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EXHIBIT 2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (the "Agreement"), dated as of October 31,
1998, by and between Xxxxx & Xxxxxxx, Inc., a Delaware corporation (the
"Company"), and BMC Software, Inc., a Delaware corporation (the "Grantee").
RECITALS
The Grantee, the Company and Ranger Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Grantee ("Merger Sub"), propose to
enter into an Agreement and Plan of Reorganization providing, among other
things, for the merger of Merger Sub with and into the Company (the "Merger")
with the Company as the surviving corporation.
The Board of Directors of the Grantee has approved the Agreement and
Plan of Reorganization, the Merger and this Agreement.
The Board of Directors of the Company has approved the Agreement and
Plan of Reorganization, the Merger and this Agreement and has recommended
approval of the Agreement and Plan of Reorganization and the transactions
contemplated thereby, including the Merger, by holders of common stock, par
value $.001 per share, of the Company (the "Company Common Stock").
As a condition and inducement to the Grantee's willingness to enter
into the Agreement and Plan of Reorganization, the Grantee has requested that
the Company agree, and the Company has agreed, to grant the Grantee the Option
(as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Agreement and Plan of Reorganization, the Company and the Grantee agree as
follows:
1. Capitalized Terms. Capitalized terms used but not defined
herein are defined in the Agreement and Plan of Reorganization and are
used herein with the same meanings as ascribed to them therein;
provided, however, that, as used in this Agreement, "Person" shall
have the meaning specified in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act.
2. Grant of Option. Subject to the terms and conditions set
forth herein, the Company hereby grants to the Grantee an irrevocable
option (the "Option") to purchase, out of the authorized but unissued
Company Common Stock, a number of shares equal to up to 19.0% of the
shares of Company Common Stock outstanding as of the date hereof (as
adjusted as set forth herein) (the "Option Shares"), at a purchase
price per Option Share equal to the lesser of (i) $32.44 and (ii) the
product of (x) 0.675 times (y) the average of the closing sales prices
per share of BMC Common Stock, rounded to the nearest thousandth
(.0005 being
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rounded to .001), as reported by the Nasdaq National Market on each of
the three (3) trading days immediately preceding the exercise of the
Option by the Grantee (the "Exercise Price").
3. Term. The Option shall become exercisable following the
occurrence of an Exercise Event (as hereinafter defined) and shall
remain in full force and effect until the earliest to occur of (i) the
Effective Time, (ii) the first anniversary of the receipt by the
Grantee of written notice from the Company of the occurrence of an
Exercise Event or (iii) termination of the Agreement and Plan of
Reorganization prior to the occurrence of an Exercise Event (the
"Option Term"). The rights and obligations set forth in Sections 7,
8, 9, 10 and 13 shall not terminate at the expiration of the Option
Term, but shall extend to such time as is provided in those Sections.
4. Exercise of Option.
a. The Grantee may exercise the Option on one occasion
only, in whole or in part, at any time during the Option Term
following the occurrence of an Exercise Event; provided,
however, that (i) the Grantee may exercise the Option
following the occurrence of the Exercise Events set forth in
Section 4(b)(i) and 4(b)(ii) below only if (A) a meeting of
the Company's stockholders at which a final vote is taken by
such stockholders on a proposal to approve and adopt the
Agreement and Plan of Reorganization and to approve the Merger
shall have been held, and (B) the adoption and approval of the
Agreement and Plan of Reorganization and the approval of the
Merger by the holders of a majority of the shares of Company
Common Stock outstanding as of the record date for such
meeting of stockholders shall not have been obtained at such
meeting; and (ii) notwithstanding the provisions set forth in
(A) above, the Grantee may also exercise the Option following
the occurrence of the Exercise Event set forth in Section
4(b)(i) below if the Company fails to recommend rejection of
any tender offer or exchange offer of the type referred to in
Section 4(b)(i) within the time period prescribed by Rule
14e-2 under the Exchange Act. Notwithstanding the expiration
of the Option Term, the Grantee shall be entitled to purchase
those Option Shares with respect to which it has exercised the
Option in accordance with the terms hereof prior to the
expiration of the Option Term.
b. As used herein, an "Exercise Event" shall mean any of
the following events:
(i) any Person (other than the Grantee or any
affiliate of the Grantee) shall have commenced (as such term
is defined in Rule 14d-2 under the Exchange Act) a tender
offer or exchange offer to purchase any shares of Company
Common Stock such that, upon consummation of such offer, such
Person would own or control 20% or more of the then
outstanding Company Common Stock;
(ii) any Person (other than the Grantee, the
Company or any of their subsidiaries) shall have, subsequent
to the date of this Agreement, acquired beneficial ownership
(as such term is defined in Rule 13d-3 under the Exchange Act)
or the right to acquire beneficial ownership of, or any
"Group" (as such term is defined in
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Rule 13d-3 under the Exchange Act) shall have been formed that
beneficially owns, or has the right to acquire beneficial
ownership of, 20% or more of the then outstanding Company
Common Stock; or
(iii) any event giving rise to a right of
termination under the Agreement and Plan of Reorganization
under (A) Section 6.1.2 (breach) solely relating to a breach
of Section 4.3.11 (Stockholders' Meeting), (B) Section 6.1.5
(change of recommendation) or (C) Section 6.1.10 (failure to
obtain stockholder approval) if prior to the time of the
meeting of the Company's stockholders at which a final vote is
taken by such stockholders on a proposal to approve and adopt
the Agreement and Plan of Reorganization and to approve the
Merger, there is publicly announced by a third party (other
than the Grantee or an affiliate of the Grantee) a proposal
for Another Xxxxx Transaction.
c. If the Grantee wishes to exercise the Option, it
shall send a written notice (the date of which being herein
referred to as the "Notice Date") to the Company specifying
(i) the total number of Option Shares it intends to purchase
pursuant to such exercise and (ii) a place and a date not
earlier than three business days nor later than 15 business
days from the Notice Date for the closing of such purchase
(the "Closing Date"); provided, however, that, if the closing
of the purchase and sale pursuant to the Option (the
"Closing") cannot be consummated by reason of any applicable
law, regulation or order, the period of time that otherwise
would run pursuant to this sentence shall run instead from the
date on which such restriction on consummation has expired or
been terminated; and, provided, further, that, without
limiting the foregoing, if prior notification to, or
authorization of, any governmental authority is required in
connection with such purchase, the Grantee and, if applicable,
the Company shall promptly file the required notice or
application for authorization and shall expeditiously process
the same (and the Company shall cooperate with the Grantee in
the filing of any such notice or application and the obtaining
of any such authorization), and the period of time that
otherwise would run pursuant to this sentence shall run
instead from the date on which, as the case may be, (i) any
required notification period has expired or been terminated or
(ii) such authorization has been obtained and, in either
event, any requisite waiting period has passed.
d. Notwithstanding Section 4(c), in no event shall any
Closing Date be more than 12 months after the related Notice
Date, and, if the Closing Date shall not have occurred within
12 months after the related Notice Date due to the failure to
obtain any required authorization of a governmental authority,
the exercise of the Option effected on the Notice Date shall
be deemed to have expired. If (i) the Grantee receives
official notice that an authorization of any governmental
authority required for the purchase of Option Shares will not
be issued or granted or (ii) a Closing Date shall not have
occurred within 12 months after the related Notice Date due to
the failure to obtain any such required authorization of a
governmental authority, (A) the Grantee (to the extent that a
Repurchase Event shall have occurred) shall be entitled to
exercise its right as set forth in Section 7 or (B) to the
extent permitted by
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applicable law, the Grantee shall be entitled to exercise the
Option in connection with the resale of the Company Common
Stock or other securities pursuant to a registration statement
as provided in Section 9. The provisions of this Section 4
and Section 5 shall apply with appropriate adjustments to any
such exercise in connection with such a resale.
5. Payment and Delivery of Certificates.
a. On each Closing Date, the Grantee shall pay to the
Company in immediately available funds by wire transfer to a
bank account designated by the Company an amount equal to the
Exercise Price multiplied by the Option Shares to be purchased
on such Closing Date.
b. At each Closing, simultaneously with the delivery of
immediately available funds as provided in Section 5(a), the
Company shall deliver to the Grantee a certificate or
certificates representing the Option Shares to be purchased at
such Closing, which Option Shares shall be duly authorized,
validly issued, fully paid and nonassessable and free and
clear of all Encumbrances, and Grantee shall deliver to the
Company its written agreement that the Grantee will not offer
to sell or otherwise dispose of such Option Shares in
violation of applicable law or the provisions of this
Agreement.
c. Certificates for the Option Shares delivered at each
Closing shall be endorsed with a restrictive legend that shall
read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO RESTRICTIONS ARISING
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT
DATED AS OF OCTOBER 31, 1998. A COPY OF SUCH
AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE COMPANY OF A
WRITTEN REQUEST THEREFOR.
A new certificate or certificates evidencing the same number of shares
of the Company Common Stock will be issued to the Grantee in lieu of
the certificate bearing the above legend, and such new certificate
shall not bear such legend, insofar as it applies to the Securities
Act, if the Grantee shall have delivered to the Company a copy of a
letter from the staff of the Commission, or an opinion of counsel in
form and substance reasonably satisfactory to the Company and its
counsel, to the effect that such legend is not required for purposes
of the Securities Act.
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6. Adjustment Upon Changes in Capitalization, Etc.
a. In the event of any change in the Company Common
Stock by reason of a stock dividend, split-up, combination,
recapitalization, exchange of shares or similar transaction,
the type and number of shares or securities subject to the
Option, and the Exercise Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the
agreements governing such transaction, so that the Grantee
shall receive upon exercise of the Option the same class and
number of outstanding shares or other securities or property
that Grantee would have received in respect of the Company
Common Stock if the Option had been exercised immediately
prior to such event, or the record date therefor, as
applicable. If any additional shares of Company Common Stock
are issued after the date of this Agreement (other than
pursuant to an event described in the first sentence of this
Section 6(a)), the number of shares of Company Common Stock
then remaining subject to the Option shall be adjusted so
that, after such issuance of additional shares, such number of
shares then remaining subject to the Option, together with
shares theretofore issued pursuant to the Option, equals 15.9%
of the number of shares of the Company Common Stock then
issued and outstanding; provided, however, that the number of
shares of Company Common Stock subject to the Option shall
only be increased to the extent the Company then has available
authorized but unissued and unreserved shares of Company
Common Stock.
b. If during the Option Term the Company shall enter
into an agreement (i) to consolidate, exchange shares or merge
with any Person, other than the Grantee or one of its
affiliates, and, in the case of a merger, shall not be the
continuing or surviving corporation, (ii) to permit any
Person, other than the Grantee or one of its affiliates, to
merge into the Company and the Company shall be the continuing
or surviving corporation, but, in connection with such merger,
the then outstanding shares of Company Common Stock shall be
changed into or exchanged for stock or other securities of the
Company or any other Person or cash or any other property, or
the shares of Company Common stock outstanding immediately
before such merger shall after such merger represent less than
50% of the common shares and common share equivalents of the
Company outstanding immediately after the merger or (iii) to
sell, lease or otherwise transfer all or substantially all of
its assets to any Person, other than the Grantee or one of its
affiliates, then, and in each such case, proper provisions
shall be made in the agreement governing such transaction so
that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth
herein, become exercisable for the stock, securities, cash or
other property that would have been received by the Grantee if
the Grantee had exercised this Option immediately prior to
such transaction or the record date for determining
stockholders entitled to participate therein, as appropriate.
c. The provisions of Sections 7, 8, 9, 10, 11 and 13
shall apply with appropriate adjustments to any securities for
which the Option becomes exercisable pursuant to this Section
6.
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7. Repurchase at the Option of Grantee.
a. At any time during the Option Term, at the request of
the Grantee made at any time after the first Repurchase Event
(as hereinafter defined) and ending on the first anniversary
thereof (the "Put Period"), the Company (or any successor
thereto) shall repurchase from the Grantee (i) that portion of
the Option that then remains unexercised and (ii) all (but not
less than all) the shares of Company Common Stock purchased by
the Grantee pursuant hereto and with respect to which the
Grantee then has beneficial ownership. The date on which the
Grantee exercises its rights under this Section 7 is referred
to as the "Grantee Request Date." Subject to Section 7(e),
such repurchase shall be at an aggregate price (the "Section 7
Repurchase Consideration") equal to the sum of:
i. the aggregate exercise price paid (or, in the
case of Option Shares with respect to which the
Option has been exercised but the Closing Date has
not occurred, payable) by the Grantee for any Option
Shares as to which the Option has theretofore been
exercised and with respect to which the Grantee then
has beneficial ownership;
ii. the excess, if any, of the Applicable Price
(as defined below), over the Exercise Price (subject
to adjustment pursuant to Section 6) paid (or, in the
case of Option Shares with respect to which the
Option has been exercised but the Closing Date has
not occurred, payable) by the Grantee for each Option
Share as to which the Option has been exercised and
with respect to which the Grantee then has beneficial
ownership, multiplied by the number of such shares;
and
iii. the excess, if any, of (x) the Applicable
Price for each share of Company Common Stock over (y)
the Exercise Price (subject to adjustment pursuant to
Section 6), multiplied by the number of Option Shares
as to which the Option has not been exercised.
b. If the Grantee exercises its rights under this
Section 7, the Company shall (to the extent permitted by law),
within five business days (or as soon as permitted thereafter
under applicable law) after the Grantee Request Date, pay the
Section 7 Repurchase Consideration to the Grantee in
immediately available funds, and the Grantee shall surrender
to the Company the Option and the certificates evidencing the
shares of Company Common Stock purchased thereunder with
respect to which the Grantee then has beneficial ownership,
and the Grantee shall warrant to the Company that, immediately
prior to the repurchase thereof pursuant to this Section 7,
the Grantee had sole record and beneficial ownership of such
shares and that such shares were then held free and clear of
all Encumbrances.
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c. For purposes of this Agreement, the "Applicable
Price" means the highest of (i) the highest purchase price per
share paid pursuant a tender or exchange offer made for shares
of Company Common Stock after the date hereof and on or prior
to the Grantee Request Date, (ii) the price per share to be
paid by any third Person for shares of Company Common Stock,
in each case pursuant to an agreement for a merger or other
business combination transaction with the Company entered into
on or prior to the Grantee Request Date, or (iii) the highest
bid price per share of Company Common Stock as quoted on The
Nasdaq National Market (or if Company Common Stock is not
quoted on The Nasdaq National Market, the highest bid price
per share as quoted on any other market comprising a part of
The Nasdaq Stock Market or, if the shares of Company Common
Stock are not quoted thereon, on the principal trading market
(as defined in Regulation M under the Exchange Act) on which
such shares are traded as reported by a recognized source)
during the 60 Business Days preceding the Grantee Request
Date. If the consideration to be offered, paid or received
pursuant to either of the foregoing clauses (i) or (ii) shall
be other than in cash, the value of such consideration shall
be determined in good faith by an independent nationally
recognized investment banking firm selected by the Grantee and
reasonably acceptable to the Company, which determination
shall be conclusive for all purposes of this Agreement.
d. As used herein, a "Repurchase Event" means the
occurrence of any Exercise Event specified in Section
4(b)(iii)(B) or 4(b)(iii)(C), in each case only if a Break-Up
Fee has been paid or would be payable under Section 4.3.6.2 of
the Agreement and Plan of Reorganization.
e. Notwithstanding any provision to the contrary in this
Agreement, the Grantee may not exercise its rights pursuant to
this Section 7 in a manner that would result in the cash
payment to the Grantee of an aggregate amount under this
Section 7 of more than $30.0 million, including the amount, if
any, paid to the Grantee pursuant to Section 4.3.6.2 of the
Agreement and Plan of Reorganization; provided, however, that
nothing in this sentence shall limit the Grantee's ability to
exercise the Option in accordance with its terms.
8. Repurchase at the Option of the Company.
a. Unless the Grantee shall have previously exercised
its rights under Section 7, at the request made by the Company
at any time during the six-month period commencing at the
expiration of the Put Period (or, if no Repurchase Event shall
have occurred, at the expiration of one year from the date on
which the Option was first exercised) (the "Call Period"), the
Company may repurchase from the Grantee, and the Grantee shall
sell to the Company, all (but not less than all) the shares of
Company Common Stock acquired by the Grantee pursuant hereto
and with respect to which the Grantee has beneficial ownership
at the time of such repurchase at a price per share equal to
the Exercise Price per share in respect of the shares so
acquired (such price per share multiplied by the number of
shares of Company
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Common Stock to be repurchased pursuant to this Section 8
being herein called the "Section 8 Repurchase Consideration").
The date on which the Company exercises its rights under this
Section 8 is referred to as the "Company Request Date."
Notwithstanding the first sentence of this Section 8(a), the
Grantee, within 30 days following the Company Request Date,
may deliver (i) an Offeror's Notice pursuant to Section 10, in
which case the provisions of Section 10 and not those of this
Section 8 shall control (unless the sale to a third Person
contemplated thereby is not consummated) or (ii) a
Registration Notice pursuant to Section 9 and sell the shares
of Company Common Stock acquired or acquirable by the Grantee
pursuant hereto pursuant to Section 9, in which case the
provisions of Section 9 and not those of this Section 8 shall
control (unless the sale under Section 9 is not consummated
within 180 days after the effectiveness of such registration
statement, which effectiveness shall have been continuous
during the period) and the Grantee shall not have been
required to discontinue any disposition of any shares as
provided in Section 9. The Company's rights under this
Section 8 shall be suspended (and the Call Period shall be
extended accordingly) during any period when the exercise of
such rights would subject the Grantee to liability pursuant to
Section 16(b) of the Exchange Act by reason of the issuance of
the Option, any adjustment pursuant to Section 6 hereof, the
Grantee's purchase of shares of Company Common Stock hereunder
or the Grantee's sale of shares pursuant to Section 7, 8, 9 or
10.
b. If the Company exercises its rights under this
Section 8 and the Grantee does not deliver an Offeror's Notice
or, having delivered an Offeror's Notice, the Grantee does not
sell the shares to a third Person pursuant thereto, the
Company shall, within five business days after the expiration
of the Grantee's right to deliver an Offeror's Notice or to
sell the shares subject to an Offeror's Notice to a third
Person, pay the Section 8 Repurchase Consideration in
immediately available funds, and the Grantee shall surrender
to the Company certificates evidencing the shares of Company
Common Stock purchased hereunder, and the Grantee shall
warrant to the Company that, immediately prior to the
repurchase thereof pursuant to this Section 8, the Grantee had
sole record and beneficial ownership of such shares and that
such shares were then held free and clear of all Encumbrances.
9. Registration Rights.
a. The Company shall, if requested by the Grantee (a
"Registration Notice") at any time and from time to time
within two years of the first exercise of the Option (the
"Registration Period"), as expeditiously as practicable,
prepare, file and use reasonable efforts to cause to be made
effective up to two registration statements under the
Securities Act if such registration is necessary or desirable
in order to permit the offering, sale and delivery by Grantee
of any or all shares of Company Common Stock or other
securities that have been acquired by or are issuable to the
Grantee upon exercise of the Option in accordance with the
intended method of sale or other disposition stated by the
Grantee, including, at the sole discretion of the Company, a
"shelf" registration statement under Rule 415 under the
Securities Act
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or any successor provision, and the Company shall use all
reasonable efforts to qualify such shares or other securities
under any applicable state securities laws; provided, however,
that notwithstanding anything to the contrary contained in
this Agreement, the Company shall in no event be required to
(i) qualify to do business as a foreign corporation in any
jurisdiction wherein it would not otherwise be required to
qualify, or (ii) consent to service of process in any such
jurisdiction. Without the Grantee's prior written consent
which will not unreasonably be withheld, no other securities
may be included in any such registration. The Company shall
use all reasonable efforts to cause each such registration
statement to become effective, to obtain all consents or
waivers of other parties that are required therefor and to
keep such registration statement effective for such period not
in excess of 180 days from the day such registration statement
first becomes effective as may be reasonably necessary to
effect such sale or other disposition. The obligations of the
Company hereunder to file a registration statement and to
maintain its effectiveness may be suspended for one or more
periods of time not exceeding 90 days in the aggregate in any
one year period if the Board of Directors of the Company shall
have determined in good faith that the filing of such
registration or the maintenance of its effectiveness would
require disclosure of nonpublic information that would
materially and adversely affect the Company. Upon receipt of
notice of the happening of any event as a result of which any
registration statement, prospectus, prospectus supplement, or
any document incorporated by reference in any of the
foregoing, contains any untrue statement of material fact or
fails or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not
misleading, the Grantee shall forthwith discontinue the
disposition of any shares or other securities under such
registration statement, prospectus or prospectus supplement
until the Grantee receives from the Company copies of an
amended or supplemented registration statement, prospectus or
supplement so that, as thereafter delivered to purchasers of
such shares or other securities, such registration statement,
prospectus or prospectus supplement shall not contain any
untrue statement of material fact or fail or omit to state any
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they are made, not misleading. For purposes of
determining whether two requests have been made under this
Section 9, only requests relating to a registration statement
that has become effective under the Securities Act and
pursuant to which the Grantee has disposed of all shares
covered thereby in the manner contemplated therein shall be
counted.
b. The expenses associated with the preparation and
filing of any such registration statement pursuant to this
Section 9 and any sale covered thereby (including any fees
related to blue sky qualifications and filing fees in respect
of the National Association of Securities Dealers, Inc.)
("Registration Expenses") shall be for the account of the
Company except for underwriting discounts or commissions or
brokers' fees in respect to shares to be sold by the Grantee
and the fees and
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disbursements of the Grantee's counsel; provided, however,
that the Company shall not be required to pay for any
Registration Expenses with respect to such registration if the
registration request is subsequently withdrawn at the request
of the Grantee unless the Grantee agrees to forfeit its right
to request one registration; and provided further that, if at
the time of such withdrawal the Grantee has learned of a
material adverse change in the results of operations,
condition (financial or other), business or prospects of the
Company from that known to the Grantee at the time of its
request and has withdrawn the request with reasonable
promptness following disclosure by the Company of such
material adverse change, then the Grantee shall not be
required to pay any of such expenses and shall retain all
remaining rights to request registration.
c. The Grantee shall provide all information reasonably
requested by the Company for inclusion in any registration
statement to be filed hereunder. If during the Registration
Period the Company shall propose to register under the
Securities Act the offering, sale and delivery of Company
Common Stock for cash for its own account (other than any
registration on Form S-8 or any successor form or in
connection with any offering to employees of the Company or
in connection with any employee, director or consultant
benefit or compensation plan) or for any other stockholder of
the Company pursuant to a firm underwriting, it shall, in
addition to the Company's other obligations under this Section
9, allow the Grantee the right to participate in such
registration provided that the Grantee participates in the
underwriting; provided, however, that, if the managing
underwriter of such offering advises the Company in writing
that in its opinion the number of shares of Company Common
Stock requested to be included in such registration exceeds
the number that can be sold in such offering, the Company
shall, after fully including therein all securities to be sold
by the Company, include the shares requested to be included
therein by the Grantee pro rata (based on the number of shares
intended to be included therein) with the shares intended to
be included therein by Persons other than the Company. In
connection with any offering, sale and delivery of Company
Common Stock pursuant to a registration statement effected
pursuant to this Section 9, the Company and the Grantee shall
provide each other and each underwriter of the offering with
customary representations, warranties and covenants, including
covenants of indemnification and contribution.
10. First Refusal. At any time after the first occurrence of an
Exercise Event, if the Grantee shall desire to sell, assign, transfer
or otherwise dispose of all or any of the Option Shares or other
securities acquired by it pursuant to the Option, it shall give the
Company written notice of the proposed transaction (an "Offeror's
Notice"), identifying the proposed transferee, accompanied by a copy
of a bona fide binding offer, which is not subject to financing or
other material conditions other than regulatory approvals, to purchase
such shares or other securities signed by such transferee and setting
forth the terms of the proposed transaction. An Offeror's Notice
shall be deemed an offer by the Grantee to the Company, which may be
accepted, in whole but not in part, within ten business days of the
receipt of such Offeror's Notice, on the same terms and conditions and
at the same price at which the
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Grantee is proposing to transfer such shares or other securities to
such transferee. The purchase of any such shares or other securities
by the Company shall be settled within ten business days of the date
of the acceptance of the offer (or such later date on which any
conditions of such offer would have been reasonably satisfied or
waived had the offer not been accepted by the Company) and the
purchase price shall be paid to the Grantee in immediately available
funds. If the Company shall fail or refuse to purchase all the shares
or other securities covered by an Offeror's Notice, the Grantee may,
within sixty days from the date of the Offeror's Notice, sell all, but
not less than all, of such shares or other securities to the proposed
transferee at no less than the price specified and on terms no more
favorable than those set forth in the Offeror's Notice; provided,
however, that the provisions of this sentence shall not limit the
rights the Grantee may otherwise have if the Company has accepted the
offer contained in the Offeror's Notice and wrongfully refuses to
purchase the shares or other securities subject thereto. The
requirements of this Section 10 shall not apply to (a) any disposition
as a result of which the proposed transferee (together with the
proposed transferee's affiliates) would own beneficially not more than
2% of the outstanding voting power of the Company, (b) any disposition
of Company Common Stock or other securities by a Person to whom the
Grantee has assigned its rights under the Option with the consent of
the Company, (c) any sale by means of a public offering registered
under the Securities Act or (d) any transfer to a wholly owned
subsidiary of the Grantee which agrees in writing to be bound by the
terms hereof.
11. Listing. If the Company Common Stock or any other securities
then subject to the Option are then listed on The Nasdaq National
Market (or if Company Common Stock is not quoted on The Nasdaq
National Market, on any other market comprising a part of The Nasdaq
Stock Market or, if the shares of Company Common Stock are not quoted
thereon, on another trading market or exchange), the Company, upon the
occurrence of an Exercise Event, shall promptly file an application to
list on The Nasdaq National Market, such other market comprising a
part of The Nasdaq Stock Market or such other trading market or
exchange, as applicable, the shares of the Company Common Stock or
other securities then subject to the Option and will use all
reasonable efforts to cause such listing application to be approved as
promptly as practicable.
12. Replacement of Agreement. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Agreement, if mutilated, the
Company will execute and deliver a new Agreement of like tenor and
date. Any such new Agreement shall constitute an additional
contractual obligation of the Company, whether or not the Agreement so
lost, stolen, destroyed or mutilated shall at any time be enforceable
by anyone.
13. Standstill. Other than pursuant to the Agreement and Plan of
Reorganization, following the occurrence of an Exercise Event and
prior to the first anniversary of the date on which the Option is
first exercised (the "Standstill Period"), without the prior written
consent of the Company, the Grantee shall not, nor shall the Grantee
permit its affiliates to, directly or indirectly, along or in concert
or conjunction with any other person or group, in
12
any manner acquire, agree to acquire or make any proposal to acquire,
any Company Common Stock (other than pursuant to this Agreement or the
Agreement and Plan of Reorganization) for a price per share of Company
Common Stock that is less than $32.44; provided, however, that should
any event that would be an Exercise Event under Section 4(b)(i) or
(ii) or otherwise be a proposal for Another Motel Transaction occur
during the Standstill Period, the restrictions on Grantee pursuant to
this Section 13 shall not apply.
14. Miscellaneous.
a. Expenses. Except as otherwise provided in the
Agreement and Plan of Reorganization or in Sections 7, 8 or 9
hereof, each of the parties hereto shall bear and pay all
costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
b. Waiver and Amendment. Any provision of this
Agreement may be waived at any time by the party that is
entitled to the benefits of such provision. This Agreement
may not be modified, amended, altered or supplemented except
upon the execution and delivery of a written agreement
executed by the parties hereto.
c. Entire Agreement; No Third Party Beneficiary;
Severability. Except as otherwise set forth in the Agreement
and Plan of Reorganization, this Agreement (including the
Agreement and Plan of Reorganization and the other documents
and instruments referred to herein and therein) (i)
constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between
the parties with respect to the subject matter hereof and (ii)
is not intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder. If any term,
provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected,
impaired or invalidated.
d. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
Delaware, regardless of the laws that might otherwise govern
under applicable principles of conflicts of law; provided,
however, that any matter involving the internal corporate
affairs of any party hereto shall be governed by the
provisions of the state of its incorporation.
e. Descriptive Headings. The descriptive headings
contained herein are for convenience or reference only and
shall not affect in any way the meaning or interpretation of
this Agreement.
f. Notices. Any notice to be given to any party hereto
shall be in writing and shall be delivered by overnight
courier, sent by facsimile transmission or first class
registered or certified mail, postage prepaid.
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If to the Company to:
Xxxxx & Xxxxxxx, Inc.
0000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Godward LLP
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxx and Xxxxx Xxxxx
Facsimile: (000) 000-0000
If to Grantee to:
BMC Software, Inc.
0000 Xxxxxxxx Xxxx.
Xxxxxxx, XX 00000-0000
Attention: Xxx Xxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
2300 First City Tower
0000 Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
Any communication so addressed and mailed by first-class
registered or certified mail, postage prepaid, shall be deemed to be
received on the fifth business day after so mailed, and any
communication so addressed and if delivered by overnight courier or
facsimile to such address shall be deemed to be received (i) in the
case of delivery by overnight courier, on the second business day
after such communication is delivered to the overnight courier
service, and (ii) in the case of delivery by facsimile, upon delivery
during normal business hours on any business day.
g. Counterparts. This Agreement and any amendments
hereto may be executed in two counterparts, each of which
shall be considered one and the same agreement and shall
become effective when both counterparts have been signed by
each of the
14
parties and delivered to the other party, it being understood
that both parties need not execute the same counterpart.
h. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder or under the Option
shall be assigned by either of the parties hereto (whether by
operation of law or otherwise) without the prior written
consent of the other party, except that the Grantee may assign
this Agreement to a wholly owned subsidiary of the Grantee;
provided, however, that no such assignment shall have the
effect of releasing the Grantee from its obligations
hereunder. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and
assigns.
i. Further Assurances. In the event of any exercise of
the Option by the Grantee, the Company and the Grantee shall
execute and deliver all other documents and instruments and
take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such
exercise.
j. Specific Performance. The parties hereto hereby
acknowledge and agree that the failure of any party to this
Agreement to perform its agreements and covenants hereunder
will cause irreparable injury to the other party to this
Agreement for which damages, even if available, will not be an
adequate remedy. Accordingly, each of the parties hereto
hereby consents to the granting of equitable relief (including
specific performance and injunctive relief) by any court of
competent jurisdiction to enforce any party's obligations
hereunder. The parties further agree to waive any requirement
for the securing or posting of any bond in connection with the
obtaining of any such equitable relief and that this provision
is without prejudice to any other rights that the parties
hereto may have for any failure to perform this Agreement.
15
IN WITNESS WHEREOF, the Company and the Grantee have caused this Stock
Option Agreement to be signed by their respective officers thereunto duly
authorized, all as of the day and year first written above.
XXXXX & BABBAGE, INC.
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title: President and Chief
Executive Officer
BMC SOFTWARE, INC.
By: /s/ Xxx X. Xxxxxx Xx.
----------------------------------
Name: Xxx X. Xxxxxx Xx.
Title: President
