As filed with the Securities and Exchange Commission on ~~February 22, 2001~~ March 2, 2021

Registration No. ~~333-54810 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------~~ 333-253138

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 ~~---------------~~

AMENDMENT NO. 1

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933 ~~---------------~~

MICROSOFT CORPORATION ~~(Exact~~

(Exact name of registrant issuer as specified in its charter) ~~---------------~~ Washington 7372 91-1144442 (State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer of incorporation or organization) Classification Code Number) Identification No.)

~~Washington~~

~~(State or other jurisdiction of incorporation)~~

~~7372~~

~~(Primary Standard Industrial Classification Code Number)~~

~~91-1144442~~

~~(I.R.S. Employer Identification Number)~~

~~One Microsoft Way~~

~~Redmond, Washington 98052-6399~~

~~(425) 882-8080 ~~(Address,~~~~

(Address, including zip code, and telephone number, including area code, of ~~Registrant's~~registrant’s principal executive offices) ~~--------------- John Seethoff Associate~~

~~Keith R. Dolliver, Esq.~~

~~Deputy General Counsel, ~~Finance~~Corporate, External, and ~~Operations~~ Legal Affairs~~

~~and Assistant Secretary~~

~~One Microsoft Way~~

~~Redmond, Washington 98052-6399~~

~~(425) 882-8080 ~~(Name,~~~~

~~(Name, address, including zip code, and telephone number, including area code, of agent for service) ~~Copies~~~~

~~With copies to:~~

~~Timothy S. Hearn Richard~~

William B. ~~Dodd Dorsey~~Brentani, Esq.

Simpson Thacher & ~~Whitney~~Bartlett LLP ~~Christopher H. Cunningham 220 South Sixth~~

2475 Hanover Street ~~Preston Gates~~

Palo Alto, California 94304

Tel: (650) 251-5000

Fax: (650) 251-5002

Corey R. Chivers, Esq.

Weil, Gotshal & ~~Ellis~~Manges LLP ~~Minneapolis, Minnesota 55402-1498 701~~

767 Fifth Avenue ~~Suite 5000 (612) 340-2600 Seattle, Washington 98104-7078 (206) 623-7580~~

New York, New York 10153

Tel: (212) 310-8000

Fax: (212) 310-8007

~~---------------~~
Approximate date of ~~commencement~~proposed sale of ~~proposed sale~~the securities to the public: ~~As soon as practicable~~The offering of the securities will commence promptly following the filing of the Registration Statement. No tendered securities will be accepted for exchange until after this Registration Statement ~~becomes~~has been declared effective.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ~~[_]~~ ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, ~~of 1933,~~ check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ~~[_]__________~~ ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, ~~of 1933,~~ check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ~~[_]__________ ---------------~~ ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross Border Issuer Tender Offer)  ☐
Exchange Act Rule 14d-1(d) (Cross Border Third Party Tender Offer)  ☐
CALCULATION OF REGISTRATION FEE

Title of Each Class of
Securities to be Registered Amount
to be
Registered(1)
Proposed
Maximum
Offering Price
Per Unit(2)

Proposed
Maximum
Aggregate
Offering Price(2)
Amount of
Registration Fee(3)
New Notes due 2052
$6,250,000,000 100% $6,250,000,000 $681,875
New Notes due 2062
$2,000,000,000 100% $2,000,000,000 $218,200
Total
$8,250,000,000 $900,075

(1)
Represents the aggregate principal amount of each series of notes to be offered in the exchange offers to which this Registration Statement relates.
(2)
Represents the proposed maximum offering price of all notes to be offered in the exchange offers to which this Registration Statement relates.
(3)
Calculated in accordance with Rule 457(f) under the Securities Act of 1933, as amended (based on the market value of the consideration to be received in exchange for the New Notes offered hereby, less the cash consideration to be paid by the Registrant). $818,250 of such fee was previously paid in connection with the initial filing of the Registration Statement on February 16, 2021.
The ~~registrant~~Registrant hereby amends this ~~registration statement~~Registration Statement on such date or dates as may be necessary to delay its effective date until the ~~registrant~~Registrant shall file a further amendment which specifically states that this ~~registration statement~~Registration Statement shall thereafter become effective in accordance with ~~section~~Section 8(a) of the Securities Act of 1933, as amended, or until the ~~registration statement~~Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said ~~section~~Section 8(a), may determine. ~~- ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------~~ [LOGO OF GREAT PLAINS] Dear Shareholder: We invite you to attend a special meeting of Great Plains' shareholders, which will be held on Wednesday, March 28, 2001, at 2 p.m. Central time, at Ramada Plaza Suites, 1635 42nd Street S.W., Fargo, North Dakota. At the meeting, shareholders will be asked to approve a merger agreement that will combine Great Plains with Microsoft Corporation. In the merger, you will be entitled to receive 1.1 shares of Microsoft common stock for each share of Great Plains common stock you own. Microsoft's common stock is traded on the Nasdaq Stock Market under the symbol MSFT. Thank you in advance for participating

The information in this ~~important shareholder vote. To vote, please~~prospectus may change. We may not complete ~~sign~~the exchange offers and ~~date~~issue these securities until the enclosed proxy card and return it in the enclosed postage-paid envelope or you may vote your shares using a toll- free telephone number or over the Internet, using instructions provided on the proxy card. If you attend the meeting, you may vote in person if you wish, even if you have previously voted. YOUR VOTE IS VERY IMPORTANT. The merger cannot be completed unless the holders of at least a majority of the outstanding shares of Great Plains common stock as of Wednesday, February 21, 2001, the record date, approve the merger agreement. Your vote is important because failing to vote will have the effect of voting against the merger agreement. The Great Plains board of directors has approved the merger agreement and unanimously recommends that you vote "FOR" approval of the merger agreement. The board of directors has determined that the merger is advisable and fair to, and in the best interests of, Great Plains and its shareholders. Great Plains' board of directors also believes that the merger provides additional opportunities and potential benefits for Great Plains team members, channel partners and customers. Attached is a notice of special meeting to shareholders and a proxy statement/prospectus, which describes the merger in detail. For your convenience, the first three, blue-colored pages of the proxy statement/prospectus contain frequently asked questions and related answers about the proposed merger. Please review the proxy statement/prospectus carefully. In particular, you should carefully consider the discussion in the section entitled "Risk Factors" beginning on page 15. If you would like assistance in completing your proxy card, or if you have any questions about the procedure for voting your shares described in the attached proxy statement/prospectus, please contact Great Plains Investor Relations at (701) 281-6780. We look forward to seeing many of you on March 28, 2001. And, to all Great Plains shareholders, we thank you for your support along our journey of delivering on the Great Plains mission of improving the lives and business success of partners and customers. This proxyregistration statement of Great Plains and prospectus of Microsoft is dated February 22, 2001 and is first being mailed to Great Plains shareholders on or about February 27, 2001. Sincerely, /s/ Douglas J. Burgum Douglas J. Burgum Chairman and Chief Executive Officer Neitherfiled with the Securities and Exchange Commission is effective.

~~SUBJECT TO CHANGE, DATED March 2, 2021~~

~~PROSPECTUS~~

~~MICROSOFT CORPORATION~~

Offers to exchange Existing Notes (as defined below) and a cash payment (as described below) for up to $6,250,000,000 in Aggregate Principal Amount of New 2052 Notes (as defined below) and up to $2,000,000,000 in Aggregate Principal Amount of New 2062 Notes (as defined below) and cash payment (as described below), as applicable.

The Exchange Offers (as defined below) with respect to the Existing Notes will expire at 11:59 p.m., New York City time, on March 15, 2021, unless extended or earlier terminated by us (such date and time, as the same may be extended or earlier terminated, the “Expiration Time”). In order to be eligible to receive the Early Exchange Premium (as defined below), holders of Existing Notes must validly tender their Existing Notes at or prior to 5:00 p.m., New York City time, on March 1, 2021 (such date and time, the “Early Exchange Time”). Tenders of Existing Notes may be validly withdrawn at any time at or prior to 11:59 p.m., New York City time, on March 15, 2021, unless extended by us, but will thereafter be irrevocable except in the limited circumstances where additional withdrawal rights are required by law.

Upon the terms and subject to the conditions set forth in this prospectus, Microsoft Corporation, a Washington corporation (“Microsoft” or the “Company”), is offering to exchange (the “Pool 1 Offer”) the fourteen series of notes described in the below table (collectively, the “Pool 1 Notes”) for up to $6,250,000,000 aggregate principal amount (the “New 2052 Notes Issue Cap”) of a new series of Microsoft’s 2.921% notes to be due March 17, 2052 (the “New 2052 Notes”) and a cash payment, as provided herein. The aggregate principal amount of Pool 1 Notes of each series that are accepted for exchange will be based on the order of acceptance priority for such series as set forth in the table below, subject to the New 2052 Notes Issue Cap. See Annex B to this prospectus for the final pricing terms with respect to the Pool 1 Offer.

CUSIP
Number

Title of
Security
Principal
Amount
Outstanding
(MM) Acceptance
Priority
Level Reference
UST
Security⁽¹⁾ Bloomberg
Reference
Page Fixed
Spread
(basis
points) Cash
Payment
Percent of
Premium⁽²⁾ Early
Exchange
Premium⁽³⁾⁽⁴⁾
594918BD5
   3.750% Notes due 2045 $ 640.567 9 30-year FIT 1 45 100 % $ 30
594918AR5
   3.500% Notes due 2042 $ 900.000 10 30-year FIT 1 35 100 % $ 30
594918BZ6
   4.100% Notes due 2037 $ 1,916.467 11 30-year FIT 1 5 100 % $ 30
594918BK9
   4.200% Notes due 2035 $ 1,000.000 12 30-year FIT 1 (10 ) 100 % $ 30
594918BS2
   3.450% Notes due 2036 $ 2,250.000 13 30-year FIT 1 (7 ) 100 % $ 30
594918BC7
   3.500% Notes due 2035 $ 1,500.000 14 30-year FIT 1 (15 ) 100 % $ 30
(1)
The “30-year Reference UST Security” refers to the 1.625% U.S. Treasury Notes due November 15, 2050.
(2)
The “Cash Payment Percent of Premium” is the percent (as set forth with respect to each series of Pool 1 Notes in the table above) of the amount by which the Total Exchange Consideration (as defined below and calculated at the Pricing Time (as defined below) and in accordance with the formula set forth in Annex A to this prospectus) exceeds $1,000 per $1,000 principal amount of such Pool 1 Notes.
(3)
Per $1,000 principal amount of Pool 1 Notes.
(4)
Holders who validly tender Pool 1 Notes after the Early Exchange Time but on or before the Expiration Time will not be eligible to receive the “Early Exchange Premium” of $30 principal amount of New 2052 Notes for each $1,000 principal amount of Pool 1 Notes validly tendered and not validly withdrawn. For the avoidance of doubt, the $30 per $1,000 Early Exchange Premium is included within the Total Exchange Consideration, as calculated using the Fixed Spread over the 30-year Reference UST Security as described herein, and is not in addition to the Total Exchange Consideration.
Upon the terms and subject to the conditions set forth in this prospectus, the Company is also offering to exchange (the “Pool 2 Offer” and, together with the Pool 1 Offer, the “Exchange Offers”) the four series of notes described in the below table (collectively, the “Pool 2 Notes” and, together with the Pool 1 Notes, the “Existing Notes”) for up to $2,000,000,000 (increased from $1,250,000,000) aggregate principal amount (the “New 2062 Notes Issue Cap” and, together with the New 2052 Notes Issue Cap, the “New Issue Cap”) of a new series of Microsoft’s 3.041% notes to be due March 17, 2062 (the “New 2062 Notes” and, together with the New 2052 Notes, the “New Notes”) and a cash payment, as provided herein. The aggregate principal amount of Pool 2 Notes of each series that are accepted for exchange will be based on the order of acceptance priority for such series as set forth in the below table, subject to the New 2062 Notes Issue Cap. See Annex B to this prospectus for the final pricing terms with respect to the Pool 2 Offer.
CUSIP
Number

Title of
Security
Principal
Amount
Outstanding
(MM) Acceptance
Priority
Level Reference
UST
Security⁽¹⁾ Bloomberg
Reference
Page Fixed
Spread
(basis
points) Cash
Payment
Percent of
Premium⁽²⁾ Early
Exchange
Premium⁽³⁾⁽⁴⁾
Pool 2 Notes

594918BU7
3.950% Notes due 2056 $ 1,954.510 1 30-year FIT 1 67 100% $ 30
594918BM5
4.750% Notes due 2055 $ 326.735 2 30-year FIT 1 67 96% $ 30
594918CB8
4.500% Notes due 2057 $ 883.777 3 30-year FIT 1 67 100% $ 30
594918BE3
4.000% Notes due 2055 $ 793.850 4 30-year FIT 1 67 100% $ 30

(1)	The “30-year Reference UST Security” refers to the 1.625% U.S. Treasury Notes due November 15, 2050.

(2)

The “Cash Payment Percent of Premium” is the percent (as set forth with respect to each series of Pool 2 Notes in the table above) of the amount by which the Total Exchange Consideration (calculated at the Pricing Time and in accordance with the formula set forth in Annex A to this prospectus) exceeds $1,000 per $1,000 principal amount of such Pool 2 Notes. The percentages for the 3.950% Notes due 2056, the 4.750% Notes due 2055, the 4.500% Notes due 2057 and the 4.000% Notes due 2055 have been increased to the percentages included in the table above from the previously stated percentages for such series of notes.

(3)	Per $1,000 principal amount of Pool 2 Notes.

(4)

Holders who validly tender Pool 2 Notes after the Early Exchange Time but on or before the Expiration Time will not be eligible to receive the “Early Exchange Premium” of $30 principal amount of New 2062 Notes for each $1,000 principal amount of Pool 2 Notes validly tendered and not validly withdrawn. For the avoidance of doubt, the $30 per $1,000 Early Exchange Premium is included within the Total Exchange Consideration, as calculated using the Fixed Spread over the 30-year Reference UST Security as described herein, and is not in addition to the Total Exchange Consideration.

~~Set forth below is a table summarizing the terms of the New Notes offered in the Exchange Offers:~~


Title of Series	Maturity Date	Aggregate Principal Amount of Existing Notes Accepted for Tender (MM)	Benchmark Security	Spread to Benchmark Security	Redemption at Option of the Company
New 2052 Notes (2.921% Notes due 2052)	March 17, 2052	An amount of Pool 1 Notes such that the aggregate principal amount of New 2052 Notes issued does not exceed $6,250.0.	1.625% U.S. Treasury Notes due November 15, 2050	+70 bps	The New 2052 Notes may be redeemed in accordance with the Optional Redemption provisions set forth in this prospectus. See “Description of the New Notes—Optional Redemption.”

New 2062 Notes (3.041% Notes due 2062)	March 17, 2062	An amount of Pool 2 Notes such that the aggregate principal amount of New 2062 Notes issued does not exceed $2,000.0.	1.625% U.S. Treasury Notes due November 15, 2050	+82 bps	The New 2062 Notes may be redeemed in accordance with the Optional Redemption provisions set forth in this prospectus. See “Description of the New Notes—Optional Redemption.”

The Exchange Offers will expire at 11:59 p.m., New York City time, on March 15, 2021, unless extended by us (such date and time, as they may be extended, the “Expiration Time”). To be eligible to receive the Early Exchange Premium, holders must validly tender their Existing Notes at or prior to 5:00 p.m., New York City time, on March 1, 2021 (such date and time, the “Early Exchange Time”). Tenders of Existing Notes in the Exchange Offers may be validly withdrawn at any time at or prior to the Expiration Time, but will thereafter be irrevocable, except in certain limited circumstances where additional withdrawal rights are required by law.

The consummation of each Exchange Offer is subject to, and conditional upon, the satisfaction or, where permitted, the waiver of the conditions discussed under “Description of the Exchange Offers—Conditions to the Exchange Offers,” including, among other things, the registration statement on Form S-4 of which this prospectus forms a part having been declared

effective by the Securities and Exchange Commission (the “SEC”) on or prior to the Expiration Time and remaining effective on the Settlement Date (as defined in this prospectus). We may, at our option waive any such conditions at or by the Expiration Time, except the condition that the registration statement of which this prospectus forms a part has been declared effective by the SEC on or prior to the Expiration Time and remains effective on the Settlement Date. For information about other conditions to our obligations to complete the Exchange Offers, see “Description of the Exchange Offers—Conditions to the Exchange Offers.”

For a discussion of factors you should consider in determining whether to tender your Existing Notes in connection with the Exchange Offers, see the information under “Risk Factors” beginning on page 13 of this prospectus and in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are incorporated by reference into this prospectus.

None of Microsoft, the Dealer Managers, the Exchange Agent and Information Agent (each as defined in this prospectus) for the Exchange Offers, or the trustee under the Indenture (as defined in this prospectus), or any other person makes any recommendation as to whether you should exchange your Existing Notes in the Exchange Offers.

Neither the SEC nor any state securities commission has approved or disapproved of ~~the Microsoft common stock to be issued in connection with the merger~~these securities or passed upon the ~~adequacy~~accuracy or ~~accuracy~~adequacy of this ~~proxy statement/~~prospectus. Any representation to the contrary is a criminal offense. [LOGO OF GREAT PLAINS] 1701 S.W. 38th Street Fargo, North Dakota 58103 ---------------- NOTICE OF SPECIAL MEETING OF SHAREHOLDERS ---------------- To the shareholders of Great Plains Software, Inc.: We will hold a special meeting of shareholders of Great Plains Software, Inc. on Wednesday, March 28, 2001, at 2 p.m. Central time, at Ramada Plaza Suites, 1635 42nd Street S.W., Fargo, North Dakota,

~~The Joint Lead Dealer Managers for the ~~following purpose: To consider~~Exchange Offers are:~~


Morgan Stanley		Wells Fargo Securities

~~The Senior Co-Dealer Managers for the Exchange Offers are:~~


Barclays		Credit Suisse

~~The Co-Dealer Managers for the Exchange Offers are:~~

~~The date of this prospectus is March 2, 2021.~~

~~The Exchange Offers~~

As of March 2, 2021, the aggregate principal amounts of Pool 1 Notes and ~~vote~~Pool 2 Notes outstanding were $17,898.6 million and $3,958.9 million, respectively. The aggregate principal amount of New Notes to be issued pursuant to the Exchange Offers will be subject to the applicable New Issue Cap (as described below). The principal amount of each series of Existing Notes to be accepted pursuant to the Exchange Offers will be subject to the “acceptance priority level” (in numerical priority order) of such series as set forth in the applicable table on the front cover of this prospectus.

With respect to Existing Notes tendered in an Exchange Offer, and not validly withdrawn prior to the Expiration Time, such Existing Notes of a series having a higher acceptance priority level for such Exchange Offer will be accepted for exchange before any such Existing Notes of a series having a lower acceptance priority level. If acceptance of all validly tendered Existing Notes of a series would not result in us issuing New Notes having an aggregate principal amount in excess of the applicable New Issue Cap, we will accept all validly tendered Existing Notes of such series. If acceptance of all validly tendered Existing Notes of a series would result in us issuing New Notes having an aggregate principal amount in excess of the applicable New Issue Cap, the tendered Existing Notes of such series will be accepted subject to proration as described more fully in this prospectus.

The completion of the Exchange Offers for each series of Existing Notes is subject to, and conditional upon, the satisfaction or waiver of certain conditions, including, among other things, (i) the registration statement on Form S-4 of which this prospectus forms a ~~proposal~~part having been declared effective by the SEC on or prior to ~~approve~~ the ~~Agreement~~Expiration Time and ~~Plan of Reorganization, dated~~remaining effective on the Settlement Date; (ii) the condition that, as of ~~December 21, 2000, among Microsoft Corporation, Rubicon Acquisition Corporation, a wholly owned subsidiary~~the Pricing Time, the combination of ~~Microsoft, and Great Plains~~the yield of the New Notes and the ~~transactions contemplated thereby. Under~~Total Exchange Consideration for the ~~merger agreement, Great Plains will become a wholly owned subsidiary~~applicable series of Microsoft and each outstanding share of Great Plains common stock (other than dissenters' shares) will be converted into the right to receive 1.1 shares of Microsoft common stock. This proposal is more fully describedExisting Notes would result in the ~~attached proxy statement/prospectus, which you should read carefully. We will conduct no other business at~~New Notes and such Existing Notes not being treated as “substantially different” under FASB Accounting Standards Codification (“ASC”) 470-50 (the “Accounting Treatment Condition”); (iii) the Great Plains shareholders' special meeting except business that may be properly brought before the special meeting and that is within the purpose described above. We cannot complete the merger unless the holders of a majority of the shares of Great Plains common stock outstanding on the record date vote to approve the merger agreement. Holders of Great Plains common stock are entitled to assert dissenters' rightsrequirement, with respect to the ~~merger under chapter 302A~~Exchange Offers of New Notes for Existing Notes, that we issue at least (a) $3,000,000,000 aggregate principal amount of New 2052 Notes and (b) $750,000,000 aggregate principal amount of New 2062 Notes; (iv) the Yield Condition (as defined below) (for any applicable series of Existing Notes); and (v) that nothing has occurred or may occur that would or might, in our reasonable judgment, be expected to prohibit, prevent, restrict or delay an Exchange Offer or delay the scheduled Pricing Time or impair us from realizing the anticipated benefits of an Exchange Offer. The Exchange Offer for any particular series of Existing Notes is further subject to the condition that the acceptance of validly tendered series of Existing Notes with a higher acceptance priority level would not result in the issuance of New 2052 Notes or New 2062 Notes in excess of the ~~Minnesota Business Corporation Act. All~~New 2052 Notes Issue Cap or the New 2062 Notes Issue Cap, as applicable. The Accounting Treatment Condition and the Yield Condition have been satisfied for each series of Existing Notes in the Exchange Offers. We may, at our option, waive any such conditions at or by the Expiration Time, except the condition that the registration statement of which this prospectus forms a part has been declared effective by the SEC on or prior to the Expiration Time and remains effective on the Settlement Date. The “Settlement Date” will promptly follow the Expiration Time and is expected to be March 17, 2021, which is the second business day following the Expiration Time. Tendering holders of ~~record~~Existing Notes must tender Existing Notes in minimum denominations of ~~Great Plains common stock~~$2,000 and integral multiples of $1,000 in excess thereof. New Notes will be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.

~~The Yield Condition~~

Notwithstanding any other provision in this prospectus to the contrary, if, at the ~~close~~Pricing Time, the yield of ~~business on February 21, 2001,~~the 30-year Reference UST Security with respect to any series of Existing Notes (as set forth in the table below) is less than the applicable minimum yield or is greater than the applicable maximum yield with respect to such series of Existing Notes, then, unless this condition is waived by us, we will not accept for exchange, or issue the applicable series of New Notes in exchange for, any Existing Notes of such series tendered in the Exchange Offers (the “Yield Condition”). The Yield Condition has been satisfied for the Exchange Offers.

If you validly tender Existing Notes after the Early Exchange Time, but prior to the Expiration Time, and such Existing Notes are accepted by us, you will receive, for each $1,000 principal amount of Existing Notes tendered and accepted, a combination of a principal amount of New Notes and cash with an aggregate value equal to the Exchange Consideration as follows:

(i)

an aggregate principal amount of New Notes equal to (a) the Total Exchange Consideration for such Existing Notes minus (b) the Cash Component minus (c) the Early Exchange Premium; and

(ii)

a cash payment equal to the Cash Component.

In addition to the Total Exchange Consideration or Exchange Consideration, as applicable, holders with Existing Notes that are accepted for exchange will receive a cash payment representing (i) all or a portion of the accrued and unpaid interest to, but not including, the Settlement Date and (ii) amounts due in lieu of any fractional amounts of New Notes, in each case, as described herein. As DTC (as defined below) is the record ~~date~~holder of the Existing Notes, all holders of any Existing Notes will also receive any applicable accrued and unpaid interest on those Existing Notes in accordance with DTC procedures, regardless of the record dates with respect to each series of Existing Notes.

~~The “Pricing Time” is 10:00 a.m., New York City time, on March 2, 2021.~~

The “Total Exchange Consideration” (calculated at the Pricing Time and in accordance with the formula set forth in Annex A to this prospectus) for the ~~special meeting, are entitled~~Existing Notes validly tendered prior to ~~vote~~the Early Exchange Time, and not validly withdrawn prior to the Expiration Time, is equal to the discounted value on the Settlement Date of the remaining payments of principal and interest per $1,000 principal amount of the Existing Notes through the applicable maturity date or par call date (as applicable) of the Existing Notes, using a yield (the “Exchange Offer Yield”) equal to the sum of: (i) the bid-side yield on the 30-year Reference UST Security set forth with respect to each series of Existing Notes on the front cover of this prospectus plus (ii) the applicable fixed spread set forth with respect to each series of Existing Notes on the front cover of this prospectus, minus accrued and unpaid interest on such series of Existing Notes to but not including the Settlement Date. For the avoidance of doubt, the $30 per $1,000 Early Exchange Premium is included within the Total Exchange Consideration, as calculated using the Fixed Spread over the 30-year Reference UST Security as described herein, and is not in addition to the Total Exchange Consideration. Further, for the avoidance of doubt, for the Existing Notes that have par call dates, if the applicable Exchange Offer Yield as determined in accordance with this prospectus is less than the contractual annual rate of interest, then such Total Consideration will be calculated based on the par call date; if the applicable Exchange Offer Yield as determined in accordance with this prospectus is higher than or equal to the contractual annual rate of interest, then such Total Consideration will be calculated based on the maturity date.

The “Cash Component” is the portion of the Total Exchange Consideration to be paid to holders in cash and is equal to (i) the applicable Cash Payment Percent of Premium for such series of Existing Notes multiplied by (ii) (a) the applicable Total Exchange Consideration for such series of Existing Notes minus (b) $1,000.

The “Cash Payment Percent of Premium” is the percent (as set forth with respect to each series of Existing Notes on the front cover of this prospectus) of the amount by which the Total Exchange Consideration (as calculated at the ~~special meeting or any adjournment or postponement~~Pricing Time and in accordance with the formula set forth in Annex A to this prospectus) exceeds $1,000 per $1,000 principal amount of such Existing Notes.

The “Exchange Consideration” for the Existing Notes validly tendered after the Early Exchange Time but prior to the Expiration Time is equal to the Total Exchange Consideration minus the applicable Early Exchange Premium.

~~iii~~

~~See “Description of the ~~meeting. By Order~~Exchange Offers—Total Exchange Consideration and Exchange Consideration.”~~

~~Early Exchange Premium~~

To encourage holders of Existing Notes to tender prior to the Early Exchange Time, the Total Exchange Consideration includes an Early Exchange Premium of $30 principal amount of New 2052 Notes or $30 principal amount of New 2062 Notes, as applicable, for each $1,000 principal amount of Existing Notes validly tendered and not validly withdrawn (the “Early Exchange Premium”). Only holders who validly tender their Existing Notes prior to the Early Exchange Time (and who do not validly withdraw prior to the Expiration Time), and whose tenders are accepted for exchange pursuant to the Exchange Offers, will receive the Early Exchange Premium.

Upon the terms and subject to the conditions set forth in this prospectus, holders who validly tender their Existing Notes after the Early Exchange Time but prior to the Expiration Time, and whose tenders are accepted for exchange by us, will receive only the Exchange Consideration, which does not include the Early Exchange Premium.

The “Early Exchange Time” is 5:00 p.m., New York City time, on March 1, 2021. The “Expiration Time” is 11:59 p.m., New York City time, on March 15, 2021, unless extended, in which case the Expiration Time will be such time and date to which the Expiration Time is extended.

See “Description of the Board of Directors of Great Plains Software, Inc. /s/ Bradley J. Burgum Bradley J. Burgum Secretary Fargo, North Dakota February 22, 2001 WhetherExchange Offers—Total Exchange Consideration and Exchange Consideration—Early Exchange Premium.”

~~TABLE OF CONTENTS~~


	Page
About this Prospectus		v
Incorporation of Certain Information by Reference		v
Forward-Looking Statements		vi
Prospectus Summary		1
Risk Factors		13
Use of Proceeds		16
Description of the Exchange Offers		17
Description of the New Notes		33
Certain U.S. Federal Income Tax Considerations		45
Notices to Certain Non-U.S. Holders		55
Validity of the New Notes		59
Experts		59
Where You Can Find More Information		60
Annex A—Formula to Determine the Total Exchange Consideration and Exchange Consideration		A-1
Annex B—Final Pricing Terms of the Exchange Offers		B-1

~~ABOUT THIS PROSPECTUS~~

As used in this prospectus, unless otherwise stated or ~~not you plan to attend~~ the ~~meeting, please complete, sign~~context otherwise requires, “we,” “us,” the “Company,” “our,” or “Microsoft” means Microsoft Corporation and ~~date the enclosed proxy card and mail it promptly~~its consolidated subsidiaries. However, in the ~~postage-paid envelope provided.~~“Description of the New Notes” and related summary sections of this prospectus, references to “we,” “us” and “our” are to Microsoft Corporation (parent company only) and not to any of its subsidiaries. References herein to “$” are to the lawful currency of the United States.

No person is authorized to give any information or to make any representations other than those contained or incorporated by reference in this prospectus. We and the Dealer Managers take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is not an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction where the offer or sale is unlawful. You ~~can revoke your proxy at any time before it is voted.~~ ~~PROXY STATEMENT/PROSPECTUS CONTENTS~~
~~Page ----~~ QUESTIONS AND ANSWERS ABOUT THE MICROSOFT/GREAT PLAINS MERGER............. 1 SUMMARY OF THIS PROXY STATEMENT/PROSPECTUS................................ 4 SUMMARY OF THE TRANSACTION................................................ 6 The merger.............................................................. 6 Great Plains' reasons forshould not assume that the merger; recommendation of Great Plains' board of directors..................................................... 6 Merger consideration.................................................... 6 Treatment of options.................................................... 6 Treatment of employee stock plans and other benefit plans............... 6 Opinion of Great Plains' financial advisor.............................. 7 Great Plains special meeting............................................ 7 Votes required for approval............................................. 7 Conditions to completion of the merger.................................. 7 No other negotiations involving Great Plains............................ 8 Termination of the merger agreement..................................... 8 Termination fees........................................................ 9 Great Plains management voting agreements............................... 9 Interests of Great Plains' directors, executive officers and certain employees in the merger................................................ 9 Restrictions on the ability to sell Microsoft stock..................... 10 Tax consequences of the merger.......................................... 10 Accounting treatment of the merger...................................... 10 Regulatory approvals required to complete the merger.................... 10 Dissenters' rights...................................................... 10 Differences in rights of Great Plains and Microsoft shareholders........ 11 Comparative market price information.................................... 11 SELECTED FINANCIAL DATA OF MICROSOFT AND GREAT PLAINS..................... 12 COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA............. 14 RISK FACTORS.............................................................. 15 Risks related to the merger............................................. 15 Risks related to Microsoft's business................................... 16 COMPARATIVE STOCK PRICE AND DIVIDEND INFORMATION.......................... 20 THE GREAT PLAINS SPECIAL MEETING.......................................... 22 Date, time, place and purpose of Great Plains' special meeting.......... 22 Record date; outstanding shares; shares entitled to vote................ 22 Quorum; vote required................................................... 22 Recommendation of Great Plains' board of directors...................... 22 Voting of proxies....................................................... 22 Voting electronically via Internet or telephone......................... 23 How to revoke your proxy................................................ 23 Share ownership of management........................................... 23 Abstentions and broker nonvotes......................................... 23 Proxy solicitation...................................................... 24 Dissenters' rights...................................................... 24 THE MERGER................................................................ 25 Background of the merger................................................ 25 Great Plains' reasons for the merger.................................... 26 Recommendation of Great Plains' board of directors...................... 28
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~~Page ----~~ Opinion of Great Plains' financial advisor.............................. 28 Microsoft's reasons for the merger...................................... 35 Structure of the merger; completion and effectiveness of the merger..... 36 Merger consideration; conversion of Great Plains common stock........... 36 Treatment of options and employee stock purchase and benefit plans...... 37 Interests of Great Plains' directors, executive officers and certain employees in the merger................................................ 37 Restrictions on sales by affiliates of Great Plains and Microsoft....... 39 Material United States federal income tax consequences of the merger.... 39 Accounting treatment of the merger...................................... 41 Regulatory filings and approvals required to complete the merger........ 41 Exchange of Great Plains stock certificates for Microsoft stock certificates........................................................... 41 Listing of Microsoft common stock; delisting and deregistration of Great Plains common stock.................................................... 42 Operations after the merger............................................. 42 THE MERGER AGREEMENT...................................................... 43 Conditions to completion of the merger.................................. 43 Representations and warranties.......................................... 44 Conduct of business before closing of the merger........................ 45 Exclusivity............................................................. 47 Termination of the merger agreement..................................... 47 Termination fees........................................................ 48 Extension; waiver....................................................... 49 Amendments.............................................................. 49 RELATED AGREEMENTS........................................................ 50 Great Plains management voting agreements............................... 50 Affiliate letters....................................................... 50 COMPARISON OF RIGHTS OF HOLDERS OF GREAT PLAINS COMMON STOCK AND MICROSOFT COMMON STOCK............................................................. 51 Anti-Takeover Legislation............................................... 51 Directors' Standard of Care and Personal Liability...................... 53 Limitation or Elimination of Directors' Personal Liability.............. 53 Indemnification......................................................... 54 Shareholder Voting...................................................... 54 Appraisal Rights in Connection with Corporate Reorganizations and Other Actions................................................................ 55 Cumulative Voting for Directors......................................... 55 Conflicts of Interest................................................... 55 Classified Board of Directors........................................... 55 Removal of Director..................................................... 56 Vacancies on Board of Directors......................................... 56 Annual Meetings of Shareholders......................................... 56 Special Meetings of Shareholders........................................ 56 Voluntary Dissolution................................................... 57 Involuntary Dissolution................................................. 57 Inspection of Shareholder Lists......................................... 57 Amendment of the Bylaws................................................. 57 Amendment of the Articles............................................... 57 Proxies................................................................. 58 Preemptive Rights....................................................... 58 Dividends............................................................... 58 Shareholders' Action Without a Meeting.................................. 58 Stock Repurchases....................................................... 58 RIGHTS OF DISSENTING GREAT PLAINS SHAREHOLDERS............................ 59
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~~Page ----~~ Who may exercise appraisal rights...................................... 59 Requirements for exercising appraisal rights........................... 59 Appraisal procedure.................................................... 60 SHARE OWNERSHIP OF PRINCIPAL SHAREHOLDERS, MANAGEMENT AND DIRECTORS OF GREAT PLAINS............................................................ 62 LEGAL MATTERS............................................................ 64 EXPERTS.................................................................. 64 SHAREHOLDER PROPOSALS.................................................... 64 DOCUMENTS INCORPORATED BY REFERENCE INTO THIS PROXY STATEMENT/PROSPECTUS.................................................... 65 WHERE YOU CAN FIND MORE INFORMATION...................................... 66 STATEMENTS REGARDING FORWARD-LOOKING INFORMATION......................... 66 ANNEXES ANNEX A--Agreement and Plan of Reorganization ANNEX B--Opinion of Goldman, Sachs & Co. ANNEX C--Minnesota Dissenters' Rights Statutes
~~iii~~ ~~REFERENCE TO ADDITIONAL INFORMATION This proxy statement/prospectus incorporates important business and financial~~ information ~~about Microsoft and Great Plains from documents that are not~~we have included in this prospectus is accurate as of any date other than the date of this prospectus or ~~delivered~~that any information we have incorporated by reference is accurate as of any date other than the date of the document incorporated by reference. Our business, financial condition, results of operations, and prospects may have changed since those dates.

This prospectus is part of a registration statement that we have filed with the SEC. Before making any decision on the Exchange Offers, you should read this ~~proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain~~prospectus and any prospectus supplement, together with the documents incorporated by reference in this ~~proxy statement/~~prospectus, the registration statement, the exhibits thereto and the additional information described under the heading “Where You Can Find More Information.”

~~INCORPORATION OF CERTAIN INFORMATION BY REFERENCE~~

The SEC allows us to incorporate by ~~requesting them~~reference information into this prospectus. This means that we can disclose important information to you by referring you to another document. Any information referred to in ~~writing~~this way is considered part of this prospectus from the date we file that document. Any reports filed by us with the SEC after the date of this prospectus will automatically update and, where applicable, supersede any information contained or incorporated by ~~telephone from Microsoft~~reference in this prospectus.

We incorporate by reference in this prospectus the documents set forth below that have been previously filed with the SEC; provided, however, that we are not incorporating any documents or ~~Great Plains, as~~information deemed to have been furnished rather than filed in accordance with SEC rules:

•

our Annual Report on Form 10-K for the fiscal year ended June 30, 2020;

•

the information specifically incorporated by reference into our Annual Report on Form 10-K for the fiscal year ended June 30, 2020 from our Definitive Proxy Statement on Schedule 14A filed on October 19, 2020;

•

our Quarterly Reports on Form 10-Q for the quarterly periods ended September 30, 2020 and December 31, 2020;

•

our Current Reports on Form 8-K filed on July 1, 2020, July 7, 2020, December 4, 2020 and February 16, 2021; and

any filings we make with the ~~case may be, at the following addresses and telephone numbers:~~ Microsoft Corporation Great Plains Software, Inc. One Microsoft Way 1701 S.W. 38th Street Redmond, Washington 98052 Fargo, North Dakota 58103 Phone: (800) 285-7772 Phone: (701) 281-6780 Attention: Investor Relations Attention: Pam Kloster, Investor Relations Email: msft@microsoft.com Email: pam.kloster@greatplains.com Fax: (425) 936-8000 Fax: (701) 492-1018
~~If you would like to request documents, please do so by Wednesday, March 21, 2001 in order to ensure timely delivery~~SEC under Sections 13(a), 13(c), 14, or 15(d) of the ~~documents. iv~~ ~~QUESTIONS AND ANSWERS ABOUT THE MICROSOFT/GREAT PLAINS MERGER Q: What is the merger? A: In the merger a wholly owned subsidiary~~Securities Exchange Act of ~~Microsoft Corporation will merge with and into Great Plains Software, Inc.~~1934, as amended (the “Exchange Act”), and Great Plains will become a wholly owned subsidiary of Microsoft. Q: Why are Microsoft and Great Plains proposing to merge? A: The merger will expand Microsoft's product offerings to include Great Plains' e-business solutions for interconnecting business communities. These e-business solutions automate processes among financials, distribution, enterprise reporting, project accounting, electronic commerce, human resources and payroll, manufacturing, sales and marketing management, customer service and support functions. For Great Plains' shareholders, the merger offers the opportunity to receive a premium for their shares based upon the market prices of Great Plains and Microsoft common stock immediately prior to the public announcement of the merger. The merger also offers Great Plains' shareholders the opportunity to continue to participate in the growth of the business conducted by Microsoft and Great Plains following the merger and to benefit from the potential appreciation in value of Microsoft common stock. Q: What will I receive in the merger? A: For each share of Great Plains common stock you own, you will receive 1.1 shares of Microsoft common stock. For example, if you own 100 shares of Great Plains common stock, you will receive 110 shares of Microsoft common stock. Microsoft will not issue fractional shares of its common stock. Instead of any fractional shares, you will receive cash based on the average market price of Microsoft common stock over a specified period of time before the closing of the merger. Q: Does the board of directors of Great Plains recommend voting in favor of the merger agreement? A: Yes. After careful consideration, Great Plains' board of directors has determined that the terms of the merger are fair to, and in the best interests of, Great Plains and its shareholders and unanimously recommends that you vote in favor of the merger agreement. Q: What vote is required to approve the merger? A: The holders of at least a majority of the outstanding shares of Great Plains common stock must approve the merger agreement. Microsoft shareholders are not required to approve the merger and will not vote on the merger. You are entitled to cast one vote per share of Great Plains common stock you owned at the close of business on February 21, 2001, the record date for the special meeting. As of the record date, the holders of approximately 22.4% of the outstanding shares of common stock have already agreed to vote in favor of the merger pursuant to voting agreements entered into in connection with the execution of the merger agreement. These shareholders have already given irrevocable proxies to Microsoft to vote in favor of the merger. Q: Are there risks I should consider in deciding whether to vote for the merger? A: Yes. For example, Great Plains shareholders will receive 1.1 shares of Microsoft common stock for each share of Great Plains common stock they own, regardless of the market price of either Microsoft common stock or Great Plains common stock at the effective time of the merger. The market value of Microsoft common stock is likely to fluctuate, and no one can accurately predict what the market value will be either at the effective time of the merger or after the ~~merger. In evaluating~~date of this prospectus.

~~To obtain copies of these filings, see information described under the ~~merger, you should carefully consider~~heading “Where You Can Find More Information” in this prospectus.~~

~~FORWARD-LOOKING STATEMENTS~~

Certain statements in this prospectus, any prospectus supplement and the documents incorporated by reference herein, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise. Actual results could differ materially because of, among others, the following factors:

~~intense competition in all of our markets that may lead to lower revenue or operating margins;~~

~~increasing focus on cloud-based services presenting execution and competitive risks;~~

~~significant investments in products and services that may not achieve expected returns;~~

~~acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;~~

~~impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;~~

~~cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;~~

~~disclosure and misuse of personal data that could cause liability and harm to our reputation;~~

~~the possibility that we may not be able to protect information stored in our products and services from use by others;~~

~~abuse of our advertising or social platforms that may harm our reputation or user engagement;~~

~~the development of the internet of things presenting security, privacy, and execution risks;~~

~~issues about the use of artificial intelligence in our offerings that may result in competitive harm, legal liability, or reputational harm;~~

~~excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;~~

~~quality or supply problems;~~

~~government litigation and regulatory activity relating to competition rules that may limit how we design and market our products;~~

~~potential liability under trade protection, anti-corruption, and other laws resulting from our global operations;~~

~~laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;~~

~~claims against us that may result in adverse outcomes in legal disputes;~~

~~uncertainties relating to our business with government customers;~~

~~additional tax liabilities;~~

~~the possibility that we may fail to protect our source code;~~

~~legal changes, our evolving business model, piracy, and other factors ~~discussed~~may decrease the value of our intellectual property;~~

~~claims that Microsoft has infringed the intellectual property rights of others;~~

~~damage to our reputation or our brands that may harm our business and operating results;~~

~~adverse economic or market conditions that may harm our business;~~

~~catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business;~~

~~exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange; and~~

~~the dependence of our business on our ability to attract and retain talented employees.~~

A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in this prospectus under the ~~section entitled "Risk Factors" beginning~~heading “Risk Factors” and in Part I, Item 1A of our Annual Report on ~~page 15. 1~~ ~~Q: What do I need to do now? A: You~~Form 10-K, Part II, Item 1A of our Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K incorporated by reference in this prospectus. These factors should cast your vote on the merger agreement by completing, signing and dating your proxy card. You should return your completed proxy card as soon as possible in the enclosed postage-paid envelope. If you return your signed proxy card but do not include instructions on how to vote, your shares will be voted "FOR" approval of the merger agreement. Instead of returning your proxy by mail, you may vote your shares through a toll-free number or over the Internet. Instructions for using these convenient services are provided on the enclosed proxy card. You can also attend the special meeting and vote in person. If you abstain from voting or do not vote, it will have the effect of voting against approval of the merger agreement. THE BOARD OF DIRECTORS OF GREAT PLAINS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT. Q: What do I do if I want to change my vote? A: At any time before your proxy is voted at the special meeting, you can change your vote. First, you can send Mellon Investor Services LLC, the firm that Great Plains has retained to provide proxy solicitation services, a written notice stating that you would like to revoke your proxy. Second, you can complete and send a later-dated signed proxy card to Mellon Investor Services. Third, if you voted by telephone or over the Internet, you can follow the revocation procedures provided at the time of your vote on the Internet voting site or telephone voting system. Finally, you can attend the special meeting and vote in person. Q: If my Great Plains shares are held in "street name" by my broker, will my broker vote my shares for me? A: Your broker will vote your shares only if you provide instructions on how to vote. You should fill out the voter instruction form sent to you by your broker with this proxy statement/prospectus. If you do not give instructions to your broker, your shares will not be ~~voted, which will have the effect of voting against the merger. Q: Should I send~~construed as exhaustive and should be read in my Great Plains stock certificates now? A: No. After the merger is completed, we will send you written instructions for exchanging your Great Plains stock certificates for Microsoft stock certificates. Please do not send in your stock certificates with your proxy card. Q: When do you expect the merger to be completed? A: We are working toward completing the merger as quickly as possible. We hope to complete the merger in the second calendar quarter of 2001, if regulatory approvals and other required matters are completed at that time. Q: Will I recognize a taxable gain or loss on the transaction? A: Microsoft and Great Plains intend the merger to qualify as a tax-free reorganization under the Internal Revenue Code. Accordingly, we expect that if the merger is completed, Great Plains shareholders should not recognize a gain or loss for United States federal income tax purposes as a result of the merger, except that you will recognize a gain or loss with respect to cash received instead of a fractional share or with respect to cash received upon exercise of dissenters' rights. However, we urge you to consult your own tax advisor to determine the tax consequences particular to your situation. 2 Q: Will Great Plains employee stock options become Microsoft stock options? A: Yes. Employee stock options to purchase shares of Great Plains common stock will be assumed by Microsoft and will automatically become options to purchase shares of Microsoft common stock. The number of shares subject to each option and the exercise price per share will be adjusted to reflect the 1.1 exchange ratio, with options for fractional shares being rounded to the nearest whole Microsoft share. Vesting schedules for employee options will not be affected by the merger. Q: Whom should I call with questions? A: If you have any questions about the merger or if you need additional copies of the proxy statement/prospectus, you should contact: Pam Kloster Investor Relations Great Plains Software Inc. Phone: (701) 281-6780 Fax: (701) 492-1018 Email: pam.kloster@greatplains.com If you have any questions regarding Microsoft, you should contact: Investor Relations Microsoft Corporation One Microsoft Way Redmond, Washington 98052 Phone: (800) 285-7772 Fax: (425) 936-8000 Email: msft@microsoft.com You may also obtain additional information about Microsoft and Great Plains from documents we fileconjunction with the ~~Securities and Exchange Commission,~~other cautionary statements that are included or incorporated by ~~following the instructions~~reference in ~~the section entitled "Where you can find more information" on page 66. 3~~ this prospectus.

~~We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise, except as required by law.~~

~~vii~~

~~PROSPECTUS SUMMARY ~~OF THIS PROXY STATEMENT/PROSPECTUS~~~~

This summary highlights ~~selected~~ information ~~from~~appearing elsewhere in this ~~proxy statement/~~prospectus and may not contain all of the information that ismay be important to you. ~~To understand the merger fully and for a more complete description of the legal terms of the merger, you~~You should ~~carefully~~ read this entire ~~proxy statement/~~prospectus carefully, including the ~~documents attached to this proxy statement/prospectus,~~information set forth under the heading “Risk Factors” and the ~~other documents to which we refer you, as described~~information incorporated by reference in this prospectus before participating in the ~~section entitled "Where~~Exchange Offers. See the sections of this prospectus titled “Where You Can Find More ~~Information" beginning~~Information” and “Incorporation of Certain Information by Reference.”

~~Embracing Our Future~~

Microsoft is a technology company whose mission is to empower every person and every organization on ~~page 66.~~the planet to achieve more. We ~~have included page references~~strive to create local opportunity, growth, and impact in ~~parentheses~~every country around the world. Our platforms and tools help drive small business productivity, large business competitiveness, and public-sector efficiency. They also support new startups, improve educational and health outcomes, and empower human ingenuity. As the world continues to ~~direct you~~respond to the coronavirus (“COVID-19”), we are working to do our part by ensuring the safety of our employees, striving to protect the health and well-being of the communities in which we operate, and providing technology and resources to our customers to help them do their best work while remote.

We continue to transform our business to lead in the new era of the intelligent cloud and intelligent edge. We bring technology and products together into experiences and solutions that unlock value for our customers. Our unique role as a platform and tools provider allows us to connect the dots, bring together an ecosystem of partners, and enable organizations of all sizes to build the digital capability required to address these challenges.

In this next phase of innovation, computing is more powerful and ubiquitous from the cloud to the edge. Artificial intelligence (“AI”) capabilities are rapidly advancing, fueled by data and knowledge of the world. Physical and virtual worlds are coming together with the Internet of Things (“IoT”) and mixed reality to create richer experiences that understand the context surrounding people, the things they use, the places they go, and their activities and relationships. A person’s experience with technology spans a multitude of devices and has become increasingly more natural and multi-sensory with voice, ink, and gaze interactions.

~~What We Offer~~

~~Founded in 1975, we develop and support software, services, devices, and solutions that deliver new value for customers and help people and businesses realize their full potential.~~

We offer an array of services, including cloud-based solutions that provide customers with software, services, platforms, and content, and we provide solution support and consulting services. We also deliver relevant online advertising to a ~~more complete description of some~~global audience.

Our products include operating systems; cross-device productivity applications; server applications; business solution applications; desktop and server management tools; software development tools; and video games. We also design, manufacture, and sell devices, including PCs, tablets, gaming and entertainment consoles, other intelligent devices, and related accessories.

~~Corporate Information~~

Microsoft Corporation, a Washington corporation, was founded as a partnership in 1975 and incorporated under the laws of the ~~topics presented~~State of Washington in ~~this summary. The Companies [MICROSOFT LOGO] Microsoft Corporation~~1981. Our principal executive offices are located at One Microsoft Way, Redmond, Washington ~~98052~~98052-6399, and our main telephone number is (425) 882-8080 http://www.microsoft.com Microsoft (Nasdaq: MSFT) develops, manufactures, licenses and supports a wide range of software products for a multitude of computing devices. Microsoft software includes scalable operating systems for servers, personal computers (PCs) and intelligent devices, server applications for client/server environments, knowledge worker productivity applications and software development tools. Microsoft's online efforts include the MSN(TM) network of Internet products and services and alliances with companies involved with broadband access and various forms of digital interactivity. Microsoft also licenses consumer software programs, sells hardware devices, provides consulting services, trains and certifies system integrators and researches and develops advanced technologies for future software products. Microsoft's business strategy emphasizes the development of a broad line of software products for information technology professionals, knowledge workers, developers and consumers, marketed882-8080. Our website address is www.microsoft.com. Information contained on, or that can be accessed through, multiple channels of distribution. On February 14, 2001, Microsoft filed its financial results for the second quarter of fiscal year 2001, ended December 31, 2000, with the SEC on Form 10- Q. Net income for the quarter was $2.62 billion and diluted earnings per share were $0.47. Revenues totaled $6.59 billion, an 8% increase over $6.11 billion for the comparable quarter of the prior year. Net income for the quarter rose 8% and diluted earnings per share grew 7% to $0.47, from $0.44 in the second quarter of the prior year. For additional information about Microsoft's business, see Microsoft's Annual Report on Form 10-K for the fiscal year ended June 30, 2000 and other documents Microsoft has filed with the SEC, which are incorporated into this proxy statement/prospectus by reference. See "Where you can find more information" on page 66. The information on Microsoft's Web site isour website does not constitute part of this ~~proxy statement/prospectus. 4~~ ~~[LOGO OF GREAT PLAINS] Great Plains Software, Inc. 1701 S.W. 38th Street Fargo, North Dakota 58103 (701) 281-6500 http://www.greatplains.com Great Plains (Nasdaq: GPSI) was founded~~prospectus, and inclusions of our website address in ~~1981~~this prospectus are inactive textual references only.

~~The Exchange Offers~~

The following summary is provided solely for your convenience and was incorporated as a Minnesota corporation in 1983. Great Plains completed its initial public offering in June 1997 and a secondary offering in March 1999. Great Plains develops, markets, sells and supports interconnected business management solutions that automate processes across the back office functions of financials, distribution, enterprise reporting, project accounting, human resources and payroll, manufacturing and the front office applications of sales and marketing management, customer service and support. In addition, Great Plains provides solutions across electronic commerce, self-service and Web-based analytics. Great Plains' solutions are designed to meet the business application needs of small to medium-sized businesses, generally defined as having between $1 million and $500 million in annual revenue. Over 135,000 customers are currently improving their businesses with Great Plains, and 6,000 new customers joined the Great Plains community this last year. Great Plains solutions are available in eight languages, leverage the Internet and are optimized for Microsoft technologies. Great Plains' solutions are fully and seamlessly integrated across the application areas of back office, front office and e-business. Great Plains' worldwide network of 2,000 independent partner organizations dramatically expands the company's ability to reach and serve small and medium sized businesses. Great Plains considers the partnership with these value added resellers, system integrators, consultants, solution developers, application solution providers, accounting firms and e-business implementation providersis not intended to be ~~one~~complete. You should read the full text and more specific details contained elsewhere in this prospectus for a more detailed description of the ~~company's strongest assets. Great Plains has 2,000 team members worldwide and has been named four times to the "Top 100 Companies to Work~~notes.

Exchange Offers

We are offering holders consideration consisting of a cash payment and up to $6,250,000,000 aggregate principal amount of our New 2052 Notes, or a cash payment and up to $2,000,000,000 aggregate principal amount of our New 2062 Notes, as applicable. The holders of each series of Existing Notes accepted for exchange will receive the applicable Total Exchange Consideration as determined as described under “Description of the Exchange Offers—Total Exchange Consideration and Exchange Consideration” for such series of Existing Notes validly tendered on or before the Early Exchange Time and not validly withdrawn prior to the Expiration Time. For Existing Notes validly tendered after the Early Exchange Time and on or before the Expiration Time, the holders of each series of Existing Notes accepted for exchange will be eligible to receive the applicable Exchange Consideration as determined as described under “Description of the Exchange Offers—Total Exchange Consideration and Exchange Consideration.” The Total Exchange Consideration includes the Early Exchange Premium as an incentive for holders of Existing Notes to tender their Existing Notes on or before the Early Exchange Time.

Unless we waive such condition, if less than $3,000,000,000 of New 2052 Notes would be issued, then all Pool 1 Note tenders will be cancelled and no New 2052 Notes will be created. Unless we waive such condition, if less than $750,000,000 of New 2062 Notes would be issued, then all Pool 2 Note tenders will be cancelled and no New 2062 Notes will be created.

In addition to the Total Exchange Consideration or the Exchange Consideration, as applicable, we will pay all of the accrued and unpaid interest to, but not including, the Settlement Date on Existing Notes which are validly tendered and accepted. As DTC is the record holder of the Existing Notes, all holders of any Existing Notes will also receive any applicable accrued and unpaid interest on those Existing Notes in accordance with DTC procedures, regardless of the record dates with respect to each series of Existing Notes.

The New Notes will only be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.

Acceptance Priority Levels and Proration Procedures

We will accept tenders of Existing Notes by series in accordance with the “acceptance priority level” (in numerical priority order) of each such series as set forth in the applicable table on the front cover of this prospectus.

With respect to Existing Notes tendered in an Exchange Offer, and not validly withdrawn prior to the Expiration Time, such Existing Notes of a series having a higher acceptance priority level for such Exchange Offer will be accepted for exchange before any such Existing Notes of a series having a lower acceptance priority level. If acceptance of all validly tendered Existing Notes of a series would not result in us issuing New Notes having an aggregate principal amount in excess of the applicable New Issue Cap, we will accept all validly tendered Existing Notes of such series. If acceptance of all validly tendered Existing Notes of a series would result in us issuing New Notes having an aggregate principal amount in excess of the applicable New Issue Cap, the tendered Existing Notes of such series will be accepted on a pro rata basis. See “Description of the Exchange Offers—Acceptance Priority Levels and Proration Procedures.”

Total Exchange Consideration and Exchange Consideration

If you validly tender Existing Notes prior to the Early Exchange Time and do not validly withdraw such tendered Existing Notes prior to the Expiration Time, and such Existing Notes are accepted by us, you will receive, for each $1,000 principal amount of Existing Notes tendered and accepted, a combination of a principal amount of New Notes and cash with an aggregate value equal to the Total Exchange Consideration as follows:

(i)

an aggregate principal amount of New Notes equal to (a) the Total Exchange Consideration for such Existing Notes minus (b) the Cash Component; and

(ii)

a cash payment equal to the Cash Component.

If you validly tender Existing Notes after the Early Exchange Time, but prior to the Expiration Time,and such Existing Notes are accepted by us, youwill receive, for each $1,000 principal amount ofExisting Notes tendered and accepted, a combination of a principal amount of New Notes and cash with an aggregate value equal to the Exchange Consideration as follows:

(i)

an aggregate principal amount of New Notes equal to (a) the Total Exchange Consideration for such Existing Notes minus (b) the Cash Component minus (c) the Early Exchange Premium; and

(ii)

a cash payment equal to the Cash Component.

In addition to the Total Exchange Consideration or Exchange Consideration, as applicable, holders with Existing Notes that are accepted for exchange will receive a cash payment representing (i) all or a portion of the accrued and unpaid interest to, but not including, the Settlement Date and (ii) amounts due in lieu of any fractional amounts of New Notes, in each case as described herein. As DTC is the record holder of the Existing Notes, all holders of any Existing Notes will also receive any applicable accrued and unpaid interest on those Existing Notes in accordance with DTC procedures, regardless of the record dates with respect to each series of Existing Notes.

The “Total Exchange Consideration” (calculated at the Pricing Time and in accordance with the formula set forth in America" list. On January 16, 2001, Great Plains filed its financial results for the second quarter of fiscal year 2001, ended November 30, 2000, with the SEC on Form 10-Q. Revenues for the quarter ended November 30, 2000 were $75.5 million, a 59.5% increase over revenues for the second quarter of fiscal 2000 of $47.4 million. Net income (loss) for the second quarter of fiscal 2001 was $(10.5) million, compared to net income for the second quarter of fiscal 2000 of $4.4 million. Diluted earnings (loss) per share for the second quarter of fiscal 2001 were $(0.52), compared to diluted earnings per share for the second quarter of fiscal 2000 of $0.27. Excluding the amortization of acquired intangibles and the related tax effect, pro forma net income was $4.2 million for the second quarter of fiscal 2001, compared to $4.6 million for the second quarter of fiscal 2000. Pro forma diluted earnings per share for the second quarter of fiscal 2001 were $0.20, compared to $0.28 for the second quarter of fiscal 2000. For additional information about Great Plains' business, see Great Plains' Annual Report on Form 10-K for the fiscal year ended May 31, 2000 and other documents Great Plains has filed with the SEC, which are incorporated into this proxy statement/prospectus by reference. See "Where you can find more information" on page 66. The information on Great Plains' Web site is not part of this proxy statement/prospectus. 5 SUMMARY OF THE TRANSACTION The merger (see page 25) In the merger, a wholly owned subsidiary of Microsoft will merge with and into Great Plains, and Great Plains will become a wholly owned subsidiary of Microsoft. The merger agreement is attached to this proxy statement/prospectus as Annex A to this prospectus) for the Existing Notes validly tendered prior to the Early Exchange Time, and not validly withdrawn prior to the Expiration Time, is equal to the discounted value on the Settlement Date of the remaining payments of principal and interest per $1,000 principal amount of the Existing Notes through the applicable maturity date or par call date (as applicable) of the Existing Notes, using a yield equal to the sum of: (i) the bid-side yield on the 30-year Reference UST Security set forth with respect to each series of Existing Notes on the front cover of this prospectus plus (ii) the applicable fixed spread set forth with respect to each series of Existing Notes on the front cover of this prospectus, minus accrued and unpaid interest on such series of Existing Notes to but not including the Settlement Date. For the avoidance of doubt, the $30 per $1,000 Early Exchange Premium is

included within the Total Exchange Consideration, as calculated using the Fixed Spread over the 30 year Reference UST Security as described herein, and is not in addition to the Total Exchange Consideration.

The “Cash Payment Percent of Premium” is the percent (as set forth with respect to each series of Existing Notes on the front cover of this prospectus) of the amount by which the Total Exchange Consideration (as calculated at the Pricing Time and in accordance with the formula set forth in Annex A to this prospectus) exceeds $1,000 per $1,000 principal amount of such Existing Notes.

Early Exchange Premium

Holders who validly tender their Existing Notes after the Early Exchange Time but prior to the Expiration Time, and whose tenders are accepted for exchange by us, will receive only the Exchange Consideration, which does not include the Early Exchange Premium.

Accrued and Unpaid Interest

In addition to the Total Exchange Consideration or the Exchange Consideration, as applicable, we will pay all of the accrued and unpaid interest to, but not including,

the Settlement Date on Existing Notes which are validly tendered and accepted. As DTC is the record holder of the Existing Notes, all holders of any Existing Notes will also receive any applicable accrued and unpaid interest on those Existing Notes in accordance with DTC procedures, regardless of the record dates with respect to each series of Existing Notes.

Information

Any questions concerning the terms of the Exchange Offers should be directed to the Dealer Managers at the telephone numbers listed on the back cover page of this prospectus.

Questions concerning tender procedures and requests for additional copies of this prospectus should be directed to the Information Agent (as defined below) at its address or telephone numbers listed on the back cover page of this prospectus.

Early Exchange Time

5:00 p.m., New York City time, on March 1, 2021.

Pricing Time

10:00 a.m., New York City time, on March 2, 2021.

Expiration Time

Each of the Exchange Offers will expire at 11:59 p.m., New York City time, on March 15, 2021, which is the 20th business day after the date of this prospectus, unless extended by us. We do not currently intend to extend the Expiration Time.

Settlement Date

Promptly following the Expiration Time and expected to be March 17, 2021, which is the second business day following the Expiration Time (the “Settlement Date”).

Withdrawal of Tenders

Tenders submitted in the Exchange Offers may be validly withdrawn at or prior to 11:59 p.m., New York City time, on March 15, 2021, unless extended by us, but will thereafter be irrevocable except in the limited circumstances where additional withdrawal rights are required by law. See “Description of the Exchange Offers—Withdrawal of Tenders.”

Conditions to the Exchange Offers

The consummation of each Exchange Offer is subject to, and conditional upon, the satisfaction or, where permitted, the waiver of the conditions discussed under “Description of the Exchange Offers—Conditions to the Exchange Offers,” including, among other things, the registration statement of which this prospectus forms a part having been declared effective by the SEC on or prior to the Expiration Time and remaining effective on the Settlement Date. We may, at our option, waive any

such conditions at or by the Expiration Time, except the condition that the registration statement of which this prospectus forms a part has been declared effective by the SEC on or prior to the Expiration Time and remains effective on the Settlement Date.

Procedures for Tendering

If you wish to participate in the Exchange Offers and your Existing Notes are held by a custodial entity, such as a bank, broker, dealer, trust company or other nominee, you must instruct that custodial entity to tender your Existing Notes on your behalf pursuant to the procedures of that custodial entity. Please ensure that you contact your custodial entity as soon as possible to give them sufficient time to meet your requested deadline. Beneficial owners are urged to appropriately instruct their bank, broker, custodian or other nominee at least five business days prior to the Early Exchange Time or the Expiration Time, as the case may be, in order to allow adequate processing time for their instruction. You must tender Existing Notes through the Automated Tender Offer Program (“ATOP”) maintained by The Depository Trust Company (“DTC”), as described under “Description of the Exchange Offers—Procedures for Tendering.”

We have not provided guaranteed delivery procedures in conjunction with the Exchange Offers. No letter of transmittal will be used in connection with the Exchange Offers. The valid electronic transmission of acceptance through ATOP shall constitute delivery of your Existing Notes in connection with the Exchange Offers.

If you are a beneficial owner that holds Existing Notes through Euroclear (as defined below) or Clearstream (as defined below) and wish to tender your Existing Notes, you must instruct Euroclear or Clearstream, as the case may be, to block the account in respect of the tendered Existing Notes in accordance with the procedures established by Euroclear or Clearstream. You are encouraged to contact Euroclear or Clearstream directly to ascertain their procedures for tendering Existing Notes.

Consequences of Failure to Exchange

For a description of the consequences of failing to exchange your Existing Notes, see “Risk Factors” and “Description of the Exchange Offers—Certain Consequences to Holders of Existing Notes Not Tendering in the Exchange Offers.”

Brokerage Fees and Commissions

No brokerage fees or commissions are payable by the holders of the Existing Notes to the Dealer Managers, the Exchange Agent, the Information Agent, or the Company in connection with the Exchange Offers. If a tendering holder handles the transaction through its broker, dealer, commercial bank, trust company, or other institution, that holder may be required to pay brokerage fees or commissions.

Certain U.S. Federal Income Tax Considerations

For a discussion of certain U.S. federal income tax consequences of the Exchange Offers and the ownership and disposition of the New Notes, see “Certain U.S. Federal Income Tax Considerations.”

Use of Proceeds

We will not receive any cash proceeds from the issuance of the New Notes in the Exchange Offers. See “Use of Proceeds.”

Dealer Managers

Morgan Stanley & Co. LLC and Wells Fargo Securities, LLC are serving as the joint lead dealer managers for the Exchange Offers for the Existing Notes. The addresses and telephone numbers of the joint lead dealer managers are set forth on the back cover of this prospectus.

Barclays Capital Inc. and Credit Suisse Securities (USA) LLC are serving as senior co-dealer managers for the Exchange Offers for Existing Notes.

Academy Securities, Inc., CastleOak Securities, L.P., Drexel Hamilton, LLC, Loop Capital Markets LLC, MFR Securities, Inc., Mischler Financial Group, Inc., Samuel A. Ramirez & Company, Inc. and Siebert Williams Shank & Co., LLC are serving as co-dealer managers for the Exchange Offers for Existing Notes.

We have other business relationships with the dealer managers, as described in ‘‘Description of the Exchange Offers—Dealer Managers.’’

Exchange and Information Agent

D.F. King & Co., Inc. is the exchange agent (the “Exchange Agent”) and the information agent (the “Information Agent”) for the Exchange Offers. The address and telephone number of D.F. King & Co., Inc. are set forth in the section captioned “Description of the Exchange Offers—Exchange Agent; Information Agent” of this prospectus.

Differences Between Existing Notes and New Notes

The New Notes will be issued under the same indenture as the Existing Notes and will be subject to the same covenants as described herein. The New Notes will have the interest rates, tenors and redemption terms as described herein.

Further Information

Questions or requests for assistance related to the Exchange Offers or for additional copies of this prospectus may be directed to the Information Agent. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offers. The contact information for the Dealer Managers is set forth on the back cover page of this prospectus. See also “Where You Can Find More Information.”

Risk Factors

You should carefully consider all information set forth or incorporated by reference in this prospectus prior to exchanging your Existing Notes. In particular, you should evaluate the specific risks related to the Exchange Offers described in the section entitled “Risk Factors” in this prospectus before participating in the Exchange Offers.

We encourage you to carefully read the merger agreement and the discussion of the merger and merger agreement in this proxy statement/prospectus. Great Plains' reasons for the merger (see page 26) In reaching its decision to approve and adopt the merger agreement and to unanimously recommend that Great Plains shareholders approve the merger agreement, Great Plains' board of directors identified reasons why the merger shouldmay be beneficial to Great Plains and its shareholders, employees, partners and customers. In the course of deliberations, Great Plains' board also reviewed with its executive management team and its legal and financial advisors a number of additional factors relevant to the merger. Great Plains' board also considered and balanced against the potential benefits of the merger a number of potentially negative factors. Recommendation of Great Plains' board of directors (see page 28) After careful consideration, Great Plains' board of directors approved the merger agreement and unanimously recommends that you vote "FOR" approval of the merger agreement. Merger consideration (see page 36) You will be entitled to receive 1.1 shares of Microsoft common stock for each share of Great Plains common stock you own. Microsoft will not issue fractional shares of stock. You instead will receive cash for fractional shares based on the average market price of Microsoft common stock over a specified period of time before the closing of the merger. Treatment of options (see page 37) Outstanding options to purchase shares of Great Plains common stock will become options to purchase shares of Microsoft common stock on the same terms and conditions as the Great Plains options. Microsoft has agreed to use good faith efforts to ensure that Great Plains options which qualified as "incentive stock options" as defined by the Internal Revenue Code prior to the merger will qualify as incentive stock options for Microsoft common stock after the merger. Great Plains options that do not qualify as incentive stock options will convert into options for Microsoft common stock that are similarly non- qualified. The number of shares subject to each option and the exercise price per share will be adjusted to reflect the 1.1 exchange ratio. Option vesting schedules and exercisability will not be affected by the merger. Treatment of employee stock plans and other benefit plans (see page 37) Immediately before the effective time of the merger, Great Plains will terminate or modify according to Microsoft's direction all of Great Plains' various stock option and stock purchase plans. This termination will not result in any loss of rights for those employees who purchased stock or have already been granted options or other awards under these plans. Microsoft has the right to require Great Plains to modify or terminate its other employee benefits plans; however it is currently anticipated that Great Plains will maintain its own separate non-stock based benefits plans for the immediate future without modification. 6 Opinion of Great Plains' financial advisor (see page 28; Annex B) Great Plains' board of directors received an opinion from Great Plains' financial advisor, Goldman, Sachs & Co., that, subject to the matters and assumptions set forth in that opinion, as of December 21, 2000, the exchange ratio in connection with the merger was fair from a financial point of view to holders of Great Plains common stock. Great Plains special meeting (see page 22) The special meeting of Great Plains' shareholders will be held on Wednesday, March 28, 2001, at 2 p.m. Central time, at Ramada Plaza Suites, 1635 42nd Street S.W., Fargo, North Dakota. At the meeting, you will be asked to approve a merger agreement that will cause Great Plains to become a wholly owned subsidiary of Microsoft. You can vote at the special meeting only if you owned shares of Great Plains common stock at the close of business on February 21, 2001, the record date. Votes required for approval (see page 22) The holders of at least a majority of the outstanding shares of Great Plains common stock must approve the merger agreement. Great Plains' shareholders are entitled to cast one vote for each share of Great Plains common stock they owned as of the record date. Each of Great Plains' directors and executive officers, who collectively held the power to vote approximately 22.4% of Great Plains' outstanding common stock as of the record date, have already agreed to vote their shares in favor of the merger. Microsoft's shareholders are not required to approve the merger and will not vote on the merger. Conditions to completion of the merger (see page 43) Great Plains' and Microsoft's respective obligations to effect the merger are subject to the prior satisfactionamend or waiver of specific conditions. The conditions that must be satisfied or waived before the completion of the merger include the following, subject to exceptions and qualifications: . Great Plains' shareholders approve the merger agreement as required by Minnesota law; . no statute, regulation, order, decree or injunction prevents the merger; . Great Plains and Microsoft receive all material consents and approvals for the merger; . Great Plains' and Microsoft's respective representations and warranties in the agreement are true and correct except in respects that do not have a material adverse effect; . no material adverse change has occurred with respect to Great Plains' business condition or the economic or business benefits expected from the merger; . both Great Plains and Microsoft materially perform their obligations under the merger agreement; . both Great Plains and Microsoft receive required legal opinions, including opinions that the merger will be treated as a tax-free reorganization for federal income tax purposes; and . certain specified employees of Great Plains remain employed by Great Plains immediately prior to closing. 7 No other negotiations involving Great Plains (see page 47) Until the merger is completed or the merger agreement is terminated, Great Plains has agreed, with limited exceptions, not to directly or indirectly take any of the following actions with any party other than Microsoft: . solicit, encourage, initiate or participate in any negotiations, inquiries or discussions regarding any offer or proposal to acquire Great Plains; . enter into any agreement related to an acquisition of Great Plains; . make any public statement, recommendation or solicitation in support of an acquisition of Great Plains; or . disclose any customarily nonpublic information about Great Plains in connection with an acquisition of Great Plains. However, Great Plains' board of directors may recommend to shareholders that they tender their shares in connection with a tender offer by an acquiror other than Microsoft if the board determines in good faith that its fiduciary duty to its shareholders requires such a recommendation. In addition, upon notice to Microsoft, the board may give information to a third party which has made an unsolicited acquisition proposal that the board reasonably believes is financially more favorable to Great Plains and its shareholders than the merger with Microsoft. Great Plains has agreed that it will inform Microsoft of the status and details of any unsolicited acquisition proposal or request for disclosure of or access to nonpublic information that it receives. Termination of the merger agreement (see page 47) Even if Great Plains' shareholders approve the merger agreement, Microsoft and Great Plains can mutually agreesupplement this prospectus at any time to ~~terminate~~add, update or change the merger agreement without completing the merger. In addition, subject to qualifications, the merger agreement may be terminated by either Great Plains or Microsoft under any of the following circumstances: . if the merger is not completed by September 30, 2001 (subject to extension to March 31, 2002, if Microsoft and Great Plains have agreed to pursue litigation against any administrative or judicial action or proceeding challenging the merger on the basis that it violates antitrust law); . if Great Plains' shareholders do not approve the merger agreement; . if the terminating party is not in material breach of any representation, warranty, covenant or agreementinformation contained in this prospectus. You should read this prospectus and any amendment or supplement hereto, together with the ~~merger agreement~~documents incorporated by reference herein and therein and the other party breaches a representation, warranty, covenant or agreement in the merger agreement and the breach has a material adverse effect on the non-breaching party or on the benefits of the merger and has not been cured or the breaching party is not using best efforts to cure the breach within twenty days after notice is given to the breaching party; . if either party determines it is not in its best interests to contest any administrative or judicial action or proceeding challenging the merger on the basis that it violates antitrust law; or . if a final permanent injunction or other court order prohibiting the merger is issued and is not appealable. In addition, the merger agreement may also be terminated by Microsoft if: . Great Plains' board withdraws or modifies in an adverse manner its approval or recommendation of the merger; or . Great Plains or its representatives engage in the prohibited behavior,additional information described ~~above, regarding potential acquisitions of Great Plains by parties other than Microsoft. 8~~ Termination fees (see page 48) Microsoft has agreed to pay Great Plains a termination fee of $40 million if Great Plains is not then in material breach of the merger agreement and Great Plains terminates the agreement as a result of a material breach by Microsoft of its representations, warranties, covenants or agreements and that breach has not been cured or Microsoft is not using its best efforts to cure the breach within twenty days after notice is given to Microsoft. Great Plains has agreed to pay Microsoft a termination fee of $40 million if Microsoft is not then in material breach of the merger agreement and Microsoft terminates the merger agreement for any of the following reasons: . Great Plains or its representatives engage in the prohibited behavior, described above, regarding potential acquisitions of Great Plains by parties other than Microsoft; . Great Plains' board of directors withdraws or adversely modifies its approval or recommendation of the merger; . Great Plains agrees to an acquisition by a party other than Microsoft in a transaction that will result in a change in the beneficial ownership of more than 50% of the voting power of Great Plains' capital stock; or . Great Plains materially breaches a representation, warranty, covenant or agreement in the merger agreement and the breach has not been cured or Great Plains is not using its best efforts to cure the breach within twenty days after notice is given to Great Plains. In addition, Microsoft has agreed to pay Great Plains a termination fee of $5 million if: . certain antitrust approvals have not been obtained before September 30, 2001 (subject to extension until March 31, 2002 if Great Plains and Microsoft have agreed to pursue litigation against any administrative or judicial action or proceeding challenging the merger on the basis that it violates antitrust law); or . either party terminates the agreement as a result of an administrative or judicial action or proceeding challenging the merger on the basis that it violates antitrust law and that party determines that it is not in its best interest to contest the proceeding. Great Plains management voting agreements (see page 50) As a condition to the merger, Microsoft required all of Great Plains' directors and executive officers, who collectively held the power to vote approximately 22.4% of Great Plains' outstanding common stock as of the record date, to enter into voting agreements with Microsoft. under “Where You Can Find More Information.”

The voting agreements require Great Plains' directors and executive officers to vote all of their shares in favor of the merger agreement. These shareholders have given irrevocable proxies to Microsoft to vote in favor of the merger. Great Plains' directors and executive officers also agreed not to sell or otherwise dispose of any shares of Great Plains common stock they own or acquire until the expiration of the voting agreement, unless the transferee of the shares agrees to the same restrictions. Interests of Great Plains' directors, executive officers and certain employees in the merger (see page 37) When considering the recommendation of Great Plains' board of directors, you should be aware that some of Great Plains' directors and executive officers have interests in the merger that are different from, or in addition to, yours. For directors, these interests include accelerated vesting of stock options and indemnification rights. Additional interests of executive officers include potential severance benefits and other employment- 9 related benefits. Great Plains' board of directors was aware of and considered these interests in approving the merger agreement and recommending that Great Plains' shareholders approve the merger agreement. Restrictions on the ability to sell Microsoft stock (see page 39) All shares of Microsoft common stock received by you in connection with the merger will be freely transferable unless you are considered an affiliate of either Great Plains or Microsoft under the Securities Act of 1933. Shares of Microsoft common stock held by affiliates may be sold only pursuant to an effective registration statement or an exemption from registration under the Securities Act. Microsoft has received letter agreements from each of Great Plains' executive officers and directors, each of whom may be considered an affiliate of Great Plains, agreeing to abide by these restrictions. In addition, Doug Burgum, the chairman and chief executive officer of Great Plains, has entered into an agreement under which he has agreed that certain percentages of the Microsoft common stock to be issued in the merger to him shall be restricted from transfer until the fourth anniversary of the merger. New Notes

The time periods during which these restrictions apply will be extended by an additional year under the agreement if Mr. Burgum ceases to be employed by Great Plains or Microsoft prior to the second anniversary of the merger. Tax consequences of the merger (see page 39) Microsoft and Great Plains intend the merger to qualify as a tax-free reorganization under the Internal Revenue Code. It is a condition to the completion of the merger that both parties receive an opinion from their respective tax counsel that the merger will so qualify. We expect that none of Great Plains, Microsoft or their respective shareholders will recognize a gain or loss for United States federal income tax purposes, except with respect to cash received in lieu of fractional shares of Microsoft common stock or with respect to cash received upon exercise of dissenters' rights. Because tax matters are complicated, however, we urge you to consult your own tax advisor to understand fully how the merger will affect you, including how any state, local or foreign tax laws may apply to you. Accounting treatment of the merger (see page 41) Microsoft expects to account for the merger using the purchase method of accounting under generally accepted accounting principles. Regulatory approvals required to complete the merger (see page 41) The merger is subject to antitrust laws, including the reporting and waiting period provisions of the Hart-Scott-Rodino Act. On January 19, 2001, each of Microsoft and Great Plains made the required premerger notification filings with the Federal Trade Commission and the Antitrust Division of the Department of Justice. On February 14, 2001, Microsoft and Great Plains received notification of the early termination of the waiting period under the Hart- Scott-Rodino Act. Due to the international scope of Microsoft's and Great Plains' businesses, regulatory filings will also be required in certain European and other jurisdictions. Microsoft and Great Plains do not expect those non-U.S. filings to affect the expected timing of the merger. Dissenters' rights (see page 59; Annex C) Under Minnesota law, Great Plains' shareholders have the right to dissent from the merger and to receive payment in cash for the fair value of their shares of Great Plains common stock. To preserve their rights, Great Plains' shareholders who wish to exercise their statutory dissenters' rights must precisely follow the procedures described in Sections 302A.471 and 302A.473 of the Minnesota Business Corporation Act, attached to this proxy statement/prospectus as Annex C. 10 Differences in rights of Great Plains and Microsoft shareholders (see page 51) The rights of Great Plains' shareholders are governed by Minnesota law and Great Plains' articles of incorporation and bylaws. When the merger is completed, Great Plains' shareholders will become shareholders of Microsoft. Because Microsoft is a Washington corporation, following the merger the rights of former Great Plains' shareholdersNew Notes will be governed by ~~Washington law. In addition,~~the same indenture under which the Existing Notes were issued. The following ~~the merger the rights of Great Plains' shareholders will~~summary is not intended to be governed by Microsoft's articles of incorporation and bylaws, which differ from Great Plains' articles of incorporation and bylaws. Comparative market price information (see page 20) Shares of both Microsoft common stock and Great Plains common stock are listed on the Nasdaq Stock Market. On December 20, 2000, the last full trading day before the public announcementa complete description of the proposed merger, Microsoft's common stock closed at $41.50 per share and Great Plains' common stock closed at $35.3125 per share. On February 21, 2001, the last full trading day for which closing prices were available at the timeterms of the printing of this proxy statement/prospectus, Microsoft's common stock closed at $56.25 per share and Great Plains' common stock closed at $62.25 per share. We urge you to obtain current market quotations. 11 SELECTED FINANCIAL DATA OF MICROSOFT AND GREAT PLAINS The following tables provide selected financial data of Microsoft and Great Plains, which were derived from the audited financial statements of Microsoft and Great Plains for their last five fiscal years. The data should be read in conjunction with the financial statements, related notes and other financial information of Microsoft and Great Plains that are incorporated by reference into this proxy statement/prospectus. The Microsoft table provides selected financial data of Microsoft as of December 31, 2000 and for the six months ended December 31, 2000 and 1999, which were derived from the unaudited financial statements of Microsoft. In the opinion of Microsoft management, the unaudited statements include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with U.S. generally accepted accounting principles. Interim results are not necessarily indicative of results forNew Notes. For a full year. The Great Plains table also provides selected financial data of Great Plains as of November 30, 2000 and for the six months ended November 30, 2000 and 1999, which were derived from unaudited financial statements of Great Plains. In Great Plains' opinion, the unaudited financial statements include all adjustments necessary for the fair presentation of Great Plains' financial position and results of operations for those periods. The historical results for the six-month periods may not be indicativemore detailed description of the ~~results of operations for a full year. Selected financial data of Microsoft~~
Six Months Ended December Fiscal Year Ended June 30, 31, --------------------------------------- --------------- 1996 1997 1998 1999 2000 1999(2) 2000(2) ------- ------- ------- ------- ------- ------- ------- (in millions, except per share data) Income Statement Data: Revenue................. $ 9,050 $11,936 $15,262 $19,747 $22,956 $11,496 $12,385 Net income.............. 2,195 3,454 4,490 7,785 9,421 4,627 4,830 Basic earnings per share.................. 0.46 0.72 0.92 1.54 1.81 0.90 0.91 Diluted earnings per share.................. 0.43 0.66 0.84 1.42 1.70 0.84 0.87 June 30, --------------------------------------- December 31, 1996 1997 1998 1999 2000 2000(2) ------- ------- ------- ------- ------- --------------- (in millions, except per share data) Balance Sheet Data: Cash and short-term investments............ $ 6,940 $ 8,966 $13,927 $17,236 $23,798 $26,889 Total assets............ 10,093 14,387 22,357 38,625 52,150 57,691 Stockholders' equity.... 6,908 10,777 16,627 28,438 41,368 46,422 Historical book value per share(1)........... $ 1.45 $ 2.24 $ 3.37 $ 5.57 $ 7.83 $ 8.72 Shares used in computing book value per share... 4,776 4,816 4,940 5,109 5,283 5,321
~~- -------- (1) Historical book value per share is computed by dividing total stockholders' equity by the number of common shares outstanding at the end~~New Notes, see “Description of the ~~period. (2) Unaudited. 12~~ ~~Selected financial data of Great Plains~~ New Notes” in this prospectus.

Six Months Ended Fiscal Year Ended May 31, November 30, ------------------------------------------- ---------------- 1996 1997 1998 1999 2000 1999(3) 2000(3) ------- ------- ------- -------- -------- ------- --------
Issuer	Microsoft Corporation, a Washington corporation.

Notes Offered

Up to $6,250,000,000 aggregate principal amount of New 2052 Notes; and up to $2,000,000,000 aggregate principal amount of New 2062 Notes.

Maturity Dates

The New 2052 Notes will mature on March 17, 2052, unless earlier redeemed or repurchased.

The New 2062 Notes will mature on March 17, 2062, unless earlier redeemed or repurchased.

Interest

We will pay interest on the New Notes at a rate per annum equal to (a) the yield, rounded to three decimal places when expressed as a percentage and calculated in accordance with standard market practice, that corresponds to the bid-side price of the 30-year Reference UST Security as of the Pricing Time as displayed on the Bloomberg Government Pricing Monitor page FIT1 (or any recognized quotation source selected by the Company in its sole discretion if such quotation report is not available or is manifestly erroneous), plus (b) a fixed spread of 70 basis points (which translates to a per annum interest rate of 2.921%), in the case of the New 2052 Notes, and 82 basis points (which translates to a per annum interest rate of 3.041%), in the case of the New 2062 Notes. Interest on the New Notes will accrue from the first date any New Notes are issued (which we expect will be the Settlement Date). We will pay interest in cash semi-annually in arrears on March 17 and September 17 of each year, beginning on September 17, 2021. Interest on the New Notes will be computed on the basis of a 360-day year comprised of twelve 30-day months.

Optional Redemption

We will have the right at our option to redeem the notes of any series of notes, in whole or in part, at any time or from time to time prior to September 17, 2051 (in ~~thousands, except per share data)~~ ~~Income Statement Data: Revenue................. $42,271 $57,120 $85,659 $134,907 $194,852 $87,234 $142,613 Total amortization~~the case of acquired intangible assets................. 29 117 187 1,078 11,979 619 28,235 Operating income (loss)................. 3,262 5,293 4,376 17,713 4,757 10,316 (24,292) Income tax provision (benefit)(1)........... (4,099) 2,207 3,203 8,520 4,850 5,244 10,381 Net income (loss)....... 7,461 3,644 4,447 12,785 5,409 7,864 (33,147) Basic net income (loss) per share(2)........... 0.58 (1.78) 0.33 0.90 0.34 0.51 (1.66) Diluted net income (loss) per share....... 0.76 0.36 0.32 0.86 0.32 0.49 (1.66)

We will also have the right at our option to redeem the New 2052 Notes and the New 2062 Notes, in whole or in part, at any time on or after September 17, 2051 (in the case of the New 2052 Notes) and September 17, 2061 (in the case of the New 2062 Notes) at the redemption price of 100% of the principal amount of the notes to be redeemed, plus, in each case, accrued and unpaid interest to the date of redemption.

Ranking

The notes will be our senior unsecured obligations and will rank equally with our other unsecured and unsubordinated debt from time to time outstanding.

Further Issuances

We may from time to time issue further notes of any series ranking equally and capital lease obligations, less current portion........ 20 -- -- -- 3,007 4,074 Mandatorily redeemable convertible preferred stock.................. 11,502 28,698 -- -- -- -- Stockholders' equity (deficit).............. (4,812) (16,277) 69,671 133,193 256,985 290,510 Historical book value per share(4)........... $ (0.65) $ (2.01) $ 5.08 $ 8.67 $ 14.79 $ 14.36 Shares usedratably with the notes of such series in ~~computing book value per share... 7,359,765 8,080,335 13,720,920 15,362,820 17,375,010 20,226,146~~ all respects, including the same terms as to status, redemption or otherwise.

- ------- (1) For the fiscal year ended May 31, 1996, Great Plains recorded an income tax benefit of $4.1 million related to the reversal of a valuation allowance. The reversal reflects the recognition of net operating loss carry forwards and other deferred tax assets and was a result of management's analysis of Great Plains current level of earnings and future outlook, which increased the likelihood of Great Plains realizing its deferred tax assets. A majority of the amortization of acquired intangible assets related to acquisitions completed
Form and Denomination
The notes of each series will be issued in the form of one or more fully registered global securities, without coupons, in denominations of $2,000 in principal amount and integral multiples of $1,000 in excess thereof. These global securities will be deposited with the trustee as custodian for, and registered in the name of, a nominee of DTC. Except in the limited circumstances described under “Description of the New Notes—Book-Entry; Delivery and Form; Global Securities” in this prospectus, notes in certificated form will not be issued or exchanged for interests in global securities.
Trading
The notes are new issues of securities with no established trading markets. We do not intend to apply for listing of the notes on any securities exchange. The Dealer Managers have advised us that they currently intend to make a market in each series of the notes, but they are not obligated to do so and may, in their sole discretion, discontinue market-making at any time without notice.
Trustee
The Bank of New York Mellon Trust Company, N.A.
Use of Proceeds
We will not receive any proceeds from the Exchange Offers. See “Use of Proceeds.”
Governing Law
The New Notes will be governed by the laws of the State of New York.

~~RISK FACTORS~~

Before participating in the latter half of fiscal 2000 and the first half of fiscal 2001 are not deductible for income tax purposes. (2) For the fiscal years ending May 31, 1996 and 1997, basic net income (loss) per share is lower than the diluted net income (loss) per share due to the fact that net income available to common shareholders for the basic calculation is reduced by the increase in carrying value of the mandatorily redeemable preferred stock. This increase in carrying value has a greater impact on the basic calculation than does the inclusion of the preferred shares in the diluted calculation. The mandatorily redeemable preferred stock was converted into shares of common stock in June 1997 in connection with Great Plains' initial public offering. (3) Unaudited. (4) Historical book value per share is computed by dividing total stockholders' equity by the number of common shares outstanding at the end of the period. 13 COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA The following table presents: . historical and unaudited pro forma combined net income per share and net tangible book value per share data of Microsoft; and . historical and unaudited equivalent pro forma net income (loss) per share and net tangible book value per share data of Great Plains. The pro forma combined per share data was derived from financial information of Microsoft and Great Plains incorporated by reference into this proxy statement/prospectus. The information in the table should be read in conjunction with the historical financial statements of Microsoft and Great Plains and the related notes incorporated by reference in this proxy statement/prospectus. The pro forma data is not necessarily indicative of amounts which would have been achieved had the merger been consummated at the beginning of the periods presented and should not be construed as representative of future operations. The following table contains certain historical per share data of Microsoft and Great Plains and combined per share data on an unaudited pro forma basis after giving effect to the merger using the purchase method of accounting with a ratio of 1.1 shares of Microsoft common stock issued in exchange for each share of Great Plains common stock.
As of, and As of, and for the for the year ended, six months ended, June 30, 2000 December 31, 2000(1) ------------- -------------------- Microsoft Book value per share Historical.............................. $7.83 $8.72 Pro forma............................... $8.04 $8.93 Earnings per share--basic Historical.............................. $1.81 $0.91 Pro forma............................... $1.75 $0.88 Earnings per share--diluted Historical.............................. $1.70 $0.87 Pro forma............................... $1.64 $0.84
As of, and As of, and for the for the year ended, six months ended, May 31, 2000 November 30, 2000(1) ------------ -------------------- Great Plains Book value per share Historical............................... $14.79 $14.36 Equivalent pro forma(2).................. $ 8.85 $ 9.82 Earnings per share--basic Historical............................... $ 0.34 $(1.66) Equivalent pro forma(2).................. $ 1.92 $ 0.97 Earnings per share--diluted Historical............................... $ 0.32 $(1.66) Equivalent pro forma(2).................. $ 1.80 $ 0.93
- -------- (1) Unaudited. (2) Equivalent pro forma book value per share and earnings per share were derived from the Microsoft pro forma book value per share as of June 30, 2000 and December 31, 2000 and the Microsoft pro forma earnings per share for the year ended June 30, 2000 and six months ended December 31, 2000. 14 ~~RISK FACTORS In addition to the other information contained or incorporated by reference into this proxy statement/prospectus and in the documents to which we refer you,~~Exchange Offers, you should carefully consider the following risk factors and all other information set forth or incorporated by reference in ~~deciding whether to vote for approval of~~this prospectus together with the ~~merger agreement. Risks related to~~registration statement and the merger The exchange ratio for Great Plains common stock to be received in the merger is fixed and will not be adjusted in the event of any change in stock price. Regardless of the market prices of Microsoft and Great Plains common stock at the effective time of the merger, Great Plains shareholders will receive 1.1 shares of Microsoft common stock for each share of Great Plains common stock they own. The market value of Microsoft common stock is likely to change, both before and after the merger, and no one can accurately predict what the market value will be at any given time. Market prices of Microsoft and Great Plains common stock may vary for many reasons, including changes in the business, operations or prospects of Microsoft or Great Plains, market assessments of the likelihood that the merger will be completed, the timing of regulatory considerations and general market and economic conditions. Because the merger will be completed after the special meeting, the prices of Microsoft and Great Plains common stock on the date of the special meeting may not be indicative of their prices on the date the merger is completed. Great Plains cannot terminate the merger or resolicit the vote of its shareholders based solely on changes in the value of Microsoft common stock. We urge you to obtain current market quotations for Microsoft and Great Plains common stock. Great Plains' directors and executive officers have interests that are different from, or in addition to, those of other shareholders, which may influence them to support the merger. The directors and executive officers of Great Plains participate in arrangements that provide them with interests in the merger that are different from, or are in addition to, yours. For directors, these interests include accelerated vesting of stock options and indemnification rights. Additional interests of executive officers include potential severance benefits and other employment-related benefits. As a result, Great Plains' directors and executive officers could be more likely to support approval of the merger than if they did not hold these interests. You should consider whether these interests may have influenced these directors and executive officers to support and recommend the merger. Announcement of the merger could negatively impact Great Plains' stock price and future business and operations. Great Plains customers may, in response to the announcement of the merger, delay or defer purchasing decisions. Any delay or deferral in purchasing decisions by Great Plains customers could have a material adverse effect on Great Plains' business, regardless of whether or not the merger is ultimately completed. Some current and prospective Great Plains employees may experience uncertainty about their future role within the combined companies. This may adversely affect Great Plains' ability to attract and retain key management, marketing, technical, sales and other personnel. Failure to complete the merger could negatively impact Great Plains' stock price and future business and operations. If the merger is not completed for any reason, Great Plains may be subject to a number of material risks,exhibits thereto, including the ~~following: . Great Plains may be required to pay Microsoft a termination fee~~risks and uncertainties described under the heading “Risk Factors” included in Part I, Item 1A of ~~$40 million; 15~~ . the price of Great Plains common stock may decline to the extent that the current market price of Great Plains common stock reflects an assumption that the merger will be completed; and . Great Plains must pay its costs related to the merger, including legal and accounting fees and financial advisory expenses. Further, if the merger is terminated and Great Plains' board of directors determines to seek another merger or business combination, it may not be able to find a partner willing to pay an equivalent or more attractive price than that which would have been paid in the merger. In addition, while the merger agreement is in effect, subject to limited exceptions described on page 47 of this proxy statement/prospectus, Great Plains is prohibited from soliciting, initiating, participating in any negotiations regarding, or entering into specified extraordinary transactions, such as a merger, sale of assets or other business combination with any party other than Microsoft. The price of Microsoft common stock may be affected by factors different from those affecting the price of Great Plains common stock. Upon completion of the merger, the holders of Great Plains common stock will become holders of Microsoft common stock. Microsoft's business differs from that of Great Plains, and Microsoft's results of operations and the price of Microsoft common stock may be affected by factors different from those that affect Great Plains' results of operations and the price of Great Plains common stock before the merger, and certain factors may affect the two companies in different ways and to different degrees. For a discussion of Microsoft's and Great Plains' businesses and factors to consider in connection with those businesses, see Microsoft'sour Annual Report on Form 10-K for the fiscal year ended June 30, ~~2000, other documents Microsoft has subsequently filed with the SEC, Great Plains' Annual Report~~2020 and Part II, Item 1A of our Quarterly Reports on Form ~~10-K~~10-Q for the ~~fiscal year~~quarterly periods ended ~~May~~September 30, 2020 and December 31, ~~2000~~2020. See “Where You Can Find More Information” in this prospectus. The risks and ~~other documents Great Plains has subsequently filed~~uncertainties described below are not the only risks facing us and your investment in the New Notes. Additional risks and uncertainties that we are unaware of, or those we currently deem less significant, also may become important factors that affect us. The following risks could materially and adversely affect our business, financial condition, results of operations or liquidity. The value of the New Notes could decline due to any of these risks, and you may lose all or part of your investment.

~~Risks Related to the Exchange Offers~~

~~The liquidity of the Existing Notes that are not exchanged will be reduced.~~

We expect that the trading market for unexchanged Existing Notes will become more limited than the existing trading market and could cease to exist altogether due to the reduction in the amount of the Existing Notes outstanding upon consummation of the Exchange Offers. Because of the acceptance priority levels, it is more likely that a reduction in the principal amount outstanding could occur with respect to a series of Existing Notes having a higher priority acceptance level. A more limited trading market for a particular series of Existing Notes might adversely affect the ~~SEC,~~liquidity, market price and price volatility of such series of Existing Notes. If a market for unexchanged Existing Notes exists or develops, those securities may trade at a discount to the price at which ~~are incorporated by reference into this proxy statement/prospectus. Risks related to Microsoft's business Microsoft's current position in~~the securities would trade if the amount outstanding were not reduced, depending on prevailing interest rates, the market for ~~computer software is continuously threatened because this~~similar securities and other factors. However, we cannot assure you that an active market ~~is intensely competitive and technology is constantly changing. Microsoft is the leading producer of software for personal computers ("PCs")~~ in the ~~world. Nonetheless, rapid change, uncertainty due~~unexchanged Existing Notes will exist, develop or be maintained or as to ~~new~~the prices at which the unexchanged Existing Notes may be traded.

We have not made a recommendation as to whether you should tender your Existing Notes in exchange for the New Notes in the Exchange Offers, and ~~emerging technologies~~we have not made a determination or obtained a third-party determination that the Exchange Offers are fair to holders of the Existing Notes.

Neither we nor our board of directors has made, nor will either make, any recommendation as to whether holders of Existing Notes should tender their Existing Notes in exchange for the New Notes pursuant to the Exchange Offers. Furthermore, neither we nor our board of directors has made any determination that the consideration to be received represents a fair valuation of the Existing Notes, and ~~fierce competition characterize~~we also have not retained, and do not intend to retain, any unaffiliated representative to act solely on behalf of the ~~PC software industry, which means that Microsoft's market position~~holders of Existing Notes for purposes of negotiating the terms of the Exchange Offers, or preparing a report or making any recommendation concerning the fairness of the Exchange Offers. Holders of Existing Notes must make their own independent decisions regarding their participation in the applicable Exchange Offer.

~~The Exchange Offers may be cancelled or delayed.~~

The consummation of the Exchange Offers is ~~always at risk. Microsoft's ability~~subject to, ~~maintain its current market share~~and conditional upon, the satisfaction or, where permitted, waiver of the conditions specified in this prospectus. See “Description of the Exchange Offers—Conditions to the Exchange Offers.” In addition, unless we waive such condition, if less than $3,000,000,000 of New 2052 Notes would be issued, then all Pool 1 Note tenders will be

cancelled and no New 2052 Notes will be created; and unless we waive such condition, if less than $750,000,000 of New 2062 Notes would be issued, then all Pool 2 Note tenders will be cancelled and no New 2062 Notes will be created. Even if each of the Exchange Offers is completed, the Exchange Offers may ~~depend upon its ability~~not be completed on the schedule described in this prospectus. Accordingly, holders participating in the Exchange Offers may have to ~~satisfy customer requirements, enhance existing products, develop and introduce new products and achieve market~~wait longer than they expect to receive the New Notes.

We have established priorities for acceptance of the Existing Notes, which makes it more likely that holders of series of Existing Notes with a lower acceptance priority may be excluded from acceptance of tender. Any tenders that are accepted may be prorated.

If New Notes in an aggregate principal amount in excess of the applicable New Issue Cap are to be issued pursuant to validly tendered Existing Notes in the applicable Exchange Offer at the Expiration Time, we will accept tenders of Existing Notes by series in accordance with the “acceptance priority level” (in numerical priority order) set forth in the applicable table on the front cover of this prospectus. With respect to Existing Notes tendered in an Exchange Offer, and not validly withdrawn prior to the Expiration Time, such ~~products. This process is challenging since~~Existing Notes of a series having a higher acceptance priority level will be accepted for exchange before any such Existing Notes of a series having a lower acceptance priority level.

If acceptance of all validly tendered Existing Notes of a series would result in us issuing New Notes having an aggregate principal amount in excess of the ~~pace~~applicable New Issue Cap, the tendered Existing Notes of ~~change continues~~such series will be accepted subject to ~~accelerate,~~proration. See “Description of the Exchange Offers—Acceptance Priority Levels and Proration Procedures.”

~~Late deliveries of Existing Notes or any other failure to comply with the Exchange Offer procedures could prevent a holder from exchanging its Existing Notes.~~

Holders of Existing Notes are responsible for complying with all the procedures of the Exchange Offers. The issuance of New Notes in exchange for Existing Notes will only occur upon proper completion of the procedures described in this prospectus under “Description of the Exchange Offers.” Therefore, holders of Existing Notes who wish to exchange their Existing Notes for New Notes should allow sufficient time for timely completion of the procedures of the Exchange Offers. Neither we nor the Exchange Agent are obligated to extend the Exchange Offers or notify you of any failure to follow the proper procedures.

~~We may acquire New Notes in future transactions.~~

We may in the future seek to acquire New Notes in open market or privately-negotiated transactions, through subsequent exchange offers or otherwise. The terms of any of those purchases or offers could differ from the terms of these Exchange Offers and such other terms may be more or less favorable to holders of the New Notes.

~~Risks Related to the New Notes~~

~~The Indenture governing the New Notes does not contain financial covenants or meaningful restrictions on us or our subsidiaries.~~

Neither we nor any of our subsidiaries are restricted from incurring additional debt or other liabilities, including debt secured by liens, under the Indenture. We may from time to time incur additional debt and other liabilities. In addition, we are not restricted from paying dividends or making distributions on our capital stock or purchasing or redeeming our capital stock under the Indenture.

~~Active trading markets for the New Notes may not develop.~~

The New Notes are new issues of securities with no established trading markets. We do not intend to apply for listing of the New Notes on any securities exchange. We cannot assure you trading markets for the New Notes will develop or of the ability of holders of the New Notes to sell their notes or of the prices at which holders may be able to sell their notes. The Dealer Managers have advised us that they currently intend to make a market in each series of the New Notes. However, the Dealer Managers are not obligated to do so, and any market-making with respect to ~~"open source" software, new computing devices, new microprocessor architectures,~~ the ~~Internet~~New Notes may be discontinued, in their sole discretion, at any time without notice. If no active trading markets develop, you may be unable to resell the New Notes at any price or at their fair market value.

~~If trading markets do develop, changes in our ratings or the financial markets could adversely affect the market prices of the New Notes.~~

~~The market prices of the New Notes will depend on many factors, including, among others, the following:~~

~~ratings on our debt securities assigned by rating agencies;~~

~~the prevailing interest rates being paid by other companies similar to us;~~

~~our results of operations, financial condition and ~~Web-based computing models. If Microsoft does not successfully identify new product opportunities~~prospects; and ~~develop~~~~

~~the condition of the financial markets.~~

The condition of the financial markets and bring new products to market in a timely and cost-efficient manner, its business growth will suffer and demand for its products will decrease. Further, the PC software industry is inherently complex. New products and product enhancements can require long development and testing periods. Significant delays in new product releases or significant problems in creating new products could damage Microsoft's business. The competitionprevailing interest rates have fluctuated in the ~~PC software industry is intense~~past and ~~may have multiple effects. For example, competing companies and systems may gain market share,~~are likely to fluctuate in the future, which could have an adverse effect on the market prices of the New Notes.

Rating agencies continually review the ratings they have assigned to companies and debt securities. Negative changes in the ratings assigned to us or our debt securities could have an adverse effect on the market prices of ~~directly or indirectly reducing Microsoft's existing market share. In addition, competitors, working with new technology, may arrive at a technology~~the New Notes.

~~USE OF PROCEEDS~~

We will not receive any cash proceeds from the issuance of the New Notes in the Exchange Offers. The Existing Notes that ~~creates a new market altogether~~are surrendered in exchange for the New Notes will be retired and ~~renders Microsoft's product offerings obsolete. Microsoft expects that~~cancelled and cannot be reissued.

~~DESCRIPTION OF THE EXCHANGE OFFERS~~

~~Terms of the ~~overall number of competitors providing niche products that compete with its products will increase due~~Exchange Offers~~

We are offering to holders, upon the terms and subject to the ~~market's attractive growth. 16~~ ~~While Microsoft works closely~~conditions set forth in this prospectus, consideration consisting of up to $6,250,000,000 aggregate principal amount of our New 2052 Notes (the “New 2052 Notes Issue Cap”) and a cash payment, and up to $2,000,000,000 (increased from $1,250,000,000) aggregate principal amount of our New 2062 Notes (the “New 2062 Notes Issue Cap” and, together with ~~computer manufacturers~~the New 2052 Notes Issue Cap, the “New Issue Cap”) and ~~developers, other companies promote~~a cash payment, as applicable, in exchange for their ~~platforms~~Existing Notes, all as described under “—Total Exchange Consideration and ~~technologies against Microsoft's products~~Exchange Consideration.”

Holders of each series of Existing Notes accepted for exchange will be eligible to receive the applicable Total Exchange Consideration as determined as described under “—Total Exchange Consideration and ~~existing industry standards. These operating systems, platforms~~Exchange Consideration” for such series of Existing Notes validly tendered on or before the Early Exchange Time and ~~products may gain popularity with customers, computer manufacturers~~not validly withdrawn. The Total Exchange Consideration includes the Early Exchange Premium. For Existing Notes validly tendered after the Early Exchange Time and ~~developers, reducing Microsoft's future revenues. For example, Microsoft is engaged~~on or before the Expiration Time, the holders of each series of Existing Notes accepted for exchange will be eligible to receive the applicable Exchange Consideration as described under “—Total Exchange Consideration and Exchange Consideration.” The New Notes will only be issued in ~~intense competition with companies that develop~~minimum denominations of $2,000 and ~~support operating systems such as the open source Linux operating system~~integral multiples of $1,000 in excess thereof. Tendering holders of Existing Notes must tender Existing Notes in minimum denominations of $2,000 and ~~Unix operating systems for many business installations. These competitors include Caldera Systems, Inc., Red Hat, Inc., IBM and Sun Microsystems, Inc. This increased level~~integral multiples of ~~competition may result~~$1,000 in price reductions, lower-than- expected gross margins or Microsoft's inability to maintain its market share, any of which may result in a loss of revenue and cause Microsoft's business to suffer. Because of increasing competition in the PC industry, Microsoft may experience reduced product sales and lower revenue growth. The nature of the PC market is changing in ways that may reduce Microsoft's software sales and its revenue growth. Microsoft earns a portion of its revenue by licensing its software to PC manufacturers, who install Microsoft applications during production and sell PCs to consumers that are fully operational at the time of purchase. Recently, manufacturers have sought to reach more consumers by developing and producing lower cost PCs that come without pre-installed software or contain software with reduced functionality to keep prices down.excess thereof. In addition to the ~~influx~~Total Exchange Consideration or Exchange Consideration, as applicable, holders with Existing Notes that are accepted for exchange will receive a cash payment representing (i) all or a portion of ~~low-cost PCs,~~the accrued and unpaid interest to, but not including, the Settlement Date, and (ii) amounts due in lieu of any fractional amounts of New Notes, in each case, as described under “—Accrued Interest” and “—No Fractional Amounts of New Notes.” As DTC is the record holder of the Existing Notes, all holders of any Existing Notes will also receive any applicable accrued and unpaid interest on those Existing Notes in accordance with DTC procedures, regardless of the record dates with respect to each series of Existing Notes. We will accept valid tenders of Existing Notes by series in accordance with the acceptance priority levels (in numerical priority order) set forth in the applicable table on the front cover of this prospectus, subject to proration as discussed under “—Acceptance Priority Levels and Proration Procedures.”

~~Total Exchange Consideration and Exchange Consideration~~

~~Upon the terms and subject to the conditions set forth in this prospectus:~~

If you validly tender Existing Notes prior to the Early Exchange Time and do not validly withdraw such tendered Existing Notes prior to the Expiration Time, and such Existing Notes are accepted by us, you will receive, for each $1,000 principal amount of Existing Notes tendered and accepted, a ~~market has developed~~combination of a principal amount of New Notes and cash with an aggregate value equal to the Total Exchange Consideration as follows:

(i)

an aggregate principal amount of New Notes equal to (a) the Total Exchange Consideration for such Existing Notes minus (b) the Cash Component; and

(ii)

a cash payment equal to the Cash Component.

If you validly tender Existing Notes after the Early Exchange Time, but prior to the Expiration Time, and such Existing Notes are accepted by us, you will receive, for ~~hand- held computing~~each $1,000 principal amount of Existing Notes tendered and ~~communication devices,~~accepted, a combination of a principal amount

~~of New Notes and cash with an aggregate value equal to the Exchange Consideration as follows:~~

(i)

an aggregate principal amount of New Notes equal to (a) the Total Exchange Consideration for such Existing Notes minus (b) the Cash Component minus (c) the Early Exchange Premium; and

(ii)

a cash payment equal to the Cash Component.

In addition to the Total Exchange Consideration or Exchange Consideration, as applicable, holders with Existing Notes that are accepted for exchange will receive a cash payment representing (i) all or a portion of the accrued and unpaid interest to, but not including, the Settlement Date, and (ii) amounts due in lieu of any fractional amounts of New Notes, in each case, as described under “—Accrued Interest” and “—No Fractional Amounts of New Notes.” As DTC is the record holder of the Existing Notes, all holders of any Existing Notes will also receive any applicable accrued and unpaid interest on those Existing Notes in accordance with DTC procedures, regardless of the record dates with respect to each series of Existing Notes.

~~The “Pricing Time” is 10:00 a.m., New York City time, on March 2, 2021.~~

The “Total Exchange Consideration” (calculated at the Pricing Time and in accordance with the formula set forth in Annex A to this prospectus) for the Existing Notes validly tendered prior to the Early Exchange Time, and not validly withdrawn prior to the Expiration Time, is equal to the discounted value on the Settlement Date of the remaining payments of principal and interest per $1,000 principal amount of the Existing Notes through the applicable maturity date or par call date (as applicable) of the Existing Notes, using a yield equal to the sum of: (i) the bid-side yield on the 30-year Reference UST Security set forth with respect to each series of Existing Notes on the front cover of this prospectus plus (ii) the applicable fixed spread set forth with respect to each series of Existing Notes on the front cover of this prospectus, minus accrued and unpaid interest on such series of Existing Notes up to but not including the Settlement Date. For the avoidance of doubt, the $30 per $1,000 Early Exchange Premium is included within the Total Exchange Consideration, as ~~hand-held computers~~calculated using the Fixed Spread over the 30-year Reference UST Security as described herein, and ~~wireless communication devices~~is not in addition to the Total Exchange Consideration. Further, for the avoidance of doubt, for the Existing Notes that have par call dates, if the ~~ability~~applicable Exchange Offer Yield as determined in accordance with this prospectus is less than the contractual annual rate of interest, then such Total Consideration will be calculated based on the par call date; if the applicable Exchange Offer Yield as determined in accordance with this prospectus is higher than or equal to ~~communicate with~~ the ~~Internet. While these devices are not as powerful or versatile as PCs, they threaten~~contractual annual rate of interest, then such Total Consideration will be calculated based on the maturity date.

The “Exchange Consideration” for the Existing Notes validly tendered after the Early Exchange Time but prior to ~~erode sales growth in~~ the ~~market for PCs with pre-installed software. This may affect Microsoft's revenue growth because manufacturers may choose not~~Expiration Time is equal to install Microsoft software in these low-cost PCs or consumers may purchase alternative devices that do not utilize Microsoft software. These lower-priced devices require Microsoft to provide lower-priced software with a subsetthe Total Exchange Consideration minus the applicable Early Exchange Premium.

The “Cash Component” is the portion of the ~~original functionality. As a result, Microsoft~~Total Exchange Consideration to be paid to holders in cash and is equal to (i) the applicable Cash Payment Percent of Premium for such series of Existing Notes multiplied by (ii) (a) the applicable Total Exchange Consideration for such series of Existing Notes minus (b) $1,000.

The Dealer Managers will ~~experience slower revenue growth from~~calculate the ~~sale~~interest rate of ~~software produced~~the New Notes, the Total Exchange Consideration, the Exchange Consideration, the Cash Component and accrued interest for these devices than from the sale of software for traditional PCs. In addition, in response to present and future anticipated competitive pressures in its industry, Microsoft is providing alternative distribution of its products at a cost lower than if the customer were to purchase the individual products in a shrink-wrapped box at a traditional retail, mail order or online store. For example, Microsoft offers suites of software products like the Microsoft Office suite, which is a collection of stand-alone products such as Excel, Word, Outlook and PowerPoint. By packaging the products as a suite, Microsoft offers customers the opportunity to purchase a license to use a collection of products for less cost than purchasing each of the ~~individually- licensed products~~Existing Notes, and their calculations will be final and binding absent manifest error, subject to holders of Existing Notes disputing such determination in ~~standard boxes~~a court of competent jurisdiction. We will announce

the interest rate of the New Notes, the Total Exchange Consideration, the Exchange Consideration and the Cash Component for the Existing Notes promptly after they are determined by the Dealer Managers. The formula that will be used by the Dealer Managers in making the calculations of the Total Exchange Consideration and the Exchange Consideration is attached hereto as Annex A. The final pricing terms of the Exchange Offers are set forth in Annex B attached hereto.

You can obtain recently calculated hypothetical quotes of the yield for the 30-year Reference UST Security set forth with respect to each series of Existing Notes on the front cover of this prospectus, the hypothetical interest rate of the New Notes, the hypothetical Total Exchange Consideration and the hypothetical Exchange Consideration for the Existing Notes prior to the Pricing Time, and can obtain the actual yield for the 30-year Reference UST Security set forth with respect to each series of Existing Notes on the front cover of this prospectus, the interest rate of the New Notes, the Total Exchange Consideration and the Exchange Consideration for the Existing Notes after the Pricing Time, by contacting the Dealer Managers at the addresses and telephone numbers set forth on the back cover of this prospectus. Although the Dealer Managers will calculate the Total Exchange Consideration and the Exchange Consideration for the Existing Notes based solely on the yield on the 30-year Reference UST Security set forth with respect to each series of Existing Notes on the front cover of this prospectus, you can also find information regarding the closing yield to maturity for each 30-year Reference UST Security on any trading day in the online versions of TheWall Street Journal and The New York Times.

~~Early Exchange Premium~~

To encourage holders of Existing Notes to tender prior to the Early Exchange Time, the Total Exchange Consideration includes an Early Exchange Premium of $30 principal amount of New 2052 Notes or $30 principal amount of New 2062 Notes, as applicable, for each $1,000 principal amount of Existing Notes validly tendered and not validly withdrawn. Only holders who validly tender their Existing Notes prior to the Early Exchange Time (and who do not validly withdraw prior to the Expiration Time), and whose tenders are accepted for exchange pursuant to the Exchange Offers, will receive the Early Exchange Premium.

Holders who validly tender their Existing Notes after the Early Exchange Time but prior to the Expiration Time, and whose tenders are accepted for exchange, will receive only the Exchange Consideration, which does not include the Early Exchange Premium.

~~Accrued Interest~~

~~No Fractional Amounts of New Notes~~

New Notes will be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. We will not accept any tender that would result in the issuance of less than $2,000 principal amount of New Notes. If, under the terms of the Exchange Offers, the aggregate principal amount of New Notes that any tendering holder is entitled to receive is not in a minimum denomination of $2,000 or an integral multiple of $1,000 in excess thereof, we will round downward the amount of the New Notes to $1,000 or the nearest integral multiple of $1,000 in excess thereof and pay the difference in cash.

~~Acceptance Priority Levels and Proration Procedures~~

We will accept tenders of Existing Notes by series in accordance with the “acceptance priority level” (in numerical priority order) for each such series as set forth in the applicable table on the front cover of this prospectus. With respect to Existing Notes tendered in an Exchange Offer, such Existing Notes of a series having a higher acceptance priority level for such Exchange Offer will be accepted for exchange before any such Existing Notes of a series having a lower acceptance priority level.

If acceptance of all validly tendered Existing Notes of a series would result in us issuing New Notes having an aggregate principal amount in excess of the applicable New Issue Cap, the tendered Existing Notes of such series will be accepted subject to proration.

Any proration would result in the principal amount of Existing Notes of the applicable series accepted from a ~~retail, mail order or online store. Additionally, Microsoft is offering products through alternative distribution channels other than~~holder of Existing Notes in exchange for New Notes to be equal to the ~~standard individually shrink-wrapped boxes sold through traditional retail vendors. These channels include: . Licensing agreements--customers may purchase multiple-user licenses~~applicable principal amount of Existing Notes that would otherwise have been accepted from such holder (based on such holder’s valid tenders of the applicable series of Existing Notes) multiplied by the proration factor. The proration factor would be equal to the amount of the applicable New Issue Cap remaining available for the applicable series of Existing Notes divided by the total aggregate principal amount of Existing Notes of the applicable series that were validly tendered. Depending on the aggregate principal amount of Existing Notes of the applicable series validly tendered and not validly withdrawn and the proration factor applied, if the principal amount of Existing Notes of such series returned to a suite of products for a lower cost than paying for each license separately; . Subscriptions--customers may enter into an annual gold license, which entitles them to automatic upgrades and replacement products for a lower cost than acquiring upgrades and replacement products on an individual basis; and . Downloads over the Internet--customers are able to download service releases and upgradesholder as ~~well as other products directly from the Internet. As~~ a result of ~~responding~~proration would result in less than $2,000 of principal amount of Existing Notes of such series being returned to ~~competitive pressures~~such holder, the Company will either accept or reject all of such holder’s Existing Notes of such series validly tendered and not validly withdrawn. The proration factor will be announced by press release as promptly as practicable after the Expiration Time. Existing Notes not accepted due to their acceptance priority level or the above proration procedures will be returned to their tendering holders promptly after the Expiration Time.

~~Expiration Time; Extensions; Amendments; Termination~~

For purposes of the Exchange Offers, the term “Expiration Time” means 11:59 p.m., New York City time, on March 15, 2021, subject to our right to extend that time and date in our absolute discretion, in which case the Expiration Time means the latest time and date to which an Exchange Offer is extended.

~~We reserve the right, in our absolute discretion, by giving oral or written notice to the Exchange Agent, to:~~

~~extend an Exchange Offer;~~

~~amend an Exchange Offer; and~~

terminate an Exchange Offer in those situations in which a condition to our obligation to exchange the series of Existing Notes subject to such Exchange Offer for New Notes and cash is not satisfied or waived on or before the Expiration Time.

If an Exchange Offer is amended in a manner that we determine constitutes a material change, we will extend such Exchange Offer for a period of two to ten business days, depending upon the significance of the amendment and the manner of disclosure to the holders, if such Exchange Offer would otherwise have expired during that two-to-ten business day period. If any Exchange Offer is extended with respect to any series of Existing Notes, we will also extend any Exchange Offers for all series having a lower acceptance priority level to such “new” Expiration Time. Any increase in the ~~marketplace~~consideration offered to holders of a series of Existing Notes pursuant to the Exchange Offers will be paid to all holders whose Existing Notes of such series have been previously tendered and not validly withdrawn.

~~In addition, if we extend the Early Exchange Time, we may in our discretion extend it with respect to only one or more Exchange Offers or series of Existing Notes and not all.~~

We will promptly announce any extension, amendment or termination of an Exchange Offer by ~~offering products through alternative distribution methods, Microsoft~~issuing a press release. We will announce any extension of the Pricing Time and/or Expiration Time no later than 9:00 a.m., New York City time, on the first business day after the previously scheduled Pricing Time and/or Expiration Time, as applicable. We have no other obligation to publish, advertise or otherwise communicate any information about any extension, amendment or termination.

~~Settlement Date~~

We will deliver the New Notes and pay cash amounts with respect to the Exchange Offers on the Settlement Date. The “Settlement Date” will promptly follow the Expiration Time and is expected to be March 17, 2021, which is the second business day following the Expiration Time. We will not be obligated to deliver New Notes or pay any cash amounts unless the Exchange Offers are consummated.

~~Conditions to the Exchange Offers~~

Notwithstanding any other provisions of the Exchange Offers, or any extension of the Exchange Offers, we will not be required to accept any Existing Notes for exchange, exchange any New Notes for Existing Notes or pay any cash amounts, and we may ~~experience slower revenue growth. 17~~ ~~Prices~~terminate any Exchange Offer or, at our option, modify, extend or otherwise amend an Exchange Offer if any of ~~Microsoft products could decrease,~~the following conditions have not been satisfied or waived on or before the Expiration Time (unless stated otherwise):

1. the registration statement of which ~~would reduce its net income. The competitive factors described above may require Microsoft~~this prospectus forms a part having been declared effective by the SEC on or prior to ~~lower product prices to meet competition. Since Microsoft's cost~~the Expiration Time and remaining effective on the Settlement Date;

2. as of ~~revenue is already very low, price reductions would reduce its net income. Developing software is expensive,~~the Pricing Time, the combination of the yield of the New Notes and the ~~investment~~Total Exchange Consideration or Exchange Consideration for the applicable series of Existing Notes would result in ~~product development often involves a long payback cycle. Microsoft's continued success depends~~the New Notes and such Existing Notes not being treated as “substantially different” under ASC 470-50 (the “Accounting Treatment Condition”);

~~3. we issue at least (a) $3,000,000,000 aggregate principal amount of New 2052 Notes and (b) $750,000,000 aggregate principal amount of New 2062 Notes;~~

~~4. the Yield Condition (for any applicable series of Existing Notes);~~

5. no action or event shall have occurred, been threatened, no action shall have been taken, and no statute, rule, regulation, judgment, order, stay, decree, injunction or regulatory comments shall have been issued, promulgated, enacted, entered, enforced or deemed to be applicable to such Exchange Offer or the exchange of Existing Notes for New Notes under such Exchange Offer by or before any court or governmental regulatory or administrative agency, authority, instrumentality or tribunal, including, without limitation, taxing authorities, that either:

(a) challenges the making of such Exchange Offer or the exchange of Existing Notes for New Notes and cash under such Exchange Offer or might, directly or indirectly, be reasonably expected to prohibit, prevent, restrict or delay the scheduled Pricing Time or the consummation of, or might otherwise adversely affect in ~~part on its continued~~any manner, such Pricing Time, Exchange Offer or the exchange of Existing Notes for New Notes and cash under such Exchange Offer; or

(b) in our reasonable judgment, could materially adversely affect our (or our subsidiaries’) business, condition (financial or otherwise), income, operations, properties, assets, liabilities or

~~prospects or impair the contemplated benefits to us of such Exchange Offer, the exchange of Existing Notes for New Notes under such Exchange Offer or the delivery of any cash amounts;~~

6. nothing has occurred or may occur that would or might, in our reasonable judgment, be expected to prohibit, prevent, restrict or delay such Exchange Offer or delay the schedule Pricing Time or impair our ability to ~~create more versatile software products faster than its competitors. Microsoft plans to continue significant investments~~realize the anticipated benefits of such Exchange Offer;

7. there shall not have occurred (a) any general suspension of or limitation on trading in software research and development. It also expends significant resources on researching and developing new technologies such as voice recognition and ClearType software, a software that provides improved font sharpness and text display on color LCD screens allowing for better on-screen reading comparable to reading on paper. Microsoft is also making significant investments in strategic relationships with third parties where Microsoft has the opportunity to establish leadership in new businesses. Microsoft anticipates that these investments in research and development will increase over historical spending levels without corresponding growth in revenues in the near future. Microsoft cannot assure that significant revenue from these product opportunities will be achieved for a number of years, if at all. Microsoft's profit margins internationally may be threatened by factors in other countries that are outside of its control and force down the price of its software relative to its costs. Microsoft develops and sells its products throughout the world. The prices of Microsoft products in countries outside of the United States are generally higher than Microsoft's pricessecurities in the United States ~~because~~securities or financial markets, whether or not mandatory, (b) any material adverse change in the prices of the ~~costs incurred~~Existing Notes, (c) a material impairment in ~~localizing software~~the general trading market for ~~non-U.S. markets and the higher costs~~debt securities, (d) a declaration of ~~producing and selling its products~~a banking moratorium or any suspension of payments in ~~these countries. Pressures to globalize Microsoft's pricing structure might require that it reduce the sales price~~respect of ~~its software in other countries, even though the costs of the software continue to be higher than~~banks by federal or state authorities in the United ~~States. This would reduce Microsoft's margins and result in overall declines in its revenue growth. Negative changes~~States, whether or not mandatory, (e) a material escalation or commencement of a war, armed hostilities, a terrorist act or other national or international calamity directly or indirectly relating to the United States, if the effect of any such event, in the ~~following factors, among others, could also have an impact~~Company’s reasonable judgment, makes it impracticable or inadvisable to proceed with such Exchange Offer, (f) any limitation, whether or not mandatory, by any governmental authority on, ~~Microsoft's business and results~~or other event in the Company’s reasonable judgment, having a reasonable likelihood of ~~operations outside~~affecting, the extension of credit by banks or other lending institutions in the United States, (g) any material adverse change in the securities or financial markets in the United States generally or (h) in the case of any of the United States: . software "piracy" trade protection laws, policies and measures and other regulatory requirements affecting trade and investment; . unexpected changes in regulatory requirements for software; . social, political, labor or economic conditions in a specific country or region; . difficulties in staffing and managing foreign operations; and . potential adverse foreign tax consequences. Microsoft's intellectual property rights may be difficult to protect. Microsoft diligently defends its intellectual property rights, but unlicensed copying of software represents a loss of revenue. While this adversely affects U.S. revenue, revenue loss is even more significant outside of the U.S., particularly in countries where laws are less protective of intellectual property rights. Throughout the world, Microsoft actively educates consumers on the benefits of licensing genuine products and educates lawmakers on the advantages of a business climate where intellectual property rights are protected. However, continued efforts may not affect revenue positively. 18 Microsoft cannot predict the outcome or impact of antitrust claims by the U.S. and several states. Microsoft is a defendant in a lawsuit filed by the Antitrust Division of the U.S. Department of Justice and a group of nineteen state attorneys general alleging violations of the Sherman Act and various state antitrust laws. After trial, the District Court entered Findings of Fact and Conclusions of Law stating that Microsoft had violated the Sherman Act and various state antitrust laws. A judgment was entered on June 7, 2000 that if not stayed or modified, would require the breakup of Microsoft into two companies and would impose severe product design and business conduct restrictions. On June 13, 2000, Microsoft filed an appeal of the judgment. On June 20, 2000, the District Court entered an order staying the judgment of June 7, 2000 in its entirety until the appeal therefrom is heard and decided, unless the stay is earlier vacated by an appellate court. The Court of Appeals will hear oral argument on Microsoft's appeal on February 26-27, 2001. Although Microsoft believes it will obtain ultimate relief from the judgment, Microsoft cannot predict with certainty when or the extent to which such relief will be obtained. The failure to obtain sufficient relief through the appeal could have a material adverse effect on the value of Microsoft's common stock and/or the stock of the two resulting companies if the divestiture is finally approved. For more information concerning this litigation, particularly the current status of the litigation which is changing very rapidly, you are encouraged to review Microsoft's other SEC filings, which are incorporated below under "Where You Can Find More Information" and copies of orders, motions, briefs and other court filings that are available at the following websites: . www.microsoft.com/presspass/trial/default.asp, . www.usdoj.gov/atr/cases/ms index.htm and . www.dcd.uscourts.gov/microsoft-all.html. Microsoft may not be able to maintain its present revenue growth rate or operating margins. Microsoft's revenue growth rate in 2001 may not approach the level attained in prior years. Operating expenses are expected to increase from historical levels. Because of the fixed nature of a significant portion of such expenses, coupled with the possibility of slower revenue growth, operating margins may decrease from historical levels. 19 COMPARATIVE STOCK PRICE AND DIVIDEND INFORMATION Great Plains common stock has been traded on the Nasdaq Stock Market under the symbol GPSI since June 20, 1997, the date of Great Plains' initial public offering. Microsoft common stock has been traded on the Nasdaq Stock Market under the symbol MSFT since March 13, 1986, the date of Microsoft's initial public offering. The following table lists, for the calendar quarters indicated, the high and low closing prices per share of Great Plains common stock and Microsoft common stock as reported on the Nasdaq Stock Market. Sales prices in the table have been adjusted to reflect Microsoft's two-for-one splits of its common stock in March 1999 and February 1998. The following table provides information for calendar quarters; Great Plains' fiscal quarters end February 28 (or February 29, as applicable), May 31, August 31 and November 30.
Great Plains Microsoft Common Stock Common Stock ------------- ------------- High Low High Low ------ ------ ------ ------ Calendar year ended December 31, 1998: First quarter................................. $36.38 $24.88 $45.47 $31.10 Second quarter................................ 39.25 32.50 54.28 40.94 Third quarter................................. 48.25 31.63 59.81 47.25 Fourth quarter................................ 49.00 30.13 72.00 48.13 Calendar year ended December 31, 1999: First quarter................................. 48.69 37.94 94.63 68.00 Second quarter................................ 48.94 26.75 95.63 75.50 Third quarter................................. 55.25 38.81 99.44 81.75 Fourth quarter................................ 77.38 51.75 117.94 84.94 Calendar year ended December 31, 2000: First quarter................................. 82.94 49.06 116.56 89.38 Second quarter................................ 48.63 19.06 111.88 61.44 Third quarter................................. 30.25 17.00 82.00 64.56 Fourth quarter................................ 58.75 25.19 70.88 41.50 Calendar year ending December 31, 2001: First quarter (through February 21, 2001)..... 70.19 46.81 64.50 43.38
The following table lists the closing prices per share of Microsoft common stock and Great Plains common stock as reported on the Nasdaq Stock Market on: . December 20, 2000, the last full trading day preceding the public announcement that Microsoft and Great Plains had entered into the merger agreement; and . February 21, 2001, the last full trading day for which closing prices were availableforegoing existing at the time of the ~~printing~~commencement of ~~this proxy statement/prospectus. The table also lists~~ the ~~equivalent per share price~~Exchange Offers, a material acceleration or worsening thereof; and

8. the applicable trustee under the indenture for the Existing Notes that are the subject of ~~Great Plains common stock on those dates. The equivalent per share price is equal~~such Exchange Offer and the trustee with respect to the ~~closing price of a share of Microsoft common stock on that date multiplied by 1.1, the number of shares of Microsoft common stock~~New Notes to be issued in the Exchange Offers, shall not have been directed by any holders of Existing Notes subject to such Exchange Offer to object in any respect to, nor take any action that could, in our reasonable judgment, adversely affect the consummation of such Exchange Offer or the exchange of Existing Notes for New Notes under such Exchange Offer, nor shall the any such trustee have taken any action that challenges the validity or effectiveness of the procedures used by us in making such Exchange Offer, the exchange of Existing Notes for New Notes under such Exchange Offer or the delivery of any cash amounts.

The Exchange Offer for any particular series of Existing Notes is further subject to the condition that acceptance of validly tendered series of Existing Notes with a higher acceptance priority level would not result in the issuance of the New 2052 Notes and 2062 Notes in excess of the New 2052 Notes Issue Cap or the New 2062 Notes Issue Cap, as applicable.

~~The Yield Condition~~

Notwithstanding any other provision in this prospectus to the contrary, if at the Pricing Time, the yield of the 30-year Reference UST Security, as set forth in the table below with respect to any series of Existing Notes, is less than the applicable minimum yield or is greater than the applicable maximum yield, to the extent such yield is specified in the table below, then we will not be obligated to accept for exchange, or issue the applicable series of New Notes in exchange for, any Existing Notes of such series tendered in the Exchange Offers.

Title of Security

Reference UST Security
Minimum Yield Maximum Yield
Pool 1 Notes


4.875% Notes due 2043
   1.625% due November 15, 2050 1.00 % 2.40 %

4.450% Notes due 2045
   1.625% due November 15, 2050 1.00 % 2.40 %

4.250% Notes due 2047
   1.625% due November 15, 2050 1.00 % 2.40 %

5.300% Notes due 2041
   1.625% due November 15, 2050 1.00 % 2.40 %

5.200% Notes due 2039
   1.625% due November 15, 2050 1.00 % 2.40 %

4.500% Notes due 2040
   1.625% due November 15, 2050 1.00 % 2.40 %

3.700% Notes due 2046
   1.625% due November 15, 2050 1.00 % 2.40 %

3.750% Notes due 2043
   1.625% due November 15, 2050 1.00 % 2.40 %

3.750% Notes due 2045
   1.625% due November 15, 2050 1.00 % 2.40 %

3.500% Notes due 2042
   1.625% due November 15, 2050 1.00 % 2.40 %

4.100% Notes due 2037
   1.625% due November 15, 2050 1.00 % 2.40 %

4.200% Notes due 2035
   1.625% due November 15, 2050 1.00 % 2.40 %

3.450% Notes due 2036
   1.625% due November 15, 2050 1.00 % 2.40 %

3.500% Notes due 2035
   1.625% due November 15, 2050 1.00 % 2.40 %
Pool 2 Notes


3.950% Notes due 2056
   1.625% due November 15, 2050 1.00 % 2.40 %

4.750% Notes due 2055
   1.625% due November 15, 2050 1.00 % 2.40 %

4.500% Notes due 2057
   1.625% due November 15, 2050 1.00 % 2.40 %

4.000% Notes due 2055
   1.625% due November 15, 2050 1.00 % 2.40 %
The Accounting Treatment Condition and the Yield Condition have been satisfied for each series of Existing Notes subject to the Exchange Offers.
The foregoing conditions are for our sole benefit and may be asserted or waived by us, in whole or in part, on a series by series basis, in our absolute discretion, except as described below. Any determination made by us concerning an event, development or circumstance described or referred to above will be conclusive and binding, subject to challenge in a court of competent jurisdiction.
If any of the foregoing conditions are not satisfied, we may, on a series by series basis, at any time prior to the Expiration Time:
terminate such Exchange Offer and return all tendered Existing Notes subject to such Exchange Offer to the respective tendering holders;
modify, extend or otherwise amend such Exchange Offer and retain all tendered Existing Notes subject to such Exchange Offer until the Expiration Time, as extended, subject, however, to the withdrawal rights of holders; or
waive the unsatisfied conditions with respect to such Exchange Offer, except for the condition that the registration statement of which this prospectus forms a part has been declared effective by the SEC on or prior to the Expiration Time and remains effective on the Settlement Date, and accept all Existing Notes (subject to proration and the priorities described herein) tendered and not previously validly withdrawn pursuant to such Exchange Offer.
Additional Purchases of Existing Notes
We reserve the right, in our absolute discretion, to purchase or make offers to purchase any Existing Notes that remain outstanding subsequent to the Expiration Time and, to the extent permitted by applicable law, to purchase Existing Notes in the open market, in privately negotiated transactions or otherwise. The terms of any such purchases or offers could differ from the terms of the Exchange Offers. Any purchase or offer to purchase will be made in accordance with applicable law.

~~Certain Consequences to Holders of Existing Notes Not Tendering in the Exchange Offers~~

The following considerations, in addition to the other information described elsewhere herein or incorporated by reference herein, should be carefully considered by each holder of Existing Notes before deciding whether to tender Existing Notes pursuant to the Exchange Offers.

~~Limited Trading Market~~

Consummation of an Exchange Offer may have adverse consequences to holders of Existing Notes that are subject to such Exchange Offer who elect not to tender their Existing Notes in such Exchange Offer. In particular, the trading market for such Existing Notes that are not exchanged could become more limited than the existing trading market for such Existing Notes and could cease to exist altogether due to the reduction in the amount of such Existing Notes outstanding upon consummation of such Exchange Offer. Because of the acceptance priority levels, it is more likely that a reduction in the principal amount outstanding could occur with respect to a series of Existing Notes having a higher priority acceptance level. A more limited trading market for a particular series of Existing Notes might adversely affect the liquidity, market price and price volatility of such series of Existing Notes.

~~Treatment of Existing Notes Not Tendered in the Exchange Offers~~

Existing Notes not tendered and purchased in the Exchange Offers will remain outstanding. The terms and conditions governing the Existing Notes, will remain unchanged. No amendments to the indenture governing the Existing Notes are being sought. From time to time in the future, we or our subsidiaries may acquire Existing Notes that are not tendered in the Exchange Offers through open market purchases, privately negotiated transactions, tender offers, exchange offers or otherwise, upon such terms and at such prices as we or they may determine, which may be more or less than the price to be paid pursuant to the Exchange Offers and could be for cash or other consideration. Alternatively, we may repurchase any or all of the Existing Notes not purchased pursuant to the Exchange Offers at any time. We cannot assure you as to which, if any, of these alternatives (or combinations thereof) we or our subsidiaries may choose to pursue in the future.

~~Effect of Tender~~

Any tender by a holder, and our subsequent acceptance of that tender, of Existing Notes will constitute a binding agreement between that holder and us upon the terms and subject to the conditions of the applicable Exchange Offer described in this prospectus. The participation in an Exchange Offer by a tendering holder will constitute the agreement by that holder to deliver good and marketable title to the tendered Existing Notes, free and clear of any and all liens, restrictions, charges, pledges, security interests, encumbrances or rights of any kind of third parties.

~~Representations, Warranties and Covenants of Holders of Existing Notes~~

By tendering Existing Notes through the submission of an electronic acceptance instruction in accordance with the requirements of ATOP, each holder of Existing Notes, or the beneficial holder of Existing Notes on behalf of which the holder has tendered, will, subject to that holder’s ability to withdraw its tender, and subject to the terms and conditions of the applicable Exchange Offer generally, be deemed to represent, warrant, agree and undertake to:

1. irrevocably sell, assign and transfer to or upon our order or the order of our nominee all right, title and interest in and to, and any and all claims in respect of or arising or having arisen as a result of the holder’s status as a holder of, all Existing Notes tendered thereby, such that thereafter the holder

shall have no contractual or other rights or claims in law or equity against us or any fiduciary, trustee, fiscal agent or other person connected with the Existing Notes arising under, from or in connection with those Existing Notes;

2. waive any and all rights with respect to the Existing Notes tendered thereby, including, without limitation, any existing or past defaults and their consequences in respect of those Existing Notes; and

3. release and discharge us and the trustee with respect to the indenture for the Existing Notes from any and all claims that the holder may have, now or in the future, arising out of or related to the Existing Notes tendered thereby, including, without limitation, any claims that the holder is entitled to receive additional principal or interest payments with respect to the Existing Notes tendered thereby, other than accrued and unpaid interest on the Existing Notes or as otherwise expressly provided in this prospectus, or to participate in any redemption or defeasance of the Existing Notes tendered thereby.

In addition, for each holder of Existing Notes tendered in an Exchange Offer, the submission of an electronic acceptance instruction in accordance with the requirements of ATOP will be deemed to represent, warrant and agree that:

~~1. it has received this prospectus;~~

2. it is the beneficial owner (as defined below) of, or a duly authorized representative of one or more beneficial owners of, the Existing Notes tendered thereby, and it has full power and authority to tender, sell, assign and transfer the Existing Notes tendered thereby;

3. the Existing Notes being tendered thereby were owned as of the date of tender, free and clear of any liens, charges, claims, encumbrances, interests and restrictions of any kind, and we will acquire good, indefeasible and unencumbered title to those Existing Notes, free and clear of all liens, charges, claims, encumbrances, interests and restrictions of any kind, when we accept the same;

4. it will not sell, pledge, hypothecate or otherwise encumber or transfer any Existing Notes tendered thereby from the date of tender, and any purported sale, pledge, hypothecation or other encumbrance or transfer will be void and of no effect;

5. it is not from or located in any jurisdiction where the making or acceptance of the Exchange Offers does not comply with the laws of that jurisdiction and is otherwise a person to whom it is lawful to make available this prospectus or to make the applicable Exchange Offer in accordance with applicable laws;

6. it is not resident and/or located in the United Kingdom or, if resident and/or located in the United Kingdom, it is: (a) a person falling within the definition of investment professionals as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”); (b) a person falling within Article 43(2) or Articles 49(2)(a) to (d) of the Order; or (c) a person to whom this confidential offering memorandum and other documents or materials relating to the New Notes may otherwise lawfully be communicated in accordance with the Order;

7. the New Notes are not intended to be offered, sold or otherwise made available to and are not being offered, sold or otherwise made available to any retail investor in the European Economic Area (the “EEA”). For these purposes, a “retail investor” means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of the EU Directive on Markets in Financial Instruments (2014/65/EU) (as amended, “MiFID II”); (ii) a customer within the meaning of Directive (EU) 2016/97 (the “Insurance Distribution Directive”), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in

Regulation (EU) 2017/1129 (as amended, the “Prospectus Regulation”). Consequently, no key information document required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the New Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the New Notes or otherwise making them available to any retail investor in the EEA may be unlawful. This prospectus has been prepared on the basis that any offer of New Notes in any Member State of the EEA will be made pursuant to an exemption under the Prospectus Regulation from the requirement to publish a prospectus for offers of notes. This prospectus is not a prospectus for the purposes of the Prospectus Regulation;

8. the New Notes are not intended to be offered, sold or otherwise made available to and are not being offered, sold or otherwise made available to any retail investor in the United Kingdom. For these purposes, a “retail investor” means a person who is one (or more) of (i) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (“EUWA”); or (ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (as amended, “FSMA”) and any rules or regulations made under the FSMA to implement the Insurance Distribution Directive, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of the Prospectus Regulation as it forms part of domestic law by virtue of the EUWA (as amended, the “UK Prospectus Regulation”). Consequently no key information document required by the PRIIPs Regulation as it forms part of domestic law by virtue of the EUWA (as amended, the “UK PRIIPs Regulation”) for offering or selling the New Notes or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the New Notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation. This prospectus has been prepared on the basis that any offer of New Notes in the UK will be made pursuant to an exemption under the UK Prospectus Regulation from the requirement to publish a prospectus for offers of notes. This prospectus is not a prospectus for the purposes of the UK Prospectus Regulation;

9. if it is, located or resident, in Canada, such holder is an accredited investor, as defined in National Instrument 45-106Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and is a permitted client as defined in National Instrument 31-103Registration Requirements, Exemptions andOngoing Registrant Obligations, and such holder has completed, signed and submitted, or shall forthwith complete, sign and submit, a Canadian Eligibility Form in the form approved by the Company and in accordance with the procedures established by the Company;

10. in evaluating the applicable Exchange Offer and in making its decision whether to participate in such Exchange Offer by the tender of Existing Notes, it has made its own independent appraisal of the matters referred to in this prospectus and in any related communications;

11. the tender of Existing Notes shall constitute an undertaking to execute any further documents and give any further assurances that may be required in connection with any of the foregoing, in each case on and subject to the terms and conditions described or referred to in this prospectus;

12. the submission of an electronic acceptance instruction in accordance with the requirements of ATOP shall, subject to a holder’s ability to withdraw its tender on or prior to the Expiration Time, and subject to the terms and conditions of the applicable Exchange Offer, constitute the irrevocable appointment of the Exchange Agent as its attorney and agent and an irrevocable instruction to that attorney and agent to complete and execute all or any forms of transfer and other documents at the discretion of that attorney and agent in relation to the Existing Notes tendered thereby in favor of us or any other person or persons as we may direct and to deliver those forms of transfer and other documents in the attorney’s and agent’s discretion and the certificates and other documents of title

relating to the registration of Existing Notes and to execute all other documents and to do all other acts and things as may be in the opinion of that attorney or agent necessary or expedient for the purpose of, or in connection with, the ~~merger~~acceptance of such Exchange Offer, and to vest in us or our nominees those Existing Notes;

13. it has a net long position in the Existing Notes being tendered pursuant to the applicable Exchange Offer within the meaning of Rule 14e-4 under the Exchange Act, and the tender of such Existing Notes complies with Rule 14e-4;

14. it understands that tenders with respect to a series of Existing Notes may be withdrawn by written notice of withdrawal or a properly transmitted “Request Message” through ATOP received by the Exchange Agent at any time on or prior to the Expiration Time. In the event of a termination of the Exchange Offer with respect to such series of Existing Notes, the Existing Notes tendered pursuant to such Exchange Offer will be credited to the account maintained at DTC from which such Existing Notes were delivered;

15. it understands that tenders of Existing Notes pursuant to any of the procedures described in this prospectus and acceptance of such Existing Notes by the Company will constitute a binding agreement between holders and the Company upon the terms and subject to the conditions of the Exchange Offers. For purposes of the Exchange Offers, it understands that validly tendered Existing Notes will be deemed to have been accepted by the Company if, as and when the Company gives written notice thereof to the Exchange Agent;

16. it has agreed to all of the terms of the Exchange Offers. All authority conferred or agreed to be conferred shall not be affected by, and shall survive, the death or incapacity of the holder, and any obligation of the holder hereunder shall be binding upon the heirs, executors, administrators, trustees in bankruptcy, personal and legal representatives, successors and assigns of the holder;

17. it acknowledges that on submitting the required electronic instructions to DTC, it is deemed to agree that the relevant Existing Notes will be blocked in the relevant clearing system with effect from the date the relevant tender of Existing Notes is made until the earlier of (i) the time of settlement on the Settlement Date and (ii) the date on which the Exchange Offers of the relevant Existing Notes are terminated by the Company or on which such tender is withdrawn or revoked, in each case in accordance with the terms of this prospectus;

18. it recognizes that under certain circumstances set forth in this prospectus, the Company may terminate or amend the Exchange Offers with respect to one or more series of Existing Notes or may postpone the acceptance for exchange of, or the exchange for, ~~each share of Great Plains common stock.~~
Great Plains Microsoft Great Plains Equivalent Common Stock Common Stock Per Share Price ------------ ------------ --------------- ~~December 20, 2000.................. $41.50 $35.31 $45.65 February 21, 2001.................. 56.25 62.25 61.88~~
~~Microsoft believes that Great Plains common stock presently trades on the basis~~Existing Notes tendered or may not be required to exchange any of the ~~value~~Existing Notes tendered thereby;

19. it understands that the delivery and surrender of any Existing Notes is not effective, and the risk of loss of the ~~Microsoft common stock expected~~Existing Notes does not pass to the Exchange Agent, until receipt by the Exchange Agent of an Agent’s Message (as defined below) properly completed and duly executed, together with all accompanying evidences of authority and any other required documents in form satisfactory to the Company. All questions as to form of all documents and the validity (including time of receipt) and acceptance of tenders and withdrawals of Existing Notes will be determined by the Company, in its sole discretion, which determination shall be final and binding, subject to holders of Existing Notes disputing such determination in a court of competent jurisdiction; and

20. it has observed the laws of all relevant jurisdictions, obtained all requisite governmental, exchange control or other required consents, complied with all requisite formalities and paid any issue, transfer or other taxes or requisite payments due from such holder, and not otherwise required to be

paid by the Company pursuant to the Exchange Offers, in each respect in connection with any offer or acceptance, in any jurisdiction and that such holder has not taken or omitted to take any action in breach of the terms of the Exchange Offers or which will or may result in the Company or any other person acting in breach of the legal or regulatory requirements of any such jurisdiction in connection with the Exchange Offers or tender of Existing Notes in connection therewith.

The representations, warranties and agreements of a holder tendering Existing Notes will be deemed to be repeated and reconfirmed on and as of the Early Exchange Time, the Expiration Time and the Settlement Date. For purposes of this prospectus, the “beneficial owner” of any Existing Notes means any holder that exercises investment discretion with respect to those Existing Notes.

~~Absence of Appraisal and Dissenters’ Rights~~

~~Holders of the Existing Notes do not have any appraisal or dissenters’ rights in connection with the Exchange Offers.~~

~~Acceptance of Existing Notes for Exchange and Delivery of New Notes~~

On the Settlement Date, the New Notes to be issued in exchange for ~~Great Plains common stock~~Existing Notes in the ~~merger, 20~~ ~~discounted primarily for~~Exchange Offers, if consummated, will be delivered in book-entry form, and payment of any cash amounts will be made by deposit of funds with DTC, Clearstream or Euroclear, as applicable, which will transmit those payments to tendering holders.

We expressly reserve the ~~uncertainties associated with the merger. Microsoft cannot state with certainty what factors account for changes~~right, in ~~the market price of Microsoft common stock. You are advised~~our sole discretion, to ~~obtain current market quotations for Microsoft common stock and Great Plains common stock. The market prices of Microsoft common stock and Great Plains common stock~~(1) extend or amend an Exchange Offer at any time, ~~before~~(2) waive any of the ~~merger,~~conditions to an Exchange Offer or (3) terminate an Exchange Offer in those situations in which a condition to an Exchange Offer is not satisfied or waived prior to the Expiration Time.

We will be deemed to accept Existing Notes that have been validly tendered by holders and that have not been validly withdrawn as provided in this prospectus (subject to the acceptance priority levels of each series of Existing Notes and the ~~market price~~New Issue Cap) when, and if, we give oral or written notice of ~~Microsoft common stock at any time after~~acceptance to the ~~merger, may fluctuate. The exchange ratio will not be adjusted for any increases or decreases in~~Exchange Agent. Following receipt of that notice by the ~~market price of Microsoft common stock that occur before~~Exchange Agent and subject to the ~~merger becomes effective. If the market price of Microsoft common stock decreases or increases before the merger, the value~~terms and conditions of the ~~Microsoft common stock to~~Exchange Offers, delivery of the New Notes and any cash amounts will be ~~received in~~made by the ~~merger in exchange~~Exchange Agent on the Settlement Date. The Exchange Agent will act as agent for ~~Great Plains common stock will correspondingly decrease or increase. Neither Great Plains nor Microsoft has ever paid cash dividends on its shares~~tendering holders of ~~common stock. Great Plains has agreed not to pay cash dividends before~~Existing Notes for the merger without Microsoft's written consent. If the merger is not completed, Great Plains presently intends that it would continue to retain all earnings to finance the expansion of its business. Similarly, although Microsoft's board of directors regularly reviews its dividend policy, Microsoft has no present intention to pay cash dividends on its common stock before or after the merger. 21 ~~THE GREAT PLAINS SPECIAL MEETING Date, time, place and~~ purpose of Great Plains' special meeting The special meeting of Great Plains' shareholders will be held at 2 p.m. Central time on Wednesday, March 28, 2001, at Ramada Plaza Suites, 1635 42nd Street S.W., Fargo, North Dakota. At the meeting, Great Plains' shareholdersreceiving Existing Notes and transmitting New Notes and cash as of the ~~record date~~Settlement Date. If any tendered Existing Notes are not accepted for any reason described in the terms and conditions of the Exchange Offers, such unaccepted Existing Notes will be ~~asked~~returned without expense to ~~approve~~ the ~~merger agreement with Microsoft. Record date; outstanding shares; shares entitled to vote Only~~tendering holders ~~of record of Great Plains common stock at~~promptly after the ~~close of business on the record date, February 21, 2001, are entitled to notice of and to vote at the special meeting. As~~expiration or termination of the ~~record date, there were 20,722,098 shares of Great Plains common stock outstanding, held of record by approximately 525 shareholders. Each holder of Great Plains common stock is entitled to one vote~~Exchange Offers.

~~Procedures for ~~each share of Great Plains common stock he or she owned as of the record date.~~ Tendering~~

If you ~~do not vote, either~~wish to participate in ~~person~~the Exchange Offers and your Existing Notes are held by a custodial entity such as a bank, broker, dealer, trust company or ~~by proxy, it will have~~other nominee, you must instruct that custodial entity to tender your Existing Notes on your behalf pursuant to the ~~same effect~~procedures of that custodial entity. Please ensure you contact your custodial entity as voting against the merger agreement. Quorum; vote required The required quorum for the transaction of business at the special meeting is a majority of the shares of Great Plains common stock outstanding on the record date, represented in personsoon as possible to give them sufficient time to meet your requested deadline. Beneficial owners are urged to appropriately instruct their bank, broker, custodian or ~~by proxy. The affirmative vote of the holders of~~other nominee at least ~~a majority of~~five business days prior to the ~~outstanding shares of Great Plains common stock~~Early Exchange Time or the Expiration Time, as of the ~~record date is required~~case may be, in order to approve the merger agreement. Recommendation of Great Plains' board of directors Great Plains' board of directors unanimously recommends that you vote "FOR" approval of the merger agreement. Voting of proxies The Great Plains board of directors requests that you return the proxy card accompanying this proxy statement/prospectusallow adequate processing time for use at the meeting. Please complete, date and sign the proxy card and promptly return it to Mellon Investor Services LLC, the firm that Great Plains has retained to provide proxy solicitation services,their instruction.

To participate in the ~~enclosed envelope. All properly signed proxies received by Mellon Investor Services and not revoked~~Exchange Offers, you must comply with the ATOP procedures for book-entry transfer described below prior to the Expiration Time or, in order to receive the Early Exchange

Premium, on or before the ~~vote at~~Early Exchange Time. We have not provided guaranteed delivery procedures in conjunction with the ~~meeting~~Exchange Offers. No letter of transmittal will be ~~voted at~~used in connection with the ~~meeting according~~Exchange Offers. The valid electronic transmission of acceptance through ATOP shall constitute delivery of your Existing Notes in connection with the Exchange Offers.

~~If you wish to tender Existing Notes held on your behalf by a nominee with DTC, you must:~~

~~inform your nominee of your interest in tendering your Existing Notes pursuant to the ~~instructions indicated on~~applicable Exchange Offer; and~~

instruct your nominee to tender all Existing Notes you wish to be tendered in the proxies or, if no instructions are given, to approve the merger agreement. We do not expect that any matter other than approval of the merger agreement will be brought before the special meeting. If other matters are properly presented and are within the purpose of the special meeting, however, the persons named as proxies will voteExchange Offers in accordance with ~~their judgment~~the procedures described below.

For a holder to validly tender Existing Notes pursuant to the Exchange Offers, an Agent’s Message transmitted through DTC must be received by the Exchange Agent at or prior to the Expiration Time, and the Existing Notes must be transferred pursuant to the procedures for book-entry transfer described below and a Book-Entry Confirmation (as defined below) must be received by the Information Agent, in each case at or prior to the Expiration Time. In all cases, the exchange of Existing Notes tendered and accepted for exchange pursuant to the Exchange Offers will be made only after timely receipt by the Exchange Agent of:

a Book-Entry Confirmation with respect to ~~those matters. If you have questions or need assistance in completing or submitting your proxy card, please contact Mellon Investor Services~~such Existing Notes; and

~~an Agent’s Message transmitted through DTC.~~

Any acceptance of an Agent’s Message transmitted through ATOP is at the ~~following address~~election and ~~telephone number: Mellon Investor Services LLC 520 Pike Street, Suite 1220 Seattle, Washington 98101 (800) 610-3775 22~~ ~~Voting electronically via Internet~~risk of the person transmitting such Agent’s Message and delivery will be deemed made only when actually received by the Exchange Agent. No documents should be sent to us, the trustee or ~~telephone Instead~~the Dealer Managers.

The Exchange Agent will establish an account with respect to each series of ~~returning your proxy~~Existing Notes at DTC for purposes of the Exchange Offers, and any financial institution that is a nominee in DTC, including Euroclear and Clearstream, may make book-entry delivery of Existing Notes by ~~mail, you may vote your shares through~~causing DTC to transfer such Existing Notes into the Exchange Agent’s account in accordance with the ATOP procedures for transfer. DTC will then verify the acceptance, execute a ~~toll-free number~~book-entry delivery to the Exchange Agent’s account at DTC and send an Agent’s Message to the Exchange Agent. The Agent’s Message, and any other required documents, must, in any case, be transmitted to and received by the Exchange Agent at or ~~over~~prior to the ~~Internet. Instructions for using these convenient services are provided on~~Expiration Time or at or prior to the ~~enclosed proxy card. Votes cast by proxy through this process are valid under Minnesota law. Additionally, a large number of banks~~Early Exchange Time in order to be eligible to receive the Total Exchange Consideration and ~~brokerage firms are participating in the ADP Investor Communication Services online program. This program provides shareholders whose shares are registered in the name~~Exchange Consideration, as applicable. The confirmation of a ~~participating bank or brokerage firm~~book-entry transfer into the ~~opportunity~~Exchange Agent’s account at DTC as described above is referred to ~~vote via~~herein as a “Book-Entry Confirmation.” Delivery of documents to DTC does not constitute delivery to the ~~Internet or~~Exchange Agent.

The term “Agent’s Message” means a message transmitted by ~~telephone. The voting form sent~~DTC to, and received by, the Exchange Agent and forming a ~~beneficial owner will provide instructions for participating in the ADP program if those options are available. How to revoke your proxy You may revoke your proxy at any time by taking any~~part of the ~~following actions before your proxy is voted at~~Book-Entry Confirmation, which states that DTC has received an express and unconditional acknowledgment from the ~~meeting: . delivering to Mellon Investor Services a written notice bearing a date later than~~participant in DTC described in such Agent’s Message, stating (i) the ~~date~~aggregate principal amount of ~~the proxy card, stating~~Existing Notes that ~~you revoke the proxy; . signing and delivering to Mellon Investor Services a proxy card relating~~have been tendered by such participant pursuant to the ~~same shares~~Exchange Offers, (ii) that such participant has received the prospectus and bearing a later date; . if you voted by Internet or telephone, by following the revocation procedures provided at the time of your vote on the Internet voting site or telephone voting system; or . attending the meeting and voting in person, although attendance at the meeting will not, by itself, revoke a proxy. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wishagrees to vote at the meeting, you must bring to the meeting a letter from the broker, bank or other nominee confirming your beneficial ownership of the shares. Share ownership of management As of the record date, collectively, Great Plains' directors and executive officers beneficially owned 4,798,710 shares of Great Plains common stock, or approximately 23.0% of Great Plains' outstanding shares. All of Great Plains' executive officers and directors have executed voting agreements with Microsoft, under which they have agreed to vote their shares in favor of the merger. Abstentions and broker nonvotes Only shares affirmatively voted for approval of the merger agreement, including shares represented by properly executed proxies that do not contain voting instructions, will be counted as votes "for" the merger agreement. Brokers who hold shares of Great Plains common stock in street name for a customer who is the beneficial owner of those shares may not give a proxy to vote the customer's shares without specific instructions from the customer. These nonvoted shares are referred to as broker nonvotes. If your broker holds your Great Plains stock in street name, your broker will vote your shares only if you provide instructions on how to vote by filling out the voter instruction form sent to you by your broker with this proxy statement/prospectus. Abstentions and broker nonvotes will be included in determining the presence of a quorum, but will have the same effect as voting against the merger agreement. 23 Proxy solicitation The enclosed proxy is solicited by and on behalf of Great Plains' board of directors. Great Plains will pay the expenses of soliciting proxies to be voted at the meeting. Following the original mailing of the proxies and other soliciting materials, Great Plains and its agents also may solicit proxies by mail, telephone, facsimile or in person. Great Plains has retained a proxy solicitation firm, Mellon Investor Services LLC, to aid it in the solicitation process. Great Plains will pay Mellon Investor Services LLC a fee of $6,500, plus reasonable expenses, for these services. Great Plains intends to reimburse persons who hold Great Plains stock of record but not beneficially, such as brokers, custodians, nominees and fiduciaries, for their reasonable expenses in forwarding copies of proxies and other soliciting materials to, and requesting authority for the exercise of proxies from, the persons for whom they hold the shares. Dissenters' rights Under Minnesota law, a shareholder has the right to dissent from the merger and to receive payment in cash for the fair value of shares of Great Plains common stock held. To preserve your rights if you wish to exercise your statutory dissenters' rights, you must: . in addition to and separate from any proxy or vote against approval of the merger agreement, file a written notice of your intent to demand fair value for your shares of Great Plains common stock before the shareholder vote is taken to approve the merger agreement; . not vote your shares for approval of the merger agreement; and . follow the statutory procedures for perfecting dissenters' rights under Minnesota law, which are described in the section entitled "Rights of dissenting Great Plains shareholders" beginning on page 59. If you do not satisfy all of these conditions, you cannot exercise dissenters' rights and will be bound by the terms of the ~~merger agreement. Voting~~Exchange Offers as described in this prospectus and (iii) that we may enforce such agreement against ~~abstaining from voting~~such participant.

If you are a beneficial owner which holds Existing Notes through Euroclear or ~~failing~~Clearstream and wish to ~~vote~~tender your Existing Notes, you are encouraged to ~~approve~~contact Euroclear and Clearstream directly to ascertain their procedure for tendering Existing Notes.

All questions as to the ~~merger agreement does not constitute a demand for appraisal within the meaning~~validity, form, eligibility, including time of ~~Minnesota law. A shareholder's failure to vote against the approval~~receipt, and acceptance and withdrawal of the merger agreement will not constitute a waiver of dissenters' rights. However, if a shareholder returns a signed proxy but does not specify a vote against approval of the merger agreement or direction to abstain, the proxytendered Existing Notes will be ~~voted for approval of the merger agreement, and the shareholder's dissenters' rights~~determined by us in our absolute discretion, which determination will be ~~waived. See~~final and binding, subject to holders of Existing Notes disputing such determination in a court of competent jurisdiction. We reserve the ~~section~~absolute right to reject any and all tendered Existing Notes determined by us not to be in proper form or not to be tendered properly or any tendered Existing Notes our acceptance of this proxy statement/prospectus entitled "Rights of Dissenting Great Plains Shareholders" beginning on page 59 for a more complete description of dissenters' rights and the procedures to follow to assert these rights. You should not send in any certificates representing Great Plains common stock. Following the effective time of the merger, you will receive instructions for the surrender and exchange of your Great Plains stock certificates. 24 THE MERGER This section of the proxy statement/prospectus describes the proposed merger. While we believe that this description covers the material terms of the merger, this summary may not contain all of the information that is important to you. You should carefully read this entire proxy statement/prospectus and the other documents to which we refer for a more complete understanding of the merger. Background of the merger Great Plains and Microsoft have enjoyed a close working relationship since the late 1980's. Great Plains has historically been a developer of products based on Microsoft platforms. Over the years, Great Plains has worked extensively with Microsoft to more fully utilize the capabilities of Microsoft tools, languages, databases and operating systems. More recently, Great Plains was an initial technical collaborator with Microsoftwould, in the newly announced .NET technology. Great Plains' current products are very compatible with Microsoft productivity tools and database offerings, with similar user interfaces, similar help systems and built-in Microsoft development tools. Great Plains and Microsoft haveopinion of our counsel, be unlawful. We also ~~developed joint product solutions and conducted marketing initiatives from time~~reserve the right to ~~time and have purchased and sold products~~waive, in our absolute discretion, any defects, irregularities or conditions of tender as to each other. In September of 1999, after a significant amount of joint work and discussion around the Microsoft .NET platform adoption by Great Plains, Great Plains and Microsoft executives and key technical leaders met to discuss the two companies' technical and marketing relationship and to explore the possibility of the two companies partnering further around key e-commerce and .Net initiatives. However, there were no business combination discussions at these meetings. In March of 2000, Great Plains and Microsoft signed a joint cooperation agreement to work togetherparticular Existing Notes, whether or not waived in the ~~area~~case of ~~the .NET runtime. At this time Great Plains was one~~other Existing Notes. Our interpretation of the only companies committed to working on this technology. Accordingly, there was support among Microsoft management that Microsoft should look into ways of partnering more closely with Great Plains. During this time Steve Ballmer, the Chief Executive Officer of Microsoft, and David Vaskevitch, the Senior Vice President of Microsoft's Business Application Division, began to discuss the formation of a new company division focused on business applications. Mr. Vaskevitch assumed the role of leading Microsoft's new business applications division at the end of March 2000 to focus on Microsoft's efforts in key e-commerce and business applications. Great Plains was considered a key Microsoft ally in this business sector. In June 2000, Mr. Vaskevitch proposed to Mr. Ballmer that Microsoft consider the acquisition of Great Plains to support Microsoft efforts in the business applications domain. On June 20, 2000, Mr. Ballmer placed a telephone call to Doug Burgum, Chief Executive Officer of Great Plains, in which they discussed the upcoming visit to Great Plains by Mr. Vaskevitch, and the possibility of acquisition of Great Plains by Microsoft. On June 26, 2000, with Mr. Ballmer's approval, Mr. Vaskevitch and key members of his team visited Great Plains at their corporate headquarters and reviewed the decision to create a business applications division within Microsoft, and discussed the current offerings from Microsoft's bCentral Internet site. Later that day, in a meeting between Mr. Vaskevitch and Mr. Burgum, the possibility of a business combination with Great Plains was again discussed. During the months of July, August and September of 2000, Microsoft and Great Plains team members held a number of joint meetings intended to compare goals and objectives of both organizations, as well as to test the cultural and business method compatibility between the companies. A variety of scenarios were considered, including Great Plains remaining independent from Microsoft but expanding the current partnering activities. On October 16, 2000, Mr. Vaskevitch and his team made a presentation on the possible business combination to the Strategic Leadership Team, a group composed of senior Microsoft executives. That group 25 approved moving ahead with acquisition negotiations contingent on the support of Jeff Raikes, a Group Vice President at Microsoft. Mr. Ballmer and Mr. Burgum met the next day to further discuss the opportunities presented by a potential business combination. To further this process, Mr. Raikes met with Mr. Burgum and other Great Plains executives on numerous occasions beginning October 21, 2000. Mr. Raikes and Mr. Vaskevitch presented their thoughts and findings relating to the acquisition to the Microsoft board of directors on November 9, 2000. The Microsoft board approved the acquisition of Great Plains pending due diligence. During this same time, through a number of strategy planning meetings, the Great Plains management team considered if a business combination could accelerate the delivery of the next generation of business applications to its target market of small and medium-size (mid-market) businesses. Concurrent with these planning meetings, Great Plains' management team informed and consulted with Great Plains' board of directors through a series of board meetings which included presentations from both Great Plains' management team and outside advisors including Goldman Sachs, Great Plains' financial advisor. On October 20, 2000, Goldman Sachs was formally engaged to act as Great Plains financial advisor in connection with a possible sale of Great Plains. Goldman Sachs has been Great Plains' lead investment banker since Great Plains' June 1997 initial public offering. On October 24, 2000, the Great Plains board of directors held a meeting to discuss business strategies. Representatives of Goldman Sachs, who were also present at this meeting, discussed with the Great Plains board of directors, among other matters, possible strategic and other business combination opportunities, including a potential strategic transaction with Microsoft. During the first half of November 2000, representatives of Great Plains and Microsoft, in consultation with their respective legal and financial advisors, engaged in preliminary discussions concerning the possible terms for an acquisition of Great Plains by Microsoft. On November 17, 2000, Great Plains and Microsoft management approved a non-binding list of acquisition terms and agreed to begin their respective due diligence investigations and preparation of definitive agreements. Commencing on November 27, 2000, management from Microsoft and Great Plains, as well as legal counsel and other representatives and advisors of both companies, worked to facilitate the completion of the due diligence investigations in anticipation of the acquisition. During this time, Microsoft and its counsel prepared draft definitive agreements, and the parties and their legal counsel negotiated final documents. From December 6 through December 12, 2000, the parties, together with their counsel, met in Seattle to discuss and negotiate the definitive agreements. On December 20, the final merger agreement was presented to the Great Plains board of directors who, after a presentation from Goldman Sachs, approved the transaction, conditional upon the receipt of a fairness opinion from Goldman Sachs. Goldman Sachs delivered its fairness opinion early in the morning of December 21, 2000, and the merger agreement was executed and the transaction announced that same day. Great Plains' reasons for the merger In reaching its decision to approve and adopt the merger agreement and to unanimously recommend that Great Plains shareholders approve the merger agreement, Great Plains' board identified reasons why the merger should be beneficial to Great Plains and its shareholders, employees, partners and customers. These potential benefits include the following: . the opportunity for Great Plains shareholders to receive a premium for their shares based upon the market prices of Great Plains and Microsoft common stock immediately prior to the public 26 announcement of the merger. Specifically, the exchange ratio in the merger represented a 29.3% premium over the closing price for Great Plains common stock on December 20, 2000, the last trading day before Great Plains and Microsoft announced the merger; . the ability of Great Plains shareholders to continue to participate in the growth of the business conducted by Microsoft and Great Plains following the merger and to benefit from the potential appreciation in value of shares of Microsoft common stock; . the larger public float and trading volumes of shares of Microsoft common stock compared to the public float and trading volumes of shares of Great Plains common stock, which would provide Great Plains shareholders with the opportunity to gain greater liquidity in their investment; . the enhanced ability of Great Plains to execute against its mission statement (to improve the lives and business success of its partners and customers) and on its business plan based on the combined resources of Great Plains and Microsoft; and . the potential for increased opportunities for Great Plains employees and partners, and the potential for even better solutions for Great Plains current and future customers. In the course of deliberations, Great Plains' board also reviewed with its executive management team and its legal and financial advisors a number of additional factors relevant to the merger, including: . the terms and conditions of the ~~merger agreement,~~Exchange Offers, including ~~termination fees~~the terms and ~~closing conditions; .~~instructions in this prospectus, will be final and binding on all parties, subject to holders of Existing Notes disputing such determination in a court of competent jurisdiction. Unless waived, any defects or irregularities in connection with tenders of Existing Notes must be cured within the ~~likelihood~~time we determine. Although we intend to notify holders of defects or irregularities with respect to tenders of Existing Notes, neither we, nor the Exchange Agent, the Information Agent, the Dealer Managers or any other person will be under any duty to give that notification or shall incur any liability for failure to give that notification. Tenders of Existing Notes will not be deemed to have been made until any defects or irregularities therein have been cured or waived.

Any holder whose Existing Notes have been mutilated, lost, stolen or destroyed will be responsible for obtaining replacement securities or for arranging for indemnification with the ~~merger would be completed; . the expected qualification~~trustee of the ~~merger as~~Existing Notes. Holders may contact the Information Agent for assistance with these matters.

~~Withdrawal of Tenders~~

Tenders submitted in the Exchange Offers may be validly withdrawn at any time at or prior to 11:59 p.m., New York City time, on March 15, 2021, unless extended by us, but will thereafter be irrevocable except in the limited circumstances where additional withdrawal rights are required by law.

For a ~~tax-free reorganization under Section 368~~withdrawal of a tender to be effective, a written or facsimile transmission notice of withdrawal or a properly transmitted “Request Message” through ATOP must be received by the Exchange Agent prior to the Expiration Time. The withdrawal notice must:

specify the name of the tendering holder of Existing Notes (or, if tendered by book-entry transfer, the name of the participant in the book-entry transfer facility whose name appears on the security position listing as the owner of such Existing Notes);

bear a description, including the series, of the Existing Notes to be withdrawn;

specify, in the case of Existing Notes tendered by delivery of certificates for those Existing Notes, the certificate numbers shown on the particular certificates evidencing those Existing Notes;

specify the aggregate principal amount represented by those Existing Notes; and

specify, in the case of Existing Notes tendered by delivery of certificates for those Existing Notes, the name of the registered holder, if different from that of the tendering holder, or specify, in the case of Existing Notes tendered by book-entry transfer, the name and number of the account at DTC to be credited with the withdrawn Existing Notes.

Withdrawal of tenders of Existing Notes may not be rescinded, and any Existing Notes validly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the ~~Internal Revenue Code; .~~Exchange Offers. Validly withdrawn Existing Notes may, however, be re-tendered by again following one of the ~~opinion~~procedures described in “—Procedures for Tendering” on or before the Expiration Time or, in order to receive the Early Exchange Premium, on or before the Early Exchange Time.

~~Compliance with “Short Tendering” Rule~~

It is a violation of ~~Goldman Sachs~~Rule 14e-4 (promulgated under the Exchange Act) for a person, directly or indirectly, to tender Existing Notes for his own account unless the person so tendering (a) has a net long position equal to or greater than the aggregate principal amount at maturity, of such Existing Notes being tendered and (b) will cause such Existing Notes to be delivered in accordance with the terms of the Exchange Offers. Rule 14e-4 provides a similar restriction applicable to the ~~effect that, as~~tender or guarantee of a tender on behalf of another person.

A tender of Existing Notes in the Exchange Offers under any of the ~~date of~~procedures described above will constitute a binding agreement between the ~~merger agreement~~tendering holder and us with respect to such Exchange Offer upon the terms and subject to the ~~considerations set forth in~~conditions of such Exchange Offer, including the ~~opinion, the 1.1 exchange ratio was fair to shareholders of Great Plains from a financial point of view. (The full text~~tendering holder’s acceptance of the ~~opinion, which describes assumptions made, matters considered~~terms and ~~limitations on~~conditions of such Exchange Offer, as well as the ~~review undertaken~~tendering holder’s representation and warranty that (a) such holder has a net long position in such Existing Notes being tendered pursuant to such Exchange Offer within the meaning of Rule 14e-4 under the Exchange Act and (b) the tender of such Existing Notes complies with Rule 14e-4.

~~Exchange Agent; Information Agent~~

D.F. King & Co., Inc. has been appointed as the Exchange Agent and the Information Agent for the Exchange Offers. All correspondence in connection with the ~~opinion, is attached~~Exchange Offers should be sent or delivered by each holder of Existing Notes, or a beneficial owner’s commercial bank, broker, dealer, trust company or other nominee, to the Exchange Agent at the address listed on the back cover page of this prospectus. Questions concerning tender procedures and requests for additional copies of this prospectus should be directed to the Information Agent at the address and telephone numbers listed on the back cover page of this prospectus or to microsoft@dfking.com. Holders of Existing Notes may also contact their commercial bank, broker, dealer, trust company or other nominee for assistance concerning the Exchange Offers. We will pay the Exchange Agent and the Information Agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses.

~~Dealer Managers~~

We have retained (i) Morgan Stanley & Co. LLC and Wells Fargo Securities, LLC to serve as ~~Annex B~~the Joint Lead Dealer Managers, (ii) Barclays Capital Inc. and ~~Great Plains shareholders~~Credit Suisse Securities (USA) LLC to serve as the Senior Co-Dealer Managers and (iii) Academy Securities, Inc., CastleOak Securities, L.P., Drexel Hamilton, LLC, Loop Capital Markets LLC, MFR Securities, Inc., Mischler Financial Group, Inc., Samuel A. Ramirez & Company, Inc. and Siebert Williams Shank & Co., LLC to serve as the Co-Dealer Managers. We will pay the Dealer Managers customary fees for soliciting acceptances of the Exchange Offers. The obligations of the Dealer Managers to perform their functions are ~~encouraged~~subject to ~~read~~various conditions. We have agreed to indemnify the ~~opinion in its entirety.); . information~~Dealer Managers against various liabilities, including various liabilities under the federal securities laws. The Dealer Managers may contact holders of Existing Notes by mail, telephone, facsimile transmission, personal interviews and otherwise may request broker dealers and the other nominee holders to forward materials relating to the business, assets, management, competitive position, operating performance, trading performance and prospects of each of Great Plains and Microsoft, including the prospects of Great Plains if it wereExchange Offers to continue as an independent company; . current economic and financial market conditions and historical market prices, volatility and trading information for Great Plains common stock and Microsoft common stock; . the belief, based on presentations by Great Plains' legal and financial advisors, thatbeneficial holders. Questions regarding the terms of the ~~merger agreement, including~~Exchange Offers may be directed to the ~~limited conditions~~Dealer Managers at the addresses and telephone numbers listed on the back cover page of this prospectus. At any given time, the Dealer Managers or their affiliates may trade the Existing Notes or other of our securities for their own account or for the accounts of their customers and, accordingly, may hold a long or short position in the Existing Notes. To the extent that the Dealer Managers or their affiliates hold Existing Notes during the Exchange Offers, they may tender such Existing Notes in the Exchange Offers pursuant to ~~Microsoft's obligation~~the terms of the Exchange Offers.

From time to ~~close~~time in the ~~merger~~ordinary course of business, the Dealer Managers and their affiliates have provided us and our affiliates with investment banking and other services for customary compensation. The Dealer Managers or their affiliates engage in commercial banking activities with us. One of our directors, Charles W. Scharf, is the Chief Executive Officer and President of Wells Fargo & Company (the parent of Wells Fargo Securities, LLC).

~~Other Fees and Expenses~~

We will bear the expenses of soliciting tenders of the Existing Notes. The principal solicitation is being made by electronic communications. Additional solicitations may, however, be made by e-mail, mail, facsimile transmission, telephone or in person by the Dealer Managers and the ~~ability~~Information Agent, as well as by our officers and other employees and those of ~~Great Plains~~our affiliates.

Tendering holders of Existing Notes will not be required to ~~consider proposed alternative business combinations under certain circumstances, are generally customary for transactions such as the merger; . whether strategic alternatives~~pay any fee or commission to the ~~merger would enhance long-term shareholder value; and . discussions with management as~~Dealer Managers. If, however, a tendering holder handles the transaction through its broker, dealer, commercial bank, trust company or other institution, that holder may be required to ~~their due diligence investigations~~pay brokerage fees or commissions.

~~DESCRIPTION OF THE NEW NOTES~~

For purposes of ~~Microsoft. Great Plains' board also considered and balanced against the potential benefits~~this section “Description of the ~~merger a number~~New Notes”, the terms “we,” “us” and “our” refer to Microsoft Corporation (parent company only) and not to any of ~~potentially negative factors, including, without limitation, the following: . the risk that the merger would not be consummated and the effect~~its subsidiaries. The terms of the ~~public announcement~~New Notes will include those stated in our Indenture and those made part of the merger on Great Plains' sales and operating results and Great Plains' ability to attract and retain key management, marketing, technical, sales and other personnel; . the possibility that the market value of Microsoft common stock might decrease prior to closing, causing less aggregate value to be paid to Great Plains shareholders; 27 . a recognition that Microsoft common stock is traded at high valuation multiples, and the risk that those multiples might not be sustained in the future; . the fact that shareholders of Great Plains will not receive the full benefit of any future growth in the value of their equity that Great Plains may have achieved as an independent company, and the potential disadvantage to Great Plains shareholders who receive Microsoft common stock in the event that Microsoft does not perform as well in the future as Great Plains may have performed as an independent company; . the possibility that some provisions of the merger agreement, including the no-solicitation and termination fee payment provisions, might have the effect of discouraging other persons potentially interested in merging with or acquiring Great Plains from pursuing such an opportunity; and . other matters described in the section entitled "Risk factors" beginning on page 15. Great Plains' board concluded that overall these risks were outweighedIndenture by the potential benefits of the merger, and determined that the merger was fair to and in the best interests of Great Plains and its shareholders. The above discussion does not include all of the information and factors considered by Great Plains' board. In view of the variety of factors considered in connection with its evaluation of the merger agreement, Great Plains' board did not find it practicable to and did not quantify or otherwise assign relative weightreference to the ~~specific factors considered in reaching its determination. In addition, individual members~~Trust Indenture Act of Great Plains' board may have given different weight to different factors. Recommendation of Great Plains' board of directors After carefully evaluating these factors, both positive and negative, Great Plains' board of directors has determined that the merger is fair to, and in the best interests of, Great Plains and its shareholders. Great Plains' board of directors unanimously recommends that you vote "FOR" approval of the merger agreement. Opinion of Great Plains' financial advisor Goldman, Sachs & Co. delivered an oral opinion, subsequently confirmed by delivery of a written opinion to the board of directors of Great Plains, dated1939, as of December 21, 2000, that, subject to the matters and assumptions set forth in the opinion, as of that date, the exchange ratio in connection with the merger was fair from a financial point of view to the holders of shares of Great Plains common stock. The full text of the written opinion of Goldman Sachs, dated as of December 21, 2000, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Goldman Sachs in connection with the opinion, is attached as Annex B and is incorporated by reference in this proxy statement/prospectus. Great Plains shareholders are urged to, and should read, the opinion in its entirety. In connection with its opinion, Goldman Sachs reviewed, among other things: . the merger agreement; . the Registration Statement on Form S-1 of Great Plains, dated March 5, 1997; . annual reports to stockholders and annual reports on Form 10-K of Great Plains for the three fiscal years ended May 31, 2000; . annual reports to stockholders and annual reports on Form 10-K of Microsoft for the five fiscal years ended June 30, 2000; . various interim reports to stockholders and quarterly reports on Form 10- Q of Great Plains and Microsoft; 28 . various other communications from Great Plains and Microsoft to their respective stockholders; and . various internal financial analyses and forecasts for Great Plains prepared by the management of Great Plains. Goldman Sachs also held discussions with members of the senior management of Great Plains regarding their assessment of the strategic rationale for, and the potential benefits of, the merger and the past and current business operations, financial condition and future prospects of Great Plains and Microsoft. In addition, Goldman Sachs: . reviewed the reported price and trading activity for the common stock of Great Plains and Microsoft; . compared financial and stock market information for Great Plains and Microsoft with similar information for the securities of other publicly traded companies; . reviewed the financial terms of recent business combinations in the software industry specifically, and in other industries generally; and . performed other studies and analyses that Goldman Sachs considered appropriate. Goldman Sachs relied upon the accuracy and completeness of all of the financial and other information that was discussed with or reviewed by it. Goldman Sachs assumed the accuracy and completeness of this information for purposes of rendering its opinion. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities of Great Plains or Microsoft or any of their subsidiaries and was not furnished with an evaluation or appraisal of any of these assets or liabilities. With the consent of the Great Plains board of directors, Goldman Sachs took into account Great Plains' management's views of the risks and uncertainties relating to Great Plains' ability to achieve the forecasts prepared by its management in the amounts and time periods contemplated by those forecasts. Microsoft did not make available to Goldman Sachs its projections of its expected future performance and, therefore, Goldman Sachs' review of these matters was limited to discussions with Microsoft's management of specific research analysts' estimates. With the consent of the Great Plains board of directors, Goldman Sachs did not conduct an independent evaluation of the pending litigation against Microsoft, including litigation regarding antitrust and intellectual property matters, or the resulting liability or other consequences Microsoft may incur in connection with that litigation. Based on the information contained in Microsoft's public filings with the Securities and Exchange Commission and on Microsoft's representations and warranties contained in the merger agreement and after consulting with counsel to Great Plains, the Great Plains board of directors directed Goldman Sachs in rendering its opinion to assume that the pending litigation will not have a material adverse effect on Microsoft's financial condition or results of operations, the market price of Microsoft common stock or the conduct of the operations of Microsoft and its subsidiaries. Goldman Sachs was not requested to solicit, and did not solicit, interest from other parties with respect to an acquisition of or other business combination with Great Plains (other than a limited discussion with one party which expressed an interest in Great Plains). Goldman Sachs provided its advisory services and opinion for the information and assistance of the board of directors of Great Plains in connection with its consideration of the merger. Goldman Sachs' opinion does not constitute a recommendation as to how any holder of common stock of Great Plains should vote with respect to the merger.amended. The following is a summary of the material ~~financial analyses presented by Goldman Sachs to Great Plains in connection with the rendering~~provisions of the Goldman Sachs opinion. This summary does not purport to be a complete description of the analyses performed by Goldman Sachs. The order of the analyses described, and the results of those analyses, do not represent the relative importance or weight given to the analyses by Goldman Sachs. 29 The following summaries of financial analyses include information presented in tabular format. You should read these tables together with the text of each summary. (1) Acquisition Premia Analysis. Goldman Sachs calculated the implied acquisition premia for the various periods ending December 20, 2000, the date prior to the date of the announcement of the merger, and for December 20, 2000. Based on the exchange ratio and the average prices for the periods set forth below and for December 20, 2000, Goldman Sachs' analysis indicated the following: Implied Acquisition Premia on Various Prices for Great Plains
~~Period Premia ------ ------~~ 52-week high ending on December 20, 2000............................. -45.3% 52-week low ending on December 20, 2000.............................. 185.3% 30 day average ending on December 20, 2000........................... -7.4% 60 day average ending on December 20, 2000........................... 1.9% 90 day average ending on December 20, 2000........................... 17.1% December 20, 2000.................................................... 29.3%
(2) Relative Stock Price Performance for Selected Comparables. Goldman Sachs reviewed the change in stock price from October 20, 2000 through December 20, 2000 and from November 8, 2000 through December 20, 2000 for Great Plains and Microsoft and compared these changes to similar information for selected indices and companies which included the Nasdaq Composite, JD Edwards, PeopleSoft, Microsoft and SAP. The results ofour Indenture. Because this ~~analysis are as follows:~~
Selected Comparables Great ------------- Plains Microsoft Mean Median ------ --------- ----- ------ % change in the stock price from October 20, 2000 through December 20, 2000....... 17.7% -36.3% -25.5% -32.7% % change in the stock price from November 8, 2000 through December 20, 2000........ -21.6% -40.2% -31.5% -27.9%
(3) Selected Companies Comparison. Goldman Sachs reviewed and compared selected financial information and ratios to corresponding financial information and ratios for the following enterprise applications, domestic mid- market and international software companies: Enterprise Applications Companies Domestic Mid-Market Companies . International Business Machines, Inc. . Citrix Software Limited . JD Edwards Company . Epicor Software Corporation . Microsoft Corporation . Hyperion Solutions Corporation . Oracle Corporation . Interact Commerce Corporation . PeopleSoft, Inc. . Made2Manage Systems Inc. . SAP AG . Mapics Inc. . Siebel Systems Inc. . Onyx Software Corporation . Pivotal Corporation International Companies . QAD Inc. . Damgaard A/S . Symix Systems, Inc. . Exact Holding NV . Navision Software A/S . Sage Group PLC
30 The multiples and other financial information calculated by Goldman Sachs were based on the closing prices on December 20, 2000 for shares of Great Plains and the selected companies common stock and/or the most recent publicly available information for Great Plains and each of the selected companies. The price-to-earnings multiples for calendar years 2000 and 2001 and the five-year earnings per share compound annual growth rate for Great Plains and the selected companies were based on median estimates provided by the Institutional Brokers Estimate System, or IBES, except for Microsoft's estimates, which, following a Microsoft public conference call on December 14, 2000 and discussions with Microsoft's management, were based on Goldman Sachs public analyst estimates dated December 15, 2000. Goldman Sachs' analysis of the selected companies compared the following to the results for Great Plains: . the December 20, 2000, closing share price as a percentage of the 52-week high share price; . the equity market capitalization; . the multiple of enterprise value to revenues for calendar years 2000 and 2001; . the price-to-earnings multiples for calendar years 2000 and 2001; . the five-year earnings per share compound annual growth rate; and . the quarterly revenue growth for the last publicly reported quarter. The results of these analyses are summarized as follows:
Selected Selected Domestic Mid- Selected Enterprise International Market Applications Software Software Companies Companies Companies Great -------------------- ---------------- -------------- Plains Mean Median Mean Median Mean Median ------ --------- --------- -------- ------ ------ ------ December 20, 2000 closing share price as a percentage of the 52- week high share price.. 42.6% 53.1% 50.1% 27.7% 28.0% 25.9% 21.7% Equity market capitalization (in millions).............. $724.9 $88,630.8 $40,241.3 $1,806.7 $609.7 $576.4 $104.1 Enterprise value (in millions).............. $673.0 $87,856.6 $39,483.3 $1,768.6 $557.2 $530.3 $137.5 Multiple of enterprise value to revenues for 2000............... 4.0x 8.3x 6.3x 4.7x 3.7x 3.4x 1.4x Multiple of enterprise value to revenues for 2001............... 2.6x 6.6x 5.1x 3.7x 2.9x 2.4x 0.8x Price-to-earnings multiple for calendar year 2000.............. 37.6x 33.6x 23.2x 51.8x 45.4x 24.1x 20.7x Price-to-earnings multiple for calendar year 2001.............. 27.6x 45.6x 43.2x 30.4x 30.6x 18.0x 17.7x Five-year earnings per share compound annual growth rate............ 37.5% 24.0% 20.0% N/A N/A 37.1% 37.5% Quarterly revenue growth for the last publicly reported quarter....... 12.6% 0.8% 0.5% N/A N/A 11.7% 15.6%
31 (4) Selected Transactions Analysis. Goldman Sachs reviewed fifty selected transactions in the software industry since 1999. Goldman Sachs analyzed financial information relating to these transactions, including: . the implied offer premium as a percentage of the closing price of the acquired company's shares on the day prior to announcement of the proposed transaction; . the implied offer premium as a percentage of the highest price of the acquired company's shares over the fifty-two weeks prior to announcement of the proposed transaction; . the multiple of the implied offer price to the acquired company's sales for the latest twelve months, or LTM; . the multiple of the implied offer price to the acquired company's LTM earnings before interest and taxes, or EBIT; and . the multiple of the implied offer price to the acquired company's LTM net income. The results of this selected transactions analysis are set forth as follows:
~~High Mean Median Low ------ ----- ------ -----~~ Implied offer premium as a percentage of the closing price of the acquired company's shares on the day prior to announcement of the proposed transaction................... 196.2% 45.5% 36.7% -36.7% Implied offer premium as a percentage of the highest price of the acquired company's shares over the 52 weeks prior to the announcement of the proposed transaction... 285.6% 3.5% 0.0% -85.2% Multiple of the implied offer price to the acquired company's LTM sales............... 301.5x 45.3x 10.4x 1.0x Multiple of the implied offer price to the acquired company's LTM EBIT................ 2375.9x 285.7x 68.1x 16.7x Multiple of the implied offer price to the acquired company's LTM net income.......... 1159.2x 246.3x 100.5x 24.1x
Goldman Sachs also calculated similar percentages and multiples implied by the merger based on a price per share of Microsoft common stock of $41.50, the closing price on the Nasdaq National Market on December 20, 2000 and, applying the exchange ratio, the corresponding implied value of $45.65 per share of Great Plains common stock. The results of these calculations are as follows: . Implied offer premium as a percentage of the closing price of Great Plains common stock on December 20, 2000........................... 29.3% . Implied offer discount as a percentage of the highest price of Great Plains common stock over the 52 weeks prior to December 20, 2000............................................................... -45.3% . Multiple of the implied offer price to Great Plains' LTM sales (as of September 1, 2000).............................................. 4.12x . Multiple of the implied offer price to Great Plains' LTM EBIT (as of September 1, 2000).............................................. 95.0x . Multiple of the implied offer price to Great Plains' LTM net income (as of September 1, 2000).......................................... 196.8x
32 (5) Discounted Cash Flow Analysis. Goldman Sachs performed a discounted cash flow analysis by calculating the present value of the future cash flows that would be produced by Great Plains for 2000 through 2005 based upon Great Plains' management forecasts. Goldman Sachs calculated the terminal values based on multiples of estimated 2005 earnings per share, or EPS, ranging from 20x to 28x. Goldman Sachs discounted the cash flows and the terminal values to a present value based on discount rates ranging from 20% to 30%. Goldman Sachs applied this analysis to Great Plains on both an enterprise and per share basis. The results of this analysis are as follows: Implied Enterprise Value (in millions)
Range of terminal values (calculated as a multiple of estimated 2005 EPS) -------------------------------------------------------------------- Discount Rate 20.0x 22.0x 24.0x 26.0x 28.0x ------------- ------ ------ ------ ------ -------- 20.0% $768.5 $829.2 $890.0 $950.8 $1,011.5 22.5 707.7 763.2 818.7 874.1 929.6 25.0 653.1 703.8 754.6 805.3 856.1 27.5 603.9 650.4 696.9 743.4 789.9 30.0 559.5 602.1 644.8 687.5 730.2
~~Implied Equity Value Per Share~~
Range of terminal values (calculated as a multiple of estimated 2005 EPS) ------------------------------------------------------------------ Discount Rate 20.0x 22.0x 24.0x 26.0x 28.0x ------------- ------ ------ ------ ------ ------ 20.0% $39.62 $42.22 $44.82 $47.43 $50.03 22.5 37.01 39.39 41.77 44.14 46.52 25.0 34.67 36.85 39.02 41.20 43.37 27.5 32.56 34.56 36.55 38.54 40.53 30.0 30.46 32.49 34.32 36.15 37.97
Goldman Sachs also performed discounted cash flow analysis taking into account a range of sales growth changes from -10.0% to 10.0% and a range of EBIT margin changes from -4.0% to 4.0%. In performing this analysis, Goldman Sachs assumed a terminal value of 24x 2005 estimated EPS and a discount rate of 25%. The results of this analysis on both an enterprise and per share basis are as follows: Implied Enterprise Value (in millions)
Range of change in sales growth ------------------------------------------------------------- Range of change in EBIT margin -10.0% -5.0% 0.0% 5.0% 10.0% --------------- ------ ------ ------- ------- ------- -4.0% $438.9 $467.9 $ 501.6 $ 540.8 $ 585.9 -2.0 527.7 574.1 628.1 690.5 762.3 0.0 616.4 680.3 754.6 840.3 938.7 2.0 705.2 786.6 881.0 990.0 1,115.1 4.0 793.9 892.8 1,007.5 1,139.7 1,291.4
~~Implied Equity Value Per Share~~
Range of change in sales growth ------------------------------------------------------------------ Range of change in EBIT margin -10.0% -5.0% 0.0% 5.0% 10.0% --------------- ------ ------ ------ ------ ------ -4.0% $24.46 $25.90 $27.58 $29.53 $31.78 -2.0% 28.88 31.19 33.60 36.28 39.35 0.0% 33.10 35.84 39.02 42.69 46.91 2.0% 36.90 40.39 44.44 49.11 54.47 4.0% 40.71 44.95 49.86 55.53 62.03
33 (6) Present Value of Future Stock Prices Analysis. Based on Great Plains management projections of calendar year earnings for 2001, 2002 and 2003, Goldman Sachs calculated a range of potential future prices for shares of Great Plains common stock assuming trading multiples ranging from 25x to 40x calendarized EPS. Goldman Sachs calculated the present value of these potential future share prices using a range of discount rates of 15% to 30%. The results of this analysis are as follows:
25x EPS Multiple 30x EPS Multiple -------------------- -------------------- Discount Rate 2001 2002 2003 Discount Rate 2001 2002 2003 ------------- ------ ------ ------ ------------- ------ ------ ------ 15% $34.13 $34.91 $38.45 15% $40.96 $41.89 $46.14 20 34.13 33.45 35.31 20 40.96 40.14 42.37 25 34.13 32.11 32.54 25 40.96 38.54 39.05 30 34.13 30.88 30.09 30 40.96 37.06 36.10
35x EPS Multiple 40x EPS Multiple -------------------- -------------------- Discount Rate 2001 2002 2003 Discount Rate 2001 2002 2003 ------------- ------ ------ ------ ------------- ------ ------ ------ 15% $47.79 $48.87 $53.83 15% $54.62 $55.85 $61.52 20 47.79 46.83 49.43 20 54.62 53.52 56.50 25 47.79 44.96 45.56 25 54.62 51.38 52.07 30 47.79 43.23 42.12 30 54.62 49.41 48.14
(7) Summary Merger Analysis. Goldman Sachs analyzed the financial impact of the merger to the EPS of Microsoft common stock assuming the completion of the merger. Based on management estimates for Great Plains' 2001 EPS and, following a Microsoft public conference call on December 14, 2000 and discussions with Microsoft's management, on Goldman Sachs public analyst estimates for Microsoft's 2001 EPS, this analysis indicated that the merger would have a dilutive effect on Microsoft's 2001 EPS. (8) Exchange Ratio Analysis. Goldman Sachs reviewed the exchange ratio history for various periods ending December 20, 2000, including the period beginning July 1, 1997, the date of Great Plains' initial public offering or IPO. Goldman Sachs calculated the implied historical exchange ratios of shares of Great Plains common stock to shares of Microsoft common stock for the average of the periods set forth below and for December 20, 2000, as follows:
~~Period Implied Exchange Ratio ------ ----------------------~~ Since IPO through December 20, 2000................. .63 One year ended December 20, 2000.................... .55 Six months ended December 20, 2000.................. .48 Three months ended December 20, 2000................ .64 One month ended December 20, 2000................... .85 December 20, 2000................................... .85
~~The preparation of a fairness opinion~~ is a ~~complex process and is not necessarily susceptible to partial analysis or~~ summary, description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs' opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all these analyses and did not attribute any particular weight to any factor or analysis considered by it; rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of these analyses. No company or transaction used in the above analyses is directly comparable to Great Plains or Microsoft or the merger. The analyses were prepared solely for purposes of providing an opinion to the Great Plains board of directors as to the fairness from a financial point of view to the stockholders of Great Plains of the exchange ratio to be received in connection with the merger. The analyses do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of 34 future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than those suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Great Plains, Microsoft, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast. As described above, the financial analyses presented by Goldman Sachs to the Great Plains board of directors was one of many factors taken into consideration by the Great Plains board of directors in making its determination to approve the merger. Goldman Sachs, as part of its investment banking business, is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. Goldman Sachs is familiar with Great Plains having provided investment banking services to Great Plains from time to time, including having made an $8.3 million principal investment in Great Plains in 1994 and having acted as: . managing underwriter of its initial public offering of 3,000,000 shares of common stock in March 1997; . managing underwriter of its public offerings of 588,000 shares of common stock in April 1998 and 2,000,000 shares of common stock in March 1999; and . its financial advisor in connection with, and having participated in certain of the negotiations leading to, the merger agreement. Goldman Sachs also has provided investment banking services to Microsoft from time to time, including having acted as: . managing underwriter of its public offering of 10,954,616 shares of its convertible exchangeable preferred stock in December 1996; . its financial advisor in connection with its equity investment in Titus Communications Corporation in April 2000; and . managing underwriter of the initial public offering of 5,200,000 shares of common stock of Expedia, Inc., a subsidiary of Microsoft, in November 1999. Goldman Sachs provides a full range of financial advisory and securities services and, in the course of its normal trading activities, may from time to time effect transactions and hold positions in securities, including derivative securities, of Great Plains or Microsoft for its own account and for the accounts of customers. Pursuant to a letter agreement dated October 20, 2000, as amended, Great Plains engaged Goldman Sachs to act as its financial advisor in connection with a possible sale of Great Plains. Pursuant to the letter agreement, Great Plains has agreed to reimburse Goldman Sachs for their reasonable out-of-pocket expenses, including attorneys' fees, and to indemnify Goldman Sachs against various liabilities, including liabilities under the federal securities laws. Also pursuant to the terms of that letter agreement, Great Plains has agreed to pay Goldman Sachs a transaction fee equal to the greater of (1) $8 million or (2) 0.9% of the total consideration paid in connection with a transaction, provided that Great Plains will not pay an aggregate amount in excess of $11 million. Under the letter agreement, total consideration is defined as the amount paid for Great Plains' equity securities (including amounts paid to holders of options, warrants and convertible securities) plus the principal amount of Great Plains' unpaid indebtedness for borrowed money as set forth on the most recent consolidated balance sheet of Great Plains prior to the consummation of a transaction. Microsoft's reasons for the merger Microsoft's board of directors has determined that the merger is in the best interests of Microsoft and its shareholders. Microsoft's board of directors has approved the merger and the issuance of shares of Microsoft common stock in the merger. 35 In reaching its determination, Microsoft's board of directors identified the following reasons, among others, for entering into the merger agreement: . Great Plains has built a strong business centered on delivering business applications to small and medium-sized customers through a global network of channel partners and Microsoft does not have a similar product offering; . The nature of Great Plains' products and its customers creates a natural complement to the Microsoft bCentral business; . In the view of Microsoft's management, Great Plains' future growth prospects will be derived from accelerating small and medium business efficiency and agility and by automating interconnected business processes. The combination of Microsoft's Internet technology with Great Plains' domain expertise and application development capacity in business management will create solutions that help companies realize this growth potential; and . The Great Plains indirect business model which focuses on offering solutions through value added resellers is very compatible with Microsoft's own business models and the Great Plains channel will provide a more business focused distribution channel. Structure of the merger; completion and effectiveness of the merger The merger agreement provides for the merger of Rubicon Acquisition Corporation, a wholly owned subsidiary of Microsoft, with and into Great Plains. Before the effective time of the merger, Microsoft, Rubicon and Great Plains will continue to be separate entities. The merger will be completed when all of the conditions to completion of the merger are satisfied or waived, including approval of the merger agreement by Great Plains' shareholders. At the effective time of the merger, which occurs the day that articles of merger and an agreement and plan of merger are filed with the Secretary of State of the states of Washington and Minnesota, Rubicon and Great Plains will merge. Great Plains will survive the merger as a wholly owned subsidiary of Microsoft. Merger consideration; conversion of Great Plains common stock At the effective time of the merger, each outstanding share of Great Plains common stock will be automatically converted into the right to receive 1.1 shares of Microsoft common stock. The exchange ratio of 1.1 was determined through arm's-length negotiations between Microsoft and Great Plains. Up to 24,186,077 shares of Microsoft common stock will be issued in the merger (based on the number of shares of Great Plains common stock currently outstanding and assuming that all options to acquire Great Plains common stock that are currently outstanding and which will be exercisable as of September 30, 2001 are exercised prior to the merger). No fractional shares of Microsoft common stock will be issued in connection with the merger. You will receive cash for any fractional share you would otherwise receive in the merger. The amount of cash that Microsoft will pay you in lieu of a fractional share is equal to the average closing price of Microsoft common stock on the Nasdaq Stock Market over the last twenty trading days ending on the fifth trading day before the closing date, multiplied by the fraction of a share of Microsoft common stock to which you would otherwise be entitled. Great Plains shareholders will not receive interest on cash payments in lieu of fractional shares. The conversion of Great Plains common stock into the right to receive Microsoft common stock will occur automatically at the effective time of the merger. At that time, all shares of Great Plains common stock will no longer be outstanding, will automatically be canceled and will cease to exist. Subject to the dissenters' rights described elsewhere in this proxy statement/prospectus, each holder of shares of Great Plains common stock will cease to have any rights as a shareholder except the right to receive the Microsoft common stock into 36 which those shares were converted in the merger and the right to receive cash for any fractional share of Microsoft common stock. Treatment of options and employee stock purchase and benefit plans At the effective time of the merger, each then-outstanding option to purchase shares of Great Plains common stock will be assumed by Microsoft and will become an option to purchase shares of Microsoft common stock. The number of shares of Microsoft common stock for which the assumed option will be exercisable will be determined by multiplying the number of Great Plains shares subject to the option by 1.1, and the per share exercise price will be determined by dividing the per share exercise price of the Great Plains option by 1.1 (rounded up to the nearest whole cent). To avoid options to purchase fractional shares, the number of shares of Microsoft common stock subject to an assumed option will be rounded down to the nearest whole share. The other terms of the assumed Great Plains options (other than those held by non-employee directors), including exercisability and vesting schedules, will remain unchanged. Microsoft has agreed to use good faith efforts to ensure that Great Plains options which qualified as "incentive stock options" as defined by the Internal Revenue Code prior to the merger will qualify as incentive stock options for Microsoft common stock after the merger. Great Plains options that do not qualify as incentive stock options will convert into options for Microsoft common stock that are similarly non-qualified. Microsoft intends to issue the shares of Microsoft common stock issuable upon the exercise of assumed Great Plains options under Microsoft's 2001 Stock Plan, which is subject to a currently effective registration statement on Form S-8 filed with the SEC. Alternatively, Microsoft may file a registration statement with the SEC to register the shares of Microsoft common stock to be issued upon exercise of the assumed Great Plains options. Microsoft will use its best efforts to maintain the effectiveness of the applicable registration statement for as long as any assumed Great Plains options remain outstanding. Microsoft will use commercially reasonable best efforts to give holders of substituted Microsoft options notice of their new options as soon as practicable after the effective time of the merger. Certain options granted under Great Plains' stock option plans accelerate following a change in control of Great Plains if those options are not assumed on the same terms and conditions. Because all options under these plans will be assumed by Microsoft on the same terms, acceleration of options under these plans will not occur. Immediately before the effective time of the merger, Great Plains will terminate or modify according to Microsoft's direction Great Plains' stock purchase plan. This termination will not result in any loss of rights for those employees who purchased stock or have already been granted options or other awards under the plan. On the date of the termination of the plan, all funds that have been withheld from the wages of Great Plains employees for the purchase of Great Plains common stock under the plan will be applied to a final purchase under the Great Plains stock purchase plan. Following the closing, Microsoft intends that Great Plains employees will be eligible to participate in Microsoft's employee stock purchase plan subject to the eligibility requirements set forth in that plan. After completion of the merger, Microsoft has the right to require Great Plains to modify or terminate its other employee benefits plans; however, it is currently anticipated that Great Plains will maintain its own separate non- stock based benefits plans for the immediate future, without modification. Interests of Great Plains' directors, executive officers and certain employees in the merger When considering the recommendation of Great Plains' board of directors, you should be aware that some of Great Plains' directors and executive officers have interests in the merger and have arrangements that are different from, or are in addition to, their interests as shareholders of Great Plains generally. These include, 37 among other things, indemnification rights and other benefits and payments under certain agreements and employee benefit and retention plans. . Nonemployee directors. Microsoft does not plan to retain any nonemployee directors of Great Plains following completion of the merger. Accordingly, pursuant to the terms of the Great Plains Outside Directors Stock Plan, options to purchase an aggregate of 29,000 shares of Great Plains common stock held by directors under this plan and not yet vested as of the record date will accelerate upon the completion of the merger. These directors will receive no other benefits in connection with the merger. . Indemnification. Microsoft has agreed that if the merger is completed, all rights to indemnification (including payment of litigation expenses) of current or former directors, officers and employees of Great Plains and its subsidiaries arising from actions taken before the consummation of the merger, under Minnesota law and Great Plains' articles of incorporation and bylaws, will be assumed by Microsoft, continue in full force and effect for six years from the effective date of the merger and be guaranteed by Microsoft. . Employment offer letters. Microsoft has agreed to issue offer letters to the following officers and senior administrative employees of Great Plains who might otherwise have been adversely affected by a business combination:
~~Name: Title: ----- ------~~ Coulombe, David Vice President of Strategy and Planning Edson, David Vice President of Finance and Controller Erdle, Dennis Senior Vice President of U.S. Operations Herman, Doug General Counsel Laybourn, Darren Executive Vice President of Products O'Hara, David Executive Vice President of International Operations and Business Development Olsen, Michael Senior Vice President, Corporate Communications Reller, Tami Chief Financial Officer Robertson, Bonnie Vice President of Organizational Development Slette, Michael Vice President of Human Resources Uecker-Rust, Jodi Chief Operating Officer Young, Jeffrey Executive Vice President of Global Operations
Under the terms of these offer letters, employment of these officers and employees of Great Plains will continue following the merger and they will receive the same salary and bonus compensation as they do prior to the merger. In addition to their existing options to acquire Great Plains common stock that will be assumed by Microsoft in the merger, these persons, along with all other Great Plains employees, will be eligible to receive new-hire grants of options to acquire Microsoft common stock under Microsoft's 2001 Stock Plan. The number of new stock options offered would be similar to the number Microsoft typically grants to other new Microsoft employees performing comparable work. The offer letters also provide that, upon termination of the employee without cause within twenty-four months after the merger, the employee will be entitled to receive a payment equal to the greater of the employee's annual base salary plus annual incentive compensation bonuses paid at 100% of goal (excluding special compensation such as stock-based compensation) at the time of such termination or the date of the announcement of the merger. The offer letters replace the right to certain payments which would have been due under pre-existing employment arrangements with these officers and employees that would otherwise be triggered upon (i) a change in control of Great Plains, and (ii) termination of employment. . Doug Burgum. Microsoft intends to offer employment to Doug Burgum, Great Plains' Chairman and Chief Executive Officer, on substantially the same terms and conditions as his current employment. Doug Burgum will be President of the Great Plains Division and a Microsoft senior vice president. 38 . Stock ownership. Under the terms of the merger agreement, at the time the merger is completed, each outstanding share of Great Plains common stock will be automatically converted into the right to receive 1.1 shares of Microsoft common stock. As of February 21, 2001, the record date, collectively Great Plains' directors and executive officers beneficially owned 4,639,335 shares, or approximately 22.4%, of Great Plains' outstanding common stock (not including options, which are described below). . Stock options. Under the terms of the merger agreement, at the time the merger is completed, each outstanding option to purchase shares of Great Plains common stock issued to employees and directors of Great Plains will be assumed by Microsoft and will become an option to purchase shares of Microsoft common stock. The terms of an assumed Great Plains option held by a Great Plains employee or officer will not be affected by the merger, except that the number of shares subject to the option and the exercise price per share will be adjusted to reflect the exchange ratio. The terms of an assumed Great Plains option held by a non-employee director will be affected by the merger to the extent that these options must be exercised within ninety days following the merger. As of the record date, directors and executive officers of Great Plains collectively held outstanding options to purchase 399,710 shares of Great Plains common stock. Of these options, 159,375 are currently exercisable or will be exercisable within sixty days after the record date. Great Plains' board of directors was aware of and considered these interests in approving the merger agreement and recommending that Great Plains' shareholders approve the merger agreement. Restrictions on sales by affiliates of Great Plains and Microsoft All shares of Microsoft common stock received by Great Plains shareholders in connection with the merger will be freely transferable unless the shareholder is considered an affiliate of either Great Plains or Microsoft under the Securities Act. Each Great Plains affiliate agreed that he or she will sell, offer to sell or otherwise dispose of any Microsoft common stock issued in connection with the merger only under an effective registration statement or in compliance with Rule 145 or other exemption from registration under the Securities Act. Microsoft has agreed to use its reasonable efforts to permit affiliate sales under Rule 145 and Rule 144 and to file all reports required to be filed under the Securities Exchange Act of 1934. Material United States federal income tax consequences of the merger It is a condition to the merger that Great Plains and Microsoft each receive an opinion from their respective tax counsel that the merger will constitute a reorganization under Section 368 of the Internal Revenue Code of 1986, as amended, and that Microsoft, the wholly owned subsidiary of Microsoft and Great Plains will each be a party to that reorganization. Great Plains will receive an opinion of its tax counsel, Dorsey & Whitney LLP, as to certain federal income tax consequences of the merger to Great Plains shareholders and Microsoft will receive an opinion of its tax counsel, Preston Gates & Ellis LLP, as to certain federal income tax consequences of the merger. The Internal Revenue Service has not been and will not be asked to rule upon the tax consequences of the merger. The opinions of Dorsey & Whitney LLP and Preston Gates & Ellis LLP will be based upon the facts described herein and various representations and covenants made by Microsoft and Great Plains and will also be subject to various assumptions and qualifications. The opinions of Dorsey & Whitney LLP and Preston Gates & Ellis LLP will be based upon the Internal Revenue Code, existing and proposed Treasury regulations, current administrative rulings and practice and judicial authority, all of which are subject to change, possibly with retroactive effect. Unlike a ruling from the Service, an opinion of counsel is not binding on the Internal Revenue Service and there can be no assurance, and none is given in this proxy statement/prospectus, that the 39 Service will not take a position contrary to one or more positions reflected herein or that the opinions will be upheld by the courts if challenged by the Service. The following is only a general description of certain anticipated federal income tax consequences of the merger, without regard to the particular circumstances of each shareholder of Great Plains. It does not discuss all of the consequences that may be relevant to Great Plains shareholders subject to special treatment under the Internal Revenue Code (such as insurance companies, dealers in securities, exempt organizations or foreign persons) or to shareholders of Great Plains who acquired their Great Plains common stock in connection with employee stock options, stock purchase plans or otherwise as compensation. The following summary does not purport to be a complete analysis of all potential tax effects of the transactions contemplated by the merger agreement or the merger itself. No information is provided herein with respect to the tax consequences, if any, of the merger under state, local or foreign tax laws. Each holder of Great Plains common stock is urged to consult his or her own tax advisor as to the federal income tax consequences of the merger, and also as to any state, local, foreign or other tax consequences based on his or her own particular facts and circumstances. Assuming the merger qualifies as a tax-free reorganization, the following federal income tax consequences will result from the merger: . Great Plains, Microsoft and the wholly owned merger subsidiary of Microsoft will each be a party to the reorganization within the meaning of Section 368(b) of the Internal Revenue Code. . No income, gain or loss will be recognized by Great Plains or Microsoft as a result of the consummation of the merger. . No gain or loss will be recognized by the holders of Great Plains common stock upon the exchange of Great Plains common stock solely for Microsoft common stock pursuant to the merger, except to the extent of cash received in lieu of fractional shares of Microsoft common stock or in connection with the exercise of dissenters' rights. . The basis of the Microsoft common stock received by a shareholder of Great Plains pursuant to the merger, including any fractional shares deemed received as described below, will be the same as the basis of the Great Plains common stock surrendered in exchange therefor. . The holding period of the Microsoft common stock received by a shareholder of Great Plains pursuant to the merger will include the period during which the Great Plains common stock surrendered therefor was held, provided the Great Plains common stock is a capital asset in the hands of the Great Plains shareholder at the time of the merger. . Cash payments made to a holder of Great Plains common stock in lieu of fractional shares of Microsoft common stock will be treated as if a fractional share of Microsoft common stock had been issued pursuant to the merger and then redeemed by Microsoft. A holder of Great Plains common stock receiving cash in lieu of fractional shares will generally recognize gain or loss equal to the difference between the shareholder's basis in the fractional share and the amount of cash received. This gain or loss will be capital gain or loss provided the Great Plains common stock was a capital asset in the hands of the Great Plains shareholder at the time of the merger. . Cash payments made to a holder of Great Plains common stock who exercises dissenters' rights will be treated as distributions in redemption of the shareholder's Great Plains common stock. A holder of Great Plains common stock receiving cash in connection with the exercise of dissenters' rights will recognize either (1) gain or loss equal to the difference between the cash received and the holder's basis in the Great Plains common stock or (2) dividend income, depending upon whether the deemed redemption qualifies for sale or exchange treatment under the tests set forth in Section 302 of the Code. Gain or loss will be capital gain or loss provided the Great Plains common stock was a capital asset in the hands of the Great Plains shareholder at the time of the merger. 40 Accounting treatment of the merger The merger will be accounted for using the purchase method of accounting in accordance with generally accepted accounting principles. Microsoft will be deemed the acquiror for financial reporting purposes. Under the purchase method of accounting, the purchase price in the merger is allocated among the Great Plains assets acquired, including identifiable intangibles, and the Great Plains liabilities assumed to the extent of their fair market value, with any excess purchase price being allocated to goodwill. Regulatory filings and approvals required to complete the merger Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, certain acquisition transactions, including the merger, cannot be consummated unless specified information has been furnished to the Federal Trade Commission and the Antitrust Division of the United States Department of Justice and specific waiting period requirements have been satisfied. On January 19, 2001, each of Microsoft and Great Plains made the required premerger notification filings with the Federal Trade Commission and the Antitrust Division of the Department of Justice. Under the Hart-Scott-Rodino Act, the merger may not be consummated until the expiration of at least thirty days following the receipt of the Notifications under the Act, unless the waiting period is earlier terminated by the FTC and the Antitrust Division or extended by the issuance of a request for additional information and documents. On February 14, 2001, Microsoft and Great Plains received notification of the early termination of the thirty-day waiting period under the Hart-Scott-Rodino Act. The FTC and the Antitrust Division are charged with enforcing antitrust laws concerning transactions such as the merger. At any time before or after the consummation of the merger, the FTC or the Antitrust Division could take such action under the antitrust laws as it deems appropriate, including seeking to enjoin the consummation of the merger or seeking the divestiture of assets of Great Plains or Microsoft. Great Plains and Microsoft believe that the proposed merger does not violate the antitrust laws. However, a challenge to the merger on antitrust grounds could be made. If such a challenge is made, it is uncertain what the results would be. Due to the international scope of Microsoft's and Great Plains' businesses, regulatory filings will also be required in certain European and other jurisdictions. Microsoft and Great Plains do not expect those non-U.S. filings to affect the timing of the merger. Other than as described in this paragraph and the filing of the actual merger documents with the Secretary of State of the states of Washington and Minnesota, Microsoft and Great Plains believe that the merger does not require the approval of any U.S. federal, state or other agency. Exchange of Great Plains stock certificates for Microsoft stock certificates Within fifteen days after the closing of the merger, Microsoft will send a letter of transmittal to all former Great Plains shareholders. In order to exchange Great Plains common stock for Microsoft common stock, you must deliver the letter of transmittal to the exchange agent, Mellon Investor Services LLC. To be effective, the letter of transmittal must be properly completed, signed and submitted to the exchange agent in the return envelope mailed with the letter of transmittal and accompanied by (a) the certificates as to which the exchange is proposed to be made or (b) an appropriate guarantee of delivery of the certificates from a firm that is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States, provided that you do in fact deliver the certificates to the exchange agent within three Nasdaq trading days after the date the guarantee of delivery is executed. Microsoft has the reasonable discretion, which it may delegate in whole or in part to the exchange agent, to determine whether any letter of transmittal has been properly completed, signed and submitted or revoked and to disregard immaterial defects in the form of election or letter of transmittal. The exchange agent will make those computations contemplated by the merger agreement, and, in the absence of manifest error, all such computations will be conclusive and binding on the holders of Great Plains common stock. As soon as practicable after receipt of your properly completed letter of transmittal, the exchange agent will deliver to you a certificate representing the appropriate number of shares of Microsoft common stock, together with a check representing the cash payment for any fractional share. 41 Listing of Microsoft common stock; delisting and deregistration of Great Plains common stock If the merger is completed, Microsoft is obligated to use commercially reasonable best efforts to cause the shares of Microsoft common stock that will be issued in connection with the merger, and the shares of Microsoft common stock that will be issued on exercise of assumed Great Plains options, to be quoted on the Nasdaq Stock Market or listed on the same national securities exchange as Microsoft common stock is then listed. Great Plains common stock will be delisted from the Nasdaq Stock Market and will be deregistered under the Exchange Act. Operations after the merger After the merger, Great Plains will continue to operate as the Great Plains Division of Microsoft, reporting jointly to Jeff Raikes, Group Vice President of Microsoft's Productivity and Business Services Group, and David Vaskevitch, Senior Vice President of the Business Application Division at Microsoft. The Productivity and Business Services Group is charged with delivering business productivity solutions that empower knowledge workers. The Business Application Division is engaged in developing and delivering a core set of business management software applications and Internet services to small and medium size businesses. Doug Burgum, Great Plains' Chairman and Chief Executive Officer, will be President of the Great Plains Division and a Microsoft senior vice president. 42 THE MERGER AGREEMENT This section of the proxy statement/prospectus describes the merger agreement. While we believe that the description covers the material terms of the merger agreement, this summary may not contain all of the information that is important to you. We urge you to carefully read the merger agreement, which is incorporated by reference into this proxy statement/prospectus and attached to this proxy statement/prospectus as Annex A. Conditions to completion of the merger The obligations of each of Microsoft and Great Plains to effect the merger are subject to the satisfaction before the closing date of specific conditions, any or all of which may be waived by the party for whose benefit the condition runs, including: . the approval by Great Plains' shareholders of the merger agreement as required by Minnesota law; . the obtaining of all legally required consents and approvals, including expiration of all applicable waiting periods under the Hart-Scott-Rodino Act, except when the failure to obtain a consent would not have a material adverse effect on the consummation of the merger or the business condition of Microsoft or Great Plains; . the effectiveness of the registration statement relating to the Microsoft common stock to be issued in connection with the merger; . the absence of any statute, rule, regulation, order, decree or injunction prohibiting the merger or which imposes a condition which would materially adversely impact Great Plains' business or the expected benefits of the transaction; . the absence of any governmental action or proceeding challenging or seeking to restrain the merger or material damages or seeking to impose conditions on the merger that would materially impact Microsoft's ability to operate Great Plains' business; . the accuracy of the other party's representations and warranties in the agreement, except in respects that do not have a material adverse effect, and the receipt by each party of a certificate to that effect from a designated executive officer of the other party; . the performance by both parties of their obligations under the merger agreement, except for breaches that would not have a material adverse effect on the other party, and the receipt by each party of a certificate to that effect from a designated executive officer of the other party; . receipt by each of Great Plains and Microsoft of an opinion from its tax counsel that the merger will qualify as a tax-free reorganization for federal income tax purposes; . the execution of certain other related agreements; . receipt by each of Great Plains and Microsoft of a legal opinion from the other party's legal counsel; . each of certain key officers and senior managers of Great Plains, not less than 90% of Great Plains' employees engaged in development and support and at least 80% of all other employees of Great Plains shall remain employed by Great Plains; . Great Plains shareholders holding not more than 5% of Great Plains common stock shall have asserted dissenters rights under applicable law; and . certain change in control agreements that would provide for cash payments to certain officers and senior managers of Great Plains shall have been amended to Microsoft's satisfaction in accordance with the merger agreement. 43 Representations and warranties The merger agreement contains customary representations and warranties of each of Great Plains, Microsoft and Rubicon Acquisition Corporation relating to, among other things: . organization and related matters; . capital structure; . authorization, execution, delivery, performance and enforceability of the merger agreement and related matters; . an absence of defaults and violations under charter documents, instruments and laws; . documents filed by the parties with the SEC and the accuracy of the information contained in those documents; . the accuracy of information supplied by the parties for inclusion in filings and other documents contemplated by the merger agreement; . an absence of defaults which would have a material adverse effect on business conditions of the parties under obligations of the parties; . an absence of undisclosed material adverse changes; . disclosures made in the merger agreement or in connection with the merger; . an absence of undisclosed liabilities; . the vote required for approval of the merger agreement and the consummation of the transactions contemplated by the merger agreement; and . brokers and finders fees. Great Plains has made additional customary representations and warranties relating to, among other things: . litigation; . ownership of Great Plains' subsidiaries; . an absence of violations of any applicable law, rule, regulation, judgment, decree or order of any governmental entity; . employee benefits and other employment matters; . major contracts; . taxes; . interests of officers and directors of Great Plains; . technology and intellectual property rights; . real property; . material relations; . the receipt of a fairness opinion from Great Plains' financial advisor; . change in control agreements; . leases; . environmental matters; and . absence of illegal or unreported or unrecorded payments. 44 Conduct of business before closing of the merger Microsoft and Great Plains have each agreed that until the earlier of the termination of the merger agreement or the effective time of the merger, except as expressly contemplated by the merger agreement or with the prior written consent of the other party, it will take specified actions and decline to take specified actions, as described below. Each of Microsoft and Great Plains has agreed that it will, among other things: . not take any action that would breach its respective representations and warranties under the merger agreement; . use its commercially reasonable best efforts to obtain all consents and approvals required for the consummation of the transactions contemplated by the merger agreement; . take all reasonable steps to (a) make the filings required under the Hart-Scott-Rodino Act with respect to the merger, (b) comply in a timely manner with any request under the Hart-Scott-Rodino Act for additional information from the FTC, the Antitrust Division of the Department of Justice or other governmental entity with respect to those filings and (c) cooperate with the other party in connection with those filings and in connection with resolving any investigation or other inquiry of any agency or other governmental entity under any antitrust laws with respect to those filings, the merger or any other relevant transaction; . take all reasonable (a) steps to resolve any objections asserted by any governmental entity with respect to the merger and (b) actions required to cause the expiration of the notice periods under the Hart-Scott-Rodino Act or other antitrust laws with respect to the merger and any other relevant transactions; . use its commercially reasonable best efforts to effectuate the transactions contemplated by the merger agreement and fulfill the conditions to the closing of the merger, subject to certain exceptions; . use its commercially reasonable best efforts to cause their respective accountants to issue customary "comfort letters" in connection with this proxy statement/prospectus; . allow reasonable mutual access to their respective business books and records and other business information; . prepare and file a registration statement for the Microsoft common stock issuable in the merger on Form S-4, including this proxy statement/prospectus; . take any necessary action so that the acquisition of Microsoft common stock or options and the disposition of Great Plains common stock or options by Great Plains employees subject to Section 16 of the Exchange Act and by Great Plains directors will be exempt from the short-swing profit liability rules of Section 16(b) and Rule 16b-3 of the Exchange Act; . notify the other party of any material adverse events; . work together to develop appropriate communications to employees of Great Plains regarding the merger, and to develop a transition plan; . take all reasonable actions necessary to comply with any legal requirements related to the merger, and disclose to each other the information relevant to the legal requirements; and . cooperate with respect to public announcements related to the merger. Great Plains has agreed that it and each of its significant subsidiaries will carry on their businesses in the ordinary course consistent with past practice, and use all reasonable efforts consistent with past practice to preserve intact their business organizations, keep available the services of their present officers, consultants and employees and preserve their relationships with customers, suppliers, distributors and others having business 45 with them. Great Plains will promptly notify Microsoft of any event that is not in the ordinary course of business of Great Plains or its subsidiaries and is materially adverse to Great Plains' business condition. In addition, Great Plains has agreed that, except as previously disclosed to Microsoft, neither it nor any of its subsidiaries will, without the prior written consent of Microsoft: . alter or accelerate any exercisability, vesting or similar provisions of stock option or benefit plans or authorize cash payments in exchange for awards under those plans, except in the ordinary course of business; . grant any severance pay to any officer, director or employee, except in the ordinary course consistent with past practice; . except in the ordinary course of business consistent with past practices, transfer to any outside person or entity any rights to Great Plains' intellectual property; . enter into or amend any agreement granting a third party exclusive marketing or manufacturing rights; . commence or settle any claim, action or proceeding, except in the ordinary course of business or in immaterial amounts and except for specified types of lawsuits; . enter into leases that extend beyond December 21, 2002 and obligate Great Plains to pay aggregate gross rent in excess of $1 million; . extend any offers of employment for a position of vice president or higher without consulting with Microsoft; . declare or pay any dividends or make any other distributions with respect to its capital stock, split or reclassify its capital stock, issue or authorize the issuance of any other securities in respect of or in substitution for its capital stock, or repurchase or otherwise acquire any of its capital stock other than repurchasing vested stock from former employees; . issue or agree to issue any capital stock, options, warrants, calls, conversion rights or other similar securities, subject to certain limited exceptions; . accelerate any options to acquire Great Plains stock; . amend its corporate charter documents; . acquire or agree to acquire any corporation, partnership or other business organization or assets that are material to Great Plains' business condition; . dispose of any assets, except in the ordinary course of business or in immaterial amounts; . incur material indebtedness; . enter into or materially amend any material employee benefit plans or, except in the ordinary course of business, enter into employment agreements or increase employee remuneration; or . settle any material claims, actions or proceedings, except in the ordinary course of business. In addition, Great Plains has agreed that it will: . call a special meeting of Great Plains shareholders for the consideration and approval of the merger agreement and the transactions contemplated by the merger agreement; . provide Microsoft with such information for inclusion in this proxy statement/prospectus and the related registration statement as Microsoft may reasonably request; . without the loss of any vested benefits but without accelerating any unvested rights (except as required by law), terminate or modify any employee benefit plans as directed by Microsoft immediately before the effective time of the merger or take such action as may be directed by Microsoft to merge those plans with Microsoft employee benefit plans at the effective time of the merger; and 46 . promptly file all tax returns and pay all taxes required to be filed or paid before the closing of the merger. Microsoft has agreed that it will: . use its commercially reasonable best efforts to cause the shares of Microsoft common stock to be issued in connection with the merger and upon the exercise of assumed Great Plains options to be quoted at the effective time on the Nasdaq Stock Market or listed on the same national exchange as Microsoft common stock is listed; and . implement certain compensation and bonus arrangements for Great Plains employees following the merger. See "Interests of Great Plains' directors and executive officers in the merger" on page 37. Exclusivity Great Plains has agreed that, subject to limited exceptions, it will not, and will use its commercially reasonable best efforts to ensure that none of its officers, directors, agents, representatives or affiliates will not, take or cause or permit any subsidiary to take any of the following actions with any party other than Microsoft: . solicit, encourage, initiate or participate in any negotiations, inquiries or discussions regarding any offer or proposal to acquire all or a significant part of Great Plains' or its subsidiaries' business, assets or capital shares; . enter into any agreement related to an acquisition of all or a significant part of Great Plains' or its subsidiaries' business, assets or capital shares; . authorize or announce any public statement, recommendation or solicitation in support of an acquisition of all or a significant part of Great Plains' or its subsidiaries' business, assets or capital shares; or . disclose any customarily nonpublic information about Great Plains in connection with an acquisition of all or a significant part of Great Plains' or its subsidiaries' business, assets or capital shares. However, Great Plains' board of directors may recommend to shareholders that they tender their shares in connection with a tender offer by an acquiror other than Microsoft if the board determines in good faith and after consultation with legal counsel that its fiduciary duty to its shareholders so requires. In addition, the board may give information to a third party who has made an unsolicited acquisition proposal that the board reasonably believes is financially more favorable to Great Plains and its shareholders than the merger with Microsoft, as long as Great Plains notifies Microsoft three business days before furnishing the information. Great Plains will promptly inform Microsoft of any inquiry or proposal that it receives with respect to an acquisition transaction or any request by any person for nonpublic information concerning Great Plains or any of its subsidiaries, and will provide Microsoft with the material facts relating to the offer, proposal or request, including the identity of the third party making the inquiry or proposal. After that notification, Great Plains is obligated to inform Microsoft of additional material facts as they arise and to provide Microsoft with any additional information Great Plains gives to the third party. Termination of the merger agreement Even if Great Plains' shareholders approve the merger agreement, the merger agreement may be terminated by the mutual agreement of the parties at any time before the effective time of the merger. In addition, the merger agreement may be terminated by either Great Plains or Microsoft under any of the following circumstances: . if the terminating party is not in material breach of any representation, warranty, covenant or agreement and the other party breaches a representation, warranty, covenant or agreement in the merger agreement, if the breach has a material adverse effect on the business of the non- breaching party or on the benefits of the merger and the breach has not been cured or best efforts are not being employed to cure the breach within twenty days after notice is given to the breaching party; 47 . if the merger has not been consummated before September 30, 2001 (subject to extension until March 31, 2002 if Great Plains and Microsoft have agreed to pursue litigation against any administrative or judicial action or proceeding challenging the merger on the basis that it violates antitrust law); . if Great Plains shareholders have voted on but not approved the merger agreement; . if there exists an administrative or judicial action or proceeding challenging the merger on the basis that it violates antitrust law and either party determines that it is not in its best interest to contest or resist the proceeding; or . if any permanent injunction or other order preventing the merger has become final and non-appealable. In addition, Microsoft may terminate the merger agreement if: . Great Plains' board of directors withdraws or modifies, in a manner adverse to Microsoft, its approval or recommendation of the merger; or . Great Plains or its representatives take any action prohibited by the exclusivity provisions of the merger agreement. Termination fees Microsoft has agreed to pay Great Plains a termination fee of $40 million if Great Plains is not then in material breach of the merger agreement and Great Plains terminates the agreement as a result of a material breach by Microsoft of its representations, warranties, covenants or agreements and that breach has not been cured or Microsoft is not using its best efforts to cure the breach within twenty days after notice is given to Microsoft. Great Plains has agreed to pay Microsoft a termination fee of $40 million if Microsoft is not then in material breach of the merger agreement and Microsoft terminates the agreement for any of the following reasons: . Great Plains' board of directors has withdrawn or modified, in a manner adverse to Microsoft, its approval or recommendation of the merger; . Great Plains or its representatives have taken any action prohibited by the provisions of the merger agreement regarding potential acquisitions of Great Plains by parties other than Microsoft; . Great Plains has entered an agreement with any person other than Microsoft to a transaction that will result in a change in the beneficial ownership of more than 50% of the voting power of Great Plains capital stock before or within twelve months after the termination of the merger agreement; or . Great Plains has materially breached its representations, warranties, covenants or agreements in the merger agreement and that breach has not been cured or Great Plains is not using its best efforts to cure the breach within twenty days after notice is given to Great Plains. The termination fee from Great Plains may increase the likelihood of the completion of the merger in accordance with the terms of the merger agreement. The termination fee may also discourage persons from making an offer to acquire all of or a significant interest in Great Plains by increasing the cost of an acquisition. In addition, Microsoft has agreed to pay Great Plains a termination fee of $5 million if . the required antitrust approvals have not been obtained before September 30, 2001 (subject to extension until March 31, 2002 if Great Plains and Microsoft have agreed to pursue litigation against any administrative or judicial action or proceeding challenging the merger on the basis that it violates antitrust law); or 48 . either party terminates the agreement as a result of an administrative or judicial action or proceeding challenging the merger on the basis that it violates antitrust law and that party determines that it is not in its best interest to contest or resist the proceeding. Extension; waiver At any time before the effective time of the merger, any party to the merger agreement may, to the extent legally allowed, extend the time for the performance of any other party's obligations under the merger agreement, waive any inaccuracies in the representations and warranties of any other party in the merger agreement or related documents and waive compliance with any of the agreements, conditions or covenants in the merger agreement that are for the benefit of the waiving party. Amendments The merger agreement may be amended by Microsoft and Great Plains at any time before or after approval by Great Plains' shareholders, except that, after shareholder approval, Great Plains and Microsoft may not make any amendment that by law requires the further approval of Great Plains' shareholders without obtaining that approval. 49 RELATED AGREEMENTS This section of the proxy statement/prospectus describes agreements related to the merger agreement, including the Great Plains management voting agreements and letters of Great Plains affiliates. While we believe that these descriptions cover the material terms of these agreements, these summaries may not contain all of the information that is important to you. You should read the Indenture in its entirety. See “Where You Can Find More Information.” Capitalized terms used but not defined in this prospectus have the meanings assigned in the Indenture.

~~General~~

The New Notes will be issued in two series of debt securities under the indenture, dated as of May 18, 2009, between us and The Bank of New York Mellon Trust Company, N.A., as trustee, as supplemented by a supplemental indenture between us and The Bank of New York Mellon Trust Company, N.A., as trustee for the New Notes offered hereby (the “Indenture”). The New Notes will be our senior unsecured obligations and will rank equally with our other unsecured and unsubordinated debt from time to time outstanding.

The New 2052 Notes initially will be limited to up to $6,250,000,000 aggregate principal amount and the New 2062 Notes initially will be limited to up to $2,000,000,000 aggregate principal amount. The maturity date of the New 2052 Notes will be March 17, 2052 and the maturity date of the New 2062 Notes will be March 17, 2062. We may, at any time or from time to time, issue additional New Notes of each series of New Notes offered hereby without the consent of the holders of that series of New Notes, but we will not issue such additional New Notes unless they are fungible for U.S. federal income tax purposes with the relevant series of New Notes offered hereby.

~~The New Notes will be subject to legal defeasance and covenant defeasance as provided below under “—Discharge, Defeasance and Covenant Defeasance.”~~

The New Notes of each series will be issued in a form of one or more fully registered global securities, without coupons, in denominations of $2,000 in principal amount and integral multiples of $1,000 in excess thereof.

~~The New Notes will not benefit from any sinking fund.~~

~~Interest and Principal~~

The New Notes will bear interest from the first date any New Notes are issued (which we expect will be the Settlement Date), at a rate per annum equal to (a) the yield, rounded to three decimal places when expressed as a percentage and calculated in accordance with standard market practice, that corresponds to the bid-side price of the 30-year Reference UST Security as of the Pricing Time as displayed on the Bloomberg Government Pricing Monitor page FIT1 (or any recognized quotation source selected by the Company in its sole discretion if such quotation report is not available or is manifestly erroneous) plus (b) a fixed spread of 70 basis points (which translates to a per annum interest rate of 2.921%), in the case of the New 2052 Notes, and 82 basis points (which translates to a per annum interest rate of 3.041%), in the case of the New 2062 Notes, in each case, payable semi-annually in arrears on March 17 and September 17 of each year, commencing on September 17, 2021, to the persons in whose names the New Notes are registered at the close of business on the immediately preceding March 2 and September 2, respectively, whether or not that day is a business day.

~~General~~

We will pay the principal of and interest on each New Note to the registered holder in U.S. dollars in immediately available funds. Payment will be made upon presentation of the New Notes at the office or agency we maintain for this purpose currently at the trustee’s office located at 400 South Hope Street, Suite 500, Los Angeles, California 90071, Attention: Corporate Trust Administration – Microsoft Corporation; provided, however, that payment of interest may be made at our option by check mailed to the registered holder on the record date at such address as shall appear in the security register or by wire transfer of immediately available funds to an account specified in writing by such holder to us and the trustee prior to the relevant record date. Notwithstanding anything to the contrary in this prospectus, so long as the New Notes are in book-entry form, we will make payments of principal and interest through the trustee to DTC.

Interest payable on any interest payment date for a series of New Notes or the maturity date for that series of New Notes will be the amount of interest accrued from, and including, the next preceding interest payment date for that series of New Notes in respect of which interest has been paid or duly provided for (or from and including the original issue date, if no interest has been paid or duly provided for with respect to the New Notes of that series) to, but excluding, such interest payment date or maturity date, as the case may be. If any interest payment date falls on a day that is not a business day, the interest payment will be made on the next succeeding business day, and we will not be liable for any additional interest as a result of the delay in payment. If a maturity date falls on a day that is not a business day, the related ~~agreements,~~payment of principal and interest will be made on the next succeeding business day, and no interest will accrue on the amounts so payable for the period from and after such date to the next succeeding business day. The term “business day” means any day, other than a Saturday or a Sunday, that is not a day on which banking institutions are authorized or obligated by law or executive order to close in New York City.

~~Optional Redemption~~

At any time prior to September 17, 2051 (in the case of the New 2052 Notes) and September 17, 2061 (in the case of the New 2062 Notes), we will have the right at our option to redeem the New Notes of such series, in whole or in part, at any time or from time to time, on at least 10 days’ but not more than 60 days’ prior notice mailed to the registered address of each holder of the New Notes of such series to be redeemed, at a redemption price, calculated by us, equal to the greater of (1) 100% of the principal amount of the New Notes of such series to be redeemed and (2) the sum of the present values of each remaining scheduled payment of principal and interest on New Notes of such series to be redeemed (assuming for such purposes the New 2052 Notes and the New 2062 Notes mature on September 17, 2051 and September 17, 2061, respectively) (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semiannual (assuming a 360-day year consisting of twelve 30-day months) basis at the applicable Treasury Rate plus 12.5 basis points (in the case of the New 2052 Notes) and 12.5 basis points (in the case of the New 2062 Notes).

At any time on or after September 17, 2051 (in the case of the New 2052 Notes) and September 17, 2061 (in the case of the New 2062 Notes), we will have the right at our option to redeem the New Notes of such series, in whole or in part, on at least 10 days’ but not more than 60 days’ prior notice at any time at a redemption price equal to 100% of the principal amount of the New Notes of such series to be redeemed.

~~The redemption price for the New Notes will include, in each case, accrued and unpaid interest on the principal amount of the New Notes to be redeemed to the redemption date.~~

~~“Comparable Treasury Issue” means the United States Treasury security or securities selected by an Independent Investment Banker as having an actual or interpolated maturity comparable to the~~

remaining term of the series of New Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of the New Notes of such series (assuming for such purposes the New 2052 Notes and the New 2062 Notes mature on September 17, 2051 and September 17, 2061, respectively).

“Comparable Treasury Price” means, with respect to any redemption date (1) the arithmetic average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations or (2) if we obtain fewer than four such Reference Treasury Dealer Quotations, the arithmetic average of all such quotations for such redemption date.

~~“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by us.~~

“Reference Treasury Dealer” means Morgan Stanley & Co. LLC and Wells Fargo Securities, LLC or their respective affiliates, which are ~~attached~~primary U.S. government securities dealers in the United States of America and their respective successors plus two other primary U.S. government securities dealers in the United States of America designated by us; provided, however, that if any of the foregoing ceases to ~~this proxy statement/prospectus or filed~~be a primary U.S. government securities dealer in the United States of America (a “Primary Treasury Dealer”), we will substitute therefor another Primary Treasury Dealer.

“Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer and any redemption date, the arithmetic average, as ~~an exhibit~~determined by us, of the bid and asked prices for the applicable Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to us by such Reference Treasury Dealer at 3:30 p.m. (New York City time) on the third business day preceding such redemption date.

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the ~~registration statement filed by Microsoft~~semiannual equivalent yield to maturity or interpolated maturity (on a day count basis) of the applicable Comparable Treasury Issue, assuming a price for such Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the applicable Comparable Treasury Price for such redemption date.

On and after a redemption date, interest will cease to accrue on the New Notes called for redemption or any portion of any series of the notes called for redemption (unless we default in the payment of the redemption price and accrued and unpaid interest). On or before the redemption date, we will deposit with the ~~SEC,~~trustee money sufficient to pay the redemption price of ~~which this proxy statement/prospectus is a part. Great Plains management voting agreements As a condition~~and (unless the redemption date shall be an interest payment date) accrued and unpaid interest to the ~~merger agreement, Microsoft required Great Plains' directors and executive officers~~redemption date on the New Notes of such series to ~~enter into voting agreements. These voting agreements require, without any additional consideration, Great Plains' directors and executive officers to vote~~be redeemed on such date. If less than all of the ~~shares~~New Notes of ~~Great Plains common~~a series are to be redeemed, the New Notes of such series to be redeemed will be selected pursuant to applicable depositary procedures; provided, however, that no New Notes of a principal amount of $2,000 or less shall be redeemed in part.

~~Covenants~~

~~The Indenture sets forth limited covenants, including the covenant described below, that will apply to each series of New Notes. However, these covenants do not, among other things:~~

~~limit the amount of indebtedness or lease obligations that may be incurred by us and our subsidiaries;~~

~~limit our ability or that of our subsidiaries to issue, assume or guarantee debt secured by liens; or~~

~~restrict us from paying dividends or making distributions on our capital stock ~~they beneficially own in favor~~or purchasing or redeeming our capital stock.~~

~~Consolidation, Merger and Sale of Assets~~

The Indenture provides that we may consolidate with or merge with or into any other person, and may sell, transfer, or lease or convey all or substantially all of our properties and assets to another person; provided that the following conditions are satisfied:

we are the continuing entity, or the resulting, surviving or transferee person (the “Successor”) is a person organized and existing under the laws of the ~~merger. As~~United States of ~~February 21, 2001,~~America, any state thereof or the ~~record date, Great Plains' directors~~District of Columbia and ~~executive officers collectively held~~ the ~~power~~Successor (if not us) will expressly assume, by supplemental indenture, all of our obligations under the New Notes and the Indenture;

immediately after giving effect to ~~vote 4,639,335 shares~~such transaction, no default or event of ~~Great Plains common stock, which represented approximately 22.4%~~default under the Indenture has occurred and is continuing; and

if requested, the trustee receives from us, an officers’ certificate and an opinion of ~~Great Plains' outstanding common stock. In connection~~counsel that the merger, consolidation or transfer and such supplemental indenture, as the case may be, complies with the ~~agreement, Great Plains' directors~~applicable provisions of the Indenture.

If we consolidate or merge with or into any other person or sell, transfer, lease or convey all or substantially all of our properties and ~~executive officers granted~~assets in accordance with the Indenture, the Successor will be substituted for us in the Indenture, with the same effect as if it had been an ~~irrevocable proxy~~original party to the ~~directors~~Indenture. As a result, the Successor may exercise our rights and powers under the Indenture, and we will be released from all our liabilities and obligations under the Indenture and under the New Notes.

Any substitution of ~~Microsoft, giving~~ the ~~Microsoft directors~~Successor for us might be deemed for federal income tax purposes to be an exchange of the New Notes for “new” New Notes, resulting in recognition of gain or loss for such purposes and possibly certain other adverse tax consequences to beneficial owners of the New Notes. Holders should consult their own tax advisors regarding the tax consequences of any such substitution.

For purposes of this covenant, “person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof or any other entity.

~~Events of Default~~

Each of the following events are defined in the Indenture as an “event of default” (whatever the reason for such event of default and whether or not it will be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) with respect to the New Notes:

~~(1) default in the payment of any installment of interest on the New Notes for 30 days after becoming due;~~

~~(2) default in the payment of principal of or premium, if any, on the New Notes when it becomes due and payable at its stated maturity, upon optional redemption, upon declaration or otherwise;~~

~~(3) default in the deposit of any sinking fund payment, when and as due by the terms of the New Notes;~~

~~(4) default in the performance, or breach, of any covenant or agreement of ours in the Indenture with respect to the New Notes (other than as referred to in clause (1), (2) or (3) above), which~~

~~continues for a period of 90 days after written notice to us by the trustee or to us and the trustee by the holders of at least 25% in aggregate principal amount of the outstanding New Notes;~~

~~(5) we pursuant to or within the meaning of the Bankruptcy Law:~~

~~commence a voluntary case or proceeding;~~

~~consent to the entry of an order for relief against us in an involuntary case or proceeding;~~

~~consent to the appointment of a Custodian of us or for all or substantially all of our property;~~

~~make a general assignment for the benefit of our creditors;~~

~~file a petition in bankruptcy or answer or consent seeking reorganization or relief;~~

~~consent to the filing of such petition or the appointment of or taking possession by a Custodian; or~~

~~take any comparable action under any foreign laws relating to insolvency; or~~

~~(6) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:~~

~~is for relief against us in an involuntary case, or adjudicates us insolvent or bankrupt;~~

~~appoints a Custodian of us or for all or substantially all of our property; or~~

~~orders the winding-up or liquidation of us (or any similar relief is granted under any foreign laws);~~

~~and the order or decree remains unstayed and in effect for 90 days.~~

~~“Bankruptcy Law” means Title 11, United States Code or any similar federal or state or foreign law for the relief of debtors.~~

~~“Custodian” means any custodian, receiver, trustee, assignee, liquidator or other similar official under any Bankruptcy Law.~~

If an event of default with respect to the New Notes (other than an event of default relating to certain events of bankruptcy, insolvency, or reorganization of us) occurs and is continuing, the trustee by notice to us, or the holders of at least 25% in aggregate principal amount of the outstanding New Notes by notice to us and the trustee, may, and the trustee at the request of these holders will, declare the principal of and premium, if any, and accrued and unpaid interest on all the New Notes to be due and payable. Upon such a declaration, such principal, premium and accrued and unpaid interest will be due and payable immediately. If an event of default relating to certain events of bankruptcy, insolvency, or reorganization of us occurs and is continuing, the principal of and premium, if any, and accrued and unpaid interest on the New Notes will become and be immediately due and payable without any declaration or other act on the part of the trustee or any holders.

The holders of not less than a majority in aggregate principal amount of the outstanding New Notes may rescind a declaration of acceleration and its consequences, if we have deposited certain sums with the trustee and all events of default with respect to the New Notes, other than the non-payment of the principal or interest which have become due solely by such acceleration, have been cured or waived, as provided in the Indenture.

~~An event of default for a particular series of debt securities does not necessarily constitute an event of default for any other series of debt securities issued under the Indenture.~~

We are required to furnish the trustee annually a statement by certain of our officers to the effect that, to the best of their knowledge, we are not in default in the fulfillment of any of our obligations under the Indenture or, if there has been a default in the fulfillment of any such obligation, specifying each such default.

No holder of any debt securities of any series will have any right to institute any judicial or other proceeding with respect to the Indenture, or for the appointment of a receiver or trustee, or for any other remedy unless:

~~(1) an event of default has occurred and is continuing and such holder has given the trustee prior written notice of such continuing event of default with respect to the New Notes;~~

~~(2) the holders of not less than 25% of the aggregate principal amount of the outstanding New Notes have requested the trustee to institute proceedings in respect of such event of default;~~

~~(3) the trustee has been offered indemnity reasonably satisfactory to it against its costs, expenses and liabilities in complying with such request;~~

~~(4) the trustee has failed to institute proceedings 60 days after the receipt of such notice, request and offer of indemnity; and~~

~~(5) no direction inconsistent with such written request has been given for 60 days by the holders of a majority in aggregate principal amount of the outstanding New Notes.~~

The holders of a majority in aggregate principal amount of outstanding New Notes will have the right, subject to certain limitations, to direct the time, method and place of conducting any proceeding for any remedy available to the trustee with respect to the debt securities of that series or exercising any trust or power conferred to the trustee, and to waive certain defaults. The Indenture provides that if an event of default occurs and is continuing, the trustee will exercise such of its rights and powers under the Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs. Subject to such provisions, the trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any of the holders of the debt securities of a series unless they will have offered to the trustee security or indemnity satisfactory to the trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request.

Notwithstanding the foregoing, the holder of the New Notes will have an absolute and unconditional right to receive payment of the principal of and premium, if any, and interest on the New Notes and to institute suit for the enforcement of payment.

~~Modification and Waivers~~

Modification and amendments of the Indenture and the New Notes may be made by us and the trustee with the consent of the holders of not less than a majority in aggregate principal amount of the outstanding series of New Notes affected thereby; provided, however, that no such modification or amendment may, without the consent of the holder of each outstanding series of New Notes affected thereby:

~~change the stated maturity of the principal of, or installment of interest on, the New Notes;~~

reduce the principal amount of the New Notes or reduce the amount of the principal of the New Notes which would be due and payable upon a declaration of acceleration of the maturity thereof or reduce the rate of interest on the New Notes;

~~reduce any premium payable on the redemption of the New Notes or change the date on which the New Notes may or must be redeemed;~~

~~change the coin or currency in which the principal of, premium, if any, or interest on the New Notes is payable;~~

~~impair the right of any holder to institute suit for the enforcement of any payment on or after the stated maturity of the New Notes (or, in the case of redemption, on or after the redemption date);~~

~~reduce the percentage in principal amount of the outstanding New Notes, the consent of whose holders is required in order to take certain actions;~~

~~reduce the requirements for quorum or voting by holders of the New Notes in the Indenture or the New Notes;~~

modify any of the provisions in the Indenture regarding the waiver of past defaults and the waiver of certain covenants by the holders of the New Notes except to increase any percentage vote required or to provide that certain other provisions of the indenture cannot be modified or waived without the consent of the holder of the New Notes affected thereby;

make any change that adversely affects the right to ~~vote~~convert or exchange the ~~shares covered~~New Notes or decreases the conversion or exchange rate or increases the conversion price of the New Notes, unless such decrease or increase is permitted by the ~~voting agreement~~terms of the New Notes; or

~~modify any of the above provisions.~~

~~We and the Trustee may, without the consent of any holders, modify or amend the terms of the Indenture and any series of New Notes with respect to the following:~~

~~to add to our covenants for the benefit of holders of the New Notes of all or any series or to surrender any right or power conferred upon us;~~

to evidence the succession of another person to, and the assumption by the successor of our covenants, agreements and obligations under, the Indenture pursuant to the covenant described under “—Covenants—Consolidation, Merger and Sale of Assets”;

~~to add any additional events of default for the benefit of holders of the New Notes of all or any series;~~

~~to add one or more guarantees for the benefit of holders of the New Notes;~~

~~to secure the New Notes pursuant to the covenants of the Indenture;~~

~~to add or appoint a successor or separate trustee or other agent;~~

~~to provide for the issuance of additional New Notes of any series;~~

~~to establish the form or terms of any series of New Notes as permitted by the Indenture;~~

~~to comply with the rules of any applicable securities depository;~~

~~to provide for uncertificated New Notes in addition to or in place of certificated New Notes;~~

~~to add to, change or eliminate any of the provisions of the Indenture in respect of one or more series of New Notes;~~

~~to cure any ambiguity, omission, defect or inconsistency; or~~

~~to change any other provision; provided that the change does not adversely affect the interests of the holders of any series of New Notes in any material respect.~~

The holders of at least a majority in aggregate principal amount of any series of the outstanding New Notes may, on behalf of the holders of all New Notes of that series, waive compliance by us with certain restrictive provisions of the Indenture. The holders of not less than a majority in aggregate principal amount of the outstanding New Notes of a series may, on behalf of the holders of all New Notes of that series, waive any past default and its consequences under the Indenture with respect to that series of New Notes, except a default (1) in the payment of principal or premium, if any, or interest on that series of New Notes or (2) in respect of a covenant or provision of the Indenture that cannot be modified or amended without the consent of the holder of each New Note of that series. Upon any such waiver, such default will cease to exist, and any event of default arising therefrom will be deemed to have been cured, for every purpose of the Indenture; however, no such waiver will extend to any subsequent or other default or event of default or impair any rights consequent thereon.

~~Book-Entry; Delivery and Form; Global Securities~~

Each series of New Notes will be issued in the form of one or more global securities, in definitive, fully registered form without interest coupons, each of which we refer to as a “global security.” Each such global security will be deposited with the trustee as custodian for DTC and registered in the name of a nominee of DTC in New York, New York for the accounts of participants in DTC.

We will not issue certificated securities to you for the New Notes you purchase, except in the limited circumstances described ~~above. The voting agreement~~below. Each global security will ~~expire~~be issued to DTC, which will keep a computerized record of its participants whose clients have purchased and beneficially own New Notes of a particular series. Each participant will then keep a record of its clients who have purchased and beneficially own New Notes of a particular series. Unless it is exchanged in whole or in part for a certificated security, a global security may not be transferred. DTC, its nominee and their successors may, however, transfer a global security as a whole to one another, and these transfers are required to be recorded on our records or a register to be maintained by the trustee.

DTC has advised us as follows: DTC is a limited-purpose trust company organized under New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities of institutions that have accounts with DTC (“participants”) and to facilitate the clearance and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. DTC’s participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Access to DTC’s book-entry system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a participant, whether directly or indirectly.

~~Ownership of Beneficial Interests~~

Upon the issuance of each global security, DTC will credit, on its book-entry registration and transfer system, the respective principal amount of the individual beneficial interests represented by the global security to the accounts of participants. Ownership of beneficial interests in each global security will be limited to participants or persons that may hold interests through participants. Beneficial interests in a global security will be shown on, and transfers of beneficial interests in the global

securities will be made only through, records maintained by DTC and its participants. When you purchase notes through the DTC system, the purchases must be made by or through a direct participant, which will receive credit for the notes on DTC’s records. When you actually purchase the New Notes, you will become its beneficial owner. Your ownership interest will be recorded only on the ~~earlier~~direct or indirect participants’ records. DTC will have no knowledge of your individual ownership of the ~~termination~~notes. DTC’s records will show only the identity of the ~~merger agreement~~direct participants and the amount of the notes held by or through them. You will not receive a written confirmation of your purchase or sale or any periodic account statement directly from DTC. You should instead receive these from your direct or indirect participant. As a result, the direct or indirect participants are responsible for keeping accurate account of the holdings of their customers.

So long as DTC or its nominee is the registered holder and owner of a global security, DTC or such nominee, as the case may be, will be considered the sole legal owner of the New Notes represented by the global security for all purposes under the Indenture, the New Notes and applicable law. Except as set forth below, owners of beneficial interests in a global security will not be entitled to receive certificated New Notes and will not be considered to be the owners or holders of any New Notes represented by the global security. We understand that under existing industry practice, in the event an owner of a beneficial interest in a global security desires to take any actions that DTC, as the holder of the global security, is entitled to take, DTC would authorize the participants to take such action, and that participants would authorize beneficial owners owning through such participants to take such action or would otherwise act upon the instructions of beneficial owners owning through them. No beneficial owner of an interest in a global security will be able to transfer such interest except in accordance with DTC’s applicable procedures, in addition to those provided for under the Indenture. Because DTC can only act on behalf of participants, who in turn act on behalf of others, the ability of a person having a beneficial interest in a global security to pledge that interest to persons that do not participate in the DTC system, or otherwise to take actions in respect of that interest, may be impaired by the lack of a physical certificate representing that interest.

All payments on the New Notes represented by a global security registered in the name of and held by DTC or its ~~terms~~nominee will be made to DTC or its nominee, as the case may be, as the registered owner and holder of the global security.

The trustee will wire payments on the New Notes to DTC’s nominee. The trustee and we will treat DTC’s nominee as the owner of each global security for all purposes. Accordingly, the trustee, any paying agent and we will have no direct responsibility or liability to pay amounts due on a global security to you or any other beneficial owners in that global security. Any redemption notices will be sent by us directly to DTC, which will, in turn, inform the direct participants (or the indirect participants), which will then contact you as a beneficial holder.

It is DTC’s current practice, upon receipt of any payment of principal, interest, redemption prices, distributions or liquidation amounts, to credit direct participants’ accounts proportionately on the payment date based on their holdings. In addition, it is DTC’s current practice to pass through any consenting or voting rights to such participants by using an omnibus proxy. Those participants will, in turn, make payments to and solicit votes from you, the beneficial owner of notes, based on their customary practices. Payments to you will be the responsibility of the participants and not of DTC, the trustee or our company.

Unless and until it is exchanged in whole or in part for certificated New Notes, each global security may not be transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC. Transfers between participants in DTC will be effected in the ordinary way in accordance with DTC rules and will be settled in same-day funds.

We expect that DTC will take any action permitted to be taken by a holder of New Notes only at the direction of one or more participants to whose account the DTC interests in a global security are credited and only in respect of such portion of the aggregate principal amount of the New Notes as to which such participant or participants has or have given such direction. However, if there is an event of default under the New Notes, DTC will exchange each global security for certificated New Notes, which it will distribute to its participants.

Although we expect that DTC will agree to the foregoing procedures in order to facilitate transfers of interests in each global security among participants of DTC, DTC is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. None of we, the Dealer Managers or the ~~completion~~trustee will have any responsibility for the performance or nonperformance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

The Indenture provides that the global securities will be exchanged for New Notes in certificated form of like tenor and of an equal principal amount, in authorized denominations in the following limited circumstances:

(i)

DTC notifies us that it is unwilling or unable to continue as depository or if DTC ceases to be eligible under the Indenture and we do not appoint a successor depository within 90 days;

(ii)

we determine that the New Notes will no longer be represented by global securities and execute and deliver to the trustee an order to such effect; or

(iii)

an event of default with respect to the New Notes will have occurred and be continuing.

These certificated New Notes will be registered in such name or names as DTC will instruct the trustee. It is expected that such instructions may be based upon directions received by DTC from participants with respect to ownership of beneficial interests in global securities.

The information in this section of this prospectus concerning DTC and DTC’s book-entry system has been obtained from sources that we believe to be reliable, but we do not take responsibility for this information.

~~Euroclear and Clearstream~~

If the depositary for a global security is DTC, you may hold interests in the global security through Clearstream Banking, société anonyme, which we refer to as “Clearstream,” or Euroclear Bank SA/ NV, as operator of the ~~merger. Affiliate letters Each Great Plains affiliate also~~Euroclear System, which we refer to as “Euroclear,” in each case, as a participant in DTC. Euroclear and Clearstream will hold interests, in each case, on behalf of their participants through customers’ securities accounts in the names of Euroclear and Clearstream on the books of their respective depositaries, which in turn will hold such interests in customers’ securities in the depositaries’ names on DTC’s books.

Links have been established among DTC, Clearstream and Euroclear to facilitate the initial issuance of the New Notes sold outside of the United States and cross-market transfers of the notes associated with secondary market trading.

Although DTC, Clearstream and Euroclear have agreed to the procedures described below in order to facilitate transfers, they are under no obligation to perform these procedures, and these procedures may be modified or discontinued at any time.

Clearstream and Euroclear will record the ownership interests of their participants in much the same way as DTC, and DTC will record the total ownership of each of the U.S. agents of Clearstream and Euroclear, as participants in DTC. When New Notes are to be transferred from the account of a DTC participant to the account of a Clearstream participant or a Euroclear participant, the purchaser must send instructions to Clearstream or Euroclear through a participant at least one day prior to settlement. Clearstream or Euroclear, as the case may be, will instruct its U.S. agent to receive New Notes against payment. After settlement, Clearstream or Euroclear will credit its participant’s account. Credit for the New Notes will appear on the next day (European time).

Because settlement is taking place during New York business hours, DTC participants will be able to employ their usual procedures for sending New Notes to the relevant U.S. agent acting for the benefit of Clearstream or Euroclear participants. The sale proceeds will be available to the DTC seller on the settlement date. As a result, to the DTC participant, a cross-market transaction will settle no differently than a trade between two DTC participants.

When a Clearstream or Euroclear participant wishes to transfer New Notes to a DTC participant, the seller will be required to send instructions to Clearstream or Euroclear through a participant at least one business day prior to settlement. In these cases, Clearstream or Euroclear will instruct its U.S. agent to transfer these New Notes against payment for them. The payment will then be reflected in the account of the Clearstream or Euroclear participant the following day, with the proceeds back-valued to the value date, which would be the preceding day, when settlement occurs in New York. If settlement is not completed on the intended value date, that heis, the trade fails, proceeds credited to the Clearstream or ~~she~~Euroclear participant’s account will ~~sell, offer~~instead be valued as of the actual settlement date.

You should be aware that you will only be able to ~~sell~~make and receive deliveries, payments and other communications involving the New Notes through Clearstream and Euroclear on the days when those clearing systems are open for business. Those systems may not be open for business on days when banks, brokers and other institutions are open for business in the United States. In addition, because of time zone differences there may be problems with completing transactions involving Clearstream and Euroclear on the same business day as in the United States.

~~Discharge, Defeasance and Covenant Defeasance~~

We may discharge certain obligations to holders of the New Notes of a series that have not already been delivered to the trustee for cancellation and that either have become due and payable or ~~otherwise dispose~~will become due and payable within one year (or scheduled for redemption within one year) by depositing with the trustee, in trust, funds in U.S. dollars in an amount sufficient to pay the entire indebtedness including the principal and premium, if any, and interest to the date of such deposit (if the New Notes have become due and payable) or to the maturity thereof or the redemption date of the New Notes of that series, as the case may be. We may direct the trustee to invest such funds in U.S. Treasury securities with a maturity of one year or less or in a money market fund that invests solely in short-term U.S. Treasury securities.

The Indenture provides that we may elect either (1) to defease and be discharged from any and all obligations with respect to the New Notes of a series (except for, among other things, obligations to register the transfer or exchange of the New Notes, to replace temporary or mutilated, destroyed, lost or stolen New Notes, to maintain an office or agency with respect to the New Notes and to hold moneys for payment in trust) (“legal defeasance”) or (2) to be released from our obligations to comply with the restrictive covenants under the Indenture, and any omission to comply with such obligations will not constitute a default or an event of default with respect to the New Notes of a series and clauses (4) and (7) under the heading “Events of Default” in the Indenture will no longer be applied (“covenant defeasance”). Legal defeasance or covenant defeasance, as the case may be, will be conditioned

upon, among other things, the irrevocable deposit by us with the trustee, in trust, of an amount in U.S. dollars, or U.S. government obligations, or both, applicable to the New Notes of that series which through the scheduled payment of principal and interest in accordance with their terms will provide money in an amount sufficient to pay the principal or premium, if any, and interest on the New Notes on the scheduled due dates therefor.

If we effect covenant defeasance with respect to the New Notes of any ~~Microsoft common stock issued~~series, the amount in ~~connection~~U.S. dollars, or U.S. government obligations, or both, on deposit with the ~~merger only under an effective registration statement or~~trustee will be sufficient, in ~~compliance with Rule 145 or other exemption~~the opinion of a nationally recognized firm of independent accountants, to pay amounts due on the New Notes of that series at the time of the stated maturity but may not be sufficient to pay amounts due on the New Notes of that series at the time of the acceleration resulting from ~~registration under~~such event of default. However, we would remain liable to make payment of such amounts due at the ~~Securities Act. Microsoft has agreed to use its reasonable efforts to permit affiliate sales under Rule 145 and Rule 144 and to file all reports~~time of acceleration.

We will be required to ~~be filed under~~deliver to the ~~Securities Exchange Act~~trustee an opinion of ~~1934. 50~~ ~~COMPARISON OF RIGHTS OF HOLDERS OF GREAT PLAINS COMMON STOCK AND MICROSOFT COMMON STOCK After completion of~~counsel that the ~~merger,~~deposit and related defeasance will not cause the holders of ~~Great Plains common stock will become shareholders~~the New Notes of ~~Microsoft. Before~~that series to recognize gain or loss for federal income tax purposes. If we elect legal defeasance, that opinion of counsel must be based upon a ruling from the ~~merger,~~U.S. Internal Revenue Service or a change in law to that effect.

~~We may exercise our legal defeasance option notwithstanding our prior exercise of our covenant defeasance option.~~

~~Trustee, Paying Agent and Security Registrar~~

The Bank of New York Mellon Trust Company, N.A. is the ~~rights~~trustee, paying agent and security registrar for the notes offered hereby. The Bank of ~~shareholders of Great Plains are~~New York Mellon Trust Company, N.A. is a national banking association organized under and governed by ~~Minnesota law, Great Plains' articles~~the laws of ~~incorporation~~the United States of America, and ~~Great Plains' bylaws. After~~provides trust services and acts as indenture trustee for numerous corporate securities issuances, including for other series of debt securities of which we are the ~~merger, as Microsoft shareholders, their rights~~issuer.

~~Governing Law~~

The Indenture and the New Notes will be governed by ~~Washington law~~ and ~~Microsoft's articles of incorporation and bylaws, as those documents currently exist or may exist~~construed in accordance with the future. The following discussion summarizes the material differences between the rights of holders of Microsoft common stock and holders of Great Plains common stock under the articles of incorporation and bylaws of Microsoft and Great Plains. This summary is not complete and is qualified in its entirety by reference to Microsoft's articles of incorporation and bylaws, Great Plains' articles of incorporation and bylaws and the relevant provisions of Washington and Minnesota law. Copieslaws of the charter documents are attached as exhibits to Great Plains' and Microsoft's filings with the SEC. See "Documents incorporated by reference into this proxy statement/prospectus" on page 65 and "Where you can find more information" on page 66. Although Washington and Minnesota corporation laws currently in effect are similar in many respects, certain differences will affect the rightsState of ~~the Company's shareholders if the merger is consummated.~~ New York.

~~CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS~~

The following discussion summarizes certain ~~differences considered by management~~U.S. federal income tax consequences to ~~be significant~~U.S. Holders and ~~is qualified in its entirety by reference to the full text~~Non-U.S. Holders (each term as defined below) of the ~~Minnesota Business Corporation Act~~Exchange Offers and the ~~Washington Business Corporation Act. Anti-Takeover Legislation Both Minnesota~~ownership and ~~Washington law contain provisions intended to protect shareholders from individuals or companies attempting a takeover~~disposition of ~~a corporation~~any New Notes acquired in ~~certain circumstances. The anti-takeover~~the Exchange Offers. This summary is based upon the provisions of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), proposed, temporary and final Treasury regulations promulgated under the Code, and administrative rulings and judicial decisions, in each case as of the date of this prospectus. These authorities are subject to differing interpretations and may be changed, perhaps retroactively, resulting in U.S. federal income tax consequences different from those discussed below. We have not obtained, nor do we intend to obtain, a ruling from the U.S. Internal Revenue Service (the “IRS”) with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS will agree with such statements and conclusions.

This summary assumes that the Existing Notes are, and any New Notes will be, held as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment). This summary does not address other U.S. federal tax laws (such as Medicare contribution tax laws and estate and gift tax laws) or the tax considerations arising under the laws of ~~Minnesota and Washington differ~~any state, local or non-U.S. jurisdiction. In addition, this summary does not address all tax considerations that may be applicable to a particular holder’s circumstances or to holders that may be subject to special tax rules, including, without limitation, holders subject to the alternative minimum tax, banks, insurance companies or other financial institutions, regulated investment companies, real estate investment trusts, tax-exempt organizations, dealers in securities or currencies, traders in securities that elect to use a mark-to-market method of tax accounting for their securities holdings, U.S. Holders whose “functional currency” is not the U.S. dollar, controlled foreign corporations, passive foreign investment companies, U.S. expatriates, partnerships or other pass-through entities for U.S. federal income tax purposes, holders holding the Existing Notes or the New Notes as a position in a ~~number~~hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction, holders deemed to sell the Existing Notes or the New Notes under the constructive sale provisions of ~~respects,~~the Code, holders required to accelerate the recognition of any item of gross income with respect to the Existing Notes or the New Notes as a result of such income being recognized on an applicable financial statement, or subsequent purchasers of the New Notes.

For purposes of this discussion, a “U.S. Holder” is a beneficial owner of the Existing Notes or the New Notes that is, for U.S. federal income tax purposes: (i) a citizen or individual resident of the United States, (ii) a corporation, including any entity treated as a corporation for U.S. federal income tax purposes, created or organized in, or under the laws of, the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust, if its administration is subject to the primary supervision of a U.S. court and one or more United States persons have the authority to control all substantial decisions of the trust, or if it has made a valid election under applicable Treasury regulations to be treated as a United States person.

For purposes of this discussion, a “Non-U.S. Holder” is a beneficial owner of the Existing Notes or the New Notes that is neither a U.S. Holder nor a partnership or other entity treated as a partnership for U.S. federal income tax purposes.

If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds the Existing Notes or the New Notes, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. If you are a partnership or a partner in a partnership holding the Existing Notes or the New Notes, you should consult your tax advisor regarding the tax consequences of the Exchange Offers and the ownership and disposition of any New Notes acquired in the Exchange Offers.

~~We believe, and the following discussion assumes, that the Existing Notes are, and the New Notes will be, treated as debt for U.S. federal income tax purposes.~~

This summary is for general information purposes only, and is not ~~practical~~intended to ~~summarize~~be, and should not be construed to be, legal or tax advice to any particular holder. You are urged to consult your tax advisor with regard to the application of the U.S. federal income tax laws, as well as the application of non-income tax laws and the laws of any state, local or non-U.S. taxing jurisdiction, to your particular situation.

~~Tax Consequences to Exchanging U.S. Holders~~

~~Tax Consequences of the Exchange~~

Under general principles of U.S. federal income tax law, the modification of a debt instrument can give rise to an exchange under Section 1001 of the Code upon which gain or loss is realized if the modified debt instrument differs materially either in kind or in extent from the original debt instrument. In this regard, governing Treasury regulations (the “Modification Regulations”) provide that, as a general rule, an exchange occurs when, based on all the facts and circumstances and taking into account all changes in the terms of ~~those differences here.~~the debt instrument collectively (other than certain specified changes), the legal rights or obligations that are altered, and the degree to which they are altered, are economically significant (a “significant modification”). The Modification Regulations can apply to any modification of a debt instrument, regardless of the form of the modification, including an exchange of a new debt instrument for an existing debt instrument. Therefore, the Modification Regulations are relevant in determining the consequences of an exchange of Existing Notes for New Notes pursuant to the Exchange Offers.

Under the Modification Regulations, a change in yield of a debt instrument is a significant modification if the yield of the modified debt instrument varies from the yield on the unmodified instrument (determined as of the date of the modification) by more than the greater of (i) 25 basis points and (ii) 5 percent of the annual yield of the unmodified instrument. For this purpose, the yield of the modified debt instrument is the annual yield of a debt instrument with (i) an issue price equal to the adjusted issue price of the unmodified debt instrument on the date of the modification (increased by accrued but unpaid interest and decreased by payments made to the holder as consideration for the modification) and (ii) payments equal to the payments on the modified debt instrument from the date of the modification. The Modification Regulations also provide that, in general, a modification of a debt instrument that results in a material deferral of scheduled payments, including an extension of the final maturity date, is a significant modification. However, the ~~following~~Modification Regulations provide that a deferral is not a ~~summary~~material deferral if the deferred payments are unconditionally payable no later than at the end of ~~certain significant differences. Control Share Acquisition. The Minnesota control share acquisition statute, Section 302A.671~~a safe harbor period which begins on the original due date of the ~~Minnesota Business Corporation Act, establishes various disclosure~~first scheduled payment that is deferred and shareholder approval requirements to be met by individuals or companies attempting a takeover of an "issuing public corporation" such as Great Plains. Washington has no comparable provision. However, Great Plains has elected not to be governed by this statute through Great Plains' articles of incorporation in accordance with Section 302A.671. Business Combinations. While there is no Washington statute comparable to Section 302A.671 of the Minnesota Business Corporation Act, both Minnesota and Washington have business combination statutes that are intended primarily to deter highly leveraged takeover bids which propose to use the target's assets as collateral for the offeror's debt financing or to liquidate the target, in whole or in part, to satisfy financing obligations. The Minnesota statute, Section 302A.673 of the Minnesota Business Corporation Act, provides that an issuing public corporation such as Great Plains may not engage in certain business combinations with any person that becomes an interested shareholder by acquiring beneficial ownership of 10% or more of the voting stock of that corporationextends for a period equal to the lesser of ~~four~~(i) five years or (ii) 50% of the original term of the debt instrument.

We intend to take the position, and the following ~~the date~~discussion assumes, that the ~~person became an interested shareholder~~exchange of Existing Notes for New Notes pursuant to the Exchange Offers will, in each case, constitute a significant modification under the Modification Regulations. Therefore, you will generally recognize gain or loss in full upon the exchange of Existing Notes for New Notes unless ~~prior~~the exchange qualifies as a recapitalization for U.S. federal income tax purposes.

In order for the exchange to ~~that date,~~qualify as a ~~committee~~recapitalization, the Existing Notes surrendered and the New Notes received must be treated as “securities” under the relevant provisions of the ~~corporation's disinterested directors approve either~~Code. Neither the ~~business combination~~Code nor the Treasury regulations define the term security. Whether a debt instrument is a security is based on all of the facts and circumstances, but most authorities have held that the term to maturity

of the debt instrument is one of the most significant factors. In this regard, debt instruments with a term of ten years or more generally have qualified as securities, whereas debt instruments with a term of less than five years generally have not qualified as securities. Each series of Existing Notes had an initial term of more than ten years and the ~~acquisition~~New Notes will have a term of ~~shares. Only defined types of "business combinations" are prohibited by~~more than ten years.Thus, although the ~~Minnesota statute. In general,~~matter is not free from doubt, we believe, and the ~~definition includes: any merger or~~following discussion assumes, that the Existing Notes and the New Notes would both be treated as securities and that the exchange of ~~securities~~Existing Notes for New Notes will be treated as a recapitalization for U.S. federal income tax purposes. There can be no assurance, however, that the IRS will not challenge the treatment of the ~~corporation with~~exchange of Existing Notes for New Notes as a recapitalization, and any such challenge, if successful, would generally result in consequences different than those described below. You should consult your tax advisor regarding the ~~interested shareholder; certain sales, transfers or other disposition of assets~~qualification of the ~~corporation~~exchange as a recapitalization for U.S. federal income tax purposes.

Upon the exchange of Existing Notes for New Notes pursuant to ~~an interested shareholder; transfers by 51~~ the ~~corporation~~Exchange Offers, you will, subject to ~~interested shareholders~~the discussions under “—Early Exchange Premium” and “—Cash in Lieu of ~~shares that have a market value~~Fractional New Notes,” generally recognize gain (but not loss) equal to the lesser of ~~5% or more~~(i) the amount of any gain realized on the exchange, computed in the manner described below, and (ii) cash received in the exchange (other than cash paid in respect of accrued and unpaid interest on the Existing Notes, the treatment of which is described below under “—Accrued and Unpaid Interest”). The gain, if any, realized on the exchange will equal the difference between (i) the sum of the ~~value of all outstanding shares, except for a pro rata transfer made to all shareholders; any liquidation or dissolution of, or reincorporation in another jurisdiction~~“issue price” of the ~~corporation which is proposed by the interested shareholder; certain transactions proposed by the interested shareholder or any affiliate or associate~~New Notes received (as described below under “—Issue Price of the ~~interested shareholder that would result~~New Notes”) and the cash received (other than cash paid in ~~an increase~~respect of accrued and unpaid interest on the Existing Notes), and (ii) your adjusted tax basis in the ~~proportion of shares entitled to vote owned~~Existing Notes surrendered. Your adjusted tax basis in the Existing Notes will generally equal the amount paid therefor, increased by ~~the interested shareholder~~market discount, if any, previously included in income and transactions whereby the interested shareholder receives the benefit of loans, advantages, guarantees, pledges or other financial assistance or tax advances or credits from the corporation. For purposes of selecting a committee, a director or person is "disinterested" under the Minnesota Statute if the director or person is neither an officer nor an employee, nor has been an officer or employee within five years preceding the formation of the committee of the issuing public corporation, or of a related corporation. The committee must consider and act onreduced by any written, good faith proposal to acquire shares or engage in a business combination. The committee must consider and take action on the proposal and within thirty days render a decision in writing regarding the proposal. In contrastbond premium previously amortized. Subject to the ~~Minnesota provisions, Washington law (Chapter 19 of~~discussions under “—Market Discount” and “—Early Exchange Premium,” any gain recognized in the Washington Business Corporation Act) prohibits a "target corporation," with certain exceptions, from engaging in certain "significant business transactions" (such as a merger or sale of assets) with an "acquiring person" who acquires 10% orexchange will be capital gain and will be long-term capital gain if you held the Existing Notes for more of the voting securities of a target corporation for a period of five years after such acquisition, unless the transaction is approved by a majority of the members of the target corporation's board of directorsthan one year prior to the date of the ~~acquisition. Target~~exchange. Long-term capital gains of non-corporate U.S. Holders (including individuals) are eligible for reduced rates of taxation. You will have an initial tax basis in the New Notes equal to your adjusted tax basis in the Existing Notes surrendered in the exchange, increased by any gain that you recognize in the exchange, and decreased by any cash received in the exchange (other than cash paid in respect of accrued and unpaid interest on the Existing Notes). In addition, your holding period for the New Notes will include your holding period for the Existing Notes surrendered in the Exchange Offers.

~~If you hold Existing Notes with differing tax bases and/or holding periods, the preceding rules must be applied separately to each identifiable block of Existing Notes.~~

Issue Price of the New Notes. The determination of the issue price of the New Notes will depend on whether the New Notes and/or the Existing Notes exchanged therefor are “publicly traded” for U.S. federal income tax purposes. If the New Notes are publicly traded, they generally will have an issue price equal to their fair market value on the date of issuance. We expect that the New Notes will be publicly traded, and, thus, that each series of New Notes will have an issue price equal to their fair market value on the date of issuance. If we determine that the New Notes are publicly traded for U.S. federal income tax purposes, we will make that determination as well as our determination of the fair market value of the New Notes available to holders in a commercially reasonable fashion, including by electronic publication, within 90 days of the date that the New Notes are issued.

Market Discount. You will be considered to have acquired an Existing Note with “market discount” if the stated principal amount of such Existing Note exceeded your initial tax basis for such Existing Note by more than a de minimis amount. If your Existing Notes were acquired with market discount, any gain recognized on the exchange of Existing Notes for New Notes will be treated as ordinary income (and will not receive capital gain treatment) to the extent of the market discount accrued during

your period of ownership, unless you previously had elected to include market discount in income as it accrued for U.S. federal income tax purposes. Any accrued market discount on the Existing Notes that was not previously included in income (including in connection with the exchange) will generally carry over to the New Notes. The New Notes received will also be treated as acquired with market discount (including any accrued market discount described above) if their stated principal amount (or their issue price if the New Notes are issued with original issue discount as described below) exceeds your initial tax basis in such New Notes by more than a de minimis amount.

If you acquired your Existing Notes (other than at original issuance) for a price less than their stated principal amount, you should consult your tax advisor regarding the possible application of the market discount rules.

Early Exchange Premium. If you tender your Existing Notes on or before the Early Exchange Time, you will be eligible to receive the Early Exchange Premium. Although the U.S. federal income tax treatment of the receipt of the Early Exchange Premium is unclear, we intend to take the position, and this discussion assumes, that the Early Exchange Premium should be treated as additional consideration received in exchange for the Existing Notes. However, the IRS could take the position that the Early Exchange Premium instead should be treated as a separate fee that would be subject to tax as ordinary income. You are urged to consult your tax advisor with respect to the U.S. federal income tax treatment of the Early Exchange Premium.

Cash in Lieu of Fractional New Notes. If you receive cash in lieu of fractional amounts of New Notes, you will generally be treated as having received fractional New Notes corresponding to such fractional amounts pursuant to the Exchange Offers and then as having had those fractional New Notes sold for cash. As a result, you will generally recognize gain or loss on the receipt of cash in lieu of fractional New Notes, which gain or loss will generally be determined as described below under “—Tax Consequences of the Ownership of the New Notes—Sale, Exchange or Retirement of the New Notes.”

Accrued and Unpaid Interest. Any amount received pursuant to the Exchange Offers that is properly allocable to accrued and unpaid interest on an Existing Note will generally be includible in your gross income as ordinary interest income if such accrued interest had not been included previously in your gross income for U.S. federal income tax purposes.

~~Tax Consequences of the Ownership of the New Notes~~

Payments of Interest. Payments of stated interest on the New Notes will be taxed to you as ordinary income at the time the interest is paid or accrued in accordance with your method of accounting for U.S. federal income tax purposes.

Original Issue Discount. If the issue price of the New Notes of a series (as described above under “—Tax Consequences of the Exchange—Issue Price of the New Notes”) is less than their stated principal amount by more than a specified de minimis amount, such New Notes will be treated as issued with original issue discount (“OID”) in an amount equal to such difference. For these purposes, the discount will be considered to exceed the de minimis threshold if it is at least equal to 0.25% of the stated principal amount of the New Notes multiplied by the number of complete years to maturity from the issue date of the New Notes.

You must generally include OID in your gross income (as ordinary income) as it accrues (on a constant yield to maturity basis) over the term of a New Note without regard to your regular method of accounting for U.S. federal income tax purposes and in advance of the receipt of cash payments attributable to that income.

The amount of OID, if any, that you must include in income with respect to a New Note will generally equal the sum of the “daily portions” of OID with respect to the New Note for each day during the taxable year or portion of the taxable year in which you held such New Note (“accrued OID”). The daily portion is determined by allocating to each day in each “accrual period” a pro rata portion of the OID allocable to that accrual period. The “accrual period” for a New Note may be of any length and may vary in length over the term of the New Note, provided that each accrual period is no longer than one year and each scheduled payment of principal or interest occurs on the first day or the final day of an accrual period. The amount of OID allocable to any accrual period other than the final accrual period is an amount equal to the excess, if any, of (i) the product of the New Note’s adjusted issue price at the beginning of such accrual period and its yield to maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period) over (ii) the aggregate of all stated interest allocable to the accrual period. OID allocable to a final accrual period is the difference between the amount payable at maturity (other than a payment of stated interest) and the adjusted issue price of the New Note at the beginning of the final accrual period. The adjusted issue price of a New Note at the beginning of any accrual period is equal to its issue price, increased by the accrued OID, if any, for each prior accrual period (determined without regard to the amortization of any acquisition premium or amortizable bond premium, as discussed below). Under these rules, you generally will have to include in income increasingly greater amounts of OID in successive accrual periods.

If your initial tax basis in a New Note is greater than its issue price and less than or equal to its stated principal amount, the New Note will be considered to have been issued to you at an “acquisition premium.” Under the acquisition premium rules, the amount of OID that you must include in gross income with respect to the New Note for any taxable year will be reduced by the portion of the acquisition premium properly allocable to that year.

You may elect to treat all interest (including stated interest, OID or de minimis OID, and market discount or de minimis market discount, as adjusted by any acquisition premium or amortizable bond premium) on a New Note as OID and calculate the amount includible in gross income under the constant yield method described above. The election must be made for the taxable year in which you acquire the New Note, and may not be revoked without the consent of the IRS. You should consult your tax advisor about this election. This discussion assumes this election is not made.

Amortizable Bond Premium. If your initial tax basis in a New Note is greater than its stated principal amount, you will be considered to have acquired the New Note with “amortizable bond premium” and, in the case of any New Notes issued with OID, you will not be required to include any OID in income. You generally may elect to amortize the premium over the remaining term of the New Note on a constant yield method as an offset to interest when includible in income under your regular accounting method. However, because the New Notes may be redeemed by us prior to maturity at a premium, special rules apply that may reduce, eliminate or defer the amount of premium that you may amortize with respect to a New Note. You should consult your tax advisor about these special rules. If you do not elect to amortize the premium, that premium will decrease the gain or increase the loss you would otherwise recognize on maturity or disposition of the New Note. An election to amortize premium on a constant yield method will also apply to all other taxable debt instruments held or subsequently acquired by you on or after the first day of the first taxable year for which the election is made. Such an election may not be revoked without the consent of the IRS. You should consult your tax advisor about this election.

Market Discount. If your New Notes have market discount (see “—Tax Consequences of the Exchange— Market Discount” above), under the market discount rules, you will be required to treat any gain on the sale, exchange or retirement of such New Notes as ordinary income to the extent of the market discount that is treated as having accrued on such New Notes at the time of the sale,

exchange or retirement, and which you have not previously included in income. Any market discount will be considered to accrue ratably during the period from the date of acquisition to the maturity date of the New Notes unless you elect to accrue on a constant interest method.

You may elect to include market discount in income currently as it accrues, on either a ratable or constant interest method, in which case any gain recognized will not be recharacterized as ordinary income.

Sale, Exchange or Retirement of the New Notes. Unless a non-recognition provision applies, you will recognize taxable gain or loss upon a sale, exchange or retirement of a New Note in an amount equal to the difference between (i) the amount of cash and the fair market value of any property received (less an amount equal to any accrued but unpaid stated interest, which will be taxed in the manner described above under “—Payments of Interest”) and (ii) your adjusted tax basis in the New Note. Your adjusted tax basis in a New Note will be your initial tax basis in the New Note, increased by any OID or market discount previously included in income, and reduced by any amortized bond premium.

Any gain or loss on the sale, exchange or retirement of a New Note will be capital gain or loss (although all or a portion of any recognized gain could be subject to ordinary income treatment if there is any accrued market discount on the New Note that has not been included in income at the time of the sale, exchange or retirement, as discussed above under “—Market Discount”) and will be long-term capital gain or loss if the New Note has a holding period of more than one year at the time of the sale, exchange or retirement. Long-term capital gains of non-corporate U.S. Holders (including individuals) are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.

~~Tax Consequences to Exchanging Non-U.S. Holders~~

The following discussion is a summary of certain U.S. federal income tax consequences that will apply to you if you are a Non-U.S. Holder who exchanges Existing Notes for New Notes pursuant to the Exchange Offers.

~~For purposes of the discussion below, any income or gain will be considered to be “U.S. trade or business income” if such income or gain is:~~

~~effectively connected with your conduct of a U.S. trade or business; and~~

~~if required by an applicable income tax treaty with the United States, attributable to a U.S. permanent establishment (or a fixed base) maintained by you in the United States.~~

~~Tax Consequences of the Exchange~~

Subject to the discussions under “—Early Exchange Premium” and “—Backup Withholding and Information Reporting—Non-U.S. Holders,” you will generally not be subject to U.S. federal income or withholding tax on any gain recognized on the exchange of Existing Notes for New Notes (which gain would be determined as described above under “—Tax Consequences to Exchanging U.S. Holders—Tax Consequences of the Exchange”) unless:

~~such gain is U.S. trade or business income; or~~

~~you are an individual who is present in the United States for 183 days or more in the taxable year in which the gain is realized and certain other conditions are met.~~

~~Regarding the first bullet above, a Non-U.S. Holder who realizes U.S. trade or business income with respect to the exchange generally will be subject to U.S. federal income tax on that income in the~~

same manner as a U.S. Holder (see “—Tax Consequences to Exchanging U.S. Holders—Tax Consequences of the Exchange” above). In addition, if you are a foreign corporation, you may be subject to a branch profits tax equal to 30% (or lower applicable income tax treaty rate) of your effectively connected earnings and profits, subject to adjustments. If you are an individual Non-U.S. Holder described in the second bullet above, unless an applicable income tax treaty provides otherwise, you will generally be subject to a flat 30% U.S. federal income tax on any gain recognized, which may be offset by certain U.S. source losses.

Accrued and Unpaid Interest. Subject to the discussions under “—Backup Withholding and Information Reporting—Non-U.S. Holders” and “—Additional Withholding Requirements,” the portion of the amount paid pursuant to the Exchange Offers that is properly allocable to accrued but unpaid interest on the Existing Notes will not be subject to U.S. federal income or withholding tax under the “portfolio interest rule,” provided that:

~~the accrued interest is not U.S. trade or business income;~~

~~you do not actually (or constructively) own 10% or more of the total combined voting power of all classes of our voting stock within the meaning of the Code and applicable Treasury regulations;~~

~~you are not a controlled foreign corporation that is related to us through stock ownership;~~

~~you are not a bank whose receipt of interest on the Existing Notes is described in Section 881(c)(3)(A) of the Code; and~~

either (a) you provide your name and address on an applicable IRS Form W-8, and certify, under penalties of perjury, that you are not a United States person as defined under the Code or (b) you hold your Existing Notes through certain foreign intermediaries and satisfy the certification requirements of applicable United States Treasury regulations. Special certification rules apply to Non-U.S. Holders that are pass-through entities rather than corporations ~~include domestic corporations~~or individuals.

If you cannot satisfy the requirements described above, the portion of the amount paid pursuant to the Exchange Offers that is properly allocable to accrued but unpaid interest on the Existing Notes will generally be subject to a 30% U.S. federal withholding tax, unless you provide the applicable withholding agent with a ~~class~~properly executed:

~~IRS Form W-8BEN or Form W-8BEN-E (or other applicable form) claiming an exemption from or reduction in withholding under the benefit of ~~voting shares~~an applicable income tax treaty; or~~

IRS Form W-8ECI (or other applicable form) stating that interest paid on the Existing Notes is not subject to withholding tax because it is U.S. trade or business income (as discussed in further detail below).

If the portion of the proceeds received by you that is properly allocable to accrued but unpaid interest on the Existing Notes is U.S. trade or business income, you will not be subject to the 30% U.S. federal withholding tax on such interest if you provide the applicable withholding agent with a properly executed IRS Form W-8ECI, as discussed above. Instead, you generally will be taxed on such interest in the same manner as a U.S. Holder (see “—Tax Consequences to Exchanging U.S. Holders—Tax Consequences of the Exchange—Accrued and Unpaid Interest” above). In addition, if you are a foreign corporation, you may be subject to an additional branch profits tax equal to 30% (or lower applicable income tax treaty rate) of your effectively connected earnings and profits, subject to adjustments.

Early Exchange Premium. As discussed above under “—Tax Consequences to Exchanging U.S. Holders—Tax Consequences of the Exchange—Early Exchange Premium,” although the U.S. federal

income tax treatment of the Early Exchange Premium is uncertain, we intend to take the position that any Early Exchange Premium should be treated as part of the consideration received in exchange for the Existing Notes. However, if any Early Exchange Premium were to be treated as a separate fee, then such payment could be subject to U.S. federal withholding tax. You are urged to consult your tax advisor with respect to the U.S. federal income tax treatment of the Early Exchange Premium.

~~Tax Consequences of the Ownership of the New Notes~~

Payments of Interest. Subject to the discussions under “—Backup Withholding and Information Reporting—Non-U.S. Holders” and “—Additional Withholding Requirements,” U.S. federal withholding tax will not apply to any payment of interest (including any OID) on the New Notes, provided that you meet the requirements of the portfolio interest rule described above in “—Tax Consequences of the Exchange—Accrued and Unpaid Interest.”

If you cannot satisfy the requirements of the portfolio interest rule, payments of interest (including any OID) on the New Notes made to you will generally be subject to a 30% U.S. federal withholding tax, unless you provide the applicable withholding agent with a properly executed:

~~IRS Form W-8BEN or Form W-8BEN-E (or other applicable form) claiming an exemption from or reduction in withholding under the benefit of an applicable income tax treaty; or~~

~~IRS Form W-8ECI (or other applicable form) stating that interest paid on the New Notes is not subject to withholding tax because it is U.S. trade or business income.~~

Sale, Exchange or Retirement of the New Notes. Subject to the discussion under “—Backup Withholding and Information Reporting—Non-U.S. Holders,” any gain realized upon the sale, exchange or retirement of a New Note will not be subject to U.S. federal income or withholding tax unless:

~~the gain is U.S. trade or business income, in which case the gain will be subject to tax as described below under “—Effectively Connected Interest and Gain”; or~~

you are an individual who is present in the United States for 183 days or more in the taxable year of that sale, exchange or retirement, and certain other conditions are met, in which case the gain (net of certain U.S. source capital losses) will be subject to a flat 30% tax, unless an applicable income tax treaty provides otherwise.

To the extent proceeds from the sale, exchange or retirement of a New Note represent accrued and unpaid stated interest, you will generally be subject to U.S. federal income tax with respect to such accrued and unpaid stated interest in the same manner as described above under “—Payments of Interest.”

Effectively Connected Interest and Gain. If any interest (including any OID) on, or gain realized upon the disposition of, the New Notes is U.S. trade or business income, you will be subject to U.S. federal income tax on that interest or gain on a net income basis (although you will be exempt from the 30% U.S. federal withholding tax on interest, provided the certification requirements discussed above are satisfied) in the same manner as if you were a U.S. Holder. In addition, if you are a foreign corporation, you may be subject to an additional branch profits tax equal to 30% (or lower applicable income tax treaty rate) of your effectively connected earnings and profits, subject to adjustments.

~~Backup Withholding and Information Reporting~~

~~U.S. Holders~~

~~Information reporting requirements will generally apply to payments of interest on the Existing Notes or the New Notes, any OID accruals on the New Notes, and proceeds from a disposition~~

(including a retirement or redemption) of the Existing Notes or the New Notes (unless, in each case, you are an exempt recipient such as a corporation). Backup withholding may apply to any payments described in the preceding sentence if you fail to provide a taxpayer identification number or a certification that you are not subject to backup withholding. Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against your U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.

~~Non-U.S. Holders~~

Information returns generally will be filed in connection with the amount of interest (including any OID) paid to you with respect to the Existing Notes or the New Notes and the amount of tax, if any, withheld with respect to such payments. Copies of the information returns reporting such interest payments and any withholding may also be made available to the tax authorities in the country in which you reside under the provisions of an applicable income tax treaty.

In general, you will not be subject to backup withholding with respect to interest (including any OID) paid to you with respect to the Existing Notes or the New Notes, provided in each case that the applicable withholding agent does not have actual knowledge or reason to know that you are a United States person as defined under the Code, and you have provided a validly completed applicable IRS Form W-8 establishing that you are not a United States person (or you satisfy certain documentary evidence requirements for establishing that you are not a United States person).

Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale or other disposition (including a retirement or redemption) of the Existing Notes or the New Notes made within the United States or conducted through certain United States-related financial intermediaries, unless you certify to the payor under penalties of perjury that you are not a United States person as defined under the Code (and the payor does not have actual knowledge or reason to know that you are a United States person), or you otherwise establish an exemption.

Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against your U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.

~~Additional Withholding Requirements~~

Under Sections 1471 through 1474 of the Code (such Sections commonly referred to as “FATCA”), a 30% U.S. federal withholding tax may apply to any interest (including any OID) paid on the Existing Notes or the New Notes to (i) a “foreign financial institution” (as specifically defined in the Code) which does not provide sufficient documentation, typically on IRS Form W-8BEN-E, evidencing either (x) an exemption from FATCA, or (y) its compliance (or deemed compliance) with FATCA (which may alternatively be in the form of compliance with an intergovernmental agreement with the United States) in a manner which avoids withholding, or (ii) a “non-financial foreign entity” (as specifically defined in the Code) which does not provide sufficient documentation, typically on IRS Form W-8BEN-E, evidencing either (x) an exemption from FATCA, or (y) adequate information regarding certain substantial U.S. beneficial owners of such entity (if any). If an interest payment is both subject to withholding under FATCA and subject to the withholding tax discussed above under “—Tax Consequences to Exchanging Non-U.S. Holders—Tax Consequences of the Exchange—Accrued and Unpaid Interest” and “—Tax Consequences to Exchanging Non-U.S. Holders—Tax Consequences of the Ownership of the New Notes—Payments of Interest,” the withholding under FATCA may be credited against, and therefore reduce, such other withholding tax.

However, any debt instrument issued before July 1, 2014 is generally treated as a “grandfathered obligation” that is exempt from FATCA withholding (unless such debt instrument was the subject of a “significant modification” after such date). Accordingly, FATCA withholding is not expected to apply with respect to payments attributable to accrued and unpaid interest on the 5.200% Notes due 2039, the 4.500% Notes due 2040, the 5.300% Notes due 2041, the 3.500% Notes due 2042, the 3.750% Notes due 2043 and the 4.875% Notes due 2043. In addition, while withholding under FATCA would also have applied to payments of gross proceeds from a taxable disposition of the Existing Notes or the New Notes on or after January 1, 2019, proposed U.S. Treasury regulations (the preamble to which indicates that taxpayers may rely on the regulations pending their finalization) eliminate FATCA withholding on payments of gross proceeds entirely.

You should consult your tax advisor regarding these rules and whether they may be relevant to the exchange of the Existing Notes pursuant to the Exchange Offers and your ownership and disposition of the New Notes.

~~Non-Exchanging Holders~~

~~If you are a holder of Existing Notes that does not participate in the Exchange Offers, you will not recognize any gain or loss in respect of the Exchange Offers for U.S. federal income tax purposes.~~

~~NOTICES TO CERTAIN NON-U.S. HOLDERS~~

~~General~~

No action has been or will be taken in any non-U.S. jurisdiction that would permit a public offering of the New Notes or the possession, circulation or distribution of this prospectus or any material relating to us, the Existing Notes or the New Notes in any jurisdiction where action for that purpose is required. Accordingly, the New Notes offered in the exchange offers may not be offered, sold or exchanged, directly or indirectly, and neither this prospectus nor any other offering material or advertisements in connection with the exchange offers may be distributed or published, in or from any such country or jurisdiction, except in compliance with any applicable rules or regulations of any such country or jurisdiction.

This prospectus does not constitute an offer to buy or sell or a solicitation of an offer to buy or sell either Existing Notes or New Notes in any jurisdiction in which, or to or from any person to or from whom, it is unlawful to make such offer or solicitation under applicable securities laws or otherwise. The distribution of this prospectus in certain jurisdictions (including, but not limited to, Canada, the European Economic Area, the United Kingdom, the People’s Republic of China, Japan, Hong Kong, Singapore and Switzerland) may be restricted by law. Persons into whose possession this prospectus comes are required by us, the dealer managers and the exchange agent to inform themselves about, and to observe, any such restrictions. In those jurisdictions where the securities, blue sky or other laws require the exchange offers to be made by a licensed broker or dealer and the dealer managers or any of their affiliates is a licensed broker or dealer in any such jurisdiction, such exchange offers shall be deemed to be made by such dealer manager or such affiliate (as the case may be) on our behalf in such jurisdiction.

The New Notes will be issued only in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. See ‘‘Description of the Exchange Offers—No Fractional Amounts of New Notes.’’ If, under the terms of the Exchange Offers, the aggregate principal amount of New Notes that any tendering holder is entitled to receive is not in a minimum denomination of $2,000 or an integral multiple of $1,000 in excess thereof, we will round downward the amount of the New Notes to $1,000 or the nearest integral multiple of $1,000 in excess thereof and pay the difference in cash.

~~Canada~~

The New Notes may be offered or sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103Registration Requirements, Exemptions and Ongoing Registrant Obligations. Accordingly, holders of Existing Notes that are located or resident in Canada may only participate in and receive New Notes in the Exchange Offers if they satisfy these requirements. Any resale of the New Notes must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this offering memorandum (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105Underwriting Conflicts (NI 33-105), the purchasers are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with the Tender Offers and Solicitations.

Holders of Existing Notes that are located or resident in Canada must complete, sign and submit a Canadian Eligibility Form in the form approved by the Company and in accordance with the procedures established by the Company to confirm that they satisfy applicable Canadian securities law requirements and to provide certain additional information required for them to participate in the Exchange Offers.

~~European Economic Area~~

The New Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the EEA. For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or (ii) a customer within the meaning of the Insurance Distribution Directive, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the Prospectus Regulation. Consequently no key information document required by the PRIIPs Regulation for offering or selling the New Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the New Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.

This prospectus has been prepared on the basis that any offer of New Notes in any member state of the EEA will be made pursuant to an exemption under the Prospectus Regulation from the requirement to publish a prospectus for offers of notes. This prospectus is not a prospectus for the purposes of the Prospectus Regulation.

~~United Kingdom~~

The New Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom (“UK”). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the EUWA; (ii) a customer within the meaning of the provisions of the FSMA and any rules or regulations made under the FSMA to implement the Insurance Distribution Directive, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of the Prospectus Regulation as it forms part of domestic law by virtue of the UK Prospectus Regulation. Consequently no key information document required by the PRIIPs Regulation as it forms part of domestic law by virtue of the UK PRIIPs Regulation for offering or selling the New Notes or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the New Notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.

This prospectus has been prepared on the basis that any offer of New Notes in the UK will be made pursuant to an exemption under the UK Prospectus Regulation from the requirement to publish a prospectus for offers of notes. This prospectus is not a prospectus for the purposes of the UK Prospectus Regulation.

~~People’s Republic of China~~

This prospectus may not be circulated or distributed in the People’s Republic of China (‘‘PRC’’) and the New Notes may not be offered or sold, and will not be offered, sold or exchanged, directly or indirectly, to any resident of the PRC or to persons for re-offering or resale, directly or indirectly, to any resident of the PRC except pursuant to applicable laws, rules and regulations of the PRC. For the

~~purpose of this paragraph only, the PRC does not include Taiwan and the special administrative regions of Hong Kong and Macau.~~

~~Japan~~

The New Notes have not been and will not be registered under the Securities and Exchange Law of Japan (the ‘‘Securities and Exchange Law’’) and no dealer manager may offer, sell or offer to exchange any New Notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering, resale or re-exchange, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange ~~Commission~~Law and any other applicable laws, regulations and ministerial guidelines of Japan.

~~Hong Kong~~

The New Notes may not be offered, sold or exchanged by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to ‘‘professional investors’’ within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a ‘‘prospectus’’ within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), and no advertisement, invitation or document relating to the New Notes may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to New Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to ‘‘professional investors’’ within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

~~Singapore~~

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the exchange offers for the New Notes may not be circulated or distributed, nor may the New Notes be offered, sold or exchanged, or be made the subject of an offer to exchange, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the ‘‘SFA’’), (ii) to a relevant person, or any person pursuant to Section 275(IA), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the New Notes are exchanged under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the notes under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(IA), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

~~Singapore Securities and Futures Act Product Classification~~

Solely for the purposes of its obligations pursuant to sections 309B(1)(a) and 309B(1)(c) of the SFA, Microsoft has determined, and hereby notifies all relevant persons (as defined in Section 309A of the SFA) that the New Notes are ‘‘prescribed capital markets products’’ (as defined in the Securities ~~Exchange~~and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

~~Switzerland~~

Microsoft has not and will not register with the Swiss Financial Market Supervisory Authority (‘‘FINMA’’) as a foreign collective investment scheme pursuant to Article 119 of the Federal Act on Collective Investment Scheme of ~~1934 (the "Exchange Act"~~23 June 2006, as amended (‘‘CISA’’)~~. Foreign corporations required~~, and accordingly the New Notes being offered pursuant to this prospectus have not and will not be approved, and may not be licensable, with FINMA. Therefore, the New Notes have not been authorized for distribution by FINMA as a ~~certificate of authority~~foreign collective investment scheme pursuant to ~~transact business in Washington are also subject~~Article 119 CISA and the notes offered hereby may not be offered to the ~~statute if: (i)~~public (as this term is defined in Article 3 CISA) in or from Switzerland. The notes may solely be offered to ‘‘qualified investors,’’ as this term is defined in Article 10 CISA, and in the ~~corporation~~circumstances set out in Article 3 of the Ordinance on Collective Investment Scheme of 22 November 2006, as amended (‘‘CISO’’), such that there is no public offer. Investors, however, do not benefit from protection under CISA or CISO or supervision by FINMA. This prospectus and any other materials relating to the New Notes are strictly personal and confidential to each offeree and do not constitute an offer to any other person. This prospectus may only be used by those qualified investors to whom it has ~~a class of voting shares registered~~been handed out in connection with the ~~SEC~~offer described herein and may neither directly or indirectly be distributed or made available to any person or entity other than its recipients. It may not be used in connection with any other offer and shall in particular not be copied and/or distributed to the public in Switzerland or from Switzerland. This prospectus does not constitute an issue prospectus as that term is understood pursuant to Article 652a and/or 1156 of the ~~Exchange Act; (ii) its principal executive office is located in Washington; (iii) (A) more than 10%~~Swiss Federal Code of ~~its shareholders~~Obligations.

~~VALIDITY OF THE NEW NOTES~~

The validity of ~~record resident in Washington, (B) more than 10% of its shares are owned~~the New Notes will be passed upon for us by ~~Washington residents or (C) one thousand or more shareholders of record reside in Washington; (iv) a majority of its employees, together~~Simpson Thacher & Bartlett LLP, Palo Alto, California, and, with ~~those of its subsidiaries, are residents~~respect to matters of Washington or the corporation, together with its subsidiaries, employs more than one thousand residents in Washington and (v) a majority of the corporation's tangible assets, together with those of its subsidiaries, are located in Washington or the corporation and its subsidiaries have more than $50 million worth of tangible assets in Washington. A target corporation that meets the definition may not "opt out" of this statute. Only certain "significant business transactions" are prohibited under Washington law. A significant business transaction is defined broadly to include any of the following: (i) any merger or consolidation with the acquiring person; (ii) any sale, transfer or other disposition of assetslaw, by Keith R. Dolliver, Esq. our Deputy General Counsel. Certain legal matters relating to the ~~acquiring person if~~securities offered hereby will be passed upon for the ~~assets have a market value equal to~~Dealer Managers by Weil, Gotshal & Manges LLP, New York, New York.

Mr. Dolliver beneficially owns, or greater than 5% of the aggregate market value of all of the corporation's assets; (iii) the termination of 5% or more of the employees of the target corporation employed in Washington; (iv) any issuance, transfer or redemption of shares, options, warrants or rights to acquire shares of the corporation to the acquiring person, except for transfers in a conversion or exchange or a pro rata distribution; (v) the liquidation or dissolution of a target corporation proposed by or pursuant to an agreement with the acquiring person; (vi) a reclassification of securities involving, proposed by or pursuant to an agreement with an acquiring person or (vii) any receipt by the acquiring person of any loans, advances, guarantees, pledges and other financial benefits. In both Minnesota and Washington, an interested shareholder or acquiring person is one who owns 10% of the outstanding shares, and in both states, a person is deemed to beneficially own shares which that person has the right to acquire, an aggregate of less than 0.01% of the common stock of Microsoft Corporation.

~~Weil, Gotshal & Manges LLP performs legal services for us from time to time.~~

~~EXPERTS~~

The financial statements incorporated in this Prospectus by reference from Microsoft Corporation’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020, and the effectiveness of Microsoft Corporation’s internal control over financial reporting, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated herein by reference. Such financial statements have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.

With respect to the unaudited interim financial information for the periods ended December 31, 2020 and 2019 and September 30, 2020 and 2019, which is incorporated herein by reference, Deloitte & Touche LLP, an independent registered public accounting firm, have applied limited procedures in accordance with the standards of the Public Company Accounting Oversight Board (United States) for a review of such information. However, as stated in their reports included in Microsoft Corporation’s Quarterly Reports on Form 10-Q for the quarters ended December 31, 2020 and September 30, 2020, and incorporated by reference herein, they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their reports on such information should be restricted in light of the limited nature of the review procedures applied. Deloitte & Touche LLP are not subject to the liability provisions of Section 11 of the Securities Act of 1933, as amended (the “Securities Act”), for their reports on the unaudited interim financial information because those reports are not “reports” or a “part” of the Registration Statement prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Securities Act.

~~WHERE YOU CAN FIND MORE INFORMATION~~

We file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains an Internet web site that contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC. The public can obtain any documents that we file electronically with the SEC at http://www.sec.gov.

We also make available, free of charge, on or through our Internet web site (http://www.microsoft.com) our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements on Schedule 14A and, if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) of the ~~exercise~~Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Please note, however, that we have not incorporated any other information by reference from our Internet web site, other than the documents listed in this prospectus under the heading “Incorporation of ~~stock options, warrants~~Certain Information by Reference.” In addition, you may request copies of these filings at no cost through our Investor Relations Department at: Microsoft Corporation, One Microsoft Way, Redmond, Washington 98052-6399, telephone: 800-285-7772 (U.S.) or (425) 706-4400 (international), e-mail: msft@microsoft.com.

We have filed with the SEC a registration statement on Form S-4 relating to the New Notes covered by this prospectus. This prospectus is a part of the registration statement and does not contain all the information in the registration statement. Whenever a reference is made in this prospectus to a contract or other ~~rights. An acquiring person must wait five years in Washington to engage in prohibited business combinations, while~~document of ours, the ~~waiting period~~reference is only ~~four years in Minnesota. Washington also has~~ a ~~potentially broader definition~~summary and you should refer to the exhibits that are a part of the registration statement for a ~~business combination, which encompasses a larger variety~~copy of ~~transactions. 52~~ ~~Under both statutes, an otherwise prohibited business combination may be permitted only by advance board~~the contract or ~~board committee approval. In addition,~~other document.

~~ANNEX A~~

~~FORMULA TO DETERMINE THE TOTAL EXCHANGE CONSIDERATION AND~~

~~EXCHANGE CONSIDERATION~~

~~Definitions:~~


YLD		The exchange offer yield equals the sum of (i) the bid-side yield of the 30-year Reference UST Security set forth with respect to each series of Existing Notes on the front cover of this prospectus, as calculated by the Dealer Managers in accordance with standard market practice at the Pricing Time, as reported on the Bloomberg Government Pricing Monitor or any recognized quotation source selected by the Dealer Managers in their sole discretion if the Bloomberg Government Pricing Monitor is not available or is manifestly erroneous, plus (ii) the applicable fixed spread in basis points, expressed as a decimal number, set forth with respect to each series of Existing Notes on the front cover of this prospectus.

CPN		The contractual rate of interest payable on the Existing Note, expressed as a decimal number.

N		The number of semi-annual interest payments on the Existing Note, from, but not including, the expected Settlement Date to, and including, the applicable maturity date or par call date (as applicable).

S		The number of days from, and including, the semi-annual interest payment date immediately preceding the expected Settlement Date to, but not including, the expected Settlement Date. For the avoidance of doubt, if the Settlement Date is a semi-annual interest payment date for the Existing Note, S will equal zero for calculations of the Existing Note. The number of days is computed using the 30/360 day count method.

		Summate. The term in the brackets to the right of the summation symbol is separately calculated “N” times (substituting for “k” in that term each whole number shown between 1 and N, inclusive), and the separate calculations are then added together.

exp		Exponentiate. The term to the left of “exp” is raised to the power indicated by the term to the right of “exp.”

Total Exchange Consideration		The price for each $1,000 principal amount of Existing Notes validly tendered prior to the Early Exchange Time and not validly withdrawn prior to the Expiration Time, to be paid in a combination of a principal amount of New Notes and cash. The Total Exchange Consideration includes the Early Exchange Premium. Each of the Total Exchange Consideration and the Cash Component of the Total Exchange Consideration will be rounded to the nearest cent.


Exchange Consideration		The price for each $1,000 principal amount of Existing Notes validly tendered after the Early Exchange Time but prior to the Expiration Time, to be paid in a combination of a principal amount of New Notes and cash. The Exchange Consideration is equal to the Total Exchange Consideration, minus the Early Exchange Premium. The Cash Component of the Exchange Consideration will be rounded to the nearest cent.

Cash Component		The portion of the Total Exchange Consideration or Exchange Consideration, as applicable, to be paid in cash.

Cash Payment Percent of Premium		The percent (as set forth with respect to each series of Existing Notes on the front cover of this prospectus) of the amount by which the Total Exchange Consideration (as calculated at the Pricing Time and in accordance with the formula set forth in this Annex A) exceeds $1,000 per $1,000 principal amount of such Existing Notes.

Early Exchange Premium		$30 principal amount of New 2052 Notes or $30 principal amount of New 2062 Notes, as applicable, for each $1,000 principal amount of Existing Notes validly tendered and not validly withdrawn prior to the Expiration Time.

TOTAL EXCHANGE CONSIDERATION =

For the ~~Washington statute provides~~avoidance of doubt, for the Existing Notes that have par call dates, if the ~~corporation proposes a merger or sale~~applicable Exchange Offer Yield as determined in accordance with this prospectus is less than the contractual annual rate of ~~assets, or does not oppose a tender offer, all acquiring persons are released from~~interest, then such Total Consideration will be calculated based on the five year prohibition and may compete with the company- sponsored transaction in certain circumstances. The Minnesota statute does not have a comparable provision. Under both Minnesota and Washington law, covered corporations may not opt out of the business combination statute. Other Anti-Takeover Provisions. The Minnesota Business Corporation Act includes three other provisions that may be applicable in the takeover context that are not included in the Washington Business Corporation Act. These provisions address a corporation's use of golden parachutes, greenmail and the standard of conduct of the board of directors in connection with the consideration of takeover proposals. Section 302A.255, Subdivision 3, of the Minnesota Business Corporation Act prohibits a publicly-held corporation from entering into or amending agreements (commonly referred to as "golden parachutes") that increase current or future compensation of any officer or director during any tender offer or request or invitation for tenders. Section 302A.553, Subdivision 3, of the Minnesota Business Corporation Act limits the ability of a corporation to repurchase shares at a price above market value (commonly referred to as "greenmail"). The statute provides that a publicly-held corporation is prohibited from purchasing or agreeing to purchase any shares from a person who beneficially owns more than 5% of the voting power of the corporationpar call date; if the ~~shares had been beneficially owned by that person for less~~applicable Exchange Offer Yield as determined in accordance with this prospectus is higher than ~~two years, and if~~or equal to the ~~purchase price would exceed~~contractual annual rate of interest, then such Total Consideration will be calculated based on the ~~market value~~maturity date.

~~EXCHANGE CONSIDERATION =Total Exchange Consideration-Early Exchange Premium~~

~~CASH COMPONENT = Cash Payment Percent of ~~those shares. However, such a purchase will not violate~~Premium×(Total Exchange Consideration—$1,000)~~

~~ANNEX B~~

~~FINAL PRICING TERMS OF THE EXCHANGE OFFERS~~

Below are the statute if the purchase is approved at a meeting of the shareholders by a majority of the voting power of all shares entitled to vote or if the corporation makes an offer of at least equal value per share to all holders of shares of the class or series and to all holders of any class or series into which the securities may be converted. Section 302A.251, Subdivision 5, of the Minnesota Business Corporation Act authorizes the board of directors, in considering the best interests of the corporation (includingpricing terms with respect to ~~a proposed acquisition~~Microsoft’s offer to exchange (the “Pool 1 Offer”) the fourteen series of ~~an interest~~notes described in the ~~corporation),~~table below (collectively, the “Pool 1 Notes”) for a new series of Microsoft’s 2.921% notes due March 17, 2052 (the “New 2052 Notes”) and a cash payment, as applicable. For each $1,000 principal amount of Pool 1 Notes validly tendered and not validly withdrawn prior to ~~consider~~ the ~~interest~~Expiration Time and accepted by the Company, the following table sets forth the yield, the Total Exchange Consideration, the principal amount of the ~~corporation's employees, customers, suppliers~~New 2052 Notes and ~~creditors,~~ the ~~economy~~amount of the ~~state~~cash payment, as applicable:

Pool 1 Table

Title of
Security
CUSIP
Number Acceptance
Priority
Level Reference
UST
Security⁽¹⁾ Fixed
Spread
(basis
points) Yield⁽²⁾ Early
Exchange
Premium⁽³⁾ Total
Exchange
Consideration⁽³⁾⁽⁴⁾ Principal
Amount
of New
Notes⁽⁵⁾ Cash
Payment⁽³⁾
4.875% Notes due 2043
594918AX2 1 30-year +45 2.671 % $ 30 $ 1,367.81 $ 1,000.00 $ 367.81
4.450% Notes due 2045
594918BL7 2 30-year +50 2.721 % $ 30 $ 1,304.37 $ 1,000.00 $ 304.37
4.250% Notes due 2047
594918CA0

3

30-year +55 2.771 % $ 30 $ 1,268.30 $ 1,000.00 $ 268.30
5.300% Notes due 2041
594918AM6 4 30-year +30 2.521 % $ 30 $ 1,432.59 $ 1,000.00 $ 432.59
5.200% Notes due 2039
594918AD6 5 30-year +20 2.421 % $ 30 $ 1,407.16 $ 1,000.00 $ 407.16
4.500% Notes due 2040
594918AJ3 6 30-year +25 2.471 % $ 30 $ 1,312.94 $ 1,000.00 $ 312.94
3.700% Notes due 2046
594918BT0 7 30-year +52 2.741 % $ 30 $ 1,172.18 $ 1,000.00 $ 172.18
3.750% Notes due 2043
594918AU8 8 30-year +45 2.671 % $ 30 $ 1,176.34 $ 1,000.00 $ 176.34
3.750% Notes due 2045
594918BD5 9 30-year +45 2.671 % $ 30 $ 1,186.84 $ 1,000.00 $ 186.84
3.500% Notes due 2042
594918AR5 10 30-year +35 2.571 % $ 30 $ 1,153.54 $ 1,000.00 $ 153.54
4.100% Notes due 2037
594918BZ6 11 30-year +5 2.271 % $ 30 $ 1,236.37 $ 1,000.00 $ 236.37
4.200% Notes due 2035
594918BK9 12 30-year -10 2.121 % $ 30 $ 1,252.63 $ 1,000.00 $ 252.63
3.450% Notes due 2036
594918BS2 13 30-year -7 2.151 % $ 30 $ 1,164.75 $ 1,000.00 $ 164.75
3.500% Notes due 2035
594918BC7 14 30-year -15 2.071 % $ 30 $ 1,166.48 $ 1,000.00 $ 166.48
(1)
The “30-year Reference UST Security” refers to the 1.625% U.S. Treasury Notes due November 15, 2050.
(2)
Reflects the bid-side yield of the 30-year Reference UST Security as of the Pricing Time of 2.221% plus the applicable Fixed Spread, calculated in accordance with the procedures set forth in this prospectus.
(3)
Per $1,000 principal amount of Pool 1 Notes.
(4)
Holders who validly tender Pool 1 Notes after the Early Exchange Time will not be eligible to receive the Early Exchange Premium of $30 principal amount of the New 2052 Notes for each $1,000 principal amount of Pool 1 Notes validly tendered and not withdrawn. For the avoidance of doubt, the $30 per $1,000 Early Exchange Premium is included within the Total Exchange Consideration and is not in addition to the Total Exchange Consideration.
(5)
Does not reflect any accrued and unpaid interest. The Company will pay accrued and unpaid interest on the Existing Notes up to, but not including, the Settlement Date.

Below are the pricing terms with respect to Microsoft’s offer to exchange (the “Pool 2 Offer”) the four series of notes described in the table below (collectively, the “Pool 2 Notes”) for a new series of Microsoft’s 3.041% notes due March 17, 2062 (the “New 2062 Notes”) and ~~nation, community~~a cash payment, as applicable. For each $1,000 principal amount of Pool 2 Notes validly tendered and ~~social considerations~~not validly withdrawn prior to the Expiration Time and accepted by Microsoft, the following table sets forth the yield, the Total Exchange Consideration, the principal amount of the New 2062 Notes and the ~~long-term as well as short-term interests~~amount of the ~~corporation~~cash payment, as applicable:

Pool 2 Table⁽¹⁾

Title of
Security
CUSIP
Number Acceptance
Priority
Level Reference
UST
Security⁽²⁾ Fixed
Spread
(basis
points) Yield⁽³⁾ Early
Exchange
Premium⁽⁴⁾ Total
Exchange
Consideration⁽⁴⁾⁽⁵⁾ Principal
Amount
of New
Notes⁽⁶⁾ Cash
Payment⁽⁴⁾
3.950% Notes due 2056
594918BU7 1 30-year +67 2.891 % $ 30 $ 1,231.73 $ 1,000.00 $ 231.73
4.750% Notes due 2055
594918BM5 2 30-year +67 2.891 % $ 30 $ 1,401.56 $ 1,016.06 $ 385.50
4.500% Notes due 2057
594918CB8 3 30-year +67 2.891 % $ 30 $ 1,354.97 $ 1,000.00 $ 354.97
4.000% Notes due 2055
594918BE3 4 30-year +67 2.891 % $ 30 $ 1,236.52 $ 1,000.00 $ 236.52
(1)
The figures in this table reflect any optional adjustments of the Total Exchange Consideration as permitted under the terms and conditions in this prospectus.
(2)
The “30-year Reference UST Security” refers to the 1.625% U.S. Treasury Notes due November 15, 2050.
(3)
Reflects the bid-side yield of the 30-year Reference UST Security as of the Pricing Time of 2.221% plus the applicable Fixed Spread, calculated in accordance with the procedures set forth in this prospectus.
(4)
Per $1,000 principal amount of Pool 2 Notes.
(5)
Holders who validly tender Pool 2 Notes after the Early Exchange Time will not be eligible to receive the Early Exchange Premium of $30 principal amount of the New 2062 Notes for each $1,000 principal amount of Pool 2 Notes validly tendered and not withdrawn. For the avoidance of doubt, the $30 per $1,000 Early Exchange Premium is included within the Total Exchange Consideration and is not in addition to the Total Exchange Consideration.
(6)
Does not reflect any accrued and unpaid interest. The Company will pay accrued and unpaid interest on the Existing Notes up to, but not including, the Settlement Date.
The aggregate principal amount of Pool 1 Notes and ~~its shareholders,~~Pool 2 Notes of each series that are accepted for exchange will be based on the order of acceptance priority for such series, as applicable, as set forth in the tables above, up to the New 2052 Notes Issue Cap and up to the New 2062 Notes Issue Cap, respectively. Holders who validly tender the Existing Notes after the Early Exchange Time but on or before the Expiration Time will only be eligible to receive the Exchange Consideration, which equals the Total Exchange Consideration minus the Early Exchange Premium as detailed in the tables above.
In addition to the principal amount of New Notes and applicable cash payment specified in the tables above, holders with Existing Notes that are accepted for exchange will receive a cash payment representing (i) all or a portion of the accrued and unpaid interest to, but not including, the ~~possibility that these interests~~Settlement Date, and (ii) amounts due in lieu of any fractional amounts of New Notes, in each case, as described in this prospectus.

~~The Exchange Agent for the Exchange Offers is:~~

~~D.F. King & Co., Inc.~~


By Regular, Registered or Certified Mail; Hand or Overnight Delivery: 48 Wall Street, 22^nd Floor New York, New York 10005 Attention: Andrew Beck		By Facsimile Transmission (for Eligible Institutions Only): (212) 709-3328 Attention: Andrew Beck

~~For Confirmation by Telephone:~~

~~(212) 269-5552~~

~~The Information Agent for the Exchange Offers is:~~

~~D.F. King & Co., Inc.~~

~~48 Wall Street, 22^nd Floor~~

~~New York, New York 10005~~

~~Banks and brokers: (212) 269-5550~~

~~Toll Free: (877) 864-5060~~

~~Email: microsoft@dfking.com~~

~~Website: https://www.dfking.com/microsoft~~

Questions or requests for assistance related to the Exchange Offers or for additional copies of this prospectus may be ~~best served by~~directed to the ~~continued independence~~Information Agent at its telephone numbers and address listed above.

~~You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offers.~~

~~The Joint Lead Dealer Managers for the Exchange Offers are:~~


Morgan Stanley		Wells Fargo Securities

1585 Broadway, 4th Floor New York, NY 10036 Toll Free: (800) 624-1808 Collect: (212) 761-1057 Attn: Liability Management Group		550 South Tryon Street, 5th Floor Charlotte, North Carolina 28202 Toll Free: (866) 309-6316 Collect: (704) 410-4756 Attn: Liability Management Group

~~The Senior Co-Dealer Managers for the Exchange Offers are:~~


Barclays		Credit Suisse

~~The Co-Dealer Managers for the Exchange Offers are:~~


Academy Securities	CastleOak Securities, L.P.	Drexel Hamilton	Loop Capital Markets
MFR Securities, Inc.	Mischler Financial Group, Inc.	Ramirez & Co., Inc.	Siebert Williams Shank

~~PART II~~

~~INFORMATION NOT REQUIRED IN PROSPECTUS~~

~~Item 20. Indemnification of ~~the corporation. Directors' Standard~~Directors and Officers.~~

Sections 23B.08.510 and 23B.08.570 of ~~Care and Personal Liability Both the Minnesota Business Corporation Act and~~ the Washington Business Corporation Act ~~provide that~~(“WBCA”) authorizes Washington corporations to indemnify their officers and directors under certain circumstances against expenses and liabilities incurred in legal proceedings involving them as a ~~director shall discharge the director's duties in good faith, in a manner the director reasonably believed to be in the best interests~~result of their service as an officer or director. Section 23B.08.560 of the WBCA authorizes a corporation ~~and with the care an ordinarily prudent person~~by provision in a like position would have exercised under similar circumstances. A director who so performs those duties may not be held liable by reason of being a director or having been a director of the corporation. Limitation or Elimination of Directors' Personal Liability The Minnesota Business Corporation Act provides that, if theits articles of incorporation ~~so provide, the personal liability of~~to indemnify or agree to indemnify a director ~~for breach of fiduciary duty as~~made a ~~director may be eliminated~~party to a proceeding, or ~~limited, but that~~obligate itself to advance or reimburse expenses incurred in a proceeding, without regard to the ~~articles may not limit or eliminate such liability for (a) any breach~~limitations imposed by Sections 23B.08.510 through .550 of the ~~director's duty~~WBCA; provided, however, that no such indemnity shall be made for or on account of ~~loyalty to the corporation or its shareholders, (b)~~(a) acts or omissions ~~not in good faith or that involve~~of the director finally adjudged to be intentional misconduct or a knowing violation of law, ~~(c)~~(b) conduct of the ~~payment~~director finally adjudged to be in violation of Section 23B.08.310 of the WBCA (relating to unlawful ~~dividends, stock repurchases~~distributions) or ~~redemptions, (d)~~(c) any transaction inwith respect to which the director received an improper personal benefit, (e) certain violations of the Minnesota securities laws and (f) any act or omission occurring prior to the date when the provision in the articles 53 eliminating or limiting liability becomes effective. Great Plains' articles of incorporation contain a provision eliminating the personal liability of its directors for monetary damages for breach of fiduciary duty as a director, subject to the foregoing limitations, and specifyingit was finally adjudged that any repeal or modification of these limits on director liability may not adversely affect any right or protection of a director existing at the time of such repeal or modification. The Washington Business Corporation Act provides that the Articles of Incorporation may not eliminate or limit the liability of a director for: (i) acts or omissions involving intentional misconduct or a knowing violation of law; (ii) approval of certain distributions contrary to law or (iii) any transaction from which the director personally ~~receives~~received a benefit in money, property, or services to which the director is not legally entitled. ~~In Microsoft's~~

The Registrant’s Amended and Restated Articles of Incorporation ~~these limits on director liability are deemed to be contract rights that are to be automatically amended as authorized by changes in applicable law so that~~require indemnification of the ~~liability~~Registrant’s officers and directors and advancement of ~~a director shall be eliminated or limited~~expenses to the fullest extent not prohibited by applicable ~~law,~~law. The Registrant’s Amended and any repeal or modification of the relevant provision of Microsoft's Articles of Incorporation shall not adversely affect any right or protection of a director of Microsoft with respect to any acts or omissions of such director occurring prior to such repeal or modification. Neither the Minnesota Business Corporation Act nor the Washington Business Corporation Act limit a director's liability for violation of certain federal laws including the federal securities laws. Indemnification Except as limited by a corporation's articles of incorporation or bylaws, the Minnesota Business Corporation Act generally provides for mandatory indemnification of persons acting in an official capacity on behalf of the corporation if such a person acted in good faith, received no improper personal benefit, acted in a manner the person reasonably believed to be in or not opposed to the best interest of the corporation, and, in the case of a criminal proceeding, had no reasonable cause to believe that the conduct was unlawful. Great Plains' bylaws provide for indemnification to the full extent provided by Minnesota law. Microsoft'sRestated Articles of Incorporation provide ~~that Microsoft shall indemnify~~for procedures for those seeking indemnification and/or advancement of expenses. In addition, as authorized by Section 23B.08.320 of the WBCA, the Registrant’s Amended and Restated Articles of Incorporation contain a provision eliminating the personal liability of directors to the Registrant or its ~~directors and officers~~shareholders for ~~expenses and liabilities incurred by them~~monetary damages for conduct as a ~~result of their service as directors and officers, provided that no such indemnification shall be provided on account of: (i) acts or~~director, except for (a) omissions ofinvolving intentional misconduct by the director ~~or officer finally adjudged to be intentional misconduct~~ or a knowing violation of law by the ~~law; (ii) approval~~director, (b) conduct violating Section 23B.08.310 of ~~certain distributions contrary to law~~the WBCA or ~~(iii)~~(c) any transaction ~~with respect~~from which the director will personally receive a benefit in money, property or services to which the director ~~or officer~~ is ~~finally adjudged to have received a benefit to which he or she was~~ not legally entitled. ~~This comprehensive language~~

The Registrant has established an indemnification trust (“2016 Directors’ Trust”) to fund the Registrant’s obligations to indemnify and/or advance expenses to directors arising from their board service in the event the Registrant does not or is ~~intended~~financially unable to provide the ~~broadest~~ indemnification and/or advancement. As required by the 2016 Directors’ Trust agreement, the Registrant has funded a minimum balance of ~~directors and officers not prohibited by Washington law, and to authorize indemnification~~principal assets of directors and officers of amounts paid in settlement of actions brought on behalf of Microsoft, commonly known as derivative actions. Microsoft's Board of Directors believes that the potential personal liability that can result from derivative actions arising out of an individual's service as a director or officer of a corporation is a major concern for individuals who are asked to serve in such positions. Microsoft's Board of Directors has concluded that by providing indemnification to Microsoft's directors and officers for amounts paid in settlement of derivative actions, subject to the restrictions set forthno less than $50 million in the ~~Washington Business Corporation Act, Microsoft will be able~~trust. The Registrant also has an indemnification trust (“2016 Officers’ Trust”) that funds the Registrant’s indemnification obligations to ~~effectively maintain its ability to recruit~~certain past and ~~retain individuals who possess the qualities and experience necessary to serve~~present officers arising from their activities as directors and officers of Microsoft. Microsoft is not aware of any pending or threatened litigation to which the above-described limitation of directors' liability would apply. Shareholder Voting Under Minnesota law, action on certain matters, including the sale, lease or exchange of all or substantially all of the corporation's property or assets, mergers and consolidations and voluntary dissolution, must be approvedsuch. As required by the ~~affirmative vote~~2016 Officers’ Trust agreement, the Registrant has funded a minimum balance of ~~the holders~~principal assets of ~~a majority of the voting power of all shares entitled 54~~ ~~to vote. Washington law provides, however, that unless specified to the contrary~~no less than $50 million in the ~~articles of incorporation, the affirmative vote of two-thirds of all votes entitled~~trust. The 2016 Directors’ Trust and 2016 Officers’ Trust are successors to ~~be cast is required for approval~~certain trusts originally established in the case of a merger, consolidation, sale of all or substantially all of its assets not in the ordinary course of its business or dissolution, instead of a simple majority, which is the Minnesota requirement. Microsoft's Articles of Incorporation provide that only a majority of votes entitled to be cast is required for approval of a merger, share exchange, sale of substantially all of Microsoft's assets or dissolution. Appraisal Rights in Connection with Corporate Reorganizations1993, and Other Actions Under Minnesota law and Washington law, shareholders have the right, in some circumstances, to dissent from certain corporate transactions by demanding payment in cash for their shares equal to the fair value as determined by agreement with the corporation or by a court in an action timely brought by the dissenters. Both laws generally afford dissenters' rights upon certain amendments to the articles that materially and adversely affect the rights or preferences of the shares of the dissenting shareholder, upon the sale of substantially all corporate assets and upon merger or exchange by a corporation, regardless of whether the shares of the corporation are listed on a national securities exchange or widely held. See "Rights of Dissenting Great Plains Shareholders" on page 59. Cumulative Voting for Directors Minnesota law provides that each shareholder entitled to vote for directors has the right to cumulate those votes in the election of directors by giving written notice of intent to do so, unless the corporation's articles of incorporation provide otherwise. Great Plains' articles of incorporation prohibit such accumulation of votes in elections of directors. Under Washington law, no such cumulative voting exists, unless the certificate of incorporation provides otherwise. Microsoft's Articles of Incorporation do not provide for cumulative voting in elections of directors. Conflicts of Interest Under Minnesota law, a contract or transaction between a corporation and one or more of its directors, or an entity in or of which one or more of the corporation's directors are directors, officers or legal representatives or have a material financial interest, is not void or voidable solely by reason of the conflict, provided that (i) the contract or transaction is fair and reasonable at the time it is authorized, approved or ratified, (ii) the material facts of the contract or transaction are fully disclosed to or known by the shareholders and approved by (a) the holders of two-thirds of the voting power of shares entitled to vote held by disinterested shareholders or (b) the unanimous affirmative vote of all shareholders, whether or not entitled to vote, (iii) it is authorized in good faith by a majority of the disinterested members of the board of directors holding a quorum after disclosure of the relationship or interest or (iv) the contract or transaction is a merger approved in accordance with the Minnesota Business Corporation Act. The Washington Business Corporation Act sets forth a safe harbor for transactions between a corporation and one or more of its directors. A conflicting interest transaction may not be enjoined, set aside or give rise to damages if: (i) it is approved by a majority of qualified directors; (ii) it is approved by the affirmative vote of all qualified shares or (iii) at the time of commitment, the transaction was fair to the corporation. For purposes of this provision, "qualified director" is one who does not have: (a) a conflicting interest respecting the transaction or (b) a familial, financial, professional or employment relationship with a second director which relationship would reasonably be expected to exert an influence on the first director's judgment when voting on the transaction. "Qualified shares" are defined generally as shares other than those beneficially owned, or the voting of which is controlled, by a director who has a conflicting interest respecting the transaction. Classified Board of Directors Both Minnesota and Washington permit a corporation's articles or bylaws to provide for a classified board of directors. Washington permits electing one or more directors by the holders of one or more specified classes 55 or series of shares. In addition, the statute permits staggered terms for directors, up to a maximum of three separate groups. Minnesota law does not limit the number of classes. Great Plains' bylaws provide for a classified board of directors under which directors are elected to three-year terms, with one-third of the directors being elected each year. Microsoft's articles and bylaws do not provide for election of directors by class or series or in staggered terms. Removal of Director Under Minnesota and Washington law, in general, unless a corporation's articles provide otherwise, a director may be removed with or without cause by the affirmative vote of a majority of the shareholders. Under Minnesota law, the bylaws may also establish a different standard for removal of directors. Great Plains' bylaws provide that in order for the shareholders to remove a director it must be for cause and by the affirmative vote of a majority of the shareholders holding a majority of the shares entitled to vote at an election of directors. A director named by the board of directors to fill a vacancy may be removed from office at any time, with or without cause, by the affirmative vote of the remaining directors if the shareholders have not elected directors in the interim between the time of the appointment to fill the vacancy and the time of the removal. Vacancies on Board of Directors Under Minnesota law, unless the articles or bylaws provide otherwise, (a) a vacancy on a corporation's board of directors may be filled by the vote of a majority of directors then in office, although less than a quorum; and (b) a newly created directorship resulting from an increase in the number of directors may be filled by the board. Any director so elected shall hold office only until a qualified successor is elected at the next regular or special meeting of shareholders. Under Washington law, a vacancy on a corporation's board of directors may be filled by a majority of the remaining directors, even if less than a quorum, or by the affirmative vote of a majority of the outstanding voting shares, unless otherwise provided in the articles of incorporation or bylaws. A newly created directorship, resulting from an increase in the number of directors, may be filled by the board. A director's term continues until the next annual shareholders' meeting. Annual Meetings of Shareholders Minnesota law provides that if a regular meeting of shareholders has not been held during the immediately preceding fifteen months, a shareholder or shareholders holding 3% or more of the voting power of all shares entitled to vote may demand a regular meeting of shareholders. Washington law provides that the corporation shall hold meetings at a time stated or fixed in the bylaws. Microsoft's Bylaws provide that the annual meeting be held at a time and date within 150 days of the end of the fiscal year, to be determined by the board or an authorized committee of the board. Special Meetings of Shareholders Minnesota law and Great Plains' bylaws provide that the chief executive officer, the chief financial officer, two or more directors, a person authorized in the articles or bylaws to call a special meeting or a shareholder holding 10% or more of the voting power of all shares entitled to vote, may call a special meeting of the shareholders, except that a special meeting concerning a business combination must be called by 25% of the voting power of all shares entitled to vote. Under Washington law, the board of directors or those persons authorized by the corporation's articles of incorporation or bylaws may call a special meeting of the corporation's shareholders, as well as shareholders holding 10% of the voting power. Under Washington law, the right of shareholders of a public company to call a special meeting may be limited by the articles of 56 incorporation. Microsoft's articles of incorporation provide that special meetings are to be held only upon notice given by the board of directors. Voluntary Dissolution Minnesota law provides that a corporation may be dissolved by the voluntary action of holders of a majority of a corporation's shares entitled to vote at a meeting called for the purpose of considering such dissolution. Washington law provides that voluntary dissolution of a corporation first must be deemed advisable by a majority of the board of directors and then approved by two- thirds of the outstanding shares entitled to vote (or a lesser vote as stated in articles, but not less than a majority.) Involuntary Dissolution Minnesota law provides that a court may dissolve a corporation in an action by a shareholder where: (a) the situation involves a deadlock in the management of corporate affairs and the shareholders cannot break the deadlock; (b) the directors have acted fraudulently, illegally or in a manner unfairly prejudicial to the corporation; (c) the shareholders are divided in voting power for two consecutive regular meetings to the point where successor directors are not elected; (d) there is a case of misapplication or waste of corporate assets or (e) the duration of the corporation has expired. Washington law does not have a parallel provision. Inspection of Shareholder Lists Under Minnesota law, a shareholder, beneficial owner or a holder of a voting trust certificate of a publicly held corporation has, upon written demand stating the purpose and acknowledged or verified by a notary public or by other proper means under Minnesota law, a right at any reasonable time to examine and copy the corporation's share register and other corporate records reasonably related to the stated purpose and described with reasonable particularity in the written demand upon demonstrating the stated purpose to be a proper purpose. The acknowledged or verified demand must be directed to the corporation at its registered office in Minnesota or at its principal place of business. A proper purpose is one reasonably related to the person's interest as a shareholder, beneficial owner or a holder of a voting trust certificate of the corporation. Under Washington law, any shareholder has an absolute right, upon written demand, to examine and copy, in person or by a legal representative, at any reasonable time, the corporation's share register. Amendment of the Bylaws Minnesota law provides that, unless reserved by the articles to the shareholders, the power to adopt, amend or repeal a corporation's bylaws is vested in the board, subject to the power of the shareholders to adopt, amend or repeal the bylaws. After adoption of initial bylaws, the board of a Minnesota corporation cannot adopt, amend or repeal a bylaw fixing a quorum for meetings of shareholders, prescribing procedures for removing directors or filling vacancies in the board or fixing the number of directors or their classifications, qualifications or terms of office, but may adopt or amend a bylaw to increase the number of directors. Washington law provides that either the board or shareholders may amend the bylaws. Amendment of the Articles Under Minnesota law, before the shareholders may vote on an amendment to the articles of incorporation, either a resolution to amend the articles must have been approved by the affirmative vote of the majority of the directors present at the meeting where such resolution was considered or the amendment must have been proposed by shareholders holding 3% or more of the voting power of the shares entitled to vote. Amending the articles of incorporation requires the affirmative vote of the holders of the majority of the voting power present and entitled to vote at the meeting (and of each class, if entitled to vote as a class), unless the articles of incorporation require a larger proportion. Minnesota law provides that a proposed amendment may be voted upon by the holders of a class or series even if the articles of incorporation would deny that right, if among other things, the proposed amendment would increase or decrease the aggregate number of authorized shares of 57 the class or series, change the rights or preferences of the class or series, create a new class or series of shares having rights and preferences prior and superior to the shares of that class or series or limit or deny any existing preemptive right of the shares of the class or series. The Washington Business Corporation Act authorizes a corporation's board of directors to make various changes to its articles of incorporation without shareholder approval including changes of corporate name, changes of the number of outstanding shares necessary to effectuate a stock split or stock dividend in the corporation's own shares and changes of the par value of its shares. Other amendments to a corporation's articles of incorporation must be recommended to the shareholders by the board of directors, unless the board determines that because of a conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the shareholders with the amendment. For the amendment to be adopted, it must be approved by a majority of all votes entitled to be cast by each voting group that has a right to vote on the amendment. Proxies Both Minnesota law and Washington law permit proxies of definite duration. In the event the proxy does not specify its duration, under both Minnesota and Washington law it is valid for eleven months. Under Minnesota and Washington law, no appointment of a proxy is irrevocable unless the appointment is coupled with an interest in the shares or in the corporation. Preemptive Rights Under both Minnesota and Washington law, shareholders have preemptive rights to acquire a certain fraction of the unissued securities or rights to purchase securities of a corporation before the corporation may offer them to other persons, unless the corporation's articles of incorporation otherwise provide. Great Plains' articles of incorporation provide that no such preemptive right exists in Great Plains' shareholders. Microsoft's articles of incorporation provide that Microsoft's shareholders have no preemptive rights. Dividends Generally, under both Minnesota and Washington law, a corporation may pay a dividend if its board determines that the corporation will be able to pay its debts in the ordinary course of business after paying the dividend and if, among other things, the dividend payment does not reduce the remaining net assets of the corporation below the aggregate preferential amount payable in the event of liquidation to the holders of the shares having preferential rights, unless the payment is made to those shareholders in the order and to the extent of their respective priorities. Shareholders' Action Without a Meeting Under both Minnesota and Washington law, any action required or permitted to be taken at a shareholders' meeting may be taken without a meeting by written consent signed by all of the shareholders entitled to vote on such action. This power can be restricted by a Washington corporation's articles. Microsoft's articles of incorporation do not restrict such shareholder action without a meeting. Stock Repurchases A Minnesota corporation may acquire its own shares if, after the acquisition, it is able to pay its debts as they become due in the ordinary course of business and if enough value remains in the corporation to satisfy all preferences of senior securities. Under Washington law, a corporation may purchase or redeem shares of any class so long as the purchase does not (a) impair the corporation's ability to pay its debts as they become due in the ordinary course of business, or (b) cause its total assets to become less than its total liabilities (plus, unless the corporation's articles of incorporation provide otherwise, preferential rights of senior securities). 58 RIGHTS OF DISSENTING GREAT PLAINS SHAREHOLDERS The following is a brief summary of the rights of holders of Great Plains common stock to dissent from the merger and receive cash equal to the "fair value" of their Great Plains common stock instead of receiving shares of Microsoft common stock. This summary is not exhaustive, and you should read Sections 320A.471 and 302A.473 of the Minnesota Business Corporation Act, which are attached to this proxy statement/prospectus as Annex C. If you are contemplating the possibility of dissenting from the merger, you should carefully review the text of Annex C, particularly the procedural steps required to perfect dissenters' rights, which are complex. You should also consult your legal counsel. If you do not fully comply with the procedural requirements of the statute, you will lose your dissenters' rights. Who may exercise appraisal rights Under Minnesota law, shareholders of Great Plains have the right, by fully complying with the applicable provisions of Sections 301A.471 and 302A.473, to dissent with respect to the merger and to receive from Great Plains payment in cash for the "fair value" of their shares after the merger is completed. The term "fair value" means the value of the shares immediately before the effective time of the merger and may be less than, equal to or greater than the market price of the Microsoft common stock to be issued to nondissenting shareholders for their Great Plains common stock if the merger is consummated. All references in this summary to a "shareholder" or "you" are to a shareholder of Great Plains as of February 21, 2001, the record date for the special meeting. A person having beneficial ownership of shares that are held of record in the name of another person, such as a broker, nominee, trustee or custodian, must act promptly to cause the record holder to follow the steps summarized below in a proper and timely manner if the beneficial owner wishes to perfect any dissenters' rights. Requirements for exercising appraisal rights Shareholders who desire to exercise their dissenters' rights must: . file a written notice of intent to demand fair value for his, her or its shares with Great Plains before the shareholder vote is taken to approve the merger agreement. This written demand must be in addition to and separate from any proxy or vote against approval of the merger agreement; . not vote his, her or its shares in favor of the merger agreement; and . follow the statutory procedures for perfecting dissenters' rights, which are described below. If you do not satisfy all of these conditions, you cannot exercise dissenters' rights and will be bound by the terms of the merger agreement. Voting against, abstaining from voting or failing to vote to approve the merger agreement does not constitute a demand for appraisal within the meaning of Minnesota law. A shareholder's failure to vote against the approval of the merger agreement will not constitute a waiver of dissenter's appraisal rights. However, if a shareholder returns a signed proxy but does not specify a vote against approval of the merger agreement or direction to abstain, the proxy will be voted for approval of the merger agreement, and the shareholder's dissenter's appraisal rights will be waived. A shareholder must assert dissenters' rights with respect to all of the shares registered in the holder's name except where certain shares are beneficially owned by another person but registered in the holder's name. If a record owner, such as a broker, nominee, trustee or custodian, wishes to dissent with respect to shares beneficially owned by another person, the shareholder must dissent with respect to all of the beneficial owner's shares and must disclose the name and address of the beneficial owner on whose behalf dissent is made. Also, a 59 beneficial owner of shares who is not the record owner of those shares may assert dissenters' rights as to the shares held on that person's behalf, provided that the beneficial owner submits a written consent from the record owner to Great Plains at or before the time the dissenters' rights are asserted. Notices of intent to exercise dissenters' rights should be filed with Great Plains at: Great Plains Software, Inc., 1701 S.W. 38th Street, Fargo, ND 58103, Attn: General Counsel. Appraisal procedure After the proposed merger has been approved by the shareholders at the special meeting, Great Plains will send written notice to all shareholders who have given written notice under the dissenters' rights provisions and have not voted in favor of the merger as described above. The notice will contain: . the address where the demand for payment and certificates representing shares of Great Plains common stock must be sent and the date by which they must be received; . any restrictions on transfer of uncertificated shares that will apply after the demand for payment is received; . a form for demanding payment that requires certification of the date the shareholder, or the beneficial owner on whose behalf the shareholder dissents, acquired the Great Plains common stock or an interest in it; and . a copy of sections 302A.471 and 302A.473 of the Minnesota Business Corporation Act, attached hereto as Annex C, and a brief description of the procedures to be followed under those provisions. If you wish to assert dissenters' rights and receive the fair value of your shares, you must demand payment, deposit your certificates with Great Plains and provide any other related information specified in the notice from Great Plains, within thirty days after the notice is given. If you fail to make demand for payment and deposit your certificates within the thirty-day period, you will lose the right to receive fair value for your shares under the dissenters' rights provisions, even if you filed a timely notice of intent to demand payment. Except as provided below, after the later of the effective time of the merger or Great Plains' receipt of a valid demand for payment, Great Plains will remit to each dissenting shareholder who complied with the requirements of the Minnesota Business Corporation Act the amount Great Plains estimates to be the fair value of the shareholder's Great Plains common stock, with interest starting five days after the effective time of the merger at a rate prescribed by statute. Great Plains will include the following information with the payment: . Great Plains' closing balance sheet and statement of income for the fiscal year ending no more than sixteen months before the effective date of the merger, together with the latest available interim financial statement; . Great Plains' estimate of the fair value of the shares and a brief description of the method used to reach that estimate; . a copy of Sections 302A.471 and 302A.473 of the Minnesota Business Corporation Act (attached hereto as Annex C); and . a brief description of the procedures to be followed in demanding supplemental payment. Great Plains may withhold payment for any person who was not a shareholder on December 21, 2000, the date the merger was first announced to the public, or who is dissenting on behalf of a person who was not a beneficial owner on that date. If the dissenter has complied with the procedures described above, Great Plains shall send a statement to the dissenter setting forth the above information as well as the reason for withholding the remittance and an offer to pay to the dissenter the estimate of the fair value of the shares, with interest, as a final settlement of the dissenting shareholder's demand for payment. 60 If you are dissatisfied with your payment or offer, you may, within thirty days of the payment or offer for payment, notify Great Plains in writing of and demand payment of your estimate of the fair value of your shares plus interest, to the extent that your estimate exceeds Great Plains' payment or offer. Within sixty days after receipt by Great Plains of any dissenting shareholder's demand for supplemental payment, Great Plains shall either pay to the dissenter the supplemental amount demanded or agreed to by the dissenter after discussion with Great Plains or file a petition in court requesting that the court determine the fair value of the shares, plus interest. The petition shall be filed in Hennepin County, Minnesota, and shall name as parties all dissenting shareholders whose demands remain unsettled. The court may appoint one or more appraisers to receive evidence and make recommendations to the court as to the amount of the fair value of the shares. The court shall determine whether the shareholder or shareholders in question have fully complied with the requirements of this section, and shall determine the fair value of the shares, taking into account any and all factors the court finds relevant, computed by any method or combination of methods that the court, in its discretion, sees fit to use, whether or not used by Great Plains or by a dissenter. The fair value of the shares as determined by the court is binding on all dissenting shareholders. If the court determines that the fair value of the shares is in excess of any amount remitted by Great Plains, then the court will enter a judgment for cash in favor of the dissenting shareholders in an amount by which the value determined by the court, plus interest, exceeds the amount previously remitted. The court will determine the costs and expenses of the court proceeding, including the reasonable expenses and compensation of any appraisers appointed by the court, and assess them against Great Plains, except that the court may assess part or all of the costs against any dissenting shareholders whose actions in demanding supplemental payments are found by the court to be arbitrary, vexatious or not in good faith. If the court finds that Great Plains did not substantially comply with the relevant provisions of section 302A.473 of the Minnesota Business Corporation Act, the court may also assess against Great Plains any fees and expenses of attorneys or experts that the court deems equitable. The court may also assess those fees and expenses against any party if the court finds that the party has acted arbitrarily, vexatiously or not in good faith in bringing the proceedings. The court may award, in its discretion, fees and expenses of an attorney for the dissenting shareholders out of the amount awarded to the shareholders, if it finds the services of the attorney were of substantial benefit to the other dissenting shareholders and that those fees should not be assessed against Great Plains. Under subdivision 4 of Section 302A.471 of the Minnesota Business Corporation Act, a shareholder has no right, at law or in equity, to set aside the approval of the merger agreement except if the approval is fraudulent with respect to that shareholder or Great Plains. 61 SHARE OWNERSHIP OF PRINCIPAL SHAREHOLDERS, MANAGEMENT AND DIRECTORS OF GREAT PLAINS The following table provides information concerning the beneficial ownership of Great Plains common stock as of February 21, 2001, the record date, for the following: . each person or entity who is known by Great Plains to beneficially own more than 5% of the outstanding shares of Great Plains common stock; . each of Great Plains' current directors; . Great Plains' chief executive officer and its five other executive officers; and . all of Great Plains' directors and executive officers as a group. This table includes percentage ownership data reflecting ownership both before and after consummation of the merger with Microsoft. The pre-merger percentage ownership is based on 20,722,098 shares of Great Plains common stock outstanding as of the record date. The post-merger percentage ownership includes only the 22,794,307 shares of Microsoft common stock that would be issued to Great Plains shareholders based on the 20,722,098 shares of Great Plains common stock outstanding as of the record date. All shares subject to options exercisable within sixty days after the record date are deemed to be beneficially owned by the person or entity holding that option and to be outstanding solely for calculating that person's or entity's percentage ownership. 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.
Pre-Merger Post-Merger ----------------------------- ----------------------------- Number of Shares Percent of Number of Shares Percent of of Great Plains Great Plains of Microsoft Microsoft Stock Stock Common Stock Common Stock Name and Address of Beneficially Beneficially Beneficially Beneficially Beneficial Owner Owned Owned Owned Owned ------------------- ---------------- ------------ ---------------- ------------ Frederick W. Burgum(1).... 2,451,015 11.8% 2,696,116 * Douglas J. Burgum(2)...... 1,625,602 7.8% 1,788,162 * U.S. Trust Corporation and affiliates(3)............ 1,474,391 7.1% 1,621,830 * Bradley J. Burgum(4)...... 511,325 2.5% 562,457 * Jodi A. Uecker-Rust(5).... 64,305 * 70,735 * Darren C. Laybourn(6)..... 39,144 * 43,058 * J.A. Heidi Roizen(7)...... 33,000 * 36,300 * Tami L. Reller(8)......... 24,691 * 27,160 * Joseph S. Tibbetts, Jr.(9)................... 23,250 * 25,575 * Jeffrey A. Young(10)...... 15,647 * 17,211 * James Leland Strange(11).. 7,259 * 7,984 * David M. O'Hara(12)....... 3,472 * 3,819 * All directors and executive officers as a group (11 persons)(13) .. 4,798,710 23.0% 5,278,581 *
- -------- * Less than 1% (1) Includes 17,000 shares issuable pursuant to options. Also includes shares held by certain members of Frederick W. Burgum's household that are beneficially owned by Mr. Burgum. His address is 1701 S.W. 38th Street, Fargo, North Dakota 58103. (2) Includes 25,033 shares issuable pursuant to options. Also includes shares held by certain members of Douglas J. Burgum's household that are beneficially owned by Mr. Burgum. His address is 1701 S.W. 38th Street, Fargo, North Dakota 58103. 62 (3) Based on Schedule 13G filed with the SEC on February 14, 2001. Includes shares held by United States Trust Company of New York, a subsidiary of U.S. Trust Corporation. The address of U.S. Trust Corporation is 114 West 47th Street, New York, New York 10036. (4) Includes 17,000 shares issuable pursuant to options. Also includes shares held by certain members of Bradley J. Burgum's household that are beneficially owned by Mr. Burgum. (5) Includes 13,333 shares issuable pursuant to options. (6) Includes 4,300 shares issuable pursuant to options. (7) Includes 32,000 shares issuable pursuant to options. (8) Includes 6,400 shares issuable pursuant to options. Also includes shares held by certain members of Tami L. Reller's household that are beneficially owned by Ms. Reller. (9) Includes 23,250 shares issuable pursuant to options. (10) Includes 10,800 shares issuable pursuant to options. (11) Includes 7,259 shares issuable pursuant to options. (12) Includes 3,000 shares issuable pursuant to options. (13) Includes 159,375 shares issuable pursuant to options. 63 LEGAL MATTERS The validity of the Microsoft common stock to be issued to Great Plains shareholders in the merger will be passed upon by Preston Gates & Ellis LLP, Seattle, Washington. It is a condition to the completion of the merger that Great Plains receive an opinion from Dorsey & Whitney LLP, Minneapolis, Minnesota, and that Microsoft receive an opinion from Preston Gates & Ellis LLP, with respect to the tax treatment of the merger. EXPERTS The financial statements incorporated in this proxy statement/prospectus by reference from Microsoft's Annual Report on Form 10-K for the year ended June 30, 2000 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The financial statements of Great Plains incorporated in this proxy statement/prospectus by reference to the Great Plains' Annual Report on Form 10-K for the year ended May 31, 2000, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. SHAREHOLDER PROPOSALS Great Plains will hold an annual meeting of Great Plains shareholders in the year 2001 only if the merger is not completed before the time of that meeting. If the merger is not completed, you may present proper proposals for consideration at the next annual meeting of Great Plains shareholders by submitting your proposal in writing to the secretary of Great Plains in a timely manner. Any proposal by a shareholder to be considered for inclusion in Great Plains' proxy materials for the 2001 Annual Meeting of Shareholders must have been received at Great Plains' executive offices, 1701 S.W. 38th Street, Fargo, North Dakota 58103, no later than the close of business on April 9, 2001. Proposals should be sent to the attention of the Secretary. In connection with any matter to be proposed by a shareholder at the 2001 Annual Meeting of Shareholders, but not proposed for inclusion in Great Plains' proxy materials, the proxy holders designated by Great Plains for that meeting may exercise their discretionary voting authority with respect to that shareholder proposal if appropriate notice of that proposal is not received by Great Plains at its principal executive offices by April 9, 2001. In order for a shareholder proposal to be properly brought before the 2001 Annual Meeting of Shareholders, appropriate notice must have been received by Great Plains at its principal executive offices by April 9, 2001. 64 DOCUMENTS INCORPORATED BY REFERENCE INTO THIS PROXY STATEMENT/PROSPECTUS This proxy statement/prospectus incorporates documents by reference that are not presented in or delivered with this document. The SEC allows Microsoft and Great Plains to "incorporate by reference" information into this proxy statement/prospectus, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this proxy statement/prospectus, except for any information superseded by information included in or incorporated by reference from subsequently filed documents into this proxy statement/prospectus. This proxy statement/prospectus incorporates by reference the documents listed below that Microsoft and Great Plains have previously filed with the SEC. These documents contain important information about Microsoft's and Great Plains' business and finances.
~~Microsoft SEC Filings (File No. 0-14278) Date Filed ---------------------------------------- ----------~~ Quarterly Report on Form 10-Q for the quarter ended December 31, 2000................................................... February 14, 2001 Quarterly Report on Form 10-Q for the quarter ended September 30, 2000......................................... November 14, 2000 Annual Report on Form 10-K for the fiscal year ended June 30, 2000................................................... September 28, 2000 Definitive Proxy Statement for the annual meeting to be held November 9, 2000........................................... September 28, 2000 Description of Microsoft's common stock, contained in Microsoft's Registration Statement on Form S-3/A........... December 13, 1996 ~~Great Plains SEC Filings (File No. 0-22703) Date Filed ------------------------------------------- ----------~~ Quarterly Report on Form 10-Q for the quarter ended November 30, 2000................................................... January 16, 2001 Amendment to Annual Report on Form 10-K405/A for the fiscal year ended May 31, 2000.................................... November 3, 2000 Quarterly Report on Form 10-Q for the quarter ended August 31, 2000................................................... October 16, 2000 Annual Report on Form 10-K405 for the fiscal year ended May 31, 2000................................................... August 11, 2000 Definitive additional materials for Proxy Statement for the annual meeting held September 13, 2000..................... August 11, 2000 Definitive Proxy Statement for the annual meeting held September 13, 2000......................................... August 11, 2000 Description of Great Plains' common stock, contained in the registration statement on Form 8-A, including any amendments or reports filed for the purpose of updating that description........................................... June 13, 1997
We also incorporate by reference any additional documents that Microsoft or Great Plains files with the SEC after the date of this proxy statement/prospectus and before the date of the special meeting. This proxy statement/prospectus is dated February 22, 2001. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any other date, and neither the mailing of the proxy statement/prospectus to shareholders nor the issuance of Microsoft common stock in the merger shall create any implication to the contrary. Please note that Microsoft has supplied all information contained or incorporated by reference into this proxy statement/prospectus relating to Microsoft, and Great Plains has supplied all information relating to Great Plains. You should rely only on the information contained in this document or in documents to which we have referred you. We have not authorized anyone to provide you with different information. 65 WHERE YOU CAN FIND MORE INFORMATION On your written or oral request, Great Plains or Microsoft will provide you, without charge, with a copy of any of the documents incorporated by reference into this proxy statement/prospectus, not including exhibits to the information unless those exhibits are specifically incorporated by reference. You should make any request for documents by Wednesday, March 21, 2001 to ensure timely delivery of the documents. Requests for documents relating to Great Requests for documents relating to Plains should be directed to: Microsoft should be directed to: Great Plains Software, Inc. Microsoft Corporation 1701 S.W. 38th Street One Microsoft Way Fargo, North Dakota 58103 Redmond, Washington 98052 Phone: (701) 281-6780 Phone: (800) 285-7772 Attention: Pam Kloster, Investor Relations Attention: Investor Relations Email: pam.kloster@greatplains.com Email: msft@microsoft.com Fax: (701) 492-1018 Fax: (425) 936-8000
Great Plains and Microsoft file annual, quarterly and special reports, proxy statements and other information with the SEC. Copies of Great Plains' or Microsoft's reports, proxy statements and other information may be inspected and copied at the public reference facilities maintained by the SEC: Judiciary Plaza Citicorp Center Seven World Trade Center Room 1024 500 West Madison Street 13th Floor 450 Fifth Street, N.W. Suite 1400 New York, New York 10048 Washington, D.C. 20549 Chicago, Illinois 60661
Information on the operation of the SEC's public reference rooms may be obtained by calling the SEC at 1-800-SEC-0330. Copies of these materials can also be obtained by mail at prescribed rates from the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, or by calling the SEC at 1-800-SEC-0330. The SEC maintains a Web site that includes reports, proxy statements and other information regarding Microsoft and Great Plains. The address of the SEC Web site is http://www.sec.gov. Microsoft has filed a registration statement under the Securities Act with the SEC to register the Microsoft common stock to be issued to Great Plains' shareholders in the merger. This proxy statement/prospectus is part of that registration statement. As allowed by SEC rules, this proxy statement/prospectus does not contain all of the information you can find in the registration statement or the exhibits to the registration statement, and constitutes a prospectus of Microsoft in addition to being a proxy statement of Great Plains for the special meeting. You may inspect and copy the registration statement at any of the addresses listed above. If you have any questions about the merger, please call Great Plains' investor relations group at (701) 281-6780. You may also call Microsoft's investor relations group at (800) 285-7772. STATEMENTS REGARDING FORWARD-LOOKING INFORMATION This proxy statement/prospectus and the documents incorporated by reference into this proxy statement/prospectus contain forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve risks and uncertainties. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks" and "estimates" and similar expressions identify forward-looking statements, and any statements regarding the benefits of the merger and Microsoft's and Great Plains' financial condition, results of operations and business are forward- looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, contingencies and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. 66 Factors that may affect such forward-looking statements include: . the ability to retain Great Plains' key employees after the consummation of the merger; . competitive factors in the businesses in which Microsoft and Great Plains compete; . changes in governmental regulation; and . overall economic and business conditions. Actual results could also differ materially because of factors such as: changes in the rate of PC shipments; technological shifts; customer demand; market acceptance of new products and services; competitive products, services and pricing; changes in product and service mix; delay in product ship schedules; product life cycles; currency fluctuations; sale terms and conditions; equity investment volatility; litigation; and other factors discussed in the Form 10-K and other SEC filings of each of Microsoft and Great Plains. For a description of some of the factors or uncertainties in Great Plains' and Microsoft's respective operations and business environment that could cause actual results to differ from those discussed in forward-looking statements, see Microsoft's Annual Report on Form 10-K for the fiscal year ended June 30, 2000, other documents Microsoft has subsequently filed with the SEC, Great Plains' Quarterly Report on Form 10-Q for the fiscal year ended November 30, 2000 and other documents Great Plains has subsequently filed with the SEC, all of which are incorporated by reference into this proxy statement/prospectus. 67 ANNEX A MICROSOFT CORPORATION GREAT PLAINS SOFTWARE, INC. RUBICON ACQUISITION CORPORATION AGREEMENT AND PLAN OF REORGANIZATION Dated as of December 21, 2000 ~~TABLE OF CONTENTS~~ ARTICLE I THE MERGER 1.1 Effective Time of the Merger.......................................... A-1 1.2 Closing............................................................... A-1 1.3 Effects of the Merger................................................. A-1 1.4 Tax-Free Reorganization............................................... A-1 ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES 2.1 Effect on Capital Stock............................................... A-2 2.1.1 Capital Stock of Sub.......................................... A-2 2.1.2 Cancellation of Company Common Stock.......................... A-2 2.1.3 Conversion of Company Common Stock............................ A-2 2.1.4 Adjustments of Exchange Ratio................................. A-2 2.1.5 Dissenter's Rights............................................ A-2 2.1.6 Fractional Shares............................................. A-3 2.1.7 Certain Restricted Shares..................................... A-3 2.2 Exchange of Certificates.............................................. A-3 2.2.1 Exchange Agent................................................ A-3 2.2.2 Microsoft to Provide Common Stock and Cash.................... A-3 2.2.3 Exchange Procedures........................................... A-3 2.2.4 No Further Ownership Rights in Company Common Stock........... A-4 2.2.5 Return to Microsoft........................................... A-4 2.3 Company Options....................................................... A-4 2.3.1 Conversion to Microsoft Options............................... A-4 2.3.2 Registration.................................................. A-4 2.3.3 Incentive Stock Options....................................... A-5 ARTICLE III REPRESENTATIONS AND WARRANTIES 3.1 Representations and Warranties of Company............................. A-5 3.1.1 Organization, Standing and Power.............................. A-5 3.1.2 Capital Structure............................................. A-6 3.1.3 Authority..................................................... A-6 3.1.4 SEC Documents and Financial Statements........................ A-7 3.1.5 Information Supplied.......................................... A-8 3.1.6 No Defaults................................................... A-8 3.1.7 Litigation.................................................... A-8 3.1.8 No Material Adverse Change.................................... A-8 3.1.9 Absence of Undisclosed Liabilities............................ A-9 3.1.10 No Violations................................................. A-9 3.1.11 Certain Agreements............................................ A-9 3.1.12 Employees..................................................... A-9 3.1.13 Employee Benefit Plans........................................ A-10 3.1.14 Real Property................................................. A-10 3.1.15 Major Contracts............................................... A-10 3.1.16 Taxes......................................................... A-11 3.1.17 Interests of Officers......................................... A-12 3.1.18 Technology and Intellectual Property Rights................... A-13 3.1.19 Material Relations............................................ A-15 3.1.20 Opinion of Financial Advisor.................................. A-15 3.1.21 Vote Required................................................. A-15 3.1.22 Brokers and Finders........................................... A-15
~~A-i~~ ~~TABLE OF CONTENTS--(Continued)~~ 3.1.23 Change of Control............................................ A-16 3.1.24 Leases in Effect............................................. A-16 3.1.25 Environmental................................................ A-16 3.1.26 Certain Payments............................................. A-17 3.1.27 Disclosure................................................... A-17 3.1.28 Reliance..................................................... A-17 3.2 Representations and Warranties of Microsoft and Sub.................. A-17 3.2.1 Organization; Standing and Power............................. A-17 3.2.2 Authority.................................................... A-17 3.2.3 Capital Structure............................................ A-18 3.2.4 SEC Documents and Financial Statements....................... A-18 3.2.5 Information Supplied......................................... A-19 3.2.6 No Defaults.................................................. A-19 3.2.7 Absence of Certain Changes or Events......................... A-19 3.2.8 Absence of Undisclosed Liabilities........................... A-19 3.2.9 No Vote Required............................................. A-19 3.2.10 Brokers and Finders.......................................... A-19 3.2.11 Interim Operation of Sub..................................... A-19 3.2.12 Disclosure................................................... A-19 3.2.13 Reliance..................................................... A-20 ARTICLE IV COVENANTS OF COMPANY 4.1 Conduct of Business.................................................. A-20 4.1.1 Ordinary Course.............................................. A-20 4.1.2 Dividends: Changes in Stock.................................. A-21 4.1.3 Issuance of Securities....................................... A-21 4.1.4 Acceleration of Vesting...................................... A-21 4.1.5 Governing Documents.......................................... A-21 4.1.6 Exclusivity; Acquisition Proposals........................... A-21 4.1.7 No Acquisitions.............................................. A-22 4.1.8 No Dispositions.............................................. A-22 4.1.9 Indebtedness................................................. A-22 4.1.10 Plans........................................................ A-23 4.1.11 Claims....................................................... A-23 4.1.12 Agreement.................................................... A-23 4.2 Breach of Representation and Warranties.............................. A-23 4.3 Consents............................................................. A-23 4.4 Commercially Reasonable Best Efforts................................. A-23 4.5 Information for Prospectus/Proxy Statement........................... A-23 4.6 Company Plans........................................................ A-23 4.7 Restrictive Covenants................................................ A-23 4.8 Shareholder Approval................................................. A-23 4.9 Employee Matters..................................................... A-24 4.10 Tax Returns.......................................................... A-24 4.11 Section 16 Approval.................................................. A-24 ARTICLE V COVENANTS OF MICROSOFT 5.1 Breach of Representations and Warranties............................. A-25 5.2 Conduct of Business.................................................. A-25 5.3 Consents............................................................. A-25 5.4 Commercially Reasonable Best Efforts................................. A-25
~~A-ii~~ ~~TABLE OF CONTENTS--(Continued)~~ 5.5 Employee Compensation and Benefits................................... A-25 5.6 Nasdaq Listing....................................................... A-25 ARTICLE VI ADDITIONAL AGREEMENTS 6.1 Preparation of S-4................................................... A-26 6.2 Letter of Company's Accountants...................................... A-26 6.3 Letter of Microsoft's Accountants.................................... A-26 6.4 Access to Information................................................ A-26 6.5 Legal Conditions to the Merger....................................... A-26 6.6 Affiliate Agreements................................................. A-27 6.7 HSR Act Filings...................................................... A-27 6.7.1 Filings and Cooperation...................................... A-27 6.7.2 Objections................................................... A-27 6.8 Officers and Directors............................................... A-28 6.9 Expenses............................................................. A-28 6.10 Additional Agreements................................................ A-28 6.11 Public Announcements................................................. A-28 6.12 State Takeover Laws.................................................. A-28 ARTICLE VII CONDITIONS PRECEDENT 7.1 Conditions to Each Party's Obligation to Effect the Merger........... A-29 7.1.1 Shareholder Approval......................................... A-29 7.1.2 Consents..................................................... A-29 7.1.3 S-4.......................................................... A-29 7.1.4 No Restraints................................................ A-29 7.1.5 No Burdensome Condition...................................... A-29 7.1.6 Tax-Free Reorganization...................................... A-29 7.2 Conditions of Obligations of Microsoft and Sub....................... A-29 7.2.1 Representations and Warranties of Company.................... A-29 7.2.2 Performance of Obligations of Company........................ A-29 7.2.3 Executed Affiliates Agreement................................ A-30 7.2.4 Restrictive Covenant......................................... A-30 7.2.5 Opinion of Company's Counsel................................. A-30 7.2.6 Certain Employees............................................ A-30 7.2.7 Restricted Stock Agreement................................... A-30 7.2.8 Legal Action................................................. A-30 7.2.9 Dissenting Shares............................................ A-30 7.2.10 Modification of Change of Control Agreements................. A-30 7.3 Conditions of Obligation of Company.................................. A-30 7.3.1 Representations and Warranties of Microsoft and Sub.......... A-30 7.3.2 Performance of Obligations of Microsoft and Sub.............. A-30 7.3.3 Legal Action................................................. A-30 7.3.4 Opinion of Microsoft's Counsel............................... A-31 ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER 8.1 Termination.......................................................... A-31 8.2 Effect of Termination................................................ A-31 8.3 Break-up Fees........................................................ A-32 8.3.1 Company Break-up Fee......................................... A-32 8.3.2 Microsoft Break-up Fee....................................... A-32 8.3.3 HSR Break-up Fee............................................. A-32
~~A-iii~~ ~~TABLE OF CONTENTS--(Continued)~~ 8.4 Amendment............................................................ A-32 8.5 Extension, Waiver.................................................... A-32 ARTICLE IX GENERAL PROVISIONS 9.1 Nonsurvival of Representations, Warranties and Agreements............ A-33 9.2 Notices.............................................................. A-33 9.3 Interpretation....................................................... A-34 9.4 Counterparts......................................................... A-34 9.5 Miscellaneous........................................................ A-34 9.6 No Joint Venture..................................................... A-34 9.7 Governing Law........................................................ A-34 9.8 Enforcement of this Agreement........................................ A-34
~~A-iv~~ ~~LIST OF EXHIBITS~~
~~Title Number ----- ------------------~~ Restricted Stock Agreement................................. 2.1.7 Shareholder Agreements..................................... 4.8 Severance Plan............................................. 4.9 Terms and conditions of termination of Company employees Prior to Closing.......................................... 4.9(A) Form of Continued Employment Offer......................... 4.9(B)(i) and (ii) Change of Control Agreements............................... 4.9(C)(i) Form of Amendment to Change of Control Agreements.......... 4.9(C)(ii) Expatriate agreements...................................... 4.9(D) Employment Agreements to be Terminated..................... 4.9(E) Affiliates Agreement....................................... 6.6 Restrictive Covenant Agreement............................. 7.2.4 Opinion of Dorsey & Whitney LLP............................ 7.2.5 Opinion of Preston Gates & Ellis LLP....................... 7.3.4
~~A-v~~ ~~INDEX OF DEFINED TERMS~~
~~Term Page Defined - ---- ------------~~ Acquisition Transaction......................................... A-21 affiliate....................................................... A-4 Affiliate Agreements............................................ A-27 Antitrust Laws.................................................. A-27 blue sky........................................................ A-7, A-18, A-26 Business Condition.............................................. A-5 Certificate..................................................... A-2 Closing......................................................... A-1 Closing Date.................................................... A-1 Code............................................................ A-1 Company......................................................... A-1 Company Stock Plans............................................. A-6 Company Break-up Fee............................................ A-32 Company Business................................................ A-5 Company Comfort Letter.......................................... A-26 Company Common Shares........................................... A-2 Company Disclosure Schedule..................................... A-5 Company Financial Statements.................................... A-7 Company Intellectual Property................................... A-13 Company Licensed Intellectual Property.......................... A-13 Company Options................................................. A-6 Company Owned Intellectual Property............................. A-13 Company Preferred Stock......................................... A-6 Company Required Statutory Approvals............................ A-7 Company Required Vote........................................... A-29 Company SEC Documents........................................... A-7 Company Section 16 Insider...................................... A-25 Company Shareholder Agreements.................................. A-24 Company Shareholders Meeting.................................... A-24 Company Stock Plans............................................. A-6 Company Voting Debt............................................. A-6 Company's Principals............................................ A-24 Confidentiality Agreement....................................... A-26 Consents........................................................ A-7 Dissenting Shares............................................... A-2 Effective Time.................................................. A-1 Environmental Laws.............................................. A-16 ERISA........................................................... A-10 Exchange Act.................................................... A-7 Exchange Agent.................................................. A-3 Exchange Ratio.................................................. A-2 Governmental Entity............................................. A-7 Hazardous Material.............................................. A-17 HSR Act......................................................... A-7 HSR Break-up Fee................................................ A-32 Incentive Stock Options......................................... A-5 include......................................................... A-34 includes........................................................ A-34 including....................................................... A-34
~~A-vi~~ ~~INDEX OF DEFINED TERMS--(Continued)~~
~~Page Term Defined - ---- -------~~ Indemnified Parties..................................................... A-28 IRS..................................................................... A-11 Lease................................................................... A-16 Leases.................................................................. A-16 Letter of Transmittal................................................... A-3 Liabilities............................................................. A-9 Material Adverse Effect................................................. A-5 MBCA.................................................................... A-1 Merger.................................................................. A-1 Merger Consideration.................................................... A-2 Merger Documents........................................................ A-1 Microsoft............................................................... A-1 Microsoft Average Closing Price......................................... A-3 Microsoft Break-up Fee.................................................. A-32 Microsoft Comfort Letter................................................ A-26 Microsoft Common Shares................................................. A-2 Microsoft Disclosure Schedule........................................... A-17 Microsoft Financial Statements.......................................... A-17 Microsoft Options....................................................... A-17 Microsoft Preferred Stock............................................... A-17 Microsoft Required Statutory Approvals.................................. A-17 Microsoft SEC Documents................................................. A-17 multiemployer plan...................................................... A-10 Order................................................................... A-27 Owned Real Property..................................................... A-10 Payment Date............................................................ A-32 Plan.................................................................... A-10 plan of reorganization.................................................. A-1 prohibited transaction.................................................. A-10 Prospects............................................................... A-5 Proxy Statement......................................................... A-8 Proxy Statement/Prospectus.............................................. A-8 Real Property........................................................... A-16 Required Statutory Approvals............................................ A-17 Restricted Stock Agreement.............................................. A-3 Return Periods.......................................................... A-11 Returns................................................................. A-11 S-4..................................................................... A-8 SEC..................................................................... A-7 Securities Act.......................................................... A-4 single-employer plan.................................................... A-10 Sub..................................................................... A-1 Subsidiaries............................................................ A-2 Subsidiary.............................................................. A-2 Substituted Microsoft Option............................................ A-4 Superior Proposal....................................................... A-22 Surviving Corporation................................................... A-1 Surviving Corporation's Common Stock.................................... A-1 tax..................................................................... A-11
~~A-vii~~ ~~INDEX OF DEFINED TERMS--(Continued)~~
~~Page Term Defined - ---- -------~~ taxes................................................................... A-11 Violation............................................................... A-7 WBCA.................................................................... A-1 Year 2000 Compliant..................................................... A-15
~~A-viii~~ AGREEMENT AND PLAN OF REORGANIZATION AGREEMENT AND PLAN OF REORGANIZATION, dated as of December 21, 2000, among Microsoft Corporation, a Washington corporation ("Microsoft"), Rubicon Acquisition Corporation, a Washington corporation and a wholly-owned subsidiary of Microsoft ("Sub"), and Great Plains Software, Inc., a Minnesota corporation ("Company"). INTENDING TO BE LEGALLY BOUND, and in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein, Microsoft, Sub and Company hereby agree as follows: ARTICLE I THE MERGER 1.1 Effective Time of the Merger. Subject to the provisions of this Agreement, Sub will be merged into Company (the "Merger"). An Agreement and Plan of Merger and articles, certificates or other appropriate filing documents (the "Merger Documents") shall be duly prepared, executed and acknowledged by the parties and thereafter delivered to the Secretaries of State of Minnesota and Washington, for filing, as provided in the Minnesota Business Corporation Act (the "MBCA") and the Washington Business Corporation Act (the "WBCA") as soon as practicable on or after the Closing Date. The Merger shall become effective upon the acceptance for filing of the Merger Documents by the Secretaries of State of Minnesota and Washington or at such time thereafter as is provided in the Merger Documents (the "Effective Time"). Company acknowledges and agrees that Microsoft will have no obligation to make any payment or issue any securities pursuant to this Agreement until such filings have been confirmed in writing. 1.2 Closing. The closing of the Merger (the "Closing") will take place as soon as practicable but no later than the fifth business day after satisfaction or waiver of the last to be fulfilled of the conditions set forth in Article VII that by their terms are not to occur at the Closing (the "Closing Date"), at the offices of Preston Gates & Ellis LLP, Seattle, Washington, unless another date or place is agreed to in writing by the parties hereto. 1.3 Effects of the Merger. At the Effective Time, (i) the separate existence of Sub shall cease and Sub shall be merged with and into Company (Company after the Merger is sometimes referred to herein as the "Surviving Corporation"), (ii) the Articles of Incorporation of Company shall be the Articles of Incorporation of the Surviving Corporation, except that such Articles of Incorporation shall be amended to provide that the authorized capital stock of the Surviving Corporation shall be 1,000 shares of Common Stock, $.01 par value ("Surviving Corporation's Common Stock"), until duly amended, (iii) the Bylaws of Sub shall be the Bylaws of the Surviving Corporation, (iv) the directors and officers of the Surviving Corporation shall be designated by Microsoft prior to the Closing, and (v) the Merger shall, from and after the Effective Time, have all the effects provided by applicable law. 1.4 Tax-Free Reorganization. The Merger is intended to be a reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"), and this Agreement is intended to be a "plan of reorganization" within the meaning of the regulations promulgated under Section 368 of the Code. Each party hereto agrees to treat the Merger as a reorganization within the meaning of Section 368 of the Code, and agrees to treat this Agreement as a "plan of reorganization" within the meaning of the regulations promulgated under Section 368 of the Code, unless and until there is a determination, within the meaning of Section 1313 of the Code, that such treatment is not correct. Each party hereto agrees to act in good faith consistent with the intent of the parties and the intended treatment of the Merger as set forth in this Section 1.4. A-1 ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES 2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the Merger and without any action (except as provided in Section 4.8 and in this Section) on the part of the holder of any shares of Company common stock, par value $0.01 per share ("Company Common Shares"): 2.1.1 Capital Stock of Sub. All issued and outstanding shares of capital stock of Sub shall continue to be issued and shall be converted into 1,000 shares of Surviving Corporation Common Stock with the stock certificate of Sub evidencing ownership of such shares of capital stock of the Surviving Corporation. 2.1.2 Cancellation of Company Common Stock. All Company Common Shares that are owned directly or indirectly by Company or Microsoft or by any Subsidiary of Company or Microsoft shall be canceled and no stock of Microsoft or other consideration shall be delivered in exchange therefor. For purposes of this Agreement, "Subsidiary" or "Subsidiaries" shall mean an entity of which, an amount of the voting securities, or other voting ownership or voting partnership interests of which is sufficient to elect a majority of its board of directors or other governing body (or, if there are no such interests, 50% or more of the equity interests of which) is owned directly or indirectly by Company. Unless otherwise expressly stated or implied by context, all references to Company shall include each of Company's Subsidiaries. 2.1.3 Conversion of Company Common Stock. Each Company Common Share issued and outstanding immediately prior to the Effective Time, other than Dissenting Shares, as such term is defined in Section 2.1.8, shall, by virtue of the Merger, be converted into the right to receive 1.1 shares (the "Exchange Ratio") of common stock, par value $0.0000125 per share, of Microsoft (the "Microsoft Common Shares") (the "Merger Consideration"). All such Company Common Shares shall no longer be outstanding and shall cease to exist, and each certificate (a "Certificate") previously representing any such shares shall represent only the right to receive (i) whole shares of Microsoft Common Shares and (ii) cash in lieu of fractional shares, in each case as provided by this Section 2.1. 2.1.4 Adjustments of Exchange Ratio. If, between the date of this agreement and the Effective Time, the outstanding Microsoft Common Shares or Company Common Shares shall have been changed into a different number of shares or a different class or series or otherwise changed by reason of any reclassification, recapitalization, split-up, stock dividend, stock combination, exchange of shares or readjustment or similar transaction, the Exchange Ratio shall be correspondingly adjusted. 2.1.5 Dissenters' Rights. Notwithstanding any provision of this Agreement to the contrary, each outstanding Company Common Share, the holder of which has demanded and perfected such holder's right to dissent from the Merger and to be paid the fair value of such shares in accordance with Sections 302A.471 et seq. of the MBCA and, as of the Effective Time, has not effectively withdrawn or lost such dissenters' rights ("Dissenting Shares"), shall not be converted into or represent a right to receive the Merger Consideration into which Company Common Shares are converted pursuant to Section 2.1.3 hereof, but the holder thereof shall be entitled only to such rights as are granted by the MBCA. Company shall give Microsoft (i) prompt written notice of any notice of intent to demand fair value for any Company Common Shares, withdrawals of such notices, and any other instruments served pursuant to the MBCA or any other provisions of Minnesota law and received by the Company, and (ii) to the extent it can lawfully do so, the opportunity to conduct jointly all negotiations and proceedings with respect to demands for fair value for Company Common Shares under the MBCA. Company shall not, except with the prior written consent of Microsoft, voluntarily make any payment with respect to any demands for fair value for Company Common Shares or offer to settle or settle any such demands. To the extent possible, any amounts paid to holders of Company Common Stock in respect of Dissenting Shares shall be paid out of assets held by the Company immediately prior to the Effective Time. If, before the A-2 Effective Time, such holder fails to perfect or loses any such right to exercise such holder's dissenters' rights with respect to such Company Common Shares, each such share of such holder shall be treated as a share that had been converted as of the Effective Time into the right to receive the Merger Consideration. 2.1.6 Fractional Shares. No fractional Microsoft Common Shares shall be issued in the Merger and such fractional interests shall not entitle the owner thereof to vote. In lieu of any fractional share, each holder of Company Common Shares who would otherwise be entitled to receive a fraction of a Microsoft Common Share will be entitled to receive from Company an amount of cash, without interest, equal to the Microsoft Average Closing Price multiplied by the fraction of a Microsoft Common Share to which such holder would otherwise be entitled. The "Microsoft Average Closing Price" shall mean the average closing price of the Microsoft Common Stock as publicly reported for the Nasdaq National Market System as of 4:00 p.m. Eastern Time over the last 20 trading days ending on the fifth trading day prior to the Closing Date. 2.1.7 Certain Restricted Shares. The Microsoft Common Shares issuable to Douglas Burgum, Company's Chief Executive Officer, in exchange for his Company Common Shares will be restricted from transfer as provided in a Restricted Stock Agreement set forth as Exhibit 2.1.7 (the "Restricted Stock Agreement"), which shall be executed concurrently with the execution of this Agreement. 2.2 Exchange of Certificates. 2.2.1 Exchange Agent. Prior to the Closing Date, Microsoft shall appoint Mellon Investor Services L.L.C., or other bank or trust company reasonably satisfactory to Company, to act as exchange agent (the "Exchange Agent") in the Merger. 2.2.2 Microsoft to Provide Common Stock and Cash. Promptly after the Effective Time, Microsoft shall make available to the Exchange Agent the certificates representing whole Microsoft Common Shares issued pursuant to Section 2.1 in exchange for outstanding Company Common Shares and, from time to time, ~~cash for payment in lieu~~to fund Registrant’s indemnification obligations to directors and officers. The Registrant has also entered into separate indemnification agreements with certain of ~~fractional shares. 2.2.3 Exchange Procedures. Microsoft shall use~~ its ~~reasonable best efforts~~directors and executive officers.

~~II-1~~

~~Item 21. Exhibits and Financial Statement Schedules.~~

         Incorporated by Reference
Exhibit
Number

Exhibit Description

Filed
Herewith
   Form    Exhibit    Filing Date
3.1    Amended and Restated Articles of Incorporation of Microsoft Corporation       8-K    3.1    12/1/16
3.2    Bylaws of Microsoft Corporation       8-K    3.2    6/14/17
4.1    Indenture, dated as of May 18, 2009, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee       S-3ASR    4.1    10/29/15
4.2    Form of First Supplemental Indenture for 2.95% Notes due 2014, 4.20% Notes due 2019, and 5.20% Notes due 2039, dated as of May 18, 2009, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee, to the Indenture       8-K    4.2    5/15/09
4.3    Form of Second Supplemental Indenture for 0.875% Notes due 2013, 1.625% Notes due 2015, 3.00% Notes due 2020, and 4.50% Notes due 2040, dated as of September 27, 2010, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee, to the Indenture, dated as of May 18, 2009, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee       8-K    4.2    9/27/10
4.4    Third Supplemental Indenture for 2.500% Notes due 2016, 4.000% Notes due 2021, and 5.300% Notes due 2041, dated as of February 8, 2011, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee, to the Indenture, dated as of May 18, 2009, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee       8-K    4.2    2/8/11
II-2

         Incorporated by Reference
Exhibit
Number

Exhibit Description

Filed
Herewith
   Form    Exhibit    Filing Date
4.5    Fourth Supplemental Indenture for 0.875% Notes due 2017, 2.125% Notes due 2022, and 3.500% Notes due 2042, dated as of November 7, 2012, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee, to the Indenture, dated as of May 18, 2009, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee       8-K    4.1    11/7/12
4.6    Fifth Supplemental Indenture for 2.625% Notes due 2033, dated as of May 2, 2013, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee, to the Indenture, dated as of May 18, 2009, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee       8-K    4.1    5/1/13
4.7    Sixth Supplemental Indenture for 1.000% Notes due 2018, 2.375% Notes due 2023, and 3.750% Notes due 2043, dated as of May 2, 2013, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee, to the Indenture, dated as of May 18, 2009, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee       8-K    4.2    5/1/13
4.8    Seventh Supplemental Indenture for 2.125% Notes due 2021 and 3.125% Notes due 2028, dated as of December 6, 2013, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee, to the Indenture, dated as of May 18, 2009, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee       8-K    4.1    12/6/13
II-3

         Incorporated by Reference
Exhibit
Number

Exhibit Description

Filed
Herewith
   Form    Exhibit    Filing Date
4.9    Eighth Supplemental Indenture for 1.625% Notes due 2018, 3.625% Notes due 2023, and 4.875% Notes due 2043, dated as of December 6, 2013, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee, to the Indenture, dated as of May 18, 2009, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee       8-K    4.2    12/6/13
4.10    Ninth Supplemental Indenture for 1.850% Notes due 2020, 2.375% Notes due 2022, 2.700% Notes due 2025, 3.500% Notes due 2035, 3.750% Notes due 2045, and 4.000% Notes due 2055, dated as of February 12, 2015, between Microsoft Corporation and U.S. Bank National Association, as Trustee, to the Indenture, dated as of May 18, 2009, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee       8-K    4.1    2/12/15
4.11    Tenth Supplemental Indenture for 1.300% Notes due 2018, 2.000% Notes due 2020, 2.650% Notes due 2022, 3.125% Notes due 2025, 4.200% Notes due 2035, 4.450% Notes due 2045, and 4.750% Notes due 2055, dated as of November 3, 2015, between Microsoft Corporation and U.S. Bank National Association, as Trustee, to the Indenture, dated as of May 18, 2009, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee       8-K    4.1    11/3/15
II-4

         Incorporated by Reference
Exhibit
Number

Exhibit Description

Filed
Herewith
   Form    Exhibit    Filing Date
4.12    Eleventh Supplemental Indenture for 1.100% Notes due 2019, 1.550% Notes due 2021, 2.000% Notes due 2023, 2.400% Notes due 2026, 3.450% Notes due 2036, 3.700% Notes due 2046, and 3.950% Notes due 2056, dated as of August 8, 2016, between Microsoft Corporation and U.S. Bank, National Association, as trustee, to the Indenture, dated as of May 18, 2009, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee       8-K    4.1    8/5/16
4.13    Twelfth Supplemental Indenture for 1.850% Notes due 2020, 2.400% Notes due 2022, 2.875% Notes due 2024, 3.300% Notes due 2027, 4.100% Notes due 2037, 4.250% Notes due 2047, and 4.500% Notes due 2057, dated as of February 6, 2017, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as trustee, to the Indenture, dated as of May 18, 2009, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee       8-K    4.1    2/3/17
4.14    Thirteenth Supplemental Indenture for 2.525% Notes due 2050 and 2.675% Notes due 2060, dated June 1, 2020, between Microsoft Corporation and U.S. Bank National Association, as trustee, to the Indenture, dated as of May 18, 2009, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee       8-K    4.1    6/1/20
4.15    Form of Fourteenth Supplemental Indenture for 2.921% Notes due 2052 and 3.041% Notes due 2062 between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as trustee, to the Indenture, dated as of May 18, 2009, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee    X
II-5

         Incorporated by Reference
Exhibit
Number

Exhibit Description

Filed
Herewith
   Form    Exhibit    Filing Date
4.16    Form of 2.921% Notes due 2052 (included in Exhibit 4.15)    X
4.17    Form of 3.041% Notes due 2062 (included in Exhibit 4.15)    X
5.1    Opinion of Simpson Thacher & Bartlett LLP as to the legality of the securities being registered    X
5.2    Opinion of Keith R. Dolliver, Esq., Microsoft Corporation’s Deputy General Counsel, Corporate, External and Legal Affairs, and Assistant Secretary, as to matters of the law of the State of Washington    X
15.1    Awareness Letter of Deloitte & Touche LLP    X
23.1    Consent of Simpson Thacher & Bartlett LLP (included in Exhibit 5.1)    X
23.2    Consent of Keith R. Dolliver, Esq. (included in Exhibit 5.2)    X
23.3    Consent of Deloitte & Touche LLP    X
24.1    Power of Attorney       S-4    24.1    2/16/21
25.1    Statement of Eligibility of The Bank of New York Mellon Trust Company, N.A., under the Indenture, dated as of May 18, 2009, between Microsoft Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee on Form T-1, with respect to the Indenture       S-4    25.1    2/16/21
Item 22. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) to ~~cause the Exchange Agent, as soon as practicable but in~~file, during any case not more than fifteen (15) days after the Closing Date, to mail to each holder of record as of the Effective Time, other than to those holders of Dissenting Shares, of a Certificate or Certificates, (i) a letter of transmittal (the "Letter of Transmittal") (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent) and (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 Exchange Agent, together with a duly executed letter of transmittal and such other documents as the Exchange Agent shall require, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration, as adjusted, pursuant to Section 2.1 hereof plus cash in lieu of fractional shares as provided in Section 2.1.6. The Certificate so surrendered shall forthwith be canceled. Notwithstanding any other provision of this Agreement, until holders of Certificates have surrendered them for exchange as provided herein, (i) no dividends or other distributions shall be paid with respect to any shares represented by such Certificates and no payment for fractional shares shall be made, and (ii) without regard to when such Certificates are surrendered for exchange as provided herein, no interest shall be paid on any dividends or other distributions or any payment for fractional shares. Upon surrender of a Certificate, there shall be paid to the holder of such Certificate the amount of any dividends or other distributions which theretofore became payable, but which were not paid by reason of the foregoing, with respect to the number of whole Microsoft Common Shares represented by the certificate or certificates issued upon such surrender. If any certificate for Microsoft Common Shares is to be issued in a name other than thatperiod in which ~~the Certificate surrendered in exchange therefore is registered, it shall be~~offers or sales are being made, a ~~condition of such exchange that the person requesting such exchange pay~~post-effective amendment to this registration statement:
(i) to include any ~~transfer or other taxes~~prospectus required by ~~reason~~section 10(a)(3) of the issuance of certificates for such Microsoft Common Shares in a name other than that of the registered holder of the Certificate surrendered, or establish to the satisfaction of the Surviving A-3 Corporation that such tax has been paid or is not applicable. In connection with its undertakings pursuant to this Section 2.2.3, the Exchange Agent shall be entitled to withhold any income taxes as required by the Code. 2.2.4 No Further Ownership Rights in Company Common Stock. All Microsoft Common Shares and cash delivered upon the surrender for exchange of Company Common Shares in accordance with the terms hereof shall be deemed to have been delivered in full satisfaction of all rights pertaining to such Company Common Shares. After the Effective time there shall be no transfers on the stock transfer books of Company of Company Common Shares. Upon the effectiveness of the Merger, all Company Common Shares shall no longer be outstanding and shall cease to exist, and each Certificate previously representing any such shares shall represent only the right to receive the form of Merger Consideration described in Section 2.1.3. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article II. Certificates surrendered for exchange by any person constituting an "affiliate" of Company for purposes of Rule 145(c) under the Securities Act of 1933, as amended (the ~~"Securities Act"~~“Securities Act”)~~, shall not be exchanged until Microsoft receives a written agreement from such person as provided by Section 6.6. 2.2.5 Return~~;
(ii) to ~~Microsoft. Any Microsoft Common Shares and~~reflect in the prospectus any ~~cash made available to the Exchange Agent and not exchanged for Certificates within nine (9) months~~facts or events arising after the Effective Time and any dividends and distributions held by the Exchange Agent for payment or delivery to the holders of unsurrendered Certificates representing Company Common Stock and unclaimed at the end of such nine month period shall be redelivered or repaid by the Exchange Agent to Microsoft, after which time any holder of Certificates who has not theretofore delivered or surrendered such Certificates to the Exchange Agent, subject to applicable law, shall look as a general creditor only to Microsoft for paymenteffective date of the Microsoft Common Shares, cash in lieu of fractional shares, and any such dividends or distributions. Notwithstanding any provision of this Agreement, none of Microsoft, the Exchange Agent, the Surviving Corporation or any other party hereto shall be liable to any holder of Company Common Stock for any Microsoft Common Shares, cash in lieu of fractional shares or dividends or distributions delivered to a public official pursuant to applicable abandoned property, escheat or similar law. 2.3 Company Options. 2.3.1 Conversion to Microsoft Options. At the Effective Time, each of the then outstanding Company Options (as defined in Section 3.1.2) shall, by virtue of the Merger and at the Effective Time, and without any further action on the part of any holder thereof, be converted into an incentive stock option or a nonstatutory option, depending on the type of Company Option being converted, to purchase that number of Microsoft Common Shares determined by multiplying the number of Company Common Shares subject to such Company Option at the Effective Time by the Exchange Ratio, at an exercise price per Microsoft Common Share equal to the exercise price per share of such Company Option immediately prior to the Effective Time divided by the Exchange Ratio (rounded up to the nearest whole cent) (a "Substituted Microsoft Option"). If the foregoing calculation results in a Substituted Microsoft Option being exercisable for a fraction of a Microsoft Common Share, then the number of Microsoft Common Shares subject to such option shall be rounded down to the nearest whole number of shares. Continuous employment with Company shall be credited to the optionee for purposes of determining the vesting of the number of Microsoft Common Shares subject to exercise under the optionee's Substituted Microsoft Option after the Effective Time. All vested options owned by a holder whose employment or status as a nonemployee director with Company is terminated on or before the Closing must be exercised within ninety (90) days of their termination or such other period as may be provided for in the Company Option and as set forth on Schedule 2.3.1. 2.3.2 Registration. Microsoft shall use its commercially reasonable best efforts to cause the Microsoft Common Shares issuable upon exercise of the Substituted Microsoft Options to be registered as of the Effective time on a then effective Form S-8 promulgated by the SEC or to file a Form S-8 covering such options within ten (10) days of the Effective Time and shall use its best efforts to maintain the A-4 ~~effectiveness of such~~ registration statement ~~or registration statements for so long as such Substituted Microsoft Options remain outstanding. With respect to those individuals who subsequent to~~(or the Merger will be subject to the reporting requirements under Section 16(a) of the Exchange Act (as defined in Section 3.1.3), Microsoft shall administer Company Options assumed pursuant to this Section 2.3 in a manner that complies with Rule 16b-3 promulgated by the SEC under the Exchange Act, but shall have no responsibility for such compliance by Company or its predecessors. Microsoft shall use its commercially reasonable best efforts to give holders of Substituted Microsoft Options notice of their new options as soon as practicable after Effective time. 2.3.3 Incentive Stock Options. In the case of any Company Options to which Section 421 of the Code applies by reason of Section 422 of the Code ("Incentive Stock Options"), the option exercise price, the number of Microsoft Common Shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in order to comply with Section 424(a) of the Code. Microsoft will make good faith efforts to ensure, to the extent permitted by the Code and to the extent required by and subject to the terms of any such Incentive Stock Options, that Company Options which qualified as Incentive Stock Options prior to the Effective Time continue to qualify as Incentive Stock Options of Microsoft after the Effective Time. ARTICLE III REPRESENTATIONS AND WARRANTIES 3.1 Representations and Warranties of Company. Except as disclosed in the Company SEC Documents (as defined below) or in a disclosure schedule which identifies by section number the section and subsection to which such disclosure relates (provided, however, that Company shall be deemed to have adequately disclosed with respect to any section or subsection any matters that are clearly described elsewhere in such document if a reader(s) who has not been actively involved in Company but is generally familiar with the business software development industry can understand the applicability of such disclosure to such non-referenced sections or subsections) and is delivered by Company to Microsoft concurrently with the execution of this Agreement (the "Company Disclosure Schedule"), whether or not the Company Disclosure Schedule is referred to in a specific section or subsection and except as specifically provided for in this Agreement or any agreement attached as an Exhibit hereto, Company represents and warrants to Microsoft and Sub as follows: 3.1.1 Organization, Standing and Power. Each of Company and its Subsidiaries is an entity duly organized, validly existing and in good standing, as applicable, under the laws of its jurisdiction of incorporation or organization, has all requisite power and authority to own, lease and operate its properties and to carry on its businesses as now being conducted, and is duly qualified and in good standing to do business in each jurisdiction in which a failure to so qualify would have a Material Adverse Effect (as hereinafter defined) on the Business Condition (as hereinafter defined) of Company. As used in this Agreement, "Business Condition" with respect to any entity shall mean the financial condition, results of operations, assets, or prospects (without giving effect to the consequences of the transactions contemplated by this Agreement) of such entity and its Subsidiaries taken as a whole. For the purposes of this Agreement, the term "Material Adverse Effect" means material adverse effect other than resulting from (i) changes attributable to conditions affecting the Company Business or the software industry generally (in the case of Company), or the software industry generally (in the case of Microsoft), (ii) changes in general economic, political, or regulatory conditions, or (iii) changes attributable to the announcement or pendency of the Merger. "Prospects" shall mean developments, facts or conditions which are known to such entity as of the date of this Agreement and which in the ordinary course of events would be reasonably expected to have a material effect on future operations of the business assuming the continuation of the business as presently conducted by such entity on a stand alone basis. "Company Business" shall mean the business generally related to development, licensing and sales of business management software. Company has delivered to Microsoft complete and correct copies of the Articles of Incorporation, Bylaws, and minutes of the board (and each committeemost recent post-effective amendment thereof) ~~of directors of Company A-5~~ and the comparable governing instrument and minutes of each of its Subsidiaries, in each case, as amended to the date hereof. All Subsidiaries of Company are identified in the Company Disclosure Schedule. 3.1.2 Capital Structure. The authorized capital stock of Company consists of 100,000,000 Company Common Shares of which 20,266,146 are outstanding as of November 30, 2000, 30,000,000 shares of preferred stock, par value $0.01 per share (the "Company Preferred Stock") of which none are authorized, designated, or outstanding as of the date hereof, and no shares are held by Subsidiaries of Company. In addition, as of the date hereof, 1,504,459 Company Common Shares are reserved for issuance upon the exercise of outstanding stock options ("Company Options") under the 1983 Incentive Stock Option Plan, the 1997 Stock Incentive Plan, the Outside Directors Stock Option Plan, the 1997 Employee Stock Purchase Plan, 1997 Non-Employee Director Stock Option Plan of Solomon Software, Inc, Solomon Software (TLB, Inc.) Stock Option Plan, the 1991 Employee Stock Option Plan of Smith, Dennis & Gaylord, the Second TLB, Inc. Key Employees Stock Option Plan Free Standing Options, FRx Software Corporation 1996 Stock Option Plan, FRx Software Corporation 1999 Stock Option/Stock Issuance Plan, Realworld Corporation 1997 Stock Option Plan, and other stock option plans and other options (the "Company Stock Plans"). All outstanding Company Common Shares are, and any Company Common Shares issued upon exercise of any Company Options will be validly issued, fully paid, nonassessable and not subject to any preemptive rights, or to any agreement to which Company is a party or by which Company may be bound. Except for 3,104,818 shares of Common Stock issuable upon the exercise of options outstanding as of November 30, 2000, there are not any options, warrants, calls, conversion rights, commitments, agreements, contracts, understandings, restrictions, arrangements or rights of any character to which Company or any Subsidiary of Company is a party or by which any of them may be bound obligating Company or any Subsidiary of Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of the capital stock of Company or of any Subsidiary of Company or obligating Company or any Subsidiary of Company to grant, extend or enter into any such option, warrant, call, conversion right, commitment, agreement, contract, understanding, restriction, arrangement or right. Company does not have outstanding any bonds, debentures, notes or other indebtedness the holders of which have the right to vote (or convertible or exercisable into securities having the right to vote) with holders of Company Common Stock on any matter ("Company Voting Debt"). Company is the owner, directly or indirectly, of all outstanding shares of capital stock of each of its Subsidiaries free and clear of all liens, pledges, security interests, claims or other encumbrances and all such shares are duly authorized, validly issued, fully paid and nonassessable. Company has never issued any stock appreciation rights, stock performance awards, dividend equivalents, tracking stock or other stock-based or equity-linked securities or a similar nature. 3.1.3 Authority. Company has all requisite corporate power and authority to enter into this Agreement and subject, in the case of this Agreement, to approval of this Agreement by the shareholders of Company and the Company Required Statutory Approvals (as defined below), to consummate the transactions contemplated hereby. The execution and delivery by Company of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Company, including the unanimous approval of the Board of Directors of Company (including the unanimous approval of the non-employee directors of the Company so as satisfy the requirements of Section 302A.673(d) and 302A.675 of the MBCA), subject only to approval of this Agreement by the shareholders of Company. The amendment to the Company's Articles of Incorporation dated February 26, 1995 opting out of the Minnesota Control Share Statute (MBCA 302A.671 and 302A.449 subd.7), was duly adopted by the shareholders as reflected in the minutes of the shareholder meeting as of January 26, 1995. Accordingly, the authorization, execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereunder will not, result in a "control share acquisition" as defined in Section 302A.011 of the MBCA. Assuming for the purpose of this Section that no person or entity associated or affiliated with Microsoft is an "interested shareholder" (as such term is defined in the MBCA) of Company who has not continuously been an interested shareholder of Company during the four-year period preceding the Merger, Section 302A.673 of the MBCA applicable to A-6 a "business combination" does not, and will not, prohibit the transactions contemplated hereunder. No other "fair price", "moratorium" or other similar anti-take-over statute or regulation prohibits the Merger or the other transactions contemplated by this Agreement. This Agreement has been duly executed and delivered by Company and constitutes a valid and binding obligation of Company enforceable in accordance with its terms, except that such enforceability may be subject to (i) bankruptcy, insolvency, reorganization or other similar laws relating to enforcement of creditors' rights generally and (ii) general equitable principles. Subject to the satisfaction of the conditions set forth in Sections 7.1 and 7.3, the execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby will not, conflict with or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or the creation of a lien, pledge, security interest, charge or other encumbrance on assets (any such conflict, violation, default, right, loss or creation being referred to herein as a "Violation") pursuant to (a) any provision of the Articles of Incorporation or Bylaws of Company or the comparable governing instruments of any Subsidiary or (b) any loan or credit agreement, note, bond, mortgage, indenture, contract, lease, or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Company or any Subsidiary of Company or their respective properties or assets, other than, in the case of (b), any such Violation which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not ~~have a Material Adverse Effect on~~exceed that which was registered) and any deviation from the ~~Business Condition of Company. No consent, approval, order~~low or authorization of or registration, declaration or filing with or exemption by (collectively "Consents"), any court, administrative agency or commission or other governmental authority or instrumentality, whether domestic or foreign (each a "Governmental Entity"), is required by or with respect to Company in connection with the execution and delivery of this Agreement or the consummation by Companyhigh end of the transactions contemplated hereby or thereby, except for Consents, if any, relating to (w) the filing of a premerger notification report and all other required documents by Microsoft and Company, and the expiration of all applicable waiting periods, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") and any similar required foreign antitrust filings, (x) the filing with the Securities and Exchange Commission (the "SEC") of the S-4, including the Proxy Statement/Prospectus (as defined in Section 3.1.5), and such reports and information asestimated maximum offering range may be ~~required under~~reflected in the ~~Securities Exchange Act~~form of 1934, as amended (the "Exchange Act"), the Securities Act and the rules and regulations promulgated by the SEC under the Exchange Act or the Securities Act, and the declaration of the effectiveness of the S-4 by the SEC, (y) such filings, authorizations, orders and approvals as may be required under foreign laws, state securities laws and the NASD Bylaws or "blue sky" laws, and (z) the filing of the Merger Documents with the Secretaries of State of the States of Minnesota and Washington (the filings and approvals referred to in clauses (w) through (z) are collectively referred to as the "Company Required Statutory Approvals") and except for such other Consents which if not obtained or made would not have a Material Adverse Effect on the Business Condition of Company. 3.1.4 SEC Documents and Financial Statements. Company has furnished or made available to Microsoft a true and complete copy of each statement, report, schedule, registration statement and definitive proxy or information statementprospectus filed ~~by Company, or any present or former Subsidiary,~~ with the SEC ~~since March 5, 1997 (the "Company SEC Documents"), which are all the documents (other than preliminary material) that Company, or any present or former Subsidiary, was required~~
II-6

pursuant to file with the SEC since such date. As of their respective filing dates, the Company SEC Documents complied in all material respects with the requirements of the Exchange Act or the Securities Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Company SEC Documents, and none of the Company SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of Company includedRule 424(b) if, in the ~~Company SEC Documents (the "Company Financial Statements") comply as to form~~aggregate, the changes in ~~all material respects with all applicable accounting requirements~~volume and ~~with the published rules and regulations of the SEC with respect thereto and have been prepared in accordance with generally accepted A-7~~ ~~accounting principles consistently applied (except as may be indicated~~price represent no more than 20% change in the ~~notes thereto) and fairly present the consolidated financial position of Company as at the dates thereof and the results of their operations and cash flows for the periods then ended (subject,~~maximum aggregate offering price set forth in the ~~case~~“Calculation of unaudited statements, to normal, recurring audit adjustments not material in scope or amount). Company currently satisfies the requirements to file on Form S-3 under the Securities Act. There has been no change in Company's accounting policies or the methods of making accounting estimates or changes in estimates that are material to Company Financial Statements, except as describedRegistration Fee” table in the ~~notes thereto. 3.1.5 Information Supplied. None of the information supplied or~~effective registration statement; and

(iii) to be supplied by Company, its auditors, attorneys, financial advisors or other consultants or advisors for inclusion in (i) the registration statement on Form S-4, and any amendment thereto, to be filed under the Securities Act with the SEC by Microsoft in connection with the issuance of the Microsoft Common Shares in or as a result of the Merger (the "S-4"), or (ii) the proxy statement and any amendment or supplement thereto to be distributed in connection with Company's meetings of shareholders to vote upon this Agreement and the transactions contemplated hereby (the "Proxy Statement" and, together with the prospectus included in the S-4, the "Proxy Statement/Prospectus") will, in the case of the Proxy Statement and any amendment or supplement thereto, at the time of the mailing of the Proxy Statement and any amendment or supplement thereto, and at the time of the meeting of shareholders of Company to vote upon this Agreement and the transactions contemplated hereby, or, in the case of the S-4, as amended or supplemented, at the time it becomes effective and at the time of any post- effective amendment thereto and at the time of the meeting of shareholders of Company, contain any untrue statement of a material fact or omit to stateinclude any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they are made, not misleading or necessary to correct any statement in any earlier filing with the SEC of such Proxy Statement/Prospectus or any amendment or supplement thereto or any earlier communication (including the Proxy Statement/Prospectus) to shareholders of Companyinformation with respect to the ~~transactions contemplated by this Agreement. The Proxy Statement/Prospectus will comply as to form in all material respects with the provisions~~plan of all applicable laws, including the provisions of the Exchange Act and the rules and regulations of the SEC thereunder, except that Company makes no representation with respect to information supplied by Microsoft specifically for inclusion therein. 3.1.6 No Defaults. Neither Company nor any Subsidiary of Company is, or has received notice that it would be with the passage of time, in default or violation of any term, condition or provision of (i) the Articles of Incorporation or Bylaws of Company or any comparable governing instrument of any Subsidiary of Company; (ii) any judgment, decree or order applicable to Company or any Subsidiary of Company; or (iii) any loan or credit agreement, note, bond, mortgage, indenture, contract, agreement, lease, license or other instrument to which Company or any Subsidiary of Company is now a party or by which it or any of its properties or assets may be bound, except for defaults and violations which, individually or in the aggregate, woulddistribution not have a Material Adverse Effect on the Business Condition of Company. 3.1.7 Litigation. There is no claim, action, suit or proceeding pending or, to the knowledge of Company, threatened, which would, if adversely determined, individually or in the aggregate, have a Material Adverse Effect on the Business Condition of Company, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against Company having, or which, insofar as reasonably can be foreseen, in the future could have, any such effect. There is no investigation pending or, to the knowledge of Company, threatened against Company, before any foreign, federal, state, municipal or other governmental department, commission, board, bureau, agency, instrumentality or other Government Entity. The Company Disclosure Schedule sets forth, with respect to any such pending action, suit, proceeding, or investigation to which Company is a party, the forum, the parties thereto, the subject matter thereof, and the amount of damages claimed. 3.1.8 No Material Adverse Change. Since May 31, 2000, Company has conducted its business in the ordinary course and there has not been: (i) any Material Adverse Effect on the Business Condition of Company or any development or combination of developments of which management of Company has A-8 knowledge which is reasonably likely to result in such an effect; (ii) any damage, destruction or loss, whether or not covered by insurance, having a Material Adverse Effect on the Business Condition of Company; (iii) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to the capital stock of Company; (iv) any increase or change in the compensation or benefits payable or to become payable by Company or any Subsidiary to any of their employees, except in the ordinary course of business consistent with past practice; (v) any acquisition or sale of a material amount of property of Company, except in the ordinary course of business; (vi) any increase or modification in any bonus, pension, insurance or other employee benefit plan for, or with any of its employees; or (vii) the granting of stock options, restricted stock awards, stock bonuses, stock appreciation rights and similar equity based awards other than stock options granted in connection with the hiring of new employees with the number of shares having been granted in numbers consistent with Company's past practices and which will not result in a compensation charge against earnings or the loss of deductions for federal or state income tax purposes. 3.1.9 Absence of Undisclosed Liabilities. Company has no liabilities or obligations (whether absolute, accrued or contingent) except (i) liabilities, obligations or contingencies ("Liabilities") that are accrued or reserved against in the consolidated balance sheet of Company as of May 31, 2000 or reflected in the notes thereto; or (ii) additional Liabilities reserved against since May 31, 2000 that (x) have arisen in the ordinary course of business; and (y) are accrued or reserved against on the books and records of Company; or (iii) additional Liabilities that have not arisen in the ordinary course of business, but which Liabilities would not have a Material Adverse Effect on the Business Condition of Company. 3.1.10 No Violations. The Company Business is not being conducted in violation of, (whether or not a violation has been asserted), any applicable law, rule or regulation, judgment, decree or order of any Governmental Entity which could cause Liability, except for any violations or practices, which, individually or in the aggregate, have not had and will not have a Material Adverse Effect on the Business Condition of Company. 3.1.11 Certain Agreements. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (i) result in any payment (including, without limitation, severance, unemployment compensation, parachute payment, bonus or otherwise) becoming due to any director, employee or independent contractor of Company, from Company under any Plan (as hereinafter defined), agreement or otherwise, (ii) materially increase any benefits otherwise payable under any Plan or agreement, or (iii) result in the acceleration of the time of payment or vesting of any such benefits. 3.1.12 Employees. Company does not have any written contract of employment or other employment agreement, including oral agreements, with any of its employees that is not terminable at will by Company. Company has not made any representations to members of its work force or their representatives that is inconsistent with the at-will employment relationship. Company is not a party to any past or pending, or to Company's knowledge, threatened, labor dispute, organizing drive, union election or demand for recognition. Company has complied in all material respects with all applicable federal, state, and local laws, ordinances, rules and regulations and requirements relating to the employment of labor, including but not limited to the provisions thereof relating to wages, hours, collective bargaining, payment of social security, unemployment and withholding taxes, worker health and safety, plant closing and mass layoffs and ensuring equality of opportunity for employment and advancement of minorities and women. There are not claims pending, or to Company's knowledge, threatened to be brought, in any court or administrative agency by any former or current Company employees for compensation, pending severance benefits, vacation time, vacation pay or pension benefits, or any other claim pending from any current or former employee or any other person or governmental agency arising out of Company's status as employer, whether in the form of claims for employment discrimination, harassment, unfair labor practices, grievances, worker health or safety, wrongful discharge or otherwise. Company has not terminated the employment of any employee within the period of ninety (90) days prior to the date of this A-9 Agreement. Company has no reason to believe that the requisite percentages of employees set forth in Section 7.2.6 will not accept offer letters or employment continuation letters. 3.1.13 Employee Benefit Plans. Each material employee benefit plan ("Plan") covering active, former or retired employees of Company is listed in the Company Disclosure Schedule. Company has provided to Microsoft a copy of each Plan document (or, if there is no Plan document, a written description), and where applicable, any related trust agreement, annuity or insurance contract and, where applicable, the most recent annual reports (Form 5500) filed with the IRS. To the extent applicable, each Plan complies, in all material respects, with the requirements of the Employee Retirement Income Security Act of 1974 as amended ("ERISA"), and the Code, and any Plan intended to be qualified under Section 401(a) of the Code has been determined by the IRS to be so qualified and has remained tax- qualified to this date and its related trust is tax-exempt and has been so since its creation. No Plan is covered by Title IV of ERISA or Section 412 of the Code. No material "prohibited transaction," as defined in ERISA Section 406 or Code Section 4975 has occurred with respect to any Plan. Each Plan has been maintained and administered in material compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations, including but not limited to ERISA and the Code, which are applicable to such Plans. There are no pending or reasonably anticipated material claims against or otherwise involving any of the Plans and no suit, action or other litigation (excluding claims for benefits incurred in the ordinary course of Plan activities) has been brought against or with respect to any Plan. All material contributions, reserves or premium payments to each Plan to the date hereof have been made or properly accrued. Company has not incurred any liability under Subtitle C or D of Title IV of ERISA with respect to any "single-employer plan," within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by Company, or any entity which is considered one employer with Company under Section 4001 of ERISA. Company has not incurred, and will not incur as a result of the transactions contemplated by this Agreement, any withdrawal liability under Subtitle E of Title IV of ERISA with respect to any "multiemployer plan," within the meaning of Section 4001(a)(3) of ERISA. Company has no obligation for retiree health or life benefits under any Plan, except as set forth on the Company Disclosure Schedule or as required by state law or to avoid excise taxes under Section 4980(B) of the Code. There are no restrictions on the rights of Company to amend or terminate any Plan without incurring any liability thereunder. Company has not engaged in, nor is it a successor or parent corporation to an entity that has engaged in, a transaction described in ERISA Section 4069. There have been no amendments to, written interpretation of, or announcement (whether or not written) by Company relating to, or change in employee participation or coverage under, any Plan that would increase materially the expense of maintaining such Plan above the level of expense incurred in respect thereof for the year ended May 31, 2000. No tax under Section 4980B of the Code has been incurred in respect of any Plan that is a group health plan, as defined in Section 5000(b)(1) of the Code. 3.1.14 Real Property. All real property owned by Company ("Owned Real Property") is listed in the Company Disclosure Schedule. Company has good and marketable title, free and clear of all title defects, security interests, pledges, options, claims, liens, encumbrances, and restrictions of any nature whatsoever (including, without limitation, leases, conditional sale contracts, collateral security arrangements, and other title or interest-retaining agreements) in fee simple absolute to all Owned Real Property. There are no condemnation proceedings pending or, to the Knowledge of Company, threatened in respect to the Owned Real Property. There are no leases, subleases, licenses, occupancy agreements or other agreements, oral or written, under which Company is the lessor of any portion of the Owned Real Property. All Owned Real Property used in the operation of the Company Business is in satisfactory condition and repair for the requirements of the Company Business as presently conducted. 3.1.15 Major Contracts. Except as otherwisepreviously disclosed in the Company Disclosure Schedule, Company is not a party to or subject to: (a) Any union contract, or any employment contract or arrangement providing for future compensation, written or oral, with any officer, consultant, director or employee which (i) exceeds A-10 $150,000 per annum, or (ii) is not terminable by it or its Subsidiary on 30 days notice or less without penalty or obligation to make payments related to such termination; (b) Any joint venture contract or arrangement or any other agreement which has involved or is expected to involve a sharing of revenues of $500,000 per annum or more to other persons; (c) Any lease for real or personal property in which the amount of payments which Company is required to make on an annual basis exceeds $250,000 and which has not been filed as an exhibit to the Company SEC Documents; (d) Any material agreement, license, franchise, permit, indenture or authorization which has not been terminated or performed in its entirety and not renewed which may be, by its terms, terminated, impaired or adversely affected by reason of the execution of this Agreement, the closing of the Merger, or the consummation of the transactions contemplated hereby; or (e) Any contract containing covenants purporting to materially limit Company's freedom or that of any Subsidiary of Company to compete in any line of business in any geographic area. All contracts, plans, arrangements, agreements, leases, licenses, franchises, permits indentures, authorizations, instruments and other commitments listed in the Company Disclosure Schedule pursuant to this Section 3.1.15 are valid and in full force and effect and Company has not, nor to the knowledge of Company has any other party thereto, breached any material provisions of, or is in default in any material respect under the terms thereof. 3.1.16 Taxes. Company has timely filed (or caused to be filed) all federal, state, local and foreign tax returns, reports, information statements and similar statements ("Returns") required to be filed by each of them, which Returns are true, correct and complete in all material respects, and paid all taxes required to be paid as shown on such Returns. All material taxes required to be paid in respect of the periods covered by such Returns ("Return Periods") by Company have either been paid or fully accrued on the books of Company. Company has fully accrued all material unpaid taxes in respect of all periods (or the portion of any such periods) subsequent to the Return Periods. Company has not taken any position on any tax return or filing which is or would be subject to penalties under Section 6662 of the Code. Company has not requested or been granted any extension of time to file any Return. There is no material difference between the amounts of the book basis and the tax basis of any assets of Company that is not reflected in an appropriate accrual of deferred tax liability on the books of Company. All material elections with respect to taxes made by or with respect to Company are set forth on the Company Disclosure Schedule. Company has provided Microsoft true and correct copies of all Returns, work papers, correspondence with any taxing authority, tax planning memoranda and other tax data. No deficiencies or adjustments for any tax have been claimed, proposed, assessed or, to the Knowledge of Company, threatened. No claim has ever been made in writing by an authority in a jurisdiction where Company does not file Returns that Company is or may be subject to taxation by that jurisdiction. The Company Disclosure Schedule accurately sets forth the years for which Company's federal and state income tax returns, respectively, have been audited and any years which are the subject of a pending audit by the Internal Revenue Service ("IRS") and the applicable state agencies. Except as so disclosed, Company is not subject to any pending or threatened tax audit or examination and Company has not waived or entered in to any other agreement with respect to any statute of limitation with respect to its taxes or Returns. The Company Financial Statements contain adequate accruals for all unpaid taxes. For the purposes of this Agreement, the terms "tax" and "taxes" shall include all federal, state, local and foreign taxes, assessments, duties, tariffs, registration fees, and other governmental charges including without limitation all income, franchise, property, production, sales, use, payroll, license, windfall profits, severance, withholding, excise, gross receipts and other taxes, as well as any interest, additions or penalties relating thereto and any interest in respect of such additions or penalties. The Company Disclosure Schedule sets forth as of the date hereof a list of all joint ventures, partnerships, limited liability companies or other business entities (within the meaning of Treas. Reg. Section 701.7701-3) in A-11 which the Company has an interest. No consent or agreement has been made under Section 341(f) of the Code by or on behalf of Company or any predecessor thereof. Company has no interests in real estate, which would be subject to any real estate excise, transfer or other similar tax as a result of the consummation of the transactions contemplated by this Agreement. There are no liens for taxes upon the assets of Company except for taxes that are not yet payable. Company has withheld all material taxes required to be withheld in respect of wages, salaries and other payments to all employees, officers and directors and timely paid all such amounts withheld to the proper taxing authority. Company is not party to any tax sharing or tax allocation agreements and Company has not been a member of any affiliated group of corporations within the meaning of Section 1504 of the Code other than the group of which Company is currently the common parent. Company does not have and has not had a "permanent establishment" (as defined in any applicable income tax treaty) in any country other than the United States. There are no outstanding rulings or requests for rulings from any taxing authority with respect to Company. Company does not have an "overall foreign loss" as defined in Section 904(f) of the Code. The use of any net operating loss carryover, net capital loss carryover, unused investment credit or other credit carryover of the Company is not subject to any limitation pursuant to Section 382 of the Code or otherwise. Company is not and has never been a real property holding corporation within the meaning of Section 897 of the Code. Company has not participated in, or cooperated with, an international boycott within the meaning of Section 999 of the Code. Company is not required to include in income any adjustment pursuant to Section 481(a) of the Code (or similar provisions of other law or regulations) in its current or in any future taxable period, by reason of a change in accounting method; nor does Company have any knowledge that the IRS (or other taxing authority) has proposed, or is considering, any such change in accounting method. Company will not be obligated to make a payment, in connection with the transactions contemplated hereunder or otherwise, that would be a "parachute payment" as such term is defined in Section 280G of the Code without regard to whether such payment is reasonable compensation for services performed or to be performed in the future; provided, however, that for purposes of the foregoing, any payments made in connection with the offer letters to employees and continuing employment with Microsoft from and after the Closing Date pursuant to Section 4.9 hereof and Exhibits 4.9(B) (i) and (ii) hereto shall not be taken into account. Company will not be obligated to pay any excise taxes or similar taxes imposed on any employee or former employee of, or individual providing services to, Company under Section 4999 of the Code or any similar provisions as a result of the consummation of the transactions contemplated hereby, either alone or in connection with any other event. None of the assets of Company is property that is required to be treated as owned by any other person pursuant to the "safe harbor lease" provisions of former Section 168(f)(8) of the Internal Revenue Code of 1954 as amended and in effect immediately prior to the enactment of the Tax Reform Act of 1986 and none of the assets of Company is "tax exempt use property" within the meaning of Section 168(h) of the Code. None of the assets of Company secures any debt the interest on which is tax exempt under Section 103 of the Code. Company has not constituted either a "distributing corporation" or a "controlled corporation" in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (i) in the two (2) years prior to the date of this Agreement, or (ii) in a distribution which could otherwise constitute part of a "plan" or "series of related transactions" (within the meaning of Section 355(e) of the Code) in conjunction with the transactions contemplated hereunder. 3.1.17 Interests of Officers. None of Company's officers or directors has, nor to the knowledge of Company does any officer or director of any Subsidiary have, any material interest in any property, real or personal, tangible or intangible, including inventions, copyrights, trademarks or trade names, used in or pertaining to the Company Business, or any supplier, distributor or customer of Company, except, in the case of Company, for the normal rights of a shareholder, and except for rights under existing employee benefit plans. A-12 3.1.18 Technology and Intellectual Property Rights. (a) The "Company Intellectual Property" consists of the following: (i) all patents, trademarks, trade names, service marks, mask works, domain names, copyrights and any renewal rights, applications and registrations for any of the foregoing, and all trade dress, net lists, schematics, technology, manufacturing processes, supplier lists, trade secrets, know-how, moral rights, computer software programs or applications (in both source and object code form) owned by Company; (ii) all goodwill associated with trademarks, trade names service marks and trade dress owned by Company; (iii) all software and firmware listings, and updated software source code, and complete system build software and instructions related to all software described herein owned by Company; (iv) all documents, records and files relating to design, end user documentation, manufacturing, quality control, sales, marketing or customer support for all intellectual property described herein owned by Company; (v) all other tangible or intangible proprietary information and materials owned by Company; and (vi) all license and other rights held by Company in any third party product, intellectual property, proprietary or personal rights, documentation, or tangible or intangible property, including without limitation the types of intellectual property and tangible and intangible proprietary information described in (i) through (v) above; that are being, and/or have been, used, or are currently under development for use, in the business of Company as it has been, is currently or is currently anticipated to be (up to the Closing), conducted. Company Intellectual Property described in clauses (i) to (v) above is referred to herein as "Company Owned Intellectual Property" and the Company Intellectual Property described in clause (vi) above is referred to herein as "Company Licensed Intellectual Property." Unless otherwise noted, all references to "Company Intellectual Property" shall refer to both Company Owned Intellectual Property and Company Licensed Intellectual Property. (b) The Company Disclosure Schedule lists: (i) all patents, registered copyrights, mask works, trademarks, service marks, trade dress, any renewal rights for any of the foregoing, and any applications and registrations for any of the foregoing, that are included in the Company Owned Intellectual Property; (ii) all hardware products and tools, software products and tools, and services that are currently published, offered, or under development by Company; (iii) all licenses, sublicenses and other agreements to which Company is a party and pursuant to which any other person is authorized to have access to or use the Company Owned Intellectual Property or exercise any other right with regard thereto (except standard form, unmodified end user license agreements for Company's commercially distributed products, entered into between Company and the end users of Company products); (iv) all Company Licensed Intellectual Property (other than license agreements for standard "shrink wrapped, off the shelf," commercially available, third party products used by the Company but including any software tools or "open source" licenses); and (v) any obligations of exclusivity, noncompetition, nonsolicitation, right of first refusal or first negotiation to which Company is subject. (c) The Company Intellectual Property consists solely of items and rights that are either: (i) owned by Company, (ii) in the public domain, or (iii) rightfully used and authorized for use by Company and its successors pursuant to a valid license or other agreement. Company has all rights in the Company Intellectual Property reasonably necessary to carry out Company's current and anticipated future (up to the Closing) activities and has or had all rights in the Company Intellectual A-13 Property reasonably necessary to carry out Company's former activities, including without limitation, if necessary to carry out such activities, rights to make, use, exclude others from using, reproduce, modify, adapt, create derivative works based on, translate, distribute (directly and indirectly), transmit, display and perform publicly, license, rent, lease, assign, and sell the Company Intellectual Property in all geographic locations and fields of use, and to sublicense any or all such rights to third parties, including the right to grant further sublicenses. All software and firmware listings that are part of the Company Owned Intellectual Property are adequately commented in accordance with current software industry standards. (d) Company is not, nor as a result of the execution or delivery of this Agreement, or performance of Company's obligations hereunder, will Company be, in violation of any license, sublicense or other agreement relating to the Company Intellectual Property to which Company is a party or otherwise bound. Except pursuant to the terms of the agreements listed in the Company Disclosure Schedule, Company is not obligated to provide any consideration (whether financial or otherwise) to any third party, nor is any third party otherwise entitled to any consideration, with respect to any exercise of rights by Company or its successors in the Company Intellectual Property. (e) The use, reproduction, modification, distribution, licensing, sublicensing, sale, or any other exercise of rights in any Company Owned Intellectual Property or any other authorized exercise of rights in or to the Company Owned Intellectual Property by Company or its licensees does not and will not infringe any copyright, patent, trade secret, trademark, service mark, trade name, firm name, logo, trade dress, mask work, moral right, other intellectual property right, right of privacy, right of publicity or right in personal or other data of any person. No claims (i) challenging the validity, effectiveness, or ownership by Company of any of the Company Owned Intellectual Property, or (ii) to the effect that the use, reproduction, modification, manufacturing, distribution, licensing, sublicensing, sale or any other exercise of rights in any Company Owned Intellectual Property by Company or its licensees infringes, or will infringe on, any intellectual property or other proprietary or personal right of any person, have been asserted or, to the knowledge of Company, are threatened by any person nor, to the knowledge of Company, are there any valid grounds for any bona fide claim of any such kind. All granted or issued patents and mask works and all registered trademarks listed on the Company Disclosure Schedule and all copyright registrations held by Company are valid, enforceable and subsisting. To the knowledge of Company, there is no unauthorized use, infringement or misappropriation of any of the Company Owned Intellectual Property by any third party, employee or former employee. (f) No parties other than Company possess any current or contingent rights to any source code that is part of the Company Owned Intellectual Property (including, without limitation, through any escrow account). (g) The Company Disclosure Schedule lists all parties who have created any material portion of, or otherwise have any rights in or to, the Company Owned Intellectual Property other than employees of Company whose work product was created by them entirely within the scope of their employment by Company and constitutes works made for hire owned by Company. Company has secured from all parties who have created any material portion of, or otherwise have any rights in or to, the Company Owned Intellectual Property valid and enforceable written assignments or licenses of any such work or other rights to Company and has provided true and complete copies of such assignments or licenses to Microsoft. (h) The Company Disclosure Schedule includes a true and complete list of support and maintenance agreements relating to Company Owned Intellectual Property or to which Company is a party as to Company Licensed Intellectual Property including the identity of the parties and the respective dates of such agreements and remedies for their breach. (i) Company has obtained legally binding written agreements from all employees and third parties with whom Company has shared confidential proprietary information (i) of Company, or A-14 (ii) received from others which Company is obligated to treat as confidential, which agreements require such employees and third parties to keep such information confidential. (j) Company has obtained any and all necessary consents from consumers with regard to the Company's collection and dissemination of personal consumer information in accordance with the privacy policy published on any website owned and/or operated by or on behalf of Company. Company's practices regarding the collection and use of consumer personal information are and have been in accordance with such privacy policies. (k) The Company Owned Intellectual Property is, and any products manufactured and commercially released by Company or currently under development, are fully Year 2000 Compliant in all material respects and will not cease to be fully Year 2000 Compliant in any material respect at any time during or after the calendar year 2000. To the best of Company's knowledge, the Company Licensed Intellectual Property is fully Year 2000 Compliant in all material respects and will not cease to be fully Year 2000 Compliant in any material respect at any time during or after the calendar year 2000. Schedule 3.1.5(k) sets forth the tests, inquiries and other activities undertaken by Company up to Closing, with respect to the Year 2000 Compliant nature of any and all Company Licensed Intellectual Property. For the purposes of this Agreement, "Year 2000 Compliant" means that neither the performance nor the functionality of the applicable Company Intellectual Property or applicable product has been or will be materially affected by dates prior to, during or after the calendar year 2000 AD and in particular (but without limitation): (i) such Company Intellectual Property or product accurately receives, provides and processes, and will accurately receive, provide and process four-digit year date/time data (including calculating, comparing and sequencing) from, into and between the twentieth and twenty-first centuries, including calendar years 1999, 2000 and 2001; (ii) such Company Intellectual Property or product will not malfunction, cease to function, provide invalid or incorrect results or cause any interruption in the operation of the business of Company as a result of any four-digit year date/time data; (iii) date-based functionality of such Company Intellectual Property or product behaves and will continue to behave consistently for dates prior to, during and after the year 2000; (iv) in all interfaces and data storage of such Company Intellectual Property or product, the century in any date is and will be specified either explicitly or by unambiguous algorithms or inferencing rules; and (v) the year 2000 was and will continue to be recognized as a leap year by such Company Intellectual Property or product. 3.1.19 Material Relations. To Company's knowledge, none of the parties to any of the major contracts identified in the Company Disclosure Schedule pursuant to Section 3.1.15 have terminated, or in any way expressed an intent to materially reduce or terminate the amount of its business with Company in the future. 3.1.20 Opinion of Financial Advisor. Company has received the opinion of Goldman, Sachs & Co., dated the date hereof, to the effect that, as of such date and based upon and subject to the matters and assumptions set forth therein, the Exchange Ratio is fair, from a financial point of view, to Company's shareholders. 3.1.21 Vote Required. The affirmative vote of the holders of a majority of the outstanding Company Common Shares is the only vote of the holders of Company's capital stock necessary to approve this Agreement and the consummation of the transactions contemplated hereby. 3.1.22 Brokers and Finders. Other than Goldman, Sachs & Co. in accordance with the terms of its engagement letter, a copy of which has previously been provided to Microsoft, none of Company nor any A-15 of its directors, officers or employees has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or similar payments in connection with the transactions contemplated by this Agreement. 3.1.23 Change of Control. With regard to any options, stock, restricted stock, stock bonus or other awards granted under the Company Stock Plans which are not exercisable or vested prior to the Effective Time, Company has not taken any action to make such options or awards exercisable or vested by reason of the Merger. Company has taken all action necessary relating to the Company Stock Plans to provide that the occurrence of the transactions contemplated by this Agreement shall not entitle participants under such plans to a cash-out or acceleration of the stock options, restricted stock, stock bonus or other awards granted to them thereunder. 3.1.24 Leases in Effect. All real property leases and subleases as to which Company or any Subsidiary is a party and any amendments or modifications thereof which have been filed as exhibits to the Company SEC Documents or are listed on the Company Disclosure Schedule pursuant to Section 3.1.15(c) (each a "Lease" and collectively, the "Leases") are valid, in full force and effect, enforceable, and there are no existing material defaults on the part of Company, and Company has not received nor given notice of default or claimed default with respect to any Lease, nor is there any event that with notice or lapse of time, or both, would constitute a default thereunder. No consent is required from any party under any Lease in connection with the completion of the transactions contemplated by this Agreement, and Company has not received notice that any party to any Lease intends to cancel, terminate, or refuse to renew the same or to exercise any option or other right thereunder, except where the failure to receive such consent, or where such cancellation, termination or refusal, would not have a Material Adverse Effect on Company's Business Condition. 3.1.25 Environmental. (a) There has not been a discharge or release on any real property owned or leased by Company (the "Real Property") of any Hazardous Material (as defined below) in violation of any federal, state or local statute, regulation, rule or order applicable to health, safety and the environment, including without limitation, contamination of soil, groundwater or the environment, generation, handling, storage, transportation or disposal of Hazardous Materials or exposure to Hazardous Materials ("Environmental Laws"), except for those that would not, individually or in the aggregate have a material adverse effect on Company; (b) No Hazardous Material has been used by Company in the operation of Company's business in amounts that would violate any Environmental Laws; (c) Company has not received from any Governmental Entity or third party any written request for information, notice of claim, demand letter, or other notification, notice or information that Company is or may be potentially subject to or responsible for any investigation or clean-up or other remediation of Hazardous Material present on any Real Property; (d) Company does not have, has not undertaken and is not aware of any environmental investigations, studies, audits, tests, reviews, or other analyses, the purpose of which was to discover, identify, or otherwise characterize the condition of the soil, groundwater, air, or presence of asbestos at any of the Real Property sites; (e) To the Knowledge of Company there is no asbestos present in any Real Property presently owned or operated by Company. No asbestos has been removed from any Real Property while such Real Property was owned or operated by Company; and (f) To the Knowledge of Company there are no underground storage tanks on, in or under any of the Real Property. No underground storage tanks have been closed or removed from any Real Property while such Real Property was owned or operated by Company. A-16 "Hazardous Material" means any substance (i) that is a "hazardous waste" or "hazardous substance" under any federal, state or local statute, regulation, rule, or order, (ii) that is toxic, explosive, corrosive, flammable, infectious, radioactive, or otherwise hazardous and is regulated by any Governmental Entity, (iii) the presence of which on any of the Real Property causes or threatens to cause a nuisance on any of the Real Property or to adjacent properties or poses or threatens to pose a hazard to the health or safety of persons on or about any of the Real Property, or (iv) the presence of which on adjacent properties could constitute a trespass by Company or the then current owner(s) of any of the Real Property. 3.1.26 Certain Payments. Neither Company nor to the Knowledge of Company, any person or other entity acting on behalf of Company has, directly or indirectly, on behalf of or with respect to Company: (i) made an unreported political contribution, (ii) made or received any payment which was not legal to make or receive, (iii) engaged in any transaction or made or received any payment which was not properly recorded on the books of Company, (iv) created or used any "off-book" bank or cash account or "slush fund," or (v) engaged in any conduct constituting a violation of the Foreign Corrupt Practices Act of 1977. 3.1.27 Disclosure. No representation or warranty made by Company in this Agreement, nor any document, written information, statement, financial statement, certificate or exhibit prepared and furnished or to be prepared and furnished by Company or its representatives pursuant hereto or in connection with the transactions contemplated hereby, when taken together, contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements or facts contained herein or therein not misleading in light of the circumstances under which they were furnished. 3.1.28 Reliance. The foregoing representations and warranties are made by Company with the knowledge and expectation that Microsoft and Sub are placing reliance thereon. 3.2 Representations and Warranties of Microsoft and Sub. Except as disclosed in the Microsoft SEC Documents (as defined below) or in a disclosure schedule which identifies by section number the section and subsection to which such disclosure relates (provided, however, that Microsoft shall be deemed to have adequately disclosed with respect to any section or subsection any matters that are clearly described elsewhere in such document if a reader(s) who has not been actively involved in Microsoft but is generally familiar with the business software development industry can understand the applicability of such disclosure to such non-referenced sections or subsections) and is delivered by Microsoft to Company concurrently with the execution of this Agreement (the "Microsoft Disclosure Schedule"), whether or not the Microsoft Disclosure Schedule is referred to in a specific section or subsection and except as specifically provided for in this Agreement or any agreement attached as an Exhibit hereto, Microsoft and Sub represent and warrant to Company as follows: 3.2.1 Organization; Standing and Power. Each of Microsoft and Sub is a corporation duly organized and validly existing under the laws of the State of Washington. Each of Microsoft and Sub has all requisite power and authority to own, lease and operate its properties and to carry on its businesses as now being conducted, and is duly qualified to do business in each jurisdiction in which a failure to so qualify would have a Material Adverse Effect on the Business Condition of Microsoft. 3.2.2 Authority. Microsoft and Sub have all requisite corporate power and authority to enter into this Agreement, and subject to the Microsoft Required Statutory Approvals (as defined below), to consummate the transactions contemplated hereby. The execution and delivery by Microsoft of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Microsoft, including the approval of the Board of Directors of Microsoft. This Agreement has been duly executed and delivered by Microsoft and Sub and constitutes a valid and binding obligation of Microsoft and Sub enforceable in accordance with its terms. Subject to satisfaction of the conditions set forth in Sections 7.1 and 7.2, the execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby will not, conflict with or result in any Violation (a) of any provision of the Restated Articles of Incorporation or Bylaws of Microsoft or Sub or (b) any loan or credit agreement, note, bond, mortgage, indenture, contract, lease, or A-17 other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Microsoft or Sub or their respective properties or assets, other than, in the case of (b), any such Violation which individually or in the aggregate would not have a Material Adverse Effect on the Business Condition of Microsoft. No Consent is required by or with respect to Microsoft or Sub in connection with the execution and delivery of this Agreement by Microsoft or Sub or the consummation by Microsoft and Sub of the transactions contemplated hereby or thereby, except for (i) the filing of a premerger notification report by Microsoft and Company, and the expiration of all applicable waiting periods, under the HSR Act and any similar foreign antitrust filings, (ii) the filing of the Proxy Statement/Prospectus with the SEC pursuant to the Exchange Act and the Securities Act, and the declaration of the effectiveness thereof by the SEC and compliance with various state securities or "blue sky" laws, and (iii) the filing of the Merger Documents with the Secretaries of State of the States of Minnesota and Washington (the filings and approvals referred to in clauses (i) through (iii) are collectively referred to as the "Microsoft Required Statutory Approvals" and together with the Company Required Statutory Approvals, the "Required Statutory Approvals") and except for such other Consents which if not obtained or made would not have a Material Adverse Effect on the value of the Microsoft Common Shares and would not have a Material Adverse Effect on the Business Condition of Microsoft. 3.2.3 Capital Structure. The authorized capital stock of Microsoft consists of 12,000,000,000 Microsoft Common Shares of which 5,332,337,924 were outstanding as of October 31, 2000, all of which are duly authorized, validly issued, fully paid and nonassessable and free of any preemptive rights in respect thereof, and 100,000,000 shares of preferred stock, par value $0.01 per share (the "Microsoft Preferred Stock") none of which are outstanding, and no shares are held by Subsidiaries of Microsoft. In addition, as of October 31, 2000, there are 680,315,818 Microsoft Common Shares are reserved for issuance upon the exercise of outstanding stock options ("Microsoft Options") under the Microsoft 1991 Stock Option Plan. The authorized capital stock of Sub consists of 10,000 shares of common stock, par value $.01 per share, all of which are duly authorized, validly issued, fully paid and nonassessable and free of any preemptive rights in respect thereof and all of which are owned by Microsoft. The Microsoft Common Shares to be issued pursuant to the Merger in accordance with Section 2.1.3 (i) will be duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights created by statute, Microsoft's Restated Articles of Incorporation or Bylaws or any agreement to which Microsoft is a party or is bound and (ii) will, when issued, be registered under the Securities Act and the Exchange Act and registered or exempt from registration under applicable blue sky laws. 3.2.4 SEC Documents and Financial Statements. Microsoft has furnished or made available to Company a true and complete copy of each statement, report, schedule, registration statement and definitive proxy or information statement filed by Microsoft with the SEC since June 30, 2000 (the "Microsoft SEC Documents"), which are all the documents (other than preliminary material) that Microsoft was required to file with the SEC since such date. As of their respective filing dates, the Microsoft SEC Documents complied in all material respects with the requirements of the Exchange Act or the Securities Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Microsoft SEC Documents, and none of the Microsoft SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The financial statements of Microsoft included in the Microsoft SEC Documents (the "Microsoft Financial Statements") comply as to form in all material respects with all applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto and have been prepared in accordance with generally accepted accounting principles consistently applied (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of Microsoft and its Subsidiaries as at the dates thereof and the results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal, recurring audit adjustments not material in scope or amount). There has been no change in Microsoft's accounting policies or the methods of making accounting estimates or changes in estimates that are material to Microsoft Financial Statements or estimates except as described in the notes thereto. A-18 3.2.5 Information Supplied. None of the information supplied or to be supplied by Microsoft or its Subsidiaries, auditors, attorneys, financial advisors, other consultants or advisors or Sub for inclusion in the S-4 or the Proxy Statement/Prospectus, will, in the case of the Proxy Statement and any amendment or supplement thereto, at the time of the mailing of the Proxy Statement and any amendment or supplement thereto, and at the time of any meeting of shareholders of Company to vote upon this Agreement and the transactions contemplated hereby, or in the case of the S-4, as amended or supplemented, at the time it becomes effective and at the time of any post- effective amendment thereto contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they are made, not misleading or necessary to correct any statement in any earlier filing with the SEC of such Proxy Statement/Prospectus or any amendment or supplement thereto or any earlier communication (including the Proxy Statement/Prospectus) to shareholders of Company with respect to the transactions contemplated by this Agreement. The S-4 and the Proxy Statement/Prospectus will comply as to form in all material respects with the provisions of all applicable laws including the provisions of the Securities Act and the Exchange Act and the rules and regulations of the SEC thereunder, except that no representation is made by Microsoft with respect to information supplied by Company specifically for inclusion therein. 3.2.6 No Defaults. Microsoft has not received notice that it would be with the passage of time, in default or violation of any term, condition or provision of (i) the Restated Articles of Incorporation or Bylaws of Microsoft; (ii) any judgment, decree or order applicable to Microsoft; or (iii) any loan or credit agreement, note, bond, mortgage, indenture, contract, agreement, lease, license or other instrument to which Microsoft is now a party or by which it or any of its properties or assets may be bound, except for defaults and violations which, individually or in the aggregate, would not have a Material Adverse Effect on the Business Condition of Microsoft. 3.2.7 Absence of Certain Changes or Events. Since July 1, 2000, except as contemplated by or as disclosed in this Agreement, as set forth in the Microsoft Disclosure Schedule or as disclosed in any Microsoft SEC Documents filed since July 1, 2000, Microsoft and its Subsidiaries have conducted their businesses only in the ordinary course and in a manner consistent with past practice and, since such date, there has not been any Material Adverse Effect on the Business Condition of Microsoft. 3.2.8 Absence of Undisclosed Liabilities. Microsoft and its Subsidiaries, taken as a whole, have no liabilities or obligations (whether absolute, accrued or contingent) except (i) Liabilities that are accrued or reserved against in the consolidated balance sheet of Microsoft and its Subsidiaries as of June 30, 2000 or reflected in the notes thereto or disclosed in the financial statements filed as a part of the Microsoft SEC Documents, (ii) Liabilities that would not have a Material Adverse Effect on the Business Condition of Microsoft, or (iii) additional Liabilities reserved against since July 1, 2000 that (x) have arisen in the ordinary course of business; and (y) are accrued or reserved against on the books and records of Microsoft and its Subsidiaries. 3.2.9 No Vote Required. No vote of the shareholders of Microsoft is required by law, Microsoft's Restated Articles of Incorporation or Bylaws or otherwise in order for Microsoft and Sub to consummate the Merger and the transactions contemplated hereby. 3.2.10 Brokers and Finders. None of Microsoft or any of its respective directors, officers or employees has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or similar payments in connection with the transactions contemplated by this Agreement. 3.2.11 Interim Operation of Sub. Sub was formed solely for the purpose of engaging in the transactions contemplated hereby, has engaged in no other business activities and has conducted its operations only as contemplated hereby. 3.2.12 Disclosure. No representation or warranty made by Microsoft or Sub, nor any document, written information, statement, financial statement, certificate or exhibit prepared and furnished or to be A-19 prepared and furnished by Microsoft or its representatives pursuant hereto or in connection with the transaction contemplated hereby, when taken together, contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements or facts contained herein or therein not misleading in light of the circumstances under which they were furnished. 3.2.13 Reliance. The foregoing representations and warranties are made by Microsoft with the knowledge and expectation that Company is placing reliance thereon. ARTICLE IV COVENANTS OF COMPANY During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, Company agrees (except as expressly contemplated by this Agreement, as specifically permitted by the Company Disclosure Schedule or with Microsoft's prior written consent, which shall not be unreasonably withheld) that: 4.1 Conduct of Business. 4.1.1 Ordinary Course. Company shall carry on its business in the usual, regular and ordinary course in the same manner as heretofore conducted and, to the extent consistent with such businesses, use all reasonable efforts consistent with past practice and policies to preserve intact their present business organizations, keep available the services of their present officers, consultants, and employees and preserve their relationships with customers, suppliers, distributors and others having business dealings with them. Company shall promptly notify Microsoft of any event or occurrence or emergency not in the ordinary course of business, of Company, and material and adverse to the Business Condition of Company. Company shall not: (a) accelerate, amend or change the period of exercisability or vesting of options, restricted stock, stock bonus or other awards granted under the Company Stock Plans (including any discretionary acceleration of the exercise periods of Company's Board of Directors permitted under such plans) or authorize cash payments in exchange for any options, restricted stock, stock bonus or other awards granted under any of such plans; (b) grant any severance or termination pay to any officer or director or, except in the ordinary course of business consistent with past practices, to any employee of Company; (c) except in the ordinary course of business consistent with past practices and other than transfers between or among Company and any of its wholly owned Subsidiaries, transfer to any person or entity any rights to the Company Intellectual Property Rights; (d) enter into or amend any agreements pursuant to which any other party is granted exclusive marketing or manufacturing rights of any type or scope with respect to any hardware or software products of Company; (e) commence a lawsuit other than: (i) for the routine collection of bills; (ii) for software piracy; (iii) in such cases where Company in good faith determines that failure to commence suit would result in a material impairment of a valuable aspect of Company's business, provided Company consults with Microsoft prior to filing such suit; or (iv) for a breach of this Agreement; (f) enter into one or more leases which extend for a period of two years beyond the date of this Agreement and which obligate Company to pay aggregate gross rent in excess of $1,000,000; and (g) extend an offer of employment to a candidate for an officer position at the level of vice president or above without prior consultation with Microsoft. A-20 4.1.2 Dividends: Changes in Stock. Company shall not: (i) declare or pay any dividends on or make other distributions (whether in cash, stock or property) in respect to any of its capital stock other than transfers between or among Company and (y) any of its wholly owned Subsidiaries or (z) Subsidiaries that are 100% beneficially owned by either Company or a wholly owned Subsidiary of Company; (ii) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of capital stock of Company; (iii) repurchase or otherwise acquire, directly or indirectly, any shares of its capital stock other than repurchase of vested stock from former employees; or (iv) propose any of the foregoing. 4.1.3 Issuance of Securities. Other than issuances of Company Common Shares upon exercise of presently outstanding Company Options, Company shall not contribute, issue, deliver, or sell, or authorize, propose or agree to, or commit to the contribution, issuance, delivery, or sale of any shares of its capital stock of any class, any Company Voting Debt or any securities convertible into its capital stock or Company Voting Debt, any options, warrants, calls, conversion rights, commitments, agreements, contracts, understandings, restrictions, arrangements or rights of any character obligating it to issue any such shares, Company Voting Debt or other convertible securities other than the issuance of options for Company Common Stock to employees under the Company Stock Plans in amounts and on terms consistent with prior practices, and in any event in an aggregate amount not in excess of 200,000 shares and to any single person in an amount not in excess of 20,000 shares. 4.1.4 Acceleration of Vesting. No Company Options subject to vesting shall accelerate in connection with the Merger. Prior to the Closing, the Company shall take such steps to ensure that such vesting restrictions shall continue to apply to Substituted Microsoft Options issued in the Merger on substantially similar terms and vesting schedules, except that any stock restrictions which function by way of rights of repurchase shall be amended so that unvested shares are automatically forfeited upon the occurrence of a termination event. 4.1.5 Governing Documents. Company shall not, amend its Articles of Incorporation or Bylaws, nor shall it cause or permit any of its Subsidiaries to amend any comparable governing instruments of such Subsidiaries. 4.1.6 Exclusivity; Acquisition Proposals. Unless and until this Agreement shall have been terminated by either party pursuant to Section 8.1 hereof, Company shall not (and it shall use its best efforts to ensure that none of its officers, directors, agents, representatives or affiliates) take or cause or permit any Subsidiary to take, directly or indirectly, any of the following actions with any party other than Microsoft and its designees: (i) solicit, encourage, initiate or participate in any negotiations, inquiries or discussions with respect to any offer or proposal to acquire all or any significant part of its business, assets or capital shares whether by merger, consolidation, other business combination, purchase of assets, tender or exchange offer or otherwise (each of the foregoing, an "Acquisition Transaction"); (ii) disclose, other than to Microsoft or its representatives, in connection with an Acquisition Transaction, any information not customarily disclosed to any person concerning Company's business or properties or afford to any person other than Microsoft or its representatives access to its properties, books or records, except in the ordinary course of business and as required by law or pursuant to a governmental request for information; (iii) enter into or execute any agreement relating to an Acquisition Transaction; or (iv) make or authorize any public statement, recommendation or solicitation in support of any Acquisition Transaction or any offer or proposal relating to an Acquisition Transaction other than with respect to the Merger; provided, however, that the Board of Directors of Company may recommend that the shareholders of Company tender their shares in connection with a tender offer to the extent the Board of Directors of Company by a majority vote determines in its good faith judgment that such a recommendation is required to comply with the fiduciary duties of the Board of Directors of Company to shareholders under applicable Minnesota Law, after receiving the advice of outside legal counsel. In the event Company shall receive any offer or proposal, directly or indirectly, of the type referred to in clause (i) above, or any request for disclosure or access with respect to information of the type referred to in clause (ii) above, it shall immediately, and prior to taking any action in response thereto, inform Microsoft as to all material facts A-21 concerning any such offer, proposal or request including the identity of the party making the offer, proposal or request, and will thereafter cooperate with Microsoft by informing Microsoft of additional material facts as they arise and furnishing to Microsoft any additional information it furnished to any third party making such proposal or requesting information. Nothing contained in this Agreement shall prevent the Board of Directors of Company from (i) furnishing information to, or answering questions of, a third party which the Board of Directors of Company reasonably believes has made a bona fide proposal with respect to an Acquisition Transaction that is a Superior Proposal (as defined below) not solicited in violation of this Agreement, provided that prior to providing information, such third party executes an agreement with confidentiality provisions substantially similar to those then in effect between Company and Microsoft and provided further that Microsoft is notified three business day prior to Company's providing of such information to a third party, or (ii) subject to compliance with the other terms of this Section 4.1.6, considering a proposal with respect to an Acquisition Transaction, which the Board of Directors of Company reasonably believes to be a bona fide proposal, that is a Superior Proposal not solicited in violation of this Agreement. For purposes of this Agreement, a "Superior Proposal" means any proposal made by a third party to acquire, directly or indirectly, for consideration consisting of cash and/or securities, substantially all of the equity securities of Company entitled to vote generally in the election of directors, on terms which the Board of Directors of Company reasonably believes (x) (after consultation with a financial advisor of nationally recognized reputation) to be more favorable to its shareholders than the Merger and the transactions contemplated by this Agreement taking into account at the time of determination any changes to the financial terms of this Agreement proposed in writing by Microsoft and (y) to be more favorable to Company than the Merger and the transactions contemplated by this Agreement after taking into account all pertinent factors deemed relevant by the Board of Directors of Company under the laws of the State of Minnesota; provided, however, that a Superior Proposal may be subject to a due diligence review of confidential information and to other customary conditions. (b) Nothing contained in this Section 4.1.6 shall prohibit Company from taking and disclosing to its shareholders a position required by Rule 14d-9 or 14e-2(a) promulgated under the Exchange Act or from making any disclosure to its shareholders required by applicable law, rule or regulation; provided, however, the Board of Directors of Company shall only recommend that its shareholders tender their shares in connection with a tender offer to the extent that the Board of Directors of Company by a majority vote determines in its good faith judgment that such a recommendation is required to comply with the fiduciary duties of the Board of Directors of Company to shareholders under applicable Minnesota law, after receiving the advice of outside legal counsel. (c) Nothing in contained in this Section 4.1.6 shall be interpreted to affect or modify in any way the obligations of Company as set forth in Section 6.1 relating to the preparation of the S-4, or Section 4.8, to call, hold and conduct a Company shareholder meeting to approve the Merger. 4.1.7 No Acquisitions. Company shall not, and shall not permit any Subsidiary of Company to, acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets which are material, individually or in the aggregate, to the Business Condition of Company. 4.1.8 No Dispositions. Company shall not, and shall not permit any Subsidiary of Company to, sell, lease, license, transfer, mortgage, encumber or otherwise dispose of any of their assets or cancel, release, or assign any indebtedness or claim, except in the ordinary course of business or in amounts which are not material, individually or in the aggregate, to the Business Condition of Company. 4.1.9 Indebtedness. Company shall not, and shall not permit any Subsidiary of Company to, incur any indebtedness for borrowed money by way of direct loan, sale of debt securities, purchase money obligation, conditional sale, guarantee, or otherwise in amounts which are material, individually or in the aggregate, to the Business Condition of Company. A-22 4.1.10 Plans. Company shall not, and shall not permit any Subsidiary of Company to, adopt or amend in any material respect any Plan, other than a modification of vesting provisions as provided in Section 4.1.4 above or modifications required to maintain a Plan's tax-qualified status, or pay any pension or retirement allowance not required by any existing Plan. Company shall not and shall not permit any Subsidiary of Company to, enter into any employment contracts, pay any special bonuses or special remuneration to officers, directors, or employees, or increase the salaries, wage rates or fringe benefits of its officers or employees other than pursuant to scheduled reviews under Company's normal compensation review cycle, in all cases consistent with Company's existing policies and past practice. Company shall not, and shall not permit a Subsidiary of Company to, contribute, sell, loan or otherwise transfer to a Plan, capital stock or any other security or securities of Company or any Subsidiary thereof. 4.1.11 Claims. Company shall not, and shall not permit any Subsidiary of Company to, settle any claim, action or proceeding, except in the ordinary course of business or in amounts which are not material, individually or in the aggregate, to the Business Condition of Company. 4.1.12 Agreement. Company shall not, and shall not permit any Subsidiary of Company to, agree to take any of the actions prohibited by this Section 4.1. 4.2 Breach of Representation and Warranties. Company will not take any action which would cause or constitute a breach of any of the representations and warranties set forth in Section 3.1 or which would cause any of such representations and warranties to be inaccurate in any material respect. In the event of, and promptly after becoming aware of, the occurrence of or the pending or threatened occurrence of any event which would cause or constitute such a breach or inaccuracy, Company will give detailed written notice thereof to Microsoft and will use its best efforts to prevent or promptly remedy such breach or inaccuracy. 4.3 Consents. Company will promptly apply for or otherwise seek, and use its commercially reasonable best efforts to obtain, all consents and approvals, and make all filings, required with respect to Company for the consummation of the Merger, except such consents and approvals as Microsoft and Company agree Company shall not seek to obtain. 4.4 Commercially Reasonable Best Efforts. Company will use its commercially reasonable best efforts to effectuate the transactions contemplated hereby and to fulfill and cause to be fulfilled the conditions to closing under this Agreement, provided that Company shall in no event be required to agree to the imposition of, or comply with, any condition, obligation or restriction on Company or on the Surviving Corporation of the type referred to in Section 7.1.5 hereof. 4.5 Information for Prospectus/Proxy Statement. Company will promptly provide to Microsoft and its counsel for inclusion within the Proxy Statement/Prospectus and the S-4 in a form reasonably satisfactory to Microsoft and its counsel, such information concerning Company, its operations, capitalization, technology, share ownership and other information as Microsoft or its counsel may reasonably request. 4.6 Company Plans. Without the loss of any vested benefits but without accelerating any unvested rights (except as required by law), Company shall terminate or modify the Plans as may be directed by Microsoft immediately prior to the Effective Time or take such action as directed by Microsoft to merge such Plans with the Microsoft plans at the Effective Time. 4.7 Restrictive Covenants. Prior to the Effective Time, the Company's Chief Executive Officer will execute a Restrictive Covenant Agreement in favor of Microsoft in the form attached as Exhibit 7.2.4 and Company shall use its best efforts to secure restrictive covenants from those members of its senior management as Company's Chief Executive Officer shall, after consultation with Microsoft, identify as necessary to facilitate a successful transition of the Company Business after the Closing. 4.8 Shareholder Approval. Company will call a special Shareholders Meeting to be held as soon as practicable but in no event later than thirty-five (35) days after the Form S-4 shall have been declared effective A-23 by the SEC to submit this Agreement, the Merger and related matters for the consideration and approval of Company's Shareholders ("Company Shareholders Meeting"). Such approval will be recommended by Company's Board of Directors, subject to the fiduciary obligations of its directors as set forth in Section 4.1.6; provided that in any event such meeting will be called, held and conducted, notwithstanding any change in the recommendation of the Company's Board of Director or any decision of the Company's Board of Directors to approve another Acquisition Transaction. Concurrently with the execution of this Agreement, all executive officers and directors of Company, (collectively the "Company's Principals") have executed Shareholder Agreements in the form of Exhibit 4.8 ("Company Shareholder Agreements") agreeing, among other things, to vote in favor of the Merger and against any competing proposals. 4.9 Employee Matters. Prior to the Closing, Microsoft and Company will work together on developing appropriate communications to Company employees regarding the Merger, and developing a transition plan in contemplation of the Closing. Company may not communicate with its employees regarding the Merger or future terms or conditions pertaining to their employment or termination thereof without Microsoft's advance approval of any such communication. To the extent any employees of Company are terminated on or before the Closing other than at the direction of Microsoft, Company will be responsible for administering such termination, including payment of severance and the obtaining of an appropriate release of claims from such employees, in a form satisfactory to Microsoft. With regard to the termination of employees of Company prior to Closing at the direction of Microsoft, the terms and conditions set forth in Exhibit 4.9(A) shall apply. The parties anticipate that most employees of Company will remain employees of Company following Closing. Prior to Closing, Company shall present offers of continued employment to such employees of Company designated by Microsoft; such offers shall be in substantially the forms set forth in Exhibit 4.9(B)(i) and (ii) and shall be presented in a manner and at times acceptable to Microsoft. Except as expressly agreed in writing by Sub or Microsoft, no specific terms and conditions of employment, including terms and conditions pertaining to length of employment, are guaranteed. Prior to Closing, Company shall terminate all of the Change of Control Agreements identified at Exhibit 4.9(C)(i) substantially in the form attached as Exhibit 4.9(C)(ii) and such amendments shall contain a binding release and waiver of rights pertaining to such agreement in a form satisfactory to Microsoft. Prior to Closing, Company shall use its commercially reasonable best efforts to terminate all expatriate agreements with employees listed at Exhibit 4.9(D), receive from each party to such agreements a binding release and waiver of rights pertaining to such agreement in a form satisfactory to Microsoft, and enter into new expatriate agreements with such parties in a form acceptable to Microsoft. Prior to Closing, Company shall use its commercially reasonable best efforts to terminate the agreements listed at Exhibit 4.9(E) and receive from each individual party to such agreements a binding release and waiver of rights pertaining to such agreement in a form satisfactory to Microsoft. Company will use its commercially reasonable best efforts to obtain acceptances of the requisite number of employees specified in Section 7.2.6 prior to Closing. 4.10 Tax Returns. Company shall properly and timely file all Returns with respect to Company and any Subsidiary required to be filed prior to the Closing Date and shall pay all taxes required to be paid prior to the Closing Date. All such Returns shall be prepared consistent with past practice and shall be subject to the approval of Microsoft, which shall not be unreasonably withheld. Company shall (i) notify Microsoft promptly if it receives notice of any tax audit, the assessment of any tax, the assertion of any tax lien, or any request, notice or demand for taxes by any taxing authority, (ii) provide Microsoft a description of any such matter in reasonable detail (including a copy of any written materials received from the taxing authority), and (iii) take no action with respect to such matter without the consent of Microsoft which shall not be unreasonably withheld. Company shall not (x) make or revoke any tax election that may affect Company, (y) execute any waiver of restrictions on assessment of any tax, or (z) enter into any agreement or settlement with respect to any tax without the approval of Microsoft, which shall not be unreasonably withheld. 4.11 Section 16 Approval. On or after the date hereof and prior to the Effective Time, each of Microsoft and Company shall take all necessary action such that, with respect to (i) any Company Employee who as of the date hereof is subject to Section 16 of the Exchange Act and (ii) any member of the Company's A-24 Board of Directors (each, a "Company Section 16 Insider"), the acquisition by any such Company Section 16 Insider of Microsoft Common Shares or Microsoft stock options and the disposition by any such Company Section 16 Insider of Company Common Stock or Company Options pursuant to the transactions contemplated herein shall be exempt from the short-swing profit liability rules of Section 16(b) of the Exchange Act pursuant to Rule 16b-3 promulgated thereunder. ARTICLE V COVENANTS OF MICROSOFT During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, Microsoft agrees (except as expressly contemplated by this Agreement or with Company's prior written consent which will not be unreasonably withheld) that: 5.1 Breach of Representations and Warranties. Microsoft will not take any action that would cause or constitute a breach of any of the representations and warranties set forth in Section 3.2 or which would cause any of such representations and warranties to be inaccurate in any material respect. In the event of, and promptly after becoming aware of, the occurrence of or the pending or threatened occurrence of any event that would cause or constitute such a breach or inaccuracy, Microsoft will give detailed notice thereof to Company and will use its best efforts to prevent or promptly remedy such breach or inaccuracy. 5.2 Conduct of Business. Microsoft shall promptly notify Company of any event or occurrence that would constitute a Material Adverse Effect to the Business Condition of Microsoft no later than the time that the disclosure of such event or occurrence is made in a Microsoft SEC Document and in any event prior to the Effective Time. 5.3 Consents. Microsoft will promptly apply for or otherwise seek, and use its commercially reasonable best efforts to obtain, all consents and approvals, and make all filings, required for the consummation of the Merger. 5.4 Commercially Reasonable Best Efforts. Microsoft will use its commercially reasonable best efforts to effectuate the transactions contemplated hereby and to fulfill and cause to be fulfilled the conditions to closing under this Agreement, provided that Microsoft shall in no event be required to agree to the imposition of, or to comply with, any condition, obligation or restriction on Microsoft or on the Surviving Corporation of the type referred to in Section 7.1.5 hereof. 5.5 Employee Compensation and Benefits. After the Effective Time, Microsoft will provide, or cause Company to provide, the compensation and benefits to Company employees substantially as set forth in Exhibits 4.9(B) (i) and (ii). 5.6 Nasdaq Listing. Microsoft will use commercially reasonable best efforts (i) to cause the Microsoft Common Shares to be issued in the Merger to be quoted upon the Effective Time on the Nasdaq National Market or listed on such national securities exchange as the Microsoft Common Shares are listed and (ii) to cause the Microsoft Common Shares issued upon the exercise of converted Company Options to be quoted upon issuance on the Nasdaq National Market or listed on such national securities exchange as Microsoft Common Shares are listed. A-25 ARTICLE VI ADDITIONAL AGREEMENTS In addition to the foregoing, Microsoft and Company each agree to take the following actions after the execution of this Agreement. 6.1 Preparation of S-4. As promptly as practicable after the date hereof, Microsoft and Company shall prepare and file with the SEC the Proxy Statement and any other documents required by the Exchange Act in connection with the Merger, and Microsoft shall prepare and file with the SEC the S-4, in which the Proxy Statement will be included as a prospectus. Each of Microsoft and Company shall use its commercially reasonable best efforts to have the S-4 declared effective under the Securities Act as promptly as practicable after such filing. Microsoft shall also take any action required to be taken under any applicable state securities or "blue sky" laws in connection with the issuance of the Microsoft Common Shares in the Merger. 6.2 Letter of Company's Accountants. Company shall use its commercially reasonable best efforts to cause to be delivered to Microsoft a letter (each, a "Company Comfort Letter") addressed to Microsoft and Company of PricewaterhouseCoopers LLP, Company's independent auditors, dated the date on which the S-4 shall become effective and within two business days prior to the Closing Date, in form and substance reasonably satisfactory to Microsoft and customary in scope and substance for letters delivered by independent public accountants in connection with registration statements similar to the S-4. 6.3 Letter of Microsoft's Accountants. Microsoft shall use its commercially reasonable best efforts to cause to be delivered to Company letters (each a "Microsoft Comfort Letter") addressed to Company and Microsoft of Deloitte & Touche LLP, Microsoft's independent auditors, dated the date on which the S-4 shall become effective and within two business days prior to the Closing Date in form and substance reasonably satisfactory to Company and customary in scope and substance for letters delivered by independent public accountants in connection with registration statements similar to the S-4. 6.4 Access to Information. Subject to appropriate restrictions on access to information which Company determines in good faith to be proprietary or competitively sensitive, Company and Microsoft shall, subject to applicable law, each afford the other and their respective accountants, counsel and other representatives, reasonable access during normal business hours during the period prior to the Effective Time to (i) all of their and their respective Subsidiaries' properties, books, contracts, commitments and records, and (ii) all other information concerning the business, properties and personnel of Company and Microsoft and their respective Subsidiaries, as the other party may reasonably request which is necessary to complete the transaction and prepare for an orderly transition to operations after the Effective Time. Company and Microsoft agree to provide to the other and their respective accountants, counsel and representatives copies of internal financial statements promptly upon the request therefore. No information or knowledge obtained in any investigation pursuant to this Section 6.4 shall affect or be deemed to modify any representation or warranty contained herein or the conditions to the obligations of the parties to consummate the Merger. Company and Microsoft agree that the non-disclosure agreement, dated November 21, 2000 (the "Confidentiality Agreement"), between Company and Microsoft shall continue in full force and effect and shall be applicable to all Evaluation Material (as defined in the Confidentiality Agreement) received pursuant to this Agreement. 6.5 Legal Conditions to the Merger. Each of Microsoft, Sub and Company will take all reasonable actions necessary to comply promptly with all legal requirements which may be imposed on any of them with respect to the Merger and will promptly cooperate with and furnish information to each other in connection with any such requirements imposed upon the other. Each of Microsoft, Sub and Company will take, and will cause its respective Subsidiaries to take, all reasonable actions to obtain (and to cooperate with the other parties in obtaining) any consent, approval, order or authorization of, or any exemption by, any Governmental Entity, or other third party, required to be obtained or made by Company or Microsoft or their respective Subsidiaries in connection with the Merger or the taking of any action contemplated thereby or by this Agreement. The A-26 foregoing shall not require any party to agree to the imposition of, or to comply with, any condition, obligation or restriction on Microsoft or any of its Subsidiaries or on the Surviving Corporation of the type referred to in Section 7.1.5 hereof. 6.6 Affiliate Agreements. Contemporaneously with the execution of this Agreement, the affiliate agreements (the "Affiliate Agreements") in the form attached as Exhibit 6.6 have been executed with Company's Principals. Microsoft shall be entitled to place appropriate legends on the certificate evidencing any Microsoft Common Shares to be received by Company Principals pursuant to the terms of this Agreement and to issue appropriate stop transfer instructions to the transfer agent for Microsoft Common Shares consistent with the terms of the Affiliates Agreements. 6.7 HSR Act Filings. 6.7.1 Filings and Cooperation. Each of Microsoft and Company shall take all reasonable steps to: (i) promptly make or cause to be made the filings required of such party or any of its Affiliates or Subsidiaries under the HSR Act with respect to the Merger and the other transactions provided for in this Agreement, (ii) comply in a timely manner with any request under the HSR Act for additional information, documents, or other material received by such party or any of its Affiliates or Subsidiaries from the Federal Trade Commission or the Department of Justice or other Governmental Entity in respect of such filings, the Merger, or such other transactions, and (iii) cooperate with the other party in connection with any such filing and in connection with resolving any investigation or other inquiry of any such agency or other Governmental Entity under any Antitrust Laws (as defined in Section 6.7.2) with respect to any such filing, the Merger, or any such other transaction. With regard to any communication with any Governmental Entity regarding such filings, each party shall inform the other party: (i) prior to delivering any material communication to a Governmental Entity (ii) promptly after receiving any material communication from a Governmental Entity, and (iii) before entering into any proposed understanding, undertaking, or agreement with, any Governmental Entity regarding any such filings, the Merger, or any such other transactions. Neither party shall participate in any meeting with any Governmental Entity in respect of any such filings, investigation, or other inquiry without giving the other party prior notice of the meeting and, to the extent permitted by such Governmental Entity, the opportunity to attend and participate. 6.7.2 Objections. Each of Microsoft and Company shall take all reasonable steps to resolve such objections, if any, as may be asserted by any Governmental Entity with respect to the Merger or any other transactions provided for in this Agreement under the HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and any other federal, state or foreign statutes, rules, regulations, orders, or decrees that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade (collectively, "Antitrust Laws"). In connection therewith, if any administrative or judicial action or proceeding is instituted (or threatened to be instituted) challenging the Merger as violative of any Antitrust Law, and, if by mutual agreement, Microsoft and Company decide that litigation is in their best interests, each of Microsoft and Company shall cooperate to vigorously contest and resist any such action or proceeding and to have vacated, lifted, reversed, or overturned any decree, judgment, injunction, or other order, whether temporary, preliminary, or permanent (each an "Order"), that is in effect and that prohibits, prevents, or restricts consummation of the Merger. Each of Microsoft and Company shall take such reasonable action as may be required to cause the expiration of the notice periods under the HSR Act or other Antitrust Laws with respect to the Merger and such other transactions as promptly as possible after the execution of this Agreement. Notwithstanding anything to the contrary in this Section 6.7.2 or in Section 6.7.1, (x) neither Microsoft nor any of its Subsidiaries shall be required to divest any of their respective businesses, product lines, or assets, or to take or agree to take any other action or agree to any limitation that would have a Material Adverse Effect on the business of Microsoft or the business applications division of Microsoft combined with the Company Business of the Surviving Corporation after Closing, (y) neither Company nor its Subsidiaries shall be required to divest any of their respective businesses, A-27 product lines, or assets, or to take or agree to take any other action or agree to any limitation would have a Material Adverse Effect on the Business Condition of Company and (z) neither Microsoft nor Company (nor any of their Subsidiaries) shall be required to continue to contest or resist any action or proceeding brought by a Governmental Entity if it concludes that such action is no longer in its best interest. 6.8 Officers and Directors. Microsoft agrees that all rights to indemnification (including advancement of expenses) existing on the date hereof in favor of the present or former officers, directors and employees of Company ("Indemnified Parties") with respect to actions taken in their capacities as directors, officers or employees of Company prior to the Effective Time, as provided under Section 302A.521 of the MBCA, in Company's Articles of Incorporation or Bylaws, shall survive the Merger and continue in full force and effect for a period of six (6) years following the Effective Time and shall be guaranteed by Microsoft. 6.9 Expenses. Whether or not the Merger is consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby and thereby shall be paid by the party incurring such expense, except that if the Merger is not consummated expenses incurred in connection with printing and mailing of the documents distributed or to be distributed to shareholders of Company and the filing fee with respect to the S-4 shall be shared equally by Microsoft and Company. 6.10 Additional Agreements. In case at any time after the Effective Time any further action is reasonably necessary or desirable to carry out the purposes of this Agreement or to vest the Surviving Corporation with full title to all properties, assets, rights, approvals, immunities and franchises of either of the Constituent Corporations, the proper officers and directors of each corporation which is a party to this Agreement shall take all such necessary action. The Company will cooperate as reasonably requested by Microsoft in developing, reviewing and implementing risk financing solutions, including without limitation additional insurance, with respect to intellectual property liability risk, in a form and in amounts reasonably acceptable to Microsoft. 6.11 Public Announcements. Microsoft and Company shall cooperate with each other in releasing information concerning this Agreement and the transactions contemplated herein. Where practicable each of the parties shall furnish to the other drafts of all releases prior to publication. Nothing contained herein shall prevent either party at any time from furnishing any information to any governmental agency or from issuing any release when it believes it is legally required to do so. Company shall consult with Microsoft prior to making any Company-wide announcements to its employees. Such announcements shall be in accordance with the employee retention plans specified in Section 4.9 above. 6.12 State Takeover Laws. Company (including all nonemployee directors), and the Board of Directors of Company, shall grant such approvals and take all necessary steps to exempt the transactions contemplated by this Agreement from, or if necessary challenge the validity or applicability of Sections 302A.671, .673, and .675 of the MBCA to the Merger. A-28 ARTICLE VII CONDITIONS PRECEDENT 7.1 Conditions to Each Party's Obligation to Effect the Merger. The respective obligation of each party to effect the Merger shall be subject to the satisfaction prior to the Closing Date of the following conditions: 7.1.1 Shareholder Approval. This Agreement and the transactions contemplated hereby shall have been approved and adopted as required by Section 302.613 subd. 2 of the MBCA (the "Company Required Vote"). 7.1.2 Consents. Other than the filing of the Merger Documents with the Secretaries of State of the State of Minnesota and Washington, all Consents legally required for the consummation of the Merger and the transactions contemplated by this Agreement shall have been satisfied, filed, occurred, or been obtained, other than such Consents (i) as Microsoft and Company agree Company shall not seek or obtain, or (ii) the failure of which to obtain would not have a Material Adverse Effect on the consummation of the Merger or the other transactions contemplated hereby or on the Business Condition of Microsoft or Company. 7.1.3 S-4. The S-4 shall have become effective under the Securities Act and shall not be the subject of any stop order or proceedings seeking a stop order and the Proxy Statement shall not be subject to any proceedings commenced or threatened by the SEC. 7.1.4 No Restraints. No statute, rule, regulation, executive order, decree or injunction shall have been enacted, entered, promulgated or enforced by any United States court or Governmental Entity of competent jurisdiction which enjoins or prohibits the consummation of the Merger and shall be in effect. 7.1.5 No Burdensome Condition. There shall not be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Merger by any Governmental Entity which, in connection with the grant of any Required Statutory Approval, imposes any restriction, condition or obligation upon Microsoft, Company or the Surviving Corporation which would materially adversely impact the Business Condition of the Company Business or the economic or business benefits of the transactions contemplated by this Agreement. 7.1.6 Tax-Free Reorganization. Each of Company and Microsoft shall have received a written opinion from their respective counsel, dated as of the Closing Date, to the effect that the Merger will constitute a reorganization within the meaning of Section 368 of the Code, and that Microsoft, Sub and Company will each be a party to that reorganization. In preparing Company and Microsoft tax opinions, counsel may rely on reasonable representations related thereto. 7.2 Conditions of Obligations of Microsoft and Sub. The obligations of Microsoft and Sub to effect the Merger are subject to the satisfaction of the following conditions unless waived by Microsoft and Sub: 7.2.1 Representations and Warranties of Company. The representations and warranties of Company set forth in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, except: (i) as otherwise contemplated by this Agreement, or (ii) in respects that do not have a Material Adverse Effect on Company's Business Condition or on the benefits of the transactions provided for in this Agreement. Microsoft shall have received a certificate signed on behalf of Company by the chief executive officer and the chief financial officer of Company to such effect on the Closing Date. 7.2.2 Performance of Obligations of Company. Company shall have performed all agreements and covenants required to be performed by it under this Agreement prior to the Closing Date, except for breaches that do not have a Material Adverse Effect on Company's Business Condition or on the benefits of the transactions provided for in this Agreement. Microsoft shall have received a certificate signed on behalf of Company by the chief executive officer and the chief financial officer of Company to such effect. A-29 7.2.3 Executed Affiliates Agreement. Microsoft shall have received from each person or entity who may be deemed pursuant to Section 6.6 hereof to be a Company Principal a duly executed Affiliates Agreement substantially in the form attached hereto as Exhibit 6.6. 7.2.4 Restrictive Covenants. Douglas Burgum shall have executed a Noncompetition Agreement substantially in the form attached as Exhibit 7.2.4 and not taken any action or expressed any intent to terminate or modify such agreement. 7.2.5 Opinion of Company's Counsel. Microsoft shall have received an opinion dated the Closing Date of Dorsey & Whitney LLP, counsel to Company, substantially in the form attached as Exhibit 7.2.5. 7.2.6 Certain Employees. As of immediately prior to the Closing, those employees of Company set forth on Schedule 7.2.6(A) and not less than 90% of employees of Company in development and support as of the date of this Agreement as set forth on Schedule 7.2.6(B) and at least 80% of all of the other employees of Company as of the date of this Agreement shall be employed by Company. 7.2.7 Restricted Stock Agreement. The Restricted Stock Agreement, shall be in full force and effect and no efforts shall be pending to void or terminate such agreement. 7.2.8 Legal Action. There shall not be pending any action, proceeding or other application before any court or Government Entity brought by any Governmental Entity: (i) challenging or seeking to restrain or prohibit the consummation of the transactions contemplated by this Agreement, or seeking to obtain any material damages; or (ii) seeking to prohibit or impose any material limitations on Microsoft's or the Surviving Corporation's ownership or operation of all or any portion of Microsoft's and Company's combined Company Business or to compel Microsoft or Surviving Corporation to dispose of or hold separate all or any material portion of Microsoft's and Surviving Corporation's combined Company Business as a result of the transactions contemplated by the Agreement, other than in accordance with the provisions of Section 6.7.2 or other plan, proposed by or consentedchange to ~~in writing by Microsoft. 7.2.9 Dissenting Shares. Company shall not have received any notice that holders which alone or~~such information in the aggregate own or beneficially own five percent (5%) or more of the Company Common Shares then outstanding have purported to assert dissenter's rights, and shall have delivered a certificate to Company to such effect. 7.2.10 Modification of Change of Control Agreements. The Change of Control Agreements identified at Exhibit 4.9(C)(i) shall have been amended substantially in the form attached as Exhibit 4.9(C)(ii). 7.3 Conditions of Obligation of Company. The obligation of Company to effect the Merger is subject to the satisfaction of the following conditions unless waived by Company: 7.3.1 Representations and Warranties of Microsoft and Sub. The representations and warranties of Microsoft and Sub set forth in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, except: (i) as otherwise contemplated by this Agreement, or (ii) in respectsregistration statement;

(2) that, do not have a Material Adverse Effect on the Microsoft's Business Condition or on the benefits of the transactions provided for in this Agreement to be untrue or incorrect as of the Closing Date. Company shall have received a certificate signed on behalf of Microsoft by an authorized officer of Microsoft to such effect on the Closing Date. 7.3.2 Performance of Obligations of Microsoft and Sub. Microsoft and Sub shall have performed all agreements and covenants required to be performed by them under this Agreement prior to the Closing Date except for breaches that do not have a Material Adverse Effect on Microsoft's Business Condition or on the benefits of the transactions provided for in this Agreement, and Company shall have received a certificate signed on behalf of Microsoft by an authorized officer of Microsoft to such effect. 7.3.3 Legal Action. There shall not be overtly threatened or pending any action, proceeding or other application before any court or Governmental Entity brought by any person or Governmental Entity A-30 challenging or seeking to restrain or prohibit the consummation of the transactions contemplated by this Agreement, or seeking to obtain any damages caused by such transactions which if successful would have a material adverse effect on the viability of such transactions. 7.3.4 Opinion of Microsoft's Counsel. Company shall have received an opinion dated the Closing Date of Preston Gates & Ellis LLP, counsel to Microsoft, substantially in the form attached as Exhibit 7.3.4. ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER 8.1 Termination. This Agreement may be terminated at any time prior to the Effective Time, whether before or after approval of matters presented in connection with the Merger by the shareholders of Company or Sub: (a) by mutual consent of Microsoft and Company; (b) by either Microsoft or Company (provided that the terminating party is not then in material breach of any representation, warranty, covenant or agreement contained in this Agreement) if there has been a breach of any representation, warranty, covenant or agreement which has a Material Adverse Effect on the Business Condition of Company or Microsoft, as the case may be, or on the benefits of the transaction provided for in this Agreement, and such breach has not been cured, or best efforts are not being employed to cure such breach, within twenty (20) days after notice thereof is given to the party committing such breach; (c) by either Microsoft or Company if the Merger shall not have been consummated before September 30, 2001, provided, however if the parties have agreed to pursue litigation pursuant to Section 6.7.2, such date shall be extended to March 31, 2002; (d) by Microsoft or Company if any approval of the shareholders of Company shall not have been obtained by reason of the failure to obtain the required vote upon a vote taken at any duly held Company Shareholders Meeting or any adjournment thereof; (e) by either Microsoft or Company if any permanent injunction or other order of a court or other competent authority preventing the Merger shall have become final and not subject to appeal; (f) by Microsoft if the Board of Directors of Company shall have withdrawn or modified in a manner adverse to Microsoft its approval or recommendation of the Merger, this Agreement or the transactions contemplated hereby; (g) by Microsoft if Company or any of the other persons or entities described in Section 4.1.6 shall take any of the actions that would be proscribed by Section 4.1.6 other than actions in exercise of Company's fiduciary duties and satisfying all conditions of Section 4.1.6; or (h) by either Microsoft or Company if either, pursuant to Section 6.7.2, has determined that it is not in its best interest to commence litigation or to continue to contest or resist any action or proceeding. Where action is taken to terminate this Agreement pursuant to this Section 8.1, it shall be sufficient for such action to be authorized by the Board of Directors of the party taking such action without any requirement to submit such action to the shareholders of such party. 8.2 Effect of Termination. In the event of termination of this Agreement by either Company or Microsoft as provided in Section 8.1, this Agreement shall forthwith become void and have no effect, and there shall be no liability or obligation on the part of Microsoft, Sub or Company or their respective officers or directors, except that (i) the provisions of the last sentence of Section 6.4 and all of Sections 6.9, 6.11, 8.2, 8.3, A-31 9.7 and 9.8 and the Confidentiality Agreement shall survive any such termination and abandonment, and (ii) except as provided in Section 8.3, no party shall be released or relieved from any liability arising from the willful breach by such party of any of its representations, warranties, covenants or agreements as set forth in this Agreement. 8.3 Break-up Fees. 8.3.1 Company Break-up Fee. Company agrees to pay Microsoft, (provided that Microsoft is not then in material breach of any representation, warranty, covenant or agreement contained in this Agreement) on the fifteenth day (or, if such day is not a business day, the next business day thereafter) following (a) the termination of this Agreement or (b) such later date as may apply in the case of (ii) below ("Payment Date") by wire transfer, the sum of $40,000,000 in immediately available funds (the "Company Break-up Fee") in the event that following the date of the execution of this Agreement any of the following events shall have occurred: (i) Microsoft shall have terminated this Agreement pursuant to Section 8.1(f) or Section 8.1(g) hereof; (ii) Company shall have agreed to an Acquisition Transaction which results in a change in the beneficial owners of more than fifty percent (50%) of the voting power of the capital stock of Company, before, or within twelve months after, termination of this Agreement, with any person, other than Microsoft or any of its affiliates; or (iii) Microsoft shall have terminated this Agreement pursuant to Section 8.1(b) hereof, following a material breach of this Agreement by Company. 8.3.2 Microsoft Break-up Fee. In the event that following the date of the execution of this Agreement, and at or prior to the termination of this Agreement, Company shall have terminated this Agreement pursuant to Section 8.1(b) hereof, following a material breach of this Agreement by Microsoft, then Microsoft agrees to pay Company, (provided that Company is not then in material breach of any representation, warranty, covenant or agreement contained in this Agreement) promptly upon such termination by wire transfer, the sum of $40,000,000 in immediately available funds (the "Microsoft Break-up Fee"). 8.3.3 HSR Break-up Fee. In the event the Closing does not occur because (i) the condition relating to the termination of the waiting period under the HSR Act has not been satisfied prior to September 30, 2001, or, if the parties have elected to pursue litigation pursuant to Section 6.7.2, March 31, 2002, or (ii) either party has terminated this Agreement pursuant to Section 8.3.1(h), Microsoft shall pay Company (provided that Company is not then in material breach of any representation, warranty, covenant or agreement contained in this Agreement) by wire transfer, the sum of $5,000,000 in immediately available funds (the "HSR Break-up Fee"). The payment of the fees set forth in this Section 8.3 shall be the exclusive remedy at law or in equity to which either party may be entitled upon termination of this Agreement. 8.4 Amendment. This Agreement may be amended by the parties hereto, by action taken by their respective Board of Directors, at any time before or after approval of matters presented in connection with the Merger by the shareholders of Company or Microsoft, but after any such shareholder approval, no amendment shall be made which by law requires the further approval of shareholders without obtaining such further approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. 8.5 Extension, Waiver. At any time prior to the Effective Time, any party hereto, by action taken by its Board of Directors may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties made to such party contained herein or in any document delivered pursuant hereto and (iii) waive A-32 compliance with any of the agreements, covenants or conditions for the benefit of such party contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. ARTICLE IX GENERAL PROVISIONS 9.1 Nonsurvival of Representations, Warranties and Agreements. All representations, warranties and agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall be deemed to be conditions to the Merger and shall not survive the Merger, except for the agreements contained in Article II and in Sections 4.11, 5.4, 6.8 and 6.9 and the agreements delivered pursuant to this Agreement. 9.2 Notices. All notices, requests, demands or other communications which are required or may be given pursuant to the terms of this Agreement shall be in writing and shall be deemed to have been duly given: (i) on the date of delivery if personally delivered by hand, (ii) upon the third day after such notice is (a) deposited in the United States mail, if mailed by registered or certified mail, postage prepaid, return receipt requested, or (b) sent by a nationally recognized overnight express courier, or (iii) by facsimile upon written confirmation (other than the automatic confirmation that is received from the recipient's facsimile machine) of receipt by the recipient of such notice: (a) if to Microsoft or Sub, to: Microsoft Corporation One Microsoft Way Redmond, Washington 98052-6399 Attention: Group Vice President, Productivity and Business Services With a copy to: Deputy General Counsel, Finance and Operations Facsimile No.: (206) 869-1327 With an additional copy to: Preston Gates & Ellis LLP 701 Fifth Avenue, Suite 5000 Seattle, Washington 98104 Attention: Richard B. Dodd Facsimile No.: (206) 623-7022 (b) if to Company, to: Great Plains Software, Inc. 1701 S.W. 38th Street Fargo, ND 58103 Attention: Douglas R. Herman Facsimile No.: (701) 281-6844 With a copy to: Dorsey & Whitney LLP 220 South Sixth Street Minneapolis, MN 55402-1498 Attention: Timothy S. Hearn Facsimile No.: (612) 340-2868 A-33 9.3 Interpretation. When a reference is made in this Agreement to Sections or Exhibits, such reference shall be to a Section or Exhibit to this Agreement unless otherwise indicated. The words "include," "includes," and "including" when used therein shall be deemed in each case to be followed by the words "without limitation." The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. The "knowledge of," "the best of knowledge of," or other derivations of "know" with respect to Company will mean the knowledge of the officers and directors of Company, in each case assuming the exercise of reasonable inquiry either directly or by representatives on his, her or their behalf. This Agreement has been negotiated by the respective parties hereto and their attorneys and the language hereof will not be construed for or against either party. A reference to a Section or an Exhibit will mean a section in, or exhibit to, this Agreement unless otherwise explicitly set forth. 9.4 Counterparts. This Agreement may be executed in two or more partially or fully executed counterparts each of which shall be deemed an original and shall bind the signatory, but all of which together shall constitute but one and the same instrument. The execution and delivery of a Signature Page-Agreement and Plan of Reorganization, in the form annexed to this Agreement, by any party hereto who shall have been furnished the final form of this Agreement shall constitute the execution and delivery of this Agreement by such party. 9.5 Miscellaneous. This Agreement, the Confidentiality Agreement, and the documents referred to herein (a) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof; (b) is not intended to confer upon any other person any rights or remedies hereunder (except as otherwise expressly provided herein and except that Section 6.8 is for the benefit of Company's directors and officers and Section 2.3.1 is for the benefit of holders of Company Stock Options and said Sections are intended to confer rights on such persons); and (c) shall not be assigned by operation of law or otherwise except as otherwise specifically provided. 9.6 No Joint Venture. Nothing contained in this Agreement will be deemed or construed as creating a joint venture or partnership between any of the parties hereto. No party is by virtue of this Agreement authorized as an agent, employee or legal representative of any other party. No party will have the power to control the activities and operations of any other and their status is, and at all times, will continue to be, that of independent contractors with respect to each other. No party will have any power or authority to bind or commit any other. No party will hold itself out as having any authority or relationship in contravention of this Section. 9.7 Governing Law. This Agreement shall be governed in all respects, including validity, interpretation and effect, by the laws of the State of Washington. 9.8 Enforcement of this Agreement. The parties hereto 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 in any material respect. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or any related agreement and to enforce specifically the terms and provisions of this Agreement or any related agreement in the state and federal courts in Seattle, King County, Washington, 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 the state and federal courts in King County, Washington in the event any dispute arises out of this Agreement or any related agreement or any transaction contemplated hereby or thereby, (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, (c) agrees that it will not bring any action relating to this Agreement or any related agreement or any transaction contemplated hereby or thereby in any court other than the state and federal courts in King County, Washington and (d) waives any right to trial by jury with respect to any action related to or arising out of this A-34 Agreement or related agreement or any transaction contemplated hereby or thereby. Neither any action seeking damages pursuant to Section 8.2, nor any action brought pursuant to this Section 9.8, shall be interpreted as providing an exclusive remedy to any party. [The remainder of this page was intentionally left blank] A-35 SIGNATURE PAGE--AGREEMENT AND PLAN OF REORGANIZATION IN WITNESS WHEREOF, Microsoft, Sub and Company have caused this Agreement to be signed by their respective officers thereunder duly authorized, all as of the date first written above. MICROSOFT CORPORATION /s/ Jeffrey Raikes By __________________________________ RUBICON ACQUISITION CORPORATION /s/ Keith Dolliver By __________________________________ GREAT PLAINS SOFTWARE, INC. /s/ Douglas J. Burgum By __________________________________ A-36 ANNEX B OPINION OF GOLDMAN, SACHS & CO. PERSONAL AND CONFIDENTIAL December 21, 2000 Board of Directors Great Plains Software, Inc. 1701 Southwest 38th Street Fargo, ND 28103 Ladies and Gentlemen: You have requested our opinion as to the fairness from a financial point of view to the holders of the outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Great Plains Software, Inc. (the "Company") of the exchange ratio of 1.1 shares of Common Stock, par value $0.0000125 per share (the "Microsoft Shares"), of Microsoft to be received for each Share (the "Exchange Ratio") pursuant to the Agreement and Plan of Reorganization, dated as of December 21, 2000 (the "Agreement"), among Microsoft Corporation ("Microsoft"), Rubicon Acquisition Corporation, a wholly-owned subsidiary of Microsoft ("Merger Sub"), and the Company. Pursuant to the Agreement, Merger Sub will be merged with and into the Company (the "Merger") and each outstanding Share will be converted into the right to receive a number of Microsoft Shares equal to the Exchange Ratio. Goldman, Sachs & Co., as part of its investment banking business, is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. We are familiar with the Company having provided certain investment banking services to the Company from time to time, including having made an $8.3 million principal investment in the Company in 1994; having acted as a managing underwriter of its initial public offering of 3,000,000 Shares in March 1997; having acted as a managing underwriter of public offerings of 588,000 Shares in April 1998 and 2,000,000 Shares in March 1999; and having acted as its financial advisor in connection with, and having participated in certain of the negotiations leading to, the Agreement. We also have provided certain investment banking services to Microsoft from time to time, including having acted as managing underwriter of a public offering of 10,954,616 shares of convertible exchangeable preferred stock of Microsoft in December 1996; having acted as financial advisor to Microsoft in connection with its equity investment in Titus Communications Corporation in April 2000; having acted as a managing underwriter of the initial public offering of 5,200,000 shares and Common Stock of Expedia, Inc., a subsidiary of Microsoft, in November 1999. We also may provide investment banking services to Microsoft in the future. Goldman, Sachs & Co. provides a full range of financial advisory and securities services and, in the course of its normal trading activities, may from time to time effect transactions and hold positions in securities, including derivative securities, of the Company or Microsoft for its own account and for the accounts of customers. In connection with this opinion, we have reviewed, among other things, the Agreement; the Registration Statement on Form S-1 of the Company, dated March 5, 1997; Annual Reports to Stockholders and Annual Reports on Form 10-K of the Company and Microsoft for the three fiscal years ended May 31, 2000 and for the five fiscal years ended June 30, 2000, respectively; certain interim reports to stockholders and Quarterly Reports on Form 10-Q of the Company and Microsoft; certain other communications from the Company and Microsoft to their respective stockholders; and certain internal financial analyses and forecasts for the Company prepared by its management (the "Company Forecasts"). We also have held discussions with members of the senior management of the Company and Microsoft regarding their assessment of the strategic rationale for, and B-1 the potential benefits of, the transaction contemplated by the Agreement. We have held discussions with members of senior management of the Company regarding their assessment of the past and current business operations, financial condition and future prospects of the Company. We have also held discussions with members of senior management of the Company and Microsoft regarding the past and current business operations, financial condition and future prospects of Microsoft. In addition, we have reviewed the reported price and trading activity for the Shares and the Microsoft Shares, compared certain financial and stock market information for the Company and Microsoft with similar information for certain other companies the securities of which are publicly traded, reviewed the financial terms of certain recent business combinations in the software industry specifically and in other industries generally and performed such other studies and analyses as we considered appropriate. We have relied upon the accuracy and completeness of all of the financial and other information discussed with or reviewed by us and have assumed such accuracy and completeness for purposes of rendering this opinion. In addition, we have not made an independent evaluation or appraisal of the assets and liabilities of the Company or Microsoft or any of their subsidiaries and we have not been furnished with any such evaluation or appraisal. With your consent, we have taken into account the views of the Company's management of the risks and uncertainties relating to the Company's ability to achieve the Company Forecasts in the amounts and time periods contemplated thereby. As you are aware, Microsoft did not make available to us its projections of expected future performance. Accordingly, our review of such matters was limited to discussions with the management of Microsoft of certain research analysts' estimates. With your consent, we have not conducted an independent evaluation of the pending litigation against Microsoft, including litigation regarding antitrust and intellectual property matters (the "Litigation"), or the resulting liability or other consequences, if any, Microsoft may incur in connection with the Litigation. Based on the information contained in Microsoft's public filings with the Securities and Exchange Commission and its representations and warranties in the Agreement and after consulting with counsel to the Company, you have directed us in rendering this opinion to assume that the Litigation will not have a material adverse effect on Microsoft's financial condition or results of operations, the market price of Microsoft Shares or, the conduct of the operations of Microsoft and its subsidiaries. We were not requested to solicit, and did not solicit, interest from other parties with respect to an acquisition of or other business combination with the Company (other than a limited discussion with one party which expressed an interest in the Company). Our advisory services and the opinion expressed herein are provided for the information and assistance of the Board of Directors of the Company in connection with its consideration of the transaction contemplated by the Agreement and such opinion does not constitute a recommendation as to how any holder of Shares should vote with respect to such transaction. Based upon and subject to the foregoing and based upon such other matters as we consider relevant, it is our opinion that as of the date hereof the Exchange Ratio pursuant to the Agreement is fair from a financial point of view to the holders of Shares. Very truly yours, /s/ Goldman, Sachs & Co. (Goldman, Sachs & Co.) B-2 ANNEX C MINNESOTA DISSENTERS' RIGHTS STATUTES Minnesota Statutes (S)(S) 302A.471 & 302A.473 302A.471 Rights of dissenting shareholders. Subdivision 1. Actions creating rights. A shareholder of a corporation may dissent from, and obtain payment for the fair value of the shareholder's shares in the event of, any of the following corporate actions: (a) An amendment of the articles that materially and adversely affects the rights or preferences of the shares of the dissenting shareholder in that it: (1) alters or abolishes a preferential right of the shares; (2) creates, alters, or abolishes a right in respect of the redemption of the shares, including a provision respecting a sinking fund for the redemption or repurchase of the shares; (3) alters or abolishes a preemptive right of the holder of the shares to acquire shares, securities other than shares, or rights to purchase shares or securities other than shares; (4) excludes or limits the right of a shareholder to vote on a matter, or to cumulate votes, except as the right may be excluded or limited through the authorization or issuance of securities of an existing or new class or series with similar or different voting rights; except that an amendment to the articles of an issuing public corporation that provides that section 302A.671 does not apply to a control share acquisition does not give rise to the right to obtain payment under this section; (b) A sale, lease, transfer, or other disposition of all or substantially all of the property and assets of the corporation, but not including a transaction permitted without shareholder approval in section 302A.661, subdivision 1, or a disposition in dissolution described in section 302A.725, subdivision 2, or a disposition pursuant to an order of a court, or a disposition for cash on terms requiring that all or substantially all of the net proceeds of disposition be distributed to the shareholders in accordance with their respective interests within one year after the date of disposition; (c) A plan of merger, whether under this chapter or under chapter 322B, to which the corporation is a constituent organization, except as provided in subdivision 3; (d) A plan of exchange, whether under this chapter or under chapter 322B, to which the corporation is a party as the corporation whose shares will be acquired by the acquiring corporation, except as provided in subdivision 3; or (e) Any other corporate action taken pursuant to a shareholder vote with respect to which the articles, the bylaws, or a resolution approved by the board directs that dissenting shareholders may obtain payment for their shares. Subd. 2. Beneficial owners. (a) A shareholder shall not assert dissenters' rights as to less than all of the shares registered in the name of the shareholder, unless the shareholder dissents with respect to all the shares that are beneficially owned by another person but registered in the name of the shareholder and discloses the name and address of each beneficial owner on whose behalf the shareholder dissents. In that event, the rights of the dissenter shall be determined as if the shares as to which the shareholder has dissented and the other shares were registered in the names of different shareholders. (b) A beneficial owner of shares who is not the shareholder may assert dissenters' rights with respect to shares held on behalf of the beneficial owner, and shall be treated as a dissenting shareholder under the terms C-1 of this section and section 302A.473, if the beneficial owner submits to the corporation at the time of or before the assertion of the rights a written consent of the shareholder. Subd. 3. Rights not to apply. (a) Unless the articles, the bylaws, or a resolution approved by the board otherwise provide, the right to obtain payment under this section does not apply to a shareholder of (1) the surviving corporation in a merger with respect to shares of the shareholder that are not entitled to be voted on the merger and are not canceled or exchanged in the merger or (2) the corporation whose shares will be acquired by the acquiring corporation in a plan of exchange with respect to shares of the shareholder that are not entitled to be voted on the plan of exchange and are not exchanged in the plan of exchange. (b) If a date is fixed according to section 302A.445, subdivision 1, for the determination of shareholders entitled to receive notice of and to vote on an action described in subdivision 1, only shareholders as of the date fixed, and beneficial owners as of the date fixed who hold through shareholders, as provided in subdivision 2, may exercise dissenters' rights. Subd. 4. Other rights. The shareholders of a corporation who have a right under this section to obtain payment for their shares do not have a right at law or in equity to have a corporate action described in subdivision 1 set aside or rescinded, except when the corporate action is fraudulent with regard to the complaining shareholder or the corporation. 302A.473 Procedures for asserting dissenters' rights. Subdivision 1. Definitions. (a) For purposes of this section, the terms defined in this subdivision have the meanings given them. (b) "Corporation" means the issuer of the shares held by a dissenter before the corporate action referred to in section 302A.471, subdivision 1 or the successor by merger of that issuer. (c) "Fair value of the shares" means the value of the shares of a corporation immediately before the effective date of the corporate action referred to in section 302A.471, subdivision 1. (d) "Interest" means interest commencing five days after the effective date of the corporate action referred to in section 302A.471, subdivision 1, up to and including the date of payment, calculated at the rate provided in section 549.09 for interest on verdicts and judgments. Subd. 2. Notice of action. If a corporation calls a shareholder meeting at which any action described in section 302A.471, subdivision 1 is to be voted upon, the notice of the meeting shall inform each shareholder of the right to dissent and shall include a copy of section 302A.471 and this section and a brief description of the procedure to be followed under these sections. Subd. 3. Notice of dissent. If the proposed action must be approved by the shareholders, a shareholder who is entitled to dissent under section 302A.471 and who wishes to exercise dissenters' rights must file with the corporation before the vote on the proposed action a written notice of intent to demand the fair value of the shares owned by the shareholder and must not vote the shares in favor of the proposed action. Subd. 4. Notice of procedure; deposit of shares. (a) After the proposed action has been approved by the board and, if necessary, the shareholders, the corporation shall send to all shareholders who have complied with subdivision 3 and to all shareholders entitled to dissent if no shareholder vote was required, a notice that contains: (1) The address to which a demand for payment and certificates of certificated shares must be sent in order to obtain payment and the date by which they must be received; (2) Any restrictions on transfer of uncertificated shares that will apply after the demand for payment is received; C-2 (3) A form to be used to certify the date on which the shareholder, or the beneficial owner on whose behalf the shareholder dissents, acquired the shares or an interest in them and to demand payment; and (4) A copy of section 302A.471 and this section and a brief description of the procedures to be followed under these sections. (b) In order to receive the fair value of the shares, a dissenting shareholder must demand payment and deposit certificated shares or comply with any restrictions on transfer of uncertificated shares within 30 days after the notice required by paragraph (a) was given, but the dissenter retains all other rights of a shareholder until the proposed action takes effect. Subd. 5. Payment; return of shares. (a) After the corporate action takes effect, or after the corporation receives a valid demand for payment, whichever is later, the corporation shall remit to each dissenting shareholder who has complied with subdivisions 3 and 4 the amount the corporation estimates to be the fair value of the shares, plus interest, accompanied by: (1) the corporation's closing balance sheet and statement of income for a fiscal year ending not more than 16 months before the effective date of the corporate action, together with the latest available interim financial statements; (2) an estimate by the corporation of the fair value of the shares and a brief description of the method used to reach the estimate; and (3) a copy of section 302A.471 and this section, and a brief description of the procedure to be followed in demanding supplemental payment. (b) The corporation may withhold the remittance described in paragraph (a) from a person who was not a shareholder on the date the action dissented from was first announced to the public or who is dissenting on behalf of a person who was not a beneficial owner on that date. If the dissenter has complied with subdivisions 3 and 4, the corporation shall forward to the dissenter the materials described in paragraph (a), a statement of the reason for withholding the remittance, and an offer to pay to the dissenter the amount listed in the materials if the dissenter agrees to accept that amount in full satisfaction. The dissenter may decline the offer and demand payment under subdivision 6. Failure to do so entitles the dissenter only to the amount offered. If the dissenter makes demand, subdivisions 7 and 8 apply. (c) If the corporation fails to remit payment within 60 days of the deposit of certificates or the imposition of transfer restrictions on uncertificated shares, it shall return all deposited certificates and cancel all transfer restrictions. However, the corporation may again give notice under subdivision 4 and require deposit or restrict transfer at a later time. Subd. 6. Supplemental payment; demand. If a dissenter believes that the amount remitted under subdivision 5 is less than the fair value of the shares plus interest, the dissenter may give written notice to the corporation of the dissenter's own estimate of the fair value of the shares, plus interest, within 30 days after the corporation mails the remittance under subdivision 5, and demand payment of the difference. Otherwise, a dissenter is entitled only to the amount remitted by the corporation. Subd. 7. Petition; determination. If the corporation receives a demand under subdivision 6, it shall, within 60 days after receiving the demand, either pay to the dissenter the amount demanded or agreed to by the dissenter after discussion with the corporation or file in court a petition requesting that the court determine the fair value of the shares, plus interest. The petition shall be filed in the county in which the registered office of the corporation is located, except that a surviving foreign corporation that receives a demand relating to the shares of a constituent domestic corporation shall file the petition in the county in this state in which the last registered office of the constituent corporation was located. The petition shall name as parties all dissenters who have demanded payment under subdivision 6 and who have not reached agreement with the corporation. The corporation shall, after filing the petition, serve all parties with a summons and copy of the petition under the C-3 rules of civil procedure. Nonresidents of this state may be served by registered or certified mail or by publication as provided by law. Except as otherwise provided, the rules of civil procedure apply to this proceeding. The jurisdiction of the court is plenary and exclusive. The court may appoint appraisers, with powers and authorities the court deems proper, to receive evidence on and recommend the amount of the fair value of the shares. The court shall determine whether the shareholder or shareholders in question have fully complied with the requirements of this section, and shall determine the fair value of the shares, taking into account any and all factors the court finds relevant, computed by any method or combination of methods that the court, in its discretion, sees fit to use, whether or not used by the corporation or by a dissenter. The fair value of the shares as determined by the court is binding on all shareholders, wherever located. A dissenter is entitled to judgment in cash for the amount by which the fair value of the shares as determined by the court, plus interest, exceeds the amount, if any, remitted under subdivision 5, but shall not be liable to the corporation for the amount, if any, by which the amount, if any, remitted to the dissenter under subdivision 5 exceeds the fair value of the shares as determined by the court, plus interest. Subd. 8. Costs; fees; expenses. (a) The court shall determine the costs and expenses of a proceeding under subdivision 7, including the reasonable expenses and compensation of any appraisers appointed by the court, and shall assess those costs and expenses against the corporation, except that the court may assess part or all of those costs and expenses against a dissenter whose action in demanding payment under subdivision 6 is found to be arbitrary, vexatious, or not in good faith. (b) If the court finds that the corporation has failed to comply substantially with this section, the court may assess all fees and expenses of any experts or attorneys as the court deems equitable. These fees and expenses may also be assessed against a person who has acted arbitrarily, vexatiously, or not in good faith in bringing the proceeding, and may be awarded to a party injured by those actions. (c) The court may award, in its discretion, fees and expenses to an attorney for the dissenters out of the amount awarded to the dissenters, if any. C-4 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 20. Indemnification of Directors and Officers. Article XII of the Restated Articles of Incorporation of the registrant authorizes the registrant to indemnify any present or former director or officer to the fullest extent not prohibited by the Washington Business Corporation Act, public policy or other applicable law. Sections 23B.8.510 and .570 of the Washington Business Corporation Act authorizes a corporation to indemnify its directors, officers, employees or agents in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities (including provisions permitting advances for expenses incurred) arising under the Securities Act of 1933. The registrant has agreed that if the merger is completed, all rights to indemnification (including payment of litigation expenses) of current or former directors, officers and employees of Great Plains and its subsidiaries arising from actions taken before the consummation of the merger, under Minnesota law and in Great Plains' articles of incorporation and bylaws, will be assumed by the registrant, continue in full force and effect for six years from the effective date of the merger and be guaranteed by the registrant. In addition, the registrant maintains directors' and officers' liability insurance under which the registrant's directors and officers are insured against loss (as defined in the policy) resulting from claims brought against them for their wrongful acts in such capacities. Item 21. List of Exhibits. The exhibits to this registration statement are listed in the Index to Exhibits on page II-4. Item 22. Undertakings. (a) The undersigned registrant hereby undertakes that, for purposespurpose of determining any liability under the Securities Act, of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) (i) The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form. (ii) The registrant undertakes that every prospectus (a) that is filed pursuant to paragraph (b)(i) immediately preceding, or (b) that purports to meet the requirements of Section 10(a)(3) of the Securities Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;

~~(3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;~~

(4) That, for the purpose of determining liability under the Securities Act to any purchaser, if the registrants are subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use; and

(5) that, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

~~(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;~~

~~(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;~~

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

~~(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.~~

(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Exchange Act), that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

~~II-7~~

(c) Insofar as indemnification for liabilities arising under the Securities Act ~~of 1933~~ may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, ~~II-1~~ the registrant has been advised that in the opinion of the ~~Securities and Exchange Commission~~SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

(d) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

(e) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. ~~[Remainder of Page Intentionally Left Blank] II-2~~

~~II-8~~

~~SIGNATURES~~

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Amendment No. 1 to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Redmond, State of Washington, on February 21, 2001. MICROSOFT CORPORATION /s/ Steven A. Ballmer By: _________________________________ Steven A. Ballmer Chief Executive Officer and Director (Principal Executive Officer) March 2, 2021.


Microsoft Corporation

By:		/s/ Alice L. Jolla
		Name: Alice L. Jolla
		Title: Corporate Vice President, Chief Accounting Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to the registration statement has been signed by the following persons in the capacities ~~and~~indicated on ~~the dates indicated.~~ March 2, 2021.



Signature		Title ~~Date --------- ----- ----~~ ~~/s/ Steven A. Ballmer~~

* John W. Thompson		Chairman

* Satya Nadella		Director and Chief Executive Officer ~~February 21, 2001 ____________________________________~~

Reid Hoffman		Director ~~(Principal Steven A. Ballmer~~

* Hugh F. Johnston		Director

* Teri L. List		Director

* Sandra E. Peterson		Director

* Penny S. Pritzker		Director

* Charles W. Scharf		Director

* John W. Stanton		Director

* Emma Walmsley		Director


Signature		Title

* Padmasree Warrior		Director

* Amy E. Hood		Executive Officer) /s/ William H. Gates III Chairman, Chief Software February 21, 2001 ____________________________________ Architect, Director William H. Gates III * Vice President ~~Finance, ____________________________________~~and Chief Financial Officer ~~John Connors (Principal~~ (Principal Financial Officer)

/s/ Alice L. Jolla Alice L. Jolla		Corporate Vice President and Chief Accounting Officer (Principal Accounting Officer)



* Director ____________________________________ David F. Marquardt /s/ Ann McLaughlin Korologos Director February 21, 2001 ____________________________________ Ann McLaughlin Korologos * Director ____________________________________ W. G. Reed, Jr. * Director ____________________________________ Jon A. Shirley By:		/s/ Alice L. Jolla
Name:		Alice L. Jolla
Title:		Attorney-in-Fact

~~- -------- * Pursuant to a Power of Attorney dated February 1, 2001 II-3~~ ~~INDEX TO EXHIBITS~~
~~Exhibit No. Description ------- -----------~~ 2.1 Agreement and Plan of Reorganization, dated as of December 21, 2000, among Microsoft Corporation, Rubicon Acquisition Corporation and Great Plains Software, Inc., incorporated by reference to Annex A to the proxy statement/prospectus contained in this registration statement* 2.2 Form of Voting Agreement 2.3 Form of Great Plains Affiliate Letter Agreement 3.1 Amended and Restated Articles of Incorporation of Microsoft Corporation, incorporated by reference to Microsoft's Annual Report on Form 10-K for the fiscal year ended June 30, 1999 3.2 Bylaws of Microsoft, incorporated by reference to Microsoft's Annual Report on Form 10-K for the fiscal year ended June 30, 1999 5 Opinion and consent of Preston Gates & Ellis LLP regarding validity of the shares to be issued* 8 Opinion and consent of Dorsey & Whitney LLP regarding certain tax matters* 23.1 Consent of Deloitte & Touche LLP 23.2 Consent of PricewaterhouseCoopers LLP 23.3 Consent of Preston Gates & Ellis LLP (contained in exhibit 5)* 23.4 Consent of Dorsey & Whitney LLP (contained in exhibit 8)* 23.5 Consent of Goldman, Sachs & Co. 24 Power of Attorney* 99.1 Form of Proxy to be used by shareholders of Great Plains Software, Inc.
~~- -------- * Previously filed II-4~~


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐



Title of Each Class of Securities to be Registered	Amount to be Registered(1)	Proposed Maximum Offering Price Per Unit(2)	Proposed Maximum Aggregate Offering Price(2)	Amount of Registration Fee(3)
New Notes due 2052	$6,250,000,000	100%	$6,250,000,000	$681,875
New Notes due 2062	$2,000,000,000	100%	$2,000,000,000	$218,200
Total			$8,250,000,000	$900,075


CUSIP Number	Title of Security	Principal Amount Outstanding (MM)		Acceptance Priority Level		Reference UST Security⁽¹⁾		Bloomberg Reference Page		Fixed Spread (basis points)		Cash Payment Percent of Premium⁽²⁾			Early Exchange Premium⁽³⁾⁽⁴⁾
Pool 1 Notes
594918AX2	4.875% Notes due 2043	$	174.572		1		30-year		FIT 1		45		100	%	$	30
594918BL7	4.450% Notes due 2045	$	1,288.337		2		30-year		FIT 1		50		100	%	$	30
594918CA0	4.250% Notes due 2047	$	1,584.630		3		30-year		FIT 1		55		100	%	$	30
594918AM6	5.300% Notes due 2041	$	770.339		4		30-year		FIT 1		30		100	%	$	30
594918AD6	5.200% Notes due 2039	$	558.545		5		30-year		FIT 1		20		100	%	$	30
594918AJ3	4.500% Notes due 2040	$	571.171		6		30-year		FIT 1		25		100	%	$	30
594918BT0	3.700% Notes due 2046	$	4,500.000		7		30-year		FIT 1		52		100	%	$	30
594918AU8	3.750% Notes due 2043	$	244.015		8		30-year		FIT 1		45		100	%	$	30


Title of Security	Reference UST Security	Minimum Yield		Maximum Yield
Pool 1 Notes
4.875% Notes due 2043	1.625% due November 15, 2050		1.00%		2.40%
4.450% Notes due 2045	1.625% due November 15, 2050		1.00%		2.40%
4.250% Notes due 2047	1.625% due November 15, 2050		1.00%		2.40%
5.300% Notes due 2041	1.625% due November 15, 2050		1.00%		2.40%
5.200% Notes due 2039	1.625% due November 15, 2050		1.00%		2.40%
4.500% Notes due 2040	1.625% due November 15, 2050		1.00%		2.40%
3.700% Notes due 2046	1.625% due November 15, 2050		1.00%		2.40%
3.750% Notes due 2043	1.625% due November 15, 2050		1.00%		2.40%
3.750% Notes due 2045	1.625% due November 15, 2050		1.00%		2.40%
3.500% Notes due 2042	1.625% due November 15, 2050		1.00%		2.40%
4.100% Notes due 2037	1.625% due November 15, 2050		1.00%		2.40%
4.200% Notes due 2035	1.625% due November 15, 2050		1.00%		2.40%
3.450% Notes due 2036	1.625% due November 15, 2050		1.00%		2.40%
3.500% Notes due 2035	1.625% due November 15, 2050		1.00%		2.40%
Pool 2 Notes
3.950% Notes due 2056	1.625% due November 15, 2050		1.00%		2.40%
4.750% Notes due 2055	1.625% due November 15, 2050		1.00%		2.40%
4.500% Notes due 2057	1.625% due November 15, 2050		1.00%		2.40%
4.000% Notes due 2055	1.625% due November 15, 2050		1.00%		2.40%


Pool 1 Table
Title of Security	CUSIP Number		Acceptance Priority Level		Reference UST Security⁽¹⁾		Fixed Spread (basis points)		Yield⁽²⁾			Early Exchange Premium⁽³⁾		Total Exchange Consideration⁽³⁾⁽⁴⁾		Principal Amount of New Notes⁽⁵⁾		Cash Payment⁽³⁾
4.875% Notes due 2043		594918AX2		1		30-year		+45		2.671	%	$	30	$	1,367.81	$	1,000.00	$	367.81
4.450% Notes due 2045		594918BL7		2		30-year		+50		2.721	%	$	30	$	1,304.37	$	1,000.00	$	304.37
4.250% Notes due 2047		594918CA0		3		30-year		+55		2.771	%	$	30	$	1,268.30	$	1,000.00	$	268.30
5.300% Notes due 2041		594918AM6		4		30-year		+30		2.521	%	$	30	$	1,432.59	$	1,000.00	$	432.59
5.200% Notes due 2039		594918AD6		5		30-year		+20		2.421	%	$	30	$	1,407.16	$	1,000.00	$	407.16
4.500% Notes due 2040		594918AJ3		6		30-year		+25		2.471	%	$	30	$	1,312.94	$	1,000.00	$	312.94
3.700% Notes due 2046		594918BT0		7		30-year		+52		2.741	%	$	30	$	1,172.18	$	1,000.00	$	172.18
3.750% Notes due 2043		594918AU8		8		30-year		+45		2.671	%	$	30	$	1,176.34	$	1,000.00	$	176.34
3.750% Notes due 2045		594918BD5		9		30-year		+45		2.671	%	$	30	$	1,186.84	$	1,000.00	$	186.84
3.500% Notes due 2042		594918AR5		10		30-year		+35		2.571	%	$	30	$	1,153.54	$	1,000.00	$	153.54
4.100% Notes due 2037		594918BZ6		11		30-year		+5		2.271	%	$	30	$	1,236.37	$	1,000.00	$	236.37
4.200% Notes due 2035		594918BK9		12		30-year		-10		2.121	%	$	30	$	1,252.63	$	1,000.00	$	252.63
3.450% Notes due 2036		594918BS2		13		30-year		-7		2.151	%	$	30	$	1,164.75	$	1,000.00	$	164.75
3.500% Notes due 2035		594918BC7		14		30-year		-15		2.071	%	$	30	$	1,166.48	$	1,000.00	$	166.48


Pool 2 Table⁽¹⁾
Title of Security	CUSIP Number		Acceptance Priority Level		Reference UST Security⁽²⁾		Fixed Spread (basis points)		Yield⁽³⁾			Early Exchange Premium⁽⁴⁾		Total Exchange Consideration⁽⁴⁾⁽⁵⁾		Principal Amount of New Notes⁽⁶⁾		Cash Payment⁽⁴⁾
3.950% Notes due 2056		594918BU7		1		30-year		+67		2.891	%	$	30	$	1,231.73	$	1,000.00	$	231.73
4.750% Notes due 2055		594918BM5		2		30-year		+67		2.891	%	$	30	$	1,401.56	$	1,016.06	$	385.50
4.500% Notes due 2057		594918CB8		3		30-year		+67		2.891	%	$	30	$	1,354.97	$	1,000.00	$	354.97
4.000% Notes due 2055		594918BE3		4		30-year		+67		2.891	%	$	30	$	1,236.52	$	1,000.00	$	236.52

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