MICROSOFT CORPORATION
MOVIESUB, INC.
VISIO CORPORATION
AGREEMENT AND PLAN OF REORGANIZATION
Dated as of September 14, 1999
Table of Contents
Page
----
ARTICLE I THE MERGER........................................................................................... 1
1.1 Effective Time of the Merger......................................................................... 1
1.2 Closing.............................................................................................. 2
1.3 Effects of the Merger................................................................................ 2
1.4 Tax-Free Reorganization.............................................................................. 2
1.5 Accounting Treatment................................................................................. 2
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS, EXCHANGE OF CERTIFICATES.. 3
2.1 Effect on Capital Stock.............................................................................. 3
2.1.1 Capital Stock of Sub................................................................................. 3
2.1.2 Cancellation of Company Common Stock................................................................. 3
2.1.3 Conversion of Company Common Stock................................................................... 3
2.1.4 Adjustments of Exchange Ratio........................................................................ 3
2.1.5 Dissenter's Rights................................................................................... 3
2.1.6 Fractional Shares.................................................................................... 4
2.2 Exchange of Certificates............................................................................. 4
2.2.1 Exchange Agent....................................................................................... 4
2.2.2 Microsoft to Provide Common Stock and Cash........................................................... 4
2.2.3 Exchange Procedures.................................................................................. 4
2.2.4 No Further Ownership Rights in Company Common Stock.................................................. 5
2.2.5 Return to Microsoft.................................................................................. 5
2.3 Company Options...................................................................................... 6
2.3.1 Assumption by Microsoft.............................................................................. 6
2.3.2 Registration......................................................................................... 6
2.3.3 Notice; Reservation of Shares........................................................................ 7
2.4 Employee Stock Purchase Plans........................................................................ 7
ARTICLE III REPRESENTATIONS AND WARRANTIES....................................................................... 7
3.1 Representations and Warranties of Company............................................................ 7
3.1.1 Organization, Standing and Power..................................................................... 7
3.1.2 Capital Structure.................................................................................... 8
3.1.3 Authority............................................................................................ 9
3.1.4 SEC Documents and Financial Statements............................................................... 10
3.1.5 Information Supplied................................................................................. 10
3.1.6 No Defaults.......................................................................................... 10
3.1.7 Litigation........................................................................................... 11
3.1.8 No Material Adverse Change........................................................................... 11
3.1.9 Absence of Undisclosed Liabilities................................................................... 12
3.1.10 No Violations........................................................................................ 12
3.1.11 Certain Agreements................................................................................... 12
-i-
Page
----
3.1.12 Employee Benefit Plans............................................................................... 12
3.1.13 Major Contracts...................................................................................... 13
3.1.14 Taxes................................................................................................ 13
3.1.15 Interests of Officers................................................................................ 15
3.1.16 Technology and Intellectual Property Rights.......................................................... 15
3.1.17 Opinion of Financial Advisor......................................................................... 18
3.1.18 Vote Required........................................................................................ 18
3.1.19 Accounting Matters................................................................................... 18
3.1.20 Brokers and Finders.................................................................................. 18
3.1.21 Change of Control.................................................................................... 18
3.1.22 Leases in Effect..................................................................................... 18
3.1.23 Environmental........................................................................................ 19
3.1.24 Certain Payments..................................................................................... 19
3.1.25 Reliance............................................................................................. 19
3.2 Representations and Warranties of Microsoft and Sub.................................................. 19
3.2.1 Organization; Standing and Power..................................................................... 20
3.2.2 Capital Structure.................................................................................... 20
3.2.3 Authority............................................................................................ 20
3.2.4 SEC Documents and Financial Statements............................................................... 21
3.2.5 Information Supplied................................................................................. 21
3.2.6 No Defaults.......................................................................................... 22
3.2.7 Absence of Certain Changes or Events................................................................. 22
3.2.8 Absence of Undisclosed Liabilities................................................................... 22
3.2.9 No Vote Required..................................................................................... 22
3.2.10 Accounting Matters................................................................................... 22
3.2.11 Brokers and Finders.................................................................................. 23
3.2.12 Interim Operation of Sub............................................................................. 23
3.2.13 Reliance............................................................................................. 23
ARTICLE IV COVENANTS OF COMPANY.................................................................................. 23
4.1 Conduct of Business.................................................................................. 23
4.1.1 Ordinary Course...................................................................................... 23
4.1.2 Dividends: Changes in Stock......................................................................... 24
4.1.3 Issuance of Securities............................................................................... 24
4.1.4 Governing Documents.................................................................................. 25
4.1.5 Exclusivity; Acquisition Proposals................................................................... 25
4.1.6 No Acquisitions...................................................................................... 26
4.1.7 No Dispositions...................................................................................... 26
4.1.8 Indebtedness......................................................................................... 26
4.1.9 Plans................................................................................................ 27
4.1.10 Claims............................................................................................... 27
4.1.11 Agreement............................................................................................ 27
4.2 Breach of Representation and Warranties.............................................................. 27
4.3 Pooling.............................................................................................. 27
4.4 Consents............................................................................................. 27
ii
Page
----
4.5 Commercially Reasonable Best Efforts................................................................. 27
4.6 Information for Prospectus/Proxy Statement........................................................... 28
4.7 Company Plans........................................................................................ 28
4.8 Employee Transition Committee........................................................................ 28
4.9 Shareholder Approval................................................................................. 28
4.10 Tax Returns.......................................................................................... 28
4.11 Representations of Shareholders...................................................................... 29
4.12 Employee Benefits Matters............................................................................ 29
4.12.1 Service Credit....................................................................................... 29
4.12.2 Section 16 Approval.................................................................................. 29
4.12.3 Retention Plans...................................................................................... 30
ARTICLE V COVENANTS OF MICROSOFT................................................................................. 30
5.1 Breach of Representations and Warranties............................................................. 30
5.2 Conduct of Business by Microsoft Pending the Merger.................................................. 30
5.3 Consents............................................................................................. 31
5.4 Commercially Reasonable Best Efforts................................................................. 31
5.5 Agreements of Microsoft Affiliates................................................................... 31
5.6 Representations of Shareholders...................................................................... 31
5.7 Tax Free Reorganization.............................................................................. 31
5.8 Nasdaq Listing....................................................................................... 32
5.9 Employee Transition Committee........................................................................ 32
5.10 Retention Plan....................................................................................... 32
ARTICLE VI ADDITIONAL AGREEMENTS................................................................................. 32
6.1 Preparation of S-4................................................................................... 32
6.2 Letter of Company's Accountants...................................................................... 33
6.3 Letter of Microsoft's Accountants.................................................................... 33
6.4 Access to Information................................................................................ 33
6.5 Legal Conditions to the Merger....................................................................... 34
6.6 Affiliates........................................................................................... 34
6.7 HSR Act Filings...................................................................................... 34
6.7.1 Filings and Cooperation.............................................................................. 34
6.7.2 Objections........................................................................................... 35
6.8 Officers and Directors............................................................................... 35
6.9 Expenses............................................................................................. 35
6.10 Stock Option Agreement............................................................................... 36
6.11 Additional Agreements................................................................................ 36
6.12 Public Announcements................................................................................. 36
6.13 State Takeover Laws.................................................................................. 36
ARTICLE VII CONDITIONS PRECEDENT................................................................................. 36
7.1 Conditions to Each Party's Obligation to Effect the Merger........................................... 36
7.1.1 Shareholder Approval................................................................................. 36
7.1.2 Consents............................................................................................. 36
-iii-
Page
----
7.1.3 S-4.................................................................................................. 37
7.1.4 No Restraints........................................................................................ 37
7.1.5 Tax-Free Reorganization.............................................................................. 37
7.1.6 No Burdensome Condition.............................................................................. 37
7.2 Conditions of Obligations of Microsoft and Sub....................................................... 37
7.2.1 Representations and Warranties of Company............................................................ 37
7.2.2 Performance of Obligations of Company................................................................ 37
7.2.3 Affiliates........................................................................................... 38
7.2.4 Pooling of Interests; Comfort Letters................................................................ 38
7.2.5 Opinion of Company's Counsel......................................................................... 38
7.3 Conditions of Obligation of Company.................................................................. 38
7.3.1 Representations and Warranties of Microsoft and Sub.................................................. 38
7.3.2 Performance of Obligations of Microsoft and Sub...................................................... 38
7.3.3 Opinion of Microsoft Counsel......................................................................... 38
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER................................................................... 39
8.1 Termination.......................................................................................... 39
8.2 Effect of Termination................................................................................ 40
8.3 Break-up Fee......................................................................................... 40
8.4 Amendment............................................................................................ 40
8.5 Extension, Waiver.................................................................................... 40
ARTICLE IX GENERAL PROVISIONS.................................................................................... 41
9.1 Nonsurvival of Representations, Warranties and Agreements............................................ 41
9.2 Notices.............................................................................................. 41
9.3 Interpretation....................................................................................... 42
9.4 Counterparts......................................................................................... 42
9.5 Miscellaneous........................................................................................ 42
9.6 No Joint Venture..................................................................................... 43
9.7 Governing Law........................................................................................ 43
9.8 Specific Performance................................................................................. 43
-iv-
INDEX OF DEFINED TERMS
Term Page Term Page
Acquisition Transaction................. 25 Company's Principal Shareholders........ 29
affiliate............................... 5 Competitive Business.................... 30
Affiliate Letters....................... 34 Confidentiality Agreement............... 33
Affiliates.............................. 34 Consents................................ 9
Antitrust Laws.......................... 35 Effective Time.......................... 1
blue sky................................ 9 ERISA................................... 12
Business Condition...................... 7 Exchange Act............................ 9
Certificate............................. 3 Exchange Agent.......................... 4
Closing................................. 2 Exchange Ratio.......................... 3
Closing Date............................ 2 GAAP.................................... 10
Code.................................... 2 Governmental Entity..................... 9
Company................................. 1 Hazardous Material...................... 19
Company Break-up Fee.................... 40 HSR Act................................. 9
Company Business........................ 8 include................................. 42
Company Comfort Letter.................. 33 includes................................ 42
Company Common Stock.................... 3 including............................... 42
Company Disclosure Schedule............. 7 Lease................................... 18
Company Employee........................ 29 Leases.................................. 18
Company Financial Statements............ 10 Liabilities............................. 12
Company Incentive and Stock Option Plans 8 Material Adverse Effect................. 8
Company Options......................... 8 Merger.................................. 1
Company Preferred Stock................. 8 Merger Consideration.................... 3
Company Required Statutory Approvals.... 9 Merger Documents........................ 1
Company Section 16 Insider.............. 29 Microsoft............................... 1
Company Shareholders Meeting............ 28 Microsoft Average Closing Price......... 4
Company Voting Debt..................... 8 Microsoft Comfort Letter................ 33
Microsoft Common Stock.................. 3
-v-
Term Page Term Page
Microsoft Disclosure Schedule........... 20 Return Periods.......................... 14
Microsoft Financial Statements.......... 21 Returns................................. 14
Microsoft Required Statutory Approvals.. 21 S-4..................................... 10
Microsoft SEC Documents................. 21 SEC..................................... 9
multiemployer plan...................... 13 Securities Act.......................... 5
Non-U.S. Plans.......................... 12 single-employer plan.................... 13
Order................................... 35 Stock Option Agreement.................. 36
Plan.................................... 12 Sub..................................... 1
plan of reorganization.................. 2 Surviving Corporation................... 2
prohibited transaction.................. 12 tax..................................... 13
Proxy Statement......................... 10 taxes................................... 13
Proxy Statement/Prospectus.............. 10 Transition Committee.................... 28
Real Property........................... 19 U.S. Plans.............................. 12
Required Statutory Approvals............ 21 Violation............................... 9
Retention Plan.......................... 30 Voting Agreements....................... 28
WBCA.................................... 1
-vi-
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of September 14, 1999, among
Microsoft Corporation, a Washington corporation ("Microsoft"), MovieSub, Inc., a
Washington corporation and a wholly-owned subsidiary of Microsoft ("Sub"), and
Visio Corporation, a Washington corporation ("Company").
WITNESSETH
WHEREAS, upon the terms and subject to the conditions of this Agreement and
in accordance with the Washington Business Corporation Act (the "WBCA"),
Microsoft and Company will enter into a business combination transaction
pursuant to which Sub will merge with and into Company (the "Merger");
WHEREAS, the Board of Directors of Company (i) has determined that the
Merger is advisable and fair to, and in the best interests of, Company and its
shareholders and has adopted this Agreement, the Merger and the other
transactions contemplated by this Agreement and (ii) has recommended the
approval of this Agreement by the shareholders of Company;
WHEREAS, the respective Boards of Directors of Microsoft and Sub have
determined that the Merger is advisable and fair to, and in the best interests
of, Microsoft and Sub;
WHEREAS, for United States federal income tax purposes, the Merger is
intended to qualify as a reorganization within the meaning of Section 368 of the
United States Internal Revenue Code of 1986, as amended; and
WHEREAS, the parties intend that the Merger shall be accounted for as a
"pooling of interests" for financial reporting purposes.
INTENDING TO BE LEGALLY BOUND, and in consideration of the premises and the
mutual representations, warranties, covenants and agreements contained herein,
Microsoft, Sub and Company hereby agree as follows:
ARTICLE I
THE MERGER
1.1 Effective Time of the Merger. Subject to the provisions of this
Agreement, Sub will be merged with and into Company. An Agreement and Plan of
Merger, and articles, certificates or other appropriate filing documents (the
"Merger Documents") shall be duly prepared, executed and acknowledged by the
parties and thereafter delivered to the Secretary of State of Washington, for
filing, as provided in the WBCA as soon as practicable on or after the Closing
Date (as defined in Section 1.2). The Merger shall become effective upon the
filing of the Merger Documents with the Secretary of State of Washington or at
such time thereafter as is provided in the Merger Documents (the "Effective
Time"). Company acknowledges and agrees
that Microsoft will have no obligation to make any payment or issue any
securities pursuant to this Agreement until the Merger has been confirmed in
writing by the Secretary of State of Washington.
1.2 Closing. The closing of the Merger (the "Closing") will take place
as soon as practicable but no later than the third business day after
satisfaction or waiver of the last to be fulfilled of the conditions set forth
in Article VII that by their terms are not to occur at the Closing (the "Closing
Date"), at the offices of Preston Gates & Ellis LLP, Seattle, Washington, unless
another date or place is agreed to in writing by the parties hereto.
1.3 Effects of the Merger. At the Effective Time, (i) the separate
existence of Sub shall cease and Sub shall be merged with and into Company
(Company after the Merger is sometimes referred to herein as the "Surviving
Corporation"), (ii) the Articles of Incorporation of Company shall be the
Articles of Incorporation of the Surviving Corporation, except that such
Articles of Incorporation shall be amended to provide that the authorized
capital stock of the Surviving Corporation shall be 1,000 shares of Common
Stock, $.01 par value, until duly amended, (iii) the Bylaws of Sub shall be the
Bylaws of the Surviving Corporation, (iv) the directors of the Surviving
Corporation shall be the directors of Sub immediately prior to the Effective
Time, (v) the officers of the Surviving Corporation shall be the officers of Sub
immediately prior to the Effective Time, and (vi) the Merger shall, from and
after the Effective Time, have all the effects provided by applicable law.
1.4 Tax-Free Reorganization. The Merger is intended to be a
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"), and this Agreement is intended to be a "plan of
reorganization" within the meaning of the regulations promulgated under Section
368 of the Code. Each party hereto and its affiliates agree to treat the Merger
as a reorganization within the meaning of Section 368 of the Code, and this
Agreement is intended to be a "plan of reorganization" within the meaning of the
regulations promulgated under Section 368 of the Code, unless and until there is
a determination, within the meaning of Section 1313 of the Code that such
conclusions are wholly or partially incorrect. Microsoft agrees to act in good
faith consistent with the intent of the parties expressed in this provision.
1.5 Accounting Treatment. The business combination to be effected by the
Merger is intended to be treated for accounting purposes as a "pooling of
interests." However, Microsoft has reserved the right under this Agreement to
cause the Merger to be treated for accounting purposes as a "purchase."
-2-
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS, EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action (except as provided in Section 4.9) on the part of
the holder of any shares of Company common stock, par value $.001 per share
("Company Common Stock"):
2.1.1 Capital Stock of Sub. All issued and outstanding shares of
capital stock of Sub shall continue to be issued and shall be converted into
1,000 shares of Surviving Corporation Common Stock with the stock certificate of
Sub evidencing ownership of such shares of capital stock of the Surviving
Corporation.
2.1.2 Cancellation of Company Common Stock. All shares of Company
Common Stock that are owned directly or indirectly by Company or Microsoft or by
any Subsidiary (as defined below) of Company or Microsoft immediately prior to
the Merger shall be canceled and no stock of Microsoft or other consideration
shall be delivered in exchange therefor. In this Agreement, "Subsidiary" or
"Subsidiaries" shall mean an entity of which an amount of the voting securities,
or other voting ownership or voting partnership interests of which is sufficient
to elect a majority of its board of directors or other governing body (or, if
there are no such interests, 50% or more of the equity interests of which) is
owned directly or indirectly by Company. All Subsidiaries of Company are
identified in the Company Disclosure Schedule (as defined in Section 3.1). All
references to Company, unless otherwise indicated shall include each of
Company's Subsidiaries.
2.1.3 Conversion of Company Common Stock. Each issued and
outstanding share of Company Common Stock (other than shares to be canceled
pursuant to Section 2.1.2 and dissenting shares as described in Section 2.1.5)
shall be converted, without any action on the part of the holders thereof, into
the right to receive .45 shares (the "Exchange Ratio") of common stock, par
value $0.0000125 per share, of Microsoft (the "Microsoft Common Stock") (the
"Merger Consideration"). All such shares of Company Common Stock shall no longer
be outstanding and shall cease to exist, and each certificate (a "Certificate")
previously representing any such shares shall represent only the right to
receive (i) whole shares of Microsoft Common Stock and (ii) cash in lieu of
fractional shares, in each case as provided by this Section 2.1.
2.1.4 Adjustments of Exchange Ratio. If, between the date of this
agreement and the Effective Time, the outstanding shares of Microsoft Common
Stock or Company Common Stock shall have been changed into a different number of
shares or a different class or series or otherwise changed by reason of any
reclassification, recapitalization, split-up, stock dividend, stock combination,
exchange of shares or readjustment or similar transaction, the Exchange Ratio
shall be correspondingly adjusted.
2.1.5 Dissenters' Rights. Notwithstanding any provision of this
Agreement to the contrary, each outstanding share of Company Common Stock, the
holder of which has
-3-
demanded and perfected such holder's right to dissent from the Merger and to be
paid the fair value of such shares in accordance with Sections 23B.13.010 et
seq. of the WBCA and, as of the Effective Time, has not effectively withdrawn or
lost such dissenters' rights, shall not be converted into or represent a right
to receive the Merger Consideration, but the holder thereof shall be entitled
only to such rights as are granted by the WBCA. Company shall give Microsoft (i)
prompt written notice of any notice of intent to demand fair value for any
shares of Company Common Stock, withdrawals of such notices, and any other
instruments served pursuant to the WBCA or any other provisions of Washington
law and received by the Company, and (ii) the opportunity to conduct jointly all
negotiations and proceedings with respect to demands for fair value for shares
of Company Common Stock under the WBCA. Company shall not, except with the prior
written consent of Microsoft, voluntarily make any payment with respect to any
demands for fair value for shares of Company Common Stock or offer to settle or
settle any such demands.
2.1.6 Fractional Shares. No fractional shares of Microsoft Common
Stock shall be issued in the Merger and such fractional interests shall not
entitle the owner thereof to vote. In lieu of any fractional share, each holder
of shares of Company Common Stock who would otherwise be entitled to receive a
fraction of a share of Microsoft Common Stock will be entitled to receive from
Microsoft an amount of cash, without interest, equal to the Microsoft Average
Closing Price (as defined below) multiplied by the fraction of a share of
Microsoft Common Stock to which such holder would otherwise be entitled. The
"Microsoft Average Closing Price" shall mean the average closing price of the
Microsoft Common Stock as publicly reported for the NASDAQ National Market
System as of 4:00 p.m. Eastern Time over the last 20 trading days ending on the
fifth trading day prior to the Closing Date.
2.2 Exchange of Certificates.
2.2.1 Exchange Agent. Prior to the Closing Date, Microsoft shall
appoint ChaseMellon Shareholder Services, LLC, or other bank or trust company
reasonably satisfactory to Company, to act as exchange agent (the "Exchange
Agent") in the Merger.
2.2.2 Microsoft to Provide Common Stock and Cash. As promptly as
practicable after the Effective Time, Microsoft shall make available to the
Exchange Agent the certificates representing whole shares of Microsoft Common
Stock issued pursuant to Section 2.1 in exchange for outstanding shares of
Company Common Stock and, from time to time, cash for payment in lieu of
fractional shares.
2.2.3 Exchange Procedures. As soon as practicable after the
Effective Time, Microsoft shall cause the Exchange Agent to mail to each holder
of record as of the Effective Time of a Certificate or Certificates, (i) a
letter of transmittal (which shall be in customary form and specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing Microsoft Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with a duly
executed letter of transmittal and such other documents as the Exchange
-4-
Agent shall require, the holder of such Certificate shall be entitled to receive
in exchange therefor the number of whole shares of Microsoft Common Stock to
which the holder of Company Common Stock is entitled pursuant to Section 2.1
hereof plus cash in lieu of fractional shares as provided in Section 2.1.6. The
Certificate so surrendered shall forthwith be canceled. Notwithstanding any
other provision of this Agreement, until holders of Certificates have
surrendered them for exchange as provided herein, (i) no dividends or other
distributions shall be paid with respect to any shares represented by such
Certificates and no payment for fractional shares shall be made, and (ii)
without regard to when such Certificates are surrendered for exchange as
provided herein, no interest shall be paid on any dividends or other
distributions or any payment for fractional shares. Upon surrender of a
Certificate, there shall be paid to the holder of such Certificate the amount of
any dividends or other distributions which theretofore became payable, but which
were not paid by reason of the foregoing, with respect to the number of whole
shares of Microsoft Common Stock represented by the certificate or certificates
issued upon such surrender. If any certificate for Microsoft Common Stock is to
be issued in a name other than in which the Certificate surrendered in exchange
therefore is registered, it shall be a condition of such exchange that the
person requesting such exchange pay any transfer or other taxes required by
reason of the issuance of certificates for such shares of Microsoft Common Stock
in a name other than that of the registered holder of the Certificate
surrendered, or establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. In connection with its undertakings
pursuant to this Section 2.2.3, the Exchange Agent shall be entitled to withhold
any income taxes as required by the Code.
2.2.4 No Further Ownership Rights in Company Common Stock. All
Microsoft Common Stock delivered upon the surrender for exchange of shares of
Company Common Stock in accordance with the terms hereof shall be deemed to have
been delivered in full satisfaction of all rights pertaining to such shares of
Company Common Stock. After the Effective Time there shall be no transfers on
the stock transfer books of Company of shares of Company Common Stock. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article II. Certificates surrendered for exchange by any person
constituting an "affiliate" of Company for purposes of Rule 145(c) under the
Securities Act of 1933, as amended (the "Securities Act"), or for purposes of
preserving pooling of interests accounting treatment for the Merger shall not be
exchanged until Microsoft receives a written agreement from such persons as
provided by Section 6.6.
2.2.5 Return to Microsoft. Any Microsoft Common Stock and any cash
in lieu of fractional share interests made available to the Exchange Agent and
not exchanged for Certificates within one year after the Effective Time and any
dividends and distributions held by the Exchange Agent for payment or delivery
to the holders of unsurrendered Certificates representing Company Common Stock
and unclaimed at the end of such one year period shall be redelivered or repaid
by the Exchange Agent to Microsoft, after which time any holder of Certificates
who has not theretofore delivered or surrendered such Certificates to the
Exchange Agent, subject to applicable law, shall look as a general creditor only
to Microsoft for payment of the Microsoft Common Stock, cash in lieu of
fractional shares, and any such dividends or distributions. Notwithstanding any
provision of this Agreement, none of Microsoft, the
-5-
Exchange Agent, the Surviving Corporation or any other party hereto shall be
liable to any holder of Company Common Stock for any Microsoft Common Stock,
cash in lieu of fractional shares or dividends or distributions delivered to a
public official pursuant to applicable abandoned property, escheat or similar
law.
2.3 Company Options.
2.3.1 Assumption by Microsoft. At the Effective Time, each of the
then outstanding Company Options (as defined in Section 3.1.2) shall, by virtue
of the Merger and at the Effective Time, and without any further action on the
part of any holder thereof, be assumed by Microsoft and converted into an option
to purchase that number of shares of Microsoft Common Stock determined by
multiplying the number of shares of Company Common Stock subject to such Company
Option at the Effective Time by the Exchange Ratio, at an exercise price per
share of Microsoft Common Stock equal to the exercise price per share of such
Company Option immediately prior to the Effective Time divided by the Exchange
Ratio. If the foregoing calculation results in an assumed Company Option being
exercisable for a fraction of a share of Microsoft Common Stock, then the number
of shares of Microsoft Common Stock subject to such option shall be rounded to
the nearest whole number of shares. Continuous employment with Company or any
Company Subsidiaries shall be credited to the optionee for purposes of
determining the vesting of the number of shares of Microsoft Common Stock
subject to exercise under the optionee's converted Company Option after the
Effective Time. Except as provided in this Section 2.3.1, each Company Option
assumed by Microsoft hereunder shall be exercisable upon, and otherwise be
subject to, the same terms and conditions as under the applicable Company
Incentive and Stock Option Plan (as defined in Section 3.1.2), the applicable
option agreement issued thereunder and any other plan or agreement pertaining to
the exercisability or any other term of such Company Option. Notwithstanding
anything in this Section 2.3.1 to the contrary, the Company Options shall be
assumed by Microsoft in such a manner that Microsoft (i) is a corporation
"assuming a stock option in a transaction to which Section 424(a) applies"
within the meaning of Section 424 of the Code and the regulations thereunder or
(ii) to the extent that Section 424 of the Code does not apply to any such
Company Options, would be such a corporation were Section 424 of the Code
applicable to such Company Options.
2.3.2 Registration. Microsoft shall cause the shares of Microsoft
Common Stock issuable upon exercise of the assumed Company Options to be
registered, or to be issued pursuant to a then effective registration statement,
as soon as practicable after the Effective Time, but in no event later than 10
days after the Effective Time, on Form S-8 promulgated by the SEC or, in the
event that Form S-8 is not available under the applicable rules and regulations
of the SEC for shares of Microsoft Common Stock, on Form S-3 promulgated by the
SEC for the portion of such shares not registrable on Form S-8, and shall use
its commercially reasonable best efforts to maintain the effectiveness of such
registration statement or registration statements for so long as such assumed
Company Options remain outstanding. With respect to those individuals who
subsequent to the Merger will be subject to the reporting requirements under
Section 16(a) of the Exchange Act (as defined in Section 4.12.2), Microsoft
shall administer Company Options assumed pursuant to this Section 2.3 in a
manner that complies with Rule 16b-3
-6-
promulgated by the SEC under the Exchange Act, but shall have no responsibility
for such compliance by Company or its predecessors.
2.3.3 Notice; Reservation of Shares. As soon as practicable after
the Effective Time, Microsoft shall deliver to each holder of an assumed Company
Option an appropriate notice setting forth such holder's rights pursuant
thereto. Microsoft shall comply with the terms of all such Company Options and
shall take all corporate action necessary to reserve for issuance a sufficient
number of shares of Microsoft Common Stock for delivery upon exercise of the
assumed Company Options.
2.4 Employee Stock Purchase Plan. Company shall cause its 1995 Employee
Stock Purchase Plan to be terminated as of the day immediately prior to the
Effective Time, and all funds which have been withheld from the wages of
Company's employees for the purchase of Company Common Stock as of such time
shall be applied to a final purchase thereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Company. Except as disclosed in the
Company SEC Documents (as defined below) or in a Disclosure Schedule which
identifies by section number the section and subsection to which such disclosure
relates (provided, however, that Company shall be deemed to have adequately
disclosed with respect to any section or subsection any matters that are clearly
described elsewhere in such document if a reader(s) who has not been actively
involved in Company but is generally familiar with the software development
industry can understand the applicability of such disclosure to such non-
referenced sections or subsections) and is delivered by Company to Microsoft
concurrently with the execution of this Agreement (the "Company Disclosure
Schedule"), whether or not the Company Disclosure Schedule is referred to in a
specific section or subsection and except as specifically provided for in this
Agreement or any agreement attached as an Exhibit hereto, Company represents and
warrants to Microsoft and Sub as follows:
3.1.1 Organization, Standing and Power. Each of Company and its
Subsidiaries is an entity duly organized, validly existing and in good standing,
as applicable under the laws of its jurisdiction of incorporation or
organization has all requisite power and authority to own, lease and operate its
properties and to carry on its businesses as now being conducted, and is duly
qualified and in good standing to do business in each jurisdiction in which it
owns, leases or operates its properties or conducts its businesses so as to
require such qualification, except where the failure to be so organized,
existing, qualified or in good standing or to have such corporate or other
applicable power and authority have not had, and would not have, a Material
Adverse Effect (as hereinafter defined) on the Business Condition (as
hereinafter defined) of Company. As used in this Agreement, "Business
Condition" with respect to any entity shall mean the financial condition and
results of operations (without giving effect to the consequences of the
transactions contemplated by this Agreement) of such entity and its Subsidiaries
taken as a whole. For the purposes of this Agreement, the term "Material
Adverse
-7-
Effect" means material adverse effect other than resulting from (i) changes
attributable to conditions affecting the Company Business generally or the
software industry generally, (ii) changes in general economic, political or
regulatory conditions, (iii) changes attributable to the announcement or
pendency of the Merger, or the other transactions contemplated hereby, or (iv)
with respect to Company, litigation arising from allegations of a breach of
fiduciary duty relating to this Agreement. Company has made available to
Microsoft complete and correct copies of the Certificate or Articles of
Incorporation, Bylaws, and minutes of each meeting of the board (and each
committee thereof) of directors of Company and each of its Subsidiaries, in each
case, as amended to the date hereof. "Company Business" means the business
generally related to the development and sale of software for business
diagramming, technical drawing and information technology design and
documentation together with all other Company assets dedicated to such business.
3.1.2 Capital Structure. The authorized capital stock of Company
consists of 200,000,000 shares of Company Common Stock of which 30,213,572 were
outstanding as of September 10, 1999 and 40,000,000 shares of Preferred Stock
(the "Company Preferred Stock"), of which none are outstanding as of the date
hereof and none of which are held by Subsidiaries of Company. In addition, as
of September 10, 1999 there were 4,494,597 shares of Company Common Stock
issuable upon the exercise of outstanding stock options ("Company Options")
under the 1995 Nonemployee Director Stock Option Plan, the 1995 Long-Term
Incentive Compensation Plan, the 1990 Stock Option Plan and any other stock
option plans and other options (together with the 1995 Employee Stock Purchase
Plan, the "Company Incentive and Stock Option Plans"). All outstanding shares
of Company Common Stock are, and any shares of Company Common Stock issued upon
exercise of any Company Options will be, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
validly issued, fully paid, nonassessable and not subject to any preemptive
rights, or to any agreement to which Company or any of its Subsidiaries is a
party or by which Company or any of its Subsidiaries may be bound other than
agreements pursuant to which Company has the right to repurchase shares of
Company Common Stock. Except for the shares of Common Stock issuable upon the
exercise of Company Options, there are not any options, warrants, calls,
conversion rights, commitments, agreements, contracts, understandings,
restrictions, arrangements or rights of any character to which Company or any
Subsidiary of Company is a party or by which any of them may be bound obligating
Company or any Subsidiary of Company to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of the capital stock of Company or
of any Subsidiary of Company or obligating Company or any Subsidiary of Company
to grant, extend or enter into any such option, warrant, call, conversion right,
commitment, agreement, contract, understanding, restriction, arrangement or
right. Company does not have outstanding any bonds, debentures, notes or other
indebtedness the holders of which have the right to vote (or convertible or
exercisable into securities having the right to vote) with holders of Company
Common Stock on any matter ("Company Voting Debt"). Company is the owner,
directly or indirectly, of all outstanding shares of capital stock of each of
its Subsidiaries free and clear of all liens, pledges, security interests,
claims or other encumbrances and all such shares are duly authorized, validly
issued, fully paid and nonassessable.
-8-
3.1.3 Authority. Company has all requisite corporate power and
authority to enter into this Agreement and subject, in the case of this
Agreement, to approval of this Agreement by the shareholders of Company and the
Company Required Statutory Approvals (as defined below), to consummate the
transactions contemplated hereby. The execution and delivery by Company of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Company,
including the unanimous approval of the Board of Directors of Company, subject
only to approval of this Agreement by the shareholders of Company. This
Agreement has been duly executed and delivered by Company and assuming the due
authorization, execution and delivery by Microsoft and Sub, constitutes a valid
and binding obligation of Company enforceable in accordance with its terms,
except that such enforceability may be subject to (i) bankruptcy, insolvency,
reorganization or other similar laws relating to enforcement of creditors'
rights generally and (ii) general equitable principles. Subject to the
satisfaction of the conditions set forth in Sections 7.1 and 7.3, the execution
and delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby 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 the creation of a lien, pledge, security
interest, charge or other encumbrance on assets (any such conflict, violation,
default, right, loss or creation being referred to herein as a "Violation")
pursuant to (i) any provision of the Articles of Incorporation or Bylaws of
Company or the comparable governing instruments of any Subsidiary or (ii) any
loan or credit agreement, note, bond, mortgage, indenture, contract, lease, or
other agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Company
or any Subsidiary of Company or their respective properties or assets, other
than, in the case of (ii), any such Violation which individually or in the
aggregate would not have a Material Adverse Effect on the Business Condition of
Company. No consent, approval, order or authorization of or registration,
declaration or filing with or exemption by (collectively "Consents"), any court,
administrative agency or commission or other governmental authority or
instrumentality, whether domestic or foreign (each a "Governmental Entity"), is
required by or with respect to Company in connection with the execution and
delivery of this Agreement or the consummation by Company of the transactions
contemplated hereby, except for Consents, if any, relating to (i) the filing of
a premerger notification report and all other required documents by Microsoft
and Company, and the expiration of all applicable waiting periods, under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) any filings with the Securities and Exchange Commission (the "SEC")
including such reports and information as may be required under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Securities Act and
the rules and regulations promulgated by the SEC under the Exchange Act or the
Securities Act and the declaration of the effectiveness of the S-4 (as defined
in Section 3.1.5) by the SEC, (iii) such filings, authorizations, orders and
approvals as may be required under foreign laws, state securities laws and the
NASD Bylaws or "blue sky" laws, and (iv) the filing of the Merger Documents with
the Secretary of State of the State Washington (the filings and approvals
referred to in clauses (i) through (iii) are collectively referred to as the
"Company Required Statutory Approvals") and except for such other Consents which
if not obtained or made would not have a Material Adverse Effect on the Business
Condition of Company.
-9-
3.1.4 SEC Documents and Financial Statements. Company has filed all
forms, reports and documents required to be filed by it with the SEC since
November 30, 1995 through the date of this Agreement (collectively, the "Company
SEC Documents"). As of their respective filing dates, the Company SEC Documents
complied in all material respects with the requirements of the Exchange Act or
the Securities Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Company SEC Documents, and none of the Company SEC
Documents 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. As of their respective filing dates, the financial statements
of Company included in the Company SEC Documents (the "Company Financial
Statements") complied as to form in all material respects with all applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto and were prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied (except as may be indicated
in the notes thereto) and fairly presented, in all material respects, the
consolidated financial position of Company and its Subsidiaries as at the dates
thereof and the results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal, recurring audit
adjustments not material in scope or amount). There has been no change in
Company's accounting policies or the methods of making accounting estimates or
changes in estimates that are material to Company Financial Statements, except
as described in the notes thereto.
3.1.5 Information Supplied. None of the information supplied or to
be supplied by Company or its Subsidiaries, auditors, attorneys, financial
advisors or other consultants or advisors for inclusion in (i) the registration
statement on Form S-4, and any amendment thereto, to be filed under the
Securities Act with the SEC by Microsoft in connection with the issuance of the
Microsoft Common Stock in or as a result of the Merger (the "S-4"-), or (ii) the
proxy statement and any amendment or supplement thereto to be distributed in
connection with Company's meetings of shareholders to vote upon this Agreement
and the transactions contemplated hereby (the "Proxy Statement" and, together
with the prospectus included in the S-4, the "Proxy Statement/Prospectus") will,
in the case of the Proxy Statement and any amendment or supplement thereto, at
the time of the mailing of the Proxy Statement and any amendment or supplement
thereto, and at the time of the meeting of shareholders of Company to vote upon
this Agreement and the transactions contemplated hereby, or, in the case of the
S-4, as amended or supplemented, at the time it becomes effective and at the
time of any post-effective amendment thereto and at the time of the meeting of
shareholders of Company, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading or necessary to correct any statement in any earlier filing with
the SEC of such Proxy Statement/Prospectus or any amendment or supplement
thereto or any earlier communication (including the Proxy Statement/Prospectus)
to shareholders of Company with respect to the transactions contemplated by this
Agreement.
3.1.6 No Defaults. Neither Company nor any Subsidiary of Company is,
or has received notice that it would be with the passage of time, in default or
violation of any term,
-10-
condition or provision of (i) the Articles of Incorporation or Bylaws of Company
or any comparable governing instrument of any Subsidiary of Company, (ii) any
judgment, decree or order applicable to Company or any Subsidiary of Company or
(iii) any loan or credit agreement, note, bond, mortgage, indenture, contract,
agreement, lease, license or other instrument to which Company or any Subsidiary
of Company is now a party or by which it or any of its properties or assets may
be bound, except for defaults and violations which, individually or in the
aggregate, would not have a Material Adverse Effect on the Business Condition of
Company.
3.1.7 Litigation. There is no claim, action, suit or proceeding
pending or, to the knowledge of Company, threatened, which would, if adversely
determined, individually or in the aggregate, have a Material Adverse Effect on
the Business Condition of Company, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Company or any of its Subsidiaries having, or which, insofar as
reasonably can be foreseen, in the future would have, any Material Adverse
Effect on the Business Condition of Company. There is no investigation pending
or, to the knowledge of Company, threatened against Company or any Subsidiary of
Company, before any foreign, federal, state, municipal or other governmental
department, commission, board, bureau, agency, instrumentality or other
Government Entity which would have a Material Adverse Effect on the Business
Condition of Company. To the Company's knowledge, the Company Disclosure
Schedule sets forth, with respect to any pending action, suit, proceeding, or
investigation to which Company or any of its Subsidiaries is a party (other than
(i) cases involving the collection of monies owed to Company or in the ordinary
course of business or (ii) trademark infringement or anti-piracy actions in the
ordinary course of business in which Company is the plaintiff), the forum, the
parties thereto, the subject matter thereof, and the amount of damages claimed.
3.1.8 No Material Adverse Change. Since October 3, 1998 through the
date hereof, Company and its Subsidiaries have conducted their respective
businesses in the ordinary course and there has not been: (i) any Material
Adverse Effect on the Business Condition of Company or any development or
combination of developments of which management of Company has knowledge which
is reasonably likely to result in such an effect; (ii) any damage, destruction
or loss, whether or not covered by insurance, having a Material Adverse Effect
on the Business Condition of Company; (iii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the capital stock of Company; (iv) any material
increase or change in the compensation or benefits payable or to become payable
by Company or any Subsidiary to their employees in the aggregate, except in the
ordinary course of business consistent with past practice; (v) any acquisition
or sale of a material amount of property of Company or any of its Subsidiaries,
except in the ordinary course of business and which would not have a Material
Adverse Effect on the Business Condition of Company; (vi) any material increase
or modification in any bonus, pension, insurance or other employee benefit plan,
payment or arrangement made to, for, or with its employees in the aggregate; or
(vii) the granting of stock options, restricted stock awards, stock bonuses,
stock appreciation rights and similar equity based awards other than consistent
with Company's past practices and which will not result in a compensation charge
against earnings or the loss of deductions for federal or state income tax
purposes.
-11-
3.1.9 Absence of Undisclosed Liabilities. Company and its
Subsidiaries, taken as a whole, have no liabilities or obligations (whether
absolute, accrued or contingent) except (i) liabilities, obligations or
contingencies ("Liabilities") that are accrued or reserved against in the
consolidated balance sheet of Company and its Subsidiaries as of October 3, 1998
or reflected in the notes thereto or disclosed in the financial statements of
Company filed as a part of the Company SEC Documents, (ii) Liabilities that
would not have a Material Adverse Effect on the Business Condition of Company,
or (iii) additional Liabilities reserved against since October 3, 1998 that (x)
have arisen in the ordinary course of business and (y) are accrued or reserved
against on the books and records of Company and its Subsidiaries.
3.1.10 No Violations. The businesses of Company and its Subsidiaries
are not being conducted in violation of, or in a manner which could cause
liability under any applicable law, rule or regulation, judgment, decree or
order of any Governmental Entity, except for any violations or practices, which,
individually or in the aggregate, have not had and will not have a Material
Adverse Effect on the Business Condition of Company.
3.1.11 Certain Agreements. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
result in any payment (including, without limitation, severance, unemployment
compensation, parachute payment, bonus or otherwise) becoming due to any
director, employee or independent contractor of Company or its Subsidiaries,
from Company or any of its Subsidiaries under any Plan (as hereinafter defined),
agreement or otherwise, (ii) materially increase any benefits otherwise payable
under any Plan or agreement, or (iii) result in the acceleration of the time of
payment or vesting of any such benefits.
3.1.12 Employee Benefit Plans. Each material employee benefit plan
("Plan") covering active, former or retired employees of Company and any of its
Subsidiaries that is subject to U.S. law ("U.S. Plans" ) is listed in the
Company Disclosure Schedule. With respect to each U.S. Plan, Company has
provided to Microsoft a copy of each such Plan, and where applicable, any
related trust agreement, annuity or insurance contract and, where applicable,
all annual reports (Form 5500) filed with the IRS. With respect to each Plan
that is not subject to U.S. law ("Non-U.S. Plans"), Company shall provide to
Microsoft a copy of such Plan and, where applicable, any related trust
agreement, annuity or insurance contract, as soon as practicable after the date
hereof. To the extent applicable, each U.S. Plan complies in all material
respects with the requirements of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and the Code, and any U.S. Plan intended to be
qualified under Section 401(a) of the Code has been determined by the IRS to be
so qualified and has remained tax-qualified to this date and its related trust
is tax-exempt and has been so since its creation. No U.S. Plan is covered by
Title IV of ERISA or Section 412 of the Code. No material "prohibited
transaction," as defined in ERISA Section 406 or Code Section 4975 has occurred
with respect to any U.S. Plan. Each U.S. Plan has been maintained and
administered in all material respects in compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations,
including but not limited to ERISA and the Code, which are applicable to such
U.S. Plans. There are no pending or reasonably anticipated material claims
against or otherwise involving any of the U.S. Plans and no suit, action or
other litigation (excluding claims
-12-
for benefits incurred in the ordinary course of Plan activities) has been
brought against or with respect to any U.S. Plan. All material contributions,
reserves or premium payments to U.S. Plans, accrued to the date hereof have been
made or provided for. Company has not incurred any material liability under
Subtitle C or D of Title IV of ERISA with respect to any "single-employer plan,"
within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by Company, or any entity which is considered one employer with
Company under Section 4001 of ERISA. Company has not incurred, and will not
incur as a result of the transactions contemplated by this Agreement, any
withdrawal liability under Subtitle E of Title IV of ERISA with respect to any
"multiemployer plan," within the meaning of Section 4001(a)(3) of ERISA. Company
has no obligation for retiree health and life benefits under any U.S. Plan,
except as required to avoid excise taxes under Section 4980(B) of the Code.
There are no restrictions on the rights of Company to amend or terminate any
U.S. Plan without incurring any liability thereunder (other than any liability
for accrued benefits thereunder). Company has not engaged in, nor is it a
successor to, an entity that has engaged in, a transaction described in ERISA
Section 4069. There have been no amendments to, written interpretation of, or
announcement (whether or not written) by Company relating to, or change in
employee participation or coverage under, any U.S. Plan that would increase
materially the expense of maintaining such Plan above the level of expense
incurred in respect thereof for the year ended December 31, 1998. Neither
Company nor any of its ERISA affiliates have any current or projected liability
in respect of post-employment or post-retirement welfare benefits for retired or
former employees of Company. No tax under Section 4980B of the Code has been
incurred in respect of any U.S. Plan that is a group health plan, as defined in
Section 5000(b)(1) of the Code. Each Non-U.S. Plan has been maintained and
administered in all material respects in compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations
that are applicable to such Non-U.S. Plan. Each Non-U.S. Plan that is required
by contract or under applicable local law to be funded has been funded to the
extent required and if and to the extent any Non-U.S. Plan is not funded, the
unfunded obligations under such Non-U.S. Plan are reflected on the books and
records of the entity maintaining the plan.
3.1.13 Major Contracts. As of the date of this Agreement, all of
Company's "material contracts" as such term is defined under Item 601 of
Regulation S-K, have been filed under the Exchange Act. Except to the extent
that such agreements have expired by their own terms, each agreement disclosed
by Company under the Exchange Act is in full force and effect, except where the
failure to be in full force and effect would not have a Material Adverse Effect
on the Business Condition of Company. None of the parties to any of such
agreements have terminated, except when such agreements have expired under their
own terms, or, to the Company's knowledge, in any way expressed an intent to
terminate or otherwise materially modify such agreements in the future. Company
has provided to Microsoft lease documents for any real or personal property in
which the amount of payments that Company is required to make on an annual basis
exceeds $100,000 and that have not been filed as an exhibit to any Company SEC
Documents.
3.1.14 Taxes. For the purposes of this Agreement, the terms "tax"
and "taxes" shall include all federal, state, local and foreign taxes,
assessments, duties, tariffs, registration fees, and other governmental charges
including without limitation all income, franchise,
-13-
property, production, sales, use, payroll, license, windfall profits, severance,
withholding, excise, gross receipts and other taxes, as well as any interest,
additions or penalties relating thereto and any interest in respect of such
additions or penalties. Company and each of its Subsidiaries has timely filed
(or caused to be filed), taking into account all extensions, all material
federal, state, local and foreign tax returns, reports and information
statements ("Returns") required to be filed by each of them, which returns,
reports and statements are true, correct and complete in all material respects,
and paid or accrued all material taxes shown as due on such returns, reports and
statements. Company and each of its Subsidiaries has fully accrued in accordance
with GAAP all material unpaid taxes in respect of all periods (or the portion of
any such periods) subsequent to the periods covered by such returns). Company
has received no written notice of any claimed, proposed or assessed material
deficiencies or adjustments for any tax, nor to the best of Company's knowledge,
have any such deficiencies or adjustments been threatened. Company and its
Subsidiaries are not subject to any ongoing tax audit or examination nor, to the
best of Company's knowledge, are such audits or examinations pending or
threatened, and Company has not waived or entered into any other agreement with
respect to any statute of limitation with respect to the assessment of any tax.
Company has made available to Microsoft true and correct copies of all U.S.
Returns for the fiscal years 1996, 1997 and 1998 reasonably requested by
Microsoft. Company covenants to provide to Microsoft at its reasonable request
true and correct copies of all tax returns, information, statements, reports,
work papers and other tax data as soon as practicable after the date hereof. No
consent or agreement has been made under Section 341 of the Code by or on behalf
of Company or any predecessor thereof. Other than interests in certain
leasehold improvements, Company has no interests in real estate in the State of
Washington, the transfer or disposition of which would give rise to Washington
State real estate excise tax.
Company has withheld all taxes required to be withheld in respect of wages,
salaries and other payments to all employees, officers and directors and timely
paid all such amounts withheld to the proper taxing authority. Neither the
Company nor the Subsidiaries are parties to any tax sharing agreements and
neither the Company nor any of the Subsidiaries have been members of any
affiliated group for federal income tax purposes other than the one of which
they are currently a member. The Company does not have an "overall foreign loss"
as defined in Section 904(f) of the Code. Prior to the Merger, the use of any
net operating loss carryover, net capital loss carryover, unused investment
credit or other credit carryover of the Company is not subject to any limitation
pursuant to Section 382 of the Code or otherwise. The Company is not and has
never been a real property holding corporation within the meaning of Section 897
of the Code. Neither Company nor any Subsidiary has participated in, or
cooperated with, an international boycott within the meaning of Section 999 of
the Code. There are no material liens for taxes upon the assets of Company or
its Subsidiaries except for taxes that are not yet payable. The Company
Disclosure Schedule contains a list of all states or foreign jurisdictions where
the Company believes it or any Subsidiary is required to file Returns.
Neither Company nor any Subsidiary of Company is a party to any agreement,
contract, or arrangement that would result in the payment of any "excess
parachute payment" within the meaning of Section 280G of the Code. None of
Company or any Subsidiary is "tax exempt use
-14-
property" within the meaning of Section 168(h) of the Code. None of the assets
of Company or of any Subsidiary secures any debt the interest on which is tax
exempt under Section 103 of the Code.
To the knowledge of Company, there are no facts or circumstances relating
to the Company including any covenants or undertakings of the Company pursuant
to this Agreement, that would prevent Shearman & Sterling from delivering the
opinion referred to in Section 7.1.5 as of the date hereof.
3.1.15 Interests of Officers. None of Company's officers or
directors has, nor to the knowledge of Company does any officer or director of
any Subsidiary have, any material interest in any property, real or personal,
tangible or intangible, including inventions, copyrights, trademarks or trade
names, used in or pertaining to the business of Company or that of its
Subsidiaries, or any supplier, distributor or customer of Company or its
Subsidiary, except, in the case of Company, for the normal rights of a
shareholder, and except for rights under existing employee benefit plans.
3.1.16 Technology and Intellectual Property Rights .
(a) "Company Intellectual Property" shall mean:
(i) all patents, trademarks, trade names, service marks,
domain names, copyrights and any renewal rights, applications and
registrations for any of the foregoing, and all trade dress, schematics,
technology, trade secrets, know-how, moral rights and computer software
programs or applications (in both source and object code form) owned by
Company; and
(ii) all license rights in any third party intellectual
property, proprietary or personal rights, documentation, or tangible or
intangible property, including without limitation the types of intellectual
property and tangible and intangible proprietary information described in
(i) above;
that are being, and/or have been, used in, or are currently under development
for use in, and are material to, the business of Company as it has been, is
currently or is currently anticipated to be (up to the Closing), conducted.
Company Intellectual Property described in clause (i) above is referred to
herein as "Company Owned Intellectual Property" and Company Intellectual
Property described in clause (ii) above is referred to herein as "Company
Licensed Intellectual Property". Unless otherwise noted, all references to
"Company Intellectual Property" shall include both Company Owned Intellectual
Property and Company Licensed Intellectual Property.
(b) The Company Disclosure Schedule lists: (i) all patents,
registered copyrights, trademarks, and service marks and any applications and
registrations for any of the foregoing, that are included in the Company Owned
Intellectual Property; (ii) all software products and services that are
currently published, offered, or under development by Company
-15-
and scheduled to be commercially released within six months of the date hereof;
(iii) licenses and sublicenses of Company Owned Intellectual Property that are
material to the business of Company as it has been, is currently or is currently
anticipated to be (up to the Closing), conducted; (iv) all Company Licensed
Intellectual Property (other than license agreements for standard "shrink
wrapped, off the shelf," commercially available, third party products used by
the Company); and (v) any obligations of exclusivity, non-competition, non-
solicitation, or first negotiation to which Company is subject under any
agreement that does not fall within the ambit of (iii) or (iv) above and that
are either material to Company's business or that to Company's knowledge could
reasonably be expected to be materially adverse to Microsoft's business.
(c) Each item of the Company Intellectual Property is either:
(i) owned by Company, (ii) in the public domain, or (iii) rightfully used by
Company pursuant to a valid license or other agreement. Company has all rights
in the Company Intellectual Property reasonably necessary to carry out Company's
current, and anticipated future (up to the Closing) activities and has or had
during the relevant period all rights in the Company Intellectual Property
reasonably necessary to carry out Company's former activities. All software and
firmware listings that are part of the Company Owned Intellectual Property are
commented in accordance with a reasonable developer standard.
(d) Company is not, nor as a result of the execution or
delivery of this Agreement, or performance of Company's obligations hereunder,
will Company be, in violation of any license, sublicense or other agreement
relating to the Company Intellectual Property or of any non-disclosure agreement
to which Company is a party or otherwise bound, except for any such violations
that would not have a Material Adverse Effect on the Business Condition of
Company.
(e) Except pursuant to the terms of the agreements listed in
the Company Disclosure Schedule, Company is not obligated to provide any
financial consideration or other material consideration to any third party, nor
is any third party otherwise entitled to any financial consideration or other
material consideration, with respect to any exercise of rights by Company or its
successors in the Company Intellectual Property contained in Company's current
products as listed on the Company Disclosure Schedule or in the Company
Intellectual Property contained in any Company web site.
(f) The use, reproduction, modification, distribution,
licensing, sublicensing, sale, or any other exercise of rights in any Company
Owned Intellectual Property by Company or its licensees, does not infringe any
copyright, patent, trade secret, trademark, service mark, trade name, firm name,
logo, trade dress, moral right, other intellectual property right, right of
privacy, right of publicity or right in personal or other data of any person,
except for any such violations that would not have a Material Adverse Effect on
the Business Condition of Company. Further, to the knowledge of Company, the
use, reproduction, modification, distribution, licensing, sublicensing, sale, or
any other exercise of rights in any Company Licensed Intellectual Property or
any other authorized exercise of rights in or to the Company Licensed
Intellectual Property by Company or its licensees does not infringe any
copyright, patent, trade secret, trademark, service mark, trade name, firm name,
logo, trade dress, moral
-16-
right, other intellectual property right, right of privacy, right of publicity
or right in personal or other data of any person, except for any such violations
that would not have a Material Adverse Effect on the Business Condition of
Company. No claims (i) challenging the validity, enforceability, or ownership by
Company of any of the Company Owned Intellectual Property or (ii) to the effect
that the use, reproduction, modification, manufacturing, distribution,
licensing, sublicensing, sale or any other exercise of rights in any Company
Owned Intellectual Property by Company or its licensees infringes any
intellectual property or other proprietary or personal right of any person, have
been asserted or, to the knowledge of Company, are threatened by any person. To
the knowledge of Company, there is no unauthorized use, infringement or
misappropriation of any of the Company Owned Intellectual Property by any third
party, employee or former employee.
(g) No parties other than Company possess any current or
contingent rights to any source code that is part of the Company Owned
Intellectual Property (including, without limitation, through any escrow
account).
(h) Company's standard practice is to secure from all parties
who have created any material portion of, or otherwise have any material rights
in or to, the Company Owned Intellectual Property written assignments or
licenses of any such work or other rights to Company.
(i) Company has provided Microsoft with a copy of or access
to all material support and maintenance agreements relating to Company Owned
Intellectual Property or to which Company is a party as to Company Licensed
Intellectual Property.
(j) To the knowledge of Company, Company has obtained written
agreements from all employees and third parties with whom Company has shared
confidential information (i) of Company, or (ii) received from others which
Company is obligated to treat as confidential, which agreements require such
employees and third parties to keep such information confidential.
(k) Company's practices regarding the collection and use of
consumer personal information are in accordance in all material respects with
Company's privacy policy as published on its website.
(l) Any Company Owned Intellectual Property is, and any
products manufactured and commercially released by Company or currently under
development, are Year 2000 Compliant in all material respects and will not cease
to be Year 2000 Compliant in any material respect at any time prior to, during
or after the calendar year 2000. To Company's knowledge, the Company Licensed
Intellectual Property material to the operation of Company is Year 2000
Compliant in all material respects and will not cease to be Year 2000 Compliant
in any material respect at any time prior to, during or after the calendar year
2000. For the purposes of this Agreement, "Year 2000 Compliant" means that
neither the performance nor the
-17-
functionality of the applicable Company Intellectual Property or applicable
product is or will be materially affected by dates prior to, during or after the
calendar year 2000 AD.
3.1.17 Opinion of Financial Advisor. Company has received the
opinion of Morgan Stanley & Co. Incorporated, dated the date hereof, a copy of
which has been provided to Microsoft, to the effect that, as of such date, the
Exchange Ratio is fair, from a financial point of view, to Company's
shareholders.
3.1.18 Vote Required. The affirmative vote of the holders of two-
thirds of the outstanding shares of Company Common Stock is the only vote of the
holders of Company's capital stock necessary to approve this Agreement and the
consummation of the transactions contemplated hereby.
3.1.19 Accounting Matters. To the knowledge of Company, neither
Company nor any of its affiliates has taken or agreed to take any action that,
without giving effect to any action taken or agreed to be taken by Microsoft or
any of its affiliates, would prevent Microsoft from accounting for the business
combination to be effected by the Merger as a pooling of interests.
3.1.20 Brokers and Finders. Other than Morgan Stanley & Co.
Incorporated, in accordance with the terms of its engagement letter, a copy of
which has previously been provided to Microsoft, none of Company or any of its
Subsidiaries nor any of their respective directors, officers or employees has
employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or similar payments in connection
with the transactions contemplated by this Agreement.
3.1.21 Change of Control. With regard to any options, stock,
restricted stock, stock bonus or other awards granted under the Company
Incentive and Stock Option Plans which are not exercisable or vested prior to
the Effective Time, Company has not taken any action to make such options or
awards exercisable or vested by reason of the Merger. Prior to the Effective
Time, Company shall take all action necessary relating to the Company Incentive
and Stock Option Plans to provide that the occurrence of the transactions
contemplated by this Agreement shall not entitle participants under such plans
to a cash-out of the stock options, restricted stock, stock bonus or other
awards granted to them thereunder.
3.1.22 Leases in Effect. All real property leases and subleases as
to which Company or any Subsidiary is a party and any amendments or
modifications thereof which have been filed as exhibits to the Company SEC
Documents or are listed on the Company Disclosure Schedule (each a "Lease" and
collectively, the "Leases") are valid, in full force and effect, enforceable,
and there are no existing defaults on the part of Company, and Company has not
received nor given notice of default or claimed default with respect to any
Lease, nor is there any event that with notice or lapse of time, or both, would
constitute a default thereunder, except for defaults, claimed defaults or events
that with notice or lapse of time, or both, would constitute a default that have
not had, and would not have, individually or in the aggregate, a Material
Adverse Effect on the Business Condition of Company. No consent is required from
any party
-18-
under any Lease in connection with the completion of the transactions
contemplated by this Agreement, and Company has not received notice that any
party to any Lease intends to cancel, terminate, or refuse to renew the same or
to exercise any option or other right thereunder, except where the failure to
receive such consent, or where such cancellation, termination or refusal, would
not have a Material Adverse Effect on Company's Business Condition.
3.1.23 Environmental.
(a) There has not been a discharge or release on any real
property at the time it was owned or leased by Company (the "Real Property") of
any Hazardous Material (as defined below), including without limitation
contamination of soil, groundwater or the environment, generation, handling,
storage, transportation or disposal of Hazardous Materials or exposure to
Hazardous Materials, except for those that would not, individually or in the
aggregate have a Material Adverse Effect on the Business Condition of Company;
(b) No Hazardous Material has been used by Company in the
operation of Company's business in amounts that would have a Material Adverse
Effect on the Business Condition of Company; and
(c) Company has not received from any Governmental Entity or
third party any written request for information, notice of claim, demand letter,
or other notification, notice or information that Company is or may be
potentially subject to or responsible for any investigation or clean-up or other
remediation of Hazardous Material present on any Real Property or at any other
location.
"Hazardous Material" means any substance (i) that is a "hazardous waste" or
"hazardous substance" under any federal, state or local statute, regulation,
rule, or order or (ii) that is toxic, explosive, corrosive, flammable,
infectious, radioactive, or otherwise hazardous and is regulated by any
Governmental Entity.
3.1.24 Certain Payments. To the knowledge of Company, neither Company
nor any person or other entity acting on behalf of Company has, directly or
indirectly, on behalf of or with respect to Company: (i) made an unreported
political contribution, (ii) made or received any payment which was not legal to
make or receive, (iii) engaged in any transaction or made or received any
payment which was not properly recorded on the books of Company, (iv) created or
used any "off-book" bank or cash account or "slush fund", or (v) engaged in any
conduct constituting a violation of the Foreign Corrupt Practices Act of 1977.
3.1.25 Reliance. The foregoing representations and warranties are made
by Company with the knowledge and expectation that Microsoft and Sub are placing
reliance thereon.
3.2 Representations and Warranties of Microsoft and Sub. Except as
disclosed in a Disclosure Schedule which identifies by section number the
section and subsection to which such disclosure relates (unless the
applicability of such disclosure to any section or subsection is
-19-
reasonably apparent in light of the circumstances under which made) and is
delivered by Microsoft to Company concurrently with the execution of this
Agreement (the "Microsoft Disclosure Schedule"), Microsoft and Sub represent and
warrant to Company as follows:
3.2.1 Organization; Standing and Power. Each of Microsoft and Sub is
a corporation duly organized, validly existing under the laws of its
jurisdiction of incorporation or organization, has all requisite power and
authority to own, lease and operate its properties and to carry on its
businesses as now being conducted, and is duly qualified and in good standing to
do business in each jurisdiction in which it owns, leases or operates its
properties or conducts its businesses so as to require such qualification,
except where the failure to be so organized, existing, qualified or in good
standing or to have such corporate or other applicable power and authority have
not had, and would not have, a Material Adverse Effect on the Business Condition
of Microsoft.
3.2.2 Capital Structure. The authorized capital stock of Microsoft
consists of 12,000,000,000 shares of Microsoft Common Stock of which
5,137,062,528 are outstanding as of August 31, 1999 and 100,000,000 shares of
preferred stock, par value $0.01 per share (the "Microsoft Preferred Stock") of
which 12,519,562 are outstanding as of August 31, 1999, and no shares are held
by Subsidiaries of Microsoft. In addition, as of August 31, 1999, there are
755,669,934 shares of Microsoft Common Stock are reserved for issuance upon the
exercise of outstanding stock options ("Microsoft Options") under the Microsoft
1991 Stock Option Plan. The authorized capital stock of Sub consists of 10,000
shares of common stock, par value $.01 per share, all of which are duly
authorized, validly issued, fully paid and nonassessable and free of any
preemptive rights in respect thereof and all of which are owned by Microsoft.
The shares of Microsoft Common Stock to be issued pursuant to the Merger in
accordance with Section 2.1.3(i) will be duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights created by statute,
Microsoft's Restated Articles of Incorporation or Bylaws or any agreement to
which Microsoft is a party or is bound and (ii) will, when issued, be registered
under the Securities Act and the Exchange Act and registered or exempt from
registration under applicable blue sky laws.
3.2.3 Authority. Microsoft and Sub have all requisite corporate power
and authority to enter into this Agreement, and subject to the Microsoft
Required Statutory Approvals (as defined below), to consummate the transactions
contemplated hereby. The execution and delivery by Microsoft of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Microsoft. This
Agreement has been duly executed and delivered by Microsoft and Sub and assuming
the due authorization, execution and delivery by Company, constitutes a valid
and binding obligation of Microsoft and Sub enforceable in accordance with its
terms. Subject to satisfaction of the conditions set forth in Sections 7.1 and
7.2, the execution and delivery of this Agreement do not, and the consummation
of the transactions contemplated hereby will not, conflict with or result in any
Violation of (i) any provision of the Restated Articles of Incorporation or
Bylaws of Microsoft or the comparable governing instruments of any Subsidiary of
Microsoft or (ii) any loan or credit agreement note, bond, mortgage, indenture,
contract, lease, or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree,
-20-
statute, law, ordinance, rule or regulation applicable to Microsoft or any
Subsidiary of Microsoft or their respective properties or assets, other than, in
the case of (ii), any such Violation, which individually or in the aggregate
would not have a Material Adverse Effect on the Business Condition of Microsoft.
No Consent is required by or with respect to Microsoft or Sub in connection with
the execution and delivery of this Agreement by Microsoft or Sub or the
consummation by Microsoft and Sub of the transactions contemplated hereby,
except for (i) the filing of a premerger notification report by Microsoft and
Company under the HSR Act, (ii) the filing of the Proxy Statement/Prospectus
with the SEC pursuant to the Exchange Act and the Securities Act and the
declaration of the effectiveness thereof by the SEC and compliance with various
state securities or blue sky laws, and (iii) the filing of the Merger Documents
with the Secretary of State of the State of Washington (the filings and
approvals referred to in clauses (i) through (iii) are collectively referred to
as the "Microsoft Required Statutory Approvals" and together with the Company
Required Statutory Approvals, the "Required Statutory Approvals") and except for
such other Consents which if not obtained or made would not have a Material
Adverse Effect on the value of the Microsoft Common Stock and would not have a
Material Adverse Effect on the Business Condition of Microsoft.
3.2.4 SEC Documents and Financial Statements. Microsoft has filed all
forms, reports and documents required to be filed by it with the SEC since July
1, 1995 through the date of this Agreement (collectively, the "Microsoft SEC
Documents"). As of their respective filing dates, the Microsoft SEC Documents
complied in all material respects with the requirements of the Exchange Act or
the Securities Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Microsoft SEC Documents, and none of the Microsoft
SEC Documents 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 made therein, in light of the circumstances under which they
were made, not misleading. As of their respective filing dates, the financial
statements of Microsoft included in the Microsoft SEC Documents (the "Microsoft
Financial Statements") complied as to form in all material respects with all
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto and were prepared in accordance with generally
accepted accounting principles consistently applied (except as may be indicated
in the notes thereto) and fairly presented, in all material respects, the
consolidated financial position of Microsoft and its Subsidiaries as at the
dates thereof and the results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal, recurring
audit adjustments not material in scope or amount). There has been no change in
Microsoft's accounting policies or the methods of making accounting estimates or
changes in estimates that are material to Microsoft Financial Statements or
estimates except as described in the notes thereto.
3.2.5 Information Supplied. None of the information supplied or to be
supplied by Microsoft or its Subsidiaries, auditors, attorneys, financial
advisors, other consultants or advisors or Sub for inclusion in the S-4 or the
Proxy Statement/Prospectus, will, in the case of the Proxy Statement and any
amendment or supplement thereto, at the time of the mailing of the Proxy
Statement and any amendment or supplement thereto, and at the time of any
meeting of shareholders of Company to vote upon this Agreement and the
transactions contemplated hereby,
-21-
or in the case of the S-4, as amended or supplemented, at the time it becomes
effective and at the time of any post-effective amendment thereto and at the
time of the meeting of shareholders of Company, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they are made, not misleading or necessary to correct any statement in any
earlier filing with the SEC of such Proxy Statement/Prospectus or any amendment
or supplement thereto or any earlier communication (including the Proxy
Statement/Prospectus) to shareholders of Company with respect to the
transactions contemplated by this Agreement.
3.2.6 No Defaults. Microsoft has not received notice that it would be
with the passage of time, in default or violation of any term, condition or
provision of (i) the Restated Articles of Incorporation or Bylaws of Microsoft;
(ii) any judgment, decree or order applicable to Microsoft; or (iii) any loan or
credit agreement, note, bond, mortgage, indenture, contract, agreement, lease,
license or other instrument to which Microsoft is now a party or by which it or
any of its properties or assets may be bound, except for defaults and violations
which, individually or in the aggregate, would not have a Material Adverse
Effect on the Business Condition of Microsoft.
3.2.7 Absence of Certain Changes or Events. Since July 1, 1998
through the date of this Agreement, except as contemplated by or as disclosed in
this Agreement, as set forth in the Microsoft Disclosure Schedule or as
disclosed in any Microsoft SEC Documents filed since July 1, 1998 and prior to
the date of this Agreement, Microsoft and its Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, since such date, there has not been any Material Adverse Effect on
the Business Condition of Microsoft.
3.2.8 Absence of Undisclosed Liabilities. Microsoft and its
Subsidiaries, taken as a whole, have no liabilities or obligations (whether
absolute, accrued or contingent) except (i) Liabilities that are accrued or
reserved against in the consolidated balance sheet of Microsoft and its
Subsidiaries as of June 30, 1998 or reflected in the notes thereto or disclosed
in the financial statements filed as a part of the Microsoft SEC Documents, (ii)
Liabilities that would not have a Material Adverse Effect on the Business
Condition of Microsoft, or (iii) additional Liabilities reserved against since
July 1, 1998 that (x) have arisen in the ordinary course of business; and (y)
are accrued or reserved against on the books and records of Microsoft and its
Subsidiaries.
3.2.9 No Vote Required. No vote of the shareholders of Microsoft
is required by law, Microsoft's Restated Articles of Incorporation or Bylaws or
otherwise in order for Microsoft and Sub to consummate the Merger and the
transactions contemplated hereby.
3.2.10 Accounting Matters. To the knowledge of Microsoft, neither
Microsoft nor any of its affiliates has taken or agreed to take any action that,
without giving effect to any action taken or agreed to be taken by Company or
any of its affiliates, would prevent Microsoft from accounting for the business
combination to be effected by the Merger as a pooling of interests.
-22-
3.2.11 Brokers and Finders. None of Microsoft or any of its
respective directors, officers or employees has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage fees,
commissions or similar payments in connection with the transactions contemplated
by this Agreement.
3.2.12 Interim Operation of Sub. Sub is a direct, wholly owned
subsidiary of Microsoft, was formed solely for the purpose of engaging in the
transactions contemplated hereby, has engaged in no other business activities
and has conducted its operations only as contemplated hereby.
3.2.13 Reliance. The foregoing representations and warranties are
made by Microsoft with the knowledge and expectation that Company is placing
reliance thereon.
ARTICLE IV
COVENANTS OF COMPANY
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, Company
agrees (except as expressly contemplated by this Agreement or with Microsoft's
prior written consent which will not be unreasonably withheld) that:
4.1 Conduct of Business.
4.1.1 Ordinary Course. Except as set forth in the Company Disclosure
Schedule, Company and its Subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and, to the extent consistent with such
businesses, use all reasonable efforts consistent with past practice and
policies to preserve intact their present business organizations, keep available
the services of their present officers, consultants, and employees and preserve
their relationships with customers, suppliers, distributors and others having
business dealings with them. Company shall promptly notify Microsoft of any
event or occurrence or emergency not in the ordinary course of business, of
Company or its Subsidiaries, and material and adverse to the Business Condition
of Company. Except as set forth in the Company Disclosure Schedule, neither
Company nor any of its Subsidiaries shall:
(a) accelerate, amend or change the period of exercisability or
vesting of options, restricted stock, stock bonus or other awards granted under
the Company Incentive and Stock Option Plans (including any discretionary
acceleration of the exercise periods by Company's Board of Directors permitted
under such plans) or authorize cash payments in exchange for any options,
restricted stock, stock bonus or other awards granted under any of such plans;
-23-
(b) except in the ordinary course of business consistent with
past practices, grant any severance or termination pay to any officer or
director or to any employee of Company or any of its Subsidiaries;
(c) except in the ordinary course of business consistent with
past practices and other than transfers between or among Company and any of its
wholly owned Subsidiaries, transfer to any person or entity any rights to the
Company Intellectual Property Rights;
(d) enter into or amend any agreements pursuant to which any
other party is granted exclusive marketing or manufacturing rights of any type
or scope for a period of more than two years with respect to any hardware or
software products of Company or any of its Subsidiaries; and
(e) except in the ordinary course of business consistent with
past practices, commence a lawsuit other than: (i) for the routine collection of
bills; (ii) for software piracy; (iii) in such cases where Company in good faith
determines that failure to commence suit would result in a material impairment
of a valuable aspect of Company's business, provided Company consults with
Microsoft prior to filing such suit; or (iv) for a breach of this Agreement.
(f) enter into one or more leases which extend for a period of
five years beyond the date of this Agreement and which obligate Company to pay
aggregate gross rent in excess of $1,000,000.
(g) extend an offer of employment to a candidate for an officer
position without prior consultation with Microsoft.
4.1.2 Dividends: Changes in Stock. Other than transfers between or
among Company and any of its wholly owned Subsidiaries, Company shall not, and
shall not permit any of its Subsidiaries to: (i) declare or pay any dividends on
or make other distributions (whether in cash, stock or property) in respect to
any of its capital stock; (ii) 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 capital stock of Company; (iii)
repurchase or otherwise acquire, directly or indirectly, any shares of its
capital stock other than repurchase of vested stock from former employees; or
(iv) propose any of the foregoing.
4.1.3 Issuance of Securities. Company shall not, and shall not permit
its Subsidiaries to, issue, deliver, or sell, or authorize, propose or agree to,
or commit to the issuance, delivery, or sale of any shares of its capital stock
of any class, any Company Voting Debt or any securities convertible into its
capital stock or Company Voting Debt, any options, warrants, calls, conversion
rights, commitments, agreements, contracts, understandings, restrictions,
arrangements or rights of any character obligating it or any of its Subsidiaries
to issue any such shares, Voting Debt or other convertible securities other than
the issuance of options for Company Common Stock to employees under the Company
Incentive and Stock
-24-
Option Plans in amounts and on terms consistent with prior practices and other
than the issuance of Company Common Stock upon the exercise of options granted
under the Company Incentive and Stock Option Plans. Any grant of stock options
or restricted stock in excess of the amounts set forth in Section 4.1.3 of the
Company Disclosure Schedule shall require the prior written approval of
Microsoft.
4.1.4 Governing Documents. Company shall not, nor shall it cause or
permit any of its Subsidiaries to, amend its Articles or Certificate of
Incorporation or Bylaws.
4.1.5 Exclusivity; Acquisition Proposals. (a) Unless and until this
Agreement shall have been terminated by either party pursuant to Section 8.1
hereof, Company shall not (and it shall use its commercially reasonable best
efforts to ensure that none of its officers, directors, agents, representatives
or affiliates) take or cause or permit any Subsidiary to take, directly or
indirectly, any of the following actions with any party other than Microsoft and
its designees: (i) solicit, knowingly encourage, initiate or participate in any
negotiations, inquiries or discussions with respect to any offer or proposal to
acquire all or any significant part of its business, assets or capital shares
whether by merger, consolidation, other business combination, purchase of
assets, tender or exchange offer or otherwise (each of the foregoing, an
"Acquisition Transaction"); (ii) disclose, in connection with an Acquisition
Transaction, any information not customarily disclosed to any person other than
Microsoft or its representatives concerning Company's business or properties or
afford to any person other than Microsoft or its representatives or entity
access to its properties, books or records, except in the ordinary course of
business and as required by law or pursuant to a governmental request for
information; (iii) enter into or execute any agreement relating to an
Acquisition Transaction; or (iv) make or authorize any public statement,
recommendation or solicitation in support of any Acquisition Transaction or any
offer or proposal relating to an Acquisition Transaction other than with respect
to the Merger provided, however, that the Board of Directors of Company may
recommend that the shareholders of Company tender their shares in connection
with a tender offer to the extent the Board of Directors of Company by a
majority vote determines in its good faith judgment that such a recommendation
is required to comply with the fiduciary duties of the Board of Directors of
Company to shareholders under applicable Washington Law, after receiving the
advice of outside legal counsel. In the event Company shall receive any offer or
proposal, directly or indirectly, of the type referred to in clause (i) above,
or any request for disclosure or access with respect to information of the type
referred to in clause (ii) above, it shall immediately, and prior to taking any
action in response thereto inform Microsoft as to the existence of such offer or
proposal and generally describe the material facts concerning any such offer
including the identity of the third party making such offer, proposal or
request, and will thereafter cooperate with Microsoft by informing Microsoft of
additional material facts as they arise and furnishing to Microsoft any
additional information it furnished to any third party making such proposal or
requesting information. Nothing contained in this Agreement shall prevent the
Board of Directors of Company from (i) furnishing information to, or answering
questions of, a third party which the Board of Directors of Company reasonably
believes has made a bona fide proposal with respect to an Acquisition
Transaction that is a Superior Proposal (as defined below) not solicited in
violation of this Agreement, provided that prior to providing information, such
third party executes an agreement with confidentiality provisions substantially
-25-
similar to those then in effect between Company and Microsoft and provided
further that Microsoft is notified one business day prior to Company's providing
of such information to a third party, or (ii) subject to compliance with the
other terms of this Section 4.1.5, considering a proposal with respect to an
Acquisition Transaction, which the Board of Directors of Company reasonably
believes to be a bona fide proposal, that is a Superior Proposal not solicited
in violation of this Agreement. For purposes of this Agreement, a "Superior
Proposal" means any proposal made by a third party to acquire, directly or
indirectly, for consideration consisting of cash and/or securities,
substantially all of the equity securities of Company entitled to vote generally
in the election of directors, on terms which the Board of Directors of Company
reasonably believes (x) (after consultation with a financial advisor of
nationally recognized reputation) to be more favorable from a financial point of
view to its shareholders than the Merger and the transactions contemplated by
this Agreement taking into account at the time of determination any changes to
the financial terms of this Agreement proposed in writing by Microsoft and (y)
to be more favorable to Company than the Merger and the transactions
contemplated by this Agreement after taking into account all pertinent factors
deemed relevant by the Board of Directors of Company under the laws of the State
of Washington; provided, however, that a Superior Proposal may be subject to a
due diligence review of confidential information and to other customary
conditions.
(b) Nothing contained in this Section 4.1.5 shall prohibit
Company from taking and disclosing to its shareholders a position required by
Rule 14d-9 or 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to its shareholders required by applicable law, rule or regulation;
provided, however, the Board of Directors of Company shall only recommend that
its shareholders tender their shares in connection with a tender offer to the
extent that the Board of Directors of Company by a majority vote determines in
its good faith judgment that such a recommendation is required to comply with
the fiduciary duties of the Board of Directors of Company to shareholders under
applicable Washington law, after receiving the advice of outside legal counsel.
4.1.6 No Acquisitions. Except as set forth in the Company Disclosure
Schedule, Company shall not, and shall not permit any Subsidiary of Company to,
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, 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 Condition of
Company.
4.1.7 No Dispositions. Company shall not, and shall not permit any
Subsidiary of Company to, sell, lease, license, transfer, mortgage, encumber or
otherwise dispose of any of their assets or cancel, release, or assign any
indebtedness or claim, except in the ordinary course of business or in amounts
which are not material, individually or in the aggregate, to the Business
Condition of Company.
4.1.8 Indebtedness. Company shall not, and shall not permit any
Subsidiary of Company to, incur any indebtedness for borrowed money by way of
direct loan, sale of debt
-26-
securities, purchase money obligation, conditional sale, guarantee, or otherwise
in amounts which are material, individually or in the aggregate, to the Business
Condition of Company.
4.1.9 Plans. Except as set forth in the Company Disclosure Schedule,
Company shall not, and shall not permit any Subsidiary of Company to, adopt or
amend in any material respect any Plan, or pay any pension or retirement
allowance not required by any existing Plan. Except in the ordinary course of
business consistent with past practices, Company shall not and shall not permit
any Subsidiary of Company to, enter into any employment contracts, pay any
special bonuses or special remuneration to officers, directors, or employees, or
increase the salaries, wage rates or fringe benefits of its officers or
employees.
4.1.10 Claims. Company shall not, and shall not permit any Subsidiary
of Company to, settle any claim, action or proceeding, except in the ordinary
course of business or in amounts which are not material, individually or in the
aggregate, to the Business Condition of Company.
4.1.11 Agreement. Company shall not, and shall not permit any
Subsidiary of Company to, agree to take any of the actions prohibited by this
Section 4.1.
4.2 Breach of Representations and Warranties. Company will not knowingly
take any action which would cause or constitute a breach of any of the
representations and warranties set forth in Section 3.1 or which would cause any
of such representations and warranties to be inaccurate in any material respect.
In the event of, and promptly after becoming aware of, the occurrence of or the
pending or threatened occurrence of any event which would cause or constitute
such a breach or inaccuracy, Company will give written notice thereof to
Microsoft and will use its commercially reasonable best efforts to prevent or
promptly remedy such breach or inaccuracy.
4.3 Pooling. Company shall not knowingly take or cause to be taken any
action, whether before or after the Effective Time, which would disqualify the
Merger as a pooling of interests for accounting purposes.
4.4 Consents. Company will promptly apply for or otherwise seek, and use
its commercially reasonable best efforts to obtain, all Consents set forth in
the Company Disclosure Schedule, and make all filings, required with respect to
Company for the consummation of the Merger, except such Consents as Microsoft
and Company agree Company shall not seek to obtain.
4.5 Commercially Reasonable Best Efforts. Company will use its commercially
reasonable best efforts to effectuate the transactions contemplated hereby and
to fulfill and cause to be fulfilled the conditions to closing under this
Agreement provided that Company shall in no event be required to agree to the
imposition of, or comply with, any condition, obligation or restriction on
Company or any of its Subsidiaries or on the Surviving Corporation of the type
referred to in Section 7.1.6 hereof.
-27-
4.6 Information for Prospectus/Proxy Statement. Company will as promptly
as practicable provide to Microsoft and its counsel for inclusion within the
Proxy Statement/Prospectus and the S-4 in a form reasonably satisfactory to
Microsoft and its counsel, such information concerning Company, its operations,
capitalization, technology, share ownership and other information as Microsoft
or its counsel may reasonably request.
4.7 Company Plans. Without the loss of any vested benefits but without
accelerating any unvested rights (except as required by law), Company shall
terminate or modify the Plans as may be directed by Microsoft immediately prior
to the Effective Time or take such action as directed by Microsoft to merge such
Plans with the Microsoft plans at the Effective Time; provided, however, that
any such modification, termination or merger shall be contingent upon the
occurrence of the Effective Time.
4.8 Employee Transition Committee.
(a) Company and Microsoft shall promptly establish a transition
committee (the "Transition Committee"), which shall coordinate the joint efforts
of Company and Microsoft to transition Company's employees in connection with
the Merger. The Transition Committee shall consist of Company's Chief Executive
Officer and Chief Technology Officer and Microsoft's Senior Vice President,
Business Productivity Group and an additional designee of Microsoft. The
Transition Committee shall meet regularly to determine policies and practices
relating to transition of Company's employees in connection with the Merger.
(b) As promptly as practicable, but in any event within 10 business
days after the date hereof, the Transition Committee shall identify 20 key
contributors of Company. Promptly thereafter, Company and Microsoft, through
their representatives on the Transition Committee, shall use their respective
commercially reasonable best efforts to enter into employment agreements with
each such key contributor.
4.9 Shareholder Approval. Company will call a special Shareholders
Meeting as soon as practicable but in no event later than 45 days after the Form
S-4 is declared effective by the SEC to submit this Agreement, the Merger and
related matters for the consideration and approval of Company's Shareholders
("Company Shareholders Meeting"). Such approval will be recommended by Company's
Board of Directors, subject to the fiduciary obligations of its directors. Such
meeting will be called, held and conducted, and any proxies will be solicited,
in compliance with applicable law. Concurrently with the execution of this
Agreement, all officers and directors of Company shall have executed Voting
Agreements in the form of Exhibit 4.9 agreeing, among other things, to vote in
favor of the Merger and against any competing proposals; provided, however, that
any director of Company who is also a shareholder of Company shall not be
prevented from exercising his/her fiduciary obligations as a director of
Company.
4.10 Tax Returns. Company shall properly and timely file all Returns with
respect to Company and any Subsidiary required to be filed prior to the Closing
Date and shall pay all taxes required to be paid prior to the Closing Date,
except for those taxes being contested in good faith.
-28-
All such Returns shall be prepared consistent with past practice. Company shall
(i) notify Microsoft as promptly as practicable if it receives notice of any tax
audit, the assessment of any tax, the assertion of any tax lien, or any request,
notice or demand for taxes by any taxing authority, (ii) provide Microsoft a
description of any such matter in reasonable detail (including a copy of any
written materials received from the taxing authority), and (iii) take no action
with respect to such matter without the consent of Microsoft. Company shall not
(x) make or revoke any tax election which may affect Company, (y) execute any
waiver of restrictions on assessment of any tax without the approval of
Microsoft, or (z) enter into any agreement or settlement with respect to any tax
without the approval of Microsoft which shall not be unreasonably withheld.
4.11 Representations of Shareholders. Company will use its commercially
reasonable best efforts to cause (i) all officers and directors of Company, and
(ii) beneficial owners of five percent (5%) or more of the outstanding Company
Common Stock (collectively, the "Company's Principal Shareholders"') to
cooperate with counsel to Company and Microsoft to assist them in providing the
tax opinions called for by Section 7.1.5 hereof.
4.12 Employee Benefits Matters.
4.12.1 Service Credit. To the extent that service is relevant for
eligibility, vesting and (except as would result in duplication of benefits)
benefit accruals under any employee benefit plan, program or arrangement
maintained by Microsoft or any Subsidiary of Microsoft, such plan, program or
arrangement shall credit each employee of Company or any Subsidiary of Company
(a "Company Employee") who participate therein for service on or prior to the
Effective Time with Company or any Subsidiary of Company or any Affiliate or
predecessor of any of them. Microsoft agrees to offer to Company Employees
benefits commensurate with those benefits conferred to Microsoft employees
similarly situated. In addition, Microsoft shall (i) waive limitations on
benefits relating to any pre-existing conditions under any Microsoft or
Subsidiary of Microsoft welfare benefit plan in which Company Employees may
participate and (ii) recognize, for purposes of annual deductible and out-of-
pocket limits under its medical and dental plans, deductible and out-of-pocket
expenses paid by Company Employees and their respective dependents under
Company's and any of its Subsidiary's medical, dental and other healthcare plans
in the calendar year in which the Effective Time occurs.
4.12.2 Section 16 Approval. On or after the date hereof and prior to the
Effective Time, each of Microsoft and Company shall take all necessary action
such that, with respect to (i) any Company Employee who as of the date hereof is
subject to Section 16 of the Exchange Act and (ii) any member of the Company's
Board of Directors (each, a "Company Section 16 Insider"), the acquisition by
any such Company Section 16 Insider of Microsoft Common Stock or Microsoft stock
options and the disposition by any such Company Section 16 Insider of Company
Common Stock or Company Options pursuant to the transactions contemplated herein
shall be exempt from the short-swing profit liability rules of Section 16(b) of
the Exchange Act pursuant to Rule 16b-3 promulgated thereunder.
-29-
4.12.3 Retention Plans and Related Matters. Prior to the Effective
Time, Microsoft shall implement retention and severance bonus plans having the
terms set forth in Schedule 4.12.3 pursuant to final documentation to be
approved by the Transition Committee (the "Retention Plans") for the benefit of
Company Employees after the Merger. Microsoft agrees not to terminate, amend or
otherwise modify the Retention Plans and to make all payments provided for in
the Retention Plans as such payments become due and payable, subject to the
terms of the Retention Plans.
ARTICLE V
COVENANTS OF MICROSOFT
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, Microsoft
agrees (except as expressly contemplated by this Agreement or with Company's
prior written consent which will not be unreasonably withheld) that:
5.1 Representations and Warranties. Microsoft will not knowingly take any
action which would cause or constitute a breach of any of the representations
and warranties set forth in Section 3.2 or which would cause any of such
representations and warranties to be inaccurate in any material respect. In the
event of, and promptly after becoming aware of, the occurrence of or the pending
or threatened occurrence of any event which would cause or constitute such a
breach or inaccuracy, Microsoft will give notice thereof to Company and will use
its commercially reasonable best efforts to prevent or promptly remedy such
breach or inaccuracy.
5.2 Conduct of Business by Microsoft Pending the Merger. Microsoft shall
promptly notify Company of any event or occurrence that is material and adverse
to the Business Condition of Microsoft; provided, however, that the disclosure
of such event or occurrence in a Microsoft SEC Document shall satisfy such
requirement so long as such Microsoft SEC Document is filed within a reasonable
period of time after Microsoft becomes aware of such event or occurrence and in
any event prior to the Effective Time. In the event Microsoft or any of its
Subsidiaries shall agree to acquire by merging or consolidating with, by
purchasing an equity interest in, or a portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof and any such business or assets to be
acquired includes products that could reasonably be considered to be competitive
with the Company's business generally related to the development and sale of
software for business diagramming and technical drawing (a "Competitive
Business"), Microsoft shall either (i) delay any filings required to be made by
Microsoft under the HSR Act with respect to such acquisition until the
applicable waiting period with respect to the Merger under the HSR Act shall
have expired or have been earlier terminated or (ii) agree with the applicable
Governmental Entity to hold separate such Competitive Business or take similar
actions that would cause such Governmental Entity to permit promptly the
expiration or termination of the waiting period under the HSR Act with respect
to the Merger.
-30-
5.3 Consents. Microsoft will promptly apply for or otherwise seek, and
use its commercially reasonable best efforts to obtain, all consents and
approvals, and make all filings, required for the consummation of the Merger.
5.4 Commercially Reasonable Best Efforts. Microsoft will use its
commercially reasonable best efforts to effectuate the transactions contemplated
hereby and to fulfill and cause to be fulfilled the conditions to closing under
this Agreement provided that Microsoft shall in no event be required to agree to
the imposition of, or comply with, any condition, obligation or restriction on
Microsoft or any of its Subsidiaries or on the Surviving Corporation of the type
referred to in Section 7.1.6 hereof.
5.5 Agreements of Microsoft Affiliates. Prior to the Effective Time,
Microsoft will use its commercially reasonable best efforts to obtain the
execution of agreements with respect to the sale of Microsoft Common Stock with
each person who is an Affiliate of Microsoft for purposes of compliance with
pooling restrictions.
5.6 Representations of Shareholders. Microsoft will use its commercially
reasonable best efforts to cause each of its principal shareholders who is the
beneficial owner of five percent (5%) or more of the outstanding Microsoft
Common Stock to cooperate with counsel to Microsoft and Company to assist them
in providing the tax opinions called for by Section 7.1.5. Microsoft shall
provide to Company and its counsel such customary representations as such
persons shall reasonably request in connection with the opinions contemplated in
Section 7.1.5. To the knowledge of Microsoft, there are no facts or
circumstances relating to Microsoft, including any covenants or undertakings of
Microsoft pursuant to this Agreement, that would prevent Shearman & Sterling
from delivering the opinion referred to in Section 7.1.5 as of the date hereof.
5.7 Tax Free Reorganization. Microsoft has no present plan or intention
following the Merger to take any of the following actions:
(a) Cause Company to issue additional shares of its capital stock that
would result in Microsoft losing control of company within the meaning of
Section 368(c) of the Code.
(b) Merge Company with or into another corporation, or sell or
otherwise dispose of the capital stock of Company (except for transfers of such
stock to corporations controlled by Microsoft within the meaning of Code Section
368(a)(2)(c));
(c) Reacquire any shares of its capital stock issued in the Merger,
other than possible purchases in the ordinary course of business of shares held
by Company employees in connection with termination of employment of such
employees and open market repurchases in connection with its normal share
repurchase program.
(d) Cause Company to fail to hold at least 90% of the fair market
value of the Company's net assets and at least 70% of the fair market value of
its gross assets, and at least 90% of the fair market value of Sub's net assets
and at least 70% of its gross assets held
-31-
immediately prior to the Merger, other than pursuant to a transfer of rights or
assets by means of a sale, license or merger permitted under subsection (b),
provided that Company receives reasonable arms-length consideration for any sale
or license of its assets. For this purpose, amounts paid by Company or Sub to
dissenters to shareholders who receive cash or other property, to pay
reorganization expenses, and in connection with redemptions and distributions
(except for regular, normal distributions) will be treated as assets of the
Company or Sub, respectively, held immediately prior to the Merger.
(e) Fail to cause Company (or a transferee of Company's stock or
business to which the stock or assets of Company are transferred in a
transaction described in Section 368(a)(2)(C) of the Code) either to continue
Company's historic business or use a significant portion of its business assets
in a business.
5.8 Nasdaq Listing. Microsoft will use its commercially reasonable best
efforts (i) to cause the shares of Microsoft Common Stock to be issued in the
Merger to be quoted upon the Effective Time on the Nasdaq National Market or
listed on such national securities exchange as Microsoft Common Stock is listed
and (ii) to cause the shares o Microsoft Common Stock issued upon the exercise
of assumed Company Options to be quoted upon issuance on the Nasdaq National
Market or listed on such national securities exchange as shares of Microsoft
Common Stock are listed.
5.9 Employee Transition Committee. Microsoft shall assist Company in the
organization, establishment and administration of the Transition Committee as
described in Section 4.8.
5.10 Retention Plans. Prior to the Effective Time, Microsoft agrees to
implement the Retention Plans for the benefit of Company Employees after the
Merger. Microsoft agrees not to terminate, amend or otherwise modify the
Retention Plans and to make all payments provided for in the Retention Plans as
such payments become due and payable, subject to the terms of the Retention
Plans. Microsoft also agrees to take all other actions with respect to Company
employees that are described in or contemplated by Schedule 4.12.3.
ARTICLE VI
ADDITIONAL AGREEMENTS
In addition to the foregoing, Microsoft and Company each agree to take the
following actions after the execution of this Agreement.
6.1 Preparation of S-4. As promptly as practicable after the date hereof,
Microsoft and Company shall prepare and file with the SEC the Proxy Statement
and any other documents required by the Exchange Act in connection with the
Merger, and Microsoft shall prepare and file with the SEC the S-4, in which the
Proxy Statement will be included as a part of the prospectus. Each of Microsoft
and Company shall use its commercially reasonable best efforts
-32-
to have the S-4 declared effective under the Securities Act as promptly as
practicable after such filing. Prior to the effective date of the S-4, Microsoft
shall also take any action required to be taken under any applicable federal or
state securities or blue sky laws in connection with the issuance of the
Microsoft Common Stock in the Merger. Company agrees that the Proxy
Statement/Prospectus will comply as to form in all material respects with the
provisions of all applicable laws, including the provisions of the Exchange Act
and the rules and regulations of the SEC thereunder, except that no
representation is made by Company with respect to information supplied by
Microsoft specifically for inclusion therein. Microsoft agrees that the S-4 and
the Proxy Statement/Prospectus will comply as to form in all material respects
with the provisions of all applicable laws including the provisions of the
Securities Act and the Exchange Act and the rules and regulations of the SEC
thereunder, except that no representation is made by Microsoft with respect to
information supplied by Company specifically for inclusion therein.
6.2 Letters of Company's Accountants. Company shall use its commercially
reasonable best efforts to cause to be delivered to Microsoft letters (each, a
"Company Comfort Letter") addressed to Microsoft and Company of Ernst & Young
LLP, Company's independent auditors, dated the date on which the S-4 shall
become effective and within two business days prior to the Closing Date, in form
and substance reasonably satisfactory to Microsoft and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the S-4.
6.3 Letter of Microsoft's Accountants. Microsoft shall use its
commercially reasonable best efforts to cause to be delivered to Company letters
(each a "Microsoft Comfort Letter") addressed to Company and Microsoft of
Deloitte & Touche LLP, Microsoft's independent auditors, dated the date on which
the S-4 shall become effective and within two business days prior to the Closing
Date in form and substance reasonably satisfactory to Company and customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements similar to the S-4.
6.4 Access to Information. Subject to appropriate restrictions on access
to information which Company determines in good faith to be proprietary or
competitively sensitive, Company and Microsoft shall, subject to applicable law,
each afford the other and their respective accountants, counsel and other
representatives, reasonable access during normal business hours during the
period prior to the Effective Time to (i) all of their and their respective
Subsidiaries' properties, books, contracts, commitments and records, and (ii)
all other information concerning the business, properties and personnel of
Company and Microsoft and their respective Subsidiaries, as the other party may
reasonably request which is necessary to complete the transaction and prepare
for an orderly transition to operations after the Effective Time. Company and
Microsoft agree to provide to the other and their respective accountants,
counsel and representatives copies of internal financial statements promptly
upon the request therefore. No information or knowledge obtained in any
investigation pursuant to this Section 6.4 shall affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger. Company and Microsoft
agree that the non-disclosure agreement, dated August 11, 1999 (the
"Confidentiality Agreement"), between Company and Microsoft shall continue in
full force and effect and shall
-33-
be applicable to all Confidential Information (as defined in the Confidentiality
Agreement) received pursuant to this Agreement.
6.5 Legal Conditions to the Merger. Each of Microsoft, Sub and Company
will take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on any of them with respect to the Merger and
will promptly cooperate with and furnish information to each other in connection
with any such requirements imposed upon the other. Each of Microsoft, Sub and
Company will take, and will cause its respective Subsidiaries to take, all
reasonable actions to obtain (and to cooperate with the other parties in
obtaining) any consent, approval, order or authorization of, or any exemption
by, any Governmental Entity, or other third party, required to be obtained or
made by Company or Microsoft or their respective Subsidiaries in connection with
the Merger or the taking of any action contemplated thereby or by this
Agreement. The foregoing shall not require any party to agree to the imposition
of, or to comply with, any condition, obligation or restriction on Microsoft or
any of its Subsidiaries or on the Surviving Corporation of the type referred to
in Section 7.1.6 hereof.
6.6 Affiliates. Contemporaneously with the execution of this Agreement,
the affiliate letters substantially in the form attached as Exhibit 6.6 (the
"Affiliate Letters") with respect to the sale of Microsoft Common Stock, shall
have been executed by all of the executive officers and directors of Company
(the "Affiliates"). Microsoft shall be entitled to place appropriate legends on
the certificate evidencing any shares of Microsoft Common Stock to be received
by Affiliates pursuant to the terms of this Agreement and to issue appropriate
stop transfer instructions to the transfer agent for shares of Microsoft Common
Stock consistent with the terms of the Affiliate Letters.
6.7 HSR Act Filings.
6.7.1 Filings and Cooperation. Each of Microsoft and Company shall
take all reasonable steps (i) promptly to make or cause to be made the filings
required of such party or any of its Affiliates or Subsidiaries under the HSR
Act with respect to the Merger and the other transactions provided for in this
Agreement, (ii) to comply in a timely manner with any request under the HSR Act
for additional information, documents, or other material received by such party
or any of its Affiliates or Subsidiaries from the Federal Trade Commission or
the Department of Justice or other Governmental Entity in respect of such
filings, the Merger, or such other transactions, and (iii) to cooperate with the
other party in connection with any such filing and in connection with resolving
any investigation or other inquiry of any such agency or other Governmental
Entity under any Antitrust Laws (as defined in Section 6.7.2) with respect to
any such filing, the Merger, or any such other transaction. Each party shall
promptly inform the other party of any material communication with, and any
proposed understanding, undertaking, or agreement with, any Governmental Entity
regarding any such filings, the Merger, or any such other transactions. Neither
party shall participate in any meeting with any Governmental Entity in respect
of any such filings, investigation, or other inquiry without giving the other
party notice of the meeting and, to the extent permitted by such Governmental
Entity, the opportunity to attend and participate.
-34-
6.7.2 Objections. Each of Microsoft and Company shall take all reasonable
steps to resolve such objections, if any, as may be asserted by any Governmental
Entity with respect to the Merger or any other transactions provided for in this
Agreement under the HSR Act, the Sherman Act, as amended, the Clayton Act, as
amended, the Federal Trade Commission Act, as amended, and any other federal,
state or foreign statutes, rules, regulations, orders, or decrees that are
designed to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade (collectively, "Antitrust Laws"). In
connection therewith, if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging the Merger as violative
of any Antitrust Law, and, if by mutual agreement, Microsoft and Company decide
that litigation is in their best interests, each of Microsoft and Company shall
cooperate vigorously to contest and resist any such action or proceeding and to
have vacated, lifted, reversed, or overturned any decree, judgment, injunction,
or other order, whether temporary, preliminary, or permanent (each an "Order"),
that is in effect and that prohibits, prevents, or restricts consummation of the
Merger. Each of Microsoft and Company shall take such reasonable action as may
be required to cause the expiration of the notice periods under the HSR Act or
other Antitrust Laws with respect to the Merger and such other transactions as
promptly as possible after the execution of this Agreement. Notwithstanding
anything to the contrary in this Section 6.7.2 or in Section 6.7.1, (x) neither
Microsoft nor any of its Subsidiaries shall be required to divest any of their
respective businesses, product lines, or assets, or to take or agree to take any
other action or agree to any limitation that would have a Material Adverse
Effect on the drawing and diagramming software business of Microsoft combined
with the Surviving Corporation after Closing, (y) neither Company nor its
Subsidiaries shall be required to divest any of their respective businesses,
product lines, or assets, or to take or agree to take any other action or agree
to any limitation that would have a Material Adverse Effect on the Business
Condition of Company and (z) neither Microsoft nor Company (nor any of their
Subsidiaries) shall be required to continue to contest or resist any action or
proceeding brought by a Governmental Entity if it concludes that such action is
no longer in its best interest.
6.8 Officers and Directors. Microsoft agrees that all rights to
indemnification (including advancement of expenses) existing on the date hereof
in favor of the present or former officers, directors and employees of Company
or any of its Subsidiaries (collectively, the "Indemnified Parties") with
respect to actions taken in their capacities as officers, directors and
employees prior to the Effective Time as provided in Company's Articles of
Incorporation or Bylaws, employment agreements and indemnification agreements
shall survive the Merger and continue in full force and effect for a period of
six years following the Effective Time and shall be guaranteed by Microsoft and
that Company's former and present officers and directors shall be provided by
Microsoft with the same level of indemnification as currently exists for
Microsoft's officers and directors. This Section 6.8 shall survive the
consummation of the Merger at the Effective Time, and is intended to be for the
benefit of, and shall be enforceable by, the Indemnified Parties, their heirs
and personal representatives and shall be binding on the Surviving Corporation
and its respective successors and assigns.
6.9 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense, except
that if the Merger is not consummated expenses
-35-
incurred in connection with printing and mailing of the documents distributed or
to be distributed to shareholders of Company and the filing fee with respect to
the S-4 shall be shared equally by Microsoft and Company.
6.10 Stock Option Agreement. To induce Microsoft to execute this
Agreement, Company has executed and delivered to Microsoft as of the date hereof
a Stock Option Agreement (the "Stock Option Agreement") in the form attached
hereto as Exhibit 6.10.
6.11 Additional Agreements. In case at any time after the Effective
Time any further action is reasonably necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of
either of the Constituent Corporations, the proper officers and directors of
each corporation which is a party to this Agreement shall take all such
necessary action.
6.12 Public Announcements. Microsoft and Company shall cooperate with
each other in releasing information concerning this Agreement and the
transactions contemplated herein. Where practicable each of the parties shall
furnish to the other drafts of all releases prior to publication. Nothing
contained herein shall prevent either party at any time from furnishing any
information to any governmental agency or from issuing any release when it
believes it is legally required to do so.
6.13 State Takeover Laws. Company, and the Board of Directors of Company,
shall grant such approvals and take all necessary steps to exempt the
transactions contemplated by this Agreement from, or if necessary challenge the
validity or applicability of Chapter 19 of the WBCA to the Merger.
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 shall be subject to the
satisfaction prior to the Closing Date of the following conditions:
7.1.1 Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the required vote of
holders of Company Common Stock.
7.1.2 Consents. Other than the filing of the Merger Documents with the
Secretary of State of the State of Washington, all Consents legally required for
the consummation of the Merger and the transactions contemplated by this
Agreement shall have been filed, occurred, or been obtained, other than such
Consents, the failure of which to obtain would not have a Material Adverse
Effect on the consummation of the Merger or the other transactions contemplated
hereby or on the Business Condition of Microsoft or Company.
-36-
7.1.3 S-4. The S-4 shall have become effective under the Securities
Act and shall not be the subject of any stop order or proceedings seeking a stop
order and the Proxy Statement shall not be at the Effective Time subject to any
proceedings commenced or threatened by the SEC.
7.1.4 No Restraints. No statute, rule, regulation, executive order,
decree or injunction shall have been enacted, entered, promulgated or enforced
by any United States court or Governmental Entity of competent jurisdiction
which enjoins or prohibits the consummation of the Merger and shall be in
effect.
7.1.5 Tax-Free Reorganization. Each of Company and Microsoft shall
have received a written opinion from their respective counsel to the effect that
the Merger will constitute a reorganization within the meaning of Section 368 of
the Code, and that Microsoft, Sub and Company will each be a party to that
reorganization. In preparing Company and Microsoft tax opinions, counsel may
rely on reasonable representations related thereto.
7.1.6 No Burdensome Condition. There shall not be any action taken,
or any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger by any Governmental Entity which, in connection with
the grant of any Required Statutory Approval, imposes any restriction, condition
or obligation upon Microsoft, Company or the Surviving Corporation which would
(i) have a Material Adverse Effect on the Business Condition of Company or (ii)
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement.
7.2 Conditions of Obligations of Microsoft and Sub. The obligations of
Microsoft and Sub to effect the Merger are subject to the satisfaction of the
following conditions unless waived by Microsoft and Sub:
7.2.1 Representations and Warranties of Company. The representations
and warranties of Company set forth in this Agreement shall be true and correct
as of the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date, except: (i) as otherwise contemplated by this
Agreement (but excluding from this exception any breach made unknowingly
pursuant to Section 4.2), or (ii) in respects that do not have a Material
Adverse Effect on Company or Microsoft's Business Condition. Microsoft shall
have received a certificate signed on behalf of Company by the chief executive
officer or the chief financial officer of Company to such effect on the Closing
Date.
7.2.2 Performance of Obligations of Company. Company shall have
performed all agreements and covenants required to be performed by it under this
Agreement prior to the Closing Date, except for breaches that do not have a
Material Adverse Effect on Company's Business Condition. Microsoft shall have
received a certificate signed on behalf of Company by the chief executive
officer or the chief financial officer of Company to such effect.
-37-
7.2.3 Affiliates. Microsoft shall have received from each person or
entity who may be deemed pursuant to Section 6.6 hereof to be an Affiliate of
Company a duly executed Affiliates Letter substantially in the form attached
hereto as Exhibit 6.6.
7.2.4 Pooling of Interests; Comfort Letters. Except if Microsoft has
taken or caused to be taken any action that would disqualify the Merger as a
pooling of interests for accounting purposes or if Microsoft has failed to
obtain any required Affiliate Letters from affiliates of Microsoft, (i) Company
shall not have breached its representation in Section 3.1.19 or its covenant in
Section 4.3 with the result that the Merger will not qualify for pooling of
interest accounting treatment and (ii) Microsoft shall have received a letter
from Ernst & Young LLP addressed to Company to the effect that the Merger will
qualify for pooling of interest accounting treatment (without regard to any
action or conduct by Microsoft). Except if Microsoft has failed to provide to
Ernst & Young LLP any customary representations reasonably requested by Ernst & Young LLP, Microsoft shall have received a Company Comfort Letter, dated as of a
date within two business days prior to the Closing.
7.2.5 Opinion of Company's Counsel. Microsoft shall have received an
opinion dated the Closing Date of Shearman & Sterling or Perkins Coie LLP,
counsel to Company, as to matters substantially set forth in Exhibit 7.2.5
hereto. In rendering such opinion, Shearman & Sterling may rely on opinions of
local counsel reasonably satisfactory to Microsoft, including Perkins Coie LLP.
7.3 Conditions of Obligation of Company. The obligation of Company to
effect the Merger is subject to the satisfaction of the following conditions
unless waived by Company:
7.3.1 Representations and Warranties of Microsoft and Sub. The
representations and warranties of Microsoft and Sub set forth in this Agreement
shall be true and correct as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date, except: (i) as otherwise
contemplated by this Agreement (but excluding from this exception any breach
made unknowingly pursuant to Section 5.1), or (ii) in respects that do not have
a Material Adverse Effect on Microsoft's Business Condition. Company shall have
received a certificate signed on behalf of Microsoft by an authorized executive
officer of Microsoft to such effect on the Closing Date.
7.3.2 Performance of Obligations of Microsoft and Sub. Microsoft and
Sub shall have performed all agreements and covenants required to be performed
by them under this Agreement prior to the Closing Date except for breaches that
do not have a Material Adverse Effect on Microsoft's Business Condition and
Company shall have received a certificate signed on behalf of Microsoft by an
authorized executive officer of Microsoft to such effect.
7.3.3 Opinion of Microsoft Counsel. Company shall have received an
opinion dated the Closing Date of Preston Gates & Ellis LLP, counsel to
Microsoft, as to matters that are customary for transactions of this type.
-38-
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 Company:
(a) by mutual consent of Microsoft and Company;
(b) by either Microsoft or Company (provided that the terminating
party is not then in material breach of any representation, warranty, covenant
or agreement contained in this Agreement) if there has been a breach of any
representation, warranty, covenant or agreement which has a Material Adverse
Effect on the Business Condition of Company or Microsoft, as the case may be,
and such breach has not been cured, or commercially reasonable best efforts are
not being employed to cure such breach, within 20 days after notice thereof is
given to the party committing such breach;
(c) by either Microsoft or Company if the Merger shall not have
been consummated before March 31, 2000, provided, however if the parties have
agreed to pursue litigation pursuant to Section 6.7.2, such date shall be
extended to September 30, 2000;
(d) by either Microsoft or Company if any approval of the
shareholders of Company shall not have been obtained by reason of the failure to
obtain the required vote upon a vote taken at any Company Shareholders Meeting
or any adjournment thereof;
(e) by either Microsoft or Company if any permanent injunction or
other order of a court or other competent authority preventing the Merger shall
have become final and not subject to appeal;
(f) by Microsoft if the Board of Directors of Company shall have
withdrawn or modified in a manner adverse to Microsoft its approval or
recommendation of the Merger, this Agreement or the transactions contemplated
hereby; or
(g) by Microsoft if Company or any of the other persons or
entities described in Section 4.1.5 shall take any of the actions that would be
proscribed by Section 4.1.5 other than actions in exercise of Company's
fiduciary duties and satisfying all conditions of Section 4.1.5 and such actions
have a Material Adverse Effect on the Business Condition of Company.
Where action is taken to terminate this Agreement pursuant to this Section
8.1, it shall be sufficient for such action to be authorized by the Board of
Directors of the party taking such action without any requirement to submit such
action to the shareholders of such party.
-39-
8.2 Effect of Termination. In the event of termination of this Agreement
by either Company or Microsoft as provided in Section 8.1, this Agreement shall
forthwith become void and have no effect, and there shall be no liability or
obligation on the part of Microsoft, Sub or Company or their respective officers
or directors, except that (i) all of Sections 6.9, 8.2, 8.3, and Article IX and
the Confidentiality Agreement shall survive any such termination and
abandonment, and (ii) no party shall be released or relieved from any liability
arising from the willful breach by such party of any of its representations,
warranties, covenants or agreements as set forth in this Agreement except as
provided in Section 8.3(b).
8.3 Break-up Fee.
(a) Company agrees to pay Microsoft, (provided that Microsoft is not
then in material breach of any representation, warranty, covenant or agreement
contained in this Agreement) promptly upon the termination of this Agreement by
wire transfer, the sum of $30 million in immediately available funds in the
event that following the date of the execution of this Agreement, and at or
prior to the termination of this Agreement, any of the following events shall
have occurred:
(i) Microsoft shall have terminated this Agreement pursuant to
Section 8.1(g) hereof;
(ii) Microsoft shall have terminated this Agreement pursuant to
Section 8.1(f) hereof at such time Company shall have agreed to an
Acquisition Transaction which would result in a change in the beneficial
owners of more than fifty percent (50%) of the voting power of the capital
stock of Company with any person, other than Microsoft or any of its
affiliates; or
(iii) Microsoft shall have terminated this Agreement pursuant to
Section 8.1(b) hereof, following a willful material breach of this
Agreement by Company.
(b) The right to the payment of the fees set forth in this Section 8.3
shall be the exclusive remedy at law or in equity to which Microsoft may be
entitled upon termination of this Agreement under the conditions set forth in
Section 8.3(a).
8.4 Amendment. This Agreement may be amended by the parties hereto, by
action taken by their respective Board of Directors, at any time before or after
approval of matters presented in connection with the Merger by the shareholders
of Company or Microsoft, but after any such shareholder approval, no amendment
shall be made which by law requires the further approval of shareholders without
obtaining such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
8.5 Extension, Waiver. At any time prior to the Effective Time, any party
hereto, by action taken by its Board of Directors may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any
-40-
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements, covenants or conditions for the benefit of such
party contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties and Agreements. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall be deemed to be conditions
to the Merger and shall not survive the Merger, except for the agreements
contained in Article II and in Sections 1.4, 4.3, 4.12, 6.4, 6.7, 6.8, 6.9, and
6.12 and the agreements delivered pursuant to this Agreement.
9.2 Notices. All notices, requests, demands or other communications which
are required or may be given pursuant to the terms of this Agreement shall be in
writing and shall be deemed to have been duly given: (i) on the date of delivery
if personally delivered by hand, (ii) upon the third day after such notice is
deposited in the United States mail, if mailed by registered or certified mail,
postage prepaid, return receipt requested, (iii) on the date of delivery if sent
by a nationally recognized overnight express courier, or (iv) upon written
confirmation of receipt by the recipient of such notice if by facsimile:
(a) If to Microsoft or Sub:
Microsoft Corporation
One Microsoft Way
Redmond, WA 98052-6399
Attention: Chief Financial Officer; General Counsel,
Finance and Operations
Telephone No.: (425) 882-8080
Facsimile No.: (425) 869-1327
with copies to:
Preston Gates & Ellis LLP
5000 Columbia Center
701 Fifth Avenue
Seattle, Washington 98104
Attention: Richard B. Dodd
Facsimile No.: (206) 623-7022
-41-
(b) if to Company, to:
Visio Corporation
2211 Elliott Avenue
Seattle, WA 98121
Attention: Chief Financial Officer
Phone No.: (206) 956-6000
Facsimile No.: (206) 956-6001
with a copy to:
Shearman & Sterling
1550 El Camino Real
Menlo Park, CA 94025-4100
Attention: Christopher D. Dillon
Facsimile No.: (650) 330-2299
Perkins Coie LLP
1201 Third Avenue, Suite 4800
Seattle, Washington 98101-3099
Attention: Linda A. Schoemaker
Facsimile No.: (206) 583-8500
9.3 Interpretation. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section or Exhibit to this
Agreement unless otherwise indicated. The words "include," "includes," and
"including" when used therein shall be deemed in each case to be followed by the
words "without limitation." The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. The "knowledge of," "the best of
knowledge of," or other derivations of "know" with respect to Microsoft or
Company will mean the actual knowledge of the executive officers and directors
of Microsoft or Company, in each case assuming the exercise of reasonable
inquiry. This Agreement has been negotiated by the respective parties hereto and
their attorneys and the language hereof will not be construed for or against
either party. A reference to a Section or an Exhibit will mean a section in, or
exhibit to, this Agreement unless otherwise explicitly set forth.
9.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to each of the other parties, it being understood that
all parties need not sign the same counterpart.
9.5 Miscellaneous. This Agreement, the Confidentiality Agreement, and the
documents referred to herein (a) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof; (b) is not intended to confer upon any
other person any rights or remedies hereunder (except as otherwise expressly
provided herein and except that Section 6.8 is for the benefit of Company's
directors and officers and
-42-
Sections 2.3.1, 2.3.2 and 4.12 are for the benefit of
holders of Company Stock Options and the other employees of Company and said
Sections are intended to confer rights on such persons); and (c) shall not be
assigned by operation of law or otherwise except as otherwise specifically
provided.
9.6 No Joint Venture. Nothing contained in this Agreement will be deemed
or construed as creating a joint venture or partnership between any of the
parties hereto. No party is by virtue of this Agreement authorized as an agent,
employee or legal representative of any other party. No party will have the
power to control the activities and operations of any other and their status is,
and at all times, will continue to be, that of independent contractors with
respect to each other. No party will have any power or authority to bind or
commit any other. No party will hold itself out as having any authority or
relationship in contravention of this Section.
9.7 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Washington. Company and Microsoft consent to jurisdiction and venue in the state
and federal courts in King County, Washington.
9.8 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
-43-
SIGNATURE PAGE AGREEMENT AND PLAN OF REORGANIZATION
IN WITNESS WHEREOF, Microsoft, Sub and Company have caused this Agreement
to be signed by their respective officers thereunder duly authorized, all as of
the date first written above.
MICROSOFT CORPORATION
By: /s/ William H. Gates
------------------------------
Its: Chief Executive Officer
-----------------------------
MOVIESUB, INC.
By: /s/ Robert A. Shel
------------------------------
Its: Secretary
-----------------------------
VISIO CORPORATION
By: /s/ Jeremy A. Jaech
------------------------------
Its: President and Chief
Executive Officer
-----------------------------
-44-