<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 12, 1997
REGISTRATION NO.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
PARAMETRIC TECHNOLOGY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
MASSACHUSETTS 7372 04-2866152
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
128 TECHNOLOGY DRIVE
WALTHAM, MA 02154
(781) 398-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
EDWIN J. GILLIS
EXECUTIVE VICE PRESIDENT OF FINANCE AND ADMINISTRATION
PARAMETRIC TECHNOLOGY CORPORATION
128 TECHNOLOGY DRIVE
WALTHAM, MA 02154
(781) 398-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
WITH COPIES TO:
STANLEY KELLER, ESQ.
PALMER & DODGE LLP
ONE BEACON STREET
BOSTON, MASSACHUSETTS 02108
(617) 573-0100
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the merger described in the enclosed Prospectus and Proxy
Statement have been satisfied or waived.
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED(1) PER SHARE OFFERING PRICE FEE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value................. 6,000,000 shares $40.07(2) $240,420,000(2) $72,855
</TABLE>
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(1) Based upon the Registrant's estimate of the maximum number of shares that
may be issued in the Merger described herein.
(2) Estimated solely for purposes of calculating the registration fee, in
accordance with Rule 457(f) under the Securities Act of 1933, as amended.
Pursuant to Rule 457(f), the maximum aggregate offering price is based
upon the market value of the shares of Computervision Corporation common
stock to be exchanged in the Merger, as the average of the high and low
prices for November 7, 1997, as reported by the New York Stock Exchange.
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 WHICH 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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<PAGE>
COMPUTERVISION CORPORATION
100 CROSBY DRIVE
BEDFORD, MASSACHUSETTS 01780
(781) 275-1800
, 1997
Dear Stockholder:
You are cordially invited to attend the special meeting of stockholders of
Computervision Corporation ("Computervision") to be held at 11:00 a.m. on
[Day, Month, Year] at the offices of Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts.
The principal purpose of the meeting will be to vote on approving the
proposed acquisition of Computervision by Parametric Technology Corporation
("Parametric"), in which Computervision stockholders will receive 0.0866
shares of Parametric common stock in exchange for each of their shares of
Computervision common stock and Computervision will become a wholly-owned
subsidiary of Parametric.
The Board of Directors believes that this acquisition is in the best
interests of the stockholders of Computervision and has unanimously approved
the acquisition. Information about Parametric and details of the proposed
acquisition are included in the attached Prospectus/Proxy Statement. I urge
you to read these materials carefully.
We appreciate the loyalty and support our stockholders have demonstrated
over the years. We hope that you will continue this support by voting FOR the
acquisition proposal now. Approval of the acquisition requires the affirmative
vote of a majority of the outstanding Computervision shares. Therefore,
regardless of the number of shares you may own, it is important that your
shares be represented at the meeting. Accordingly, please promptly sign and
return your proxy card in the envelope provided, whether or not you plan to
attend the meeting.
Sincerely,
[INSERT PLANITZER FACSIMILE
SIGNATURE]
Chairman of the Board
NOTE: PLEASE DO NOT SEND IN YOUR STOCK CERTIFICATES NOW.
<PAGE>
COMPUTERVISION CORPORATION
100 CROSBY DRIVE
BEDFORD, MASSACHUSETTS 01730
(781) 275-1800
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [DAY, MONTH] , 199[7]
----------------
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of
Computervision Corporation ("Computervision") will be held on [DAY, MONTH,
YEAR], at [11:00] a.m., at the offices of Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts for the following purposes:
1. To approve and adopt the Agreement and Plan of Reorganization dated
November 3, 1997 between Computervision, Parametric Technology Corporation
("Parametric") and PTC Acquisition Corporation ("Merger Sub"), a wholly-
owned subsidiary of Parametric, and the merger contemplated by that
Agreement, pursuant to which Merger Sub will be merged with and into
Computervision and the Computervision stockholders will have the right to
receive 0.0866 shares of Parametric common stock in exchange for each of
their shares of Computervision common stock.
2. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Stockholders at the close of business on , 1997 are entitled to notice
of, and to vote at, the Special Meeting and any adjournment or postponement of
the Special Meeting.
By Order of the Board of Directors,
[INSERT FIORE FACSIMILE SIGNATURE]
Secretary
Bedford, Massachusetts
[Date], 1997
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE SPECIAL MEETING, PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
PROSPECTUS AND PROXY STATEMENT
PARAMETRIC TECHNOLOGY CORPORATION COMPUTERVISION CORPORATION
128 TECHNOLOGY DRIVE 100 CROSBY DRIVE
WALTHAM, MASSACHUSETTS 02154 BEDFORD, MASSACHUSETTS 01730
(781) 398-5000 (781) 275-1800
PROSPECTUS PROXY STATEMENT
COMMON STOCK, $.01 PAR VALUE FOR THE SPECIAL MEETING OF
STOCKHOLDERS
TO BE HELD ON [DATE]
This Prospectus and Proxy Statement (the "Prospectus/Proxy Statement") is
being furnished to holders of Common Stock, $.01 par value ("Computervision
Common Stock") of Computervision Corporation, a Delaware corporation
("Computervision"), in connection with the solicitation of proxies by the
Board of Directors of Computervision to be used at the Special Meeting of
Stockholders of Computervision (the "Computervision Special Meeting") to be
held on [Day, Month, Year] and any adjournments or postponements thereof.
The principal item on the agenda at the Computervision Special Meeting will
be to vote on approving the proposed acquisition of Computervision by
Parametric Technology Corporation, a Massachusetts corporation ("Parametric"),
in which Computervision stockholders will have the right to receive 0.0866
shares of the Common Stock, $.01 par value, of Parametric ("Parametric Common
Stock") for each share of Computervision Common Stock they hold when the
acquisition is completed.
The acquisition will take place on the terms of an Agreement and Plan of
Reorganization dated November 3, 1997 (the "Merger Agreement") among
Computervision, Parametric and PTC Acquisition Corporation ("Merger Sub")
under which Merger Sub, a wholly-owned subsidiary of Parametric, will be
merged with and into Computervision (the "Merger") and Computervision will
become a wholly-owned subsidiary of Parametric. (The Merger Agreement is
attached as Appendix A to this Prospectus/Proxy Statement and is incorporated
herein by reference.)
Parametric has filed a registration statement on Form S-4 (including the
exhibits and amendments thereto, the "Registration Statement") pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), covering up to
6,000,000 shares of Parametric Common Stock issuable in accordance with the
Merger Agreement in exchange for Computervision Common Stock. This
Prospectus/Proxy Statement also constitutes the prospectus of Parametric
covering the shares of Parametric Common Stock to be issued pursuant to the
Merger Agreement.
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY COMPUTERVISION STOCKHOLDERS.
----------------
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/PROXY STATEMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus/Proxy Statement is [Date], 1997, and it is first
being mailed or delivered to Computervision stockholders on or about that
date.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION..................................................... 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 1
SUMMARY................................................................... 3
RISK FACTORS.............................................................. 8
SELECTED HISTORICAL AND UNAUDITED PRO FORMA COMBINED FINANCIAL DATA....... 12
COMPARATIVE PER SHARE DATA................................................ 15
MARKET PRICE INFORMATION.................................................. 16
COMPUTERVISION SPECIAL MEETING............................................ 17
Matters to be Considered at the Meeting................................. 17
Record Date; Outstanding Securities..................................... 17
Required Votes; Voting of Proxies....................................... 17
PARAMETRIC TECHNOLOGY CORPORATION......................................... 19
COMPUTERVISION CORPORATION................................................ 20
BACKGROUND AND REASONS FOR THE MERGER..................................... 21
Background of the Merger................................................ 21
Parametric's Reasons for the Merger..................................... 22
Computervision's Reasons for the Merger; Recommendation of the Board of
Directors.............................................................. 23
Opinion of Computervision's Financial Advisor........................... 26
THE MERGER................................................................ 31
General................................................................. 31
Conversion of Computervision Common Stock............................... 31
Surrender of Certificates............................................... 31
Merger and Effective Time............................................... 32
Conditions of Merger.................................................... 32
Regulatory Approvals Required........................................... 33
Amendment............................................................... 33
Termination............................................................. 34
Termination Fee......................................................... 35
No Solicitation......................................................... 36
Stockholder Voting Agreements........................................... 36
Affiliate Letter; Resales of Parametric Common Stock.................... 37
Interests of Certain Persons in the Merger.............................. 37
Stock Options and Employee Benefits..................................... 38
Certain Federal Income Tax Consequences................................. 39
Accounting Treatment.................................................... 40
Conduct of Computervision's Business Pending the Merger................. 40
Expenses................................................................ 41
No Computervision Stockholder Appraisal Rights.......................... 41
STOCK OPTION AGREEMENT.................................................... 41
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS............... 42
DESCRIPTION OF PARAMETRIC CAPITAL STOCK................................... 50
COMPARISON OF RIGHTS OF HOLDERS OF PARAMETRIC AND COMPUTERVISION COMMON
STOCK.................................................................... 50
LEGAL MATTERS............................................................. 54
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
EXPERTS.................................................................. 55
OTHER MATTERS............................................................ 55
APPENDICES
A--Agreement and Plan of Reorganization ................................. A-1
B--Stock Option Agreement................................................ B-1
C--Opinion of Hambrecht & Quist LLC on the Fairness of the Merger
Consideration........................................................... C-1
</TABLE>
ii
<PAGE>
AVAILABLE INFORMATION
Parametric and Computervision are each subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, file periodic reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). Reports, proxy and information statements filed pursuant to
Sections 14(a) and 14(c) of the Exchange Act and other information filed with
the Commission 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 following Regional Offices of the
Commission: Midwest Regional Office, 500 West Madison Avenue, Suite 1400,
Chicago, Illinois 60661; and Northeast Regional Office, 7 World Trade Center,
13th Floor, New York, New York 10048. Copies of such material can also be
obtained at prescribed rates from the Public Reference Section of the
Commission at its principal office at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. In addition, Parametric and Computervision are each
required to file electronic versions of such material with the Commission
through the Commission's Electronic Data Gathering, Analysis and Retrieval
(EDGAR) system. The Commission maintains a World Wide Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. Parametric Common Stock is quoted on the Nasdaq National Market.
Reports and other information concerning Parametric can also be inspected at
the offices of National Association of Securities Dealers Inc., Market Listing
Section, 1735 K Street, N.W., Washington, D.C. 20006. Computervision Common
Stock is listed on the New York Stock Exchange. Reports and other information
concerning Computervision can also be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
This Prospectus/Proxy Statement does not contain all of the information set
forth in the Registration Statement and the exhibits thereto, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. Statements made in this Prospectus/Proxy Statement as to the
contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made
to the exhibit for a more complete description of the matter involved, and
each such statement shall be deemed qualified in its entirety by such
reference. The Registration Statement and any amendments thereto, including
exhibits filed or incorporated by reference as a part thereof, are available
for inspection and copying at the Commission's offices as described above. All
information herein with respect to Parametric has been furnished by Parametric
and all information with respect to Computervision has been furnished by
Computervision.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Parametric with the Commission are
incorporated by reference herein, except as superseded or modified herein:
(1) Parametric's annual report on Form 10-K for the year ended September
30, 1996.
(2) Parametric's quarterly reports on Form 10-Q for the quarters ended
December 28, 1996, March 29, 1997 and June 28, 1997.
(3) Parametric's current report on Form 8-K filed with the Commission on
November 4, 1997.
(4) The description of the Parametric Common Stock contained in its
Registration Statement filed under Section 12 of the Exchange Act,
including any amendment or reports filed for the purpose of updating any
such description.
(5) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal period covered by the annual
report referred to in (1) above.
1
<PAGE>
The following documents filed by Computervision with the Commission are
incorporated by reference herein, except as superseded or modified herein:
(1) Computervision's annual report on Form 10-K for the year ended
December 31, 1996.
(2) Computervision's quarterly reports on Form 10-Q for the quarters
ended March 30, 1997, June 28, 1997 and September 28, 1997.
(3) Computervision's current reports on Form 8-K filed with the
Commission on April 30, 1997, May 28, 1997, June 18, 1997, June 26, 1997,
July 22, 1997, July 24, 1997, August 4, 1997, September 9, 1997, October 9,
1997, October 21, 1997, November 5, 1997 and November 12, 1997.
(4) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal period covered by the annual
report referred to in (1) above.
All documents filed by Parametric and Computervision pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus/Proxy Statement and before the date of the Computervision Special
Meeting shall be deemed to be incorporated by reference in this
Prospectus/Proxy Statement and to be a part hereof from the date of filing
such documents.
Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document which also is or is deemed to be
incorporated herein by reference) modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus/Proxy Statement.
THIS PROSPECTUS/PROXY STATEMENT INCORPORATES BY REFERENCE DOCUMENTS OF
PARAMETRIC AND COMPUTERVISION THAT ARE NOT PRESENTED HEREIN OR DELIVERED
HEREWITH. SUCH DOCUMENTS (NOT INCLUDING EXHIBITS THERETO, UNLESS SUCH EXHIBITS
ARE SPECIFICALLY INCORPORATED BY REFERENCE IN THE INFORMATION INCORPORATED
HEREIN BY REFERENCE) ARE AVAILABLE WITHOUT CHARGE TO EACH PERSON TO WHOM A
COPY OF THIS PROSPECTUS/PROXY STATEMENT IS DELIVERED, UPON WRITTEN OR ORAL
REQUEST, IN THE CASE OF PARAMETRIC DIRECTED TO INVESTOR RELATIONS, PARAMETRIC
TECHNOLOGY CORPORATION, 128 TECHNOLOGY DRIVE, WALTHAM, MA 02154 (TELEPHONE
(781) 398-5000), OR IN THE CASE OF COMPUTERVISION DIRECTED TO SHAREHOLDER
RELATIONS, COMPUTERVISION CORPORATION, 100 CROSBY DRIVE, BEDFORD, MA 01730
(TELEPHONE (781) 275-1800). IN ORDER TO ENSURE TIMELY DELIVERY OF THESE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY [5 BUSINESS DAYS PRIOR TO SPECIAL
MEETING DATE].
No person is authorized to give any information or make any representation
not contained in this Prospectus/Proxy Statement, and, if given or made, such
information or representation should not be relied upon as having been
authorized. This Prospectus/Proxy Statement does not constitute an offer to
sell or a solicitation of an offer to buy the securities offered by this
Prospectus/Proxy Statement or a solicitation of a proxy in any jurisdiction
where, or to or from any person to whom, it is unlawful to make such offer or
solicitation of an offer or proxy solicitation. Neither the delivery of this
Prospectus/Proxy Statement nor any distribution of the securities offered
pursuant to this Prospectus/Proxy Statement shall create an implication that
there has been no change in the affairs of Parametric or Computervision since
the date of this Prospectus/Proxy Statement or that the information in this
Prospectus/Proxy Statement or in the documents incorporated herein by
reference is correct as of any time after the dates hereof or thereof.
"Parametric Technology Corporation" and "Pro/ENGINEER" are registered
trademarks, and all names in the Parametric product family are trademarks, of
Parametric. "CADDS," "Computervision," the Computervision logo and "Optegra"
are registered trademarks, and "Electronic Product Definition," and "EPD" are
trademarks, of Computervision.
2
<PAGE>
SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information contained elsewhere in this Prospectus/Proxy Statement,
including the appendices hereto. You are urged to read this Prospectus/Proxy
Statement, the Merger Agreement, which is attached hereto as Appendix A and
incorporated herein by reference, and the other appendices attached hereto in
their entirety. Cross-references in this summary are to captions in this
Prospectus/Proxy Statement. Certain capitalized terms used in this summary are
defined in this Prospectus/Proxy Statement.
Certain of the information contained in this Prospectus/Proxy Statement may
constitute forward-looking statements, including statements as to the benefits
and synergies expected to be realized as a result of the Merger and as to
future financial performance and the analyses used by the financial advisors to
Computervision. See "Background and Reasons for the Merger--Parametric's
Reasons for the Merger," "--Computervision's Reasons for the Merger;
Recommendation of the Board of Directors" and "--Opinion of Computervision's
Financial Advisor." There are a number of important factors that could cause
actual results to differ materially from those indicated by such forward-
looking statements. Such factors include but are not limited to those set forth
in this Prospectus/Proxy Statement under the heading "Risk Factors."
THE COMPANIES
PARAMETRIC TECHNOLOGY CORPORATION
Parametric develops, markets and supports the Pro/ENGINEER family of software
products--a suite of more than 70 application modules that automate the design-
through-manufacturing process within the mechanical computer-aided design,
manufacturing and engineering ("CAD/CAM/CAE") industry. Parametric's
Pro/ENGINEER product line is based on an innovative software architecture that
incorporates a unique parametric, feature-based, solid modeling technology. It
includes capabilities in industrial design, mechanical design, including large
assembly management, functional simulation, manufacturing, information
management, and data exchange.
Parametric's executive offices are located at 128 Technology Drive, Waltham,
Massachusetts 02154. Its telephone number is (781) 398-5000.
COMPUTERVISION CORPORATION
Computervision develops, produces and markets software and provides support
services that are designed to aid manufacturing companies in enhancing their
product development and manufacturing processes. Computervision's principal
products include its CADDS design automation and Optegra product data
management software. Manufacturers use Computervision's software to design,
enhance, and modify their products and to access, share and manage their
product data collaboratively. Computervision's support services include
implementation, consulting and training services designed to assist customers
in reengineering their product development processes and in increasing
productivity.
Computervision's principal executive offices are located at 100 Crosby Drive,
Bedford, Massachusetts 01730. Its telephone number is (781) 275-1800.
COMPUTERVISION SPECIAL MEETING
THE MEETING
The Computervision Special Meeting will be held on [Date], at [Time], at the
offices of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts. At the
Computervision Special Meeting, the stockholders of
3
<PAGE>
Computervision will be asked to approve and adopt the Merger Agreement. Holders
of record of shares of Computervision Common Stock at the close of business on
[Date] are entitled to notice of and to vote at the Computervision Special
Meeting. At such date, [Amount] shares of Computervision Common Stock were
outstanding, each of which will be entitled to one vote.
REQUIRED VOTES
The affirmative vote of the holders of a majority of the shares of
Computervision Common Stock outstanding as of the record date and entitled to
vote is required to approve and adopt the Merger Agreement, which is a
condition to the consummation of the Merger. Parametric and its directors and
executive officers own fewer than 100 shares of Computervision Common Stock.
The officers and directors of Computervision, together with certain principal
stockholders of Computervision, collectively owning approximately % of the
shares of Computervision Common Stock outstanding as of the record date, have
agreed to vote such shares in favor of the approval and adoption of the Merger
Agreement and have executed an irrevocable proxy in favor of Parametric for
such purpose. See "Computervision Special Meeting--Required Votes; Voting of
Proxies."
THE MERGER
TERMS OF THE MERGER
Parametric's acquisition of Computervision will be structured as a merger of
Merger Sub into Computervision. Following the Merger, Computervision will be
the surviving corporation and will operate as a wholly-owned subsidiary of
Parametric. At the time the Merger becomes effective (the "Effective Time"),
each issued and outstanding share of Computervision Common Stock will be
converted into the right to receive 0.0866 shares of Parametric Common Stock
(the "Exchange Ratio") together with cash in lieu of any fractional share
otherwise issuable, based on the market price of Parametric Common Stock over
the ten trading days preceding the Effective Time. See "The Merger--General"
and "--Conversion of Computervision Common Stock."
At the Effective Time, each outstanding option to purchase Computervision
Common Stock will be converted into an option to purchase a number of shares of
Parametric Common Stock (rounded down to the nearest whole number) equal to the
number of shares of Computervision Common Stock issuable upon exercise of such
option immediately before the Effective Time multiplied by the Exchange Ratio.
The exercise price per share of each such option, as so converted, will be
equal to the quotient determined by dividing the exercise price per share of
Computervision Common Stock at which such outstanding option was exercisable
immediately prior to the Effective Time by the Exchange Ratio (rounded up to
the nearest whole cent). See "The Merger--Stock Options and Employee Benefits."
The Merger will become effective after the conditions specified in the Merger
Agreement have been met. Parametric and Computervision have targeted the first
quarter of calendar 1998 for completion of the Merger. See "The Merger--Merger
and Effective Time" and "--Conditions of Merger."
RECOMMENDATION OF THE COMPUTERVISION BOARD OF DIRECTORS
The Computervision Board of Directors (the "Computervision Board") has
unanimously approved the Merger Agreement and determined that the Merger is
fair to and in the best interests of Computervision and its stockholders. THE
COMPUTERVISION BOARD UNANIMOUSLY RECOMMENDS THAT COMPUTERVISION STOCKHOLDERS
VOTE TO APPROVE AND ADOPT THE MERGER AGREEMENT AND THE MERGER. For a discussion
of the factors considered by the Computervision Board in reaching its decision
to approve the Merger Agreement and the Merger, see "Background and Reasons for
the Merger--Computervision's Reasons for the Merger; Recommendation of the
Board of Directors."
4
<PAGE>
OPINION OF COMPUTERVISION'S FINANCIAL ADVISOR
Hambrecht & Quist LLC ("Hambrecht & Quist"), a nationally recognized
investment banking firm, has rendered a written opinion to the Computervision
Board to the effect that, as of the date the Board approved the Merger
Agreement, the consideration to be received in the Merger is fair, from a
financial point of view, to Computervision's stockholders. This opinion is
based on financial forecasts provided by the managements of Parametric and
Computervision, as well as on current market, economic, financial and other
conditions. The full text of Hambrecht & Quist's opinion setting forth the
assumptions made, the procedures followed and the matters considered is
included in Appendix C to this Prospectus/Proxy Statement and should be read in
its entirety. See "Background and Reasons for the Merger--Opinion of
Computervision's Financial Advisor."
PARAMETRIC'S BOARD APPROVAL OF THE MERGER
The Board of Directors of Parametric (the "Parametric Board") has determined
that the Merger Agreement and the transactions contemplated thereby are in the
best interests of Parametric and, therefore, has unanimously approved the
Merger Agreement. In making this determination, the Parametric Board and
management reviewed information about Computervision made available to them by
Computervision's management and other sources and assessed Computervision's
financial condition. After considering this information, the Parametric Board
concluded that the anticipated business advantages of the Merger favored
adoption of the Merger Agreement and consummation of the Merger. See
"Background and Reasons for the Merger--Parametric's Reasons for the Merger."
CONDITIONS TO THE MERGER
The obligations of Parametric and Computervision to consummate the Merger are
subject to the satisfaction of certain conditions, including but not limited to
obtaining the approval of Computervision stockholders, obtaining requisite
regulatory clearance (including under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "Hart-Scott-Rodino Act")), the
continuing accuracy as of the Effective Time of the representations and
warranties made by Parametric and Computervision in the Merger Agreement, the
receipt of certain legal opinions with respect to tax matters and the receipt
of accountants' letters with respect to qualification of the Merger as a
pooling of interests transaction. Each party has the right to waive certain of
the closing conditions referred to above. See "The Merger--Conditions of
Merger," "--Regulatory Approvals Required," "--Certain Federal Income Tax
Consequences" and "--Accounting Treatment."
CONDUCT OF COMPUTERVISION'S BUSINESS PENDING THE MERGER
Computervision has made certain covenants and agreements in the Merger
Agreement relating to, among other things, the conduct of its business pending
the consummation of the Merger, including actions taken by Computervision in
relation to issuing shares of stock, employment and compensation, payment of
dividends on Computervision Common Stock, acquisition transactions and other
matters. See "The Merger--Conduct of Computervision's Business Pending the
Merger."
NO SOLICITATION
Computervision has agreed that, from the date of the Merger Agreement through
the Effective Time, neither Computervision nor any of its subsidiaries nor any
of their respective directors, officers, advisors or other representatives may,
directly or indirectly, without the prior written consent of Parametric,
solicit or encourage the solicitation from, or engage in negotiations with, any
third party concerning any proposal regarding the sale or acquisition of 10% or
more of the outstanding Computervision Common Stock or a merger, consolidation
or sale of substantial assets or other similar transaction involving
Computervision or any of its subsidiaries; provided, however, that
Computervision may, prior to the approval of the Merger Agreement by the
stockholders
5
<PAGE>
of Computervision, to the extent the Computervision Board determines that the
Board's fiduciary duties require it to do so, but subject to the conditions in
the Merger Agreement, participate in discussions or negotiations with, furnish
information to, and consummate a transaction with, any person, entity or group
that has delivered a superior proposal to Computervision. See "The Merger--No
Solicitation" and "--Termination Fee."
TERMINATION
The Merger Agreement is subject to termination by mutual written consent of
Parametric and Computervision, at the option of either Parametric or
Computervision if the Merger is not consummated by February 28, 1998 (although
either company may unilaterally extend such date to March 31, 1998 in order to
permit the satisfaction of certain regulatory conditions) or upon the
occurrence of certain events, including if the Merger Agreement is not approved
by Computervision's stockholders. See "The Merger--Termination."
TERMINATION FEE
In the event the Merger Agreement is terminated and certain circumstances
occur involving the acquisition or proposed acquisition of Computervision by
another party, Computervision may be required to pay Parametric termination
fees of up to $18,000,000. See "The Merger--Termination" and "--Termination
Fee."
PARAMETRIC STOCK OPTION
At the time of execution of the Merger Agreement, Computervision granted
Parametric an option to purchase up to 9,558,809 shares of Computervision
Common Stock, representing 15% of the shares of Computervision Common Stock
then outstanding, at an exercise price of $4.00 per share. The option is
exercisable upon the occurrence of certain events principally involving the
acquisition or proposed acquisition of Computervision by a party other than
Parametric. See "Stock Option Agreement."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to be a tax-free reorganization in which no gain or
loss will be recognized by Computervision, Parametric or Merger Sub and no gain
or loss will be recognized by Computervision stockholders, except in respect of
cash received in lieu of fractional shares. Each party's obligation to effect
the Merger is conditioned on delivery of a tax opinion, in the case of
Computervision, from its counsel, Hale and Dorr LLP, and, in the case of
Parametric, from its counsel, Palmer & Dodge LLP, each dated as of the
Effective Time, substantially to the effect that for federal income tax
purposes, the Merger constitutes a reorganization within the meaning of Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"). No ruling
has been or will be requested from the Internal Revenue Service with request to
any tax matters. With respect to the foregoing, as well as the consequences if
the Merger does not constitute a reorganization within the meaning of the Code,
see "The Merger--Certain Federal Income Tax Consequences."
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON THE
PARTICULAR CIRCUMSTANCES OF EACH COMPUTERVISION STOCKHOLDER, EACH STOCKHOLDER
SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE FEDERAL (AND ANY STATE,
LOCAL OR FOREIGN) TAX CONSEQUENCES OF THE MERGER ON HIS OR HER PARTICULAR
CIRCUMSTANCES.
ACCOUNTING TREATMENT
The Merger is intended to qualify as a pooling of interests for accounting
and financial reporting purposes. Parametric has received a letter from Coopers
& Lybrand L.L.P. as of the date of the Merger Agreement to the effect that the
Merger will qualify for pooling of interests accounting treatment and
Computervision has received a letter from Arthur Andersen LLP as of the date of
the Merger Agreement to the effect that Computervision is eligible for pooling
of interests treatment. Parametric may terminate the Merger Agreement if it
receives written
6
<PAGE>
notice from either Coopers & Lybrand L.L.P., Arthur Andersen LLP or the
Commission that, in the opinion of such firm or the Commission, the Merger will
not qualify for such treatment. Under the pooling of interests method of
accounting, the historical recorded assets and liabilities of Parametric and
Computervision will be carried forward to the combined company at their
recorded amounts, the operating results of the combined company will include
the operating results of Parametric and Computervision for the entire fiscal
year in which the combination occurs and the historical reported operating
results of the separate companies for prior periods will be combined and
restated as the operating results of the combined company. See "The Merger--
Accounting Treatment" and "--Termination."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of the Board of Directors and management of Computervision
have certain interests in the Merger that are in addition to the interests of
stockholders of Computervision generally. Among other things, Computervision
has entered into agreements with several of its executive officers, as well as
certain other members of management, that provide certain benefits in the event
of the termination of such officer's employment following a change in control
of Computervision. The Merger will constitute a change in control of
Computervision within the meaning of the executive compensation agreements. In
addition, certain executive officers have consulting agreements that will
continue after the Merger. See "The Merger--Interests of Certain Persons in the
Merger." In the Merger Agreement, Parametric has agreed to continue the
provisions of Computervision's Certificate of Incorporation indemnifying each
present and former director and officer of Computervision against liabilities
or expenses incurred in connection with claims relating to matters prior to the
Effective Time, and to maintain in effect directors' and officers' liability
insurance for their benefit. See "The Merger--Interests of Certain Persons in
the Merger." The Computervision Board was aware of these interests and
considered them, among other matters, in approving and adopting the Merger
Agreement and the transactions contemplated thereby.
NO APPRAISAL RIGHTS
Holders of Computervision Common Stock are not entitled to appraisal rights
under Section 262 of the Delaware General Corporation Law in connection with
the Merger because the Computervision Common Stock was listed on the New York
Stock Exchange on the record date for the Computervision Special Meeting and
the shares of Parametric Common Stock to be issued pursuant to the Merger will
be quoted on the Nasdaq National Market as of the Effective Time. See "The
Merger--No Computervision Stockholder Appraisal Rights."
COMPARATIVE RIGHTS OF HOLDERS OF COMPUTERVISION AND PARAMETRIC COMMON STOCK
Upon consummation of the Merger, holders of Computervision Common Stock will
become stockholders of Parametric. The internal affairs of Parametric are
governed by the Massachusetts Business Corporation Law and Parametric's
Articles of Organization and By-laws. There are certain differences in the
rights of holders of Computervision and Parametric Common Stock. See
"Description of Parametric Capital Stock" and "Comparison of Rights of Holders
of Parametric and Computervision Common Stock."
7
<PAGE>
RISK FACTORS
The following risk factors, in addition to other information contained or
incorporated by reference in this Prospectus/Proxy Statement, should be
considered by the holders of Computervision Common Stock in evaluating whether
to approve and adopt the Merger Agreement and thereby become holders of
Parametric Common Stock.
RISKS RELATING TO THE MERGER
Integration of Operations. Parametric and Computervision operate world-wide
businesses with complementary product lines and development and sales forces
in a variety of international locations. Integrating the operations (including
product integration, workforce rationalization, marketing plans and
activities, employee training, and expansion strategy) and management of the
two companies will be a time-consuming process, and there can be no assurance
that this integration will result in the achievement of the anticipated
synergies and other benefits expected to be realized from the Merger.
Moreover, the integration of these organizations will require the dedication
of management resources, which may temporarily distract attention from the
day-to-day business of the combined company. The inability of management to
successfully integrate the operations of the two companies could have a
material adverse effect on the business and operating results of Parametric.
In addition, as commonly occurs with mergers of technology companies, during
the pre-merger and integration phases aggressive competitors may undertake
formal initiatives to attract customers and recruit key employees.
Retention of Customers. Computervision customers represent some of the
largest automotive, aerospace and shipbuilding companies in the world, but
Computervision has been losing market share as a result of its financial
instability and lack of new product offerings. While a number of these
customers have expressed their strong support for the Merger, it will be
important for Parametric to demonstrate that it can continue to support and
enhance Computervision's products, provide top-quality services and help these
customers meet their future design automation needs. Parametric's inability to
meet any of these needs may result in a loss of some or all of these
customers' business.
Merger Related Charges. Parametric and Computervision estimate that, as a
result of the Merger, the combined company will incur consolidation and
integration expenses of approximately $45 to $65 million and debt prepayment
costs of approximately $20 million. In addition, it is expected that
Parametric and Computervision will incur merger-related expenses of
approximately $10 million, including investment advisory fees, regulatory
filing costs, legal and accounting expenses and other transaction costs. The
combined company expects to incur approximately $75 to $95 million of charges
relating to the above-referenced expenses in the quarter in which the Merger
is consummated. These estimates are preliminary and are subject to change.
Moreover, additional unanticipated expenses may be incurred in connection with
the integration of the businesses of the two companies.
Fixed Conversion Ratio Does Not Reflect Changes in Stock Prices. The number
of shares of Parametric Common Stock into which each share of Computervision
Common Stock is to be converted in the Merger is fixed. The market value of
Parametric Common Stock and/or Computervision Common Stock at the Effective
Time of the Merger may vary significantly from the price as of the date of
execution of the Merger Agreement, the date hereof or the date on which
stockholders vote on the Merger due to, among other factors, market perception
of the synergies expected to be achieved by the Merger, changes in the
business, operations or prospects of Parametric or Computervision, market
assessments of the likelihood that the Merger will be consummated and the
timing thereof, and general market and economic conditions. Because the
Exchange Ratio will not be adjusted to reflect changes in the market value of
Parametric Common Stock or Computervision Common Stock, the market value of
the Parametric Common Stock issued in the Merger and the market value of the
Computervision Common Stock surrendered in the Merger may be higher or lower
than the value of such shares at the time the Merger was negotiated or
approved by stockholders.
8
<PAGE>
RISKS RELATING TO PARAMETRIC FOLLOWING THE MERGER
Fluctuations in Quarterly Operating Results. Computervision has experienced,
and following the Merger Parametric may experience, fluctuations in its
quarterly operating results. Computervision's revenue has been substantially
derived from large, multi-year customer contracts with substantial customers.
As the software provided under such contracts affects the customer's entire
enterprise, the purchase decisions are made at senior management levels and
the sales cycle is typically long, making the timing of such orders more
difficult to anticipate. Parametric's sales cycle, too, varies substantially
from customer to customer, and a high percentage of its revenues are expected
to be realized in the third month of each fiscal quarter and tend to be
concentrated in the latter half of that month. In addition, Parametric's
operating expenses are based on expected future revenue and are relatively
fixed for the short term. Since all of the foregoing factors will apply to
Parametric after the Merger, its results for any particular quarter will
continue to be difficult to predict before the end of the quarter and a
shortfall in shipments or contract orders at the end of any quarter may cause
the results for that quarter to fall short of anticipated levels. Other
factors, such as one-time charges associated with acquisitions or other
events, also could contribute to quarterly variations in operating results.
Moreover, there can be no assurance that Parametric will continue to realize
the earnings growth it has experienced over recent years, or that earnings in
any particular quarter will not fall short of either a prior fiscal quarter or
investors' expectations.
Rapid Technological and Market Changes. The mechanical CAD/CAM/CAE industry
is highly competitive and is characterized by rapid technological advances.
Parametric's ability to realize its expectations will depend on its success at
integrating the Computervision product line, enhancing its current offerings,
licensing technology from third parties, developing new products and services
that keep pace with developments in technology and meet evolving customer
requirements and delivering those products through appropriate distribution
channels. This will require, among other things, correctly anticipating
customer needs, hiring and retaining personnel with the necessary skills and
creativity, providing adequate funding for the development efforts, and
managing distribution channels effectively. Parametric's failure to anticipate
or respond adequately to customer requirements or technological developments
(particularly those by competitors that could make its technology obsolete or
noncompetitive), or significant delays in the development, production,
testing, marketing, or availability of new or enhanced products or services
could adversely affect Parametric's competitive position and operating
results.
Dependence on Certain Industries. Computervision's product offerings are
heavily concentrated in the automotive, aerospace and shipbuilding industries.
Parametric's offerings to these industries after the Merger may be adversely
affected by reductions in capital spending in, and cyclical trends affecting,
these industries. Also, customers in these industries tend to continue with a
technology choice for long periods (an entire development cycle), so that an
opportunity lost at a given customer may not become a new opportunity for
several years.
Competition. Parametric believes that the principal bases for competition in
its markets are product functionality, price/performance characteristics,
product portability, ease of product use, sales and marketing strength,
support services and corporate reputation. In particular, Parametric believes
that the success of its Pro/ENGINEER product line has been due in part to the
mechanical and functional superiority of these products over competitive
offerings. Parametric is aware of a number of efforts to develop technically
equivalent competitive products and to market these products at lower prices.
Should a competitor successfully bring such a product to market and be able to
sell it at a lower price in the future, Parametric's operating results could
be adversely affected. Parametric's and Computervision's products compete with
offerings from major, well-financed competitors. In addition, Parametric is
aware of ongoing efforts by competitors, some of whom have greater resources,
to emulate the performance and functionality of its products, and competitors
may develop equivalent or superior technology. Parametric's future success
will depend in large part on its ability to license additional products and
services to its and Computervision's existing customer bases as well as the
installed customer bases of traditional mechanical CAD/CAM/CAE suppliers.
9
<PAGE>
Risks Associated with International Business. A significant portion of
Parametric's business comes from outside the United States, as does a
significant portion of Computervision's business. A consequence of this
international business is that a growing percentage of revenue and expenses
are denominated in foreign currencies, which subjects results of operations to
foreign exchange fluctuations. Although Parametric typically enters into
forward exchange and foreign currency option contracts to offset a portion of
the foreign exchange fluctuations, unanticipated events may materially and
adversely affect its results. Additional risks associated with international
business include, but are not limited to, governmental approval requirements,
unexpected changes in regulatory practices and tariffs, difficulties in
staffing and managing foreign operations, longer collection cycles in certain
areas, potential changes in tax laws, greater difficulty in protecting
intellectual property rights and general economic and political conditions.
RISKS RELATING TO COMPUTERVISION
As a stand-alone company, Computervision's business is subject to numerous
risks and uncertainties, including those described below. Computervision
stockholders should understand that these and other risks will continue to
apply to Computervision's business if the Merger is not consummated.
Need for Additional Financing; Going Concern Qualification. If the Merger is
not consummated and Computervision were to continue as a stand-alone company,
Computervision would not have sufficient capital to continue its business
operations as they are now being conducted. Because of its substantial
operating losses during the past four quarters and its burdensome debt
obligations, Computervision may not be able to obtain the funds needed to
continue its business operations at the current level on terms favorable to
Computervision, or on any terms. The combination of the lack of required
capital, the heavy debt burden and the concern among Computervision's
principal customers about Computervision's future viability could, if the
merger is not consummated, force Computervision either to substantially
curtail its business operations or to seek protection under the bankruptcy
laws. On November 12, 1997, the Company filed a report on Form 8-K with the
Commission to include a "subsequent event" footnote to its financial
statements for the year ended December 31, 1996 and the quarter ended March
30, 1997 and reissued reports thereon by Arthur Andersen LLP, its independent
accountants, which contains an explanatory paragraph that describes
substantial doubt about Computervision's ability to continue as a going
concern. For further information regarding Computervision's current business
condition and its prospects for the future, see "Background and Reasons for
the Merger--Computervision's Reasons for the Merger; Recommendation of the
Board of Directors."
Impact of Large Contracts; Potential Fluctuations of Quarterly Operating
Reports. Computervision's software revenue for the past several years has been
dependent principally on its ability to sell its products to large customers.
For example, in 1995, revenue from a contract with a single customer group
represented approximately 4% of its annual software license revenue and, in
1996, revenue from a separate single customer group represented approximately
7% of its annual software license revenue. Computervision expects that it will
continue to rely on large customers in the future. Although Computervision has
increased its efforts to develop lower-end and mid-range products for a wider
customer base during 1997, no assurance can be given that it will be
successful in doing so.
As the software and services provided under large contracts affect the
customer's entire enterprise and the core of the customer's product
development efforts, the purchase decisions are made at senior management
levels of the enterprise and the sales cycle is generally much longer than is
typically the case, making the timing of such orders more difficult to
anticipate. In addition, the customer's own design cycle and capital spending
budget will affect the timing of orders. A large customer's delay in making
purchase decisions or Computervision's failure to obtain one or more
significant contracts could have a material adverse impact on the orders and
shipments planned for a current or future quarter.
Large contracts increasingly require Computervision to provide additional
consulting and other services. At times, the customer's implementation
schedule may differ from Computervision's expectations and Computervision may
incur costs to fulfil its contractual commitments before the customer requests
implementation services.
10
<PAGE>
Computervision's quarterly operating results may vary significantly
depending on factors such as the timing of significant orders and the timing
of new product introductions by Computervision and its competitors. The
majority of Computervision's software product revenue in each quarter results
from orders booked in that quarter and a substantial portion of
Computervision's orders and shipments typically occur during the last two
weeks of each quarter so that forecasting of revenue is uncertain. As expenses
in the short term are incurred in advance of expected revenues, Computervision
may not be able to reduce expenses commensurately with an unanticipated
shortfall in revenue in a given quarter.
New Products, Technological Change and Market Pressures. Computervision
continues to devote substantial resources to the research, development,
acquisition and marketing of design automation and product data management
technologies, and believes that their acceptance by customers is critical to
the future success of Computervision. However, the development of new
technology and products is made increasingly complex and uncertain, as
Computervision expands its use of third party technology through licensing or
acquisition. There can be no assurance that Computervision will be successful
in developing, acquiring or licensing, and marketing these new products, that
customers will accept them or that competitors will not develop products or
technologies which render Computervision's products or technologies
uncompetitive or obsolete.
In addition to new technology, competitors are constantly marketing their
product in new ways, with new pricing and combinations of products and service
options which may affect Computervision's own pricing and packaging decisions
and margins. Also, competitors are aligning with new partners and buying
technology to strengthen the breadth of their product offerings and reduce
Computervision's distinctive breadth of product offerings.
Dependence on Certain Industries. Computervision sells its products to
customers in a number of industries, but its product revenues are heavily
concentrated in the automotive, aerospace and shipbuilding industries and may
be adversely affected by reductions in capital spending in these industries,
as well as cyclical economic trends affecting these industries.
Computervision's future revenues would also be adversely affected by future
declines in sales to its automotive, aerospace and shipbuilding customers. In
addition, customers in these industries tend to continue with a technology
choice for long periods (an entire development cycle) so that an opportunity
lost at a given customer will not become a new opportunity for several years.
Other Risks. Computervision faces other risks in common with others in the
software industry which could also impair Computervision's future financial
performance. For example, the market for high technology stocks is extremely
volatile and can be affected by factors beyond Computervision's control, such
as the performance of Computervision's competitors, market conditions in the
CAD/CAM/CAE industry or general economic conditions. International sales are
subject to additional risks, including the fact that foreign countries could
impose additional withholding taxes or otherwise further tax Computervision's
income, impose tariffs or adopt other restrictions on foreign trade,
agreements and intellectual property rights may be difficult to enforce
through a foreign country's legal system, and unfavorable exchange rate shifts
may be difficult to anticipate. Computervision remains highly leveraged and
has a stockholders' deficit which may place Computervision at a competitive
disadvantage.
11
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SELECTED HISTORICAL AND UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following selected historical financial data of Parametric and
Computervision has been derived from their respective historical financial
statements and should be read in conjunction with such consolidated financial
statements and the notes thereto incorporated by reference herein. See
"Available Information" and "Incorporation of Certain Documents by Reference."
The Parametric and Computervision historical financial statement data as of
and for the interim periods presented below has been prepared on the same
basis as the historical data derived from audited financial statements and, in
the opinion of management of the respective companies, includes all
adjustments, consisting only of normal recurring accruals, necessary for a
fair presentation of the financial position and results of operations of the
respective companies as of such dates and for such periods.
The selected pro forma combined financial data is derived from the unaudited
pro forma combined condensed financial statements appearing elsewhere herein,
which give effect to the Merger as a pooling of interests, and should be read
in conjunction with such pro forma statements and the notes thereto. For the
purpose of the pro forma combined statement of income data, Parametric's
historical results of operations for the fiscal years ended September 30,
1994, 1995 and 1996 and the nine months ended June 29, 1996 and June 28, 1997
have been combined with Computervision's historical results of operations for
the fiscal years ended December 31, 1994, 1995 and 1996 and the nine months
ended September 29, 1996 and September 28, 1997, respectively. For the purpose
of the pro forma combined balance sheet, Parametric's consolidated balance
sheet as of June 28, 1997 has been combined with Computervision's consolidated
balance sheet as of September 28, 1997, giving effect to the Merger as if it
had occurred on June 28, 1997.
The pro forma combined financial data is presented for illustrative purposes
only and is not necessarily indicative of the operating results or financial
position that would have been achieved if the Merger had been consummated as
of the beginning of the periods presented, nor is it necessarily indicative of
the future operating results or financial position of
Parametric/Computervision. The pro forma combined financial data does not give
effect to any cost savings that may result from the integration of
Parametric's and Computervision's operations. Additionally, the pro forma
combined statements of income do not include the merger-related costs, debt
prepayment and consolidation and integration expenses associated with the
Merger (which are currently estimated to be approximately $75 to $95 million
on a pre-tax basis). The pro forma combined financial data does not include
adjustments to conform the accounting policies of Computervision to those
followed by Parametric. The nature and extent of such adjustments, if any,
will be based upon further analysis and are not expected to be material.
12
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
PARAMETRIC
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
--------------------------------------------------------------------- ------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, JUNE 29, JUNE 28,
1992 1993 1994 1995 1996 1996 1997
------------- ------------- ------------- ------------- ------------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenue................. $ 98,377 $179,311 $266,974 $394,310 $600,122 $422,994 $588,627
Operating income(1)..... 30,818 66,502 103,362 118,631 204,656 165,992 236,186
Net income.............. 21,036 43,470 68,089 77,362 137,910 111,477 158,697
Net income per share.... 0.18 0.36 0.54 0.60 1.04 0.84 1.18
Excluding acquisition
and related costs(1):
Net income............. 21,036 43,470 68,089 98,500 158,402 111,477 158,697
Net income per share... 0.18 0.36 0.54 0.76 1.19 0.84 1.18
BALANCE SHEET DATA
Working capital......... $ 73,464 $137,581 $229,878 $317,702 $416,058 $507,089
Total assets............ 119,259 190,975 305,125 453,727 659,217 781,363
Stockholders' equity.... 85,895 154,655 251,178 370,929 512,432 595,187
</TABLE>
COMPUTERVISION
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
---------------------------------------------------------------- ---------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 29, SEPTEMBER 28,
1992 1993 1994 1995 1996 1996 1997
------------ ------------ ------------ ------------ ------------ ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenue(2).............. $1,065,579 $ 827,315 $ 573,637 $507,074 $477,199 $355,445 $ 217,361
Gross profit............ 459,587 322,966 273,994 264,319 258,383 192,648 85,801
Operating income
(loss)(3).............. 48,733 (517,992) 59,452 80,675 55,073 59,304 (86,089)
Income (loss) from
continuing
operations(4).......... (142,189) (571,107) 9,771 30,746 21,657 31,915 (111,314)
Net income (loss)....... (225,872) (571,107) 9,771 22,816 21,657 31,915 (111,314)
Pro forma income (loss)
per share (5):
Continuing
operations(4)......... (3.46) (11.89) 0.20 0.58 0.33 0.49 (1.75)
Net income (loss)...... (6.09) (11.89) 0.20 0.43 0.33 0.49 (1.75)
BALANCE SHEET DATA
Working capital......... $ (47,453) $(112,703) $(138,648) $(82,505) $(59,949) $(146,166)
Total assets............ 904,312 412,713 263,184 246,917 208,345 116,678
Total long-term
liabilities, less
current portion........ 443,910 556,258 476,890 324,441 300,630 304,791
Stockholders' equity
(deficit).............. 48,979 (530,177) (509,413) (337,726) (316,775) (428,558)
Cash dividends declared
and paid............... -- 1,440 -- -- -- --
</TABLE>
- --------
(1) Operating income included non-recurring charges related to acquisitions of
$29,438 and $32,119 for the years ended September 30, 1995 and 1996,
respectively.
(2) In 1992 and 1993 revenue included $254,528 and $140,373 associated with
Computervision's hardware resale business, which it exited effective
January 1, 1994. Revenue also included other service revenue, which is
associated with its hardware services business, in which Computervision
sold a majority interest effective July 18, 1997, of $460,724, $390,800,
$287,458, $220,473, $174,384, $133,307 and $82,224 for the years ended
December 31, 1992, 1993, 1994, 1995, and 1996, and for the nine months
ended September 29, 1996 and September 28, 1997, respectively.
(3) Operating income (loss) included non-recurring charges of $25,000,
$515,800, $19,500 and $52,000 for the years ended December 31, 1992, 1993
and 1996, and the nine-months ended September 28, 1997, respectively.
(4) Loss from continuing operations for the year ended December 31, 1992 also
included charges of $64,050 associated with Computervision's 1992
recapitalization. Income from continuing operations for the year ended
December 31, 1995 excludes an extraordinary charge of $7,930 associated
with the early extinguishment of debt.
(5) Pro forma loss from continuing operations per share and pro forma net loss
per share for the year ended December 31, 1992 have been adjusted to
reflect Computervision's issuance of 23,000 shares of common stock in 1992
to retire certain of its long-term debt. The pro forma loss from
continuing operations per share and pro forma loss per share calculations
therefore, reflect on a pro forma basis, the elimination of interest
expense related to the retired portion of the debt and the issuance of the
23,000 shares.
13
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SUMMARY OF PARAMETRIC YEAR-END AND FOURTH QUARTER 1997 RESULTS
On October 16, 1997 Parametric reported that its net income for the fiscal
year ended September 30, 1997 increased 38% to $219.2 million, compared with
$158.4 million for the 1996 fiscal year. Net income per share for the fiscal
year increased to $1.64, from $1.19 in the prior year. Fiscal 1997 revenue
totaled $808.8 million, an increase of 35% (40% at constant currency) from
fiscal 1996 revenue of $600.1 million.
In the fourth quarter of fiscal 1997, Parametric's net income increased 29%
to $60.5 million, compared with $46.9 million for the same period last year.
Net income per share increased to $0.46, from $0.35 per share in last year's
fourth quarter. Revenue for the fourth quarter totaled $220.2 million, an
increase of 24% (30% at constant currency) from last year's fourth-quarter
revenue of $177.1 million.
The comparisons presented above for fiscal 1996 net income and net income
per share exclude a non-recurring charge related to Parametric's acquisition
of Reflex software technology from Greenshire License Co. in the fourth
quarter of fiscal 1996. Including this charge, actual net income for fiscal
1996 was $137.9 million, or $1.04 per share, and actual net income for the
fourth quarter of fiscal 1996 was $26.4 million, or $0.20 per share.
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
----------------------------------------- -----------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, JUNE 29, JUNE 28,
1994 1995 1996(2) 1996 1997(2)
------------- ------------- ------------- -------- --------
<S> <C> <C> <C> <C> <C>
PRO FORMA COMBINED
STATEMENT OF INCOME
DATA(1):
Revenue................. $840,611 $901,384 $1,077,321 $778,439 $805,988
Net income before
extraordinary charge... $ 77,860 $108,108 $ 159,567 $143,392 $ 47,383
Net income per share
before extraordinary
charge................. $ 0.60 $ 0.81 $ 1.15 $ 1.03 $ 0.34
Shares used to compute
net income per share... 129,240 133,600 138,821 138,785 140,192
</TABLE>
<TABLE>
<CAPTION>
JUNE 28,
1997(3)
--------
<S> <C>
PRO FORMA COMBINED BALANCE SHEET DATA(1):
Working capital....................................................... $360,923
Total assets.......................................................... 898,041
Total long-term liabilities, less current portion..................... 305,532
Stockholders' equity.................................................. 166,629
</TABLE>
- --------
(1) See Notes to Unaudited Pro Forma Combined Condensed Financial Statements.
(2) As discussed in the June 29, 1997 financial statements of Computervision
included with its Quarterly Report on Form 10-Q, on July 18, 1997
Computervision transferred its other services business to CVSI, Inc. and
sold a majority interest in the voting securities of CVSI, Inc. to a third
party. Assuming that the CVSI transaction was completed as of January 1,
1996, the pro forma results of the combined company are as follows:
<TABLE>
<CAPTION>
NINE MONTHS FISCAL YEAR ENDED
ENDED JUNE 28, 1997 SEPTEMBER 30, 1996
------------------- ------------------
<S> <C> <C>
Revenue............................. $723,764 $902,937
Net income.......................... 59,154 149,070
Net income per share................ 0.42 1.07
</TABLE>
(3) The pro forma combined balance sheet as of June 28, 1997 excludes any
accrual for the estimated merger-related, debt prepayment and
consolidation and integration expenses (approximately $75-$95 million on a
pre-tax basis).
14
<PAGE>
COMPARATIVE PER SHARE DATA
The following tables set forth certain unaudited historical per share data
of Parametric and Computervision and the combined per share data on an
unaudited pro forma basis after giving effect to the Merger on a pooling of
interests basis (and assuming the issuance of 0.0866 shares of Parametric
Common Stock in the Merger in exchange for each share of Computervision Common
Stock). This data should be read in conjunction with the selected financial
data and the unaudited pro forma combined condensed financial statements
included elsewhere in this Prospectus/Proxy Statement and the separate
historical financial statements of Parametric and Computervision incorporated
by reference herein. The pro forma combined financial data is not necessarily
indicative of the operating results or financial position that would have been
achieved if the Merger had been consummated as of the beginning of the periods
presented, nor is it necessarily indicative of the future operating results or
financial position of Parametric/Computervision. Parametric has never paid any
cash dividends on its Common Stock. Computervision has not paid a cash
dividend on its Common Stock since its fiscal year ended December 31, 1993.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
----------------------------------------- ---------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, JUNE 29, JUNE 28,
1994 1995 1996 1996 1997
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
HISTORICAL--PARAMETRIC:
Net income................ $0.54 $0.60 $ 1.04 $0.84 $ 1.18
Book value(1)............. $ 4.02 $ 4.67
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
----------------------------------------- ---------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 29, SEPTEMBER 28,
1994 1995 1996 1996 1997
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
HISTORICAL--
COMPUTERVISION:
Net income(loss) before
extraordinary charge..... $0.20 $0.58 $ 0.33 $0.49 $(1.75)
Book value(1)............. $(4.99) $(6.73)
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
----------------------------------------- ---------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, JUNE 29, JUNE 28,
1994 1995 1996 1996 1997(2)
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
PRO FORMA COMBINED--PER
PARAMETRIC/COMPUTERVISION
SHARE(3):
Net income before
extraordinary charge..... $0.60 $0.81 $ 1.15 $1.03 $ 0.34
Book value(1)............. $ 1.47 $ 1.25
EQUIVALENT PRO FORMA
COMBINED--PER
COMPUTERVISION SHARE(4):
Net income before
extraordinary charge..... $0.05 $0.07 $ 0.10 $0.09 $ 0.03
Book value................ $ 0.13 $ 0.11
</TABLE>
- --------
(1) Historical book value per share is computed by dividing stockholders'
equity by the number of shares of common stock outstanding at the end of
each period. Pro Forma Combined--Per Parametric/Computervision Share book
value is computed by dividing pro forma stockholders' equity by the pro
forma number of shares of Parametric Common Stock which would have been
outstanding had the Merger been consummated as of each balance sheet date.
(2) The pro forma combined balance sheet as of June 28, 1997 excludes any
accrual for the estimated merger-related, debt prepayment and
consolidation and integration expenses (approximately $75-$95 million on a
pre-tax basis). See Notes to Unaudited Pro Forma Combined Condensed
Financial Statements.
(3) For the purposes of the pro forma combined data, Parametric's financial
data for the fiscal years ended September 30, 1994, 1995 and 1996 and the
nine months ended June 29, 1996 and June 28, 1997 has been combined with
Computervision's financial data for the fiscal years ended December 31,
1994, 1995 and 1996 and the nine months ended September 29, 1996 and
September 28, 1997, respectively.
(4) The equivalents of Computervision's pro forma per share amounts are
calculated by multiplying the combined pro forma per share amounts by the
Exchange Ratio of 0.0866 shares of Parametric Common Stock for each share
of Computervision Common Stock.
15
<PAGE>
MARKET PRICE INFORMATION
Parametric Common Stock is quoted on the Nasdaq National Market ("Nasdaq")
and Computervision Common Stock is listed on the New York Stock Exchange
("NYSE"). The table below sets forth the reported high and low closing sales
prices for Parametric Common Stock and Computervision Common Stock as reported
on the Nasdaq and the NYSE, respectively, for the periods indicated. For
purposes of comparison, the Computervision Common Stock price information is
presented for the fiscal periods of Parametric rather than for
Computervision's historical fiscal periods.
<TABLE>
<CAPTION>
PARAMETRIC COMPUTERVISION
COMMON STOCK COMMON STOCK
------------- --------------
HIGH LOW HIGH LOW
------ ------ ------- ------
<S> <C> <C> <C> <C>
FISCAL 1996
Quarter ended December 30, 1995................. $35.63 $27.38 $ 15.50 $ 9.75
Quarter ended March 30, 1996.................... $39.13 $27.13 $ 15.25 $ 9.00
Quarter ended June 29, 1996..................... $48.75 $34.38 $ 12.75 $ 8.75
Quarter ended September 30, 1996................ $51.63 $37.38 $ 10.63 $ 5.75
FISCAL 1997
Quarter ended December 28, 1996................. $56.38 $48.25 $ 10.38 $ 7.88
Quarter ended March 29, 1997.................... $62.50 $46.50 $ 9.38 $ 4.63
Quarter ended June 28, 1997..................... $48.88 $39.31 $ 5.75 $ 3.13
Quarter ended September 30, 1997................ $53.50 $41.25 $ 4.69 $ 1.94
FISCAL 1998 (through December , 1997)............ $ $ $ $
</TABLE>
On November 3, 1997, the last full trading day prior to the execution and
delivery of the Merger Agreement and the public announcement thereof, the last
reported sale price of Parametric Common Stock on the Nasdaq was $45.375 per
share, and the last reported sale price of Computervision Common Stock on the
NYSE was $3.0625 per share. Based on an exchange ratio of 0.0866 shares of
Parametric Common Stock for each share of Computervision Common Stock, the pro
forma equivalent per share value of Computervision Common Stock on November 3,
1997 was $3.93 per share.
On December , 1997, the most recent practicable date before the printing of
this Prospectus/Proxy Statement, the last reported sale price of Parametric
Common Stock on the Nasdaq was $ per share, and the last reported sale price
of Computervision Common Stock on the NYSE was $ per share.
Because the market prices of Parametric Common Stock and Computervision
Common Stock are subject to fluctuation, the market value of the shares of
Parametric Common Stock that holders of Computervision Common Stock will
receive in the Merger may increase or decrease prior to the Merger.
COMPUTERVISION STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION OF
THE COMPUTERVISION COMMON STOCK AND THE PARAMETRIC COMMON STOCK.
16
<PAGE>
COMPUTERVISION SPECIAL MEETING
This Prospectus/Proxy Statement is being furnished to holders of
Computervision Common Stock in connection with the solicitation of proxies by
the Computervision Board for use at the Computervision Special Meeting to be
held on [Date] at [Time], at the offices of Hale and Dorr LLP, 60 State
Street, Boston, Massachusetts, and at any adjournments or postponements
thereof.
MATTERS TO BE CONSIDERED AT THE MEETING
At the Computervision Special Meeting, the stockholders of Computervision
will consider and vote upon the approval and adoption of the Merger Agreement
and any other matters that may properly come before the meeting, or any
adjournment or postponement thereof. See "The Merger--General," "--Conversion
of Computervision Common Stock" and "--Stock Options and Employee Benefits."
THE BOARD OF DIRECTORS OF COMPUTERVISION HAS UNANIMOUSLY RECOMMENDED A VOTE
IN FAVOR OF APPROVING AND ADOPTING THE MERGER AGREEMENT. SEE "BACKGROUND AND
REASONS FOR THE MERGER--COMPUTERVISION'S REASONS FOR THE MERGER;
RECOMMENDATION OF THE BOARD OF DIRECTORS."
RECORD DATE; OUTSTANDING SECURITIES
Only Computervision stockholders of record at the close of business on
[Record Date] will be entitled to receive notice of and to vote at the
Computervision Special Meeting. At that date, there were [Number] shares of
Computervision Common Stock outstanding held by approximately [Number] holders
of record, each of which is entitled to one vote. The presence, in person or
by proxy, of at least a majority of the total number of shares of
Computervision Common Stock outstanding will constitute a quorum at the
Computervision Special Meeting.
REQUIRED VOTES; VOTING OF PROXIES
Under Computervision's Restated Certificate of Incorporation, the
affirmative vote of the holders of a majority of the outstanding shares of
Computervision Common Stock entitled to vote is required to adopt the Merger
Agreement. No vote of Parametric stockholders is required, or will be sought,
to consummate the transaction.
All shares of Computervision Common Stock represented in person or by proxy
at the Computervision Special Meeting (including proxies that abstain from the
matter presented at the meeting) will be tabulated to determine whether or not
a quorum is present, but broker non-votes, since they are not entitled to vote
on the sole matter to be presented at the meeting, will not be so tabulated. A
"broker non-vote" occurs when a broker holding a customer's shares in the name
of the broker receives no instructions to vote those shares on a particular
matter and indicates on the proxy that it does not have discretionary
authority to vote such shares on the matter. Abstentions will be treated as
shares that are present and entitled to vote on each matter, but will not
count as votes in favor of such matter. Accordingly, abstentions and broker
non-votes would have the same legal effect as a vote "against" adoption.
As of , 199 , directors and executive officers of Computervision and
their affiliates may be deemed to have or share beneficial ownership of
approximately % of the outstanding shares of Computervision Common Stock.
Each of the directors and executive officers of Computervision has agreed to
vote all shares of Computervision Common Stock over which he or she has or
shares voting control for approval and adoption of the Merger Agreement, and
has executed an irrevocable proxy in favor of Parametric for such purpose.
Parametric and the directors and executive officers of Parametric and their
affiliates own fewer than 100 shares of Computervision Common Stock.
All proxies that are properly executed and returned, unless previously
revoked, will be voted at the Computervision Special Meeting in accordance
with the instructions thereon. The execution of a proxy will not
17
<PAGE>
affect a stockholder's right to attend the Computervision Special Meeting and
vote in person. EXECUTED BUT UNMARKED PROXIES WILL BE VOTED FOR THE PROPOSAL
TO APPROVE AND ADOPT THE MERGER AGREEMENT. Except for procedural matters
incident to the conduct of the Computervision Special Meeting, no matters
other than those described in the Notice of Special Meeting are expected to
come before the Computervision Special Meeting. However, if any other matters
are properly presented at the Computervision Special Meeting for
consideration, including, among other things, consideration of a motion to
adjourn the Computervision Special Meeting to another time and/or place
(including, without limitation, for the purpose of soliciting additional
proxies), the persons named in the enclosed form of proxy and acting
thereunder will have discretion to vote on such matters in accordance with
their best judgment.
ANY COMPUTERVISION STOCKHOLDER GIVING A PROXY HAS THE POWER TO REVOKE THE
PROXY PRIOR TO ITS EXERCISE. A PROXY MAY BE REVOKED BY (A) FILING WITH THE
SECRETARY OF COMPUTERVISION, AT OR BEFORE THE TAKING OF THE VOTE AT THE
COMPUTERVISION SPECIAL MEETING, (1) A WRITTEN NOTICE OF REVOCATION SPECIFYING
THE NUMBER OF SHARES AND CLEARLY IDENTIFYING THE PROXY TO BE REVOKED OR (2)
DULY EXECUTING AND FILING A NEW PROXY BEARING A LATER DATE, OR (B) ATTENDING
THE COMPUTERVISION SPECIAL MEETING AND VOTING IN PERSON (ALTHOUGH ATTENDANCE
AT THE MEETING WILL NOT IN AND OF ITSELF CONSTITUTE A REVOCATION OF A PROXY).
ANY WRITTEN NOTICE OF REVOCATION OR SUBSEQUENT PROXY SHOULD BE SENT AND
DELIVERED TO COMPUTERVISION CORPORATION, 100 CROSBY DRIVE, BEDFORD,
MASSACHUSETTS 01730, ATTENTION: ANTHONY N. FIORE, JR., SECRETARY, OR HAND
DELIVERED TO ANTHONY N. FIORE, JR., AT OR BEFORE THE TAKING OF THE VOTE AT THE
COMPUTERVISION SPECIAL MEETING.
The cost of preparing and filing this Prospectus/Proxy Statement, other than
attorneys' and accountants' fees, will be shared equally by Computervision and
Parametric. All other expenses will be paid by the party incurring such
expenses. Proxies may be solicited by use of the mails and by directors,
officers and employees of Computervision in person or by telephone, telegram
or other means of communication. Such directors, officers and employees will
not receive additional compensation, but may be reimbursed for reasonable out-
of-pocket expenses in connection with such solicitation. Computervision has
retained , a proxy solicitation firm, for assistance in connection with
such solicitation of proxies for the Computervision Special Meeting at an
estimated expense of $ , plus reasonable out-of-pocket expenses.
Arrangements will also be made with custodians, nominees and fiduciaries for
forwarding of proxy solicitation materials to beneficial owners of shares held
of record by such custodians, nominees and fiduciaries, and Computervision
will reimburse such custodians, nominees and fiduciaries for their reasonable
expenses incurred in connection therewith.
18
<PAGE>
PARAMETRIC TECHNOLOGY CORPORATION
Parametric develops, markets and supports the Pro/ENGINEER family of
software products--a suite of more than 70 application modules that automate
the design-through-manufacturing process within the mechanical computer-aided
design, manufacturing and engineering ("CAD/CAM/CAE") industry. Parametric's
Pro/ENGINEER product line includes capabilities in industrial design,
mechanical design, including large assembly management, functional simulation,
manufacturing, information management, and data exchange.
Parametric focuses its marketing and sales efforts primarily on the
electronic, aerospace, automotive, consumer products, medical equipment,
industrial equipment and telecommunications industries. The Pro/ENGINEER
product line primarily competes in the high-end of the mechanical CAD/CAM/CAE
market.
Mechanical CAD/CAM/CAE is a complex, iterative process encompassing a broad
spectrum of distinct engineering disciplines which is essential to the
development of virtually all manufactured products, ranging from consumer
products to jet aircraft. Manufacturers compete on the basis of cost, time to
market and product performance criteria, which are significantly affected by
the quality and length of the design process. Parametric's mechanical
CAD/CAM/CAE products offer a high-performance, fully integrated solution which
enables end-users to reduce the time to market and manufacturing costs for
their products and to improve product quality by easily evaluating multiple
design alternatives. Parametric believes that its Pro/ENGINEER product line
offers better price/performance, greater ease of use, and more complete
integration of multiple engineering disciplines than other available
mechanical CAD/CAM/CAE products.
Parametric's Pro/ENGINEER product line is based on an innovative software
architecture that incorporates a unique parametric, feature-based, solid
modeling technology. Parametric's Pro/ENGINEER software uses a single data
structure to capture changes made in any stage of the design-through-
manufacturing process and to automatically update designs and all engineering
deliverables. The single data structure allows all changes to be propagated
automatically throughout the design and manufacturing process, thus enabling
users to integrate multiple engineering activities in the mechanical design
process and to conduct them on a concurrent basis. In addition, as a result of
the data structure of Parametric's products, engineers can create, process,
modify and store designs quickly and easily, in a highly efficient manner.
Parametric has over 3,400 employees serving more than 15,000 customers in
more than 70 countries. Despite having installed more than 101,000 seats of
Pro/ENGINEER software, Parametric believes that the potential business
opportunity is much greater. The acquisition of Computervision is intended to
increase Parametric's ability to realize this potential.
19
<PAGE>
COMPUTERVISION CORPORATION
Computervision develops, produces and markets software and provides support
services that are designed to aid manufacturing companies in enhancing their
product development and manufacturing processes. Computervision's principal
products include design automation and product data management software.
Manufacturers use Computervision's software to design, enhance, and modify
their products and to access, share and manage their product data
collaboratively. Computervision's support services include implementation,
consulting and training services designed to assist customers in reengineering
their product development processes and in increasing productivity.
Computervision's product development technology and service, marketed as
"Electronic Product Definition" ("EPD"), allows its customers to concurrently
create, manage, share and reuse electronic product information in a
collaborative environment. Companies from the aerospace, automotive, white
goods, shipbuilding and consumer products industries today implement EPD in an
effort to obtain a competitive advantage.
Computervision principally markets two families of software products which
may be used separately. When integrated and complemented by Computervision's
implementation and support services, these products provide customers with a
comprehensive EPD capability. Computervision's CADDS design automation
software includes products that allow a customer to create and store a single
product definition that can be made available in electronic form for
simultaneous review and analysis by design and build teams located throughout
the customer's enterprise. Computervision's Optegra product data management
("PDM") products and software solutions are designed to improve collaboration
and information access and sharing throughout an enterprise. These products
provide for data management, configuration management, workflow management,
advanced product visualization and product structure navigation. Using these
products and software solutions, design and build teams have the ability to
leverage and control all information about product development and related
design, test, analysis and manufacturing processes. The integration of the PDM
products with design automation software products from Computervision or other
design automation suppliers allows customers to implement a product
development process organized around a single common electronic definition of
the product.
20
<PAGE>
BACKGROUND AND REASONS FOR THE MERGER
BACKGROUND OF THE MERGER
Commencing in mid-1995, Computervision's management has from time to time
engaged in preliminary discussions with several companies in the CAD/CAM/CAE
industry relating to potential acquisition or strategic alliance transactions.
All of these discussions were exploratory in nature and none resulted in any
meaningful discussions.
In July 1996, management from Parametric and Computervision met to discuss
how they might be able to benefit from combining Parametric's strength in
modeling technology and Computervision's strength in data and process
management. These were exploratory discussions, which concluded after
Parametric advised Computervision that it was not interested in continuing
them.
In November 1996, management of Computervision initiated discussions with
Parametric regarding a possible business combination. These discussions
included a financial model prepared by Computervision with the assistance of
Hambrecht & Quist, its financial advisor. These discussions were terminated in
November 1996.
During the summer of 1997, new discussions commenced regarding a potential
sale of a portion of Computervision's design automation business to
Parametric. These discussions took place in late June and early July. After a
hiatus during the remainder of the summer, these discussions resumed in mid-
September 1997. A meeting of senior management teams took place on September
18, 1997 to review a Computervision presentation on its design automation
business. Financial management of both companies met to discuss the proposed
sale on September 24, 1997. On September 25, 1997, discussion at a meeting of
the senior management teams evolved into an examination of a purchase of
Computervision in its entirety. Subsequent discussions focused on a purchase
of the entire company, based on a recognition by the parties that it would be
necessary to address both the design automation and data management
requirements of major customers.
In the fall of 1997, Computervision, through its financial advisor,
Hambrecht & Quist, contacted two other potentially interested parties
regarding a possible business combination and made available to one such party
certain Computervision financial information. No substantive discussions arose
as a result of these contacts.
During the period from September 26 through October 9, 1997, both companies
worked with their respective advisors to evaluate the legal, financial and
accounting implications of a proposed transaction. In addition, senior
management from both companies contacted on a confidential basis some of
Computervision's major customers to assess their reaction to a possible
business combination between Parametric and Computervision. The initial
reaction of these customers to such a combination was favorable and confirmed
the parties' conclusion that a purchase of Computervision in its entirety
would be necessary to satisfy the expectations of the major customers. During
this period, Parametric retained Goldman Sachs & Co. as its financial advisor.
On October 10, 1997, a meeting took place between Computervision's
management and Board representatives, Computervision's financial advisor and
the management of Parametric and its financial advisor in order to discuss the
strategic rationale for the combination, the structure of a potential
transaction and a valuation range. As a result of the meeting, it was agreed
that the financial teams would work together over the next few days to
understand better the nature of each other's business, financial results and
condition and the financial aspects of a combination.
On October 15, 1997, Parametric sent a letter to Computervision outlining
the terms of a proposed stock-for- stock merger transaction at a value of
$4.00 for each share of Computervision Common Stock, based on a fixed exchange
ratio. On October 16 and October 20, 1997 the Computervision Board met to
discuss Computervision's revised business plan for 1998 and 1999 and its long-
term strategy and strategic relationships. At each meeting, the Computervision
Board discussed the proposed Parametric combination, explored alternative
relationships and
21
<PAGE>
reviewed the advantages and disadvantages of pursuing its revised business
plan on a stand-alone basis. At these meetings, the Computervision Board
authorized and instructed management to continue discussions with Parametric.
On October 20, 1997, Parametric's management and representatives of
Computervision's management and Board met to discuss Parametric's proposal and
valuation methodology. There were also discussions regarding specific details
of the transaction, including a discussion that led to agreement on an
exchange ratio based on the average of the closing prices of Parametric's
Common Stock for the preceding thirty trading days.
On October 20, 1997, the Computervision Board voted to accept the terms of
the Parametric proposal, subject to negotiation and execution of a definitive
agreement.
Parametric and Computervision executed a confidentiality agreement and,
during the period from October 21 to October 28, 1997, both parties
participated in a series of due diligence meetings to examine the legal,
financial, contractual and business aspects of the transaction. At the same
time, technical aspects of the transaction were being reviewed by external
legal advisors and independent accountants.
On October 28, 1997, there were a series of meetings among the senior
management teams and financial advisors of both companies at which their
respective business and financial strategies were presented. Following these
sessions, the management teams met privately to review the two companies'
business cultures and the related implications of the proposed merger.
Between October 29 and November 2, 1997, representatives of both companies
and their respective advisors continued their due diligence reviews. In
addition, members of both management teams and their financial and legal
advisors participated in ongoing negotiations regarding the terms of the
proposed transaction. During this period, counsel for Computervision and
Parametric met or communicated on numerous occasions to review and discuss
drafts of the Merger Agreement, the Stock Option Agreement and other ancillary
documents and related issues.
On October 30, 1997, the Parametric Board held a meeting at which the
proposed business combination was discussed and Parametric's financial and
legal advisors made presentations regarding the key elements of the
transaction. The Parametric Board met again on November 3, 1997, with members
of management and representatives of Goldman Sachs & Co. and Palmer & Dodge
LLP present, to review the terms of the proposed transaction. After discussing
the merits of the combination and with the advice of financial and legal
advisors, the Parametric Board voted unanimously to approve the Merger.
On November 3, 1997, the Computervision Board met, with representatives of
Hambrecht & Quist and Hale and Dorr LLP present, to review and discuss the
terms of the proposed transaction. Following presentations and advice from
their advisors and discussion of the proposed transaction and of available
alternatives, the Computervision Board unanimously approved the Merger and
authorized execution of the Merger Agreement, the Stock Option Agreement and
other ancillary documents. The definitive documents were then executed and
delivered by the parties.
On November 4, 1997, the parties issued a joint press release to announce
the Merger prior to the opening of trading in the U.S. securities markets.
PARAMETRIC'S REASONS FOR THE MERGER
Parametric believes that the Merger with Computervision will meet its
strategic objectives by expanding its business presence in the high-end of the
computer aided design market in the automotive and aerospace industries. It
considers these industries as presenting growth opportunities, and believes
that the increased penetration from the addition of Computervision's customers
will make it more competitive in these industries. The addition of
Computervision's EPD and Optegra enterprise level data management products to
Parametric's
22
<PAGE>
data management product offerings that focus on engineering departments also
will broaden Parametric's data management product offerings and permit it to
offer enterprise-wide data management products that address the requirements
of larger customers.
Parametric believes that Computervision's customer base is attractive and
generates a desirable base of maintenance and service revenues.
Computervision's customers include many large companies, particularly in the
automotive and aerospace industries, such as the Airbus Consortium
(Aerospatiale, British Aerospace and Daimler-Benz Aerospace), Rolls-Royce
Aerospace Groups and PSA Peugot Citroen. Computervision's strong relationship
with major customers in Europe is expected to complement and enhance
Parametric's European presence.
Parametric plans to continue development, maintenance and support of
Computervision's products independently of Parametric's own Pro/ENGINEER
product line, and also to continue to support the relationships currently in
place between Computervision and its customers. Parametric believes that there
are opportunities for growth in product revenues from the Computervision
customer base following the Merger because the financial and technological
strength of the combined company should increase customer confidence and
willingness to make additional systems commitments, as well as present the
opportunity to introduce Parametric products and services.
The Parametric Board also considered a number of potential risks relating to
the Merger, including (i) the difficulties inherent in integrating the two
operations and the risk that the synergies and benefits sought in the Merger
would not be fully achieved, (ii) the risk that the Merger would not be
consummated, and the effect of the public announcement of the Merger on the
market price of the Parametric Common Stock, (iii) the significant financial
obligations of Computervision that will be inherited in the Merger and the
impact of Computervision's financial difficulties on Parametric's historic
reported results and on market perceptions, (iv) the risks inherent in the
ability to reverse Computervision's product revenue decline and the
possibility of the loss of key Computervision customers, and (v) the
significant charges expected to be incurred by Parametric in connection with
the Merger. The Parametric Board believed that these risks were outweighed by
the potential benefits to be realized from the Merger.
COMPUTERVISION'S REASONS FOR THE MERGER; RECOMMENDATION OF THE BOARD OF
DIRECTORS
The Computervision Board has determined that the terms of the Merger
Agreement and the transactions contemplated thereby are fair to, and in the
best interests of, Computervision and its stockholders. Accordingly, the
Computervision Board has unanimously approved the Merger Agreement and the
Merger and unanimously recommends that the stockholders of Computervision vote
FOR approval and adoption of the Merger Agreement and the Merger.
The Computervision Board identified a number of reasons for the Merger and
believes that for these reasons, the stockholders of Computervision should
vote for the approval and adoption of the Merger Agreement and the Merger:
. The software markets in which Computervision competes are highly
competitive and characterized by rapid advances in technology. Its
principal competitors in the EPD market are IBM (which markets a
component modeling system, CATIA, developed and maintained by Dassault
Systems S.A. ("Dassault")) and Unigraphics, a division of Electronic Data
Systems. In the design automation market, Computervision competes with
Intergraph Corporation, Structural Dynamics Research Corporation ("SDRC")
and Parametric, and its principal competitors in the product data
management market are Metaphase Technology, Inc., a wholly owned
subsidiary of SDRC, and Sherpa Corporation. Although Computervision has
been a leading provider of design automation software to the aerospace
and automobile markets, it has been losing market share over the past two
years as a result of its burdensome debt obligations, financial
instability and the absence of new product offerings. These factors,
coupled with increasing consolidation in the industry, as evidenced by
Dassault's recent acquisition of Solid
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Works, have led Computervision to the conclusion that its competitive
position would be significantly compromised unless it combined with a
strong company with complementary products and financial resources
sufficient to support its operations and product development efforts.
. Computervision's principal market is providing critical design automation
software and data management products for the high-end aerospace,
automotive and shipbuilding industries, each of which makes long- term
decisions regarding the design and production of its products. These
decisions are not based solely on the software's advantages, but include
the size and financial strength of the supplier and its ability to meet
the customer's demands for mission-critical software over an extended
period of time. Because of Computervision's sharp revenue decline over
the past four quarters, substantial restructuring costs and expenses and
burdensome debt obligations, Computervision reduced its personnel (by
approximately 245 employees during the twelve months ended October 31,
1997) and the expenditures that it devotes to product development and
marketing. As Computervision's ability to compete in its principal
markets has diminished, its stock price has declined and its ability to
raise needed equity funds has been adversely impacted. As a stand-alone
company, Computervision currently lacks the financial resources to
continue to develop competitive products to meet the sophisticated design
automation needs of its traditional customer base. The Computervision
Board believes that the combined company, with greater financial
resources, complementary products, more customers and expanded sales and
distribution networks, should enable Computervision not only to enhance
its service to its principal customers but also to expand its customer
base.
. Computervision is experiencing both short-term and long-term liquidity
problems. The inability to increase its revenue while servicing its heavy
debt obligations will require Computervision to continue to reduce its
costs so as to align them with expected lower revenue over the long term
and to revise its operating plan to remain competitive. To accomplish
this objective, if the Merger does not take place, Computervision would
have to effect further personnel reductions, resulting in an attendant
increase in excess facilities and a need for substantially increased
funds. Also, because it might be unable to raise additional equity funds,
Computervision might not be able to meet its short-term liquidity
requirements or redeem the $175 million of senior notes that come due, or
an additonal $47 million of debt that must be paid, in 1999.
. The Computervision Board believes that the Merger will provide
Computervision with the opportunity, combined with Parametric, to compete
more effectively in its primary markets, serve its customers more
effectively, and develop new products, resulting in a combination which
would be in the best interests of its employees, customers, creditors and
stockholders.
In making this determination, the Computervision Board consulted with
management of Computervision, as well as its financial advisors and legal
counsel, and considered a number of factors, including, without limitation,
the following:
1. The following terms of the Merger Agreement and the Option Agreement:
(a) The Exchange Ratio and the fact that the Merger would provide holders
of Computervision Common Stock with the opportunity to receive merger
consideration that represents a significant premium over the price at which
Computervision Common Stock was trading in the months prior to execution of
the Merger Agreement.
(b) The likelihood of consummation of the Merger, despite certain
conditions to the consummation of the Merger and circumstances under which
Parametric can terminate the Merger Agreement. See "The Merger--Conditions
of Merger," "--Termination" and "--Termination Fee."
(c) The fact that the Merger Agreement (which prohibits Computervision
and its subsidiaries and others on their behalf from soliciting or
knowingly encouraging submission of any proposals or offers in connection
with an Acquisition Proposal (as defined herein under "The Merger--No
Solicitation"), or participating in any discussions or negotiations with
any person regarding an Acquisition Proposal or
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agreeing with any person in connection with an Acquisition Proposal with
respect to Computervision) permits the Computervision Board, in the
exercise of its fiduciary obligations, to furnish non-public information
to, and to enter into discussions or negotiations with, any person that
makes an unsolicited written, bona fide proposal to acquire Computervision
pursuant to a merger, consolidation, share exchange, business combination,
tender or exchange offer or other similar transaction, which the
Computervision Board in its good faith reasonable judgment determines would
result in a transaction more favorable to the stockholders of
Computervision from a financial point of view than the Merger.
(d) The provision of the Merger Agreement that requires Computervision to
pay Parametric up to $18 million under certain circumstances as described
under "The Merger--Termination" and "--Termination Fee," and the provisions
of the Option Agreement that permit Parametric, under certain circumstances
as described under "Stock Option Agreement," to purchase up to 9,588,809
shares of Computervision Common Stock at a cash purchase price of $4.00 per
share, subject, however, to an overall profit limit of $18 million. A
failure by stockholders of Computervision to approve the Merger Agreement
by the requisite vote at the Computervision Special Meeting would permit
Parametric to terminate the Merger Agreement and be paid a fee of $800,000.
Under certain additional circumstances, Computervision would be required to
pay $3 million or $15 million in termination fees to Parametric following
such termination. Although the Computervision Board resisted the grant of
the Option and sought to decrease the amount of the termination fees, the
Computervision Board determined that the negative features of the Option
and termination fees were outweighed by the benefits derived from the
Merger Agreement described herein.
(e) The treatment of the Merger as a "tax-free reorganization" for
federal income tax purposes and as a "pooling of interests" for accounting
purposes. See "The Merger--Certain Federal Income Tax Consequences," and
"--Accounting Treatment."
2. The opinion of Hambrecht & Quist to the effect that, as of the date of
its opinion and based upon and subject to certain matters stated therein, the
consideration to be received in the Merger was fair to the stockholders of
Computervision from a financial point of view. The full text of Hambrecht &
Quist's written opinion, which sets forth the assumptions made, matters
considered and limitations on review undertaken by Hambrecht & Quist, is
attached hereto as Appendix C and is incorporated herein by reference.
Computervision stockholders are urged to read the opinion of Hambrecht & Quist
in its entirety.
3. Historical and pro forma information concerning the financial performance
and condition, business operations and prospects of Computervision and
Parametric as separate entities and on a pro forma combined basis.
4. The opportunity for Computervision stockholders to vote on whether to
approve and adopt the Merger.
The Computervision Board also considered negative factors relating to the
Merger, including (i) the risk that the benefits sought in the Merger would
not be fully achieved; (ii) the risk that the Merger would not be consummated,
and the effect of the Merger's announcement on Computervision's business and
customers; (iii) the risk that the trading price of Parametric Common Stock
may be adversely affected by the announcement of the Merger; (iv) the effect
of the announcement of the Merger on Computervision's ability to attract and
retain key management, marketing and technical personnel; (v) possible loss of
revenue from other customers that consider Parametric a significant
competitor; and (vi) other risks described above under "Risk Factors."
In view of the wide variety of factors, both positive and negative,
considered by the Computervision Board, the Board did not find it practical
to, and did not, quantify or otherwise assign relative weights to the specific
factors considered.
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OPINION OF COMPUTERVISION'S FINANCIAL ADVISOR
Computervision engaged Hambrecht & Quist to act as its financial advisor in
connection with the Merger and to render an opinion as to the fairness from a
financial point of view to the holders of the outstanding shares of
Computervision Common Stock of the consideration to be received by such
holders in the Merger. Hambrecht & Quist was selected by the Computervision
Board based on Hambrecht & Quist's qualifications, expertise and reputation,
as well as Hambrecht & Quist's historic investment banking relationship and
familiarity with Computervision. Hambrecht & Quist rendered its oral opinion
(subsequently confirmed in writing) on November 3, 1997 to the Computervision
Board that, as of such date, the consideration to be received by the holders
of the Common Stock in the Merger is fair to the holders of the Common Stock
from a financial point of view. A copy of Hambrecht & Quist's opinion dated
November 3, 1997, which sets forth the assumptions made, matters considered,
the scope and limitations of the review undertaken and the procedures followed
by Hambrecht & Quist is attached as Appendix C to this Prospectus/Proxy
Statement. Computervision stockholders are advised to read the opinion in its
entirety. No limitations were placed on Hambrecht & Quist by the
Computervision Board with respect to the investigation made or the procedures
followed in preparing and rendering its opinion. The Hambrecht & Quist opinion
was for the information of the Computervision Board in connection with their
evaluation of the Merger and does not constitute a recommendation to any
stockholder as to how such stockholder should vote on the Merger.
In its review of the Merger, and in arriving at its opinion, Hambrecht &
Quist, among other things: (i) reviewed the publicly available consolidated
financial statements of Parametric for recent years and interim periods to
date and certain other relevant financial and operating data of Parametric
made available to Hambrecht & Quist from published sources and from the
internal records of Parametric; (ii) reviewed certain internal financial and
operating information, including certain projections, relating to Parametric
prepared by the management of Parametric; (iii) discussed the business,
financial condition and prospects of Parametric with certain of its officers;
(iv) reviewed the financial statements of Computervision for recent years and
interim periods to date and certain other relevant financial and operating
data of Computervision made available to Hambrecht & Quist from published
sources and from the internal records of Computervision; (v) reviewed certain
internal financial and operating information relating to Computervision,
including certain projections, prepared by the management of Computervision;
(vi) discussed the business, financial condition and prospects of
Computervision with certain of its officers; (vii) reviewed the recent
reported prices and trading activity for the Common Stocks of Parametric and
Computervision and compared such information and certain financial information
for Parametric and Computervision with similar information for certain other
companies engaged in businesses Hambrecht & Quist considered comparable;
(viii) reviewed the financial terms, to the extent publicly available, of
certain comparable merger and acquisition transactions; (ix) reviewed the
Merger Agreement; and (x) performed such other analyses and examinations and
considered such other information, financial studies, analyses and
investigations and financial, economic and market data as Hambrecht & Quist
deemed relevant.
Hambrecht & Quist did not assume responsibility for independent verification
of any of the information concerning Computervision or Parametric considered
in connection with its review of the Merger and, for purposes of its opinion,
Hambrecht & Quist assumed and relied upon the accuracy and completeness of all
such information. In connection with its opinion, Hambrecht & Quist did not
prepare or obtain any independent evaluation or appraisal of any of the assets
or liabilities of Computervision or Parametric, nor did it conduct a physical
inspection of the properties and facilities of Computervision or Parametric.
With respect to the financial forecasts and projections used in its analysis,
Hambrecht & Quist assumed that they reflected the best currently available
estimates and judgments of the expected future financial performance of
Parametric and Computervision. For the purposes of their opinion, Hambrecht &
Quist also assumed that neither Computervision nor Parametric was a party to
any pending transactions, including external financings (other than those
contemplated that had been disclosed to Hambrecht & Quist), recapitalizations
or merger discussions, other than the Merger and those in the ordinary course
of conducting their respective businesses. For purposes of its opinion,
Hambrecht & Quist assumed that the Merger would qualify as a tax-free
reorganization under the Internal Revenue Code for the stockholders of
Computervision and that the Merger would be accounted for as a pooling of
interests. Hambrecht & Quist's opinion is necessarily based upon market,
economic, financial and
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other conditions as they existed and can be evaluated as of the date of the
opinion and any subsequent change in such conditions would require a
reevaluation of such opinion.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. The
summary of the Hambrecht & Quist analyses set forth below does not purport to
be a complete description of the presentation by Hambrecht & Quist to the
Computervision Board. In arriving at its opinion, Hambrecht & Quist did not
attribute any particular weight to any analysis or factor considered by it,
but rather made qualitative judgments as to the significance and relevance of
each analysis and factor. Accordingly, Hambrecht & Quist believes that its
analyses and the summary set forth below must be considered as a whole and
that selecting portions of its analyses, without considering all analyses, or
of the following summary, without considering all factors and analyses, could
create an incomplete view of the processes underlying the analyses set forth
in the Hambrecht & Quist presentation to the Computervision Board and its
opinion. In performing its analyses, Hambrecht & Quist made numerous
assumptions with respect to industry performance, general business and
economic conditions and other matters, many of which are beyond the control of
Computervision and Parametric. The analyses performed by Hambrecht & Quist
(and summarized below) are not necessarily indicative of actual values or
actual future results, which may be significantly more or less favorable than
suggested by such analyses. Additionally, analyses relating to the values of
businesses do not purport to be appraisals or to reflect the prices at which
businesses actually may be acquired.
In performing its analyses, Hambrecht & Quist used projections of
Computervision's calendar year 1997 and 1998 financial performance that it
derived after discussions with Computervision's management ("Case A") as well
as projections of Computervision's calendar 1997 and 1998 financial
performance that it derived after discussions with Parametric's management
("Case B"). Case A is based on certain assumptions, including that
Computervision would be able to obtain substantial external financing and
otherwise significantly improve its financial position as a stand alone
entity. Case B reflected Parametric's management's expectations of
Computervision's financial performance under Parametric management and
encompassed lower revenue estimates than Case A as well as different margin
structures and revenue mix. Hambrecht & Quist also used its published
estimates to project Parametric's calendar year 1997 and 1998 financial
performance.
The following is a brief summary of certain financial analyses performed by
Hambrecht & Quist in connection with providing its written opinion to the
Computervision Board on November 3, 1997:
Contribution Analysis: Hambrecht & Quist analyzed the contribution of each
of Computervision and Parametric to certain calendar 1998 financial statement
categories of the pro forma combined company. The financial statement
categories included revenue, operating income, pretax income, net income,
cash, and book value. This contribution analysis was then compared to the pro
forma ownership percentage of Computervision and Parametric stockholders in
the pro forma post-Merger combined company (the "Combined Company"). Hambrecht
& Quist observed that, calculated using the treasury stock method,
Computervision stockholders are expected to own approximately 4% of the
Combined Company equity at the close of the Merger and Parametric stockholders
are expected to own approximately 96% of the Combined Company equity at the
close of the Merger. It was estimated that Computervision and Parametric would
contribute approximately 5% and 95%, respectively, of the combined cash and
Computervision would contribute negative book value. Hambrecht & Quist
examined the expected contributions to the Combined Company's revenues,
operating income, pretax income and net income by Computervision for calendar
year 1998 (i.e., the four quarters ending December 31), derived from Case A
and Case B, and by Parametric for calendar year 1998. It was estimated that
Computervision and Parametric would contribute approximately 14% and 86%,
respectively, for Case A and 10% and 90%, respectively, for Case B of the
combined revenues and approximately 7% and 93%, respectively, in both cases of
the combined operating income. It was also estimated that Computervision would
contribute negative pretax and net income and that Parametric would contribute
(excluding non-recurring charges) approximately 97% and 96%, respectively, in
both cases to the Combined Company's pretax and net income; 3% and 4% of the
Combined Company's pretax and net income, respectively, in both cases would
result from the elimination of Computervision's interest expense net of
interest foregone on the cash required to eliminate the debt.
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Pro Forma Merger Analysis: Hambrecht & Quist analyzed the pro forma impact
of the Merger on the Combined Company's calendar 1998 earnings per share
("EPS") using (i) estimates of Parametric's EPS in calendar 1998 and (ii) Case
A and Case B earnings estimates for calendar 1998. The analysis indicated that
the difference between the calendar 1998 EPS of the pro forma Combined Company
and the calendar 1998 EPS for Parametric as a stand alone company was
negligible in Case A and Case B. The actual results and savings achieved by
the Combined Company resulting from the Merger may vary from the forecasted
results and variations may be material.
Premium Analysis: Hambrecht & Quist compared the implied price per share of
the offer as of October 31, 1997 to the last sale price of Computervision
Common Stock on both October 31, 1997 and October 6, 1997 (the twentieth
trading day preceding the board meeting) to similar premiums for certain
technology transactions announced since 1989. Hambrecht & Quist analyzed nine
such public company technology transactions in the design automation software
industry (the "Design Transactions") and eight such public company
transactions in the software industry in which the acquired company was in
financial distress or in the midst of a financial turnaround (the "Transition
Software Transactions"). Hambrecht & Quist observed that the median one
trading-day premium and 20 trading-day premium paid in the Design Transactions
were 17% and 32%, respectively, and that the median one trading-day premium
and 20 trading-day premium paid in the Transition Software Transactions were
49% and 56%, respectively. This compared with the proposed acquisition in
which, as of October 31, 1997, the one-day premium offered over the October
31, 1997 closing price for Computervision Common Stock was 36% and the 20
trading-day premium offered over the closing price for Computervision Common
Stock on October 6, 1997 was 9%, and it compared with the proposed acquisition
in which, as of November 3, 1997, the one trading-day premium offered over the
November 3, 1997 closing price for Computervision Common Stock was 28% and the
20 trading-day premium offered over the closing price for Computervision
Common Stock on October 7, 1997 was 19%. Hambrecht & Quist also analyzed the
implied premiums to average historical closing prices for the 5, 10, 20, and
90 trading days ending October 31, 1997 using the implied offer price based on
the closing price of Parametric's Common Stock on October 31, 1997 and found
that the implied premiums were 63%, 46%, 30%, and 22%, respectively.
Discounted Cash Flow Analysis: Hambrecht & Quist performed a discounted cash
flow analysis for Computervision using projected financial performance through
2002 derived from Case A and Case B. The analysis aggregated (i) the present
value of the projected free cash flow (defined as earnings before interest and
taxes ("EBIT"), less increases in working capital, plus depreciation and
amortization, and less capital expenditures) through 2002 and (ii) the present
value of a range of terminal values (the hypothetical value of selling the
enterprise in its entirety at some future date) for the year 2002. The
terminal values for Computervision were determined by applying multiples
ranging from 14 to 18 times Computervision's estimated EBIT in 2002.
Computervision's free cash flow streams and terminal values were discounted to
present values using discount rates ranging from 15% to 25%. Such analysis
indicated a range of equity values for Computervision of between $0.93 per
share and $4.92 per share for Case A and $0.63 per share and $4.37 per share
for Case B. These results compared to an implied offer per share of
approximately $3.82 per share of Computervision Common Stock in the proposed
acquisition, based on the closing price of Parametric Common Stock on October
31, 1997, and approximately $3.93 per share of Computervision Common Stock in
the proposed acquisition, based on the closing price of Parametric Common
Stock on November 3, 1997.
Analysis of Publicly Traded Comparable Companies: Hambrecht & Quist compared
selected historical and projected financial information of Computervision to
publicly traded companies Hambrecht & Quist deemed to be comparable to
Computervision. Such information included the ratio of market value to
historical net income, market value to book value, and price per share to
projected EPS. Hambrecht & Quist also examined the ratio of the enterprise
value (market value plus debt less cash) to historical revenue, historical
earnings before interest and taxes, historical earnings before interest,
taxes, depreciation and amortization ("EBITDA"), and projected calendar year
1997 and 1998 revenue. Companies deemed comparable included selected design
automation software companies (the "Design Comparables") and selected
underperforming software companies (the "Underperforming Comparables"). The
foregoing multiples were applied to historical financial results of
Computervision for the latest-twelve-month ("LTM") period ended September 28,
1997 and projected financial
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results of Computervision derived from Case A. Hambrecht & Quist determined
median multiples for the Design Comparables of 6.5 times LTM revenue, 20.7
times LTM EBITDA, 25.8 times LTM EBIT, 28.8 times LTM net income, 6.0 times
calendar year 1997 revenue, 4.4 times calendar 1998 revenue, 25.9 times
calendar 1997 net income, and 20.1 times calendar 1998 net income, and median
multiples for the Underperforming Comparables of 0.7 times LTM revenue, 9.3
times LTM EBITDA, 37.6 times LTM EBIT, 29.9 times LTM net income, 0.6 times
calendar year 1997 revenue, 0.4 times calendar 1998 revenue, 31.1 times
calendar 1997 net income, and 13.8 times calendar 1998 net income.
Based on the analysis of publicly traded comparable companies,
Computervision's implied equity value per share applying Design Comparables
multiples to historical results and Case A (which reflects an analysis of
Computervision as a stand alone company) ranged from negative equity values
using six different multiples to positive equity values of approximately $9.12
per share and approximately $18.82 per share. Computervision's implied equity
value per share applying Underperforming Comparables multiples to historical
results and Case A was negative using nine different multiples and not
meaningful. This compared with an offer in the proposed acquisition of
approximately $3.82 per share for Computervision, based on the closing price
of Parametric Common Stock on October 31, 1997, and approximately $3.93 per
share for Computervision, based on the closing price of Parametric Common
Stock on November 3, 1997.
Analysis of Selected Merger and Acquisition Transactions: Hambrecht & Quist
compared the proposed acquisition with selected merger and acquisition
transactions, consisting of the Design Transactions and the Transition
Software Transactions. In examining these transactions, Hambrecht & Quist
analyzed certain income statement and balance sheet parameters of the acquired
company relative to the consideration offered. The foregoing multiples were
applied to historical financial results of Computervision for the twelve-month
period ended September 28, 1997. Multiples analyzed included consideration
offered to LTM revenue, LTM EBIT, LTM EBITDA, LTM earnings, net operating
assets, LTM operating cash flow, and book value. The consideration offered in
the Design Transactions was a median multiple of 5.8 times LTM revenue, 31.4
times LTM EBITDA, 30.8 times LTM EBIT, 55.4 times LTM earnings, 24.0 times net
operating assets, 35.8 times LTM operating cash flow, and 6.3 times book
value. The consideration offered in the Transition Software Transactions was a
median multiple of 1.1 times LTM revenue, 14.1 times LTM EBITDA, 13.2 times
LTM EBIT, 21.7 times LTM earnings, 4.5 times net operating assets, 15.5 times
LTM operating cash flow, and 2.9 times book value.
Based on the analysis of selected merger and acquisition transactions,
Computervision's implied equity value per share applying Design Transactions'
multiples to historical results ranged from negative values using five
different multiples to positive values between approximately $0.55 per share
and approximately $16.47 per share. Computervision's implied equity value per
share applying Transition Software Transactions' multiples to historical
results ranged from negative values using six different multiples to positive
values between approximately $0.36 per share and approximately $5.45 per
share. This result compared with an implied value in the proposed acquisition
of approximately $3.82 per share of Computervision Common Stock, based on the
closing price of Parametric Common Stock on October 31, 1997, and
approximately $3.93 per share of Computervision Common Stock, based on the
closing price of Parametric Common Stock on November 3, 1997.
No company or transaction used in the above analyses is identical to
Computervision or the Merger. Accordingly, an analysis of the results of the
foregoing is not mathematical; rather it involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and other factors that could affect the public trading values of
the companies or company to which they are compared.
The foregoing description of Hambrecht & Quist's opinion is qualified in its
entirety by reference to the full text of such opinion, which is attached as
Appendix C to this Prospectus/Proxy Statement.
Hambrecht & Quist, as part of its investment banking services, is regularly
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, corporate restructurings, strategic alliances,
negotiated underwritings, secondary distributions of listed and unlisted
securities, private placements
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and valuations for corporate and other purposes. Hambrecht & Quist is familiar
with Computervision, having acted as managing underwriter of its initial
public offering in 1992 and a follow-on offering in 1995. Hambrecht & Quist
received customary compensation in connection with such transactions. In the
ordinary course of business, Hambrecht & Quist acts as a market maker and
broker in the publicly traded securities of Computervision and of Parametric
and receives customary compensation in connection therewith, and also provides
research coverage for Computervision and for Parametric. In the ordinary
course of business, Hambrecht & Quist actively trades in the securities of
Computervision and of Parametric for its own account and for the accounts of
its customers and, accordingly, may at any time hold a long or short position
in such securities. Hambrecht & Quist may in the future provide additional
investment banking or other financial advisory services to Parametric.
Computervision has agreed to pay Hambrecht & Quist a fee (a "Fairness
Opinion Fee") of $500,000 in connection with the delivery of a fairness
opinion. Computervision also has agreed to pay Hambrecht & Quist, in
connection with its services as financial advisor to Computervision in
connection with the Merger, an additional fee payable upon the closing of the
Merger (the "Transaction Fee") equal to 0.5625% of the aggregate equity
consideration received in the Merger. The Fairness Opinion Fee shall be
credited against the total Transaction Fee. Computervision also has agreed to
reimburse Hambrecht & Quist for its reasonable out-of-pocket expenses and to
indemnify Hambrecht & Quist against certain liabilities, including liabilities
under the federal securities laws or relating to or arising out of Hambrecht &
Quist's engagement as financial advisor.
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THE MERGER
This portion of the Prospectus/Proxy Statement describes various aspects of
the Merger. The following description does not purport to be complete and is
qualified in its entirety by reference to the Merger Agreement, which is
incorporated herein by reference and a conformed copy of which is attached
hereto as Appendix A. Capitalized terms used herein and not otherwise defined
have the respective meanings ascribed to them in the Merger Agreement.
Computervision's stockholders are urged to read the Merger Agreement
carefully.
GENERAL
The Merger Agreement provides that, subject to the satisfaction or, in
certain cases, waiver of certain conditions (including the approval of the
Merger Agreement by the stockholders of Computervision), Merger Sub will be
merged with and into Computervision. Computervision will be the surviving
corporation under the name "Computervision Corporation" and will be a wholly-
owned subsidiary of Parametric. The outstanding shares of Computervision will
automatically be converted into the right to receive the Merger Consideration
(as described below), and the stockholders of Computervision will become
stockholders of Parametric.
CONVERSION OF COMPUTERVISION COMMON STOCK
At the Effective Time, subject to adjustment as discussed below, each issued
and outstanding share of Computervision Common Stock shall by virtue of the
Merger, automatically and without any action on the part of the holder
thereof, be converted into the right to receive 0.0866 shares of Parametric
Common Stock (the "Merger Consideration"). The Merger Consideration was agreed
to as a result of arm's-length negotiations between representatives of
Parametric and Computervision, during which Computervision had the benefit of
advice from its financial advisor, the investment banking firm of Hambrecht &
Quist. The total value of the Merger Consideration when the Computervision
Board approved the Merger Agreement was approximately $4.00 per share of
Computervision Common Stock, and was based on the average of the closing
prices of Parametric's Common Stock on Nasdaq for the thirty (30) trading days
ending on and including October 20, 1997.
SURRENDER OF CERTIFICATES
The conversion of Computervision Common Stock into Parametric Common Stock
will occur automatically at the Effective Time. Promptly after the Effective
Time, Parametric shall cause its exchange agent (the "Exchange Agent") to mail
to each holder of record of Computervision Common Stock at the Effective Time
instructions for surrendering his or her certificate(s) representing shares of
Computervision Common Stock in exchange for certificate(s) representing
Parametric Common Stock. COMPUTERVISION STOCKHOLDERS SHOULD NOT SURRENDER
THEIR CERTIFICATES FOR EXCHANGE UNTIL THEY RECEIVE A LETTER OF INSTRUCTION
FROM THE EXCHANGE AGENT.
Upon surrender to the Exchange Agent of a duly executed certificate for
exchange and cancellation, the holder of such certificate shall be entitled to
receive in exchange therefor a certificate representing the number of whole
shares of Parametric Common Stock to which such holder of Computervision
Common Stock shall have become entitled under the Merger Agreement, and a
check representing the amount of cash payable in lieu of a fractional share,
as described below, and the certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on unpaid dividends and
distributions, if any, payable to holders of certificates.
After the Effective Time, there shall be no transfers on the stock transfer
books of the shares of Computervision Common Stock. If, after the Effective
Time, certificates representing such shares are presented for transfer to the
Exchange Agent, they shall be cancelled and exchanged for certificates
representing shares of Parametric Common Stock and cash as provided above. No
fractional shares of Parametric Common Stock will be issued to any
Computervision stockholder upon consummation of the Merger. Each holder of
Computervision Common Stock otherwise entitled to a fraction of a share of
Parametric Common Stock shall be entitled to
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receive an amount of cash in lieu thereof equal to such fraction multiplied by
the average of the closing prices for the Parametric Common Stock over the ten
preceding trading days. Following consummation of the Merger, no former holder
of Computervision Common Stock shall be entitled to dividends or any other
rights in respect of any such fraction.
MERGER AND EFFECTIVE TIME
The Merger will become effective upon the filing of a Certificate of Merger
with the Secretary of State of Delaware, unless a different date and time is
specified as the effective time in such Certificate of Merger (the "Effective
Time"). At the Effective Time, Merger Sub shall be merged with and into
Computervision as permitted by and in accordance with applicable laws and on
the terms and subject to the conditions contained in the Merger Agreement. At
the Effective Time, the separate existence of Merger Sub shall cease and
Computervision, as the surviving corporation ("Surviving Corporation"), shall
continue to exist under and be governed by the Delaware General Corporation
Law ("DGCL"). At the Effective Time, the certificate of incorporation and by-
laws of the Surviving Corporation shall be the certificate of incorporation
and by-laws of Merger Sub as in effect immediately prior to the Merger and the
directors and officers of the Surviving Corporation shall be those persons who
were the directors and officers of Merger Sub immediately prior to the Merger.
Parametric and Computervision have targeted the first quarter of calendar 1998
for completion of the Merger.
CONDITIONS OF MERGER
The respective obligations of Parametric and Computervision to effect the
Merger are subject to satisfaction, on or prior to the Effective Time, of
certain conditions, including: (i) the Merger Agreement shall not have been
terminated in accordance with its terms; (ii) the waiting period applicable to
the consummation of the Merger under the Hart-Scott-Rodino Act shall have
expired or been terminated by the reviewing agency and any similar
governmental requirements shall have been satisfied or complied with (see "The
Merger--Regulatory Approvals Required"); (iii) approval of the Merger
Agreement and the Merger by the Computervision stockholders; (iv) the
Registration Statement of which this Prospectus/Proxy Statement forms a part
shall have been declared effective by the Commission and shall remain
effective and no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for
that purpose, and no similar proceeding in respect of the Proxy Statement,
shall have been initiated or threatened in writing by the Commission; (v) no
governmental entity shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) that has the effect
of making the Merger illegal or otherwise prohibiting consummation of the
Merger; and (vi) Parametric and Computervision each shall have received
opinions from their respective counsel to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code.
The obligation of Computervision to consummate the transactions contemplated
by the Merger Agreement is further subject to the satisfaction, or waiver by
Computervision, on or before the Effective Time, of the following conditions:
(i) the representations and warranties of Parametric and Merger Sub contained
in the Merger Agreement shall be true and correct in all material respects as
of the date of the Merger Agreement and (except to the extent that such
representations and warranties speak as of an earlier date) as of the
Effective Time as though made on and as of the Effective Time, and
Computervision shall have received a certificate signed on behalf of
Parametric by its Chief Executive Officer or its Chief Operating Officer to
the foregoing effect; (ii) Parametric and Merger Sub shall have in all
material respects performed all obligations and agreements and complied with
all covenants contained in the Merger Agreement to be performed and complied
with by Parametric and Merger Sub on or prior to the Effective Time, and
Computervision shall have received a certificate signed on behalf of
Parametric by its Chief Executive Officer or Chief Operating Officer to the
foregoing effect; (iii) Computervision shall have received the opinion of
Palmer & Dodge LLP, counsel to Parametric, dated the Effective Time, in a form
that is customary for transactions of this type; and (iv) the shares of
Parametric Common Stock issuable to stockholders of Computervision pursuant to
the Merger Agreement and such other shares required to be reserved for
issuance in connection with the Merger shall have been authorized for
quotation on the Nasdaq.
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The obligations of Parametric and Merger Sub to consummate the transactions
contemplated by the Merger Agreement are further subject to the satisfaction,
or waiver by Parametric, on or before the Effective Time, of the following
conditions: (i) the representations and warranties of Computervision contained
in the Merger Agreement shall be true and correct in all material respects as
of the date of the Merger Agreement and (except to the extent that such
representations and warranties speak as of an earlier date) as of the
Effective Time as though made on and as of the Effective Time, and Parametric
shall have received a certificate signed on behalf of Computervision by its
Chief Executive Officer or its Chief Operating Officer to the foregoing
effect; (ii) Computervision shall have in all material respects performed all
obligations and agreements and complied with all covenants contained in the
Merger Agreement to be performed and complied with by Computervision on or
prior to the Effective Time, and Parametric shall have received a certificate
signed on behalf of Computervision by its Chief Executive Officer or Chief
Operating Officer to the foregoing effect; (iii) Parametric shall have
received the opinion of Hale and Dorr LLP, counsel to Computervision, dated
the Closing Date, in a form that is customary for transactions of this type;
(iv) each of certain individuals and entities shall have entered into a Voting
Agreement with Parametric, and such agreements shall be in full force and
effect as of the Effective Time; (v) Parametric shall have received a letter
from Coopers & Lybrand L.L.P. substantially to the effect that the Merger will
qualify for pooling of interests accounting treatment, and Computervision
shall have received a letter from Arthur Andersen LLP substantially to the
effect that Computervision is eligible for pooling of interests treatment;
(vi) each of certain individuals shall have entered into an Affiliate
Agreement in the form attached to the Merger Agreement, and such agreements
shall be in full force and effect as of the Effective Time; (vii) certain
individuals shall have entered into a Non-Competition Agreement in the form
attached to the Merger Agreement with Parametric or Merger Sub, and such
agreements shall be in full force and effect as of the Effective Time; and
(viii) certain customers of Computervision or a subsidiary thereof shall have
granted any consent, approval, or waiver required under each agreement between
such customer and Computervision or such subsidiary such that neither the
Merger nor the relationship between Parametric and the Surviving Corporation
after the Effective Time shall constitute a default under, give such customer
or any other party the right to terminate, or result in any penalty under, any
such customer agreement; and (ix) the order approving the settlement of a
certain class action lawsuit against Computervision shall be final and
nonappealable.
REGULATORY APPROVALS REQUIRED
Consummation of the Merger is subject to expiration or termination by the
reviewing agency, either the Federal Trade Commission or the Department of
Justice, of the waiting period applicable to the consummation of Merger under
the Hart-Scott-Rodino Act.
Parametric and Computervision are not aware of any other governmental
approvals, other than those of the Commission and state securities
administrators with respect to the Registration Statement and this
Prospectus/Proxy Statement, or actions that are required before the parties
may consummate the Merger. It is presently contemplated that if any such
additional governmental approvals or actions are required, such approvals or
actions will be sought. There can be no assurance, however, that any such
additional approvals or actions will be obtained.
AMENDMENT
The Merger Agreement may be amended by the parties thereto by written
instrument executed by all parties (subject to compliance with applicable
law); provided, however, that after any approval of the transactions
contemplated by the Merger Agreement by Computervision's stockholders, there
may not be, without further approval of such stockholders, any amendment of
the Merger Agreement which reduces the amount or changes the form of the
Merger Consideration other than as contemplated by the Merger Agreement.
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TERMINATION
The Merger Agreement may be terminated at any time prior to the Closing
Date, whether before or after approval of the Merger by Computervision's
stockholders, by mutual written consent of Parametric and Computervision. In
addition, the Merger Agreement may be terminated by either Computervision or
Parametric: (i) if the Merger shall not have been consummated by February 28,
1998 (which date may be unilaterally extended by either Computervision or
Parametric to March 31, 1998 if certain regulatory conditions have not been
satisfied); provided, however, that the actions or the failure to act of the
party exercising such right shall not have been a principal cause of or
resulted in the failure of the Merger to occur on or before such date if such
action or failure to act constitutes a breach of the Merger Agreement; (ii) if
a court of competent jurisdiction or governmental, regulatory or
administrative agency or commission shall have issued an order, decree or
ruling or taken any other action, in any case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger, which order,
decree or ruling is final and nonappealable; (iii) if the required approval of
the Computervision's stockholders contemplated by the Merger Agreement shall
not have been obtained by reason of the failure to obtain the required vote
upon a vote taken at a meeting of stockholders, provided that the right to
terminate the Merger Agreement for this reason shall not be available to
Computervision where the failure to obtain the approval of Computervision's
stockholders shall have been caused by the action or failure to act of
Computervision in breach of the Merger Agreement; (iv) if Computervision shall
have accepted a Superior Proposal (as defined below under "Termination Fee")
or if the Computervision Board of Directors recommends a Superior Proposal to
Computervision's stockholders.
Further, the Merger Agreement may be terminated by Parametric: (i) if the
Computervision Board shall have (a) failed to convene the Computervision
Special Meeting, (b) failed to recommend approval of the Merger Agreement and
the Merger in this Prospectus/Proxy Statement or withdrawn or modified in a
manner adverse to Parametric its recommendation in favor of the Merger, (c)
after receipt of an Acquisition Proposal (as defined below under "No
Solicitation"), and upon request by Parametric, failed to reconfirm its
recommendation of approval of the Merger and the Merger Agreement within ten
business days following receipt of such request, or (d) recommended approval
of or a tender of shares of Computervision Common Stock in an Alternative
Transaction (as defined below under "Termination Fee"); (ii) upon a breach of
any representation, warranty, covenant or agreement on the part of
Computervision set forth in the Merger Agreement, if (a) as a result of such
breach the conditions set forth in the representations and warranties or the
agreements and covenants would not be satisfied as of the time of such breach
and (b) such breach shall not have been cured by Computervision within ten
business days following receipt by Computervision of written notice of such
breach from Parametric; (iii) if there shall have occurred any event or
condition that constitutes a Material Adverse Effect (as defined in the Merger
Agreement) with respect to Computervision since the date of the Merger
Agreement, which condition or event shall not have been ameliorated such that
it is no longer a Material Adverse Effect within ten (10) business days
following receipt by Computervision of notice from Parametric; (iv) in the
event that it receives written notice from either Coopers & Lybrand L.L.P.,
Arthur Andersen LLP, or the Commission that, in the opinion of the entity
giving such notice, the Merger will not qualify for pooling of interests
accounting treatment; (v) in the event that Computervision's maintenance
revenue (as defined therein) for its fiscal quarter ending December 31, 1997
does not equal at least $18.25 million or it appears reasonably likely that
such revenue for such period will not equal at least such amount or there are
fewer than 55,000 CADDS and Medusa seats licensed to Computervision's
customers under active maintenance; and (vi) in the event that any one of
certain key customers of Computervision and its subsidiaries or any three of
certain other customers cancels or terminates or gives notice of cancellation
or termination of its relationship or a material portion of its relationship
with Computervision or its Subsidiaries or there is any material decrease or
planned decrease in the usage or purchase of the products or services of
Computervision or any of its subsidiaries by any such customer from that
reasonably expected by Computervision at the date of execution of the Merger
Agreement of such a nature that it demonstrates a material deterioration in
the ongoing relationship of Computervision and its subsidiaries with that
customer.
Finally, the Merger Agreement may be terminated by Computervision: (i) upon
a breach of any representation, warranty, covenant or agreement on the part of
Parametric set forth in the Merger Agreement, if
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(a) as a result of such breach the representations and warranties or covenants
and agreements would not be satisfied as of the time of such breach and (b)
such breach shall not have been cured by Parametric within ten business days
following receipt by Parametric of written notice of such breach from
Computervision or (ii) if there shall have occurred any event or condition
that constitutes a Material Adverse Effect with respect to Parametric since
the date of the Merger Agreement, which condition or event shall not have been
ameliorated such that it is no longer a Material Adverse Effect within ten
business days following receipt by Parametric of notice from Computervision.
TERMINATION FEE
In order to induce Parametric to enter into the Merger Agreement and to
reimburse it for its expenses involved in investigating Computervision and
negotiating and entering into the Merger Agreement and related matters,
Computervision agreed to make certain cash payments to Parametric in the event
that the Merger Agreement is terminated under certain circumstances.
Computervision agreed to make a cash payment of $800,000 to Parametric if: (i)
either Computervision or Parametric has terminated the Merger Agreement as a
result of Computervision's stockholders not adopting the Merger Agreement or
(ii) upon a material non-willful breach of any representation, warranty,
covenant or agreement on the part of Computervision set forth in the Merger
Agreement, if (a) as a result of such breach the representations and
warranties or covenants and agreements would not be satisfied as of the time
of such breach and (b) such breach shall not have been cured by Computervision
within ten business days following receipt by Computervision of written notice
of such breach from Parametric, provided that, in the case of a willful
breach, Computervision has agreed to make a cash payment to Parametric of
$15,000,000. In the case of termination as a result of the failure to obtain
the requisite vote of Computervision stockholders to adopt the Merger
Agreement, if at the time of such failure, (a) there shall have been announced
or commenced an Alternative Transaction and Computervision shall have either
(x) executed an agreement to engage in the same or (y) the Computervision
Board shall not have recommended against such Alternative Transaction
affirmatively or, if the Computervision Board has recommended against such
Alternative Transaction, the Computervision Board shall have withdrawn such
recommendation against such Alternative Transaction or modified such
recommendation in a manner adverse to Parametric, or (b) there shall have been
announced an Alternative Transaction with a party other than Parametric or its
affiliates and (x) Computervision shall have engaged in, or entered into an
agreement to engage in, an Alternative Transaction with such third party or
any affiliate thereof within twelve months after the date of the
Computervision Special Meeting or (y) the Computervision Board shall have
recommended an Alternative Transaction with the third party proposing such
Alternative Transaction or any affiliate thereof within twelve months after
the date of the Computervision Special Meeting, Computervision has agreed to
make a cash payment to Parametric of $15,000,000. Computervision has also
agreed to make a cash payment of $15,000,000 to Parametric if the Merger
Agreement is terminated, by either Computervision or Parametric, if
Computervision shall have accepted a Superior Proposal or if the
Computervision Board recommends a Superior Proposal to Computervision's
stockholders.
Computervision has agreed to make a cash payment of $3,000,000 to Parametric
if the Computervision Board shall have (i) failed to convene the
Computervision Special Meeting, (ii) failed to recommend approval of the
Merger Agreement and the Merger in this Prospectus/Proxy Statement or
withheld, withdrawn or modified in a manner adverse to Parametric such
recommendation in favor of the Merger, (iii) after receipt of an Acquisition
Proposal, upon request of Parametric, failed to reconfirm its recommendation
of approval of the Merger and the Merger Agreement within ten business days of
receiving such request, or (iv) recommended approval of or a tender of shares
of Computervision Common Stock in an Alternative Transaction. In the event the
Merger Agreement is terminated pursuant to this clause and before or at the
time of such termination or within twelve months thereafter Computervision
shall have entered into an agreement to engage in or shall have engaged in an
Alternative Transaction, Computervision has agreed to make a cash payment to
Parametric of $15,000,000.
As used herein (i) the term "Alternative Transaction" means either (a) a
transaction pursuant to which any person or entity other than Parametric or
its affiliates acquires more than 10% of the outstanding shares of
Computervision Common Stock, pursuant to a tender offer or exchange offer of
otherwise, (b) a merger or other
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business combination involving Computervision pursuant to which any third
party acquires more than 10% of the outstanding equity securities of
Computervision or the entity surviving such merger or business combination,
(c) any other transaction pursuant to which any third party acquires control
of assets (including for this purpose the outstanding equity securities of
subsidiaries of Computervision, and the entity surviving any merger or
business combination including any of them) of Computervision having a fair
market value (as determined by the Computervision Board in good faith) equal
to more than 10% of the fair market value of all the assets of Computervision
immediately prior to such transaction, or (d) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing, and (ii) the term "Superior Proposal" means an
acquisition proposal that the Computervision Board determines, based on the
advice of its independent financial advisors, would result in a transaction
more favorable to the stockholders of Computervision from a financial point of
view than the Merger and for which financing is then committed or which, in
judgment of the Computervision Board, is reasonably capable of being financed
by such person, entity or group and which is likely to be consummated.
NO SOLICITATION
Computervision and its subsidiaries have agreed that, from the date of
execution of the Merger Agreement and until the earlier of the Effective Time
or termination of the Merger Agreement, neither Computervision nor its
subsidiaries will solicit any proposals or offers by any person, entity or
group, participate in any discussions or negotiations with, disclose any non-
public information concerning Computervision or any of its subsidiaries to, or
afford any access to the properties, books or records of Computervision or any
of its subsidiaries to, or enter into any agreement with, any entity in
connection with any Acquisition Proposal with respect to Computervision. As
used herein, the term "Acquisition Proposal" means (i) any proposal or offer
relating to (a) any merger, consolidation, sale of substantial assets of
Computervision or similar transactions involving Computervision or any
subsidiary, (b) sale of 10% or more of the outstanding shares of capital stock
of Computervision, including a sale by way of a tender offer or an exchange
offer, or (c) the acquisition by any person of beneficial ownership or a right
to acquire beneficial ownership of, or the formation of any "group" that
beneficially owns, or has the right to acquire beneficial ownership of, 10% or
more of the then outstanding shares of capital stock of Computervision, or
(ii) any public announcement of a proposal or plan to do any of the foregoing
or any agreement to engage in any such transaction listed above.
Computervision may, however, prior to the approval of the Merger Agreement
by its stockholders, to the extent the Computervision Board determines that
the Board's fiduciary duties require it to do so, participate in discussions
or negotiations with, and furnish information to any person, entity or group
after such person, entity or group has delivered to Computervision a Superior
Proposal. The Computervision Board may approve the Superior Proposal, or
recommend the Superior Proposal to Computervision's stockholders, if such
action is required by its fiduciary duties. In such case, the Computervision
Board may withdraw, modify or refrain from making its recommendation
concerning the approval of the Merger Agreement. Computervision has agreed not
to accept or recommend to its stockholders, or enter into any agreement
concerning, a Superior Proposal for a period of not less than 48 hours after
Parametric's receipt of a copy of the Superior Proposal, any proposed
agreement, and any description thereof.
STOCKHOLDER VOTING AGREEMENTS
Certain stockholders of Computervision have entered into Stockholder Voting
Agreements with Parametric in the form of Exhibit B to the Merger Agreement.
Pursuant to the terms of such Stockholder Voting Agreements, such stockholders
have agreed, until termination of the Merger Agreement, (i) not to transfer or
otherwise dispose of any shares of Computervision Common Stock owned by them
and (ii) to vote all such shares of Computervision Common Stock (w) in favor
of the Merger and any matters that would facilitate the Merger, (x) against
any proposal made in opposition to or in competition with the Merger, (y)
against any merger, consolidation, sale of assets, reorganization or
recapitalization with any party other than Parametric and its affiliates, and
(z) against any proposed liquidation or winding up of Computervision. Such
stockholders have granted certain officers of Parametric irrevocable proxies
to vote the stockholders' shares to implement the foregoing agreements.
Directors,
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executive officers and their associates having the right to vote in the
aggregate [ ] shares of Computervision Common Stock, or approximately [ %]
of the Computervision Common Stock outstanding as of the Record Date
(excluding shares that the stockholder has the right to acquire upon the
exercise of stock options), have executed the Stockholder Voting Agreements.
AFFILIATE LETTER; RESALES OF PARAMETRIC COMMON STOCK
Affiliate Letters. Computervision has agreed to use its best efforts to
cause each director, executive officer and other Affiliate (for purposes of
Rule 145 under the Securities Act) of Computervision to execute an agreement
in the form of Exhibit C to the Merger Agreement (an "Affiliate Letter") as
soon as possible after the execution of the Merger Agreement. The Affiliate
Letter provides that the signatory will not sell, transfer, assign or
otherwise dispose or reduce the risk of ownership of any shares of
Computervision Common Stock owned by such person other than by gift or other
distribution without consideration during a period commencing 30 days prior to
the effective date of the Merger and ending when financial results covering at
least 30 days of combined operations of Parametric and Computervision after
the effective date of the Merger have been published. The signatory also makes
certain representations related to the tax-free nature of the Merger.
Resales. The shares of Parametric Common Stock to be issued pursuant to the
Merger Agreement have been registered under the Securities Act and may be
traded without restriction by all former holders of shares of Computervision
Common Stock who are not Affiliates of Computervision. Directors and certain
executive officers of Computervision, and certain members of their immediate
families and associates, may be deemed to be Affiliates. The ability of
Affiliates to sell the shares of Parametric Common Stock they receive in
connection with the Merger is restricted by the terms of Rule 145 under the
Securities Act, and each person executing the Affiliate Letter has agreed to
comply with such restrictions.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendations of the Computervision Board with respect
to the Merger, stockholders should be aware that certain members of the Board
of Directors and management of Computervision have certain interests in the
Merger that are in addition to the interests of stockholders of Computervision
generally. The Computervision Board was aware of these interests and
considered them, among other matters, in approving and adopting the Merger
Agreement and the transactions contemplated thereby.
Computervision Stock Options and Severance Arrangements. Substantially all
outstanding stock options for the purchase of Computervision Common Stock
granted to officers and employees after December 5, 1996 ("Eligible Options")
were granted pursuant to option agreements that provide that 50% of the
unvested portion of such Eligible Options shall become immediately exercisable
after the date of a change of control of Computervision. The Merger will
constitute a change of control of Computervision within the meaning of such
option agreements. As of November 1, 1997 there were outstanding Eligible
Options for the purchase of an aggregate of approximately 850,000 shares of
Computervision Common Stock that will become exercisable upon the consummation
of the Merger.
All outstanding stock options for the purchase of Computervision Common
Stock granted to directors pursuant to the Computervision 1995 Director Option
Plan were granted pursuant to option agreements that provide that such options
shall become exercisable in full after the date of a change of control of
Computervision. The Merger will constitute a change of control of
Computervision within the meaning of such option agreements. As of November 1,
1997 there were outstanding options for the purchase of an aggregate of
approximately 200,000 shares of Computervision Common Stock under such
agreements.
Computervision has entered into Management Retention Agreements with several
of its executive officers as well as certain other members of management. Such
agreements generally provide for a continuation of salary and certain health
and life insurance benefits in the event of a termination of employment by the
Company (other than for cause, disability or death) or by the executive
officer for good reason (as defined in the retention
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agreements) within two years after a change of control of Computervision. The
Merger will constitute a change of control under such agreements. In the case
of Kathleen A. Cote, the President and Chief Executive Officer and a director
of Computervision, and Barry F. Cohen, Senior Vice President of
Computervision, the agreements provide for severance payments over a three
year period in an amount equal to 2.99 times the sum of (a) the higher of the
annual base salary in effect as of the date of termination or immediately
prior to a change of control and (b) 100% of the average annual incentive
bonus payable by Computervision for the 1995 and 1996 fiscal years. In the
case of the other executive officers of Computervision, the agreements provide
for severance payments over an eighteen month period in an amount equal to 1.5
times the sum of (a) the higher of the annual base salary in effect as of the
date of termination or immediately prior to a change of control and (b) 50% of
the average annual incentive bonus payable by Computervision for the 1995 and
1996 fiscal years. Each Management Retention Agreement provides that the
foregoing severance amounts shall be reduced to the extent that any amount to
be paid thereunder would constitute an "excess parachute payment" under
Section 280G of the Code such that the aggregate total payments thereunder
would be one dollar less than the maximum amount that could be payable to such
person without becoming subject to the "excess parachute payment" provisions
of Section 4999 and Section 280G of the Code.
Cote Consulting Agreement. Ms. Cote has entered into a Consulting Agreement
with Parametric. Ms. Cote's consulting agreement provides that she will
provide consulting services with respect to the transition of customers from
Computervision to Parametric for the period from the date on which her
employment with Computervision is terminated until May 1, 1999. Ms. Cote will
receive an annual fee of $120,000 and all outstanding options will continue to
vest to the same extent as if she had continued in employment until the end of
the consulting period.
Planitzer Agreement. Russell E. Planitzer, Chairman of the Board of
Computervision, has entered into an amendment to his Employment Agreement with
Computervision. Pursuant to the amendment to the Employment Agreement,
Computervision's obligation to pay Mr. Planitzer a special bonus in the amount
of $1,113,500, originally due on June 30, 1997, was extended to the earlier of
June 30, 1998 or the Effective Time (with interest at the rate of 14% per
annum). In addition, under the Employment Agreement previously in effect, Mr.
Planitzer was to be retained as a consultant from July 1, 1997 through June
30, 1998 at a monthly rate of $20,000. Pursuant to the amendment, the
consultation period was extended to April 30, 1999.
Arrangements with Eugene Freedman. Eugene Freedman, a member of the
Computervision Board, undertook efforts to identify and approach Parametric as
a party with whom Computervision might enter into a business combination.
Under a letter agreement with Mr. Freedman, Computervision agreed to pay Mr.
Freedman a fee based upon the consideration received by Computervision in
connection with a business transaction with Parametric. The fee payable to Mr.
Freedman upon the effectiveness of the Merger will equal 0.0625% of the market
value of Parametric Common Stock received by Computervision stockholders in
connection with the Merger.
Indemnity and Insurance Arrangements. In the Merger Agreement, the Surviving
Corporation has agreed to honor in all respects the indemnification
obligations under the Certificate of Incorporation and Bylaws of
Computervision in effect prior to the Effective Time and not to amend the
provisions relating to indemnification and elimination of liability of
monetary damages in a way which would adversely affect the rights of
individuals who were officers and directors of Computervision as of the
Effective Time. In addition, Parametric has agreed to maintain, or cause the
Surviving Corporation to maintain, in effect a policy or policies of directors
and officers liability insurance with coverage substantially comparable to
policies currently in force covering the directors and officers of
Computervision as of the date of the Merger Agreement for a period of not less
than six years following the Effective Time; provided, however, should
comparable coverage be unavailable at an aggregate cost of less than 125% of
Computervision's current annual premium for such insurance, Parametric and/or
the Surviving Corporation shall only be required to obtain such lesser
coverage as may be obtained for such amount.
STOCK OPTIONS AND EMPLOYEE BENEFITS
Upon the effectiveness of the Merger, each option to purchase shares of
Computervision Common Stock granted under the Computervision stock option
plans that is then outstanding and unexercised will be assumed
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by Parametric and converted automatically into an option to purchase shares of
Parametric Common Stock in an amount and at an exercise price determined as
follows. The number of shares of Parametric Common Stock to be subject to the
new option will be equal to the product of the number of shares of
Computervision Common Stock subject to the original option multiplied by the
Exchange Ratio, rounded down to the nearest share. The exercise price per share
of Parametric Common Stock under the new option will be equal to the exercise
price per share of Computervision Common Stock under the original option
divided by the Exchange Ratio, rounded up to the nearest cent.
Parametric has agreed either to continue Computervision's other employee
benefit plans in effect after the Effective Time or to provide Computervision
employees with the benefits provided to similarly situated Parametric
employees. Parametric also has agreed to continue Computervision's severance
pay policy for six months after the Effective Time, subject to certain
conditions.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General. The following is a summary description of the material federal
income tax consequences of the Merger, based on currently existing provisions
of the Code. This summary is not a complete description of all of the tax
consequences of the Merger and, in particular, may not address federal income
tax considerations that may affect the treatment of a stockholder who, at the
Effective Time, already owns some Parametric Common Stock, is not a U.S.
person, is a tax-exempt entity or an individual who acquired Computervision
Common Stock pursuant to an employee stock option or otherwise as compensation.
In addition, no information is provided herein with respect to the tax
consequences of the Merger under applicable foreign, state or local laws.
Consequently, each Computervision stockholder is advised to consult a tax
advisor as to the specific tax consequences of the transaction to that
stockholder. The following discussion is based on the law, as in effect on the
date of this Prospectus/Proxy Statement, and there can be no assurances that
future legislation, regulations, administrative rulings or court decisions will
not adversely affect the accuracy of the statements contained herein. The
following discussion gives no consideration to the particular facts or
circumstances of any holder of Computervision Common Stock and assumes that the
Computervision Common Stock held by each holder thereof is held as a capital
asset.
Effect of the Merger. Neither Parametric nor Computervision has requested or
will receive an advance ruling from the Internal Revenue Service as to the tax
consequences of the Merger. Consummation of the Merger is conditioned on the
rendering of tax opinions by Palmer & Dodge LLP, counsel to Parametric, and
Hale and Dorr LLP, counsel to Computervision, each dated as of the Effective
Time. The opinions will be substantially to the effect that, on the basis of
representations obtained from Parametric and Computervision substantially
similar to representations that the Internal Revenue Service customarily
requires for advance rulings on tax-free acquisitive reorganizations and facts
that are reasonably consistent with facts existing at the Effective Time, the
Merger will be treated for federal income tax purposes as a "reorganization"
within the meaning of Section 368 of the Code (a "Reorganization").
The following discussion reflects the opinions of Palmer & Dodge LLP and Hale
and Dorr LLP attached as Exhibits 8.1 and 8.2 to the Registration Statement of
which this Prospectus/Proxy Statement is a part (the "Exhibit Opinions"). The
Exhibit Opinions each include an opinion to the effect that the Merger will
constitute a Reorganization. The Exhibit Opinions are based on certain
assumptions and subject to certain limitations and qualifications as noted in
the Opinions. In particular, they are based upon the assumption that Palmer &
Dodge LLP and Hale and Dorr LLP will receive factual representations from
Parametric and Computervision substantially similar to the representations that
the Internal Revenue Service customarily requires for advance rulings on
Reorganizations and that such representations are currently true and will
remain true at all times through the Closing.
The Exhibit Opinions each include an opinion to the effect that the Merger
will constitute a Reorganization and that as a consequence, (i) no gain or loss
will be recognized by Computervision, Parametric or Merger Sub as a result of
the Merger; (ii) no gain or loss will be recognized by stockholders of
Computervision on account of their receipt of Parametric Common Stock in
exchange for their Computervision Common Stock as a result of
39
<PAGE>
the Merger; (iii) a holder of Computervision Common Stock who receives cash
proceeds for fractional interests in Parametric Common Stock will be treated as
if the fractional shares were distributed as part of the exchange and then were
redeemed by Parametric; (iv) the tax consequences of the assumed redemption
occurring in connection with the payment of cash in lieu of fractional shares
will be determined in accordance with Section 302 of the Code and should
generally give rise to capital gain or loss; (v) the tax basis of the
Parametric Common Stock received by stockholders who exchange Computervision
Common Stock for Parametric Common Stock in the Merger will be the same as the
tax basis of the Computervision Common Stock surrendered in exchange therefor
(reduced by any amount allocable to a fractional share interest for which cash
is received); and (vi) the holding period of the Parametric Common Stock in the
hands of the Computervision stockholders will include the holding period of the
Computervision Common Stock exchanged therefor.
If, for any reason, the Merger is not treated as a reorganization within the
meaning of Section 368 of the Code, no gain or loss will be recognized by
Computervision, Parametric or Merger Sub. However, exchanges of Computervision
Common Stock pursuant to the Merger will be taxable transactions. In that
event, each exchanging holder of Computervision Common Stock will recognize
capital gain or loss equal to the difference between such holder's adjusted
basis in the Computervision Common Stock exchanged and the sum of fair market
value of Parametric Common Stock received by such holder in the Merger and the
amount of any cash received in lieu of fractional shares.
ACCOUNTING TREATMENT
The Merger is intended to be accounted for as a pooling of interests under
generally accepted accounting principles ("GAAP"). Under this method of
accounting, the historical recorded assets and liabilities of Parametric and
Computervision will be carried forward to the combined company at their
recorded amounts, the operating results of the combined company will include
the operating results of Parametric and Computervision for the entire fiscal
year in which the combination occurs and the historical reported operating
results of the separate companies for prior periods will be combined and
restated as the operating results of the combined company. Parametric has
received a letter from Coopers & Lybrand L.L.P. as of the date of the Merger
Agreement concurring with the company's opinion that the Merger will qualify
for pooling of interests accounting treatment and a copy of a letter from
Arthur Andersen LLP to Computervision to the effect that Computervision is
eligible for pooling of interests treatment. It is a condition to consummation
of the Merger that there be no change in such qualification.
CONDUCT OF COMPUTERVISION'S BUSINESS PENDING THE MERGER
Computervision has agreed in the Merger Agreement that, except as may be
permitted by the terms of the Merger Agreement, during the period from the date
of the execution of the Merger Agreement and continuing until the earlier of
the termination of the Merger Agreement pursuant to its terms or the Closing
Date, Computervision and each of its subsidiaries will carry on its business
diligently and in accordance with good commercial practice and in the usual,
regular and ordinary course, in substantially the same manner as heretofore
conducted and will use its commercially reasonable efforts consistent with past
practices and policies to preserve intact its present business organization,
keep available the services of its present officers and employees and preserve
its relationships with customers, suppliers, distributors, licensors,
licensees, and others with which it has business dealings.
The Merger Agreement also contains certain restrictions on the conduct of
Computervision's business pending consummation of the Merger. Generally, except
as may be otherwise permitted by the terms of the Merger Agreement,
Computervision may not and may not permit its subsidiaries to amend their
charter documents, enter into material agreements, including agreements to
merge with or acquire the stock or assets of another entity or to encumber or
dispose of assets of Computervision or to incur any additional indebtedness,
increase compensation, issue additional shares of Computervision Common Stock,
declare or pay dividends or make any other distributions or repurchase any
shares of common stock.
40
<PAGE>
EXPENSES
Fees, expenses and out-of-pocket expenses incurred by Parametric,
Computervision and Merger Sub in connection with the transactions contemplated
by the Merger Agreement will be borne by the party that incurs such expenses,
except that Parametric and Computervision will bear equally the expenses of
printing and filing this Prospectus/Proxy Statement.
NO COMPUTERVISION STOCKHOLDER APPRAISAL RIGHTS
Holders of Computervision Common Stock are not entitled to appraisal rights
under Section 262 of the DGCL in connection with the Merger because the
Computervision Common Stock was listed on the NYSE on the record date for the
Computervision Special Meeting and the shares of Parametric Common Stock to be
issued pursuant to the Merger will be quoted on Nasdaq at the Effective Time.
STOCK OPTION AGREEMENT
Parametric and Computervision have entered into a Stock Option Agreement
dated November 3, 1997 (the "Stock Option Agreement") in connection with, and
as a condition to, Parametric's execution of the Merger Agreement. The Stock
Option Agreement is included as Appendix B to this Prospectus/Proxy Statement
and is incorporated herein by reference. The following discussion sets forth a
description of the material terms of the Stock Option Agreement and is
qualified by, and made subject to, the more complete information set forth in
the Stock Option Agreement.
Under the Stock Option Agreement, Computervision has granted to Parametric an
irrevocable option (the "Option") to purchase up to 9,558,809 shares of
Computervision Common Stock (the "Option Shares") representing 15% of the
outstanding shares, at a price per share of $4.00, which Option is exercisable
in whole or in part at any time and from time to time after the occurrence of
an Exercise Event (as defined below) and prior to the Expiration Date (as
defined below). The Option may not be exercised if Parametric is in material
breach of any of its representations, warranties, covenants or agreements
contained in the Stock Option Agreement or in the Merger Agreement. An
"Exercise Event" occurs if the Merger Agreement becomes terminable in
circumstances that would entitle Parametric to payment of a termination fee of
$15,000,000, regardless of whether the Merger Agreement is terminated or
whether an Alternative Transaction is consummated. See "The Merger--Termination
Fee." The term "Expiration Date" means the earliest of: (i) the Effective Time
of the Merger, (ii) the termination of the Merger Agreement pursuant to its
terms other than pursuant to an Exercise Event, and (iii) the passage of 180
days after the termination of the Merger Agreement if such termination follows
an Exercise Event, which period may be extended for limited periods if exercise
of the Option is then prohibited or if the Exercise Event could occur in the
future.
Put Right. At any time during which the Option is exercisable, Parametric may
require Computervision to purchase from Parametric all or any portion of the
Option, at the price per share equal to the difference between the
"Market/Offer Price" and the Exercise Price, or all or any portion of the
Option Shares purchased, at the price equal to the sum of the Exercise Price
plus the difference between Fair Market Value for Computervision Common Stock
and such Exercise Price. The "Market/Offer Price" means, the higher of (x) the
highest price per share offered as of such date pursuant to any Alternative
Transaction which would have entitled Parametric to payment of a termination
fee of $15,000,000 and which was initiated prior to such date and not
terminated or withdrawn as of such date or (y) the Fair Market Value (as
defined below) of the Computervision Common Stock as of such date. The "Fair
Market Value" of the Computervision Common Stock shall mean the average of the
daily closing sales prices of the Computervision Common Stock on the NYSE
during the five trading days ending on the trading day immediately preceding
the date Parametric gives notice of its intent to exercise its rights under the
Put Option.
Registration Rights. Following termination of the Merger Agreement, to the
extent Parametric owns shares of Computervision Common Stock acquired pursuant
to the exercise of the Option, Computervision has agreed, at the request of
Parametric, to register under the Securities Act all or any part of such
shares.
41
<PAGE>
Limitation on Parametric Profit. Notwithstanding any other provisions of the
Stock Option Agreement: (i) in no event shall Parametric's Total Profit (as
defined below) exceed $18,000,000 and (ii) the Option may not be exercised for
a number of Option Shares that would result in a Notional Total Profit (as
defined below) of more than $18,000,000. "Total Profit" means the aggregate
amount (before taxes) of (i) the $3,000,000 and $15,000,000 termination fees
received by Parametric, (ii) the amount of cash received by Parametric pursuant
to the exercise of the Put Right and (iii) the net cash amounts received by
Parametric pursuant to the sale of the Option Shares to Computervision or any
unaffiliated party, less the purchase price paid by Parametric for such shares.
"Notional Total Profit" means, with respect to such number of Option Shares as
to which Parametric proposes to exercise the Exercise Notice, the Total Profit
determined as of the date on which Parametric gives its Exercise Notice,
assuming that the Option was exercised on such date for the designated number
of Option Shares and assuming that such shares, together with all other Option
Shares held by Parametric and its affiliates as of such date, were sold for
cash at the closing market price for the Computervision Common Stock as of the
close of business on the preceding trading day (less customary brokerage
commissions).
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
assume a business combination between Parametric and Computervision accounted
for on a pooling of interests basis and are based on the respective historical
financial statements and the notes thereto of Parametric and Computervision,
which are incorporated by reference in this Prospectus/Proxy Statement. The pro
forma combined condensed balance sheet combines Parametric's June 28, 1997
unaudited consolidated balance sheet with Computervision's September 28, 1997
unaudited consolidated balance sheet. The pro forma statements of income
combine Parametric's historical operating results for the nine months ended
June 28, 1997 and June 29, 1996 and the fiscal years ended September 30, 1996,
1995 and 1994 with the corresponding Computervision historical operating
results for the nine months ended September 28, 1997 and September 29, 1996 and
the fiscal years ended December 31, 1996, 1995 and 1994, respectively.
For purposes of the preparation of the unaudited pro forma combined balance
sheet, merger-related, debt prepayment and consolidation and integration
expenses (which the companies anticipate will be approximately $75 to $95
million on a pre-tax basis) were not included.
The pro forma combined condensed financial statements are presented for
illustrative purposes only and are not necessarily indicative of the operating
results or financial position that would have been achieved if the Merger had
been consummated as of the beginning of the periods presented, nor are they
necessarily indicative of the future operating results or financial position of
the combined company. The pro forma combined condensed financial statements do
not give effect to any cost savings which may result from the integration of
Parametric's and Computervision's operations.
These pro forma combined condensed financial statements are based on, and
should be read in conjunction with, the historical consolidated financial
statements and the related notes thereto of Parametric and Computervision,
incorporated by reference in this Prospectus/Proxy Statement. See "Available
Information" and "Incorporation of Certain Documents by Reference."
42
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF JUNE 28, 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
PARAMETRIC -----------------------
TECHNOLOGY COMPUTERVISION ADJUSTMENTS COMBINED
---------- -------------- ----------- -----------
A S S E T S
<S> <C> <C> <C> <C>
Current assets:
Cash and cash
equivalents.............. $223,642 $ 25,948 $ $ 249,590
Short-term investments.... 301,466 -- 301,466
Accounts receivable, net.. 145,721 48,465 194,186
Other current assets...... 21,695 19,866 41,561
-------- ----------- ----- -----------
Total current assets.... 692,524 94,279 -- 786,803
Property and equipment,
net........................ 44,332 10,007 54,339
Other assets................ 44,507 12,392 56,899
-------- ----------- ----- -----------
Total assets............ $781,363 $ 116,678 $ -- $ 898,041
======== =========== ===== ===========
L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y(D E F I C I T)
Current liabilities:
Notes payable and current
portion of long-term
debt..................... $ -- $ 18,379 $ $ 18,379
Accounts payable.......... 9,673 29,255 38,928
Accrued expenses.......... 27,066 89,315 116,381
Accrued compensation,
severence and related
expenses................. 38,658 55,563 94,221
Deferred revenue and
customer advances........ 76,687 31,661 108,348
Income taxes.............. 33,351 16,272 49,623
-------- ----------- ----- -----------
Total current
liabilities............ 185,435 240,445 -- 425,880
Deferred income taxes....... 724 29,851 30,575
Long-term debt, less current
portion.................... -- 217,383 217,383
Other liabilities........... 17 57,557 57,574
Stockholders'
equity(deficit):
Preferred stock........... -- -- --
Common stock.............. 1,281 637 (582) 1,336
Additional paid-in
capital.................. 237,038 1,186,762 582 1,424,382
Foreign currency
translation adjustment... (3,916) 6,541 2,625
Retained
earnings(deficit)........ 394,725 (1,622,498) (1,227,773)
Treasury stock, at cost... (34,035) -- (34,035)
Unrealized gain on
investments.............. 94 -- 94
-------- ----------- ----- -----------
Total stockholders'
equity(deficit)........ 595,187 (428,558) -- 166,629
-------- ----------- ----- -----------
Total liabilities and
stockholders'
equity(deficit)........ $781,363 $ 116,678 $ -- $ 898,041
======== =========== ===== ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
43
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED JUNE 28, 1997
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PARAMETRIC PRO FORMA
TECHNOLOGY COMPUTERVISION COMBINED
---------- -------------- ---------
<S> <C> <C> <C>
Software revenue:
License................................. $434,868 $ 61,886 $496,754
Service................................. 153,759 73,251 227,010
-------- --------- --------
Total software revenue................ 588,627 135,137 723,764
Other services revenue.................... -- 82,224 82,224
-------- --------- --------
Total revenue......................... 588,627 217,361 805,988
Cost of software revenue:
License................................. 6,048 9,150 15,198
Service................................. 49,570 47,603 97,173
Cost of other services revenue............ -- 74,807 74,807
-------- --------- --------
Total cost of revenue................. 55,618 131,560 187,178
-------- --------- --------
Software gross profit:
License................................. 428,820 52,736 481,556
Service................................. 104,189 25,648 129,837
-------- --------- --------
Total software gross profit........... 533,009 78,384 611,393
Other services gross profit............... -- 7,417 7,417
-------- --------- --------
Total gross profit.................... 533,009 85,801 618,810
Software operating expenses:
Sales and marketing..................... 229,060 60,061 289,121
Research and development................ 39,141 29,827 68,968
General and administrative.............. 28,622 17,814 46,436
Non-recurring software charges.......... -- 45,000 45,000
Other services operating expenses......... -- 12,188 12,188
Non-recurring other services charges...... -- 7,000 7,000
-------- --------- --------
Total operating expenses.............. 296,823 171,890 468,713
-------- --------- --------
Operating income(loss):
Software................................ 236,186 (74,318) 161,868
Other services.......................... -- (11,771) (11,771)
-------- --------- --------
Total operating income(loss).......... 236,186 (86,089) 150,097
Interest and other income(expense), net... 7,912 (25,225) (17,313)
-------- --------- --------
Income(loss) before income taxes.......... 244,098 (111,314) 132,784
Provision for income taxes................ 85,401 -- 85,401
-------- --------- --------
Net income(loss).......................... $158,697 $(111,314) $ 47,383
======== ========= ========
Net income(loss) per share................ $ 1.18 $ (1.75) $ 0.34
======== ========= ========
Weighted average number of common and
dilutive common equivalent shares
outstanding.............................. 134,683 63,614 140,192
======== ========= ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
44
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED JUNE 29, 1996
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PARAMETRIC PRO FORMA
TECHNOLOGY COMPUTERVISION COMBINED
---------- -------------- ---------
<S> <C> <C> <C>
Software revenue:
License................................. $312,686 $138,918 $451,604
Service................................. 110,308 83,220 193,528
-------- -------- --------
Total software revenue................ 422,994 222,138 645,132
Other services revenue.................... -- 133,307 133,307
-------- -------- --------
Total revenue......................... 422,994 355,445 778,439
Cost of software revenue:
License................................. 2,926 11,828 14,754
Service................................. 37,007 48,362 85,369
Cost of other services revenue............ -- 102,607 102,607
-------- -------- --------
Total cost of revenue................. 39,933 162,797 202,730
-------- -------- --------
Software gross profit:
License................................. 309,760 127,090 436,850
Service................................. 73,301 34,858 108,159
-------- -------- --------
Total software gross profit........... 383,061 161,948 545,009
Other services gross profit............... -- 30,700 30,700
-------- -------- --------
Total gross profit.................... 383,061 192,648 575,709
Software operating expenses:
Sales and marketing..................... 169,670 66,509 236,179
Research and development................ 27,225 30,012 57,237
General and administrative.............. 20,174 18,647 38,821
Other services operating expenses......... -- 18,176 18,176
-------- -------- --------
Total operating expenses.............. 217,069 133,344 350,413
-------- -------- --------
Operating income:
Software................................ 165,992 46,780 212,772
Other services.......................... -- 12,524 12,524
-------- -------- --------
Total operating income................ 165,992 59,304 225,296
Interest and other income(expense), net... 8,737 (23,040) (14,303)
-------- -------- --------
Income before income taxes................ 174,729 36,264 210,993
Provision for income taxes................ 63,252 4,349 67,601
-------- -------- --------
Net income................................ $111,477 $ 31,915 $143,392
======== ======== ========
Net income per share...................... $ 0.84 $ 0.49 $ 1.03
======== ======== ========
Weighted average number of common and
dilutive common equivalent shares
outstanding.............................. 133,175 64,782 138,785
======== ======== ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
45
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PARAMETRIC PRO FORMA
TECHNOLOGY COMPUTERVISION COMBINED
---------- -------------- ----------
<S> <C> <C> <C>
Software revenue:
License............................... $448,699 $191,728 $ 640,427
Service............................... 151,423 111,087 262,510
-------- -------- ----------
Total software revenue.............. 600,122 302,815 902,937
Other services revenue.................. -- 174,384 174,384
-------- -------- ----------
Total revenue....................... 600,122 477,199 1,077,321
Cost of software revenue:
License............................... 4,642 16,382 21,024
Service............................... 51,812 67,748 119,560
Cost of other services revenue.......... -- 134,686 134,686
-------- -------- ----------
Total cost of revenue............... 56,454 218,816 275,270
-------- -------- ----------
Software gross profit:
License............................... 444,057 175,346 619,403
Service............................... 99,611 43,339 142,950
-------- -------- ----------
Total software gross profit......... 543,668 218,685 762,353
Other services gross profit............. -- 39,698 39,698
-------- -------- ----------
Total gross profit.................. 543,668 258,383 802,051
Software operating expenses:
Sales and marketing................... 238,860 93,569 332,429
Research and development.............. 39,476 40,144 79,620
General and administrative............ 28,557 25,896 54,453
Acquisition and related costs......... 32,119 3,500 35,619
Non-recurring software charges........ -- 11,000 11,000
Other services operating expenses....... -- 24,201 24,201
Non-recurring other services charges.... -- 5,000 5,000
-------- -------- ----------
Total operating expenses............ 339,012 203,310 542,322
-------- -------- ----------
Operating income:
Software.............................. 204,656 44,576 249,232
Other services........................ -- 10,497 10,497
-------- -------- ----------
Total operating income.............. 204,656 55,073 259,729
Interest and other income(expense),
net.................................... 11,501 (30,806) (19,305)
-------- -------- ----------
Income before income taxes.............. 216,157 24,267 240,424
Provision for income taxes.............. 78,247 2,610 80,857
-------- -------- ----------
Net income.............................. $137,910 $ 21,657 $ 159,567
======== ======== ==========
Net income per share.................... $ 1.04 $ 0.33 $ 1.15
======== ======== ==========
Weighted average number of common and
dilutive common equivalent shares
outstanding............................ 133,211 64,784 138,821
======== ======== ==========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
46
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PARAMETRIC PRO FORMA
TECHNOLOGY COMPUTERVISION COMBINED
---------- -------------- ---------
<S> <C> <C> <C>
Software revenue:
License................................. $288,349 $163,716 $452,065
Service................................. 105,961 122,885 228,846
-------- -------- --------
Total software revenue................ 394,310 286,601 680,911
Other services revenue.................... -- 220,473 220,473
-------- -------- --------
Total revenue......................... 394,310 507,074 901,384
Cost of software revenue:
License................................. 3,348 17,181 20,529
Service................................. 32,970 70,704 103,674
Cost of other services revenue............ -- 154,870 154,870
-------- -------- --------
Total cost of revenue................. 36,318 242,755 279,073
-------- -------- --------
Software gross profit:
License................................. 285,001 146,535 431,536
Service................................. 72,991 52,181 125,172
-------- -------- --------
Total software gross profit........... 357,992 198,716 556,708
Other services gross profit............... -- 65,603 65,603
-------- -------- --------
Total gross profit.................... 357,992 264,319 622,311
Software operating expenses:
Sales and marketing..................... 163,918 92,905 256,823
Research and development................ 25,591 41,533 67,124
General and administrative.............. 20,414 20,706 41,120
Acquisition and related costs........... 29,438 -- 29,438
Other services operating expenses......... -- 28,500 28,500
-------- -------- --------
Total operating expenses.............. 239,361 183,644 423,005
-------- -------- --------
Operating income:
Software................................ 118,631 43,572 162,203
Other services.......................... -- 37,103 37,103
-------- -------- --------
Total operating income................ 118,631 80,675 199,306
Interest and other income(expense), net... 9,029 (44,924) (35,895)
-------- -------- --------
Income before income taxes................ 127,660 35,751 163,411
Provision for income taxes................ 50,298 5,005 55,303
-------- -------- --------
Net income before extraordinary charge.... $ 77,362 $ 30,746 $108,108
======== ======== ========
Net income per share before extraordinary
charge................................... $ 0.60 $ 0.58 $ 0.81
======== ======== ========
Weighted average number of common and
dilutive common equivalent shares
outstanding.............................. 129,046 52,591 133,600
======== ======== ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
47
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1994
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PARAMETRIC PRO FORMA
TECHNOLOGY COMPUTERVISION COMBINED
---------- -------------- ---------
<S> <C> <C> <C>
Software revenue:
License................................. $206,243 $163,199 $369,442
Service................................. 60,731 122,980 183,711
-------- -------- --------
Total software revenue................ 266,974 286,179 553,153
Other services revenue.................... -- 287,458 287,458
-------- -------- --------
Total revenue......................... 266,974 573,637 840,611
Cost of software revenue:
License................................. 2,028 30,218 32,246
Service................................. 19,004 72,682 91,686
Cost of other services revenue............ -- 196,743 196,743
-------- -------- --------
Total cost of revenue................. 21,032 299,643 320,675
-------- -------- --------
Software gross profit:
License................................. 204,215 132,981 337,196
Service................................. 41,727 50,298 92,025
-------- -------- --------
Total software gross profit........... 245,942 183,279 429,221
Other services gross profit............... -- 90,715 90,715
-------- -------- --------
Total gross profit.................... 245,942 273,994 519,936
Software operating expenses:
Sales and marketing..................... 107,940 91,657 199,597
Research and development................ 19,882 57,223 77,105
General and administrative.............. 14,758 25,846 40,604
Other services operating expenses......... -- 39,816 39,816
-------- -------- --------
Total operating expenses.............. 142,580 214,542 357,122
-------- -------- --------
Operating income:
Software................................ 103,362 8,553 111,915
Other services.......................... -- 50,899 50,899
-------- -------- --------
Total operating income................ 103,362 59,452 162,814
Interest and other income(expense), net... 5,342 (49,681) (44,339)
-------- -------- --------
Income before income taxes................ 108,704 9,771 118,475
Provision for income taxes................ 40,615 -- 40,615
-------- -------- --------
Net income................................ $ 68,089 $ 9,771 $ 77,860
======== ======== ========
Net income per share...................... $ 0.54 $ 0.20 $ 0.60
======== ======== ========
Weighted average number of common and
dilutive common equivalent shares
outstanding.............................. 125,051 48,367 129,240
======== ======== ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
48
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
1. The unaudited pro forma combined condensed financial statements of
Parametric and Computervision give retroactive effect to the Merger, which
is being accounted for as a pooling of interests and, as a result, such
statements are presented as if the combining companies had been combined
for all periods presented.
2. The pro forma combined net income per share is based on the combined
weighted average number of common and dilutive common equivalent shares of
Parametric Common Stock and Computervision Common Stock for each period.
This is based on the Exchange Ratio of 0.0866 shares of Parametric Common
Stock for each share of Computervision Common Stock as described in the
Merger Agreement.
3. The unaudited pro forma combined condensed financial statements combine
Parametric's financial statements for the nine months ended June 28, 1997
and June 29, 1996 and the fiscal years ended September 30, 1996, 1995 and
1994 with Computervision's financial statements for the nine months ended
September 28, 1997 and September 29, 1996 and the fiscal years ended
December 31, 1996, 1995 and 1994, respectively.
4. The unaudited pro forma combined condensed financial statements do not
include adjustments to conform the accounting policies of Computervision to
those followed by Parametric. The nature and extent of such adjustments, if
any, will be based upon further analysis and are not expected to be
material.
5. Parametric and Computervision estimate they will incur merger-related costs
of approximately $10 million, including investment advisory fees,
regulatory filing costs, legal and accounting expenses, and other
transaction costs. In addition, it is expected that as a result of the
Merger, the combined company will incur debt prepayment and consolidation
and integration expenses presently estimated to be approximately $65 to $85
million on a pre-tax basis. All of these costs and expenses and any tax
benefit relating to these costs and expenses have not been reflected as a
pro forma adjustment in the pro forma combined condensed financial
statements as of June 28, 1997. These amounts are preliminary estimates and
subject to change. Moreover, additional unanticipated expenses may be
incurred in connection with the integration of the business of the two
companies.
6. Certain financial statement balances of Computervision have been
reclassified to conform with the Parametric financial statement
presentation.
7. As discussed in the June 29, 1997 financial statements of Computervision
included with its Quarterly Report on Form 10-Q, on July 18, 1997
Computervision transferred its other services business to CVSI, Inc. and
sold a majority interest in the voting securities of CVSI, Inc. to a third
party. Assuming that the CVSI transaction was completed as of January 1,
1996, the pro forma results of the combined company are as follows:
<TABLE>
<CAPTION>
NINE MONTHS FISCAL YEAR ENDED
ENDED JUNE 28, 1997 SEPTEMBER 30, 1996
------------------- ------------------
<S> <C> <C>
Revenue............................. $723,764 $902,937
Net income.......................... 59,154 149,070
Net income per share................ 0.42 1.07
</TABLE>
49
<PAGE>
DESCRIPTION OF PARAMETRIC CAPITAL STOCK
Parametric's authorized capital stock consists of 350,000,000 shares of
Parametric Common Stock, $.01 par value per share, and 5,000,000 shares of
Preferred Stock, $.01 par value per share.
COMMON STOCK
As of October 31, 1997, there were 127,936,236 outstanding shares of
Parametric Common Stock held by approximately 4,200 holders of record. The
holders of Parametric Common Stock are entitled to one vote for each share on
all matters submitted to a vote of stockholders and do not have cumulative
voting rights. The Parametric Board is classified into three classes of
approximately equal size, one of which is elected each year. Accordingly,
holders of a majority of the Parametric Common Stock entitled to vote in any
election of directors may elect all of the directors standing for election.
The holders of Parametric Common Stock are entitled to share ratably in all
assets of Parametric which are legally available for distribution, after
payment of all debts and other liabilities and subject to the prior rights of
any holders of Preferred Stock then outstanding. The holders of Parametric
Common Stock have no preemptive, subscription, redemption or conversion
rights. The outstanding shares of Parametric Common Stock are fully paid and
nonassessable. The rights, preferences and privileges of holders of Parametric
Common Stock are subject to the rights of the holders of shares of any series
of Preferred Stock which Parametric may issue in the future. Parametric has
never paid cash dividends on the Parametric Common Stock. Parametric presently
intends to retain earnings for use in the operating and expansion of its
business and therefore does not anticipate paying any cash dividends in the
foreseeable future.
PREFERRED STOCK
Preferred Stock may be issued from time to time in one or more series and
the Parametric Board, without further approval of the stockholders, is
authorized to fix the dividend rights and terms, conversion rights, voting
rights, redemption rights and terms, liquidation preferences, sinking funds
and any other rights, preferences, privileges and restrictions applicable to
each such series of Preferred Stock. The purpose of authorizing the Parametric
Board to determine such rights and preferences is to eliminate delays
associated with a stockholder vote on specific issuances. The issuance of
Preferred Stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things,
adversely affect the voting power of holders of Parametric Common Stock and,
under certain circumstances, make it more difficult for a third party to gain
control of Parametric. As of October 31, 1997, there were no outstanding
shares of Preferred Stock.
COMPARISON OF RIGHTS OF HOLDERS OF PARAMETRIC AND
COMPUTERVISION COMMON STOCK
At the Effective Time of the Merger, the stockholders of Computervision will
become stockholders of Parametric, a corporation governed by Massachusetts law
and Articles of Organization and Bylaws adopted thereunder. The following
discussion summarizes the material differences between the rights of holders
of Computervision Common Stock and holders of Parametric Common Stock, based
on a comparison of the Delaware and Massachusetts corporation laws and
differences between the charters and bylaws of Computervision and Parametric.
The Restated Certificate of Incorporation and Bylaws of Computervision are
referred to herein as the "Computervision Charter" and the "Computervision
Bylaws," respectively, and the Articles of Organization and Bylaws of
Parametric are referred to herein as the "Parametric Charter" and the
"Parametric Bylaws," respectively. This summary does not purport to be
complete and is qualified in its entirety by reference to the Computervision
Charter and Computervision Bylaws, the Parametric Charter and Parametric
Bylaws and the relevant provisions of the DGCL and the Massachusetts Business
Corporation Law (the "MBCL").
50
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MEETINGS OF STOCKHOLDERS
Delaware law provides that special meetings of stockholders may be called
only by the directors or by any other person authorized by a corporation's
certificate of incorporation or bylaws. The Computervision Charter and
Computervision Bylaws authorize the president, the chairman or any two members
of the Board of Directors to call special meetings. The Parametric Bylaws
provide for the call of a special meeting of stockholders by the president or
the Board of Directors of Parametric, or upon written application of the
owners of not less than 40% in interest of the corporation's stock entitled to
vote at such meeting.
INSPECTION RIGHTS
Inspection rights under the Delaware corporation statute are more extensive
than under the Massachusetts statute. Under Delaware law, stockholders
demonstrating a proper purpose have the right to inspect a corporation's stock
ledger, stockholder list, and other books and records. Under Massachusetts
law, a corporation's stockholders have the right for a proper purpose to
inspect the corporation's articles of organization, bylaws, records of all
meetings of incorporators and stockholders, and stock and transfer records,
including the stockholder list. In addition, stockholders of a Massachusetts
business corporation have a qualified common law right under certain
circumstances to inspect other books and records of the corporation.
ACTION BY CONSENT OF STOCKHOLDERS
Under the Computervision Bylaws, action may be taken by written consent of
stockholders without a meeting only if the action to be taken and the taking
of such action by written consent has been expressly authorized by the
Computervision Board. Under Massachusetts law, any action to be taken by
stockholders may be taken without a meeting only by unanimous written consent,
and a corporation may not provide otherwise in its articles of organization or
bylaws.
CUMULATIVE VOTING
Under Delaware law, a corporation may provide in its certificate of
incorporation for cumulative voting by stockholders in elections of directors
(i.e., each stockholder casts as many votes for directors as he has shares of
stock multiplied by the number of directors to be elected). The MBCL does not
authorize or provide for cumulative voting rights. Neither the Computervision
Charter nor the Parametric Charter authorize or provide for cumulative voting
rights.
ISSUANCE OF STOCK; PREFERRED STOCK
Shares of Computervision Common Stock may be issued by Computervision from
time to time as approved by the Computervision Board without stockholder
approval. Holders of the capital stock of Computervision are not entitled to
preemptive or preferential rights to purchase or to subscribe for any shares
of capital stock or other securities that may be issued by Computervision.
Computervision has 5,000,000 authorized shares of Preferred Stock, par value
$.01 per share. None of such shares is outstanding. The Preferred Stock is
issuable in one or more series. The Computervision Board can authorize,
without stockholder approval, the issuance of each series of Preferred Stock
and can fix the voting rights, if any, dividend rate, liquidation preferences,
optional and sinking fund redemption provisions, if any, conversion rights, if
any, and other rights of each such series, any of which rights could adversely
affect the voting and other rights of the holders of Computervision Common
Stock.
Shares of Parametric Common Stock may be issued from time to time, in such
amounts and for such consideration, as may be determined by the Parametric
Board. No holder of Parametric Common Stock has any preemptive or preferential
rights to purchase or to subscribe for any shares of capital stock or other
securities that may be issued by Parametric. Parametric has 5,000,000
authorized shares of Preferred Stock, par value $.01 per share. None of such
shares is outstanding. The Preferred Stock is issuable in one or more series.
The Parametric Board is empowered to authorize without stockholder approval
the issuance of each series of Preferred Stock and is empowered to fix the
voting rights, if any (in addition to those prescribed by law),
51
<PAGE>
dividend rate, liquidation preferences, optional and sinking fund redemption
provisions, if any, conversion rights, if any, and other rights of each such
series, any of which rights could adversely affect the voting and other rights
of the holders of Parametric Common Stock.
DIVIDENDS AND REPURCHASES OF STOCK
Under Delaware law, a corporation generally is permitted to declare and pay
dividends out of surplus or out of net profits for the current and/or
preceding fiscal year, provided that such dividends will not reduce capital
below the amount of capital represented by all classes of stock having a
preference upon the distribution of assets. Also under Delaware law, a
corporation may generally redeem or repurchase shares of its stock if such
redemption or repurchase will not impair the capital of the corporation. The
directors of a Delaware corporation may be jointly and severally liable to the
corporation for a willful or negligent violation of such provisions of
Delaware law. Under Massachusetts law, the payment of dividends and the
repurchase of the corporation's stock are generally permissible if such
actions are not taken when the corporation is insolvent, do not render the
corporation insolvent, and do not violate the corporation's articles of
organization. The directors of a Massachusetts corporation may be jointly and
severally liable to the corporation to the extent that a dividend authorized
by the directors exceeds such permissible amounts and is not repaid to the
corporation.
CLASSIFICATION OF THE BOARD OF DIRECTORS
Delaware law permits (but does not require) classification of a
corporation's board of directors into one, two or three classes. The
Computervision Charter provides that the Computervision Board is divided into
three classes, elected for staggered three year terms. In the case of a public
company incorporated in Massachusetts, Section 50A of the MBCL provides that
the number of directors may only be fixed by the board of directors and
requires that the board be divided into three classes with staggered three-
year terms. A public company may exempt itself from the provisions of Section
50A by vote of the board of directors or of the holders of two-thirds of the
voting stock. Parametric is subject to Section 50A.
REMOVAL OF DIRECTORS
Under Delaware law, stockholders may remove directors with or without cause
by a majority vote unless otherwise provided in the certificate of
incorporation. The Computervision Charter provides that directors may be
removed only for cause by the holders of at least a majority in voting power
of the then issued and outstanding shares of capital of the corporation.
Unlike Massachusetts law, Delaware law does not permit directors to remove
other directors. Under Section 50A of the MBCL, directors of a public company
subject to that section may be removed from office only by the holders of a
majority of the shares outstanding and entitled to vote in the election of
directors or a majority of the directors then in office, in each case only for
certain causes specified in the law.
VACANCIES ON THE BOARD OF DIRECTORS
Under Delaware law, unless otherwise provided in the charter or bylaws,
vacancies on the board of directors and newly created directorships resulting
from any increase in the authorized number of directors may be filled by the
remaining directors. The Computervision Charter and Bylaws do not provide
otherwise. Under Section 50A of the MBCL, vacancies and newly created
directorships of a Massachusetts public company subject to that section may be
filled only by the vote of a majority of the remaining directors in office.
EXCULPATION OF DIRECTORS
Delaware law and Massachusetts law have substantially similar provisions
relating to exculpation of directors. Each state's law permits a corporation
to provide that no director shall be personally liable to the company or its
stockholders for monetary damages for breaches of fiduciary duty except where
such exculpation is expressly prohibited. The circumstances under which such
exculpation is prohibited are substantially similar.
52
<PAGE>
Under both the Computervision and Parametric Charters, directors are not
exculpated for (i) any breach of their duty of loyalty to the corporation or
its stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law or (iii) any transactions
from which such director derived an improper benefit. In addition, under the
Parametric Charter, a director is not exculpated from liability under
provisions of Massachusetts law relating to unauthorized distributions and
loans to insiders, while under the Computervision Charter, a director is not
exculpated from liability under provisions of Delaware law relating to
unlawful payments of dividends and unlawful stock purchases or redemptions.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
Both Delaware and Massachusetts law generally permit indemnification, or
reimbursement, of directors and officers for expenses, judgments, fines and
amounts paid in settlement of claims incurred by them by reason of their
position with the corporation, if the director or officer has acted in good
faith and with the reasonable belief that his conduct was in the best interest
of the corporation. However, Delaware law, unlike Massachusetts law, does not
permit a corporation to indemnify persons against judgments in actions brought
by or in the right of the corporation (although it does permit indemnification
in such situations if approved by the Delaware Court of Chancery and for
expenses of such actions). The Parametric Charter and Bylaws provide for the
indemnification of officers and directors to the maximum extent legally
permissible, with substantially the same effect as the Computervision Charter
as supplemented by Delaware statutory provisions. However, because
Massachusetts law does not prohibit indemnification for judgments in actions
by or in the right of the corporation, the Parametric Charter and Bylaws to
this extent appear to afford Parametric officers and directors greater rights
to indemnification for judgments in derivative actions than would be available
under Delaware law (but Parametric is not aware of any Massachusetts court
that has approved indemnification under such circumstances).
INTERESTED DIRECTOR TRANSACTIONS
The DGCL and the Computervision Bylaws provide that no transaction between a
corporation and one or more of its directors or officers or an entity in which
one or more of its directors or officers are directors or officers or have a
financial interest, shall be void or voidable solely for that reason. In
addition, no such transaction shall be void or voidable solely because the
director or officer is present at, participates in, or votes at the meeting of
the board of directors, or committee thereof, which authorizes the
transaction. In order that such a transaction not be found void or voidable,
it must, after disclosure of material facts, be approved by the disinterested
directors, a committee of disinterested directors, or the stockholders, or the
transaction must be fair as to the corporation. The MBCL has no comparable
provision.
SALE, LEASE OR EXCHANGE OF ASSETS AND MERGERS
Delaware law requires the approval of the directors and the vote of the
holders of a majority of the outstanding stock entitled to vote thereon for
the sale, lease, or exchange of all or substantially all of a corporation's
property and assets or a merger or consolidation of the corporation into any
other corporation, although the certificate of incorporation may require a
higher stockholder vote. Massachusetts law provides that a vote of two-thirds
of the shares of each class of stock outstanding and entitled to vote thereon
is required to authorize the sale, lease, or exchange of all or substantially
all of a corporation's property and assets or a merger or consolidation of the
corporation into any other corporation, except that the articles of
organization may provide that the vote of a greater or lesser proportion, but
not less than a majority of the outstanding shares of each class, is required.
AMENDMENTS TO CHARTER
Under the DGCL, charter amendments require the approval of the directors and
the vote of the holders of a majority of the outstanding stock and a majority
of each class of stock outstanding and entitled to vote thereon as a class,
unless the certificate of incorporation requires a greater proportion. The
Computervision Charter does not require a greater proportion except with
respect to amendment, repeal or modification of indemnification
53
<PAGE>
rights, which requires a vote of at least 75% of the issued and outstanding
shares entitled to vote thereon. In addition, Delaware law requires a class
vote when, among other things, an amendment will adversely affect the powers,
preferences or special rights of a class of stock. Under the MBCL, amendments
to a corporation's articles of organization relating to certain changes in
capital or in the corporate name require the vote of at least a majority of
each class of stock outstanding and entitled to vote thereon. Amendments
relating to other matters require a vote of at least two-thirds of each class
outstanding and entitled to vote thereon or, if the articles of organization
so provide, a greater or lesser proportion but not less than a majority of the
outstanding shares of each class. The Parametric Charter requires the vote of
a majority of each class of stock outstanding. Under Massachusetts law, the
articles of organization or bylaws may provide that all outstanding classes of
stock vote as a single class, but a separate vote of any class of stock
adversely affected by the amendment also is required.
APPRAISAL RIGHTS
Dissenting stockholders have the right to obtain the fair value of their
shares (so-called "appraisal rights") in more circumstances under
Massachusetts law than under Delaware law. Under Delaware law, a stockholder
is entitled to appraisal rights in the event of certain mergers or
consolidations, but not in the event of the sale, lease, or exchange of all or
substantially all of a corporation's assets or the adoption of an amendment to
its certificate of incorporation, unless such rights are granted in the
corporation's certificate of incorporation. The Computervision Charter does
not grant such rights. Under Massachusetts law, a properly dissenting
stockholder is entitled to receive the appraised value of his shares when the
corporation votes (i) to sell, lease, or exchange all or substantially all of
its property and assets, (ii) to adopt an amendment to its articles of
organization which adversely affects the rights of the stockholder or (iii) to
merge or consolidate with another corporation.
"ANTI-TAKEOVER" PROVISIONS
The Charters and Bylaws of both Parametric and Computervision contain
provisions that could discourage potential takeover attempts and prevent
stockholders from changing the company's management, including provisions
authorizing the Board of Directors to issue shares of preferred stock in
series and restrictions on the ability of stockholders to call a special
meeting of stockholders.
Delaware's Business Combination statute is substantially similar to the
Massachusetts Business Combination statute. However, while the Delaware
statute provides that, if a person acquires 15% or more of the stock of a
Delaware corporation without the approval of its board of directors (an
"interested stockholder"), such person may not engage in certain transactions
with the corporation for a period of three years, the Massachusetts statute
lowers the 15% threshold to 5% (except in the case of certain stockholders
eligible to file Schedule 13G under the Exchange Act). Both the Delaware and
Massachusetts statutes include certain exceptions to this prohibition; for
example, if the board of directors approves the acquisition of stock or the
transaction prior to the time that the person became an interested
stockholder, or if the interested stockholder acquires 85% (in the Delaware
statute) or 90% (in the Massachusetts statute) of the voting stock of the
corporation (excluding voting stock owned by directors who are also officers
and certain employee stock plans) in one transaction, or if the transaction is
approved by the board of directors and by the affirmative vote of two-thirds
of the outstanding voting stock which is not owned by the interested
stockholder, the prohibition does not apply. The Computervision Board has
approved the Merger pursuant to the Delaware Business Combination statute, and
Parametric is currently subject to the Massachusetts Business Combination
statute.
LEGAL MATTERS
The validity of the shares of Parametric Common Stock to be issued in
connection with the Merger will be passed upon for Parametric by Palmer &
Dodge LLP, Boston, Massachusetts.
54
<PAGE>
EXPERTS
The consolidated financial statements of Parametric Technology Corporation
as of September 30, 1996 and for the year then ended have been incorporated by
reference from Parametric's Annual Report on Form 10-K for the year ended
September 30, 1996 into this Prospectus/Proxy Statement in reliance on the
reports of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of said firm as experts in accounting and auditing. The consolidated
financial statements of Parametric Technology Corporation as of September 30,
1995 and for each of the two years in the period ended September 30, 1995,
incorporated by reference in Parametric Technology Corporation's Annual Report
on Form 10-K for the year ended September 30, 1996, except as they relate to
Rasna Corporation as of December 31, 1994 and for the year then ended, have
been audited by Price Waterhouse LLP, independent accountants, and, insofar as
they relate to Rasna Corporation as of December 31, 1994 and for the year then
ended, by Deloitte & Touche LLP, independent accountants, as indicated in
their reports which appear as exhibits to the Annual Report on Form 10-K of
Parametric Technology Corporation for the year ended September 30, 1996. Such
financial statements are incorporated by reference into this Prospectus/Proxy
Statement in reliance of the reports of such independent accountants given on
the authority of such firms as experts in auditing and accounting.
The consolidated financial statements of Computervision Corporation and
Subsidiaries as of December 31, 1996 and 1995, and for each of the years in
the three year period ended December 31, 1996, included in the current report
on Form 8-K filed with the Commission on November 12, 1997, incorporated by
reference in this Prospectus/Proxy Statement have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report,
which includes an explanatory paragraph that describes the substantial doubt
about the Company's ability to continue as a going concern, and are included
in reliance upon the authority of said firm as experts in accounting and
auditing in giving said reports.
With respect to the unaudited interim financial information for the quarters
ended March 30, 1997 and March 31, 1996, Arthur Andersen LLP has applied
limited procedures in accordance with professional standards for a review of
that information. However, their separate report, which includes reference to
the uncertainty of the Company's ability to continue as a going concern,
included in the current report on Form 8-K filed with the Commission on
November 12, 1997, thereon states that they did not audit and they do not
express an opinion on that interim financial information. Accordingly, the
degree of reliance on their report on that information should be restricted in
light of the limited nature of the review procedures applied. In addition, the
accountants are not subject to the liability provisions of Section 11 of the
Securities Act of 1933 for their report on the unaudited interim financial
information because that report on the unaudited interim financial information
is not a "report" or a "part" of the Prospectus/Proxy Statement prepared or
certified by the accountants within the meaning of Section 7 and 11 of the
Act.
Representatives of Arthur Andersen LLP are expected to be present at the
Computervision Special Meeting and will have the opportunity to make a
statement if they desire to do so and also will be available to respond to
appropriate questions from stockholders.
OTHER MATTERS
Computervision knows of no other business that will be presented for action
by the stockholders at the Computervision Special Meeting.
55
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
PARAMETRIC TECHNOLOGY CORPORATION
PTC ACQUISITION CORPORATION
AND
COMPUTERVISION CORPORATION
DATED AS OF NOVEMBER 3, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<C> <S> <C>
ARTICLE I
The Merger
1.1. THE MERGER......................................................... A-1
1.2. EFFECTIVE TIME; CLOSING............................................ A-2
1.3. EFFECT OF THE MERGER............................................... A-2
1.4. CERTIFICATE OF INCORPORATION; BYLAWS............................... A-2
1.5. DIRECTORS AND OFFICERS............................................. A-2
1.6. EFFECT ON CAPITAL STOCK............................................ A-2
1.7. SURRENDER OF CERTIFICATES.......................................... A-3
1.8. NO FURTHER OWNERSHIP RIGHTS IN COMPUTERVISION COMMON STOCK......... A-4
1.9. LOST, STOLEN OR DESTROYED CERTIFICATES............................. A-4
1.10. TAX AND ACCOUNTING CONSEQUENCES.................................... A-5
1.11. TAKING OF NECESSARY ACTION; FURTHER ACTION......................... A-5
ARTICLE II
Representations and Warranties of Computervision
2.1. ORGANIZATION OF COMPUTERVISION..................................... A-5
2.2. COMPUTERVISION CAPITAL STRUCTURE................................... A-6
2.3. OBLIGATIONS WITH RESPECT TO CAPITAL STOCK.......................... A-6
2.4. AUTHORITY.......................................................... A-7
2.5. SECTION 203 OF DELAWARE LAW NOT APPLICABLE......................... A-8
2.6. SEC FILINGS; COMPUTERVISION FINANCIAL STATEMENTS................... A-8
2.7. ABSENCE OF CERTAIN CHANGES OR EVENTS............................... A-9
2.8. TAXES.............................................................. A-10
2.9. RESTRICTIONS ON BUSINESS ACTIVITIES................................ A-11
2.10. TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES............. A-12
2.11. INTELLECTUAL PROPERTY.............................................. A-12
2.12. COMPLIANCE; PERMITS; RESTRICTIONS.................................. A-13
2.13. LITIGATION......................................................... A-13
2.14. BROKERS' AND FINDERS' FEES......................................... A-14
2.15. EMPLOYEE BENEFIT PLANS; EMPLOYMENT MATTERS......................... A-14
2.16. EMPLOYEES.......................................................... A-17
2.17. ENVIRONMENTAL MATTERS.............................................. A-17
2.18. AGREEMENTS, CONTRACTS AND COMMITMENTS.............................. A-18
2.19. CHANGE OF CONTROL PAYMENTS......................................... A-18
2.20. STATEMENTS; PROXY STATEMENT/PROSPECTUS............................. A-18
2.21. BOARD APPROVAL..................................................... A-19
2.22. FAIRNESS OPINION................................................... A-19
2.23. MINUTE BOOKS....................................................... A-19
ARTICLE III
Representations and Warranties of Parametric and Merger Sub
3.1. ORGANIZATION OF PARAMETRIC......................................... A-19
3.2. PARAMETRIC CAPITAL STRUCTURE....................................... A-19
3.3. AUTHORITY.......................................................... A-20
3.4. SEC FILINGS; PARAMETRIC FINANCIAL STATEMENTS....................... A-20
</TABLE>
i
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<TABLE>
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PAGE
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<C> <S> <C>
3.5. LITIGATION......................................................... A-21
3.6. REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS................. A-21
3.7. INTERIM OPERATIONS OF MERGER SUB................................... A-22
3.8. ABSENCE OF CERTAIN CHANGES OR EVENTS............................... A-22
ARTICLE IV
Conduct Prior to the Effective Time
4.1. CONDUCT OF BUSINESS BY COMPUTERVISION AND PARAMETRIC............... A-22
4.2. CERTAIN ACTIONS BY COMPUTERVISION.................................. A-22
ARTICLE V
Additional Agreements
5.1. PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT; OTHER
FILINGS........................................................... A-24
5.2. MEETING OF COMPUTERVISION STOCKHOLDERS............................. A-24
5.3. ACCESS TO INFORMATION; CONFIDENTIALITY ............................ A-24
5.4. NO SOLICITATION.................................................... A-25
5.5. PUBLIC DISCLOSURE.................................................. A-26
5.6. LEGAL REQUIREMENTS................................................. A-26
5.7. THIRD PARTY CONSENTS............................................... A-27
5.8. FIRPTA............................................................. A-27
5.9. NOTIFICATION OF CERTAIN MATTERS.................................... A-27
5.10. BEST EFFORTS AND FURTHER ASSURANCES................................ A-27
5.11. STOCK OPTIONS; EMPLOYEE STOCK PURCHASE PLAN........................ A-27
5.12. COMPPUTERVISION EMPLOYEE PLANS..................................... A-28
5.13. PARAMETRIC FORM S-8................................................ A-28
5.14. INDEMNIFICATION.................................................... A-28
5.15. TAX-FREE REORGANIZATION............................................ A-29
5.16. NMS LISTING........................................................ A-29
5.17. COMPUTERVISION AFFILIATE AGREEMENT................................. A-29
ARTICLE VI
Conditions to the Merger
6.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER....... A-29
6.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPUTERVISION............. A-30
6.3. ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARAMETRIC AND MERGER
SUB............................................................... A-30
ARTICLE VII
Termination, Amendment and Waiver
7.1. TERMINATION........................................................ A-31
7.2. NOTICE OF TERMINATION; EFFECT OF TERMINATION....................... A-33
7.3. FEES AND EXPENSES.................................................. A-33
7.4. AMENDMENT.......................................................... A-34
7.5. EXTENSION; WAIVER.................................................. A-34
</TABLE>
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<TABLE>
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<C> <S> <C>
ARTICLE VIII
General Provisions
8.1. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES..................... A-35
8.2. NOTICES............................................................ A-35
8.3. INTERPRETATION; KNOWLEDGE.......................................... A-35
8.4. COUNTERPARTS....................................................... A-36
8.5. ENTIRE AGREEMENT................................................... A-36
8.6. SEVERABILITY....................................................... A-36
8.7. OTHER REMEDIES; SPECIFIC PERFORMANCE............................... A-36
8.8. GOVERNING LAW...................................................... A-36
8.9. RULES OF CONSTRUCTION.............................................. A-36
8.10. ASSIGNMENT......................................................... A-36
</TABLE>
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INDEX OF EXHIBITS
<TABLE>
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<S> <C>
Exhibit A Computervision Stock Option Agreement
Exhibit B Computervision Stockholder Voting Agreement
Exhibit C Computervision Affiliate Agreement
Exhibit D Form of Opinion of Palmer & Dodge LLP
Exhibit E Form of Opinion of Hale & Dorr LLP
Exhibit F Non-Competition Agreement
</TABLE>
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") dated as of
November 3, 1997 is by and among Parametric Technology Corporation
("Parametric"), a Massachusetts corporation, PTC Acquisition Corporation
("Merger Sub"), a Delaware corporation and a wholly-owned subsidiary of
Parametric, and Computervision Corporation ("Computervision"), a Delaware
corporation.
R e c i t a l s
A. Upon the terms and subject to the conditions of this Agreement and in
accordance with the Massachusetts Business Corporation Law and the Delaware
General Corporation Law ("Delaware Law"), Parametric and Computervision will
enter into a business combination transaction pursuant to which Merger Sub
will merge with and into Computervision (the "Merger").
B. The Board of Directors of Parametric (i) has determined that the Merger
is consistent with and in furtherance of the long-term business strategy of
Parametric and fair to, and in the best interests of, Parametric and its
stockholders, and (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement.
C. The Board of Directors of Computervision (i) has determined that the
Merger is consistent with and in furtherance of the long-term business
strategy of Computervision and fair to, and in the best interests of,
Computervision and its stockholders, (ii) has approved this Agreement, the
Merger and the other transactions contemplated by this Agreement and (iii) has
recommended the approval of this Agreement by the stockholders of
Computervision.
D. Concurrently with the execution of this Agreement, and as a condition and
inducement to Parametric's willingness to enter into this Agreement,
Computervision shall execute and deliver a Stock Option Agreement in favor of
Parametric in the form attached hereto as Exhibit A (the "Computervision Stock
Option Agreement").
E. Concurrently with the execution of this Agreement, and as a condition and
inducement to Parametric's willingness to enter into this Agreement, certain
affiliates of Computervision shall each enter into a Voting Agreement in the
form attached hereto as Exhibit B (the "Computervision Voting Agreements").
F. Parametric, Computervision and Merger Sub desire to make certain
representations and warranties and other agreements in connection with the
Merger.
G. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
ARTICLE I
The Merger
1.1. THE MERGER. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware Law, Merger Sub shall be merged with and
into Computervision, the separate corporate existence of Merger Sub shall
cease and Computervision shall continue as the surviving corporation.
Computervision as the surviving corporation after the Merger is hereinafter
sometimes referred to as the "Surviving Corporation."
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1.2. EFFECTIVE TIME; CLOSING. Subject to the provisions of this Agreement,
the parties hereto shall cause the Merger to be consummated by filing a
Certificate of Merger (the "Certificate of Merger") with the Secretary of
State of Delaware in accordance with the relevant provisions of Delaware Law
(the time of such filing (or such later time as may be agreed in writing by
the parties and specified in the Certificate of Merger) being the "Effective
Time") as soon as practicable on the Closing Date (as herein defined). Unless
the context otherwise requires, the term "Agreement" as used herein refers
collectively to this Agreement and the Certificate of Merger. The closing of
the Merger (the "Closing") shall take place at the offices of Palmer & Dodge
LLP at a time and date to be specified by the parties, which shall be no later
than the second business day after the satisfaction or waiver of the
conditions set forth in Article VI, or at such other time, date and location
as the parties hereto agree in writing (the "Closing Date"). At the Closing,
(a) Computervision shall deliver to Parametric the various certificates and
instruments required under Article VI, (b) Parametric and Merger Sub shall
deliver to Computervision the various certificates and instruments required
under Article VI, and (c) Computervision and Merger Sub shall execute and file
the Certificate of Merger with the Secretary of State of Delaware.
1.3. EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers
and franchises of Computervision and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Computervision and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4. CERTIFICATE OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Certificate of Incorporation of Merger
Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation; provided,
however, that at the Effective Time the Certificate of Incorporation of the
Surviving Corporation shall be amended so that the name of the Surviving
Corporation shall be "Computervision Corporation."
(b) The Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be, at the Effective Time, the Bylaws of the
Surviving Corporation until thereafter amended.
1.5. DIRECTORS AND OFFICERS. The directors of Merger Sub immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation, to serve until their respective successors are duly elected or
appointed and qualified. The officers of Merger Sub immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation, to
serve until their successors are duly elected or appointed or qualified.
1.6. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the Merger
and without any action on the part of Merger Sub, Computervision or the
holders of any of the following securities:
(a) Conversion of Computervision Common Stock. Each share of Common
Stock, par value $.01 per share, of Computervision (the "Computervision
Common Stock") issued and outstanding immediately prior to the Effective
Time (other than any shares of Computervision Common Stock to be canceled
pursuant to Section 1.6(b)) will be canceled and extinguished and
automatically converted (subject to Sections 1.6(e) and (f)) into the right
to receive 0.0866 (the "Exchange Ratio") shares of Common Stock, par value
$.01 per share, of Parametric (the "Parametric Common Stock") upon
surrender of the certificate representing such share of Computervision
Common Stock in the manner provided in Section 1.7 (or in the case of a
lost, stolen or destroyed certificate, upon delivery of an affidavit (and
bond, if required) in the manner provided in Section 1.9).
(b) Cancellation of Certain Shares. Each share of Computervision Common
Stock held in the treasury of Computervision or owned by Merger Sub,
Parametric or any direct or indirect wholly owned subsidiary of
Computervision or of Parametric immediately prior to the Effective Time
shall be canceled and extinguished without any conversion thereof.
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(c) Stock Options. At the Effective Time all options to purchase
Computervision Common Stock then outstanding under Computervision's 1992
Stock Option Plan, 1993 Director Stock Option Plan, and 1995 Director Stock
Option Plan (collectively, the "Computervision Stock Option Plans") shall
be assumed by Parametric in accordance with Section 5.11 hereof.
(d) Capital Stock of Merger Sub. Each share of Common Stock, par value
$.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into and exchanged for one validly
issued, fully paid and nonassessable share of Common Stock, par value $.01
per share, of the Surviving Corporation. Each stock certificate of Merger
Sub evidencing ownership of any such shares shall continue to evidence
ownership of such shares of capital stock of the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted
to reflect fully the effect of any stock split, reverse stock split, stock
dividend (including any dividend or distribution of securities convertible
into Parametric Common Stock or Computervision Common Stock),
recapitalization or other like change without receipt of consideration with
respect to Parametric Common Stock or Computervision Common Stock occurring
on or after the date hereof and prior to the Effective Time. In addition,
during the period from the date of this Agreement and continuing until the
earlier of the termination of the Agreement or the Effective Time,
Parametric shall not, without the prior written consent of Computervision,
declare or pay any dividend or distribution on the Parametric Common Stock
(other than ordinary cash dividends) unless prior thereto either (i)
Parametric shall have provided that holders of Computervision Common Stock,
upon the Effective Time, shall receive such dividend or distribution to the
same extent they would have if their shares of Computervision's Common
Stock had been converted into Parametric Common Stock immediately prior to
the record date of any such dividend or distribution or (ii) Parametric and
Computervision shall mutually have agreed upon an adjustment of the
Exchange Ratio to fully reflect the effect of any such dividend or
distribution.
(f) Fractional Shares. No fraction of a share of Parametric Common Stock
will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Computervision Common Stock who would otherwise be entitled to a
fraction of a share of Parametric Common Stock (after aggregating all
fractional shares of Parametric Common Stock to be received by such holder)
shall receive from Parametric an amount of cash (rounded to the nearest
whole cent) equal to the product of (i) such fraction, multiplied by (ii)
the average closing price of a share of Parametric Common Stock for the ten
most recent days that Parametric Common Stock has traded ending on the
trading day immediately prior to the Effective Time, as reported on the
Nasdaq National Market.
1.7. SURRENDER OF CERTIFICATES.
(a) Exchange Agent. Parametric shall select a bank or trust company
reasonably acceptable to Computervision, which may be Parametric's existing
transfer agent, to act as the exchange agent (the "Exchange Agent") in the
Merger.
(b) Parametric to Provide Common Stock. Promptly after the Effective
Time, Parametric shall make available to the Exchange Agent for exchange in
accordance with this Article I the shares of Parametric Common Stock
issuable pursuant to Section 1.6 in exchange for outstanding shares of
Computervision Common Stock and cash in an amount sufficient for payment in
lieu of fractional shares pursuant to Section 1.6(f) and any dividends or
distributions to which holders of shares of Computervision Common Stock may
be entitled pursuant to Section 1.6(e) or 1.7(d).
(c) Exchange Procedures. Promptly after the Effective Time, Parametric
shall cause the Exchange Agent to mail to each holder of record (as of the
Effective Time) of a certificate or certificates (the "Certificates") that
immediately prior to the Effective Time represented outstanding shares of
Computervision Common Stock whose shares were converted into the right to
receive shares of Parametric Common Stock pursuant to Section 1.6, cash in
lieu of any fractional shares pursuant to Section 1.6(f) and any dividends
or other distributions pursuant to Section 1.6(e) or 1.7(d), (i) a letter
of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon
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<PAGE>
delivery of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as Parametric may reasonably specify)
and (ii) instructions for effecting the exchange of the Certificates for
certificates representing shares of Parametric Common Stock, cash in lieu
of any fractional shares pursuant to Section 1.6(f) and any dividends or
other distributions pursuant to Section 1.6(e) or 1.7(d). Upon surrender of
a Certificate for cancellation to the Exchange Agent or to such other agent
or agents as may be appointed by Parametric, together with such letter of
transmittal duly completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing the number of whole
shares of Parametric Common Stock, payment in lieu of fractional shares
that such holder has the right to receive pursuant to Section 1.6(f) and
any dividends or distributions payable pursuant to Section 1.6(e) or
1.7(d), and the Certificate so surrendered shall forthwith be canceled.
Until so surrendered, each outstanding Certificate will be deemed from and
after the Effective Time, for all corporate purposes, subject to Section
1.6(e) or 1.7(d) as to the payment of dividends, to evidence only the
ownership of the number of full shares of Parametric Common Stock into
which such shares of Computervision Common Stock shall have been so
converted and the right to receive an amount in cash in lieu of the
issuance of any fractional shares in accordance with Section 1.6(f) and any
dividends or distributions payable pursuant to Section 1.6(e) or 1.7(d).
(d) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the date of this Agreement with
respect to Parametric Common Stock with a record date after the Effective
Time will be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parametric Common Stock represented thereby until
the holder of record of such Certificate shall surrender such Certificate.
Subject to applicable law, following surrender of any such Certificate,
there shall be paid to the record holder thereof certificates representing
whole shares of Parametric Common Stock issued in exchange therefor,
without interest, along with the amount of dividends or other distributions
with a record date after the Effective Time payable with respect to such
whole shares of Parametric Common Stock and cash in lieu of any fractional
shares in accordance with Section 1.6(f).
(e) Transfers of Ownership. If any certificate for shares of Parametric
Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will
be properly endorsed, accompanied by any documents required to evidence and
effect such transfer and otherwise in proper form for transfer and that the
person requesting such exchange will have paid to Parametric or any agent
designated by it any applicable transfer taxes required by reason of the
issuance of a certificate for shares of Parametric Common Stock in any name
other than that of the registered holder of the Certificate surrendered, or
shall provide evidence that any applicable transfer taxes have been paid.
(f) No Liability. Notwithstanding anything to the contrary in this
Section 1.7, neither the Exchange Agent, Parametric, the Surviving
Corporation nor any party hereto shall be liable to a holder of shares of
Parametric Common Stock or Computervision Common Stock for any amount
properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
1.8. NO FURTHER OWNERSHIP RIGHTS IN COMPUTERVISION COMMON STOCK. All shares
of Parametric Common Stock issued upon the surrender for exchange of shares of
Computervision Common Stock in accordance with the terms hereof (including any
cash paid in respect thereof pursuant to Sections 1.6(f) and 1.7(d)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to
such shares of Computervision Common Stock, and there shall be no further
registration of transfers on the records of the Surviving Corporation of
shares of Computervision Common Stock that were outstanding immediately prior
to the Effective Time. If after the Effective Time, Certificates are presented
to the Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in this Article I.
1.9. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any Certificates
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of
an affidavit of that fact by the holder thereof, such shares of Parametric
Common
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Stock, cash for fractional shares, if any, as may be required pursuant to
Section 1.6(f) and any dividends or distributions payable pursuant to Section
1.7(d); provided, however, that Parametric may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parametric or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
1.10. TAX AND ACCOUNTING CONSEQUENCES. It is intended by the parties hereto
that the Merger shall constitute a reorganization within the meaning of
Section 368 of the Code. The parties hereto 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 Income Tax Regulations. It is also intended by the parties
hereto that the Merger shall be treated as a "pooling for interests" for
accounting purposes.
1.11. TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges,
powers and franchises of Computervision and Merger Sub, the officers and
directors of Computervision and Merger Sub are fully authorized in the name of
their respective corporations or otherwise to take, and will take, all such
lawful and necessary action, so long as such action is consistent with this
Agreement.
ARTICLE II
Representations and Warranties of Computervision
Computervision represents and warrants to Parametric and Merger Sub, subject
to the exceptions specifically disclosed in writing in the disclosure schedule
supplied by Computervision to Parametric (the "Computervision Disclosure
Schedule"), the section numbers and letters of which correspond to the section
and subsection numbers and letters of this Agreement to which they refer, as
follows:
2.1. ORGANIZATION OF COMPUTERVISION. Computervision and each of its
Subsidiaries (as defined below) is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, has the requisite corporate
or similar power to own, lease and operate its property and to carry on its
business as now being conducted and as proposed by Computervision to be
conducted, and is duly qualified to do business and in good standing as a
foreign corporation or other legal entity in each jurisdiction in which the
failure to be so qualified would have a Computervision Material Adverse Effect
(as defined below). Computervision has delivered to Parametric a true and
complete list of all of Computervision's Subsidiaries, together with the
jurisdiction of incorporation or organization of each Subsidiary and
Computervision's equity interest therein. Computervision has delivered or made
available a true and correct copy of the Certificate of Incorporation and
Bylaws of Computervision and similar governing instruments of each of its
Subsidiaries, each as amended to date, to Parametric. The term "Computervision
Material Adverse Effect" means, for purposes of this Agreement, any change,
event or effect that is, or that would be, materially adverse to the business,
assets (including intangible assets), financial condition or results of
operations of Computervision or the Surviving Corporation and its Subsidiaries
taken as a whole; provided, however, that, for purposes of Sections 6.3(a) and
7.1(i), the following shall not be deemed to constitute a "Computervision
Material Adverse Effect": (i) an adverse change in or effect on the market
price of Computervision Common Stock between the date of this Agreement and
the Effective Time; (ii) a failure of quarterly results of operations for any
quarter ending between the date of this Agreement and the Effective Time to
meet generally analysts' expectations as reflected in the First Call consensus
estimate; or (iii) a reduction in revenues of Computervision other than
software maintenance revenues (as defined in Section 7.1(l) between the date
of this Agreement and the Effective Time and any effect of such reduction on
Computervision's financial condition or gross profit margin. "Subsidiary"
means, with respect to any party, any corporation or other organization,
whether incorporated or unincorporated, of which (i) such party or any other
Subsidiary of such party is a general partner (excluding partnerships, the
general partnership interests of which held by such party
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or any Subsidiary of such party do not have a majority of the voting interest
in such partnership) or (ii) at least 40% of the securities or other interests
having by their terms ordinary voting power to elect a majority of the Board
of Directors or others performing similar functions with respect to such
corporation or other organization are directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries.
2.2. COMPUTERVISION CAPITAL STRUCTURE.
(a) The authorized capital stock of Computervision consists of
100,000,000 shares of Common Stock, par value $0.01 per share, of which
there were 63,725,393 shares issued and outstanding as of October 31, 1997,
and no shares in treasury, and 5,000,000 shares of Preferred Stock, par
value $0.01 per share, of which no shares are issued or outstanding. No
shares of Computervision Common Stock have been issued since that date
except pursuant to the exercise of stock options or warrants listed on the
Computervision Disclosure Schedule. All outstanding shares of
Computervision Common Stock are duly authorized, validly issued, fully paid
and non-assessable and are not subject to preemptive rights created by
statute, the Certificate of Incorporation or Bylaws of Computervision or
any agreement or document to which Computervision is a party or by which it
is bound. As of October 31, 1997, (i) an aggregate of 8,878,380 shares of
Computervision Common Stock, net of exercises, were reserved for issuance
to employees, consultants and non-employee directors pursuant to the
Computervision Stock Option Plans, under which options were outstanding for
an aggregate of 7,528,075 shares, (ii) 108,300 shares of Computervision
Common Stock were reserved for issuance upon exercise of the Common Stock
Purchase Warrant(s) dated December 22, 1993 (the "1993 Warrants"), and
(iii) 635,739 shares of Computervision Common Stock were reserved for
issuance upon exercise of the Common Stock Purchase Warrant dated August
14, 1997 (the "1997 Warrant"), which has been rescinded. There are
9,558,809 shares of Computervision Common Stock reserved for issuance upon
exercise of the Computervision Stock Option Agreement. All shares of
Computervision Common Stock subject to issuance as aforesaid, upon issuance
on the terms and conditions specified in the instruments pursuant to which
they are issuable, would be duly authorized, validly issued, fully paid and
nonassessable.
(b) Computervision has outstanding $48,610,000 principal amount of 8%
Convertible Subordinated Debentures due 2009 ("8% Debentures"), $3,430,000
principal amount of 5 3/4% Convertible Subordinated Debentures due 2012 ("5
3/4% Debentures"), and $175,000,000 principal amount of 11 3/8% Senior
Subordinated Notes due 1999 ("11 3/8% Debentures" and collectively,
"Debentures"). The Company has paid in full or accrued all amounts now or
heretofore due under each of the Debentures, and has satisfied in full or
provided for all of its liabilities and obligations thereunder that are
presently or heretofore were required to be satisfied or provided for, and
is not in default under any of such Debentures or the respective
Indenture(s) with respect to such Debentures (each, an "Indenture"), nor
does any condition exist that with notice or lapse of time or both would
constitute a default under any of such Debentures or Indenture(s). None of
the Debentures are convertible into or exercisable for shares of
Computervision Common Stock nor any security convertible into or
exercisable for Computervision Common Stock.
2.3. OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. The Computervision
Disclosure Schedule lists (i) each outstanding option to acquire shares of the
Common Stock of Computervision under the Computervision Stock Option Plans as
of the date hereof, the name of the holder of such option, the number of
shares subject to such option, the exercise price of such option, the number
of shares as to which such option will have vested at such date and whether
the exercisability of such option will be accelerated in any way by the
transactions contemplated by this Agreement or for any other reason, and
indicates the extent of acceleration, if any, and (ii) the name(s),
address(es), and respective numbers of shares of Computervision Common Stock
issuable upon exercise of the 1993 Warrants and the 1997 Warrant to the
holder(s) of such Warrants. As of October 31, 1997, there were 96 participants
in the Computervision Employee Stock Purchase Plans. The only offerings
currently in process under Computervision's Employee Stock Purchase Plans will
terminate no later than December 31, 1997. Except as set forth in Section 2.2
of the Computervision Disclosure Schedule, there are no equity securities of
any class of Computervision, or any securities exchangeable or convertible
into or
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exercisable for such equity securities, issued, reserved for issuance or
outstanding. Except for securities Computervision owns, directly or indirectly
through one or more Subsidiaries, there are no equity securities of any class
of any Subsidiary of Computervision, or any security exchangeable or
convertible into or exercisable for such equity securities, issued, reserved
for issuance or outstanding, except, in the case of certain foreign
Subsidiaries, directors' qualifying shares. Except as set forth in Section 2.2
or the Computervision Disclosure Schedule, there are no options, warrants,
equity securities, calls, rights (including preemptive rights), commitments or
agreements of any character to which Computervision or any of its Subsidiaries
is a party or by which it is bound obligating Computervision or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, or repurchase, redeem or otherwise acquire, or cause the repurchase,
redemption or acquisition, of any shares of capital stock of Computervision or
any of its Subsidiaries or obligating Computervision or any of its
Subsidiaries to grant, extend, accelerate the vesting of or enter into any
such option, warrant, equity security, call, right, commitment or agreement.
Except as set forth on the Computervision Disclosure Schedule, there are no
registration rights and, to the knowledge of Computervision, there are no
voting trusts, proxies or other agreements or understandings with respect to
any equity security of any class of Computervision or with respect to any
equity security of any class of any of its Subsidiaries.
2.4. AUTHORITY.
(a) Computervision has all requisite corporate power and authority to
enter into this Agreement and the Computervision Stock Option Agreement and
to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Computervision Stock
Option Agreement and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate
action on the part of Computervision, subject only to the adoption of this
Agreement by Computervision's stockholders and the filing and recording of
the Certificate of Merger pursuant to Delaware Law. Computervision's
stockholders may adopt this Agreement by vote of the holders of a majority
of the outstanding shares of the Computervision Common Stock. This
Agreement and the Computervision Stock Option Agreement have been duly
executed and delivered by Computervision. Each of the Computervision Stock
Option Agreement and, assuming the due authorization, execution and
delivery by Parametric and Merger Sub, this Agreement constitute the valid
and binding obligation of Computervision, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general principles of
equity. The execution and delivery of this Agreement and the Computervision
Stock Option Agreement by Computervision do not, and the performance of
this Agreement and the Computervision Stock Option Agreement by
Computervision will not, (i) conflict with or violate the Certificate of
Incorporation or Bylaws of Computervision or the equivalent organizational
documents of any of its Subsidiaries, (ii) subject to obtaining the
adoption by Computervision's stockholders of this Agreement as contemplated
in Section 5.2 and compliance with the requirements set forth in Section
2.4(b) below, conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Computervision or any of its Subsidiaries
or by which its or any of their respective properties is bound, or (iii)
result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or impair
the rights of Computervision or any Subsidiary or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of
Computervision or any of its Subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which Computervision or any of its
Subsidiaries is a party or by which Computervision or any of its
Subsidiaries or its or any of their respective properties are bound or
affected, except, with respect to clauses (ii) and (iii), for any such
conflicts, violations, defaults or other occurrences that would not have a
Computervision Material Adverse Effect. The Computervision Disclosure
Schedule lists all material consents, waivers and approvals under any of
Computervision's or any of its Subsidiaries' agreements, contracts,
licenses or leases required to be obtained in connection with the
consummation of the transactions contemplated hereby, except for those the
absence of which would not have a Computervision Material Adverse Effect.
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(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any court, administrative agency or commission
or other governmental or regulatory body or authority or instrumentality
("Governmental Entity") is required by or with respect to Computervision in
connection with the execution and delivery of this Agreement or the
Computervision Stock Option Agreement or the consummation of the
transactions contemplated hereby or thereby, except for (i) the filing of
the Certificate of Merger with the Secretary of State of Delaware, (ii) the
filing of the Proxy Statement (as defined in Section 2.20) with the U.S.
Securities and Exchange Commission ("SEC") in accordance with the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (iii) the
filing of a Current Report on Form 8-K with the SEC, (iv) the filing with
the United States Department of Justice and the Federal Trade Commission of
such forms as may be required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), (v) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal and state securities laws and the laws of
any foreign country and (vi) such other consents, authorizations, filings,
approvals and registrations that, if not obtained or made, would not have a
Computervision Material Adverse Effect or a material adverse effect on the
ability of the parties to consummate the Merger.
2.5. SECTION 203 OF DELAWARE LAW NOT APPLICABLE. The Board of Directors of
Computervision has taken all actions so that the restrictions contained in
Section 203 of Delaware Law applicable to a "business combination" (as defined
in Section 203) will not apply to the execution, delivery or performance of
this Agreement or the Computervision Stock Option Agreement or to the
consummation of the Merger or the other transactions contemplated by this
Agreement.
2.6. SEC FILINGS; COMPUTERVISION FINANCIAL STATEMENTS.
(a) Computervision has filed all forms, reports and documents required to
be filed with the SEC since January 1, 1996, and has made available to
Parametric such forms, reports and documents in the form filed with the
SEC. All such required forms, reports and documents (including those that
Computervision may file after the date hereof until the Closing) are
referred to herein as the "Computervision SEC Reports." As of their
respective dates, the Computervision SEC Reports (i) were or will be
prepared in accordance with the requirements of the Securities Act of 1933,
as amended (the "Securities Act") or the Exchange Act, as the case may be,
and the rules and regulations of the SEC thereunder applicable to such
Computervision SEC Reports, and (ii) did not or will not at the time they
were or are filed (or if amended or superseded by a filing prior to the
Closing, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances in which they were made, not misleading. None of
Computervision's Subsidiaries is required to file any forms, reports or
other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in Computervision SEC Reports
(the "Computervision Financials"), including any Computervision SEC Reports
filed after the date hereof until the Closing, (x) complied or will comply
as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, (y) was or will be prepared in
accordance with generally accepted accounting principles ("GAAP") applied
on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited interim
financial statements, as may be permitted by the SEC on Form 10-Q under the
Exchange Act) and (z) fairly presented or will fairly present, in all
material respects, the consolidated financial position of Computervision
and its Subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods
indicated, consistent with the books and records of Computervision, except
that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not, or are not
expected to be, material in amount. The balance sheet of Computervision
contained in Computervision's SEC Report as of September 28, 1997 is
hereinafter referred to as the "Computervision Balance Sheet." Except as
disclosed in the Computervision Financials or the Computervision Disclosure
Schedule and except for obligations under this Agreement or the
Computervision Stock Option Agreement, neither Computervision nor any of
its Subsidiaries has (i) any liabilities (absolute, accrued, contingent or
otherwise) of a nature required to
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be disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of Computervision and its Subsidiaries
taken as a whole, except liabilities (x) provided for in the Computervision
Balance Sheet, (y) incurred since the date of the Computervision Balance
Sheet in the ordinary course of business consistent with past practices or
(z) incurred in connection with the transactions contemplated hereby, nor
(ii) any other liabilities reasonably likely to have a Computervision
Material Adverse Effect.
(c) Computervision has previously furnished to Parametric a complete and
correct copy of any amendments or modifications, that have not yet been
filed with the SEC but that are required to be filed, to agreements,
documents or other instruments that previously had been filed by
Computervision with the SEC pursuant to the Securities Act or the Exchange
Act.
2.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in the
Computervision Disclosure Schedule, since September 28, 1997, there has not
occurred any Computervision Material Adverse Effect other than as disclosed in
the Computervision SEC Reports filed before the date hereof and there has not
been, occurred or arisen any:
(a) transaction by Computervision or its Subsidiaries except in the
ordinary course of business as conducted on the date of the Computervision
Balance Sheet and consistent with past practices;
(b) amendments or changes to the Certificate of Incorporation or Bylaws
of Computervision;
(c) individual capital expenditure or commitment, or series of related
capital expenditure or commitments, by Computervision or its Subsidiaries
outside the ordinary course of business exceeding $250,000;
(d) destruction of, damage to or loss of any assets material to the
business of Computervision and its Subsidiaries taken as a whole (whether
or not covered by insurance);
(e) material adverse change in a material customer relationship,
including without limitation any cancellation or termination or notice of
cancellation or termination by any material customer of its relationship or
a material portion of its relationship with Computervision or any of its
Subsidiaries or any material decrease or planned decrease in the usage or
purchase of the products or services of Computervision or any of its
Subsidiaries by any such customer from that reasonably expected by
Computervision at the date of this Agreement.
(f) labor trouble or claim of wrongful discharge (except for such claims
as would not reasonably be expected to result in potential damages greater
than $250,000) or other unlawful labor practice or action that would have a
Computervision Material Adverse Effect ;
(g) material change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by
Computervision;
(h) material revaluation by Computervision or its Subsidiaries of any of
its assets;
(i) declaration, setting aside or payment of a dividend or other
distribution with respect to the capital stock of Computervision, or any
direct or indirect redemption, purchase or other acquisition by
Computervision of any of its capital stock;
(j) increase in the salary or other compensation payable or to become
payable to any of its (i) officers or directors or (ii) employees or
advisors receiving, after such increase, annualized compensation in excess
of $100,000 per year, or the declaration, payment or commitment or
obligation of any kind for the payment of a bonus or other additional
salary or compensation to any such person except as disclosed in the
Computervision Disclosure Schedule or otherwise contemplated by this
Agreement and except for increases, payments or commitments in the ordinary
course of business and consistent with past practices;
(k) sale, lease, license or other disposition of any of the assets or
properties of Computervision or its Subsidiaries, except in the ordinary
course of business;
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(l) amendment or termination of any material contract, agreement or
license to which Computervision or any of its Subsidiaries is a party or by
which it is bound except for amendments in the ordinary course of business
or terminations pursuant to the terms of the contract, agreement or license
and not as a result of any breach, and except for amendments or
terminations described in Section 2.7(e);
(m) loan by Computervision or any of its Subsidiaries to any person or
entity, incurring by Computervision or any Subsidiary of any indebtedness
(except for indebtedness in amounts described in Section 2.18(d) of the
Computervision Disclosure Schedule incurred under existing credit lines or
arrangements set forth in Section 2.18(d) of the Computervision Disclosure
Schedule), guaranteeing by Computervision or any Subsidiary of any
indebtedness, issuance or sale of any debt securities of Computervision or
any Subsidiary or guaranteeing of any debt securities of others, except for
advances to employees for travel and business expenses in the ordinary
course of business, consistent with past practices;
(n) waiver or release of any material right or claim of Computervision or
any of its Subsidiaries, including any write-off or other compromise of any
account receivable of Computervision or any Subsidiary other than in the
ordinary course of business and consistent with past practices;
(o) change in pricing or royalties set or charged by Computervision or
its subsidiaries to its customers or licensees or in pricing or royalties
set or charged by persons who have licensed Intellectual Property to
Computervision or any of its Subsidiaries other than in the ordinary course
of business and consistent with past practices; or
(p) commitment, understanding or agreement by Computervision or any of
its Subsidiaries or any officer or employee thereof to do any of the things
described in the preceding clauses (a) through (o) (other than this
Agreement).
2.8. TAXES.
(a) Definition of Taxes. For the purposes of this Agreement, "Tax" or,
collectively, "Taxes", means any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties, impositions and
liabilities in the nature of a tax including taxes based upon or measured
by gross receipts, income, profits, sales, use and occupation, and value
added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, together with all interest,
penalties and additions imposed with respect to such amounts and any
obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for taxes of a
predecessor entity.
(b) Tax Returns and Audits. Except as set forth in Schedule 2.8:
(i) Computervision and each of its Subsidiaries as of the Effective
Time will have prepared and filed all required federal, state, local
and foreign returns, estimates, information statements and reports
("Returns") then due relating to any and all Taxes concerning or
attributable to Computervision or such Subsidiary or its operations and
such Returns are true and correct in all material respects and have
been completed in all material respects in accordance with applicable
law or, with respect to any Taxes payable, an adequate reserve has been
established on the Computervision Balance Sheet.
(ii) Computervision and each of its Subsidiaries as of the Effective
Time: (A) will have paid or accrued all Taxes set forth on its Returns,
and (B) will have withheld and paid (or will pay at the time required)
with respect to its employees all federal and state income taxes, FICA,
FUTA and other Taxes required to be withheld.
(iii) Neither Computervision nor any of its Subsidiaries is
delinquent in any material respect in the payment of any Tax nor is
there any material Tax deficiency outstanding, proposed or assessed
against Computervision or any of its Subsidiaries, nor has
Computervision or any Subsidiary executed any waiver of any statute of
limitations on or extending the period for the assessment or collection
of any Tax.
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(iv) Other than the audits set forth in the Computervision Disclosure
Schedule, no audit or other examination of any Return of Computervision
is currently in progress, nor has Computervision or any Subsidiary been
notified of any request for such an audit or other examination.
(v) Computervision and its Subsidiaries did not have, as of September
28, 1997, any liabilities, whether asserted or unasserted, contingent
or otherwise, for unpaid federal, state, local and foreign Taxes which
have not been accrued or reserved against in accordance with GAAP on
the Computervision Balance Sheet, and neither Computervision nor any of
its Subsidiaries has incurred any such liabilities since such date
except in the ordinary course of business and consistent with past
practices.
(vi) Computervision has made available to Parametric copies of all
federal and state income and all state sales and use Tax Returns for
all periods since December 31, 1987.
(vii) There are (and as of immediately following the Effective Date
there will be) no liens, pledges, charges, claims, security interests
or other encumbrances of any sort ("Liens") of a material nature on the
assets of Computervision or any Subsidiary relating to or attributable
to Taxes, except for Liens for Taxes not yet due and payable or that
are being contested in good faith by appropriate proceedings.
(viii) Neither Computervision nor any Subsidiary has received written
or oral notice of any claim relating or attributable to Taxes that, if
adversely determined, would result in any Lien on the assets of
Computervision or any Subsidiary.
(ix) None of Computervision's or its Subsidiaries' assets are treated
as "tax-exempt use property" within the meaning of Section 168(h) of
the Code.
(x) As of the Effective Time, there will not be any contract,
agreement, plan or arrangement, including but not limited to the
provisions of this Agreement, covering any employee or former employee
of Computervision or any of its subsidiaries that, individually or
collectively, could give rise to the payment of any amount that would
not be deductible pursuant to Section 280G of the Code or the
limitations in Sections 162 of the Code.
(xi) Neither Computervision nor any of its Subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as defined in Section 341(f)(4) of the Code) owned by
Computervision or such Subsidiary.
(xii) Neither Computervision nor any of its Subsidiaries is a party
to a tax sharing or allocation agreement nor does Computervision or any
Subsidiary owe any amount under any such agreement.
(xiii) Neither Computervision nor any of its Subsidiaries is or has
been at any time during the period specified in Section
897(c)(1)(A)(ii) of the Code, a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code.
(xiv) For a period of two (2) years following each reported ownership
change, as defined in Section 382(g) of the Code, Computervision and
its Subsidiaries have continued a significant line of their historic
business within the meaning of Treasury Regulation Section 1.368-
1(d)(3).
(xv) Neither Computervision nor any Subsidiary has agreed to, or is
required to, make any adjustments under Section 481(c) of the Code by
reason of a change in accounting method or otherwise.
2.9. RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement (noncompete
or otherwise), commitment, judgment, injunction, order or decree to which
Computervision or any of its Subsidiaries is a party or, to the knowledge of
Computervision, otherwise binding upon Computervision or its Subsidiaries,
that has or reasonably could be expected to have the effect of prohibiting or
impairing in a material way any business practice of Computervision or any
Subsidiary, any acquisition of property (tangible or intangible) by
Computervision or its Subsidiaries or the conduct of business by
Computervision and its
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Subsidiaries. Without limiting the foregoing, neither Computervision nor any
of its Subsidiaries has entered into any agreement under which Computervision
or any Subsidiary is restricted from selling, licensing or otherwise
distributing any of its products to any class of customers, in any geographic
area, during any period of time or in any segment of the market, and to the
best of Computervision's knowledge neither Computervision nor any Subsidiary
has granted any exclusive rights with respect to any of its products to any
other person.
2.10. TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES.
(a) Neither Computervision nor any of its Subsidiaries own any real
property. Section 2.10(a) of the Computervision Disclosure Schedule lists
all real property leases to which Computervision or any of its Subsidiaries
is a party and each amendment thereto. All such current leases are in full
force and effect, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time,
or both, would constitute a default) that would give rise to a claim in an
amount greater than $250,000.
(b) Computervision and its Subsidiaries have good and valid title to, or,
in the case of leased properties and assets, valid leasehold interests in,
all of their tangible properties and assets, real, personal and mixed, used
or held for use in their business, and such properties and assets, as well
as all other properties and assets of Computervision and its Subsidiaries,
whether tangible or intangible, are free and clear of any Liens, except as
reflected in Computervision Financials or in Schedule 2.10(b) and except
for liens for taxes not yet due and payable and such imperfections of title
and encumbrances, if any, that are not material in character, amount or
extent, and that do not materially detract from the value, or materially
interfere with the present use, of the property subject thereto or affected
thereby.
2.11. INTELLECTUAL PROPERTY.
(a) Computervision and its Subsidiaries own, or are licensed or otherwise
possess legally enforceable rights to use, all patents, trademarks, trade
names, service marks, copyrights, and any applications therefor,
schematics, technology, know-how, computer software programs or
applications (in both source code and object code form), and tangible or
intangible proprietary information or material that are (i) required or
reasonably necessary for the conduct of business of Computervision or its
Subsidiaries as currently conducted or (ii) under development for such
business, in either case the absence of which, individually or in the
aggregate, would have a Computervision Material Adverse Effect
(collectively, the "Computervision Intellectual Property Rights").
(b) The Computervision Disclosure Schedule sets forth a list of all
federal, state and foreign patents, registered copyrights, registered
trademarks, and any applications therefor, and specifies, where applicable,
the jurisdictions in which each such Computervision Intellectual Property
Right has been issued or registered or in which an application for such
issuance and registration has been filed, including the respective
registration or application numbers and the names of all registered owners.
The Computervision Disclosure Schedule sets forth a list of all material
licenses, sublicenses and other agreements to which Computervision or any
of its Subsidiaries is a party and pursuant to which Computervision, any of
its Subsidiaries or any other person is authorized to use or license the
use of any (i) Computervision Intellectual Property Right (excluding
licenses granted to customers or distributors in the ordinary course of
business) or trade secret of Computervision or any Subsidiary and (ii)
third party patents, copyrights, trademarks, and applications for
registration thereof, schematics, technology, know-how, computer software
programs or applications (in both source code and object code form), and
tangible or intangible proprietary information or material that are, are
incorporated in, or form a part of any Computervision Intellectual
Property. The execution and delivery of this Agreement by Computervision,
and the consummation of the transactions contemplated hereby, will neither
cause Computervision or any Subsidiary to be in violation or default under
any such license, sublicense or agreement, nor entitle any other party to
any such license, sublicense or agreement to terminate or modify such
license, sublicense or agreement. Except as set forth in the Computervision
Disclosure Schedule, Computervision or a Subsidiary (i) is the sole and
exclusive owner of, with all right, title and interest in and to (free and
clear of any liens or encumbrances), the
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Computervision Intellectual Property Rights, or (ii) is a licensee of the
Computervision Intellectual Property Rights under valid and binding license
agreements listed in the Computervision Disclosure Schedule.
(c) No claims with respect to Computervision Intellectual Property Rights
have been asserted in writing or are, to Computervision's knowledge,
threatened by any person, (i) to the effect that the manufacture, sale,
licensing or use of any of the products of Computervision or its
Subsidiaries infringes on any copyright, patent, trademark, service mark,
trade secret or other proprietary right of any third party, (ii) against
the use by Computervision or any Subsidiary of any trademarks, service
marks, trade names, trade secrets, copyrights, patents, technology, know-
how or computer software programs and applications used in Computervision's
or its Subsidiaries' business as currently conducted or under development
for use in such business, or (iii) challenging the ownership by
Computervision or a Subsidiary, or the validity or effectiveness, of any of
Computervision Intellectual Property Rights. All registered copyrights held
by Computervision or any Subsidiary that are material to the business of
Computervision and its Subsidiaries taken as a whole are valid and
subsisting. To Computervision's knowledge, neither Computervision nor any
Subsidiary has infringed, and the business of Computervision and its
Subsidiaries does not infringe, any copyright, patent, trade secret or
other proprietary right of any third party. To Computervision's knowledge,
there is no material unauthorized use, infringement or misappropriation of
any of Computervision Intellectual Property Rights by any third party,
including any employee or former employee of Computervision or any
Subsidiary. No Computervision Intellectual Property Right or product of
Computervision or any of its Subsidiaries is subject to any outstanding
decree, order, judgment, or stipulation restricting in any manner the
licensing thereof by Computervision or its subsidiaries. Substantially all
persons who are now, or within the last five years have been, employees,
consultants or contractors of Computervision and its Subsidiaries have
executed proprietary information and confidentiality agreements
substantially in Computervision's standard forms.
2.12. COMPLIANCE; PERMITS; RESTRICTIONS.
(a) Neither Computervision nor any of its Subsidiaries is in conflict
with, or in default or violation of, (i) any law, rule, regulation, order,
judgment or decree applicable to Computervision or any of its Subsidiaries
or by which its or any of their respective properties is bound or affected,
or (ii) any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which
Computervision or any of its Subsidiaries is a party or by which
Computervision or any of its Subsidiaries or its or any of their respective
properties is bound or affected, except for any conflicts, defaults or
violations that would not have a Computervision Material Adverse Effect.
(b) Computervision and its Subsidiaries hold all consents, permits,
licenses, variances, exemptions, orders and approvals from governmental
authorities that are material to the operation of the business of
Computervision and its Subsidiaries taken as a whole (collectively, the
"Computervision Permits"). Computervision and its Subsidiaries are in
compliance with the terms of Computervision Permits, except where the
failure to so comply would not have a Computervision Material Adverse
Effect.
2.13. LITIGATION. Except as set forth in the Computervision Disclosure
Schedule, there is no action, suit or proceeding of any nature pending or to
Computervision's knowledge threatened against Computervision or any of its
Subsidiaries, or any of their respective properties, officers or directors, in
their respective capacities as such (i) involving Computervision Intellectual
Property Rights or in which injunctive or other equitable relief or damages in
excess of $100,000 are or are reasonably likely to be sought against
Computervision or any Subsidiary or that could otherwise result in a
Computervision Material Adverse Effect or (ii) that in any manner challenges
or seeks to prevent, enjoin, alter or delay any of the transactions
contemplated by this Agreement. Except as set forth in Schedule 2.13, to
Computervision's knowledge, there is no investigation pending or threatened
against Computervision or any of its Subsidiaries, their respective properties
or any of their respective officers or directors by or before any Governmental
Entity that would have a Computervision Material Adverse Effect. Schedule 2.13
sets forth, with respect to any pending or threatened action, suit, proceeding
or investigation, the forum, the parties thereto, the subject matter thereof
and the amount of damages claimed or other remedy requested. To the knowledge
of Computervision, no Governmental Entity has at any time
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challenged or questioned in writing the legal right of Computervision or any
Subsidiary to manufacture, offer or sell any of its products in the present
manner or style thereof.
2.14. BROKERS' AND FINDERS' FEES. Except for fees payable to Hambrecht &
Quist LLC and Eugene Freedman disclosed to Parametric, Computervision has not
incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
2.15. EMPLOYEE BENEFIT PLANS; EMPLOYMENT MATTERS.
(a) Definitions. With the exception of the definition of "Affiliate" set
forth in Section 2.15(a)(i) below (which definition shall apply only to
this Section 2.15), for purposes of this Agreement, the following terms
shall have the meanings set forth below:
(i) "Affiliate" shall mean any other person or entity controlled by
or under common control with Computervision within the meaning of
Section 414(b), (c), (m) or (o) of the Code and the regulations
thereunder;
(ii) "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended;
(iii) "Computervision Employee Plan" shall refer to any plan,
program, policy, practice, contract, agreement or other arrangement
providing for compensation, deferred compensation, incentive
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or
remuneration of any kind, whether formal or informal, funded or
unfunded and whether or not legally binding, including without
limitation, each "employee benefit plan", within the meaning of Section
3(3) of ERISA that is or has been maintained, contributed to, or
required to be contributed to, by Computervision or any Affiliate for
the benefit of any "Employee" (as defined below), and pursuant to which
Computervision or any Affiliate has or may have any material liability
contingent or otherwise;
(iv) "Employee" shall mean any current, former, or retired employee,
officer, or director of Computervision or any Affiliate;
(v) "Employee Agreement" shall refer to each management, employment,
severance, consulting, relocation, repatriation, expatriation, visas,
work permit or similar agreement or contract between Computervision or
any Affiliate and any Employee or consultant;
(vi) "IRS" shall mean the Internal Revenue Service;
(vii) "Multiemployer Plan" shall mean any "Pension Plan" (as defined
below) that is a "multiemployer plan" as defined in Section 3(37) of
ERISA; and
(viii) "Pension Plan" shall refer to each Computervision Employee
Plan that is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA.
(b) Schedule. The Computervision Disclosure Schedule contains an accurate
and complete list of each Computervision Employee Plan and each Employee
Agreement. Except as may be set forth on the Computervision Disclosure
Schedule, neither Computervision nor any Affiliate has any plan or
commitment, whether legally binding or not, to establish any new
Computervision Employee Plan or Employee Agreement, to modify any
Computervision Employee Plan or Employee Agreement (except to the extent
required by law or to conform any such Computervision Employee Plan or
Employee Agreement to the requirements of any applicable law, in each case
as previously disclosed to Parametric in writing, or as required by this
Agreement), or to enter into any Computervision Employee Plan or Employee
Agreement.
(c) Documents. Computervision has provided or made available to
Parametric true and complete copies of (i) all documents comprising each
written Computervision Employee Plan and each Employment Agreement,
including all amendments thereof and any trust agreements, insurance
contracts, and other funding agreements; (ii) the three most recent annual
reports (Series 5500 and all schedules thereto), if any, required under
ERISA or the Code in connection with each Computervision Employee Plan or
related trust;
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(iii) the most recent actuarial reports prepared for each of the
Computervision Employee Plans for which such report is required or was
prepared and the most recent certified financial statements for each of the
Computervision Employee Plans for which such report is required or was
prepared; (iv) the most recent summary plan description together with the
most recent summary of material modifications, if any, required under ERISA
with respect to each Computervision Employee Plan; (v) all IRS
determination letters and rulings relating to Computervision Employee Plans
and copies of all applications and correspondence to or from the IRS or the
Department of Labor ("DOL") with respect to any Computervision Employee
Plan; (vi) all communications material to any Employee or Employees
relating to any Computervision Employee Plan and any proposed
Computervision Employee Plans, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits,
acceleration of payments or vesting schedules or other events which would
result in any material liability to Computervision or any Affiliate; and
(vii) all registration statements and prospectuses prepared in connection
with each Computervision Employee Plan.
(d) Employee Plan Compliance. Except as set forth on the Computervision
Disclosure Schedule, (i) Computervision and each Affiliate has performed in
all material respects all obligations required to be performed by it under
each Computervision Employee Plan, and each Computervision Employee Plan
has been established and maintained in all material respects in accordance
with its terms and in compliance with all applicable laws, statutes,
orders, rules and regulations, including but not limited to ERISA or the
Code; (ii) no "prohibited transaction," within the meaning of Section 4975
of the Code or Section 406 of ERISA, has occurred with respect to any
Computervision Employee Plan for which no exemption exists under Section
4975(c) or (d) of the Code or Section 408 of ERISA that would have a
Computervision Material Adverse Effect; (iii) there are no actions, suits
or claims pending, or, to the knowledge of Computervision, threatened or
anticipated (other than routine claims for benefits or actions seeking
qualified domestic relations orders) against any Computervision Employee
Plan or against the assets of any Computervision Employee Plan; (iv) each
Computervision Employee Plan can be amended, terminated or otherwise
discontinued after the Effective Time in accordance with its terms, without
liability to Computervision, Parent or any of its Affiliates (other than
for ordinary administration expenses typically incurred in a termination
event and benefits accrued through the effective date of such amendment,
termination or discontinuance not materially in excess of those provided
for in the Computervision Financials); (v) there are no inquiries or
proceedings pending or, to the knowledge of Computervision or any
affiliates, threatened by the IRS or DOL with respect to any Computervision
Employee Plan; (vi) neither Computervision nor any Affiliate is subject to
any material penalty or tax with respect to any Computervision Employee
Plan under Section 406(i) of ERISA or Section 4975 through 4980 of the
Code; (vii) all contributions, premiums or other payments due from
Computervision or its Affiliates with respect to any Computervision
Employee Plan have been fully paid or adequately provided for on
Computervision's audited financial statements; and (viii) all reports
required by any governmental agency to be filed with respect to each
Computervision Employee Plan since January 1, 1995 have been timely filed
except where the failure to be so timely filed would not have a
Computervision Material Adverse Effect.
(e) Pension Plan Qualification Funding.
(i) With respect to each Pension Plan which is intended to be
qualified under Section 401(a) of the Code, each such Pension Plan has
received a favorable determination as to its qualification from the IRS
and nothing has occurred, whether by action or failure to act, which
would case the loss of such qualification.
(ii) The financial statements of Computervision reflect all employee
benefit liabilities of Computervision in a manner satisfying the
requirements of FAS 87 and 88.
(iii) With respect to each Pension Plan that is subject to the
provisions of Title I, Subtitle B, part 3 of ERISA, the funding method
used in connection with such Pension Plan is acceptable under ERISA,
and the actuarial assumptions used in connection with funding such
Pension Plan are, in the aggregate, reasonable. No such Pension Plan
has incurred any "accumulated funding deficiency" (as defined in
Section 412 of the Code), whether or not waived.
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(f) Multiemployer Plans. At no time has Computervision or any Affiliate
contributed to or been required to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. Except as set forth in the
Computervision Disclosure Schedule, no Computervision Employee Plan
provides, or has any liability to provide, life insurance, medical or other
employee benefits to any Employee upon his or her retirement or termination
of employment for any reason, except for benefits accrued through the date
of termination and as may be required by statute, and neither
Computervision or any Affiliate has ever represented, promised or
contracted (whether in oral or written form) to any Employee (either
individually or to Employees as a group) that such Employee(s) would be
provided with life insurance, medical or other employee welfare benefits
upon their retirement or termination of employment, except to the extent
required by statute.
(h) Effect of Transaction.
(i) Except as set forth on the Computervision Disclosure Schedule,
the execution of this Agreement and the consummation of the
transactions contemplated hereby will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any Computervision Employee Plan, Employee Agreement, trust or
loan or applicable law that will result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee.
(ii) Except as set forth on the Computervision Disclosure Schedule,
no payment or benefit that will be made by Computervision or any
Affiliate with respect to any Employee as a result of the transactions
contemplated by this Agreement will be characterized as an "excess
parachute payment" within the meaning of Section 280G(b)(1) of the
Code.
(i) Funded Welfare Benefit Plans. Each Computervision Employee Plan which
is maintained in connection with any trust or other arrangement described
in Section 501(c)(9) of the Code or is otherwise funded within the meaning
of Section 419 of the Code has received a favorable ruling as to its tax-
exempt status and nothing has occurred, whether by action or failure to
act, which would cause the loss of such tax-exempt status.
(j) Employment Matters. Computervision and each of its Subsidiaries (i)
is in compliance in all material respects with all applicable foreign,
federal, state and local laws, rules and regulations respecting employment,
employment practices, terms and conditions of employment and wages and
hours, in each case, with respect to Employees; (ii) has withheld all
amounts required by law or by agreement to be withheld from the wages,
salaries and other payments to Employees; (iii) is not liable for any
arrears of wages or any taxes or any penalty for failure to comply with any
of the foregoing; and (iv) is not liable for any payment to any trust or
other fund or to any governmental or administrative authority, with respect
to unemployment compensation benefits, social security or other benefits or
obligations for Employees (other than routine payments to be made in the
normal course of business and consistent with past practice).
(k) Labor. No work stoppage or labor strike against Computervision or any
of its Subsidiaries is pending or, to the best knowledge of Computervision,
threatened. Except as set forth in the Computervision Disclosure Schedule,
neither Computervision nor any of its Subsidiaries is involved in or, to
the best knowledge of Computervision, threatened with, any labor dispute,
grievance, or litigation relating to labor, safety or discrimination
matters involving any Employee, including, without limitation, charges of
unfair labor practices or discrimination complaints, that, if adversely
determined, would, individually or in the aggregate, have a Material
Adverse Effect on Computervision or the Surviving Corporation. Neither
Computervision nor any of its Subsidiaries has engaged in any unfair labor
practices within the meaning of the National Labor Relations Act that
would, individually or in the aggregate, directly or indirectly have a
Material Adverse Effect on Computervision or the Surviving Corporation.
Except as set forth in the Computervision Disclosure Schedule, neither
Computervision nor any of its Subsidiaries is presently, nor has it been in
the past, a party to, or bound by, (i) any collective bargaining agreement
or union contract with respect to Employees and no collective bargaining
agreement is being negotiated by Computervision or any of its Subsidiaries
or (ii) any statutory works council or other agreement, statute, rule or
regulation
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that mandates employee approval, participation, consultation or consent
with regard to the transactions contemplated hereby.
2.16. EMPLOYEES. To Computervision's knowledge, no employee of
Computervision or any of its Subsidiaries at or above the director level (i)
is in violation of any term of any employment contract, patent disclosure
agreement, non-competition agreement, or any restrictive covenant to a former
employer relating to the right of any such employee to be employed by
Computervision or any of its Subsidiaries because of the nature of the
business conducted or presently proposed to be conducted by Computervision or
such Subsidiary or to the use of trade secrets or proprietary information of
others or (ii) has given notice to Computervision or any Subsidiary, nor is
Computervision otherwise aware, that any such employee intends to terminate
his or her employment with Computervision or any Subsidiary except for
terminations of a nature and number that are consistent with Computervision's
prior experience.
2.17. ENVIRONMENTAL MATTERS.
(a) Hazardous Material. To Computervision's knowledge, no underground
storage tanks are present under any property that Computervision or its
Subsidiaries have at any time owned or occupied. No material amount of any
substance that has been designated by any Governmental Entity or by
applicable federal, state or local law to be radioactive, hazardous or
otherwise to pose an unreasonable danger to human health or the
environment, including, without limitation, PCBs, friable asbestos,
petroleum, urea-formaldehyde and all substances listed as hazardous
substances pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or defined as a
hazardous waste pursuant to the United States Resource Conservation and
Recovery Act of 1976, as amended, and the regulations promulgated pursuant
to said laws, (a "Hazardous Material"), but excluding office, maintenance,
shipping and janitorial supplies, are present as a result of the actions of
Computervision or any of its Subsidiaries, or, to the knowledge of
Computervision, as a result of any actions of any third party or otherwise,
in, on or under any property, including the land and the improvements,
ground water and surface water thereof, that Computervision or any of its
Subsidiaries has at any time owned, operated, occupied or leased. The
Computervision Disclosure Schedule lists all locations that Computervision
or any Subsidiary formerly owned or leased where, to Computervision's
knowledge, Hazardous Materials are present in a volume or concentration
that would reasonably be expected to have a Computervision Material Adverse
Effect.
(b) Hazardous Materials Activities. Neither Computervision nor any of its
Subsidiaries has transported, stored, used, manufactured, disposed of,
released or exposed its employees or others to Hazardous Materials in
violation of any law in effect on or before the Closing Date, nor has
Computervision or any of its Subsidiaries disposed of, transported, sold,
or manufactured any product containing a Hazardous Material (collectively
"Hazardous Materials Activities") in violation of any rule, regulation,
treaty or statute promulgated by any Governmental Entity in effect prior to
or as of the date hereof to prohibit, regulate or control Hazardous
Materials or any Hazardous Material Activity which would reasonably be
expected to have a Computervision Material Adverse Effect.
(c) Permits. Computervision and its Subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the
"Computervision Environmental Permits") necessary for the conduct of
Computervision's and its Subsidiaries' Hazardous Material Activities and
other businesses of Computervision and its Subsidiaries as such activities
and businesses are currently being conducted, except where the failure to
so hold would not have a Computervision Material Adverse Effect.
(d) Environmental Liabilities. No material action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending, or
to Computervision's knowledge, threatened concerning any Computervision
Environmental Permit, Hazardous Material in, on or under any property owned
or leased by Computervision or any of its Subsidiaries or any Hazardous
Materials Activity of Computervision or any of its Subsidiaries.
Computervision is not aware of any fact or circumstance that could involve
Computervision or any of its Subsidiaries in any environmental litigation
that would reasonably be expected to have a Computervision Material Adverse
Effect or impose upon Computervision or any of its Subsidiaries any
material environmental liability.
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2.18. AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as identified in the
Computervision Disclosure Schedule or filed as exhibits to the Computervision
SEC Reports, neither Computervision nor any of its Subsidiaries is a party to
or is bound by:
(a) any agreement, contract or commitment containing any covenant
limiting the freedom of Computervision or any of its Subsidiaries to engage
in any line of business or compete with any person;
(b) any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of $250,000 and not
cancelable without penalty;
(c) any agreement, contract or commitment currently in force relating to
the disposition or acquisition of assets not in the ordinary course of
business or any ownership interest in any corporation, partnership, joint
venture or other business enterprise (other than Computervision's wholly-
owned subsidiaries);
(d) any mortgages, indentures, loans or credit agreements, security
agreements relating to a material amount of assets or other agreements or
instruments relating to the borrowing of money or extension of credit; or
(e) any other agreement, contract or commitment (excluding real and
personal property leases) which requires annual payments by Computervision
or any of its Subsidiaries under any such agreement, contract or commitment
of $500,000 or more in the aggregate and is not cancelable without penalty
within thirty (30) days.
Neither Computervision nor any of its Subsidiaries, nor to Computervision's
knowledge any other party to a Computervision Contract (as defined below), has
breached, violated or defaulted under, or received notice that it has breached
violated or defaulted under, any of the material terms or conditions of any of
the agreements, contracts or commitments to which Computervision or any
Subsidiary is a party or by which it is bound of the type described in clauses
(a) through (e) above (any such agreement, contract or commitment, a
"Computervision Contract") in such a manner as would permit any other party to
cancel or terminate any such Computervision Contract, or would permit any
other party to seek damages, which would have a Computervision Material
Adverse Effect.
2.19. CHANGE OF CONTROL PAYMENTS. The Computervision Disclosure Schedule
sets forth each plan or agreement pursuant to which any amount may become
payable (whether currently or in the future) to current or former officers and
directors of Computervision as a result of or in connection with the Merger.
2.20. STATEMENTS; PROXY STATEMENT/PROSPECTUS. The information to be supplied
by Computervision for inclusion in the Registration Statement on Form S-4 to
be filed to register under the Securities Act the Parametric Common Stock
issuable pursuant to Section 1.6 (the "Registration Statement") shall not at
the time the Registration Statement is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The information
supplied by Computervision for inclusion in the proxy statement/prospectus to
be sent to the stockholders of Computervision in connection with the meeting
of Computervision's stockholders to consider the adoption of this Agreement
and approval of the Merger (the "Computervision Stockholders' Meeting") (such
proxy statement/prospectus as amended or supplemented is referred to herein as
the "Proxy Statement") shall not, on the date the Proxy Statement is first
mailed to Computervision's stockholders and at the time of the Computervision
Stockholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not false or misleading; or omit to state any material fact
necessary to correct any statement in any earlier written communication with
respect to the solicitation of proxies for the Computervision Stockholders'
Meeting which has become false or misleading. The Proxy Statement will comply
as to form in all material respects with the provisions of the Exchange Act
and the rules and regulations thereunder. If at any time prior to the
Effective Time, any event relating to Computervision or any of its affiliates,
officers or directors should be discovered by Computervision which should be
set forth in an amendment to the Registration Statement or a supplement to the
Proxy Statement,
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Computervision shall promptly inform Parametric. Notwithstanding the
foregoing, Computervision makes no representation or warranty with respect to
any information supplied by Parametric or Merger Sub that is contained in any
of the foregoing documents.
2.21. BOARD APPROVAL. The Board of Directors of Computervision has, as of
the date of this Agreement, determined unanimously (i) that the Merger is fair
to, and in the best interests of Computervision and its stockholders, and (ii)
to recommend that the stockholders of Computervision approve this Agreement.
2.22. FAIRNESS OPINION. Computervision has received an opinion from
Hambrecht & Quist LLC, dated as of the date hereof, to the effect that as of
the date hereof, the consideration to be received by Computervision's
stockholders in the Merger is fair from a financial point of view and will
deliver to Parametric a copy of such written opinion.
2.23. MINUTE BOOKS. The minute books of Computervision made available to
Parametric are the only minute books of Computervision, and the minutes
contain a reasonably accurate record of all actions taken in all meetings of
directors (or committees thereof) and stockholders or all actions by written
consent.
ARTICLE III
Representations and Warranties of Parametric and Merger Sub
Parametric and Merger Sub represent and warrant to Computervision, subject
to the exceptions specifically disclosed in the disclosure schedule supplied
by Parametric to Computervision (the "Parametric Disclosure Schedule"), the
section numbers and letters of which correspond to the section and subsection
numbers and letters of this Agreement to which they refer, as follows:
3.1. ORGANIZATION OF PARAMETRIC. Parametric and each of its material
Subsidiaries is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, has the requisite corporate or similar power to
own, lease and operate its property and to carry on its business as now being
conducted and as proposed to be conducted, and is duly qualified to do
business and in good standing as a foreign corporation or other legal entity
in each jurisdiction in which the failure to be so qualified would have a
Parametric Material Adverse Effect (as defined below). Parametric has
delivered or made available a true and correct copy of the Articles of
Organization and Bylaws of Parametric, each as amended to date, to
Computervision. The term "Parametric Material Adverse Effect" means, for
purposes of this Agreement, any change, event or effect that is, or that would
reasonably be expected to be, materially adverse to the business, assets
(including intangible assets), financial condition or results of operations of
Parametric and its Subsidiaries taken as a whole; provided, however, that
neither (i) an adverse change in or effect on the market price of Parametric
Common Stock nor (ii) a failure of quarterly results of operations to meet
generally analysts' expectations as reflected in the First Call consensus
estimate shall be deemed to constitute a "Parametric Material Adverse Effect."
3.2. PARAMETRIC CAPITAL STRUCTURE. The authorized capital stock of
Parametric consists of 350,000,000 shares of Common Stock, par value $0.01 per
share, of which there were 127,936,236 shares issued and outstanding as of
October 31, 1997 and 5,000,000 shares of Preferred Stock, par value $0.01 per
share, of which no shares are issued or outstanding. The authorized capital
stock of Merger Sub consists of 1,000 shares of Common Stock, par value $0.01
per share, all of which, as of the date hereof, are issued and outstanding and
are held by Parametric. All outstanding shares of Parametric Common Stock are
duly authorized, validly issued, and fully paid and non-assessable and are not
subject to preemptive rights created by statute, the Articles of Organization
or Bylaws of Parametric or any agreement or document to which Parametric is a
party or by which it is bound. All of the shares of Parametric Common Stock to
be issued in the Merger will be, when issued in accordance with this
Agreement, duly authorized, validly issued, fully paid and nonassessable.
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3.3. AUTHORITY.
(a) Each of Parametric and Merger Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of
Parametric and Merger Sub, subject only to the filing and recording of the
Certificate of Merger pursuant to Delaware Law. This Agreement has been
duly executed and delivered by each of Parametric and Merger Sub and,
assuming the due authorization, execution and delivery of this Agreement by
Computervision, this Agreement constitutes the valid and binding
obligations of each of Parametric and Merger Sub, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general principles of
equity. The execution and delivery of this Agreement by each of Parametric
and Merger Sub do not, and the performance of this Agreement by each of
Parametric and Merger Sub will not, (i) conflict with or violate the
Articles of Organization or Bylaws of Parametric or the Certificate of
Incorporation or Bylaws of Merger Sub, (ii) subject to compliance with the
requirements set forth in Section 3.3(b) below, conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to
Parametric or any of its Subsidiaries or by which its or any of their
respective properties is bound or affected, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or impair Parametric's rights or
alter the rights or obligations of any third party under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance on any of the properties or
assets of Parametric or any of its Subsidiaries (including Merger Sub)
pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to
which Parametric or any of its Subsidiaries is a party or by which
Parametric or any of its Subsidiaries or its or any of their respective
properties are bound or affected, except, with respect to clauses (ii) and
(iii), for any such conflicts, violations, defaults or other occurrences
that would not have a Parametric Material Adverse Effect. The Parametric
Disclosure Schedule lists all material consents, waivers and approvals
under any of Parametric's or any of its Subsidiaries' agreements,
contracts, licenses or leases required to be obtained in connection with
the consummation of the transactions contemplated hereby, except for those
the absence of which would not have a Parametric Material Adverse Effect.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity is required by or with
respect to Parametric or Merger Sub in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the Registration
Statement with the SEC in accordance with the Securities Act, (ii) the
filing of the Certificate of Merger with the Secretary of State of
Delaware, (iii) the filing of a Current Report on Form 8-K with the SEC,
(iv) the filing with the United States Department of Justice and the
Federal Trade Commission of such forms as may be required by the HSR Act,
(v) the listing of the Parametric Common Stock issuable pursuant to Section
1.6 on the Nasdaq Stock Market, (vi) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under applicable federal and state securities laws and the laws of any
foreign country and (vii) such other consents, authorizations, filings,
approvals and registrations that, if not obtained or made, would not have a
Parametric Material Adverse Effect or a material adverse effect on the
ability of Parametric or Merger Sub to consummate the Merger.
3.4. SEC FILINGS; PARAMETRIC FINANCIAL STATEMENTS.
(a) Parametric has filed all forms, reports and documents required to be
filed with the SEC since October 1, 1996, and has made available to
Computervision such forms, reports and documents in the form filed with the
SEC. All such required forms, reports and documents (including those that
Parametric may file after the date hereof until the Closing) are referred
to herein as the "Parametric SEC Reports." As of their respective dates,
the Parametric SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC thereunder applicable to such
Parametric SEC Reports, and (ii) did not at the time they were filed (or if
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amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. None of Parametric's
subsidiaries is required to file any forms, reports or other documents with
the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in Parametric SEC Reports (the
"Parametric Financials"), including any Parametric SEC Reports filed after
the date hereof until the Closing, (x) complied or will comply as to form
in all material respects with the published rules and regulations of the
SEC with respect thereto, (y) was or will be prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto or, in the case of unaudited
interim financial statements, as may be permitted by the SEC on Form 10-Q
under the Exchange Act) and (z) fairly presented or will fairly present, in
all material respects, the consolidated financial position of Parametric
and its Subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or
are subject to normal and recurring year-end adjustments which were not, or
are not expected to be, material in amount. The balance sheet of Parametric
contained in Parametric SEC Reports as of June 28, 1997 is hereinafter
referred to as the "Parametric Balance Sheet." Except as disclosed in the
Parametric Financials or obligations under this Agreement, neither
Parametric nor any of its Subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise) of a nature required to be disclosed on a
balance sheet or in the related notes to the consolidated financial
statements prepared in accordance with GAAP that are, individually or in
the aggregate, material to the business, results of operations or financial
condition of Parametric and its subsidiaries taken as a whole, except
liabilities (i) provided for in the Parametric Balance Sheet, (ii) incurred
since the date of the Parametric Balance Sheet in the ordinary course of
business consistent with past practices, or (iii) incurred in connection
with the transactions contemplated hereby.
(c) Parametric has heretofore furnished to Computervision a complete and
correct copy of any amendments or modifications, that have not yet been
filed with the SEC but that are required to be filed, to agreements,
documents or other instruments that previously had been filed by Parametric
with the SEC pursuant to the Securities Act or the Exchange Act.
3.5. LITIGATION. There is no action, suit, proceeding, claim, arbitration or
investigation pending, or as to which Parametric or any of its Subsidiaries
has received any notice of assertion nor, to Parametric's knowledge, is there
a threatened action, suit, proceeding, claim, arbitration or investigation
against Parametric or any of its Subsidiaries that would have a Parametric
Material Adverse Effect or that in any manner challenges or seeks to prevent,
enjoin, alter or delay any of the transactions contemplated by this Agreement.
3.6. REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The information
supplied by Parametric for inclusion in the Registration Statement (as defined
in Section 2.4(b)) shall not at the time the Registration Statement is filed
with the SEC and at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The information supplied by Parametric for inclusion in the
Proxy Statement to be sent to the stockholders of Computervision in connection
with the Computervision Stockholders' Meeting shall not, on the date the Proxy
Statement is first mailed to Computervision's stockholders, and at the time of
the Computervision Stockholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not false or misleading; or omit to
state any material fact necessary to correct any statement in any earlier
written communication with respect to the solicitation of proxies for the
Computervision Stockholders' Meeting which has become false or misleading. The
Registration Statement will comply as to form in all material respects with
applicable provisions of the Securities Act and the rules and regulations
thereunder. If at any time prior to the Effective Time, any event relating to
Parametric or any of its affiliates, officers or directors should be
discovered by Parametric that should be set forth in an amendment to the
Registration
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Statement or a supplement to the Proxy Statement, Parametric shall promptly
inform Computervision. Notwithstanding the foregoing, Parametric makes no
representation or warranty with respect to any information supplied by
Computervision that is contained in any of the foregoing documents.
3.7. INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only
as contemplated by this Agreement.
3.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 28, 1997 to the date
of this Agreement, there has not occurred any Parametric Material Adverse
Effect, nor (i) any amendment to Parametric's Articles of Organization or
Bylaws, (ii) any material change in accounting methods or practices by
Parametric, (iii) any material revaluation by Parametric or any of its
Subsidiaries of any of its assets, or (iv) any declaration, setting aside, or
payment of a dividend or other distribution with respect to the Parametric
Common Stock, or direct or indirect redemption, purchase or other acquisition
by Parametric of any of its capital stock (other than pursuant to Parametric's
previously announced stock repurchase program or in connection with the
exercises of stock options).
ARTICLE IV
Conduct Prior to the Effective Time
4.1. CONDUCT OF BUSINESS BY COMPUTERVISION AND PARAMETRIC. During the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement pursuant to its terms or the Effective Time,
Computervision (which for the purposes of this Article IV shall include
Computervision and each of its Subsidiaries) and Parametric (which for the
purposes of this Article IV shall include Parametric and each of its material
Subsidiaries) agree, except (i) in the case of Computervision as provided in
Article IV of the Computervision Disclosure Schedule and in the case of
Parametric as provided in Article IV of the Parametric Disclosure Schedule,
(ii) as otherwise contemplated by this Agreement, or (iii) to the extent that
the other party shall otherwise consent in writing, to carry on its business
diligently and in accordance with good commercial practice and to carry on its
business in the usual, regular and ordinary course, in substantially the same
manner as heretofore conducted and use its commercially reasonable efforts
consistent with past practices and policies to preserve intact its present
business organization, keep available the services of its present officers and
employees and preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others with which it has business
dealings.
4.2. CERTAIN ACTIONS BY COMPUTERVISION. In addition, notwithstanding Section
4.1 above, without the prior written consent of Parametric, Computervision
shall not do any of the following, nor shall Computervision permit its
Subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or change the
period of exercisability of options or restricted stock, or reprice options
granted under any employee, consultant or director stock plans or authorize
cash payments in exchange for any options granted under any of such plans;
(b) Enter into any material partnership arrangements, joint development
agreements or strategic alliances, agreements to create standards or
agreements with "Standards" bodies;
(c) Grant any severance or termination pay to any officer or employee
except payments in amounts consistent with policies and past practices or
pursuant to written agreements outstanding, or policies existing, on the
date hereof and as previously disclosed in writing to Parametric, or adopt
any new severance plan;
(d) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Computervision
Intellectual Property Rights, or enter into grants to future patent rights,
in each case other than in the ordinary course of business;
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(e) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any capital stock or
split, combine or reclassify any capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for any capital stock;
(f) Repurchase or otherwise acquire, directly or indirectly, any shares
of capital stock except pursuant to rights of repurchase of any such shares
under any employee, consultant or director stock plan;
(g) Issue, deliver, sell, authorize or propose the issuance, delivery or
sale of, any shares of capital stock or any securities convertible into
shares of capital stock, or subscriptions, rights, warrants or options to
acquire any shares of capital stock or any securities convertible into
shares of capital stock, or enter into other agreements or commitments of
any character obligating it to issue any such shares or convertible
securities, other than (i) the grant of options ("New Options") to purchase
up to 200,000 shares of Computervision Common Stock on terms consistent
with Computervision's policies and past practices; provided that no single
individual shall receive more than one grant of New Options and no such
grant shall be for more than 5,000 shares, and (ii) the issuance of shares
of Computervision Common Stock pursuant to (A) the exercise of stock
options therefor outstanding as of the date of this Agreement and disclosed
on the Computervision Disclosure Schedule, (B) the New Options, (C) the
Computervision Employee Stock Purchase Plans, consistent with the terms
thereof, and (D) the 1993 Warrant(s);
(h) Cause, permit or propose any amendments to its Certificate of
Incorporation or Bylaws (or similar governing instruments of any
Subsidiaries other than with respect to the Subsidiaries, amendments
necessary to conform to actions taken in the ordinary course of business);
(i) Acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a material portion of the assets of,
or by any other manner, any business or any corporation, partnership
interest, association or other business organization or division thereof,
or otherwise acquire or agree to acquire any material amount of assets;
(j) Sell, lease, license (except as permitted by Section 4.2(d)),
encumber or otherwise dispose of any properties or assets that are
material, individually or in the aggregate, to the business of
Computervision;
(k) Incur any indebtedness for borrowed money (other than ordinary course
trade payables or pursuant to existing credit facilities identified in
Section 4.2(k) of Computervision's Disclosure Schedule in accordance with
their existing terms in the ordinary course of business) or guarantee any
such indebtedness or issue or sell any debt securities or warrants or
rights to acquire debt securities of Computervision or guarantee any debt
securities of others;
(l) Adopt or amend any employee benefit or stock purchase or option plan,
or enter into any employment contract, pay any special bonus or special
remuneration to any director or employee (including without limitation
pursuant to the 1997 Management Incentive Plan), or increase the salaries
or wage rates of (i) its officers or (ii) other than in the ordinary course
of business, its employees whose annualized compensation following such
increase would exceed $100,000; provided that Computervision may base
payments under the Management Retention Agreements upon the average of the
bonuses paid in 1995 and 1996;
(m) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than payment, discharge or satisfaction in the ordinary course of business;
(n) Make any grant of exclusive rights to any third party or grant any
site license to any customer, except for site licenses granted in the
ordinary course of business for not more than 500 seats and having a
contract value of not more than $4,000,000;
(o) Make any individual capital expenditure or commitment, or series of
related capital expenditures or commitments, outside the ordinary course of
business exceeding $250,000;
(p) Commence any legal action outside the ordinary course of business
that could expose Computervision or the Surviving Corporation or any of its
Subsidiaries directly or indirectly to any material liability as a result
of any counterclaim or cross-claim or otherwise; or
(q) Agree in writing or otherwise to take any of the actions described in
this Section 4.2.
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ARTICLE V
Additional Agreements
5.1. PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT; OTHER FILINGS. As
promptly as practicable after the execution of this Agreement and with
reasonable efforts to do so within five business days thereafter,
Computervision will prepare and file with the SEC the Proxy Statement and
Parametric will prepare and file with the SEC the Registration Statement in
which the Proxy Statement will be included as a prospectus. Each of
Computervision and Parametric will respond to any comments of the SEC and will
use its best efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after such filing.
Computervision will cause the Proxy Statement to be mailed to its stockholders
at the earliest practicable time. As promptly as practicable after the date of
this Agreement, Computervision and Parametric will prepare and file any other
filings required under the Exchange Act, the Securities Act or any other
Federal, foreign or Blue Sky laws relating to the Merger and the transactions
contemplated by this Agreement (the "Other Filings"). Each party will notify
the other party promptly upon the receipt of any comments from the SEC or its
staff and of any request by the SEC or its staff or any other government
officials for amendments or supplements to the Registration Statement, the
Proxy Statement or any Other Filing or for additional information and will
supply the other party with copies of all correspondence between such party or
any of its representatives, on the one hand, and the SEC, or its staff or any
other government officials, on the other hand, with respect to the
Registration Statement, the Proxy Statement, the Merger or any Other Filing.
Whenever any event occurs that is required to be set forth in an amendment or
supplement to the Proxy Statement, the Registration Statement or any Other
Filing, Computervision or Parametric, as the case may be, will promptly inform
the other party of such occurrence and cooperate in filing with the SEC or its
staff or any other government officials, and/or mailing to stockholders of
Computervision, such amendment or supplement. The Proxy Statement will also
include the recommendations of the Board of Directors of Computervision in
favor of approval of this Agreement (except that the Board of Directors of
Computervision may withdraw, modify or refrain from making such recommendation
to the extent that the Board determines in good faith on the advice of outside
legal counsel that the Board's fiduciary duties under applicable law require
it to do so).
5.2. MEETING OF COMPUTERVISION STOCKHOLDERS. Promptly after the date hereof,
Computervision will take all action necessary in accordance with Delaware Law
and its Certificate of Incorporation and Bylaws to convene the Computervision
Stockholders' Meeting to be held as promptly as practicable, and in any event
within 45 days after the declaration of effectiveness of the Registration
Statement, for the purpose of voting upon this Agreement. Unless otherwise
required by the fiduciary duties of the Computervision Board of Directors,
Computervision will use its best efforts to solicit from its stockholders
proxies in favor of the approval of this Agreement and the Merger, and will
take all other action necessary or advisable to secure the vote or consent of
its stockholders required by Delaware Law to obtain such approvals.
5.3. ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Each party will afford the other party and its accountants, counsel
and other representatives reasonable access during normal business hours to
the properties, books, records and personnel of the other party during the
period prior to the Effective Time to obtain all information concerning the
business, including the status of product development efforts, properties,
results of operations and personnel of such party, as the other party may
reasonably request. No information or knowledge obtained in any
investigation pursuant to this Section 5.3 will affect or be deemed to
modify any representation or warranty contained herein or the conditions to
the obligations of the parties to consummate the Merger.
(b) The parties acknowledge that Computervision and Parametric have
previously executed a Confidentiality and Evaluation Agreement, dated
October 24, 1997 (the "Confidentiality Agreement"), which Confidentiality
Agreement will continue in full force and effect in accordance with its
terms, except as is necessary to comply with the terms of this Agreement.
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5.4. NO SOLICITATION.
(a) From and after the date of this Agreement until the earlier of the
Effective Time or termination of this Agreement pursuant to its terms,
Computervision and its Subsidiaries will not, and will instruct their
respective directors, officers, employees, representatives, investment
bankers, agents and affiliates not to, directly or indirectly, (i) solicit
or knowingly encourage submission of, any proposals or offers by any
person, entity or group (other than Parametric and its affiliates, agents
and representatives), or (ii) participate in any discussions or
negotiations with, or disclose any non-public information concerning
Computervision or any of its Subsidiaries to, or afford any access to the
properties, books or records of Computervision or any of its Subsidiaries
to, or otherwise assist or facilitate, or enter into any agreement or
understanding with, any person, entity or group (other than Parametric and
its affiliates, agents and representatives), in connection with any
Acquisition Proposal with respect to Computervision. For the purposes of
this Agreement, an "Acquisition Proposal" means (x) any proposal or offer
(other than one with or relating to Parametric or an affiliate thereof)
relating to (i) any merger, consolidation, sale of substantial assets of
Computervision or similar transactions involving Computervision or any
Subsidiary (other than sales of assets or inventory in the ordinary course
of business or permitted under the terms of this Agreement), (ii) sale of
10% or more of the outstanding shares of capital stock of Computervision
(including without limitation by way of a tender offer or an exchange
offer), or (iii) the acquisition by any person of beneficial ownership or a
right to acquire beneficial ownership of, or the formation of any "group"
(as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) that beneficially owns, or has the right to acquire
beneficial ownership of, 10% or more of the then outstanding shares of
capital stock of Computervision (except for acquisitions for passive
investment purposes only in circumstances where the person or group
qualifies for and files a Schedule 13G with respect thereto); or (y) any
public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
Computervision will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with
respect to any of the foregoing. Computervision will orally and in writing
in reasonable detail (i) notify Parametric as promptly as practicable (and
in any event within one business day) if any inquiry or proposal is made or
any information or access is requested in writing in connection with an
Acquisition Proposal or potential Acquisition Proposal and (ii) as promptly
as practicable (and in any event within one business day) notify Parametric
of the applicable terms and conditions of any such Acquisition Proposal
(including the identity of the person making such Acquisition Proposal) and
of any modification thereof or any proposed agreement. Computervision shall
promptly furnish to Parametric copies of any written communications or
documents received with respect to the foregoing and promptly and fully
inform Parametric in writing of the nature and status of any discussions or
negotiations regarding the foregoing. In addition, subject to the other
provisions of this Section 5.4, from and after the date of this Agreement
until the earlier of the Effective Time and termination of this Agreement
pursuant to its terms, Computervision and its Subsidiaries will not, and
will instruct their respective directors, officers, employees,
representatives, investment bankers, agents and affiliates not to, directly
or indirectly, make or authorize any public statement, recommendation or
solicitation in support of any Acquisition Proposal made by any person,
entity or group (other than Parametric); provided, however, that nothing
herein shall prohibit Computervision's Board of Directors from taking and
disclosing to Computervision's stockholders a position with respect to a
tender offer pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act.
(b) Notwithstanding the provisions of paragraph (a) above, prior to the
approval of this Agreement by the stockholders of Computervision at the
Computervision Stockholders' Meeting, Computervision may, to the extent the
Board of Directors of Computervision determines, in good faith, based upon
the advice of outside legal counsel, that the Board's fiduciary duties
under applicable law require it to do so, participate in discussions or
negotiations with, and, subject to the requirements of paragraph (c) below,
furnish information to any person, entity or group after such person,
entity or group has delivered to Computervision in writing an unsolicited
bona fide Acquisition Proposal that the Board of Directors of
Computervision in its good faith reasonable judgment determines, based on
the advice of its independent financial advisors, would result in a
transaction more favorable to the stockholders of Computervision from
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a financial point of view than the Merger and for which financing, to the
extent required, is then committed or which, in the good faith reasonable
judgment of the Board of Directors of Computervision (based upon the advice
of independent financial advisors), is reasonably capable of being financed
by such person, entity or group and which is likely to be consummated (a
"Computervision Superior Proposal"). In addition, notwithstanding the
provisions of paragraph (a) above, in connection with a possible
Acquisition Proposal, Computervision may refer any third party to this
Section 5.4 or make a copy of this Section 5.4 available to a third party.
In the event Computervision receives a Computervision Superior Proposal,
nothing contained in this Agreement (but subject to the terms hereof) will
prevent the Board of Directors of Computervision from approving such
Computervision Superior Proposal, or recommending such Computervision
Superior Proposal to Computervision's stockholders, if the Board determines
in good faith, based on the advice of its outside legal counsel, that such
action is required by its fiduciary duties under applicable law; in such
case, the Board of Directors of Computervision may withdraw, modify or
refrain from making its recommendation concerning the approval of this
Agreement; provided, however, that Computervision shall not accept or
recommend to its stockholders, or enter into any agreement concerning, a
Computervision Superior Proposal for a period of not less than 48 hours
after Parametric's receipt of a copy of such Computervision Superior
Proposal and any proposed agreement related thereto (or a description of
the applicable terms and conditions thereof, if not in writing).
(c) Notwithstanding anything to the contrary in this Section 5.4,
Computervision will not provide any non-public information to a third party
unless: (i) Computervision provides such non-public information pursuant to
a nondisclosure agreement with terms regarding the protection of
confidential information at least as restrictive as such terms in the
Confidentiality Agreement; and (ii) such non-public information has
previously been delivered or made available to Parametric.
5.5. PUBLIC DISCLOSURE. Parametric and Computervision will consult with each
other before issuing any press release or otherwise making any public
statement with respect to the Merger, this Agreement or an Acquisition
Proposal and will not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or any
listing agreement with a national securities exchange or the Nasdaq National
Market.
5.6. LEGAL REQUIREMENTS.
(a) Each of Parametric, Merger Sub and Computervision will take all
reasonable actions necessary or desirable to comply promptly with all legal
requirements that may be imposed on them with respect to the consummation
of the transactions contemplated by this Agreement (including furnishing
all information required in connection with approvals of or filings with
any Governmental Entity, and prompt resolution of any litigation prompted
hereby) and will promptly cooperate with and furnish information to any
party hereto necessary in connection with any such requirements imposed
upon any of them or their respective Subsidiaries in connection with the
consummation of the transactions contemplated by this Agreement. Parametric
will use its commercially reasonable efforts to take such steps as may be
necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable to the issuance of Parametric Common
Stock pursuant hereto. Computervision will use its commercially reasonable
efforts to assist Parametric as may be necessary to comply with the
securities and blue sky laws of all jurisdictions that are applicable in
connection with the issuance of Parametric Common Stock pursuant hereto.
(b) As soon as practicable, and in any event within five business days,
after execution of this Agreement, each of Parametric and Computervision
shall file with the Federal Trade Commission (the "FTC") and the Antitrust
Division of the Department of Justice (the "Antitrust Division") a
premerger notification form and any supplemental information (other than
privileged information) which may be requested in connection therewith
pursuant to the HSR Act, which fillings and supplemental information will
comply in all material respects with the requirements of the HSR Act. Each
of Parametric and Computervision shall cooperate fully with the other in
connection with the preparation of such filings and shall use best efforts
to respond to any requests for supplemental information from the FTC or the
Antitrust Division and to obtain early termination of any waiting period
applicable to the Merger under the HSR Act
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without any materially burdensome conditions or any divestiture. Filing
fees required to be paid in connection with the premerger notification
pursuant to the HSR Act shall be borne and paid by Parametric.
5.7. THIRD PARTY CONSENTS. As soon as practicable following the date hereof,
each of Computervision and Parametric will use its commercially reasonable
efforts to obtain all material consents, waivers and approvals under any of
its or its Subsidiaries' agreements, contracts, licenses or leases required to
be obtained in connection with the consummation of the transactions
contemplated hereby.
5.8. FIRPTA. At or prior to the Closing, Computervision, if requested by
Parametric, shall deliver to the IRS a notice that the Computervision Common
Stock is not a "U.S. Real Property Interest" as defined and in accordance with
the requirements of Treasury Regulation Section 1.897-2(h)(2).
5.9. NOTIFICATION OF CERTAIN MATTERS. Parametric and Merger Sub will give
prompt notice to Computervision, and Computervision will give prompt notice to
Parametric, of the occurrence, or failure to occur, of any event, which
occurrence or failure to occur would be reasonably likely to cause (a) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date of this Agreement
to the Effective Time, or (b) any material failure of Parametric and Merger
Sub or Computervision, as the case may be, or of any officer, director,
employee or agent thereof, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement.
Notwithstanding the above, the delivery of any notice pursuant to this section
will not limit or otherwise affect the remedies available hereunder to the
party receiving such notice or the conditions to such party's obligation to
consummate the Merger.
5.10. BEST EFFORTS AND FURTHER ASSURANCES. Subject to the respective rights
and obligations of Parametric and Computervision under this Agreement, each of
the parties to this Agreement will use its best efforts to effectuate the
Merger and the other transactions contemplated hereby and to fulfill and cause
to be fulfilled the conditions to closing under this Agreement. Each party
hereto, at the reasonable request of another party hereto, will execute and
deliver such other instruments and do and perform such other acts and things
as may be necessary or desirable for effecting completely the consummation of
the transactions contemplated hereby. Notwithstanding the foregoing, nothing
in this Agreement shall require Parametric to agree to any materially
burdensome condition or any divestiture in order to obtain any clearance for
the Merger under the HSR Act.
5.11. STOCK OPTIONS; EMPLOYEE STOCK PURCHASE PLAN.
(a) At the Effective Time, each outstanding option to purchase shares of
Computervision Common Stock (each a "Computervision Stock Option") under
the Computervision Stock Option Plans, whether or not exercisable, will be
assumed by Parametric. Each Computervision Stock Option so assumed by
Parametric under this Agreement will continue to have, and be subject to,
the same terms and conditions set forth in the applicable Computervision
Stock Option Plan immediately prior to the Effective Time (including,
without limitation, any repurchase rights), except that (i) each
Computervision Stock Option will be exercisable (or will become exercisable
in accordance with its terms) for that number of whole shares of Parametric
Common Stock equal to the product of the number of shares of Computervision
Common Stock that were issuable upon exercise of such Computervision Stock
Option immediately prior to the Effective Time multiplied by the Exchange
Ratio, rounded down to the nearest whole number of shares of Parametric
Common Stock, and (ii) the per share exercise price for the shares of
Parametric Common Stock issuable upon exercise of such assumed
Computervision Stock Option will be equal to the quotient determined by
dividing the exercise price per share of Computervision Common Stock at
which such Computervision Stock Option was exercisable immediately prior to
the Effective Time by the Exchange Ratio, rounded up to the nearest whole
cent. After the Effective Time, Parametric will issue to each holder of an
outstanding Computervision Stock Option a notice describing the foregoing
assumption of such Computervision Stock Option by Parametric.
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(b) It is the intention of the parties that Computervision Stock Options
assumed by Parametric qualify following the Effective Time as incentive
stock options as defined in Section 422 of the Code to the extent
Computervision Stock Options qualified as incentive stock options
immediately prior to the Effective Time; and that notwithstanding anything
contained in Section 1.6(c) or Section 5.11 hereof, or any other provision
of this Agreement, the exercise price, the number of shares purchasable and
the terms and conditions applicable to any Computervision Stock Options
shall be determined so as to comply with Sections 422 and 424 of the Code
and the regulations promulgated thereunder.
(c) The Board of Directors of Computervision shall, prior to or as of the
Effective Time, take appropriate action to approve the deemed cancellation
of the Computervision Stock Options for purposes of Section 16(b) of the
Exchange Act. The Board of Directors of Parametric shall, prior to or as of
the Effective Time, take appropriate action to approve the deemed grant of
options to purchase Parametric Common Stock under the Computervision Stock
Options (as converted pursuant to this Section 5.11) for purposes of
Section 16(b) of the Exchange Act.
(d) Parametric will reserve sufficient shares of Parametric Common Stock
for issuance under Section 5.11(a) and under Section 1.6(c) hereof.
(e) Computervision shall not commence any offering under its Employee
Stock Purchase Plans after the date hereof.
5.12. COMPUTERVISION EMPLOYEE PLANS.
(a) From and after the Effective Time, and subject to applicable law,
Parametric shall either continue Computervision's welfare benefit plans and
qualified pension plans as in effect at the Effective Time or provide to
employees who were employees of Computervision at the Effective Time
welfare benefits provided to similarly situated employees of Parametric.
From and after the Effective Time, employees who were employees of
Computervision at the Effective Time shall, to the extent permitted by the
terms of the plan and applicable law, receive credit for service with
Computervision (or other service credited under Computervision's plans) for
purposes of eligibility and vesting levels, but not for the accrual of
benefits, under the Parametric welfare benefit and 401(k) Plans, and all
preexisting conditions to which any such employees are subject shall be
waived, and credit toward deductibles shall be carried over, under
Parametric's welfare benefit plans to the extent permitted under the
applicable plans. Nothing in this Agreement shall be interpreted as
preventing Parametric from amending, modifying or terminating any
Computervision or Parametric Employee Plan in accordance with its terms.
(b) Parametric agrees that during the six-month period beginning as of
the Effective Time, it will provide severance pay benefits to
Computervision employees who continue in employment with Parametric or the
Surviving Corporation after the Effective Time which are the same as the
severance pay benefits which would have been provided to such employees
under the Computervision U.S. Separation Notification Policy, as effective
August 19, 1991 and as amended January 18, 1994 (the "Notification
Policy"), provided that Parametric may require as a condition of the
payment of such benefits the execution of a general release and such
nonsolicitation covenants as Parametric requires of its own employees.
5.13. PARAMETRIC FORM S-8. Parametric agrees to file a registration
statement on Form S-8 for the shares of Parametric Common Stock issuable with
respect to the assumed Computervision Stock Options no later than ten (10)
business days after the Closing Date and shall keep such registration
statement effective for so long as any such Options remain outstanding.
5.14. INDEMNIFICATION.
(a) From and after the Effective Time, the Surviving Corporation will
fulfill and honor in all respects the indemnification obligations of
Computervision pursuant to the provisions of the Certificate of
Incorporation and the Bylaws of Computervision as in effect immediately
prior to the Effective Time. The Certificate of Incorporation and Bylaws of
the Surviving Corporation will contain the provisions with respect to
indemnification and elimination of liability for monetary damages set forth
in the Certificate of
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Incorporation and Bylaws of Computervision, which provisions will not be
amended, repealed or otherwise modified in any manner that would adversely
affect the rights thereunder of individuals who, at the Effective Time,
were directors or officers of Computervision, unless such modification is
required by law.
(b) For a period of six (6) years after the Effective Time, Parametric
shall cause the Surviving Corporation to maintain (to the extent available
in the market) in effect a directors' and officers' liability insurance
policy covering those persons who are currently covered by Computervision's
directors' and officers' liability insurance policy (a copy of which has
been heretofore delivered to Parametric) with coverage in amount and scope
at least as favorable as Computervision's existing coverage (which coverage
may be an endorsement extending the period in which claims may be made
under such existing policy); provided that in no event shall Parametric or
the Surviving Corporation be required to expend under this Section 5.14(b)
more than an aggregate of 125% of the current annual premium expended by
Computervision to provide such coverage.
5.15. TAX-FREE REORGANIZATION. Parametric and Computervision will each use
its best efforts to cause the Merger to be treated as a reorganization within
the meaning of Section 368 of the Code. Parametric and Computervision will
each make available to the other party and their respective legal counsel
copies of all Returns requested by the other party. Parametric and
Computervision will make such responsible representations as requested by
legal counsel for the purpose of rendering the opinions contemplated by
Section 6.1(d).
5.16. NMS LISTING. Parametric shall use its best efforts to cause the shares
of Parametric Common Stock to be issued in the Merger to be approved for
quotation on the Nasdaq National Market, subject to official notice of
issuance if applicable prior to the Effective Time.
5.17. COMPUTERVISION AFFILIATE AGREEMENT. Set forth on Section 5.17 of the
Computervision Disclosure Schedule is a list of those persons who may be
deemed to be, in Computervision's reasonable judgment, affiliates of
Computervision within the meaning of Rule 145 promulgated under the Securities
Act (each a "Computervision Affiliate"). Computervision will provide
Parametric with such information and documents as Parametric reasonably
requests for purposes of reviewing such list. Computervision will use its best
efforts to deliver or cause to be delivered to Parametric promptly after the
date hereof from each Computervision Affiliate an executed affiliate agreement
in substantially the form attached hereto as Exhibit C (the "Computervision
Affiliate Agreement"), each of which will be in full force and effect as of
the Effective Time. Parametric will be entitled to place appropriate legends
on the certificates evidencing any Parametric Common Stock to be received by
an Computervision Affiliate pursuant to the terms of this Agreement, and to
issue appropriate stop transfer instructions to the transfer agent for the
Parametric Common Stock, consistent with the terms of the Computervision
Affiliate Agreement.
ARTICLE VI
Conditions to the Merger
6.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by the requisite vote under Delaware Law by the stockholders of
Computervision.
(b) Registration Statement Effective. The SEC shall have declared the
Registration Statement effective. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose, and no similar proceeding
in respect of the Proxy Statement, shall have been initiated or threatened
in writing by the SEC.
(c) No Order. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, injunction or other order (whether temporary,
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preliminary or permanent) which is in effect and which has the effect of
making the Merger illegal or otherwise prohibiting consummation of the
Merger.
(d) Tax Opinions. Parametric and Computervision shall each have receive
substantially identical written opinions from their counsel, Palmer & Dodge
LLP and Hale and Dorr LLP, respectively, in form and substance reasonably
satisfactory to them, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code; provided
that if the respective counsel to Parametric or Computervision does not
render such opinion, this condition shall nonetheless be deemed satisfied
with respect to such party if counsel to the other party renders such
opinion to such party.
(e) HSR and Similar Compliance. The waiting period applicable to the
consummation of Merger under the HSR Act shall have expired or been
terminated by the reviewing agency and any similar government requirements
have been satisfied or complied with.
6.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPUTERVISION. The obligations
of Computervision to consummate and effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, exclusively by
Computervision:
(a) Representations and Warranties. The representations and warranties of
Parametric and Merger Sub contained in this Agreement shall be true and
correct on and as of the Effective Time (without regard to any updates to
the Parametric Disclosure Schedules, unless otherwise agreed by
Computervision), except for changes contemplated by this Agreement and
except for those representations and warranties that address matters only
as of a particular date (which shall remain true and correct as of such
particular date), with the same force and effect as if made on and as of
the Effective Time, except, in all such cases, where the failure to be so
true and correct would not have a Parametric Material Adverse Effect
(provided that any determination with regard to a Material Adverse Effect
on Parametric shall be made without regard to any knowledge or materiality
qualification or particular dollar threshold in any particular
representation); and Computervision shall have received a certificate to
such effect signed on behalf of Parametric by the Chief Executive Officer
or Chief Operating Officer of Parametric;
(b) Agreements and Covenants. Parametric and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
them on or prior to the Effective Time, and Computervision shall have
received a certificate to such effect signed on behalf of Parametric by the
Chief Executive Officer or Chief Operating Officer of Parametric;
(c) Legal Opinion. Computervision shall have received a legal opinion
from Palmer & Dodge LLP, counsel to Parametric, in form reasonably
satisfactory to Hale & Dorr LLP, counsel to Computervision, as to the
matters set forth in Exhibit D hereto; and
(d) Nasdaq Listing. The shares of Parametric Common Stock issuable to
stockholders of Computervision pursuant to this Agreement and such other
shares required to be reserved for issuance in connection with the Merger
shall have been authorized for quotation on the Nasdaq National Market.
6.3. ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARAMETRIC AND MERGER
SUB. The obligations of Parametric and Merger Sub to consummate and effect the
Merger shall be subject to the satisfaction at or prior to the Effective Time
of each of the following conditions, any of which may be waived, in writing,
exclusively by Parametric:
(a) Representations and Warranties. The representations and warranties of
Computervision contained in this Agreement shall be true and correct on and
as of the Effective Time (without regard to any updates to the
Computervision Disclosure Schedules, unless otherwise agreed by
Parametric), except for changes contemplated by this Agreement and except
for those representations and warranties that address matters only as of a
particular date (which shall remain true and correct as of such particular
date), with the same force and effect as if made on and as of the Effective
Time, except, in all such cases, where the failure to be so true and
correct would not have a Computervision Material Adverse Effect (provided
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that any determination with regard to a Material Adverse Effect on
Computervision shall be made without regard to any knowledge or materiality
qualification or particular dollar threshold in any particular
representation); and Parametric and Merger Sub shall have received a
certificate to such effect signed on behalf of Computervision by the Chief
Executive Officer or Chief Operating Officer of Computervision;
(b) Agreements and Covenants. Computervision shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time, and the Parametric shall have received a
certificate to such effect signed on behalf of Computervision by the Chief
Executive Officer or Chief Operating Officer of Computervision;
(c) Legal Opinion. Parametric shall have received a legal opinion from
Hale and Dorr LLP, counsel to Computervision, in form reasonably
satisfactory to Palmer & Dodge LLP, counsel to Parametric, as to the
matters set forth in Exhibit E hereto.
(d) Voting Agreement. Each of the individuals and entities listed on
Section 5.17 of the Computervision Disclosure Schedule shall have entered
into a Voting Agreement with Parametric in the form attached hereto as
Exhibit B, and such agreements shall be in full force and effect;
(e) Accounting Treatment. Parametric shall have received a letter from
Coopers & Lybrand L.L.P. addressed to Parametric and a copy of a letter
from Arthur Andersen LLP addressed to Computervision to the effect that the
Merger will qualify for pooling of interests accounting treatment.
(f) Affiliate Agreements. Except as set forth thereon, each of the
individuals and entities listed on Section 5.17 of the Computervision
Disclosure Schedule shall have entered into an Affiliate Agreement, and
such Agreements are in full force and effect;
(g) Non-Competition Agreements. Each of the individuals listed on
Schedule 6.3(g) shall have entered into a Non-Competition Agreement with
Parametric or Merger Sub in the form attached hereto as Exhibit F, and such
agreements shall be in full force and effect.
(h) Customer Agreements. Each customer of Computervision or a Subsidiary
listed on Section 6.3(h) of the Computervision Disclosure Schedule shall
have granted any consent, approval, or waiver required under each agreement
between such customer and Computervision or such Subsidiary such that
neither the Merger nor the relationship between Parametric and the
Surviving Corporation after the Effective Time shall constitute a default
under, give such customer or any other party the right to terminate, or
result in any penalty under, any such customer agreement.
(i) Settlement Order. The Order of the Delaware Chancery Court approving
the settlement of the Dieter class action lawsuit shall be final and not
subject to appeal.
ARTICLE VII
Termination, Amendment and Waiver
7.1. TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time of the Merger, whether before or after approval of the Merger
by the stockholders of Computervision:
(a) by mutual written consent duly authorized by the Boards of Directors
of Parametric and Computervision;
(b) by either Computervision or Parametric if the Merger shall not have
been consummated by February 28, 1998 (which date may be extended at the
written request of either Computervision or Parametric to March 31, 1998 to
the extent necessary to satisfy the condition set forth in Section 6.1(b)
or Section 6.1(e)); provided, however, that the right to terminate this
Agreement under this Section 7.1(b) shall not be available to any party
whose action or failure to act has been a principal cause of or resulted in
the failure of the Merger to occur on or before such date if such action or
failure to act constitutes a breach of this Agreement;
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(c) by either Computervision or Parametric if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action (an "Order"), in any case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger, which order,
decree or ruling is final and nonappealable;
(d) by either Computervision or Parametric if the required approval of
the stockholders of Computervision contemplated by this Agreement shall not
have been obtained by reason of the failure to obtain the required vote
upon a vote taken at a meeting of stockholders duly convened therefor or at
any adjournment thereof (provided that the right to terminate this
Agreement under this Section 7.1(d) shall not be available to
Computervision where the failure to obtain stockholder approval of
Computervision shall have been caused by the action or failure to act of
Computervision in breach of this Agreement);
(e) by either Computervision or Parametric, if Computervision shall have
accepted a Computervision Superior Proposal or if the Computervision Board
of Directors recommends a Computervision Superior Proposal to the
stockholders of Computervision as permitted by Section 5.4(b);
(f) by Parametric, if the Board of Directors of Computervision shall have
(i) failed to convene the Computervision Stockholders' Meeting, as required
by Section 5.2, (ii) failed to recommend approval of this Agreement and the
Merger in the Proxy Statement or withheld, withdrawn or modified in a
manner adverse to Parametric such recommendation in favor the Merger, (iii)
after receipt of an Acquisition Proposal, if requested in writing by
Parametric, shall have failed to reconfirm its recommendation of approval
of this Agreement and the Merger within ten (10) business days following
receipt of such request, or (iv) recommended approval of or a tender of
shares of Computervision Common Stock in an Alternative Transaction (as
defined in Section 7.3(e));
(g) by Computervision, upon a breach of any representation, warranty,
covenant or agreement on the part of Parametric set forth in this
Agreement, if (i) as a result of such breach the conditions set forth in
Section 6.2(a) or Section 6.2(b) would not be satisfied as of the time of
such breach and (ii) such breach shall not have been cured by Parametric
within ten (10) business days following receipt by Parametric of written
notice of such breach from Computervision;
(h) by Parametric, upon a breach of any representation, warranty,
covenant or agreement on the part of Computervision set forth in this
Agreement, if (i) as a result of such breach the conditions set forth in
Section 6.3(a) or Section 6.3(b) would not be satisfied as of the time of
such breach and (ii) such breach shall not have been cured by
Computervision within ten (10) business days following receipt by
Computervision of written notice of such breach from Parametric;
(i) by Parametric, if there shall have occurred any event or condition
that constitutes a Computervision Material Adverse Effect since the date of
this Agreement which condition or event shall not have been ameliorated
such that it is no longer a Computervision Material Adverse Effect within
ten (10) business days following receipt by Computervision of notice from
Parametric;
(j) by Computervision, if there shall have occurred any event or
condition that constitutes a Parametric Material Adverse Effect since the
date of this Agreement, which condition or event shall not have been
ameliorated such that it is no longer a Parametric Material Adverse Effect
within ten (10) business days following receipt by Parametric of notice
from Computervision;
(k) by Parametric, in the event that it receives written notice from
either Coopers & Lybrand L.L.P., Arthur Andersen LLP, or the SEC that, in
the opinion of the entity giving such notice, the Merger will not qualify
for pooling of interests accounting treatment;
(l) by Parametric, in the event that (i) Computervision's software
maintenance revenue (which shall mean the aggregate of monthly license
fees, on- site support revenue and extended support service revenue) for
its fiscal quarter ending December 31, 1997, determined in accordance with
GAAP on a basis consistent with past practice, does not equal at least
$18.25 million or it appears reasonably likely that such revenue for that
period will not equal at least such amount or (ii) there are fewer than
55,000 CADDS and Medusa seats licensed to Computervision customers under
active maintenance in accordance with past practice; or
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(m) by Parametric, in the event that any one of the customers of
Computervision and its Subsidiaries listed in Item A of Section 7.1(m) of
the Computervision Disclosure Schedule or any three of the customers listed
in Item B of that Section cancels or terminates or gives notice of
cancellation or termination of its relationship or a material portion of
its relationship with Computervision or its Subsidiaries or there is any
material decrease or planned decrease in the usage or purchase of the
products or services of Computervision or any of its Subsidiaries by any
such customer from that reasonably expected by Computervision at the date
of this Agreement of such a nature that it demonstrates a material
deterioration in the ongoing relationship of Computervision and its
Subsidiaries with that customer.
7.2. NOTICE OF TERMINATION; EFFECT OF TERMINATION.
(a) Subject to Sections 7.2(b) and (c), any termination of this Agreement
under Section 7.1 above will be effective immediately upon the delivery of
written notice of the terminating party to the other parties hereto. In the
event of the termination of this Agreement as provided in Section 7.1, this
Agreement shall be of no further force or effect, except (i) as set forth
in this Section 7.2, Section 7.3 and Article 8 (Miscellaneous), each of
which shall survive the termination of this Agreement, and (ii) nothing
herein shall relieve any party from liability for any willful breach of
this Agreement. No termination of this Agreement shall affect the
obligations of the parties contained in the Confidentiality Agreement, all
of which obligations shall survive termination of this Agreement in
accordance with their terms.
(b) Any termination of this Agreement by Computervision pursuant to
Sections 7.1(d) or 7.1(e) hereof shall be of no force or effect unless
prior to such termination Computervision shall have paid to Parametric the
amount payable pursuant to Sections 7.3(b) and 7.3(c).
7.3. FEES AND EXPENSES.
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses,
whether or not the Merger is consummated; provided, however, that
Parametric and Computervision shall share equally all fees and expenses,
other than attorneys' and accountants fees and expenses, incurred in
relation to the printing and filing of the Proxy Statement (including any
preliminary materials related thereto) and the Registration Statement
(including financial statements and exhibits) and any amendments or
supplements thereto. Notwithstanding the foregoing, in order to induce
Parametric to enter into this Agreement and to reimburse Parametric for its
costs and expenses and loss of other opportunities related to negotiating
and entering into this Agreement and investigating the desirability of and
seeking to consummate the transactions contemplated by this Agreement,
Computervision agrees to make cash payments to Parametric in the
circumstances, and in the amounts, set forth in Sections 7.3(b) and (c).
(b) Computervision shall pay Parametric a termination fee of $800,000
upon the earlier to occur of the following events:
(i) the termination of this Agreement by Parametric pursuant to
Section 7.1(d) (other than in the circumstances set forth in Section
7.3(d)(ii)); or
(ii) the termination of this Agreement by Parametric pursuant to
Section 7.1(h) after a non-willful material breach by Computervision of
this Agreement.
(c) Computervision shall pay Parametric a termination fee of $3,000,000
in the event of a termination of this Agreement by Parametric pursuant to
Section 7.1(f) (other than in the circumstances set forth in Section
7.3(d)(iii)).
(d) Computervision shall pay Parametric a termination fee of $15,000,000
upon the earliest to occur of the following events:
(i) the termination of this Agreement pursuant to Section 7.1(e); or
(ii) the termination of this Agreement pursuant to Section 7.1(d) as
a result of the failure to receive the requisite vote for approval of
this Agreement and the Merger by the stockholders of Computervision at
the Computervision Stockholders' Meeting if, at the time of such
failure,
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(A) there shall have been announced or commenced an Alternative
Transaction (as defined in Section 7.3(f)) and Computervision shall
have either (x) executed an agreement to engage in the same or (y)
the Computervision Board of Directors shall not have recommended
against such Alternative Transaction affirmatively or, if the
Computervision Board of Directors has recommended against such
Alternative Transaction, the Computervision Board of Directors shall
have withdrawn such recommendation against such Alternative
Transaction or modified such recommendation in a manner adverse to
Parametric, or
(B) there shall have been announced an Alternative Transaction
with a Third Party (as defined in Section 7.3(f)) and (x)
Computervision shall have engaged in, or entered into an agreement
to engage in, an Alternative Transaction with such Third Party or
any affiliate thereof within twelve months after the date of the
Computervision Stockholders Meeting or (y) the Computervision Board
of Directors shall have recommended an Alternative Transaction (as
defined in Section 7.3(f)) with the Third Party proposing such
Alternative Transaction or any affiliate thereof within twelve
months after the date of the Computervision Stockholders Meeting; or
(iii) the termination of this Agreement pursuant to Section 7.1(f) if
before such termination or within twelve months thereafter
Computervision shall have entered into an agreement to engage in or
shall have engaged in an Alternative Transaction; or
(iv) the termination of this Agreement by Parametric pursuant to
Section 7.1(h) after a willful breach by Computervision of this
Agreement.
(e) The expenses and fees, if applicable, payable pursuant to Section
7.3(b), 7.3(c) or 7.3(d) shall be paid within one business day after the
first to occur of the events described in Section 7.3(b)(i) or (ii), 7.3(c)
or 7.3(d)(i), (ii), (iii) or (iv); provided that, (i) despite the foregoing
provision, if Computervision is obligated to pay a termination fee to
Parametric pursuant to Section 7.3(d)(ii)(B) or 7.3(d)(iii), then the fees
payable by Computervision to Parametric pursuant to Section 7.3(d)(ii) or
7.3(d)(iii) shall be paid within one business day after the occurrence of
the transaction or recommendation occurring or continuing after the
Computervision Stockholders Meeting which gives rise to the rights to
receive the termination fee and (ii) in no event shall Computervision be
required to pay any expenses or termination fees to Parametric if,
immediately prior to the termination of this Agreement, Parametric was in
breach of any of its material obligations under this Agreement.
(f) As used in this Agreement, "Alternative Transaction" means either (i)
a transaction pursuant to which any person (or group of persons) other than
Parametric or its Affiliates (a "Third Party"), acquires more than 10% of
the outstanding shares of Computervision Common Stock, pursuant to a tender
offer or exchange offer of otherwise, (ii) a merger or other business
combination involving Computervision pursuant to which any Third Party
acquires more than 10% of the outstanding equity securities of
Computervision or the entity surviving such merger or business combination,
(iii) any other transaction pursuant to which any Third Party acquires
control of assets (including for this purpose the outstanding equity
securities of Subsidiaries of Computervision, and the entity surviving any
merger or business combination including any of them) of Computervision
having a fair market value (as determined by the Board of Directors of
Computervision in good faith) equal to more than 10% of the fair market
value of all the assets of Computervision immediately prior to such
transaction ("Material Assets"), or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
7.4. AMENDMENT. Subject to applicable law, this Agreement may be amended by
the parties hereto at any time by execution of an instrument in writing signed
on behalf of each of the parties hereto.
7.5. EXTENSION; WAIVER. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties made
to such party contained
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herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE VIII
General Provisions
8.1. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Computervision, Parametric and Merger Sub contained in this
Agreement shall terminate at the Effective Time, and only the covenants that
by their terms survive the Effective Time shall survive the Effective Time.
8.2. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at
the following addresses or telecopy numbers (or at such other address or
telecopy numbers for a party as shall be specified by like notice):
(a) if to Parametric or Merger Sub, to:
Parametric Technology Corporation
128 Technology Drive
Waltham, MA 02154
Attention: Chairman and Chief Executive Officer
Telephone: (617) 398-5000
Facsimile: (617) 398-5662
with a copy at the same address to the attention of Corporate Counsel,
and with a copy to:
Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108
Attention: Stanley Keller
Telephone: (617) 573-0100
Facsimile: (617) 227-4420
(b) if to Computervision, to:
Computervision Corporation
100 Crosby Drive
Bedford, MA 01730-1480
Attention: President
Telephone: (617) 275-1800
Facsimile: (800) 743-1755
with a copy at the same address to the attention of the General
Counsel, and with a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention: Paul P. Brountas
Telephone: (617) 526-6000
facsimile: (617) 526-5000
8.3. INTERPRETATION; KNOWLEDGE. When a reference is made in this Agreement
to Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. The words "include,"
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"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. When
reference is made herein to "the business of" an entity, such reference shall
be deemed to include the business of all direct and indirect subsidiaries of
such entity. Reference to the Subsidiaries of an entity shall be deemed to
include all direct and indirect subsidiaries of such entity. References to the
"knowledge of Computervision," or any similar expression shall mean the actual
knowledge of any executive officer of Computervision.
8.4. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5. ENTIRE AGREEMENT. This Agreement and the documents and instruments and
other agreements among the parties hereto as contemplated by or referred to
herein, including the Computervision Schedules and the Parametric Schedules
(a) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, it being understood that the Confidentiality Agreement shall continue
in full force and effect until the Closing and shall survive any termination
of this Agreement; and (b) are not intended to confer upon any other person
any rights or remedies hereunder, except as set forth herein.
8.6. SEVERABILITY. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
8.7. OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions hereof
in any court of the United States or any state having jurisdiction, this being
in addition to any other remedy to which they are entitled at law or in
equity.
8.8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of law thereof, except that the Delaware General Corporation Law shall, to the
extent applicable, govern the procedures to be taken hereunder to effect the
Merger.
8.9. RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule
of construction providing that ambiguities in an agreement or other document
will be construed against the party drafting such agreement or document.
8.10. ASSIGNMENT. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties.
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IN WITNESS WHEREOF, Parametric, Merger Sub, and Computervision have caused
this Agreement to be signed by themselves or their duly authorized respective
officers, all as of the date first written above.
PARAMETRIC TECHNOLOGY CORPORATION
/s/ Edwin J. Gillis
By:__________________________________
Edwin J. Gillis
COMPUTERVISION CORPORATION
/s/ Anthony N. Fiore, Jr.
By:__________________________________
Anthony N. Fiore, Jr.
PTC ACQUISITION CORPORATION
/s/ Edwin J. Gillis
By:__________________________________
Edwin J. Gillis
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EXHIBIT A
STOCK OPTION AGREEMENT
[SEE APPENDIX B]
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EXHIBIT B
STOCKHOLDER VOTING AGREEMENT
This Stockholder Voting Agreement (the "Agreement") dated as of November 3,
1997 is by and between Parametric Technology Corporation ("Parametric"), a
Massachusetts corporation, and the undersigned stockholder ("Stockholder") of
Computervision Corporation (the "Company"), a Delaware corporation.
R e c i t a l s
A. Concurrently with the execution of this Agreement, Parametric, the
Company and PTC Acquisition Corporation ("Merger Sub"), a Delaware corporation
and a wholly owned subsidiary of the Company, have entered into an Agreement
and Plan of Reorganization (the "Acquisition Agreement") which provides for a
merger of Merger Sub with and into the Company (the "Merger"). Pursuant to the
Merger, shares of Common Stock of the Company will be converted into the right
to receive shares of Common Stock of Parametric on the basis set forth in the
Acquisition Agreement.
B. The Stockholder is the record holder and beneficial owner (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of such number of shares of the outstanding capital stock of
the Company as is indicated on the final page of this Agreement (the
"Shares").
C. Parametric desires the Stockholder to agree, and the Stockholder is
willing to agree, (i) not to transfer or otherwise dispose of any of the
Shares, or any other shares of capital stock of the Company acquired hereafter
and prior to the Expiration Date (as defined in Section 1 below) (together
with the Shares, the "Subject Shares"), except as otherwise permitted hereby,
and (ii) to vote the Subject Shares so as to facilitate consummation of the
Merger.
NOW, THEREFORE, intending to be legally bound, the parties agree as follows:
1. Agreement to Retain Shares. Stockholder agrees not to transfer (except as
may be specifically required by court order), sell, exchange, pledge or
otherwise dispose of or encumber any of the Subject Shares, or to make any
offer or agreement relating thereto, at any time prior to the Expiration Date.
As used herein, the term "Expiration Date" shall mean the earlier to occur of
such date and time as (i) the Merger shall become effective in accordance with
the provisions of the Acquisition Agreement and (ii) the Acquisition Agreement
shall be terminated pursuant to Section 7.1 thereof.
2. Agreement to Vote Subject Shares. At every meeting of the stockholders of
the Company called with respect to any of the following, and at every
adjournment thereof, and on every action or approval by written consent of the
stockholders of the Company with respect to any of the following, Stockholder
shall vote the Subject Shares: (i) in favor of approval of the Acquisition
Agreement and the Merger and any matter that could reasonably be expected to
facilitate the Merger; and (ii) against approval of any proposal made in
opposition to or competition with consummation of the Merger and against any
merger, consolidation, sale of assets, reorganization or recapitalization,
with any party other than with Parametric and its affiliates, and against any
liquidation or winding up of the Company (each of the foregoing is hereinafter
referred to as an "Opposing Proposal"). Stockholder agrees not to take any
actions contrary to Stockholder's obligations under this Agreement.
3. Irrevocable Proxy. Concurrently with the execution of this Agreement,
Stockholder agrees to deliver to Parametric a proxy in the form attached
hereto as Exhibit I (the "Proxy"), which shall be irrevocable to the extent
provided in Section 212 of the Delaware General Corporation Law, with respect
to the total number of shares of capital stock of the Company beneficially
owned (as such term is defined in Rule 13d-3 under the Exchange Act) by
Stockholder set forth therein.
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4. Representations, Warranties and Covenants of the Stockholder. Stockholder
hereby represents, warrants and covenants to Parametric as follows:
4.1 Ownership of Shares. Stockholder (i) is and will be at the time of
the action of the stockholders of the Company on the Merger the beneficial
owner of the Shares and the Subject Shares, which at the date hereof and at
all times up until the Expiration Date will be free and clear of any liens,
claims, options, charges or other encumbrances; (ii) does not beneficially
own any shares of capital stock of the Company other than the Shares
(excluding shares as to which Stockholder currently disclaims beneficial
ownership in accordance with applicable law); and (iii) has full power and
authority to make, enter into and carry out the terms of this Agreement and
the Proxy.
4.2 No Proxy Solicitations. Stockholder will not, and will not permit any
entity under Stockholder's control to: (i) solicit proxies or become a
"participant" in a "solicitation" (as such terms are defined in Regulation
14A under the Exchange Act) with respect to an Opposing Proposal or
otherwise encourage or assist any party in taking or planning any action
that would compete with, restrain or otherwise serve to interfere with or
inhibit the timely consummation of the Merger in accordance with the terms
of the Acquisition Agreement; (ii) initiate a stockholders' vote or action
by consent of stockholders of the Company with respect to an Opposing
Proposal; or (iii) become a member of a "group" (as such term is used in
Section 13(d) of the Exchange Act) with respect to any voting securities of
the Company that takes any action in support of an Opposing Proposal.
5. No Limitation on Discretion as Director. This Agreement is intended
solely to apply to the exercise by Stockholder in his or her individual
capacity of rights attaching to ownership of the Subject Shares, and nothing
herein shall be deemed to apply to, or to limit in any manner the discretion
of Stockholder with respect to, any action which may be taken or omitted by
him or her acting in his or her fiduciary capacity as a director of the
Company.
6. Additional Documents. Stockholder hereby covenants and agrees to execute
and deliver any additional documents necessary or desirable, in the reasonable
opinion of Parametric or Stockholder, as the case may be, to carry out the
intent of this Agreement.
7. Consent and Waiver. Stockholder hereby gives any consents or waivers that
are reasonably required for the consummation of the Merger under the terms of
any agreements to which Stockholder is a party or pursuant to any rights
Stockholder may have.
8. Termination. This Agreement shall terminate and shall have no further
force or effect as of the Expiration Date.
9. Miscellaneous.
9.1 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, then the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
9.2 Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement
nor any of the rights, interests or obligations of the parties hereto may
be assigned by either party without prior written consent of the other.
9.3 Amendments and Modification. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of
a written agreement executed by the parties hereto.
9.4 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that Parametric will be irreparably harmed and that there will
be no adequate remedy at law for a violation of any of the covenants or
agreements of Stockholder set forth herein. Therefore, it is agreed that,
in addition to any other remedies
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that may be available to Parametric upon any such violation, Parametric
shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to
Parametric at law or in equity.
9.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if delivered in
person, by cable, telegram or facsimile, or sent by mail (registered or
certified mail, postage prepaid, return receipt requested) or overnight
courier (prepaid) to the respective parties as follows:
(a) If to Parametric, to:
Parametric Technology Corporation
128 Technology Drive
Waltham, Massachusetts 02154
Attention: Chairman and Chief Executive Officer
Telephone No: (617) 398-5000
Telecopy No.: (617) 398-5662
with a copy at the same address to the attention of Corporate Counsel,
and
with a copy to: Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108
Attn: Stanley Keller
Telephone No.: (617) 573-0100
Telecopy No.: (617) 227-4420
(b) if to the Stockholder:
To the address for notice set forth on the last page
hereof.
with a copy to: Hale and Dorr
60 State Street
Boston, Massachusetts 02109
Attn: Paul P. Brountas, Esq.
Telephone No.: (617) 526-6000
Telecopy No.: (617) 526-5000
or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
9.6 Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of Delaware.
9.7 Entire Agreement. This Agreement contains the entire understanding of
the parties in respect of the subject matter hereof, and supersedes all
prior negotiations and understandings between the parties with respect to
such subject matter.
9.8 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be an original, but all of which together shall
constitute one and the same agreement.
9.9 Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction of interpretation of this
Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Stockholder Voting
Agreement to be duly executed on the date and year first above written.
PARAMETRIC TECHNOLOGY CORPORATION
By: _________________________________
Title: ______________________________
STOCKHOLDER:
By: _________________________________
Stockholder's Address for Notice:
_____________________________________
_____________________________________
_____________________________________
Shares beneficially owned:
shares of Common Stock
Shares subject to outstanding
options:
shares of Common Stock
[Signature Page to Stockholder Voting Agreement]
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EXHIBIT I
IRREVOCABLE PROXY
The undersigned stockholder of Computervision Corporation (the "Company"), a
Delaware corporation, hereby irrevocably (to the extent provided in Section
212 of the Delaware General Corporation Law) appoints Steven C. Walske and C.
Richard Harrison, and each of them individually, as the sole and exclusive
attorneys and proxies of the undersigned, with full power of substitution and
resubstitution, to the full extent of the undersigned's right, subject to the
following paragraphs, with respect to the shares of capital stock of the
Company beneficially owned by the undersigned, which shares are listed on the
final page of this Proxy (the "Shares"), and any and all other shares or
securities issued or issuable in respect thereof on or after the date hereof,
until such time as the Agreement and Plan of Reorganization dated as of
November 3, 1997 (the "Acquisition Agreement") among Parametric Technology
Corporation ("Parametric"), a Massachusetts corporation, the Company and PTC
Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary
of Parametric ("Merger Sub"), shall be terminated in accordance with its terms
or the Merger (as defined in the Acquisition Agreement) is effective. Upon the
execution hereof, all prior proxies given by the undersigned with respect to
the Shares and any and all other shares or securities issued or issuable in
respect thereof on or after the date hereof are hereby revoked and no
subsequent proxies will be given.
This proxy is irrevocable (to the extent provided in Section 212 of the
Delaware General Corporation Law), is granted pursuant to the Stockholder
Voting Agreement dated as of November 3, 1997 between Parametric and the
undersigned stockholder (the "Voting Agreement"), and is granted in
consideration of Parametric entering into the Acquisition Agreement. The
attorneys and proxies named above will be empowered at any time prior to
termination of the Acquisition Agreement to exercise all voting rights
(including, without limitation, the power to execute and deliver written
consents with respect to the Shares) of the undersigned, solely to the extent
set forth as follows: at every annual, special or adjourned meeting of
stockholders of the Company, and in every written consent in lieu of such a
meeting, or otherwise, in favor of approval of the Acquisition Agreement and
the Merger and any matter that could reasonably be expected to facilitate the
Merger, and against any proposal made in opposition to or competition with the
consummation of the Merger and against any merger, consolidation, sale of
assets, reorganization or recapitalization of the Company with any party other
than Parametric and its affiliates and against any liquidation or winding up
of the Company.
The attorneys and proxies named above may only exercise this proxy to vote
the Shares subject hereto at any time prior to termination of the Acquisition
Agreement at every annual, special or adjourned meeting of the stockholders of
the Company and in every written consent in lieu of such meeting, in favor of
approval of the Acquisition Agreement and the Merger and any matter that could
reasonably be expected to facilitate the Merger, and against any merger,
consolidation, sale of assets, reorganization or recapitalization of the
Company with any party other than Parametric and its affiliates, and against
any liquidation or winding up of the Company, and may not exercise this proxy
on any other matter. The undersigned stockholder may vote the Shares on all
other matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
This Proxy is irrevocable.
Dated: , 1997 Signature of Stockholder:
_____________________________________
Print Name of Stockholder:
_____________________________________
Shares beneficially owned:
shares of Common Stock
A-43
<PAGE>
EXHIBIT C
AFFILIATE AGREEMENT
This Affiliate Agreement (the "Agreement") dated as of November 3, 1997 is
between PARAMETRIC TECHNOLOGY CORPORATION ("Parametric"), a Massachusetts
corporation, and the undersigned affiliate ("Affiliate") of COMPUTERVISION
CORPORATION (the "Company"), a Delaware corporation.
Recitals
A. Parametric, the Company and PTC Acquisition Corporation ("Merger Sub"), a
Delaware corporation and wholly-owned subsidiary of Parametric, have entered
into an Agreement and Plan of Reorganization dated as of November 3, 1997 (the
"Acquisition Agreement") pursuant to which Merger Sub will merge with and into
the Company ("Merger"), and the Company will become a subsidiary of
Parametric. Pursuant to the Merger, shares of Common Stock of the Company (the
"Company Shares"), including any shares owned by Affiliate, will be converted
into the right to receive shares of Common Stock of Parametric (the
"Parametric Shares").
B. Parametric and the Company intend that the Merger constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986 as amended (the "Code"). It is a condition to effectiveness of
the Merger under the Acquisition Agreement that legal counsel for each of
Parametric and the Company will have delivered written opinions to such
effect, and in connection therewith such legal counsel require certain
representations of Affiliate.
C. Affiliate has been advised that he may be deemed to be an "affiliate" of
the Company, as the term "affiliate" is used for purposes of paragraphs (c)
and (d) of Rule 145 of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), although nothing contained herein shall be construed as an admission by
Affiliate that he is in fact an affiliate of Company;
D. It is a condition to Parametric's obligations under the Acquisition
Agreement that the Merger qualify for pooling of interests accounting
treatment, and to achieve such treatment certain representations and
agreements of Affiliate are required; and
E. The execution and delivery of this Agreement by Affiliate is a material
inducement to Parametric to enter into the Acquisition Agreement.
NOW, THEREFORE, intending to be legally bound, the parties hereby agree as
follows:
1. Securities Act Compliance.
(a) Affiliate has been advised that if he is an "affiliate" of the
Company at the time the Acquisition Agreement was submitted for approval of
the shareholders of the Company and a distribution by the undersigned of
the Parametric Shares has not been registered under the Securities Act,
Rule 145 under the Securities Act will restrict his sales of Parametric
Shares received in the Merger. Affiliate agrees that he will not sell or
otherwise dispose of any Parametric Shares except pursuant to Rule 145(d)
under the Securities Act, an effective registration statement under the
Securities Act or an exemption from the registration requirements under the
Securities Act, provided that Affiliate may make bona fide gifts or
distributions (including, if Affiliate is a partnership, to its partners)
without consideration or transfers by operation of law, so long as any
donee or transferee agrees not to sell, transfer or otherwise dispose of
Parametric Shares except as provided herein.
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<PAGE>
(b) Affiliate acknowledges that Parametric is under no obligation to
register the sale, transfer or other disposition by Affiliate of the
Parametric Shares or to take any action necessary in order to make an
exemption from registration available.
2. Pooling of Interests
(a) Affiliate agrees that he will not engage, and represents that he has
not engaged, in any sale, exchange, transfer, distribution, pledge,
disposition or any other transaction, including a transaction that reduces
the risk of loss by short sale, hedging or otherwise, that would result in
a reduction in the risk of ownership (any such transaction, a "Sale") with
respect to any of the Company Shares owned by Affiliate during the 30 days
prior to the effective date of the Merger.
(b) Affiliate agrees that he will not engage in any Sale of the
Parametric Shares until after such time as financial results covering at
least 30 days of combined operations of Parametric and the Company after
the effective date of the Merger have been published by Parametric, in the
form of a quarterly earnings report, a registration statement filed with
the Commission, a report on Form 10-K, 10-Q or 8-K or any other public
filing or announcement.
3. Tax Effects of the Merger. Affiliate represents, warrants and covenants
as follows:
i. Affiliate is the beneficial owner of Company Shares (including shares
issuable upon exercise of stock options) and did not acquire any such
shares in contemplation of the Merger;
ii. Affiliate has not engaged in a Sale of any Company Shares in
contemplation of the Merger, and Affiliate has no current plan or intention
(a "Plan") to engage in a Sale of any Company Shares in contemplation of
(and not in) the Merger;
iii. Affiliate has no Plan to engage in a Sale of any of the Parametric
Shares (on a fully diluted basis, giving effect to all options) to be
received by Affiliate in the Merger;
iv. Affiliate has not entered into any discussions or negotiations with
regard to the possible sale of any Company Shares or any Parametric Shares
to be received by Affiliate in the Merger;
v. If Affiliate is a partnership, then the term "Sale" as used in
paragraph iii above shall not be deemed to include any distribution to its
partners, provided that if any recipient of any such distribution will
receive Parametric Shares having a fair market value of 1% or more of the
fair market value of all the Company Shares presently outstanding,
Affiliate is not aware of any Plan on the part of such recipient to engage
in a Sale of any of the Parametric Shares (on a fully diluted basis, giving
effect to all options) to be received by such recipient in such
distribution;
vi. Affiliate is not aware of, or participating in, any Plan on the part
of the stockholders of the Company to engage in one or more Sales of the
Parametric Shares to be received in the Merger such that the aggregate fair
market value, as of the Effective Time of the Merger, of the Parametric
Shares subject to such Sales would exceed 50% of the aggregate fair market
value of all Company Shares outstanding immediately prior to the Merger;
and
vii. Affiliate does not intend to take a position on any tax return that
is inconsistent with the treatment of the Merger as a reorganization within
the meaning of Section 368(a) of the Code.
4. Legends.
(a) Affiliate understands that there will be placed on the certificates
representing Parametric Shares to be received by Affiliate in the Merger,
and, except as provided in paragraph (b) below, any certificates delivered
in substitution or exchange therefor, a legend stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER CONTAINED IN AN AGREEMENT WITH THE ISSUER DATED NOVEMBER 3, 1997,
INCLUDING WITHOUT LIMITATION A RESTRICTION THAT THESE SHARES MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH RULE 145(D) UNDER THE SECURITIES ACT OF 1933
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<PAGE>
(THE "ACT") OR AN EFFECTIVE REGISTRATION STATEMENT OR EXEMPTION FROM
REGISTRATION UNDER THE ACT. THE ISSUER WILL FURNISH A COPY OF SUCH
AGREEMENT TO THE HOLDER UPON WRITTEN REQUEST AND WITHOUT CHARGE.
(b) The legend referred to in paragraph (a) above shall be terminated or
removed if Affiliate shall have delivered to Parametric a copy of a letter
from the staff of the SEC, an opinion of counsel in form and substance
satisfactory to Parametric or other evidence satisfactory to Parametric, to
the effect that such instructions and legend are not required for the
purposes of the Act and, in the case of Section 3 above, counsel for
Parametric shall have determined that such instructions are no longer
necessary for purposes of such paragraph.
5. Miscellaneous.
(a) For the convenience of the parties hereto, this Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
document.
(b) This Agreement shall be enforceable by, and shall inure to the
benefit of and be binding upon, the parties hereto and their respective
successors and assigns. As used herein, the term "successors and assigns"
shall mean, where the context so permits, heirs, executors, administrators,
trustees and successor trustees, and personal and other representatives.
(c) This Agreement shall be governed by and construed, interpreted and
enforced in accordance with the internal laws of the Commonwealth of
Massachusetts.
(d) If a court of competent jurisdiction determines that any provision of
this Agreement is not enforceable or enforceable only if limited in time or
scope, this Agreement shall continue in full force and effect with such
provision stricken or so limited.
(e) Affiliate has carefully read this Agreement, including the
limitations upon the disposition of the Parametric Shares received by
Affiliate contained herein, and has obtained such advice regarding
execution of this Agreement as he deemed necessary.
(f) This Agreement shall not be modified or amended, or any right
hereunder waived or any obligation excused, except by a written agreement
signed by both parties.
(g) The acknowledgements and representations set forth herein shall be
accurate and complete at all times from the date hereof through the date on
which the Merger is consummated, unless Affiliate notifies Parametric and
the Company to the contrary, in writing, prior to such date.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth on the first page of this Agreement.
PARAMETRIC TECHNOLOGY CORPORATION
By: _________________________________
Title: ______________________________
AFFILIATE
By: _________________________________
Name of Affiliate: __________________
Name of Signatory (if different from
name of Affiliate): ________________
Title of Signatory (if applicable): _
Company shares beneficially owned:
shares of Common Stock
Company shares subject to
outstanding options:
shares of Common Stock
[Signature Page to Affiliate Agreement]
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<PAGE>
EXHIBIT D
MATTERS TO BE COVERED BY OPINION OF PALMER & DODGE LLP
1. The Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts, with the
corporate power and authority to enter into and perform the Acquisition
Agreement.
2. Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with the corporate power and
authority to enter into and perform the Acquisition Agreement.
3. The execution and delivery of the Acquisition Agreement and the
consummation of the Merger have been duly authorized by all necessary
corporate action on the part of the Buyer and Merger Sub. The Buyer and Merger
Sub have duly executed and delivered the Acquisition Agreement, and the
Acquisition Agreement constitutes the valid and binding obligation of the
Buyer and Merger Sub, enforceable against each in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or similar laws of general applicability relating to or affecting
creditors' rights and to general principles of equity.
4. The shares of Buyer Common Stock to be issued in the Merger have been
duly authorized by all necessary corporate action on the part of the Buyer
and, when issued in the Merger pursuant to the terms thereof, such shares will
be validly issued, fully paid and nonassessable. Such shares of Buyer Common
Stock have been authorized for quotation on the Nasdaq National Market.
5. Except for (a) the filing of the Certificate of Merger with the Secretary
of State of Delaware and (b) such filings, notices, permits, consents and
approvals as have been made, given or obtained, the execution, delivery and
performance of the Acquisition Agreement by the Buyer and consummation of the
Merger will not: (i) violate any provision of the Articles of Organization or
Bylaws of the Buyer or the Certificate of Incorporation or Bylaws of Merger
Sub, (ii) violate any law or regulation or any order, judgment or decree that,
to our knowledge, is applicable to Buyer or any of its Subsidiaries, (iii)
result in any breach of or a default (or an event that with notice or lapse of
time or both would become a default) under, or impair the rights of the Buyer
or any of its Subsidiaries or alter the rights or obligations of any third
party under, or result in the creation of any lien or encumbrance on the
properties or assets of the Buyer or any of its Subsidiaries, or give to
others any rights of termination, amendment, acceleration or cancellation of,
under any instrument, contract or other agreement included as an exhibit to
Buyer's Annual Report on Form 10-K for the year ended September 30, 1996, or
to any report filed with the SEC subsequent thereto, to which the Buyer or any
of its Subsidiaries is a party or to which the Buyer or any of its
Subsidiaries or its or any of their respective properties is bound or
affected, or (iv) require any consent, approval, order or authorization of, or
any registration, declaration or filing with any Governmental Entity,
excluding from the foregoing clauses (ii), (iii) and (iv) any exceptions to
the foregoing that, in the aggregate, would not have a Parametric Material
Adverse Effect or a material adverse effect on the ability of the Buyer or
Merger Sub to consummate the Merger.
6. To our knowledge, and except as disclosed on the Parametric Disclosure
Schedule, there is no action, suit, proceeding, claim, arbitration or
investigation pending or threatened against the Buyer or any of its
Subsidiaries that would have a Parametric Material Adverse Effect or that
challenges or seeks to prevent, enjoin, alter or delay the Merger.
7. Upon the filing of the Certificate of Merger, the Merger will become
effective in accordance with the Delaware General Corporation Law.
8. The Registration Statement referred to in Section 5.1 of the Acquisition
Agreement has become effective under the Securities Act and, to our knowledge,
no stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or are
pending or threatened by the SEC.
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<PAGE>
EXHIBIT E
MATTERS TO BE COVERED BY OPINION OF HALE AND DORR LLP
1. The Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with the requisite corporate
power and authority to enter into and perform the Acquisition Agreement.
2. The Seller is authorized to issue 100,000,000 shares of Common Stock, of
which shares are issued and outstanding, and 5,000,000 shares of Preferred
Stock, none of which are issued or outstanding. All of the issued and
outstanding shares of the Seller's capital stock are duly authorized and are
validly issued, fully paid, nonassessable and free of preemptive rights under
any statute, the Certificate of Incorporation or the By-laws.
3. The execution and delivery of the Acquisition Agreement and the
consummation of the Merger have been duly authorized by all necessary
corporate action on the part of the Seller. The Seller has duly executed and
delivered the Acquisition Agreement, and the Acquisition Agreement constitutes
the valid and binding obligation of the Seller, enforceable against the Seller
in accordance with its terms.
4. Except for (a) the filing of the Certificate of Merger with the Secretary
of State of Delaware and (b) such filings, notices, permits, consents and
approvals as have been made, given or obtained, the execution, delivery and
performance of the Acquisition Agreement by the Seller and consummation of the
Merger will not: (i) violate any provision of the Certificate of Incorporation
or Bylaws of the Seller, (ii) violate any law or regulation or any order,
judgment or decree that, to our knowledge, is applicable to the Seller or any
of its Subsidiaries, (iii) result in any breach of or a default (or an event
that with notice or lapse of time or both would become a default) under, or
impair the rights of the Seller or any of its Subsidiaries or alter the rights
or obligations of any third party under, result in the creation of any lien or
encumbrance on the properties or assets of the Seller or any of its
Subsidiaries, or give to others any rights of termination, amendment,
acceleration or cancellation of, any instrument, contract or other agreement
included as an exhibit to Seller's Annual Report on Form 10-K for the year
ended December 31, 1996, or to any report filed with the SEC subsequent
thereto, to which the Seller or any of its Subsidiaries is a party or to which
the Seller or any of its Subsidiaries or its or any of their respective
properties is bound or affected, (iv) require any consent, approval, order or
authorization of, or any registration, declaration or filing with any
Governmental Entity, excluding from the foregoing clauses (ii), (iii) and (iv)
any exceptions to the foregoing that, in the aggregate, would not have a
Computervision Material Adverse Effect, or a material adverse effect on the
ability of the Seller to consummate the Merger.
5. To our knowledge, and except as disclosed on the Computervision
Disclosure Schedule, there is no action, suit, proceeding, claim, arbitration
or investigation pending or threatened against the Seller or any of its
Subsidiaries that would have a Computervision Material Adverse Effect or that
challenges or seeks to prevent, enjoin, alter or delay the Merger.
6. Upon the filing of the Certificate of Merger, the Merger will become
effective and will be binding upon all holders of shares of Seller Stock in
accordance with the Delaware General Corporation Statute. No stockholder of
Computervision is entitled to dissenters' appraisal rights under the Delaware
General Corporation Statute in respect of the Merger.
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EXHIBIT F
NON-COMPETITION AGREEMENT
This Agreement dated as of , 199 is entered into by and between
PARAMETRIC TECHNOLOGY CORPORATION ("Parametric"), a Massachusetts corporation,
COMPUTERVISION CORPORATION ("Computervision"), a Delaware corporation, and
("Employee").
R e c i t a l s
A. Pursuant to the Plan and Agreement of Reorganization (the "Acquisition
Agreement") dated as of November 3, 1997, by and between Parametric,
Computervision and PTC Acquisition Corporation ("Merger Sub"), Merger Sub will
merge with and into Computervision (the "Merger"). Pursuant to the Merger,
shares of Common Stock of Computervision will be converted into the right to
receive shares of Common Stock of Parametric on the basis described in the
Acquisition Agreement.
B. Employee has served as of Computervision and has gained substantial
knowledge and expertise in connection with Computervision's products,
organization and customers;
C. Parametric and Employee acknowledge that it would be seriously
detrimental to Parametric if Employee would compete with Parametric or
Computervision following consummation of the Merger;
D. Computervision is engaged in the development, production, distribution
and selling of computer-aided design software (the "Business");
E. It is a condition to the obligation of Parametric to consummate the
Merger that Employee enter into this Agreement; and
F. As inducement to Parametric to consummate the Merger, and in
consideration of the issuance of shares of Common Stock of Parametric to
stockholders of Computervision in the Merger as provided in the Acquisition
Agreement, Employee desires to agree with Parametric as further provided
herein.
NOW, THEREFORE, intending to be legally bound hereby, the parties hereto
agree as follows:
1. Non-Competition.
(a) The parties understand and agree that this Agreement is entered into
in connection with the Merger. The parties further understand and agree
that Employee is a key employee of Computervision, and that the Merger is
contingent upon Employee entering into this Agreement, including this non-
competition provision. In addition, the parties understand that prior to
the Merger, Computervision was engaged in the Business in each of the fifty
states of the United States and Canada, Europe, Japan and other Pacific Rim
countries. The parties further understand that Parametric is currently
engaged in business in each of the fifty states of the United States and
Canada, Europe, Japan and other Pacific Rim countries. (The United States
and the regions set forth above shall hereafter be referred to as the
"Geographic Scope of the Business.") Computervision and Parametric have
informed Employee that following the Merger they will continue conducting
such business in all parts of the Geographic Scope of the Business. The
parties expressly acknowledge and agree that the non-competition provisions
contained in this Agreement are permissible and enforceable pursuant to the
provisions of applicable law.
(b) During the period commencing on the effective date of the Merger (the
"Effective Date") and ending one year after the Effective Date, Employee
shall not, directly or indirectly, either as an individual or as an
employee, agent, consultant, advisor, independent contractor, general
partner, officer, director,
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shareholder, investor, lender, or in any other capacity whatsoever, of any
person, firm, corporation, partnership or other entity or in any other
capacity:
(i) participate or engage in the design, development, manufacture,
production, marketing, sale or servicing of any product, or the
provision of any service, that competes with the "Enterprise Products
or Services" (for purposes hereof, "Enterprise Products or Services"
shall be defined as the products produced, marketed, sold, serviced or
under development, or services provided, either (A) by Computervision
as part of the Business at any time prior to the Effective Date, or (B)
by Computervision or Parametric, related to the Business at any time
from the Effective Date through the date when Employee ceases to be
employed by Computervision or Parametric); or
(ii) induce or attempt to induce any person who at the time of such
inducement is an employee of Computervision or Parametric to perform
work or services for any other person or entity other than
Computervision or Parametric.
Notwithstanding the foregoing, Employee may own, directly or indirectly,
solely as a passive investment, up to one percent (1%) of any class of
"publicly traded securities" of any person or entity which owns a competitive
Business. For the purposes of this Section 1, the term "publicly traded
securities" shall mean securities that are traded on a national securities
exchange or listed on the Nasdaq National Market. Notwithstanding the
foregoing, Employee will not be prohibited from competing with Parametric in
any part of Parametric's Geographic Scope of the Business, if Parametric, or
any entity obtaining title to its good will or shares, ceases to carry on a
like Business therein. This exception to Employee's covenant not to compete
only applies to the country in which the Business is no longer carried on and
does not affect the enforceability of this Section 1 in the countries in which
the Business is continued.
2. Discontinuance of Benefits. In the event that Parametric determines that
Employee has failed to comply with any of the conditions of this Agreement,
Parametric shall have the right to discontinue any or all remaining benefits
payable to Employee under any retention or other severance plan or agreements.
Such discontinuance of benefits shall be in addition to and shall not limit
any and all other rights and remedies that Parametric may have against
Employee.
3. Right to Injunction. Employee further understands and agrees that the
restrictions contained in this Agreement are necessary for the protection of
the business and goodwill of Computervision, Parametric, and the Business (the
"Protected Interests") and are considered by Employee to be reasonable for
such purpose. Employee agrees that any breach of this Agreement will cause
substantial and irrevocable damage to the Protected Interests with respect to
which the remedy at law for damages will be inadequate. Therefore, in the
event of breach or anticipatory breach of the covenants set forth in this
Agreement by Employee, Employee and Parametric agree that Parametric shall be
entitled to the following particular forms of relief, in addition to any other
remedies otherwise available to it at law or equity: (i) injunctions, both
preliminary and permanent, enjoining or restraining such breach or
anticipatory breach and Employee hereby consents to the issuance thereof
forthwith and without bond by any court of competent jurisdiction; and (ii)
recovery of all reasonable sums expended and costs, including reasonable
attorneys fees, incurred by Parametric to enforce the covenants set forth in
this Agreement.
4. Supersession. To the extent that any of the provisions of this Agreement
conflict with the provisions of any prior non-competition clause or agreement
between Employee and Computervision, the provisions of this Agreement shall
control.
5. Savings Clause. If any restriction set forth in Section 1 above is held
to be unreasonable or unenforceable, then Employee agrees, and hereby submits,
to the reduction and limitation of such prohibition to such area or period as
shall be deemed reasonable.
6. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of Parametric and its successors and assigns. This
Agreement shall be binding upon Employee and shall inure to
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his benefit and to the benefit of his heirs, executors, administrators and
legal representatives, but shall not be assignable by Employee.
7. Amendment. This Agreement may be amended or altered only in a writing
signed by the Chief Executive Officer or the Chief Operating Officer of
Parametric and Employee.
8. Applicable Law; Severability. This Agreement shall be construed and
interpreted in accordance with the laws of the Commonwealth of Massachusetts
without regard to conflicts of laws principles. The covenants contained in
this Agreement constitute a series of separate covenants, one for each
applicable State in the United States and the District of Columbia, and one
for each applicable foreign country. If in any judicial proceeding a court
shall hold unenforceable any of the separate covenants deemed included herein,
then such unenforceable covenant or covenants shall be deemed eliminated from
the provisions of this Agreement for the purpose of such proceeding to the
extent necessary to permit the remaining separate covenants to be enforced in
such proceeding. Employee and Parametric further agree that the covenants in
this Agreement shall each be construed as a separate agreement independent of
any other provisions of this Agreement, and the existence of any claim or
cause of action by Employee against Parametric whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Parametric of any of the covenants of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of
the date first written above.
COMPUTERVISION CORPORATION PARAMETRIC TECHNOLOGY CORPORATION
By:____________________________________ By: _________________________________
Print Name: ___________________________ Print Name: _________________________
Its: __________________________________ Its: ________________________________
EMPLOYEE
_______________________________________
Name
[Signature Page to Non-Competition Agreement]
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APPENDIX B
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT dated as of November 3, 1997 (the "Agreement")
is entered into by and between Parametric Technology Corporation
("Parametric"), a Massachusetts corporation, and Computervision Corporation
("Computervision"), a Delaware corporation. Concurrently with the execution
and delivery of this Agreement, Computervision, Parametric and PTC Acquisition
Corporation ("Merger Sub"), a Delaware corporation and a wholly owned
subsidiary of Parametric, are entering into an Agreement and Plan of
Reorganization (the "Acquisition Agreement"), which provides that, among other
things, upon the terms and subject to the conditions thereof, Merger Sub will
be merged with and into Computervision (the "Merger") with Computervision
continuing as the surviving corporation and as a wholly owned subsidiary of
Parametric. Capitalized terms used herein but not defined herein shall have
the meanings set forth in the Acquisition Agreement. As a condition and
inducement to Parametric's willingness to enter into the Acquisition
Agreement, Parametric has required that Computervision agree, and
Computervision has so agreed, to grant to Parametric an option to acquire
shares of Computervision's Common Stock upon the terms and subject to the
conditions set forth herein.
Accordingly, in consideration of the foregoing and of the mutual covenants
and agreements set forth herein and in the Acquisition Agreement and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant of Option. Computervision hereby grants to Parametric an
irrevocable option (the "Option") to acquire up to 9,558,809 shares (the
"Option Shares") of the Common Stock, par value $.01 per share, of
Computervision ("Computervision Shares") (being 15% of the number of
Computervision Shares outstanding as of the date hereof) in the manner set
forth below at a price of $4.00 per Computervision Share (the "Exercise
Price"), payable in cash. The number of Computervision Shares that may be
purchased upon exercise of this Option and the Exercise Price are subject to
adjustment as provided in Section 9. Notwithstanding the foregoing, in no
event shall the number of Computervision Shares for which the Option is
exercisable exceed 15% of the number of issued and outstanding Computervision
Shares.
2. Exercise of Option. (a) The Option may only be exercised by Parametric,
in whole or in part, at any time or from time to time, after the Acquisition
Agreement becomes terminable under circumstances which would entitle
Parametric to a payment under Section 7.3(d) of the Acquisition Agreement upon
its termination, regardless of whether the Acquisition Agreement is terminated
pursuant to such provisions or whether an Alternative Transaction is
consummated (any of the events specified in this sentence being referred to
herein as an "Exercise Event"). Computervision shall notify Parametric
promptly in writing of the occurrence of any Exercise Event, it being
understood that the giving of such notice by Computervision shall not be a
condition to the right of Parametric to exercise the Option. In the event
Parametric wishes to exercise the Option, Parametric shall deliver to
Computervision a written notice (an "Exercise Notice") specifying the total
number of Option Shares it wishes to acquire. Each closing of a purchase of
Option Shares (a "Closing") shall occur on a date and at a time designated by
Parametric in an Exercise Notice delivered at least two business days prior to
the date of such Closing, which Closing shall be held at the offices of
counsel to Parametric. Upon the giving by Parametric to Computervision of the
Exercise Notice and the tender of the applicable aggregate Exercise Price and
provided that the conditions to Computervision's obligation to issue the
Option Shares to Parametric hereunder set forth in Section 3 have been
satisfied or waived, Parametric shall be deemed to be the holder of record of
the Option Shares issuable upon such exercise, notwithstanding that the stock
transfer book of Computervision shall then be closed or that certificates
representing such Option Shares shall not then be actually delivered to
Parametric.
(b) The Option shall terminate upon the earliest to occur of (i) the
Effective Date, (ii) 180 days following the termination of the Acquisition
Agreement pursuant to Article VII thereof, if an Exercise Event shall have
occurred on or prior to the date of such termination, and (iii) the date on
which the Acquisition Agreement is
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terminated pursuant to Article VII thereof if an Exercise Event shall not have
occurred on or prior to such date; provided, however, with respect to the
preceding clause (ii) of this sentence, that (x) if the Option cannot be
exercised by reason of any applicable government order or because the waiting
period related to the issuance of the Option Shares under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), if
applicable, shall not have expired or been terminated, then the Option shall
not terminate until the tenth business day after such impediment to exercise
shall have been removed or shall have become final and not subject to appeal
and (y) if Sections 7.3(d)(ii) or (iii) of the Acquisition Agreement are
applicable, the Option shall not terminate until 30 days after the event
entitling Parametric to a payment thereunder.
3. Conditions to Closing. The obligation of Computervision to issue the
Option Shares to Parametric hereunder is subject to the conditions that (i)
any waiting period under the HSR Act applicable to the issuance of the Option
Shares hereunder shall have expired or been terminated; (ii) all consents,
approvals, orders or authorizations of, or registrations, declarations or
filings with, any Federal, state or local administrative agency or commission
or other Federal, state or local governmental authority or instrumentality, if
any, required in connection with the issuance of the Option Shares hereunder
shall have been obtained or made, as the case may be; and (iii) no preliminary
or permanent injunction or other order by any court of competent jurisdiction
prohibiting or otherwise restraining such issuance shall be in effect.
4. Closing. At any Closing, (i) Computervision shall deliver to Parametric a
single certificate in definitive form representing the number of Option Shares
designated by Parametric in its Exercise Notice, such certificate to be
registered in the name of Parametric and to bear the legend set forth in
Section 10 hereof, and (ii) Parametric shall pay to Computervision the
aggregate purchase price for the Computervision Shares so designated and being
purchased by wire transfer of immediately available funds or by delivery of a
certified check or bank check. At any Closing at which Parametric is
exercising the Option in part, Parametric shall present and surrender this
Agreement to Computervision, and Computervision shall deliver to Parametric an
executed new agreement with the same terms as this Agreement evidencing the
right to purchase the balance of the Computervision Shares constituting the
Option Shares purchasable hereunder. Computervision shall pay all expenses,
and any and all Federal, state and local transfer or issuance taxes, and other
similar charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 4.
5. Representations and Warranties of Computervision. Computervision
represents and warrants to Parametric that (i) Computervision is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder; (ii) the execution and
delivery of this Agreement by Computervision and consummation by
Computervision of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Computervision and
no other corporate proceedings on the part of Computervision are necessary to
authorize this Agreement or any of the transactions contemplated hereby; (iii)
this Agreement has been duly executed and delivered by Computervision and
constitutes a legal, valid and binding obligation of Computervision and,
assuming this Agreement constitutes a legal, valid and binding obligation of
Parametric, is enforceable against Computervision in accordance with its
terms; (iv) except for any filings as may be required under the HSR Act,
Computervision has taken all necessary corporate and other action to authorize
and reserve for issuance and to permit it to issue upon exercise of the
Option, and at all times from the date hereof until the termination of the
Option will have reserved for issuance, a sufficient number of unissued
Computervision Shares for Parametric to exercise the Option in full and will
take all necessary corporate or other action to authorize and reserve for
issuance all additional Computervision Shares or other securities which may be
issuable pursuant to Section 9 upon exercise of the Option, all of which, upon
their issuance and delivery in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable and free of any
preemptive right; (v) upon delivery of the Option Shares and any other
securities to Parametric upon exercise of the Option or upon becoming deemed
the holder of record of the Option Shares and any other securities delivered
to Parametric upon exercise of the Option, Parametric will acquire such Option
Shares or other securities free and clear of all material claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever,
excluding those imposed by Parametric; (vi) the execution and delivery of this
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Agreement by Computervision does not, and the performance of this Agreement by
Computervision will not, (A) violate the Certificate of Incorporation or By-
Laws of Computervision, (B) conflict with or violate any law, ordinance or
regulation or any order, judgment, injunction, decree or other requirement of
any court, arbitrator, governmental or regulatory body applicable to
Computervision or any of its Subsidiaries or by which they or any of their
property is bound or (C) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give rise to any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the property or assets of Computervision or any of its Subsidiaries pursuant
to, any contract or agreement to which Computervision or any of its
Subsidiaries is a party or by which Computervision or any of its Subsidiaries
or any of their property is bound, except, in the case of clauses (B) and (C)
above, for violations, conflicts, breaches, defaults, rights of termination,
amendment, acceleration or cancellation, liens or encumbrances which would
not, individually or in the aggregate, have a Computervision Material Adverse
Effect; (vii) the execution and delivery of this Agreement by Computervision
does not, and the performance of this Agreement by Computervision will not,
require any consent, approval, authorization or permit of, or filing with, or
notification to, any Governmental Entity except pursuant to the HSR Act, if
applicable; and (viii) none of Computervision, any of its affiliates or anyone
acting on its or their behalf, has issued, sold or offered any security of
Computervision to any person under circumstances that would cause the issuance
and sale of the Option Shares, as contemplated by this Agreement, to be
subject to the registration requirements of the Securities Act, as in effect
on the date hereof, and, assuming the representations and warranties of
Parametric contained in clause (iv) of Section are true and correct, the
issuance, sale and delivery of the Option Shares hereunder would be exempt
from the registration and prospectus delivery requirements of the Securities
Act, as in effect on the date hereof (and Computervision shall not take any
action which would cause the issuance, sale and delivery of the Option Shares
hereunder not to be exempt from such requirements).
6. Representations and Warranties of Parametric. Parametric represents and
warrants to Computervision that (i) Parametric is a corporation duly
incorporated, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has the corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder; (ii) the
execution and delivery of this Agreement by Parametric and the consummation by
Parametric of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Parametric and no other
corporate proceedings on the part of Parametric are necessary to authorize
this Agreement or any of the transactions contemplated hereby; (iii) this
Agreement has been duly executed and delivered by Parametric and constitutes a
legal, valid and binding obligation of Parametric and, assuming this Agreement
constitutes a legal, valid and binding obligation of Computervision, is
enforceable against Parametric in accordance with its terms; and (iv) any
Computervision Shares acquired upon exercise of the Option will not be
acquired by Parametric with a view to the public distribution thereof and
Parametric will not sell or otherwise dispose of such shares in violation of
applicable law or this Agreement.
7. Certain Rights.
(a) Put. At the request of Parametric at any time during the period
during which the Option is exercisable pursuant to Section 2 (the "Purchase
Period"), Computervision (or any successor entity thereof) shall, subject
to the limitation set forth in Section 10, purchase from Parametric (x) all
or any portion of the Option at the price set forth in subparagraph (i)
below or (y) all or any portion of the Option Shares, if any, acquired by
Parametric pursuant to the Option, at the following price:
(i) The purchase price of the Option shall be the difference between
the "Market/Offer Price" (as defined below) for Computervision Shares
as of the date Parametric gives notice of its intent to exercise its
rights under this Section 7 and the Exercise Price, multiplied by the
number of Option Shares purchasable pursuant to the Option (or portion
thereof with respect to which Parametric is exercising its rights under
this Section 7), but only if the Market/Offer Price is greater than the
Exercise Price. For purposes of this subparagraph (i), "Market/Offer
Price" shall mean, as of any date, the higher of (x) the highest price
per share offered as of such date pursuant to any Alternative
Transaction which would have entitled Parametric to a payment under
Section 7.3(d) of the Acquisition Agreement
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and which was initiated prior to such date and not terminated or
withdrawn as of such date and (y) the Fair Market Value (as defined
below) of the Computervision Shares as of such date. For purposes of
this Agreement, the "Fair Market Value" of the Computervision Shares
shall mean the average closing sale price of Computervision Shares on
the New York Stock Exchange during the five (5) trading days ending on
the trading day immediately preceding the date Parametric gives notice
of its intent to exercise its rights under this Section 7.
(ii) The purchase price of the Option Shares shall be the sum of (x)
the Exercise Price paid by Parametric for Option Shares acquired
pursuant to the Option plus (y) the difference between the Fair Market
Value for Computervision Shares and such Exercise Price (but only if
the Fair Market Value is greater than the Exercise Price) multiplied by
the number of Computervision Shares so purchased.
(b) Payment and Redelivery of Shares. In the event Parametric exercises
its rights under Section 7(a), Computervision shall, within ten business
days after Parametric delivers notice pursuant to Section 7(a) (which
notice may be delivered prior to consummation of the exercise of the
Option), pay the required amount to Parametric in immediately available
funds and Parametric shall surrender to Computervision the Option or the
certificates evidencing the Computervision Shares purchased by Parametric
pursuant thereto, and Parametric shall represent and warrant that it owns
such Computervision Shares and that such Computervision Shares are then
free and clear of all claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever.
(c) Repurchase Price Reduced at Parametric's Option. In the event the
repurchase price specified in Section 7(a) would subject the purchase of
the Option or the Option Shares purchased by Parametric pursuant to the
Option to a vote of the shareholders of Computervision pursuant to
applicable law or Computervision's Certificate of Incorporation then
Parametric may, at its election, reduce the repurchase price to an amount
which would permit such repurchase without the necessity for such a
shareholder vote.
8. Registration Rights. (a) Following the termination of the Acquisition
Agreement, Parametric may by written notice (a "Registration Notice") to
Computervision request Computervision to register under the Securities Act all
or any part of the shares acquired by Parametric pursuant to this Agreement
(the "Registrable Securities") in order to permit the sale or other
disposition of such shares pursuant to a bona fide firm commitment
underwritten public offering.
(b) Computervision shall use its best efforts to effect, as promptly as
practicable, the registration under the Securities Act of the Registrable
Securities; provided, however, that (i) Parametric shall not be entitled to
more than an aggregate of two effective registration statements hereunder and
(ii) Computervision will not be required to file any such registration
statement during any period of time (not to exceed 40 days after a
Registration Notice in the case of clause (A) below or 90 days after a
Registration Notice in the case of clauses (B) and (C) below) when (A)
Computervision is in possession of material non-public information which it
reasonably believes would be detrimental to be disclosed at such time and, in
the written opinion of counsel to Computervision, such information would have
to be disclosed if a registration statement were filed at that time; (B)
Computervision is required under the Securities Act to include audited
financial statements for any period in such registration statement and such
financial statements are not yet available for inclusion in such registration
statement; or (C) Computervision determines, in its reasonable judgment, that
such registration would interfere with any financing, acquisition or other
material transaction involving Computervision. If consummation of the sale of
any Registrable Securities pursuant to a registration hereunder does not occur
within 180 days after the filing with the SEC of the initial registration
statement therefor, the provisions of this Section 8 shall again be applicable
to any proposed registration, it being understood that Parametric shall be
entitled to no more than an aggregate of two effective registration statements
hereunder. Computervision shall use all reasonable efforts to cause any
Registrable Securities registered pursuant to this Section 8 to be qualified
for sale under the securities or blue sky laws of such jurisdictions as
Parametric may reasonably request and shall continue such registration or
qualification in effect in such jurisdictions; provided, however, that
Computervision shall not be required to qualify to do business in, or consent
to general service of process in, any jurisdiction by reason of this
provision.
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(c) The registration rights set forth in this Section 8 are subject to the
condition that Parametric shall provide Computervision with such information
with respect to Parametric's Registrable Securities, the plan for distribution
thereof, and such other information with respect to Parametric as is necessary
to enable Computervision to include in a registration statement all material
facts required to be disclosed with respect to a registration thereunder.
(d) A registration effected under this Section 8 shall be effected at
Computervision's expense, except for underwriting discounts and commissions
and the fees and expenses of counsel to Parametric, and Computervision shall
provide to the underwriters such documentation (including certificates,
opinions of counsel and "comfort" letters from auditors) as are customary in
connection with underwritten public offerings and as such underwriters may
reasonably require. In connection with any registration, the parties agree (i)
to indemnify each other and the underwriters in the customary manner, (ii) to
enter into an underwriting agreement in form and substance customary for
transactions of this type with the underwriters participating in such
offering, and (iii) to take all further actions which shall be reasonably
necessary to effect such registration and sale (including if the managing
underwriter deems it necessary, participating in road show presentations).
9. Adjustment Upon Changes in Capitalization. In the event of any change in
the Computervision Shares by reason of stock dividends, split-ups, mergers
(other than the Merger), recapitalizations, combinations, exchanges of shares
and the like, the type and number of shares or securities subject to the
Option, and the Exercise Price, shall be adjusted appropriately, and proper
provision shall be made in the agreements governing such transaction so that
Parametric shall receive, upon exercise of the Option, the number and class of
shares or other securities or property that Parametric would have received in
respect of the Computervision Shares if the Option had been exercised
immediately prior to such event or the record date therefor, as applicable.
10. Profit Limitation. (a) Notwithstanding any other provision of this
Agreement, in no event shall Parametric's Total Profit (as hereinafter
defined) exceed $18 million and, if it otherwise would exceed such amount,
Parametric, at its sole election, shall either (a) deliver to Computervision
for cancellation Option Shares previously purchased by Parametric, (b) pay
cash to Computervision or (c) undertake any combination thereof, so that
Parametric's Total Profit shall not exceed $18 million after taking into
account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, the Option may
not be exercised for a number of Option Shares as would, as of the date of the
Exercise Notice, result in a Notional Total Profit (as hereinafter defined) of
more than $18 million and, if exercise of the Option otherwise would exceed
such amount, Parametric, at its discretion, may increase the Exercise Price
for the number of Computervision Shares set forth in the Exercise Notice so
that the Notional Total Profit shall not exceed $18 million.
(c) As used herein, the term "Total Profit" shall mean the aggregate amount
(before taxes) of the following: (i) the amount of cash received by Parametric
pursuant to Sections 7.3(c) and (d) of the Acquisition Agreement, (ii) the
amount of cash received by Parametric pursuant to the exercise of the put
right with respect to the Option under Section 7(a)(i) and (iii) (x) the net
cash amounts received by Parametric pursuant to the sale of Option Shares (or
any other securities into which such Option Shares are converted or exchanged)
to Computervision or any unaffiliated party, less (y) Parametric's purchase
price for such Option Shares.
(d) As used herein, the term "Notional Total Profit" with respect to any
number of Option Shares as to which Parametric may propose to exercise the
Option shall be the Total Profit determined as of the date of the Exercise
Notice assuming that the Option was exercised on such date for such number of
Option Shares and assuming that such Option Shares, together with all other
Computervision Shares held by Parametric and its affiliates as of such date,
were sold for cash at the closing market price for the Computervision Shares
as of the close of business on the preceding trading day (less customary
brokerage commissions).
(e) Notwithstanding the foregoing, the Option may not be exercised if
Parametric is in breach in any material respect of any of its covenants or
agreements contained in the Acquisition Agreement.
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11. Restrictive Legends. Each certificate representing Option Shares issued
to Parametric hereunder shall include a legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD
ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF NOVEMBER 3,
1997, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER.
12. Listing and HSR filing. Computervision, upon the request of Parametric,
shall promptly file an application to list the Computervision Shares to be
acquired upon exercise of the Option for quotation on the New York Stock
Exchange and shall use its best efforts to obtain approval of such listing as
soon as practicable. Promptly after the date such a filing is permitted to be
made, each of the parties hereto shall file with the Federal Trade Commission
and the Antitrust Division of the United States Department of Justice all
required premerger notification and report forms and other documents and
exhibits required to be filed under the HSR Act, if any, to permit the
acquisition of the Computervision Shares subject to the Option at the earliest
possible date.
13. Effect. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
Nothing contained in this Agreement, express or implied, is intended to confer
upon any person other than the parties hereto and their respective successors
and permitted assigns any rights or remedies of any nature whatsoever by
reason of this Agreement. Certificates representing shares sold in a
registered public offering pursuant to Section 8 shall not be required to bear
the legend set forth in Section 11.
14. Specific Performance. The parties recognize and agree that if for any
reason any of the provisions of this Agreement are not performed in accordance
with their specific terms or are otherwise breached, immediate and irreparable
harm or injury would be caused for which money damages would not be an
adequate remedy. Accordingly, each party agrees that in addition to other
remedies the other party shall be entitled to an injunction restraining any
violation or threatened violation of the provisions of this Agreement. In the
event that any action shall be brought in equity to enforce the provisions of
the Agreement, neither party will allege, and each party hereby waives the
defense, that there is an adequate remedy at law.
15. Entire Agreement. This Agreement and the Acquisition Agreement
(including the appendices and exhibits thereto) constitute the entire
agreement between the parties with respect to the subject matter hereof and
supersede all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.
16. Further Assurances. Each party will execute and deliver all such further
documents and instruments and take all such further action as may be necessary
in order to constitute the transactions contemplated hereby.
17. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect. In
the event any Governmental Entity of competent jurisdiction holds any
provision of this Agreement to be null, void or unenforceable, the parties
hereto shall negotiate in good faith and shall execute and deliver an
amendment to this Agreement in order, as nearly as possible, to effectuate, to
the extent permitted by law, the intent of the parties hereto with respect to
such provision.
18. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at
the following addresses or telecopy numbers (or at such other address or
telecopy numbers for a party as shall be specified by like notice):
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(a) if to Parametric, to:
Parametric Technology Corporation
128 Technology Drive
Waltham, MA 02154
Attention: Chairman and Chief Executive Officer
Telephone No.: (617) 398-5000
Telecopy No.: (617) 398-5662
with a copy at the same address to the attention of the General
Counsel, and
with a copy to:
Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108
Attn: Stanley Keller, Esq.
Telephone No.: (617) 573-0100
Telecopy No.: (617) 227-4420
(b) if to Computervision, to:
Computervision Corporation
100 Crosby Drive
Bedford, MA 01730-1480
Attention: President
Telephone No.: (617) 275-1800
Telecopy No.: (617) 743-1755
with a copy at the same address to the attention of the General
Counsel, and
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attn: Paul P. Brountas, Esq.
Telephone No.: (617) 526-6000
Telecopy No.: (617) 526-5000
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts applicable to
agreements made and to be performed entirely within such state.
20. Counterparts. This Agreement may be executed in two counterparts, each
of which shall be deemed to be an original, but both of which, taken together,
shall constitute one and the same instrument.
21. Expenses. Except as otherwise expressly provided herein or in the
Acquisition Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
22. Amendments; Waiver. This Agreement may be amended by the parties hereto
and the terms and conditions hereof may be waived only by an instrument in
writing signed on behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument signed on behalf of the party waiving compliance.
23. Assignment. Neither of the parties hereto may sell, transfer, assign or
otherwise dispose of any of its rights or obligations under this Agreement or
the Option created hereunder to any other person, without the express written
consent of the other party, except that Parametric may (a) assign any of its
rights hereunder to
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<PAGE>
any affiliate and (b) assign its registration rights under Section 8 to any
subsequent holder of Option Shares other than a holder who acquired such
shares in a sale that was either registered under the Securities Act or
pursuant to SEC Rule 144 under the Securities Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first
above written.
PARAMETRIC TECHNOLOGY CORPORATION
/s/ Edwin J. Gillis
By: _________________________________
Name: Edwin J. Gillis
Title: Executive Vice President,
Chief Financial Officer and
Treasurer
COMPUTERVISION CORPORATION
/s/ Anthony N. Fiore, Jr.
By: _________________________________
Name: Anthony N. Fiore, Jr.
Title: Vice President of Business
Operations, General Counsel
[SIGNATURE PAGE TO STOCK OPTION AGREEMENT]
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<PAGE>
APPENDIX C
HAMBRECHT & QUIST LLC 50 Rowes Wharf, 4th
Floor
Boston, MA 02110
(617) 574-0500
November 3, 1997
Confidential
The Board of Directors
Computervision Corporation
100 Crosby Drive
Bedford, Massachusetts 01730
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of common stock (the "Common
Stock") of Computervision Corporation, a Delaware corporation,
("Computervision" or the "Company") of the consideration to be received by such
shareholders in connection with the proposed merger of PTC Acquisition
Corporation, a Delaware corporation, ("Merger Sub"), a wholly owned subsidiary
of Parametric Technology Corporation, a Massachusetts corporation,
("Parametric"), with and into Computervision (the "Proposed Transaction")
pursuant to the Agreement and Plan of Reorganization to be dated as of November
3, 1997 among Parametric, Merger Sub, and Computervision (the "Agreement").
We understand that the terms of the Agreement provide, among other things,
that each issued and outstanding share of Common Stock shall be converted into
the right to receive 0.0866 shares of common stock of Parametric, as more fully
set forth in the Agreement. For purposes of this opinion, we have assumed that
the Proposed Transaction will qualify as a tax-free reorganization under the
United States Internal Revenue Code for the shareholders of the Company and
that the Proposed Transaction will be accounted for as a pooling of interests.
Hambrecht & Quist LLC ("Hambrecht & Quist"), as part of its investment
banking services, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, strategic transactions,
corporate restructurings, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements and valuations for corporate
and other purposes. We have acted as a financial advisor to the Board of
Directors of Computervision in connection with the Proposed Transaction, and we
will receive a fee for our services, which include the rendering of this
opinion.
In the past, we have provided investment banking and other financial advisory
services to Computervision and have received fees for rendering these services.
Hambrecht & Quist acted as managing underwriter in the Company's initial public
offering in 1992, and as managing underwriter of a follow-on offering in 1995.
In the ordinary course of business, Hambrecht & Quist acts as a market maker
and broker in the publicly traded securities of Computervision and of
Parametric and receives customary compensation in connection therewith, and
also provides research coverage for Computervision and for Parametric. In the
ordinary course of business, Hambrecht & Quist actively trades in the
securities of Computervision and of Parametric for its own account and for the
accounts of its customers and, accordingly, may at any time hold a long or
short position in such securities. Hambrecht & Quist may in the future provide
additional investment banking or other financial advisory services to
Parametric.
In connection with our review of the Proposed Transaction, and in arriving at
our opinion, we have, among other things:
(i) reviewed the publicly available consolidated financial statements of
Parametric for recent years and interim periods to date and certain other
relevant financial and operating data of Parametric made available to us
from published sources and from the internal records of Parametric;
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(ii) reviewed certain internal financial and operating information,
including certain projections, relating to Parametric prepared by the
management of Parametric;
(iii) discussed the business, financial condition and prospects of
Parametric with certain of its officers;
(iv) reviewed the publicly available consolidated financial statements of
Computervision for recent years and interim periods to date and certain
other relevant financial and operating data of Computervision made
available to us from published sources and from the internal records of
Computervision;
(v) reviewed certain internal financial and operating information,
including certain projections, relating to Computervision prepared by the
management of Computervision;
(vi) discussed the business, financial condition and prospects of
Computervision with certain of its officers;
(vii) reviewed the recent reported prices and trading activity for the
common stocks of Parametric and Computervision and compared such
information and certain financial information for Parametric and
Computervision with similar information for certain other companies engaged
in businesses we consider comparable;
(viii) reviewed the financial terms, to the extent publicly available, of
certain comparable merger and acquisition transactions;
(ix) reviewed the Agreement;
(x) performed such other analyses and examinations and considered such
other information, financial studies, analyses and investigations and
financial, economic and market data as we deemed relevant.
In rendering our opinion, we have assumed and relied upon the accuracy and
completeness of all of the information concerning Parametric or Computervision
considered in connection with our review of the Proposed Transaction, and we
have not assumed any responsibility for independent verification of such
information. We have not prepared any independent valuation or appraisal of
any of the assets or liabilities of Parametric or Computervision; nor have we
conducted a physical inspection of the properties and facilities of either
company. With respect to the financial forecasts and projections made
available to us and used in our analysis, we have assumed that they reflect
the best currently available estimates and judgments of the expected future
financial performance of Parametric and Computervision. For purposes of this
opinion, we have assumed that neither Parametric nor Computervision is a party
to any pending transactions, including external financings (other than those
contemplated that have been disclosed to us), recapitalizations or material
merger discussions, other than the Proposed Transaction and those activities
undertaken in the ordinary course of conducting their respective businesses.
Our opinion is necessarily based upon market, economic, financial and other
conditions as they exist and can be evaluated as of the date of this letter
and any change in such conditions would require a reevaluation of this
opinion. We express no opinion as to the price at which Parametric common
stock will trade subsequent to the Effective Time (as defined in the
Agreement).
It is understood that this letter is for the information of the Board of
Directors and may not be used for any other purpose without our prior written
consent; provided, however, that this letter may be reproduced in full in the
Proxy Statement relating to the Proposed Transaction. This letter does not
constitute a recommendation to any stockholder as to how such stockholder
should vote on the Proposed Transaction.
Based upon and subject to the foregoing and after considering such other
matters as we deem relevant, we are of the opinion that as of the date hereof
the consideration to be received by the holders of Computervision Common Stock
in the Proposed Transaction is fair to such holders from a financial point of
view. We express no opinion, however, as to the adequacy or fairness of any
consideration received in the Proposed Transaction by Parametric or any of its
affiliates.
Very truly yours,
HAMBRECHT & QUIST LLC
/s/ Katherine R. Kirk
By __________________________________
Katherine R. Kirk
Managing Director
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 67 of Chapter 156B of the Massachusetts Business Corporation Law
grants Parametric the power to indemnify any director, officer, employee or
agent to whatever extent permitted by Parametric's Articles of Organization,
By-Laws or a vote adopted by the holders of a majority of the shares entitled
to vote thereon, unless the proposed indemnitee has been adjudicated in any
proceeding not to have acted in good faith in the reasonable belief that his
action was in the best interests of Parametric or, to the extent that the
matter for which indemnification is sought relates to service with respect to
an employee benefit plan, in the best interests of the participants or
beneficiaries of such employee benefit plan. Such indemnification may include
payment by Parametric of expenses incurred in defending a civil or criminal
action or proceeding in advance of the final disposition of such action or
proceeding, upon receipt of an undertaking by the person indemnified to repay
such payment if he shall be adjudicated to be not entitled to indemnification
under the statute.
Article 6B of Parametric's Articles of Organization provides that Parametric
shall, to the fullest extent legally permissible, indemnify each person at any
time elected or appointed a director or officer of Parametric, or who serves
at Parametric's request as a director or officer of another organization or in
any capacity with respect to any employee benefit plan against any and all
costs and expenses (including but not limited to court costs and legal fees)
reasonably incurred by, and any and all liabilities imposed upon, him in
connection with, or arising out of, or resulting from, any claim made, or any
action, suit or proceeding (whether civil, criminal, administrative or
investigative) threatened or brought, against him or in which he may be
involved as a party or otherwise by reason of his having so served or by
reason of any action taken or omitted or alleged to have been taken or omitted
by him in such capacity unless in any proceeding such person shall have been
finally adjudicated with respect to the matter or matters as to which
indemnification is sought not to have acted in good faith in the reasonable
belief that his action was in the best interest of Parametric or, to the
extent that such matter or matters relate to service with respect to an
employee benefit plan, in the best interests of the participants or
beneficiaries of such employee benefit plan. Such indemnification shall
include payment by Parametric of expenses incurred in defending any such
action, suit or proceeding in advance of the final disposition of such action,
suit or proceeding, upon receipt of an undertaking by or on behalf of the
person indemnified to repay such payment if he shall be adjudicated to be not
entitled to indemnification under Article VI, which undertaking shall be
accepted without reference to the financial ability of such person to make
repayment.
The right of indemnification under Article 6B does not extend to amounts
incurred or paid in connection with any matter which shall be disposed of
through a compromise payment or other settlement prior to final adjudication,
whether by or pursuant to a consent decree or otherwise, unless such
compromise or other settlement is approved by Parametric, which approval shall
not unreasonably be withheld, or by a court of competent jurisdiction. Article
VI sets forth certain circumstances under which the payment of indemnification
is conclusively deemed approved by Parametric. Article VI also contains
certain procedural and other provisions which provide additional protection
for persons seeking indemnification.
The indemnification provided for in Article VI is a contract right inuring
to the benefit of the directors, officers and others entitled to
indemnification. In addition, the indemnification is expressly in addition to
and not exclusive of any other rights to which such director, officer or other
person may be entitled and inures to the benefit of the heirs, executors,
administrators and legal representatives of such a person.
Section 13(b)(1 1/2) of Chapter 156B of the Massachusetts Business
Corporation Law provides that a corporation may, in its Articles of
Organization, eliminate the directors' personal liability to the corporation
and its stockholders for monetary damages for breaches of fiduciary duty,
except in circumstances involving (i) a breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) unauthorized distributions and loans to insiders, and (iv)
transactions from which the director derived an improper personal benefit.
Parametric's
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<PAGE>
Articles of Organization include a provision providing that no director shall
be personally liable to Parametric or its stockholders for monetary damages
for any breach of fiduciary duty as a director, except to the extent that such
exculpation is not permitted under the provisions of the Massachusetts
Business Corporation Law summarized above. No amendment or repeal of that
provision of the Articles of Organization shall apply or have any effect on
the liability of any director for or with respect to acts or omissions
occurring prior to the amendment or repeal.
Parametric maintains an insurance policy on behalf of the directors and
officers of Parametric and its subsidiaries covering certain liabilities which
may arise as a result of the actions of said directors and officers.
The provisions described above may be sufficiently broad to indemnify
directors and officers and control persons of Parametric against liability
arising under the Securities Act of 1933, as amended (the "Act"). Insofar as
indemnification for liabilities arising under the Act may be permitted to
directors, officers or persons controlling Parametric pursuant to the
foregoing provisions, Parametric has been informed that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2 Merger Agreement dated November 3, 1997 by and among Parametric
Technology Corporation, PTC Acquisition Corporation and Computervision
Corporation. Filed as Exhibit 2.1 to the Registrant's Current Report
on Form 8-K filed November 4, 1997 and incorporated herein by
reference. Pursuant to Item 601(b)(2) of Regulation S-K, the schedules
referred to in the Merger Agreement are omitted. The Registrant hereby
undertakes to furnish supplementally a copy of any omitted schedule to
the Commission upon request.
4.1 Articles of Organization as amended through February 2, 1997. Filed as
Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 29, 1997 and incorporated herein by reference.
4.2 By-Laws as amended through November 21, 1990. Filed as Exhibit 3.2 to
the Registrant's Annual Report on Form 10-K for the year ended
September 30, 1996 and incorporated herein by reference.
5 Opinion of Palmer & Dodge LLP.
8.1 Opinion of Palmer & Dodge LLP with respect to certain federal income
tax matters.
8.2 Opinion of Hale and Dorr LLP with respect to certain federal income
tax matters.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Price Waterhouse LLP.
23.3 Consent of Deloitte & Touche LLP.
23.4 Consent of Arthur Andersen LLP.
23.5 Awareness Letter of Arthur Andersen LLP.
23.6 Consents of Palmer & Dodge LLP (contained in Exhibits 5 and 8.1).
23.7 Consent of Hambrecht & Quist LLC.
23.8 Consent of Hale and Dorr LLP (contained in Exhbit 8.2).
24 Power of Attorney. Contained on the Signature Page to this
Registration Statement.
99.1 Fairness Opinion of Hambrecht & Quist LLC. Filed herewith as Appendix
C to the Prospectus/Proxy Statement.
</TABLE>
(b) Financial Statement Schedules.
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are not applicable, and, therefore, have been
omitted.
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<PAGE>
ITEM 22. UNDERTAKINGS.
(a) Parametric hereby undertakes:
(1) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items
of the applicable form.
(2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act of 1933 and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part
of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, 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.
(b) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(1) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(2) To reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represents a fundamental change in the information set forth in this
Registration Statement;
(3) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that paragraphs (b)(1) and (b)(2) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by Parametric pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(c) That, for the purpose of determining any liability under the Securities
Act of 1933, 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.
(d) 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.
(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Parametric pursuant to the foregoing provisions, or otherwise, Parametric has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Parametric of expenses
incurred or paid by a director, officer or controlling person of Parametric 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, Parametric 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 Act and will be governed by the
final adjudication of such issue.
(f) Parametric hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of Parametric's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities
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<PAGE>
Exchange Act of 1934 that is incorporated by reference in this 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.
(g) Parametric hereby undertakes to respond to requests for information that
is incorporated by reference into the prospectus pursuant to Items 4, 10(b),
11 or 13 of this Form within one business day of receipt of such request, and
to send the incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent to
the effective date of the Registration Statement through the date of
responding to the request.
(h) Parametric hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and included in the
Registration Statement when it became effective.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF BOSTON, COMMONWEALTH OF
MASSACHUSETTS, ON NOVEMBER 12, 1997.
Parametric Technology Corporation
/s/ Edwin J. Gillis
By:__________________________________
Edwin J. Gillis
Executive Vice President of
Finance and Administration, Chief
Financial Officer and Treasurer
POWER OF ATTORNEY
We, the undersigned officers and directors of Parametric Technology
Corporation, hereby severally constitute Steven C. Walske, Edwin J. Gillis,
Martha L. Durcan, Esq. and Matthew C. Dallett and any of them singly, our true
and lawful attorneys with full power to them, and each of them singly, to sign
for us and in our names in the capacities indicated below, the Registration
Statement on Form S-4 filed herewith and any and all subsequent amendments to
said Registration Statement, and generally to do all such things in our names
and behalf in our capacities as officers and directors to enable Parametric
Technology Corporation to comply with all requirements of the Securities and
Exchange Commission, hereby ratifying and confirming our signatures as they
may be signed by said attorneys, or any of them, to said registration
statement and any and all amendments thereto.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
(i) Principal Executive Officer:
/s/ Steven C. Walske Chairman and Chief November 12,
- ------------------------------------- Executive Officer 1997
STEVEN C. WALSKE
(ii) Principal Financial and Accounting Officer:
/s/ Edwin J. Gillis Executive Vice November 12,
- ------------------------------------- President of 1997
EDWIN J. GILLIS Finance and
Administration,
Chief Financial
Officer and
Treasurer
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<PAGE>
SIGNATURE TITLE DATE
(iii) Board of Directors
/s/ Steven C. Walske Director November 12,
- ------------------------------------- 1997
STEVEN C. WALSKE
/s/ C. Richard Harrison Director November 12,
- ------------------------------------- 1997
C. RICHARD HARRISON
/s/ Robert N. Goldman Director November 12,
- ------------------------------------- 1997
ROBERT N. GOLDMAN
/s/ Donald K. Grierson Director November 12,
- ------------------------------------- 1997
DONALD K. GRIERSON
/s/ Oscar B. Marx, III Director November 12,
- ------------------------------------- 1997
OSCAR B. MARX, III
/s/ Michael E. Porter Director November 12,
- ------------------------------------- 1997
MICHAEL E. PORTER
/s/ Noel G. Posternak Director November 12,
- ------------------------------------- 1997
NOEL G. POSTERNAK
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
2 Merger Agreement dated November 3, 1997 by and among Parametric
Technology Corporation, PTC Acquisition Corporation and
Computervision Corporation. Filed as Exhibit 2.1 to the
Registrant's Current Report on Form 8-K filed November 4, 1997
and incorporated herein by reference. Pursuant to Item
601(b)(2) of Regulation S-K, the schedules referred to in the
Merger Agreement are omitted. The Registrant hereby undertakes
to furnish supplementally a copy of any omitted schedule to the
Commission upon request.
4.1 Articles of Organization as amended through February 2, 1997.
Filed as Exhibit 3.1 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended March 29, 1997 and incorporated
herein by reference.
4.2 By-Laws as amended through November 21, 1990. Filed as Exhibit
3.2 to the Registrant's Annual Report on Form 10-K for the year
ended September 30, 1996 and incorporated herein by reference.
5 Opinion of Palmer & Dodge LLP.
8.1 Opinion of Palmer & Dodge LLP with respect to certain federal
income tax matters.
8.2 Opinion of Hale and Dorr LLP with respect to certain federal
income tax matters.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Price Waterhouse LLP.
23.3 Consent of Deloitte & Touche LLP.
23.4 Consent of Arthur Andersen LLP.
23.5 Awareness Letter of Arthur Andersen LLP.
23.6 Consents of Palmer & Dodge LLP (contained in Exhibits 5 and
8.1).
23.7 Consent of Hambrecht & Quist LLC.
23.8 Consent of Hale and Dorr LLP (contained in Exhbit 8.2).
24 Power of Attorney. Contained on the Signature Page to this
Registration Statement.
99.1 Fairness Opinion of Hambrecht & Quist LLC. Filed herewith as
Appendix C to the Prospectus/Proxy Statement.
</TABLE>
<PAGE>
EXHIBIT 5
PALMER & DODGE LLP
One Beacon Street, Boston, MA 02108-3190
Telephone: (617) 573-0100 Facsimile: (617) 227-4420
November 12, 1997
Parametric Technology Corporation
128 Technology Drive
Waltham, MA 02154
Ladies and Gentlemen:
This opinion is furnished to you in connection with a registration statement
on Form S-4 (the "Registration Statement") filed with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, for the registration of 6,000,000 shares of Common Stock, $.01 par
value (the "Shares"), of Parametric Technology Corporation ("Parametric"), a
Massachusetts corporation. We understand that the Shares are to be issued as
described in the Registration Statement at not less than their par value.
We are general counsel to Parametric and are familiar with the proceedings
of its stockholders and Board of Directors, respectively. For purposes of this
opinion, we have examined and relied upon the Registration Statement and such
other documents and records as we have deemed necessary.
Based upon the foregoing, we are of the opinion that the Shares have been
duly authorized for issuance and, when issued as described in the Registration
Statement, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion with and as part of the
Registration Statement and to the use of our name therein and in the related
prospectus and proxy statement under the caption "Legal Matters."
Very truly yours,
/s/ Palmer & Dodge llp
Palmer & Dodge llp
<PAGE>
EXHIBIT 8.1
PALMER & DODGE LLP
One Beacon Street, Boston, MA 02108-3190
Telephone: (617) 573-0100 Facsimile: (617) 227-4420
November 12, 1997
Parametric Technology Corporation
128 Technology Drive
Waltham, MA 02154
We have acted as counsel to Parametric Technology Corporation ("Parametric")
in connection with the merger described in the Registration Statement on Form
S-4 (the "Registration Statement") of which this exhibit is a part. As counsel
to Parametric, we have prepared the description of the federal income tax
consequences of the merger set forth in the Registration Statement under the
heading "Certain Federal Income Tax Consequences." That description fairly and
accurately represents our opinion as to the federal income tax matters
discussed therein, assuming that the merger is carried out in the manner
described in the Registration Statement.
We hereby consent to the use of our name under the caption "Certain Federal
Income Tax Consequences" in the Registration Statement and to the filing of
this opinion as an exhibit to the Registration Statement.
Very truly yours,
/s/ Palmer & Dodge LLP
<PAGE>
EXHIBIT 8.2
Hale and Dorr LLP
Counsellors at Law
60 State Street, Boston, Massachusetts 02109
617-526-6000 . Fax 617-526-5000
November 12, 1997
Computervision Corporation
100 Crosby Drive
Bedford, MA 01730-1480
Re: Merger pursuant to Agreement and Plan of Merger among Parametric
Technology Corporation, PTC Acquisition Corporation, and
Computervision Corporation
Ladies and Gentlemen:
This opinion is being delivered to you in connection with the filing of a
registration statement (the "Registration Statement") on Form S-4, which
includes the Proxy Statement and Prospectus relating to the Agreement and Plan
of Merger dated as of November 3, 1997 (the "Merger Agreement"), by and among
Parametric Technology Corporation, a Massachusetts corporation ("Parent"), PTC
Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of
Parent ("Sub"), and Computervision Corporation, a Delaware corporation
("Target"). Pursuant to the Merger Agreement, Sub will merge with and into
Target (the "Merger"). Except as otherwise provided, capitalized terms not
defined herein have the meanings set forth in the Merger Agreement and the
exhibits thereto. All section references, unless otherwise indicated, are to
the United States Internal Revenue Code of 1986, as amended (the "Code").
In our capacity as counsel to Target in the Merger, and for purposes of
rendering this opinion, we have examined and relied upon the Registration
Statement, the Merger Agreement and the exhibits thereto, the Affiliate
Agreements entered into by certain affiliates of Target in connection with the
Merger Agreement and such other documents as we considered relevant to our
analysis. In our examination of documents, we have assumed the authenticity of
original documents, the accuracy of copies, the genuineness of signatures, and
the legal capacity of signatories.
We have assumed that all parties to the Merger Agreement and to any other
documents examined by us have acted, and will act, in accordance with the
terms of such Merger Agreement and documents and that the Merger will be
consummated at the Effective Time pursuant to the terms and conditions set
forth in the Merger Agreement without the waiver or modification of any such
terms and conditions. In addition, we have assumed that each of Parent and
Target will deliver to us prior to the Closing letters (the "Representation
Letters") containing such representations as we may determine are necessary
for purposes of our opinion, which representations will be generally
consistent with representations required by the Internal Revenue Service (the
"IRS") in connection with the issuance of private letter rulings regarding the
classification of transactions as "reorganizations" under Section 368 of the
Code pursuant to Section 368(a)(2)(E) of the Code. We have further assumed
that all representations contained in the Merger Agreement and the Affiliate
Agreements, as well as those representations to be contained in the
Representation Letters, are, and at the Effective Time will be, true and
complete in all material respects, and that any representation made in any of
the documents referred to herein "to the best of the knowledge and belief" (or
similar qualification) of any person or party is correct without such
qualification. We have also assumed that as to all matters for which a person
or entity has represented that such person or entity is not a party to, does
not have, or is not aware of, any plan, intention, understanding, or
<PAGE>
agreement, there is no such plan, intention, understanding, or agreement. We
have not attempted to verify independently such representations, but in the
course of our representation, nothing has come to our attention that would
cause us to question the accuracy thereof.
The conclusions expressed herein represent our judgment as to the proper
treatment of certain aspects of the Merger under the income tax laws of the
United States based upon the Code, Treasury Regulations, case law, and rulings
and other pronouncements of the IRS as in effect on the date of this opinion.
No assurances can be given that such laws will not be amended or otherwise
changed prior to the Effective Time, or at any other time, or that such
changes will not affect the conclusions expressed herein. Nevertheless, we
undertake no responsibility to advise you of any developments after the
Effective Time in the application or interpretation of the income tax laws of
the United States.
Our opinion represents our best judgment of how a court would decide if
presented with the issues addressed herein and is not binding upon either the
IRS or any court. Thus, no assurances can be given that a position taken in
reliance on our opinion will not be challenged by the IRS or rejected by a
court.
This opinion addresses only the specific United States federal income tax
consequences of the Merger set forth below, and does not address any other
federal, state, local, or foreign income, estate, gift, transfer, sales, use,
or other tax consequences that may result from the Merger or any other
transaction (including any transaction undertaken in connection with the
Merger). We express no opinion regarding the tax consequences of the Merger to
shareholders of Target that are subject to special tax rules, and we express
no opinion regarding the tax consequences of the Merger arising in connection
with the ownership of options or warrants for Target stock.
On the basis of, and subject to, the foregoing, and in reliance upon the
representations and assumptions described above, we are of the following
opinion:
1. The Merger will constitute a reorganization within the meaning of Section
368(a);
2. No gain or loss will be recognized by Parent, Sub, or Target as a result
of the Merger;
3. No gain or loss will be recognized by the shareholders of Target upon the
exchange of Target stock solely for shares of Parent stock in the Merger;
4. Cash received by the shareholders of Target in lieu of fractional shares
of Parent stock will be treated as received as a distribution in redemption of
such fractional shares, subject to the provisions of Section 302, as if such
fractional shares had been issued in the Merger and then redeemed by Parent;
5. The tax basis of the shares of Parent stock received by the shareholders
of Target in the Merger will be equal to the tax basis of the shares of Target
stock exchanged therefor in the Merger, reduced by any basis allocable to a
fractional share of Parent stock treated as sold or exchanged under Section
302; and
6. The holding period for the shares of Parent stock received by the
shareholders of Target will include the holdings period for the shares of
Target stock exchanged therefor in the Merger, provided that the shares of
Target stock are held as capital assets at the Effective Time.
In rendering this opinion, we have assumed that Palmer & Dodge LLP has
delivered, and has not withdrawn, an opinion that is substantially similar to
this one. No opinion is expressed as to any federal income tax consequence of
the Merger except as specifically set forth herein, and this opinion may not
be relied upon except with respect to the consequences specifically discussed
herein.
This opinion is intended solely for the purpose of inclusion as an exhibit
to the Registration Statement. It may not be relied upon for any other purpose
or by any other person or entity, and may not be made available to any other
person or entity without our prior written consent. We hereby consent to the
filing of this opinion as
<PAGE>
an exhibit to the Registration Statement and further consent to the use of our
name in the Registration Statement in connection with references to this
opinion and the tax consequences of the Merger. In giving this consent,
however, we do not hereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Hale and Dorr LLP
Hale and Dorr LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
of Parametric Technology Corporation on Form S-4 of our reports dated October
16, 1996, on our audit of the consolidated financial statements and financial
statement schedule of Parametric Technology Corporation as of September 30,
1996 and for the year then ended, which reports are included or incorporated
by reference in the Annual Report on Form 10-K of Parametric Technology
Corporation for the year ended September 30, 1996. We also consent to the
reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
November 7, 1997
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Parametric
Technology Corporation and its subsidiaries of our report dated October 19,
1995, except as to Notes F and G which are dated November 17, 1995, which
appears as Exhibit 23.3 in the Annual Report on Form 10-K for the year ended
September 30, 1996. We also consent to the incorporation by reference of our
report on the Financial Statement Schedule, which appears as Exhibit 23.4 on
page 15 of such Annual Report on Form 10-K. We also consent to the reference
to us under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
November 7, 1997
<PAGE>
EXHIBIT 23.3
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in the Registration Statement
of Parametric Technology Corporation on Form S-4 of our report dated April 4,
1995 relating to the consolidated financial statements of Rasna Corporation
(not presented separately in the Form S-4) appearing in the Annual Report on
Form 10-K of Parametric Technology Corporation for the year ended September
30, 1996 and to the reference to us under the heading "Experts" in such Form
S-4.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
San Jose, California
November 7, 1997
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the Company's Registration/Proxy Statement on Form S-4 of our
report dated March 27, 1997 (except with respect to the matter discussed in
Note 4, as to which the date is April 15, 1997 and the matters discussed in
Note 15, as to which the date is November 10, 1997) included in the current
report on Form 8-K filed with the Commission on November 12, 1997 and to all
references to our Firm included in the Registration Statement/Proxy Statement.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Boston, Massachusetts
November 10, 1997
<PAGE>
EXHIBIT 23.5
November 10, 1997
Computervision Corporation
100 Crosby Drive
Bedford, MA 01730
To Computervision Corporation:
We are aware that Computervision Corporation has incorporated by reference in
a Prospectus/Proxy Statement filed on Form S-4, its Form 10-Q for the three
month period ended March 30, 1997, included in the current report on Form 8-K
filed with the Commission on November 12, 1997, which includes our report
dated April 24, 1997, (except with respect to the matters discussed in Note 8,
as to which the date is November 10, 1997), which includes an explanatory
paragraph that describes the uncertainties related to the Company's ability to
continue as a going concern, covering the unaudited interim financial
information contained therein. Pursuant to Regulation C of the Securities Act
of 1993, this report is not considered a part of the Prospectus/Proxy
Statement filed on Form S-4 prepared or certified by our firm or a report
prepared or certified by our firm within the meaning of Sections 7 and 11 of
the Act.
Very truly yours,
/s/ Arthur Andersen LLP
<PAGE>
EXHIBIT 23.7
CONSENT OF HAMBRECHT & QUIST LLC
We hereby consent to the inclusion of our opinion letter dated November 3,
1997 to the Board of Directors of Computervision Corporation as Appendix C to
the joint Prospectus/Proxy Statement which forms a part of the Registration
Statement on Form S-4 relating to the proposed merger of PTC Acquisition
Corporation, a wholly-owned subsidiary of Parametric Technology Corporation,
with and into Computervision Corporation and to the references to us and to
such opinion in the Prospectus/Proxy Statement under the captions "Summary--
The Merger--Opinion of Financial Advisor," "Background and Reasons for the
Merger--Computervision's Reasons for the Merger; Recommendation of the Board
of Directors," "--Opinion of Computervision's Financial Advisor" and "The
Merger-- Conversion of Computervision Common Stock." In giving such consent,
we do not admit and we disclaim that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations issued by the Securities and Exchange
Commission thereunder.
Habrecht & Quist llc
November 10, 1997 By: /s/ Katherine R. Kirk
---------------------------
Katherine K. Kirk
Managing Director
