-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, STcT5BoDrSecpUV9hiGwe0NDNHDdNfzav2T+WvHEzTD5hqHwZE9KU20yrouI+4sG JSW02yTCSDkEOPeLXOuyxg== 0000891618-98-004512.txt : 19981020 0000891618-98-004512.hdr.sgml : 19981020 ACCESSION NUMBER: 0000891618-98-004512 CONFORMED SUBMISSION TYPE: SC 14D9 PUBLIC DOCUMENT COUNT: 19 FILED AS OF DATE: 19981019 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: QUARTERDECK CORP CENTRAL INDEX KEY: 0000707668 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 954320650 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 14D9 SEC ACT: SEC FILE NUMBER: 005-45153 FILM NUMBER: 98727583 BUSINESS ADDRESS: STREET 1: 13160 MINDANAO WAY CITY: MARINA DEL REY STATE: CA ZIP: 90292 BUSINESS PHONE: 3103093700 MAIL ADDRESS: STREET 1: 13160 MINDANAO WAY CITY: MARINA DEL RAY STATE: CA ZIP: 90292 FORMER COMPANY: FORMER CONFORMED NAME: QUARTERDECK OFFICE SYSTEMS INC DATE OF NAME CHANGE: 19940510 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: QUARTERDECK CORP CENTRAL INDEX KEY: 0000707668 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 954320650 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 14D9 BUSINESS ADDRESS: STREET 1: 13160 MINDANAO WAY CITY: MARINA DEL REY STATE: CA ZIP: 90292 BUSINESS PHONE: 3103093700 MAIL ADDRESS: STREET 1: 13160 MINDANAO WAY CITY: MARINA DEL RAY STATE: CA ZIP: 90292 FORMER COMPANY: FORMER CONFORMED NAME: QUARTERDECK OFFICE SYSTEMS INC DATE OF NAME CHANGE: 19940510 SC 14D9 1 SCHEDULE 14-D9 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-9 SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ QUARTERDECK CORPORATION (NAME OF SUBJECT COMPANY) QUARTERDECK CORPORATION (NAMES OF PERSON(S) FILING STATEMENT) COMMON STOCK, $0.001 PAR VALUE (TITLE OF CLASS OF SECURITIES) 747712107 (CUSIP NUMBER OF CLASS OF SECURITIES) FRANK R. GREICO CHIEF FINANCIAL OFFICER QUARTERDECK CORPORATION 13160 MINDANAO WAY, 3RD FLOOR MARINA DEL REY, CA 90292 (310) 309-3700 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT) WITH A COPY TO: BRADLEY D. SCHWARTZ SCHWARTZ & ASSOCIATES 333 SOUTH GRAND AVENUE, SUITE 3950 LOS ANGELES, CALIFORNIA 90071 (213) 629-0978 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 ITEM 1. SECURITY AND SUBJECT COMPANY The name of the subject company is Quarterdeck Corporation, a Delaware corporation (the "Company"). The address of the principal executive offices of the Company is 13160 Mindanao Way, Marina del Rey, California 90292. The title of the class of equity securities to which this Solicitation/Recommendation Statement on Schedule 14D-9 (this "Schedule 14D-9" or "Statement") relates is the common stock, $0.001 par value, of the Company (the "Common Stock"), together with the associated preferred stock purchase rights issued pursuant to the Rights Agreement dated August 11, 1992, as amended, between the Company and American Stock Transfer & Trust (the "Rights"). Unless the context otherwise requires, as used herein the term "Shares" shall mean shares of Common Stock, including the Rights. ITEM 2. TENDER OFFER OF THE PURCHASER This Statement relates to the cash tender offer (the "Offer") described in the Tender Offer Statement on Schedule 14D-1, dated October 19, 1998 (as amended or supplemented, the "Schedule 14D-1"), filed by Symantec Corporation, a Delaware corporation ("Symantec" or "Parent"), and Oak Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of Parent ("Purchaser"), with the Securities and Exchange Commission (the "SEC"), relating to an offer to purchase all of the issued and outstanding Shares at $0.52 per Share (such amount, or any greater amount per Share paid pursuant to the Offer, hereinafter referred to as the "Offer Price"), net to the seller in cash, upon the terms and subject to the conditions (including the condition that a majority of the fully-diluted Shares are validly tendered) set forth in Purchaser's Offer to Purchase, dated October 19, 1998 (the "Offer to Purchase"), and in the related Letter of Transmittal (which together with any amendments or supplements thereto constitute the "Offer Documents"). The Offer is being made in accordance with an Agreement and Plan of Merger, dated as of October 15, 1998 (the "Merger Agreement"), by and among Parent, Purchaser and the Company. Pursuant to the Merger Agreement, at the effective time of the Merger (the "Effective Time") and pursuant to the provisions of the Delaware General Corporation Law (the "DGCL"), Purchaser will be merged with and into the Company (the "Merger"), and the Company will become a wholly owned subsidiary of Parent (the "Surviving Corporation"). At the Effective Time, each Share issued and outstanding immediately prior to the Effective Time (other than Shares held by Parent, Purchaser, the Company or any of their wholly owned subsidiaries and Shares held by stockholders of the Company who will have properly perfected their dissenters' rights, if any, under Delaware law) will be converted into the right to receive $0.52 in cash, or any greater amount paid per Share in the Offer, without interest (the "Merger Consideration"). The Merger Agreement is summarized in Item 3 of this Schedule 14D-9. The Offer Documents indicate that the principal executive offices of Parent and Purchaser are located at 10201 Torre Avenue, Cupertino, California 95014. ITEM 3. IDENTITY AND BACKGROUND (a) The name and address of the Company, which is the person filing this Schedule 14D-9, are set forth in Item 1 above. (b) Certain contracts, agreements, arrangements or understandings between the Company or its affiliates and certain of its executive officers, directors or affiliates are described in the Company's Proxy Statement, dated January 5, 1998, relating to its February 5, 1998 Annual Meeting of Stockholders (the "Proxy Statement") under the headings "DIRECTORS' COMPENSATION," "EXECUTIVE COMPENSATION," "EMPLOYMENT AGREEMENTS," "REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS," "DISCRETIONARY BONUS PLAN" and "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS." A copy of the applicable portions of the Proxy Statement has been filed as an exhibit to this Schedule 14D-9 and is incorporated herein by reference. 2 3 THE MERGER AGREEMENT The following is a summary of the material terms of the Merger Agreement. This summary is not a complete description of the terms and conditions of the Merger Agreement and is qualified in its entirety by reference to the full text of the Merger Agreement which is incorporated by reference herein and a copy of which has been filed as an Exhibit to this Schedule. Capitalized terms not otherwise defined in the following description of the Merger Agreement have the respective meanings ascribed to them in the Merger Agreement. The Merger Agreement provides for the commencement of the Offer within five business days after the public announcement of the execution of the Merger Agreement. The obligation of Purchaser to accept for payment Shares tendered pursuant to the Offer is subject to there being validly tendered and not withdrawn prior to the expiration of the Offer that number of Shares which shall constitute at last a majority of the then outstanding Shares on a fully-diluted basis (after giving effect to the exercise or conversion of all options, rights and securities exercisable or convertible into Shares, but only to the extent that any such options, rights or securities are exercisable or convertible into such Shares at a price per Share less than $0.52), and to certain other conditions that are described below under "Conditions to the Offer." Purchaser and Symantec have agreed that no change in the Offer may be made which decreases the price per Share payable in the Offer, reduces the maximum number of Shares to be purchased in the Offer, imposes conditions to the Offer in addition to those set forth below under "Conditions to the Offer," changes the form of consideration payable in the Offer or amends any other material terms of the Offer in a manner materially adverse to the Company's stockholders. The Merger Agreement provides that, following consummation of the Offer and upon the terms and subject to the conditions in the Merger Agreement and in accordance with Delaware Law, at the Effective Time, Purchaser will be merged with and into the Company. As a result of the Merger, the separate corporate existence of Purchaser will cease and the Company will continue as the Surviving Corporation (the "Surviving Corporation") and will become a direct or indirect wholly owned subsidiary of Symantec. Upon consummation of the Merger, each issued and outstanding Share (other than any Shares owned by the Company or by any subsidiary of the Company, or owned by Purchaser, Symantec or any other subsidiary of Symantec and any Shares which are held by stockholders who have not voted in favor of the Merger or consented thereto in writing and who shall have demanded appraisal for such Shares in accordance with Delaware Law) shall be automatically converted into, and exchanged for, the right to receive the Merger Consideration. Pursuant to the Merger Agreement, each share of capital stock of Purchaser issued and outstanding immediately prior to the Effective Time shall be converted into and become one share of common stock, par value $0.001 per share, of the Surviving Corporation, which will thereby become a wholly owned subsidiary of Symantec. The Merger Agreement provides that the directors of Purchaser immediately prior to the Effective Time will be the initial directors of the Surviving Corporation and that the officers of Purchaser immediately prior to the Effective Time will be the initial officers of the Surviving Corporation. The Merger Agreement further provides that the Certificate of Incorporation and by-laws of Purchaser as in effect at the Effective Time shall be the Certificate of Incorporation and by-laws of the Surviving Corporation. Pursuant to and subject to the conditions in the Merger Agreement, if stockholder approval is required by law, the Company will, at the request of Symantec, as soon as practicable following the consummation of the Offer, duly call, give notice of, convene and hold a meeting of its stockholders for the purpose of obtaining stockholder approval of the Merger (the "Stockholders Meeting"). If Purchaser acquires a majority of the outstanding Shares pursuant to the Offer, Purchaser will have sufficient voting power to approve the Merger, even if no other stockholder votes in favor of the Merger. The Merger Agreement provides that, if stockholder approval is required by law, the Company will, at Symantec's request, as soon as practicable following the expiration of the Offer, prepare and file a preliminary proxy statement and related proxy materials (the "Proxy Statement") with the Commission under the Exchange Act, and will use all reasonable efforts to respond to any comments of the Commission or its staff 3 4 and to cause the Proxy Statement to be mailed to stockholders of the Company as promptly as practicable after responding to all such comments to the satisfaction of the staff of the Commission. The Company has agreed, subject to certain fiduciary duties under applicable law as described below, to include in the Proxy Statement the recommendation of the Board of Directors that the stockholders of the Company approve and adopt the Merger. The Merger Agreement provides that, in the event that Purchaser or any other subsidiary of Symantec acquires at least 90% of the outstanding Shares, Symantec, Purchaser and the Company agree, at the request of Symantec, to take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after expiration of the Offer without a meeting of the Company's stockholders, in accordance with Delaware Law. Pursuant to the Merger Agreement, the Company has covenanted and agreed to carry on the businesses of the Company and its subsidiaries in the ordinary course of business consistent with past practices and to use all reasonable efforts to preserve intact their current business organizations, to keep available the services of their current officers and employees and to preserve relationships with distributors, licensors, contractors, customers, suppliers, lenders, employees and others having business dealings with any of them. The Merger Agreement provides that, except as expressly permitted by the other provisions of the Merger Agreement and the Ancillary Agreements, or as may be agreed to in writing by Symantec, neither the Company nor any subsidiary will do any of the following: (i) declare, set aside or pay any dividends on or make any other distributions in respect of any of its capital stock, other than by any wholly owned subsidiary of the Company to its parent or, in the case of less than wholly owned subsidiaries, as required by agreements existing on the date of the Merger Agreement, or split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for Shares of its capital stock or purchase, redeem or otherwise acquire any shares of its capital stock or any of its subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities; (ii) issue, deliver, sell, pledge or otherwise encumber any shares of its or of any subsidiary's capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities (other than the issuance of Company Common Stock upon the exercise of Options and warrants outstanding on the date of the Merger Agreement and disclosed in the Company's disclosure schedule and the issuance of Company Common Stock upon conversion of the Convertible Notes or Company Preferred Stock); (iii) amend its Certificate of Incorporation, by-laws or other comparable charter or organizational documents; (iv) acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof, or any assets that individually or in the aggregate are material to the business of the Company and its subsidiaries taken as a whole; (v) sell, lease, license, mortgage or otherwise encumber or subject to any pledge, claim, lien, charge, title retention, mortgage, security interest or encumbrance or otherwise dispose of any of its properties or assets (including intellectual property) except for sales, leases or encumbrances of immaterial or obsolete properties or assets, and non-exclusive licenses of intellectual property rights, in each case in the ordinary course of business consistent with past practices; (vi) transfer or license to any person or entity or otherwise extend, amend or modify in any material respect any rights to any of the Company's intellectual property rights or the Company's intellectual property, other than non-exclusive licenses in the ordinary course of business, or assign or grant any exclusive license to any of the Company's intellectual property rights; (vii) incur any indebtedness for borrowed money or draw down on any credit facility or arrangement or guarantee any such indebtedness of another person, issue or sell any debt securities or warrants or rights to acquire debt securities of the Company or any subsidiary of the Company, or guarantee any debt securities of any person, enter into any "keep well" or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing (other than borrowings of not more than $2.0 million in any calendar month, not to exceed $3.0 million in the aggregate outstanding at any time after the date of the Merger Agreement);(viii) make any loans, advances or capital contributions to, or investments in, any other person, other than to the Company or any subsidiary of the Company; (ix) make or agree to make any new capital expenditure(s) which individually is in excess of $100,000 or which in the aggregate are in excess of $200,000; (x) make any material tax election or settle or compromise any income or franchise tax liability; (xi) pay, discharge, settle or satisfy any claims (accrued, 4 5 asserted or unasserted, contingent or otherwise) for an amount greater than $100,000; (xii) enter into, amend, modify or terminate any agreement, transaction, commitment or other right or obligation that, if in effect on the date of the Merger Agreement, would be a material agreement, or that requires or contemplates a current and/or future financial commitment, expense or obligation on the part of the Company or any of its subsidiaries in excess of $100,000, other than in the ordinary course of business consistent with past practices, or waive, release or assign any material rights or claims thereunder, other than discounting of accounts receivable to obtain prompt collection; (xiii) terminate or lay off any material numbers of employees, other than for cause consistent with past practice and Company policy; (xiv) other than as disclosed by the Company in its Disclosure Schedule (as defined in the Merger Agreement) delivered to Symantec, adopt or amend in any material respect any employee benefit or employee stock purchase or employee option plan, or enter into any employment contract, pay any special bonus or special remuneration to any director or employee, or increase the salaries, wage rates or other compensation payable to its officers or employees other than in the ordinary course of business consistent with past practices, or commit or agree to do any of the foregoing, or otherwise alter or commit to any compensation, benefit or severance or change of control arrangement for or with any officer or employee of the Company; (xv) grant or provide any severance or termination pay to any officer or employee except payments that are in amounts consistent with the Company's policies and past practices, are made pursuant to written plans or agreements outstanding or policies existing on the date of the Merger Agreement; (xvi) voluntarily take actions to liquidate or dissolve the Company or to take advantage of bankruptcy or other creditor protection laws; (xvii) take any action that would cause or constitute a breach of any representation or warranty made by the Company in the Merger Agreement or any Ancillary Agreement or (xviii) authorize any of, or commit or agree to take any of, the foregoing actions. Pursuant to the Merger Agreement, from the date of the Merger Agreement until the Effective Time, the Company shall, and shall cause its subsidiaries to, afford Symantec and its officers, employees, accountants, counsel, financial advisors and other representatives, reasonable access during normal business hours to all their respective properties, books, contracts, commitments, personnel and records and to furnish or make available promptly to Symantec a copy of each report, schedule, registration statement and other document filed by it during such period pursuant to the requirements of federal or state securities laws, and all other information concerning its business, properties and personnel as Symantec may reasonably request. The Company has agreed that until the earlier of the Effective Time or termination of the Merger Agreement, the Company shall not, nor shall it permit any of its subsidiaries, nor shall it authorize or permit any of their respective officers, directors, employees, investment bankers, attorneys or other advisors or representatives, directly or indirectly, to (i) solicit, initiate or encourage the submission of any "takeover proposals" (as defined below), (ii) participate in any discussions or negotiations with, or furnish any information to any person or group (other than Symantec) in connection with any takeover proposal or (iii) take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any takeover proposal. Under the Merger Agreement, a "takeover proposal" means any proposal for a merger or other business combination involving the Company or any of its subsidiaries, any proposal, offer or tender offer to acquire (including by license) in any manner, directly or indirectly, an equity interest in, not less than 35% of the outstanding voting securities of the Company or any of its subsidiaries, or any proposal to acquire assets representing not less than 25% of the annual revenues of the Company or any of its subsidiaries in the fiscal year ended September 30, 1998 or to obtain a license to the Company's ProComm or CleanSweep products or to any of the Company's intellectual property that is incorporated, embodied or used therein and that is material to such product, other than the transactions contemplated by the Merger Agreement or the Ancillary Agreements. The Company has also agreed that it, its subsidiaries, officers, directors, employees, investment bankers, attorneys and other agents and representatives will immediately cease any and all existing activities, discussions or negotiations with any parties conducted previously regarding a takeover proposal. Pursuant to the Merger Agreement, the Company will promptly advise Symantec orally and in writing of any request for information or of any takeover proposal, or any inquiry with respect to, or which could reasonably be expected to lead to, any takeover proposal, the material terms and conditions of such request, takeover proposal or inquiry, and the identity of the person 5 6 making any such takeover proposal or inquiry. The Company has also agreed to keep Symantec informed of the status and material terms of any such request, takeover proposal or inquiry. Notwithstanding the foregoing, the Merger Agreement provides that, prior to the Effective Time the Company may, to the extent the Board of Directors of the Company determines in good faith, after consultation with outside counsel, that the Board of Director's fiduciary duty under applicable law requires it to do so, participate in discussions or negotiations with, or furnish information to, any person, entity or group in response to an unsolicited bona fide takeover proposal which the Company's Board of Directors in its good faith reasonable judgment determines, after consultation with its independent financial advisors, would result in a transaction more favorable to the Company's stockholders from a financial point of view than the Offer and the Merger and after reasonable inquiry by the Company that the party making such takeover proposal is financially capable of consummating such takeover proposal (a "Superior Proposal"). In the event the Company receives a Superior Proposal, nothing contained in the Merger Agreement (subject to the provisions set forth in this paragraph) will prevent the Company's Board of Directors from recommending such Superior Proposal to the Company's stockholders, subject to the payment of a break-up fee discussed below, if the Board determines, in good faith after consultation with outside legal counsel, that such action is required by its fiduciary duties under applicable law, and, in connection therewith, withdraw, modify or refrain from making its recommendation of the Offer; provided, however, that the Company shall not recommend to the Company's stockholders a Superior Proposal for a period of not less than 48 hours after the Company's receipt of such Superior Proposal. The Company further agrees that it will not provide any non-public information to a third party unless such information is provided pursuant to a nondisclosure agreement with terms regarding the protection of confidential information at least as restrictive as such terms in the mutual nondisclosure agreement between the Company and Symantec. The provisions described in this paragraph shall not prohibit the Company's Board of Directors from taking and disclosing to the Company's stockholders a position with respect to a takeover proposal pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act. Pursuant to the Merger Agreement, the Company will give written notice to each holder of a Company Option stating that such Option will terminate at the Effective Time and that all outstanding Options, whether or not vested, will be exercisable during the thirty (30) day period preceding the Effective Date. All Options that are outstanding immediately prior to the Effective Time will be terminated and canceled at the Effective Time and the holders of cancelled Options having an exercise price that is less than the Offer Price, other than members of the Company's Board of Directors or the Company's Chief Executive Officer, will be entitled to receive an amount in cash equal to the product of the difference between the Offer Price and the exercise price of such Option, multiplied by the number of Shares issuable upon exercise of such Option immediately prior to the Effective Time. The Company has entered into an agreement with the holder of the Convertible Notes providing that, immediately after the Effective Time, the Surviving Corporation shall be entitled to repay all then-outstanding Convertible Notes in their original principal amount and accrued interest without premium or penalty and that the Merger Agreement would provide that Surviving Corporation will repay the Notes in full within five business days after consummation of the Merger. Symantec has agreed to fulfill and honor and cause the Surviving Corporation to fulfill and honor in all respects the obligations of the Company pursuant to its Certificate of Incorporation, by-laws and any indemnification agreements between the Company and its directors and officers in their capacity as such existing prior to the date of the Merger Agreement. From and after the Effective Time, such obligations will be the joint and several obligations of Symantec and the Surviving Corporation, and Symantec has assumed such obligations. The Certificate of Incorporation and by-laws of the Surviving Corporation will contain provisions with respect to indemnification and elimination of liability for monetary damages set forth in the Certificate of Incorporation and by-laws of the Company, which provisions will not be amended, repealed or otherwise modified from the Effective Time in any manner that would adversely affect the rights of the individuals who, immediately prior to the Effective Time, were directors, officers, employees or agents of the Company or its subsidiaries, unless required by law. 6 7 For at least three years from the Effective Time, Symantec shall maintain in effect the Company's current directors' and officers' insurance and indemnification policy to the extent that it provides coverage for events occurring prior to the Effective Time for those persons who are directors and officers as of the date of the Merger Agreement (and, to the extent covered by the existing policy, persons who were directors or officers prior to the date of the Merger Agreement) in their capacity as such, so long as the annual premium would not be in excess of 150% of the last annual premium paid prior to the date of the Merger Agreement (the "Maximum Premium") and, to the extent the annual premium would exceed the Maximum Premium, Symantec will cause to be maintained the maximum amount of insurance that can be procured for the Maximum Premium. If the existing insurance expires, is terminated or is canceled during such three year period, Symantec will use all reasonable efforts to cause to be obtained as much insurance as can be obtained for the remainder of the period for an annualized premium not in excess of the amount indicated above, on terms and conditions no less advantageous than the existing insurance. In lieu of maintaining the Company's current insurance, Symantec may elect to add the directors and officers of the Company on the date of the Merger Agreement to its own insurance policy, provided that such election does not diminish the rights provided to such persons under the Company's existing insurance. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement and the Ancillary Agreements, each of the parties thereto agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to use all reasonable efforts to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in an expeditious manner, the Offer, the Merger and the transactions contemplated by the Merger Agreement and the Ancillary Agreements. Among other things, the Merger Agreement specifies the following actions: (i) obtaining all necessary actions and no actions, waivers, consents and approvals from any federal, state or local government or any court, administrative or regulatory agency or commission or other governmental authority or agency, domestic or foreign (a "Governmental Entity"), and making all necessary registrations and filings and taking all reasonable steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental Entity, (ii) obtaining all necessary consents, approvals and waivers from third parties, (iii) defending any lawsuits or other legal proceedings challenging the Merger Agreement or any Ancillary Agreement or the consummation of any of the transactions contemplated thereby and (iv) the execution and delivery of any additional instruments necessary to consummate the transactions contemplated by, and fully to carry out the purposes of, the Merger Agreement and the Ancillary Agreements. In particular, the Company and the Board of Directors have agreed to take all action necessary to ensure that no state takeover statute or similar statute or regulation is or becomes applicable to the Offer, the Merger, the Merger Agreement, the Ancillary Agreements or any other transaction contemplated thereby. Further, the Company has agreed that if any state takeover statute or similar statute or regulation becomes applicable to the Offer, the Merger, the Merger Agreement or the Ancillary Agreements or any other transaction contemplated thereby, it will take all action necessary to ensure that the Offer, the Merger and the other transactions contemplated thereby may be consummated as promptly as practicable on the terms contemplated by the Merger Agreement and the Ancillary Agreements and otherwise to minimize the effect of such statute or regulation on the Offer, the Merger and the other transactions contemplated thereby. The Company and Symantec are obligated to give prompt notice to the other party of any material breach of any representation or warranty made by it in the Merger Agreement or any Ancillary Agreement. Further, such parties are obligated to give prompt notice of the failure to comply with or satisfy in any material respect any covenant, condition or agreement under the Merger Agreement or any Ancillary Agreement. Representations and Warranties. The Merger Agreement contains various customary representations and warranties of the parties thereto including representations by the Company as to its organization, standing and corporate power, the absence of certain changes or events concerning the Company's business, litigation, employee benefit plans, taxes, compliance with laws, environmental matters, intellectual property, and material contracts. Conditions to the Merger. Under the Merger Agreement, the respective obligation of each party to effect the Merger is subject to the satisfaction or waiver on or prior to the Effective Time of the following conditions: 7 8 (i) if required by applicable law, the approval of the Company's stockholders shall have been obtained; (ii) Purchaser shall have purchased Shares pursuant to the Offer; and (iii) no statute, rule, regulation, executive order, decree, injunction, judgment or other order or ruling issued by any court or other Governmental Entity or other legal restraint or prohibition shall be in effect which would (a) make the acquisition or holding by Symantec or its affiliates of Shares or shares of Common Stock of the Surviving Corporation illegal or otherwise prevent the consummation of the Merger, (b) prohibit Symantec's or Purchaser's ownership or operation of, or compel Symantec or Purchaser to dispose of or hold separate, all or a material portion of the business or assets of Symantec or its subsidiaries taken as a whole, or the Company or its subsidiaries taken as a whole, (c) compel Symantec, Purchaser or the Company to dispose of or hold separate all or a material portion of the business or assets of Symantec or its subsidiaries taken as a whole or the Company or any of its subsidiaries taken as a whole, (d) impose material limitations on the ability of Symantec or Purchaser or their affiliates effectively to exercise full ownership and financial benefits of the Surviving Corporation, or (e) impose any material condition to the Merger Agreement, any Ancillary Agreements or the Merger which would be materially adverse to Symantec. Termination; Fees and Expenses. The Merger Agreement may be terminated at any time prior to the Effective Time, whether before or after approval of matters presented in connection with the Merger by the stockholders of the Company (provided, however, that if Shares are purchased pursuant to the Offer, Symantec may not terminate the Merger Agreement): (i) by mutual written consent of Symantec and the Company; (ii) by Symantec or the Company (a) if, as a result of the failure of any of the conditions to the Offer, the Purchaser fails to commence the Offer in the time required by the Merger Agreement, or as a result of the failure of any of the conditions to the Offer the Offer has terminated or expired in accordance with its terms (as extended, if applicable) without the Purchaser having accepted for payment any Shares pursuant to the Offer, or the Purchaser has not accepted for payment any Shares pursuant to the Offer by December 31, 1998 as a result of the failure of any of the conditions to the Offer, provided that the ability to terminate in the above circumstances is not available to a party whose failure to perform in any material respect any of its obligations under the Merger Agreement results in a failure of such condition or if the failure of such condition results from facts or circumstances that constitute a material breach of a representation or warranty under the Merger Agreement by such party; or (b) if any Governmental Entity has issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the acceptance for payment of, or payment for, the Shares pursuant to the Offer or the Merger and such order, decree or ruling or other action has become final and nonappealable; (iii) by the Company, if prior to the purchase of any Shares by the Purchaser pursuant to the Offer the Company has received any Superior Proposal; (iv) by Symantec in the event that (a) the Company's Board of Directors or any committee thereof has failed to recommend the Offer, the Merger, or the Merger Agreement, or shall have so resolved; (b) the Company's Board of Directors or any committee thereof has withdrawn or modified in a manner adverse to Symantec or Purchaser its approval or recommendation of the Offer, the Merger, the Merger Agreement and the Ancillary Agreements, has approved or recommended any takeover proposal, has authorized the redemption or amendment of the Rights Agreement after the Company has received a takeover proposal (other than the amendment to the Rights Agreement required by the Merger Agreement) or shall have so resolved (provided that a statement that states that a takeover proposal is under consideration by the Company's Board of Directors or management and states that the Company will, at a future date, take a position with respect to such takeover proposal, without making any adverse statements with respect to the Offer, shall not be deemed to constitute such a withdrawal, modification, approval or recommendation); or (c) the Company has entered into any letter of intent, acquisition agreement or similar agreement with respect to any Superior Proposal or the Company's Board of Directors or any committee thereof shall have resolved to do so; (v) by Symantec in the event that (a) any person entity or "group" (as defined in Section 13(d)(3) of the Exchange Act) other than Symantec or Purchaser acquires beneficial ownership of 35% or more of 8 9 the outstanding Shares; or (b) the Board of Directors of the Company or any committee thereof upon a request to reaffirm the Company's approval of recommendation of the Offer, the Merger or the Merger Agreement and the Ancillary Agreements, shall have failed to do so within three business days after such request is made or shall have so resolved; (vi) by Symantec if any of the Company's representations and warranties set forth in the Merger Agreement are not true and correct in any manner that either represents or results from a Willful Breach (as defined below) or has or represents a Material Adverse Effect (as defined below) or the Company has committed a material breach of any of the Company's covenants under the Merger Agreement and such breach either represents or results from a Willful Breach or has a Material Adverse Effect, and the Company has not cured such material breach within thirty days after Symantec has given to the Company written notice of the material breach and its intention to terminate the Merger Agreement; or (vii) by the Company if the Purchaser has not accepted for payment any Shares pursuant to the Offer on or prior to December 31, 1998 and (a) any of Symantec's representations and warranties set forth in Section 4.2 of the Merger Agreement are not true and correct in any manner that has or represents a material adverse effect on Symantec or materially adversely affects the exercise by the Company of its rights under the Merger Agreement or the License Agreement, or (b) Symantec has committed a material breach of any of its covenants under the Merger Agreement, which breach has a Material Adverse Effect or materially adversely affects the Company's exercise of its rights under the Merger Agreement or the License Agreement and Symantec has not cured such material breach within thirty days after the Company has given Symantec written notice of the material breach and its intention to terminate the Merger Agreement. "Material Adverse Change" or "Material Adverse Effect" means any change or effect that (i) materially adversely affects, or is highly likely to materially adversely affect, the ability of the Company and its subsidiaries to market and license either its ProComm product or its CleanSweep product (or both), or to use any of the Company's intellectual property rights or its intellectual property that is incorporated, embodied or used therein and that is material to such product or the ownership by the Company and its subsidiaries of any such intellectual property right or intellectual property, (ii) materially adversely affects, or is highly likely to materially adversely affect, the exercise by Symantec of its material rights under the Merger Agreement or the License Agreement or (iii) represents or results in, or is highly likely to result in, a liability, cost or expense of more than $3.0 million, or the reduction of the fair value of any assets by more than $3.0 million (in each case after giving effect to the availability of payments under any insurance policy). For purposes of clause (iii), no change, event or effect that is demonstrated by the Company to result from any of the following shall be deemed by itself to constitute a Material Adverse Change or be taken into account in determining whether there has been or would be a Material Adverse Change: (a) conditions affecting the U.S. economy generally or the economy of any nation or region in which the Company or any of its subsidiaries conducts business that is material to the Company and its subsidiaries, taken as a whole; (b) conditions generally affecting the utility software industry or (c) the announcement or pendency of the Offer or the Merger or the execution of the Merger Agreement or the License Agreement. "Willful Breach" by the Company means (i) the failure of a representation or warranty of the Company in this Agreement to be true and correct in all material respects as a result of any fact or condition of which any of the Company's executive officers or directors had actual knowledge as of the date of the Merger Agreement or (ii) a material breach or failure to perform in any material respect any obligation or to comply in any material respect with any agreement or covenant to be performed or complied with by it pursuant to the Merger Agreement, where performance of such obligation, or compliance with such agreement or covenant was not impossible and (a) in the case of a breach that can not readily be cured by the Company within thirty days after written notice of such breach, the action or inaction constituting such breach was taken by or at the request of or with the express permission of any of the Company's executive officers or directors and (b) in the case of a breach that can readily be cured by the Company within thirty days after written notice of such breach, such period shall expire without the cure of such breach. The Merger Agreement provides that the Company shall pay to Symantec the sum of $2.0 million (the "Break-up Fee"), if: (i) the Merger Agreement is terminated as set forth in subsection (ii)(a) in the first 9 10 paragraph of this section as a result of the failure of the following conditions to the Offer: the Board of Directors of the Company or any committee thereof shall have failed to recommend the Offer, the Merger or the Merger Agreement, including any failure to include such recommendation in the Schedule 14D-9, or shall have so resolved, the Board of Directors of the Company or any committee thereof shall have withdrawn or modified (including without limitation by amendment of the Schedule 14D-9) in a manner adverse to Symantec or Purchaser its approval or recommendation of the Offer, the Merger or the Merger Agreement and the Ancillary Agreements, shall have approved or recommended any takeover proposal, shall have authorized the redemption or amendment of the Rights Agreement after the Company has received any takeover proposal (except as described below under "Rights Agreement") or shall have resolved to do any of the foregoing; (ii) the Merger Agreement is terminated as set forth in subsections (iii) and (iv) in the first paragraph of this section or (iii) the Merger Agreement is terminated by Symantec as set forth in subsection (ii)(a) or (vi) as a result of a Willful Breach by the Company of its nonsolicitation covenants. The Break-Up Fee may be applied by the Company dollar for dollar to reduce any royalty obligations of Symantec to the Company pursuant to the License Agreement (and shall not be payable to the extent the Break-Up Fee exceeds the amount of such royalties required to be paid over the term of the License Agreement), except that if, pursuant to the terms of the License Agreement, Symantec would not be required at any time after the date of termination of the Merger Agreement to pay any royalties, the Break-Up Fee shall be payable in cash. In each case described in subsection (iii), payments of the foregoing amount, together with the exercise by Parent of its rights under the License Agreement, shall constitute the sole remedy for Symantec. Post Merger Employment Benefits. Employees of the Company who become employed by Symantec or any controlled subsidiary thereof after the Effective Time will either, at Symantec's election, to the extent permitted under the terms of the Company's employee benefit plans, continue to be eligible to participate in such plans, if and for so long as continued, or become eligible to participate in the same standard employee benefit plans as are generally available to similarly situated Symantec employees. Rights Agreement. The Company has entered into an amendment to the Rights Agreement to (i) exclude Symantec and the Purchaser and their respective Affiliates and Associates (as such terms are defined in the Rights Agreement) from the definition of "Acquiring Person" therein, with respect to the beneficial ownership of the Shares which Symantec, Purchaser and/or any of their respective Affiliates and Associates have obtained the right to acquire, or will acquire, as a result of the transactions contemplated by the Merger Agreement or any Ancillary Agreement, (ii) provide that no Distribution Date (as such term is defined in the Rights Agreement) shall result from the Offer and (iii) provide for the expiration of the Rights Agreement upon the Effective Date. CERTAIN CONDITIONS OF THE OFFER The Merger Agreement provides that, notwithstanding any other provision of the Offer or the Merger Agreement, and in addition to (and not in limitation of) Purchaser's rights to extend and amend the Offer (subject to certain limitations), Purchaser shall not be required to accept for payment, purchase or pay for, subject to Rule 14e-1(c) under the Exchange Act, any Shares tendered pursuant to the Offer and may terminate the Offer as to any Shares not then paid for unless (i) the Minimum Condition is satisfied and (ii) any waiting period (and any extension thereof) under the HSR Act applicable to the purchase of Shares pursuant to the Offer shall have expired or been terminated. Furthermore, the Merger Agreement provides that Purchaser shall not be required to commence the Offer or accept for payment, purchase or pay for any Shares not previously accepted for payment or paid for and may terminate or amend the Offer, if at any time before acceptance of the Shares any of the following events shall occur or shall be determined by Symantec in good faith to have occurred which, in the reasonable good faith judgment of Symantec or Purchaser, and regardless of the circumstances giving rise to any such condition (other than action or inaction by Symantec or any of its subsidiaries which constitutes a breach of the Merger Agreement), makes it inadvisable to proceed with such acceptance for payment or payment: (a) there shall be pending any suit, action or proceeding brought by or on behalf of any Governmental Entity (or the staff of the Federal Trade Commission or the staff of the Antitrust Division 10 11 of the Department of Justice shall have recommended the commencement of such), any shareholder of the Company or any other person or party, directly or indirectly, (1) challenging the acquisition by Symantec or Purchaser of any of the Shares, seeking to restrain or prohibit the making or consummation of the Offer or the Merger or the performance of any of the other transactions contemplated by the Merger Agreement, or alleging (on grounds that Purchaser reasonably and in good faith determines are reasonably likely to result in financial exposure to the Company in excess of $3 million taking into account available insurance coverage and/or proceeds) that any such acquisition or other transaction relates to, involves or constitutes a violation by the Company or its directors of federal securities law or applicable corporate statutes or principles, (2) seeking to prohibit or limit the ownership or operation by the Company, Symantec or any of their respective subsidiaries of a material portion of the business or assets of the Company and its subsidiaries, taken as a whole, or Symantec and its subsidiaries, taken as a whole, or to compel the Company or Symantec to dispose of or hold separate any material portion of the business or assets of the Company and its subsidiaries, taken as a whole, or Symantec and its subsidiaries, taken as a whole, as a result of the Offer or any of the other transactions contemplated by the Merger Agreement, (3) seeking to impose material limitations on the ability of Symantec or Purchaser to acquire or hold, or exercise full rights of ownership of, any of the Shares accepted for payment pursuant to the Offer, including the right to vote any such Shares accepted for payment by it on all matters properly presented to the stockholders of the Company, (4) seeking to prohibit Symantec or any of its subsidiaries from effectively managing or controlling in any material respect the business or operations of the Company and its subsidiaries taken as a whole, (5) which is likely to result in a Material Adverse Effect or (6) seeking to impose a material condition to the Offer, the Merger or the Merger Agreement which would be materially adverse to Symantec; provided that in case of any such suit, action or proceeding by any person other than a Governmental Entity, such suit, action or proceeding could reasonably be expected to result in a Material Adverse Effect; or (b) there shall be any statute, rule, regulation, judgment, order or injunction enacted, entered, enforced, promulgated or deemed applicable to the Offer or the Merger, or any other action shall be taken by any Governmental Entity or court, other than the application to the Offer or the Merger of applicable waiting periods under the HSR Act, that is reasonably likely to result, in any of the consequences referred to in clauses (a)(1) through (a)(6) above; (c) there shall have occurred since June 30, 1998, any Material Adverse Change; (d) either (1) the Board of Directors of the Company or any committee thereof shall have failed to recommend the Offer, the Merger or the Merger Agreement, including any failure to include such recommendation in the Schedule 14D-9, or shall have so resolved, or (2) the Board of Directors of the Company or any committee thereof shall have withdrawn or modified (including without limitation by amendment of the Schedule 14D-9) in a manner adverse to Symantec or Purchaser its approval or recommendation of the Offer, the Merger or the Merger Agreement and Ancillary Agreements, shall have approved or recommended any takeover proposal (provided that a statement that states that a takeover proposal is under consideration by the Company's Board of Directors or management and states that the Company will, at a future date, take a position with respect to such takeover proposal, without making any adverse statements with respect to the Offer, shall not be deemed to constitute such a withdrawal, modification, approval or recommendation), or shall have authorized the redemption or amendment of the Rights Agreement after the Company has received any takeover proposal (other than the Rights Amendment in accordance with the Merger Agreement) or shall have resolved to do any of the foregoing; 11 12 (e) either (1) any person, entity or "group" (as defined in Section 13(d)(3) of the Exchange Act) other than Symantec and Purchaser acquired beneficial ownership of 35% or more of the outstanding Shares or (2) the Board of Directors of the Company or any committee thereof upon request to reaffirm the Company's approval or recommendation of the Offer, the Merger or the Merger Agreement, shall have failed to do so within three business days after such request is made or shall have so resolved; (f) the representations and warranties of the Company in the Merger Agreement shall not be true and correct in all material respects (without regard to any qualification therein as to the Company's knowledge) as a result of any facts or circumstances that have a Material Adverse Effect; (g) the Company shall have breached or failed to perform in any material respect any obligation or to comply in any material respect with any agreement or covenant of the Company to be performed or complied with by it pursuant to the Merger Agreement and the same shall have a Material Adverse Effect; (h) the Merger Agreement shall have been terminated in accordance with its terms; or (i) any voluntary, involuntary or ancillary petition in bankruptcy shall have been instituted under Title 11 to the United States Code with respect to the Company as a debtor or alleged debtor and not dismissed. The Merger Agreement provides that the foregoing conditions are for the sole benefit of Symantec and Purchaser and their respective affiliates and may be asserted by Symantec or Purchaser regardless of the circumstances giving rise to such condition (other than any action or inaction by Symantec or any of its subsidiaries which constitutes a breach of the Merger Agreement) or may be waived (except for the Minimum Condition, which can only be waived with the consent of the Company) by Symantec and the Purchaser in whole or in part at any time and from time to time in their sole discretion. The failure by Symantec, Purchaser or any other affiliate of Symantec at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and circumstances shall not be deemed a waiver of any such rights with respect to any other facts and circumstances and each such right shall be deemed an ongoing right that may asserted at any time and from time to time prior to expiration of the Offer. THE LICENSE AGREEMENT Concurrently with the execution of the Merger Agreement, the Company and Parent entered into the License Agreement. The following is a summary of the material terms of the License Agreement. This summary is not a complete description of the terms and conditions of the License Agreement and is qualified in its entirety by reference to the full text of the License Agreement, which is incorporated herein by reference, and a copy of which has been filed as an exhibit to this Schedule 14D-9. The Company has granted to Symantec, pursuant to the License Agreement entered into concurrently with the Merger Agreement, a non-exclusive license (the "Distribution License") to use, copy, distribute, display and perform all of the Company's CleanSweep(TM) product and related technology (the "Licensed Product") and a nonexclusive license (the "Development License") under all of the Company's intellectual property rights to use, copy and create derivative works during the term of the License Agreement from the source code of the Licensed Product or materials and information provided by the Company relating thereto. In consideration of this grant, Symantec has agreed to pay the Company royalties equal to 8% of net revenue from the distribution or other revenue producing exploitation of the Licensed Product, provided that the royalty rate shall be 6% if the Company is obligated to pay a Break-up Fee as a result of a Willful Breach of the Company's covenant not to solicit or negotiate a takeover proposal. The parties have further agreed that, for copies of the Licensed Products, the royalty per seat shall not be less than $1.25 for stand-alone sales of the Licensed Product, $0.75 for bundles of the Licensed Product as part of Norton Systemworks and $0.20 for original equipment manufacturer transactions. The Development License commences on October 15, 1998 and the Distribution License commences upon the earlier of either (i) the consummation of the Offer or (ii) an event giving rise to the Company's obligation to pay the Break-up Fee under the Merger Agreement. If neither of these events occur, no right to distribute the CleanSweep product will arise. The Company has deposited in escrow the source code for its CleanSweep product and related technology to be released to 12 13 Symantec upon commencement of the Distribution License. The License Agreement terminates immediately if, after consummation of the Offer, Symantec fails to close the Merger in accordance with the Merger Agreement or the Merger has not occurred by January 31, 1999 and the Company has not been obligated to pay the Break-up Fee. The License Agreement also terminates for a material breach of any term of the License Agreement unless such breach is cured within thirty days of notice of such breach. THE STOCKHOLDER AGREEMENTS Concurrently with the execution of the Merger Agreement, Parent and Purchaser entered into a Stockholder Agreement with each of the directors and executive officers of the Company, namely King R. Lee, Frank W. T. LaHaye, William H. Lane III, Howard Morgan, Frank R. Greico, Joyce Wrenn, Suzanne Dickson, Cheri Kaplan-Smith, Gadi Navon and John Strosahl (collectively, the "Stockholder Agreements"). In the aggregate, the signatories to the Stockholder Agreements beneficially own 316,004, or 0.43%, of the outstanding Shares and 1,816,004, or 2.0%, of the Shares on a fully-diluted basis (to calculate fully-diluted Shares, each outstanding option with an exercise price of less than $0.52 per share is treated as exercised). The following is a summary of the material terms of the Stockholder Agreements. This summary is not a complete description of the terms and conditions of the Stockholder Agreements and is qualified in its entirety by reference to the full text of the Stockholder Agreements which are incorporated herein by reference and copies of which have been filed as exhibits to this Schedule 14D-9. Pursuant to the Stockholder Agreements, these stockholders agreed to tender and not withdraw their Shares pursuant to the Offer. Such stockholders have also agreed, for so long as the Stockholder Agreement is in effect, at any meeting of the stockholders of the Company, however called, to vote their Shares (i) in favor of the Merger, (ii) against any action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement, and (iii) against any action or agreement that would impede, frustrate, prevent or nullify the Stockholder Agreement or result in any of the conditions to the consummation of the Offer or the Merger, which are set forth in the Merger Agreement, not being fulfilled. Such stockholders also granted representatives of Parent an irrevocable proxy to vote their Shares in favor of the Merger and other transactions contemplated by the Merger Agreement, and against any other takeover transaction proposed by a third party. In addition, such stockholders agreed not to (i) transfer any or all of their Shares, (ii) enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of their Shares, (iii) grant any proxy, power-of-attorney or other authorization in or with respect to their Shares, (iv) deposit their Shares into a voting trust or enter into a voting agreement or arrangement with respect to his Shares or (v) take any other action that would in any way restrict, limit or interfere with the performance of his obligations under the Stockholder Agreements or the Merger Agreement or which would make any representation or warranty of such stockholder under the Stockholder Agreement untrue or incorrect. The agreements and proxy contained in each Stockholder Agreement will terminate on the earlier of payment for the Shares pursuant to the Offer or the termination of the Merger Agreement in accordance with its terms. CONVERSION AND/OR REPURCHASE OF SERIES C CONVERTIBLE PREFERRED STOCK After negotiating the terms thereof over a period of several weeks, the Company has entered into an agreement, dated October 9, 1998, with the holders of the Company's Series C Convertible Preferred Stock. Pursuant to the agreement, the holders of the Series C Convertible Preferred Stock agreed not to convert any such shares at a conversion price of less than $0.2650 for a period of six months after October 9, 1998, the date of the Agreement and that, during the first sixty calendar days following such date, upon conversion of any shares of the Series C Convertible Preferred Stock in accordance with their terms, the Company will issue shares of Common Stock at a conversion price of $0.2650 notwithstanding the actual conversion price then in effect. At a conversion price of $0.2650, each share of Series C Convertible Preferred Stock is convertible into 3,774 shares of Common Stock. The Company has agreed to issue additional shares of Common Stock (or, at the Company's election, cash) to each holder of the Series C Convertible Preferred Stock, up to an amount 13 14 equal to five percent of the original purchase price of such shares of Series C Convertible Preferred Stock, but only to the extent that such holder does not realize at least a 50% gross aggregate return upon resale of the shares of Common Stock received upon conversion of such shares of Series C Convertible Preferred Stock. During the six months following October 9, 1998, the Company has the right to repurchase all of the shares of Series C Convertible Preferred Stock owned by the holders thereof at a price equal to 110% of the original purchase price. The Company may exercise this repurchase right upon 10 days notice (which may be by press release), during which time period the holders of the Series C Convertible Preferred Stock will remain entitled to convert such shares into shares of Common Stock. The holders of the Series C Convertible Preferred Stock also agreed that upon a "sales event" (as defined below), the Company may, at its option, repurchase the shares of Series C Convertible Preferred Stock at a price equal to 110% of the original price or require such holders to convert their shares of Series C Convertible Preferred Stock into shares of Common Stock, or to effect a combination of the foregoing. A "sales event" means the sale of all or substantially all of the assets of the Company, a consolidation or merger of the Company in which the stockholders of the Company immediately prior to such event do not retain a majority of the voting power of the surviving corporation or the sale of more than 50% of the stock of the Company. INDEMNIFICATION The Company's Certificate of Incorporation provides that a director of the Company shall not be liable to the Company or its stockholders for monetary damages for a breach of fiduciary duty as a director by such director except, to the extent permitted by Delaware law, if such breach relates to (i) a breach of the duty of loyalty; (ii) an act or omission in bad faith or which involved intentional misconduct or knowing violation of law; (iii) an unlawfully paid dividend or unlawful stock purchase or redemption; or (iv) any transaction from which a director derived an improper personal benefit. The Company's Bylaws provide that the Company is required to indemnify its directors and officers and the directors and officers of each of its subsidiaries and may indemnify its other employees and agents, and persons serving in such capacities in other business enterprises at the Company's request, in any proceeding, provided such persons acted in good faith and in a manner reasonably believed to be in, or not opposed to, the best interests of the Company and, in the case of a criminal proceeding, if such persons had no reasonable cause to believe their actions were unlawful. The Bylaws require the Company to advance expenses incurred by such directors and officers and permit the Company to advance expenses to such other employees and agents in connection with defending a proceeding, however, the Company is not required to advance expenses to a person against whom the Company brings a claim for breach of the duty of loyalty, failure to act in good faith, intentional misconduct, knowing violation of law or deriving an improper personal benefit. The rights conferred in the Bylaws are not exclusive and the Company is authorized to enter into indemnification agreements with its directors, officers, employees and agents. In addition, the Bylaws permit the Company to maintain director and officer liability insurance to the extent reasonably available. The Company may not retroactively amend the Bylaw provisions in a way that is adverse to such directors, officers, employees and agents. The Company has previously also entered into an agreement with its directors and certain of its officers indemnifying them to the fullest extent permitted by the Bylaws. A copy of the applicable portions of the Certificate of Incorporation and Bylaws and a copy of the Company's form of indemnification agreement have been filed as exhibits to this Schedule 14D-9 and are incorporated herein by reference. ITEM 4. THE SOLICITATION OR RECOMMENDATION (a) RECOMMENDATION OF THE COMPANY BOARD. The Company Board has unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including each of the Offer and the Merger, are fair to and in the best interests of the holders of the Shares, (ii) approved and adopted the Merger Agreement and the transactions contemplated thereby, and (iii) resolved to recommend that the stockholders of the Company accept the Offer, tender their 14 15 Shares pursuant to the Offer and approve and adopt the Merger Agreement and approve the transactions contemplated thereby. (b) BACKGROUND OF THE OFFER; REASONS FOR THE RECOMMENDATION. Background In early 1997, the Company Board resolved to undertake a search for strategic alternatives to the Company's then current strategy. The Company Board decided to retain an investment banker to explore the capital needs of the Company and the strategic alternatives available to the Company, including an expansion into additional product lines, a partnering of the Company with third parties, and a sale of particular product lines or of the entire Company. On or about May 22, 1997, Broadview International LLC ("Broadview") presented to the Company Board its analysis of the strategic alternatives available to the Company. In light of this presentation, the Company engaged Broadview on June 19, 1997 to advise the Company with respect to opportunities involving partnering with third parties or the sale of either all of the Company or of particular product lines. In late September 1997 and the following months, the Company issued approximately $29 million of its Series C Convertible Preferred Stock and related warrants. The Company used the net proceeds of this sale for working capital and to redeem all $10 million of its outstanding Series B Preferred Stock. During the period from June 1997 to March 1998, Broadview conducted extensive interviews with senior management, engaged in customary due diligence procedures, analyzed valuation parameters, explored new product opportunities and product line sales and developed a list of potential acquirors for the Company. Broadview and the Company Board discussed and explored these possibilities in numerous meetings. Broadview and the Company contacted several parties to explore partnering relationships and/or the sale of the entire Company. As of March 1998, no party had expressed serious interest in partnering with or acquiring the Company and the Company terminated its engagement of Broadview. In April 1998, however, a publicly traded company contacted the Company and expressed interest in entering into a partnering relationship with the Company. The parties held preliminary discussions until June 1998 when the potential partner was acquired by a third party. On June 3, 1998, the Company was notified by the Nasdaq National Market ("Nasdaq") of the possible delisting of the Common Stock due to the failure of the Common Stock to satisfy Nasdaq's continued listing requirements. In June 1998, the Company Board continued to discuss the Company's need for capital and the status of possible strategic alternatives. On June 24, 1998, the Company signed an engagement letter with TikSoft LLC (which letter was subsequently assigned to Software Syndicate, Inc. ("SSI")), pursuant to which SSI agreed to assist the Company with respect to opportunities involving four potential acquirors that had been identified. In June 1998, the Company determined that additional cost-cutting measures, including layoffs, were needed in order to manage cash flow. In late June 1998, the Company laid off 70 employees. On July 6, 1998, Curtis Hessler resigned as the Chief Executive Officer of the Company and King R. Lee was appointed Interim Chief Executive Officer and President. In July 1998, SSI introduced the Company to another publicly traded company interested in a merger. The parties held several meetings, conducted mutual standard due diligence, interviewed senior management at the respective companies and entered into a confidentiality agreement regarding the matter. The parties ultimately terminated these discussions in September 1998 without any agreement regarding a transaction. By letter dated July 13, 1998, Nasdaq advised the Company that it was not convinced the Company could satisfy Nasdaq's continued listing requirements. At the Company's request, an oral hearing on the matter was scheduled for late August. In connection with its preparation for such oral hearing, and to assist the Company in its exploration of its strategic alternatives, the Company again retained Broadview as its financial advisor on August 4, 1998. 15 16 On August 10, 1998, Broadview discussed with the Company a list of approximately 20 potential partners or acquirors, including Parent. Over the next few weeks, Broadview and SSI contacted several parties, including Parent, none of whom expressed interest in acquiring the Company at that time. In mid- to late August, Broadview and SSI again contacted Parent and discussed the Company generally, as well as the existence of potentially significant net operating losses of the Company that could be advantageous to a potential buyer. At that point, Parent expressed interest in a transaction with the Company to SSI and Broadview. Broadview contacted Gordon E. Eubanks, Jr., the Chief Executive Officer of Parent, with additional information about the Company. Representatives of Broadview and Parent held several telephone calls and discussed possible transaction alternatives through the end of August. On August 27, 1998, the Company had a hearing with Nasdaq regarding the potential delisting of the Company's Common Stock. On September 11, 1998, Enrique T. Salem, Chief Technical Officer of Parent, contacted Suzanne Dickson, Vice President of Product Management of the Company, to discuss the possibility of the Company entering into a technology licensing agreement with Symantec with respect to the Company's CleanSweep uninstaller product. On September 13, 1998, the Company replied that it was not interested in licensing its CleanSweep product and instead proposed a license of its RemoveIt uninstaller product, which also has some of the capabilities of the Norton Uninstall Deluxe product. On September 18, 1998, Symantec and the Company entered into a license agreement under which the Company licensed Symantec to distribute the Company's RemoveIt uninstaller. In mid-September 1998, Broadview reported to the Company Board that Parent had proposed that the transaction take the form of an acquisition of the Company's assets. On September 15, 1998, representatives of Parent and the Company met at the Company's offices to discuss the Company's financial performance and condition, and Parent and the Company entered into a Confidentiality Agreement, pursuant to which Parent was furnished with certain financial and business information concerning the Company. Over the next few weeks, discussions between Parent and the Company continued in which Broadview represented the Company in framing possible transaction alternatives. Also in mid-September, the Company and Broadview met and held preliminary discussions with an investment group proposing a recapitalization and acquisition of the Company as part of an industry segment consolidation. The discussions were terminated with no expression of interest by such party after the parties determined they would be unlikely to obtain financing. On September 17, 1998, the Company Board met to discuss the status of negotiations between Parent and the Company. On September 18, 1998, representatives of Parent notified the Company of the Parent's interest in commencing due diligence investigations of the Company. In response to this call, the Company organized diligence materials and prepared them for review by Parent and its legal and financial advisors. Two senior executives of Parent met with representatives of the Company at the Company's offices on Monday, September 21, 1998. On September 23, 1998, the Company Board met. Representatives of Broadview informed the Company Board about their discussions with Parent's representatives earlier that day. During these discussions, Parent had indicated its willingness to proceed with a tender offer and subsequent merger, with the grant by the Company of a nonexclusive license agreement for the Company's CleanSweep product. The Company Board discussed the framework of Parent's proposals concerning a possible transaction. The Company Board indicated that a substantial risk would be involved if the Company granted Parent a license to the CleanSweep product and the proposed tender offer and merger did not close. The Company Board also discussed the possibility of selling the CleanSweep product line on a stand-alone basis. The Company Board instructed Broadview and its management team to resist the granting of the CleanSweep license if at all possible and also to explore selling the CleanSweep product line on a stand-alone basis. During the period from September 24, 1998 through the end of September, the Company Board held several meetings in which representatives of Broadview, the Company's legal counsel and the Company's management team participated. The principal terms of the proposed transaction were reviewed and discussed. 16 17 The Company Board also discussed the possibility of any other acquirors or partners becoming available, and representatives of Broadview advised the Company Board that no other potential investors and acquirors had expressed interest in the Company. The Company Board instructed management to continue negotiating and attempt to avoid granting the license of CleanSweep, and to address the additional concerns raised by the Company Board. During this time period, the Company Board received a memorandum from its counsel outlining its fiduciary duties in the context of a potential change of control. Also during this period, the Company and Parent decided that they would not be able to agree on the price or terms of a sale of the CleanSweep product line on a stand-alone basis. From early October to October 15, 1998, representatives of the Company, Broadview and the Company's legal counsel held discussions with representatives of Parent and Parent's legal counsel to negotiate various aspects of, and the definitive agreements related to, the acquisition proposal. In addition, from time to time during such period, Parent's legal counsel, accountants and representatives of Parent conducted legal, financial and technical reviews of the Company. On October 3, 1998, after receiving a preliminary indication of price from Parent, the Company Board authorized the Company's management to enter into a Non-disclosure Agreement, under which the Company agreed not to solicit takeover proposals from third parties through the close of business on October 13, 1998, which period was subsequently extended through the close of business on October 16, 1998. During the first week of October 1998, the Company Board held several meetings regarding the status of the negotiations. Also during this period, the Company Board and its representatives continued to negotiate with Parent about the terms of the transaction, including the license of CleanSweep. Parent insisted that the license was an integral part of the transaction and that the transaction could not be consummated without it. On October 7, 1998, the Company Board held a meeting during which the Company's legal counsel reviewed for the Company Board (i) its fiduciary duties in the context of a sale of the Company and (ii) the status of negotiations of the terms of the proposed transaction. Counsel for the Company explained the Board's fiduciary duties in the context of granting the license of CleanSweep requested by Parent. Representatives of Broadview provided an analysis of the proposed transaction that included an overview of the Company's financial condition and recent stock price performance, as well as various analyses for determining Company's valuation. The Company's management also reviewed for the Company Board the Company's financial and operating history, discussions relating to the unsuccessful search by Broadview and SSI for additional potential partners or acquirors, discussions regarding the potential delisting of the Common Stock by Nasdaq, the nature and strength of competing companies, industry developments and comparable transactions. The Company Board discussed the continuing need for financing. The Company Board then discussed the open issues related to Parent's acquisition proposal and directed management to continue negotiations with Parent. From October 7 through October 15, 1998, representatives of the Company's management and the Company Board continued to negotiate the transaction with Parent. During such negotiations, the terms of the transaction, including the terms upon which the license of CleanSweep would become effective, were discussed and agreed upon, and discussions on valuation occurred. On October 15, 1998, the Company Board held a meeting to review and discuss Parent's proposed acquisition of the Company. At this meeting, the Company's legal counsel gave a presentation to the Board on the terms of the Merger Agreement and related documents, the structure of the Offer and the Merger, the terms of the License Agreement and the Company Board's fiduciary duties to stockholders. The Company Board also received an opinion from Broadview to the effect that, as of such date, the consideration to be received by the holders of Shares pursuant to the Offer and the Merger as contemplated in the Merger Agreement was fair from a financial point of view to such holders. The Company Board members discussed the terms of the proposed acquisition with its advisors and among themselves. Following this discussion, the Company Board unanimously (a) determined that the Merger Agreement, the License Agreement and the transactions contemplated thereby, including each of the Offer and the Merger, are fair to and in the best interests of the holders of the Shares, (b) approved and adopted the Merger Agreement and the transactions contemplated thereby, and (c) resolved to recommend that the stockholders of the Company accept the Offer, 17 18 tender their shares of Common Stock pursuant to the Offer and approve and adopt the Merger Agreement and approve the transactions contemplated thereby. At approximately 1:00 p.m., Pacific Standard Time on October 15, 1998, Parent and the Company executed the Merger Agreement and the License Agreement and, simultaneously, the directors and executive officers of the Company executed the Stockholder Agreements. After the close of trading on October 15, 1998, the Company and Parent issued a press release announcing the execution of the Merger Agreement and the License Agreement. Shortly thereafter, the Company received notification from Nasdaq by fax that the Common Stock had been delisted, effective at the close of trading on October 15, 1998, for failure to satisfy certain continued listing requirements. Factors Considered by the Board of Directors In approving the Merger Agreement and the transactions contemplated thereby, and recommending that all stockholders tender their Shares pursuant to the Offer, the Company Board considered a number of factors, including: (1) the financial and other terms of the Offer, the Merger Agreement, the License Agreement and the related transaction agreements; (2) Broadview's presentations to the Company Board and its opinion to the effect that, as of the date of its opinion and based upon and subject to certain matters stated therein, the $0.52 per Share cash consideration to be received by the holders of Shares pursuant to the Offer and the Merger was fair to the stockholders of the Company, from a financial point of view (the "Fairness Opinion"). THE FULL TEXT OF BROADVIEW'S WRITTEN FAIRNESS OPINION IS FILED AS EXHIBIT 14 TO THIS SCHEDULE 14D-9 AND IS ALSO ATTACHED HERETO AS ANNEX A. STOCKHOLDERS ARE URGED TO READ SUCH OPINION IN ITS ENTIRETY. (3) that the $0.52 per share tender offer price represents a premium of 10.9%, 28.0% and 95.5% over the closing price of the Common Stock on October 14, 1998 (one day prior to the announcement of the Merger Agreement), September 17, 1998 (20 days prior to such announcement) and September 2, 1998 (30 days prior to such announcement), respectively; (4) the declining price of the Shares on Nasdaq over the last two years, and the fact that the price of the Common Stock would adversely impact the ability of the Company to make acquisitions using its Common Stock or to successfully raise additional equity capital; (5) the Company's difficulty in competing effectively with companies having significantly greater financial and marketing resources than the Company, especially given that (i) the industry segments in which certain of the Company's leading products compete were entering a period of predicted decline, (ii) the anticipated industry shift to "suite products," which bundle a number of utility products into one package, would likely adversely impact revenues from the Company's products, the majority of which are individual utility products and (iii) the fact that the Company does not currently possess the ability to obtain or develop the additional products necessary to compete in the "suite" market environment; (6) the significant need for the Company to raise additional capital to support research and development activities that would be necessary to rebuild revenues in light of the market factors noted above and the Company Board's belief, which was based on the advice of Company management and Broadview, that the Company's ability to raise capital would be impaired by the financial condition of the Company, including the terms of its outstanding debt and Series C Convertible Preferred Stock, and the condition of the capital markets generally; (7) the adverse impact of the pending delisting of the Shares by Nasdaq; (8) the Company Board's view that a superior offer was unlikely to arise, which view was based upon presentations by management and Broadview, the lack of additional potential financing sources or merger candidates, and the fact that the discussions that had been held between the Company and several other parties over the last year had ultimately proven unsuccessful; 18 19 (9) the Company's lack of success in negotiating with Parent a sale of CleanSweep on a stand-alone basis or a sale of the Company which did not include a license for CleanSweep; (10) the fact that the terms of the License Agreement and the conditions under which Parent's license to CleanSweep would come into effect were heavily negotiated by representatives of the Company when it became clear that Parent would not enter into a transaction that did not include the License Agreement; (11) the provisions of the Merger Agreement and the License Agreement, including the provisions allowing the Company to respond to certain unsolicited inquiries concerning an acquisition of the Company, and the provisions which permit the Company to terminate the Merger Agreement upon payment to Parent of a break-up fee, which fee includes the effectiveness of the license of CleanSweep; and (12) the fact that Parent's and Purchaser's obligations under the Offer were not subject to any financing condition, and the fact that Parent has the financial condition and ability to cause Purchaser to meet its obligations under the Merger Agreement. The foregoing discussion of the information and factors considered and given weight by the Company Board is not intended to be exhaustive. In view of the variety of factors considered in connection with its evaluation of the Merger Agreement and the Offer, the Company Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination. In addition, individual members of the Company Board may have given different weights to different factors. ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED The Company retained Broadview in connection with the Offer and the Merger. Pursuant to a letter agreement, dated August 4, 1998, the Company is required to pay Broadview, upon delivery of the Fairness Opinion, a fee, payable in cash, of $325,000, which amount will be credited against any compensation otherwise payable by the Company to Broadview upon the consummation of a sale of the Company. Upon consummation of a sale of the Company, including a sale pursuant to the transactions contemplated by the Merger Agreement, the Company has agreed to pay Broadview a fee, payable in cash on closing, of $500,000 plus 1% of all consideration in excess of $20 million received by the Company and/or its stockholders, which amount is net of the fee paid in connection with the delivery of the Fairness Opinion and net of $125,000 in fees and payments previously paid to Broadview. In addition to the foregoing compensation, the Company has agreed to indemnify Broadview against certain liabilities and expenses arising out of the engagement and the transactions in connection therewith, including certain liabilities under the federal securities laws. The Company's engagement of Broadview is an exclusive engagement, except with respect to the efforts of SSI described below. In addition, the Company entered into a letter agreement, dated June 24, 1998, with TikSoft, pursuant to which TikSoft agreed to contact certain companies with respect to a potential sale of the Company. By amendment to the letter agreement dated August 15, 1998, SSI replaced TikSoft under the agreement. Upon the consummation of a sale of the Company to a buyer which SSI introduced to the Company, the Company is required to pay SSI a fee, payable in cash on closing, equal to 1% of the consideration received by the Company and/or its shareholders. The Company will be required to pay such fee to SSI upon consummation of the transactions contemplated by the Merger Agreement. In addition to the foregoing fee, the Company is required to indemnify SSI against certain liabilities and expenses arising out of the engagement. Except as set forth above, neither the Company nor any person acting on its behalf has or currently intends to employ, retain or compensate any person to make solicitations or recommendations to the stockholders of the Company on its behalf with respect to the Offer and the Merger. 19 20 ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES (a) As part of the Company's restructuring efforts, in July 1998 King R. Lee was appointed Interim Chief Executive Officer and President, a new management team was promoted from within the Company, and the outside members of the Company Board decided to take a significantly increased role in the Company's restructuring efforts and its exploration of strategic alternatives. As part of this process, management and the Company Board undertook a review of appropriate compensation levels in light of certain considerations, including the Company's desire to conserve cash and retain key individuals, the low market price of the Company's Common Stock and the substantial increase in the number of outstanding shares of capital stock. On September 1, 1998 the Company Board approved a grant of options to purchase 200,000 shares of Common Stock to each director, except for Joyce Wrenn who received options to purchase 100,000 shares of Common Stock. At such time, each of the Company's new executive officers received options to purchase 150,000 shares of Common Stock. Each of the foregoing options have an exercise price of $0.281 per share. Other than these option grants and certain option grants to employees of the Company, no transactions in the Shares have been effected during the past 60 days by the Company or, to the best of the Company's knowledge, by any executive officer, director, affiliate or subsidiary of the Company. (b) To the best of the Company's knowledge, to the extent permitted by applicable securities laws, rules or regulations, all of the Company's executive officers, directors and affiliates who own Shares presently intend to tender such Shares to Purchaser pursuant to the Offer. See "Item 3--Stockholder Agreements." ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY SUBJECT COMPANY (a) Except as set forth herein, the Company is not engaged in any negotiation in response to the Offer which relates to or would result in (i) an extraordinary transaction such as a merger or reorganization, involving the Company or any subsidiary of the Company; (ii) a purchase, sale or transfer of a material amount of assets by the Company or any subsidiary of the Company; (iii) a tender offer for or other acquisition of securities by or of the Company; or (iv) any material change in the present capitalization or dividend policy of the Company. (b) Except as set forth herein, there are no transactions, Company Board resolutions, agreements in principle or signed contracts in response to the Offer that relate to or would result in one or more of the events referred to in Item 7(a) above. ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED Short Form Merger. Under the DGCL, if Purchaser acquires, pursuant to the Offer or otherwise, at least 90% of the outstanding shares of Common Stock, Purchaser will be able to effect the Merger after consummation of the Offer without a vote of the Company's stockholders. However, if Purchaser does not acquire at least 90% of the outstanding Shares of Common Stock pursuant to the Offer or otherwise and a vote of the Company's stockholders is required under Delaware Law, a significantly longer period of time will be required to effect the Merger. 20 21 ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 1 Agreement and Plan of Merger, dated October 15, 1998, by and among Symantec Corporation, Oak Acquisition Corporation and Quarterdeck Corporation, including Conditions to the Offer. 2 License Agreement, dated October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and Quarterdeck Corporation. 3 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and King R. Lee. 4 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and Frank W. T. LaHaye. 5 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and William H. Lane III. 6 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and Howard Morgan. 7 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and Frank R. Greico. 8 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and Joyce Wrenn. 9 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and Suzanne Dickson. 10 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and Gadi Navon. 11 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and Cheri Kaplan-Smith. 12 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and John Strosahl. 13 Letter to Stockholders of Quarterdeck Corporation, dated October 19, 1998. 14 Fairness Opinion of Broadview International LLC, dated October 15, 1998. 15 Confidentiality Agreement, dated September 15, 1998, by and between Symantec Corporation and Quarterdeck Corporation. 16 Non-Disclosure Agreement, dated October 1, 1998, by and between Symantec Corporation and Quarterdeck Corporation, as amended October 13, 1998. 17 Form of Indemnification Agreement and provisions regarding indemnification of directors and officers from the Company's Certificate of Incorporation and Bylaws. 18 Selected pages of the Company's Proxy Statement, dated January 5, 1998, for the Annual Stockholder Meeting on February 5, 1998.
21 22 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. By: /s/ KING R. LEE ------------------------------------ King R. Lee Interim Chief Executive Officer and President Dated: October 19, 1998 22 23 SCHEDULE I QUARTERDECK CORPORATION 13160 MINDANAO WAY, 3RD FLOOR MARINA DEL REY, CALIFORNIA 90292 ------------------------ INFORMATION STATEMENT PURSUANT TO SECTION 14(f) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER This Information Statement is being mailed on or about October 20, 1998 as part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") to holders of shares (the "Shares") of common stock, $0.001 par value (the "Common Stock"), of Quarterdeck Corporation, a Delaware corporation (the "Company"). Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Schedule 14D-9. You are receiving this Information Statement in connection with the possible election of persons designated by Oak Acquisition Corporation ("Purchaser"), a wholly owned subsidiary of Symantec Corporation, a Delaware corporation ("Parent"), to the board of directors of the Company (the "Company Board"). Such designation is to be made pursuant to an Agreement and Plan of Merger, dated as of October 15, 1998 (the "Merger Agreement"), by and among Parent, Purchaser and the Company. This Information Statement is required by Section 14(f) of the Securities Exchange Act of 1934, as amended, and Rule 14f-1 thereunder. YOU ARE URGED TO READ THIS INFORMATION STATEMENT CAREFULLY. YOU ARE NOT, HOWEVER, REQUIRED TO TAKE ANY ACTION. Pursuant to the Merger Agreement, Purchaser commenced a cash tender offer to acquire all of the Shares (the "Offer"). The Offer is scheduled to expire at 12:00 Midnight, New York City time, on November 16, 1998, unless the Offer is extended. Following the successful completion of the Offer, upon approval by a stockholder vote, if required, and subject to certain other conditions, Purchaser will be merged with and into the Company (the "Merger"). The information contained in this Information Statement concerning Purchaser has been furnished to the Company by Purchaser, and the Company assumes no responsibility for the accuracy or completeness of such information. GENERAL INFORMATION REGARDING THE COMPANY GENERAL The Common Stock is the only class of voting securities of the Company outstanding. Each Share entitles its record holder to one vote. As of October 15, 1998, there were 73,531,703 Shares outstanding (not including Shares issuable upon conversion of shares of Series C Convertible Preferred Stock or Shares that are subject to purchase upon the exercise of outstanding options). PROPOSED CHANGES TO THE COMPANY'S BOARD OF DIRECTORS If Purchaser purchases Shares pursuant to the Offer, the Merger Agreement provides that Parent will be entitled to designate such number of directors, rounded up to the next whole number, on the Company Board as is equal to the product of the total number of directors (determined after giving effect to the directors elected pursuant to this sentence) multiplied by the percentage that the aggregate number of Shares beneficially owned by Parent or its affiliates bears to the total number of Shares then outstanding. The Company has further agreed, upon request of Parent, to promptly take all actions necessary to cause Parent's designees to be so elected, including, if necessary, increasing the size of the Company Board and/or obtaining the resignation of one or more incumbent directors, provided, however, that until such time as the Purchaser acquires a majority of the outstanding Shares, on a fully-diluted basis, the Company shall use all reasonable I-1 24 efforts to ensure that all of the members of the Company Board who are not employees of the Company remain members of the Company Board. Parent has informed the Company that Parent will designate directors from among the persons set forth in the following table. With respect to Parent's designees, the following table, prepared from information furnished to the Company by Parent, sets forth the name, age, present principal occupation or employment and five-year employment history for each of the persons who may be designated by Parent as Parent's designees. Each occupation set forth opposite a person's name, unless otherwise indicated, refers to employment with Parent. If necessary, Parent may choose additional or other Parent's designees, subject to the requirements of Rule 14f-1. Unless otherwise indicated below, the business address of each person is Symantec Corporation, 10201 Torre Avenue, Cupertino, California 95014.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; NAME AND CITIZENSHIP AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS -------------------- --- -------------------------------------------------- Gordon E. Eubanks, Jr. 51 President and Chief Executive Officer since October 1986 and a member of the Board of Directors since November 1983. Howard A. Bain III 52 Vice President, Worldwide Operations and Chief Financial Officer. Mr. Bain joined Parent in October 1991 as its Vice President, Finance. Enrique T. Salem 32 Vice President, Security and Assistance Business Unit and Chief Technical Officer. Mr. Salem joined Parent in April 1990 and has held numerous positions including Director of Development and General Manager of Advanced Utilities Group. Derek Witte 41 Vice President, General Counsel and Secretary. Mr. Witte joined Parent in October 1990.
Parent has advised the Company that to the best knowledge of Parent, none of Parent's designees currently is a director of, or holds any position with, the Company, and except as disclosed in the Offer to Purchase, none of Parent's designees beneficially owns any securities (or rights to acquire any securities) of the Company or has been involved in any transactions with the Company or any of its directors, executive officers or affiliates that are required to be disclosed pursuant to the rules of the Securities and Exchange Commission (the "SEC"), except as may be disclosed in the Offer to Purchase. None of Parent's designees has any family relationship with any director or executive officer of the Company. Parent has advised the Company that each of the persons listed in the table above has consented to act as a director, and that none of such persons has during the last five years been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was, or is, subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws or is involved in any other legal proceeding which is required to be disclosed under Item 401(f) of Regulation S-K promulgated by the SEC. It is expected that Parent's designees may assume office at any time following the purchase by Parent of a majority of outstanding Shares pursuant to the Offer, which purchase cannot be earlier than November 16, 1998, and that, upon assuming office, Parent's designees will thereafter constitute a majority of the Company Board. I-2 25 THE CURRENT MEMBERS OF THE BOARD OF DIRECTORS The names of the current directors, their ages as of October 9, 1998 and certain other information about them are set forth below. Some of the current directors may resign effective immediately following the purchase of Shares by Purchaser pursuant to the Offer.
YEAR FIRST ELECTED A POSITION WITH THE COMPANY OR PRINCIPAL OCCUPATION NAME OF DIRECTOR AGE DIRECTOR DURING THE PAST FIVE YEARS ---------------- --- ---------- ------------------------------------------------- King R. Lee........... 58 1994 Mr. Lee has served as the Interim Chief Executive Officer and President of the Company since July 1998. Mr. Lee also served as a member of the Office of the President of the Company from August 27, 1996 until February 1997. Mr. Lee also served as Interim Chief Executive Officer of the Company from December 1994 until January 1995 and served as Interim Chief Operating Officer of the Company between July and December 1994. He was elected a Director of the Company in July 1994. Mr. Lee served as the Chief Executive Officer of Wynd Communications Corporation, a two-way wireless messaging service provider, from October 1995 to January 1997, and has served as its Chairman since October 1995. Mr. Lee is President of King R. Lee & Associates, Inc., a management consulting firm, which provides consulting services to the Company. From 1987 to 1993, Mr. Lee was President and Chief Executive Officer of Xtree Company, a developer of computer systems software. He serves as a director of Nettech Systems, Inc., Outback Resource Group, Inc., Boss Entertainment, Dover Pacific, Inc. and Mobile Automation, Inc. Frank W. T. LaHaye.... 69 1982 Mr. LaHaye has been a Director of the Company since 1982 and the Chairman of the Board since 1985. Mr. LaHaye was a general partner of the general partnership of Peregrine Ventures, a venture capital investment partnership, from its formation in 1981 until its dissolution in 1998. Mr. LaHaye has been a general partner of the general partnership of Peregrine Ventures II, a venture capital investment partnership, since its formation in 1983. Mr. LaHaye serves as a director or trustee of various funds affiliated with the Franklin/Templeton Group of Funds and as a director of Digital Transmission Systems, Inc. William H. Lane III... 60 1996 Mr. Lane has been a director of the Company since September 1996. He retired from Intuit Inc., a personal and small business finance software publisher, effective July 31, 1996, having served as its Vice President, Chief Financial Officer, Secretary and Treasurer since January 1994. Mr. Lane served in a similar capacity at ChipSoft, Inc., a tax preparation software company, from July 1991 until its acquisition by Intuit Inc. in December 1993. Mr. Lane is also a director of Expert Software, Inc., a value-priced general PC software publisher, MetaCreations Corporation, a visual computing software company, and Storm Technology, Inc., a scanning devices company.
I-3 26
YEAR FIRST ELECTED A POSITION WITH THE COMPANY OR PRINCIPAL OCCUPATION NAME OF DIRECTOR AGE DIRECTOR DURING THE PAST FIVE YEARS ---------------- --- ---------- ------------------------------------------------- Dr. Howard L. 52 1983 Dr. Morgan has been a Director of the Company Morgan.............. since 1983. He is currently President of Arca Group, Inc., a consulting and investment management firm specializing in the areas of computer and communications technologies. He serves as a director of Cylink Corporation, a developer of software for secure communications, Franklin Electronic Publishers, Inc., a developer of electronic books, Infonautics Corporation, a provider of online information, Kentek Information Systems, a manufacturer of laser printers, Neoware Systems, Inc., a provider of network terminals, MetaCreations, Inc., a developer of computer graphics software, Segue Software, a developer of automated software systems, and Unitronix Corp., a software supplier. Joyce Wrenn........... 62 1998 Ms. Wrenn became a director of the Company on September 8, 1998. Since March 1992, Ms. Wrenn has been Vice President -- Information Technologies and Chief Information Officer of Union Pacific Railroad.
Each of the directors has been engaged in the principal occupation(s) described above during the past five years. There are no family relationships among any of the directors or executive officers of the Company. INFORMATION CONCERNING THE BOARD; DIRECTOR COMPENSATION The Company's Board of Directors has a standing Audit Committee and Compensation Committee. The Audit Committee, currently comprised of Messrs. LaHaye, Lane and Morgan, advises and assists the Board of Directors in evaluating the performance of the Company's auditors, including the scope and adequacy of the auditors' examinations. During fiscal year 1998, the Audit Committee held two meetings. The Compensation Committee, currently comprised of Messrs. LaHaye and Lane, oversees the Company's overall executive compensation program, reviews the Company's employee benefit plans and administers the Company's stock option plans. The Compensation Committee met six times during the last fiscal year. The Company's Board of Directors selects nominees for election as directors. The Company does not have a standing nominating committee. Stockholder nominations for election as directors may be voted on at an annual meeting only if such nominations are made pursuant to written notice timely given to the Secretary of the Company accompanied by certain information specified in the Company's bylaws. To be timely, a stockholder's written notice must be delivered to or mailed and received at the principal executive offices of the Company not less than 60 days nor more than 90 days prior to the meeting; provided, however, that, in the event that less than 60 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, a stockholder's notice will be timely if received not later than the tenth day following the day on which such notice of the date of the meeting is mailed or such public disclosure is made. Such stockholder's notice must set forth with respect to each director nominee all of the information relating to such person that is required to be disclosed in solicitations for elections of directors under the rules of the Securities and Exchange Commission and such stockholder's name and address, as they appear on the Company's books, and the number of shares of Common Stock owned by the stockholder giving the notice. The Board of Directors held 24 meetings during the fiscal year ended September 30, 1998. All directors then in office attended at least 75% of the meetings of the Board of Directors, and all members of the committees of the Board of Directors attended at least 75% of the meetings of those committees, in each case, after the election of such individuals to the Board of Directors or to such committee. I-4 27 DIRECTORS' COMPENSATION Non-employee directors receive $6,000 ($12,000 in the case of the Chairman of the Board) annually, payable quarterly, as compensation for serving on the Board of Directors, plus $1,500 per meeting for Board or Committee meetings attended ($500 for telephonic meetings). Non-employee directors are reimbursed for their reasonable expenses incurred in attending meetings. Non-employee directors also participate in the 1990 Directors Stock Option Plan which provides for automatic grants of options to non-employee directors. Under the 1990 Directors Stock Option Plan, each non-employee director is granted an option to purchase 30,000 shares of the Company's Common Stock three business days following his or her first election as a director (the "initial grant"). Thereafter, each non-employee director who has been re-elected or who is continuing as a member of the Board of Directors is granted an option to purchase 7,500 shares of the Company's Common Stock on the date of the Company's annual meeting of stockholders (an "annual grant"). Options are granted at 100% of the fair market value of the Company's Common Stock on the grant date and have a term of five years. Initial grants vest immediately as to one-third of the shares and vest an additional one-third of the shares on each of the first and second anniversaries of the grant date. Annual grants vest in full on the first anniversary of the grant date. The Board of Directors or the Compensation Committee may also make discretionary option grants to non-employee directors. During fiscal 1998, the Board of Directors made discretionary grants of 670,000 options, in the aggregate, to the non-employee directors. On August 27, 1996, when King R. Lee, the Interim President and a director of the Company, assumed the duties as a member of the Office of the President, Mr. Lee entered into a consulting agreement (the "Prior Consulting Agreement") with the Company. Under the terms of the Prior Consulting Agreement, as amended, King R. Lee & Associates, Inc., of which Mr. Lee is President and sole stockholder, was paid $1,500 per full day plus expenses in exchange for Mr. Lee's consulting services to the Company. The Company paid to King R. Lee & Associates, Inc. $33,000 during fiscal year 1996 and a total of $76,500 during fiscal year 1997 pursuant to the Prior Consulting Agreement. Mr. Lee provided consulting services to the Company under the Prior Consulting Agreement through February 1997. In addition, the Company entered into a new consulting agreement (the "New Consulting Agreement") with Mr. Lee on July 8, 1998 when Mr. Lee assumed the duties of Interim President of the Company. Pursuant to the New Consulting Agreement, King R. Lee & Associates, Inc. is paid $2,500 per full day, plus expenses and medical benefits, in exchange for consulting services rendered by Mr. Lee to the Company. During fiscal year 1998, the Company paid $150,000 to King R. Lee & Associates, Inc. and granted 200,000 options to Mr. Lee, all of which were fully vested on the grant date. The New Consulting Agreement provides for severance in the amount of $162,500 in the event that Mr. Lee's consulting services to the Company are terminated. EXECUTIVE OFFICERS OF THE COMPANY The following individuals currently serve as executive officers of the Company:
NAME AGE POSITION(S) HELD ---- --- ---------------- King R. Lee...................... 58 Interim President Frank R. Greico.................. 40 Chief Financial Officer John Strosahl.................... 31 Vice President -- International Cheri Kaplan-Smith............... 33 Vice President -- North American Sales Suzanne Dickson.................. 38 Vice President -- Product Marketing Gadi Navon....................... 33 Vice President and General Counsel
See "The Current Members of the Board" above for background information on Mr. Lee. Mr. Greico was named Chief Financial Officer and Senior Vice President in February 1996. On October 9, 1998, Mr. Greico ceased to be an employee of the Company and began to serve as a consultant, however he continues to serve as the Company's Chief Financial Officer. Prior to joining the Company, Mr. Greico served as Chief Financial Officer and Vice President of Finance and Operations of Knowledge Adventure, Inc., a developer and publisher of educational software. I-5 28 Mr. Strosahl was appointed as the Company's Vice President -- International in August 1997. Prior to that, Mr. Strosahl served as Interim Vice President -- Worldwide Sales from March 1997 to August 1997, and as Senior Director -- Asia/Pacific and Latin America from March 1996 until March 1997. Ms. Kaplan-Smith was appointed as the Company's Vice President -- North American Sales in June 1998. From March 1998 until such time, she served as Senior Director of Enterprise Sales. Prior to joining the Company, Ms. Kaplan-Smith was Vice President of Channel Sales and Programs at Novonyx, and earlier held a similar position at Cheyenne Software. Ms. Dickson was appointed Vice President -- Product Marketing in September 1997. From October 1995 until her appointment to her current position, Ms. Dickson served as Vice President in the Company's Communication and Collaboration Unit. From October 1994 until September 1995, Ms. Dickson was a Director in the Company's Internet Business Unit, and prior to that she was a Senior Product Manager in the same unit from the time she joined the Company in February 1994. Prior to her employment by the Company, Ms. Dickson was a Senior Marketing Manager at Symantec. Mr. Navon was appointed General Counsel of the Company in June 1998. Prior to that, he served as the Company's corporate counsel since September 1995. Prior to joining the Company, Mr. Navon was an associate at the law firm of Arter & Hadden LLP. EXECUTIVE COMPENSATION The following table sets forth information concerning the annual and long-term compensation paid by the Company during the fiscal years ended September 30, 1998, 1997 and 1996 to (i) the persons who served as Chief Executive Officer or performed the functions thereof during fiscal year 1998, (ii) the four most highly compensated executive officers as of the end of fiscal year 1998, whose total annual salary and bonus exceeded $100,000 and (iii) two additional individuals who would have been included among the four most highly compensated executive officers, but for the fact that neither individual was serving as an executive officer at the end of fiscal year 1998 (each, a "Named Officer"). SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION AWARDS ANNUAL ---------------------------- COMPENSATION SECURITIES -------------------- UNDERLYING ALL OTHER SALARY BONUS OPTIONS/SARS COMPENSATION NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($) --------------------------- ---- -------- -------- ------------ ------------ Curtis A. Hessler(1)............... 1998 $380,770 $125,000 150,000 $ 24,040 Former President and CEO 1997 297,692 0 1,350,000 0 King R. Lee(2)..................... 1998 170,000 0 207,500 0 Interim Chief Executive Officer 1997 101,250 0 122,500 0 and President 1996 58,500 0 100,000 0 Frank R. Greico(3)................. 1998 189,909 32,500 75,000 0 Senior VP and CFO 1997 187,589 61,250 106,250 0 1996 129,230 25,000 75,000 0 Joseph Fusco(4).................... 1998 169,507 20,000 150,000 45,000 Former Senior VP -- Marketing 1997 145,802 43,531 150,000 0 and Product Management Mark Epstein(5).................... 1998 216,150 60,000 0 55,380 Former Chief Technology Officer 1997 38,769 0 600,000 0 John Strosahl(6)................... 1998 188,461 19,026 180,000 0 Vice President -- International 1997 138,221 72,320 51,575 0 1996 60,000 30,000 0 0
- --------------- (1) Mr. Hessler served as the President and Chief Executive Officer of the Company from February 1997 to July 6, 1998. I-6 29 (2) Mr. Lee has served as Interim Chief Executive Officer and President since July 8, 1998. From September of 1994 until January 1995, Mr. Lee acted in the capacity of Chief Executive Officer and was formally appointed Interim Chief Executive Officer in December 1994. In addition, Mr. Lee was Interim Chief Executive Officer between July and December 1994. Mr. Lee was appointed as a member of the Office of President in August 1996 and resigned from such position upon the appointment of Mr. Hessler in February 1997. Mr. Lee is also a director of the Company and received compensation as a non-employee director. Mr. Lee's salary for fiscal 1996 includes $33,000 of consulting fees paid to King R. Lee & Associates and $25,000 of non-employee director fees, Mr. Lee's salary for fiscal 1997 includes $76,500 of consulting fees paid to King R. Lee & Associates and approximately $25,000 of non-employee director fees, and Mr. Lee's salary for fiscal 1998 includes $150,000 of consulting fees paid to King R. Lee & Associates and $20,000 of non-employee director fees. The options granted to Mr. Lee during fiscal 1997 include 90,000 options granted to Mr. Lee in connection with a like value exchange of options described in the Company's Proxy Statement dated January 5, 1998. (3) Mr. Greico was an employee of the Company and an executive officer from February 1996 until October 9, 1998. Mr. Greico is currently a consultant to the Company although he continues to serve as Chief Financial Officer. The options granted to Mr. Greico during fiscal 1997 include 56,250 options granted to Mr. Greico in connection with a like value exchange of options described in the Company's Proxy Statement dated January 5, 1998. (4) Mr. Fusco was appointed as a Vice President in September 1996 and as Senior Vice President -- Marketing and Product Management on April 28, 1997. Mr. Fusco served in these positions until July 15, 1998 when his employment with the Company terminated. The options granted to Mr. Fusco during fiscal 1997 include 67,500 options granted to Mr. Fusco in connection with a like value exchange of options described in the Company's Proxy Statement dated January 5, 1998. (5) Mr. Epstein served as Chief Technology Officer of the Company from July 1997 through July 15, 1998. He is no longer employed by the Company. The options granted to Mr. Epstein during fiscal 1997 include 700,000 options granted to Mr. Epstein in connection with a like value exchange of options described in the Company's Proxy Statement dated January 5, 1998. (6) Mr. Strosahl was appointed as the Company's Vice President -- International in August 1997. Prior to that, Mr. Strosahl served as Interim Vice President -- Worldwide Sales from March 1997 to August 1997, and as Senior Director -- Asia/Pacific and Latin America from March 1996 until March 1997. The bonus amount for Mr. Strosahl in fiscal 1997 includes reimbursement of relocation and relocation related expenses that he received from the Company in the amount of $38,722. The options granted to Mr. Strosahl during fiscal 1997 include 21,575 options granted to Mr. Strosahl in connection with a like value exchange of options described in the Company's Proxy Statement,dated January 5, 1998. I-7 30 The following two tables set forth information concerning stock options granted to, exercised by and held by the named executive officers in fiscal year 1998. No SARs were granted by the Company or exercised by the named executive officers in fiscal year 1998. OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS --------------------------- POTENTIAL REALIZABLE NUMBER OF VALUE AT ASSUMED SECURITIES % OF TOTAL ANNUAL RATES OF STOCK UNDERLYING OPTIONS/SARS EXERCISE PRICE APPRECIATION FOR OPTIONS/SARS GRANTED TO OR OPTION TERM GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ------------------------- NAME (#)(1) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($) ---- ------------ ------------ ---------- ---------- ----------- ----------- Curtis A. Hessler.... 150,000 3.6 % $1.8125 12/08/07 $171,281.25 $432,281.25 King R. Lee.......... 7,500 .18 2.1250 02/05/08 10,040.625 25,340.625 200,000 4.8 0.2810 09/01/08 35,406.00 89,358.00 Frank R. Greico...... 75,000 1.8 2.3438 11/10/07 110,744.55 279,498.15 Joseph Fusco......... 150,000 3.6 2.3438 11/10/07 221,489.10 558,996.30 Mark Epstein......... -- -- -- -- -- -- John Strosahl........ 30,000 .72 2.3438 11/10/07 44,297.82 111,799.26 150,000 3.6 .2810 09/01/08 26,554.50 67,018.50
- --------------- (1) Except as noted below, the options granted to the executive officers listed above vest in the following manner: one fourth of the options vest on the first anniversary of the date of grant and 1/48 of the total number of options vest thereafter on a monthly basis. The employment agreements of certain individuals also provide for accelerated vesting under certain circumstances generally related to achievement of certain targets or certain changes-of-control. See "Executive Compensation -- Employment Agreements." Options generally remain exercisable for ten years from the date of grant. All options were granted at a price equal to the fair market value on the date of grant. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS AT OPTIONS/SARS SHARES ACQUIRED VALUE REALIZED FISCAL YEAR-END (#) AT FISCAL YEAR-END (#) NAME ON EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE ---- --------------- -------------- ------------------------- ------------------------- Curtis A. Hessler.... 0 $0 590,625 909,375 $ 0 $ 0 King R. Lee.......... 0 0 343,750 43,750 68,800 0 Frank R. Greico...... 0 0 55,208 0 0 0 Joseph Fusco......... 0 0 53,596 0 0 0 Mark Epstein......... 0 0 300,000 0 0 0 John Strosahl........ 0 0 22,985 208,590 0 51,600
EMPLOYMENT AGREEMENTS The Company's former Chief Executive Officer, Curtis A. Hessler, was employed pursuant to a four-year employment agreement dated as of January 13, 1997. Pursuant to that agreement, Mr. Hessler was entitled to receive a base salary of $450,000 per year and an annual target bonus of $250,000 based upon achievement of objectives established by the Board of Directors or the Compensation Committee. In addition, Mr. Hessler was granted options to purchase 1,350,000 shares of Common Stock. The employment agreement also provided for accelerated vesting of Mr. Hessler's options upon the occurrence of certain "change in control" transactions or if certain stock price levels were reached. Pursuant to the terms of an agreement entered into I-8 31 with Mr. Hessler upon his resignation in July 1998, Mr. Hessler is entitled to receive severance payments in an aggregate amount equal to $173,089, payable over 18 months. As described above, King R. Lee received compensation from the Company pursuant to the terms of the New Consulting Agreement. The terms of Mr. Greico's offer letter provided that, as a result of the termination of his employment, he is entitled to receive an amount equal to six months' salary plus six months' targeted bonus and accelerated vesting of 50% of his unvested options. In addition, upon Mr. Greico's termination as an employee, the Company forgave approximately $33,000 of outstanding debt owed to the Company by Mr. Greico. In connection with Mr. Greico's agreement to serve as the Company's Chief Financial Officer throughout the acquisition process, Mr. Greico will be paid a retention bonus in the amount of $37,500. The Company entered into a two-year employment agreement with Joseph Fusco, its former Senior Vice President -- Marketing and Product Management, dated as of September 16, 1996. Pursuant to that agreement, Mr. Fusco was entitled to receive a base salary of $135,000 per year and an annual target bonus of $67,500 determined in accordance with the terms of a management performance bonus plan of the Company and contingent upon attainment of objectives mutually agreed upon by Mr. Fusco and the Chief Executive Officer of the Company. In addition, Mr. Fusco was granted options to purchase 75,000 shares of Common Stock pursuant to the terms of the employment agreement. Mr. Fusco is entitled to receive $92,500 in severance as a result of the termination of his employment, payable over six months. Mr. Epstein, the Company's former Senior Vice President and Chief Technology Officer, was employed pursuant to an offer letter dated July 11, 1997. Mr. Epstein's offer letter provided for a base salary of $240,000 and an annual target bonus of $120,000 determined in accordance with the terms of a management performance bonus plan of the Company and contingent upon attainment of objectives mutually agreed upon by Mr. Epstein and the Chief Executive Officer of the Company. In addition, Mr. Epstein was granted options to purchase 700,000 shares of Common Stock pursuant to the terms of the employment offer letter. Mr. Epstein is entitled to received $240,000 in severance as a result of the termination of his employment, payable over twelve months. I-9 32 COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Company's Compensation Committee oversees the Company's overall executive compensation program in addition to reviewing and administering programs available to employees of the Company. COMPENSATION POLICIES In recognition that the recruitment of personnel in the computer software industry is highly competitive, the Company's compensation policies, both for executive and non-executive employees, are structured to attract and retain highly skilled technical, marketing and management personnel. To reward and encourage performance that enhances both the short-term and long-term results of the Company, the Company's compensation program is centered in three specific areas: base salary, performance bonus and long-term incentive awards. In applying these main components to executive compensation, the Compensation Committee has determined to place a greater emphasis on merit and risk-oriented compensation for the Company's executive officers. Consequently, for executive officers, the Compensation Committee has generally preferred base salaries for executive officers that fall within the moderate range of competitor salaries and to establish bonus guidelines and long-term incentive programs (particularly option grants) that are designed to inspire and reward performance. BASE SALARY In general, the Compensation Committee reviews salaries for the Chief Executive Officer and executive officers on an annual basis, generally coordinated with the Board's annual election of executive officers following the Company's annual meeting. During fiscal year 1998, the base salary for each of Messrs. Hessler, Greico, Fusco and Epstein was paid pursuant to the terms of their employment agreements. Also during such year, consulting fees were paid to Mr. Lee pursuant to the New Consulting Agreement. The Compensation Committee believes that the terms of each employment agreement are consistent with the Committee's philosophy of establishing base salaries within the moderate range and placing greater emphasis on merit and risk-oriented compensation such as bonus payments based on performance and stock options. DISCRETIONARY BONUS PLAN In fiscal 1997, the Company implemented a Discretionary Bonus Plan (the "Bonus Plan") designed to further the long-term growth and profitability of the Company by motivating participants to achieve predefined quarterly and annual objectives. Employees of the Company in senior management positions were eligible to receive benefits under the Bonus Plan with the exception of Messrs. Hessler and Lee, neither of whom are eligible to receive any benefits under the Bonus Plan. Awards under the Bonus Plan were based on a combination of Company, departmental and individual performance. The Company performance objectives were established by the Board of Directors in conjunction with the Chief Executive Officer. Quarterly and annual personal and departmental performance objectives were generally established by the Chief Executive Officer in conjunction with each eligible employee and reviewed by the Compensation Committee. In general, payment of bonus amounts was dependent on achievement of the objectives according to the following formula: (i) 50% of the individual bonus award for each eligible employee was based upon achievement of company-wide sales and profitability relative to the established performance objective and (ii) 50% of the individual bonus award for the executive officer was based on an evaluation of the eligible employee's personal performance against the targeted personal performance objectives and achievement of department objectives. Pursuant to his employment agreement, Mr. Hessler received a base salary of $450,000 per year and was entitled to receive an annual target bonus of $250,000 based upon achievement of objectives established by the Board of Directors or the Compensation Committee. Mr. Hessler received a bonus of $125,000, which was the minimum guaranteed bonus for the first year of Mr. Hessler's employment under his employment contract. I-10 33 Pursuant to the New Consulting Agreement, Mr. Lee is paid a fixed per-day consulting fee and is not entitled to any bonuses from the Company. LONG-TERM INCENTIVE AWARDS The Company's Stock Plan permits the Compensation Committee to grant to eligible employees stock options, stock appreciation rights and other stock awards such as restricted stock and bonus stock. The Compensation Committee believes that the option grants made to the executive officers of the Company were a key factor in the Company's ability to hire such executives during fiscal year 1998 and were consistent with the Committee's philosophy of placing emphasis on risk-oriented compensation. The Compensation Committee has determined that long-term incentives should be granted on a discretionary basis based principally on the quality of individual performance and base salary levels. The Compensation Committee takes into consideration the amount of previous option grants held when granting additional options. INTERNAL REVENUE CODE SECTION 162(m) Section 162(m) of the Internal Revenue Code of 1986, as amended, places a per-person limit of $1,000,000 on the amount of compensation that may be deducted by the Company in any year with respect to certain of the Company's most highly compensated officers. Section 162(m) does not, however, disallow a deduction for qualified "performance-based compensation" the material terms of which are disclosed to and approved by stockholders. In February 1995, the stockholders approved amendments to and a restatement of the Company's 1990 Stock Plan with the result that compensation resulting from most awards granted thereunder would be qualified "performance-based compensation" and would be deductible. However, the Company may from time to time pay compensation to its executive officers that may not be deductible. None of the options granted to either Mr. Hessler during fiscal year 1998 were granted outside of the Company's 1990 Stock Plan. Compensation Committee: Frank W.T. LaHaye William H. Lane III I-11 34 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information regarding the beneficial ownership of the Common Stock as of October 15, 1998 for (i) each person known to the Company to be the beneficial owner of more than 5% percent of the outstanding Common Stock, (ii) each director of the Company, (iii) the Named Officers, and (iv) all current directors and executive officers of the Company as a group. The address of each such person is that of the Company, 13160 Mindanao Way, Marina del Rey, California 90292.
NUMBER OF SHARES AND NUMBER OF SHARES OF PERCENT OF SHARES OF IN-THE-MONEY NAME COMMON STOCK COMMON STOCK(1) OPTIONS(2) ---- ------------------- -------------------- -------------------- Frank W.T. LaHaye(3)....... 269,221 * 351,721 Howard Morgan(4)........... 246,926 * 329,426 King R. Lee(5)............. 355,833 * 210,000 William H. Lane III(6)..... 130,000 * 215,000 Joyce Wrenn(7)............. 23,334 * 100,000 Curtis A. Hessler(8)....... 684,375 * 0 Frank R. Greico(9)......... 62,208 * 7,000 Joseph Fusco(10)........... 53,596 * 0 Mark Epstein(11)........... 300,000 * 0 John Strosahl(12).......... 82,634 * 152,857 All directors and executive officers as a group (10 persons)(13)............. 1,407,881 1.9% 1,816,004
- --------------- * Less than one percent (1) Percent Ownership is based on 73,531,705 shares of Common Stock outstanding as of October 15, 1998. Unless otherwise indicated below, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Shares subject to options that are currently exercisable or exercisable within 60 days of October 15, 1998 are deemed to be outstanding and to be beneficially owned by the person holding such options or warrants for the purpose of computing the percentage ownership of such person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. (2) This column reflects all shares that will, under the terms of the Merger Agreement, be sold by such individuals, consisting of shares of Common Stock that are currently owned by such individuals and additional shares that are, or will be under the terms of the Merger Agreement, purchasable upon the exercise of options which have exercise prices of less than $0.52 per share. (3) Includes 117,500 shares that may be purchased by Mr. LaHaye upon the exercise of options that are either currently exercisable or will become so within 60 days of October 15, 1998, and includes 151,721 shares of Common Stock held by the Frank LaHaye Family Trust, of which Mr. LaHaye is Trustee. (4) Includes 117,500 shares that may be purchased by Dr. Morgan upon the exercise of options that are either currently exercisable or will become so within 60 days of October 15, 1998, and includes 24,000 shares of Common Stock held in trust for Dr. Morgan's children with respect to which Dr. Morgan disclaims beneficial ownership. (5) Includes 345,833 shares that may be purchased by Mr. Lee upon the exercise of options that are either currently exercisable or will become so within 60 days of October 15, 1998, and includes 10,000 shares of Common Stock held by The Lee Living Trust, of which Mr. Lee and his spouse are the Trustees. (6) Includes 115,000 shares that may be purchased by Mr. Lane upon the exercise of options that are either currently exercisable or will become so within 60 days of October 15, 1998, and includes 15,000 shares I-12 35 of Common Stock held by the Canyon Lane Corporation Profit Sharing Plan, of which Mr. Lane is the sole stockholder. (7) Includes 23,334 shares that may be purchased by Ms. Wrenn upon the exercise of options that are either currently exercisable or will become so within 60 days of October 15, 1998. (8) Includes 684,375 shares that may be purchased by Mr. Hessler upon the exercise of options that are either currently exercisable or will become so within 60 days of October 15, 1998. (9) Includes 55,208 shares that may be purchased by Mr. Greico upon the exercise of options that are either currently exercisable or will become so within 60 days of October 15, 1998, and includes 6,000 shares of Common Stock held by the Greico Family Trust, of which Mr. Greico and his spouse are the Trustees, and with respect to which Mr. Greico disclaims beneficial ownership. (10) Includes 53,596 shares that may be purchased by Mr. Fusco upon the exercise of options that are either currently exercisable or will become so within 60 days of October 15, 1998. (11) Includes 300,000 shares that may be purchased by Mr. Epstein upon the exercise of options that are either currently exercisable or will become so within 60 days of October 15, 1998. (12) Includes 22,985 shares which may be purchased by Mr. Strosahl upon the exercise of options that are either currently exercisable or will become so within 60 days of October 15, 1998. (13) Includes 976,877 shares which may be purchased upon the exercise of options granted to the directors and executive officers as a group, which are either currently exercisable or will become so within 60 days of October 15, 1998. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In November 1996, Mr. Greico, the Company's Chief Financial Officer, received an advance on the bonus portion of his compensation in the amount of approximately $74,000, which advance was made pursuant to the terms of Mr. Greico's employment offer letter. At the end of fiscal 1998, approximately $33,000 remained outstanding on this advance. On October 9, 1998, Mr. Greico ceased to be an employee of the Company and the balance of the advance then outstanding was forgiven by the Company as part of Mr. Greico's severance package. As noted above, Mr. Lee receives consulting fees under the New Consulting Agreement. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's officers and directors, and persons who own more than ten percent of a registered class of the Company's equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. To the Company's knowledge, based solely on its review of the copies of such reports furnished to the Company and written representations that no other reports were required, the Company believes that all of its officers and directors and greater than ten percent beneficial owners complied with all Section 16(a) filing requirements applicable to them with respect to those transactions during the fiscal year ended September 30, 1998. I-13 36 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 1 Agreement and Plan of Merger, dated October 15, 1998, by and among Symantec Corporation, Oak Acquisition Corporation and Quarterdeck Corporation, including Conditions to the Offer. 2 License Agreement, dated October 15, 1998, by and between Symantec Corporation and Quarterdeck Corporation. 3 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and King R. Lee. 4 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and Frank W. T. LaHaye. 5 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and William H. Lane III. 6 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and Howard Morgan. 7 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and Frank R. Greico. 8 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and Joyce Wrenn. 9 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and Suzanne Dickson. 10 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and Gadi Navon. 11 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and Cheri Kaplan-Smith. 12 Stockholder Agreement, dated as of October 15, 1998, by and between Symantec Corporation, Oak Acquisition Corporation and John Strosahl. 13 Letter to Stockholders of Quarterdeck Corporation, dated October 19, 1998. 14 Fairness Opinion of Broadview International LLC, dated October 15, 1998. 15 Confidentiality Agreement, dated September 15, 1998, by and between Symantec Corporation and Quarterdeck Corporation. 16 Non-Disclosure Agreement, dated October 1, 1998, by and between Symantec Corporation and Quarterdeck Corporation, as amended October 13, 1998. 17 Form of Indemnification Agreement and provisions regarding indemnification of directors and officers from the Company's Certificate of Incorporation and Bylaws. 18 Selected pages of the Company's Proxy Statement, dated January 5, 1998, for the Annual Stockholder Meeting on February 5, 1998.
I-14
EX-1 2 AGREEMENT AND PLAN OF MERGER 1 Exhibit 1 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER dated as of October 15, 1998 (the "AGREEMENT DATE"), among SYMANTEC CORPORATION, a Delaware corporation ("PARENT"), OAK ACQUISITION CORPORATION, a Delaware corporation and a wholly-owned Subsidiary of Parent ("SUB"), and QUARTERDECK CORPORATION, a Delaware corporation (the "COMPANY"). Certain defined terms used in this Agreement shall have the meaning ascribed to them in Section 9.3. WHEREAS, in furtherance of the acquisition of all of the capital stock of the Company by Parent on the terms and subject to the conditions set forth in this Agreement, Parent proposes to cause Sub to make a tender offer (as it may be amended from time to time as permitted under this Agreement, the "OFFER") to purchase all the issued and outstanding shares of Common Stock, par value $0.001 per share, of the Company and all associated rights (the "COMPANY COMMON STOCK"), at a price per share of the Company Common Stock of not less than $0.52 net to the seller in cash and without interest thereon (such price, as may hereafter be increased, the "OFFER PRICE"), subject to reduction for any applicable federal backup or other applicable withholding or stock transfer taxes, upon the terms and subject to the conditions set forth in Exhibit A, and the Board of Directors of the Company has approved the Offer and has resolved to recommend that the Company's stockholders accept the Offer; WHEREAS, Sub has been formed for the sole purpose of enabling Parent to acquire all of the capital stock of the Company and Sub has not conducted any operations that were not related to, and for the purpose of, such acquisition; WHEREAS, concurrently with the execution of this Agreement, the Company and Parent have entered into the Technology License Agreement in the form attached hereto as Exhibit B (the "LICENSE AGREEMENT") pursuant to which the Company has granted Parent a worldwide, perpetual, non-exclusive license (including a license to create and distribute derivative works) to the Company's software product "CleanSweep" and has deposited in escrow the source code to such product, and the Parent has agreed to pay certain royalties to the Company; WHEREAS, the respective Boards of Directors of Parent, Sub and the Company have approved the Offer and the merger of Sub into the Company, as set forth below (the "MERGER"), upon the terms and subject to the conditions set forth in this Agreement, whereby each issued and outstanding share of the Company Common Stock, other than shares owned directly or indirectly by Parent or the Company and Dissenting Shares (as defined in Section 3.1(e)), will be converted into the right to receive the Offer Price; WHEREAS, each of the directors and executive officers of the Company have entered into Stockholder Agreements with the Parent in the form attached hereto as Exhibit C (the "Stockholder Agreements") in which each such person has agreed to tender all shares of the Company Common Stock held by such person pursuant to the Offer and to vote in favor of the Merger and against any competing proposals; 2 WHEREAS, Parent, Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Offer and the Merger and also to prescribe various conditions to the Offer and the Merger; and NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement, the parties agree as follows: ARTICLE I THE OFFER 1.1 The Offer. (a) Subject to the provisions of this Agreement, Sub shall, and Parent shall cause Sub to, within five business days of the public announcement (on the Agreement Date or the following day) of the execution of this Agreement, commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) the Offer. The obligation of Sub to, and of Parent to cause Sub to, commence the Offer and accept for payment, and pay for, any shares of the Company Common Stock tendered pursuant to the Offer shall be subject to the conditions set forth in Exhibit A and to the terms and conditions of this Agreement. Sub expressly reserves the right unilaterally to waive any conditions to the Offer (other than (without the Company's prior written consent) the Minimum Tender Condition, as defined in Exhibit A), to increase the price per Share payable in the Offer, to extend the duration of the Offer or to make any other changes in the terms and conditions of the Offer; provided, however, that no such change may be made which decreases the price per Share payable in the Offer, reduces the maximum number of Shares to be purchased in the Offer, imposes conditions to the Offer in addition to those set forth in Exhibit A, changes the form of consideration payable in the Offer or amends any other material terms of the Offer in a manner materially adverse to the Company's stockholders; and provided further that if, at the expiration of the Offer (as the same may be extended pursuant to this proviso), any condition (other than the Minimum Tender Condition) shall not have been satisfied which could reasonably be expected to be satisfied within the next succeeding ten (10) business days, then the Offer shall be extended an additional ten (10) business days (but in no event beyond the date forty-five (45) business days after the date on which the Offer shall have been first commenced). Subject to the terms and conditions of this Agreement and the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), Sub shall, and Parent shall cause Sub to, accept for payment, and pay for, all shares of the Company Common Stock validly tendered and not withdrawn pursuant to the Offer as soon as practicable after the expiration of the Offer. (b) On the date of commencement of the Offer, Parent and Sub shall file with the Securities and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect to the Offer, which shall contain an offer to purchase and a related letter of transmittal and summary advertisement (such Schedule 14D-1 and the documents included therein pursuant to which the Offer will be made, together with any supplements or amendments thereto, the "OFFER DOCUMENTS"). Parent and Sub represent and agree that the Offer Documents shall comply as to form in all material respects with the Exchange Act, and the rules and 2 3 regulations promulgated thereunder and that the Offer Documents, on the date first published, sent or given to the Company's stockholders, shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representation is made by Parent or Sub with respect to information supplied by the Company specifically for inclusion in the Offer Documents. Each of Parent, Sub and the Company agrees promptly to correct any information provided by it for use in the Offer Documents if and to the extent that such information shall become false or misleading in any material respect, and each of Parent and Sub further agrees to take all steps necessary to amend or supplement the Offer Documents and to cause the Offer Documents as so amended or supplemented to be filed with the SEC and to be disseminated to the Company's stockholders, in each case as and to the extent required by applicable Federal securities laws. The Company and its counsel shall be given a reasonable opportunity to review the Offer Documents and all amendments and supplements thereto prior to their filing with the SEC or dissemination to stockholders of the Company. Parent and Sub agree to provide the Company and its counsel any comments which Parent, Sub or their respective counsel may receive from the SEC or its staff with respect to the Offer Documents promptly after the receipt of such comments including a copy of any such comments that are made in writing. (c) Parent shall provide or cause to be provided to Sub on a timely basis the funds necessary to accept for payment, and pay for, any shares of the Company Common Stock that Sub becomes obligated to accept for payment, and pay for, pursuant to the Offer. 1.2 Company Actions. (a) The Company hereby approves of and consents to the Offer and represents that the Board of Directors of the Company, at a meeting duly called and held, duly and unanimously adopted resolutions approving this Agreement and each Company Ancillary Agreement, the Offer and the Merger, determining that the terms of the Offer and the Merger are fair to, and in the best interests of, the Company's stockholders and recommending that the Company's stockholders accept the Offer and tender their shares pursuant to the Offer and approve and adopt this Agreement and the Company Ancillary Agreements and the Merger. The Company represents that its Board of Directors has received the opinion of Broadview Associates LLC that the proposed consideration to be received by the holders of shares of the Company Common Stock pursuant to the Offer and the Merger is fair to such holders from a financial point of view, and a complete and correct signed copy of such opinion will be promptly delivered by the Company to Parent. The Company hereby consents to the inclusion in the Offer Documents of the recommendation of the Company's Board of Directors described in the first sentence of this Section 1.2(a) (subject to Section 5.2) and will use all reasonable efforts to obtain the consent of Broadview Associates LLC to the inclusion in the Schedule 14D-9 of a copy of the written opinion referred to in the preceding sentence. (b) On the date the Offer Documents are filed with the SEC, the Company shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from time to time, together with all 3 4 exhibits, amendments and supplements thereto as well as the Information Statement required pursuant to Section 14(f) under the Exchange Act, collectively the "SCHEDULE 14D-9") containing the recommendation described in paragraph (a) (subject to Section 5.2) and shall mail the Schedule 14D-9 to the stockholders of the Company. The Company agrees that the Schedule 14D-9 shall comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations promulgated thereunder and, on the date filed with the SEC and on the date first published, sent or given to the Company's stockholders, shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representation is made by the Company with respect to information supplied by Parent or Sub specifically for inclusion in the Schedule 14D-9. Each of the Company, Parent and Sub agrees promptly to correct any information provided by it for use in the Schedule 14D-9 if and to the extent that such information shall have become false or misleading in any material respect, and the Company further agrees to take all steps necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented to be filed with the SEC and disseminated to the Company's stockholders, in each case as and to the extent required by applicable Federal securities laws. Parent and its counsel shall be given a reasonable opportunity to review the Schedule 14D-9 and all amendments and supplements thereto prior to their filing with the SEC or dissemination to stockholders of the Company. The Company agrees to provide Parent and its counsel any comments which the Company or its counsel may receive from the SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt of such comments including a copy of any such comments that are made in writing. (c) In connection with the Offer, the Company shall cause its transfer agent promptly to furnish Sub with mailing labels containing the names and addresses of the record holders of the Company Common Stock as of a record date and of those persons becoming record holders subsequent to such date, together with copies of all lists of stockholders, security position listings and, to the extent reasonably requested, computer files and other information in the Company's possession or control regarding the record and beneficial owners of the Company Common Stock, and shall furnish to Sub such information and assistance (including updated lists of stockholders, mailing labels, security position listings and computer files) as Parent may reasonably request in communicating the Offer to the Company's stockholders. The Company represents that the information provided to Parent pursuant to this paragraph shall be true and correct as of its respective dates. ARTICLE II THE MERGER 2.1 The Merger. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the Delaware General Corporation Law (the "DGCL"), Sub shall be merged with and into the Company at the Effective Time (as defined in Section 2.3). Following the Effective Time, the separate corporate existence of Sub shall cease and the Company shall continue as the surviving corporation (the "SURVIVING CORPORATION") and shall 4 5 succeed to and assume all the rights and obligations of Sub in accordance with the DGCL. Notwithstanding the foregoing, Parent may elect at any time prior to the Merger to merge the Company with and into Sub instead of merging Sub into the Company as provided above; provided, however, that the Company shall not be deemed to have breached any of its representations, warranties, covenants or agreements set forth in this Agreement and the Company Ancillary Agreements solely by reason of such election. In such event, the parties agree to execute an appropriate amendment to this Agreement and the Company Ancillary Agreements in order to reflect the foregoing. At the election of Parent, any direct or indirect subsidiary of Parent may be substituted for Sub as a constituent corporation in the Merger. In such event, the parties agree to execute an appropriate amendment to this Agreement and the Company Ancillary Agreements in order to reflect the foregoing. 2.2 Closing. The closing of the Merger will take place at 10:00 a.m. on the second business day after satisfaction or waiver of the conditions set forth in Article VII (the "CLOSING DATE"), at the Palo Alto, California offices of Fenwick & West LLP, counsel to Parent and Sub, unless another date or place is agreed to in writing by the parties hereto. Parent and the Company agree to use all reasonable efforts to close the Merger as soon as practicable following consummation of the Offer, subject to Section 7.1 hereof. 2.3 Effective Time. Subject to the provisions of this Agreement, as soon as practicable on or after the Closing Date, the parties shall execute and file a certificate of merger or other appropriate documents (in any such case, the "CERTIFICATE OF MERGER") in accordance with the relevant provisions of the DGCL and shall make all other filings or recordings required under the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Delaware Secretary of State, or at such other time as Sub and the Company shall agree should be specified in the Certificate of Merger (the time the Merger becomes effective being hereinafter referred to as the "EFFECTIVE TIME"). 2.4 Effects of the Merger. The Merger shall have the effects set forth in Section 259 of the DGCL. 2.5 Certificate of Incorporation and By-laws. The certificate of incorporation and by-laws of the Surviving Corporation shall be amended and restated, effective as of the Effective Time, to be identical to the certificate of incorporation and by-laws of Sub until thereafter changed or amended as provided therein or by applicable law. 2.6 Directors. The directors of Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be. 2.7 Officers. The officers of the Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be. 5 6 ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES 3.1 Effect on Capital Stock. As of the Effective Time, by virtue of the Merger and without any action on the part of the holder of any shares of the Company Common Stock or any shares of capital stock of Sub: (a) Capital Stock of Sub. Each issued and outstanding share of capital stock of Sub shall be converted into and become one fully paid and nonassessable share of Common Stock, par value $0.001 per share, of the Surviving Corporation. (b) Cancellation of Treasury Stock and Parent Owned Stock. Each share of the Company Common Stock that is owned by the Company or by any Subsidiary of the Company and each share of the Company Common Stock that is owned by Parent, Sub or any other Subsidiary of Parent shall automatically be canceled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor. (c) Conversion of the Company Common Stock. Subject to Section 3.1(e), each issued and outstanding share of the Company Common Stock (other than shares to be canceled in accordance with Section 3.1(b)) shall be converted into the right to receive from the Surviving Corporation in cash, without interest, the Offer Price. As of the Effective Time, all such shares of the Company Common Stock shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of a certificate representing any such shares of the Company Common Stock shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration as provided in this Section 3.1(c), without interest. (d) Conversion of the Preferred Stock. Subject to Section 3.1(e), each issued and outstanding share of any class or series of preferred stock issued by the Company (such stock, collectively, the "COMPANY PREFERRED STOCK") shall be converted into the right to receive from the Surviving Corporation in cash, without interest, the product obtained by multiplying (i) the Offer Price by (ii) the number of shares of the Company Common Stock into which such share of the Company Preferred Stock is convertible at the Effective Time under the Certificate of Incorporation of the Company. As of the Effective Time, all such shares of the Company Preferred Stock shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of a certificate representing any such shares of the Company Preferred Stock shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration as provided in this Section 3.1(d), without interest. (e) Shares of Dissenting Stockholders. Notwithstanding anything in this Agreement to the contrary, any shares of the Company Common Stock or Company Preferred Stock outstanding immediately prior to the Effective Time and, in the case of Company Common Stock, held by a holder who has not voted in favor of the Merger or consented thereto in writing, 6 7 and, in the case of either Company Common Stock or Company Preferred Stock, who has demanded appraisal (a "DISSENTING STOCKHOLDER") for such shares of Company Common Stock or Company Preferred Stock in accordance with DGCL ("DISSENTING SHARES") shall, to the extent provided in the DGCL, not be converted into the right to receive Merger Consideration, unless such holder fails to perfect or withdraws or otherwise loses his right to appraisal, but instead shall become the right to receive such consideration as may be determined to be due to such Dissenting Stockholder pursuant to the DGCL. If, after the Effective Time, such Dissenting Stockholder withdraws his demand for appraisal or fails to perfect or otherwise loses his right of appraisal, in any case pursuant to the DGCL, his shares of the Company Common Stock or Company Preferred Stock, as the case may be, shall be treated as if they had been converted as of the Effective Time into the right to receive the Merger Consideration. The Company shall give Parent (i) prompt notice of any demands for appraisal of shares of the Company Common Stock or Company Preferred Stock received by the Company and (ii) the opportunity to participate in and direct all negotiations and proceedings with respect to any such demands. The Company shall not, without the prior written consent of Parent, make any payment with respect to, or enter into a binding settlement agreement or make a written offer to settle, any demand for appraisal of Dissenting Shares. (f) Treatment of Options. At the Effective Time, each outstanding Company Option shall be terminated and canceled. The Company agrees to give written notice to each holder of a Company Option as soon as practicable (and in any event within five (5) business days of the commencement of the Offer) stating that such Company Option will terminate at the Effective Time, and permitting the exercise of such Company Option (including any portion not yet otherwise exercisable pursuant to the terms of such Company Option) during the thirty (30) day period preceding the Effective Time. At the Effective Time, all holders of cancelled Company Options having an exercise price that is less than the Offer Price, other than directors, or the Chief Executive Officer, of the Company, shall be entitled to receive an amount in cash equal to product of (i) the difference between the Offer Price and the exercise price of such option, multiplied by the number of shares of Company Common Stock issuable upon exercise of such Company Option immediately prior to the Effective Time. (g) Treatment of Convertible Debt Securities. Prior to the Effective Time, the Company shall have entered into an agreement with each holder of a 6% Convertible Senior Subordinated Note issued by the Company under the Note Agreement, dated as of March 1, 1996, between the Company and The Northwestern Mutual Life Insurance Company (all such securities, collectively, the "CONVERTIBLE NOTES") providing that, immediately after the Effective Time, the Surviving Corporation shall be entitled to repay all then-outstanding Convertible Notes in their original principal amount and accrued interest without premium or penalty, and within five (5) business days after the Effective Time, the Parent shall cause the Surviving Corporation to repay in full the then-outstanding principal of, and accrued interest on, such Convertible Notes (unless the holder or holders thereof shall otherwise agree in writing). 7 8 3.2 Exchange of Certificates. (a) Paying Agent. Prior to the Effective Time, Parent shall select a bank or trust company to act as paying agent (the "PAYING AGENT") for the payment of the Merger Consideration upon surrender of certificates representing the Company Common Stock or Preferred Stock. (b) Parent To Provide Funds. Parent shall make available to the Paying Agent on a timely basis, as and when needed after the Effective Time, funds necessary to pay for the shares of the Company Common Stock and Preferred Stock pursuant to Section 3.1. (c) Exchange Procedure. As soon as reasonably practicable after the Effective Time, the Paying Agent shall mail to each holder of record of a certificate or certificates which immediately prior to the Effective Time represented outstanding shares of the Company Common Stock and Company Preferred Stock (in each case, the "CERTIFICATES") whose shares were converted into the right to receive the Merger Consideration pursuant to Section 3.1, (i) a letter of transmittal (which 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 Paying Agent and shall be in a form and have such other provisions as Parent may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration. Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly executed, and such other documents as may reasonably be required by the Paying Agent, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration, and the Certificate so surrendered shall forthwith be canceled. In the event of a transfer of ownership of the Company Common Stock or the Company Preferred Stock, as the case may be, which is not registered in the transfer records of the Company, payment may be made to a person other than the person in whose name the Certificate so surrendered is registered, if such Certificate shall be properly endorsed or otherwise be in proper form for transfer and the person requesting such payment shall pay any transfer or other taxes required by reason of the payment to a person other than the registered holder of such Certificate or establish to the satisfaction of the Surviving Corporation that such tax has been paid or is not applicable. Until surrendered as contemplated by this Section 3.2, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender thereof the Merger Consideration, without interest (other than Certificates representing Dissenting Shares). (d) No Further Ownership Rights in the Company Capital Stock. All cash paid upon the surrender of Certificates in accordance with the terms of this Article III shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of the Company Common Stock and the Company Preferred Stock theretofore represented by such Certificates. After the Effective Time, there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of the Company Common Stock and the Company Preferred Stock which were outstanding immediately prior to the Effective Time. If, 8 9 after the Effective Time, Certificates are presented to the Surviving Corporation or the Paying Agent for any reason, they shall be canceled and exchanged as provided in this Article III. (e) Failure to Timely Surrender; No Liability. Promptly following the date that is six (6) months after the Effective Time, the Paying Agent shall return to the Surviving Corporation all Merger Consideration and other cash, property and instruments in its possession relating to the transactions described in this Agreement, and the Paying Agent's duties shall terminate. Thereafter, each holder of a Certificate may surrender such Certificate to the Surviving Corporation and (subject to applicable abandoned property, escheat and similar laws) receive in exchange therefor the Merger Consideration (without interest thereon). Notwithstanding the foregoing, the Surviving Corporation shall be entitled to receive from time to time all interest or other amounts earned with respect to any cash deposited with the Paying Agent as such amounts accrue or become available. If any Certificates shall not have been surrendered prior to such date on which any payment pursuant to this Article III would otherwise escheat to or become the property of any Governmental Entity (as defined in Section 4.1(e)), the cash payment in respect of such Certificate shall, to the extent permitted by applicable law, become the property of the Surviving Corporation, free and clear of all claims or interests of any person previously entitled thereto. None of Parent, Sub, the Company or the Paying Agent shall be liable to any person in respect of any cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. (f) Withholding Taxes. The right of any person to receive any payment or consideration pursuant to this Agreement and the Company Ancillary Agreements and the transactions contemplated herein and therein shall be subject to any applicable requirements with respect to the withholding of Taxes. (g) Lost, Stolen or Destroyed Certificates. In the event any Certificate shall have been lost, stolen or destroyed, the Paying Agent shall pay to such holder the Merger Consideration required pursuant to Section 3.1, in exchange for each such lost, stolen or destroyed Certificate, upon the making of an affidavit of that fact by the holder thereof with such assurances (including, without limitation, the posting of a bond in an amount reasonably sufficient to indemnify the Parent against any claim that may be made against it on account of such Certificate) as the Paying Agent and the Parent, in their discretion and as a condition precedent to the payment of the Merger Consideration, may each reasonably require of the holder of such lost, stolen or destroyed Certificate. (h) Return of Merger Consideration for Dissenting Shares. Any portion of the Merger Consideration made available to the Paying Agent pursuant to Section 3.2(b) for shares of the Company Common Stock or the Company Preferred Stock for which appraisal rights have been perfected shall be returned to Parent, upon demand. (i) Supplementary Action. If at any time after the Effective Time, any further assignments or assurances in law or any other things are necessary or desirable to vest or to perfect or confirm of record in the Surviving Corporation the title to any property or rights of either the Company or Sub, or otherwise to carry out the provision of this Agreement and the 9 10 Company Ancillary Agreements, the officers and directors of the Surviving Corporation are hereby authorized and empowered, in the name of and on behalf of the Company and Sub, to execute and deliver any and all things necessary or proper to vest or perfect or confirm title to such property or rights in the Surviving Corporation, and otherwise to carry out the purposes and provisions of this Agreement and the Company Ancillary Agreements. ARTICLE IV REPRESENTATIONS AND WARRANTIES 4.1 Representations and Warranties of the Company. The Company represents and warrants to Parent and Sub that the statements contained in this Article IV are true and correct except as expressly set forth herein and in the disclosure schedule delivered by the Company to Parent and Sub prior to the execution and delivery of this Agreement (the "COMPANY DISCLOSURE SCHEDULE"). The Company Disclosure Schedule shall be arranged in sections and paragraphs corresponding to the numbered and lettered sections and paragraphs contained in this Article IV and the disclosure in any section or paragraph shall qualify other sections and paragraphs in this Article IV only to the extent that it is reasonably apparent from a reading of such disclosure that it also qualifies or applies to such other sections and paragraphs. (a) Organization, Standing and Corporate Power. The Company and each of its Subsidiaries (other than inactive Subsidiaries that do not own any material assets, do not have any material liabilities and do not conduct any material operations) is a corporation or partnership duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has the requisite corporate or partnership power and authority to carry on its business as now being conducted. The Company and each of its Subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed individually or in the aggregate would not have a Material Adverse Effect on the Company. The Company has provided to Parent complete and correct copies of its certificate of incorporation and by-laws, in each case as amended to the Agreement Date. (b) Subsidiaries. All Subsidiaries of the Company and their respective jurisdictions of incorporation or organization (other than inactive Subsidiaries that do not own any material assets and do not conduct any material operations) are identified in Section 4.1(b) of the Company Disclosure Schedule. The outstanding shares of capital stock of each Subsidiary have been validly issued and are fully paid and nonassessable and (except as may be required by foreign jurisdictions as set forth in the Company Disclosure Schedule) are owned by the Company, by another Subsidiary of the Company or by the Company and another such Subsidiary, free and clear of all pledges, claims, liens, charges, title retentions, mortgages, security interests and encumbrances of any kind or nature whatsoever, other than liens for taxes that are not yet due and payable (collectively, "LIENS") other than Liens disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1997 (the "1997 10-K") or the Company Disclosure Schedule. Except for the capital stock of its 10 11 Subsidiaries and investments identified in the Company Disclosure Schedule, the Company does not own, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, joint venture or other entity. (c) Capital Structure. (i) The authorized capital stock of the Company consists of 100,000,000 shares of Company Common Stock, per value $0.001 per share, and 2,000,000 shares of Company Preferred Stock, par value $0.001 per share, 1,000,000 shares of which are designated Series A Junior Participating Preferred Stock, 200,000 of which are designated Series B Convertible Preferred Stock and 40,000 of which are designated Series C Convertible Preferred Stock, of which 73,531,703 shares of Company Common Stock are issued and outstanding, 1,143 shares of Company Common Stock are held by the Company in its treasury, no shares of the Company Series A Junior Participating Preferred Stock are issued and outstanding, no shares of the Company's Series B Preferred Stock are issued and outstanding, and 4,248 shares of the Company's Series C Convertible Preferred Stock (including 1,379 shares issuable upon exercise of outstanding warrants to purchase Series C Convertible Preferred Stock) are issued and outstanding (subject to any changes in the outstanding Common Stock after the Agreement Date solely as a result of the issuance of any shares of Company Common Stock after the Agreement Date pursuant to the exercise of Company Options, or the conversion of Convertible Notes or Company Preferred Stock, that were outstanding on the Agreement Date). As of the Agreement Date, the outstanding shares of Series C Convertible Preferred Stock, together with all shares of Series C Convertible Preferred Stock issuable upon exercise of outstanding warrants to purchase Series C Convertible Preferred Stock, are convertible into 16,030,188 shares of Company Common Stock. (ii) Not more than 7,335,227 shares of the Company Common Stock are reserved for issuance upon exercise of outstanding Company Options (1,380,686 of which are issuable pursuant to options having an exercise price of less than $0.52), assuming a net, or "cashless," exercise of such options, and, except as set forth in Section 4.1(c) of the Company Disclosure Schedule, there are no options, warrants or rights to acquire any shares of the Company's capital stock or any other securities of the Company outstanding other than such Company Options, the Convertible Notes and the outstanding Series C Preferred Stock. Section 4.1(c) of the Company Disclosure Schedule sets forth a true and complete list of the outstanding Company Options as of the Agreement Date, setting forth in each case the issue date of such Company Option, the number of shares of Company Common Stock subject to such Company Option, the exercise price and vesting schedule of such Company Option, and a description of any acceleration of such option which will be triggered by the Offer, the execution of this Agreement and the Company Ancillary Agreements or the Closing of the Merger. (iii) Except as set forth in this Section 4.1(c), at the close of business on the Agreement Date, no shares of capital stock, stock appreciation rights or other equity or voting securities of the Company were issued, reserved for issuance or outstanding. All outstanding shares of capital stock of the Company are, and all shares which may be issued will be, when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to 11 12 preemptive rights. Except for the $25,000,000 principal amount of Convertible Notes which are presently convertible into 1,180,359 shares of Company Common Stock at a conversion price of in excess of $20.00, there are no bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of the Company may vote. Except as set forth in this Section 4.1(c), there are no outstanding securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which the Company or any of its Subsidiaries is a party or by which any of them is bound obligating the Company or any of its Subsidiaries to issue, deliver or sell additional shares of capital stock or other equity or voting securities of the Company or of any of its Subsidiaries or obligating the Company or any of its Subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. As of the Agreement Date, there are no outstanding contractual obligations (i) of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock or other equity securities of the Company or any of its Subsidiaries or (ii) of the Company to vote or to dispose of any shares of the capital stock of any of its Subsidiaries. (d) Authority. The Company has all the requisite corporate power and authority to enter into this Agreement and the Company Ancillary Agreements and, subject to, if required by law, approval of the Merger by an affirmative vote of the holders of a majority of the outstanding shares of the Company Common Stock (the "COMPANY STOCKHOLDER APPROVAL"), to consummate the transactions contemplated by this Agreement and the Company Ancillary Agreements. The execution and delivery of this Agreement and the Company Ancillary Agreements by the Company and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company (subject, in the case of the consummation of the Merger, to the Company Stockholder Approval if such approval is required by the DGCL). This Agreement and the Company Ancillary Agreements have each been duly executed and delivered by the Company and constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms (except as enforcement hereof and thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium and similar laws, both state and federal, affecting the enforcement of creditors' rights or remedies in general as from time to time in effect or (ii) the exercise by courts of equity powers). (e) Noncontravention. Except as set forth in the Company Disclosure Schedule, the execution and delivery of this Agreement and the Company Ancillary Agreements do not, and the consummation of the transactions contemplated hereby and thereby and compliance with the provisions of hereof and thereof will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time or both) under, give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, require the consent or approval of any party under, or result in the creation of any Lien upon any of the properties or assets of the Company or any of its Subsidiaries under (i) the certificate of incorporation or by-laws of the Company or the comparable charter or organizational documents of any of its Subsidiaries, (ii) any Company Material Agreement (as defined in Section 4.1(x)) or (iii) any governmental filings and other matters referred to in the 12 13 following sentence, any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries or their respective properties or assets, other than, in the case of clause (ii) or (iii), any such conflicts, violations, defaults, rights or Liens that individually or in the aggregate would not (x) have a Material Adverse Effect on the Company, (y) materially impair the ability of the Company to perform its obligations under this Agreement or any Company Ancillary Agreement or (z) prevent the consummation of any of the transactions contemplated by this Agreement and the Company Ancillary Agreements. No consent, approval, order or authorization of, or registration, declaration or filing with, any Federal, state or local government or any court, administrative or regulatory agency or commission or other governmental authority or agency, domestic or foreign (a "GOVERNMENTAL ENTITY"), is required by or with respect to the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement and the Company Ancillary Agreements by the Company or the consummation by the Company of the transactions contemplated hereby and thereby, except for (1) the filing of a pre-merger notification and report form by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT"), (2) the filing with the SEC and the National Association of Securities Dealers, Inc. of (A) the Schedule 14D-9, (B) a proxy statement relating to the Company Stockholder Approval, if such approval is required by law (as amended or supplemented from time to time, the "PROXY STATEMENT"), and (C) such reports under Section 13(a) of the Exchange Act as may be required in connection with this Agreement and the Company Ancillary Agreements and the transactions contemplated hereby and thereby, (3) the filing of the Certificate of Merger with the Delaware Secretary of State and appropriate documents with the relevant authorities of other states in which the Company is qualified to do business and (4) such other consents, approvals, orders, authorizations, registrations, declarations and filings as would not individually or in the aggregate (A) have a Material Adverse Effect on the Company, (B) materially impair the ability of the Company to perform its obligations under this Agreement and the Company Ancillary Agreements or (C) prevent or have a material adverse effect on the ability of the parties to consummate any of the transactions contemplated by this Agreement and the Company Ancillary Agreements. (f) SEC Documents; Financial Statements. (i) The Company has filed in a timely manner all required reports, schedules, forms, statements and other documents with the SEC since October 1, 1997. All such required reports, schedules, forms, statements and other documents filed by the Company with the SEC (including those that the Company may file subsequent to the date hereof) are referred to herein as the "SEC DOCUMENTS." As of their respective filing dates, the SEC Documents complied with the requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT") or the Exchange Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Documents, and none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company does not have knowledge of any material fact or information concerning the Company and existing on the Agreement Date which is required to be made generally available to the public and which has not been, or will not prior to or concurrently with the commencement of the Offer be, made generally available to the public. 13 14 (ii) The financial statements of the Company included in the SEC Documents, including those filed after the date hereof until the Closing, (A) are derived from and in accordance with the books and records of the Company and its Subsidiaries; (B) comply or will comply with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, (C) have been prepared or will be prepared in accordance with generally accepted accounting principles ("GAAP") (except, in the case of unaudited statements, with respect to footnote disclosure) applied on a basis consistent with prior periods (except as otherwise stated in the notes thereto) and (D) fairly present or will fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal recurring year-end audit adjustments). The quarterly financial statements included in the SEC Documents are prepared on a basis consistent with those employed in the audited financial statements of the Company included in the 1997 10-K. (iii) Neither the Company nor any of its Subsidiaries has any liabilities of any nature (whether accrued, absolute, contingent, determined, determinable or otherwise and whether due or to become due) which are, individually or in the aggregate, material to the business, results of operations or financial condition of the Company and its Subsidiaries taken as a whole, except liabilities (i) provided for in the consolidated balance sheet included in the Company's Form 10-Q for the quarter ended June 30, 1998 (the "BALANCE SHEET"), (ii) disclosed in an SEC Document or the Disclosure Schedule, or (iii) incurred since June 30, 1998 (the "BALANCE SHEET DATE") in the ordinary course of business consistent with past practices. All reserves established by the Company and set forth in or reflected in the Balance Sheet are reasonably sufficient and were established in accordance with generally accepted accounting principles consistently applied. At the Balance Sheet Date, there were no material loss contingencies (as such term is used in Statement of Financial Accounting Standards No. 5 issued by the Financial Accounting Standards Board in March 1975) which are not adequately provided for in the Balance Sheet as required by said Statement No. 5. On the day preceding the Agreement Date, the Company has (i) total consolidated cash of at least $7,167,000 and (ii) indebtedness for borrowed money not in excess of $25,000,000 (in each case determined on a consolidated basis in accordance with GAAP on a basis consistent with the Balance Sheet). (g) Information Supplied. None of (i) the information supplied or to be supplied by the Company specifically for inclusion or incorporation by reference in the Offer Documents, (ii) the Schedule 14D-9, (iii) the information to be filed by the Company in connection with the offer pursuant to Rule 14f-1 promulgated under the Exchange Act (the "INFORMATION STATEMENT") or (iv) the Proxy Statement, will, in the case of the Offer Documents, the Schedule 14D-9 and the Information Statement, at the respective times the Offer Documents, the Schedule 14D-9 and the Information Statement are filed with the SEC or first published, sent or given to the Company's stockholders, or, in the case of the Proxy Statement, at the time the Proxy Statement is first mailed to the Company's stockholders or at the time of the Stockholders Meeting (as defined in Section 6.1(a)), contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Schedule 14 15 14D-9, the Information Statement and the Proxy Statement will comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder, except that no representation or warranty is made by the Company with respect to statements made or incorporated by reference therein based on information supplied by Parent or Sub in writing specifically for inclusion or incorporation by reference therein. (h) Absence of Certain Changes or Events. Except as disclosed in the Company Disclosure Schedule or in the SEC Documents filed and publicly available prior to the Agreement Date (the "FILED SEC DOCUMENTS"), since June 30, 1998 the Company and its Subsidiaries have conducted their respective business only in the ordinary course of business consistent with past practices, and up to the Agreement Date, there has not been with respect to the Company or any of its Subsidiaries any: (i) Material Adverse Change; (ii) amendment or change in the Certificate of Incorporation or Bylaws of the Company; (iii) purchase, license, sale, assignment or other disposition or transfer (or any agreement or other arrangement for the purchase, license, sale, assignment or other disposition or transfer), of any of the assets or properties of the Company or any of its Subsidiaries (including any Intellectual Property Rights), other than (a) non-exclusive licenses of any product or products of the Company or any of its Subsidiaries made in the ordinary course of the Company's business consistent with its past practices, (b) purchases and sales of assets (other than Intellectual Property Rights (as defined in Section 4.1(i)) in the ordinary course of business consistent with its past practices, and (c) purchases and sales of assets (other than Intellectual Property Rights) having a purchase price of less than $100,000 on an individual basis and less than $250,000 in aggregate; (iv) damage, destruction or loss of any property or asset, whether or not covered by insurance, having (or reasonably likely with the passage of time to have) a Material Adverse Effect on the Company; (v) declaration, setting aside or payment of any dividend on, or the making of any other distribution in respect of, any shares of the capital stock of the Company, any split, combination or recapitalization of the capital stock of the Company or any direct or indirect redemption, purchase or other acquisition of any shares of the capital stock of the Company or any change in any rights, preferences, privileges or restrictions of any outstanding stock or other security of the Company; (vi) obligation or liability incurred by the Company or any of its Subsidiaries to any of its officers or directors except for normal and customary compensation and expense allowances payable to officers in the ordinary course of the Company's business consistent with past practices; 15 16 (vii) making by the Company or any of its Subsidiaries of any loan, advance or capital contribution to, or any investment in, any officer or director of the Company or, to the knowledge of the Company, any firm or business enterprise in which any such person had a direct or indirect material interest at the time of such loan, advance, capital contribution or investment; (viii) material adverse development in any litigation described in any Filed SEC Document or in any litigation or proceeding required to be disclosed in Section 4.1(j) of the Company Disclosure Schedule; (ix) material increase in the volume or dollar amount of returns (or claims therefor) of any of the Company's products by distributors, customers, value added resellers, original equipment manufacturers or other resellers of such product, or any claims for price adjustments by any such parties with respect to any products of the Company that have been delivered to such party, or any reason to believe that any such increases or claims are likely; (x) material change in the manner in which, or terms on which, the Company or any of its Subsidiaries extends discounts or credits or rights to return products or receive price adjustments to customers or distributors or otherwise deals with its customers or distributors; (xi) change in accounting methods, principles or practices by the Company (other than as required by GAAP) or any material revaluation of any of the assets of the Company or any of its Subsidiaries, or any material write-offs of accounts receivable or write-downs of the value of capitalized inventory not in the ordinary course of business consistent with past practices; or (xii) license, transfer or grant of a right under any Company IP Rights (as defined in Section 4.1(i), other than non-exclusive licenses granted in the ordinary course of the Company's business consistent with its past practices. (i) Intellectual Property. (i) The Company and its Subsidiaries own, or have the valid right or license to use, possess, sell or license, all Intellectual Property Rights (as defined below) necessary or required for the conduct of the business of the Company and its Subsidiaries as presently conducted, and such rights to use, possess, sell or license are sufficient for such conduct of such business, except as disclosed in Section 4.1(i) of the Company Disclosure Schedule (except that as to patents and trademarks, such representation is made only to the Company's knowledge). As used herein: (i) the term "INTELLECTUAL PROPERTY RIGHTS" means, collectively, all worldwide intellectual property rights, including, without limitation, patents, patent applications, patent rights, trademark rights, service mark rights, trademark and service mark registrations and applications therefor, trade dress rights, trade name rights, copyrights, copyright registrations and applications therefor, mask work rights, mask work registrations and applications therefor, franchises, licenses and trade secrets, (ii) the term "COMPANY IP RIGHTS" means the Intellectual Property Rights that the Company or any of its Subsidiaries own or have 16 17 the right or license to use, possess, sell or license and (iii) the term "COMPANY INTELLECTUAL PROPERTY" means all trademarks, service marks, inventions, trade secrets, know how, customer lists, supplier lists, proprietary processes and formulae, software source and object code, algorithms, architectures, structures, screen displays, layouts, inventions, development tools, designs, blueprints, specifications, technical drawings (or similar information in electronic format), and all documentation and media constituting, describing or relating to the above, including without limitation manuals, programmers' notes, memoranda and records used or owned by the Company. (ii) The execution, delivery and performance of this Agreement and the Company Ancillary Agreements and the consummation of the Offer, the Merger and the other transactions contemplated hereby and thereby will not constitute a material breach of or default under any instrument, contract, license or other agreement governing any Company IP Right or Company Intellectual Property, to which the Company or any of its Subsidiaries is a party that (i) is material to the Company or (ii) that materially affects any material Company IP Rights or Company Intellectual Property that is incorporated, embodied or used in the Company's ProComm or CleanSweep products, or licensing or assigning such rights to the Company or any of its Subsidiaries (collectively, the "COMPANY IP RIGHTS AGREEMENTS"), will not cause the forfeiture or termination of, or give rise to a right of forfeiture or termination of, any material Company IP Right or materially impair the right of the Company or any of its Subsidiaries or the Surviving Corporation to use, possess, sell or license any material Company IP Right or portion thereof. There are no royalties, honoraria, fees or other payments payable by the Company to any third person by reason of the ownership, use, possession, license, sale or disposition of any Company IP Rights or Company Intellectual Property by the Company or any of its Subsidiaries other than (i) as disclosed in Section 4.1(i) of the Company Disclosure Schedule and (ii) pursuant to agreements that did not require the payment in the fiscal year ended September 30, 1998 of more than $100,000 in the aggregate, and are not expected to require the payment in the fiscal year ended September 30, 1999 of more than $150,000 in the aggregate by the Company and its Subsidiaries. (iii) Neither the development, manufacture, marketing, license, sale, furnishing or intended use of either the Company's ProComm or CleanSweep product or, to the Company's knowledge, any other product or service currently licensed, marketed, utilized, sold, provided or furnished by the Company or any of its Subsidiaries or currently under development by the Company or any of its Subsidiaries, violates any license or agreement between the Company (or any Subsidiary thereof) and any third party or, to the Company's knowledge, infringes any patent or trademark, or infringes or misappropriates any other Intellectual Property Right of any other party, except where the same could not reasonably be expected to have a Material Adverse Effect. Except as expressly disclosed in the Filed SEC Documents, there is, to the Company, no pending or, threatened claim or litigation contesting the validity, ownership or right of the Company or any of its Subsidiaries to use, possess, sell, license or dispose of any Company IP Right or Company Intellectual Property or any other Intellectual Property Rights used or embodied in either the Company's ProComm product or its CleanSweep product, or to the Company's knowledge, any other product marketed or licensed, or under development, by the Company or any of its Subsidiaries, nor, to the knowledge of the 17 18 Company, is there any basis for any such claim, nor has the Company received any notice asserting that any Company IP Right or Company Intellectual Property or the proposed use, sale, license or disposition thereof, or of any other Intellectual Property Rights used or embodied in any product marketed or licensed, or under development, by the Company, conflicts or will conflict with the rights of any other party, nor, to the knowledge of the Company, is there any basis for any such assertion, in each case except where the same would not reasonably be expected to have a Material Adverse Effect. (iv) The Company has taken such measures as are customary and standard in its industry to protect, preserve and maintain all the Company's (and its Subsidiaries') proprietary rights in the Company IP Rights and Company Intellectual Property. All officers, employees and consultants of the Company and any of its Subsidiaries who had access to proprietary information and who either (a) were first employed or engaged by the Company within the two year period ending on the Agreement Date or (b) were or are involved in the development of any aspect of the Company's CleanSweep or ProComm product, or any Company IP Rights or Company Intellectual Property that is incorporated, embodied or used therein, have executed and delivered to the Company or its predecessor in interest, or a Subsidiary of the Company, an agreement regarding the protection of such proprietary information and the assignment of inventions to the Company; and copies of the current standard form of such agreements have been provided to Parent's counsel. The Company or its predecessor in interest, or a Subsidiary of the Company, has secured valid written assignments or licenses from all consultants, employees and entities who the Company directly hired or engaged and were involved in, or who contributed to, the creation or development of any Company IP Rights, Company Intellectual Property or other Intellectual Property Rights that are incorporated, embodied or used in the Company's CleanSweep or ProComm products or any other material Company IP Rights or any Intellectual Property Rights, of the rights to such contributions that the Company does not already own by operation of law. No current or former employee, officer, director, consultant or independent contractor of the Company or any Subsidiary of the Company has any right, license, claim or interest whatsoever in or with respect to any material Company IP Rights or Company Intellectual Property. (v) Section 4.1(i) of the Company Disclosure Schedule contains a complete list of all worldwide registrations of any patents with any governmental authority, and all patent applications, made or held by, or assigned to, the Company or any of its Subsidiaries. To the Company's knowledge, all patents and all material registered trademarks, service marks and copyrights held by the Company and its Subsidiaries are valid, enforceable and subsisting. (vi) Section 4.1(i) of the Company Disclosure Schedule contains a complete list of: (A) all licenses, sublicenses and other agreements as to which the Company or any of its Subsidiaries is a party and pursuant to which any person is authorized to use any Company IP Rights or Company Intellectual Property (other than non-exclusive licenses granted in the ordinary course of business) and (B) all licenses, sublicenses and other agreements to which the Company or any of its Subsidiaries is a party and pursuant to which the Company or any of its Subsidiaries is authorized to use any third party Intellectual Property Rights, including software ("THIRD PARTY IP RIGHTS") which would be infringed by, embody or are incorporated in, 18 19 or form a part of, any product or service sold, licensed, distributed or marketed by the Company or any of its Subsidiaries, in each case other than (a) non-exclusive licenses in the ordinary course of business and (b) licenses of Third Party IP Rights to the Company or any of its Subsidiaries that are not material to any product currently being marketed or under development by the Company. (vii) To the Company's knowledge, there is no material unauthorized use, disclosure, infringement or misappropriation of any Company IP Rights or any Intellectual Property Right of the Company or any of its Subsidiaries by any third party, including any employee or former employee of the Company or any of its Subsidiaries. (viii) Neither the Company nor any of its Subsidiaries, nor, to the knowledge of the Company, any other party acting on its or their behalf, has disclosed or delivered to any party, or permitted the disclosure or delivery to any escrow agent or other party, of any Company Source Code (as defined below). No event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will, or would reasonably be expected to, result in the disclosure or delivery to any party of any Company Source Code owned by the Company or, to the Company's knowledge, licensed to the Company except, in the case of such licensed Company Source Code, where such disclosure or delivery would not result in a breach of an obligation by the Company. Section 4.1(i) of the Company Disclosure Schedule identifies each contract, agreement and instrument (written or oral) pursuant to which the Company or any of its Subsidiaries has deposited, or is or may be required to deposit, with an escrow holder or any other party, any Company Source Code and further describes whether the execution of this Agreement or the Company Ancillary Agreements, the consummation of the Merger or any of the other transactions contemplated hereby or thereby, in and of themselves, would reasonably be expected to result in the release from escrow of any Company Source Code. As used in this Section 4.1(i), "COMPANY SOURCE CODE" means any source code, or any material proprietary or confidential portion of any source code, or any material algorithm contained in any source code, of any product marketed or licensed, or under development, by the Company or any of its Subsidiaries. (ix) To the Company's knowledge, the Company's ProComm and CleanSweep products (as currently being distributed by the Company and its Subsidiaries) do not contain any defects or "bugs" that could reasonably be expected to lead to data loss or system failure on the part of end-users that use such product on the hardware and operating system platforms specified in the product specifications and documentation provided to end-users with such products. (x) The Company's CleanSweep and ProComm products (as currently being distributed by the Company and its subsidiaries) are each Year 2000 Compliant (as defined below), except as disclosed in Section 4.1(i) of the Company Disclosure Letter. "YEAR 2000 COMPLIANT" means, as applied to such products, that: (a) all dates received by the program require a century indicator and all dates produced by the program include a century indicator, (b) date calculations involving either a single century or multiple centuries neither cause an abnormal ending nor generate incorrect results, (c) when sorting by date, all records sort in 19 20 accurate sequence, (d) the year 2000 is considered a leap year, (e) hard-coding in century fields and date fields has been removed, and (f) no date fields are used for other than date purposes. To the Company's knowledge, the Company and its Subsidiaries will not be required to incur any material expense to make any one or more of its products, or any software owned by it or licensed to it (and used by it), Year 2000 Complaint, or any material liability as a result of the failure of any of its products to be Year 2000 Compliant, except where the same could not reasonably be expected to have a Material Adverse Effect, and except for any expense incurred to correct items disclosed in Section 4.1(i) of the Company Disclosure Schedule. (j) Litigation. Except as disclosed in the Filed SEC Documents or the Company Disclosure Schedule, there is no suit, action, arbitration, proceeding, claim or investigation pending or, to the Company's knowledge, threatened against the Company or any of its Subsidiaries (or any of their respective officers, directors or employees in their capacity as such), that individually or in the aggregate, if determined or resolved adversely to the Company or such Subsidiary in accordance with the plaintiff's (or other adverse party's) demand, could reasonably be expected to (i) have a Material Adverse Effect on the Company, (ii) challenge or seek to enjoin or seek damages with respect to the Company's entering into and performing this Agreement and the Company Ancillary Agreements or impair the ability of the Company to perform its obligations under this Agreement and the Company Ancillary Agreements or (iii) prevent the consummation of any of the transactions contemplated by this Agreement and the Company Ancillary Agreements, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against the Company or any of its Subsidiaries having, or which is reasonably likely to have, any effect referred to in the foregoing clause (i), (ii) or (iii) above. A suit or action which has been filed with a state or local court outside of California but which has not been served upon an employee or director of the Company shall be deemed to have been threatened but not pending for purposes of this paragraph. (k) Employees, ERISA and Other Compliance. (i) A list of all employees and officers of the Company and its Subsidiaries as of the Agreement Date and their then-current compensation and title and/or job description is set forth in Section 4.1(k) of the Company Disclosure Schedule. The Company and its Subsidiaries do not have any employment contracts currently in effect that by their terms, may not be terminated at will without severance or other payment obligations in excess of those disclosed in Section 4.1(k) of the Company Disclosure Schedule (other than oral agreements, or agreements with persons that are not employed in the United States if both (i) such agreement is not with an officer of the Company and (ii) the Company does not have knowledge of such agreement). To the Company's knowledge, the Company and its Subsidiaries do not utilize the services of a material number of persons who should be but are not properly classified as employees for the purposes of federal and applicable state tax laws, laws applicable to employee benefits and other applicable law. (ii) Neither the Company nor any of its Subsidiaries: (i) now is, nor has ever been, subject to a union organizing effort; (ii) is subject to any collective bargaining 20 21 agreement with respect to any of its employees; (iii) is subject to any other contract, written or oral, with any trade or labor union, employees' association or similar organization or (iv) has any current labor disputes. There are no controversies pending or, to the knowledge of the Company or any of its Subsidiaries, threatened, between the Company or any of its Subsidiaries (on the one hand) and any of their respective employees (on the other hand), which controversies have or could reasonably be expected to have a Material Adverse Effect. To the Company's knowledge, all of the employees of the Company and its Subsidiaries that are employed by the Company or any of its Subsidiaries in the United States of America are legally permitted to be employed by the Company or its Subsidiaries in the United States of America. (iii) Section 4.1(k) of the Company Disclosure Schedule lists each "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); and each plan or arrangement providing for insurance coverage (including any self-insured arrangements), workers' benefits, vacation benefits, severance benefits, disability benefits, death benefits, hospitalization benefits, retirement benefits, deferred compensation, profit-sharing, bonuses, stock options, stock purchase, phantom stock, stock appreciation or other forms of incentive compensation or post-retirement insurance, compensation or benefits for employees, consultants or directors which is entered into, maintained or contributed to by the Company or any of its Subsidiaries and covers any employee or former employee of the Company or any of its Subsidiaries. Such contracts, plans and arrangements as are described in this Section 4.1(k) are hereinafter collectively referred to as "COMPANY BENEFIT ARRANGEMENTS." Each Company Benefit Arrangement has been maintained in compliance in all material respects with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations that are applicable to such Company Benefit Arrangement, and each such Company Benefit Arrangement that is an "employee pension benefit plan" as defined in Section 3(2) of ERISA which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter that such plan satisfied the requirements of the Internal Revenue Code of 1986, as amended (the "CODE") (a copy of which letter(s), if any, have been provided to Parent and its counsel). The Company has provided to Parent or its counsel a correct copy and description of each Company Benefit Arrangement. The Company has never been a participant in any "prohibited transaction", within the meaning of Section 406 of ERISA with respect to any employee pension benefit plan (as defined in Section 3(2) of ERISA) which the Company sponsors as employer or in which Company participates as an employer, which was not otherwise exempt pursuant to Section 408 of ERISA (including any individual exemption granted under Section 408(a) of ERISA), or which could result in an excise tax under the Code. All contributions due from the Company or any of its Subsidiaries as of the Balance Sheet Date with respect to any of the Company Benefit Arrangements have been made or have been accrued on the Balance Sheet and no further contributions will be due or will have accrued thereunder as of the Closing Date other than amounts consistent with the amounts paid or accrued in the periods reflected on the Company Financial Statements. (iv) The group health plans (as defined in Section 4980B(g) of the Code) that benefit employees of the Company and its Subsidiaries are in compliance, in all material respects, with the continuation coverage requirements of Section 4980B of the Code as such requirements affect the Company and its employees. As of the Closing Date, there will be 21 22 no material outstanding, uncorrected violations under the Consolidation Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), with respect to any of the Company Benefit Arrangements, covered employees, or qualified beneficiaries that could result in a Material Adverse Effect on the Company, or in a Material Adverse Effect on Parent after the Effective Time. (v) No benefit payable or which may become payable by the Company pursuant to any Company Benefit Arrangement or as a result of or arising under this Agreement, the Company Ancillary Agreements or the Agreement of Merger will constitute an "excess parachute payment" (as defined in Section 280G(b)(1) of the Code) which is subject to the imposition of an excise tax under Section 4999 of the Code or which would not be deductible by reason of Section 280G of the Code. Except as disclosed in Section 4.1(k) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party to any: (a) agreement with any executive officer or other key employee thereof, (i) the benefits of which are contingent, or the terms of which are materially altered, upon the occurrence of a transaction involving the Company in the nature of the Offer or the Merger or any of the other transactions contemplated by this Agreement or any Company Ancillary Agreement or (ii) providing severance benefits or other benefits after the termination of employment of such employee regardless of the reason for such termination of employment; or (b) agreement or plan, including, without limitation, any stock option plan, stock appreciation rights plan or stock purchase plan, any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence or consummation of the Offer or the Merger or any of the other transactions contemplated by this Agreement or any Company Ancillary 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 or any Company Ancillary Agreement. All outstanding Company Options will terminate at the Effective Time. (vi) To the Company's knowledge, no employee, consultant or independent contractor of the Company or any Subsidiary: (a) is in material violation of any term or covenant of any employment contract, patent disclosure agreement, noncompetition agreement or any other contract or agreement with, or obligation to, any other party by virtue of such employee's, consultant's, or independent contractor's being employed by, or performing services for, the Company or such Subsidiary or using trade secrets or proprietary information of others, or that would be likely to have a Material Adverse Effect; or (b) has developed any technology, software or other copyrightable, patentable, or otherwise proprietary work for the Company or any of its Subsidiaries that is subject to any agreement under which such employee, consultant or independent contractor has assigned or otherwise granted to any third party any rights (including without limitation Intellectual Property Rights) in such technology, software or other copyrightable, patentable or otherwise proprietary work. To the Company's knowledge, the employment of any employee of the Company or any of its Subsidiaries does not subject the Company or any such Subsidiary to any liability to any third party. (vii) Except as set forth in Section 4.1(l) of the Company Disclosure Schedule, (a) the Company and its Subsidiaries are operating and have operated the business in compliance in all material respects with all applicable laws relating to the business respecting 22 23 employment and employment practices; (b) no Governmental Entity has given the Company or any of its Subsidiaries written notice regarding any pending charge, audit, claim, complaint, investigation or review by or before any Governmental Entity concerning or requesting in writing to explain any possible conflicts with or violations of any such laws by the Company or such Subsidiary, nor, to the knowledge of the Company, is any such investigation threatened or pending; (c) the Company and its Subsidiaries are not delinquent in payments to any employees for any material wages, salaries, commissions, bonuses or other compensation for any services performed by them relating to the business or amounts required to be reimbursed to such employees. (m) Taxes. (i) The Company and each of its Subsidiaries have timely filed all federal, state, local and foreign tax returns required to be filed by it, has timely paid all taxes required to be paid by it in respect of all periods for which returns have been filed, has established an adequate accrual or reserve for the payment of all taxes payable in respect of the periods subsequent to the periods covered by the most recent applicable tax returns (which accrual or reserve as of the Balance Sheet Date is fully reflected on the Balance Sheet), has made all necessary estimated tax payments, and has no material liability for taxes in excess of the amount so paid or accruals or reserves so established. Except as disclosed in Section 4.1(m) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is delinquent in the payment of any tax or in the filing of any tax returns, and no deficiencies for any tax of the Company or any of its Subsidiaries have been claimed or assessed (or, to the Company's knowledge, threatened or proposed) against the Company or any of its Subsidiaries or any of their respective officers, employees or agents in their capacity as such that remain outstanding. Except as disclosed in Section 4.1(m) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has received any notification that any material issues have been raised by (and are currently pending before) the Internal Revenue Service or any other taxing authority (including but not limited to any sales or use tax authority) regarding the Company or any of its Subsidiaries, and no tax return of the Company or any of its Subsidiaries has been audited for any taxable period beginning on or after October 1, 1993 by the Internal Revenue Service or any foreign, state or local taxing agency or authority other than audits which have been completed and resolved without the assessment of any material taxes or penalties against the Company or any of its Subsidiaries. Except as disclosed in Section 4.1(m) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party to any agreement waiving or extending any statute of limitations with respect to any taxes. No Liens have been filed against any assets of the Company or any of its Subsidiaries with regard to any tax. The Company and its Subsidiaries have each withheld with respect to each of its employees and independent contractors all taxes, including but not limited to federal and state income taxes, FICA, Medicare, FUTA and other taxes, required to be withheld, and paid (or will pay) such withheld amounts to the appropriate tax authority within the time prescribed by law. (ii) The Company has made available to Parent true and complete copies of all tax returns, including foreign, federal and state income or franchise tax returns and 23 24 state sales and use tax returns with respect to the Company or any of its Subsidiaries or any of their respective assets or operations, for all periods since (or beginning on) October 1, 1994. (iii) For the purposes of this Section 4.1(m), (a) the terms "TAX" and "TAXES" include all federal, state, local and foreign income, alternative or add-on minimum income, gains, franchise, excise, property, property transfer, sales, use, employment, license, payroll, ad valorem, payroll, documentary, stamp, occupation, recording, value added or transfer taxes, and other governmental charges, fees, customs duties, levies or assessments of a nature similar to taxes (whether payable directly or by withholding) and, with respect to any such taxes, any estimated tax, interest, fines and penalties or additions to tax and interest on such fines, penalties and additions to tax and (b) the term "RETURNS" shall mean all reports, estimates, declarations of estimated tax, information statements and returns relating to, or required to be filed with connection with, any taxes, including information returns or reports with respect to backup withholding and other payments to third parties. (n) Compliance with Laws. The Company and each of its Subsidiaries has complied, and is and will be in compliance, in all material respects with all applicable federal, state, local or foreign laws, ordinances, regulations, and rules, and all orders, writs, injunctions, awards, judgments, and decrees applicable to it or to its assets, properties, and business. The Company and each of its Subsidiaries of the Company holds all permits, licenses and approvals from, and has made all filings with, government agencies and authorities, that are necessary in connection with its present business ("GOVERNMENTAL PERMITS") and all such Governmental Permits are in full force and effect, except where the failure to hold any such Governmental Permit or make such filings has not had, and could not reasonably be expected to have, a Material Adverse Effect on the Company. The Company is in compliance in all material respects with the terms of such Governmental Permits. Neither the Company nor any of its Subsidiaries has received any notice or other communication from any Governmental Entity regarding (a) any actual or possible violation of law or any Governmental Permit or any failure to comply with any term or requirement of any Governmental Permit, or any investigation or audit (or proposed investigation or audit relating thereto) or (b) any actual or possible revocation, withdrawal, suspension, cancellation, termination or modification of any Governmental Permit. Neither the Company nor any of its Subsidiaries, nor any director, officer, agent or employee of the Company and/or any of its Subsidiaries, has, for or on behalf of the Company or any of its Subsidiaries, (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns or violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (iii) made any other unlawful payment. (o) Certain Transactions and Agreements. Except as disclosed in Section 4.1(o) of the Company Disclosure Schedule, to the knowledge of the Company, (i) none of the officers or directors of the Company, nor any member of their immediate families, is directly or indirectly a party to, or otherwise interested in, any contract or informal arrangement with the Company or any of its Subsidiaries that is or would be required to be disclosed in an annual report on Form 10-K or in a proxy statement relating to a meeting of stockholders at 24 25 which directors were to be elected, except for normal compensation for services as an officer or director thereof that have been disclosed in the 1997 10-K (or the proxy statement incorporated by reference therein) and except for option agreements related to Company Options granted to such persons and disclosed in Section 4.1(c) of the Company Disclosure Schedule; and (ii) none of such officers or directors or family members has any interest in any property, real or personal, tangible or intangible (including but not limited to any the Company IP Rights or any other Intellectual Property Rights) that is used in or that pertains to the business of the Company, except for the normal rights of a stockholder. (p) Books and Records. (i) The books, records and accounts of the Company and its Subsidiaries (a) are in all material respects true, complete and correct, (b) have been maintained in accordance with good business practices on a basis consistent with prior years, (c) are stated in reasonable detail and accurately and fairly reflect the transactions and dispositions of the assets of the Company and its Subsidiaries, and (d) accurately and fairly reflect the basis for the Company Financial Statements. (ii) The Company has devised and maintains a system of internal accounting controls sufficient to provide reasonable assurances that: (a) transactions are executed in accordance with management's general or specific authorization; (b) transactions are recorded as necessary (i) to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements and (ii) to maintain accountability for assets and (c) the amount recorded for assets on the books and records of the Company is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (q) Insurance. During the two years prior to the Agreement Date, the Company and its Subsidiaries have maintained, and now maintain, policies of insurance and bonds of the type and in amounts that the Company reasonably believes to be adequate for its business. Except as disclosed in Section 4.1(q) of the Company Disclosure Schedule, 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 the Company and its Subsidiaries are otherwise in compliance in all material respects with the terms of such policies and bonds. (r) Environmental Matters. (i) The Company and its Subsidiaries are in compliance in all material respects with all applicable Environmental Laws (as defined below), which compliance includes the possession by the Company and its Subsidiaries of all permits and other governmental authorizations required under applicable Environmental Laws, and compliance with the terms and conditions thereof. As of the Agreement Date, neither the Company nor any of its Subsidiaries has received any notice or other communication (in writing or otherwise) from a Governmental Entity that alleges that the Company or any of its Subsidiaries is not in 25 26 compliance with any Environmental Law. To the Company's Knowledge, no Materials of Environmental Concern (as defined below) are located in, on or about, or in the subsoil or groundwater of, any property owned, leased, occupied, operated, or controlled by the Company or any Subsidiary or any improvements situated thereon in violation of any Environmental Law. (ii) For purposes of this Section 4.1(r): (i) "ENVIRONMENTAL LAW" means any federal, state, local or foreign statute, law regulation or other legal requirement relating to pollution or protection of human health or the environment (including ambient air, surface water, ground water, land surface or subsurface strata), including any law or regulation relating to emissions, discharges, releases or threatened releases of Materials of Environmental Concern, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern; and (ii) "MATERIAL OF ENVIRONMENTAL CONCERN" means chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and petroleum products and any other substance that is currently regulated by an Environmental Law or that is otherwise a danger to health, reproduction or the environment. (s) Accounts Receivable. As of the Balance Sheet Date, and in each case subject to any reserves set forth in the Balance Sheet, the accounts receivable shown on the Balance Sheet represented bona fide claims against debtors for sales and other charges, and were not subject to any right of offset or to any discount except for normal cash and immaterial trade discounts. (t) Stockholder Agreements. All of the directors and executive officers of the Company have agreed in writing to tender their shares of Company Common Stock in the Offer pursuant to Stockholder Agreements in the form attached hereto as Exhibit C. (u) State Takeover Statutes. The Board of Directors of the Company has approved this Agreement, the Company Ancillary Agreements, the Offer and the Merger and such approval is sufficient to render the provisions of Section 203 of the DGCL inapplicable to the Offer, the Merger and the transactions contemplated by this Agreement and the Company Ancillary Agreements. To the Company's knowledge, no other state takeover statute or similar statute or regulation applies or purports to apply to this Agreement, the Company Ancillary Agreements, the Offer or the Merger, or any of the transactions contemplated by this Agreement and the Company Ancillary Agreements. The Company is not subject to any provision of the California General Corporation Law by operation of Section 2115 thereof. (v) Brokers; Schedule of Fees and Expenses. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission, nor to any fee that is contingent on closing of the transactions contemplated hereby or that is based on a percentage of the transaction value, in connection with the transactions contemplated by this Agreement and the Company Ancillary Agreements based upon arrangements made by or on behalf of the Company, other than the fees payable to Broadview Associates LLC and Software Syndicate, Inc. upon the Effective Time, the amounts 26 27 of which are set forth on Section 4.1(v) of the Company Disclosure Schedule, which will be paid by the Company. (w) Opinion of Financial Advisor. The Company has received the opinion of Broadview Associates LLC, dated the Agreement Date, to the effect that, as of such date, the consideration to be received in the Offer and the Merger by the Company's stockholders is fair to the Company's stockholders from a financial point of view, and a signed copy of such opinion will promptly be delivered to Parent. (x) Contracts and Commitments. Section 4.1(x) of the Company Disclosure Schedule sets forth a list of each of the following written or oral contracts, agreements, commitments or other instruments to which the Company or any of its Subsidiaries is a party or to which the Company or any of its Subsidiaries or any of their respective assets or properties is bound: (i) any distributor, OEM (Original Equipment Manufacturer), VAR (Value Added Reseller), sales representative or similar agreement under which any third party is authorized to sell, sublicense, lease, distribute, market or take orders for, any product or technology of the Company or any of its Subsidiaries or marketed by the Company or any of its Subsidiaries, in each case that is material or of which the Company has knowledge (other than non-exclusive agreements that are terminable by the Company on not more than thirty (30) days notice without cost or liability); (ii) any joint venture or partnership contract or agreement or other agreement which has involved or is reasonably expected to involve a sharing of profits or losses with any other party; (iii) any agreement of which the Company has knowledge with any independent contractor or consultant involved in the development of the Company's CleanSweep product or ProComm product (or any material feature or component thereof or any material Company IP Rights or Company Intellectual Property incorporated, embodied or used therein), by or for the Company or any of its Subsidiaries; (iv) any indenture, mortgage, trust deed, promissory note, loan agreement, security agreement, guarantee or other agreement or commitment for the borrowing of money, for a line of credit or for a leasing transaction of a type required to be capitalized in accordance with Statement of Financial Accounting Standards No. 13 of the Financial Accounting Standards Board; (v) any lease or other agreement under which the Company or any of its Subsidiaries is lessee of or holds or operates any items of tangible personal property or real property owned by any third party and under which payments to such third party exceed $100,000 per annum; (vi) any agreement or arrangement for the sale or disposition of any assets, properties, services or rights by the Company or any of its Subsidiaries having a value in 27 28 excess of $100,000, other than in the ordinary course of the Company's business consistent with its past practices; (vii) any agreement that restricts or prohibits the Company or any of its Subsidiaries from freely engaging in any aspect of its business, from participating or competing in any line of business or that restricts the Company or any of its Subsidiaries from engaging in any business in any geographic area or grants any exclusive licenses to any Intellectual Property Rights or which, to the Company's knowledge, grants most favored customer pricing; (viii) any Company IP Rights Agreements (as defined in Section 4.1(i)); (ix) any agreement relating to the sale, issuance, grant, exercise, award, purchase, repurchase or redemption of any shares of capital stock or other securities of the Company or any options, warrants or other rights to purchase or otherwise acquire any such shares of stock, other securities or options, warrants or other rights therefor; (x) any employment or severance agreement required to be disclosed in Section 4.1(k) of the Company Disclosure Schedule, and any agreement or plan, including, without limitation, any stock option plan, stock appreciation right plan or stock purchase plan, any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of the Offer, the Merger, the execution of License Agreement or any of the other transactions contemplated by this Agreement or any Company Ancillary Agreement or the value of any of the benefits of which will be calculated on the basis of the Offer, the Merger, the License Agreement or any of the other transactions contemplated by this Agreement; (xi) any contract with or commitment to any labor union; or (xii) any contract or arrangement under which the Company or any of its Subsidiaries has made any commitment to develop any new technology, to deliver any software currently under development or to enhance or customize any software (other than agreements to deliver updates or upgrades on terms and conditions described in Section 4.1(x) of the Company Disclosure Schedule); A copy of each agreement or document required by this Section to be listed on Section 4.1(x) of the Company Disclosure Schedule (such agreements and documents being hereinafter collectively referred to as the "COMPANY MATERIAL AGREEMENTS") has been provided to Parent. (y) No Default. Except as disclosed in Section 4.1(y) of the Company Disclosure Schedule, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) does or will, or would reasonably be expected to, (i) represent, constitute or result in a violation or breach by the Company or any of its Subsidiaries or, to the Company's knowledge, any other party, of any of the provisions of any Company Material Agreement, or (ii) give any third party (A) the right to declare a default or exercise any remedy under any Company Material Agreement, (B) the right to a rebate, chargeback, damages or penalty, or material increase in rent or other payments, under any Company Material Agreement, 28 29 (C) the right to accelerate the maturity or performance of any obligation of the Company or any of its Subsidiaries under any Company Material Agreement, or (D) the right to cancel, terminate or modify any Company Material Agreement, except in each such case for violations, breaches, defaults, acceleration rights, termination rights and other rights that in the aggregate have not had, and could not reasonably be expected to have, a Material Adverse Effect on the Company. Since September 30, 1997 and prior to the Agreement Date, neither the Company nor any Subsidiary of the Company has received any communication or notice from any other party to any Company Material Agreement regarding any actual or claimed material violation or material breach of, or default under, such Company Material Agreement or communication or notice by such party of problems of a material nature with the Company's products, services or performance under such Company Material Agreement or its desire to amend, relinquish, terminate or not renew any such Company Material Agreement, in each case which would have a Material Adverse Effect. (z) Title to Properties. (i) The Company and each of its Subsidiaries has good and marketable title to, or valid leasehold interests in, all its material properties and assets except for such as are no longer used or useful in the conduct of its businesses or as have been disposed of in the ordinary course of business and except for defects in title, easements, restrictive covenants and similar encumbrances or impediments that individually or in the aggregate would not materially interfere with its ability to conduct its business as currently conducted. All such material properties and assets, other than properties and assets in which the Company or any of its Subsidiaries has leasehold interests, are free and clear of all Liens, except for (a) Liens that individually or in the aggregate would not materially interfere with the ability of the Company and its Subsidiaries to conduct business as currently conducted and (b) Liens disclosed in the Company SEC Documents or the Company Disclosure Schedule. (ii) The Company and each of its Subsidiaries has complied in all material respects with the terms of all material leases to which it is a party and under which it is in occupancy, and all such leases are in full force and effect. The Company and each of its Subsidiaries enjoys peaceful and undisturbed possession under all such material leases. (aa) Board Approval. The Board of Directors of the Company has unanimously and without qualification (i) authorized and approved this Agreement, all Company Ancillary Agreements, the Offer and the Merger, (ii) recommended that the Company's stockholders tender their shares in the Offer, and (iii) determined that such agreements, the Offer and the Merger are fair to and in the best interests of the Company's stockholders and are on terms that are fair to such stockholders. (ab) No Existing Discussions. Neither the Company, nor any director or officer of the Company, nor any other person acting on behalf of the Company, is engaged, directly or indirectly, in any discussions or negotiations with any third party relating to any takeover proposal (as defined in Section 5.2). 29 30 (ac) Preferred Share Rights Agreement. The Company's Board of Directors has duly authorized and approved an amendment as provided in this Section 4.1(ac) (THE "RIGHTS AMENDMENT") to that certain Preferred Share Rights Agreement between the Company and American Stock Transfer & Trust (the "RIGHTS AGENT") dated as of August 11, 1992, as amended (the "RIGHTS AGREEMENT") to: (i) exclude Parent and Sub and their respective Affiliates and Associates (as such terms are defined under the Rights Agreement) from the definition of "Acquiring Person" in the Rights Agreement, with respect to the beneficial ownership of shares of the Company Common Stock which Parent, Sub and/or any of their respective Affiliates and Associates have hereby obtained the right to acquire, or will acquire, as a result of the transactions contemplated by this Agreement or any of the Company Ancillary Agreements, including but not limited to the Offer or the Merger, or any other agreement or transaction involving Parent, Sub and/or any of their respective Affiliates and Associates that has been approved by the Board of Directors of the Company prior to such acquisition, (ii) provide that no Distribution Date (as such term is defined under the Rights Agreement) shall result from the Offer, including without limitation, in connection with any announcement of the Offer, the commencement of the Offer, the acquisition by Parent of any amount of Company Common Stock or Company Preferred Stock pursuant to the Offer, or the consummation of the Merger, and (iii) provide for the expiration of the Rights Agreement upon the Effective Time. The Rights Amendment has been duly executed and delivered by the Company and the Rights Agent, and is in full force and effect. The Company's Board of Directors has determined that the terms of the Offer and of the Merger as well as the transactions contemplated hereby and thereby meets the criteria specified in the Rights Agreement for a Permitted Offer (as such term is defined under the Rights Agreement). 4.2 Representations and Warranties of Parent and Sub. Parent and Sub represent and warrant to the Company as follows: (a) Organization, Standing and Corporate Power. Each of Parent and Sub is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to carry on its business as now being conducted. Each of Parent and Sub is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed individually or in the aggregate would not have a material adverse effect on Parent. (b) Authority. Parent and Sub have all the requisite corporate power and authority to enter into this Agreement and the Parent Ancillary Agreements and to consummate the transactions contemplated by this Agreement and the Parent Ancillary Agreements. The execution and delivery of this Agreement and the Parent Ancillary Agreements by the Parent and Sub and the consummation by the Parent and Sub of the transactions contemplated by hereby and thereby have been duly authorized by all necessary corporate action on the part of the Parent and Sub. This Agreement and the Parent Ancillary Agreements have been duly executed and delivered by the Parent and the Sub and constitute valid and binding obligations of the Parent and the Sub (as applicable), enforceable against the Parent and the Sub (as applicable) in 30 31 accordance with their terms (except as enforcement hereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium and similar laws, both state and federal, affecting the enforcement of creditors' rights or remedies in general as from time to time in effect or (ii) the exercise by courts of equity powers). (c) Noncontravention. The execution and delivery of this Agreement and the Parent Ancillary Agreements do not, and the consummation of the transactions contemplated hereby and thereby and compliance with the provisions of hereof and thereof will not, conflict with or result in a violation of or default (with or without notice or lapse of time or both) under (i) the certificate of incorporation or by-laws of Parent or Sub, (ii) any instrument, agreement or contract to which Parent or Sub is a party or by which either of them is bound that has been or is required to have been, filed by the Parent with the SEC as an exhibit (whether incorporated by reference of filed separately) to the Parent's annual report on Form 10-K for its fiscal year ended April 3, 1998 or in any other document filed by Parent with the SEC under the 1993 Act or the Exchange Act after April 3, 1998 and prior to the Agreement Date (the "PARENT SEC DOCUMENTS"), or (iii) any governmental filings and other matters referred to in the following sentence, any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Parent or Sub or their respective properties or assets, other than, in the case of clause (ii) or (iii), any such conflicts, violations, defaults, rights or Liens that individually or in the aggregate would not (x) have a Material Adverse Effect on Parent or Sub, (y) materially impair the ability of Parent or Sub to perform its obligations under this Agreement and the Parent Ancillary Agreements or (z) prevent the consummation of any of the transactions contemplated by this Agreement and the Parent Ancillary Agreements. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to Parent or Sub in connection with its execution and delivery of this Agreement and the Parent Ancillary Agreements or the consummation of the transactions contemplated by hereby and thereby, except for (1) the filing of a pre-merger notification and report form by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT"), (2) the filing with the SEC and the National Association of Securities Dealers, Inc. of (A) the Schedule 14D-1 and (B) such reports under Section 13(a) and 16(a) of the Exchange Act of the Exchange Act as may be required in connection with this Agreement and the Parent Ancillary Agreements and the transactions contemplated hereby and thereby and (3) the filing of the Certificate of Merger with the Delaware Secretary of State and appropriate documents with the relevant authorities of other states in which the Company is qualified to do business. (d) Information Supplied. None of (i) the Offer Documents or (ii) the information supplied or to be supplied by Parent or Sub specifically for inclusion or incorporation by reference in the Schedule 14D-9, the Information Statement or the Proxy Statement will, in the case of the Offer Documents, the Schedule 14D-9 and the Information Statement, at the respective times the Offer Documents, the Schedule 14D-9 and the Information Statement are filed with the SEC or first published, sent or given to the Company's stockholders, or, in the case of the Proxy Statement, at the date the Proxy Statement is first mailed to the Company's stockholders or at the time of the Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or 31 32 necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Offer Documents will comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations promulgated thereunder, except that no representation or warranty is made by Parent or Sub with respect to statements made or incorporated by reference therein based on information supplied by the Company in writing specifically for inclusion or incorporation by reference therein. (e) Brokers. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement and the Parent Ancillary Agreements based upon arrangements made by or on behalf of Parent or Sub other than Donaldson, Lufkin & Jenrette Incorporated, the fees and expenses of which will be paid by Parent. (f) Financing. Parent has funds sufficient to consummate the Offer and the Merger on the terms contemplated by this Agreement and the Company Ancillary Agreements, and at the expiration of the Offer and the Effective Time, Parent and Sub will have available funds sufficient to acquire to perform their respective obligations under this Agreement and the Parent Ancillary Agreements, including without limitation payment in full for all shares of Company Common Stock validly tendered in the Offer and all shares of Company Common Stock and Company Preferred Stock outstanding at the Effective Time. (g) Litigation. As of the Agreement Date, there is no suit, action, arbitration, proceeding, claim or investigation pending or threatened against the Parent or Sub, nor is their any reasonable basis therefor, that individually or in the aggregate could reasonably be expected to (i) except as disclosed in the Parent SEC Documents, have a Material Adverse Effect on the Parent, (ii) challenge or seek to enjoin or seek damages with respect to the Parent's or Sub's entering into and performing this Agreement and the Parent Ancillary Agreements or impair the ability of the Parent or Sub to perform their respective obligations under this Agreement and the Parent Ancillary Agreements or (iii) prevent the consummation of any of the transactions contemplated by this Agreement and the Company Ancillary Agreements, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against the Parent or Sub having, or which is reasonably likely to have, any effect referred to in the foregoing clause (i), (ii) or (iii) above. ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS 5.1 Conduct of Business. The Company shall, and shall cause its Subsidiaries to, carry on its and their respective businesses in the ordinary course of business consistent with its past practices and use all reasonable efforts to preserve intact their current business organizations, to keep available the services of their current officers and employees and to preserve relationships with distributors, licensors, contractors, customers, suppliers, lenders, employees and others having business dealings with any of them. Without limiting the generality of the foregoing, except as may be expressly permitted by other provisions of this 32 33 Agreement and the Company Ancillary Agreements, or as may be agreed to in writing by Parent, the Company shall not, and shall not permit any of its Subsidiaries to: (i) either (x) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of its capital stock, other than dividends and distributions by any direct or indirect wholly owned Subsidiary of the Company to its parent, in the case of less than wholly owned Subsidiaries, as required by agreements existing on the Agreement Date, (y) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities; (ii) issue, deliver, sell, pledge or otherwise encumber any shares of its or of any Subsidiary's capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities (other than (x) the issuance of the Company Common Stock upon the exercise of Company Options and warrants outstanding on the Agreement Date and disclosed in the Company Disclosure Schedule, in accordance with their present terms), and (y) the issuance of Company Common Stock upon the conversion of Convertible Notes or Series C Preferred Stock); (iii) amend its certificate of incorporation, by-laws or other comparable charter or organizational documents; (iv) acquire or agree to acquire (x) by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof or (y) any assets that individually or in the aggregate are material to the Company and its Subsidiaries taken as a whole; (v) sell, lease, license, mortgage or otherwise encumber or subject to any Lien or otherwise dispose of any of its properties or assets (including Intellectual Property Rights), except for (a) sales, leases, or encumbrances of immaterial or obsolete properties or assets, and non-exclusive licenses of Intellectual Property Rights, in each case in the ordinary course of business consistent with past practices and (b) sales or dispositions of assets, or subleases of facilities, specifically described in Section 5.1 of the Company Disclosure Schedule. (vi) transfer or license to any person or entity or otherwise extend, amend or modify in any material respect any rights to any Company IP Rights or Company Intellectual Property, other than non-exclusive licenses in the ordinary course of business, or assign or grant any exclusive license to any Intellectual Property Rights; (vii) incur any indebtedness for borrowed money or draw down on any credit facility or arrangement or guarantee any such indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or 33 34 any of its Subsidiaries, guarantee any debt securities of another person, enter into any "keep well" or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing (other than borrowings of not more than $2.0 million in any calendar month (not to exceed $3.0 million in the aggregate outstanding at any time after the Agreement Date); (viii) make any loans, advances or capital contributions to, or investments in, any other person, other than to the Company or Subsidiary of the Company; (ix) make or agree to make any new capital expenditure or expenditures which individually is in excess of $100,000 or which in the aggregate are in excess of $200,000; (x) make any material Tax election or settle or compromise any income or franchise Tax liability; (xi) pay, discharge, settle or satisfy any claims (accrued, asserted or unasserted, contingent or otherwise) for an amount greater than $100,000, except discharges or payments of claims existing on the Balance Sheet Date in an amount not in excess of the amount shown or reserved therefor on the Balance Sheet; (xii) enter into, amend, modify or terminate any agreement, transaction, commitment or other right or obligation that, if in effect on the Agreement Date, would be a Company Material Agreement, or that by its terms requires or contemplates a current and/or future financial commitment, expense or obligation on the part of the Company or any of its Subsidiaries involving in excess of $100,000, other than in the ordinary course of business consistent with past practices, or waive, release or assign any material rights or claims thereunder, other than discounting of accounts receivable to obtain prompt collection; (xiii) terminate or lay off any material numbers of employees, other than for cause consistent with past practice and Company policy; (xiv) adopt or amend in any material respect any employee benefit or employee stock purchase or employee option plan, or enter into any employment contract, pay any special bonus or special remuneration to any director or employee, or increase the salaries, wage rates or other compensation payable to its officers or employees other than in the ordinary course of business consistent with past practices, or commit or agree to do any of the foregoing, or otherwise alter or commit to any compensation, benefit or severance or change of control arrangement for or with any officer or employee of the Company except compensation increases, severance payments or bonuses specifically disclosed in Section 5.1 of the Company Disclosure Schedule. (xv) grant or provide any severance or termination pay to any officer or employee except payments that (x) are in amounts consistent with the Company's policies and past practices and are made pursuant to written plans or agreements outstanding, or policies existing, on the Agreement Date that are disclosed in the Company Disclosure Schedule, or 34 35 (y) are made pursuant to arrangements, and in amounts, specifically disclosed in Section 5.1 of the Company Disclosure Schedule; (xvi) voluntarily take actions to liquidate or dissolve the Company or to take advantage of bankruptcy or other creditor protection laws; (xvii) institute any litigation or other proceeding other than in connection with a breach of this Agreement or any of the Parent Ancillary Agreements by Parent or Sub; (xviii) take any action that would cause or constitute a breach of any representation or warranty made by the Company in this Agreement or any of the Company Ancillary Agreements; or (xix) authorize any of, or commit or agree to take any of, the foregoing actions. 5.2 No Solicitation. (a) From and after the Agreement Date until the earlier of the Effective Time or termination of this Agreement in accordance with its terms, the Company shall not, nor shall it permit any of its Subsidiaries to, nor shall it authorize or permit any officer, director or employee of, or any investment banker, attorney or other advisor or representative of, the Company or any of its Subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage the submission of any takeover proposal (as defined below), (ii) participate in any discussions or negotiations with, or furnish any information to, or provide access to the Company's properties, books and records to, or enter into any agreement with to, any person or group (other than Parent) in connection with any takeover proposal or (iii) take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any takeover proposal. The Company, its Subsidiaries, officers, directors, employees, investment bankers, attorneys and other agents and representatives will immediately cease any and all existing activities, discussions or negotiations with any parties conducted previously regarding a takeover proposal. Without limiting the foregoing, it is understood that any violation of the restrictions set forth in the preceding two sentences by any officer or director of the Company or any investment banker or attorney of the Company or any of its Subsidiaries, shall be deemed to be a breach of this Section 5.2(a) by the Company. In addition, subject to the other provisions of this Section 5.2(a), from and after the Agreement Date until the earlier of the Effective Time and termination of this Agreement pursuant to its terms, the Company and its Subsidiaries will not, and will instruct their respective directors, officers, employees, representatives, investment bankers, agents and affiliates not to, directly or indirectly, make or authorize any public statement, recommendation or solicitation in support of any takeover proposal made by any person, entity or group (other than Parent); provided, however, that nothing herein shall prohibit the Company's Board of Directors from taking and disclosing to the Company's stockholders a position with respect to a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act. For purposes of this Agreement, "TAKEOVER PROPOSAL" means any (x) proposal for a merger or other business combination involving the Company or any of its Subsidiaries (y) proposal, offer or tender offer to acquire (including without limitation by license) in any manner, directly or 35 36 indirectly, an equity interest in, not less than 35% of the outstanding voting securities of the Company or any of its Subsidiaries, or (z) proposal to acquire assets representing not less than 25% of the annual revenues of the Company or any of its Subsidiaries in the fiscal year ending September 30, 1998 or to obtain a license to the Company's ProComm or CleanSweep product or to any Company IP Right or Company Intellectual Property that is incorporated, embodied or used therein and that is material to such product (except as permitted by Section 5.1), in each case in clauses (x), (y) or (z) of this subsection, other than the transactions contemplated by this Agreement and the Company Ancillary Agreements. (b) Notwithstanding any other provision of this Agreement, prior to the Effective Time, the Company may, to the extent the Board of Directors of the Company determines, in good faith, after consultation with outside legal counsel, that the Board's fiduciary duties under applicable law require it to do so, participate in discussions or negotiations with, and, subject to the requirements of Section 5.02(c) paragraph (c), below, furnish information to any person, entity or group after such person, entity or group has delivered to the Company an unsolicited bona fide takeover proposal which the Board of Directors of the Company in its good faith reasonable judgment determines, (i) after consultation with its independent financial advisors, would result in a transaction more favorable to the stockholders of the Company from a financial point of view than the Offer and the Merger and (ii) after reasonable inquiry by the Company that the party making such takeover proposal is financially capable of consummating such takeover proposal (a "SUPERIOR PROPOSAL"). In addition, notwithstanding any other provision of this Agreement, in connection with a possible takeover proposal, the Company may refer any third party to this Section 5.2 or make a copy of this Section 5.2 available to any third party. In the event the Company receives a Superior Proposal, nothing contained in this Agreement (but subject to the terms of this Section 5.2(b)) will prevent the Board of Directors of the Company from recommending such Superior Proposal to its stockholders, if the Board determines, in good faith, after consultation with outside legal counsel, that such action is required by its fiduciary duties under applicable law; in such case, the Board of Directors of the Company may withdraw, modify or refrain from making its recommendation of the Offer, provided, however, that the Company shall not recommend to its stockholders a Superior Proposal for a period of not less than 48 hours after Parent's receipt of a copy of such Superior Proposal (or a description of the significant terms and conditions thereof, if such Superior Proposal is not in writing). (c) Notwithstanding anything to the contrary in this Section 5.2, the Company will not provide any non-public information to a third party unless (x) the Company provides such non-public information pursuant to a nondisclosure agreement with terms regarding the protection of confidential information at least as restrictive as such terms in the Confidentiality Agreement (as defined in Section 6.2) and (y) such non-public information has been previously delivered to the Parent or will simultaneously be furnished to Parent. (d) In addition to the obligations of the Company set forth in paragraph 5.2(b) above, the Company shall promptly advise Parent orally and in writing of any request for information or of any takeover proposal, or any inquiry with respect to, or which could reasonably be expected to lead to, any takeover proposal, the material terms and conditions of 36 37 such request, takeover proposal or inquiry, and the identity of the person making any such takeover proposal or inquiry. The Company will keep Parent informed of the status and material terms of any such request, takeover proposal or inquiry. ARTICLE VI ADDITIONAL AGREEMENTS 6.1 Stockholder Approval; Preparation of Proxy Statement. (a) If Company Stockholder Approval is required by law, the Company will, at Parent's request, as soon as practicable following the consummation of the Offer, duly call, give notice of, convene and hold a meeting of its stockholders (the "STOCKHOLDERS MEETING") for the purpose of obtaining the Company Stockholder Approval. If able to do so, Parent shall cause the Company to comply with its obligations under this Section 6.1(a) and Section 6.1(b). Subject to the provisions of Section 5.2(b), the Company will, through its Board of Directors, recommend to its stockholders that the Company Stockholder Approval be given. Notwithstanding the foregoing, if Sub or any other subsidiary of Parent shall acquire at least 90% of the outstanding shares of the Company Common Stock, the parties shall, at the request of Parent, take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after the expiration of the Offer without a Stockholders Meeting in accordance with Section 253 of the DGCL. Without limiting the generality of the foregoing, the Company agrees that its obligations pursuant to the first sentence of this Section 6.1(a) shall not be affected by (i) the commencement, public proposal, public disclosure or communication to the Company of any takeover proposal or (ii) the withdrawal or modification by the Board of Directors of the Company of its approval or recommendation of the Offer, this Agreement, any of the Company Ancillary Agreements or the Merger, except that such obligations shall terminate if this Agreement is terminated. (b) If the Company Stockholder Approval is required by law, the Company will, at Parent's request, as soon as practicable following the expiration of the Offer, prepare and file a preliminary Proxy Statement with the SEC and will use all reasonable efforts to respond to any comments of the SEC or its staff and to cause the Proxy Statement to be mailed to the Company's stockholders as promptly as practicable after responding to all such comments to the satisfaction of the staff. The Company will notify Parent promptly of the receipt of any comments from the SEC or its staff and of any request by the SEC or its staff for amendments or supplements to the Proxy Statement or for additional information and will supply Parent with copies of all correspondence between the Company or any of its representatives, on the one hand, and the SEC or its staff, on the other hand, with respect to the Proxy Statement or the Merger. If at any time prior to the Stockholders Meeting there shall occur any event that should be set forth in an amendment or supplement to the Proxy Statement, the Company will promptly prepare and mail to its stockholders such an amendment or supplement. The Company will not mail any Proxy Statement, or any amendment or supplement thereto, to which Parent reasonably objects. 37 38 (c) Parent agrees to cause all shares of the Company Common Stock purchased pursuant to the Offer and all other shares of the Company Common Stock owned by Sub or any other subsidiary of Parent to be voted in favor of the Company Stockholder Approval. 6.2 Access to Information; Confidentiality. The Company shall, and shall cause each of its Subsidiaries to, afford to Parent, and to Parent's officers, employees, accountants, counsel, financial advisers and other representatives, reasonable access during normal business hours during the period prior to the Effective Time to all their respective properties, books, contracts, commitments, personnel and records and, during such period, the Company shall, and shall cause each of its Subsidiaries to, furnish or make available promptly to Parent (a) a copy of each report, schedule, registration statement and other document filed by it during such period pursuant to the requirements of Federal or state securities laws and (b) all other information concerning its business, properties and personnel as Parent may reasonably request. Except as required by law, Parent will hold, and will cause its officers, employees, accountants, counsel, financial advisers and other representatives and affiliates to hold, any confidential information in accordance with the Mutual Non-Disclosure Agreement between Parent and the Company (THE "CONFIDENTIALITY AGREEMENT"). 6.3 All Reasonable Efforts; Notification. (a) Upon the terms and subject to the conditions set forth in this Agreement and the Company Ancillary Agreements, each of the parties agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to use all reasonable efforts to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in an expeditious manner, the Offer, the Merger and the other transactions contemplated by this Agreement and the Company Ancillary Agreements, including (i) the obtaining of all necessary actions or non actions, waivers, consents and approvals from Governmental Entities and the making of all necessary registrations and filings (including filings with Governmental Entities, if any) and the taking of all reasonable steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental Entity, (ii) the obtaining of all necessary consents, approvals or waivers from third parties, including but not limited to those set forth in Section 4.1(e) of the Company Disclosure Schedule, (iii) the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or any of the Company Ancillary Agreements or the consummation of any of the transactions contemplated by this Agreement and the Company Ancillary Agreements, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed and (iv) the execution and delivery of any additional instruments necessary to consummate the transactions contemplated by, and fully to carry out the purposes of, this Agreement and the Company Ancillary Agreements. In connection with and without limiting the foregoing, the Company and its Board of Directors shall (A) take all action necessary to ensure that no state takeover statute or similar statute or regulation is or becomes applicable to the Offer, the Merger, this Agreement, any Company Ancillary Agreement or any of the other transactions contemplated hereby or thereby and (B) if any state takeover statute or similar statute or regulation becomes applicable to the Offer, the Merger, this Agreement, any Company Ancillary Agreement or any other 38 39 transaction contemplated hereby or thereby, take all action within its power and authority necessary to ensure that the Offer, the Merger, each Company Ancillary Agreement and the other transactions contemplated by hereby and thereby may be consummated as promptly as practicable on the terms contemplated by this Agreement and the Company Ancillary Agreements and otherwise to minimize the effect of such statute or regulation on the Offer, the Merger and the other transactions contemplated hereby and thereby. Notwithstanding anything to the contrary set forth in this Section 6.3(a), the Board of Directors of the Company shall not be prohibited from taking any action consistent with Section 5.2(a) or 5.2(b), subject to Parent's rights set forth in Section 5.2(b) and in Section 5.2(c). (b) As soon as may be reasonably practicable, the Company and Parent each shall file with the United States Federal Trade Commission (the "FTC") and the Antitrust Division of the United States Department of Justice ("DOJ") Notification and Report Forms relating to the transactions contemplated herein as required by the HSR Act, as well as comparable pre-merger notification forms required by the merger notification or control laws and regulations of any applicable jurisdiction, as agreed to by the parties. The Company and Parent each shall promptly (a) supply the other with any information which may be required in order to effectuate such filings and (b) supply any additional information which reasonably may be required by the FTC, the DOJ or the competition or merger control authorities of any other jurisdiction and which the parties may reasonably deem appropriate. (c) The Company shall give prompt notice to Parent, and Parent shall give prompt notice to the Company, of (i) any material breach of any representation or warranty made by it in this Agreement or any Company Ancillary Agreement (in the case of the Company) or in this Agreement or any Parent Ancillary Agreement (in the case of Parent) or (ii) the failure by it to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement or under any Company Ancillary Agreement (in the case of the Company) or in this Agreement or any Parent Ancillary Agreement (in the case of Parent); provided, however, that no such notification shall affect the representations, warranties, covenants, or agreements of the parties or the conditions to the obligations of the parties under this Agreement, the Company Ancillary Agreements and the Parent Ancillary Agreements. (d) In the event that the Company or, following consummation of the Offer, the Parent, shall determine to effect a reduction or cessation of operations or workforce, or to terminate the employment of any employees, of the Company or any Subsidiary thereof, the Company shall (when and if requested by Parent, and not before the consummation of the Offer, in the case of such a determination by Parent) perform and take all acts that may be required to comply with the applicable provisions of the Worker Adjustment and Retraining Act (the "WARN ACT"), and, in the case of such a determination by Parent, shall give notice in such form, at such time, and to such employees as may be reasonably requested by Parent in connection therewith. 6.4 Post Merger Employment Benefits. Employees of the Company who become employed by Parent or any controlled subsidiary thereof after the Effective Time will, at Parent's 39 40 election, either to the extent permitted under the terms of such Company Benefit Arrangements continue to be eligible to participate in Company Benefit Arrangements, if and for so long as continued, or become eligible to participate in the same standard employee benefit plans as are generally available to similarly situated employees of Parent. Upon the request of the Parent, following the consummation of the Offer, the Company shall (and shall cause its Subsidiaries to), effective immediately prior to the Effective Time, terminate such of its Company Benefit Arrangements as may be specified by Parent, provided that following the Effective Time, the affected employees of the Company and such Subsidiaries will be eligible to participate in the same standard employee benefit plans as are generally available to similarly situated employees of Parent, and such employee's time served with the Company or any Subsidiary thereof shall be credited to such employee for purposes of determining such employee's eligibility or level of benefits under the terms of Parent's employee benefit plans. 6.5 Indemnification, Exculpation and Insurance. (a) From and after the Effective Time, the Parent will fulfill and honor and will cause the Surviving Corporation to fulfill and honor in all respects the obligations of the Company pursuant to its certificate of incorporation, its bylaws and any indemnification agreements between the Company and its directors and officers in their capacity as such (the "INDEMNIFIED PARTIES") existing prior to the date hereof. From and after the Effective Time, such obligations shall be the joint and several obligations of Parent and the Surviving Corporation and, by executing this Agreement, Parent hereby assumes such obligations. The Certificate of Incorporation and Bylaws of the Surviving Corporation will contain the provisions with respect to indemnification and elimination of liability for monetary damages set forth in the Certificate of Incorporation and Bylaws of the Company, which provisions will not be amended, repealed or otherwise modified from the Effective Time in any manner that would adversely affect the rights thereunder of individuals who, immediately prior to the Effective Time, were directors, officers, employees or agents of the Company or its Subsidiaries, unless such modification is required by law. (b) Parent will cause to be maintained for a period of not less than three years from the Effective Time the Company's current directors' and officers' insurance and indemnification policy to the extent that it provides coverage for events occurring prior to the Effective Time (the "D&O INSURANCE") for all persons who are directors and officers of the Company on the Agreement Date (and to the extent covered by the D&O Insurance as of the Agreement Date, persons who were directors and officers of the Company prior to the Agreement Date), in their capacity as such, so long as the annual premium therefor would not be in excess of 150% of the last annual premium paid prior to the Agreement Date (the "MAXIMUM PREMIUM") and, to the extent the annual premium would exceed the Maximum Premium, Parent will cause to be maintained for such period the maximum amount of such D&O Insurance that can readily be procured for the Maximum Premium. If the existing D&O Insurance expires, is terminated or canceled during such two year period, Parent will use all reasonable efforts to cause to be obtained as much D&O Insurance as can be obtained for the remainder of such period for an annualized premium not in excess of the Maximum Premium, on terms and conditions no less advantageous than the existing D&O insurance. In lieu of maintaining the Company's 40 41 current D&O insurance, Parent may elect to add the directors and officers of the Company on the Agreement Date (and to the extent covered by the D&O Insurance as of the Agreement Date, persons who were directors and officers of the Company prior to the Agreement Date) to its own insurance policy, provided that such election does not diminish the rights provided to such persons under the Company's existing D&O Insurance. (c) This Section 6.5 will survive any termination of this Agreement and the consummation of the Merger at the Effective Time is intended to benefit the Company, the Surviving Corporation and the persons who are or were directors or officers of the Company on or prior to the Effective Time, and will be binding on all successors and assigns of the Parent or the Surviving Corporation. (d) In the event that Parent or the Surviving Corporation or any of their successors or assigns consolidates with or merges into any other Person and shall not be the continuing or surviving corporations or entities of such consolidation or merger, then and in each such case, proper provisions shall be made so that the successors and assigns of the Parent or the Surviving Corporation shall assume the obligations of the Parent or the Surviving Corporation, as the case may be, set forth in this Section 6.5. (e) The provisions of this Section 6.5 are intended to be for the benefit of, and shall be enforceable by, each indemnified party and such party's heirs and representatives. 6.6 Directors. (a) Effective upon the acceptance for payment by Sub of any shares of Company Common Stock, Parent shall be entitled to designate the number of members, rounded up to the next whole number, on the Company's Board of Directors that equals the product of (i) the total number of members of the Company's Board of Directors (giving effect to the election of any additional directors pursuant to this Section 6.6) and (ii) the percentage that the number of shares of Company Common Stock accepted for payment by Purchaser bears to the total number of shares of Company Common Stock outstanding, and the Company shall take all action necessary to cause Parent's designees to be elected or appointed to the Company's Board of Directors, including, without limitation, increasing the number of directors, and seeking and accepting resignations of incumbent directors. At such times, the Company will use all reasonable efforts to cause individuals designated by Parent to constitute the same percentage as such individuals represent on the Company's Board of Directors or each committee of the Board (other than any committee of the Board established to take action under this Agreement), and, if requested by Parent, each board of directors of each Subsidiary and each committee of each such board. Notwithstanding the foregoing, until such time as Parent acquires a majority of such outstanding shares of Company Common Stock on a fully-diluted basis (determined as set forth in Exhibit A to this Agreement), the Company shall use all reasonable efforts to ensure that all of the members of the Board of Directors and such boards and committees as of the date hereof who are not employees of the Company shall remain members of the Board of Directors and such boards and committees. 41 42 (b) The Company's obligations to appoint designees to the Board of Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this Section 6.6 and shall include in the Schedule 14D-9 such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-1 to fulfill its obligations under this Section 6.6. Parent will supply to the Company in writing and be solely responsible for any information with respect to itself and its nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1. 6.7 Fees and Expenses. (a) Except as provided below in this Section 6.7, all fees and expenses incurred in connection with the Offer, the Merger, this Agreement, the Company Ancillary Agreements and the transactions contemplated hereby and thereby shall be paid by the party incurring such fees or expenses, whether or not the Offer or the Merger is consummated. (b) The Company shall pay, or cause to be paid, in same or next day funds to Parent, $2 million (the "COMPANY FEE") (i) if this Agreement is terminated pursuant to Section 8.1(b)(i) as a result of the failure of the condition set forth in paragraph (d) of Exhibit A to this Agreement, or pursuant to Section 8.1(c) or Section 8.1(d), or (ii) if this Agreement is terminated by Parent pursuant to Section 8.1(f), or pursuant to Section 8.1(b)(i) as a result of the failure of the condition set forth in paragraph (g) of Exhibit A to this Agreement, in each case in this clause (ii) where the breach or failure to perform or comply that permits such termination results from, or represents, a Willful Breach of Section 5.2(a), (b) or (c) of this Agreement. The Company Fee may be applied by the Company dollar for dollar to reduce any royalty obligations of Parent to the Company pursuant to the License Agreement (and shall not be payable to the extent that the Company Fee exceeds the amount of such royalties required to be paid over the term of the License Agreement), except that if, pursuant to the terms of the License Agreement, Parent would not be required at any time after the date of termination of this Agreement to pay any royalties, the Company Fee shall be payable in cash on demand by Parent. (c) Payment of the amounts described in this Section 6.7 and the exercise by Parent of its rights under the License Agreement shall constitute the sole remedy of Parent for a Willful Breach of Section 5.2(a), (b) or (c) of this Agreement. 6.8 Public Announcements. Parent and Sub, on the one hand, and the Company, on the other hand, will consult with each other before issuing, and provide each other the opportunity to review, comment upon and concur with, any press release or other public statements with respect to the transactions contemplated by this Agreement and the Company Ancillary Agreements, including the Offer and the Merger, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable law, court process or by obligations pursuant to any listing agreement with any national market system. The parties agree that the initial press release to be issued with respect to the transactions contemplated by this Agreement and the Company Ancillary Agreements shall be in the form heretofore agreed to by the parties. 42 43 6.9 Rights Agreement. As soon as possible, and in no event later than two business days after the Agreement Date, the Company shall file a Current Report Form 8-K to reflect the Rights Amendment, and the Company shall take all additional action necessary to effect the changes in the Rights Agreement to provide for the exclusions therefrom set forth in Section 4.1(ac) hereof. After the effectiveness of the Rights Amendment until the Effective Time, or until this Agreement is terminated, the Company shall not (i) redeem the Rights, (ii) exchange the Rights, (iii) terminate the Rights Agreement or (iv) further amend the Rights Agreement, in each case without the prior written consent of Parent. 6.10 Technology License Agreement. Concurrently with the execution of this Agreement, the Company and Parent shall enter into the License Agreement. ARTICLE VII CONDITIONS PRECEDENT 7.1 Conditions to Each Party's Obligation to Effect the Merger. The respective obligation of each party to effect the Merger is subject to the satisfaction or waiver on or prior to the Effective Time of the following conditions: (a) Company Stockholder Approval. If required by applicable law, the Company Stockholder Approval shall have been obtained. (b) Consummation of the Offer. Sub shall have purchased Shares pursuant to the Offer. (c) No Injunctions or Restraints. No statute, rule, regulation, executive order, decree, injunction, judgment or other order or ruling issued by any court or other Governmental Entity or other legal restraint or prohibition shall be in effect which would (i) make the acquisition or holding by Parent or its affiliates of Company Common Stock or Common Stock of the Surviving Corporation illegal or otherwise prevent the consummation of the Merger, (ii) prohibit Parent's or Sub's ownership or operation of, or compel Parent or Sub to dispose of or hold separate, all or a material portion of the business or assets of Parent and its Subsidiaries taken as a whole, or the Company and its Subsidiaries taken as a whole (iii) compel Parent, Sub or the Company to dispose of or hold separate all or a material portion of the business or assets of Parent and its Subsidiaries taken as a whole or the Company and its Subsidiaries taken as a whole, (iv) impose material limitations on the ability of Parent or Sub or their affiliates effectively to exercise full ownership and financial benefits of the Surviving Corporation or impose any material condition to this Agreement, any of the Company Ancillary Agreements or the Merger which would be materially adverse to Parent. 43 44 ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER 8.1 Termination. This Agreement may be terminated at any time prior to the Effective Time, whether before or after approval of matters presented in connection with the Merger by the stockholders of the Company (provided, however, that if Shares are purchased by Sub pursuant to the Offer, Parent may not in any event terminate this Agreement): (a) by mutual written consent of Parent and the Company; (b) by either Parent or the Company: (i) if (w) as the result of the failure of any of the conditions set forth in Exhibit A to this Agreement, Sub shall have failed to commence the Offer in the time required by this Agreement, (x) as a result of the failure of any of the conditions set forth in Exhibit A to this Agreement the Offer shall have terminated or expired in accordance with its terms (as extended, if Sub so elects or as may be required pursuant to Section 1.1(a)) without Sub having accepted for payment any shares of Company Common Stock pursuant to the Offer or (y) Sub shall not have accepted for payment any shares of Company Common Stock pursuant to the Offer by December 31, 1998 as a result of the failure of any of the conditions set forth in Exhibit A to this Agreement; provided, however, that the right to terminate this Agreement pursuant to clauses (w), (x) or (y) above of this Section 8.1(b)(i) shall not be available to any party whose failure to perform in any material respect any of its obligations under this Agreement results in the failure of any such condition or if the failure of such condition results from facts or circumstances that constitute a material breach of a representation or warranty under this Agreement by such party; or (ii) if any Governmental Entity shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the acceptance for payment of, or payment for, shares of the Company Common Stock pursuant to the Offer or the Merger and such order, decree or ruling or other action shall have become final and nonappealable; (c) by the Company, if prior to the purchase of any shares of Company Common Stock by Sub pursuant to the Offer, the Company shall have received any Superior Proposal; (d) by Parent in the event that (i) the Board of Directors of the Company or any committee thereof shall have failed to recommend the Offer, the Merger or this Agreement, including any failure to include such recommendation in the Schedule 14D-9, or shall have so resolved, (ii) the Board of Directors of the Company or any committee thereof shall have withdrawn or modified (including without limitation by amendment of the Company's Schedule 14D-9) in a manner adverse to Parent or Sub its approval or recommendation of the Offer, the Merger or this Agreement and the Company Ancillary Agreements, shall have approved or recommended any takeover proposal, shall have authorized the redemption or amendment of the 44 45 Rights Agreement after the Company has received a takeover proposal (other than the Rights Amendment in accordance with Section 6.9 of this Agreement) or shall have resolved to do any of the foregoing (provided that a statement that states that a takeover proposal is under consideration by the Company's board of directors or management and states that the Company will, at a future date, take a position with respect to such takeover proposal, without making any adverse statements with respect to the Offer, shall not be deemed to constitute such a withdrawal, modification, approval or recommendation), or (iii) the Company shall have entered into any letter of intent, acquisition agreement or similar agreement with respect to any Superior Proposal in accordance with Section 5.2(b) of this Agreement or the Board of Directors or any committee thereof shall have resolved to do so; (e) by Parent in the event that (i) any person entity or "group" (as defined in Section 13(d)(3) of the Exchange Act) other than Parent and Sub acquires beneficial ownership of 35% or more of the outstanding shares of Common Stock of the Company; or (ii) the Board of Directors of the Company or any committee thereof upon a request to reaffirm the Company's approval or recommendation of the Offer, the Merger or this Agreement and the Company Ancillary Agreements, shall have failed to do so within three (3) business days after such request is made or shall have so resolved; (f) by Parent if (i) any of the representations and warranties of the Company set forth in Section 4.1 shall not be true and correct in any manner that either (A) represents or results from a Willful Breach or (B) has or represents a Material Adverse Effect or (ii) the Company has committed a breach of any of the Company's covenants under Article 5 and Article 6 of this Agreement, which breach either (A) represents or results from a Willful Breach or (B) has a Material Adverse Effect, and has not cured such material breach within thirty (30) days after the Parent has given the Company written notice of the breach and its intention to terminate this Agreement pursuant to this Section 8.1(f); and (g) by the Company if Sub shall not have accepted for payment any shares of Company Common Stock pursuant to the Offer on or prior to December 31, 1998 and (i) any of the representations and warranties of Parent set forth in Section 4.2 hereof shall not be true and correct in any manner that has or represents a material adverse effect on the Parent or on the exercise by the Company of its rights under this Agreement or the License Agreement; or (ii) Parent has committed a material breach of any of Parent's covenants under this Agreement, which breach has a Material Adverse Effect or materially adversely affects the Company's exercise of its rights under this Agreement or the License Agreement and has not cured such material breach within thirty (30) days after the Company has given the Parent written notice of the material breach and its intention to terminate this Agreement pursuant to this Section 8.1(g). 8.2 Effect of Termination. In the event of termination of this Agreement by either the Company or Parent as provided in Section 8.1, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of Parent, Sub or the Company, other than pursuant to the last sentence of Section 6.2, Section 6.7, this Section 8.2 and Article IX, other than liability for damages incurred in the event of a breach by a party of any of 45 46 its representations, warranties, covenants or agreements set forth in this Agreement or any of the Company Ancillary Agreements except as provided in Section 6.7(c). 8.3 Amendment. This Agreement may be amended by the parties at any time before or after obtaining the Company Stockholder Approval (if the Company Stockholder Approval shall be required by law), subject to Section 8.5; provided, however, that after any such approval, there shall not be made any amendment that by law requires further approval by such stockholders without the further approval of such stockholders. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties. 8.4 Extension; Waiver. At any time prior to the Effective Time, the parties may (a) extend the time for the performance of any of the obligations or other acts of the other parties, (b) waive any inaccuracies in the representations and warranties contained in this Agreement or in any document delivered pursuant to this Agreement or (c) subject to the proviso of Section 8.3, waive compliance with any of the agreements or conditions contained in this Agreement. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights. 8.5 Procedure for Termination, Amendment, Extension or Waiver. A termination of this Agreement pursuant to Section 8.1, an amendment of this Agreement pursuant to Section 8.3 or an extension or waiver pursuant to Section 8.4 shall, in order to be effective, require in the case of Parent, Sub or the Company, action by its Board of Directors or the duly authorized designee of its Board of Directors; provided, however, that in the event that Sub's designees are appointed or elected to the Board of Directors of the Company as provided in Section 6.7, after the acceptance for payment of shares of the Company Common Stock pursuant to the Offer and prior to the Effective Time, the affirmative vote of a majority of the members of the Company's Board of Directors (if any) who were members of the Company's Board of Directors on the Agreement Date shall be required by the Company to (i) amend or terminate this Agreement by the Company, (ii) exercise or waive any of the Company's rights or remedies under this Agreement or (iii) extend the time for performance of Parent's and Sub's respective obligations under this Agreement. ARTICLE IX GENERAL PROVISIONS 9.1 Nonsurvival of Representations and Warranties. None of the representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time or, in the case of the Company, shall survive the acceptance for payment of, and payment for, shares of the Company Common Stock by Sub pursuant to the Offer. This Section 9.1 shall not limit any covenant or agreement of the parties which by its terms contemplates performance after the Effective Time. 46 47 9.2 Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, telecopied (which is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (A) if to Parent or Sub, to Symantec Corporation 10201 Torre Ave. Cupertino, CA 95014 Attention: General Counsel with copies to its counsel: Fenwick & West LLP Two Palo Alto Square Palo Alto, CA 94306 Fax: (415) 494-1417 Attention: Gordon K. Davidson, Esq. (b) if to the Company, to Quarterdeck Corporation 13160 Mindanao Way Marina del Rey, CA 90292 Attention: Chief Executive Officer with copies to its counsel: Bradley D. Schwartz, Esq. Schwartz & Associates 333 South Grand Avenue, #3950 Los Angeles, CA 90071 9.3 Definitions. For purposes of this Agreement: (a) an "AFFILIATE" of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person; (b) "COMPANY ANCILLARY AGREEMENTS" means, collectively, the Certificate of Merger and the License Agreement. (c) "COMPANY OPTIONS" means any option to purchase Company Common Stock granted under the Company's 1990 Directors Stock Option Plan, the Company's Amended and Restated 1990 Stock Plan or the Company's 1996 Acquisition Stock Option Plan, and any 47 48 other option to purchase Company Common Stock disclosed in Section 4.1(c) of the Company Disclosure Schedule not granted under any such plan. (d) "EXECUTIVE OFFICERS" of the Company means any one of the following persons: King R. Lee, Frank Greico, John Strosahl, Cheri Kaplan-Smith, Suzanne Dickson and Gadi Navon, for so long as they may serve, and if any of such persons shall cease to serve in their current capacity with the Company, then such persons' successor (d) "KNOWLEDGE" of a party means, with respect to a matter, the actual knowledge of the executive officers and directors of such party. (e) "MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means any change or effect that (i) materially adversely affects, or is highly likely to materially adversely affect, the ability of the Company and its Subsidiaries to market and license either its ProComm product or its CleanSweep product (or both), or to use any Company IP Right or Company Intellectual Property that is incorporated, embodied or used therein and that is material to such product or the ownership by the Company and its Subsidiaries of any such Company IP Right or Company Intellectual Property, (ii) materially adversely affects, or is highly likely to materially adversely affect, the exercise by Parent of its material rights under this Agreement or the License Agreement or (iii) represents or results in, or is highly likely to result in, a liability (contingent or otherwise), cost or expense of more than $3.0 million, or the reduction of the fair value of any assets by more than $3.0 million (in each case after giving effect to the availability of payments under any insurance policy); provided, however, that none of the following shall be deemed, by itself, to constitute a Material Adverse Change or be taken into account in determining whether there has been or would be a Material Adverse Effect as a result of this clause (iii): (A) any adverse change, event or effect that is demonstrated by the Company to be caused by conditions affecting the United States economy generally or the economy of any nation or region in which the Company or any of its Subsidiaries conducts business that is material to the business of the Company and its Subsidiaries, taken as a whole, (B) any adverse change, event or effect that is demonstrated by the Company to be caused by conditions generally affecting the utility software industry and (C) any adverse change, event or effect that is demonstrated by the Company to be caused by the announcement or pendency of the Offer or the Merger or the execution of this Agreement or the License Agreement. (f) "MERGER CONSIDERATION" means the consideration in money paid by the Parent, in the applicable case, on account of each share of Company Common Stock, or each share of Company Preferred Stock or each option in the Merger in accordance with Section 3.1 of this Agreement. (g) "PARENT ANCILLARY AGREEMENTS" means the Certificate of Merger and the License Agreement. (h) "PERSON" means an individual, corporation, partnership, joint venture, association, trust, unincorporated organization or other entity; 48 49 (i) a "SUBSIDIARY" of any person means a corporation, partnership or other entity in which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other individuals performing similar functions for such corporation, partnership or other entity are directly or indirectly owned by such person; (j) "SUPERIOR PROPOSAL" has the meaning assigned thereto in Section 5.2(b); (k) "TAKEOVER PROPOSAL" has the meaning assigned thereto in Section 5.2(a); and (l) "WILLFUL BREACH" by the Company means (1) the failure of a representation or warranty of such party in this Agreement to be true and correct in all material respects as a result of any fact or condition of which any executive officer or director of such party had actual knowledge as of the Agreement Date, or (2) a material breach or failure to perform in any material respect any obligation or to comply in any material respect with any agreement or covenant to be performed or complied with by it pursuant to this Agreement, where both (A) performance of such obligation, or compliance with such agreement or covenant was not impossible (taking into consideration the financial and other resources of the breaching or non-performing party) and (B) (i) in the case of a breach that can not readily be cured by the breaching party within 30 days after written notice of such breach, the action or inaction constituting such breach was taken by or at the request of, or with the express permission of, any executive officer or director of the breaching party, and (ii) in the case of a breach that can readily be cured by the breaching party within 30 days after written notice of such breach, such period shall expire without the cure of such breach . 9.4 Interpretation. When a reference is made in this Agreement to an Article, a Section, Exhibit or Schedule, such reference shall be to an Article or a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are only for reference purposes and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." The words "hereof," "herein" and "thereunder" and words of similar import when used in this Agreement shall 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 meanings 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. References to a person are also to its permitted successors and assigns. 9.5 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. 9.6 Entire Agreement; No Third-Party Beneficiaries. This Agreement and the Confidentiality Agreement constitute the entire agreement, and supersede all prior agreements 49 50 and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement and except for the provisions of Sections 6.4 and 6.5, are not intended to confer upon any person other than the parties and the Company's stockholders any rights or remedies hereunder. 9.7 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflict of laws thereof. 9.8 Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, except that Sub may assign, in its sole discretion, any of or all its rights, interests and obligations under this Agreement to Parent or to any direct or indirect wholly owned subsidiary of Parent, but no such assignment shall relieve Sub and Parent of any of its obligations under this Agreement. This Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. 9.9 Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States located in the State of Delaware or in Delaware state court, this being in addition to any other remedy to which they are entitled at law or in equity. In addition, each of the parties hereto (a) consents to submit itself to the personal jurisdiction of any Federal court located in the State of Delaware or any Delaware state court in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, or seek without the agreement of the other parties hereto to change the venue of such action or to obtain dismissal thereof on ground of forum non conveniens or similar doctrines and (c) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than a Federal or state court sitting in the State of Delaware. 50 51 IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above. PARENT: SYMANTEC CORPORATION By: -------------------------------------- Name: ------------------------------------ Title: ----------------------------------- SUB: OAK ACQUISITION CORPORATION By: -------------------------------------- Name: ------------------------------------ Title: ----------------------------------- THE COMPANY: QUARTERDECK CORPORATION By: -------------------------------------- Name: ------------------------------------ Title: ----------------------------------- ***AGREEMENT AND PLAN OF MERGER SIGNATURE PAGE*** 51 52 EXHIBIT A Offer Notwithstanding any other term of the Offer or this Agreement, Sub shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating to Sub's obligation to pay for or return tendered shares of the Company Common Stock after the termination or withdrawal of the Offer), to accept for payment or pay for, and may delay the acceptance for payment of or, subject to the restriction referred to above, the payment for, any tendered shares, and may terminate the Offer as to any shares not then paid for unless (i) there shall have been validly tendered and not withdrawn prior to the expiration of the Offer that number of shares of the Company Common Stock which would, upon consummation of the Offer, then represent at least a majority of the Fully Diluted Shares (the "MINIMUM TENDER CONDITION") and (ii) any waiting period under the HSR Act applicable to the purchase of shares of the Company Common Stock pursuant to the Offer shall have expired or been terminated. The term "FULLY DILUTED SHARES" means all outstanding securities entitled generally to vote in the election of directors of the Company on a fully diluted basis, after giving effect to the exercise or conversion of all options, rights and securities exercisable or convertible into such voting securities, including all Company Options (whether or not then vested or exercisable), but only to the extent that any such options, rights or securities are exercisable or convertible into such voting securities at a per share price not in excess of the Offer Price. Furthermore, notwithstanding any other term of the Offer or this Agreement, Sub shall not be required to commence the Offer or to accept for payment or, subject as aforesaid, to pay for any shares of the Company Common Stock not theretofore accepted for payment or paid for, and may terminate or amend the Offer, if, at any time after the Agreement Date and before the time of acceptance of such shares for payment or the payment therefor, any of the following events shall occur (or shall be determined by Parent in good faith to have occurred): (a) there shall be pending any suit, action or proceeding brought by or on behalf of any Governmental Entity (or the staff of the Federal Trade Commission or the staff of the Antitrust Division of the Department of Justice shall have recommended the commencement of such), any shareholder of Company or any other person or party directly or indirectly (i) challenging the acquisition by Parent or Sub of any shares of the Company Common Stock, seeking to restrain or prohibit the making or consummation of the Offer or the Merger or the performance of any of the other transactions contemplated by this Agreement, or alleging, (on grounds that Sub reasonably and in good faith determines are reasonably likely to result in financial exposure to the Company in excess of available insurance coverage and/or proceeds), that any such acquisition or other transaction relates to, involves or constitutes a violation by the Company or its directors of federal securities law or applicable corporate statutes or principles, (ii) seeking to prohibit or limit the ownership or operation by the Company, Parent or any of their respective Subsidiaries of a material portion of the business or assets of the Company and its Subsidiaries, taken as a whole, or Parent and its Subsidiaries, taken as a whole, or to compel the Company or Parent to dispose of or hold separate any material portion of the business or assets of the Company and its Subsidiaries, taken as a whole, or Parent and its Subsidiaries, taken 52 53 as a whole, as a result of the Offer or any of the other transactions contemplated by this Agreement, (iii) seeking to impose material limitations on the ability of Parent or Sub to acquire or hold, or exercise full rights of ownership of, any shares of the Company Common Stock accepted for payment pursuant to the Offer including without limitation the right to vote the Company Common Stock accepted for payment by it on all matters properly presented to the stockholders of the Company, (iv) seeking to prohibit Parent or any of its Subsidiaries from effectively managing or controlling in any material respect the business or operations of the Company and its Subsidiaries taken as a whole, (v) which is reasonably likely to result in a Material Adverse Effect or (vi) seeking to impose a material condition to the Offer, the Merger or this Agreement which would be materially adverse to Parent; provided that in the case of any such suit, action or proceeding by any person other than a Governmental Entity, such suit, action or proceeding could reasonably be expected to result in a Material Adverse Effect; (b) there shall be any statute, rule, regulation, judgment, order or injunction enacted, entered, enforced, promulgated or deemed applicable to the Offer or the Merger, or any other action shall be taken by any Governmental Entity or court, other than the application to the Offer or the Merger of applicable waiting periods under the HSR Act, that is reasonably likely to result in any of the consequences referred to in clauses (i) through (vi) of paragraph (a) above; (c) there shall have occurred since June 30, 1998 any Material Adverse Change; (d) either (i) the Board of Directors of the Company or any committee thereof shall have failed to recommend the Offer, the Merger or this Agreement, including any failure to include such recommendation in the Schedule 14D-9, or shall have so resolved; or (ii) the Board of Directors of the Company or any committee thereof shall have withdrawn or modified (including without limitation by amendment of the Company's Schedule 14D-9) in a manner adverse to Parent or Sub its approval or recommendation of the Offer, the Merger or this Agreement and the Company Ancillary Agreements, shall have approved or recommended any takeover proposal (provided that a statement that states that a takeover proposal is under consideration by the Company's board of directors or management and states that the Company will, at a future date, take a position with respect to such takeover proposal, without making any adverse statements with respect to the Offer, shall not be deemed to constitute such a withdrawal, modification, approval or recommendation); or shall have authorized the redemption or amendment of the Rights Agreement after the Company has received any takeover proposal (other than the Rights Amendment in accordance with Section 6.9 of this Agreement) or shall have resolved to do any of the foregoing; (e) either (i) any person, entity or "group" (as defined in Section 13(d)(3) of the Exchange Act) other than Parent and Sub acquired beneficial ownership of 35% or more of the outstanding Shares; or (ii) the Board of Directors of the Company or any committee thereof upon a request to reaffirm the Company's approval or recommendation of the Offer, the Merger or this Agreement, shall have failed to do so within three business days after such request is made or shall have so resolved; 53 54 (f) any of the representations and warranties of the Company set forth in Section 4.1 shall not be true and correct in all material respects (without regard to any qualification therein as to the Company's knowledge) as a result of any facts or circumstances that have a Material Adverse Effect; (g) the Company shall have breached or failed to perform in any material respect any obligation or to comply in any material respect with any agreement or covenant of the Company to be performed or complied with by it pursuant to this Agreement and the same shall have a Material Adverse Effect; (h) this Agreement shall have been terminated in accordance with its terms; or (i) any voluntary, involuntary or ancillary petition in bankruptcy shall have been instituted under Title 11 to the United States Code with respect to the Company as a debtor or alleged debtor and not dismissed; which, in the reasonable good faith judgment of Sub or Parent, in any such case, and regardless of the circumstances giving rise to any such condition (other than any action or inaction by Parent or any of its Subsidiaries which constitutes a breach of this Agreement), makes it inadvisable to proceed with such acceptance for payment or payment. The foregoing conditions are for the sole benefit of Sub and Parent and their respective affiliates and may be asserted by Sub or Parent regardless of the circumstances giving rise to such condition (other than any action or inaction by Parent or any of its Subsidiaries which constitutes a breach of this Agreement) or may be waived (except for the Minimum Tender Condition, which can only be waived with the consent of the Company) by Sub and Parent in whole or in part at any time and from time to time in their sole discretion. The failure by Parent, Sub or any other affiliate of Parent at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and circumstances shall not be deemed a waiver with respect to any other facts and circumstances and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time prior to the expiration of the Offer. 54 EX-2 3 LICENSE AGREEMENT DATED OCTOBER 15, 1998 1 Exhibit 2 LICENSE AGREEMENT This License Agreement (the "Agreement") is entered into as of October 15, 1998 (the "Effective Date") by and between Symantec Corporation, a Delaware corporation, Symantec Limited, an Ireland corporation (collectively, "Symantec"), and Quarterdeck Corporation, a Delaware corporation ("Quarterdeck"). RECITALS Quarterdeck is the creator and owner of, or otherwise has the right to license, the product known as CleanSweep, as described in more detail in Exhibit A (the "Quarterdeck Software"). Symantec and Quarterdeck have entered into an Agreement and Plan of Merger (the "Merger Agreement") that contemplates the acquisition of Quarterdeck by Symantec. Symantec wishes to license the Quarterdeck Software for distribution as a stand-alone product and as part of a suite of other products. In connection with the Merger Agreement, Quarterdeck has agreed to grant such licenses, subject to the terms and conditions set forth below. AGREEMENT The parties agree as follows: 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings: "AFFILIATE" means, as to any legal entity, any other legal entity that is directly or indirectly controlling, controlled by, or under common control with, such legal entity. In this context, control means ownership of 100% of the voting stock or the equivalent. "AGREEMENT" shall have the meaning ascribed thereto in the first paragraph to this Agreement. "BUSINESS DAY" means any day other than a Saturday, Sunday or federal or California state holiday. "CONSUMMATION" means the purchase of Shares pursuant to the Offer (as those terms are defined in the Merger Agreement) in accordance with the terms of the Merger Agreement. "DELIVERABLES" shall mean the items relating to the Quarterdeck Software described in Exhibit B. "DERIVATIVE WORK" shall mean any modification, translation, port, adaptation, modification, extension, improvement, compilation, abridgment or other form in which the Quarterdeck Software may be recast, transformed or adapted for use on computer systems, including, but not limited to, any form which would infringe any copyright to the Quarterdeck Software. 2 "EFFECTIVE DATE" shall have the meaning ascribed thereto in the introductory paragraph to this Agreement. "INTELLECTUAL PROPERTY RIGHTS" means all of Quarterdeck's intellectual property rights worldwide arising under statutory or common law, and whether or not perfected, including, without limitation, all rights relating to patents, copyrights, trade secrets and any rights analogous thereto. "LICENSES" shall mean the licenses granted in Section 2 below. "NET REVENUE" means Symantec's actual gross revenues (invoiced amounts, net of actual returns) from marketing, distribution or other revenue-generating use of the Quarterdeck Licensed Products. No royalties will be earned on sales, use, excise and similar taxes, currency exchange fees, and shipping costs (including, but not limited to, insurance and transportation costs and duties) to the extent such amounts are invoiced separately. If the Quarterdeck Licensed Products are distributed with other titles in a package for a single price, which other titles are distributed by Symantec stand-alone through the retail channel, the Net Revenue attributable to the Quarterdeck Licensed Products will be determined by prorating the revenues from the sale or license of the package according to the distribution prices to Ingram Micro for the separate works contained in the package. Notwithstanding the foregoing, any Symantec product other than Norton Utilities, Norton Antivirus, Crashguard, Norton Web Services, pcANYWHERE, Norton Mobil Essentials or Winfax (and follow-on versions of such products) will not be considered for purposes of prorating the revenues from the sale or license of any such package unless it is the first or second top selling title in its category. Further, the Licensed Quarterdeck Product shall be deemed to be sold, licensed or otherwise distributed as part of a bundle with another product(s) if it is sold, licensed or otherwise distributed for a discounted price (or a zero price), conditioned in whole or part on the customer's purchase, license or other acquisition of such other product(s). Amounts received by Symantec as deposits or advances will not be deemed to be revenue until shipment or other revenue-generating use of the Quarterdeck Licensed Products to the party making the deposits or advances have been made against such deposits or advances or Symantec recognizes such amounts as revenue on any other basis. For purposes of calculating Royalties, revenues in foreign currencies will be deemed converted into United States Dollars at the average monthly exchange rates used generally by Symantec in its financial statements. "ROYALTIES" shall mean the royalties payable with respect to distribution of the Quarterdeck Licensed Products, as described in Section 4.1 below. "QUARTERDECK DEVELOPMENT LICENSE" means the license granted in Section 2.2. "QUARTERDECK DISTRIBUTION LICENSE" shall have the meaning described in Section 2.1 below. "QUARTERDECK LICENSED PRODUCTS" shall mean binary executable versions of the Quarterdeck Software and Derivative Works of the Quarterdeck Software that Symantec may create if it receives the Source Code for the Quarterdeck Software from the escrow agent referenced in Section 7. 2 3 "QUARTERDECK LICENSES" shall mean the Quarterdeck Distribution License and the Quarterdeck Development License. "QUARTERDECK SOFTWARE" shall have the meaning described in the recitals above and Exhibit A to this Agreement. "QUARTERDECK TRADEMARKS" shall mean the "CleanSweep" mark and such other related marks owned by Quarterdeck as the parties may agree. "SOURCE CODE" shall mean the human readable form of computer software, including any corresponding comments and annotations. "UPDATES" shall mean bug fixes, modifications, variations, or enhancements made to a product without a significant change in the functionality of the product, the packaging (other than to indicate a change in the version number to the right of the decimal point), or the version number to the left of the decimal point. "UPGRADES" shall mean new releases and versions which include significant changes to functionality, new packaging or a change in the version number to the left of the decimal point. 2. GRANT OF RIGHTS. 2.1 DISTRIBUTION LICENSE FOR QUARTERDECK LICENSED PRODUCTS. Subject to the provisions of this Agreement, Quarterdeck hereby grants to Symantec a nonexclusive, world-wide, non-transferable, license under all Quarterdeck Intellectual Property Rights to use, copy, distribute, display and perform the Quarterdeck Licensed Products during the term of such license specified in Section 6, except that no right is granted to distribute Japanese language versions of the Quarterdeck Licensed Products in Japan except to the extent that Symantec may do so without giving rise to a violation of any of the rights granted to Marubeni Corporation under the agreement between Marubeni Corporation and Quarterdeck dated September 29, 1997, and except for any other distribution arrangement to which Symantec secures Marubeni Corporation's written consent (the "Quarterdeck Distribution License"). Symantec may sublicense the Quarterdeck Licensed Products by permitting bona fide distributors and resellers to sell end-user licenses to Quarterdeck Licensed Products, by permitting duplication and distribution of the Quarterdeck Licensed Products by OEMs, and by permitting end-users to duplicate the Quarterdeck Licensed Products in connection with site licenses and similar transactions provided that such transactions are consistent with Symantec's normal business practices Symantec will be responsible for manufacturing all Quarterdeck Licensed Products distributed by it pursuant to this Agreement. Notwithstanding the foregoing, Symantec will not enter into site licenses, OEM agreements or other arrangements or agreements that provide for unlimited numbers of seats of the Quarterdeck Licensed Products to be distributed or used for a single price or otherwise allow any third party to create copies of the Quarterdeck Products without reporting the number of copies made, distributed and used to Symantec. Symantec will be entitled to modify the documentation for the Quarterdeck Licensed Products and distribute such modified documentation with the Quarterdeck Licensed Products, provided that Symantec will retain all Quarterdeck copyright, trademark and similar notices in such documentation. The 3 4 Quarterdeck Licensed Products will be distributed by Symantec or its OEMs with an end-user license in substantially the form of the license set forth in Exhibit C or such other form of license that provides substantially the same protections to Quarterdeck. 2.2 DEVELOPMENT LICENSE FOR QUARTERDECK SOFTWARE. Subject to the provisions of this Agreement, Quarterdeck hereby grants to Symantec a nonexclusive, world-wide, non-transferable, license under all Quarterdeck Intellectual Property Rights to use, copy, and create Derivative Works during the term of this Agreement from the materials and information provided to Symantec pursuant to Section 5.3 or from any Source Code of the Quarterdeck Software (the Quarterdeck Source Code) that Symantec may obtain from the escrow established pursuant to Section 7 solely for the purpose of developing, localizing, compiling to binary form and supporting Derivative Works of the Quarterdeck Software. Symantec may not distribute, sublicense or make available to any third party the materials provided to Symantec pursuant to Section 5.3, the Quarterdeck Source Code, or the Source Code for Derivative Works of the Quarterdeck Source Code. 2.3 LICENSES TO AFFILIATES. Symantec's Affiliates shall have the benefit of the Quarterdeck Licenses, provided that any such Affiliate shall also be bound by the applicable obligations, limitations and covenants set forth in this Agreement. 2.4 NO OTHER LICENSES. Neither party grants any other licenses or rights, except as specifically set forth above. Without limiting the foregoing, Symantec acknowledges that (i) it is not authorized and agrees not to decompile, disassemble or otherwise reverse engineer the Quarterdeck Software unless and until Symantec rightfully receives the Source Code therefor from the escrow seferenced in Section 7, and (ii) it is granted no right to use or refer to "CleanSweep" or any other Ouarterdeck trademark, trade name, trade dress or other designation. Further, Symantec agrees not to advertise the expected availabilily of the Quarterdeck Licensed Product from Symantec, except that Symantec may disclose its intentions to incorporate the Quarterdeck Licensed Product into its Norton Systemworks products after Consummation in response to customer and media inquiries, may make disclosures that have been approved by Quarterdeck and may also disclose the terms of this Agreement only in the manner and to the extent required by applicable law. 3. DELIVERABLES. Promptly upon completion thereof, Quarterdeck will deliver to Symantec the Object Code Deliverables relating to the enhancements of the Quarterdeck Software created pursuant to Section 5.3. Quarterdeck shall subsequently deliver each revision to such enhancements promptly after completion thereof. Quarterdeck shall deposit the Source Code Deliverables for the current version of the Quarterdeck Software with the escrow agent referenced in Section 7 upon the establishment of such escrow and shall thereafter deposit the Source Code Deliverables relating to enhancements of the Quarterdeck Software created pursuant to Section 5.3 promptly after the creation thereof so long as this Agreement and such escrow remain in force. 4 5 4. PAYMENTS. 4.1 ROYALTIES. Symantec shall pay to Quarterdeck Royalties equal to 8% of Net Revenue from the distribution or other revenue producing exploitation of Quarterdeck Licensed Products, provided that the Royalty rate shall be 6% if the Quarterdeck Distribution License commences because Quarterdeck is obligated to pay a Company Fee (as defined in the Merger Agreement) as a result of a Willful Breach (as defined in the Merger Agreement) of Section 5.2(a), (b) or (c) of the Merger Agreement, and provided further that for copies of the Quarterdeck Licensed Products the royalty per seat shall not be less than: (i) $1.25 in the case of stand-alone sales of the Quarterdecks Software, (ii) $0.75 in the case of bundles of the Quarterdeck software as part of Norton Systemworks and (iii) $0.20 for OEM transactions (the number of seats in any transaction being equal to the total number of users authorized to use the Quarterdeck Licensed Products under such transaction) provided however, all such OEM transactions will allow the Quarterdeck Licensed Products to be distributed only as part of a bundle with other products that are marketed stand-alone in the retail channel, where the Quarterdeck Licensed Products comprise less than 35% of the value of the bundle as a whole (based on the retail prices of the components of the bundle sold separately) and acquiring the Quarterdeck Software is not a primary reason that customers typically acquire the bundle. No Royalties will be payable with respect to copies of the Quarterdeck Licensed Products that are used internally by Symantec or its Affiliates for non-revenue generating activities. 4.2 REPORTS AND ACCOUNTING. Royalties payable pursuant to this Section shall be calculated and paid, on a quarterly basis, not more than 30 days after the last day of the fiscal quarter in which the Net Revenue giving rise to such Royalties are recognized by Symantec. Symantec shall deliver to Quarterdeck, along with its payment of Royalties due for each quarter, a written report showing, in detail, its calculation of Royalties payable with respect to such quarter. At Quarterdeck's request, Symantec will also provide to Quarterdeck a report of the number of Not-For-Resale copies distributed by Symantec for the quarter. Symantec shall maintain such books and records as are necessary to properly calculate the amounts of Royalties to be paid pursuant to this Agreement. An independent certified public accountant selected by Quarterdeck from any major accounting firm may, upon reasonable notice and during normal business hours, but no more often than once each year, inspect the records of Symantec. Any information revealed in such inspection shall be kept confidential and not disclosed to anyone, except to the extent necessary to identify to Quarterdeck, Symantec or any factfinder in any action instituted to enforce the terms of this Agreement, any inaccuracy which may be found in the amount of Royalties due to Quarterdeck. Quarterdeck shall bear the cost of any such audit, except that if the audit reveals shortfall in payment of Royalties of 5% or more, but not less than $10,000, Symantec shall pay for the reasonable cost of such audit, and Quarterdeck may thereafter conduct a follow up audit at any time at Symantec's expense. Symantec's determination of the payments due Quarterdeck under this Agreement will be deemed conclusive unless, within 24 months from the termination of the Agreement, Quarterdeck notifies Symantec in writing of any error in such payments. 5. SUPPORT. 5.1. TECHNICAL SUPPORT. Symantec will be responsible for answering the questions of and supporting the needs of its own customers. Quarterdeck will provide Symantec with 5 6 reasonable support by telephone and/or electronic mail, to answer Symantec's questions and to assist Symantec in supporting Symantec's customers with respect to the Quarterdeck Software. Quarterdeck will also provide Symantec, and its customers, with support in person on a time and materials basis at Quarterdeck's then standard published rates therefor. 5.2. TRAINING. Quarterdeck will make available at Symantec's facilities in Santa Monica, California, on a mutually agreed date no later than November 15, 1998, qualified members of its staff to provide training of employees of Symantec relating to the Quarterdeck Software, in sufficient detail as to provide Symantec's technical support, marketing and sales people with sufficient knowledge to permit proper marketing and distribution of the Quarterdeck Software. The training contemplated by this Section shall not exceed a total of sixteen (16) hours. 5.3 CUSTOMIZATION. Within one business day after the Effective Date, Quarterdeck shall provide Symantec or a third party engaged by Symantec and acceptable to Quarterdeck such information as Symantec shall reasonably require to (i) modify graphical elements of the user interface (such as icons or splash screens) of the Quarterdeck Licensed Product (but not modify the structure or sequences associated with such user interface), (ii) reasonably integrate the Quarterdeck Licensed Product with the Symantec products included in Symantec's Norton SystemWorks bundle with respect to installation, automatic updating, changing all of the registry keys to place them under the Symantec software registry key and on-line registration, as well as by making changes to the About Box and to graphical elements (bit maps) of the user interface as provided in clause (i) above, and (iii) translate the Quarterdeck Licensed Product into foreign languages. Additionally, commencing upon the Effective Date, a reasonable number of Symantec's personnel or a third party engaged by Symantec and acceptable to Quarterdeck may be resident at Quarterdeck's facility and work with Quarterdeck personnel to integrate the Quarterdeck Licensed Product with Symantec's Norton SystemWorks products as provided above. To the extent that Quarterdeck's personnel are unable or unwilling to timely make the changes required hereunder, such Symantec personnel will be given reasonable access to those parts of the Source Code, if any, for the Quarterdeck Licensed Products required for the sole purpose of creating the modifications authorized by this Section 5.3. Promptly after completion of such modifications, Quarterdeck will compile a version or versions of such modified Quarterdeck Licensed Products and provide the executable form of such modified Quarterdeck Licensed Products to Symantec for testing. Quarterdeck will use commercially reasonable efforts to make or, at its option, will allow Symantec to make such corrections as are required to repair errors in such modified Quarterdeck Licensed Products that were introduced by any of the work done pursuant to this Section 5.3 and will promptly provide such corrected versions of the Quarterdeck Licensed Products upon completion to Symantec for further testing. This process will be repeated until Symantec is reasonably satisfied with the work performed pursuant to this Section 5.3. Quarterdeck shall establish and notify Symantec of rules for Symantec's personnel intended to ensure that such personnel do not receive sensitive or confidential information of Quarterdeck. Within two days after the Effective Date, Quarterdeck shall provide Symantec with the entire help system, the related FrameMaker files and those things necessary to incorporate the foregoing into Symantec's products. Provided that Symantec's personnel abide in all respects by such rules and that Symantec does not breach its obligations to complete Consummation and 6 7 acquire Quarterdeck under the Merger Agreement, Quarterdeck covenants not to sue Symantec for misappropriation of trade secret information based solely on Symantec's use of information obtained by such personnel while at Quarterdeck's facility pursuant to this Section 5.3. In addition to the changes described above, Quarterdeck will, subject to Section 11, make such changes as are required to substitute Symantec's trademarks for Quarterdeck's trademarks, trade names or trade dress from the Quarterdeck Products. The parties understand and agree that Symantec is granted no right to distribute or otherwise exploit any of the software, materials or information provided to it under this Section 5.3 unless and until the Quarterdeck Distribution License commences. 6. TERM AND TERMINATION. 6.1 TERM. The Quarterdeck Development License will commence upon the Effective Date. The Quarterdeck Distribution License will commence upon the earliest to occur of (i) Consummation or (ii) an event giving rise to an obligation on the part of Quarterdeck to pay a Company Fee (as defined in the Merger Agreement). If the Merger Agreement terminates before the Consummation for any reason other than the occurrence of such an event, then Symantec shall neither have nor exercise any rights under the Quarterdeck Licenses, and this Agreement shall immediately terminate upon such termination of the Merger Agreement. 6.2 TERMINATION OF THE LICENSE FOR BREACH. The term of this Agreement shall begin on the Effective Date and will terminate immediately if after the Consummation, Symantec fails to close the Merger (as defined in the Merger Agreement) in accordance with the terms of the Merger Agreement or if the Merger has not occurred by January 31, 1999 and the Merger Agreement has not been terminated as a result of an event giving rise to an obligation on the part of Quarterdeck to pay a Company Fee. The term of this Agreement will terminate 30 days after the receipt by either party of written notice that it is in material breach of any terms of this Agreement, unless such party cures such breach within such 30-day period. For purposes of this Agreement, a material breach will be a breach or series or pattern or breaches that lead to loss or damage of no less than $350,000 in the aggregate to the non-breaching party. Any such notice shall provide, in reasonable detail, a description of the alleged breach and the requested cure of that breach. Provided however, that if Symantec disputes the right of Quarterdeck to terminate this Agreement for the reasons specified in such notice and notifies Quarterdeck thereof promptly after receiving the notice of breach, then the parties agree that the licenses granted to Symantec hereunder shall continue to remain in full force and effect until Symantec is found to have committed and not timely cured a material breach under the dispute resolution process provided for in Section 6.4. 6.3 POST TERMINATION RIGHTS. Any termination of this Agreement shall not affect the rights of any distributor, dealer, reseller or end-user that has received the Quarterdeck Licensed Products from a party in accordance with the terms of this Agreement prior to its termination, provided that after notice of termination of this Agreement, Symantec shall not have the right to distribute quantities of the Quarterdeck Licensed Products that are disproportionate to the quantities distributed prior to that time. Upon termination of this Agreement, Symantec will return to Quarterdeck all of the Quarterdeck Source Code, if any, in its possession or control, and 7 8 Symantec shall immediately cease any sale, license or other distribution of Quarterdeck Licensed Products. Further, notwithstanding the foregoing, if such termination was after Consummation and Symantec fails to close the Merger in accordance with the terms of the Merger Agreement or if the Merger has not occurred by January 31, 1999, then the rights of distributors, dealers and resellers to distribute the Quarterdeck Products shall immediately terminate.. The provisions of this Agreement that, by their sense and context, are intended to survive termination of this Agreement (including without limitation all obligations of confidentiality) shall survive termination and remain fully enforceable thereafter. 6.4 DISPUTE RESOLUTION PROCEDURE. If an alleged breach is not cured to the non-breaching party's satisfaction, or if the breaching party disputes the allegation of breach, the determination of whether a breach occurred and whether the breach was cured will be resolved by a single arbitrator in Los Angeles, California, in accordance with the Expedited Procedures of the Commercial Arbitration Rules of the American Arbitration Association (the "AAA") then in force. Such arbitrator shall be an attorney with substantial experience representing retail software companies. The arbitration shall be governed by the United States Arbitration Act, and judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction thereof. Notwithstanding the Expedited Procedures of the Commercial Arbitration Rules of the AAA, the parties agree that the AAA shall appoint the arbitrator without the parties submitting lists of requested arbitrators. In addition, the arbitrator shall be instructed to complete any hearings and render his or her award within thirty (30) days after his or her appointment or as soon thereafter as is reasonably possible consistent with providing each party a meaningful opportunity to conduct such discovery as is reasonably necessary and otherwise prepare and present its arguments. The arbitrator shall grant such orders and impose such sanctions as are reasonably required to conform to the foregoing schedule. 7. SOURCE CODE ESCROW. Upon the execution of this Agreement Symantec and Quarterdeck shall enter into an agreement with an escrow in the form attached as Exhibit D hereto pursuant to which such escrow agent shall hold a copy of the Source Code Deliverables for the Quarterdeck Software. The escrow agreement shall require the escrow agent to release such Source Code Deliverables to Symantec upon commencement of the Quarterdeck Distribution License. Symantec shall pay the fees of the escrow agent. Prior to the execution hereof, Quarterdeck has delivered the Source Code Deliverables described on Exhibit B to the escrow agent. 8. REPRESENTATIONS AND WARRANTIES; LIMITATIONS 8.1 REPRESENTATIONS AND WARRANTIES OF QUARTERDECK. Quarterdeck hereby represents and warrants that: (a) Quarterdeck has authorized the person who has signed this Agreement for Quarterdeck to execute and deliver this Agreement to Symantec on behalf of Quarterdeck, and Quarterdeck has the full power and authority to enter into this Agreement and grant the rights and fulfill the obligations set forth herein, provided that nothing in this Section 8.1(a) is intended or should be construed to grant any representation or warranty regarding non-infringement of any 8 9 third party intellectual property right by the Quarterdeck Software or any use, distribution or other exploitation thereof; (b) Quarterdeck has not previously granted and will not grant any rights in the Quarterdeck Software to any third party that conflict with the rights granted to Symantec herein, provided that Symantec acknowledges that Quarterdeck has granted to a third party certain exclusive right to distribute Japanese language versions of the Quarterdeck Licensed Products in Japan and has granted such other rights with respect to the Quarterdeck Software as are disclosed in the Merger Agreement or the schedules, exhibits or other attachments thereto; and (c) Quarterdeck warrants that, the Quarterdeck Software does not violate the, copyrights, trade secret rights, or other similar proprietary or contractual rights of any third party, and Quarterdeck has not received any claim to that effect. Symantec acknowledges and understands that Quarterdeck has not performed any patent search or otherwise undertaken to determine whether the Quarterdeck Software infringes any patent. 8.2 REPRESENTATIONS AND WARRANTIES OF SYMANTEC. Symantec hereby represents and warrants that it has authorized the person who has signed this Agreement for Symantec to execute and deliver this Agreement to Quarterdeck on behalf of Symantec, and Symantec has the full power and authority to enter into this Agreement and fulfill the obligations set forth herein. 8.3 GENERAL DISCLAIMER. EXCEPT AS SPECIFIED IN THIS AGREEMENT ALL EXPRESS OR IMPLIED REPRESENTATIONS AND WARRANTIES, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT, ARE HEREBY DISCLAIMED. 9. LIMITATION OF LIABILITY. IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT (INCLUDING LOSS OF PROFITS, USE, DATA, OR OTHER ECONOMIC ADVANTAGE), NO MATTER WHAT THEORY OF LIABILITY, EVEN IF THE REMEDIES PROVIDED FOR IN THIS AGREEMENT FAIL OF THEIR ESSENTIAL PURPOSE AND EVEN IF EITHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OR PROBABILITY OF SUCH DAMAGES. Nothing herein shall preclude a party from seeking equitable remedies in an appropriate case. Except for the indemnity provisions of Section 10 and the confidentiality provisions in Section 12(a), (i) the liability of Quarterdeck under this Agreement shall be limited to the amounts paid to it by Symantec hereunder during the one year period ending upon accrual of such liability, and Symantec's liability shall be limited to the same amount, except that Symantec's obligation to make the payments described in this Agreement shall be in addition to such amount. FURTHER, THE EXCLUSIONS OF DAMAGES AND LIMITATIONS OF LIABILITY STATED ABOVE SHALL REMAIN IN EFFECT, EVEN IF THE EXCLUSIVE REMEDIES PROVIDED FOR IN THIS AGREEMENT FAIL OF THEIR ESSENTIAL PURPOSE. Nothing in this Section 9 shall in any way limit any right or remedy available to either party for any infringement or misappropriation of such party's copyrights, patents, trademarks, trade secrets, or other intellectual property rights. 9 10 10. INDEMNIFICATION. 10.1 BY QUARTERDECK. Quarterdeck shall, at its expense and Symantec's request, defend any claim brought against Symantec and Symantec's affiliates, directors, officers, employees, agents and independent contractors, (a) that the Quarterdeck Software infringes any United States copyrights or trade secrets; or (b) which, if true, would constitute a breach of a warranty by Quarterdeck in Section 8.1, and Quarterdeck will pay any damages awarded by a court of competent jurisdiction in a final, unappealable judgment for such claim or any amount owing in settlement of such claim, provided that Symantec tenders sole control of the defense and settlement of such claim to Quarterdeck and reasonably cooperates in the defense thereof. 10.2 BY SYMANTEC. Symantec shall, at its expense and Quarterdeck's request, defend any claim brought against Quarterdeck and Quarterdeck's affiliates, directors, officers, employees, agents and independent contractors, based on any allegation that Symantec's business practices with respect to the Software are unlawful or unethical, on allegations of Symantec's negligence, recklessness, willful misconduct, on allegations by Marubeni Corporation that Symantec's distribution of Japanese language versions of the Quarterdeck Products violated Marubeni Corporation's rights under the agreement between Quarterdeck and Marubeni dated September 29, 1997, or on allegations that, if true, would constitute a breach of this Agreement, and Symantec will pay any damages awarded by a court of competent jurisdiction in a final, unappealable judgment for such claim or any amount owing in settlement of such claim, provided that Symantec tenders sole control of the defense and settlement of such claim to Quarterdeck and reasonably cooperates in the defense thereof. 11. PROTECTION OF RIGHTS. As an express condition of this Agreement, each party will apply to any works created, copied or distributed under the Licenses applicable copyright and other proprietary rights notices sufficient to protect each party's rights in such works. Each party will retain the ownership to its trademarks and tradenames and, except as expressly provided in this Agreement, neither party will have any right to use the trademarks or tradenames of the other party. 12. GENERAL. (a) CONFIDENTIALITY. Each party acknowledges that in the course of the relationship contemplated by this Agreement it will receive information which is confidential and proprietary to the other. Each party agrees not to use such information except in performance of this Agreement and not to disclose such information to third parties. Such confidential and proprietary information includes, without limitation, the parties' current and future business plans, and other information which is stamped or marked as confidential by such party and any other information disclosed by such party if, within 30 days of disclosure, whether orally or by way of written documents, such party identifies by written notice to the other the confidential nature of such information. Without limiting the foregoing, any Source Code shall be deemed confidential information regardless of whether so marked or identified. The foregoing restrictions will not apply to information that (a) has been independently developed other than pursuant to this Agreement and without reference to the disclosing party's information, (b) has 10 11 become publicly known through no wrongful act of the party wishing to make use of such information, (c) has been rightfully received from a third party authorized to make such disclosure without restriction, (d) has been approved for release in writing, or (e) is required to be disclosed by law, provided that the party required to make such disclosure shall be required to make reasonable efforts, consistent with applicable law, to limit the scope and nature of such required disclosure. (b) EQUITABLE RELIEF. Each party acknowledges that any breach of its obligations under this Agreement with respect to the proprietary rights or confidential information of the other will cause the other irreparable injury for which there are inadequate remedies at law, and that the injured party will be entitled to equitable relief with respect to any such breach in addition to all other remedies provided by this Agreement or available at law. (c) GOVERNING LAW. This Agreement will be governed and interpreted in accordance with the laws of the State of California, except for that body of law pertaining to conflicts of law. Venue for any legal action shall be proper in the state and federal courts of California, and Symantec and Quarterdeck each expressly consent to venue and jurisdiction therein. (d) RELATIONSHIP OF PARTIES. Quarterdeck's relationship with Symantec during the term of this Agreement will be that of an independent contractor. Neither party will have, and neither party will represent that it has, any power, right or authority to bind the other party, or to assume or create any obligation or responsibility, express or implied, on behalf of the other party or in the other party's name, except as herein expressly provided. Nothing stated in this Agreement shall be construed as constituting Quarterdeck and Symantec as partners or as creating the relationships of employer/employee, franchiser/franchisee, or principal/agent between the parties; provided that nothing herein shall limit the parties respective rights and obligations under the Merger Agreement. (e) ATTORNEYS' FEES. In the event that any legal action is required in order to enforce or interpret any of the provisions of this Agreement, the prevailing party in such action shall recover all reasonable costs and expenses, including attorney's fees, incurred in connection therewith. (f) WAIVER. The failure of either party to enforce any provision of this Agreement shall not be deemed a waiver of that or any other provision of this Agreement. (g) HEADINGS; INTERPRETATION. The headings of the Sections of this Agreement are for convenience only and will not be of any effect in construing the meanings of the Sections. Because both parties have participated in the drafting of this Agreement, there shall be no presumption that the terms of the Agreement should be interpreted against the drafting party. (h) SEVERABILITY. If any of the provisions of this Agreement are found or deemed by a court of competent jurisdiction to be invalid or unenforceable, they shall be severable from the remainder of the Agreement and shall not cause the invalidity or unenforceability of the Agreement. 11 12 (i) NOTICES. Notices to either party shall be in writing and shall be deemed delivered when served in person or three Business Days after being deposited in the United States mail, first-class certified mail, postage prepaid, return receipt requested, or one Business Day after being dispatched by a nationally recognized one-day express courier service addressed as follows: if to Symantec, to Symantec Corporation 10201 Torre Ave. Cupertino, CA 95014 Attention: General Counsel if to Quarterdeck, to Quarterdeck Corporation 13160 Mindanao Way Marina del Rey, CA 90292 Attention: Chief Executive Officer with a copy to Quarterdeck's General Counsel at the same address and to Quarterdeck's outside counsel: Schwartz and Associates 333 South Grand Avenue, Suite 3950 Los Angeles, California 90071 Attention: Brad Schwartz (j) ENTIRE AGREEMENT. This Agreement (and, to the extent referenced herein, the Merger Agreement) constitutes the entire agreement between the parties pertaining to the subject matter hereof, and supersedes in their entirety any and all written or oral agreements previously existing between the parties with respect to such subject matter (provided that this Agreement shall not supercede the Merger Agreement or any agreement ancillary or entered into pursuant thereto). Any modifications of this Agreement must be in writing and signed by duly authorized officers of each party hereto. (k) COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which when so executed shall be deemed an original, and all of which together shall constitute one and the same instrument. 12 13 (l) This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and, except as otherwise provided herein, their respective legal successors and permitted assigns, provided however that neither party shall assign, voluntarily or involuntarily or by operation of law, or otherwise, any part of this Agreement unless in connection with such party's assignment to an entity which it then controls, is under the control of, or is under common control with or in connection with a transfer of substantially all assets of such party, or with the prior written consent of the other party. Notwithstanding the foregoing, Quarterdeck may assign this Agreement, including without limitation all of Quarterdeck's rights, remedies, obligations and duties of performance, in connection with a sale or assignment of the Intellectual Property Rights in the Quarterdeck Licensed Products. The parties have executed this Agreement on the Effective Date. SYMANTEC CORPORATION QUARTERDECK CORPORATION By: By: ------------------------------ ------------------------------ Printed Name: Printed Name: -------------------- ------------------- Title: Title: -------------------------- -------------------------- SYMANTEC LIMITED By: ------------------------------ Printed Name: ------------------- Title: -------------------------- 14 EXHIBIT A QUARTERDECK SOFTWARE Quarterdeck Software means (a) the product distributed by Quarterdeck under the name "CleanSweep," and (b) any updates, upgrades or other revisions to CleanSweep. 15 EXHIBIT B DELIVERABLES The Source Code Deliverables with respect to Quarterdeck Software shall include the following: Copies of machine-readable Source Code for the then current versions of the Quarterdeck Software. Copies of system build instructions such that Symantec can rebuild the Quarterdeck Software from the Source Code provided. Copies of existing Quarterdeck technical documentation for those maintaining and supporting the Quarterdeck Software. Copies of any tools written by Quarterdeck for the development of the Quarterdeck Software and the instructions for their operation. Copies of existing testing materials developed by Quarterdeck for the Quarterdeck Software. User manual source files Any technical specs, design docs, etc. that exist for the code Test cases, tools and plans, including DBCS and Hi-ASCII cases/plans -any in-house localization tools written for the product Bug database and top known issues (i.e, were they planning any inlines to fix bugs causing major support issues?) Any techsupport documents or databases List of scripts and script-creation documentation The Object Code Deliverables for the Quarterdeck Software shall include the following: Electronic masters for all associated end-user documentation for the Software. Golden master disks of the binary executable form of the then current version of the Quarterdeck Software, electronic masters for all associated end-user documentation for the Quarterdeck Software, and copies of all available technical support and customer support materials, provided that Quarterdeck shall have no obligation to identify or disclose any information regarding its customers. 16 EXHIBIT C END USER LICENSE SYMANTEC END-USER LICENSE NOTICE: SYMANTEC LICENSES THE ENCLOSED SOFTWARE TO YOU ONLY UPON THE CONDITION THAT YOU ACCEPT ALL OF THE TERMS CONTAINED IN THIS LICENSE AGREEMENT. PLEASE READ THE TERMS CAREFULLY BEFORE OPENING THIS PACKAGE, AS OPENING THE PACKAGE WILL INDICATE YOUR ASSENT TO THEM. IF YOU DO NOT AGREE TO THESE TERMS, THEN SYMANTEC IS UNWILLING TO LICENSE THE SOFTWARE TO YOU, IN WHICH EVENT YOU SHOULD RETURN THE FULL PRODUCT WITH PROOF OF PURCHASE TO THE DEALER FROM WHOM IT WAS ACQUIRED WITHIN SIXTY DAYS OF PURCHASE, AND YOUR MONEY WILL BE REFUNDED. LICENSE AND WARRANTY: The software which accompanies this license (the "Software") is the property of Symantec or its licensors and is protected by copyright law. While Symantec continues to own the Software, you will have certain rights to use the Software after your acceptance of this license. Except as may be modified by a license addendum which accompanies this license, your rights and obligations with respect to the use of this Software are as follows: o You may: (i) use one copy of the Software on a single computer; (ii) make one copy of the Software for archival purposes, or copy the software onto the hard disk of your computer and retain the original for archival purposes; (iii) use the Software on a network, provided that you have a licensed copy of the Software for each computer that can access the Software over that network; (iv) after written notice to Symantec, transfer the Software on a permanent basis to another person or entity, provided that you retain no copies of the Software and the transferee agrees to the terms of this agreement; and (v) if a single person uses the computer on which the Software is installed at least 80% of the time, then after returning the completed product registration card which accompanies the Software, that person may also use the Software on a single home computer. o You may not: 17 (i) copy the documentation which accompanies the Software; (ii) sublicense, rent or lease any portion of the Software; (iii) reverse engineer, decompile, disassemble, modify, translate, make any attempt to discover the source code of the Software, or create derivative works from the Software; or (iv) use a previous version of the Software after you have received an upgraded version as a replacement of the prior version. Upon upgrading the Software, all copies of the prior version must be destroyed. o Sixty Day Customer Satisfaction Guarantee: If you are the original licensee of this copy of the Software and are dissatisfied with it for any reason, you may return the complete product, together with your receipt, to Symantec or an authorized dealer, postage prepaid, for a full refund at any time during the sixty day period following the delivery to you of the Software. o Limited Warranty: Symantec warrants that the media on which the Software is distributed will be free from defects for a period of sixty (60) days from the date of delivery of the Software to you. Your sole remedy in the event of a breach of this warranty will be that Symantec will, at its option, replace any defective media returned to Symantec within the warranty period or refund the money you paid for the Software. Symantec does not warrant that the Software will meet your requirements or that operation of the Software will be uninterrupted or that the Software will be error-free. THE ABOVE WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT. THIS WARRANTY GIVES YOU SPECIFIC LEGAL RIGHTS. YOU MAY HAVE OTHER RIGHTS, WHICH VARY FROM STATE TO STATE. o Disclaimer of Damages: REGARDLESS OF WHETHER ANY REMEDY SET FORTH HEREIN FAILS OF ITS ESSENTIAL PURPOSE, IN NO EVENT WILL SYMANTEC OR ITS LICENSORS BE LIABLE TO YOU FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT OR SIMILAR DAMAGES, INCLUDING ANY LOST PROFITS OR LOST DATA ARISING OUT OF THE USE OR INABILITY TO USE THE SOFTWARE EVEN IF SYMANTEC HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. SOME STATES DO NOT ALLOW THE LIMITATION OR EXCLUSION OF LIABILITY 2 18 FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES SO THE ABOVE LIMITATION OR EXCLUSION MAY NOT APPLY TO YOU. IN NO CASE SHALL THE LIABILITY OF SYMANTEC OR ITS LICENSORS EXCEED THE PURCHASE PRICE FOR THE SOFTWARE. The disclaimers and limitations set forth above will apply regardless of whether you accept the Software. o U.S. Government Restricted Rights: RESTRICTED RIGHTS LEGEND. Use, duplication, or disclosure by the Government is subject to restrictions as set forth in subparagraph (c) (1) (ii) of the Rights in Technical Data and Computer Software clause at DFARS 252.227-7013 or subparagraphs (c) (1) and (2) of the Commercial Computer Software-Restricted Rights clause at 48 CFR 52.227-19, as applicable, Symantec Corporation, [Address]. o General: This Agreement will be governed by the laws of the State of California. This Agreement may only be modified by a license addendum which accompanies this license or by a written document which has been signed by both you and Symantec. Should you have any questions concerning this Agreement, or if you desire to contact Symantec for any reason, please write: Symantec Customer Sales and Service, [address.] 3 19 EXHIBIT D FORM OF SOURCE CODE ESCROW AGREEMENT ESCROW AGREEMENT Account Number: This Escrow Agreement (this "Agreement") is effective October 15, 1998 (the "Effective Date") by and among Data Securities International, Inc., a Delaware corporation with offices at 425 California Street, Suite 1450, San Francisco, California 94104 ("Escrow Agent"), Quarterdeck Corporation, a Delaware corporation with principal offices at 13160 Mindanao Way, Marina del Rey, California 90292 ("Quarterdeck") and Symantec Corporation, a Delaware corporation with principal offices at 10201 Torre Avenue, Cupertino, California 95014 ("Symantec"). Recitals This Agreement is entered into in furtherance of the provisions and objectives of that certain Agreement and Plan of Merger (the "Merger Agreement") among Quarterdeck, Symantec, and McGuire Acquisition Corporation, dated October 15, 1998 , and a License Agreement (the "License Agreement") between Symantec and Quarterdeck. The License Agreement provides that under certain conditions Symantec shall have the right to receive a license to the Quarterdeck Software, as defined in Exhibit A, and that Quarterdeck shall place in escrow the Deliverables identified in Exhibit B. Agreement For valuable consideration, the parties agree as follows: 1. Deposit. Quarterdeck has heretofore deposited with Escrow Agent the Source Code Deliverables (as defined in the License Agreement) (the "Deposit"). Symantec has verified that the initial Deposit includes the appropriate Deliverables. If there are changes to the Quarterdeck Software that are released to the public, Quarterdeck shall keep the Deposit current by adding or substituting materials within two business days after such changes are released to the public. Upon any such additional or replacement Deposit, Escrow Agent will, if requested by Symantec, build the binary version of the Quarterdeck Software from the materials included in the Deposit and deliver the resulting executable program to Symantec. Symantec may then verify that the Deposit is complete by comparing the executable program delivered by the Escrow Agent to the then current 4 20 version of the Quarterdeck Software. 2. Retention of Replaced Deposit. Escrow Agent will retain any replaced Deposit (including any replacement of a portion of the Deposit) unless Escrow Agent has been instructed by Symantec within 10 business days of notice from Escrow Agent to destroy it. Retention of the replaced Deposit may result in an additional fee, as specified in Escrow Agent's fee schedule, to be paid by Symantec. 3. Verification and Delivery of Deposit to Escrow Agent. Risk of loss or damage during shipment of the Deposit or any replacement Deposit to Quarterdeck or Escrow Agent shall rest with Quarterdeck. Accordingly, Escrow Agent shall follow any instructions provided by Quarterdeck regarding transport or shipment of the Deposit. The Deposit shall be packaged for storage as reasonably determined by Escrow Agent and accompanied by a cover sheet identifying the contents as indicated in Exhibit A. Escrow Agent shall give written notice to Symantec of any replacement Deposit or other addition or substitution of materials in the Deposit within three business days after such replacement Deposit. 4. Obligations of Escrow Agent. Escrow Agent shall safekeep the Deposit in a security vault and exercise the same high standard of care to protect the Deposit which Escrow Agent would use to protect items of this nature which Escrow Agent might own, but in no event less than that standard of care customary in the industry. 5. Term of Agreement. This Agreement shall have an initial term of six months, renewable upon receipt by Escrow Agent of the specified renewal fee. If Escrow Agent does not receive the renewal fee by the expiration date, Escrow Agent shall give notice to Symantec. If the fee is not received from Symantec within thirty days of such notice, this Agreement shall expire. Upon expiration of this Agreement, Escrow Agent will return the Deposit to Quarterdeck. All obligations of Escrow Agent under this Agreement shall terminate thereafter, except for those obligations set forth in Section 9 below. In no event shall this Agreement be renewed after expiration or termination of the Merger Agreement or the License Agreement. 6. Delivery of Deposit to Symantec. If Symantec notifies Escrow Agent of the occurrence of a release condition as defined in Exhibit C, Escrow Agent shall immediately notify Quarterdeck in writing and provide Quarterdeck with a copy of the notice from Symantec. Quarterdeck shall have ten business days from the date of receipt of such written notice from Escrow Agent to notify Escrow Agent, with a copy to Symantec, that the release condition has not occurred. Failing such timely notice from Quarterdeck, Escrow Agent shall release the Deposit to Symantec. Upon release of the deposit, Symantec shall have the license to use the Deposit as set forth in the License Agreement (the "Development License"). However, if Escrow Agent receives timely notice from Quarterdeck, Escrow Agent shall not release the Deposit but shall instead notify the parties that there is a dispute, and subject to Section 5, Escrow Agent will continue to hold the Deposit until such dispute is resolved. 5 21 Symantec shall in no event use the Deposit except to the extent permitted under the Development License. Further, Symantec shall not disclose the Deposit or any part thereof to any person or entity, except that, after rightful receipt of the Deposit hereunder, Symantec may disclose the Deposit to its employees who require access to the Deposit to allow Symantec to exercise its rights under the Development License, provided that such employees have first agreed in writing to refrain from disclosing the Deposit except as permitted under this Agreement. Symantec shall protect the Deposit using the same standard of care it uses to protect its own most valuable source code, but in no event less care than is prudent and customary under the circumstances. Symantec's obligations under this paragraph shall survive any termination or expiration of this Agreement. 7. Dispute Resolution Process. Escrow Agent shall first notify Quarterdeck and Symantec in writing of contrary instructions from Symantec and Quarterdeck for release of the Deposit (the "Dispute Notice"). Within five business days after the Dispute Notice is sent by Escrow Agent, Symantec and Quarterdeck shall each appoint a referee, and the referees so appointed shall jointly appoint a third referee (the "Neutral Referee"). Quarterdeck and Symantec shall each notify the other parties of its referee's identity within such five-day period. Within ten business days after the Dispute Notice, Symantec and Quarterdeck shall use their respective best efforts to cause the referees to meet at a mutually acceptable location and to hear testimony and other evidence that Quarterdeck and Symantec may wish to present with respect to the dispute. The meetings shall proceed with all referees present, and shall be conducted from 9:30 a.m. to 5:00 p.m. on no more than three consecutive business days . Symantec shall present up to one day of evidence followed by up to one day of presentation from Quarterdeck, followed by a final day reserved for rebuttal by each party, concluding with Quarterdeck's rebuttal. Quarterdeck, Symantec and Escrow Agent agree that the evidence presented at the hearings which is designated as confidential shall not be disclosed to other third parties except as required by law. Within two business days after the close of the presentations, the referees shall resolve the dispute by majority vote. Any refusal to vote by one of the referees appointed by a party shall be deemed an abstention by that referee. If the there is no majority vote and the Neutral Referee refuses to vote, then the referees appointed by the parties shall appoint a replacement Neutral Referee as soon as possible, and the process described in this paragraph shall be repeated. This dispute resolution process shall be the exclusive means for resolving disputes to which it applies, and the decision of the referees shall be final, conclusive and enforceable by a court of competent jurisdiction. All costs of the referees shall be borne by the unsuccessful party. 8. Joint Instructions. Symantec and Quarterdeck may, by joint written instruction to Escrow Agent, authorize the delivery of the Deposit to the party named in the instruction; provided that Escrow Agent shall not comply with any such instructions unless it notifies 6 22 Quarterdeck of such instructions and Escrow Agent's intention to release the Deposit to Symantec and Quarterdeck confirms such instructions in writing. Escrow Agent shall in any event wait not less than five business days after sending such notice before releasing the Deposit, even if it earlier receives such confirmation. 9. Use and Nondisclosure. Except as provided in this Agreement, Escrow Agent shall not copy, disclose or make any use whatsoever of the Deposit. Escrow Agent shall not disclose or make use of any confidential information provided to Escrow Agent by Quarterdeck in connection with this Agreement without the prior written consent of Quarterdeck. Escrow Agent shall not disclose or make use of any confidential information provided to Escrow Agent by Symantec in connection with this Agreement without the prior written consent of Symantec. These obligations shall continue indefinitely notwithstanding termination of this Agreement. 10. Records and Audit Rights. Escrow Agent shall keep complete written records of the activities undertaken and materials prepared pursuant to this Agreement. Upon reasonable notice to Escrow Agent during the term of this Agreement, each of Quarterdeck and Symantec shall be entitled at reasonable times during normal business hours at Escrow Agent's facilities to inspect the records of Escrow Agent with respect to this Agreement. 11. Designated Representative. Quarterdeck, Symantec and Escrow Agent shall each designate an authorized individual to receive notices and otherwise act on behalf of each such party in connection with this Agreement. Failing designation, notices shall be sent to the signatories to this Agreement. 12. Notices. All notices in connection with this Agreement shall be in writing given to the parties at their respective addresses shown above (or such other address as may be designated by a party in writing to the other parties) by being personally delivered, sent by overnight, pre-paid air freight, or sent by registered or certified mail, return receipt requested, and shall be effective upon receipt if personally delivered, upon two business days after deposit if sent by air freight, or upon five business days after deposit if sent with the U.S. Postal Service. 13. Fees. All fees shall be due in full within thirty (30) days of the date of Escrow Agent's invoice. Symantec shall pay the fees due. Fees shall be those specified in Escrow Agent's schedule of fees in effect for the term of this Agreement plus applicable taxes. Escrow Agent shall notify Symantec at least ninety days prior to expiration of the term (or any renewal term) of this Agreement of any scheduled increase of the fees payable for succeeding renewal terms. 14. Authenticity. Subject to Section 8, Escrow Agent may act in reliance upon any instruction, instrument or signature believed to be genuine and may assume that it has been duly authorized. 15. Indemnification. Escrow Agent shall be responsible to perform its 7 23 obligations under this Agreement and to act in a reasonable and prudent manner with regard to this escrow arrangement. Provided Escrow Agent has acted in the manner stated in the preceding sentence, Symantec and Quarterdeck each agree to indemnify, defend and hold harmless Escrow Agent from any and all claims, actions, damages, arbitration fees and expenses, costs, attorney's fees and other liabilities incurred by Escrow Agent relating in any way to this escrow arrangement. 16. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 17. Complete Agreement. This Agreement, including the Exhibits, constitutes the entire agreement between the parties concerning the subject matter and shall supersede all previous communications, representations, understandings, and agreements, either oral or written, between the parties. Without limiting the generality of the foregoing sentence, this Agreement shall specifically supplant and replace the Interim Escrow Agreement among the parties dated as of October 13, 1998 (the "Interim Agreement"). The parties acknowledge and agree that the Interim Agreement shall terminate as of the date hereof, and that the deposit under the Interim Agreement shall hereafter be governed by this Agreement. 18. Severability. If any provision of this Agreement is held by any court to be invalid or unenforceable, then that provision will be severed from this Agreement and the remaining provisions shall continue in force. 19. Exhibits. The following Exhibit is made a part of this Agreement by this reference: Exhibit A: Quarterdeck Software Exhibit B: Deliverables Exhibit C: Release Conditions QUARTERDECK CORPORATION SYMANTEC CORPORATION - ---------------------------- ---------------------------- By: By: Its: Its: 8 24 DATA SECURITIES INTERNATIONAL, INC. - ---------------------------- By: Its: 9 25 EXHIBIT A QUARTERDECK SOFTWARE Quarterdeck Software means (a) the product distributed by Quarterdeck under the name "CleanSweep," and (b) any updates or upgrades to CleanSweep. 26 EXHIBIT B DELIVERABLES The Deliverables with respect to Quarterdeck Software shall include the following: Copies of machine-readable Source Code for the then current versions of the Quarterdeck Software. Copies of system build instructions such that Symantec can rebuild the Quarterdeck Software from the Source Code provided. Copies of existing Quarterdeck technical documentation for those maintaining and supporting the Quarterdeck Software. Copies of any tools written by Quarterdeck for the development of the Quarterdeck Software and the instructions for their operation. Copies of existing testing materials developed by Quarterdeck for the Quarterdeck Software. Electronic masters for all associated end-user documentation for the Software. Any technical specs, design docs, etc. that exist for the code Test cases, tools and plans, including DBCS and Hi-ASCII cases/plans -any in-house localization tools written for the product Bug database and top known issues (i.e, were they planning any inlines to fix bugs causing major support issues?) Any techsupport documents or databases List of scripts and script-creation documentation BINARY EXECUTABLES Golden master disks of the binary executable form of the then current version of the Quarterdeck Software, electronic masters for all associated end-user documentation for the Quarterdeck Software, and copies of all available technical support and customer support materials. 27 EXHIBIT C RELEASE CONDITIONS Any of the following shall be deemed to be a Release Condition: 1) Consummation (as that term is defined in the License Agreement) in accordance with the terms of the License Agreement. 2) The occurrence of an event giving rise to an obligation on the part of Quarterdeck to pay a Company Fee (as that term is defined in the Merger Agreement) in accordance with the terms of the Merger Agreement EX-3 4 STOCKHOLDER AGREEMENT WITH KING R. LEE 1 Exhibit 3 STOCKHOLDER AGREEMENT STOCKHOLDER AGREEMENT dated October ___, 1998, among SYMANTEC CORPORATION, a Delaware corporation ("PARENT"), QUARTERDECK ACQUISITION CORPORATION, a Delaware corporation and a wholly owned Subsidiary of Parent ("SUB"), and King R. Lee (the "STOCKHOLDER"). WHEREAS, concurrently with the execution and delivery of this Agreement, Parent, Sub and QUARTERDECK CORPORATION, a Delaware corporation (the "COMPANY"), have entered into an Agreement and Plan of Merger (as such agreement may hereafter be amended from time to time, the "MERGER AGREEMENT"), pursuant to which Sub will be merged with and into the Company (the "MERGER"); WHEREAS, in furtherance of the Merger, Parent and the Company desire that as soon as practicable (and not later than five (5) business days) after the announcement of the execution of the Merger Agreement, Sub shall commence a cash tender offer (the "OFFER") to purchase at the Offer Price all outstanding shares of Common Stock (each as defined in Section 1 hereof), including all of the Securities (as defined in Section 2 hereof) Beneficially Owned by the Stockholder; and WHEREAS, as an inducement and a condition to entering into the Merger Agreement, Parent has required that the Stockholder agree, and the Stockholder has agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: 1. Definitions. For purposes of this Agreement: (a) "BENEFICIALLY OWNED" or "BENEFICIAL OWNERSHIP" with respect to any securities shall mean having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a Person (as hereinafter defined) shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a "group" within the meaning of Section 13(d)(3) of the Exchange Act. (b) "COMMON STOCK" shall mean the Common Stock, $0.001 par value per share, of the Company. (c) "OFFER PRICE" shall mean cash in the amount of $_____ per share of Common Stock or, if greater, the price per share paid by Sub in the Offer. 2 (d) "PERSON" shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. (e) "SECURITIES" shall mean any shares of Common Stock Beneficially Owned by the Stockholder on the date hereof, as reflected on Exhibit I hereto (the "Existing Securities") or acquired by the Stockholder in any capacity after the date hereof and prior to the termination of this Agreement by means of purchase, dividend, distribution, exercise of options or other rights to acquire Common Stock or in any other way. (f) Capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Merger Agreement. 2. Tender of Shares. (a) In order to induce Parent and Sub to enter into the Merger Agreement, the Stockholder hereby agrees to validly tender the Securities (or cause the record owner of such Securities to validly tender such Securities), and not to withdraw such Securities (except following termination of this Agreement pursuant to Section 7 hereof), pursuant to and in accordance with the terms of the Offer, as soon as practicable after commencement of the Offer pursuant to Section 1.1 of the Merger Agreement and Rule 14d-2 under the Exchange Act (but in the case of Securities acquired after the date hereof, in no event later than two business days after such acquisition). The Stockholder hereby acknowledges and agrees that Parent's and Sub's obligation to accept for payment and pay for the Securities in the Offer, including the Securities Beneficially Owned by the Stockholder, is subject to the terms and conditions of the Offer. (b) The Stockholder hereby permits Parent and Sub to publish and disclose in the Offer Documents and, if approval of the Company's stockholders is required under applicable law, the Proxy Statement (including all documents and schedules filed with the SEC) its identity and ownership of the Securities and the nature of its commitments, arrangements and understandings under this Agreement. 3. Additional Agreements. (a) Voting Agreement. Until the termination of this Agreement pursuant to Section 7 hereof, the Stockholder shall, at any meeting of the stockholders of the Company, however called, or in connection with any written consent of the stockholders of the Company, vote (or cause to be voted) all Securities then held of record or Beneficially Owned by the Stockholder, (i) in favor of the Merger, the execution and delivery by the Company of the Merger Agreement and the approval of the terms thereof and each of the other actions contemplated by the Merger Agreement and this Agreement and any actions required in furtherance thereof and hereof; and (ii) against any proposal relating to a takeover proposal and against any action or agreement that would impede, frustrate, prevent or nullify this Agreement, or result in a breach in any respect of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or which would result in any of the conditions set forth in Exhibit A to the Merger Agreement or set forth in Article VII of the Merger Agreement not being fulfilled. 2 3 (b) No Inconsistent Arrangements. The Stockholder hereby covenants and agrees that, except as contemplated by this Agreement and the Merger Agreement, it shall not (i) transfer (which term shall include, without limitation, any sale, gift, pledge (other than a pledge which does not impair the Stockholder's ability to perform under this Agreement) or other disposition), or consent to any transfer of, any or all of the Securities or any interest therein, (ii) enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of the Securities or any interest therein, (iii) grant any proxy, power-of-attorney or other authorization in or with respect to the Securities, (iv) deposit the Securities into a voting trust or enter into a voting agreement or arrangement with respect to the Securities or (v) take any other action that would in any way restrict, limit or interfere with the performance of its obligations hereunder or the transactions contemplated hereby or by the Merger Agreement (c) Grant of Irrevocable Proxy; Appointment or Proxy. (i) The Stockholder hereby irrevocably grants to, and appoints, Parent and ___________________________ and ______________________________, or either of them, in their respective capacities as officers or directors of Parent, and any individual who shall hereafter succeed to any such office or directorship of Parent, and each of them individually, the Stockholder's proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of the Stockholder, to vote the Securities, or grant a consent or approval in respect of the Securities, in favor of the various transactions contemplated by the Merger Agreement (the "TRANSACTIONS") and against any proposal relating to a takeover proposal. (ii) The Stockholder represents that any proxies heretofore given in respect of the Stockholder's Securities are not irrevocable, and that any such proxies are hereby revoked. (iii) The Stockholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. The Stockholder hereby affirms that the irrevocable proxy set forth in this Section 3(c) is given in connection with the execution of the Merger Agreement, and that such irrevocable proxy is given to secure the performance of the duties of the Stockholder under this Agreement. The Stockholder hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked. The Stockholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 212(e) of the DGCL. (d) No Solicitation. The Stockholder hereby agrees, in the capacity as a stockholder of the Company, that neither the Stockholder nor any affiliates, representatives or agents shall, directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Parent, Sub or any of their respective affiliates or representatives) concerning any proposal relating to a takeover proposal. The Stockholder will immediately cease any existing activities, discussions or negotiations with any parties conducted heretofore with 3 4 respect to any proposal relating to a takeover proposal. The Stockholder will immediately communicate to Parent the terms of any proposal, discussion, negotiation or inquiry (and will disclose any written materials received by the Stockholder in connection with such proposal, discussion, negotiation or inquiry) and the identity of the party making such proposal or inquiry which it may receive in respect of any such takeover proposal. Any action taken by the Company or any member of the Board of Directors of the Company in accordance with Section 5.2(b) of the Merger Agreement shall be deemed not to violate this Section 4(d). (e) Reasonable Efforts. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement. Each party shall promptly consult with the other and provide any necessary information and material with respect to all filings made by such party with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby. (f) Waiver of Appraisal Rights. The Stockholder hereby waives any rights of appraisal or rights to dissent from the Merger that it may have. 4. Representations and Warranties of the Stockholder. The Stockholder hereby represents and warrants to Parent and Sub as follows: (a) Ownership of Securities. The Stockholder is the record and Beneficial Owner of the Existing Securities, as set forth on Schedule I. On the date hereof, the Existing Securities constitute all of the Securities owned of record or Beneficially Owned by the Stockholder. The Stockholder has sole voting power and sole power to issue instructions with respect to the matters set forth in Sections 2 and 3 hereof, sole power of disposition, sole power to demand appraisal rights and sole power to agree to all of the matters set forth in this Agreement, in each case with respect to all of the Existing Securities with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. (b) Power; Binding Agreement. The Stockholder has the power and authority to enter into and perform all of the Stockholder's obligations under this Agreement. The execution, delivery and performance of this Agreement by the Stockholder will not violate any other agreement to which the Stockholder is a party including, without limitation, any voting agreement, proxy arrangement, pledge agreement, shareholders agreement or voting trust. This Agreement has been duly and validly executed and delivered by the Stockholder and constitutes a valid and binding agreement of the Stockholder, enforceable against the Stockholder in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which the Stockholder is a trustee, or any party to any other agreement or arrangement, whose consent is required for the 4 5 execution and delivery of this Agreement or the consummation by the Stockholder of the transactions contemplated hereby. (c) No Conflicts. Except for filings under the HSR Act, other applicable Antitrust Laws and the Exchange Act (i) no filing with, and no permit, authorization, consent or approval of, any Governmental Entity is necessary for the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby and the compliance by the Stockholder with the provisions hereof and (ii) none of the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby or compliance by the Stockholder with any of the provisions hereof, except in cases in which any conflict, breach, default or violation described below would not interfere with the ability of such Stockholder to perform such Stockholder's obligations hereunder, shall (A) conflict with or result in any breach of any organizational documents applicable to the Stockholder, (B) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, modification or acceleration) under, any of the terms, conditions or provisions of any note, loan agreement, bond, mortgage, indenture, license, contract, commitment, arrangement, understanding, agreement or other instrument or obligation of any kind to which the Stockholder is a party or by which the Stockholder or any of its properties or assets may be bound, or (C) violate any order, writ, injunction, decree, judgment, order, statute, rule or regulation applicable to the Stockholder or any of such Stockholder's properties or assets. (d) No Liens. Except as permitted by this Agreement, the Existing Securities and the certificates representing such securities are now, and at all times during the term hereof will be, held by the Stockholder, or by a nominee or custodian for the benefit of the Stockholder, free and clear of all Liens, proxies, voting trusts or agreements, understandings or arrangements or any other rights whatsoever, except for any such Liens or proxies arising hereunder. (e) No Finder's Fees. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial adviser's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Stockholder. (f) Reliance by Parent. The Stockholder understands and acknowledges that Parent is entering into, and causing Sub to enter into, the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. 5. Further Assurances. From time to time, at the other party's request and without further consideration, each party hereto shall execute and deliver such additional documents and take all such further lawful action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. 6. Stop Transfer. The Stockholder shall not request that the Company register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of 5 6 the Securities, unless such transfer is made in compliance with this Agreement. In the event of a stock dividend or distribution, or any change in the Common Stock by reason of any stock dividend, split-up, recapitalization, combination, exchange of shares or the like, the term "Securities" shall refer to and include the Securities as well as all such stock dividends and distributions and any shares into which or for which any and all of the Securities may be changed or exchanged. 7. Termination. This Agreement and Stockholder's obligation to tender provided herein shall terminate on the earlier of the payment for the Securities pursuant to the Offer and the termination of the Merger Agreement in accordance with its terms. 8. No Limitation. Nothing in this Agreement shall be construed to prohibit any officer or affiliate of the Stockholder who is or has designated a member of the Board of Directors of the Company from taking any action solely in his capacity as a member of the Board of Directors of the Company or from exercising his fiduciary duties as a member of such Board of Directors. 9. Miscellaneous. (a) Entire Agreement. This Agreement and the Merger Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. (b) Binding Agreement. This Agreement and the obligations hereunder shall attach to the Securities and shall be binding upon any person or entity to which legal or beneficial ownership of the Securities shall pass, whether by operation of law or otherwise, including, without limitation, the Stockholder's administrators or successors. Notwithstanding any transfer of Securities, the transferor shall remain liable for the performance of all obligations of the transferor under this Agreement. (c) Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, except that Sub may assign, in its sole discretion, any of or all its rights, interests and obligations under this Agreement to Parent or to any direct or indirect wholly owned subsidiary of Parent, but no such assignment shall relieve Sub and Parent of any of its obligations under this Agreement. This Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. (d) Amendments, Waivers, Etc. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by the parties hereto. (e) Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, 6 7 telecopied (which is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (i) if to Parent or Sub, to Symantec Corporation 10201 Torre Ave. Cupertino, CA 95014 Attention: Chief Financial Officer with copies to its counsel: Fenwick & West LLP Two Palo Alto Square Palo Alto, CA 94306 Fax: (415) 494-1417 Attention: Gordon K. Davidson, Esq. (ii) if to the Stockholder, to Quarterdeck Corporation 13160 Mindanao Way Marina del Rey, CA 90292 Attention: Chief Financial Officer with copies to its counsel: Schwartz & Associates Suite 3950 333 South Grand Avenue Los Angeles, California 90071 Facsimile: 213-621-0982 (f) Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. (g) Specific Performance. Each of the parties hereto recognizes and acknowledges that a breach by it of any covenants or agreements contained in this Agreement will cause the other party to sustain damages for which it would not have an adequate remedy at 7 8 law for money damages, and therefore in the event of any such breach the aggrieved party shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. (h) Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. (i) No Waiver. The failure of any party hereto to exercise any rights, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. (j) No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of, and shall not be enforceable by, any person or entity who or which is not a party hereto. (k) Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. (l) Waiver of Jury Trial. Each party hereto hereby waives any right to a trial by jury in connection with any action, suit or proceeding brought in connection with this Agreement. (m) Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. (n) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same agreement. 8 9 IN WITNESS WHEREOF, Parent, Sub and Stockholder have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above. PARENT: SYMANTEC CORPORATION By: --------------------------------- Name: ------------------------------- Title: ------------------------------ SUB: QUARTERDECK ACQUISITION CORPORATION By: --------------------------------- Name: ------------------------------- Title: ------------------------------ STOCKHOLDER: ------------------------------------ King R. Lee 9 10 EXHIBIT I SHARES OWNED OPTIONS HELD ------------ ------------ 10,000 387,500 EX-4 5 STOCKHOLDER AGREEMENT WITH FRANK W. T. LAHAYE 1 Exhibit 4 STOCKHOLDER AGREEMENT STOCKHOLDER AGREEMENT dated October ___, 1998, among SYMANTEC CORPORATION, a Delaware corporation ("PARENT"), QUARTERDECK ACQUISITION CORPORATION, a Delaware corporation and a wholly owned Subsidiary of Parent ("SUB"), and Frank W. T. LaHaye (the "STOCKHOLDER"). WHEREAS, concurrently with the execution and delivery of this Agreement, Parent, Sub and QUARTERDECK CORPORATION, a Delaware corporation (the "COMPANY"), have entered into an Agreement and Plan of Merger (as such agreement may hereafter be amended from time to time, the "MERGER AGREEMENT"), pursuant to which Sub will be merged with and into the Company (the "MERGER"); WHEREAS, in furtherance of the Merger, Parent and the Company desire that as soon as practicable (and not later than five (5) business days) after the announcement of the execution of the Merger Agreement, Sub shall commence a cash tender offer (the "OFFER") to purchase at the Offer Price all outstanding shares of Common Stock (each as defined in Section 1 hereof), including all of the Securities (as defined in Section 2 hereof) Beneficially Owned by the Stockholder; and WHEREAS, as an inducement and a condition to entering into the Merger Agreement, Parent has required that the Stockholder agree, and the Stockholder has agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: 1. Definitions. For purposes of this Agreement: (a) "BENEFICIALLY OWNED" or "BENEFICIAL OWNERSHIP" with respect to any securities shall mean having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a Person (as hereinafter defined) shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a "group" within the meaning of Section 13(d)(3) of the Exchange Act. (b) "COMMON STOCK" shall mean the Common Stock, $0.001 par value per share, of the Company. (c) "OFFER PRICE" shall mean cash in the amount of $_____ per share of Common Stock or, if greater, the price per share paid by Sub in the Offer. 2 (d) "PERSON" shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. (e) "SECURITIES" shall mean any shares of Common Stock Beneficially Owned by the Stockholder on the date hereof, as reflected on Exhibit I hereto (the "Existing Securities") or acquired by the Stockholder in any capacity after the date hereof and prior to the termination of this Agreement by means of purchase, dividend, distribution, exercise of options or other rights to acquire Common Stock or in any other way. (f) Capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Merger Agreement. 2. Tender of Shares. (a) In order to induce Parent and Sub to enter into the Merger Agreement, the Stockholder hereby agrees to validly tender the Securities (or cause the record owner of such Securities to validly tender such Securities), and not to withdraw such Securities (except following termination of this Agreement pursuant to Section 7 hereof), pursuant to and in accordance with the terms of the Offer, as soon as practicable after commencement of the Offer pursuant to Section 1.1 of the Merger Agreement and Rule 14d-2 under the Exchange Act (but in the case of Securities acquired after the date hereof, in no event later than two business days after such acquisition). The Stockholder hereby acknowledges and agrees that Parent's and Sub's obligation to accept for payment and pay for the Securities in the Offer, including the Securities Beneficially Owned by the Stockholder, is subject to the terms and conditions of the Offer. (b) The Stockholder hereby permits Parent and Sub to publish and disclose in the Offer Documents and, if approval of the Company's stockholders is required under applicable law, the Proxy Statement (including all documents and schedules filed with the SEC) its identity and ownership of the Securities and the nature of its commitments, arrangements and understandings under this Agreement. 3. Additional Agreements. (a) Voting Agreement. Until the termination of this Agreement pursuant to Section 7 hereof, the Stockholder shall, at any meeting of the stockholders of the Company, however called, or in connection with any written consent of the stockholders of the Company, vote (or cause to be voted) all Securities then held of record or Beneficially Owned by the Stockholder, (i) in favor of the Merger, the execution and delivery by the Company of the Merger Agreement and the approval of the terms thereof and each of the other actions contemplated by the Merger Agreement and this Agreement and any actions required in furtherance thereof and hereof; and (ii) against any proposal relating to a takeover proposal and against any action or agreement that would impede, frustrate, prevent or nullify this Agreement, or result in a breach in any respect of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or which would result in any of the conditions set forth in Exhibit A to the Merger Agreement or set forth in Article VII of the Merger Agreement not being fulfilled. 2 3 (b) No Inconsistent Arrangements. The Stockholder hereby covenants and agrees that, except as contemplated by this Agreement and the Merger Agreement, it shall not (i) transfer (which term shall include, without limitation, any sale, gift, pledge (other than a pledge which does not impair the Stockholder's ability to perform under this Agreement) or other disposition), or consent to any transfer of, any or all of the Securities or any interest therein, (ii) enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of the Securities or any interest therein, (iii) grant any proxy, power-of-attorney or other authorization in or with respect to the Securities, (iv) deposit the Securities into a voting trust or enter into a voting agreement or arrangement with respect to the Securities or (v) take any other action that would in any way restrict, limit or interfere with the performance of its obligations hereunder or the transactions contemplated hereby or by the Merger Agreement (c) Grant of Irrevocable Proxy; Appointment or Proxy. (i) The Stockholder hereby irrevocably grants to, and appoints, Parent and ___________________________ and ______________________________, or either of them, in their respective capacities as officers or directors of Parent, and any individual who shall hereafter succeed to any such office or directorship of Parent, and each of them individually, the Stockholder's proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of the Stockholder, to vote the Securities, or grant a consent or approval in respect of the Securities, in favor of the various transactions contemplated by the Merger Agreement (the "TRANSACTIONS") and against any proposal relating to a takeover proposal. (ii) The Stockholder represents that any proxies heretofore given in respect of the Stockholder's Securities are not irrevocable, and that any such proxies are hereby revoked. (iii) The Stockholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. The Stockholder hereby affirms that the irrevocable proxy set forth in this Section 3(c) is given in connection with the execution of the Merger Agreement, and that such irrevocable proxy is given to secure the performance of the duties of the Stockholder under this Agreement. The Stockholder hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked. The Stockholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 212(e) of the DGCL. (d) No Solicitation. The Stockholder hereby agrees, in the capacity as a stockholder of the Company, that neither the Stockholder nor any affiliates, representatives or agents shall, directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Parent, Sub or any of their respective affiliates or representatives) concerning any proposal relating to a takeover proposal. The Stockholder will immediately cease any existing activities, discussions or negotiations with any parties conducted heretofore with 3 4 respect to any proposal relating to a takeover proposal. The Stockholder will immediately communicate to Parent the terms of any proposal, discussion, negotiation or inquiry (and will disclose any written materials received by the Stockholder in connection with such proposal, discussion, negotiation or inquiry) and the identity of the party making such proposal or inquiry which it may receive in respect of any such takeover proposal. Any action taken by the Company or any member of the Board of Directors of the Company in accordance with Section 5.2(b) of the Merger Agreement shall be deemed not to violate this Section 4(d). (e) Reasonable Efforts. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement. Each party shall promptly consult with the other and provide any necessary information and material with respect to all filings made by such party with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby. (f) Waiver of Appraisal Rights. The Stockholder hereby waives any rights of appraisal or rights to dissent from the Merger that it may have. 4. Representations and Warranties of the Stockholder. The Stockholder hereby represents and warrants to Parent and Sub as follows: (a) Ownership of Securities. The Stockholder is the record and Beneficial Owner of the Existing Securities, as set forth on Schedule I. On the date hereof, the Existing Securities constitute all of the Securities owned of record or Beneficially Owned by the Stockholder. The Stockholder has sole voting power and sole power to issue instructions with respect to the matters set forth in Sections 2 and 3 hereof, sole power of disposition, sole power to demand appraisal rights and sole power to agree to all of the matters set forth in this Agreement, in each case with respect to all of the Existing Securities with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. (b) Power; Binding Agreement. The Stockholder has the power and authority to enter into and perform all of the Stockholder's obligations under this Agreement. The execution, delivery and performance of this Agreement by the Stockholder will not violate any other agreement to which the Stockholder is a party including, without limitation, any voting agreement, proxy arrangement, pledge agreement, shareholders agreement or voting trust. This Agreement has been duly and validly executed and delivered by the Stockholder and constitutes a valid and binding agreement of the Stockholder, enforceable against the Stockholder in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which the Stockholder is a trustee, or any party to any other agreement or arrangement, whose consent is required for the 4 5 execution and delivery of this Agreement or the consummation by the Stockholder of the transactions contemplated hereby. (c) No Conflicts. Except for filings under the HSR Act, other applicable Antitrust Laws and the Exchange Act (i) no filing with, and no permit, authorization, consent or approval of, any Governmental Entity is necessary for the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby and the compliance by the Stockholder with the provisions hereof and (ii) none of the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby or compliance by the Stockholder with any of the provisions hereof, except in cases in which any conflict, breach, default or violation described below would not interfere with the ability of such Stockholder to perform such Stockholder's obligations hereunder, shall (A) conflict with or result in any breach of any organizational documents applicable to the Stockholder, (B) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, modification or acceleration) under, any of the terms, conditions or provisions of any note, loan agreement, bond, mortgage, indenture, license, contract, commitment, arrangement, understanding, agreement or other instrument or obligation of any kind to which the Stockholder is a party or by which the Stockholder or any of its properties or assets may be bound, or (C) violate any order, writ, injunction, decree, judgment, order, statute, rule or regulation applicable to the Stockholder or any of such Stockholder's properties or assets. (d) No Liens. Except as permitted by this Agreement, the Existing Securities and the certificates representing such securities are now, and at all times during the term hereof will be, held by the Stockholder, or by a nominee or custodian for the benefit of the Stockholder, free and clear of all Liens, proxies, voting trusts or agreements, understandings or arrangements or any other rights whatsoever, except for any such Liens or proxies arising hereunder. (e) No Finder's Fees. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial adviser's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Stockholder. (f) Reliance by Parent. The Stockholder understands and acknowledges that Parent is entering into, and causing Sub to enter into, the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. 5. Further Assurances. From time to time, at the other party's request and without further consideration, each party hereto shall execute and deliver such additional documents and take all such further lawful action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. 6. Stop Transfer. The Stockholder shall not request that the Company register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of 5 6 the Securities, unless such transfer is made in compliance with this Agreement. In the event of a stock dividend or distribution, or any change in the Common Stock by reason of any stock dividend, split-up, recapitalization, combination, exchange of shares or the like, the term "Securities" shall refer to and include the Securities as well as all such stock dividends and distributions and any shares into which or for which any and all of the Securities may be changed or exchanged. 7. Termination. This Agreement and Stockholder's obligation to tender provided herein shall terminate on the earlier of the payment for the Securities pursuant to the Offer and the termination of the Merger Agreement in accordance with its terms. 8. No Limitation. Nothing in this Agreement shall be construed to prohibit any officer or affiliate of the Stockholder who is or has designated a member of the Board of Directors of the Company from taking any action solely in his capacity as a member of the Board of Directors of the Company or from exercising his fiduciary duties as a member of such Board of Directors. 9. Miscellaneous. (a) Entire Agreement. This Agreement and the Merger Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. (b) Binding Agreement. This Agreement and the obligations hereunder shall attach to the Securities and shall be binding upon any person or entity to which legal or beneficial ownership of the Securities shall pass, whether by operation of law or otherwise, including, without limitation, the Stockholder's administrators or successors. Notwithstanding any transfer of Securities, the transferor shall remain liable for the performance of all obligations of the transferor under this Agreement. (c) Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, except that Sub may assign, in its sole discretion, any of or all its rights, interests and obligations under this Agreement to Parent or to any direct or indirect wholly owned subsidiary of Parent, but no such assignment shall relieve Sub and Parent of any of its obligations under this Agreement. This Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. (d) Amendments, Waivers, Etc. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by the parties hereto. (e) Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, 6 7 telecopied (which is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (i) if to Parent or Sub, to Symantec Corporation 10201 Torre Ave. Cupertino, CA 95014 Attention: Chief Financial Officer with copies to its counsel: Fenwick & West LLP Two Palo Alto Square Palo Alto, CA 94306 Fax: (415) 494-1417 Attention: Gordon K. Davidson, Esq. (ii) if to the Stockholder, to Quarterdeck Corporation 13160 Mindanao Way Marina del Rey, CA 90292 Attention: Chief Financial Officer with copies to its counsel: Schwartz & Associates Suite 3950 333 South Grand Avenue Los Angeles, California 90071 Facsimile: 213-621-0982 (f) Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. (g) Specific Performance. Each of the parties hereto recognizes and acknowledges that a breach by it of any covenants or agreements contained in this Agreement will cause the other party to sustain damages for which it would not have an adequate remedy at 7 8 law for money damages, and therefore in the event of any such breach the aggrieved party shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. (h) Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. (i) No Waiver. The failure of any party hereto to exercise any rights, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. (j) No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of, and shall not be enforceable by, any person or entity who or which is not a party hereto. (k) Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. (l) Waiver of Jury Trial. Each party hereto hereby waives any right to a trial by jury in connection with any action, suit or proceeding brought in connection with this Agreement. (m) Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. (n) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same agreement. 8 9 IN WITNESS WHEREOF, Parent, Sub and Stockholder have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above. PARENT: SYMANTEC CORPORATION By: ---------------------------------- Name: ---------------------------------- Title: ---------------------------------- SUB: QUARTERDECK ACQUISITION CORPORATION By: ---------------------------------- Name: ---------------------------------- Title: ---------------------------------- STOCKHOLDER: ---------------------------------------- Frank W. T. LaHaye 9 10 EXHIBIT I
SHARES OWNED OPTIONS HELD ------------ ------------ 151,721 262,500
EX-5 6 STOCKHOLDER AGREEMENT WITH WILLIAM H. LANE III 1 Exhibit 5 STOCKHOLDER AGREEMENT STOCKHOLDER AGREEMENT dated October ___, 1998, among SYMANTEC CORPORATION, a Delaware corporation ("PARENT"), QUARTERDECK ACQUISITION CORPORATION, a Delaware corporation and a wholly owned Subsidiary of Parent ("SUB"), and William H. Lane III (the "STOCKHOLDER"). WHEREAS, concurrently with the execution and delivery of this Agreement, Parent, Sub and QUARTERDECK CORPORATION, a Delaware corporation (the "COMPANY"), have entered into an Agreement and Plan of Merger (as such agreement may hereafter be amended from time to time, the "MERGER AGREEMENT"), pursuant to which Sub will be merged with and into the Company (the "MERGER"); WHEREAS, in furtherance of the Merger, Parent and the Company desire that as soon as practicable (and not later than five (5) business days) after the announcement of the execution of the Merger Agreement, Sub shall commence a cash tender offer (the "OFFER") to purchase at the Offer Price all outstanding shares of Common Stock (each as defined in Section 1 hereof), including all of the Securities (as defined in Section 2 hereof) Beneficially Owned by the Stockholder; and WHEREAS, as an inducement and a condition to entering into the Merger Agreement, Parent has required that the Stockholder agree, and the Stockholder has agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: 1. Definitions. For purposes of this Agreement: (a) "BENEFICIALLY OWNED" or "BENEFICIAL OWNERSHIP" with respect to any securities shall mean having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a Person (as hereinafter defined) shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a "group" within the meaning of Section 13(d)(3) of the Exchange Act. (b) "COMMON STOCK" shall mean the Common Stock, $0.001 par value per share, of the Company. (c) "OFFER PRICE" shall mean cash in the amount of $_____ per share of Common Stock or, if greater, the price per share paid by Sub in the Offer. 2 (d) "PERSON" shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. (e) "SECURITIES" shall mean any shares of Common Stock Beneficially Owned by the Stockholder on the date hereof, as reflected on Exhibit I hereto (the "Existing Securities") or acquired by the Stockholder in any capacity after the date hereof and prior to the termination of this Agreement by means of purchase, dividend, distribution, exercise of options or other rights to acquire Common Stock or in any other way. (f) Capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Merger Agreement. 2. Tender of Shares. (a) In order to induce Parent and Sub to enter into the Merger Agreement, the Stockholder hereby agrees to validly tender the Securities (or cause the record owner of such Securities to validly tender such Securities), and not to withdraw such Securities (except following termination of this Agreement pursuant to Section 7 hereof), pursuant to and in accordance with the terms of the Offer, as soon as practicable after commencement of the Offer pursuant to Section 1.1 of the Merger Agreement and Rule 14d-2 under the Exchange Act (but in the case of Securities acquired after the date hereof, in no event later than two business days after such acquisition). The Stockholder hereby acknowledges and agrees that Parent's and Sub's obligation to accept for payment and pay for the Securities in the Offer, including the Securities Beneficially Owned by the Stockholder, is subject to the terms and conditions of the Offer. (b) The Stockholder hereby permits Parent and Sub to publish and disclose in the Offer Documents and, if approval of the Company's stockholders is required under applicable law, the Proxy Statement (including all documents and schedules filed with the SEC) its identity and ownership of the Securities and the nature of its commitments, arrangements and understandings under this Agreement. 3. Additional Agreements. (a) Voting Agreement. Until the termination of this Agreement pursuant to Section 7 hereof, the Stockholder shall, at any meeting of the stockholders of the Company, however called, or in connection with any written consent of the stockholders of the Company, vote (or cause to be voted) all Securities then held of record or Beneficially Owned by the Stockholder, (i) in favor of the Merger, the execution and delivery by the Company of the Merger Agreement and the approval of the terms thereof and each of the other actions contemplated by the Merger Agreement and this Agreement and any actions required in furtherance thereof and hereof; and (ii) against any proposal relating to a takeover proposal and against any action or agreement that would impede, frustrate, prevent or nullify this Agreement, or result in a breach in any respect of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or which would result in any of the conditions set forth in Exhibit A to the Merger Agreement or set forth in Article VII of the Merger Agreement not being fulfilled. 2 3 (b) No Inconsistent Arrangements. The Stockholder hereby covenants and agrees that, except as contemplated by this Agreement and the Merger Agreement, it shall not (i) transfer (which term shall include, without limitation, any sale, gift, pledge (other than a pledge which does not impair the Stockholder's ability to perform under this Agreement) or other disposition), or consent to any transfer of, any or all of the Securities or any interest therein, (ii) enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of the Securities or any interest therein, (iii) grant any proxy, power-of-attorney or other authorization in or with respect to the Securities, (iv) deposit the Securities into a voting trust or enter into a voting agreement or arrangement with respect to the Securities or (v) take any other action that would in any way restrict, limit or interfere with the performance of its obligations hereunder or the transactions contemplated hereby or by the Merger Agreement (c) Grant of Irrevocable Proxy; Appointment or Proxy. (i) The Stockholder hereby irrevocably grants to, and appoints, Parent and ___________________________ and ______________________________, or either of them, in their respective capacities as officers or directors of Parent, and any individual who shall hereafter succeed to any such office or directorship of Parent, and each of them individually, the Stockholder's proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of the Stockholder, to vote the Securities, or grant a consent or approval in respect of the Securities, in favor of the various transactions contemplated by the Merger Agreement (the "TRANSACTIONS") and against any proposal relating to a takeover proposal. (ii) The Stockholder represents that any proxies heretofore given in respect of the Stockholder's Securities are not irrevocable, and that any such proxies are hereby revoked. (iii) The Stockholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. The Stockholder hereby affirms that the irrevocable proxy set forth in this Section 3(c) is given in connection with the execution of the Merger Agreement, and that such irrevocable proxy is given to secure the performance of the duties of the Stockholder under this Agreement. The Stockholder hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked. The Stockholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 212(e) of the DGCL. (d) No Solicitation. The Stockholder hereby agrees, in the capacity as a stockholder of the Company, that neither the Stockholder nor any affiliates, representatives or agents shall, directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Parent, Sub or any of their respective affiliates or representatives) concerning any proposal relating to a takeover proposal. The Stockholder will immediately cease any existing activities, discussions or negotiations with any parties conducted heretofore with 3 4 respect to any proposal relating to a takeover proposal. The Stockholder will immediately communicate to Parent the terms of any proposal, discussion, negotiation or inquiry (and will disclose any written materials received by the Stockholder in connection with such proposal, discussion, negotiation or inquiry) and the identity of the party making such proposal or inquiry which it may receive in respect of any such takeover proposal. Any action taken by the Company or any member of the Board of Directors of the Company in accordance with Section 5.2(b) of the Merger Agreement shall be deemed not to violate this Section 4(d). (e) Reasonable Efforts. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement. Each party shall promptly consult with the other and provide any necessary information and material with respect to all filings made by such party with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby. (f) Waiver of Appraisal Rights. The Stockholder hereby waives any rights of appraisal or rights to dissent from the Merger that it may have. 4. Representations and Warranties of the Stockholder. The Stockholder hereby represents and warrants to Parent and Sub as follows: (a) Ownership of Securities. The Stockholder is the record and Beneficial Owner of the Existing Securities, as set forth on Schedule I. On the date hereof, the Existing Securities constitute all of the Securities owned of record or Beneficially Owned by the Stockholder. The Stockholder has sole voting power and sole power to issue instructions with respect to the matters set forth in Sections 2 and 3 hereof, sole power of disposition, sole power to demand appraisal rights and sole power to agree to all of the matters set forth in this Agreement, in each case with respect to all of the Existing Securities with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. (b) Power; Binding Agreement. The Stockholder has the power and authority to enter into and perform all of the Stockholder's obligations under this Agreement. The execution, delivery and performance of this Agreement by the Stockholder will not violate any other agreement to which the Stockholder is a party including, without limitation, any voting agreement, proxy arrangement, pledge agreement, shareholders agreement or voting trust. This Agreement has been duly and validly executed and delivered by the Stockholder and constitutes a valid and binding agreement of the Stockholder, enforceable against the Stockholder in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which the Stockholder is a trustee, or any party to any other agreement or arrangement, whose consent is required for the 4 5 execution and delivery of this Agreement or the consummation by the Stockholder of the transactions contemplated hereby. (c) No Conflicts. Except for filings under the HSR Act, other applicable Antitrust Laws and the Exchange Act (i) no filing with, and no permit, authorization, consent or approval of, any Governmental Entity is necessary for the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby and the compliance by the Stockholder with the provisions hereof and (ii) none of the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby or compliance by the Stockholder with any of the provisions hereof, except in cases in which any conflict, breach, default or violation described below would not interfere with the ability of such Stockholder to perform such Stockholder's obligations hereunder, shall (A) conflict with or result in any breach of any organizational documents applicable to the Stockholder, (B) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, modification or acceleration) under, any of the terms, conditions or provisions of any note, loan agreement, bond, mortgage, indenture, license, contract, commitment, arrangement, understanding, agreement or other instrument or obligation of any kind to which the Stockholder is a party or by which the Stockholder or any of its properties or assets may be bound, or (C) violate any order, writ, injunction, decree, judgment, order, statute, rule or regulation applicable to the Stockholder or any of such Stockholder's properties or assets. (d) No Liens. Except as permitted by this Agreement, the Existing Securities and the certificates representing such securities are now, and at all times during the term hereof will be, held by the Stockholder, or by a nominee or custodian for the benefit of the Stockholder, free and clear of all Liens, proxies, voting trusts or agreements, understandings or arrangements or any other rights whatsoever, except for any such Liens or proxies arising hereunder. (e) No Finder's Fees. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial adviser's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Stockholder. (f) Reliance by Parent. The Stockholder understands and acknowledges that Parent is entering into, and causing Sub to enter into, the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. 5. Further Assurances. From time to time, at the other party's request and without further consideration, each party hereto shall execute and deliver such additional documents and take all such further lawful action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. 6. Stop Transfer. The Stockholder shall not request that the Company register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of 5 6 the Securities, unless such transfer is made in compliance with this Agreement. In the event of a stock dividend or distribution, or any change in the Common Stock by reason of any stock dividend, split-up, recapitalization, combination, exchange of shares or the like, the term "Securities" shall refer to and include the Securities as well as all such stock dividends and distributions and any shares into which or for which any and all of the Securities may be changed or exchanged. 7. Termination. This Agreement and Stockholder's obligation to tender provided herein shall terminate on the earlier of the payment for the Securities pursuant to the Offer and the termination of the Merger Agreement in accordance with its terms. 8. No Limitation. Nothing in this Agreement shall be construed to prohibit any officer or affiliate of the Stockholder who is or has designated a member of the Board of Directors of the Company from taking any action solely in his capacity as a member of the Board of Directors of the Company or from exercising his fiduciary duties as a member of such Board of Directors. 9. Miscellaneous. (a) Entire Agreement. This Agreement and the Merger Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. (b) Binding Agreement. This Agreement and the obligations hereunder shall attach to the Securities and shall be binding upon any person or entity to which legal or beneficial ownership of the Securities shall pass, whether by operation of law or otherwise, including, without limitation, the Stockholder's administrators or successors. Notwithstanding any transfer of Securities, the transferor shall remain liable for the performance of all obligations of the transferor under this Agreement. (c) Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, except that Sub may assign, in its sole discretion, any of or all its rights, interests and obligations under this Agreement to Parent or to any direct or indirect wholly owned subsidiary of Parent, but no such assignment shall relieve Sub and Parent of any of its obligations under this Agreement. This Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. (d) Amendments, Waivers, Etc. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by the parties hereto. (e) Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed 6 7 given if delivered personally, telecopied (which is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (i) if to Parent or Sub, to Symantec Corporation 10201 Torre Ave. Cupertino, CA 95014 Attention: Chief Financial Officer with copies to its counsel: Fenwick & West LLP Two Palo Alto Square Palo Alto, CA 94306 Fax: (415) 494-1417 Attention: Gordon K. Davidson, Esq. (ii) if to the Stockholder, to Quarterdeck Corporation 13160 Mindanao Way Marina del Rey, CA 90292 Attention: Chief Financial Officer with copies to its counsel: Schwartz & Associates Suite 3950 333 South Grand Avenue Los Angeles, California 90071 Facsimile: 213-621-0982 (f) Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. (g) Specific Performance. Each of the parties hereto recognizes and acknowledges that a breach by it of any covenants or agreements contained in this Agreement will cause the other party to sustain damages for which it would not have an adequate remedy at 7 8 law for money damages, and therefore in the event of any such breach the aggrieved party shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. (h) Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. (i) No Waiver. The failure of any party hereto to exercise any rights, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. (j) No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of, and shall not be enforceable by, any person or entity who or which is not a party hereto. (k) Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. (l) Waiver of Jury Trial. Each party hereto hereby waives any right to a trial by jury in connection with any action, suit or proceeding brought in connection with this Agreement. (m) Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. (n) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same agreement. 8 9 IN WITNESS WHEREOF, Parent, Sub and Stockholder have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above. PARENT: SYMANTEC CORPORATION By: ---------------------------- Name: ---------------------------- Title: ---------------------------- SUB: QUARTERDECK ACQUISITION CORPORATION By: ---------------------------- Name: ---------------------------- Title: ---------------------------- STOCKHOLDER: ----------------------------------- William H. Lane III 9 10 EXHIBIT I
SHARES OWNED OPTIONS HELD ------------ ------------ 15,000 270,000
EX-6 7 STOCKHOLDER AGREEMENT WITH HOWARD MORGAN 1 Exhibit 6 STOCKHOLDER AGREEMENT STOCKHOLDER AGREEMENT dated October ___, 1998, among SYMANTEC CORPORATION, a Delaware corporation ("PARENT"), QUARTEREDECK ACQUISITION CORPORATION, a Delaware corporation and a wholly owned Subsidiary of Parent ("SUB"), and Howard Morgan (the "STOCKHOLDER"). WHEREAS, concurrently with the execution and delivery of this Agreement, Parent, Sub and QUARTERDECK CORPORATION, a Delaware corporation (the "COMPANY"), have entered into an Agreement and Plan of Merger (as such agreement may hereafter be amended from time to time, the "MERGER AGREEMENT"), pursuant to which Sub will be merged with and into the Company (the "MERGER"); WHEREAS, in furtherance of the Merger, Parent and the Company desire that as soon as practicable (and not later than five (5) business days) after the announcement of the execution of the Merger Agreement, Sub shall commence a cash tender offer (the "OFFER") to purchase at the Offer Price all outstanding shares of Common Stock (each as defined in Section 1 hereof), including all of the Securities (as defined in Section 2 hereof) Beneficially Owned by the Stockholder; and WHEREAS, as an inducement and a condition to entering into the Merger Agreement, Parent has required that the Stockholder agree, and the Stockholder has agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: 1. Definitions. For purposes of this Agreement: (a) "BENEFICIALLY OWNED" or "BENEFICIAL OWNERSHIP" with respect to any securities shall mean having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a Person (as hereinafter defined) shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a "group" within the meaning of Section 13(d)(3) of the Exchange Act. (b) "COMMON STOCK" shall mean the Common Stock, $0.001 par value per share, of the Company. (c) "OFFER PRICE" shall mean cash in the amount of $_____ per share of Common Stock or, if greater, the price per share paid by Sub in the Offer. 2 (d) "PERSON" shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. (e) "SECURITIES" shall mean any shares of Common Stock Beneficially Owned by the Stockholder on the date hereof, as reflected on Exhibit I hereto (the "Existing Securities") or acquired by the Stockholder in any capacity after the date hereof and prior to the termination of this Agreement by means of purchase, dividend, distribution, exercise of options or other rights to acquire Common Stock or in any other way. (f) Capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Merger Agreement. 2. Tender of Shares. (a) In order to induce Parent and Sub to enter into the Merger Agreement, the Stockholder hereby agrees to validly tender the Securities (or cause the record owner of such Securities to validly tender such Securities), and not to withdraw such Securities (except following termination of this Agreement pursuant to Section 7 hereof), pursuant to and in accordance with the terms of the Offer, as soon as practicable after commencement of the Offer pursuant to Section 1.1 of the Merger Agreement and Rule 14d-2 under the Exchange Act (but in the case of Securities acquired after the date hereof, in no event later than two business days after such acquisition). The Stockholder hereby acknowledges and agrees that Parent's and Sub's obligation to accept for payment and pay for the Securities in the Offer, including the Securities Beneficially Owned by the Stockholder, is subject to the terms and conditions of the Offer. (b) The Stockholder hereby permits Parent and Sub to publish and disclose in the Offer Documents and, if approval of the Company's stockholders is required under applicable law, the Proxy Statement (including all documents and schedules filed with the SEC) its identity and ownership of the Securities and the nature of its commitments, arrangements and understandings under this Agreement. 3. Additional Agreements. (a) Voting Agreement. Until the termination of this Agreement pursuant to Section 7 hereof, the Stockholder shall, at any meeting of the stockholders of the Company, however called, or in connection with any written consent of the stockholders of the Company, vote (or cause to be voted) all Securities then held of record or Beneficially Owned by the Stockholder, (i) in favor of the Merger, the execution and delivery by the Company of the Merger Agreement and the approval of the terms thereof and each of the other actions contemplated by the Merger Agreement and this Agreement and any actions required in furtherance thereof and hereof; and (ii) against any proposal relating to a takeover proposal and against any action or agreement that would impede, frustrate, prevent or nullify this Agreement, or result in a breach in any respect of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or which would result in any of the conditions set forth in Exhibit A to the Merger Agreement or set forth in Article VII of the Merger Agreement not being fulfilled. 2 3 (b) No Inconsistent Arrangements. The Stockholder hereby covenants and agrees that, except as contemplated by this Agreement and the Merger Agreement, it shall not (i) transfer (which term shall include, without limitation, any sale, gift, pledge (other than a pledge which does not impair the Stockholder's ability to perform under this Agreement) or other disposition), or consent to any transfer of, any or all of the Securities or any interest therein, (ii) enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of the Securities or any interest therein, (iii) grant any proxy, power-of-attorney or other authorization in or with respect to the Securities, (iv) deposit the Securities into a voting trust or enter into a voting agreement or arrangement with respect to the Securities or (v) take any other action that would in any way restrict, limit or interfere with the performance of its obligations hereunder or the transactions contemplated hereby or by the Merger Agreement (c) Grant of Irrevocable Proxy; Appointment or Proxy. (i) The Stockholder hereby irrevocably grants to, and appoints, Parent and ___________________________ and ______________________________, or either of them, in their respective capacities as officers or directors of Parent, and any individual who shall hereafter succeed to any such office or directorship of Parent, and each of them individually, the Stockholder's proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of the Stockholder, to vote the Securities, or grant a consent or approval in respect of the Securities, in favor of the various transactions contemplated by the Merger Agreement (the "TRANSACTIONS") and against any proposal relating to a takeover proposal. (ii) The Stockholder represents that any proxies heretofore given in respect of the Stockholder's Securities are not irrevocable, and that any such proxies are hereby revoked. (iii) The Stockholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. The Stockholder hereby affirms that the irrevocable proxy set forth in this Section 3(c) is given in connection with the execution of the Merger Agreement, and that such irrevocable proxy is given to secure the performance of the duties of the Stockholder under this Agreement. The Stockholder hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked. The Stockholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 212(e) of the DGCL. (d) No Solicitation. The Stockholder hereby agrees, in the capacity as a stockholder of the Company, that neither the Stockholder nor any affiliates, representatives or agents shall, directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Parent, Sub or any of their respective affiliates or representatives) concerning any proposal relating to a takeover proposal. The Stockholder will immediately cease any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any proposal relating to a takeover proposal. The Stockholder will immediately 3 4 communicate to Parent the terms of any proposal, discussion, negotiation or inquiry (and will disclose any written materials received by the Stockholder in connection with such proposal, discussion, negotiation or inquiry) and the identity of the party making such proposal or inquiry which it may receive in respect of any such takeover proposal. Any action taken by the Company or any member of the Board of Directors of the Company in accordance with Section 5.2(b) of the Merger Agreement shall be deemed not to violate this Section 4(d). (e) Reasonable Efforts. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement. Each party shall promptly consult with the other and provide any necessary information and material with respect to all filings made by such party with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby. (f) Waiver of Appraisal Rights. The Stockholder hereby waives any rights of appraisal or rights to dissent from the Merger that it may have. 4. Representations and Warranties of the Stockholder. The Stockholder hereby represents and warrants to Parent and Sub as follows: (a) Ownership of Securities. The Stockholder is the record and Beneficial Owner of the Existing Securities, as set forth on Schedule I. On the date hereof, the Existing Securities constitute all of the Securities owned of record or Beneficially Owned by the Stockholder. The Stockholder has sole voting power and sole power to issue instructions with respect to the matters set forth in Sections 2 and 3 hereof, sole power of disposition, sole power to demand appraisal rights and sole power to agree to all of the matters set forth in this Agreement, in each case with respect to all of the Existing Securities with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. (b) Power; Binding Agreement. The Stockholder has the power and authority to enter into and perform all of the Stockholder's obligations under this Agreement. The execution, delivery and performance of this Agreement by the Stockholder will not violate any other agreement to which the Stockholder is a party including, without limitation, any voting agreement, proxy arrangement, pledge agreement, shareholders agreement or voting trust. This Agreement has been duly and validly executed and delivered by the Stockholder and constitutes a valid and binding agreement of the Stockholder, enforceable against the Stockholder in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which the Stockholder is a trustee, or any party to any other agreement or arrangement, whose consent is required for the execution and delivery of this Agreement or the consummation by the Stockholder of the transactions contemplated hereby. 4 5 (c) No Conflicts. Except for filings under the HSR Act, other applicable Antitrust Laws and the Exchange Act (i) no filing with, and no permit, authorization, consent or approval of, any Governmental Entity is necessary for the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby and the compliance by the Stockholder with the provisions hereof and (ii) none of the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby or compliance by the Stockholder with any of the provisions hereof, except in cases in which any conflict, breach, default or violation described below would not interfere with the ability of such Stockholder to perform such Stockholder's obligations hereunder, shall (A) conflict with or result in any breach of any organizational documents applicable to the Stockholder, (B) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, modification or acceleration) under, any of the terms, conditions or provisions of any note, loan agreement, bond, mortgage, indenture, license, contract, commitment, arrangement, understanding, agreement or other instrument or obligation of any kind to which the Stockholder is a party or by which the Stockholder or any of its properties or assets may be bound, or (C) violate any order, writ, injunction, decree, judgment, order, statute, rule or regulation applicable to the Stockholder or any of such Stockholder's properties or assets. (d) No Liens. Except as permitted by this Agreement, the Existing Securities and the certificates representing such securities are now, and at all times during the term hereof will be, held by the Stockholder, or by a nominee or custodian for the benefit of the Stockholder, free and clear of all Liens, proxies, voting trusts or agreements, understandings or arrangements or any other rights whatsoever, except for any such Liens or proxies arising hereunder. (e) No Finder's Fees. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial adviser's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Stockholder. (f) Reliance by Parent. The Stockholder understands and acknowledges that Parent is entering into, and causing Sub to enter into, the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. 5. Further Assurances. From time to time, at the other party's request and without further consideration, each party hereto shall execute and deliver such additional documents and take all such further lawful action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. 6. Stop Transfer. The Stockholder shall not request that the Company register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of the Securities, unless such transfer is made in compliance with this Agreement. In the event of a stock dividend or distribution, or any change in the Common Stock by reason of any stock dividend, split-up, recapitalization, combination, exchange of shares or the like, the term 5 6 "Securities" shall refer to and include the Securities as well as all such stock dividends and distributions and any shares into which or for which any and all of the Securities may be changed or exchanged. 7. Termination. This Agreement and Stockholder's obligation to tender provided herein shall terminate on the earlier of the payment for the Securities pursuant to the Offer and the termination of the Merger Agreement in accordance with its terms. 8. No Limitation. Nothing in this Agreement shall be construed to prohibit any officer or affiliate of the Stockholder who is or has designated a member of the Board of Directors of the Company from taking any action solely in his capacity as a member of the Board of Directors of the Company or from exercising his fiduciary duties as a member of such Board of Directors. 9. Miscellaneous. (a) Entire Agreement. This Agreement and the Merger Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. (b) Binding Agreement. This Agreement and the obligations hereunder shall attach to the Securities and shall be binding upon any person or entity to which legal or beneficial ownership of the Securities shall pass, whether by operation of law or otherwise, including, without limitation, the Stockholder's administrators or successors. Notwithstanding any transfer of Securities, the transferor shall remain liable for the performance of all obligations of the transferor under this Agreement. (c) Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, except that Sub may assign, in its sole discretion, any of or all its rights, interests and obligations under this Agreement to Parent or to any direct or indirect wholly owned subsidiary of Parent, but no such assignment shall relieve Sub and Parent of any of its obligations under this Agreement. This Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. (d) Amendments, Waivers, Etc. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by the parties hereto. (e) Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, telecopied (which is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): 6 7 (i) if to Parent or Sub, to Symantec Corporation 10201 Torre Ave. Cupertino, CA 95014 Attention: Chief Financial Officer with copies to its counsel: Fenwick & West LLP Two Palo Alto Square Palo Alto, CA 94306 Fax: (415) 494-1417 Attention: Gordon K. Davidson, Esq. (ii) if to the Stockholder, to Quarterdeck Corporation 13160 Mindanao Way Marina del Rey, CA 90292 Attention: Chief Financial Officer with copies to its counsel: Schwartz & Associates Suite 3950 333 South Grand Avenue Los Angeles, California 90071 Facsimile: 213-621-0982 (f) Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. (g) Specific Performance. Each of the parties hereto recognizes and acknowledges that a breach by it of any covenants or agreements contained in this Agreement will cause the other party to sustain damages for which it would not have an adequate remedy at law for money damages, and therefore in the event of any such breach the aggrieved party shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. 7 8 (h) Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. (i) No Waiver. The failure of any party hereto to exercise any rights, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. (j) No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of, and shall not be enforceable by, any person or entity who or which is not a party hereto. (k) Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. (l) Waiver of Jury Trial. Each party hereto hereby waives any right to a trial by jury in connection with any action, suit or proceeding brought in connection with this Agreement. (m) Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. (n) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same agreement. 8 9 IN WITNESS WHEREOF, Parent, Sub and Stockholder have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above. PARENT: SYMANTEC CORPORATION By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- SUB: QUARTERDECK ACQUISITION CORPORATION By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- STOCKHOLDER: ----------------------------------------- Howard Morgan 9 10 EXHIBIT I
SHARES OWNED OPTIONS HELD ------------ ------------ 129,426 262,500
EX-7 8 STOCKHOLDER AGREEMENT WITH FRANK GREICO 1 Exhibit 7 STOCKHOLDER AGREEMENT STOCKHOLDER AGREEMENT dated October ___, 1998, among SYMANTEC CORPORATION, a Delaware corporation ("PARENT"), QUARTERDECK ACQUISITION CORPORATION, a Delaware corporation and a wholly owned Subsidiary of Parent ("Sub"), and Frank Greico (the "STOCKHOLDER"). WHEREAS, concurrently with the execution and delivery of this Agreement, Parent, Sub and QUARTERDECK CORPORATION, a Delaware corporation (the "COMPANY"), have entered into an Agreement and Plan of Merger (as such agreement may hereafter be amended from time to time, the "MERGER AGREEMENT"), pursuant to which Sub will be merged with and into the Company (the "MERGER"); WHEREAS, in furtherance of the Merger, Parent and the Company desire that as soon as practicable (and not later than five (5) business days) after the announcement of the execution of the Merger Agreement, Sub shall commence a cash tender offer (the "OFFER") to purchase at the Offer Price all outstanding shares of Common Stock (each as defined in Section 1 hereof), including all of the Securities (as defined in Section 2 hereof) Beneficially Owned by the Stockholder; and WHEREAS, as an inducement and a condition to entering into the Merger Agreement, Parent has required that the Stockholder agree, and the Stockholder has agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: 1. Definitions. For purposes of this Agreement: (a) "BENEFICIALLY OWNED" or "BENEFICIAL OWNERSHIP" with respect to any securities shall mean having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a Person (as hereinafter defined) shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a "group" within the meaning of Section 13(d)(3) of the Exchange Act. (b) "COMMON STOCK" shall mean the Common Stock, $0.001 par value per share, of the Company. (c) "OFFER PRICE" shall mean cash in the amount of $_____ per share of Common Stock or, if greater, the price per share paid by Sub in the Offer. 2 (d) "PERSON" shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. (e) "SECURITIES" shall mean any shares of Common Stock Beneficially Owned by the Stockholder on the date hereof, as reflected on Exhibit I hereto (the "Existing Securities") or acquired by the Stockholder in any capacity after the date hereof and prior to the termination of this Agreement by means of purchase, dividend, distribution, exercise of options or other rights to acquire Common Stock or in any other way. (f) Capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Merger Agreement. 2. Tender of Shares. (a) In order to induce Parent and Sub to enter into the Merger Agreement, the Stockholder hereby agrees to validly tender the Securities (or cause the record owner of such Securities to validly tender such Securities), and not to withdraw such Securities (except following termination of this Agreement pursuant to Section 7 hereof), pursuant to and in accordance with the terms of the Offer, as soon as practicable after commencement of the Offer pursuant to Section 1.1 of the Merger Agreement and Rule 14d-2 under the Exchange Act (but in the case of Securities acquired after the date hereof, in no event later than two business days after such acquisition). The Stockholder hereby acknowledges and agrees that Parent's and Sub's obligation to accept for payment and pay for the Securities in the Offer, including the Securities Beneficially Owned by the Stockholder, is subject to the terms and conditions of the Offer. (b) The Stockholder hereby permits Parent and Sub to publish and disclose in the Offer Documents and, if approval of the Company's stockholders is required under applicable law, the Proxy Statement (including all documents and schedules filed with the SEC) its identity and ownership of the Securities and the nature of its commitments, arrangements and understandings under this Agreement. 3. Additional Agreements. (a) Voting Agreement. Until the termination of this Agreement pursuant to Section 7 hereof, the Stockholder shall, at any meeting of the stockholders of the Company, however called, or in connection with any written consent of the stockholders of the Company, vote (or cause to be voted) all Securities then held of record or Beneficially Owned by the Stockholder, (i) in favor of the Merger, the execution and delivery by the Company of the Merger Agreement and the approval of the terms thereof and each of the other actions contemplated by the Merger Agreement and this Agreement and any actions required in furtherance thereof and hereof; and (ii) against any proposal relating to a takeover proposal and against any action or agreement that would impede, frustrate, prevent or nullify this Agreement, or result in a breach in any respect of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or which would result in any of the conditions set forth in Exhibit A to the Merger Agreement or set forth in Article VII of the Merger Agreement not being fulfilled. 2 3 (b) No Inconsistent Arrangements. The Stockholder hereby covenants and agrees that, except as contemplated by this Agreement and the Merger Agreement, it shall not (i) transfer (which term shall include, without limitation, any sale, gift, pledge (other than a pledge which does not impair the Stockholder's ability to perform under this Agreement) or other disposition), or consent to any transfer of, any or all of the Securities or any interest therein, (ii) enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of the Securities or any interest therein, (iii) grant any proxy, power-of-attorney or other authorization in or with respect to the Securities, (iv) deposit the Securities into a voting trust or enter into a voting agreement or arrangement with respect to the Securities or (v) take any other action that would in any way restrict, limit or interfere with the performance of its obligations hereunder or the transactions contemplated hereby or by the Merger Agreement (c) Grant of Irrevocable Proxy; Appointment or Proxy. (i) The Stockholder hereby irrevocably grants to, and appoints, Parent and ___________________________ and ______________________________, or either of them, in their respective capacities as officers or directors of Parent, and any individual who shall hereafter succeed to any such office or directorship of Parent, and each of them individually, the Stockholder's proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of the Stockholder, to vote the Securities, or grant a consent or approval in respect of the Securities, in favor of the various transactions contemplated by the Merger Agreement (the "TRANSACTIONS") and against any proposal relating to a takeover proposal. (ii) The Stockholder represents that any proxies heretofore given in respect of the Stockholder's Securities are not irrevocable, and that any such proxies are hereby revoked. (iii) The Stockholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. The Stockholder hereby affirms that the irrevocable proxy set forth in this Section 3(c) is given in connection with the execution of the Merger Agreement, and that such irrevocable proxy is given to secure the performance of the duties of the Stockholder under this Agreement. The Stockholder hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked. The Stockholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 212(e) of the DGCL. (d) No Solicitation. The Stockholder hereby agrees, in the capacity as a stockholder of the Company, that neither the Stockholder nor any affiliates, representatives or agents shall, directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Parent, Sub or any of their respective affiliates or representatives) concerning any proposal relating to a takeover proposal. The Stockholder will immediately cease any existing activities, discussions or negotiations with any parties conducted heretofore with 3 4 respect to any proposal relating to a takeover proposal. The Stockholder will immediately communicate to Parent the terms of any proposal, discussion, negotiation or inquiry (and will disclose any written materials received by the Stockholder in connection with such proposal, discussion, negotiation or inquiry) and the identity of the party making such proposal or inquiry which it may receive in respect of any such takeover proposal. Any action taken by the Company or any member of the Board of Directors of the Company in accordance with Section 5.2(b) of the Merger Agreement shall be deemed not to violate this Section 4(d). (e) Reasonable Efforts. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement. Each party shall promptly consult with the other and provide any necessary information and material with respect to all filings made by such party with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby. (f) Waiver of Appraisal Rights. The Stockholder hereby waives any rights of appraisal or rights to dissent from the Merger that it may have. 4. Representations and Warranties of the Stockholder. The Stockholder hereby represents and warrants to Parent and Sub as follows: (a) Ownership of Securities. The Stockholder is the record and Beneficial Owner of the Existing Securities, as set forth on Schedule I. On the date hereof, the Existing Securities constitute all of the Securities owned of record or Beneficially Owned by the Stockholder. The Stockholder has sole voting power and sole power to issue instructions with respect to the matters set forth in Sections 2 and 3 hereof, sole power of disposition, sole power to demand appraisal rights and sole power to agree to all of the matters set forth in this Agreement, in each case with respect to all of the Existing Securities with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. (b) Power; Binding Agreement. The Stockholder has the power and authority to enter into and perform all of the Stockholder's obligations under this Agreement. The execution, delivery and performance of this Agreement by the Stockholder will not violate any other agreement to which the Stockholder is a party including, without limitation, any voting agreement, proxy arrangement, pledge agreement, shareholders agreement or voting trust. This Agreement has been duly and validly executed and delivered by the Stockholder and constitutes a valid and binding agreement of the Stockholder, enforceable against the Stockholder in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which the Stockholder is a trustee, or any party to any other agreement or arrangement, whose consent is required for the 4 5 execution and delivery of this Agreement or the consummation by the Stockholder of the transactions contemplated hereby. (c) No Conflicts. Except for filings under the HSR Act, other applicable Antitrust Laws and the Exchange Act (i) no filing with, and no permit, authorization, consent or approval of, any Governmental Entity is necessary for the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby and the compliance by the Stockholder with the provisions hereof and (ii) none of the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby or compliance by the Stockholder with any of the provisions hereof, except in cases in which any conflict, breach, default or violation described below would not interfere with the ability of such Stockholder to perform such Stockholder's obligations hereunder, shall (A) conflict with or result in any breach of any organizational documents applicable to the Stockholder, (B) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, modification or acceleration) under, any of the terms, conditions or provisions of any note, loan agreement, bond, mortgage, indenture, license, contract, commitment, arrangement, understanding, agreement or other instrument or obligation of any kind to which the Stockholder is a party or by which the Stockholder or any of its properties or assets may be bound, or (C) violate any order, writ, injunction, decree, judgment, order, statute, rule or regulation applicable to the Stockholder or any of such Stockholder's properties or assets. (d) No Liens. Except as permitted by this Agreement, the Existing Securities and the certificates representing such securities are now, and at all times during the term hereof will be, held by the Stockholder, or by a nominee or custodian for the benefit of the Stockholder, free and clear of all Liens, proxies, voting trusts or agreements, understandings or arrangements or any other rights whatsoever, except for any such Liens or proxies arising hereunder. (e) No Finder's Fees. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial adviser's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Stockholder. (f) Reliance by Parent. The Stockholder understands and acknowledges that Parent is entering into, and causing Sub to enter into, the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. 5. Further Assurances. From time to time, at the other party's request and without further consideration, each party hereto shall execute and deliver such additional documents and take all such further lawful action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. 6. Stop Transfer. The Stockholder shall not request that the Company register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of 5 6 the Securities, unless such transfer is made in compliance with this Agreement. In the event of a stock dividend or distribution, or any change in the Common Stock by reason of any stock dividend, split-up, recapitalization, combination, exchange of shares or the like, the term "Securities" shall refer to and include the Securities as well as all such stock dividends and distributions and any shares into which or for which any and all of the Securities may be changed or exchanged. 7. Termination. This Agreement and Stockholder's obligation to tender provided herein shall terminate on the earlier of the payment for the Securities pursuant to the Offer and the termination of the Merger Agreement in accordance with its terms. 8. No Limitation. Nothing in this Agreement shall be construed to prohibit any officer or affiliate of the Stockholder who is or has designated a member of the Board of Directors of the Company from taking any action solely in his capacity as a member of the Board of Directors of the Company or from exercising his fiduciary duties as a member of such Board of Directors. 9. Miscellaneous. (a) Entire Agreement. This Agreement and the Merger Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. (b) Binding Agreement. This Agreement and the obligations hereunder shall attach to the Securities and shall be binding upon any person or entity to which legal or beneficial ownership of the Securities shall pass, whether by operation of law or otherwise, including, without limitation, the Stockholder's administrators or successors. Notwithstanding any transfer of Securities, the transferor shall remain liable for the performance of all obligations of the transferor under this Agreement. (c) Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, except that Sub may assign, in its sole discretion, any of or all its rights, interests and obligations under this Agreement to Parent or to any direct or indirect wholly owned subsidiary of Parent, but no such assignment shall relieve Sub and Parent of any of its obligations under this Agreement. This Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. (d) Amendments, Waivers, Etc. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by the parties hereto. (e) Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, 6 7 telecopied (which is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (i) if to Parent or Sub, to Symantec Corporation 10201 Torre Ave. Cupertino, CA 95014 Attention: Chief Financial Officer with copies to its counsel: Fenwick & West LLP Two Palo Alto Square Palo Alto, CA 94306 Fax: (415) 494-1417 Attention: Gordon K. Davidson, Esq. (ii) if to the Stockholder, to Quarterdeck Corporation 13160 Mindanao Way Marina del Rey, CA 90292 Attention: Chief Financial Officer with copies to its counsel: Schwartz & Associates Suite 3950 333 South Grand Avenue Los Angeles, California 90071 Facsimile: 213-621-0982 (f) Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. (g) Specific Performance. Each of the parties hereto recognizes and acknowledges that a breach by it of any covenants or agreements contained in this Agreement will cause the other party to sustain damages for which it would not have an adequate remedy at 7 8 law for money damages, and therefore in the event of any such breach the aggrieved party shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. (h) Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. (i) No Waiver. The failure of any party hereto to exercise any rights, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. (j) No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of, and shall not be enforceable by, any person or entity who or which is not a party hereto. (k) Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. (l) Waiver of Jury Trial. Each party hereto hereby waives any right to a trial by jury in connection with any action, suit or proceeding brought in connection with this Agreement. (m) Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. (n) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same agreement. 8 9 IN WITNESS WHEREOF, Parent, Sub and Stockholder have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above. PARENT: SYMANTEC CORPORATION By: --------------------------------- Name: ------------------------------- Title: ------------------------------ SUB: QUARTERDECK ACQUISITION CORPORATION By: --------------------------------- Name: ------------------------------- Title: ------------------------------ STOCKHOLDER: ------------------------------------ Frank Greico 9 10 EXHIBIT I SHARES OWNED OPTIONS HELD ------------ ------------ 7,000 106,250 EX-8 9 STOCKHOLDER AGREEMENT WITH JOYCE WRENN 1 Exhibit 8 STOCKHOLDER AGREEMENT STOCKHOLDER AGREEMENT dated October ___, 1998, among SYMANTEC CORPORATION, a Delaware corporation ("PARENT"), QUARTERDECK ACQUISITION CORPORATION, a Delaware corporation and a wholly owned Subsidiary of Parent ("SUB"), and Joyce M. Wrenn (the "STOCKHOLDER"). WHEREAS, concurrently with the execution and delivery of this Agreement, Parent, Sub and QUARTERDECK CORPORATION, a Delaware corporation (the "COMPANY"), have entered into an Agreement and Plan of Merger (as such agreement may hereafter be amended from time to time, the "MERGER Agreement"), pursuant to which Sub will be merged with and into the Company (the "MERGER"); WHEREAS, in furtherance of the Merger, Parent and the Company desire that as soon as practicable (and not later than five (5) business days) after the announcement of the execution of the Merger Agreement, Sub shall commence a cash tender offer (the "OFFER") to purchase at the Offer Price all outstanding shares of Common Stock (each as defined in Section 1 hereof), including all of the Securities (as defined in Section 2 hereof) Beneficially Owned by the Stockholder; and WHEREAS, as an inducement and a condition to entering into the Merger Agreement, Parent has required that the Stockholder agree, and the Stockholder has agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: 1. Definitions. For purposes of this Agreement: (a) "BENEFICIALLY OWNED" or "BENEFICIAL OWNERSHIP" with respect to any securities shall mean having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a Person (as hereinafter defined) shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a "group" within the meaning of Section 13(d)(3) of the Exchange Act. (b) "COMMON STOCK" shall mean the Common Stock, $0.001 par value per share, of the Company. (c) "OFFER PRICE" shall mean cash in the amount of $_____ per share of Common Stock or, if greater, the price per share paid by Sub in the Offer. 2 (d) "PERSON" shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. (e) "SECURITIES" shall mean any shares of Common Stock Beneficially Owned by the Stockholder on the date hereof, as reflected on Exhibit I hereto (the "Existing Securities") or acquired by the Stockholder in any capacity after the date hereof and prior to the termination of this Agreement by means of purchase, dividend, distribution, exercise of options or other rights to acquire Common Stock or in any other way. (f) Capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Merger Agreement. 2. Tender of Shares. (a) In order to induce Parent and Sub to enter into the Merger Agreement, the Stockholder hereby agrees to validly tender the Securities (or cause the record owner of such Securities to validly tender such Securities), and not to withdraw such Securities (except following termination of this Agreement pursuant to Section 7 hereof), pursuant to and in accordance with the terms of the Offer, as soon as practicable after commencement of the Offer pursuant to Section 1.1 of the Merger Agreement and Rule 14d-2 under the Exchange Act (but in the case of Securities acquired after the date hereof, in no event later than two business days after such acquisition). The Stockholder hereby acknowledges and agrees that Parent's and Sub's obligation to accept for payment and pay for the Securities in the Offer, including the Securities Beneficially Owned by the Stockholder, is subject to the terms and conditions of the Offer. (b) The Stockholder hereby permits Parent and Sub to publish and disclose in the Offer Documents and, if approval of the Company's stockholders is required under applicable law, the Proxy Statement (including all documents and schedules filed with the SEC) its identity and ownership of the Securities and the nature of its commitments, arrangements and understandings under this Agreement. 3. Additional Agreements. (a) Voting Agreement. Until the termination of this Agreement pursuant to Section 7 hereof, the Stockholder shall, at any meeting of the stockholders of the Company, however called, or in connection with any written consent of the stockholders of the Company, vote (or cause to be voted) all Securities then held of record or Beneficially Owned by the Stockholder, (i) in favor of the Merger, the execution and delivery by the Company of the Merger Agreement and the approval of the terms thereof and each of the other actions contemplated by the Merger Agreement and this Agreement and any actions required in furtherance thereof and hereof; and (ii) against any proposal relating to a takeover proposal and against any action or agreement that would impede, frustrate, prevent or nullify this Agreement, or result in a breach in any respect of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or which would result in any of the conditions set forth in Exhibit A to the Merger Agreement or set forth in Article VII of the Merger Agreement not being fulfilled. 2 3 (b) No Inconsistent Arrangements. The Stockholder hereby covenants and agrees that, except as contemplated by this Agreement and the Merger Agreement, it shall not (i) transfer (which term shall include, without limitation, any sale, gift, pledge (other than a pledge which does not impair the Stockholder's ability to perform under this Agreement) or other disposition), or consent to any transfer of, any or all of the Securities or any interest therein, (ii) enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of the Securities or any interest therein, (iii) grant any proxy, power-of-attorney or other authorization in or with respect to the Securities, (iv) deposit the Securities into a voting trust or enter into a voting agreement or arrangement with respect to the Securities or (v) take any other action that would in any way restrict, limit or interfere with the performance of its obligations hereunder or the transactions contemplated hereby or by the Merger Agreement (c) Grant of Irrevocable Proxy; Appointment or Proxy. (i) The Stockholder hereby irrevocably grants to, and appoints, Parent and ___________________________ and ______________________________, or either of them, in their respective capacities as officers or directors of Parent, and any individual who shall hereafter succeed to any such office or directorship of Parent, and each of them individually, the Stockholder's proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of the Stockholder, to vote the Securities, or grant a consent or approval in respect of the Securities, in favor of the various transactions contemplated by the Merger Agreement (the "TRANSACTIONS") and against any proposal relating to a takeover proposal. (ii) The Stockholder represents that any proxies heretofore given in respect of the Stockholder's Securities are not irrevocable, and that any such proxies are hereby revoked. (iii) The Stockholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. The Stockholder hereby affirms that the irrevocable proxy set forth in this Section 3(c) is given in connection with the execution of the Merger Agreement, and that such irrevocable proxy is given to secure the performance of the duties of the Stockholder under this Agreement. The Stockholder hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked. The Stockholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 212(e) of the DGCL. (d) No Solicitation. The Stockholder hereby agrees, in the capacity as a stockholder of the Company, that neither the Stockholder nor any affiliates, representatives or agents shall, directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Parent, Sub or any of their respective affiliates or representatives) concerning any proposal relating to a takeover proposal. The Stockholder will immediately cease any existing activities, discussions or negotiations with any parties conducted heretofore with 3 4 respect to any proposal relating to a takeover proposal. The Stockholder will immediately communicate to Parent the terms of any proposal, discussion, negotiation or inquiry (and will disclose any written materials received by the Stockholder in connection with such proposal, discussion, negotiation or inquiry) and the identity of the party making such proposal or inquiry which it may receive in respect of any such takeover proposal. Any action taken by the Company or any member of the Board of Directors of the Company in accordance with Section 5.2(b) of the Merger Agreement shall be deemed not to violate this Section 4(d). (e) Reasonable Efforts. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement. Each party shall promptly consult with the other and provide any necessary information and material with respect to all filings made by such party with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby. (f) Waiver of Appraisal Rights. The Stockholder hereby waives any rights of appraisal or rights to dissent from the Merger that it may have. 4. Representations and Warranties of the Stockholder. The Stockholder hereby represents and warrants to Parent and Sub as follows: (a) Ownership of Securities. The Stockholder is the record and Beneficial Owner of the Existing Securities, as set forth on Schedule I. On the date hereof, the Existing Securities constitute all of the Securities owned of record or Beneficially Owned by the Stockholder. The Stockholder has sole voting power and sole power to issue instructions with respect to the matters set forth in Sections 2 and 3 hereof, sole power of disposition, sole power to demand appraisal rights and sole power to agree to all of the matters set forth in this Agreement, in each case with respect to all of the Existing Securities with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. (b) Power; Binding Agreement. The Stockholder has the power and authority to enter into and perform all of the Stockholder's obligations under this Agreement. The execution, delivery and performance of this Agreement by the Stockholder will not violate any other agreement to which the Stockholder is a party including, without limitation, any voting agreement, proxy arrangement, pledge agreement, shareholders agreement or voting trust. This Agreement has been duly and validly executed and delivered by the Stockholder and constitutes a valid and binding agreement of the Stockholder, enforceable against the Stockholder in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which the Stockholder is a trustee, or any party to any other agreement or arrangement, whose consent is required for the 4 5 execution and delivery of this Agreement or the consummation by the Stockholder of the transactions contemplated hereby. (c) No Conflicts. Except for filings under the HSR Act, other applicable Antitrust Laws and the Exchange Act (i) no filing with, and no permit, authorization, consent or approval of, any Governmental Entity is necessary for the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby and the compliance by the Stockholder with the provisions hereof and (ii) none of the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby or compliance by the Stockholder with any of the provisions hereof, except in cases in which any conflict, breach, default or violation described below would not interfere with the ability of such Stockholder to perform such Stockholder's obligations hereunder, shall (A) conflict with or result in any breach of any organizational documents applicable to the Stockholder, (B) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, modification or acceleration) under, any of the terms, conditions or provisions of any note, loan agreement, bond, mortgage, indenture, license, contract, commitment, arrangement, understanding, agreement or other instrument or obligation of any kind to which the Stockholder is a party or by which the Stockholder or any of its properties or assets may be bound, or (C) violate any order, writ, injunction, decree, judgment, order, statute, rule or regulation applicable to the Stockholder or any of such Stockholder's properties or assets. (d) No Liens. Except as permitted by this Agreement, the Existing Securities and the certificates representing such securities are now, and at all times during the term hereof will be, held by the Stockholder, or by a nominee or custodian for the benefit of the Stockholder, free and clear of all Liens, proxies, voting trusts or agreements, understandings or arrangements or any other rights whatsoever, except for any such Liens or proxies arising hereunder. (e) No Finder's Fees. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial adviser's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Stockholder. (f) Reliance by Parent. The Stockholder understands and acknowledges that Parent is entering into, and causing Sub to enter into, the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. 5. Further Assurances. From time to time, at the other party's request and without further consideration, each party hereto shall execute and deliver such additional documents and take all such further lawful action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. 6. Stop Transfer. The Stockholder shall not request that the Company register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of 5 6 the Securities, unless such transfer is made in compliance with this Agreement. In the event of a stock dividend or distribution, or any change in the Common Stock by reason of any stock dividend, split-up, recapitalization, combination, exchange of shares or the like, the term "Securities" shall refer to and include the Securities as well as all such stock dividends and distributions and any shares into which or for which any and all of the Securities may be changed or exchanged. 7. Termination. This Agreement and Stockholder's obligation to tender provided herein shall terminate on the earlier of the payment for the Securities pursuant to the Offer and the termination of the Merger Agreement in accordance with its terms. 8. No Limitation. Nothing in this Agreement shall be construed to prohibit any officer or affiliate of the Stockholder who is or has designated a member of the Board of Directors of the Company from taking any action solely in his capacity as a member of the Board of Directors of the Company or from exercising his fiduciary duties as a member of such Board of Directors. 9. Miscellaneous. (a) Entire Agreement. This Agreement and the Merger Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. (b) Binding Agreement. This Agreement and the obligations hereunder shall attach to the Securities and shall be binding upon any person or entity to which legal or beneficial ownership of the Securities shall pass, whether by operation of law or otherwise, including, without limitation, the Stockholder's administrators or successors. Notwithstanding any transfer of Securities, the transferor shall remain liable for the performance of all obligations of the transferor under this Agreement. (c) Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, except that Sub may assign, in its sole discretion, any of or all its rights, interests and obligations under this Agreement to Parent or to any direct or indirect wholly owned subsidiary of Parent, but no such assignment shall relieve Sub and Parent of any of its obligations under this Agreement. This Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. (d) Amendments, Waivers, Etc. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by the parties hereto. (e) Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, 6 7 telecopied (which is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (i) if to Parent or Sub, to Symantec Corporation 10201 Torre Ave. Cupertino, CA 95014 Attention: Chief Financial Officer with copies to its counsel: Fenwick & West LLP Two Palo Alto Square Palo Alto, CA 94306 Fax: (415) 494-1417 Attention: Gordon K. Davidson, Esq. (ii) if to the Stockholder, to Quarterdeck Corporation 13160 Mindanao Way Marina del Rey, CA 90292 Attention: Chief Financial Officer with copies to its counsel: Schwartz & Associates Suite 3950 333 South Grand Avenue Los Angeles, California 90071 Facsimile: 213-621-0982 (f) Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. (g) Specific Performance. Each of the parties hereto recognizes and acknowledges that a breach by it of any covenants or agreements contained in this Agreement will cause the other party to sustain damages for which it would not have an adequate remedy at 7 8 law for money damages, and therefore in the event of any such breach the aggrieved party shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. (h) Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. (i) No Waiver. The failure of any party hereto to exercise any rights, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. (j) No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of, and shall not be enforceable by, any person or entity who or which is not a party hereto. (k) Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. (l) Waiver of Jury Trial. Each party hereto hereby waives any right to a trial by jury in connection with any action, suit or proceeding brought in connection with this Agreement. (m) Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. (n) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same agreement. 8 9 IN WITNESS WHEREOF, Parent, Sub and Stockholder have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above. PARENT: SYMANTEC CORPORATION By: Name: Title: SUB: QUARTERDECK ACQUISITION CORPORATION By: Name: Title: STOCKHOLDER: Joyce M. Wrenn 9 10 EXHIBIT I SHARES OWNED OPTIONS HELD ------------ ------------ 0 100,000 EX-9 10 STOCKHOLDER AGREEMENT WITH SUZANNE DICKSON 1 Exhibit 9 STOCKHOLDER AGREEMENT STOCKHOLDER AGREEMENT dated October ___, 1998, among SYMANTEC CORPORATION, a Delaware corporation ("PARENT"), QUARTERDECK ACQUISITION CORPORATION, a Delaware corporation and a wholly owned Subsidiary of Parent ("Sub"), and Suzanne Dickson (the "STOCKHOLDER"). WHEREAS, concurrently with the execution and delivery of this Agreement, Parent, Sub and QUARTERDECK CORPORATION, a Delaware corporation (the "COMPANY"), have entered into an Agreement and Plan of Merger (as such agreement may hereafter be amended from time to time, the "MERGER AGREEMENT"), pursuant to which Sub will be merged with and into the Company (the "MERGER"); WHEREAS, in furtherance of the Merger, Parent and the Company desire that as soon as practicable (and not later than five (5) business days) after the announcement of the execution of the Merger Agreement, Sub shall commence a cash tender offer (the "OFFER") to purchase at the Offer Price all outstanding shares of Common Stock (each as defined in Section 1 hereof), including all of the Securities (as defined in Section 2 hereof) Beneficially Owned by the Stockholder; and WHEREAS, as an inducement and a condition to entering into the Merger Agreement, Parent has required that the Stockholder agree, and the Stockholder has agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: 1. Definitions. For purposes of this Agreement: (a) "BENEFICIALLY OWNED" or "BENEFICIAL OWNERSHIP" with respect to any securities shall mean having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a Person (as hereinafter defined) shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a "group" within the meaning of Section 13(d)(3) of the Exchange Act. (b) "COMMON STOCK" shall mean the Common Stock, $0.001 par value per share, of the Company. (c) "OFFER PRICE" shall mean cash in the amount of $_____ per share of Common Stock or, if greater, the price per share paid by Sub in the Offer. 2 (d) "PERSON" shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. (e) "SECURITIES" shall mean any shares of Common Stock Beneficially Owned by the Stockholder on the date hereof, as reflected on Exhibit I hereto (the "Existing Securities") or acquired by the Stockholder in any capacity after the date hereof and prior to the termination of this Agreement by means of purchase, dividend, distribution, exercise of options or other rights to acquire Common Stock or in any other way. (f) Capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Merger Agreement. 2. Tender of Shares. (a) In order to induce Parent and Sub to enter into the Merger Agreement, the Stockholder hereby agrees to validly tender the Securities (or cause the record owner of such Securities to validly tender such Securities), and not to withdraw such Securities (except following termination of this Agreement pursuant to Section 7 hereof), pursuant to and in accordance with the terms of the Offer, as soon as practicable after commencement of the Offer pursuant to Section 1.1 of the Merger Agreement and Rule 14d-2 under the Exchange Act (but in the case of Securities acquired after the date hereof, in no event later than two business days after such acquisition). The Stockholder hereby acknowledges and agrees that Parent's and Sub's obligation to accept for payment and pay for the Securities in the Offer, including the Securities Beneficially Owned by the Stockholder, is subject to the terms and conditions of the Offer. (b) The Stockholder hereby permits Parent and Sub to publish and disclose in the Offer Documents and, if approval of the Company's stockholders is required under applicable law, the Proxy Statement (including all documents and schedules filed with the SEC) its identity and ownership of the Securities and the nature of its commitments, arrangements and understandings under this Agreement. 3. Additional Agreements. (a) Voting Agreement. Until the termination of this Agreement pursuant to Section 7 hereof, the Stockholder shall, at any meeting of the stockholders of the Company, however called, or in connection with any written consent of the stockholders of the Company, vote (or cause to be voted) all Securities then held of record or Beneficially Owned by the Stockholder, (i) in favor of the Merger, the execution and delivery by the Company of the Merger Agreement and the approval of the terms thereof and each of the other actions contemplated by the Merger Agreement and this Agreement and any actions required in furtherance thereof and hereof; and (ii) against any proposal relating to a takeover proposal and against any action or agreement that would impede, frustrate, prevent or nullify this Agreement, or result in a breach in any respect of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or which would result in any of the conditions set forth in Exhibit A to the Merger Agreement or set forth in Article VII of the Merger Agreement not being fulfilled. 2 3 (b) No Inconsistent Arrangements. The Stockholder hereby covenants and agrees that, except as contemplated by this Agreement and the Merger Agreement, it shall not (i) transfer (which term shall include, without limitation, any sale, gift, pledge (other than a pledge which does not impair the Stockholder's ability to perform under this Agreement) or other disposition), or consent to any transfer of, any or all of the Securities or any interest therein, (ii) enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of the Securities or any interest therein, (iii) grant any proxy, power-of-attorney or other authorization in or with respect to the Securities, (iv) deposit the Securities into a voting trust or enter into a voting agreement or arrangement with respect to the Securities or (v) take any other action that would in any way restrict, limit or interfere with the performance of its obligations hereunder or the transactions contemplated hereby or by the Merger Agreement (c) Grant of Irrevocable Proxy; Appointment or Proxy. (i) The Stockholder hereby irrevocably grants to, and appoints, Parent and ___________________________ and ______________________________, or either of them, in their respective capacities as officers or directors of Parent, and any individual who shall hereafter succeed to any such office or directorship of Parent, and each of them individually, the Stockholder's proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of the Stockholder, to vote the Securities, or grant a consent or approval in respect of the Securities, in favor of the various transactions contemplated by the Merger Agreement (the "TRANSACTIONS") and against any proposal relating to a takeover proposal. (ii) The Stockholder represents that any proxies heretofore given in respect of the Stockholder's Securities are not irrevocable, and that any such proxies are hereby revoked. (iii) The Stockholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. The Stockholder hereby affirms that the irrevocable proxy set forth in this Section 3(c) is given in connection with the execution of the Merger Agreement, and that such irrevocable proxy is given to secure the performance of the duties of the Stockholder under this Agreement. The Stockholder hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked. The Stockholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 212(e) of the DGCL. (d) No Solicitation. The Stockholder hereby agrees, in the capacity as a stockholder of the Company, that neither the Stockholder nor any affiliates, representatives or agents shall, directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Parent, Sub or any of their respective affiliates or representatives) concerning any proposal relating to a takeover proposal. The Stockholder will immediately cease any existing activities, discussions or negotiations with any parties conducted heretofore with 3 4 respect to any proposal relating to a takeover proposal. The Stockholder will immediately communicate to Parent the terms of any proposal, discussion, negotiation or inquiry (and will disclose any written materials received by the Stockholder in connection with such proposal, discussion, negotiation or inquiry) and the identity of the party making such proposal or inquiry which it may receive in respect of any such takeover proposal. Any action taken by the Company or any member of the Board of Directors of the Company in accordance with Section 5.2(b) of the Merger Agreement shall be deemed not to violate this Section 4(d). (e) Reasonable Efforts. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement. Each party shall promptly consult with the other and provide any necessary information and material with respect to all filings made by such party with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby. (f) Waiver of Appraisal Rights. The Stockholder hereby waives any rights of appraisal or rights to dissent from the Merger that it may have. 4. Representations and Warranties of the Stockholder. The Stockholder hereby represents and warrants to Parent and Sub as follows: (a) Ownership of Securities. The Stockholder is the record and Beneficial Owner of the Existing Securities, as set forth on Schedule I. On the date hereof, the Existing Securities constitute all of the Securities owned of record or Beneficially Owned by the Stockholder. The Stockholder has sole voting power and sole power to issue instructions with respect to the matters set forth in Sections 2 and 3 hereof, sole power of disposition, sole power to demand appraisal rights and sole power to agree to all of the matters set forth in this Agreement, in each case with respect to all of the Existing Securities with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. (b) Power; Binding Agreement. The Stockholder has the power and authority to enter into and perform all of the Stockholder's obligations under this Agreement. The execution, delivery and performance of this Agreement by the Stockholder will not violate any other agreement to which the Stockholder is a party including, without limitation, any voting agreement, proxy arrangement, pledge agreement, shareholders agreement or voting trust. This Agreement has been duly and validly executed and delivered by the Stockholder and constitutes a valid and binding agreement of the Stockholder, enforceable against the Stockholder in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which the Stockholder is a trustee, or any party to any other agreement or arrangement, whose consent is required for the 4 5 execution and delivery of this Agreement or the consummation by the Stockholder of the transactions contemplated hereby. (c) No Conflicts. Except for filings under the HSR Act, other applicable Antitrust Laws and the Exchange Act (i) no filing with, and no permit, authorization, consent or approval of, any Governmental Entity is necessary for the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby and the compliance by the Stockholder with the provisions hereof and (ii) none of the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby or compliance by the Stockholder with any of the provisions hereof, except in cases in which any conflict, breach, default or violation described below would not interfere with the ability of such Stockholder to perform such Stockholder's obligations hereunder, shall (A) conflict with or result in any breach of any organizational documents applicable to the Stockholder, (B) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, modification or acceleration) under, any of the terms, conditions or provisions of any note, loan agreement, bond, mortgage, indenture, license, contract, commitment, arrangement, understanding, agreement or other instrument or obligation of any kind to which the Stockholder is a party or by which the Stockholder or any of its properties or assets may be bound, or (C) violate any order, writ, injunction, decree, judgment, order, statute, rule or regulation applicable to the Stockholder or any of such Stockholder's properties or assets. (d) No Liens. Except as permitted by this Agreement, the Existing Securities and the certificates representing such securities are now, and at all times during the term hereof will be, held by the Stockholder, or by a nominee or custodian for the benefit of the Stockholder, free and clear of all Liens, proxies, voting trusts or agreements, understandings or arrangements or any other rights whatsoever, except for any such Liens or proxies arising hereunder. (e) No Finder's Fees. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial adviser's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Stockholder. (f) Reliance by Parent. The Stockholder understands and acknowledges that Parent is entering into, and causing Sub to enter into, the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. 5. Further Assurances. From time to time, at the other party's request and without further consideration, each party hereto shall execute and deliver such additional documents and take all such further lawful action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. 6. Stop Transfer. The Stockholder shall not request that the Company register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of 5 6 the Securities, unless such transfer is made in compliance with this Agreement. In the event of a stock dividend or distribution, or any change in the Common Stock by reason of any stock dividend, split-up, recapitalization, combination, exchange of shares or the like, the term "Securities" shall refer to and include the Securities as well as all such stock dividends and distributions and any shares into which or for which any and all of the Securities may be changed or exchanged. 7. Termination. This Agreement and Stockholder's obligation to tender provided herein shall terminate on the earlier of the payment for the Securities pursuant to the Offer and the termination of the Merger Agreement in accordance with its terms. 8. No Limitation. Nothing in this Agreement shall be construed to prohibit any officer or affiliate of the Stockholder who is or has designated a member of the Board of Directors of the Company from taking any action solely in his capacity as a member of the Board of Directors of the Company or from exercising his fiduciary duties as a member of such Board of Directors. 9. Miscellaneous. (a) Entire Agreement. This Agreement and the Merger Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. (b) Binding Agreement. This Agreement and the obligations hereunder shall attach to the Securities and shall be binding upon any person or entity to which legal or beneficial ownership of the Securities shall pass, whether by operation of law or otherwise, including, without limitation, the Stockholder's administrators or successors. Notwithstanding any transfer of Securities, the transferor shall remain liable for the performance of all obligations of the transferor under this Agreement. (c) Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, except that Sub may assign, in its sole discretion, any of or all its rights, interests and obligations under this Agreement to Parent or to any direct or indirect wholly owned subsidiary of Parent, but no such assignment shall relieve Sub and Parent of any of its obligations under this Agreement. This Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. (d) Amendments, Waivers, Etc. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by the parties hereto. (e) Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, 6 7 telecopied (which is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (i) if to Parent or Sub, to Symantec Corporation 10201 Torre Ave. Cupertino, CA 95014 Attention: Chief Financial Officer with copies to its counsel: Fenwick & West LLP Two Palo Alto Square Palo Alto, CA 94306 Fax: (415) 494-1417 Attention: Gordon K. Davidson, Esq. (ii) if to the Stockholder, to Quarterdeck Corporation 13160 Mindanao Way Marina del Rey, CA 90292 Attention: Chief Financial Officer with copies to its counsel: Schwartz & Associates Suite 3950 333 South Grand Avenue Los Angeles, California 90071 Facsimile: 213-621-0982 (f) Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. (g) Specific Performance. Each of the parties hereto recognizes and acknowledges that a breach by it of any covenants or agreements contained in this Agreement will cause the other party to sustain damages for which it would not have an adequate remedy at 7 8 law for money damages, and therefore in the event of any such breach the aggrieved party shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. (h) Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. (i) No Waiver. The failure of any party hereto to exercise any rights, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. (j) No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of, and shall not be enforceable by, any person or entity who or which is not a party hereto. (k) Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. (l) Waiver of Jury Trial. Each party hereto hereby waives any right to a trial by jury in connection with any action, suit or proceeding brought in connection with this Agreement. (m) Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. (n) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same agreement. 8 9 IN WITNESS WHEREOF, Parent, Sub and Stockholder have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above. PARENT: SYMANTEC CORPORATION By: -------------------------------- Name: ------------------------------ Title: ----------------------------- SUB: QUARTERDECK ACQUISITION CORPORATION By: -------------------------------- Name: ------------------------------ Title: ----------------------------- STOCKHOLDER: ----------------------------------- Suzanne Dickson 9 10 EXHIBIT I SHARES OWNED OPTIONS HELD ------------ ------------ 0 315,920 EX-10 11 STOCKHOLDER AGREEMENT WITH GADI NAVON 1 Exhibit 10 STOCKHOLDER AGREEMENT STOCKHOLDER AGREEMENT dated October ___, 1998, among SYMANTEC CORPORATION, a Delaware corporation ("PARENT"), QUARTERDECK ACQUISITION CORPORATION, a Delaware corporation and a wholly owned Subsidiary of Parent ("SUB"), and Gadi Navon (the "STOCKHOLDER"). WHEREAS, concurrently with the execution and delivery of this Agreement, Parent, Sub and QUARTERDECK CORPORATION, a Delaware corporation (the "COMPANY"), have entered into an Agreement and Plan of Merger (as such agreement may hereafter be amended from time to time, the "MERGER Agreement"), pursuant to which Sub will be merged with and into the Company (the "MERGER"); WHEREAS, in furtherance of the Merger, Parent and the Company desire that as soon as practicable (and not later than five (5) business days) after the announcement of the execution of the Merger Agreement, Sub shall commence a cash tender offer (the "OFFER") to purchase at the Offer Price all outstanding shares of Common Stock (each as defined in Section 1 hereof), including all of the Securities (as defined in Section 2 hereof) Beneficially Owned by the Stockholder; and WHEREAS, as an inducement and a condition to entering into the Merger Agreement, Parent has required that the Stockholder agree, and the Stockholder has agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: 1. Definitions. For purposes of this Agreement: (a) "BENEFICIALLY OWNED" or "BENEFICIAL OWNERSHIP" with respect to any securities shall mean having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a Person (as hereinafter defined) shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a "group" within the meaning of Section 13(d)(3) of the Exchange Act. (b) "COMMON STOCK" shall mean the Common Stock, $0.001 par value per share, of the Company. (c) "OFFER PRICE" shall mean cash in the amount of $_____ per share of Common Stock or, if greater, the price per share paid by Sub in the Offer. 2 (d) "PERSON" shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. (e) "SECURITIES" shall mean any shares of Common Stock Beneficially Owned by the Stockholder on the date hereof, as reflected on Exhibit I hereto (the "Existing Securities") or acquired by the Stockholder in any capacity after the date hereof and prior to the termination of this Agreement by means of purchase, dividend, distribution, exercise of options or other rights to acquire Common Stock or in any other way. (f) Capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Merger Agreement. 2. Tender of Shares. (a) In order to induce Parent and Sub to enter into the Merger Agreement, the Stockholder hereby agrees to validly tender the Securities (or cause the record owner of such Securities to validly tender such Securities), and not to withdraw such Securities (except following termination of this Agreement pursuant to Section 7 hereof), pursuant to and in accordance with the terms of the Offer, as soon as practicable after commencement of the Offer pursuant to Section 1.1 of the Merger Agreement and Rule 14d-2 under the Exchange Act (but in the case of Securities acquired after the date hereof, in no event later than two business days after such acquisition). The Stockholder hereby acknowledges and agrees that Parent's and Sub's obligation to accept for payment and pay for the Securities in the Offer, including the Securities Beneficially Owned by the Stockholder, is subject to the terms and conditions of the Offer. (b) The Stockholder hereby permits Parent and Sub to publish and disclose in the Offer Documents and, if approval of the Company's stockholders is required under applicable law, the Proxy Statement (including all documents and schedules filed with the SEC) its identity and ownership of the Securities and the nature of its commitments, arrangements and understandings under this Agreement. 3. Additional Agreements. (a) Voting Agreement. Until the termination of this Agreement pursuant to Section 7 hereof, the Stockholder shall, at any meeting of the stockholders of the Company, however called, or in connection with any written consent of the stockholders of the Company, vote (or cause to be voted) all Securities then held of record or Beneficially Owned by the Stockholder, (i) in favor of the Merger, the execution and delivery by the Company of the Merger Agreement and the approval of the terms thereof and each of the other actions contemplated by the Merger Agreement and this Agreement and any actions required in furtherance thereof and hereof; and (ii) against any proposal relating to a takeover proposal and against any action or agreement that would impede, frustrate, prevent or nullify this Agreement, or result in a breach in any respect of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or which would result in any of the conditions set forth in Exhibit A to the Merger Agreement or set forth in Article VII of the Merger Agreement not being fulfilled. 2 3 (b) No Inconsistent Arrangements. The Stockholder hereby covenants and agrees that, except as contemplated by this Agreement and the Merger Agreement, it shall not (i) transfer (which term shall include, without limitation, any sale, gift, pledge (other than a pledge which does not impair the Stockholder's ability to perform under this Agreement) or other disposition), or consent to any transfer of, any or all of the Securities or any interest therein, (ii) enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of the Securities or any interest therein, (iii) grant any proxy, power-of-attorney or other authorization in or with respect to the Securities, (iv) deposit the Securities into a voting trust or enter into a voting agreement or arrangement with respect to the Securities or (v) take any other action that would in any way restrict, limit or interfere with the performance of its obligations hereunder or the transactions contemplated hereby or by the Merger Agreement (c) Grant of Irrevocable Proxy; Appointment or Proxy. (i) The Stockholder hereby irrevocably grants to, and appoints, Parent and ___________________________ and ______________________________, or either of them, in their respective capacities as officers or directors of Parent, and any individual who shall hereafter succeed to any such office or directorship of Parent, and each of them individually, the Stockholder's proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of the Stockholder, to vote the Securities, or grant a consent or approval in respect of the Securities, in favor of the various transactions contemplated by the Merger Agreement (the "TRANSACTIONS") and against any proposal relating to a takeover proposal. (ii) The Stockholder represents that any proxies heretofore given in respect of the Stockholder's Securities are not irrevocable, and that any such proxies are hereby revoked. (iii) The Stockholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. The Stockholder hereby affirms that the irrevocable proxy set forth in this Section 3(c) is given in connection with the execution of the Merger Agreement, and that such irrevocable proxy is given to secure the performance of the duties of the Stockholder under this Agreement. The Stockholder hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked. The Stockholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 212(e) of the DGCL. (d) No Solicitation. The Stockholder hereby agrees, in the capacity as a stockholder of the Company, that neither the Stockholder nor any affiliates, representatives or agents shall, directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Parent, Sub or any of their respective affiliates or representatives) concerning any proposal relating to a takeover proposal. The Stockholder will immediately cease any existing activities, discussions or negotiations with any parties conducted heretofore with 3 4 respect to any proposal relating to a takeover proposal. The Stockholder will immediately communicate to Parent the terms of any proposal, discussion, negotiation or inquiry (and will disclose any written materials received by the Stockholder in connection with such proposal, discussion, negotiation or inquiry) and the identity of the party making such proposal or inquiry which it may receive in respect of any such takeover proposal. Any action taken by the Company or any member of the Board of Directors of the Company in accordance with Section 5.2(b) of the Merger Agreement shall be deemed not to violate this Section 4(d). (e) Reasonable Efforts. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement. Each party shall promptly consult with the other and provide any necessary information and material with respect to all filings made by such party with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby. (f) Waiver of Appraisal Rights. The Stockholder hereby waives any rights of appraisal or rights to dissent from the Merger that it may have. 4. Representations and Warranties of the Stockholder. The Stockholder hereby represents and warrants to Parent and Sub as follows: (a) Ownership of Securities. The Stockholder is the record and Beneficial Owner of the Existing Securities, as set forth on Schedule I. On the date hereof, the Existing Securities constitute all of the Securities owned of record or Beneficially Owned by the Stockholder. The Stockholder has sole voting power and sole power to issue instructions with respect to the matters set forth in Sections 2 and 3 hereof, sole power of disposition, sole power to demand appraisal rights and sole power to agree to all of the matters set forth in this Agreement, in each case with respect to all of the Existing Securities with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. (b) Power; Binding Agreement. The Stockholder has the power and authority to enter into and perform all of the Stockholder's obligations under this Agreement. The execution, delivery and performance of this Agreement by the Stockholder will not violate any other agreement to which the Stockholder is a party including, without limitation, any voting agreement, proxy arrangement, pledge agreement, shareholders agreement or voting trust. This Agreement has been duly and validly executed and delivered by the Stockholder and constitutes a valid and binding agreement of the Stockholder, enforceable against the Stockholder in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which the Stockholder is a trustee, or any party to any other agreement or arrangement, whose consent is required for the 4 5 execution and delivery of this Agreement or the consummation by the Stockholder of the transactions contemplated hereby. (c) No Conflicts. Except for filings under the HSR Act, other applicable Antitrust Laws and the Exchange Act (i) no filing with, and no permit, authorization, consent or approval of, any Governmental Entity is necessary for the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby and the compliance by the Stockholder with the provisions hereof and (ii) none of the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby or compliance by the Stockholder with any of the provisions hereof, except in cases in which any conflict, breach, default or violation described below would not interfere with the ability of such Stockholder to perform such Stockholder's obligations hereunder, shall (A) conflict with or result in any breach of any organizational documents applicable to the Stockholder, (B) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, modification or acceleration) under, any of the terms, conditions or provisions of any note, loan agreement, bond, mortgage, indenture, license, contract, commitment, arrangement, understanding, agreement or other instrument or obligation of any kind to which the Stockholder is a party or by which the Stockholder or any of its properties or assets may be bound, or (C) violate any order, writ, injunction, decree, judgment, order, statute, rule or regulation applicable to the Stockholder or any of such Stockholder's properties or assets. (d) No Liens. Except as permitted by this Agreement, the Existing Securities and the certificates representing such securities are now, and at all times during the term hereof will be, held by the Stockholder, or by a nominee or custodian for the benefit of the Stockholder, free and clear of all Liens, proxies, voting trusts or agreements, understandings or arrangements or any other rights whatsoever, except for any such Liens or proxies arising hereunder. (e) No Finder's Fees. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial adviser's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Stockholder. (f) Reliance by Parent. The Stockholder understands and acknowledges that Parent is entering into, and causing Sub to enter into, the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. 5. Further Assurances. From time to time, at the other party's request and without further consideration, each party hereto shall execute and deliver such additional documents and take all such further lawful action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. 6. Stop Transfer. The Stockholder shall not request that the Company register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of 5 6 the Securities, unless such transfer is made in compliance with this Agreement. In the event of a stock dividend or distribution, or any change in the Common Stock by reason of any stock dividend, split-up, recapitalization, combination, exchange of shares or the like, the term "Securities" shall refer to and include the Securities as well as all such stock dividends and distributions and any shares into which or for which any and all of the Securities may be changed or exchanged. 7. Termination. This Agreement and Stockholder's obligation to tender provided herein shall terminate on the earlier of the payment for the Securities pursuant to the Offer and the termination of the Merger Agreement in accordance with its terms. 8. No Limitation. Nothing in this Agreement shall be construed to prohibit any officer or affiliate of the Stockholder who is or has designated a member of the Board of Directors of the Company from taking any action solely in his capacity as a member of the Board of Directors of the Company or from exercising his fiduciary duties as a member of such Board of Directors. 9. Miscellaneous. (a) Entire Agreement. This Agreement and the Merger Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. (b) Binding Agreement. This Agreement and the obligations hereunder shall attach to the Securities and shall be binding upon any person or entity to which legal or beneficial ownership of the Securities shall pass, whether by operation of law or otherwise, including, without limitation, the Stockholder's administrators or successors. Notwithstanding any transfer of Securities, the transferor shall remain liable for the performance of all obligations of the transferor under this Agreement. (c) Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, except that Sub may assign, in its sole discretion, any of or all its rights, interests and obligations under this Agreement to Parent or to any direct or indirect wholly owned subsidiary of Parent, but no such assignment shall relieve Sub and Parent of any of its obligations under this Agreement. This Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. (d) Amendments, Waivers, Etc. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by the parties hereto. (e) Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, 6 7 telecopied (which is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (i) if to Parent or Sub, to Symantec Corporation 10201 Torre Ave. Cupertino, CA 95014 Attention: Chief Financial Officer with copies to its counsel: Fenwick & West LLP Two Palo Alto Square Palo Alto, CA 94306 Fax: (415) 494-1417 Attention: Gordon K. Davidson, Esq. (ii) if to the Stockholder, to Quarterdeck Corporation 13160 Mindanao Way Marina del Rey, CA 90292 Attention: Chief Financial Officer with copies to its counsel: Schwartz & Associates Suite 3950 333 South Grand Avenue Los Angeles, California 90071 Facsimile: 213-621-0982 (f) Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. (g) Specific Performance. Each of the parties hereto recognizes and acknowledges that a breach by it of any covenants or agreements contained in this Agreement will cause the other party to sustain damages for which it would not have an adequate remedy at 7 8 law for money damages, and therefore in the event of any such breach the aggrieved party shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. (h) Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. (i) No Waiver. The failure of any party hereto to exercise any rights, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. (j) No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of, and shall not be enforceable by, any person or entity who or which is not a party hereto. (k) Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. (l) Waiver of Jury Trial. Each party hereto hereby waives any right to a trial by jury in connection with any action, suit or proceeding brought in connection with this Agreement. (m) Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. (n) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same agreement. 8 9 IN WITNESS WHEREOF, Parent, Sub and Stockholder have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above. PARENT: SYMANTEC CORPORATION By: Name: Title: SUB: QUARTERDECK ACQUISITION CORPORATION By: Name: Title: STOCKHOLDER: Gadi Navon 9 10 EXHIBIT I SHARES OWNED OPTIONS HELD 0 179,800 EX-11 12 STOCKHOLDER AGREEMENT WITH CHERI KAPLAN-SMITH 1 Exhibit 11 STOCKHOLDER AGREEMENT STOCKHOLDER AGREEMENT dated October ___, 1998, among SYMANTEC CORPORATION, a Delaware corporation ("PARENT"), QUARTERDECK ACQUISITION CORPORATION, a Delaware corporation and a wholly owned Subsidiary of Parent ("SUB"), and Cheri Kaplan-Smith (the "STOCKHOLDER"). WHEREAS, concurrently with the execution and delivery of this Agreement, Parent, Sub and QUARTERDECK CORPORATION, a Delaware corporation (the "COMPANY"), have entered into an Agreement and Plan of Merger (as such agreement may hereafter be amended from time to time, the "MERGER AGREEMENT"), pursuant to which Sub will be merged with and into the Company (the "MERGER"); WHEREAS, in furtherance of the Merger, Parent and the Company desire that as soon as practicable (and not later than five (5) business days) after the announcement of the execution of the Merger Agreement, Sub shall commence a cash tender offer (the "OFFER") to purchase at the Offer Price all outstanding shares of Common Stock (each as defined in Section 1 hereof), including all of the Securities (as defined in Section 2 hereof) Beneficially Owned by the Stockholder; and WHEREAS, as an inducement and a condition to entering into the Merger Agreement, Parent has required that the Stockholder agree, and the Stockholder has agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: 1. Definitions. For purposes of this Agreement: (a) "BENEFICIALLY OWNED" or "BENEFICIAL OWNERSHIP" with respect to any securities shall mean having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a Person (as hereinafter defined) shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a "group" within the meaning of Section 13(d)(3) of the Exchange Act. (b) "COMMON STOCK" shall mean the Common Stock, $0.001 par value per share, of the Company. (c) "OFFER PRICE" shall mean cash in the amount of $_____ per share of Common Stock or, if greater, the price per share paid by Sub in the Offer. 2 (d) "PERSON" shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. (e) "SECURITIES" shall mean any shares of Common Stock Beneficially Owned by the Stockholder on the date hereof, as reflected on Exhibit I hereto (the "Existing Securities") or acquired by the Stockholder in any capacity after the date hereof and prior to the termination of this Agreement by means of purchase, dividend, distribution, exercise of options or other rights to acquire Common Stock or in any other way. (f) Capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Merger Agreement. 2. Tender of Shares. (a) In order to induce Parent and Sub to enter into the Merger Agreement, the Stockholder hereby agrees to validly tender the Securities (or cause the record owner of such Securities to validly tender such Securities), and not to withdraw such Securities (except following termination of this Agreement pursuant to Section 7 hereof), pursuant to and in accordance with the terms of the Offer, as soon as practicable after commencement of the Offer pursuant to Section 1.1 of the Merger Agreement and Rule 14d-2 under the Exchange Act (but in the case of Securities acquired after the date hereof, in no event later than two business days after such acquisition). The Stockholder hereby acknowledges and agrees that Parent's and Sub's obligation to accept for payment and pay for the Securities in the Offer, including the Securities Beneficially Owned by the Stockholder, is subject to the terms and conditions of the Offer. (b) The Stockholder hereby permits Parent and Sub to publish and disclose in the Offer Documents and, if approval of the Company's stockholders is required under applicable law, the Proxy Statement (including all documents and schedules filed with the SEC) its identity and ownership of the Securities and the nature of its commitments, arrangements and understandings under this Agreement. 3. Additional Agreements. (a) Voting Agreement. Until the termination of this Agreement pursuant to Section 7 hereof, the Stockholder shall, at any meeting of the stockholders of the Company, however called, or in connection with any written consent of the stockholders of the Company, vote (or cause to be voted) all Securities then held of record or Beneficially Owned by the Stockholder, (i) in favor of the Merger, the execution and delivery by the Company of the Merger Agreement and the approval of the terms thereof and each of the other actions contemplated by the Merger Agreement and this Agreement and any actions required in furtherance thereof and hereof; and (ii) against any proposal relating to a takeover proposal and against any action or agreement that would impede, frustrate, prevent or nullify this Agreement, or result in a breach in any respect of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or which would result in any of the conditions set forth in Exhibit A to the Merger Agreement or set forth in Article VII of the Merger Agreement not being fulfilled. 2 3 (b) No Inconsistent Arrangements. The Stockholder hereby covenants and agrees that, except as contemplated by this Agreement and the Merger Agreement, it shall not (i) transfer (which term shall include, without limitation, any sale, gift, pledge (other than a pledge which does not impair the Stockholder's ability to perform under this Agreement) or other disposition), or consent to any transfer of, any or all of the Securities or any interest therein, (ii) enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of the Securities or any interest therein, (iii) grant any proxy, power-of-attorney or other authorization in or with respect to the Securities, (iv) deposit the Securities into a voting trust or enter into a voting agreement or arrangement with respect to the Securities or (v) take any other action that would in any way restrict, limit or interfere with the performance of its obligations hereunder or the transactions contemplated hereby or by the Merger Agreement (c) Grant of Irrevocable Proxy; Appointment or Proxy. (i) The Stockholder hereby irrevocably grants to, and appoints, Parent and ___________________________ and ______________________________, or either of them, in their respective capacities as officers or directors of Parent, and any individual who shall hereafter succeed to any such office or directorship of Parent, and each of them individually, the Stockholder's proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of the Stockholder, to vote the Securities, or grant a consent or approval in respect of the Securities, in favor of the various transactions contemplated by the Merger Agreement (the "TRANSACTIONS") and against any proposal relating to a takeover proposal. (ii) The Stockholder represents that any proxies heretofore given in respect of the Stockholder's Securities are not irrevocable, and that any such proxies are hereby revoked. (iii) The Stockholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. The Stockholder hereby affirms that the irrevocable proxy set forth in this Section 3(c) is given in connection with the execution of the Merger Agreement, and that such irrevocable proxy is given to secure the performance of the duties of the Stockholder under this Agreement. The Stockholder hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked. The Stockholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 212(e) of the DGCL. (d) No Solicitation. The Stockholder hereby agrees, in the capacity as a stockholder of the Company, that neither the Stockholder nor any affiliates, representatives or agents shall, directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Parent, Sub or any of their respective affiliates or representatives) concerning any proposal relating to a takeover proposal. The Stockholder will immediately cease any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any proposal relating to a takeover proposal. The Stockholder will immediately 3 4 communicate to Parent the terms of any proposal, discussion, negotiation or inquiry (and will disclose any written materials received by the Stockholder in connection with such proposal, discussion, negotiation or inquiry) and the identity of the party making such proposal or inquiry which it may receive in respect of any such takeover proposal. Any action taken by the Company or any member of the Board of Directors of the Company in accordance with Section 5.2(b) of the Merger Agreement shall be deemed not to violate this Section 4(d). (e) Reasonable Efforts. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement. Each party shall promptly consult with the other and provide any necessary information and material with respect to all filings made by such party with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby. (f) Waiver of Appraisal Rights. The Stockholder hereby waives any rights of appraisal or rights to dissent from the Merger that it may have. 4. Representations and Warranties of the Stockholder. The Stockholder hereby represents and warrants to Parent and Sub as follows: (a) Ownership of Securities. The Stockholder is the record and Beneficial Owner of the Existing Securities, as set forth on Schedule I. On the date hereof, the Existing Securities constitute all of the Securities owned of record or Beneficially Owned by the Stockholder. The Stockholder has sole voting power and sole power to issue instructions with respect to the matters set forth in Sections 2 and 3 hereof, sole power of disposition, sole power to demand appraisal rights and sole power to agree to all of the matters set forth in this Agreement, in each case with respect to all of the Existing Securities with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. (b) Power; Binding Agreement. The Stockholder has the power and authority to enter into and perform all of the Stockholder's obligations under this Agreement. The execution, delivery and performance of this Agreement by the Stockholder will not violate any other agreement to which the Stockholder is a party including, without limitation, any voting agreement, proxy arrangement, pledge agreement, shareholders agreement or voting trust. This Agreement has been duly and validly executed and delivered by the Stockholder and constitutes a valid and binding agreement of the Stockholder, enforceable against the Stockholder in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which the Stockholder is a trustee, or any party to any other agreement or arrangement, whose consent is required for the execution and delivery of this Agreement or the consummation by the Stockholder of the transactions contemplated hereby. 4 5 (c) No Conflicts. Except for filings under the HSR Act, other applicable Antitrust Laws and the Exchange Act (i) no filing with, and no permit, authorization, consent or approval of, any Governmental Entity is necessary for the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby and the compliance by the Stockholder with the provisions hereof and (ii) none of the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby or compliance by the Stockholder with any of the provisions hereof, except in cases in which any conflict, breach, default or violation described below would not interfere with the ability of such Stockholder to perform such Stockholder's obligations hereunder, shall (A) conflict with or result in any breach of any organizational documents applicable to the Stockholder, (B) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, modification or acceleration) under, any of the terms, conditions or provisions of any note, loan agreement, bond, mortgage, indenture, license, contract, commitment, arrangement, understanding, agreement or other instrument or obligation of any kind to which the Stockholder is a party or by which the Stockholder or any of its properties or assets may be bound, or (C) violate any order, writ, injunction, decree, judgment, order, statute, rule or regulation applicable to the Stockholder or any of such Stockholder's properties or assets. (d) No Liens. Except as permitted by this Agreement, the Existing Securities and the certificates representing such securities are now, and at all times during the term hereof will be, held by the Stockholder, or by a nominee or custodian for the benefit of the Stockholder, free and clear of all Liens, proxies, voting trusts or agreements, understandings or arrangements or any other rights whatsoever, except for any such Liens or proxies arising hereunder. (e) No Finder's Fees. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial adviser's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Stockholder. (f) Reliance by Parent. The Stockholder understands and acknowledges that Parent is entering into, and causing Sub to enter into, the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. 5. Further Assurances. From time to time, at the other party's request and without further consideration, each party hereto shall execute and deliver such additional documents and take all such further lawful action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. 6. Stop Transfer. The Stockholder shall not request that the Company register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of the Securities, unless such transfer is made in compliance with this Agreement. In the event of a stock dividend or distribution, or any change in the Common Stock by reason of any stock dividend, split-up, recapitalization, combination, exchange of shares or the like, the term 5 6 "Securities" shall refer to and include the Securities as well as all such stock dividends and distributions and any shares into which or for which any and all of the Securities may be changed or exchanged. 7. Termination. This Agreement and Stockholder's obligation to tender provided herein shall terminate on the earlier of the payment for the Securities pursuant to the Offer and the termination of the Merger Agreement in accordance with its terms. 8. No Limitation. Nothing in this Agreement shall be construed to prohibit any officer or affiliate of the Stockholder who is or has designated a member of the Board of Directors of the Company from taking any action solely in his capacity as a member of the Board of Directors of the Company or from exercising his fiduciary duties as a member of such Board of Directors. 9. Miscellaneous. (a) Entire Agreement. This Agreement and the Merger Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. (b) Binding Agreement. This Agreement and the obligations hereunder shall attach to the Securities and shall be binding upon any person or entity to which legal or beneficial ownership of the Securities shall pass, whether by operation of law or otherwise, including, without limitation, the Stockholder's administrators or successors. Notwithstanding any transfer of Securities, the transferor shall remain liable for the performance of all obligations of the transferor under this Agreement. (c) Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, except that Sub may assign, in its sole discretion, any of or all its rights, interests and obligations under this Agreement to Parent or to any direct or indirect wholly owned subsidiary of Parent, but no such assignment shall relieve Sub and Parent of any of its obligations under this Agreement. This Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. (d) Amendments, Waivers, Etc. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by the parties hereto. (e) Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, telecopied (which is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): 6 7 (i) if to Parent or Sub, to Symantec Corporation 10201 Torre Ave. Cupertino, CA 95014 Attention: Chief Financial Officer with copies to its counsel: Fenwick & West LLP Two Palo Alto Square Palo Alto, CA 94306 Fax: (415) 494-1417 Attention: Gordon K. Davidson, Esq. (ii) if to the Stockholder, to Quarterdeck Corporation 13160 Mindanao Way Marina del Rey, CA 90292 Attention: Chief Financial Officer with copies to its counsel: Schwartz & Associates Suite 3950 333 South Grand Avenue Los Angeles, California 90071 Facsimile: 213-621-0982 (f) Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. (g) Specific Performance. Each of the parties hereto recognizes and acknowledges that a breach by it of any covenants or agreements contained in this Agreement will cause the other party to sustain damages for which it would not have an adequate remedy at law for money damages, and therefore in the event of any such breach the aggrieved party shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. 7 8 (h) Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. (i) No Waiver. The failure of any party hereto to exercise any rights, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. (j) No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of, and shall not be enforceable by, any person or entity who or which is not a party hereto. (k) Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. (l) Waiver of Jury Trial. Each party hereto hereby waives any right to a trial by jury in connection with any action, suit or proceeding brought in connection with this Agreement. (m) Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. (n) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same agreement. 8 9 IN WITNESS WHEREOF, Parent, Sub and Stockholder have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above. PARENT: SYMANTEC CORPORATION By: ------------------------------------- Name: ----------------------------------- Title: ----------------------------------- SUB: QUARTERDECK ACQUISITION CORPORATION By: ------------------------------------- Name: ----------------------------------- Title: ----------------------------------- STOCKHOLDER: ----------------------------------------- Cheri Kaplan-Smith 9 10 EXHIBIT I
SHARES OWNED OPTIONS HELD ------------ ------------ 0 275,000
EX-12 13 STOCKHOLDER AGREEMENT WITH JOHN STROSAHL 1 Exhibit 12 STOCKHOLDER AGREEMENT STOCKHOLDER AGREEMENT dated October ___, 1998, among SYMANTEC CORPORATION, a Delaware corporation ("PARENT"), QUARTERDECK ACQUISITION CORPORATION, a Delaware corporation and a wholly owned Subsidiary of Parent ("SUB"), and John R. Strosahl (the "STOCKHOLDER"). WHEREAS, concurrently with the execution and delivery of this Agreement, Parent, Sub and QUARTERDECK CORPORATION, a Delaware corporation (the "COMPANY"), have entered into an Agreement and Plan of Merger (as such agreement may hereafter be amended from time to time, the "MERGER AGREEMENT"), pursuant to which Sub will be merged with and into the Company (the "MERGER"); WHEREAS, in furtherance of the Merger, Parent and the Company desire that as soon as practicable (and not later than five (5) business days) after the announcement of the execution of the Merger Agreement, Sub shall commence a cash tender offer (the "OFFER") to purchase at the Offer Price all outstanding shares of Common Stock (each as defined in Section 1 hereof), including all of the Securities (as defined in Section 2 hereof) Beneficially Owned by the Stockholder; and WHEREAS, as an inducement and a condition to entering into the Merger Agreement, Parent has required that the Stockholder agree, and the Stockholder has agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: 1. Definitions. For purposes of this Agreement: (a) "BENEFICIALLY OWNED" or "BENEFICIAL OWNERSHIP" with respect to any securities shall mean having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a Person (as hereinafter defined) shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a "group" within the meaning of Section 13(d)(3) of the Exchange Act. (b) "COMMON STOCK" shall mean the Common Stock, $0.001 par value per share, of the Company. (c) "OFFER PRICE" shall mean cash in the amount of $_____ per share of Common Stock or, if greater, the price per share paid by Sub in the Offer. 2 (d) "PERSON" shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. (e) "SECURITIES" shall mean any shares of Common Stock Beneficially Owned by the Stockholder on the date hereof, as reflected on Exhibit I hereto (the "Existing Securities") or acquired by the Stockholder in any capacity after the date hereof and prior to the termination of this Agreement by means of purchase, dividend, distribution, exercise of options or other rights to acquire Common Stock or in any other way. (f) Capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Merger Agreement. 2. Tender of Shares. (a) In order to induce Parent and Sub to enter into the Merger Agreement, the Stockholder hereby agrees to validly tender the Securities (or cause the record owner of such Securities to validly tender such Securities), and not to withdraw such Securities (except following termination of this Agreement pursuant to Section 7 hereof), pursuant to and in accordance with the terms of the Offer, as soon as practicable after commencement of the Offer pursuant to Section 1.1 of the Merger Agreement and Rule 14d-2 under the Exchange Act (but in the case of Securities acquired after the date hereof, in no event later than two business days after such acquisition). The Stockholder hereby acknowledges and agrees that Parent's and Sub's obligation to accept for payment and pay for the Securities in the Offer, including the Securities Beneficially Owned by the Stockholder, is subject to the terms and conditions of the Offer. (b) The Stockholder hereby permits Parent and Sub to publish and disclose in the Offer Documents and, if approval of the Company's stockholders is required under applicable law, the Proxy Statement (including all documents and schedules filed with the SEC) its identity and ownership of the Securities and the nature of its commitments, arrangements and understandings under this Agreement. 3. Additional Agreements. (a) Voting Agreement. Until the termination of this Agreement pursuant to Section 7 hereof, the Stockholder shall, at any meeting of the stockholders of the Company, however called, or in connection with any written consent of the stockholders of the Company, vote (or cause to be voted) all Securities then held of record or Beneficially Owned by the Stockholder, (i) in favor of the Merger, the execution and delivery by the Company of the Merger Agreement and the approval of the terms thereof and each of the other actions contemplated by the Merger Agreement and this Agreement and any actions required in furtherance thereof and hereof; and (ii) against any proposal relating to a takeover proposal and against any action or agreement that would impede, frustrate, prevent or nullify this Agreement, or result in a breach in any respect of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or which would result in any of the conditions set forth in Exhibit A to the Merger Agreement or set forth in Article VII of the Merger Agreement not being fulfilled. 2 3 (b) No Inconsistent Arrangements. The Stockholder hereby covenants and agrees that, except as contemplated by this Agreement and the Merger Agreement, it shall not (i) transfer (which term shall include, without limitation, any sale, gift, pledge (other than a pledge which does not impair the Stockholder's ability to perform under this Agreement) or other disposition), or consent to any transfer of, any or all of the Securities or any interest therein, (ii) enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of the Securities or any interest therein, (iii) grant any proxy, power-of-attorney or other authorization in or with respect to the Securities, (iv) deposit the Securities into a voting trust or enter into a voting agreement or arrangement with respect to the Securities or (v) take any other action that would in any way restrict, limit or interfere with the performance of its obligations hereunder or the transactions contemplated hereby or by the Merger Agreement (c) Grant of Irrevocable Proxy; Appointment or Proxy. (i) The Stockholder hereby irrevocably grants to, and appoints, Parent and ___________________________ and ______________________________, or either of them, in their respective capacities as officers or directors of Parent, and any individual who shall hereafter succeed to any such office or directorship of Parent, and each of them individually, the Stockholder's proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of the Stockholder, to vote the Securities, or grant a consent or approval in respect of the Securities, in favor of the various transactions contemplated by the Merger Agreement (the "TRANSACTIONS") and against any proposal relating to a takeover proposal. (ii) The Stockholder represents that any proxies heretofore given in respect of the Stockholder's Securities are not irrevocable, and that any such proxies are hereby revoked. (iii) The Stockholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. The Stockholder hereby affirms that the irrevocable proxy set forth in this Section 3(c) is given in connection with the execution of the Merger Agreement, and that such irrevocable proxy is given to secure the performance of the duties of the Stockholder under this Agreement. The Stockholder hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked. The Stockholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 212(e) of the DGCL. (d) No Solicitation. The Stockholder hereby agrees, in the capacity as a stockholder of the Company, that neither the Stockholder nor any affiliates, representatives or agents shall, directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Parent, Sub or any of their respective affiliates or representatives) concerning any proposal relating to a takeover proposal. The Stockholder will immediately cease any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any proposal relating to a takeover proposal. The Stockholder will immediately 3 4 communicate to Parent the terms of any proposal, discussion, negotiation or inquiry (and will disclose any written materials received by the Stockholder in connection with such proposal, discussion, negotiation or inquiry) and the identity of the party making such proposal or inquiry which it may receive in respect of any such takeover proposal. Any action taken by the Company or any member of the Board of Directors of the Company in accordance with Section 5.2(b) of the Merger Agreement shall be deemed not to violate this Section 4(d). (e) Reasonable Efforts. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement. Each party shall promptly consult with the other and provide any necessary information and material with respect to all filings made by such party with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby. (f) Waiver of Appraisal Rights. The Stockholder hereby waives any rights of appraisal or rights to dissent from the Merger that it may have. 4. Representations and Warranties of the Stockholder. The Stockholder hereby represents and warrants to Parent and Sub as follows: (a) Ownership of Securities. The Stockholder is the record and Beneficial Owner of the Existing Securities, as set forth on Schedule I. On the date hereof, the Existing Securities constitute all of the Securities owned of record or Beneficially Owned by the Stockholder. The Stockholder has sole voting power and sole power to issue instructions with respect to the matters set forth in Sections 2 and 3 hereof, sole power of disposition, sole power to demand appraisal rights and sole power to agree to all of the matters set forth in this Agreement, in each case with respect to all of the Existing Securities with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. (b) Power; Binding Agreement. The Stockholder has the power and authority to enter into and perform all of the Stockholder's obligations under this Agreement. The execution, delivery and performance of this Agreement by the Stockholder will not violate any other agreement to which the Stockholder is a party including, without limitation, any voting agreement, proxy arrangement, pledge agreement, shareholders agreement or voting trust. This Agreement has been duly and validly executed and delivered by the Stockholder and constitutes a valid and binding agreement of the Stockholder, enforceable against the Stockholder in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which the Stockholder is a trustee, or any party to any other agreement or arrangement, whose consent is required for the execution and delivery of this Agreement or the consummation by the Stockholder of the transactions contemplated hereby. 4 5 (c) No Conflicts. Except for filings under the HSR Act, other applicable Antitrust Laws and the Exchange Act (i) no filing with, and no permit, authorization, consent or approval of, any Governmental Entity is necessary for the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby and the compliance by the Stockholder with the provisions hereof and (ii) none of the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby or compliance by the Stockholder with any of the provisions hereof, except in cases in which any conflict, breach, default or violation described below would not interfere with the ability of such Stockholder to perform such Stockholder's obligations hereunder, shall (A) conflict with or result in any breach of any organizational documents applicable to the Stockholder, (B) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, modification or acceleration) under, any of the terms, conditions or provisions of any note, loan agreement, bond, mortgage, indenture, license, contract, commitment, arrangement, understanding, agreement or other instrument or obligation of any kind to which the Stockholder is a party or by which the Stockholder or any of its properties or assets may be bound, or (C) violate any order, writ, injunction, decree, judgment, order, statute, rule or regulation applicable to the Stockholder or any of such Stockholder's properties or assets. (d) No Liens. Except as permitted by this Agreement, the Existing Securities and the certificates representing such securities are now, and at all times during the term hereof will be, held by the Stockholder, or by a nominee or custodian for the benefit of the Stockholder, free and clear of all Liens, proxies, voting trusts or agreements, understandings or arrangements or any other rights whatsoever, except for any such Liens or proxies arising hereunder. (e) No Finder's Fees. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial adviser's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Stockholder. (f) Reliance by Parent. The Stockholder understands and acknowledges that Parent is entering into, and causing Sub to enter into, the Merger Agreement in reliance upon the Stockholder's execution and delivery of this Agreement. 5. Further Assurances. From time to time, at the other party's request and without further consideration, each party hereto shall execute and deliver such additional documents and take all such further lawful action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. 6. Stop Transfer. The Stockholder shall not request that the Company register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of the Securities, unless such transfer is made in compliance with this Agreement. In the event of a stock dividend or distribution, or any change in the Common Stock by reason of any stock dividend, split-up, recapitalization, combination, exchange of shares or the like, the term 5 6 "Securities" shall refer to and include the Securities as well as all such stock dividends and distributions and any shares into which or for which any and all of the Securities may be changed or exchanged. 7. Termination. This Agreement and Stockholder's obligation to tender provided herein shall terminate on the earlier of the payment for the Securities pursuant to the Offer and the termination of the Merger Agreement in accordance with its terms. 8. No Limitation. Nothing in this Agreement shall be construed to prohibit any officer or affiliate of the Stockholder who is or has designated a member of the Board of Directors of the Company from taking any action solely in his capacity as a member of the Board of Directors of the Company or from exercising his fiduciary duties as a member of such Board of Directors. 9. Miscellaneous. (a) Entire Agreement. This Agreement and the Merger Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. (b) Binding Agreement. This Agreement and the obligations hereunder shall attach to the Securities and shall be binding upon any person or entity to which legal or beneficial ownership of the Securities shall pass, whether by operation of law or otherwise, including, without limitation, the Stockholder's administrators or successors. Notwithstanding any transfer of Securities, the transferor shall remain liable for the performance of all obligations of the transferor under this Agreement. (c) Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, except that Sub may assign, in its sole discretion, any of or all its rights, interests and obligations under this Agreement to Parent or to any direct or indirect wholly owned subsidiary of Parent, but no such assignment shall relieve Sub and Parent of any of its obligations under this Agreement. This Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. (d) Amendments, Waivers, Etc. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by the parties hereto. (e) Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, telecopied (which is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): 6 7 (i) if to Parent or Sub, to Symantec Corporation 10201 Torre Ave. Cupertino, CA 95014 Attention: Chief Financial Officer with copies to its counsel: Fenwick & West LLP Two Palo Alto Square Palo Alto, CA 94306 Fax: (415) 494-1417 Attention: Gordon K. Davidson, Esq. (ii) if to the Stockholder, to Quarterdeck Corporation 13160 Mindanao Way Marina del Rey, CA 90292 Attention: Chief Financial Officer with copies to its counsel: Schwartz & Associates Suite 3950 333 South Grand Avenue Los Angeles, California 90071 Facsimile: 213-621-0982 (f) Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. (g) Specific Performance. Each of the parties hereto recognizes and acknowledges that a breach by it of any covenants or agreements contained in this Agreement will cause the other party to sustain damages for which it would not have an adequate remedy at law for money damages, and therefore in the event of any such breach the aggrieved party shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. 7 8 (h) Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. (i) No Waiver. The failure of any party hereto to exercise any rights, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. (j) No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of, and shall not be enforceable by, any person or entity who or which is not a party hereto. (k) Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. (l) Waiver of Jury Trial. Each party hereto hereby waives any right to a trial by jury in connection with any action, suit or proceeding brought in connection with this Agreement. (m) Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. (n) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same agreement. 8 9 IN WITNESS WHEREOF, Parent, Sub and Stockholder have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above. PARENT: SYMANTEC CORPORATION By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- SUB: QUARTERDECK ACQUISITION CORPORATION By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- STOCKHOLDER: ----------------------------------------- John R. Strosahl 9 10 Exhibit I SHARES OWNED OPTIONS HELD ------------ ------------ 2,857 231,575 EX-13 14 LETTER TO STOCKHOLDERS OF QUARTERDECK CORPORATION 1 [QUARTERDECK LETTERHEAD] October 19, 1998 To Our Stockholders: On behalf of the Board of Directors of Quarterdeck Corporation (the "Company"), we are pleased to inform you that on October 15, 1998, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Symantec Corporation and Oak Acquisition Corporation, its wholly owned subsidiary, pursuant to which Oak Acquisition Corporation today has commenced a cash tender offer (the "Offer") to purchase all of the outstanding shares of the Common Stock of the Company at $0.52 per share, representing a premium of 10.9%, 28.0% and 95.5% over the closing price of the Common Stock on October 14, 1998 (one day prior to the announcement of the Merger Agreement), September 17 (20 days prior to such announcement) and September 2, 1998 (30 days prior to such announcement), respectively. Under the Merger Agreement, upon satisfaction of certain conditions, including the tender of a majority of the fully-diluted shares of the Company, the Offer will be followed by a merger (the "Merger") in which any remaining Shares will be converted into the right to receive $0.52 per share in cash, without interest (except any Shares as to which the holder has properly exercised dissenter's rights of appraisal). All of the directors and executive officers of the Company have agreed to tender their Shares in the Offer. THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED UNANIMOUSLY THAT EACH OF THE OFFER (AS DEFINED HEREIN) AND THE MERGER (AS DEFINED HEREIN) IS FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. In arriving at its recommendation, the Board of Directors gave careful consideration to the factors described in the attached Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") that is being filed today with the Securities and Exchange Commission. Among other things, the Board of Directors considered the opinion of its financial advisor, Broadview International LLC, that the consideration to be received by the holders of Shares in the Offer and Merger is fair to such holders from a financial point of view. In addition to the attached Schedule 14D-9, enclosed also is the Offer to Purchase dated October 19, 1998, together with related materials, including a Letter of Transmittal, to be used for tendering your Shares in the Offer. These documents state the terms and conditions of the Offer and the Merger and provide instructions as to how to tender your Shares. We urge you to read these documents carefully in making your decision with respect to tendering your shares pursuant to the Offer. On behalf of the Board of Directors, LOGO King R. Lee Interim Chief Executive Officer and President EX-14 15 FAIRNESS OPINION OF BROADVIEW INTERNATIONAL LLC 1 CONFIDENTIAL Board of Directors Quarterdeck Corporation 13160 Mindanao Way Marina del Rey, CA 90292-9705 Dear Members of the Board: We understand that Symantec Corporation ("Symantec" or the "Parent"), Oak Acquisition Corporation, a wholly owned subsidiary of Parent ("Sub"), and Quarterdeck Corporation ("Quarterdeck" or the "Company") propose to enter into an Agreement and Plan of Merger (the "Agreement") pursuant to which, Parent proposes to cause Sub to make a tender offer (the "Offer") to purchase all the issued and outstanding shares of Common Stock of the Company (the "Company Common Stock"), at a price per share of not less than $0.52 (the "Offer Price") and, subsequently merge with and into the Company (the "Merger"), with each share of Quarterdeck Common Stock not tendered pursuant to the offer being converted into the right to receive the Offer Price. Quarterdeck's obligations under the Convertible Notes (as defined in the Agreement) will be assumed by the surviving corporation in the Merger. The terms and conditions of the above described Merger are more fully detailed in the Agreement. For purposes of this opinion, we have relied on management's assumption and expectation that all issued and outstanding shares of Company Preferred Stock (as defined in the Agreement) and Company warrants will be converted into 16,030,189 shares of Quarterdeck Common Stock upon commencement of the offer. You have requested our opinion as to whether the Offer Price is fair, from a financial point of view, to Quarterdeck shareholders. Broadview International LLC focuses on providing merger and acquisition advisory services to information technology ("IT") companies. In this capacity, we are continually engaged in valuing such businesses, and we maintain an extensive database of IT mergers and acquisitions for comparative purposes. We are currently acting as financial advisor to the Quarterdeck Board of Directors and will receive a fee from Quarterdeck upon the successful conclusion of the Merger. In rendering our opinion, we have, among other things: 1.) reviewed the terms of the Agreement and Plan of Merger and the associated exhibits thereto in the form of the draft dated October 15, 1998 furnished to us by Fenwick & West on October 15, 1998 (which, for the purposes of this opinion, we have assumed, with your permission, to be identical in all material respects to the agreement to be executed); 2.) reviewed Quarterdeck's annual report and Form 10-K for the fiscal year ended September 30, 1997, including the audited financial statements included therein, and Quarterdeck's Form 10-Q for the quarterly period ended June 30, 1998, including the unaudited financial statements included therein; 3.) reviewed certain internal financial and operating information, including certain projections for the fiscal year ending September 30, 1999, relating to Quarterdeck prepared by Quarterdeck management; 4.) participated in discussions with Quarterdeck management concerning the operations, business strategy, financial performance and prospects for Quarterdeck; 5.) discussed with Quarterdeck management its view of the strategic rationale for the Merger; 6.) reviewed the recent reported closing prices and trading activity for Quarterdeck Common Stock; 7.) compared certain aspects of the financial performance of Quarterdeck with public companies we deemed comparable; 2 8.) analyzed available information, both public and private, concerning other mergers and acquisitions we believe to be comparable in whole or in part to the Merger; 9.) reviewed Symantec's annual report and Form 10-K for the fiscal year ended March 31, 1998, including the audited financial statements included therein, and Symantec's quarterly report on Form 10-Q for the quarterly period ended June 30, 1998, including the unaudited financial information included therein; 10.) discussed with Symantec management its view of the strategic rationale for the Merger; 11.) reviewed recent equity analyst reports covering Symantec; 12.) assisted in negotiations and discussions related to the Merger among Quarterdeck, Symantec and their financial and legal advisors; 13.) conducted other financial studies, analyses and investigations as we deemed appropriate for purposes of this opinion. In rendering our opinion, we have relied, without independent verification, on the accuracy and completeness of all the financial and other information (including without limitation the representations and warranties contained in the Agreement) that was publicly available or furnished to us by Quarterdeck or Symantec. With respect to the financial projections examined by us, we have assumed that they were reasonably prepared and reflected the best available estimates and good faith judgment of the management of Quarterdeck as to the future performance of Quarterdeck. We have neither made nor obtained an independent appraisal or valuation of any of Quarterdeck's assets. Based upon and subject to the foregoing, we are of the opinion that the Offer Price to be paid in the Merger is fair, from a financial point of view, to Quarterdeck shareholders. For purposes of this Opinion, we have assumed that neither Quarterdeck nor Symantec is currently involved in any material transaction other than the Merger and those activities undertaken in the ordinary course of conducting their respective businesses. Our opinion is necessarily based upon market, economic, financial and other conditions as they exist and can be evaluated as of the date of this opinion, and any change in such conditions may impact this opinion. This opinion speaks only as of the date hereof and may be relied upon only by the Board of Directors of Quarterdeck in connection with its consideration of the Merger and does not constitute a recommendation to any Quarterdeck shareholder as to whether such shareholder should tender his shares or as to how such shareholder should vote on the Merger. This opinion may not be published or referred to, in whole or part, without our prior written permission, which shall not be unreasonably withheld. Broadview hereby consents to references to, and the inclusion of this opinion in its entirety in the tender offer documents and proxy statement, if any, to be distributed to Quarterdeck shareholders in connection with the tender offer and the Merger, respectively. Sincerely, LOGO BROADVIEW INTERNATIONAL LLC EX-15 16 CONFIDENTIALITY AGREEMENT DATED SEPTEMBER 15, 1998 1 EXHIBIT 15 September 14, 1998 CONFIDENTIAL Mr. Gordon E. Eubanks, Jr. President & Chief Executive Officer Symantec Corporation 10201 Torre Avenue Cupertino, CA 95014-2132 Dear Gordon: In connection with your consideration of a possible transaction with Quarterdeck Corporation (the "Company"), you have requested that the Company provide financial and other information concerning its business and affairs. As a condition to your receipt of such information which has not theretofore been made available to the public, you agree to treat all such non-public information furnished to you in writing or orally by Broadview, the Company or its other representatives (herein collectively referred to as the "evaluation material"), as follows: (1) You recognize and acknowledge the competitive value and confidential nature of the evaluation material and the damage that could result to the Company if information contained therein is disclosed to any third party. You also recognize and acknowledge that the valuation material is being provided to you in reliance upon your acceptance of the terms of this agreement. (2) You agree to use the evaluation material solely to evaluate the proposed transaction (the "Purpose") and not to disclose the evaluation material to anyone other than your directors, officers, employees, agents, representatives and advisors (collectively, "your representatives") who need to know such information in connection with the Purpose and agree to keep such information confidential to the same extent as if they were parties hereto. You shall be responsible for any breach of this agreement by your representatives. (3) You shall return to Company any and all evaluation material, together with any copies (including, but not limited to, 2 Gordon E. Eubanks September 14, 1998 Page 2 complete or partial copies incorporated into other materials) in your possession or under your control (or in the possession or control of any of your representatives), promptly upon Company's request or, if not requested earlier, promptly after the Purpose has been accomplished or abandoned. (4) You and your representatives shall have no obligation hereunder with respect to any information in the evaluation materials to the extent that such information has been made publicly available (other than in violation of this Agreement) nor any obligation with respect to information that you demonstrate to be already properly in your possession on a non-confidential basis from sources other than the Company or its representatives. (5) You are aware, and will advise your representatives who receive evaluation material, of the restrictions imposed by the United States securities laws on the purchase or sale of securities by any person who has received material, non-public information from the Company and on the communication of such information to any other person who may purchase or sell such securities in reliance upon such information. You and your representatives will comply with all applicable securities laws in connection with the purchase or sale, directly or indirectly, of securities of the Company for as long as you or your representatives are in possession of material non-public information about the Company. (6) You agree that you will not solicit directly or indirectly any of the Company's employees or contractors involved in these discussions during the period of these discussions and for a period of 6 months thereafter, without the express written approval of the Company. Furthermore, you agree that you will not use the information disclosed in the course of these discussions to directly or indirectly solicit the employees or contractors of the Company during the same period. Notwithstanding the foregoing, nothing in this paragraph will prevent Symantec from hiring any employee or contractor that contacts Symantec to inquire about employment opportunities, or that responds to general help wanted advertisements or the like not targeted at employees or contractors of the Company. (7) The provisions of this agreement relating to confidentiality shall terminate two years from the date hereof. The invalidity or unenforceability of any provision of this agreement shall not affect the validity or enforeceability of any other provision. 3 Gordon E. Eubanks, Jr. September 14, 1998 Page 3 This agreement shall be governed by the laws of the State of California applicable to agreements made and to be performed within. This Agreement constitutes the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes any prior oral or written communication relating thereto. (8) The engagement of Broadview by Company and Company's intention to enter into or consideration of transactions such as the potential transaction with you is confidential information of Company. Your use and disclosure of such information will be restricted under this Agreement to the same extent that your use and disclosure of evaluation material is restricted under this Agreement. Acceptance of the above terms shall be indicated by having this letter countersigned on your behalf and returning one original to Broadview. Sincerely, BROADVIEW INT'L LLC For: Quarterdeck Corporation By: ------------------------------ Managing Director Received and consented to this 16th day of September, 1998 Symantec Corporation By: Enrique T. Salem ----------------------------- EX-16 17 DISCLOSURE AGREEMENT 1 EXHIBIT 16 October 1, 1998 Quarterdeck Corporation 13160 Mindanao Way Marina del Rey, California 90292 Ladies & Gentlemen: In connection with your consideration of a possible negotiated transaction (the "Transaction") between Symantec Corporation (the "COMPANY") and Quarterdeck Corporation ("Quarterdeck"), the Company and Quarterdeck expect to make available to one another certain information concerning our respective business, financial condition, operations, assets and liabilities. As a condition to such information being furnished to each party and its directors, officers, employees, agents or advisors (including, without limitation, attorneys, accountants, consultants, bankers and financial advisors) (collectively, "REPRESENTATIVES"), each party agrees to treat any information concerning the other party (whether prepared by the disclosing party, its advisors or otherwise and irrespective of the form of communication) which is furnished hereunder or furnished prior hereto in connection with our discussions to a party or to its Representatives now or in the future by or on behalf of the disclosing party (herein collectively referred to as the "EVALUATION MATERIAL") in accordance with the provisions of this letter agreement, and to take or abstain from taking certain other actions hereinafter set forth. 1. Evaluation Material. The term "Evaluation Material" also shall be deemed to include all notes, analyses, compilations, studies, interpretations or other documents prepared by each party or its Representatives which contain, reflect or are based upon, in whole or in part, the information furnished to such party or its Representatives pursuant hereto. The term "Evaluation Material" does not include information which (a) is or becomes generally available to the public other than as a result of a disclosure by the receiving party or its Representatives, (b) was within the receiving party's possession prior to its being furnished to the receiving party by or on behalf of the disclosing party pursuant hereto or prior hereto in connection with our discussions; provided that the source of such information was not known by the receiving party to be bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the disclosing party or any other party with respect to such information, (c) becomes available to the receiving party on a non-confidential basis from a source other than the disclosing party or any of its Representatives; provided that such source is not bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the disclosing party or any other party with respect to such information, (d) is not clearly identified as confidential or was not clearly understood by the parties to have been disclosed on a confidential basis, or (e) is independently developed by the receiving party without use of or reference to the Evaluation Material. 2. Purpose of Disclosure of Evaluation Material. It is understood and agreed to by each party that any exchange of information under this letter agreement shall be solely for the purpose of 2 evaluating a potential business transaction between the parties and not to affect, in any way, each party's relative competitive position to each party or to other entities. It is further agreed that the information to be disclosed to each other shall only be that information which is reasonably necessary to evaluate a proposed transaction and that information which is not reasonably necessary for such purposes shall not be disclosed or exchanged. 3. Use and Disclosure of Evaluation Material. Each party hereby agrees that it and its Representatives shall use the other's Evaluation Material solely for the purpose of evaluating a possible transaction between the parties, and that the disclosing party's Evaluation Material will be kept confidential and each party and its Representatives will not copy or disclose any of the other's Evaluation Material in any manner whatsoever; provided, however, that the receiving party may make any use or disclosure of such information to which the disclosing party gives its prior written consent. 4. Non-Disclosure of Transaction. In addition, each party agrees that, without the prior written consent of the other party, it and its Representatives will not disclose to any other person the fact that any Evaluation Material has been made available hereunder, that discussions or negotiations are taking place concerning a possible transaction involving the parties or any of the terms, conditions or other facts with respect thereto (including the status thereof); provided that Quarterdeck may make such disclosure to Northwestern Mutual Life Insurance Company under appropriate confidentiality arrangements provided that a party may make such disclosure if, in the reasonable opinion of outside counsel for such party, such disclosure is required by law, regulation or exchange or Nasdaq National Market System requirements. 5. Required Disclosure. In the event that a party or any of its Representatives is requested or required (by government authorities by oral questions, interrogations, requests for information or documents in legally required government filings, legal proceedings, subpoena, civil investigative demand or other similar process) to disclose any of the other party's Evaluation Material, the party requested or required to make the disclosure shall provide the other party with prompt written notice of any such request or requirement so that the other party may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this letter agreement. If, in the absence of a protective order or other remedy or the receipt of a waiver by such other party, the party requested or required to make the disclosure or any of its Representatives is nonetheless in the written opinion of counsel, legally compelled to disclose the other party's Evaluation Material to any government agency or tribunal or else stand liable for contempt or suffer other censure or penalty, the party requested or required to make the disclosure or its Representative may, without liability hereunder, disclose to such government agency or tribunal only that portion of the other party's Evaluation Material which such counsel advises is legally required to be disclosed; provided that the party requested or required to make the disclosure exercises its best efforts to preserve the confidentiality of the other party's Evaluation material, including, without limitation, by cooperating with the other party to obtain confidential treatment or an appropriate protective order or other reliable assurance that confidential treatment will be accorded the other party's Evaluation Material by such government agency or tribunal. 6. Termination of Discussion. If either party decides that it does not wish to proceed with a transaction with the other party, the party so deciding will promptly inform the other party by the way of a notice of termination of that decision. In that case, or at any time upon the request of the disclosing party for any reason, each receiving party will promptly deliver to the disclosing party all Evaluation Material (and all copies thereof) furnished to the receiving party or its Representatives 2 3 by or on behalf of the disclosing party pursuant hereto. In the event of such a decision or request, all other Evaluation Material incorporated into materials prepared by the receiving party shall be destroyed and no copy thereof shall be retained, and in no event shall either party be obligated to disclose or provide the material prepared by it or its Representatives to the other party. Notwithstanding the return or destruction of the Evaluation Material, each party and its Representatives will continue to be bound by its obligations of confidentiality and other obligations hereunder. 7. No Representation of Accuracy. Each party understands and acknowledges that neither party nor any of its Representatives makes any representation or warranty, express or implied, as to the accuracy or completeness of the Evaluation Material made available to it. Each party agrees that neither party nor any of its Representatives shall have any liability to the other party or to any of its Representatives relating to or resulting from the use of such other party's Evaluation Material or any errors therein or omissions therefrom. Only those representations or warranties which are made in a final definitive agreement regarding any transaction contemplated hereby, when, as and if executed, and subject to such limitations and restrictions as may be specified therein, will have any legal effect. 8. Definitive Agreements. Each party understands and agrees that no contract or agreement providing for any transaction of the type contemplated by this letter agreement involving the parties shall be deemed to exist between the parties unless and until a final definitive agreement has been executed and delivered. Each party also agrees that unless and until a final definitive agreement regarding a transaction between the parties has been executed and delivered, neither party will be under any legal obligation of any kind whatsoever with respect to such a transaction by virtue of this letter agreement except for the matters specifically agreed to herein. Both parties further acknowledge and agree that each party reserves the right, in its sole discretion, to reject any and all proposals made by the other party or any of its Representatives with regard to a transaction between the parties, and to terminate discussions and negotiations at any time. 9. Waiver. It is understood and agreed that no failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or future exercise thereof or the exercise of any other right, power or privilege hereunder. 10. Nonsolicitation of Employees. Beginning on the date of this letter and continuing until 3 months after the date of a notice of termination under Section 6 above, neither party will, either for itself or for any other person or entity, directly or indirectly, solicit, induce or attempt to induce any employee of the other to terminate his or her employment with the other party. The parties agree that general solicitation through newspaper advertising or job fairs shall not be deemed a violation of this provision. 11. No-Shop Provision. Until the close of business on October 13, 1998, Quarterdeck will not, and will not permit its officers, directors, employees, agents or Representatives, or any other person acting on its behalf, to (a) solicit, encourage, negotiate with or accept any offer from any party concerning the possible disposition of all or any substantial portion of Quarterdeck's business, assets 3 4 or capital stock by merger, sale or any other means or any other transaction that would involve a change in control of Quarterdeck, (b) hold or participate in discussions or negotiations with any party (other than the Company) with respect to any such transaction, or (c) enter into any agreement with any party (other than the Company) with respect to any such transaction. Quarterdeck also agrees that it will notify the Company immediately if Quarterdeck receives any inquiry after the date hereof from any third party with respect to any such transaction, or any possible acquisition of any of its capital stock or assets. 12. No Trading in Securities. Both parties agree to take all reasonable precautions to prevent any trading in their respective securities by their respective officers, directors, employees and agents having knowledge of the proposed transaction between the parties until the proposed transaction has been sufficiently publicly disclosed. The parties understand and agree that until a press release is issued regarding a proposed transaction between the parties, neither party will disclose the fact that negotiations are taking place, except to professional advisors and to employees of the parties on a confidential, need-to-know basis and by Quarterdeck to Northwestern. 13. Injunctive Relief. It is further understood and agreed that money damages would not be a sufficient remedy for any breach of this letter agreement by either party or any of its Representatives and that the non-breaching party shall be entitled to equitable relief, including injunction and specific performance, as a remedy for any such breach. Such remedies shall not be deemed to be the exclusive remedies for a breach of this letter agreement but shall be in addition to all other remedies available at law or equity. In the event of litigation relating to this letter agreement, if a court of competent jurisdiction determines that either party or any of its Representatives have breached this letter agreement, then the breaching party shall be liable and pay to the non-breaching party the reasonable legal fees incurred in connection with such litigation. 14. Governing Law. This Agreement shall be governed by the internal laws of the State of California. 4 5 Please confirm your agreement with the foregoing by signing and returning one copy of this letter to the undersigned, whereupon this letter agreement shall become a binding agreement between Quarterdeck and the Company. Very truly yours, Symantec Corporation By: ---------------------------------- Accepted and Agreed as of the date first written above: Quarterdeck Corporation By: ---------------------------------- Name: -------------------------------- Title: ------------------------------- 5 6 October 13, 1998 Sossa Corporation 10201 Torre Avenue Cupertino, California 95014 Ladies & Gentlemen: In reference to paragraph 11 of the letter agreement dated October 1, 1998, between Sossa Corporation and McGwire Corporation, this letter will confirm our agreement to extend the term of the "No Shop Provision" until the close of business on Friday, October 16, 1998. Please sign below to indicate your consent. Very truly yours, McGwire Corporation /s/ King R. Lee ------------------------------ King R. Lee Interim CEO Accepted and Agreed as of the date first written above: Sossa Corporation By: /s/ Derek Witte ---------------- Name: -------------- Title: VP ------------- EX-17 18 FORM OF INDEMNIFICATION AGREEMENT 1 Exhibit 17 FORM OF INDEMNIFICATION AGREEMENT This Indemnification Agreement ("Agreement") is made as of , by and between QUARTERDECK CORPORATION, a Delaware corporation (the "Company"), and ("Indemnitee"), with reference to the following facts: A. Indemnitee is currently serving as a director or officer of the Company. B. The Company and Indemnitee recognize the substantial increase in corporate litigation in general, subjecting officers and directors to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited. C. Indemnitee does not regard the current protection available to be adequate under the present circumstances to protect him or her against the risks associated with his or her service to the Company and the Company recognizes that Indemnitee and other officers and directors of the Company may not be willing to continue to serve as officers or directors without additional protection. D. The Company desires to attract and retain the services of highly qualified individuals, including Indemnitee, to serve as officers and directors of the Company and thus desires to indemnify its officers and directors to provide them with the maximum protection permitted by law. THEREFORE, IN CONSIDERATION OF the foregoing premises, the Company and Indemnitee hereby agree as follows: 1. Indemnification. 1.1 Third Party Proceedings. The Company shall indemnify Indemnitee if Indemnitee is or was a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the Company to procure a judgment in its favor) by reason of the fact that Indemnitee is or was a director, officer, employee or other agent of the Company, or any subsidiary of the Company, and such proceeding relates to any action or inaction on the part of Indemnitee while an officer, director, employee or agent or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including, subject to Section 13 hereof, attorney's fees and any expenses of establishing a right to indemnification pursuant to this Agreement or under Delaware law), judgments, fines, settlements (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) and other amounts actually and reasonable incurred by Indemnitee in connection with such proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonable believed to be in or not opposed to the best interests of the Company and, in the case of a criminal proceeding, if Indemnitee had no reasonable cause to believe Indemnitee's conduct was unlawful. The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or with respect to any criminal proceedings, would not create a presumption that Indemnitee had reasonable cause to believe that Indemnitee's conduct was unlawful. 2 1.2 Proceedings By or In the Right of the Company. The Company shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made a party to any threatened, pending or completed action by or in the right of the Company or any subsidiary of the Company to procure a judgment in its favor by reason of the fact that Indemnitee is or was a director, officer, employee or other agent of the Company, or any subsidiary of the Company, and such action relates to any action or inaction on the part of Indemnitee while an officer, director or agent, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including, subject to Section 13 hereof, attorneys' fees and any expenses of establishing a right to indemnification pursuant to this Agreement or under Delaware law) and amounts paid in settlement, in each case to the extent actually and reasonably incurred by Indemnitee in connection with the defense or settlement of the proceeding if Indemnitee acted in good faith and in a manner Indemnitee believed to be in or not opposed to the best interests of the Company, except that no indemnification shall be made with respect to any claim, issue or matter to which Indemnitee shall have been adjudged to have been liable to the Company in the performance of Indemnitee's duty to the Company, unless and only to the extent that the court in which such proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for expenses and then only to the extent that the court shall determine. 1.3 Successful Defense on Merits. To the extent that Indemnitee has been successful on the merits in defense of any proceeding referred to in Section 1.1 or 1.2 above, or in defense of any claim, issue or matter therein, the Company shall indemnify Indemnitee against expenses (including attorneys' fees) actually and reasonably incurred by Indemnitee in connection therewith. 1.4 Certain Terms Defined. For purposes of this Agreement, references to "other enterprises" shall include employee benefit plans, references to "fines" shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan and references to "proceeding" shall include any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative. For purposes of this Agreement, references to the "Company" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued. 2. Agreement to serve. Indemnitee agrees to serve or continue to serve as a director and/or officer of the Company for so long as he or she is duly elected or appointed or until such time as he or she voluntarily resigns. Indemnitee agrees to tender written notice to the Company at least 30 days prior to voluntarily resigning. The terms of any existing employment agreement between Indemnitee and the Company shall continue in effect but shall be modified or supplemented by the terms of this Agreement. Nothing contained in this Agreement is intended to create in Indemnitee any right to continued employment. 2 3 3. Expenses; Indemnification Procedure. 3.1 Advancement of Expenses. The Company shall advance all expenses incurred by Indemnitee in connection with the investigation, defense, settlement (excluding amounts actually paid in settlement of any action, suit or proceeding) or appeal of any civil or criminal action, suit or proceeding referenced in Section 1.1 or 1.2 hereof. Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it shall be determined ultimately that Indemnitee is not entitled to be indemnified by the Company as authorized hereby. The advances to be made hereunder shall be paid by the Company to Indemnitee within twenty (20) days following delivery of a written request therefor by Indemnitee to the Company. 3.2 Notice of Claim. Indemnitee shall, as a condition precedent to his right to be indemnified under this Agreement, give the Company notice in writing as soon as practicable of any claim made against Indemnitee for which indemnification will or could be sought under this Agreement. Notice to the Company shall be directed to the President of the Company at the address shown on the signature page of this Agreement (or such other address as the Company shall designate in writing to Indemnitee). In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee's power. 3.3 Enforcement Rights. Any indemnification provided for in Section 1 shall be made no later than forty-five (45) days after receipt of the written request of Indemnitee. If a claim or request under this Agreement, under any statute, or under any provision of the Company's Bylaws providing for indemnification, is not paid by the Company, or on its behalf, within forty-five (45) days after written request for payment thereof has been received by the Company, Indemnitee may, but need not, at any time thereafter bring suit against the Company to recover the unpaid amount of the claim or request, and subject to Section 13, Indemnitee shall also be entitled to be paid for the expenses (including attorneys' fees) of bringing such action. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in connection with any action, suit or proceeding in advance of its final disposition) that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed by the burden for proving such defense shall be on the Company and Indemnitee shall be entitled to receive interim payments of expenses pursuant to Section 3.1 unless and until such defense may be finally adjudicated by court order or judgment for which no further right of appeal exists. The parties hereto intend that if the Company contests Indemnitee's right to indemnification, the question of Indemnitee's right to indemnification shall be a decision for the court and no presumption regarding whether the applicable standard has been met will arise based on any determination or lack of determination of such by the Company (including its Board or any subgroup thereof, independent legal counsel or its stockholders). 3.4 Assumption of Defense. In the event the Company shall be obligated to pay the expenses of any proceeding against Indemnitee, the Company, as appropriate, shall be entitled to assume the defense of such proceeding with counsel approved by Indemnitee, which approval shall not be unreasonably withheld, upon the delivery to Indemnitee of written notice of its election so to do. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same proceeding, unless (I) the employment of counsel by Indemnitee is authorized by 3 4 the Company, (ii) Indemnitee shall have reasonably concluded that there may be a conflict of interest of such counsel retained by the Company between the Company and Indemnitee in the conduct of such defense, or (iii) the Company ceases or terminates the employment of such counsel with respect to the defense of such proceeding, in any of which events then the fees and expenses of Indemnitee's counsel shall be at the expense of the Company. At all times Indemnitee shall have the right to employ other counsel in any such proceeding at Indemnitee's expense. 3.5 Approval of Expenses. No expenses for which indemnity shall be sought under this Agreement, other than those in respect of judgments and verdicts actually rendered, shall be incurred without the prior consent of the Company, which consent shall not be unreasonably withheld. 3.6 Notice to Insurers. If, at the time of the receipt of a notice of a claim pursuant to Section 3.2 hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice to the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies. 3.7 Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall do all things that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 4. Exceptions. Notwithstanding any other provision herein to the contrary, the Company shall not be obligated pursuant to the terms of this Agreement: 4.1 Claims Initiated by Indemnitee. To indemnify or advance expenses to Indemnitee with respect to proceedings or claims initiated or brought voluntarily by Indemnitee and not by way of defense, except with respect to proceedings brought to establish or enforce a right to indemnification under this Agreement or any other statute or law or as otherwise required under the Delaware General Corporation Law, but such indemnification or advancement of expenses may be provided by the Company in specific cases if the Board of Directors has approved the initiation or bringing of such suit; or 4.2 Lack of Good Faith. To indemnify Indemnitee for any expenses incurred by Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that such proceeding was not made in good faith or was frivolous; or 4.3 Insured Claims. To indemnify Indemnitee for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) which have been paid directly to Indemnitee by an insurance carrier under a policy of officers' and directors' liability insurance maintained by the Company; or 4 5 4.4 Claims Under Section 16(b). To indemnify Indemnitee for expenses and the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute. 5. Partial Indemnification. If Indemnitee is entitled under any provisions of this Agreement to indemnification by the Company for some or a portion of the expenses, judgments, fines or penalties actually or reasonably incurred by Indemnitee in the investigation, defense, appeal or settlement of any civil or criminal action, suit or proceeding, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such expenses, judgments, fines or penalties to which Indemnitee is entitled. 6. Additional Indemnification Rights; Nonexclusivity. 6.1 Scope. Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify Indemnitee to the fullest extent permitted by law, including those circumstances in which indemnification would otherwise be discretionary. In the event of any change in any applicable law, statute or rule which narrows the rights of a Delaware corporation to indemnify a member of its Board of Directors or an officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties' rights and obligations hereunder. 6.2 Non-Exclusivity. Nothing herein shall be deemed to diminish or otherwise restrict any rights to which Indemnitee may be entitled under the Company's Restated Bylaws, any agreement, any vote of stockholders or disinterested directors, or under the laws of the State of Delaware. 7. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge that in certain instances, Federal laws or applicable public policy may prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company's right under public policy to indemnify Indemnitee. 8. Officer and Director Liability Insurance. The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the officers and directors of the Company with coverage for losses from wrongful acts, or to ensure the Company's performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or if Indemnitee is covered by similar insurance maintained by a subsidiary or parent of the Company. 5 6 9. Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company's inability, pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. If this Agreement or any portion hereof shall be invalidated on any grounds by any court of competent jurisdiction, than the Company shall nevertheless indemnify Indemnitee to the fullest extent permitted by any applicable portion of this Agreement that shall not have been invalidated and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms. 10. Effective Dates. This Agreement shall be effective as of the date set forth on the first page and may apply to acts or omissions of Indemnitee which occurred prior to such date as Indemnitee was an officer, director, employee or other agent of the Company, or any predecessor corporation or constituent corporation in a merger involving the Company, or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, at the time such act or omission occurred. 11. Coverage. The provisions of the Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity even though Indemnitee may have ceased to serve in such capacity at the time of any action, suit or other covered proceeding. This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns. 12. Notice. All notices, requests, demands and other communication under this Agreement shall be in writing and shall be deemed duly given (I) if delivered by hand and receipted for by the addressee, on the date of such receipt, or (ii) if mailed by domestic certified or registered mail with postage prepaid, on the third business day after the date postmarked. Addresses for notice to either party are as shown on the signature page of this Agreement or as subsequently modified by written notice. 13. Attorneys' Fees. In the event that any action is instituted by Indemnitee under this Agreement to enforce or interpret any of the terms hereof, Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable attorneys' fees, incurred by Indemnitee with respect to such action, unless as a part of such action, the court of competent jurisdiction determines that the action was not instituted in good faith or was frivolous. In the event of an action instituted by or in the name of the Company under this Agreement, or to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including attorneys' fees, incurred by Indemnitee in defense of such action (including with respect to Indemnitee's counterclaims and cross-claims made in such action), unless as a part of such action the court determines that Indemnitee's defenses to such action were not made in good faith or were frivolous. 14. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, as applied to contracts between Delaware residents entered into and to be performed entirely within Delaware. 6 7 15. Consent to Jurisdiction. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of Delaware for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be brought only in the state courts in the State of Delaware. 16. Counterparts. This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. QUARTERDECK CORPORATION Address: 13160 Mindanao Way Marina del Rey, CA 90292-9705 By: -------------------------------- Title: ----------------------------- INDEMNITEE Address: - -------------------------------- ----------------------------- Signature ----------------------------- - -------------------------------- Print Name 7 EX-18 19 PROXY STATEMENT PAGES 1 Exhibit 18 The Board of Directors held 13 meetings during the fiscal year ended September 30, 1997. All directors attended at least 75% of the meetings of the Board of Directors, and all members of the committees of the Board of Directors attended at least 75% of the meetings of those committees, in each case, after the election of such individuals to the Board of Directors or to such committee. DIRECTORS' COMPENSATION Non-employee directors receive $6,000 ($12,000 in the case of the Chairman of the Board) annually, payable quarterly, as compensation for serving on the Board of Directors, plus $1,500 per meeting for Board or Committee meetings attended. Non-employee directors are reimbursed for their reasonable expenses incurred in attending meetings. Non-employee directors also participate in the 1990 Directors Stock Option Plan which provides for automatic grants of options to non-employee directors. Under the 1990 Directors Stock Option Plan, each non-employee director is granted an option to purchase 30,000 shares of the Company's Common Stock three business days following his or her first election as a director (the "initial grant"). Thereafter, each non-employee director who has been re-elected or who is continuing as a member of the Board of Directors is granted an option to purchase 7,500 shares of the Company's Common Stock on the date of the Company's annual meeting of stockholders (an "annual grant"). Options are granted at 100% of the fair market value of the Company's Common Stock on the grant date and have a term of five years. Initial grants vest immediately as to one-third of the shares and vest an additional one-third on the first and second anniversaries of the grant date. Annual grants vest in full on the first anniversary of the grant date. The Board of Directors or the Compensation Committee may also make discretionary option grants to non-employee directors. During fiscal 1997, the Board of Directors made a discretionary grant of 25,000 options to each non-employee director. In July 1994, King R. Lee, a director of the Company, entered into a consulting agreement (the "Consulting Agreement") with the Company. Under the terms of the Consulting Agreement, as amended, King R. Lee & Associates, Inc., of which Mr. Lee is President and sole stockholder, was paid $1,500 per full day plus expenses in exchange for Mr. Lee's consulting services to the Company, generally for four full days a week. Mr. Lee provided consulting services to the Company under the Consulting Agreement through January 1995 and King R. Lee & Associates, Inc. was paid $181,000 in fiscal year 1995 pursuant to the terms of the Consulting Agreement. In addition, the Company entered into a new consulting agreement (the "New Consulting Agreement") with Mr. Lee on August 27, 1996 when Mr. Lee assumed the duties as a member of the Office of the President. Pursuant to the New Consulting Agreement, King R. Lee & Associates, Inc. was paid $1,500 per full day plus expenses in exchange for Mr. Lee's consulting service to the Company. The Company paid to King R. Lee & Associates, Inc. an additional $33,000 during fiscal year 1996 and a total of $76,500 during fiscal year 1997 pursuant to the New Consulting Agreement. Mr. Lee provided consulting services to the Company under the New Consulting Agreement through February 1997. 2 EXECUTIVE COMPENSATION The following table sets forth information concerning the annual and long-term compensation paid by the Company during the fiscal years ended September 30, 1997, 1996 and 1995 to (i) the persons who served as Chief Executive Officer or performed the functions thereof during fiscal year 1997, (ii) the four most highly compensated executive officers as of the end of fiscal year 1997, whose total annual salary and bonus exceeded $100,000 and (iii) one additional individual who would have been included among the four most highly compensated executive officers, but for the fact the individual was not serving as an executive officer at the end of fiscal year 1997. SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION AWARDS ANNUAL ------------------------------ COMPENSATION SECURITIES ------------------------ UNDERLYING ALL OTHER SALARY BONUS OPTIONS/SARS COMPENSATION NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($) - ----------------------------------------------- ---- ------- ------- ---------- ------------ Curtis A. Hessler(1) 1997 297,692 0 1,350,000 0 President and Chief Executive Officer King R. Lee(2) 1997 101,250 0 122,500 0 Former Office of the President 1996 58,500 0 100,000 0 1995 192,000 0 0 0 Anatoly Tikhman(3) 1997 182,922 57,375 275,000 0 Former Office of the President 1996 22,153 0 250,000 0 Frank R. Greico(4) 1997 187,589 61,250 106,250 0 Senior Vice President and Chief Financial 1996 129,230 25,000 75,000 0 Officer Joseph Fusco(5) 1997 145,802 43,531 150,000 0 Senior Vice President--Marketing and Product Management Ron Ben-Yehuda(6) 1997 136,667 61,083 72,500 0 Vice President, General Counsel and 1996 47,115 12,222 30,000 0 Secretary John Strosahl(7) 1997 138,221 72,320 51,575 0 Vice President--International 1996 60,000 30,000 0 0 Bradley D. Schwartz(8) 1997 110,000 128,000 115,200 165,000 Former Senior Vice President, General 1996 127,500 82,500 100,000 0 Counsel and Secretary
- ---------- (1) Mr. Hessler became President and Chief Executive Officer of the Company in February 1997. Mr. Hessler was granted options to purchase an additional 150,000 shares of Common Stock in the first quarter of fiscal 1998. (2) From September of 1994 until January 1995, Mr. Lee acted in the capacity of Chief Executive Officer and was formally appointed Interim Chief Executive Officer in December 1994. In addition, Mr. Lee was Interim Chief Executive Officer between July and December 1994. Mr. Lee was appointed as a member of the Office of President in August 1996 and resigned from such position upon the appointment of Mr. Hessler in February 1997. Mr. Lee is also a director of the Company and received compensation as a non-employee director. Mr. Lee's salary for fiscal 1995 includes $181,000 of consulting fees paid to King R. Lee & Associates and 3 $11,000 of non-employee director fees, Mr. Lee's salary for fiscal 1996 includes $33,000 of consulting fees paid to King R. Lee & Associates and $25,000 of non-employee director fees and Mr. Lee's salary for fiscal 1997 includes $76,500 of consulting fees paid to King R. Lee & Associates and approximately $25,000 of non-employee director fees. The options granted to Mr. Lee during fiscal 1997 include 90,000 options granted to Mr. Lee in connection with a like value exchange of options discussed below. (3) Mr. Tikhman was appointed Senior Vice President in July 1996 and as a member of the Office of President in August 1996. He resigned as a member of the Office of President upon the appointment of Mr. Hessler in February 1997 and as a Senior Vice President in October 1997. The options granted to Mr. Tikhman during fiscal 1997 include 225,000 options granted to Mr. Tikhman in connection with a like value exchange of options discussed below. (4) Mr. Greico was appointed an executive officer in February 1996. The options granted to Mr. Greico during fiscal 1997 include 56,250 options granted to Mr. Greico in connection with a like value exchange of options discussed below. (5) Mr. Fusco was appointed as a Vice President in September 1996 and in April 28, 1997 he was appointed Senior Vice President--Marketing and Product Management. The options granted to Mr. Fusco during fiscal 1997 include 67,500 options granted to Mr. Fusco in connection with a like value exchange of options discussed below. (6) Mr. Ben-Yehuda was appointed an executive officer in May 1997 and joined the Company in April 1996. The options granted to Mr. Ben-Yehuda during fiscal 1997 include 22,500 options granted to Mr. Ben-Yehuda in connection with a like value exchange of options discussed below. (7) Mr. Strosahl was appointed an executive officer in August 1997. The bonus amount for Mr. Strosahl in fiscal 1997 includes reimbursement of relocation and relocation related expenses that he received from the Company in the amount of $38,722. The options granted to Mr. Strosahl during fiscal 1997 include 21,575 options granted to Mr. Strosahl in connection with a like value exchange of options discussed below. (8) Mr. Schwartz was appointed an executive officer in February 1997 and resigned as such in April 1997. The amounts shown for Mr. Schwartz under "All Other Compensation" consist of severance payments which Mr. Schwartz became entitled to receive upon resignation in accordance with the terms of his employment agreement. The options granted to Mr. Schwartz during fiscal 1997 include 75,000 options granted to Mr. Schwartz in connection with a like value exchange of options discussed below. 4 The following table sets forth the details of all exchanges and repricings of options held by any named executive officer during the last ten completed fiscal years (which only includes those in connection with the 1997 like-value exchange).
NUMBER OF LENGTH OF SECURITIES ORIGINAL UNDERLYING MARKET PRICE OF OPTION OPTIONS/SARS STOCK AT TIME OF EXERCISE PRICE AT TERM REMAINING REPRICED OR REPRICING OR TIME OF REPRICING NEW EXERCISE AT DATE OF AMENDED AMENDMENT OR AMENDMENT PRICE REPRICING OR NAME DATE (#) ($) ($) ($) AMENDMENT - ------------------ -------- ------------ ---------------- ------------------ ------------ ------------- Curtis A. Hessler -- -- -- -- -- -- King R. Lee 1/8/1997 100,000 4.6875 6.00 4.6875 9/18/2006 Anatoly Tikhman 1/8/1997 250,000 4.6875 7.00 4.6875 7/24/2006 Frank R. Greico 1/8/1997 75,000 4.6875 15.813 4.6875 1/18/2006 Joseph Fusco 1/8/1997 75,000 4.6875 6.875 4.6875 9/30/2006 Ron Ben-Yehuda 1/8/1997 30,000 4.6875 13.625 4.6875 4/18/2006 John Strosahl 1/8/1997 20,000 4.6875 8.8125 4.6875 6/25/2006 1/8/1997 4,766 4.6875 13.625 4.6875 3/28/2006 Bradley D. Schwartz 1/8/1997 100,000 4.6875 15.25 4.6875 1/16/2006
EMPLOYMENT AGREEMENTS The Company entered into four-year employment agreement with Curtis A. Hessler, dated as of January 13, 1997. Pursuant to that agreement, Mr. Hessler is entitled to receive a base salary of $450,000 per year and an annual target bonus of $250,000 based upon achievement of objectives established by the Board of Directors or the Compensation Committee; provided, however, that during the first four full fiscal quarters of employment, the minimum amount of bonus shall be $125,000. In addition, Mr. Hessler was granted, pursuant to the terms of his employment agreement, options to purchase 1,350,000 shares of Common Stock. The employment agreement also provides for accelerated vesting of Mr. Hessler's options upon the occurrence of certain "change in control" transactions or if certain stock price levels are reached. Mr. Hessler is entitled to, among other things, eighteen months annual base salary upon a termination of Mr. Hessler's employment (other than for cause) prior to the expiration of the employment agreement or if Mr. Hessler terminates his employment within one year of a change in control if there is a material diminution of his duties and responsibilities, a reduction in compensation or significant reduction in benefits or a non-voluntary relocation from the Southern California area. As described above, King R. Lee received compensation from the Company pursuant to the terms of the Consulting Agreement. The Company entered into an employment agreement with Anatoly Tikhman dated as of July 24, 1996. The agreement provided for salary of $180,000 per year and an annual bonus in an amount not to exceed $90,000 determined in accordance with the terms of a management performance bonus plan. In addition, Mr. Tikhman was granted options to purchase 300,000 shares of Common Stock pursuant to the terms of the employment agreement. Mr. Tikhman resigned in October 1997 and pursuant to the terms of his employment agreement is entitled to receive, among other things, twelve months' salary payable in bi-weekly installments over a twelve month period and accelerated vesting of 50% of his unvested options. 5 Pursuant to the terms of Mr. Greico's offer letter, in the event that his employment is terminated, he is entitled to receive an amount equal to six months' salary plus six months' targeted bonus and accelerated vesting of 50% of his unvested options. The Company entered into a two-year employment agreement with Joseph Fusco, dated as of September 16, 1996. Pursuant to that agreement, Mr. Fusco is entitled to receive a base salary of $135,000 per year and an annual target bonus of $67,500 determined in accordance with the terms of a management performance bonus plan of the Company and contingent upon attainment of objectives mutually agreed upon by Mr. Fusco and the Chief Executive Officer of the Company. In addition, Mr. Fusco was granted options to purchase 75,000 shares of Common Stock pursuant to the terms of the employment agreement. The Company entered into an employment agreement with Ron Ben-Yehuda, dated as of May 1, 1996, which was amended on June 6, 1997. The agreement may be terminated by the Company or Mr. Ben-Yehuda at any time in accordance with the terms of the agreement. Pursuant to that agreement, Mr. Ben-Yehuda is entitled to receive a base salary of $155,000 per year and an annual target bonus of $70,000 contingent upon corporate and personal performance. In addition, Mr. Ben-Yehuda was granted options to purchase 50,000 shares of Common Stock pursuant to the terms of the employment agreement. The Company entered into a four-year employment agreement with Bradley D. Schwartz, dated as of January 16, 1996. Pursuant to that agreement, Mr. Schwartz received a base salary of $170,000 per year and an annual bonus of $110,000 multiplied by a "Multiplier" based upon achievement of certain individual and department goals, but to be no less than one. Mr. Schwartz resigned in April 1997 and pursuant to the terms of his employment agreement is entitled to receive among other things, twelve months' salary plus an amount equal to the maximum bonus he could have received for such 12-month period (payable in bi-weekly installments) and accelerated vesting of 50% of his unvested options. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Company's Compensation Committee oversees the Company's overall executive compensation program in addition to reviewing and administering programs available to employees of the Company. COMPENSATION POLICIES In recognition that the recruitment of personnel in the computer software industry is highly competitive, the Company's compensation policies, both for executive and non-executive employees, are structured to attract and retain highly skilled technical, marketing and management personnel. To reward and encourage performance that enhances both the short-term and long-term results of the Company, the Company's compensation program is centered in three specific areas: base salary, performance bonus and long-term incentive awards. In applying these main components to executive compensation, the Compensation Committee has determined to place a greater emphasis on merit and risk-oriented compensation for the Company's executive officers. Consequently, for executive officers, the Compensation Committee has generally preferred base salaries for executive officers that fall within the moderate range of competitor salaries and to establish bonus guidelines and long-term incentive programs (particularly option grants) that are designed to inspire and reward performance. BASE SALARY In general, the Compensation Committee reviews salaries for the Chief Executive Officer and executive officers on an annual basis, generally coordinated with the Board's annual election of executive officers following the Company's annual meeting. During fiscal year 1997, the base salary for each of Messrs. Hessler, Fusco, Ben-Yehuda, Tikhman and 6 Schwartz was paid pursuant to the terms of their employment agreements. The Compensation Committee believes that the terms of each employment agreement are consistent with the Committee's philosophy of establishing base salaries within the moderate range and placing greater emphasis on merit and risk-oriented compensation such as bonus payments based on performance and stock options. DISCRETIONARY BONUS PLAN In fiscal 1997, the Company implemented a Discretionary Bonus Plan (the "Bonus Plan") designed to further the long-term growth and profitability of the Company by motivating participants to achieve predefined quarterly and annual objectives. Employees of the Company in senior management positions were eligible to receive benefits under the Bonus Plan with the exception of Curt Hessler, who was not eligible to receive any benefits under the Bonus Plan. Awards under the Bonus Plan were based on a combination of Company, departmental and individual performance. The Company performance objectives were established by the Board of Directors in conjunction with the Chief Executive Officer. Quarterly and annual personal and departmental performance objectives were generally established by the Chief Executive Officer in conjunction with each eligible employee and reviewed by the Compensation Committee. In general, payment of bonus amounts was dependent on achievement of the objectives according to the following formula: (i) 50% of the individual bonus award for each eligible employee was based upon achievement of company-wide sales and profitability relative to the established performance objective and (ii) 50% of the individual bonus award for the executive officer was based on an evaluation of the eligible employee's personal performance against the targeted personal performance objectives and achievement of department objectives. Pursuant to his employment agreement, Mr. Hessler is entitled to receive a base salary of $450,000 per year and an annual target bonus of $250,000 based upon achievement of objectives established by the Board of Directors or the Compensation Committee; provided, however, that during the first four full fiscal quarters of employment, the minimum amount of bonus shall be $125,000. Mr. Hessler's bonus has not yet been determined for fiscal 1997, but is expected to be based on his achieving or exceeding certain financial performance goals for the Company and other factors. LONG-TERM INCENTIVE AWARDS The Company's Stock Plan permits the Compensation Committee to grant to eligible employees stock options, stock appreciation rights and other stock awards such as restricted stock and bonus stock. The Compensation Committee believes that the option grants made to the executive officers of the Company were a key factor in the Company's ability to hire such executives during fiscal year 1997 and were consistent with the Committee's philosophy of placing emphasis on risk-oriented compensation. The Compensation Committee has determined that long-term incentives should be granted on a discretionary basis based principally on the quality of individual performance and base salary levels. The Compensation Committee takes into consideration the amount of previous option grants held when granting additional options. INTERNAL REVENUE CODE SECTION 162(m) Section 162(m) of the Internal Revenue Code of 1986, as amended, places a per-person limit of $1,000,000 on the amount of compensation that may be deducted by the Company in any year with respect to certain of the Company's most highly compensated officers. Section 162(m) does not, however, disallow a deduction for qualified "performance-based compensation" the material terms of which are disclosed to and approved by stockholders. In February 1995, the stockholders approved amendments to and a restatement of the Company's 1990 Stock Plan with the result that compensation resulting from most awards granted thereunder would be qualified "performance-based compensation" and would be deductible. However, the Company may from time to time pay compensation to its executive officers that may not be deductible. 750,000 of the options granted to Mr. Hessler during fiscal year 1997 were granted outside of the Company's 1990 Stock Plan and will not qualify as performance based compensation. 7 Compensation Committee: Frank W.T. LaHaye William H. Lane III 8 Frank R. Greico(7)........................................ 29,126 * Joseph Fusco(8)........................................... 21,094 * William H. Lane III(9).................................... 15,000 * Ron Ben-Yehuda(10)........................................ 9,843 * John Strosahl(11)......................................... 8,314 * All directors and executive officers as a group (10 persons)(12)........................................... 2,320,438 5.35%
- ---------- * Less than one percent (1) Includes 175,000 shares which may be purchased pursuant to options granted to Mr. Tikhman, exercisable within 60 days of November 19, 1997. (2) Includes 337,500 shares which may be purchased pursuant to options granted to Mr. Hessler, exercisable within 60 days of November 19, 1997. (3) Includes 22,500 shares which may be purchased pursuant to options granted to Mr. LaHaye, exercisable within 60 days of November 19, 1997, and also includes 151,721 shares of Common Stock held by the Frank LaHaye Family Trust, of which Mr. LaHaye is Trustee. (4) Includes 22,500 shares which may be purchased pursuant to options granted to Mr. Morgan, exercisable within 60 days of November 19, 1997, and also includes 24,000 shares of Common Stock held in trust for Dr. Morgan's children with respect to which Dr. Morgan disclaims beneficial ownership. (5) Includes 90,200 shares which may be purchased pursuant to options granted to Mr. Schwartz, exercisable within 60 days of November 19, 1997. (6) Includes 80,000 shares which may be purchased pursuant to options granted to Mr. Lee, exercisable within 60 days of November 19, 1997, and also includes 10,000 shares of Common Stock held by The Lee Living Trust, of which Mr. Lee and his spouse are the Trustees. (7) Includes 28,126 shares which may be purchased pursuant to options granted to Mr. Greico, exercisable within 60 days of November 19, 1997. (8) Includes 21,094 shares which may be purchased pursuant to options granted to Mr. Fusco, exercisable within 60 days of November 19, 1997. (9) Includes 10,000 shares which may be purchased pursuant to options granted to Mr. Lane, exercisable within 60 days of November 19, 1997. (10) Includes 9,843 shares which may be purchased pursuant to options granted to Mr. Ben-Yehuda, exercisable within 60 days of November 19, 1997. (11) Includes 8,314 shares which may be purchased pursuant to options granted to Mr. Strosahl, exercisable within 60 days of November 19, 1997. (12) Includes 805,077 shares which may be purchased pursuant to options grated to the directors and executive officers as a group, exercisable within 60 days of November 19, 1997. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In November 1996, Frank Greico, Senior Vice President and Chief Financial Officer of the Company, received an advance on his compensation of approximately $74,000 pursuant to his employment offer letter. As of November 19, 1997, approximately $40,000 remained outstanding on the advance.
-----END PRIVACY-ENHANCED MESSAGE-----