EXHIBIT (c)(1)
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Among
INTERNATIONAL BUSINESS MACHINES CORPORATION,
TOPAZ ACQUISITION CORP.
and
TIVOLI SYSTEMS INC.
Dated as of January 30, 1996
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TABLE OF CONTENTS
Page
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ARTICLE I
The Offer
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SECTION 1.01. The Offer . . . . . . . . . . . . . . . 2
SECTION 1.02. Company Actions . . . . . . . . . . . . 4
ARTICLE II
The Merger
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SECTION 2.01. The Merger . . . . . . . . . . . . . . 6
SECTION 2.02. Closing . . . . . . . . . . . . . . . . 6
SECTION 2.03. Effective Time . . . . . . . . . . . . 6
SECTION 2.04. Effects of the Merger . . . . . . . . . 7
SECTION 2.05. Certificate of Incorporation and
By-laws . . . . . . . . . . . . . . . 7
SECTION 2.06. Directors . . . . . . . . . . . . . . . 7
SECTION 2.07. Officers . . . . . . . . . . . . . . . 7
ARTICLE III
Effect of the Merger on the Capital Stock of the
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Constituent Corporations; Exchange of Certificates
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SECTION 3.01. Effect on Capital Stock . . . . . . . . 7
(a) Capital Stock of Sub . . . . . . . 8
(b) Cancelation of Treasury Stock and
Parent Owned Stock . . . . . . . 8
(c) Conversion of Company Common Stock 8
(d) Shares of Dissenting Stockholders 8
SECTION 3.02. Exchange of Certificates . . . . . . . 9
(a) Paying Agent . . . . . . . . . . . 9
(b) Exchange Procedure . . . . . . . . 9
(c) No Further Ownership Rights in
Company Common Stock . . . . . . 10
(d) No Liability . . . . . . . . . . . 10
Contents, p. 2
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ARTICLE IV
Representations and Warranties of the Company
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SECTION 4.01. Organization . . . . . . . . . . . . . 11
SECTION 4.02. Subsidiaries . . . . . . . . . . . . . 11
SECTION 4.03. Capitalization . . . . . . . . . . . . 12
SECTION 4.04. Authority . . . . . . . . . . . . . . . 13
SECTION 4.05. Consents and Approvals; No Violations . 13
SECTION 4.06. SEC Reports and Financial Statements . 14
SECTION 4.07. Absence of Certain Changes or Events . 15
SECTION 4.08. No Undisclosed Liabilities . . . . . . 17
SECTION 4.09. Information Supplied . . . . . . . . . 17
SECTION 4.10. Benefit Plans . . . . . . . . . . . . . 18
SECTION 4.11. Other Compensation Arrangements. . . . . 18
SECTION 4.12. Litigation . . . . . . . . . . . . . . . 19
SECTION 4.13. Compliance with Applicable Law . . . . 19
SECTION 4.14. Tax Matters . . . . . . . . . . . . . . 20
SECTION 4.15. State Takeover Statutes . . . . . . . . 21
SECTION 4.16. Brokers; Fees and Expenses . . . . . . 22
SECTION 4.17. Opinion of Financial Advisor . . . . . 22
SECTION 4.18. Intellectual Property . . . . . . . . . 22
SECTION 4.19. Distribution Agreements . . . . . . . . 25
SECTION 4.20. Indebtedness . . . . . . . . . . . . . 25
ARTICLE V
Representations and Warranties
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of Parent and Sub
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SECTION 5.01. Organization . . . . . . . . . . . . . 25
SECTION 5.02. Authority . . . . . . . . . . . . . . . 25
SECTION 5.03. Consents and Approvals; No Violations . 26
SECTION 5.04. Information Supplied . . . . . . . . . 27
SECTION 5.05. Interim Operations of Sub . . . . . . . 27
SECTION 5.06. Brokers . . . . . . . . . . . . . . . . 27
SECTION 5.07. Financing . . . . . . . . . . . . . . . 27
Contents, p. 3
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ARTICLE VI
Covenants
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SECTION 6.01. Covenants of the Company . . . . . . . 28
(a) Ordinary Course . . . . . . . . . 28
(b) Dividends; Changes in Stock . . . 28
(c) Issuance of Securities . . . . . . 28
(d) Governing Documents . . . . . . . 29
(e) No Acquisitions . . . . . . . . . 29
(f) No Dispositions . . . . . . . . . 29
(g) Indebtedness . . . . . . . . . . . 29
(h) Advice of Changes; Filings . . . . 30
(i) Tax Matters . . . . . . . . . . . 30
(j) Capital Expenditures . . . . . . . 30
(k) Discharge of Liabilities . . . . . 30
(l) Material Contracts . . . . . . . . 31
(m) Compensation of Company Employees 31
(n) General . . . . . . . . . . . . . 31
SECTION 6.02. No Solicitation . . . . . . . . . . . . 31
SECTION 6.03. Other Actions . . . . . . . . . . . . . 34
ARTICLE VII
Additional Agreements
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SECTION 7.01. Stockholder Approval; Preparation of
Proxy Statement . . . . . . . . . . . 35
SECTION 7.02. Access to Information . . . . . . . . . 36
SECTION 7.03. Reasonable Efforts . . . . . . . . . . 36
SECTION 7.04. Company Stock Options; Shares Subject
to Repurchase Right . . . . . . . . . . 37
SECTION 7.05. Directors . . . . . . . . . . . . . . . 39
SECTION 7.06. Fees and Expenses . . . . . . . . . . . 40
SECTION 7.07. Indemnification; Insurance . . . . . . 41
SECTION 7.08. Certain Litigation . . . . . . . . . . 41
SECTION 7.09. Benefits . . . . . . . . . . . . . . . 42
Contents, p. 4
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ARTICLE VIII
Conditions
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SECTION 8.01. Conditions to Each Party's Obligation To
Effect the Merger . . . . . . . . . . 42
(a) Company Stockholder Approval . . . 42
(b) No Injunctions or Restraints . . . 42
(c) Purchase of Shares . . . . . . . . 43
ARTICLE IX
Termination and Amendment
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SECTION 9.01. Termination . . . . . . . . . . . . . . 43
SECTION 9.02. Effect of Termination . . . . . . . . . 44
SECTION 9.03. Amendment . . . . . . . . . . . . . . . 44
SECTION 9.04. Extension; Waiver . . . . . . . . . . . 45
ARTICLE X
Miscellaneous
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SECTION 10.01. Nonsurvival of Representations,
Warranties and Agreements . . . . . . 45
SECTION 10.02. Notices . . . . . . . . . . . . . . . . 45
SECTION 10.03. Interpretation . . . . . . . . . . . . 47
SECTION 10.04. Counterparts . . . . . . . . . . . . . 47
SECTION 10.05. Entire Agreement; Third Party
Beneficiaries . . . . . . . . . . . . 47
SECTION 10.06. Governing Law . . . . . . . . . . . . . 48
SECTION 10.07. Publicity . . . . . . . . . . . . . . . 48
SECTION 10.08. Assignment . . . . . . . . . . . . . . 48
SECTION 10.09. Enforcement . . . . . . . . . . . . . . 48
Exhibits
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Exhibit A Conditions of the Offer
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER dated as of
January 30, 1996, among INTERNATIONAL
BUSINESS MACHINES CORPORATION, a New York
corporation ("Parent"), TOPAZ ACQUISITION
CORP., a Delaware corporation and a wholly
owned subsidiary of Parent ("Sub"), and
TIVOLI SYSTEMS INC., a Delaware corporation
(the "Company").
WHEREAS the respective Boards of Directors of
Parent, Sub and the Company have approved the acquisition of
the Company by Parent on the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition,
Parent proposes to cause Sub to make a tender offer (as it
may be amended from time to time as permitted under this
Agreement, the "Offer") to purchase all the outstanding
shares of Common Stock, par value $0.01 per share, of the
Company (the "Company Common Stock"; all the outstanding
shares of Company Common Stock being hereinafter
collectively referred to as the "Shares") at a purchase
price of $47.50 per share (the "Offer Price"), net to the
seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in this Agreement; and
the Board of Directors of the Company has adopted
resolutions approving the Offer and the Merger (as defined
below), recommending that the Company's stockholders accept
the Offer and approving the acquisition of Shares by Sub
pursuant to the Offer and the Stockholder Agreement (as
defined below);
WHEREAS the respective Boards of Directors of
Parent, Sub and the Company have each approved the merger of
Sub into the Company (the "Merger"), upon the terms and
subject to the conditions set forth in this Agreement,
whereby each share of Company Common Stock, other than
shares of Company Common Stock owned directly or indirectly
by Parent or the Company and Dissenting Shares (as defined
in Section 3.01(d)), will be converted into the right to
receive the price per share paid in the Offer;
WHEREAS, concurrently with the execution of this
Agreement and as an inducement to Parent to enter into this
Agreement, Parent, Sub and certain stockholders of the
Company are entering into a Stockholder Agreement (the
"Stockholder Agreement") pursuant to which such stockholders
have, among other things, agreed to sell all such
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stockholders' Shares to the Purchaser at a cash price per
Share of the Offer Price, or such higher price per Share as
may be offered by Sub in the Offer, upon the terms and
subject to the conditions set forth in the Stockholder
Agreement;
WHEREAS, concurrently with the execution of this
Agreement and as an inducement to Parent to enter into this
Agreement, Parent and certain stockholders of the Company
who are employed by the Company are entering into a
Noncompetition Agreement (the "Noncompetition Agreement")
pursuant to which such stockholders have, among other
things, agreed to not have any Relationship (as defined in
the Noncompetition Agreement) with certain third parties
during the Noncompetition Period (as defined in the
Noncompetition Agreement); and
WHEREAS Parent, Sub and the Company desire to make
certain representations, warranties, covenants and
agreements in connection with the Offer and the Merger and
also to prescribe various conditions to the Offer and the
Merger.
NOW, THEREFORE, in consideration of the foregoing
and the mutual covenants and agreements herein contained,
and intending to be legally bound hereby, Parent, Sub and
the Company hereby agree as follows:
ARTICLE I
The Offer
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SECTION 1.01. The Offer. (a) Subject to the
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provisions of this Agreement, as promptly as practicable but
in no event later than five business days after the date of
the public announcement by Parent and the Company of this
Agreement, Sub shall, and Parent shall cause Sub to,
commence the Offer. The obligation of Sub to, and of Parent
to cause Sub to, commence the Offer and accept for payment,
and pay for, any Shares tendered pursuant to the Offer shall
be subject to the conditions set forth in Exhibit A (the
"Offer Conditions") (any of which may be waived in whole or
in part by Sub in its sole discretion, provided that,
without the consent of the Company, Sub shall not waive the
Minimum Condition (as defined in Exhibit A)) and to the
terms and conditions of this Agreement. Sub expressly
reserves the right to modify the terms of the Offer, except
3
that, without the consent of the Company, Sub shall not
(i) reduce the number of Shares subject to the Offer,
(ii) reduce the Offer Price, (iii) add to the Offer
Conditions, (iv) except as provided in the next sentence,
extend the Offer, (v) change the form of consideration
payable in the Offer or (vi) amend any other term of the
Offer in any manner adverse to the holders of the Shares.
Notwithstanding the foregoing, Sub may, without the consent
of the Company, (A) extend the Offer, if at the scheduled or
extended expiration date of the Offer any of the Offer
Conditions shall not be satisfied or waived, until such time
as such conditions are satisfied or waived, (B) extend the
Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange
Commission (the "SEC") or the staff thereof applicable to
the Offer and (C) extend the Offer for any reason on one or
more occasions for an aggregate period of not more than
25 business days beyond the latest expiration date that
would otherwise be permitted under clause (A) or (B) of this
sentence. Subject to the terms and conditions of the Offer
and this Agreement, Sub shall, and Parent shall cause Sub
to, accept for payment, and pay for, all Shares validly
tendered and not withdrawn pursuant to the Offer that Sub
becomes obligated to accept for payment, and pay for,
pursuant to the Offer as soon as practicable after the
expiration of the Offer.
(b) On the date of commencement of the Offer,
Parent and Sub shall file with the SEC a Tender Offer
Statement on Schedule 14D-1 (the "Schedule 14D-1") with
respect to the Offer, which shall contain an offer to
purchase and a related letter of transmittal and summary
advertisement (such Schedule 14D-1 and the documents
included therein pursuant to which the Offer will be made,
together with any supplements or amendments thereto, the
"Offer Documents"). Parent and Sub agree that the Offer
Documents shall comply as to form in all material respects
with the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated
thereunder and the Offer Documents, on the date first
published, sent or given to the Company's stockholders,
shall not contain any untrue statement of a material fact or
omit to state any material fact required to be stated
therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading, except that no representation or
warranty is made by Parent or Sub with respect to
information supplied by the Company or any of its
stockholders specifically for inclusion or incorporation by
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reference in the Offer Documents. Parent, Sub and the
Company each agrees promptly to correct any information
provided by it for use in the Offer Documents if and to the
extent that such information shall have become false or
misleading in any material respect, and Parent and Sub
further agree to take all steps necessary to cause the
Schedule 14D-1 as so corrected to be filed with the SEC and
the other Offer Documents as so corrected to be disseminated
to holders of Shares, in each case as and to the extent
required by applicable Federal securities laws. The Company
and its counsel shall be given reasonable opportunity to
review and comment upon the Offer Documents prior to their
filing with the SEC or dissemination to the stockholders of
the Company. Parent and Sub agree to provide the Company
and its counsel any comments Parent, Sub or their counsel
may receive from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments.
(c) Parent shall provide or cause to be provided
to Sub on a timely basis the funds necessary to accept for
payment, and pay for, any Shares that Sub becomes obligated
to accept for payment, and pay for, pursuant to the Offer.
SECTION 1.02. Company Actions. (a) The Company
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hereby approves of and consents to the Offer and represents
that the Board of Directors of the Company, at a meeting
duly called and held, duly and unanimously adopted
resolutions approving this Agreement, the Offer and the
Merger, determining that the terms of the Offer and the
Merger are fair to, and in the best interests of, the
Company's stockholders and recommending that the Company's
stockholders accept the Offer, tender their shares pursuant
to the Offer and approve and adopt this Agreement. The
Company represents that its Board of Directors has received
the opinion of Xxxxxxx, Xxxxx & Co. that the proposed
consideration to be received by the holders of Shares
pursuant to the Offer and the Merger is fair to such
holders, and a complete and correct signed copy of such
opinion has been delivered by the Company to Parent.
(b) On the date the Offer Documents are filed
with the SEC, or promptly thereafter, the Company shall file
with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such
Schedule 14D-9, as amended from time to time, the
"Schedule 14D-9") containing the recommendation described in
paragraph (a) and shall mail the Schedule 14D-9 to the
stockholders of the Company. The Schedule 14D-9 shall
comply as to form in all material respects with the
5
requirements of the Exchange Act and the rules and
regulations promulgated thereunder and, on the date filed
with the SEC and on the date first published, sent or given
to the Company's stockholders, shall not contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no
representation or warranty is made by the Company with
respect to information supplied by Parent or Sub
specifically for inclusion in the Schedule 14D-9. Each of
the Company, Parent and Sub agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if
and to the extent that such information shall have become
false or misleading in any material respect, and the Company
further agrees to take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the
Schedule 14D-9 as so amended or supplemented to be filed
with the SEC and disseminated to the Company's stockholders,
in each case as and to the extent required by applicable
Federal securities laws. Parent and its counsel shall be
given reasonable opportunity to review and comment upon the
Schedule 14D-9 prior to its filing with the SEC or
dissemination to stockholders of the Company. The Company
agrees to provide Parent and its counsel any comments the
Company or its counsel may receive from the SEC or its staff
with respect to the Schedule 14D-9 promptly after the
receipt of such comments.
(c) In connection with the Offer and the Merger,
the Company shall cause its transfer agent to furnish Sub
promptly with mailing labels containing the names and
addresses of the record holders of Shares as of a recent
date and of those persons becoming record holders subsequent
to such date, together with copies of all lists of
stockholders, security position listings and computer files
and all other information in the Company's possession or
control regarding the beneficial owners of Shares, and shall
furnish to Sub such information and assistance (including
updated lists of stockholders, security position listings
and computer files) as Parent may reasonably request in
communicating the Offer to the Company's stockholders.
Subject to the requirements of applicable law, and except
for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate
the Merger, Parent and Sub and their agents shall hold in
confidence the information contained in any such labels,
listings and files, will use such information only in
connection with the Offer and the Merger and, if this
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Agreement shall be terminated, will, upon request, deliver,
and will use their best efforts to cause their agents to
deliver, to the Company all copies of such information then
in their possession or control.
ARTICLE II
The Merger
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SECTION 2.01. The Merger. Upon the terms and
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subject to the conditions set forth in this Agreement, and
in accordance with the Delaware General Corporation Law (the
"DGCL"), Sub shall be merged with and into the Company at
the Effective Time (as defined in Section 2.03). Following
the Effective Time, the separate corporate existence of Sub
shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed
to and assume all the rights and obligations of Sub in
accordance with the DGCL. At the election of Parent, any
direct or indirect wholly owned subsidiary (as defined in
Section 10.03) of Parent may be substituted for Sub as a
constituent corporation in the Merger. In such event, the
parties agree to execute an appropriate amendment to this
Agreement in order to reflect the foregoing. In addition,
after the Effective Time, Parent intends to merge the
Surviving Corporation with and into Parent.
SECTION 2.02. Closing. The closing of the Merger
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will take place at 10:00 a.m. (New York City time) on a date
to be specified by Parent or Sub, which shall be no later
than the second business day after satisfaction or waiver of
the conditions set forth in Article VIII (the "Closing
Date"), at the offices of Cravath, Swaine & Xxxxx, Worldwide
Plaza, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless
another date, time or place is agreed to in writing by the
parties hereto.
SECTION 2.03. Effective Time. Subject to the
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provisions of this Agreement, as soon as practicable on or
after the Closing Date, the parties shall file a certificate
of merger or other appropriate documents (in any such case,
the "Certificate of Merger") executed in accordance with the
relevant provisions of the DGCL and shall make all other
filings or recordings required under the DGCL. The Merger
shall become effective at such time as the Certificate of
Merger is duly filed with the Delaware Secretary of State,
or at such other time as Sub and the Company shall agree
should be specified in the Certificate of Merger (the time
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the Merger becomes effective being hereinafter referred to
as the "Effective Time").
SECTION 2.04. Effects of the Merger. The Merger
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shall have the effects set forth in Section 259 of the DGCL.
SECTION 2.05. Certificate of Incorporation and
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By-laws. (a) The Amended and Restated Certificate of
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Incorporation of the Company, as in effect immediately prior
to the Effective Time, shall be amended as of the Effective
Time so that ARTICLE FOUR of such certificate of
incorporation reads in its entirety as follows: "The total
number of shares of all classes of stock which the
Corporation shall have authority to issue is 40,000,000
shares of Common Stock, par value $.01 per share." and, as
so amended, such certificate of incorporation shall be the
certificate of incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or
by applicable law.
(b) The by-laws of the Company as in effect
immediately prior to the Effective Time shall be the by-laws
of the Surviving Corporation, until thereafter changed or
amended as provided therein or by applicable law.
SECTION 2.06. Directors. The directors of Sub
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immediately prior to the Effective Time shall be the
directors of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective
successors are duly elected and qualified, as the case may
be.
SECTION 2.07. Officers. The officers of the
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Company immediately prior to the Effective Time shall be the
officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective
successors are duly elected and qualified, as the case may
be.
ARTICLE III
Effect of the Merger on the Capital Stock of the
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Constituent Corporations; Exchange of Certificates
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SECTION 3.01. Effect on Capital Stock. As of the
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Effective Time, by virtue of the Merger and without any
action on the part of the holder of any Shares or any shares
of capital stock of Sub:
8
(a) Capital Stock of Sub. Each issued and
---------------------
outstanding share of capital stock of Sub shall be
converted into and become 160,000 fully paid and
nonassessable shares of Common Stock, par value $.01
per share, of the Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent
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Owned Stock. Each share of Company Common Stock that
------------
is owned by the Company or by any subsidiary of the
Company and each Share that is owned by Parent, Sub or
any other subsidiary of Parent shall automatically be
canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject
-----------------------------------
to Section 3.01(d), each Share issued and outstanding
(other than Shares to be canceled in accordance with
Section 3.01(b)) shall be converted into the right to
receive from the Surviving Corporation in cash, without
interest, the price paid in the Offer (the "Merger
Consideration"). As of the Effective Time, all such
Shares shall no longer be outstanding and shall
automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing
any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger
Consideration, without interest.
(d) Shares of Dissenting Stockholders.
----------------------------------
Notwithstanding anything in this Agreement to the
contrary, any issued and outstanding Shares held by a
person (a "Dissenting Stockholder") who objects to the
Merger and complies with all the provisions of Delaware
law concerning the right of holders of Company Common
Stock to dissent from the Merger and require appraisal
of their Shares ("Dissenting Shares") shall not be
converted as described in Section 3.01(c) but shall
become the right to receive such consideration as may
be determined to be due to such Dissenting Stockholder
pursuant to the laws of the State of Delaware. If,
after the Effective Time, such Dissenting Stockholder
withdraws his demand for appraisal or fails to perfect
or otherwise loses his right of appraisal, in any case
pursuant to the DGCL, his Shares shall be deemed to be
converted as of the Effective Time into the right to
receive the Merger Consideration. The Company shall
give Parent (i) prompt notice of any demands for
appraisal of Shares received by the Company and
(ii) the opportunity to participate in and direct all
9
negotiations and proceedings with respect to any such
demands. The Company shall not, without the prior
written consent of Parent, make any payment with
respect to, or settle, offer to settle or otherwise
negotiate, any such demands.
SECTION 3.02. Exchange of Certificates.
-------------------------
(a) Paying Agent. Prior to the Effective Time, Parent shall
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designate a bank or trust company to act as paying agent in
the Merger (the "Paying Agent"), and, from time to time on,
prior to or after the Effective Time, Parent shall make
available, or cause the Surviving Corporation to make
available, to the Paying Agent funds in amounts and at the
times necessary for the payment of the Merger Consideration
upon surrender of certificates representing Shares as part
of the Merger pursuant to Section 3.01 (it being understood
that any and all interest earned on funds made available to
the Paying Agent pursuant to this Agreement shall be turned
over to Parent).
(b) Exchange Procedure. As soon as reasonably
-------------------
practicable after the Effective Time, the Paying Agent shall
mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time
represented Shares (the "Certificates"), (i) a letter of
transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the
Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancelation to the Paying
Agent or to such other agent or agents as may be appointed
by Parent, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor the amount
of cash into which the Shares theretofore represented by
such Certificate shall have been converted pursuant to
Section 3.01, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of
ownership of Shares that is not registered in the transfer
records of the Company, payment may be made to a person
other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay
any transfer or other taxes required by reason of the
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payment to a person other than the registered holder of such
Certificate or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered as contemplated by this
Section 3.02, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to
receive upon such surrender the amount of cash, without
interest, into which the Shares theretofore represented by
such Certificate shall have been converted pursuant to
Section 3.01. No interest will be paid or will accrue on
the cash payable upon the surrender of any Certificate.
(c) No Further Ownership Rights in Company Common
---------------------------------------------
Stock. All cash paid upon the surrender of Certificates in
------
accordance with the terms of this Article III shall be
deemed to have been paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such
Certificates. At the Effective Time, the stock transfer
books of the Company shall be closed, and there shall be no
further registration of transfers on the stock transfer
books of the Surviving Corporation of the Shares that were
outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the
Surviving Corporation or the Paying Agent for any reason,
they shall be canceled and exchanged as provided in this
Article III.
(d) No Liability. None of Parent, Sub, the
-------------
Company or the Paying Agent shall be liable to any person in
respect of any cash delivered to a public official pursuant
to any applicable abandoned property, escheat or similar
law. If any Certificates shall not have been surrendered
prior to seven years after the Effective Time (or
immediately prior to such earlier date on which any payment
pursuant to this Article III would otherwise escheat to or
become the property of any Governmental Entity (as defined
in Section 4.05)), the cash payment in respect of such
Certificate shall, to the extent permitted by applicable
law, become the property of the Surviving Corporation, free
and clear of all claims or interests of any person
previously entitled thereto.
11
ARTICLE IV
Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to Parent and
Sub as follows:
SECTION 4.01. Organization. The Company and each
-------------
of its United States subsidiaries is a corporation duly
organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its
business as now being conducted, except where the failure to
be so organized, existing and in good standing or to have
such power and authority would not have a material adverse
effect (as defined in Section 10.03) on the Company. The
Company and each of its United States subsidiaries is duly
qualified or licensed to do business and in good standing in
each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in
such jurisdictions where the failure to be so duly qualified
or licensed and in good standing would not have a material
adverse effect on the Company or prevent or materially delay
the consummation of the Offer and/or the Merger. The
Company has made available to Parent complete and correct
copies of its Amended and Restated Certificate of
Incorporation and By-laws and the certificates of
incorporation and by-laws (or similar organizational
documents) of its subsidiaries.
SECTION 4.02. Subsidiaries. The only
-------------
subsidiaries of the Company are Tivoli Systems Subsidiary
Inc., a Texas corporation, Tivoli Systems Software SA, a
Swiss corporation, Tivoli Systems KK, a Japanese subsidiary,
and Tivoli Systems UK Ltd, a United Kingdom subsidiary. All
the outstanding shares of capital stock of each such
subsidiary, other than director qualifying shares of foreign
subsidiaries, are owned by the Company, by another wholly
owned subsidiary of the Company or by the Company and
another wholly owned subsidiary of the Company, free and
clear of all pledges, claims, liens, charges, encumbrances
and security interests of any kind or nature whatsoever
(collectively, "Liens"), except for immaterial Liens on
outstanding shares of capital stock of foreign subsidiaries
of the Company, and are duly authorized, validly issued,
fully paid and nonassessable. Except for the capital stock
of its subsidiaries and capital stock of net.Genesis, Inc.
and DBMX, Ltd., the Company does not own, directly or
12
indirectly, any capital stock or other ownership interest in
any corporation, partnership, joint venture or other entity.
SECTION 4.03. Capitalization. The authorized
---------------
capital stock of the Company consists of 40,000,000 shares
of Company Common Stock and 3,000,000 shares of preferred
stock, par value $0.01 per share ("Company Preferred
Stock"). At the close of business on December 31, 1995,
(i) 14,943,580 shares of Company Common Stock were issued
and outstanding, (ii) a number of shares of Company Common
Stock were held by the Company in its treasury,
(iii) 2,072,415 shares of Company Common Stock were reserved
for issuance upon exercise of outstanding Company Stock
Options (as defined in Section 7.04), (iv) a maximum of
100,000 shares of Company Common Stock were issuable upon
the exercise of outstanding warrants and (v) no shares of
Company Preferred Stock were issued and outstanding. Except
as set forth above, and except for 70,775 shares of Company
Common Stock reserved for issuance upon the exercise of
Company Stock Options granted since December 31, 1995, and
except for Shares issued upon the exercise of Company Stock
Options since December 31, 1995, as of the date of this
Agreement, no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance
or outstanding. All outstanding shares of capital stock of
the Company are, and all shares which may be issued will be,
when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There
are no bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on
any matters on which stockholders of the Company may vote.
Except as set forth above, and except for obligations to
grant options, subject to the approval of the Board of
Directors of the Company, for up to 50,000 shares of the
Company Common Stock pursuant to job offer letters
outstanding on the date of this Agreement, as of the date of
this Agreement, there are not any securities, options,
warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the
Company or any of its subsidiaries is a party or by which
any of them is bound obligating the Company or any of its
subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital
stock or other voting securities of the Company or of any of
its subsidiaries or obligating the Company or any of its
subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. As of the date of
13
this Agreement, there are not any outstanding contractual
obligations (i) of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or (ii) of the Company to vote
or to dispose of any shares of the capital stock of any of
its subsidiaries.
SECTION 4.04. Authority. The Company has the
----------
requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby (other than, with respect to the Merger,
the approval and adoption of the terms of this Agreement by
the holders of a majority of the Shares (the "Company
Stockholder Approval")). The execution, delivery and
performance of this Agreement and the consummation by the
Company of the Merger and of the other transactions
contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company and no
other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the
transactions so contemplated (in each case, other than, with
respect to the Merger, the Company Stockholder Approval).
This Agreement has been duly executed and delivered by the
Company and, assuming this Agreement constitutes a valid and
binding obligation of Parent and Sub, constitutes a valid
and binding obligation of the Company enforceable against
the Company in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or
other equitable remedies.
SECTION 4.05. Consents and Approvals; No
--------------------------
Violations. Except for filings, permits, authorizations,
-----------
consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act (including the
filing with the SEC of the Schedule 14D-9 and a proxy
statement relating to any required approval by the Company's
stockholders of this Agreement (the "Proxy Statement")), the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the DGCL, the laws of other states
in which the Company is qualified to do or is doing
business, state takeover laws and foreign laws, neither the
execution, delivery or performance of this Agreement by the
Company nor the consummation by the Company of the
transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of the Amended and
14
Restated Certificate of Incorporation or By-laws of the
Company or of the similar organizational documents of any of
its United States subsidiaries, (ii) require any filing
with, or permit, authorization, consent or approval of, any
Federal, state or local government or any court, tribunal,
administrative agency or commission or other governmental or
other regulatory authority or agency, domestic, foreign or
supranational (a "Governmental Entity") (except where the
failure to obtain such permits, authorizations, consents or
approvals or to make such filings would not have a material
adverse effect on the Company or prevent or materially delay
the consummation of the Offer and/or the Merger),
(iii) except as set forth on Schedule 4.05, result in a
violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancelation or
acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or
obligation to which the Company or any of its subsidiaries
is a party or by which any of them or any of their
properties or assets may be bound, provided, however, that
-------- -------
certain contracts and agreements, the material ones of which
have been identified to Parent by the Company, (A) provide
for their termination upon a change of control of the
Company or (B) contain provisions restricting their
assignment, or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the
Company, any of its subsidiaries or any of their properties
or assets, except in the case of clauses (iii) or (iv) for
violations, breaches or defaults that would not have a
material adverse effect on the Company or prevent or
materially delay the consummation of the Offer and/or the
Merger.
SECTION 4.06. SEC Reports and Financial
-------------------------
Statements. The Company has filed with the SEC, and has
-----------
heretofore made available to Parent true and complete copies
of, all forms, reports, schedules, statements and other
documents required to be filed by it since December 31,
1994, under the Exchange Act or the Securities Act of 1933
(the "Securities Act") (such forms, reports, schedules,
statements and other documents, including any financial
statements or schedules included therein, are referred to as
the "Company SEC Documents"). The Company SEC Documents, at
the time filed, (a) did not contain any untrue statement of
a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the
statements therein, in light of the circumstances under
15
which they were made, not misleading and (b) complied in all
material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be, and
the applicable rules and regulations of the SEC thereunder.
Except to the extent revised or superseded by a subsequently
filed Company Filed SEC Document (as defined in
Section 4.07) (a copy of which has been made available to
Parent prior to the date hereof) or by the Company's annual
earnings press release dated January 25, 1996, the Company
SEC Documents and such press release, considered as a whole,
do not contain an untrue statement of a material fact or
omit to state a material fact required to be stated or
incorporated by reference therein or necessary in order to
make the statements therein, in light of the circumstances
under which they were made, not misleading (it being
understood that the foregoing does not cover future events
resulting from public announcement of the Offer and the
Merger). The financial statements of the Company included
in the Company SEC Documents comply as to form in all
material respects with applicable accounting requirements
and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may
be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC)
and fairly present (subject, in the case of the unaudited
statements, to normal, recurring audit adjustments) the
consolidated financial position of the Company and its
consolidated subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for
the periods then ended.
SECTION 4.07. Absence of Certain Changes or
-----------------------------
Events. Except as disclosed in the Company SEC Documents
-------
filed and publicly available prior to the date of this
Agreement (the "Company Filed SEC Documents"), and except as
disclosed in the Company's financial statements dated as of
December 31, 1995 (the "Company 1995 Financial Statements")
(a copy of which has been delivered to Parent by the
Company), and except as contemplated by Section 7.04, since
December 31, 1995, the Company and its subsidiaries have
conducted their respective businesses only in the ordinary
course, and there has not been any material adverse change
(as defined in Section 10.03) with respect to the Company.
Except as set forth in a letter from the Company to Parent
dated January 29, 1996, and except as disclosed in the
Company Filed SEC Documents or the Company 1995 Financial
Statements, since December 31, 1995, there has not been
16
(i) any declaration, setting aside or payment of any
dividend or other distribution with respect to its capital
stock or any redemption, purchase or other acquisition of
any of its capital stock (except for the repurchase of
Shares from employees and other providers at cost in the
ordinary course of business consistent with past practice),
(ii) any split, combination or reclassification of any of
its capital stock or any issuance or the authorization of
any issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock,
(iii) (w) any granting by the Company or any of its
subsidiaries to any officer of the Company or any of its
subsidiaries of any increase in compensation, except in the
ordinary course of business (including in connection with
promotions) consistent with past practice or as was required
under employment agreements in effect as of March 10, 1995,
(x) any granting by the Company or any of its subsidiaries
to any such officer of any increase in severance or
termination pay, except as part of a standard employment
package to any person promoted or hired (but not including
the five most senior officers), or as was required under
employment, severance or termination agreements in effect as
of March 10, 1995, (y) except employment arrangements in the
ordinary course of business consistent with past practice
with employees other than any executive officer of the
Company, any entry by the Company or any of its subsidiaries
into any employment, severance or termination agreement with
any such employee or executive officer or (z) except as
contemplated by Section 7.04, any increase in or
establishment of any bonus, insurance, deferred
compensation, pension, retirement, profit-sharing, stock
option (including the granting of stock options, stock
appreciation rights, performance awards or restricted stock
awards or the amendment of any existing stock options, stock
appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan or
agreement or arrangement, except in the ordinary course of
business consistent with past practice, (iv) any damage,
destruction or loss, whether or not covered by insurance,
that has or reasonably could be expected to have a material
adverse effect on the Company, (v) any revaluation by the
Company of any of its material assets, (vi) any material
change in accounting methods, principles or practices by the
Company or (vii) (A) any licensing or other agreement with
regard to the acquisition or disposition of any material
Intellectual Property (as defined in Section 4.18) or rights
thereto other than licenses or other agreements in the
ordinary course of business consistent with past practice or
(B) any amendment or consent with respect to any licensing
17
agreement filed, or required to be filed, by the Company
with the SEC.
SECTION 4.08. No Undisclosed Liabilities. Except
---------------------------
as and to the extent set forth in the Company 1995 Financial
Statements, as of December 31, 1995, neither the Company nor
any of its subsidiaries had any liabilities or obligations
of any nature, whether or not accrued, contingent or
otherwise, that would be required by generally accepted
accounting principles to be reflected on a consolidated
balance sheet of the Company and its subsidiaries (including
the notes thereto). Since December 31, 1995, except as and
to the extent set forth in the Company Filed SEC Documents
or the Company 1995 Financial Statements, neither the
Company nor any of its subsidiaries has incurred any
liabilities of any nature, whether or not accrued,
contingent or otherwise, that would be reasonably expected
to have a material adverse effect on the Company.
SECTION 4.09. Information Supplied. None of the
---------------------
information supplied or to be supplied by the Company
specifically for inclusion or incorporation by reference in
(i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
information to be filed by the Company in connection with
the Offer pursuant to Rule 14f-1 promulgated under the
Exchange Act (the "Information Statement") or (iv) the Proxy
Statement, will, in the case of the Offer Documents, the
Schedule 14D-9 and the Information Statement, at the
respective times the Offer Documents, the Schedule 14D-9 and
the Information Statement are filed with the SEC or first
published, sent or given to the Company's stockholders, or,
in the case of the Proxy Statement, at the time the Proxy
Statement is first mailed to the Company's stockholders or
at the time of the Stockholders Meeting (as defined in
Section 7.01), contain any untrue statement of a material
fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are
made, not misleading. The Schedule 14D-9, the Information
Statement and the Proxy Statement will comply as to form in
all material respects with the requirements of the Exchange
Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with
respect to statements made or incorporated by reference
therein based on information supplied by Parent or Sub
specifically for inclusion or incorporation by reference
therein.
18
SECTION 4.10. Benefit Plans. (a) Each "employee
--------------
pension benefit plan" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (a "Pension Plan"), "employee welfare benefit
plan" (as defined in Section 3(1) of ERISA) (a "Welfare
Plan") and each other plan, arrangement or policy (written
or oral) relating to stock options, stock purchases,
compensation, deferred compensation, bonuses, severance,
fringe benefits or other employee benefits, in each case
maintained or contributed to, or required to be maintained
or contributed to, by the Company or its subsidiaries for
the benefit of any present or former employee, officer or
director (each of the foregoing, a "Benefit Plan") has been
administered in all material respects in accordance with its
terms. The Company and its subsidiaries and all the Benefit
Plans are in compliance in all material respects with the
applicable provisions of ERISA, the Internal Revenue Code of
1986, as amended (the "Code"), all other applicable laws and
all applicable collective bargaining agreements.
(b) None of the Pension Plans is subject to
Title IV of ERISA and none of the Company or any other
person or entity that, together with the Company, is treated
as a single employer under Section 414 of the Code (each,
including the Company, a "Commonly Controlled Entity") has
incurred any liability to a Pension Plan, or to an employee
pension benefit plan that is no longer maintained,
contributed to or required to be contributed to by a
Commonly Controlled Entity under Title IV of ERISA (other
than for contributions not yet due) or to the Pension
Benefit Guaranty Corporation (other than for payment of
premiums not yet due), which liability has not been fully
paid.
(c) No Commonly Controlled Entity is required to
contribute to any "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA) or has withdrawn from any
multiemployer plan where such withdrawal has resulted or
would result in any "withdrawal liability" (within the
meaning of Section 4201 of ERISA) that has not been fully
paid.
(d) Each Benefit Plan that is a Welfare Plan may
be amended or terminated at any time after the Effective
Time without material liability to the Company or its
subsidiaries.
SECTION 4.11. Other Compensation Arrangements.
--------------------------------
Except as disclosed in the Company Filed SEC Documents, and
19
except as provided in this Agreement, as of the date of this
Agreement, neither the Company nor any of its subsidiaries
is a party to any oral or written (i) consulting agreement
not terminable on not more than 60 calendar days notice
(except for third party agreements for the development of,
and assignment to, the Company of Intellectual Property in
the ordinary course of business) and involving the payment
of more than $200,000 per annum or union or collective
bargaining agreement, (ii) agreement with any executive
officer or other key employee of the Company or any of its
subsidiaries (x) the benefits of which are contingent, or
the terms of which are materially altered, upon the
occurrence of a transaction involving the Company of the
nature contemplated by this Agreement or (y) providing any
term of employment or compensation guarantee extending for a
period longer than two years or the payment of more than
$100,000 per year (except for employment agreements with
employees of the Swiss subsidiary) or (iii) agreement or
plan, including any stock option plan, stock appreciation
right plan, restricted stock plan or stock purchase plan,
any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions
contemplated by this Agreement.
SECTION 4.12. Litigation. Except as disclosed in
-----------
the Company Filed SEC Documents, there is no suit, claim,
action, proceeding or investigation pending before any
Governmental Entity or, to the best knowledge of the
Company, threatened against the Company or any of its
subsidiaries that could reasonably be expected to have a
material adverse effect on the Company. Except as disclosed
in the Company Filed SEC Documents, neither the Company nor
any of its subsidiaries is subject to any outstanding order,
writ, injunction or decree that could reasonably be expected
to have a material adverse effect on the Company.
SECTION 4.13. Compliance with Applicable Law.
-------------------------------
The Company and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals of all
Governmental Entities necessary for the lawful conduct of
their respective businesses (the "Company Permits"), except
for failures to hold such permits, licenses, variances,
exemptions, orders and approvals that would not have a
material adverse effect on the Company. The Company and its
subsidiaries are in compliance with the terms of the Company
Permits, except where the failure so to comply would not
20
have a material adverse effect on the Company. Except as
disclosed in the Company Filed SEC Documents, to the best
knowledge of the Company, the businesses of the Company and
its subsidiaries are not being conducted in violation of any
law, ordinance or regulation of any Governmental Entity,
except for possible violations that would not have a
material adverse effect on the Company or prevent or
materially delay the consummation of the Offer and/or the
Merger. As of the date of this Agreement, no investigation
or review by any Governmental Entity with respect to the
Company or any of its subsidiaries is pending or, to the
best knowledge of the Company, threatened, nor has any
Governmental Entity indicated an intention to conduct any
such investigation or review, other than, in each case,
those the outcome of which would not be reasonably expected
to have a material adverse effect on the Company or prevent
or materially delay the consummation of the Offer and/or the
Merger.
SECTION 4.14. Tax Matters. (a) The Company and
------------
each of its subsidiaries has filed all Federal income tax
returns and all other material tax returns and reports
required to be filed by it. All such returns are complete
and correct in all material respects (except to the extent a
reserve has been established on the financial statements
contained in the Company Filed SEC Documents or the Company
1995 Financial Statements). Each of the Company and each of
its subsidiaries has paid (or the Company has paid on its
subsidiaries' behalf) all taxes required to be paid by it
(without regard to whether a tax return is required), except
taxes for which an adequate reserve has been established on
the financial statements contained in the Company Filed SEC
Documents or the Company 1995 Financial Statements. The
most recent financial statements contained in the Company
Filed SEC Documents reflect an adequate reserve for all
taxes payable by the Company and its subsidiaries for all
taxable periods and portions thereof through the date of
such financial statements.
(b) No material tax return of the Company or any
of its subsidiaries is under audit or examination by any
taxing authority, and no written or unwritten notice of such
an audit or examination has been received by the Company or
any of its subsidiaries. Each material deficiency resulting
from any audit or examination relating to taxes by any
taxing authority has been paid, except for deficiencies
being contested in good faith. No material issues relating
to taxes were raised in writing by the relevant taxing
authority during any presently pending audit or examination,
21
and no material issues relating to taxes were raised in
writing by the relevant taxing authority in any completed
audit or examination that can reasonably be expected to
recur in a later taxable period. The Federal income tax
returns of the Company and each of its subsidiaries
consolidated in such returns have not been examined by and
settled with the Internal Revenue Service.
(c) There is no agreement or other document
extending, or having the effect of extending, the period of
assessment or collection of any taxes and no power of
attorney with respect to any taxes has been executed or
filed with any taxing authority.
(d) No material liens for taxes exist with
respect to any assets or properties of the Company or any of
its subsidiaries, except for liens for taxes not yet due.
(e) None of the Company or any of its
subsidiaries is a party to or is bound by any tax sharing
agreement, tax indemnity obligation or similar agreement,
arrangement or practice with respect to taxes (including any
advance pricing agreement, closing agreement or other
agreement relating to taxes with any taxing authority).
(f) None of the Company or any of its
subsidiaries shall be required to include in a taxable
period ending after the Effective Time taxable income
attributable to income that accrued in a prior taxable
period but was not recognized in any prior taxable period as
a result of the installment method of accounting, the
completed contract method of accounting, the long-term
contract method of accounting, the cash method of accounting
or Section 481 of the Code or comparable provisions of
state, local or foreign tax law.
(g) As used in this Agreement, "taxes" shall
include all Federal, state, local and foreign income,
property, sales, excise, withholding and other taxes,
tariffs or governmental charges of any nature whatsoever.
SECTION 4.15. State Takeover Statutes. The Board
------------------------
of Directors of the Company has approved the Offer, the
Merger, this Agreement and the acquisition of Shares by Sub
pursuant to the Offer and the Stockholder Agreement and such
approval is sufficient to render inapplicable to the Offer,
the Merger, this Agreement and the Stockholder Agreement and
the transactions contemplated by this Agreement and the
Stockholder Agreement the provisions of Section 203 of the
22
DGCL. To the best knowledge of the Company, no other state
takeover statute or similar statute or regulation applies or
purports to apply to the Offer, the Merger, this Agreement,
the Stockholder Agreement or any of the transactions
contemplated by this Agreement or the Stockholder Agreement.
SECTION 4.16. Brokers; Fees and Expenses. No
---------------------------
broker, investment banker, financial advisor or other
person, other than Xxxxxxx, Xxxxx & Co., the fees and
expenses of which will be paid by the Company, is entitled
to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the
transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The
estimated fees and expenses incurred and to be incurred by
the Company in connection with this Agreement and the
transactions contemplated by this Agreement (including the
fees of the Company's legal counsel and the legal counsel
for its financial advisor) are set forth in a letter dated
January 29, 1996, from the Company to Parent.
SECTION 4.17. Opinion of Financial Advisor. The
-----------------------------
Company has received the opinion of Xxxxxxx, Sachs & Co.,
dated the date of this Agreement, to the effect that, as of
the date of this Agreement, the consideration to be received
in the Offer and the Merger by the Company's stockholders is
fair, and a complete and correct signed copy of such opinion
has been, or promptly upon receipt thereof will be,
delivered to Parent.
SECTION 4.18. Intellectual Property. (a) Except
----------------------
as listed on Schedule 4.18, the Company has made available
to Parent true and correct copies of all license agreements
relating to Intellectual Property to which the Company is a
party.
(b) Except to the extent that the inaccuracy of
any of the following (or the circumstances giving rise to
such inaccuracy) would not have a material adverse effect on
the Company:
(1) the Company and each of its subsidiaries owns,
or is licensed or otherwise has the right to use (in
each case, clear of any liens or encumbrances of any
kind), all Intellectual Property used in or necessary
for the conduct of its business as currently conducted;
(2) no claims are pending or, to the best
knowledge of the Company, threatened that the Company
23
or any of its subsidiaries is infringing on or
otherwise violating the rights of any person with
regard to any Intellectual Property owned by and/or
licensed to the Company or its subsidiaries;
(3) to the best knowledge of the Company, no
person is infringing on or otherwise violating any
right of the Company or any of its subsidiaries with
respect to any Intellectual Property owned by and/or
licensed to the Company or its subsidiaries;
(4) none of the former or current members of
management or key personnel of the Company or any of
its subsidiaries, including all former and current
employees, agents, consultants and contractors who have
contributed to or participated in the conception and
development of computer software or other Intellectual
Property of the Company or any of its subsidiaries have
any valid claim against the Company or any of its
subsidiaries in connection with the involvement of such
persons in the conception and development of any
computer software or other Intellectual Property of the
Company or any of its subsidiaries, and no such claim
has been asserted or threatened;
(5) except as set forth in Schedule 4.18, the
execution and delivery of this Agreement, compliance
with its terms and the consummation of the transactions
contemplated hereby do not and will not conflict with
or result in any violation or default (with or without
notice or lapse of time or both) or give rise to any
right, license or encumbrance relating to Intellectual
Property owned by the Company or with respect to which
the Company now has or has had any agreement with any
third party, or right of termination, cancelation or
acceleration of any material Intellectual Property
right or obligation set forth in any agreement to which
the Company is a party, or the loss or encumbrance of
any Intellectual Property or material benefit related
thereto, or result in or require the creation,
imposition or extension of any lien or encumbrance upon
any Intellectual Property or right, other than certain
contracts and agreements, the material ones of which
have been identified to Parent by the Company, that
(A) provide for their termination upon a change of
control of the Company or (B) contain provisions
restricting their assignment;
24
(6) except as set forth in Schedule 4.18, and
except in the ordinary course of business consistent
with past practice, no licenses or rights have been
granted to distribute the source code of, or to use
source code to create Derivative Works (as hereinafter
defined) of, Tivoli Management Environment or any
product currently marketed by, commercially available
from or under development by the Company or any of its
subsidiaries for which the Company possesses the source
code; and
(7) the Company and each of its subsidiaries has
taken reasonable and necessary steps to protect their
Intellectual Property and their rights thereunder, and
to the best knowledge of the Company no such rights to
Intellectual Property have been lost or are in jeopardy
of being lost through failure to act by the Company or
any of its subsidiaries.
As used herein, "Derivative Work" shall mean a
work that is based upon one or more preexisting works, such
as a revision, enhancement, modification, abridgement,
condensation, expansion or any other form in which such
preexisting works may be recast, transformed or adapted, and
which, if prepared without authorization of the owner of the
copyright in such preexisting work, would constitute a
copyright infringement. For purposes hereof, a Derivative
Work shall also include any compilation that incorporates
such a preexisting work as well as translations from one
human language to another and from one type of code to
another.
(c) For purposes of this Agreement, "Intellectual
Property" shall mean trademarks (registered or
unregistered), service marks, brand names, certification
marks, trade dress, assumed names, trade names and other
indications of origin, the goodwill associated with the
foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing,
including any extension, modification or renewal of any such
registration or application; inventions, discoveries and
ideas, whether patented, patentable or not in any
jurisdiction; trade secrets and confidential information and
rights in any jurisdiction to limit the use or disclosure
thereof by any person; writings and other works, whether
copyrighted, copyrightable or not in any jurisdiction;
registration or applications for registration of copyrights
in any jurisdiction, and any renewals or extensions thereof;
any similar intellectual property or proprietary rights and
25
computer programs and software (including source code,
object code and data); licenses, immunities, covenants not
to xxx and the like relating to the foregoing; and any
claims or causes of action arising out of or related to any
infringement or misappropriation of any of the foregoing.
SECTION 4.19. Distribution Agreements. The
------------------------
Company has made available to Parent and its representatives
true and correct copies of all contracts, agreements,
arrangements or understandings to which the Company or any
of its subsidiaries is a party, except those that are
immaterial in any one country or jurisdiction, relating to
the distribution of its products or products licensed by the
Company or its subsidiaries in any foreign country or
jurisdiction.
SECTION 4.20. Indebtedness. As of the date
-------------
hereof, the Company and its subsidiaries do not have
consolidated indebtedness for borrowed money in excess of
the amount disclosed in the Company 1995 Financial
Statements.
ARTICLE V
Representations and Warranties
------------------------------
of Parent and Sub
-----------------
Parent and Sub represent and warrant to the
Company as follows:
SECTION 5.01. Organization. Each of Parent and
-------------
Sub is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and
authority to carry on its business as now being conducted,
except where the failure to be so organized, existing and in
good standing or to have such power and authority would not
be reasonably expected to prevent or materially delay the
consummation of the Offer and/or the Merger.
SECTION 5.02. Authority. Parent and Sub have
----------
requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Parent and
Sub and no other corporate proceedings on the part of Parent
26
and Sub are necessary to authorize this Agreement or to
consummate such transactions. No vote of Parent
shareholders is required to approve this Agreement or the
transactions contemplated hereby. This Agreement has been
duly executed and delivered by Parent and Sub, as the case
may be, and, assuming this Agreement constitutes a valid and
binding obligation of the Company, constitutes a valid and
binding obligation of each of Parent and Sub enforceable
against them in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or
other equitable remedies.
SECTION 5.03. Consents and Approvals; No
--------------------------
Violations. Except for filings, permits, authorizations,
-----------
consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act (including the
filing with the SEC of the Offer Documents), the HSR Act,
the DGCL, the laws of other states in which Parent is
qualified to do or is doing business, state takeover laws
and foreign laws, neither the execution, delivery or
performance of this Agreement by Parent and Sub nor the
consummation by Parent and Sub of the transactions
contemplated hereby will (i) conflict with or result in any
breach of any provision of the respective certificate of
incorporation or by-laws of Parent and Sub, (ii) require any
filing with, or permit, authorization, consent or approval
of, any Governmental Entity (except where the failure to
obtain such permits, authorizations, consents or approvals
or to make such filings would not be reasonably expected to
prevent or materially delay the consummation of the Offer
and/or the Merger), (iii) result in a violation or breach
of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of
termination, amendment, cancelation or acceleration) under,
any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, lease, contract,
agreement or other instrument or obligation to which Parent
or any of its subsidiaries is a party or by which any of
them or any of their properties or assets may be bound or
(iv) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Parent, any of its
subsidiaries or any of their properties or assets, except in
the case of clauses (iii) and (iv) for violations, breaches
or defaults which would not, individually or in the
27
aggregate, be reasonably expected to prevent or materially
delay the consummation of the Offer and/or the Merger.
SECTION 5.04. Information Supplied. None of the
---------------------
information supplied or to be supplied by Parent or Sub
specifically for inclusion or incorporation by reference in
(i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement will, in
the case of the Offer Documents, the Schedule 14D-9 and the
Information Statement, at the respective times the Offer
Documents, the Schedule 14D-9 and the Information Statement
are filed with the SEC or first published, sent or given to
the Company's stockholders, or, in the case of the Proxy
Statement, at the time the Proxy Statement is first mailed
to the Company's stockholders or at the time of the
Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they are made, not misleading. The Offer Documents
will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation or
warranty is made by Parent or Sub with respect to statements
made or incorporated by reference therein based on
information supplied by the Company specifically for
inclusion or incorporation by reference therein.
SECTION 5.05. Interim Operations 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.
SECTION 5.06. Brokers. No broker, investment
--------
banker, financial advisor or other person, other than Xxxxxx
Xxxxxxx & Co. Incorporated, the fees and expenses of which
will be paid by Parent, is entitled to any broker's,
finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on
behalf of Parent or Sub.
SECTION 5.07. Financing. Parent has sufficient
----------
funds readily available to purchase, or to cause Sub to
purchase, all the Shares pursuant to the Offer and the
Merger and to pay all fees and expenses related to the
transactions contemplated by this Agreement.
28
ARTICLE VI
Covenants
---------
SECTION 6.01. Covenants of the Company. Until
-------------------------
such time as Parent's designees shall constitute a majority
of the members of the Board of Directors of the Company, the
Company agrees as to itself and its subsidiaries that
(except as expressly contemplated or permitted by this
Agreement, or to the extent that Parent shall otherwise
consent in writing):
(a) Ordinary Course. The Company shall, and
----------------
shall cause its subsidiaries to, carry on their respective
businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted (it
being understood that the foregoing does not cover future
events resulting from public announcement of the Offer and
the Merger) and shall use all reasonable efforts to preserve
intact their present business organizations, keep available
the services of their present officers and employees and
preserve their relationships with customers, suppliers and
others having business dealings with the Company and its
subsidiaries.
(b) Dividends; Changes in Stock. The Company
----------------------------
shall not, and shall not permit any of its subsidiaries to,
(i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, except
for dividends by a direct or indirect wholly owned
subsidiary of the Company to its parent, (ii) split, combine
or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital
stock or (iii) repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or its subsidiaries
or any other securities thereof except pursuant to contracts
existing on the date of this Agreement.
(c) Issuance of Securities. The Company shall
-----------------------
not, and shall not permit any of its subsidiaries to, issue,
deliver, sell, pledge or encumber, or authorize or propose
the issuance, delivery, sale, pledge or encumbrance of, any
shares of its capital stock of any class or any securities
convertible into, or any rights, warrants, calls,
subscriptions or options to acquire, any such shares or
convertible securities, or any other ownership interest
(including stock appreciation rights or phantom stock) other
than (i) the issuance of shares of Company Common Stock upon
29
the exercise of Company Stock Options outstanding on the
date of this Agreement and in accordance with the terms of
such Company Stock Options and (ii) the issuance of shares
of Company Common Stock upon the exercise of warrants
outstanding on the date of this Agreement and in accordance
with the terms of such warrants as of the date of this
Agreement.
(d) Governing Documents. The Company shall not,
--------------------
and shall not permit any of its subsidiaries to, amend or
propose to amend its certificate of incorporation or by-laws
(or similar organizational documents).
(e) No Acquisitions. The Company shall not, and
----------------
shall not permit any of its subsidiaries to, acquire or
agree to acquire (i) by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial
portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint venture,
association or other business organization or division
thereof or (ii) any assets that are material, individually
or in the aggregate, to the Company and its subsidiaries
taken as a whole, except purchases of inventory in the
ordinary course of business consistent with past practice.
(f) No Dispositions. Other than sales or
----------------
licenses of its products to customers in the ordinary course
of business consistent with past practice, the Company shall
not, and shall not permit any of its subsidiaries to, sell,
lease, license, encumber or otherwise dispose of, or agree
to sell, lease, license, encumber or otherwise dispose of,
any of its assets, except for the disposition of equipment
in the ordinary course of business consistent with past
practice.
(g) Indebtedness. The Company shall not, and
-------------
shall not permit any of its subsidiaries to, (i) incur
(which shall not be deemed to include entering into credit
agreements, lines of credit or similar agreements until
borrowings are made under such agreements) any indebtedness
for borrowed money or guarantee any such indebtedness or
issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of others, enter
into any "keep-well" or other agreement to maintain any
financial statement condition of another person or enter
into any arrangement having the economic effect of any of
the foregoing, except for working capital borrowings
incurred in the ordinary course of business consistent with
30
past practice, or (ii) make any loans, advances or capital
contributions to, or investments in, any other person, other
than, with respect to both clause (i) and (ii) above, (A) to
the Company or any direct or indirect wholly owned
subsidiary of the Company or (B) any advances to employees
in accordance with past practice.
(h) Advice of Changes; Filings. The Company
---------------------------
shall confer with Parent on a regular and frequent basis as
reasonably requested by Parent, report on operational
matters and promptly advise Parent orally and, if requested
by Parent, in writing of any material adverse change with
respect to the Company. The Company shall promptly provide
to Parent (or its counsel) copies of all filings made by the
Company with any Governmental Entity in connection with this
Agreement and the transactions contemplated hereby.
(i) Tax Matters. The Company shall not make any
------------
tax election that would have a material effect on the tax
liability of the Company or any of its subsidiaries or
settle or compromise any material income tax liability of
the Company or any of its subsidiaries. The Company shall,
before filing or causing to be filed any material tax return
of the Company or any of its subsidiaries, consult with
Parent and its advisors as to the positions and elections
that may be taken or made with respect to such return, and
shall take such positions or make such elections as the
Company and Parent shall jointly agree.
(j) Capital Expenditures. Neither the Company
---------------------
nor any of its subsidiaries shall make or agree to make any
new capital expenditure or expenditures other than in
accordance with the Company's 1996 Operating Plan, which
plan has been made available to Parent.
(k) Discharge of Liabilities. The Company shall
-------------------------
not, and shall not permit any of its subsidiaries to, pay,
discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge,
settlement or satisfaction, in the ordinary course of
business consistent with past practice or in accordance with
their terms, of (i) liabilities recognized or disclosed in
the Company 1995 Financial Statements, (ii) liabilities not
required by generally accepted accounting principles to be
recognized or disclosed therein, or (iii) liabilities
incurred since the date of such financial statements in the
ordinary course of business consistent with past practice.
The Company shall not, and shall not permit any of its
31
subsidiaries to, waive the benefits of, or agree to modify
in any manner, any confidentiality, standstill or similar
agreement to which the Company or any of its subsidiaries is
a party.
(l) Material Contracts. Except in the ordinary
-------------------
course of business, neither the Company nor any of its
subsidiaries shall (i) modify, amend or terminate any
material contract or agreement to which the Company or such
subsidiary is a party, (ii) waive, release or assign any
material rights or claims or (iii) grant any rights to
Intellectual Property except for licenses in the ordinary
course of business consistent with past practice.
(m) Compensation of Company Employees. Except as
----------------------------------
set forth in a letter from the Company to Parent dated
January 29, 1996, and except as provided in Section 7.04,
the Company and its subsidiaries will not, without the prior
written consent of Parent, except as may be required by law,
(i) enter into, adopt, amend or terminate any Company
Benefit Plan or other employee benefit plan or any
agreement, arrangement, plan or policy for the benefit of
any director, officer or current or former employee,
(ii) except for normal increases or bonuses in the ordinary
course of business consistent with past practice that, in
the aggregate, do not result in a material increase in
benefits or compensation expense to the Company, increase in
any manner the compensation or fringe benefits of, or pay
any bonus to, any director, officer or employee or (iii) pay
any benefit not required by any plan or arrangement as in
effect as of the date hereof (including the granting of,
acceleration of exercisability of or vesting of stock
options, stock appreciation rights or restricted stock).
(n) General. The Company shall not, and shall
--------
not permit any of its subsidiaries to, authorize any of, or
commit or agree to take any of, the foregoing actions
described in this Section 6.01.
SECTION 6.02. No Solicitation. (a) The Company
----------------
and its officers, directors, employees, representatives and
agents shall immediately cease any discussions or
negotiations with any parties that may be ongoing with
respect to a Takeover Proposal (as hereinafter defined).
The Company shall not, nor shall it permit any of its
subsidiaries to, authorize or permit any of its officers,
directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative
retained by it or any of its subsidiaries to, directly or
32
indirectly, (i) solicit, initiate or encourage (including by
way of furnishing information), or take any other action to
facilitate, any inquiries or the making of any proposal
which constitutes, or may reasonably be expected to lead to,
any Takeover Proposal or (ii) participate in any discussions
or negotiations regarding any Takeover Proposal; provided,
--------
however, that if, at any time prior to the acceptance for
-------
payment of Shares pursuant to the Offer, the Board of
Directors of the Company determines in good faith, after
consultation with outside counsel, that it is necessary to
do so in order to comply with its fiduciary duties to the
Company's stockholders under applicable law, the Company
may, in response to an unsolicited Takeover Proposal, and
subject to compliance with Section 6.02(c), (x) furnish
information with respect to the Company to any person
pursuant to a confidentiality agreement in a form approved
by the Company and Parent (such approval not to be
unreasonably withheld) and (y) participate in negotiations
regarding such Takeover Proposal. Without limiting the
foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any
director or executive officer of the Company or any of its
subsidiaries or any investment banker, financial advisor,
attorney, accountant or other representative of the Company
or any of its subsidiaries, whether or not such person is
purporting to act on behalf of the Company or any of its
subsidiaries or otherwise, shall be deemed to be a breach of
this Section 6.02(a) by the Company. For purposes of this
Agreement, "Takeover Proposal" means any inquiry, proposal
or offer from any person relating to any direct or indirect
acquisition or purchase of 20% or more of the assets of the
Company and its subsidiaries or 20% or more of any class of
equity securities of the Company or any of its subsidiaries,
any tender offer or exchange offer that if consummated would
result in any person beneficially owning 20% or more of any
class of equity securities of the Company or any of its
subsidiaries, any merger, consolidation, business
combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its
subsidiaries, other than the transactions contemplated by
this Agreement, or any other transaction the consummation of
which could reasonably be expected to impede, interfere
with, prevent or materially delay the Offer and/or the
Merger or which would reasonably be expected to dilute
materially the benefits to Parent of the transactions
contemplated hereby.
33
(b) Except as set forth in this Section 6.02,
neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by such Board of Directors or
such committee of the Offer, this Agreement or the Merger,
(ii) approve or recommend, or propose to approve or
recommend, any Takeover Proposal or (iii) cause the Company
to enter into any agreement with respect to any Takeover
Proposal. Notwithstanding the foregoing, in the event that
prior to the acceptance for payment of Shares pursuant to
the Offer the Board of Directors of the Company determines
in good faith, after consultation with outside counsel, that
it is necessary to do so in order to comply with its
fiduciary duties to the Company's stockholders under
applicable law, the Board of Directors of the Company may
(subject to the other provisions of Section 6.02) withdraw
or modify its approval or recommendation of the Offer, this
Agreement and the Merger, approve or recommend a Superior
Proposal (as defined below), cause the Company to enter into
an agreement with respect to a Superior Proposal or
terminate this Agreement, but in each case only at a time
that is after the second business day following Parent's
receipt of written notice (a "Notice of Superior Proposal")
advising Parent that the Board of Directors of the Company
has received a Superior Proposal, specifying the material
terms and conditions of such Superior Proposal and
identifying the person making such Superior Proposal. In
the event that a Notice of Superior Proposal is delivered
and any material term or condition of the Superior Proposal
described therein is subsequently changed, the Company shall
deliver a supplemental Notice of Superior Proposal
describing such change and may withdraw or modify its
approval or recommendation of the Offer, this Agreement and
the Merger, approve or recommend the modified Superior
Proposal or cause the Company to enter into an agreement
with respect to the modified Superior Proposal only at a
time that is after the second business day following
Parent's receipt of the supplemental Notice of Superior
Proposal. In addition, if the Company proposes to enter
into an agreement with respect to any Takeover Proposal, it
shall concurrently with entering into such agreement pay, or
cause to be paid, to Parent the Initial Termination Fee (as
such term is defined in Section 7.06(b)). For purposes of
this Agreement, a "Superior Proposal" means any bona fide
proposal made by a third party to acquire, directly or
indirectly, for consideration consisting of cash and/or
securities, more than 50% of the shares of Company Common
Stock then outstanding or all or substantially all the
34
assets of the Company and otherwise on terms which the Board
of Directors of the Company determines in its good faith
judgment (based on the advice of a financial advisor of
nationally recognized reputation) to be more favorable to
the Company's stockholders than the Offer and the Merger.
(c) In addition to the obligations of the Company
set forth in paragraphs (a) and (b) of this Section 6.02,
the Company shall immediately advise Parent orally and in
writing of any request for information or of any Takeover
Proposal, the material terms and conditions of such request
or Takeover Proposal and the identity of the person making
such request or Takeover Proposal. The Company will keep
Parent fully informed of the status and details (including
amendments or proposed amendments) of any such request or
Takeover Proposal.
(d) Nothing contained in this Section 6.02 shall
prohibit the Company from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good
faith judgment of the Board of Directors of the Company,
after consultation with outside counsel, failure so to
disclose would be inconsistent with its fiduciary duties to
the Company's stockholders under applicable law; provided,
--------
however, neither the Company nor its Board of Directors nor
-------
any committee thereof shall, except as permitted by
Section 6.02(b), withdraw or modify, or propose to withdraw
or modify, its position with respect to the Offer, this
Agreement or the Merger or approve or recommend, or propose
to approve or recommend, a Takeover Proposal.
SECTION 6.03. Other Actions. The Company shall
--------------
not, and shall not permit any of its subsidiaries to, take
any action that would, or that could reasonably be expected
to, result in (i) any of the representations and warranties
of the Company set forth in this Agreement that are
qualified as to materiality becoming untrue, (ii) any of
such representations and warranties that are not so
qualified becoming untrue in any material respect or
(iii) any of the Offer Conditions not being satisfied
(subject to the Company's right to take actions specifically
permitted by Section 6.02).
35
ARTICLE VII
Additional Agreements
---------------------
SECTION 7.01. Stockholder Approval; Preparation
---------------------------------
of Proxy Statement. (a) If the Company Stockholder
-------------------
Approval is required by law, the Company will, at Parent's
request, as soon as practicable following the expiration of
the Offer, duly call, give notice of, convene and hold a
meeting of its stockholders (the "Stockholders Meeting") for
the purpose of obtaining the Company Stockholder Approval.
The Company will, through its Board of Directors, recommend
to its stockholders that the Company Stockholder Approval be
given. Notwithstanding the foregoing, if Sub or any other
subsidiary of Parent shall acquire at least 90% of the
outstanding Shares, the parties shall, at the request of
Parent, take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after
the expiration of the Offer without a Stockholders Meeting
in accordance with Section 253 of the DGCL. Without
limiting the generality of the foregoing, the Company agrees
that its obligations pursuant to the first sentence of this
Section 7.01(a) shall not be affected by (i) the
commencement, public proposal, public disclosure or
communication to the Company of any Takeover Proposal or
(ii) the withdrawal or modification by the Board of
Directors of the Company of its approval or recommendation
of the Offer, this Agreement or the Merger.
(b) If the Company Stockholder Approval is
required by law, the Company will, at Parent's request, as
soon as practicable following the expiration of the Offer,
prepare and file a preliminary Proxy Statement with the SEC
and will use its best efforts to respond to any comments of
the SEC or its staff and to cause the Proxy Statement to be
mailed to the Company's stockholders as promptly as
practicable after responding to all such comments to the
satisfaction of the staff. The Company will notify Parent
promptly of the receipt of any comments from the SEC or its
staff and of any request by the SEC or its staff for
amendments or supplements to the Proxy Statement or for
additional information and will supply Parent with copies of
all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff,
on the other hand, with respect to the Proxy Statement or
the Merger. If at any time prior to the Stockholders
Meeting there shall occur any event that should be set forth
in an amendment or supplement to the Proxy Statement, the
Company will promptly prepare and mail to its stockholders
36
such an amendment or supplement. The Company will not mail
any Proxy Statement, or any amendment or supplement thereto,
to which Parent reasonably objects.
(c) Parent agrees to cause all Shares purchased
pursuant to the Offer and all other Shares owned by Parent
or any subsidiary of Parent to be voted in favor of the
Company Stockholder Approval.
SECTION 7.02. Access to Information. Upon
----------------------
reasonable notice and subject to restrictions contained in
confidentiality agreements to which the Company is subject
(from which it shall use reasonable efforts to be released),
the Company shall, and shall cause each of its subsidiaries
to, afford to Parent and to the officers, employees,
accountants, counsel and other representatives of Parent
access, during normal business hours during the period prior
to the Effective Time, to all their respective properties,
books, contracts, commitments and records and, during such
period, the Company shall (and shall cause each of its
subsidiaries to) furnish promptly to Parent (a) a copy of
each report, schedule, registration statement and other
document filed or received by it during such period pursuant
to the requirements of the Federal or state securities laws
or the Federal tax laws and (b) all other information
concerning its business, properties and personnel as Parent
may reasonably request (including the Company's outside
accountants' work papers). Except as otherwise agreed to by
the Company, unless and until Parent and Sub shall have
purchased a majority of the outstanding Shares pursuant to
the Offer or otherwise, and notwithstanding termination of
this Agreement, the terms of Confidential Disclosure
Agreement #RAL-R95632-00, dated August 16, 1995, shall apply
to all information about the Company which has been
furnished under this Agreement by the Company to Parent or
Sub.
SECTION 7.03. Reasonable Efforts. Each of the
-------------------
Company, Parent and Sub agree to use its reasonable efforts
to take, or cause to be taken, all actions necessary to
comply promptly with all legal requirements which may be
imposed on itself with respect to the Offer and the Merger
(which actions shall include furnishing all information
required under the HSR Act and in connection with approvals
of or filings with any other Governmental Entity) and will
promptly cooperate with and furnish information to each
other in connection with any such requirements imposed upon
any of them or any of their subsidiaries in connection with
the Offer and the Merger. Each of the Company, Parent and
37
Sub will, and will cause its subsidiaries to, use its
reasonable efforts to take all reasonable actions necessary
to obtain (and will cooperate with each other in obtaining)
any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity or other public or
private third party required to be obtained or made by
Parent, Sub, the Company or any of their subsidiaries in
connection with the Offer and the Merger or the taking of
any action contemplated thereby or by this Agreement, except
that no party need waive any substantial rights or agree to
any substantial limitation on its operations or to dispose
of any assets.
SECTION 7.04. Company Stock Options; Shares
-----------------------------
Subject to Repurchase Right. (a) The Company shall amend,
----------------------------
if necessary, each of the Company's stock option plans (the
"Company Stock Option Plans") to provide that each
outstanding option to purchase Company Common Stock (a
"Company Stock Option") issued pursuant to a Company Stock
Option Plan, whether vested or unvested, shall remain
outstanding after the Effective Time and shall be assumed by
Parent. Parent shall assume such Company Stock Options in
such manner that Parent (i) is a corporation "assuming a
stock option in a transaction to which Section 424(a)
applied" within the meaning of Section 424 of the Code, or
(ii) to the extent that Section 424 of the Code does not
apply to any such Company Stock Options, would be such a
corporation were Section 424 applicable to such option.
Each Company Stock Option assumed by Parent shall be
exercisable upon the same terms and conditions as under the
applicable Company Stock Option Plan and the applicable
option agreement issued thereunder, except that (i) such
option shall be exercisable for that number of shares of
common stock of Parent equal to the product of (x) the
number of shares of Company Common Stock for which such
option was exercisable and (y) the Merger Consideration
divided by the average closing price of common stock of
Parent on the NYSE Composite Transactions Tape for the 30
consecutive trading days immediately preceding the date of
the Effective Time (the "Conversion Number"), and (ii) the
per share exercise price of such option shall be equal to
the per share exercise price of such option as of the date
hereof divided by the Conversion Number.
The Company represents that none of the Offer, the
Merger, the execution of this Agreement, the execution of
the Stockholder Agreement or the assumption of the Company
Stock Options by Parent shall accelerate the exercisability
of any Company Stock Option. However, except as set forth
38
in a letter from the Company to Parent dated January 29,
1996, the Company intends to accelerate the exercisability
of up to 50% of the unexercisable Company Stock Options
outstanding as of the date of this Agreement in the manner
set forth on Schedule 7.04 and this Agreement shall not
prohibit the Company from doing so. In addition, with
respect to any Shares held by employees or other eligible
individuals that are subject to the Company's repurchase
right (the "Repurchase Right"), the Company hereby assigns,
as of the Effective Time, such Repurchase Right with respect
to all such Shares to Parent. However, prior to the
Effective Time, the Company intends to terminate such
Repurchase Right for up to 50% of the Shares subject to the
Repurchase Right as of the date of this Agreement in the
manner set forth on Schedule 7.04 and this Agreement shall
not prohibit the Company from doing so.
(b) As soon as practicable after the Effective
Time, Parent shall deliver to the holders of the Company
Stock Options appropriate notices setting forth such
holders' rights pursuant to the Company Stock Option Plans
and the agreements evidencing the grants of such Company
Stock Options shall continue in effect on the same terms and
conditions (subject to the adjustments required by this
Section 7.04 after giving effect to the Merger).
Parent shall comply with the terms of the Company
Stock Option Plans and ensure, to the extent required by,
and subject to the provisions of, such Company Stock Option
Plans, that the Company Stock Options which qualified as
qualified stock options prior to the Effective Time continue
to qualify as qualified stock options after the Effective
Time. Parent shall use all reasonable efforts to register
under the Securities Act all shares subject to options that
were formerly Company Stock Options as of the Effective
Time.
(c) Notwithstanding anything to the contrary
herein, if it is determined that compliance with any of the
foregoing would cause any individual subject to Section 16
of the Exchange Act to become subject to the profit recovery
provisions thereof, any Company Stock Options held by such
individual will be canceled or purchased, as the case may
be, at the Effective Time or at such later time as may be
necessary to avoid application of such profit recovery
provisions and such individual will be entitled to receive
from the Company or the Surviving Corporation an amount
equal to the excess, if any, of the Merger Consideration
over the per Share exercise price of such Company Stock
39
Option multiplied by the number of Shares subject thereto,
and the parties hereto will cooperate so as to achieve the
intent of the foregoing without giving rise to such profit
recovery.
SECTION 7.05. Directors. Promptly upon the
----------
acceptance for payment of, and payment for, any Shares by
Sub pursuant to the Offer, Sub shall be entitled to
designate such number of directors on the Board of Directors
of the Company as will give Sub, subject to compliance with
Section 14(f) of the Exchange Act, a majority of such
directors, and the Company shall, at such time, cause Sub's
designees to be so elected by its existing Board of
Directors; provided, however, that in the event that Sub's
-------- -------
designees are elected to the Board of Directors of the
Company, until the Effective Time such Board of Directors
shall have at least two directors who are directors on the
date of this Agreement and who are not officers of the
Company (the "Independent Directors"); and provided further
-------- -------
that, in such event, if the number of Independent Directors
shall be reduced below two for any reason whatsoever, the
remaining Independent Director shall designate a person to
fill such vacancy who shall be deemed to be an Independent
Director for purposes of this Agreement or, if no
Independent Directors then remain, the other directors shall
designate two persons to fill such vacancies who shall not
be officers or affiliates of the Company or any of its
subsidiaries, or officers or affiliates of Parent or any of
its subsidiaries, and such persons shall be deemed to be
Independent Directors for purposes of this Agreement.
Subject to applicable law, the Company shall take all action
requested by Parent necessary to effect any such election,
including mailing to its stockholders the Information
Statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, and the Company agrees to make such mailing with
the mailing of the Schedule 14D-9 (provided that Sub shall
have provided to the Company on a timely basis all
information required to be included in the Information
Statement with respect to Sub's designees). In connection
with the foregoing, the Company will promptly, at the option
of Parent, either increase the size of the Company's Board
of Directors and/or obtain the resignation of such number of
its current directors as is necessary to enable Sub's
designees to be elected or appointed to, and to constitute a
majority of, the Company's Board of Directors as provided
above.
40
SECTION 7.06. Fees and Expenses. (a) Except as
------------------
provided below in this Section 7.06, all fees and expenses
incurred in connection with the Offer, the Merger, this
Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Offer or the Merger is
consummated.
(b) The Company shall pay, or cause to be paid,
in same day funds to Parent $5,000,000 (the "Initial
Termination Fee") upon demand if (i) Parent or Sub
terminates this Agreement under Section 9.01(d); (ii) the
Company terminates this Agreement pursuant to
Section 9.01(e) or (iii) prior to any termination of this
Agreement (other than by the Company pursuant to
Section 9.01(f)), a Takeover Proposal shall have been made
and within 12 months of such termination, a transaction
constituting a Takeover Proposal is consummated or the
Company enters into an agreement with respect to, approves
or recommends or takes any action to facilitate such
Takeover Proposal. In addition, if the Company becomes
obligated to pay the Initial Termination Fee and a
transaction constituting a Takeover Proposal is consummated
within 12 months of the termination of this Agreement, the
Company shall pay, or cause to be paid, in same day funds to
Parent upon consummation of such transaction the sum of (x)
the Expenses (as hereinafter defined) in an amount up to but
not to exceed $2,000,000 and (y) $15,000,000. "Expenses"
shall mean documented out-of-pocket fees and expenses
incurred or paid by or on behalf of Parent in connection
with the Offer, the Merger or the consummation of any of the
transactions contemplated by this Agreement, including all
fees and expenses of law firms, commercial banks, investment
banking firms, accountants, experts and consultants to
Parent.
(c) If (i) the waiting period under the HSR Act
applicable to the purchase of the Shares shall not have
expired or terminated or (ii) there shall be any threatened,
instituted or pending antitrust litigation by the United
States government (or any agency or commission thereof)
challenging on antitrust grounds the acquisition by Parent
or Sub of any Shares (or any related transaction) and, in
the case of each of clauses (i) and (ii) above, if Parent by
reason of the foregoing terminates this Agreement, then
Parent shall pay $5,000,000 in same day funds to the Company
upon demand.
41
SECTION 7.07. Indemnification; Insurance.
---------------------------
(a) Parent and Sub agree that all rights to indemnification
for acts or omissions occurring prior to the Effective Time
now existing in favor of the current or former directors or
officers (the "Indemnified Parties") of the Company and its
subsidiaries as provided in their respective certificates of
incorporation or by-laws (or similar organizational
documents) or existing indemnification contracts as filed
with the Company Filed SEC Documents shall survive the
Merger and shall continue in full force and effect in
accordance with their terms.
(b) For six years from the Effective Time, Parent
shall, unless Parent agrees in writing to guarantee the
indemnification obligations set forth in Section 7.07(a),
maintain in effect the Company's current directors' and
officers' liability insurance covering those persons who are
currently covered by the Company's directors' and officers'
liability insurance policy (a copy of which has been
heretofore delivered to Parent); provided, however, that in
-------- -------
no event shall Parent be required to expend in any one year
an amount in excess of 200% of the annual premiums currently
paid by the Company for such insurance which the Company
represents is not more than $250,000; and, provided,
--------
further, that if the annual premiums of such insurance
-------
coverage exceed such amount, Parent shall be obligated to
obtain a policy with the greatest coverage available for a
cost not exceeding such amount.
(c) This Section 7.07 shall survive the
consummation of the Merger at the Effective Time, is
intended to benefit the Company, Parent, the Surviving
Corporation and the Indemnified Parties, and shall be
binding on all successors and assigns of Parent and the
Surviving Corporation.
SECTION 7.08. Certain Litigation. The Company
-------------------
agrees that it will not settle any litigation commenced
after the date hereof against the Company or any of its
directors by any stockholder of the Company relating to the
Offer, the Merger or this Agreement, without the prior
written consent of Parent. In addition, the Company will
not voluntarily cooperate with any third party which may
hereafter seek to restrain or prohibit or otherwise oppose
the Offer or the Merger and will cooperate with Parent and
Sub to resist any such effort to restrain or prohibit or
otherwise oppose the Offer or the Merger, unless the Board
of Directors of the Company determines in good faith, after
consultation with outside counsel, that failing so to
42
cooperate with such third party or cooperating with Parent
or Sub, as the case may be, would constitute a breach of the
Board's fiduciary duties under applicable law.
SECTION 7.09. Benefits. (a) Parent and Sub shall
---------
take such reasonable actions as are necessary to allow
eligible employees of the Company to participate in benefit
programs of Parent including severance and alternative
benefit programs substantially comparable to those
applicable to comparable employees of Parent on similar
terms as soon as practicable after the Effective Time. To
the extent reasonably possible, eligible employees of the
Company shall receive service credit under Parent's vacation
and severance programs, but not under Parent's pension plans
and post-retirement welfare benefit plans, for the duration
of their service with the Company. In addition, Parent has
transmitted to the Company a letter dated January 29, 1996,
regarding certain incentive benefits matters.
ARTICLE VIII
Conditions
----------
SECTION 8.01. 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:
(a) Company Stockholder Approval. If required by
-----------------------------
applicable law, the Company Stockholder Approval shall
have been obtained.
(b) No Injunctions or Restraints. No statute,
-----------------------------
rule, regulation, executive order, decree, temporary
restraining order, preliminary or permanent injunction
or other order issued by any court of competent
jurisdiction or other Governmental Entity or other
legal restraint or prohibition preventing the
consummation of the Merger shall be in effect;
provided, however, that each of the parties shall have
-------- -------
used reasonable efforts to prevent the entry of any
such injunction or other order and to appeal as
promptly as possible any injunction or other order that
may be entered.
43
(c) Purchase of Shares. Sub shall have
-------------------
previously accepted for payment and paid for Shares
pursuant to the Offer.
ARTICLE IX
Termination and Amendment
-------------------------
SECTION 9.01. Termination. This Agreement may be
------------
terminated at any time prior to the Effective Time, whether
before or after approval of the terms of this Agreement by
the stockholders of the Company:
(a) by mutual written consent of Parent and the
Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any
of the Offer Conditions the Offer shall have
terminated or expired in accordance with its terms
without Sub having accepted for payment any Shares
pursuant to the Offer or (y) Sub shall not have
accepted for payment any Shares pursuant to the
Offer prior to May 31, 1996; provided, however,
-------- -------
that the right to terminate this Agreement
pursuant to this Section 9.01(b)(i) shall not be
available to any party whose failure to perform
any of its obligations under this Agreement
results in the failure of any such condition or if
the failure of such condition results from facts
or circumstances that constitute a breach of
representation or warranty under this Agreement by
such party; or
(ii) if any Governmental Entity shall have
issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or
otherwise prohibiting the acceptance for payment
of, or payment for, shares of Company Common Stock
pursuant to the Offer or the Merger and such
order, decree or ruling or other action shall have
become final and nonappealable;
(c) by Parent or Sub prior to the purchase of
Shares pursuant to the Offer in the event of a breach
by the Company of any representation, warranty,
covenant or other agreement contained in this Agreement
44
which (i) would give rise to the failure of a condition
set forth in paragraph (e) or (f) of Exhibit A and (ii)
cannot be or has not been cured within 20 days after
the giving of written notice to the Company;
(d) by Parent or Sub if either Parent or Sub is
entitled to terminate the Offer as a result of the
occurrence of any event set forth in paragraph (d) of
Exhibit A to this Agreement;
(e) by the Company in connection with entering
into a definitive agreement in accordance with
Section 6.02(b), provided it has complied with all
provisions thereof, including the notice provisions
therein, and that it makes simultaneous payment of the
Initial Termination Fee; or
(f) by the Company, if Sub or Parent shall have
breached in any material respect any of their
respective representations, warranties, covenants or
other agreements contained in this Agreement, which
breach or failure to perform is incapable of being
cured or has not been cured within 20 days after the
giving of written notice to Parent or Sub, as
applicable, except, in any case, such breaches and
failures which are not reasonably likely to affect
adversely Parent's or Sub's ability to complete the
Offer or the Merger.
SECTION 9.02. Effect of Termination. In the
----------------------
event of a termination of this Agreement by either the
Company or Parent as provided in Section 9.01, this
Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Parent, Sub or the
Company or their respective officers or directors, except
with respect to the last sentence of Section 1.02(c),
Section 4.16, Section 5.06, the last sentence of
Section 7.02, Section 7.06, this Section 9.02 and Article X;
provided, however, that nothing herein shall relieve any
-------- -------
party for liability for any breach hereof.
SECTION 9.03. Amendment. This Agreement may be
----------
amended by the parties hereto, by action taken or authorized
by their respective Boards of Directors, at any time before
or after obtaining the Company Stockholder Approval (if
required by law), but, after any such approval, no amendment
shall be made which by law requires further approval by such
shareholders without obtaining such further approval. This
Agreement may not be amended except by an instrument in
45
writing signed on behalf of each of the parties hereto.
Following the election or appointment of the Sub's designees
pursuant to Section 7.05 and prior to the Effective Time,
the affirmative vote of a majority of the Independent
Directors then in office shall be required by the Company to
(i) amend or terminate this Agreement by the Company, (ii)
exercise or waive any of the Company's rights or remedies
under this Agreement or (iii) extend the time for
performance of Parent and Sub's respective obligations under
this Agreement.
SECTION 9.04. Extension; Waiver. At any time
------------------
prior to the Effective Time, the parties hereto, by action
taken or authorized by their respective Boards 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 contained herein or in any
document delivered pursuant hereto or (iii) subject to the
proviso of Section 9.03, waive compliance with any of the
agreements or conditions 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 a written instrument
signed on behalf of such party. The failure of any party to
this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of
those rights.
ARTICLE X
Miscellaneous
-------------
SECTION 10.01. Nonsurvival of Representations,
-------------------------------
Warranties and Agreements. None of the representations and
--------------------------
warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time
or, in the case of the Company, shall survive the acceptance
for payment of, and payment for, Shares by Sub pursuant to
the Offer. This Section 10.01 shall not limit any covenant
or agreement of the parties which by its terms contemplates
performance after the Effective Time of the Merger.
SECTION 10.02. Notices. All notices and other
--------
communications hereunder shall be in writing and shall be
deemed given if delivered personally, telecopied (which is
confirmed), sent by overnight courier (providing proof of
delivery) or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses
46
(or at such other address for a party as shall be specified
by like notice):
(a) if to Parent or Sub, to
International Business Machines Corporation
Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xx. Xxx X. Xxxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
and
(b) if to the Company, to
Tivoli Systems Inc.
0000 Xxxxxxx xx Xxxxx Xxxxxxx Xxxxx
Xxxxxxxxx Plaza One, Suite 500
Austin, TX 78759
Attention: Xx. Xxxxxxxx X. Xxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx
Xxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxxx Xxx
0xx Xxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Xx., Esq.
Telecopy No.: (000) 000-0000
47
SECTION 10.03. Interpretation. When a reference
---------------
is made in this Agreement to an Article or a Section, such
reference shall be to an Article or a Section of this
Agreement unless otherwise indicated. 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. Whenever the words
"include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words
"without limitation". The phrase "made available" in this
Agreement shall mean that the information referred to has
been made available if requested by the party to whom such
information is to be made available. As used in this
Agreement, the term "subsidiary" of any person means another
person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of
which) is owned directly or indirectly by such first person.
As used in this Agreement, "material adverse change" or
"material adverse effect" means, when used in connection
with the Company, any change or effect (or any development
that, insofar as can reasonably be foreseen, is likely to
result in any change or effect) that, individually or in the
aggregate with any such other changes or effects, is
materially adverse to the business, financial condition or
results of operations of the Company and its subsidiaries
taken as a whole. Notwithstanding the foregoing, a material
adverse change or material adverse effect shall not include
any material adverse change or material adverse effect
caused by any change resulting from the announcement of the
Offer or the Merger.
SECTION 10.04. Counterparts. This Agreement may
-------------
be executed in two or more counterparts, all of which shall
be considered one and the same agreement and shall become
effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same
counterpart.
SECTION 10.05. Entire Agreement; Third Party
-----------------------------
Beneficiaries. This Agreement (including the documents and
--------------
the instruments referred to herein) (a) constitute the
entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties
with respect to the subject matter hereof, and (b) except as
provided in Section 7.07 and Section 7.09, are not intended
48
to confer upon any person other than the parties hereto any
rights or remedies hereunder.
SECTION 10.06. Governing Law. This Agreement
--------------
shall be governed and construed in accordance with the laws
of the State of New York without regard to any applicable
conflicts of law, except to the extent the DGCL shall be
held to govern the terms of the Merger.
SECTION 10.07. Publicity. Except as otherwise
----------
required by law or the rules of the NYSE or the Nasdaq
National Market, for so long as this Agreement is in effect,
neither the Company nor Parent shall, or shall permit any of
its subsidiaries to, issue or cause the publication of any
press release or other public announcement with respect to
the transactions contemplated by this Agreement without the
consent of the other party, which consent shall not be
unreasonably withheld.
SECTION 10.08. Assignment. Neither this
-----------
Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights,
interests and obligations hereunder to Parent or to any
direct or indirect wholly owned subsidiary of Parent.
Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
SECTION 10.09. Enforcement. The parties agree
------------
that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in a
Delaware state court, this being in addition to any other
remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit
such party to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court
in the event any dispute arises out of this Agreement or any
of the transactions contemplated hereby, (ii) agrees that
such party will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any
00
xxxx xxxxx, (xxx) agrees that such party will not bring any
action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court
sitting in the state of Delaware or a Delaware state court
and (iv) waives any right to trial by jury with respect to
any claim or proceeding related to or arising out of this
Agreement or any of the transactions contemplated hereby.
IN WITNESS WHEREOF, Parent, Sub and the Company
have caused this Agreement to be signed by their respective
officers thereunto duly authorized as of the date first
written above.
INTERNATIONAL BUSINESS
MACHINES CORPORATION,
by /s/ Xxxx X. Xxxxxx
-----------------------------
Name:
Title:
TOPAZ ACQUISITION CORP.,
by /s/ Xxx X. Xxxxxx
--------------------------
Name:
Title:
TIVOLI SYSTEMS INC.,
by /s/ Xxxxxxxx X. Xxxx
--------------------------
Name:
Title:
EXHIBIT A
Conditions of the Offer
-----------------------
Notwithstanding any other term of the Offer or this Agreement,
Sub shall not be required to accept for payment or, subject to
applicable rules and regulations of the SEC, including Rule 14e-1(c)
under the Exchange Act (relating to Sub's obligation to pay
for or return tendered Shares after the termination or withdrawal
of the Offer), to pay for any Shares tendered pursuant to the
Offer unless (i) there shall have been validly tendered and not
withdrawn prior to the expiration of the Offer such number of
Shares that would constitute a majority of the outstanding Shares
(determined on a fully diluted basis for all outstanding stock
options and any other rights to acquire Shares) (the "Minimum
Condition") and (ii) any waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall
have expired or been terminated. Furthermore, notwithstanding
any other term of the Offer or this Agreement, Sub shall not be
required to accept for payment or, subject as aforesaid, to pay
for any Shares not theretofore accepted for payment or paid for,
and may terminate the Offer if, at any time on or after the date
of this Agreement and before the acceptance of such Shares for
payment or the payment therefor, any of the following conditions
exists (other than as a result of any action or inaction of
Parent or any of its subsidiaries that constitutes a breach of
this Agreement):
(a) there shall be threatened, instituted or pending by any
person or Governmental Entity any suit, action or proceeding (i)
challenging the acquisition by Parent or Sub of any Shares under
the Offer or pursuant to the Stockholder Agreement, seeking to
restrain or prohibit the making or consummation of the Offer or
the Merger or the performance of any of the other transactions
contemplated by this Agreement or the Stockholder Agreement
(including the voting provision thereunder), or seeking to obtain
from the Company, Parent or Sub any damages that are material in
relation to the Company and its subsidiaries taken as a whole,
(ii) seeking to prohibit or materially limit the ownership or
operation by the Company, Parent or any of their respective
subsidiaries of a material portion of the software business or
assets of the Company and its subsidiaries, taken as a whole, or
Parent and its subsidiaries, taken as a whole, or to compel the
Company or Parent to dispose of or hold separate any material
portion of the software business or assets of the Company and its
subsidiaries, taken as a whole, or Parent and its subsidiaries,
taken as a whole, as a result of the Offer or any of the other
transactions contemplated by this Agreement or the Stockholder
Agreement, (iii) seeking to impose material limitations on the
ability of Parent or Sub to acquire or hold, or exercise full
rights of ownership of, any Shares to be accepted for payment
pursuant to the Offer or purchased under the Stockholder
Agreement including, without limitation, the right to vote such
Shares on all matters properly presented to the stockholders of
the Company or (iv) seeking to prohibit Parent or any of its
subsidiaries from effectively controlling in any material respect
any material portion of the software business or operations of
the Company and its subsidiaries, taken as a whole;
(b) there shall be any statute, rule, regulation, judgment, order
or injunction enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger, or any other action
shall be taken by any Governmental Entity or court, other
than the application to the Offer or the Merger of applicable
waiting periods under the HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred any material adverse change with
respect to the Company other than a change resulting from the
announcement of the Offer or the Merger;
(d) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to
Parent or Sub its approval or recommendation of the Offer, the
Merger or this Agreement, or approved or recommended any Takeover
Proposal, (ii) the Company shall have entered into any agreement
with respect to any Superior Proposal in accordance with Section
6.02(b) of this Agreement or (iii) the Board of Directors of the
Company or any committee thereof shall have resolved to take any
of the foregoing actions;
(e) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall
not be true and correct or any such representations and
warranties that are not so qualified shall not be true and
correct in any material respect, in each case at the date of this
Agreement and at the scheduled or extended expiration of the
Offer;
(f) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material
respect with any material agreement or covenant of the Company to
be performed or complied with by it under this Agreement; or
(g) this Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of Sub and
Parent and may, subject to the terms of this Agreement, be waived
by Sub and Parent in whole or in part at any time and from time
to time in their sole discretion. The failure by Parent or Sub
at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, the waiver of any such right
with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances
and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
