\nMicrosoft Disclosure Schedule……….. 20 Return Periods…………………….. 14
\nMicrosoft Financial Statements………. 21 Returns…………………………… 14
\nMicrosoft Required Statutory Approvals.. 21 S-4………………………………. 10
\nMicrosoft SEC Documents…………….. 21 SEC………………………………. 9
\nmultiemployer plan…………………. 13 Securities Act…………………….. 5
\nNon-U.S. Plans…………………….. 12 single-employer plan……………….. 13
\nOrder…………………………….. 35 Stock Option Agreement……………… 36
\nPlan……………………………… 12 Sub………………………………. 1
\nplan of reorganization……………… 2 Surviving Corporation………………. 2
\nprohibited transaction……………… 12 tax………………………………. 13
\nProxy Statement……………………. 10 taxes…………………………….. 13
\nProxy Statement\/Prospectus………….. 10 Transition Committee……………….. 28
\nReal Property……………………… 19 U.S. Plans………………………… 12
\nRequired Statutory Approvals………… 21 Violation…………………………. 9
\nRetention Plan…………………….. 30 Voting Agreements………………….. 28
\n WBCA……………………………… 1 <\/p>\n<\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n
-vi-<\/p>\n
AGREEMENT AND PLAN OF REORGANIZATION<\/p>\n
AGREEMENT AND PLAN OF REORGANIZATION, dated as of September 14, 1999, among
\nMicrosoft Corporation, a Washington corporation (“Microsoft”), MovieSub, Inc., a
\nWashington corporation and a wholly-owned subsidiary of Microsoft (“Sub”), and
\nVisio Corporation, a Washington corporation (“Company”).<\/p>\n
WITNESSETH<\/p>\n
WHEREAS, upon the terms and subject to the conditions of this Agreement and
\nin accordance with the Washington Business Corporation Act (the “WBCA”),
\nMicrosoft and Company will enter into a business combination transaction
\npursuant to which Sub will merge with and into Company (the “Merger”);<\/p>\n
WHEREAS, the Board of Directors of Company (i) has determined that the
\nMerger is advisable and fair to, and in the best interests of, Company and its
\nshareholders and has adopted this Agreement, the Merger and the other
\ntransactions contemplated by this Agreement and (ii) has recommended the
\napproval of this Agreement by the shareholders of Company;<\/p>\n
WHEREAS, the respective Boards of Directors of Microsoft and Sub have
\ndetermined that the Merger is advisable and fair to, and in the best interests
\nof, Microsoft and Sub;<\/p>\n
WHEREAS, for United States federal income tax purposes, the Merger is
\nintended to qualify as a reorganization within the meaning of Section 368 of the
\nUnited States Internal Revenue Code of 1986, as amended; and<\/p>\n
WHEREAS, the parties intend that the Merger shall be accounted for as a
\n“pooling of interests” for financial reporting purposes.<\/p>\n
INTENDING TO BE LEGALLY BOUND, and in consideration of the premises and the
\nmutual representations, warranties, covenants and agreements contained herein,
\nMicrosoft, Sub and Company hereby agree as follows:<\/p>\n
ARTICLE I<\/p>\n
THE MERGER<\/p>\n
1.1 Effective Time of the Merger. Subject to the provisions of this
\nAgreement, Sub will be merged with and into Company. An Agreement and Plan of
\nMerger, and articles, certificates or other appropriate filing documents (the
\n“Merger Documents”) shall be duly prepared, executed and acknowledged by the
\nparties and thereafter delivered to the Secretary of State of Washington, for
\nfiling, as provided in the WBCA as soon as practicable on or after the Closing
\nDate (as defined in Section 1.2). The Merger shall become effective upon the
\nfiling of the Merger Documents with the Secretary of State of Washington or at
\nsuch time thereafter as is provided in the Merger Documents (the “Effective
\nTime”). Company acknowledges and agrees<\/p>\n
that Microsoft will have no obligation to make any payment or issue any
\nsecurities pursuant to this Agreement until the Merger has been confirmed in
\nwriting by the Secretary of State of Washington.<\/p>\n
1.2 Closing. The closing of the Merger (the “Closing”) will take place
\nas soon as practicable but no later than the third business day after
\nsatisfaction or waiver of the last to be fulfilled of the conditions set forth
\nin Article VII that by their terms are not to occur at the Closing (the “Closing
\nDate”), at the offices of Preston Gates & Ellis LLP, Seattle, Washington, unless
\nanother date or place is agreed to in writing by the parties hereto.<\/p>\n
1.3 Effects of the Merger. At the Effective Time, (i) the separate
\nexistence of Sub shall cease and Sub shall be merged with and into Company
\n(Company after the Merger is sometimes referred to herein as the “Surviving
\nCorporation”), (ii) the Articles of Incorporation of Company shall be the
\nArticles of Incorporation of the Surviving Corporation, except that such
\nArticles of Incorporation shall be amended to provide that the authorized
\ncapital stock of the Surviving Corporation shall be 1,000 shares of Common
\nStock, $.01 par value, until duly amended, (iii) the Bylaws of Sub shall be the
\nBylaws of the Surviving Corporation, (iv) the directors of the Surviving
\nCorporation shall be the directors of Sub immediately prior to the Effective
\nTime, (v) the officers of the Surviving Corporation shall be the officers of Sub
\nimmediately prior to the Effective Time, and (vi) the Merger shall, from and
\nafter the Effective Time, have all the effects provided by applicable law.<\/p>\n
1.4 Tax-Free Reorganization. The Merger is intended to be a
\nreorganization within the meaning of Section 368 of the Internal Revenue Code of
\n1986, as amended (the “Code”), and this Agreement is intended to be a “plan of
\nreorganization” within the meaning of the regulations promulgated under Section
\n368 of the Code. Each party hereto and its affiliates agree to treat the Merger
\nas a reorganization within the meaning of Section 368 of the Code, and this
\nAgreement is intended to be a “plan of reorganization” within the meaning of the
\nregulations promulgated under Section 368 of the Code, unless and until there is
\na determination, within the meaning of Section 1313 of the Code that such
\nconclusions are wholly or partially incorrect. Microsoft agrees to act in good
\nfaith consistent with the intent of the parties expressed in this provision.<\/p>\n
1.5 Accounting Treatment. The business combination to be effected by the
\nMerger is intended to be treated for accounting purposes as a “pooling of
\ninterests.” However, Microsoft has reserved the right under this Agreement to
\ncause the Merger to be treated for accounting purposes as a “purchase.”<\/p>\n
-2-<\/p>\n
ARTICLE II<\/p>\n
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
\n CONSTITUENT CORPORATIONS, EXCHANGE OF CERTIFICATES<\/p>\n
2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
\nMerger and without any action (except as provided in Section 4.9) on the part of
\nthe holder of any shares of Company common stock, par value $.001 per share
\n(“Company Common Stock”):<\/p>\n
2.1.1 Capital Stock of Sub. All issued and outstanding shares of
\ncapital stock of Sub shall continue to be issued and shall be converted into
\n1,000 shares of Surviving Corporation Common Stock with the stock certificate of
\nSub evidencing ownership of such shares of capital stock of the Surviving
\nCorporation.<\/p>\n
2.1.2 Cancellation of Company Common Stock. All shares of Company
\nCommon Stock that are owned directly or indirectly by Company or Microsoft or by
\nany Subsidiary (as defined below) of Company or Microsoft immediately prior to
\nthe Merger shall be canceled and no stock of Microsoft or other consideration
\nshall be delivered in exchange therefor. In this Agreement, “Subsidiary” or
\n“Subsidiaries” shall mean an entity of which an amount of the voting securities,
\nor other voting ownership or voting partnership interests of which is sufficient
\nto elect a majority of its board of directors or other governing body (or, if
\nthere are no such interests, 50% or more of the equity interests of which) is
\nowned directly or indirectly by Company. All Subsidiaries of Company are
\nidentified in the Company Disclosure Schedule (as defined in Section 3.1). All
\nreferences to Company, unless otherwise indicated shall include each of
\nCompany’s Subsidiaries.<\/p>\n
2.1.3 Conversion of Company Common Stock. Each issued and
\noutstanding share of Company Common Stock (other than shares to be canceled
\npursuant to Section 2.1.2 and dissenting shares as described in Section 2.1.5)
\nshall be converted, without any action on the part of the holders thereof, into
\nthe right to receive .45 shares (the “Exchange Ratio”) of common stock, par
\nvalue $0.0000125 per share, of Microsoft (the “Microsoft Common Stock”) (the
\n“Merger Consideration”). All such shares of Company Common Stock shall no longer
\nbe outstanding and shall cease to exist, and each certificate (a “Certificate”)
\npreviously representing any such shares shall represent only the right to
\nreceive (i) whole shares of Microsoft Common Stock and (ii) cash in lieu of
\nfractional shares, in each case as provided by this Section 2.1.<\/p>\n
2.1.4 Adjustments of Exchange Ratio. If, between the date of this
\nagreement and the Effective Time, the outstanding shares of Microsoft Common
\nStock or Company Common Stock shall have been changed into a different number of
\nshares or a different class or series or otherwise changed by reason of any
\nreclassification, recapitalization, split-up, stock dividend, stock combination,
\nexchange of shares or readjustment or similar transaction, the Exchange Ratio
\nshall be correspondingly adjusted.<\/p>\n
2.1.5 Dissenters’ Rights. Notwithstanding any provision of this
\nAgreement to the contrary, each outstanding share of Company Common Stock, the
\nholder of which has<\/p>\n
-3-<\/p>\n
demanded and perfected such holder’s right to dissent from the Merger and to be
\npaid the fair value of such shares in accordance with Sections 23B.13.010 et
\nseq. of the WBCA and, as of the Effective Time, has not effectively withdrawn or
\nlost such dissenters’ rights, shall not be converted into or represent a right
\nto receive the Merger Consideration, but the holder thereof shall be entitled
\nonly to such rights as are granted by the WBCA. Company shall give Microsoft (i)
\nprompt written notice of any notice of intent to demand fair value for any
\nshares of Company Common Stock, withdrawals of such notices, and any other
\ninstruments served pursuant to the WBCA or any other provisions of Washington
\nlaw and received by the Company, and (ii) the opportunity to conduct jointly all
\nnegotiations and proceedings with respect to demands for fair value for shares
\nof Company Common Stock under the WBCA. Company shall not, except with the prior
\nwritten consent of Microsoft, voluntarily make any payment with respect to any
\ndemands for fair value for shares of Company Common Stock or offer to settle or
\nsettle any such demands.<\/p>\n
2.1.6 Fractional Shares. No fractional shares of Microsoft Common
\nStock shall be issued in the Merger and such fractional interests shall not
\nentitle the owner thereof to vote. In lieu of any fractional share, each holder
\nof shares of Company Common Stock who would otherwise be entitled to receive a
\nfraction of a share of Microsoft Common Stock will be entitled to receive from
\nMicrosoft an amount of cash, without interest, equal to the Microsoft Average
\nClosing Price (as defined below) multiplied by the fraction of a share of
\nMicrosoft Common Stock to which such holder would otherwise be entitled. The
\n“Microsoft Average Closing Price” shall mean the average closing price of the
\nMicrosoft Common Stock as publicly reported for the NASDAQ National Market
\nSystem as of 4:00 p.m. Eastern Time over the last 20 trading days ending on the
\nfifth trading day prior to the Closing Date.<\/p>\n
2.2 Exchange of Certificates.<\/p>\n
2.2.1 Exchange Agent. Prior to the Closing Date, Microsoft shall
\nappoint ChaseMellon Shareholder Services, LLC, or other bank or trust company
\nreasonably satisfactory to Company, to act as exchange agent (the “Exchange
\nAgent”) in the Merger.<\/p>\n
2.2.2 Microsoft to Provide Common Stock and Cash. As promptly as
\npracticable after the Effective Time, Microsoft shall make available to the
\nExchange Agent the certificates representing whole shares of Microsoft Common
\nStock issued pursuant to Section 2.1 in exchange for outstanding shares of
\nCompany Common Stock and, from time to time, cash for payment in lieu of
\nfractional shares.<\/p>\n
2.2.3 Exchange Procedures. As soon as practicable after the
\nEffective Time, Microsoft shall cause the Exchange Agent to mail to each holder
\nof record as of the Effective Time of a Certificate or Certificates, (i) a
\nletter of transmittal (which shall be in customary form and specify that
\ndelivery shall be effected, and risk of loss and title to the Certificates shall
\npass, only upon delivery of the Certificates to the Exchange Agent) and (ii)
\ninstructions for use in effecting the surrender of the Certificates in exchange
\nfor certificates representing Microsoft Common Stock. Upon surrender of a
\nCertificate for cancellation to the Exchange Agent, together with a duly
\nexecuted letter of transmittal and such other documents as the Exchange<\/p>\n
-4-<\/p>\n
Agent shall require, the holder of such Certificate shall be entitled to receive
\nin exchange therefor the number of whole shares of Microsoft Common Stock to
\nwhich the holder of Company Common Stock is entitled pursuant to Section 2.1
\nhereof plus cash in lieu of fractional shares as provided in Section 2.1.6. The
\nCertificate so surrendered shall forthwith be canceled. Notwithstanding any
\nother provision of this Agreement, until holders of Certificates have
\nsurrendered them for exchange as provided herein, (i) no dividends or other
\ndistributions shall be paid with respect to any shares represented by such
\nCertificates and no payment for fractional shares shall be made, and (ii)
\nwithout regard to when such Certificates are surrendered for exchange as
\nprovided herein, no interest shall be paid on any dividends or other
\ndistributions or any payment for fractional shares. Upon surrender of a
\nCertificate, there shall be paid to the holder of such Certificate the amount of
\nany dividends or other distributions which theretofore became payable, but which
\nwere not paid by reason of the foregoing, with respect to the number of whole
\nshares of Microsoft Common Stock represented by the certificate or certificates
\nissued upon such surrender. If any certificate for Microsoft Common Stock is to
\nbe issued in a name other than in which the Certificate surrendered in exchange
\ntherefore is registered, it shall be a condition of such exchange that the
\nperson requesting such exchange pay any transfer or other taxes required by
\nreason of the issuance of certificates for such shares of Microsoft Common Stock
\nin a name other than that of the registered holder of the Certificate
\nsurrendered, or establish to the satisfaction of the Surviving Corporation that
\nsuch tax has been paid or is not applicable. In connection with its undertakings
\npursuant to this Section 2.2.3, the Exchange Agent shall be entitled to withhold
\nany income taxes as required by the Code.<\/p>\n
2.2.4 No Further Ownership Rights in Company Common Stock. All
\nMicrosoft Common Stock delivered upon the surrender for exchange of shares of
\nCompany Common Stock in accordance with the terms hereof shall be deemed to have
\nbeen delivered in full satisfaction of all rights pertaining to such shares of
\nCompany Common Stock. After the Effective Time there shall be no transfers on
\nthe stock transfer books of Company of shares of Company Common Stock. If,
\nafter the Effective Time, Certificates are presented to the Surviving
\nCorporation for any reason, they shall be canceled and exchanged as provided in
\nthis Article II. Certificates surrendered for exchange by any person
\nconstituting an “affiliate” of Company for purposes of Rule 145(c) under the
\nSecurities Act of 1933, as amended (the “Securities Act”), or for purposes of
\npreserving pooling of interests accounting treatment for the Merger shall not be
\nexchanged until Microsoft receives a written agreement from such persons as
\nprovided by Section 6.6.<\/p>\n
2.2.5 Return to Microsoft. Any Microsoft Common Stock and any cash
\nin lieu of fractional share interests made available to the Exchange Agent and
\nnot exchanged for Certificates within one year after the Effective Time and any
\ndividends and distributions held by the Exchange Agent for payment or delivery
\nto the holders of unsurrendered Certificates representing Company Common Stock
\nand unclaimed at the end of such one year period shall be redelivered or repaid
\nby the Exchange Agent to Microsoft, after which time any holder of Certificates
\nwho has not theretofore delivered or surrendered such Certificates to the
\nExchange Agent, subject to applicable law, shall look as a general creditor only
\nto Microsoft for payment of the Microsoft Common Stock, cash in lieu of
\nfractional shares, and any such dividends or distributions. Notwithstanding any
\nprovision of this Agreement, none of Microsoft, the<\/p>\n
-5-<\/p>\n
Exchange Agent, the Surviving Corporation or any other party hereto shall be
\nliable to any holder of Company Common Stock for any Microsoft Common Stock,
\ncash in lieu of fractional shares or dividends or distributions delivered to a
\npublic official pursuant to applicable abandoned property, escheat or similar
\nlaw.<\/p>\n
2.3 Company Options.<\/p>\n
2.3.1 Assumption by Microsoft. At the Effective Time, each of the
\nthen outstanding Company Options (as defined in Section 3.1.2) shall, by virtue
\nof the Merger and at the Effective Time, and without any further action on the
\npart of any holder thereof, be assumed by Microsoft and converted into an option
\nto purchase that number of shares of Microsoft Common Stock determined by
\nmultiplying the number of shares of Company Common Stock subject to such Company
\nOption at the Effective Time by the Exchange Ratio, at an exercise price per
\nshare of Microsoft Common Stock equal to the exercise price per share of such
\nCompany Option immediately prior to the Effective Time divided by the Exchange
\nRatio. If the foregoing calculation results in an assumed Company Option being
\nexercisable for a fraction of a share of Microsoft Common Stock, then the number
\nof shares of Microsoft Common Stock subject to such option shall be rounded to
\nthe nearest whole number of shares. Continuous employment with Company or any
\nCompany Subsidiaries shall be credited to the optionee for purposes of
\ndetermining the vesting of the number of shares of Microsoft Common Stock
\nsubject to exercise under the optionee’s converted Company Option after the
\nEffective Time. Except as provided in this Section 2.3.1, each Company Option
\nassumed by Microsoft hereunder shall be exercisable upon, and otherwise be
\nsubject to, the same terms and conditions as under the applicable Company
\nIncentive and Stock Option Plan (as defined in Section 3.1.2), the applicable
\noption agreement issued thereunder and any other plan or agreement pertaining to
\nthe exercisability or any other term of such Company Option. Notwithstanding
\nanything in this Section 2.3.1 to the contrary, the Company Options shall be
\nassumed by Microsoft in such a manner that Microsoft (i) is a corporation
\n“assuming a stock option in a transaction to which Section 424(a) applies”
\nwithin the meaning of Section 424 of the Code and the regulations thereunder or
\n(ii) to the extent that Section 424 of the Code does not apply to any such
\nCompany Options, would be such a corporation were Section 424 of the Code
\napplicable to such Company Options.<\/p>\n
2.3.2 Registration. Microsoft shall cause the shares of Microsoft
\nCommon Stock issuable upon exercise of the assumed Company Options to be
\nregistered, or to be issued pursuant to a then effective registration statement,
\nas soon as practicable after the Effective Time, but in no event later than 10
\ndays after the Effective Time, on Form S-8 promulgated by the SEC or, in the
\nevent that Form S-8 is not available under the applicable rules and regulations
\nof the SEC for shares of Microsoft Common Stock, on Form S-3 promulgated by the
\nSEC for the portion of such shares not registrable on Form S-8, and shall use
\nits commercially reasonable best efforts to maintain the effectiveness of such
\nregistration statement or registration statements for so long as such assumed
\nCompany Options remain outstanding. With respect to those individuals who
\nsubsequent to the Merger will be subject to the reporting requirements under
\nSection 16(a) of the Exchange Act (as defined in Section 4.12.2), Microsoft
\nshall administer Company Options assumed pursuant to this Section 2.3 in a
\nmanner that complies with Rule 16b-3<\/p>\n
-6-<\/p>\n
promulgated by the SEC under the Exchange Act, but shall have no responsibility
\nfor such compliance by Company or its predecessors.<\/p>\n
2.3.3 Notice; Reservation of Shares. As soon as practicable after
\nthe Effective Time, Microsoft shall deliver to each holder of an assumed Company
\nOption an appropriate notice setting forth such holder’s rights pursuant
\nthereto. Microsoft shall comply with the terms of all such Company Options and
\nshall take all corporate action necessary to reserve for issuance a sufficient
\nnumber of shares of Microsoft Common Stock for delivery upon exercise of the
\nassumed Company Options.<\/p>\n
2.4 Employee Stock Purchase Plan. Company shall cause its 1995 Employee
\nStock Purchase Plan to be terminated as of the day immediately prior to the
\nEffective Time, and all funds which have been withheld from the wages of
\nCompany’s employees for the purchase of Company Common Stock as of such time
\nshall be applied to a final purchase thereunder.<\/p>\n
ARTICLE III<\/p>\n
REPRESENTATIONS AND WARRANTIES<\/p>\n
3.1 Representations and Warranties of Company. Except as disclosed in the
\nCompany SEC Documents (as defined below) or in a Disclosure Schedule which
\nidentifies by section number the section and subsection to which such disclosure
\nrelates (provided, however, that Company shall be deemed to have adequately
\ndisclosed with respect to any section or subsection any matters that are clearly
\ndescribed elsewhere in such document if a reader(s) who has not been actively
\ninvolved in Company but is generally familiar with the software development
\nindustry can understand the applicability of such disclosure to such non-
\nreferenced sections or subsections) and is delivered by Company to Microsoft
\nconcurrently with the execution of this Agreement (the “Company Disclosure
\nSchedule”), whether or not the Company Disclosure Schedule is referred to in a
\nspecific section or subsection and except as specifically provided for in this
\nAgreement or any agreement attached as an Exhibit hereto, Company represents and
\nwarrants to Microsoft and Sub as follows:<\/p>\n
3.1.1 Organization, Standing and Power. Each of Company and its
\nSubsidiaries is an entity duly organized, validly existing and in good standing,
\nas applicable under the laws of its jurisdiction of incorporation or
\norganization has all requisite power and authority to own, lease and operate its
\nproperties and to carry on its businesses as now being conducted, and is duly
\nqualified and in good standing to do business in each jurisdiction in which it
\nowns, leases or operates its properties or conducts its businesses so as to
\nrequire such qualification, except where the failure to be so organized,
\nexisting, qualified or in good standing or to have such corporate or other
\napplicable power and authority have not had, and would not have, a Material
\nAdverse Effect (as hereinafter defined) on the Business Condition (as
\nhereinafter defined) of Company. As used in this Agreement, “Business
\nCondition” with respect to any entity shall mean the financial condition and
\nresults of operations (without giving effect to the consequences of the
\ntransactions contemplated by this Agreement) of such entity and its Subsidiaries
\ntaken as a whole. For the purposes of this Agreement, the term “Material
\nAdverse<\/p>\n
-7-<\/p>\n
Effect” means material adverse effect other than resulting from (i) changes
\nattributable to conditions affecting the Company Business generally or the
\nsoftware industry generally, (ii) changes in general economic, political or
\nregulatory conditions, (iii) changes attributable to the announcement or
\npendency of the Merger, or the other transactions contemplated hereby, or (iv)
\nwith respect to Company, litigation arising from allegations of a breach of
\nfiduciary duty relating to this Agreement. Company has made available to
\nMicrosoft complete and correct copies of the Certificate or Articles of
\nIncorporation, Bylaws, and minutes of each meeting of the board (and each
\ncommittee thereof) of directors of Company and each of its Subsidiaries, in each
\ncase, as amended to the date hereof. “Company Business” means the business
\ngenerally related to the development and sale of software for business
\ndiagramming, technical drawing and information technology design and
\ndocumentation together with all other Company assets dedicated to such business.<\/p>\n
3.1.2 Capital Structure. The authorized capital stock of Company
\nconsists of 200,000,000 shares of Company Common Stock of which 30,213,572 were
\noutstanding as of September 10, 1999 and 40,000,000 shares of Preferred Stock
\n(the “Company Preferred Stock”), of which none are outstanding as of the date
\nhereof and none of which are held by Subsidiaries of Company. In addition, as
\nof September 10, 1999 there were 4,494,597 shares of Company Common Stock
\nissuable upon the exercise of outstanding stock options (“Company Options”)
\nunder the 1995 Nonemployee Director Stock Option Plan, the 1995 Long-Term
\nIncentive Compensation Plan, the 1990 Stock Option Plan and any other stock
\noption plans and other options (together with the 1995 Employee Stock Purchase
\nPlan, the “Company Incentive and Stock Option Plans”). All outstanding shares
\nof Company Common Stock are, and any shares of Company Common Stock issued upon
\nexercise of any Company Options will be, upon issuance on the terms and
\nconditions specified in the instruments pursuant to which they are issuable,
\nvalidly issued, fully paid, nonassessable and not subject to any preemptive
\nrights, or to any agreement to which Company or any of its Subsidiaries is a
\nparty or by which Company or any of its Subsidiaries may be bound other than
\nagreements pursuant to which Company has the right to repurchase shares of
\nCompany Common Stock. Except for the shares of Common Stock issuable upon the
\nexercise of Company Options, there are not any options, warrants, calls,
\nconversion rights, commitments, agreements, contracts, understandings,
\nrestrictions, arrangements or rights of any character to which Company or any
\nSubsidiary of Company is a party or by which any of them may be bound obligating
\nCompany or any Subsidiary of Company to issue, deliver or sell, or cause to be
\nissued, delivered or sold, additional shares of the capital stock of Company or
\nof any Subsidiary of Company or obligating Company or any Subsidiary of Company
\nto grant, extend or enter into any such option, warrant, call, conversion right,
\ncommitment, agreement, contract, understanding, restriction, arrangement or
\nright. Company does not have outstanding any bonds, debentures, notes or other
\nindebtedness the holders of which have the right to vote (or convertible or
\nexercisable into securities having the right to vote) with holders of Company
\nCommon Stock on any matter (“Company Voting Debt”). Company is the owner,
\ndirectly or indirectly, of all outstanding shares of capital stock of each of
\nits Subsidiaries free and clear of all liens, pledges, security interests,
\nclaims or other encumbrances and all such shares are duly authorized, validly
\nissued, fully paid and nonassessable.<\/p>\n
-8-<\/p>\n
3.1.3 Authority. Company has all requisite corporate power and
\nauthority to enter into this Agreement and subject, in the case of this
\nAgreement, to approval of this Agreement by the shareholders of Company and the
\nCompany Required Statutory Approvals (as defined below), to consummate the
\ntransactions contemplated hereby. The execution and delivery by Company of this
\nAgreement and the consummation of the transactions contemplated hereby have been
\nduly authorized by all necessary corporate action on the part of Company,
\nincluding the unanimous approval of the Board of Directors of Company, subject
\nonly to approval of this Agreement by the shareholders of Company. This
\nAgreement has been duly executed and delivered by Company and assuming the due
\nauthorization, execution and delivery by Microsoft and Sub, constitutes a valid
\nand binding obligation of Company enforceable in accordance with its terms,
\nexcept that such enforceability may be subject to (i) bankruptcy, insolvency,
\nreorganization or other similar laws relating to enforcement of creditors’
\nrights generally and (ii) general equitable principles. Subject to the
\nsatisfaction of the conditions set forth in Sections 7.1 and 7.3, the execution
\nand delivery of this Agreement do not, and the consummation of the transactions
\ncontemplated hereby will not, conflict with or result in any violation of, or
\ndefault (with or without notice or lapse of time, or both) under, or give rise
\nto a right of termination, cancellation or acceleration of any obligation or to
\nloss of a material benefit under, or the creation of a lien, pledge, security
\ninterest, charge or other encumbrance on assets (any such conflict, violation,
\ndefault, right, loss or creation being referred to herein as a “Violation”)
\npursuant to (i) any provision of the Articles of Incorporation or Bylaws of
\nCompany or the comparable governing instruments of any Subsidiary or (ii) any
\nloan or credit agreement, note, bond, mortgage, indenture, contract, lease, or
\nother agreement or instrument, permit, concession, franchise, license, judgment,
\norder, decree, statute, law, ordinance, rule or regulation applicable to Company
\nor any Subsidiary of Company or their respective properties or assets, other
\nthan, in the case of (ii), any such Violation which individually or in the
\naggregate would not have a Material Adverse Effect on the Business Condition of
\nCompany. No consent, approval, order or authorization of or registration,
\ndeclaration or filing with or exemption by (collectively “Consents”), any court,
\nadministrative agency or commission or other governmental authority or
\ninstrumentality, whether domestic or foreign (each a “Governmental Entity”), is
\nrequired by or with respect to Company in connection with the execution and
\ndelivery of this Agreement or the consummation by Company of the transactions
\ncontemplated hereby, except for Consents, if any, relating to (i) the filing of
\na premerger notification report and all other required documents by Microsoft
\nand Company, and the expiration of all applicable waiting periods, under the
\nHart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR
\nAct”), (ii) any filings with the Securities and Exchange Commission (the “SEC”)
\nincluding such reports and information as may be required under the Securities
\nExchange Act of 1934, as amended (the “Exchange Act”), the Securities Act and
\nthe rules and regulations promulgated by the SEC under the Exchange Act or the
\nSecurities Act and the declaration of the effectiveness of the S-4 (as defined
\nin Section 3.1.5) by the SEC, (iii) such filings, authorizations, orders and
\napprovals as may be required under foreign laws, state securities laws and the
\nNASD Bylaws or “blue sky” laws, and (iv) the filing of the Merger Documents with
\nthe Secretary of State of the State Washington (the filings and approvals
\nreferred to in clauses (i) through (iii) are collectively referred to as the
\n“Company Required Statutory Approvals”) and except for such other Consents which
\nif not obtained or made would not have a Material Adverse Effect on the Business
\nCondition of Company.<\/p>\n
-9-<\/p>\n
3.1.4 SEC Documents and Financial Statements. Company has filed all
\nforms, reports and documents required to be filed by it with the SEC since
\nNovember 30, 1995 through the date of this Agreement (collectively, the “Company
\nSEC Documents”). As of their respective filing dates, the Company SEC Documents
\ncomplied in all material respects with the requirements of the Exchange Act or
\nthe Securities Act, as the case may be, and the rules and regulations of the SEC
\nthereunder applicable to such Company SEC Documents, and none of the Company SEC
\nDocuments contained any untrue statement of a material fact or omitted to state
\na material fact required to be stated therein or necessary in order to make the
\nstatements therein, in light of the circumstances under which they were made,
\nnot misleading. As of their respective filing dates, the financial statements
\nof Company included in the Company SEC Documents (the “Company Financial
\nStatements”) complied as to form in all material respects with all applicable
\naccounting requirements and with the published rules and regulations of the SEC
\nwith respect thereto and were prepared in accordance with generally accepted
\naccounting principles (“GAAP”) consistently applied (except as may be indicated
\nin the notes thereto) and fairly presented, in all material respects, the
\nconsolidated financial position of Company and its Subsidiaries as at the dates
\nthereof and the results of their operations and cash flows for the periods then
\nended (subject, in the case of unaudited statements, to normal, recurring audit
\nadjustments not material in scope or amount). There has been no change in
\nCompany’s accounting policies or the methods of making accounting estimates or
\nchanges in estimates that are material to Company Financial Statements, except
\nas described in the notes thereto.<\/p>\n
3.1.5 Information Supplied. None of the information supplied or to
\nbe supplied by Company or its Subsidiaries, auditors, attorneys, financial
\nadvisors or other consultants or advisors for inclusion in (i) the registration
\nstatement on Form S-4, and any amendment thereto, to be filed under the
\nSecurities Act with the SEC by Microsoft in connection with the issuance of the
\nMicrosoft Common Stock in or as a result of the Merger (the “S-4”-), or (ii) the
\nproxy statement and any amendment or supplement thereto to be distributed in
\nconnection with Company’s meetings of shareholders to vote upon this Agreement
\nand the transactions contemplated hereby (the “Proxy Statement” and, together
\nwith the prospectus included in the S-4, the “Proxy Statement\/Prospectus”) will,
\nin the case of the Proxy Statement and any amendment or supplement thereto, at
\nthe time of the mailing of the Proxy Statement and any amendment or supplement
\nthereto, and at the time of the meeting of shareholders of Company to vote upon
\nthis Agreement and the transactions contemplated hereby, or, in the case of the
\nS-4, as amended or supplemented, at the time it becomes effective and at the
\ntime of any post-effective amendment thereto and at the time of the meeting of
\nshareholders of Company, contain any untrue statement of a material fact or omit
\nto state any material fact required to be stated therein or necessary to make
\nthe statements therein, in light of the circumstances in which they are made,
\nnot misleading or necessary to correct any statement in any earlier filing with
\nthe SEC of such Proxy Statement\/Prospectus or any amendment or supplement
\nthereto or any earlier communication (including the Proxy Statement\/Prospectus)
\nto shareholders of Company with respect to the transactions contemplated by this
\nAgreement.<\/p>\n
3.1.6 No Defaults. Neither Company nor any Subsidiary of Company is,
\nor has received notice that it would be with the passage of time, in default or
\nviolation of any term,<\/p>\n
-10-<\/p>\n
condition or provision of (i) the Articles of Incorporation or Bylaws of Company
\nor any comparable governing instrument of any Subsidiary of Company, (ii) any
\njudgment, decree or order applicable to Company or any Subsidiary of Company or
\n(iii) any loan or credit agreement, note, bond, mortgage, indenture, contract,
\nagreement, lease, license or other instrument to which Company or any Subsidiary
\nof Company is now a party or by which it or any of its properties or assets may
\nbe bound, except for defaults and violations which, individually or in the
\naggregate, would not have a Material Adverse Effect on the Business Condition of
\nCompany.<\/p>\n
3.1.7 Litigation. There is no claim, action, suit or proceeding
\npending or, to the knowledge of Company, threatened, which would, if adversely
\ndetermined, individually or in the aggregate, have a Material Adverse Effect on
\nthe Business Condition of Company, nor is there any judgment, decree,
\ninjunction, rule or order of any Governmental Entity or arbitrator outstanding
\nagainst Company or any of its Subsidiaries having, or which, insofar as
\nreasonably can be foreseen, in the future would have, any Material Adverse
\nEffect on the Business Condition of Company. There is no investigation pending
\nor, to the knowledge of Company, threatened against Company or any Subsidiary of
\nCompany, before any foreign, federal, state, municipal or other governmental
\ndepartment, commission, board, bureau, agency, instrumentality or other
\nGovernment Entity which would have a Material Adverse Effect on the Business
\nCondition of Company. To the Company’s knowledge, the Company Disclosure
\nSchedule sets forth, with respect to any pending action, suit, proceeding, or
\ninvestigation to which Company or any of its Subsidiaries is a party (other than
\n(i) cases involving the collection of monies owed to Company or in the ordinary
\ncourse of business or (ii) trademark infringement or anti-piracy actions in the
\nordinary course of business in which Company is the plaintiff), the forum, the
\nparties thereto, the subject matter thereof, and the amount of damages claimed.<\/p>\n
3.1.8 No Material Adverse Change. Since October 3, 1998 through the
\ndate hereof, Company and its Subsidiaries have conducted their respective
\nbusinesses in the ordinary course and there has not been: (i) any Material
\nAdverse Effect on the Business Condition of Company or any development or
\ncombination of developments of which management of Company has knowledge which
\nis reasonably likely to result in such an effect; (ii) any damage, destruction
\nor loss, whether or not covered by insurance, having a Material Adverse Effect
\non the Business Condition of Company; (iii) any declaration, setting aside or
\npayment of any dividend or other distribution (whether in cash, stock or
\nproperty) with respect to the capital stock of Company; (iv) any material
\nincrease or change in the compensation or benefits payable or to become payable
\nby Company or any Subsidiary to their employees in the aggregate, except in the
\nordinary course of business consistent with past practice; (v) any acquisition
\nor sale of a material amount of property of Company or any of its Subsidiaries,
\nexcept in the ordinary course of business and which would not have a Material
\nAdverse Effect on the Business Condition of Company; (vi) any material increase
\nor modification in any bonus, pension, insurance or other employee benefit plan,
\npayment or arrangement made to, for, or with its employees in the aggregate; or
\n(vii) the granting of stock options, restricted stock awards, stock bonuses,
\nstock appreciation rights and similar equity based awards other than consistent
\nwith Company’s past practices and which will not result in a compensation charge
\nagainst earnings or the loss of deductions for federal or state income tax
\npurposes.<\/p>\n
-11-<\/p>\n
3.1.9 Absence of Undisclosed Liabilities. Company and its
\nSubsidiaries, taken as a whole, have no liabilities or obligations (whether
\nabsolute, accrued or contingent) except (i) liabilities, obligations or
\ncontingencies (“Liabilities”) that are accrued or reserved against in the
\nconsolidated balance sheet of Company and its Subsidiaries as of October 3, 1998
\nor reflected in the notes thereto or disclosed in the financial statements of
\nCompany filed as a part of the Company SEC Documents, (ii) Liabilities that
\nwould not have a Material Adverse Effect on the Business Condition of Company,
\nor (iii) additional Liabilities reserved against since October 3, 1998 that (x)
\nhave arisen in the ordinary course of business and (y) are accrued or reserved
\nagainst on the books and records of Company and its Subsidiaries.<\/p>\n
3.1.10 No Violations. The businesses of Company and its Subsidiaries
\nare not being conducted in violation of, or in a manner which could cause
\nliability under any applicable law, rule or regulation, judgment, decree or
\norder of any Governmental Entity, except for any violations or practices, which,
\nindividually or in the aggregate, have not had and will not have a Material
\nAdverse Effect on the Business Condition of Company.<\/p>\n
3.1.11 Certain Agreements. Neither the execution and delivery of this
\nAgreement nor the consummation of the transactions contemplated hereby will (i)
\nresult in any payment (including, without limitation, severance, unemployment
\ncompensation, parachute payment, bonus or otherwise) becoming due to any
\ndirector, employee or independent contractor of Company or its Subsidiaries,
\nfrom Company or any of its Subsidiaries under any Plan (as hereinafter defined),
\nagreement or otherwise, (ii) materially increase any benefits otherwise payable
\nunder any Plan or agreement, or (iii) result in the acceleration of the time of
\npayment or vesting of any such benefits.<\/p>\n
3.1.12 Employee Benefit Plans. Each material employee benefit plan
\n(“Plan”) covering active, former or retired employees of Company and any of its
\nSubsidiaries that is subject to U.S. law (“U.S. Plans” ) is listed in the
\nCompany Disclosure Schedule. With respect to each U.S. Plan, Company has
\nprovided to Microsoft a copy of each such Plan, and where applicable, any
\nrelated trust agreement, annuity or insurance contract and, where applicable,
\nall annual reports (Form 5500) filed with the IRS. With respect to each Plan
\nthat is not subject to U.S. law (“Non-U.S. Plans”), Company shall provide to
\nMicrosoft a copy of such Plan and, where applicable, any related trust
\nagreement, annuity or insurance contract, as soon as practicable after the date
\nhereof. To the extent applicable, each U.S. Plan complies in all material
\nrespects with the requirements of the Employee Retirement Income Security Act of
\n1974, as amended (“ERISA”), and the Code, and any U.S. Plan intended to be
\nqualified under Section 401(a) of the Code has been determined by the IRS to be
\nso qualified and has remained tax-qualified to this date and its related trust
\nis tax-exempt and has been so since its creation. No U.S. Plan is covered by
\nTitle IV of ERISA or Section 412 of the Code. No material “prohibited
\ntransaction,” as defined in ERISA Section 406 or Code Section 4975 has occurred
\nwith respect to any U.S. Plan. Each U.S. Plan has been maintained and
\nadministered in all material respects in compliance with its terms and with the
\nrequirements prescribed by any and all statutes, orders, rules and regulations,
\nincluding but not limited to ERISA and the Code, which are applicable to such
\nU.S. Plans. There are no pending or reasonably anticipated material claims
\nagainst or otherwise involving any of the U.S. Plans and no suit, action or
\nother litigation (excluding claims<\/p>\n
-12-<\/p>\n
for benefits incurred in the ordinary course of Plan activities) has been
\nbrought against or with respect to any U.S. Plan. All material contributions,
\nreserves or premium payments to U.S. Plans, accrued to the date hereof have been
\nmade or provided for. Company has not incurred any material liability under
\nSubtitle C or D of Title IV of ERISA with respect to any “single-employer plan,”
\nwithin the meaning of Section 4001(a)(15) of ERISA, currently or formerly
\nmaintained by Company, or any entity which is considered one employer with
\nCompany under Section 4001 of ERISA. Company has not incurred, and will not
\nincur as a result of the transactions contemplated by this Agreement, any
\nwithdrawal liability under Subtitle E of Title IV of ERISA with respect to any
\n“multiemployer plan,” within the meaning of Section 4001(a)(3) of ERISA. Company
\nhas no obligation for retiree health and life benefits under any U.S. Plan,
\nexcept as required to avoid excise taxes under Section 4980(B) of the Code.
\nThere are no restrictions on the rights of Company to amend or terminate any
\nU.S. Plan without incurring any liability thereunder (other than any liability
\nfor accrued benefits thereunder). Company has not engaged in, nor is it a
\nsuccessor to, an entity that has engaged in, a transaction described in ERISA
\nSection 4069. There have been no amendments to, written interpretation of, or
\nannouncement (whether or not written) by Company relating to, or change in
\nemployee participation or coverage under, any U.S. Plan that would increase
\nmaterially the expense of maintaining such Plan above the level of expense
\nincurred in respect thereof for the year ended December 31, 1998. Neither
\nCompany nor any of its ERISA affiliates have any current or projected liability
\nin respect of post-employment or post-retirement welfare benefits for retired or
\nformer employees of Company. No tax under Section 4980B of the Code has been
\nincurred in respect of any U.S. Plan that is a group health plan, as defined in
\nSection 5000(b)(1) of the Code. Each Non-U.S. Plan has been maintained and
\nadministered in all material respects in compliance with its terms and with the
\nrequirements prescribed by any and all statutes, orders, rules and regulations
\nthat are applicable to such Non-U.S. Plan. Each Non-U.S. Plan that is required
\nby contract or under applicable local law to be funded has been funded to the
\nextent required and if and to the extent any Non-U.S. Plan is not funded, the
\nunfunded obligations under such Non-U.S. Plan are reflected on the books and
\nrecords of the entity maintaining the plan.<\/p>\n
3.1.13 Major Contracts. As of the date of this Agreement, all of
\nCompany’s “material contracts” as such term is defined under Item 601 of
\nRegulation S-K, have been filed under the Exchange Act. Except to the extent
\nthat such agreements have expired by their own terms, each agreement disclosed
\nby Company under the Exchange Act is in full force and effect, except where the
\nfailure to be in full force and effect would not have a Material Adverse Effect
\non the Business Condition of Company. None of the parties to any of such
\nagreements have terminated, except when such agreements have expired under their
\nown terms, or, to the Company’s knowledge, in any way expressed an intent to
\nterminate or otherwise materially modify such agreements in the future. Company
\nhas provided to Microsoft lease documents for any real or personal property in
\nwhich the amount of payments that Company is required to make on an annual basis
\nexceeds $100,000 and that have not been filed as an exhibit to any Company SEC
\nDocuments.<\/p>\n
3.1.14 Taxes. For the purposes of this Agreement, the terms “tax”
\nand “taxes” shall include all federal, state, local and foreign taxes,
\nassessments, duties, tariffs, registration fees, and other governmental charges
\nincluding without limitation all income, franchise,<\/p>\n
-13-<\/p>\n
property, production, sales, use, payroll, license, windfall profits, severance,
\nwithholding, excise, gross receipts and other taxes, as well as any interest,
\nadditions or penalties relating thereto and any interest in respect of such
\nadditions or penalties. Company and each of its Subsidiaries has timely filed
\n(or caused to be filed), taking into account all extensions, all material
\nfederal, state, local and foreign tax returns, reports and information
\nstatements (“Returns”) required to be filed by each of them, which returns,
\nreports and statements are true, correct and complete in all material respects,
\nand paid or accrued all material taxes shown as due on such returns, reports and
\nstatements. Company and each of its Subsidiaries has fully accrued in accordance
\nwith GAAP all material unpaid taxes in respect of all periods (or the portion of
\nany such periods) subsequent to the periods covered by such returns). Company
\nhas received no written notice of any claimed, proposed or assessed material
\ndeficiencies or adjustments for any tax, nor to the best of Company’s knowledge,
\nhave any such deficiencies or adjustments been threatened. Company and its
\nSubsidiaries are not subject to any ongoing tax audit or examination nor, to the
\nbest of Company’s knowledge, are such audits or examinations pending or
\nthreatened, and Company has not waived or entered into any other agreement with
\nrespect to any statute of limitation with respect to the assessment of any tax.<\/p>\n
Company has made available to Microsoft true and correct copies of all U.S.
\nReturns for the fiscal years 1996, 1997 and 1998 reasonably requested by
\nMicrosoft. Company covenants to provide to Microsoft at its reasonable request
\ntrue and correct copies of all tax returns, information, statements, reports,
\nwork papers and other tax data as soon as practicable after the date hereof. No
\nconsent or agreement has been made under Section 341 of the Code by or on behalf
\nof Company or any predecessor thereof. Other than interests in certain
\nleasehold improvements, Company has no interests in real estate in the State of
\nWashington, the transfer or disposition of which would give rise to Washington
\nState real estate excise tax.<\/p>\n
Company has withheld all taxes required to be withheld in respect of wages,
\nsalaries and other payments to all employees, officers and directors and timely
\npaid all such amounts withheld to the proper taxing authority. Neither the
\nCompany nor the Subsidiaries are parties to any tax sharing agreements and
\nneither the Company nor any of the Subsidiaries have been members of any
\naffiliated group for federal income tax purposes other than the one of which
\nthey are currently a member. The Company does not have an “overall foreign loss”
\nas defined in Section 904(f) of the Code. Prior to the Merger, the use of any
\nnet operating loss carryover, net capital loss carryover, unused investment
\ncredit or other credit carryover of the Company is not subject to any limitation
\npursuant to Section 382 of the Code or otherwise. The Company is not and has
\nnever been a real property holding corporation within the meaning of Section 897
\nof the Code. Neither Company nor any Subsidiary has participated in, or
\ncooperated with, an international boycott within the meaning of Section 999 of
\nthe Code. There are no material liens for taxes upon the assets of Company or
\nits Subsidiaries except for taxes that are not yet payable. The Company
\nDisclosure Schedule contains a list of all states or foreign jurisdictions where
\nthe Company believes it or any Subsidiary is required to file Returns.<\/p>\n
Neither Company nor any Subsidiary of Company is a party to any agreement,
\ncontract, or arrangement that would result in the payment of any “excess
\nparachute payment” within the meaning of Section 280G of the Code. None of
\nCompany or any Subsidiary is “tax exempt use<\/p>\n
-14-<\/p>\n
property” within the meaning of Section 168(h) of the Code. None of the assets
\nof Company or of any Subsidiary secures any debt the interest on which is tax
\nexempt under Section 103 of the Code.<\/p>\n
To the knowledge of Company, there are no facts or circumstances relating
\nto the Company including any covenants or undertakings of the Company pursuant
\nto this Agreement, that would prevent Shearman & Sterling from delivering the
\nopinion referred to in Section 7.1.5 as of the date hereof.<\/p>\n
3.1.15 Interests of Officers. None of Company’s officers or
\ndirectors has, nor to the knowledge of Company does any officer or director of
\nany Subsidiary have, any material interest in any property, real or personal,
\ntangible or intangible, including inventions, copyrights, trademarks or trade
\nnames, used in or pertaining to the business of Company or that of its
\nSubsidiaries, or any supplier, distributor or customer of Company or its
\nSubsidiary, except, in the case of Company, for the normal rights of a
\nshareholder, and except for rights under existing employee benefit plans.<\/p>\n
3.1.16 Technology and Intellectual Property Rights .<\/p>\n
(a) “Company Intellectual Property” shall mean:<\/p>\n
(i) all patents, trademarks, trade names, service marks,
\n domain names, copyrights and any renewal rights, applications and
\n registrations for any of the foregoing, and all trade dress, schematics,
\n technology, trade secrets, know-how, moral rights and computer software
\n programs or applications (in both source and object code form) owned by
\n Company; and<\/p>\n
(ii) all license rights in any third party intellectual
\n property, proprietary or personal rights, documentation, or tangible or
\n intangible property, including without limitation the types of intellectual
\n property and tangible and intangible proprietary information described in
\n (i) above;<\/p>\n
that are being, and\/or have been, used in, or are currently under development
\nfor use in, and are material to, the business of Company as it has been, is
\ncurrently or is currently anticipated to be (up to the Closing), conducted.
\nCompany Intellectual Property described in clause (i) above is referred to
\nherein as “Company Owned Intellectual Property” and Company Intellectual
\nProperty described in clause (ii) above is referred to herein as “Company
\nLicensed Intellectual Property”. Unless otherwise noted, all references to
\n“Company Intellectual Property” shall include both Company Owned Intellectual
\nProperty and Company Licensed Intellectual Property.<\/p>\n
(b) The Company Disclosure Schedule lists: (i) all patents,
\nregistered copyrights, trademarks, and service marks and any applications and
\nregistrations for any of the foregoing, that are included in the Company Owned
\nIntellectual Property; (ii) all software products and services that are
\ncurrently published, offered, or under development by Company<\/p>\n
-15-<\/p>\n
and scheduled to be commercially released within six months of the date hereof;
\n(iii) licenses and sublicenses of Company Owned Intellectual Property that are
\nmaterial to the business of Company as it has been, is currently or is currently
\nanticipated to be (up to the Closing), conducted; (iv) all Company Licensed
\nIntellectual Property (other than license agreements for standard “shrink
\nwrapped, off the shelf,” commercially available, third party products used by
\nthe Company); and (v) any obligations of exclusivity, non-competition, non-
\nsolicitation, or first negotiation to which Company is subject under any
\nagreement that does not fall within the ambit of (iii) or (iv) above and that
\nare either material to Company’s business or that to Company’s knowledge could
\nreasonably be expected to be materially adverse to Microsoft’s business.<\/p>\n
(c) Each item of the Company Intellectual Property is either:
\n(i) owned by Company, (ii) in the public domain, or (iii) rightfully used by
\nCompany pursuant to a valid license or other agreement. Company has all rights
\nin the Company Intellectual Property reasonably necessary to carry out Company’s
\ncurrent, and anticipated future (up to the Closing) activities and has or had
\nduring the relevant period all rights in the Company Intellectual Property
\nreasonably necessary to carry out Company’s former activities. All software and
\nfirmware listings that are part of the Company Owned Intellectual Property are
\ncommented in accordance with a reasonable developer standard.<\/p>\n
(d) Company is not, nor as a result of the execution or
\ndelivery of this Agreement, or performance of Company’s obligations hereunder,
\nwill Company be, in violation of any license, sublicense or other agreement
\nrelating to the Company Intellectual Property or of any non-disclosure agreement
\nto which Company is a party or otherwise bound, except for any such violations
\nthat would not have a Material Adverse Effect on the Business Condition of
\nCompany.<\/p>\n
(e) Except pursuant to the terms of the agreements listed in
\nthe Company Disclosure Schedule, Company is not obligated to provide any
\nfinancial consideration or other material consideration to any third party, nor
\nis any third party otherwise entitled to any financial consideration or other
\nmaterial consideration, with respect to any exercise of rights by Company or its
\nsuccessors in the Company Intellectual Property contained in Company’s current
\nproducts as listed on the Company Disclosure Schedule or in the Company
\nIntellectual Property contained in any Company web site.<\/p>\n
(f) The use, reproduction, modification, distribution,
\nlicensing, sublicensing, sale, or any other exercise of rights in any Company
\nOwned Intellectual Property by Company or its licensees, does not infringe any
\ncopyright, patent, trade secret, trademark, service mark, trade name, firm name,
\nlogo, trade dress, moral right, other intellectual property right, right of
\nprivacy, right of publicity or right in personal or other data of any person,
\nexcept for any such violations that would not have a Material Adverse Effect on
\nthe Business Condition of Company. Further, to the knowledge of Company, the
\nuse, reproduction, modification, distribution, licensing, sublicensing, sale, or
\nany other exercise of rights in any Company Licensed Intellectual Property or
\nany other authorized exercise of rights in or to the Company Licensed
\nIntellectual Property by Company or its licensees does not infringe any
\ncopyright, patent, trade secret, trademark, service mark, trade name, firm name,
\nlogo, trade dress, moral<\/p>\n
-16-<\/p>\n
right, other intellectual property right, right of privacy, right of publicity
\nor right in personal or other data of any person, except for any such violations
\nthat would not have a Material Adverse Effect on the Business Condition of
\nCompany. No claims (i) challenging the validity, enforceability, or ownership by
\nCompany of any of the Company Owned Intellectual Property or (ii) to the effect
\nthat the use, reproduction, modification, manufacturing, distribution,
\nlicensing, sublicensing, sale or any other exercise of rights in any Company
\nOwned Intellectual Property by Company or its licensees infringes any
\nintellectual property or other proprietary or personal right of any person, have
\nbeen asserted or, to the knowledge of Company, are threatened by any person. To
\nthe knowledge of Company, there is no unauthorized use, infringement or
\nmisappropriation of any of the Company Owned Intellectual Property by any third
\nparty, employee or former employee.<\/p>\n
(g) No parties other than Company possess any current or
\ncontingent rights to any source code that is part of the Company Owned
\nIntellectual Property (including, without limitation, through any escrow
\naccount).<\/p>\n
(h) Company’s standard practice is to secure from all parties
\nwho have created any material portion of, or otherwise have any material rights
\nin or to, the Company Owned Intellectual Property written assignments or
\nlicenses of any such work or other rights to Company.<\/p>\n
(i) Company has provided Microsoft with a copy of or access
\nto all material support and maintenance agreements relating to Company Owned
\nIntellectual Property or to which Company is a party as to Company Licensed
\nIntellectual Property.<\/p>\n
(j) To the knowledge of Company, Company has obtained written
\nagreements from all employees and third parties with whom Company has shared
\nconfidential information (i) of Company, or (ii) received from others which
\nCompany is obligated to treat as confidential, which agreements require such
\nemployees and third parties to keep such information confidential.<\/p>\n
(k) Company’s practices regarding the collection and use of
\nconsumer personal information are in accordance in all material respects with
\nCompany’s privacy policy as published on its website.<\/p>\n
(l) Any Company Owned Intellectual Property is, and any
\nproducts manufactured and commercially released by Company or currently under
\ndevelopment, are Year 2000 Compliant in all material respects and will not cease
\nto be Year 2000 Compliant in any material respect at any time prior to, during
\nor after the calendar year 2000. To Company’s knowledge, the Company Licensed
\nIntellectual Property material to the operation of Company is Year 2000
\nCompliant in all material respects and will not cease to be Year 2000 Compliant
\nin any material respect at any time prior to, during or after the calendar year
\n2000. For the purposes of this Agreement, “Year 2000 Compliant” means that
\nneither the performance nor the<\/p>\n
-17-<\/p>\n
functionality of the applicable Company Intellectual Property or applicable
\nproduct is or will be materially affected by dates prior to, during or after the
\ncalendar year 2000 AD.<\/p>\n
3.1.17 Opinion of Financial Advisor. Company has received the
\nopinion of Morgan Stanley & Co. Incorporated, dated the date hereof, a copy of
\nwhich has been provided to Microsoft, to the effect that, as of such date, the
\nExchange Ratio is fair, from a financial point of view, to Company’s
\nshareholders.<\/p>\n
3.1.18 Vote Required. The affirmative vote of the holders of two-
\nthirds of the outstanding shares of Company Common Stock is the only vote of the
\nholders of Company’s capital stock necessary to approve this Agreement and the
\nconsummation of the transactions contemplated hereby.<\/p>\n
3.1.19 Accounting Matters. To the knowledge of Company, neither
\nCompany nor any of its affiliates has taken or agreed to take any action that,
\nwithout giving effect to any action taken or agreed to be taken by Microsoft or
\nany of its affiliates, would prevent Microsoft from accounting for the business
\ncombination to be effected by the Merger as a pooling of interests.<\/p>\n
3.1.20 Brokers and Finders. Other than Morgan Stanley & Co.
\nIncorporated, in accordance with the terms of its engagement letter, a copy of
\nwhich has previously been provided to Microsoft, none of Company or any of its
\nSubsidiaries nor any of their respective directors, officers or employees has
\nemployed any broker or finder or incurred any liability for any financial
\nadvisory fees, brokerage fees, commissions or similar payments in connection
\nwith the transactions contemplated by this Agreement.<\/p>\n
3.1.21 Change of Control. With regard to any options, stock,
\nrestricted stock, stock bonus or other awards granted under the Company
\nIncentive and Stock Option Plans which are not exercisable or vested prior to
\nthe Effective Time, Company has not taken any action to make such options or
\nawards exercisable or vested by reason of the Merger. Prior to the Effective
\nTime, Company shall take all action necessary relating to the Company Incentive
\nand Stock Option Plans to provide that the occurrence of the transactions
\ncontemplated by this Agreement shall not entitle participants under such plans
\nto a cash-out of the stock options, restricted stock, stock bonus or other
\nawards granted to them thereunder.<\/p>\n
3.1.22 Leases in Effect. All real property leases and subleases as
\nto which Company or any Subsidiary is a party and any amendments or
\nmodifications thereof which have been filed as exhibits to the Company SEC
\nDocuments or are listed on the Company Disclosure Schedule (each a “Lease” and
\ncollectively, the “Leases”) are valid, in full force and effect, enforceable,
\nand there are no existing defaults on the part of Company, and Company has not
\nreceived nor given notice of default or claimed default with respect to any
\nLease, nor is there any event that with notice or lapse of time, or both, would
\nconstitute a default thereunder, except for defaults, claimed defaults or events
\nthat with notice or lapse of time, or both, would constitute a default that have
\nnot had, and would not have, individually or in the aggregate, a Material
\nAdverse Effect on the Business Condition of Company. No consent is required from
\nany party<\/p>\n
-18-<\/p>\n
under any Lease in connection with the completion of the transactions
\ncontemplated by this Agreement, and Company has not received notice that any
\nparty to any Lease intends to cancel, terminate, or refuse to renew the same or
\nto exercise any option or other right thereunder, except where the failure to
\nreceive such consent, or where such cancellation, termination or refusal, would
\nnot have a Material Adverse Effect on Company’s Business Condition.<\/p>\n
3.1.23 Environmental.<\/p>\n
(a) There has not been a discharge or release on any real
\nproperty at the time it was owned or leased by Company (the “Real Property”) of
\nany Hazardous Material (as defined below), including without limitation
\ncontamination of soil, groundwater or the environment, generation, handling,
\nstorage, transportation or disposal of Hazardous Materials or exposure to
\nHazardous Materials, except for those that would not, individually or in the
\naggregate have a Material Adverse Effect on the Business Condition of Company;<\/p>\n
(b) No Hazardous Material has been used by Company in the
\noperation of Company’s business in amounts that would have a Material Adverse
\nEffect on the Business Condition of Company; and<\/p>\n
(c) Company has not received from any Governmental Entity or
\nthird party any written request for information, notice of claim, demand letter,
\nor other notification, notice or information that Company is or may be
\npotentially subject to or responsible for any investigation or clean-up or other
\nremediation of Hazardous Material present on any Real Property or at any other
\nlocation.<\/p>\n
“Hazardous Material” means any substance (i) that is a “hazardous waste” or
\n“hazardous substance” under any federal, state or local statute, regulation,
\nrule, or order or (ii) that is toxic, explosive, corrosive, flammable,
\ninfectious, radioactive, or otherwise hazardous and is regulated by any
\nGovernmental Entity.<\/p>\n
3.1.24 Certain Payments. To the knowledge of Company, neither Company
\nnor any person or other entity acting on behalf of Company has, directly or
\nindirectly, on behalf of or with respect to Company: (i) made an unreported
\npolitical contribution, (ii) made or received any payment which was not legal to
\nmake or receive, (iii) engaged in any transaction or made or received any
\npayment which was not properly recorded on the books of Company, (iv) created or
\nused any “off-book” bank or cash account or “slush fund”, or (v) engaged in any
\nconduct constituting a violation of the Foreign Corrupt Practices Act of 1977.<\/p>\n
3.1.25 Reliance. The foregoing representations and warranties are made
\nby Company with the knowledge and expectation that Microsoft and Sub are placing
\nreliance thereon.<\/p>\n
3.2 Representations and Warranties of Microsoft and Sub. Except as
\ndisclosed in a Disclosure Schedule which identifies by section number the
\nsection and subsection to which such disclosure relates (unless the
\napplicability of such disclosure to any section or subsection is<\/p>\n
-19-<\/p>\n
reasonably apparent in light of the circumstances under which made) and is
\ndelivered by Microsoft to Company concurrently with the execution of this
\nAgreement (the “Microsoft Disclosure Schedule”), Microsoft and Sub represent and
\nwarrant to Company as follows:<\/p>\n
3.2.1 Organization; Standing and Power. Each of Microsoft and Sub is
\na corporation duly organized, validly existing under the laws of its
\njurisdiction of incorporation or organization, has all requisite power and
\nauthority to own, lease and operate its properties and to carry on its
\nbusinesses as now being conducted, and is duly qualified and in good standing to
\ndo business in each jurisdiction in which it owns, leases or operates its
\nproperties or conducts its businesses so as to require such qualification,
\nexcept where the failure to be so organized, existing, qualified or in good
\nstanding or to have such corporate or other applicable power and authority have
\nnot had, and would not have, a Material Adverse Effect on the Business Condition
\nof Microsoft.<\/p>\n
3.2.2 Capital Structure. The authorized capital stock of Microsoft
\nconsists of 12,000,000,000 shares of Microsoft Common Stock of which
\n5,137,062,528 are outstanding as of August 31, 1999 and 100,000,000 shares of
\npreferred stock, par value $0.01 per share (the “Microsoft Preferred Stock”) of
\nwhich 12,519,562 are outstanding as of August 31, 1999, and no shares are held
\nby Subsidiaries of Microsoft. In addition, as of August 31, 1999, there are
\n755,669,934 shares of Microsoft Common Stock are reserved for issuance upon the
\nexercise of outstanding stock options (“Microsoft Options”) under the Microsoft
\n1991 Stock Option Plan. The authorized capital stock of Sub consists of 10,000
\nshares of common stock, par value $.01 per share, all of which are duly
\nauthorized, validly issued, fully paid and nonassessable and free of any
\npreemptive rights in respect thereof and all of which are owned by Microsoft.
\nThe shares of Microsoft Common Stock to be issued pursuant to the Merger in
\naccordance with Section 2.1.3(i) will be duly authorized, validly issued, fully
\npaid and nonassessable and not subject to preemptive rights created by statute,
\nMicrosoft’s Restated Articles of Incorporation or Bylaws or any agreement to
\nwhich Microsoft is a party or is bound and (ii) will, when issued, be registered
\nunder the Securities Act and the Exchange Act and registered or exempt from
\nregistration under applicable blue sky laws.<\/p>\n
3.2.3 Authority. Microsoft and Sub have all requisite corporate power
\nand authority to enter into this Agreement, and subject to the Microsoft
\nRequired Statutory Approvals (as defined below), to consummate the transactions
\ncontemplated hereby. The execution and delivery by Microsoft of this Agreement
\nand the consummation of the transactions contemplated hereby have been duly
\nauthorized by all necessary corporate action on the part of Microsoft. This
\nAgreement has been duly executed and delivered by Microsoft and Sub and assuming
\nthe due authorization, execution and delivery by Company, constitutes a valid
\nand binding obligation of Microsoft and Sub enforceable in accordance with its
\nterms. Subject to satisfaction of the conditions set forth in Sections 7.1 and
\n7.2, the execution and delivery of this Agreement do not, and the consummation
\nof the transactions contemplated hereby will not, conflict with or result in any
\nViolation of (i) any provision of the Restated Articles of Incorporation or
\nBylaws of Microsoft or the comparable governing instruments of any Subsidiary of
\nMicrosoft or (ii) any loan or credit agreement note, bond, mortgage, indenture,
\ncontract, lease, or other agreement or instrument, permit, concession,
\nfranchise, license, judgment, order, decree,<\/p>\n
-20-<\/p>\n
statute, law, ordinance, rule or regulation applicable to Microsoft or any
\nSubsidiary of Microsoft or their respective properties or assets, other than, in
\nthe case of (ii), any such Violation, which individually or in the aggregate
\nwould not have a Material Adverse Effect on the Business Condition of Microsoft.
\nNo Consent is required by or with respect to Microsoft or Sub in connection with
\nthe execution and delivery of this Agreement by Microsoft or Sub or the
\nconsummation by Microsoft and Sub of the transactions contemplated hereby,
\nexcept for (i) the filing of a premerger notification report by Microsoft and
\nCompany under the HSR Act, (ii) the filing of the Proxy Statement\/Prospectus
\nwith the SEC pursuant to the Exchange Act and the Securities Act and the
\ndeclaration of the effectiveness thereof by the SEC and compliance with various
\nstate securities or blue sky laws, and (iii) the filing of the Merger Documents
\nwith the Secretary of State of the State of Washington (the filings and
\napprovals referred to in clauses (i) through (iii) are collectively referred to
\nas the “Microsoft Required Statutory Approvals” and together with the Company
\nRequired Statutory Approvals, the “Required Statutory Approvals”) and except for
\nsuch other Consents which if not obtained or made would not have a Material
\nAdverse Effect on the value of the Microsoft Common Stock and would not have a
\nMaterial Adverse Effect on the Business Condition of Microsoft.<\/p>\n
3.2.4 SEC Documents and Financial Statements. Microsoft has filed all
\nforms, reports and documents required to be filed by it with the SEC since July
\n1, 1995 through the date of this Agreement (collectively, the “Microsoft SEC
\nDocuments”). As of their respective filing dates, the Microsoft SEC Documents
\ncomplied in all material respects with the requirements of the Exchange Act or
\nthe Securities Act, as the case may be, and the rules and regulations of the SEC
\nthereunder applicable to such Microsoft SEC Documents, and none of the Microsoft
\nSEC Documents contained any untrue statement of a material fact or omitted to
\nstate a material fact required to be stated therein or necessary in order to
\nmake the statements made therein, in light of the circumstances under which they
\nwere made, not misleading. As of their respective filing dates, the financial
\nstatements of Microsoft included in the Microsoft SEC Documents (the “Microsoft
\nFinancial Statements”) complied as to form in all material respects with all
\napplicable accounting requirements and with the published rules and regulations
\nof the SEC with respect thereto and were prepared in accordance with generally
\naccepted accounting principles consistently applied (except as may be indicated
\nin the notes thereto) and fairly presented, in all material respects, the
\nconsolidated financial position of Microsoft and its Subsidiaries as at the
\ndates thereof and the results of their operations and cash flows for the periods
\nthen ended (subject, in the case of unaudited statements, to normal, recurring
\naudit adjustments not material in scope or amount). There has been no change in
\nMicrosoft’s accounting policies or the methods of making accounting estimates or
\nchanges in estimates that are material to Microsoft Financial Statements or
\nestimates except as described in the notes thereto.<\/p>\n
3.2.5 Information Supplied. None of the information supplied or to be
\nsupplied by Microsoft or its Subsidiaries, auditors, attorneys, financial
\nadvisors, other consultants or advisors or Sub for inclusion in the S-4 or the
\nProxy Statement\/Prospectus, will, in the case of the Proxy Statement and any
\namendment or supplement thereto, at the time of the mailing of the Proxy
\nStatement and any amendment or supplement thereto, and at the time of any
\nmeeting of shareholders of Company to vote upon this Agreement and the
\ntransactions contemplated hereby,<\/p>\n
-21-<\/p>\n
or in the case of the S-4, as amended or supplemented, at the time it becomes
\neffective and at the time of any post-effective amendment thereto and at the
\ntime of the meeting of shareholders of Company, contain any untrue statement of
\na material fact or omit to state any material fact required to be stated therein
\nor necessary to make the statements therein, in light of the circumstances in
\nwhich they are made, not misleading or necessary to correct any statement in any
\nearlier filing with the SEC of such Proxy Statement\/Prospectus or any amendment
\nor supplement thereto or any earlier communication (including the Proxy
\nStatement\/Prospectus) to shareholders of Company with respect to the
\ntransactions contemplated by this Agreement.<\/p>\n
3.2.6 No Defaults. Microsoft has not received notice that it would be
\nwith the passage of time, in default or violation of any term, condition or
\nprovision of (i) the Restated Articles of Incorporation or Bylaws of Microsoft;
\n(ii) any judgment, decree or order applicable to Microsoft; or (iii) any loan or
\ncredit agreement, note, bond, mortgage, indenture, contract, agreement, lease,
\nlicense or other instrument to which Microsoft is now a party or by which it or
\nany of its properties or assets may be bound, except for defaults and violations
\nwhich, individually or in the aggregate, would not have a Material Adverse
\nEffect on the Business Condition of Microsoft.<\/p>\n
3.2.7 Absence of Certain Changes or Events. Since July 1, 1998
\nthrough the date of this Agreement, except as contemplated by or as disclosed in
\nthis Agreement, as set forth in the Microsoft Disclosure Schedule or as
\ndisclosed in any Microsoft SEC Documents filed since July 1, 1998 and prior to
\nthe date of this Agreement, Microsoft and its Subsidiaries have conducted their
\nbusinesses only in the ordinary course and in a manner consistent with past
\npractice and, since such date, there has not been any Material Adverse Effect on
\nthe Business Condition of Microsoft.<\/p>\n
3.2.8 Absence of Undisclosed Liabilities. Microsoft and its
\nSubsidiaries, taken as a whole, have no liabilities or obligations (whether
\nabsolute, accrued or contingent) except (i) Liabilities that are accrued or
\nreserved against in the consolidated balance sheet of Microsoft and its
\nSubsidiaries as of June 30, 1998 or reflected in the notes thereto or disclosed
\nin the financial statements filed as a part of the Microsoft SEC Documents, (ii)
\nLiabilities that would not have a Material Adverse Effect on the Business
\nCondition of Microsoft, or (iii) additional Liabilities reserved against since
\nJuly 1, 1998 that (x) have arisen in the ordinary course of business; and (y)
\nare accrued or reserved against on the books and records of Microsoft and its
\nSubsidiaries.<\/p>\n
3.2.9 No Vote Required. No vote of the shareholders of Microsoft
\nis required by law, Microsoft’s Restated Articles of Incorporation or Bylaws or
\notherwise in order for Microsoft and Sub to consummate the Merger and the
\ntransactions contemplated hereby.<\/p>\n
3.2.10 Accounting Matters. To the knowledge of Microsoft, neither
\nMicrosoft nor any of its affiliates has taken or agreed to take any action that,
\nwithout giving effect to any action taken or agreed to be taken by Company or
\nany of its affiliates, would prevent Microsoft from accounting for the business
\ncombination to be effected by the Merger as a pooling of interests.<\/p>\n
-22-<\/p>\n
3.2.11 Brokers and Finders. None of Microsoft or any of its
\nrespective directors, officers or employees has employed any broker or finder or
\nincurred any liability for any financial advisory fees, brokerage fees,
\ncommissions or similar payments in connection with the transactions contemplated
\nby this Agreement.<\/p>\n
3.2.12 Interim Operation of Sub. Sub is a direct, wholly owned
\nsubsidiary of Microsoft, was formed solely for the purpose of engaging in the
\ntransactions contemplated hereby, has engaged in no other business activities
\nand has conducted its operations only as contemplated hereby.<\/p>\n
3.2.13 Reliance. The foregoing representations and warranties are
\nmade by Microsoft with the knowledge and expectation that Company is placing
\nreliance thereon.<\/p>\n
ARTICLE IV<\/p>\n
COVENANTS OF COMPANY<\/p>\n
During the period from the date of this Agreement and continuing until the
\nearlier of the termination of this Agreement or the Effective Time, Company
\nagrees (except as expressly contemplated by this Agreement or with Microsoft’s
\nprior written consent which will not be unreasonably withheld) that:<\/p>\n
4.1 Conduct of Business.<\/p>\n
4.1.1 Ordinary Course. Except as set forth in the Company Disclosure
\nSchedule, Company and its Subsidiaries shall carry on their respective
\nbusinesses in the usual, regular and ordinary course in substantially the same
\nmanner as heretofore conducted and, to the extent consistent with such
\nbusinesses, use all reasonable efforts consistent with past practice and
\npolicies to preserve intact their present business organizations, keep available
\nthe services of their present officers, consultants, and employees and preserve
\ntheir relationships with customers, suppliers, distributors and others having
\nbusiness dealings with them. Company shall promptly notify Microsoft of any
\nevent or occurrence or emergency not in the ordinary course of business, of
\nCompany or its Subsidiaries, and material and adverse to the Business Condition
\nof Company. Except as set forth in the Company Disclosure Schedule, neither
\nCompany nor any of its Subsidiaries shall:<\/p>\n
(a) accelerate, amend or change the period of exercisability or
\nvesting of options, restricted stock, stock bonus or other awards granted under
\nthe Company Incentive and Stock Option Plans (including any discretionary
\nacceleration of the exercise periods by Company’s Board of Directors permitted
\nunder such plans) or authorize cash payments in exchange for any options,
\nrestricted stock, stock bonus or other awards granted under any of such plans;<\/p>\n
-23-<\/p>\n
(b) except in the ordinary course of business consistent with
\npast practices, grant any severance or termination pay to any officer or
\ndirector or to any employee of Company or any of its Subsidiaries;<\/p>\n
(c) except in the ordinary course of business consistent with
\npast practices and other than transfers between or among Company and any of its
\nwholly owned Subsidiaries, transfer to any person or entity any rights to the
\nCompany Intellectual Property Rights;<\/p>\n
(d) enter into or amend any agreements pursuant to which any
\nother party is granted exclusive marketing or manufacturing rights of any type
\nor scope for a period of more than two years with respect to any hardware or
\nsoftware products of Company or any of its Subsidiaries; and<\/p>\n
(e) except in the ordinary course of business consistent with
\npast practices, commence a lawsuit other than: (i) for the routine collection of
\nbills; (ii) for software piracy; (iii) in such cases where Company in good faith
\ndetermines that failure to commence suit would result in a material impairment
\nof a valuable aspect of Company’s business, provided Company consults with
\nMicrosoft prior to filing such suit; or (iv) for a breach of this Agreement.<\/p>\n
(f) enter into one or more leases which extend for a period of
\nfive years beyond the date of this Agreement and which obligate Company to pay
\naggregate gross rent in excess of $1,000,000.<\/p>\n
(g) extend an offer of employment to a candidate for an officer
\nposition without prior consultation with Microsoft.<\/p>\n
4.1.2 Dividends: Changes in Stock. Other than transfers between or
\namong Company and any of its wholly owned Subsidiaries, Company shall not, and
\nshall not permit any of its Subsidiaries to: (i) declare or pay any dividends on
\nor make other distributions (whether in cash, stock or property) in respect to
\nany of its capital stock; (ii) split, combine or reclassify any of its capital
\nstock or issue or authorize the issuance of any other securities in respect of,
\nin lieu of or in substitution for shares of capital stock of Company; (iii)
\nrepurchase or otherwise acquire, directly or indirectly, any shares of its
\ncapital stock other than repurchase of vested stock from former employees; or
\n(iv) propose any of the foregoing.<\/p>\n
4.1.3 Issuance of Securities. Company shall not, and shall not permit
\nits Subsidiaries to, issue, deliver, or sell, or authorize, propose or agree to,
\nor commit to the issuance, delivery, or sale of any shares of its capital stock
\nof any class, any Company Voting Debt or any securities convertible into its
\ncapital stock or Company Voting Debt, any options, warrants, calls, conversion
\nrights, commitments, agreements, contracts, understandings, restrictions,
\narrangements or rights of any character obligating it or any of its Subsidiaries
\nto issue any such shares, Voting Debt or other convertible securities other than
\nthe issuance of options for Company Common Stock to employees under the Company
\nIncentive and Stock<\/p>\n
-24-<\/p>\n
Option Plans in amounts and on terms consistent with prior practices and other
\nthan the issuance of Company Common Stock upon the exercise of options granted
\nunder the Company Incentive and Stock Option Plans. Any grant of stock options
\nor restricted stock in excess of the amounts set forth in Section 4.1.3 of the
\nCompany Disclosure Schedule shall require the prior written approval of
\nMicrosoft.<\/p>\n
4.1.4 Governing Documents. Company shall not, nor shall it cause or
\npermit any of its Subsidiaries to, amend its Articles or Certificate of
\nIncorporation or Bylaws.<\/p>\n
4.1.5 Exclusivity; Acquisition Proposals. (a) Unless and until this
\nAgreement shall have been terminated by either party pursuant to Section 8.1
\nhereof, Company shall not (and it shall use its commercially reasonable best
\nefforts to ensure that none of its officers, directors, agents, representatives
\nor affiliates) take or cause or permit any Subsidiary to take, directly or
\nindirectly, any of the following actions with any party other than Microsoft and
\nits designees: (i) solicit, knowingly encourage, initiate or participate in any
\nnegotiations, inquiries or discussions with respect to any offer or proposal to
\nacquire all or any significant part of its business, assets or capital shares
\nwhether by merger, consolidation, other business combination, purchase of
\nassets, tender or exchange offer or otherwise (each of the foregoing, an
\n“Acquisition Transaction”); (ii) disclose, in connection with an Acquisition
\nTransaction, any information not customarily disclosed to any person other than
\nMicrosoft or its representatives concerning Company’s business or properties or
\nafford to any person other than Microsoft or its representatives or entity
\naccess to its properties, books or records, except in the ordinary course of
\nbusiness and as required by law or pursuant to a governmental request for
\ninformation; (iii) enter into or execute any agreement relating to an
\nAcquisition Transaction; or (iv) make or authorize any public statement,
\nrecommendation or solicitation in support of any Acquisition Transaction or any
\noffer or proposal relating to an Acquisition Transaction other than with respect
\nto the Merger provided, however, that the Board of Directors of Company may
\nrecommend that the shareholders of Company tender their shares in connection
\nwith a tender offer to the extent the Board of Directors of Company by a
\nmajority vote determines in its good faith judgment that such a recommendation
\nis required to comply with the fiduciary duties of the Board of Directors of
\nCompany to shareholders under applicable Washington Law, after receiving the
\nadvice of outside legal counsel. In the event Company shall receive any offer or
\nproposal, directly or indirectly, of the type referred to in clause (i) above,
\nor any request for disclosure or access with respect to information of the type
\nreferred to in clause (ii) above, it shall immediately, and prior to taking any
\naction in response thereto inform Microsoft as to the existence of such offer or
\nproposal and generally describe the material facts concerning any such offer
\nincluding the identity of the third party making such offer, proposal or
\nrequest, and will thereafter cooperate with Microsoft by informing Microsoft of
\nadditional material facts as they arise and furnishing to Microsoft any
\nadditional information it furnished to any third party making such proposal or
\nrequesting information. Nothing contained in this Agreement shall prevent the
\nBoard of Directors of Company from (i) furnishing information to, or answering
\nquestions of, a third party which the Board of Directors of Company reasonably
\nbelieves has made a bona fide proposal with respect to an Acquisition
\nTransaction that is a Superior Proposal (as defined below) not solicited in
\nviolation of this Agreement, provided that prior to providing information, such
\nthird party executes an agreement with confidentiality provisions substantially<\/p>\n
-25-<\/p>\n
similar to those then in effect between Company and Microsoft and provided
\nfurther that Microsoft is notified one business day prior to Company’s providing
\nof such information to a third party, or (ii) subject to compliance with the
\nother terms of this Section 4.1.5, considering a proposal with respect to an
\nAcquisition Transaction, which the Board of Directors of Company reasonably
\nbelieves to be a bona fide proposal, that is a Superior Proposal not solicited
\nin violation of this Agreement. For purposes of this Agreement, a “Superior
\nProposal” means any proposal made by a third party to acquire, directly or
\nindirectly, for consideration consisting of cash and\/or securities,
\nsubstantially all of the equity securities of Company entitled to vote generally
\nin the election of directors, on terms which the Board of Directors of Company
\nreasonably believes (x) (after consultation with a financial advisor of
\nnationally recognized reputation) to be more favorable from a financial point of
\nview to its shareholders than the Merger and the transactions contemplated by
\nthis Agreement taking into account at the time of determination any changes to
\nthe financial terms of this Agreement proposed in writing by Microsoft and (y)
\nto be more favorable to Company than the Merger and the transactions
\ncontemplated by this Agreement after taking into account all pertinent factors
\ndeemed relevant by the Board of Directors of Company under the laws of the State
\nof Washington; provided, however, that a Superior Proposal may be subject to a
\ndue diligence review of confidential information and to other customary
\nconditions.
\n (b) Nothing contained in this Section 4.1.5 shall prohibit
\nCompany from taking and disclosing to its shareholders a position required by
\nRule 14d-9 or 14e-2(a) promulgated under the Exchange Act or from making any
\ndisclosure to its shareholders required by applicable law, rule or regulation;
\nprovided, however, the Board of Directors of Company shall only recommend that
\nits shareholders tender their shares in connection with a tender offer to the
\nextent that the Board of Directors of Company by a majority vote determines in
\nits good faith judgment that such a recommendation is required to comply with
\nthe fiduciary duties of the Board of Directors of Company to shareholders under
\napplicable Washington law, after receiving the advice of outside legal counsel.<\/p>\n
4.1.6 No Acquisitions. Except as set forth in the Company Disclosure
\nSchedule, Company shall not, and shall not permit any Subsidiary of Company to,
\nacquire or agree to acquire by merging or consolidating with, or by purchasing a
\nsubstantial portion of the assets of, or by any other manner, any business or
\nany corporation, partnership, association or other business organization or
\ndivision thereof or otherwise acquire or agree to acquire any assets which are
\nmaterial, individually or in the aggregate, to the Business Condition of
\nCompany.<\/p>\n
4.1.7 No Dispositions. Company shall not, and shall not permit any
\nSubsidiary of Company to, sell, lease, license, transfer, mortgage, encumber or
\notherwise dispose of any of their assets or cancel, release, or assign any
\nindebtedness or claim, except in the ordinary course of business or in amounts
\nwhich are not material, individually or in the aggregate, to the Business
\nCondition of Company.<\/p>\n
4.1.8 Indebtedness. Company shall not, and shall not permit any
\nSubsidiary of Company to, incur any indebtedness for borrowed money by way of
\ndirect loan, sale of debt<\/p>\n
-26-<\/p>\n
securities, purchase money obligation, conditional sale, guarantee, or otherwise
\nin amounts which are material, individually or in the aggregate, to the Business
\nCondition of Company.<\/p>\n
4.1.9 Plans. Except as set forth in the Company Disclosure Schedule,
\nCompany shall not, and shall not permit any Subsidiary of Company to, adopt or
\namend in any material respect any Plan, or pay any pension or retirement
\nallowance not required by any existing Plan. Except in the ordinary course of
\nbusiness consistent with past practices, Company shall not and shall not permit
\nany Subsidiary of Company to, enter into any employment contracts, pay any
\nspecial bonuses or special remuneration to officers, directors, or employees, or
\nincrease the salaries, wage rates or fringe benefits of its officers or
\nemployees.<\/p>\n
4.1.10 Claims. Company shall not, and shall not permit any Subsidiary
\nof Company to, settle any claim, action or proceeding, except in the ordinary
\ncourse of business or in amounts which are not material, individually or in the
\naggregate, to the Business Condition of Company.<\/p>\n
4.1.11 Agreement. Company shall not, and shall not permit any
\nSubsidiary of Company to, agree to take any of the actions prohibited by this
\nSection 4.1.<\/p>\n
4.2 Breach of Representations and Warranties. Company will not knowingly
\ntake any action which would cause or constitute a breach of any of the
\nrepresentations and warranties set forth in Section 3.1 or which would cause any
\nof such representations and warranties to be inaccurate in any material respect.
\nIn the event of, and promptly after becoming aware of, the occurrence of or the
\npending or threatened occurrence of any event which would cause or constitute
\nsuch a breach or inaccuracy, Company will give written notice thereof to
\nMicrosoft and will use its commercially reasonable best efforts to prevent or
\npromptly remedy such breach or inaccuracy.<\/p>\n
4.3 Pooling. Company shall not knowingly take or cause to be taken any
\naction, whether before or after the Effective Time, which would disqualify the
\nMerger as a pooling of interests for accounting purposes.<\/p>\n
4.4 Consents. Company will promptly apply for or otherwise seek, and use
\nits commercially reasonable best efforts to obtain, all Consents set forth in
\nthe Company Disclosure Schedule, and make all filings, required with respect to
\nCompany for the consummation of the Merger, except such Consents as Microsoft
\nand Company agree Company shall not seek to obtain.<\/p>\n
4.5 Commercially Reasonable Best Efforts. Company will use its commercially
\nreasonable best efforts to effectuate the transactions contemplated hereby and
\nto fulfill and cause to be fulfilled the conditions to closing under this
\nAgreement provided that Company shall in no event be required to agree to the
\nimposition of, or comply with, any condition, obligation or restriction on
\nCompany or any of its Subsidiaries or on the Surviving Corporation of the type
\nreferred to in Section 7.1.6 hereof.<\/p>\n
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4.6 Information for Prospectus\/Proxy Statement. Company will as promptly
\nas practicable provide to Microsoft and its counsel for inclusion within the
\nProxy Statement\/Prospectus and the S-4 in a form reasonably satisfactory to
\nMicrosoft and its counsel, such information concerning Company, its operations,
\ncapitalization, technology, share ownership and other information as Microsoft
\nor its counsel may reasonably request.<\/p>\n
4.7 Company Plans. Without the loss of any vested benefits but without
\naccelerating any unvested rights (except as required by law), Company shall
\nterminate or modify the Plans as may be directed by Microsoft immediately prior
\nto the Effective Time or take such action as directed by Microsoft to merge such
\nPlans with the Microsoft plans at the Effective Time; provided, however, that
\nany such modification, termination or merger shall be contingent upon the
\noccurrence of the Effective Time.<\/p>\n
4.8 Employee Transition Committee.<\/p>\n
(a) Company and Microsoft shall promptly establish a transition
\ncommittee (the “Transition Committee”), which shall coordinate the joint efforts
\nof Company and Microsoft to transition Company’s employees in connection with
\nthe Merger. The Transition Committee shall consist of Company’s Chief Executive
\nOfficer and Chief Technology Officer and Microsoft’s Senior Vice President,
\nBusiness Productivity Group and an additional designee of Microsoft. The
\nTransition Committee shall meet regularly to determine policies and practices
\nrelating to transition of Company’s employees in connection with the Merger.<\/p>\n
(b) As promptly as practicable, but in any event within 10 business
\ndays after the date hereof, the Transition Committee shall identify 20 key
\ncontributors of Company. Promptly thereafter, Company and Microsoft, through
\ntheir representatives on the Transition Committee, shall use their respective
\ncommercially reasonable best efforts to enter into employment agreements with
\neach such key contributor.<\/p>\n
4.9 Shareholder Approval. Company will call a special Shareholders
\nMeeting as soon as practicable but in no event later than 45 days after the Form
\nS-4 is declared effective by the SEC to submit this Agreement, the Merger and
\nrelated matters for the consideration and approval of Company’s Shareholders
\n(“Company Shareholders Meeting”). Such approval will be recommended by Company’s
\nBoard of Directors, subject to the fiduciary obligations of its directors. Such
\nmeeting will be called, held and conducted, and any proxies will be solicited,
\nin compliance with applicable law. Concurrently with the execution of this
\nAgreement, all officers and directors of Company shall have executed Voting
\nAgreements in the form of Exhibit 4.9 agreeing, among other things, to vote in
\nfavor of the Merger and against any competing proposals; provided, however, that
\nany director of Company who is also a shareholder of Company shall not be
\nprevented from exercising his\/her fiduciary obligations as a director of
\nCompany.<\/p>\n
4.10 Tax Returns. Company shall properly and timely file all Returns with
\nrespect to Company and any Subsidiary required to be filed prior to the Closing
\nDate and shall pay all taxes required to be paid prior to the Closing Date,
\nexcept for those taxes being contested in good faith.<\/p>\n
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All such Returns shall be prepared consistent with past practice. Company shall
\n(i) notify Microsoft as promptly as practicable if it receives notice of any tax
\naudit, the assessment of any tax, the assertion of any tax lien, or any request,
\nnotice or demand for taxes by any taxing authority, (ii) provide Microsoft a
\ndescription of any such matter in reasonable detail (including a copy of any
\nwritten materials received from the taxing authority), and (iii) take no action
\nwith respect to such matter without the consent of Microsoft. Company shall not
\n(x) make or revoke any tax election which may affect Company, (y) execute any
\nwaiver of restrictions on assessment of any tax without the approval of
\nMicrosoft, or (z) enter into any agreement or settlement with respect to any tax
\nwithout the approval of Microsoft which shall not be unreasonably withheld.<\/p>\n
4.11 Representations of Shareholders. Company will use its commercially
\nreasonable best efforts to cause (i) all officers and directors of Company, and
\n(ii) beneficial owners of five percent (5%) or more of the outstanding Company
\nCommon Stock (collectively, the “Company’s Principal Shareholders”‘) to
\ncooperate with counsel to Company and Microsoft to assist them in providing the
\ntax opinions called for by Section 7.1.5 hereof.<\/p>\n
4.12 Employee Benefits Matters.<\/p>\n
4.12.1 Service Credit. To the extent that service is relevant for
\neligibility, vesting and (except as would result in duplication of benefits)
\nbenefit accruals under any employee benefit plan, program or arrangement
\nmaintained by Microsoft or any Subsidiary of Microsoft, such plan, program or
\narrangement shall credit each employee of Company or any Subsidiary of Company
\n(a “Company Employee”) who participate therein for service on or prior to the
\nEffective Time with Company or any Subsidiary of Company or any Affiliate or
\npredecessor of any of them. Microsoft agrees to offer to Company Employees
\nbenefits commensurate with those benefits conferred to Microsoft employees
\nsimilarly situated. In addition, Microsoft shall (i) waive limitations on
\nbenefits relating to any pre-existing conditions under any Microsoft or
\nSubsidiary of Microsoft welfare benefit plan in which Company Employees may
\nparticipate and (ii) recognize, for purposes of annual deductible and out-of-
\npocket limits under its medical and dental plans, deductible and out-of-pocket
\nexpenses paid by Company Employees and their respective dependents under
\nCompany’s and any of its Subsidiary’s medical, dental and other healthcare plans
\nin the calendar year in which the Effective Time occurs.<\/p>\n
4.12.2 Section 16 Approval. On or after the date hereof and prior to the
\nEffective Time, each of Microsoft and Company shall take all necessary action
\nsuch that, with respect to (i) any Company Employee who as of the date hereof is
\nsubject to Section 16 of the Exchange Act and (ii) any member of the Company’s
\nBoard of Directors (each, a “Company Section 16 Insider”), the acquisition by
\nany such Company Section 16 Insider of Microsoft Common Stock or Microsoft stock
\noptions and the disposition by any such Company Section 16 Insider of Company
\nCommon Stock or Company Options pursuant to the transactions contemplated herein
\nshall be exempt from the short-swing profit liability rules of Section 16(b) of
\nthe Exchange Act pursuant to Rule 16b-3 promulgated thereunder.<\/p>\n
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4.12.3 Retention Plans and Related Matters. Prior to the Effective
\nTime, Microsoft shall implement retention and severance bonus plans having the
\nterms set forth in Schedule 4.12.3 pursuant to final documentation to be
\napproved by the Transition Committee (the “Retention Plans”) for the benefit of
\nCompany Employees after the Merger. Microsoft agrees not to terminate, amend or
\notherwise modify the Retention Plans and to make all payments provided for in
\nthe Retention Plans as such payments become due and payable, subject to the
\nterms of the Retention Plans.<\/p>\n
ARTICLE V<\/p>\n
COVENANTS OF MICROSOFT<\/p>\n
During the period from the date of this Agreement and continuing until the
\nearlier of the termination of this Agreement or the Effective Time, Microsoft
\nagrees (except as expressly contemplated by this Agreement or with Company’s
\nprior written consent which will not be unreasonably withheld) that:<\/p>\n
5.1 Representations and Warranties. Microsoft will not knowingly take any
\naction which would cause or constitute a breach of any of the representations
\nand warranties set forth in Section 3.2 or which would cause any of such
\nrepresentations and warranties to be inaccurate in any material respect. In the
\nevent of, and promptly after becoming aware of, the occurrence of or the pending
\nor threatened occurrence of any event which would cause or constitute such a
\nbreach or inaccuracy, Microsoft will give notice thereof to Company and will use
\nits commercially reasonable best efforts to prevent or promptly remedy such
\nbreach or inaccuracy.<\/p>\n
5.2 Conduct of Business by Microsoft Pending the Merger. Microsoft shall
\npromptly notify Company of any event or occurrence that is material and adverse
\nto the Business Condition of Microsoft; provided, however, that the disclosure
\nof such event or occurrence in a Microsoft SEC Document shall satisfy such
\nrequirement so long as such Microsoft SEC Document is filed within a reasonable
\nperiod of time after Microsoft becomes aware of such event or occurrence and in
\nany event prior to the Effective Time. In the event Microsoft or any of its
\nSubsidiaries shall agree to acquire by merging or consolidating with, by
\npurchasing an equity interest in, or a portion of the assets of, or by any other
\nmanner, any business or any corporation, partnership, association or other
\nbusiness organization or division thereof and any such business or assets to be
\nacquired includes products that could reasonably be considered to be competitive
\nwith the Company’s business generally related to the development and sale of
\nsoftware for business diagramming and technical drawing (a “Competitive
\nBusiness”), Microsoft shall either (i) delay any filings required to be made by
\nMicrosoft under the HSR Act with respect to such acquisition until the
\napplicable waiting period with respect to the Merger under the HSR Act shall
\nhave expired or have been earlier terminated or (ii) agree with the applicable
\nGovernmental Entity to hold separate such Competitive Business or take similar
\nactions that would cause such Governmental Entity to permit promptly the
\nexpiration or termination of the waiting period under the HSR Act with respect
\nto the Merger.<\/p>\n
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5.3 Consents. Microsoft will promptly apply for or otherwise seek, and
\nuse its commercially reasonable best efforts to obtain, all consents and
\napprovals, and make all filings, required for the consummation of the Merger.<\/p>\n
5.4 Commercially Reasonable Best Efforts. Microsoft will use its
\ncommercially reasonable best efforts to effectuate the transactions contemplated
\nhereby and to fulfill and cause to be fulfilled the conditions to closing under
\nthis Agreement provided that Microsoft shall in no event be required to agree to
\nthe imposition of, or comply with, any condition, obligation or restriction on
\nMicrosoft or any of its Subsidiaries or on the Surviving Corporation of the type
\nreferred to in Section 7.1.6 hereof.<\/p>\n
5.5 Agreements of Microsoft Affiliates. Prior to the Effective Time,
\nMicrosoft will use its commercially reasonable best efforts to obtain the
\nexecution of agreements with respect to the sale of Microsoft Common Stock with
\neach person who is an Affiliate of Microsoft for purposes of compliance with
\npooling restrictions.<\/p>\n
5.6 Representations of Shareholders. Microsoft will use its commercially
\nreasonable best efforts to cause each of its principal shareholders who is the
\nbeneficial owner of five percent (5%) or more of the outstanding Microsoft
\nCommon Stock to cooperate with counsel to Microsoft and Company to assist them
\nin providing the tax opinions called for by Section 7.1.5. Microsoft shall
\nprovide to Company and its counsel such customary representations as such
\npersons shall reasonably request in connection with the opinions contemplated in
\nSection 7.1.5. To the knowledge of Microsoft, there are no facts or
\ncircumstances relating to Microsoft, including any covenants or undertakings of
\nMicrosoft pursuant to this Agreement, that would prevent Shearman & Sterling
\nfrom delivering the opinion referred to in Section 7.1.5 as of the date hereof.<\/p>\n
5.7 Tax Free Reorganization. Microsoft has no present plan or intention
\nfollowing the Merger to take any of the following actions:<\/p>\n
(a) Cause Company to issue additional shares of its capital stock that
\nwould result in Microsoft losing control of company within the meaning of
\nSection 368(c) of the Code.<\/p>\n
(b) Merge Company with or into another corporation, or sell or
\notherwise dispose of the capital stock of Company (except for transfers of such
\nstock to corporations controlled by Microsoft within the meaning of Code Section
\n368(a)(2)(c));<\/p>\n
(c) Reacquire any shares of its capital stock issued in the Merger,
\nother than possible purchases in the ordinary course of business of shares held
\nby Company employees in connection with termination of employment of such
\nemployees and open market repurchases in connection with its normal share
\nrepurchase program.<\/p>\n
(d) Cause Company to fail to hold at least 90% of the fair market
\nvalue of the Company’s net assets and at least 70% of the fair market value of
\nits gross assets, and at least 90% of the fair market value of Sub’s net assets
\nand at least 70% of its gross assets held<\/p>\n
-31-<\/p>\n
immediately prior to the Merger, other than pursuant to a transfer of rights or
\nassets by means of a sale, license or merger permitted under subsection (b),
\nprovided that Company receives reasonable arms-length consideration for any sale
\nor license of its assets. For this purpose, amounts paid by Company or Sub to
\ndissenters to shareholders who receive cash or other property, to pay
\nreorganization expenses, and in connection with redemptions and distributions
\n(except for regular, normal distributions) will be treated as assets of the
\nCompany or Sub, respectively, held immediately prior to the Merger.<\/p>\n
(e) Fail to cause Company (or a transferee of Company’s stock or
\nbusiness to which the stock or assets of Company are transferred in a
\ntransaction described in Section 368(a)(2)(C) of the Code) either to continue
\nCompany’s historic business or use a significant portion of its business assets
\nin a business.<\/p>\n
5.8 Nasdaq Listing. Microsoft will use its commercially reasonable best
\nefforts (i) to cause the shares of Microsoft Common Stock to be issued in the
\nMerger to be quoted upon the Effective Time on the Nasdaq National Market or
\nlisted on such national securities exchange as Microsoft Common Stock is listed
\nand (ii) to cause the shares o Microsoft Common Stock issued upon the exercise
\nof assumed Company Options to be quoted upon issuance on the Nasdaq National
\nMarket or listed on such national securities exchange as shares of Microsoft
\nCommon Stock are listed.<\/p>\n
5.9 Employee Transition Committee. Microsoft shall assist Company in the
\norganization, establishment and administration of the Transition Committee as
\ndescribed in Section 4.8.<\/p>\n
5.10 Retention Plans. Prior to the Effective Time, Microsoft agrees to
\nimplement the Retention Plans for the benefit of Company Employees after the
\nMerger. Microsoft agrees not to terminate, amend or otherwise modify the
\nRetention Plans and to make all payments provided for in the Retention Plans as
\nsuch payments become due and payable, subject to the terms of the Retention
\nPlans. Microsoft also agrees to take all other actions with respect to Company
\nemployees that are described in or contemplated by Schedule 4.12.3.<\/p>\n
ARTICLE VI<\/p>\n
ADDITIONAL AGREEMENTS<\/p>\n
In addition to the foregoing, Microsoft and Company each agree to take the
\nfollowing actions after the execution of this Agreement.<\/p>\n
6.1 Preparation of S-4. As promptly as practicable after the date hereof,
\nMicrosoft and Company shall prepare and file with the SEC the Proxy Statement
\nand any other documents required by the Exchange Act in connection with the
\nMerger, and Microsoft shall prepare and file with the SEC the S-4, in which the
\nProxy Statement will be included as a part of the prospectus. Each of Microsoft
\nand Company shall use its commercially reasonable best efforts<\/p>\n
-32-<\/p>\n
to have the S-4 declared effective under the Securities Act as promptly as
\npracticable after such filing. Prior to the effective date of the S-4, Microsoft
\nshall also take any action required to be taken under any applicable federal or
\nstate securities or blue sky laws in connection with the issuance of the
\nMicrosoft Common Stock in the Merger. Company agrees that the Proxy
\nStatement\/Prospectus will comply as to form in all material respects with the
\nprovisions of all applicable laws, including the provisions of the Exchange Act
\nand the rules and regulations of the SEC thereunder, except that no
\nrepresentation is made by Company with respect to information supplied by
\nMicrosoft specifically for inclusion therein. Microsoft agrees that the S-4 and
\nthe Proxy Statement\/Prospectus will comply as to form in all material respects
\nwith the provisions of all applicable laws including the provisions of the
\nSecurities Act and the Exchange Act and the rules and regulations of the SEC
\nthereunder, except that no representation is made by Microsoft with respect to
\ninformation supplied by Company specifically for inclusion therein.<\/p>\n
6.2 Letters of Company’s Accountants. Company shall use its commercially
\nreasonable best efforts to cause to be delivered to Microsoft letters (each, a
\n“Company Comfort Letter”) addressed to Microsoft and Company of Ernst & Young
\nLLP, Company’s independent auditors, dated the date on which the S-4 shall
\nbecome effective and within two business days prior to the Closing Date, in form
\nand substance reasonably satisfactory to Microsoft and customary in scope and
\nsubstance for letters delivered by independent public accountants in connection
\nwith registration statements similar to the S-4.<\/p>\n
6.3 Letter of Microsoft’s Accountants. Microsoft shall use its
\ncommercially reasonable best efforts to cause to be delivered to Company letters
\n(each a “Microsoft Comfort Letter”) addressed to Company and Microsoft of
\nDeloitte & Touche LLP, Microsoft’s independent auditors, dated the date on which
\nthe S-4 shall become effective and within two business days prior to the Closing
\nDate in form and substance reasonably satisfactory to Company and customary in
\nscope and substance for letters delivered by independent public accountants in
\nconnection with registration statements similar to the S-4.<\/p>\n
6.4 Access to Information. Subject to appropriate restrictions on access
\nto information which Company determines in good faith to be proprietary or
\ncompetitively sensitive, Company and Microsoft shall, subject to applicable law,
\neach afford the other and their respective accountants, counsel and other
\nrepresentatives, reasonable access during normal business hours during the
\nperiod prior to the Effective Time to (i) all of their and their respective
\nSubsidiaries’ properties, books, contracts, commitments and records, and (ii)
\nall other information concerning the business, properties and personnel of
\nCompany and Microsoft and their respective Subsidiaries, as the other party may
\nreasonably request which is necessary to complete the transaction and prepare
\nfor an orderly transition to operations after the Effective Time. Company and
\nMicrosoft agree to provide to the other and their respective accountants,
\ncounsel and representatives copies of internal financial statements promptly
\nupon the request therefore. No information or knowledge obtained in any
\ninvestigation pursuant to this Section 6.4 shall affect or be deemed to modify
\nany representation or warranty contained herein or the conditions to the
\nobligations of the parties to consummate the Merger. Company and Microsoft
\nagree that the non-disclosure agreement, dated August 11, 1999 (the
\n“Confidentiality Agreement”), between Company and Microsoft shall continue in
\nfull force and effect and shall<\/p>\n
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be applicable to all Confidential Information (as defined in the Confidentiality
\nAgreement) received pursuant to this Agreement.<\/p>\n
6.5 Legal Conditions to the Merger. Each of Microsoft, Sub and Company
\nwill take all reasonable actions necessary to comply promptly with all legal
\nrequirements which may be imposed on any of them with respect to the Merger and
\nwill promptly cooperate with and furnish information to each other in connection
\nwith any such requirements imposed upon the other. Each of Microsoft, Sub and
\nCompany will take, and will cause its respective Subsidiaries to take, all
\nreasonable actions to obtain (and to cooperate with the other parties in
\nobtaining) any consent, approval, order or authorization of, or any exemption
\nby, any Governmental Entity, or other third party, required to be obtained or
\nmade by Company or Microsoft or their respective Subsidiaries in connection with
\nthe Merger or the taking of any action contemplated thereby or by this
\nAgreement. The foregoing shall not require any party to agree to the imposition
\nof, or to comply with, any condition, obligation or restriction on Microsoft or
\nany of its Subsidiaries or on the Surviving Corporation of the type referred to
\nin Section 7.1.6 hereof.<\/p>\n
6.6 Affiliates. Contemporaneously with the execution of this Agreement,
\nthe affiliate letters substantially in the form attached as Exhibit 6.6 (the
\n“Affiliate Letters”) with respect to the sale of Microsoft Common Stock, shall
\nhave been executed by all of the executive officers and directors of Company
\n(the “Affiliates”). Microsoft shall be entitled to place appropriate legends on
\nthe certificate evidencing any shares of Microsoft Common Stock to be received
\nby Affiliates pursuant to the terms of this Agreement and to issue appropriate
\nstop transfer instructions to the transfer agent for shares of Microsoft Common
\nStock consistent with the terms of the Affiliate Letters.<\/p>\n
6.7 HSR Act Filings.<\/p>\n
6.7.1 Filings and Cooperation. Each of Microsoft and Company shall
\ntake all reasonable steps (i) promptly to make or cause to be made the filings
\nrequired of such party or any of its Affiliates or Subsidiaries under the HSR
\nAct with respect to the Merger and the other transactions provided for in this
\nAgreement, (ii) to comply in a timely manner with any request under the HSR Act
\nfor additional information, documents, or other material received by such party
\nor any of its Affiliates or Subsidiaries from the Federal Trade Commission or
\nthe Department of Justice or other Governmental Entity in respect of such
\nfilings, the Merger, or such other transactions, and (iii) to cooperate with the
\nother party in connection with any such filing and in connection with resolving
\nany investigation or other inquiry of any such agency or other Governmental
\nEntity under any Antitrust Laws (as defined in Section 6.7.2) with respect to
\nany such filing, the Merger, or any such other transaction. Each party shall
\npromptly inform the other party of any material communication with, and any
\nproposed understanding, undertaking, or agreement with, any Governmental Entity
\nregarding any such filings, the Merger, or any such other transactions. Neither
\nparty shall participate in any meeting with any Governmental Entity in respect
\nof any such filings, investigation, or other inquiry without giving the other
\nparty notice of the meeting and, to the extent permitted by such Governmental
\nEntity, the opportunity to attend and participate.<\/p>\n
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6.7.2 Objections. Each of Microsoft and Company shall take all reasonable
\nsteps to resolve such objections, if any, as may be asserted by any Governmental
\nEntity with respect to the Merger or any other transactions provided for in this
\nAgreement under the HSR Act, the Sherman Act, as amended, the Clayton Act, as
\namended, the Federal Trade Commission Act, as amended, and any other federal,
\nstate or foreign statutes, rules, regulations, orders, or decrees that are
\ndesigned to prohibit, restrict or regulate actions having the purpose or effect
\nof monopolization or restraint of trade (collectively, “Antitrust Laws”). In
\nconnection therewith, if any administrative or judicial action or proceeding is
\ninstituted (or threatened to be instituted) challenging the Merger as violative
\nof any Antitrust Law, and, if by mutual agreement, Microsoft and Company decide
\nthat litigation is in their best interests, each of Microsoft and Company shall
\ncooperate vigorously to contest and resist any such action or proceeding and to
\nhave vacated, lifted, reversed, or overturned any decree, judgment, injunction,
\nor other order, whether temporary, preliminary, or permanent (each an “Order”),
\nthat is in effect and that prohibits, prevents, or restricts consummation of the
\nMerger. Each of Microsoft and Company shall take such reasonable action as may
\nbe required to cause the expiration of the notice periods under the HSR Act or
\nother Antitrust Laws with respect to the Merger and such other transactions as
\npromptly as possible after the execution of this Agreement. Notwithstanding
\nanything to the contrary in this Section 6.7.2 or in Section 6.7.1, (x) neither
\nMicrosoft nor any of its Subsidiaries shall be required to divest any of their
\nrespective businesses, product lines, or assets, or to take or agree to take any
\nother action or agree to any limitation that would have a Material Adverse
\nEffect on the drawing and diagramming software business of Microsoft combined
\nwith the Surviving Corporation after Closing, (y) neither Company nor its
\nSubsidiaries shall be required to divest any of their respective businesses,
\nproduct lines, or assets, or to take or agree to take any other action or agree
\nto any limitation that would have a Material Adverse Effect on the Business
\nCondition of Company and (z) neither Microsoft nor Company (nor any of their
\nSubsidiaries) shall be required to continue to contest or resist any action or
\nproceeding brought by a Governmental Entity if it concludes that such action is
\nno longer in its best interest.<\/p>\n
6.8 Officers and Directors. Microsoft agrees that all rights to
\nindemnification (including advancement of expenses) existing on the date hereof
\nin favor of the present or former officers, directors and employees of Company
\nor any of its Subsidiaries (collectively, the “Indemnified Parties”) with
\nrespect to actions taken in their capacities as officers, directors and
\nemployees prior to the Effective Time as provided in Company’s Articles of
\nIncorporation or Bylaws, employment agreements and indemnification agreements
\nshall survive the Merger and continue in full force and effect for a period of
\nsix years following the Effective Time and shall be guaranteed by Microsoft and
\nthat Company’s former and present officers and directors shall be provided by
\nMicrosoft with the same level of indemnification as currently exists for
\nMicrosoft’s officers and directors. This Section 6.8 shall survive the
\nconsummation of the Merger at the Effective Time, and is intended to be for the
\nbenefit of, and shall be enforceable by, the Indemnified Parties, their heirs
\nand personal representatives and shall be binding on the Surviving Corporation
\nand its respective successors and assigns.<\/p>\n
6.9 Expenses. Whether or not the Merger is consummated, all costs and
\nexpenses incurred in connection with this Agreement and the transactions
\ncontemplated hereby shall be paid by the party incurring such expense, except
\nthat if the Merger is not consummated expenses<\/p>\n
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incurred in connection with printing and mailing of the documents distributed or
\nto be distributed to shareholders of Company and the filing fee with respect to
\nthe S-4 shall be shared equally by Microsoft and Company.<\/p>\n
6.10 Stock Option Agreement. To induce Microsoft to execute this
\nAgreement, Company has executed and delivered to Microsoft as of the date hereof
\na Stock Option Agreement (the “Stock Option Agreement”) in the form attached
\nhereto as Exhibit 6.10.<\/p>\n
6.11 Additional Agreements. In case at any time after the Effective
\nTime any further action is reasonably necessary or desirable to carry out the
\npurposes of this Agreement or to vest the Surviving Corporation with full title
\nto all properties, assets, rights, approvals, immunities and franchises of
\neither of the Constituent Corporations, the proper officers and directors of
\neach corporation which is a party to this Agreement shall take all such
\nnecessary action.<\/p>\n
6.12 Public Announcements. Microsoft and Company shall cooperate with
\neach other in releasing information concerning this Agreement and the
\ntransactions contemplated herein. Where practicable each of the parties shall
\nfurnish to the other drafts of all releases prior to publication. Nothing
\ncontained herein shall prevent either party at any time from furnishing any
\ninformation to any governmental agency or from issuing any release when it
\nbelieves it is legally required to do so.<\/p>\n
6.13 State Takeover Laws. Company, and the Board of Directors of Company,
\nshall grant such approvals and take all necessary steps to exempt the
\ntransactions contemplated by this Agreement from, or if necessary challenge the
\nvalidity or applicability of Chapter 19 of the WBCA to the Merger.<\/p>\n
ARTICLE VII<\/p>\n
CONDITIONS PRECEDENT<\/p>\n
7.1 Conditions to Each Party’s Obligation to Effect the Merger. The
\nrespective obligation of each party to effect the Merger shall be subject to the
\nsatisfaction prior to the Closing Date of the following conditions:<\/p>\n
7.1.1 Shareholder Approval. This Agreement and the transactions
\ncontemplated hereby shall have been approved and adopted by the required vote of
\nholders of Company Common Stock.<\/p>\n
7.1.2 Consents. Other than the filing of the Merger Documents with the
\nSecretary of State of the State of Washington, all Consents legally required for
\nthe consummation of the Merger and the transactions contemplated by this
\nAgreement shall have been filed, occurred, or been obtained, other than such
\nConsents, the failure of which to obtain would not have a Material Adverse
\nEffect on the consummation of the Merger or the other transactions contemplated
\nhereby or on the Business Condition of Microsoft or Company.<\/p>\n
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7.1.3 S-4. The S-4 shall have become effective under the Securities
\nAct and shall not be the subject of any stop order or proceedings seeking a stop
\norder and the Proxy Statement shall not be at the Effective Time subject to any
\nproceedings commenced or threatened by the SEC.<\/p>\n
7.1.4 No Restraints. No statute, rule, regulation, executive order,
\ndecree or injunction shall have been enacted, entered, promulgated or enforced
\nby any United States court or Governmental Entity of competent jurisdiction
\nwhich enjoins or prohibits the consummation of the Merger and shall be in
\neffect.<\/p>\n
7.1.5 Tax-Free Reorganization. Each of Company and Microsoft shall
\nhave received a written opinion from their respective counsel to the effect that
\nthe Merger will constitute a reorganization within the meaning of Section 368 of
\nthe Code, and that Microsoft, Sub and Company will each be a party to that
\nreorganization. In preparing Company and Microsoft tax opinions, counsel may
\nrely on reasonable representations related thereto.<\/p>\n
7.1.6 No Burdensome Condition. There shall not be any action taken,
\nor any statute, rule, regulation or order enacted, entered, enforced or deemed
\napplicable to the Merger by any Governmental Entity which, in connection with
\nthe grant of any Required Statutory Approval, imposes any restriction, condition
\nor obligation upon Microsoft, Company or the Surviving Corporation which would
\n(i) have a Material Adverse Effect on the Business Condition of Company or (ii)
\nmaterially adversely impact the economic or business benefits of the
\ntransactions contemplated by this Agreement.<\/p>\n
7.2 Conditions of Obligations of Microsoft and Sub. The obligations of
\nMicrosoft and Sub to effect the Merger are subject to the satisfaction of the
\nfollowing conditions unless waived by Microsoft and Sub:<\/p>\n
7.2.1 Representations and Warranties of Company. The representations
\nand warranties of Company set forth in this Agreement shall be true and correct
\nas of the date of this Agreement and as of the Closing Date as though made on
\nand as of the Closing Date, except: (i) as otherwise contemplated by this
\nAgreement (but excluding from this exception any breach made unknowingly
\npursuant to Section 4.2), or (ii) in respects that do not have a Material
\nAdverse Effect on Company or Microsoft’s Business Condition. Microsoft shall
\nhave received a certificate signed on behalf of Company by the chief executive
\nofficer or the chief financial officer of Company to such effect on the Closing
\nDate.<\/p>\n
7.2.2 Performance of Obligations of Company. Company shall have
\nperformed all agreements and covenants required to be performed by it under this
\nAgreement prior to the Closing Date, except for breaches that do not have a
\nMaterial Adverse Effect on Company’s Business Condition. Microsoft shall have
\nreceived a certificate signed on behalf of Company by the chief executive
\nofficer or the chief financial officer of Company to such effect.<\/p>\n
-37-<\/p>\n
7.2.3 Affiliates. Microsoft shall have received from each person or
\nentity who may be deemed pursuant to Section 6.6 hereof to be an Affiliate of
\nCompany a duly executed Affiliates Letter substantially in the form attached
\nhereto as Exhibit 6.6.<\/p>\n
7.2.4 Pooling of Interests; Comfort Letters. Except if Microsoft has
\ntaken or caused to be taken any action that would disqualify the Merger as a
\npooling of interests for accounting purposes or if Microsoft has failed to
\nobtain any required Affiliate Letters from affiliates of Microsoft, (i) Company
\nshall not have breached its representation in Section 3.1.19 or its covenant in
\nSection 4.3 with the result that the Merger will not qualify for pooling of
\ninterest accounting treatment and (ii) Microsoft shall have received a letter
\nfrom Ernst & Young LLP addressed to Company to the effect that the Merger will
\nqualify for pooling of interest accounting treatment (without regard to any
\naction or conduct by Microsoft). Except if Microsoft has failed to provide to
\nErnst & Young LLP any customary representations reasonably requested by Ernst & Young LLP, Microsoft shall have received a Company Comfort Letter, dated as of a
\ndate within two business days prior to the Closing.<\/p>\n
7.2.5 Opinion of Company’s Counsel. Microsoft shall have received an
\nopinion dated the Closing Date of Shearman & Sterling or Perkins Coie LLP,
\ncounsel to Company, as to matters substantially set forth in Exhibit 7.2.5
\nhereto. In rendering such opinion, Shearman & Sterling may rely on opinions of
\nlocal counsel reasonably satisfactory to Microsoft, including Perkins Coie LLP.<\/p>\n
7.3 Conditions of Obligation of Company. The obligation of Company to
\neffect the Merger is subject to the satisfaction of the following conditions
\nunless waived by Company:<\/p>\n
7.3.1 Representations and Warranties of Microsoft and Sub. The
\nrepresentations and warranties of Microsoft and Sub set forth in this Agreement
\nshall be true and correct as of the date of this Agreement and as of the Closing
\nDate as though made on and as of the Closing Date, except: (i) as otherwise
\ncontemplated by this Agreement (but excluding from this exception any breach
\nmade unknowingly pursuant to Section 5.1), or (ii) in respects that do not have
\na Material Adverse Effect on Microsoft’s Business Condition. Company shall have
\nreceived a certificate signed on behalf of Microsoft by an authorized executive
\nofficer of Microsoft to such effect on the Closing Date.<\/p>\n
7.3.2 Performance of Obligations of Microsoft and Sub. Microsoft and
\nSub shall have performed all agreements and covenants required to be performed
\nby them under this Agreement prior to the Closing Date except for breaches that
\ndo not have a Material Adverse Effect on Microsoft’s Business Condition and
\nCompany shall have received a certificate signed on behalf of Microsoft by an
\nauthorized executive officer of Microsoft to such effect.<\/p>\n
7.3.3 Opinion of Microsoft Counsel. Company shall have received an
\nopinion dated the Closing Date of Preston Gates & Ellis LLP, counsel to
\nMicrosoft, as to matters that are customary for transactions of this type.<\/p>\n
-38-<\/p>\n
ARTICLE VIII<\/p>\n
TERMINATION, AMENDMENT AND WAIVER<\/p>\n
8.1 Termination. This Agreement may be terminated at any time prior to
\nthe Effective Time, whether before or after approval of matters presented in
\nconnection with the Merger by the shareholders of Company:<\/p>\n
(a) by mutual consent of Microsoft and Company;<\/p>\n
(b) by either Microsoft or Company (provided that the terminating
\nparty is not then in material breach of any representation, warranty, covenant
\nor agreement contained in this Agreement) if there has been a breach of any
\nrepresentation, warranty, covenant or agreement which has a Material Adverse
\nEffect on the Business Condition of Company or Microsoft, as the case may be,
\nand such breach has not been cured, or commercially reasonable best efforts are
\nnot being employed to cure such breach, within 20 days after notice thereof is
\ngiven to the party committing such breach;<\/p>\n
(c) by either Microsoft or Company if the Merger shall not have
\nbeen consummated before March 31, 2000, provided, however if the parties have
\nagreed to pursue litigation pursuant to Section 6.7.2, such date shall be
\nextended to September 30, 2000;<\/p>\n
(d) by either Microsoft or Company if any approval of the
\nshareholders of Company shall not have been obtained by reason of the failure to
\nobtain the required vote upon a vote taken at any Company Shareholders Meeting
\nor any adjournment thereof;<\/p>\n
(e) by either Microsoft or Company if any permanent injunction or
\nother order of a court or other competent authority preventing the Merger shall
\nhave become final and not subject to appeal;<\/p>\n
(f) by Microsoft if the Board of Directors of Company shall have
\nwithdrawn or modified in a manner adverse to Microsoft its approval or
\nrecommendation of the Merger, this Agreement or the transactions contemplated
\nhereby; or<\/p>\n
(g) by Microsoft if Company or any of the other persons or
\nentities described in Section 4.1.5 shall take any of the actions that would be
\nproscribed by Section 4.1.5 other than actions in exercise of Company’s
\nfiduciary duties and satisfying all conditions of Section 4.1.5 and such actions
\nhave a Material Adverse Effect on the Business Condition of Company.<\/p>\n
Where action is taken to terminate this Agreement pursuant to this Section
\n8.1, it shall be sufficient for such action to be authorized by the Board of
\nDirectors of the party taking such action without any requirement to submit such
\naction to the shareholders of such party.<\/p>\n
-39-<\/p>\n
8.2 Effect of Termination. In the event of termination of this Agreement
\nby either Company or Microsoft as provided in Section 8.1, this Agreement shall
\nforthwith become void and have no effect, and there shall be no liability or
\nobligation on the part of Microsoft, Sub or Company or their respective officers
\nor directors, except that (i) all of Sections 6.9, 8.2, 8.3, and Article IX and
\nthe Confidentiality Agreement shall survive any such termination and
\nabandonment, and (ii) no party shall be released or relieved from any liability
\narising from the willful breach by such party of any of its representations,
\nwarranties, covenants or agreements as set forth in this Agreement except as
\nprovided in Section 8.3(b).<\/p>\n
8.3 Break-up Fee.<\/p>\n
(a) Company agrees to pay Microsoft, (provided that Microsoft is not
\nthen in material breach of any representation, warranty, covenant or agreement
\ncontained in this Agreement) promptly upon the termination of this Agreement by
\nwire transfer, the sum of $30 million in immediately available funds in the
\nevent that following the date of the execution of this Agreement, and at or
\nprior to the termination of this Agreement, any of the following events shall
\nhave occurred:<\/p>\n
(i) Microsoft shall have terminated this Agreement pursuant to
\n Section 8.1(g) hereof;<\/p>\n
(ii) Microsoft shall have terminated this Agreement pursuant to
\n Section 8.1(f) hereof at such time Company shall have agreed to an
\n Acquisition Transaction which would result in a change in the beneficial
\n owners of more than fifty percent (50%) of the voting power of the capital
\n stock of Company with any person, other than Microsoft or any of its
\n affiliates; or<\/p>\n
(iii) Microsoft shall have terminated this Agreement pursuant to
\n Section 8.1(b) hereof, following a willful material breach of this
\n Agreement by Company.<\/p>\n
(b) The right to the payment of the fees set forth in this Section 8.3
\nshall be the exclusive remedy at law or in equity to which Microsoft may be
\nentitled upon termination of this Agreement under the conditions set forth in
\nSection 8.3(a).<\/p>\n
8.4 Amendment. This Agreement may be amended by the parties hereto, by
\naction taken by their respective Board of Directors, at any time before or after
\napproval of matters presented in connection with the Merger by the shareholders
\nof Company or Microsoft, but after any such shareholder approval, no amendment
\nshall be made which by law requires the further approval of shareholders without
\nobtaining such further approval. This Agreement may not be amended except by an
\ninstrument in writing signed on behalf of each of the parties hereto.<\/p>\n
8.5 Extension, Waiver. At any time prior to the Effective Time, any party
\nhereto, by action taken by its Board of Directors may, to the extent legally
\nallowed, (i) extend the time for the performance of any of the obligations or
\nother acts of the other parties hereto, (ii) waive any<\/p>\n
-40-<\/p>\n
inaccuracies in the representations and warranties made to such party contained
\nherein or in any document delivered pursuant hereto and (iii) waive compliance
\nwith any of the agreements, covenants or conditions for the benefit of such
\nparty contained herein. Any agreement on the part of a party hereto to any such
\nextension or waiver shall be valid only if set forth in an instrument in writing
\nsigned on behalf of such party.<\/p>\n
ARTICLE IX<\/p>\n
GENERAL PROVISIONS<\/p>\n
9.1 Nonsurvival of Representations, Warranties and Agreements. All
\nrepresentations, warranties and agreements in this Agreement or in any
\ninstrument delivered pursuant to this Agreement shall be deemed to be conditions
\nto the Merger and shall not survive the Merger, except for the agreements
\ncontained in Article II and in Sections 1.4, 4.3, 4.12, 6.4, 6.7, 6.8, 6.9, and
\n6.12 and the agreements delivered pursuant to this Agreement.<\/p>\n
9.2 Notices. All notices, requests, demands or other communications which
\nare required or may be given pursuant to the terms of this Agreement shall be in
\nwriting and shall be deemed to have been duly given: (i) on the date of delivery
\nif personally delivered by hand, (ii) upon the third day after such notice is
\ndeposited in the United States mail, if mailed by registered or certified mail,
\npostage prepaid, return receipt requested, (iii) on the date of delivery if sent
\nby a nationally recognized overnight express courier, or (iv) upon written
\nconfirmation of receipt by the recipient of such notice if by facsimile:<\/p>\n
(a) If to Microsoft or Sub:<\/p>\n
Microsoft Corporation
\n One Microsoft Way
\n Redmond, WA 98052-6399
\n Attention: Chief Financial Officer; General Counsel,
\n Finance and Operations
\n Telephone No.: (425) 882-8080
\n Facsimile No.: (425) 869-1327<\/p>\n
with copies to:<\/p>\n
Preston Gates & Ellis LLP
\n 5000 Columbia Center
\n 701 Fifth Avenue
\n Seattle, Washington 98104
\n Attention: Richard B. Dodd<\/p>\n
Facsimile No.: (206) 623-7022<\/p>\n
-41-<\/p>\n
(b) if to Company, to:<\/p>\n
Visio Corporation
\n 2211 Elliott Avenue
\n Seattle, WA 98121
\n Attention: Chief Financial Officer
\n Phone No.: (206) 956-6000
\n Facsimile No.: (206) 956-6001<\/p>\n
with a copy to:<\/p>\n
Shearman & Sterling
\n 1550 El Camino Real
\n Menlo Park, CA 94025-4100
\n Attention: Christopher D. Dillon
\n Facsimile No.: (650) 330-2299<\/p>\n
Perkins Coie LLP
\n 1201 Third Avenue, Suite 4800
\n Seattle, Washington 98101-3099
\n Attention: Linda A. Schoemaker
\n Facsimile No.: (206) 583-8500<\/p>\n
9.3 Interpretation. When a reference is made in this Agreement to
\nSections or Exhibits, such reference shall be to a Section or Exhibit to this
\nAgreement unless otherwise indicated. The words “include,” “includes,” and
\n“including” when used therein shall be deemed in each case to be followed by the
\nwords “without limitation.” The table of contents and headings contained in this
\nAgreement are for reference purposes only and shall not affect in any way the
\nmeaning or interpretation of this Agreement. The “knowledge of,” “the best of
\nknowledge of,” or other derivations of “know” with respect to Microsoft or
\nCompany will mean the actual knowledge of the executive officers and directors
\nof Microsoft or Company, in each case assuming the exercise of reasonable
\ninquiry. This Agreement has been negotiated by the respective parties hereto and
\ntheir attorneys and the language hereof will not be construed for or against
\neither party. A reference to a Section or an Exhibit will mean a section in, or
\nexhibit to, this Agreement unless otherwise explicitly set forth.<\/p>\n
9.4 Counterparts. This Agreement may be executed in one or more
\ncounterparts, all of which shall be considered one and the same agreement and
\nshall become effective when one or more counterparts have been signed by each of
\nthe parties and delivered to each of the other parties, it being understood that
\nall parties need not sign the same counterpart.<\/p>\n
9.5 Miscellaneous. This Agreement, the Confidentiality Agreement, and the
\ndocuments referred to herein (a) constitute the entire agreement among the
\nparties with respect to the subject matter hereof and supersede all prior
\nagreements and understandings, both written and oral, among the parties with
\nrespect to the subject matter hereof; (b) is not intended to confer upon any
\nother person any rights or remedies hereunder (except as otherwise expressly
\nprovided herein and except that Section 6.8 is for the benefit of Company’s
\ndirectors and officers and<\/p>\n
-42-<\/p>\n
Sections 2.3.1, 2.3.2 and 4.12 are for the benefit of
\nholders of Company Stock Options and the other employees of Company and said
\nSections are intended to confer rights on such persons); and (c) shall not be
\nassigned by operation of law or otherwise except as otherwise specifically
\nprovided.<\/p>\n
9.6 No Joint Venture. Nothing contained in this Agreement will be deemed
\nor construed as creating a joint venture or partnership between any of the
\nparties hereto. No party is by virtue of this Agreement authorized as an agent,
\nemployee or legal representative of any other party. No party will have the
\npower to control the activities and operations of any other and their status is,
\nand at all times, will continue to be, that of independent contractors with
\nrespect to each other. No party will have any power or authority to bind or
\ncommit any other. No party will hold itself out as having any authority or
\nrelationship in contravention of this Section.<\/p>\n
9.7 Governing Law. This Agreement shall be governed in all respects,
\nincluding validity, interpretation and effect, by the laws of the State of
\nWashington. Company and Microsoft consent to jurisdiction and venue in the state
\nand federal courts in King County, Washington.<\/p>\n
9.8 Specific Performance. The parties hereto agree that irreparable
\ndamage would occur in the event that any provision of this Agreement were not
\nperformed in accordance with the terms hereof and that the parties shall be
\nentitled to specific performance of the terms hereof, in addition to any other
\nremedy at law or in equity.<\/p>\n
-43-<\/p>\n
SIGNATURE PAGE AGREEMENT AND PLAN OF REORGANIZATION<\/p>\n
IN WITNESS WHEREOF, Microsoft, Sub and Company have caused this Agreement
\nto be signed by their respective officers thereunder duly authorized, all as of
\nthe date first written above.<\/p>\n
MICROSOFT CORPORATION<\/p>\n
By: \/s\/ William H. Gates
\n ——————————
\n Its: Chief Executive Officer
\n —————————–<\/p>\n
MOVIESUB, INC.<\/p>\n
By: \/s\/ Robert A. Shel
\n ——————————
\n Its: Secretary
\n —————————–<\/p>\n
VISIO CORPORATION<\/p>\n
By: \/s\/ Jeremy A. Jaech
\n ——————————
\n Its: President and Chief
\n Executive Officer
\n —————————–<\/p>\n
-44-<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8221,9263],"corporate_contracts_industries":[9513],"corporate_contracts_types":[9622,9626],"class_list":["post-43194","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-microsoft-corp","corporate_contracts_companies-visio-corp","corporate_contracts_industries-technology__software","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43194","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43194"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43194"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43194"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43194"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}