<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
SIMWARE INC.
(NAME OF SUBJECT COMPANY)
NETMANAGE BID CO.
PRESTON DELAWARE ACQUISITION CORPORATION
NETMANAGE, INC.
(BIDDERS)
COMMON SHARES, NO PAR VALUE
(TITLE OF CLASS OF SECURITIES)
829219104
(CUSIP NUMBER OF CLASS OF SECURITIES)
CLIFF MOORE
NETMANAGE, INC.
10725 N. DEANZA BLVD.
CUPERTINO, CALIFORNIA 95014
(408) 973-7171
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPY TO:
MICHAEL J. DANAHER
WILSON SONSINI GOODRICH & ROSATI
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
(650) 493-9300
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
TRANSACTION VALUATION(1) AMOUNT OF FILING FEE(2)
- ---------------------------------------------------------------------------------------------
$31,666,106 $6,333
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) Note: The Transaction Value is calculated by multiplying $3.75, the per
share tender offer price, by 8,444,295, which is the sum of (i) the number
of Common Shares outstanding, (ii) the 1,452,260 Common Shares subject to
options outstanding and (iii) the 29,288 Common Shares reserved for issuance
under Simware Inc.'s Employee Share Purchase Plan.
(2) 1/50 of 1% of Transaction Value.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
<TABLE>
<S> <C>
Amount Previously Paid: Filing Party:
Form or Registration No.: Date Filed:
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Simware Inc., a corporation
incorporated under the Canada Business Corporations Act (the "Company"), and the
address of its principal executive offices is at 2 Gurdwara Road, Ottawa,
Ontario, Canada K2E 1A2.
(b) This Tender Offer Statement on Schedule 14D-1 relates to the offer by
NetManage Bid Co., a Nova Scotia unlimited liability company ("Purchaser"), a
direct wholly-owned subsidiary of Preston Delaware Acquisition Corporation, a
Delaware corporation ("Sub") and an indirect wholly-owned subsidiary of
NetManage, Inc., a Delaware corporation ("Parent") to purchase all outstanding
Common Shares (the "Shares") of the Company at a price of U.S. $3.75 per Share,
net to the seller in cash and without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase and Offering
Circular dated October 1, 1999 (the "Offer to Purchase") and in the related
Letter of Transmittal (which, together with any amendments and supplements
thereto, collectively constitute the "Offer"), copies of which are attached
hereto as Exhibits (a)(1) and (a)(2), respectively. Information set forth in the
Introduction and Section 1 ("Terms of the Offer; Expiration Date") of the Offer
to Purchase is incorporated herein by reference.
(c) Information concerning the principal market in which the Shares are
traded and the high and low sales prices for the Shares in such principal market
for each quarterly period during the past two years is set forth in Section 10
("Price Range of Shares; Dividends") of the Offer to Purchase and is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (d) and (g) This Schedule 14D-1 is filed by Purchaser, Parent and
Sub. Information concerning the name, state or other place of organization,
principal business and address of the principal office of each of Purchaser,
Parent and Sub and information concerning the name, business address, present
principal occupation or employment and the name, principal business and address
of any corporation or other organization in which such employment or occupation
is conducted, material occupations, positions, offices or employments during the
last five years and citizenship of each of the executive officers and directors
of Purchaser, Parent and Sub is set forth in the Introduction, Section 12
("Certain Information Concerning Purchaser, Parent and Sub") and Schedule I of
the Offer to Purchase and is incorporated herein by reference.
(e) and (f) During the last five years, none of Purchaser, Parent or Sub
or, to the best knowledge of Purchaser, Parent and Sub, any of their respective
executive officers or directors, has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), nor has any of them been
a party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 12 ("Certain Information
Concerning Purchaser, Parent and Sub") and Section 15 ("Background of the Offer;
Contacts with the Company; the Acquisition Agreement") of the Offer to Purchase
is incorporated herein by reference.
(b) The information set forth in the Introduction, Section 11 ("Certain
Information Concerning the Company"), Section 12 ("Certain Information
Concerning Purchaser, Parent and Sub"), Section 15 ("Background of the Offer;
Contacts with the Company; the Acquisition Agreement") and Section 16 ("Purpose
of the Offer; Plans for the Company After the Offer") of the Offer to Purchase
is incorporated herein by reference.
2
<PAGE> 3
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 13 ("Financing of the
Offer") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS.
(a) - (e) The information set forth in the Introduction, Section 15
("Background of the Offer; Contacts with the Company; the Acquisition
Agreement") and Section 16 ("Purpose of the Offer; Plans for the Company After
the Offer") of the Offer to Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 19 ("Effect of the Offer
on the Market for the Shares, Exchange Listing and Exchange Act Registration")
of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) Not applicable.
ITEM 7.CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 12 ("Certain
Information Concerning Purchaser, Parent and Sub"), Section 15 ("Background of
the Offer; Contacts with the Company; the Acquisition Agreement") and Section 16
("Purpose of the Offer; Plans for the Company After the Offer") of the Offer to
Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 23 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 12 ("Certain Information Concerning
Purchaser, Parent and Sub") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 16 ("Purpose of the Offer; Plans
for the Company after the Offer -- Change in Control Agreements") of the Offer
to Purchase is incorporated herein by reference.
(b) and (c) The information set forth in Section 22 ("Certain Legal Matters
and Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(d) Not applicable.
(e) None.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal and the Acquisition Agreement dated as of September 26, 1999 among
Purchaser, Parent and the Company, copies of which are attached hereto as
Exhibits (a)(1), (a)(2) and (c)(1), respectively, is incorporated herein by
reference.
3
<PAGE> 4
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer to Purchase and Offering Circular.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification
number on Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated October 1, 1999.
(a)(8) Text of Press Release issued by Parent and the Company on
September 27, 1999.
(b) None.
(c)(1) Acquisition Agreement, dated as of September 26, 1999, among
Parent, Purchaser and the Company.
(c)(2) Change in Control Agreement, dated as of September 26, 1999,
between the Company and Mr. Glen Brownlee.
(c)(3) Change in Control Agreement, dated as of September 26, 1999,
between the Company and Mr. Juan Guillen.
(c)(4) Change in Control Agreement, dated as of September 26, 1999,
between the Company and Mr. Michael Peckham.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
4
<PAGE> 5
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
October 1, 1999
NETMANAGE BID CO.
By: /s/ GARY ANDERSON
-------------------------------------------
Name: Gary Anderson
-----------------------------------------
Title: Chief Financial Officer
------------------------------------------
PRESTON DELAWARE ACQUISITION CORPORATION
By: /s/ GARY ANDERSON
-------------------------------------------
Name: Gary Anderson
-----------------------------------------
Title: Chief Financial Officer
------------------------------------------
NETMANAGE, INC.
By: /s/ GARY ANDERSON
-------------------------------------------
Name: Gary Anderson
-----------------------------------------
Title: Chief Financial Officer
------------------------------------------
5
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- ------------------------------------------------------------
<S> <C>
(a)(1) Offer to Purchase and Offering Circular.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification
number on Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated October 1, 1999.
(a)(8) Text of Press Release issued by Parent and the Company on
September 27, 1999.
(b) None.
(c)(1) Acquisition Agreement, dated as of September 26, 1999, among
Parent, Purchaser and the Company.
(c)(2) Change in Control Agreement, dated as of September 26, 1999,
between the Company and Mr. Glen Brownlee.
(c)(3) Change in Control Agreement, dated as of September 26, 1999,
between the Company and Mr. Juan Guillen.
(c)(4) Change in Control Agreement, dated as of September 26, 1999,
between the Company and Mr. Michael Peckham.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
<PAGE> 1
Exhibit (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES
OF
SIMWARE INC.
AT
U.S. $3.75 NET PER SHARE
BY
NETMANAGE BID CO.
A WHOLLY-OWNED SUBSIDIARY OF
PRESTON DELAWARE ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
NETMANAGE, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, OCTOBER 29, 1999, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF SIMWARE INC. HAS UNANIMOUSLY APPROVED THE OFFER
REFERRED TO HEREIN AND DETERMINED THAT THE OFFER IS FAIR TO, AND IN THE BEST
INTERESTS OF, THE SHAREHOLDERS OF SIMWARE INC. AND RECOMMENDS THAT SHAREHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THAT
NUMBER OF COMMON SHARES OF SIMWARE INC. THAT SHALL CONSTITUTE SIXTY-SIX AND
TWO-THIRDS PERCENT (66 2/3%) OF THE THEN OUTSTANDING SHARES ON A FULLY DILUTED
BASIS. SEE SECTION 20 OF THE OFFER TO PURCHASE.
------------------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
common shares (the "Shares") of Simware Inc. should either (1) complete and sign
the accompanying Letter of Transmittal (or a facsimile thereof) in accordance
with the instructions in the Letter of Transmittal and mail or deliver it,
together with the certificate(s) evidencing tendered Shares, and any other
required documents, to the Depositary listed in the Letter of Transmittal or
tender such Shares pursuant to the procedure for book-entry transfer set forth
in Section 3 or (2) request such shareholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such shareholder.
Any shareholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if such shareholder
desires to tender such Shares.
A shareholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply with
the procedure for book-entry transfer on a timely basis, may tender such Shares
by following the procedure for guaranteed delivery set forth in Section 3.
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may also be obtained from the Information Agent or from brokers,
dealers, commercial banks or trust companies.
------------------------
The Dealer Manager for the Offer is:
CIBC WORLD MARKETS LOGO
October 1, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
INTRODUCTION....................................................... 1
OFFER TO PURCHASE.................................................. 3
1. Terms of the Offer; Expiration Date......................... 3
2. Acceptance for Payment and Payment for Shares............... 4
3. Procedures for Accepting the Offer and Tendering Shares..... 5
4. Withdrawal Rights........................................... 7
5. Extension or Variation of the Offer......................... 8
6. Mail Service Interruption................................... 9
7. Notices and Delivery........................................ 9
8. Other Terms of the Offer.................................... 10
9. Certain Income Tax Consequences............................. 10
10. Price Range of Shares; Dividends............................ 13
OFFERING CIRCULAR.................................................. 14
11. Certain Information Concerning the Company.................. 14
12. Certain Information Concerning Purchaser, Parent and Sub.... 17
13. Financing of the Offer...................................... 18
14. Material Changes and Other Information...................... 18
15. Background of the Offer; Contacts with the Company; the
Acquisition Agreement....................................... 18
16. Purpose of the Offer; Plans for the Company After the
Offer....................................................... 25
17. Contracts, Agreements and Share Plans....................... 26
18. Dividends and Distributions................................. 27
19. Effect of the Offer on the Market for the Shares, Exchange
Listing and Exchange Act Registration....................... 28
20. Conditions of the Offer..................................... 28
21. Acquisition of Shares Not Deposited Under the Offer......... 29
22. Certain Legal Matters and Regulatory Approvals.............. 31
23. Fees and Expenses........................................... 32
24. Offerees' Statutory Rights.................................. 32
25. Miscellaneous............................................... 32
SCHEDULE I -- DIRECTORS AND EXECUTIVE OFFICERS..................... I-1
SCHEDULE II -- EXCHANGE RATES...................................... II-1
</TABLE>
<PAGE> 3
To the Holders of Common Shares of
SIMWARE INC.:
INTRODUCTION
NetManage Bid Co., a Nova Scotia unlimited liability company ("Purchaser"),
a direct wholly-owned subsidiary of Preston Delaware Acquisition Corporation, a
Delaware corporation ("Sub") and an indirect wholly-owned subsidiary of
NetManage, Inc., a Delaware corporation, ("Parent") hereby offers to purchase
all outstanding Common Shares (the "Shares") of Simware Inc., a corporation
incorporated under the Canada Business Corporations Act (the "Company"), at a
price of U.S. $3.75 per Share (the "Offer Price"), net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase and in the related Letter of Transmittal (which,
together with any amendments or supplements hereto or thereto, collectively
constitute the "Offer").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, transfer taxes with respect to the purchase of Shares pursuant to
the Offer. Parent will pay all charges and expenses of ChaseMellon Shareholder
Services, L.L.C. (the "Depositary"), CIBC World Markets Corp. (the "Dealer
Manager") and MacKenzie Partners, Inc. (the "Information Agent") incurred in
connection with the Offer. See Section 23.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
APPROVED THE OFFER AND DETERMINED THAT THE OFFER IS FAIR TO, AND IN THE BEST
INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY AND RECOMMENDS THAT SHAREHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. SEE THE
ACCOMPANYING SCHEDULE 14D-9 (AS DEFINED BELOW).
Alliant Partners ("Alliant"), the Company's financial advisor, has
delivered to the Board its written opinion to the effect that, as of the date of
such opinion, the consideration to be received by the shareholders of the
Company pursuant to the Offer is fair from a financial point of view. A copy of
the opinion of Alliant is contained in the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 and Director's Circular (the "Schedule 14D-9"),
which is being mailed to shareholders herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THAT
NUMBER OF SHARES THAT SHALL CONSTITUTE SIXTY-SIX AND TWO-THIRDS PERCENT
(66 2/3%) OF THE THEN OUTSTANDING SHARES ON A FULLY DILUTED BASIS (THE "MINIMUM
CONDITION"). FOR THE PURPOSES HEREOF, SHARES ON A FULLY DILUTED BASIS MEANS ALL
OUTSTANDING SECURITIES ENTITLED GENERALLY TO VOTE IN THE ELECTION OF DIRECTORS
OF THE COMPANY ON A FULLY DILUTED BASIS, AFTER GIVING EFFECT TO THE EXERCISE OF
ALL OPTIONS EXERCISABLE INTO SUCH SHARES. THE OFFER WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, OCTOBER 29, 1999, UNLESS EXTENDED. SEE
SECTIONS 1 AND 20.
The Company has advised the Purchaser that the authorized capital of the
Company consists of an unlimited number of Shares and an unlimited number of
preferred shares issuable in series. As of September 27, 1999, (i) 6,962,747
Shares and no preferred shares were issued and outstanding; (ii) 1,877,921
Shares were reserved for issuance upon the exercise of stock options granted
pursuant to the Company's Employee Stock Option Plan (the "Option Plan") and
outside the Option Plan pursuant to which options for the purchase of 1,452,260
Shares were issued and outstanding; and (iii) 29,288 Shares were reserved for
issuance pursuant to the Company's Employee Share Purchase Plan.
The Offer is being made pursuant to an Acquisition Agreement, dated as of
September 26, 1999 (the "Acquisition Agreement"), among Parent, Purchaser and
the Company. The Acquisition Agreement provides that, among other things, after
the Shares are taken up and paid for under the Offer, Purchaser will utilize the
compulsory acquisition provisions of the Canada Business Corporations Act
("CBCA"), if permitted to do so thereby, to acquire any remaining Shares that
were not deposited under the Offer (the "Compulsory Acquisition"). If the
Compulsory Acquisition is not available, then, Purchaser will seek to call a
special meeting of shareholders to consider a Subsequent Acquisition Transaction
(as defined in Section 2.1 "Acquisition of Shares Not Deposited Under the
Offer") for purposes of enabling Parent to acquire all Shares
1
<PAGE> 4
not acquired under the Offer. The term "Acquisition" as used in the Offer to
Purchase and the Offering Circular and accompanying documents shall mean either
the Compulsory Acquisition or any Subsequent Acquisition Transaction.
Depending on the nature of the transaction, the consummation of the
Subsequent Acquisition Transaction may be subject to the satisfaction or waiver
of certain conditions, including the approval of the Subsequent Acquisition
Transaction by the requisite vote of the shareholders of the Company. In
accordance with the CBCA, the affirmative vote of the holders of two-thirds of
the outstanding Shares may be required to approve the Subsequent Acquisition
Transaction. Consequently, if Purchaser acquires (pursuant to the Offer or
otherwise) at least two-thirds of the outstanding Shares, Purchaser will have
sufficient voting power to approve such Subsequent Acquisition Transaction
without the affirmative vote of any other shareholder. See Section 21,
"Acquisition of Shares Not Deposited Under the Offer".
The Acquisition Agreement provides that, promptly upon the purchase by
Purchaser of Shares satisfying the Minimum Condition, Parent shall be entitled
to designate such number of directors of the Board as is proportionate to the
percentage of outstanding Shares owned by Purchaser and its affiliates, subject
to compliance with the Securities and Exchange Act of 1934, as amended (the
"Exchange Act") and the CBCA. The Acquisition Agreement also provides that the
Company shall exercise reasonable commercial efforts to cause Parent's designees
to be elected as directors of the Company, including increasing the size of the
Board or securing the resignations of incumbent directors or both. The
Acquisition Agreement is more fully described in Section 15, "Background of the
Offer, Contacts with the Company; the Acquisition Agreement."
No appraisal rights are available in connection with the Offer. However,
shareholders may have appraisal rights in connection with the Acquisition,
subject to compliance with the provisions of the CBCA. See Section 21,
"Acquisition of Shares Not Deposited Under the Offer."
Certain Canadian and United States federal income tax consequences of the
sale of Shares pursuant to the Offer are described in Section 9, "Certain Income
Tax Consequences."
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ IN ITS ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
2
<PAGE> 5
OFFER TO PURCHASE
THIS OFFER TO PURCHASE AND OFFERING CIRCULAR (COLLECTIVELY, THE "OFFER TO
PURCHASE") CONSTITUTE THE TAKE-OVER BID CIRCULAR REQUIRED UNDER CANADIAN
SECURITIES LEGISLATION WITH RESPECT TO THE OFFER. THIS OFFER TO PURCHASE,
TOGETHER WITH THE ACCOMPANYING LETTER OF TRANSMITTAL AND NOTICE OF GUARANTEED
DELIVERY, ARE COLLECTIVELY REFERRED TO HEREIN AS THE "OFFER". THEY CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE MAKING A DECISION
WITH RESPECT TO THIS OFFER.
1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of such extension or amendment), Purchaser hereby offers to
purchase all of the Shares at a price of U.S. $3.75 per Share, net to the Seller
in cash, and will pay for all Shares validly tendered prior to the Expiration
Date (as hereinafter defined) and not withdrawn as permitted by Section 4
"Withdrawal Rights". The term "Expiration Date" means 12:00 midnight, New York
City time, on Friday, October 29, 1999, unless and until Purchaser, in its sole
discretion (but subject to the terms and conditions of the Acquisition
Agreement), shall have extended the period during which the Offer is open, in
which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by Purchaser, shall expire.
Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms and conditions of the Acquisition Agreement), at any time and from
time to time, to extend for any reason the period of time during which the Offer
is open, including the occurrence of any of the conditions specified in Section
20 "Conditions of the Offer", by giving oral or written notice of such extension
to the Depositary. During any such extension, all Shares previously tendered and
not withdrawn will remain subject to the Offer, subject to the rights of a
tendering shareholder to withdraw his, her or its Shares. See Section 4
"Withdrawal Rights" and Section 5 "Extension or Variation of the Offer".
Subject to applicable securities legislation and the terms and conditions
of the Acquisition Agreement, Purchaser also expressly reserves the right (i) to
increase the price per Share payable in the Offer, (ii) to terminate the Offer
and not accept for payment any Shares if the conditions to the Offer shall not
be satisfied and (iii) to waive any condition or otherwise amend the Offer in
any respect (subject to the limitations described below), by giving oral or
written notice of such delay, termination, waiver or amendment to the Depositary
and by making a public announcement thereof. However, the Acquisition Agreement
provides that Purchaser will not (i) decrease the price per Share payable
pursuant to the Offer, (ii) reduce the maximum number of Shares to be purchased
in the Offer, (iii) impose conditions to the Offer in addition to those set
forth in Section 20, (iv) amend any other material terms of the Offer in a
manner materially adverse to the Company's shareholders. Purchaser acknowledges
that (i) Rule 14e-1(c) under the Exchange Act requires Purchaser to pay the
consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer and (ii) Purchaser may not delay
acceptance for payment of, or payment for (except as specified in Section 20),
any Shares upon the occurrence of any of the conditions specified in Section 20
without extending the period of time during which the Offer is open.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required under applicable
securities laws. The minimum period during which an offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in the price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. With
respect to a change in price or a change in the percentage of securities sought,
a minimum period of 10 business days is generally required to allow for adequate
dissemination to shareholders. Where there is a variation of the Offer, other
than a variation consisting solely of a waiver of a condition in the Offer, the
Offer must remain open for at least 10 days after a notice of variation has been
delivered to shareholders in Canada. For purposes of the Offer, a "business day"
means any day other than a Saturday, Sunday or federal holiday and consists of
the time period from 12:01 a.m. through 12:00 midnight, New York City time.
The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer and other relevant materials will be
3
<PAGE> 6
mailed by Purchaser to record holders of Shares whose names appear on the
Company's shareholder list and will be furnished, for subsequent transmittal to
beneficial owners of Shares, to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), Purchaser
will accept for payment, and will pay for, all Shares validly tendered prior to
the Expiration Date and not properly withdrawn promptly within 10 days of the
Expiration Date. Subject to applicable rules of the United States and Canadian
securities commissions, Purchaser expressly reserves the right to delay
acceptance for payment of, or payment for, Shares pending receipt of any
regulatory approvals specified in Section 22, "Certain Legal Matters and
Regulatory Approvals", or in order to comply in whole or in part with any other
applicable law.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in Section
3 "Procedure for Accepting the Offer and Payment for Shares", (ii) the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message (as defined below) in
connection with a book-entry transfer and (iii) any other documents required by
the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
Shareholders who cannot comply on a timely basis with the foregoing
procedures for acceptance of the Offer may deposit Share Certificates pursuant
to the procedures set forth below for guaranteed delivery.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn if and when Purchaser gives written notice to the Depositary of
Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon
the terms and subject to the conditions of the Offer, payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering shareholders whose Shares have been
accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if the Share Certificates are
submitted evidencing more Shares than are tendered, the Share Certificates
evidencing unpurchased Shares will be returned, without expense to the tendering
shareholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedure set forth in Section 3 "Procedure for Accepting the Offer and Payment
for Shares", such Shares will be credited to an account maintained at the
Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
Holders of Options. Holders of options to acquire Shares may participate in
this Offer by exercising such options in accordance with and subject to their
terms and, after such exercises, deposit the Shares received as provided for in
this Offer. Reference should be made to the terms of the Acquisition Agreement
dealing with the Option Plan (as defined in the Offer to Purchase) as described
in Section 17 of the Offer to Purchase "Contracts, Agreements and Share Plans."
4
<PAGE> 7
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates, the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such transfer
or assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering shareholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES. In order for a
holder of Shares to validly tender Shares pursuant to the Offer, the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
together with any required signature guarantees, or an Agent's Message in
connection with a book-entry delivery of Shares, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase and
either (i) the Share Certificates evidencing tendered Shares must be received by
the Depositary at such address or such Shares must be tendered pursuant to the
procedure for book-entry transfer described below and a Book-Entry Confirmation
must be received by the Depositary, in each case prior to the Expiration Date,
or (ii) the tendering shareholder must comply with the guaranteed delivery
procedures described below.
Purchaser reserves the right to permit the Offer to be accepted in a manner
other than that set out herein.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of the Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing the Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at the Book-Entry Transfer Facility,
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in connection with a book-entry transfer, and any other required documents,
must, in any case, be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering shareholder must comply with the guaranteed delivery procedures
described below. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by the registered holder
(which term, for purposes of this Section 3, includes any participant in any of
the Book-Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal or (b) if such Shares are tendered for the account of a
firm which is a member of a recognized stock exchange in Canada, a registered
national securities exchange in the United States, the National Association of
Securities Dealers, Inc. or the Investment Dealers Association of Canada, or by
a Canadian chartered bank or trust company in Canada or a commercial bank or
trust company having an office or correspondent in the United States (an
"Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be medallion guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the Share Certificates are
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made or the Share Certificates not tendered
or not accepted for payment are to be returned to a person other than the
registered holder of the Share Certificates surrendered, the tendered Share
Certificates must be endorsed or accompanied by appropriate stock powers, in
5
<PAGE> 8
either case signed exactly as the name or names of the registered holders appear
on the Share Certificates, with the signatures on the Share Certificates or
stock powers guaranteed in the manner described above. See Instructions 1 and 5
to the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates evidencing such Shares are
not immediately available or such shareholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such shareholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered, provided that all the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is
received prior to the Expiration Date by the Depositary as provided below;
and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees (or, in the case
of a book-entry transfer, an Agent's Message), and any other documents
required by the Letter of Transmittal are received by the Depositary within
three National Association of Securities Dealers Automated
Quotation -- National Market System ("Nasdaq") trading days after the date
of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram, telex or facsimile transmission to the Depositary and
must include a signature medallion guaranteed by an Eligible Institution in the
form set forth in the form of Notice of Guaranteed Delivery made available by
Purchaser.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message), and any other
documents required by the Letter of Transmittal. UNDER NO CIRCUMSTANCES WILL ANY
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any or all tenders determined by it not to be in proper
form or the acceptance for payment of which may, in the opinion of its counsel,
be unlawful. Purchaser also reserves the absolute right to waive any condition
of the Offer or any defect or irregularity in the tender of any Shares of any
particular shareholder, whether or not similar defects or irregularities are
waived in the case of other shareholders. No tender of Shares will be deemed to
have been validly made until all defects and irregularities relating thereto
have been cured or waived. None of Purchaser, Parent, Sub, the Depositary, the
Information Agent, the Dealer Manager or any other person will be under any duty
to give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. Purchaser's interpretation
of the terms and conditions of the Offer (including the Letter of Transmittal
and the instructions thereto) will be final and binding.
Other Requirements. The execution of the Letter of Transmittal by a
tendering shareholder irrevocably appoints each of the Depositary, any officer
of Purchaser and any other person designated by Purchaser in writing as the true
and lawful agent, attorney, attorney-in-fact and proxy of that shareholder with
respect to Shares deposited and purchased by Purchaser (the "Purchased
Securities") and with respect to any and all dividends, distributions, payments,
securities, rights, warrants, assets or other interests (collectively, "Other
Securities") accrued, declared, paid, issued, transferred, made or distributed
on or in respect of the Purchased Securities on or after the date of the Offer
to Purchase, effective from the date that Purchaser takes up and
6
<PAGE> 9
pays for the Purchased Securities (the "Effective Date"), with full power of
substitution, in the name of and on behalf of such shareholder (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to:
(a) register or record, transfer and enter the transfer of the Purchased
Securities and any Other Securities on the appropriate register of holders
maintained by the Company; (b) vote, execute and deliver any and all instruments
of proxy, authorizations or consents in respect of any and all such Purchased
Securities and Other Securities, revoke any such instruments, authorizations or
consents given prior to or after the Effective Date and designate in any such
instruments of proxy any person or persons as the proxy or the proxy nominee of
the shareholder in respect of such Purchased Securities and Other Securities
including, without limiting the generality of the foregoing, in connection with
any meeting (whether annual, special or otherwise) of holders of securities of
the Company (or any adjournments thereof); (c) execute, endorse and negotiate,
for and in the name of and on behalf of the registered shareholder of the
Purchased Securities and Other Instruments, any and all checks or other
instruments representing any distribution payable to or to the order of such
registered shareholder; and (d) exercise any and all rights of the shareholder
in respect of such Purchased Securities and Other Securities; all as set forth
in the Letter of Transmittal.
The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering shareholder and Purchaser upon the terms and subject to the conditions
of the Offer.
Backup Withholding. Shareholders may be subject to a 31% backup withholding
tax under United States tax law when they receive payments of cash pursuant to
the Offer or the Acquisition. To avoid the imposition of the backup withholding
tax, U.S. Shareholders should submit the attached Substitute Form W-8 and
Non-U.S. Shareholders should submit the attached Substitute Form W-9. For
purposes of this Offer to Purchase, the Letter of Transmittal, and other
documents included in this tender offer package, "U.S. Shareholder" and
"Non-U.S. Shareholder" have the meanings indicated below.
"U.S. Shareholder" means one of (1) a citizen or resident of the United
States, including an alien individual (such as a Canadian citizen) who is a
lawful permanent resident of the United States or meets the "substantial
presence test" under Section 7701(b) of the Code (for example, because the alien
individual is present in the United States for 183 days in the current calendar
year), (2) a corporation or partnership created or organized in the United
States or under the laws of the United States or any political subdivision, or
(3) a foreign estate or trust under Section 7701(a)(31) of the Code. "Non-U.S.
Shareholder" means any shareholder that is not a U.S. Shareholder, except for
Non-U.S. Shareholders, if any, who are subject to United States federal income
tax on payments received pursuant to the Offer or the Acquisition because such
payments are effectively connected with their conduct of a U.S. trade or
business. Any such shareholder receiving payments that are effectively connected
with the conduct of a U.S. trade or business should contact an independent tax
advisor with respect to the backup withholding and other U.S. tax consequences
of receiving payments pursuant to the Offer or the Acquisition.
U.S. Shareholders. In order to avoid "backup withholding" on payments of
cash pursuant to the Offer or the Acquisition (including cash paid pursuant to
the exercise of appraisal rights), a U.S. Shareholder surrendering Shares in the
Offer or the Acquisition must, unless an exemption applies, provide the
Depositary with such shareholder's correct taxpayer identification number
("TIN") on a Substitute Form W-9 and certify under penalties of perjury that
such TIN is correct and that such stock holder is not subject to backup
withholding. If a U.S. Shareholder does not provide such shareholder's correct
TIN or fails to provide the certifications described above, the Internal Revenue
Service (the "IRS") may impose a penalty on such shareholder and payment of cash
to such shareholder pursuant to the Offer or the Acquisition may be subject to
backup withholding of 31%. All shareholders surrendering Shares pursuant to the
Offer should complete and sign the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary to
avoid backup withholding.
Non-U.S. Shareholders. In order to avoid 31% "backup withholding,"
Non-U.S. Shareholders should properly complete and provide to the Depositary the
enclosed Substitute Form W-8.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are
irrevocable except that tendered Shares may be withdrawn by or on behalf of the
tendering shareholder at any time prior to the
7
<PAGE> 10
Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn by such shareholder at any time
after Monday, November 15, 1999. In addition, if: (i) there is a variation in
the terms of this Offer before the Expiration Date (including any extension of
the period during which the Shares may be deposited hereunder or any
modification of any term or condition of the Offer, but excluding, unless
otherwise required by applicable law, a variation which consists solely of an
increase in the consideration offered under this Offer, where the Expiration
Date is not extended for a period of greater than 10 days); or (ii) on or before
the Expiration Date or after the Expiration Date, but before the expiry of all
rights of withdrawal in respect of this Offer, a change occurs in the
information contained in this Offer or in the accompanying Offering Circular, as
amended from time to time, that would reasonably be expected to affect the
decision of a holder of Shares to accept or reject this Offer, any Shares
deposited under this Offer but not yet taken up by Purchaser may be withdrawn by
or on behalf of the depositing holder at any time before the expiration of 10
days from the date of mailing or other communication of the notice of such
variation or change, subject to abridgement of that period pursuant to such
order or orders as may be granted by Canadian courts or securities regulatory
authorities. If Purchaser is delayed in taking up or paying for Shares or is
unable to take up or pay for Shares pursuant to the Offer for any reason, then,
without prejudice to Purchaser's rights under the Offer, the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares
may not be withdrawn except to the extent that tendering shareholders are
entitled to withdrawal rights as described in this Section 4. Any such delay
will be by an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover page of this
Offer to Purchase and must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of such Shares, if different from that of the person who
tendered such Shares. If Share Certificates have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such Share
Certificates, the serial numbers shown on such Share Certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution, unless such Shares have been
tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer as set forth in
Section 3, any notice of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares, in which case a notice of withdrawal will be effective if delivered to
the Depositary by any method of delivery described in the first sentence of this
paragraph. Any Shares properly withdrawn will thereafter be deemed not to have
been validly tendered for purposes of the Offer. However, withdrawn Shares may
be re-tendered at any time prior to the Expiration Date by following one of the
procedures described in Section 3.
In addition to the foregoing rights of withdrawal, shareholders in certain
provinces and territories of Canada are entitled to statutory rights of
rescission in certain circumstances. See Section 24 "Offerees' Statutory
Rights".
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser in its sole discretion,
whose determination will be final and binding. None of Purchaser, Parent, Sub,
the Depositary, the Information Agent, Dealer Manager or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
5. EXTENSION OR VARIATION OF THE OFFER. Unless extended at the sole
discretion of Purchaser, the Offer will be open for acceptance until the
Expiration Date. The Expiration Date may be extended, at the sole discretion of
Purchaser, from time to time, provided that the Expiration Date may not, without
the Company's prior written consent, be extended beyond November 19, 1999.
Purchaser may, at any time and from time to time prior to the Expiration
Date or at any other time if permitted by law and subject to the terms of the
Acquisition Agreement, vary the Offer or extend the Expiration Date (to the
extent permitted by law or by the terms of the Offer) by giving oral or written
notice of such extension or variation to the Depositary at its principal office
in Ridgefield Park, New Jersey. Upon the giving of notice to the
8
<PAGE> 11
Depositary, the Expiration Date shall be deemed to be extended to the date
specified in such notice or the Offer shall be deemed to be varied in the manner
described therein, as the case may be. Purchaser will, as soon as practicable
after giving any such notice, publicly announce such extension or variation and
cause the Depositary to communicate such notice to all shareholders whose Shares
have not been taken up prior to the extension or variation as required by
applicable securities legislation and in the manner set forth in Section 7
"Notices and Delivery". Any notice of variation will be deemed to have been
given and be effective on the day on which it is delivered or otherwise
communicated to the Depositary at its principal office in Ridgefield Park, New
Jersey. In the case of an extension of the Offer, a public announcement of the
extension shall be made not later than 9:00 a.m. (New York City time) on the
first business day following the previously scheduled Expiration Date. During
any such extension, all Shares previously deposited and not taken up and paid
for or withdrawn will remain subject to the Offer and, subject to applicable
law, may be accepted for purchase by Purchaser on or before the Expiration Date
in accordance with the terms of the Offer.
Notwithstanding the foregoing, the Offer may not be extended by Purchaser
if all of the terms and conditions of the Offer have been fulfilled, complied
with or waived by Purchaser unless Purchaser first takes up and pays for all
Shares validly deposited under the Offer and not withdrawn.
Where the terms of the Offer are varied, the Offer shall not expire before
10 days after the notice of variation in respect of such variation has been
given to shareholders unless otherwise permitted by applicable law. During any
such extension or in the event of any variation, all Shares previously deposited
and not taken up or withdrawn will remain subject to the Offer and may be
accepted for purchase by Purchaser in accordance with the terms hereof, subject
to Section 4 "Withdrawal Rights". No extension of the Expiration Date or
variation of the Offer shall constitute a waiver by Purchaser of any of its
rights under Section 20 of the Offer, "Conditions of the Offer".
Pursuant to the Acquisition Agreement, Purchaser reserves the right to
waive any conditions of the Offer, to increase the price per Share payable in
the Offer, to extend the duration of the Offer, or to make any other changes in
the terms and conditions of the Offer; provided, however, that no such change
may be made which decreases the price per Share payable in the Offer, reduces
the maximum number of Shares to be Purchased in the Offer, imposes conditions to
the Offer in addition to those set forth in the Acquisition Agreement or amends
any other material terms of the Offer in a manner materially adverse to the
Company's shareholders, and provided, further, that the Offer may not be
extended beyond November 19, 1999, without the Company's prior written consent.
6. MAIL SERVICE INTERRUPTION. Notwithstanding any other provisions of the
Offer, checks, share certificates and any other relevant documents will not be
mailed if Purchaser determines that delivery thereof by mail may be delayed by a
disruption of mail service. Shareholders entitled to checks or any other
relevant documents which are not mailed for the foregoing reason may take
delivery thereof at the office of the Depositary at which their Shares were
deposited until such time as Purchaser has determined that delivery by mail will
no longer be delayed. Notwithstanding Section 2 "Acceptance for Payment and
Payment for Shares", checks and other relevant documents not mailed for the
foregoing reason will be conclusively deemed to have been delivered on the first
day upon which they are available for delivery to the depositing shareholders at
the office of the Depositary at which the Shares were deposited. Notice of any
determination by Purchaser not to mail as a result of mail service delay or
interruption shall be given to shareholders in accordance with Section 7
"Notices and Delivery".
7. NOTICES AND DELIVERY. Except as otherwise provided in the Offer, any
notice which Purchaser or the Depositary may provide, give or cause to be given
under the Offer will be deemed to have been properly given if it is in writing
and is mailed by first-class mail to registered shareholders at their respective
addresses appearing in the registers maintained by the Company in respect of
Shares and will be deemed to have been delivered and received on the first
business day following mailing. These provisions shall apply notwithstanding any
accidental omission to provide or give notice to any one or more shareholders
and notwithstanding any interruption of mail service in Canada or elsewhere
following mailing. In the event of any interruption of mail service, Purchaser
intends to make reasonable efforts to disseminate the notice by other means,
such as publication. Subject to the approval of the applicable regulatory
authorities, in the event of any interruption of
9
<PAGE> 12
mail service, any notice which Purchaser or the Depositary may provide, give or
cause to be given under the Offer will be deemed to have been properly provided
or given to or received by shareholders if it is given to the Nasdaq for
dissemination through its facilities and a summary of the material facts thereof
is published once in a newspaper of general circulation in the cities of New
York, Toronto and Ottawa.
The Offer will be mailed to registered shareholders or made in such other
manner as is permitted by applicable regulatory authorities and will be
furnished by the Offer to stockbrokers, investment dealers, banks and similar
persons whose names, or the names of whose nominees, appear in the register
maintained by the Company in respect of the Shares or, if security position
listings are available, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares when such listings are received.
WHENEVER THE OFFER CALLS FOR DOCUMENTS TO BE DELIVERED TO THE DEPOSITORY,
SUCH DOCUMENTS WILL NOT BE CONSIDERED DELIVERED UNLESS AND UNTIL THEY HAVE BEEN
PHYSICALLY RECEIVED AT ONE OF THE ADDRESSES LISTED FOR THE DEPOSITARY ON THE
LETTER OF TRANSMITTAL OR NOTICE OF GUARANTEED DELIVERY, AS APPLICABLE. WHENEVER
THE OFFER CALLS FOR DOCUMENTS TO BE DELIVERED TO A PARTICULAR OFFICE OF THE
DEPOSITARY, SUCH DOCUMENTS WILL NOT BE CONSIDERED DELIVERED UNLESS AND UNTIL
THEY HAVE BEEN PHYSICALLY RECEIVED AT THE PARTICULAR OFFICE AT THE ADDRESS
INDICATED ON THE LETTER OF TRANSMITTAL OR NOTICE OF GUARANTEED DELIVERY, AS
APPLICABLE.
8. OTHER TERMS OF THE OFFER. No stockbroker, investment dealer or other
person has been authorized to give any information or to make any representation
on behalf of Purchaser other than as contained in this Offer and, if any such
information or representation is given or made, it must not be relied upon as
having been authorized. No stockbroker, investment dealer or other person shall
be deemed to be the agent of Purchaser, any of its affiliates, or the Depositary
for the purposes of this Offer.
This Offer is not being made to, nor will deposits be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Purchaser may, in its sole discretion, take such action as it may
deem necessary to extend the Offer to holders of Shares in any such
jurisdiction.
Purchaser, in its sole discretion, shall be entitled to make a final and
binding determination of all questions relating to the interpretation of the
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery, the validity of any acceptance of this Offer, the validity of any
elections and the validity of any withdrawal of Shares.
9. CERTAIN INCOME TAX CONSEQUENCES.
U.S. Federal Income Tax Consequences.
U.S. SHAREHOLDERS The receipt of cash for Shares by a U.S. Shareholder
pursuant to the Offer or in the Acquisition (including by reason of exercise of
dissenters' rights) will be a taxable transaction for United States federal
income tax purposes and may also be a taxable transaction under applicable
state, local or foreign tax laws. In general, a U.S. Shareholder will recognize
gain or loss for U.S. federal income tax purposes equal to the difference
between the amount received in exchange for the Shares sold and such
shareholder's adjusted tax basis in such Shares. Assuming the Shares constitute
capital assets in the hands of the shareholder, such gain or loss will be
capital gain or loss. If, at the time of the Offer or the Acquisition, the
Shares then exchanged have been held for more than one year by such shareholder,
such gain or loss will be long-term capital gain or loss. Under current law,
long-term capital gains of individuals are generally taxed at lower rates than
items of ordinary income and short-term capital gains. Capital losses are only
deductible to the extent of capital gains plus, in the case of taxpayers other
than corporations, $3,000 of ordinary income. In the case of individuals and
other non-corporate taxpayers, capital losses that are not currently deductible
may be carried forward to other years, subject to certain limitations.
10
<PAGE> 13
NON-U.S. SHAREHOLDERS. Non-U.S. Shareholders generally will not be
subject to United States federal income tax on the receipt of cash for Shares
pursuant to the Offer or in the Acquisition, unless such Non-U.S. Shareholder's
gain is effectively connected with a United States trade or business; or, in the
case of gain recognized by an individual Non-U.S. Shareholder, such individual
is present in the United States for 183 days or more during the taxable year and
certain other conditions are satisfied.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN SHAREHOLDERS,
DEPENDING ON THEIR CIRCUMSTANCES, INCLUDING SHAREHOLDERS WHO ACQUIRED SHARES
PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. SHAREHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX
CONSEQUENCES OF THE OFFER AND THE ACQUISITION TO THEM, INCLUDING THE APPLICATION
AND EFFECT OF THE ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND FOREIGN TAX
LAWS.
Canadian Federal Income Tax Consequences. The following is a summary of the
principal Canadian federal income tax considerations under the Income Tax Act
(Canada) (the "Act") generally applicable to a holders of Shares who disposes of
his or her Shares under the Offer. This summary applies only to shareholders
who, for purposes of the Act, hold their Shares as capital property and deal at
arm's length with the Company and Purchaser. The Shares will generally be
considered capital property to a shareholder unless either the shareholder holds
such Shares in the course of carrying on a business, or the shareholder has
acquired the Shares in a transaction or transactions considered to be an
adventure in the nature of trade. Certain shareholders whose Shares might not
otherwise qualify as capital property may be entitled to have them so qualify by
making the election permitted by subsection 39(4) of the Act. A shareholder who
is a "financial institution" for whom Shares constitute "mark-to-market
property" under the Act are prevented from treating the Shares as capital
property.
This summary is based upon the current provisions of the Act and the
regulations thereunder (the "Regulations") in force on the date hereof as well
as the proposals to amend the Act and the Regulations publicly announced by the
Minister of Finance prior to the date hereof (collectively, the "Amendments"),
the current provisions of the Canada-United States Income Tax Convention (the
'Treaty") and counsel's understanding of the current administrative practices of
Revenue Canada, Customs, Excise & Taxation ("Revenue Canada") in relation to the
administration of the Act and Regulations. No assurance can be given that the
Act or the Regulations will be amended as proposed by the Amendments, or at all.
This summary does not otherwise take into account or anticipate any changes in
law, whether by judicial, governmental or legislative action or decision, or
changes in the administrative practices of Revenue Canada nor does it consider
provincial or foreign income tax considerations.
THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO CONSTITUTE,
NOR SHOULD IT BE CONSTRUED TO CONSTITUTE, LEGAL OR TAX ADVICE TO ANY PARTICULAR
SHAREHOLDER. SHAREHOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISERS AS TO
THE PARTICULAR INCOME TAX CONSEQUENCES TO THEM OF THE OFFER.
CANADIAN RESIDENTS. The following portion of the summary is generally
applicable to holders of Shares who are residents of Canada for the purposes of
the Act (a "Canadian Holder").
Sale Pursuant to the Offer. A Canadian Holder will realize a capital gain
(or a capital loss) equal to the amount by which the cash received by the
Canadian Holder for Shares sold pursuant to the Offer exceeds (or is exceeded
by) the adjusted cost base to the shareholder of the Shares and any reasonable
costs of disposition.
A Canadian Holder will be required to include in income three-quarters of
the amount of any capital gain (the "taxable capital gain") realized by the
Canadian Holder and will generally be entitled to deduct three-quarters of the
amount of any capital loss so realized against taxable capital gains realized by
the Canadian Holder in the year of sale, in any of the three years preceding the
year of sale or in any year following the year of sale.
11
<PAGE> 14
In the case of Canadian Holder that is a corporation, the amount of any
special loss otherwise determined may be reduced by the amount of dividends
(including deemed dividends) previously received by the corporate Canadian
Holder on the Shares to the extent and under the circumstances prescribed in the
Act, analogous rules apply where the corporate Canadian Holder is a member of a
partnership or a beneficiary of a trust that owns Share.
Capital gains realized by an individual Canadian Holder or certain trusts
may give rise to alternative minimum tax under the Act. A Canadian Holder which
is a Canadian-controlled private corporation may be liable to pay an additional
refundable tax of 6 2/3 percent on a taxable capital gains.
Compulsory Acquisition and Subsequent Acquisition Transaction. A Dissenting
Offeree (as defined in "Acquisition of Shares Not Deposited Under the Offer")
whose shares are acquired by Purchaser pursuant to its rights under Section 206
of the CBCA will realize a capital gain (or a capital loss) equal to the amount
by which the consideration received by the dissenting offeree from Purchaser, or
the fair value for the Shares received by the dissenting offeree from Purchaser,
exceeds (or is exceeded by) the adjusted cost base to the dissenting offeree of
the Shares and any reasonable costs of disposition (see "Sale Pursuant to the
Offer").
As discussed in Section 21 "Acquisition of Shares Not Deposited Under the
Offer", Purchaser may acquire all of the Shares not deposited pursuant to the
Offer in accordance with applicable law including by way of Canadian Subsequent
Acquisition Transaction (as defined in Section 21) involving the Company and
Purchaser or an affiliate of Purchaser. The tax considerations applicable to a
Canadian Holder of Shares in these circumstances will depend on the transaction
actually undertaken by Purchaser and may be substantially different from those
discussed above. Holders of Shares are advised to consult with their own
advisors in this regard.
NON-RESIDENTS OF CANADA. The following portion of this summary is generally
applicable to holders of Shares who, at all relevant times, for purposes of the
Act, are not resident or deemed to be resident in Canada, do not hold or use,
and are not deemed to hold or use, Shares in connection with a trade or business
carried on, or deemed to be carried on, in Canada, and in the case of insurers
who carry on an insurance business in Canada and elsewhere, do not hold Shares
that are "designated insurance property" as defined in the Act or that are
effectively connected with an insurance business carried on in Canada (the
"Non-Resident Holders").
Sale Pursuant to the Offer and Compulsory Acquisition
A Non-Resident Holder who disposes of a Share (whether pursuant to the
Offer or on a compulsory acquisition as described above under "(i) Canadian
residents") will not be subject to tax pursuant to the Act on a capital gain
realized on the disposition unless the Share is "taxable Canadian property" of
the Non-Resident Holder within the meaning of the Act and no relief is afforded
under any applicable tax treaty. A share will generally not be taxable Canadian
property to a Non-Resident Holder provided such Holder, or persons with whom
such Holder did not deal at arm's length (within the meaning of the Act), or any
combination thereof, did not own 25% or more of the issued shares of any class
or series of the Company at any time within five years immediately preceding the
date of disposition. It is understood that Revenue Canada, Taxation is of the
view that for purposes of the 25% calculation at any particular time in respect
of a particular Non-Resident Holder, options in respect of such shares,
including warrants, held by the Non-Resident Holder and persons with whom the
Non-Resident Holder does not deal at arm's length will be treated as exercised.
Shares may be deemed taxable Canadian property of a Non-Resident Holder who
receives such Shares in exchange for other taxable Canadian property.
Even if a Share constitutes or is deemed to constitute taxable Canadian
property of a Non-Resident Holder, and provided such Holder is a resident of the
United States for purposes of the Treaty, the Treaty will generally exempt such
a Holder from tax in respect of the disposition of a Share provided its value is
not derived principally from real property (including resource property)
situated in Canada. The Company believes that the value of the Shares is not
derived principally from such property on the date hereof. This relief under the
Treaty may not be available to a Non-Resident Holder who had a permanent
establishment or
12
<PAGE> 15
fixed base available to such Holder in Canada during the 12 months immediately
preceding the disposition of the Share.
Subsequent Acquisition Transaction
As discussed in "Subsequent Acquisition Transaction", Purchaser may acquire
all of the Shares not deposited pursuant to the Offer in accordance with
applicable law including by way of a Subsequent Acquisition Transaction
involving the Company and Purchaser or an affiliate of Purchaser. The tax
considerations applicable to a Non-Resident Holder in these circumstances will
depend on the transaction actually undertaken by Purchaser and may be
substantially different from those discussed above. Non-Resident Holders are
advised to consult with their own advisors in this regard.
10. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are listed and principally
traded on Nasdaq. The following table sets forth, for the periods indicated, the
aggregate volume and the high and low sales prices per Share on Nasdaq as
reported by the Dow Jones News Service. All prices are quoted in U.S. dollars.
<TABLE>
<CAPTION>
HIGH LOW VOLUME(1)
------ ------ ---------
<S> <C> <C> <C>
Fiscal year ending April 30, 1998:
First Quarter............................................. $1.750 $0.563 1,672,800
Second Quarter............................................ 3.313 1.313 1,761,900
Third Quarter............................................. 3.250 2.000 1,146,300
Fourth Quarter............................................ 5.500 2.625 3,278,700
Fiscal year ending April 30, 1999:
First Quarter............................................. $4.938 $2.313 1,431,300
Second Quarter............................................ 4.563 2.375 1,544,700
Third Quarter............................................. 4.500 2.938 2,137,200
Fourth Quarter............................................ 7.125 3.000 3,330,900
Fiscal Year ending April 30, 2000:
First Quarter............................................. $4.500 $2.875 483,500
Previous Six Months
March, 1999............................................... $4.188 $3.000 821,700
April, 1999............................................... 7.125 3.625 2,023,100
May, 1999................................................. 4.500 3.531 426,800
June, 1999................................................ 4.188 3.125 733,300
July, 1999................................................ 3.563 2.875 290,300
August, 1999.............................................. 3.063 2.500 806,100
</TABLE>
- ---------------
(1) Aggregate trading volume per period
The Company historically has not declared dividends.
On September 24, 1999, the last full trading day prior to the announcement
of the execution of the Acquisition Agreement and of Purchaser's intention to
commence the Offer, the closing price per Share as reported on Nasdaq was $3.00.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
DATED: October 1, 1999 NETMANAGE BID CO.
By: /s/ ZVI ALON
------------------------------------
Zvi Alon
Chief Executive Officer
13
<PAGE> 16
OFFERING CIRCULAR
This Offering Circular forms part of the Offer to Purchase dated the date
hereof made by Purchaser to purchase all of the Shares for U.S. $3.75 cash for
each Share tendered. Reference is made to the Offer to Purchase for details of
its terms and conditions.
OTHER THAN INFORMATION CONCERNING THE SHARES HELD BY PURCHASER AND OTHERS
CONTAINED IN SECTION 12 "CERTAIN INFORMATION CONCERNING PURCHASER, PARENT AND
SUB", ALL INFORMATION CONCERNING THE COMPANY CONTAINED IN THIS OFFERING CIRCULAR
HAS BEEN TAKEN FROM OR IS BASED UPON PUBLICLY AVAILABLE DOCUMENTS. ALTHOUGH
PURCHASER, PARENT AND SUB HAVE NO KNOWLEDGE THAT WOULD INDICATE THAT ANY
STATEMENTS IN, TAKEN FROM, OR BASED ON SUCH DOCUMENTS ARE UNTRUE OR INCOMPLETE,
PURCHASER, PARENT AND SUB DO NOT ASSUME ANY RESPONSIBILITY FOR THE ACCURACY OR
COMPLETENESS OF THE INFORMATION CONTAINED IN THOSE DOCUMENTS OR FOR ANY FAILURE
OF THE COMPANY TO DISCLOSE ANY EVENTS THAT MAY HAVE OCCURRED OR MAY AFFECT THE
SIGNIFICANCE OR ACCURACY OF ANY SUCH INFORMATION.
11. CERTAIN INFORMATION CONCERNING THE COMPANY.
General. The Company is a corporation incorporated under the CBCA with its
principal executive offices located at 2 Gurdwara Road, Ottawa, Ontario, Canada
K2E 1A2. The Company develops, markets and supports software products for
development and support of Web applications based on integrating enterprise data
sources, remote connectivity, and the automation of LAN administration tasks for
enterprise network environments.
Capitalization of the Company. The Company has advised the Purchaser that
the authorized capital of the Company consists of an unlimited number of Shares
and an unlimited number of preferred shares issuable in series. As of September
27, 1999, (i) 6,962,747 Shares and no preferred shares were issued and
outstanding; (ii) 1,877,921 Shares were reserved for issuance upon the exercise
of stock options granted pursuant to the Option Plan and outside the Option Plan
pursuant to which options for the purchase of 1,452,260 Shares were issued and
outstanding; and (iii) 29,288 Shares were reserved for issuance pursuant to the
Company's Employee Share Purchase Plan.
Financial Information. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the audited financial Statements contained in the
Company's Annual Report on Form 20-F for the fiscal year ended April 30, 1999
(the "Form 20-F"). More comprehensive financial information is included in the
Form 20-F and other documents filed by the Company with the United States
Securities and Exchange Commission (the "Commission"). The financial information
that follows is qualified in its entirety by reference to such reports and other
documents, including the financial statements and related notes contained
therein. Such reports and other documents may be examined and copies may be
obtained from the offices of the Commission in the manner set forth at the end
of this Section 11.
14
<PAGE> 17
SIMWARE INC.
SELECTED CONSOLIDATED FINANCIAL DATA
FIVE YEAR FINANCIAL SUMMARY(1)
<TABLE>
<CAPTION>
US $ EQUIVALENT(2)
------------------
YEAR ENDED APRIL 30, YEAR ENDED
--------------------------------------------------- APRIL 30,
1995 1996 1997 1998 1999 1999
------- ------- ------- ------- ------- ------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
(Canadian GAAP)
Revenue
Product license.................................... $ 9,331 $ 8,258 $ 7,249 $ 8,957 $12,436 $ 8,236
Maintenance........................................ 7,090 7,164 6,008 5,617 7,009 4,642
Professional Services.............................. 2,589 2,086 948 1,724 2,033 1,346
------- ------- ------- ------- ------- -------
19,010 17,508 14,205 16,298 21,478 14,224
------- ------- ------- ------- ------- -------
Cost of revenue
Product license.................................... 353 548 545 148 110 73
Maintenance and professional services.............. 1,900 1,856 1,435 1,466 1,646 1,090
------- ------- ------- ------- ------- -------
2,253 2,404 1,980 1,614 1,756 1,163
------- ------- ------- ------- ------- -------
Gross profit......................................... 16,757 15,104 12,225 14,684 19,722 13,061
------- ------- ------- ------- ------- -------
Expenses
Selling and marketing.............................. 11,088 12,379 11,979 8,412 10,467 6,932
Research and development........................... 2,468 3,479 5,023 3,342 4,393 2,909
General and administrative......................... 2,626 2,732 2,801 2,626 2,564 1,698
Foreign exchange (gain) loss....................... (66) (150) 117 257 413 274
Restructuring charge(3)............................ -- -- 1,837 -- -- --
------- ------- ------- ------- ------- -------
16,116 18,440 21,757 14,637 17,837 11,813
------- ------- ------- ------- ------- -------
Earnings (loss) from operations...................... 641 (3,336) (9,532) 47 1,885 1,248
Other income (expense)............................... (7) 522 453 372 356 236
------- ------- ------- ------- ------- -------
Earnings (loss) before income taxes.................. 634 (2,814) (9,079) 419 2,241 1,484
Provision for income taxes......................... 65 32 28 27 126 83
------- ------- ------- ------- ------- -------
Net earnings (loss).................................. $ 569 $(2,846) $(9,107) $ 392 $ 2,115 $ 1,401
------- ------- ------- ------- ------- -------
Earnings (loss) per share............................ $ 0.11 $ (0.46) $ (1.35) $ 0.06 $ 0.31 $ 0.21
======= ======= ======= ======= ======= =======
Weighted average number of common shares
outstanding........................................ 5,070 6,165 6,754 6,797 6,890 6,890
(US GAAP)(4)
Net earnings (loss).................................. $ 847 $(3,027) $(9,300) $ 531 $ 2,168 $ 1,436
------- ------- ------- ------- ------- -------
Earnings (loss) per share............................ $ 0.15 $ (0.49) $ (1.38) $ 0.08 $ 0.31 $ 0.21
======= ======= ======= ======= ======= =======
Weighted average number of common shares
outstanding........................................ 5,584 6,165 6,754 6,797 6,890 6,890
</TABLE>
<TABLE>
<CAPTION>
US $ EQUIVALENT(1)
------------------
APRIL 30, YEAR ENDED
-------------------------------------------------- APRIL 30,
1995 1996 1997 1998 1999 1999
------ ------- ------- ------- ------- ------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
(Canadian GAAP)
Cash and cash equivalents............................. $1,869 $13,847 $ 7,347 $ 8,055 $ 7,104 $ 4,872
Working capital....................................... 1,368 14,641 5,569 6,104 7,835 5,374
Total assets.......................................... 9,955 24,294 16,136 15,581 16,625 11,403
Shareholders equity................................... 3,076 17,075 8,129 8,713 11,048 7,578
</TABLE>
- ---------------
(1) Figures are in Canadian dollars unless otherwise noted.
(2) Solely for the convenience of the reader, Canadian dollar statement of
earnings amounts have been translated into US dollars using the average rate
for the relevant period, and Canadian dollar balance sheet amounts have been
translated using the relevant period-end rate. These translations are not
necessarily representative of the amounts that would have been reported if
the Company historically had reported its financial statements in US
dollars. In addition, the rates utilized are not necessarily indicative of
the rates in effect at any other time.
(3) In the year ended April 30, 1997, the Company recorded a restructuring
charge of $1.8 million related to the reorganization of several sales
offices, relocation of employees and equipment, employee severance costs and
other restructuring activities.
(4) The Selected Consolidated Financial Data are prepared on the basis of
Canadian GAAP, which is different in some regards from US GAAP. For a
description of the differences between Canadian GAAP and US GAAP in regards
to the Company's consolidated financial statements, see Note 15 of the Notes
to Consolidated Financial Statements.
15
<PAGE> 18
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required to file periodic reports,
and other information with the Commission relating to its business, financial
condition and other matters. Information as of particular dates concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities and any material
interest of such persons in transactions with the Company is required to be
disclosed in circulars distributed to the Company's shareholders and filed with
the Commission. Such reports and other information should be available for
inspection at the public reference facilities maintained by the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, and also should be available for
inspection at the Commission's regional offices located at Seven World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials
may also be obtained by mail, upon payment of the Commission's customary fees,
by writing to its principal office at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material should also be available for inspection at
the offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.
Other Financial Information. In connection with Purchaser's and Parent's
review of the Company and in the course of the negotiations between the Company
and Purchaser and Parent, the Company provided those parties with certain
business and financial information about the Company which Parent and Purchaser
believe is not publicly available. This information included forecasts of
potential financial performance of the Company (without regard to the impact on
the Company of a transaction with Parent). Subsequent to the time such
information was provided to Parent, the Company advised Parent that the
Company's estimated fiscal 2000 revenues could be approximately U.S. $14,775,000
and its fiscal 2000 net income could be approximately U.S. $480,000.
PROJECTED INFORMATION OF THIS TYPE IS BASED ON ESTIMATES AND ASSUMPTIONS
THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY
OF WHICH ARE BEYOND THE COMPANY'S CONTROL. ACCORDINGLY, THERE CAN BE NO
ASSURANCE THAT THE PROJECTED RESULTS WOULD BE REALIZED OR THAT ACTUAL RESULTS
WOULD NOT BE SIGNIFICANTLY HIGHER OR LOWER THAN THOSE SET FORTH ABOVE. IN
ADDITION, THESE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE
OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES
ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING
PROJECTIONS AND FORECASTS AND ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY
BECAUSE SUCH INFORMATION WAS MADE AVAILABLE TO THE PURCHASER AND PARENT BY THE
COMPANY. NONE OF PARENT, PURCHASER, THE COMPANY, ANY OF THEIR RESPECTIVE
AFFILIATES OR ANY OTHER PARTY ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OR
VALIDITY OF THE FOREGOING PROJECTIONS.
16
<PAGE> 19
12. CERTAIN INFORMATION CONCERNING PURCHASER, PARENT AND SUB. Purchaser is
a newly formed Nova Scotia unlimited liability company organized in connection
with the Offer and has not carried on any activities other than in connection
with the Offer. The principal offices of Purchaser are located at 10725 N.
DeAnza Boulevard, Cupertino, California 95014. Purchaser is a direct
wholly-owned subsidiary of Sub.
Until immediately prior to the time that Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer. Because Purchaser is newly formed and has minimal assets and
capitalization, no meaningful financial information regarding Purchaser is
available.
Sub is a newly incorporated Delaware corporation organized in connection
with the Offer and has not carried on any activities other than in connection
with the Offer. The principal offices of Sub are located at 10725 N. DeAnza
Boulevard, Cupertino, California 95014.
Parent is a Delaware corporation, with its principal office at 10725 N.
DeAnza Boulevard, Cupertino, California 95014. Parent's principal business is
developing, marketing and supporting software applications for connecting
personal computers to UNIX, AS/400, midrange and corporate mainframe computers
and software that increases the productivity of corporate call centers, and
allows real-time application sharing on corporate networks and across the
Internet.
The name, citizenship, business address, principal occupation or
employment, and five-year employment history for each of the directors and
executive officers of Purchaser and Parent and certain other information are set
forth in Schedule I hereto.
Neither Parent, Sub or Purchaser nor, to the best knowledge of Purchaser,
Parent, Sub, any of the persons listed in Schedule I to this Offer to Purchase
or any associate or majority-owned subsidiary, holding body corporate of
Purchaser, Parent, Sub or any of the persons so listed beneficially owns,
exercises control or direction over or has any right to acquire, directly or
indirectly, any Shares; and neither Parent or Purchaser nor, to the best
knowledge of Purchaser and Parent, any of the persons or entities referred to
above nor any director, executive officer or subsidiary of Parent, Sub or
Purchaser has effected any transaction in the Shares during the six months
preceding the date of the Offer. To the knowledge of the Purchaser, after
reasonable enquiry, there is no person or company who beneficially owns,
directly or indirectly, more than 10% of any class of equity securities of the
Company or any person or company acting jointly or in concert with the Purchaser
that owns any securities of the Company.
Except as provided in the Acquisition Agreement and as otherwise described
in this Offer to Purchase, to the best of their knowledge, none of Parent, Sub,
Purchaser or any of their respective subsidiaries or any of the persons listed
in Schedule I to this Offer to Purchase, or any associate of the persons so
listed on Schedule I hereto, has any contract, arrangement, commitment,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, finder's fees, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss, guarantees of
profits, division of profits or loss or the giving or withholding of proxies. To
the best of their knowledge and except as set forth in this Offer to Purchase,
none of Purchaser, Parent, Sub, nor any of the persons listed on Schedule I
hereto, has had any business relationship or transaction with the Company or any
of its executive officers, directors or affiliates that is required to be
reported under the rules and regulations of the Commission applicable to the
Offer. Set forth below in Section 15 of this Offer to Purchase, "Background of
the Offer, Contacts with the Company; the Acquisition Agreement", and elsewhere
herein is a summary description of the mutual contacts, negotiations and
transactions between any of Purchaser, Parent, Sub, or any of their respective
subsidiaries or any of the persons listed in Schedule I to this Offer to
Purchase, on the one hand, and the Company or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets.
17
<PAGE> 20
Except as disclosed in this Offer to Purchase, there are no contracts,
arrangements or agreements made or proposed to be made between Purchaser and any
of the directors or officers of the Company, and no payments or other benefits
have been proposed to be made or given by way of compensation for loss of office
or as to their remaining in or retiring from office if the Offer is successful.
Purchaser will not acquire Shares while the Offer is outstanding, other
than as described in the Offer.
The audited balance sheets of Parent and the related statements of income,
total recognized gains and losses, changes in combined shareholders' equity and
cash flows for the three years ended December 31, 1999, 1998 and 1997 are
contained in Item 14 of the annual report of Parent filed with the Commission on
March 31, 1999 (the "Annual Report") and are hereby incorporated by reference. A
copy of the Annual Report may be obtained by: (i) writing to Parent at 10725 N.
DeAnza Boulevard, Cupertino, California 95014, attention: Corporate Secretary,
(ii) mail, upon payment of the Commission's customary fees, by writing to its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549 or (iii) downloading such report from the Commission's world-wide web site
at http://www.sec.gov. Additionally, the Annual Report may be inspected at the
Commission's offices or the office of Nasdaq Operations, 1735 K Street, N.W.,
Washington, D.C. 20006.
13. FINANCING OF THE OFFER. Purchaser estimates that the amount of funds
required to purchase all outstanding Shares on a fully diluted basis pursuant to
the Offer and to pay fees and expenses related to the Offer will be
approximately $32.8 million. Purchaser will obtain all of such funds from Parent
or one of its affiliates. Parent and its affiliates will provide such funds from
working capital.
14. MATERIAL CHANGES AND OTHER INFORMATION. Purchaser is not aware of any
information which indicates that a material change has occurred in the affairs
of the Company since the date of the last published financial statements of the
Company other than as has been publicly disclosed by the Company. The Purchaser
has no knowledge of any other matter that has not previously been generally
disclosed but which would reasonably be expected to affect the decision of
shareholders to accept or reject the Offer.
15. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY; THE ACQUISITION
AGREEMENT.
Background of the Offer
The Company engages in certain lines of business that are complementary to
those of Parent. In January 1999, Parent contacted the Company through a third
party to discuss possibilities for a strategic alliance. Abe Ostrovsky, a
director of Parent, met with William G. Breen, Chairman of the Board of
Directors of the Company, and Michael R. Peckham, the Company's Vice President
of Finance and Administration and indicated that Parent was interested in the
Company's technologies and products.
On February 9, 1999, Zvi Alon, Chairman and Chief Executive Officer of
Parent, then met with Glen Brownlee, the Company's President and Chief Executive
Officer, and Mr. Peckham at the Company's offices in Ottawa. Mr. Alon indicated
that Parent was interested in Company's activities relating to Internet/Extranet
technologies and products, and expressed interest in a possible acquisition of
the Company by Parent. The Company and Parent entered into a letter agreement
outlining the terms of confidentiality that would pertain to future discussions
regarding a potential transaction.
In March 1999, representatives of the two companies conducted extensive
discussions regarding possible synergies, fit, overlap and market issues. On
March 17, 1999, Mr. Alon and Gary Anderson, Senior Vice President and Chief
Financial Officer of Parent, met with Messrs. Brownlee and Peckham, along with
John Cromwell of Alliant, at Parent's offices. Discussions between the two
companies regarding various structures under which the companies could be
combined did not result in any firm offer.
In August 1999, the Company contacted Parent to ascertain whether Parent
was still interested in acquiring the Company. On August 10, 1999, Mr. Alon and
a representative of CIBC World Markets Corp. ("CIBC"), met with Messrs.
Brownlee, Peckham and Cromwell in Ottawa to discuss a possible acquisition of
the Company by Parent.
18
<PAGE> 21
On August 19 and 20, 1999, Mr. Alon and representatives of CIBC met with
Messrs. Brownlee and Peckham, Juan Guillen, the Company's Vice President of
Engineering, and a representative of Alliant, the Company's financial adviser,
to review each company's respective market focus and operations. During these
meetings, Messrs. Brownlee, Peckham and Guillen were introduced to a number of
members of Parent's senior management.
On September 7 and 8, 1999, Messrs. Alon and Anderson met with Messrs.
Brownlee and Peckham at Parent's offices, at which time Parent indicated that it
would be willing to pay U.S. $3.75 per Share, subject to the satisfactory
completion of due diligence and definitive documentation.
On September 13, 1999, Messrs. Brownlee and Peckham contacted Parent to
commence negotiations for the acquisition of the Company by Parent. From
September 14 through 17, 1999, Parent and its legal and financial advisors
conducted a due diligence review of the Company. On September 15, 1999, the
parties entered into a "no-shop" letter agreement which provided for exclusive
negotiations through October 5, 1999 and for a "breakup fee" of U.S. $1 million
in the event the Company accepted another offer.
On September 24, 1999, the two companies presented the draft Acquisition
Agreement to their respective boards of directors for approval. Alliant
delivered an opinion to the Company's Board of Directors that the proposed
transaction was fair to the Company's shareholders from a financial point of
view.
On September 25 and 26, 1999, the parties and their respective legal
counsel made final changes to the Acquisition Agreement.
On the evening of September 26, 1999, the parties executed the agreements.
On September 27, 1999, the transaction was publicly announced.
The Acquisition Agreement
THE FOLLOWING IS A SUMMARY OF THE ACQUISITION AGREEMENT, A COPY OF WHICH IS
FILED AS AN EXHIBIT TO THE TENDER OFFER STATEMENT ON SCHEDULE 14D-1 (THE
"SCHEDULE 14D-1") FILED BY PURCHASER AND PARENT WITH THE COMMISSION IN
CONNECTION WITH THE OFFER. SUCH SUMMARY IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE ACQUISITION AGREEMENT. CAPITALIZED TERMS NOT OTHERWISE DEFINED
IN THE FOLLOWING DESCRIPTION OF THE ACQUISITION AGREEMENT HAVE THE RESPECTIVE
MEANINGS ASCRIBED TO THEM IN THE ACQUISITION AGREEMENT.
The Offer. The Acquisition Agreement provides for the commencement of the
Offer as promptly as reasonably practicable, but in no event later than five
business days after the initial public announcement of Purchaser's intention to
commence the Offer. The obligation of Purchaser to accept for payment Shares
tendered pursuant to the Offer is subject to the satisfaction of the Minimum
Condition and certain other conditions that are described in Section 20 hereof.
Purchaser and Parent have agreed that no change in the Offer may be made which
decreases the price per Share payable in the Offer, reduces the maximum number
of Shares to be purchased in the Offer, imposes conditions to the Offer in
addition to those set forth in Section 20 hereof or amends any other material
terms of the Offer in a manner materially adverse to the Company's shareholders.
The Compulsory Acquisition; Subsequent Acquisition Transaction. The
Acquisition Agreement provides that, after the Shares are taken up and paid for
under the Offer, Purchaser will utilize the compulsory acquisition provisions of
the CBCA if permitted to do so under the CBCA (the "Compulsory Acquisition"). As
a result of the Compulsory Acquisition, the separate corporate existence of
Purchaser will cease and the Company will become an indirect wholly owned
subsidiary of Parent. If the Compulsory Acquisition is not available, then
Purchaser will, if required, seek to cause a special meeting of shareholders of
the Company to be called to consider a Subsequent Acquisition Transaction (as
defined in Section 21 hereof) of the Company with Purchaser or an affiliate of
Purchaser, if possible to do so under, and subject to compliance with, all
applicable laws, including Canadian securities laws and U.S. federal securities
laws. See Section 21 "Acquisition of Shares Not Deposited Under the Offer."
Company Covenants. Pursuant to the Acquisition Agreement, the Company has
covenanted and agreed to carry on the businesses of the Company and its
subsidiaries (the "Subsidiaries" and, individually, a
19
<PAGE> 22
"Subsidiary"), between the date of the Acquisition Agreement and the Effective
Time, unless Parent shall otherwise consent in writing in the usual, regular and
ordinary course, in substantially the same manner as heretofore conducted and in
compliance with all applicable laws and regulations, to pay its debts and taxes
when due subject to good faith disputes over such debts or taxes, to pay or
perform other material obligations when due, 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. In addition, the Company will promptly notify Parent of any breach of
its representations, warranties or covenants under the Acquisition Agreement.
The Acquisition Agreement provides that, except as permitted by the terms of the
Acquisition Agreement, neither the Company nor any subsidiary will do any of the
following, without the prior written consent of Parent: (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) 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 of the Acquisition Agreement and as previously
disclosed in writing to the other, or adopt any new severance plan; (c) transfer
or license to any person or entity or otherwise extend, amend or modify in any
material respect any rights to the Company's intellectual property or other
proprietary rights, or enter into grants to future patent rights, other than in
the ordinary course of business, consistent with past practice; (d) buy any
intellectual property of a third party or enter into any license agreement with
respect to the intellectual property of any third party for an acquisition or
license, the price for which exceeds $50,000 individually or in the aggregate,
other than "shrink wrap", "click wrap", and similar widely available commercial
end-user licenses; (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 existing on the date of the Acquisition Agreement; (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 (1) the issuance of Shares,
pursuant to the exercise of stock options therefor outstanding as of the date of
the Acquisition Agreement, and (2) Shares issuable pursuant to the Company's
Employee Share Purchase Plan; (h) cause, permit or propose any amendments to any
charter document or Bylaw (or similar governing instruments of any
subsidiaries); (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 assets which are material, individually or in
the aggregate, to the business of the Company, or enter into any joint ventures,
strategic partnerships or alliances; (j) sell, lease, license, encumber or
otherwise dispose of any properties or assets which are material, individually
or in the aggregate, to the business of the Company, except in the ordinary
course of business consistent with past practice; (k) incur any indebtedness for
borrowed money (other than ordinary course trade payables or pursuant to
existing credit facilities 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, or guarantee any debt securities of others; (l) adopt
or amend any employee benefit or employee stock purchase or employee option
plan, or enter into any employment contract, pay any special bonus or special
remuneration to any director or employee, or increase the salaries or wage rates
of its officers or employees other than in the ordinary course of business,
consistent with past practice, or change in any material respect any management
policies or procedures; (m) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business; (n) make any grant of exclusive rights to any third party; (o) except
in the ordinary course of business, modify, amend or terminate any material
contract or agreement involving payments of $50,000 or more to which the Company
or any
20
<PAGE> 23
subsidiary thereof is a party or waive, release or assign any material rights or
claims thereunder; (p) materially revalue any of its assets or, except as
required by GAAP, make any change in accounting methods, principles or
practices; (q) make or change any material election in respect of taxes, adopt
or change any accounting method in respect of taxes, enter into any closing
agreement, settle any claim or assessment in respect of taxes, or consent to any
extension or waiver of the limitation period applicable to any claim or
assessment in respect of taxes in an amount in excess of $50,000 in the
aggregate; (r) commence any litigation or settle any litigation for an amount in
excess of the greater of $50,000 in the aggregate or the amount reserved in
respect thereof in the Company Balance Sheet, as set forth in Section 4.1 of the
Company Schedules to the Acquisition Agreement; or (s) agree in writing or
otherwise to take any of the actions described in (a) through (r) above.
Board of Directors. The Acquisition Agreement provides that, promptly upon
the purchase by Purchaser of Shares satisfying the Minimum Condition, Parent
shall be entitled to designate such number of directors of the Board as is
proportionate to the percentage of outstanding Shares owned by Purchaser and its
affiliates, subject to compliance with applicable law. The Acquisition Agreement
also provides that the Company shall exercise reasonable commercial efforts to
increase the size of the Board of Directors to the extent permitted by its
Certificate of Incorporation and/or secure the resignations of such number of
directors as is necessary to cause Parent's designees to be elected as directors
of the Company.
The Acquisition Agreement provides that following the election or
appointment of Purchaser's designees in accordance with the immediately
preceding paragraph, any amendment or termination of the Acquisition Agreement
by the Company or any extension by the Company of the time for the performance
of any of the obligations or other acts of Parent or Purchaser or waiver of any
of the Company's rights thereunder, will require the concurrence of a majority
of those directors of the Company then in office who were not designated by
Parent.
Confidentiality. The Acquisition Agreement provides that subject to and in
accordance with the terms and conditions of that certain letter dated February
9, 1999 between Parent and the Company (the "Confidentiality Agreement"), from
the date of the Acquisition Agreement to the Effective Time, the Company shall,
and shall cause its subsidiaries, officers, directors, employees and agents to,
afford the officers, employees and agents of Parent, Purchaser and their
affiliates and the attorneys, accountants, banks, other financial institutions
and investment banks working with Parent or Purchaser, and their respective
officers, employees and agents, reasonable access at all reasonable times and on
reasonable prior notice to its officers, employees, agents, properties, books,
records and contracts, and shall furnish Parent, Purchaser and their affiliates
and the attorneys, banks, other financial institutions and investment banks
working with Parent or Purchaser, all financial, operating and other data and
information as they reasonably request. Subject to the requirements of law,
Parent and Purchaser shall require their officers, employees and agents, and the
attorneys, banks, other financial institutions and investment banks who obtain
such information to hold all information obtained pursuant to the Acquisition
Agreement or the Confidentiality Agreement in accordance with the terms and
conditions of the Confidentiality Agreement.
The No Shop Provisions. Acquisition Agreement provides that the Company 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 encourage submission of, any
proposals or offers by any person, entity or group (other than Parent and its
affiliates, agents and representatives), or (ii) participate in any discussions
or negotiations with, or disclose any non-public information concerning the
Company or any of its subsidiaries to, or afford any access to the properties,
books or records of the Company 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 Parent and its affiliates, agents and
representatives), in connection with any Acquisition Proposal with respect to
the Company. Under the Acquisition Agreement, an "Acquisition Proposal" with
respect to an entity means any proposal or offer relating to (i) any merger,
consolidation, sale of substantial assets, plan or arrangement, reorganization,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transactions involving the entity or any subsidiaries of the entity
(other than sales of assets or inventory in the ordinary course of business or
as permitted under the terms of the Acquisition Agreement), (ii) sale of
outstanding shares of capital stock of the entity (including without limitation
by way of a tender offer or an exchange offer), (iii) the acquisition by any
person of beneficial
21
<PAGE> 24
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) which beneficially owns, or has the right to acquire
beneficial ownership of, 10% or more of the then outstanding shares of capital
stock of the entity; 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. The Company has also agreed that it will immediately cease any and
all existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. Pursuant to the Acquisition
Agreement, the Company will (i) notify Parent as promptly as practicable if any
inquiry or proposal is made or any information or access is requested in
connection with an Acquisition Proposal or potential Acquisition Proposal and
(ii) as promptly as practicable notify Parent of the terms and conditions of any
such Acquisition Proposal. In addition, from and after the date of the
Acquisition Agreement, until the earlier of the Effective Time or termination of
the Acquisition Agreement pursuant to its terms, the Company 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 Parent).
Notwithstanding the foregoing, the Acquisition Agreement provides that,
prior to consummation of the Offer, the Company may, to the extent the Board
determines, in good faith, after consultation with outside legal counsel, that
the Board's fiduciary duties under applicable law 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 the
Company in writing, an unsolicited bona fide Acquisition Proposal which the
Board of the Company in its good faith reasonable judgment determines, after
consultation with its independent financial advisors, would result in a
transaction more favorable than the Offer to the shareholders of the Company
from a financial point of view and for which financing, to the extent required,
is then committed or which, in the good faith reasonable judgment of the Board
of the Company (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 "Superior Proposal"). In the event the Company
receives a Superior Proposal, nothing contained in the Acquisition Agreement
(but subject to the terms thereof) will prevent the Board of the Company from
recommending such Superior Proposal to the Company's shareholders, provided that
(i) the Board determines, in good faith, after consultation with outside legal
counsel, that such action is required by its fiduciary duties under applicable
law; (ii) the Company shall not recommend to its shareholders a Superior
Proposal until at least 48 hours after Parent's receipt of a copy of such
Superior Proposal (or a description of the terms and conditions thereof, if not
in writing), and (iii) the Company shall not recommend to its shareholders a
Superior Proposal unless the Company shall have terminated the Acquisition
Agreement and paid the Break-up Fee. Notwithstanding anything to the contrary in
the Acquisition Agreement, the Company will not provide any non-public
information to a third party unless the Company 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 such non-public information has been
previously delivered to Parent. Nothing contained in this paragraph shall
prohibit the Company from at any time taking and disclosing to its shareholders
a position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or
from making any disclosure to the Company's shareholders if, in the good faith
judgment of the Company's Board, after consultation with outside counsel,
failure so to disclose would constitute a breach of its fiduciary duties to the
Company's shareholders under applicable law; provided, however, that neither the
Company nor its Board nor any committee thereof shall, except as permitted by
this paragraph, withdraw or modify, or propose to withdraw or modify, its
position with respect to the Acquisition or the Acquisition Agreement or approve
or recommend, or propose to approve or recommend, an Acquisition Proposal;
provided, further, that the taking of a position by the Company pursuant to Rule
14e-2(a)(2) or (3) of the Exchange Act in respect of an Acquisition Proposal
shall not be deemed a withdrawal, a modification or a proposal to withdraw or
modify its position with respect to the Acquisition for purposes of the
Acquisition Agreement.
Failures to Comply. Pursuant to the Acquisition Agreement, the Company
shall give prompt notice in writing to Parent, and Parent and Purchaser shall
give prompt notice in writing to the Company, of (i) the occurrence, or failure
to occur, of any event which occurrence or failure would be likely to cause any
22
<PAGE> 25
representation or warranty contained in the Acquisition Agreement to be untrue
or inaccurate in any material respect at any time from the date of the
Acquisition Agreement through the Effective Time and (ii) any failure of the
Company, Parent or Purchaser, as the case may be, or of any officer, director,
employee or agent thereof, to comply with or satisfy in all material respects
any covenant, condition or agreement to be complied with or satisfied by it
under the Acquisition Agreement; provided, however, no such notification shall
affect the representations or warranties of the parties or the conditions to the
obligations of the parties thereunder. The Acquisition Agreement provides that
the Company shall give prompt notice in writing to Parent of (i) any act,
omission to act, event or occurrence which, with the passage of time or
otherwise, would likely have a Material Adverse Effect on the Company and (ii)
any material contingent liability of the Company or any of its subsidiaries for
which such party reasonably believes it will, with the passage of time or
otherwise, become liable; provided, however, that no such notification shall
affect the representations or warranties of the parties or the conditions to the
obligations of the parties thereunder.
Option Plan; Purchase Plan. The Acquisition Agreement provides that
immediately upon expiration of the Offer and acceptance of the Shares for
payment, either (i) the Company will terminate the Option Plan and other
outstanding options after giving all optionees the required notice of
termination and permitting them to exercise all options, vested and unvested, on
a net exercise basis, or (ii) if requested by Parent, the Company will cancel
each outstanding option, whether vested or unvested, in exchange for cash
payments equal to the Offer Price minus the exercise price per share of such
option, multiplied by the number of shares subject to the Option, which cash
payment shall be reduced by any applicable withholding taxes and be without
interest. Pursuant to the Acquisition Agreement, Parent and Purchaser will cause
the Company to terminate the Employee Share Purchase Plan (the "Purchase Plan")
as of the date of the Subsequent Acquisition Transaction. At such time, each
participant in the current offering period under the Purchase Plan will be paid
an amount equal to the Offer Price minus the purchase price of shares in the
current offering period (Can. $4.00), multiplied by the number of shares that
would have been purchased by them under the Purchase Plan if it had remained in
effect through December 31, 1999. No offering period will be commenced under the
Purchase Plan covering any period after 1999, whether or not the Subsequent
Acquisition Transaction occurs after December 31, 1999.
Indemnification; Litigation. Pursuant to the Acquisition Agreement, Parent
agrees that from and after the Effective Time all rights to indemnification or
exculpation now existing in favor of the officers and directors of the Company
(collectively, the "Indemnified Parties") as provided in its Certificate of
Incorporation, Bylaws or the CBCA, shall survive the Offer and shall continue in
full force and effect for a period of six years from the Effective Time. The
Acquisition Agreement provides that on or prior to the Effective Time, Parent
shall cause the Company to obtain six years "tail" coverage under the Company's
existing directors' and officers' liability insurance covering the Indemnified
Parties who are currently covered by such insurance, on terms and conditions no
less favorable to such directors and officers than those in effect on the date
of the Acquisition Agreement, provided that in no event shall Parent or the
Company be required to expend for more than 150% of the current year's annual
premium, net of premium credits available.
The Acquisition Agreement provides that the Company shall give Parent the
opportunity to participate in the defense or settlement of any shareholder
litigation against the Company and its directors relating to any of the
transactions contemplated by the Acquisition Agreement until the purchase of
Shares pursuant to the Offer, and thereafter, shall give Parent the opportunity
to direct the defense of such litigation and, if Parent so chooses to direct
such litigation, Parent shall give the Company and its directors an opportunity
to participate in such litigation; provided, however, that no settlement of such
litigation shall be agreed to without Parent's consent; and provided further
that no settlement requiring a payment by a director shall be agreed to without
such director's consent.
Anti-takeover Provisions. Pursuant to the Acquisition Agreement, if any
"fair price," "moratorium," "control share acquisition," "shareholder
protection" or other form of anti-takeover statute, regulation or charter
provision or contract is or shall become applicable to the Offer or the
transactions contemplated by the Acquisition Agreement, the Company and the
Board of the Company shall grant such approvals and take such actions as are
necessary under such laws and provisions so that the transactions contemplated
by the Acquisition Agreement may be consummated as promptly as practicable on
the terms contemplated thereby
23
<PAGE> 26
and otherwise act to eliminate or minimize the effects of such statute,
regulation, provision or contract on the transactions contemplated thereby.
Representations and Warranties. The Acquisition Agreement contains various
customary representations and warranties of the parties thereto including
representations by the Company as to the absence of certain changes or events
concerning the Company's business, compliance with law, litigation, employee
benefit plans, real property and leases, trademarks, intellectual property,
environmental matters, Year 2000 compliance, and material contracts.
Termination; Fees and Expenses. The Acquisition Agreement provides that it
may be terminated and the Acquisition and the other transactions contemplated
thereby may be abandoned at any time prior to the Effective Time, whether before
or after any approval and adoption of the Acquisition Agreement and the
transactions contemplated thereby by the shareholders of the Company: (a) by
mutual written agreement of the Boards of Directors of Parent and the Company;
(b) by either Parent or the Company if (i) the Offer shall be terminated or
expire without any Shares having been purchased pursuant to the Offer; provided,
however, that a party shall not be entitled to terminate the Acquisition
Agreement if it is in material breach of its representations and warranties,
covenants or other obligations thereunder or (ii) any court of competent
jurisdiction in Canada or the United States or other Canadian or United States
governmental body shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the Offer and such
order, decree, ruling or other action shall have become final and nonappealable;
(c) by Parent if (i) if the Board of the Company or any committee thereof shall
have approved, or recommended that shareholders of the Company accept or
approve, an Acquisition Proposal by a third party, or shall have resolved to do
any of the foregoing; (ii) if the Board of the Company or any committee thereof
shall have withdrawn or modified its approval of, or recommendation that the
shareholders of the Company accept the Offer or shall have resolved to do any of
the foregoing; (iii) if the Company shall have failed to include in the Schedule
14D-9 the recommendation of the Board of Directors of the Company that the
shareholders of the Company accept the Offer; (iv) prior to the purchase of
Shares pursuant to the Offer, in the event that any of the conditions to the
Offer set forth in the Acquisition Agreement (see Section 20, "Conditions of the
Offer") shall not be satisfied; or at any time on or after the date of the
Acquisition Agreement, any of the following events shall have occurred: (A)
there shall have been any action taken or threatened, or any statute, rule,
regulation, judgment, temporary restraining order, preliminary or permanent
injunction or other order, decree or ruling proposed, sought, promulgated,
enacted, entered, enforced or deemed applicable to the Offer by any governmental
entity or arbitration panel that could reasonably be expected to, directly or
indirectly, (1) make the acceptance for payment or the payment for, or the
purchase of some or all of the Shares pursuant to the Offer illegal or otherwise
delay, restrict or prohibit consummation of the Offer, (2) result in a delay in
or restrict the ability of Purchaser, or render Purchaser unable, to accept for
payment, pay for or purchase some or all of the Shares, (3) require the
divestiture by Parent, Purchaser, the Company or any of their respective
subsidiaries or affiliates of all or any portion of the business, assets or
property of any of them or any Shares or impose any material limitation on the
ability of any of them to conduct their business and own such assets, properties
or Shares, (4) impose any material limitation on the ability of Parent,
Purchaser or their affiliates to acquire or hold or to exercise effectively all
rights of ownership of the Shares, including the right to vote any Shares
purchased by any of them on all matters properly presented to the shareholders
of the Company, (5) result in a material diminution in the benefits expected to
be derived by Parent or Purchaser as a result of the transactions contemplated
by the Offer or the Agreement, or (6) impose any material condition to the Offer
or the Acquisition Agreement unacceptable to Parent or Purchaser; or (B) the
Company shall have breached, or failed to comply with, in any material respect,
any of its covenants or obligations under the Acquisition Agreement or any
representation or warranty of the Company in the Acquisition Agreement shall
have been incorrect, in any material respect, when made or shall have since
ceased to be true and correct in any material respect; or (C) the Board of the
Company or any committee thereof shall have (1) withdrawn or modified (including
without limitation, by amendment of the Schedule 14D-9 in a manner adverse to
Parent or Purchaser its approval or recommendation of the Offer, (2) approved or
recommended any Acquisition Proposal by a third party other than the Offer, (3)
publicly resolved to do any of the foregoing, or (4) upon a request to reaffirm
the Company's approval or recommendation of the Offer, the Board of the Company
shall fail to do so within two business days after such request is made; or (D)
the Acquisition Agreement shall have
24
<PAGE> 27
been terminated in accordance with its terms, or the Offer shall have been
terminated with the consent of the Company; or (E) there shall have occurred any
Material Adverse Effect (as that term is defined in the Acquisition Agreement)
on the Company, or any event, fact or change which could reasonably be expected
to result in a Material Adverse Effect on the Company; or (v) if the Company is
in material breach of any of its covenants or obligations under the Acquisition
Agreement, or any representation or warranty of the Company contained in the
Acquisition Agreement shall have been incorrect, in any material respect, when
made or shall have since ceased to be true and correct in any material respect;
or (d) by the Company (i) if the Offer shall not have been commenced or Parent
or Purchaser shall have failed to take up and pay for validly tendered Shares in
violation of the terms of the Offer within ten days after the expiration of the
Offer; provided, however, that the Company shall not be entitled to terminate
the Acquisition Agreement if it is in material breach of its representations and
warranties, covenants or other obligations under the Acquisition Agreement; (ii)
if the Board of the Company has resolved to, and in fact does, recommend to the
Company's shareholders that they accept a Superior Proposal, provided that all
the provisions of the Acquisition Agreement with respect to Superior Proposals
have been fully complied with, and provided further that the Company shall have
paid to Parent the entire Break-up Fee; or (iii) prior to the purchase of Shares
pursuant to the Offer, if Parent or Purchaser is in material breach of any of
its covenants or obligations under the Acquisition Agreement, or any
representation or warranty of Parent or Purchaser contained in the Acquisition
Agreement shall have been incorrect, in any material respect, when made or shall
have since ceased to be true and correct in any material respect.
The Acquisition Agreement provides that the Company shall pay to Parent, in
same day funds, upon demand an amount equal to U.S. $2,500,000 (the "Break-up
Fee") in the event that (a) the Board of the Company or any committee thereof
shall have approved, or recommended that shareholders of the Company accept or
approve, an Acquisition Proposal by a third party, or shall have resolved to do
any of the foregoing; (b) the Board of the Company or any committee thereof
shall have withdrawn or modified its approval of, or recommendation that the
shareholders of the Company accept or approve (as the case may be), the Offer or
shall have resolved to do any of the foregoing; or (c) the Company shall have
failed to include in the Schedule 14D-9 and Director's Circular the
recommendation of the Board of the Company that the shareholders of the Company
accept the Offer. The Acquisition Agreement provides that recommendation of a
Superior Proposal in accordance with the provisions of the Acquisition Agreement
shall not constitute a breach of the Acquisition Agreement.
Pursuant to the Acquisition Agreement the Break-up Fee shall not be deemed
to be liquidated damages, and the right to the payment of the Break-up Fee shall
be in addition to (and not a maximum payment in respect of) any other damages or
remedies at law or in equity to which Parent or Purchaser may be entitled as a
result of the Company's violation or breach of any term or provision of the
Acquisition Agreement. The Acquisition Agreement provides that except as
otherwise provided in this Agreement and whether or not the transactions
contemplated by the Offer and this Agreement are consummated, all costs and
expenses incurred in connection with the transactions contemplated by the Offer
and this Agreement shall be paid by the party incurring such expenses.
16. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER.
Purpose of the Offer. The purpose of the Offer is for Parent to acquire the
entire equity interest in the Company.
Plans for the Company. Purchaser has agreed in the Acquisition Agreement to
utilize the compulsory acquisition provisions of the CBCA, if permitted to do so
under the CBCA, to acquire the Shares of any shareholders who have not accepted
the Offer (the "Compulsory Acquisition"). If such statutory right of acquisition
is not available, then the Purchaser has agreed in the Acquisition Agreement to
seek, if possible, to cause a special meeting of the shareholders to be called
to consider a Subsequent Acquisition Transaction. See Section 21 "Acquisition of
Shares Not Deposited Under the Offer." It is expected that, initially following
the acquisition of the shares, the business and operations of the Company will,
except as set forth in this Offer, be continued by the Company substantially as
they are currently being conducted. Parent will continue to evaluate the
business and operations of the Company during the pendency of the Offer, and
after the
25
<PAGE> 28
consummation of the Offer and will take such actions as it deems appropriate
under the circumstances then existing. Parent intends to seek additional
information about the Company during this period. Thereafter, Parent intends to
review such information as part of a comprehensive review of the Company's
business, operations, capitalization and management with a view to optimizing
realization of the Company's potential in conjunction with Parent's businesses.
It is expected that the business and operations of the Company would form an
important part of Parent's future business plans.
Except as indicated in this Offer, Parent does not have any present plans
or proposals which relate to or would result in an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Company or any subsidiary, a sale, lease, exchange or transfer of a material
amount of assets of the Company or any subsidiary or any material change in the
Company's capitalization or dividend policy or any other material changes in the
Company's corporate structure or business, or the composition of the Board or
the Company's management or personnel.
17. CONTRACTS, AGREEMENTS AND SHARE PLANS. Except as disclosed below, no
arrangements or agreements have been made or proposed to be made by Purchaser or
any of its affiliates with any of the directors or senior officers of the
Company and no payment or other benefit is proposed to be made or given by
Purchaser by way of compensation or loss of office or in respect of their
remaining in office or retiring from office or otherwise after the acquisition
of Shares under this Offer.
Change in Control Agreements. In early 1998, when the Company began
investigating strategic alternatives, it entered into certain agreements (the
"Change in Control Agreements") in order to provide incentives to its key
executive officers to remain with the Company during this critical period. The
Company entered into the Change in Control Agreements with each of Glen M.
Brownlee, President and Chief Executive Officer, Michael R. Peckham, Vice
President, Finance and Administration, and Juan Guillen, Vice President,
Engineering (each individually, the "Officer" and collectively, the "Officers").
The Company entered into the Change in Control Agreements with Mr. Brownlee and
Mr. Peckham on February 23, 1998, and with Mr. Guillen on March 25, 1998.
Under the Change in Control Agreements, in the event that any Officer's
employment with the Company terminates as a result of an "Involuntary
Termination" within the period of 24 months immediately following a "Change in
Control", the Company agreed to provide the respective Officer with certain
severance benefits. The term "Change in Control" as defined in the Change in
Control Agreements includes the completion of any offer resulting in not less
than 50% of the outstanding securities of the Company being acquired by a third
party purchaser. The consummation of the Offer and Acquisition would result in a
Change in Control as defined in the Change in Control Agreements. The term
"Involuntary Termination" means: (a) termination of the respective Officer's
employment by the Company following a Change in Control for any reason (other
than death or "Just Cause", as defined in the Change in Control Agreements), or
(b) the respective Officer's resignation from his employment within the 30-day
period immediately following certain "Changes Affecting Your Employment" (as
defined in the Change in Control Agreements).
The severance benefits each of the Officers would receive upon such a
termination include, but are not limited to, the following:
- a lump sum equal to 24-months' base salary in the case of Mr. Brownlee
and 18-months' base salary in the case of Mr. Peckham and Mr. Guillen;
- a lump sum equal to 12-months' incentive target, calculated at the rate
of each Officer's respective annual incentive target immediately prior to
the Involuntary Termination; and
- certain payments to benefit plans for a period of 24 months in the case
of Mr. Brownlee and 18 months in the case of Mr. Peckham and Mr. Guillen,
unless the respective Officer commenced new employment during the
respective periods.
On September 26, 1999, Parent and the Officers executed new Change in
Control Agreements (the "New Agreements") to set out the terms and conditions of
the Officers' employment in the event Parent acquired the Company. Recognizing
that the Acquisition might entitle the Officers to payments under the
26
<PAGE> 29
Change in Control Agreements, the New Agreements provide that the Officers waive
such entitlements, and entitlements under separate severance agreements, in
consideration of installment payments of the aggregate of 24-months' base salary
and 12-months' incentive target, payable in 24 equal monthly installments in the
case of Mr. Brownlee; and 18-months' base salary and 12-months' incentive
target, payable in 18 equal monthly installments in the case of Mr. Peckham and
Mr. Guillen. The New Agreements also provide that the Officers agree to accept
positions that are equivalent in status and compensation, including bonus and
stock options, to those of similar senior officers in Parent, and that the
Officers' base pay will be no less than their current base pay.
If, during the 24-month payment period for Mr. Brownlee or the 18-month
payment period for Mr. Peckham and Mr. Guillen, the Officer voluntarily
terminates his employment or is terminated for cause, then the Officer forfeits
his entitlement to any outstanding balance. In the event the Officer is
terminated without cause during his respective payment period or is subject to a
Change Affecting Your Employment, the payments will be accelerated such that the
outstanding balance becomes immediately due and payable.
The New Agreements further provide that the provisions of the New
Agreements and employee confidentiality agreements constitute the full extent of
the employment contract between the Company, Parent and the Officers, regardless
of any oral or written agreements or understandings that may presently exist.
The foregoing summary of the New Agreements is qualified in its entirety by
reference to the complete text of the New Agreements, copies of which are filed
as Exhibits (C)(2) through (C)(4) to the Schedule 14D-1 and are incorporated
herein by reference.
Stock Options. The Acquisition Agreement provides that immediately upon
expiration of the Offer and acceptance of the Shares for payment, either (i) the
Company will terminate the Option Plan after giving all optionees the required
notice of termination and permitting them to exercise all options, vested and
unvested, in accordance with the Option Plan, or (ii) if requested by Parent,
the Company will cancel each outstanding option, whether vested and unvested, in
exchange for cash payments equal to the Offer Price minus the exercise price per
share of such option, multiplied by the number of shares subject to the option,
which cash payment shall be reduced by any applicable withholding taxes and be
without interest.
18. DIVIDENDS AND DISTRIBUTIONS. The Acquisition Agreement provides that
the Company will not, between the date of the Acquisition Agreement and the
Effective Time, without the prior written consent of Parent, 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.
Shares acquired pursuant to the Offer shall be acquired by Purchaser free
and clear of all security interests, liens, charges, restrictions, encumbrances,
claims and equities and together with all rights and benefits arising therefrom
including the right to any and all cash and stock dividends, distributions,
payments, securities, rights, warrants, assets or other interests which may be
accrued, declared, paid, issued, distributed, made or transferred on or in
respect of such Shares and which are made payable or distributable to
shareholders of record on a date on or after the date of the Offer. If the
Company declares or pays any cash or stock dividend or declares, makes or pays
any other distribution or payment on, or declares, allots, reserves or issues
any securities, rights, warrants or other interests or distributions in respect
of the Shares which is or are payable or distributable to the shareholders of
record on a record date which is on or after the date of this Offer, then such
dividends, distributions, payments or rights will be received and held by the
depositing shareholder for the account of Purchaser and (i) to the extent that
cash dividends, distributions or payments do not exceed the amount payable in
cash to the depositing shareholder by Purchaser pursuant to the Offer, the
amount payable to the depositing shareholder will be reduced by the amount of
any such dividends, distributions or payments; and (ii) the amount by which any
cash dividends, distributions or payments exceed the amount payable in cash and
the whole of any non-cash dividends, distributions, payments, or rights shall be
remitted promptly and transferred by the depositing shareholder to the
Depositary, or any other person designated by Purchaser, for the account of the
Purchaser, accompanied by appropriate documentation of transfer. Pending such
remittance, Purchaser shall be entitled to all rights and privileges as owner of
any such
27
<PAGE> 30
dividends, distributions, payments, rights or other interests and may withhold
the entire purchase price payable by Purchaser pursuant to the Offer or deduct
from the amount payable in cash by Purchaser pursuant to the Offer to the
depositing shareholder, the value thereof as determined by Purchaser in its sole
discretion.
19. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
will reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.
The Acquisition Agreement provides that, if the Shares are taken up and
paid for under the Offer, Purchaser will acquire the Shares of any shareholders
who have not accepted the Offer pursuant to a Compulsory Acquisition, if
permitted to do so under the CBCA. See Section 21 "Acquisition of Shares Not
Deposited Under the Offer". If the Purchaser proceeds with a Compulsory
Acquisition, Purchaser will cause the Shares to be delisted from Nasdaq and will
cause the termination of registration of the Shares pursuant to Rule 12g-4 under
the Exchange Act.
20. CONDITIONS OF THE OFFER. The Acquisition Agreement provides that,
notwithstanding any other provision of the Offer, and in addition to (and not in
limitation of) Purchaser's rights to extend and amend the Offer at any time in
accordance with the terms of the Acquisition Agreement, Purchaser shall not be
required to accept for payment, purchase or pay for and Purchaser may elect to
terminate or amend the Offer and to postpone the acceptance of, and payment for,
subject to compliance with Canadian securities laws and Rule 14e-1(c) under the
Exchange Act (whether or not any Shares have theretofore been accepted for
payment or paid for pursuant to the Offer), any Shares tendered pursuant to the
Offer if (a) any waiting period (and any extension thereof) under the
Competition Act (Canada) and Investment Canada Act applicable to the purchase of
Shares pursuant to the Offer shall not have expired or been terminated; (b) the
Minimum Condition is not satisfied; or (c) at any time on or after the date of
the Acquisition Agreement, any of the following events shall have occurred: (i)
there shall have been any action taken or threatened, or any statute, rule,
regulation, judgment, temporary restraining order, preliminary or permanent
injunction or other order, decree or ruling proposed, sought, promulgated,
enacted, entered, enforced or deemed applicable to the Offer by any governmental
entity or arbitration panel that could reasonably be expected to, directly or
indirectly, (1) make the acceptance for payment or the payment for, or the
purchase of some or all of the Shares pursuant to the Offer illegal or otherwise
delay, restrict or prohibit consummation of the Offer, (2) result in a delay in
or restrict the ability of Purchaser, or render Purchaser unable, to accept for
payment, pay for or purchase some or all of the Shares, (3) require the
divestiture by Parent, Purchaser, the Company or any of their respective
subsidiaries or affiliates of all or any portion of the business, assets or
property of any of them or any Shares or impose any material limitation on the
ability of any of them to conduct their business and own such assets, properties
or Shares, (4) impose any material limitation on the ability of Parent,
Purchaser or their affiliates to acquire or hold or to exercise effectively all
rights of ownership of the Shares, including the right to vote any Shares
purchased by any of them on all matters properly presented to the shareholders
of the Company, (5) result in a material diminution in the benefits expected to
be derived by Parent or Purchaser as a result of the transactions contemplated
by the Offer or the Acquisition Agreement, or (6) impose any material condition
to the Offer, or the Acquisition Agreement unacceptable to Parent or Purchaser;
or (ii) the Company shall have breached, or failed to comply with, in any
material respect, any of its covenants or obligations under the Acquisition
Agreement or any representation or warranty of the Company in the Acquisition
Agreement shall have been incorrect, in any material respect, when made or shall
have since ceased to be true and correct in any material respect; or (iii) the
Board of the Company or any committee thereof shall have (1) withdrawn or
modified (including without limitation, by amendment of the Schedule 14D-9) in a
manner adverse to Parent or Purchaser its approval or recommendation of the
Offer, (2) approved or recommended any Acquisition Proposal by a third party
other than the Offer (3) publicly resolved to do any of the foregoing, or (4)
upon a request to reaffirm the Company's approval or recommendation of the
Offer, the Board of the Company shall fail to do so within two business days
after such request is made; or (iv) the Acquisition Agreement shall have been
terminated in accordance with its terms or the Offer shall have been terminated
with the consent of the Company; or (v) there shall have occurred any Material
Adverse Effect (as defined in the Acquisition Agreement) on the Company, or any
event, fact or
28
<PAGE> 31
change which could reasonably be expected to result in a Material Adverse Effect
(as defined in the Acquisition Agreement) on the Company.
The Acquisition Agreement provides that the foregoing conditions are for
the sole benefit of Parent, Purchaser and their affiliates and may be asserted
by Parent or Purchaser regardless of the circumstances giving rise to such
condition, or may be waived by Parent or Purchaser in whole or in part at any
time and from time to time in the sole discretion of Parent or Purchaser. The
failure by Parent or Purchaser at any time to exercise its rights with respect
to the foregoing conditions shall not be deemed a waiver of any such condition,
and each condition shall be deemed an ongoing condition with respect to which
Parent or Purchaser may assert its rights at any time and from time to time.
21. ACQUISITION OF SHARES NOT DEPOSITED UNDER THE OFFER
Compulsory Acquisition. If, within 120 days after the date of the Offer,
the Offer has been accepted by holders of not less than 90% of the Shares (other
than Shares owned, directly or indirectly, on the date hereof by or on behalf of
Purchaser or an affiliate or associate of Purchaser), Purchaser intends to
acquire all the Shares held by holders who did not deposit their Shares under
the Offer and by any person who subsequently acquires Shares from such a
shareholder (each such holder and each such person being herein referred to as a
"Dissenting Offeree") pursuant to the compulsory acquisition provisions of
Section 206 of the CBCA, on the same terms and at the same price that Purchaser
acquired Shares from holders who accepted the Offer.
To exercise such statutory rights, Purchaser must give notice (the
"Purchaser's Notice") to the Dissenting Offerees and to the Director under the
CBCA of such proposed acquisition on or before the earlier of 60 days from the
Expiration Date and 180 days from the date of the Offer. Within 20 days of
giving such Purchaser's Notice, Purchaser must pay to the Company the
consideration offered under the Offer for the Shares not acquired under the
Offer, to be held in trust for the Dissenting Offerees. Within 20 days after
receipt of the Purchaser's Notice, each Dissenting Offeree must send the
certificates representing the Shares held by such Dissenting Offeree to the
Company, and may elect either to transfer such Shares to Purchaser on the terms
on which Purchaser acquired Shares under the Offer or to demand payment of the
fair value of such Shares held by such holder by so notifying Purchaser. If a
Dissenting Offeree has elected to demand payment of the fair value of such
Shares, Purchaser may apply to a court having jurisdiction to head such
application to fix the fair value of such Shares of that Dissenting Offeree. If
Purchaser fails to apply to such court within 20 days after making the payment
to the Company referred to above, the Dissenting Offeree may then apply to the
court within a further period of 20 days to have the court fix the fair value of
such Shares. If there is no such application by the Dissenting Offeree within
such period, the Dissenting Offeree will be deemed to have elected to transfer
such Shares to the Purchaser on the same terms that the Purchaser acquired
Shares under the Offer.
THE FOREGOING IS A SUMMARY ONLY OF THE RIGHT OF COMPULSORY ACQUISITION
WHICH MAY BECOME AVAILABLE TO PURCHASER. THE SUMMARY IS NOT INTENDED TO BE
COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY THE PROVISIONS OF SECTION 206 OF
THE CBCA. SHAREHOLDERS SHOULD REFER TO SECTION 206 OF THE CBCA FOR THE FULL TEXT
OF THE RELEVANT STATUTORY PROVISIONS. SECTION 206 OF THE CBCA IS COMPLEX AND MAY
REQUIRE STRICT ADHERENCE TO NOTICE AND TIMING PROVISIONS, FAILING WHICH SUCH
RIGHTS MAY BE LOST OR ALTERED. SHAREHOLDERS WHO WISH TO BE BETTER INFORMED ABOUT
THESE PROVISIONS SHOULD CONSULT THEIR LEGAL ADVISORS.
Subsequent Acquisition Transactions. If the Compulsory Acquisition is not
available, then Purchaser will, if required, cause a special meeting of
shareholders to be called to consider a statutory arrangement, amalgamation
merger, reorganization, consolidation, recapitalization or other combination
involving Purchaser and/or an affiliate of Purchaser, and the Company for the
purposes of enabling Purchaser to acquire all of the Shares not acquired under
the Offer (a "Subsequent Acquisition Transaction"). Purchaser intends that the
Shares acquired by it pursuant to the Offer will be counted as part of any
minority approval in connection with any such transaction. In any Subsequent
Acquisition Transaction, including the continuance of the Company, the
shareholders may have the right to dissent under the CBCA and to be paid fair
value for their Shares, with such fair value to be determined by a court.
29
<PAGE> 32
Each type of Subsequent Acquisition Transaction described above would be a
"going private transaction" within the meaning of Ontario Securities Commission
("OSC") Policy Statement No. 9.1 ("OSC Policy 9.1") and Quebec Securities
Commission ("QSC") Policy Q-27 ("QSC Policy Q-27") and the regulations to
securities legislation in certain of the provinces of Canada (collectively the
"Regulations"), if such Subsequent Acquisition Transaction would result in the
interest of a shareholder (the "Affected Securities") being terminated without
the consent of the holder and without the substitution therefor of an interest
of equivalent value in participating security of the Company, a successor to the
business of the Company or a person who controls the Company or, in the case of
OSC Policy 9.1 and OSC Policy Q-27, a person who controls a successor to the
business of the Company. In certain circumstances, the provisions of OSC Policy
9.1 and QSC Policy Q-27 may also deem certain types of Subsequent Acquisition
Transactions to be "related party transactions."
OSC Policy 9.1, QSC Policy Q-27 and the Regulations provide that, unless
exempted, a corporation proposing to carry out a going private transaction is
required to prepare a valuation of the Affected Securities (and any non-cash
consideration being offered therefor) and provide to the holders of the Affected
Securities a summary of such valuation. OSC Policy 9.1 and QSC Policy Q-27 have
similar requirements for related party transactions. In connection therewith,
Purchaser intends to seek waivers pursuant to OSC Policy 9.1 and QSC Policy Q-27
from the OSC and QSC exempting Purchaser and/or an affiliate of Purchaser, or
the Company, as appropriate, from the requirement to prepare a valuation in
connection with a Subsequent Acquisition Transaction.
OSC Policy 9.1 and QSC Policy Q-27 would also require that, in addition to
any other required security holder approval, in order to complete a going
private transaction, the approval of a simple or two-thirds majority (depending
on the nature of the transaction) of the votes cast by "minority" holders of the
Affected Securities be obtained. In relation to the Offer and any subsequent
going private transaction or related party transaction, the minority
shareholders will be all holders of Shares, other than Purchaser, certain
"related parties" and "interested parties", any person or company acting jointly
or in concert with the foregoing or any affiliate of any of the foregoing.
However, under OSC Policy 9.1 and also as a result of a Rule of the OSC, if
following the Offer, Purchaser and its affiliates are the registered holders of
90% or more of the Shares at the time the going private transaction or related
party transaction is initiated, the requirement for minority approval would not
apply to the transaction if a statutory dissent and appraisal remedy is
available to the minority holders or if a substantially equivalent enforceable
right is made available to the minority shareholders. OSC Policy 9.1 also
provides that Purchaser may treat Shares acquired from the minority pursuant to
the Offer as "minority" shares and to vote them, or to consider them voted, in
favor of such going private transaction or related party transaction if the
consideration per security in the going private transaction or related party
transaction is at least equal in value to the consideration paid pursuant to the
Offer. Purchaser currently intends that the consideration under any Subsequent
Acquisition Transaction proposed by it would be the same as the consideration
under the Offer.
If 90% of the Shares are acquired by or on behalf of Purchaser, and its
affiliates and associates, then all other holders of Shares shall be entitled,
in accordance with Section 206 of the CBCA, to require the Offeror to acquire
the holders' Shares.
Shareholders are advised that certain judicial decisions may be considered
relevant to any going private transaction or related party transaction which may
be proposed or effected subsequent to the expiry of the Offer. Prior to the
adoption of OSC Policy 9.1, Canadian courts, in a few instances, granted
preliminary injunctions to prohibit transactions involving going private
amalgamations. The current trend, both in legislation and in the American
jurisprudence upon which the previous Canadian decisions were based, permits
going private transactions to proceed subject to compliance with procedures
designed to ensure substantive fairness to the minority shareholders.
Shareholders should consult their legal advisors for a determination of their
legal rights with respect to the transaction which may constitute a Subsequent
Acquisition Transaction.
Purchaser reserves the right to acquire, or cause an affiliate to acquire,
additional Shares after the consummation of the Offer in open market purchases,
through a tender offer, in privately negotiated
30
<PAGE> 33
transactions or otherwise, in order to obtain a sufficient number of Shares to
permit or facilitate the consummation of a going-private transaction, if
necessary.
See the discussion under "Canadian Federal Income Tax Considerations" for
discussion of the tax considerations which may apply to shareholders in the
event of a going private transaction.
In the event a going private transaction or other Subsequent Acquisition
Transaction were to be consummated, shareholders, under section 190 of the CBCA,
may have the right to dissent and demand payment of the fair value of such
Common Shares. This right, if the statutory procedures are complied with, could
lead to a judicial determination of the fair value required to be paid to such
dissenting holders for their Shares. The fair value of Shares so determined
could be more or less than the amount paid per Share pursuant to the Subsequent
Acquisition Transaction or the Offer. Any such judicial determination of the
fair value of the Shares could be based upon considerations other than, or in
addition to, the market price of the Shares.
22. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
U.S. Legal Matters and Regulatory Approvals.
General. Based upon its examination of publicly available information with
respect to the Company and the review of certain information furnished by the
Company to Parent and discussions of representatives of Parent with
representatives of the Company during Parent's investigation of the Company,
neither Purchaser nor Parent is aware of any license or other regulatory permit
that appears to be material to the business of the Company and the subsidiaries,
taken as a whole, which might be adversely affected by the acquisition of Shares
by Purchaser pursuant to the Offer or, except as set forth below, of any
approval or other action by any domestic (federal or state) or foreign
governmental, administrative or regulatory authority or agency which would be
required prior to the acquisition of Shares by Purchaser pursuant to the Offer.
Should any such approval or other action be required, it is Purchaser's present
intention to seek such approval or action. Purchaser does not currently intend,
however, to delay the purchase of Shares tendered pursuant to the Offer pending
the outcome of any such action or the receipt of any such approval (subject to
Purchaser's right to decline to purchase Shares if any of the conditions in
Section 20 shall have occurred). There can be no assurance that any such
approval or other action, if needed, would be obtained without substantial
conditions or that adverse consequences might not result to the business of the
Company, Purchaser Sub, or Parent or that certain parts of the businesses of the
Company, Purchaser Sub or Parent might not have to be disposed of or held
separate or other substantial conditions complied with in order to obtain such
approval or other action or in the event that such approval was not obtained or
such other action was not taken. Purchaser's obligation under the Offer to
accept for payment and pay for Shares is subject to certain conditions,
including conditions relating to the legal matters discussed in this Section.
See Section 20.
State Takeover Laws. A number of states throughout the United States have
adopted laws and regulations applicable to attempts to acquire securities of
corporations which are incorporated, or have substantial assets, shareholders,
principal executive offices or principal places of business, or whose business
operations otherwise have substantial economic effects, in such states. In Edgar
v. MITE Corp., the Supreme Court of the United States invalidated on
constitutional grounds the Illinois Business Takeover Act, which, as a matter of
state securities law, made takeovers of corporations meeting certain
requirements more difficult. However, in 1987 in CTS Corp. v. Dynamics Corp. of
America, the Supreme Court of the United States held that a state may, as a
matter of corporate law and, in particular, with respect to those aspects of
corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
the prior approval of the remaining shareholders provided that such laws were
applicable only under certain circumstances.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. Purchaser does not know whether any of these laws will, by their
terms, apply to the Offer or to the Acquisition and has not complied with any
such laws. Should any person seek to apply any state takeover law, Purchaser
will take such action as then appears desirable, which may include challenging
the validity or applicability of any such statute in appropriate court
proceedings. In the event it is asserted that one or more state takeover laws is
applicable to the Offer or the
31
<PAGE> 34
Acquisition, and an appropriate court does not determine that it is inapplicable
or invalid as applied to the Offer, Purchaser might be required to file certain
information with, or receive approvals from, the relevant state authorities. In
addition, if enjoined, Purchaser might be unable to accept for payment any
Shares tendered pursuant to the Offer, or be delayed in continuing or
consummating the Offer, and the Acquisition. In such case, Purchaser may not be
obligated to accept for payment any Shares tendered. See Section 20.
Antitrust. Under the HSR Act applicable to the Offer and the rules that
have been promulgated thereunder by the Federal Trade Commission (the "FTC"),
certain acquisition transactions may not be consummated unless certain
information has been furnished to the Antitrust Division and the FTC and certain
waiting period requirements have been satisfied. The acquisition of Shares by
Purchaser pursuant to the Offer is not subject to such requirements.
Canadian Legal Matters and Regulatory Approvals.
Investment Canada Act. Under the Investment Canada Act (the "IC Act"), the
acquisition by a non-Canadian of control of a Canadian business which exceeds
certain size thresholds is reviewable and subject to the approval of the
Minister designated as responsible for the IC Act (the "Minister"). The
acquisition contemplated by the Offer is not reviewable nor subject to any
approval by the Minister. The notification procedures under the IC Act will be
applicable to the acquisition contemplated by the Offer and the prescribed form
of notification must be filed before, or within 30 days after, the acquisition
is made.
23. FEES AND EXPENSES. Except as set forth below, Purchaser will not pay
any fees or commissions to any broker, dealer or other person for soliciting
tenders of Shares pursuant to the Offer.
Parent has engaged CIBC to act as Dealer Manager for the Offer and as
Parent's exclusive financial advisor in connection with Parent's proposed
acquisition of the Company, for which services CIBC will receive customary
compensation. Parent also has agreed to reimburse CIBC for reasonable
out-of-pocket expenses (including reasonable fees and expenses of its legal
counsel), and to indemnify CIBC and certain related parties against certain
liabilities, including liabilities under the federal securities laws, arising
out of its engagement. In the ordinary course of business, CIBC and its
affiliates may actively trade or hold the securities of Parent and the Company
for their own account or for the account of customers and, accordingly, may at
any time hold a long or short position in such securities.
Parent has also engaged MacKenzie Partners, Inc. to serve as the
Information Agent in connection with the Offer. The Purchaser will pay customary
fees for the Information Agent's services, will reimburse the Information Agent
for reasonable out of pocket expenses and will provide customary indemnity to
the Information Agent.
24. OFFEREES' STATUTORY RIGHTS. Securities legislation in certain of the
provinces and territories of Canada provides shareholders with, in addition to
any other rights they may have at law, rights of rescission or to damages, or
both, if there is a misrepresentation in a circular or notice that is required
to be delivered to such shareholders. However, such rights must be exercised
within prescribed time limits. Shareholders should refer to the applicable
provisions of the securities legislation of their province or territory for
particulars of those rights or consult with a lawyer.
25. MISCELLANEOUS
Prohibitions on the Offer. Purchaser is not aware of any jurisdiction where
the making of the Offer is prohibited by any administrative or judicial action
pursuant to any valid statute. If Purchaser becomes aware of any valid statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, Purchaser will make a good faith effort to comply with any such
statute. If, after such good faith effort, Purchaser cannot comply with any such
statute, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of Shares in such jurisdiction. In any jurisdiction where
the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
Purchaser by one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
32
<PAGE> 35
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR THE COMPANY NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE ACCOMPANYING LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the Commission the Schedule
14D-1, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in Section 11 (except that they will not be
available at the regional offices of the Commission).
33
<PAGE> 36
APPROVAL AND CERTIFICATE
The contents of the Offer and this Offering Circular have been approved and
the sending thereof to the shareholders of the Company has been authorized by
the Board of Directors of NetManage Bid Co.
The foregoing contains no untrue statement of a material fact and does not
omit to state a material fact that is required to be stated or that is necessary
to make a statement not misleading in the light of the circumstances in which it
was made and does not contain any misrepresentation likely to affect the value
or the market price of the Shares.
Dated: October 1, 1999. NETMANAGE BID CO.
<TABLE>
<S> <C>
/s/ ZVI ALON /s/ GARY ANDERSON
- ----------------------------------------------------- -----------------------------------------------------
Chief Executive Officer Chief Financial Officer
On behalf of the Board of Directors
/s/ ZVI ALON /s/ GARY ANDERSON
- ----------------------------------------------------- -----------------------------------------------------
Director Director
</TABLE>
34
<PAGE> 37
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT, SUB AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years, of each
member of the Board of Directors and executive officer of Parent. Unless
otherwise indicated each such person (i) has held his Principal Occupation for
the past five years, (ii) is a citizen of the United States and (iii) has not
been convicted in a criminal proceeding and has not been party to a proceeding
related to state and federal securities laws.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY BUSINESS ADDRESS
---- ------------------------------------------ ---------------------
<S> <C> <C>
Zvi Alon.................. Chairman, President and Chief Executive Officer 10725 N. DeAnza Blvd.
Cupertino, CA 95014
Gary R. Anderson.......... Senior Vice President, Finance 10725 N. DeAnza Blvd.
Chief Financial Officer, and Secretary Cupertino, CA 95014
Richard French(1)......... Senior Vice President and General Manager of 10725 N. DeAnza Blvd.
Emerging Technology (Visual Connectivity) Cupertino, CA 95014
D. Patrick Linehan(1)..... Senior Vice President, Worldwide Sales and 10725 N. DeAnza Blvd.
Support Cupertino, CA 95014
Peter R. Havart-Simkin.... Senior Vice President of Marketing 10725 N. DeAnza Blvd.
Cupertino, CA 95014
Uzia Galil(2)............. Director (1990 - present); Chairman and Chief 850 Third Avenue
Executive Officer, Elron Electronics New York, NY 10022
Industries,
Ltd. (1981 - present)
Darrell Miller............ Director (1994 - present); Executive Vice 195 Loma Alta
President, Los Gatos, CA 95032
Corporate Strategic Marketing (1994 - 1996)
Abraham Ostrovsky......... Director (1998 - present); Chief Executive 200 Sheridan Avenue,
Officer, #404
Compressent Corporation (1996 - 1997); Palo Alto, CA 94306
Chairman, Jetform Corporation,
(1995 - present);
Chairman and Chief Executive Officer, Jetform
Corporation (1991 - 1995)
John Bosch................ Director (1991 - present); General Partner, 14241 Worden Way
Bay Partners (1981 - 1998) Saratoga, CA 95070
Dr. Shelley Harrison...... Director (1996 - present); Chief Executive 300 D Street, SW,
Officer, Suite 814
Spacehab, Inc. (1996 - present); Chairman, Washington, D.C.
Spacehab, Inc. (1993 - present) 20024
</TABLE>
- -------------------------
(1) Citizen of the United Kingdom
(2) Citizen of Israel
I-1
<PAGE> 38
2. DIRECTORS AND EXECUTIVE OFFICERS OF SUB. The following table sets forth
the name, current business address, citizenship and present principal occupation
or employment, and material occupations, positions, offices or employments and
business addresses thereof for the past five years, of each member of the Board
of Directors and executive officer of Sub. Unless otherwise indicated each such
person (i) has held his Principal Occupation for the past five years, (ii) is a
citizen of the United States and (iii) has not been convicted in a criminal
proceeding and has not been party to a proceeding related to state and federal
securities laws.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY BUSINESS ADDRESS
---- ------------------------------------------ ---------------------
<S> <C> <C>
Zvi Alon............. Chairman, President and Chief Executive 10725 N. DeAnza Blvd.
Officer Cupertino, CA 95014
Gary R. Anderson..... Senior Vice President, Finance 10725 N. DeAnza Blvd.
Chief Financial Officer, and Secretary Cupertino, CA 95014
</TABLE>
3. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years, of each
member of the Board of Directors and executive officer of Purchaser. Unless
otherwise indicated each such person (i) has held his Principal Occupation for
the past five years, (ii) is a citizen of the United States and (iii) has not
been convicted in a criminal proceeding and has not been party to a proceeding
related to state and federal securities laws.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY BUSINESS ADDRESS
---- ------------------------------------------ ---------------------
<S> <C> <C>
Zvi Alon............. Chairman, President and Chief Executive 10725 N. DeAnza Blvd.
Officer Cupertino, CA 95014
Gary R. Anderson..... Senior Vice President, Finance 10725 N. DeAnza Blvd.
Chief Financial Officer, and Secretary Cupertino, CA 95014
</TABLE>
I-2
<PAGE> 39
SCHEDULE II
EXCHANGE RATES
The exchange rates expressed in U.S. dollars for Canadian dollars at the
end of each of the last five years ended December 31, 1998 and the daily
average, the high and the low exchange rates for each of such five years, were
as follows (such rates being the noon buying rates in New York City for cable
transfers in Canadian dollars as certified for customs purposes by the Federal
Reserve Bank of New York):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
At end of period........... US$0.6511 US$0.6988 US$0.7296 US$0.7332 US$0.7129
Average for period*........ 0.6747 0.7224 0.7334 0.7289 0.7322
High for period............ 0.7101 0.7484 0.7514 0.7523 0.7636
Low for period............. 0.6327 0.6951 0.7218 0.7016 0.7108
</TABLE>
- ---------------
* Based on the average of the exchange rates on each business day during the
period.
During the period from January 1, 1999 to September 29, 1999, such average,
high and low exchange rates, respectively, were U.S.$0.6742, U.S.$0.6883 and
U.S.$0.6511. On September 29, 1999, such exchange rate was U.S.$0.6820. Unless
otherwise indicated, all references to dollars or $ in the Offer are to Canadian
dollars.
II-1
<PAGE> 40
The Depositary for the Offer is:
CHASEMELLON
SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Carrier: By Hand:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Reorganization Department Reorganization Department Reorganization Department
PO Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ 07606 Mail Stop -- Reorg 13th Floor
Ridgefield Park, NJ 07660 New York, NY 10271
</TABLE>
Facsimile (for Eligible Institutions only): (201) 296-4293
To confirm by telephone: (201) 296-4860
The Canadian Forwarding Agent for the Offer is:
CIBC MELLON TRUST COMPANY
By Courier or Hand:
199 Bay Street
Commerce Court West
Securities Level
Toronto, Ontario
M5L1G9
Attention: Courier Window
In Toronto Call (416) 643-5500
All Others Call Toll Free (800) 387-0825
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent. A shareholder may also contact brokers, dealers, commercial
banks or trust companies for assistance concerning the Offer.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC. LOGO
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
The Dealer Manager for the Offer is:
CIBC WORLD MARKETS LOGO
One World Financial Center
New York, New York 10281
(212) 667-6345
<PAGE> 1
Exhibit (a)(2)
LETTER OF TRANSMITTAL
TO TENDER COMMON SHARES
OF
SIMWARE INC.
AT
U.S. $3.75 NET PER SHARE
BY
NETMANAGE BID CO.
A WHOLLY-OWNED SUBSIDIARY OF
PRESTON DELAWARE ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
NETMANAGE, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, OCTOBER 29, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
CHASEMELLON
SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Carrier: By Hand:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Reorganization Department Reorganization Department Reorganization Department
PO Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ 07606 Mail Stop - Reorg 13th Floor
Ridgefield Park, NJ 07660 New York, NY 10271
</TABLE>
Facsimile (for Eligible Institutions only): (201) 296-4293
To confirm by telephone: (201) 296-4860
The Canadian Forwarding Agent for the Offer is:
CIBC MELLON TRUST COMPANY
By Courier or Hand:
199 Bay Street
Commerce Court West
Securities Level
Toronto, Ontario
M5L 1G9
Attention: Courier Window
In Toronto Call (416) 643-5500
All Others Call Toll Free (800) 387-0825
<PAGE> 2
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS
ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
PLEASE REFER TO INSTRUCTION 9 OF THIS LETTER OF TRANSMITTAL FOR IMPORTANT
INFORMATION REGARDING BACKUP WITHHOLDING REQUIRED BY THE INTERNAL REVENUE
SERVICE AND THE SUBMISSION OF SUBSTITUTE FORM W-9 (FOR U.S. RESIDENTS) OR FORM
W-8 (FOR CANADIAN AND OTHER NON-U.S. RESIDENTS) TO THE DEPOSITARY.
The undersigned delivers to you the enclosed certificate(s) representing Shares,
details of which are as follows:
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- -------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
SHARE OF SHARES NUMBER OF
CERTIFICATE EVIDENCED BY SHARES
NUMBER(S)* SHARE CERTIFICATE(S)* TENDERED**
-----------------------------------------------------------
<S> <C> <C> <C>
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
TOTAL SHARES
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by shareholders delivering Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares delivered to
the Depositary are being tendered hereby. See Instruction 4.
- --------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF
TRANSMITTAL CAREFULLY
This Letter of Transmittal is to be completed by shareholders either if
certificates evidencing Shares (as defined below) are to be forwarded
herewith or, unless an Agent's Message (as defined in the Offer to Purchase)
is utilized, if delivery of Shares is to be made by book-entry transfer to
an account maintained by the Depositary at the Book-Entry Transfer Facility
(as defined in and pursuant to the book-entry transfer procedure described
in Section 3 of the Offer to Purchase (as defined below). Shareholders whose
certificates evidencing Shares ("Share Certificates") are not immediately
available or who cannot deliver their Share Certificates and all other
documents required hereby to the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase) or who cannot complete the
procedure for delivery by book-entry transfer on a timely basis and who wish
to tender their Shares must do so pursuant to the guaranteed delivery
procedure described in Section 3 of the Offer to Purchase. See Instruction
2.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
The terms and conditions of the Offer are incorporated by reference in
this Letter of Transmittal. Capitalized terms used herein but not defined in
this Letter of Transmittal which are defined in the Offer to Purchase and
Offering Circular dated October 1, 1999 shall have the meanings set out in
the Offer to Purchase and the Offering Circular (collectively, the "Offer to
Purchase").
2
<PAGE> 3
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution:
Account Number: Transaction Code Number:
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
Window Ticket No. (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
3
<PAGE> 4
Ladies and Gentlemen:
The undersigned hereby tenders to NetManage Bid Co., a Nova Scotia
unlimited liability company ("Purchaser"), a direct wholly-owned subsidiary of
Preston Delaware Acquisition Corporation, a Delaware corporation ("Sub") and an
indirect wholly-owned subsidiary of NetManage, Inc., a Delaware corporation, the
above-described Common Shares (the "Shares") of Simware Inc., a corporation
incorporated under the Canada Business Corporations Act (the "Company"),
pursuant to Purchaser's offer to purchase all Shares at U.S. $3.75 per Share,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase and Offering Circular, dated October 1, 1999 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which together constitute the "Offer"). The undersigned
understands that Purchaser reserves the right to transfer or assign, in whole
or, from time to time, in part, to one or more of its affiliates, the right to
purchase all or any portion of the Shares tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer and subject to each
shareholder's withdrawal rights, the undersigned hereby irrevocably deposits and
sells, assigns and transfers to, or upon the order of, Purchaser all right,
title and interest in and to all the Shares that are being tendered hereby and
all dividends, distributions (including, without limitation, distributions of
additional Shares), payments, securities, rights, warrants, assets or other
interests which may be accrued, declared, paid, issued, distributed, made or
transferred on or in respect of such Shares on or after October 1, 1999
(collectively, "Distributions"), and irrevocably constitutes and appoints
ChaseMellon Shareholder Services, L.L.C. (the "Depositary") the true and lawful
agent and attorney-in-fact of the undersigned with respect to the Shares taken
up and paid for under the Offer and all Distributions, effective on and after
the date the Purchaser takes up and pays for the Shares (the "Effective Date"),
with full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (i) deliver Share Certificates
evidencing such Shares and all Distributions, or transfer ownership of such
Shares and all Distributions on the account books maintained by a Book-Entry
Transfer Facility, together, in either case, with all accompanying evidences of
transfer and authenticity, to or upon the order of Purchaser, (ii) register or
record, transfer and enter the transfer of such Shares and all Distributions on
the appropriate register of holders maintained by the Company, (iii) vote,
execute and deliver any and all instruments of proxy, authorizations or consents
in respect of any and all such Shares and Distributions, revoke any such
instruments, authorizations or consents given prior to, on, or after the
Effective Date, designate in any such instruments of proxy any person or persons
as the proxy or proxy nominee of the undersigned in respect of such Shares and
Distributions for all purposes including, without limitation, in connection with
any meeting (whether annual, special or otherwise or any adjournment or
adjournments thereof) of holders of securities of the Company, (iv) execute,
endorse and negotiate, for and in the name of and on behalf of the undersigned
with respect to Shares and Distributions, any and all checks or other
instruments respecting any distribution payable to or to the order of the
undersigned and (v) exercise any and all rights of the undersigned with respect
to such Shares and Distributions.
The undersigned acknowledges that, if the Company should declare or pay any
cash dividend or stock dividend or declare, make or pay any other distribution
or payment on, or declare, allot, reserve or issue any securities, rights,
warrants or other interests or distributions with respect to the Shares tendered
herewith, payable or distributable to the shareholders of record on a record
date which is on or after the date of the Offer, then, without prejudice to
Purchaser's rights under Section 20 of the Offer "Conditions of the Offer", (i)
in the case of any such cash dividend, distribution or payment that does not
exceed the purchase price per Share, the purchase price per Share payable by
Purchaser pursuant to the Offer will be reduced by the amount of any such cash
dividend, distribution or payment received in respect of that Share and (ii) in
the case of any such non-cash dividend, distribution, payment or right, the
whole of any such non-cash dividend, distribution or payment or right, and in
the case of any cash dividend, distribution or payment in an amount that exceeds
the purchase price per Share, the whole of any such cash dividend, distribution
or payment, will be received and held by the depositing shareholder for the
account of Purchaser and shall be required to be promptly remitted and
transferred by the depositing shareholder to the Depositary for the account of
Purchaser, accompanied by appropriate documentation of transfer. The undersigned
also acknowledges that pending such remittance, Purchaser will be entitled to
all rights and privileges as the owner of any such dividend, distribution,
payment or right, and may withhold the entire purchase price payable by
Purchaser pursuant to the Offer or deduct from the purchase price payable by
Purchaser pursuant to the Offer the amount or value thereof, as determined by
Purchaser in its sole discretion.
4
<PAGE> 5
The undersigned hereby irrevocably appoints Zvi Alon and Gary Anderson, and
each of them, as the designees of the Purchaser, attorneys-in-fact and proxies
of the undersigned, each with full power of substitution, to vote in such manner
as each such attorney-in-fact and proxy or his or her substitute shall, in his
or her sole discretion, deem proper and otherwise act (by written consent or
otherwise) with respect to all the Shares tendered hereby which have been
accepted for payment by Purchaser prior to the time of such vote or other action
and all Shares and other securities issued in Distributions in respect of such
Shares, which the undersigned is entitled to vote at any meeting of shareholders
of the Company (whether annual or special and whether or not an adjourned or
postponed meeting) or consent in lieu of any such meeting or otherwise. This
proxy and power of attorney is coupled with an interest in the Shares tendered
hereby, is irrevocable and is granted in consideration of, and is effective
upon, the acceptance for payment of such Shares by Purchaser in accordance with
other terms of the Offer. Such acceptance for payment shall revoke all other
proxies and powers of attorney granted by the undersigned at any time with
respect to such Shares (and all Shares and other securities issued in
Distributions in respect of such Shares), and no subsequent proxy or power of
attorney shall be given or written consent executed (and if given or executed,
shall not be effective) by the undersigned with respect thereto. The undersigned
understands that, in order for Shares to be deemed validly tendered, immediately
upon Purchaser's acceptance of such Shares for payment, Purchaser must be able
to exercise full voting and other rights with respect to such Shares and all
Distributions, including, without limitation, voting at any meeting of the
Company's shareholders then scheduled.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, that when such Shares are accepted for
payment by Purchaser, Purchaser will acquire good, marketable and unencumbered
title thereto and to all Distributions, free and clear of all security
interests, liens, restrictions, charges and encumbrances, and that none of such
Shares and Distributions will be subject to any adverse claim. The undersigned,
upon request, shall execute and deliver all additional documents deemed to be
necessary or advisable to complete the sale, the assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby, or deduct from such purchase
price, the amount or value of such Distribution as determined by Purchaser in
its sole discretion.
To the extent permitted by law, no authority herein conferred or agreed to
be conferred shall be affected by, and all such authority shall survive, the
death, incapacity, bankruptcy or insolvency of the undersigned. All obligations
of the undersigned hereunder shall be binding upon the heirs, personal
representatives, successors, executors and assigns of the undersigned. Except as
stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions", please issue the check for the purchase price of all Shares
purchased, and/or return all Share Certificates evidencing Shares not purchased
or not tendered in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered". Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions", please mail the check for the
purchase price of all Shares purchased and/or all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing under
"Description of Shares Tendered". In the event that the boxes entitled "Special
Payment Instructions" and "Special Delivery Instructions" are both completed,
please issue the check for the purchase price of all Shares purchased and/or
return all Share Certificates evidencing Shares not purchased or not tendered in
the name(s) of, and mail such check and/or Share Certificates to, the person(s)
so indicated. Unless otherwise indicated herein in the box entitled "Special
Payment Instructions", please credit any Shares tendered hereby and delivered by
book-entry transfer, but which are not purchased, by crediting the account at
the Book-Entry Transfer Facility designated above. The undersigned recognizes
that Purchaser has no obligation, pursuant to the "Special Payment
Instructions," to transfer any Shares from the name of the registered holder(s)
thereof if Purchaser does not purchase any of the Shares tendered hereby.
5
<PAGE> 6
[ ] CHECK HERE IF ANY OF THE SHARE CERTIFICATES REPRESENTING SHARES THAT YOU
OWN HAVE BEEN LOST OR DESTROYED AND SEE INSTRUCTION 10.
Number, class and series of Shares represented by the lost or destroyed
certificates:
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7)
To be completed ONLY if the check for the purchase price of Shares or Share
Certificates evidencing Shares not tendered or not purchased are to be issued in
the name of someone other than the undersigned.
Issue [ ] Check [ ] Share Certificate(s) to:
Name:
---------------------------------------------------------------------------
(PLEASE PRINT)
Address:
------------------------------------------------------------------------
(ZIP OR POSTAL CODE)
- --------------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER IF U.S. RESIDENT)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased or
Share Certificates evidencing Shares not tendered or not purchased are to be
mailed to someone other than the undersigned, or to the undersigned at an
address other than that shown under "Description of Shares Tendered."
Mail [ ] Check [ ] Share Certificate(s) to:
Name:
---------------------------------------------------------------------------
(PLEASE PRINT)
Address:
------------------------------------------------------------------------
(ZIP OR POSTAL CODE)
- --------------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER IF U.S. RESIDENT)
DEPOSITS PURSUANT TO NOTICE OF GUARANTEED DELIVERY
(SEE INSTRUCTION 2)
[ ] CHECK HERE IF SHARES ARE BEING DEPOSITED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name of Registered Holder:
- ------------------------------------------------
Date of Execution of Notice
of Guaranteed Delivery:
- ------------------------------------------------
Name of Institution which
Guaranteed Delivery:
- ------------------------------------------------
6
<PAGE> 7
IMPORTANT
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 OR W-8. SEE INSTRUCTION 9)
-----------------------------------------------------
-----------------------------------------------------
Signature(s) of Holder(s)
Dated: , 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
Certificates or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information and see
Instruction 5.)
Name(s):
------------------------------------------------------------------------
(Please Print)
Capacity (full title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip or Postal Code)
Area Code and Telephone No.:
----------------------------------------------------
Taxpayer Identification or
Social Security No. if U.S. resident:
-------------------------------------------
(See Substitute Form W-9 or W-8)
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
Authorized Signature:
-----------------------------------------------------------
Name:
---------------------------------------------------------------------------
(Please Print)
Title:
--------------------------------------------------------------------------
Name of Firm:
-------------------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip or Postal Code)
Area Code and Telephone Number:
-------------------------------------------------
Date:
-------------------------
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member of a recognized stock exchange in
Canada, a registered national securities exchange in the United States, the
National Association of Securities Dealers, Inc., or the Investment Dealers
Association of Canada, or by a Canadian chartered bank or trust company in
Canada or a commercial bank or trust company having an office or correspondent
in the United States (each of the foregoing being referred to as an "Eligible
Institution"), unless (i) this Letter of Transmittal is signed by the registered
holder(s) of the Shares (which term, for purposes of this document, shall
include any participant in a Book-Entry Transfer Facility whose name appears on
a security position listing as the owner of Shares) tendered hereby and such
holder(s) has (have) completed neither the box entitled "Special Payment
Instructions" nor the box entitled "Special Delivery Instructions" on the
reverse hereof or (ii) such Shares are tendered for the account of an Eligible
Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if Shares are to be
delivered by book-entry transfer pursuant to the procedure set forth in Section
3 of the Offer to Purchase. Share Certificates evidencing all physically
tendered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of all Shares delivered
by book-entry transfer as well as a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature guarantees,
or an Agent's Message in the case of a book-entry delivery, and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on this Letter of Transmittal
hereof prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase). If Share Certificates are forwarded to the Depositary in multiple
deliveries, a properly completed and duly executed Letter of Transmittal must
accompany each such delivery. Shareholders whose Share Certificates are not
immediately available, who cannot deliver their Share Certificates and all other
required documents to the Depositary prior to the Expiration Date or who cannot
complete the procedure for delivery by book-entry transfer on a timely basis may
tender their Shares pursuant to the guaranteed delivery procedure described in
Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender
must be made by or through an Eligible Institution; (ii) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form made
available by Purchaser, must be received by the Depositary prior to the
Expiration Date; and (iii) the Share Certificates evidencing all physically
delivered Shares in proper form for transfer by delivery, or a confirmation of a
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility of all Shares delivered by book- entry transfer, in each case together
with a Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, with any required signature guarantees (or, in the case of
book-entry delivery, an Agent's Message), and any other documents required by
this Letter of Transmittal, must be received by the Depositary within three
National Association of Securities Dealers Automated Quotation
System -- National Market System trading days after the date of execution of
such Notice of Guaranteed Delivery, all as described in Section 3 of the Offer
to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering shareholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the Share
Certificate numbers, the number of Shares evidenced by such Share Certificates
and the number of Shares tendered should be listed on a separate schedule and
attached hereto.
8
<PAGE> 9
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
which are to be tendered in the box entitled "Number of Shares Tendered". In
such cases, new Share Certificate(s) evidencing the remainder of the Shares that
were evidenced by the Share Certificates delivered to the Depositary will be
sent to the person(s) signing this Letter of Transmittal, unless otherwise
provided in the box entitled "Special Delivery Instructions" on the reverse
hereof, as soon as practicable after the acceptance for payment of, and payment
for, the Shares tendered. All Shares evidenced by Share Certificates delivered
to the Depositary will be deemed to have been tendered unless otherwise
indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay any stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATES EVIDENCING THE
SHARES TENDERED HEREBY.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" on the reverse hereof, the appropriate
boxes on the reverse of this Letter of Transmittal must be completed.
Shareholders delivering Shares tendered hereby by book-entry transfer may
request that Shares not purchased be credited to such
9
<PAGE> 10
account maintained at the Book-Entry Transfer Facility as such shareholder may
designate in the box entitled "Special Payment Instructions" on the reverse
hereof. If no such instructions are given, all such Shares not purchased will be
returned by crediting the account at the Book-Entry Transfer Facility.
8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent or the
Dealer Manager at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal
and the Notice of Guaranteed Delivery may be obtained from the Information Agent
or from brokers, dealers, commercial banks or trust companies.
9. SUBSTITUTE FORMS W-9 AND W-8. U.S. shareholders must submit Substitute
Form W-9 to the Depositary and non-U.S. shareholders (including Canadian
shareholders) must generally submit Substitute Form W-8 to avoid 31% backup
withholding.
U.S. Shareholders. Under United States federal income tax law, each U.S.
Shareholder (as defined in Section 3 "Procedures for Accepting the Offer and
Tendering Shares" of Offer to Purchase) whose tendered Shares are accepted for
payment is required by law to provide the Depositary (as payer) with such
shareholder's correct TIN on Substitute Form W-9 below. If such shareholder is
an individual, the TIN is such shareholder's social security number. If the
Depositary is not provided with the correct TIN, the shareholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such shareholder with respect to Shares purchased pursuant to
the Offer may be subject to backup withholding. If backup withholding applies,
the Depositary is required to withhold 31% of any payments made to the
shareholder. Backup withholding is not an additional tax. Rather, the tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld. If withholding results in an overpayment of taxes, a refund may
be obtained from the Internal Revenue Service. Certain shareholders (including,
among others, all corporations and certain foreign persons) are not subject to
these backup withholding and reporting requirements.
For a U.S. shareholder to prevent backup withholding on payments that are
made to a shareholder with respect to Shares purchased pursuant to the Offer,
the shareholder is required to notify the Depositary of such U.S. shareholder's
correct TIN by completing the form below certifying that the TIN provided on
Substitute Form W-9 is correct (or that such shareholder is awaiting a TIN), and
that (i) such shareholder has not been notified by the Internal Revenue Service
that he is subject to backup withholding as a result of a failure to report all
interest or dividends or (ii) the Internal Revenue Service has notified such
shareholder that such shareholder is no longer subject to backup withholding.
See the enclosed "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9" for additional instructions.
Non-U.S. Shareholders. To avoid backup withholding, Non-U.S. shareholders,
(as defined in Section 3 "Procedures for Accepting the Offer and Tendering
Shares" of Offer to Purchase) including individuals, must generally submit a
Substitute Form W-8 to the Depositary, signed under penalties of perjury,
attesting to such shareholder's exempt status. To prevent backup withholding on
payments made to a shareholder with respect to shares purchased pursuant to the
Offer, the Substitute Form W-8 requires a Non-U.S. Shareholder to certify, under
penalties of perjury, that the shareholder (1) is a nonresident alien individual
or a foreign corporation, partnership or trust, and (2) is not an individual who
has been, or who plans to be, present in the United States for a total of 183
days or more during the calendar year, and (3) is not engaged and does not plan
to be engaged during the year, in a United States trade or business that has
effectively connected gains from transactions with a broker or barter exchange.
Substitute Form W-8 is attached to this Letter of Transmittal.
10. LOST CERTIFICATES. If a Share Certificate has been lost or destroyed,
this Letter of Transmittal should be completed as fully as possible and
forwarded, together with a letter describing the loss, to the Depositary. The
Depositary will assist in making arrangements for the replacement of such share
certificates. Please ensure that you provide your telephone number to the
Depositary so that the Depositary may contact you if required.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY
DELIVERY (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND SHARE CERTIFICATES
OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE.
10
<PAGE> 11
- --------------------------------------------------------------------------------
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1 -- Please provide Social Security Number(s)
your Taxpayer
Form W-9 Identification Number ----------------------------
Department of the Treasury in the box at right and
Internal Revenue Service certify by signing and or
PAYER'S REQUEST FOR TAXPAYER dating below. Employer Identification
IDENTIFICATION NUMBER (TIN) Number(s)
----------------------------
</TABLE>
- --------------------------------------------------------------------------------
PART 2 -- CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (the "IRS") that I am subject to
backup withholding as a result of failure to report all interest or
dividends, or the IRS has notified me that I am no longer subject to
backup withholding.
- --------------------------------------------------------------------------------
PART 3 -- AWAITING TIN [ ] PART 4 -- EXEMPT [ ]
- --------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) in Part 2 above if
you have been notified by the IRS that you are subject to backup withholding
because of underreporting interest or dividends on your tax return. However,
if after being notified by the IRS that you were subject to backup withholding
you received another notification from the IRS that you were no longer subject
to backup withholding, do not cross out item (2). If you are exempt from
backup withholding, check the box in Part 4 above.
- --------------------------------------------------------------------------------
SIGNATURE ________________________________________ DATE _______________________
- --------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(b) I intend to mail or deliver an application in the near future. I
understand that, if I do not provide a taxpayer identification number to the
Depositary, 31% of all reportable payments made to me will be withheld, but
will be refunded if I provide a certified taxpayer identification number
within 60 days.
Signature: ___________________________________ Date: _________________________
- --------------------------------------------------------------------------------
NOTE: IF YOU ARE A U.S. SHAREHOLDER, FAILURE TO COMPLETE AND RETURN THIS FORM
MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU
PURSUANT TO THE OFFER. FOR ADDITIONAL DETAILS, PLEASE REVIEW THE ENCLOSED
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9.
11
<PAGE> 12
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
- ------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE Please provide your U.S. taxpayer Social Security Number(s)
identification number, if any, in the
FORM W-8 box at right. or
DEPARTMENT OF THE TREASURY Employer Identification
INTERNAL REVENUE SERVICE Number(s)
CERTIFICATE OF FOREIGN STATUS
--------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATION. --
Under penalties of perjury, I certify that: (please check applicable
box(es))
[ ] For INTEREST PAYMENTS and DIVIDENDS, I am not a U.S. citizen or
resident (or I am filing for a foreign corporation, partnership, estate or
trust).
[ ] For BROKER TRANSACTIONS or BARTER EXCHANGES, I (1) am a
nonresident alien individual or a foreign corporation, partnership or trust,
and (2) am not an individual who has been, or who plans to be, present in
the United States for a total of 183 days or more during the calendar year,
and (3) am not engaged and do not plan to be engaged during the year, in a
United States trade or business that has effectively connected gains from
transactions with a broker or barter exchange.
- --------------------------------------------------------------------------------
SIGNATURE____________________________________ DATE_____________, 199______
- --------------------------------------------------------------------------------
NOTE: IF YOU ARE A NON-U.S. SHAREHOLDER, FAILURE TO COMPLETE AND RETURN
THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU
PURSUANT TO THE OFFER. THIS FORM MUST BE COMPLETED IN ACCORDANCE WITH APPLICABLE
INSTRUCTIONS AND OTHER REQUIREMENTS. ADDITIONAL INFORMATION MAY BE FOUND IN THE
INSTRUCTIONS TO FORM W-8 AND IN IRS PUBLICATION 515, BOTH OF WHICH ARE AVAILABLE
FROM THE DEPOSITARY ON REQUEST.
12
<PAGE> 13
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC. LOGO
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
The Dealer Manager for the Offer is:
CIBC WORLD MARKETS LOGO
One World Financial Center
New York, New York 10281
(212) 667-6345
<PAGE> 1
Exhibit (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF COMMON SHARES
OF
SIMWARE INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) (i) if certificates
("Share Certificates") evidencing Common Shares (the "Shares") of Simware Inc.,
a corporation incorporated under the Canada Business Corporations Act (the
"Company"), are not immediately available, (ii) if Share Certificates and all
other required documents cannot be delivered to ChaseMellon Shareholder
Services, L.L.C., as Depositary (the "Depositary"), prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase (as defined below)) or (iii)
if the procedure for delivery by book-entry transfer cannot be completed on a
timely basis. This Notice of Guaranteed Delivery may be delivered by hand or
mail or transmitted by telegram, telex or facsimile transmission to the
Depositary and must include guarantee by an Eligible Institution. See Section 3
of the Offer to Purchase (as defined below).
The Depositary for the Offer is:
CHASEMELLON
SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Carrier: By Hand:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ 07606 Mail Stop -- Reorg 13th Floor
Ridgefield Park, NJ 07660 New York, NY 10271
</TABLE>
Facsimile (for Eligible Institutions only): (201) 296-4293
To confirm by telephone: (201) 296-4860
The Canadian Forwarding Agent for the Offer is:
CIBC MELLON TRUST COMPANY
By Courier or Hand:
199 Bay Street
Commerce Court West
Securities Level
Toronto, Ontario
M5L 1G9
Attention: Courier Window
In Toronto Call (416) 643-5500
All Others Call Toll Free (800) 387-0825
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to NetManage Bid Co., a Nova Scotia
unlimited liability company and a direct wholly-owned subsidiary of Preston
Delaware Acquisition Corporation, a Delaware corporation, and an indirect
wholly-owned subsidiary of NetManage, Inc., a Delaware Corporation, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
October 1, 1999 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which together with any amendments or supplements thereto,
collectively constitute the "Offer"), receipt of each of which is hereby
acknowledged, the number of Shares specified below pursuant to the guaranteed
delivery procedures described in Section 3 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: -----------------------------------------------------------
-----------------------------------------------------------
- ---------------------------------------------- Signature(s) of Holders(s)
- ------------------------------------------------
Dated: -------------------------------------------- , 1999
Certificate Nos. (If Available):
- ------------------------------------------------ Name(s) of Holders:
- ------------------------------------------------ -----------------------------------------------------------
-----------------------------------------------------------
[ ] Check box if Shares will be delivered Please Print
by book-entry transfer: -----------------------------------------------------------
Address
-----------------------------------------------------------
Zip or Postal Code
-----------------------------------------------------------
Area Code and Telephone No.
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a firm which is a member of a recognized stock exchange in
Canada, a registered national securities exchange in the United States, of the
National Association of Securities Dealers, Inc. or the Investment Dealers
Association of Canada or which is a commercial bank or trust company having an
office or correspondent in the United States that is a member in good standing
of the Securities Transfer Agents Medallion Program or the New York Stock
Exchange Guarantee Program or the Stock Exchange Medallion Program or an
"Eligible Institution" as that term is defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, hereby, guarantees to deliver to
the Depositary, Share Certificates evidencing the Shares tendered hereby, in
proper form for transfer, or confirmation of book-entry transfer of such Shares,
in each case with delivery of a Letter of Transmittal (or facsimile thereof)
properly completed and duly executed, with any required signature guarantees or
an Agent's Message (as defined in the Offer to Purchase) in the case of a
book-entry delivery, and any other required documents, all within three National
Association of Securities Dealers Automated Quotation -- National Market System
trading days of the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depository and must deliver the Letter of Transmittal and the
Share Certificates to the Depository within the time period shown herein and
otherwise in accordance with Instruction 2 of the Letter of Transmittal. Failure
to do so could result in a financial loss to such Eligible Institution.
2
<PAGE> 3
<TABLE>
<S> <C>
- ----------------------------------------------------- -----------------------------------------------------
Name of Firm Authorized Signature
- ----------------------------------------------------- Name:
Address ----------------------------------------------
- ----------------------------------------------------- (Please Type or Print)
Zip or Postal Code -----------------------------------------------------
- ----------------------------------------------------- Title
Area Code and Telephone No. Dated: -------------------------------------- , 1999
</TABLE>
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
Exhibit (a)(4)
One World Financial Center
LOGO New York, New York 16281
OFFER TO PURCHASE
ALL OUTSTANDING COMMON SHARES
OF
SIMWARE INC.
AT
U.S. $3.75 NET PER SHARE
BY
NETMANAGE BID CO.
A WHOLLY-OWNED SUBSIDIARY OF
PRESTON DELAWARE ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
NETMANAGE, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, OCTOBER 29, 1999, UNLESS THE OFFER IS EXTENDED.
October 1, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged to act as Dealer Manager in connection with the offer
by NetManage Bid Co., a Nova Scotia unlimited liability company ("Purchaser"), a
direct wholly-owned subsidiary of Preston Delaware Acquisition Corporation, a
Delaware corporation ("Sub"), and an indirect wholly-owned subsidiary of
NetManage, Inc., a Delaware corporation ("Parent") to purchase all outstanding
Common Shares (the "Shares") of Simware Inc., a corporation incorporated under
the Canada Business Corporations Act ("CBCA") (the "Company"), at a price of
U.S. $3.75 per Share, net to the seller in cash, upon the terms and subject to
the conditions set forth in Purchaser's Offer to Purchase and Offering Circular,
dated October 1, 1999 (collectively, the "Offer to Purchase"), and the related
Letter of Transmittal (which together with any amendments and supplements
thereto, constitute the "Offer") enclosed herewith. Please furnish copies of the
enclosed materials to those of your clients for whose accounts you hold Shares
registered in your name or in the name of your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THAT
NUMBER OF SHARES THAT SHALL CONSTITUTE SIXTY-SIX AND TWO-THIRDS PERCENT
(66 2/3%) OF THE THEN OUTSTANDING SHARES ON A FULLY DILUTED BASIS.
Enclosed for your information and use are copies of the following
documents:
1. Offer to Purchase and Offering Circular, dated October 1, 1999;
2. Letter of Transmittal to be used by holders of Shares in accepting
the Offer and tendering Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required
<PAGE> 2
documents are not immediately available or cannot be delivered to
ChaseMellon Shareholder Services, L.L.C. (the "Depositary") by the
Expiration Date (as defined in the Offer to Purchase) or if the procedure
for book-entry transfer cannot be completed by the Expiration Date;
4. A printed form of letter to shareholders of the Company from
William G. Breen, Chairman of the Board of the Company and Glen Brownlee,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9, dated October 1,
1999, filed with the Securities and Exchange Commission by the Company;
5. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 or Substitute Form W-8; and
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, OCTOBER 29, 1999, UNLESS THE OFFER IS EXTENDED.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
evidencing such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at the Book-Entry Transfer Facilities (as
defined in the Offer to Purchase)), (ii) a Letter of Transmittal (or facsimile
thereof) properly completed and duly executed or an Agent's Message (as defined
in the Offer to Purchase) in connection with a book-entry delivery of Shares and
(iii) any other required documents.
If a holder of Shares wishes to tender, but cannot deliver such holder's
certificates or other required documents, or cannot comply with the procedure
for book-entry transfer, prior to the expiration of the Offer, a tender of
Shares may be effected by following the guaranteed delivery procedure described
in Section 3 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer or
other person in connection with the solicitation of tenders of Shares pursuant
to the Offer. However, Purchaser will reimburse you for customary mailing and
handling expenses incurred by you in forwarding any of the enclosed materials to
your clients. Purchaser will pay or cause to be paid any stock transfer taxes
payable with respect to the transfer of Shares to it, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
either CIBC World Markets Corp. as the Dealer Manager, or MacKenzie Partners,
Inc., as the Information Agent, at their respective addresses and telephone
numbers set forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed materials may be obtained from the
Information Agent at (800) 322-2885.
Very truly yours,
CIBC WORLD MARKETS CORP.
Enclosures
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL AUTHORIZE YOU
OR ANY OTHER PERSON TO ACT ON BEHALF OF OR AS THE AGENT OF PARENT, SUB,
PURCHASER, THE COMPANY, THE DEALER MANAGER, THE DEPOSITARY OR THE INFORMATION
AGENT, OR OF ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON
TO USE ANY DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN
CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS
CONTAINED THEREIN.
<PAGE> 1
Exhibit (a)(5)
OFFER TO PURCHASE
ALL OUTSTANDING COMMON SHARES
OF
SIMWARE INC.
AT
U.S. $3.75 NET PER SHARE
BY
NETMANAGE BID CO.
A WHOLLY-OWNED SUBSIDIARY OF
PRESTON DELAWARE ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
NETMANAGE, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, OCTOBER 29, 1999, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are an Offer to Purchase and Offering
Circular dated October 1, 1999 (the "Offer to Purchase") and a related Letter of
Transmittal (which together constitute the "Offer") in connection with the offer
by NetManage Bid Co., a Nova Scotia unlimited liability company ("Purchaser"), a
direct wholly-owned subsidiary of Preston Delaware Acquisition Corporation, a
Delaware corporation ("Sub"), and an indirect wholly-owned subsidiary of
NetManage, Inc., a Delaware corporation ("Parent"), to purchase all outstanding
Common Shares (the "Shares") of Simware Inc., a corporation incorporated under
the Canada Business Corporations Act ("CBCA") (the "Company"), at a price of
U.S. $3.75 per Share, net to the seller in cash, upon the terms and subject to
the conditions set forth in the Offer. Also enclosed is the letter to
shareholders of the Company from William G. Breen, Chairman of the Board of the
Company and Glen Brownlee, President and Chief Executive Officer of the Company,
together with a Solicitation/ Recommendation Statement on Schedule 14D-9 filed
with the Securities and Exchange Commission by the Company.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is U.S. $3.75 per Share, net to the seller in
cash.
2. The Offer is being made for all outstanding Shares.
<PAGE> 2
3. The Board of Directors of the Company unanimously has determined
that the Offer is fair to, and in the best interests of, the shareholders
of the Company, and recommends that shareholders accept the Offer and
tender their Shares pursuant to the Offer.
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Friday, October 29, 1999, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being
validly tendered and not properly withdrawn prior to the expiration of the
Offer at least that number of Shares that shall constitute sixty-six and
two-thirds percent (66 2/3%) of the then outstanding Shares on a fully
diluted basis. Shareholders are urged to read the Offer to Purchase in its
entirety for a description of all conditions to the Offer and the other
items set forth therein.
6. Tendering shareholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes with respect to the purchase of
Shares by Purchaser pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. YOUR INSTRUCTIONS
SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR
BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares. Purchaser is not aware
of any jurisdiction where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid or provincial statute.
If Purchaser becomes aware of any valid state or provincial statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, Purchaser
will make a good faith effort to comply with any such or provincial statute. If,
after such good faith effort, Purchaser cannot comply with any such statute, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
the holders of Shares in such state or province. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
ALL OUTSTANDING COMMON SHARES
OF
SIMWARE INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase and Offering Circular, dated October 1, 1999 and the related
Letter of Transmittal (which together constitute the "Offer"), in connection
with the offer by NetManage Bid Co., a Nova Scotia unlimited liability company
and a direct wholly-owned subsidiary of Preston Delaware Acquisition
Corporation, a Delaware corporation, and an indirect wholly-owned subsidiary of
NetManage, Inc., a Delaware corporation, to purchase all outstanding common
shares (the "Shares") of Simware Inc., a corporation incorporated under the
Canada Business Corporations Act.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
Number of Shares to be Tendered: ________________________ Shares*
Dated: ________________________ , 1999
- --------------------------------------------------------------------------------
SIGN HERE
Account #:
Signature(s):
- --------------------------------------------------------------------------------
Please type or print name(s):
- --------------------------------------------------------------------------------
Please type or print address:
- --------------------------------------------------------------------------------
Area Code and Telephone Number:
Taxpayer Identification or Social Security Number:
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
3
<PAGE> 1
Exhibit (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
- -------------------------------------------------------------
- -------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE SOCIAL SECURITY
NUMBER OF --
- -------------------------------------------------------------
- -------------------------------------------------------------
1. An individual's The individual
account
2. Two or more The actual owner
individuals of the account or,
(joint account) if combined funds,
any one of the
individuals(1)
3. Husband and wife The actual owner
(joint account) of the account or,
if joint funds,
either person(1)
4. Custodian account of The minor(2)
a minor (Uniform
Gift to Minors Act)
5. Adult and minor The adult or, if
(joint account) the minor is the
only contributor,
the minor(1)
6. Account in the name The ward, minor,
of guardian or or incompetent
committee for a person(3)
designated ward,
minor, or
incompetent person
7. a. The usual The
revocable savings grantor-trustee(1)
trust account
(grantor is also
trustee)
b. So-called trust The actual owner(1)
account that is
not a legal or
valid trust under
State law
- -------------------------------------------------------------
- -------------------------------------------------------------
FOR THIS TYPE OF GIVE THE EMPLOYER
ACCOUNT: IDENTIFICATION
NUMBER OF --
8. Sole The Owner(4)
proprietorship
account
9. A valid Legal entity (Do not
trust, furnish the identifying
estate, or number of the personal
pension representative or
trust trustee unless the legal
entity itself is not
designated in the
account title)(5)
10. Corporate The corporation
account
11. Religious, The organization
charitable,
or
educational
organization
account
12. Partnership The partnership
account held
in the name
of the
business
13. Association, The organization
club, or
other
tax-exempt
organization
14. A broker or The broker or nominee
registered
nominee
15. Account with The public entity
the
Department
of
Agriculture
in the name
of a public
entity (such
as a State
or local
government,
school
district or
prison) that
receives
agricultural
program
payments
- -------------------------------------------------------------
- -------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the valid trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), or an individual
retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities in the U.S. or a possession
of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. File this form with the payer, furnish your taxpayer
identification number, write "exempt" on the face of the form, and return it to
the payer, if the payments are interest, dividends, or patronage dividends, also
sign and date the form.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning with January 1, 1984, payers must
generally withhold 20% of taxable interest, dividend, and certain other payments
to a payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an under
payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
<PAGE> 1
EXHIBIT (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated October
1, 1999 and the related Letter of Transmittal, and is being made to all holders
of Shares. Purchaser is not aware of any jurisdiction where the making of the
Offer is prohibited by administrative or judicial action pursuant to any valid
statute. If Purchaser becomes aware of any valid statute prohibiting the making
of the Offer or the acceptance of Shares pursuant thereto, Purchaser will make a
good faith effort to comply with such statute. If, after such good faith effort,
Purchaser cannot comply with such statute, the Offer will not be made to (nor
will tenders be accepted from or on behalf of) the holders of Shares in such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of Purchaser by CIBC World Markets Corp. or one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES
OF
SIMWARE INC.
AT
U.S. $3.75 NET PER SHARE
BY
NETMANAGE BID CO.
A WHOLLY-OWNED SUBSIDIARY OF
PRESTON DELAWARE ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
NETMANAGE, INC.
NetManage Bid Co., a Nova Scotia unlimited liability company ("Purchaser"),
a direct wholly-owned subsidiary of Preston Delaware Acquisition Corporation, a
Delaware corporation ("Sub") and an indirect wholly-owned subsidiary of
NetManage, Inc., a Delaware corporation ("Parent"), is offering to purchase all
outstanding Common Shares (the "Shares") of Simware Inc., a corporation
incorporated under the Canada Business Corporations Act (the "Company"), at a
price of U.S. $3.75 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated October 1, 1999 (the "Offer to Purchase") and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer"). Following the Offer, Purchaser
intends to effect the Acquisition described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, OCTOBER 29, 1999, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer at least that
number of Shares that shall constitute sixty-six and two-thirds percent (66
2/3%) of the then outstanding Shares on a fully diluted basis.
The Offer is being made pursuant to an Acquisition Agreement, dated as of
September 26, 1999 (the "Acquisition Agreement"), among Parent, Purchaser and
the Company. The Acquisition Agreement provides that, among other things, after
the Shares are taken up and paid for under the Offer, Purchaser will utilize the
compulsory acquisition provisions of the Canada Business Corporations Act
("CBCA"), if permitted to do so thereby, to acquire any remaining Shares that
were not deposited under the Offer (the "Compulsory Acquisition"). If the
Compulsory Acquisition is not available, then Purchaser will seek to call a
special meeting of shareholders to consider a Subsequent Acquisition Transaction
(as defined in the Offer) for purposes of enabling Parent to acquire all Shares
not acquired under the Offer. The term "Acquisition" as used herein shall mean
either Compulsory Acquisition or Subsequent Acquisition Transaction.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER
AND DETERMINED THAT THE TERMS OF THE OFFER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY, AND RECOMMENDS THAT SHAREHOLDERS
OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn if and when Purchaser gives written notice to ChaseMellon Shareholder
Services, L.L.C. (the "Depositary") of Purchaser's acceptance for payment of
such Shares pursuant to the Offer. Upon the terms and subject to the conditions
of the Offer, payment for Shares accepted for payment pursuant to the Offer will
be made by deposit of the purchase price therefor with the Depositary, which
will act as agent for tendering shareholders for the purpose of receiving
payments from Purchaser and transmitting such payments to tendering shareholders
whose Shares have been accepted for payment. Under no circumstances will
interest on the purchase price for Shares be paid on the purchase price of the
Shares, regardless of any extension of the Offer or any delay in making such
payment. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) the certificates evidencing such Shares (the "Share Certificates") or
timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility (as defined in Section
2 of the Offer to Purchase) pursuant to the procedures set forth in Section 3 of
the Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry transfer and (iii) any other documents required by the Letter of
Transmittal.
Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms and conditions of the Acquisition Agreement), at any time and from
time to time, to extend for any reason the period of time during which the Offer
is open by giving written notice of such extension to the Depositary. Any such
extension will be followed as promptly as practicable by public announcement
thereof, such announcement to be made no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled expiration date of
the Offer. During any such extension, all Shares previously deposited and not
taken up and paid for or withdrawn will remain subject to the Offer and subject
to applicable law, may be accepted for purchase by the Purchaser on or before
the Expiration Date in accordance with the terms of the Offer.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to 12:00 Midnight, New York City
time, on Friday, October 29, 1999 (or the latest time and date at which the
Offer, if extended by Purchaser, shall expire) and, unless theretofore accepted
for payment by Purchaser pursuant to the Offer, may also be withdrawn at any
time after November 15, 1999. For the withdrawal to be effective, a written,
telegraphic, telex or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
page of the Offer to Purchase. Any such notice of withdrawal must specify the
name of the person who tendered the Shares to be withdrawn, the number of Shares
to be withdrawn and the name of the registered holder of such Shares, if
different from that of the person who tendered such Shares. If Share
Certificates evidencing Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such Share
Certificates, the serial numbers shown on such Share Certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution (as defined in Section 3 of the
Offer to Purchase), unless such Shares have been tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares. All
questions as to the form and validity (including the time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and other relevant materials will be mailed to
record holders of Shares whose names appear on the Company's shareholder list
and will be furnished to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
shareholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information which should be read in its entirety before any decision
is made with respect to the Offer.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager as set forth below. Requests for additional copies
of the Offer to Purchase and the related Letter of Transmittal and other tender
offer materials may be directed to the Information Agent, and copies will be
furnished promptly at Purchaser's expense. No fees or commissions will be paid
to brokers, dealers or other persons for soliciting tenders of Shares pursuant
to the Offer.
The Information Agent for the Offer is:
[MacKenzie Partners, Inc. LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
The Dealer Manager for the Offer is:
[CIBC World Markets LOGO]
One World Financial Center
New York, New York 10281
(212) 667-6345
October 1, 1999
<PAGE> 1
EXHIBIT (a)(8)
NetManage, Inc. Announces Agreement to Acquire Simware Inc. Advancing
NetManage's Position in the eCommerce Market
CUPERTINO, Calif. and OTTAWA, Sept. 27/PRNewswire/--NetManage, Inc.
(Nasdaq:NETM), a leader in complete PC Connectivity solutions, and Simware Inc.
(Nasdaq:SIMW), a leader in web-based eCommerce solutions and web integration
servers, jointly announced today that they have signed an acquisition agreement
whereby NetManage, Inc. intends to acquire all of the outstanding shares of
Simware Inc., at US$3.75 per share, or approximately US$28 million. To implement
the agreement, NetManage will commence a cash tender offer within five business
days. The completion of the offer is subject to a number of customary
conditions.
The combined company expects to build on the technology and user base
established by Simware for its market leading Salvo Commerce Servers and Salvo
application re-engineering and integration servers, and to integrate the
technology into NetManage's recently announced eN2000 Connectivity Framework.
The combined company also expects to increase its presence in the rapidly
growing Web-to-Host market and the Web Integration Server market as a single
source supplier of world-class connectivity applications for UNIX, IBM AS/400
Midrange and IBM Mainframe systems. Upon the closing of the acquisition, Zvi
Alon will retain the position of president and CEO of NetManage, Inc.
Consummation of the acquisition is conditioned on, among other things, the
tender of at least two-thirds of the outstanding stock of Simware Inc. in the
tender offer, which will expire on or about October 28, 1999. Documents relating
to the tender offer are expected to be sent to stockholders on or before October
1, 1999. Shares not purchased in the tender offer will be acquired in a
subsequent transaction at the same price as soon as practicable after completion
of the tender. On completion of the acquisition, Simware Inc. will become a
wholly-owned subsidiary of NetManage, Inc.
"With the acquisition of Simware," said Zvi Alon, president and CEO of
NetManage, "we are continuing our strategy of increasing our penetration into
the eCommerce market, while solidifying and building our core business of
providing connectivity solutions. Simware's strength in the eCommerce server and
integration server markets, as well as their established presence in the
application re-engineering segment, will help us achieve our goal of providing a
full spectrum of web access solutions to our present and new users."
About Simware
Simware is a leading provider of Internet-based Extranet solutions for the
demand chain, helping customers get outstanding ROI from distribution systems,
customer self-serve applications and Web-based call center extensions. Simware
has earned the trust of its 1,000 customers worldwide over the past 17 years
because the company understands how to leverage the demand chain process to
increase revenue and decrease costs. Today, Simware customers are implementing
Salvo-based Extranet applications to solve business problems. Simware is a
publicly traded company headquartered in Ottawa, Canada with offices in the
United States, the United Kingdom, and Europe as well as alliances with leading
customer solution providers globally. For more information about Simware, please
visit www.simware.com.
This press release may contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements with respect
to the completion of the acquisition by NetManage, Inc. Actual results could
differ materially from those projected in the forward-looking statements.
The NetManage logo and the lizard-in-the-box logo are either trademarks or
registered trademarks of NetManage, Inc. and/or its subsidiaries in the United
States and other countries. All other trademarks are the property of their
respective owners.
CONTACT: Anh-Thi Burry of NetManage, Inc., 408-342-7682; or Corien Kershey,
media, 613-228-5103, or [email protected], or Mike Peckham, investors,
613-228-5155, or [email protected], both of Simware.
<PAGE> 1
EXHIBIT (c)(1)
to 14D-1
===============================================================================
DATED: September 26, 1999
ACQUISITION AGREEMENT
By and Among
NETMANAGE, INC.
NETMANAGE BID CO.
and
SIMWARE INC.
Dated as of September 26, 1999
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I THE TENDER OFFER.......................................................................1
1.1 The Offer.........................................................................1
1.2 Company Action....................................................................3
1.3 Directors.........................................................................5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................5
2.1 Organization of the Company.......................................................5
2.2 Company Capital Structure.........................................................6
2.3 Obligations With Respect to Capital Stock.........................................6
2.4 Authority.........................................................................7
2.5 Securities Filings; the Company Financial Statements..............................8
2.6 Absence of Certain Changes or Events..............................................9
2.7 Taxes.............................................................................9
2.8 Title to Properties; Absence of Liens and Encumbrances...........................11
2.9 Intellectual Property............................................................11
2.10 Compliance; Permits; Restrictions................................................14
2.11 Litigation.......................................................................14
2.12 Brokers' and Finders' Fees.......................................................14
2.13 Canadian Pension and Other Benefit Plans.........................................15
2.14 U.S. Employee Benefit Plans......................................................17
2.15 Employees; Labor Matters.........................................................17
2.16 Environmental Matters............................................................17
2.17 Agreements, Contracts and Commitments............................................19
2.18 Change of Control Payments.......................................................20
2.19 Board Approval...................................................................20
2.20 Fairness Opinion.................................................................20
2.21 Year 2000 Compliance.............................................................20
2.22 Offer Documents..................................................................21
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER..............................21
3.1 Organization and Qualification...................................................21
3.2 Corporate Power, Authorization and Enforceability................................21
3.3 No Conflict; Required Filings and Consents.......................................21
3.4 Offer Documents..................................................................22
3.5 Available Funds..................................................................22
3.6 Agreements Contracts and Commitments.............................................22
ARTICLE IV COVENANTS............................................................................23
4.1 Conduct of Business by the Company...............................................23
4.2 Access to Information; Confidentiality...........................................25
4.3 No Solicitation; Break-up Fee....................................................25
</TABLE>
-i-
<PAGE> 3
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
4.4 Public Announcements.............................................................27
4.5 Notification of Certain Matters..................................................27
4.6 Actions by Company...............................................................28
4.7 Officers' and Directors' Indemnification; Insurance..............................28
4.8 Additional Agreements............................................................28
4.9 Other Actions by the Company.....................................................29
4.10 Company Options..................................................................29
4.11 Stockholder Litigation...........................................................29
ARTICLE V TERMINATION, AMENDMENT AND WAIVER.....................................................30
5.1 Termination......................................................................30
5.2 Procedure and Effect of Termination..............................................31
5.3 Fees and Expenses................................................................31
5.4 Amendment........................................................................32
5.5 Waiver...........................................................................32
ARTICLE VI MISCELLANEOUS........................................................................32
6.1 Severability.....................................................................32
6.2 Notices..........................................................................32
6.3 Entire Agreement; No Third Party Beneficiaries; No Assignment....................34
6.4 Interpretation; Knowledge........................................................34
6.5 Counterparts.....................................................................35
6.6 Other Remedies; Specific Performance.............................................35
6.7 Governing Law....................................................................35
6.8 Rules of Construction............................................................35
6.9 WAIVER OF JURY TRIAL.............................................................36
</TABLE>
ANNEX I Conditions of the Offer
<PAGE> 4
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "AGREEMENT") is made and entered into as
of this 26th day of September, 1999, by and among NetManage, Inc., a Delaware
corporation ("PARENT"), NetManage Bid Co., an unlimited liability company formed
under the laws of Nova Scotia and an indirect wholly-owned subsidiary of Parent
("PURCHASER"), and Simware Inc., a corporation incorporated under the CBCA (the
"COMPANY").
RECITALS
A. The Boards of Directors of Parent, Purchaser and the Company have
each unanimously approved the terms and conditions of the acquisition of the
Company by Purchaser (the "ACQUISITION") upon the terms and subject to the
conditions set forth herein.
B. Pursuant to the Acquisition, Purchaser will acquire each issued and
outstanding Common Share of the Company at a price of U.S. $3.75 net per Share
to the seller in cash and without interest thereon (the "OFFER PRICE"). In order
to accomplish the Acquisition, Purchaser shall first commence a
tender offer (the "OFFER") by Purchaser under (i) Section 14(d)(1) of the
Securities and Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and (ii)
Canadian Securities Laws (as defined below), to purchase all outstanding Common
Shares, without nominal or par value, of the Company (Common Shares are referred
to herein as the "SHARES").
C. The Board of Directors of the Company has unanimously resolved to
recommend the acceptance of the Offer to the stockholders of the Company and
determined that the consideration to be paid for each Share in the Offer is fair
to the stockholders and that the Offer is in the best interests of the
stockholders.
NOW, THEREFORE, intending to be legally bound hereby, the parties agree
as follows:
ARTICLE I
THE TENDER OFFER
1.1 THE OFFER.
(a) Provided that this Agreement shall not have been terminated
pursuant to Section 5.1 and none of the events set forth in clause (iii) of
Annex I shall have occurred or be existing, Purchaser shall, and Parent shall
cause Purchaser to, within five business days after the public announcement of
the execution of this Agreement commence (within the meaning of Rule 14d-2 under
the Exchange Act) the Offer at the Offer Price by mailing to holders of record
of Shares a takeover bid offer and circular (the "OFFER AND CIRCULAR") with
respect to the Offer which shall include a form of letter of transmittal (the
"LETTER OF TRANSMITTAL").
(b) The obligations of Purchaser to consummate the Offer and to accept
for payment and pay for any of the Shares tendered shall be subject to the
conditions set forth on
<PAGE> 5
-2-
Annex I, including that a minimum of not less than sixty-six and two-thirds
percent (66 2/3%) of the Shares outstanding on a fully diluted basis (including
for purposes of such calculation all Shares issuable upon exercise of all vested
and unvested stock options, and conversion of convertible securities or other
rights to purchase or acquire Shares) being validly tendered and not withdrawn
prior to the expiration of the Offer (the "MINIMUM CONDITION"). The per Share
amount shall be net to the seller in cash, upon the terms and subject to the
conditions of the Offer and subject to reduction for any applicable federal
back-up or other applicable withholding or stock transfer taxes. The Offer shall
remain open until 12:00 Midnight, New York City time, on October 29, 1999
(twenty (20) business days following the commencement of the Offer). As used in
this Agreement, the "EXPIRATION DATE" means 12:00 Midnight, New York City time,
on October 29, 1999, unless Purchaser extends the Offer as permitted by this
Agreement, in which case the "Expiration Date" means the latest time and date to
which the Offer is extended.
(c) Purchaser expressly reserves the right in its sole discretion to
waive any conditions to the Offer, to increase the price per Share payable in
the Offer, to extend the duration of the Offer, or to make any other changes in
the terms and conditions of the Offer; provided, however, that no such change
may be made which decreases the price per Share payable in the Offer, reduces
the maximum number of Shares to be purchased in the Offer, imposes conditions to
the Offer in addition to those set forth in Annex I or amends any other material
terms of the Offer in a manner materially adverse to the Company's stockholders,
and provided, further, that the Offer may not, without the Company's prior
written consent, be extended beyond November 19, 1999.
(d) The Offer shall be made by means of the Offer and Circular, which
shall contain the terms set forth in this Agreement and the conditions set forth
in Annex I. Concurrently with the commencement of the Offer, Parent and
Purchaser shall file (i) with the Ontario Securities Commission and other
provincial and territorial securities commissions or similar authorities in
Canada (the "CANADIAN SECURITIES REGULATORS"), the Offer and Circular and Letter
of Transmittal, and (ii) with the Securities and Exchange Commission (the "SEC")
a tender offer statement on Schedule 14D-1 reflecting the Offer (together with
all exhibits, amendments and supplements thereto, the "SCHEDULE 14D-1"). The
Company and its counsel shall be given an opportunity to review and shall be
reasonably satisfied with the Offer and Circular and the Schedule 14D-1 in the
form in which such document is originally filed with the applicable Canadian
Securities Regulators and the SEC, respectively, and all amendments and
supplements thereto, prior to the time at which such documents and all documents
related thereto are filed with the applicable Canadian Securities Regulators and
the SEC. Parent and Purchaser agree to provide the Company and its counsel with
any comments which Parent, Purchaser or their counsel may receive from the
Canadian Securities Regulators, the SEC or the staff of the SEC with respect to
such documents promptly after receipt thereof. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), Purchaser will
purchase by accepting for payment and will pay for Shares validly tendered and
not properly withdrawn, as promptly as practicable after the expiration of the
Offer, and in any event within ten days after expiration of the Offer, provided
that Purchaser may extend the Offer for any period of time thereafter in
accordance with (c) above. The Schedule 14D-1 will contain or will incorporate
by reference the Offer and Circular (or portions thereof) and forms of the
related Letter of Transmittal and summary advertisements (which Schedule 14D-1,
Offer and Circular, Letter of Transmittal and other documents, together with any
supplements or amendments thereto, are referred
<PAGE> 6
-3-
to herein collectively as the "OFFER DOCUMENTS"). Parent, Purchaser and the
Company agree promptly to correct any information provided by any of them for
use in the Offer Documents that shall have become false or misleading, and
Parent and Purchaser further agree to take all steps necessary to cause the
Offer and Circular and Schedule 14D-1 as so corrected to be filed with the SEC
and the Canadian Securities Regulators, as the case may be, and the other Offer
Documents as so corrected to be disseminated to the Company's stockholders, in
each case as and to the extent required by (i) all applicable securities laws in
each of the provinces and territories of Canada, the respective regulations and
rules under such laws and the applicable published policy statements of the
Canadian Regulatory Authorities in such provinces (collectively, the "CANADIAN
SECURITIES LAWS") and (ii) applicable U.S. federal securities laws. The Offer
Documents will, on the date filed, comply in all material respects with all
provisions of applicable U.S. federal securities laws and Canadian Securities
Laws.
(e) Purchaser agrees that, after the Shares are taken up and paid for
under the Offer, it will utilize the compulsory acquisition provisions of the
CBCA if permitted to do so under the CBCA. If the statutory right of acquisition
described above is not available, then Purchaser will seek to cause a special
meeting of stockholders of the Company to be called to consider a statutory
arrangement, amalgamation, merger, reorganization, consolidation,
recapitalization or other combination (a "SUBSEQUENT ACQUISITION TRANSACTION")
of the Company with the Purchaser or an affiliate of the Purchaser, if possible
to do so under, and subject to compliance with, all applicable laws, including
Canadian Securities Laws and U.S. federal securities laws. Any such Subsequent
Acquisition Transaction will be conducted in accordance with the "Going Private
Transaction" provisions of Ontario Securities Commission Policy Statement No.
9.1 ("POLICY 9.1") and Quebec Securities Commission Policy Statement No. Q-27
("POLICY Q-27"). Purchaser intends that the consideration offered under any
Subsequent Acquisition Transaction proposed by it would be identical to the
consideration offered under the Offer. Nothing herein shall be construed to
prevent the Purchaser from acquiring, directly or indirectly, additional shares
in the open market, in privately negotiated transactions, in another takeover
bid, tender or exchange offer, in settlement or appraisal proceedings or
otherwise in accordance with applicable laws, fully in consummation of the
Offer.
1.2 COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that (i) its Board of Directors has unanimously (A)
determined that this Agreement and the transactions contemplated hereby,
including each of the Offer and the Acquisition, are fair to and in the best
interests of the Company's stockholders, (B) approved and adopted this Agreement
and the transactions contemplated hereby and (C) resolved to recommend that the
stockholders of the Company accept the Offer and tender their Shares to
Purchaser in accordance with the Letter of Transmittal (provided, however, that
subject to the provisions of Section 4.3 such recommendation may be withdrawn,
modified or amended in connection with a Superior Proposal (as defined in
Section 4.3)) and (ii) Alliant Partners ("BANKER") has rendered to the Board of
Directors of the Company its written opinion (which opinion is permitted to be
included in writing in the Directors' Circular and the Schedule 14D-9 (as
defined in Section 1.2(b)), to the effect that the consideration to be received
by the stockholders pursuant to each of the Offer and the Acquisition is fair to
the stockholders from a financial point of view. The Company hereby consents to
the inclusion in the Offer Documents of the recommendation of the Company's
Board of Directors described in the first
<PAGE> 7
-4-
sentence of this Section 1.2(a), and has obtained the consent of Banker to the
inclusion in the Schedule 14D-9 of a copy of the written opinion referred to in
clause (ii) above.
(b) Concurrently with the mailing of the Offer Documents, the Company
(i) shall mail to stockholders of record and to each of the directors of the
Company and shall file with the applicable Canadian Regulatory Authorities a
Directors' Circular (together with all documents, supplements, and exhibits)
including the opinion of Banker referred to in paragraph 1.2(a), and (ii) file
with the SEC, concurrently with the filing by Parent and Purchaser of the
Schedule 14D-1, a Solicitation/Recommendation Statement on Schedule 14D-9 under
the Exchange Act relating to the Offer (together with all exhibits, amendments
and supplements thereto as well as the Information Statement required pursuant
to Section 14(f) under the Exchange Act, collectively the "SCHEDULE 14D-9"),
which shall contain, included as an exhibit, the Directors' Circular, and shall
disseminate the Schedule 14D-9 as required by Rule 14d-9 promulgated under the
Exchange Act. The Directors' Circular and the Schedule 14D-9, as the case may
be, and each amendment thereto, will, on the date filed, comply in all material
respects with the provisions of Canadian Securities Laws and applicable U.S.
federal securities laws, as the case may be. The Company, Parent and Purchaser
agree promptly to correct any information provided by any of them for use in the
Directors' Circular and Schedule 14D-9 that shall have become false or
misleading, and the Company further agrees to take all steps necessary to cause
the Directors' Circular and Schedule 14D-9 as so corrected to be filed with the
SEC and the applicable Canadian Securities Regulators, as the case may be, and
the Schedule 14D-9 and Directors' Circular as so corrected to be disseminated to
the stockholders, in each case as and to the extent required by applicable
Canadian Securities Laws and U.S. federal securities laws. The Company will
comply with the laws of the Province of Quebec relating to the use of French
language in connection with the Directors' Circular to be delivered to the
stockholders. Parent and its counsel shall be given the opportunity to review
and shall be reasonably satisfied with the Directors' Circular and the Schedule
14D-9 in the form in which such document is originally filed with the Canadian
Securities Regulators and the SEC, respectively, and all amendments and
supplements thereto, prior to the time at which such documents and all documents
related thereto are filed with the Canadian Regulatory Authorities and the SEC.
The Company shall provide Purchaser and its counsel with any comments the
Company or its counsel may receive from the SEC with respect to the Schedule
14D-9 promptly after receipt of such comments.
(c) The Company agrees to use its reasonable commercial efforts to cause
the senior officers and directors of the Company to support the Offer. The
Company has been advised by all of its directors and executive officers, and by
Banker and its affiliates that, as of the date of this Agreement, each intends
to tender all outstanding Shares beneficially owned by such person to Purchaser
pursuant to the Offer unless to do so would subject such person to liability
under Section 16(b) of the Exchange Act.
(d) The Company shall promptly furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and security
position listings of Shares held in stock depositories, each of a recent date,
and shall promptly furnish Purchaser with such additional information, including
updated lists of stockholders, mailing labels and security position listings,
and such other assistance as Parent, Purchaser or their agents may reasonably
request in connection with communicating the Offer and any amendments or
supplements thereto to the
<PAGE> 8
-5-
Company's stockholders. Subject to the requirements of applicable laws and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Acquisition, Parent and
Purchaser shall hold in confidence the information contained in any of such
labels and lists.
1.3 DIRECTORS. Promptly upon the acquisition by Purchaser pursuant to
the Offer of such number of Shares which satisfies the Minimum Condition and
from time to time thereafter, Parent shall be entitled to designate such number
of directors of the Company's Board of Directors and any committee thereof, as
is proportionate to the percentage of outstanding Shares owned by Purchaser and
its affiliates, subject to compliance with applicable law. The Company shall,
upon request by Parent, subject to applicable law, promptly exercise its
reasonable commercial efforts to increase the size of the Board of Directors to
the extent permitted by its Certificate of Incorporation and/or secure the
resignations of such number of directors as is necessary to enable Parent's
designees to be elected to the Board of Directors and shall exercise its
reasonable commercial efforts to enable Parent's designees to be so elected. The
Company shall take, at its expense, all action necessary to effect any such
election, including, if applicable, mailing to its stockholders the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder in form and substance reasonably satisfactory to Parent and its
counsel. Following the election or appointment of Parent's designees pursuant to
this Section 1.3, any amendment or termination of this Agreement, extension for
the performance or waiver of the obligations or other acts of Parent or
Purchaser or waiver of the Company's rights hereunder, shall require the
concurrence of a majority of the Company's directors (or the concurrence of the
director, if there is only one remaining) then in office who are directors on
the date hereof, or are directors (other than directors designated by Parent in
accordance with this Section 1.3) designated by such persons to fill any vacancy
(the "CONTINUING DIRECTORS").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company (which for purposes of this Article II shall include the
Company and each of its subsidiaries unless the context otherwise requires)
represents and warrants to Parent and Purchaser, subject to the exceptions
specifically disclosed in writing in the disclosure letter supplied by the
Company to Parent and Purchaser dated as of the date hereof and certified by a
duly authorized officer of the Company (the "Company Schedules"), as follows:
2.1 ORGANIZATION OF THE COMPANY.
(i) The Company and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; has the corporate power and authority to own,
lease and operate its assets and property and to carry on its business as now
being conducted and as proposed to be conducted; and is duly qualified or
licensed to do business and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
activities makes such qualification or licensing necessary, except where the
failure to be so qualified would not have a Material Adverse Effect (as defined
below) on the Company.
<PAGE> 9
-6-
(ii) The Company has delivered to Parent a true and complete list
of all of the Company's subsidiaries, indicating the jurisdiction of
incorporation of each subsidiary, the jurisdictions in which such subsidiary is
qualified or licensed, and the Company's and any other person's equity interest
therein. All shares of subsidiaries owned of record by persons other than the
Company are owned beneficially (or the substantive equivalent) by the Company.
(iii) The Company has delivered or made available to Parent a
true and correct copy of the Certificate of Incorporation and Bylaws of the
Company and similar governing instruments of each of its subsidiaries, each as
amended to date, and each such instrument is in full force and effect. Neither
the Company nor any of its subsidiaries is in violation of any of the provisions
of its Certificate of Incorporation or Bylaws or equivalent governing
instruments.
(iv) When used in connection with the Company, the term "MATERIAL
ADVERSE EFFECT" means, for purposes of this Agreement, any change, event or
effect that is materially adverse to the business, assets (including intangible
assets), financial condition or results of operations of Company and its
subsidiaries taken as a whole. Except where the context otherwise requires, as
used in this Article II, the "Company" includes the Company's subsidiaries.
2.2 COMPANY CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of an unlimited number of Common Shares, without nominal or par
value, of which there were 6,962,747 shares issued and outstanding as of August
31, 1999 and an unlimited number of Preferred Shares without nominal or par
value, issuable in series, of which no shares are issued or outstanding. All
outstanding Common Shares are duly authorized, validly issued, fully paid and
nonassessable and are not subject to preemptive rights created by statute, the
Certificate of Incorporation or Bylaws of the Company or any agreement or
document to which the Company is a party or by which it is bound. As of
September 1, 1999, the Company had reserved an aggregate of 1,857,337 Common
Shares, net of exercises, for issuance to employees, consultants and
non-employee directors pursuant to the Company's Employee Stock Option Plan
("the Option Plan") as well as options issued outside the Option Plan and 29,288
Common Shares for issuance pursuant to the Company's Employee Share Purchase
Plan. As of September 1, 1999, there were options outstanding to purchase an
aggregate of 1,450,839 Common Shares, issued to employees, consultants and
non-employee directors pursuant to the Option Plan and otherwise. All of the
Company Common Shares 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. The Company has delivered to Parent a complete and accurate list
of each person who held restricted stock or options, the name of the holder of
such shares or option, the exercise price of such option, the number of shares
which will have vested at such date, the vesting schedule for such shares or
option, and has identified on such list whether the lapsing of the Company's
repurchase rights or exercisability of such option will be accelerated in any
way by the transactions contemplated by this Agreement, and has indicated the
extent of acceleration, if any.
2.3 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set forth in
Section 2.2, there are no equity securities, partnership interests or similar
ownership interests of any class of the Company, or any securities exchangeable
or convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests, issued, reserved for issuance or
outstanding. Except for securities the Company owns, directly or indirectly
through one or more
<PAGE> 10
-7-
subsidiaries, there are no equity securities, partnership interests or similar
ownership interests of any class of any subsidiary of the Company, or any
security exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except as set forth in Section 2.2, there
are no options, warrants, equity securities, partnership interests or similar
ownership interests, calls, rights (including preemptive rights), commitments or
agreements of any character to which the Company or any of its subsidiaries is a
party or by which it is bound obligating the Company 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, partnership interests or similar
ownership interests of the Company or any of its subsidiaries or obligating the
Company 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. There are no registration rights and, to the knowledge of the
Company, as of the date of this Agreement, there are no voting trusts, proxies
or other agreements or understandings with respect to any equity security of any
class of the Company or with respect to any equity security, partnership
interest or similar ownership interest of any class of any of its subsidiaries.
2.4 AUTHORITY.
(i) The Company 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 the Company. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and, if applicable, Purchaser, constitutes a
valid and binding obligation of the Company, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy and other similar
laws and general principles of equity. The execution and delivery of this
Agreement by the Company do not, and the performance of this Agreement by the
Company will not, (i) conflict with or violate the Certificate of Incorporation
or Bylaws of the Company or the equivalent organizational documents of any of
its subsidiaries, (ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its subsidiaries
or by which its or any of their respective properties is bound or affected, or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or impair the
Company'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 the Company or any of its subsidiaries pursuant to,
any material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other material instrument or obligation to which
the Company or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries or its or any of their respective properties are bound or
affected. The Company Schedules list all material consents, waivers and
approvals under any of the Company'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.
(ii) No consent, approval, order or authorization of, or
registration, declaration or filing with any court, administrative agency or
commission or other governmental authority or
<PAGE> 11
-8-
instrumentality, foreign or domestic ("GOVERNMENTAL ENTITY"), is required by or
with respect to the Company in connection with the execution and delivery of
this Agreement, except for such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
Canadian Securities Laws and U.S. federal and state securities laws and the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), the Competition Act (Canada) (the "COMPETITION ACT"), the Investment
Canada Act and the securities or antitrust laws of any foreign country, and
(iii) such other consents, authorizations, filings, approvals and registrations
which if not obtained or made would not be material to the Company, Parent or
Purchaser or have a material adverse effect on the ability of the parties to
consummate the Offer.
2.5 SECURITIES FILINGS; THE COMPANY FINANCIAL STATEMENTS.
(i) The Company has filed in a timely manner all forms, reports
and documents required to be filed with the applicable Canadian Securities
Regulators and the SEC since its initial public offering and has made available
to Parent such forms, reports and documents in the form filed with the Canadian
Securities Regulators and the SEC. All such required forms, reports and
documents (including those that the Company may file subsequent to the date
hereof) are referred to herein as the "COMPANY REPORTS." As of their respective
dates, the Company Reports (i) were prepared in accordance with the requirements
of Canadian Securities Laws, the Securities Act of 1933, as amended (the
"SECURITIES ACT"), or the Exchange Act, as the case may be, and the rules and
regulations thereunder applicable to such the Company Reports, and (ii) did not
at the time they were filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. None of
the Company's subsidiaries is required to file any forms, reports or other
documents with the Canadian Securities Regulators or the SEC.
(ii) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company Reports (the
"COMPANY FINANCIALS"), including any Company Reports filed after the date hereof
until the Closing, (x) complied as to form in all material respects with the
published rules and regulations of Canadian Securities Laws and the SEC with
respect thereto, (y) was prepared in accordance with Canadian generally accepted
accounting principles ("GAAP") and has been reconciled with the rules and
regulations of the SEC, in each case, 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 Canadian
Securities Laws or rules promulgated by the Securities and Exchange Commission
under the Exchange Act) and (z) fairly presented the consolidated financial
position of the Company and its subsidiaries as at the respective dates thereof
and the consolidated results of the Company's 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. The balance sheet
of the Company contained in the Company Reports as of April 30, 1999 is
hereinafter referred to as the "COMPANY BALANCE SHEET." Except as disclosed in
the Company Financials, since the date of the Company Balance Sheet neither the
Company nor any of its subsidiaries has any liabilities (absolute, accrued,
contingent or otherwise) of a nature required to be disclosed on a balance sheet
or in the related notes to the consolidated financial statements prepared in
accordance with GAAP which are,
<PAGE> 12
-9-
individually or in the aggregate, material to the business, results of
operations or financial condition of the Company and its subsidiaries taken as a
whole, except liabilities (i) provided for in the Company Balance Sheet, or (ii)
incurred since the date of the Company Balance Sheet in the ordinary course of
business consistent with past practices and immaterial in the aggregate.
(iii) The Company has heretofore furnished to Parent a complete
and correct copy of any amendments or modifications to the Company Reports,
which have not yet been filed with the Canadian Securities Regulators and the
SEC, as the case may be, but which are required to be filed, to agreements,
documents or other instruments which previously had been filed by the Company
with the Canadian Securities Regulators pursuant to Canadian Securities Laws and
the SEC pursuant to the Securities Act or the Exchange Act.
(iv) The Company has previously provided Parent with a complete
and correct copy of any amendments or modifications, which have not yet been
filed with the Canadian Securities Regulators or the SEC to agreements,
documents or other instruments which previously were filed by the Company or any
of its subsidiaries with the Canadian Securities Regulators or the SEC pursuant
to Canadian Securities Laws or the Securities Act or the Exchange Act.
(v) The Company has previously furnished to Parent, copies of all
reports, assessments or valuations which could be considered to be "prior
valuations" for the purpose of Policy 9.1 or Policy Q-27.
2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the Company
Balance Sheet, except as reflected in the Company Reports, there has not been:
(i) any event having a Material Adverse Effect on the Company, (ii) any material
change by the Company in its accounting methods, principles or practices, except
as required by concurrent changes in GAAP, or (iii) any material revaluation by
the Company of any of its assets, including, without limitation, writing down
the value of capitalized inventory or writing off notes or accounts receivable
other than in the ordinary course of business.
2.7 TAXES.
(i) Definition of Taxes. For the purposes of this Agreement,
"TAX" or "TAXES" refers to any and all Canadian federal, provincial, municipal
and local taxes and all U.S. federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, health, health insurance, disability, education, land transfer,
social services, social security, Canada, Quebec and other government pension
plan premiums, and other tax or governmental fee of any kind whatsoever,
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.
<PAGE> 13
-10-
(ii) Tax Returns and Audits.
(A) The Company and each of its subsidiaries have timely filed
all federal, provincial, state, local and foreign returns, estimates,
information statements and reports ("RETURNS") relating to Taxes required to be
filed by the Company and each of its subsidiaries, except such Returns which are
not material to the Company, and have timely paid all Taxes shown to be due on
such Returns.
(B) Except as is not material to the Company, the Company and
each of its subsidiaries as of the Effective Time will have withheld with
respect to its employees all Canadian federal and provincial income taxes, all
federal and state income taxes, the Federal Insurance Contribution Act ("FICA"),
the Federal Unemployment Tax Act ("FUTA") and other Taxes required to be
withheld in the United States and Canada.
(C) Except as is not material to the Company, neither the Company
nor any of its subsidiaries has been delinquent in the payment of any Tax nor is
there any Tax deficiency outstanding, proposed or assessed against the Company
or any of its subsidiaries, nor has the Company or any of its subsidiaries
executed any waiver of any statute of limitations on or extending the period for
the assessment or collection of any Tax.
(D) Except as is not material to the Company, no audit or other
examination of any Return of the Company or any of its subsidiaries is presently
in progress, nor has the Company or any of its subsidiaries been notified of any
request for such an audit or other examination.
(E) Except as is not material to the Company, no adjustment
relating to any Returns filed by the Company or any of its subsidiaries has been
proposed formally or informally by any Tax authority to the Company or any of
its subsidiaries or any representative thereof.
(F) Except as is not material to the Company, neither the Company
nor any of its subsidiaries has any liability for unpaid Taxes which has not
been accrued for or reserved on the Company Balance Sheet, whether asserted or
unasserted, contingent or otherwise.
(G) There is no contract, agreement, plan or arrangement,
including but not limited to the provisions of this Agreement, covering any
employee or former employee of the Company or any of its subsidiaries that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to Sections 280G, 404 or 162(m) of the U.S. Tax
Code.
(H) Neither the Company nor any of its subsidiaries has filed any
consent agreement under Section 341(f) of the U.S. Tax Code or agreed to have
Section 341(f)(2) of the U.S. Tax Code apply to any disposition of a subsection
(f) asset (as defined in Section 341(f)(4) of the U.S. Tax Code) owned by the
Company.
(I) Neither the Company nor any of its subsidiaries is party to
or has any obligation under any tax-sharing or allocation agreement or
arrangement.
<PAGE> 14
-11-
(J) The Canadian federal and provincial income and capital tax
liabilities of the Company and its subsidiaries have been assessed by the
relevant taxing authorities and notices of assessment have been issued to each
such entity by the relevant taxing authorities for all taxation years up to and
including the taxation year specified on Schedule 2.7.
(K) For purposes of the Income Tax Act (Canada) or any applicable
provincial or municipal taxing statute, no persons or group of persons has ever
acquired or had the right to acquire control of the Company or any of its
subsidiaries.
(L) Neither the Company nor any of its subsidiaries (except
Simware Corp.) are "engaged in a trade or business within the United States" or
have a "permanent establishment" in the United States.
2.8 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES.
(i)The Company Schedules list the real property owned by the
Company. The Company Schedules list all real property leases to which the
Company 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 $100,000.
(ii) The Company has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its material
tangible properties and material assets, real, personal and mixed, used or held
for use in its business, free and clear of any liens, pledges, charges, claims,
security interests or other encumbrances of any sort ("LIENS"), except as
reflected in the Company Financials or in the Company Schedules and except for
liens for taxes not yet due and payable and such imperfections of title and
encumbrances, if any, which are not material in character, amount or extent, and
which do not materially detract from the value, or materially interfere with the
present use, of the property subject thereto or affected thereby.
2.9 INTELLECTUAL PROPERTY.
For the purposes of this Agreement, the following terms have the
following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following
and all rights in, arising out of, or associated therewith: (i)
all Canadian, United States, international and foreign patents
and applications therefor and all reissues, divisions, renewals,
extensions, provisionals, continuations and continuations-in-part
thereof; (ii) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer
lists, and all documentation relating to any of the foregoing;
(iii) all copyrights, copyrights registrations and applications
therefor, and all other rights corresponding thereto throughout
the world; (iv) all industrial designs and any registrations and
applications therefor throughout the world; (v) all trade names,
logos, common law trademarks and service marks, trademark and
service mark registrations and
<PAGE> 15
-12-
applications therefor throughout the world; (vi) all databases
and data collections and all rights therein throughout the world;
and (vii) any similar or equivalent rights to any of the
foregoing anywhere in the world.
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is owned by, or exclusively licensed to, the
Company.
"REGISTERED INTELLECTUAL PROPERTY" means all Canadian, United
States, international and foreign: (i) patents and patent
applications (including provisional applications); (ii)
registered trademarks, applications to register trademarks,
intent-to-use applications, or other registrations or
applications related to trademarks; (iii) registered copyrights
and applications for copyright registration; and (iv) any other
Intellectual Property that is the subject of an application,
certificate, filing, registration or other document issued, filed
with, or recorded by any state, government or other public legal
authority.
(i) Schedule 2.9 lists all of the Registered Intellectual
Property owned by, or filed in the name of, the Company (the "COMPANY REGISTERED
INTELLECTUAL PROPERTY").
(ii) Schedule 2.9 lists all proceedings or actions before any
court, tribunal (including the United States Patent and Trademark Office ("PTO")
or equivalent authority anywhere in the world) related to any Company
Intellectual Property.
(iii) No Company Intellectual Property or product or service of
the Company is subject to any proceeding or outstanding decree, order, judgment,
agreement, or stipulation restricting in any manner the use, transfer, or
licensing thereof by the Company, or which may affect the validity, use or
enforceability of such Company Intellectual Property.
(iv) Each item of Company Registered Intellectual Property is
valid and subsisting, all necessary registration, maintenance and renewal fees
in connection with such Registered Intellectual Property have been made and all
necessary documents and certificates in connection with such Registered
Intellectual Property have been filed with the relevant patent, copyright,
trademark or other authorities in Canada and the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such
Registered Intellectual Property.
(v) Except as set forth in Schedule 2.9: (i) the Company owns and
has good and exclusive title to each item of Company Intellectual Property,
including all Company Registered Intellectual Property listed on Schedule 2.9,
free and clear of any lien or encumbrance; and (ii) the Company is the exclusive
owner of all trademarks and trade names used in connection with the operation or
conduct of the business of the Company, including the sale of any products or
the provision of any services by the Company.
(vi) The Company owns exclusively, and has good title to, all
copyrighted works that are Company products or which the Company otherwise
purports to own.
(vii) To the extent that any work, invention, or material has
been developed or created by a third party for the Company, the Company has a
written agreement with such third party
<PAGE> 16
-13-
with respect thereto and the Company thereby has obtained ownership of, and is
the exclusive owner of, all Intellectual Property in such work, material or
invention by operation of law or by valid assignment.
(viii) Except as set forth in Schedule 2.9, the Company has not
transferred ownership of, or granted any exclusive license with respect to, any
Intellectual Property that is or was Company Intellectual Property, to any third
party.
(ix) Schedule 2.9 lists all material contracts, licenses and
agreements to which the Company is a party (i) with respect to Company
Intellectual Property licensed or transferred to any third party; or (ii)
pursuant to which a third party has licensed or transferred any Intellectual
Property to the Company, with a potential value or cost in excess of $10,000.
Schedule 2.9 lists any agreements pursuant to which the Company has licensed any
Company Intellectual Property or products to any third party that differs in any
material respect from its standard form.
(x) The contracts, licenses and agreements listed on Schedule 2.9
are in full force and effect. The consummation of the transactions contemplated
by this Agreement will neither violate nor result in the breach, modification,
cancellation, termination, or suspension of such contracts, licenses and
agreements. The Company is in compliance in all material respects with, and has
not breached any term any of such contracts, licenses and agreements and, to the
knowledge of the Company, all other parties to such contracts, licenses and
agreements are in compliance in all material respects with, and have not
breached any term of, such contracts, licenses and agreements. Following the
completion of the Acquisition, Purchaser will be permitted to exercise all of
the Company's rights under the contracts, licenses and agreements listed on
Schedule 2.9 to the same extent the Company would have been able to had the
transactions contemplated by this Agreement not occurred and without the payment
of any additional amounts or consideration other than ongoing fees, royalties or
payments which the Company would otherwise be required to pay.
(xi) Schedule 2.9 lists all contracts, licenses and agreements
between the Company and any third party wherein or whereby the Company has
agreed to, or assumed, any obligation or duty to warrant, indemnify, hold
harmless or otherwise assume or incur any obligation or liability with respect
to the infringement or misappropriation by the Company or such third party of
the Intellectual Property of any third party.
(xii) The operation of the business of the Company as such
business currently is conducted, or is reasonably is contemplated to be
conducted, including the Company's design, development, manufacture, marketing
and sale of the products or services of the Company (including with respect to
products currently under development) has not, does not and will not infringe or
misappropriate the Intellectual Property of any third party or constitute unfair
competition or trade practices under the laws of any jurisdiction.
(xiii) The Company has not received notice from any third party
that the operation of the business of the Company or any act, product or service
of the Company, infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the laws
of any jurisdiction. There have been, and are, no claims asserted against
<PAGE> 17
-14-
any customer of the Company which allege that the customer's use or distribution
of the Company's products violates any Intellectual Property of any third party.
(xiv) The Company has taken all steps that are reasonably
required to protect the Company's rights in the Company's confidential
information and trade secrets or any trade secrets or confidential information
of third parties provided to the Company, and, without limiting the foregoing,
the Company has and enforces a policy requiring each employee and contractor to
execute a proprietary information / confidentiality agreement substantially in
the Company's standard form and all current and former employees and contractors
of the Company have executed such an agreement.
2.10 COMPLIANCE; PERMITS; RESTRICTIONS.
(i) Neither the Company nor any of its subsidiaries is, in any
material respect, in conflict with, or in default or violation of (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which the Company or any of its subsidiaries or any of
their respective properties is bound or affected, or (ii) any material note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other material instrument or obligation to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties is bound or affected.
To the knowledge of the Company, no investigation or review by any Governmental
Entity is pending or threatened against the Company or any of its subsidiaries,
nor has any Governmental Entity indicated an intention to conduct the same.
There is no material agreement, judgment, injunction, order or decree binding
upon the Company or any of its subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of the Company or any of its subsidiaries, any acquisition of material
property by the Company or any of its subsidiaries or the conduct of business by
the Company as currently conducted.
(ii) The Company and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities that
are material to the operation of the business of the Company (collectively, the
"COMPANY PERMITS"). The Company and its subsidiaries are in compliance in all
material respects with the terms of the Company Permits.
2.11 LITIGATION. There is no action, suit, proceeding, claim,
arbitration or investigation pending, or as to which the Company or any of its
subsidiaries has received any notice of assertion nor, to the Company's
knowledge, is there a threatened action, suit, proceeding, claim, arbitration or
investigation against the Company or any of its subsidiaries which reasonably
would be likely to be material to the Company. To the knowledge of the Company,
no Governmental Entity has at any time challenged or questioned in writing the
legal right of the Company to manufacture, offer or sell any of its products in
the present manner or style thereof.
2.12 BROKERS' AND FINDERS' FEES. Except for fees payable to
Banker pursuant to an engagement letter dated August 4, 1998, a copy of which
has been provided to Parent, the Company has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or
<PAGE> 18
-15-
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
2.13 CANADIAN PENSION AND OTHER BENEFIT PLANS
(i) The Company has accurately disclosed to Parent and Purchaser
the existence of all Pension/Benefit Plans (as defined below).
(ii) Current and complete copies of all written Pension/Benefit
Plans, where oral, written summaries of the material terms thereof, have been
provided or made available to the Parent and the Purchaser together with current
and complete copies of all documents relating to the Pension/Benefit Plans,
including as applicable: (i) all documents establishing, creating or amending
any Pension/Benefit Plan; (ii) all trust agreements, funding agreements,
insurance contracts, investment management agreements and investment policies;
(iii) all financial statements and accounting statements and reports, and
investment reports for each of the last three years and the three most recent
actuarial reports; (iv) all reports, returns, filings and material
correspondence with any regulatory authority in the last three years; (v) all
booklets, summaries or manuals prepared for or circulated to, and written
communications of a general nature prepared for or distributed to, employees
concerning any Pension/Benefit Plan; and (vi) all legal opinions, consulting
reports and correspondence with respect to the administration or funding of any
Pension/Benefit Plan, or the investment of funds included thereunder.
(iii) Each Pension/Benefit Plan is, and has been, established,
registered, qualified, administered and invested, in compliance in all material
respects with (i) the terms thereof and (ii) all applicable laws; and the
Company and its subsidiaries have not received, in the last three years, any
notice from any person questioning or challenging such compliance (other than in
respect of any claim related solely to that person).
(iv) All material obligations under the Pension/Benefit Plans
(whether pursuant to the terms thereof or applicable law) have been satisfied,
and there are no outstanding material defaults or violations thereunder by the
Company or any of its subsidiaries, nor does the Company have any knowledge of
any material default or violation by any other party to any Pension/Benefit
Plan.
(v) Except as required by applicable law, there have been no
amendments, modifications or restatements of any Pension/Benefit Plans made, or
any improvements in benefits promised, under the Pension/Benefit Plans since
January 1, 1999, and none of the Pension/Benefit Plans provide for benefit
increases or the acceleration of funding obligations that are contingent upon or
will be triggered by the entering into of this Agreement or the completion of
the transactions contemplated hereby.
(vi) All payments, contributions or premiums required to be paid
to or in respect of each Pension/Benefit Plan have been paid in a timely fashion
in accordance with the terms thereof and all applicable laws, and no Taxes (as
defined in Section 2.7), penalties or fees are owing or exigible under any
Pension/Benefit Plan.
<PAGE> 19
-16-
(vii) There is no proceeding, action, suit or claim (other than
routine claims for the payment of benefits) pending or, to the knowledge of the
Company, threatened involving any Pension/Benefit Plan or its assets.
(viii) No event has occurred respecting any Pension/Benefit Plan
which would entitle any person (without the consent of the Company) to windup or
terminate any Pension/Benefit Plan, in whole or in part, or which could
reasonably be expected to adversely effect the tax status thereof.
(ix) There are no going concern unfunded actuarial liabilities,
past service unfunded liabilities or solvency deficiencies respecting any of the
Pension/Benefit Plans.
(x) No changes have occurred in respect of any Pension/Benefit
Plan since the date of the most recent financial, accounting, actuarial or other
report, as applicable, issued in connection with any Pension/Benefit Plan and
delivered to Parent and Purchaser pursuant to Section 3.13(ii), which could
reasonably be expected to render any of the information contained in the
relevant report misleading in any material respect.
(xi) Neither the Company nor any of its subsidiaries has received
or applied for any payment of surplus out of any Pension/Benefit Plan.
(xii) Neither the Company nor any of its subsidiaries has taken
any contribution holidays under any Pension/Benefit Plan.
(xiii) There have been no withdrawals or transfers of assets from
any Pension/Benefit Plan other than in accordance with the terms of such
Pension/Benefit Plans and applicable laws.
(xiv) All employee data necessary to administer each
Pension/Benefit Plan is in the possession of the Company and is in all material
respects complete, correct and in a form which is sufficient for the proper
administration of the Pension/Benefit Plans in accordance with the terms of such
Pension/Benefit Plans and applicable laws, and none of the Pension/Benefit
Plans, other than the pension plans and any group registered retirement savings
plan or supplemental pension or retirement plan, provide benefits to retired
employees or to the beneficiaries or dependents of retired employees.
(xv) None of the Pension/Benefit Plans require or permit a
retroactive increase in premiums or payments, and the level of insurance
reserves, if any, under any insured Pension/Benefit Plan is reasonable and
sufficient to provide for all incurred but unreported claims.
For purposes of this Agreement, the term "PENSION/BENEFIT PLANS" shall
mean (i) all plans, arrangements, agreements, programs, policies or practices,
whether oral or written, formal or informal, funded or unfunded, regulated or
unregulated, to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or under which the Company
or any of its subsidiaries has any liability or contingent liability, relating
to: (a) retirement savings or pensions, including any defined benefit pension
plan, defined contribution pension plan, group registered retirement savings
plan, deferred profit sharing plan, or supplemental
<PAGE> 20
-17-
pension or retirement plan; or (b) bonuses, profit sharing, deferred
compensation, incentive compensation, hospitalization, health, medical or dental
treatment or expenses, disability, supplementary unemployment insurance
benefits, employee loans, vacation pay, severance or termination pay or other
benefit plan with respect to any of its employees or former employees,
individuals working on contract with it or other individuals providing services
to it of a kind normally provided by employees, or those eligible dependents of
any such persons (including all amendments to any of the foregoing); and (ii)
all statutory plans which the Company or any of its subsidiaries is required to
comply with, including the Canada or Quebec Pension Plans and plans administered
pursuant to applicable provincial health tax, workers' compensation and
unemployment insurance legislation (including all amendments to any of the
foregoing); provided, however, that Pension/Benefit Plans shall not include any
U.S. Employee Benefit Plans (as that term is used in Section 2.14).
2.14 U.S. EMPLOYEE BENEFIT PLANS. The Company has no employees in the
United States and no employee benefit plan governed by United States law.
2.15 EMPLOYEES; LABOR MATTERS. To the Company's knowledge, no employee
of the Company (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 the Company because of the nature of the business conducted or
presently proposed to be conducted by the Company or to the use of trade secrets
or proprietary information of others and (ii) has given notice to the Company,
nor is the Company otherwise aware, that any employee intends to terminate his
or her employment with the Company except for terminations of a nature and
number that are consistent with the Company's prior experience. To the Company's
knowledge, there are no activities or proceedings of any labor union to organize
any employees of the Company or any of its subsidiaries and there are no
strikes, or material slowdowns, work stoppages or lockouts, or threats thereof
by or with respect to any employees of the Company or any of its subsidiaries.
The Company and its subsidiaries are and have been in compliance in all material
respects with all applicable laws regarding employment practices, terms and
conditions of employment, and wages and hours.
2.16 ENVIRONMENTAL MATTERS.
(i) Except as set forth in Schedule 2.16 and except to the extent
that the inaccuracy of any of the following (or the circumstances giving rise to
such inaccuracy), individually or in the aggregate, could not reasonably be
expected to be materially adverse to the Company and its subsidiaries on a
consolidated basis:
(a) (A) the Company and its subsidiaries are, and during the
past five years have been, in compliance with all applicable Environmental Laws
(as defined below); and (B) the Company has no reason to believe that any of
them will not, or will incur material expense to, timely attain or maintain
compliance with any Environmental Laws applicable to any of their current
operations or properties or to any of their planned operations;
(b) (A) the Company and its subsidiaries hold all
Environmental Permits (as defined below) (each of which is in full force and
effect) required for any of their current
<PAGE> 21
-18-
operations and for any property owned, leased, or otherwise operated by any of
them, and are, and its subsidiaries have been, in compliance will all such
Environmental Permits; and (B) the Company has no reason to believe that: any
Environmental Permits held by the Company and its Subsidiaries will not be, or
will entail material expense to be, timely renewed or complied with; any
additional Environmental Permits required of any of them for current operations
or for any property owned, leased, or otherwise operated by any of them, or for
any of their planned operations, will not be, or will entail material expense to
be, timely granted or complied with; or any transfer or renewal of, or
reapplication for, any Environmental Permit required as a result of the
transactions contemplated by this Agreement will not be, or will entail material
expense to be, timely effected;
(c) no review by, or approval of, any governmental
authority or other person is required under any Environmental Law in connection
with the execution or delivery of this Agreement;
(d) neither the Company nor any of its subsidiaries has
received any Environmental Claim (as defined below) against any of them, and the
Company has no knowledge of any such Environmental Claim being threatened;
(e) (A) Hazardous Materials are not present on any
property owned, leased, or operated by the Company or any of its subsidiaries,
that could reasonably likely form the basis of any Environmental Claim against
any of them; and (B) the Company has no reason to believe that Hazardous
Materials are present on any other property that could be reasonably likely to
form the basis of any Environmental Claim against any of them;
(f) the Company has no knowledge of any material
Environmental Claim pending or threatened, or of the presence or suspected
presence of any Hazardous Materials that could be reasonably likely to form the
basis of any Environmental Claim, in any case against any person or entity
(including, without limitation, any predecessor of the Company or any of its
subsidiaries) whose liability the Company or any of its subsidiaries has or may
have retained or assumed either contractually or by operation of law, or against
any real or personal property which the Company or any of its subsidiaries
formerly owned, leased, or operated, in whole or in part.
(ii) To the knowledge of the Company, the Company and its
subsidiaries have disclosed to Parent and Purchaser all material facts which the
Company reasonably believes could form the basis of a material Environmental
Claim against the Company or any of its subsidiaries; all material costs the
Company reasonably expects it and any of its subsidiaries to incur to comply
with Environmental Laws during the next three years; all material costs the
Company and any of its subsidiaries expect to incur for ongoing, and reasonably
anticipated, investigation and remediation of Hazardous Materials (including,
without limitation, any payments to resolve any threatened or asserted
Environmental Claim for investigation and remediation costs); and any other
material matter affecting the Company or any of its subsidiaries relating to any
Environmental Law.
(iii) For purposes of this Agreement, the terms below shall have
the following meanings:
<PAGE> 22
"Environmental Claim" means any claim, demand, action, suit,
complaint, proceeding, directive, investigation, lien, demand letter, or
notice (written or oral) of non-compliance, violation, or liability, by
any entity asserting liability or potential liability (including,
without limitation, liability or potential liability for enforcement,
investigatory costs, cleanup costs, governmental response costs, natural
resource damages, property damage, personal injury, fines or penalties)
arising out of, relating to, based on or resulting from (a) the
presence, discharge, emission, release or threatened release of any
Hazardous Materials at any location, (b) circumstances forming the basis
of any violation or alleged violation of any Environmental Laws or
Environmental Permits, or (c) otherwise relating to obligations or
liabilities under any Environmental Law.
"Environmental Laws" means all Canadian or United States federal,
state, provincial, and local statutes, rules, regulations, ordinances,
orders, decrees and common law, and any requirement of any other
governmental authority having the force of law, relating in any manner
to pollution or protection of human health, or of the environment
(including, without limitation, indoor air, ambient air, surface water,
groundwater, land surface, subsurface strata, or plant or animal
species).
"Environmental Permits" means all permits, licenses,
registrations, exemptions and other filings with or authorizations by
any governmental authority under any Environmental Law.
"Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any
fraction thereof), petroleum products, asbestos, asbestos-containing
materials, pollutants, contaminants, radioactivity, and all other
materials and forces, whether or not defined as any of the foregoing,
that are regulated pursuant to any Environmental Laws or that could
result in liability under any Environmental Laws.
2.17 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as set forth in the
Company Schedules, neither the Company nor any of its subsidiaries is a party to
or is bound by:
(i) any employment or consulting agreement, contract or
commitment with any officer or director level employee or member of the
Company's Board of Directors, other than those that are terminable by the
Company or any of its subsidiaries on no more than thirty days notice without
liability or financial obligation, except to the extent general principles of
wrongful termination law may limit the Company's or any of its subsidiaries'
ability to terminate employees at will;
(ii) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan, stock purchase plan or
restricted stock purchase agreement, any of the benefits of which will be
increased, or the vesting of benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement;
<PAGE> 23
-20-
(iii) any agreement of indemnification or guaranty not entered
into in the ordinary course of business other than indemnification agreements
between the Company or any of its subsidiaries and any of its officers or
directors;
(iv) any agreement, contract or commitment containing any
covenant limiting the freedom of the Company or any of its subsidiaries to
engage in any line of business or compete with any person or granting any
exclusive distribution rights;
(v) 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; or
(vi) any material joint marketing or development agreement.
Neither the Company nor any of its subsidiaries, nor to the Company's
knowledge any other party to a Company 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 the Company or any of its
subsidiaries is a party or by which it is bound of the type described in clauses
(i) through (vi) above (any such agreement, contract or commitment, as well as
any agreement, contract or commitment that is an exhibit to any Company Report,
a "COMPANY CONTRACT") in such a manner as would permit any other party to cancel
or terminate any such Company Contract, or would permit any other party to seek
damages, which would be reasonably likely to be material to the Company.
2.18 CHANGE OF CONTROL PAYMENTS. The Company Schedules set forth each
plan or agreement pursuant to which any amounts may become payable (whether
currently or in the future) to current or former officers and directors of the
Company as a result of or in connection with the Offer, and the nature and
amount of any such obligation.
2.19 BOARD APPROVAL. The Board of Directors of the Company has, as of
the date of this Agreement (A) determined that this Agreement and the
transactions contemplated hereby, including each of the Offer, are fair to and
in the best interests of the stockholders, (B) approved and adopted this
Agreement and the transactions contemplated hereby and (C) resolved to recommend
that the stockholders of the Company accept the Offer.
2.20 FAIRNESS OPINION. The Company's Board of Directors has received a
written opinion from Banker to the effect that, in the context of the
transactions contemplated hereby, the consideration to be received by the
stockholders pursuant to the Offer is fair from a financial point of view.
2.21 YEAR 2000 COMPLIANCE. All of the current versions of the Company?s
products (including products currently under development) will record, store,
process, calculate and present calendar dates falling on and after (and if
applicable, spans of time including) January 1, 2000, and will calculate any
information dependent on or relating to such dates in the same manner, and with
the same functionality, data integrity and performance, as the products record,
store, process, calculate and present calendar dates on or before December 31,
1999, or calculate any information
<PAGE> 24
-21-
dependent on or relating to such dates (collectively, "Year 2000 Compliant").
The Company's material internal computer and technology products and systems are
Year 2000 Compliant, except for upgrades or replacements which may be made
without disruption to the Company's operations and for which the cost to the
Company is estimated to be less than $100,000 in aggregate.
2.22 OFFER DOCUMENTS. None of the Directors' Circular, the
Schedule 14D-9, nor any of the information supplied by the Company for inclusion
in the Offer Documents, shall, at the respective times that the Directors'
Circular, the Schedule 14D-9, the Offer Documents or any amendments or
supplements thereto are filed with the Canadian Securities Regulators or the
SEC, as the case may be, or are first published, sent or given to stockholders,
as the case may be, 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 the light of the circumstances under which they
were made, not misleading. The Directors' Circular and the Schedule 14D-9 will
comply in all material respects as to form and substance with the requirements
of Canadian Securities Laws, the Exchange Act and the rules and regulations
thereunder, as the case may be.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser, jointly and severally, represent and warrant to
the Company that:
3.1 ORGANIZATION AND QUALIFICATION. Each of Parent and Purchaser is a
corporation duly organized validly existing and in good standing under the laws
of the jurisdiction of its incorporation, and has all requisite corporate power
and authority to own, operate and lease its properties and to carry on its
business as it is now being conducted.
3.2 CORPORATE POWER, AUTHORIZATION AND ENFORCEABILITY. Each of Parent
and Purchaser has full corporate power and authority to enter into this
Agreement and to perform its obligations hereunder and to consummate all the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Purchaser, the performance by each of Parent and Purchaser of
their respective obligations hereunder and the consummation by Parent and
Purchaser of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of each of Parent and Purchaser and no
other corporate action on the part of Parent or Purchaser are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
(other than the filing and recordation of appropriate Acquisition documents as
required by [Canadian law]). This Agreement has been duly executed and delivered
by each of Parent and Purchaser and is a legal, valid and binding obligation of
each of Parent and Purchaser, enforceable against Parent and Purchaser in
accordance with its terms.
3.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Assuming satisfaction of all applicable requirements referred
to in Section 3.3 (b) below, the execution and delivery of this Agreement by
Parent and Purchaser, the compliance by Parent and Purchaser with the
provisions hereof and the consummation by Parent and Purchaser of the
transactions contemplated hereby will not conflict with or violate (i) any
statute,
<PAGE> 25
-22-
law, ordinance, rule, regulation, order, writ, judgment, award, injunction,
decree or ruling applicable to Parent or Purchaser or any of their properties,
other than such conflicts or violations which individually or in the aggregate
do not and will not have a material adverse effect on the business, properties,
assets, results of operations or financial condition of Parent and Purchaser,
taken as a whole, or (ii) conflict with or violate the Certificate of
Incorporation or Bylaws of Parent or Purchaser.
(b) Other than in connection with or in compliance with the
provisions of Canadian Securities Laws, the Delaware General Corporation Law
("DGCL"), the Exchange Act, the "takeover" or "blue sky" laws of various states,
the Competition Act, the Investment Canada Act and the HSR Act, (i) neither
Parent nor Purchaser is required to submit any notice, report, registration,
declaration or other filing with any Governmental Entity in connection with the
execution or delivery of this Agreement by Parent and Purchaser or the
performance by Parent and Purchaser of their obligations hereunder or the
consummation by Parent and Purchaser of the transactions contemplated by this
Agreement and (ii) no waiver, consent, approval, order or authorization of any
Governmental Entity is required to be obtained by Parent or Purchaser in
connection with the execution or delivery of this Agreement by Parent and
Purchaser or the performance by Parent and Purchaser of their obligations
hereunder or the consummation by Parent and Purchaser of the transactions
contemplated by this Agreement.
3.4 OFFER DOCUMENTS. None of the Offer Documents, nor any of the
information supplied by Parent and Purchaser for inclusion in the Directors'
Circular and the Schedule 14D-9, shall at the respective times the Directors'
Circular and the Schedule 14D-1 or the Offer Documents or any amendments or
supplements thereto are filed with the Canadian Securities Regulators or the
SEC, as the case may be, or are first published, sent or given to stockholders
or upon the expiration of the Offer, as the case may be, 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 the light
of the circumstances under which they were made not misleading (except for
information supplied by the Company for inclusion in the Directors' Circular,
the Schedule 14D-1 and the Offer Documents, as to which Parent and Purchaser
make no representation).
3.5 AVAILABLE FUNDS. Parent has or has available to it, and will make
available to Purchaser, all funds necessary to satisfy all of Parent's and
Purchaser's obligations under this Agreement and in connection with the
transaction contemplated hereby, including, without limitation, the obligation
to purchase all outstanding Shares pursuant to the Offer and to pay all related
fees and expenses in connection with the Offer.
3.6 AGREEMENTS CONTRACTS AND COMMITMENTS. Neither the Parent nor the
Purchaser is party to any agreement, contract or commitment that would be
breached or violated by the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereunder or would be reasonably
expected to cause any third party to seek injunctive relief with respect to the
transactions contemplated hereunder.
<PAGE> 26
-23-
ARTICLE IV
COVENANTS
4.1 CONDUCT OF BUSINESS BY THE COMPANY. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms and the time Purchaser takes up and pays for the
Shares (the "EFFECTIVE TIME"), the Company (which for the purposes of this
Article 4 shall include the Company and each of its subsidiaries) agrees, except
to the extent that Parent shall otherwise consent in writing, to carry on its
business in the usual, regular and ordinary course, in substantially the same
manner as heretofore conducted and in compliance with all applicable laws and
regulations, to pay its debts and taxes when due subject to good faith disputes
over such debts or taxes, to pay or perform other material obligations when due,
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. In addition, the Company will
promptly notify Parent of any breach of its representations, warranties or
covenants under this Agreement.
In addition, except as permitted by the terms of this Agreement (other
than as provided in Article 4.1 of the Company Schedules), without the prior
written consent of Parent, the Company shall not do any of the following, and
shall not permit any of its subsidiaries to do any of the following:
(i) 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;
(ii) 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 the other, or adopt any new
severance plan;
(iii) Transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to the Company's
intellectual property or other proprietary rights, or enter into grants to
future patent rights, other than in the ordinary course of business, consistent
with past practice;
(iv) Buy any Intellectual Property of a third party or enter into
any license agreement with respect to the Intellectual Property of any third
party for an acquisition or license, the price for which exceeds $50,000
individually or in the aggregate, other than "shrink wrap", "click wrap"; and
similar widely available commercial end-user licenses;
(v) 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
<PAGE> 27
-24-
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for any capital stock.
(vi) 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 existing on the
date hereof.
(vii) 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 issuance of Shares, pursuant to the exercise of stock options therefor
outstanding as of the date of this Agreement, and (ii) Shares issuable pursuant
to the Employee Share Purchase Plan;
(viii) Cause, permit or propose any amendments to any charter
document or Bylaw (or similar governing instruments of any subsidiaries);
(ix) 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 assets which are material,
individually or in the aggregate, to the business of the Company, or enter into
any joint ventures, strategic partnerships or alliances;
(x) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of the Company, except in the ordinary course of business
consistent with past practice;
(xi) Incur any indebtedness for borrowed money (other than
ordinary course trade payables or pursuant to existing credit facilities 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, or
guarantee any debt securities of others;
(xii) Adopt or amend any employee benefit or employee stock
purchase or employee option plan, or enter into any employment contract, pay any
special bonus or special remuneration to any director or employee, or increase
the salaries or wage rates of its officers or employees other than in the
ordinary course of business, consistent with past practice, or change in any
material respect any management policies or procedures;
(xiii) Pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business;
(xiv) Make any grant of exclusive rights to any third party;
or
<PAGE> 28
-25-
(xv) Except in the ordinary course of business, modify, amend or
terminate any material contract or agreement involving payments of $50,000 or
more to which the Company or any subsidiary thereof is a party or waive, release
or assign any material rights or claims thereunder;
(xvi) Materially revalue any of its assets or, except as required
by GAAP, make any change in accounting methods, principles or practices;
(xvii) Make or change any material election in respect of Taxes,
adopt or change any accounting method in respect of Taxes, enter into any
closing agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes in an amount in excess of $50,000 in the
aggregate;
(xviii) Commence any litigation or settle any litigation for an
amount in excess of the greater of $50,000 in the aggregate or the amount
reserved in respect thereof in the Company Balance Sheet, as set forth in
Section 4.1 of the Company Schedules;
(xix) Agree in writing or otherwise to take any of the actions
described in (i) through (xviii) above.
4.2 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Subject to and in accordance with the terms and conditions of
that certain letter dated February 9, 1999 between Parent and the Company (the
"CONFIDENTIALITY AGREEMENT"), from the date of this Agreement to the Effective
Time, the Company shall, and shall cause its subsidiaries, officers, directors,
employees and agents to, afford the officers, employees and agents of Parent,
Purchaser and their affiliates and the attorneys, accountants, banks, other
financial institutions and investment banks working with Parent or Purchaser,
and their respective officers, employees and agents, reasonable access at all
reasonable times and on reasonable prior notice to its officers, employees,
agents, properties, books, records and contracts, and shall furnish Parent,
Purchaser and their affiliates and the attorneys, banks, other financial
institutions and investment banks working with Parent or Purchaser, all
financial, operating and other data and information as they reasonably request.
(b) Subject to the requirements of law, Parent and Purchaser
shall, and shall require their officers, employees and agents, and the
attorneys, banks, other financial institutions and investment banks who obtain
such information to, hold all information obtained pursuant to this Agreement or
the Confidentiality Agreement in accordance with the terms and conditions of the
Confidentiality Agreement.
(c) No investigation pursuant to this Section 4.2 shall affect
any representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
4.3 NO SOLICITATION; BREAK-UP FEE.
<PAGE> 29
-26-
(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,
the Company and its subsidiaries shall not, and will instruct their respective
directors, officers, employees, representatives, investment bankers, agents and
affiliates not to, directly or indirectly, (i) solicit or encourage submission
of, any proposals or offers by any person, entity or group (other than Parent
and its affiliates, agents and representatives), or (ii) participate in any
discussions or negotiations with, or disclose any non-public information
concerning the Company or any of its subsidiaries to, or afford any access to
the properties, books or records of the Company 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 Parent and its affiliates, agents
and representatives), in connection with any Acquisition Proposal with respect
to the Company. For the purposes of this Agreement, an "ACQUISITION PROPOSAL"
with respect to an entity means any proposal or offer relating to (i) any
merger, consolidation, sale of substantial assets, plan or arrangement,
reorganization, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transactions involving the entity or any
subsidiaries of the entity (other than sales of assets or inventory in the
ordinary course of business or as permitted under the terms of this Agreement),
(ii) sale of outstanding shares of capital stock of the entity (including
without limitation by way of a tender offer or an exchange offer), (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)
which beneficially owns, or has the right to acquire beneficial ownership of,
10% or more of the then outstanding shares of capital stock of the entity; 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. The Company will
immediately cease any and all existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing. The
Company will (i) notify Parent as promptly as practicable if any inquiry or
proposal is made or any information or access is requested in connection with an
Acquisition Proposal or potential Acquisition Proposal and (ii) as promptly as
practicable notify Parent of the terms and conditions of any such Acquisition
Proposal. In addition, subject to the other provisions of this Section 4.3(a),
from and after the date of this Agreement until the earlier of the Effective
Time and termination of this Agreement pursuant to its terms, the Company 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 Parent).
(b) Notwithstanding the provisions of paragraph (a) above, prior
to consummation of the Offer, the Company may, to the extent the Board of
Directors of the Company determines, in good faith, after consultation with
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 the
Company in writing, an unsolicited bona fide Acquisition Proposal which the
Board of Directors of the Company in its good faith reasonable judgment
determines, after consultation with its independent financial advisors, would
result in a transaction more favorable than the Offer to the stockholders of the
Company from a financial point of view 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 the Company (based upon the advice of independent
financial
<PAGE> 30
-27-
advisors), is reasonably capable of being financed by such person, entity or
group and which is likely to be consummated (a "SUPERIOR PROPOSAL"). In the
event the Company receives a Superior Proposal, nothing contained in this
Agreement (but subject to the terms hereof) will prevent the Board of Directors
of the Company from recommending such Superior Proposal to the Company's
stockholders, provided that (i) the Board determines, in good faith, after
consultation with outside legal counsel, that such action is required by its
fiduciary duties under applicable law; (ii) the Company shall not recommend to
its stockholders a Superior Proposal until at least 48 hours after Parent's
receipt of a copy of such Superior Proposal (or a description of the terms and
conditions thereof, if not in writing), and (iii) the Company shall not
recommend to its stockholders a Superior Proposal unless the Company shall have
terminated this Agreement and paid the Break-up Fee pursuant to Section
5.1(d)(ii). Recommendation of a Superior Proposal in accordance with this
Section 4.3(b) shall not constitute a breach of this Agreement.
(c) Notwithstanding anything to the contrary herein, the Company
will not provide any non-public information to a third party unless: (x) the
Company 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 (y)
such non-public information has been previously delivered to Parent.
(d) Nothing contained in this Section 4.3 shall prohibit the
Company from at any time taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's stockholders if, in the good faith judgment of
the Company Board, after consultation with outside counsel, failure so to
disclose would constitute a breach of its fiduciary duties to the Company's
stockholders under applicable law; provided, however, that neither the Company
nor its Board of Directors nor any committee thereof shall, except as permitted
by Section 4.3(b), withdraw or modify, or propose to withdraw or modify, its
position with respect to the Acquisition or this Agreement or approve or
recommend, or propose to approve or recommend, an Acquisition Proposal;
provided, further, that the taking of a position by the Company pursuant to Rule
14e-2(a)(2) or (3) of the Exchange Act in respect of an Acquisition Proposal
shall not be deemed a withdrawal, a modification or a proposal to withdraw or
modify its position with respect to the Acquisition for purposes hereof.
4.4 PUBLIC ANNOUNCEMENTS. Parent and Purchaser on the one hand and the
Company on the other hand will consult with each other before issuing any press
release or otherwise making any public statements with respect to this Agreement
or the Acquisition or the other transactions contemplated hereby, and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by law. This Section 4.4 shall supersede
any conflicting provisions in the Confidentiality Agreement.
4.5 NOTIFICATION OF CERTAIN MATTERS.
(a) The Company shall give prompt notice (which notice shall
state that it is delivered pursuant to Section 4.5(a) of this Agreement) in
writing to Parent, and Parent and Purchaser shall give prompt notice in writing
to the Company, of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at any time
<PAGE> 31
-28-
from the date of this Agreement through the Effective Time and (ii) any failure
of the Company, Parent or Purchaser, as the case may be, or of any officer,
director, employee or agent thereof, to comply with or satisfy in all material
respects any covenant, condition or agreement to be complied with or satisfied
by it under this Agreement; provided, however, no such notification shall affect
the representations or warranties of the parties or the conditions to the
obligations of the parties hereunder.
(b) The Company shall give prompt notice in writing (which notice
shall state that it is delivered pursuant to Section 5.6(b) of this Agreement)
to Parent of (i) any act, omission to act, event or occurrence which, with the
passage of time or otherwise, would likely have a Material Adverse Effect on the
Company and (ii) any material contingent liability of the Company or any of its
subsidiaries for which such party reasonably believes it will, with the passage
of time or otherwise, become liable; provided, however, that no such
notification shall affect the representations or warranties of the parties or
the conditions to the obligations of the parties hereunder.
4.6 ACTIONS BY COMPANY. Subject to the terms and conditions hereof, the
Company shall, and shall cause its subsidiaries to, cooperate with Parent and
Purchaser and take all such actions as may be reasonably requested by Parent and
Purchaser to accomplish the Acquisition.
4.7 OFFICERS' AND DIRECTORS' INDEMNIFICATION; INSURANCE.
(a) Parent agrees that from and after the Effective Time all
rights to indemnification or exculpation now existing in favor of the officers
and directors of the Company (collectively, the "Indemnified Parties") as
provided in its Certificate of Incorporation, Bylaws or the CBCA, shall survive
the Offer and shall continue in full force and effect for a period of six years
from the Effective Time.
(b) On or prior to the Effective Time, Parent shall cause the
Company to obtain six years "tail" coverage under the Company's existing
directors' and officers' liability insurance covering the Indemnified Parties
who are currently covered by such insurance, on terms and conditions no less
favorable to such directors and officers than those in effect on the date
hereof, provided that in no event shall Parent or the Company be required to
expend for such tail coverage more than 150% of the current year's annual
premium, net of premium credits available.
4.8 ADDITIONAL AGREEMENTS.
(a) Subject to the terms and conditions hereof, each of the
parties to this Agreement agrees to use all reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement and to cooperate with each other
in connection with the foregoing.
(b) Subject to the terms and conditions hereof, each of the
parties to this Agreement agrees to use (i) all reasonable efforts to obtain all
necessary waivers, consents and approvals from other parties to loan agreements,
leases, licenses and other contracts, and (ii) all
<PAGE> 32
-29-
reasonable efforts to obtain all necessary consents, approvals and
authorizations as required to be obtained under any Canadian federal, provincial
or local laws, any U.S. federal, state or foreign law or regulations, including,
but not limited to, those required under the Competition Act, the Investment
Canada Act and the HSR Act, to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby, to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby, to effect all necessary registrations and filings,
including, but not limited to, filings under the Competition Act, the Investment
Canada Act, HSR Act and submissions of information requested by Governmental
Entities, and to fulfill all conditions to this Agreement.
4.9 OTHER ACTIONS BY THE COMPANY. If any "fair price," "moratorium,"
"control share acquisition," "shareholder protection" or other form of
anti-takeover statute, regulation or charter provision or contract is or shall
become applicable to the Offer or the transactions contemplated hereby, the
Company and the Board of Directors of the Company shall grant such approvals and
take such actions as are necessary under such laws and provisions so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise act to eliminate or minimize the
effects of such statute, regulation, provision or contract on the transactions
contemplated hereby.
4.10 COMPANY OPTIONS.
(a) Immediately upon expiration of the Offer and acceptance of
the Shares for payment, either (i) the Company will terminate the Option Plan
and other outstanding options after giving all optionees the required notice of
termination and permitting them to exercise all options, vested and unvested, on
a net excercise basis, or (ii) if requested by Parent, the Company will cancel
each outstanding option, whether vested or unvested, in exchange for cash
payments equal to the Offer Price minus the exercise price per share of such
option, multiplied by the number of shares subject to the Option, which cash
payment shall be reduced by any applicable withholding taxes and be without
interest.
(b) Parent and Purchaser will cause the Company to terminate the
Employee Share Purchase Plan (the "Purchase Plan") as of the date of the
Subsequent Acquisition Transaction. At such time, each participant in the
current offering period under the Purchase Plan will be paid an amount equal to
Offer Price minus the purchase price of shares in the current offering period
(Can. $4.00), multiplied by the number of shares that would have been purchased
by them under the Purchase Plan if it had remained in effect through December
31, 1999. No offering period will be commenced under the Purchase Plan covering
any period after 1999, whether or not the Subsequent Acquisition Transaction
occurs after December 31, 1999.
4.11 STOCKHOLDER LITIGATION. The Company shall give Parent the
opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and its directors relating to any of the
transactions contemplated by this Agreement until the purchase of Company Common
Stock pursuant to the Offer, and thereafter, shall give Parent the opportunity
to direct the defense of such litigation and, if Parent so chooses to direct
such litigation, Parent shall give the Company and its directors an opportunity
to participate in such litigation; provided,
<PAGE> 33
-30-
however, that no settlement of such litigation shall be agreed to without
Parent's consent; and provided further that no settlement requiring a payment by
a director shall be agreed to without such director's consent.
ARTICLE V
TERMINATION, AMENDMENT AND WAIVER
5.1 TERMINATION. This Agreement may be terminated, at any time prior to
the Effective Time, whether before or after approval by the stockholders of the
Company:
(a) by mutual written agreement of the Boards of Directors of Parent
and the Company;
(b) by either Parent or the Company:
(i)if the Offer shall be terminated or expire without any Shares
having been purchased pursuant to the Offer; provided, however, that a party
shall not be entitled to terminate this Agreement pursuant to this Section
5.1(b)(i) if it is in material breach of its representations and warranties,
covenants or other obligations under this Agreement; or
(ii) if any court of competent jurisdiction in Canada or the
United States or other Canadian or United States governmental body shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Offer and such order, decree, ruling or
other action shall have become final and nonappealable;
(c) by Parent:
(i)if the Board of Directors of the Company or any committee
thereof shall have approved, or recommended that stockholders of the Company
accept or approve, an Acquisition Proposal by a third party, or shall have
resolved to do any of the foregoing;
(ii) if the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified its approval of, or recommendation that
the stockholders of the Company accept the Offer or shall have resolved to do
any of the foregoing;
(iii) if the Company shall have failed to include in the
Directors' Circular and Schedule 14D-9 the recommendation of the Board of
Directors of the Company that the stockholders of the Company accept the Offer;
(iv) prior to the purchase of Shares pursuant to the Offer, in
the event that the conditions to the Offer set forth in clause (i) or (ii) of
Annex I shall not be satisfied or if any of the events set forth in clause (iii)
thereof shall have occurred; or
(v)if the Company is in material breach of any of its covenants
or obligations under this Agreement, or any representation or warranty of the
Company contained in
<PAGE> 34
-31-
this Agreement shall have been incorrect, in any material respect, when made or
shall have since ceased to be true and correct in any material respect;
(d) by the Company
(i)if the Offer shall not have been commenced in accordance with
Section 1.1, or Parent or Purchaser shall have failed to take up and pay for
validly tendered Shares in violation of the terms of the Offer within ten days
after the expiration of the Offer; provided, however, that the Company shall not
be entitled to terminate this Agreement pursuant to this Section 5.1(d)(i) if it
is in material breach of its representations and warranties, covenants or other
obligations under this Agreement;
(ii) if the Board of Directors of the Company has resolved to,
and in fact does, recommend to the Company's Stockholders that they accept a
Superior Proposal, provided that all the provisions of Section 4.3 have been
fully complied with, and provided further that the Company shall have paid to
Parent the entire Break-up Fee as provided in Section 5.3 (b); or
(iii) prior to the purchase of Shares pursuant to the Offer, if
Parent or Purchaser is in material breach of any of its covenants or obligations
under this Agreement, or any representation or warranty of Parent or Purchaser
contained in this Agreement shall have been incorrect, in any material respect,
when made or shall have since ceased to be true and correct in any material
respect.
5.2 PROCEDURE AND EFFECT OF TERMINATION.
(a) In the event of the termination of this Agreement by the Company
or Parent or both of them pursuant to Section 5.1, the terminating party shall
provide written notice of such termination to the other party and this Agreement
shall forthwith become void and there shall be no liability on the part of
Parent, Purchaser or the Company, except as set forth in this Section 5.2 and in
Sections 4.2(b) and 5.3, The foregoing shall not relieve any party for liability
for damages actually incurred as a result of any breach of this Agreement.
Sections 4.2(b), 5.2, 5.3 and Article VI shall survive the termination of this
Agreement.
5.3 FEES AND EXPENSES.
(a) Except as otherwise provided in this Agreement and whether or
not the transactions contemplated by the Offer and this Agreement are
consummated, all costs and expenses incurred in connection with the transactions
contemplated by the Offer and this Agreement shall be paid by the party
incurring such expenses.
(b) The Company shall pay to Parent, in same day funds, upon demand,
a fee of $2,500,000 (the "BREAK-UP FEE"), if any of the following shall occur:
(i)if the Board of Directors of the Company or any committee
thereof shall have approved, or recommended that stockholders of the Company
accept or approve, an Acquisition Proposal by a third party, or shall have
resolved to do any of the foregoing;
<PAGE> 35
-32-
(ii) if the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified its approval of, or recommendation that
the stockholders of the Company accept or approve (as the case may be), the
Offer or shall have resolved to do any of the foregoing; or
(iii) if the Company shall have failed to include in the
Directors' Circular and the Schedule 14D-9 the recommendation of the Board of
Directors of the Company that the stockholders of the Company accept the Offer.
(c) The Break-up Fee shall not be deemed to be liquidated damages,
and the right to the payment of the Break-up Fee shall be in addition to (and
not a maximum payment in respect of) any other damages or remedies at law or in
equity to which Parent or Purchaser may be entitled as a result of the Company's
violation or breach of any term or provision of this Agreement.
5.4 AMENDMENT. This Agreement may be amended by each of the parties by
action taken by or on behalf of their respective Boards of Directors at any time
prior to the Effective Time; provided, however, that (i) such amendment shall be
in writing signed by all of the parties, and (ii) any such waiver, amendment or
supplement by the Company shall be effective as against the Company only if
approved by a majority of the Continuing Directors.
5.5 WAIVER. At any time prior to the Effective Time, any party hereto,
by action taken by its Board of Directors, may (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto or
(ii) subject to the provisions of Section 5.4, waive compliance with any of the
agreements of any other party or with any conditions to its own obligations. 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 by a duly authorized officer of such party. Notwithstanding the above, any
waiver given shall not apply to any subsequent failure of compliance with
agreements of the other party or conditions to its own obligations.
ARTICLE VI
MISCELLANEOUS
6.1 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by rule of law or public policy,
all other conditions and provisions of this Agreement shall nevertheless remain
in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
6.2 NOTICES. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given, or made
as of the date delivered if sent via telecopier or delivered personally
(including, without limitation, delivery by commercial carrier warranting
next-day delivery) to the parties at the following addresses (or at such other
address for a
<PAGE> 36
-33-
party as shall be specified by similar notice, except that notices of changes of
address shall be effective upon receipt):
(a) If to Parent or Purchaser:
NetManage, Inc.
10725 N. DeAnza Blvd.
Cupertino, CA 95014
Attn.: Gary Anderson, Chief Financial Officer
With copies to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: Michael J. Danaher, Esq.
Telecopier No.: (650) 493-6811
and to:
Ogilvy, Renault
Suite 1600
45 O'Connor Street
Ottawa, Ontario K1P 1A4
Canada
Attention: Andrew A. Foti, Esq.
Telecopier No.: (613) 230-5459
and to:
NetManage Bid Co.
10725 N. DeAnza Blvd.
Cupertino, CA 95014
Attn.: Gary Anderson, Chief Financial Officer
<PAGE> 37
-34-
(b) If to the Company:
Simware Inc.
2 Gurdwara Road
Ottawa, Ont. K2E 1A2
Canada
Attn: Michael Peckham, Chief Financial Officer
With copies to:
Fraser Milner
180 Elgin Street
Ottawa, Ontario K2P 2K7
Canada
Attention: Thomas A. Houston, Esq.
Telecopier No.: (613) 783-9690
and to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, NY 10103
Attention: Richard H. Gilden, Esq.
Telecopier No.: (212) 752-5958
6.3 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; NO ASSIGNMENT. This
Agreement, Annex I, the documents delivered pursuant hereto or in connection
herewith, and the Confidentiality Agreement (i) constitute the entire agreement
and supersede all other prior agreements and undertakings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof, (ii) are not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder (except as expressly set forth in
Section 4.7 with respect to present officers and directors of the Company), and
(iii) may not be assigned, except that Parent or Purchaser may assign their
rights hereunder in whole or in part to one or more direct or indirect
subsidiaries or affiliates of Parent which, in written instruments reasonably
satisfactory to the Company, shall agree to make all representations and
warranties of Purchaser set forth herein and shall agree to assume all of such
party's obligations hereunder and be bound by all of the terms and conditions of
this Agreement; provided, however, that no such assignment shall relieve the
assignor of its obligations hereunder.
6.4 INTERPRETATION; KNOWLEDGE.
(i) 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," "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.
<PAGE> 38
-35-
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.
(ii) For purposes of this Agreement, the term "KNOWLEDGE" means,
with respect to any matter in question, that any of the Chief Executive Officer,
Chief Operating Officer, Chief Financial Officer or Controller (or principal
accounting officer if different from the foregoing) of the parties, as the case
may be, have actual knowledge of such matter.
(iii) All references in this Agreement to "dollars" or "$" shall
refer to United States Dollars unless otherwise indicated.
6.5 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.
6.6 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.
6.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof;
provided that issues involving the corporate governance of any of the parties
hereto shall be governed by their respective jurisdictions of incorporation.
Each of the parties hereto irrevocably consents to the exclusive jurisdiction of
any state or federal court within the Northern District of California, in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, other than issues involving the corporate
governance of any of the parties hereto, agrees that process may be served upon
them in any manner authorized by the laws of the State of California for such
persons and waives and covenants not to assert or plead any objection which they
might otherwise have to such jurisdiction and such process.
6.8 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.
<PAGE> 39
-36-
6.9 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT HEREOF.
*****
<PAGE> 40
-37-
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
NETMANAGE, INC.
By:
---------------------------------
Zvi Alon, Chief Executive Officer
NETMANAGE BID CO.
By:
---------------------------------
Zvi Alon, Chief Executive Officer
SIMWARE INC.
By:
---------------------------------
Glen Brownlee, President and
Chief Executive Officer
*****SIGNATURE PAGE -- ACQUISITION AGREEMENT *****
<PAGE> 41
ANNEX I
CONDITIONS OF THE OFFER
The term "AGREEMENT" as used in this Annex I shall mean the Acquisition
Agreement to which this Annex I is attached, and all capitalized terms used in
this Annex I and not defined in this Annex I shall have the respective meanings
set forth in the Agreement.
Notwithstanding any other provision of the Offer, and in addition to
(and not in limitation of) Purchaser's rights to extend and amend the Offer at
any time in accordance with the terms of the Agreement, Purchaser shall not be
required to accept for payment, purchase or pay for and Purchaser may elect to
terminate or amend the Offer and to postpone the acceptance of, and payment for,
subject to compliance with Canadian Securities Laws and Rule 14e-1(c) under the
Exchange Act (whether or not any Shares have theretofore been accepted for
payment or paid for pursuant to the Offer), any Shares tendered pursuant to the
Offer if:
(i) any waiting period (and any extension thereof) under the
Competition Act and Investment Canada Act applicable to the purchase of Shares
pursuant to the Offer shall not have expired or been terminated;
(ii) the Minimum Condition is not satisfied; or
(iii) at any time on or after the date of the Agreement, any of
the following events shall have occurred:
(A) there shall have been any action taken or threatened,
or any statute, rule, regulation, judgment, temporary restraining order,
preliminary or permanent injunction or other order, decree or ruling proposed,
sought, promulgated, enacted, entered, enforced or deemed applicable to the
Offer by any Governmental Entity or arbitration panel that could reasonably be
expected to, directly or indirectly, (1) make the acceptance for payment or the
payment for, or the purchase of some or all of the Shares pursuant to the Offer
illegal or otherwise delay, restrict or prohibit consummation of the Offer, (2)
result in a delay in or restrict the ability of Purchaser, or render Purchaser
unable, to accept for payment, pay for or purchase some or all of the Shares,
(3) require the divestiture by Parent, Purchaser, the Company or any of their
respective subsidiaries or affiliates of all or any portion of the business,
assets or property of any of them or any Shares or impose any material
limitation on the ability of any of them to conduct their business and own such
assets, properties or Shares, (4) impose any material limitation on the ability
of Parent, Purchaser or their affiliates to acquire or hold or to exercise
effectively all rights of ownership of the Shares, including the right to vote
any Shares purchased by any of them on all matters properly presented to the
stockholders of the Company, (5) result in a material diminution in the benefits
expected to be derived by Parent or Purchaser as a result of the transactions
contemplated by the Offer or the Agreement, or (6) impose any material condition
to the Offer or the Agreement unacceptable to Parent or Purchaser; or
<PAGE> 42
-2-
(B) the Company shall have breached, or failed to comply
with, in any material respect, any of its covenants or obligations under the
Agreement or any representation or warranty of the Company in the Agreement
shall have been incorrect, in any material respect, when made or shall have
since ceased to be true and correct in any material respect; or
(C) the Board of Directors of the Company or any committee
thereof shall have (1) withdrawn or modified (including without limitation, by
amendment of the Directors' Circular or the Schedule 14D-9) in a manner adverse
to Parent or Purchaser its approval or recommendation of the Offer, (2) approved
or recommended any Acquisition Proposal by a third party other than the Offer,
(3) publicly resolved to do any of the foregoing, or (4) upon a request to
reaffirm the Company's approval or recommendation of the Offer, the Board of
Directors of the Company shall fail to do so within two business days after such
request is made; or
(D) the Agreement shall have been terminated in accordance
with its terms, or the Offer shall have been terminated with the consent of the
Company; or
(E) there shall have occurred any Material Adverse Effect
on the Company, or any event, fact or change which could reasonably be expected
to result in a Material Adverse Effect on the Company.
The foregoing conditions are for the sole benefit of Parent, Purchaser
and their affiliates and may be asserted by Parent or Purchaser regardless of
the circumstances giving rise to such condition, or may be waived by Parent or
Purchaser in whole or in part at any time and from time to time in the sole
discretion of Parent or Purchaser. The failure by Parent or Purchaser at any
time, to exercise its rights with respect to the foregoing conditions shall not
be deemed a waiver of any such condition, and each condition shall be deemed an
ongoing condition with respect to which Parent or Purchaser may assert its
rights at any time and from time to time.
<PAGE> 43
1
COMPANY SCHEDULES
SCHEDULE 2.5 SECURITIES FILINGS; THE COMPANY FINANCIAL STATEMENTS
1. Copies of pre-1997 securities filings have not been specifically
provided to the Parent. Copies are available upon request.
SCHEDULE 2.7 TAXES
(ii) Tax Returns and Audits
A Revenue Canada audit for 1994 and 1995 has been completed. The Company
is appealing the assessment but all amounts payable under the assessment have
been recorded in the books of the Company. The Ministry of Finance (Ontario) has
proposed adjustments based on its audit of 1994 and 1995 to parallel the Revenue
Canada assessment. The Ministry of Finance (Ontario) has also informed the
Company that it intends to conduct an audit for 1996 and 1997.
There is an outstanding assessment by the Ministry of Finance (Ontario)
in respect of Ontario Retail Sales Taxes involving approximately $144,000 (see
Tab 17 of Disclosure Binders). The potential liability was paid from cash and
fully expensed in 1997.
SCHEDULE 2.8 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES
(i) List of real property owned by the Company.
Nil.
List of real property leases to which Company is a party, and each
amendment thereto.
(a) Lease agreement between 841037 Ontario Limited, as lessor, and
Simware Inc., as lessee, signed on January 31, 1992, for the
lease of premises located at 2 Gurdwara Road, Ottawa, Ontario,
expiring on October 31, 2004.
(b) Lease agreement between Guardian Assurance PLC, as lessor, and
Simware Limited, as lessee, signed on June 23, 1997, for the
lease of Suite
<PAGE> 44
2
C1 and C2, First Floor, South Wing, Centennial Court,
Easthampstead Road, Bracknell, Berkshire, UK, expiring on June
23, 2002.
(c) Lease agreement between Guardian Assurance PLC, as lessor, and
Simware Limited, as lessee, for the lease of Suite C5, Centennial
Court, First Floor South Wing, Easthampstead Road, Bracknell,
Berkshire, UK expiring on November 29, 2003.
(d) Lease agreement between Mechelen Pand N.V., as lessor, and
Simware Ltd., as lessee, signed on May 28, 1999, for the lease of
2800 Mechelen, Generaal de Wittelaan, Intercity Business Park,
Mechelen, Belgium, expiring on June 30, 2008, and with either
party having the ability to terminate the lease at each of July
1, 2002 and July 1, 2005.
(e) Lease agreement between HQ Global Workplaces, Inc., as lessor,
and Simware Inc., as lessee, signed on August 11, 1999, for the
lease of 945 Concord Street, Office #213, Framingham,
Massachusetts, 01701, U.S.A., expiring on
August 31, 2000.
(f) Lease and service agreement between American Executive Centers,
Inc., as lessor, and Simware Inc., as lessee, for the lease of
900 East Eighth Avenue, Suite 300, Office #55, King of Prussia,
Pennsylvania, 19406, U.S.A., expiring
on June 20, 2000.
(ii) Liens
(a) General Security Agreement in favour of the Royal Bank of Canada.
(b) Security interest in favour of Hewlett-Packard (Canada) Ltd. in
respect of equipment and other.
(c) Security interest in favour of AT&T Capital Canada, Ltd. in
respect of equipment and other.
(d) Security interest in favour of AT&T Capital Canada, Ltd. in
respect of equipment and other.
(e) Security interest in favour of MTC Leasing Inc. in respect of a
projector, number 14459-47577.
<PAGE> 45
3
2.9 INTELLECTUAL PROPERTY
(i) List of all Registered Intellectual Property owned by, or filed in the
name of, the Company (the "Company Registered Intellectual Property").
REGISTERED TRADE-MARKS
* Due to administrative delays in indexing new correspondence and applications
at the various trade-mark offices, the information available to us in
compiling these tables may not include correspondence filed by third parties
within the past 1-3 months, as such information may not be available for
public inspection.
CANADA
<TABLE>
<CAPTION>
TAB TRADE-MARK REG. NO. REG. DATE RENEWAL DUE
- --- ------------------- -------- --------- -----------
<S> <C> <C> <C> <C>
1. SIMPC 377,480 Dec. 21, 1990 Dec. 21, 2005
2. SIM 3278 377,762 Dec. 28, 1990 Dec. 28, 2005
3. SIMWARE 377,879 Jan. 11, 1991 Jan. 11, 2006
4. SIM/DIALOUT 379,850 Feb. 15, 1991 Feb. 15, 2006
5. SIM ACCESS 379,866 Feb. 15, 1991 Feb. 15, 2006
6. SIM SESSION 379,867 Feb. 15, 1991 Feb. 15, 2006
7. SIMMAC 392,407 Dec. 27, 1991 Dec. 27, 2006
8. MAC3270 395,719 Mar. 13, 1992 Mar. 13, 2007
9. SPLITSECOND 402,858 Sept. 18, 1992 Sept. 18, 2007
10. SIMPC MASTER 405,043 Nov. 20, 1992 Nov. 20, 2007
11. SECOND LOOK 409,550 Mar. 12, 1993 Mar. 12, 2008
12. A 2 B 409,551 Mar. 12, 1993 Mar. 12, 2008
13. SIMHLLAPI 431,591 Aug. 5, 1994 Aug. 5, 2009
14. REXXWARE 439,282 Feb. 10, 1995 Feb. 10, 2010
15. YOU CAN GET THERE 478,930 July 23, 1997 July 23, 2012
FROM HERE
16. SALVO CONNECT 488,885 Jan. 30, 1998 Jan. 30, 2013
17. SALVO 489,004 Feb. 2, 1998 Feb. 2, 2013
18. SALVO VISTA 495,820 June 10, 1998 June 10, 2013
19. SALVO IMPACT 506,382 Jan. 12, 1999 Jan. 12, 2014
20. INFORMATION OBJECTS 510,550 April 8, 1999 April 8, 2014
21. INFORMATION RULES 513,624 July 29, 1999 July 29, 2014
</TABLE>
<PAGE> 46
4
UNITED STATES OF AMERICA
<TABLE>
<CAPTION>
TAB TRADE-MARK REG. NO. REG. DATE RENEWAL DUE
- --- ---------- -------- --------- -----------
<S> <C> <C> <C> <C>
22. SIM 3278 1,335,173 May 14, 1985 Renewal Due Date: May 14, 2005
23. SIMWARE 1,435,322 April 7, 1987 Renewal Due Date: April 7, 2007
24. SIMMAC 1,657,279 Sept. 17, 1991 Renewal Due Date: Sept. 17, 2001
25. SPLITSECOND 1,658,088 Sept. 24, 1991 Renewal Due Date: Sept. 24, 2001
26. A 2 B 1,842,285 June 28, 1994 Section 8 Declaration due
Due Date: June 28, 2000;
Renewal Due Date: June 28, 2004
27. SECOND LOOK 1,843,505 July 5, 1994 Section 8 Declaration due
Due Date: July 5, 2000;
Renewal Due Date: July 5, 2004
28. REXXWARE 2,010,636 Oct. 22, 1996 Section 8 Declaration due
Due Date: Oct. 22, 2002;
Renewal Due Date: Oct. 22, 2006
29. SALVO 2,272,564 August 24, 1999 Section 8 Declaration due
Due Date: Aug. 24, 2005;
Renewal Due Date: Aug. 24, 2009
</TABLE>
FRANCE
<TABLE>
<CAPTION>
TAB TRADE-MARK REG. NO. REG. DATE RENEWAL DUE
- --- ---------- -------- --------- -----------
<S> <C> <C> <C> <C>
30. SIMWARE 1,642,954 Nov. 21, 1990 Nov. 21, 2000
31. REXXWARE 94 528,044 July 7, 1994 July 7, 2004
</TABLE>
<PAGE> 47
5
GERMANY
<TABLE>
<CAPTION>
TAB TRADE-MARK REG. NO. REG. DATE RENEWAL DUE
- --- ---------- -------- --------- -----------
<S> <C> <C> <C> <C>
32. REXXWARE 2 903 572 Mar. 23, 1995 July 8, 2004
33. SALVO 396 30 Oct. 22, 1996 July 31, 2006
</TABLE>
UNITED KINGDOM
<TABLE>
<CAPTION>
TAB TRADE-MARK REG. NO. REG. DATE RENEWAL DUE
- --- ---------- -------- --------- -----------
<S> <C> <C> <C> <C>
34. REXXWARE 1,577,620 Feb. 21, 1997 July 7, 2001
35. SALVO 2,104,674 July 9, 1996 July 9, 2006
</TABLE>
EUROPE
<TABLE>
<CAPTION>
TAB TRADE-MARK REG. NO. REG. DATE RENEWAL DUE
- --- ---------- -------- --------- -----------
<S> <C> <C> <C> <C>
36. SALVO 364,588 June 16, 1998 August 31, 2006
</TABLE>
REGISTERED PATENTS
1. Title: "Method for High Speed Data Transfer"
CANADIAN REGISTRATION:
Patent Number: 2019131
Date Granted and Issued: October 29, 1996
UNITED STATES REGISTRATION:
Patent Number: 5,086,402
Date Granted and Issued: February 4, 1992
<PAGE> 48
6
(ii) Other than the trade-mark Oppositions and Section 45 actions to which
Simware Inc. is a party (as disclosed in the following tables), there
are no other proceedings or actions before any court, tribunal
(including the United States Patent and Trademark Office ("PTO") or
equivalent authority anywhere in the world) related to any Company
Intellectual Property.
PROCEEDINGS INITIATED BY THE CORPORATION
I. OPPOSITIONS BY SIMWARE INC.
CANADA (ACTIVE)
<TABLE>
<CAPTION>
TRADE-MARK & SERIAL NO. STATUS OF
TAB APPLICANT & FILING DATE OPPOSITION
- --- ---------------- ------------- ----------
<S> <C> <C> <C>
65. OSIM & Design 855,156 Rule 42 evidence due
Originalsim Inc. September 4, 1997 Applicants deadline:
October 19, 1999
66. ORIGINALSIM 847,228 Rule 42 evidence due
Originalsim Inc. June 6, 1997 Applicants deadline:
October 19, 1999
67. SIMEX 848,389 Rule 41 evidence due
ANDREAS RU(beta) June 18, 1997 Opponent's deadline:
November 28, 1999
</TABLE>
II. SECTION 45 PROCEEDINGS BY SIMWARE INC.
CANADA
<TABLE>
<CAPTION>
TRADE-MARK &
TAB OWNER REG. NO. STATUS
- ---- ------------------- -------- ------
<S> <C> <C> <C>
78. PETRO SIM & Design 360,876 Registration expunged
Petro Simulator Systems Inc. February 11, 1994
79. INSITE 407,462 Registration expunged
Silcom Research Limited July 22, 1999
</TABLE>
<PAGE> 49
7
PROCEEDINGS INITIATED AGAINST THE CORPORATION
Nil.
(v) Other than as disclosed below, searches of Simware Inc.'s records and of
the records of the Canadian Intellectual Property Office, Trade-mark
Branch, confirmed that Simware Inc. owns and has good exclusive title to
each item of intellectual property, including all Company registered
intellectual property listed on the aforementioned tables, free and
clear of any lien or encumbrance and in particular, that Simware Inc. is
the exclusive owner of all trade-marks used in connection with the
operation and conduct of the business of the Company.
1. The General Security Agreement in favour of the Royal Bank of
Canada extends to intellectual property.
(viii) Third parties to which the Company has transferred ownership of, or
granted any exclusive license with respect to, any Intellectual Property
that is or was Company Intellectual Property.
Nil.
(ix) Material contracts, licenses and agreements to which the Company is a
party:
(i) With respect to Company Intellectual Property licensed or
transferred to any third party.
1. In the ordinary course of business, the Company licenses
the use of its Intellectual Property to third parties.
(ii) Pursuant to which a third party has licensed or transferred any
Intellectual Property to the Company with a potential value or
cost greater than $10,000.
1. OEM Software License Agreement between RSA Data Security
Inc. and Simware Inc., dated October 5, 1992.
<PAGE> 50
8
2. OEM Customer Agreement between Microdyne Corporation and
Simware Inc., dated September 30, 1994.
3. OEM License and Distribution Agreement between KLOS
Technologies Inc. and Simware Inc., dated May 3, 1995.
4. OEM License Agreement between The Wollongong Group Inc.
and Simware Inc., dated June 30, 1994.
5. VAR License Agreement between Visigenic Software, Inc. and
Simware Inc., dated June 28, 1996.
6. OEM Software License Agreement between Relay Technology
Inc. and Simware Inc., dated May 31, 1996.
7. Partner Subscription License between DartCom Incorporated
and Simware Inc., dated March 12, 1997.
8. Reseller Agreement between MetaInfo, Inc. and Simware
Inc., dated June 30, 1998.
9. License Agreement between Monotype Typography, Inc. and
Simware Inc., dated August 8, 1994.
10. OEM Software Program License Agreement between Mortice
Kern Systems Inc. and Simware Inc., dated October 14,
1997.
11. Software License Agreement between NeoLogic Systems, Inc.
and Simware Inc.
12. License Agreement between Alan Phillips and Simware Inc.,
dated February 6, 1997.
13. License Agreement between Tom Sawyer Software Corporation
and Simware Inc., dated April 23, 1999.
<PAGE> 51
9
Agreements pursuant to which the Company has licensed any Company
Intellectual Property or products to any third party that differ
in any material respect from its standard form.
1. Nil, other than licenses to U.S. and Canadian Governments
which are completed in accordance with their standard
procurement practices.
(xi) Contracts, licenses and agreements between the Company and any third
party whereby the Company has agreed to indemnify, warrant, hold
blameless, etc. any misappropriation or infringement by the Company or
third party of the Intellectual Property of any third party.
1. The Company's standard license agreement contains
intellectual property indemnification provisions.
(xiv) To the knowledge of the Company, infringement or misappropriation of
Company Intellectual Property by a Person.
Nil.
(xv) Claims related to any product or service of the Company.
Nil.
SCHEDULE 2.17 AGREEMENTS, CONTRACTS AND COMMITMENTS
(i) Letters of hire (and, in the case of Lew Shepherdson, his employment
agreement) with the following individuals specify severance entitlements
on termination of employment:
1. Allan Jones
2. Mike Peckham
3. Jim Rawlings
4. Corien Kershey (Greenwood)
5. Glen Brownlee
<PAGE> 52
10
6. Ray Melvin
7. Yvon Martineau
8. Lew Shepherdson
9. Mark Kent
(ii) Any agreement or plan, including, without limitation, any stock option
plan, stock appreciation right plan, stock purchase plan or restricted
stock purchase agreement, any of which the benefits will be increased or
accelerated with the occurrence of the transaction contemplated.
1. Pursuant to the Employee Stock Option Plan, all options (vested
or unvested) will accelerate.
2. Pursuant to the Employee Share Purchase Plan, the Company intends
to permit employees to purchase their full 1999 entitlement prior
to closing.
(iii) Agreement of indemnification or guaranty.
Nil.
(iv) Agreement, contract or commitment containing a covenant limiting the
Company's or its subsidiaries' freedom to carry on business or to
compete with any person or to grant any exclusive distribution rights.
Nil.
(v) Agreement, contract or commitment currently in force relating to
disposition or acquisition of assets, etc.
Nil.
(vi) Any material joint marketing or development agreement.
- IBM Independent Software Vendor's Agreement dated September 29,
1998.
<PAGE> 53
11
SCHEDULE 2.18 CHANGE OF CONTROL PAYMENTS
1. Agreement dated February 23, 1998 between the Company and Glen M.
Brownlee.
2. Agreement dated March 25, 1998 between the Company and Juan Guillen.
3. Agreement dated February 23, 1998 between the Company and Michael
Peckham.
<PAGE> 1
EXHIBIT (c)(2)
to 14D-1
September 26, 1999
STRICTLY PERSONAL AND CONFIDENTIAL
Mr. Glen M. Brownlee
12 Clarence Street,
Suite 14
Ottawa, Ont.
K1N 5P3
Dear Mr. Brownlee:
RE: ADDENDUM TO CHANGE OF CONTROL
LETTER AGREEMENT
-----------------------------
We are writing to confirm the terms and conditions of your
employment in the event NetManage, Inc. acquires Simware Inc. You agree to
accept a position that is equivalent in status and compensation, including bonus
and stock options, to those of similar senior officers in NetManage, Inc.
divisions. Your base pay will be no less than your current base pay. NetManage,
Inc. divisional officers earn bonuses based on between 25 and 50% of base
salary.
As you know, you entered into an agreement with Simware Inc. dated
February 23, 1998 (the "Agreement") that governs your entitlement and
obligations in the event of a change in control which results in a change
affecting your employment. "Change of Control" is defined in the Agreement as
follows:
"CHANGE IN CONTROL" shall be deemed to have occurred on the first to happen of
the following:
(a) the completion of any offer, arrangement or transaction resulting,
directly or indirectly, in not less than fifty per cent (50%) of the
outstanding securities of Simware being acquired by a third party
purchaser;
<PAGE> 2
-2-
Mr. Glen M. Brownlee
September 26, 1999
(b) Simware sells or otherwise disposes of all or substantially all of its
assets, in which case the date of Change in Control shall be deemed to
be the date of closing of the first of a series of such transactions;
(c) the shareholders of Simware approve an amalgamation of Simware with any
other corporation or corporations (other than a short form
amalgamation), in which case the date of Change in Control shall be
deemed to be the date of which such amalgamation is effective;
(d) the Board of Directors of Simware adopts a resolution to the effect
that, for the purposes of this Agreement, a Change in Control has
occurred, in which case the date of Change in Control shall be deemed to
be the date of such resolution; or
(e) any other transaction which results in a third party acquiring control
of the shares or assets of Simware or board of directors.
"Change Affecting Your Employment" is defined in the Agreement as
follows:
"CHANGE AFFECTING YOUR EMPLOYMENT" means any of the following circumstances
which are not accepted by you during the 60-day period immediately following the
date on which you become aware of such circumstance:
(a) any change to your employment conditions which would significantly
reduce the nature of status or your responsibilities;
(b) the imposition by Simware of a requirement that you perform all or
substantially all of your duties of employment at a location which is 30
or more kilometres from the location at which you work as of the date of
this Agreement;
(c) a reduction by Simware in your annual compensation as of the date of the
Change in Control;
(d) the failure by Simware to continue in effect for your benefit any
perquisites or participation in any employee benefit plan to which other
employees of Simware are entitled, to the same extent to which other
employees enjoy such benefits; or
(e) any other change which would constitute "constructive dismissal" under
applicable law.
<PAGE> 3
-3-
Mr. Glen M. Brownlee
September 26, 1999
It is agreed that the acquisition of Simware Inc. by NetManage, Inc.
constitutes a "change of control" and may constitute a "change affecting your
employment" as defined by the Agreement. You may therefore be entitled to
payments under the Agreement. You have agreed, however, to waive your
entitlements under the Agreement in consideration of the total payment of
$599,200.00 Cdn, payable in 24 equal monthly instalments of $24,966.66 which
represents an amount equal to 24 months base salary and 12 months incentive
target (calculated at the rate of your incentive target for the current year).
The first payment will be made thirty (30) days after NetManage, Inc. becomes
the majority shareholder of Simware Inc.
If, during the 24 month payment period, you voluntarily terminate
your employment, or are terminated for cause, you will forfeit your entitlement
to any outstanding balance. In the event you are terminated without cause during
the 24 month payment period or there is a subsequent `change affecting your
employment', the payments will be accelerated such that the outstanding balance
will immediately become due and payable. You will not be entitled to any
payments in respect of notice and severance except as agreed between Zvi Alon
and yourself within the next 30 days.
The written provisions of this letter and the Employee Agreement as
to Confidential Information and Property Rights (appended) shall constitute the
full extent of the employment contract between Simware Inc., NetManage, Inc.,
and you, regardless of any oral or written agreements or understandings which
may presently exist. No waiver or modification of any provision of this letter
shall be valid unless in writing and duly executed by both Simware Inc. or
NetManage, Inc. and you.
This agreement may be executed in two or more counterparts and
signed by facsimile, each of which will be deemed to be an original but all of
which together shall constitute one of the same instrument.
You release all claims arising out of the acquisition of Simware
Inc. by NetManage, Inc. and out of your employment with Simware Inc. prior to
the effective date of this agreement, save and except any claims to accrued
salary, bonus, vacation and expenses.
Please sign below to acknowledge your agreement with these terms and
fax a signed copy to (613) 230-5459, attention L.A. Johnson. Please courier your
original signed letter to the offices of Ogilvy Renault, attention L.A. Johnson,
Suite 1600, 45 O'Connor Street, Ottawa, K1P 1A4.
We look forward to working with you.
<PAGE> 4
-4-
Mr. Glen M. Brownlee; September 26, 1999
Yours very truly,
"Gary Anderson"
Gary Anderson
Senior Vice President and C.F.O.
The foregoing terms are acceptable.
Dated this 26th day of September, 1999.
SIGNED, SEALED AND DELIVERED )
IN THE PRESENCE OF )
)
)
)
)
"M. R. PECKHAM" "GLEN M. BROWNLEE"
- ----------------------------- -----------------------------
WITNESS GLEN M. BROWNLEE
<PAGE> 1
EXHIBIT (c)(3)
to 14D-1
September 26, 1999
STRICTLY PERSONAL AND CONFIDENTIAL
Mr. Juan Guillen
50 Lakeway Drive
Rockcliffe Park, Ontario
K1L 5B1
Dear Mr. Guillen:
RE: ADDENDUM TO CHANGE OF CONTROL
LETTER AGREEMENT
-----------------------------
We are writing to confirm the terms and conditions of your
employment in the event NetManage, Inc. acquires Simware Inc. You agree to
accept a position that is equivalent in status and compensation, including bonus
and stock options, to those of similar senior officers in NetManage, Inc.
divisions. Your base pay will be no less than your current base pay. NetManage,
Inc. divisional officers earn bonuses based on between 25 and 50% of base
salary.
As you know, you entered into an agreement with Simware Inc. dated
March 25, 1998 (the "Agreement") that governs your entitlement and obligations
in the event of a change in control which results in a change affecting your
employment. "Change of Control" is defined in the Agreement as follows:
"CHANGE IN CONTROL" shall be deemed to have occurred on the first to happen of
the following:
(a) the completion of any offer, arrangement or transaction resulting,
directly or indirectly, in not less than fifty per cent (50%) of the
outstanding securities of Simware being acquired by a third party
purchaser;
<PAGE> 2
-2-
Mr. Juan Guillen September 26, 1999
(b) Simware sells or otherwise disposes of all or substantially all of its
assets, in which case the date of Change in Control shall be deemed to
be the date of closing of the first of a series of such transactions;
(c) the shareholders of Simware approve an amalgamation of Simware with any
other corporation or corporations (other than a short form
amalgamation), in which case the date of Change in Control shall be
deemed to be the date of which such amalgamation is effective;
(d) the Board of Directors of Simware adopts a resolution to the effect
that, for the purposes of this Agreement, a Change in Control has
occurred, in which case the date of Change in Control shall be deemed to
be the date of such resolution; or
(e) any other transaction which results in a third party acquiring control
of the shares or assets of Simware or board of directors.
"Change Affecting Your Employment" is defined in the Agreement as
follows:
"CHANGE AFFECTING YOUR EMPLOYMENT" means any of the following circumstances
which are not accepted by you during the 60-day period immediately following the
date on which you become aware of such circumstance:
(a) any change to your employment conditions which would significantly
reduce the nature of status of your responsibilities;
(b) the imposition by Simware of a requirement that you perform all or
substantially all of your duties of employment at a location which is 30
or more kilometres from the location at which you work as of the date of
this Agreement;
(c) a reduction by Simware in your annual compensation as of the date of the
Change in Control;
(d) the failure by Simware to continue in effect for your benefit any
perquisites or participation in any employee benefit plan to which other
employees of Simware are entitled, to the same extent to which other
employees enjoy such benefits; or
(e) any other change which would constitute "constructive dismissal" under
applicable law.
<PAGE> 3
-3-
Mr. Juan Guillen September 26, 1999
It is agreed that the acquisition of Simware Inc. by NetManage, Inc.
constitutes a "change of control" and may constitute a "change affecting your
employment" as defined by the Agreement. You may therefore be entitled to
payments under the Agreement. You have agreed, however, to waive your
entitlements under the Agreement in consideration of the total payment of
$312,400.00 Cdn, payable in 18 equal monthly instalments of $17,357.77 which
represents an amount equal to 18 months base salary and 12 months incentive
target (calculated at the rate of your incentive target for the current year).
The first payment will be made thirty (30) days after NetManage, Inc. becomes
the majority shareholder of Simware Inc.
If, during the 18 month payment period, you voluntarily terminate
your employment, or are terminated for cause, you will forfeit your entitlement
to any outstanding balance. In the event you are terminated without cause during
the 18 month payment period or there is a subsequent `change affecting your
employment', the payments will be accelerated such that the outstanding balance
will immediately become due and payable. You will not be entitled to any
payments in respect of notice and severance except as agreed between Zvi Alon
and yourself within the next 30 days.
The written provisions of this letter and the Employee Agreement as
to Confidential Information and Property Rights (appended) shall constitute the
full extent of the employment contract between Simware Inc., NetManage, Inc.,
and you, regardless of any oral or written agreements or understandings which
may presently or hereafter exist. No waiver or modification of any provision of
this letter shall be valid unless in writing and duly executed by both Simware
Inc. or NetManage, Inc. and you.
This agreement may be executed in two or more counterparts and
signed by facsimile, each of which will be deemed to be an original but all of
which together shall constitute one of the same instrument.
You release all claims arising out of the acquisition of Simware
Inc. by NetManage, Inc. and out of your employment with Simware Inc. prior to
the effective date of this agreement, save and except any claims to accrued
salary, bonus, vacation and expenses.
Please sign below to acknowledge your agreement with these terms and
fax a signed copy to (613) 230-5459, attention L.A. Johnson. Please courier your
original signed letter to the offices of Ogilvy Renault, attention L.A. Johnson,
Suite 1600, 45 O'Connor Street, Ottawa, K1P 1A4.
We look forward to working with you.
<PAGE> 4
-4-
Mr. Juan Guillen September 26, 1999
Yours very truly,
"Gary Anderson"
Gary Anderson
Senior Vice President and C.F.O.
The foregoing terms are acceptable.
Dated this 26th day of September, 1999.
SIGNED, SEALED AND DELIVERED )
IN THE PRESENCE OF )
)
)
)
)
"M. R. PECKHAM" "JUAN GUILLEN"
- -------------------------- ---------------------------
WITNESS JUAN GUILLEN
<PAGE> 1
EXHIBIT (c) (4)
to 14D-1
September 26, 1999
STRICTLY PERSONAL AND CONFIDENTIAL
Mr. Michael Peckham
911 Plante Drive
Ottawa, Ontario
K1V 9E3
Dear Mr. Peckham:
RE: ADDENDUM TO CHANGE OF CONTROL LETTER
AGREEMENT
------------------------------------
We are writing to confirm the terms and conditions of your
employment in the event NetManage, Inc. acquires Simware Inc. You agree to
accept a position that is equivalent in status and compensation, including bonus
and stock options, to those of similar senior officers in NetManage, Inc.
divisions. Your base pay will be no less than your current base pay. NetManage,
Inc. divisional officers earn bonuses based on between 25 and 50% of base
salary.
As you know, you entered into an agreement with Simware Inc. dated
February 23, 1998 (the "Agreement") that governs your entitlement and
obligations in the event of a change in control which results in a change
affecting your employment. "Change of Control" is defined in the Agreement as
follows:
"CHANGE IN CONTROL" shall be deemed to have occurred on the first to happen of
the following:
(a) the completion of any offer, arrangement or transaction resulting,
directly or indirectly, in not less than fifty per cent (50%) of the
outstanding securities of Simware being acquired by a third party
purchaser;
<PAGE> 2
-2-
Mr. Michael Peckham September 26, 1999
(b) Simware sells or otherwise disposes of all or substantially all of its
assets, in which case the date of Change in Control shall be deemed to
be the date of closing of the first of a series of such transactions;
(c) the shareholders of Simware approve an amalgamation of Simware with any
other corporation or corporations (other than a short form
amalgamation), in which case the date of Change in Control shall be
deemed to be the date of which such amalgamation is effective;
(d) the Board of Directors of Simware adopts a resolution to the effect
that, for the purposes of this Agreement, a Change in Control has
occurred, in which case the date of Change in Control shall be deemed to
be the date of such resolution; or
(e) any other transaction which results in a third party acquiring control
of the shares or assets of Simware or board of directors.
"Change Affecting Your Employment" is defined in the Agreement as
follows:
"CHANGE AFFECTING YOUR EMPLOYMENT" means any of the following circumstances
which are not accepted by you during the 60-day period immediately following the
date on which you become aware of such circumstance:
(a) any change to your employment conditions which would significantly
reduce the nature of status of your responsibilities;
(b) the imposition by Simware of a requirement that you perform all or
substantially all of your duties of employment at a location which is 30
or more kilometres from the location at which you work as of the date of
this Agreement;
(c) a reduction by Simware in your annual compensation as of the date of the
Change in Control;
(d) the failure by Simware to continue in effect for your benefit any
perquisites or participation in any employee benefit plan to which other
employees of Simware are entitled, to the same extent to which other
employees enjoy such benefits; or
(e) any other change which would constitute "constructive dismissal" under
applicable law.
<PAGE> 3
-3-
Mr. Michael Peckham September 26, 1999
It is agreed that the acquisition of Simware Inc. by NetManage, Inc.
constitutes a "change of control" and may constitute a "change affecting your
employment" as defined by the Agreement. You may therefore be entitled to
payments under the Agreement. You have agreed, however, to waive your
entitlements under the Agreement in consideration of the total payment of
$284,130.00 Cdn, payable in 18 equal monthly instalments of $15,785.00 which
represents an amount equal to 18 months base salary and 12 months incentive
target (calculated at the rate of your incentive target for the current year).
The first payment will be made thirty (30) days after NetManage, Inc. becomes
the majority shareholder of Simware Inc.
If, during the 18 month payment period, you voluntarily terminate
your employment, or are terminated for cause, you will forfeit your entitlement
to any outstanding balance. In the event you are terminated without cause during
the 18 month payment period or there is a subsequent `change affecting your
employment', the payments will be accelerated such that the outstanding balance
will immediately become due and payable. You will not be entitled to any
payments in respect of notice and severance except as agreed between Zvi Alon
and yourself within the next 30 days.
The written provisions of this letter and the Employee Agreement as
to Confidential Information and Property Rights (appended) shall constitute the
full extent of the employment contract between Simware Inc., NetManage, Inc.,
and you, regardless of any oral or written agreements or understandings which
may presently or hereafter exist. No waiver or modification of any provision of
this letter shall be valid unless in writing and duly executed by both Simware
Inc. or NetManage, Inc. and you.
This agreement may be executed in two or more counterparts and
signed by facsimile, each of which will be deemed to be an original but all of
which together shall constitute one of the same instrument.
You release all claims arising out of the acquisition of Simware
Inc. by NetManage, Inc. and out of your employment with Simware Inc. prior to
the effective date of this agreement, save and except any claims to accrued
salary, bonus, vacation and expenses.
Please sign below to acknowledge your agreement with these terms and
fax a signed copy to (613) 230-5459, attention L.A. Johnson. Please courier your
original signed letter to the offices of Ogilvy Renault, attention L.A. Johnson,
Suite 1600, 45 O'Connor Street, Ottawa, K1P 1A4.
We look forward to working with you.
<PAGE> 4
-4-
Mr. Michael Peckham September 26, 1999
Yours very truly,
"Gary Anderson"
Gary Anderson
Senior Vice President and C.F.O.
The foregoing terms are acceptable.
Dated this 26th day of September, 1999.
SIGNED, SEALED AND DELIVERED )
IN THE PRESENCE OF )
)
)
)
)
"JUAN GUILLEN" "M. R. PECKHAM"
- --------------------------- ---------------------------
WITNESS MICHAEL PECKHAM
