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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
VIASOFT, INC.
(NAME OF SUBJECT COMPANY)
VIASOFT, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, $0.001 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
92552U-10-2
(CUSIP NUMBER OF CLASS OF SECURITIES)
CATHERINE R. HARDWICK, ESQ.
3033 NORTH 44TH STREET
SUITE 101
PHOENIX, AZ 85018
(602) 952-0050
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICE AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
WITH COPIES TO:
WILLIAM M. HARDIN, ESQ.
RONDA R. BECKERLEG, ESQ.
OSBORN MALEDON, P.A.
2929 NORTH CENTRAL AVENUE, SUITE 2100
PHOENIX, ARIZONA 85012-2794
(602) 640-9000
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Viasoft, Inc., a Delaware corporation
("Viasoft" or the "Company"). The address of the principal executive offices of
the Company is 3033 N. 44th Street, Suite 101, Phoenix, Arizona 85018. The title
of the class of equity securities to which this Solicitation/Recommendation
Statement on Schedule 14D-9 (this "Statement" or "Schedule 14D-9") relates is
the Company's Common Stock, $0.001 par value ("Common Stock" or the "Shares"),
including the associated Preferred Share Purchase Rights ("Rights") issued
pursuant to the Rights Agreement ("Rights Plan") between the Company and Harris
Trust and Savings Bank, as rights agent, dated as of April 20, 1998, as amended
on July 14, 1999.
ITEM 2. TENDER OFFER OF THE BIDDER
This Schedule 14D-9 relates to the tender offer by Compuware Corporation, a
Michigan corporation ("Compuware"), and CV Acquisition, Inc., a Delaware
corporation and wholly-owned subsidiary of Compuware ("Purchaser") to purchase
all of the outstanding Shares, including the associated Rights, held by the
Company's shareholders at $9.00 per Share (the "Offer Price"), net to the seller
in cash, without interest, upon the terms and subject to the conditions set
forth in the Purchaser's Offer to Purchase dated July 22, 1999 (as amended or
supplemented, the "Offer to Purchase") and in the related Letter of Transmittal
(as amended or supplemented, the "Letter of Transmittal", which together with
the Offer to Purchase, constitute the "Offer"). The Offer is more fully
described below in Item 3 of this Schedule 14D-9 and in the Offer to Purchase
and in a Tender Offer Statement on Schedule 14D-1 dated July 22, 1999 (the
"Schedule 14D-1") filed by Compuware and Purchaser with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the rules promulgated by the
Commission thereunder.
The Offer is being made by the Purchaser pursuant to the Agreement and Plan
of Merger, dated as of July 14, 1999 (the "Merger Agreement"), by and among
Compuware, Purchaser and the Company. The Merger Agreement provides that, among
other things, as promptly as practicable after the purchase of Shares pursuant
to the Offer and the satisfaction or waiver of the other conditions set forth in
the Merger Agreement and in accordance with the applicable provisions of the
Delaware General Corporation Law (the "DGCL"), Purchaser will be merged with and
into the Company (the "Merger"), the separate corporate existence of Purchaser
will cease and the Company will continue as the surviving corporation (the
"Surviving Corporation") and will be a wholly-owned subsidiary of Compuware. At
the effective time of the Merger (the "Effective Time"), each outstanding Share
will be converted automatically into the right to receive the Offer Price,
without interest (excluding Shares owned by the Company or any subsidiary of the
Company or by Compuware, Purchaser or any subsidiary of Compuware immediately
prior to the Effective Time (the "Ineligible Shares") and Shares held by Company
shareholders who properly elect to demand appraisal of their Shares under the
DGCL (the "Dissenting Shares")). A copy of the press release issued by Viasoft
and Compuware on July 15, 1999 is filed as Exhibit 2 hereto. The Merger
Agreement, a copy of which is filed as Exhibit 4 hereto, is summarized in Item 3
of this Schedule 14D-9.
The Schedule 14D-1 states that the address of the principal executive
offices of Compuware and Purchaser is 31440 Northwestern Highway, Farmington
Hills, Michigan 48334-2564.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
Schedule 14D-9, is set forth in Item 1 above. All information contained in this
Schedule 14D-9 concerning Purchaser or Compuware and their respective directors
and executive officers, or actions or events with respect to any of them, was
provided by Purchaser or Compuware, respectively, and the Company takes no
responsibility for such information. Information contained in this Statement
with respect to the Company and its advisors has been provided by the Company.
(b)(1) Certain contracts, agreements, arrangements or understandings
between the Company and certain of its executive officers, directors or
affiliates are described in the Information Statement dated July 22, 1999,
included as Annex A to this Schedule 14D-9 and incorporated herein by reference.
Certain additional
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arrangements with respect to the Company's equity incentive plans are described
at pages 6 through 14 of the Company's definitive Proxy Statement, dated October
15, 1998. A copy of such portions of that proxy statement is filed as Exhibit 7
to this Schedule 14D-9 and such portions are incorporated herein by reference.
The Information Statement is also being furnished to the Company's shareholders
pursuant to Section 14(f) of the Exchange Act, and Rule 14f-1 issued under the
Exchange Act in connection with Compuware's right (after consummation of the
Offer) to designate persons to be appointed to the Board of Directors of the
Company (the "Board") other than at a meeting of the shareholders of the
Company.
In considering the recommendations of the Board, the shareholders of the
Company should be aware that certain members of the Board and certain of the
Company's officers have interests in the Merger and the Offer which are
described herein and in the Information Statement, which are in some respects
different from the interests of the shareholders of the Company generally and
which may involve certain conflicts of interest. For example, the consummation
of the Offer and/or the Merger will accelerate the vesting of certain unvested
stock options for certain officers and directors of the Company. Each of the
members of the Board was aware of these potential conflicts and considered them
along with the other factors described in Item 4(b) below in considering whether
to approve the Offer and the Merger. Other such contracts, agreements,
arrangements and understandings known to the Company are described below:
Accelerated Vesting Of Unvested Stock Options. The consummation of
the Offer and/or the Merger will constitute a "Change of Control" for
purposes of certain unvested options to purchase Shares which were granted
to directors and executive officers of the Company, resulting in
acceleration of exercisability of such options under the terms of the
options. In addition, the Merger Agreement provides that, following the
Effective Time, each outstanding option to purchase Shares granted pursuant
to the Company's option plans will be fully vested and entitle the optionee
to receive the Merger Consideration (without interest) per Share subject to
such option, resulting in acceleration of exercisability at that time of
all unvested options granted to directors and executive officers of the
Company. See "Employment Contracts and Change-in-Control Arrangements",
"Board of Directors Compensation" and "Security Ownership of Certain
Beneficial Owners and Management" contained in the Information Statement
for information regarding the number of options that will become
exercisable as a result of the consummation of the Offer and/or the Merger
for each of the Company's directors and executive officers.
Severance Plan. On July 14, 1999, the Board adopted the Viasoft, Inc.
Change in Control Separation Plan ("Severance Plan"). The Severance Plan
provides designated executive officers and other key employees with certain
separation benefits if a Change in Control (as defined in the plan) occurs
and (i) within nine months thereafter (60 days in the case of certain
participants) (as applicable, the "Transition Period"), a participant's
employment with the Company is terminated either by action of the Company
without "Cause" or by the participant's resignation from employment for
"Good Reason" (as defined in the plan) or (ii) a participant elects to
resign at the end of the Transition Period. See "Employment Contracts and
Change-in-Control Arrangements" contained in the Information Statement for
additional information regarding the Severance Plan.
(b)(2) Merger Agreement And Shareholder Tender And Voting Agreement.
A copy of the Merger Agreement is filed as Exhibit 4 to this Statement. In
connection with the Merger Agreement, the directors and executive officers of
the Company have entered into a Shareholder Tender and Voting Agreement
("Shareholder Agreement") with Purchaser, a copy of which is filed as Exhibit 5
to this Statement. Certain portions of the Merger Agreement and the Shareholder
Agreement are summarized in this Section. This summary is qualified in its
entirety by reference to the Merger Agreement and the Shareholder Agreement
themselves.
The Offer. The Merger Agreement provides for the commencement of the Offer
within five business days after the initial public announcement of Purchaser's
intention to commence the Offer. The obligation of Purchaser to accept Shares
tendered pursuant to the Offer for payment is subject to the satisfaction of the
conditions described under "Conditions to the Offer" below. Purchaser and
Compuware have agreed that no change in the Offer may be made without the
Company's consent which decreases the price per Share payable in the Offer,
reduces the minimum or maximum number of Shares to be purchased in the Offer,
imposes
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conditions to the Offer in addition to those set forth under "Conditions to the
Offer" below, changes the form of consideration payable in the Offer, extends
the expiration date of the Offer beyond five business days following the initial
expiration of the Offer (unless, in Purchaser's reasonable judgment, it is
reasonably likely that during such extension (not to exceed 20 days) any
condition to the offer which is not satisfied as of the date of such extension
will be satisfied), or amends any other material terms of the Offer in a manner
materially adverse to the Company's shareholders.
The Merger. The Merger Agreement provides that, following the Offer and
upon the terms and subject to the conditions in the Merger Agreement and in
accordance with Delaware law, Purchaser will be merged with and into the
Company. As a result of the Merger, the separate corporate existence of
Purchaser will cease and the Company will continue as the Surviving Corporation
(the "Surviving Corporation") and will become a wholly-owned subsidiary of
Compuware. Alternatively, Compuware may elect to merge the Company into
Purchaser, with Purchaser continuing as the Surviving Corporation and a
wholly-owned subsidiary of Compuware. In either case, upon consummation of the
Merger, each issued and then outstanding Share (other than any Shares held in
the treasury of the Company, or owned by Purchaser, Compuware or any other
subsidiary of Compuware and any Shares which are held by shareholders who have
complied with all the provisions of the DGCL concerning the right of holders of
Shares to require appraisal of their Shares) shall be automatically converted
into, and exchanged for, the right to receive a cash payment per Share equal to
the Offer Price, without interest. Each stock option outstanding at the time of
the Merger that was granted by the Company under the Company's Stock Option
Plans (as defined in the Merger Agreement) will, following the Effective Time,
be fully vested and entitle the optionee to receive the Merger Consideration
(without interest) per Share subject to such option; provided, that any such
option that is not duly exercised within thirty (30) days after the Effective
Time will automatically expire. The Company's Employee Stock Purchase Plan will
terminate when the Merger occurs (unless terminated before then in accordance
with its terms). If terminated upon the Merger, the Company will cause a final
purchase of Shares to be made under the plan on the last trading day before the
Merger.
Shareholder Approval. Under Delaware law, if Purchaser acquires at least
90% of the Company's then outstanding Shares of Common Stock, Purchaser will be
able to approve the Merger without a vote of the Company's shareholders. If at
least 90% of the outstanding Shares are tendered (as of the close of business on
the last business day before the Offer expires), it is expected that Purchaser
will cause the Merger to occur without a shareholder vote (assuming the other
conditions for the Merger described below under "Conditions to the Merger" have
been met).
If following the expiration of the Offer Purchaser does not own at least
90% of the Company's outstanding shares of Common Stock, then shareholder
approval of the Merger will be required. The Company has agreed that, in the
event shareholder approval is required, then, as soon as practicable following
the expiration of the Offer, the Company will call a meeting of its shareholders
for the purpose of obtaining shareholder approval of the Merger, the Merger
Agreement and any other actions contemplated by the Merger Agreement which
require the approval of the Company's shareholders.
Unless the Merger Agreement is terminated as described under "Termination"
below, the Company's obligations to call and hold a shareholders meeting for the
purpose of obtaining the requisite shareholder approval of the Merger will not
be affected by the commencement of any competing takeover proposal (whether or
not it is a superior proposal, as defined below) or by the withdrawal or
modification of the Company's Board of Director's recommendation in favor of the
Merger. See "Proxy Statement; Recommendation of Board of Directors" below.
Shareholder Tender and Voting Agreement. Purchaser has entered into a
Shareholder Tender and Voting Agreement with all directors and executive
officers of the Company. These shareholders own, in the aggregate, approximately
356,434 Shares, constituting approximately 2.0% of all Shares outstanding on
July 14, 1999. Under the agreement, each such shareholder agreed (i) to tender
pursuant to the Offer all Shares currently owned or later acquired by the
shareholder and not to withdraw such tender (subject to applicable law) unless
and until the Merger Agreement is terminated in accordance with its terms, (ii)
if the Offer is not consummated and if approval by the Company's shareholders of
the Merger is sought, then, until
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termination of the Merger Agreement, to vote such Shares in favor of the Merger
and against any competing proposal, merger, consolidation, sale of assets,
reorganization or recapitalization, or any liquidation or winding up of the
Company, (iii) not to sell, transfer, encumber, pledge, dispose of or grant an
option with respect to such Shares until the earlier of termination of the
Merger Agreement or the record date for the meeting at which shareholders of the
Company are asked to vote on the Merger (other than pursuant to the Offer or
with certain other exceptions) and (iv) from the consummation of the Offer to
the closing of the Merger, not to exercise stock options for Shares or other
rights to acquire capital stock of the Company.
Proxy Statement; Recommendation of Board of Directors. The Merger
Agreement provides that the Company will, if necessary, as soon as practicable
following expiration of the Offer, file with the Securities and Exchange
Commission under the Exchange Act, a proxy statement and related proxy materials
(the "Proxy Statement") with respect to the Company's shareholders meeting and
will use its best efforts to respond to any comments of the Commission and to
cause the Proxy Statement to be mailed to shareholders of the Company as
promptly as practicable after responding to all such comments to the
satisfaction of the staff of the Commission. The Company has agreed, subject to
applicable law (i) to recommend to the Company's shareholders, through the
Company's Board of Directors, that the shareholders approve the Merger, the
Merger Agreement and any related actions requiring shareholder approval, (ii) to
include such recommendation in the Proxy Statement and (iii) that neither the
Company's Board of Directors nor any committee of the board will withdraw or
change (or propose or resolve to withdraw or change) in a manner adverse to
Compuware, such recommendation. Notwithstanding the foregoing, the Company's
Board of Directors may withhold, withdraw, amend or modify its recommendation in
favor of the Merger Agreement, the Offer, the Merger or shareholder approval if
all of the following occur:
(i) a superior proposal (as defined below) is made to the Company and
not withdrawn;
(ii) the Company shall have notified Compuware in writing of the
superior proposal, specifying all the material terms and conditions and
identifying the person making the proposal;
(iii) Compuware shall not have, within three business days after
receipt of the above notice, made an offer that the Company's Board of
Directors by majority vote determines in its good faith judgment, after
consultation with its financial advisor, to be at least as favorable to the
Company's shareholders as the superior proposal;
(iv) the Company's Board of Directors concludes in good faith after
consultation with qualified outside counsel, that the withholding,
withdrawal, amendment or modification of such recommendation is required
for the board to comply with its fiduciary duties to the Company's
shareholders; and
(v) the Company shall not have violated the no-solicitation provisions
of the Merger Agreement (described below under "No Solicitation") or the
provisions referred to herein with respect to shareholder approval.
The Company is required to give Compuware at least three business days' prior
notice (or such lesser notice as the Company provides to the members of its
Board of Directors but in no event less than 24 hours notice) of any meetings of
the Company's Board of Directors at which the Company's Board of Directors is
reasonably expected to determine whether any takeover proposal constitutes a
"superior proposal." For the purposes of the Merger Agreement a "superior
proposal" means an unsolicited, bona fide written offer made by a third party to
consummate any of the following transactions on terms and conditions that the
Company's Board of Directors determines, in its reasonable judgment (after
consultation with its financial advisor) to be more favorable to the Company's
shareholders than the terms of the Merger: (i) a merger, consolidation, business
combination, sale of assets or similar transaction involving the Company
pursuant to which the Shares outstanding immediately before the transaction will
represent less than 50% of the equity interests of the surviving or resulting
entity or (ii) the acquisition by any person or group (including by way of a
tender offer or an exchange offer or a two step transaction involving a tender
offer followed with reasonable promptness by a merger), directly or indirectly,
of ownership of 100% of the outstanding shares of the Company's capital stock;
however, an offer will not be considered a "superior proposal" if any financing
required to consummate the proposed transaction is not committed and is not
likely, in the reasonable judgment of the Company's
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Board of Directors (after consultation with its financial advisor) to be
obtained on a timely basis. Nothing in the Merger Agreement prohibits the
Company or its Board of Directors from taking and disclosing to the Company's
shareholders a position contemplated by Rules 14d-9 and 14e-2(a) under the
Exchange Act.
Compuware has agreed to cause all Shares purchased pursuant to the Offer
and all other Shares owned by Purchaser or any other Compuware subsidiary to be
voted in favor of the Merger.
Directors. Upon consummation of the Offer, provided that Purchaser has
purchased more than 50% of the then outstanding Shares, Purchaser may designate
a number of persons to be elected or appointed to the Company's Board of
Directors so that the percentage of board members designated by Purchaser
(rounded up to the next whole number) is equal to the percentage of Shares
purchased by Purchaser in connection with the Offer. Thereafter (until the
Merger is consummated), the Company may not amend or terminate the Merger
Agreement, extend or waive Purchaser's or Compuware's performance or obligations
under the Merger Agreement or exercise or waive the Company's rights under the
Merger Agreement without a concurrence of a majority of the directors then in
office who are currently members of the Company's Board of Directors or who
subsequently become members but are not designated by Purchaser.
Conduct of Business Pending the Merger. Pursuant to the Merger Agreement,
the Company has agreed to carry on the business of the Company and its
subsidiaries in the ordinary course and to use its reasonable efforts to
preserve intact their current business organization, to keep available the
services of their current officers and employees and to preserve relations with
distributors, licensors, contractors, customers, suppliers, lenders, employees
and others having business dealings with any of them. The Merger Agreement
provides that, except as permitted by the terms of the Merger Agreement (or as
set forth in a disclosure letter provided by Viasoft in connection with the
Merger Agreement), neither the Company nor any subsidiary will do any of the
following, without the prior written consent of Compuware:
(i) declare, set aside or pay any dividends on or make any other
distributions in respect of any of its capital stock (other than by any
wholly-owned subsidiary of the Company to its Compuware or, in the case of
less than wholly-owned subsidiaries as required by agreements existing as
of the Merger Agreement) or split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for any of its capital stock or purchase,
redeem or otherwise acquire any shares of its capital stock or any of its
subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities, other than the
issuance of Shares, pursuant to the exercise of stock options outstanding
under the Company's Stock Option Plans as of the date of the Merger
Agreement and in accordance with their present terms, and pursuant to the
Company's employee stock purchase plan;
(iii) with certain exceptions, amend its articles of incorporation,
by-laws or other charter documents;
(iv) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
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 and its
subsidiaries as a whole except purchases of inventory in the ordinary
course of business consistent with past practice;
(v) sell, lease, license, mortgage or otherwise encumber or subject to
any pledge, claim, charge, encumbrance, security interest or lien or
otherwise dispose of any of its properties or assets (including
intellectual property) except in the ordinary course of business consistent
with past practice;
(vi) incur any indebtedness for borrowed money or draw down on any
credit facility or arrangement or guarantee any indebtedness of another
person, issue or sell any debt securities or warrants or rights to
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acquire debt securities, or guarantee any debt securities of others, enter
into any "keep well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing or make any loans, advances or
capital contributions to, or investments in, any other person, other than
any subsidiary of the Company;
(vii) make or agree to make any new capital expenditure(s) which
individually is in excess of $100,000 or which in the aggregate are in
excess of $500,000;
(viii) make any material tax election or settle or compromise any
income or franchise tax liability;
(ix) with certain exceptions, pay, discharge, settle or satisfy any
material claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge,
settlement or satisfaction, in the ordinary course of business consistent
with past practice or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the most recent
consolidated financial statements (or notes thereto) of the Company
included in documents filed with the Securities and Exchange Commission or
incurred since the date of such financial statements in the ordinary course
of business consistent with past practice in accordance with the terms of
the Merger Agreement;
(x) except as expressly contemplated by the Merger Agreement, waive,
release or assign any rights or claims under any contract or agreement
binding on the Company or any subsidiary, or, except as expressly
contemplated by the Merger Agreement or in the ordinary course of business
consistent with past practice, enter into, modify, amend or terminate any
contract or agreement binding on the Company or any subsidiary, or, in any
event, enter into any contract or agreement binding on the Company or any
subsidiary which would be in conflict with the Merger Agreement or the
transactions contemplated therein;
(xi) with certain exceptions, terminate or lay off more than five
employees other than for cause consistent with past practice;
(xii) with certain exceptions, adopt or amend in any material respect
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, waive any stock repurchase rights,
accelerate, amend or change the period of exercisability of or authorize
cash payments in exchange for any stock options or otherwise alter or
commit to any compensation, benefit or severance arrangement for or with
any officer or employee of the Company or enter into any related or
interested party transaction;
(xiii) with certain exceptions, grant or provide any severance or
termination pay as to any officer or employee (except payments pursuant to
written plans or arrangements outstanding of the date of the Merger
Agreement and disclosed in connection therewith);
(xiv) take any actions (including seeking any corporate approvals)
directed toward seeking to liquidate or dissolve the Company or to take
advantage of bankruptcy or any other creditor protection laws or that would
or are reasonably likely to render the Company insolvent or to cause it to
become involved in bankruptcy proceedings, including soliciting creditor
arrangements or moratoria;
(xv) except as disclosed in connection with the Merger Agreement,
institute any litigation or other proceeding;
(xvi) take any action that might cause or constitute a breach of any
representation or warranty made by the Company in the Merger Agreement;
(xvii) other than the Rights Plan, enter into any "rights agreement,"
"poison pill" or similar plan, agreement or any arrangement or take or
permit any other action that could affect the capitalization of
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the Company or the issuance of capital stock by the Company which would be
triggered by the Offer, the Merger, the Merger Agreement or any transaction
contemplated thereby; or
(xviii) authorize any of, or commit or agree to take any of, the
foregoing actions.
Further, the Company and Compuware have agreed not to, and not to permit
any of their respective subsidiaries to, knowingly and willfully, take
deliberate action (i) that would cause any of their representations and
warranties set forth in the Merger Agreement to become untrue in such a manner,
with respect to the Company, as would have a Material Adverse Effect or to
become untrue, with respect to Compuware, in any material respect as of the date
when made, or (ii) that would cause any of the conditions to the Offer or to the
Merger not being satisfied (subject to the Company's right to take action
consistent with the provisions described below in "No Solicitation"). "Material
Adverse Change" or "Material Adverse Effect" with respect to the Company means
any change or effect that is or would be materially adverse to the Company and
its subsidiaries, taken as a whole, taking into account the business,
properties, assets, employees, financial condition or results of operations of
the Company and its subsidiaries, excluding those changes, effects and
developments that directly result from the announcement of the Offer or the
Merger, any act or omission of Compuware or Purchaser, general economic
conditions or conditions generally affecting the industry in which the Company
competes (provided that such conditions do not adversely affect the Company
disproportionately). In any litigation regarding this definition where the
principal change or effect at issue involves the termination for any reason of
the employees of the Company or any of its subsidiaries, the Company will have
the burden of proving by clear and convincing evidence that the adverse effect
in question directly resulted from announcement of the Offer or the Merger or an
act or omission of Compuware or Purchaser.
No Solicitation. The Company has agreed that, until the earlier of the
closing of the Merger or termination of the Merger Agreement in accordance with
its terms, the Company will not itself, nor permit any of its subsidiaries to,
and will not authorize or permit any officer, director or employee of the
Company or any of its subsidiaries or any investment banker, attorney or other
adviser or representative of the Company or any of its subsidiaries to, directly
or indirectly, (i) solicit, initiate or encourage submission of any "takeover
proposals" (as defined below), or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any non-public Company
information with respect to, or enter into any agreement with respect to, or
take any other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any takeover
proposal, except as set forth below. Under the Merger Agreement, a "Takeover
Proposal" means any offer or proposal relating to any transaction or series of
related transactions (other than the transactions contemplated by the Merger
Agreement) involving (i) any acquisition from the Company by any person or group
of more than a 10% interest in the total outstanding voting securities of the
Company or any of its subsidiaries or any tender offer or exchange offer that
would result in any person or group owning more than such 10% interest or any
merger, consolidation, business combination or similar transaction involving the
Company pursuant to which the shareholders of the Company immediately before the
transactions hold less than 90% of the equity interest of the surviving or
resulting entity; (ii) any sale, lease (other than in the ordinary course of
business), exchange, transfer, license (other than in the ordinary course of
business), acquisition or disposition of more than 10% of the Company's assets;
or (iii) any liquidation or dissolution of the Company. The Company has also
agreed that the Company, its subsidiaries, officers, directors, employees,
investment bankers, attorneys and other agents and representatives will
immediately cease any existing activities, discussions or negotiations with any
parties conducted previously regarding a takeover proposal.
In addition, the Company has agreed to promptly advise Compuware orally and
in writing of any request for information, takeover proposal, or inquiry with
respect to or which is expected to lead to any takeover proposal, the material
terms and conditions thereof, and the identity of the person making such
request, takeover proposal or inquiry.
Notwithstanding the foregoing, the Merger Agreement provides that the
Company is not prohibited from furnishing non-public information regarding the
Company and its subsidiaries to, or entering into discussions or negotiations
with, any person or group who has submitted (and not withdrawn) to the Company
an unsolicited, written, bona fide takeover proposal that the Company's Board of
Directors reasonably concludes
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(after consultation with its financial advisor) may constitute a superior
proposal (as defined above) provided that (i) neither the Company nor any
representative of the Company and its subsidiaries have violated the non
solicitation provisions of the Merger Agreement, (ii) the Company's Board of
Directors concludes in good faith, after consultation with its outside legal
counsel, that such action is required in order for the Company's Board of
Directors to comply with its fiduciary obligations to the Company's shareholders
under applicable law, (iii) the Company gives Compuware prior written notice of
the identity of the person or group in question, of all of the material terms
and conditions of the takeover proposal and of the Company's intention to
furnish information to or enter into discussions or negotiations with that
person or group, (iv) the Company has obtained a signed confidentiality
agreement from the person or group containing terms at least as restrictive as
the Company's confidentiality agreement with Compuware and (v) contemporaneously
with furnishing any information to the person or group, the Company furnishes
the same information to Compuware (unless it has previously done so).
Access. Pursuant to the Merger Agreement, from the date of the Merger
Agreement until the Merger is consummated, the Company will, and will cause its
subsidiaries to, afford Compuware with reasonable access during normal business
hours to their properties, books, contracts, commitments, personnel and records
and shall furnish or promptly make available to Compuware a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of federal or state securities laws, and all
other information concerning its business, properties and personnel as Compuware
may reasonably request. Compuware has agreed that, except as required by law or
the rules and regulations of the Nasdaq National Market, Compuware will hold,
and will cause its officers, employees, representatives and affiliates to hold,
in confidence any confidential information in accordance with the
Confidentiality Agreement (described under "Confidentiality Agreement" below).
Indemnification; Shareholder Litigation. Compuware has agreed to fulfill
and honor, and cause the Surviving Corporation to fulfill and honor in all
respects the obligations of the Company pursuant to any indemnification
agreements between the Company and any of its subsidiaries and their respective
directors and officers existing prior to the Merger Agreement. From and after
the Merger, such obligations will be the joint and several obligations of
Compuware and the Surviving Corporation, and Compuware will assume such
obligations. Notwithstanding the foregoing, Compuware and Purchaser will have no
obligation to indemnify the Company, any subsidiary or any of their respective
directors and officers in respect of claims, liabilities or damages arising out
of a breach knowingly and willfully caused by the indemnified party of a
representation or covenant made by the Company in the Merger Agreement.
Compuware has agreed to cause the Company's current directors' and officers'
insurance and indemnification policy or alternative coverage to be maintained
for a period of not less than two years after the Merger, so long as the annual
premium therefor would not be in excess of 150% of the amount per annum paid by
the Company for such coverage in its last fiscal year prior to the Merger. The
certificate of incorporation and bylaws of the Surviving Corporation will
contain the same provisions with respect to indemnification and elimination of
liability for monetary damages as are set forth in the articles of incorporation
and bylaws of the Company, which provisions will not be amended, repealed or
otherwise modified after the Merger in any manner that would adversely affect
the rights of the individuals who, on the date of the Merger Agreement or at any
time from that date to the date of the Merger, were directors, officers,
employees or agents of the Company or its subsidiaries, unless required by law.
The indemnification and exculpation obligations described above will
survive the termination of the Merger Agreement and the consummation of the
Merger and will be binding on all successors and assigns of Compuware or the
Surviving Corporation. If Compuware, the Surviving Corporation or any of their
successors or assigns consolidates with or merges into any other person and is
not the surviving corporation, then proper provision must be made so that the
successors or assigns assume the obligations described above.
If any shareholder litigation is brought against the Company and its
directors and officers relating to any of the transactions contemplated by the
Merger Agreement, then (i) until the purchase of Shares pursuant to the Offer is
consummated, the Company will give Compuware the opportunity to participate in
the defense or settlement of the litigation and (ii) thereafter, the Company
will give Compuware the opportunity to direct the defense of the litigation (in
which case, Compuware will give the Company and its directors and officers the
opportunity to participate in the litigation). No settlement of such litigation
may be made without
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<PAGE> 10
Compuware's consent, which will not be unreasonably withheld. No settlement of
such litigation requiring payment by an officer, director or other
representative will be agreed upon without such person's consent.
Reasonable Efforts, Notification. The Merger Agreement provides that,
subject to its terms and conditions, each of the parties thereto agrees to use
its reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to use its reasonable efforts to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer, the Merger and the other transactions contemplated by
the Merger Agreement. Among other things, the Merger Agreement specifies the
following actions: (i) obtaining all necessary consents, approvals, waivers,
actions and nonactions from any federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental Entity"), and the
making of all necessary registrations and filings and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by, any Governmental Entity, (ii) obtaining all
necessary waivers, consents and approvals from third parties, (iii) defending
any lawsuits or other legal proceedings challenging the Merger Agreement or the
consummation of the transactions contemplated thereby and (iv) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by the Merger Agreement. In particular, the Company has agreed that
the Company and its Board of Directors will to take all action necessary to
ensure that no state takeover statute or similar statute or regulation is or
becomes applicable to the Offer, the Merger, the Merger Agreement or any other
transaction contemplated by the Merger Agreement. Further, the Company has
agreed that if any state takeover statute or similar statute or regulation
becomes applicable to such transactions, it and its Board of Directors will take
all action necessary to ensure that such transactions may be consummated as
promptly as practicable on the terms contemplated by the Merger Agreement and
otherwise to minimize the effect of such statute or regulation on such
transactions.
Each of the Company and Compuware is obligated to give prompt notice to the
other of any material representation or warranty made by it in the Merger
Agreement or the failure to comply with or satisfy in any material respect any
covenant, condition or agreement under the Merger Agreement.
Rights To Receive Shares. The Merger Agreement provides that each right to
receive Shares other than (i) the Rights, (ii) the terms of securities
convertible into or exercisable for Shares which provide otherwise, or (iii) as
otherwise provided in the Merger Agreement, is automatically converted, upon the
Merger, into the right to receive from the Company a cash payment equal to the
Offer Price per Share, without interest.
Expenses. Each party to the Merger Agreement will bear its own expenses in
connection with the Offer, the Merger, the Merger Agreement and the transactions
contemplated by the Merger Agreement, whether or not the Offer is consummated
except that (i) if the Merger Agreement is terminated by Compuware in certain
circumstances, the Company will pay all reasonable legal, accounting and
investment banking fees and expenses incurred by Compuware up to $500,000 and
(ii) if the agreement is terminated by the Company in certain circumstances,
Compuware will pay all reasonable legal, accounting and investment banking fees
and expenses incurred by the Company up to $500,000. See "Termination" below.
Representations And Warranties. The Merger Agreement contains customary
representations and warranties of the parties thereto including, without
limitation, representations by the Company as to the Company's organization and
capitalization, authority and enforceability, absence of conflicts, required
filings and consents, SEC documents and financial statements, the absence of
certain changes or events concerning the Company's business, the Company's
intellectual property, litigation, employee benefit plans, taxes, compliance
with applicable laws, environmental matters, applicability of state takeover
laws, brokers, material contracts and agreements, real property and leases,
labor matters, customer relationships and obligations, and product and service
quality.
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<PAGE> 11
Conditions To The Merger.
(i) Under the Merger Agreement, the respective obligations of each party to
effect the Merger are subject to the satisfaction or waiver on or prior to the
closing of the Merger of the following conditions:
(a) if required by applicable law, the Merger shall have been approved
by the requisite vote of the shareholders of the Company;
(b) any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") shall have expired or been
terminated; and
(c) no temporary restraining order, preliminary or permanent
injunction, judgment or other order, decree or ruling nor any statute,
rule, regulation or executive order shall be in effect which would (1) make
the acquisition or holding by Compuware or its affiliates of Shares or
shares of Common Stock of the Surviving Corporation illegal or otherwise
prevent the consummation of the Merger, (2) prohibit Compuware's or
Purchaser's ownership or operation of, or compel Compuware or Purchaser to
dispose of or hold separate, all or a material portion of the business or
assets of Purchaser, the Company or any subsidiary thereof, (3) compel
Compuware, Purchaser or the Company to dispose of or hold separate all or a
material portion of the business or assets of Compuware or any of its
subsidiaries or the Company or any of its subsidiaries, (4) impose material
limitations on the ability of Compuware or Purchaser or their affiliates
effectively to exercise full ownership and financial benefits of the
Surviving Corporation, or (5) impose any material condition to the Merger
Agreement or the Merger, which would be adverse to Compuware.
(ii) In addition, the obligations of Compuware and Purchaser to effect the
Merger are further subject to:
(a) the accuracy of the Company's representations and warranties in
the Merger Agreement in all material respects as of the closing date of the
Merger;
(b) the performance in all material respects by the Company of each of
its covenants and obligations under the Merger Agreement;
(c) the absence of a Material Adverse Change in the Company or an
event that is reasonably likely to result in a Material Adverse Effect to
the Company;
(d) the absence of any pending or overtly threatened suit, action or
proceeding brought by any Governmental Entity (or recommended by the staff
of the Federal Trade Commission (the "FTC"), or the Antitrust Division of
the Department of Justice by any shareholder (but only if Compuware deems
such shareholder suit, action or proceeding to have a reasonable likelihood
of success) or by any other person, directly or indirectly, (1) challenging
Compuware's or Purchaser's acquisition of Shares, seeking to restrain or
prohibit consummation of the Offer, the Merger or any other transaction
contemplated by the Merger Agreement or alleging that such acquisition or
other transaction relates to, involves or constitutes a breach of fiduciary
duty by the Company's directors or a breach of the securities laws or
corporate law, (2) seeking to prohibit or limit the Company's, Compuware's
or Purchaser's ownership of a material portion of the business or assets of
the Company and its subsidiaries or of Compuware and its subsidiaries or to
compel the Company or Compuware to dispose of or hold separate any material
portion of the business or assets of the Company and its subsidiaries,
taken as a whole, or Compuware and its subsidiaries, taken as a whole, as a
result of the Offer or any of the other transactions contemplated by the
Merger Agreement, (3) seeking to impose material limitations on the ability
of Purchaser or Compuware to acquire, hold or exercise full ownership
rights of all the Shares purchased in the Offer, (4) seeking to prohibit
Compuware or any of its subsidiaries from effectively managing or
controlling in any material respect the business or operations of the
Company and its subsidiaries or (5) seeking to impose a material condition
on the Offer, the Merger or the Merger Agreement which would be adverse to
Compuware; and
(e) all third party consents needed to avoid causing a Material
Adverse Effect on the Company having been obtained.
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<PAGE> 12
Notwithstanding the foregoing, the only conditions to Compuware's and
Purchaser's obligation to effect the Merger by means of a short-form merger if
Purchaser owns at least 90% of the Company's then outstanding Shares and no
approval is required of the Company's shareholders would be the conditions set
forth in (i)(b) and (i)(c) above.
(iii) In addition to the conditions to each party's obligation described
above, the obligation of the Company to effect the Merger is further subject to:
(a) the accuracy of Compuware's and Purchaser's representations and
warranties in the Merger Agreement in all material respects as of the
closing date of the Merger; and
(b) the performance in all material respects by Compuware and
Purchaser of each of their respective covenants and obligations under the
Merger Agreement.
Termination. The Merger Agreement may be terminated, and the Merger may be
abandoned, at any time prior to the closing of the Merger:
(i) by mutual written consent of Compuware and the Company (duly
authorized by their respective Boards of Directors);
(ii) by Compuware or the Company (a) if the Merger is not consummated
on or before January 31, 2000 (except that a party may not terminate the
Merger Agreement on this basis if that party's action or failure to act is
a principal cause of, or resulting in the failure of, the Merger to occur
on or before January 31, 2000 and such action or failure to act constitutes
a breach of the Merger Agreement, (b) if any Governmental Entity shall have
taken any action permanently enjoining, restraining or otherwise
prohibiting the Merger and such action shall have become final and
nonappealable or (c) if any required approval of the Company's shareholders
is not obtained due to the failure to obtain the required vote at a duly
convened shareholders meeting (except that the Company may not terminate
the Merger Agreement on this basis if the failure to obtain such
shareholder approval is caused by the Company's action or failure to act in
breach of the Merger Agreement or by a breach of the Shareholder Tender and
Voting Agreement by any party thereto other than Compuware),
(iii) by Compuware if (a) the Company's Board of Directors or any
committee thereof shall have failed to recommend either the Offer or the
approval by the Company's shareholders of the Merger or the Merger
Agreement or shall have failed to reaffirm such recommendation within two
business days after being requested to do so or shall have withdrawn or
modified such recommendation (or resolved to do so) in a manner adverse to
Compuware or Compuware, (b) the Company's Board of Directors or a committee
thereof shall have recommended another takeover proposal (or resolved to do
so), (c) the Company shall have entered into a letter of intent, agreement
or commitment with respect to a takeover proposal (or the Company's Board
of Directors or a committee thereof shall have resolved to do so) or (d) a
tender offer or exchange offer for securities of the Company shall have
been commenced (by a person unaffiliated with Compuware) and the Company
shall not have sent a statement to its shareholders (pursuant to Rule 14e-2
under the Exchange Act) within ten business days disclosing that the
Company recommends rejection of that offer;
(iv) by Compuware, if any of the Company's representations and
warranties in the Merger Agreement are not true in any material respect as
of the date of the Merger Agreement or thereafter or if the Company shall
have breached or failed to perform in any material respect any obligation,
agreement or covenant, except that if any such breach or failure (other
than a breach of the non solicitation provisions of the Merger Agreement,
the provisions regarding obtaining shareholder approval, or any other
breach that has caused irreparable harm, which may not be cured) is curable
by the Company through reasonable efforts, then Compuware may not terminate
the Merger Agreement under this subparagraph unless the matter has not been
cured within ten business days after Compuware has given written notice of
the breach or failure to the Company;
(v) by the Company, if any of Compuware's representations and
warranties in the Merger Agreement are not true in any material respect as
of the date of the Merger Agreement or thereafter or if
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<PAGE> 13
Purchaser or Compuware shall have breached or failed to perform in any
material respect any obligation, agreement or covenant, except that if any
such breach or failure (other than a breach that caused irreparable harm,
which may not be cured) is curable by Purchaser or Compuware through
reasonable efforts, then the Company may not terminate the Merger Agreement
under this subparagraph unless the matter has not been cured within ten
business days after the Company has given written notice of the breach or
failure to Purchaser and Compuware;
(vi) by the Company, if the Board of Directors of Viasoft shall have
withheld, withdrawn, modified or amended its recommendation in favor of the
Merger Agreement, the Offer, the Merger or the approval of the Company's
shareholders as permitted under the Merger Agreement and shall have
authorized the Company to enter into an agreement with a third party with
respect to a superior proposal; or
(vii) by the Company, if (a) Compuware or Purchaser shall have failed
to commence the Offer on or prior to 5 business days following the date of
the initial public announcement of the Offer or shall have terminated the
Offer, or (b) the Offer expires without Compuware or Purchaser purchasing
Shares pursuant thereto; provided that the Company may not terminate the
Merger Agreement under the preceding clauses (a) or (b) if the Company is
then in material breach of the Merger Agreement.
If the Merger Agreement is terminated in accordance with the above
provisions, then no party will have any liability to the others under the
agreement except as indicated below:
(A) If termination results from a party's breach of its
representations, warranties, covenants or agreements in the Merger
Agreement, the breaching party may be liable for damages for such breach;
(B) If the Merger Agreement is terminated by Compuware as a result of
any of the events described in (iii) above, or by the Company as a result
of any of the events described in (vi) above (in both cases regarding
certain action or inaction by the Company's Board of Directors or a
committee thereof), the Company must pay Compuware within two business days
after such termination a $5,500,000 fee;
(C) If (a) the Merger Agreement is terminated (x) by Compuware because
the January 31, 2000 deadline referred to in (ii)(a) above is not met, (y)
by Compuware because any of the Company's representations and warranties
are untrue, or because of a breach or failure of the Company to perform, as
described in (iv) above, or (z) by Compuware or the Company because the
required shareholder approval is not obtained as provided in (ii)(c) above,
and (b) before the termination a third party has publicly announced a
takeover proposal which, if consummated, would constitute an Acquisition
Event (as defined below), and (c) within 12 months after the termination,
an Acquisition Event is consummated or the Company enters into an agreement
for an Acquisition Event, then the Company will be required to pay
Compuware a $5,500,000 fee; provided, however, that the fee would be
reduced to $2,000,000 if the Acquisition Event provides for consideration
per Share less than Compuware's Offer Price but more than $6 11/32 (the
closing price per Share on the last trading day before the public
announcement of the signing of the Merger Agreement); and, provided,
further, that if the Acquisition Event provides for consideration per Share
equal to or less than $6 11/32, no fee will be payable. For the purposes of
the Merger Agreement, an "Acquisition Event" means (1) a merger or other
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company pursuant to which the Company's
shareholders immediately before the transaction hold less than 50% of the
aggregate equity interest of the surviving corporation, (2) a sale of
assets representing more than 50% of fair market value of the Company's
business or (3) the acquisition by any person or group, directly or
indirectly, of beneficial ownership or a right to acquire such ownership of
shares representing more than 50% of the voting power of the Company's
outstanding capital stock.
(D) If the Merger Agreement is terminated by Compuware as a result of
any of the events described in (iii) above, or because any of the Company's
representations and warranties are untrue or because of a breach or failure
of the Company to perform its agreements therein as described in (iv)
above, then the Company must pay promptly Compuware's reasonable legal,
accounting and investment banking fees up to $500,000.
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<PAGE> 14
(E) If the Merger Agreement is terminated by the Company because any
of Compuware's representations or warranties are untrue or because of a
breach or failure of Purchaser or Compuware to perform their agreements
therein, as described in (v) above, then Compuware must pay promptly the
Company's reasonable legal, accounting and investment banking fees up to
$500,000.
Termination of the Merger Agreement will not affect the parties' respective
obligations under the Confidentiality Agreement described below as to certain
information provided in connection with the matters referred to herein.
Amendment And Waiver. The Merger Agreement may be amended at any time
without the approval of the Company's shareholders, unless such approval is
required by law. The Merger Agreement may be amended only by a written
instrument signed by each of the parties.
Before the Merger, the parties may extend the time for the performance of
any party's obligations under the Merger Agreement, may waive any inaccuracies
in the representations or warranties in the Merger Agreement or in any document
delivered in connection with that agreement and, subject to any shareholder
approval required by law, may waive compliance with any covenant or condition in
that agreement. Any such extension or waiver by a party must be set forth in a
written instrument signed by that party.
Post Merger Employment Benefits. Employees of the Company who become
employed by Compuware or any subsidiary thereof after the Merger will become
eligible to participate in the same standard employee benefit plans as are
generally available to similarly situated Compuware employees and will receive
credit for all service with the Company for the purposes of any "employee
benefit plan" (as defined in Section 3(3) of ERISA). The Company may, if
requested to do so by Compuware and to the extent permitted by law, terminate
its employee plans immediately prior to the Merger. Promptly following the
Merger, Compuware will evaluate, in light of the equity incentive compensation
provided to similarly situated employees of Compuware, the equity incentive
compensation of Company employees who become employees of Compuware or any of
its subsidiaries after the Merger. If deemed appropriate by Compuware in its
sole discretion, Compuware will make grants of equity incentive compensation to
those employees.
Dividends And Distributions. The Merger Agreement provides that the
Company will not, between the date of the Merger Agreement and the Merger,
without the prior written consent of Compuware, declare or pay any dividends on
or make any other distributions 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.
Conditions to the Offer. The Merger Agreement provides that,
notwithstanding any other provision of the Offer or the Merger Agreement, and in
addition to (and not in limitation of) Purchaser's rights to extend and amend
the Offer (subject to certain limitations), Purchaser will not be required to
accept for payment, purchase or pay for (subject to the rules of the Securities
and Exchange Commission, including Rule 14e-1(c) under the Exchange Act, which
applies to Purchaser's obligation to pay for or return tendered Shares) any
Shares tendered pursuant to the Offer unless more than 50% of the Shares
outstanding, on a fully diluted basis, at the close of business on the business
day immediately preceding the day on which the Offer expires or terminates have
been validly tendered and not withdrawn and any waiting period (and any
extension thereof) under the HSR Act applicable to the purchase of Shares
pursuant to the Offer has expired or been terminated.
In addition, notwithstanding any other provision of the Offer or the Merger
Agreement, Purchaser will not be required to accept for payment (subject to the
Securities and Exchange Commission's rules) and pay for any Shares not
theretofore accepted for payment and paid for, and may terminate or amend the
Offer, or if, upon the scheduled expiration date of the Offer (as extended, if
applicable), and before acceptance of the Shares for payment or payment
therefor, any of the following conditions exists and is continuing:
(i) there shall be pending any suit, action or proceeding brought by
or on behalf of any Governmental Entity (or the staff of the FTC or the
Antitrust Division of the Department of Justice shall have recommended the
commencement of such), any shareholder of the Company or any other person
or party (but only if such shareholder suit, action or proceeding is deemed
by Compuware to have a
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<PAGE> 15
reasonable likelihood of success), directly or indirectly, (a) challenging
the acquisition by Compuware or Purchaser of any Shares, seeking to
restrain or prohibit the making or consummation of the Offer or the Merger
or the performance of any of the other transactions contemplated by the
Merger Agreement, or alleging that any such acquisition or other
transaction relates to, involves or constitutes a breach of fiduciary duty
by the Company's directors or a violation of federal securities law or
applicable corporate law, (b) seeking to prohibit or limit the ownership or
operation by the Company, Compuware or any of their respective subsidiaries
of a material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Compuware and its subsidiaries, taken as
a whole, or to compel the Company or Compuware to dispose of or hold
separate any material portion of the business or assets of the Company and
its subsidiaries, taken as a whole, or Compuware and its subsidiaries,
taken as a whole, as a result of the Offer or any of the other transactions
contemplated by the Merger Agreement, (c) seeking to impose material
limitations on the ability of Compuware or Purchaser to acquire or hold, or
to exercise full rights of ownership of, any of the Shares accepted for
payment pursuant to the Offer, (including without limitation the right to
vote any such Shares on all matters properly presented to the shareholders
of the Company), (d) seeking to prohibit Compuware or any of its
subsidiaries from effectively managing or controlling in any material
respect the business or operations of the Company and its subsidiaries
taken as a whole or (e) seeking to impose a material condition to the
Offer, the Merger Agreement or the Merger which would be materially adverse
to Compuware;
(ii) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
Governmental Entity or court (other than the applicable waiting period
under the HSR Act referred to above) that is reasonably likely to result in
any of the consequences referred to in (a) through (e) of paragraph (i)
above; or
(iii) there shall have occurred any Material Adverse Change (as
defined above) in the Company and its subsidiaries taken as a whole or any
event that is reasonably likely to result in a Material Adverse Effect (as
defined above) in the Company and its subsidiaries taken as a whole;
(iv) (a) the Company's Board of Directors or any committee of the
Board shall have failed to recommend either the Offer or the approval by
the Company's shareholders of the Merger or the Merger Agreement or shall
have failed to reaffirm such recommendation within two business days after
being requested to do so or shall have withdrawn or modified such
recommendation (or resolved to do so) in a manner adverse to Compuware or
Purchaser, (b) the Company's Board of Directors or a committee of the Board
shall have recommended another takeover proposal (or resolved to do so),
(c) the Company shall have entered into a letter of intent, agreement or
commitment with respect to a takeover proposal (or the Company's Board of
Directors or a committee of the Board of Directors shall have resolved to
do so) or (d) a tender offer or exchange offer or securities of the Company
shall have been commenced (by a person unaffiliated with Compuware) and the
Company shall not have sent a statement to its securityholders (pursuant to
Rule 14e-2 under the Exchange Act) within ten business days disclosing that
the Company recommends rejection of that offer;
(v) any representation or warranty of the Company in the Merger
Agreement shall have failed to be true and correct, in any material
respect, as of the date of the Merger Agreement or shall have ceased to be
true and correct in any material respect at any time thereafter; or
(vi) the Company shall have breached, or failed to perform, in any
material respect, any obligation or to comply in any material respect with
any agreement or covenant of the Company to be performed or complied with
by it, except that, if any such breach or failure (other than a breach of
the non-solicitation provisions or the provisions for obtaining shareholder
approval referred to above or any other breach that has caused irreparable
harm, which may not be cured) is curable by the Company through the
exercise of reasonable efforts, then Compuware may not terminate the Offer
until ten business days after Compuware or Purchaser has given written
notice thereof to the Company and unless at such time the matter has not
been cured;
(vii) the Merger Agreement shall have been terminated in accordance
with its terms;
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<PAGE> 16
(viii) there shall have occurred (a) any general suspension of trading
in, or limitation on prices for, securities on the Nasdaq National Market,
(b) the declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States (whether or not mandatory), (c)
the commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States and
having a Material Adverse Effect or materially adversely affecting (or
materially delaying) the consummation of the Offer, (d) any limitation or
proposed limitation (whether or not mandatory) by any U.S. governmental
authority or agency, or any other event, that materially adversely affects
generally the extension of credit by banks or other financial institutions,
or (e) in the case of any of the situations described in clauses (a)
through (d) inclusive existing at the date of commencement of the Offer, a
material escalation or worsening thereof;
(ix) any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act), other than Purchaser, any of its
affiliates or any group of which any of them is a member, (a) shall have
acquired beneficial ownership of more than 10% of the outstanding Shares
(unless Purchaser acquires more than 50% of the Shares outstanding at the
expiration or termination of the Offer, as provided above); (b) shall have
entered into a definitive agreement or an agreement in principle with the
Company with respect to a tender offer or exchange offer for any Shares or
merger, consolidation or other business combination with or involving the
Company or any of its subsidiaries or (c) shall have otherwise announced a
tender offer with respect to Shares of Company Common Stock (unless
Purchaser acquires more than 50% of the Shares outstanding at the
expiration or termination of the Offer, as provided above);
(x) any bankruptcy proceedings shall have been instituted with respect
to the Company and not dismissed;
(xi) any third party consents which if not obtained would have a
Material Adverse Effect on the Company shall not have been obtained;
which, with respect to each condition listed in (i) through (xi) above, in the
sole judgment of Purchaser or Compuware, and regardless of the circumstances
giving rise to any such condition (other than any action or inaction by
Compuware or any of its subsidiaries which constitutes a breach of the Merger
Agreement), makes it inadvisable to proceed with acceptance of the tendered
Shares for payment or payment therefor.
The Merger Agreement provides that the foregoing conditions are for the
sole benefit of Compuware, Purchaser and their affiliates and may be asserted by
Compuware or Purchaser regardless of the circumstances giving rise to such
condition (other than any action or inaction by Compuware or any of its
subsidiaries which constitutes a breach of the Merger Agreement) and may be
waived (except for the Minimum Tender Condition) by Compuware or Purchaser in
whole or in part at any time and from time to time in the sole discretion of
Compuware or Purchaser. The failure by Compuware or Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right; the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver of any such rights with respect to
other facts and circumstances; and each right shall be deemed an ongoing right
that may be asserted at any time and from time to time.
(b)(3) Confidentiality Agreement.
On June 2, 1999, the Company and Compuware entered into a Confidentiality
Agreement ("Confidentiality Agreement"), a copy of which is filed as Exhibit 8
to this Statement. Certain portions of the Confidentiality Agreement are
summarized in this Section. This summary is qualified in its entirety by
reference to the Confidentiality Agreement itself.
Pursuant to the Confidentiality Agreement, the Company and Compuware agreed
to provide among other things, for the confidential treatment of their
discussions regarding a possible transaction and the exchange of certain
confidential information concerning the Company and Compuware. The
Confidentiality Agreement also provides that for a period of two years neither
Viasoft nor Compuware will solicit for employment any employee of the other
party who became known to Viasoft or Compuware, as the case may be, in
connection with consideration of a possible transaction. The Confidentiality
Agreement further provides
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that, for a period of one year from the date thereof, neither the Company nor
Compuware (nor any of their respective affiliates) will, without the prior
written consent of the other party, (i) acquire or offer or agree to acquire,
directly or indirectly, any voting securities or assets of the other party or
its subsidiaries or certain affiliates, (ii) make or in any way seek to
participate in, directly or indirectly, any solicitation of proxies to vote, or
seek to advise or influence any person with respect to voting, any securities of
the other party, (iii) form, join or participate in a group with respect to any
voting of the other party's securities, (iv) otherwise act or seek to control or
influence the management, board of directors or policies of the other party, (v)
make any public announcement with respect to, or submit a proposal for, or offer
of, any extraordinary transaction involving the other party or its securities or
assets, (vi) take any action that might require the other party to make a public
announcement regarding the possibility of a business combination or merger, or
(vii) request the other party to amend or waive any of the foregoing provisions.
(b)(4) Rights Plan Amendment.
Prior to the execution and delivery of the Merger Agreement, the Company's
Board of Directors approved an Amendment dated as of July 14, 1999 to the Rights
Agreement between the Company and Harris Trust and Savings Bank, as rights agent
("Rights Plan Amendment"), a copy of which is filed as Exhibit 9 to this
Statement. Certain portions of the Rights Plan Amendment are summarized in this
Section. This summary is qualified in its entirety by reference to the Rights
Plan Amendment itself.
The Rights Plans Amendment provides, among other things, that no person
shall be or become an Acquiring Person (as defined in the Rights Plan) by reason
of the execution and delivery of the Merger Agreement, the Shareholder Agreement
or any amendment thereto, or any purchase of Shares pursuant to the Offer. The
Rights Plan Amendment also provides that the time period during which Rights may
be exercised by the registered holder thereof following the Distribution Date
(as defined in the Rights Plan) will expire on the earliest of (i) the earlier
of (1) the consummation of the Offer or (2) the close of business on the Final
Expiration Date (as defined in the Rights Plan), or (ii) the time at which the
right to exercise the Rights otherwise terminates pursuant to the Rights Plan.
The Rights Plan Amendment further provides that a Shares Acquisition Date (as
defined in the Rights Plan) shall not be deemed to have occurred solely by
reason of the public announcement, public disclosure, execution and delivery or
amendment of the Offer, the Merger, the Merger Agreement or the Shareholder
Agreement and the transactions contemplated thereby.
(b)(5) Indemnification of Directors and Officers.
Article IX of the Company's Restated Certificate of Incorporation provides
that the Company shall indemnify directors, officers, and their legal
representatives to the fullest extent permitted by the DGCL. The DGCL contains
an extensive indemnification provision which permits a corporation to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. In suits by or in the
right of a corporation, only expenses and not judgments, fine, and amounts paid
in settlement may be indemnified against. In addition, if the director or
officer has been adjudged to be liable to the corporation in such a suit,
indemnification of expenses must be approved by a court. Article IX of the
Restated Certificate of Incorporation also provides that the Company may, in its
discretion, indemnify employees and agents in circumstances where
indemnification is not required by law.
Article VII of the Company's Restated Certificate of Incorporation provides
that directors of the Company shall not be personally liable to the Company or
its stockholders for monetary damages for breach of fiduciary duty. However,
this provision does not eliminate or limit the liability of a director for
breach of the director's duty of loyalty to the Company or its stockholders, for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, for the payment of dividends or distributions or
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the redemption or purchase of the Company's shares of stock in violation of the
DGCL, or for any transaction from which the director derives an improper
personal benefit. This provision does not affect any liability of a director or
officer under federal securities laws.
The Company currently maintains directors' and officers' liability
insurance ("D&O Insurance") with a policy limit of $10,000,000 and an excess
policy limit of $5,000,000. Under these policies, the Company pays a deductible
amount of up to $200,000 per claim. In addition, the Company has entered into an
indemnification agreement with each of its non-employee directors
("Indemnification Agreement") under which the Company has indemnified each of
them against expenses and losses incurred for claims brought against them to the
extent that either the Company does not have D&O Insurance in place at the time
or the claim is not covered by the Company's D&O Insurance policy. Under the
Indemnification Agreements, the Company is not obligated to indemnify the
director for expenses or losses in connection with claims ("Excluded Claims")
which have been determined by final adjudication to be: (i) based on the
director gaining any unentitled personal profit or advantage, (ii) for the
return of illegal remuneration, (iii) for an accounting of profits made from the
director's purchase or sale of the Company's securities within the meaning of
Section 16 of the Exchange Act or similar state laws, (iv) resulting from the
director's knowingly fraudulent, dishonest, or willful misconduct, (v) based on
a payment which is not permitted by applicable law, (vi) claims as to which the
director shall have been adjudged liable to the Company, unless the court
determines that the director is fairly and reasonably entitled to
indemnification, or (vii) claims, the payment of which would exceed the maximum
amount permitted by law to be paid as indemnification. Under the Indemnification
Agreements, the directors each agree to reimburse the Company for amounts paid
to them in the event that a final adjudication determines that the claim is
either an Excluded Claim or the director is not otherwise entitled to payment
under the Indemnification Agreement.
The Merger Agreement includes certain agreements by Compuware with respect
to continuation of indemnification and D&O Insurance, as summarized under
"Indemnification; Shareholder Litigation" in item 3(b)(2) above.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Recommendation of the Board. At a meeting on July 14, 1999, the Board
unanimously approved the Merger Agreement and transactions contemplated thereby
and unanimously determined that the Offer and the Merger are advisable and fair
to, and in the best interests of, the Company and its shareholders. The Board
unanimously recommends that the shareholders of the Company accept the Offer and
tender their Shares pursuant to the Offer, approve and adopt the Merger
Agreement and approve the Merger. At the July 14, 1999 meeting, Broadview
International LLC ("Broadview") delivered its written opinion to the Board that,
as of the date of such opinion and based upon and subject to certain matters
stated in such opinion, the consideration to be received by holders of Shares
(other than Compuware and its affiliates) pursuant to the Offer and the Merger
was fair to such shareholders from a financial point of view (the "Fairness
Opinion"). The Board relied in part on the Fairness Opinion in making its
recommendations to accept the Offer and approve the Merger. The full text of the
Fairness Opinion, which sets forth the assumptions made, matters considered and
limitations on the review undertaken by Broadview, is attached hereto as Annex B
and is incorporated herein by reference. Such opinion was directed to the Board
of Directors of the Company in its consideration of the transactions
contemplated by the Merger Agreement and is directed only to the fairness from a
financial point of view as of its date of the consideration to be received by
the holders of Shares (other than Compuware and its affiliates) pursuant to the
Offer and the Merger. SUCH OPINION DOES NOT CONSTITUTE A RECOMMENDATION AS TO
WHETHER OR NOT SHAREHOLDERS SHOULD TENDER THEIR SHARES IN THE OFFER OR, IF A
SHAREHOLDER VOTE IS REQUIRED, HOW SUCH SHAREHOLDERS SHOULD VOTE ON THE MERGER OR
ANY MATTER RELATED THERETO. HOLDERS OF SHARES ARE ENCOURAGED TO READ THE
FAIRNESS OPINION CAREFULLY IN ITS ENTIRETY.
(b)(1) Background of the Offer. In February 1998, Viasoft engaged an
investment banking firm to identify potential candidates for a strategic
acquisition by Viasoft. At that time, the investment banking firm suggested that
Viasoft also consider other strategic alternatives, including a possible
acquisition of Viasoft by
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another company. In addition to contacting potential candidates for a strategic
acquisition by Viasoft, the investment banking firm contacted Compuware
regarding its potential interest in a transaction with Viasoft. On March 6,
1998, Messrs. Steven D. Whiteman, President and CEO, Kevin M. Hickey, then
Executive Vice President and Chief of Operations, and Jean-Luc G. Valente, then
Senior Vice President, Marketing, met with Messrs. Joseph A. Nathan, Compuware
President and Chief Operating Officer, and Eliot R. Stark, Compuware Executive
Vice President, at the offices of Compuware. During this meeting, the
participants held a general discussion of Viasoft's current operations and
strategic direction and the possibility of a business combination. Following the
meeting, no further discussions were pursued at that time.
In late June 1998, Mr. Hickey contacted Mr. Nathan about an unrelated
business matter and during that discussion, Mr. Nathan expressed interest in
meeting with Viasoft to reconsider whether a possible business combination would
be in the interest of both companies. On July 10, 1998, the Viasoft Board
reviewed these developments and authorized management to proceed with
preliminary discussions to identify possible alternatives.
On July 13, 1998, Viasoft and Compuware entered into a confidentiality
agreement containing terms and conditions substantially similar to the
Confidentiality Agreement and Messrs. Hickey and Mark R. Schonau, Senior Vice
President, Finance & Administration and Chief Financial Officer, met with
Messrs. Nathan and Stark at the offices of Compuware to provide information
about Viasoft's operations and discuss potential synergies between the two
companies. After that meeting, various telephonic discussions were held between
representatives of Compuware, Viasoft and an investment banking firm then
advising Viasoft, regarding the structure and terms of a possible transaction.
At Viasoft's regularly scheduled Board meeting on July 16, 1998, the Board and
management extensively reviewed Viasoft's business strategy as an independent
public company, and considered whether other alternatives, such as a business
combination with Compuware, should also be explored. The Board authorized
management to continue discussions with Compuware and to engage one or more
investment banking firms to assist in that effort. Between July 16, 1998 and
July 27, 1998, Mr. Hickey and other representatives of Viasoft consulted with
investment banking firms and had various discussions with Mr. Stark regarding a
proposed transaction, but the parties were unable to reach an agreement on
terms. On July 27, 1998, Viasoft management reported to its Board that
discussions had been terminated.
In March 1999, Mr. Nathan called Mr. Whiteman to explore renewing prior
discussions about a possible business combination. Mr. Whiteman expressed
interest in discussing the possibilities, but no meeting was scheduled at that
time.
In early May 1999, Mr. Whiteman and Mr. Nathan spoke by telephone to renew
discussions and agreed to meet again, at which time Viasoft would update
Compuware on its activities and strategy and the parties could discuss
possibilities of a business combination. On May 17, 1999, the Viasoft Board met
and authorized Mr. Whiteman to engage an investment banking firm to advise the
Company with respect to available strategic alternatives and specifically, with
respect to a possible transaction with Compuware. On May 20, 1999 Viasoft
entered into an engagement letter with Broadview to act as its financial
advisor. Representatives of Broadview met with representatives of Viasoft on May
20 and 21, 1999 to gather additional information about Viasoft and develop a
strategy on how to proceed.
On May 24, 1999, Mr. Whiteman had a series of telephone calls with Mr.
Nathan and Mr. Stark, during which he informed Mr. Nathan that Viasoft had hired
Broadview to explore strategic alternatives. In a subsequent call, Mr. Stark
expressed interest in beginning more formal discussions with Viasoft about a
possible business combination. A meeting was set for June 2, 1999.
During the period from May 27, 1999 through June 29, 1999, Broadview
contacted several other companies with Viasoft's approval to ascertain their
potential interest in pursuing a transaction with Viasoft. With the exception of
Compuware, no company contacted by Broadview indicated an interest in pursuing a
potential transaction with Viasoft at this time.
On June 1, 1999, Viasoft provided a proposed confidentiality agreement to
Mr. Stark at Compuware as a basis for beginning discussions, which was signed by
the parties on June 2, 1999. On June 2, 1999,
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Messrs. Whiteman and Schonau met with Messrs. Nathan, Stark and Henry A. Jallos,
Compuware Executive Vice President, Products Division, at the offices of
Compuware and discussed potential synergies of a business combination between
Viasoft and Compuware. At the end of the meeting, Mr. Nathan again expressed
interest in pursuing an acquisition of Viasoft. On June 7, 1999, Mr. Stark spoke
with a representative of Broadview, Scot Sedlacek, and requested additional
information regarding the Company. Between June 7 and 14, 1999, Mr. Sedlacek and
Mr. Stark had several conversations regarding the structure and timing of a
proposed business combination with Viasoft.
On June 15, 1999, Compuware sent to Viasoft a non-binding letter of
interest regarding a proposed acquisition of Viasoft, outlining basic terms on
which Compuware would be willing to pursue such a transaction. Compuware's
letter of interest also proposed that Viasoft enter into an exclusive dealing or
"no shop" agreement with Compuware, providing for Viasoft to negotiate
exclusively with Compuware, and not provide information to, engage in
discussions or negotiations with, or solicit offers from, any third party
through August 31, 1999.
Viasoft held a telephonic Board meeting on June 16, 1999 to discuss the
price and terms of Compuware's indication of interest. In addition to the
directors, representatives of Broadview were present at the meeting, together
with representatives of Viasoft outside counsel, Osborn Maledon, P.A., and
special Delaware counsel, Morris Nichols, Arsht & Tunnel ("Morris Nichols"). At
this meeting, Broadview reviewed the activities it had undertaken since its
engagement, including its discussions with potential acquirors other than
Compuware, and reviewed the terms of the proposal with the Board. Broadview also
reviewed the current mergers and acquisition environment and presented a
preliminary valuation analysis that Broadview had provided to the Board before
the meeting. A representative of Morris Nichols reviewed with the Board its
fiduciary duties in the context of a proposed business combination. The Board
discussed the terms of the proposal and authorized and directed management to
proceed with due diligence and negotiations with Compuware. However, the Board
determined not to enter into the proposed letter agreement, which included the
exclusive dealing, "no shop" arrangement with Compuware, at that time. The Board
directed Broadview and management to continue to consider strategic alternatives
and to discuss proposed transactions with other parties, during the course of
the continuing discussions with Compuware.
On June 17, 1999, Mr. Sedlacek communicated to Mr. Stark the Board's
determination to continue discussions without entering into the proposed letter
agreement and communicated certain counterproposals from the Board on price and
other terms. On June 18 and 20, 1999, Mr. Stark and Mr. Sedlacek continued to
discuss Viasoft's counterproposals.
Mr. Whiteman reported the status of discussions to individual members of
the Board on June 18, 1999. After these discussions, Mr. Whiteman authorized Mr.
Sedlacek to continue negotiations with Compuware on the proposed price and
terms. During the following week, discussions continued between representatives
of Viasoft, Broadview and Compuware, with certain interruptions due to various
parties' travel schedules. After these discussions, Mr. Whiteman spoke to the
Viasoft Board members individually and set up a telephonic meeting for Monday,
June 28, 1999.
On June 26, 1999, Mr. Sedlacek discussed a proposed timetable for a
transaction with Mr. Stark.
On the morning of June 28, 1999, Mr. Whiteman received an unsolicited
letter of interest from another company ("Other Offeror") regarding a possible
cash acquisition of Viasoft. The proposed price range was substantially below
the price under discussion with Compuware.
In the afternoon of June 28, 1999, the Board met by telephone to discuss
the status of discussions with Compuware and the unsolicited letter of interest.
After discussion, the Board authorized Mr. Whiteman to proceed with due
diligence and negotiations of the proposed transaction with Compuware and also
directed him to pursue the unsolicited proposal on a parallel track, to
determine whether the Other Offeror would be willing to increase its offered
price. Later that day, representatives of Viasoft had a conference call with a
representative of Compuware to discuss a schedule for due diligence and other
activities. Also later that day, Mr. Whiteman spoke to a representative of the
Other Offeror, indicating that Viasoft would be willing to pursue discussions if
that company were able to increase substantially its proposed price.
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On June 30, 1999, a due diligence team from Compuware arrived to begin its
review of Viasoft and its operations and finances. This due diligence continued
for two days at the offices of Osborn Maledon, in Phoenix, Arizona. On July 2,
1999, Messrs. Whiteman and Schonau, along with other representatives from
Viasoft and Broadview, held a conference call with Messrs. Scott Johnson, a
business development executive, and Ronald D. Sleiter, Senior Vice President,
Worldwide Sales, of Compuware to review preliminary financial results from
Viasoft's fourth fiscal quarter ended June 30, 1999.
On July 2, 1999, having received no further communications from the Other
Offeror since their June 28, 1999 conversation, Mr. Whiteman attempted to
contact Other Offeror. Mr. Whiteman was unable to reach a representative of the
Other Offeror, but left a message reiterating Viasoft's willingness to pursue
further discussions at a higher price. The Other Offeror did not contact Viasoft
again.
From July 6 through 8, 1999, additional representatives from Compuware met
in the offices of Osborn Maledon to review contracts and other matters with
representatives from Viasoft. From July 8 through July 13, 1999, Viasoft
representatives continued to respond to questions and document requests from
Compuware's representatives conducting due diligence.
On July 7, 1999, Compuware's legal counsel delivered a draft of the Merger
Agreement to Viasoft and its legal counsel. On July 8, 1999, the Board held a
telephonic meeting at which Mr. Whiteman and representatives of Broadview and
Osborn Maledon reviewed the progress of negotiations, the anticipated timetable
for the transaction, and the terms and conditions of the draft Merger Agreement.
Mr. Whiteman also reported on his efforts to obtain a higher offer from the
Other Offeror. On July 9, 1999, Osborn Maledon distributed to Compuware's legal
counsel initial comments on the Merger Agreement. On July 9, 1999, Viasoft also
distributed the draft Merger Agreement, together with counsel's comments, to the
Viasoft Board for its review. Representatives of Viasoft and Compuware, together
with their respective counsel, held a conference call on July 10, 1999 during
which the terms of the draft Merger Agreement, the parties' comments, and the
manner in which the transaction should be effected were reviewed, discussed and
negotiated extensively. On July 10, 1999, Compuware's legal counsel distributed
a revised draft of the Merger Agreement to Viasoft and its legal counsel.
During the week of July 5, 1999, Mr. Whiteman, Mr. Stark and
representatives of Broadview discussed a plan to provide incentives for certain
key employees of Viasoft to remain employed following an acquisition of Viasoft,
in order to facilitate an orderly transition and the achievement of the parties'
goals for the acquisition. On July 12, 1999, Osborn Maledon distributed to
Compuware's legal counsel a first draft of a proposed Change in Control
Separation Plan ("Separation Plan"). On July 14, 1999, Compuware's legal counsel
distributed to Viasoft and its legal counsel a revised draft of the Separation
Plan incorporating significant changes requested by Compuware.
On July 12, 1999, Compuware's outside counsel distributed the first draft
of the Shareholder Tender and Voting Agreement ("Shareholder Agreement") to
Viasoft's legal counsel. On July 12, 1999, Viasoft distributed to the Board a
revised draft of the Merger Agreement and the first draft of the Shareholder
Agreement together with the comments of Viasoft management and legal counsel on
these documents.
From July 12 through July 14, 1999, Viasoft, Compuware and their respective
legal and financial advisers participated in numerous conferences during which
the terms of the draft Merger Agreement and Shareholder Agreement were further
discussed and negotiated. In addition, during this period, the parties discussed
and documented the proposed Separation Plan.
After the close of business on July 14, 1999, Viasoft held a telephonic
Board meeting to consider the proposed final terms of the Merger Agreement,
Shareholder Agreement and Separation Plan. Participating in the meeting were all
Viasoft directors, Messrs. Whiteman and Schonau, Catherine R. Hardwick, Viasoft
Vice President and General Counsel, and representatives of Broadview, Osborn
Maledon and Morris Nichols. Mr. Whiteman summarized the status of the
transaction generally and the results of discussions and negotiations with
Compuware. Representatives of Broadview presented its Fairness Opinion to the
Board that as of the date of the meeting and based upon and subject to certain
matters stated in such opinion, the consideration to be received by holders of
Shares (other than Compuware and its affiliates) was fair to such
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shareholders from a financial point of view. The Broadview representatives made
a presentation to the Board of certain information supporting its Fairness
Opinion and responded to questions from the Board. A representative of Osborn
Maledon reviewed with the Board the principal provisions of the proposed Merger
Agreement, Shareholder Agreement and Separation Plan and responded to questions
from the Board. The Board considered these matters carefully. After discussion,
the Board of Directors unanimously approved the transactions contemplated by the
Merger Agreement, including execution and delivery of the Merger Agreement,
approval of the Shareholder Agreement and adoption of the Separation Plan. In
addition, the Board considered and unanimously approved an amendment to the
Company's Rights Plan, which legal counsel advised was necessary in order to
facilitate the transactions contemplated by the Merger Agreement.
The Merger Agreement was executed and delivered following the Board meeting
on the evening of July 14, 1999.
(b)(2) Reasons for the Board's Recommendation. In making the
determinations and recommendations set forth in subparagraphs (a) and (b)(1)
above, the Board considered a number of factors, including, without limitation,
the following:
(i) the Board's familiarity with, and information provided by Viasoft
management as to, the business, financial condition, results of operations,
current business strategy and future prospects of the Company, recent
trends in the software product and services markets in which the Company
operates, the Company's position in such markets, the historical and recent
market prices for the Shares, and the information provided by Broadview as
to the Company's strategic and other alternatives;
(ii) the possible alternatives to the Offer and the Merger, including
seeking additional proposals from other parties and accepting the related
uncertainties (including with respect to timing, valuation and the
likelihood of completion of any such proposals that might be received) or
continuing to maintain Viasoft as an independent public corporation and not
engaging in any extraordinary transaction;
(iii) the fact that Broadview sought indications of interest in a
potential acquisition of Viasoft from several companies other than
Compuware that Broadview and the Company considered to be likely potential
acquirers, none of which chose to pursue discussions;
(iv) the letter of interest received from the Other Offeror by the
Company on June 28, 1999, and the relative risks and benefits of entering
into the Merger Agreement with Compuware as compared to pursuing business
combination discussions with that party or other parties without a binding
commitment from Compuware or any other party;
(v) Viasoft's prospects if it were to remain independent, including
the risks and benefits inherent in remaining independent and in particular,
the risks associated with Viasoft's previously-announced realignment of its
business to emphasize a professional services model;
(vi) the historical and recent trading prices of the Shares and the
fact that the $9.00 price contemplated by the Offer and the Merger will
enable Viasoft shareholders to realize a substantial premium over the
prices at which the Shares traded prior to the announcement of the
execution of the Merger Agreement;
(vii) the terms of the Merger Agreement, including (x) the proposed
structure of the Offer and the Merger involving an immediate cash tender
offer followed by a merger for the same cash consideration and (y) the fact
that financing is not a condition to the Offer and the Merger and the
Board's view that Compuware can finance the transaction, thereby enabling
tendering shareholders to obtain cash for their Shares quickly;
(viii) the financial analysis and presentation of Broadview, and the
written Fairness Opinion of Broadview delivered on July 14, 1999, to the
effect that, as of such date and based upon and subject to certain matters
stated in such opinion, the $9.00 per Share cash consideration to be
received by holders of Shares (other than Compuware and its affiliates)
pursuant to the Offer and the Merger was fair to such holders from a
financial point of view (A COPY OF THE FAIRNESS OPINION IS ATTACHED AS
ANNEX B TO THIS SCHEDULE 14D-9 AND IS INCORPORATED HEREIN BY REFER-
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ENCE; HOLDERS OF SHARES ARE ENCOURAGED TO READ THE FAIRNESS OPINION
CAREFULLY IN ITS ENTIRETY);
(ix) the high likelihood that the Offer and the Merger would be
consummated, in light of the experience, reputation and financial
capabilities of Compuware;
(x) possible adverse effects on the business and operations of the
Company resulting from a prolonged sale process;
(xi) the terms of the Merger Agreement, including the circumstances
under which the Board may withdraw its recommendation of the Merger and the
Offer, and/or terminate the Merger Agreement, and the parties'
representations, warranties and covenants and the conditions to their
respective obligations; and
(xii) the termination provisions of the Merger Agreement, which under
certain circumstances could obligate the Company to pay a $5,500,000
termination fee to Compuware and to reimburse Compuware for its actual
expenses (not to exceed $500,000) incurred in connection with the
transaction, and the Board's belief that such fees and expense
reimbursement provisions are reasonable in the circumstances and would not
deter a higher offer.
The foregoing discussion summarizes the material information and factors
considered by the Board in its consideration and approval of the Offer and the
Merger. In view of the variety of factors and the amount of information
considered, the Board did not find it practicable to quantify or otherwise
assign relative weights to the specific factors considered or to determine that
any factor was of special importance. The determination to recommend that
stockholders tender their shares in the Offer and approve the Merger was made
after consideration of all of the factors taken as a whole. In addition,
individual members of the Board may have assigned different weights to differ
factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
Pursuant to a letter agreement (the "Engagement Letter") dated May 20,
1999, the Company engaged Broadview as its financial advisor with respect to a
possible transaction between the Company and Compuware or any related entity,
subsidiary or affiliate, and other possible strategic alternatives. If, during
the period that Broadview is retained by the Company or within 12 months
thereafter, the sale of the Company is consummated with Purchaser or any party
with whom contact was initiated or developed by Broadview, the Company or a
third party prior to termination of the Engagement Letter, the Company will pay
a success fee to Broadview of 1.25% of the total consideration received by the
Viasoft shareholders ("Success Fee"). A fee of $400,000 is due upon initial
delivery of the Fairness Opinion, to be credited against the Success Fee. In the
event that the Offer is consummated at the Offer Price, the aggregate fee
payable to Broadview pursuant to the Engagement Letter will be approximately
$2.1 million. The Engagement Letter also provides that the Company will
reimburse Broadview for reasonable out-of-pocket costs and expenses. In
addition, the Company agreed to indemnify Broadview against certain liabilities,
including liabilities arising under the federal securities laws.
Prior to engaging Broadview, the Company terminated its engagement of
another investment banking firm pursuant to an agreement that provides for such
other firm to receive a transaction fee equal to 0.75% of the total
consideration received by the Viasoft shareholders in any business combination
with Compuware, if Viasoft enters into an agreement for, or consummates such a
transaction within 18 months after termination of that engagement.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) Except pursuant to the Company's stock option plans and employee stock
purchase plan and the transactions contemplated by the Offer, the Merger, and
the Merger Agreement, no transactions in the Shares have been effected during
the past 60 days by the Company or, to the knowledge of the Company, any of its
executive officers, directors, affiliates or subsidiaries.
22
<PAGE> 24
(b) To the knowledge of the Company, all of its executive officers,
directors, affiliates and subsidiaries currently intend to tender pursuant to
the Offer all Shares held of record or beneficially owned by them (other than
Shares issuable upon exercise of stock options and Shares, if any, which if
tendered could cause such persons to incur liability under the provisions of
Section 16(b) of the Exchange Act). See "Shareholder Tender and Voting
Agreement" under Item 3(b)(2) above.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as described in this Schedule 14D-9, to the knowledge of the
Company no negotiation is being undertaken or is underway by the Company in
response to the Offer, the Merger or the Merger Agreement which relates to or
would result in (1) an extraordinary transaction, such as a merger or
reorganization, involving the Company or any subsidiary of the Company, (2) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company, (3) a tender offer for or other acquisition of
securities by or of the Company, or (4) any material change in the present
capitalization or dividend policy of the Company.
(b) Except as described in this Schedule 14D-9, there are no transactions,
board resolutions, agreements in principle, or signed contracts in response to
the Offer, the Merger or the Merger Agreement which relate to or would result in
one or more of the matters referred to in clauses (1) through (4) of paragraph
(a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
(a) Information Statement. The Information Statement attached as Annex A
hereto is being furnished in connection with the possible designation by the
Purchaser, pursuant to the Merger Agreement, of certain persons to be appointed
to the Board other than at a meeting of the Company's shareholders.
(b) Section 203. As a Delaware corporation, the Company is subject to
Section 203 ("Section 203") of the DGCL. Section 203 prohibits a corporation
which has voting stock traded on a national securities exchange, designated on
The Nasdaq Stock Market or held of record by more than 2,000 stockholders from
engaging in certain business combinations, including a merger, sale of
substantial assets, loan or substantial issuance of stock, with an interested
stockholder (defined as the owner of 15% or more of the corporation's voting
stock), or an interested stockholder's affiliates or associates, for a
three-year period beginning on the date the interested stockholder acquires 15%
or more of the outstanding voting stock of the corporation. The restrictions on
business combinations do not apply if (i) prior to such date, the board of
directors gives prior approval to the business combination or the transaction in
which the 15% ownership level is exceeded, (ii) the interested stockholder
acquires, in the transaction pursuant to which the interested stockholder
becomes the owner of 15% or more of the outstanding voting stock, 85% of the
corporation's voting stock (excluding those shares owned by persons who are
directors and also officers as well as employee stock plans in which employees
do not have a confidential right to determine whether shares held subject to the
plan will be tendered in a tender or exchange offer) or (iii) the business
combination is approved by the board of directors and authorized at a meeting of
stockholders by the holders of at least two-thirds of the outstanding voting
stock, excluding shares owned by the interested stockholder. In accordance with
Section 203, the Board of Directors of the Company has approved the Merger
Agreement and the Shareholder Agreement and the transactions contemplated
thereby, including the Offer and the Merger, and, therefore, the restrictions of
Section 203 of the DGCL are inapplicable to the Offer and the Merger and the
related transactions.
(c) Antitrust. Under the HSR Act, and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division of the
Department of Justice and the FTC and certain waiting period requirements have
been satisfied The acquisition of Shares by Purchaser pursuant to the Offer is
subject to such requirements.
Pursuant to the requirements of the HSR Act, Compuware and the Company
filed the required Notification and Report Forms (the "Forms") with respect to
the Offer and the Merger with the Antitrust Division and the FTC on July 19,
1999. The statutory waiting period applicable to the purchase of Shares pursuant
to the Offer will expire fifteen calendar days after the date of such filing.
However, prior to such date,
23
<PAGE> 25
the Antitrust Division or the FTC may extend the waiting period by requesting
additional information or documentary material relevant to the acquisition. If
such a request is made, the waiting period will be extended until 11:59 P.M.,
New York City time, on the tenth day after substantial compliance by Compuware
and the Company with such request. Thereafter, such waiting period can be
extended only by court order.
A request is being made pursuant to the HSR Act for early termination of
the waiting period applicable to the Offer. There can be no assurance, however,
that the HSR Act waiting period will be terminated early.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the acquisition of shares by
Purchaser pursuant to the Offer. At any time before or after the consummation of
any such transactions, the Antitrust Division or the FTC could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or seeking divestiture of the Shares so acquired or divestiture of
substantial assets of Compuware or the Company. Private parties (including
individual states) may also bring legal actions under the antitrust laws. The
Company does not believe that the consummation of the Offer will result in a
violation of any applicable antitrust laws. However, there can be no assurance
that a challenge to the Offer on antitrust grounds will not be made, or if such
a challenge is made, what the result will be.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<S> <C>
Exhibit
1 Letter to Shareholders of Viasoft, Inc. dated July 22,
1999.*
Exhibit
2 Text of Joint Press Release issued by Compuware and the
Company on July 15, 1999.
Exhibit
3 Opinion of Broadview International LLC (included as Annex B
to the Schedule 14D-9).*
Exhibit
4 Agreement and Plan of Merger dated as of July 14, 1999,
among Viasoft, Inc., Compuware Corporation and CV
Acquisition, Inc.
Exhibit
5 Shareholder Tender and Voting Agreement dated as of July 14,
1999, among CV Acquisition, Inc. and certain shareholders
and option holders of Viasoft, Inc.
Exhibit
6 Viasoft, Inc. Change in Control Separation Plan dated July
14, 1999.
Exhibit
7 Portions of the Company's definitive Proxy Statement dated
October 15, 1998.
Exhibit
8 Confidentiality Agreement between Compuware and Viasoft,
Inc. dated as of June 2, 1999.
Exhibit
9 Amendment to Rights Agreement Between Viasoft, Inc. and
Harris Trust and Savings Bank, as Rights Agent dated as of
July 14, 1999.
ANNEX A Information Statement
ANNEX B Opinion Of Broadview International LLC
</TABLE>
- ---------------
* Included with Schedule 14D-9 mailed to shareholders.
24
<PAGE> 26
SIGNATURE
After reasonable 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.
VIASOFT, INC.
By: /s/ STEVEN D. WHITEMAN
------------------------------------
Steven D. Whiteman
Chairman of the Board and Chief
Executive Officer
Dated: July 22, 1999
25
<PAGE> 27
ANNEX A
VIASOFT, INC.
3033 NORTH 44TH STREET
PHOENIX, ARIZONA 85018
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
Viasoft, Inc. ("Viasoft" or the "Company") is mailing this Information
Statement on or about July 22, 1999 as part of the Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") to holders of shares
("Shares") of Viasoft's Common Stock, $0.001 par value per share ("Common
Stock"). Capitalized terms used and not otherwise defined in this Information
Statement shall have the respective meanings set forth in the Schedule 14D-9.
You are receiving this Information Statement in connection with the possible
election of persons designated by CV Acquisition, Inc. ("Purchaser"), a
wholly-owned subsidiary of Compuware Corporation ("Compuware"), to a majority of
the seats on the Board of Directors of Viasoft by means other than through a
meeting of the Company's stockholders. That designation is to be made pursuant
to an Agreement and Plan of Merger dated as of July 14, 1999 (the "Merger
Agreement") by and among Compuware, Purchaser and Viasoft.
Pursuant to the Merger Agreement, Purchaser is offering to purchase all
outstanding and issued Shares at a price of $9.00 per share. The Offer was
commenced by Purchaser on July 22, 1999 and is scheduled to expire at 12:00
midnight (New York time) on August 19, 1999, unless extended. The Merger
Agreement and Offer are more fully described under Item 3(b) of the Schedule
14D-9, to which this Information Statement is attached as Annex A.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
promulgated thereunder. You are urged to read this Information Statement
carefully. You are not, however, required to take any action. The information
contained in this Information Statement concerning Compuware, Purchaser and
their respective directors and executive officers has been furnished to Viasoft
by Compuware, and Viasoft assumes no responsibility for the accuracy,
completeness or fairness of any such information.
GENERAL INFORMATION REGARDING THE COMPANY
At the close of business on July 12, 1999 there were 17,906,636 Shares
issued and outstanding, each of which entitles its record holder to one vote.
The Shares constitute the only class of outstanding voting shares of the
Company.
PROPOSED CHANGES TO THE COMPANY BOARD OF DIRECTORS
Pursuant to the Merger Agreement, promptly upon the payment for a number of
shares of Common Stock of Viasoft by Purchaser pursuant to the Offer that
satisfies the Minimum Tender Condition, Purchaser will be entitled to designate
for appointment or election to the Viasoft Board of Directors, such number of
persons (the "Designees"), rounded up to the next whole number, so that the
Designees equal the same percentage of the Viasoft Board of Directors as the
percentage of shares of Common Stock acquired in connection with the Offer.
However, the number of Designees shall not be less than a majority of the
Viasoft Board of Directors. Upon request by Purchaser, Viasoft is required at
such time to take all action necessary to cause the Designees to be elected to
the Viasoft Board of Directors, including either increasing the size of the
Viasoft Board of Directors or securing the resignations of incumbent directors
or both. Purchaser has informed the Company that it will choose the Designees
from among the directors and executive officers of Compuware and Purchaser
listed below. Purchaser has also informed Viasoft that each of the persons
listed below has consented to serve as a director if appointed or elected. None
of the Designees is currently a director of, or
A-1
<PAGE> 28
holds any positions with, Viasoft. Purchaser has further advised Viasoft that
none of the Designees or any of their affiliates beneficially owns any equity
securities or rights to acquire any equity securities of Viasoft, nor has any
such person been involved in any transaction with Viasoft or any of its
directors, executive officers or affiliates that is required to be disclosed
under the rules and regulations of the Securities and Exchange Commission (the
"Commission"), other than transactions among Compuware, Purchaser and Viasoft
that have been described in the Schedule 14D-9.
The name, age, present principal occupation or employment and material
occupation, positions, offices or employment for the past five years of each
director and executive officer of Purchaser and Compuware are set forth below.
The business address of each such person is 31440 Northwestern Highway,
Farmington Hills, Michigan 48334.
Unless otherwise indicated, each person listed below (i) has held his
principal occupation for the past five years, (ii) has not been convicted in a
criminal proceeding and has not been party to a proceeding related to U.S. state
and federal securities laws, and (iii) is a citizen of the United States. Ages
are as of July 22, 1999.
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
<TABLE>
<CAPTION>
POSITION WITH PURCHASER
-----------------------
<S> <C>
Eliot R. Stark.................... President and Director
Thomas Costello, Jr. ............. Vice President, Secretary, Treasurer and
Director
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF COMPUWARE
<TABLE>
<CAPTION>
POSITION WITH COMPUWARE
-----------------------
<S> <C>
Peter Karmanos, Jr................ Chairman of the Board of Directors and Chief
Executive Officer
Joseph A. Nathan.................. President and Chief Operating Officer; Director
Eliot R. Stark.................... Executive Vice President, Finance
Denise A. Knobblock............... Executive Vice President, Human Resources and
Administration
Henry A. Jallos................... Executive Vice President, Products Division
Laura Lawson Fournier............. Senior Vice President, Chief Financial Officer
Phyllis Recca..................... Senior Vice President, Professional Services
Division
Stephen H. Fagan.................. Senior Vice President, Strategic Relationships,
Europe
John N. Shevillo.................. Senior Vice President, Strategic Account
Relationships
Thomas Thewes..................... Vice Chairman of the Board of Directors
W. James Prowse................... Director
William O. Grabe.................. Director
Bernard M. Goldsmith.............. Director
G. Scott Romney................... Director
William R. Halling................ Director
Lowell P. Weicker, Jr............. Director
Elizabeth A. Chappell............. Director
Elaine K. Didier.................. Director
</TABLE>
Peter Karmanos, Jr., age 56, a founder of Compuware, has served as a
director of Compuware since its inception, as Chairman of the board since
November, 1978, and as Chief Executive Officer since July 1987. From January
1992 until October 1994, Mr. Karmanos served as President of Compuware.
Joseph A. Nathan, age 46, has served as a director of Compuware since
September 1990 and as President and Chief Operating Officer since October 1994.
From December 1990 to October 1994, Mr. Nathan served as Senior Vice President
and Chief Operating Officer -- Products Division.
A-2
<PAGE> 29
Eliot R. Stark, age 46, has served as Executive Vice President, Finance,
since February 1998. From June 1995 through January 1998, Mr. Stark served as
Senior Vice President, Mergers & Acquisitions, Strategic Business Planning, and
Corporate Planning. In 1995, Mr. Stark served at Comerica Bank as Senior Vice
President, Corporate Development and Planning. From 1993 to 1995, Mr. Stark
served at Comerica Bank, as Director, Information Technology. On July 2, 1999,
Mr. Stark was appointed President and a director of Purchaser.
Denise A. Knobblock, age 43, has served as Executive Vice President, Human
Resources and Administration since February 1998. From January 1995 through
January 1998, Ms. Knobblock served as Senior Vice President, Administration and
from August 1991 through December 1994, as Compuware's Director, Facilities,
Administration.
Laura Lawson Fournier, age 46, has served as Senior Vice President, Chief
Financial Officer since April 1998. From June 1995 through March 1998, Ms.
Fournier served as Corporate Controller and from February 1990 through May 1995,
as Compuware's Director of Internal Audit.
Phyllis Recca, age 45, has served as Senior Vice President, Professional
Services Division, since January 1999. From January 1995 through December 1998,
Ms. Recca served as Vice President, Professional Services, Mideast Region. From
1987 through December 1994, Ms. Recca served as Branch Manager,
Baltimore/Washington.
Stephen H. Fagan, age 44, has served as Senior Vice President, Strategic
Relationships, Europe, since April 1999. From November 1997 through March 1999,
Mr. Fagan served as Senior Vice President, Professional Services. From 1994
through October 1997, Mr. Fagan served as Vice President, Enterprise Products.
Henry A. Jallos, age 50, has served as Executive Vice President, Products
Division, since September 1997. From August 1994 through August 1997, Mr. Jallos
served as Senior Vice President, Worldwide Sales.
John N. Shevillo, age 62, has served as Senior Vice President, Strategic
Account Relationships since June 1999. From April 1997 through May 1999, Mr.
Shevillo served as Senior Vice President, Enterprise Systems. From April 1994
through March 1997, Mr. Shevillo served as Senior Vice President, Professional
Services.
Thomas Thewes, age 67, a founder of Compuware, has served as a director of
Compuware since its inception, and has served as Vice Chairman of the Board
since March 1988. Mr. Thewes served as Treasurer from May 1988 until May 1995.
Mr. Thewes served as Senior Vice President from March 1988 until March 1995 and
as Secretary from April 1973 until May 1995.
W. James Prowse, age 56, has served as a director of Compuware since
December 1986 and served as Executive Vice President from February 1998 through
March 31, 1999. From January 1992 through January 1998, Mr. Prowse served as
Senior Vice President.
William O. Grabe, age 61, has served as a director of Compuware since April
1992. Mr. Grave is a Managing Member of General Atlantic Partners, LLC and has
been affiliated with General Atlantic Partners, LLC or its predecessor since
April 1992. From 1984 until March 1992, Mr. Grabe was an IBM Vice President. Mr.
Grabe is also a director of Baan Company NV, Gartner Group, Inc., LHS Group,
Inc., and TDS GmbH along with a number of privately held companies in which
General Atlantic Partners, LLC is an investor.
Bernard M. Goldsmith, age 55, has served as a director of Compuware since
July 1992. Mr. Goldsmith has been the Managing Director of Updata Capital, Inc.,
an investment banking firm, since 1986.
G. Scott Romney, age 58, has served as a director of Compuware since
January 1996. Mr. Romney has been a partner at Honigman Miller Schwartz and
Cohn, a law firm, since 1977. The law firm serves as counsel to Compuware.
A-3
<PAGE> 30
William R. Halling, age 60, has served as a director of Compuware since
October 1996. Mr. Halling is the President of The Economic Club of Detroit. Mr.
Halling was with KPMG Peat Marwick from 1961 through 1993, where he served as a
Managing Partner and member of the Board of Directors.
Lowell P. Weicker, Jr., age 68, has served as a director of Compuware since
October 1996. Mr. Weicker is presently a visiting professor at the University of
Virginia in Charlottesville, Virginia, and currently serves on the Board of
Directors of Duty Free International, HPSC, Inc., UST Corporation and Phoenix
Duff & Phelps Mutual Funds. From 1990 through 1994, Mr. Weicker served as the
Governor of Connecticut, and from 1970 through 1988, as a U.S. Senator from
Connecticut. From 1962 through 1968, Mr. Weicker served as a Connecticut State
Representative.
Elizabeth Chappell, age 41, has served as a director of Compuware since
October 1997. Ms. Chappell is the Chief Executive Officer of The Chappell Group,
Inc., a consulting firm. From September 1979 to September 1994, Ms. Chappell
served as a Vice President with ATT. Ms. Chappell is also a director of
Handleman Company.
Elaine K. Didier, age 51, has served as a director of Compuware since
October 1997. Effective August 30, 1999, Ms. Didier will serve as Dean of
University Library and Professor at Oakland University. Ms. Didier served as the
Interim Director of Academic Outreach at the University of Michigan until March
1999. Prior to her assignment as Interim Director, Ms. Didier held other
positions with the University, including Director of Information Resources.
Thomas Costello, Jr., age 45, has served as General Counsel of Compuware
since January 1985. Mr. Costello has served as Vice President since January 1995
and Secretary since May 1995. On July 2, 1999, Mr. Costello was appointed Vice
President, Secretary, Treasurer and a director of Purchaser.
CURRENT DIRECTORS OF VIASOFT
Each of the persons named below was elected by the stockholders at the last
annual meeting to serve as a member of the Company's Board of Directors until
the 1999 Annual Meeting of Stockholders and until his successor has been duly
elected and qualified. Some of the current directors may resign effective
immediately following the purchase of Shares by Purchaser pursuant to the Offer.
The names of the current directors and certain information about them, as of
July 12, 1999, are set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE POSITION SINCE
- --------------- --- -------- --------
<S> <C> <C> <C>
Steven D. Whiteman...................... 48 President, Chairman of the Board of 1994
Directors, Chief Executive Officer
and Director
John J. Barry III(1)(2)................. 59 Director 1991
Alexander S. Kuli(2).................... 54 Director 1994
J. David Parrish(1)..................... 56 Director 1994
Arthur C. Patterson(1).................. 55 Director 1984
</TABLE>
- ---------------
(1) Member of Compensation Committee
(2) Member of Audit and Finance Committee
Steven D. Whiteman has served as President since November 1998, as Chief
Executive Officer and a director since January 1994 and as Chairman of the Board
of Directors since April 24, 1997. Mr. Whiteman previously served as President
of the Company from May 1993 to April 1998. Prior to that, he served as Vice
President of Sales and Marketing of the Company from December 1990. Mr. Whiteman
serves on the boards of directors of Unify Corporation and Actuate Corporation.
John J. Barry III has served as a director of the Company since August
1991. Mr. Barry has served as the President and CEO of Work Process Systems,
Inc., a software company, since May 1999. Prior to that, Mr. Barry provided
strategic and management consulting services to senior management in the
information
A-4
<PAGE> 31
technology and other industries from January 1997 to May 1999. Mr. Barry was the
Chairman, President and Chief Executive Officer of Petroleum Information
Corporation, an energy industry information solutions company, in Houston,
Texas, from May 1991 through December 1996. Mr. Barry serves on the boards of
directors of several privately held companies.
Alexander S. Kuli has served as a director of the Company since April 1994.
In April 1998, Mr. Kuli became Advisor to Senior Staff for Tivoli Systems, Inc.,
a vendor of distributed software products. Prior to that, Mr. Kuli served as
Vice President, Worldwide Sales for Tivoli from January 1993 to October 1997 and
as Vice President from October 1997 until April 1998. Prior to joining Tivoli,
Mr. Kuli served as Vice President, Worldwide Sales for Candle Corporation, a
vendor of mainframe systems performance management software, from October 1985
through December 1992. Mr. Kuli serves on the board of directors of Oberon
Software, Inc.
J. David Parrish has served as a director of the Company since January
1994. Mr. Parrish is an independent consultant in the software services
industry. Mr. Parrish served as the Senior Vice President of Walker Interactive
Systems, Inc., a financial application software company, from November 1989 to
August 1997.
Arthur C. Patterson has served as a director of the Company since September
1984. He served as President of the Company from October 1984 to June 1985. Mr.
Patterson is a founder and General Partner of Accel Partners, a venture capital
firm. Mr. Patterson also serves on the boards of directors of PageMart Wireless,
Inc., Unify Corporation, Actuate Corporation, and Portal Software, Inc. as well
as several other privately held software and telecommunication companies.
BOARD OF DIRECTORS COMMITTEES, MEETINGS AND COMPENSATION
BOARD OF DIRECTORS COMMITTEES
The Board of Directors is responsible for the overall affairs of the
Company. To assist it in carrying out this responsibility, the Board of
Directors has delegated certain authority to designated committees, the current
membership and duties of which are as follows:
<TABLE>
<CAPTION>
AUDIT AND FINANCE COMMITTEE COMPENSATION COMMITTEE
- --------------------------- ----------------------
<S> <C>
Alexander S. Kuli, Chairman John J. Barry III, Chairman
John J. Barry III J. David Parrish
Arthur C. Patterson
</TABLE>
Audit and Finance Committee. The Audit and Finance Committee of the Board
of Directors reviews the internal accounting procedures of the Company and
consults with and reviews the services provided by the Company's independent
public accountants. This Committee met once during the last fiscal year.
Compensation Committee. The Compensation Committee of the Board of
Directors reviews and recommends to the Board of Directors the compensation and
benefits of all executive officers of the Company and reviews general policy
relating to compensation and benefits of employees of the Company. The
Compensation Committee also administers the issuance of stock options and other
awards under the Company's stock plans. The Compensation Committee met once
during the last fiscal year.
Nominations. The Company does not have a standing nominating committee.
The function of nominating directors is carried out by the entire Board of
Directors. Pursuant to the Company's Bylaws, a stockholder may nominate persons
for election as director, provided that the stockholder (a) is a stockholder of
record at the time of the nomination and is entitled to vote at the meeting of
stockholders to which the nomination relates, and (b) complies with the notice
procedures of Article III of the Bylaws.
A-5
<PAGE> 32
BOARD OF DIRECTORS MEETINGS
The Board of Directors held four regular meetings and ten special
telephonic meetings during the fiscal year ended June 30, 1999. No incumbent
director attended fewer than 75% of the aggregate of all meetings of the Board
of Directors and the committees, if any, of which the director was a member
during the fiscal year ended June 30, 1999.
BOARD OF DIRECTORS COMPENSATION
Each non-employee director is paid an annual retainer of $7,500 upon
re-election to the Board of Directors at each annual meeting of stockholders.
The Chairman of each standing Committee is paid an annual retainer of $2,000
upon election as Chairman. In addition, in accordance with the Company's policy,
non-employee directors are paid a $1,000 fee for attendance, in person, at each
Board of Directors meeting and $500 for participation in each telephone Board
meeting. Non-employee directors receive a $500 fee for each standing Committee
meeting attended. Directors are reimbursed reasonable, out-of-pocket expenses
incurred in attending both Board and Committee meetings. Each non-employee
director also participates in the Company's Outside Director Stock Option Plan
(the "Director Plan"). Pursuant to the Director Plan, each non-employee director
who is re-elected to the Board of Directors is automatically granted an option
to purchase 10,000 shares of Common Stock. The exercise price for such options
is the closing price of Common Stock on that date. Each person who is elected
for the first time to be a non-employee director of the Company is automatically
granted an option to purchase 20,000 shares of Common Stock, at the closing
price of the Common Stock on the grant date, under the terms and conditions of
the Director Plan. In addition to the automatic grants awarded pursuant to the
Director Plan, on December 4, 1998 each non-employee director was awarded a
non-qualified stock option to purchase 6,000 shares of Common Stock at an
exercise price of $6.75 per share, under the terms and conditions set forth in
the resolutions of the Board and in a stock option agreement, the terms of which
are substantially similar to those of the Director Plan.
Directors who are also employees of the Company receive no additional
compensation for serving as a director or committee member.
Pursuant to the terms of stock options held by non-employee directors, the
exercisability of certain options will accelerate upon a change of control as
defined in the applicable agreements. In addition, the Merger Agreement provides
that the exercisability of all outstanding stock options will accelerate at the
time the Merger is effective. See the footnotes to the table set forth below
under "Security Ownership of Certain Beneficial Owners and Management."
A-6
<PAGE> 33
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock, as of July 12, 1999, by (a) each
stockholder who is known by the Company to own beneficially more than 5% of the
Common Stock, (b) each executive officer of the Company named in the Summary
Compensation Table below, (c) each director of the Company and (d) all directors
and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) PERCENT(1)
- ------------------------------------ ----------------- ----------
<S> <C> <C>
T. Rowe Price Associates(2)............................. 1,211,400 6.8
100 East Pratt Street
Baltimore, MD 21202
Steven D. Whiteman(3)................................... 393,070 2.2
Colin J. Reardon(4)..................................... 112,855 *
Arthur C. Patterson(5).................................. 84,581 *
Alexander S. Kuli(6).................................... 39,668 *
John J. Barry III(7).................................... 33,495 *
J. David Parrish(8)..................................... 24,336 *
Mark R. Schonau(9)...................................... 35,714 *
David M. Lee(10)........................................ 16,212 *
Kevin J. Donoghue(11)................................... 13,297 *
All Executive Officers and Directors as a Group (11
persons)(12).......................................... 796,844 4.3
</TABLE>
- ---------------
* Represents beneficial ownership of less than 1%.
(1) Except as otherwise noted, and subject to community property laws where
applicable, each of the stockholders named in the table has sole voting and
investment power with respect to all shares shown as beneficially owned by
the stockholder. Applicable percentages are based on 17,906,636 shares of
Common Stock outstanding as of July 12, 1999, adjusted as required by rules
promulgated by the Commission.
(2) The 1,211,400 shares held are owned by various individual and institutional
investors, including T. Rowe Price Small-Cap Stock Fund, Inc. (which owns
968,000 shares representing 5.4% of the shares outstanding), for which T.
Rowe Price Associates, Inc. ("Price Associates") serves as investment
adviser with power to direct investments and/or power to vote the
securities. For purposes of the reporting requirements of the Securities
Exchange Act of 1934, Price Associates is deemed to be a beneficial owner
of such securities; however, Price Associates expressly disclaims that it
is, in fact, the beneficial owner of such securities. Price Associates has
sole dispositive power for the entire 1,211,400 shares and sole voting
power for 210,500 shares.
(3) Includes 38,000 shares held by a trust for the benefit of Steven D. and
Beverly C. Whiteman, of which Mr. Whiteman is trustee, and 149,377 shares
that Mr. Whiteman may acquire upon the exercise of options exercisable
within 60 days of July 12, 1999, 21,876 of which have an exercise price
that exceeds the Offer Price. An additional 83,956 shares may be acquired
upon the exercise of options that become exercisable at the time the Merger
is effective, 28,124 of which have an exercise price that exceeds the Offer
Price. See "Employment Contracts and Change-in-Control Arrangements" below.
(4) Includes 102,812 shares that Mr. Reardon may acquire upon the exercise of
options exercisable within 60 days of July 12, 1999, 15,313 of which have
an exercise price that exceeds the Offer Price. An additional 117,187
shares may be acquired upon the exercise of options that become exercisable
at the time the Merger is effective, 19,687 of which have an exercise price
that exceeds the Offer Price. See "Employment Contracts and
Change-in-Control Arrangements" below.
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<PAGE> 34
(5) Includes 36,668 shares that Mr. Patterson may acquire upon the exercise of
options exercisable within 60 days of July 12, 1999, 10,000 of which have
an exercise price that exceeds the Offer Price. An additional 26,000 shares
may be acquired upon the exercise of options that become exercisable at the
time the Merger is effective, 10,000 of which have an exercise price that
exceeds the Offer Price. See "Employment Contracts and Change-in-Control
Arrangements" below.
(6) Includes 36,668 shares that Mr. Kuli may acquire upon the exercise of
options exercisable within 60 days of July 12, 1999, 10,000 of which have
an exercise price that exceeds the Offer Price. An additional 26,000 shares
may be acquired upon the exercise of options that become exercisable at the
time the Merger is effective, 10,000 of which have an exercise price that
exceeds the Offer Price. See "Employment Contracts and Change-in-Control
Arrangements" below.
(7) Includes 10,000 shares that Mr. Barry may acquire upon the exercise of
options exercisable within 60 days of July 12, 1999, all of which have an
exercise price that exceeds the Offer Price. An additional 26,000 shares
may be acquired upon the exercise of options that become exercisable at the
time the Merger is effective, 10,000 of which have an exercise price that
exceeds the Offer Price. See "Employment Contracts and Change-in-Control
Arrangements" below.
(8) Includes 23,668 shares that Mr. Parrish may acquire upon the exercise of
options exercisable within 60 days of July 12, 1999, 10,000 of which have
an exercise price that exceeds the Offer Price. An additional 26,000 shares
may be acquired upon the exercise of options that become exercisable at the
time the Merger is effective, 10,000 of which have an exercise price that
exceeds the Offer Price. See "Employment Contracts and Change-in-Control
Arrangements" below.
(9) Includes 22,814 shares that Mr. Schonau may acquire upon the exercise of
options exercisable within 60 days of July 12, 1999, 15,313 of which have
an exercise price that exceeds the Offer Price. An additional 172,519
shares may be acquired upon the exercise of options that become exercisable
at the time the Merger is effective, 19,687 of which have an exercise price
that exceeds the Offer Price. See "Employment Contracts and
Change-in-Control Arrangements" below.
(10) Includes 15,000 shares that Mr. Lee may acquire upon the exercise of
options exercisable within 60 days of July 12, 1999, 7,500 of which have an
exercise price that exceeds the Offer Price. An additional 106,666 shares
may be acquired upon the exercise of options that become exercisable at the
time the Merger is effective, 12,500 of which have an exercise price that
exceeds the Offer Price. See "Employment Contracts and Change-in-Control
Arrangements" below.
(11) Includes 10,526 shares that Mr. Donoghue may acquire upon the exercise of
options exercisable within 60 days of July 12, 1999, 750 of which have an
exercise price that exceeds the Offer Price. An additional 69,875 shares
may be acquired upon the exercise of options that become exercisable at the
time the Merger is effective, 2,250 of which have an exercise price that
exceeds the Offer Price. See "Employment Contracts and Change-in-Control
Arrangements" below.
(12) Includes 440,410 shares that all current executive officers and directors
may acquire upon the exercise of options exercisable within 60 days of July
12, 1999, 122,628 of which have an exercise price that exceeds the Offer
Price. An additional 766,826 shares may be acquired upon the exercise of
options that become exercisable at the time the Merger is effective,
137,872 of which have an exercise price that exceeds the Offer Price. See
"Employment Contracts and Change-in-Control Arrangements" below.
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<PAGE> 35
MANAGEMENT
EXECUTIVE OFFICERS
The executive officers of the Company are elected to serve annual terms at
the first Board of Directors meeting following each annual meeting of
stockholders. Certain information concerning the Company's executive officers,
as of July 12, 1999, is set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Steven D. Whiteman........... 48 President, Chairman of the Board of Directors and Chief
Executive Officer
Mark R. Schonau.............. 42 Senior Vice President, Finance and Administration,
Chief Financial Officer and Treasurer
Catherine R. Hardwick........ 40 Vice President, General Counsel and Secretary
Colin J. Reardon............. 46 Senior Vice President, International Operations
David M. Lee................. 32 Vice President, Products Division
Kevin J. Donoghue............ 38 Vice President, North American Sales Division
Timothy W. Brewer............ 40 Vice President, Services Division
</TABLE>
Information with respect to Mr. Whiteman is set forth above under "Current
Directors of Viasoft."
Mark R. Schonau has served as Senior Vice President, Finance and
Administration, since July 1997, and as Chief Financial Officer and Treasurer
since September 1996. Mr. Schonau also served as Vice President, Finance and
Administration, from September 1996 to July 1997. He consulted with the Company
for a short period of time prior to this employment. Before joining Viasoft, Mr.
Schonau served as Chief Financial Officer, Corporate Secretary and Treasurer of
CyCare Systems, Inc., a healthcare software company, from October 1989 to August
1996.
Catherine R. Hardwick has served as Vice President of the Company since
July 1997 and as Secretary and General Counsel of the Company since January
1996. Prior to holding these offices, Ms. Hardwick served as Corporate Counsel
for the Company from February 1995. Before joining the Company, Ms. Hardwick
practiced law with the law firm of Meyer, Hendricks, Victor, Osborn & Maledon,
P.A. in the areas of corporate and securities law and intellectual property
licensing.
Colin J. Reardon has served as Senior Vice President, International
Operations of the Company since July 1997. Mr. Reardon served as Vice President,
International Operations of the Company from August 1994 to July 1997. Prior to
joining Viasoft, Mr. Reardon served as Vice President of International Marketing
of Sterling Software, Inc., a systems management software and services company,
from July 1993 through July 1994.
David M. Lee has served as Vice President, Products Division since
September 1997. Prior to joining the Company in September 1997, Mr. Lee was
employed by Tivoli Systems, Inc., a computer software and information services
company, where he served as Manager, Development from January 1993 through
September 1997.
Kevin J. Donoghue was named Vice President, North American Sales Division
in August 1998. Mr. Donoghue served as Vice President, Western Region, from
January 1998 through August 1998, Western Region Sales Director, August 1996
through January 1998 and Account Manager, Sales Representative from December
1993 through August 1996.
Timothy W. Brewer was named Vice President, Services Division, in April
1999. Mr. Brewer served as Executive Director, Global Services from November
1998 through April 1999, as Director of Consulting Services from May 1998 to
November 1998 and as Manager of Viasoft's Solution Provider Program from August
1996 through April 1998. Prior to joining the Company in August 1996, Mr. Brewer
was employed by CDI Corporation as Director of Strategic Planning and Technical
Development of CDI Managed Information Services from February 1996 to August
1996 and as Director of CDI Information Services-West from
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<PAGE> 36
August 1994 to February 1996 and Manager CDI System Integration division from
August 1993 to August 1994.
EXECUTIVE COMPENSATION
The following table sets forth all compensation received for services
rendered to the Company in all capacities during the fiscal years ended June 30,
1999, 1998 and 1997 by the Company's Chief Executive Officer and each of the
Company's four other most highly compensated executive officers, which ranking
is based on salary and bonus earned during the fiscal year ended June 30, 1999
(together, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-------------------- ------------
SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- --------------------------- ------ -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Steven D. Whiteman............... 1999 $230,000 $ 24,000 63,333 $ 2,076(1)
Chairman of the Board, 1998 $220,000 $ 48,595 50,000 $ 2,817(1)
President and Chief 1997 $200,000 $181,980 -- $ 1,885(1)
Executive Officer
Colin J. Reardon................. 1999 $192,430 $153,710(2) 105,000(4) $18,966(3)
Senior Vice President, 1998 $175,777 $121,363(2) 35,000 $14,630(3)
International Operations 1997 $163,256 $202,000(2) 40,000 $ 8,170(3)
Kevin J. Donoghue(5)............. 1999 $134,720 $114,452(2) 75,001(4) $ 2,076(1)
Vice President, North 1998 $ 91,775 $141,367(2) 26,667 $ 2,817(1)
American Sales Division 1997 $ 79,500 $232,809(2)(6) 10,000 $30,713(1)(7)
Mark R. Schonau.................. 1999 $182,000 $ 14,000 160,333(4) $ 2,076(1)
Senior Vice President, F&A 1998 $171,000 $ 25,020 35,000 $ 2,817(1)
CFO & Treasurer 1997 $126,667 $ 74,821 140,000 $ 600(1)
David M. Lee(8).................. 1999 $165,000 $ 13,000 101,666(4) $ 2,076(1)
Vice President, Products
Division 1998 $122,523 $ 39,400(9) 103,333 $32,046(1)(10)
</TABLE>
- ---------------
(1) Amounts represent Company matching and discretionary contributions under
the Viasoft, Inc. 401(k) Plan.
(2) Amounts represent bonus and commission payable.
(3) The Company provides a contribution to Mr. Reardon's private pension plan
that matches his private contributions, up to a maximum of 5% of his base
salary and, beginning in fiscal 1998, 2.5% of his on-target earnings per
year. The Company's matching contribution is paid directly to the pension
company administering Mr. Reardon's account, on a monthly basis.
(4) Certain of these options were issued pursuant to an option replacement
program adopted December 4, 1998. See "Report of the Compensation
Committee" and the 10-Year Option/SAR Repricings table below.
(5) Mr. Donoghue became an executive officer during fiscal 1999. Information
provided includes all compensation paid to Mr. Donoghue in previous
positions held with the Company.
(6) Includes a relocation bonus of $15,000.
(7) Includes reimbursement of relocation expenses of $30,113, including related
gross-up payments for taxes, $2,750 of which is excludable from W-2 gross
income but reportable as a fringe benefit.
(8) Mr. Lee joined the Company in September 1997.
(9) Includes a signing bonus of $15,000.
(10) Includes reimbursement of relocation expenses of $29,388, including related
gross-up payments for taxes, $2,346 of which is excludable from W-2 gross
income but reportable as a fringe benefit.
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<PAGE> 37
OPTION GRANTS, EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth certain information regarding stock option
grants to the Named Executive Officers during the fiscal year ended June 30,
1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(5)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED(1) FISCAL YEAR(3) ($/SHARE)(4) DATE 5% 10%
- ---- ---------- -------------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Steven D. Whiteman........ 30,000 3.8 8.875 8/27/2008 $167,443 $424,334
33,333 6.75 12/4/2008 $141,500 $358,588
Colin J. Reardon.......... 30,000 6.4 8.875 8/27/2008 $167,443 $424,334
26,667(2) 6.75 12/4/2008 $113,202 $286,877
23,333 6.75 12/4/2008 $ 99,049 $251,011
25,000 4.00 3/9/2009 $ 62,889 $159,374
Kevin J. Donoghue......... 30,000 4.5 8.875 8/27/2008 $167,443 $424,334
18,001(2) 6.75 12/4/2008 $ 76,415 $193,680
2,000 6.75 12/4/2008 $ 8,490 $ 21,515
25,000 4.00 3/9/2009 $ 6,288 $159,374
Mark R. Schonau........... 30,000 9.7 8.875 8/27/2008 $167,443 $424,334
82,000(2) 6.75 12/4/2008 $348,093 $882,136
23,333 6.75 12/4/2008 $ 99,049 $251,011
25,000 4.00 3/9/2009 $ 62,889 $159,374
David M. Lee.............. 30,000 6.2 8.875 8/27/2008 $167,443 $424,334
33,333(2) 6.75 12/4/2008 $141,500 $358,588
13,333 6.75 12/4/2008 $ 56,599 $143,433
25,000 4.00 3/9/2009 $ 62,889 $159,374
</TABLE>
- ---------------
(1) The stock options were granted under the Company's 1997 Plan. Options with
respect to 25% of the total shares granted become exercisable on the first
anniversary of the date of grant and cumulatively thereafter 6.25% of the
total shares granted become exercisable at the end of each three-month
period, except for those options granted under the option replacement
program adopted December 4, 1998. With respect to options granted under the
option replacement program adopted December 4, 1998, options with respect to
33.33% of the total shares granted become exercisable on the first
anniversary of the date of grant and cumulatively thereafter 8.258% of the
total shares granted become exercisable at the end of each three-month
period. See "Report of the Compensation Committee -- Stock Option
Replacement."
(2) These stock options were granted under the option replacement program
adopted December 4, 1998. See "Report of the Compensation Committee -- Stock
Option Replacement."
(3) Based on an aggregate of 1,651,113 shares subject to options granted to
employees in the fiscal year ended June 30, 1999; 382,226 of these shares
were granted pursuant to the option replacement program adopted December 4,
1998. See "Report of the Compensation Committee -- Stock Option
Replacement."
(4) The exercise price per share under each option was equal to the fair market
value of the Common Stock on the date of grant.
(5) In accordance with Commission regulations, amounts represent hypothetical
gains that could be achieved for the respective options if exercised at the
end of the option term. These gains are based on assumed rates of stock
appreciation of 5% and 10% compounded annually from the date the respective
options were granted to their expiration date and are not presented to
forecast possible future appreciation, if any, in the price of the Common
Stock. The gains shown are net of the option exercise price, but do not
include deductions for taxes or other expenses associated with the exercise
of the options or the sale of the underlying shares. The actual gains, if
any, on the stock option exercises will depend on the future
A-11
<PAGE> 38
performance of the Common Stock, the optionee's continued employment through
applicable vesting periods and the date on which the options are exercised.
AGGREGATED OPTION EXERCISES IN FISCAL 1999
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END ($)(2)
ACQUIRED ON VALUE -------------------------- -------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- ----------- -------------------------- -------------------------
<S> <C> <C> <C> <C>
Steven D. Whiteman..... 10,000 $23,750 138,750/94,583 -0-/-0-
Colin J. Reardon....... -- -- 79,791/140,208 $3,333/$1,667
Mark R. Schonau........ -- -- 13,126/182,207 -0-/-0-
David M. Lee........... -- -- 6,250/115,416 -0-/-0-
Kevin J. Donoghue...... -- -- 3,025/77,376 $1,190/-0-
</TABLE>
- ---------------
(1) The "Value Realized" reflects the appreciation on the date of exercise,
based on the excess of the fair market value of the shares on the date of
exercise over the exercise price. These amounts do not necessarily reflect
cash realized upon the sale of those shares, as an executive officer may
keep the shares exercised, or sell them at a different time and price.
(2) In accordance with Commission regulations, the "Value" set forth in this
column is based on the difference between the fair market value at June 30,
1999 ($3.50 per share as quoted on The Nasdaq Stock Market), and the option
exercise price, multiplied by the number of shares underlying the option.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
On July 14, 1999, the Board adopted the Viasoft, Inc. Change in Control
Separation Plan ("Separation Plan"). The plan provides designated executive
officers and other key employees with certain separation benefits if a Change in
Control (as defined in the Separation Plan) occurs and (i) within nine months
thereafter (60 days in the case of the Chief Executive Officer, Chief Financial
Officer, Senior Vice-President, International Operations and Vice President and
General Counsel) (as applicable, the "Transition Period"), a participant's
employment with the Company is terminated either by action of the Company
without "Cause" or by the participant's resignation from employment for "Good
Reason" (as defined in the Separation Plan) or (ii) a participant elects to
resign at the end of the Transition Period. The separation benefits payable in
such circumstances include payment of the participant's base salary and
reimbursement for COBRA insurance premiums and certain life insurance premiums
for a period specified for each participant, ranging from 6 to 18 months, as
specified in the Separation Plan. The payment periods for the Named Executive
Officers are as follows: Messrs. Whiteman, Reardon and Schonau, 18 months;
Messrs. Donoghue and Lee, 12 months. If a participant is entitled to receive a
separate severance benefit pursuant to any employment or similar agreement, such
participant is entitled to receive benefits under the Separation Plan only if
such participant agrees to waive and terminate any right to receive such other
severance benefits within 15 days following a change in control.
Whether or not the Merger becomes effective, pursuant to the terms of the
Company's stock option plans and the various purchase agreements between the
Company and each of the executive officers relating to stock options and
restricted stock, the Company has agreed to accelerate the vesting of certain
options, or waive its right of repurchase, in the case of restricted stock, in
the event of a change of control of the Company (as defined in the applicable
agreement). Restricted stock agreements and stock options granted to executive
officers under the 1986 Stock Option Plan provide that one half of the shares
subject to the agreement will automatically vest if the executive officer's
employment is terminated or if he suffers a material reduction in his level of
responsibility and authority within six months after a change of control of the
Company. The 1994 Equity Incentive Plan provides that all outstanding options
and other awards granted thereunder vest automatically upon a change in control.
Award agreements under the 1997 Plan generally provide for the
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<PAGE> 39
vesting of options to accelerate to provide the greater of one additional year
of vesting or total vesting of one half of the outstanding option upon a change
in control of the Company, subject to certain conditions and limitations. In
addition, the Merger Agreement provides that all outstanding stock options of
the Company will become fully exercisable at the time the Merger becomes
effective, and that any options not exercised within 30 days of that effective
time will automatically expire. As a result, the exercisability of certain
options held by Named Executive Officers will accelerate at the time the Merger
is effective. See the footnotes to the table set forth above under "Security
Ownership of Certain Beneficial Owners and Management."
Mr. Reardon was employed by the Company effective August 1, 1994. At that
time, the Company entered into an employment agreement with Mr. Reardon that
sets forth the basic terms of his employment, including salary, working hours
and holidays, vacation and sick time and a car allowance. In addition, the
agreement provides that it is terminable by either party upon six months written
notice and that the Company may pay Mr. Reardon his salary and contractual
benefits for the six-month period in lieu of notice. Alternatively, Mr. Reardon
can elect to waive these severance benefits and participate instead in the
Separation Plan described above.
Mr. Schonau has an employment agreement with the Company pursuant to which
he is entitled to certain benefits upon a change of control and upon termination
of his employment with the Company. If there is a change of control, as defined
in the agreement, Mr. Schonau is entitled to at least the same benefit as any
other senior vice president might receive. In the case of his termination,
without cause, Mr. Schonau is entitled to continue to receive his base salary
and certain insurance benefits for a period of six months. Alternatively, Mr.
Schonau can elect to waive these severance benefits and participate instead in
the Separation Plan described above.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is made up of three non-management directors. Working with the chief
executive officer, the Compensation Committee is responsible for developing and
implementing compensation policies and programs for the executive officers of
the Company. During fiscal 1999, the Compensation Committee also was responsible
for administering the 1997 Equity Incentive Plan, the 1994 Equity Incentive
Plan, the Deferred Compensation Plan and the Employee Stock Purchase Plan.
For fiscal 1999, the process utilized by the chief executive officer and
the Compensation Committee in determining executive officer compensation levels
took into account both qualitative and quantitative factors. Among the factors
considered was informal research into compensation levels at other similarly
sized companies. However, no formal study was conducted and the Compensation
Committee made the final compensation decisions.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The guiding principle behind the Compensation Committee's compensation
programs is to align compensation of executive officers of the Company with the
Company's business objectives, desired corporate performance, Company values and
stockholder interests. Supporting this philosophy, the objectives of the
compensation program are to (a) provide rewards that are closely linked to
Company and individual performance, (b) provide incentives to achieve long-term
corporate goals and enhance stockholder value and (c) ensure that executive
compensation is at levels which enable the Company to attract and retain the
highly qualified and productive people critical to the long-term success of the
Company.
The key elements of the Company's executive compensation program include a
base salary and certain employee benefits, short term performance incentives and
long-term equity incentives.
BASE SALARIES AND EMPLOYEE BENEFITS
Base salaries for executive officers are initially determined by evaluating
the responsibilities of the position, the experience and knowledge of the
individual and the competitive marketplace for executive talent.
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<PAGE> 40
Annual salary adjustments, if any, are determined primarily by evaluating the
performance of each executive officer, including the individual's contributions
to corporate goals, any increases in responsibilities and attainment of specific
individual objectives, as well as past performance and potential with the
Company. Other factors include growth in the Company's size and complexity, cost
of living increases, internal compensation equity considerations and overall
Company performance. In July 1998, the base salaries of the then current
executive officers were increased at rates ranging from 4.5% to 13.4%. These
specific increases included merit increases for those in the 4.5% to 6.5% range,
and adjustments for market conditions and internal equity, as well as additional
responsibilities, for those receiving increases over 6.5%.
In addition, there were several personnel changes within the executive
officer group during fiscal 1999. Four executive officers left the Company
during the year and two new executive officers were added. The executive
officers that left were provided severance benefits comprised of base salary and
insurance benefits for periods ranging from three to six months. The two new
executive officers, Kevin J. Donoghue and Timothy W. Brewer, were promoted
during the year and received increases of 10% and 17% in base salary,
respectively, when promoted.
Certain employee benefits are also provided to executive officers,
including life and health insurance, long-term disability insurance and the
right to participate in the Company's Employee Stock Purchase Plan, and either
(i) the Company's 401(k) plan and the Deferred Compensation Plan in the United
States, or (ii) a private pension plan in the United Kingdom.
SHORT TERM PERFORMANCE INCENTIVES
Executive Bonus Plan. Most of the Company's executive officers
participated in the Viasoft Executive Bonus Plan for fiscal 1999 (the "Bonus
Plan"). The Bonus Plan is designed to reward executive officers for the
Company's financial performance above certain set targets. The Compensation
Committee uses annual "Net Income" goals, which are based on the Company's
internal budget. The Company missed both its internal revenue and earnings
target in the first fiscal quarter due to the downturn in the year 2000 market,
which occurred faster than expected. Because of the reduced revenue expectations
due to the market change, as well as the related reduction in force early in the
second quarter of fiscal 1999, the Company restated its internal budget for the
rest of the fiscal year. As a result, both the quarterly and annual "Net Income"
goals used by the Compensation Committee were revised downward from the original
goals set at the beginning of the fiscal year. The annual target bonuses were
also reduced accordingly.
Under the Bonus Plan, the Compensation Committee sets annual target bonuses
for each executive officer, based primarily on the degree of responsibility of
the officer for the overall achievement of the Company's "Net Income" goals,
taking into consideration other incentive compensation. For example, the
potential annual bonus for the Senior Vice President, International Operations,
the Vice President, North American Sales Division and Vice President, Services
Division under the Bonus Plan was substantially lower than those of many of the
other executive officers in light of the potential commissions and quarterly
bonuses for such officers described below. The Bonus Plan provided that if the
Company achieved at least 85% but less than 90% of the annual goal, one-half of
the target bonus would have been paid. If the Company achieved 90% but less than
105% of the annual goal, target bonuses were based on the percent of the goal
achieved, with additional incentives if "Net Income" surpassed the annual goal
by five percent or more. Because the Company did not achieve the financial
objectives set for fiscal 1999, no annual bonuses were paid under the Bonus
Plan. See "Executive Compensation -- Summary Compensation Table."
In addition to annual goals and target bonuses, the Committee also set
quarterly target bonuses. Similar to the annual target bonuses, the quarterly
target bonuses are based primarily on the degree of responsibility of the
officer for the overall achievement of the Company's quarterly "Net Income"
goals, which are based on the Company's internal budget, taking into
consideration other incentive compensation. For all executive officers other
than the Senior Vice President, International Operations, the Vice President,
North American Sales Division, and the Vice President, Services Division, the
Committee set a quarterly target bonus for achievement of the Company's "Net
Income" goal. If the Company did not achieve the quarterly "Net Income" goal, no
target bonus was payable for that quarter, and the target bonus would not be
recoverable in
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<PAGE> 41
subsequent quarters. The quarterly "Net Income" goals were met in the second and
fourth quarters of fiscal 1999. As a result, quarterly bonuses paid under the
Bonus Plan totaled an aggregate of $30,500 per quarter for each of the two
quarters in which the Net Income goals were met, representing bonuses paid to
four officers.
In summary, bonuses paid under the Executive Bonus Plan in fiscal 1999 were
significantly less than in prior years. No annual bonuses were paid under the
Bonus Plan. Of a possible $323,000 payable at 100% performance of annual and
quarterly financial targets under the Bonus Plan, the Company paid bonuses in
two quarters to four executive officers in an aggregate amount of $61,000.
Revenue Commissions and Bonuses. A key component of compensation for
executive officers responsible for the sales of products and services of the
Company is payment of commissions. Commissions are set at a percentage of
revenue derived from the officer's territorial area of responsibility. During
fiscal 1999, the Senior Vice President, International Operations and the Vice
President, North American Sales Division had compensation plans in which they
were assigned revenue quotas that supported the Company's objectives and which
provided a set percentage as a commission for revenue received from the license
of products and the provision of professional services within their respective
territories. The commission rate increased for revenue generated over the
assigned quotas. When the Company restated its internal budget in the second
quarter, the quotas and commission rates were also adjusted. While the
international operations generally met assigned quotas after the second quarter
adjustment, the North American Sales operations did not, and the commissions
paid under the incentive plans reflect these results. The Vice President,
Services Division, was also under a compensation plan that provided for payment
of incentive compensation based on revenue attainment. Under this plan,
quarterly bonuses were paid based on achievement of at least 80% of services
revenue targets for each quarter. Under this plan, Mr. Brewer was paid quarterly
revenue bonuses in the first, second and third quarters, aggregating $11,649. As
a result of these incentive plans, a significant portion of the compensation of
the executive officers who are directly responsible for sales of the Company's
products and services is dependent on achieving specified revenue goals. See
"Executive Compensation -- Summary Compensation Table."
Profit Bonuses. In addition to revenue commissions, the Senior Vice
President, International Operations and the Vice President, North American Sales
Division were also paid quarterly bonuses based on the achievement of budgeted
profit objectives for their assigned territories. The Compensation Committee
uses quarterly profitability goals for each territory based on the internal
budget. If the applicable territory did not achieve at least 75% of the set
quarterly profitability goal, no target bonus was paid for that quarter, and the
target bonus would not be recoverable in subsequent quarters. If the operations
achieved at least 75% but no more than 90% of the quarterly profitability goal,
one-half of the target bonus was paid. If the operations achieved over 90% of
the quarterly profitability goal, the target bonus was based on the percent of
the goal achieved, with additional incentives if operations surpassed the
quarterly profitability goal by 10% or more. This profitability component was
designed to provide significant incentives for the Senior Vice President,
International Operations and Vice President, North American Sales Division to
monitor profitability, as well as revenue. Mr. Reardon received profit bonuses
in the second, third and fourth quarters in fiscal 1999 totaling an aggregate of
$58,988. Mr. Donoghue received a profit bonus in the second quarter in fiscal
1999 of $10,472. In addition, the Vice President, Services Division was also
under a compensation plan that provided for payment of incentive compensation
based on profitability. Under this plan, performance targets were set to measure
the overall profitability margin achieved on services engagements. Quarterly
bonuses were paid based on achievement of at least 80% of the margin targets.
Under this plan, Mr. Brewer was paid quarterly margin bonuses in the first and
second quarter, aggregating approximately $9,570.
Discretionary Bonuses. Mr. Brewer, Vice President, Services Division,
received a discretionary bonus in the second fiscal quarter totaling $5,000,
prior to the time he became an executive officer. No executive officers received
discretionary bonuses during the year.
LONG TERM EQUITY INCENTIVES
Long-term incentive compensation, in the form of stock options or
restricted stock, vesting over a period of years, allows the executive officers
to share in any appreciation in value of the Company's Common Stock
A-15
<PAGE> 42
and directly aligns the officers' interests with those of its stockholders. This
strategy encourages creation of stockholder value over the long term because the
full benefit of the compensation cannot be realized unless stock price
appreciation occurs over several years. The Compensation Committee awarded
options to executive officers several times during the past fiscal year,
believing that equity compensation was particularly important during the
reorganization and transition the Company was experiencing to drive the new
strategy and retain key management personnel. In granting these options, the
Committee considered existing levels of stock ownership, previous grants of
stock options, job responsibilities and individual performance. During fiscal
1999, new option grants representing 445,332 shares were awarded to seven
executive officers. Replacement options representing 160,001 shares were granted
under the Company's stock option replacement program described below, and
corresponding options representing 220,000 shares were canceled pursuant to that
program. Options representing approximately 298,716 shares were cancelled in
connection with the departure of four executive officers. See "Executive
Compensation -- Option Grants in Last Fiscal Year" and "Stock Option
Replacement."
STOCK OPTION REPLACEMENT
At a meeting of the Board of Directors held December 4, 1998, the Board
reviewed the continued decline of the Company's stock price during calendar year
1998, and it considered the general morale of its employees and the need to
retain key personnel, particularly in light of the reduction in force
implemented by the Company in October 1998. The Board approved a plan to replace
all outstanding options under the 1994 Equity Incentive Plan with an exercise
price of $10.00 or more and all outstanding options under the 1997 Equity
Incentive Plan with an exercise price of $10.00 or more but less than $30.00.
Under this replacement program, the employees could elect to continue to hold
the existing options or to have those options replaced with new options granted
under the 1997 Equity Incentive Plan. The replacement options were designed to
grant two shares of Common Stock for every three shares subject to the replaced
option, at an exercise price of $6.75 per share, with a three year vesting
schedule commencing on the date of the new grant. Certain employees held options
received pursuant to an option replacement program adopted by the Company on May
5, 1998 (the "1998 Replacement Program") which was described in the Company's
Proxy Statement dated October 18, 1998. Under the replacement program approved
on December 4, 1998, the holder of an option that had been issued under the 1998
Replacement Program could elect to have that option replaced with a new grant
for the same number of shares at the lower price with a new vesting period
commencing on December 4, 1998.
Except for the option replacement program described above and the options
which were replaced under the 1998 Replacement Program, the Company has not
repriced stock options in the past 10 years. The following table sets forth
information with respect to the repricing of stock options held by any executive
officer of the Company during the last 10 years.
A-16
<PAGE> 43
10-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF MARKET
SECURITIES PRICE OF EXERCISE LENGTH OF ORIGINAL
UNDERLYING STOCK AT PRICE AT OPTION TERM
OPTIONS/SARS TIME OF TIME OF NEW REMAINING AT DATE
REPRICED OR REPRICING OR REPRICING OR EXERCISE OF REPRICING OR
NAME AND POSITION DATE AMENDED AMENDMENT AMENDMENT PRICE AMENDMENT
- ----------------- ------- ------------ ------------ ------------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Colin J. Reardon............. 12-4-98 40,000 $ 6.75 $17.00 $ 6.75 3 Years, 7 Months
Senior Vice President,
International Operations
Kevin J. Donoghue(1)......... 5-5-98 10,000 $16.00 $49.00 $16.00 5 Years, 5 Months
Vice President, North 12-4-98 7,000 $ 6.75 $13.63 $ 6.75 9 Years, 6 Months
American Sales Division 12-4-98 6,667 $ 6.75 $16.00 $ 6.75 9 Years, 5 Months
12-4-98 10,000 $ 6.75 $42.25 $ 6.75 3 Years, 11 Months
Mark R. Schonau.............. 12-4-98 123,000 $ 6.75 $15.88 $ 6.75 3 Years, 7 Months
Senior VP, Finance and
Administration, Chief
Financial Officer and
Treasurer
David M. Lee(2).............. 5-5-98 50,000 $16.00 $49.00 $16.00 5 Years, 5 Months
Vice President, 12-4-98 33,333 $ 6.75 $16.00 $ 6.76 9 Years, 5 Months
Products Division
Jean-Luc G. Valente(3)....... 5-5-98 10,000 $16.00 $49.00 $16.00 5 Years, 5 Months
Former Senior Vice
President, Marketing
Abbott H. Ezrilov(2)......... 5-5-98 15,000 $16.00 $49.00 $16.00 5 Years, 5 Months
Former Vice President,
Channel Sales and
Vendor Relationships
</TABLE>
- ---------------
(1) Mr. Donoghue was elected Vice President, North American Sales Division in
August 1998.
(2) Messrs. Ezrilov and Lee were elected executive officers of the Company in
April 1998. Mr. Ezrilov resigned from the Company on November 2, 1998.
(3) Mr. Valente resigned from his employment with the Company effective
September 30, 1998.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation for the Company's Chief Executive Officer, Steven D.
Whiteman, was determined based on the same policies and criteria as the
compensation of the other executive officers, as discussed above. During fiscal
1999, Mr. Whiteman's compensation included a base salary, cash bonuses and stock
options. Mr. Whiteman's salary for fiscal 1999 was set at $230,000, an increase
of $10,000, or 4.5% from the prior fiscal year. This increase was due to the
Compensation Committee's subjective evaluation of Mr. Whiteman's performance in
fiscal 1998. A significant portion of Mr. Whiteman's total compensation plan for
fiscal 1999 was in the form of cash bonuses under the Bonus Plan, which tied his
compensation to the achievement of financial performance objectives;
specifically, budgeted "Net Income" goals. For fiscal 1999, the Compensation
Committee increased the portion of variable compensation that was based on the
performance of the Company from approximately 33% in fiscal 1998 to over 50% of
Mr. Whiteman's total target compensation at 100% performance by the Company of
the Net Income goals set in the Bonus Plan. Because the Company did not achieve
the financial objectives set, Mr. Whiteman's performance bonuses under the Bonus
Plan during fiscal 1999 totaled $24,000, which was a decrease of $24,595, or
approximately 51%, from fiscal 1998 and a decrease of $157,980, or approximately
87%, from fiscal 1997. Mr. Whiteman's performance bonuses under the Bonus Plan
during fiscal 1999 accounted for approximately 9.4% of his total cash
compensation. The Compensation Committee believes that this mix of compensation
properly rewards and provides incentives to Mr. Whiteman for his overall
responsibility for the performance of the Company.
A-17
<PAGE> 44
TAX CONSIDERATIONS
In August 1993, as part of the Omnibus Budget Reconciliation act of 1993,
Section 162(m) of the Internal Revenue Code was enacted, which provides for an
annual one million dollar limitation on the deduction that an employer may claim
for compensation of certain executives. While no one executive officer will
approach the one million dollar limitation in cash compensation, it is possible
that one or more executive officers will in the future have taxable compensation
in excess of one million dollars as a result of the exercise and sale of Viasoft
Common Stock received from stock options.
Section 162(m) of the Code provides certain exceptions to the one million
dollar deduction limitation, and it has been the policy of the Compensation
Committee to review the possible exceptions and exemptions and to implement them
when needed, to the extent feasible and in the best interests of the Company.
Consequently, the Compensation Committee recommended and the Company included
certain provisions in the 1997 Equity Incentive Plan that exempts stock options
and other grants of equity compensation under the 1997 Plan from the one million
dollar limitation. Certain previously granted stock options of the Company are
not exempt from the one million dollar limitation.
This report is submitted by the members of the Compensation Committee:
<TABLE>
<S> <C> <C>
J. David Parrish John J. Barry III, Chairman Arthur C. Patterson
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
In accordance with Section 16(a) of the Securities Exchange Act of 1934 and
the regulations of the Securities and Exchange Commission, the Company's
directors, executive officers and certain other 10% stockholders are required to
file reports of ownership and changes in ownership with the Commission and The
Nasdaq Stock Market and to furnish the Company with copies of all such reports
they file.
Based solely on its review of the copies of such forms furnished to the
Company and written representations from certain reporting persons, the Company
believes that during fiscal 1999 all filings required under Section 16(a)
applicable to its directors, executive officers and 10% stockholders were
satisfied.
A-18
<PAGE> 45
COMPANY STOCK PERFORMANCE GRAPH
The Company Stock Performance Graph below compares the cumulative total
stockholder return on the Common Stock of the Company, on a quarterly basis,
from March 1, 1995 (the date of its initial public offering) to June 30, 1999
(the last day of the Company's most recent fiscal year), with the cumulative
total return on The Nasdaq Stock Market for United States companies ("Nasdaq
Stock Market Index") and the Nasdaq Computer and Data Processing Stocks ("Nasdaq
Computer Index") over the same period. This graph assumes a $100 investment at
March 1, 1995 in the Company's Common Stock and in each of the indexes and
reinvestment of all dividends, if any.
The graph displayed below is presented in accordance with Commission
requirements. Stockholders are cautioned against drawing any conclusions from
the data contained therein, as past results are not necessarily indicative of
future performance. This graph is not intended to reflect the Company's forecast
of future financial performance.
[Viasoft-Company Stock Performance Graph]
<TABLE>
<CAPTION>
VIASOFT NASDAQ US NASDAQ COMP&DP
------- --------- --------------
<S> <C> <C> <C>
'3/1/95' 100.00 100.00 100.00
'6/30/95' 164.06 118.07 126.19
'6/28/96' 807.81 151.59 167.60
'6/30/97' 1268.75 184.36 211.58
'6/30/98' 404.69 242.74 319.62
'6/30/99' 87.50 347.19 487.61
</TABLE>
A-19
<PAGE> 46
ANNEX B
BROADVIEW
JULY 14, 1999
CONFIDENTIAL
Board of Directors
Viasoft, Inc.
3033 N. 44th St.
Phoenix, AZ 85018-7296
Dear Members of the Board:
We understand that Viasoft, Inc. ("Viasoft" or the "Company"), Compuware
Corporation ("Compuware" or the "Parent"), and CV Acquisition, Inc., a wholly
owned subsidiary of Compuware (the "Merger Sub"), propose to enter into an
Agreement and Plan of Merger (the "Agreement") pursuant to which Parent will
cause Merger Sub to make a tender offer (the "Offer") to purchase all of the
issued and outstanding shares of Common Stock of Viasoft ("Viasoft Common
Stock"), at a price per share of not less than $9.00 in cash (the "Offer
Price"), and subsequently merge with and into Viasoft (the "Merger"). Pursuant
to the Merger, each issued and outstanding Share of Viasoft not acquired in the
Offer will be converted into the right to receive an amount of cash equal to the
Offer Price. The terms and conditions of the above described Offer and Merger
(together the "Transaction") are more fully detailed in the Agreement.
You have requested our opinion as to whether the Offer Price is fair, from
a financial point of view, to Viasoft shareholders.
Broadview International LLC ("Broadview") focuses on providing merger and
acquisition advisory services to information technology ("IT") companies. In
this capacity, we are continually engaged in valuing such businesses, and we
maintain an extensive database of IT mergers and acquisitions for comparative
purposes. We are currently acting as financial advisor to Viasoft's Board of
Directors and will receive a fee from Viasoft upon the successful conclusion of
the Transaction.
In rendering our opinion, we have, among other things:
1.) reviewed the terms of the Agreement dated July 14, 1999 furnished
to us by Viasoft management on July 14, 1999 (which, for the
purposes of this opinion, we have assumed, with your permission, to
be identical in all material respects to the agreement to be
executed);
2.) reviewed Viasoft annual report on Form 10-K for its fiscal year
ended June 30, 1998, including the audited financial statements
included therein, and Viasoft's quarterly report on Form 10-Q for
the period ended March 31, 1999, including the unaudited financial
statements included therein;
3.) reviewed certain internal financial and operating information
relating to Viasoft, including preliminary results for its fiscal
quarter ending June 30, 1999 and certain quarterly projections
through June 30, 2000, prepared by and furnished to us by Viasoft
management;
4.) participated in discussions with Viasoft management concerning the
operations, business strategy, current financial performance and
prospects for Viasoft;
5.) discussed with Viasoft management its view of the strategic
rationale for the Merger;
6.) reviewed the recent reported closing prices and trading activity
for Viasoft Common Stock;
7.) compared certain aspects of the financial performance of Viasoft
with public companies we deemed comparable;
8.) analyzed available information, both public and private, concerning
other mergers and acquisitions we believe to be comparable in whole
or in part to the Transaction;
B-1
<PAGE> 47
9.) reviewed recent equity research analyst reports covering Viasoft;
10.) assisted in negotiations and discussions related to the Transaction
among Viasoft, Compuware and their respective financial and legal
advisors; and
11.) conducted other financial studies, analyses and investigations as
we deemed appropriate for purposes of this opinion.
In rendering our opinion, we have relied, without independent verification,
on the accuracy and completeness of all the financial and other information
(including without limitation the representations and warranties contained in
the Agreement) that was publicly available or furnished to us by Viasoft. With
respect to the financial projections examined by us, we have assumed that they
were reasonably prepared and reflected the best available estimates and good
faith judgments of the management of Viasoft as to the future performance of
Viasoft. We have neither made nor obtained an independent appraisal or valuation
of any of Viasoft assets.
Based upon and subject to the foregoing, we are of the opinion that the
Offer Price is fair, from a financial point of view, to Viasoft shareholders.
For purposes of this opinion, we have assumed that Viasoft is not currently
involved in any material transaction other than the Transaction and those
activities undertaken in the ordinary course of conducting its business. Our
opinion is necessarily based upon market, economic, financial and other
conditions as they exist and can be evaluated as of the date of this opinion,
and any change in such conditions may impact this opinion.
This opinion speaks only as of the date hereof. It is understood that this
opinion is for the information of the Board of Directors of Viasoft in
connection with its consideration of the Transaction and does not constitute a
recommendation to any Viasoft shareholder as to whether such shareholder should
tender its shares in the Offer or as to how such shareholder should vote on the
Merger. This opinion may not be published or referred to, in whole or part,
without our prior written permission, which shall not be unreasonably withheld.
Broadview hereby consents to references to, and the inclusion of, this opinion
in its entirety in the Solicitation/Recommendation Statement on Schedule 14D-9
and Proxy Statement to be distributed to Viasoft shareholders in connection with
the Transaction.
Sincerely,
/s/BROADVIEW INTERNATIONAL
Broadview International LLC
B-2
<PAGE> 48
VIASOFT, INC. FAIRNESS OPINION
SUMMARY EXPLANATION OF
VALUATION METHODOLOGY
The following is a summary explanation of the various sources of
information and valuation methodologies employed by Broadview Int'l LLC
("Broadview") in valuing Viasoft, Inc. ("Viasoft" or the "Company") in
conjunction with rendering its fairness opinion regarding the transaction with
Compuware Corporation ("Compuware"). Broadview employed analyses based on: (1)
public company comparables, (2) transaction comparables, (3) transaction
premiums paid; and (4) stock price performance to determine the fairness of the
Transaction.
PUBLIC COMPANY COMPARABLES ANALYSIS -- Ratios of a Company's Common Stock
Share Price and Equity Market Capitalization ("EMC"), adjusted for cash and debt
when appropriate, to selected historical and projected operating metrics
indicate the value public equity markets place on companies in a particular
market segment. Several companies are comparable to Viasoft based on revenue
growth, revenue size, products offered, business model and management structure.
Broadview reviewed eight public company comparables in the analysis, design and
modeling, development management, application construction and data management
market segments with Trailing Twelve Month ("TTM") revenue between $35 million
and $500 million, and TTM Revenue Growth less than 30%, from a financial point
of view including each company's: TTM Revenue; TTM Revenue Growth; TTM Earnings
Before Interest and Taxes ("TTM EBIT") Margin, Projected 6/30/2000 ("Projected
2000") Revenue; Projected 6/30/00 Revenue Growth; Net Cash; Equity Market
Capitalization; Total Market Capitalization ("TMC" defined as Equity Market
Capitalization plus debt minus cash)/TTM Revenue ("TTM TMC/R") ratio; TMC/TTM
EBIT ("TTM TMC/EBIT") ratio; Price/TTM EPS ("TTM P/E") ratio; TMC/Projected
6/30/2000 Revenue ratio ("Projected 2000 TMC/R"); and Price/Projected 6/30/2000
EPS ratio ("Projected 6/30/2000 P/E"). The public company comparables were
selected from the Broadview Barometer, a proprietary database of publicly-
traded Information Technology ("IT"), Communications and Media companies
maintained by Broadview and broken down by industry segment.
In order of descending TTM TMC/R, the public company comparables consist
of:
1) Forte Software, Inc.;
2) Progress Software Corp.;
3) MERANT plc;
4) Object Design, Inc.;
5) Saga Systems, Inc.;
6) Rogue Wave Software, Inc.;
7) Inprise Corp.; and
8) Centura Software Corp.
These comparables exhibit the following medians and ranges for revenue
growth:
<TABLE>
<CAPTION>
MEDIAN RANGE OF
GROWTH RATE GROWTH RATES
----------- --------------
<S> <C> <C>
TTM Revenue Growth............................. 15.9 % (7.0)% -- 27.3%
Projected 6/30/2000 Revenue Growth............. 15.4 % (2.2)% -- 25.8%
</TABLE>
Because of the significant difference between Viasoft management's
financial projections and the financial projections of external research
analysts, Broadview incorporated both sets of projections in its analysis.
Viasoft's TTM revenue growth was 4.4%. Viasoft management's projection for
6/30/2000 revenue growth is 8.3%. The median of external research analyst
projections for Viasoft's 6/30/2000 revenue growth is (4.8)%.
1
<PAGE> 49
These comparables exhibit the following medians and ranges for the
applicable multiples:
<TABLE>
<CAPTION>
MEDIAN
MULTIPLE RANGE OF MULTIPLES
-------- ------------------
<S> <C> <C>
TTM TMC/R......................................... 1.36x 0.45x -- 2.74x
TTM TMC/EBIT...................................... 10.93x 7.41x -- 43.27x
TTM P/E........................................... 22.03x 14.67x -- 44.92x
Projected 2000 TMC/R.............................. 1.31x 0.72x -- 1.41x
Projected 2000 P/E................................ 17.63x 11.21x -- 41.03x
</TABLE>
These comparables imply the following medians and ranges for per share
value:
<TABLE>
<CAPTION>
IMPLIED RANGE OF
MEDIAN VALUE IMPLIED VALUES
------------ --------------
<S> <C> <C>
TTM TMC/R.............................................. $12.80 $7.24 -- $21.18
TTM TMC/EBIT........................................... $ 6.94 $6.15 -- $14.18
TTM P/E................................................ $ 6.29 $4.19 -- $12.82
Projected 2000 TMC/R................................... $12.43 $8.88 -- $13.04
(Management Projections)
Projected 2000 TMC/R................................... $11.47 $8.35 -- $12.00
(Analyst Projections)
Projected 2000 P/E..................................... $ 6.26 $3.98 -- $14.56
(Management Projections)
Projected 2000 P/E..................................... $ 3.41 $2.17 -- $ 7.93
(Analyst Projections)
</TABLE>
TRANSACTION COMPARABLES ANALYSIS -- Ratios of Equity Purchase Price,
adjusted for the seller's cash and debt when appropriate, to selected historical
operating metrics indicate the value strategic and financial acquirers have been
willing to pay for companies in a particular market segment. A handful of
companies involved in recent transactions are comparable to Viasoft based on
products offered and business model. Broadview reviewed ten comparable merger
and acquisition ("M&A") transactions from January 1, 1997 through July 14, 1999
involving sellers in the analysis, design and modeling, development management,
application construction, and data management market segments, with TTM revenue
between $35 million and $500 million, from a financial point of view including
each transaction's: Adjusted Price (Equity Price plus debt minus cash); Seller
TTM Revenue; and Adjusted Price/TTM Revenue ("P/R") ratio. Transactions were
selected from Broadview's proprietary database of published and confidential M&A
transactions in the IT, Communications and Media industries. In order of
descending P/R multiple, the transactions used are the acquisition of:
1) Pure Atria Corp. by Rational Software Corp.;
2) Logic Works, Inc. by Platinum technology, inc.;
3) Intersolv, Inc. by Micro Focus Group plc;
4) Confidential by Confidential;
5) Synon Corp. by Sterling Software, Inc.;
6) Prism Solutions, Inc. by Ardent Software, Inc.;
7) SEER Technologies, Inc. by Level 8 Systems, Inc.;
8) Texas Instruments, Inc. (Texas Instruments Software Division) by
Sterling Software, Inc.;
9) Red Brick Systems, Inc. by Informix Corp.; and
10) Cayenne Software, Inc. by Sterling Software, Inc.
These comparables exhibit the following median and range for the applicable
multiple:
<TABLE>
<CAPTION>
MEDIAN MULTIPLE RANGE OF MULTIPLES
--------------- ------------------
<S> <C> <C>
P/R.................................. 0.87x 0.22x -- 6.12x
</TABLE>
2
<PAGE> 50
These comparables imply the following median and range for per share value:
<TABLE>
<CAPTION>
MEDIAN IMPLIED RANGE OF
VALUE IMPLIED VALUES
-------------- --------------
<S> <C> <C>
P/R................................... $9.81 $5.84 -- $41.82
</TABLE>
TRANSACTION PREMIUMS PAID ANALYSIS -- Premiums paid above the seller's EMC
indicate the additional value, when compared to public shareholders, strategic
and financial acquirers are willing to pay for companies in a particular market
segment. In this analysis, the value of consideration paid in transactions
involving stock is computed using the buyer's last reported closing price (on
the appropriate exchange) prior to announcement. The seller's equity market
capitalization one trading day prior to announcement is calculated using the
seller's last reported closing price (on the appropriate exchange) prior to
announcement. The seller's equity market capitalization twenty trading days
prior to announcement is calculated using the seller's closing price (on the
appropriate exchange) on the first day of that period which: (1) consists of
twenty consecutive days during which the appropriate exchange conducts trading
activity, and (2) ends on the day of the last reported closing price prior to
announcement. Broadview reviewed 53 comparable M&A transactions involving North
American software vendors from January 1, 1997 to July 14, 1999 with equity
consideration between $50 million and $250 million. Transactions were selected
from Broadview's proprietary database of published and confidential M&A
transactions in the IT, Communications and Media industries. In order of
descending premium paid to seller's equity market capitalization 20 trading days
prior to the date of announcement, the software transactions used were the
acquisition of:
1) FullTime Software, Inc. by Legato Systems, Inc.;
2) Marcam Solutions, Inc., by Invensys plc (pending);
3) Sulcus Hospitality Technologies Corp. by Eltrax Systems, Inc.;
4) Consilium, Inc. by Applied Materials, Inc.;
5) Concentra Corp. by Oracle Corp.;
6) Cybermedia, Inc. by Network Associates, Inc.;
7) Interlink Computer Sciences by Sterling Software, Inc.;
8) Oshap Technologies Ltd. by SunGard Data Systems, Inc.;
9) TeleBackup Systems, Inc. by VERITAS Software Corp.;
10) National Health Enhancement Systems, Inc. by HBO & Company;
11) Visigenic Software, Inc. by Borland International, Inc.;
12) US Servis, Inc. by HBO & Company;
13) C*ATS Software, Inc. by Misys plc;
14) Technology Modeling Associates, Inc. by Avant! Corp.;
15) Interactive Group by DataWorks Corp.;
16) OrCAD, Inc. by Cadence Design Systems, Inc.;
17) FDP Corp. by SunGard Data Systems, Inc.;
18) Logic Works, Inc. by PLATINUM technology, inc.;
19) Accugraph Corp. by Architel Systems Corp.;
20) Award Software International, Inc. by Phoenix Technologies Ltd.;
21) Software Artistry, Inc. by IBM Corp.;
22) Kurzweil Applied Intelligence, Inc. by Lernout & Hauspie Speech
Products NV;
23) Ultradata Corp by CFI Proservices, Inc. (pending);
24) Walsh International, Inc. by Cognizant Corp.;
25) The ForeFront Group by CBT Group plc.;
26) Amisys Managed Care Systems, Inc. by HBO & Company;
27) Globalink, Inc. by Lernout and Hauspie Speech Products NV;
28) Maxis, Inc. by Electronic Arts, Inc.;
29) Learmonth & Burchett Management Systems, Inc. by PLATINUM
technology, inc.;
30) Oacis Healthcare Holdings Corp. by Science Applications
International Corp.;
31) Equitrac Corporation by Investor Group (pending);
32) PC DOCS Group International Inc. by Hummingbird Communications Ltd.
(pending);
3
<PAGE> 51
33) Prism Solutions, Inc. by Ardent Software, Inc.;
34) Medicus Systems Corp. by Quadramed Corp.;
35) Mosaix, Inc. by Lucent Technologies, Inc. (pending);
36) PHAMIS, Inc. by IDX Systems Corp.;
37) IQ Software Corp. by Information Advantage Software, Inc.;
38) Voice Control Systems, Inc. by Philips Electronics NV;
39) State Of The Art, Inc. by Sage Group plc;
40) Quaterdeck Corp. by Symantec Corp.;
41) Innovative Technologies Systems, Inc. by Peregrine Systems, Inc.;
42) Interlinq Software Corp. by W.R. Hambrecht & Co.;
43) Andyne Computing Ltd. by Hummingbird Communications Ltd.;
44) Unison Software, Inc. by IBM Corp.;
45) Premenos Corp. by Harbinger Corp;
46) DataWorks Corp. by Platinum Software Corp.;
47) Simulation Sciences, Inc. by Siebe plc;
48) Enterprise Systems, Inc. by HBO & Company;
49) XcelleNet, Inc. by Sterling Commerce, Inc.;
50) Red Brick Systems, Inc. by Informix Corp.;
51) Fractal Design Corp. by MetaTools, Inc.;
52) Orcad, Inc. by Summit Design; and
53) FTP Software, Inc. by NetManage, Inc.
These comparables exhibit the following medians and ranges for the
applicable premiums (discounts):
<TABLE>
<CAPTION>
MEDIAN
MULTIPLE RANGE OF MULTIPLES
-------- ------------------
<S> <C> <C>
Premium Paid to Seller's EMC 20 Trading Days
Prior to Announcement......................... 40.0% (26.5%) -- 326.7%
Premium Paid to Seller's EMC 1 Trading Day Prior
to Announcement............................... 25.5% (31.7%) -- 186.7%
</TABLE>
These comparables imply the following medians and ranges for per share
value:
<TABLE>
<CAPTION>
MEDIAN RANGE OF
IMPLIED VALUE IMPLIED VALUES
------------- --------------
<S> <C> <C>
Premium Paid to Seller's per Share Value
20 Trading Days Prior to Announcement........ $5.60 $2.94 -- $17.07
Premium Paid to Seller's per Share Value
1 Trading Day Prior to Announcement.......... $7.96 $4.33 -- $18.19
</TABLE>
VIASOFT STOCK PERFORMANCE ANALYSIS -- For comparative purposes, Broadview
examined the following:
1) Viasoft Common Stock weekly historical volume and trading prices from
7/10/98 through 7/9/99; and
2) Daily relative closing prices for an index of the public company
comparables vs. Viasoft and the S&P 500 from 7/10/98 through 7/9/99.
CONSIDERATION OF THE DISCOUNTED CASH FLOW VALUATION METHODOLOGY -- While
discounted cash flow is a commonly used valuation methodology, Broadview did not
employ such an analysis for the purposes of this opinion. Discounted cash flow
analysis is most appropriate for companies which exhibit relatively steady or
somewhat predictable streams of future cash flow. For company a such as Viasoft,
a preponderance of the value in a valuation based on discounted cash flow will
be in the terminal value of the entity, which is extremely sensitive to
assumptions about the sustainable long-term growth rate of the company. Given
the uncertainty in estimating both the future cash flows and a sustainable
long-term growth rate for the Company, Broadview considered a discounted cash
flow analysis inappropriate for valuing Viasoft.
4
<PAGE> 52
SUMMARY OF VALUATION ANALYSES -- Taken together, the information and
analyses employed by Broadview lead to Broadview's overall opinion that the
Offer Price is fair from a financial point of view, to Viasoft shareholders.
5
<PAGE> 53
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
Exhibit 1 Letter to Shareholders of Viasoft, Inc. dated July 22,
1999.*
Exhibit 2 Text of Joint Press Release issued by Compuware and the
Company on July 15, 1999.
Exhibit 3 Opinion of Broadview International LLC (included as Annex B
to the Schedule 14D-9).*
Exhibit 4 Agreement and Plan of Merger dated as of July 14, 1999,
among Viasoft, Inc., Compuware Corporation and CV
Acquisition, Inc.
Exhibit 5 Shareholder Tender and Voting Agreement dated as of July 14,
1999, among CV Acquisition, Inc. and certain shareholders
and option holders of Viasoft, Inc.
Exhibit 6 Viasoft, Inc. Change in Control Separation Plan dated July
14, 1999.
Exhibit 7 Portions of the Company's definitive Proxy Statement dated
October 15, 1998.
Exhibit 8 Confidentiality Agreement between Compuware and Viasoft,
Inc. dated as of June 2, 1999.
Exhibit 9 Amendment to Rights Agreement Between Viasoft, Inc. and
Harris Trust and Savings Bank, as Rights Agent dated as of
July 14, 1999.
ANNEX A Information Statement
ANNEX B Opinion Of Broadview International LLC
</TABLE>
- ---------------
* Included with Schedule 14D-9 mailed to shareholders.
<PAGE> 1
LOGO
July 22, 1999
To Our Shareholders:
I am pleased to announce that on July 14, 1999, Viasoft, Inc. ("Viasoft")
entered into an Agreement and Plan of Merger (the "Merger Agreement") with
Compuware Corporation ("Compuware"), and CV Acquisition, Inc., a wholly-owned
subsidiary of Compuware ("Purchaser"), providing for the acquisition of all
outstanding shares of Viasoft Common Stock for $9.00 in cash per share.
Today, Purchaser has commenced a cash tender offer (the "Offer") to
purchase all of the outstanding shares of Viasoft Common Stock (the "Shares")
for $9.00 per share, net to the seller in cash. The Merger Agreement provides
that the Offer will be followed by a merger (the "Merger") in which any Shares
of Viasoft Common Stock not purchased by Purchaser in the tender offer will be
converted into the right to receive the same $9.00 per share purchase price from
the Purchaser, in cash, without interest.
YOUR BOARD OF DIRECTORS (I) HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND
THE MERGER ARE ADVISABLE AND FAIR TO, AND IN THE BEST INTERESTS OF, THE
SHAREHOLDERS OF VIASOFT, (II) HAS UNANIMOUSLY APPROVED AND ADOPTED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER, AND (III) UNANIMOUSLY RECOMMENDS THAT VIASOFT SHAREHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
In arriving at its decision, your Board of Directors gave careful
consideration to a number of factors, including, among other things, the opinion
of Viasoft's financial advisor, Broadview International LLC, that the
consideration to be received by holders of Viasoft Common Stock in the Offer and
the Merger is fair to the shareholders from a financial point of view. A more
complete description of the factors considered by the Board of Directors is set
forth in the attached Solicitation/Recommendation Statement on Schedule 14D-9.
A more complete description of the Offer and the Merger is set forth in the
accompanying Offer to Purchase dated July 22, 1999, together with related
materials, including a Letter of Transmittal to be used for tendering your
Shares. These documents set forth the terms and conditions of the Offer and the
Merger and provide instructions as to how to tender your Shares. I urge you to
read the enclosed materials carefully before making a decision with respect to
tendering your Shares in the Offer.
Sincerely,
/s/ Steven D. Whiteman
Steven D. Whiteman
Chairman of the Board
and Chief Executive Officer
<PAGE> 1
[VIASOFT LETTERHEAD]
N E W S R E L E A S E
FOR IMMEDIATE RELEASE
CONTACT
Mark R. Schonau
Chief Financial Officer
Viasoft, Inc.
(602) 952-0050
COMPUWARE TO ACQUIRE VIASOFT, INC.
PHOENIX, Ariz. (July 15, 1999) - Compuware Corporation (NASDAQ: CPWR) and
Viasoft, Inc. (Viasoft) (NASDAQ: VIAS) today announced they have entered into
an agreement for Compuware to acquire Viasoft through a cash tender offer. A
wholly owned subsidiary of Compuware will offer to purchase any and all
outstanding shares of Viasoft's common stock for $9 per share. The transaction
has been approved by the Boards of Directors of both Viasoft and Compuware.
Viasoft is a leader in understanding enterprise applications to help
companies realize the greatest return on their information technology
investments. The company provides business solutions consisting of specialized
professional services and award-winning software that is designed to enable
customers worldwide to cost-effectively manage and evolve their information
technology assets. Viasoft's suite of products and services-including its
recently announced advanced e-commerce transformation product for IBM MVS Cobol
applications - complement Compuware's Testing and Implementation solutions.
Together the combined companies are expected to be ideally positioned to help
large corporations deploy evolving technologies.
"We are very excited to welcome Viasoft's team to the Compuware family,"
said Joseph A. Nathan, Compuware President and Chief Operating Officer.
"Acquiring Viasoft will accelerate work underway at Compuware to help clients
better manage maintenance
1
<PAGE> 2
backlogs and extend their legacy applications to take full advantage of
e-commerce opportunities."
"The Board of Directors and the team of employees at Viasoft are extremely
proud of the value that we have provided to our customers since 1985," stated
Steven D. Whiteman, Viasoft Chairman and CEO. "We have worked hard to deliver
quality products and services to our customers as well as provide challenging
opportunities for our employees. We believe that our alliance with
Compuware will serve the best interests of our customers and employees.
Compuware's strong management team, its fundamental value system and the
respect Compuware shows for its employees make it an ideal partner."
In the tender offer, Compuware seeks to purchase no less than a majority
of Viasoft's outstanding shares on a fully diluted basis. Consummation of the
tender offer will be subject to the expiration or termination of any applicable
antitrust waiting period, the receipt of any required regulatory approvals and
customary conditions. Following completion of the tender offer, the subsidiary
of Compuware will be merged into Viasoft (with the approval of Viasoft
shareholders, if necessary), and all of Viasoft's shares not owned by Compuware
will be converted into the right to receive $9 per share in cash.
ABOUT VIASOFT, INC.
Headquartered in Phoenix, Ariz., Viasoft provides sales and professional
services through regional offices in the United States, Canada, Australia,
Europe and a growing network of international subsidiaries, distributors and
resellers. For more information on Viasoft's services and technologies, please
visit the company's World Wide Web site at www.viasoft.com.
ABOUT COMPUWARE CORPORATION
Compuware productivity solutions help 14,000 of the world's largest
corporations more efficiently maintain and enhance their most critical business
applications. Providing immediate and measurable return on information
technology investments, Compuware products and services improve quality, lower
costs and increase the speed at which systems can be developed, implemented and
supported. Inclusive of pending acquisitions, Compuware employs nearly 15,000
information technology professionals worldwide, including more than 10,500 in
its
2
<PAGE> 3
professional services organization. With fiscal 1999 revenues of $1.6 billion,
Compuware is the world leader in client/server development technology. For more
information on Compuware, please contact the corporate offices at 800-521-9353.
Compuware also can be found on the World Wide Web at http://www.compuware.com.
###
================================================================================
Statements herein concerning the growth and strategies of Compuware and
Viasoft include forward-looking statements. Compuware's and/or Viasoft's
actual results may differ materially from those suggested as a result of
various factors, including, without limitation, Compuware's and Viasoft's
ability to consummate the transaction, successfully integrate Viasoft's
operations and compete successfully with existing and future competitors.
Interested parties should refer to the disclosure set forth in Compuware's
and Viasoft's recent public filings, under the caption "Risk Factors" and
elsewhere, for additional information regarding risks affecting Compuware's
or Viasoft's financial conditions and results of operations.
3
<PAGE> 1
EXHIBIT 4
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
dated as of July 14, 1999
among
COMPUWARE CORPORATION,
CV ACQUISITION, INC.
and
VIASOFT, INC.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I - THE OFFER.................................................................................................2
1.1 The Offer...................................................................................................2
1.2 Viasoft Actions.............................................................................................3
ARTICLE II - THE MERGER...............................................................................................4
2.1 The Merger..................................................................................................4
2.2 Closing.....................................................................................................5
2.3 Effective Time..............................................................................................5
2.4 Effects of the Merger.......................................................................................5
2.5 Certificate of Incorporation and Bylaws.....................................................................5
2.6 Directors...................................................................................................5
2.7 Officers....................................................................................................5
2.8 Merger Without Shareholders Meeting.........................................................................5
ARTICLE III - EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES.....6
3.1 Effect on Capital Stock.....................................................................................6
3.2 Exchange of Certificates....................................................................................7
ARTICLE IV - REPRESENTATIONS AND WARRANTIES...........................................................................9
4.1 Representations and Warranties of Viasoft...................................................................9
4.2 Representations and Warranties of Compuware and Merger Sub.................................................26
ARTICLE V - COVENANTS RELATING TO CONDUCT OF BUSINESS................................................................29
5.1 Conduct of Business........................................................................................29
5.2 No Solicitation............................................................................................31
ARTICLE VI - ADDITIONAL AGREEMENTS...................................................................................33
6.1 Shareholder Approval; Preparation of Proxy Statement.......................................................33
6.2 Access to Information; Confidentiality.....................................................................35
6.3 Reasonable Efforts; Notification...........................................................................35
6.4 Stock Plans................................................................................................36
6.5 Post Merger Employment Benefits............................................................................36
6.6 Indemnification, Exculpation and Insurance.................................................................37
6.7 Directors..................................................................................................37
6.8 Fees and Expenses..........................................................................................38
6.9 Public Announcements.......................................................................................38
6.10 Shareholder Litigation.....................................................................................39
6.11 Certain Tax Matters........................................................................................39
ARTICLE VII - CONDITIONS PRECEDENT...................................................................................39
7.1 Conditions to Each Party's Obligation to Effect the Merger.................................................39
7.2 Conditions to Compuware's and Merger Sub's Obligation to Effect the Merger.................................40
7.3 Conditions to Viasoft's Obligation to Effect the Merger....................................................41
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
7.4 Conditions to the Short-Form Merger........................................................................41
ARTICLE VIII - TERMINATION, AMENDMENT AND WAIVER.....................................................................41
8.1 Termination................................................................................................41
8.2 Effect of Termination......................................................................................43
8.3 Amendment..................................................................................................44
8.4 Extension; Waiver..........................................................................................44
8.5 Procedure for Termination, Amendment, Extension or Waiver..................................................44
ARTICLE IX - GENERAL PROVISIONS......................................................................................45
9.1 Nonsurvival of Representations and Warranties..............................................................45
9.2 Notices....................................................................................................45
9.3 Definitions................................................................................................46
9.4 Interpretation.............................................................................................49
9.5 Counterparts...............................................................................................50
9.6 Entire Agreement; No Third-Party Beneficiaries.............................................................50
9.7 Governing Law..............................................................................................50
9.8 Assignment.................................................................................................50
9.9 Enforcement................................................................................................50
</TABLE>
-ii-
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 14, 1999, among
Compuware Corporation, a Michigan corporation ("Compuware"), CV Acquisition,
Inc., a Delaware corporation and a wholly-owned subsidiary of Compuware ("Merger
Sub"), and Viasoft, Inc., a Delaware corporation ("Viasoft").
Recitals
A. In furtherance of the acquisition of Viasoft by Compuware on the
terms and subject to the conditions set forth in this Agreement, Compuware
proposes to cause Merger Sub to make a tender offer (as it may be amended from
time to time as permitted under this Agreement, the "Offer") to purchase all the
issued and outstanding shares of Common Stock, $0.001 par value, of Viasoft
("Viasoft Common Stock") (including the associated Preferred Share Purchase
Rights ("Rights") issued pursuant to the Viasoft Rights Agreement (defined
below)), at a price per share of Viasoft Common Stock (a "Share") of not less
than $9.00 net to the seller in cash and without interest thereon (such price,
as may hereafter be increased, the "Offer Price"), subject to reduction for any
applicable federal backup or other applicable withholding or stock transfer
taxes, upon the terms and subject to the conditions set forth in this Agreement,
and the Board of Directors of Viasoft has approved the Offer and has resolved to
recommend that Viasoft's shareholders accept the Offer.
B. The respective Boards of Directors of Compuware, Merger Sub and
Viasoft have approved the Offer and the merger of Merger Sub into Viasoft, as
set forth below (the "Merger"), upon the terms and subject to the conditions set
forth in this Agreement, whereby each issued and outstanding Share, other than
Shares owned directly or indirectly by Compuware or Viasoft and Dissenting
Shares (as defined in Section 3.1(d)), will be converted into the right to
receive the Offer Price.
C. Compuware, Merger Sub and Viasoft desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
D. Concurrently with the execution and delivery of this Agreement,
Compuware and certain shareholders of Viasoft have entered into a Shareholder
Tender and Voting Agreement, pursuant to which such shareholders agree to tender
their shares of Viasoft Common Stock in the Offer and vote in favor of the
Merger.
Therefore, the parties agree as follows:
<PAGE> 5
ARTICLE I
THE OFFER
1.1 The Offer.
(a) Subject to the provisions of this Agreement, Merger
Sub will, and Compuware will cause Merger Sub to, within five business days
after the public announcement (on the date hereof or the following business day)
of the execution of this Agreement, commence (within the meaning of Rule 14d-2
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) the
Offer. The obligation of Merger Sub to, and of Compuware to cause Merger Sub to,
commence the Offer and accept for payment, and pay for, any Shares tendered
pursuant to the Offer will be subject to the conditions set forth in Exhibit A
and to the terms and conditions of this Agreement. Merger Sub expressly reserves
the right to waive any conditions to the Offer, to increase the price per Share
payable in the Offer, to extend the duration of the Offer (subject to the
limitations set forth in this Section), or to make any other changes in the
terms and conditions of the Offer; provided, however, that without Viasoft's
consent, no such change may be made which (i) decreases the price per Share
payable in the Offer, (ii) reduces the minimum (including by waiver of the
Minimum Tender Condition, as defined in Exhibit A) or maximum number of Shares
to be purchased in the Offer, (iii) imposes conditions to the Offer in addition
to those set forth in Exhibit A, (iv) changes the form of consideration payable
in the Offer, (v) extends the expiration of the Offer (the "Expiration Date")
(which will initially be twenty business days following the commencement of the
Offer) beyond five business days following the initial expiration of the Offer
except (A) as required by the Exchange Act or (B) in the case of any such
greater than five day extension of the Offer, in Merger Sub's reasonable
judgment, it is reasonably likely that during any such extension, any condition
set forth in Exhibit A (including the Minimum Tender Condition) which is not
satisfied as of the date of such extension will be satisfied during such
extension; provided that, without Viasoft's consent, the Expiration Date may not
be extended pursuant to clause (B) of this sentence beyond twenty business days
following the initial expiration of the Offer, or (vi) amends any other material
terms of the Offer in a manner materially adverse to Viasoft's shareholders.
Subject to the terms and conditions of this Agreement and the Offer (including,
if the Offer is extended or amended, the terms and conditions of any such
extension or amendment), Merger Sub will, and Compuware will cause Merger Sub
to, accept for payment, and pay for, all shares of Viasoft Common Stock validly
tendered and not withdrawn pursuant to the Offer that Merger Sub becomes
obligated to accept for payment, and pay for, pursuant to the Offer as soon as
practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Compuware
and Merger Sub will file with the Securities and Exchange Commission (the "SEC")
a Tender Offer Statement on Schedule 14D-1 with respect to the Offer, which will
contain an offer to purchase and a related letter of transmittal and summary
advertisement (such Schedule 14D-1 and the documents included therein pursuant
to which the Offer will be made, together with any supplements or amendments
thereto, the "Offer Documents") and will mail the Offer Documents to the
shareholders of Viasoft. Compuware and Merger Sub agree that the Offer Documents
will comply as to form in all material respects with the Exchange Act and the
rules and regulations promulgated thereunder, and the Offer Documents, on the
date first published, sent or given to Viasoft's shareholders, will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or
-2-
<PAGE> 6
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by Compuware or Merger Sub with respect to information supplied by Viasoft
specifically for inclusion in the Offer Documents. Each of Compuware, Merger Sub
and Viasoft agrees promptly to correct any information provided by it for use in
the Offer Documents if and to the extent that such information will have become
false or misleading in any material respect, and each of Compuware and Merger
Sub further agrees to take all steps necessary to amend or supplement the Offer
Documents and to cause the Offer Documents as so amended or supplemented to be
filed with the SEC and to be disseminated to Viasoft's shareholders, in each
case as and to the extent required by applicable federal securities laws.
Viasoft and its counsel will be given a reasonable opportunity to review the
Offer Documents and all amendments and supplements thereto prior to their filing
with the SEC or dissemination to shareholders of Viasoft. Compuware and Merger
Sub agree to provide Viasoft and its counsel any comments Compuware, Merger Sub
or their counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments including a copy of such
comments that are made in writing.
(c) Compuware will provide or cause to be provided to
Merger Sub on a timely basis the funds necessary to accept for payment, and pay
for, any shares of Viasoft Common Stock that Merger Sub becomes obligated to
accept for payment, and pay for, pursuant to the Offer.
1.2 Viasoft Actions.
(a) Viasoft hereby approves of and consents to the Offer
and represents that the Board of Directors of Viasoft, at a meeting duly called
and held, duly and unanimously adopted resolutions approving this Agreement, the
Offer and the Merger, determining that the terms of the Offer and the Merger are
fair to, and in the best interests of, Viasoft's shareholders and recommending
that Viasoft's shareholders accept the Offer and tender their shares pursuant to
the Offer and approve and adopt this Agreement and approve the Merger. Viasoft
represents that its Board of Directors has received the opinion of Broadview
International LLC that the proposed consideration to be received by the holders
of Shares pursuant to the Offer and the Merger is fair to such holders from a
financial point of view, and a complete and correct signed copy of such opinion
has been delivered by Viasoft to Compuware. Viasoft hereby consents to the
inclusion in the Offer Documents of the recommendation of Viasoft's Board of
Directors described in the first sentence of this Section 1.2(a) and has
obtained the consent of Broadview International LLC to the inclusion in the
Schedule 14D-9 of a copy of the written opinion referred to in the preceding
sentence. Viasoft has been advised by each of its directors and a majority of
the executive officers that each such person intends to tender all Shares (other
than Shares, if any, held by such person which if tendered, could cause such
person to incur liability under the provisions of Section 16(b) of the Exchange
Act) held by such person pursuant to the Offer.
(b) On the date the Offer Documents are filed with the
SEC, Viasoft will file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, 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") containing the recommendation
described in
-3-
<PAGE> 7
paragraph (a) and will mail the Schedule 14D-9 to the shareholders of Viasoft.
Viasoft agrees that the Schedule 14D-9 will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder, and, on the date filed with the SEC and on the date
first published, sent or given to Viasoft's shareholders, will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by Viasoft with respect to information supplied
by Compuware or Merger Sub specifically for inclusion in the Schedule 14D-9.
Each of Viasoft, Compuware and Merger Sub agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that such information will have become false or misleading in any material
respect, and Viasoft further agrees to take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or
supplemented to be filed with the SEC and disseminated to Viasoft's
shareholders, in each case as and to the extent required by applicable federal
securities laws. Compuware and its counsel will be given a reasonable
opportunity to review the Schedule 14D-9 and all amendments and supplements
thereto prior to their filing with the SEC or dissemination to shareholders of
Viasoft. Viasoft agrees to provide Compuware and its counsel any comments
Viasoft or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments including a copy of
such comments that are made in writing.
(c) In connection with the Offer, Viasoft will cause its
transfer agent promptly to furnish Merger Sub with mailing labels containing the
names and addresses of the record holders of Viasoft Common Stock as of a record
date and of those persons becoming record holders subsequent to such date,
together with copies of all lists of shareholders, security position listings
and, to the extent reasonably requested, computer files and other information in
Viasoft's possession or control regarding the beneficial owners of Viasoft
Common Stock, and will furnish to Merger Sub such information and assistance
(including updated lists of shareholders, security position listings and
computer files) as Compuware may reasonably request in communicating the Offer
to Viasoft's shareholders. Subject to the requirements of applicable law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Merger, Compuware and Merger Sub
and their agents will hold in confidence the information contained in any such
labels, listings and files, will use such information only in connection with
the Offer and the Merger and, if this Agreement is terminated, will, upon
request, deliver, and will use their best efforts to cause their agents to
deliver, to Viasoft all copies of such information then in their possession or
control.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware General Corporation
Law (the "DGCL"), Merger Sub will be merged with and into Viasoft at the
Effective Time (as defined in Section 2.3). Following the Effective Time, the
separate corporate existence of Merger Sub will cease and Viasoft will continue
as the surviving corporation (the "Surviving Corporation") and will succeed to
and assume all the
-4-
<PAGE> 8
rights and obligations of Merger Sub in accordance with the DGCL.
Notwithstanding the foregoing, Compuware may elect at any time prior to the
Merger to merge Viasoft with and into Merger Sub instead of merging Merger Sub
into Viasoft as provided above; provided, however, that Viasoft will not be
deemed to have breached any of its representations, warranties, covenants or
agreements set forth in this Agreement solely by reason of such election. In
such event, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect the foregoing and, where appropriate, to provide
that Merger Sub will be the Surviving Corporation and will continue under the
name "Viasoft, Inc." At the election of Compuware, any direct or indirect
Subsidiary (as defined in Section 9.3) of Compuware may be substituted for
Merger Sub as a constituent corporation in the Merger. In such event, the
parties agree to execute an appropriate amendment to this Agreement in order to
reflect the foregoing.
2.2 Closing. The closing of the Merger will take place at 10:00
a.m. on a date to be specified by the parties, which will be no later than the
second business day after satisfaction or waiver of the conditions set forth in
Article VII (the "Closing Date"), at the Detroit, Michigan offices of Honigman
Miller Schwartz and Cohn, counsel to Compuware and Merger Sub, unless another
date or place is agreed to in writing by the parties hereto.
2.3 Effective Time. Subject to the provisions of this Agreement,
as soon as practicable on or after the Closing Date, the parties will file a
Certificate of Merger (or Certificate of Ownership and Merger in the case of a
Short-Form Merger (defined below)) with the Delaware Secretary of State. The
Merger will become effective at such time as the Certificate of Merger is duly
filed with the Delaware Secretary of State, or at such other time as Merger Sub
and Viasoft agree should be specified in the Certificate of Merger (the time the
Merger becomes effective being hereinafter referred to as the "Effective Time").
2.4 Effects of the Merger. The Merger will have the effects set
forth in the applicable provisions of the DGCL.
2.5 Certificate of Incorporation and Bylaws. The certificate of
incorporation and bylaws of Merger Sub as in effect at the Effective Time will
be the certificate of incorporation and bylaws of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law;
provided that at the Effective Time, the certificate of incorporation of the
Surviving Corporation will be amended to read as follows: "The name of the
corporation is Viasoft, Inc."
2.6 Directors. The directors of Merger Sub immediately prior to
the Effective Time will be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
2.7 Officers. The officers of Merger Sub immediately prior to the
Effective Time will be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
2.8 Merger Without Shareholders Meeting. If Merger Sub (or any
other Subsidiary of Compuware) acquires, and maintains through the effectiveness
of the Merger, ownership of at least
-5-
<PAGE> 9
90% of the outstanding Shares sufficient to enable Merger Sub (or such other
Subsidiary) and Viasoft to cause the Merger to become effective without Viasoft
Shareholder Approval in accordance with Section 253 of the DGCL (the "Short-Form
Merger"), the parties hereto will, subject to the terms and conditions of this
Agreement (including Article VII) and applicable law, take all necessary and
appropriate action to cause the Short-Form Merger to become effective as
promptly as practicable.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 Effect on Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any Shares or
any shares of capital stock of Merger Sub:
(a) Capital Stock of Merger Sub. Each issued and
outstanding share of capital stock of Merger Sub will be converted into and
become one fully paid and nonassessable share of Common Stock, no par value, of
the Surviving Corporation.
(b) Cancellation of Treasury Stock and Compuware Owned
Stock. Each Share that is owned by Viasoft or by any subsidiary of Viasoft and
each Share that is owned by Compuware, Merger Sub or any other Subsidiary of
Compuware will automatically be cancelled and will cease to exist, and no
consideration will be delivered in exchange therefor.
(c) Conversion of Viasoft Common Stock. Subject to
Section 3.1(d), each issued and outstanding Share (other than Shares to be
cancelled in accordance with Section 3.1(b)) will be converted into the right to
receive from the Surviving Corporation in cash, without interest, the Offer
Price (the "Merger Consideration"). As of the Effective Time, all such Shares
will no longer be outstanding and will automatically be cancelled and will cease
to exist, and each holder of a certificate representing any such Shares will
cease to have any rights with respect thereto, except the right to receive the
Merger Consideration, without interest.
(d) Shares of Dissenting Shareholders. Notwithstanding
anything in this Agreement to the contrary, to the extent provided by the DGCL,
any issued and outstanding Shares held by a person (a "Dissenting Shareholder")
who elects to demand appraisal of his shares and complies with all the
provisions of the DGCL concerning the right of holders of Viasoft Common Stock
to require appraisal of their Shares ("Dissenting Shares") will not be converted
as described in Section 3.1(c) but will become the right to receive such
consideration as may be determined to be due to such Dissenting Shareholder
pursuant to the laws of the State of Delaware. If, after the Effective Time,
such Dissenting Shareholder withdraws his demand for appraisal or fails to
perfect or otherwise loses his right of appraisal, in any case pursuant to the
DGCL, his Shares will be deemed to be converted as of the Effective Time into
the right to receive the Merger Consideration. Viasoft will give Compuware (i)
prompt notice of any demands for appraisal of Shares received by Viasoft and
(ii) the opportunity to participate in and direct all negotiations and
proceedings with respect to any such demands. Viasoft will not, without the
prior written consent of Compuware, make any payment
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with respect to, or enter into a binding settlement agreement or make a written
offer to settle, any such demands.
(e) Rights to Receive Shares. Each right to receive
Shares, other than pursuant to (i) the Rights, (ii) the terms of securities
convertible into or exercisable for Shares which provide otherwise, or (iii) as
otherwise provided in this Agreement, will be converted into the right to
receive from the Surviving Corporation in cash, without interest, the Merger
Consideration.
3.2 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Compuware
will select a bank or trust company to act as paying agent (the "Paying Agent")
for the payment of the Merger Consideration upon surrender of certificates
representing Viasoft Common Stock.
(b) Compuware To Provide Funds. Compuware will take all
steps necessary to enable and cause the Surviving Corporation to provide to the
Paying Agent on a timely basis, as and when needed after the Effective Time,
funds necessary to pay for the Shares as part of the Merger pursuant to Section
3.1.
(c) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, the Paying Agent will mail to each holder of record of
a certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates") whose Shares were converted
into the right to receive the Merger Consideration pursuant to Section 3.1: (i)
a letter of transmittal (which will specify that delivery will be effected, and
risk of loss and title to the Certificates will pass, only upon delivery of the
Certificates to the Paying Agent and will be in a form and have such other
provisions as Compuware may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Compuware,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Paying Agent, the holder of such
Certificate will be entitled to receive in exchange therefor the Merger
Consideration, and the Certificate so surrendered will forthwith be cancelled.
In the event of a transfer of ownership of Viasoft Common Stock which is not
registered in the transfer records of Viasoft, payment may be made to a person
other than the person in whose name the Certificate so surrendered is
registered, if such Certificate is properly endorsed or otherwise in proper form
for transfer and the person requesting such payment pays any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 3.2, each Certificate will be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration. No interest will be paid or will accrue on
the cash payable upon the surrender of any Certificate.
(d) No Further Ownership Rights in Viasoft Common Stock.
All cash paid upon the surrender of Certificates in accordance with the terms of
this Article III will be deemed to have been paid in full satisfaction of all
rights pertaining to the Shares previously represented by such
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Certificates, and there will be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or the Paying
Agent for any reason, they will be cancelled and exchanged as provided in this
Article III.
(e) Failure to Timely Surrender; No Liability. Promptly
following the date that is six months after the Effective Time, the Paying Agent
will return to the Surviving Corporation all Merger Consideration and other
cash, property and instruments in its possession relating to the transactions
described in this Agreement, and the Paying Agent's duties will terminate.
Thereafter, each holder of a Certificate formerly representing a Share may
surrender such Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in exchange
therefor the Merger Consideration (without interest thereon). Notwithstanding
the foregoing, the Surviving Corporation will be entitled to receive from time
to time all interest or other amounts earned with respect to any cash deposited
with the Paying Agent as such amounts accrue or become available. If any
Certificates will not have been surrendered prior to 2 years after the Effective
Time (or immediately prior to such earlier date on which any payment pursuant to
this Article III would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 4.1(d)), the cash payment in respect
of such Certificate will, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interests
of any person previously entitled thereto. To the fullest extent permitted by
law, none of Compuware, Merger Sub, Viasoft or the Paying Agent will be liable
to any person in respect of any cash delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(f) Withholding Taxes. The right of any person to receive
any payment or consideration pursuant to this Agreement and the transactions
contemplated herein will be subject to any applicable requirements with respect
to the withholding of Taxes.
(g) Lost, Stolen or Destroyed Certificates. If any
certificates evidencing Shares have been lost, stolen or destroyed, the Paying
Agent will pay to such holder the Merger Consideration required pursuant to
Section 3.1, in exchange for such lost, stolen or destroyed certificates, upon
the making of an affidavit of that fact by the holder thereof with such
assurances as the Paying Agent, in its discretion and as a condition precedent
to the payment of the Merger Consideration, may reasonably require of the holder
of such lost, stolen or destroyed certificates.
(h) Supplementary Action. If at any time after the
Effective Time, any further assignments or assurances in law or any other things
are necessary or desirable to vest or to perfect or confirm of record in the
Surviving Corporation the title to any property or rights of either Viasoft or
Merger Sub, or otherwise to carry out the provisions of this Agreement, the
officers and directors of the Surviving Corporation are hereby authorized and
empowered, in the name of and on behalf of Viasoft and Merger Sub, to execute
and deliver any and all things necessary or proper to vest or to perfect or
confirm title to such property or rights in the Surviving Corporation, and
otherwise to carry out the purposes and provisions of this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Viasoft. Except as set forth
in the disclosure letter delivered by Viasoft to Compuware concurrently with the
execution of this Agreement (the "Viasoft Disclosure Letter"), Viasoft
represents and warrants to Compuware and Merger Sub as follows:
(a) Organization, Standing and Corporate Power. Viasoft
and each of its subsidiaries is a corporation or partnership duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized and has the requisite corporate or partnership power and
authority to carry on its business as now being conducted. Viasoft and each of
its subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed individually or in the aggregate would not have a Material Adverse
Effect on Viasoft. Viasoft has made available to Compuware complete and correct
copies of its certificate of incorporation and bylaws and the articles of
incorporation and bylaws or other organizational documents of its subsidiaries,
in each case as amended to the date of this Agreement.
(b) Subsidiaries. Section 4.1(b) of the Viasoft
Disclosure Letter lists each subsidiary of Viasoft. Except as set forth in
Section 4.1(b) of the Viasoft Disclosure Letter, all the outstanding shares of
capital stock of each such subsidiary have been validly issued and are fully
paid and nonassessable and (except as may be required by foreign jurisdictions)
are owned by Viasoft, by another subsidiary of Viasoft or by Viasoft and another
such subsidiary, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever, other than
resale restrictions imposed by applicable securities laws (collectively,
"Liens"). Except for the capital stock of its subsidiaries, Viasoft does not
own, directly or indirectly, any capital stock or other ownership interest in
any corporation, partnership, joint venture or other entity.
(c) Capital Structure. The authorized capital stock of
Viasoft consists of 48,000,000 shares of Viasoft Common Stock and 2,000,000
shares of preferred stock, $0.001 par value ("Viasoft Preferred Stock"). At the
close of business on July 12, 1999, (i) 17,906,636 shares of Viasoft Common
Stock and no shares of Viasoft Preferred Stock were issued and outstanding, (ii)
1,549,497 shares of Viasoft Common Stock were held by Viasoft in its treasury,
(iii) 3,338,681 shares of Viasoft Common Stock were reserved for issuance upon
exercise of outstanding Options (as defined in Section 6.4). Except as set forth
in Section 4.1(c)(i) of the Viasoft Disclosure Letter, the only plans or
arrangements pursuant to which Viasoft is obligated to issue Shares or pursuant
to which Options are outstanding are Viasoft's 1986 Stock Option Plan, the 1994
Equity Incentive Plan, the 1997 Equity Incentive Plan, the Outside Director
Stock Plan and the resolutions of the Board of Directors of Viasoft referenced
in Section 4.1(c)(i) of the Viasoft Disclosure Letter, each as amended,
(together, the "Viasoft Option Plans"), and Viasoft's Employee Stock Purchase
Plan (the "Stock Purchase Plan"). Except as set forth above, at the close of
business on July 12, 1999, no shares of capital stock or other voting securities
of Viasoft were issued, reserved for issuance or outstanding. There are no
outstanding stock appreciation rights. All outstanding shares of capital stock
of Viasoft are duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights
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created by Viasoft's certificate of incorporation, bylaws or any agreement to
which Viasoft is a party. Except as set forth in Section 4.1(c)(ii) of the
Viasoft Disclosure Letter, there are no bonds, debentures, notes or other
indebtedness of Viasoft having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
shareholders of Viasoft may vote. Except as set forth above or in Section
4.1(c)(iii) of the Viasoft Disclosure Letter, as of the date of this Agreement,
there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which
Viasoft or any of its subsidiaries is a party or by which any of them is bound
obligating Viasoft or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of Viasoft or of any of its subsidiaries or obligating
Viasoft or any of its subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking. As of the date of this Agreement, there are no outstanding
contractual obligations (i) of Viasoft or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of Viasoft or any of its
subsidiaries or (ii) of Viasoft to vote or to dispose of any shares of the
capital stock of any of its subsidiaries.
(d) Authority; Noncontravention. Viasoft has all the
requisite corporate power and authority to enter into this Agreement and,
subject to, if required by law, adoption and approval of the Merger Agreement
and approval of the Merger by an affirmative vote of the holders of a majority
of the outstanding shares of Viasoft Common Stock (the "Viasoft Shareholder
Approval"), to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by Viasoft and the consummation by
Viasoft of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of Viasoft, subject to
Viasoft Shareholder Approval, if such approval is required by law. This
Agreement has been duly executed and delivered by Viasoft and constitutes a
valid and binding obligation of Viasoft, enforceable against Viasoft in
accordance with its terms (except as enforcement hereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium and similar laws, both state
and federal, affecting the enforcement of creditors' rights or remedies in
general as from time to time in effect or (ii) the exercise by courts of equity
powers). The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or the loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of Viasoft or any of
its subsidiaries under (i) the certificate of incorporation or bylaws of Viasoft
or the comparable charter or organizational documents of any of its
subsidiaries, (ii) except as set forth in Section 4.1(d) of the Viasoft
Disclosure Letter (including change of control or acceleration rights under
Viasoft Option Plans or other agreements disclosed therein), any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Viasoft or
any of its subsidiaries or their respective properties or assets or (iii) any
governmental filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Viasoft or any of its subsidiaries or their respective properties
or assets, other than, in the case of clause (ii) or (iii), any such conflicts,
violations, defaults, rights or Liens that individually or in the aggregate
would not (x) have a Material Adverse Effect on Viasoft, (y) materially impair
the ability of Viasoft to perform its obligations under this Agreement or (z)
prevent the consummation of
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any of the transactions contemplated by this Agreement. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
federal, state or local government or any court, administrative or regulatory
agency or commission or other governmental authority or agency, domestic or
foreign (a "Governmental Entity"), is required by or with respect to Viasoft or
any of its subsidiaries in connection with the execution and delivery of this
Agreement by Viasoft or the consummation by Viasoft of the transactions
contemplated by this Agreement, except for (1) the filing of a pre-merger
notification and report form by Viasoft under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), (2) the filing with the SEC and the
National Association of Securities Dealers, Inc. of (A) the Schedule 14D-9 and
related Information Statement, (B) a proxy statement relating to Viasoft
Shareholder Approval, if such approval is required by law (as amended or
supplemented from time to time, the "Proxy Statement"), and (C) such reports
under Section 13(a) of the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated by this Agreement, (3) the
filing of the Certificate of Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which
Viasoft is qualified to do business, (4) such other consents, approvals, orders,
authorizations, registrations, declarations and filings as would not
individually or in the aggregate (A) have a Material Adverse Effect on Viasoft,
(B) materially impair the ability of Viasoft to perform its obligations under
this Agreement or (C) prevent or have a material adverse effect on the ability
of the parties to consummate any of the transactions contemplated by this
Agreement and (5) any of the foregoing disclosed pursuant to the following
sentence. Section 4.1(d) of the Viasoft Disclosure Letter lists all consents,
waivers and approvals under any of Viasoft'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, which if,
individually or in the aggregate, were not obtained, would result in a Material
Adverse Effect on Viasoft.
(e) SEC Documents; Financial Statements. Viasoft has
filed in a timely manner all required reports, schedules, forms, statements and
other documents with the SEC since December 31, 1996. All such required reports,
schedules, forms, statements and other documents filed by Viasoft with the SEC
(including those that Viasoft may file subsequent to the date hereof) are
referred to herein as the "SEC Documents". As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and none of the SEC Documents, when
filed, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except to the extent that information contained in any SEC
Document has been revised or superseded by a later Filed SEC Document (as
defined in Section 4.1(g)), none of the SEC Documents contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of Viasoft included in the SEC Documents, including those filed after
the date hereof until the Closing, comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as may be
indicated in the notes
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thereto) and fairly present in all material respects the consolidated financial
position of Viasoft and its consolidated subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments). Except as set forth in the SEC Documents or in Section
4.1(e) of the Viasoft Disclosure Letter or as contemplated by this Agreement,
since the date of the most recent consolidated balance sheet included in the SEC
Documents neither Viasoft nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by generally accepted accounting principles, consistently applied
("GAAP"), to be set forth on a consolidated balance sheet of Viasoft and its
consolidated subsidiaries or in the related notes to the consolidated financial
statements prepared in accordance with GAAP which are, individually or in the
aggregate, material to the business, results of operations or financial
condition of Viasoft and its subsidiaries taken as a whole, except liabilities
(i) provided for in the most recent consolidated balance sheet included in the
SEC Documents or (ii) incurred since the date of such balance sheet in the
ordinary course of business consistent with past practices.
(f) Information Supplied. None of the information
supplied or to be supplied by Viasoft specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the Schedule 14D-9,
(iii) the information to be filed by Viasoft in connection with the Offer
pursuant to Rule 14f-1 promulgated under the Exchange Act (the "Information
Statement") or (iv) the Proxy Statement, will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC or first published, sent or given to Viasoft's shareholders,
or, in the case of the Proxy Statement, at the time the Proxy Statement is first
mailed to Viasoft's shareholders or at the time of the Shareholders Meeting (as
defined in Section 6.1(a)), contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Schedule 14D-9, the Information Statement and
the Proxy Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by Viasoft with respect to
statements made or incorporated by reference therein based on information
supplied by Compuware or Merger Sub specifically for inclusion or incorporation
by reference therein.
(g) Absence of Certain Changes or Events. Except as
disclosed in the SEC Documents filed and publicly available prior to the date of
this Agreement (the "Filed SEC Documents") or in Section 4.1(g) of the Viasoft
Disclosure Letter, since the date of the most recently audited financial
statements included in the Filed SEC Documents, Viasoft has conducted its
business only in the ordinary course, and there has not been (i) any Material
Adverse Change affecting Viasoft, (ii) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or property) with
respect to any of Viasoft's capital stock, (iii) any split, combination or
reclassification of any of its capital stock or any issuance or authorization of
any issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, (iv)(x) any granting by Viasoft or
any of its subsidiaries to any executive officer of Viasoft or any of its
subsidiaries of any increase in excess of $10,000 per annum in compensation,
except in the ordinary course of business consistent with prior practice or as
was required under employment agreements in effect as of the date of the most
recent audited financial statements included in the Filed SEC Documents, (y) any
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granting by Viasoft or any of its subsidiaries to any executive officer of any
increase in excess of $10,000 per annum in severance or termination pay, except
as was required under any employment, severance or termination agreements in
effect as of the date of the most recent audited financial statements included
in the Filed SEC Documents, or (z) except as set forth in Section 4.1(g)(iv) of
the Viasoft Disclosure Letter, any entry by Viasoft or any of its subsidiaries
into any employment, severance or termination agreement with any executive
officer, (v) any damage, destruction or loss, whether or not covered by
insurance, that has or could reasonably be expected to have a Material Adverse
Effect on Viasoft, (vi) any change in accounting methods, principles or
practices by Viasoft materially affecting its assets, liabilities or business,
except insofar as may have been required by a change in GAAP and SEC rules and
regulations, (vii) any material revaluation of any of Viasoft's assets,
including, without limitation, writing down the value of capitalized inventory
or writing off accounts receivable, other than in the ordinary course consistent
with past practice, or (viii) any executive officer or other key employee who
has terminated such person's employment with Viasoft, or threatened to do so,
nor has Viasoft been informed that any such person plans to do so, because of
the pendency of the Offer or Merger.
(h) Intellectual Property.
(i) Viasoft and its subsidiaries own, or are licensed
or otherwise possess legally enforceable rights to use, all patents, trademarks,
trade names, service marks, copyrights, and any applications therefor,
maskworks, net lists, schematics, technology, know-how, trade secrets,
inventory, ideas, algorithms, processes, computer software programs or
applications (in both source code and object code form), and tangible or
intangible proprietary information or material ("Intellectual Property") that
are material to the business of Viasoft and its subsidiaries as currently
conducted by Viasoft and its subsidiaries.
(ii) Section 4.1(h)(ii) of the Viasoft Disclosure
Letter lists (x) all patents and patent applications and all registered and
unregistered trademarks, trade names and service marks, registered copyrights,
which Viasoft considers to be material to its business and included in the
Intellectual Property, including the jurisdictions in which each such
Intellectual Property right has been issued or registered or in which any
application for such issuance and registration has been filed, (y) all material
licenses, sublicenses, and other agreements as to which Viasoft is a party and
pursuant to which any person other than Viasoft is authorized to use any
Intellectual Property (other than end-user licenses in Viasoft's current
standard form provided to Compuware's counsel), and (z) all material licenses,
sublicenses and other agreements as to which Viasoft is a party and pursuant to
which Viasoft is authorized to use any third party patents, trademarks or
copyrights, including software ("Third Party Intellectual Property Rights")
which are incorporated in, are, or form a part of any Viasoft product that is
material to its business.
(iii) To Viasoft's knowledge, there is no material
unauthorized use, disclosure, infringement or misappropriation of any
Intellectual Property rights of Viasoft or any of its subsidiaries, any trade
secret material to Viasoft or any of its subsidiaries, or any Intellectual
Property right of any third party to the extent licensed by or through Viasoft
or any of its subsidiaries, by any third party, including any employee or former
employee of Viasoft or any of its subsidiaries. To Viasoft's knowledge, no
Viasoft Intellectual Property or product or service of Viasoft is subject to
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any proceeding or outstanding decree, order, judgment, agreement, or stipulation
restricting in any manner the use, transfer, or licensing thereof by Viasoft, or
which may affect the validity, use or enforceability of such Viasoft
Intellectual Property. Neither Viasoft nor any of its subsidiaries has entered
into any agreement to indemnify any other person against any charge of
infringement of any Intellectual Property, other than indemnification provisions
contained in licenses, purchase, service or work orders with customers,
distribution and reseller agreements, or other agreements arising in the
ordinary course of business.
(iv) Viasoft is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
under this Agreement, in material breach of any license, sublicense or other
agreement relating to Viasoft Intellectual Property or Third Party Intellectual
Property Rights, Viasoft's service offerings or its ability to exploit its
products which could reasonably be expected to result in a material loss or
liability to Viasoft.
(v) No suit, action or proceeding involving Viasoft
which involves a claim of infringement of any patents, trademarks, service
marks, copyrights or violation of any trade secret or other proprietary right,
or breach of any license or agreement involving Intellectual Property is
currently pending or, to the knowledge of Viasoft, is threatened, nor, to the
knowledge of Viasoft, is there any reasonable basis therefor. The manufacture,
marketing, licensing or sale of Viasoft's products and the provision of
Viasoft's services does not, to Viasoft's knowledge after due inquiry of each of
Viasoft's executive officers, directors and officers in charge of Viasoft's
corporate functions, infringe any patent, trademark, service mark, copyright,
trade secret or other proprietary right of any third party.
(vi) Viasoft has not received notice from any third
party that the operation of the business of Viasoft or any act, product or
service of Viasoft, infringes or misappropriates any Third Party Intellectual
Property Rights or constitutes unfair competition or trade practices under the
laws of any jurisdiction.
(vii) Except as set forth in Section 4.1(h)(vii) of the
Viasoft Disclosure Letter, to the knowledge of Viasoft, no Person has previously
infringed or misappropriated or is infringing or misappropriating any
Intellectual Property material to Viasoft.
(viii) Except as set forth in Section 4.1(h)(viii) of the
Viasoft Disclosure Letter, all current and former employees and consultants of
Viasoft have signed a confidentiality/nondisclosure agreement in the forms
attached to the Viasoft Disclosure Letter. All current and former employees and
consultants of Viasoft involved in product development work have signed an
invention assignment agreement in the form attached to the Viasoft Disclosure
Letter. To Viasoft's knowledge, no such current or former employees or
consultants of Viasoft have violated any such agreement or otherwise
misappropriated any trade secrets of Viasoft or of any third party. Viasoft does
not believe it is or will be necessary to utilize any inventions, trade secrets
or proprietary information of any of its employees made prior to their
employment by Viasoft, except for inventions, trade secrets or proprietary
information that have been assigned to Viasoft.
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(ix) Viasoft has taken all reasonable and appropriate
steps to protect and preserve the confidentiality of all Intellectual Property
not otherwise protected by patents, or patent applications or copyright
("Confidential Information"). All use, disclosure or appropriation of
Confidential Information owned by Viasoft by or to a third party has been
pursuant to the terms of a written agreement between Viasoft and such third
party. All use, disclosure or appropriation by Viasoft of Confidential
Information not owned by Viasoft has been pursuant to the terms of a written
agreement between Viasoft and the owner of such Confidential Information, or is
otherwise lawful.
(x) Except as set forth in Section 4.1(h)(x) of the
Viasoft Disclosure Letter, Viasoft's operating codes, programs, utilities,
development tools and other software, as well as all hardware and systems,
utilized by Viasoft or any of its subsidiaries internally or to develop products
or to provide services to customers, as well as all products of Viasoft or any
of its subsidiaries sold to customers (collectively, "Systems") will not, as a
result of processing data containing dates in the year 2000 and any preceding or
following years, fail (except where a failure could not reasonably be expected
to result in a material loss or liability to Viasoft) to initiate or operate, or
to correctly store, represent and process all dates or abnormally terminate such
processing; provided that any date data input from external sources is in a four
digit year format or is specified by unambiguous algorithms or interfacing
rules. Except as set forth in Section 4.1(h)(x) of the Viasoft Disclosure
Letter, Viasoft's Systems operate and will operate substantially in accordance
with their specifications prior to, during and after the calendar year 2000 or
any leap years, except where a failure to so operate could not reasonably be
expected to result in a material loss or liability to Viasoft. Since January 1,
1998, Viasoft has not given, and none of its subsidiaries has given to customers
any written representations or warranties or indemnities with respect to year
2000 compliance or conformity, except (A) where Viasoft's liability is limited
to amounts paid to Viasoft or to repairing or replacing the Product pursuant to
the contract in which such representation, warranty or indemnity appears and
lost profits and consequential damages are expressly excluded, (B) pursuant to
Viasoft's standard form warranties attached as Exhibit 4.1(h)(x) to the Viasoft
Disclosure Letter, (C) as disclosed in Section 4.1(h)(x) of the Viasoft
Disclosure Letter, or (D) where the breach of such representations and
warranties or where such indemnities could not reasonably be expected to result
in a material loss or liability to Viasoft.
(i) Litigation. Except as disclosed in the Filed SEC Documents
or in Section 4.1(i) of the Viasoft Disclosure Letter, as of the date of this
Agreement, there is no suit, action or proceeding pending or, to the knowledge
of Viasoft, threatened against Viasoft or any of its subsidiaries, nor, to the
knowledge of Viasoft, is their any reasonable basis therefor, that individually
or in the aggregate could reasonably be expected to (i) have a Material Adverse
Effect on Viasoft, (ii) challenge or seek to enjoin or seek damages with respect
to Viasoft's entering into and performing this Agreement or that impair the
ability of Viasoft to perform its obligations under this Agreement or (iii)
prevent the consummation of any of the transactions contemplated by this
Agreement, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Viasoft or any of its
subsidiaries having, or which is reasonably likely to have, any effect referred
to in the foregoing clauses (i), (ii) or (iii) above.
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<PAGE> 19
(j) Absence of Changes in Benefit Plans. Except as disclosed
in the Filed SEC Documents or Section 4.1(j) of the Viasoft Disclosure Letter,
since the date of the most recent audited financial statements included in the
Filed SEC Documents, there has not been any adoption or amendment in any
material respect by Viasoft or any of its subsidiaries of any collective
bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or former
employee, officer or director of Viasoft or any of its subsidiaries. Except as
disclosed in the Filed SEC Documents or Section 4.1(j) of the Viasoft Disclosure
Letter, there exist no employment, consulting, severance, termination or
indemnification agreements, arrangements or understandings between Viasoft or
any of its subsidiaries and any current or former employee, officer or director
of Viasoft or any of its subsidiaries as to which there is or could be aggregate
liability on the part of Viasoft or any of its subsidiaries in excess of
$100,000.
(k) ERISA Compliance.
(i) Viasoft is in compliance in all material respects with all
applicable laws, agreements and contracts relating to employment, employment
practices, wages, hours, and terms and conditions of employment, including, but
not limited to, employee compensation matters. Except as set forth in Section
4.1(k) of the Viasoft Disclosure Letter, Viasoft does not have any employment
contracts or consulting agreements currently in effect that are not terminable
at will (other than agreements with the sole purpose of providing for the
confidentiality of proprietary information or assignment of inventions).
(ii) Viasoft (w) has never been and is not now subject to a
union organizing effort, (x) is not subject to any collective bargaining
agreement with respect to any of its employees, (y) is not subject to any other
contract, written or oral, with any trade or labor union, employees' association
or similar organization and (z) does not have any current labor disputes.
Viasoft has good labor relations, has not been informed of any facts indicating
that the consummation of the transactions contemplated hereby will have a
material adverse effect on such labor relations, and has not been informed that
any of its key employees intends to leave its employ.
(iii) Neither Viasoft nor any trade or business (a "Viasoft
Affiliate") which is under common control with Viasoft within the meaning of
Section 414 of the Internal Revenue Code of 1986, as amended (the "Revenue
Code") has a pension plan which is subject to Section 412 of the Revenue Code or
subject to Title IV of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or maintains a "multiemployer plan" as defined in Section
3(37) of ERISA. Viasoft has made available to Compuware a true and complete copy
of, to the extent applicable, (i) such Viasoft Employee Plan, (ii) except as set
forth in Section 4.1(k)(iii) of the Viasoft Disclosure Letter, the most recent
annual report (Form 5500), (iii) each trust agreement related to such Viasoft
Employee Plan, (iv) the most recent summary plan description for each Viasoft
Employee Plan for which such a description is required and (v) the most recent
United States Internal Revenue Service ("IRS") determination letter issued with
respect to any Viasoft Employee Plan.
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<PAGE> 20
(iv) Each employment, severance or other similar contract,
arrangement or policy, each "employee benefit plan" as defined in Section 3(3)
of ERISA and each plan or arrangement (written or oral) providing for insurance
coverage (including any self-insured arrangements), workers' benefits, vacation
benefits, severance benefits, disability benefits, death benefits,
hospitalization benefits, retirement benefits, deferred compensation,
profit-sharing, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits for employees, consultants or directors
which is entered into, maintained or contributed to by Viasoft or any Viasoft
Affiliate and covers any employee or former employee of Viasoft or any Viasoft
Affiliate (collectively referred to as "Viasoft Employee Plans") has been
maintained in compliance in all material respects with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations
that are applicable to such Viasoft Employee Plan. Except as set forth in
Section 4.1(k)(iv) of the Viasoft Disclosure Letter, all contributions to any
Viasoft Employee Plan for all periods prior to the Effective Time have been
timely made or are accrued on Viasoft's financial statements.
(v) There has been no amendment to, written interpretation or
announcement (whether or not written) by Viasoft relating to, or change in
employee participation or coverage under, any Viasoft Employee Plan that would
increase materially the expense of maintaining such Viasoft Employee Plan above
the level of the expense incurred in respect thereof for Viasoft's fiscal year
ended June 30, 1999.
(vi) All Viasoft Employee Plans, to the extent applicable, are
in compliance, in all material respects, with (x) the continuation coverage
requirements of Section 4980B of the Revenue Code and Sections 601 through 608
of ERISA, (y) the Americans with Disabilities Act of 1990, as amended, and (z)
the Family Medical and Leave Act of 1993, as amended, and the regulations
thereunder.
(vii) No benefit payable or which may become payable by Viasoft
or any of its subsidiaries pursuant to any Viasoft Employee Plan or as a result
of or arising under this Agreement or the Agreement of Merger will constitute an
"excess parachute payment" (as defined in Section 280G(b)(1) of the Revenue
Code) which is subject to the imposition of an excise Tax under Section 4999 of
the Revenue Code or which would not be deductible by reason of Section 280G of
the Revenue Code. Except as set forth in Section 4.1(k)(vii) of the Viasoft
Disclosure Letter, neither Viasoft nor its subsidiaries is a party to any: (x)
agreement (other than as described in (y) below) with any executive officer or
other key employee thereof (A) the benefits of which are contingent, or the
terms of which are materially altered, upon the occurrence of a transaction
involving Viasoft or its subsidiaries in the nature of any of the transactions
contemplated by this Agreement or the consummation of the transactions
contemplated hereby, (B) providing any term of employment or compensation
guarantee, or (C) providing severance benefits or other benefits after the
termination of employment of such employee regardless of the reason for such
termination of employment, or (y) agreement or plan, including, without
limitation, any stock option plan, stock appreciation rights plan or stock
purchase plan, any of the benefits of which will be materially increased, or the
vesting of benefits of which will be materially accelerated, by the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
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<PAGE> 21
(viii) Viasoft has made available to Compuware a list of the names
of all employees of Viasoft and of any of its subsidiaries and their salaries as
of the most recent practicable date.
(l) Taxes.
(i) Except as set forth in Section 4.1(l) of the Viasoft
Disclosure Letter, Viasoft and each of its subsidiaries has duly filed on a
timely basis all material Tax Returns required to be filed by it. All such
Returns are true, complete and correct in all material respects. Neither Viasoft
nor any of its subsidiaries has been delinquent in the payment of any material
Tax nor is there any material Tax deficiency outstanding, proposed or assessed
against Viasoft or any of its subsidiaries, nor has Viasoft or any of its
subsidiaries executed any unexpired waiver of any statute of limitations on or
extending the period for the assessment or collection of any Tax. Neither
Viasoft nor any of its subsidiaries has any liability for any material unpaid
Taxes which has not been accrued for or reserved on the balance sheet of Viasoft
contained in the most recent financial statements contained in the Filed SEC
Documents (the "Viasoft Balance Sheet") in accordance with GAAP, whether
asserted or unasserted, contingent or otherwise, which is material to Viasoft,
other than any liability for unpaid Taxes that may have accrued since the date
of the Viasoft Balance Sheet in connection with the operation of the business of
Viasoft and its subsidiaries in the ordinary course. The most recent financial
statements contained in the Filed SEC Documents properly reflect in accordance
with GAAP all Taxes payable by or properly accruable by Viasoft and its
subsidiaries for all taxable periods and portions thereof through the date of
such financial statements.
(ii) Except as set forth in Section 4.1(l) of the Viasoft
Disclosure Letter, no deficiencies for any Taxes have been proposed, asserted or
assessed against Viasoft or any of its subsidiaries that are not properly
reflected in accordance with GAAP in the most recent financial statements
contained in the Filed SEC Documents, and no requests for waivers of the time to
assess any such Taxes are pending. Viasoft and/or any of its subsidiaries have
not agreed with any Tax authority to extend the time to assess any Taxes beyond
the date of this Agreement. Except as set forth in Section 4.1(l)(ii) of the
Viasoft Disclosure Letter, none of the Returns of Viasoft and each of its
subsidiaries have been examined by the Internal Revenue Service or any other
taxing authority during the 5 year period ending on the Closing Date which has
resulted or may result in a liability in excess of $25,000 per Return or in
excess of $1,000,000 for all Returns. None of Viasoft and its subsidiaries has
entered into any closing agreement with respect to any taxable year. Except as
set forth in Section 4.1(l)(ii) of the Viasoft Disclosure Letter, none of
Viasoft and its subsidiaries is a party to any audit, dispute, claim, action or
proceeding relating to, or for the assessment or collection of, Taxes, nor has
such event been asserted or threatened in writing against Viasoft or any of its
subsidiaries or any of their assets that involves a liability or potential
liability in excess of $25,000 per Return or in excess of $1,000,000 for all
Returns. Viasoft and each of its subsidiaries has disclosed on their federal
income tax returns all positions taken therein that could give rise to a
substantial understatement penalty within the meaning of Revenue Code Section
6662. Neither Viasoft nor any of its subsidiaries is (nor has ever been) a party
to any Tax sharing agreement with any party other than Viasoft or its
subsidiaries. There are no Liens or security interests on any of the assets of
Viasoft or its subsidiaries that arose in connection with any failure (or
alleged failure) to pay Taxes.
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<PAGE> 22
(iii) Except as set forth in Schedule 4.1(l) of the Viasoft
Disclosure Letter, neither Viasoft nor any subsidiary is a party to any safe
harbor lease within the meaning of Section 168(f)(8) of the Revenue Code, as in
effect prior to amendment by the Tax Equity and Fiscal Responsibility Act of
1982. Viasoft is not and has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Revenue Code during
the applicable period specified in Section 897(c)(l)(A)(ii) of the Revenue Code.
Neither Viasoft nor any subsidiary has participated in an international boycott
as defined in Revenue Code Section 999. Neither Viasoft nor any subsidiary is a
member of, a partner in, or otherwise owns an interest in a partnership, limited
liability or other "pass through" entity. Neither Viasoft nor any subsidiary has
agreed, nor is it required to make, any adjustment under Revenue Code Section
481(a) by reason of a change in accounting method or otherwise. Neither Viasoft
nor any of its subsidiaries owns any interest in any controlled foreign
corporation (as defined in Section 957 of the Revenue Code), passive foreign
investment company (as defined in Section 1296 of the Revenue Code) or other
entity, the income of which is required to be included in the income of Viasoft
or any of its subsidiaries. Neither Viasoft nor any of its subsidiaries has been
a "distributing" or "controlled" corporation as defined in Section 355 of the
Revenue Code in a transaction intended to qualify under Section 355 and Section
368(a)(1)(D) of the Revenue Code within the two years immediately prior to the
signing of this Agreement. Neither Viasoft nor any subsidiary has liability for
the Taxes in excess of $100,000 of any person for any taxable period beginning
or ending during the 5 year period ending on the Closing Date under Treasury
Regulation ss.1.1502-6 (or any similar provision of state, local or foreign law)
as a transferee or successor, by contract or otherwise. Neither Viasoft nor any
subsidiary has granted a power of attorney with respect to any matter relating
to Taxes, except with respect to matters for which both (i) the identity of the
attorney or representative appointed, and a description of the Tax matter
covered, by the power of attorney is set forth in Section 4.1(l)(iii) of the
Viasoft Disclosure Letter, and (ii) a copy of the power of attorney is provided
to Compuware.
(iv) Neither Viasoft nor any of its subsidiaries has filed
any consent agreement under Section 341(f) of the Revenue Code or agreed to have
Section 341(f)(2) of the Revenue Code apply to any disposition of a subsection
(f) asset (as defined in Section 341(f)(4) of the Revenue Code) owned by Viasoft
or any of its subsidiaries.
(v) Schedule 4.1(l) sets forth all material Tax elections
for Viasoft and each of its subsidiaries. Except as set forth on Schedule
4.1(l), Viasoft and/or each of its subsidiaries does not have a net operating
loss or other tax attributes presently subject to limitation under Code
ss.ss.382, 383, or 384 or the underlying Treasury Regulations.
(vi) As used in this Agreement, "Tax" or "Taxes" will mean
all taxes, however, denominated, including any interest, penalties or other
additions to tax that may become payable in respect thereof, imposed by any
federal, territorial, state, local or foreign government or any agency or
political subdivision of any such government, which taxes will include, without
limiting the generality of the foregoing, all income or profits taxes
(including, but not limited to, federal income taxes and state income taxes),
payroll and employee withholding taxes, unemployment insurance, social security
taxes, sales and use taxes, ad valorem taxes, excise taxes, franchise taxes,
gross receipts taxes, business license taxes, occupation taxes, real and
personal property taxes, stamp taxes, environmental taxes, transfer taxes,
workers' compensation, Pension Benefit Guaranty
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Corporation premiums and other governmental charges, and other obligations of
the same or of a similar nature to any of the foregoing, which Viasoft or any of
its subsidiaries is required to pay, withhold or collect. As used in this
Agreement, "Returns" will mean all reports, estimates, declarations of estimated
tax, information statements and returns relating to, or required to be filed in
connection with, any Taxes, including information returns or reports with
respect to withholding and other payments to third parties.
(m) No Excess Parachute Payments. Any amount that could be
received (whether in cash or property or the vesting of property) as a result of
any of the transactions contemplated by this Agreement by any employee, officer
or director of Viasoft or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any employment, severance or termination agreement, other
compensation arrangement or benefit plan currently in effect would not be
characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Revenue Code). There is no agreement, contract or
arrangement to which Viasoft or any of its subsidiaries is a party that may
result in the payment of any amount that would not be deductible pursuant to
Sections 280G, 162 or 404 of the Revenue Code.
(n) Compliance with Applicable Laws.
(i) Viasoft and each of its subsidiaries has in effect
all federal, state, local and foreign governmental approvals, authorizations,
certificates, filings, franchises, licenses, notices, permits and rights
("Permits") necessary for it to own, lease or operate its properties and assets
and to carry on its business as now conducted, and there has occurred no default
under any such Permit, except for the lack of Permits and for defaults under
Permits which individually or in the aggregate would not have a Material Adverse
Effect on Viasoft. Except as disclosed in Section 4.1(n) of the Viasoft
Disclosure Letter, Viasoft and its subsidiaries are in compliance with all
applicable statutes, laws, ordinances, rules, orders and regulations of any
Governmental Entity, except for noncompliance which individually or in the
aggregate would not have a Material Adverse Effect on Viasoft.
(ii) Viasoft and its subsidiaries are, and have been, and
each of Viasoft's former subsidiaries, while subsidiaries of Viasoft, was in
compliance with all applicable Environmental Laws except for noncompliance which
individually or in the aggregate would not have a Material Adverse Effect on
Viasoft. The term "Environmental Laws" means any federal, state or local
statute, code, ordinance, rule, regulation, policy, guideline, permit, consent,
approval, license, judgment, order, writ, decree, directive, injunction or other
authorization, including the requirement to register underground storage tanks,
relating to: (x) Releases or threatened Releases of Hazardous Material into the
environment, including into ambient air, soil, sediments, land surface or
subsurface, buildings or facilities, surface water, ground water, publicly-owned
treatment works, septic systems or land; or (y) the generation, treatment,
storage, disposal, use, handling, manufacturing, transportation or shipment of
Hazardous Material.
(iii) During the period of ownership or operation by
Viasoft and its subsidiaries of any of their respective current or previously
owned or leased properties, there have been no Releases of Hazardous Material by
Viasoft or its subsidiaries, or, to Viasoft's knowledge, any other party, in
violation of Environmental Laws in, on, under or affecting such properties or,
to
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<PAGE> 24
the knowledge of Viasoft, any surrounding site, and none of Viasoft or its
subsidiaries have disposed of any Hazardous Material or any other substance in a
manner that could reasonably be anticipated to lead to a Release in violation of
Environmental Laws, except in each case for those which individually or in the
aggregate would not have a Material Adverse Effect on Viasoft. Prior to the
period of ownership or operation by Viasoft and its subsidiaries of any of their
respective currently or previously owned or leased properties, to the knowledge
of Viasoft, there were no Releases of Hazardous Material in, on, under or
affecting any such property or any surrounding site. The term "Release" has the
meaning set forth in 42 U.S.C. ss. 9601(22). The term "Hazardous Material" means
(1) hazardous materials, pollutants, contaminants, constituents, medical or
infectious wastes, hazardous wastes and hazardous substances as those terms are
defined in the following statutes and their implementing regulations: the
Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., the Comprehensive
Environmental Response, Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act, 42 U.S.C. ss. 9601 et seq., the
Clean Water Act, 33 U.S.C. ss. 1251 et seq., the Toxic Substances Control Act,
15 U.S.C. ss. 2601 et seq., and the Clean Air Act, 42 U.S.C. ss. 7401 et seq.,
(2) petroleum, including crude oil and any fractions thereof, (3) natural gas,
synthetic gas and any mixtures thereof, (4) asbestos and/or asbestos containing
material, (5) radon and (6) PCBs, or materials or fluids containing PCBs.
(o) State Takeover Statutes; Rights Agreement. No Delaware
takeover statute or similar statute or regulation applies so as to impede, delay
or otherwise adversely affect, the Offer, the Merger, this Agreement, or any of
the transactions contemplated by this Agreement. Other than the Rights Plan
described in Section 4.1(o) of the Viasoft Disclosure Letter, Viasoft is not a
party to, nor affected by, any "rights agreement", "poison pill" or similar
plan, agreement or arrangement (a "Rights Plan") affecting the capitalization
of, or issuance of capital stock by, Viasoft, which would be triggered by the
Offer, the Merger, this Agreement or any other transaction contemplated hereby.
(p) Brokers; Schedule of Fees and Expenses. Except as set
forth in Section 4.1(p) of the Viasoft Disclosure Letter, no broker, investment
banker, financial advisor or other person, other than Broadview International
LLC, the fees and expenses of which will be paid by Viasoft (and a copy of whose
engagement letter has been provided to Compuware), is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission, nor to any fee
that is contingent on closing of the transactions contemplated hereby or that is
based on a percentage of the transaction value, in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Viasoft. Assuming consummation of the Merger, no such engagement
letter obligates Viasoft to continue to use their services or pay fees or
expenses in connection with any future transaction.
(q) Opinion of Financial Advisor. Viasoft's Board of Directors
has received the opinion of Broadview International LLC, dated the date of this
Agreement, to the effect that, as of such date, the consideration to be received
in the Offer and the Merger by Viasoft's shareholders is fair to Viasoft's
shareholders (other than Compuware and Merger Sub) from a financial point of
view, and a signed copy of such opinion has been delivered to Compuware.
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(r) Contracts, Debt Instruments.
(i) Set forth in Section 4.1(r) of the Viasoft
Disclosure Letter is (x) a list of all loan or credit agreements, notes, bonds,
mortgages, indentures and other agreements and instruments pursuant to which any
indebtedness of Viasoft or any of its subsidiaries in an aggregate principal
amount in excess of $100,000 is outstanding or may be incurred and (y) the
respective principal amounts currently outstanding thereunder. For purposes of
this Agreement, "indebtedness" will mean, with respect to any person, without
duplication, (A) all obligations of such person for borrowed money, or with
respect to deposits or advances of any kind to such person, (B) all obligations
of such person evidenced by bonds, debentures, notes or similar instruments, (C)
all obligations of such person upon which interest charges are customarily paid,
(D) all obligations of such person under conditional sale or other title
retention agreements relating to property purchased by such person, (E) all
obligations of such person issued or assumed as the deferred purchase price of
property or services (excluding obligations of such person to creditors for raw
materials, inventory, services and supplies incurred in the ordinary course of
such person's business), (F) all capitalized lease obligations of such person,
(G) all obligations of others secured by any lien on property or assets owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed, (H) all obligations of such person under interest rate or currency
hedging transactions (valued at the termination value thereof), (I) all letters
of credit issued for the account of such person (excluding letters of credit
issued for the benefit of suppliers to support accounts payable to suppliers
incurred in the ordinary course of business) and (J) all guarantees and
arrangements having the economic effect of a guarantee of such person of any
indebtedness of any other person.
(ii) Except as set forth in Section 4.1(r) of the
Viasoft Disclosure Letter, neither Viasoft nor any of its subsidiaries is in
violation of or in default under (nor does there exist any condition which upon
the passage of time or the giving of notice would cause such a violation of or
default under): (x) its certificate of incorporation or bylaws, (y) any loan or
credit agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or any other contract, agreement, arrangement or
understanding to which it is a party or by which it or any of its properties or
assets is bound, (z) any order, writ, injunction, decree, statute, rule or
regulation applicable to Viasoft or any of its subsidiaries, except for
violations or defaults that individually or in the aggregate would not have a
Material Adverse Effect on Viasoft.
(iii) Except as set forth in Section 4.1(r) of the
Viasoft Disclosure Letter, neither Viasoft nor any of its subsidiaries is a
party to or is bound by: (x) any agreement of indemnification or guaranty not
entered into in the ordinary course of business other than indemnification
agreements between Viasoft or any of its subsidiaries and any of its officers or
directors; (y) 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 (z) any material joint marketing or
development agreement.
(s) Certain Agreements. Except as set forth in Section 4.1(s)
of the Viasoft Disclosure Letter, Viasoft and its subsidiaries are not parties
to or subject to any agreement which falls within any of the following
classifications:
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(i) any employment, deferred compensation, bonus or
contract of a similar nature requiring payments in excess of $100,000 per year
by Viasoft or any subsidiary;
(ii) any contract or agreement that materially restricts
or materially impairs Viasoft or any of its subsidiaries or employees from
carrying on such person's business as now conducted or any part thereof or from
competing in any line of business with any person, corporation or other entity
or that grants any exclusive license or distribution rights;
(iii) any collective bargaining agreement or other such
contract or agreement with any labor organization;
(iv) any lease of personal property requiring rental
payments of $250,000 or more throughout its term and having a term of one year
or more, whether as lessor or lessee;
(v) any mortgage, pledge, conditional sales contract,
security agreement, option, or any other similar agreement with respect to any
interest of Viasoft or any subsidiary in personal property;
(vi) any stock purchase, stock option, stock bonus,
stock ownership, profit sharing, group insurance, bonus, deferred compensation,
severance pay, pension, retirement, savings or other incentive, change in
control, welfare or employee plan or material agreement providing benefits to
any present or former employees, officers or directors of Viasoft or any of its
subsidiaries;
(vii) any agreement to acquire equipment or commitment to
make capital expenditures by Viasoft or any subsidiary of $50,000 or more;
(viii) any agreement for the sale of any material
properties or assets or for the grant of any preferential right to purchase any
such material properties or assets or which requires the consent of any third
party to the transfer and assignment of any such material properties or assets,
other than in the ordinary course of business in connection with Viasoft's sale
of properties or assets;
(ix) any agreement requiring Viasoft to indemnify any
current or former officer, director, employee or agent;
(x) any agreement of any kind, including any
distributorship, sales, marketing or representative agreement, which involves
future payments or performance of services or delivery of items, requiring
payments of $350,000 or more by Viasoft or any subsidiary; or
(xi) any agreement with a customer of Viasoft providing
for services to be performed for such customer for a fixed or capped fee or
payment structure.
Neither Viasoft nor any subsidiary is in default under any
contract or agreement, nor, to the knowledge of Viasoft, are any other parties
to such agreements in default, and to Viasoft's knowledge, no act or omission
has occurred which, with notice or lapse of time or both,
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would constitute a default under any term or provision of any contract or
agreement, except for such defaults which, individually or in the aggregate,
would not have a Material Adverse Effect on Viasoft. Each agreement disclosed in
items (i) through (xii) of this Section is in full force and effect and true and
complete copies of all such agreements have been provided to Compuware or its
representatives.
(t) Title to Properties.
(i) Section 4.1(t) of the Viasoft Disclosure Letter lists
all real property interests owned or leased by Viasoft or its subsidiaries.
Viasoft and each of its subsidiaries has good and marketable title to, or valid
leasehold interests in, all of its material properties and assets except for
such as are no longer used or useful in the conduct of its businesses or as have
been disposed of in the ordinary course of business and except for defects in
title, easements, restrictive covenants and similar encumbrances or impediments
that individually or in the aggregate would not materially interfere with its
ability to conduct its business as currently conducted. All such material
properties and assets, other than properties and assets in which Viasoft or any
of its subsidiaries has leasehold interests, are free and clear of all Liens,
except for Liens that individually or in the aggregate would not materially
interfere with the ability of Viasoft and its subsidiaries to conduct business
as currently conducted.
(ii) Viasoft and each of its subsidiaries has complied in
all material respects with the terms of all material leases to which it is a
party and under which it is in occupancy, and all such leases are in full force
and effect. Viasoft and each of its subsidiaries enjoys peaceful and undisturbed
possession under all such material leases.
(u) Labor Matters. Except as set forth in the Section 4.1(u)
of the Viasoft Disclosure Letter, (a) Viasoft and its subsidiaries are operating
and have operated their businesses in compliance in all material respects with
all applicable laws relating to such businesses respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including the Immigration Reform and Control Act ("IRCA"), the Worker Adjustment
and Retraining Notification Act of 1988 ("WARN Act"), any such applicable laws
respecting employment of foreign nationals, employment discrimination, equal
opportunity, affirmative action, employee privacy, wrongful or unlawful
termination, workers' compensation, occupational safety and health requirements,
labor/management relations and unemployment insurance, the Family and Medical
Leave Act or related matters, and Viasoft and its subsidiaries are not engaged
in and have not engaged in any unlawful practice relating to such businesses
under such applicable laws, or in any unfair labor practice relating to the
business of Viasoft or its subsidiaries; (b) no Governmental Entity has given
Viasoft or any of its subsidiaries written notice regarding any pending charge,
audit, claim, complaint, investigation or review by or before any Governmental
Entity concerning or requesting in writing to explain any conflicts with or
violations of any such laws relating to the business conducted by Viasoft or
such subsidiary or in connection with the operation of the business, nor, to the
knowledge of Viasoft, is any such investigation threatened or pending, nor, to
the knowledge of Viasoft, has any such investigation occurred during the last
two years; (c) there is no labor strike, dispute, slowdown or stoppage actually
pending or, to the knowledge of Viasoft, threatened against or affecting the
business, and neither Viasoft nor any subsidiary has experienced any work
stoppage or other material labor difficulty relating to the business in the last
two years; (d) to the knowledge of
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Viasoft, no union representation question or union organizational activity
exists respecting employees and, to Viasoft's knowledge, no one has petitioned
within the last two years, and no one is now petitioning, for union
representation of any employees; (e) there exists no collective bargaining
agreement or other contract or agreement relating to the business with any labor
union or association representing any employee, and no collective bargaining
agreement affecting employees is currently being negotiated; and (f) Viasoft and
its subsidiaries are in material compliance with all obligations under all
Viasoft Employee Plans and all employment contracts and are not delinquent in
payments to any employees for any wages, salaries, commissions, bonuses or other
compensation for any services performed by them relating to the business or
amounts required to be reimbursed to such employees. Except as set forth in
Section 4.1(a) of the Viasoft Disclosure Letter, there are no pending or, to the
knowledge of Viasoft, threatened proceedings, actions or suits of any nature (i)
under or alleging violation of IRCA, WARN or any law respecting employment of
foreign nationals, employment discrimination, equal opportunity, affirmative
action, employee privacy, wrongful or unlawful termination or demotion, sexual
and other harassment, workers' compensation, occupational safety and health
requirements, labor/management relations (including any grievances or
arbitration proceeding arising out of or under any collective bargaining
agreements) and unemployment insurance, or matters involving any employee; (ii)
relating to alleged unlawful employment practices or unfair labor practices
involving any employee (or the equivalent thereof under any law); or (iii)
relating to alleged breaches of any of Viasoft Employee Plans. To Viasoft's
knowledge, no employee of Viasoft has in any material respect violated any
employment contract, confidentiality agreement, patent disclosure agreement or
noncompetition agreement between such employee and any former employer of such
employee due to such employee being employed by Viasoft or any of its
subsidiaries or disclosing to Viasoft or any of its subsidiaries trade secrets
or proprietary information of any such employer. No employee of Viasoft or any
of its subsidiaries has given notice to Viasoft or any of its subsidiaries, nor
is Viasoft otherwise aware, that any employee intends to terminate his or her
employment with Viasoft or any of its subsidiaries.
(v) Government Contracts. All representations, certifications
and disclosures made by Viasoft or any subsidiary to any Government Contract
Party have been in all material respects current, complete and accurate at the
times they were made. There have been no acts, omissions or noncompliance with
regard to any applicable public contracting statute, regulation or contract
requirement (whether express or incorporated by reference) relating to any
contracts of Viasoft or any subsidiary with any Government Contract Party in
either case that have led to or is reasonably likely to lead to, either before
or after the Closing Date, (a) any material claim or dispute involving Viasoft
or any subsidiary and/or Compuware or Merger Sub as successor in interest to
Viasoft and any Government Contract Party or (b) any suspension, debarment or
contract termination, or proceeding related thereto. There has been no act or
omission that relates to the marketing, licensing or selling to any Government
Contract Party of any of Viasoft's technical data, computer software, products
and services and that has led to or is reasonably likely to lead to, either
before or after the Closing Date, any cloud on any of Viasoft's or its
subsidiaries' rights in and to its technical data, computer software, products
and services. There is currently no dispute between Viasoft or any of its
subsidiaries and any Government Contract Party. For purposes of this Section,
the term "Government Contract Party" means any independent or executive agency,
division, subdivision, audit group or procuring office of the federal, state,
county, local or municipal government, including any prime contractor of the
federal government and any higher level
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subcontractor of a prime contractor of the federal government, and including any
employees or agents thereof, in each case acting in such capacity.
(w) Warranties, Guarantees and Indemnities. Except as
disclosed in Section 4.1(w) of the Viasoft Disclosure Letter, neither Viasoft
nor any of its subsidiaries has provided to its customers rights to obtain
refunds or made any other warranties, guarantees or indemnities with respect to
the services it provides to such customers except where Viasoft's liability is
limited to (i) amounts paid to Viasoft pursuant to the contract in which such
right, warranty, guaranty or indemnity appears and lost profits and
consequential damages are expressly excluded, and/or (ii) Viasoft's obligation
to remedy a deficiency under such contract without further charge to the
customer.
(x) Customer Relationships. Each of Viasoft and its
subsidiaries has good commercial working relationships with its customers and
suppliers. None of Viasoft's top twenty-five customers (based on Viasoft's
consolidated revenues for the fiscal year ended June 30, 1999 (each, a "Material
Customer")) has, from July 1, 1999 to the date of this Agreement, cancelled or
otherwise terminated its relationship with Viasoft or any subsidiary thereof,
decreased or limited materially the amount of product or services ordered from
Viasoft or any subsidiary thereof, or threatened to take any such action other
than in the ordinary course upon completion of customer projects.
(y) Product and Service Quality. Except as set forth in
Section 4.1(y) of the Viasoft Disclosure Letter, all products manufactured,
sold, licensed, leased or delivered by Viasoft and its subsidiaries and all
services provided by Viasoft and its subsidiaries, to customers on or prior to
the Closing Date conform in all material respects to applicable contractual
commitments, express and implied warranties, product specifications and quality
standards and none of Viasoft or its subsidiaries has any material liability
(and there is no basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand against Viasoft or
its subsidiaries giving rise to any material liability) for replacement or
repair thereof or other damages in connection therewith. Neither Viasoft nor its
subsidiaries has received a complaint from a Material Customer regarding
Viasoft's or its subsidiaries' services pursuant to which such Material Customer
is withholding payment of any material amounts payable to Viasoft or such
subsidiary, or which is the subject of an ongoing dispute or correspondence
between Viasoft and such customer.
(z) Disclosure. Nothing in the Viasoft Disclosure Letter will
be deemed adequate to disclose an exception to a representation or warranty made
herein unless the disclosure identifies the exception with particularity and
describes the relevant facts in reasonable detail; provided that a particular
matter need only be disclosed once in such manner so long as it is
cross-referenced wherever else applicable in the Viasoft Disclosure Letter in a
manner sufficiently clear to identify to which representation or warranty an
exception is being made.
4.2 Representations and Warranties of Compuware and Merger Sub.
Compuware and Merger Sub represent and warrant to Viasoft as follows:
(a) Organization, Standing and Corporate Power. Each of
Compuware and Merger Sub is a corporation duly organized, validly existing and
in good standing under the laws of
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the jurisdiction in which it is incorporated and has the requisite corporate
power and authority to carry on its business as now being conducted. Each of
Compuware and Merger Sub is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed individually or in the aggregate would not have a material adverse
effect on Compuware.
(b) Authority; Noncontravention. Compuware and Merger Sub have
all requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Compuware and Merger Sub and the consummation by
Compuware and Merger Sub of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the part of Compuware
and Merger Sub. This Agreement has been duly executed and delivered by Compuware
and Merger Sub and constitutes a valid and binding obligation of each such
party, enforceable against each such party in accordance with its terms (except
as enforcement hereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium and similar laws, both state and federal, affecting
the enforcement of creditors' rights or remedies in general as from time to time
in effect or (ii) the exercise by courts of equity powers). The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time or both) under, or give rise to a right
of termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of the
properties or assets of Compuware or Merger Sub under (i) the articles of
incorporation or bylaws of Compuware or the certificate of incorporation or
bylaws of Merger Sub, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Compuware or Merger Sub or their respective properties
or assets or (iii) any governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Compuware or Merger Sub or their respective
properties or assets, other than, in the case of clause (ii) or (iii), any such
conflicts, violations, defaults, rights or Liens that individually or in the
aggregate would not (x) have a material adverse effect on Compuware and its
subsidiaries, taken as a whole, (y) materially impair the ability of Compuware
or Merger Sub to perform their obligations under this Agreement, (z) prevent the
consummation of any of the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to Compuware
or Merger Sub in connection with the execution and delivery of this Agreement or
the consummation by Compuware or Merger Sub, as the case may be, of any of the
transactions contemplated by this Agreement, except for (1) the filing of a
pre-merger notification and report form under the HSR Act, (2) the filing with
the SEC and the National Association of Securities Dealers, Inc. of (A) the
Offer Documents and (B) such reports under Sections 13(a), 13(d) and 16(a) of
the Exchange Act as may be required in connection with this Agreement and the
transactions contemplated by this Agreement, (3) the filing of the Certificate
of Merger or an agreement of merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which
Viasoft is qualified to do business and (4) such other consents, approvals,
orders, authorizations, registrations, declarations and filings as would not
individually or in the aggregate (A) have a material adverse effect on Compuware
and its subsidiaries,
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taken as a whole, (B) impair the ability of Compuware and Merger Sub to perform
their respective obligations under this Agreement or (C) prevent the
consummation of any of the transactions contemplated by this Agreement.
(c) Information Supplied. None of the information supplied or
to be supplied by Compuware or Merger Sub specifically for inclusion or
incorporation by reference in the Offer Documents, the Schedule 14D-9, the
Information Statement or the Proxy Statement will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC or first published, sent or given to Viasoft's shareholders,
or, in the case of the Proxy Statement, at the date the Proxy Statement is first
mailed to Viasoft's shareholders or at the time of the Shareholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Offer Documents will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder, except that no representation or warranty is made by
Compuware or Merger Sub with respect to statements made or incorporated by
reference therein based on information supplied by Viasoft specifically for
inclusion or incorporation by reference therein.
(d) Brokers. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Compuware or
Merger Sub.
(e) Financing. At the expiration of the Offer and the
Effective Time, Compuware and Merger Sub will have available all the funds
necessary for the acquisition of all Shares pursuant to the Offer or Merger and
to perform their respective obligations under this Agreement, including without
limitation payment in full for all Shares validly tendered or outstanding at the
Effective Time.
(f) Litigation. Except as disclosed in documents filed with
the SEC by Compuware, as of the date of this Agreement, there is no suit, action
or proceeding pending or, to the knowledge of Compuware, threatened against
Compuware or any of its subsidiaries that individually or in the aggregate could
reasonably be expected to (i) impair the ability of Compuware or Merger Sub to
perform their obligations under this Agreement or (ii) prevent the consummation
of any of the transactions contemplated by this Agreement, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Compuware or any of its subsidiaries having, or
which is reasonably likely to have, any effect referred to in the foregoing
clause (i) or (ii) above.
(g) Financial Statements. The financial statements of
Compuware included in the required reports, schedules, forms, statements and
other documents filed with the SEC since December 31, 1996, including those
filed after the date hereof until the Closing, comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with GAAP (except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC), except as may be indicated in the
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notes thereto, and fairly present in all material respects the consolidated
financial position of Compuware and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments).
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Business.
(a) Conduct of Business by Viasoft. Viasoft will, and will
cause its subsidiaries to, carry on its and their respective businesses in the
ordinary course consistent with past practice and use all reasonable efforts to
preserve intact their current business organizations, to keep available the
services of their current officers and employees and to preserve their
relationships with distributors, licensors, contractors, customers, suppliers,
lenders and others having business dealings with any of them. Without limiting
the generality of the foregoing, except as may be expressly permitted by other
provisions of this Agreement, as set forth in Section 5.1 of the Viasoft
Disclosure Letter cross-referenced to a subsection of this Section 5.1, or as
may be agreed to in writing by Compuware, Viasoft will not, and will not permit
any of its subsidiaries to:
(i) (x) declare, set aside or pay any dividends on,
or make any other distributions in respect of, any of its capital stock, other
than dividends and distributions by any direct or indirect wholly-owned
subsidiary of Viasoft to its parent, or in the case of less than wholly-owned
subsidiaries, as required by agreements existing on the date of this Agreement,
(y) split, combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (z) purchase, redeem or
otherwise acquire any shares of capital stock of Viasoft or any of its
subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities or convertible securities (other than the
issuance of Viasoft Common Stock upon the exercise of Options (as defined in
Section 6.4) outstanding on the date of this Agreement and in accordance with
their present terms and pursuant to the Stock Purchase Plan); provided that,
without the prior written consent of Compuware, in no event will Viasoft issue
any shares of its capital stock during the period commencing with the
consummation of the Offer and ending at the Effective Time;
(iii) except as set forth in Section 5.1(a)(iii) of
the Viasoft Disclosure Letter, amend its certificate of incorporation, bylaws or
other comparable charter or organizational documents;
(iv) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any
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corporation, partnership, joint venture, association or other business
organization or division thereof or (y) any assets that individually or in the
aggregate are material to Viasoft and its subsidiaries taken as a whole, except
in the ordinary course of business consistent with past practice;
(v) sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of its properties or
assets (including Intellectual Property), except for sales, leases, licenses, or
encumbrances of its properties or assets in the ordinary course of business
consistent with past practice;
(vi) (x) incur any indebtedness for borrowed money or
draw down on any credit facility or arrangement or guarantee any indebtedness of
another person, issue or sell any debt securities or warrants or other rights to
acquire any debt securities of Viasoft or any of its subsidiaries, guarantee any
debt securities of another person, enter into any "keep well" or other agreement
to maintain any financial statement condition of another person or enter into
any arrangement having the economic effect of any of the foregoing or (y) make
any loans or advances to, or investments in, any other person, other than any
subsidiary of Viasoft;
(vii) make or agree to make any new capital
expenditure or expenditures which individually is in excess of $100,000 or which
in the aggregate are in excess of $500,000;
(viii) make any material tax election or settle or
compromise any material income or franchise tax liability;
(ix) pay, discharge, settle or satisfy any material
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than as set forth in Section 5.1(a)(ix) of the
Viasoft Disclosure Letter or the payment, discharge, settlement or satisfaction,
in the ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the notes
thereto) of Viasoft included in the Filed SEC Documents or incurred since the
date of such financial statements in the ordinary course of business consistent
with past practice in accordance with the terms of this Section 5.1;
(x) except as expressly contemplated hereby,
waive, release or assign any rights or claims under any contract or agreement
binding on Viasoft or any subsidiary; or, except as expressly contemplated
hereby or in the ordinary course of business consistent with past practice,
enter into, modify, amend or terminate any contract or agreement binding on
Viasoft or any subsidiary; or, in any event, enter into any contract or
agreement binding on Viasoft or any subsidiary which would be required to be
disclosed in Section 4.1(d) of the Viasoft Disclosure Letter;
(xi) terminate or lay off more than 5 employees,
except for cause consistent with past practice and Viasoft policy or except as
set forth in Section 5.1(a)(xi) of the Viasoft Disclosure Letter;
(xii) except as set forth in Section 5.1(a)(xii) of
the Viasoft Disclosure Letter, adopt or amend in any material respect any
employee benefit or employee stock purchase or
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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, waive any stock repurchase
rights, accelerate, amend or change the period of exercisability of any Options
(as defined in Section 6.4), or authorize cash payments in exchange for any
Options, or otherwise alter or commit to any compensation, benefit or severance
arrangement for or with any officer or employee of Viasoft or enter into any
related or interested party transaction;
(xiii) except as set forth in Section 5.1(a)(xiii) of the
Viasoft Disclosure Letter, grant or provide any severance or termination pay to
any officer or employee except payments pursuant to written plans or agreements
outstanding on the date hereof and described in the Viasoft Disclosure Letter;
(xiv) take any actions (including seeking or soliciting
corporate approvals) directed towards seeking to liquidate or dissolve Viasoft
or to take advantage of bankruptcy or other creditor protection laws or that
would or are reasonably likely to render Viasoft insolvent or to cause Viasoft
to become involved in bankruptcy proceedings, including soliciting creditor
arrangements or moratoria;
(xv) except as described in Section 5.1(a)(xv) of the
Viasoft Disclosure Letter, institute any litigation or other proceeding;
(xvi) take any action that might cause or constitute a
breach of any representation or warranty made by Viasoft in this Agreement; or
(xvii) other than the Rights Plan disclosed in Section
4.1(o) of the Viasoft Disclosure Letter, enter into any Rights Plan, or take or
permit any other action which could have the effect of causing the
representation made in Section 4.1(o) to be untrue in any respect;
(xviii) authorize any of, or commit or agree to take any
of, the foregoing actions.
(b) Other Actions. Viasoft and Compuware will not, and will
not permit any of their respective Subsidiaries to, knowingly and willfully take
any deliberate action that would cause (i) any of the representations and
warranties of such party set forth in this Agreement to become untrue in (x)
such a manner as would have a Material Adverse Effect on Viasoft (in the case of
Viasoft) or (y) any material respect (in the case of Compuware) as of the date
when made or (ii) any of the conditions to the Offer set forth in Exhibit A or
any of the conditions to the Merger to not be satisfied (subject to Viasoft's
right to take action consistent with Sections 5.2 and 6.1).
5.2 No Solicitation.
(a) From and after the date of this Agreement until the earlier of the
Effective Time or termination of this Agreement in accordance with its terms,
Viasoft will not, nor will it permit any of
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its subsidiaries to, nor will it authorize or permit any officer, director or
employee of, or any investment banker, attorney or other advisor or
representative of, Viasoft or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage the making, announcement or
submission of any takeover proposal or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any non-public information with
respect to, or enter into any agreement with respect to, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any takeover proposal;
provided, however, that this Section 5.2 will not prohibit Viasoft from
furnishing non-public information regarding Viasoft and its subsidiaries to, or
entering into discussions or negotiations with, any person or group who has
submitted (and not withdrawn) to Viasoft an unsolicited, written, bona fide
takeover proposal (as defined in this Section 5.2) that Viasoft's Board of
Directors reasonably concludes (after consultation with its financial adviser)
may constitute or lead to a superior proposal (as defined in Section 6.1) if (1)
neither Viasoft nor any representative of Viasoft and its subsidiaries will have
violated any of the restrictions set forth in this Section 5.2, (2) Viasoft's
Board of Directors concludes in good faith, after consultation with its outside
legal counsel, that such action is required in order for Viasoft's Board of
Directors to comply with its fiduciary obligations to Viasoft's shareholders
under applicable law, and (3) prior to furnishing any such nonpublic information
to, or entering into any such discussions with, such person or group, (x)
Viasoft gives Compuware written notice of the identity of such person or group
and all of the material terms and conditions of such takeover proposal and of
Viasoft's intention to furnish information to, or enter into discussions or
negotiations with, such person or group, (y) Viasoft receives from such person
or group an executed confidentiality agreement containing terms at least as
restrictive with regard to Viasoft's confidential information as the
Confidentiality Agreement, and (z) contemporaneously with furnishing any such
information to such person or group, Viasoft furnishes such information to
Compuware (to the extent such information has not been previously furnished by
Viasoft to Compuware). Upon execution of this Agreement, Viasoft, its
subsidiaries, officers, directors, employees, investment bankers, attorneys and
other agents and representatives will immediately cease any and all existing
activities, discussions or negotiations with any parties conducted previously
regarding a takeover proposal. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in the preceding two sentences
by any officer or director of Viasoft or any investment banker or attorney of
Viasoft or any of its subsidiaries, will be deemed to be a breach of this
Section 5.2(a) by Viasoft. For purposes of this Agreement, "takeover proposal"
means any offer or proposal relating to any transaction or series of related
transactions (other than the transactions contemplated by this Agreement)
involving: (A) any acquisition or purchase from Viasoft by any person or "group"
(as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) of more than a 10% interest in the total outstanding
voting securities of Viasoft or any of its subsidiaries or any tender offer or
exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 10% or more of the total outstanding voting
securities of Viasoft or any of its subsidiaries or any merger, consolidation,
business combination or similar transaction involving Viasoft pursuant to which
the shareholders of Viasoft immediately preceding such transaction hold less
than 90% of the equity interests in the surviving or resulting entity of such
transaction; (B) any sale, lease (other than in the ordinary course of
business), exchange, transfer, license (other than in the ordinary course of
business), acquisition or disposition of more than 10% of the assets of Viasoft;
or (C) any liquidation or dissolution of Viasoft.
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(b) In addition to the obligations of Viasoft set forth in
paragraph (a) above, Viasoft will promptly advise Compuware orally and in
writing of any request for information or of any takeover proposal, or any
inquiry with respect to or which is expected to lead to any takeover proposal,
the material terms and conditions of such request, takeover proposal or inquiry,
and the identity of the person making any such takeover proposal or inquiry.
Viasoft will keep Compuware fully informed of the status and details of any such
request, takeover proposal or inquiry.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Shareholder Approval; Preparation of Proxy Statement.
(a) If Viasoft Shareholder Approval is required by law in
order to effect the Merger, Viasoft will, as soon as practicable following the
expiration of the Offer, duly call, give notice of, convene and hold a meeting
of its shareholders (the "Shareholders Meeting") for the purpose of obtaining
Viasoft Shareholder Approval. Subject to applicable law and the provisions of
Section 6.1(c): (i) Viasoft will, through its Board of Directors, recommend to
its shareholders that Viasoft Shareholder Approval be given; (ii) the Proxy
Statement will include a statement to the effect that Viasoft's Board of
Directors recommends that Viasoft Shareholder Approval be given at the
Shareholders Meeting; and (iii) neither Viasoft's Board of Directors nor any
committee thereof will withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify in a manner adverse to Compuware, the recommendation
of Viasoft's Board of Directors that Viasoft Shareholder Approval be given at
the Shareholders Meeting. Notwithstanding the foregoing, if Merger Sub (or any
other Subsidiary of Compuware) will acquire and will maintain through the
effectiveness of the Short-Form Merger, ownership of at least 90% of the
outstanding Shares sufficient to enable Merger Sub (or such other Subsidiary) to
effect the Short-Form Merger, the parties will, at the request of Compuware,
take all necessary and appropriate action to cause the Short-Form Merger to
become effective as soon as practicable after the expiration of the Offer
without a Shareholders Meeting in accordance with Section 253 of the DGCL.
Without limiting the generality of the foregoing, Viasoft agrees that its
obligations pursuant to the first sentence of this Section 6.1(a) will not be
affected by (i) the commencement, public proposal, public disclosure or
communication to Viasoft of any takeover proposal (including a superior
proposal) or (ii) the withdrawal or modification by Viasoft's Board of Directors
of its approval or recommendation of the Offer, this Agreement, the Merger or
Viasoft Shareholder Approval.
(b) If Viasoft Shareholder Approval is required by law in
order to effect the Merger, Viasoft will, as soon as practicable following the
expiration of the Offer, prepare and file a preliminary Proxy Statement with the
SEC and will use its best efforts to respond to any comments of the SEC or its
staff and to cause the Proxy Statement to be mailed to Viasoft's shareholders as
promptly as practicable after responding to all such comments to the
satisfaction of the staff. Viasoft will notify Compuware promptly of the receipt
of any comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Proxy Statement or for additional
information and will supply Compuware with copies of all correspondence between
Viasoft or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or the Merger. If
at any time prior to the Shareholders Meeting there will
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occur any event that Viasoft determines, on advice of its outside counsel,
should be set forth in an amendment or supplement to the Proxy Statement,
Viasoft will promptly prepare and mail to its shareholders such an amendment or
supplement. Except as required by law, Viasoft will not mail any Proxy
Statement, or any amendment or supplement thereto, to which Compuware reasonably
objects.
(c) Nothing in this Agreement will prevent Viasoft's Board of
Directors from withholding, withdrawing, amending or modifying its
recommendation in favor of the Offer, this Agreement, the Merger or Viasoft
Shareholder Approval if (i) a superior proposal is made to Viasoft and is not
withdrawn, (ii) Viasoft provides written notice to Compuware (a "Notice of
Superior Proposal") advising Compuware that Viasoft has received a superior
proposal, specifying all of the material terms and conditions of such superior
proposal and identifying the person or entity making such superior proposal,
(iii) Compuware will not have, within three business days of Compuware's receipt
of the Notice of Superior Proposal, made an offer that Viasoft's Board by a
majority vote determines in its good faith judgment, after consultation with its
financial adviser, to be at least as favorable to Viasoft's shareholders as such
superior proposal (it being agreed that Viasoft's Board of Directors will
convene a meeting to consider any such offer by Compuware promptly following the
receipt thereof), (iv) Viasoft's Board of Directors concludes in good faith,
after consultation with qualified outside counsel, that, in light of such
superior proposal, the withholding, withdrawal, amendment or modification of
such recommendation is required in order for Viasoft's Board of Directors to
comply with its fiduciary obligations to Viasoft's shareholders under applicable
law and (v) Viasoft will not have violated any of the restrictions set forth in
Section 5.2 or this Section 6.1. Viasoft will provide Compuware with at least
three business days prior notice (or such lesser prior notice as provided to the
members of Viasoft's Board of Directors but in no event less than twenty-four
hours) of any meeting of Viasoft's Board of Directors at which Viasoft's Board
of Directors is reasonably expected to consider any takeover proposal to
determine whether such takeover proposal is a superior proposal. For purposes of
this Agreement, "superior proposal" will mean an unsolicited, bona fide written
offer made by a third party to consummate any of the following transactions: (i)
a merger, consolidation, business combination, sale of assets or similar
transaction involving Viasoft pursuant to which the Shares outstanding
immediately preceding such transaction will represent less than 50% of the
equity interest in the surviving or resulting entity of such transaction or (ii)
the acquisition by any person or group (including by way of a tender offer or an
exchange offer or a two step transaction involving a tender offer followed with
reasonable promptness by a merger involving Viasoft), directly or indirectly, of
ownership of 100% of the then-outstanding shares of capital stock of Viasoft, on
terms and conditions that Viasoft's Board of Directors determines, in its
reasonable judgment, after consultation with its financial adviser, to be more
favorable to Viasoft shareholders than the terms of the Merger; provided,
however, that any such offer will not be deemed to be a "superior proposal" if
any financing required to consummate the transaction contemplated by such offer
is not committed and is not likely in the reasonable judgment of Viasoft's Board
of Directors (after consultation with its financial adviser) to be obtained by
such third party on a timely basis.
(d) Nothing contained in this Agreement will prohibit Viasoft
or its Board of Directors from taking and disclosing to its shareholders a
position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange
Act.
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(e) Compuware agrees to cause all shares of Viasoft Common
Stock purchased pursuant to the Offer and all other shares of Viasoft Common
Stock owned by Merger Sub or any other subsidiary of Compuware to be voted in
favor of Viasoft Shareholder Approval.
6.2 Access to Information; Confidentiality. Viasoft will, and will
cause each of its subsidiaries to, afford to Compuware, and to Compuware's
officers, employees, accountants, counsel, financial advisers and other
representatives, reasonable access during normal business hours during the
period prior to the Effective Time to all their respective properties, books,
contracts, commitments, personnel and records and, during such period, Viasoft
will, and will cause each of its subsidiaries to, furnish or make available
promptly to Compuware (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (b) all other information
concerning its business, properties and personnel as Compuware may reasonably
request. Any disclosure that may be required by law, regulation or rule will be
coordinated by and between the parties and their advisors prior to such
disclosure. Except as required by law or the rules and regulations of the Nasdaq
National Market, Compuware will hold, and will cause its officers, employees,
accountants, counsel, financial advisers and other representatives and
affiliates to hold, in confidence any confidential information in accordance
with the Confidentiality Agreement dated June 2, 1999, between Compuware and
Viasoft (the "Confidentiality Agreement").
6.3 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use its reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
use its reasonable efforts to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer, the Merger and
the other transactions contemplated by this Agreement, including (i) the
obtaining of all necessary actions or non actions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities, if any)
and the taking of all reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any Governmental Entity,
(ii) the obtaining of all necessary consents, approvals or waivers from third
parties, including but not limited to those set forth in Section 4.1(d) of the
Viasoft Disclosure Letter, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of any of the transactions contemplated by this Agreement,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed and (iv) the execution
and delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement. In connection with and without limiting the foregoing, Viasoft and
its Board of Directors will (A) take all action necessary to ensure that no
state takeover statute or similar statute or regulation is or becomes applicable
to the Offer, the Merger, this Agreement or any of the other transactions
contemplated by this Agreement and (B) if any state takeover statute or similar
statute or regulation becomes applicable to the Offer, the Merger, this
Agreement, or any other transaction contemplated by this Agreement, take all
action necessary to ensure that the Offer, the Merger and the other transactions
contemplated by this Agreement may be consummated as promptly
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as practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Offer, the Merger and
the other transactions contemplated by this Agreement.
(b) Viasoft will give prompt notice to Compuware, and
Compuware will give prompt notice to Viasoft, of: (i) the breach of any material
representation or warranty made by it contained in this Agreement or (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; provided, however, that no such notification will affect the
representations, warranties, covenants, or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
6.4 Stock Plans.
(a) Stock Option Plans. Pursuant to the Viasoft Option Plans,
following the Effective Time, each option to purchase Shares granted pursuant to
the Viasoft Option Plans ("Options") will be fully vested and entitle the
optionee to receive the Merger Consideration (without interest) per Share
subject to such Option; provided, that any such Option that is not duly
exercised within thirty (30) days after the Effective Time will automatically
expire.
(b) Employee Stock Purchase Plan. Unless terminated prior to
the Effective Time in accordance with its terms, the Stock Purchase Plan will be
terminated as of the Effective Time. Unless the Stock Purchase Plan is
terminated prior to the Effective Time in accordance with its terms, Viasoft
will take such actions as are necessary to cause the last day of the then
current "Purchase Right Period" (as such term is used in the Stock Purchase
Plan) to be the last trading day on which Viasoft Common Stock is traded on the
Nasdaq National Market immediately prior to the Effective Time (the "Final
Viasoft Exercise Date"); provided that such change will be conditioned on the
consummation of the Merger. On the Final Viasoft Exercise Date, Viasoft will
apply the funds credited as of such date under the Stock Purchase Plan within
each participant's payroll withholdings account to the purchase of whole shares
of Viasoft Common Stock in accordance with the terms of the Stock Purchase Plan.
6.5 Post Merger Employment Benefits.
(a) Employees of Viasoft who become employed by Compuware or
any Subsidiary thereof after the Effective Time will become eligible to
participate in the same standard employee benefit plans as are generally
available to similarly situated employees of Compuware, and such employees will
receive credit for all service with Viasoft for purposes of any "employee
benefit plan" as such term is defined in Section 3(3) of ERISA. Upon the request
of Compuware, to the extent permitted by applicable law, any Viasoft Employee
Plans will be terminated immediately prior to the Effective Time.
(b) Promptly following the Effective Time, Compuware will
evaluate, in light of the equity incentive compensation provided to similarly
situated employees of Compuware, the equity incentive compensation of the
employees of Viasoft who become employed by Compuware or its
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Subsidiaries after the Effective Time, and, if deemed appropriate in Compuware's
sole discretion, Compuware will make grants of equity incentive compensation to
such employees.
6.6 Indemnification, Exculpation and Insurance.
(a) From and after the Effective Time, Compuware will fulfill
and honor and will cause the Surviving Corporation to fulfill and honor in all
respects the obligations of Viasoft pursuant to any indemnification agreements
between Viasoft and any of its subsidiaries and their respective directors and
officers (each, an "Indemnified Party") existing prior to the date hereof;
provided that Compuware and the Surviving Corporation will have no obligation to
indemnify an Indemnified Party thereunder in respect of claims, liabilities or
damages arising out of a breach of a representation or covenant made by Viasoft
in this Agreement knowingly and willfully caused by such Indemnified Party. From
and after the Effective Time, such obligations will be the joint and several
obligations of Compuware and the Surviving Corporation and, by executing this
Agreement, Compuware hereby assumes such obligations. Compuware will cause to be
maintained for a period of not less than two years after the Effective Time
Viasoft's current directors' and officers' insurance and indemnification policy
to the extent that it provides coverage for events occurring prior to the
Effective Time (the "D&O Insurance") for all persons who are directors and
officers of Viasoft on the date of this Agreement, so long as the annual premium
therefor would not be in excess of 150% of the amount per annum Viasoft paid in
its last full fiscal year, which amount has been disclosed to Compuware. If the
existing D&O Insurance cannot be maintained, expires or is terminated or
cancelled during such two-year period, Compuware will use all reasonable efforts
to cause to be obtained as much D&O Insurance as can be obtained for the
remainder of such period for an annualized premium not in excess of 150% of the
amount per annum Viasoft paid in its last full fiscal year, which amount has
been disclosed to Compuware, on terms and conditions substantially similar to
the existing D&O Insurance. The certificate of incorporation and bylaws of the
Surviving Corporation will contain the same provisions with respect to
indemnification and elimination of liability for monetary damages as are set
forth in the certificate of incorporation and bylaws of Viasoft, which
provisions will not be amended, repealed or otherwise modified from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who, as of the date hereof or any time after the date hereof and
prior to the Effective Time, were directors, officers, employees or agents of
Viasoft or its subsidiaries, unless such modification is required by law.
(b) This Section 6.6 will survive any termination of this
Agreement and the consummation of the Merger at the Effective Time and will be
binding on all successors and assigns of Compuware or the Surviving Corporation.
In the event that Compuware or the Surviving Corporation or any of their
successors or assigns consolidates with or merges into any other person and will
not be the continuing or surviving corporations or entities of such
consolidation or merger, then and in each such case, proper provisions will be
made so that the successors and assigns of Compuware or the Surviving
Corporation will assume the obligations of Compuware or the Surviving
Corporation, as the case may be, set forth in this Section 6.6.
6.7 Directors. Promptly upon the acceptance for payment of, and
payment for, a number of shares of Viasoft Common Stock by Merger Sub pursuant
to the Offer that satisfies the Minimum Tender Condition, Merger Sub will be
entitled to designate for appointment or election to Viasoft's
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Board of Directors, upon written notice to Viasoft, such number of persons so
that the designees of Merger Sub constitute the same percentage (but in no event
less than a majority) of Viasoft's Board of Directors (rounded up to the next
whole number) as the percentage of Shares acquired in connection with the Offer.
Viasoft will, upon Merger Sub's request, promptly increase the size of the Board
of Directors and/or secure the resignations of such number of directors as is
necessary to enable Merger Sub's designees to be elected to the Board of
Directors and will cause Merger Sub's designees to be so elected. Subject to
applicable law, Viasoft will take all action requested by Compuware necessary to
effect any such election, including mailing to its shareholders the Information
Statement containing the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder, and Viasoft agrees to make such
mailing with the mailing of the Schedule 14D-9 (provided that Merger Sub will
have provided to Viasoft on a timely basis all information required to be
included in the Information Statement with respect to Merger Sub's designees).
Following the election or appointment of Merger Sub's designees pursuant to this
Section 6.7, and prior to the Effective Time, any amendment or termination of
this Agreement, extension for the performance or waiver of the obligations or
other acts of Compuware or Merger Sub or exercise or waiver of Viasoft's rights
or remedies hereunder, will require the concurrence of a majority of Viasoft's
directors (including, if Compuware so elects, a majority of Viasoft's
non-employee directors) (or the concurrence of the sole remaining director, if
there is only one remaining) then in office who are directors of Viasoft on the
date hereof, or are directors (other than directors designated by Merger Sub in
accordance with this Section 6.7) designated by such persons or person to fill
any vacancy (the "Continuing Directors").
6.8 Fees and Expenses. All fees and expenses incurred in connection
with the Offer, the Merger, this Agreement and the transactions contemplated by
this Agreement will be paid by the party incurring such fees or expenses,
whether or not the Offer or the Merger is consummated; provided, however, that
(i) Viasoft agrees to promptly assume and pay, or reimburse Compuware for, all
reasonable legal, accounting and investment banking fees payable and expenses
incurred by Compuware in connection with this Agreement and the transactions
contemplated hereby, up to a maximum of $500,000, following termination of this
Agreement pursuant to Sections 8.1(c) or 8.1(d) hereof, and (ii) Compuware
agrees to promptly assume and pay, or reimburse Viasoft for, all reasonable
legal, accounting and investment banking fees payable and expenses incurred by
Viasoft in connection with this Agreement and the transactions contemplated
hereby, up to a maximum of $500,000, following termination of this Agreement
pursuant to Section 8.1(e) hereof.
6.9 Public Announcements. Compuware and Merger Sub, on the one hand,
and Viasoft, on the other hand, will consult with each other before issuing, and
provide each other the opportunity to review, comment upon and concur with, any
press release or other public statements with respect to the transactions
contemplated by this Agreement, including the Offer and the Merger, and will not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with the Nasdaq National Market.
The parties agree that the initial press release to be issued with respect to
the transactions contemplated by this Agreement will be in the form heretofore
agreed to by the parties.
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6.10 Shareholder Litigation. Viasoft will give Compuware the
opportunity to participate in the defense or settlement of any shareholder
litigation against Viasoft and its directors and officers relating to any of the
transactions contemplated by this Agreement until the purchase of Viasoft Common
Stock pursuant to the Offer or the prior termination of this Agreement in
accordance with its terms, and thereafter, will give Compuware the opportunity
to direct the defense of such litigation and, if Compuware so chooses to direct
such litigation, Compuware will give Viasoft and its directors and officers an
opportunity to participate in such litigation; provided, however, that no
settlement thereof will be agreed to without Compuware's consent, which consent
will not be unreasonably withheld, and provided further that no settlement
requiring a payment by an officer, director or other representative will be
agreed to without such person's consent.
6.11 Certain Tax Matters. Prior to the Closing Date, Viasoft will
deliver to Compuware the following information with respect to Viasoft and each
of its subsidiaries as of the most recent practicable date as well as on an
estimated pro forma basis as of the Closing Date giving effect to the
consummation of the transaction contemplated by this Agreement for Tax purposes:
(1) the basis of Viasoft and each of its subsidiaries in their respective
assets; (2) the amount of any net operating loss, net capital loss, unused
investment, research and development or other credit, unused foreign tax credit,
or excess charitable contribution of Viasoft and/or each of its subsidiaries;
(3) excess loss accounts in the consolidated group or groups of which Viasoft
and/or each of its subsidiaries is a member; (4) the amount of any deferred gain
or loss of Viasoft and each of its subsidiaries arising out of any deferred
intercompany transaction; and (5) the amount of any gain or loss allocable to
Viasoft and each of its subsidiaries arising out of any deferred intercompany
transaction or intercompany transaction.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Effective Time of the following
conditions:
(a) Viasoft Shareholder Approval. If required by applicable
law, Viasoft Shareholder Approval will have been obtained.
(b) HSR Act. All waiting periods, if any, under the HSR Act
relating to the transactions contemplated hereby will have expired or terminated
early and all material foreign antitrust approvals required to be obtained prior
to the Merger in connection with the transactions contemplated hereby will have
been obtained.
(c) No Injunctions or Restraints. No statute, rule,
regulation, executive order, decree, temporary restraining order, preliminary or
permanent injunction, judgment or other order or ruling issued by any court of
competent jurisdiction or other Governmental Entity or other legal restraint or
prohibition will be in effect which would (i) make the Merger or the acquisition
or holding by Compuware or its affiliates of Viasoft Common Stock or Common
Stock of the Surviving Corporation illegal or otherwise prevent the consummation
of the Merger, (ii) prohibit Compuware's
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or Merger Sub's ownership or operation of, or compel Compuware or Merger Sub to
dispose of or hold separate, all or a material portion of the business or assets
of Viasoft or any subsidiary thereof, (iii) compel Compuware, Merger Sub or
Viasoft to dispose of or hold separate all or a material portion of the business
or assets of Compuware or any of its subsidiaries or Viasoft or any of its
subsidiaries, or (iv) impose material limitations on the ability of Compuware or
Merger Sub or their affiliates effectively to exercise full ownership and
financial benefits of the Surviving Corporation, or impose any material
condition to the Offer, this Agreement or the Merger which would be adverse to
Compuware.
7.2 Conditions to Compuware's and Merger Sub's Obligation to
Effect the Merger. The respective obligations of Compuware and Merger Sub to
effect the Merger are subject to the satisfaction or waiver on or prior to the
Effective Time of the following conditions:
(a) the representations and warranties of Viasoft set forth in
this Agreement will be true and correct in all material respects on the Closing
Date as if made on and as of the Closing Date, and Compuware will have received
a certificate with respect to the foregoing signed by a duly authorized officer
of Viasoft;
(b) Viasoft will have performed in all material respects each
of its covenants and obligations under this Agreement required to be performed
by it at or prior to the Effective Time pursuant to the terms hereof, and
Compuware will have received a certificate with respect to the foregoing signed
by a duly authorized officer of Viasoft;
(c) there will not have occurred any Material Adverse Change
in Viasoft or any event that is reasonably likely to result in a Material
Adverse Effect to Viasoft;
(d) there will not be pending or overtly threatened any suit,
action or proceeding brought by or on behalf of any Governmental Entity (nor
will the staff of the Federal Trade Commission or the staff of the Antitrust
Division of the Department of Justice have recommended the commencement of
such), any shareholder of Viasoft or any other person or party (but only if such
shareholder suit, action or proceeding is deemed by Compuware to have a
reasonable likelihood of success) directly or indirectly (i) challenging the
acquisition by Compuware or Merger Sub of any shares of Viasoft Common Stock,
seeking to restrain or prohibit the making or consummation of the Offer or the
Merger or the performance of any of the other transactions contemplated by this
Agreement, or alleging that any such acquisition or other transaction relates
to, involves or constitutes a breach of fiduciary duty by Viasoft's directors or
a violation of federal securities law or applicable corporate law, (ii) seeking
to prohibit or limit the ownership or operation by Viasoft, Compuware or any of
their respective subsidiaries of a material portion of the business or assets of
Viasoft and its subsidiaries, taken as a whole, or Compuware and its
subsidiaries, taken as a whole, or to compel Viasoft or Compuware to dispose of
or hold separate any material portion of the business or assets of Viasoft and
its subsidiaries, taken as a whole, or Compuware and its subsidiaries,
taken as a whole, as a result of the Offer or any of the other transactions
contemplated by this Agreement, (iii) seeking to impose material limitations on
the ability of Compuware or Merger Sub to acquire or hold, or exercise full
rights of ownership of, any shares of Viasoft Common Stock accepted for payment
pursuant to the Offer including without limitation the right to vote Viasoft
Common Stock
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accepted for payment by it on all matters properly presented to the shareholders
of Viasoft, (iv) seeking to prohibit Compuware or any of its subsidiaries from
effectively managing or controlling in any material respect the business or
operations of Viasoft and its subsidiaries taken as a whole, or (v) seeking to
impose a material condition to the Offer, Merger or Agreement which would be
adverse to Compuware; and
(e) All third party consents, the failure of which to obtain
would have a Material Adverse Effect on Viasoft, will have been obtained.
7.3 Conditions to Viasoft's Obligation to Effect the Merger. The
obligation of Viasoft to effect the Merger is subject to the satisfaction or
waiver on or prior to the Effective Time of the following conditions:
(a) the representations and warranties of Compuware and Merger
Sub set forth in this Agreement will be true and correct in all material
respects on the Closing Date as if made on and as of the Closing Date, and
Viasoft will have received a certificate with respect to the foregoing signed by
duly authorized officers of Compuware and Merger Sub; and
(b) Compuware and Merger Sub will have performed in all
material respects each of its covenants and obligations under this Agreement
required to be performed by it at or prior to the Effective Time pursuant to the
terms hereof, and Viasoft will have received a certificate with respect to the
foregoing signed by duly authorized officers of Compuware and Merger Sub.
7.4 Conditions to the Short-Form Merger. Notwithstanding the
foregoing provisions of this Article VII, the only conditions to Compuware's and
Merger Sub's obligation to effect the Short-Form Merger, if the Short-Form
Merger may be effected pursuant to applicable law, will be the conditions set
forth in Section 7.1(b) and (c).
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the shareholders of Viasoft:
(a) by mutual written consent duly authorized by the
Boards of Directors of Compuware and Viasoft;
(b) by either Compuware or Viasoft,
(i) if the Merger has not been consummated on or
prior to January 31, 2000; provided, however, that the right to terminate this
Agreement under this Section 8.1(b)(i) will not be available to any party whose
action or failure to act has been a principal cause of or resulted in the
failure of the Merger to occur on or before such date and such action or failure
to act constitutes a breach of this Agreement;
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(ii) if any Governmental Entity issues an order, decree or
ruling or takes any other action permanently enjoining, restraining or otherwise
prohibiting the Merger and such order, decree or ruling or other action becomes
final and nonappealable; or
(iii) if any required approval of Viasoft's shareholders
contemplated by this Agreement has not been obtained by reason of the failure to
obtain the required vote at the Shareholders Meeting duly convened therefor and
at any adjournment thereof; provided, however, that the right to terminate this
Agreement pursuant to this Section 8.1(b)(iii) will not be available to Viasoft
where the failure to obtain Viasoft Shareholder Approval was caused by (x) the
action or failure to act of Viasoft and such action or failure to act
constitutes a material breach by Viasoft of this Agreement or (y) a breach of
the Shareholder Tender and Voting Agreement by any party thereto other than
Compuware;
(c) by Compuware, if (i) Viasoft's Board of Directors or any
committee thereof fails to recommend the Offer, the Merger, this Agreement, or
Viasoft Shareholder Approval, including any failure to include such
recommendation in the Schedule 14D-9 or the Proxy Statement, or has so resolved;
(ii) Viasoft's Board of Directors or any committee thereof withdraws or modifies
(including by amendment of the Schedule 14D-9 or Proxy Statement) in a manner
adverse to Compuware or Merger Sub its approval or recommendation of the Offer,
the Merger, this Agreement, or Viasoft Shareholder Approval, approves or
recommends any takeover proposal (including a superior proposal), or resolves to
do any of the foregoing; (iii) Viasoft enters into any letter of intent or
similar document, agreement or commitment with respect to any takeover proposal
(including a superior proposal) or Viasoft's Board of Directors or any committee
thereof resolves to do so; (iv) Viasoft's Board of Directors or any committee
thereof upon a request to reaffirm Viasoft's approval or recommendation of the
Offer, the Merger or this Agreement, fails to do so within two business days
after such request is made or has so resolved; or (v) a tender or exchange offer
relating to securities of Viasoft is commenced by a person unaffiliated with
Compuware, and Viasoft does not send to its securityholders pursuant to Rule
14e-2 promulgated under the Exchange Act, within 10 business days after such
tender or exchange offer is first published sent or given, a statement
disclosing that Viasoft recommends rejection of such tender or exchange offer;
(d) by Compuware, if any of the representations and warranties
of Viasoft set forth in this Agreement fail to be true and correct in any
material respect as of the date of the Agreement or cease to be true and correct
in any material respect at any time thereafter, or if Viasoft breaches or fails
to perform in any material respect any obligation or to comply in any material
respect with any agreement or covenant of Viasoft to be performed or complied
with by it; provided that if any such breach or failure (other than a breach of
Sections 5.2 or 6.1 or any other breach that has caused irreparable harm) is
curable by Viasoft through the exercise of its reasonable efforts, then
Compuware may not terminate this Agreement under this subsection (d) until ten
business days after written notice thereof has been given to Viasoft by
Compuware and unless at such time the matter has not been cured;
(e) by Viasoft, if any of the representations and warranties
of Compuware or Merger Sub set forth in this Agreement fail to be true and
correct in any material respect as of the
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date of the Agreement or cease to be true and correct in any material respect at
any time thereafter, or if Compuware or Merger Sub breaches or fails to perform
in any material respect any obligation or to comply in any material respect with
any agreement or covenant of Compuware or Merger Sub to be performed or complied
with by it; provided that if any such breach or failure (other than a breach
that has caused irreparable harm) is curable by Compuware or Merger Sub through
the exercise of its reasonable efforts, then Viasoft may not terminate this
Agreement under this subsection (e) until ten business days after written notice
thereof has been given to Compuware and Merger Sub by Viasoft and unless at such
time the matter has not been cured;
(f) by Viasoft, if the Board of Directors of Viasoft will have
withheld, withdrawn, modified or amended its recommendation in favor of this
Agreement, the Offer, the Merger or Viasoft Shareholder Approval as permitted
pursuant to Section 6.1(c) and will have authorized Viasoft to enter into an
agreement with a third party with respect to a superior proposal; or
(g) by Viasoft, if (i) Compuware, Merger Sub, or any of their
affiliates will have failed to commence the Offer on or prior to 5 business days
following the date of the initial public announcement of the Offer or will have
terminated the Offer, or (ii) the Offer expires without Compuware, Merger Sub or
their affiliates, as the case may be, purchasing Shares pursuant thereto;
provided that in each case Viasoft may not terminate this Agreement pursuant to
this Section 8.1(g) if Viasoft is then in material breach of this Agreement.
8.2 Effect of Termination. If this Agreement is terminated by
either Viasoft or Compuware as provided in Section 8.1, this Agreement will
forthwith become void and have no effect, without any liability or obligation on
the part of Compuware, Merger Sub or Viasoft, other than the provisions of the
last sentence of Section 6.2, Section 6.8, this Section 8.2 and Article IX;
provided, however, to the extent that such termination results from the breach
by a party of any of its representations, warranties, covenants or agreements
set forth in this Agreement, such breaching party may be held liable for damages
for such breach; and, provided further that (x) if this Agreement is terminated
by Compuware pursuant to Section 8.1(c) or by Viasoft pursuant to Section
8.1(f), Viasoft will pay or cause to be paid a fee equal to $5,500,000 in
immediately available funds within two business days of such termination, and
(y) if this Agreement is terminated by Compuware pursuant to Sections 8.1(b)(i)
or 8.1(d), or by Compuware or Viasoft pursuant to Section 8.1(b)(iii), and,
prior to such termination under any of such Sections, a third party has publicly
announced a takeover proposal, the consummation of which would constitute an
Acquisition Event, and within 12 months following the termination of this
Agreement, an Acquisition Event is consummated or Viasoft enters into a
definitive agreement providing for an Acquisition Event, Viasoft will pay or
cause to be paid to Compuware a fee equal to $5,500,000 in immediately available
funds within two business days after the consummation of such Acquisition Event
or the entry by Viasoft into such definitive agreement; provided, that if such
Acquisition Event provides for a consideration per Share less than the Offer
Price but greater than the closing price per Share on the Nasdaq National Market
on the trading day immediately prior to the public announcement of the execution
of this Agreement (the "Pre-Offer Price"), the fee payable by Viasoft pursuant
to this clause (y) will be $2,000,000, and if such Acquisition Event provides
for a consideration per Share less than or equal to the Pre-Offer Price, no fee
will be payable by Viasoft pursuant to this clause (y). No termination of this
Agreement will affect the obligations of the parties contained in the
Confidentiality Agreement, all of which
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<PAGE> 47
obligations will survive in accordance with their terms. For the purposes of
this Agreement, "Acquisition Event" means any of the following transactions
(other than the transactions contemplated by this Agreement): (i) a merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving Viasoft pursuant to which the shareholders of
Viasoft immediately preceding such transaction hold less than 50% of the
aggregate equity interests in the surviving or resulting entity of such
transaction, (ii) a sale or other disposition by Viasoft of assets representing
in excess of 50% of the aggregate fair market value of Viasoft's business
immediately prior to such sale or (iii) the acquisition by any person or group
(including by way of a tender offer or an exchange offer or issuance by
Viasoft), directly or indirectly, of beneficial ownership or a right to acquire
beneficial ownership of shares representing in excess of 50% of the voting power
of the then outstanding shares of capital stock of Viasoft. Payment of the
amounts described in this Section 8.2 will not be in lieu of damages incurred in
the event of breach of this Agreement.
8.3 Amendment. This Agreement may be amended by the parties at any time
before or after obtaining Viasoft Shareholder Approval, if Viasoft Shareholder
Approval is required by law; provided, however, that after any required Viasoft
Shareholder Approval, there will not be made any amendment that by law requires
further approval by such shareholders without the further approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
8.3, waive compliance with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
will be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise will not constitute a waiver of those
rights.
8.5 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 8.1, an amendment of this
Agreement pursuant to Section 8.3 or an extension or waiver pursuant to Section
8.4 will, in order to be effective, require in the case of Compuware, Merger Sub
or Viasoft, action by its Board of Directors or the duly authorized designee of
its Board of Directors; provided, however, that in the event that Merger Sub's
designees are appointed or elected to the Board of Directors of Viasoft as
provided in Section 6.7, after the acceptance for payment of shares of Viasoft
Common Stock pursuant to the Offer and prior to the Effective Time, the
affirmative vote of the Continuing Directors will be required by Viasoft to (i)
amend or terminate this Agreement by Viasoft, (ii) exercise or waive any of
Viasoft's rights or remedies under this Agreement or (iii) extend the time for
performance or waiver of Compuware's and Merger Sub's respective obligations
under this Agreement.
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ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement will survive the Effective Time. This Section 9.1
will not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
9.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement will be in writing and will be deemed given
if delivered personally, telecopied (which is confirmed) or sent by overnight
courier (providing proof of delivery) to the parties at the following addresses
(or at such other address for a party as will be specified by like notice):
(a) if to Compuware or Merger Sub, to
Compuware Corporation
31440 Northwestern Highway
Farmington Hills, Michigan 48334
Attention: President
Facsimile: 248-737-1822
with copies to:
Compuware Corporation
31440 Northwestern Highway
Farmington Hills, Michigan 48334
Attention: General Counsel
Facsimile: 248-737-7690
(b) if to Viasoft, to
Viasoft, Inc.
3033 North 44th Street
Phoenix, Arizona 85018
Attention: Chief Executive Officer
Facsimile: 1-602-840-4068
with a copy to:
Osborn Maledon, P.A.
2929 North Central Avenue, Suite 2100
Phoenix, Arizona 85012
Attention: William M. Hardin, Esq.
Facsimile: 1-602-640-9050
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9.3 Definitions. For purposes of this Agreement:
"Acquisition Event" is defined in Section 6.8(b)(ii) of this
Agreement.
"Affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person.
"Certificates" is defined in Section 3.2(c) of this Agreement.
"Closing Date" is defined in Section 2.2 of this Agreement.
"Compuware" is defined in the introductory paragraph of this
Agreement.
"Confidentiality Agreement" is defined in Section 6.2 of this
Agreement.
"Confidential Information" is defined in Section 4.1(h)(ix) of
this Agreement.
"Continuing Directors" is defined in Section 6.7 of this
Agreement.
"Viasoft" is defined in the introductory paragraph of this
Agreement.
"Viasoft Affiliate" is defined in Section 4.1(k)(iii) of this
Agreement.
"Viasoft Balance Sheet" is defined in Section 4.1(l)(i) of
this Agreement.
"Viasoft Common Stock" is defined in Recital A of this
Agreement.
"Viasoft Disclosure Letter" is defined in Section 4.1 of this
Agreement.
"Viasoft Employee Plans" is defined in Section 4.1(k)(iv) of
this Agreement.
"Viasoft Option Plans" is defined in Section 4.1(c) of this
Agreement.
"Viasoft Preferred Stock" is defined in Section 4.1(c) of this
Agreement.
"Viasoft Shareholder Approval" is defined in Section 4.1(d) of
this Agreement.
"Dissenting Shareholder" is defined in Section 3.1(d) of this
Agreement.
"Dissenting Shares" is defined in Section 3.1(d) of this
Agreement.
"DGCL" is defined in Section 2.1 of this Agreement.
"Effective Time" is defined in Section 2.3 of this Agreement.
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"Employment and Noncompetition Agreements" is defined in
Section 6.5(b) of this Agreement.
"Environmental Laws" is defined in Section 4.1(n)(ii) of this
Agreement.
"ERISA" is defined in Section 4.1(k)(iii) of this Agreement.
"Exchange Act" is defined in Section 1.1(a) of this Agreement.
"Expiration Date" is defined in Section 1.1(a) of this
Agreement.
"Filed SEC Documents" is defined in Section 4.1(g) of this
Agreement.
"Final Viasoft Exercise Date" is defined in Section 6.4(b) of
this Agreement.
"GAAP" is defined in Section 4.1(e) of this Agreement.
"Government Contract Party" is defined in Section 4.1(v) of
this Agreement.
"Governmental Entity" is defined in Section 4.1(d) of this
Agreement.
"Hazardous Material" is defined in Section 4.1(n)(iii) of this
Agreement.
"HSR Act" is defined in Section 4.1(d) of this Agreement.
"Indemnified Party" is defined in Section 6.6(a) of this
Agreement.
"Information Statement" is defined in Section 4.1(f) of this
Agreement.
"Intellectual Property" is defined in Section 4.1(h) of this
Agreement.
"IRCA" is defined in Section 4.1(u) of this Agreement.
"IRS" is defined in Section 4.1(k)(iii) of this Agreement.
"Liens" is defined in Section 4.1(b) of this Agreement.
"Material Adverse Change" or "Material Adverse Effect" means,
when used in connection with Viasoft or in connection with Viasoft and
its subsidiaries, any change or effect that is or would be materially
adverse to Viasoft and its subsidiaries, taken as a whole, taking into
account the business, properties, assets, employees, financial
condition or results of operations of Viasoft and its subsidiaries,
excluding those changes, effects and developments that directly result
from (i) the announcement of the Offer or the Merger, (ii) any act or
omission of Compuware or Merger Sub, (iii) general economic conditions,
or (iv)
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conditions generally affecting the industry in which Viasoft
competes (provided that such conditions do not materially and adversely
affect Viasoft disproportionately); provided that in any litigation
regarding this definition where the principal change or effect at issue
involves the termination for any reason of the employment of Viasoft's
or its subsidiaries' employees, Viasoft will be required to sustain the
burden of proving by clear and convincing evidence that the exclusion
set forth in clause (i) or (ii) of this sentence is applicable.
"Material Customer" is defined in Section 4.1(x) of this
Agreement.
"Merger" is defined in Recital B of this Agreement.
"Merger Consideration" is defined in Section 3.1(c) of this
Agreement.
"Merger Sub" is defined in the introductory paragraph of this
Agreement.
"Minimum Tender Condition" is defined in Exhibit A attached to
this Agreement.
"Notice of Superior Proposal" is defined in Section 6.1(c) of
this Agreement.
"Offer" is defined in Recital A of this Agreement.
"Offer Documents" is defined in Section 1.1(b) of this
Agreement.
"Offer Price" is defined in Recital A of this Agreement.
"Options" is defined in Section 6.4(a) of this Agreement.
"Paying Agent" is defined in Section 3.2(a) of this Agreement.
"Permits" is defined in Section 4.1(n)(i) of this Agreement.
"Person" means an individual, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or other entity.
"Pre-Offer Price" is defined in Section 8.2 of this Agreement.
"Proxy Statement" is defined in Section 4.1(d) of this
Agreement.
"Returns" is defined in Section 4.1(l)(v) of this Agreement.
"Revenue Code" is defined in Section 4.1(k)(iii) of this
Agreement.
"Rights" is defined in the Recitals Section of this Agreement.
"Rights Plan" is defined in Section 4.1(o) of this Agreement.
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"Schedule 14D-9" is defined in Section 1.2(b) of this
Agreement.
"SEC" is defined in Section 1.1(b) of this Agreement.
"Securities Act" is defined in Section 4.1(e) of this
Agreement.
"Share" is defined in Recital A of this Agreement.
"Shareholders Meeting" is defined in Section 6.1(a) of this
Agreement.
"Short-Form Merger" is defined in Section 2.8 of this
Agreement.
"Stock Purchase Plan" is defined in Section 4.1(c) of this
Agreement.
"Subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is
owned directly or indirectly by such first person.
"Superior proposal" is defined in Section 6.1 of this
Agreement.
"Surviving Corporation" is defined in Section 2.1 of this
Agreement.
"Systems" is defined in Section 4.1(h)(x) of this Agreement.
"Takeover proposal" is defined in Section 5.2 of this
Agreement.
"Tax" or "Taxes" is defined in Section 4.1(l)(v) of this
Agreement.
"Third Party Intellectual Property Rights" is defined in
Section 4.1(h)(ii) of this Agreement.
"WARN Act" is defined in Section 4.1(u) of this Agreement.
9.4 Interpretation. When a reference is made in this Agreement to
an Article, a Section, Exhibit or Schedule, such reference is to an Article or a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they will be deemed to be followed by
the words "without limitation." The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement will refer to this Agreement
as a whole and not to any particular provision of this Agreement. All terms
defined in this Agreement will have the defined meanings when used in any
certificate or other
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<PAGE> 53
document made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. References to a person are also to its
permitted successors and assigns. References to a law or statute in this
Agreement include all amendments and modifications to such law or statute, and
all rules and regulations promulgated thereunder. References to Viasoft in this
Agreement refer also to Viasoft's subsidiaries unless the context would clearly
indicate otherwise.
9.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
9.6 Entire Agreement; No Third-Party Beneficiaries. This Agreement, the
exhibits and schedules hereto, the Viasoft Disclosure Letter, the Shareholder
Tender and Voting Agreement, and the Confidentiality Agreement constitute the
entire agreement, and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of this
Agreement and, other than Sections 6.6 and 6.10, are not intended to confer upon
any person other than the parties any rights or remedies hereunder.
9.7 Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflict of laws thereof.
9.8 Assignment. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement will be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties, except that Merger Sub may assign, in its sole
discretion, any of or all of its rights, interests and obligations under this
Agreement to Compuware or to any direct or indirect wholly-owned subsidiary of
Compuware, but no such assignment will relieve Merger Sub and Compuware of any
of its obligations under this Agreement. This Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
9.9 Enforcement. The parties 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 will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Michigan or in the State of Delaware or in Michigan or
Delaware state court, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction and venue of any federal
court located in the State of Michigan or the State of Delaware or any Michigan
or Delaware state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement, (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction or choice of venue by
motion or other request for leave from any such court and (c) agrees that it
will not bring any action relating to this Agreement or
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<PAGE> 54
any of the transactions contemplated by this Agreement in any court other than a
federal or state court sitting in the State of Michigan or in the State of
Delaware.
REST OF THIS PAGE INTENTIONALLY LEFT BLANK
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<PAGE> 55
IN WITNESS WHEREOF, Compuware, Merger Sub and Viasoft have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
COMPUWARE CORPORATION
By: /s/ Eliot R. Stark
---------------------------------
Name: Eliot R. Stark
Title: Executive Vice President
CV ACQUISITION, INC.
By: /s/ Eliot R. Stark
---------------------------------
Name: Eliot R. Stark
Title: President
VIASOFT, INC.
By: /s/ Steven D. Whiteman
---------------------------------
Name: Steven D. Whiteman
Title: Chairman and Chief Executive
Officer
<PAGE> 56
EXHIBIT A
OFFER
Notwithstanding any other term of the Offer or this Agreement, Merger
Sub will not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to Merger Sub's obligation to pay for or return tendered shares of
Viasoft Common Stock after the termination or withdrawal of the Offer), to pay
for any shares of Viasoft Common Stock tendered pursuant to the Offer unless (i)
there will have been validly tendered and not withdrawn prior to the expiration
of the Offer that number of shares of Viasoft Common Stock which would represent
more than 50% of the fully-diluted shares of Viasoft Common Stock outstanding at
the close of business on the business day immediately preceding the day on which
the Offer will expire or terminate (the "Minimum Tender Condition") and (ii) any
waiting period under the HSR Act applicable to the purchase of shares of Viasoft
Common Stock pursuant to the Offer will have expired or been terminated.
Furthermore, notwithstanding any other term of the Offer or this
Agreement, Merger Sub will not be required to accept for payment or, subject as
aforesaid, to pay for any shares of Viasoft Common Stock not theretofore
accepted for payment or paid for, and may terminate or amend the Offer, if, upon
the scheduled expiration date of the Offer (as extended) and before the
acceptance of such shares for payment or the payment therefor, any of the
following conditions exists and is continuing:
(a) there will be pending or overtly threatened any suit,
action or proceeding brought by or on behalf of any Governmental Entity (or the
staff of the Federal Trade Commission or the staff of the Antitrust Division of
the Department of Justice will have recommended the commencement of such), any
shareholder of Viasoft or any other person or party (but only if such
shareholder suit, action or proceeding is deemed by Compuware to have a
reasonable likelihood of success) directly or indirectly (i) challenging the
acquisition by Compuware or Merger Sub of any shares of Viasoft Common Stock,
seeking to restrain or prohibit the making or consummation of the Offer or the
Merger or the performance of any of the other transactions contemplated by this
Agreement, or alleging that any such acquisition or other transaction relates
to, involves or constitutes a breach of fiduciary duty by Viasoft's directors or
a violation of federal securities law or applicable corporate law, (ii) seeking
to prohibit or limit the ownership or operation by Viasoft, Compuware or any of
their respective subsidiaries of a material portion of the business or assets of
Viasoft and its subsidiaries, taken as a whole, or Compuware and its
subsidiaries, taken as a whole, or to compel Viasoft or Compuware to dispose of
or hold separate any material portion of the business or assets of Viasoft and
its subsidiaries, taken as a whole, or Compuware and its subsidiaries, taken as
a whole, as a result of the Offer or any of the other transactions contemplated
by this Agreement, (iii) seeking to impose material limitations on the ability
of Compuware or Merger Sub to acquire or hold, or exercise full rights of
ownership of, any shares of Viasoft Common Stock accepted for payment pursuant
to the Offer including without limitation the right to vote Viasoft Common Stock
accepted for payment by it on all matters properly presented to the shareholders
of Viasoft, (iv) seeking to prohibit Compuware or any of its subsidiaries from
effectively managing or controlling
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<PAGE> 57
in any material respect the business or operations of Viasoft and its
subsidiaries taken as a whole, or (v) seeking to impose a material condition to
the Offer, Merger or Agreement which would be adverse to Compuware;
(b) there will be any statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated or deemed applicable
to the Offer or the Merger, or any other action will be taken by any
Governmental Entity or court, other than the application to the Offer or the
Merger of applicable waiting periods under the HSR Act, that is reasonably
likely to result, in any of the consequences referred to in clauses (i) through
(v) of paragraph (a) above;
(c) there will have occurred any Material Adverse Change in
Viasoft and its subsidiaries taken as a whole or any event that is reasonably
likely to result in a Material Adverse Change in Viasoft and its subsidiaries
taken as a whole;
(d) (i) Viasoft's Board of Directors or any committee thereof
will have failed to recommend the Offer, the Merger, this Agreement, or Viasoft
Shareholder Approval, including any failure to include such recommendation in
the Schedule 14D-9 or the Proxy Statement, or will have so resolved; (ii)
Viasoft's Board of Directors or any committee thereof will have withdrawn or
modified (including by amendment of the Schedule 14D-9 or Proxy Statement) in a
manner adverse to Compuware or Merger Sub its approval or recommendation of the
Offer, the Merger, this Agreement, or Viasoft Shareholder Approval, will have
approved or recommended any takeover proposal (including a superior proposal),
or will have resolved to do any of the foregoing; (iii) Viasoft will have
entered into any letter of intent or similar document, agreement or commitment
with respect to any takeover proposal (including a superior proposal) or
Viasoft's Board of Directors or any committee thereof will have resolved to do
so; (iv) Viasoft's Board of Directors or any committee thereof upon a request to
reaffirm Viasoft's approval or recommendation of the Offer, the Merger or this
Agreement, will have failed to do so within two business days after such request
is made or will have so resolved; or (v) a tender or exchange offer relating to
securities of Viasoft will have been commenced by a person unaffiliated with
Compuware, and Viasoft will not have sent to its securityholders pursuant to
Rule 14e-2 promulgated under the Exchange Act, within 10 business days after
such tender or exchange offer is first published sent or given, a statement
disclosing that Viasoft recommends rejection of such tender or exchange offer;
(e) any of the representations and warranties of Viasoft set
forth in this Agreement will have failed to be true and correct in any material
respect as of the date of the Agreement or will have ceased to be true and
correct in any material respect at any time thereafter;
(f) Viasoft will have breached or failed to perform in any
material respect any obligation or to comply in any material respect with any
agreement or covenant of Viasoft to be performed or complied with by it;
provided that if any such breach or failure (other than a breach of Sections 5.2
or 6.1 or any other breach that has caused irreparable harm) is curable by
Viasoft through the exercise of its reasonable efforts, then Compuware may not
terminate the Offer under this subsection (f) until ten business days after
written notice thereof has been given to Viasoft by Compuware or Merger Sub and
unless at such time the matter has not been cured;
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<PAGE> 58
(g) this Agreement will have been terminated in accordance
with its terms;
(h) there will have occurred (1) any general suspension of
trading in, or limitation on prices for, securities on the Nasdaq National
Market, (2) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not mandatory),
(3) the commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States and having
a Material Adverse Effect or materially adversely affecting (or materially
delaying) the consummation of the Offer, (4) any limitation or proposed
limitation (whether or not mandatory) by any U.S. governmental authority or
agency, or any other event, that materially adversely affects generally the
extension of credit by banks or other financial institutions, or (5) in the case
of any of the situations described in clauses (1) through (4) inclusive existing
at the date of commencement of the Offer, a material escalation or worsening
thereof;
(i) any person (which includes a "person" as such term is
defined in Section 13(d)(3) of the Exchange Act) other than Merger Sub, any of
its affiliates, or any group of which any of them is a member, (1) will have
acquired beneficial ownership of more than 10% of the outstanding shares of
Viasoft Common Stock, (2) will have entered into a definitive agreement or an
agreement in principle with Viasoft with respect to a tender offer or exchange
offer for any shares of Viasoft Common Stock or merger, consolidation or other
business combination with or involving Viasoft or any of its subsidiaries or (3)
will have otherwise announced a tender offer with respect to shares of Viasoft
Common Stock; provided that upon satisfaction and maintenance of the Minimum
Tender Condition, this condition (i) will only consist of clause (2) hereof;
(j) any bankruptcy proceedings will have been instituted with
respect to Viasoft and not dismissed;
(k) all third party consents, the failure of which to obtain
would have a Material Adverse Effect on Viasoft, will not have been obtained;
which, in the sole judgment of Merger Sub or Compuware, in any such case, and
regardless of the circumstances giving rise to any such condition (other than
any action or inaction by Compuware or any of its subsidiaries which constitutes
a breach of this Agreement), makes it inadvisable to proceed with such
acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Merger Sub and
Compuware and their respective affiliates and may be asserted by Merger Sub or
Compuware regardless of the circumstances giving rise to such condition (other
than any action or inaction by Compuware or any of its Subsidiaries which
constitutes a breach of this Agreement) or may be waived by Merger Sub and
Compuware in whole or in part at any time and from time to time in their sole
discretion (except for the Minimum Tender Condition). The failure by Compuware,
Merger Sub or any other affiliate of Compuware at any time to exercise any of
the foregoing rights will not be deemed a waiver of any such right, the waiver
of any such right with respect to particular facts and circumstances will not be
deemed a waiver with respect to any other facts and circumstances and each such
right will be deemed an ongoing right that may be asserted at any time and from
time to time.
-3-
<PAGE> 59
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-4-
<PAGE> 1
EXHIBIT 5
SHAREHOLDER TENDER AND VOTING AGREEMENT
AGREEMENT dated as of July 14, 1999 among CV Acquisition,
Inc., a Delaware corporation ("Buyer"), and the holders (the "Shareholders") of
the shares of Common Stock, no par value (the "Shares"), of Viasoft, Inc., a
Delaware corporation (the "Company"), listed on the signature pages hereof.
In order to induce Buyer and Compuware Corporation, a Michigan
corporation ("Parent") and the owner of 100% of the outstanding capital stock of
Buyer, to enter into an Agreement and Plan of Merger with the Company of even
date herewith (the "Merger Agreement"), Buyer has requested the Shareholders,
and the Shareholders have agreed, to enter into this Agreement. Capitalized
terms used and not defined herein have the meanings given in the Merger
Agreement.
The parties hereto agree as follows:
ARTICLE I
TENDER OFFER AND MERGER
SECTION 1.1. Tender of Shares. (a) Each Shareholder hereby
agrees, pursuant to the terms and subject to the conditions set forth herein, to
tender in the Offer all Shares currently owned by such Shareholder as set forth
on the signature pages hereto and any additional Shares acquired by such
Shareholder (whether by purchase or otherwise) after the date of this Agreement
(with respect to each Shareholder, the "Shareholder's Shares" and, collectively,
the "Shareholder Shares").
(b) Within five business days of the commencement of the Offer
and within one business day of any acquisition by each Shareholder of any
additional Shares, each Shareholder shall deliver to the depositary (the
"Depositary") designated in the Offer (i) a letter of transmittal with respect
to such Shareholder's Shares complying with the terms of the Offer together with
instructions directing the Depositary to make payment for such Shares directly
to the Shareholder, (ii) a certificate or certificates representing such
Shareholder's Shares and (iii) all other documents or instruments required to be
delivered pursuant to the terms of the Offer (such documents in clauses (i)
through (iii) collectively being hereinafter referred to as the "Tender
Documents").
(c) Unless and until the Merger Agreement shall have been
terminated pursuant to its terms, no Shareholder shall, subject to applicable
law, withdraw any tender effected in accordance with Section 1.1(b).
SECTION 1.2. Voting of Shares. If the Offer, and Shareholder's
tender pursuant thereto, is not consummated, and the approval by the Company's
shareholders of the Merger Agreement and the Merger is sought, until termination
of the Merger Agreement pursuant to its terms, at every meeting of the
shareholders of the Company called with respect to any of the following, and at
every adjournment thereof, and on every action or approval by written consent of
the shareholders of Company with respect to any of the following, each
Shareholder shall cause all Shares owned of record or beneficially (over which
beneficially-owned Shares Shareholder
<PAGE> 2
exercises voting power) to be voted (i) in favor of adoption and approval of the
Merger Agreement and approval of the Merger and (ii) against approval of (a) any
proposal made in opposition to or in competition with consummation of the
Merger, (b) any merger, consolidation, sale of assets, reorganization or
recapitalization with any party other than Parent or its affiliates or (c) any
liquidation or winding up of Company.
SECTION 1.3. No Transfer. Until the earlier of the termination
of this Agreement or the record date for the meeting at which shareholders of
the Company are asked to vote upon adoption and approval of the Merger Agreement
and approval of the Merger, except pursuant to Shareholder's tender in the
Offer, or as may be required by the foreclosure on any encumbrance secured by
such Shareholder's Shares as of the date hereof or court order, each Shareholder
agrees not to sell, pledge, encumber, transfer, dispose of, or grant an option
with respect to, any of such Shareholder's Shares.
SECTION 1.4. No Option Exercise. During the period commencing
with the consummation of the Offer and ending at the Effective Time of the
Merger, each Shareholder agrees not to exercise any stock option issued by the
Company, or any other security exercisable for, or convertible into, Shares or
other capital stock of the Company.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
Each of the Shareholders severally represents and warrants to
Buyer that:
SECTION 2.1. Valid Title. Such Shareholder is the sole, true,
lawful and beneficial owner of such Shareholder's Shares with no restrictions on
such Shareholder's rights of disposition pertaining thereto.
SECTION 2.2. Authority; Noncontravention. Such Shareholder has
the requisite power and authority to enter into this Agreement and to consummate
the transactions contemplated by this Agreement. The execution and delivery of
this Agreement by such Shareholder and the consummation by such Shareholder of
the transactions contemplated by this Agreement have been duly authorized by all
necessary action (including any consultation, approval or other action by or
with any other person). This Agreement has been duly executed and delivered by
such Shareholder and constitutes a valid and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with its terms.
The execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to loss of a material benefit under, or result in the creation of any lien
upon any of the properties or assets of such Shareholder under, any provision of
applicable law or regulation or of any agreement, judgment, injunction, order,
decree, or other instrument binding on such Shareholder or result in the
imposition of any lien on any asset of such Shareholder. No consent, approval,
order or authorization of, or registration, declaration or filing with or
exemption by any Federal, state or local government or any court, administrative
or regulatory agency or commission or other
2
<PAGE> 3
governmental authority or agency, domestic or foreign, is required by or with
respect to such Shareholder in connection with the execution and delivery of
this Agreement by such Shareholder or the consummation by such Shareholder of
the transactions contemplated by this Agreement, except for applicable
requirements, if any, of Sections 13 and 16 of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder. If this Agreement is
being executed in a representative or fiduciary capacity, the person signing
this Agreement has full power and authority to enter into and perform such
Agreement.
SECTION 2.3. Total Shares. The number of Shares set forth on
the signature pages hereto are the only Shares beneficially owned by such
Shareholder and, except as set forth on such signature pages, the beneficial
owner or owners of such Shareholder's Shares owns or own no options to purchase
or rights to subscribe for or otherwise acquire any securities of the Company
and has or have no other interest in or voting rights with respect to any
securities of the Company.
SECTION 2.4. No Brokers. Except as set forth in the Merger
Agreement and the Viasoft Disclosure Letter, no investment banker, broker or
finder is entitled to a commission or fee from Buyer or the Company in respect
of this Agreement based upon any arrangement or agreement made by or on behalf
of such Shareholder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF BUYER
Buyer represents and warrants to each of the Shareholders
that:
SECTION 3.1. Corporate Power and Authority. Buyer has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate action on
the part of Buyer. This Agreement has been duly executed and delivered by Buyer
and constitutes a valid and binding obligation of Buyer, enforceable against it
in accordance with its terms.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost or
expense.
SECTION 4.2. Conduct of Shareholders. Such Shareholder will
not (a) take, agree or commit to take any action that would make any
representation and warranty of such Shareholder hereunder inaccurate in any
respect as of any time prior to the termination of this Agreement or (b) omit,
or agree or commit to omit, to take any action necessary to prevent any such
representation or warranty from being inaccurate in any respect at any such
time.
SECTION 4.3. Specific Performance. The parties hereto agree
that Buyer may be irreparably damaged if for any reason any Shareholder failed
to tender in the Offer, and to not
3
<PAGE> 4
withdraw, such Shareholder's Shares in accordance with the terms of this
Agreement or to perform any of its other obligations under this Agreement, and
that Buyer would not have an adequate remedy at law for money damages in such
event. Accordingly, Buyer shall be entitled to specific performance and
injunctive and other equitable relief to enforce the performance of this
Agreement by each Shareholder. This provision is without prejudice to any other
rights that Buyer may have against any Shareholder for any failure to perform
its obligations under this Agreement.
SECTION 4.4. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be deemed given
if delivered personally or sent by overnight courier (providing proof of
delivery) or by telecopy (with copies by overnight courier) to such party at its
address set forth on the signature page hereto or to such other address as such
party may have furnished to the other parties in writing in accordance herewith.
SECTION 4.5. Amendments; Termination. This Agreement may not
be modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. This Agreement
may be terminated by any of the parties hereto upon written notice to the other
parties hereto on or after the earlier of (a) the date that Shares are accepted
for payment in the Offer and (b) the date that the Merger Agreement terminates
in accordance with its terms.
SECTION 4.6. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that Buyer may assign its
rights and obligations to any affiliate of Buyer and provided, further, that no
Shareholder may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the prior written consent of Buyer.
SECTION 4.7. Governing Law. This Agreement shall be construed
in accordance with and governed by the law of Delaware without giving effect to
the principles of conflicts of laws thereof.
SECTION 4.8. Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
REST OF PAGE INTENTIONALLY LEFT BLANK
4
<PAGE> 5
The parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
CV ACQUISITION, INC.
By: /s/ Eliot R. Stark
-------------------------
Eliot R. Stark, President
c/o Compuware Corporation
31440 Northwestern Highway
Farmington Hills, Michigan
48334
Attention: General Counsel
Facsimile: (248) 737-7690
<TABLE>
<CAPTION>
Shares Subject
to Options Shares Owned SHAREHOLDERS:
<S> <C> <C>
36,000 23,495 /s/ John J. Barry, III
-----------------------------
Name: John J. Barry, III
c/o Viasoft, Inc.
3033 North 44th Street
Phoenix, Arizona 85018
96,333 9,116 /s/ Catherine R. Hardwick
-----------------------------
Name: Catherine Hardwick
c/o Viasoft, Inc.
3033 North 44th Street
Phoenix, Arizona 85018
121,666 1,212 /s/ David Lee
-----------------------------
Name: David Lee
c/o Viasoft, Inc.
3033 North 44th Street
Phoenix, Arizona 85018
</TABLE>
[signatures continued on next page]
[signatures continued from previous page]
5
<PAGE> 6
<TABLE>
<S> <C> <C>
62,668 3,000 /s/ Alexander Kuli
-----------------------------
Name: Alexander Kuli
c/o Viasoft, Inc.
3033 North 44th Street
Phoenix, Arizona 85018
49,668 668 /s/ David Parrish
-----------------------------
Name: David Parrish
c/o Viasoft, Inc.
3033 North 44th Street
Phoenix, Arizona 85018
62,668 47,913 /s/ Arthur Patterson
-----------------------------
Name: Arthur Patterson
c/o Viasoft, Inc.
3033 North 44th Street
Phoenix, Arizona 85018
219,999 10,043 /s/ C.J. Reardon
-----------------------------
Name: Colin Reardon
c/o Viasoft, Inc.
3033 North 44th Street
Phoenix, Arizona 85018
195,333 12,900 /s/ Mark R. Schonau
-----------------------------
Name: Mark R. Schonau
c/o Viasoft, Inc.
3033 North 44th Street
Phoenix, Arizona 85018
</TABLE>
[signatures continued on next page]
[signatures continued from previous page]
6
<PAGE> 7
<TABLE>
<S> <C> <C>
/s/ Beverly C. Whiteman
-----------------------------
Name: Beverly C. Whiteman
233,333 205,693 /s/ Steven D. Whiteman
38,000* -----------------------------
Name: Steven D. Whiteman
c/o Viasoft, Inc.
3033 North 44th Street
Phoenix, Arizona 85018
</TABLE>
* Owned in Trust - Trust Name: The Whiteman Family Trust dated August 12,
1993 Trustees: Steven D. Whiteman and Beverly C. Whiteman
<TABLE>
<S> <C> <C>
80,401 2,771 /s/ Kevin J. Donoghue
-----------------------------
Name: Kevin J. Donoghue
49,167 1,528** /s/ Timothy Brewer
-----------------------------
Name: Timothy Brewer
</TABLE>
** 95 shares are owned jointly with Mr. Brewer's spouse.
7
<PAGE> 1
Exhibit 6
to 14D-9
VIASOFT, INC.
CHANGE IN CONTROL SEPARATION PLAN
Introduction
The Board of Directors ("Board") of Viasoft, Inc. (the "Company")
recognizes that a change in control of the Company may be proposed or may occur
at a future date, and that the possibility of a change in control may create
uncertainty and distraction for certain key employees of the Company. These
uncertainties and distractions may reduce the effectiveness or result in the
loss of key employees at a critical juncture when they are most needed to guide
and assist the Company in connection with an extraordinary situation.
The Board believes the avoidance of such loss and distraction is
essential to protect and promote the best interests of the Company and its
stockholders. The Board further believes that when a change in control is
perceived as imminent, or is occurring, the Company should be able to receive
and rely on disinterested, effective service from its key employees without
concern that such employees might be distracted or concerned by the personal
uncertainties of an imminent change in control.
Accordingly, the Board has determined that appropriate measures should
be implemented to encourage the continued employment and effectiveness of
certain key employees, notwithstanding the possibility, threat or occurrence of
a change in control.
Therefore, the Viasoft, Inc. Change In Control Separation Plan is
hereby adopted by the Board.
ARTICLE I
ESTABLISHMENT OF PLAN
As of the Effective Date, the Company has established a compensation
plan known as the Viasoft, Inc. Change In Control Separation Plan as set forth
herein.
ARTICLE II
DEFINITIONS
As used herein the following words and phrases shall have the following
respective meanings unless the context clearly indicates otherwise:
2.1 Base Salary. The rate of monthly base salary in effect on the
Effective Date; provided, that in the case of a Change in Control that occurs
after the first anniversary of the Effective Date, Base Salary shall mean the
highest rate of monthly base salary in effect for a Participant from the Company
or its Subsidiaries during the two most recent fiscal years of the Company
completed prior to the occurrence of a Change in Control. Base Salary shall not
include bonuses, overtime pay, and incentive compensation.
<PAGE> 2
2.2 Board. The Board of Directors of the Company.
2.3 Cause. "Cause" shall be determined by the Board in the exercise of
good faith and reasonable judgment, after providing at least three (3) days
notice specifying in reasonable detail any of the conduct set forth below
(except for subsection (i) below) and a reasonable opportunity for the
Participant to appear before a duly constituted committee of the Board to
challenge such determination, and shall mean the occurrence of any one or more
of the following:
(i) The Participant's conviction for commission of a crime
involving dishonesty or moral turpitude, or for committing an act of fraud,
embezzlement, theft, or other act constituting a felony;
(ii) The engaging by the Participant in misconduct materially
injurious to the Company or its Subsidiaries; or
(iii) A failure or refusal, after written notice by the
Company specifying said failure or refusal in reasonable detail, and affording
Participant ten (10) business days opportunity to cure, to comply in any
material respect with the reasonable written policies, procedures, standards or
regulations of Company.
2.4 Change in Control. "Change in Control" means and includes each of
the following:
(i) Any transaction or series of transactions, whereby any
person (as that term is used in Section 13 and 14(d)(2) of the Exchange Act), is
or becomes the beneficial owner (as that term is used in Section 13(d) of the
Exchange Act) directly or indirectly, of securities of the Company representing
90% or more of the combined voting power of the Company's then outstanding
securities; provided, that for purposes of this paragraph, the term "person"
shall exclude (i) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or of a Subsidiary and (ii) a corporation
owned directly or indirectly by the stockholders of the Company in substantially
the same proportions as their ownership of the common stock of the Company.
(ii) Any merger, consolidation, or liquidation of the Company
in which the Company is not the continuing or surviving corporation or pursuant
to which Stock would be converted into cash, securities, or other property,
other than (i) a merger or consolidation with a wholly owned Subsidiary, (ii) a
reincorporation of the Company in a different jurisdiction, or (iii) other
transaction in which there is no substantial change in the shareholders of the
Company;
(iii) Any merger or consolidation of the Company with or into
another entity or any other corporate reorganization, if more than 90% of the
combined voting power of the continuing or surviving entity's securities
outstanding immediately after such merger, consolidation or other reorganization
is owned by persons who were not stockholders of the Company immediately prior
to such merger, consolidation or other reorganization.
(iv) The sale, transfer, or other disposition of all or
substantially all of the assets of the Company.
2
<PAGE> 3
(v) A change in the composition of the Board, as a result of
which fewer than 50% of the then incumbent directors are directors who either
(i) had been directors of the Company on the Effective Date (the "original
directors") or (ii) were elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of the aggregate of the original
directors who were still in office at the time of the election or nomination
(other than pursuant to the merger or similar definitive agreement of event
effecting a Change of Control) and the directors whose election or nomination
was previously so approved.
A transaction shall not constitute a Change of Control if its sole
purpose is to change the state of incorporation of the Company or to create a
holding company that will be owned in substantially the same proportions by the
persons who held the Company's securities immediately before such transaction.
2.5 Code. The Internal Revenue Code of 1986, as amended from time to
time.
2.6 Committee. The Compensation Committee of the Board.
2.7 Company. Viasoft, Inc., a Delaware Company, and any Successor.
2.8 Date of Termination. The effective date of a Participant's
termination of employment with the Company and its Subsidiaries.
2.9 Effective Date. July 14, 1999 or such other date as the Board shall
designate in its resolution approving the Plan.
2.10 Executive Participant. A Participant whose Payment Period set
forth in the attached Schedule A is 18 months.
2.11 Good Reason. Without the Participant's express written consent,
the occurrence of any one or more of the following:
(i) The Participant's responsibilities, duties, or management
reporting are not generally commensurate with Participant's background and
experience;
(ii) The Company requires the Participant to be based at a
location in excess of fifty (50) miles from the location of the Participant's
principal job location or office immediately prior to the Change in Control,
except for required travel on the Company's business to an extent substantially
consistent with the Participant's business travel obligations immediately prior
to the commencement of the Change in Control event;
(iii) A material reduction by the Company of the Participant's
Base Salary from that in effect immediately prior to the commencement of the
Change in Control event;
(iv) The failure of a Successor to assume or to perform the
Company's obligations to the Participant under this Plan, as contemplated in
Article V herein;
3
<PAGE> 4
(v) The failure to provide benefits substantially similar to
similarly situated employees of Company or Successor.
The Participant's right to terminate employment for Good Reason shall
not be affected by the Participant's (A) incapacity due to physical or mental
illness or (B) continued employment for less than thirty (30) days following the
occurrence of (or, if later, the Participant's gaining knowledge of) any event
constituting Good Reason herein. Should Participant remain employed for more
than 30 days following the occurrence of (or, if later, the Participant's
gaining knowledge of) any event constituting Good Reason herein, Participant
shall be deemed to have waived any rights to terminate for Good Reason as a
result of that occurrence or event. Notwithstanding anything stated herein, a
change in Participant's title, job description, or responsibilities following
commencement of a Change of Control event shall not, by and of itself,
constitute Good Reason.
2.12 Participants. A key employee who has been designated by the Board
as a participant in the Plan and whose name is set forth in Schedule A to the
Plan, unless such proposed Participant has elected to receive a separate
severance benefit pursuant to any employment or similar agreement with Company.
The Company shall be entitled to deem an election to receive benefits under this
Plan as a waiver and termination of any right to receive severance benefits
under any such employment or similar agreement. In order to be eligible to
receive Severance Benefits under this Plan, a proposed Participant must make
such election within 15 business days following the consummation of a Change of
Control.
2.13 Plan. Viasoft, Inc. Change in Control Separation Plan, as the same
may be amended from time to time.
2.14 Payment Period. The number of months set forth in Schedule A with
respect to each Participant during which Separation Benefits may be provided
under Article IV of the Plan.
2.15 Separation Benefits. The benefits payable in accordance with
Section 4.2 of the Plan.
2.16 Subsidiary. Any Company in which the Company, directly or
indirectly, holds a majority of the voting power of such Company's outstanding
shares of capital stock.
2.17 Successor. Another Company or unincorporated entity or group of
companies or unincorporated entities which consummates a transaction which would
constitute a Change of Control.
2.18 Transition Period. That period commencing on the date on which a
Change of Control event is consummated and ending on the date nine (9) months
thereafter; provided, that the Transition Period shall be 60 days in the case of
any Executive Participant.
4
<PAGE> 5
ARTICLE III
ELIGIBILITY
Schedule A to this Plan provides a list of the key employees of the
Company who shall be Participants as of the Effective Date. The Board may from
time to time designate other key employees as Participants and add their names
and Payment Periods to a revised Schedule A to the Plan. A Participant shall
cease to be a Participant in the Plan when such Participant ceases to be an
employee of the Company or a Subsidiary, unless such Participant is then
entitled to payment of a Separation Benefit as provided in the Plan. A
Participant entitled to payment of a Separation Benefit shall remain a
Participant in the Plan until the full amount of all Separation Benefits has
been paid to such Participant.
ARTICLE IV
SEPARATION BENEFITS
4.1 Right to Separation Benefit.
(a) A Participant shall be entitled to receive from the
Company Separation Benefits provided in Section 4.2 if a Change in Control is
consummated and if, prior to expiration of the Transition Period the
Participant's employment with the Company or its Subsidiaries shall terminate
either (a) by action of the Company without Cause or (b) by reason of the
Participant's resignation from such employment for Good Reason. Should a
Participant elect to terminate employment for Good Reason, Participant shall
provide Company prior to termination of employment with a reasonable description
of the basis for such termination and shall thereafter provide Company a five
(5) day right to cure.
(b) On the date immediately following the expiration of the
applicable Transition Period, a Participant's right to receive any Separation
Benefits shall expire unless, 30 days prior to the expiration of such Transition
Period, Participant provides the Company with notice of his or her intent to
resign from employment with the Company upon expiration of the Transition
Period. In the event a Participant so elects to resign, such Participant shall
have the right to receive the Separation Benefits set forth in Section 4.2
below.
(c) Nothing herein shall prohibit Successor and Participant
from agreeing (but neither shall have any such obligation) to mutually
satisfactory terms of employment following a Change of Control; which terms may
include the waiver by a Participant, in his or her sole discretion, to any right
to receive Separation Benefits hereunder.
(d) Should an Executive Participant elect to resign from the
Company as provided in Section 4.1(b) above, as a condition of receiving any
Separation Benefits, such Executive Participant shall agree to make himself or
herself available (at mutually agreed times) to the Successor for reasonable
consultation and advice from time to time at no additional cost for a period not
to exceed six (6) months following expiration of the applicable Transition
Period; provided, that such consulting shall not prevent an Executive
Participant from accepting full-time employment with a third party during such
six (6) month period.
5
<PAGE> 6
4.2 Separation Benefits. If a Participant's employment terminates in
circumstances entitling the Participant to Separation Benefits as provided in
Section 4.1, the Participant shall be entitled to the following:
(a) The Company shall continue to pay an amount equal to the
Participant's Base Salary, net of applicable withholding, payable on the
Company's regular pay days, for the number of months following the Date of
Termination set forth for such Participant in Schedule A (the "Payment Period").
(b) The Company shall reimburse Participant for
post-termination COBRA costs, and life insurance benefit premiums, for the
Payment Period. The Company shall pay the full cost of such continued benefits,
except that the Participant shall bear any portion of such cost as was required
to be borne by key employees of the Company generally at the Date of
Termination. Notwithstanding the foregoing, these benefits may be discontinued
prior to the end of the Payment Period to the extent, but only to the extent,
that the Participant is eligible to receive similar benefits from a subsequent
employer other than a Successor.
(c) All stock options and stock-based rights held by the
Participant on the Date of Termination shall be administered in accordance with
the terms of the applicable plans and agreements and shall be unaffected by this
Plan.
4.3 Other Benefits Payable. With the exception of severance benefits
pursuant to employment or similar agreements described in Section 2.12 above,
the Separation Benefits described in Section 4.2 above shall be payable in
addition to, and not in lieu of, all other accrued or vested or earned but
deferred compensation, rights, options or other benefits which may be owed to a
Participant following termination, including but not limited to accrued vacation
or sick pay amounts or benefits payable under any bonus or other compensation
plans, stock option plan, stock ownership plan, stock purchase plan, life
insurance plan, health plan, disability plan or similar or successor plan.
4.4 Limitation on Payments By the Company.
(a) Anything in this Plan to the contrary notwithstanding, the
aggregate total amount of all payments, awards, benefits or distributions (and
any acceleration of any payments, awards, benefits or distributions) by the
Company (or any of its Subsidiaries) or any entity which effectuates a Change in
Control (or any of its affiliated entities) to or for the benefit of any
Participant (whether pursuant to the terms of this Plan or otherwise) (the
"Payments") shall not exceed an amount equal to $1.00 less than the amount which
would trigger application of the excise tax imposed by Section 4999 of the Code
The reduction of the amounts payable hereunder, if applicable, shall be made by
reducing first the payments under Section 4.2(a), unless an alternative method
of reduction is elected by such Participant. For purposes of reducing the
Payments hereunder, only amounts payable under this Plan (and no other Payments)
shall be reduced.
(b) Subject to the provisions of Section 4.4(a), all
determinations required to be made under this Section 4.4, including whether
Payments would otherwise exceed the limitation set forth in Section 4.4(a), the
amount or value of such Payments and the assumptions
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<PAGE> 7
to be utilized in arriving at such determinations, shall be made by Company
which shall provide detailed supporting calculations both to the Company and to
any Participant determined to be subject to the limitation set forth in Section
4.4(a). A Participant shall cooperate with any reasonable requests by the
Company in connection with any contests or disputes with the Internal Revenue
Service in connection with the excise tax imposed by Section 4999 of the Code.
(c) If it is established pursuant to a final determination of
a court or an Internal Revenue Service (the "IRS") proceeding which has been
finally and conclusively resolved, that Payments have been made to, or provided
for the benefit of, Participants by the Company, which are in excess of the
limitation provided in Section 4.4(a) (hereinafter referred to as an "Excess
Payment"), such Excess Payment shall be deemed for all purposes to be a loan to
the Participant made on the date such Participant received the Excess Payment
and the Participant shall repay the Excess Payment to the Company on demand,
together with interest on the Excess Payment at the applicable federal rate from
the date of the Participant's receipt of such Excess Payment until the date of
such repayment. As a result of the uncertainty in the application of Section
4999 of the Code at the time of the determination, it is possible that Payments
which will not have been made by the Company should have been made (a "Safe
Harbor Underpayment"), consistent with the calculations required to be made
under this Section 4.4. In the event that it is determined (i) by the Accounting
Firm, the Company (which shall include the position taken by the Company, or
together with its consolidated group, on its federal income tax return) or the
IRS or (ii) pursuant to a determination by a court, that a Safe Harbor
Underpayment has occurred, the Company shall pay an amount equal to such Safe
Harbor Underpayment to the Participant within fifteen (15) days of such
determination together with interest on such amount at the applicable federal
rate from the date such amount would have been paid to the Participant until the
date of payment.
4.5 Payment Obligations Absolute. Upon a Change in Control, the
Company's obligations to pay the Separation Benefits described in Section 4.2
shall be absolute and unconditional and shall not be affected by any
circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company or any of its Subsidiaries
may have against any Participant. In no event shall a Participant be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to a Participant under any of the provisions of this Plan and,
except as otherwise provided in Section 4.2(b)(i), in no event shall the amount
of any compensation payment hereunder be reduced by any compensation earned by a
Participant as a result of employment by another employer.
ARTICLE V
CONTRACT RIGHT; SUCCESSOR TO COMPANY
The rights of Participants expressly set forth in the Plan shall be
enforceable as contract rights, subject to the terms and conditions of this
Plan, including but not limited to the authority of the Board to amend or
terminate the Plan prior to the occurrence of a Change in Control. The Plan
shall bind any Successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise), in the same manner and to the same extent that the
Company would be obligated under the Plan if no succession had taken place. In
the case of any transaction in which a
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<PAGE> 8
Successor would not by the foregoing provision or by operation of law be bound
by the Plan, the Company shall require such Successor expressly and
unconditionally to assume and agree to perform the Company's obligations under
the Plan, in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place.
ARTICLE VI
DURATION, AMENDMENT AND TERMINATION
6.1 Duration. If a Change in Control has not occurred, the Plan shall
expire five (5) years from the Effective Date, unless sooner terminated as
provided in Section 6.2, or unless extended as described below. Following the
end of the five (5) year term, on each anniversary of the Effective Date before
a Change in Control, the term of the Plan shall be automatically extended to
continue for an additional one (1) year period, unless the Board determines
before the anniversary date that the term will not be extended. If a Change in
Control occurs during the term of this Plan, the Plan shall continue in full
force and effect and shall not terminate or expire until all Participants who
become entitled to Separation Benefits hereunder shall have received such
payments in full.
6.2 Amendment and Termination. The Plan may be terminated or amended in
any respect by resolution adopted by a majority of the Board, unless a Change in
Control has previously occurred. If a Change in Control occurs, the Plan shall
no longer be subject to amendment, change, substitution, deletion, revocation or
termination in any respect whatsoever, without the written consent of the
Participant(s) affected thereby.
6.3 Form of Amendment. The form of any amendment or termination of the
Plan shall be a written instrument signed by a duly authorized officer or
officers of the Company, certifying that the amendment or termination has been
approved by the Board. An amendment of the Plan shall automatically effect a
corresponding amendment to all Participants' rights hereunder. A termination of
the Plan shall automatically effect a termination of all Participants' rights
and benefits hereunder.
ARTICLE VII
MISCELLANEOUS
7.1 Withholding Taxes. The Company may directly or indirectly withhold
from any payments made under this Plan all Federal, state, city or other taxes
as shall be required pursuant to any law or governmental regulation or ruling.
7.2 Indemnification. If a Participant or Company institutes any legal
action in seeking to obtain or enforce, or is required to defend any legal
action the validity or enforceability of, any right or benefit provided by the
Plan, the party which substantially prevails in such action will be entitled to
recover all reasonable legal fees and expenses incurred from the non-prevailing
party.
7.3 Employment Status. The Plan does not constitute a contract of
employment or impose on the Participant or the Company or any of its
Subsidiaries or Successors any obligation to retain the Participant as an
employee, to change the status of the Participant's employment, or
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<PAGE> 9
to change the Company's policies or those of its Subsidiaries or Successors
regarding termination of employment. Participant is an employee at will and
Participant's employment may be terminated with or without cause.
7.4 No Attachment. Except as required by law, no right to receive
payments under this Plan shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to execution, attachment, levy, or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
7.5 Source of Payment. All payments provided for under this Plan shall
be paid in cash from the general funds of the Company. The Company shall not be
required to establish a special or separate fund or other segregation of assets
to assure such payments, and, if the Company shall make any investments to aid
it in meeting its obligations hereunder, the Participants shall have no right,
title or interest whatever in or to any such investments except as may otherwise
be expressly provided in a separate written instrument relating to such
investments. Nothing contained in this Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship, between the Company and a Participant or any other
person. To the extent that any person acquires a right to receive payments from
the Company hereunder, such right shall be no greater than the right of an
unsecured general creditor of the Company.
7.6 Validity and Severability. The invalidity or unenforceability of
any provision of the Plan shall not affect the validity or enforceability of any
other provision of the Plan, which shall remain in full force and effect, and
any prohibition on enforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
7.7 Governing Law. The validity, interpretation, construction and
performance of the Plan shall in all respects be governed by the laws of the
State of Delaware, other than the conflict of law provisions of such laws.
7.8 Named Fiduciary and Administrator. For the purposes of the Employee
Retirement Income Security Act of 1974, the Company shall be the "named
fiduciary" and the "administrator" of the Plan. The Board or the Committee, as
Plan Administrator, shall operate, interpret and implement the Plan. The Plan
Administrator shall have all such powers as are necessary to discharge its
duties, including, but not limited to, the interpretation and construction of
all provisions of the Plan, the determination of all questions of eligibility,
participation, benefits and all other related or incidental matters, and such
duties and powers of Plan administration which are not assumed from time to time
by any other appropriate entity, individual, or institution. The Plan
Administrator shall decide all such questions and his decisions and
determinations that are not arbitrary and capricious shall be binding and
conclusive on the Company, the Participant, the Participant's designee, the
Participant's spouse or other dependent or beneficiary, employees, and all other
interested parties.
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The Plan Administrator may require each Participant to submit, in such
form as he shall deem reasonable and acceptable, proof of any information which
the Plan Administrator finds necessary or desirable for the proper
administration of the Plan.
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VIASOFT, INC.
CHANGE IN CONTROL SEPARATION PLAN
SCHEDULE A
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
PAYMENT PERIOD NAME TITLE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
18 Months Steven D. Whiteman Chairman, President & CEO
------------------------------------------------------------------------------------------
Mark R. Schonau Sr VP F&A & CFO
------------------------------------------------------------------------------------------
Catherine R. Hardwick VP & General Counsel
------------------------------------------------------------------------------------------
Colin Reardon Sr VP Int'l Operations
- ----------------------------------------------------------------------------------------------------------------------
12 Months David Lee VP Strategic Marking & Dev
------------------------------------------------------------------------------------------
Kevin Donoghue VP Sales Americas' Operations
------------------------------------------------------------------------------------------
Tim Brewer VP Services Division
- ----------------------------------------------------------------------------------------------------------------------
9 Months Colleen Shannon Dir Finance - Controller
- ----------------------------------------------------------------------------------------------------------------------
6 Months Maurice Heiblum VP Product & Solutions Mktg
------------------------------------------------------------------------------------------
Tom Beale VP Customer Support
------------------------------------------------------------------------------------------
Bill Scully Exec Dir Dev
------------------------------------------------------------------------------------------
Nancy Mattson Dir Human Resources
------------------------------------------------------------------------------------------
Mario Diaz Exec Dir Marketing
------------------------------------------------------------------------------------------
Mark Geninatti Dir MIS
------------------------------------------------------------------------------------------
Peter Thiermann General Mgr Munich
------------------------------------------------------------------------------------------
Martyn Bartlett General Mgr Sydney
------------------------------------------------------------------------------------------
David Blume General Mgr Stevenage
------------------------------------------------------------------------------------------
Ludovic Clement General Mgr - France
------------------------------------------------------------------------------------------
Bennie Peleman General Mgr Belgium
------------------------------------------------------------------------------------------
Dave Alberty International Controller
------------------------------------------------------------------------------------------
Jay Mayne Business Unit Controller
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
[PORTIONS OF VIASOFT, INC.'S DEFINITIVE PROXY STATEMENT DATED OCTOBER 15, 1998]
PROPOSAL NO. 2
PROPOSAL TO AMEND THE COMPANY'S
1997 EQUITY INCENTIVE PLAN
The 1997 Equity Incentive Plan (the "1997 Plan"), which replaced the
1994 Equity Incentive Plan (the "1994 Plan"), was approved by the Company's
stockholders and became effective on November 14, 1997. Under the 1997
Plan, 850,000 shares, plus certain shares of the Company's common stock that
(i) were available for future awards under the 1994 Plan on the effective
date of the 1997 Plan, and (ii) are subject to awards under the 1994 Plan
but are forfeited or terminate, expire or lapse for any reason, are reserved
for issuance.
Based on the Company's philosophy of rewarding and motivating its
employees, and due to the Company's expansion and acquisitions and the
ongoing recruitment of highly qualified and experienced personnel, the
Company has awarded stock option grants under the 1997 Plan totaling
1,091,051 shares of Common Stock as of September 23, 1998. As of September
23, 1998, the Record Date, there are 60,998 shares remaining available for
future grants under the 1997 Plan.
The Board of Directors has approved amendments to the 1997 Plan,
subject to approval by the Company's stockholders. The amendments to the
1997 Plan will increase the number of shares of Common Stock that may be
issued pursuant to future grants of awards under the 1997 Plan by 850,000
shares from 1,156,049 shares as of September 23, 1998, to 2,006,049 shares.
Except for awards of Incentive Stock Options which are limited to 1,700,000
shares, additional shares that may become available from time to time as a
result of forfeitures, terminations, expirations or lapses under the 1994
Plan will also be available for grants of awards under the 1997 Plan. The
additional shares of Common Stock will be made available either from the
authorized but unissued shares of the Company's Common Stock or from shares
of Common Stock reacquired by the Company, including shares repurchased on
the open market.
The proposed increase in issuable shares is the only proposed change
to the 1997 Plan. The major features of the 1997 Plan, none of which will
be affected by the proposed amendments, are summarized below, but this
summary is qualified in its entirety by reference to the actual text of the
1997 Plan. Capitalized terms not otherwise defined have the meanings given
to them in the 1997 Plan. A copy of the proposed amendments to the 1997
Plan are set forth in Appendix A to this Proxy Statement.
The market price of the Company's Common Stock as of August 31, 1998
was $6.50, based on the closing price reported by The Nasdaq Stock Market.
1997 EQUITY INCENTIVE PLAN
PURPOSE
The 1997 Plan is designed to promote the interests of the Company by
enabling the Company to motivate, attract and retain the services of persons
upon whose judgment, efforts and contributions the continued success of the
Company's business depends, and by aligning the personal interests of those
persons with the interests of the Company's stockholders.
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<PAGE> 2
ADMINISTRATION
The 1997 Plan is administered by a Committee of two or more non-
employee Board members as appointed by the Board of Directors. The
Committee has the power and authority, among other things, to (i) designate
participants and to determine the types of Awards granted to each
participant, (ii) determine the number of shares reserved under such Award
or grant, the exercise price, terms and conditions, duration and payment
provisions of the Awards, any schedule for lapse of forfeiture restrictions
or restrictions on the exercisability of an Award and accelerations or
waivers thereof, (iii) interpret the 1997 Plan, and any Award or grant
thereunder and any documentation evidencing the 1997 Plan, Award or grant,
(iv) establish, adopt or revise any regulations or rules deemed appropriate
for the administration of the 1997 Plan and (v) make all other decisions
and determinations or interpretations required regarding the 1997 Plan.
ELIGIBILITY
Awards or grants under the 1997 Plan may be made to any individual who
is an officer, director or other employee (including employees who also are
directors or officers), consultant, independent contractor, or adviser of
the Company or its subsidiaries, and to other individuals the Company
proposes to engage in one of the foregoing capacities, as determined by the
Committee.
PLAN AWARDS
The 1997 Plan provides for the grant of (i) Incentive Stock Options,
(ii) Non-Qualified Stock Options, (iii) Restricted Stock and (iv) Stock
Reference Awards.
A stock option is the right to purchase shares of the Company's Common
Stock at a set price specified in the Award agreement. An Incentive Stock
Option ("ISO") is an option that is intended to satisfy the requirements
specified in Section 422 of the Internal Revenue Code. Under the Code, ISOs
may only be granted to employees. A Non-Qualified Option is any stock
option other than an Incentive Stock Option. An award of Restricted Stock
is a grant of Common Stock or an offer to sell shares of Common Stock to a
participant subject to restrictions on sale of the shares of Common Stock or
other transfer by the participant as may be determined by the Committee.
The 1997 Plan permits the Committee to grant or sell Restricted Stock to
participants with certain vesting restrictions or a risk of forfeiture for a
period to be determined by the Committee as of the date of the award. A
Stock-Reference Award is an award payable in, valued in whole or in part by
reference to, or otherwise based on or related to shares of Common Stock of
the Company.
The 1997 Plan grants the Committee discretion to determine when stock
options or other awards will become exercisable and the vesting period of
options and awards. Vesting of stock options and other exercisable rights
granted under the 1997 Plan may be accelerated, and restrictions on other
outstanding awards may lapse, upon a change in control of the Company as
defined in the 1997 Plan.
No individual may be granted Awards of Options or Restricted Stock for
more than 250,000 shares of the Company's Common Stock in any one fiscal
year, provided that Awards for up to 500,000 shares may be granted in the
fiscal year during which a participant becomes an employee of the Company.
The maximum payment (or value of stock issued) under a Stock-Reference Award
to any one individual is $500,000 for any annual performance period.
Restricted Stock and Stock-Reference Awards may be subject to performance
goal requirements based on one or more business criteria, which
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<PAGE> 3
may include, among other things, stock price, market share, sales, earnings,
earnings per share, return on equity or costs. The Committee may designate
one or more performance goal criteria for any Award.
The 1997 Plan generally provides that no right or interest of a
participant in any award made under the 1997 Plan may be sold, assigned or
otherwise transferred other than by will, beneficiary designation, or the
laws of descent and distribution, with limited exceptions as provided by
applicable law, but grants the Committee the discretion to determine whether
a participant may assign or otherwise transfer any of his or her rights to
specified individuals or classes of individuals, or to a trust, partnership
or other entity for the benefit of those individuals.
If the Company subdivides the outstanding Common Stock, declares a
stock dividend, declares or implements a dividend other than a stock
dividend in an amount that has a material effect on the price of the Common
Stock, or implements a combination or consolidation of the outstanding
Common Stock, a recapitalization, a spin-off or a similar occurrence, the
Committee shall make such adjustments as it deems appropriate in the shares
applicable to future and outstanding Awards, exercise prices and other
references to Common Stock under the Plan. If the Company is a party to a
merger, consolidation or other reorganization, outstanding Awards shall be
subject to the agreement of merger, consolidation or reorganization. Such
an agreement may provide, among other things, for the continuation of
outstanding Awards, for their assumption by the surviving corporation, for
substitution by the surviving corporation of its own awards, for accelerated
vesting, accelerated expiration and/or lapse of restrictions, or for cash
settlement. If the agreement does not provide for one of those
alternatives, then vesting of all outstanding options, and other exercisable
rights under the 1997 Plan is accelerated and all restrictions on other
Awards lapse, upon the effectiveness of the transactions contemplated by
such agreement. If any Awards under the 1997 Plan or the 1994 Plan are
forfeited, terminate, expire or lapse for any reason, any shares of Common
Stock subject to the Award will become available for additional grants under
the 1997 Plan. In addition, any shares of Common Stock delivered to the
Company in payment for Common Stock purchased under the 1997 Plan or the
1994 Plan (or related withholding taxes) will become available for
additional grants under the 1997 Plan.
AMENDMENT, DURATION, TERMINATION OF THE 1997 PLAN
The 1997 Plan was approved by the Company's stockholders and became
effective on November 14, 1997. If not terminated sooner in accordance with
its terms, the 1997 Plan shall terminate upon the earlier of (a) November
14, 2007, or (b) the date on which all shares available for issuance under
the 1997 Plan have been awarded. With the approval of the Board, the
Committee may terminate, amend or modify the 1997 Plan. Any such
terminations, amendments or modifications shall be subject to the approval
of the Company's stockholders where required by applicable laws, regulations
and rules.
GENERAL RESTRICTIONS
The following actions are not permissible with respect to more than
10% of the total shares authorized under the 1997 Plan: (a) amending an
outstanding Option to decrease the exercise price; (b) issuing a Non-
Qualified Option with an exercise price of less than 100% of the Fair Market
Value; (c) granting Stock Awards that are not subject to any restrictions
or performance conditions unless the award is in lieu of cash compensation
and is valued at Fair Market Value; and (d) granting Restricted Stock Awards
that are not subject to either (i) a vesting condition or repurchase option
on behalf of the Company that is measured over not less than three years, or
(ii) performance criteria that must be satisfied prior to vesting and an
additional vesting condition or repurchase option on behalf of the Company
that is measured over not less than one year.
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<PAGE> 4
FEDERAL INCOME TAX INFORMATION
The rules governing the tax treatment of Common Stock-based awards,
including options and stock acquired upon the exercise of options, are quite
technical. Therefore, the description of tax consequences set forth below
is necessarily general in nature and does not purport to be complete.
Moreover, statutory provisions are subject to change, as are their
interpretations, and their application may vary in individual circumstances.
Finally, the tax consequences under applicable state and local income tax
laws may not be the same as under the federal income tax laws. The federal
income tax consequences of the grant of Awards under the 1997 Plan and the
subsequent disposition of shares of Common Stock acquired thereby may be
summarized as set forth below.
INCENTIVE STOCK OPTIONS. An employee is not taxed for regular income
tax purposes either at the time of the award or at the time of exercise of
the option. The difference between the exercise price and the fair market
value of the stock at the time of exercise, however, generally constitutes
income for alternative minimum tax purposes. Generally, the Company is not
entitled to a deduction with respect to the grant or exercise of an ISO. If
an employee holds the stock acquired upon exercise of an ISO for at least
two years from the date of the grant and at least one year following the
date of exercise, the difference between the amount paid for the stock and
the subsequent sales price is treated as long-term capital gain or loss. If
these holding period requirements are not satisfied, the employee is
generally taxed, at ordinary income tax rates, on the difference between the
exercise price and the fair market value of the stock as of the date of
exercise and the Company is then entitled to a corresponding deduction.
NON-QUALIFIED STOCK OPTIONS. The grant of a Non-Qualified Stock
Option typically does not produce any taxable income for the participant,
and the Company is not entitled to a deduction at that time. Upon exercise
of a Non-Qualified Stock Option, the optionee normally will recognize
taxable ordinary income equal to the excess of the stock's fair market value
on the date of exercise over the option exercise price. Subject to the
requirements of reasonableness, and the satisfaction of any reporting
obligations, the Company will generally be entitled to a business expense
deduction equal to the taxable ordinary income recognized by the optionee.
Upon disposition of the stock, the optionee will recognize a capital gain or
loss equal to the difference between the selling price and the sum of the
amount paid for such stock plus any amount recognized as ordinary income
upon exercise of the option. Such gain or loss will be long-term or short-
term depending on whether the stock was held for more than the applicable
holding period.
LIMITATION ON COMPENSATION DEDUCTION. Publicly-held corporations are
precluded from deducting compensation paid to certain of their executive
officers in excess of $1.0 million. The employees covered by the $1.0
million limitation on deductibility of compensation include the chief
executive officer and those employees whose annual compensation is required
to be reported to the Securities and Exchange Commission because the
employee is one of the Company's four highest compensated employees for the
taxable year (other than the chief executive officer).
Compensation attributable to stock options and other Common Stock-
based awards generally is included in an employee's compensation for
purposes of the $1.0 million limitation on deductibility of compensation.
However, there is an exception to the $1.0 million deduction limitation for
compensation (including compensation attributable to stock options) paid
pursuant to a qualified performance-based compensation plan. Compensation
attributable to a stock option is deemed to satisfy the qualified
performance-based compensation exception if (i) the grant is made by a
Compensation Committee comprised of qualifying outside directors, (ii) the
plan under which the options may be granted states the maximum number of
shares with respect to which options may be granted during a specified
period to
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<PAGE> 5
any employee, (iii) under the terms of the option, the amount of
compensation the employee would receive is based solely on an increase in
the value of the shares after the date of the grant (e.g., the option is
granted at fair market value as of the date of the grant) and (iv) the
individuals eligible to receive grants, the maximum number of shares for
which grants may be made to any employee, the exercise price of the options
and other disclosures required by SEC proxy rules are disclosed to, and
subsequently approved by stockholders. The exercise price of all options
intended to qualify for this exemption will be at least the fair market
value of the Common Stock on the date of grant.
Compensation attributable to Restricted Stock and Stock-Reference
Awards is deemed to satisfy the qualified performance-based compensation
exception if (a) the grant is made by a Compensation Committee composed of
qualifying outside directors, (b) the plan under which the options may be
granted states the maximum amount of compensation payable to participants
under such Awards, (c) the terms of the Award base compensation solely on
attainment of one or more pre-established objective performance goals, (d)
the Compensation Committee certifies in writing to satisfaction of the
performance goals and other material terms and (e) the individuals eligible
to receive grants, a description of the business criteria on which the
performance goals are based, the maximum amount of compensation payable, and
other disclosures required by the SEC proxy rules are disclosed to, and
subsequently approved by, the stockholders.
In order to satisfy the stockholder approval requirements applicable
to qualified performance-based compensation plans, there must be a separate
stockholder vote in which a majority of the votes cast on the issue are cast
in favor of approval. The amendments to the 1997 Plan are being submitted
to stockholders at the Meeting in part, to satisfy this requirement. If the
stockholder approval and the other requirements applicable to qualified
performance-based compensation plans are satisfied (including grant by a
committee of qualifying outside directors), the $1.0 million compensation
deduction limitation will not apply to stock options with an exercise price
equal to or greater than the fair market value of the underlying shares on
the date of grant and the Committee will have the authority to grant
Restricted Stock and Stock-Reference Awards to which that limitation will
not apply.
VOTE REQUIRED
Approval of the amendments to the 1997 Plan require the affirmative
vote of a majority of the shares present, in person or by proxy, and
entitled to vote at the Meeting, provided that a quorum is present. Votes
may be cast FOR or AGAINST the proposal, and stockholders may also ABSTAIN
from voting on the proposal. Abstentions will be counted as present or
represented for purposes of determining both the presence or absence of a
quorum and the number of shares entitled to vote on the proposal and as a
practical matter will have the same effect as a vote AGAINST the proposal.
Broker non-votes will be counted as present or represented for purposes of
determining the presence or absence of a quorum but will not be counted for
purposes of determining the number of shares entitled to vote on the
proposal. The practical effect of broker non-votes is to reduce the number
of affirmative votes required to achieve a majority for the proposal by
reducing the total number of shares from which the majority is calculated.
THE BOARD RECOMMENDS A VOTE FOR THE
PROPOSED AMENDMENTS TO THE 1997 EQUITY INCENTIVE PLAN
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<PAGE> 6
PROPOSAL NO. 3
PROPOSAL TO AMEND THE COMPANY'S
EMPLOYEE STOCK PURCHASE PLAN
The Company's Employee Stock Purchase Plan (the "Purchase Plan") was
approved by the stockholders in November 1994 as a qualified employee stock
purchase plan under Section 423 of the Internal Revenue Code. On November
15, 1996, the stockholders approved an amendment to the Purchase Plan which
increased the total number of shares to be purchased under the Purchase Plan
to a total of 800,000.
Based on the Company's philosophy of promoting superior levels of
performance from, and encouraging stock ownership by, eligible employees,
the Company has issued 604,597 shares of Common Stock pursuant to the
Purchase Plan and estimates that the remaining 195,403 shares available
under the Purchase Plan may be issued on the next purchase date, October 31,
1998.
The Board of Directors has approved an amendment to the Purchase Plan,
subject to approval by the Company's stockholders. The amendment to the
Purchase Plan will increase the number of shares of Common Stock that may be
issued pursuant to the Purchase Plan from 800,000 to 1,200,000. The
additional shares of Common Stock will be made available either from the
authorized but unissued shares of the Company's Common Stock or from shares
of Common Stock reacquired by the Company, including shares repurchased on
the open market.
The major features of the Purchase Plan, none of which will be
affected by the proposed amendment, are summarized below, but this summary
is qualified in its entirety by reference to the actual text of the Purchase
Plan. Capitalized terms not otherwise defined have the meanings given to
them in the Purchase Plan. A copy of the proposed amendment to Article 6 of
the Purchase Plan is set forth in Appendix B to this Proxy Statement.
EMPLOYEE STOCK PURCHASE PLAN
PURPOSE
The Purchase Plan is designed to allow eligible employees to purchase
shares of Common Stock, at semi-annual intervals, through periodic payroll
deductions.
ADMINISTRATION
The Purchase Plan, which became effective February 28, 1995, is
administered by the Compensation Committee of the Board.
ELIGIBLE EMPLOYEES
Each full-time employee who is customarily employed for more than five
months per calendar year and more than 20 hours per week by the Company or
any participating subsidiary is eligible to participate in the Purchase
Plan. As of June 30, 1998, approximately 406 of the 541 eligible employees
of the Company were enrolled in the Purchase Plan, at varying payroll
deduction amounts and percentages of salary.
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<PAGE> 7
OPTION TERMS
Offering Periods
The Purchase Plan is implemented in a series of successive offering
periods, each with a duration of up to twenty-seven (27) months. The
Purchase Plan is currently in its second offering period, which will end on
the last business day in April 1999. An individual who is an eligible
employee on the first day of a particular offering period must join that
offering period on its commencement date; otherwise, he or she will be
barred from participation until the beginning of the next offering period.
Individuals who first become eligible employees after the start of a
particular offering period must join that offering period on the first semi-
annual entry date after commencement of their employment or be barred from
participation in that particular offering period. At the time the
participant joins the offering period, he or she will be granted a purchase
right to acquire shares of Common Stock at semi-annual intervals over the
remainder of that offering period. The purchase dates will occur on the
last business day in April and October each year, and all payroll deductions
collected from the participants for the semi-annual period of participation
ending with such purchase date will automatically be applied to the purchase
of Common Stock.
Purchase Price
The purchase price per share under the Purchase Plan will be eighty-
five percent (85%) of the lower of (i) the fair market value of the Common
Stock on the participant's entry date into the offering period or (ii) the
fair market value on the semi-annual purchase date. For any participant who
first joins the offering period after the commencement date of an offering
period, the clause (i) amount will not be less than the fair market value of
the Common Stock on such commencement date of that offering period. The fair
market value on the commencement date for the second offering period under
the Purchase Plan was $44.25. The fair market value on each subsequent
entry date will be the closing selling price of the Common Stock on the date
in question, as quoted on The Nasdaq Stock Market (or principal stock
exchange if then so traded).
Purchase Limitations
The purchase price is to be paid through periodic payroll deductions
not to exceed 10% of the participant's total compensation (as defined in the
Purchase Plan) during each semi-annual period of participation within the
offering period, but in no event more than $7,500 per semi-annual purchase
date nor more than $25,000 worth of Common Stock (based on the fair market
value of the Common Stock on his or her entry date into the offering period)
in any one calendar year. In addition, not more than 200,000 shares in the
aggregate may be purchased by all participants on any one semi-annual
purchase date.
Restrictions on Transfer
Options received under the Purchase Plan, as well as payroll
deductions credited to a participant's account, may not be sold, assigned or
otherwise transferred, other than by will or the laws of descent and
distribution and other limited statutory rights. Any attempted transfer
shall be without effect, except that the Company may treat such an act as an
election to terminate participation in an offering period.
12
<PAGE> 8
DURATION, TERMINATION OF THE PURCHASE PLAN
The Company shall have the right, exercisable in the sole discretion
of the Compensation Committee, to terminate all outstanding purchase rights
under the Purchase Plan immediately following the close of any semi-annual
period. If the Company elects to exercise this right, the Purchase Plan
shall terminate in its entirety. If not terminated sooner, the Purchase
Plan shall terminate on December 31, 2003.
FEDERAL INCOME TAX INFORMATION
Options and shares purchased by participants under the Purchase Plan
are subject to certain federal income tax consequences pursuant to Section
423 of the Code. No taxable income is recognized by a participant upon the
grant of a right to purchase, or upon the purchase of shares, under the
Purchase Plan. The amount of a participant's payroll contributions under
the Purchase Plan, however, remains taxable as ordinary income to the
participant at the time of the payroll deduction. Additionally, there are
no federal tax consequences to the Company upon the grant of a right to
purchase to a participant, or upon a participant's purchase of shares, under
the Purchase Plan.
If the shares of Common Stock are sold or disposed of at least two
years after the first day of a subscription period with respect to which the
participant purchases the shares and at least one year after the date of
purchase, then the participant will recognize ordinary income equal to the
lesser of (a) the excess of the fair market value of the shares at the time
of such disposition over the purchase price of the shares, or (b) the excess
of the fair market value of the shares on the date of grant of purchase
rights over the purchase price. Any further gain upon such disposition will
be taxed as a long-term capital gain at the income tax rate then in effect.
If the shares are sold and the sale price is less than the purchase price,
then there is no ordinary income, and the participant will have a long-term
capital loss equal to the difference between the sale price and the purchase
price. The ability of a participant to utilize such a capital loss will
depend upon the participant's other tax attributes and other statutory
limitations.
If a participant sells or otherwise transfers shares less than two
years after the first day of a subscription period with respect to which he
or she purchases the shares or within one year after the date of purchase (a
"disqualifying disposition"), then at that time the participant will
realize ordinary income in an amount equal to the fair market value of the
shares on the date of purchase minus the purchase price of the shares. This
excess will constitute ordinary income for the year of sale or other
disposition even if no gain is realized on the sale or a gratuitous transfer
of shares is made. The balance of the gain will be taxed as a capital gain
at the rate then in effect. If the shares of Common Stock are sold for less
than their fair market value on the date of purchase, then the same amount
of ordinary income will be attributed to the participant and a capital loss
will be recognized equal to the difference between the sale price and the
fair market value of the shares on the date of purchase. The ability of a
participant to utilize such a capital loss will depend upon the
participant's other tax attributes and other statutory limitations.
In the event of a disqualifying disposition, the Company will
recognize a tax deduction in an amount equal to the fair market value of the
shares on the date of sale minus the participant's purchase price. If a
participant does not make a disqualifying disposition, then the Company will
have no federal tax consequences.
13
<PAGE> 9
AMENDMENT
The Board of Directors may alter, amend, suspend or discontinue the
Purchase Plan following the close of any semi-annual period. However, the
Board may not, without the approval of the Company's stockholders,
materially increase the number of shares issuable under the Purchase Plan or
the maximum number of shares which may be purchased per participant or in
the aggregate during any one semi-annual period, except that the Committee
shall have the authority, exercisable without such stockholder approval, to
effect adjustment to the extent necessary to reflect changes in the
Company's capital structure. In addition, the Board may not alter the
exercise price formula so as to reduce the exercise price payable for the
shares usable under the Purchase Plan, or materially increase the benefits
accruing to participants under the Purchase Plan or materially modify the
requirements for eligibility to participate in the Purchase Plan, without
approval of the Company's stockholders.
MARKET PRICE
The market price of the Company's Common Stock as of August 31, 1998
was $6.50, based on the closing price reported by The Nasdaq Stock Market.
VOTE REQUIRED
Approval of the amendment to the Purchase Plan requires the
affirmative vote of a majority of the shares present, in person or by proxy,
and entitled to vote at the Meeting, provided that a quorum is present.
Votes may be cast FOR or AGAINST the proposal, and stockholders may also
ABSTAIN from voting on the proposal. Abstentions will be counted as present
or represented for purposes of determining both the presence or absence of a
quorum and the number of shares entitled to vote on the proposal and as a
practical matter will have the same effect as a vote AGAINST the proposal.
Broker non-votes will be counted as present or represented for purposes of
determining the presence or absence of a quorum but will not be counted for
purposes of determining the number of shares entitled to vote on the
proposal. The practical effect of broker non-votes is to reduce the number
of affirmative votes required to achieve a majority for the proposal by
reducing the total number of shares from which the majority is calculated.
THE BOARD RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT
TO THE EMPLOYEE STOCK PURCHASE PLAN
14
<PAGE> 1
[COMPUWARE LETTERHEAD]
June 2, 1999
Mr. Steven O. Whiteman
President and CEO
Viasoft, Inc.
3033 North 44th Street
Phoenix, Arizona 85018
Dear Mr. Whiteman:
Viasoft, Inc. ("Viasoft") and Compuware Corporation ("Compuware") (Viasoft
and Compuware being referred herein individually as a "Party") and collectively
as the "Parties") have requested business and financial information from each
other in connection with a possible transaction between the parties or their
respective shareholders. As a condition to it being furnished such information,
each Party agrees to treat all Confidential Evaluation Information (as
hereinafter defined) furnished to such Party in accordance with the provisions
set forth herein.
The term "Confidential Evaluation Material" means any confidential or
proprietary information, data or knowledge concerning the disclosing Party,
regardless of form, which is delivered or disclosed (whether before or after the
date hereof) by or on behalf of the disclosing Party to the receiving Party in
writing (whatever the form or storage medium), orally or through visual means,
or which receiving Party learns or obtains orally, through observation, or
through analysis, compilation or other study of such information, data or
knowledge. Without limiting the foregoing, the term "Confidential Evaluation
Material" does not include information which the receiving Party can demonstrate
(a) was already known to the receiving Party prior to it being furnished by or
on behalf of the disclosing Party, provided such source of information was not
bound by a confidentiality agreement with the disclosing Party; (b) is now or
hereafter becomes generally available to the public other than as a result of
disclosure by the receiving Party or its representatives or agents; or (c) was
or becomes available to receiving Party from a source other than disclosing
Party, or its advisors, provided such source is not bound by a confidentiality
agreement with the disclosing Party.
Each Party agrees it will use the Confidential Evaluation Material solely
for the purpose of evaluating and implementing a possible transaction between
the Parties, and that such Confidential Evaluation Material will be kept
confidential by each Party for a period of two (2) years following the date
hereof; provided, however, that any such Confidential Evaluation Material may be
disclosed to a receiving Party's directors, officers, employees, advisors, and
agents who need access to such Confidential
<PAGE> 2
Mr. Steven O. Whiteman
Viasoft, Inc.
Page 2
Evaluation Material for the purpose of evaluating and seeking to implement any
such transaction between the Parties (it being understood and agreed that such
persons shall be informed by each Party of the confidential or proprietary
nature of the Confidential Evaluation Material and shall be directed by each
Party to treat such Confidential Evaluation Material confidentially and not to
use it other than for the purposes described above). In any event, each Party
shall be responsible for any improper use of any Confidential Evaluation
Material by its respective directors, officers, employees, advisors, or agents.
In the event that either Party (or any of its directors, officers,
employees, advisors, or agents) is requested in any proceeding to disclose any
Confidential Evaluation Material, such Party will give the other Party prompt
notice of such request so that the other Party may seek any appropriate
protective order or other appropriate remedy. It is further agreed that, if in
the absence of a protective order such Party is nonetheless compelled to
disclose Confidential Evaluation Material, such Party may disclose such
information without liability hereunder; provided, however, that such Party give
the other Party written notice of the information to be disclosed as far in
advance of its disclosure as is practicable and, upon the other Party's request,
use reasonable efforts to obtain assurances that confidential treatment will be
accorded to such information.
Each Party further agrees that it will not, and will cause its respective
directors, officers, employees, advisors, and agents not to, disclose to any
person (including current, former or prospective clients or vendors of either
Party) that it is having or has had discussions with the other Party, except
that it may make such disclosure if it has received the written opinion of its
outside legal counsel that such disclosure must be made by it in order that it
not commit a violation of law.
Each Party agrees that at any time upon the other Party's request such
Party shall promptly redeliver to the other Party all written Confidential
Evaluation Material of the other Party and that such Party will not retain any
copies, extracts or other reproductions in whole or in part of such material.
All documents, memorandum, notes and other writings whatsoever (including all
copies, extracts, or other reproductions) prepared by the receiving Party or its
directors, officers, employees or agents based on the Confidential Evaluation
Material of the disclosing Party shall be destroyed, and such destruction shall
be certified in writing to the other Party. The terms of this paragraph shall
not be construed to require the destruction of general memorandum, notes and
other writings, including but not limited to minutes of the board of directors,
created in the normal course of a Party's business.
The redelivery of the Confidential Evaluation Material or the termination
of discussions between the Parties shall not relieve the Parties'
confidentiality or other obligations hereunder. All such obligations shall
survive the termination of such discussions.
<PAGE> 3
Mr. Steven O. Whiteman
Viasoft, Inc.
Page 3
Subject only to the express obligations of confidentiality set forth
herein, this Agreement shall not be construed to limit a receiving Party's
right to develop, obtain or market services, software products or technologies
competitive or equivalent to those of the other Party or otherwise to compete
with the other Party.
The Parties agree that unless a definitive agreement with respect to a
transaction has been executed and delivered, neither Party will be under any
legal obligation of any kind whatsoever with respect to any such transaction by
virtue of this or any written or oral expression with respect to such a
transaction by the Parties or our respective directors, officers, employees, or
any other representatives except, in the case of this letter agreement, for
the matters specifically agreed to herein.
Compuware acknowledges that neither Viasoft nor its representatives
(including Broadview International LLC) has made any express or implied
representation or warranty as to the accuracy or completeness of the
Confidential Evaluation Material, and expressly disclaims any and all liability
that may be based on the Confidential Evaluation Material, errors therein or
omissions therefrom. Compuware agrees that it is not entitled to rely on the
accuracy or completeness of the Confidential Evaluation Material and that it
shall be entitled to rely solely on the representations and warranties made in
any definitive agreement executed and delivered by Viasoft and Compuware in
connection with a transaction.
The Parties agree, for a period of two (2) years from the date of this
Agreement, that each Party shall not directly or indirectly solicit for
employment any employee of the other Party who became known to the Party in
connection with such Party's consideration of the proposed transaction
referenced herein.
The Parties agree that, for a period of one (1) year from the date of this
Agreement, neither Party nor any of its affiliates, will, without prior written
consent of the other Party: (i) acquire, offer to acquire, or agree to acquire,
directly or indirectly, by purchase or otherwise, any voting securities or
direct or indirect rights to acquire any voting securities of the other Party
or any subsidiary thereof, of any successor to or person in control of the
other Party, or any assets of the other Party or any subsidiary or division
thereof or of any successor or controlling person; (ii) make, or in any way
participate in, directly or indirectly, any solicitation of proxies to vote,
or seek to advise or influence any person or entity with respect to the voting
of, any voting securities of the other Party; (iii) form, join or in any way
participate in a "group" (as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934) with respect to any voting securities of the other Party;
(iv) otherwise act or seek to control or influence the management, Board of
Directors or policies of the other Party; (v) make any public announcement with
respect to, or submit a proposal for, or offer of, any extraordinary
transaction involving the other Party or its securities or assets; (vi) take
any action that might require the other Party to make an public announcement
regarding the possibility of a business
<PAGE> 4
Mr. Steven O. Whiteman
Viasoft, Inc.
Page 4
combination or merger; (vii) request the other Party or any of its
representatives, directly or indirectly, to amend or waive any provision of this
paragraph.
The Parties agree that money damages would not be a sufficient remedy for
any breach of this Agreement by the Parties or their respective directors,
officers, employees, advisors, or agents, and that in addition to all other
remedies available to the Parties at law or in equity, the Parties shall be
entitled to specific performance and injunctive or other equitable relief as a
remedy for any such breach and each Party further agrees to waive, and to use
its best efforts to cause its respective directors, officers, employees,
advisors, and agents to waive, any requirement for the securing or posting of
any bond in connection with such remedy.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Michigan, without giving effect to any conflict of laws
principles thereof that would lead to the application of the laws of another
state. By execution and delivery of this Agreement, each Party represents and
warrants that it has been duly authorized by all necessary corporate action
and that the person signing this Agreement is duly authorized to do so.
Upon execution and delivery by the Parties, this Agreement will constitute
our entire agreement with respect to the subject matter hereof.
Very truly yours,
COMPUWARE CORPORATION
/s/ Eliot R. Stark
Eliot R. Stark
Executive Vice President
AGREED TO AND ACCEPTED
THIS 2nd day of June:
----- ------
Viasoft, Inc.
By: /s/ Steven D. Whiteman
-------------------------
Name: Steven D. Whiteman
-----------------------
Title: Chairman & CEO
----------------------
<PAGE> 1
Exhibit 9
to 14D-9
AMENDMENT TO RIGHTS AGREEMENT BETWEEN
VIASOFT, INC.
AND
HARRIS TRUST AND SAVINGS BANK, AS RIGHTS AGENT
THIS AMENDMENT TO RIGHTS AGREEMENT (this "Amendment) is made as of this
14th day of July, 1999 by and between Viasoft, Inc., a Delaware corporation (the
"Company"), and Harris Trust and Savings Bank, as rights agent (the "Rights
Agent"), at the direction of the Company. Capitalized terms used but not defined
herein shall have the meanings given to such terms in the Merger Agreement (as
defined below).
WHEREAS, the Company is entering into an Agreement and Plan of Merger
(as the same may be amended from time to time, the "Merger Agreement") among the
Company, Compuware Corporation, a Michigan corporation ("Parent"), and CV
Acquisition, Inc., a Delaware corporation and wholly-owned subsidiary of parent
("Sub"), providing for transactions (collectively, the "Merger") pursuant to
which, among other things, Sub will make the Offer and, thereafter, the Company
and Sub will effect the Merger and the Company will become a wholly-owned
subsidiary of Parent, and the former stockholders of the Company will receive
cash, all on the terms and subject to the conditions of the Merger Agreement.
WHEREAS, the Company and the Rights Agent are parties to a Rights
Agreement dated as of April 20, 1998 (the "Rights Agreement").
WHEREAS, the Company desires to amend the Rights Agreement in
connection with the execution and delivery of the Merger Agreement.
1
<PAGE> 2
WHEREAS, the Board of Directors on July 14, 1999, resolved to amend the
Rights Agreement as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein set forth, the Rights Agreement is amended as follows:
1. The definition of "Acquiring Person" set forth in Section 1 of the
Rights Agreement is hereby amended by adding the following sentence to the end
of that definition:
Notwithstanding the foregoing, no Person shall be or become an
Acquiring Person by reason of the execution and delivery of the
Agreement and Plan of Merger dated as of July 14, 1999 by and among the
Company, Compuware Corporation, a Michigan corporation ("Parent"), and
CV Acquisition , Inc., a Delaware corporation and wholly-owned
subsidiary of Parent ("Sub"), (the "Merger Agreement") or the execution
and delivery of any amendment thereto, the execution and delivery of
the Shareholder Tender and Voting Agreements contemplated thereby (the
"Tender Agreements") or the execution and delivery of any amendment
thereto or any purchase of stock of the Company pursuant to the Offer.
2. Section 7(a)(i) of the Rights Agreement shall be amended to read in
its entirety as follows:
(i) the earlier of (1) the consummation of the Offer or (2)
the Close of Business on the Final Expiration Date.
3. The definition of "Shares Acquisition Date" included in Section 1 of
the Rights Agreement shall be amended by adding the following sentence to the
end of such definition:
Notwithstanding anything else set forth in this Agreement, a
Shares Acquisition Date shall not be deemed to have occurred solely by
reason of the public announcement, public disclosure, execution and
delivery or amendment of the Offer, the Merger, the Merger Agreement or
the Tender Agreements and the transactions contemplated thereby.
2
<PAGE> 3
4. Section 3(a) of the Rights Agreement shall be amended by adding the
following sentence to the end thereof:
Notwithstanding anything else set forth in this Agreement, no
Distribution Date shall be deemed to have occurred solely by reason of
the execution and delivery or amendment of the Merger Agreement, the
Tender Agreements and the transactions contemplated thereby or the
public announcement, public disclosure or consummation of the Offer.
5. The first paragraph of Section 13 of the Rights Agreement shall be
amended by adding the following phrase immediately after "then, and in each such
case," in the first sentence thereof:
except in connection with the Merger Agreement,
6. The Rights Agreement, as amended by this Amendment, shall remain in
full force and effect in accordance with its terms.
7. This Amendment shall be deemed to be a contract made under the laws
of the State of Delaware and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State. This Amendment may be executed in any
number of counterparts, each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument. If any term, provision, covenant or restriction
of this Amendment is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Amendment shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties herein have caused this Amendment to be
duly executed and attested, all as of the date and year first above written.
Attest: VIASOFT, INC.
By: /s/ Mark R. Schonau By: /s/ Catherine R. Hardwick
------------------------------- -------------------------------
Name: Mark R. Schonau Name: Catherine R. Hardwick
Title: CFO Title: Vice President and
General Counsel
Attest: HARRIS TRUST AND SAVINGS BANK,
Rights Agent
By: /s/ Arlene M. Kaminski
By: /s/ Keith A. Bradley -------------------------------
------------------------------- Name: Arlene M. Kaminski
Name: Keith A. Bradley Title: Trust Officer
Title: Vice President
4
