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AGREEMENT AND PLAN OF MERGER
Dated as of September 12, 1997
Among
INTERNATIONAL BUSINESS
MACHINES CORPORATION,
NEW ORCHARD CORP.
And
UNISON SOFTWARE, INC.
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TABLE OF CONTENTS
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ARTICLE I
The Merger
SECTION 1.01. The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.03. Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.04. Effects of the Merger . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.05. Certificate of Incorporation and By-Laws. . . . . . . . . . . . 2
SECTION 1.06. Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.07. Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.02. Exchange of Certificates. . . . . . . . . . . . . . . . . . . . 6
SECTION 2.03. Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties
of the Company. . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 3.02. Representations and Warranties
of Parent and Sub . . . . . . . . . . . . . . . . . . . . . .29
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. Conduct of Business . . . . . . . . . . . . . . . . . . . . . .33
SECTION 4.02. No Solicitation . . . . . . . . . . . . . . . . . . . . . . . .38
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ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Preparation of the Form S-4 and the Proxy Statement;
Stockholders Meeting . . . . . . . . . . . . . . . . . . . .40
SECTION 5.02. Letters of the Company's Accountants. . . . . . . . . . . . . .41
SECTION 5.03. Letters of Parent's Accountants . . . . . . . . . . . . . . . .41
SECTION 5.04. Access to Information; Confidentiality. . . . . . . . . . . . .41
SECTION 5.05. Reasonable Efforts; Notification. . . . . . . . . . . . . . . .42
SECTION 5.06. Stock Options . . . . . . . . . . . . . . . . . . . . . . . . .43
SECTION 5.07. Indemnification . . . . . . . . . . . . . . . . . . . . . . . .45
SECTION 5.08. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . .46
SECTION 5.09. Public Announcements. . . . . . . . . . . . . . . . . . . . . .48
SECTION 5.10. Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . .48
SECTION 5.11. Stock Exchange Listing. . . . . . . . . . . . . . . . . . . . .48
SECTION 5.12. Stockholder Agreement Legend. . . . . . . . . . . . . . . . . .48
SECTION 5.13. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . .49
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation to
Effect the Merger . . . . . . . . . . . . . . . . . . . . . .50
SECTION 6.02. Conditions to Obligations of Parent
and Sub . . . . . . . . . . . . . . . . . . . . . . . . . . .51
SECTION 6.03. Conditions to Obligation of the Company . . . . . . . . . . . .52
SECTION 6.04. Frustration of Closing Conditions . . . . . . . . . . . . . . .53
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . .53
SECTION 7.02. Effect of Termination . . . . . . . . . . . . . . . . . . . . .55
SECTION 7.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . .55
SECTION 7.04. Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . .56
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and
Warranties. . . . . . . . . . . . . . . . . . . . . . . . . .56
SECTION 8.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
SECTION 8.03. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . .57
SECTION 8.04. Interpretation. . . . . . . . . . . . . . . . . . . . . . . . .58
SECTION 8.05. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . .58
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SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . .58
SECTION 8.07. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . .59
SECTION 8.08. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . .59
SECTION 8.09. Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . .59
SECTION 8.10. Severability. . . . . . . . . . . . . . . . . . . . . . . . . .60
AGREEMENT AND PLAN OF MERGER dated as of September 12, 1997,
among INTERNATIONAL BUSINESS MACHINES CORPORATION, a New York
corporation ("Parent"), NEW ORCHARD CORP., a Delaware corporation
and a wholly owned subsidiary of Parent ("Sub"), and UNISON
SOFTWARE, INC., a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company, and Parent, acting as the sole stockholder of Sub, have approved the
merger of the Company with and into Sub (the "Merger"), upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, substantially concurrently herewith and as a condition and
inducement to Parent's willingness to enter into this Agreement, Parent and
certain stockholders (the "Principal Stockholders") of the Company have
entered into a Stockholder Agreement (the "Stockholder Agreement");
WHEREAS, substantially concurrently herewith and as a condition and
inducement to Parent's willingness to enter into this Agreement, Parent and
certain stockholders of the Company who are employed by the Company have
entered into Noncompetition Agreements (the "Noncompetition Agreements")
pursuant to which such stockholders have, among other things, agreed to not
have certain Relationships (as defined in the Noncompetition Agreements) with
certain third parties during the Noncompetition Period (as defined in the
Noncompetition Agreements);
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
WHEREAS, for United States Federal income tax purposes, it is
intended that the Merger shall qualify as a reorganization within the meaning
of Section 368 of the Internal Revenue Code of 1986, as amended (the "Code");
and
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the parties
hereto agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), the Company shall be merged with and
into Sub at the Effective Time (as defined in Section 1.03). Following the
Merger, the separate corporate existence of the Company shall cease and Sub
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of the Company in
accordance with the DGCL. At the election of Parent, any direct or indirect
wholly owned subsidiary (as defined in Section 8.03) of Parent may be
substituted for Sub as a constituent corporation in the Merger. In such
event, the parties hereto agree to execute an appropriate amendment to this
Agreement in order to reflect such substitution.
SECTION 1.02. CLOSING. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or waiver
of the conditions set forth in Article VI (the "Closing Date"), at the
offices of Cravath, Swaine & Xxxxx, Worldwide Plaza, 000 Xxxxxx Xxxxxx, Xxx
Xxxx, X.X. 00000, unless another date or place is agreed to in writing by the
parties hereto.
SECTION 1.03. EFFECTIVE TIME. Subject to the 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 Parent and the Company shall
agree should be specified in the Certificate of Merger (the time the Merger
becomes effective being the "Effective Time").
SECTION 1.04. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.05. CERTIFICATE OF INCORPORATION AND BY-LAWS. (a) The
Certificate of Incorporation of Sub, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law, subject in all cases to
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Section 5.07, except that the name of the Surviving Corporation in such
Certificate of Incorporation will be changed to be "Unison Software, Inc.".
(b) The By-Laws of Sub, 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
(subject in all cases to Section 5.07).
SECTION 1.06. DIRECTORS. The directors of Sub immediately prior
to the Effective Time shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.07. OFFICERS. The officers of the 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 II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. EFFECT ON CAPITAL STOCK. As of the Effective Time,
by virtue of the Merger and without any action on the part of the holder of
any shares of common stock, par value $.001 per share, of the Company
("Company Common Stock") or any shares of capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of
capital stock of Sub shall remain issued and outstanding from and after
the Effective Time.
(b) CANCELATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each
share of Company Common Stock that is owned by the Company and each
share of Company Common Stock that is owned by Parent shall
automatically be canceled and retired and shall cease to exist, and no
shares of capital stock, par value $1.25 per share, of Parent ("Parent
Common Stock"), cash or other consideration shall be delivered in
exchange therefor.
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(c) CONVERSION OF COMPANY COMMON STOCK. (i) Except as otherwise
provided in Section 2.01(d) and subject to Sections 2.01(b) and
2.01(c)(iii), each issued and outstanding share of Company Common
Stock, shall be converted into the right to receive, at the election of
the holder thereof, one of the following (as adjusted pursuant to
Section 2.01(d), the "Merger Consideration"):
(A) for each such share of Company Common Stock with respect to
which an election to receive Parent Common Stock ("Stock
Consideration") has been effectively made, and not revoked or
lost, pursuant to Section 2.03 (a "Stock Election"), the right to
receive a number of shares of Parent Common Stock equal to a
fraction (the "Exchange Ratio"), the numerator of which is $15
and the denominator of which is the Parent Common Stock Price.
The "Parent Common Stock Price" means the average of the closing
sales prices of Parent Common Stock on the New York Stock
Exchange ("NYSE") Composite Transactions Tape on each of the ten
consecutive trading days immediately preceding the second trading
day prior to the date of the Effective Time; and
(B) for each such share of Company Common Stock with respect to
which an election to receive cash consideration (the "Cash
Consideration") has been effectively made, and not revoked or
lost, or deemed to have been made, pursuant to Section 2.03 (a
"Cash Election"), the right to receive cash from Parent, in an
amount equal to $15.
(ii) As of the Effective Time all shares of Company Common Stock
shall cease to be outstanding and shall be canceled and retired and
shall cease to exist, and each holder of a certificate that immediately
prior to the Effective Time represented any such shares of Company
Common Stock (a "Certificate") shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration
and cash in lieu of fractional shares of Parent Common Stock in
accordance with Section 2.02(e) upon the surrender of such Certificate
in accordance with Section 2.02, without interest.
(iii) Notwithstanding anything in this Agreement to the contrary,
shares of Company Common Stock that are issued and outstanding
immediately prior to the
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Effective Time and that are held by a holder who is entitled to
demand, and who properly demands, appraisal for such shares in
accordance with Section 262 of the DGCL ("Dissenting Shares") shall
not be converted into or be exchangeable for the right to receive the
Merger Consideration, unless such holder shall have failed to perfect
or shall have effectively withdrawn or lost his right to appraisal and
payment, as the case may be. If, after the Effective Time, such holder
shall have so failed to perfect or shall have effectively withdrawn or
lost such right, such shares shall thereupon be deemed to have been
converted into and to have become exchangeable for, at the Effective
Time, the right to receive the consideration described in Section
2.03(f), without any interest thereon. The Company shall give Parent
prompt notice of any Dissenting Shares (and shall also give Parent
prompt notice of any withdrawals of such demands for appraisal rights)
and Parent shall have the right to direct all negotiations and
proceedings with respect to any such demands. Neither the Company nor
the Surviving Corporation shall, except with the prior written consent
of Parent, voluntarily make any payment with respect to, or settle or
offer to settle, any such demand for appraisal rights.
(d) PRORATION.
(i) The aggregate amount of cash to be paid to holders of Company
Common Stock pursuant to this Article II (the "Cash Cap") shall not exceed
the product of (x) $15 and (y) the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time minus the sum of (A)
the number of shares of Company Common Stock that will be canceled pursuant
to Section 2.01(b) and (B) the number of Dissenting Shares and (z) 0.5.
(ii) In the event that the aggregate amount of cash requested in Cash
Elections received by (and deemed to have been received by) the Exchange
Agent in accordance with Section 2.03 (the "Requested Cash Amount") exceeds
the Cash Cap, each holder making a Cash Election (and each holder who is
deemed to have made a Cash Election pursuant to Section 2.03) shall
receive, with respect to each share of Company Common Stock for which a
Cash Election has been made or deemed made, (x) cash in an amount equal to
the product of (A) $15 and (B) the Cash Proration Factor (as defined below)
(such product, the "Prorated Cash Amount") and (y) a number of shares of
Parent Common Stock equal to a fraction, the numerator of which is equal to
$15
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minus the Prorated Cash Amount and the denominator of which is the
Parent Common Stock Price. The "Cash Proration Factor" shall be a
fraction, the numerator of which is the Cash Cap and the denominator of
which is the Requested Cash Amount.
SECTION 2.02. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. As
of the Effective Time, Parent shall deposit with the Exchange Agent (as
defined in Section 2.03(b)), for the benefit of the holders of shares of
Company Common Stock, for exchange in accordance with this Article II,
through the Exchange Agent, the cash and certificates representing the shares
of Parent Common Stock constituting the Merger Consideration (such cash and
shares of Parent Common Stock, together with any dividends or distributions
with respect thereto with a record date after the Effective Time and any cash
payments in lieu of any fractional shares of Parent Common Stock, being
hereinafter referred to as the "Exchange Fund") issuable pursuant to Section
2.01 in exchange for outstanding shares of Company Common Stock.
(b) EXCHANGE PROCEDURES. Following the Effective Time, each
holder of an outstanding Certificate or Certificates shall, upon surrender to
the Exchange Agent of such Certificate or Certificates and acceptance thereof
by the Exchange Agent, be entitled to a certificate or certificates
representing the number of full shares of Parent Common Stock, if any, and
the amount of cash, if any, into which the aggregate number of shares of
Company Common Stock previously represented by such Certificate or
Certificates surrendered shall have been converted pursuant to this
Agreement. The Exchange Agent shall accept such Certificates upon compliance
with such reasonable terms and conditions as the Exchange Agent may impose to
effect an orderly exchange thereof in accordance with normal exchange
practices. If any certificate for such Parent Common Stock is to be issued
in, or if cash is to be remitted to, a name other than that in which the
Certificate surrendered for exchange is registered, it shall be condition of
such exchange that the Certificate so surrendered shall be properly endorsed,
with signature guaranteed, or otherwise in proper form for transfer and that
the person (as defined in Section 8.03) requesting such exchange shall pay to
Parent or its transfer agent any transfer or other taxes (as defined in
Section 3.01(m)) required by reason of the issuance of Certificates for such
Parent Common Stock in a name other than that of the registered holder of the
Certificate surrendered, or establish to the satisfaction of Parent or its
transfer agent that such tax has been paid or is not applicable. Until
surrendered as contemplated by
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this Section 2.02(b), each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
Merger Consideration as contemplated by Section 2.01. No interest will be
paid or will accrue on any cash payable as Merger Consideration or in lieu of
any fractional shares of Parent Common Stock.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.02(e) until the holder of
record of such Certificate shall surrender such Certificate. Following
surrender of any such Certificate, there shall be paid to the record holder
of the certificate representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time
but prior to such surrender and a payment date subsequent to such surrender
payable with respect to such whole shares of Parent Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The
Merger Consideration issued upon the surrender for exchange of shares of
Company Common Stock in accordance with the terms hereof (including any cash
paid pursuant to Section 2.02(c) or 2.02(e)) shall be deemed to have been
issued (and paid) in full satisfaction of all rights pertaining to such
shares of Company Common Stock, SUBJECT, HOWEVER, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which may have been declared
or made by the Company on such shares of Company Common Stock in accordance
with the terms of this Agreement or prior to the date of this Agreement and
which remain unpaid at the Effective Time, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in this
Article II.
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(e) NO FRACTIONAL SHARES. (i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon
the surrender for exchange of Certificates, and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
stockholder of Parent.
(ii) Notwithstanding any other provision of this Agreement, each
holder of shares of Company Common Stock exchanged pursuant to the Merger who
would otherwise have been entitled to receive a fraction of a share of Parent
Common Stock (after taking into account all Certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an amount,
less the amount of any withholding taxes which may be required thereon, equal
to such fractional part of a share of Parent Common Stock multiplied by the
Parent Common Stock Price.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund that remains undistributed to the holders of the Certificates for six
months after the Effective Time shall be delivered to Parent, upon demand,
and any holders of the Certificates who have not theretofore complied with
this Article II shall thereafter look only to Parent for, and Parent shall
remain liable for, payment of their claim for Merger Consideration, any cash
in lieu of fractional shares of Parent Common Stock and any dividends or
distributions with respect to Parent Common Stock.
(g) NO LIABILITY. None of Parent, Sub, the Company or the Exchange
Agent shall be liable to any person in respect of any shares of Parent
Common Stock (or dividends or distributions with respect thereto) or
cash from the Exchange Fund in each case delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(h) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest
any cash included in the Exchange Fund, as directed by Parent, on a daily
basis. Any interest and other income resulting from such investments shall be
paid to Parent.
(i) LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond
in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the
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Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration and any cash in lieu of fractional
shares, and unpaid dividends and distributions on shares of Parent Common
Stock deliverable in respect thereof, pursuant to this Agreement.
(j) WITHHOLDING RIGHTS. Parent, Sub or the Exchange Agent shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock
such amounts as Parent, Sub or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are
so withheld and paid over to the appropriate taxing authority by Parent, Sub
or the Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Company Common Stock in respect of which such deduction and withholding was
made by Parent, Sub or the Exchange Agent.
SECTION 2.03. ELECTIONS. (a) Each person who, on or prior to the
Election Date referred to in (c) below, is a record holder of shares of
Company Common Stock shall be entitled, with respect to all or any portion of
such shares, to make a Stock Election or a Cash Election on or prior to such
Election Date, on the basis hereinafter set forth.
(b) Prior to the mailing of the Proxy Statement (as defined in
Section 3.01(d)), Sub shall appoint a bank or trust company reasonably
acceptable to the Company to act as exchange agent (the "Exchange Agent") for
the payment of the Merger Consideration.
(c) Parent shall prepare and mail a form of election, which form
shall be subject to the reasonable approval of the Company (the "Form of
Election"), with the Proxy Statement to the record holders of Company Common
Stock as of the record date for the Stockholders Meeting (as defined in
Section 5.01(b)), which Form of Election shall be used by each record holder
of shares of Company Common Stock who wishes to elect to receive the Stock
Consideration or the Cash Consideration for any or all shares of Company
Common Stock held by such holder. The Company will use its best efforts to
make the Form of Election and the Proxy Statement available to all persons
who become record holders of Company Common Stock during the period between
such record date and the Election Date referred to below. Any such holder's
election to receive the Stock Consideration shall have been properly made
only if the Exchange Agent
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shall have received at its designated office, by 5:00 p.m., New York City
time, on the business day next preceding the date of the Stockholders Meeting
(the "Election Date"), a Form of Election properly completed and signed and
accompanied by the Certificates for the shares of Company Common Stock to
which such Form of Election relates, duly endorsed in blank or otherwise in
form acceptable for transfer on the books of the Company (or by an
appropriate guarantee of delivery of such Certificates as set forth in such
Form of Election from a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc. or a commercial bank or trust company having an office or correspondent
in the United States, provided such Certificates are in fact delivered to the
Exchange Agent within three NYSE trading days after the date of execution of
such guarantee of delivery).
(d) Any Form of Election may be revoked, by the stockholder who
submitted such Form of Election to the Exchange Agent, only by written notice
received by the Exchange Agent (i) prior to 5:00 p.m., New York City time on
the Election Date or (ii) 60 days after the date the Proxy Statement is first
mailed to holders of Company Common Stock, if the Effective Time shall not
have occurred prior to such date. In addition, all Forms of Election shall
automatically be revoked if the Exchange Agent is notified in writing by
Parent and the Company that the Merger has been abandoned. If a Form of
Election is revoked, the Certificate or Certificates (or guarantees of
delivery, as appropriate) for the shares of Company Common Stock to which
such Form of Election relates shall be promptly returned to the stockholder
submitting the same to the Exchange Agent.
(e) The good faith determination of the Exchange Agent whether or
not elections to receive the Stock Consideration have been properly made or
revoked pursuant to this Section 2.03 with respect to shares of Company
Common Stock and when elections and revocations were received by it shall be
binding. If no Form of Election is received with respect to shares of
Company Common Stock, or if the Exchange Agent determines that any election
to receive the Stock Consideration was not properly made with respect to
shares of Company Common Stock, a Cash Election shall be deemed to have been
made with respect to such shares and such shares shall be exchanged in the
Merger for Cash Consideration pursuant to Section 2.01(c)(i)(B) (subject to
Section 2.01(d)). In addition, for purposes of calculating the Requested
Cash Amount, each holder of shares of Company Common Stock who has delivered
a demand for appraisal of such holder's shares shall be deemed to have made a
Cash
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Election with respect to such shares. The Exchange Agent shall also make all
computations as to the proration contemplated by Section 2.01(d) (which
computation shall be made as soon as practicable following the third NYSE
trading day after the Election Date), and absent manifest error any such
computation shall be conclusive and binding on the holders of shares of
Company Common Stock. The Exchange Agent may, with the mutual agreement of
Parent and the Company, make such rules as are consistent with this Section
2.03 for the implementation of the elections provided for herein as shall be
necessary or desirable fully to effect such elections.
(f) If, after the Effective Time, a holder of Dissenting Shares
shall have failed to perfect or shall have effectively withdrawn or lost his
right to appraisal and payment, such shares shall thereupon be deemed to have
been converted into and to have become exchangeable for, at the Effective
Time, the right to receive for each such share the amount in cash (and, if
applicable, the number of shares of Parent Common Stock (subject to Section
2.02(e))), without interest, that a holder of a share (a "Nondissenting
Share") of Company Common Stock who had made or had been deemed to have made
a Cash Election with respect to such Nondissenting Share pursuant to Section
2.03 prior to the Election Date would have received with respect to such
Nondissenting Share (it being understood that no adjustment shall be made to
the proration computation (if any) made following the Election Date to give
effect to the withdrawal of, or the failure to perfect, the demand for
appraisal with respect to such Dissenting Shares).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on the disclosure schedule delivered by the Company to
Parent prior to the execution of this Agreement (the "Company Disclosure
Schedule"), the Company represents and warrants to Parent and Sub as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. The Company and each
of its subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization and
has all requisite corporate power and authority to carry on its business as
now being conducted. The Company and each of its subsidiaries is
12
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure
to be so qualified or licensed or be in good standing individually or in
the aggregate would not have a material adverse effect (as defined in
Section 8.03) on the Company. The Company has delivered to Parent
complete and correct copies of its Certificate of Incorporation and
Bylaws and the certificates of incorporation and by-laws (or similar
organizational documents) of each of its subsidiaries, in each case as
amended to the date hereof.
(b) SUBSIDIARIES. The only subsidiaries of the Company are Unison
Software Texas, Inc., Unison Software U.K. Limited and Unison Software
International. 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"), and are duly authorized, validly
issued, fully paid and nonassessable. Except for the capital stock of
its subsidiaries, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any corporation,
partnership, joint venture, association or other entity.
(c) CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 40,000,000 shares of Company Common Stock and
5,000,000 shares of preferred stock, par value $.001 per share. At the
close of business on September 11, 1997, (i) 11,968,588 shares of
Company Common Stock were issued and outstanding, (ii) no shares of
Company Common Stock were held by the Company in its treasury and (iii)
1,967,824 shares of Company Common Stock were reserved for issuance
pursuant to outstanding Company Stock Plans (as defined in Section 5.06)
(including 71,829 shares reserved pursuant to the ESPP (as defined in
Section 3.01(l)). Except as set forth above, at the close of business
on September 11, 1997, no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or
outstanding. There are no outstanding stock appreciation rights or
rights (other than Stock
13
Options (as defined in Section 5.06)) to receive shares of Company Common
Stock on a deferred basis granted under the Company Stock Plans or
otherwise. All outstanding shares of capital stock of the Company are,
and all shares which may be issued pursuant to the Company Stock Plans
will be, when issued in accordance with the terms thereof, 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 Stock Options that may be granted as
permitted under clause (z) of Section 4.01(a)(ii), there are no
securities, options, warrants, calls, rights, contracts, commitments,
agreements, arrangements, obligations or undertakings of any kind to
which the Company or any of its subsidiaries is a party, or by which the
Company or any of its subsidiaries 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 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,
contract, commitment, agreement, arrangement, obligation or undertaking.
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.
(d) AUTHORITY; NONCONTRAVENTION. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and,
subject to receipt of the Stockholder Approval (as defined in Section
3.01(q)), to consummate the transactions contemplated by this Agreement.
The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated by this Agreement 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 contemplated
hereby, subject, in each case, to receipt of the Stockholder Approval.
This
14
Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. The execution and
delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancelation or
acceleration of any obligation or to loss of a material benefit under,
or result in the creation of any Lien in or upon any of the properties
or assets of the Company under, any provision of (i) the Certificate of
Incorporation or Bylaws of the Company or the certificates of
incorporation or by-laws (or similar organizational documents) of any of
its subsidiaries, (ii) any loan or credit agreement, bond, debenture,
note, mortgage, indenture, lease or other material contract, commitment,
agreement, arrangement, obligation, undertaking, instrument, permit,
concession, franchise or license applicable to the Company or any of its
subsidiaries or their respective properties or assets or (iii) subject
to the governmental filings and other matters referred to in the
following sentence, any (A) statute, law, ordinance, rule or regulation
or (B) judgment, order or decree, in each case, applicable to the
Company or any of its subsidiaries or their respective properties or
assets, other than, in the case of clauses (ii) and (iii), any such
conflicts, violations, defaults, rights or Liens that individually or in
the aggregate would not (x) have a material adverse effect on the
Company, (y) impair in any material respect the ability of the Company
to perform its obligations under this Agreement or (z) prevent or
materially delay the consummation of any of the transactions
contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Federal, state or local, domestic or foreign, government or any court,
administrative agency or commission or other governmental authority or
agency, domestic or foreign (a "Governmental Entity"), is required by or
with respect to the Company or any of its subsidiaries in connection
with the execution and delivery of this Agreement by the Company or the
consummation by the Company of the Merger or the other transactions
contemplated by this Agreement, except for (1) the filing of a premerger
notification and report form by the Company under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (2) the
filing
15
with the Securities and Exchange Commission (the "SEC") of a proxy
statement relating to the approval by the Company's stockholders of this
Agreement (as amended or supplemented from time to time, the "Proxy
Statement") and such reports under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as may be required in connection with
this Agreement and the transactions contemplated by this Agreement, (3)
the filing of the Certificate of Merger with the Delaware Secretary of
State and appropriate documents with the relevant authorities of other
states in which the Company is qualified to do business and (4) such
other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made
individually or in the aggregate would not have a material adverse
effect on the Company, impair in any material respect the ability of the
Company to perform its obligations under this Agreement or prevent or
materially delay the consummation of any of the transactions
contemplated by this Agreement.
(e) SEC DOCUMENTS. The Company has filed with the SEC, and has
heretofore made available to Parent true and complete copies of, all
reports, schedules, forms, statements and other documents required to be
filed with the SEC by the Company since July 1, 1995 (the "SEC
Documents"). As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Securities Act of
1933, as amended (the "Securities Act") or the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC Documents at the
time they were filed contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the
extent that information contained in any SEC Document has been revised
or superseded by a later-filed SEC Document, none of the SEC Documents
at the time they were filed contained any untrue statement of a material
fact or omitted 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. The financial
statements of the Company included in the SEC Documents complied as to
form in all material respects with applicable accounting requirements
and the published rules and
16
regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles ("GAAP")
(except, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly presented
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments
and the absence of footnotes). Except as set forth in the Filed SEC
Documents (as defined in Section 3.01(g)), the Company and its
subsidiaries have no liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that individually or in the
aggregate would have a material adverse effect on the Company.
(f) INFORMATION SUPPLIED. None of the information supplied or to
be supplied by the Company specifically for inclusion or incorporation
by reference in (i) the registration statement on Form S-4 to be filed
with the SEC by Parent in connection with the issuance of Parent Common
Stock in the Merger (the "Form S-4") will (except to the extent revised
or superseded by amendments or supplements contemplated hereby), at the
time the Form S-4 is filed with the SEC, at any time it is amended or
supplemented or at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are
made, not misleading or (ii) the Proxy Statement will (except to the
extent revised or superseded by amendments or supplements contemplated
hereby), at the date it 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
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 is made by the Company with
respect to statements made or incorporated by reference therein based on
information
17
supplied by Parent or Sub specifically for inclusion or incorporation by
reference in the Proxy Statement.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the SEC Documents filed by the Company and publicly available prior to
the date of this Agreement (the "Filed SEC Documents"), since the date
of the most recent financial statements included in the Filed SEC
Documents, the Company and its subsidiaries have conducted their
respective businesses only in the ordinary course consistent with past
practice, and there has not been (i) any material adverse change (as
defined in Section 8.03) with respect to the Company, (ii) any
declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of, any of
the Company's or any of its subsidiaries' capital stock except for
dividends by a wholly owned subsidiary of the Company to its parent, or
any purchase, redemption or other acquisition of any of the Company's
capital stock or any other securities of the Company or its subsidiaries
or any options, warrants, calls or rights to acquire any such shares or
other securities except for repurchases from employees following their
termination pursuant to the terms of their existing stock option or
purchase agreements, (iii) any split, combination or reclassification of
any of the Company's or any of its subsidiaries' 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 the Company's or
any of its subsidiaries' capital stock, (iv) (x) any granting by the
Company or any of its subsidiaries of any increase in compensation or
fringe benefits, except for normal increases of cash compensation in the
ordinary course of business consistent with past practice, or any
payment by the Company or any of its subsidiaries of any bonus, except
for bonuses made in the ordinary course of business consistent with past
practice, in each case to any officer, director or employee, (y) any
granting by the Company or any of its subsidiaries to any officer or
employee of any increase in severance or termination pay or (z) any
entry by the Company or any of its subsidiaries into (A) any currently
effective employment, severance, termination or indemnification
agreement, or consulting agreement (other than in the ordinary course of
business consistent with past practice), with any current or former
officer, director, employee or consultant or (B) any agreement with any
current or former officer, director, employee or consultant the benefits
of which are contingent, or
18
the terms of which are materially altered, upon the occurrence of a
transaction involving the Company of the nature contemplated by this
Agreement, (v) any damage, destruction or loss, whether or not covered
by insurance, that individually or in the aggregate would have a
material adverse effect on the Company, (vi) any change in accounting
methods, principles or practices by the Company, except insofar as may
have been required by a change in GAAP, (vii) any tax election that
individually or in the aggregate would have a material adverse effect on
the Company or any of its tax attributes or any settlement or compromise
of any material income tax liability, (viii) any revaluation by the
Company of any of its material assets or (ix)(A) any licensing or other
agreement with regard to the acquisition or disposition of any material
Intellectual Property (as defined in Section 3.01(p)) or rights thereto
other than licenses in the ordinary course of business consistent with
past practice or (B) any amendment or consent with respect to any
licensing agreement filed, or required to be filed, by the Company with
the SEC.
(h) LITIGATION. There is no suit, claim, action, investigation or
proceeding pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries that
individually or in the aggregate would have a material adverse effect on
the Company, nor is there any judgment, order, decree, injunction,
statute, law, ordinance, rule or regulation of any Governmental Entity
or arbitrator outstanding against, or, to the knowledge of the Company,
investigation by any Governmental Entity involving, the Company or any
of its subsidiaries that individually or in the aggregate would have a
material adverse effect on the Company.
(i) CONTRACTS. Except as disclosed in the Filed SEC Documents as
of the date hereof, there are no contracts or agreements that are of a
nature required to be filed as an exhibit to any Filed SEC Document
under the Exchange Act and the rules and regulations promulgated
thereunder. Neither the Company nor any of its subsidiaries is in
violation of or in default (with or without notice or lapse of time, or
both) under any lease, permit, concession, franchise, license or any
other contract, commitment, agreement, arrangement, obligation or
understanding to which it is a party or by which it or any of its
properties or assets is bound, except for violations or defaults that
individually or in the aggregate would not have a
19
material adverse effect on the Company. Neither the Company nor any of
its subsidiaries has entered into any contract, commitment, agreement,
arrangement or understanding with any affiliate (as defined in Section
8.03) of the Company that is currently in effect other than agreements
that are (i) disclosed in the Filed SEC Documents or (ii) not of a
nature required to be disclosed in the SEC Documents. Neither the
Company nor any of its subsidiaries is a party to or otherwise bound by
any agreement or covenant not to compete or by any agreement or covenant
restricting in any material respect the development, marketing or
distribution of the Company's products or services.
(j) COMPLIANCE WITH LAWS. The Company and its subsidiaries are in
compliance with all statutes, laws, ordinances, rules, regulations,
judgments, orders and decrees of any Governmental Entity applicable to
their businesses or operations, except for instances of possible
noncompliance that individually or in the aggregate would not have a
material adverse effect on the Company, impair in any material respect the
ability of the Company to perform its obligations under this Agreement or
prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement. The Company and its subsidiaries have in
effect all Federal, state and local, domestic and foreign, governmental
consents, approvals, orders, authorizations, certificates, filings,
notices, permits, franchises, licenses and rights (collectively "Permits")
necessary for them to own, lease or operate their properties and assets and
to carry on their businesses as now conducted and there has occurred no
violation of, or default under, any such Permit, except for the lack of
Permits and for violations of, or defaults under, Permits which lack,
violation or default individually or in the aggregate would not have a
material adverse effect on the Company. The Merger, in and of itself,
would not cause the revocation or cancelation of any such Permit, which
revocation or cancelation would have a material adverse effect on the
Company.
(k) ABSENCE OF CHANGES IN BENEFIT PLANS; EMPLOYMENT AGREEMENTS;
LABOR RELATIONS. Except as disclosed in the Filed SEC Documents, since
the date of the most recent financial statements included in the Filed
SEC Documents and until the date hereof, there has not been any
termination, adoption, amendment or agreement to amend in any material
respect by the Company or any of its subsidiaries of any collective
20
bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock appreciation, restricted stock, stock option, phantom stock,
performance, retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other material plan, arrangement or
understanding providing benefits to any current or former officer,
director or employee of the Company or any of its subsidiaries
(collectively, "Benefit Plans"), except that the Amended and Restated
1993 Director Stock Option Plan (the "Director Plan") may be amended to
permit the Stock Options outstanding thereunder to be assumed by Parent
in connection with the Merger. Except as disclosed in the Filed SEC
Documents, as of the date hereof there exist no currently binding (i)
employment, severance, termination or indemnification agreements or
material consulting agreements between the Company or any of its
subsidiaries and any current or former officer, director, employee or
consultant of the Company or any of its subsidiaries or (ii) agreements
between the Company or any of its subsidiaries and any current or former
officer, director, employee or consultant of the Company or any of its
subsidiaries 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. There are no
collective bargaining or other labor union agreements to which the
Company or any of its subsidiaries is a party or by which it is bound.
Since July 1, 1995, neither the Company nor any of its subsidiaries has
encountered any labor union organizing activity, nor had any actual or
threatened employee strikes, work stoppages, slowdowns or lockouts.
(l) ERISA COMPLIANCE. (i) Section 3.01(l)(i) of the Company
Disclosure Schedule contains a list of all "employee pension benefit
plans" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (sometimes referred to
herein as "Pension Plans"), "employee welfare benefit plans" (as defined
in Section 3(1) of ERISA) and all other Benefit Plans maintained or
contributed to by the Company or any of its subsidiaries or any person
or entity that, together with the Company or any of its subsidiaries, is
treated as a single employer under Section 414(b), (c), (m) or (o) of
the Code (a "Commonly Controlled Entity") for the benefit of any current
or former officers, directors or employees of the Company or any of its
subsidiaries. The Company
21
has made available to Parent true, complete and correct copies of (1)
each Benefit Plan (or, in the case of any unwritten Benefit Plans,
descriptions thereof), (2) the most recent annual report on Form 5500
required to be filed with the Internal Revenue Service (the "IRS") with
respect to each Benefit Plan (if any such report was required), (3) the
most recent summary plan description for each Benefit Plan for which
such summary plan description is required and (4) each trust agreement
and group annuity contract relating to any Benefit Plan. Each Benefit
Plan has been administered in accordance with its terms, except where
the failure to so administer would not, individually or in the
aggregate, have a material adverse effect on the Company. The Company
and its subsidiaries and all the Benefit Plans are all in compliance
with applicable provisions of ERISA and the Code, except for instances
of possible noncompliance that would not, individually or in the
aggregate, have a material adverse effect on the Company.
(ii) All Pension Plans have been the subject of determination
letters from the IRS to the effect that such Pension Plans are qualified
and exempt from United States Federal income taxes under Sections 401(a)
and 501(a), respectively, of the Code, and no such determination letter
has been revoked nor has any event occurred since the date of its most
recent determination letter or application therefor that would adversely
affect its qualification or materially increase its costs.
(iii) Neither the Company nor any Commonly Controlled Entity has
maintained, contributed to or been obligated to contribute to any
Benefit Plan that is subject to Title IV of ERISA.
(iv) With respect to any Benefit Plan that is an employee welfare
benefit plan, there are no understandings, agreements or undertakings,
written or oral, that would prevent any such plan (including any such
plan covering retirees or other former employees) from being amended or
terminated without material liability to the Company or any of its
subsidiaries on or at any time after the Effective Time.
(v) Section 3.01(l)(v) of the Company Disclosure Schedule lists
all Stock Options (excluding under the 1995 Employee Stock Purchase Plan
(the "ESPP")) outstanding as of the date hereof, indicating for each
such option (1) the number of shares issuable, (2) the
22
number of vested shares, (3) the date of expiration and (4) the exercise
price and separately sets forth the same information for all Stock
Options outstanding under the Director Plan.
(vi) No officer or employee of the Company or any of its
subsidiaries will be entitled to any additional compensation or benefits
or any acceleration of the time of payment or vesting of any
compensation or benefits under any Benefit Plan as a result of the
transactions contemplated by this Agreement or any benefits under any
Benefits Plan the value of which will be calculated on the basis of any
of the transactions contemplated by this Agreement.
(vii) The deduction of any amount payable pursuant to the terms of
the Benefit Plans or any other employment contracts or arrangements will
not be subject to disallowance under Section 162(m) of the Code.
(m) TAXES. (i) The Company and each of its subsidiaries has
timely filed all Federal, state and local, domestic and foreign, income
and franchise tax returns and reports and all other material tax returns
and reports required to be filed by each such entity. All such returns
and reports are complete and correct in all material respects. The
Company and each of its subsidiaries has timely paid all taxes due with
respect to the taxable periods covered by such returns and reports and
all other material taxes, and the most recent financial statements
contained in the 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.
(ii) No Federal, state or local, domestic or foreign, income or
franchise tax return or report or any other material tax return or
report 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 timely
paid. No material issues relating to taxes were raised by the relevant
taxing authority during any presently pending audit or examination, and
no material issues relating to taxes were raised by the relevant taxing
authority in any
23
completed audit or examination that can reasonably be expected to recur
in a later taxable period. No Federal, state or local, domestic or
foreign, tax return or report of the Company or any of its subsidiaries
has ever been under audit or examination by the IRS or other relevant
taxing authority. The relevant statute of limitations is closed with
respect to the United States Federal tax returns of the Company and its
subsidiaries for all years through 1991.
(iii) There is no currently effective 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.
(iv) No material Liens for taxes exist with respect to any assets
or properties of the Company or any of its subsidiaries, except for
statutory Liens for taxes not yet due.
(v) None of the Company or any of its subsidiaries is a party to
or 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).
(vi) None of the Company or any of its subsidiaries will 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 or local tax law, domestic or foreign, or for any other reason.
(vii) No amount or other entitlement that could be received
(whether in cash or property or the vesting of property) as a result of
any of the transactions contemplated by this Agreement by any officer,
director or employee of the Company or any of its affiliates who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any Benefit Plan or other
compensation arrangement
24
currently in effect would be characterized as an "excess parachute
payment" (as such terms are defined in Section 280G(b)(1) of the Code).
(viii) The Company and its subsidiaries have complied in all
material respects with all applicable statutes, laws, ordinances, rules
and regulations relating to the payment and withholding of taxes
(including withholding of taxes pursuant to Sections 1441, 1442, 3121
and 3402 of the Code or similar provisions under any foreign Federal
laws or any state or local laws, domestic and foreign) and have, within
the time and the manner prescribed by law, withheld from and paid over
to the proper governmental authorities all amounts required to be so
withheld and paid over under applicable laws.
(ix) As used in this Agreement, "taxes" shall include all Federal,
state and local, domestic and foreign, income, franchise, property,
sales, excise, employment, payroll, social security, value-added, ad
valorem, transfer, withholding and other taxes, including taxes based
on or measured by gross receipts, profits, sales, use or occupation,
tariffs, levies, impositions, assessments or governmental charges of any
nature whatsoever, including any interest penalties or additions with
respect thereto.
(o) TITLE TO PROPERTIES. (i) The Company and each of its
subsidiaries has good and marketable title to, or valid leasehold
interests in, all of its material properties and assets except for such
as are no longer used or useful in the conduct of its businesses or as
have been disposed of in the ordinary course of business and except for
defects in title, easements, restrictive covenants and similar
encumbrances that individually or in the aggregate would not have a
material adverse effect on the Company. All such material assets and
properties, other than assets and properties in which the Company or any
of its subsidiaries has a leasehold interest, are free and clear of all
Liens, except for Liens that individually or in the aggregate would not
have a material adverse effect on the Company.
(ii) Each of the Company and its subsidiaries has complied in all
material respects with the terms of all material leases to which it is a
party and under which it is in occupancy, and all such leases are in
full force and effect, except for such noncompliance or failure to be in
full force and effect as individually
25
or in the aggregate would not have a material adverse effect on the
Company. The Company and its subsidiaries enjoy peaceful and
undisturbed possession under all such material leases, except for
failures to do so that individually or in the aggregate would not have a
material adverse effect on the Company.
(p) INTELLECTUAL PROPERTY. (i) The Company has made available to
Parent true and correct copies of all license agreements relating to
Intellectual Property to which the Company or any of its subsidiaries is
a party.
(ii) Except to the extent that any of the following (or the
circumstances giving rise to such inaccuracy) would not have a material
adverse effect on the Company:
(A) the Company and each of its subsidiaries owns, or is licensed
or otherwise has the right to use (in each case, free and clear of any
Liens), all Intellectual Property used in or necessary for the conduct
of its business as currently conducted;
(B) there is no suit, claim, action, investigation or proceeding
pending or, to the knowledge of the Company, threatened that the Company
or any of its subsidiaries is infringing on or otherwise violating the
rights of any person with regard to any Intellectual Property owned by,
licensed to and/or otherwise used by the Company or its subsidiaries;
(C) to the 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, licensed to and/or
otherwise used by the Company or its subsidiaries;
(D) to the knowledge of the Company, 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
26
its subsidiaries, and no such claim has been asserted or threatened;
(E) the execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict
with, or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to 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 any 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 the creation of any Lien in or upon any
Intellectual Property or right, other than under certain contracts and
agreements, the material ones of which are set forth on Section 3.01(p)
of the Company Disclosure Schedule, that (1) provide for their
termination upon a change of control of the Company or (2) contain
provisions restricting their assignment;
(F) 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 the source code to create Derivative Works (as
hereinafter defined) of, 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
(G) 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 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
27
infringement. For purposes hereof, a Derivative Work shall also include
any compilation that incorporates such a preexisting work as well as
translation from one human language to another and from one type of code
to another.
(iii) 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
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.
(q) VOTING REQUIREMENTS. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock at the
Stockholders Meeting or any adjournment or postponement thereof to
approve and adopt this Agreement (the "Stockholder Approval") is the
only vote of the holders of any class or series of the Company's capital
stock necessary to approve and adopt this Agreement and approve the
transactions contemplated hereby.
(r) STATE TAKEOVER STATUTES. The Board of Directors of the
Company has approved the Merger, this Agreement, the Stockholder
Agreement, the acquisition by Parent in open market purchases of such
number of additional shares of Company Common Stock as shall constitute,
when taken together with the shares of Company Common Stock subject to
the Stockholder Agreement, 40% of the fully diluted number of shares of
Company Common Stock (the "Open Market Purchases") and
28
the other transactions contemplated by this Agreement and the
Stockholder Agreement, and such approval is sufficient to render
inapplicable to the Merger, this Agreement, the Stockholder Agreement,
the Open Market Purchases and the other transactions contemplated by
this Agreement and the Stockholder Agreement, the provisions of Section
203 of the DGCL to the extent, if any, such Section would otherwise be
applicable to the Merger, this Agreement, the Stockholder Agreement, the
Open Market Purchases and the other transactions contemplated by this
Agreement and the Stockholder Agreement.
(s) BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker, investment
banker, financial advisor or other person, other than Xxxxxxx, Sachs &
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 or the Stockholder Agreement based upon arrangements made
by or on behalf of the Company. The Company has delivered to Parent true
and complete copies of all agreements under which any such fees or
expenses are payable and all indemnification and other agreements
related to the engagement of the persons to whom such fees are payable.
The fees and expenses of any accountant, broker, financial advisor,
legal counsel or other person retained by the Company in connection with
this Agreement or the Stockholder Agreement or the transactions
contemplated hereby or thereby incurred or to be incurred by the Company
in connection with this Agreement and the Stockholder Agreement and the
transactions contemplated by this Agreement and the Stockholder
Agreement will not exceed the fees and expenses set forth in Section
3.01(s) of the Company Disclosure Schedule except under the
circumstances discussed by the parties prior to the date hereof.
(t) OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Xxxxxxx, Xxxxx & Co. to the effect that, as of the date
hereof, the consideration to be received in the Merger by the Company's
stockholders is fair to the Company's stockholders, a copy of which
opinion has been, or promptly upon receipt thereof will be, delivered to
Parent.
29
SECTION 3.02. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.
Parent and Sub represent and warrant to the Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Parent
and Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated
and has all requisite corporate power and authority to carry on its
business as now being conducted. Each of Parent and Sub is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure
to be so qualified or licensed or be in good standing individually or in
the aggregate would not have a material adverse effect on Parent.
Parent has delivered to the Company complete and correct copies of its
Certificate of Incorporation and By-Laws and the Certificate of
Incorporation and By-Laws of Sub, in each case as amended to the date
hereof.
(b) AUTHORITY; NONCONTRAVENTION. Parent and Sub have the
requisite corporate power and authority to execute and deliver this
Agreement (and, in the case of Parent, the Stockholder Agreement), and
to consummate the transactions contemplated by this Agreement (and, in
the case of Parent, those contemplated by the Stockholder Agreement).
The execution, delivery and performance of this Agreement by Parent and
Sub (and, in the case of Parent, the Stockholder Agreement) and the
consummation of the transactions contemplated by this Agreement (and, in
the case of Parent, those contemplated by the Stockholder Agreement)
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 or Sub are necessary to authorize this Agreement (and, in the
case of Parent, the Stockholder Agreement) or to consummate the
transactions contemplated hereby (or, in the case of Parent, those
contemplated by the Stockholder Agreement). This Agreement (and, in the
case of Parent, the Stockholder Agreement) has been duly executed and
delivered by Parent and Sub, as applicable, and constitutes a valid and
binding obligation of Parent and Sub, as applicable, enforceable against
Parent and Sub, as applicable, in accordance with its terms. The
execution and delivery of this Agreement and the Stockholder Agreement
do not, and the consummation of the transactions contemplated
30
by this Agreement and the Stockholder Agreement and compliance with the
provisions of this Agreement and the Stockholder Agreement will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right
of termination, cancelation or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any Lien upon
any of the properties or assets of Parent or any of its subsidiaries
under, any provision of (i) the Certificate of Incorporation or By-Laws
of Parent or Sub or similar organizational documents of any other
subsidiary of Parent, (ii) any loan or credit agreement, bond,
debenture, note, mortgage, indenture, lease or other material contract,
commitment, agreement, arrangement, obligation, undertaking, instrument,
permit, concession, franchise or license applicable to Parent, Sub or
any other subsidiary of Parent or their respective properties or assets
or (iii) subject to the governmental filings and other matters referred
to in the following sentence, any (A) statute, law, ordinance, rule or
regulation or (B) judgment, order or decree, in each case, applicable to
Parent, Sub or any other subsidiary of Parent or their respective
properties or assets, other than, in the case of clauses (ii) and (iii),
any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) have a material adverse
effect on Parent, (y) impair in any material respect the ability of each
of Parent and Sub to perform its obligations under this Agreement or (z)
prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to Parent, Sub or any
other subsidiary of Parent in connection with the execution and delivery
of this Agreement (and, in the case of Parent, the Stockholder
Agreement) by Parent and Sub or the consummation by Parent and Sub of
the Merger or the other transactions contemplated by this Agreement
(and, in the case of Parent, those contemplated by the Stockholder
Agreement), except for (1) the filing of a premerger notification and
report form under the HSR Act, (2) the filing with the SEC of the Form
S-4 and such reports under the Exchange Act as may be required in
connection with this Agreement or the Stockholder Agreement and the
transactions contemplated by this Agreement or the Stockholder
Agreement, (3) the filing of the Certificate of Merger with the Delaware
Secretary of State and appropriate
31
documents with the relevant authorities of other states in which the
Company is qualified to do business, (4) filings with the NYSE and (5)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings (i) as may be required under the "blue sky"
laws of various states or (ii) the failure of which to be obtained or
made individually or in the aggregate would not have a material adverse
effect on Parent, impair in any material respect the ability of Parent
or Sub to perform its obligations under this Agreement or prevent or
materially delay the consummation of any of the transactions
contemplated by this Agreement.
(c) PARENT SEC DOCUMENTS. Parent has filed with the SEC all
reports, schedules, forms, statements and other documents required to be
filed with the SEC by Parent since January 1, 1996 (the "Parent SEC
Documents"). As of their respective dates, the Parent SEC Documents
complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules
and regulations of the SEC promulgated thereunder applicable to such
Parent SEC Documents, and none of the Parent SEC Documents at the time
they were filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the
extent that information contained in any Parent SEC Document has been
revised or superseded by a later-filed Parent SEC Document, none of the
Parent SEC Documents at the time they were filed contained any untrue
statement of a material fact or omitted 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. The financial statements of Parent included in
the Parent SEC Documents complied as to form in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto)
and fairly presented the consolidated financial position of Parent and
its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended
32
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and the absence of footnotes).
(d) 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 Form S-4 will (except to the extent revised or
superseded by amendments or supplements contemplated hereby), at the
time the Form S-4 is filed with the SEC, at any time it is amended or
supplemented or at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are
made, not misleading or (ii) the Proxy Statement will (except to the
extent revised or superseded by amendments or supplements contemplated
hereby), at the date it is first mailed to the Company's stockholders or
at the time of 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
Form S-4 will comply as to form in all material respects with the
requirements of the Securities Act and the rules and regulations
thereunder, except that no representation 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 in the Form S-4.
(e) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Parent SEC Documents filed by Parent and publicly available prior to
the date of this Agreement ("Filed Parent SEC Documents"), since the
date of the most recent financial statements included in the Filed
Parent SEC Documents, Parent has conducted its business only in the
ordinary course consistent with past practice, and there has not been
(i) any material adverse change with respect to Parent, (ii) any
declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of, any of
Parent's capital stock (except for regular quarterly cash dividends) or
(iii) any split, combination or reclassification of any of Parent's
capital stock or any issuance or the authorization of any issuance of
33
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock.
(f) 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.
(g) PARENT COMMON STOCK. The shares of Parent Common Stock to be
issued in connection with the Merger, when issued in accordance with the
terms and provisions of this Agreement, will be duly authorized, validly
issued, fully paid and non-assessable and will not be subject to any
preemptive or other statutory right of stockholders and will be issued
in compliance with applicable United States Federal and state securities
laws.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. CONDUCT OF BUSINESS. (a) CONDUCT OF BUSINESS BY
THE COMPANY. During the period from the date of this Agreement to the
Effective Time, the Company shall and shall cause its subsidiaries to, carry
on their respective businesses in the ordinary course consistent with the
manner as heretofore conducted and use reasonable efforts to comply in all
material respects with all applicable laws, rules and regulations and, to the
extent consistent therewith, use commercially reasonable efforts to preserve
intact their current business organization, keep available the services of
their current officers and employees and preserve their relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with them. Without limiting the generality of the
foregoing, except as set forth in Section 4.01 of the Company Disclosure
Schedule, during the period from the date of this Agreement to the Effective
Time, the Company shall not, and shall not permit any of its subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect of,
any of its capital stock except for dividends by a wholly owned
subsidiary of the Company to its parent, (y) split, combine or
reclassify any of its capital stock or issue or authorize the issuance
of any other securities in
34
respect of, in lieu of or in substitution for shares of its capital
stock or (z) purchase, redeem or otherwise acquire any shares of its
capital stock or any other securities of the Company or its subsidiaries
or any options, warrants, calls or rights to acquire any such shares or
other securities except for repurchases from employees following their
termination pursuant to the terms of their existing stock option or
purchase agreements;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares
of its capital stock, any other voting securities or any securities
convertible into, or any options, warrants, calls or rights to acquire,
any such shares, voting securities or convertible securities (other than
(x) the issuance of shares of Company Common Stock upon the exercise of
Stock Options outstanding on the date of this Agreement and in
accordance with their present terms or as contemplated by Section 5.06),
(y) the issuance of shares of Company Common Stock to participants in
the ESPP in accordance with its current terms and (z) grants of Stock
Options to purchase up to 250,000 shares of Company Common Stock in the
ordinary course of business consistent with past practice and with an
exercise price per share at least equal to the market value of Company
Common Stock on the date of grant, and the issuance of shares of Company
Common Stock upon exercise of such Stock Options);
(iii) amend its certificate of incorporation or bylaws (or similar
organizational documents);
(iv) acquire or agree to acquire (x) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any
other manner, any business or any corporation, partnership, joint
venture, association or other entity or division thereof or (y) any
assets which, individually, is in excess of $50,000 or, in the
aggregate, are in excess of $250,000, except purchases of inventory,
components and raw materials in the ordinary course of business
consistent with past practice and except for capital expenditures (which
are covered by clause (vii) below);
(v) sell, lease, license, mortgage or otherwise encumber or subject
to any Lien or otherwise dispose of any of its properties or assets,
except sales of inventory or used equipment in the ordinary course of
business consistent with past practice;
35
(vi) (y) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities
or options, warrants, calls or other rights to acquire any debt
securities of the Company, guarantee any debt securities of another
person, enter into any "keep well" or other agreement to maintain any
financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, except
for short-term borrowings incurred in the ordinary course of business
consistent with past practice or (z) make any loans, advances or capital
contributions to, or investments in, any other person, other than (I) as
provided for under any current Benefit Plan in the ordinary course of
business consistent with past practice, (II) to the Company or any
direct or indirect wholly owned subsidiary of the Company and (III) for
advances to customers and employees, in each case in the ordinary course
of business consistent with past practice;
(vii) make or agree to make any new capital expenditure or
expenditures which, individually, is in excess of $50,000 or, in the
aggregate, are in excess of $250,000;
(viii) 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 claims, liabilities or
obligations reflected or reserved against in the most recent financial
statements (or the notes thereto) of the Company included in the Filed
SEC Documents or incurred since the date of such financial statements in
the ordinary course of business consistent with past practice, or waive
any material benefits of, or agree to modify in any materially adverse
respect, any confidentiality, standstill or similar agreements to which
the Company or any of its subsidiaries is a party;
(ix) except in the ordinary course of business, modify, amend or
terminate any material contract or agreement to which the Company or
such subsidiary is a party or waive, release or assign any material
rights or claims thereunder;
(x) enter into any contracts, agreements, or obligations relating to
(i) the distribution, sale,
36
license or marketing by third parties of the Company's products or
products licensed by the Company or (ii) material Intellectual Property
(other than in the ordinary course of business consistent with past
practice), it being understood that the Company may continue to obtain
licenses to Intellectual Property owned by third parties in the ordinary
course of business consistent with past practice, execute
confidentiality agreements in the ordinary course of business consistent
with past practice, and enter into agreements in the ordinary course of
business consistent with past practice permitting third parties access
to source code held in escrow, other than in the case of clauses (i) and
(ii) above, pursuant to any such contracts, agreements or obligations
existing as of the date hereof in accordance with their terms;
(xi) except as otherwise contemplated by this Agreement or as
required to comply with applicable law or agreements, plans or
arrangements existing on the date hereof, (A) terminate, adopt, enter
into or amend any collective bargaining agreement or Benefit Plan
(except that the Director Plan may be amended to permit the Stock
Options outstanding thereunder to be assumed by Parent in connection
with the Merger), (B) increase in any manner the compensation or fringe
benefits of, or pay any bonus to, any officer, director or employee
(except for normal increases of cash compensation or cash bonuses in the
ordinary course of business consistent with past practice), (C) pay any
material benefit not provided for under any Benefit Plan, (D) increase
in any manner the severance or termination pay of any officer or
employee, (E) enter into (I) any employment, severance, termination or
indemnification agreement, or consulting agreement (other than in the
ordinary course of business consistent with past practice), with any
current or former officer, director, employee or consultant or (II) any
agreements with any current or former officer, director, employee or
consultant 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, (F) grant any
awards under any Benefit Plan (including the grant of stock options,
stock appreciation rights, stock based or stock related awards,
performance units or restricted stock or the removal of existing
restrictions in any Benefit Plans or agreements or awards made
thereunder) other than as permitted under clause (z) of Section
4.01(a)(ii), (G) take any action to fund or in any other way secure the
payment of
37
compensation or benefits under any employee plan, contract,
agreement or arrangement or Benefit Plan or (H), except to the extent
required under any Benefit Plan on the date hereof, take any action to
accelerate the vesting of payment of any compensation or benefit under
any Benefit Plan;
(xii) except as otherwise contemplated by this Agreement, enter
into any contract or agreement that is of a nature required to be filed
as an exhibit to Form 10-K under the Exchange Act and the rules and
regulations promulgated thereunder, other than contracts for the sale or
licensing of the Company's products in the ordinary course of business;
(xiii) form any subsidiary of the Company;
(xiv) revalue any of its material assets or, except as required by
GAAP, make any change in accounting methods, principles or practices; or
(xv) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) CERTAIN TAX MATTERS. During the period from the date of this
Agreement to the Effective Time, (i) the Company and each of its subsidiaries
will timely file all Federal, state and local, domestic and foreign, income
and franchise tax returns and reports ("Post-Signing Returns") required to be
filed by each such entity (after taking into account any extensions); (ii)
the Company and each of its subsidiaries will timely pay all taxes due and
payable with respect to such Post-Signing Returns that are so filed; (iii)
the Company will accrue a reserve in its books and records and financial
statements in accordance with past practice for all taxes payable by the
Company or any of its subsidiaries for which no Post-Signing Return is due
prior to the Effective Time; (iv) the Company and each of its subsidiaries
will promptly notify Parent of any suit, claim action, investigation,
proceeding or audit (collectively, "Actions") pending against or with respect
to the Company or any of its subsidiaries in respect of any tax where there
is a reasonable possibility of a determination or decision which would have a
material adverse effect on the Company's or any of its subsidiaries' tax
liabilities or tax attributes and will not settle or compromise any such
Action without Parent's consent; and (v) none of the Company or any of its
subsidiaries will make any material tax election without Parent's consent,
which consent shall not be unreasonably withheld.
38
SECTION 4.02. NO SOLICITATION. (a) The Company shall not, nor
shall it authorize or permit any of its officers, directors or employees or
any investment banker, attorney or other advisor or representative retained
by it or any of its subsidiaries to, directly or indirectly, (i) solicit,
initiate or encourage the submission of any Takeover Proposal (as hereinafter
defined) or (ii) participate in any discussions or negotiations regarding, or
furnish to any person any non-public information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, any Takeover Proposal;
PROVIDED, HOWEVER, that if, at any time prior to receipt of the Stockholder
Approval 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 a Takeover Proposal that was
unsolicited or that did not otherwise result from a breach of this Section
4.02(a), and subject to compliance with Section 4.02(c), (x) furnish
information with respect to the Company to any person pursuant to a customary
and reasonable confidentiality agreement 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 officer, director or employee of the Company or any of its
subsidiaries or any investment banker, attorney or other advisor or
representative of the Company or any of its subsidiaries shall be deemed to
be a breach of this Section 4.02(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 a
substantial amount of assets of the Company or any of its subsidiaries (other
than the purchase of the Company's products in the ordinary course of
business) or more than a 20% interest in the total voting securities of the
Company or any of its subsidiaries or any tender offer or exchange offer that
if consummated would result in any person beneficially owning 20% or more of
the total voting securities of the Company or any of its subsidiaries or 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 the Stockholder Agreement.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify, or
39
propose publicly to withdraw or modify, in a manner adverse to Parent or Sub,
the approval or recommendation by such Board of Directors or any such
committee of this Agreement or the Merger, (ii) approve or recommend, or
publicly propose to approve or recommend, any Takeover Proposal or (iii)
cause the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (an "Acquisition Agreement")
with respect to any Takeover Proposal. Notwithstanding the foregoing, prior
to receipt of the Stockholder Approval, the Board of Directors of the
Company, to the extent it 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, may
withdraw or modify its approval or recommendation of this Agreement or the
Merger, approve or recommend any Superior Proposal (as hereinafter defined)
or cause the Company to terminate this Agreement in accordance with Section
7.01(b)(iv) (and concurrently with or after such termination, if it so
chooses, cause the Company to enter into an Acquisition Agreement with
respect to a Superior Proposal), in each case at any time after the third
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 the Superior Proposal and identifying the person making such
Superior Proposal (it being understood that any amendment to the price or
material terms of a Superior Proposal shall require an additional Notice of
Superior Proposal and an additional one business day period thereafter to the
extent permitted under applicable law). For purposes of this Agreement, a
"Superior Proposal" means any bona fide proposal made by a third party to
acquire, directly or indirectly, including pursuant to a tender offer,
exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the
voting power of the Company Common Stock or all or substantially all the
assets of the Company and otherwise on terms which the Board of Directors of
the Company determines in its good faith judgment (after consultation with a
financial advisor of nationally recognized reputation) to be more favorable
to the Company's stockholders than the Merger and for which financing, to the
extent required, is then committed or which, in the good faith judgment of
the Board of Directors of the Company, is capable of being obtained by such
third party.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02,
40
the Company promptly shall advise Parent orally and in writing of any request
for non-public information which the Company reasonably believes would lead
to a Takeover Proposal or of any Takeover Proposal, or any inquiry with
respect to or which the Company reasonably believes would lead to any
Takeover Proposal, the material terms and conditions of such request,
Takeover Proposal or inquiry, and the identity of the person making any such
request, Takeover Proposal or inquiry. The Company will keep Parent informed
in all material respects of the status and details (including material
amendments or proposed amendments) of any such request, Takeover Proposal or
inquiry.
(d) Nothing contained in this Section 4.02 or elsewhere in this
Agreement shall prohibit the Company from (i) taking and disclosing to its
stockholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act or (ii) making any disclosure to the Company's
stockholders if, in the good faith judgment of the majority of the members of
the Board of Directors of the Company, after consultation with independent
counsel, failure to so disclose would be inconsistent with applicable laws;
PROVIDED that none of the Company nor its Board of Directors nor any committee
thereof shall, except in accordance with the provisions of Section 4.02(b),
withdraw or modify, or publicly propose to withdraw or modify, its position with
respect to this Agreement or the Merger or approve or recommend, or propose to
approve or recommend, a Takeover Proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. PREPARATION OF THE FORM S-4 AND THE PROXY STATEMENT;
STOCKHOLDERS MEETING. (a) As soon as practicable following the date of this
Agreement, the Company and Parent shall prepare and the Company shall file with
the SEC the Proxy Statement and Parent shall prepare and file with the SEC the
Form S-4, in which the Proxy Statement will be included as a prospectus. Each
of the Company and Parent shall use all reasonable efforts to have the Form S-4
declared effective under the Securities Act as promptly as practicable after
such filing. The Company will use its reasonable efforts to cause the Proxy
Statement to be mailed to the Company's stockholders as promptly as practicable
after the Form S-4 is declared effective under the Securities Act. Parent shall
also take any action (other than qualifying to do business in any jurisdiction
in which it is not now so qualified) required to be taken under
41
any applicable state securities laws in connection with the issuance of
Parent Common Stock in the Merger and under the Company Stock Plans. Each of
Parent and the Company shall furnish all information concerning itself to the
other as may be reasonably requested in connection with any such action and
the preparation, filing and distribution of the Proxy Statement.
(b) The Company will, as soon as practicable following the date of
this Agreement, establish a record date (which will be as soon as practicable
following the date of this Agreement) for, duly call, give notice of, convene
and hold a meeting of its stockholders (the "Stockholders Meeting") for the
purpose of obtaining the Stockholder Approval. The Company will, through its
Board of Directors, recommend to its stockholders approval and adoption of
this Agreement, except to the extent that the Board of Directors of the
Company shall have withdrawn or modified its approval of this Agreement or
the Merger in accordance with Section 4.02(b) or terminated this Agreement in
accordance with Section 7.01(b)(iv). Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant to the first
sentence of this Section 5.01(b) shall not be affected by the commencement,
public proposal, public disclosure or communication to the Company of any
Takeover Proposal.
SECTION 5.02. LETTERS OF THE COMPANY'S ACCOUNTANTS. The Company
shall use its reasonable efforts to cause to be delivered to Parent two
"comfort" letters in customary form from Coopers & Xxxxxxx L.L.P., the
Company's independent public accountants, one dated a date within two
business days before the date on which the Form S-4 shall become effective
and one dated a date within two business days before the Closing Date, each
addressed to Parent.
SECTION 5.03. LETTERS OF PARENT'S ACCOUNTANTS. Parent shall use
its reasonable efforts to cause to be delivered to the Company two "comfort"
letters in customary form from Price Waterhouse LLP, Parent's independent
public accountants, one dated a date within two business days before the date
on which the Form S-4 shall become effective and one dated a date within two
business days before the Closing Date, each addressed to the Company, in the
form customarily given to underwriters in securities offerings of Parent in
the past.
SECTION 5.04. ACCESS TO INFORMATION; CONFIDENTIALITY. The Company
shall, and shall cause each of its subsidiaries to, afford to Parent, and to
Parent's officers, employees, accountants, counsel, financial advisors and
42
other representatives, reasonable access during normal business hours during
the period prior to the Effective Time or the termination of this Agreement
to all their respective properties, books, contracts, commitments, personnel
and records and, during such period, the Company shall (and shall cause each
of its subsidiaries to) make available to Parent (a) a copy of each report,
schedule, form, statement and other document filed or received by it during
such period pursuant to the requirements of United States Federal or state
securities laws or the United States Federal tax laws and (b) all other
information concerning its business, properties and personnel as Parent may
reasonably request (including Coopers & Xxxxxxx L.L.P.'s work papers).
Except as required by law, Parent will hold, and will cause its officers,
employees, accountants, counsel, financial advisors and other representatives
and controlled affiliates to hold, any and all information received from the
Company, directly or indirectly, in confidence in accordance with the IBM
Business Development Agreement for Exchange of Confidential Information dated
July 9, 1997, between Parent and the Company (as amended on August 18, 1997
and as it may be further amended from time to time, the "Confidentiality
Agreement").
SECTION 5.05. REASONABLE EFFORTS; NOTIFICATION. (a) Upon the terms
and subject to the conditions set forth in this Agreement, each of the parties
agrees to use all reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the Merger and the
other transactions contemplated by this Agreement, including using reasonable
efforts to accomplish the following: (i) the taking of all reasonable acts
necessary to cause the conditions precedent set forth in Article VI to be
satisfied, (ii) the obtaining of all necessary actions or nonactions, waivers,
consents, approvals, orders and authorizations from Governmental Entities and
the making of all necessary registrations, declarations and filings (including
registrations, declarations and filings with Governmental Entities, if any) and
the taking of all reasonable steps as may be necessary to avoid any suit, claim,
action, investigation or proceeding by any Governmental Entity, (iii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iv) the defending of any suits, claims, actions, investigations or proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby or thereby, including
seeking to have any stay or temporary
43
restraining order entered by any court or other Governmental Entity vacated
or reversed and (v) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully carry
out the purposes of, this Agreement. In connection with and without limiting
the foregoing, the Company and its Board of Directors shall, if any state
takeover statute or similar statute or regulation is or becomes applicable to
the Merger, this Agreement, the Stockholder Agreement, the Open Market
Purchases or any of the other transactions contemplated by this Agreement or
the Stockholder Agreement, use all reasonable efforts to ensure that the
Merger and the other transactions contemplated by this Agreement and the
Stockholder Agreement may be consummated as promptly as practicable on the
terms contemplated by this Agreement and the Stockholder Agreement and
otherwise to minimize the effect of such statute or regulation on the Merger,
this Agreement, the Stockholder Agreement, the Open Market Purchases and the
other transactions contemplated by this Agreement. Nothing in this Agreement
shall be deemed to require Parent or the Company to dispose of any
significant asset or collection of assets.
(b) The Company shall give prompt notice to Parent of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate such that the condition set forth in Section 6.02(a)
would not be satisfied; PROVIDED, HOWEVER, that no such notification shall
affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
(c) Parent shall give prompt notice to the Company of any
representation or warranty made by it or Sub contained in this Agreement
becoming untrue or inaccurate such that the condition set forth in Section
6.03(a) would not be satisfied; PROVIDED, HOWEVER, that no such notification
shall affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
SECTION 5.06. STOCK OPTIONS. (a) As soon as practicable following
the date of this Agreement, the Board of Directors of the Company (or, if
appropriate, any committee administering the Company Stock Plans, as defined
below) shall adopt such resolutions or take such other actions (if any) as
may be required to effect the following:
(i) adjust the terms of all outstanding options to purchase shares of
Company Common Stock (the "Stock Options") granted under any plan or
arrangement
44
providing for the grant of options to purchase shares of Company
Common Stock to current or former officers, directors, employees or
consultants of the Company (the "Company Stock Plans"), whether vested or
unvested, as necessary to provide that, at the Effective Time, each Stock
Option outstanding immediately prior to the Effective Time shall be amended
and converted into an option to acquire, on the same terms and conditions
as were applicable under the Stock Option, the number of shares of Parent
Common Stock (rounded down to the nearest whole share) determined by
multiplying the number of shares of Company Common Stock subject to such
Stock Option by the Exchange Ratio, at a price per share of Parent Common
Stock equal to (A) the aggregate exercise price for the shares of Company
Common Stock otherwise purchasable pursuant to such Stock Option divided by
(B) the number of shares of Parent Common Stock deemed purchasable pursuant
to such Stock Option (each, as so adjusted, an "Adjusted Option"); PROVIDED
that such exercise price shall be rounded up to the nearest whole cent; and
(ii) make such other changes to the Company Stock Plans as Parent and
the Company may agree are appropriate to give effect to the Merger.
(b) The adjustments provided herein with respect to any Stock
Options that are "incentive stock options" as defined in Section 422 of the
Code shall be and are intended to be effected in a manner which is consistent
with Section 424(a) of the Code.
(c) At the Effective Time, by virtue of the Merger and without the
need of any further corporate action, Parent shall assume the Company Stock
Plans, with the result that all obligations of the Company under the Company
Stock Plans, including with respect to Stock Options outstanding at the
Effective Time, shall be obligations of Parent following the Effective Time.
(d) No later than the Effective Time, Parent shall prepare and
file with the SEC a registration statement on Form S-8 (or another
appropriate form) registering a number of shares of Parent Common Stock equal
to the number of shares subject to the Adjusted Options. Such registration
statement shall be kept effective (and the current status of the prospectus
or prospectuses required thereby shall be maintained) at least for so long as
any Adjusted Options may remain outstanding.
45
(e) As soon as practicable after the Effective Time, Parent shall
deliver to the holders of Stock Options appropriate notices setting forth such
holders' rights pursuant to the respective Company Stock Plans and the
agreements evidencing the grants of such Stock Options and that such Stock
Options and agreements shall be assumed by Parent and shall continue in effect
on the same terms and conditions (subject to the adjustments required by this
Section 5.06 after giving effect to the Merger).
(f) A holder of an Adjusted Option may exercise such Adjusted
Option in whole or in part in accordance with its terms by delivering a
properly executed notice of exercise to Parent, together with the
consideration therefor and the United States Federal withholding tax
information, if any, required in accordance with the related Company Stock
Plan.
(g) Except as otherwise contemplated by this Section 5.06 and
except to the extent required under the respective terms of the Stock
Options, all restrictions or limitations on transfer and vesting with respect
to Stock Options awarded under the Company Stock Plans or any other plan,
program or arrangement of the Company, to the extent that such restrictions
or limitations shall not have already lapsed, shall remain in full force and
effect with respect to such options after giving effect to the Merger and the
assumption by Parent as set forth above.
(h) The Company shall terminate the ESPP by having its Board of
Directors amend the ESPP as necessary to provide that: (i) any shares of
Company Common Stock to be purchased under the ESPP shall be purchased under
the ESPP on a new "Exercise Date" (as such term is defined in the ESPP) set
by the Board of Directors, which Exercise Date shall be on the last trading
day immediately prior to the Effective Time, or such earlier time as the
Board shall specify, and (ii) immediately following such purchase of shares
of Company Common Stock, the ESPP shall terminate.
SECTION 5.07. INDEMNIFICATION. (a) From and after the consummation
of the Merger, Parent will, and will cause the Surviving Corporation to, fulfill
and honor in all respects the obligations of the Company pursuant to (i) each
indemnification agreement in effect at such time between the Company and each
person who is or was a director or officer of the Company at or prior to the
Effective Time and (ii) any indemnification provisions under the Company's
Certificate of Incorporation or By laws as each is in effect on the date hereof
(the persons to be indemnified pursuant to the agreements or provisions referred
to in clauses (i)
46
and (ii) of this Section 5.07(a), the "Indemnified Parties"). The Certificate
of Incorporation and By-laws of the Surviving Corporation shall contain the
provisions with respect to indemnification and exculpation from liability set
forth in the Company's Certificate of Incorporation and By-laws on the date
of this Agreement, which provisions shall not be amended, repealed or
otherwise modified for a period of six years after the Effective Time in any
manner that would adversely affect the rights thereunder of any Indemnified
Party; PROVIDED, HOWEVER, that Parent shall not be required to maintain the
Surviving Corporation's existence as a separate corporation. Until the
earlier to occur of (i) six years from the Effective Time and (ii) the
expiration of the current term of the Company's directors' and officers'
liability insurance policy (the "Company Policy"), Parent shall maintain in
effect the Company Policy (or, in lieu of maintaining such insurance, cause
coverage to be provided under any policy maintained for the benefit of Parent
or any of its subsidiaries or otherwise obtained by Parent, so long as the
terms thereof are no less advantageous to the intended beneficiaries thereof
than those of the Company Policy), covering those persons who are covered by
the Company Policy; 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 most recently paid by the Company for such insurance, and, PROVIDED,
FURTHER, that if the annual premiums of such insurance coverage exceed such
amount, Parent shall only be obligated to obtain the greatest coverage
available under such policy for a cost not exceeding such amount.
(b) This Section 5.07 shall survive the consummation of the Merger
at the Effective Time, is intended to be for the benefit of the Company,
Parent, the Surviving Corporation and each Indemnified Party and such
Indemnified Party's heirs and representatives, and shall be binding on all
successors and assigns of Parent and the Surviving Corporation.
SECTION 5.08. FEES AND EXPENSES. (a) All fees and expenses
incurred in connection with the Merger, this Agreement, the Stockholder
Agreement and the transactions contemplated by this Agreement and the
Stockholder Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated, except that expenses
incurred in connection with filing, printing and mailing the Proxy Statement
and the Form S-4, shall be shared equally by Parent and the Company.
(b) In the event that this Agreement is terminated by any party
hereto pursuant to
47
Section 7.01(b)(iv), the Company shall promptly, but in no event later than
two days after the date of such termination, pay Parent a fee equal to $6
million in immediately available funds (the "Termination Fee"). If, at the
time of any termination of this Agreement by any party hereto pursuant to
Section 7.01(b)(i), 7.01(b)(iii) or 7.01(c), a Takeover Proposal shall have
been publicly announced or otherwise publicly disclosed and not publicly
withdrawn and prior to the date 12 months following the date of the
termination of this Agreement the Company shall either (x) consummate a
Company Acquisition (as hereinafter defined) or (y) enter into a written
Acquisition Agreement providing for a Company Acquisition, then the Company
shall pay to Parent the Termination Fee in immediately available funds in the
case of clause (x) concurrently with the consummation of such Company
Acquisition or in the case of clause (y) concurrently with the consummation
of the transaction subject to such Acquisition Agreement (whether or not such
transaction is consummated prior to the date 12 months following the date of
the termination of this Agreement, but only in the event that such
transaction subject to such Acquisition Agreement is in fact consummated);
provided, however, that no Termination Fee shall be payable pursuant to this
sentence if this Agreement is terminated pursuant to Section 7.01(b)(iii) and
a material adverse change with respect to Parent had occurred and had not
been cured prior to the date of the Stockholders Meeting. The Company
acknowledges that the agreements contained in this Section 5.08(b) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Parent would not enter into this Agreement;
accordingly, if the Company fails promptly to pay the amounts due pursuant to
this Section 5.08(b), and, in order to obtain such payment, Parent commences
a suit which results in a judgment against the Company for the amounts set
forth in this Section 5.08(b), the Company shall pay to Parent its reasonable
costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amounts set forth in this
Section 5.08(b) at the prime rate of The Chase Manhattan Bank in effect on
the date such payment was required to be made. "Company Acquisition" shall
mean any of the following transactions or series of related transactions:
(i) a merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company
pursuant to which the stockholders of the Company immediately preceding such
transaction or series of related transactions hold less than 60% of the
equity interests in the surviving or resulting entity of such transaction or
transactions (other than the transactions contemplated by this Agreement);
(ii) a sale
48
by the Company of assets (excluding inventory and used equipment sold in the
ordinary course of business) representing in excess of 40% of the fair market
value of the Company's business immediately prior to such sale; or (iii) the
acquisition by any person or group (including by way of a tender offer or an
exchange offer or issuance by the Company), directly or indirectly, of
beneficial ownership or a right to acquire beneficial ownership of 40% or
more of the then outstanding shares of capital stock of the Company.
SECTION 5.09. PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one
hand, and the Company, on the other hand, will, to the extent reasonably
practicable, consult with each other before issuing, and give each other the
opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
the Stockholder Agreement or the Noncompetition Agreements, including the
Merger, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
law, court process or by obligations pursuant to any listing agreement with
any national securities exchange or national securities quotation system.
The parties agree that the initial press release to be issued with respect to
the transactions contemplated by this Agreement shall be in the form
heretofore agreed to by the parties.
SECTION 5.10. AFFILIATES. Prior to the Closing Date, the Company
shall deliver to Parent a letter identifying all persons who are, in the
Company's reasonable judgment, at the time this Agreement is submitted for
approval and adoption to the stockholders of the Company, "affiliates" of the
Company for purposes of Rule 145 under the Securities Act. The Company shall
use its reasonable efforts to cause each such person to deliver to Parent on
or prior to the Closing Date a written agreement substantially in the form
attached as Exhibit A hereto.
SECTION 5.11. STOCK EXCHANGE LISTING. To the extent Parent does
not issue treasury shares in the Merger or under the Company Stock Plans
which are already listed, Parent shall use its reasonable efforts to cause
the shares of Parent Common Stock to be issued in the Merger and under the
Company Stock Plans to be approved for listing on the NYSE, subject to
official notice of issuance, prior to the Closing Date.
SECTION 5.12. STOCKHOLDER AGREEMENT LEGEND. The Company will
inscribe upon any Certificate representing
49
Subject Shares tendered by a Stockholder (as such terms are defined in the
Stockholder Agreement) for such purpose the following legend: "THE SHARES OF
COMMON STOCK, PAR VALUE $.001 PER SHARE, OF UNISON SOFTWARE, INC. REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDER AGREEMENT DATED AS OF
SEPTEMBER 12, 1997, AND ARE SUBJECT TO TERMS THEREOF. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF UNISON
SOFTWARE, INC.".
SECTION 5.13. TAX TREATMENT. (a) The parties intend the Merger to
qualify as a reorganization under Section 368(a) of the Code. Each party and
its affiliates shall use reasonable efforts to cause the Merger to so qualify
and to obtain the opinions of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, counsel to
the Company, and Cravath, Swaine & Xxxxx, counsel to Parent, in each case to
the effect that the Merger will be treated for United States Federal income
tax purposes as a "reorganization" within the meaning of Section 368(a) of
the Code and that Parent, Sub and Company will each be a party to that
reorganization within the meaning of Section 368(b) of the Code; it being
understood that in rendering such opinions, such tax counsel shall be
entitled to rely upon representations provided by the parties hereto and
certain Company stockholders contained in certain customary representation
letters as reasonably requested by such counsel. Each of Parent, the Company
and their respective affiliates shall not take any action and shall not fail
to take any action or suffer to exist any condition which action or failure
to act or condition would prevent, or would be reasonably likely to prevent,
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code, and each shall use reasonable efforts to obtain the
opinion of counsel referred to in Sections 6.02(e) and 6.03(c).
(b) In the event of the issuance of final or temporary Treasury
regulations relating to the continuity of shareholder interest (proposed
regulations on the topic were issued in the Federal Register on December 23,
1996 (Reg-252231-96); these regulations would, among other things, add a new
section 1.368-1(e) to existing regulations), the parties agree to use their
reasonable best efforts to take advantage of, and comply with, any provisions
therein (such as an election and/or reporting requirements) to the extent
necessary to cause such regulations to apply to the Merger.
50
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been approved
and adopted by the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock.
(b) NYSE LISTING. The shares of Parent Company Stock issuable to the
Company's stockholders in the Merger and under the Company Stock Plans
shall have been approved for listing on the NYSE, subject to official
notice of issuance.
(c) HSR ACT. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
(d) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or statute, rule or regulation (collectively,
"Restraints") preventing the consummation of the Merger shall be in effect.
(e) FORM S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(f) TAX OPINIONS. The opinions of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
counsel to the Company, and Cravath, Swaine & Xxxxx, counsel to Parent,
shall have been delivered to the Company and Parent, respectively, in form
and substance reasonably satisfactory to the Company and Parent,
respectively, stating that the Merger will be treated for United States
Federal income tax purposes as a "reorganization" within the meaning of
Section 368(a) of the Code and that Parent, Sub and the Company will each
be a party to that reorganization within the meaning of Section 368(b) of
the Code. In rendering such opinions, such counsel shall be entitled to
rely upon customary representations reasonably
51
requested by such counsel and made by Parent, Sub, Company and certain
Company stockholders. The opinions shall be dated the date that is
two business days prior to the date the Proxy Statement is first mailed
to stockholders of the Company and shall not have been withdrawn or
modified in any material respect.
SECTION 6.02. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date as
though made on the Closing Date except (i) to the extent such
representations and warranties expressly relate to an earlier date (in
which case such representations and warranties shall be true and correct on
and as of such specific date) and (ii) for breaches of representations and
warranties as to matters that, individually or in the aggregate, would not
have a material adverse effect on the Company. Solely for the purpose of
the application of clause (ii) above, all representations and warranties of
the Company set forth in this Agreement that are qualified as to
materiality (including without limitation by the word "material" in the
phrases "material adverse change" or "material adverse effect") shall be
deemed to be not so qualified. Parent shall have received a certificate
signed on behalf of the Company by the chief executive officer and the
chief financial officer of the Company to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall
have performed in all material respects all material obligations required
to be performed by it under this Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed on behalf of the
Company by the chief executive officer and the chief financial officer of
the Company to such effect.
(c) LETTERS FROM COMPANY AFFILIATES. Parent shall have received from
each person named in the letter referred to in Section 5.10(a) an executed
copy of an agreement substantially in the form of Exhibit A hereto.
52
(d) NO GOVERNMENTAL LITIGATION. There shall not be pending any suit,
action, investigation or proceeding by any Governmental Entity,
(i) challenging the acquisition by Parent or Sub of any shares of Company
Common Stock, seeking to restrain or prohibit the consummation of the
Merger or seeking to place material limitations on the ownership of shares
of Company Common Stock (or shares of common stock of the Surviving
Corporation) by Parent or Sub, (ii) seeking to prohibit or materially limit
the ownership or operation by the Company, Parent or any of Parent's
subsidiaries of any material portion of any business or of any assets of
the Company, Parent or any of Parent's subsidiaries, or to compel the
Company, Parent or any of Parent's subsidiaries to dispose of or hold
separate any material portion of any business or of any assets of the
Company, Parent or any of Parent's subsidiaries, as a result of the Merger
or (iii) seeking to prohibit Parent or any of its subsidiaries from
effectively controlling in any material respect the business or operations
of the Company.
SECTION 6.03. CONDITIONS TO OBLIGATION OF THE COMPANY. The
obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Sub contained in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date as
though made on the Closing Date except (i) to the extent such
representations and warranties expressly relate to an earlier date (in
which case such representations and warranties shall be true and correct on
and as of such specific date) and (ii) for breaches of representations and
warranties as to matters that, individually or in the aggregate, would not
have a material adverse effect on Parent and Sub. Solely for the purpose
of the application of clause (ii) above, all representations and warranties
of Parent and Sub set forth in this Agreement that are qualified as to
materiality (including without limitation by the word "material" in the
phrases "material adverse change" or "material adverse effect") shall be
deemed to be not so qualified. The Company shall have received a
certificate signed on behalf of Parent by an authorized signatory of Parent
to such effect.
53
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND SUB. Parent and Sub
shall have performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the Closing Date,
and the Company shall have received a certificate signed on behalf of
Parent by an authorized signatory of Parent to such effect.
SECTION 6.04. FRUSTRATION OF CLOSING CONDITIONS. None of the
Company, Parent or Sub may rely on the failure of any condition set forth in
Section 6.01, 6.02 or 6.03, as the case may be, to be satisfied if such failure
was caused by such party's failure to use reasonable efforts to consummate the
Merger and the other transactions contemplated by this Agreement, as required by
and subject to Section 5.05.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. TERMINATION. This Agreement may be terminated, and the
Merger contemplated hereby may be abandoned, at any time prior to the Effective
Time, whether before or after the Stockholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated by March 15,
1998 for any reason; PROVIDED HOWEVER, that the right to terminate
this Agreement under this Section 7.01(b)(i) shall not be available to
any party whose action or failure to act has been a principal cause of
or resulted in the failure of the Merger to occur on or before such
date and such action or failure to act constitutes a breach of this
Agreement;
(ii) if any Restraint having any of the effects set forth in
Section 6.01(d) shall be in effect and shall have become final and
nonappealable;
(iii) if the Stockholder Approval shall not have been obtained at
the Stockholders Meeting duly convened therefor or at any adjournment
or postponement thereof or by written consent; or
54
(iv) if the Board of Directors of the Company has made the
determination that a proposal constitutes a Superior Proposal;
PROVIDED, HOWEVER, that the Company may not terminate this Agreement
pursuant to this Section 7.01(b)(iv) unless and until the Company has
complied with the notice and waiting period procedures set forth in
Section 4.02(b) and no later than two days after such determination
the Company pays to Parent the amounts specified under Section 5.08(b)
pursuant to the terms of such Section 5.08(b).
(c) by Parent if (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse to
Parent its approval or recommendation of the Merger or this Agreement or
failed to reconfirm its recommendation within 15 business days after a
written request to do so, or approved or recommended any Takeover Proposal
or (ii) the Board of Directors of the Company shall have resolved to take
any of the foregoing actions;
(d) by the Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement, or
if any such representation or warranty of Parent shall have become
inaccurate, in either case such that the conditions set forth in
Section 6.03(a) or Section 6.03(b), as the case may be, would not be
satisfied as of the time of such breach or as of the time such
representation or warranty shall have become inaccurate; PROVIDED, that if
such breach by Parent or inaccuracy in Parent's representations and
warranties is curable by Parent through the exercise of its reasonable
efforts, then (i) the Company may not terminate this Agreement under this
Section 7.01(d) with respect to a particular breach or inaccuracy prior to
or during the 45-day period commencing upon delivery by the Company of
written notice to Parent describing such breach or inaccuracy, provided
Parent continues to exercise reasonable efforts to cure such breach or
inaccuracy and (ii) the Company may not, in any event, terminate this
Agreement under this Section 7.01(d) if such inaccuracy or breach shall
have been cured in all material respects during such 45-day period; and,
provided further that the Company may not terminate this Agreement pursuant
to this Section 7.01(d) if it shall have wilfully and materially breached
this Agreement; or
55
(e) by Parent, upon a breach of any representation, warranty, covenant
or agreement on the part of the Company set forth in this Agreement, or if
any such representation or warranty of the Company shall have become
inaccurate, in either case such that the conditions set forth in
Section 6.02(a) or Section 6.02(b), as the case may be, would not be
satisfied as of the time of such breach by the Company or as of the time
such representation or warranty shall have become inaccurate; PROVIDED,
that if such breach by the Company or inaccuracy in the Company's
representations and warranties is curable by the Company through the
exercise of its reasonable efforts, then (i) Parent may not terminate this
Agreement under this Section 7.01(e) with respect to a particular breach or
inaccuracy prior to or during the 45-day period commencing upon delivery by
Parent of written notice to the Company describing such breach or
inaccuracy, provided the Company continues to exercise reasonable efforts
to cure such breach or inaccuracy and (ii) Parent may not, in any event,
terminate this Agreement under this Section 7.01(e) if such inaccuracy or
breach shall have been cured in all material respects during such 45-day
period; and PROVIDED FURTHER that Parent may not terminate this Agreement
pursuant to this Section 7.01(e) if it shall have wilfully and materially
breached this Agreement.
SECTION 7.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
provisions of Section 3.01(s), the last sentence of Section 5.04, Section 5.08,
Section 5.09, this Section 7.02 and Article VIII and except to the extent that
such termination results from the wilful and material breach by a party of any
of its representations, warranties, covenants or agreements set forth in this
Agreement.
SECTION 7.03. AMENDMENT. This Agreement may be amended by the
parties hereto at any time before or after any required approval of matters
presented in connection with the Merger by the stockholders of the Company;
PROVIDED, HOWEVER, that after any such approval, there shall be made no
amendment that by law requires further approval by such stockholders without the
further approval of such stockholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.
56
SECTION 7.04. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto or (c) subject to the proviso of Section 7.03, waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.02. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing proof of delivery)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
if to Parent or Sub, to:
International Business
Machines Corporation
Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxx X. Xxxxxx
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
57
if to the Company, to:
Unison Software, Inc.
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Attention: Xxx Xxx
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx, Esq.
Xxxxxxx Xxxxx, Esq.
Xxxxx Xxxxxx, Esq.
SECTION 8.03. DEFINITIONS. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;
(b) as it relates to the Company, "knowledge" means, with respect to
any matter in question, that any of the chief executive officer, chief
financial officer or any other executive officer of the Company has actual
knowledge of such matter.
(c) "made available" shall mean that the information referred to has
been made available if requested by the party to whom information is to be
made available.
(d) "material adverse change" or "material adverse effect" means, when
used in connection with the Company or Parent, as the case may be, any
state of facts, change, effect or occurrence that is or is reasonably
likely to be materially adverse to the business, financial condition or
results of operations of such party and its subsidiaries, taken as a whole,
as the case may be; PROVIDED, HOWEVER, that any state of facts, change,
effect or occurrence (i) relating to the economy in general or such
entity's industry in general and not specifically relating to such entity
shall not be taken into account in determining whether there has
58
been or would be a "material adverse change" or a "material adverse
effect" on or with respect to such entity and (ii) (x) directly
attributable to the announcement or pendency of this Agreement or the
pendency of the Merger, or (y) resulting from the failure to obtain a
consent or waiver with respect to an agreement to which the Company is
a party that is listed on Section 3.01(d) of the Company Disclosure
Schedule as requiring a consent or waiver in connection with this
Agreement and the consummation of the Merger shall not be taken into
account in determining whether there has been or would be a "material
adverse change" or a "material adverse effect" on or with respect to
the Company;
(e) "person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity;
and
(f) a "subsidiary" of any person means another person, an amount of
the voting securities or 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.
SECTION 8.04. INTERPRETATION. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
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".
SECTION 8.05. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 8.06. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement, the Stockholder Agreement, the Noncompetition Agreements and the
Confidentiality Agreement (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
59
of this Agreement, the Stockholder Agreement, the Noncompetition Agreements
and the Confidentiality Agreement and (b) except for the provisions of
Article II, Section 5.06 and Section 5.07, are not intended to confer upon
any person other than the parties hereto any rights or remedies.
SECTION 8.07. 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 laws thereof.
SECTION 8.08. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Sub of any of its obligations
hereunder. 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 8.09. 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 partes 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 any Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any court of the United States located in the State of
Delaware or of any Delaware state court in the event any dispute arises out of
this Agreement or the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or the transactions contemplated by
this Agreement in any court other than a court of the United States located in
the State of Delaware or a Delaware state court.
60
SECTION 8.10. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
INTERNATIONAL BUSINESS MACHINES CORPORATION,
by /s/ Xxx X. Xxxxxx
---------------------------------------
Name: Xxx X. Xxxxxx
Title: Vice President
Corporate Development &
Real Estate
NEW ORCHARD CORP.,
by /s/ Xxx X. Xxxxxx
---------------------------------------
Name: Xxx X. Xxxxxx
Title: President
UNISON SOFTWARE, INC.,
by /s/ Xxxxxx X. Xxx
---------------------------------------
Name: Xxxxxx X. Xxx
Title: President & Chief
Executive Officer
EXHIBIT A
TO THE MERGER AGREEMENT
FORM OF AFFILIATE LETTER
Dear Sirs:
The undersigned, a holder of shares of common stock, par value
$.001 per share ("Company Common Stock"), of Unison Software, Inc., a
Delaware corporation (the "Company"), acknowledges that the undersigned may
be deemed an "affiliate" of the Company within the meaning of Rule 145 ("Rule
145") promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), by the Securities and Exchange Commission (the "SEC"),
although nothing contained herein should be construed as an admission of such
fact. Pursuant to the terms of the Agreement and Plan of Merger dated as of
September 12, 1997, among International Business Machines Corporation, a New
York corporation ("Parent"), New Orchard Corp., a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), and the Company, the Company will
be merged with and into Sub (the "Merger"), and in connection with the
Merger, the undersigned is entitled to receive common stock, par value $1.25
per share ("Parent Common Stock"), of Parent.
If in fact the undersigned were an affiliate under the Securities
Act, the undersigned's ability to sell, assign or transfer the Parent Common
Stock received by the undersigned in exchange for any shares of Company
Common Stock in connection with the Merger may be restricted unless such
transaction is registered under the Securities Act or an exemption from such
registration is available. The undersigned understands that such exemptions
are limited and the undersigned has obtained or will obtain advice of counsel
as to the nature and conditions of such exemptions, including information
with respect to the applicability to the sale of such securities of Rules 144
and 145(d) promulgated under the Securities Act. The undersigned understands
that Parent will not be required to maintain the effectiveness of any
registration statement under the Securities Act for the purposes of resale of
Parent Common Stock by the undersigned.
The undersigned hereby represents to and covenants with Parent that
the undersigned will not sell, assign or transfer any of the Parent Common Stock
received by the undersigned in exchange for shares of Company Common Stock in
connection with the Merger except (i) pursuant to an effective registration
statement under the Securities Act, (ii) in conformity with the volume and other
limitations of Rule 145 or (iii) in a transaction which, in the opinion of the
general counsel of Parent or other counsel reasonably satisfactory to Parent (it
being expressly agreed that
2
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx shall be considered reasonably satisfactory
for all purposes under this Agreement) or as described in a "no-action" or
interpretive letter from the Staff of the SEC specifically issued with
respect to a transaction to be engaged in by the undersigned, is not required
to be registered under the Securities Act.
In the event of a sale or other disposition by the undersigned of
Parent Common Stock pursuant to Rule 145, the undersigned will supply Parent
with evidence of compliance with such Rule, in the form of a letter in the
form of Annex I hereto (or other reasonably satisfactory documentation
evidencing compliance with Rule 145) and the opinion of counsel or no-action
letter referred to above. The undersigned understands that Parent may
instruct its transfer agent to withhold the transfer of any Parent Common
Stock disposed of by the undersigned, but that (provided such transfer is not
prohibited by any other provision of this letter agreement) upon receipt of
such evidence of compliance, Parent shall cause the transfer agent to
effectuate the transfer of the Parent Common Stock sold as indicated in such
letter.
Parent covenants that it will take all such actions as may be
reasonably available to it to permit the sale or other disposition of Parent
Common Stock by the undersigned under Rule 145 in accordance with the terms
thereof.
The undersigned acknowledges and agrees that the legends set forth
below will be placed on certificates representing Parent Common Stock
received by the undersigned in connection with the Merger or held by a
transferee thereof, which legends will be removed by delivery of substitute
certificates upon receipt of an opinion in form and substance reasonably
satisfactory to Parent from counsel reasonably satisfactory to Parent to the
effect that such legends are no longer required for purposes of the
Securities Act.
There will be placed on the certificates for Parent Common Stock
issued to the undersigned, or any substitutions therefor, a legend stating in
substance:
"The shares represented by this certificate were issued pursuant to
transaction to which Rule 145 promulgated under the Securities Act of 1933
applies. The shares have not been acquired by the holder with a view to,
or for resale in connection with, any distribution thereof within the
meaning of the
3
Securities Act of 1933. The shares may not be sold, pledged or otherwise
transferred except in accordance with an exemption from the registration
requirements of the Securities Act of 1933."
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of Parent
Common Stock and (ii) the receipt by Parent of this letter is an inducement to
Parent's obligations to consummate the Merger.
Very truly yours,
Dated:
ANNEX I
TO EXHIBIT A
[Name] [Date]
On , the undersigned sold the securities of
International Business Machines Corporation ("Parent") described below in the
space provided for that purpose (the "Securities"). The Securities were
received by the undersigned in connection with the merger of New Orchard
Corp., a Delaware corporation, with and into Unison Software, Inc.
Based upon the most recent report or statement filed by Parent with
the Securities and Exchange Commission, the Securities sold by the
undersigned were within the prescribed limitations set forth in paragraph (e)
of Rule 144 promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
The undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Securities
Act or in transactions directly with a "market maker" as that term is defined
in Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents that the undersigned has not solicited or
arranged for the solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer or sale of
the Securities to any person other than to the broker who executed the order
in respect of such sale.
Very truly yours,
[Space to be provided for description of the Securities.]
