereto or in such
other 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
(c) acknowledging the overriding right (the "Retraction Call Right")
of Symantec 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 Symantec
in accordance with the Retraction Call Right on the terms and conditions
set out in Section 6.3 below.
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6.2 Subject to the exercise by Symantec 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
Symantec 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 Symantec thereof. In order to exercise the
Retraction Call Right, Symantec must notify the Corporation [in writing] of its
determination to do so (the "Symantec Call Notice") within two Business Days of
notification to Symantec by the Corporation of the receipt by the Corporation of
the Retraction Request. If Symantec does not so notify the Corporation within
such two Business Day period, the Corporation will notify the holder as soon as
possible thereafter that Symantec will not exercise the Retraction Call Right.
If Symantec delivers the Symantec 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
Symantec in accordance with the Retraction Call Right. In such event, the
Corporation shall not redeem the Retracted Shares and Symantec shall purchase
from such holder and such holder shall sell to Symantec 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, Symantec shall deposit with the Transfer
Agent, on or before the Retraction Date, certificates representing Symantec
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 Symantec does not deliver a
Symantec Call Notice within such two Business Day period, and provided that
Retraction Request is not revoked by the holder in the manner specified in
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 Symantec, 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 Symantec Common Shares (which shares shall be duly issued as
fully paid and non-assessable and shall be free and
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clear of any lien, claim, encumbrance, security interest or adverse claim)
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
from the total Retraction Price by the Corporation) or a cheque of Symantec
payable at par and in Canadian dollars at any branch of the bankers of Symantec
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 Symantec, as the case
may be, 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 (plus 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.
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 the Corporation or purchased by Symantec shall thereafter be
considered and deemed for all purposes to be a holder of the Symantec 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 Symantec 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
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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 Symantec to purchase such Retracted Shares from such holder
on the Retraction Date or as soon as practicable thereafter on payment by
Symantec to such holder of the Purchase Price for each such Retracted Share,
all as more specifically provided in the Voting 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 Symantec shall be deemed to have been revoked.
ARTICLE 7
REDEMPTION OF EXCHANGEABLE SHARES BY THE CORPORATION
7.1 Subject to applicable law, and if Symantec does not exercise the
Redemption Call Right, the Corporation shall on the Automatic Redemption Date
redeem the whole of the then outstanding Exchangeable Shares for an amount per
share equal to (a) the Current Market Price of a Symantec 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 Symantec Common Share for each Exchangeable Share held
by such holder, plus (b) an additional amount equivalent to the full amount of
all declared and unpaid dividends thereon (collectively the "Redemption Price").
7.2 In any case of a redemption of Exchangeable Shares under this Article
7, the Corporation shall, at least 120 days before the Automatic Redemption
Date, send or cause to be sent to each holder of Exchangeable Shares a notice in
writing of the redemption by the Corporation or the purchase by Symantec 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
Automatic Redemption Date and, if applicable, particulars of the Redemption Call
Right.
7.3 On or after the Automatic Redemption Date and subject to the exercise
by Symantec 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 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
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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 Symantec
Common Shares (which shares shall be duly issued as fully paid and non-
assessable and shall be free and clear of any lien, claim, encumbrance, security
interest or adverse claim) 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 comprising
part of the total Redemption Price (less any tax required to be deducted and
withheld from the total Redemption Price by the Corporation). On and after the
Automatic 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 the 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
Automatic 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 Automatic 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 or 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 Redemption Price, the
holders of the Exchangeable Shares shall thereafter be considered and deemed for
all purposes to be holders of the Symantec Common Shares delivered to them.
ARTICLE 8
VOTING RIGHTS
8.1 Except as required by applicable law and the provisions of Sections
9.1, 10.1, 11.1 and 11.2, 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.
ARTICLE 9
AMENDMENT AND APPROVAL
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9.1 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.
9.2 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 such approval must be given also by the
affirmative vote of holders of more than two-thirds of the Exchangeable Shares
represented in person or by proxy at the meeting (excluding Exchangeable Shares
beneficially owned by Symantec). If at any such meeting the holders of at least
50% of the 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.
ARTICLE 10
RECIPROCAL CHANGES, ETC. IN RESPECT OF SYMANTEC COMMON SHARES
10.1 (a) Each holder of an Exchangeable Share acknowledges that the Support
Agreement provides, in part, that Symantec 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 9.2 of these share provisions:
(i) issue or distribute Symantec Common Shares (or securities
exchangeable for or convertible into or carrying rights to acquire Symantec
Common Shares) to the holders of all or substantially all of the then
outstanding Symantec Common Shares by way of stock dividend or other
distribution, other than an issue of Symantec Common Shares (or securities
exchangeable for or convertible into or carrying rights to acquire Symantec
Common Shares) to holders of Symantec Common Shares who exercise an option
to receive dividends in Symantec Common Shares (or securities exchangeable
for or convertible into or carrying rights to acquire Symantec 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 Symantec Common Shares
entitling them to
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subscribe for or to purchase Symantec Common Shares (or securities
exchangeable for or convertible into or carrying rights to acquire
Symantec Common Shares); or
(iii) issue or distribute to the holders of all or substantially all
of the then outstanding Symantec Common Shares (A) shares or securities of
Symantec of any class other than Symantec Common Shares (other than shares
convertible into or exchangeable for or carrying rights to acquire Symantec
Common Shares), (B) rights, options or warrants other than those referred
to in Section 10.1(a)(ii) above, (C) evidences of indebtedness of Symantec
or (D) assets of Symantec;
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) Each holder of an Exchangeable Share acknowledges that the Support
Agreement further provides, in part, that Symantec 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 9.2 of these share
provisions:
(i) subdivide, redivide or change the then outstanding Symantec Common
Shares into a greater number of Symantec Common Shares; or
(ii) reduce, combine or consolidate or change the then outstanding
Symantec Common Shares into a lesser number of Symantec Common Shares; or
(iii) reclassify or otherwise change the Symantec Common Shares or
effect an amalgamation, merger, reorganization or other transaction
affecting the Symantec 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 further provides, in part, that the aforesaid provisions
of the Support Agreement shall not be changed without the approval of the
holders of the Exchangeable Shares given in accordance with Section 9.2 of these
share provisions.
ARTICLE 11
ACTIONS BY THE CORPORATION UNDER SUPPORT AGREEMENT
11.1 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 Symantec with all provisions of the Support
Agreement applicable to the Corporation and Symantec, respectively, in
accordance with the terms thereof including, without limitation, taking all such
actions and doing all such things as shall be necessary or advisable to enforce
to
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the fullest extent possible for the direct benefit of the Corporation all rights
and benefits in favour of the Corporation under or pursuant to such agreement.
11.2 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 without the approval of the holders of the
Exchangeable Shares given in accordance with Section 9.2 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; 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 12
LEGEND
12.1 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 13
NOTICES
13.1 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
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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.
13.2 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.
13.3 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 fifth 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.
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SCHEDULE A
NOTICE OF RETRACTION
To the Corporation and Symantec Corporation
This notice is given pursuant to Article 6 of the provisions (the "Share
Provisions") attaching to the share(s) represented by this certificate and all
capitalized words and expressions used in this notice which are defined in the
Share Provisions have the meanings ascribed to such words and expressions in
such Share Provisions.
The undersigned hereby notifies the Corporation that, subject to the
Retraction Call Right referred to below, the undersigned desires to have the
Corporation redeem in accordance with Article 6 of the Share Provisions:
M all share(s) represented by this certificate; or
M ___________________ share(s) only.
The undersigned hereby notifies the Corporation that the Retraction Date
shall be ______________________.
NOTE: The Retraction Date must be a Business Day and must not be less than
five Business Days nor more than 10 Business Days after the date upon
which this notice is received by the Corporation. In the event that
no such Business Day is specified above, the Retraction Date shall be
deemed to be the tenth Business Day after the date on which this
notice is received by the Corporation.
The undersigned acknowledges the Retraction Call Right of Symantec
Corporation to purchase all but not less than all the Retracted Shares from the
undersigned and that this notice shall be deemed to be a revocable offer by the
undersigned to sell the Retracted Shares to Symantec Corporation in accordance
with the Retraction Call Right on the Retraction Date for the Retraction Price
and on the other terms and conditions set out in Section 6.3 of the Share
Provisions. If Symantec Corporation determines not to exercise the Retraction
Call Right, the Corporation will notify the undersigned of such fact as soon as
possible. This notice of retraction, and offer to sell the Retracted Shares to
Symantec Corporation, may be revoked and withdrawn by the undersigned by notice
in writing given to the Corporation at any time before the close of business on
the Business Day immediately preceding the Retraction Date.
The undersigned acknowledges that if, as a result of solvency provisions of
applicable law, the Corporation is unable to redeem all Retracted Shares, the
undersigned will be deemed to have exercised the Exchange Right (as defined in
the Voting and Exchange Trust Agreement) so as to require Symantec Corporation
to purchase the unredeemed Retracted Shares.
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The undersigned hereby represents and warrants to the Corporation and
Symantec Corporation that the undersigned has good title to, and owns, the
share(s) represented by this certificate to be acquired by the Corporation or
Symantec Corporation, as the case may be, free and clear of all liens, claims
and encumbrances.
____________________ _________________________ ________________________
(Date) (Signature of Shareholder) (Guarantee of Signature)
M Please check box if the securities and any cheque(s) resulting from the
retraction or purchase of the Retracted Shares are to be held for pick-up
by the shareholder at the principal transfer office of The R-M Trust
Company (the "Transfer Agent") in Toronto, failing which the securities and
any cheque(s) will be mailed to the last address of the shareholder as it
appears on the register.
NOTE: This panel must be completed and this certificate, together with
such additional documents as the Transfer Agent may require, must
be deposited with the Transfer Agent at its principal transfer
office in Toronto. The securities and any cheque(s) resulting
form the retraction or purchase of the Retracted Shares will be
issued and registered in, and made payable to, respectively, the
name of the shareholder as it appears on the register of the
Corporation and the securities and cheque(s) resulting from such
retraction or purchase will be delivered to such shareholder as
indicated above, unless the form appearing immediately below is
duly completed.
___________________________________________________
Name of Person in Whose Name Securities or Cheque(s) Date___________________
Are To Be Registered, Issued or Delivered (please print)
___________________________________________________ _________________________
Street Address or P.O. Box Signature of Shareholder
___________________________________________________ _________________________
City - Province Signature Guaranteed by
NOTE: If the notice of retraction is for less than all of the share(s)
represented by this certificate, a certificate representing the
remaining shares of the Corporation will be issued and registered in
the name of the shareholder as it appears on the register of the
Corporation, unless the Share Transfer Power on the share certificate
is duly completed in respect of such shares.
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EXHIBIT 2.9
DELRINA BALANCE SHEET
[omitted; copy will be furnished supplementally to the SEC upon request]
<PAGE>
EXHIBIT 4.4
FORM OF STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 5 1995 (the "AGREEMENT"), by and
between __________________ ("GRANTOR"), and SYMANTEC CORPORATION, a Delaware
corporation ("SYMANTEC").
WHEREAS, Grantor is an officer, director and principal shareholder of
Delrina Corporation, an Ontario Corporation ("DELRINA"); and
WHEREAS, Symantec and Delrina propose to enter into a Combination Agreement
and related agreements dated as of the date hereof (the "COMBINATION AGREEMENT";
capitalized terms not defined herein shall have the meanings set forth in the
Combination Agreement), providing for, among other things, the acquisition of
Delrina by Symantec pursuant to an "ARRANGEMENT" as described therein; and
WHEREAS, as a condition and inducement to Symantec's willingness to enter
into the Combination Agreement, Symantec has requested that Grantor agree, and
Grantor has agreed, to grant Symantec the Option described in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth herein and in
the Combination Agreement, Grantor and Symantec agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Grantor hereby grants to Symantec an irrevocable option (the "OPTION")
to purchase up to 50% of the _____ common shares of Delrina ("DELRINA COMMON
STOCK") owned by Grantor as of the date hereof and up to 50% of any shares of
Delrina Common Stock hereafter acquired by Grantor (collectively, the "OPTION
SHARES"), at a purchase price of U.S. $17.00 per Option Share (the "PURCHASE
PRICE").
2. EXERCISE OF OPTION. Symantec may exercise the Option, in whole or in
part, at any time and from time to time after the occurrence of a Triggering
Event (as defined below) and prior to the Option Expiration Date (as defined
below).
(a) For purposes of this Agreement, a "TRIGGERING EVENT" shall mean
and include the occurrence of any of the following events:
(i) any person (other than Symantec or any subsidiary of
Symantec) shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filed a registration statement under the Securities
Act of 1933, as amended (the "SECURITIES ACT"), with respect to, a tender offer
or exchange offer to purchase any shares of Delrina
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Common Stock such that, upon consummation of such offer, such person would own
or control 30% or more of the then outstanding Delrina Common Stock;
(ii) Delrina or any subsidiary of Delrina shall have
authorized, recommended, proposed, or publicly announced an intention to
authorize, recommend, or propose, or entered into, an agreement with any person
(other than Symantec or any subsidiary of Symantec) to (A) effect a merger,
consolidation, or similar transaction involving Delrina or any of its material
subsidiaries (other than transactions solely among Delrina and its
subsidiaries), (B) sell, lease, or otherwise dispose of any material portion of
the consolidated assets of Delrina and its subsidiaries, or (C) issue, sell, or
otherwise dispose of (including by way of merger, consolidation, share exchange,
or any similar transaction) securities (or options, rights, or warrants to
purchase, or securities convertible into, such securities) representing 5% or
more of the voting power of Delrina or any of its subsidiaries.;
(iii) any person (other than Symantec or any subsidiary of
Symantec) shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT")) or the right to acquire beneficial ownership of, or any "group" (as such
term is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, 30% or
more of the then outstanding Delrina Common Stock;
(iv) the holders of Delrina Common Stock shall not have
approved the Arrangement at the meeting of shareholders held for the purpose of
voting on the Arrangement or such meeting shall have been canceled, in each case
after any person (other than Symantec or any subsidiary of Symantec) shall have
publicly announced a proposal, or publicly disclosed an intention to make a
proposal, to engage in any transaction described in clauses (i), (ii), or (iii)
above;
(v) Delrina's Board of Directors shall have withdrawn or
modified in a manner materially adverse to Symantec the recommendation of
Delrina's Board of Directors referred to in Section 4.4 of the Combination
Agreement that the holders of the Delrina Common Stock approve the Arrangement;
(vi) Delrina shall have terminated the Combination Agreement
pursuant to a Superior Proposal Termination as defined in Section 9.1(h) of the
Combination Agreement; or
(vii) Grantor shall have breached any of its obligations under
this Agreement or the Affiliate Agreement among Delrina, Symantec and the
Grantor.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(b) For purposes of this Agreement, "OPTION EXPIRATION DATE" shall
mean such date and time as the Arrangement shall become effective in accordance
with the terms and
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provisions of the Combination Agreement or, if the Arrangement has not then
become effective, the latest of:
(i) twelve months after the public announcement of the
execution of the Combination Agreement; or
(ii) six months after the termination of the Combination
Agreement for any of the reasons set forth in the first sentence of Section
9.4(a) of the Combination Agreement; or
(iii) the expiration of the period during which Delrina may be
obligated to pay a termination fee as set forth in the second sentence of
Section 9.4(a) of the Combination Agreement.
(c) In the event Symantec wishes to exercise the Option, it shall
send to Grantor a written notice (the date of which being herein referred to as
the "NOTICE DATE") specifying (i) the total number of Option Shares it intends
to purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 15 business days after the Notice Date for
the closing of such purchase (the "CLOSING DATE"); PROVIDED that if the closing
of the purchase and sale pursuant to the Option (the "CLOSING") cannot be
consummated by reason of any applicable judgment, decree, order, law or
regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated; and, PROVIDED FURTHER that, without
limiting the foregoing, if prior notification to or approval of any regulatory
authority is required in connection with such purchase, Symantec and, if
applicable, Grantor shall promptly file the required notice or application for
approval and shall expeditiously process the same (and Grantor shall cooperate
with Symantec in the filing of any such notice or application and the obtaining
of any such approval), and the period of time that otherwise would run pursuant
to this sentence shall run instead from the date on which, as the case may be,
(i) any required notification period has expired or been terminated or (ii) such
approval has been obtained, and in either event, any requisite waiting period
has passed.
(d) Notwithstanding Section 2(c), in no event shall any Closing Date
be more than 18 months after the related Notice Date, and if the Closing Date
shall not have occurred within 18 months after the related Notice Date due to
the failure to obtain any such required approval, the Option and the exercise
thereof effected on the Notice Date shall be deemed to have expired.
3. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Symantec shall pay to Grantor in
immediately available funds by wire transfer to a bank account designated by
Grantor an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased on such Closing Date.
(b) At each Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Grantor shall deliver to Symantec a
certificate or
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certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be fully paid and non-assessable and free and clear of
all liens, claims, charges, and encumbrances of any kind whatsoever, and
Symantec shall deliver to Grantor a letter agreeing that Symantec shall not
offer to sell or otherwise dispose of such Option Shares in violation of
applicable law or the provisions of this Agreement.
(c) Certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF JULY 5, 1995.
A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT
CHARGE UPON RECEIPT BY THE GRANTOR OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend, insofar as it applies to the
Securities Act, shall be removed by delivery of substitute certificate(s)
without such legend if Symantec shall have delivered to Grantor a copy of a
letter from the staff of the SEC, or an opinion of counsel in form and substance
reasonably satisfactory to Delrina and its counsel, to the effect that such
legend is not required for purposes of the Securities Act.
4. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC. In the event of any
change in Delrina Common Stock by reason of a stock dividend, split-up,
recapitalization, combination, exchange of shares, or similar transaction, the
type and number of shares or securities subject to the Option, and the Purchase
Price therefor, shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Symantec shall
receive upon exercise of the Option the same class and number of outstanding
shares or other securities or property that Symantec would have received in
respect of Delrina Common Stock if the Option had been exercised immediately
prior to such event, or the record date therefor, as applicable. If any
additional shares of Delrina Common Stock are issued to Grantor after the date
of this Agreement (other than pursuant to an event described in the first
sentence of this Section 4), the number of shares of Delrina Common Stock
subject to the Option shall be increased by an amount equal to 65% of the number
of shares of Delrina Common Stock so issued to Grantor. All such additional
shares or other securities or other property shall be considered "Option Shares"
for purposes of this Agreement.
5. REPRESENTATIONS OF GRANTOR. Grantor represents and warrants to
Symantec that:
(a) Grantor has full legal capacity to execute this Agreement, and
this Agreement will be binding upon the heirs, personal representatives,
successors and assigns of Grantor.
(b) Grantor is the lawful owner of the Option Shares, of record and
beneficially, free and clear of all liens, charges, pledges, security interests,
options, claims or other encumbrances, and has full right, power and authority
to sell, assign, transfer and deliver
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the Option Shares to be sold by Grantor to Symantec upon exercise of the Option;
and upon the delivery of such Option Shares to Symantec hereunder, Symantec
shall have good and valid title thereto free and clear of all liens, charges,
pledges, security interests, options, claims or other encumbrances.
(c) The execution, delivery and performance by Grantor of this
Agreement and compliance by Grantor with the provisions hereof will not (i)
violate any provision of any current law, statute, rule or regulation applicable
to Grantor, or any ruling, writ, injunction, order or decree of any court,
administrative agency or other governmental body applicable to Grantor or (ii)
conflict with or result in a breach of any provisions or constitute (with due
notice or lapse of time or both) a default under any agreement, contract or
instrument to which Grantor is a party or by which Grantor or any of the Option
Shares is bound.
6. COVENANTS OF GRANTOR.
(a) Grantor shall not sell, pledge or otherwise dispose of any of the
Option Shares prior to the Option Expiration Date except upon exercise of the
Option by Symantec.
(b) Within ten business days after the execution of this Agreement,
Grantor shall deposit the stock certificates representing the Option Shares with
James E. Kofman of Osler, Hoskin & Harcourt, counsel to Grantor, to be held by
him in escrow until delivery thereof to Symantec pursuant to exercise of the
Option or until the Option Expiration Date, whereupon such certificates shall be
returned to Grantor. In the event of a dispute with respect to the release of
such stock certificates, James E. Kofman, as escrow agent, shall be entitled to
turn the resolution of the dispute over to the Ontario Court of Justice (General
Division).
(c) Grantor shall take such steps as may be reasonably requested by
Symantec to carry out the purpose and intent of this Agreement and to effectuate
the exercise of the Option and delivery of the Option Shares upon exercise
thereof.
7. MISCELLANEOUS.
(a) EXPENSES. Except as otherwise provided in the Combination
Agreement, each of the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own counsel. Notwithstanding the
above, Symantec agrees to reimburse Mr. Kofman for any reasonable out-of-pocket
expenses he incurs in connection with the performance of his duties hereunder.
(b) WAIVER AND AMENDMENT. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARY; SEVERABILITY.
Except as otherwise set forth in the Combination Agreement, this Agreement (a)
constitutes the entire
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agreement and supersedes all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof and (b)
is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
(d) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law rules.
(e) DESCRIPTIVE HEADINGS. The descriptive headings contained herein
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) NOTICES. All notices and other communications pursuant to
this Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally,
telecopied, sent by internationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following address (or at such other address for a party as shall
be specified by like notice):
If to Grantor to: ____________________
____________________
____________________
____________________
With a copy to: Osler, Hoskin & Harcourt
1 First Canadian Place
P. O. Box 50
Toronto, Ontario M5X 1B8
CANADA
Attention: James E. Kofman, Esq.
Telecopier: 416-862-6666
And if to Symantec to: Symantec Corporation
10201 Torre Avenue
Cupertino, California 95014
U.S.A.
Attention: General Counsel
Telecopier: 408-252-5101
With a copy to: Fenwick & West
Two Palo Alto Square
Palo Alto, California 94306
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<PAGE>
U.S.A.
Attention: Gordon K. Davidson, Esq.
Telecopier: 415-857-0361
All such notices and other communications shall be deemed to have been
received (a) in the case of personal delivery, on the date of such delivery, (b)
in the case of a telecopy, when the party receiving such copy shall have
confirmed receipt of the communication, (c) in the case of delivery by
nationally-recognized overnight courier, on the business day following dispatch,
and (d) in the case of mailing, on the third business day following such
mailing.
(g) COUNTERPARTS. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
(h) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party, except that Symantec may assign this
Agreement to a wholly-owned subsidiary of Symantec. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
(i) FURTHER ASSURANCES. In the event of any exercise of the Option
by Symantec, Grantor and Symantec shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such exercise.
(j) SPECIFIC PERFORMANCE. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief. Both parties further agree to waive
any requirement for the securing or posting of any bond in connection with the
obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
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<PAGE>
IN WITNESS WHEREOF, Grantor and Symantec have caused this Stock Option
Agreement to be signed as of the day and year first written above.
GRANTOR
By:___________________________________
Name:__________________________________
SYMANTEC CORPORATION
By:____________________________________
Name:__________________________________
Title:_________________________________
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<PAGE>
EXHIBIT 3.9
SYMANTEC BALANCE SHEET
[omitted; copy will be furnished supplementally to the SEC upon request]
<PAGE>
EXHIBIT 4.5
DELRINA AFFILIATES AGREEMENT
TO: Symantec Corporation
10201 Torre Avenue
Cupertino, California 95014
Delrina Corporation
895 Don Mills Road, 500-2 Park Centre
Toronto, Ontario, Canada
M3C 1W3
DELRINA CORPORATION AFFILIATES AGREEMENT
This Delrina Corporation Affiliates Agreement (the "AGREEMENT") by and
among Symantec Corporation, a corporation incorporated under the laws of
Delaware ("SYMANTEC"), Delrina Corporation, a corporation organized under the
laws of Ontario ("DELRINA") and the undersigned shareholder of Delrina (the
"SHAREHOLDER") is being delivered pursuant to Section 4.5 of that certain
Combination Agreement, including Plan of Arrangement, dated as of July 5, 1995,
by and among Symantec and Delrina (the "COMBINATION AGREEMENT"). The
Combination Agreement provides for the recapitalization of Delrina pursuant to
which Delrina will become a subsidiary of Symantec and all the voting power of
Delrina will be owned by Symantec (the "ARRANGEMENT"). Upon the consummation of
the Arrangement and in connection therewith, the undersigned Shareholder will
become the owner of fully paid and non-assessable, non-voting exchangeable
shares of Delrina (the "EXCHANGEABLE SHARES"), which shall be exchangeable for
Symantec's common stock. Unless otherwise defined herein, the capitalized terms
used in this Agreement have the meanings given to them in the Combination
Agreement.
The Shareholder understands that since the Arrangement will be
accounted for as a "pooling-of-interests" and the Exchangeable Shares, the
Symantec common stock exchangeable therefor, the options to acquire Symantec
common stock, and the Symantec common stock acquired thereby (the "NEW SHARES"),
all of which will or may be issued to the Shareholder, will be "restricted
securities" within the meaning of the Securities Act, and the Shareholder is an
"affiliate" of Delrina (within the meaning of Rule 145 promulgated by the SEC
under the Securities Act ("RULE 145")), the New Shares and any of the
Shareholder's Delrina common shares or options to purchase Delrina common shares
as listed on the signature page hereto or Delrina common shares or options
acquired by the Shareholder after the execution of this Agreement (collectively,
the "DELRINA SECURITIES") may only be disposed of in conformity with the
limitations described herein.
The Shareholder has been informed that the treatment of the
Arrangement as a pooling-of-interests for financial accounting purposes may
depend upon the accuracy of
<PAGE>
certain of the representations and warranties and the compliance with certain of
the agreements set forth herein. The Shareholder further understands that the
representations, warranties and agreements set forth herein will be relied upon
by Symantec, Symantec's stockholders, Delrina, and their respective counsel and
accounting firms.
1. The Shareholder represents, warrants and agrees as follows:
(a) The Shareholder has full power to execute this Agreement and
to make the representations, warranties and agreements herein and to perform the
Shareholder's obligations hereunder.
(b) The Shareholder is the beneficial owner of the Delrina
common shares and the options to purchase Delrina common shares indicated on the
last page hereof. Except for such securities, the Shareholder does not
beneficially own any Delrina common shares or any other equity securities of
Delrina, or any options, warrants or other rights to acquire Delrina common
shares or other equity securities of Delrina. At the date hereof, the listed
securities are, and at all times until the "EXPIRATION DATE" (as defined below),
will be, free and clear of any liens, claims, options, charges or other
encumbrances. As used herein, the term "EXPIRATION DATE" means the earliest to
occur of (i) the publication of the first quarterly financial statements of
Symantec that include at least 30 days of combined operating results of Symantec
and Delrina, or (ii) such time as the Combination Agreement may be terminated in
accordance with its terms.
2. The Shareholder agrees as follows:
(a) Until the Expiration Date, the Shareholder will vote the
Delrina Securities in any vote of the Delrina shareholders, with respect to the
matters referred to in (i) or (ii) immediately below, and in every written
consent as a Delrina shareholder solicited with respect to any of the matters
referred to in (i) or (ii) immediately below, as follows: (i) in favor of
approval of the Combination Agreement and the Arrangement and any matter which
could reasonably be expected to facilitate the Arrangement and (ii) against
approval of any proposal made in opposition to or in competition with
consummation of the Arrangement. The Shareholder will not, directly or
indirectly, solicit or encourage any offer from any person or entity concerning
the possible disposition of all or any portion of Delrina's business, assets or
capital stock by merger, sale or other means in contravention of the Combination
Agreement.
(b) Until the Expiration Date, the Shareholder will not, and
will not permit any entity under its control to, (i) solicit proxies or become a
"participant" in a "solicitation" (as such terms are defined in Regulation 14A
under the Exchange Act), in opposition to or competition with the consummation
of the Arrangement or otherwise encourage or assist any person or entity in
taking or planning any action which would compete with, restrain or otherwise
serve to interfere with or inhibit the timely consummation of the Arrangement in
accordance with the terms of the Combination
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<PAGE>
Agreement; (ii) initiate a Delrina shareholder vote or action by consent of
Delrina shareholders in opposition to or in competition with the consummation of
the Arrangement; or (iii) become a member of a "group" (as such term is used in
Section 13(d) of the Exchange Act) with respect to any voting securities of
Delrina for the purpose of opposing or competing with the consummation of the
Arrangement.
(c) The Shareholder will execute and deliver any additional
documents necessary or desirable, in the reasonable opinion of Delrina or
Symantec, to carry out the intent of this Agreement.
(d) The Shareholder will not sell, transfer, encumber or
otherwise dispose of any New Shares that the Shareholder might acquire in
connection with the Arrangement or any securities which may be paid as a
dividend thereon or with respect thereto or issued or delivered in exchange or
substitution therefor or any Delrina Securities (collectively, the "RESTRICTED
SECURITIES"), or offer or agree to sell, transfer, encumber or otherwise dispose
of, or in any other way reduce the Shareholder's risk or ownership or investment
in, any Restricted Securities: (i) in the 30 day period immediately preceding
the Effective Time; and (ii) after the Effective Time until Symantec shall have
publicly released its combined financial results of Symantec and Delrina for a
period of at least 30 days of combined operations of Symantec and Delrina
(provided, however, that nothing in this paragraph will be deemed to prohibit
charitable contribution of such securities without consideration to transferees
who agree to all of the restrictions in this Agreement).
(e) Subject to Section 2(d) above, the Shareholder agrees not to
offer, sell, exchange, transfer, pledge or otherwise dispose of any of the New
Shares unless at the time either:
(i) such transaction shall be permitted pursuant to the
provisions of Rule 145(d) under the Securities Act;
(ii) with respect to a sale of Exchangeable Shares in the
United States, counsel representing the Shareholder, reasonably satisfactory to
Symantec, shall have advised Symantec in a written opinion letter reasonably
satisfactory to Symantec and Symantec's counsel, and upon which Symantec and its
counsel may rely, that no registration under the Securities Act would be
required in connection with the proposed sale, transfer or other disposition;
(iii) an authorized representative of the SEC shall have
rendered written advice to the Shareholder (sought by the Shareholder or counsel
to the Shareholder, with a copy thereof and of all other related communications
delivered to Symantec) to the effect that the SEC would take no action, or that
the staff of the SEC would not recommend that the SEC take action, with respect
to the proposed sale, transfer or other disposition, if consummated; or
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<PAGE>
(iv) such transaction is covered by an effective S-3
Registration Statement.
3. Each of the agreements by the Shareholder set forth in Sections
2(a) and (b) hereof are made solely as a shareholder of Delrina and are not
intended to and do not in any manner whatsoever affect or restrain the due
compliance with or exercise of any duty owed to Delrina by such Shareholder in
any other capacity. The Shareholder also understands and agrees that, unless
and until one of the conditions set forth in Section 2(e) above shall have
occurred, stop transfer instructions will be given to Symantec's transfer agent
with respect to certificates evidencing the Restricted Securities and that there
will be placed on the certificates evidencing the Restricted Securities a legend
stating in substance (in addition to any other legends required by law or
contract):
"THE SECURITIES REPRESENTED HEREBY MAY ONLY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED IN ACCORDANCE WITH THE REQUIREMENTS OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE TERMS OF AN AFFILIATES' AGREEMENT
BETWEEN THE REGISTERED HOLDER HEREOF AND GREEN CORPORATION. A COPY OF SUCH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF GREEN CORPORATION AND WILL BE
PROVIDED TO THE HOLDER OF THIS CERTIFICATE, WITHOUT CHARGE, UPON WRITTEN REQUEST
THEREFOR."
Symantec covenants that, upon the written request of the Shareholder when one or
more of the alternative conditions set forth in Section 2(e) shall have
occurred, it will remove said legend and stop transfer instructions. The
Shareholder agrees to observe and comply with the Securities Act and the General
Rules and Regulations thereunder, as now in effect and as from time to time
amended and including those hereafter enacted or promulgated, in connection with
any offer, sale, pledge, transfer or other disposition of the Restricted
Securities.
4. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
5. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but except as otherwise specifically provided,
neither this Agreement nor any of the rights, interests or obligations of the
parties hereto may be assigned by either of the parties without prior written
consent of the other.
6. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto. This Agreement will terminate upon the
termination of the Combination Agreement in accordance with its terms.
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<PAGE>
7. The Shareholder acknowledges that Symantec and Delrina will each
be irreparably harmed and that there will be no adequate remedy at law for a
violation of any of the covenants or agreements of the Shareholder set forth
herein. Therefore, it is agreed that, in addition to any other remedies which
may be available to Symantec or Delrina upon any such violation, Symantec and
Delrina shall have the right to enforce such covenants and agreements by
specific performance, injunctive relief or by any other means available at law
or in equity.
8. This Agreement shall be governed by, construed and enforced in
accordance with, the internal laws of the State of Delaware, without regard to
its rules regarding conflict of laws.
9. This Agreement contains the entire understanding of the parties
in respect of the subject matter hereof, and supersedes all prior negotiations
and understandings between the parties with respect to such subject matter.
10. This Agreement may be executed in several counterparts, each of
which shall be an original as regards the party whose signature appears thereon,
and all of which together will constitute one and the same instrument.
11. Each of the parties acknowledges having requested and being
satisfied that this document and the documents attached be drawn in English.
Chacune des parties reconnait avoir demande que ce document et les documents y
afferents soient rediges en anglais et s'en declare satisfaite.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
102
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement
effective as of the date set forth below.
Number of Delrina Securities
beneficially owned by the undersigned:
Delrina Corporation Common Shares
__________________
Options to Purchase Delrina Corporation Common Shares
__________________
Date: ____________ Very truly yours,
__________________________________
(Print name)
__________________________________
Signature
Agreed to and accepted:
SYMANTEC CORPORATION
By:____________________________________
Name:____________________________________
Title: __________________________________
DELRINA CORPORATION
By:____________________________________
Name:___________________________________
Title: _________________________________
SIGNATURE PAGE TO DELRINA CORPORATION AFFILIATES AGREEMENT
103
<PAGE>
Exhibit A to Exhibit 4.5
ASSIGNMENT OF INVENTIONS AND CONFIDENTIALITY AGREEMENT
This agreement is entered into as of _________ by and between ________
(hereinafter "Employee") and Symantec Corporation, a Delaware Corporation,
having its principal place of business at _________________ (hereinafter
"Symantec").
In consideration of his/her employment by Symantec and of the salary or
wages and other benefits received by him/her during such employment, he/she
agrees that the following terms and conditions shall govern his/her employment
relationship with Symantec in regard to inventions and discoveries, works of
authorship, and proprietary information, confidential information and trade
secrets:
1. INVENTIONS AND DISCOVERIES
A. Employee agrees that all inventions and discoveries, whether
patentable or unpatentable, which are conceived or made by him/her
during his/her employment, either solely or jointly with others, and
which relate in any way to the products or business of Symantec, shall
belong to Symantec. Employee agrees that he/she has been notified
and understands that the provisions of this paragraph do not apply to
any Invention that qualifies fully under the provisions of Section
2870 of the California Labor Code, which states as follows:
ANY PROVISION IN ANY EMPLOYMENT AGREEMENT WHICH PROVIDES THAT AN
EMPLOYEE SHALL ASSIGN OR OFFER TO ASSIGN ANY OF HIS OR HER RIGHTS IN
AN INVENTION TO HIS OR HER EMPLOYER SHALL NOT APPLY TO AN INVENTION
THAT THE EMPLOYEE DEVELOPED ENTIRELY ON HIS OR HER OWN TIME WITHOUT
USING THE EMPLOYER'S EQUIPMENT, SUPPLIES, FACILITIES, OR TRADE SECRET
INFORMATION EXCEPT FOR THOSE INVENTIONS THAT EITHER: (1) RELATE AT THE
TIME OF CONCEPTION OR REDUCTION TO PRACTICE OF THE INVENTION TO THE
EMPLOYER'S BUSINESS, OR ACTUAL OR DEMONSTRABLY ANTICIPATED RESEARCH OR
DEVELOPMENT OF THE EMPLOYMENT RESEARCH OR DEVELOPMENT OF THE EMPLOYER,
OR (2) RESULT FROM ANY WORK PERFORMED BY THE EMPLOYEE FOR THE
EMPLOYER. TO THE EXTENT A PROVISION IN AN EMPLOYMENT AGREEMENT
PURPORTS TO REQUIRE AN EMPLOYEE TO ASSIGN AN INVENTION OTHERWISE
EXCLUDED FROM BEING REQUIRED TO BE ASSIGNED UNDER CALIFORNIA LABOR
CODE SECTION 1870 (A), THE PROVISION IS AGAINST THE PUBLIC POLICY OF
THIS STATE AND IS UNENFORCEABLE.]
<PAGE>
B. Employee agrees that he/she will disclose to Symantec in writing
any inventions and discoveries covered by this Agreement.
Employee further agrees that, without further remuneration,
he/she will do any and all of the following acts at the request
and expense of Symantec:
(1) execute any assignments of Symantec or its nominee of the
entire right, title, and interest in and to any such
inventions and discoveries
(2) execute any other proper instruments or documents necessary
or desirable in applying for and obtaining patents on such
inventions and discoveries in the United States and foreign
countries;
(3) to the extent that Employee fails to so execute such
assignments or instruments, he/she hereby appoints the
Secretary of Symantec as his/her attorney in fact to execute
such assignments on such Employee's behalf; and
(4) to cooperate in the prosecution or defense of any claims,
lawsuits, or other proceedings involving such inventions and
discoveries.
2. WORKS OF AUTHORSHIP
A. Employee agrees that any works of authorship such as writings,
computer programs, and the like which are authored or created by
him/her during his/her employment, either solely or jointly with
others, and which relate in any way to the business of Symantec
shall belong to Symantec whether copyrightable or not.
B. Employee further agrees that without further remuneration, he/she
will do any and all of the following acts at the request and
expense of Symantec:
(1) execute any assignment to Symantec or its nominee of the
entire right, title, and interest in and to any such works
of authorship;
(2) execute any other proper instruments or documents necessary
or desirable in applying for and obtaining registration of
copyrights on such works of authorship in Canada and foreign
countries, including renewal papers when appropriate; and
(3) cooperate in the prosecution or defense of any claims,
lawsuits, or other proceedings involving such works or
authorship.
7
<PAGE>
C. Employee hereby waives his/her right to enforce any moral or
author's right which Employee may have in such works of
authorship.
3. PROPRIETARY INFORMATION AND TRADE SECRETS
A. Employee agrees that, in performing work for Symantec, he/she
will not knowingly use any patented inventions, trade secrets,
confidential information or proprietary information obtained from
third parties, including any prior employer or any other
organization or individual.
B. Employee agrees that he/she will retain in confidence any and all
proprietary information, confidential information and trade
secrets belonging to Symantec, or belonging to a third party and
in the possession of Symantec, which may come into his/her
possession during his/her employment. Employee further agrees
that he/she will refrain from doing any of the following acts
with respect to such proprietary information, confidential
information and trade secrets, both during his/her employment and
thereafter, without first obtaining the consent in writing of an
officer of Symantec:
(1) communicate such proprietary information, confidential
information or trade secret to any person outside Symantec
or to any other firm, association, or corporation; and
(2) use such proprietary information, confidential information
or trade secret for the private benefit of himself/herself
or for the benefit of any person outside or any other firm,
association, or corporation.
C. Employee understands and agrees that the proprietary information
and trade secrets of Symantec shall include, but shall not be
limited to, the following:
(1) inventions, discoveries and computer programs not yet
patented or published;
(2) unpublished technical specifications, data, source codes,
object codes, drawings and descriptions on the proprietary
hardware, software, and combined hardware/software products
and processes of Symantec;
(3) current engineering, research, development, and design
projects and research and development data;
(4) manufacturing processes and methods and apparatus and
equipment not generally available or known to the
public;
8
<PAGE>
(5) non-public business information such as product costs,
vendor and customer lists, lists of approved components
and sources, price lists, production schedules,
business plans and sales and profit and loss
information not yet announced to or disclosed to the
public;
(6) any other information not generally available to the
public.
D. Employee further agrees that all source code printouts,
computer programs on storage media, records, files,
memoranda, reports, price lists, customer lists, plans,
sketches, documents, equipment, prototypes, and the like,
which relate to the business of Symantec and which he/she
uses, prepares, or comes into contact with during his/her
employment shall remain the sole property of Symantec and
shall be returned to Symantec on termination of his/her
employment.
4. MISCELLANEOUS
A. Employee understands that this Agreement may not be changed
or terminated orally, and no change, termination or waiver
of any of the provisions thereof will be binding unless in
writing and signed by an Officer of Symantec.
B. Employee further understands that any agreement previously
executed by him/her during his/her employment with Symantec
shall continue in force and effect as to any subject matter
to which it applied, but in all other respects is superseded
by this Agreement.
C. This Agreement is not a contract for or guarantee of
employment.
IN WITNESS WHEREOF, the parties have entered into this Agreement effective
as of the date set forth above.
SYMANTEC CORPORATION EMPLOYEE
________________ ________________________
Executive Vice President
SIGNATURE PAGE TO
ASSIGNMENT OF INVENTIONS AND CONFIDENTIALITY AGREEMENT
9
<PAGE>
10
<PAGE>
EXHIBIT 4.1.3
EMPLOYMENT AND NONCOMPETITION AGREEMENTS
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This EMPLOYMENT AND NONCOMPETITION AGREEMENT (this "AGREEMENT") is made as
of the Effective Date indicated below by and between SYMANTEC CORPORATION, a
Delaware corporation ("SYMANTEC"), and ______________ ("EMPLOYEE").
BACKGROUND
This Agreement is entered into in connection with a Combination Agreement
dated as of July 5, 1995 (the "COMBINATION AGREEMENT") between Symantec and
Delrina Corporation, a corporation organized under the laws of Ontario
("DELRINA"). The Combination Agreement provides for the recapitalization of
Delrina pursuant to which Delrina will become a subsidiary of Symantec and all
the voting power of Delrina will be owned by Symantec (the "ARRANGEMENT"). The
date on which the Arrangement becomes effective will be the effective date of
this Agreement (the "EFFECTIVE DATE").
Employee is the ____________________ of Delrina and has been actively
involved in the development and marketing of Delrina's products. To preserve
and protect the assets of Delrina, including Delrina's goodwill, customers and
trade secrets of which Employee has and will have knowledge, and in
consideration for Symantec's entering into and performing under the Combination
Agreement, Employee has agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
of the parties contained herein, Symantec and Employee hereby agree as follows:
1. EMPLOYMENT. Symantec will employ Employee and Employee accepts
employment with Symantec commencing on the Effective Date. Symantec may
terminate the employment of Employee on providing such notice or severance is
reasonable under Ontario law. Symantec guarantees that all payments made to the
Employee shall not be less than what is required to be paid pursuant to by
applicable Ontario law. For purposes of calculating any amounts payable to
Employee under applicable Ontario law upon the termination of Employee's
employment, the parties agree that Employee's years as an employee of Delrina
shall be considered part of such employment.
2. DUTIES. Employee will be employed as a full-time employee of Symantec
and will serve as __________________ responsible for ______________________ and
reporting to _________________ or his successor. At Symantec's option, it will
be entitled to reasonable use of Employee's name in promotional, advertising and
other materials used in the ordinary course of business.
3. FULL-TIME EMPLOYMENT. Employee's employment will be on a full-time
basis. Employee will not engage in any other business or render any commercial
or professional
<PAGE>
services, directly or indirectly, to any other person or organization, whether
for compensation or otherwise that would violate the provisions of Section 8.
Notwithstanding the foregoing, it will not be deemed a violation of Section 8
for Employee to make personal investments in publicly traded corporations
regardless of the business they are engaged in, provided that Employee does not
at any time own in excess of l0% of the issued and outstanding stock of any such
corporation.
4. SALARY. Employee's salary for the period commencing on the Effective
Date will be no less than (Can.)$______________ per year, payable semi-monthly,
less required withholdings. Employee will be entitled to receive annual
compensation reviews on the same basis as other Symantec employees.
5. EMPLOYEE BENEFITS. Employee will be entitled to insurance, vacation
and other benefits commensurate with his position in accordance with Symantec's
standard policies in effect from time to time, including participation in
Symantec's management bonus program under which Employee will be eligible to
receive a bonus payable quarterly on Employee's performance of his objectives
for the prior quarter, which bonus will be based on a target amount equal to
___% of Employee's base salary paid during such prior quarter.
6. REIMBURSEMENT OF BUSINESS EXPENSES. Symantec will, in accordance with
Symantec's policies in effect from time to time, reimburse Employee for all
reasonable business expenses incurred by Employee in connection with the
performance of his duties under this Agreement, including, without limitation,
reasonable expenditures for business entertainment and travel, upon submission
of the required documentation required pursuant to Symantec's standard policies
and record keeping procedures.
7. CONFIDENTIALITY. Simultaneously with the execution of this Agreement,
Employee is executing and delivering and hereby adopts and agrees to be bound by
Symantec's standard Assignment of Inventions and Confidentiality Agreement, a
copy of which is attached to this Agreement as EXHIBIT A (the "ASSIGNMENT OF
INVENTIONS AND CONFIDENTIALITY AGREEMENT").
8. AGREEMENT NOT TO COMPETE.
(a) For the two-year period (reduced to one year if Employee's
employment is terminated by Symantec) following the Effective Date and for so
long thereafter as Employee is employed by Symantec or a subsidiary of Symantec,
Employee shall not, directly or indirectly, individually or as an employee,
partner, officer, director or shareholder (except to the extent permitted in
Section 3 above) or in any other capacity whatsoever of or for any person, firm,
partnership, company or corporation other than Symantec or its subsidiaries:
(i) Own, manage, operate, sell, control or participate in the
ownership, management, operation, sales or control of or be connected in any
manner with any business engaged, in the geographical areas referred to in
Section 8(b) below, in the design, research, development, marketing, sale or
license (excluding licensing or sales of multiple kinds and brands of software
as part of the management of a reselle, customer or distributor), of computer
software that is substantially similar to or competitive with any fax,
communications (for the purposes of this Section 8, the term "communications" as
applied to software will be defined to
2
<PAGE>
be limited to Internet, datacom, voice or paging software) or forms software
products created, distributed or known by him to be under development by Delrina
or any of its subsidiaries prior to the Effective Date;
(ii) To Employee's knowledge, directly or indirectly develop
computer software that is substantially similar to or competitive with any other
fax, communications or forms computer program or products the creation or
development of which Employee participated in prior to the termination of
Employee's employment with Symantec for any one or more of the following or any
of their affiliates: Microsoft, McAfee, Stack, Attachmate, Wall Data, DataStorm
(Procomm), Global Village and Xpedite.
(iii) Recruit, attempt to hire, solicit, assist others in
recruiting or hiring, or refer to others concerning employment, in or with
respect to the geographical areas referred to in Section 8(b) below, any person
who is an employee of Delrina or Symantec or any of their subsidiaries or induce
or attempt to induce any such employee to terminate his employment with
Symantec, Delrina or any of their subsidiaries.
(b) The geographical areas in which the restrictions provided for in
this Section 8 apply include all cities, counties, provinces and states of the
United States and Canada. Employee acknowledges that the scope and period of
restrictions and the geographical area to which the restrictions imposed in this
Section 8 applies are fair and reasonable and are reasonably required for the
protection of Symantec and that this Agreement accurately describes the business
to which the restrictions are intended to apply.
(c) It is the intent of the parties that the provisions of this
Section 8 will be enforced to the fullest extent permissible under applicable
law. If any particular provision or portion of this Section is adjudicated to
be invalid or unenforceable, this Agreement will be deemed amended to revise
that provision or portion to the minimum extent necessary to render it
enforceable. Such amendment will apply only with respect to the operation of
this paragraph in the particular jurisdiction in which such adjudication was
made.
(d) Employee acknowledges that any material breach of the covenants
of this Section 8 will result in immediate and irreparable injury to Symantec
and, accordingly, consents to the application of injunctive relief and such
other equitable remedies for the benefit of Symantec as may be appropriate in
the event such a breach occurs or is threatened. The foregoing remedies will be
in addition to all other legal remedies to which Symantec may be entitled
hereunder, including, without limitation, monetary damages.
9. SURVIVAL. Employee's and Symantec's obligations under Sections 5, 6,
7, 8, 9, and 10 (i) of this Agreement will survive the termination of Employee's
employment by Symantec.
10. MISCELLANEOUS.
(a) NOTICES. Any and all notices permitted or required to be given
under this Agreement must be in writing. Notices will be deemed given (i) when
personally received or when sent by facsimile transmission (to the receiving
party's facsimile number), (ii) on the first
3
<PAGE>
business day after having been sent by commercial overnight courier with written
verification of receipt, or (iii) on the third business day after having been
sent by registered or certified mail from a location on the United States
mainland or Canada, return receipt requested, postage prepaid, whichever occurs
first, at the address set forth below or at any new address, notice of which
will have been given in accordance with this Section 10(a):
If to Symantec: Attn. President
` Symantec Corporation
10201 Torre Avenue
Cupertino, CA 95014
With a copy to: the General Counsel at the
same address
If to Employee: address per proxy circular
Tel: (416) 221-6129
with a copy to:
Attn:
Tel:
Fax:
(b) AMENDMENTS. This Agreement, including Exhibit A hereto, contains the
entire agreement and supersedes and replaces all prior agreements between
Symantec and Employee or Delrina and Employee concerning Employee's employment.
This Agreement may not be changed or modified in whole or in part except by a
writing signed by the party against whom enforcement of the change or
modification is sought.
(c) SUCCESSORS AND ASSIGNS. This Agreement will not be assignable by
either Employee or Symantec, except that the rights and obligations of Symantec
under this Agreement may be assigned to a corporation which becomes the
successor to Symantec as the result of a merger or other corporate
reorganization and which continues the business of Symantec, or any other
subsidiary of Symantec, provided that Symantec guarantees the performance by
such assignee of Symantec's obligations hereunder.
(d) GOVERNING LAW. This Agreement will be governed by and interpreted
according to the substantive laws of the Province of Ontario without regard to
such province's conflicts law. The parties agree that the courts in the city of
Toronto, Ontario will be the exclusive venue for the adjudication of any
disputes hereunder.
(e) NO WAIVER. The failure of either party to insist on strict compliance
with any of the terms of this Agreement in any instance or instances will not be
deemed to be a waiver of any term of this Agreement or of that party's right to
require strict compliance with the terms of this Agreement in any other
instance.
4
<PAGE>
(f) SEVERABILITY. Employee and Symantec recognize that the limitations
contained herein are reasonably and properly required for the adequate
protection of the interests of Symantec. If for any reason a court of competent
jurisdiction or binding arbitration proceeding finds any provision of this
Agreement, or the application thereof, to be unenforceable, the remaining
provisions of this Agreement will be interpreted so as best to reasonably effect
the intent of the parties. The parties further agree to replace any such
invalid or unenforceable provisions with valid and enforceable provisions
designed to achieve, to the extent possible, the business purposes and intent of
such unenforceable provisions.
(g) COUNTERPARTS. This Agreement may be executed in counterparts which
when taken together will constitute one instrument. Any copy of this Agreement
with the original signatures of all parties appended will constitute an
original.
(h) EFFECT OF AGREEMENT. This Agreement will be void and have no effect
if the Effective Date does not occur on or before December 31, 1995.
(i) PAYMENT OF COSTS. The prevailing party in any action brought hereunder
will be entitled to an award of attorneys' fees and costs, and all court fees,
will be paid by the losing party, and the court will be authorized to make such
determinations.
IN WITNESS WHEREOF, this Agreement is made and effective as of the day
and year first above written.
SYMANTEC CORPORATION EMPLOYEE
a Delaware corporation
By:_____________________ _____________________
5
<PAGE>
EXHIBIT 5.5
SYMANTEC AFFILIATES AGREEMENTS
TO: Delrina Corporation
895 Don Mills Road, 500-2 Park Centre
Toronto, Ontario, Canada
M3C 1W3
Symantec Corporation
10201 Torre Avenue
Cupertino, California 95014
U.S.A.
Re: SYMANTEC CORPORATION AFFILIATES AGREEMENT
This Symantec Corporation Affiliates Agreement (the "AGREEMENT") by and
among Symantec Corporation, a corporation incorporated under the laws of
Delaware ("SYMANTEC"), Delrina Corporation, a corporation organized under the
laws of Ontario ("DELRINA") and the undersigned shareholder of Symantec (the
"SHAREHOLDER") is being delivered pursuant to Section 5.5 of that certain
Combination Agreement dated as of July 5, 1995, by and among Symantec and
Delrina (the "COMBINATION AGREEMENT"). The Combination Agreement provides for
the recapitalization of Delrina pursuant to which Delrina will become a
subsidiary of Symantec and all the voting power of Delrina will be owned by
Symantec (the "ARRANGEMENT"). Unless otherwise defined herein, the capitalized
terms used in this Agreement have the meanings given to them in the Combination
Agreement.
The Shareholder understands that, since the Arrangement will be accounted
for using the "pooling-of-interests" method and the Shareholder may be deemed an
"affiliate" of Symantec (within the meaning of Rule 145 promulgated by the SEC
under the Securities Act ("RULE 145")), the shares of Symantec common stock
which the Shareholder owns and any shares of Symantec common stock which the
Shareholder may acquire hereafter may only be disposed of in conformity with the
limitations described herein. The Shareholder has been informed that the
treatment of the Arrangement as a pooling-of-interests for financial accounting
purposes is dependent upon the accuracy of certain of the representations and
warranties and the compliance with certain of the agreements set forth herein.
The Shareholder further understands that the representations, warranties and
agreements set forth herein will be relied upon by Symantec and its counsel and
accounting firm.
1. The Shareholder represents, warrants and agrees as follows:
<PAGE>
(a) The Shareholder has full power to execute this Agreement and
to make the representations, warranties and agreements herein and to perform the
Shareholder's obligations hereunder.
(b) The Shareholder is the beneficial owner of (has sole or shared voting
or investment power with respect to) all the shares of Symantec common stock and
options to purchase shares of Symantec common stock indicated on the last page
hereof (collectively, the "SYMANTEC SECURITIES"). Except for such securities,
the Shareholder does not beneficially own any shares of Symantec common stock or
any other equity securities of Symantec or any options, warrants or other rights
to acquire shares of Symantec common stock or other equity securities of
Symantec.
(c) The Shareholder will not sell, transfer or otherwise dispose of any of
the Symantec Securities or offer or agree to sell, transfer or otherwise dispose
of, or in any other way reduce the Shareholder's risk of ownership or investment
in, any of such Symantec Securities (i) in the 30 day period immediately
preceding the effective time of the Arrangement (the "Effective Time"); or (ii)
from and after the Effective Time until Symantec shall have publicly released a
press release summarizing its first quarterly financial statements that include
at least 30 days of combined operating results of Symantec and Delrina
(provided, however, that nothing in this paragraph will be deemed to prohibit
charitable contributions of such securities without consideration to transferees
who agree to all of the restrictions in this Agreement). Notwithstanding the
above, the Shareholder may with prior written notice to Symantec and its
accountants, dispose of up to that number of shares that, when added to all
other shares being disposed of by Symantec affiliates, still qualify as "de
minimus" under the Staff Accounting Bulletin No. 76.
2. The Shareholder agrees and covenants to Delrina as follows:
(a) Until the earliest to occur of (i) the publication of the first
quarterly financial statements of Symantec that include at least 30 days of
combined operating results of Symantec and Delrina, or (ii) such time as the
Combination Agreement may be terminated in accordance with its terms (the
"EXPIRATION DATE"), the Shareholder will vote the Symantec Securities in any
vote of the Symantec shareholders, with respect to the matters referred to in
(i) or (ii) immediately below, and in every written consent as a Symantec
shareholder solicited with respect to any of the matters referred to in (i) or
(ii) immediately below, as follows: (i) in favor of approval of the Combination
Agreement and the Arrangement and any matter which could reasonably be expected
to facilitate the Arrangement and (ii) against approval of any proposal made in
opposition to or in competition with consummation of the Arrangement. The
Shareholder will not, directly or indirectly, solicit or encourage any offer
from any person or entity concerning the possible disposition of all or any
portion of Symantec's business, assets or capital stock by merger, sale or other
means in contravention of the Combination Agreement.
(b) Until the Expiration Date, the Shareholder will not, and will not
permit any entity under its control to, (i) solicit proxies or become a
"participant" in a "solicitation" (as such terms are defined in Regulation 14A
under the Exchange Act), in opposition to or competition
12
<PAGE>
with the consummation of the Arrangement or otherwise encourage or assist any
person or entity in taking or planning any action which would compete with,
restrain or otherwise serve to interfere with or inhibit the timely consummation
of the Arrangement in accordance with the terms of the Combination Agreement;
(ii) initiate a Symantec shareholder vote or action by consent of Symantec
shareholders in opposition to or in competition with the consummation of the
Arrangement; or (iii) become a member of a "group" (as such term is used in
Section 13(d) of the Exchange Act) with respect to any voting securities of
Symantec for the purpose of opposing or competing with the consummation of the
Arrangement.
3. The Shareholder also understands that stop transfer instructions will
be given to Symantec's transfer agent with respect to certificates evidencing
the Symantec Securities. Such stop transfer instructions will be promptly
rescinded upon the publication of the financial statements referred to in
Section 1(c) above.
4. This Agreement will be binding upon and enforceable against
administrators, executors, representatives, heirs, legatees and devisees of the
Shareholder and any pledgee holding Symantec Securities as collateral. If the
Combination Agreement is terminated in accordance with its terms prior to the
Effective Time, this Agreement will automatically terminate.
5. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
6. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but except as otherwise specifically provided,
neither this Agreement nor any of the rights, interests or obligations of the
parties hereto may be assigned by either of the parties without prior written
consent of the other.
7. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto. This Agreement will terminate upon the
termination of the Combination Agreement in accordance with its terms.
8. The Shareholder acknowledges that Symantec and Delrina will each
be irreparably harmed and that there will be no adequate remedy at law for a
violation of any of the covenants or agreements of the Shareholder set forth
herein. Therefore, it is agreed that, in addition to any other remedies which
may be available to Symantec or Delrina upon any such violation, Symantec and
Delrina shall have the right to enforce such covenants and agreements by
specific performance, injunctive relief or by any other means available at law
or in equity.
13
<PAGE>
9. This Agreement shall be governed by, construed and enforced in
accordance with, the internal laws of the State of Delaware, without regard to
its rules regarding conflict of laws.
10. This Agreement contains the entire understanding of the parties
in respect of the subject matter hereof, and supersedes all prior negotiations
and understandings between the parties with respect to such subject matter.
11. This Agreement may be executed in several counterparts, each of
which shall be an original as regards the party whose signature appears thereon,
and all of which together will constitute one and the same instrument.
14
<PAGE>
Number of shares of Symantec Common
Stock beneficially owned by the
undersigned:
____________________________
Number of shares of Symantec Common
Stock subject to options beneficially
owned by the undersigned:
____________________________
Date: _________________ Very truly yours,
____________________________
(Print name)
By:_________________________
Title:_______________________
(If applicable)
Agreed to and accepted:
SYMANTEC CORPORATION
By:___________________________
Name: ________________________
Title: _______________________
DELRINA CORPORATION
By:___________________________
Name: ________________________
Title: _______________________
SIGNATURE PAGE TO SYMANTEC'S AFFILIATES AGREEMENT
15
<PAGE>
[D. WITTE, H. BAIN AND TED SCHLEIN VERSION]
(NO VOTING AGREEMENT)
TO: Delrina Corporation
895 Don Mills Road, 500-2 Park Centre
Toronto, Ontario, Canada
M3C 1W3
Symantec Corporation
10201 Torre Avenue
Cupertino, California 95014
U.S.A.
Re: SYMANTEC CORPORATION AFFILIATES AGREEMENT
This Symantec Corporation Affiliates Agreement (the "AGREEMENT") by and
among Symantec Corporation, a corporation incorporated under the laws of
Delaware ("SYMANTEC"), Delrina Corporation, a corporation organized under the
laws of Ontario ("DELRINA") and the undersigned shareholder of Symantec (the
"SHAREHOLDER") is being delivered pursuant to Section 5.5 of that certain
Combination Agreement dated as of July 5, 1995, by and among Symantec and
Delrina (the "COMBINATION AGREEMENT"). The Combination Agreement provides for
the recapitalization of Delrina pursuant to which Delrina will become a
subsidiary of Symantec and all the voting power of Delrina will be owned by
Symantec (the "ARRANGEMENT"). Unless otherwise defined herein, the capitalized
terms used in this Agreement have the meanings given to them in the Combination
Agreement.
The Shareholder understands that, since the Arrangement will be accounted
for using the "pooling-of-interests" method and the Shareholder may be deemed an
"affiliate" of Symantec (within the meaning of Rule 145 promulgated by the SEC
under the Securities Act ("RULE 145")), the shares of Symantec common stock
which the Shareholder owns and any shares of Symantec common stock which the
Shareholder may acquire hereafter may only be disposed of in conformity with the
limitations described herein. The Shareholder has been informed that the
treatment of the Arrangement as a pooling-of-interests for financial accounting
purposes is dependent upon the accuracy of certain of the representations and
warranties and the compliance with certain of the agreements set forth herein.
The Shareholder further understands that the representations, warranties and
agreements set forth herein will be relied upon by Symantec and its counsel and
accounting firm.
1. The Shareholder represents, warrants and agrees as follows:
(a) The Shareholder has full power to execute this Agreement and to
make the representations, warranties and agreements herein and to perform the
Shareholder's obligations hereunder.
<PAGE>
(b) The Shareholder is the beneficial owner of (has sole or shared
voting or investment power with respect to) all the shares of Symantec common
stock and options to purchase shares of Symantec common stock indicated on the
last page hereof (collectively, the "SYMANTEC SECURITIES"). Except for such
securities, the Shareholder does not beneficially own any shares of Symantec
common stock or any other equity securities of Symantec or any options, warrants
or other rights to acquire shares of Symantec common stock or other equity
securities of Symantec.
(c) The Shareholder will not sell, transfer or otherwise dispose of
any of the Symantec Securities or offer or agree to sell, transfer or otherwise
dispose of, or in any other way reduce the Shareholder's risk of ownership or
investment in, any of such Symantec Securities (i) in the 30 day period
immediately preceding the effective time of the Arrangement (the "Effective
Time"); or (ii) from and after the Effective Time until Symantec shall have
publicly released a press release summarizing its first quarterly financial
statements that include at least 30 days of combined operating results of
Symantec and Delrina (provided, however, that nothing in this paragraph will be
deemed to prohibit charitable contributions of such securities without
consideration to transferees who agree to all of the restrictions in this
Agreement). Notwithstanding the above, the Shareholder may with prior written
notice to Symantec and its accountants, dispose of up to that number of shares
that, when added to all other shares being disposed of by Symantec affiliates,
still qualify as "de minimus" under the Staff Accounting Bulletin No. 76.
2. The Shareholder also understands that stop transfer instructions
will be given to Symantec's transfer agent with respect to certificates
evidencing the Symantec Securities. Such stop transfer instructions will be
promptly rescinded upon the publication of the financial statements referred to
in Section 1(c) above.
3. This Agreement will be binding upon and enforceable against
administrators, executors, representatives, heirs, legatees and devisees of the
Shareholder and any pledgee holding Symantec Securities as collateral. If the
Combination Agreement is terminated in accordance with its terms prior to the
Effective Time, this Agreement will automatically terminate.
4. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
5. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but except as otherwise specifically provided,
neither this Agreement nor any of the rights, interests or obligations of the
parties hereto may be assigned by either of the parties without prior written
consent of the other.
17
<PAGE>
6. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto. This Agreement will terminate upon the
termination of the Combination Agreement in accordance with its terms.
7. The Shareholder acknowledges that Symantec and Delrina will each
be irreparably harmed and that there will be no adequate remedy at law for a
violation of any of the covenants or agreements of the Shareholder set forth
herein. Therefore, it is agreed that, in addition to any other remedies which
may be available to Symantec or Delrina upon any such violation, Symantec and
Delrina shall have the right to enforce such covenants and agreements by
specific performance, injunctive relief or by any other means available at law
or in equity.
8. This Agreement shall be governed by, construed and enforced in
accordance with, the internal laws of the State of Delaware, without regard to
its rules regarding conflict of laws.
9. This Agreement contains the entire understanding of the parties
in respect of the subject matter hereof, and supersedes all prior negotiations
and understandings between the parties with respect to such subject matter.
10. This Agreement may be executed in several counterparts, each of
which shall be an original as regards the party whose signature appears thereon,
and all of which together will constitute one and the same instrument.
18
<PAGE>
Number of shares of Symantec Common
Stock beneficially owned by the
undersigned:
____________________________
Number of shares of Symantec Common
Stock subject to options beneficially
owned by the undersigned:
____________________________
Date: ________________ Very truly yours,
____________________________
(Print name)
By:_________________________
Title:_______________________
(If applicable)
Agreed to and accepted:
SYMANTEC CORPORATION
By:___________________________
Name: ________________________
Title: _______________________
DELRINA CORPORATION
By:___________________________
Name: ________________________
Title: _________________________
SIGNATURE PAGE TO SYMANTEC'S AFFILIATES AGREEMENT
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EXHIBIT 5.11
FORM OF INDEMNITY AGREEMENT
INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of ________________, 1995 is made by and
between SYMANTEC CORPORATION, a Delaware corporation (the "COMPANY"), and
_________________________________, a director, officer or key employee of the
Company (the "INDEMNITEE").
RECITALS
A. The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors or officers of corporations unless
they are protected by comprehensive liability insurance or indemnification, due
to increased exposure to litigation costs and risks resulting from their service
to such corporations, and due to the fact that the exposure frequently bears no
reasonable relationship to the compensation of such directors and officers;
B. The statutes and judicial decisions regarding the duties of directors
and officers are often difficult to apply, ambiguous, or conflicting, and
therefore fail to provide such directors and officers with adequate, reliable
knowledge of legal risks to which they are exposed or information regarding the
proper course of action to take;
C. Plaintiffs often seek damages in such large amounts and the costs of
litigation may be so substantial (whether or not the case is meritorious), that
the defense and/or settlement of such litigation is often beyond the personal
resources of officers and directors;
D. The Company believes that it is unfair for its directors and officers
and the directors and officers of its subsidiaries to assume the risk of large
judgments and other expenses that may be incurred in cases in which the director
or officer received no personal profit and in cases where the director of
officer was not culpable;
E. The Company recognizes that the issues in controversy in litigation
against a director or officer of a corporation such as the Company or a
subsidiary of the Company are often related to the knowledge, motives and intent
of such director or officer, that he is usually the only witness with knowledge
of the essential facts and exculpating circumstances regarding such matters and
that the long period of time which usually elapses before the trial or other
disposition of such litigation often extends beyond the time that the director
or officer can reasonably recall such matters; and may extend beyond the normal
time for retirement for such director or officer with the result that he, after
retirement or in the event of his death, his spouse, heirs, executors or
administrators, may be faced with limited ability and undue hardship in
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maintaining an adequate defense, which may discourage such a director or officer
from serving in that position;
F. Based upon their experience as business manages, the Board of
Directors of the Company (the "BOARD") has concluded that, to retain and attract
talented and experienced individuals to serve as officers and directors of the
Company and its subsidiaries and to encourage such individuals to take the
business risks necessary for the success of the Company and its subsidiaries, it
is necessary for the Company to contractually indemnify its officers and
directors and directors of its subsidiaries, and to assume for itself maximum
liability for expenses and damages in connection with claims against such
officers and directors in connection with their service to the Company and its
subsidiaries, and has further concluded that the failure to provide such
contractual indemnification could result in great harm to the Company and its
subsidiaries and the Company's shareholders;
G. Section 145 of the General Corporation Law of Delaware, under which
the Company is organized ("SECTION 145"), empowers the Company to indemnify by
agreement its officers, directors, employees and agents, and persons who serve,
at the request of the Company, as directors, officers, employees or agents of
other corporations or enterprises, and expressly provides that the
indemnification provided by Section 145 is not exclusive;
H. The Company has determined that the liability insurance coverage
available to the Company and its subsidiaries for their officers and directors
as of the date hereof is inadequate and/or unreasonably expensive. The Company
believes, therefore, that the interests of the Company's shareholders would best
be served by the indemnification by the Company of the directors and officers of
the Company and its subsidiaries.
I. The Company desires and has requested the Indemnitee to serve or
continue to serve as a director, officers or key employee of the Company and/or
the subsidiaries of the Company free from undue concern for claims for damages
arising out of or related to such services to the Company and/or the
subsidiaries of the Company; and
J. The Indemnitee is willing to serve, or to continue to serve, the
Company and/or the subsidiaries of the Company, provided that he is furnished
the indemnity provided for herein.
AGREEMENT
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS.
(a) AGENT. For the purposes of this Agreement, "agent" of the
Company means any person who is or was a director, officer, employee, attorney
or other agent of the Company or a subsidiary of the Company; or is or was
serving at the request of, for the convenience of, or to represent the interest
of the Company or a subsidiary of the Company as a director, officer, employee
or agent of another foreign or domestic corporation, partnership, joint
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venture, trust or other enterprise; or was a director, officer, employee or
agent of a foreign or domestic corporation which was a predecessor corporation
of the Company or a subsidiary of the Company, or was a director, officer,
employee or agent of another enterprise at the request of, for the convenience
of, or to represent the interests of such predecessor corporation.
(b) EXPENSES. For purposes of this Agreement, "expenses" includes
all direct and indirect costs of any type or nature whatsoever (including,
without limitation, all attorneys' fees and related disbursements, and other
out-of-pocket costs) actually and reasonably incurred by the Indemnitee in
connection with either the investigation, defense or appeal of a proceeding or
establishing or enforcing a right to indemnification under this Agreement,
Section 145 or otherwise; provided, however, that expenses shall not include any
judgments, fines, ERISA excise taxes or penalties or amounts paid in settlement
of a proceeding.
(c) PROCEEDING. For the purposes of this Agreement, "proceeding"
means any threatened, pending, or completed action, suit or other proceeding,
whether civil, criminal, administrative, investigative or any other type
whatsoever.
(d) SUBSIDIARY. For purposes of this Agreement, "subsidiary" means
any corporation of which more than 50% of the outstanding voting securities is
owned directly or indirectly by the Company, by the Company and one or more
other subsidiaries, or by one or more other subsidiaries.
2. AGREEMENT TO SERVE. The Indemnitee agrees to serve and/or continue to
serve as an agent of the Company, at its will (or under separate agreement, if
such agreement exists), in the capacity Indemnitee currently serves as an agent
of the Company, so long as he is duly appointed or elected and qualified in
accordance with the applicable provisions of the Bylaws of the Company or any
subsidiary of the Company or until such time as he tenders his resignation in
writing, provided, however, that nothing contained in this Agreement is intended
to create any right to continued employment by Indemnitee.
3. MANDATORY INDEMNIFICATION. The Company shall indemnify the
Indemnitee:
(a) THIRD PARTY ACTIONS. If the Indemnitee is a person who was or is
a party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the Company) by reason of the fact that he is was
an agent of the Company, or by reason of anything done or not done by him in any
such capacity, against any and all expenses and liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes
or penalties, and amounts paid in settlement) actually and reasonably incurred
by him in connection with the investigation, defense, settlement or appeal of
such proceeding if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful; and
(b) DERIVATIVE ACTIONS. If the Indemnitee is a person who was or is
a party or is threatened to be made a party to any proceeding by or in the right
of the Company to procure a judgment in its favor by reason of the fact that he
is or was an agent of the Company, or by
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reason of anything done or not done by him in any such capacity, against any
amounts paid in settlement of any such proceeding, to the maximum extent
permitted by law, and all expenses actually and reasonably incurred by him in
connection with the investigation, defense, settlement, or appeal of such
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company; except that no
indemnification under this subsection shall be made in respect of any claim,
issue or matter as to which such person shall have been finally adjudged to be
liable to the Company, unless and only to the extent that the Court of Chancery
or the court in which such proceeding was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such amounts which the Court of Chancery or such other court shall
deem proper; and
(c) ACTIONS WHERE INDEMNITEE IS DECEASED. If the Indemnitee is a
person who was or is a party or its threatened to be made a party to any
proceeding by reason of the fact that he is or was an agent of the Company, or
by reason of anything done or not done by him in any such capacity, against any
and all expenses and liabilities of any type whatsoever (including, but not
limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid
in settlement) actually and reasonably incurred by or for him connection with
the investigation, defense, settlement or appeal of such proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
be the best interests of the Company, and, prior to, during the pendency of
after completion of such proceeding Indemnitee is deceased, except that in a
proceeding by or in the right of the Company no indemnification shall be due
under the provisions of this subsection in respect of any claim, issue or matter
as to which such person shall have been fully adjudged to be liable to the
Company, unless and only to the extent that the Court of Chancery or the court
in which such proceeding was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
amounts which the Court of Chancery or such other court shall deem proper; and
4. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts
paid in settlement) incurred by him in the investigation, defense, settlement or
appeal of a proceeding but not entitled, however, to indemnification for all of
the total amount thereof, the Company shall nevertheless indemnify the
Indemnitee for such total amount except as to the portion thereof to which the
Indemnitee is not entitled.
5. MANDATORY ADVANCEMENT OF EXPENSES. Subject to the Section 8 below,
the Company shall advance all expenses incurred by the Indemnitee in connection
with the investigation, defense, settlement or appeal of any proceeding to which
the Indemnitee is a party or is threatened to be made a party by reason of the
fact that the Indemnitee is or was an agent of the Company or by reason of
anything done or not done by him in any such capacity. Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined that the Indemnity is not entitled to be
indemnified by the Company as authorized hereby. The advances to be made
hereunder shall be paid by the
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Company to the Indemnitee within twenty (20) days following delivery of a
written request therefore by the Indemnitee to the Company.
6. NOTICE AND OTHER INDEMNIFICATION PROCEDURES.
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee
shall, if the Indemnitee believes that indemnification with respect thereto may
be sought from the Company under this Agreement, notify the Company of the
commencement or threat of commencement thereof.
(b) In the event the Company shall be obligated to advance the
expenses for any proceeding against the Indemnitee, the Company, if appropriate,
shall be entitled to assume the defense of such proceeding, with counsel
approved by the Indemnitee, upon the delivery to the Indemnitee of written
notice of its election so to do. After delivery of such notice, approval of
such counsel by the Indemnitee and the retention of such counsel by the Company,
the Company will not be liable to the Indemnitee under this Agreement for any
fees of counsel subsequently incurred by the Indemnitee with respect to the same
proceeding, provided that (i) the Indemnitee shall have the right to employ his
counsel in any such proceeding at the Indemnitee's expense; and (ii) if (A) the
employment of counsel by the Indemnitee has been previously authorized by the
Company, (B) the Indemnitee shall have notified the Board of Directors in
writing that he has reasonably concluded that there may be a conflict of
interest between the Company and the Indemnitee in the conduct of any such
defense or (C) the Company shall not, in fact, have employed counsel to assume
the defense of such proceeding, the fees and expenses of Indemnitee's counsel
shall be at the expense of the Company.
7. DETERMINATION OF RIGHT TO INDEMNIFICATION.
(a) To the extent the Indemnitee has been successfully on the merits
or otherwise in defense of any proceeding referred to in Section 3(a), 3(b) or
3(c) of this Agreement or in the defense of any claim, issue or matter described
therein, the Company shall indemnify the Indemnitee against expenses actually
and reasonably incurred by him in connection therewith.
(b) In the event that Section 7(a) is inapplicable, the Company shall
also indemnify the Indemnitee if he has met the applicable standard of conduct
required to entitle the Indemnitee to such indemnification.
(c) The Indemnitee shall be entitled to select the forum in which
determination of whether or not Indemnitee has met the applicable standard of
conduct will be made from among the following:
(1) A quorum of the Board consisting of directors who are not
parties to the proceeding for which indemnification is being sought;
(2) The shareholders of the Company;
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(3) Legal counsel selected by the Indemnitee, and reasonably
approved by the Board, which counsel shall make such determination in a written
opinion.
(4) A panel of three arbitrators, one of whom is selected by the
Company, another of whom is selected by the Indemnitee and the last of whom is
selected by the first two arbitrators so selected.
(d) As soon as practicable, and in no event later than 30 days after
written notice of the Indemnitee's choice of forum pursuant to Section 7(c)
above, the Company and Indemnitee shall each submit to the selected forum such
information as they believe is appropriate for the forum to consider.
(e) Notwithstanding a determination by any forum listed in Section
7(c) hereof that Indemnitee is not entitled to indemnification with respect to a
specific proceeding, the Indemnitee shall have the right to apply to the Court
of Chancery of Delaware, the court in which that proceeding is or was pending or
any other court of competent jurisdiction, for the purposes of enforcing the
Indemnitee's right to indemnification pursuant to the Agreement.
(f) The Company shall indemnify the Indemnitee against all expenses
incurred by the Indemnitee in connection with any hearing or proceeding under
this Section 7 involving the Indemnitee and against all expenses incurred by the
Indemnitee in connection with any other proceeding between the Company and the
Indemnitee involving the interpretation or enforcement of the right of the
Indemnitee under this Agreement unless a court of competent jurisdiction finds
that each of the material claims and/or defenses of the Indemnitee in any
proceeding was frivolous or not made in good faith.
8. EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance expenses
to the Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by the Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 145, but such indemnification or advancement of expenses may be provided
by the Company in specific cases if the Board of Directors finds it to be
appropriate; or
(b) LACK OF GOOD FAITH. To indemnify the Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding instituted by the
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or
(c) UNAUTHORIZED SETTLEMENTS. To indemnify the Indemnitee under this
Agreement for any amounts paid in settlement of a proceeding unless the Company
consents to such settlement or
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(d) CLAIMS BY THE COMPANY FOR WILLFUL MISCONDUCT. To advance
expenses to the Indemnitee under this Agreement for any expenses incurred by the
Indemnitee with respect to any proceeding or claim brought by the Company
against Indemnitee for willful misconduct, unless a court of competent
jurisdiction determines that each of such claims was not made in good faith or
was frivolous.
(e) 16(B) ACTIONS. To indemnify the Indemnitee on account of any
suit in which judgment is rendered against Indemnitee for an accounting of
profits made from the purchase or sale by Indemnitee of securities of the
Company pursuant to the provisions of Section 16(b) of the Securities and
Exchange Act of 1934 and amendments thereto or similar provisions of any federal
state or local statutory law; or
(f) WILLFUL MISCONDUCT. To indemnify the Indemnitee on account of
Indemnitee's conduct which is finally adjudged to have been knowingly fraudulent
or deliberately dishonest, or to constitute willful misconduct; or
(g) UNLAWFUL INDEMNIFICATION. To indemnify the Indemnitee if a final
decision by a court having jurisdiction in the matter shall determine that such
indemnification is not lawful.
9. NON-EXCLUSIVITY. The provisions for indemnification and advancement
of expenses set forth in this Agreement shall not be deemed exclusive of any
other rights which the Indemnitee may have under any provision of law, the
Company's Certificate of Incorporation or Bylaws, the vote of the Company's
shareholders or disinterested directors, other agreements, or otherwise, both as
to action in his official capacity and to action in another capacity while
occupying his position as an agent of the Company, and the Indemnitee's rights
hereunder shall continue after the Indemnitee has ceased acting as an agent of
the Company and shall inure to the benefit of the heirs, executors and
administrators of the Indemnitee.
10. INTERPRETATION OF THE AGREEMENT. It is understood that the parties
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Indemnitee to the fullest extent now or hereafter
permitted by law.
11. SEVERABILITY. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable for any reason whatsoever, (i)
the validity, legality and enforceability of the remaining provisions of the
Agreement (including, without limitation, all portions of any paragraphs of this
Agreement containing any such provision held be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (ii) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraphs of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable and to give
effect to Section 10 hereof.
12. MODIFICATION AND WAIVER. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver
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of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.
13. SUCCESSORS AND ASSIGNS. The terms of this Agreement shall bind, and
shall inure to the benefit of, the successors and assigns of the parties hereto.
14. NOTICE. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee or (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the mailing date. Addresses for notice to either party are as shown on
the signature page of this Agreement, or as subsequently modified by written
notice.
15. GOVERNING LAW. This Agreement shall be governed exclusively by and
construed according to the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed entirely
with Delaware.
16. CONSENT TO JURISDICTION. The Company and the Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement.
The parties hereto have entered into this Indemnity Agreement effective as
of the date first above written.
SYMANTEC CORPORATION
Address: 10201 Torre Avenue
Cupertino, California 95014
By:______________________
Its:_____________________
INDEMNITEE:
_________________________
Addres __________________________
__________________________
__________________________
__________________________
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EXHIBIT 6.2(a)
EXCHANGEABLE SHARE PROVISIONS
PROVISIONS ATTACHING TO EXCHANGEABLE SHARES
The Exchangeable 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 with, that person. For the purposes of
this definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as applied to any person,
means the possession by another person, directly or indirectly, of the power to
direct or cause 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 _______________, 2002 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 Symantec 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.
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"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.
"CORPORATION" means Delrina Corporation, a corporation incorporated under
the laws of the Province of Ontario.
"CURRENT MARKET PRICE" means, in respect of a Symantec Common Share on any
date, the Canadian Dollar Equivalent of the average of the closing bid and asked
prices of Symantec Common Shares during a period of 20 consecutive trading days
ending not more than five trading days before such date on the Nasdaq National
Market, or, if the Symantec Common Shares are not then quoted on the Nasdaq
National Market, on such other stock exchange or automated quotation system on
which the Symantec 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 in the opinion of the Board of Directors the public distribution or
trading activity of Symantec Common Shares during such period does not create a
market which reflects the fair market value of a Symantec Common Share, then the
Current Market Price of a Symantec 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.
"SYMANTEC" means Symantec Corporation, a corporation organized and existing
under the laws of the State of Delaware, and any successor corporation.
"SYMANTEC CALL NOTICE" has the meaning ascribed thereto in Section 6.3 of
these share provisions.
"SYMANTEC COMMON SHARES" mean the shares of common stock of Symantec, with
a par value of U.S. $0.01 per share, having voting rights of one vote per share,
and any other securities into which such shares may be changed.
"SYMANTEC DIVIDEND DECLARATION DATE" means the date on which the Board of
Directors of Symantec declares any dividend on the Symantec Common Shares.
"SYMANTEC SPECIAL SHARE" means the one share of Special Voting Stock of
Symantec with a par value of U.S. $1.00 and having voting rights at meetings of
holders of Symantec Common Shares equal to the number of Exchangeable Shares
outstanding from time to time
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(other than Exchangeable Shares held by Symantec and its Affiliates) to be
issued to, and voted by, the Trustee pursuant to the Voting Trust Agreement.
"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.
"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 PURCHASE PRICE" has the meaning ascribed thereto in the
Plan of Arrangement.
"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 Subsection 6.1(a) of
these share provisions.
"RETRACTION CALL RIGHT" has the meaning ascribed thereto in Subsection
6.1(c) of these share provisions.
"RETRACTION DATE" has the meaning ascribed thereto in Subsection 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 Symantec and the
Corporation, made as of _______________, 1995.
"TRANSFER AGENT" means The R-M Trust Company or such other person as may
from time to time be the registrar and transfer agent for the Exchangeable
Shares.
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"TRUSTEE" means The R-M Trust Company, a corporation organized and existing
under the laws of Canada, and any successor trustee appointed under the Voting
Trust Agreement.
"VOTING AND EXCHANGE TRUST AGREEMENT" means the Voting and Exchange Trust
Agreement between the Corporation, Symantec and the Trustee, made as of
_______________, 1995.
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
2.1 The Exchangeable Shares shall rank junior to the Class A Preferred
Shares, and shall be entitled to a preference over the Common 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 Symantec Dividend
Declaration Date, declare a dividend on each Exchangeable Share (a) in the case
of a cash dividend declared on the Symantec Common Shares, in an amount in cash
for each Exchangeable Share equal to the Canadian Dollar Equivalent on the
Symantec Dividend Declaration Date of the cash dividend declared on each
Symantec Common Share or (b) in the case of a stock dividend declared on the
Symantec Common Shares to be paid in Symantec Common Shares, in such number of
Exchangeable Shares for each Exchangeable Share as is equal to the number of
Symantec Common Shares to be paid on each Symantec Common Share or (c) in the
case of a dividend declared on the Symantec Common Shares in property other than
cash or Symantec 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 Symantec 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.
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 Subsection 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
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transferred in respect of any stock dividends contemplated by Subsection 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 Subsection 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 Symantec 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
9.2 of these share provisions:
(a) pay any dividends on the Common Shares, or any other shares
ranking junior to the Exchangeable Shares, other than stock dividends
payable in Common Shares or any such other shares ranking junior to the
Exchangeable Shares, as the case may be;
(b) redeem or purchase or make any capital distribution in respect of
Common 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, 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.
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The restrictions in Subsections 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 Symantec 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 Common Shares or any other shares ranking junior to the
Exchangeable Shares, an amount per share equal to (a) the Current Market Price
of a Symantec 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 Symantec Common Share, plus (b) an additional
amount equivalent to the full amount of all declared and unpaid dividends on
each such Exchangeable Share (collectively the "Liquidation Amount").
5.2 On or promptly after the Liquidation Date, and subject to the exercise
by Symantec of the Liquidation Call Right, the Corporation shall cause to be
delivered to the holders of the Exchangeable Shares the Liquidation Amount for
each such Exchangeable Share upon 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 reasonably
require, 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 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 Symantec Common Shares
(which shares shall be duly issued as fully paid and non-assessable and shall be
free and clear of any lien, claim, encumbrance, security interest or adverse
claim) 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 comprising part of the total
Liquidation Amount (less any tax required to be deducted and withheld from the
total Liquidation Amount 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,
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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 on or 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 Symantec Common Shares delivered to them.
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 the exercise by Symantec 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
Symantec 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 Symantec 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 (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 the declared and unpaid
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 the form of Schedule A hereto or in such
other form as may be acceptable to the Corporation:
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(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
(c) acknowledging the overriding right (the "Retraction Call Right")
of Symantec 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 Symantec
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 Symantec 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
Symantec 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 Symantec thereof. In order to exercise the
Retraction Call Right, Symantec must notify the Corporation [in writing] of its
determination to do so (the "Symantec Call Notice") within two Business Days of
notification to Symantec by the Corporation of the receipt by the Corporation of
the Retraction Request. If Symantec does not so notify the Corporation within
such two Business Day period, the Corporation will notify the holder as soon as
possible thereafter that Symantec will not exercise the Retraction Call Right.
If Symantec delivers the Symantec 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
Symantec in accordance with the Retraction Call Right. In such event, the
Corporation shall not redeem the Retracted Shares and Symantec shall purchase
from such holder and such holder shall sell to Symantec 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, Symantec shall deposit with the Transfer
Agent, on or before the Retraction Date, certificates representing Symantec
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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 Symantec does not deliver a
Symantec Call Notice within such two Business Day period, and provided that
Retraction Request is not revoked by the holder in the manner specified in
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 Symantec, 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 Symantec Common Shares (which shares shall be duly issued as
fully paid and non-assessable and shall be free and clear of any lien, claim,
encumbrance, security interest or adverse claim) 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 from the total
Retraction Price by the Corporation) or a cheque of Symantec payable at par and
in Canadian dollars at any branch of the bankers of Symantec 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 Symantec, as the case may be, 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 (plus 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.
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
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Shares so redeemed by the Corporation or purchased by Symantec shall thereafter
be considered and deemed for all purposes to be a holder of the Symantec 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 Symantec 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 Symantec to purchase
such Retracted Shares from such holder on the Retraction Date or as soon as
practicable thereafter on payment by Symantec to such holder of the Purchase
Price for each such Retracted Share, all as more specifically provided in the
Voting 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 Symantec shall be deemed to have been revoked.
ARTICLE 7
REDEMPTION OF EXCHANGEABLE SHARES BY THE CORPORATION
7.1 Subject to applicable law, and if Symantec does not exercise the
Redemption Call Right, the Corporation shall on the Automatic Redemption Date
redeem the whole of the then outstanding Exchangeable Shares for an amount per
share equal to (a) the Current Market Price of a Symantec 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 Symantec Common Share for each Exchangeable Share held
by such
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holder, plus (b) an additional amount equivalent to the full amount of all
declared and unpaid dividends thereon (collectively the "Redemption Price").
7.2 In any case of a redemption of Exchangeable Shares under this Article
7, the Corporation shall, at least 120 days before the Automatic Redemption
Date, send or cause to be sent to each holder of Exchangeable Shares a notice in
writing of the redemption by the Corporation or the purchase by Symantec 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
Automatic Redemption Date and, if applicable, particulars of the Redemption Call
Right.
7.3 On or after the Automatic Redemption Date and subject to the exercise
by Symantec 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 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 Symantec
Common Shares (which shares shall be duly issued as fully paid and non-
assessable and shall be free and clear of any lien, claim, encumbrance, security
interest or adverse claim) 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 comprising
part of the total Redemption Price (less any tax required to be deducted and
withheld from the total Redemption Price by the Corporation). On and after the
Automatic 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 the 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
Automatic 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
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deposit or Automatic 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 or 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 Redemption Price, the holders of the
Exchangeable Shares shall thereafter be considered and deemed for all purposes
to be holders of the Symantec Common Shares delivered to them.
ARTICLE 8
VOTING RIGHTS
8.1 Except as required by applicable law and the provisions of Sections
9.1, 10.1, 11.1 and 11.2, 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.
ARTICLE 9
AMENDMENT AND APPROVAL
9.1 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.
9.2 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 such approval must be given also by the
affirmative vote of holders of more than two-thirds of the Exchangeable Shares
represented in person or by proxy at the meeting (excluding Exchangeable Shares
beneficially owned by Symantec). If at any such meeting the holders of at least
50% of the 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.
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ARTICLE 10
RECIPROCAL CHANGES, ETC. IN RESPECT OF SYMANTEC COMMON SHARES
10.1 (a) Each holder of an Exchangeable Share acknowledges that the Support
Agreement provides, in part, that Symantec 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 9.2 of these share provisions:
(i) issue or distribute Symantec Common Shares (or securities
exchangeable for or convertible into or carrying rights to acquire Symantec
Common Shares) to the holders of all or substantially all of the then
outstanding Symantec Common Shares by way of stock dividend or other
distribution, other than an issue of Symantec Common Shares (or securities
exchangeable for or convertible into or carrying rights to acquire Symantec
Common Shares) to holders of Symantec Common Shares who exercise an option
to receive dividends in Symantec Common Shares (or securities exchangeable
for or convertible into or carrying rights to acquire Symantec 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 Symantec Common Shares
entitling them to subscribe for or to purchase Symantec Common Shares (or
securities exchangeable for or convertible into or carrying rights to
acquire Symantec Common Shares); or
(iii) issue or distribute to the holders of all or substantially all
of the then outstanding Symantec Common Shares (A) shares or securities of
Symantec of any class other than Symantec Common Shares (other than shares
convertible into or exchangeable for or carrying rights to acquire Symantec
Common Shares), (B) rights, options or warrants other than those referred
to in Section 10.1(a)(ii) above, (C) evidences of indebtedness of Symantec
or (D) assets of Symantec;
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) Each holder of an Exchangeable Share acknowledges that the Support
Agreement further provides, in part, that Symantec 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 9.2 of these share
provisions:
(i) subdivide, redivide or change the then outstanding Symantec Common
Shares into a greater number of Symantec Common Shares; or
(ii) reduce, combine or consolidate or change the then outstanding
Symantec Common Shares into a lesser number of Symantec Common Shares; or
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(iii) reclassify or otherwise change the Symantec Common Shares or
effect an amalgamation, merger, reorganization or other transaction
affecting the Symantec 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 further provides, in part, that the aforesaid provisions
of the Support Agreement shall not be changed without the approval of the
holders of the Exchangeable Shares given in accordance with Section 9.2 of these
share provisions.
ARTICLE 11
ACTIONS BY THE CORPORATION UNDER SUPPORT AGREEMENT
11.1 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 Symantec with all provisions of the Support
Agreement applicable to the Corporation and Symantec, respectively, in
accordance with the 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 all
rights and benefits in favour of the Corporation under or pursuant to such
agreement.
11.2 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 without the approval of the holders of the
Exchangeable Shares given in accordance with Section 9.2 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; 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.
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ARTICLE 12
LEGEND
12.1 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 13
NOTICES
13.1 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.
13.2 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.
13.3 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 fifth 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.
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SCHEDULE A
NOTICE OF RETRACTION
To the Corporation and Symantec Corporation
This notice is given pursuant to Article 6 of the provisions (the "Share
Provisions") attaching to the share(s) represented by this certificate and all
capitalized words and expressions used in this notice which are defined in the
Share Provisions have the meanings ascribed to such words and expressions in
such Share Provisions.
The undersigned hereby notifies the Corporation that, subject to the
Retraction Call Right referred to below, the undersigned desires to have the
Corporation redeem in accordance with Article 6 of the Share Provisions:
M all share(s) represented by this certificate; or
M ___________________ share(s) only.
The undersigned hereby notifies the Corporation that the Retraction Date
shall be ______________________.
NOTE: The Retraction Date must be a Business Day and must not be less than
five Business Days nor more than 10 Business Days after the date upon
which this notice is received by the Corporation. In the event that
no such Business Day is specified above, the Retraction Date shall be
deemed to be the tenth Business Day after the date on which this
notice is received by the Corporation.
The undersigned acknowledges the Retraction Call Right of Symantec
Corporation to purchase all but not less than all the Retracted Shares from the
undersigned and that this notice shall be deemed to be a revocable offer by the
undersigned to sell the Retracted Shares to Symantec Corporation in accordance
with the Retraction Call Right on the Retraction Date for the Retraction Price
and on the other terms and conditions set out in Section 6.3 of the Share
Provisions. If Symantec Corporation determines not to exercise the Retraction
Call Right, the Corporation will notify the undersigned of such fact as soon as
possible. This notice of retraction, and offer to sell the Retracted Shares to
Symantec Corporation, may be revoked and withdrawn by the undersigned by notice
in writing given to the Corporation at any time before the close of business on
the Business Day immediately preceding the Retraction Date.
The undersigned acknowledges that if, as a result of solvency provisions of
applicable law, the Corporation is unable to redeem all Retracted Shares, the
undersigned will be deemed to have exercised the Exchange Right (as defined in
the Voting and Exchange Trust Agreement) so as to require Symantec Corporation
to purchase the unredeemed Retracted Shares.
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The undersigned hereby represents and warrants to the Corporation and
Symantec Corporation that the undersigned has good title to, and owns, the
share(s) represented by this certificate to be acquired by the Corporation or
Symantec Corporation, as the case may be, free and clear of all liens, claims
and encumbrances.
____________________ _________________________ ________________________
(Date) (Signature of Shareholder) (Guarantee of Signature)
M Please check box if the securities and any cheque(s) resulting from the
retraction or purchase of the Retracted Shares are to be held for pick-up
by the shareholder at the principal transfer office of The R-M Trust
Company (the "Transfer Agent") in Toronto, failing which the securities and
any cheque(s) will be mailed to the last address of the shareholder as it
appears on the register.
NOTE: This panel must be completed and this certificate, together with
such additional documents as the Transfer Agent may require, must
be deposited with the Transfer Agent at its principal transfer
office in Toronto. The securities and any cheque(s) resulting
form the retraction or purchase of the Retracted Shares will be
issued and registered in, and made payable to, respectively, the
name of the shareholder as it appears on the register of the
Corporation and the securities and cheque(s) resulting from such
retraction or purchase will be delivered to such shareholder as
indicated above, unless the form appearing immediately below is
duly completed.
___________________________________________________
Name of Person in Whose Name Securities or Cheque(s) Date___________________
Are To Be Registered, Issued or Delivered (please print)
___________________________________________________ _________________________
Street Address or P.O. Box Signature of Shareholder
___________________________________________________ _________________________
City - Province Signature Guaranteed by
NOTE: If the notice of retraction is for less than all of the share(s)
represented by this certificate, a certificate representing the
remaining shares of the Corporation will be issued and registered in
the name of the shareholder as it appears on the register of the
Corporation, unless the Share Transfer Power on the share certificate
is duly completed in respect of such shares.
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EXHIBIT 6.2(b)(i)
SUPPORT AGREEMENT
SUPPORT AGREEMENT
MEMORANDUM OF AGREEMENT made as of _______________, 1995.
B E T W E E N:
SYMANTEC CORPORATION,
a corporation existing under the laws of the
State of Delaware,
(hereinafter referred to as the "Parent"),
OF THE FIRST PART,
- and -
DELRINA CORPORATION
a corporation existing under the laws of the
Province of Ontario,
(hereinafter referred to as the "Company"),
OF THE SECOND PART.
WHEREAS pursuant to a combination agreement dated as of July 5, 1995,
by and between the Parent and the Company (such agreement as it may be amended
or restated is hereinafter referred to as the "Combination Agreement") the
parties agreed that on the Effective Date (as defined in the Combination
Agreement), the Parent and the Company would execute and deliver a Support
Agreement containing the terms and conditions set forth in Exhibit [6.2(a)(i)]
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 an arrangement (the "Arrangement") effected by
articles of arrangement dated __________ __, 1995 filed pursuant to the BUSINESS
CORPORATIONS ACT (Ontario), each issued and outstanding common share of the
Company (a "Company Common Share") was exchanged for 0.61 issued and outstanding
Exchangeable Non-Voting Shares of the Company (the "Exchangeable Shares"), and
thereafter, the Company's sole issued and outstanding share of Class A Preferred
Stock was exchanged by the holder thereof for one issued and outstanding Company
Common Share;
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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 the parties hereto desire to make appropriate provision
and to establish a procedure whereby the Parent will take certain actions and
make certain payments and deliveries necessary to ensure that the Company will
be able to make certain payments and to deliver or cause to be delivered shares
of Parent Common Stock in satisfaction of the obligations of the Company under
the Exchangeable Share Provisions with respect to the payment and satisfaction
of dividends, Liquidation Amounts, Retraction Prices and Redemption Prices, all
in accordance with the Exchangeable 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 Exchangeable 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. If any date on which any action is
required to be taken under this agreement is not a Business Day, such action
shall be required to be taken on the next succeeding Business Day. For the
purposes of this agreement, a "Business Day" means a day other than a Saturday,
a Sunday or a statutory holiday in the City of Toronto, Ontario or the City of
San Francisco, California.
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ARTICLE 2
COVENANTS OF THE PARENT AND THE COMPANY
2.1 COVENANTS OF PARENT REGARDING EXCHANGEABLE SHARES. So long
as any Exchangeable Shares are outstanding, the Parent will:
(a) not declare or pay any dividend on the Parent Common Stock unless (i)
the Company 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 Company shall simultaneously
declare or pay, as the case may be, an equivalent dividend on the
Exchangeable Shares;
(b) cause the Company to declare simultaneously with the declaration of
any dividend on the Parent Common Stock an equivalent dividend on the
Exchangeable Shares and, when such dividend is paid on the Parent
Common Stock, cause the Company to pay simultaneously therewith such
equivalent dividend on the Exchangeable Shares, in each case in
accordance with the Exchangeable Share Provisions;
(c) advise the Company sufficiently in advance of the declaration by the
Parent of any dividend on the Parent Common Stock and take all such
other actions as are necessary, in cooperation with the Company, 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 Stock and such dividend on
the Exchangeable Shares shall correspond with any requirement of the
stock exchange on which the Exchangeable Shares are listed;
(d) ensure that the record date for any dividend declared on the Parent
Common Stock 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 Company, 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 Company, including without limitation
all such actions and all such things as are necessary or desirable to
enable and permit the Company to cause to be delivered shares of
Parent Common Stock to the holders of Exchangeable Shares in
accordance with the provisions of Article 5 of the Exchangeable Share
Provisions;
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(f) take all such actions and do all such things as are necessary or
desirable to enable and permit the Company, 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 Company
to cause to be delivered shares of Parent Common Stock to the holders
of Exchangeable Shares, upon the retraction or redemption of the
Exchangeable Shares in accordance with the provisions of Article 6 or
Article 7 of the Exchangeable Share Provisions, as the case may be;
and
(g) not exercise its vote as a shareholder to initiate the voluntary
liquidation, dissolution or winding-up of the Company nor take any
action or omit to take any action that is designed to result in the
liquidation, dissolution or winding-up of the Company.
2.2 SEGREGATION OF FUNDS. The Parent will cause the Company to deposit a
sufficient amount of funds in a separate account and segregate a sufficient
amount of such assets and other property as is necessary to enable the Company
to pay or otherwise satisfy the applicable dividends, 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 of dividends and
the payment or other satisfaction of the Liquidation Amount, the Retraction
Price or the Redemption Price, as applicable.
2.3 RESERVATION OF SHARES OF PARENT COMMON STOCK. The Parent hereby
represents, warrants and covenants that it has irrevocably reserved for issuance
and will at all times keep available, free from pre-emptive and other rights,
out of its authorized and unissued capital stock such number of shares of Parent
Common Stock (or other shares or securities into which the Parent Common Stock
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
Company to meet its obligations hereunder, under the Voting and Exchange Trust
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 shares of Parent Common Stock.
2.4 NOTIFICATION OF CERTAIN EVENTS. In order to assist the Parent to
comply with its obligations hereunder, the Company will give the Parent 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
Company to institute voluntary liquidation, dissolution or winding up
proceedings with respect to the Company or to effect any other
distribution of the assets of the Company among its shareholders for
the purpose of winding up its affairs, at least 60 days
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<PAGE>
prior to the proposed effective date of such liquidation,
dissolution, winding up or other distribution;
(b) immediately, upon the earlier of (i) receipt by the Company of notice
of, and (ii) the Company 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
Company or to effect any other distribution of the assets of the
Company among its shareholders for the purpose of winding up its
affairs;
(c) immediately, upon receipt by the Company of a Retraction Request (as
defined in the Exchangeable Share Provisions);
(d) at least 130 days prior to any accelerated Automatic Redemption Date
determined by the Board of Directors of the Company in accordance with
the Exchangeable Share Provisions; and
(e) as soon as practicable upon the issuance by the Company of any
Exchangeable Shares or rights to acquire Exchangeable Shares.
2.5 DELIVERY OF SHARES OF PARENT COMMON STOCK. In furtherance of its
obligations under sections 2.1(e) and 2.1(f) hereof, upon notice of any event
which requires the Company to cause to be delivered shares of Parent Common
Stock to any holder of Exchangeable Shares, the Parent shall forthwith issue and
deliver the requisite shares of Parent Common Stock to or to the order of the
former holder of the surrendered Exchangeable Shares, as the Company shall
direct. All such shares of Parent Common Stock shall be duly issued as fully
paid and non-assessable and shall be free and clear of any lien, claim,
encumbrance, security interest or adverse claim. In consideration of the
issuance of each such share of Parent Common Stock by the Parent, the Company
shall issue to the Parent, or as the Parent shall direct, such number of Company
Common Shares as is equal to the fair value of such shares of Parent Common
Stock.
2.6 QUALIFICATION OF SHARES OF PARENT COMMON STOCK. The Parent covenants
that if any shares of Parent Common Stock (or other shares or securities into
which the Parent Common Stock may be reclassified or changed as contemplated by
Section 2.7 hereof) to be issued and delivered hereunder, including for greater
certainty, pursuant to the Exchangeable Share Provisions, or pursuant to the
Exchange Right or the Automatic Exchange Rights require registration or
qualification with or approval of or the filing of any document including any
prospectus or similar document or the taking of any proceeding with or the
obtaining of any order, ruling or consent from any governmental or regulatory
authority under any Canadian or United States federal, provincial or state law
or regulation or pursuant to the rules and regulations of any regulatory
authority or the fulfillment of any other legal requirement (collectively, the
"Applicable Laws") before such shares (or other shares or securities into which
the Parent Common Stock may be reclassified or changed as contemplated by
Section 2.7 hereof) may be issued and delivered by the Parent to the initial
holder thereof or in order that such shares may be freely traded thereafter
(other than any restrictions on transfer by reason of a holder being a
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<PAGE>
"control person" of the Parent for purposes of Canadian federal or provincial
securities law or an "affiliate" of the Parent 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 to cause such
shares of Parent Common Stock (or other shares or securities into which the
Parent Common Stock may be reclassified or changed as contemplated by Section
2.7 hereof) to be and remain duly registered, qualified or approved. The Parent
represents and warrants that it has in good faith taken all actions and done all
things as are necessary under Applicable Laws as they exist on the date hereof
to cause the shares of Parent Common Stock (or other shares or securities into
which the Parent Common Stock may be reclassified or changed as contemplated by
Section 2.7 hereof) to be issued and delivered hereunder, including for greater
certainty, pursuant to the Exchangeable Share Provisions, or pursuant to the
Exchange Right and the Automatic Exchange Rights to be freely tradeable
thereafter (other than restrictions on transfer by reason of a holder being a
"control person" of the Parent for the purposes of Canadian federal and
provincial securities law or an "affiliate" of the Parent for the 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 to
cause all shares of Parent Common Stock (or other shares or securities into
which the Parent Common Stock may be reclassified or changed as contemplated by
Section 2.7 hereof) to be delivered hereunder, including for greater certainty,
pursuant to the Exchangeable Share Provisions, or pursuant to 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 such shares are listed,
quoted or posted for trading at such time. The Parent will in good faith
expeditiously take all such action and do all such things as are necessary to
cause all Exchangeable Shares to be listed posted for trading on a stock
exchange in Canada.
2.7 ECONOMIC EQUIVALENCE.
(a) The Parent will not without the prior approval of the Company and the
prior approval of the holders of the Exchangeable Shares given in
accordance with Section 10.2 of the Exchangeable Share Provisions:
(i) issue or distribute shares of Parent Common Stock (or
securities exchangeable for or convertible into or carrying
rights to acquire shares of Parent Common Stock) to the holders
of all or substantially all of the then outstanding Parent
Common Stock by way of stock dividend or other distribution,
other than an issue of shares of Parent Common Stock (or
securities exchangeable for or convertible into or carrying
rights to acquire shares of Parent Common Stock) to holders of
shares of Parent Common Stock who exercise an option to receive
dividends in Parent Common Stock (or securities exchangeable
for or convertible into or carrying rights to acquire shares of
Parent Common Stock) 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
shares of Parent Common Stock entitling them to subscribe for or
to purchase shares of Parent Common
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<PAGE>
Stock (or securities exchangeable for or convertible into or
carrying rights to acquire shares of Parent Common Stock); or
(iii) issue or distribute to the holders of all or substantially all
of the then outstanding shares of Parent Common Stock (A) shares
or securities of the Parent of any class other than Parent
Common Stock (other than shares convertible into or exchangeable
for or carrying rights to acquire shares of Parent Common
Stock), (B) rights, options or warrants other than those
referred to in subsection 2.7(a)(ii) above, (C) evidences of
indebtedness of the Parent or (D) assets of the Parent;
unless (i) the Company is permitted 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 to holders of the Exchangeable
Shares and (ii) the Company 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 Company
and the prior approval of the holders of the Exchangeable Shares
given in accordance with Section 10.2 of the Exchangeable Share
Provisions:
(i) subdivide, redivide or change the then outstanding shares of
Parent Common Stock into a greater number of shares of
Parent Common Stock; or
(ii) reduce, combine or consolidate or change the then
outstanding shares of Parent Common Stock into a lesser
number of shares of Parent Common Stock; or
(iii) reclassify or otherwise change the shares of Parent Common
Stock or effect an amalgamation, merger, reorganization or
other transaction affecting the shares of Parent Common
Stock;
unless (i) the Company is permitted under applicable law to
simultaneously make the same or an economically equivalent
change to, or in the rights of holders of, the Exchangeable
Shares and (ii) the same or an economically equivalent change
is made to, or in the rights of the holders of, the Exchangeable
Shares.
(c) The Parent will ensure that the record date for any event
referred to in section 2.7(a) or 2.7(b) 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
Company).
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(d) The Board of Directors of the Company 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 subsection 2.7(a) or
2.7(b) above and each such determination shall be conclusive and
binding on 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 Company:
(i) in the case of any stock dividend or other distribution
payable in shares of Parent Common Stock, the number of
such shares issued in proportion to the number of
shares of Parent Common Stock previously outstanding;
(ii) in the case of the issuance or distribution of any
rights, options or warrants to subscribe for or
purchase shares of Parent Common Stock (or securities
exchangeable for or convertible into or carrying rights
to acquire shares of Parent Common Stock), 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 Company
in the manner above contemplated) of a share of Parent
Common Stock;
(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 Stock, any rights, options or
warrants other than those referred to in subsection
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 Company in the manner above
contemplated) of such property to be issued or
distributed with respect to each outstanding share of
Parent Common Stock and the current market value (as
determined by the Board of Directors of the Company in
the manner above contemplated) of a share of Parent
Common Stock;
(iv) in the case of any subdivision, redivision or change of
the then outstanding shares of Parent Common Stock into
a greater number of shares of Parent Common Stock or
the reduction, combination or consolidation or change
of the then outstanding shares of Parent Common Stock
into a lesser number of shares of Parent Common Stock
or any amalgamation, merger, reorganization or other
transaction affecting the Parent Common Stock, the
effect thereof upon the then outstanding shares of
Parent Common Stock; and
(v) in all such cases, the general taxation consequences of
the relevant event to holders of Exchangeable Shares
to the extent that such consequences may differ from
the taxation consequences to holders of shares of
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Parent Common Stock as a result of differences between
taxation laws of Canada and the United States (except
or any differing consequences arising as a result of
differing marginal taxation rates and without regard
to the individual circumstances of holders of
Exchangeable 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 weighted average of the
daily trading prices of such security during a period of not
less than 20 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 in
the opinion of the Board of Directors of the Company the
public distribution or trading activity of such securities
during such period does not create a market which reflects
the fair market value of such securities, then the current
market value thereof shall be determined by the Board of
Directors of the Company, 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 Stock (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 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
shares of Parent Common Stock, 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 Company (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
Company and the prior approval of the holders of the Exchangeable Shares given
in accordance with Section 10.2 of the Exchangeable Share Provisions, the Parent
covenants and agrees in favour of the Company that, as long as any outstanding
Exchangeable Shares are owned by any person or entity other than the Parent or
any of its Affiliates, the Parent will be and remain the direct or indirect
beneficial owner of all issued and outstanding shares in the capital of the
Company and all outstanding securities of the Company carrying or otherwise
entitled to voting rights in any circumstances, in each case other than the
Exchangeable Shares.
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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 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 not to,
exercise any voting rights which may be exercisable by holders of Exchangeable
Shares from time to time pursuant to the Exchangeable Share Provisions or
pursuant to the provisions of the BUSINESS CORPORATIONS ACT (Ontario) (or any
successor or other corporate statute by which the Company may in the future be
governed) with respect to any Exchangeable Shares held by it or by its
subsidiaries in respect of any matter considered at any meeting of holders of
Exchangeable Shares.
2.11 DUE PERFORMANCE. On and after the Effective Date, the Parent shall
duly and timely perform all of its obligations provided for in the Plan of
Arrangement, including any obligations that may arise upon the exercise of the
Parent's rights under the Exchangeable Share Provisions.
ARTICLE 3
GENERAL
3.1 TERM. This agreement shall come into force and be effective as of the
date hereof 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 COMPANY. Notwithstanding the
provisions of section 3.4 hereof, 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 Stock 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 Stock 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.
3.4 AMENDMENTS, MODIFICATIONS, ETC. This agreement may not be amended or
modified except by an agreement in writing executed by the Company and the
Parent and approved by the holders of the Exchangeable Shares in accordance with
Section 10.2 of the Exchangeable Share Provisions.
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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 either or both 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 Board of Directors of each of the
Company 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 Company 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 Company 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 Company, at the request of the
Parent, 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 Company, the
Exchangeable 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 both of the parties hereto.
3.8 INUREMENT. This agreement shall be binding upon and inure 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 at: Symantec Corporation
10201 Torre Avenue
Cupertino, CA 95014
ATTENTION: GENERAL COUNSEL
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Telecopy: (408) 252-5101
(b) if to the Company at: Delrina Corporation
895 Don Mills Road, 500-2 Park Centre
Toronto, Ontario, Canada M3C 1W3
ATTENTION: GENERAL COUNSEL
Telecopy: (416) 441-2498
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 agrees that any action or proceeding arising
out of or relating to this agreement may be instituted in the courts of Ontario,
waives 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 Company
at its registered office in the Province of Ontario as the Parent's attorney for
service of process.
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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.
SYMANTEC CORPORATION
By ___________________________
___________________________
DELRINA CORPORATION
By ___________________________
___________________________
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EXHIBIT 6.2(B)(II)
VOTING AND EXCHANGE TRUST AGREEMENT
VOTING AND EXCHANGE TRUST AGREEMENT
MEMORANDUM OF AGREEMENT made as of the ___ day of ______, 1995.
B E T W E E N:
SYMANTEC CORPORATION,
a corporation existing under the laws of the
State of Delaware,
(hereinafter referred to as the "Parent"),
OF THE FIRST PART,
- and -
DELRINA CORPORATION,
a corporation existing under the laws of the
Province of Ontario,
(hereinafter referred to as the "Company"),
OF THE SECOND PART,
- and -
THE R-M TRUST COMPANY,
a trust company incorporated under the laws
of __________,
(hereinafter referred to as the "Trustee"),
OF THE THIRD PART.
WHEREAS pursuant to a combination agreement dated as of July 5, 1995,
by and between the Parent and the Company (such agreement as it may be amended
or restated is hereinafter referred to as the "Combination Agreement") the
parties agreed that on the Effective Date (as defined in the Combination
Agreement), the Parent and the Company would execute and deliver a Voting and
Exchange Trust Agreement containing the terms and conditions set
<PAGE>
forth in Exhibit 6.2(b)(ii) 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 an arrangement (the "Arrangement") effected by
articles of arrangement dated __________ __, 1995 filed pursuant to the BUSINESS
CORPORATIONS ACT (Ontario), each issued and outstanding common share of the
Company (a "Company Common Share") was exchanged for 0.61 issued and outstanding
Exchangeable Non-Voting Shares of the Company (the "Exchangeable Shares"), and
thereafter, the Company's sole issued and outstanding share of Class A Preferred
Stock was exchanged by the holder thereof for one issued and outstanding Company
Common Share;
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 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 share of the Parent Common Stock (the
"Parent Common Stock");
AND WHEREAS the Parent 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
the Parent 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 Special Voting Stock (the "Parent Special Voting
Stock") to which voting rights attach for the benefit of such holders and
whereby the rights to require the Parent 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 rights for the
benefit of such holders;
AND WHEREAS these recitals and any statements of fact in this trust
agreement are made by the Parent and the Company 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:
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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 the direction of the management and policies of that first
mentioned person, whether through the ownership of voting securities,
by contract or otherwise.
"ARRANGEMENT" has the meaning ascribed thereto in the recitals hereto.
"AUTOMATIC EXCHANGE RIGHTS" means the benefit of the obligation of the
Parent to effect the automatic exchange of shares of Parent Common
Stock for Exchangeable Shares pursuant to section 5.12 hereof.
"BOARD OF DIRECTORS" means the Board of Directors of the Company.
"BUSINESS DAY" means a day other than a Saturday, a Sunday or a
statutory holiday in the City of Toronto, Ontario or the City of San
Francisco, California.
"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.
"COMPANY COMMON SHARES" has the meaning ascribed thereto in the
recitals hereto.
"CURRENT MARKET PRICE" means, in respect of a share of Parent Common
Stock on any date, the Canadian Dollar Equivalent of the average of
the closing bid and asked prices of shares of Parent Common Stock
during a period of 20 consecutive trading days ending not more than
five trading days before such date on the Nasdaq National Market, or,
if the shares of Parent Common Stock are not then quoted on the Nasdaq
National Market, on such other stock exchange or
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automated quotation system on which the shares of Parent Common Stock 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 in the opinion of the Board of
Directors the public distribution or trading activity of Parent Common Stock
during such period does not create a market which reflects the fair market value
of the Parent Common Stock, then the Current Market Price of the Parent Common
Stock shall be determined by the Board of Directors based upon the advice of
such qualified independent financial advisors as the Board of Directors of the
Parent 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 hereof.
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges, restrictions and
conditions attaching to the Exchangeable Shares.
"EXCHANGEABLE SHARES" has the meaning ascribed thereto in the recitals hereto.
"HOLDER VOTES" has the meaning ascribed thereto in section 4.2 hereof.
"HOLDERS" means the registered holders from time to time of Exchangeable Shares,
other than the Parent and its subsidiaries.
"INSOLVENCY EVENT" means the institution by the Company of any proceeding to be
adjudicated a bankrupt or insolvent or to be dissolved or wound up, or the
consent of the Company 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 Company to contest in good faith any such proceedings commenced
in respect of the Company within 15 days of becoming aware thereof, or the
consent by the Company to the filing of any such petition or to the appointment
of a receiver, or the making by the Company of a general assignment for the
benefit of creditors, or the admission in writing by the Company of its
inability to pay its debts generally as they become due, or the Company 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 Section 1.1 of the
Plan of Arrangement.
"LIQUIDATION EVENT" has the meaning ascribed thereto in subsection 5.12(b)
hereof.
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"LIQUIDATION EVENT EFFECTIVE DATE" has the meaning ascribed thereto in
subsection 5.12(c) hereof.
"LIST" has the meaning ascribed thereto in section 4.6 hereof.
"OFFICER'S CERTIFICATE" means, with respect to the Parent or the Company, 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 or the Company, as the case may be.
"PARENT COMMON STOCK" has the meaning ascribed thereto in the recitals hereto.
"PARENT CONSENT" has the meaning ascribed thereto in section 4.2 hereof.
"PARENT MEETING" has the meaning ascribed thereto in section 4.2 hereof.
"PARENT SPECIAL VOTING STOCK" has the meaning ascribed thereto in the recitals
hereto.
"PARENT SUCCESSOR" has the meaning ascribed thereto in subsection 11.1(a)
hereof.
"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 the Company providing for
the Arrangement.
"REDEMPTION CALL RIGHT" has the meaning ascribed thereto in Section 1.1 of the
Exchangeable Share Provisions.
"RETRACTED SHARES" has the meaning ascribed thereto in section 5.7 hereof.
"RETRACTION CALL RIGHT" has the meaning ascribed thereto in Section 6.1 of the
Exchangeable Share Provisions.
"SUPPORT AGREEMENT" means that certain support agreement made as of even date
hereof between the Company and the Parent.
"TRUST" means the trust created by this agreement.
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"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 The R-M Trust Company and, subject to the provisions of Article
10 hereof, includes any successor trustee.
"VOTING RIGHTS" means the voting rights attached to the Voting Share.
"VOTING SHARE" means the one share of Parent Special Voting Stock, U.S. $1.00
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 Stock 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 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 Holders, 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 Holders 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
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for and on behalf of, and for the use and benefit of, the Holders and in
accordance with the provisions of this trust agreement. The Parent hereby
acknowledges receipt from the Trustee as trustee for and on behalf of the
Holders of good and valuable consideration (and the adequacy thereof) for the
issuance of the Voting Share by the Parent to the Trustee. 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 Holders 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 Company will cause each certificate
representing Exchangeable Shares to bear an appropriate legend notifying the
Holders of their right to instruct the Trustee with respect to the exercise of
the Voting Rights with respect to the Exchangeable Shares held by a Holder.
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 RIGHTS
4.1 VOTING RIGHTS. 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
stockholders 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 exercise the Voting Rights only on the basis of instructions
received pursuant to this Article 4 from Holders entitled to instruct the
Trustee as to the voting thereof at the time at which the Parent Consent is
sought or the Parent Meeting is held. To the extent that no instructions are
received from a Holder with respect to the Voting Rights to which such Holder is
entitled, the Trustee shall not exercise or permit the exercise of such Holder's
Voting Rights.
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4.2 NUMBER OF VOTES. With respect to all meetings of stockholders of the
Parent at which holders of shares of Parent Common Stock are entitled to vote (a
"Parent Meeting") and with respect to all written consents sought by the Parent
from its stockholders including the holders of shares of Parent Common Stock (a
"Parent Consent"), each Holder shall be entitled to instruct the Trustee to cast
and exercise, in the manner instructed, one of the votes comprised in the Voting
Rights for each Exchangeable Share owned of record by such Holder 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 "Holder 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 Stock) to each of the Holders 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 stockholders:
(a) a copy of such notice, together with any proxy or information
statement and related materials to be provided to stockholders of
the Parent;
(b) a statement that such Holder is entitled to instruct the Trustee
as to the exercise of the Holder Votes with respect to such
Parent Meeting or Parent Consent, as the case may be, or,
pursuant to section 4.7 hereof, to attend such Parent Meeting and
to exercise personally the Holder 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 Holder or his designee to exercise
personally the Holder Votes; or
(ii) a proxy to a designated agent or other representative of the
management of the Parent to exercise such Holder Votes;
(d) a statement that if no such instructions are received from the
Holder, the Holder Votes to which such Holder is entitled will
not be exercised;
(e) a form of direction whereby the Holder may so direct and instruct
the Trustee as contemplated herein; and
(f) a statement of (i) 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 (ii) the method for revoking or amending such
instructions.
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For the purpose of determining Holder Votes to which a Holder is entitled in
respect of any such Parent Meeting or Parent Consent, the number of Exchangeable
Shares owned of record by the Holder shall be determined at the close of
business on the record date established by the Parent or by applicable law for
purposes of determining stockholders 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 STOCKHOLDER INFORMATION. The Parent will deliver to the
Trustee copies of all proxy materials, (including notices of Parent Meetings but
excluding proxies to vote shares of Parent Common Stock), 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 Stock in sufficient
quantities and in sufficient time so as to enable the Trustee to send those
materials to each Holder at the same time as such materials are first sent to
holders of Parent Common Stock. The Trustee will mail or otherwise send to each
Holder, at the expense of Parent, copies of all such materials (and all
materials specifically directed to the Holders or to the Trustee for the benefit
of the Holders 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 Stock.
The Trustee will make copies of all such materials available for inspection by
any Holder at the Trustee's principal corporate trust office in the cities of
Montreal, Toronto and Vancouver.
4.5 OTHER MATERIALS. Immediately after receipt by the Parent or any
stockholder of the Parent of any material sent or given generally to the holders
of Parent Common Stock 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 Holders
by such third party) to each Holder as soon as possible thereafter. As soon as
practicable after receipt thereof, the Trustee will mail or otherwise send to
each Holder, at the expense of the Parent, copies of all such materials received
by the Trustee from the Parent. The Trustee will also make copies of all such
materials available for inspection by any Holder at the Trustee's principal
corporate trust office in the cities of Montreal, Toronto and Vancouver.
4.6 LIST OF PERSONS ENTITLED TO VOTE. The Company 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 Holders arranged in alphabetical order and showing the number
of Exchangeable Shares held of record by each such Holder, 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
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established by the Parent or pursuant to applicable law for determining the
holders of Parent Common Stock 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
Company 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 Company 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, sufficiently prior to the date of the calling of such
meeting or seeking of such consent so as to enable the Company to perform its
obligations under this section 4.6.
4.7 ENTITLEMENT TO DIRECT VOTES. Any Holder 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 hereof with respect
to the exercise of the Holder Votes to which such Holder 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 Holder Votes
to which such Holder is entitled except, in each case, to the extent that such
Holder has transferred the ownership of any Exchangeable Shares in respect of
which such Holder is entitled to Holder 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 Holder pursuant to section 4.3 hereof,
the Holder Votes as to which such Holder 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 Holder prior to the time and date
fixed by it for receipt of such instructions in the notice given by
the Trustee to the Holder pursuant to section 4.3 hereof.
(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 Holder (or its
designee) of identification satisfactory to the Trustee's
representatives, and at the Holder's request, such representatives
shall sign and deliver to such Holder (or its designee) a proxy to
exercise personally the Holder Votes as to which such Holder is
otherwise entitled hereunder to direct the vote, if such Holder either
(i) has not previously given the Trustee instructions pursuant to
section 4.3 hereof in respect of such meeting, or (ii) submits to the
Trustee's representatives written revocation of any such previous
instructions. At such meeting, the Holder exercising such Holder
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.
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4.9 DISTRIBUTION OF WRITTEN MATERIALS. Any written materials to be
distributed by the Trustee to the Holders 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 Stock) to each
Holder at its address as shown on the books of the Company. The Company 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 Holders; 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 Holder with
respect to the Holder Votes exercisable in respect of the Exchangeable Shares
held by such Holder, including the right to instruct the Trustee as to the
voting of or to vote personally such Holder Votes, shall be deemed to be
surrendered by the Holder to the Parent and such Holder 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 Holder of the Exchange Right or the
occurrence of the automatic exchange of Exchangeable Shares for shares of Parent
Common Stock, as specified in Article 5 hereof (unless in either case the Parent
shall not have delivered the requisite shares of Parent Common Stock issuable in
exchange therefor to the Trustee for delivery to the Holders), 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 Company pursuant to Article 5 of the
Exchangeable Share Provisions, or upon the purchase of Exchangeable Shares from
the holder thereof by the Parent pursuant to the exercise by the Parent 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. The Parent hereby grants
to the Trustee as trustee for and on behalf of, and for the use and benefit of,
the Holders (a) the right (the "Exchange Right"), upon the occurrence and during
the continuance of an Insolvency Event, to require the Parent to purchase from
each or any Holder all or any part of the Exchangeable Shares held by the Holder
and (b) the Automatic Exchange Rights, all in accordance with the provisions of
this agreement. The Parent hereby acknowledges receipt from the Trustee as
trustee for and on behalf of the Holders of good and valuable consideration (and
the adequacy thereof) for the grant of the Exchange Right and the Automatic
Exchange Rights by the Parent to the Trustee. 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:
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(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
Holders 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 Company will cause each certificate
representing Exchangeable Shares to bear an appropriate legend notifying the
Holders 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
Holder; 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 hereof,
the Trustee shall exercise the Exchange Right only on the basis of instructions
received pursuant to this Article 5 from Holders entitled to instruct the
Trustee as to the exercise thereof. To the extent that no instructions are
received from a Holder 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 the Parent for each
Exchangeable Share to be purchased by the Parent under the Exchange Right shall
be an amount per share equal to (a) the Current Market Price of a share of
Parent Common Stock 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 (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 the declared and unpaid dividends). In connection with each
exercise of the Exchange Right, the Parent 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 the Parent issuing and delivering or causing
to be delivered to the Trustee, on behalf of the relevant Holder, one share of
Parent Common Stock 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 Holder 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 Holder on the books of the Company. To
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cause the exercise of the Exchange Right by the Trustee, the Holder 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 Holders, the certificates
representing the Exchangeable Shares which such Holder desires the Parent 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 Company 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 Holder thereby instructs the Trustee to
exercise the Exchange Right so as to require the Parent to purchase from the
Holder the number of Exchangeable Shares specified therein, (ii) that such
Holder has good title to and owns all such Exchangeable Shares to be acquired by
the Parent free and clear of all liens, claims and encumbrances, (iii) the names
in which the certificates representing the Parent Common Stock issuable 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 Company
and the Parent 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 the Parent 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 Company.
5.6 DELIVERY OF PARENT COMMON STOCK; EFFECT OF EXERCISE. Promptly after
receipt of the certificates representing the Exchangeable Shares which the
Holder desires the Parent 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 the Parent, the Trustee shall notify
the Parent and the Company of its receipt of the same, which notice to the
Parent and the Company shall constitute exercise of the Exchange Right by the
Trustee on behalf of the holder of such Exchangeable Shares, and the Parent
shall immediately thereafter deliver or cause to be delivered to the Trustee,
for delivery to the Holder of such Exchangeable Shares (or to such other
persons, if any, properly designated by such Holder), the certificates for the
number of shares of Parent Common Stock issuable 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;
provided, however, that no such delivery shall be made unless and until the
Holder requesting the same shall have paid (or provided evidence satisfactory to
the Trustee, the Company and the Parent of the payment of) the taxes (if any)
payable as contemplated by section 5.8 of this trust agreement. Immediately
upon the giving of notice by the Trustee to the Parent and the Company 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 Holder of such Exchangeable Shares shall be
deemed to have transferred to the Parent 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
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receive his proportionate part of the total purchase price therefor, unless the
requisite number of shares of Parent Common Stock (together with a cheque for
the balance, if any, of the total purchase price therefor) is not allotted,
issued and delivered by the Parent to the Trustee, for delivery to such Holder
(or to such other persons, if any, properly designated by such Holder), within
five Business Days of the date of the giving of such notice by the Trustee, in
which case the rights of the Holder shall remain unaffected until such shares of
Parent Common Stock are so allotted, issued and delivered by the Parent and any
such cheque is so delivered and paid. Concurrently with such Holder ceasing to
be a holder of Exchangeable Shares, the Holder shall be considered and deemed
for all purposes to be the holder of the shares of Parent Common Stock delivered
to it pursuant to the Exchange Right.
5.7 EXERCISE OF EXCHANGE RIGHT SUBSEQUENT TO RETRACTION. In the event
that a Holder has exercised its right under Article 6 of the Exchangeable Share
Provisions to require the Company to redeem any or all of the Exchangeable
Shares held by the Holder (the "Retracted Shares") and is notified by the
Company pursuant to Section 6.6 of the Exchangeable Share Provisions that the
Company will not be permitted as a result of solvency requirements of applicable
law to redeem all such Retracted Shares, and provided that the Parent shall not
have exercised the Retraction Call Right with respect to the Retracted Shares
and that the Holder has not revoked the retraction request delivered by the
Holder to the Company pursuant to Section 6.1 of the Exchangeable Share
Provisions, the retraction request will constitute and will be deemed to
constitute notice from the Holder to the Trustee instructing the Trustee to
exercise the Exchange Right with respect to those Retracted Shares which the
Company is unable to redeem. In any such event, the Company hereby agrees with
the Trustee and in favour of the Holder immediately to notify the Trustee of
such prohibition against the Company redeeming all of the Retracted Shares and
immediately to forward or cause to be forwarded to the Trustee all relevant
materials delivered by the Holder to the Company 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 Company 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 the Parent pursuant to the Exchange Right or the Automatic Exchange Rights,
the share certificate or certificates representing the Parent Common Stock to be
delivered in connection with the payment of the total purchase price therefor
shall be issued in the name of the Holder of the Exchangeable Shares so sold or
in such names as such Holder may otherwise direct in writing without charge to
the holder of the Exchangeable Shares so sold, provided, however, that such
Holder (a) shall pay (and neither the Parent, the Company nor the Trustee shall
be required to pay) any documentary, stamp, transfer or other similar 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 Holder or (b) shall have established
to the satisfaction of the Trustee, the Parent and the Company that such taxes,
if any, have been paid.
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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 Company and the Parent shall give
written notice thereof to the Trustee. As soon as practicable after receiving
notice from the Company and the Parent or from any other person of the
occurrence of an Insolvency Event, the Trustee will mail to each Holder, at the
expense of the Parent, a notice of such Insolvency Event, which notice shall
contain a brief statement of the right of the Holders with respect to the
Exchange Right.
5.10 QUALIFICATION OF PARENT COMMON STOCK. The Parent covenants that if
any shares of Parent Common Stock to be issued and delivered pursuant to the
Exchange Right or the Automatic Exchange Rights require registration or
qualification with or approval of or the filing of any document including any
prospectus or similar document or the taking of any proceeding with or the
obtaining of any order, ruling or consent from any governmental or regulatory
authority under any Canadian or United States federal, provincial or state law
or regulation or pursuant to the rules and regulations of any regulatory
authority or the fulfillment of any other legal requirement (collectively, the
"Applicable Laws") before such shares may be issued and delivered by the Parent
to the initial holder thereof or in order that such shares may be freely traded
thereafter (other than any restrictions on transfer 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 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 to cause such
shares of Parent Common Stock to be and remain duly registered, qualified or
approved. The Parent represents and warrants that it has in good faith taken
all actions and done all things as are necessary under Applicable Laws as they
exist on the date hereof to cause the shares of Parent Common Stock to be issued
and delivered pursuant to the Exchange Right and the Automatic Exchange Rights
and to be freely tradeable thereafter (other than restrictions on transfer by
reason of a holder being a "control person" of the Parent for the purposes of
Canadian federal and provincial securities law or an "affiliate" of the Parent
for the 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 to cause all shares of Parent Common Stock to be delivered
pursuant to 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 such shares are listed, quoted or posted for trading at such time.
5.11 RESERVATION OF SHARES OF PARENT COMMON STOCK.
The Parent hereby represents, warrants and covenants that it
has irrevocably reserved for issuance and will at all times keep available, free
from pre-emptive and other rights, out of its authorized and unissued capital
stock such number of shares of Parent Common Stock (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 Company to meet
its obligations hereunder, under the Support Agreement, under the Exchangeable
Share Provisions and under any other security
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or commitment pursuant to which the Parent may now or hereafter be required to
issue shares of Parent Common Stock.
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 stockholders 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
stockholders 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 Holders. Such notice shall include a brief
description of the automatic exchange of Exchangeable Shares for
shares of Parent Common Stock provided for in section 5.12(c)
below.
(c) In order that the Holders will be able to participate on a PRO
RATA basis with the holders of Parent Common Stock 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 shares of Parent Common
Stock. To effect such automatic exchange, the Parent shall
purchase each Exchangeable Share outstanding on the fifth
Business Day prior to the Liquidation Event Effective Date and
held by Holders, and each Holder 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 share of Parent Common
Stock on the fifth Business Day prior to the Liquidation Event
Effective Date, which shall be satisfied in full by the Parent
issuing to the Holder one share of Parent Common Stock, 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 the Parent Common Stock that 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
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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 amounts 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 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 Stock shall be deemed to have occurred,
and each Holder of Exchangeable Shares shall be deemed to have
transferred to the Parent all of the Holder's right, title and
interest in and to such Exchangeable Shares and the related
interest in the Trust Estate and shall cease to be a holder of
such Exchangeable Shares and the Parent shall issue to the Holder
the shares of Parent Common Stock issuable upon the automatic
exchange of Exchangeable Shares for Parent Common Stock and shall
deliver to the Trustee for delivery to the Holder a cheque for
the balance, if any, of the total purchase price for such
Exchangeable Shares. Concurrently with such Holder ceasing to be
a holder of Exchangeable Shares, the Holder shall be considered
and deemed for all purposes to be the holder of the shares of
Parent Common Stock issued to it pursuant to the automatic
exchange of Exchangeable Shares for Parent Common Stock and the
certificates held by the Holder previously representing the
Exchangeable Shares exchanged by the Holder with the Parent
pursuant to such automatic exchange shall thereafter be deemed to
represent the shares of Parent Common Stock issued to the Holder
by the Parent pursuant to such automatic exchange. Upon the
request of a Holder and the surrender by the Holder of
Exchangeable Share certificates deemed to represent shares of
Parent Common Stock, duly endorsed in blank and accompanied by
such instruments of transfer as the Parent may reasonably
require, the Parent shall deliver or cause to be delivered to the
Holder certificates representing the shares of Parent Common
Stock of which the Holder is the holder.
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 Special Voting 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:
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(a) purchasing the Voting Share from the Parent as trustee for and on
behalf of the Holders in accordance with the provisions of this
agreement;
(b) granting proxies and distributing materials to Holders as provided in
this trust agreement;
(c) voting the Holder Votes in accordance with the provisions of this
trust agreement;
(d) receiving the grant of the Exchange Right and the Automatic Exchange
Rights from the Parent as trustee for and on behalf of the Holders 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 Holders Exchangeable Shares and other requisite
documents and distributing to such Holders the shares of Parent Common
Stock and cheques, if any, to which such Holders 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 Holder or
Holders to enforce the obligations of the Parent 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 Holders and shall exercise the care, diligence and skill that a
reasonably prudent trustee would exercise in comparable circumstances.
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7.2 NO CONFLICT OF INTEREST. The Trustee represents to the Company 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 hereof. 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 Company 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, and with any such subsequent registrar or
transfer agent, of the Exchangeable Shares and the Parent Common
Stock; 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 Stock,
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 Rights in the
manner specified in Article 5 hereof.
The Company and the Parent irrevocably authorize their respective registrars and
transfer agents to comply with all such requests. The Parent covenants that it
will supply its 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 Rights, in each case pursuant to Article 5 hereof.
7.4 BOOKS AND RECORDS. The Trustee shall keep available for inspection by
the Parent and the Company, 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 Holders and
all transactions pursuant to the Voting Rights, the Exchange Right and the
Automatic Exchange Rights for the term of this Agreement. On or before June 30,
1996, and on or before June 30 in every year thereafter, so long as the Voting
Share is on deposit with the Trustee, the Trustee shall transmit to the Parent
and the Company a brief report, dated as of the preceding March 31, with respect
to:
(a) the property and funds comprising the Trust Estate as of that date;
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(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 Holders in consideration of the issue and delivery by the
Parent of shares of Parent Common Stock 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 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 Holder upon
such Holder 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 Holder 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 7.15
hereof, and with respect to the Exchange Right pursuant to Article 5 hereof,
subject to section 7.15 hereof, and with respect to the Automatic Exchange
Rights pursuant to Article 5 hereof.
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 funds, security and indemnified as aforesaid.
7.7 ACTIONS BY HOLDERS. No Holder 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 Holder 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
hereof and the Trustee shall have failed to act within a reasonable time
thereafter. In such case, but not otherwise, the Holder 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 Holders
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 Right 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
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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 Holders.
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 and 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 Company 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 Company 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 Company
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 Company 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 Company
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 Rights, 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 Company and/or the Parent it shall be in
the form of an Officer's Certificate or a statutory declaration.
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:
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(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 Company 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 Company. 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 Company, 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.
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7.13 TRUSTEE NOT BOUND TO ACT ON COMPANY'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 Company 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 Company
and the Parent that at the date of execution and delivery by it of this trust
agreement it is authorized to carry on the 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 validity 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 hereof.
7.15 CONFLICTING CLAIMS. If conflicting claims or demands are made or
asserted with respect to any interest of any Holder 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 Holder 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.
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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 Holders, subject to all the terms and conditions herein set
forth.
ARTICLE 8
COMPENSATION
8.1 FEES AND EXPENSES OF THE TRUSTEE. The Parent and the Company 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 and the Company 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 willful misconduct.
ARTICLE 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 INDEMNIFICATION OF THE TRUSTEE. The Parent and the Company
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, willful 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 or the
Company pursuant hereto. In no case shall the Parent or the Company be liable
under this indemnity for any claim against any of the Indemnified Parties unless
the Parent and the Company 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 and the Company shall be entitled to
participate at their own expense in the defense and, if the Parent or the
Company so elect at any time after receipt of such notice, either of them may
assume the defense 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 defense 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 or the Company; or (ii) the named parties to any such
suit include both the Trustee and the Parent or the Company and the Trustee
shall
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have been advised by counsel acceptable to the Parent or the Company that
there may be one or more legal defenses available to the Trustee that are
different from or in addition to those available to the Parent or the Company
and that an actual or potential conflict of interest exists (in which case the
Parent and the Company shall not have the right to assume the defense 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, willful 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 and the Company specifying the date on which it desires to resign,
provided that such notice shall never be given less than 60 days before such
desired resignation date unless the Parent and the Company 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
and the Company 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. Failing acceptance by a successor trustee, a
successor trustee may be appointed by an order of the Ontario Court of Justice
(General Division) upon application of one or more of the parties hereto.
10.2 REMOVAL. The Trustee, or any trustee hereafter appointed, may be
removed with or without cause, at any time on 60 days' prior notice by written
instrument executed by the Parent and the Company, 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 and
the Company 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 as
if originally named as
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trustee in this trust agreement. However, on the written request of the Parent
and the Company 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, the Company 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 and the Company shall cause to
be mailed notice of the succession of such trustee hereunder to each Holder
specified in a List. If the Parent or the Company 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 and the Company.
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 Holders hereunder.
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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 Company shall execute and
deliver the supplemental trust agreement provided for in Article 12 hereof 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 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 Company,
the Parent and the Trustee and approved by the Holders 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 Holders, amend or modify
this trust agreement for the purposes of:
(a) adding to the covenants of any or all of the parties hereto for the
protection of the Holders 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 and Company and in the opinion of the Trustee
and its counsel, having in mind the best interests of the Holders 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 Holders as a whole; or
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(c) making such changes or corrections which, on the advice of
counsel to the Company, the Parent 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 Company and the Parent shall be
of the opinion that such changes or corrections will not be
prejudicial to the interests of the Holders as a whole.
12.3 MEETING TO CONSIDER AMENDMENTS. The Company, at the request of
the Parent, shall call a meeting or meetings of the Holders 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 Company, the Exchangeable Share Provisions and all
applicable laws.
12.4 CHANGES IN CAPITAL OF PARENT AND THE COMPANY. 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 Stock 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 Stock 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 Company (when
authorized by a resolution of the 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 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 Holders 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, the
Company, the Trustee or this trust agreement; and
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(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 Holders as a whole will not be
prejudiced thereby.
ARTICLE 13
TERMINATION
13.1 TERM. The Trust created by this trust agreement shall continue until
the earliest to occur of the following events:
(a) no outstanding Exchangeable Shares are held by a Holder;
(b) each of the Company and the Parent elects in writing to terminate the
Trust and such termination is approved by the Holders 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 survive any
termination of the Trust and shall continue until there are no Exchangeable
Shares outstanding held by a Holder; provided, however, that the provisions of
Articles 8 and 9 hereof shall survive any such termination of this trust
agreement.
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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 INUREMENT. This trust agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns and to the benefit of the Holders.
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 at:
ATTENTION: PRESIDENT
Telecopy:
(b) if to the Company at:
ATTENTION: PRESIDENT
Telecopy:
(c) if to the Trustee at:
if by mail:
The R-M Trust Company
P.O. Box 7010
Adelaide Street Postal Station
Toronto, Ontario M5C2W9
ATTENTION: VICE-PRESIDENT
if delivered:
The R-M Trust Company
393 University Avenue
5th Floor
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Toronto, Ontario M5G1E6
ATTENTION: VICE-PRESIDENT
Telecopy: (416) 813-4555
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 HOLDERS. Any and all notices to be given and any documents
to be sent to any Holders may be given or sent to the address of such holder
shown on the register of holders of Exchangeable Shares in any manner permitted
by the by-laws of the Company 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 Holder by the Trustee or by the Company, or by
such Holder to the Trustee or to the Parent or the Company, the making of such
payment or sending of such document sent through the post shall be at the risk
of the Company, in the case of payments made or documents sent by the Trustee or
the Company, and the Holder, in the case of payments made or documents sent by
the Holder.
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.
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. The Parent agrees that any action or proceeding arising
out of or relating to this trust agreement may be instituted in the courts of
Ontario, waives 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 agrees 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 Company at its registered office in the Province of Ontario as the
Parent's attorney for service of process.
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IN WITNESS WHEREOF, the parties hereto have caused this trust
agreement to be duly executed as of the date first above written.
SYMANTEC CORPORATION
By
-------------------------------
-------------------------------
DELRINA CORPORATION
By
-------------------------------
-------------------------------
THE R-M TRUST COMPANY
By
-------------------------------
-------------------------------
[VOTING AND EXCHANGE TRUST AGREEMENT]
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EXHIBIT 6.2(B)(III)
RESTATED CERTIFICATE OF INCORPORATION
RESTATED CERTIFICATE OF INCORPORATION
OF
SYMANTEC CORPORATION
(A DELAWARE CORPORATION)
ARTICLE 1
The name of the Corporation is Symantec Corporation.
ARTICLE 2
The address of the registered office of the Corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware
19801. The name of its registered agent at such address is The Corporation
Trust Company.
ARTICLE 3
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE 4
4.1 CLASSES OF STOCK. This corporation is authorized to issue three
classes of stock to be designated "Common Stock," "Preferred Stock" and "Special
Voting Stock." Each share of Common Stock and each share of Preferred Stock
shall have a par value of $0.01. There shall be one share designated as Special
Voting Stock, such share of Special Voting Stock shall have a par value of
$1.00. The total number of shares which the corporation is authorized to issue
is one hundred one million and one (101,000,001). One hundred million
(100,000,000) shares shall be Common Stock, one million (1,000,000) shares shall
be Preferred Stock, and one (1) share shall be Special Voting Stock.
4.2 RIGHTS, PRIVILEGES AND RESTRICTIONS. The rights, privileges and
restrictions of the Common Stock and the Special Voting Stock shall be set forth
in this Article 4.
4.3 PREFERRED STOCK SERIES DETERMINATION. The Preferred Stock may be
issued from time to time in one or more series. The Board of Directors is
authorized to provide for the issuance of such shares of Preferred Stock in one
or more series, to establish from time to time the number of shares to be
included in each such series, to fix the designation, powers, preferences and
rights of the shares of each such series and any qualifications, limitations or
restrictions thereof, and to increase or decrease the number of shares of any
such series (but not below the number of shares of such series then
outstanding).
<PAGE>
4.4 VOTING RIGHTS.
4.4.1 GENERAL. Except as otherwise required by law or this
Restated Certificate of Incorporation, (i) each holder of record of Common Stock
shall have one vote in respect of each share of stock held by the holder of the
books of the Corporation, and (ii) the holder of record of the share of Special
Voting Stock shall have a number of votes equal to the number of Exchangeable
Non-Voting Shares ("Exchangeable Shares") of Delrina Corporation, an Ontario
corporation, from time to time which are not owned by the Corporation, any of
its subsidiaries or any person directly or indirectly controlled by or under
common control of the Corporation, in each case for the election of directors
and on all matters submitted to a vote of stockholders of the Corporation. Any
vacancy in the Board of Directors occurring because of the death, resignation or
removal of a director elected by the holders of Common Stock and Special Voting
Stock shall be filled by the vote or written consent of the holders of such
Common Stock and Special Voting Stock or, in the absence of action by such
holders, such vacancy shall be filled by action of the remaining directors. A
director elected by the holders of Common Stock and Special Voting Stock may be
removed from the Board of Directors with or without cause by the vote or consent
of the holders of such Common Stock and Special Voting Stock, as provided by the
Delaware General Corporation Law. For the purpose hereof, "control" (including
the correlative meanings, the terms "controlled by" and "under common control
of") as applied to any person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
that person through the ownership of voting securities, by contract or
otherwise.
4.4.2 COMMON STOCK AND SPECIAL VOTING STOCK IDENTICAL IN
VOTING. In respect of all matters concerning the voting of shares, the Common
Stock and the Special Voting Stock shall vote as a single class and such voting
rights shall be identical in all respects.
4.5 LIQUIDATION. In the event of any liquidation,
dissolution or winding up of the Corporation, the holders of Common Stock shall
be entitled to receive, pro rata, all of the remaining assets of the Corporation
available for distribution to its stockholders and the holders of Special Voting
Stock shall not be entitled to receive any such assets.
4.6 DIVIDENDS. The holders of shares of Common Stock shall
be entitled to receive, when, as and if declared by the Board of Directors, out
of the assets of the Corporation which are by law available therefor, dividends
payable either in cash, in property or in shares of capital stock and the
holders of Special Voting Stock shall not be entitled to receive any such
dividends.
4.7 SPECIAL VOTING STOCK.
4.7.1 Pursuant to the terms of that certain Combination
Agreement, dated as of July 5, 1995, by and among the Corporation and Delrina
Corporation, an Ontario corporation, one share of Special Voting Stock is being
issued to the trustee (the "Trustee") under the Voting and Exchange Trust
Agreement, dated as of ________, 1995 by and between the Corporation, Delrina
Corporation and the Trustee.
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4.7.2 The holder of the share of Special Voting Stock is
entitled to exercise the voting rights attendant thereto in such manner as such
holder desires.
4.7.3 At such time as the Special Voting Stock has no votes
attached to it because there are no Exchangeable Shares of Delrina Corporation
outstanding which are not owned by the Corporation, any of its subsidiaries or
any person directly or indirectly controlled by or under common control of the
Corporation, and there are no shares of stock, debt, options or other agreements
of Delrina Corporation which could give rise to the issuance of any Exchangeable
Shares of Delrina Corporation to any person (other than the Corporation, any of
its subsidiaries or any person directly or indirectly controlled by or under
common control of the Corporation), the Special Voting Stock shall be canceled.
ARTICLE 5
The stockholders of the Corporation holding a majority of the Corporation's
outstanding voting stock shall have the power to adopt, amend or repeal Bylaws.
The Board of Directors of the Corporation shall also have the power to adopt,
amend or repeal Bylaws of the Corporation, except as such power may be expressly
limited by Bylaws adopted by the stockholders.
ARTICLE 6
Election of the Directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide.
ARTICLE 7
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
Any repeal or modification of the foregoing provisions of this Article 7
shall be prospective only, and shall not adversely affect any limitation on the
personal liability of a director of the Corporation existing at the time of such
repeal or modification.
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Exhibit 11.01
SYMANTEC CORPORATION
COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------
(In thousands, except per share data) 1995 1994
---------------------------------------------- ----------- --------
<S> <C> <C>
Primary Net Income Per Share
Net income $ 11,700 $ 1,047
----------- --------
----------- --------
Weighted average number of common
shares outstanding during the period 37,966 35,118
Shares issuable from assumed exercise
of options 2,637 823
----------- --------
Common and common stock equivalent shares
outstanding for purpose of calculating
primary net income per share 40,603 35,941
----------- --------
----------- --------
Primary net income per share $ 0.29 $ 0.03
----------- --------
----------- --------
Fully Diluted Net Income Per Share
Net income $ 11,700 $ 1,047
Interest on assumed conversion of convertible
subordinated debentures, and assumed
repayment of short-term and long-term
borrowings and investment in U.S.
government securities, net of income
tax effect 177 295
----------- --------
Net income, as adjusted $ 11,877 $ 1,342
----------- --------
----------- --------
Weighted average number of common
shares outstanding during the period 37,966 35,118
Shares issuable from assumed exercise
of options 3,165 823
Shares issuable from assumed conversion
of convertible subordinated debentures 1,250 2,083
----------- --------
Total shares for purpose of calculating
fully diluted net income per share 42,381 38,024
----------- --------
----------- --------
Fully diluted net income per share $ 0.28 $ 0.04*
----------- --------
----------- --------
<FN>
* This calculation is submitted in accordance with Regulation S-K item 601
(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15 because it
produces an anti-dilutive result.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted form Symantec
Corporation's Quarterly Report on Form 10-Q for the period ended June 30,1995
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 25,467
<SECURITIES> 88,258
<RECEIVABLES> 53,726
<ALLOWANCES> (4,201)
<INVENTORY> 3,313
<CURRENT-ASSETS> 180,593
<PP&E> 84,538
<DEPRECIATION> (52,835)
<TOTAL-ASSETS> 224,765
<CURRENT-LIABILITIES> 70,623
<BONDS> 15,293
<COMMON> 386
0
0
<OTHER-SE> 138,463
<TOTAL-LIABILITY-AND-EQUITY> 224,765
<SALES> 90,109
<TOTAL-REVENUES> 90,109
<CGS> 14,915
<TOTAL-COSTS> 14,915
<OTHER-EXPENSES> 61,720
<LOSS-PROVISION> 133
<INTEREST-EXPENSE> 439
<INCOME-PRETAX> 14,624
<INCOME-TAX> 2,924
<INCOME-CONTINUING> 11,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,700
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.28
</TABLE>
