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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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SIMWARE INC.
(NAME OF SUBJECT COMPANY)
SIMWARE INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON SHARES, WITHOUT NOMINAL OR PAR VALUE
(TITLE OF CLASS OF SECURITIES)
829219104
(CUSIP NUMBER OF CLASS OF SECURITIES)
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MICHAEL R. PECKHAM
VICE PRESIDENT, FINANCE AND ADMINISTRATION
SIMWARE INC.
2 GURDWARA ROAD
OTTAWA, ONTARIO, CANADA K2E 1A2
(613) 727-1779
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICE AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
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WITH A COPY TO:
RICHARD H. GILDEN, ESQ.
FULBRIGHT & JAWORSKI L.L.P.
666 FIFTH AVENUE
NEW YORK, NEW YORK 10103
(212) 318-3000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Simware Inc., a corporation incorporated
under the Canada Business Corporations Act ("CBCA") (the "Company" or
"Simware"). The address of the principal executive offices of the Company is 2
Gurdwara Road, Ottawa, Ontario, Canada K2E 1A2. The title of the class of equity
securities to which this Solicitation/Recommendation Statement on Schedule 14D-9
(this "Statement" or this "Schedule 14D-9") relates is the common shares,
without nominal or par value (the "Common Shares"), of the Company.
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer (the "Offer") by NetManage Bid
Co., an unlimited liability company formed under the laws of Nova Scotia
("Purchaser"), a direct wholly-owned subsidiary of Preston Delaware Acquisition
Corporation, a Delaware corporation, and an indirect wholly-owned subsidiary of
NetManage, Inc., a Delaware corporation ("Parent" or "NetManage"), as set forth
in the Tender Offer Statement on Schedule 14D-1 dated October 1, 1999 (as
amended or supplemented, the "Schedule 14D-1"), to purchase each issued and
outstanding Common Share of the Company (the "Shares") at a price of U.S. $3.75
per Share, net to the seller in cash and without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
October 1, 1999 (the "Offer to Purchase") and the related Letter of Transmittal
(which, together with the Offer to Purchase, as each may be amended and
supplemented from time to time, collectively constitute the "Offer Documents").
The Offer is being made pursuant to an Acquisition Agreement, dated as of
September 26, 1999 (the "Acquisition Agreement"), by and among Parent, Purchaser
and the Company. Pursuant to the Acquisition Agreement, following the
consummation of the Offer, upon the satisfaction or waiver of certain
conditions, the Company will be acquired by the Purchaser (the "Acquisition"). A
copy of the Acquisition Agreement is filed as Exhibit 3 hereto and is
incorporated herein by reference.
As set forth in the Schedule 14D-1, the address of the principal executive
offices of Parent and Purchaser is c/o NetManage, Inc., 10725 N. DeAnza Blvd.,
Cupertino, California 95014.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) Except as described herein, as of the date hereof, there are no
material contracts, agreements, arrangements or understandings, or any actual or
potential conflicts of interest between the Company or its affiliates and (i)
the Company, its executive officers, directors or affiliates; or (ii) Parent or
Purchaser or their respective executive officers, directors or affiliates.
ARRANGEMENTS WITH DIRECTORS, EXECUTIVE OFFICERS OR AFFILIATES OF THE COMPANY
In early 1998, when the Company began investigating strategic alternatives,
it entered into certain agreements (the "Change in Control Agreements") in order
to provide incentives to its key executive officers to remain with the Company
during this critical period. The Company entered into the Change in Control
Agreements with each of Glen M. Brownlee, President and Chief Executive Officer,
Michael R. Peckham, Vice President, Finance and Administration, and Juan
Guillen, Vice President, Engineering (each individually, the "Officer" and
collectively, the "Officers"). The Company entered into the Change in Control
Agreements with Mr. Brownlee and Mr. Peckham on February 23, 1998, and with Mr.
Guillen on March 25, 1998.
Under the Change in Control Agreements, in the event that any Officer's
employment with Simware terminates as a result of an "Involuntary Termination"
within the period of 24 months immediately following a "Change in Control",
Simware agreed to provide the respective Officer with certain severance
benefits. The term "Change in Control" as defined in the Change in Control
Agreements includes the completion of any offer resulting in not less than 50%
of the outstanding securities of Simware being acquired by a third party
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purchaser. The consummation of the Offer and Acquisition would result in a
Change in Control as defined in the Change in Control Agreements. The term
"Involuntary Termination" means: (a) termination of the respective Officer's
employment by Simware following a Change in Control for any reason (other than
death or "Just Cause", as defined in the Change in Control Agreements), or (b)
the respective Officer's resignation from his employment within the 30-day
period immediately following certain "Changes Affecting Your Employment" (as
defined in the Change in Control Agreements).
The severance benefits each of the Officers would receive upon such a
termination include, but are not limited to, the following:
- a lump sum equal to 24-months' base salary in the case of Mr. Brownlee
and 18-months' base salary in the case of Mr. Peckham and Mr. Guillen;
- a lump sum equal to 12-months' incentive target, calculated at the rate
of each Officer's respective annual incentive target immediately prior to
the Involuntary Termination; and
- certain payments to benefit plans for a period of 24 months in the case
of Mr. Brownlee and 18 months in the case of Mr. Peckham and Mr. Guillen,
unless the respective Officer commenced new employment during the
respective periods.
On September 26, 1999, Parent and the Officers executed new Change in
Control Agreements (the "New Agreements") to set out the terms and conditions of
the Officers' employment in the event Parent acquired the Company. Recognizing
that the Acquisition might entitle the Officers to payments under the Change in
Control Agreements, the New Agreements provide that the Officers waive such
entitlements, and entitlements under separate severance agreements, in
consideration of installment payments of the aggregate of 24-months' base salary
and 12-months' incentive target, payable in 24 equal monthly installments in the
case of Mr. Brownlee; and 18-months' base salary and 12-months' incentive
target, payable in 18 equal monthly installments in the case of Mr. Peckham and
Mr. Guillen. The New Agreements also provide that the Officers agree to accept
positions that are equivalent in status and compensation, including bonus and
stock options, to those of similar senior officers in NetManage, and that the
Officers' base pay will be no less than their current base pay.
If, during the 24-month payment period for Mr. Brownlee or the 18-month
payment period for Mr. Peckham and Mr. Guillen, the Officer voluntarily
terminates his employment or is terminated for cause, then the Officer forfeits
his entitlement to any outstanding balance. In the event the Officer is
terminated without cause during his respective payment period or is subject to a
Change Affecting Your Employment, the payments will be accelerated such that the
outstanding balance becomes immediately due and payable.
The New Agreements further provide that the provisions of the New
Agreements and employee confidentiality agreements constitute the full extent of
the employment contract between the Company, NetManage and the Officers,
regardless of any oral or written agreements or understandings that may
presently exist.
The foregoing summary of the New Agreements is qualified in its entirety by
reference to the complete text of the New Agreements, copies of which are filed
as Exhibits 8 through 10 hereto and are incorporated herein by reference.
ARRANGEMENTS WITH PARENT, PURCHASER OR THEIR AFFILIATES
In connection with the transactions contemplated by the Acquisition, the
following agreements and arrangements were entered into: (i) the Acquisition
Agreement and (ii) the Confidentiality Agreement, dated as of February 9, 1999,
between the Company and Parent (the "Confidentiality Agreement").
The Acquisition Agreement
A summary of the terms of the Acquisition Agreement is contained in Section
15 of the Offer to Purchase ("Background of the Offer; Contacts with the
Company; the Acquisition Agreement"), a copy of which is filed as Exhibit 1
hereto, and is incorporated herein by reference. This summary does not purport
to
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be complete and is qualified in its entirety by reference to the complete text
of the Acquisition Agreement, a copy of which is filed as Exhibit 3 hereto and
is incorporated herein by reference.
The Confidentiality Agreement
The following summary of the Confidentiality Agreement is qualified in its
entirety by reference to the complete text of the Confidentiality Agreement, a
copy of which is filed as Exhibit 4 hereto and is incorporated herein by
reference.
The Confidentiality Agreement provides, among other things, that in
connection with negotiations or discussions between the parties, for a period of
three years from the date of disclosure of "Confidential Information" (as
defined in the Confidentiality Agreement), the parties will not disclose any
Confidential Information to any third party, without the prior written consent
of the disclosing party. The Confidentiality Agreement allows disclosure of the
Confidential Information to those employees and contractors with a need to know,
provided the receiving party binds those employees and contractors to terms at
least as restrictive as those stated in the Confidentiality Agreement. The
Confidentiality Agreement continues in full force and effect for so long as the
parties continue to exchange Confidential Information.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company (the "Board") has unanimously
approved the Acquisition Agreement and the Offer, and has determined that the
Offer is fair to the Company's shareholders (the "Shareholders") and that the
Offer is in the best interests of the Shareholders, and unanimously recommends
that the Shareholders accept the Offer and tender their Shares in the Offer.
A letter to the Shareholders communicating the Board's recommendation and a
press release announcing the execution of the Acquisition Agreement are filed
herewith as Exhibits 5 and 6, respectively, and are incorporated herein by
reference.
(b) BACKGROUND; REASONS FOR THE BOARD'S RECOMMENDATION
In early 1998, the Board determined that the Company might not have
sufficient financial and marketing resources to maximize the potential market
opportunity for Salvo, the Company's server product which allows Web
applications to interact with enterprise applications and databases, and began
investigating strategic alternatives. In August 1998, the Company engaged
Alliant Partners ("Alliant") to identify potential strategic alliances. Alliant,
a Palo Alto, California financial advisory firm, focuses exclusively on the
high-technology industry. Alliant began to identify potential partners or
acquisition candidates, and from September 1998 until August 1999, Alliant
contacted approximately 39 potential strategic alliance partners or acquisition
candidates for the Company. The Company and/or Alliant entered into discussions
with nine of these parties. However, the Company did not reach agreement with
any potential partner during this period, due in part to the weakness of the
market for shares of many companies in Simware's industry and the acquisition of
some potential strategic alliance partners by other companies.
In January 1999, NetManage contacted the Company through a third party to
determine whether the Company would consider some form of strategic alliance.
William G. Breen, Chairman of the Board, and Michael R. Peckham met with Abe
Ostrovsky, a NetManage board member, who indicated that NetManage was interested
in the Company's activities relating to Internet/Extranet technologies and
products. Glen M. Brownlee and Mr. Peckham then met with Zvi Alon, NetManage's
Chairman and Chief Executive Officer, on February 9, 1999. Mr. Alon indicated
that NetManage wanted to develop or acquire a product such as Salvo, and
expressed interest in a possible acquisition of the Company by NetManage. The
Company and NetManage entered into the Confidentiality Agreement.
In March 1999, the two companies engaged in further discussions regarding
possible synergies, fit, overlap and market issues. On March 17, 1999, Mr.
Brownlee and Mr. Peckham, along with John Cromwell of Alliant, met at
NetManage's offices with Mr. Alon and Gary Anderson, Senior Vice President and
Chief
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Financial Officer of NetManage, who had prepared a preliminary financial
analysis of the two companies as a combined entity and suggested various
structures under which the companies could be combined. These discussions did
not result in any firm offer.
In late July 1999, at the direction of NetManage, a representative of CIBC
World Markets Corp. ("CIBC") called Mr. Breen to determine if discussions
between the companies could be reestablished. In August 1999, Mr. Brownlee
contacted Mr. Alon to ascertain whether NetManage was still interested in
acquiring Simware, as Simware was in discussions with another party. On August
10, 1999, Mr. Brownlee, Mr. Peckham and Mr. Cromwell met in Ottawa with Mr. Alon
and a representative of CIBC to discuss a possible acquisition. On August 19 and
20, 1999, Mr. Brownlee, Mr. Peckham, Mr. Guillen and a representative of Alliant
met with Mr. Alon and representatives of CIBC at NetManage's offices to review
each companies' respective market focus and operations. During these meetings,
Mr. Brownlee, Mr. Peckham and Mr. Guillen were introduced to a number of members
of NetManage's senior management. On September 7 and 8, 1999, Mr. Brownlee and
Mr. Peckham met with Mr. Alon and Mr. Anderson at NetManage's offices, at which
time NetManage indicated that it was prepared to offer U.S. $3.75 per share in
cash for Simware, subject to the satisfactory completion of due diligence and
definitive documentation. On September 10, 1999, Mr. Brownlee and Mr. Peckham
provided the Board with an update on the discussions with NetManage and
NetManage's potential offer.
On September 13, 1999, Mr. Brownlee and Mr. Peckham contacted NetManage to
commence negotiations for the acquisition of Simware by NetManage. From
September 14 through 17, 1999, NetManage performed a due diligence investigation
of Simware. On September 15, 1999, the parties signed a "no-shop" letter which
provided for exclusive negotiations through October 5, 1999 and for a breakup
fee of U.S. $1 million in the event Simware accepted another offer. On September
24, 1999, the two companies presented the draft Acquisition Agreement to their
respective boards of directors for approval and Alliant delivered an opinion to
the Board that the proposed transaction was fair to the Shareholders from a
financial point of view. On September 25 and 26, 1999 the parties and their
respective legal counsel made final changes to the Acquisition Agreement.
On the evening of September 26, 1999 the parties executed the Acquisition
Agreement. On September 27, 1999, the transaction was publicly announced.
In approving the Acquisition Agreement and the transactions contemplated
thereby and recommending that all holders tender their Shares pursuant to the
Offer, the Board considered a number of factors, including the following:
(i) the Board's familiarity with, and information provided by the
Company's management as to, the business, financial condition, results of
operations, current business strategy and future prospects of the Company,
as well as the risks involved in achieving those prospects and objectives
in current industry and market conditions, the nature of the markets in
which the Company operates, the Company's position in such markets, and the
historical and current market prices for the Shares;
(ii) the terms of the Acquisition Agreement, including (a) the
proposed structure of the Offer and the Acquisition involving an immediate
cash tender offer, (b) that financing is not a condition to the Offer and
the Acquisition, thereby enabling Shareholders to obtain cash for their
Shares quickly and (c) that NetManage has a strong balance sheet, with over
$100 million in cash, which is sufficient to complete the Acquisition;
(iii) the per share price contemplated by the Acquisition Agreement,
at U.S. $3.75, represented a significant premium of approximately 33% to
the trading price of the Shares the day before the Board's approval of the
Acquisition Agreement, and, to the Board's knowledge, represented the only
firm cash offer that any potential acquirer was willing to offer;
(iv) the process engaged in by the Company's management and financial
advisor, as a result of which the Board had what it believed to be an
accurate sense of the values that could be achieved in a third party
transaction;
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(v) the presentation of Alliant at the September 24, 1999 Board
meeting and the opinion of Alliant to the effect that, as of such date, and
based on the assumptions made, matters considered and limits of review set
forth therein, the consideration to be paid by the Purchaser to the holders
of the Shares in the Offer and the Acquisition was fair to such holders
from a financial point of view. The full text of the written opinion of
Alliant, dated September 24, 1999, which sets forth assumptions made,
matters considered and limitations on the review undertaken in connection
with the opinion, is attached to this Statement and filed as Exhibit 7
hereto, and is incorporated herein by reference. The opinion of Alliant
referred to herein does not constitute a recommendation as to whether or
not any holder of Shares should tender such Shares in connection with the
Offer. All Shareholders are urged to, and should, read the opinion of
Alliant carefully in its entirety;
(vi) the Acquisition Agreement permits the Company to furnish
nonpublic information to, and to participate in negotiations with, any
third party that has submitted an unsolicited bona fide Acquisition
Proposal (as defined in the Acquisition Agreement) that constitutes, or is
reasonably likely to lead to, a Superior Proposal (as defined in the
Acquisition Agreement), if the Board determines in good faith that taking
such action is necessary in the exercise of its fiduciary obligations under
applicable law and the Acquisition Agreement permits the Board to terminate
the Acquisition Agreement in certain circumstances in the exercise of its
fiduciary duties;
(vii) the termination provisions of the Acquisition Agreement, which
under certain circumstances could obligate the Company to pay a termination
fee of U.S. $2,500,000, and the Board's belief that such fee provisions
would not deter a higher offer and are consistent with similar
transactions;
(viii) the likelihood that the transaction would be consummated,
including the conditions to the Offer, and Parent's financial strength,
including its undertaking to provide Purchaser with all necessary funds to
purchase the Shares;
(ix) a consideration of alternatives to the sale of the Company,
including without limitation continuing to operate the Company as a public
company and not engaging in any extraordinary transaction;
(x) the expressed intention of NetManage to maintain the Company as a
stand-alone subsidiary in Ottawa, and furthermore to retain a significant
number of the Company's employees; and
(xi) the Shareholders of Simware who do not tender to the Offer will,
if the statutory right of acquisition pursuant to Section 206 of the CBCA
is available and is exercised by Purchaser in respect of the Shares or if
any subsequent acquisition transaction is undertaken, be entitled, upon
compliance with certain conditions, to dissent to such statutory right of
acquisition or subsequent acquisition transaction in accordance with the
CBCA and be entitled to be paid the fair value of their Shares determined
in accordance with the CBCA.
The foregoing discussion addresses the material information and factors
considered by the Board in its consideration of the Offer. In view of the
variety of factors and the amount of information considered, the Board did not
find it practicable to provide specific assessments of, quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination. The determination to recommend that Shareholders accept the Offer
was made after consideration of all of the factors taken as a whole. In
addition, individual members of the Board may have given different weights to
different factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to a letter agreement dated August 4, 1998 between the Company and
Alliant, the Company agreed to retain Alliant to act as its financial advisor in
connection with the Offer and Acquisition. As compensation for Alliant's
services in connection with the transactions contemplated by the Acquisition
Agreement, the Company has agreed to pay Alliant fees of approximately U.S.
$370,000 upon the closing of the Acquisition.
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Alliant will be paid a separate fee of U.S. $100,000 for rendering its
fairness opinion. The Company has also agreed to reimburse Alliant for travel
and other out-of-pocket expenses, and to indemnify Alliant and certain related
parties against certain liabilities arising out of Alliant's engagement.
Neither the Company nor any person acting on its behalf has employed,
retained or compensated any other person to make solicitations or
recommendations to the Shareholders on its behalf with respect to the Offer or
the Acquisition.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) During the past 60 days, no transactions in the Shares have been
effected by the Company or, to the best of the Company's knowledge, by any
executive officer, director, affiliate or subsidiary of the Company, except as
follows: on August 26, 1999, the Company issued 5,000 options for Common Shares,
at an exercise price of Cdn $3.83, to each of Andrew Katz and Jean-Pierre
Soubliere upon their election as new directors of the Company.
(b) To the best 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 (including
Shares issuable upon the exercise of stock options).
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, the Company is not engaged
in any negotiation in response to the Offer which relates to or would result in
(i) an extraordinary transaction, such as a merger or reorganization, involving
the Company or any subsidiary of the Company, (ii) a purchase, sale or transfer
of a material amount of assets by the Company or any subsidiary of the Company,
(iii) a tender offer for or other acquisition of securities by or of the Company
or (iv) any material change in the present capitalization or dividend policy of
the Company.
(b) Except as set forth herein, there are no transactions, Board
resolutions, agreements in principle or signed contracts in response to the
Offer which relate to or would result in one or more of the matters referred to
in paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
In accordance with the Acquisition Agreement, at its meeting on September
24, 1999, the Board unanimously approved the execution and delivery of the
Acquisition Agreement in substantially the form presented to the Board.
The following information has been added to provide supplemental
information to Canadian Shareholders and includes, together with the other
information set forth in this Schedule 14D-9, the information required to be
included in a Directors' Circular under applicable Canadian law.
DIRECTORS OF THE COMPANY
The directors of the Company are Jack A. Avery, William G. Breen, Glen M.
Brownlee, Douglas C. Cameron, Paul N. Hyde, Andrew Katz and Jean-Pierre
Soubliere.
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OWNERSHIP OF SECURITIES OF THE COMPANY BY DIRECTORS, SENIOR OFFICERS AND OTHER
PERSONS
The following table and accompanying notes set out the names of all of the
directors and senior officers of the Company and the securities of the Company
beneficially owned, directly or indirectly, or over which control or direction
is exercised, by them and, to their knowledge after reasonable enquiry, their
respective associates, any person or company holding more than 10% of any class
of equity securities of the Company or any person or company acting jointly or
in concert with the Company:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND MUNICIPALITY POSITION WITH THE HELD DIRECTLY OR NUMBER OF SHARES
OF RESIDENCE COMPANY INDIRECTLY SUBJECT TO OPTION
--------------------- --------------------------- ---------------- -----------------
<S> <C> <C> <C>
Jack A. Avery.................... Director 27,500(1) 44,750
Oakville, Ontario
William G. Breen................. Chairman of the Board 492,171(2) 255,938
Ottawa, Ontario and a Director
Glen M. Brownlee................. President, Chief Executive 4,125(3) 360,062
Ottawa, Ontario Officer and a Director
Douglas C. Cameron............... Director 6,876 31,688
Ottawa, Ontario
Paul N. Hyde..................... Director Nil 10,000
Mississauga, Ontario
Andrew Katz...................... Director Nil 5,000
Nepean, Ontario
Jean-Pierre Soubliere............ Director Nil 5,000
Nepean, Ontario
David P. Desjardins.............. Vice-President, 6,667 50,000(4)
Nepean, Ontario Solutions Group
Juan A. Guillen.................. Vice-President, 7,000 154,000
Ottawa, Ontario Engineering
Allan G. Jones................... Vice-President, 16,126(5) 100,613
Wokingham, England Worldwide Operations
Corien E. Kershey................ Vice-President, 1,067 27,000
Stittsville, Ontario Marketing
Michael R. Peckham............... Vice-President, Finance & 2,750 122,784
Ottawa, Ontario Administration and Chief
Financial Officer
James P. Rawlings................ Vice-President, 5,333 44,245(6)
Nepean, Ontario North American
Operations
</TABLE>
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Notes:
(1) Does not include 21,175 Shares beneficially owned directly by Nassau Walnut
Investments Inc., a corporation controlled by Mr. Avery's spouse, Diane
Avery, to which Mr. Avery disclaims any beneficial interest.
(2) Includes 83,515 Shares beneficially owned directly by 715161 Ontario
Limited, a corporation controlled by Mr. Breen. Does not include 178,906
Shares beneficially owned directly by Mr. Breen's spouse, Jane T. Breen, to
which Mr. Breen disclaims any beneficial interest. Also does not include
12,000 Shares and 5,000 Shares beneficially owned directly by The Heather
Breen Trust and The Katie Breen Trust, respectively, of which Mr. Breen is a
trustee, to which Mr. Breen disclaims any beneficial interest.
(3) Does not include 3,000 Shares beneficially owned directly by Mr. Brownlee's
son, Christopher Glen Brownlee, to which Mr. Brownlee disclaims any
beneficial interest.
(4) Includes 5,000 Shares to be issued to Mr. Desjardins prior to the completion
of the Offer pursuant to the Company's employee share purchase plan.
(5) Does not include 987 Shares beneficially owned directly by Mr. Jones'
spouse, Pauline Jones, to which Mr. Jones disclaims any beneficial interest.
(6) Includes 4,245 Shares to be issued to Mr. Rawlings prior to the completion
of the Offer pursuant to the Company's employee share purchase plan.
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As of the date hereof, the directors and senior officers of the Company
and, to the knowledge of the directors and senior officers of the Company, after
reasonable enquiry, their respective associates as a group, beneficially own,
directly or indirectly, or exercise control or direction over 790,683 Shares,
representing approximately 11.36% of the outstanding Shares. The directors and
senior officers of the Company together with their applicable associates listed
above have indicated that they will deposit, pursuant to the Offer, the number
of Shares owned by them as indicated above together with an aggregate of
1,037,080 Shares issuable pursuant to the Company's employee share purchase plan
or upon the exercise of options having an exercise price of less than U.S. $3.75
per Share.
OWNERSHIP OF SECURITIES OF PARENT
None of the Company, the directors or senior officers of the Company or, to
the knowledge of the directors and senior officers of the Company, after
reasonable enquiry, any associate of a director or senior officer of the
Company, any person or company holding more than 10% of the Shares, or any
person or company acting jointly or in concert with the Company owns, directly
or indirectly, or exercises control or direction over, any securities of any
class of Parent.
RELATIONSHIP BETWEEN PARENT AND THE DIRECTORS AND SENIOR OFFICERS OF THE COMPANY
None of the directors or senior officers of the Company are directors or
senior officers of Parent or any of its subsidiaries.
Other than arrangements contained in the Acquisition Agreement to which
Parent, Purchaser and the Company are parties described herein or in the Offer
Documents and except as described in Item 3 under the heading "Arrangements with
Directors, Executive Officers or Affiliates of the Company", there are no
arrangements or agreements made or proposed to be made by Parent or Purchaser
and any of the directors or senior officers of the Company, including
arrangements or agreements with respect to compensation for loss of office or as
to their remaining in or retiring from office if the Offer is successful.
AGREEMENTS BETWEEN THE COMPANY AND ITS DIRECTORS AND SENIOR OFFICERS
There are no arrangements or agreements made or proposed to be made between
the Company and any of the directors or senior officers of the Company pursuant
to which a payment or other benefit is to be made or given by way of
compensation for loss of office or as to their remaining in or retiring from
office if the Offer is successful except as described in Item 3 under the
heading "Arrangements with Directors, Executive Officers or Affiliates of the
Company."
INTERESTS OF DIRECTORS, SENIOR OFFICERS AND OTHERS IN MATERIAL CONTRACTS OF
PARENT
Other than the Acquisition Agreement, none of the directors or senior
officers of the Company or their associates or, to the knowledge of the
directors and senior officers of the Company, after reasonable enquiry, any
person or company who owns more than 10% of the Shares, has any interest in any
material contract to which Parent is a party.
TRADING IN AND ISSUANCE OF SECURITIES OF THE COMPANY TO DIRECTORS, SENIOR
OFFICERS AND OTHER PERSONS
Neither the Company nor any of the directors or senior officers of the
Company, or to the knowledge of the directors and senior officers of the
Company, after reasonable enquiry, any of their associates nor any person
holding more than 10% of the Shares nor any person or company acting jointly or
in concert with the Company, has traded in securities of the Company during the
six months preceding the date of the Offer, other than as described below:
<TABLE>
<CAPTION>
NATURE OF PRICE PER NUMBER OF
NAME TRADE SHARE SHARES DATE
---- --------- ----------- --------- -------------
<S> <C> <C> <C> <C>
Karen Cameron(1).......................... Sale U.S. $3.529 6,875 June 10, 1999
</TABLE>
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Note:
(1) Karen Cameron is the spouse of Douglas C. Cameron, a director of the
Company.
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There have been no Shares or securities convertible into Shares issued by
the Company to any director or senior officer of the Company during the two-year
period preceding the date of the Offer, except as to:
<TABLE>
<CAPTION>
NUMBER AND ISSUE/EXERCISE
DESCRIPTION PRICE PER SECURITY
NAME DATE ISSUED OF SECURITIES (CDN$)
---- ----------------- ---------------------- ------------------
<S> <C> <C> <C>
William G. Breen.................... November 30, 1998 4,950 shares(1) $ 3.45
Allan G. Jones...................... November 30, 1998 2,475 shares(1) $ 3.45
Michael R. Peckham.................. November 30, 1998 2,750 shares(1) $ 3.45
William G. Breen.................... December 3, 1997 6,875 shares(1) $ 3.45
Douglas C. Cameron.................. April 13, 1998 6,875 shares(1) $ 3.09
Jack A. Avery....................... June 4, 1998 5,000 options $ 5.75
Jack A. Avery....................... May 7, 1999 5,000 options $ 4.85
William G. Breen.................... June 4, 1998 20,000 options $ 5.75
William G. Breen.................... May 7, 1999 5,000 options $ 4.85
Glen M. Brownlee.................... June 4, 1998 60,000 options $ 5.75
Glen M. Brownlee.................... June 4, 1998 20,000 options(2) $ 5.75
Glen M. Brownlee.................... May 7, 1999 65,000 options $ 4.85
Douglas C. Cameron.................. June 4, 1998 5,000 options $ 5.75
Douglas C. Cameron.................. May 7, 1999 5,000 options $ 4.85
Paul N. Hyde........................ June 4, 1998 5,000 options $ 5.75
Paul N. Hyde........................ May 7, 1999 5,000 options $ 4.85
Andrew Katz......................... August 26, 1999 5,000 options $ 3.83
Jean-Pierre Soubliere............... August 26, 1999 5,000 options $ 3.83
David P. Desjardins................. February 26, 1998 7,500 options $ 4.60
David P. Desjardins................. June 4, 1998 7,000 options $ 5.75
David P. Desjardins................. May 7, 1999 17,500 options $ 4.85
Juan A. Guillen..................... June 4, 1998 20,000 options $ 5.75
Juan A. Guillen..................... February 15, 1999 5,000 options $ 4.50
Juan A. Guillen..................... May 7, 1999 25,000 options $ 4.85
Allan G. Jones...................... June 4, 1998 20,000 options $ 5.75
Allan G. Jones...................... February 15, 1999 20,000 options $ 4.50
Allan G. Jones...................... May 7, 1999 25,000 options $ 4.85
Corien E. Kershey................... November 25, 1997 10,000 options $ 3.15
Corien E. Kershey................... June 4, 1998 7,000 options $ 5.75
Corien E. Kershey................... May 7, 1999 10,000 options $ 4.85
Michael R. Peckham.................. June 4, 1998 20,000 options $ 5.75
Michael R. Peckham.................. May 7, 1999 25,000 options $ 4.85
James P. Rawlings................... November 25, 1997 5,000 options $ 3.15
James P. Rawlings................... June 4, 1998 5,000 options $ 5.75
James P. Rawlings................... February 15, 1999 20,000 options $ 4.50
James P. Rawlings................... May 7, 1999 10,000 options $ 4.85
</TABLE>
- ---------------
Notes:
(1) Shares issued pursuant to previously granted options.
(2) Option has expired. No Shares were issued prior to option expiry date.
To the knowledge of the directors and senior officers of the Company, after
reasonable enquiry, no director or senior officer of the Company intends to
purchase Shares while the Offer is outstanding, nor do any of the directors or
senior officers of the Company know of the existence of such an intention on the
part of any person or company other than Purchaser.
10
<PAGE> 11
MATERIAL CHANGES AND OTHER INFORMATION CONCERNING THE COMPANY
Other than with respect to the Offer, the directors and senior officers of
the Company are not aware of any information that indicates any material change
in the affairs, financial position or prospects of the Company since July 31,
1999, the date of the last published interim financial statements of the
Company, except as otherwise described or referred to herein or in the Offer
Documents.
There is no other information not disclosed herein but known to the
directors and senior officers of the Company which would reasonably be expected
to affect the decision of the Shareholders to accept or reject the Offer.
RESPONSES TO THE OFFER
Except as otherwise described or referred to herein, the Company has not
entered into any transaction, agreement in principle or contract and has not
passed any board resolution in response to the Offer. There are no negotiations
underway in response to the Offer which relate to or would result in an
extraordinary transaction such as a merger or reorganization involving the
Company or a subsidiary (except a "Subsequent Acquisition Transaction" as
discussed in the Offer Documents), the purchase, sale or transfer of a material
amount of assets by the Company or a subsidiary, an issuer bid for or other
acquisition of securities by or of the Company, or any material change in the
present capitalization or dividend policy of the Company.
STATUTORY RIGHTS OF ACTION
Securities legislation in certain of the provinces and territories of
Canada provides Shareholders with, in addition to any other rights they may have
at law, rights of rescission or to damages, or both, if there is a
misrepresentation in a circular or notice that is required to be delivered to
the Shareholders. However, such rights must be exercised within prescribed time
limits. Shareholders should refer to the applicable provisions of the securities
legislation of their province or territory for particulars of those rights or
consult with a lawyer.
DIRECTORS' APPROVAL
The contents of this Schedule 14D-9 (which includes the information
required by applicable Canadian law to be included in a Directors' Circular)
have been approved and the delivery and the distribution thereof authorized by
the Board of Directors.
CERTIFICATE
The foregoing contains no untrue statement of a material fact and does not
omit to state a material fact that is required to be stated or that is necessary
to make a statement not misleading in light of the circumstances in which it was
made. In addition, the foregoing does not contain any misrepresentation likely
to affect the value or market price of the securities which are the subject of
the Offer.
October 1, 1999
ON BEHALF OF THE BOARD OF DIRECTORS
<TABLE>
<S> <C>
/s/ WILLIAM G. BREEN /s/ GLEN M. BROWNLEE
- --------------------------------------------- ---------------------------------------------
Director Director
</TABLE>
11
<PAGE> 12
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<C> <S>
Exhibit 1. Offer to Purchase, dated October 1, 1999.*+
Exhibit 2. Letter of Transmittal.*+
Exhibit 3. Acquisition Agreement, dated as of September 26, 1999, by
and among the Company, Parent and Purchaser.+
Exhibit 4. Confidentiality Agreement, dated February 9, 1999, between
the Company and Parent.
Exhibit 5. Letter to Shareholders of the Company, dated October 1,
1999.*
Exhibit 6. Press Release, issued by the Company on September 27, 1999.+
Exhibit 7. Opinion of Alliant, dated September 24, 1999 (attached
hereto as Annex A).*
Exhibit 8. Change in Control Agreement by and between the Company and
Glen M. Brownlee, dated September 26, 1999.+
Exhibit 9. Change in Control Agreement by and between the Company and
Michael R. Peckham, dated September 26, 1999.+
Exhibit 10. Change in Control Agreement by and between the Company and
Juan Guillen, dated September 26, 1999.+
Exhibit 11. No-Shop Agreement by and between the Company and Parent,
dated September 15, 1999.
Exhibit 12. Cover Sheet to Canadian Directors' Circular.*
</TABLE>
- ---------------
* Included in copies of the Schedule 14D-9 mailed to Shareholders.
+ Filed as an exhibit to Parent and Purchaser's Tender Offer Statement on
Schedule 14D-1, dated October 1, 1999, and incorporated herein by reference.
12
<PAGE> 13
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.
Dated: October 1, 1999
SIMWARE INC.
By: /s/ GLEN M. BROWNLEE
------------------------------------
Name: Glen M. Brownlee
Title: President and Chief Executive
Officer
13
<PAGE> 14
ANNEX A
ALLIANT PARTNERS
435 TASSO STREET
PALO ALTO, CA 94301
September 24, 1999
Board of Directors
Simware Inc.
2 Gurdwara Road
Ottawa, Ontario K2E 1A2
Canada
Gentlemen:
You have requested our opinion as to the fairness, from a financial point
of view, to the stockholders of Simware Inc. ("Simware") of the consideration
received in the acquisition (the "Acquisition") of Simware by NetManage, Inc.
("NetManage"). As contemplated by the latest draft of the Acquisition Agreement
(the "Agreement"), dated September 23, 1999, Simware will receive U.S. $3.75 per
share in cash, or total cash consideration of approximately U.S. $28.2 million.
For purposes of the opinion set forth herein, we have:
(a) reviewed financial statements and other information of Simware;
(b) reviewed certain internal financial statements and other
financial and operating data concerning Simware prepared by the
management of Simware;
(c) analyzed certain financial projections prepared by the
management of Simware;
(d) discussed the past and current operations, financial condition,
and the prospects of Simware with senior executives of Simware;
(e) discussed with the senior management of Simware the strategic
objectives of the Acquisition and the strategic alternatives
available to Simware;
(f) compared the financial performance of Simware with that of
certain other comparable publicly-traded companies and the prices
paid for securities in those publicly-traded companies;
(g) reviewed the financial terms, to the extent publicly available,
of certain comparable acquisition transactions;
(h) assessed Simware's forecast and future cash flows for a
discounted cash flow analysis;
(i) reviewed the Agreement and certain related documents; and
(j) performed such other analyses and considered such other factors
as we have deemed appropriate.
We have assumed and relied upon, without independent verification, the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial projections of Simware, we have
assumed that they have been reasonably prepared on bases reflecting the best
currently available estimates and judgements of the future financial performance
of Simware. The financial and other information regarding Simware reviewed by
Alliant Partners in connection with the rendering of this opinion was limited to
information provided by Simware's management and certain discussions with
Simware's senior management regarding Simware's financial condition and
prospects and their strategic objectives regarding the
<PAGE> 15
Acquisition as well as the strategic alternatives available to Simware. In
addition, we have assumed that the Acquisition will be consummated in accordance
with the terms set forth in the Agreement. We have not made any independent
valuation or appraisal of the assets or liabilities of Simware, nor have we been
furnished with any such appraisals. Our opinion is necessarily based on
economic, market and other conditions as in effect on, and the information made
available to us as of, the date hereof.
Our opinion addresses only the fairness of the transaction, from a
financial point of view, to the stockholders of Simware, and we do not express
any views on any other terms of the Agreement or the business bases underlying
the Agreement.
Alliant Partners has received fees from Simware for previous advisory
engagements as well as a fee for this transaction.
Based upon and subject to the foregoing, and based upon such other matters
as we consider relevant, it is our opinion that, as of the date hereof, the cash
consideration to be received by the Simware stockholders in the Acquisition is
fair, from a financial point of view, to the Simware stockholders.
Very truly yours,
/s/ ALLIANT PARTNERS
2
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- ------------------------------------------------------------
<S> <C>
1 Offer to Purchase, dated October 1, 1999.*+
2 Letter of Transmittal.*+
3 Acquisition Agreement, dated as of September 26, 1999, by
and among the Company, Parent and Purchaser.+
4 Confidentiality Agreement, dated February 9, 1999, between
the Company and Parent.
5 Letter to Shareholders of the Company, dated October 1,
1999.*
6 Press Release, issued by the Company on September 27, 1999.+
7 Opinion of Alliant, dated September 24, 1999 (attached
hereto as Annex A).*
8 Change in Control Agreement by and between the Company and
Glen M. Brownlee, dated September 26, 1999.+
9 Change in Control Agreement by and between the Company and
Michael R. Peckham, dated September 26, 1999.+
10 Change in Control Agreement by and between the Company and
Juan Guillen, dated September 26, 1999.+
11 No-Shop Agreement by and between the Company and Parent,
dated September 15, 1999.
12 Cover Sheet to Canadian Directors' Circular.*
</TABLE>
- ---------------
* Included in copies of the Schedule 14D-9 mailed to Shareholders.
+ Filed as an exhibit to Parent and Purchaser's Tender Offer Statement on
Schedule 14D-1, dated October 1, 1999, and incorporated herein by reference.
<PAGE> 1
Exhibit 4
[NETMANAGE LOGO]
MUTUAL NONDISCLOSURE AGREEMENT
THIS AGREEMENT (the "Agreement") is made effective as of the 9 day of
Feb., 1999, by and between NETMANAGE, INC., a Delaware corporation, and Simware
Inc., a federally incorporated corporation to assure the protection and
preservation of the confidential and/or proprietary nature of information to
be disclosed to each other in connection with certain negotiations or
discussions further described in Exhibit A attached hereto.
In reliance upon and in consideration of the following undertakings, the
parties agree as follows:
1. CONFIDENTIAL INFORMATION. Subject to the limitations set forth in
Section 2, all information disclosed to the other party, which is labeled or
marked "Confidential" or with some other similar proprietary legend, shall be
deemed to be "Confidential Information", including, without limitation, any
trade secret, information, process, technique, algorithm, computer program
(source and object code), design, drawing, formula or test data relating to any
research project, work in process, future development, engineering,
manufacturing, marketing, servicing, financing or personnel matter relating to
the disclosing party, its present or future products, sales, suppliers, clients,
customers, employees, investors or business, whether in oral, written, graphic
or electronic form. If Confidential Information is disclosed in oral form, the
disclosing party shall identify it as confidential at the time of disclosure and
thereafter summarize it in writing and transmit it to the other party within
thirty (30) days of the oral disclosure.
2. EXCLUSIONS. The term "Confidential Information" does not include
information which: (a) is now, or hereafter becomes, through no act or failure
to act on the part of the receiving party, generally known or available; (b) is
independently known by the receiving party at the time of receiving such
information as evidenced by its written and dated records; (c) is hereafter
furnished to the receiving party by a third party, without a breach of this
Agreement and without restriction on disclosure; (d) can be proven to have been
independently developed by the receiving party, as evidenced by contemporaneous
written and dated records, without using any of the discloser's Confidential
Information or breaching this Agreement; or (e) is the subject of a written
permission to disclose provided by the disclosing party.
3. RESTRICTIONS/OBLIGATIONS. Each party shall for a period of three (3)
years from the date of disclosure of the Confidential Information: (i) only
disclose the Confidential Information to those employees and contractors with a
need to know; provided, the receiving party binds those employees and
contractors to terms at least as restrictive as those stated in this Agreement;
(ii) not disclose any Confidential Information to any third party, without the
prior written consent of the disclosing party; (iii) use such Confidential
Information only to the extent required to accomplish the purpose(s) of this
Agreement as set forth on Exhibit A hereto; (iv) not reproduce Confidential
Information in any form except as required to accomplish the purpose(s) of this
Agreement; (v) not reverse engineer, decompile, or disassemble any software
disclosed by the other party; (vi) not directly or indirectly export or
transmit any Confidential Information to any country to which such export or
transmission is restricted by regulation or statute; and (vii) promptly provide
the other party with notice of any actual or threatened breach of the terms of
this Agreement. However, each party may disclose Confidential Information in
accordance with a judicial or other governmental order provided that such party
shall give the other party written notice prior to such disclosure.
4. OWNERSHIP. All Confidential Information (including copies thereof)
shall remain the property of the disclosing party and shall be returned (or, at
the disclosing party's option, certified destroyed) upon written request or
upon the receiving party's need for it has expired, and in any event, upon
completion
<PAGE> 2
or termination of this Agreement. No rights or licenses to trademarks,
inventions, copyrights or patents are implied or granted under this Agreement.
5. TERM. This Agreement shall continue in full force and effect for so
long as the parties continue to exchange Confidential Information. This
Agreement may be terminated by either party at any time upon thirty (30) days
written notice to the other party. The termination of this Agreement shall not
relieve either party of the obligations imposed by Section 3 of this Agreement
with respect to Confidential Information disclosed prior to the effective date
of such termination. The provisions of Section 3 shall survive the termination
of this Agreement, as applicable.
6. EQUITABLE REMEDIES. The parties acknowledge that monetary damages may
not be a sufficient remedy for unauthorized use or disclosure of Confidential
Information and that each party shall be entitled, without waiving any other
rights or remedies, to seek such injunctive or equitable relief as may be
deemed proper by a court of competent jurisdiction.
7. MISCELLANEOUS. This Agreement constitutes the entire Agreement and
supersedes all prior or contemporaneous oral or written agreements regarding
the subject matter hereof. This Agreement will be governed by California law.
Any addition or modification to the Agreement must be in writing and signed by
both parties.
AGREED TO: AGREED TO:
NETMANAGE, INC. SIMWARE INC.
10725 North De Anza Boulevard Address: 2 Gurdwara Road
Cupertino, CA 95014 Ottawa, Ont., Canada K2E 1A2
By: /s/ ZVI ALON By: /s/ MICHAEL R. PECKHAM
------------------------- --------------------------------------
Zvi Alon Michael R. Peckham, CA
- ----------------------------- ------------------------------------------
(Print Name) (Print Name)
President & CEO Vice President, Finance and Administration
- ----------------------------- ------------------------------------------
(Title) (Title)
February 11, 1999
- ----------------------------- ------------------------------------------
(Date) (Date)
-2-
<PAGE> 3
EXHIBIT A
---------
PURPOSE FOR WHICH CONFIDENTIAL INFORMATION IS TO BE DISCLOSED (E.G., EVALUATION
OF A CERTAIN SERVICE, NEGOTIATION OF A CERTAIN AGREEMENT, ETC.):
1. NetManage products, technologies, financial information.
2. Simware products, technologies, financial information.
3
<PAGE> 1
Exhibit 5
SIMWARE INC.
2 GURDWARA ROAD
OTTAWA, ONTARIO, CANADA K2E 1A2
October 1, 1999
Dear Shareholder:
We are pleased to inform you that on September 26, 1999, Simware Inc. (the
"Company") entered into an Acquisition Agreement (the "Acquisition Agreement")
with NetManage, Inc. ("Parent") and its wholly-owned subsidiary, NetManage Bid
Co. ("Purchaser"), which provides for certain transactions which would lead to
the acquisition of the Company by Parent and Purchaser. Under the terms of the
Acquisition Agreement, Purchaser today commenced a tender offer (the "Offer") to
purchase all of the Company's outstanding common shares (the "Shares") for U.S.
$3.75 per Share in cash.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE ACQUISITION AGREEMENT
AND THE OFFER AND HAS DETERMINED THAT THE OFFER IS FAIR TO AND IN THE BEST
INTERESTS OF THE COMPANY'S SHAREHOLDERS. THE BOARD UNANIMOUSLY RECOMMENDS THAT
THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES IN THE
OFFER.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9
that is being filed today with the U.S. Securities and Exchange Commission,
including, among other things, the opinion of Alliant Partners, the Company's
financial advisor, to the effect that, as of September 24, 1999, the U.S. $3.75
per share in cash to be received by the Company's shareholders in the Offer is
fair from a financial point of view to the Company's shareholders. The full text
of the written opinion of Alliant Partners, dated September 24, 1999, which sets
forth the assumptions made, matters considered and limitations on the review
undertaken in connection with the opinion, is attached to the Schedule 14D-9 as
Annex A. All shareholders are urged to, and should, read the opinion of Alliant
Partners carefully in its entirety.
In addition to the attached Schedule 14D-9 relating to the Offer, also
enclosed is the Offer to Purchase, dated October 1, 1999, of Parent and
Purchaser, 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 provide instructions as to how to tender your
Shares. We urge you to read the enclosed materials carefully.
The enclosed materials meet the requirements of applicable Canadian and
U.S. securities laws. For Canadian shareholders, the information set forth in
the attached Schedule 14D-9 includes the information that would be required to
be included in a Directors' Circular.
On behalf of the Board of Directors and management of the Company, we thank
you for the support you have given to the Company.
Very truly yours,
/s/ WILLIAMS G. BREEN
William G. Breen
Chairman of the Board of Directors
/s/ GLEN M. BROWNLEE
Glen M. Brownlee
President and Chief Executive Officer
<PAGE> 1
Exhibit 11
[LOGO SIMWARE]
September 15, 1999
Mr. Zvi Alon
President and CEO
NetManage, Inc.
10725 North De Anza Boulevard
Cupertino, CA 95014-2030
Dear Mr. Alon:
We understand that, as a precondition to NetManage, Inc. ("NetManage")
proceeding with its negotiations concerning a possible acquisition of Simware
Inc. ("Simware"), NetManage requires that Simware enter into exclusive
negotiations with NetManage for a period of time. Simware hereby agrees to such
an exclusive period. Accordingly, Simware and its officers, directors, employees
or other agents will not, directly or indirectly, until the earlier of October
5, 1999 or when NetManage advises Simware in writing that it is terminating
acquisition negotiations, (i) take any action to solicit, initiate or encourage
any Takeover Proposal (as defined below) or (ii) subject to the terms of the
immediately following sentence, engage in negotiations with, or disclose any
nonpublic information relating to Simware to, or afford access to the
properties, books or records of Simware to, any person that has advised Simware
that it may be considering making, or that has made, a Takeover Proposal.
Notwithstanding the immediately preceding sentence, if an unsolicited Takeover
Proposal, or an unsolicited written expression of interest that can reasonably
be expected to lead to a Takeover Proposal, shall be received by the Board of
Directors of Simware, then, to the extent the Board of Directors of Simware
believes in good faith that such Takeover Proposal would, if consummated, result
in a transaction more favorable to Simware's shareholders from a financial point
of view than the transaction contemplated by NetManage (any such more favorable
Takeover Proposal being referred to in this Agreement as a "Superior Proposal")
and the Board of Directors of Simware determines in good faith after
consultation with outside legal counsel that it is necessary for the Board of
Directors of Simware to respond to such Takeover Proposal to comply with its
fiduciary duties to shareholders under applicable law, Simware and its officers,
directors, employees, financial advisors, attorneys, accountants and other
representatives retained by it may furnish information in connection therewith
and take such other actions as are consistent
<PAGE> 2
with the fiduciary obligations of Simware's Board of Directors, and such actions
shall not be considered a breach of this letter. Simware will promptly notify
NetManage after receipt of any Takeover Proposal or any notice that any person
is considering making a Takeover Proposal or any request for nonpublic
information relating to Simware or for access to the properties, books or
records of Simware by any person that has advised Simware that it may be
considering making, or that has made, a Takeover Proposal and will keep
NetManage fully informed of the status and details of any such Takeover Proposal
notice or request. For purposes of this Agreement, "Takeover Proposal" means any
offer or proposal for, or any indication of interest in, a merger or other
business combination involving Simware or the acquisition of any significant
equity interest in, or a significant portion of the assets of Simware other than
the transactions contemplated by this Agreement.
In the event that Simware terminates negotiations with NetManage as a
result of a Superior Proposal, Simware acknowledges that NetManage will suffer
immediate and irreparable damages which are difficult to quantify and therefore
agrees to be liable to NetManage in the amount of $1,000,000 which amount shall
be paid by Simware to NetManage within 2 days of the earlier of any of the
following: 1) a written demand by NetManage, 2) acceptance of any other proposal
by Simware, or 3) a request for additional consideration or new terms by Simware
to counter any other proposal. The $1,000,000 fee shall be due and owing to
NetManage regardless of any counter-proposal or other response by NetManage to
any offer.
This letter shall be governed by California Law and shall be superceded
by any definitive agreement entered into between the parties.
Sincerely,
/s/ GLEN M. BROWNLEE
--------------------
Glen M. Brownlee
President and CEO
Accepted and Agreed to:
NETMANAGE, INC.
By: /s/ ZVI ALON Date: 9/15/99
----------------------------- ----------------------
Zvi Alon
President and CEO
<PAGE> 1
Exhibit 12
This document is important and requires your immediate attention. If you are in
doubt as to how to respond to the Offer, you should consult with your investment
dealer, stockbroker, bank manager, lawyer, tax advisor or other professional
advisor.
SIMWARE INC.
DIRECTORS' CIRCULAR
RELATING TO AN OFFER TO PURCHASE
ALL OF THE OUTSTANDING COMMON SHARES
OF
SIMWARE INC.
AT
U.S. $3.75 CASH PER SHARE
BY
NETMANAGE BID CO.,
A WHOLLY-OWNED SUBSIDIARY OF
PRESTON DELAWARE ACQUISITION CORPORATION,
A WHOLLY-OWNED SUBSIDIARY OF
NETMANAGE, INC.
THE OFFER EXPIRES AT 12:00 MIDNIGHT (NEW YORK CITY TIME) ON OCTOBER 29, 1999,
UNLESS THE OFFER IS EXTENDED.
DIRECTORS' RECOMMENDATION
THE BOARD OF DIRECTORS OF SIMWARE INC.
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF
SIMWARE INC. ACCEPT THE OFFER.
The attached Schedule 14D-9 in the form required by and filed with the U.S.
Securities and Exchange Commission in connection with the Offer includes all of
the information required by applicable Canadian securities laws to be set out in
a Directors' Circular and is hereby incorporated by reference in its entirety.
October 1, 1999
