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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CAERE CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE ____ 94-2250509
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification
Number)
100 COOPER COURT
LOS GATOS, CALIFORNIA 95030
(408) 395-7000
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
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ROBERT G. TERESI
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
100 COOPER COURT
LOS GATOS, CALIFORNIA 95030
(408) 395-7000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------
COPIES TO:
LEE F. BENTON, ESQ.
JULIE M. ROBINSON, ESQ.
COOLEY GODWARD LLP
FIVE PALO ALTO SQUARE
3000 EL CAMINO REAL
PALO ALTO, CA 94306-2155
(415) 843-5000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is filed in a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement of the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
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Common Stock, $0.001 par value 300,000 $7.1875 $2,156,250 $653.41
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(1) Estimated in accordance with Rule 457(c) solely for the purpose of computing
the amount of the registration fee based on the average of the high and low
prices of the Company's Common Stock as reported on the Nasdaq National
Market System on May 16, 1997.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PROSPECTUS
300,000 SHARES
CAERE CORPORATION
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COMMON STOCK
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This Prospectus relates to a total of 300,000 shares of Common Stock (the
"Shares"), with a par value of $0.001 (the "Common Stock") of Caere Corporation
(the "Company" or "Caere") which are being offered and sold by certain
stockholders of the Company (the "Selling Securityholders"). The Shares were
issued by the Company in an acquisition pursuant to an Agreement and Plan of
Merger and Reorganization by and among: Caere Corporation; ViewStar Acquisition
Corp.; Formonix, Inc.; and Mr. Lynn J. Formanek and Mr. David L. Formanek, dated
as of March 31, 1997 (the "Merger Agreement").
The Shares may be offered by the Selling Securityholders from time to time
in transactions on the Nasdaq National Market System, in privately negotiated
transactions or a combination of such methods of sale, at fixed prices that may
be changed, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. The Selling
Securityholders may effect such transactions by selling the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Securityholders or the
purchasers of the Shares for whom such broker-dealers may act as agent or to
whom they sell as principal or both (which compensation to a particular
broker-dealer might be in excess of customary commissions). See "Selling
Securityholders" and "Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the Shares
by the Selling Securityholders hereof. See "Plan of Distribution."
The Selling Securityholders, directly or through agents, dealers or
underwriters, may sell the Shares offered hereby
from time to time on terms to be determined at the time of sale. The Company's
Common Stock is traded on the Nasdaq National Market System under the symbol
CAER.
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THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 5.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
No underwriting commissions or discounts will be paid by the Company in
connection with this offering. Estimated expenses payable by the Company in
connection with this offering are $16,904. The aggregate proceeds to the
Selling Securityholders from the sale of the Shares will be the purchase price
of the Shares sold less the aggregate agents' commissions and underwriters'
discounts, if any, and other expenses of issuance and distribution not borne by
the Company. See "Plan of Distribution."
The Selling Securityholders and any broker-dealers, agents or underwriters
that participate with the Selling Securityholders in the distribution of the
Shares may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended (the "Act"), and any commission received by them and any
profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Act. The Company has agreed to
indemnify the Selling Securityholders and certain other persons against certain
liabilities, including liabilities under the Act.
The date of this Prospectus is May __, 1997.
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No person is authorized in connection with any offering made hereby to
give any information or to make any representation not contained or incorporated
by reference in this Prospectus, and any information or representation not
contained or incorporated herein must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell,
or a solicitation of an offer to buy, by any person in any jurisdiction in which
it is unlawful for such person to make such offer or solicitation. Neither the
delivery of this Prospectus at any time nor any sale made hereunder shall, under
any circumstances, imply that the information herein is correct as of any date
subsequent to the date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the Commission's
following Regional Offices: Chicago Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and New York Regional
Office, 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of
such material can be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of such
Web site is http://www.sec.gov. The Company's Common Stock is quoted on the
Nasdaq National Market System, and such reports, proxy statements and other
information can also be inspected at the offices of The Nasdaq Operations, 1735
K Street, N.W., Washington, D.C. 20006.
Additional information regarding the Company and the Shares offered hereby
is contained in the Registration Statement on Form S-3 and the exhibits thereto
filed with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information
contained in such Registration Statement and the exhibits thereto. Statements
contained in this Prospectus regarding the contents of any document or contract
may be incomplete and, in each instance, reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statement. For
further information pertaining to the Company and the Shares, reference is made
to the Registration Statement and the exhibits thereto, which may be inspected
without charge at, and copies thereof may be obtained at prescribed rates from,
the office of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are by this reference incorporated in and made a part of
this Prospectus:
(1) The Annual Report on Form 10-K for the fiscal year ended December 31,
1996, filed on March 31, 1997, including all matters incorporated by
reference therein;
(2) The Proxy Statement for the Company's 1997 Annual Meeting of Stockholders,
as amended, filed on April 9, 1997, including all matters incorporated by
reference therein;
(3) The Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1997, filed on May 12, 1997, including all matters incorporated by
reference therein; and
(4) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A effective November 10, 1989 and the
description of the Company's Preferred Share Purchase Rights set forth in
the Company's Registration Statement on Form 8-A effective April 22, 1991.
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All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering shall be deemed to be incorporated by reference
herein and to be a part of this Prospectus from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents or into this Prospectus) will be
provided without charge to each person, including any beneficial owner to whom
this Prospectus is delivered, upon a written or oral request to Caere
Corporation, Attention: Investor Relations, 100 Cooper Court, Los Gatos,
California, 95030, telephone number (408) 395-7000.
The discussions in this Prospectus and the documents incorporated by
reference herein contain forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein and in such incorporated documents. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
under the heading "Risk Factors" herein, as well as those discussed in the
documents incorporated herein by reference.
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3.
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THE COMPANY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE HEREIN OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS.
Caere designs, develops, manufactures, and markets optical character
recognition ("OCR") software and hardware for converting scanned and faxed
images into computer usable text, as well as desktop forms and information
management products.
Caere Corporation was originally incorporated in California in September
1973 and reincorporated in Delaware in August 1989. The Company's executive
offices are located at 100 Cooper Court, Los Gatos, California 95030, and its
telephone number is (408) 395-7000.
THE OFFERING
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Shares offered .............. Up to 300,000 Shares, all of which are being
offered by the Selling Securityholders.(1)
Use of Proceeds.............. The Company will not receive any of the proceeds
from the sale of the Shares by the Selling
Securityholders.
Nasdaq Symbol................ CAER.
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(1) The 300,000 shares of Common Stock were issued by the Company pursuant to
the Merger Agreement.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Securityholders.
DIVIDEND POLICY
The Company has never paid cash dividends. The Company's Board of
Directors currently intends to retain any earnings for use in the Company's
business and does not anticipate paying any cash dividends in the foreseeable
future.
This Prospectus includes trademarks and trade names of the Company and certain
other companies.
4.
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RISK FACTORS
The following factors should be considered carefully with the information
provided elsewhere in this Prospectus in evaluating an investment in the Shares
offered hereby.
This Prospectus contains forward-looking statements which involve risks
and uncertainties. The Company's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth in the following Risk Factors and elsewhere
in this Prospectus.
RISK OF TRANSITION OF CAERE BUSINESS MODEL
Caere continues to transition its business model due to the changing
dynamics of the marketplace. In the fourth quarter of 1994, Caere began to
"bundle" limited functionality versions of its OmniPage software recognition
products with scanner products from various manufacturers. The Company's
objective in bundling its software products with scanners was to expand the
overall market for OCR software by providing a larger number of scanner
purchasers with experience in the advantages of optical character recognition
and then upgrade these users to fully-featured products. "Light" versions, with
limited capabilities, are now bundled with most scanners being sold. The success
of this business model, compared to Caere's former model of selling its software
primarily at higher prices with lower unit volumes, will depend upon a decision
by a significant proportion of customers who first receive OCR software in a
bundled form to upgrade to a newer or more fully featured version of the
Company's software. Such an upgrade is typically sold at a substantially lower
price than the price of a fully featured non-upgrade product. The Company
believes that bundles and upgrades will become a larger portion of its total
revenues and unit sales in the future.
There can be no assurance that Caere's continued transition to the "bundle
and upgrade" business model will be successful and provide sufficient increases
in unit volume in the future to offset reduced per-unit revenue and gross
margin. In addition, customers using the bundled products may defer or forego
the purchase of Caere's more fully featured versions of OmniPage and WordScan
products if they find that the bundled products satisfy their recognition needs.
LACK OF PRODUCT REVENUE DIVERSIFICATION
Caere derived approximately 72% of sales in 1996 and 69% of sales in 1995
from the OmniPage line of products. Caere expects that this software product
will continue to account for a majority of the Company's sales in the future. A
decline in demand for the product as a result of competition, technological
change or other factors would have a material adverse effect on the Company's
results of operations.
MATURE MARKETS FOR CERTAIN OCR PRODUCTS
For fiscal years ended December 31, 1996, 1995, and 1994, Caere derived
approximately 14%, 23% and 15%, respectively, of its net revenues from sales of
its transaction processing OCR and bar code hardware products. The market for
both of these sets of products is relatively mature and may not be subject to
growth or expansion by the Company in the future. There can be no assurance that
Caere's hardware-based transaction processing products will continue to be a
significant source of net revenues for the Company.
FLUCTUATING REVENUES AND OPERATING RESULTS
Caere's revenues and operating results have fluctuated in the past and the
Company's future revenues and operating results are likely to do so in the
future, particularly on a quarterly basis. Caere's experience has been that a
disproportionately large percentage of shipments has occurred in the third month
of each fiscal quarter and
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that shipments tend to be concentrated in the latter half of that month. Because
backlog early in a quarter is not generally large enough to assure that Caere
will meet its revenue target for any particular quarter, quarterly results are
difficult to predict until the end of the quarter. A shortfall in shipments at
the end of any particular quarter may cause the results for that quarter to fall
significantly short of anticipated levels.
The Company's quarterly operating results may continue to fluctuate due to
numerous other factors. Some of these factors include the demand for the
Company's products, seasonality, customer order deferrals in anticipation of new
versions of the Company's products, the introduction of new products and product
enhancements by the Company or its competitors, including the effects of filling
the distribution channels following such introductions and of potential delays
in availability of announced or anticipated products, price changes by the
Company or its competitors, product sales mix, timing of acquisitions and
associated costs, and timing of significant marketing and sales promotions.
COMPETITION AND PRICE EROSION
The information management market is highly competitive and subject to
rapid change along with constant pressure to reduce prices. Caere's competition
within the microcomputer software industry ranges from large corporations to
small independent software vendors. Caere also expects to encounter continued
competition both from established companies and from new companies that are now
developing, or may develop, competing products. Competition in the software
products market can be grouped into the following categories:
Page recognition products contend with competition in two markets. First,
several companies offer packaged OCR application programs through the retail
distribution channel. These include Xerox Imaging Systems and several small
independent software vendors. The Company faces significant price erosion and
competition in the retail channel.
The second competitive market for page recognition products is the
original equipment manufacturer ("OEM") and reseller market in which companies
license the Company's OCR technology to incorporate into different application
software products or "bundle" the technology with related hardware products such
as scanners or fax modems. Competitors include Xerox Imaging Systems and several
small independent software vendors. The Company experiences significant price
competition in the OEM market and expects this to continue. In addition, the
Company's "bundled" OCR products themselves present competition to the Company's
fully featured shrinkwrap product. Caere is also subject to the risk that
significant portions of the functionality provided by its OCR products could be
incorporated into computer operating systems such as those developed and
marketed by Microsoft Corporation and International Business Machines, Inc.
PageKeeper has several direct competitors offering competing products in
the growing desktop document management market. These competing products
include, but are not limited to, PaperPort Deluxe by Visoneer, Paper Master by
Documagix, and Pagis by Xerox Imaging Systems. With decreasing scanner prices
driving affordable scanning solutions into the mainstream, Caere expects to face
increasing competition in this product category from a variety of software
developers in the future.
OmniForm competes against various products in the electronic forms market.
In the forms creation segment, where OmniForm's technology takes an existing
paper form and converts it into an electronic version, OmniForm has little
competition. In the forms design and print segment of the electronic forms
market, OmniForm competes with products such as Form Tool Gold and Form Tool 97
by IMSI. In the form filling and submit segment of the electronic forms market,
OmniForm competes with products including JetForm and FormFlow by JetForm. In
the Internet/intranet publish and submit segment of the electronic forms market,
OmniForm competes with JetForm by JetForm; however, as the market for these
products continues to develop, Caere expects to face increasing competition in
this product category from a variety of software developers in the future.
6.
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The major competition in the OCR segment of the Company's hardware
business is Siemens CGK. In the bar code segment of the hardware business there
are numerous competitors, including Symbol Technologies.
Many of the Company's competitors have substantially greater financial,
marketing, recruiting and training resources than the Company. Accordingly, the
Company's success will depend in part upon its ability to develop product
enhancements and new products that keep pace with continuing changes in
technology and customer preferences while remaining price competitive. There can
be no assurance that the Company will be able to successfully develop product
enhancements or new products to keep abreast of changing technologies, that it
will be able to introduce such products on a timely basis or that any such
products or enhancements will be successful in the marketplace. The Company's
failure to develop product enhancements or to adapt its products to
technological change on a timely basis would have a material adverse effect on
the Company's business and results of operations.
DEPENDENCE ON DISTRIBUTION AND SUPPORT
Domestically, the Company markets its software products through
distributors, including Ingram Micro, Merisel, Tech Data, computer superstores
such as Best Buy, CompUSA, Computer City, and Egghead, mail order houses
including PC Connection, MicroWarehouse, and Computer Discount Warehouse, and
office superstores such as OfficeMax and Office Depot. Caere also markets its
software products directly to end user customers by outsourcing telemarketing
and order fulfillment services to Softbank Services Group. High-speed and
integrator products are primarily sold through Law Cypress Distributing Company,
which works with the Company to serve value-added resellers and systems
integrators of imaging products. The Company markets its transaction processing
OCR and bar code products primarily through independent distributors,
value-added resellers ("VARs"), and hardware OEMs. The Company's agreements with
OEMs typically grant an OEM the right to distribute the Company's products with
the OEMs' microcomputers and other data collection equipment. VARs purchase the
Company's products and incorporate them into systems integrated with the
products of other manufacturers.
Sales of software products to Ingram Micro represented approximately 28%,
22%, and 23% of the Company's net revenues during 1996, 1995, and 1994,
respectively. Sales of software products through Softbank Services Group
represented approximately 15%, 9%, and 2% of the Company's net revenues during
1996, 1995, and 1994, respectively. Should either of these customers have a
significant change in its quarterly buying pattern or its financial condition,
the Company could experience a material adverse impact on its business and
financial results. In addition, there are increasing numbers of companies
competing for access to distribution channels, and distributors and retailers
often carry competing products. Retailers of Caere's products typically have a
limited amount of shelf space and promotional resources for which there is
intense competition. There can be no assurance that distributors and retailers
will continue to provide the Company's products with adequate levels of shelf
space and promotional support. Failure to do so would have a material adverse
effect on the Company's results of operations. Also, due in part to the
historical volatility of the personal computer industry, certain of Caere's VARs
and OEMs have from time to time experienced declining profit margins, cash flow
shortages and other financial difficulties. If the Company's resellers were to
experience financial difficulties, the Company's results of operations could be
adversely affected.
DEPENDENCE ON PROPRIETARY RIGHTS
The Company relies upon a combination of proprietary technology, trade
secrets, know-how, continuing technological innovations and licensing
opportunities to maintain its competitive position. The Company attempts to
protect its technology and trade secrets with patents, copyrights, trade secret
laws, technical measures and non-disclosure agreements. The Company's policy is
to file patent and copyright applications to protect technology, inventions and
improvements that are important to the development of its business. The Company
has been issued a series of patents which directly relate to its products.
Assurance cannot be given, however, that any patents issued
7.
<PAGE> 9
to the Company will not be challenged, invalidated or circumvented or that the
rights granted by the patents or copyrights will provide competitive advantages
to the Company.
In order to protect its ownership rights in its software products, the
Company licenses such products to OEMs and resellers on a non-exclusive basis
with contractual restrictions on reproduction, distribution and transferability.
In addition, the Company generally licenses its software in object code form
only. The Company licenses its software products to end users by use of a
"shrink-wrap" customer license that restricts the end user to personal use of
the product. Despite these contractual restrictions, it may be possible for
competitors or users to illegally copy the software or obtain information which
the Company regards as proprietary.
The Company also relies on trade secrets and proprietary know-how. The
Company has been, and will continue to be, required to disclose its trade
secrets and proprietary know-how to employees and consultants. Although the
Company seeks to protect its trade secrets and proprietary know how by entering
into confidentiality agreements with such persons, there can be no assurance
that these agreements will not be breached, that the Company would have an
adequate remedy for any breach, or that the Company's trade secrets will not
otherwise become known or be independently discovered by competitors.
Because of technological developments in the industry in which the Company
markets its products, it is possible that certain of the Company's products may
infringe third party proprietary rights. From time to time the Company has
received, and in the future may receive, notices of claims of infringement. In
response to these claims, the Company may have to obtain licenses for an
allegedly infringing product or stop selling such product and be liable for
damages. There can be no assurance that any required licenses or rights could be
obtained on commercially reasonable terms.
In addition, Caere has developed products in the past that incorporate
technology based on licenses received from third parties. The Company's ability
to continue to develop and commercialize its products will be affected by its
ability to renew existing technology licenses and to obtain technology licenses
from third parties in the future. There can be no assurance that the Company
will be able to renew its current licenses or obtain any necessary licenses in
the future. The failure to renew existing licenses or to obtain any licenses
that may be required in the future on commercially reasonable terms could have a
material adverse effect on the Company's business and results of operations.
Policing unauthorized use of technology is difficult, especially in the
software industry. Software piracy can be expected to remain a persistent
problem for the software industry for the foreseeable future. Such piracy can be
particularly egregious in international markets in which the Company distributes
its products. The failure to prevent piracy of the Company's products could have
a material adverse effect on the Company's business and results of operations.
PRODUCT DEVELOPMENT RISKS
The development and enhancement of the Company's OCR and desktop document
management products have historically absorbed and are expected to continue to
consume the greatest part of the Company's development effort. The Company
believes that it must continue to upgrade and enhance its existing products to
ensure that its products remain competitive.
During 1996, 1995, and 1994, research and product development expenses
were approximately $7,069,000, $7,915,000, and $9,072,000, respectively. In
addition to internal product development, the Company incorporates software
produced by other companies into its products. All such incorporation or use is
pursuant to licensing agreements. There can be no assurance that the research
and development expenses incurred will not exceed development budgets or that
new products will achieve market acceptance and generate sales sufficient to
offset
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<PAGE> 10
development costs. There also can be no assurance that license agreements for
incorporated third party software will continue to be available to the Company
on acceptable terms.
From time to time, the Company has experienced delays in product
development and "debugging" efforts, and could experience such delays in the
future. Significant delays in developing, completing, or shipping new or
enhanced products could materially adversely affect the Company's financial
results. Furthermore, as the Company's products become more complex, development
cycles become longer and more expensive. There can be no assurance that the
Company will be able to respond effectively to technological changes or new
product announcements by others, or that the Company's product development
efforts will be successful.
DEPENDENCE ON SOLE SOURCE SUPPLIER
Most of the components used in the manufacture of the Company's products
are available from multiple sources of supply. Certain components used in the
manufacture of the Company's OCR products are currently available only from a
single source. Although the Company generally maintains a several-month
inventory level of these components, failure of a single-source supplier to
deliver required quantities of such materials could materially and adversely
affect the Company's operating results. The Company believes that, if necessary,
it could develop alternative sources of supply for these components and parts,
or re-engineer the products. However, any delays in developing such alternative
sources of supply or in the re-engineering of the products could have a material
adverse effect on the Company's business and results of operations.
DEPENDENCE ON INTERNATIONAL SALES
Internationally, the Company's products are sold through distributors. At
December 31, 1996, the Company had distributors servicing Western and Eastern
Europe, Canada, Australia, New Zealand, South Korea, Mexico, and Japan. The
Company's international revenues are subject to certain risks, such as export
controls, import restrictions, and other governmental regulations. Caere's
international revenues in 1996, 1995, and 1994 were approximately $16,391,000,
$15,154,000, and $18,125,000, respectively, representing approximately 30.1%,
29.2% and 30.7% of Caere's net revenues, respectively. The Company expects that
international revenues will continue to represent a significant percentage of
the Company's net revenues. In most cases, the Company bills its international
customers in United States dollars; therefore, such revenues are not subject to
foreign currency fluctuations. However, fluctuations in exchange rates could
affect demand for the Company's products by causing their prices to be out of
line with products priced in the local currency. The Company's international
revenues are subject to certain risks, such as export controls, import
restrictions, longer payment cycles, greater difficulties in accounts receivable
collections, and the requirement of complying with a wide variety of foreign
laws. Although Caere has not previously experienced any difficulties under
foreign law in exporting its products to other countries, there can be no
assurance that the Company will not experience such difficulties in foreign
countries in the future. Any such difficulties would have a material adverse
effect on the Company's international sales and results of operations.
RISK OF PRODUCT RETURNS
The Company's agreements with its distributors generally provide for a
limited right of return, with the distributor receiving full credit for the
product's purchase price, less any discounts, against a purchase order of equal
or greater value. The Company monitors its returns and records provisions for
estimated returns as shipments are made. During 1996, 1995, and 1994, returns
represented 3.2%, 3.7%, and 4.3% of revenues, respectively. Although Caere
believes that it provides adequate allowances for returns, there can be no
assurance that actual returns will not exceed the Company's allowances. Any
product returns in excess of recorded allowances could result in a material
adverse effect on operating results of the Company.
9.
<PAGE> 11
POSSIBLE VOLATILITY OF CAERE STOCK PRICE
The market prices for Caere's Common Stock have fluctuated widely in the
past. The management of Caere believes that such fluctuations may have been
caused by announcements of new products, quarterly fluctuations in the results
of operations and other factors including, but not limited to, changes in
conditions of the personal computer industry in general. Stock markets have
experienced extreme price volatility in recent years. This volatility has had a
substantial effect on the market prices of securities issued by Caere and other
high technology companies, often for reasons unrelated to the operating
performance of the specific companies. Caere anticipates that the market price
for its Common Stock may continue to be volatile. Such future stock price
volatility for Caere Common Stock may provoke the initiation of securities
litigation, which may divert substantial management resources and have an
adverse effect on Caere and its results of operations.
DEPENDENCE ON KEY PERSONNEL
Caere's success depends to a significant degree upon the continued
contributions of the Company's key management, marketing, product development
and operational personnel. The success of the Company will depend to a large
extent upon its ability to retain and continue to attract highly skilled
personnel. Competition for employees in the computer industry is intense, and
there can be no assurance that the Company will be able to attract and retain
enough qualified employees. If the business of the Company grows, it may become
increasingly difficult for it to hire, train and assimilate the new employees
needed. The Company's inability to retain and attract key employees could have a
material adverse effect on the Company's product development and results of
operations. Caere does not carry any key person life insurance with respect to
any of its personnel.
EFFECT OF ANTITAKEOVER PROVISIONS OF DELAWARE LAW AND CAERE'S CHARTER DOCUMENTS
Caere is a corporation organized under the laws of the state of Delaware.
Certain provisions of the Delaware Law and the charter documents of Caere may
have the effect of delaying, deferring or preventing changes in control or
management of Caere. Caere is subject to the provisions of Section 203 of the
Delaware Law, which has the effect of restricting changes in control of a
company. Caere's Board of Directors is divided into three separate classes.
Additionally, Caere's Board has the authority to issue up to 2,000,000 shares of
Preferred Stock and to fix the rights, preferences, privileges and restrictions,
including voting rights, of such shares without any further vote or action by
its stockholders. Caere also has a Preferred Share Purchase Rights Plan. The
antitakeover protections of Delaware Law, the Caere charter documents, and the
Preferred Share Purchase Rights Plan could make it more difficult for a third
party to acquire, or could discourage a third party from acquiring, a majority
of the outstanding stock of the Company.
10.
<PAGE> 12
SELLING SECURITYHOLDERS
The following table sets forth the names of the Selling Securityholders,
the number of shares of Common Stock owned by each Selling Securityholder prior
to this offering, the number of shares of Common Stock being offered for the
account of each Selling Securityholder and the number of shares of Common Stock
to be owned by each Selling Securityholder after completion of this offering.
This information is based upon information provided by the Selling
Securityholders. Because the Selling Securityholders may offer all, some or none
of their Common Stock being offered, no definitive estimate as to the number of
Shares thereof that will be held by the Selling Securityholders after such
offering can be provided.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
SHARES BENEFICIALLY SHARES BEING OWNED AFTER
SELLING SECURITYHOLDER OWNED PRIOR TO OFFERING(1) OFFERED OFFERING(1)(2)
- ---------------------- -------------------------- ------- ------------------
NUMBER Percent NUMBER PERCENT
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Lynn J. Formanek 343,750 2.6% 187,500 156,250 1.2%
David L. Formanek 206,250 1.6% 112,500 93,750 *
</TABLE>
- ---------------
* Less than 1%
(1) Based on 13,246,757 shares outstanding as of April 15, 1997. The persons
named in the table have sole voting and investment power with respect to
all shares beneficially owned by them, subject to community property laws
where applicable.
(2) Assumes the sale of all Shares offered hereby. See "Plan of
Distribution."
11.
<PAGE> 13
PLAN OF DISTRIBUTION
The Shares may be offered by the Selling Securityholders from time to
time in transactions on the Nasdaq National Market System, in privately
negotiated transactions or a combination of such methods of sale, at fixed
prices that may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. The
Selling Securityholders may effect such transactions by selling the Shares
directly or by or through agents or broker-dealers who may receive compensation
in the form of discounts, concessions or commissions from the Selling
Securityholders or the purchasers of the Shares for whom such broker-dealers may
act as agent or to whom they sell as principal or both (which compensation to a
particular broker-dealer might be in excess of customary commissions).
The Selling Securityholders and any underwriters, dealers or agents that
participate in the distribution of the Shares may be deemed to be "underwriters"
within the meaning of the Securities Act, and any discounts, commissions or
concessions received by them and any provided pursuant to the sale of the Shares
by them might be deemed to be underwriting discounts and commissions under the
Securities Act. In order to comply with the securities laws of certain states,
if applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless the Shares have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
The Company is registering the Shares offered by the Selling
Securityholders hereunder pursuant to contractual registration rights contained
in the Merger Agreement. The Company will pay substantially all of the expenses
incident to the offering and sale of the Shares to the public, other than
commissions, concessions and discounts of underwriters, dealers or agents. Such
expenses (excluding such commissions and discounts) are estimated to be
$16,904. The Merger Agreement provides for cross-indemnification of the
Selling Securityholders and the Company to the extent permitted by law, for
losses, claims, damages, liabilities and expenses arising, under certain
circumstances, out of any registration of the Shares.
12.
<PAGE> 14
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Cooley Godward LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements and schedule of Caere Corporation
as of December 31, 1996 and 1995, and for each of the years in the three-year
period ended December 31, 1996, have been incorporated by reference herein and
in the registration statement in reliance upon the report of KPMG Peat Marwick
LLP, independent auditors, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
13.
<PAGE> 15
================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION
WHERE SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
--------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information..........................................2
Incorporation of Certain Documents by Reference................2
The Company....................................................4
The Offering...................................................4
Use of Proceeds................................................4
Dividend Policy................................................4
Risk Factors...................................................5
Selling Securityholders.......................................11
Plan of Distribution..........................................12
Legal Matters.................................................13
Experts.......................................................13
</TABLE>
300,000 SHARES
CAERE CORPORATION
COMMON STOCK
------------
PROSPECTUS
------------
MAY __, 1997
================================================================================
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses payable by the Company in
connection with the sale, issuance and distribution of the securities being
registered, other than underwriting discounts and commissions. All amounts are
estimates except the SEC registration fee. None of these expenses will be paid
by the Selling Securityholders.
<TABLE>
<S> <C>
SEC Registration Fee............... $ 654
Printing and Engraving Expenses.... 1,000
Legal Fees and Expenses............ 10,000
Accounting Fees and Expenses....... 5,000
Blue Sky Fees and Expenses ........ 250
-------
Total.............................. $16,904
-------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the Delaware General Corporation Law, Caere has broad
powers to indemnify its directors and officers against liabilities they may
incur in such capacities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act"). Caere's Bylaws provide that the Company
will indemnify its directors and executive officers and may indemnify other
officers to the fullest extent permitted by law. Under Caere's Bylaws,
indemnified parties are entitled to indemnification for negligence, gross
negligence and otherwise to the fullest extent permitted by law. The Bylaws also
require Caere to advance litigation expenses incurred by its directors and
executive officers in case of stockholder derivative actions or other actions,
upon receipt of an undertaking by the indemnified party to repay such advances
if it is ultimately determined that the indemnified party is not entitled to
indemnification.
In addition, Caere's Certificate of Incorporation provides that, pursuant
to Delaware law, its directors shall not be liable for monetary damages for
breach of the directors' fiduciary duty of care to Caere and its stockholders.
This provision in the Certificate of Incorporation does not eliminate the duty
of care, and in appropriate circumstances equitable remedies such as injunctive
or other forms of non-monetary relief will remain available under Delaware law.
In addition, each director will continue to be subject to liability for breach
of the director's duty of loyalty to the Company for acts or omissions not in
good faith or involving intentional misconduct or a knowing violation of law,
for any transaction from which the director derived an improper personal benefit
or for any willful or negligent payment of unlawful dividends or any unlawful
stock repurchases or redemptions. The provision also does not affect a
director's responsibilities under any other law, such as the federal securities
laws or state or federal environmental laws.
The Company has entered into indemnity agreements with each of its
directors and executive officers. Such indemnity agreements contain provisions
that are in some respects broader than the specific indemnification provisions
contained in Delaware law.
Caere maintains a policy providing directors' and officers' liability
insurance, which insures directors and officers of Caere in certain
circumstances, with a liability limit of $7,000,000 per claim and in the
aggregate. This coverage is on a claims made basis.
II-1
<PAGE> 17
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
2.2 Agreement and Plan of Merger and Reorganization by and among: Caere
Corporation; ViewStar Acquisition Corp.; Formonix, Inc.; and Mr.
Lynn J. Formanek and Mr. David L. Formanek, dated as of March 31,
1997.
4.1 Form of Specimen Certificate for Company's Common Stock.(1)
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-3.
</TABLE>
- --------------------
(1) Filed as an exhibit to the Registration Statement on Form S-1 (No.
33-30842), as amended, and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration statement;
(2) That, for purposes of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to provisions described in Item 15, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-2
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Los Gatos, State of California, on May 22, 1997.
CAERE CORPORATION
By /s/ BLANCHE M. SUTTER
---------------------------------------------------
Blanche M. Sutter
Executive Vice President, Chief Financial Officer
and Secretary
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert G. Teresi and Blanche M. Sutter,
and each or any one of them, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him or her and in
his or her name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents, in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his or her substitutes
or substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capabilities and
on the date indicated.
<TABLE>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROBERT G. TERESI Chairman of the Board, President and May 22, 1997
- ------------------------------------ Chief Executive Officer
Robert G. Teresi (Principal Executive Officer)
/s/ BLANCHE M. SUTTER Executive Vice President, Chief May 22, 1997
- ------------------------------------ Financial Officer and Secretary
Blanche M. Sutter (Principal Financial and Accounting
Officer)
Director May __, 1997
- ------------------------------------
James K. Dutton
/s/ ROBERT J. FRANKENBERG Director May 22, 1997
- ------------------------------------
Robert J. Frankenberg
/s/ FREDERICK W. ZUCKERMAN Director May 22, 1997
- ------------------------------------
Frederick W. Zuckerman
</TABLE>
II-3
<PAGE> 19
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
2.2 Agreement and Plan of Merger and Reorganization by and among: Caere
Corporation; ViewStar Acquisition Corp.; Formonix, Inc.; and Mr.
Lynn J. Formanek and Mr. David L. Formanek, dated as of March 31,
1997.
4.1 Form of Specimen Certificate for Company's Common Stock.(1)
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-3.
</TABLE>
- ------------
(1) Filed as an exhibit to the Registration Statement on Form S-1 (No.
33-30842), as amended, and incorporated herein by reference.
II-4
<PAGE> 1
EXHIBIT 2.2
================================================================================
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
by and among:
CAERE CORPORATION
a Delaware corporation;
VIEWSTAR ACQUISITION CORP.,
a California corporation;
FORMONIX, INC.,
a Colorado corporation;
and
MR. LYNN J. FORMANEK AND MR. DAVID L. FORMANEK
---------------------------
Dated as of March 31, 1997
---------------------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 1. DESCRIPTION OF TRANSACTION.................................................................... 1
1.1 Merger of Merger Sub into the Company......................................................... 1
1.2 Effect of the Merger.......................................................................... 2
1.3 Closing; Effective Time....................................................................... 2
1.4 Articles of Incorporation and Bylaws; Directors and Officers.................................. 2
1.5 Conversion of Shares.......................................................................... 2
1.6 Closing of the Company's Transfer Books....................................................... 3
1.7 Exchange of Certificates...................................................................... 3
1.8 Restriction on Transfer....................................................................... 4
1.9 Tax Consequences.............................................................................. 5
1.10 Further Action................................................................................ 5
1.11 Fractional Shares............................................................................. 5
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS.................................................................................. 5
2.1 Due Organization; No Subsidiaries; Etc........................................................ 5
2.2 Articles of Incorporation and Bylaws; Records. ............................................... 6
2.3 Capitalization, Etc........................................................................... 6
2.4 Financial Statements.......................................................................... 7
2.5 Absence of Changes............................................................................ 7
2.6 Title to Assets............................................................................... 9
2.7 Bank Accounts; Receivables; Customers......................................................... 10
2.8 Equipment; Leasehold.......................................................................... 10
2.9 Proprietary Assets............................................................................ 11
2.10 Contracts..................................................................................... 13
2.11 Liabilities................................................................................... 15
2.12 Compliance with Legal Requirements............................................................ 15
2.13 Governmental Authorizations................................................................... 16
2.14 Tax Matters................................................................................... 16
2.15 Employee and Labor Matters; Benefit Plans..................................................... 17
2.16 Environmental Matters......................................................................... 18
2.17 Sale of Products; Performance of Services..................................................... 19
2.18 Insurance..................................................................................... 19
2.19 Related Party Transactions.................................................................... 19
2.20 Legal Proceedings; Orders..................................................................... 19
2.21 Authority; Binding Nature of Agreement........................................................ 20
2.22 Non-Contravention; Consents................................................................... 20
2.23 Full Disclosure............................................................................... 21
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB....................................... 21
3.1 Authority; Binding Nature of Agreement........................................................ 21
3.2 Valid Issuance................................................................................ 22
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 4. CERTAIN SECURITIES MATTERS.................................................................... 22
4.1 Representations of Shareholders............................................................... 22
4.2 Sale of Parent Common Stock by Shareholders................................................... 23
SECTION 5. CERTAIN COVENANTS............................................................................. 24
5.1 Filings and Consents.......................................................................... 24
5.2 Employment and Noncompetition Agreements...................................................... 24
5.3 Release....................................................................................... 24
5.4 Termination of Employee Plans................................................................. 24
5.5 FIRPTA Matters................................................................................ 24
5.6 Continuity of Interest Certificates........................................................... 24
5.7 Cross License Agreement....................................................................... 25
5.8 Software License Agreement.................................................................... 25
5.9 FormVision Code............................................................................... 25
SECTION 6. INDEMNIFICATION, ETC.......................................................................... 25
6.1 Survival of Representations, Etc.............................................................. 25
6.2 Indemnification by Shareholders............................................................... 25
6.3 Deductible; Ceiling........................................................................... 26
6.4 Satisfaction of Indemnification Claim......................................................... 26
6.5 No Contribution............................................................................... 26
6.6 Interest...................................................................................... 27
6.7 Defense of Third Party Claims................................................................. 27
6.8 Exercise of Remedies by Indemnitees Other Than Parent......................................... 28
SECTION 7. REGISTRATION OF SHARES........................................................................ 28
7.1 Registration Statements....................................................................... 28
7.2 Indemnification............................................................................... 29
7.3 Transferability of Registration Rights........................................................ 30
7.4 Delay of Registration......................................................................... 30
SECTION 8. MISCELLANEOUS PROVISIONS...................................................................... 30
8.1 Further Assurances............................................................................ 30
8.2 Fees and Expenses............................................................................. 31
8.3 Attorneys' Fees............................................................................... 31
8.4 Notices....................................................................................... 31
8.5 Confidentiality............................................................................... 32
8.6 Headings...................................................................................... 32
8.7 Counterparts.................................................................................. 32
8.8 Governing Law; Venue.......................................................................... 33
8.9 Successors and Assigns........................................................................ 33
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
8.10 Remedies Cumulative; Specific Performance..................................................... 34
8.11 Waiver........................................................................................ 34
8.12 Amendments.................................................................................... 34
8.13 Severability.................................................................................. 34
8.14 Parties in Interest........................................................................... 34
8.15 Entire Agreement.............................................................................. 34
8.16 Construction.................................................................................. 35
</TABLE>
iii
<PAGE> 5
EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit A - Certain definitions
Exhibit B - Articles of Merger of Formonix, Inc. and ViewStar
Acquisition Corp.
Exhibit C - Directors and Officers of Surviving Corporation
Exhibit D - Form of Continuity of Interest Certificate
Exhibits E-1
to E-5 - Employment Agreements
Exhibit F - Form of Noncompetition Agreement
Exhibit G - Form of Release
Exhibit H - Form of Cross License Agreement between Caere
Corporation, Formonix, Inc., David Formanek and Lynn
Formanek, dated as of March 31, 1997
</TABLE>
iv
<PAGE> 6
AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement") is
made and entered into as of March 31, 1997, by and among: CAERE CORPORATION, a
Delaware corporation ("Parent"); VIEWSTAR ACQUISITION CORP., a California
corporation and a wholly owned subsidiary of Parent ("Merger Sub"); FORMONIX,
INC., a Colorado corporation (the "Company"); and MR. LYNN J. FORMANEK AND MR.
DAVID L. FORMANEK, the sole shareholders of the Company (together, the
"Shareholders"). Certain capitalized terms used in this Agreement are defined in
Exhibit A.
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger of
Merger Sub into the Company in accordance with this Agreement and the Colorado
Business Corporation Act (the "Merger"). Upon consummation of the Merger, Merger
Sub will cease to exist, and the Company will become a wholly owned subsidiary
of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
C. This Agreement has been adopted and approved by the respective
boards of directors of Parent, Merger Sub and the Company.
D. The Shareholders own an aggregate of 300,000 shares of the voting
common stock, no par value per share, of the Company, representing 100% of the
outstanding capital stock of the Company. (The voting common stock, no par value
per share, of the Company is referred to in this Agreement as "Company Common
Stock.")
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF MERGER SUB INTO THE COMPANY. Upon the terms and subject
to the conditions set forth in this Agreement, at the Effective Time (as defined
in Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall
1.
<PAGE> 7
cease. The Company will continue as the surviving corporation in the Merger (the
"Surviving Corporation").
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth
in this Agreement and in the applicable provisions of the Colorado Business
Corporation Act.
1.3 CLOSING; EFFECTIVE TIME. Contemporaneously with the execution and
delivery of this Agreement, the consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Cooley Godward
LLP, Five Palo Alto Square, 3000 El Camino Real, Palo Alto, CA 94306-2155. For
purposes of this Agreement, "Closing Date" shall mean the time and date as of
which the Closing actually takes place. Contemporaneously with the Closing, a
properly executed certificate of merger conforming to the requirements of the
Colorado Business Corporation Act (the "Certificate of Merger") shall be filed
with the Secretary of State of the State of Colorado. The Merger shall take
effect at the time the Certificate of Merger is filed with the Secretary of
State of the State of Colorado (the "Effective Time").
1.4 ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
Unless otherwise determined by Parent prior to the Effective Time:
(a) the Articles of Incorporation of the Surviving Corporation
shall be amended as of the Effective Time as set forth in the Articles
of Merger of Formonix, Inc. and ViewStar Acquisition Corp., attached
hereto as Exhibit B;
(b) the Bylaws of the Surviving Corporation shall be amended
and restated as of the Effective Time to conform to the Bylaws of
Merger Sub as in effect immediately prior to the Effective Time; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals
identified on Exhibit C.
1.5 CONVERSION OF SHARES.
Subject to Section 1.7(b), at the Effective Time, by virtue of
the Merger and without any further action on the part of Parent, Merger Sub, the
Company or the Shareholders:
(i) each share of Company Common Stock outstanding
immediately prior to the Effective Time shall be converted
into the right to receive 1.83333 shares of common stock, par
value $.001 per share, of Parent ("Parent Common Stock") to be
issued pursuant to this Agreement; and
(ii) each share of the common stock, no par value, of
Merger Sub outstanding immediately prior to the Effective Time
shall be converted into one share of common stock of the
Surviving Corporation.
2.
<PAGE> 8
1.6 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time,
holders of certificates representing shares of Company Common Stock that were
outstanding immediately prior to the Effective Time shall cease to have any
rights as shareholders of the Company, and the stock transfer books of the
Company shall be closed with respect to all such shares of Company Common Stock
outstanding immediately prior to the Effective Time. No further transfer of any
such shares of the Company's capital stock shall be made on such stock transfer
books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any of such shares of Company Common Stock
(a "Company Stock Certificate") is presented to the Surviving Corporation or
Parent, such Company Stock Certificate shall be canceled and shall be exchanged
as provided in Section 1.7.
1.7 EXCHANGE OF CERTIFICATES.
(a) At the Closing, the Shareholders will deliver to Parent
their certificates representing all of the outstanding shares of Company Common
Stock. Subject to Section 1.11, upon surrender of a Company Stock Certificate to
Parent for exchange, (1) each Shareholder shall be entitled to receive in
exchange therefor a certificate representing the number of shares of Parent
Common Stock that such Shareholder has the right to receive pursuant to the
provisions of Section 1.5(a)(i), and (2) the Company Stock Certificate so
surrendered shall be canceled. If any Company Stock Certificate shall have been
lost, stolen or destroyed, Parent may, in its discretion and as a condition
precedent to the issuance of any certificate representing Parent Common Stock,
require the Shareholder of such lost, stolen or destroyed Company Stock
Certificate to provide an appropriate affidavit and to deliver a bond (in such
sum as Parent may reasonably direct) as indemnity against any claim that may be
made against Parent or the Surviving Corporation with respect to such Company
Stock Certificate.
(b) The shares of Parent Common Stock to be issued in the
Merger shall be characterized as "restricted securities" for purposes of Rule
144 under the Securities Act, and each certificate representing any of such
shares shall bear a legend identical or similar in effect to the following
legend (together with the legend required pursuant to Section 1.8(a) below and
any other legend or, legends required pursuant to applicable state securities
laws or otherwise):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED,
PLEDGED OR HYPOTHECATED UNLESS REGISTERED UNDER THE ACT OR
UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
ACT IS AVAILABLE."
(c) Parent and the Surviving Corporation shall be entitled to
deduct and withhold from any consideration payable or otherwise deliverable to
any Shareholder pursuant to this Agreement such amounts as Parent or the
Surviving Corporation may be required to deduct or withhold therefrom under the
Code or under any provision of state, local or foreign tax law. To the extent
such amounts are so deducted or withheld, such amounts shall be treated
3.
<PAGE> 9
for all purposes under this Agreement as having been paid to the Person to whom
such amounts would otherwise have been paid.
(d) Neither Parent nor the Surviving Corporation shall be
liable to any holder or former holder of Company Common Stock for any shares of
Parent Common Stock (or dividends or distributions with respect thereto), or for
any cash amounts, delivered to any public official pursuant to any applicable
abandoned property, escheat or similar law.
1.8 RESTRICTION ON TRANSFER.
(a) Of the shares of Parent Common Stock to be issued to the
Shareholders pursuant to this Agreement, 250,000 shall be subject to a lock-up
restriction (the "Lock-Up Shares") and shall bear the following legend, in
addition to the legend or legends required pursuant to Section 1.7(b) above:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCK-UP
AGREEMENT AND MAY NOT BE SOLD OR TRANSFERRED UNTIL THE TIME SET FORTH
IN THE AGREEMENT. COPIES OF THE AGREEMENT COVERING THE ISSUANCE OF
THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST
BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF THE CORPORATION."
(b) The restrictions on the Lock-Up Shares shall be released
on the earlier of (i) ten years from the date of this Agreement or (ii) as set
forth below within 45 days of the achievement of each of the following Net
Revenue Targets from sales of OmniForm(TM) Products:
<TABLE>
<CAPTION>
NET REVENUE * MAXIMUM NUMBER OF LOCK-UP
MEASUREMENT PERIOD TARGET SHARES RELEASED PER SHAREHOLDER
LYNN FORMANEK DAVID FORMANEK
------------- --------------
<S> <C> <C> <C>
April 1, 1997 through $6,300,000 78,125 46,875
March 31, 1998
April 1, 1998 through $8,400,000 46,875 28,125
March 31, 1999
April 1, 1999 through $9,900,000 31,250 18,750
March 31, 2000
</TABLE>
*In the event that actual Net Revenue in any of the above measurement periods is
less than the respective Net Revenue Target, the number of Lock-Up Shares
released from the lock-up restriction in each of the above measurement periods
shall be pro rated in each of the measurement periods based on the percentage of
Net Revenue Target achieved. For example, if sales in the April 1, 1997 through
March 31, 1998 measurement period generate $5,040,000 (80% of the Net Revenue
Target), an aggregate of 100,000 Lock-Up Shares will be released
4.
<PAGE> 10
from restriction. Any remaining Lock-Up Shares will be released at the end of
ten years from the date of issuance.
1.9 TAX CONSEQUENCES. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.10 FURTHER ACTION. If, at any time after the Effective Time, any
further action is determined by Parent to be necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation or Parent
with full right, title and possession of and to all rights and property of
Merger Sub and the Company, the officers and directors of the Surviving
Corporation and Parent shall be fully authorized (in the name of Merger Sub, in
the name of the Company and otherwise) to take such action.
1.11 FRACTIONAL SHARES. No fractional shares of Parent Common Stock
shall be issued in connection with the Merger, and no certificates for any such
fractional shares shall be issued. In lieu of such fractional shares, a
Shareholder who would otherwise be entitled to receive a fraction of a share of
Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock issuable to such Shareholder) shall, upon surrender of such Shareholder's
Company Stock Certificate(s), be paid in cash the dollar amount (rounded to the
nearest whole cent), without interest, determined by multiplying such fraction
by the Fair Market Value of one share of Parent Common Stock.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS
The Company and each Shareholder jointly and severally
represents and warrants, to and for the benefit of the Indemnitees, as follows:
2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado and has
all necessary power and authority: (i) to conduct its business in the manner in
which its business is currently being conducted; (ii) to own and use its assets
in the manner in which its assets are currently owned and used; and (iii) to
perform its obligations under all Contracts by which it is bound.
(b) The Company has not conducted any business under or
otherwise used, for any purpose or in any jurisdiction, any fictitious name,
assumed name, trade name or other name, other than the name "Formonix, Inc."
5.
<PAGE> 11
(c) The Company is not, and has not been, required to be
qualified, authorized, registered or licensed to do business as a foreign
corporation in any jurisdiction.
(d) Part 2.1(d) of the Disclosure Schedule accurately sets
forth (i) the names of the members of the Company's board of directors, and (ii)
the names and titles of the Company's officers. The Company's board of directors
has never established any committees.
(e) The Company has no subsidiaries, and does not hold
beneficially or of record any equity interest in any Entity.
2.2 ARTICLES OF INCORPORATION AND BYLAWS; RECORDS. The Company has
delivered to Parent accurate and complete copies of: (1) the Company's articles
of incorporation and bylaws, including all amendments thereto; (2) the stock
records of the Company; and (3) the minutes and other records of the meetings
and other proceedings (including any actions taken by written consent or
otherwise without a meeting) of the shareholders of the Company and the board of
directors of the Company. There have been no meetings or other proceedings or
actions of the shareholders of the Company or the board of directors of the
Company that are not fully reflected in such minutes or other records. There has
not been any violation of any of the provisions of the Company's articles of
incorporation or bylaws or of any resolution adopted by the Company's
shareholders or the Company's board of directors. The books of account, stock
records, minute books and other records of the Company are accurate, up-to-date
and complete, have been maintained in accordance with prudent business practices
and all applicable Legal Requirements, and are in the possession and control of
the Company.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists of:
(i) one million (1,000,000) shares of Company Common Stock, no par value, of
which three hundred thousand (300,000) shares have been issued and are
outstanding. Lynn J. Formanek and David L. Formanek, respectively, own 187,500
and 112,500 shares of the outstanding Company Common Stock, representing all of
the issued and outstanding Company Common Stock. All of the outstanding shares
of Company Common Stock have been duly authorized and validly issued, and are
fully paid and non-assessable, and none of such shares is subject to any
repurchase option or restriction on transfer (other than restrictions on
transfer imposed by virtue of applicable federal and state securities laws).
(b) There is no: (i) outstanding subscription, option, call,
warrant or right (whether or not currently exercisable) to acquire, or otherwise
relating to, any shares of the capital stock or other securities of the Company;
(ii) outstanding security, instrument or obligation that is or may become
convertible into or exchangeable for any shares of the capital stock or other
securities of the Company; (iii) Contract under which the Company is or may
become obligated to sell or otherwise issue any shares of its capital stock or
any other securities; or (iv) condition or circumstance that may give rise to or
provide a basis for the assertion of a claim by any Person to the effect that
such Person is entitled to acquire or receive any shares of capital stock or
other securities of the Company.
6.
<PAGE> 12
(c) The Shareholders together own, beneficially and of record,
and have good, valid and marketable title to the shares of Company Common Stock.
All of the shares of Company Common Stock are owned by the Shareholders free and
clear of any Encumbrances. The Shareholders have full and unrestricted right and
power to sell and deliver the Company Common Stock pursuant to the provisions of
this Agreement without the consent or approval of any other person.
2.4 FINANCIAL STATEMENTS.
(a) The Company has delivered to Parent the following
financial statements and notes (collectively, the "Company Financial
Statements"):
(i) the unaudited Statements of Assets and
Liabilities of the Company as of February 28, 1997, and as of July 31,
1996, and 1995, and the related unaudited Statements of Revenues and
Expenses and Statements of Cash Flows of the Company for the seven
months ended February 28, 1997, and for the fiscal years ended July 31,
1996, and 1995; and
(ii) the unaudited Trend Statement for Selected
Categories (e.g. monthly statements of revenues and expenses) of the
Company for the seven months ended February 28, 1997, and for the
fiscal years ended July 31, 1996, and 1995.
(b) The Company Financial Statements are accurate and
complete, are in accordance with the books and records of the Company and
present fairly the financial position of the Company as of the respective dates
thereof and the results of operations and cash flows of the Company for the
periods covered thereby. The Company Financial Statements have been compiled in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants. The Company
Financial Statements have been prepared on the accounting basis used by the
Company for income tax purposes, which is a comprehensive basis of accounting.
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the
Disclosure Schedule, since February 28, 1997:
(a) there has not been any material adverse change in the
Company's business, condition, assets, liabilities, operations,
financial performance or prospects, and no event has occurred that
will, or could reasonably be expected to, have a Material Adverse
Effect on the Company;
(b) there has not been any material loss, damage or
destruction to, or any material interruption in the use of, any of the
Company's assets (whether or not covered by insurance);
(c) the Company has not declared, accrued, set aside or paid
any dividend or made any other distribution in respect of any shares of
capital stock, and has not
7.
<PAGE> 13
repurchased, redeemed or otherwise reacquired any shares of capital
stock or other securities;
(d) the Company has not sold, issued or authorized the
issuance of (i) any capital stock or other security, (ii) any option,
call, warrant or right to acquire, or otherwise relating to, any
capital stock or any other security, or (iii) any instrument
convertible into or exchangeable for any capital stock or other
security;
(e) there has been no amendment to the Company's articles of
incorporation or bylaws, and the Company has not effected or been a
party to any Acquisition Transaction, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(f) the Company has not formed any subsidiary or acquired any
equity interest or other interest in any other Entity;
(g) the Company has not made any capital expenditure;
(h) the Company has not (i) entered into or permitted any of
the assets owned or used by it to become bound by any Material Contract
(as defined in Section 2.10(a)), except that the Company has renewed
various Material Contracts in the ordinary course of business, without
materially amending the terms thereof, or (ii) amended or prematurely
terminated, or waived any material right or remedy under, any Material
Contract to which it is or was a party or under which it has or had any
rights or obligations;
(i) the Company has not (i) acquired, leased or licensed any
right or other asset from any other Person (other than immaterial
rights or other immaterial assets acquired, leased or licensed by the
Company from other Persons in the ordinary course of business and
consistent with the Company's past practices), (ii) sold or otherwise
disposed of, or leased or licensed, any right or other asset to any
other Person (other than immaterial rights or other immaterial assets
disposed of or leased or licensed by the Company to other Persons in
the ordinary course of business and consistent with the Company's past
practices), or (iii) waived or relinquished any right (other than
immaterial rights waived or relinquished by the Company in the ordinary
course of business and consistent with the Company's past practices);
(j) the Company has not written off as uncollectible, or
established any extraordinary reserve with respect to, any account
receivable or other indebtedness;
(k) the Company has not made any pledge of any of its assets
or otherwise permitted any of its assets to become subject to any
Encumbrance, except for pledges of immaterial assets made in the
ordinary course of business and consistent with the Company's past
practices;
8.
<PAGE> 14
(l) the Company has not (i) lent money to any Person, or (ii)
incurred or guaranteed any indebtedness for borrowed money;
(m) the Company has not (i) established, adopted or amended
any Employee Benefit Plan, or (ii) made any profit-sharing or similar
payment to any of its directors, officers or employees;
(n) the Company has not changed any of its methods of
accounting or accounting practices in any respect;
(o) the Company has not made any Tax election;
(p) the Company has not commenced or settled any Legal
Proceeding;
(q) the Company has not entered into any material transaction
or taken any other material action outside the ordinary course of
business or inconsistent with its past practices; and
(r) the Company has not agreed or committed to take any of the
actions referred to in clauses "(c)" through "(q)" above.
2.6 TITLE TO ASSETS.
(a) Except as set forth in Part 2.6(a) of the Disclosure
Schedule, the Company owns, and has good, valid and marketable title to, all
assets purported to be owned by it, including: (i) all assets reflected on the
Financial Statements; (ii) all assets referred to in Parts 2.7(b), 2.8 and 2.9
of the Disclosure Schedule and all of the Company's rights under the Contracts
identified in Part 2.10(a) of the Disclosure Schedule; and (iii) all other
assets reflected in the Company's books and records as being owned by the
Company. Except as set forth in Part 2.6(a) of the Disclosure Schedule, all of
said assets are owned by the Company free and clear of any liens or other
Encumbrances, except for (i) any lien for current taxes not yet due and payable,
and (ii) minor liens that have arisen in the ordinary course of business and
that do not (in any case or in the aggregate) materially detract from the value
of the assets subject thereto or materially impair the operations of the
Company.
(b) Part 2.6(b) of the Disclosure Schedule identifies all
assets that are being leased or licensed to the Company, except for any software
being duly licensed to the Company under any third party software license
generally available to the public at a total cost of less than $5,000.
2.7 BANK ACCOUNTS; RECEIVABLES; CUSTOMERS.
(a) Part 2.7(a) of the Disclosure Schedule provides accurate
and complete information with respect to each account maintained by or for the
benefit of the Company at any bank or other financial institution.
9.
<PAGE> 15
(b) Part 2.7(b) of the Disclosure Schedule provides an
accurate and complete breakdown and aging of all accounts receivable, notes
receivable and other receivables of the Company as of February 28, 1997. Except
as set forth in Part 2.7(b) of the Disclosure Schedule, all existing accounts
receivable of the Company (including those accounts receivable reflected on the
Financial Statements that have not yet been collected and those accounts
receivable that have arisen since February 28, 1997 and have not yet been
collected) (i) represent valid obligations of customers of the Company arising
from bona fide transactions entered into in the ordinary course of business, and
(ii) are current and will be collected in full, without any counterclaim or set
off, when due.
(c) Part 2.7(c) of the Disclosure Schedule identifies each
customer that is obligated to make payments to the Company. The Company has not
received any notice or other communication indicating that any customer or other
Person identified in Part 2.7(c) of the Disclosure Schedule intends or expects
to cease dealing with the Company or to effect a material reduction in the
volume of business transacted by such Person with the Company below historical
levels.
(d) Part 2.7(d) of the Disclosure Schedule provides an
accurate and complete breakdown of all pending and unfilled orders received by
the Company for products, systems and services.
2.8 EQUIPMENT; LEASEHOLD.
(a) Part 2.8 of the Disclosure Schedule provides accurate and
complete information with respect to all material items of equipment, fixtures,
leasehold improvements and other tangible assets owned by or leased to the
Company. The assets identified in Part 2.8 of the Disclosure Schedule are
adequate for the uses to which they are being put, are in good condition and
repair (ordinary wear and tear excepted) and are adequate for the conduct of the
Company's business in the manner in which such business is currently being
conducted. Other than as set forth in Part 2.8 of the Disclosure Schedule, there
are no assets owned by or leased to any Person other than the Company used in
the business or operations of the Company.
(b) The Company does not own any real property or any interest
in real property.
2.9 PROPRIETARY ASSETS.
(a) Part 2.9(a)(1) of the Disclosure Schedule sets forth, with
respect to each Company Proprietary Asset that has been registered, recorded or
filed with any Governmental Body or with respect to which an application has
been filed with any Governmental Body, (i) a brief description of such Company
Proprietary Asset, and (ii) the names of the jurisdictions covered by the
applicable registration, recordation, filing or application. Part 2.9(a)(2) of
the Disclosure Schedule identifies and provides a brief description of all other
Company Proprietary Assets owned by the Company. Part 2.9(a)(3) of the
Disclosure Schedule identifies and provides a brief description of each Company
Proprietary Asset that is owned by any other Person and
10.
<PAGE> 16
that is licensed to or used by the Company (except for any Company Proprietary
Asset that is duly licensed to the Company under any third party software
license that (1) is generally available to the public at a cost of less than
$5,000, and (2) imposes no future monetary obligation on the Company) and
identifies the license agreement or other agreement under which such Company
Proprietary Asset is being licensed to or used by the Company. The Company has
good, valid and marketable title to all of the Proprietary Assets identified in
Parts 2.9(a)(1) and 2.9(a)(2) of the Disclosure Schedule, including the source
and object codes for FormVision(TM) and OmniForm(R) Products, free and clear of
any and all Encumbrances, and has a valid right to use all Proprietary Assets
identified in Part 2.9(a)(3) of the Disclosure Schedule. Except as set forth in
Part 2.9(a)(5) of the Disclosure Schedule, the Company is not obligated to make
any payment to any Person for the use of any Company Proprietary Asset. Except
as set forth in Part 2.9(a)(6) of the Disclosure Schedule, the Company is free
to use, modify, copy, distribute, sell, license or otherwise exploit each of the
Company Proprietary Assets on an exclusive basis (other than Company Proprietary
Assets consisting of software licensed to the Company under third party licenses
generally available to the public, with respect to which the Company's rights
are not exclusive).
(b) The Company has taken all reasonable measures and
precautions necessary to protect and maintain the confidentiality and secrecy of
all Company Proprietary Assets (except Company Proprietary Assets whose value
would be unimpaired by public disclosure) and otherwise to maintain and protect
the value of all Company Proprietary Assets. Except as set forth in Part 2.9(b)
of the Disclosure Schedule, the Company has not disclosed or delivered or
permitted to be disclosed or delivered to any Person, and no Person (other than
the Company) has access to or has any rights with respect to, the source code,
or any portion or aspect of the source code, of any Company Proprietary Asset.
(c) None of the Company Proprietary Assets infringes or
conflicts with any Proprietary Asset owned or used by any other Person. The
Company is not infringing, misappropriating or making any unlawful use of, and
the Company has not at any time infringed, misappropriated or made any unlawful
use of, or received any notice or other communication of any actual, alleged,
possible or potential infringement, misappropriation or unlawful use of, any
Proprietary Asset owned or used by any other Person. To the best of the
knowledge of the Company and the Shareholders, no other Person is infringing,
misappropriating or making any unlawful use of, and no Proprietary Asset owned
or used by any other Person infringes or conflicts with, any Company Proprietary
Asset.
(d) Except as set forth in Part 2.9(d) of the Disclosure
Schedule: (i) each Company Proprietary Asset conforms in all material respects
with any specification, documentation, performance standard, representation or
statement made or provided with respect thereto by or on behalf of the Company;
and (ii) there has not been any material claim by any customer or other Person
alleging that any Company Proprietary Asset does not conform in all material
respects with any specification, documentation, performance standard,
representation or statement made or provided by or on behalf of the Company,
and, to the best of the knowledge of the Company and the Shareholders, there is
no basis for any such claim. The Company is not required under generally
accepted accounting principles to establish reserves
11.
<PAGE> 17
on its financial statements to cover any costs associated with any obligations
that the Company may have with respect to the correction or repair of
programming errors or other defects in the Company Proprietary Assets.
(e) The Company Proprietary Assets constitute all the
Proprietary Assets necessary to enable the Company to conduct its business in
the manner in which such business has been conducted. Except as set forth in
Part 2.9(e) of the Disclosure Schedule, (i) the Company has not licensed any of
the Company Proprietary Assets to any Person other than Parent, and (ii) the
Company has not entered into any covenant not to compete or Contract limiting
its ability to exploit fully any of its Proprietary Assets or to transact
business in any market or geographical area or with any Person.
(f) Except as set forth in Part 2.9(f) of the Disclosure
Schedule, all current and former employees of the Company, and all current and
former consultants and independent contractors to the Company, have executed and
delivered to the Company written agreements (containing no exceptions to or
exclusions from the scope of their coverage) that are substantially identical to
the form of Confidential Information Agreement attached to the Disclosure
Schedule as Appendix 2.9(f).
(g) Except as set forth in Part 2.9(g) of the Disclosure
Schedule, the Company has not entered into and is not bound by any Contract
under which any Person has the right to distribute or license any Company
Proprietary Asset including source code, object code, or any versions,
modifications or derivative works of source code or object code in any Company
Proprietary Asset.
(h) The source and object code presented to Parent for
inspection by Shareholders on March 28, 1997 and characterized as the
FormVision(TM) or OmniForm(R) Products source and object code is in fact the
complete source and object code for the OmniForm Products, including the source
and object code for the product known as of the Closing Date as OmniForm
Internet Server(TM), (collectively, the "FormVision Code").
2.10 CONTRACTS.
(a) Part 2.10(a) of the Disclosure Schedule identifies each
Company Contract that constitutes a "Material Contract." (For purposes of this
Agreement, each of the following shall be deemed to constitute a "Material
Contract":
(i) any Contract relating to the employment or
engagement of, or the performance of services by, any employee,
consultant or independent contractor;
(ii) any Contract relating to the acquisition,
transfer, use, development, sharing or license of any technology or any
Proprietary Asset;
(iii) any Contract imposing any restriction on the
Company's right or ability (A) to compete with any other Person, (B) to
acquire any product or other asset
12.
<PAGE> 18
or any services from any other Person, to sell any product or other
asset to or perform any services for any other Person or to transact
business or deal in any other manner with any other Person, or (C) to
develop or distribute any technology;
(iv) any Contract creating or involving any agency
relationship, distribution arrangement or franchise relationship;
(v) any Contract relating to the acquisition,
issuance or transfer of any securities;
(vi) any Contract creating or relating to the
creation of any Encumbrance with respect to any asset owned or used by
the Company;
(vii) any Contract involving or incorporating any
guaranty, any pledge, any performance or completion bond, any
indemnity, any right of contribution or any surety arrangement;
(viii) any Contract creating or relating to any
partnership or joint venture or any sharing of revenues, profits,
losses, costs or liabilities;
(ix) any Contract relating to the purchase or sale of
any product or other asset by or to, or the performance of any services
by or for, any Related Party (as defined in Section 2.19);
(x) any Contract to which any Governmental Body is a
party or under which any Governmental Body has any rights or
obligations, or involving or directly or indirectly benefiting any
Governmental Body (including any subcontract or other Contract between
the Company and any contractor or subcontractor to any Governmental
Body);
(xi) any Contract entered into outside the ordinary
course of business or inconsistent with the Company's past practices;
(xii) any Contract that has a term of more than 60
days and that may not be terminated by the Company (without penalty)
within 60 days after the delivery of a termination notice by the
Company; and
(xiii) any Contract (not otherwise identified in
clauses "(i)" through "(xii)" of this sentence) that contemplates or
involves (A) the payment or delivery of cash or other consideration in
an amount or having a value in excess of $5,000 in the aggregate, or
(B) the performance of services having a value in excess of $5,000 in
the aggregate.)
(b) The Company has delivered to Parent accurate and complete
copies of all Contracts identified in Part 2.10(a) of the Disclosure Schedule,
including all amendments thereto. Each Contract identified in Part 2.10(a) of
the Disclosure Schedule is valid and in full
13.
<PAGE> 19
force and effect, and is enforceable by the Company in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
(c) Except as set forth in Part 2.10(c) of the Disclosure
Schedule:
(i) the Company has not violated or breached in any
material respect, or committed any material default under, any Company
Contract, and, to the best of the knowledge of the Company and the
Shareholders, no other Person has materially violated or breached, or
committed any material default under, any Company Contract;
(ii) to the best of the knowledge of the Company and
the Shareholders, no event has occurred, and no circumstance or
condition exists, that (with or without notice or lapse of time) will,
or could reasonably be expected to, (A) result in a material violation
or breach of any of the provisions of any Company Contract, (B) give
any Person the right to declare a material default or exercise any
material remedy under any Company Contract, (C) give any Person the
right to accelerate the maturity or performance of any Company
Contract, or (D) give any Person the right to cancel, terminate or
materially modify any Company Contract;
(iii) the Company has not received any notice or
other communication regarding (i) any actual or possible violation or
breach of, or default under, any Company Contract, or (ii) any actual
or possible termination of any Company Contract; and
(iv) the Company has not waived any of its material
rights under any Contract.
(d) Except as set forth in Part 2.10(d) of the Disclosure
Schedule, no Person is renegotiating, or has the right to renegotiate, any
amount paid or payable to the Company under any Company Contract or any other
term or provision of any Company Contract.
(e) The Contracts identified in Part 2.10(a) of the Disclosure
Schedule collectively constitute all of the Material Contracts necessary to
enable the Company to conduct its business in the manner in which its business
is currently being conducted.
(f) The Company has not made any unexpired offer or proposal
to any customer, prospective customer or other Person.
2.11 LIABILITIES.
(a) The Company has no accrued, contingent or other
liabilities of any nature, either matured or unmatured (whether or not required
to be reflected in financial statements in accordance with generally accepted
accounting principles, and whether due or to become due), except for: (i)
liabilities identified as such in the "liabilities" column of the Financial
Statements;
14.
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(ii) accounts payable or accrued salaries that have been incurred by the Company
since February 28, 1997 in the ordinary course of business and consistent with
the Company's past practices; and (iii) the liabilities identified in Part
2.11(a) of the Disclosure Schedule.
(b) Part 2.11(b) of the Disclosure Schedule provides an
accurate and complete breakdown of (i) all accounts payable of the Company as of
February 28, 1997 and (ii) all notes payable of the Company and all indebtedness
of the Company for borrowed money.
(c) Part 2.11(c) of the Disclosure Schedule provides an
accurate and complete breakdown of the Company's "deferred support revenue" and
all related obligations and other liabilities of the Company.
2.12 COMPLIANCE WITH LEGAL REQUIREMENTS. The Company is, and has at all
times since December 31, 1994 been, in compliance with all applicable Legal
Requirements, except where the failure to comply with such Legal Requirements
has not had and will not have a Material Adverse Effect on the Company. Except
as set forth in Part 2.12 of the Disclosure Schedule, since December 31, 1994,
the Company has not received any notice or other communication from any
Governmental Body regarding any actual or possible violation of, or failure to
comply with, any material Legal Requirement.
2.13 GOVERNMENTAL AUTHORIZATIONS. Part 2.13 of the Disclosure Schedule
identifies each material Governmental Authorization held by the Company, and the
Company has delivered to Parent accurate and complete copies of all Governmental
Authorizations identified in Part 2.13 of the Disclosure Schedule. The
Governmental Authorizations identified in Part 2.13 of the Disclosure Schedule
are valid and in full force and effect, and collectively constitute all
Governmental Authorizations necessary to enable the Company to conduct its
business in the manner in which its business is currently being conducted. The
Company is, and at all times since December 31, 1994 has been, in compliance
with the material terms and requirements of the respective Governmental
Authorizations identified in Part 2.13 of the Disclosure Schedule. Since
December 31, 1994, the Company has not received any notice or other
communication from any Governmental Body regarding (a) any actual or possible
violation of or failure to comply with any term or requirement of any
Governmental Authorization, or (b) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization.
2.14 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of
the Company with any Governmental Body on or before the Closing Date (the
"Company Returns") (i) have been or will be filed when due, and (ii) have been,
or will be when filed, accurately and completely prepared, in all material
respects, in compliance with all applicable Legal Requirements. All amounts
shown on the Company Returns to be due on or before the Closing Date have been
or will be paid on or before the Closing Date. The Company has delivered to
Parent accurate and complete copies of all Company Returns filed since December
31, 1994.
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(b) The Company Financial Statements fully accrue all actual
and contingent liabilities for Taxes with respect to all periods through the
dates thereof in accordance with generally accepted accounting principles. The
Company has established, in the ordinary course of business and consistent with
its past practices, reserves adequate for the payment of all Taxes for the
period from January 1, 1997 through the Closing Date, as set forth in Part
2.14(b) of the Disclosure Schedule.
(c) No Company Return relating to income Taxes has ever been
examined or audited by any Governmental Body. Except as set forth in Part
2.14(c) of the Disclosure Schedule, there has been no examination or audit of
any Company Return, and no such examination or audit has been proposed or
scheduled by any Governmental Body. The Company has delivered to Parent accurate
and complete copies of all audit reports and similar documents (to which the
Company has access) relating to the Company Returns. Except as set forth in Part
2.14(c) of the Disclosure Schedule, no extension or waiver of the limitation
period applicable to any of the Company Returns has been granted (by the Company
or any other Person), and no such extension or waiver has been requested from
the Company.
(d) Except as set forth in Part 2.14(d) of the Disclosure
Schedule, no claim or Legal Proceeding is pending or has been threatened against
or with respect to the Company in respect of any Tax. There are no unsatisfied
liabilities for Taxes (including liabilities for interest, additions to tax and
penalties thereon and related expenses) with respect to any notice of deficiency
or similar document received by the Company. There are no liens for Taxes upon
any of the assets of the Company, except liens for current Taxes not yet due and
payable. The Company has not entered into or become bound by any agreement or
consent pursuant to Section 341(f) of the Code. The Company has not been, and
the Company will not be, required to include any adjustment in taxable income
for any tax period (or portion thereof) pursuant to Section 481 or 263A of the
Code or any comparable provision under state or foreign Tax laws as a result of
transactions or events occurring, or accounting methods employed, prior to the
Closing.
2.15 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) The Shareholders, James Moy, Kevin Burke and Christopher
Kaschmitter (collectively, Messrs. Moy, Burke and Kaschmitter are referred to
herein as "Employees") are the only persons who have ever been employed by the
Company and Part 2.15(a) of the Disclosure Schedule correctly reflects their
salaries, any other compensation payable to them (including compensation payable
pursuant to bonus, deferred compensation or commission arrangements), their
dates of employment and their positions. The Company is not a party to any
collective bargaining contract or other Contract with a labor union involving
any of its employees. The Company is not a party to any contract of employment
or consulting with any Person.
(b) There is no employee of the Company who is not fully
available to perform work because of disability or other leave.
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(c) Part 2.15(c) of the Disclosure Schedule identifies each
salary, bonus, deferred compensation, incentive compensation, stock purchase,
stock option, severance pay, termination pay, hospitalization, medical,
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement (individually referred to as a "Plan" and
collectively referred to as the "Plans") sponsored, maintained, contributed to
or required to be contributed to by the Company for the benefit of any current
or former employee of the Company.
(d) The Company does not maintain, sponsor or contribute to,
and, to the best of the knowledge of the Company and the Shareholders, the
Company has not at any time in the past maintained, sponsored or contributed to,
any employee pension benefit plan (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
(e) The Company does not maintain, sponsor or contribute to,
and, to the best of the knowledge of the Company and the Shareholders, the
Company has not at any time in the past maintained, sponsored or contributed to,
any employee welfare benefit plan (as defined in Section 3(1) of ERISA for the
benefit of employees or former employees of the Company (a "Welfare Plan").
(f) The Company is not required to be, and, to the best of the
knowledge of the Company and the Shareholders, the Company has never been
required to be, treated as a single employer with any other Person under Section
4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the Code. The Company
has never been a member of an "affiliated service group" within the meaning of
Section 414(m) of the Code.
(g) Neither the execution, delivery or performance of this
Agreement, nor the consummation of the Merger or any of the other transactions
contemplated by this Agreement, will result in any bonus payment, golden
parachute payment, severance payment or other payment to any current or former
employee or director of the Company (whether or not under any Plan), or
materially increase the benefits payable under any Plan, or result in any
acceleration of the time of payment or vesting of any such benefits.
(h) The Company is in compliance in all material respects with
all applicable Legal Requirements and Contracts relating to employment,
employment practices, employee compensation, wages, bonuses and terms and
conditions of employment.
2.16 ENVIRONMENTAL MATTERS. The Company is and has at all times been in
compliance, in all material respects, with all applicable Environmental Laws.
The Company possesses all permits and other Governmental Authorizations required
under applicable Environmental Laws, and the Company is and has at all times
been in compliance with the terms and requirements of all such Governmental
Authorizations. The Company has not received any notice or other communication
(whether from a Governmental Body, citizens group, employee or otherwise) that
alleges that the Company is not in compliance with any Environmental Law, and,
to the best of the knowledge of the Company and the Shareholders, there are no
circumstances that could reasonably be expected to prevent or interfere with the
Company's
17.
<PAGE> 23
compliance with any Environmental Law in the future. To the best of the
knowledge of the Company and the Shareholders, no current or prior owner of any
property leased or controlled by the Company has received any notice or other
communication (whether from a Governmental Body, citizens group, employee or
otherwise) that alleges that such current or prior owner or the Company is not
or was not in compliance with any Environmental Law. All Governmental
Authorizations currently held by the Company pursuant to Environmental Laws are
identified in Part 2.16 of the Disclosure Schedule. (For purposes of this
Section 2.16: (i) "Environmental Law" means any federal, state, local or foreign
Legal Requirement relating to pollution or protection of human health or the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata), including any law or regulation relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; and (ii) "Materials of Environmental Concern" include
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products and any other substance that is now or in the future
regulated by any Environmental Law or that is otherwise a danger to health,
reproduction or the environment.)
2.17 SALE OF PRODUCTS; PERFORMANCE OF SERVICES. Except as set forth in
Part 2.17 of the Disclosure Schedule, no customer or other Person has, at any
time, asserted or threatened to assert any claim against the Company (other than
claims that have been resolved satisfactorily at no material cost to the
Company) under or based upon (i) any warranty provided by or on behalf of the
Company, or (ii) any product sold or licensed or any services performed by the
Company.
2.18 INSURANCE. Part 2.18 of the Disclosure Schedule provides accurate
and complete information with respect to each insurance policy maintained by, at
the expense of or for the benefit of the Company and with respect to any claims
made thereunder. The Company has delivered to Parent accurate and complete
copies of the insurance policies identified in Part 2.18 of the Disclosure
Schedule. Each of the insurance policies identified in Part 2.18 of the
Disclosure Schedule is in full force and effect. Since December 31, 1994, the
Company has not received any notice or other communication regarding any actual
or possible (a) cancellation or invalidation of any insurance policy, (b)
refusal of any coverage or rejection of any claim under any insurance policy, or
(c) material adjustment in the amount of the premiums payable with respect to
any insurance policy.
2.19 RELATED PARTY TRANSACTIONS. No officer, director, Shareholder or
Employee of the Company or any affiliate or associate of any such person has or
has had, either directly or indirectly, (a) an interest in any Person which (i)
furnishes or sells services or products which are furnished or sold or are
proposed to be furnished or sold by the Company, or (ii) purchases from or sells
or furnishes to the Company, any goods or services, or (b) a beneficial interest
in any contract or agreement to which the Company is a party or by which any of
their respective properties or assets may be bound. There is not, and at no time
since December 31, 1996 has there been, any outstanding indebtedness for
borrowed money (i) owed by the Company to any Shareholder or Employee or (ii)
owed by any Shareholder or Employee to the Company.
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<PAGE> 24
2.20 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 2.20(a) of the Disclosure
Schedule, there is no pending Legal Proceeding, and (to the best of the
knowledge of the Company and the Shareholders) no Person has threatened to
commence any Legal Proceeding: (i) that involves the Company or any of the
assets owned or used by the Company; or (ii) that challenges, or that may have
the effect of preventing, delaying, making illegal or otherwise interfering
with, the Merger or any of the other transactions contemplated by this
Agreement. To the best of the knowledge of the Company and the Shareholders,
except as set forth in Part 2.20(a) of the Disclosure Schedule, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
will, or that could reasonably be expected to, give rise to or serve as a basis
for the commencement of any such Legal Proceeding.
(b) Except as set forth in Part 2.20(b) of the Disclosure
Schedule, no Legal Proceeding has ever been commenced by, and no Legal
Proceeding has ever been pending against, the Company.
(c) There is no order, writ, injunction, judgment or decree to
which the Company, or any of the assets owned or used by the Company, is
subject. None of the Shareholders is subject to any order, writ, injunction,
judgment or decree that relates to the Company's business or to any of the
assets owned or used by the Company. To the best of the knowledge of the Company
and the Shareholders, no officer or Employee of the Company is subject to any
order, writ, injunction, judgment or decree that prohibits such officer or
Employee from engaging in or continuing any conduct, activity or practice
relating to the Company's business.
2.21 AUTHORITY; BINDING NATURE OF AGREEMENT. The Company has the
absolute and unrestricted right, power and authority to enter into and to
perform its obligations under this Agreement. The execution, delivery and
performance by the Company of this Agreement have been duly authorized by all
necessary action on the part of the Company and its board of directors. The
execution, delivery and performance of this Agreement has been duly authorized
by all necessary action on the part of the Company's Shareholders. This
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
2.22 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 2.22 of
the Disclosure Schedule, neither (1) the execution, delivery or performance of
this Agreement or any of the other agreements referred to in this Agreement, nor
(2) the consummation of the Merger or any of the other transactions contemplated
by this Agreement, will directly or indirectly (with or without notice or lapse
of time):
19.
<PAGE> 25
(a) contravene, conflict with or result in a violation of (i)
any of the provisions of the Company's articles of incorporation or
bylaws, or (ii) any resolution adopted by the Company's shareholders or
the Company's board of directors;
(b) contravene, conflict with or result in a violation of, or
give any Governmental Body or other Person the right to challenge any
of the transactions contemplated by this Agreement or to exercise any
remedy or obtain any relief under, any Legal Requirement or any order,
writ, injunction, judgment or decree to which the Company, or any of
the assets owned or used by the Company, is subject;
(c) contravene, conflict with or result in a violation of any
of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is held by the Company or that
otherwise relates to the Company's business or to any of the assets
owned or used by the Company;
(d) contravene, conflict with or result in a violation or
breach of, or result in a default under, any provision of any Company
Contract, or give any Person the right to (i) declare a default or
exercise any remedy under any Company Contract, (ii) accelerate the
maturity or performance of any Company Contract, or (iii) cancel,
terminate or modify any Company Contract; or
(e) result in the imposition or creation of any Encumbrance
upon or with respect to any asset owned or used by the Company (except
for minor liens that will not, in any case or in the aggregate,
materially detract from the value of the assets subject thereto or
materially impair the operations of the Company).
Except as set forth in Part 2.22 of the Disclosure Schedule, the Company is not
and will not be required to make any filing with or give any notice to, or to
obtain any Consent from, any Person in connection with (x) the execution,
delivery or performance of this Agreement or any of the other agreements
referred to in this Agreement, or (y) the consummation of the Merger or any of
the other transactions contemplated by this Agreement.
2.23 FULL DISCLOSURE. This Agreement (including the Disclosure
Schedule, which is incorporated herein by reference) does not (i) contain any
representation, warranty or information that is false or misleading with respect
to any material fact, or (ii) omit to state any material fact necessary in order
to make the representations, warranties and information contained and to be
contained herein and therein not false or misleading.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company and
the Shareholders as follows:
20.
<PAGE> 26
3.1 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent and Merger Sub have
the absolute and unrestricted right, power and authority to perform their
obligations under this Agreement. The execution, delivery and performance by
Parent and Merger Sub of this Agreement have been duly authorized by all
necessary action on the part of Parent and Merger Sub and their respective
boards of directors. This Agreement constitutes the legal, valid and binding
obligation of Parent and Merger Sub, enforceable against them in accordance with
its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
3.2 VALID ISSUANCE. The Parent Common Stock to be issued in the Merger
will, when issued in accordance with the provisions of this Agreement, be
validly issued, fully paid and nonassessable.
SECTION 4. CERTAIN SECURITIES MATTERS
4.1 REPRESENTATIONS OF SHAREHOLDERS. Each Shareholder represents and
warrants, to and for the benefit of the Indemnitees, as follows:
(a) such Shareholder has received and reviewed (i) a copy of
Parent's report on Form 10-K for 1995, as filed with the SEC, (ii) a
copy of Parent's 1995 Annual Report to Shareholders, (iii) a copy of
Parent's report on Form 10-Q for the quarters ended March 31, June 30
and September 30, 1996, all as filed with the SEC, and (iv) a copy of
Parent's proxy statement for the 1995 Annual Stockholder's meeting;
(b) such Shareholder is aware (i) that the Parent Common Stock
to be received by such Shareholder in connection with the Merger is
being issued under an exemption from the registration requirements of
the Securities Act, and (ii) that such Shareholder is not being
provided with any prospectus or other offering materials other than the
documents referred to in Section 4.1(a);
(c) such Shareholder (i) is aware that because the issuance of
the shares of Parent Common Stock to be received by such Shareholder in
connection with the Merger have not been registered under the
Securities Act, such shares must be held indefinitely unless their
resale or other disposition is registered under the Securities Act or
is exempt from the registration requirements of the Securities Act,
(ii) is aware of the provisions of Rule 144 promulgated under the
Securities Act which permits limited resales of shares purchased in
certain exempt transactions, subject to the satisfaction of various
requirements;
(d) such Shareholder realizes that, if the requirements of
Rule 144 are not satisfied, any disposition by such Shareholder of the
Parent Common Stock to be received by such Shareholder in connection
with the Merger may require registration under the Securities Act, and
that Parent Common is not under any obligation (except
21.
<PAGE> 27
as expressly provided in Section 7) to take any action to register any
of such Parent Common Stock;
(E) such Shareholder has such knowledge and experience in
financial and business matters that such Shareholder is capable of
evaluating the merits and risks of the Merger and the merits and risks
of investing in Parent Common Stock;
(F) such Shareholder is acquiring the Parent Common Stock that
such Shareholder is to receive in connection with the Merger for
investment and for such Shareholder's own account and not with a view
to, or for resale in connection with, any unregistered distribution
thereof, and such Shareholder has no present intention to sell or
otherwise dispose of any interest in or risk related to the Parent
Common Stock that such Shareholder is to receive in connection with the
Merger, except in accordance with Section 4.2;
(G) such Shareholder has fully considered the risks of an
investment in Parent Common Stock, and understands that (i) such an
investment is suitable only for an investor who is able to bear the
economic consequences of losing the entire investment, (ii) such an
investment is a speculative investment which involves a high degree of
risk of loss by such Shareholder, and (iii) there are substantial
restrictions on the transferability of the Parent Common Stock to be
received by such Shareholder, and it may not be possible for such
Shareholder to liquidate his investment in the case of emergency;
(H) such Shareholder is able (i) to bear the economic risk of
his investment in Parent Common Stock, (ii) to hold the Parent Common
Stock to be received by such Shareholder for a substantial period of
time, and (iii) to afford a complete loss of such Shareholder's
investment in Parent Common Stock;
(I) such Shareholder has been given the opportunity to ask
questions of, and to receive answers from, Parent concerning the terms
and provisions of the Merger, and to obtain any additional information
necessary to verify the accuracy of the information set forth in the
documents referred to in Section 4.1(a);
(J) such Shareholder is a bona fide, full-time resident of the
State of Colorado;
(K) such Shareholder understands that the certificates
representing the Parent Common Stock to be received by such Shareholder
will bear legends identical or similar to the legends set forth in
Sections 1.7(b) and 1.8(a) hereof; and:
(L) such Shareholder understands and intends that the
representations and warranties being made by such Shareholder in this
Section 4.1 may be relied upon in determining such Shareholder's
suitability as an investor in Parent Common Stock, and
22.
<PAGE> 28
shall survive such Shareholder's receipt of the shares of Parent Common
Stock to be received by such Shareholder in connection with the Merger.
4.2 SALE OF PARENT COMMON STOCK BY SHAREHOLDERS. A Shareholder may sell
his shares of Parent Common Stock if (a) the sale of such shares by such
Shareholder is covered by the Registration Statement (as defined in Section
7(a)) and is effected in accordance with the procedures set forth in Section
7.3(c) while the Registration Statement is effective, or (b) (i) such shares may
be sold without registration or qualification because of the availability of
exemptions under the Securities Act and applicable state securities laws and
(ii) such shares are no longer Lock-Up Shares. Except as expressly permitted by
this Section 4.2, no Shareholder shall, directly or indirectly, sell or
otherwise dispose of, or offer to sell or otherwise dispose of, any shares of
Parent Common Stock at any time on or after the Closing Date.
SECTION 5. CERTAIN COVENANTS
5.1 FILINGS AND CONSENTS. At the Closing, the Shareholders shall cause
the Company to promptly deliver to Parent a copy of (a) all filings (if any) and
all notices (if any) required to be made and given by the Company in connection
with the Merger and the other transactions contemplated by this Agreement, and
(b) each Consent (if any) required to be obtained (pursuant to any applicable
Legal Requirement or Contract, or otherwise) by the Company in connection with
the Merger or any of the other transactions contemplated by this Agreement.
5.2 EMPLOYMENT AND NONCOMPETITION AGREEMENTS. At the Closing, (a) each
officer, director and employee of the Company shall tender to the Company his
resignation as an officer, director and employee, as applicable, of the Company;
(b) each Employment Agreement in the forms of Exhibits E-1 to E-5 (each an
"Employment Agreement") shall be in full force and effect; and (c) each
Shareholder shall execute and deliver to the Company and Parent a Noncompetition
Agreement in the form of Exhibit F.
5.3 RELEASE. At the Closing, each Shareholder shall execute and deliver
to the Company and Parent a Release in the form of Exhibit G.
5.4 TERMINATION OF EMPLOYEE PLANS. At the Closing, the Company shall
terminate all bonus plans and other benefit plans under which any of its
employees or former employees may have any rights and the Shareholders shall
ensure that no employee or former employee of the Company has any rights
thereunder and that any liabilities of the Company thereunder (including any
such liabilities relating to services performed prior to the Closing) are fully
extinguished at no cost to the Company.
5.5 FIRPTA MATTERS. At the Closing, (a) the Company shall deliver to
Parent a statement (in such form as may be reasonably requested by counsel to
Parent) conforming to the requirements of Section 1.897 - 2(h)(1)(i) of the
United States Treasury Regulations, and (b) the Company shall deliver to the
Internal Revenue Service the notification required under Section 1.897 - 2(h)(2)
of the United States Treasury Regulations.
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5.6 CONTINUITY OF INTEREST CERTIFICATES. At the Closing, each
Shareholder shall execute and deliver to parent a Continuity of Interest
Certificate in the form of Exhibit D.
5.7 CROSS LICENSE AGREEMENT. At the Closing, each Shareholder, Parent
and the Company shall execute and deliver the Cross License Agreement in the
form of Exhibit H.
5.8 SOFTWARE LICENSE AGREEMENT. At the Closing, the Software License
Agreement between Parent and the Company, dated as of January 23, 1995, shall
terminate.
5.9 FORMVISION CODE. Shareholders shall have presented to Parent the
FormVision Code, as set forth in Section 2.9(h).
SECTION 6. INDEMNIFICATION, ETC.
6.1 SURVIVAL OF REPRESENTATIONS, ETC.
(A) The representations and warranties made by the Company and
the Shareholders in this Agreement (including the representations and warranties
set forth in Section 2) shall survive the Closing and shall remain in full force
and effect and shall survive for an unlimited period of time. All
representations and warranties made by Parent and Merger Sub shall survive the
Closing and shall remain in full force and effect and shall survive for an
unlimited period of time.
(B) The representations, warranties, covenants and obligations
of the Company and the Shareholders, and the rights and remedies that may be
exercised by the Indemnitees, shall not be limited or otherwise affected by or
as a result of any information furnished to, or any investigation made by or
knowledge of, any of the Indemnitees or any of their Representatives.
(C) For purposes of this Agreement, each statement or other
item of information set forth in the Disclosure Schedule shall be deemed to be a
representation and warranty made by the Company and the Shareholders in this
Agreement.
6.2 INDEMNIFICATION BY SHAREHOLDERS.
(A) Subject to Section 6.3, from and after the Effective Time,
the Shareholders, jointly and severally, shall hold harmless and indemnify each
of the Indemnitees from and against, and shall compensate and reimburse each of
the Indemnitees for, any Damages which are suffered or incurred by any of the
Indemnitees or to which any of the Indemnitees may otherwise become subject
(regardless of whether or not such Damages relate to any third-party claim) and
which arise from or as a result of, or are connected with: (i) any inaccuracy in
or breach of any representation or warranty set forth in Section 2 or Section 4
(without giving effect to any "Material Adverse Effect" or other materiality
qualification or any similar qualification contained or incorporated directly or
indirectly in such representation or warranty) or in any instrument or other
agreement delivered in connection with this Agreement
24.
<PAGE> 30
by or on behalf of the Company, a Shareholder or any Employee; (ii) any breach
of any covenant or obligation of the Company or any Shareholder under this
Agreement or under any instrument or other agreement delivered in connection
with this Agreement by or on behalf of the Company, a Shareholder or an
Employee; (iii) any failure on the part of the Company to pay any Tax required
to have been paid on or prior to the Closing Date; or (iv) any Legal Proceeding
relating to any inaccuracy, breach, failure, liability or alleged liability,
use, disclosure, reproduction, disposition, attempt or inability of the type
referred to in clause "(i)," "(ii)," or "(iii)" above. (Any such Damages are
referred to in this Agreement as "Recoverable Damages.")
(B) It is acknowledged and agreed that, if the Surviving
Corporation suffers or otherwise becomes subject to any Recoverable Damages,
then (without limiting any of the rights of the Surviving Corporation as an
Indemnitee) Parent shall also be deemed, by virtue of its ownership of the stock
of the Surviving Corporation, to have suffered Recoverable Damages.
6.3 DEDUCTIBLE; CEILING.
(A) Subject to Section 6.3(b), the Shareholders shall not be
required to make any indemnification payment pursuant to Section 6.2(a)(i) until
such time as the total amount of all Recoverable Damages (whenever suffered and
whether arising from a single inaccuracy or breach or from multiple inaccuracies
or breaches of different representations and warranties) exceeds $25,000 in the
aggregate. (If the total amount of such Recoverable Damages exceeds $25,000 in
the aggregate, then the Indemnitees shall be entitled to be indemnified against
and compensated and reimbursed for only the portion of such Recoverable Damages
exceeding $25,000.)
(B) The limitations set forth in Section 6.3(a) on the
liability of the Shareholders shall not apply in connection with any inaccuracy
or breach of which any of the Shareholders has actual knowledge on the Closing
Date.
6.4 SATISFACTION OF INDEMNIFICATION CLAIM. In the event any Shareholder
shall have any liability (for indemnification or otherwise) to any Indemnitee
under this Section 6, such Indemnitee may require such Shareholder to satisfy
such liability (and, if so requested by such Indemnitee, such Shareholder shall
satisfy such liability) by delivering to such Indemnitee the number of shares of
Parent Common Stock determined by dividing (a) the aggregate dollar amount of
such liability by (b) the Fair Market Value of one share of Common Stock of
Parent.
6.5 NO CONTRIBUTION. Each Shareholder waives, and acknowledges and
agrees that he shall not have and shall not exercise or assert (or attempt to
exercise or assert), any right of contribution, right of indemnity or other
similar right or remedy against the Surviving Corporation in connection with any
actual or alleged inaccuracy in or breach of any representation, warranty,
covenant or obligation set forth in this Agreement.
6.6 INTEREST. Any Shareholder who is required to hold harmless,
indemnify, compensate or reimburse any Indemnitee pursuant to this Section 6
with respect to any Damages
25.
<PAGE> 31
shall also be liable to such Indemnitee for interest on the amount of such
Damages (for the period commencing as of the date on which such Indemnitee first
suffered or otherwise became subject to such Damages and ending on the date on
which the liability of such Shareholder to such Indemnitee is fully satisfied by
such Shareholder) at a floating rate equal to the rate of interest publicly
announced by Bank of America, N.T. & S.A. from time to time as its prime, base
or reference rate. (For purposes of this Section 6.6, an Indemnitee that suffers
Damages by virtue of being required to pay any judgment or to make any
settlement payment to any third party with respect to any third party claim
against such Indemnitee shall be deemed to have first become subject to such
Damages at the time such Indemnitee pays such judgment or makes such settlement
payment.)
6.7 DEFENSE OF THIRD PARTY CLAIMS.
(A) In the event of the assertion or commencement by any
Person of any claim or Legal Proceeding (whether against the Surviving
Corporation, against Parent or against any other Person) with respect to which
either of the Shareholders may become obligated to hold harmless, indemnify,
compensate or reimburse any Indemnitee pursuant to this Section 6, Parent shall
have the right, at its election, to proceed with the defense of such claim or
Legal Proceeding on its own. If Parent so proceeds with the defense of any such
claim or Legal Proceeding:
(I) all expenses relating to the defense of such
claim or Legal Proceeding shall be borne and paid exclusively
by the Shareholders;
(II) each Shareholder shall make available to Parent
any documents and materials in his possession or control that
may be necessary to the defense of such claim or Legal
Proceeding; and
(III) Parent shall have the right to settle, adjust
or compromise such claim or Legal Proceeding with the consent
of the Shareholders; provided, however, that such consent
shall not be unreasonably withheld.
(B) Without limiting the generality or the effect of Section
6.7(a), if (1) a third party commences a Legal Proceeding against an Indemnitee,
and (2) Parent elects to require the Shareholders to indemnify the Indemnitee
with respect to such Legal Proceeding, then:
(I) Parent shall give the Shareholders prompt notice
of the commencement of such Legal Proceeding (it being
understood, however, that any failure on the part of Parent to
so notify the Shareholders shall not limit any of the
obligations of the Shareholders under this Section 6, except
to the extent such failure materially prejudices the defense
of such Legal Proceeding); and
(II) the Shareholders may (at the sole expense of the
Shareholders) retain counsel on behalf of the Shareholders in
connection with such Legal Proceeding, and such counsel shall
be permitted to be present at all material non-
26.
<PAGE> 32
confidential proceedings relating to such Legal Proceeding (it
being understood, however, that, subject to the proviso to
Section 6.7(a)(ii), Parent and if so designated by Parent, the
Indemnitee shall have exclusive control of the defense of such
Legal Proceeding and shall have the exclusive right to make
all strategic and other decisions relating to the defense of
such Legal Proceeding).
6.8 EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN PARENT. No
Indemnitee (other than Parent or any successor thereto or assign thereof) shall
be permitted to assert any indemnification claim or exercise any other remedy
under this Agreement unless Parent (or any successor thereto or assign thereof)
shall have consented to the assertion of such indemnification claim or the
exercise of such other remedy.
SECTION 7. REGISTRATION OF SHARES
7.1 REGISTRATION STATEMENTS.
(A) After the Closing Date, Parent shall file with the SEC a
registration statement on Form S-3 (the "Registration Statement") with respect
to an aggregate of 300,000 of the shares of Parent Common Stock received in the
Merger by the Shareholders, representing 187,500 and 112,500 shares of Parent
Common Stock, respectively, being issued by Parent to Lynn Formanek and David
Formanek. Parent shall use best efforts: (a) to cause the Registration Statement
to be declared effective by the SEC on or before the date 90 days after the
Closing Date; and (b) to cause the Registration Statement to remain effective
until the earlier of (i) the first anniversary of the Closing Date, or (ii) the
date on which the distribution described in the Registration Statement is
completed.
(B) Parent shall (at its own expense):
(I) prepare and file with the SEC such amendments to
the Registration Statement, and such supplements to the related
prospectus, as may be required in order to comply with the applicable
provisions of the Securities Act;
(II) furnish to the Shareholders such numbers of
copies of a prospectus conforming to the requirements of the Securities
Act as they may reasonably request in order to facilitate the
disposition of the shares covered by the Registration Statement; and
(III) use reasonable efforts to register and qualify
the shares covered by the Registration Statement under the securities
laws of the state of Colorado.
(C) No Shareholder shall sell any Parent Common Stock pursuant
to the Registration Statement unless such Shareholder shall have notified Parent
in writing, not less than seven nor more than 21 days prior to the sale of such
shares, of such Shareholder's intention to sell such shares.
27.
<PAGE> 33
(D) Notwithstanding anything to the contrary contained herein,
all of Parent's obligations under this Section 7.1 (including its obligation to
file and maintain the effectiveness of the Registration Statement) shall
terminate and expire as of the earliest date on which any shares of Parent
Common Stock issued in the Merger can be sold pursuant to Rule 144 under the
Securities Act.
7.2 INDEMNIFICATION.
(A) Parent agrees to indemnify, to the extent permitted by
law, each Shareholder against all Damages suffered by such Shareholder as a
result of any untrue or alleged untrue statement of material fact contained in
the Registration Statement or in the related prospectus or preliminary
prospectus (or in any amendment thereof or supplement thereto) or as a result of
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such untrue statement or omission or alleged untrue statement or
omission results from or is contained in any information furnished in writing to
Parent by such Shareholder for use therein or results from such Shareholder's
failure to deliver a copy of a Registration Statement or related prospectus (or
any amendment thereof or supplement thereto) after Parent has furnished such
Shareholder with a sufficient number of copies thereof.
(B) In connection with the Registration Statement, each
Shareholder (i) shall furnish to Parent in writing such information and
affidavits as Parent reasonably requests for use in connection with such
Registration Statement or the related prospectus, and (ii) to the extent
permitted by law, will indemnify Parent, its directors and officers and each
Person who controls Parent (within the meaning of the Securities Act) against
all Damages resulting from any untrue or alleged untrue statement of material
fact contained in such Registration Statement or in the related prospectus or
preliminary prospectus (or in any amendment thereof or supplement thereto) or
from any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, but only to
the extent that such untrue statement or omission or alleged untrue statement or
omission results from or is contained in any information or affidavit furnished
in writing by such Shareholder.
(C) Any Person entitled to indemnification under this Section
7 will (i) give prompt written notice to the indemnifying party of any claim
with respect to which it seeks indemnification, and (ii) unless in the
indemnified party's reasonable judgment a conflict of interest exists between
the indemnified party and the indemnifying party with respect to such claim,
permit the indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party will not be subject to any liability for any consent to
the entry of any judgment or any settlement made by the indemnified party
without the indemnifying party's consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will pay the fees and expenses of only one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest exists between such
28.
<PAGE> 34
indemnified party and any other indemnified party with respect to such claim (in
which case the indemnifying party will pay the fees and expenses of additional
counsel).
7.3 TRANSFERABILITY OF REGISTRATION RIGHTS. The rights of the
Shareholders under this Section 7 are not transferable except in connection
with: (a) a transfer by will or intestacy; and (b) estate planning transfers
consisting of gifts to the spouse or issue of the transferor, or to a charity
qualified under Section 501(c)(3) of the Code.
7.4 DELAY OF REGISTRATION. For a period not to exceed 60 days, Parent
may delay the filing or effectiveness of the Registration Statement, or suspend
the use of the Registration Statement (and the Shareholders hereby agree not to
offer or sell any shares of Parent Common Stock pursuant to the Registration
Statement during such period), at any time when Parent, in its reasonable
judgment, believes:
(A) that the filing of a Registration Statement or the
offering or sale of Parent Common Stock pursuant thereto, or the making
of any required disclosure in connection therewith, could reasonably be
expected to have an adverse effect upon (i) a pending or scheduled
offering of Parent's securities, (ii) an acquisition, merger,
consolidation, joint venture, equity investment or other potentially
significant transaction or event, or (iii) any negotiations,
discussions or proposal with respect to any of the foregoing; and
(B) that the failure to disclose any material information with
respect to any of the foregoing could result in a violation of the
Securities Act, the Exchange Act or any provision of any state
securities law.
In the event Parent reasonably believes that any of the foregoing circumstances
are continuing after such 60-day period, it may, with the consent of the
Shareholders (which consent shall not be unreasonably withheld) extend such
60-day period for one additional 30-day period.
SECTION 8. MISCELLANEOUS PROVISIONS
8.1 FURTHER ASSURANCES. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (at or
after the Closing) for the purpose of carrying out or evidencing any of the
transactions contemplated by this Agreement.
8.2 FEES AND EXPENSES. Subject to Section 6, each party to this
Agreement shall bear and pay all fees, costs and expenses (including legal fees
and accounting fees) that have been incurred or that are incurred in the future
by such party in connection with the transactions contemplated by this
Agreement, including all fees, costs and expenses incurred by such party in
connection with or by virtue of (a) the investigation and review conducted by
Parent and its Representatives with respect to the Company's business (and the
furnishing of information to Parent and its Representatives in connection with
such investigation and review), (b) the negotiation, preparation and review of
this Agreement (including the Disclosure Schedule) and
29.
<PAGE> 35
all agreements, certificates, opinions and other instruments and documents
delivered or to be delivered in connection with the transactions contemplated by
this Agreement, (c) the preparation and submission of any filing or notice
required to be made or given in connection with any of the transactions
contemplated by this Agreement, and the obtaining of any Consent required to be
obtained in connection with any of such transactions, and (d) the consummation
of the Merger; provided, however, that, all such fees, costs and expenses
incurred by or for the benefit of the Company (including all such fees, costs
and expenses incurred prior to the date of this Agreement and including any
amounts that may become payable to any officers of the Company or other Persons
in connection with the consummation of the transactions contemplated by this
Agreement) shall be borne and paid solely by the Shareholders and not by the
Company.
8.3 ATTORNEYS' FEES. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
8.4 NOTICES. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to Parent or Merger Sub:
Caere Corporation
100 Cooper Court
Los Gatos, CA 95030
Attn: Chief Financial Officer
Facsimile: (408) 395-5263
with a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Attention: Lee F. Benton, Esq.
Facsimile: (415) 857-0663
30.
<PAGE> 36
if to the Company:
Formonix, Inc.
701 Tradition Court
Fort Collins, CO 80526
Attention: Mr. Lynn Formanek
Facsimile: (970) 282-3686
with a copy to:
Walker and Associates
Terry Walker, Esq.
2337 Spindrift Drive
Longmont, CO 80503
Facsimile: (303) 702-9340
if to a Shareholder:
c/o Formonix, Inc.
701 Tradition Court
Fort Collins, CO 80526
Facsimile: (970) 282-3686
8.5 CONFIDENTIALITY. On and at all times after the Closing Date, each
Shareholder shall keep confidential, and shall not use or disclose to any other
Person, any non-public document or other non-public information in such
Shareholder's possession that relates to the business of the Company or Parent.
8.6 HEADINGS. The bold-faced section headings contained in this
Agreement are for convenience of reference only, shall not be deemed to be a
part of this Agreement and shall not be referred to in connection with the
construction or interpretation of this Agreement.
8.7 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
8.8 GOVERNING LAW; VENUE.
(A) This Agreement shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
(B) Any legal action or other legal proceeding relating to
this Agreement or the enforcement of any provision of this Agreement may be
brought or otherwise commenced
31.
<PAGE> 37
in any federal court located in the Northern District of California in the
County of Santa Clara, in the State of California. Each party to this Agreement:
(I) expressly and irrevocably consents and submits to
the jurisdiction of each federal court located in the Northern District
of California in the County of Santa Clara, in the State of California
(and each appellate court located in the State of California) in
connection with any such legal proceeding;
(II) agrees that each federal court located in the
Northern District of California in the County of Santa Clara, in the
State of California shall be deemed to be a convenient forum; and
(III) agrees not to assert (by way of motion, as a
defense or otherwise), in any such legal proceeding commenced in any
federal court located in the Northern District of California in the
County of Santa Clara, in the State of California, any claim that such
party is not subject personally to the jurisdiction of such court, that
such legal proceeding has been brought in an inconvenient forum, that
the venue of such proceeding is improper or that this Agreement or the
subject matter of this Agreement may not be enforced in or by such
court.
(C) Nothing contained in Section 8.8(b) shall be deemed to
limit or otherwise affect the right of any Indemnitee to commence any legal
proceeding or otherwise proceed against the Company or any of the Shareholders
in any other forum or jurisdiction.
8.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon: the
Company and its successors and assigns (if any); the Shareholders and their
respective personal representatives, executors, administrators, estates, heirs,
successors and assigns (if any); Parent and its successors and assigns (if any);
and Merger Sub and its successors and assigns (if any). This Agreement shall
inure to the benefit of: the Company; the Shareholders; Parent; the other
Indemnitees (subject to Section 6.8); and the respective successors and assigns
(if any) of the foregoing. Parent may freely assign any or all of its rights
under this Agreement (including its indemnification rights under Section 6), in
whole or in part, to any other Person without obtaining the consent or approval
of any other party hereto or of any other Person.
8.10 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and remedies
of the parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that, in the event of any breach or threatened breach by
any party to this Agreement of any covenant, obligation or other provision set
forth in this Agreement for the benefit of any other party to this Agreement,
such other party shall be entitled (in addition to any other remedy that may be
available to it) to (a) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision, and (b) an injunction restraining such breach or threatened breach.
32.
<PAGE> 38
8.11 WAIVER.
(A) No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy.
(B) No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
8.12 AMENDMENTS. This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered on behalf of Parent and each of the Shareholders.
8.13 SEVERABILITY. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
8.14 PARTIES IN INTEREST. Except for the provisions of Section 6, none
of the provisions of this Agreement is intended to provide any rights or
remedies to any Person other than the parties hereto and their respective
successors and assigns (if any).
8.15 ENTIRE AGREEMENT. This Agreement and the other agreements referred
to herein set forth the entire understanding of the parties hereto relating to
the subject matter hereof and thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter hereof and thereof.
8.16 CONSTRUCTION.
(A) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(B) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
33.
<PAGE> 39
(C) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(D) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
34.
<PAGE> 40
The parties hereto have caused this Agreement to be executed and
delivered as of March 31, 1997.
CAERE CORPORATION,
a Delaware corporation
By: /s/ BLANCHE M. SUTTER
---------------------------------------------------
Blanche M. Sutter
CFO, Executive Vice President Finance
VIEWSTAR ACQUISITION CORP.,
a California corporation
By: /s/ ROBERT G. TERESI
---------------------------------------------------
Robert G. Teresi
Chief Executive Officer
35.
<PAGE> 41
FORMONIX, INC.,
a Colorado corporation
By: /s/ LYNN J. FORMANEK
---------------------------------------------------
Lynn J. Formanek
President
/s/ LYNN J. FORMANEK
---------------------------------------------------
LYNN J. FORMANEK
/s/ DAVID L. FORMANEK
---------------------------------------------------
DAVID L. FORMANEK
36.
<PAGE> 42
DISCLOSURE STATEMENT TO THE
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
RECITALS
A. This statement is a part of and is attached to the Caere Corporation
merger and plan of reorganization (hereinafter the "Agreement") with Formonix,
Inc. (hereinafter the "Company") dated March 31, 1997.
B. The parts of this disclosure statement are numbered to coincide with
the numbering of Sections and paragraphs of the Agreement.
STATEMENTS OF DISCLOSURE
Part 1
Section 1. Description of Transaction
Disclosures: None
Part 2
Section 2. Representations and Warranties of the Company and
Shareholders
2.1 Due Organization, No Subsidiaries, Etc.
(d) Names of Board of Directors
Lynn J. Formanek, Chairman
David L. Formanek
Names and Titles of Officers
Lynn J. Formanek, President,
Secretary and Treasurer
David L. Formanek, Vice President
2.5 Due Organization, No Subsidiaries, Etc.
(a) None
(b) None
(c) None
(d) None
(e) None
(f) None
(g) None
1.
<PAGE> 43
(h) The principal shareholders of the Company have
formed a new Colorado corporation on February 10,
1997, named Formanek Computer Programs, Inc.
("FCPI"). The Company has entered into an agreement
with FCPI to transfer certain assets from the Company
prior to the date of the Agreement becoming
effective. The assets transferred by the Company will
be used in further development of marketable programs
not related to the OmniForm product line as further
defined by the Agreement. A copy of the assignment
and bill of sale has been sent to counsel for Parent
in full disclosure of the transaction. The company
deems this assignment of assets as a Material
Contract as provided in Section 2.10(a) of the
Agreement.
(i)(i) None
(i)(ii) See disclosure of transaction in part 2.5(h)
above.
(j) None
(k) None
(l) None
(m) None
(n) None
(o) None
(p) None
(q) See disclosure of transaction in part 2.5(h)
above.
(r) See disclosure of transaction in part 2.5(h)
above.
2.6 Title to Assets
(a) See disclosure of transaction in part 2.5(h)
above.
(b) None
2.7 Title to Assets
(a) Bank Accounts
Bank One, N.A. Checking Account No. 1163412728
Bank One, N.A. Money Market Account No. 2163808963
These accounts will be closed twenty days after the
Closing on March 31, 1997.
2.8 Equipment; Leasehold
(a) A listing of all company assets was forwarded to
counsel for Parent during the due diligence phase of
the negotiations. The assets of the Company have not
materially changed since the date of that disclosure.
2.
<PAGE> 44
2.9 Proprietary Assets
(a) (1) No disclosure
(a) (2) OmniForm Products source code
(a) (3) See disclosure of Part 2.6(a)
(b) None
(c) None
(d) None
(e) None
(f) Gary Formanek, a former employee, has not
executed the requested quit claim for work done while
employed at Formonix. Gary Formanek has never
performed any work related to the FormVision Code.
The release from Gary Formanek has been waived by
Parent and Merger Sub.
(g) See disclosure of transaction in part 2.5(h)
above.
2.10 Contracts
See disclosure of transaction in part 2.5(h) above.
2.11 Liabilities
None
2.12 Compliance with Legal Requirements.
None
2.13 Governmental Authorizations.
None
2.14 Tax Matters
None
2.15 Employee and Labor Matters; Benefit Plans
(a) See disclosure of Part 2.9(f)
(c) Bonuses have been paid to all employees
in varying amounts in anticipation of the
merger.
3.
<PAGE> 45
2.16 Environmental Matters
None
2.17 Sale of Products; Performance of Services
None
2.18 Insurance
None
2.20 Legal Proceedings; Orders
None
2.22 Non-Contravention; Consents
None
4.
<PAGE> 46
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving:
(A) the sale, license, disposition or acquisition of all or a
material portion of the Company's business or assets;
(B) the issuance, disposition or acquisition of (i) any
capital stock or other equity security of the Company, (ii) any option,
call, warrant or right (whether or not immediately exercisable) to
acquire, or otherwise relating to, any capital stock or other equity
security of the Company, or (iii) any security, instrument or
obligation that is or may become convertible into or exchangeable for
any capital stock or other equity security of the Company; or
(C) any merger, consolidation, business combination, share
exchange, reorganization or similar transaction involving the Company.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached (including the Disclosure
Schedule), as it may be amended from time to time.
COMPANY CONTRACT. "Company Contract" shall mean any Contract: (a) to
which the Company is a party; (b) by which the Company or any of its assets is
or may become bound or under which the Company has, or may become subject to,
any obligation; or (c) under which the Company has or may acquire any right or
interest.
COMPANY PROPRIETARY ASSET. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to the Company or otherwise used by the
Company.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan, or legally binding commitment or undertaking of
any nature.
DAMAGES. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee
A-1
<PAGE> 47
(including reasonable attorneys' fees), charge, cost (including costs of
investigation) or expense of any nature.
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean the schedule
(dated as of the date of the Agreement) delivered to Parent on behalf of the
Company and the Shareholders.
EMPLOYEE BENEFIT PLAN. "Employee Benefit Plan" shall have the meaning
specified in Section 3(3) of ERISA.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
FAIR MARKET VALUE. "Fair Market Value" shall mean the average of the
closing sale prices of a share of Parent Common Stock as reported on the Nasdaq
National Market System for each of the fifteen consecutive trading days
immediately preceding the date of determination.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean
any: (a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
INDEMNITEES. "Indemnitees" shall mean the following Persons: (a)
Parent; (b) Parent's current and future affiliates (including the Surviving
Corporation); (c) the respective Representatives of the Persons referred to in
clauses "(a)" and "(b)" above; and (d) the
A-2
<PAGE> 48
respective successors and assigns of the Persons referred to in clauses "(a)",
"(b)" and "(c)" above; provided, however, that neither the Shareholders nor the
Employees shall be deemed to be "Indemnitees."
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
MATERIAL ADVERSE EFFECT. A violation or other matter will be deemed to
have a "Material Adverse Effect" on the Company if such violation or other
matter (considered together with all other matters that would constitute
exceptions to the representations and warranties set forth in the Agreement but
for the presence of "Material Adverse Effect" or other materiality
qualifications, or any similar qualifications, in such representations and
warranties) would have a material adverse effect on the Company's business,
condition, assets, liabilities, operations, financial performance or prospects.
NET REVENUE. "Net Revenue" shall mean those revenues actually received
by Parent from the sales of OmniForm Products, net of reductions for returned
products, rebated discounts, other trade discounts, freight and shipping
allowances, applicable sales taxes, and ordinary trade and promotional
allowances, and less other discounts, including those expressed as sales
commissions granted on sales to independent third parties, such as trading
parties, who acquire such products for resale, all as are received by Parent
from sales of OmniForm Products.
OMNIFORM PRODUCTS. "OmniForm Products" shall mean any and all products
developed or distributed by or on behalf of Parent based on or derived in any
manner substantially from the FormVision Code or source or object code developed
by either Shareholder during the term of his employment with Parent, pursuant to
such Shareholder's respective Employment Agreement with Parent.
PERSON. "Person" shall mean any individual, Entity or Governmental
Body.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (a) patent,
patent application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service mark (whether
registered or unregistered), service mark application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, source
A-3
<PAGE> 49
code, computer program, invention, design, blueprint, engineering drawing,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset; or (b) right to use or exploit any of the
foregoing.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933,
as amended.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
A-4
<PAGE> 50
EXHIBIT B
ARTICLES OF MERGER OF FORMONIX, INC.
AND VIEWSTAR ACQUISITION CORP.
<PAGE> 51
ARTICLES OF MERGER
OF
FORMONIX, INC.
(A COLORADO CORPORATION)
AND
VIEWSTAR ACQUISITION CORP.
(A CALIFORNIA CORPORATION)
The undersigned corporation, pursuant to Section 7-111-107 of the Colorado
Business Corporations Act, hereby execute the following Articles of Merger.
ARTICLE ONE
The names of the corporations proposing to merge and the names of the
States under the laws of which such corporations are organized, are as follows:
Name of Corporation State of Incorporation
------------------- ----------------------
Formonix, Inc. ("Formonix") Colorado
ViewStar Acquisition Corp. ("ViewStar") California
ARTICLE TWO
The laws of the State under which such foreign corporation is organized
permit such merger.
ARTICLE THREE
The name of the surviving corporation shall be "Formonix, Inc.," it shall
be governed by the laws of the State of Colorado and its principal office
address shall be at 100 Cooper Court, Los Gatos, California 95030, attention:
Caere Corporation Legal Department.
ARTICLE FOUR
The Plan of Merger is attached hereto as Exhibit A.
<PAGE> 52
ARTICLE FIVE
As to each corporation, the shareholders of which were required to vote
for approval, the number of shares outstanding, the number of shares entitled to
vote and the number and designation of shares of any class entitled to vote as a
class are:
<TABLE>
<CAPTION>
TOTAL NUMBER OF DESIGNATION OF CLASS NUMBER OF
NAME OF TOTAL NUMBER OF SHARES ENTITLED TO ENTITLED TO VOTE AS A SHARES OF SUCH
CORPORATION SHARES OUTSTANDING VOTE CLASS (IF ANY) CLASS (IF ANY)
<S> <C> <C> <C> <C>
Formonix 300,000 300,000 N/A N/A
ViewStar 100 100 N/A N/A
</TABLE>
ARTICLE SIX
As to each corporation, the shareholders of which were required to vote
for approval, the number of shares voted for and against the plan, respectively,
and the number of shares of any class entitled to vote as a class voted for and
against the plan, are:
<TABLE>
<CAPTION>
TOTAL SHARES VOTED TOTAL SHARES
NAME OF CORPORATION FOR VOTED AGAINST CLASS
- ------------------- ------------------ -------------- -------
<S> <C> <C> <C>
Formonix 300,000 0 Common
ViewStar 100 0 Common
</TABLE>
ARTICLE SEVEN
All provisions of the laws of the State of California and the State of
Colorado applicable to the proposed merger have been complied with.
ARTICLE EIGHT
The Articles of Merger shall be effective upon filing this 31st day of
March, 1997.
ARTICLE NINE
The name and address of the corporation's registered agent for service of
process is Corporation Service Company, 1560 Broadway, Denver, Colorado 80202.
<PAGE> 53
IN WITNESS WHEREOF each of the undersigned corporations has caused these
articles of merger to be executed in its name by its president or vice president
and secretary or assistant secretary, as of the 27th day of March, 1997.
FORMONIX, INC.
A COLORADO CORPORATION
By: /S/LYNN J. FORMANEK
--------------------------------------------
Lynn J. Formanek,
President and Secretary
VIEWSTAR ACQUISITION CORP.
A CALIFORNIA CORPORATION
By: /S/ ROBERT G. TERESI
--------------------------------------------
Robert G. Teresi,
Chairman of the Board and Chief
Executive Officer
By: /S/ BLANCHE M. SUTTER
--------------------------------------------
Blanche M. Sutter,
Vice President, Finance,
Chief Financial Officer and
Secretary
<PAGE> 54
EXHIBIT A
PLAN OF MERGER
THIS PLAN OF MERGER, dated as of March 31, 1997 ("Merger Agreement"), is
made and entered into by ViewStar Acquisition Corp., a California corporation
("Merger Sub"), and Formonix, Inc., a Colorado corporation ("Formonix" or
"Surviving Corporation") (Formonix and Merger Sub being hereinafter collectively
referred to as the "Constituent Corporations").
RECITALS
A. Caere Corporation, a Delaware corporation ("Parent"), Formonix,
Merger Sub, and the shareholders of Formonix (the "Shareholders") have entered
into an Agreement and Plan of Merger and Reorganization dated March 31, 1997
(the "Reorganization Agreement"), providing, among other things, for the
execution and filing of this Merger Agreement and the merger of Merger Sub with
and into Formonix upon the terms set forth in the Reorganization Agreement and
this Merger Agreement (the "Merger").
B. The respective Boards of Directors of each of the Constituent
Corporations deem it advisable and in the best interests of each of such
corporations and their respective shareholders that Merger Sub be merged with
and into Formonix.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and mutual agreements
contained in this Merger Agreement, the Constituent Corporations hereby agree
that Merger Sub shall be merged with and into Formonix in accordance with the
Reorganization Agreement and the laws of the State of Colorado upon the terms
and subject to the conditions set forth as follows:
ARTICLE 1
THE MERGER
1.1 FILING. This Merger Agreement required by the Colorado Business
Corporations Act, shall be filed with the Secretary of State of the State of
Colorado at the time specified in the Reorganization Agreement.
1.2 EFFECTIVENESS. The Merger shall become effective upon the filing of
this Merger Agreement with the Secretary of State of the State of Colorado (the
"Effective Time").
1.
<PAGE> 55
1.3 MERGER. At the Effective Time, Merger Sub shall be merged with and
into Formonix and the separate corporate existence of Merger Sub shall thereupon
cease. Formonix will be the Surviving Corporation in the merger and the separate
corporate existence of Formonix shall continue unaffected and unimpaired by the
Merger.
1.4 FURTHER ACTION. If at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Merger
Agreement or to vest the Surviving Corporation with the full right, title and
possession to all assets, property, rights, privileges, immunities, powers and
franchises of either or both of the Constituent Corporations, the officers and
directors of the Surviving Corporation are fully authorized (in the name of
either or both of the Constituent Corporations or otherwise) to take all such
action.
ARTICLE 2
CORPORATE GOVERNANCE MATTERS
The Articles of Incorporation of the Surviving Corporation shall be as
set forth in Attachment A attached hereto except that the principal street
address and the name and address of the registered agent are hereby amended and
changed so as to read as follows at the Effective Time:
Principal Street Address: 100 Cooper Court
Los Gatos, California 95030
Attention: Caere Corporation
Legal Department
Name and Address of
Registered Agent: Corporation Service Company
1560 Broadway
Denver, Colorado 80202
and said Articles of Incorporation as amended and changed shall continue in full
force and effect until further amended and changed in the manner prescribed by
the provisions of the laws of the State of Colorado.
ARTICLE 3
MANNER OF CONVERTING SHARES OF THE CONSTITUENT CORPORATIONS
3.1 CONVERSION OF FORMONIX STOCK. At the Effective Time, each share of
the voting common stock, no par value per share, of Formonix ("Formonix Common
Stock") outstanding immediately prior to the Effective Time shall be converted
into the right to receive 1.83333 shares of common stock, par value $.001 per
share, of Parent ("Parent Common Stock") to be issued pursuant to this
Agreement.
2.
<PAGE> 56
3.2 MERGER SUB COMMON STOCK. At the Effective Time, each then
outstanding share of the common stock, no par value, of Merger Sub outstanding
immediately prior to the Effective Time shall be converted into one share of
common stock of the Surviving Corporation.
3.3 CLOSING OF FORMONIX'S TRANSFER BOOKS. At the Effective Time, holders
of certificates representing shares of Formonix Common Stock that were
outstanding immediately prior to the Effective Time shall cease to have any
rights as shareholders of Formonix and the stock transfer books of Formonix
shall be closed with respect to all such shares of Formonix Common Stock
outstanding immediately prior to the Effective Time. No further transfer of any
such shares of Formonix's capital stock shall be made on such stock transfer
books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any of such shares of Formonix Common Stock
(a "Formonix Stock Certificate") is presented to the Surviving Corporation or
Parent, such Formonix Stock Certificate shall be canceled and shall be exchanged
as provided in Section 3.4.
3.4 EXCHANGE OF CERTIFICATES.
(A) At the closing of the Merger, the Shareholders will deliver
to Parent their certificates representing all of the outstanding shares of
Formonix Common Stock. Subject to Section 3.6, upon surrender of a Formonix
Stock Certificate to Parent for exchange, (1) each Shareholder shall be entitled
to receive in exchange therefor a certificate representing the number of shares
of Parent Common Stock that such Shareholder has the right to receive pursuant
to the provisions of Section 3.1, and (2) the Formonix Stock Certificate so
surrendered shall be canceled. If any Formonix Stock Certificate shall have been
lost, stolen or destroyed, Parent may, in its discretion and as a condition
precedent to the issuance of any certificate representing Parent Common Stock,
require the Shareholder of such lost, stolen or destroyed Formonix Stock
Certificate to provide an appropriate affidavit and to deliver a bond (in such
sum as Parent may reasonably direct) as indemnity against any claim that may be
made against Parent or the Surviving Corporation with respect to such Formonix
Stock Certificate.
(B) The shares of Parent Common Stock to be issued in the Merger
shall be characterized as "restricted securities" for purposes of Rule 144 under
the Securities Act of 1933, as amended, and each certificate representing any of
such shares shall bear a legend identical or similar in effect to the following
legend (together with the legend required pursuant to Section 3.5 below and any
other legend or, legends required pursuant to applicable state securities laws
or otherwise):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED
OR HYPOTHECATED UNLESS REGISTERED UNDER THE ACT OR UNLESS AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS
AVAILABLE."
3.
<PAGE> 57
3.5 RESTRICTION ON TRANSFER. Of the shares of Parent Common Stock to be
issued to the Shareholders pursuant to the Reorganization Agreement, 300,000
shall be subject to a lock-up restriction and shall bear the following legend,
in addition to the legend or legends required pursuant to Section 3.4 above:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCK-UP
AGREEMENT AND MAY NOT BE SOLD OR TRANSFERRED UNTIL THE TIME SET FORTH IN
THE AGREEMENT. COPIES OF THE AGREEMENT COVERING THE ISSUANCE OF THESE
SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE CORPORATION."
3.6 FRACTIONAL SHARES. No fractional shares of Parent Common Stock shall
be issued in connection with the Merger, and no certificates for any such
fractional shares shall be issued. In lieu of such fractional shares, a
Shareholder who would otherwise be entitled to receive a fraction of a share of
Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock issuable to such Shareholder) shall, upon surrender of such Shareholder's
Formonix Stock Certificate(s), be paid in cash the dollar amount (rounded to the
nearest whole cent), without interest, determined by multiplying such fraction
by the Fair Market Value (as defined below) of one share of Parent Common Stock.
For purposes of this Merger Agreement "Fair Market Value" shall mean the average
of the closing sale prices of a share of Parent Common Stock as reported on the
Nasdaq National Market System for each of the fifteen consecutive trading days
immediately preceding the date of determination.
ARTICLE 4
MISCELLANEOUS PROVISIONS
4.1 FURTHER ASSURANCES. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (at or
after the Effective Time) for the purpose of carrying out or evidencing any of
the transactions contemplated by this Agreement.
4.2 AMENDMENTS. This Merger Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of Parent and each of the Shareholders.
4.
<PAGE> 58
IN WITNESS WHEREOF, the parties have duly executed this Merger Agreement
as of the date first written above.
VIEWSTAR ACQUISITION CORP., FORMONIX, INC.,
A CALIFORNIA CORPORATION A COLORADO CORPORATION
By: /S/ ROBERT G. TERESI By: /S/ LYNN J. FORMANEK
----------------------- --------------------------------
Robert G. Teresi Lynn J. Formanek
Chairman of the Board and President, Secretary and
Chief Executive Officer Treasurer
By: /S/ BLANCHE M. SUTTER By: /S/ DAVID L. FORMANEK
----------------------- --------------------------------
Blanche M. Sutter David L. Formanek
Vice President, Finance, Vice President
Chief Financial Officer
and Secretary
5.
<PAGE> 59
EXHIBIT C
DIRECTORS AND OFFICERS OF SURVIVING CORPORATION
<TABLE>
<CAPTION>
DIRECTORS OFFICERS
<S> <C>
Robert G. Teresi President - Robert G. Teresi
Blanche M. Sutter Chief Financial Officer and Secretary -
Blanche M. Sutter
</TABLE>
<PAGE> 60
EXHIBIT D
FORM OF CONTINUITY OF INTEREST CERTIFICATE
<PAGE> 61
EXHIBIT D
CONTINUITY OF INTEREST CERTIFICATE
1~ ("Shareholder") is aware that, pursuant to that certain Agreement and
Plan of Merger and Reorganization dated as of March 31, 1997, among CAERE
CORPORATION, a Delaware corporation ("Parent"), VIEWSTAR ACQUISITION CORP., a
California corporation and a wholly owned subsidiary of Parent ("Merger Sub"),
FORMONIX, INC., a Colorado corporation (the "Company"), Shareholder and a
certain other shareholder of the Company (the "Reorganization Agreement"), it is
contemplated that Merger Sub will merge into the Company (the contemplated
merger of Merger Sub into the Company being referred to in this Certificate as
the "Merger"). As a result of the Merger, it is contemplated that the Company's
shareholders will receive shares of common stock, par value $.001 per share, of
Parent ("Parent Common Stock") in exchange for their shares of voting common
stock, no par value per share, of the Company ("Company Common Stock"), and that
the Company will become a wholly owned subsidiary of Parent.
1. Shareholder represents, warrants and certifies to Parent, Merger Sub
and the Company as follows:
(A) Shareholder currently is the owner of 2~ shares of Company
Common Stock (the "Shares"), and did not acquire any of the Shares in
contemplation of the Merger.
(B) Shareholder has not engaged in a Sale (as defined below) of
any shares of Company Common Stock in contemplation of the Merger.
(C) Shareholder has no plan or intention to engage in a sale,
exchange, transfer, distribution, redemption or reduction in any way of
Shareholder's risk of ownership (by short sale or otherwise), or other
disposition, directly or indirectly (such actions being collectively referred to
herein as a "Sale") of (i) any of the Lock-Up Shares (as defined in the
Reorganization Agreement) or (ii) more than fifty percent (50%) of the shares of
Parent Common Stock to be received by Shareholder in the Merger which are not
Lock-Up Shares.
(D) Shareholder has no plan or intention to exercise dissenters'
rights in connection with the Merger.
(E) Shareholder is not aware of, or participating in, any plan or
intention on the part of the shareholders of the Company to engage in a Sale or
Sales of (i) any of the LockUp Shares or (ii) more than fifty percent (50%) of
the shares of Parent Common Stock to be received by Shareholder in the Merger
which are not Lock-Up Shares.
(F) Except to the extent written notification to the contrary is
received by Parent and the Company from Shareholder prior to the consummation of
the Merger, the representations, warranties and certifications contained herein
shall be accurate at all times from the date hereof through the date on which
the Merger is consummated.
1.
<PAGE> 62
(G) Shareholder has consulted with such legal counsel and
financial advisors as he has deemed appropriate in connection with the execution
of this Certificate.
2. Shareholder understands that Parent, Merger Sub, the Company, and the
Company's shareholders, as well as legal counsel to Parent, Merger Sub and the
Company will be relying on the accuracy of the representations, warranties and
certifications contained herein.
Shareholder has executed this Certificate on March 31, 1997.
---------------------------------------
1~
2.
<PAGE> 63
EXHIBITS E-1 TO E-5
EMPLOYMENT AGREEMENTS
<PAGE> 64
EXHIBIT F
FORM OF NONCOMPETITION AGREEMENT
<PAGE> 65
EXHIBIT F
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT ("Agreement") is being executed and
delivered as of March 31, 1997 (the "Closing Date") by 1~ ("Shareholder") in
favor of and for the benefit of CAERE CORPORATION, a Delaware corporation
("Parent"), and FORMONIX, INC., a Colorado corporation (the "Corporation").
RECITALS
A. As an employee and shareholder of the Corporation, Shareholder has
obtained extensive and valuable knowledge and information concerning the
business of the Corporation (including confidential information relating to the
Corporation and its operations, assets, contracts, customers, personnel, plans
and prospects).
B. Pursuant to an Agreement and Plan of Merger and Reorganization, dated
as of March 31, 1997, among the Corporation, Parent, ViewStar Acquisition Corp.,
a California corporation and a wholly owned subsidiary of Parent ("Merger Sub"),
Shareholder and the other shareholder of the Corporation (the "Reorganization
Agreement"), Merger Sub is merging into the Corporation on the Closing Date (the
merger of Merger Sub into the Corporation being referred to in this Agreement as
the "Merger"). In connection with the Merger, Shareholder and the Corporation's
other shareholder are exchanging all of their shares of stock of the Corporation
for shares of Common Stock of Parent, and as a result of the Merger the
Corporation is becoming a wholly owned subsidiary of Parent.
C. In connection with the Merger (and as a condition to the consummation
of the Merger), and to more fully secure unto Parent the benefits of the Merger,
Parent has required that Shareholder enter into this Agreement; and Shareholder
is entering into this Agreement in order to induce Parent to consummate the
Merger.
D. Capitalized terms used in this Agreement, unless otherwise defined
herein, shall have the respective meanings set forth in the Reorganization
Agreement.
AGREEMENT
In order to induce Parent to consummate the transactions contemplated by
the Reorganization Agreement, and in consideration of the issuance and delivery
to Shareholder of shares of Common Stock of Parent (in exchange for all of his
stock of the Corporation) pursuant to the Reorganization Agreement, Shareholder
agrees as follows:
1. ACKNOWLEDGMENTS BY SHAREHOLDER. Shareholder acknowledges that the
promises and restrictive covenants he is providing in this Agreement are
reasonable and are
1.
<PAGE> 66
necessary to enable Parent to protect its legitimate interests in its
acquisition of all of the Corporation's outstanding stock pursuant to the
Reorganization Agreement (including the Corporation's goodwill). Shareholder
acknowledges that he is exchanging all of his shares of stock of the Corporation
for shares of Common Stock of Parent in the Merger.
2. NONCOMPETITION. During the period commencing on the Closing Date and
continuing until the date three years after the date of termination of
Shareholder's employment with Parent, pursuant to the Employment Agreement (the
"Employment Agreement") between Shareholder and Parent dated as of March 17,
1997 (the "Noncompetition Period"), Shareholder shall not, without the prior
written consent of the Corporation:
(A) engage in any Competing Business (as defined below) for
Shareholder's own account or for the account of any other person or
entity; or
(B) be or become an officer, director, stockholder, owner,
affiliate, salesperson, co-owner, partner, trustee, promoter,
technician, engineer, analyst, significant employee, agent,
representative, supplier, creditor, consultant, licensor, advisor or
manager of or to, or otherwise acquire or hold any interest in, or sell
any asset to, any person or entity that engages in any Competing
Business;
provided, however, that Shareholder may, without violating this Section 2, own
as a passive investment less than 1% of the outstanding shares of capital stock
of a publicly-held corporation if (i) such shares are actively traded on an
established national securities market in the United States, and (ii)
Shareholder is not otherwise associated directly or indirectly with such
corporation or any affiliate of such corporation. For purposes of this
Agreement, "Competing Business" shall mean any business that is conducted
anywhere in the Restricted Territory (as defined below) and that involves or is
competitive with any business that involves the licensing, marketing or
distribution of any software or "systems" or product that performs or includes
the same or substantially the same features and functionality as or is marketed
as a similar solution as OmniForm(R) Products, determined as of March 31, 1998.
For purposes of this Agreement, the term "Restricted Territory" shall be
worldwide.
3. NONSOLICITATION. Shareholder agrees that, during the Noncompetition
Period, he will not:
(A) encourage, induce, attempt to induce, solicit or attempt to
solicit (on Shareholder's own behalf or on behalf of any other person or
entity) any employee of Parent, the Corporation or any of Parent's other
subsidiaries or affiliates to leave his or her employment with Parent,
the Corporation or any of Parent's other subsidiaries or affiliates;
(B) employ, or permit any entity over which Shareholder
exercises any control to employ, any person who shall have been employed
by Parent, the Corporation or any of Parent's other subsidiaries or
affiliates;
2.
<PAGE> 67
(C) on behalf of or in connection with a Competing Business,
approach, contact or solicit business from any person or entity that is
known by Shareholder, as of the date of termination of Shareholder's
employment with Parent pursuant to the Employment Agreement, to be a
customer or client or prospective customer or client of the Corporation;
or
(D) interfere in any manner with the relationship of Parent, the
Corporation or any of Parent's other subsidiaries with any person or
entity that is known by Shareholder to be a customer or client or
prospective customer or client of Parent, the Corporation or any of
Parent's other subsidiaries or affiliates.
4. CONFIDENTIAL INFORMATION.
4.1 PROPRIETARY INFORMATION AGREEMENT. Shareholder acknowledges
that Shareholder has previously executed a Proprietary Information and
Inventions Agreement in favor of the Corporation and Parent and agrees to
continue to abide by the provisions of such agreements both during and after the
Noncompetition Period.
4.2 CONFIDENTIALITY. Shareholder agrees to keep all Confidential
Information (as defined in Section 4.3 below) strictly confidential and,
accordingly, agrees that he shall not, at any time, use for any purpose, or
disclose or permit to be disclosed to any person or entity, any Confidential
Information, except as may be expressly authorized in writing by the Corporation
and Parent in order to enable Shareholder to discharge his duties under the
Employment Agreement. Shareholder acknowledges that the Confidential Information
constitutes unique and valuable assets of the Corporation and Parent acquired at
great time and expense by the Corporation and Parent, and that any disclosure or
other use of such Confidential Information, other than for the sole benefit of
the Corporation and Parent, would be wrongful and would cause irreparable harm
to the Corporation and Parent.
4.3 DEFINITION OF "CONFIDENTIAL INFORMATION." The term
"Confidential Information" means any and all trade secrets and any and all
non-public information (whether or not in written form and whether or not
expressly designated as confidential) relating to the Corporation, Parent or any
of the Corporation's or Parent's direct or indirect subsidiaries or other
affiliates or relating to the business, operations, financial affairs,
performance, assets, investments, technology, processes, products, contracts,
customers, licensees, sublicensees, suppliers, personnel, plans or prospects of
the Corporation or Parent or any of the Corporation's or Parent's direct or
indirect subsidiaries or other affiliates, including any such information
consisting of or otherwise relating to technology, designs, drawings, processes,
license or sublicense arrangements, software and programs (including object code
and source code), formulae, proposals, customer lists or preferences, pricing
lists, referral sources, marketing or sales techniques or plans, operations
manuals, service manuals, financial information, projections, lists of suppliers
or distributors or sources of supply.
4.4 TERM OF CONFIDENTIALITY. Shareholder's obligations under this
Agreement with respect to any portion of the Confidential Information shall
terminate in the event that the
3.
<PAGE> 68
Confidential Information: (i) was in the public domain at the time it was
communicated to Shareholder; (ii) entered the public domain subsequent to the
time it was communicated to the Shareholder through no fault of Shareholder;
(iii) was in Shareholder's possession free of any obligation of confidence at
the time it was communicated to Shareholder; (iv) was communicated by Parent to
an unaffiliated third party free of any obligation of confidence; or (v) is
subsequently disclosed in response to an order by a court or other governmental
body, or as otherwise required by law.
5. INDEPENDENCE OF OBLIGATIONS. The covenants of Shareholder set forth
in this Agreement shall be construed as independent of any other agreement or
arrangement between Shareholder, on the one hand, and the Corporation or Parent,
on the other. The existence of any claim or cause of action by Shareholder
against the Corporation or Parent shall not constitute a defense to the
enforcement of any of such covenants against Shareholder.
6. SPECIFIC PERFORMANCE. Shareholder agrees that in the event of any
breach or threatened breach by Shareholder of any covenant, obligation or other
provision contained in this Agreement, Parent and the Corporation shall be
entitled (in addition to any other remedy that may be available to them) to (a)
a decree or order of specific performance or mandamus to enforce the observance
and performance of such covenant, obligation or other provision, and (b) an
injunction restraining such breach or threatened breach.
7. NON-EXCLUSIVITY. The rights and remedies of Parent and the
Corporation hereunder are not exclusive of or limited by any other rights or
remedies which Parent or the Corporation may have, whether at law, in equity, by
contract or otherwise, all of which shall be cumulative (and not alternative).
Without limiting the generality of the foregoing, the rights and remedies of
Parent and the Corporation hereunder, and the obligations and liabilities of
Shareholder hereunder, are in addition to their respective rights, remedies,
obligations and liabilities under the law of unfair competition,
misappropriation of trade secrets and the like. This Agreement does not limit,
and is not limited by, the terms of the Employment Agreement or the terms of any
other agreement between Shareholder and Parent or the Corporation or any
affiliate of Parent or the Corporation.
8. NOTICES. Any notice or other communication required or permitted to
be delivered to Shareholder, the Corporation or Parent under this Agreement
shall be in writing and shall be deemed properly delivered, given and received
when delivered (by hand, by registered mail, by courier or express delivery
service or by facsimile) to the address or facsimile number set forth beneath
the name of such party below (or to such other address or facsimile number as
such party shall have specified in a written notice given to the other party
hereto):
4.
<PAGE> 69
IF TO THE CORPORATION: Formonix, Inc.
In care of:
Caere Corporation
100 Cooper Court
Los Gatos, California 95030
Attention: Legal Department
Facsimile: (408) 395-5263
IF TO PARENT: Caere Corporation
100 Cooper Court
Los Gatos, California 95030
Attention: Legal Department
Facsimile: (408) 395-5263
IF TO SHAREHOLDER: 1~
3~
4~
Facsimile: (970) 282-3680
9. SEVERABILITY. If any provision of the Agreement or any part of any
such provision is held under any circumstances to be invalid or unenforceable in
any jurisdiction, then (a) such provision or part thereof shall, with respect to
such circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (b) the invalidity or unenforceability of such provision or part thereof
under such circumstances and in such jurisdiction shall not affect the validity
or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (c) the invalidity or
unenforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of the Agreement. Each provision of the
Agreement is separable from every other provision of the Agreement, and each
part of each provision of the Agreement is separable from every other part of
such provision.
10. GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed in all respects by, the laws of the State of Colorado without
giving effect to principles of conflicts of laws.
11. WAIVER. No failure on the part of Parent or the Corporation to
exercise any power, right, privilege or remedy under this Agreement, and no
delay on the part of Parent or the Corporation in exercising any power, right,
privilege or remedy under this Agreement, shall operate as a waiver of such
power, right, privilege or remedy; and no single or partial exercise of any such
power, right, privilege or remedy shall preclude any other or further exercise
thereof or of any other power, right, privilege or remedy. Neither Parent nor
the Corporation shall be deemed to have waived any claim arising out of this
Agreement, or any power, right, privilege or remedy under this Agreement, unless
the waiver of such claim, power, right, privilege or remedy is expressly set
forth in a written instrument duly executed and delivered
5.
<PAGE> 70
on behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
12. CAPTIONS. The captions contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
13. FURTHER ASSURANCES. Shareholder shall execute and/or cause to be
delivered to the Corporation and Parent such instruments and other documents and
shall take such other actions as Corporation and Parent may reasonably request
to effectuate the intent and purposes of this Agreement.
14. ENTIRE AGREEMENT. This Agreement, the Reorganization Agreement, the
Proprietary Information and Inventions Agreements, the Release between
Shareholder and Parent, dated as of March 31, 1997, the Cross-License Agreement
between David L. Formanek, Lynn J. Formanek, Parent and Formonix, dated as of
March 31, 1997 and the Employment Agreement set forth the entire understanding
of Shareholder, the Corporation and Parent relating to the subject matter hereof
and thereof and supersede all prior agreements and understandings between any of
such parties relating to the subject matter hereof and thereof.
15. AMENDMENTS. This Agreement may not be amended, modified, altered, or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of Parent and Shareholder.
16. ASSIGNMENT. This Agreement and all obligations hereunder are
personal to Shareholder and may not be transferred or assigned by Shareholder at
any time. The Corporation may assign its rights under this Agreement to any
entity in connection with any sale or transfer of all or a substantial portion
of the Corporation's assets to such entity.
17. BINDING NATURE. Subject to Section 16, this Agreement will be
binding upon Shareholder and Shareholder's representatives, executors,
administrators, estate, heirs, successors and assigns, and will inure to the
benefit of Parent and the Corporation and their respective successors and
assigns.
18. ATTORNEYS' FEES AND EXPENSES. If any legal action or other legal
proceeding relating to the enforcement of any provision of this Agreement is
brought against Shareholder, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
6.
<PAGE> 71
19. CONSTRUCTION.
(A) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa;
the masculine gender shall include the feminine and neuter genders; the
feminine gender shall include the masculine and neuter genders; and the
neuter gender shall include the masculine and feminine genders.
(B) Shareholder agrees that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party
shall not be applied in the construction or interpretation of this
Agreement.
(C) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words
"without limitation."
(D) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections
of this Agreement and Exhibits to this Agreement.
The undersigned has executed this Agreement as of the date first above
written.
SHAREHOLDER:
----------------------------------------------
1~
7.
<PAGE> 72
EXHIBIT G
FORM OF RELEASE
<PAGE> 73
EXHIBIT G
RELEASE
THIS RELEASE ("Release") is being executed and delivered as of March 31,
1997, by 1~ ("Releasor") in favor of, and for the benefit of, FORMONIX, INC., a
Colorado corporation (the "Corporation"), CAERE CORPORATION, a Delaware
corporation ("Parent"), and the other Releasees (as defined in Section 2).
RECITALS
A. Contemporaneously with the execution and delivery of this Release,
pursuant to an Agreement and Plan of Merger and Reorganization, dated as of
March 31, 1997, among the Corporation, Parent, ViewStar Acquisition Corp., Inc.,
a California corporation and a wholly owned subsidiary of Parent ("Merger Sub"),
Releasor and the other shareholder of the Corporation (the "Reorganization
Agreement"), Merger Sub is merging into the Corporation (the merger of Merger
Sub into the Corporation being referred to in this Release as the "Merger"). As
a result of the Merger, the Corporation's shareholders are receiving shares of
common stock of Parent in exchange for their shares of voting common stock of
the Corporation, and the Corporation is becoming a wholly owned subsidiary of
Parent.
B. Parent has required, as a condition to consummating the Merger and
the other transactions contemplated by the Reorganization Agreement, that
Releasor execute and deliver this Release.
AGREEMENT
In order to induce Parent to consummate the transactions contemplated by
the Reorganization Agreement, and for other valuable consideration (the receipt
and sufficiency of which are hereby acknowledged by Releasor), Releasor hereby
covenants and agrees as follows:
1. RELEASE. Releasor, for himself and for each of his Associated Parties
(as defined in Section 2), hereby generally, irrevocably, unconditionally and
completely releases and forever discharges each of the Releasees (as defined in
Section 2) from, and hereby irrevocably, unconditionally and completely waives
and relinquishes, each of the Released Claims (as defined in Section 2).
<PAGE> 74
2. DEFINITIONS.
(A) The term "Associated Parties," when used herein with respect
to Releasor, shall mean and include: (i) Releasor's predecessors, successors,
executors, administrators, heirs and estate; (ii) Releasor's past, present and
future assigns, agents and representatives; (iii) each entity that Releasor has
the power to bind (by Releasor's acts or signature) or over which Releasor
directly or indirectly exercises control; and (iv) each entity of which Releasor
owns, directly or indirectly, at least 50% of the outstanding equity,
beneficial, proprietary, ownership or voting interests.
(B) The term "Releasees" shall mean and include: (i) Parent; (ii)
the Corporation; (iii) each of the direct and indirect subsidiaries of Parent;
(iv) each other affiliate of Parent; and (v) the successors and past, present
and future assigns, directors, officers, employees, agents, attorneys and
representatives of the respective entities identified or otherwise referred to
in clauses "(i)" through "(iv)" of this sentence, other than Releasor.
(C) The term "Claims" shall mean and include all past, present
and future disputes, claims, controversies, demands, rights, obligations,
liabilities, actions and causes of action of every kind and nature, including:
(i) any unknown, unsuspected or undisclosed claim; (ii) any claim or right that
may be asserted or exercised by Releasor in his capacity as a shareholder,
director, officer or employee of the Corporation or in any other capacity; and
(iii) any claim, right or cause of action based upon any breach of any express,
implied, oral or written contract or agreement; (iv) any tort claim; and (v) any
indemnification claim.
(D) The term "Released Claims" shall mean and include each and
every Claim that (i) Releasor or any Associated Party of Releasor may have had
in the past, may now have or may have in the future against any of the
Releasees, and (ii) has arisen or arises out of, or relates to, any
circumstance, agreement, activity, action, omission, event or matter occurring
or existing on or prior to the date of this Release provided, however, that the
Released Claims shall not include:
(1) Releasor's rights, if any, against Parent under the
Reorganization Agreement;
(2) Releasor's rights against Parent under the Employment
Agreement between Releasor and Parent, dated as of March 17, 1997;
(3) any right of indemnification Releasor may have against
the Corporation under the Corporation's articles of incorporation in his
capacity as an officer and director of the Corporation, to the extent
such right of indemnification arises as a result of any lawsuit that (A)
is brought against Releasor after the date of this Release by a party
who is not a current or former shareholder of the Corporation and who is
not affiliated with or related to any current or former shareholder of
the Corporation, (B) is
2.
<PAGE> 75
not brought in the name of the Corporation, and (C) is based on an
allegedly wrongful action taken by Releasor prior to the date of this
Release in his capacity as a director and officer of the Corporation.
3. REPRESENTATIONS AND WARRANTIES. Releasor represents and
warrants that:
(A) Releasor has not assigned, transferred, conveyed or otherwise
disposed of any Claim against any of the Releasees, or any direct or indirect
interest in any such Claim, in whole or in part;
(B) to the best of Releasor's knowledge, no other person or
entity has any interest in any of the Released Claims;
(C) Releasor is not aware of any claim or potential claim by any
person or entity against Releasor, and is not aware of any other facts or
circumstances, that could give rise to a right of indemnification in favor of
Releasor against the Corporation;
(D) to the best of Releasor's knowledge, no Associated Party of
Releasor has or had any Claim against any of the Releasees;
(E) to the best of Releasor's knowledge, no Associated Party of
Releasor will in the future have any Claim against any Releasee that arises from
or relates to any circumstance, agreement, activity, action, omission, event or
matter occurring or existing on or prior to the date of this Release;
(F) this Release has been duly and validly executed and delivered
by Releasor;
(G) this Release is a valid and binding obligation of Releasor
and Releasor's Associated Parties, and is enforceable against Releasor and each
of his Associated Parties in accordance with its terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting creditors' rights, and subject to general equity
principles and to limitations on availability of equitable relief, including
specific performance;
(H) there is no action, suit, proceeding, dispute, litigation,
claim, complaint or investigation by or before any court, tribunal, governmental
body, governmental agency or arbitrator pending or, to the best of the knowledge
of Releasor, threatened against Releasor or any of Releasor's Associated Parties
that challenges or would challenge the execution and delivery of this Release or
the taking of any of the actions required to be taken by Releasor under this
Release;
(I) neither the execution and delivery of this Release nor the
performance hereof will: (i) result in any violation or breach of any agreement
or other instrument to which
3.
<PAGE> 76
Releasor or any of Releasor's Associated Parties is a party or by which Releasor
or any of Releasor's Associated Parties is bound; or (ii) result in a violation
or any law, rule, regulation, treaty, ruling, directive, order, arbitration
award, judgment or decree to which Releasor or any of Releasor's Associated
Parties is subject; and
(J) no authorization, instruction, consent or approval of any
person or entity is required to be obtained by Releasor or any of Releasor's
Associated Parties in connection with the execution and delivery of this Release
or the performance hereof.
4. CIVIL CODE SECTION 1542. Releasor (a) represents, warrants and
acknowledges that Releasor has been fully advised by his attorney of the
contents of Section 1542 of the Civil Code of the State of California, and (b)
hereby expressly waives the benefits thereof and any rights Releasor may have
thereunder. Section 1542 of the Civil Code of the State of California provides
as follows:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have
materially affected his settlement with the debtor."
Releasor also hereby waives the benefits of, and any rights Releasor may have
under, any statute or common law principle of similar effect in any
jurisdiction.
5. INDEMNIFICATION. Without in any way limiting any of the rights or
remedies otherwise available to any Releasee, Releasor shall hold harmless and
indemnify each Releasee from and against, and shall compensate and reimburse
each Releasee for, any loss, damage, injury, decline in value, lost opportunity,
liability, exposure, claim, demand, settlement, judgment, award, fine, penalty,
tax, fee (including reasonable attorneys' fees) charge, cost (including costs of
investigation) or expense of any nature which are suffered or incurred at any
time by any Releasee, or to which any Releasee otherwise becomes subject at any
time, and that arises out of or by virtue of, or relates to: (a) any failure on
the part of Releasor to observe, perform or abide by, or any other breach of,
any restriction, covenant, obligation, representation, warranty or other
provision contained herein; (b) the assertion or purported assertion of any of
the Released Claims by Releasor or any of Releasor's Associated Parties; or (c)
any inaccuracy in or breach of any representation or warranty set forth in this
Release.
6. NOTICES. Any notice or other communication required or permitted to
be delivered to Releasor, the Corporation or Parent under this Release shall be
in writing and shall be deemed properly delivered, given and received when
delivered (by hand, by registered mail, by courier or express delivery service
or by facsimile) to the address or facsimile telephone number set forth beneath
the name of such party below (or to such other address or facsimile telephone
number as such party shall have specified in a written notice given to the other
party hereto):
4.
<PAGE> 77
IF TO THE CORPORATION: Formonix, Inc.
In care of:
Caere Corporation
100 Cooper Court
Los Gatos, California 95030
Attention: Legal Department
Facsimile: (408) 395-5263
IF TO PARENT: Caere Corporation
100 Cooper Court
Los Gatos, California 95030
Attention: Legal Department
Facsimile: (408) 395-5263
IF TO RELEASOR: 1~
3~
4~
Facsimile: (970) 282-3686
7. SEVERABILITY. If any provision of this Release or any part of any
such provision is held under any circumstances to be invalid or unenforceable in
any jurisdiction, then (a) such provision or part thereof shall, with respect to
such circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (b) the invalidity or unenforceability of such provision or part thereof
under such circumstances and in such jurisdiction shall not affect the validity
or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (c) the invalidity or
unenforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Release. Each provision of this
Release is separable from every other provision of this Release, and each part
of each provision of this Release is separable from every other part of such
provision.
8. GOVERNING LAW. This Release shall be construed in accordance with,
and governed in all respects by, the laws of the State of California (without
giving effect to principles of conflicts of laws).
9. WAIVER. No failure on the part of any Releasee to exercise any power,
right, privilege or remedy under this Release, and no delay on the part of any
Releasee in exercising any power, right, privilege or remedy under this Release,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy. No Releasee shall be deemed to have waived any claim
arising out of this Release, or any power, right, privilege or remedy under this
Release, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument
5.
<PAGE> 78
duly executed and delivered on behalf of such party; and any such waiver shall
not be applicable or have any effect except in the specific instance in which it
is given.
10. CAPTIONS. The captions contained in this Release are for convenience
of reference only, shall not be deemed to be a part of this Release and shall
not be referred to in connection with the construction or interpretation of this
Release.
11. FURTHER ASSURANCES. Releasor shall execute and/or cause to be
delivered to the Corporation and Parent such instruments and other documents and
shall take such other actions as Corporation or Parent may reasonably request to
effectuate the intent and purposes of this Release.
12. ENTIRE AGREEMENT. This Release sets forth the entire understanding
of the parties relating to the subject matter hereof and supersedes all prior
agreements and understandings between the parties relating to the subject matter
hereof.
13. AMENDMENTS. This Release may not be amended, modified, altered, or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of Releasor, Parent and the Corporation.
14. BINDING NATURE. This Release will be binding upon Releasor and
Releasor's Associated Parties and will inure to the benefit of each of the
Releasees.
15. ATTORNEYS' FEES AND EXPENSES. If any legal action or other legal
proceeding relating to the enforcement of any provision of this Release is
brought against Releasor, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
6.
<PAGE> 79
16. CONSTRUCTION.
(A) For purposes of this Release, whenever the context requires:
the singular number shall include the plural, and vice versa.
(B) Releasor agrees that any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be
applied in the construction or interpretation of this Release.
(C) As used in this Release, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(D) Except as otherwise indicated, all references in this Release
to "Sections" are intended to refer to Sections of this Release.
Releasor has executed this Release as of the date first above written.
----------------------------------------
1~
7.
<PAGE> 80
EXHIBIT H
FORM OF CROSS LICENSE AGREEMENT BETWEEN
CAERE CORPORATION, FORMONIX, INC.,
DAVID FORMANEK AND LYNN FORMANEK, DATED AS OF MARCH 31, 1997
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD]
May 21, 1997
Caere Corporation
100 Cooper Court
Los Gatos, CA 95030
RE: CAERE CORPORATION FORM S-3
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Caere Corporation (the "Company") of a Registration Statement
on Form S-3 (the "Registration Statement") with the Securities and Exchange
Commission covering the offering of 300,000 shares of the Company's Common
Stock, with a par value of $0.001 (the "Shares") to be sold by certain
stockholders as described in the Registration Statement. The Shares were issued
by the Company in an acquisition pursuant to an Agreement and Plan of Merger and
Reorganization by and among: Caere Corporation; ViewStar Acquisition Corp.;
Formonix, Inc.; and Mr. Lynn J. Formanek and Mr. David L. Formanek, dated as of
March 31, 1997. Defined terms used herein shall have the meanings attributed to
such terms in the Registration Statement unless otherwise stated herein.
In connection with this opinion, we have examined and relied upon the
Registration Statement and related Prospectus, the Company's Certificate of
Incorporation, Certificate of Amendment and Bylaws, and the originals or copies
certified to our satisfaction of such documents, records, certificates,
memoranda and other instruments as in our judgment are necessary or appropriate
to enable us to render the opinion expressed below. We have assumed the
genuineness and authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies thereof, and
the due execution and delivery of all documents where due execution and delivery
are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares are validly issued, fully paid, and nonassessable.
<PAGE> 2
Caere Corporation
Page 2
We consent to the reference to our firm under the caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
Cooley Godward LLP
By: /s/ MICHAEL R. JACOBSON
----------------------------
Michael R. Jacobson
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Caere Corporation:
We consent to incorporation herein by reference of our report dated January 28,
1997, relating to the consolidated balance sheets of Caere Corporation and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of earnings, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1996, and the related
schedule, which reports appear or are incorporated by reference in the December
31, 1996 annual report on Form 10-K of Caere Corporation.
/s/ KPMG Peat Marwick LLP
San Jose, California
May 19, 1997
