Exhibit B
MERGER AGREEMENT
dated as of July 16, 2001
as amended and restated
by and among
COREL CORPORATION
CALGARY I ACQUISITION CORP.
-and-
MICROGRAFX, INC.
TABLE OF CONTENTS
ARTICLE I--THE MERGER
1.01 The Merger...................................................... 1
1.02 Closing......................................................... 1
1.03 Effective Time.................................................. 2
1.04 Certificate of Incorporation and Bylaws of the Surviving
Corporation..................................................... 2
1.05 Directors and Officers of the Surviving Corporation............. 2
1.06 Effects of the Merger........................................... 2
1.07 Further Assurances.............................................. 2
ARTICLE II--CONVERSION OF SHARES
2.01 Conversion of Capital Stock..................................... 2
2.02 Exchange of Certificates........................................ 5
ARTICLE III--REPRESENTATIONS AND WARRANTIES OF MICROGRAFX
3.01 Organization and Qualification.................................. 7
3.02 Capital Stock................................................... 8
3.03 Authority Relative to this Agreement............................ 9
3.04 Non-Contravention; Approvals and Consents....................... 9
3.05 Reports and Financial Statements................................ 10
3.06 Absence of Certain Changes or Events............................ 11
3.07 Absence of Undisclosed Liabilities.............................. 11
3.08 Legal Proceedings............................................... 11
3.09 Information Supplied............................................ 11
3.10 Compliance with Laws and Orders................................. 11
3.11 Compliance with Agreements; Certain Agreements.................. 12
3.12 Taxes........................................................... 12
3.13 Employee Benefit Plans; ERISA................................... 13
3.14 Labor Matters................................................... 14
3.15 Environmental Matters........................................... 14
3.16 Intellectual Property Rights.................................... 15
3.17 Micrografx Owned and Leased Properties.......................... 17
3.18 Title to Properties............................................. 17
3.19 Insurance....................................................... 17
3.20 Vote Required................................................... 17
3.21 Opinion of Financial Advisor.................................... 17
3.22 Ownership of Corel Common Stock................................. 17
3.23 Takeover Laws................................................... 18
ARTICLE IV--REPRESENTATIONS AND WARRANTIES OF COREL AND SUB
4.01 Organization and Qualification.................................. 18
4.02 Capital Stock................................................... 18
4.03 Authority Relative to this Agreement............................ 19
4.04 Non-Contravention; Approvals and Consents....................... 19
4.05 Reports and Financial Statements................................ 21
4.06 Absence of Certain Changes or Events............................ 21
4.07 Absence of Undisclosed Liabilities.............................. 21
4.08 Legal Proceedings............................................... 22
4.09 Information Supplied............................................ 22
4.10 Compliance with Laws and Orders................................. 22
4.11 Sub............................................................. 23
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4.12 Ownership of Micrografx Common Stock............................ 23
4.13 Reporting Issuer................................................ 23
4.14 Issuance of Capital Stock....................................... 23
4.15 Taxes........................................................... 23
ARTICLE V--COVENANTS
5.01 Covenants of Micrografx......................................... 23
5.02 No Solicitations................................................ 25
5.03 Covenants of Corel.............................................. 26
5.04 Third Party Standstill Agreements............................... 26
5.05 Purchases of Capital Stock of the Other Party................... 27
5.06 Advice of Changes............................................... 27
5.07 Notice and Cure................................................. 27
5.08 Fulfillment of Conditions....................................... 27
ARTICLE VI--ADDITIONAL AGREEMENTS
6.01 Access to Information; Confidentiality.......................... 27
6.02 Preparation of Registration Statement and Proxy Statement....... 28
6.03 Approval of Shareholders of Micrografx.......................... 28
6.04 Micrografx Affiliates........................................... 29
6.05 Stock Exchange Listing.......................................... 29
6.06 Certain Tax Matters............................................. 29
6.07 Regulatory and Other Approvals.................................. 29
6.08 Micrografx Director............................................. 29
6.09 Expenses........................................................ 29
6.10 Brokers or Finders.............................................. 30
6.11 Takeover Statutes............................................... 30
6.12 Conveyance Taxes................................................ 30
6.13 Micrografx 401(k) Plan.......................................... 30
6.14 Consents........................................................ 30
6.15 Indemnification and Insurance................................... 30
6.16 Intergraph Debenture............................................ 31
6.17 Bridge Loan..................................................... 31
ARTICLE VII--CONDITIONS
7.01 Conditions to Each Party's Obligation to Effect the Merger...... 31
7.02 Conditions to Obligation of Corel and Sub to Effect the Merger.. 32
7.03 Conditions to Obligation of Micrografx to Effect the Merger..... 33
ARTICLE VIII--TERMINATION, AMENDMENT AND WAIVER
8.01 Termination..................................................... 34
8.02 Effect of Termination........................................... 35
8.03 Amendment....................................................... 36
8.04 Waiver.......................................................... 36
ARTICLE IX--GENERAL PROVISIONS
9.01 Non-Survival of Representations, Warranties, Covenants and
Agreements...................................................... 36
9.02 Notices......................................................... 36
9.03 Entire Agreement; Incorporation of Exhibits..................... 37
9.04 Public Announcements............................................ 37
9.05 No Third Party Beneficiaries.................................... 38
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9.06 No Assignment; Binding Effect..................................... 38
9.07 Headings.......................................................... 38
9.08 Interpretation.................................................... 38
9.09 Invalid Provisions................................................ 38
9.10 Governing Law..................................................... 39
9.11 Enforcement of Agreement.......................................... 39
9.12 Jurisdiction...................................................... 39
9.13 Service of Process................................................ 39
9.14 Waiver of Trial by Jury........................................... 39
9.15 Remedies Cumulative............................................... 40
9.16 Obligation of Corel and Micrografx................................ 40
9.17 Limitations on Warranties......................................... 40
9.18 Certain Definitions............................................... 40
9.19 Counterparts...................................................... 41
9.20 Disclosure Letters................................................ 41
9.21 Execution......................................................... 41
9.22 Personal Liability................................................ 41
9.23 Currency.......................................................... 41
9.24 Date for Any Action............................................... 41
EXHIBITS
A Voting and Proxy Agreement
B Participation Rights Agreement
C Affiliate Agreement
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GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the meanings ascribed
to them in the corresponding Sections of this Agreement listed below:
"affiliate" -- Section 9.18(a)
"Affiliate Agreement" -- Section 6.04
"Aggregate Redemption Fund" -- Section 2.01(c)(i)
"this Agreement" -- Preamble
"Alternative Proposal" -- Section 5.02
"Antitrust Division" -- Section 6.07
"beneficially" -- Section 9.18(b)
"business day" -- Section 9.18(c)
"Canadian GAAP" -- Section 4.05
"Cash Alternative" -- Section 2.01(c)(ii)
"Cash Fund" -- Section 7.03(g)
"CERCLA" -- Section 3.15(b)
"Certificate of Merger" -- Section 1.03
"Certificates" -- Section 2.02(b)
"Closing" -- Section 1.02
"Closing Date" -- Section 1.02
"Code" -- Preamble
"Confidentiality Agreement" -- Section 6.01
"Confidential Information" -- Section 6.01
"Constituent Corporations" -- Section 1.01
"Contracts" -- Section 3.04(a)
"control," controlling," "controlled by" and -- Section 9.18(a)
"under common control with"
"Conversion Number" -- Section 2.01(c)(i)
"Corel" -- Preamble
"Corel Closing Share Price" -- Section 2.01(c)(ii)
"Corel Common Stock" -- Section 4.02(a)
"Corel's Counsel" -- Section 7.02(c)
"Corel Disclosure Letter" -- Section 4.01
"Corel Financial Statements" -- Section 4.05
"Corel Permits" -- Section 4.10
"Corel PR" -- Section 2.01(c)(i)
"Corel Reports" -- Section 4.05
"Corel Rights Agreement" -- Section 4.02(a)
"Corel Stock Option Plan" -- Section 4.02(a)
"Corel Stock Option Plan 2000" -- Section 4.02(a)
"Developers" -- Section 3.16(b)
"Dissenting Shareholder" -- Section 2.01(j)
"DL" -- Section 1.01
"Effective Time" -- Section 1.03
"Environmental Law" -- Section 3.15(e)(i)
"Environmental Permits" -- Section 3.15(a)
"ERISA" -- Section 3.13(b)(i)
"Exchange Act" -- Section 3.04(b)
"Exchange Agent" -- Section 2.02(a)
"FTC" -- Section 6.07
"Governmental or Regulatory Authority" -- Section 3.04(a)
"group" -- Section 9.18(f)
"Hazardous Material" -- Section 3.15(e)(ii)
"HSR Act" -- Section 3.04(b)
"Indemnified Liabilities" -- Section 6.10(a)
"Indemnified Parties" -- Section 6.10(a)
"Indemnifying Party" -- Section 6.10(a)
"Intellectual Property Rights" -- Section 3.16
"laws" -- Section 3.04(a)
"Lien" -- Section 3.02(b)
"material adverse effect" -- Section 9.18(e)
"Merger" -- Preamble
"Micrografx" -- Preamble
"Micrografx Affiliates" -- Section 6.04
"Micrografx Annual Revenues" -- Section 2.01(c)(i)
"Micrografx Common Stock" -- Section 2.01(b)
"Micrografx's Counsel" -- Section 7.03(d)
"Micrografx Director" -- Section 6.11
"Micrografx Disclosure Letter" -- Section 3.01
"Micrografx Employee Benefit Plan" -- Section 3.13(b)(i)
"Micrografx ESOP" -- Section 2.01(e)
"Micrografx ESPP" -- Section 2.01(f)
"Micrografx Financial Statements" -- Section 3.05
"Micrografx Leases" -- Section 3.17
"Micrografx Leased Properties" -- Section 3.17
"Micrografx License Agreements" -- Section 3.16(b)
"Micrografx Permits" -- Section 3.10
"Micrografx Preferred Stock -- Section 2.01(b)
"Micrografx Reports" -- Section 3.05
"Micrografx Series A Stock" -- Section 2.01(d)
"Micrografx Shareholders' Approval" -- Section 6.03(b)
"Micrografx Shareholders' Meeting" -- Section 6.03(a)
"Nasdaq" -- Section 2.02(e)
"Options" -- Section 3.02(a)
"orders" -- Section 3.04(a)
"Participation Rights Agreement" -- Section 2.01(c)(i)
"person" -- Section 9.18(f)
"Plan" -- Section 3.13(b)(ii)
"Principal Party" -- Section 5.05
"Proxy Statement" -- Section 3.09
"Registration Statement" -- Section 4.09
"Representatives" -- Section 9.18(g)
"Restraint" -- Section 7.01(e)
"SEC" -- Section 3.04(b)
"Secretary of State" -- Section 1.03
"Securities Act" -- Section 3.04(b)
"Significant Subsidiary" -- Section 9.18(h)
"Software" -- Section 3.16(b)
"Specified Amount" -- Section 8.02(b)
"Sub" -- Preamble
"Sub Common Stock" -- Section 2.01(a)
"Subsidiary" -- Section 9.18(i)
"Superior Proposal" -- Section 8.01(c)
"Surviving Corporation" -- Section 1.01
"Surviving Corporation Common Stock" -- Section 2.01(a)
"Takeover Laws" -- Section 3.23
"taxes" -- Section 3.12(c)
"Texas Secretary of State" -- Section 1.03
"TL" -- Section 1.01
"Trustee" -- Section 7.03(g)
"TSE" -- Section 2.01(e)
"U.S. GAAP" -- Section 3.05
"Voting and Proxy Agreement" -- Preamble
This MERGER AGREEMENT dated as of July 16, 2001 (the "Agreement") is made
and entered into by and among Corel Corporation, a corporation continued under
the laws of Canada ("Corel"), Calgary I Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Corel ("Sub"), and Micrografx,
Inc., a Texas corporation ("Micrografx").
WHEREAS, the Boards of Directors of Corel, Sub and Micrografx have each
previously determined that it is advisable and in the best interests of their
respective shareholders to consummate, and have approved, the merger
transaction provided for herein in which Micrografx would merge with Sub (the
"Merger");
WHEREAS, the respective Boards of Directors of Corel and Micrografx have
determined that the Merger is in furtherance of and consistent with their
respective long-term business strategies and is advisable, fair to and in the
best interests of their respective shareholders, and this Agreement and the
Merger have been approved and adopted by the sole shareholder of Sub;
WHEREAS, unless the Cash Alternative is elected by Corel, the parties intend
that for U.S. federal income tax purposes, the Merger shall qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code") and that this Agreement shall constitute
a "plan of reorganization" for the purposes of Section 368 of the Code;
WHEREAS certain holders of shares of Micrografx Common Stock and shares of
Micrografx Preferred Stock have entered into Voting and Proxy Agreements in the
form of Exhibit A hereto ("Voting and Proxy Agreement"); and
WHEREAS, Corel, Sub and Micrografx desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
various conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
The Merger
1.01 The Merger. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined in Section 1.03), Micrografx shall
be merged with and into Sub in accordance with the General Corporation Law of
the State of Delaware, as amended (the "DL") and the Business Corporations Act
of the State of Texas, as amended (the "TL"). At the Effective Time, subject to
Section 2.01(c)(ii), the separate existence of Micrografx shall cease and Sub
shall continue as the surviving corporation in the Merger (the "Surviving
Corporation"). Sub and Micrografx are sometimes referred to herein as the
"Constituent Corporations". As a result of the Merger, the outstanding shares
of capital stock of the Constituent Corporations shall be converted or
cancelled in the manner provided in Article II.
1.02 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
8.01, and subject to the satisfaction or waiver (where applicable) of the
conditions set forth in Article VII, the closing of the Merger (the "Closing")
will take place at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ located at The ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, at 10:00 a.m., local time,
on the second business day following satisfaction of the condition set forth in
Section 7.0l(a) unless another date, time or place is agreed to in writing by
the parties hereto (the "Closing Date"). At the Closing there shall be
delivered to Corel, Sub and Micrografx the certificates and other documents and
instruments required to be delivered under Article VII.
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1.03 Effective Time. At the Closing, a certificate of merger (the
"Certificate of Merger") shall be duly prepared and executed by the Surviving
Corporation and thereafter delivered to the Secretary of State of Delaware (the
"Secretary of State") for filing, as provided in Section 251 of the DL, and
articles of merger ("Articles of Merger") shall be duly prepared and executed
by the Surviving Corporation and thereafter delivered to the Secretary of State
of Texas ("Texas Secretary of State") for filing, as provided in Article 5.04
of the TL, as soon as practicable on the Closing Date. The Merger shall become
effective at the time of the filing of the Certificate of Merger with the
Secretary of State and the issuance of the Certificate of Merger by the Texas
Secretary of State (the date and time of such filing and issuance being
referred to herein as the "Effective Time").
1.04 Certificate of Incorporation and Bylaws of the Surviving
Corporation. At the Effective Time, (i) the Certificate of Incorporation of the
Surviving Corporation shall be amended to read in its entirety (except for the
corporate name) as set forth in the Certificate of Incorporation of Sub as in
effect immediately prior to the Effective Time until thereafter amended as
provided by law and such Certificate of Incorporation, and (ii) the Bylaws of
Sub as in effect immediately prior to the Effective Time shall be the Bylaws of
the Surviving Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the Surviving Corporation and such Bylaws.
1.05 Directors and Officers of the Surviving Corporation.
(a) The directors of Sub immediately prior to the Effective Time shall,
from and after the Effective Time, be the directors of the Surviving
Corporation until their successors shall have been duly elected or
appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws.
(b) The officers of Sub immediately prior to the Effective Time shall,
from and after the Effective Time, be the officers of the Surviving
Corporation until their successors shall have been duly elected or
appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws.
1.06 Effects of the Merger. Subject to the foregoing, the effects of the
Merger shall be as provided in the applicable provisions of the DL and TL
including, without limitation, Section 259 and Article 5.06, respectively,
thereof.
1.07 Further Assurances. Each party hereto will, either before or after the
Effective Time, execute such further documents, instruments, deeds, bills of
sale, assignments and assurances and take such further actions as may
reasonably be requested by one or more of the others to consummate the Merger,
to vest the Surviving Corporation with full title to all assets, properties,
privileges, rights, approvals, immunities and franchises of either of the
Constituent Corporations or to effect the other purposes of this Agreement.
ARTICLE II
Conversion of Shares
2.01 Conversion of Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of the
capital stock of either Micrografx or Sub, each of the following shall occur:
(a) Capital Stock of Sub. Each issued and outstanding share of the
common stock, par value $.01 per share, of Sub ("Sub Common Stock") shall
be converted into and become one fully paid and nonassessable share of
common stock, par value $.01 per share, of the Surviving Corporation
("Surviving Corporation Common Stock"). Each certificate representing
outstanding shares of Sub Common Stock shall at the Effective Time
represent an equal number of outstanding shares of Surviving Corporation
Common Stock.
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(b) Cancellation of Treasury Stock and Stock Owned by Corel and
Subsidiaries. All shares of common stock, par value $.01 per share, of
Micrografx ("Micrografx Common Stock") and preferred stock, par value $.01
per share, of Micrografx ("Micrografx Preferred Stock"), that are owned by
Micrografx as treasury stock or owned by Corel, Sub or any other Subsidiary
(as defined in Section 9.18) of Corel (other than shares of Surviving
Corporation Common Stock) shall be cancelled and retired and shall cease to
exist and no stock of Corel or other consideration shall be delivered in
exchange therefor.
(c) Exchange Ratio for Micrografx Common Stock.
(i) Subject to Section 2.01(c)(ii), each issued and outstanding
share of Micrografx Common Stock (other than shares to be cancelled in
accordance with Section 2.01(b) and other than Micrografx Common Stock
held by Persons who exercise their dissent rights in accordance with
Articles 5.11 and 5.12 of TL) shall be converted into the right to
receive (i) a fraction of a validly issued, fully paid and
nonassessable common share of Corel ("Corel Common Stock") resulting
from the multiplication of one share of Corel Common Stock by the
Conversion Ratio (as defined below) and (ii) one Corel participation
right ("Corel PR") in the form set forth in Sections 3.02 and 3.03 of
the Participation Rights Agreement, substantially in the form of which
is annexed as Exhibit B hereto.
"Conversion Ratio" shall be determined immediately prior to the
Effective Time and shall be the Micrografx Times Revenue Share Price
(as defined below) divided by the volume weighted average trading price
of Corel Common Stock on Nasdaq (or if the Corel Common Stock is not
then traded on Nasdaq any other principal exchange on which the shares
of Corel Common Stock are then listed) during the ten consecutive
trading day period that ends on the second business day prior to the
Effective Time (the "Corel Closing Share Price").
(A) the "Micrografx Times Revenue Share Price" means the price
per share resulting upon dividing (x) 50% of the Micrografx Annual
Revenues by (y) the sum of the number of shares of issued and
outstanding Micrografx Common Stock and the number of shares of
Micrografx Common Stock into which the issued and outstanding
Micrografx Series A Stock is convertible immediately prior to the
Effective Time; and
(B) "Micrografx Annual Revenues" means 103% of the annual audited
revenues of Micrografx for the 12 months ended June 30, 2001, plus
(x) 50% of the reduction without payment or other consideration to
the holder thereof in the principal amount of the indebtedness
represented by the Subordinated Convertible Debentures dated April
16, 1999 issued by the Corporation to Intergraph Corporation (the
"Intergraph Debentures"), (y) 50% of any reductions after the date
hereof in the principal amount of trade payable indebtedness owed by
Micrografx that is outstanding on the date of this Agreement, which
reductions are effected through the negotiation of discounts,
without other consideration to the creditor, to the principal
balance of such trade payables that are otherwise outstanding, and
(z) the proceeds received by Micrografx after the date hereof and
prior to the Effective Time from the exercise of any options or
warrants to purchase shares of its capital stock; provided, that in
no event shall the amount of Micrografx Annual Revenues exceed $34
million.
(ii) If the Corel Closing Share Price is less than $2.90 unless due
to a stock dividend, split or other share reclassification event, Corel
shall have the right (the "Cash Alternative"), in lieu of the exchange
provided for in Sections 2.01(c)(i) and 2.01(d), to require that each
issued and outstanding share of Micrografx Common Stock and each issued
and outstanding share of Micrografx Series A Stock (to the same extent
as if the Micrografx Series A Stock had first been converted into
shares of Micrografx Common Stock), as described in Section 2.01(c)(i)
shall be converted into the right to receive solely cash equal to 200%
of the Micrografx Times Revenue Share Price provided, that for the
purposes of this Section 2.01(c)(ii), the Micrografx Times Revenue
Share Price shall be calculated by substituting in the definition of
"Micrografx Annual Revenue" "100%" in place of "103%" where the same
appears. In the event Corel elects to exercise such right, and
notwithstanding any
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other provision hereof, the parties agree that Sub shall merge with and
into Micrografx and the Surviving Corporation shall be Micrografx (and
the provisions of Sections 1.01, 1.03 and 1.04 shall be read
accordingly), and the parties further agree that the Merger will be
treated as a taxable stock transfer for United States tax purposes.
(iii) All shares of Micrografx Common Stock converted in accordance
with paragraph (i) or (ii) of this Section 2.01(c) shall no longer be
outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the
right to receive the shares of Corel Common Stock and the Corel PRs, or
cash, to be issued in consideration therefor (determined in accordance
with Section 2.02(c)(i)), upon the surrender of such certificate in
accordance with Section 2.02, without interest.
(d) Conversion of Micrografx Preferred Stock. Each issued and
outstanding share of Micrografx's Series A Convertible Preferred Stock
("Micrografx Series A Stock") shall be converted into the right to receive
such number of validly issued, fully paid and nonassessable shares of Corel
Common Stock and Corel PRs to the same extent as if the Micrografx Series A
Stock had first been converted into Micrografx Common Stock.
(e) Stock Option Plans.
(i) Not less than ten days prior to the Effective Time, each
participant holding stock options under the Micrografx 1995 Incentive
and Non-Statutory Stock Option Plan and the Micrografx 1995 Director
Stock Option Plan (together, the "Micrografx ESOP") shall be given
written notice by Micrografx that all outstanding stock options under
the Micrografx ESOP must be exercised, and may, at the discretion of
the holder, be exercised on a cashless basis such that the number of
shares of Micrografx Common Stock that may be issued shall be that
number of shares of Micrografx Common Stock that is net of that number
of shares which is equal to the quotient obtained by dividing (A) the
product of the total number of shares issuable and the respective
exercise prices by (B) the greater of $1.65 and the closing price of
Micrografx Common Stock on the Over-the-Counter Bulletin Board on the
date of exercise, to the extent vested (including those which would
vest upon the Effective Time), no later than two business days prior to
the Effective Time. To the extent that such options are not exercised,
all outstanding but unexercised options under the Micrografx ESOP will
terminate at the Effective Time, and become null and void.
(ii) Each participant holding unvested options, including unvested
options which would not vest upon the Effective Time, with an exercise
price less than $1.65 per share shall be paid by Corel, at the
Effective Time, cash equal to the difference between $1.65 per share
and such exercise price (the "Option Cash").
(f) Stock Purchase Plans. Micrografx shall provide written notice not
later than 30 days prior to the second business day prior to the Effective
Time to all participants in the Micrografx Employee Stock Purchase Plan
(the "Micrografx ESPP") that all outstanding options under the Micrografx
ESPP to the extent exercisable (including those which would be exercisable
upon the Effective Time), may be exercised for a period of not less than
thirty (30) days from the date of such notice. At the end of such 30-day
period, all outstanding options under the Micrografx ESPP will terminate.
Furthermore, no further Offering Periods shall be implemented absent the
prior approval of Corel until after this Agreement has been terminated in
accordance with Section 8.01.
(g) Warrants. At the Effective Time, Corel shall assume all of
Micrografx's obligations under all outstanding warrants. Holders of
outstanding warrants shall be entitled to receive, upon exercise of such
warrants, the same number of shares of Corel Common Stock and Corel PRs as
such holders would have received in shares of Micrografx Common Stock had
they exercised the warrants prior to the Effective Time. The exercise
prices for such warrants shall be adjusted consistent with the appropriate
conversion ratios.
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(h) Convertible Promissory Notes. Immediately prior to the Effective
Date, all outstanding convertible promissory notes issued by Micrografx
shall be converted into Micrografx Common Stock pursuant to the terms and
conditions of such convertible promissory notes.
(i) Consideration for Corel Common Stock and Corel PRs. Effective as of
the Effective Time, the Surviving Corporation shall in consideration for
Corel's issuance of Corel Common Stock and Corel PRs in accordance with
Section 2.01(d), issue such shares of the Surviving Corporation to Corel as
Corel and Sub may agree.
(j) Shares of Dissenting Shareholders. Notwithstanding anything in this
Agreement to the contrary but only to the extent required by the TL, shares
of Micrografx Common Stock that are issued and outstanding immediately
prior to the Effective Time and held by a person (a "Dissenting
Shareholder") who shall not have voted to approve and adopt this Agreement
or consented thereto in writing and who shall have complied with all of the
provisions of the TL to dissent from the Merger and to demand appraisal for
such shares in accordance with Article 5.12 of the TL (the "Dissenting
Shares") shall not be converted as described in Section 2.01(c), unless
such holder fails to perfect or withdraws or otherwise loses his right to
appraisal, but shall instead become the right to receive such consideration
as may be determined to be due such Dissenting Shareholder pursuant to the
TL. If, after the Effective Time, such Dissenting Shareholder fails to
perfect or withdraws or otherwise loses his right to appraisal, such
Dissenting Shareholder's shares of Micrografx Common Stock shall no longer
be considered Dissenting Shares for purposes of this Agreement and shall
thereupon be deemed to have been converted into and to have become
exchangeable for, at the Effective Time, Shares of Corel Common Stock and
Corel PRs. Micrografx shall give Corel prompt notice of any demands
received by Micrografx for appraisal of shares of Micrografx Common Stock,
and Corel shall have the right to participate in all negotiations and
proceedings with respect to such demands. Micrografx shall not, except with
prior written consent of Corel, make any payment with respect to, or settle
or offer to settle, any such demands.
2.02 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Corel shall enter into an
agreement (the terms of which shall be reasonably satisfactory to
Micrografx) with such bank or trust company as may be designated by Corel
(the "Exchange Agent"), which shall provide that Corel shall deposit with
the Exchange Agent as of the Effective Time, for the benefit of the holders
of shares of Micrografx Common Stock and Micrografx Preferred Stock, for
exchange in accordance with this Article II, through the Exchange Agent,
either (A) if the Cash Alternative is elected by Corel, the full cash
amount provided in Section 2.01(c)(ii), or (B) if the Cash Alternative is
not elected, (i) certificates representing the number of duly authorized
whole shares of Corel Common Stock issuable in connection with the Merger,
and (ii) certificates representing the number of duly authorized Corel PRs
issuable in connection with the Merger, to be held for the benefit of and
distributed to such holders in accordance with this Section (such shares of
Corel Common Stock and such Corel PRs, being referred to herein as the
"Exchange Fund").
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time and in any event within ten business days after the
Effective Time, Corel shall cause the Exchange Agent to mail to each holder
of record of the Certificate(s) (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
the Surviving Corporation may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for cash or
for certificates representing whole shares of Corel Common Stock or whole
Corel PRs. Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with such letter of transmittal duly executed and completed
in accordance with its terms, the holder of such Certificate shall be
entitled to receive in exchange therefor, if the Cash Alternative is
elected then cash, and otherwise a certificate representing that number of
whole shares of Corel Common Stock and such number of Corel PRs, which such
holder has the right to receive pursuant to the provisions of this
Article II, and the Certificate so surrendered shall forthwith be
cancelled. In no event shall the holder of
5
any Certificate be entitled to receive any fractional shares or interest on
any funds to be received in the Merger. In the event of a transfer of
ownership of Micrografx Common Stock or Micrografx Preferred Stock which is
not registered in the transfer records of Micrografx, if the Cash
Alternative is elected then cash, and otherwise a certificate representing
that number of whole shares of Corel Common and a certificate representing
that number of Corel PRs may be issued to a transferee if the Certificate
representing such Micrografx Common Stock or Micrografx Preferred Stock is
presented to the Exchange Agent accompanied by all documents required to
evidence and effect such transfer and the person requesting such issuance
shall pay any transfer or other taxes required by reason of the issuance or
delivery of shares of Corel Common Stock or Corel PRs to a person other
than the registered holder of such Certificate or establish to the
reasonable satisfaction of Corel that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.02(b),
except as limited by paragraph (c) below, each Certificate shall be deemed
at any time after the Effective Time to represent, if the Cash Alternative
is elected then cash, and otherwise ownership of the number of shares of
Corel Common Stock (and any rights derivative thereof) and Corel PRs into
which the number of shares of Micrografx Common Stock or Micrografx
Preferred Stock shown thereon have been converted as contemplated by this
Article II. Notwithstanding the foregoing, Certificates representing
Micrografx Common Stock or Micrografx Preferred Stock surrendered for
exchange by any person constituting an "affiliate" of Micrografx for
purposes of Section 6.04 shall not be exchanged until Corel has received an
Affiliate Agreement (as defined in Section 6.04) executed by such person as
provided in Section 6.04.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect
to Corel Common Stock with a record date on or after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Micrografx Common Stock or Micrografx Preferred Stock
represented thereby until the holder of record of such Certificate shall
surrender such Certificate in accordance with this Section. Subject to the
effect of applicable laws, following surrender of any such Certificate,
there shall be paid to the record holder of the certificates representing
whole shares of Corel Common Stock or Corel PRs issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount
of dividends or other distributions, if any, with a record date on or after
the Effective Time which theretofore became payable, but which were not
paid by reason of the immediately preceding sentence, with respect to such
whole shares of Corel Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date on
or after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of Corel
Common Stock or Corel PRs.
(d) No Further Ownership Rights in Micrografx Common Stock or Micrografx
Preferred Stock. All cash paid or, as the case may be, shares of Corel
Common Stock and all Corel PRs issued upon the surrender for exchange of
Certificates in accordance with the terms hereof (including any cash paid
pursuant to Section 2.02(e)) shall be deemed to have been issued at the
Effective Time in full satisfaction of all rights pertaining to the shares
of Micrografx Common Stock or Micrografx Preferred Stock represented
thereby, as applicable. From and after the Effective Time, the stock
transfer books of Micrografx shall be closed and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Micrografx Common Stock or Micrografx
Preferred Stock which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be cancelled and exchanged
as provided in this Section.
(e) No Fractional Shares. No certificate or scrip representing
fractional shares of Corel Common Stock will be issued in the Merger upon
the surrender for exchange of Certificates, and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
shareholder of Corel. In lieu of any such fractional shares, each holder of
Certificates who would otherwise have been entitled to a fraction equal to
one-half or more of a share of Corel Common Stock shall receive a full
share of Corel Common Stock.
6
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains unclaimed by the former shareholders of Micrografx for 12 months
after the Effective Time shall be delivered to Corel, upon demand, and any
shareholders of Micrografx who have not theretofore complied with this
Article II shall thereafter look only to Corel (subject to abandoned
property, escheat and other similar laws) as general creditors for payment
of their claim for cash, on the one hand, or Corel Common Stock or Corel
PRs and any dividends or distributions with respect to Corel Common Stock
or Corel PRs on the other hand. Neither Corel nor the Surviving Corporation
shall be liable to any holder of shares of Micrografx Common Stock or
Micrografx Preferred Stock for cash or shares of Corel Common Stock or
Corel PRs (or dividends or distributions with respect thereto) delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
(g) Withholding Rights. Corel shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of shares of Micrografx Common Stock or Micrografx Preferred Stock
such amounts as Corel is required to deduct and withhold or remit pursuant
to the applicable rules under any provision of federal, provincial, local
or foreign tax law, and Corel may sell the shares of Corel Common Stock or
the Corel PRs to which such holder is entitled for the purposes of
obtaining cash necessary to remit any such amount to the applicable
authority. To the extent that amounts are so withheld by Corel, such
withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Micrografx Common Stock or
Micrografx Preferred Stock in respect of which such deduction and
withholding was made by Corel.
(h) Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming such Certificate(s) to be
lost, stolen or destroyed and, if required by Corel, the posting by such
person of a bond in such sum as Corel may reasonably direct as indemnity
against any claim that may be made against it or the Surviving Corporation
with respect to such Certificate(s), the Exchange Agent will pay the cash
or issue the shares of Corel Common Stock and the Corel PRs pursuant to
Section 2.02(b) deliverable in respect of the shares of Micrografx Common
Stock or Micrografx Preferred Stock represented by such lost, stolen or
destroyed Certificates.
ARTICLE III
Representations and Warranties of Micrografx
Micrografx represents and warrants to Corel and Sub as follows:
3.01 Organization and Qualification. Each of Micrografx and its Subsidiaries
(as defined in Section 9.18) is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has full corporate power and authority to conduct its
business as and to the extent now conducted and to own, use and lease its
assets and properties, except for such failures to be so existing and in good
standing or to have such power and authority which, individually or in the
aggregate, are not having and would not reasonably be expected to have a
material adverse effect (as defined in Section 9.18) on Micrografx and its
Subsidiaries taken as a whole. Each of Micrografx and its Subsidiaries is duly
qualified, licensed or admitted to do business and is in good standing in each
jurisdiction in which the ownership, use or leasing of its assets and
properties, or the conduct or nature of its business, makes such qualification,
licensing or admission necessary, except for such failures to be so qualified,
licensed or admitted and in good standing which, individually or in the
aggregate, are not having and would not be reasonably expected to have a
material adverse effect on Micrografx and its Subsidiaries taken as a whole.
Section 3.01 of the letter dated the date hereof and delivered to Corel by
Micrografx concurrently with the original execution and delivery of this
Agreement (the "Micrografx Disclosure Letter") sets forth: (i) the name and
jurisdiction of incorporation of each Subsidiary of Micrografx, (ii) its
authorized capital stock, (iii) the number of issued and outstanding shares of
its capital stock and (iv) the record owners of such shares. Except for
interests in the Subsidiaries of Micrografx and as disclosed in Section 3.01 of
the Micrografx Disclosure Letter, Micrografx does not directly
7
or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, limited liability company, joint
venture or other business association or entity (other than (i) non-controlling
investments in the ordinary course of business and corporate partnering,
development, cooperative marketing and similar undertakings and arrangements
entered into in the ordinary course of business and (ii) other investments of
less than $100,000 in aggregate). Except as disclosed in Section 3.01 of the
Micrografx Disclosure Letter, Micrografx has previously made available to Corel
correct and complete copies of the certificate or articles of incorporation and
bylaws (or other comparable charter documents) of Micrografx and its
Subsidiaries.
3.02 Capital Stock.
(a) As of the date of this Agreement, the authorized capital stock of
Micrografx consists solely of (A) 20,000,000 shares of Micrografx Common
Stock, and (B) 10,000,000 shares of Micrografx Preferred Stock, of which
4,000,000 shares have been designated as Micrografx Series A Stock. As of
the date of this Agreement, 12,549,542 shares of Micrografx Common Stock
are issued and outstanding, 475,509 shares of Micrografx Common Stock are
held in the treasury of Micrografx and 1,120,000 shares of Micrografx
Series A Stock are issued and outstanding. As of the date hereof, (i)
5,300,000 shares of Micrografx Common Stock are reserved for issuance upon
the exercise of options under the Micrografx ESOP of which options for
3,049,449 shares of Micrografx Common Stock have been granted and are
outstanding, (ii) 100,000 shares of Micrografx Common Stock are reserved
for issuance under the Micrografx 1993 Restricted Stock Plan, (iii)
2,000,000 shares of Micrografx Common Stock are reserved for issuance under
the Micrografx ESPP, (iv) 579,700 shares of Micrografx Common Stock are
reserved for issuance upon the conversion of the principal balance of an
outstanding debenture, (v) 939,850 shares of Micrografx Common Stock are
reserved for issuance upon conversion of the principal balance outstanding
under certain promissory notes (additional shares of Micrografx Common
Stock are reserved with respect to accrued interest, which at Closing shall
constitute approximately 35,000 shares) and (vi) 240,000 shares of
Micrografx Common Stock are reserved for issuance upon exercise of
outstanding warrants. All of the issued and outstanding shares of
Micrografx Common Stock are, and all shares reserved for issuance will be,
upon issuance in accordance with the terms specified in the instruments or
agreements pursuant to which they are issuable, duly authorized, validly
issued, fully paid and nonassessable. Except for shares of Micrografx
Common Stock issuable upon conversion of the Micrografx Series A Stock and
except pursuant to this Agreement, and except as set forth in Section 3.02
of the Micrografx Disclosure Letter or as described above in this Section
3.02, there are no outstanding subscriptions, options, warrants, rights
(including "phantom" stock rights), preemptive rights or other contracts,
commitments, understandings or arrangements, including any right of
conversion or exchange under any outstanding security, instrument or
agreement (together, "Options"), obligating Micrografx or any of its
Subsidiaries to issue or sell any shares of capital stock of Micrografx or
to grant, extend or enter into any Option with respect thereto.
(b) Except as disclosed in Section 3.02 of the Micrografx Disclosure
Letter or as described above in this Section 3.02, all of the outstanding
shares of capital stock of each Subsidiary of Micrografx are duly
authorized, validly issued, fully paid and nonassessable and are owned,
beneficially and of record, by Micrografx or a Subsidiary wholly owned,
directly or indirectly, by Micrografx, free and clear of any liens, claims,
mortgages, encumbrances, pledges, security interests, equities and charges
of any kind other than standard state and federal securities law private
offering legends and restrictions (each a "Lien"). Except as disclosed in
Section 3.02 of the Micrografx Disclosure Letter, there are no (i)
outstanding Options obligating Micrografx or any of its Subsidiaries to
issue or sell any shares of capital stock of any Subsidiary of Micrografx
or to grant, extend or enter into any such Option; (ii) outstanding bonds,
debentures or other evidences of indebtedness of Micrografx having the
right to vote (or that are convertible for or exercisable into securities
having the right to vote) with the holders of Micrografx Common Stock on
any matter; or (iii) voting trusts, proxies or other commitments,
understandings, restrictions or arrangements in favor of any person other
than Micrografx or a Subsidiary wholly owned, directly or indirectly, by
Micrografx with respect to the voting of or the right to participate in
dividends or
8
other earnings on any capital stock of any Subsidiary of Micrografx, other
than Voting and Proxy Agreements.
(c) Except as disclosed in Section 3.02 of the Micrografx Disclosure
Letter or as described above in this Section 3.02, there are no outstanding
contractual obligations of Micrografx or any Subsidiary of Micrografx to
repurchase, redeem or otherwise acquire any shares of Micrografx Common
Stock or Micrografx Preferred Stock or any capital stock of any Subsidiary
of Micrografx or to provide funds to, or make any investment (in the form
of a loan, capital contribution or otherwise) in, any Subsidiary of
Micrografx or any other person.
3.03 Authority Relative to This Agreement. Micrografx has full corporate
power and authority to enter into this Agreement and, subject to obtaining the
Micrografx Shareholders' Approval (as defined in Section 6.03(a)), to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. On or prior to the date hereof, the execution, delivery and performance
of this Agreement by Micrografx and the consummation by Micrografx of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of Micrografx, the Board of Directors of Micrografx has
recommended adoption of this Agreement by the shareholders of Micrografx and
directed that this Agreement be submitted to the shareholders of Micrografx for
their consideration, and no other corporate proceedings on the part of
Micrografx or its shareholders are necessary to authorize the execution,
delivery and performance of this Agreement by Micrografx and the consummation
by Micrografx of the transactions contemplated hereby, other than obtaining the
Micrografx Shareholders' Approval. This Agreement has been duly and validly
executed and delivered by Micrografx and, assuming due and valid authorization,
execution and delivery hereof by the other parties hereto, constitutes a legal,
valid and binding agreement of Micrografx enforceable against Micrografx in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
3.04 Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement by Micrografx do not,
and the performance by Micrografx of its obligations hereunder and the
consummation of the transactions contemplated hereby will not, conflict
with, result in a violation or breach of, constitute (with or without
notice or lapse of time or both) a default under, result in or give rise to
any right of payment or reimbursement, termination, cancellation,
modification or acceleration of, or result in the creation or imposition of
any Lien upon any of the assets or properties of Micrografx or any of its
Subsidiaries under, any of the terms, conditions or provisions of (i) the
certificates or articles of incorporation or bylaws (or other comparable
charter documents) of Micrografx or any of its Subsidiaries, or (ii)
subject to the obtaining of Micrografx Shareholders' Approval and the
taking of the actions described in paragraph (b) of this Section 3.04,
(x) any statute, law, rule, regulation or ordinance (together, "laws"), or
any judgment, decree, order, writ, permit or license (together, "orders"),
of any court, tribunal, arbitrator, authority, agency, commission, official
or other instrumentality of the United States, any foreign country or any
domestic or foreign state, province, county, city or other political
subdivision (a "Governmental or Regulatory Authority") applicable to
Micrografx or any of its Subsidiaries or any of their respective assets or
properties, or (y) to the knowledge of Micrografx, except as disclosed in
Section 3.04 of the Micrografx Disclosure Letter, any note, bond, mortgage,
security agreement, indenture, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind
(together, "Contracts") to which Micrografx or any of its Subsidiaries is a
party or by which Micrografx or any of its Subsidiaries or any of their
respective assets or properties is bound, excluding from the foregoing
clauses (x) and (y) conflicts, violations, breaches, defaults, payment or
reimbursement obligations, terminations, cancellations, modifications,
accelerations and creations and impositions of Liens which, individually or
in the aggregate, would not reasonably be expected to have a material
adverse effect on Micrografx and its Subsidiaries taken as a whole or on
the ability of Micrografx to consummate the transactions contemplated by
this Agreement.
9
(b) Except (i) for the filing of a premerger notification report by
Micrografx under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder (the "HSR Act"), (ii)
for the filing of the Proxy Statement (as defined in Section 3.09) and the
Registration Statement (as defined in Section 4.09) with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder (the "Exchange
Act"), and the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "Securities Act"), the declaration of the
effectiveness of the Registration Statement by the SEC and filings with
various Canadian provincial and state securities authorities that are
required in connection with the transactions contemplated by this
Agreement, (iii) for the filing of the Certificate of Merger and other
appropriate merger documents required by the DL with the Secretary of State
and the filing of the Articles of Merger with the Texas Secretary of States
under the TL and appropriate documents with the relevant authorities of
other states in which the Constituent Corporations are qualified to do
business, (iv) the filing(s) as may be required by the Investment Canada
Act (Canada) and/or the Competition Act (Canada), (v) such filings and
applications as are required to be made under Canadian securities law and
under the Canada Business Corporations Act, (vi) such filings as are
required to be made with Nasdaq and the TSE, and (vii) as disclosed in
Section 3.04 of the Micrografx Disclosure Letter, no consent, approval or
action of, filing with or notice to any Governmental or Regulatory
Authority or other public or private third party is necessary or required
under any of the terms, conditions or provisions of any law or order of any
Governmental or Regulatory Authority or, to the knowledge of Micrografx,
any Contract to which Micrografx or any of its Subsidiaries is a party or
by which Micrografx or any of its Subsidiaries or any of their respective
assets or properties is bound for the execution and delivery of this
Agreement by Micrografx, the performance by Micrografx of its obligations
hereunder or the consummation by Micrografx of the transactions
contemplated hereby, other than such consents, approvals, actions, filings
and notices which the failure to make or obtain, as the case may be,
individually or in the aggregate, would not reasonably be expected to have
a material adverse effect on Micrografx and its Subsidiaries taken as a
whole or on the ability of Micrografx to consummate the transactions
contemplated by this Agreement.
3.05 Reports and Financial Statements. Micrografx has made available to
Corel prior to the execution of this Agreement a true and complete copy of each
form, report, schedule, registration statement, definitive proxy statement and
other document (together with all amendments thereof and supplements thereto)
filed by Micrografx or any of its Subsidiaries with the SEC since January 1,
1997 (as such documents have since the time of their filing been amended or
supplemented, the "Micrografx Reports"), which are all the documents (other
than preliminary material) that Micrografx and its Subsidiaries were required
to file with the SEC since such date. Except as disclosed in Section 3.05 of
the Micrografx Disclosure Letter, as of their respective dates, the Micrografx
Reports (i) complied as to form in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be, and (ii) did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited interim
consolidated financial statements (including, in each case, the notes, if any,
thereto) included in the Micrografx Reports (the "Micrografx Financial
Statements") complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles in the United States
("U.S. GAAP") applied on a consistent basis during the periods involved (except
as may be indicated therein or in the notes thereto and except with respect to
unaudited statements as permitted by Form 10-Q of the SEC) and fairly present
(subject, in the case of the unaudited interim financial statements, to the
absence of certain footnotes and to normal, recurring year-end audit
adjustments (which would not reasonably be expected to, individually or in the
aggregate, materially adverse to Micrografx and its Subsidiaries taken as a
whole)) the consolidated financial position of Micrografx and its consolidated
subsidiaries as at the respective dates thereof and the consolidated results of
their operations and cash flows for the respective periods then ended. Except
as set forth in Section 3.05 of the Micrografx Disclosure Letter, each
Subsidiary of Micrografx is treated as a consolidated subsidiary of Micrografx
in the Micrografx Financial Statements for all periods covered thereby.
10
3.06 Absence of Certain Changes or Events. Except as disclosed in the
Micrografx Reports filed prior to the date of this Agreement or in Section 3.06
of the Micrografx Disclosure Letter:
(a) since March 31, 2001, there has not been any change, event or
development having, or that would reasonably be expected to have,
individually or in the aggregate, a material adverse effect on Micrografx
and its Subsidiaries taken as a whole, and
(b) between such date and the date hereof (i) Micrografx and its
Subsidiaries have conducted their respective businesses only in the
ordinary course substantially consistent with past practice and (ii)
neither Micrografx nor any of its Subsidiaries has taken any action which,
if taken after the date hereof, would constitute a breach of any provision
of clause (ii) of Section 5.01(b).
3.07 Absence of Undisclosed Liabilities. Except as disclosed in the
Micrografx Reports filed prior to the date of this Agreement, or for matters
reflected or reserved against in the consolidated balance sheet of Micrografx
and its consolidated subsidiaries, dated March 31, 2001, included in the
Micrografx Financial Statements or as disclosed in Section 3.07 of the
Micrografx Disclosure Letter, neither Micrografx nor any of its Subsidiaries
had at such date, or has incurred since that date, any liabilities or
obligations (whether absolute, accrued, contingent, fixed or otherwise, or
whether due or to become due) of any nature that would be required by U.S. GAAP
to be reflected on a consolidated balance sheet of Micrografx and its
consolidated subsidiaries (including the notes thereto), except liabilities or
obligations (i) which were incurred in the ordinary course of business
consistent with past practice or (ii) which have not been, and would not
reasonably be expected to be, individually or in the aggregate, materially
adverse to Micrografx and its Subsidiaries taken as a whole.
3.08 Legal Proceedings. Except as disclosed in the Micrografx Reports filed
prior to the date of this Agreement or in Section 3.08 of the Micrografx
Disclosure Letter, (i) there are no actions, suits, arbitrations or proceedings
pending or, to the knowledge of Micrografx, threatened against, relating to or
affecting, nor to the knowledge of Micrografx are there any Governmental or
Regulatory Authority investigations or audits pending or threatened against,
relating to or affecting, Micrografx or any of its Subsidiaries or affiliates
or any of their respective assets and properties which, individually or in the
aggregate, would reasonably be expected to have a material adverse effect on
Micrografx and its Subsidiaries taken as a whole or on the ability of
Micrografx to consummate the transactions contemplated by this Agreement, and
(ii) neither Micrografx nor any of its Subsidiaries nor any of its affiliates
is subject to any order of any Governmental or Regulatory Authority which,
individually or in the aggregate, is having or would reasonably be expected to
have a material adverse effect on Micrografx and its Subsidiaries taken as a
whole or on the ability of Micrografx to consummate the transactions
contemplated by this Agreement.
3.09 Information Supplied. The joint proxy statement relating to the
Micrografx Shareholders' Meeting (as defined in Section 6.03 (b)), as amended
or supplemented from time to time (as so amended and supplemented, the "Proxy
Statement"), and any other documents to be filed by Micrografx with the SEC,
the Ontario Securities Commission, the TSE or any other Governmental or
Regulatory Authority in connection with the Merger and the other transactions
contemplated hereby will (in the case of the Proxy Statement and any such other
documents filed with the SEC under the Exchange Act or the Securities Act)
comply as to form in all material respects with the requirements of the
Exchange Act and the Securities Act, respectively, and will not, on the date of
its filing or, in the case of the Proxy Statement, at the date it is mailed to
shareholders of Micrografx and at the times of the Micrografx Shareholders'
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading, except that no representation is made by Micrografx with
respect to information supplied in writing by or on behalf of Corel or Sub
expressly for inclusion therein and information incorporated by reference
therein from documents filed by Corel or any of its Subsidiaries with the SEC.
3.10 Compliance with Laws and Orders. Micrografx and its Subsidiaries hold
all permits, licenses, variances, exemptions, orders and approvals of all
Governmental and Regulatory Authorities necessary for the lawful conduct of
their respective businesses as presently conducted (the "Micrografx Permits"),
except for
11
failures to hold such permits, licenses, variances, exemptions, orders and
approvals which, individually or in the aggregate, are not having and would not
reasonably be expected to have a material adverse effect on Micrografx and its
Subsidiaries taken as a whole. Micrografx and its Subsidiaries are in
compliance with the terms of the Micrografx Permits, except failures so to
comply which, individually or in the aggregate, are not having and would not
reasonably be expected to have a material adverse effect on Micrografx and its
Subsidiaries taken as a whole. Except as disclosed in the Micrografx Reports
filed prior to the date of this Agreement, Micrografx and its Subsidiaries are
not in violation of or default under any law or order of any Governmental or
Regulatory Authority, except for such violations or defaults which,
individually or in the aggregate, are not having and would not be reasonably
expected to have a material adverse effect on Micrografx and its Subsidiaries
taken as a whole.
3.11 Compliance with Agreements; Certain Agreements.
(a) Except as disclosed in the Micrografx Reports filed prior to the
date of this Agreement, neither Micrografx nor any of its Subsidiaries nor,
to the knowledge of Micrografx, any other party is in breach or violation
of, or in default in the performance or observance of any term or provision
of, and no event has occurred which, with notice or lapse of time or both,
could be reasonably expected to result in a default under, (i) the
certificates or articles of incorporation or bylaws (or other comparable
charter documents) of Micrografx or any of its Subsidiaries or (ii) any
Contract to which Micrografx or any of its Subsidiaries is a party or by
which Micrografx or any of its Subsidiaries or any of their respective
assets or properties is bound, except in the case of clause (ii) for
breaches, violations and defaults which, individually or in the aggregate,
are not having and would not reasonably be expected to have a material
adverse effect on Micrografx and its Subsidiaries taken as a whole. Except
for this Agreement and those agreements and other documents filed as
exhibits to the Micrografx Reports or set forth in Section 3.11 of the
Micrografx Disclosure Letter, as of the date of this Agreement, neither
Micrografx nor any of its Subsidiaries is a party to or bound by any non-
competition agreement or other agreement or arrangement that materially
restricts it or any of its Subsidiaries from competing in any line of
business which is material to Micrografx and its Subsidiaries.
(b) Except as disclosed in Section 3.11 of the Micrografx Disclosure
Letter or in the Micrografx Reports filed prior to the date of this
Agreement or as provided for in this Agreement, as of the date hereof, to
the knowledge of Micrografx, neither Micrografx nor any of its Subsidiaries
is a party to any oral or written (i) consulting agreement not terminable
on 60 days' or less notice involving the payment of more than U.S.$100,000
per annum in the aggregate for all such agreements, (ii) union or
collective bargaining agreement which covers any employees, (iii) agreement
with any executive officer or other employee of Micrografx or any of its
Subsidiaries, the benefits of which in the aggregate for all such executive
officers and employees exceed U.S.$100,000, and which are contingent or
vest, or the terms of which are materially altered, upon the occurrence of
a transaction involving Micrografx or any of its Subsidiaries of the nature
contemplated by this Agreement, excluding accelerated vesting of options as
contemplated in Section 2.01(e), (iv) agreement with respect to any
executive officer or other employee of Micrografx or any of its
Subsidiaries providing any term of employment or compensation guarantee or
(v) agreement or plan, including any stock option, stock appreciation
right, restricted stock or stock purchase plan, any of the benefits of
which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by
this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
3.12 Taxes.
(a) Each of Micrografx and its Subsidiaries has filed all material tax
returns and reports required to be filed by it, or requests for extensions
to file such returns or reports have been timely filed or granted and have
not expired, and all such tax returns and reports are complete and accurate
in all material respects, except to the extent that such failures to file,
have extensions granted that remain in effect or be complete and accurate
in all respects, as applicable, individually or in the aggregate, would not
reasonably
12
be expected to have a material adverse effect on Micrografx and its
Subsidiaries taken as a whole. Micrografx and each of its Subsidiaries has
paid (or Micrografx has paid on its behalf) all taxes shown as due on such
tax returns and reports. The most recent financial statements contained in
the Micrografx Reports reflect a reserve for all taxes payable by
Micrografx and its Subsidiaries which is adequate in accordance with U.S.
GAAP for all taxable periods and portions thereof accrued through the date
of such financial statements, and no deficiencies for any taxes have been
proposed, asserted or assessed against Micrografx or any of its
Subsidiaries that are not adequately reserved for, except for inadequately
reserved taxes and inadequately reserved deficiencies that would not
reasonably be expected to, individually or in the aggregate, have a
material adverse effect on Micrografx and its Subsidiaries taken as a
whole. No requests for waivers of the time to assess any taxes against
Micrografx or any of its Subsidiaries have been granted or are pending,
except requests with respect to such taxes that have been adequately
reserved for in the most recent Micrografx Reports, or, to the extent not
adequately reserved, the assessment of which would not, individually or in
the aggregate, have a material adverse effect on Micrografx and its
Subsidiaries taken as a whole.
(b) To the knowledge of Micrografx, there are no liens for material
amounts of taxes on the assets of Micrografx or any of its Subsidiaries
except for statutory liens for current taxes not yet due and payable.
(c) Micrografx has not taken and, unless the Cash Alternative is elected
by Corel, will not take any action to prevent, nor has it any knowledge of
any fact or circumstance reasonably likely to prevent, the Merger from
qualifying as a tax free reorganization within the meaning of Section 368
of the Code, other than the possible election of the Cash Alternative by
Corel.
(d) As used in this Section 3.12, "taxes" shall include all federal,
provincial, state, local and foreign income, capital, franchise, property,
sales, use, goods and services, excise, land transfer, ad valorem, workers
compensation, employment insurance, workers health and other taxes,
including obligations for taxes and other amounts required to be withheld
from payments due or made to any other person (including employees and non-
resident persons) and any interest, penalties or additions to tax.
3.13 Employee Benefit Plans; ERISA.
(a) Except as described in the Micrografx Reports filed prior to the
date of this Agreement or in Section 3.13 of the Micrografx Disclosure
Letter or as would not reasonably be expected to have a material adverse
effect on Micrografx and its Subsidiaries taken as a whole, (i) all
Micrografx Employee Benefit Plans (as defined below) are in compliance in
all material respects with all applicable requirements of law, including
ERISA and the Code, and (ii) neither Micrografx nor any of its Subsidiaries
has any liabilities or obligations with respect to any such Micrografx
Employee Benefit Plans, whether accrued, contingent or otherwise, nor to
the knowledge of Micrografx are any such liabilities or obligations
expected to be incurred. Except as described in the Micrografx Reports
filed prior to the date of this Agreement or in Section 3.13 of the
Micrografx Disclosure Letter, the execution of, and performance of the
transactions contemplated in, this Agreement will not (either alone or upon
the occurrence of any additional or subsequent events) constitute an event
under any Micrografx Employee Benefit Plan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligation
to fund benefits with respect to any employee. The only severance
agreements or severance policies applicable to Micrografx or any of its
Subsidiaries are the agreements and policies specifically referred to in
Section 3.13 of the Micrografx Disclosure Letter and items 12 to 16 of
Section 3.11 of the Micrografx Disclosure Letter. The last date on which
stock options were granted to any director of Micrografx was April 1, 2001.
The last date on which stock options were granted to any employee of
Micrografx was July 12, 2001.
(b) As used herein:
(i) "Micrografx Employee Benefit Plan" means any Plan entered into,
established, maintained, sponsored, contributed to or required to be
contributed to by Micrografx or any of its Subsidiaries for the benefit
of the current or former employees or directors of Micrografx or any of
its Subsidiaries
13
and existing on the date of this Agreement or at any time subsequent
thereto and on or prior to the Effective Time and, in the case of a
Plan which is subject to Part 3 of Title I of the Employee Retirement
Income Security Act of 1974, as amended, and the rules and regulations
thereunder ("ERISA"), Section 412 of the Code or Title IV of ERISA, at
any time during the five-year period preceding the date of this
Agreement; and
(ii) "Plan" means any employment, bonus, incentive compensation,
deferred compensation, pension, profit sharing, retirement, stock
purchase, stock option, stock ownership, stock appreciation rights,
phantom stock, leave of absence, layoff, vacation, day or dependent
care, legal services, cafeteria, life, health, medical, accident,
disability, workmen's compensation or other insurance, severance,
separation, termination, change of control or other benefit plan,
agreement, practice, policy, program or arrangement of any kind,
whether written or oral, including, but not limited to any "employee
benefit plan" within the meaning of Section 3(3) of ERISA.
3.14 Labor Matters. Except as disclosed in the Micrografx Reports filed
prior to the date of this Agreement, there are no material controversies
pending or, to the knowledge of Micrografx, threatened between Micrografx or
any of its Subsidiaries and any representatives of its employees, except as
would not reasonably be expected to, individually or in the aggregate, have a
material adverse effect on Micrografx and its Subsidiaries taken as a whole,
and, to the knowledge of Micrografx, there are no material organizational
efforts presently being made involving any of the now unorganized employees of
Micrografx or any of its Subsidiaries. Since June 30, 2000, there has been no
work stoppage, strike or other concerted action by employees of Micrografx or
any of its Subsidiaries except as would not reasonably be expected to,
individually or in the aggregate, have a material adverse effect on Micrografx
and its Subsidiaries taken as a whole.
3.15 Environmental Matters.
(a) Except as disclosed in the Micrografx Reports filed prior to date of
this Agreement, each of Micrografx and its Subsidiaries has obtained all
licenses, permits, authorizations, approvals, registrations, franchises and
consents from Governmental or Regulatory Authorities which are required
under or pursuant to any applicable Environmental Law (as defined below) in
respect of its business or operations ("Environmental Permits"), except for
such failures to have Environmental Permits which, individually or in the
aggregate, would not reasonably be expected to have a material adverse
effect on Micrografx and its Subsidiaries taken as a whole. Each of such
Environmental Permits is in full force and effect and each of Micrografx
and its Subsidiaries is in compliance with the terms and conditions of all
such Environmental Permits and with any applicable Environmental Law,
except for such failures to be in compliance which, individually or in the
aggregate, would not reasonably be expected to have a material adverse
effect on Micrografx and its Subsidiaries taken as a whole.
(b) To the knowledge of Micrografx, no site or facility now or
previously owned, operated or leased by Micrografx or any of its
Subsidiaries is listed or proposed for listing on the National Priorities
List promulgated pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and the rules and
regulations thereunder ("CERCLA"), or on any similar state or local list of
sites requiring investigation or clean-up.
(c) To the knowledge of Micrografx, no Liens have arisen under or
pursuant to any Environmental Law on any site or facility owned, operated
or leased by Micrografx or any of its Subsidiaries, other than any such
real property not individually or in the aggregate material to Micrografx
and its Subsidiaries taken as a whole, and no action of any Governmental or
Regulatory Authority has been taken or, to the knowledge of Micrografx, is
in process which could subject any of such properties to such Liens.
(d) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by, or which are in the
possession of, Micrografx or any of its Subsidiaries in relation to any
site or facility now or previously owned, operated or leased by Micrografx
or any of its Subsidiaries which have not been delivered to Corel prior to
the execution of this Agreement.
14
(e) As used herein in this Section 3.15:
(i) "Environmental Law" means any law or order of any Governmental
or Regulatory Authority relating to the regulation or protection of
human health, safety or the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes into the
environment (including, without limitation, ambient air, soil, surface
water, ground water, wetlands, land or subsurface strata), or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes; and
(ii) "Hazardous Material" means (A) any petroleum or petroleum
products, flammable explosives, radioactive materials, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation
and transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls (PCBs); (B) any
chemicals or other materials or substances which are now or hereafter
become defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants" or words of similar import under any Environmental
Law; and (C) any other chemical or other material or substance,
exposure to which is now or hereafter prohibited, limited or regulated
by any Governmental or Regulatory Authority under any Environmental
Law.
3.16 Intellectual Property Rights. Except as disclosed in the Micrografx
Reports filed prior to the date of this Agreement or as set forth in Section
3.16 of the Micrografx Disclosure Letter:
(a) Micrografx and its Subsidiaries have all right, title and interest
in, or a valid and binding license to use, all Micrografx Intellectual
Property Rights (the term "Intellectual Property Rights" is defined below)
individually or in the aggregate material to the conduct of the businesses
of Micrografx and its Subsidiaries. Neither Micrografx nor any Subsidiary
of Micrografx is in default (or with the giving of notice or lapse of time
or both, would be in default) under any license to use such Micrografx
Intellectual Property Rights, to the knowledge of Micrografx, (i) such
Micrografx Intellectual Property Rights are not being infringed by any
third party, and (ii) neither Micrografx nor any Subsidiary of Micrografx
is infringing any Intellectual Property Rights of any third party, which
default or infringement is or would be reasonably likely, individually or
in the aggregate, to have a material adverse effect on Micrografx and its
Subsidiaries taken as a whole. For purposes of this Agreement,
"Intellectual Property Rights" means intellectual property of whatever
nature and kind including all domestic and foreign trade-marks, business
names, trade names, domain names, trading styles, patents and patent
rights, trade secrets, service marks and service ▇▇▇▇ rights, service names
and service name rights, industrial designs and copyrights, whether
registered or unregistered, and all applications for registration thereof,
and inventions, formulae, product formulations, processes and processing
methods, technology, techniques, know how and manuals and other proprietary
intellectual property rights and all pending applications for and
registrations of any of the foregoing.
(b) Section 3.16 of the Micrografx Disclosure Letter contains an
accurate and complete list of all the software products of Micrografx and
its Subsidiaries currently being shipped (the "Software"). All individuals
who have written the Software, other than minor components of the Software
which in the aggregate do not comprise more than 5% of the source code for
the current versions of the Software, have assigned, in writing or by
operation of applicable law, to Micrografx all their right, title and
interest (including all intellectual property rights and moral rights) in
and to the Software.
(c) Section 3.16 of the Micrografx Disclosure Letter contains (or will
be supplemented to prior to Closing to contain) an accurate and complete
list as of the date of this Agreement of all licenses, sublicenses,
assignments and other agreements under which Micrografx and its
Subsidiaries are licensed to use third party Intellectual Property Rights
which are material to the business of Micrografx as currently conducted
(the "Micrografx License Agreements").
15
(d) Except as set forth in Section 3.16 of the Micrografx Disclosure
Letter (including as it may be supplemented prior to Closing), Micrografx
and its Subsidiaries are not required to pay any royalties, fees or other
amounts to any Person in connection with the Micrografx License Agreements
or the development, manufacture or commercial exploitation of any products
of Micrografx or its Subsidiaries in each such case in excess of $100,000
in aggregate per annum.
(e) Section 3.16 of the Micrografx Disclosure Letter contains an
accurate and complete list as of the date of this Agreement of all
registered patents, registered and unregistered trademarks, registered and
unregistered trade names, registered and unregistered service marks and
registered and unregistered copyrights (in each case that are currently in
use) except for those that in the aggregate are not material to the conduct
of the business of Micrografx and its Subsidiaries, as well as all
applications, registrations, renewals, modifications, extensions,
divisionals and continuations thereto for any and all of the foregoing,
included in the Micrografx Intellectual Property Rights (excluding third
party Intellectual Property Rights), including the jurisdiction in which
each such Micrografx Intellectual Property Rights has been issued or
registered or in which any such application for such issuance, approval or
registration has been filed. All patents, trademarks, trade names, service
marks and copyrights owned by Micrografx or any of its Subsidiaries and
which are material to the conduct of their business as currently conducted
are valid and enforceable, except for those the invalidity or
unenforceability of which would not be reasonably likely, individually or
in the aggregate, to have a material adverse effect on Micrografx and its
Subsidiaries taken as a whole.
(f) Section 3.16 of Micrografx Disclosure Letter contains an accurate
and complete list as of the date of this Agreement of all material licenses
and sublicenses under which Micrografx or any of its Subsidiaries has
granted the right to manufacture, reproduce, market or exploit any products
of Micrografx or any Subsidiaries or any adaptation, derivative or
reformulation based on any such product or any portion thereof.
(g) Neither Micrografx nor any of its Subsidiaries is or will be as a
result of the execution and delivery of this Agreement or the performance
of its obligations under this Agreement, in breach of any Micrografx
License Agreements. Neither the execution or delivery of this Agreement nor
the consummation of the transactions contemplated hereby will cause or will
result in a material change to the terms of any material license,
sublicense or other similar agreement.
(h) Except as set forth in Section 3.16 of the Micrografx Disclosure
Letter, the source code for the Micrografx Software except for those that
in the aggregate are not material to the conduct of the business of
Micrografx and its Subsidiaries has not been delivered or made available to
any person and Micrografx or its Subsidiaries have not agreed or undertaken
to or in any way promised to provide such source code to any person.
(i) There are no known problems or defects in the Micrografx Software
except for those that in the aggregate are not material to the conduct of
the business of Micrografx and its Subsidiaries including bugs, logic
errors or failures of the Micrografx Software to operate in all material
respects as described in the related documentation.
(j) Except as set forth in Section 3.16 of the Micrografx Disclosure
Letter, neither Micrografx nor its Subsidiaries (i) has been named as a
party in any suit, action or proceeding which involves a claim of
infringement or violation of any Intellectual Property Right except for
those that in the aggregate are not material to the conduct of the business
of Micrografx and its Subsidiaries of any third party or (ii) has received
any written claim or allegation that the manufacturing, importation,
marketing, licensing, sale, offer for sale, or use of any of its products
infringes Intellectual Property Rights of any third party.
(k) Micrografx and its Subsidiaries have taken all reasonable steps to
protect and preserve the confidential information, trade secrets and know-
how of Micrografx and its Subsidiaries except for those that in the
aggregate are not material to the conduct of the business of Micrografx and
its Subsidiaries, including appropriate non-disclosure agreements with all
employees and third persons having access to any confidential information,
trade secrets or know-how of Micrografx and its Subsidiaries.
16
(l) Neither Micrografx nor any of its Subsidiaries has made any written
claim or allegation that any third person is or has infringed,
misappropriated, breached or violated the rights of Micrografx or its
Subsidiaries in any of the Micrografx Intellectual Property Rights which
are material to the business of Micrografx as currently conducted.
3.17 Micrografx Owned and Leased Properties. Micrografx and its Subsidiaries
do not own, and are not parties to any agreement or option to own any real
property. Except as set out in the Micrografx Reports or as disclosed in
Section 3.17 of the Micrografx Disclosure Letter, Micrografx and its
Subsidiaries are not party to, or under any agreement to become a party to, any
lease with respect to real property ("Micrografx Leases"). Each Micrografx
Lease is in good standing, creates a good and valid leasehold estate in the
leased properties thereby demised and is in full force and effect without
amendment ("Micrografx Leased Properties"). With respect to each Micrografx
Lease: (i) all rents and additional rents due have been paid, (ii) no waiver,
indulgence or postponement of Micrografx or its Subsidiaries' obligations has
been granted by the other party thereto, (iii) as described in Section 3.17 of
the Micrografx Disclosure Letter, there exists no event of default or event,
occurrence, condition or act of or relating to Micrografx or its Subsidiaries
which, with the giving of notice, the lapse of time or the happening of any
other event or condition, would become a default or require a consent from a
third party under a Micrografx Lease, and (iv) to the knowledge of Micrografx,
all of the covenants to be performed by any party (other than Micrografx and
its Subsidiaries) under each Micrografx Lease have been performed in all
material respects. Each Micrografx Leased Property is adequate and suitable in
all material respects for the purposes for which it is presently being used and
Micrografx and its Subsidiaries have adequate rights of ingress and egress into
each of Micrografx Leased Property for the operation of its business in the
ordinary course.
3.18 Title to Properties. Micrografx and each of its Subsidiaries have a
good and valid title to, or valid and subsisting leasehold interest in and to,
or a valid and enforceable license to use, all material assets, properties and
rights owned, used or held for use by them in the conduct of their business, in
each case free and clear of any leases, claims, mortgages, pledges and security
interest except those (i) arising in the ordinary course, (ii) that do not
materially impair the continued use of such properties, (iii) for current Taxes
and assessments not yet due and payable, or (iv) that are not reasonably
expected to have a material adverse effect on Micrografx.
3.19 Insurance. Micrografx and its Subsidiaries have policies of insurance
and bonds of the type and in amounts customarily carried by persons conducted
businesses and owning assets similar to those of Micrografx and its
Subsidiaries. There is no material claim pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies and bonds have been paid and Micrografx and its Subsidiaries are
otherwise in compliance in all material respects with the terms of such
policies and bonds. Micrografx has no knowledge of any threatened termination
of, or material premium increase with respect to, any of such policies.
3.20 Vote Required. Assuming the accuracy of the representation and warranty
contained in Section 4.12, the affirmative vote of the holders of record of at
least a majority of each of the outstanding shares of Micrografx Common Stock
and the outstanding shares of Micrografx Series A Stock with respect to the
adoption of this Agreement are the only votes of the holders of any class or
series of the capital stock of Micrografx required to adopt this Agreement and
to approve the Merger and the other transactions contemplated hereby.
3.21 Opinion of Financial Advisor. Micrografx has received the opinion of
Alliant Partners, dated the date hereof, to the effect that, as of the date
hereof, the consideration to be received in the Merger by the shareholders of
Micrografx is fair from a financial point of view to the shareholders of
Micrografx, and a true and complete copy of such opinion has been delivered to
Corel.
3.22 Ownership of Corel Common Stock. Neither Micrografx nor any of its
Subsidiaries beneficially owns any shares of Corel Common Stock.
17
3.23 Takeover Laws. Micrografx has taken all necessary actions so that
neither the provisions of Micrografx's articles of incorporation nor the
provisions of Article 13 of TL will, before the termination of this Agreement,
apply to this Agreement, the Merger or the other transactions contemplated
hereby. To the knowledge of Micrografx except for Article 13 of TL (which has
been rendered inapplicable), no "moratorium", "control share", "fair price" or
other antitakeover laws and regulation of any state (collectively, "Takeover
Laws") are applicable to the Merger or other transactions contemplated by this
Agreement.
ARTICLE IV
Representations and Warranties of Corel and Sub
Corel and Sub, jointly and severally, represent and warrant to Micrografx as
follows:
4.01 Organization and Qualification. Each of Corel and its Subsidiaries
(including Sub) is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has full
corporate power and authority to conduct its business as and to the extent now
conducted and to own, use and lease its assets and properties, except for such
failures to be so existing and in good standing or to have such power and
authority which, individually or in the aggregate, are not having and would not
reasonably be expected to have a material adverse effect on Corel and its
Subsidiaries taken as a whole. Sub was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby. Each of Corel and its Subsidiaries is duly qualified, licensed or
admitted to do business and is in good standing in each jurisdiction in which
the ownership, use or leasing of its assets and properties, or the conduct or
nature of its business, makes such qualification, licensing or admission
necessary, except for such failures to be so qualified, licensed or admitted
and in good standing which, individually or in the aggregate, are not having
and would not reasonably be expected to have a material adverse effect on Corel
and its Subsidiaries taken as a whole. Section 4.01 of the letter dated the
date hereof and delivered by Corel and Sub to Micrografx concurrently with the
original execution and delivery of this Agreement (the "Corel Disclosure
Letter") sets forth (i) the name and jurisdiction of incorporation of each
Subsidiary of Corel, (ii) its authorized capital stock, (iii) the number of
issued and outstanding shares of its capital stock and (iv) the record owners
of such shares. Except for interests in the Subsidiaries of Corel and as
disclosed in Section 4.01 of the Corel Disclosure Letter, Corel does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, limited liability company, joint
venture or other business association or entity (other than (i) non-controlling
investments in the ordinary course of business and corporate partnering,
development, cooperative marketing and similar undertakings and arrangements
entered into in the ordinary course of business and (ii) other investments of
less than $1,000,000). Corel has previously made available to Micrografx
correct and complete copies of the Certificate and Articles of Amalgamation and
bylaws (or other comparable charter documents) of Corel.
4.02 Capital Stock.
(a) As of the date of this Agreement, the authorized capital stock of
Corel consists solely of an unlimited number of common shares of Corel
("Corel Common Stock"), an unlimited number of preferred shares, issuable
in series, and a first series of 24,000,000 Series A Participating
Convertible Preferred Shares ("Series A Preferred Stock"). As of the date
of this Agreement, 73,761,044 shares of Corel Common Stock and 24,000,000
Series A Preferred Shares are issued and outstanding, options for 713,174
shares of Corel Common Stock are granted and outstanding under the Corel
Stock Option Plan as last amended as of January 18, 2000 (the "Corel Stock
Option Plan") and options for 2,130,174 shares of Corel Common Stock are
granted and outstanding under the Corel Stock Option Plan 2000 as amended
and restated as of February 13, 2001 (the "Corel Stock Option Plan 2000")
and warrants for 169,500 shares of Corel Common Stock are issued and
outstanding to an investor and warrants for 113,000 shares
18
of Corel Common Stock are issued and outstanding to advisors to Corel. All
of the issued and outstanding shares of Corel Common Stock are, and all
shares reserved for issuance will be, upon issuance in accordance with the
terms specified in the instruments or agreements pursuant to which they are
issuable, duly authorized, validly issued, fully paid and nonassessable.
Except pursuant to this Agreement and the rights agreement dated February
11, 1999, amended and restated as of March 31, 1999 between Corel and
Computershare Trust Company of Canada (predecessor to Montreal Trust
Company of Canada), as Rights Agent ("Corel Rights Agreement") and except
as set forth in Section 4.02 of the Corel Disclosure Letter, there are no
outstanding Options obligating Corel or any of its Subsidiaries to issue or
sell any shares of capital stock of Corel or to grant, extend or enter into
any Option with respect thereto.
(b) Except as disclosed in Section 4.02 of the Corel Disclosure Letter
or as described above in this Section 4.02, all of the outstanding shares
of capital stock of each Subsidiary of Corel are duly authorized, validly
issued, fully paid and nonassessable and are owned, beneficially and of
record, by Corel or a Subsidiary wholly owned, directly or indirectly, by
Corel, free and clear of any Liens. Except pursuant to the Corel Rights
Agreement or as disclosed in Section 4.02 of the Corel Disclosure Letter,
there are no (i) outstanding Options obligating Corel or any of its
Subsidiaries to issue or sell any shares of capital stock of any Subsidiary
of Corel or to grant, extend or enter into any such Option; (ii)
outstanding bonds, debentures or other evidences of indebtedness of Corel
having the right to vote (or that are convertible for or exercisable into
securities having the right to vote) with the holders of Corel Common Stock
on any matter; or (iii) voting trusts, proxies or other commitments,
understandings, restrictions or arrangements in favor of any person other
than Corel or a Subsidiary wholly owned, directly or indirectly, by Corel
with respect to the voting of or the right to participate in dividends or
other earnings on any capital stock of any Subsidiary of Corel.
(c) Except as disclosed in Section 4.02 of the Corel Disclosure Letter,
there are no outstanding contractual obligations of Corel or any Subsidiary
of Corel to repurchase, redeem or otherwise acquire any shares of Corel
Common Stock or any capital stock of any Subsidiary of Corel or to provide
funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any Subsidiary of Corel or any other person.
4.03 Authority Relative to This Agreement. Each of Corel and Sub has full
corporate power and authority to enter into this Agreement and, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
On or prior to the date hereof, the execution, delivery and performance of this
Agreement by each of Corel and Sub and the consummation by each of Corel and
Sub of the transactions contemplated hereby have been duly and validly approved
by its Board of Directors and by the sole shareholder of Sub, and no other
corporate proceedings on the part of either of Corel or Sub or their
shareholders are necessary to authorize the execution, delivery and performance
of this Agreement by Corel and Sub and the consummation by Corel and Sub of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Corel and Sub and, assuming due and valid
authorization, execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding agreement of each of Corel and Sub
enforceable against each of Corel and Sub in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4.04 Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement by each of Corel and
Sub do not, and the performance by each of Corel and Sub of its obligations
hereunder and the consummation of the transactions contemplated hereby will
not, conflict with, result in a violation or breach of, constitute (with or
without notice or lapse of time or both) a default under, result in or give
rise to any right of payment or reimbursement, termination, cancellation,
modification or acceleration of, or result in the creation or imposition of
any Lien upon any of the assets or properties of Corel or any of its
Subsidiaries under, any of the terms, conditions or provisions of (i) the
certificates or articles of amalgamation or bylaws (or other
19
comparable charter documents) of Corel or any of its Subsidiaries, or (ii)
subject to the taking of the actions described in paragraph (b) of this
Section, (x) any laws or orders of any Governmental or Regulatory Authority
applicable to Corel or any of its Subsidiaries or any of their respective
assets or properties or (y) to the knowledge of Corel any Contracts to
which Corel or any of its Subsidiaries is a party or by which Corel or any
of its Subsidiaries or any of their respective assets or properties is
bound, excluding from the foregoing clauses (x) and (y) conflicts,
violations, breaches, defaults, payment or reimbursement obligations,
terminations, cancellations, modifications, accelerations and creations and
impositions of Liens which, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on Corel and its
Subsidiaries taken as a whole or on the ability of Corel and Sub to
consummate the transactions contemplated by this Agreement.
(b) Except (i) for the filing of a premerger notification report by
Corel under the HSR Act, (ii) for the filing of the Registration Statement
with the SEC pursuant to the Exchange Act and the Securities Act, the
declaration of the effectiveness of the Registration Statement by the SEC
and filings with various Canadian provincial and state securities
authorities that are required in connection with the transactions
contemplated by this Agreement, (iii) for the filing of the Certificate of
Merger and other appropriate merger documents required by the DL with the
Secretary of State and the filing of the Articles of Merger with the Texas
Secretary of State under the TL and appropriate documents with the relevant
authorities of other states in which the Constituent Corporations are
qualified to do business, (iv) as may be required under applicable
requirements of the Competition Act (Canada) and the Investment Canada Act
(Canada), (v) as may be required by the by-laws, rules, regulations or
policies of the TSE in respect of the Corel Common Stock to be issued in
the Merger and upon the exercise of the Micrografx Options to be assumed by
Corel by reason of the Merger and the listing of such Corel Common Stock on
such stock exchanges, (vi) such filings as are required to be made under
the Canada Business Corporations Act or under Canadian securities laws, and
(vii) as disclosed in Section 4.04 of the Corel Disclosure Letter, no
consent, approval or action of, filing with or notice to any Governmental
or Regulatory Authority, to the knowledge of Corel, or other public or
private third party is necessary or required under any of the terms,
conditions or provisions of any law or order of any Governmental or
Regulatory Authority or any Contract to which Corel or any of its
Subsidiaries is a party or by which Corel or any of its Subsidiaries or any
of their respective assets or properties is bound for the execution and
delivery of this Agreement by each of Corel and Sub, the performance by
each of Corel and Sub of its obligations hereunder or the consummation by
Corel of the transactions contemplated hereby, other than such consents,
approvals, actions, filings and notices which the failure to make or
obtain, as the case may be, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on Corel and its
Subsidiaries taken as a whole or on the ability of Corel and Sub to
consummate the transactions contemplated by this Agreement.
(c) (i) The issuance of the Corel Common Stock and the Corel PRs will be
exempt from the prospectus and registration requirements of the securities
laws of the Province of Ontario and no other documents will be required to
be filed, proceedings taken or approvals, permits, consents or
authorizations or regulatory authorities obtained under the securities laws
of the Province of Ontario in respect of the issuance and delivery by Corel
of the Corel Common Stock or the Corel PRs.
(ii) The issuance of the Corel Common Stock upon exercise of the
Corel PRs will be exempt from the prospectus and registration
requirements of the securities laws of the Province of Ontario and no
other documents will be required to be filed, proceedings taken or
approvals, permits, consents or authorizations or regulatory
authorities obtained under the securities laws of the Province of
Ontario in respect of the issuance and delivery by Corel of the Corel
Common Stock provided that no commission or other remuneration is paid
or given to others for the trade except for ministerial or professional
services as for services performed by a registered dealer.
(iii) No other documents will be required to be filed, proceedings
taken or approvals, permits, consents, orders or authorizations of
regulatory authorities required to be obtained under the securities
laws of the Province of Ontario in connection with the first trade of
the Corel Common Stock issued at the Effective Time or the Corel Common
Stock issued upon the exercise of the Corel PRs made
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through a registrant registered under the securities laws of the
Province of Ontario who has complied with such applicable laws, provided
that:
(A) Corel is a reporting issuer as defined in the Securities Act
(Ontario);
(B) the vendor of such securities is not in a "special
relationship" with Corel or, if so, the vendor has reasonable
grounds for believing the Corporation is not in default of the
Securities Act (Ontario) or the Regulation thereunder;
(C) disclosure to the Ontario Securities Commission has been made
of the exempt trade;
(D) no unusual effort is made to prepare the market or to create
a demand for the securities subject to such trade and no
extraordinary commission or consideration is paid in respect of such
trade; and
(E) such trade is not a "control person distribution" (as defined
in Ontario Securities Commission Rule 14-501).
4.05 Reports and Financial Statements. Corel has made available to
Micrografx prior to the execution of this Agreement a true and complete copy
of each form, report, schedule, registration statement, definitive proxy
statement and other document (together with all amendments thereof and
supplements thereto) filed by Corel or any of its Subsidiaries with Canadian
securities regulatory authorities and the SEC, the TSE and Nasdaq since
January 1, 1997 (as such documents have since the time of their filing been
amended or supplemented, the "Corel Reports"), which are all the documents
(other than preliminary material) that Corel and its Subsidiaries were
required to file with the SEC, Canadian securities regulatory authorities and
the TSE since such date. As of their respective dates, the Corel Reports (i)
complied as to form in all material respects with the requirements of the
Securities Act or the Exchange Act or Canadian securities laws and the TSE,
and (ii) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The audited consolidated financial statements and
unaudited interim consolidated financial statements (including, in each case,
the notes, if any, thereto) included in the Corel Reports (the "Corel
Financial Statements") complied as to form in all material respects with the
published rules and regulations of the Canadian securities regulatory
authorities with respect thereto, were prepared in accordance with generally
accepted accounting principles in Canada ("Canadian GAAP") applied on a
consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto and except with respect to unaudited
statements as permitted by Canadian securities laws) and fairly present
(subject, in the case of the unaudited interim financial statements, to the
absence of certain footnotes and to normal, recurring year-end audit
adjustments and to the absence of complete notes (which would not reasonably
be expected to, individually or in the aggregate, be materially adverse to
Corel and its Subsidiaries taken as a whole)) the consolidated financial
position of Corel and its consolidated subsidiaries as at the respective dates
thereof and the consolidated results of their operations and cash flows for
the respective periods then ended. Except as set forth in Section 4.05 of the
Corel Disclosure Letter, each Subsidiary of Corel is treated as a consolidated
subsidiary of Corel in the Corel Financial Statements for all periods covered
thereby.
4.06 Absence of Certain Changes or Events. Except as disclosed in the Corel
Reports filed prior to the date of this Agreement or in Section 4.06 of the
Corel Disclosure Letter:
(a) since May 31, 2001, there has not been any change, event or
development having, or that would reasonably be expected to have,
individually or in the aggregate, a material adverse effect on Corel and
its Subsidiaries taken as a whole, and
(b) between such date and the date hereof Corel and its Subsidiaries
have conducted their respective businesses only in the ordinary course
substantially consistent with past practice.
4.07 Absence of Undisclosed Liabilities. Except as disclosed in the Corel
Reports filed prior to this Agreement, or for matters reflected or reserved
against in the consolidated balance sheet of Corel and its
21
consolidated subsidiaries dated May 31, 2001 included in the Corel Financial
Statements or as disclosed in Section 4.07 of the Corel Disclosure Letter,
neither Corel nor any of its Subsidiaries had at such date, or has incurred
since that date, any liabilities or obligations (whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become due) of any nature
that would be required by Canadian GAAP to be reflected on a consolidated
balance sheet of Corel and its consolidated subsidiaries (including the notes
thereto), except liabilities or obligations (i) which were incurred in the
ordinary course of business consistent with past practice or (ii) which have
not been, and would not reasonably be expected to be, individually or in the
aggregate, materially adverse to Corel and its Subsidiaries taken as a whole.
4.08 Legal Proceedings. Except as disclosed in the Corel Reports filed prior
to the date of this Agreement or in Section 4.08 of the Corel Disclosure
Letter, (i) there are no actions, suits, arbitrations or proceedings pending
or, to the knowledge of Corel, threatened against, relating to or affecting,
nor to the knowledge of Corel are there any Governmental or Regulatory
Authority investigations or audits pending or threatened against, relating to
or affecting, Corel or any of its Subsidiaries or affiliates or any of their
respective assets and properties which, individually or in the aggregate, would
reasonably be expected to have a material adverse effect on Corel and its
Subsidiaries taken as a whole or on the ability of Corel and Sub to consummate
the transactions contemplated by this Agreement, and (ii) neither Corel nor any
of its Subsidiaries nor affiliates is subject to any order of any Governmental
or Regulatory Authority which, individually or in the aggregate, is having or
would reasonably be expected to have a material adverse effect on Corel and its
Subsidiaries taken as a whole or on the ability of Corel and Sub to consummate
the transactions contemplated by this Agreement.
4.09 Information Supplied. The registration statement on Form S-4 to be
filed with the SEC by Corel in connection with the issuance of shares of Corel
Common Stock and Corel PRs in the Merger, as amended or supplemented from time
to time (as so amended and supplemented, the "Registration Statement"), and any
other documents to be filed by Corel with the SEC, Canadian securities
regulatory authorities, the TSE or any other Governmental or Regulatory
Authority in connection with the Merger and the other transactions contemplated
hereby will (in the case of the Registration Statement and any such other
documents filed with the SEC under the Securities Act or the Exchange Act, with
Canadian securities regulatory authorities under Canadian securities laws or
with the TSE) comply as to form in all material respects with the requirements
of the Exchange Act, the Securities Act or comparable Canadian laws,
respectively, and will not, on the date of its filing or, in the case of the
Registration Statement, at the time it becomes effective under the Securities
Act, at the date the Proxy Statement is mailed to shareholders of Micrografx
and at the times of the Micrografx Shareholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading, except that no
representation is made by Corel or Sub with respect to information supplied in
writing by or on behalf of Micrografx expressly for inclusion therein and
information incorporated by reference therein from documents filed by
Micrografx or any of its Subsidiaries with the SEC, Canadian securities
regulatory authorities or the TSE.
4.10 Compliance with Laws and Orders. Corel and its Subsidiaries hold all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental and Regulatory Authorities necessary for the lawful conduct of
their respective businesses as presently conducted (the "Corel Permits"),
except for failures to hold such permits, licenses, variances, exemptions,
orders and approvals which, individually or in the aggregate, are not having
and would not reasonably be expected to have a material adverse effect on Corel
and its Subsidiaries taken as a whole. Corel and its Subsidiaries are in
compliance with the terms of the Corel Permits, except failures so to comply
which, individually or in the aggregate, are not having and would not
reasonably be expected to have a material adverse effect on Corel and its
Subsidiaries taken as a whole. Except as disclosed in the Corel Reports filed
prior to the date of this Agreement, Corel and its Subsidiaries are not in
violation of or default under any law or order of any Governmental or
Regulatory Authority, except for such violations or defaults which,
individually or in the aggregate, are not having and would not reasonably be
expected to have a material adverse effect on Corel and its Subsidiaries taken
as a whole.
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4.11 Sub. Sub is a newly-formed wholly-owned subsidiary of Corel that has
not engaged in any operations through the Closing Date.
4.12 Ownership of Micrografx Common Stock. Neither Corel nor any of its
Subsidiaries beneficially owns any shares of Micrografx Common Stock.
4.13 Reporting Issuer. Corel is a reporting issuer for purposes of the
Securities Act (Ontario) and is not on the list of defaulting reporting issuers
maintained pursuant to Section 72(8) of the Securities Act (Ontario).
4.14 Issuance of Capital Stock. All issued and outstanding shares of Corel
capital stock are duly authorized, validly issued, fully paid and
nonassessable, and all shares of Corel Common Stock reserved for issuance
pursuant to the Corel PRs will be, upon issuance in accordance with the terms
specified in this Agreement, duly authorized, validly issued, fully paid and
nonassessable.
4.15 Taxes.
(a) Corel will have been engaged in an active trade or business outside
of the United States, within the meaning of Treasury Regulation Section
1.367(a)-2T(b)(2) and (3), for the entire 36-month period immediately
before the Effective Time. Corel does not have any intention, and will not
have an intention at the Effective Time, to substantially dispose of or
discontinue such trade or business. As of the date hereof but not as of any
other date, Corel represents that it satisfies the substantiality test
contained in Treasury Regulation Section 1.367(a)-3(c)(3).
(b) Corel has not taken and, unless the Cash Alternative is elected by
Corel, will not take any action to prevent, nor has it any knowledge of any
fact or circumstance reasonably likely to prevent, the Merger from
qualifying as a tax free reorganization within the meaning of Section 368
of the Code, other than the possible election of the Cash Alternative by
Corel.
ARTICLE V
Covenants
5.01 Covenants of Micrografx. Except (i) as otherwise expressly contemplated
by this Agreement or (ii) as set forth in Micrografx's Disclosure Letter, at
all times from and after the date hereof until the Effective Time, Micrografx
covenants and agrees as to itself and its Subsidiaries that (except as
expressly contemplated or permitted by this Agreement or to the extent that
Corel shall otherwise previously consent in writing):
(a) Micrografx and each of its Subsidiaries shall conduct their
respective businesses only in, and Micrografx and each of its Subsidiaries
shall refrain from taking any action except in, the ordinary course
consistent in all material respects with past practice.
(b) Without limiting the generality of paragraph (a) of this Section,
(i) Micrografx and its Subsidiaries shall use all commercially
reasonable efforts to preserve substantially intact in all material
respects their present business organization, to maintain its existence
in good standing, to keep available the services of its key officers
and employees, to maintain its assets and properties in good working
order and condition, ordinary wear and tear and obsolescence excepted,
to maintain insurance on its tangible assets and businesses in such
amounts and against such risks and losses as are currently in effect,
to preserve its relationships with customers and suppliers and others
having significant business dealings with it and to comply in all
material respects with all laws and orders of all Governmental or
Regulatory Authorities applicable to it.
(ii) Micrografx shall not and shall not permit any of its
Subsidiaries to:
(A) amend its certificate or articles of incorporation or bylaws
(or other comparable corporate charter documents);
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(B) (i) declare, set aside or pay any dividends on or make other
distributions in respect of any of its capital stock, except for the
declaration and payment of dividends by a wholly-owned Subsidiary
solely to its parent corporation, (ii) split, combine, reclassify or
take similar action with respect to any of its capital stock or
issue or authorize or propose the issuance of any other securities
in respect of, in lieu of or in substitution for shares of its
capital stock, (iii) adopt a plan of complete or partial liquidation
or resolutions providing for or authorizing such liquidation or a
dissolution, merger, consolidation, restructuring, recapitalization
or other reorganization or (iv) directly or indirectly redeem,
repurchase or otherwise acquire any shares of its capital stock or
any Option with respect thereto;
(C) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any Option
with respect thereto other than (i) the issuance of Micrografx
Common Stock pursuant to options granted under the Micrografx ESOP,
in each case outstanding on the date of this Agreement and in
accordance with their present terms, (ii) the issuance of options
pursuant to the Micrografx ESOP in accordance with their present
terms and only after consent of Corel and the issuance of shares of
Micrografx Common Stock upon exercise of such options, (iii) the
issuance by a wholly-owned Subsidiary of its capital stock to its
parent corporation or modify rights of shares or options, and (iv)
the issuance of Micrografx Common Stock pursuant to outstanding
warrants;
(D) except as otherwise contemplated by this Agreement acquire
(by merging or consolidating with, or by purchasing an equity
interest in or a portion of the assets of, or by any other manner)
any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire or
agree to acquire any assets other than in the ordinary course of its
business consistent with past practice;
(E) other than in the ordinary course of its business consistent
with past practice, sell, lease, grant any security interest in or
otherwise dispose of or encumber any of its assets or properties;
(F) except to the extent required by applicable law,
(i) permit any material change in (A) any pricing, marketing,
purchasing, investment, accounting (except as required by
applicable law or due to changes in the accounting standards
applicable to Micrografx), financial reporting, inventory,
credit, allowance or tax practice or policy or (B) any method of
calculating any bad debt, contingency or other reserve for
accounting, financial reporting or tax purposes or (ii) make any
material tax election or settle or compromise any material
income tax liability with any Governmental or Regulatory
Authority;
(G) (i) incur (which shall not be deemed to include entering into
credit agreements, lines of credit or similar arrangements until
borrowings are made under such arrangements) any indebtedness or
borrowed money or guarantee any such indebtedness other than trade
payables and loans to wholly-owned subsidiaries and loans in the
ordinary course of its business substantially consistent with past
practice or (ii) voluntarily purchase, cancel, prepay or otherwise
provide for a complete or partial discharge in advance of a
scheduled repayment date with respect to, or waive any right under,
any indebtedness for borrowed money other than in the ordinary
course of its business substantially consistent with past practice;
(H) except as contemplated in Section 2.01(e), enter into, adopt,
amend in any material respect (except as may be required by
applicable law) or terminate any Micrografx Employee Benefit Plan or
other agreement, arrangement, plan or policy between Micrografx or
one of its Subsidiaries and one or more of its directors, officers
or employees, or, except for normal increases in the ordinary course
of business substantially consistent with past practice that, in the
aggregate, do not result in a material increase in benefits or
compensation expense to Micrografx
24
and its Subsidiaries taken as a whole, increase in any manner the
compensation or fringe benefits of any director, officer or employee
or pay any benefit not required by any plan or arrangement in effect
as of the date hereof;
(I) enter into any Contract or amend or modify any existing
Contract, or engage in any new transaction, in each case outside the
ordinary course of business substantially consistent with past
practice or not on an arm's length basis, with any affiliate of
Micrografx or any of its Subsidiaries;
(J) make any capital expenditures or commitments for additions to
plant, property or equipment constituting capital assets except in
the ordinary course of business substantially consistent with past
practice;
(K) make any change in the lines of business in which it
participates or is engaged;
(L) pay, discharge, satisfy, waive, settle or release any
material claim, liability or obligation (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction, in the ordinary course of business
substantially consistent with past practice;
(M) settle or compromise any claim brought by any present, former
or purported holder of any of its securities in connection with the
transactions contemplated by this Agreement prior to the Effective
Time without the prior written consent of Corel; or
(N) enter into any Contract, commitment or arrangement to do or
engage in any of the foregoing.
Notwithstanding the other terms of this Section 5.01, nothing contained
herein shall limit the ability of Micrografx or of any of its Subsidiaries to
(i) negotiate, settle, discharge, obtain discounts to and pay trade payables,
(ii) negotiate, settle, pay, discharge or amend and obtain a discount with
respect to the Intergraph Debentures as contemplated in Section 2.01(c)(i),
(iii) negotiate, pay, settle, discharge or issue shares of Micrografx Common
Stock in exchange for all indebtedness evidenced by those certain convertible
notes issued by Micrografx in the aggregate principal amount of $939,000, (iv)
issue, in the manner contemplated in Section 2.01(e) and (g), Micrografx Common
Stock pursuant to the exercise of warrants or options to purchase shares of
Micrografx Common Stock outstanding as of the date of this Agreement, (v)
borrow up to $2.5 million, the proceeds of which will be used to reduce
Micrografx's indebtedness and otherwise provide operating capital to
Micrografx, and (vi) amend the rights of holders of Micrografx Series A Stock;
provided that, except as expressly permitted herein as such actions shall be on
terms and conditions acceptable to Corel, acting reasonably.
5.02 No Solicitations. At all times from and after the date hereof until the
Effective Time, Micrografx covenants and agrees as to itself and its
Subsidiaries (a) that neither it nor any of its Subsidiaries shall, directly or
indirectly, and it shall use its best efforts to cause its Representatives (as
defined in Section 9.18) not to, knowingly initiate, solicit or encourage,
directly or indirectly, any inquiries or the making or implementation of any
proposal or offer (including, without limitation, any proposal or offer to its
shareholders) with respect to a merger, consolidation or other business
combination including Micrografx or any of its Subsidiaries or any acquisition
or similar transaction (including, without limitation, a tender or exchange
offer) involving the purchase of (i) all or any significant portion of the
assets of Micrografx and its Subsidiaries taken as a whole, (ii) 20% or more of
the outstanding shares of Micrografx's Common Stock or (iii) 20% of the
outstanding shares of the capital stock of any Subsidiary of Micrografx (any
such proposal or offer being hereinafter referred to as an "Alternative
Proposal"), or engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any person
or group relating to an Alternative Proposal (excluding the transactions
contemplated by this Agreement), or otherwise knowingly facilitate any effort
or attempt to make or implement an Alternative Proposal; (b) that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties with respect to any of the
25
foregoing, and it will take the necessary steps to inform such parties of its
obligations under this Section; and (c) that it will notify Corel immediately
if any such inquiries, proposals or offers, written or oral, are received by,
any such information is requested from, or any such negotiations or discussions
are sought to be initiated or continued with, it or any of such persons;
provided, however, that nothing contained in this Section 5.02 shall prohibit
the Board of Directors of Micrografx or its Representatives from (i) furnishing
information to (but only pursuant to a confidentiality agreement in customary
form and having terms and conditions no less favorable to Micrografx than the
Confidentiality Agreement, a copy of which shall be provided promptly to Corel)
or entering into discussions or negotiations with any person or group that
makes an unsolicited bona fide Alternative Proposal, if, and only to the extent
that, prior to receipt of the Micrografx Shareholders' Approval, (i) based upon
the advice of outside counsel, determines in good faith and in its reasonable
judgment that such action is likely required for the Board of Directors to
comply with its fiduciary duties to shareholders imposed by applicable law, and
(ii) based on the advice of Micrografx's financial advisor, determines in good
faith and in its reasonable judgment that such Alternative Proposal is
reasonably likely to result in a Superior Proposal (as defined herein), (B)
three business days prior to furnishing such information to, or entering into
discussions or negotiations with, such person or group and proposed terms of
the transaction, Micrografx provides written notice to Corel to the effect that
it is furnishing information to, or entering into discussions or negotiations
with, such person or group, which notice shall identify such person or group
and proposed terms of the transaction in reasonable detail, and (C) Micrografx
keeps Corel informed of the status and all material information with respect to
any such discussions or negotiations and information furnished to the other
party; (ii) to the extent required, complying with Rules 14d-9 and 14e-2(a)
promulgated under the Exchange Act with regard to an Alternative Proposal.
Nothing in this Section 5.02 shall (x) permit Micrografx to terminate this
Agreement (except as specifically provided in Article VIII), (y) permit any
party to enter into any agreement with respect to an Alternative Proposal for
so long as this Agreement remains in effect (it being agreed that for so long
as this Agreement remains in effect, Micrografx shall not enter into any
agreement with any person or group that provides for, or in any way
facilitates, an Alternative Proposal (other than a confidentiality agreement
under the circumstances described above)), or (z) affect any other obligation
of any party under this Agreement.
5.03 Covenants of Corel. Except (i) as otherwise contemplated by this
Agreement, (ii) as required by applicable law or rule of any stock exchange or
over-the-counter market, or (iii) as set forth in Corel's Disclosure Letter, at
all times from and after the date hereof until the Effective Time, Corel
covenants and agrees as to itself and its Subsidiaries that (except as
expressly contemplated or permitted by this Agreement, or to the extent that
Micrografx shall otherwise previously consent in writing):
(a) Corel shall cause Sub to (i) perform its obligations under this
Agreement in accordance with its terms, (ii) not incur directly or
indirectly any liabilities or obligations other than those incurred in
connection with the Merger, and (iii) not engage directly or indirectly in
any business or activities of any type or kind and not enter into any
agreements or arrangements with any person, or be subject to or bound by
any obligation or undertaking, which is not contemplated by this Agreement.
(b) Corel and its Subsidiaries shall use all commercially reasonable
efforts to preserve substantially intact in all material respects their
present business organization and reputation, to maintain its existence in
good standing, to keep available the services of its key officers and
employees, to maintain its assets and properties in good working order and
condition, ordinary wear and tear excepted, to maintain insurance on its
tangible assets and businesses in such amounts and against such risks and
losses as are currently in effect, to preserve its relationships with
customers and suppliers and others having significant business dealings
with it and to comply in all material respects with all laws and orders of
all Governmental or Regulatory Authorities applicable to it.
5.04 Third Party Standstill Agreements. Micrografx agrees that, during the
period from the date of this Agreement through the Effective Time, neither it
nor any of its Subsidiaries shall terminate, amend, modify or waive any
provision of any confidentiality or standstill agreement to which it is a
party. During such period, Micrografx shall enforce, to the extent necessary to
prevent a breach and to the fullest extent permitted under
26
applicable law, the provisions of any such agreement, including, but not
limited to, by obtaining injunctions and to enforce specifically the terms and
provisions thereof in any court having jurisdiction.
5.05 Purchases of Capital Stock of the Other Party. Each of Micrografx and
Corel (each, a "Principal Party") agrees that, during the period from the date
hereof through the Effective Time, neither it nor any of its Subsidiaries or
other affiliates will purchase any shares of capital stock of the other
Principal Party.
5.06 Advice of Changes. Each Principal Party shall confer on a regular and
frequent basis with the other with respect to its business and operations and
other matters relevant to the Merger, and shall promptly advise the other,
orally and in writing, of any change or event, including, without limitation,
any complaint, investigation or hearing by any Governmental or Regulatory
Authority (or communication indicating the same may be contemplated) or the
institution or threat of litigation, having, or which, insofar as can be
reasonably foreseen, could have, a material adverse effect on such Principal
Party and its Subsidiaries taken as a whole or on the ability of such Principal
Party to consummate the transactions contemplated hereby; provided that no
party shall be required to make any disclosure to the extent such disclosure
would constitute a violation of any applicable law.
5.07 Notice and Cure. Each Principal Party will notify the other of, and
will use all commercially reasonable efforts to cure before the Closing, any
event, transaction or circumstance, as soon as practical after it becomes known
to such Principal Party, that causes or will cause any covenant or agreement of
such Principal Party under this Agreement to be breached or that renders or
will render untrue any representation or warranty of such Principal Party
contained in this Agreement. Each Principal Party also will notify the other in
writing of, and will use all commercially reasonable efforts to cure, before
the Closing, any violation or breach, as soon as practical after it becomes
known to such party, of any representation, warranty, covenant or agreement
made by such Principal Party. No notice given pursuant to this paragraph shall
have any effect on the representations, warranties, covenants or agreements
contained in this Agreement for purposes of determining satisfaction of any
condition contained herein.
5.08 Fulfillment of Conditions. Subject to the terms and conditions of this
Agreement, each Principal Party will take or cause to be taken all commercially
reasonable steps necessary or desirable and proceed diligently and in good
faith to satisfy each condition to the other's obligations contained in this
Agreement and to consummate and make effective the transactions contemplated by
this Agreement, and neither Principal Party will, nor will it permit any of its
Subsidiaries, officers, directors, employee or agents to, take or fail to take
any action that could be reasonably expected to result in the nonfulfillment of
any such condition.
ARTICLE VI
Additional Agreements
6.01 Access to Information; Confidentiality. Each Principal Party shall, and
shall cause each of its Subsidiaries to, throughout the period from the date
hereof to the Effective Time, (i) provide the other Principal Party and its
Representatives with full access, upon reasonable prior notice and during
normal business hours, to all officers, employees, agents and accountants of
such Principal Party and its Subsidiaries and their respective assets,
properties, books and records, but only to the extent that such access does not
unreasonably interfere with the business and operations of such Principal Party
and its Subsidiaries, and (ii) furnish promptly to such persons (x) a copy of
each report, statement, schedule and other document filed or received by such
Principal Party or any of its Subsidiaries pursuant to the requirements of
federal or state securities laws and each material report, statement, schedule
and other document filed with any other Governmental or Regulatory Authority,
and (y) all other information and data (including, without limitation, copies
of Contracts, Micrografx Employee Benefit Plans, and other books and records)
concerning the business and operations of such Principal Party and its
Subsidiaries as the other party or any of such other persons reasonably may
request. Notwithstanding anything herein to the contrary, nothing herein shall
require any Principal Party or any of its
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Subsidiaries to disclose any information to the other Principal Party or any of
its Representatives if such disclosure would be in violation of (i) any
applicable law or regulation of any Governmental or Regulatory Authority, or
(ii) any agreement to which such Principal Party is a party on the date hereof.
No investigation pursuant to this paragraph or otherwise shall affect any
representation or warranty contained in this Agreement or any condition to the
obligations of the parties hereto. Any such information or material obtained
pursuant to this Section 6.01 that constitutes "Confidential Information" (as
such term is defined in the letter agreement dated as of May 25, 2001 between
Micrografx and Corel (the "Confidentiality Agreement") shall be governed by the
terms of the Confidentiality Agreement.
6.02 Preparation of Registration Statement and Proxy Statement. Micrografx
and Corel shall prepare and file with the SEC, applicable Canadian securities
regulatory authorities and the TSE as soon as reasonably practicable after the
date hereof, the Proxy Statement. Corel shall prepare and file with the SEC, as
soon as reasonably practicable after the date hereof, the Registration
Statement, in which the Proxy Statement will be included. Corel and Micrografx
shall use their best efforts to have the Registration Statement declared
effective by the SEC as promptly as practicable after such filing. Corel shall
also take any action (other than qualifying as a foreign corporation or taking
any action which would subject it to taxation or service of process in any
jurisdiction where Corel is not now so qualified or subject) required to be
taken under applicable state blue sky or provincial or federal securities laws
in connection with the issuance and resale of Corel Common Stock and the
issuance of the Corel PRs in connection with the Merger. If at any time prior
to the Effective Time any event shall occur that should be set forth in an
amendment of or a supplement to the Registration Statement, Corel shall prepare
and file with the SEC such amendment or supplement as soon thereafter as is
reasonably practicable. Corel, Sub and Micrografx shall cooperate with each
other in the preparation of the Registration Statement and the Proxy Statement
and any amendment or supplement thereto, and each shall notify the other of the
receipt of any comments of the SEC with respect to the Registration Statement
or the Proxy Statement and of any requests by the SEC for any amendment or
supplement thereto or for additional information, and shall provide to the
other promptly copies of all correspondence between Corel or Micrografx, as the
case may be, or any of its Representatives and the SEC with respect to the
Registration Statement or the Proxy Statement. Corel shall give Micrografx and
its counsel the opportunity to review the Registration Statement and all
responses to requests for additional information by and replies to comments of
the SEC before their being filed with, or sent to, the SEC. Each of Micrografx,
Corel and Sub agrees to use its best efforts, after consultation with the other
parties hereto, to respond promptly to all such comments of and requests by the
SEC and to cause (i) the Registration Statement to be declared effective by the
SEC at the earliest practicable time and to be kept effective as long as is
necessary to consummate the Merger, and (ii) the Proxy Statement to be mailed
to the holders of Micrografx Common Stock entitled to vote at the meeting of
the shareholders of Micrografx at the earliest practicable time.
6.03 Approval of Shareholders of Micrografx.
(a) Micrografx shall, through its Board of Directors duly call, give
notice of, convene and hold a meeting of the holders of Micrografx Common
Stock and hold a meeting or obtain consent from its holders of Micrografx
Series A Stock (the "Micrografx Shareholders' Meeting") for the purpose of
voting on the approval of the Merger and this Agreement (the "Micrografx
Shareholders' Approval"). Micrografx shall, through its Board of Directors,
include in the Proxy Statement the recommendation of the Board of Directors
of Micrografx that the shareholders of Micrografx approve the Merger and
this Agreement, and shall use its reasonable best efforts to solicit
proxies in order to obtain such adoption. At such meeting, Corel shall, and
shall cause its Subsidiaries to, cause all shares of Micrografx Common
Stock then owned by Corel or any such Subsidiary to be voted in favor of
the approval of the Merger and of this Agreement. If Shareholders' Approval
is not obtained at the initial Micrografx Shareholders' Meeting, the
shareholders' meeting shall be adjourned a minimum of two times for the
purposes of seeking approval of the Merger and this Agreement.
(b) Corel and Micrografx shall coordinate and cooperate with respect to
the timing of the Micrografx Shareholders' Meeting and Micrografx shall use
its reasonable best efforts to cause the Micrografx Shareholders' Meeting
to be held as soon as practicable after the date hereof.
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6.04 Micrografx Affiliates. At least 30 days prior to the Closing Date,
Micrografx shall deliver a letter to Corel identifying all persons who, at the
time of the Micrografx Shareholders' Meeting, may, in Micrografx's reasonable
judgment, be deemed to be "affiliates" (as such term is used in Rule 145 under
the Securities Act) of Micrografx ("Micrografx Affiliates"). Micrografx shall
use its reasonable best efforts to cause each Micrografx Affiliate to deliver
to Corel on or prior to the Closing Date a written agreement substantially in
the form and to the effect of Exhibit C hereto (an "Affiliate Agreement").
6.05 Stock Exchange Listing. Corel shall use its reasonable best efforts to
cause the shares of Corel Common Stock issuable at the Effective Time and upon
exercise of the Corel PRs to be approved for listing on the TSE and on Nasdaq,
subject to official notice of issuance, prior to the Effective Time.
6.06 Certain Tax Matters. Unless the Cash Alternative is elected by Corel,
Corel and Micrografx shall not take or fail to take any action which action or
failure would cause the Merger not to qualify as a reorganization under the
provisions of Section 368(a) of the Code or cause the failure to obtain the
opinion of counsel referred to in Section 7.02(e) or 7.03(e), other than any
action contemplated by this Agreement; provided, that neither Corel nor
Micrografx shall be required to agree to an alteration of the amount or
character of the consideration offered pursuant to Section 2.01. Nothing in
this section precludes either Corel or Micrografx from taking any action that
may cause gain to be recognized by any stockholder obligated to sign a gain
recognition agreement under Section 367 of the Code. Notwithstanding the
foregoing sentence, unless the Cash Alternative is elected by Corel, Corel and
Micrografx shall comply with the "reporting requirements" of Treasury
Regulation Section 1.367(a)-3(c)(6).
6.07 Regulatory and Other Approvals. Subject to the terms and conditions of
this Agreement and without limiting the provisions of Sections 6.02 and 6.03,
each Principal Party will proceed diligently and in good faith to, as promptly
as practicable, (a) obtain all consents, approvals or actions of, make all
filings with and give all notices to Governmental or Regulatory Authorities or
any other public or private third parties required of Principal Party or any of
their Subsidiaries to consummate the Merger and the other matters contemplated
hereby, and (b) provide such other information and communications to such
Governmental or Regulatory Authorities or other public or private third parties
as the other Principal Party or such Governmental or Regulatory Authorities or
other public or private third parties may reasonably request in connection
therewith. In addition to and not in limitation of the foregoing, each
Principal Party will (i) take promptly all actions necessary to make the
filings required of either of the Principal Party or their affiliates under the
HSR Act and the Competition Act (Canada), (ii) comply at the earliest
practicable date with any request for additional information received by such
party or its affiliates from (A) the Federal Trade Commission (the "FTC") or
the Antitrust Division of the Department of Justice (the "Antitrust Division")
pursuant to the HSR Act and (B) any Canadian Governmental or Regulatory
Authority pursuant to the Competition Act (Canada), (iii) cooperate with the
other Principal Party in connection with such Principal Party's filings under
the HSR Act and the Competition Act (Canada) and in connection with resolving
any investigation or other inquiry concerning the Merger or the other matters
contemplated by this Agreement commenced by any Governmental or Regulatory
Authority of competent jurisdiction, and (iv) proceed diligently and in good
faith to obtain early termination of any waiting period applicable to the
Merger under the HSR Act and Competition Act (Canada).
6.08 Micrografx Director. Corel's Board of Directors shall take action to
cause the Board of Directors of Corel at the Effective Time to include one
person nominated by Micrografx prior to the Effective Time, who shall be
mutually agreed to by Micrografx and Corel (the "Micrografx Director"). Corel
shall also recommend and support the election of the Micrografx Director or
another individual nominated by the holders of a majority of the shares of
Micrografx Common Stock held by holders each owning beneficially 5% of more of
Micrografx Common Stock on the record date for the Micrografx Shareholders'
Meeting, who shall be acceptable to Corel, to the Corel Board of Directors at
Corel's 2002 annual meeting of shareholders.
6.09 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such cost or expense,
except that the filing fee in connection with the filings required under the
▇▇▇ ▇▇▇ ▇▇▇
▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ (▇▇▇▇▇▇) and the expenses incurred in connection with
preparing, printing and mailing the Registration Statement and the Proxy
Statement (other than professional fees), as well as any filing fees relating
thereto, shall be shared equally by Corel and Micrografx.
6.10 Brokers or Finders. Each of Micrografx and Corel represents, as to
itself and its affiliates, that no agent, broker, investment banker, financial
advisor or other firm or person is or will be entitled to any broker's or
finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement, and each of Micrografx and
Corel shall indemnify and hold the other harmless from and against any and all
claims, liabilities or obligations with respect to any other such fee or
commission or expenses related thereto asserted by any person on the basis of
any act or statement alleged to have been made by such party or its affiliate.
6.11 Takeover Statutes. If any "fair price", "moratorium", "control share
acquisition" or other form of anti-takeover statute or regulation shall become
applicable to the transactions contemplated hereby, each party hereto and the
members of the Board of Directors of such Principal Party shall grant such
approvals and take such actions as are reasonably necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and thereby and otherwise act to eliminate or
minimize the effects of such statute or regulation on the transactions
contemplated hereby and thereby.
6.12 Conveyance Taxes. Micrografx and Corel shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated by this Agreement that are
required or permitted to be filed on or before the Effective Time.
6.13 Micrografx 401(k) Plan. Micrografx shall amend the Micrografx 401(k)
Plan to provide that, at the Effective Time, all participant accounts in the
Micrografx 401(k) Plan will become 100% vested. Corel will, and will also cause
the Surviving Corporation to, maintain the existence of the Micrografx 401(k)
Plan and the current level of matching employer contribution to such Plan to a
maximum of $5,000 per employee, for a period of no less than one year following
the Effective Time.
6.14 Consents. Corel, Sub and Micrografx, for itself, shall each use
commercially reasonable best efforts to obtain the consent and approval of, or
effect the notification of or filing with, each person or authority whose
consent or approval is required of any of Corel, Sub or Micrografx,
respectively, in order to permit the consummation of the Merger and the
transactions contemplated by this Agreement and to enable the Surviving
Corporation to conduct and operate the business of Micrografx and its
subsidiaries substantially as presently conducted and as contemplated to be
conducted.
6.15 Indemnification and Insurance.
(a) From and after the Effective Time, Corel will, and will also cause
the Surviving Corporation to, fulfill and honor in all respects the
obligations of Micrografx pursuant to any indemnification provisions under
Micrografx's Articles of Incorporation or Bylaws as in effect on the date
hereof for the benefit of its present and former directors and officers in
effect on the date hereof (the "Indemnified Parties"). The Certificate of
Incorporation and Bylaws of the Surviving Corporation will contain
provisions with respect to exculpation and indemnification that are at
least as favorable to the Indemnified Parties as those contained in the
Articles of Incorporation and Bylaws of Micrografx as in effect on the date
hereof, which provisions will not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner
that would adversely affect the rights thereunder of individuals who,
immediately prior to the Effective Time, were directors, officers,
employees or agents of Micrografx, unless such modification is required by
law.
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(b) For a period of six years after the Effective Time, Corel will, or
will cause the Surviving Corporation to, use all commercially reasonable
efforts to maintain in effect, if available at a premium which is not more
than twice the premium currently paid by Micrografx, directors' and
officers' liability insurance covering those persons who are currently
covered by Micrografx's directors' and officers' liability insurance policy
on terms substantially similar to those applicable to the current directors
and officers of Micrografx, and if such premium during the six year period
equals or exceeds twice the premium currently paid by Micrografx, Corel
will, or will cause the Surviving Corporation to maintain such insurance as
is available for such maximum premium as Corel is obligated to pay
hereunder.
(c) The provisions of this Section 6.15 are intended to be in addition
to the rights otherwise available to the Indemnified Parties by law,
charter, statute, bylaw, resolution of the Board of Directors of
Micrografx, and shall operate for the benefit of, and shall be enforceable
by, each of the Indemnified Parties, their heirs and their representatives.
6.16 Intergraph Debenture. Corel will repay the Subordinated Convertible
Debenture dated April 16, 1999 issued by Micrografx to Intergraph Corporation
in the original principal amount of $5,797,000 shortly following the Effective
Date.
6.17 Bridge Loan. As soon as reasonably practicable following the date
hereof Corel shall provide to Micrografx a bridge loan in the aggregate amount
of $2.5 million for use by Micrografx to reduce its indebtedness and provide
operating capital. Such loan shall be extended to Micrografx by Corel on terms
and conditions satisfactory to Corel, including security over all of the assets
and stock of Image2Web, Inc., and Micrografx shall grant to Corel an option to
purchase 80% of the stock for a purchase price equal to the amount of the loan
owing from time to time, exercisable by Corel (A) upon default in repayment of
the loan or (B) in the event that (i) the shareholders of Micrografx do not
approve the Merger or (ii) the Merger is terminated by Micrografx or Corel in
accordance with its terms.
ARTICLE VII
Conditions
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
fulfillment or waiver, at or prior to the Closing, of each of the following
conditions:
(a) Stockholder Approval. This Agreement and the Merger shall have been
approved by the requisite vote of the stockholders of Micrografx under the
TL and Micrografx's Articles of Incorporation.
(b) Registration Statement; State Securities Laws. The Registration
Statement shall have become effective in accordance with the provisions of
the Securities Act, and no stop order suspending such effectiveness shall
have been issued by any Governmental or Regulatory Authority of competent
jurisdiction and remain in effect and no proceeding seeking such an order
shall be pending or threatened. Corel shall have received all state
securities or "Blue Sky" permits and other authorizations, and all
approvals, rulings and exceptions from applicable Canadian securities
regulatory authorities, necessary to issue the Corel Common Stock and the
Corel PRs, as well as the Corel Common Stock issuable upon conversion of
the Corel PRs.
(c) Exchange Listing. The shares of Corel Common Stock issuable at the
Effective Time and upon exercise of the Corel PRs in accordance with this
Agreement shall have been conditionally approved for listing on the TSE
subject to the customary requirements of such exchange and on Nasdaq on
official notice of issuance.
(d) HSR Act and Competition Act (Canada). Any waiting period (and any
extension thereof) applicable to the consummation of the Merger under the
HSR Act and the Competition Act (Canada) shall have expired or shall have
been terminated.
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(e) No Injunctions or Restraints. No competent Governmental or
Regulatory Authority shall have enacted, issued, promulgated, enforced or
entered any law or order (whether temporary, preliminary or permanent
(collectively, "Restraints") which is then in effect and has the effect of
making illegal or otherwise restricting, preventing, enjoining or
prohibiting consummation of the Merger or the other transactions
contemplated by this Agreement.
(f) Governmental and Regulatory and Other Consents and Approvals. Other
than the filing provided for by Section 1.03 and filings pursuant to the
HSR Act and the Competition Act (Canada) which are addressed in Section
7.01(d), all consents, approvals and actions of, filings with and notices
to any Governmental or Regulatory Authority of competent jurisdiction or
any other public or private third parties, all as listed in Schedule
7.01(f) of the Micrografx Disclosure Letter and the Corel Disclosure Letter
required of Corel, Micrografx or any of their Subsidiaries to consummate
the Merger and the other matters contemplated hereby, in form reasonably
satisfactory to Corel.
7.02 Conditions to Obligation of Corel and Sub to Effect the Merger. The
obligation of Corel and Sub to effect the Merger is further subject to the
fulfillment, at or prior to the Closing, of each of the following additional
conditions (all or any of which may be waived in whole or in part by Corel and
Sub in their sole discretion):
(a) Representations and Warranties. The representations and warranties
made by Micrografx in this Agreement shall be true and correct, in all
material respects (except that representations that have materiality in
them shall be true as written) as of the Closing Date as though made on and
as of the Closing Date or, in the case of representations and warranties
made as of a specified date earlier than the Closing Date, on and as of
such earlier date and Micrografx shall have delivered to Corel a
certificate, dated the Closing Date and executed in the name and on behalf
of Micrografx by its Chairman of the Board and Chief Executive Officer or
Chief Financial Officer, to such effect.
(b) Performance of Obligations. Micrografx shall have performed and
complied with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied with
by Micrografx at or prior to the Closing, and Micrografx shall have
delivered to Corel a certificate, dated the Closing Date and executed in
the name and on behalf of Micrografx by its Chairman of the Board and Chief
Executive Officer or its Chief Financial Officer, to such effect.
(c) All Actions. The Board of Directors and shareholders of Micrografx
shall have adopted all necessary resolutions, and all other necessary
corporate action shall have been taken by Micrografx and its Subsidiaries
to permit the Merger.
(d) Dissenting Stockholders. The holders of Micrografx Common Stock
representing in excess of 10% of the outstanding Micrografx Common Stock
shall not have exercised (and if exercised, have not withdrawn such
exercise to the satisfaction of Corel by the close of business on the day
after the day of the Micrografx Shareholders' Meeting), dissent or similar
rights in connection with the merger.
(e) U.S. Federal Tax Opinion. Unless the Cash Alternative is elected by
Corel, Corel shall have received an opinion from Milbank, Tweed, ▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, counsel to Corel ("Corel's Counsel"), in form and substance
reasonably satisfactory to Corel, dated the Effective Time, substantially
to the effect that, on the basis of facts, representations and assumptions
set forth in such opinion which are consistent with the state of facts
existing at the Effective Time, the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the Code. In
rendering its opinion, Corel's Counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of Micrografx, Corel, Sub and others, reasonably satisfactory in
form and substance to it.
(f) Micrografx Counsel's Opinion. Corel shall have received an opinion
from ▇▇▇▇▇ Liddell & ▇▇▇▇ LLP ("Micrografx's Counsel"), in form and
substance reasonably satisfactory to Corel, dated the Effective Time.
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7.03 Conditions to Obligation of Micrografx to Effect the Merger. The
obligation of Micrografx to effect the Merger is further subject to the
fulfillment, at or prior to the Closing, of each of the following additional
conditions (all or any of which may be waived in whole or in part by Micrografx
in its sole discretion):
(a) Representations and Warranties. The representations and warranties
made by Corel and Sub in this Agreement shall be true and correct in all
material respects (except that representations that have materiality in
them shall be true as written), as of the Closing Date as though made on
and as of the Closing Date or, in the case of representations and
warranties made as of a specified date earlier than the Closing Date, on
and as of such earlier date and Corel and Sub shall each have delivered to
Micrografx a certificate, dated the Closing Date and executed in the name
and on behalf of Corel by its President or Chief Financial Officer and in
the name and on behalf of Sub by its President or any Vice President, to
such effect.
(b) Performance of Obligations. Corel and Sub shall have performed and
complied with, each in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied with
by Corel or Sub at or prior to the Closing, and Corel and Sub shall each
have delivered to Micrografx a certificate, dated the Closing Date and
executed in the name and on behalf of Corel by its President or its Chief
Financial Officer and in the name and on behalf of Sub by its President or
any Vice President, to such effect.
(c) All Actions. Corel and Sub shall have adopted all necessary
resolutions, and all necessary corporate actions shall have been taken by
Corel and Sub to permit the Merger.
(d) Appointment of Directors. Corel shall have duly appointed the
Micrografx Director, subject to consummation of the Merger and acceptance
of such appointment.
(e) U.S. Federal Tax Opinion. Unless the Cash Alternative is elected by
Corel, Micrografx shall have received an opinion from Micrografx's Counsel,
in form and substance reasonably satisfactory to Micrografx, dated the
Effective Time, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the
Merger will be treated as a reorganization within the meaning of Section
368(a) of the Code. In rendering its opinion, Micrografx's Counsel may
require and rely upon representations and covenants, including those
contained in certificates of officers of Micrografx, Corel, Sub and others,
reasonably satisfactory in form and substance to it.
(f) Corel Counsel's Opinion. Micrografx shall have received an opinion
from Corel's Counsel, in form and substance reasonably satisfactory to
Micrografx, dated the Effective Time.
(g) Participation Rights Agreement. Unless the Cash Alternative is
elected by Corel, prior to the Effective Time Corel shall have entered into
the Participation Rights Agreement with a trustee acceptable to Corel and
Micrografx (the "Trustee"), and at the Effective Time Corel shall have
delivered to the Trustee by wire transfer of immediately available funds an
amount equal to the product of (i) the Micrografx Times Revenue Share Price
multiplied by (ii) the number of shares of issued and outstanding
Micrografx Common Stock and the number of shares of Micrografx Common Stock
into which the issued and outstanding Micrografx Preferred Stock is
convertible immediately prior to the Effective Time less the number of
shares of Micrografx Common Stock held by Dissenting Shareholders (the
"Cash Fund") to be held by the Trustee pursuant to and in accordance with
the terms of the Participation Rights Agreement.
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ARTICLE VIII
Termination, Amendment and Waiver
8.01 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned, at any time prior to the Effective Time,
whether prior to or after Micrografx Shareholders' Approval:
(a) By mutual written agreement of the parties hereto duly authorized by
action taken by or on behalf of their respective Boards of Directors;
(b) By either Principal Party upon notification to the non-terminating
Principal Party by the terminating Principal Party:
(i) at any time after December 31, 2001, if the Merger shall not
have been consummated on or prior to such date and such failure to
consummate the Merger is not caused by a breach of this Agreement by
the terminating Principal Party;
(ii) if the Micrografx Shareholders' Approval shall not be obtained
by reason of the failure to obtain the requisite vote upon a vote held
at a meeting of such shareholders (including at not more than two
adjournments or postponements thereof, called therefor);
(iii) if there has been a material breach of any representation,
warranty, covenant or agreement on the part of the non-terminating
Principal Party set forth in this Agreement, which breach is not
curable or, if curable, has not been cured within 30 days following
receipt by the non-terminating Principal Party of written notice of
such breach from the terminating Principal Party; or
(iv) if any Restraint having the effects set forth in Section
7.01(e) shall be in effect and shall have become final and
nonappealable; or
(c) (i) By Micrografx prior to Micrografx Shareholders' Approval, if the
Board of Directors of Micrografx determines in good faith, based upon the
advice of outside counsel that termination of the Agreement is required for
the Board of Directors to comply with its fiduciary duties to shareholders
imposed by applicable law by reason of an unsolicited bona fide Alternative
Proposal which the Board of Directors of Micrografx has determined is a
Superior Proposal (as hereinafter defined), provided that Micrografx shall
have complied with the provisions of Section 5.02 and shall notify Corel in
writing promptly of its intention to terminate this Agreement or enter into
a definitive agreement with respect to such Alternative Proposal, but in no
event shall such notice be given less than three business days prior to the
public announcement of Micrografx's termination of this Agreement, and
Micrografx must provide Corel with a reasonable opportunity to make an
equivalent proposal to enable Micrografx to proceed with the Merger; or
(ii) by Corel if the Board of Directors of Micrografx or any committee
shall have withdrawn or modified in a manner adverse to Corel its approval
or recommendation or failed to reconfirm its recommendation of this
Agreement or the Merger (it being understood that an announcement by
Micrografx that states that an Alternative Proposal is under consideration
by such Board of Directors shall be deemed such a withdrawal or
modification, unless the Board of Directors publicly reaffirms its original
recommendation within ten business days after such announcement); and
provided further that Micrografx's ability to terminate this Agreement
pursuant to clause (i) of this paragraph (c) is conditioned upon the prior
payment by Micrografx of any amounts owed by it pursuant to Section 8.02
(b). For purposes of this Agreement, a "Superior Proposal" is an
Alternative Proposal (provided that for the purposes of this Section only,
the percentages in the definition of Alternative Proposal shall be deemed
to be 50%) received by Micrografx with respect to which the Board of
Directors of Micrografx has determined, based upon the advice of
Micrografx's financial advisor and taking into account all relevant
factors, that the consideration to be received by the shareholders of
Micrografx is superior from a financial point of view to the consideration
to be received by them in the Merger and the Board of Directors has
concluded in good faith and in its reasonable judgment, that such
Alternative Proposal is superior and is reasonably likely to be consummated
and the Board of Directors has reasonably concluded in good faith
34
that the person or group making such Alternative Proposal will have
adequate sources of financing to consummate such Alternative Proposal and
that such Acquisition Proposal is more favorable and provides greater value
to Micrografx's shareholders than the Merger.
8.02 Effect of Termination.
(a) If this Agreement is validly terminated by either Micrografx or
Corel pursuant to Section 8.01, written notice thereof shall forthwith be
given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement will
forthwith become null and void and there will be no liability or obligation
under this Agreement on the part of either Micrografx or Corel (or any of
their respective Representatives or affiliates), except (i) that the
provisions of the Confidentiality Agreement and Sections 6.11 and 6.12 and
this Section 8.02 will continue to apply following any such termination,
(ii) that nothing contained herein shall relieve any party hereto from
liability for willful breach of its representations, warranties, covenants
or agreements contained in this Agreement, and (iii) as provided in
paragraph (b) below.
(b) In the event that any person or group shall have made an Alternative
Proposal with respect to Micrografx and thereafter this Agreement is
terminated by Micrografx pursuant to Section 8.01(c)(i), then Micrografx
shall pay the Specified Amount (as defined below) to Corel. In the event
that Corel shall terminate this Agreement pursuant to 8.01(c)(ii), then
Micrografx shall pay the Specified Amount and Corel's Expenses (as defined
below) to Corel. In the event that any person or group shall have made an
Alternative Proposal with respect to Micrografx and the Micrografx
Shareholders' Approval shall not be obtained, and thereafter either
Principal Party shall terminate this Agreement pursuant to Section 8.01
(b)(ii) and a definitive agreement with respect to such Alternative
Proposal or any other Alternative Proposal is entered into by Micrografx
within twelve months of the date of such termination with any person that
made the original Alternative Proposal or within nine months of the date of
such termination with any other person, then Micrografx shall pay to Corel
the Specified Amount and all accounting, legal, investment and other out-
of-pocket expenses incurred by Corel with respect to the transaction
contemplated by this Agreement ("Corel's Expenses"). In the event that any
person or group shall have made an Alternative Proposal with respect to
Micrografx, and thereafter Corel shall terminate this Agreement pursuant to
8.01(b)(iii) or 8.01(b)(iv) (and provided Micrografx has directly or
indirectly participated in the issue of the Restraint in respect of which
the right of termination has been exercised pursuant to Section
8.01(b)(iv)) and a definitive agreement with respect to such Alternative
Proposal or any other Alternative Proposal is entered into by Micrografx
within twelve months of the date of such termination with any person that
made the original Alternative Proposal or within nine months of the date of
such termination with any other person, then Micrografx shall pay the
Specified Amount and Corel's Expenses to Corel. If any person or group
shall have made an Alternative Proposal with respect to Micrografx and
thereafter this Agreement is terminated pursuant to Sections 8.01(b)(i) and
a definitive agreement with respect to such Alternative Proposal or any
other Alternative Proposal is executed by Micrografx within twelve months
after such termination with any person that made the original Alternative
Proposal or within nine months of the date of such termination with any
other person, then Micrografx shall pay to Corel the Specified Amount and
Corel's Expenses. The Specified Amount shall be paid by wire transfer of
same day funds, either on the date contemplated in Section 8.01 (c) if
applicable, or otherwise within two business days after such amount becomes
due. "Specified Amount" means a termination fee equal to 3.5% of Micrografx
Annual Revenues. If Micrografx Shareholders' Approval is not received and
no Specified Amount is payable, Micrografx will pay to Corel, Corel's
Expenses. In the event that Corel exercises its option to acquire and
acquires, 80% of the stock of the Image2Web, Inc. as described in Section
6.17, Micrografx shall not be required to pay the Specified Amount in any
of the circumstances described in this Section 8.02(b).
(c) Micrografx acknowledges that the agreements contained in Section
8.02(b) are an integral part of the transactions contemplated by this
Agreement and that, without these agreements Corel would not enter into
this Agreement; accordingly, if Micrografx fails promptly to pay the amount
due pursuant to such
35
paragraph, and in order to obtain such payment, Corel commences a suit
which results in a judgment against Micrografx for such amount, Micrografx
shall pay to Corel, all costs and expenses (including attorneys' fees and
expenses) incurred by Corel or any of its Subsidiaries in connection with
such suit, together with interest on the amount of the fee at a rate equal
to the prime rate publicly announced from time to time by Citibank, N.A.
and in effect on the date such payment was required to be made.
8.03 Amendment. This Agreement may be amended, supplemented or modified by
action taken by or on behalf of the respective Boards of Directors of the
parties hereto at any time prior to the Effective Time, whether prior to or
after the Micrografx Shareholders' Approval shall have been obtained, but after
such adoption and approval only to the extent permitted by applicable law. No
such amendment, supplement or modification shall be effective unless set forth
in a written instrument duly executed by or on behalf of each party hereto.
8.04 Waiver. At any time prior to the Effective Time any party hereto, by
action taken by or on behalf of its Board of Directors, may to the extent
permitted by applicable law (i) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties or compliance with the
covenants and agreements of the other parties hereto contained herein or in any
document delivered pursuant hereto or (iii) waive compliance with any of the
covenants, agreements or conditions of the other parties hereto contained
herein. No such extension or waiver shall be effective unless set forth in a
written instrument duly executed by or on behalf of the party extending the
time of performance or waiving any such inaccuracy or non-compliance. No waiver
by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion.
ARTICLE IX
General Provisions
9.01 Non-Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements contained
in this Agreement or in any instrument delivered pursuant to this Agreement
shall not survive the Merger but shall terminate at the Effective Time, except
for the agreements contained in Article I and Article II, in Sections 6.06,
6.08, 6.09, 6.10, 6.11 and 6.12 and this Article IX and the agreements of the
"affiliates" of Micrografx delivered pursuant to Section 6.04, which shall
survive the Effective Time.
9.02 Notices. All notices, requests and other communications hereunder must
be in writing and will be deemed to have been duly given (a) on the date of
delivery if delivered personally, including by courier service, (b) upon
receipt if delivered by registered or certified mail, return receipt requested,
postage prepaid, or (c) upon receipt if sent by facsimile transmission,
provided that any notice received by telecopy or otherwise at the addressee's
location on any business day after 5:00 p.m. (addressee's local time) shall be
deemed to have been received at 9:00 a.m. (addressee's local time) on the next
business day. Any party to this Agreement may notify any other party of any
changes to the address or any of the other details specified in this paragraph,
provided that such notification shall only be effective on the date specified
in such notice or five (5) business days after the notice is given, whichever
is later. Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was given shall be deemed to be
receipt of the notice as of the date of such rejection, refusal or inability to
deliver. All notices hereunder shall be delivered or faxed, as the case may be,
to the addresses and/or facsimile numbers set forth below, or pursuant to such
other instructions as may be designated in writing by the party to receive such
notice:
If to Corel or Sub, to:
Corel Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to Micrografx, to:
Micrografx, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
9.03 Entire Agreement; Incorporation of Exhibits.
(a) This Agreement supersedes all prior discussions, representations,
warranties and agreements, both written and oral, among the parties hereto
with respect to the subject matter hereof, other than the Confidentiality
Agreement, which shall survive the execution and delivery of this Agreement
in accordance with its terms, and contains, together with the
Confidentiality Agreement, the sole and entire agreement among the parties
hereto with respect to the subject matter hereof. No prior drafts of this
Agreement and no words or phrases from any such prior drafts shall be
admissible into evidence in any action, suit or other proceeding involving
this Agreement.
(b) The Micrografx Disclosure Letter, the Corel Disclosure Letter and
any Schedule or Exhibit attached to this Agreement and referred to herein
are hereby incorporated herein and made a part hereof for all purposes as
if fully set forth herein.
9.04 Public Announcements. Except as otherwise required by law or the rules
of any applicable securities exchange or national market system, so long as
this Agreement is in effect, Corel and Micrografx will not, and will not permit
any of their respective Subsidiaries or Representatives to, issue or cause the
publication of any press release or make any other public announcement with
respect to the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld, delayed
or conditioned. Corel and Micrografx will cooperate with each other in the
37
development and distribution of all press releases and other public
announcements with respect to this Agreement and the transactions contemplated
hereby, and will furnish the other with drafts of any such releases and
announcements as far in advance as practicable.
9.05 No Third Party Beneficiaries. Except as provided in Section 6.08, the
terms and provisions of this Agreement are intended solely for the benefit of
each party hereto and their respective successors or permitted assigns, and
except as otherwise expressly provided for herein, it is not the intention of
the parties to confer third-party beneficiary rights upon any other person.
9.06 No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto, in whole
or in part (whether by operation of law or otherwise), without the prior
written consent of the other parties hereto and any attempt to do so will be
void, except that Sub may assign any or all of its rights, interests and
obligations hereunder to another direct or indirect wholly-owned Subsidiary of
Corel, provided that any such Subsidiary agrees in writing to be bound by and
liable for all of the terms, conditions and provisions contained herein that
would otherwise be applicable to Sub. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable by the
parties hereto and their respective successors and personal or legal
representatives, executors, administrators, heirs, distributees, devisees,
legatees and permitted assigns.
9.07 Headings. The table of contents, glossary of defined terms and the
descriptive headings used in this Agreement have been inserted for convenience
of reference only and do not define, modify or limit the provisions hereof or
in any way affect the meaning or interpretation of this Agreement.
9.08 Interpretation. When a reference is made in this Agreement to Sections,
Exhibits or Schedules, such reference shall be to a Section of or Exhibit or
Schedule to this Agreement unless otherwise indicated. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." The words "hereof,"
"herein" and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement. All terms defined in this Agreement
shall have the defined meaning contained herein when used in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such term. Any agreement or instrument
defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement or instrument as from time to time
amended, modified or supplemented and attachments thereto and instruments
incorporated therein. References to a person are also to its permitted
successors and assigns. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local or foreign statute or law shall be deemed to also to refer to any
amendments thereto and all rules and regulations promulgated thereunder, unless
the context requires otherwise.
9.09 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, public
policy or order, and if the rights or obligations of any party hereto under
this Agreement, and the economic or legal substance of the transactions
contemplated hereby, will not be materially and adversely affected thereby, (i)
such provision will be fully severable, (ii) this Agreement will be construed
and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, and (iii) the remaining provisions of this Agreement
will remain in full force and effect and will not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.
38
9.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to a contract
executed and fully performed in such jurisdiction, without giving effect to the
conflicts of laws principles thereof.
9.11 Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
was not performed in accordance with its specified terms or was otherwise
breached and that money damages would not be an adequate remedy for any breach
of this Agreement. It is accordingly agreed that in any proceeding seeking
specific performance each of the parties will waive the defense of adequacy of
a remedy at law. Each of the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of competent jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
9.12 Jurisdiction. Each of the parties hereto irrevocably agrees that any
action, suit, claim or other legal proceeding with respect to this Agreement or
in respect of the transactions contemplated hereby or for recognition and
enforcement of any judgment in respect hereof brought by any other party hereto
or its successors or assigns shall be brought and determined in any federal
court located in the County of New Castle in the State of Delaware or the
courts of the State of Delaware located in the County of New Castle (or any
appeals courts thereof). The foregoing Delaware courts are hereinafter referred
to as the "Delaware Courts". Each of the parties hereto irrevocably submits
with regard to any such proceeding for itself and in respect to its property,
generally and unconditionally, to the exclusive jurisdiction of the aforesaid
courts. Each of the parties hereto irrevocably waives, and agrees not to
assert, by way of motion, as a defense, counterclaim or otherwise, in any
action or proceeding with respect to this Agreement, (a) any claim that it is
not personally subject to the jurisdiction of the above-named courts for any
reason other than the failure to serve process in accordance with Section 9.13
hereof, (b) that it or its property is exempt or immune from jurisdiction of
any such court or from any legal process commenced in such courts (whether
through service of notice, attachment before judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise) and (c) to the
fullest extent permitted by applicable law, that (i) the proceeding in any such
court is brought in an inconvenient forum, (ii) the venue of such proceeding is
improper or (iii) this Agreement, or the subject matter hereof, may not be
enforced in or by such court. Notwithstanding the foregoing, each of the
parties hereto agrees that each of the other parties shall have the right to
bring any action or proceeding for enforcement of a judgment entered by the
Delaware Courts in any other court or jurisdiction.
9.13. Service of Process.
(a) The parties agree that the delivery of process or other papers in
connection with any such action or proceeding in the manner provided in
Section 9.02, or in such other manner as may be permitted by law, shall be
valid and sufficient service thereof.
(b) Each of Micrografx, Corel and Sub hereby designates the Wilmington,
Delaware offices of CT Corporation as its respective agent for service of
process in the State of Delaware, respectively, solely with respect to any
dispute or controversy arising out of this Agreement or any of the
transactions contemplated hereby and service upon Corel or Sub for such
purposes shall be deemed to be effective upon service of CT Corporation, as
aforesaid or of its successor designated in accordance with the following
sentence. A party may designate another corporate agent or law firm
reasonably acceptable to each of the other parties and located in the
County of New Castle in the State of Delaware, as successor agent for
service of process upon 30 days' prior written notice to each other party.
9.14 Waiver of Trial by Jury. Each of the parties hereto acknowledges and
agrees that any controversy which may arise under this Agreement is likely to
involve complicated and difficult issues, and therefore each such party hereby
irrevocably and unconditionally waives, to the fullest extent permitted by
applicable law, any right such party may have to a trial by jury in respect of
any action, suit, claim or other proceeding directly or indirectly arising out
of or relating to this Agreement or the transactions contemplated by this
Agreement. Each party certifies and acknowledges that (i) no representative of
such party has been authorized by such party to
39
represent or, to the knowledge or such party, has represented, expressly or
otherwise, that such other party would not, in the event of litigation, seek to
enforce the foregoing waiver, (ii) each such party understands and has
considered the implications of this waiver, (iii) each such party makes this
waiver voluntarily and (iv) each such party has been induced to enter into this
Agreement by, among other things, the mutual waivers and certifications in this
Section 9.14.
9.15 Remedies Cumulative. Except as otherwise herein provided, the rights
and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by applicable law, either at law or in equity.
9.16 Obligation of Corel and Micrografx. Whenever this Agreement requires
Sub or another Subsidiary of Corel to take any action, such requirement shall
be deemed to include an undertaking on the part of Corel to cause Sub or such
Subsidiary to take such action and a guarantee of the performance thereof.
Whenever this Agreement requires a Subsidiary of Micrografx to take any action,
such requirement shall be deemed to include an undertaking on the part of
Micrografx to cause such Subsidiary to take such action and a guarantee of the
performance thereof.
9.17 Limitations on Warranties.
(a) Except for the representations and warranties contained in Article
III of this Agreement, Micrografx makes no other express or implied
representation or warranty to Corel or Sub. Each of Corel and Sub
acknowledge that, in entering into this Agreement, it has not relied on any
representations or warranties of Micrografx or any other Person other than
the representations and warranties of Micrografx set forth in Article III
of this Agreement.
(b) Except for the representations and warranties contained in Article
IV of this Agreement, Corel and Sub make no other express or implied
representation or warranty to Micrografx. Micrografx acknowledges that, in
entering into this Agreement, it has not relied on any representations or
warranties of Corel and Sub or any other Person other than the
representations and warranties of Corel and Sub set forth in Article IV of
this Agreement.
9.18 Certain Definitions. As used in this Agreement:
(a) except as provided in Section 6.04, the term "affiliate," as applied
to any person, shall mean any other person directly or indirectly
controlling, controlled by, or under common control with, that person; for
purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling", "controlled by", "under common control
with"), as applied to any person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of that person, whether through the ownership of voting
securities, by contract or otherwise;
(b) a person will be deemed to "beneficially" own securities if such
person would be the beneficial owner of such securities under Rule 13d-3
under the Exchange Act, including securities which such person has the
right to acquire (whether such right is exercisable immediately or only
after the passage of time);
(c) the term "business day" means any day on which commercial banks are
open for business in ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ other than a
Saturday, a Sunday or a day observed as a holiday in Toronto, Ontario under
the laws of the Province of Ontario or the federal laws of Canada or in New
York, New York under the laws of the State of New York or the federal laws
of the United States of America.
(d) the term "knowledge" or any similar formulation of "knowledge" shall
mean, with respect to Micrografx, the actual knowledge of Micrografx's
executive officers, and with respect to Corel, the actual knowledge of
Corel's executive officers;
(e) any reference to any event, change or effect being "material" or
"materially adverse" or having a "material adverse effect" on or with
respect to an entity (together with its subsidiaries taken as a whole)
40
means such event, change or effect is material or materially adverse, as
the case may be, to the business, financial condition or results of
operations, properties, liabilities, prospects of such entity (together
with its subsidiaries taken as a whole) or the ability of the parties
hereto to consummate the Merger and excluding any changes or effects caused
by changes in general economic conditions or changes generally affecting
the industry in which Micrografx operates;
(f) the term "person" shall include individuals, corporations,
partnerships, trusts, limited liability companies, associations,
unincorporated organizations, joint ventures, other entities, groups (which
term shall include a "group" as such term is defined in Section 13(d)(3) of
the Exchange Act), labor unions or Regulatory or Governmental Authorities;
(g) the "Representatives" of any entity means such entity's directors,
officers, employees, legal, investment banking and financial advisors,
accountants and any other agents and representatives;
(h) the term "Significant Subsidiary" shall have the meaning ascribed
thereto by Rule 1-02(w) of Regulation S-X of the Securities Act of 1933;
and
(i) the term "Subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated,
(i) of which such party or any other Subsidiary of such party is a general
partner, (ii) securities or other interests of which having by their terms
ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or
other organization, or the means to otherwise control such corporation,
organization or other person are directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries, or by such party
and one or more of its Subsidiaries or (iii) of which more than 50% of the
equity interests in such corporation or other organization is, directly or
indirectly through Subsidiaries or otherwise, beneficially owned by such
party.
9.19 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument, and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties.
9.20 Disclosure Letters. Each of the Micrografx Disclosure Letter and the
Corel Disclosure Letter shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
No disclosure in either the Micrografx Disclosure Letter or the Corel
Disclosure Letter shall be deemed to be an admission or representation as to
the materiality of the item so disclosed.
9.21 Execution. This Agreement may be executed by facsimile signatures by
any party and such signature shall be deemed binding for all purposes hereof,
without delivery of an original signature being thereafter required.
9.22 Personal Liability. Neither this Agreement nor any other document
delivered in connection with this Agreement (other than an Affiliate Agreement
or Proxy and Voting Agreement dated as of the date hereof, delivered by any
officer or director of Micrografx) shall create or be deemed to create or
permit any personal liability or obligation on the part of any officer or
director of any party hereto.
9.23 Currency. Unless otherwise specified, all references in this Agreement
to "dollars" or "$" shall mean United States dollars.
9.24 Date for Any Action. In the event that any date on which any action is
required to be taken hereunder by any of the parties hereto is not a business
day, such action shall be required to be taken on the next succeeding day which
is a business day.
41
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be signed
by its officers thereunto duly authorized and its corporate seal to be affixed
as of the date first above written.
Corel Corporation
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: _________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief
Executive Officer
/s/ ▇▇▇▇ ▇▇▇▇▇▇
By: _________________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President,
Finance and Chief Financial
Officer
Calgary I Acquisition Corp.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: _________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief
Executive Officer
/s/ ▇▇▇▇ ▇▇▇▇▇▇
By: _________________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer
Micrografx, Inc.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
By: _________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
42
EXHIBIT A
PROXY AND VOTING AGREEMENT
PROXY AND VOTING AGREEMENT, dated as of July , 2001 (this "Agreement"),
among Corel Corporation, a Canadian corporation ("Corel"), Calgary I
Acquisition Corp., a Delaware corporation ("Sub"), Micrografx, Inc., a Texas
corporation ("Micrografx"), and the individual shareholders of Micrografx
listed on Schedule A hereto (collectively, the "Principals"). As used in this
Agreement, the term "Principal" means, with respect to each person listed on
Schedule A hereto, such person.
Corel, Sub and Micrografx are parties to a Merger Agreement dated July ,
2001 (the "Merger Agreement"; capitalized terms not defined herein shall have
the meanings ascribed to them in the Merger Agreement), pursuant to which
Micrografx would be merged with and into Sub.
WHEREAS, each Principal is the record holder and/or beneficial owner (as
defined in rule 13d-3 under the Securities and Exchange Act of 1934, as amended
(the "Exchange Act")) of such number of shares of Micrografx's outstanding
Common Stock or Micrografx's outstanding Series A Preferred Stock ("Micrografx
Stock") and securities convertible into Micrografx Stock as indicated on
Schedule A, which Schedule A sets forth the nature of such ownership.
WHEREAS, Micrografx and Sub are entering into the Merger Agreement in
reliance upon the execution and delivery of this Agreement by the Principals;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Representations and Warranties. Each Principal represents and
warrants to Corel and Sub that:
(a) Each Principal owns, beneficially and/or of record, as of the date
hereof, the number of shares of Micrografx Stock or securities convertible
into Micrografx Stock set forth next to his name in Schedule A hereto
(collectively, the "Shares"), subject to no rights of others and free and
clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on the Principal's voting rights,
charges and other encumbrances of any nature whatsoever other than those
imposed by federal and state securities laws. On the date hereof, the
Shares constitute all of the shares of Micrografx Stock or securities
convertible into Micrografx Stock owned, beneficially and/or of record, by
each such Principal, other than shares of Micrografx Stock of which
Principal currently disclaims beneficial ownership in accordance with
applicable law. Principal's right to vote or dispose of the Shares owned,
beneficially and/or of record, by such Principal is not subject to any
voting trust, voting agreement, voting arrangement or proxy and such
Principal has not entered into any contract, option or other arrangement or
undertaking with respect thereto.
(b) Each Principal has the legal capacity to execute, deliver and
perform this Agreement and the Proxy (as defined in Section 2(c) below).
This Agreement constitutes a valid and binding obligation of each Principal
enforceable against such Principal in accordance with its terms. If such
Principal is an individual married and the Shares constitute community
property under applicable law, this Agreement has been duly authorized,
executed and delivered by, and constitutes the valid and binding agreement
of, the Principal's spouse enforceable against such spouse in accordance
with its terms. If such Principal is a person other than an individual,
such Principal has full power and authority to make, enter into and carry
out the terms of this Agreement and Proxy.
(c) The execution, delivery and performance by each Principal of this
Agreement and the consummation of the transactions contemplated hereby do
not and will not (i) result in any breach or violation of or be in conflict
with or constitute a default under the terms of any law, order, regulation
or
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agreement or arrangement to which he is a party or by which he is bound,
(ii) require any filing with or authorization by any governmental entity,
or (iii) require any consent or other action by any person under,
constitute a default under, or give rise to any right of termination,
cancellation or acceleration or to a loss of any benefit to which he is
entitled under any provision of any agreement or other instrument binding
on him.
(d) Each Principal does not beneficially own any Shares of Corel Common
Stock.
Section 2. Voting Agreement. (a) Until the Expiration Date (as defined in
Section 2(c) below), no Principal will assign, sell, pledge, hypothecate or
otherwise transfer or dispose of any of the shares of Micrografx Stock owned of
record and/or beneficially owned by such Principal, or any other securities of
Micrografx with respect to which he otherwise has the right to vote, or any
interest therein, deposit any of such shares or securities into a voting trust
or enter into a voting agreement or arrangement or grant any proxy with respect
thereto (except as contemplated by this Agreement and the Proxy) or enter into
any contract, option or other arrangement or undertaking with respect to the
direct or indirect transfer or disposition of any of the shares of Micrografx
Stock. In the case of any transfer by operation of law, this Agreement shall be
binding upon the transferee.
(b) Each Principal will, with respect to those shares of Micrografx
Stock or other securities of Micrografx that such Principal either owns for
voting at the Micrografx Shareholders Meeting to be held for the purpose of
voting on the adoption of the Merger Agreement or for granting any written
consent in connection with the solicitation of written consents in lieu of
such a meeting or with respect to which such Principal otherwise controls
the vote, vote or cause to be voted such shares (or execute written
consents with respect to such shares) (i) to approve the Merger Agreement
and the transactions contemplated thereby, (ii) against any Alternative
Proposal and (iii) in favor of any other matter necessary for the
consummation of the transactions contemplated by the Merger Agreement.
(c) Each Principal acknowledges that concurrently with the execution of
this Agreement, such Principal has executed and delivered to Corel an
Irrevocable Proxy, pursuant to Section 2.29 of the Texas Business
Corporation Act, coupled with an interest, the form of which is attached
hereto as Exhibit A (the "Proxy"), so as to vote such shares set forth
therein in accordance with this Section 2 and each Principal hereby grants
to Corel such irrevocable proxy. The terms of this proxy shall expire upon
approval by the requisite vote of Micrografx's Shareholders at the
Micrografx Shareholders Meeting or at any adjournment thereof of the
adoption of the Merger Agreement or upon the earlier termination of the
Merger Agreement in accordance with the provisions thereof (the "Expiration
Date").
(d) The Principals, Corel and Micrografx shall use commercially
reasonable efforts to cause the agreements in this Section 2 to be
appropriately disclosed in filings with the SEC, including the Registration
Statement referred to in the Merger Agreement.
(e) Principal agrees that any shares of Micrografx Stock that Principal
purchases or with respect to which Principal otherwise acquires beneficial
ownership (as such term is defined in Rule 13d-3 under the Exchange Act)
after the execution of this Agreement and prior to the Expiration Date
shall be subject to the terms and conditions of this Agreement to the same
extent as if they constituted Micrografx Stock.
Section 3. No Solicitation. Prior to the Closing Date, no Principal shall,
and each Principal shall use best efforts to cause such Principal's affiliates
and Representatives not to, (i) initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any Alternative
Proposal, or engage in any negotiations concerning, or provide any confidential
information or otherwise facilitate any effort or attempt to make or implement,
any Alternative Proposal or (ii) become a member of a "group" (as such term is
used in Section 13(d) of the Exchange Act) with respect to any voting
securities of Micrografx with respect to an Alternative Proposal. The
Principals will promptly notify Corel and Micrografx if any such inquiries,
proposals or offers are received by, any such information is requested from, or
any such negotiations are sought to be initiated or continued with, such
Principal or any of such Persons.
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Section 4. Binding Effect. All covenants, representations, warranties and
other stipulations in this Agreement and other documents referred to herein,
given by or on behalf of any of the parties hereto, shall bind and inure to the
benefit of the respective successors, heirs, personal representatives and
assigns of the parties hereto.
Section 5. Entire Agreement. This Agreement contains the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior arrangements or understandings with respect hereto.
Section 6. Notices. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument and shall be deemed to have been duly given when delivered
in person, by telecopy, by nationally-recognized overnight courier, or by first
class registered or certified mail, postage prepaid, addressed to such party at
the address set forth below or such other address as may hereafter be
designated in writing by the addressee to the addressor at the address and
telecopier numbers set forth in the Merger Agreement, with respect to Corel,
Sub and Micrografx, and at the addresses and telecopier numbers set forth in
Schedule A for the Principals. All such notices, requests, consents and other
communications shall be deemed to have been delivered when received.
Section 7. Modifications; Amendments; Waivers. The terms and provisions of
this Agreement may not be modified or amended, nor any provision hereof waived,
except pursuant to a writing signed by the parties hereto (including their
assigns). No waiver by any party of any term of this Agreement in any one or
more instances shall be deemed or construed as a waiver of such term on any
future occasion.
Section 8. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but
one agreement.
Section 9. Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.
Section 10. Severability. It is the desire and intent of the parties that
the provisions of this Agreement be enforced to the fullest extent permissible
under the law and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any provision of this Agreement would be
held in any jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn
so as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 11. Governing Law. This Agreement shall be governed by and construed
in accordance with the law of the State of Delaware, without giving effect to
principles governing conflicts of laws.
Section 12. Specific Performance: Remedies. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity. Except as otherwise expressly provided for herein, no
remedy conferred by any of the specific provisions of this Agreement is
intended to be exclusive of any other remedy, and each and every remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute or otherwise. The
election of any one or more remedies by any party hereto shall not constitute a
waiver by any such party of the right to pursue any other available remedies,
including specific performance and injunctive relief.
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Section 13. Consent to Jurisdiction; Service of Process. Each of the parties
hereto hereby irrevocably submits to the exclusive jurisdiction of the courts
of the State of Delaware and to the jurisdiction of the United States District
Court for the District of Delaware or any court of the State of Delaware
located in the County of New Castle, for the purpose of any action or
proceeding arising out of or relating to this Agreement and each of the parties
hereto hereby irrevocably agrees that all claims in respect to such action or
proceeding shall be heard and determined exclusively in any Delaware state or
federal court. Each of the parties hereto agrees that a final judgment in any
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Each of the parties hereto irrevocably consents to the service of the summons
and complaint and any other process in any other action or proceeding relating
to the transactions contemplated by this Agreement, on behalf of itself or its
property, by personal delivery of copies of such process to such party. Nothing
in this Section 13 shall affect the right of any party to serve legal process
in any other manner permitted by law.
Section 14. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE PARTIES HERETO IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
Section 15. Further Assurances. Each party covenants and agrees to execute
and deliver any additional documents or take such further actions as may
reasonably be requested by another party to effect the purposes of this
Agreement.
Section 16. Termination. This Agreement and the Proxy delivered in
connection herewith shall terminate and have no further force or effect as of
the Expiration Date.
[Signature Page Immediately Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Proxy and Voting
Agreement on the date first written above.
Corel Corporation
By:__________________________________
Name
Title
Calgary I Acquisition Corp.
By:__________________________________
Name:
Title:
Micrografx, Inc.
By:__________________________________
Name:
Title:
Principal:
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
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Schedule A
Number of Number of Amount of
Name of Record Micrografx Micrografx Series A Micrografx Options/
Owner Common Stock Preferred Stock Convertible notes Warrants
-------------- ------------ ------------------- ----------------- --------
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EXHIBIT A
IRREVOCABLE PROXY
Each of the undersigned shareholders of Micrografx, Inc., a Texas
corporation ("Micrografx"), hereby irrevocably (to the fullest extent provided
by law, but subject to automatic termination and revocation as provided below)
appoints Corel Corporation, a Canadian corporation ("Corel"), or any designee
of Corel, the attorney and proxy of the undersigned, with full power of
substitution and resubstitution, to the full extent of each of the
undersigned's rights with respect to the shares of capital stock of Micrografx
owned beneficially or of record by the undersigned, which shares are listed in
Schedule A to the Proxy and Voting Agreement dated as of July , ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ I Acquisition Corp., Micrografx and the individual stockholders
listed on Schedule A thereto, as the same may be amended from time to time (the
"Proxy and Voting Agreement", capitalized terms not otherwise defined herein
being used herein as therein defined), and any and all other shares or
securities of Micrografx issued or issuable with respect thereof or otherwise
acquired by the undersigned shareholders on or after the date hereof, until the
termination date specified in the Proxy and Voting Agreement (the "Shares").
Upon the execution hereof, all prior proxies given by the undersigned with
respect to the Shares are hereby revoked and no subsequent proxies will be
given as to the matters covered hereby prior to the earlier of the date of
termination of the Proxy and Voting Agreement pursuant to Section 16 thereof
(the "Termination Date") and the Closing Date of the Merger Agreement (such
earlier date being hereinafter referred to as the "Proxy Termination Date").
This proxy is irrevocable (to the fullest extent provided by law, but subject
to automatic termination and revocation as provided below), coupled with an
interest, and is granted in connection with the Proxy and Voting Agreement, and
is granted in consideration of the undersigned shareholders entering into the
Merger Agreement referred to therein.
The attorney and proxy named above will be empowered at any time prior to
the Proxy Termination Date to exercise all voting and other rights with respect
to the Shares (including, without limitation, the power to execute and deliver
written consents with respect to the Shares) of the undersigned at every
annual, special or adjourned meeting of shareholders of Micrografx held prior
to the Proxy Termination Date and in connection with every solicitation of
written consents in lieu of such a meeting prior to the Proxy Termination Date,
or otherwise, to the extent that any of the following matters is considered and
voted on at any such meeting or in connection with any such consent
solicitation: (i) approval of the Merger Agreement, the execution and delivery
by Micrografx of the Merger Agreement and the approval of the terms thereof and
each of the further actions contemplated by the Merger Agreement, and any
actions required in furtherance thereof; (ii) against any action, any failure
to act, or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
Micrografx or the undersigned under the Merger Agreement or the Proxy and
Voting Agreement (before giving effect to any materiality or similar
qualifications contained therein); (iii) against any Alternative Proposal and
(iv) in favor of any other matter necessary for the consummation of the
transactions contemplated by the Merger Agreement.
The attorney and proxy named above may only exercise this proxy to vote the
Shares subject hereto in accordance with the preceding paragraph, and may not
exercise this proxy in respect of any other matter. The undersigned may vote
the Shares (or grant one or more proxies to vote the Shares) on all other
matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned shareholders.
This proxy is irrevocable and coupled with an interest, but shall
automatically terminate and be revoked and be of no further force and effect on
and after the Proxy Termination Date.
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This proxy is governed by and construed in accordance with the laws of the
State of Delaware.
Dated: July , 2001
By:
Name:
Title:
Number of Series A Preferred Stock: _
Number of Common Shares: ____________
Record Holder(s): ___________________
_____________________________________
By:
Name:
Title:
Number of Series A Preferred Stock: _
Number of Common Shares: ____________
Record Holder(s): ___________________
_____________________________________
By:
Name:
Title:
Number of Series A Preferred Stock: _
Number of Common Shares: ____________
Record Holder(s): ___________________
_____________________________________
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EXHIBIT B
[Participation Rights Agreement]
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EXHIBIT C
FORM OF AFFILIATE AGREEMENT
[Date]
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of Micrografx, Inc., a Texas corporation ("Micrografx"), as that
term is defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules
and regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act"). Neither my entering into this agreement, nor anything contained herein,
shall be deemed an admission on my part that I am such an "affiliate".
Pursuant to the terms of the Agreement and Plan of Merger dated as of July
12, 2001 (the "Merger Agreement"), among Corel Corporation, a Canadian
corporation ("Corel"), Calgary I Acquisition Corp., a Delaware corporation
wholly owned by Corel ("Sub"), and Micrografx; Sub will be merged with and into
Micrografx (the "Merger"), and as a result of the Merger, I will be entitled to
receive shares of Corel's Common Stock and Contingent Value Rights exercisable
for shares of Corel's Common Stock (together, the "Corel Securities"), in
exchange for the shares of common stock, par value $.01 per share, and shares
of preferred stock, par value $.01 per share, of Micrografx owned by me at the
Effective Time (as defined in the Merger Agreement) of the Merger.
I represent, warrant and covenant to Corel that in such event:
A. I shall not make any sale, transfer or other disposition of the Corel
Securities in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Merger Agreement and
discussed its requirements and other applicable limitations upon my ability
to sell, transfer or otherwise dispose of Corel Securities, to the extent I
felt necessary, with my counsel or counsel for Micrografx.
C. I have been advised that the issuance of Corel Securities to me
pursuant to the Merger has been registered with the Commission under the
Act on a Registration Statement on Form S-4. However, I have also been
advised that, since at the time the Merger was submitted for a vote of the
stockholders of Micrografx I may have been deemed to have been an affiliate
of Micrografx and a distribution by me of Corel Securities has not been
registered under the Act, the Corel Securities must be held by me
indefinitely unless (i) a distribution of Corel Securities by me has been
registered under the Act, (ii) a sale of Corel Securities by me is made in
conformity with the volume and other limitations of Rule 145 promulgated by
the Commission under the Act,(iii) in the opinion of counsel reasonably
acceptable to Corel, some other exemption from registration is available
with respect to a proposed sale, transfer or other disposition of the Corel
Securities by me, or (iv) pursuant to a "no-action" or interpretive letter
from the Staff of the Commission, registration is not required with respect
to a proposed sale, transfer or other disposition of Corel Securities.
D. I understand that Corel is under no obligation to register the sale,
transfer or other disposition of Corel Securities by me or on my behalf or
to take any other action necessary in order to make compliance with an
exemption from registration available.
E. I also understand that stop transfer instructions will be given to
Corel's transfer agents with respect to the Corel Securities and that there
will be placed on the certificates for the Corel Securities, or any
substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933, as amended, applies. The shares represented by this
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certificate may only be transferred in accordance with the terms of an
agreement dated , , between the registered holder hereof and Corel
(the "Corporation"), a copy of which agreement is on file at the
principal offices of the Corporation."
F. I also understand that unless the transfer by me of my Corel
Securities has been registered under the Act or is a sale made in
conformity with the provisions of this Agreement, Corel reserves the right
to put the following legend on the certificates issued to my transferee:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, and were acquired from a person who
received such shares in a transaction to which Rule 145 promulgated under
such Act applies. The shares have been acquired by the holder not with a
view to, or for resale in connection with, any distribution thereof within
the meaning of such Act and may not be sold, pledged or otherwise
transferred except in accordance with an exemption from the registration
requirements of such Act."
It is understood and agreed that the legends set forth in paragraphs E and F
above shall be removed by delivery of substitute certificates without such
legend if such legend is not required for purposes of the Act or this
Agreement. It is understood and agreed that such legends and the stop orders
referred to above will be removed if (i) one year shall have elapsed from the
date that the undersigned acquired Corel Securities received in the Merger and
the provisions of Rule 145(d)(2) are then available to the undersigned, (ii)
two years shall have elapsed from the date the undersigned acquired the Corel
Securities received in the Merger and the provisions of Rule 145(d)(3) are then
applicable to the undersigned, (iii) Corel shall have received either an
opinion of counsel, which opinion and counsel shall be reasonably satisfactory
to Corel, or a "no action" or "interpretive" letter obtained from the Staff of
the Commission, to the effect that the Corel Securities subject thereto may be
transferred free of the restrictions imposed by Rule 144 or 145 under the Act
or (iv) in the event of a sale of Corel Securities received by the undersigned
in the Merger which has been registered under the Act.
By its acceptance hereof, Corel agrees, for up to two years to the extent
necessary to permit the undersigned to sell the Corel Securities pursuant to
Rule 145 and, to the extent applicable, Rule 144 under the Act, that it will
(i) file on a timely basis all reports required to be filed by it pursuant to
Section 13 of the Securities Exchange Act of 1934, as amended (the "1934 Act"),
and (ii) furnish to the undersigned, upon request, a written statement as to
whether Corel has complied with such reporting requirements during the twelve
(12) months preceding any proposed sale of Corel Securities by the undersigned
under Rule 145 and Rule 144.
Very truly yours,
Accepted this day of
, , by:
By: _________________________________
Name:
Title:
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