STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of August 6, 1999 (this "Agreement"),
between Data General Corporation, a Delaware corporation ("Dragon"), and XXX
Xxxxxxxxxxx, a Massachusetts corporation ("Emerald").
WHEREAS, Dragon, Emerald and Emerald Merger Corporation, a Delaware
corporation and a wholly-owned subsidiary of Emerald ("Sub"), propose to enter
into an Agreement and Plan of Merger, of even date herewith (the "Merger
Agreement"), which provides that, among other things, upon the terms and subject
to the conditions thereof, Sub will be merged with and into Dragon, with Dragon
continuing as the surviving corporation; and
WHEREAS, as a condition to the willingness of Emerald to enter into the
Merger Agreement, Emerald has required that Dragon agree, and in order to induce
Emerald to enter into the Merger Agreement Dragon has agreed, to grant Emerald
an option to purchase certain shares of common stock, par value $.01 per share,
of Dragon ("Dragon Common Stock"), in accordance with the terms of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein and in the Merger Agreement, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
THE STOCK OPTION
Section 1.1 Grant of Stock Option. Dragon hereby grants to Emerald an
irrevocable option (the "Stock Option") to purchase up to 10,177,850 shares (the
"Option Shares") of Dragon Common Stock, including the associated rights (the
"Dragon Rights") to purchase shares of Dragon capital stock pursuant to the
Rights Agreement, Renewed and Restated as of October 19, 1996, between Dragon
and The Bank of New York, as Rights Agent (the "Rights Agreement"), in the
manner set forth below and at a price of $19.58 per Option Share, as adjusted in
accordance with the provisions of Section 1.5 hereof (such price, as adjusted if
applicable, the "Purchase Price"); provided, however, that in no event
(including any adjustment under Section 1.5 hereof) shall the number of shares
of Dragon Common Stock for
which this Stock Option is exercisable exceed 19.9% of Dragon's issued and
outstanding shares of Dragon Common Stock without giving effect to any Option
Shares subject to or issued pursuant to the Stock Option. All references in this
Agreement to shares of Dragon Common Stock issued to Emerald hereunder shall be
deemed to include the Dragon Rights associated therewith. Capitalized terms used
herein but not defined herein shall have the meanings set forth in the Merger
Agreement.
Section 1.2 Exercise of Stock Option.
(a) Subject to the satisfaction of the conditions set forth in
Section 1.3 hereof, the Stock Option may be exercised by Emerald, in whole
or in part, at any time or from time to time after the occurrence of an
Exercise Event (as defined below) and prior to the Termination Date (as
defined below).
(b) An "Exercise Event" shall occur for purposes of this Agreement
upon the occurrence of any event or circumstance which, pursuant to the
terms of Section 8.3(c) of the Merger Agreement, would entitle Emerald to
payment of the termination fee specified in Section 8.3(c) of the Merger
Agreement.
(c) The "Termination Date" shall occur for purposes of this
Agreement upon the first to occur of any of the following:
(i) the Effective Time (as defined in the
Merger Agreement);
(ii) the date on which the Merger Agreement is
terminated pursuant to Section 8.1 thereof, unless on or after
such termination Emerald may have the right to receive the
termination fee described in Section 8.3(c) of the Merger
Agreement, including upon the occurrence of certain events; or
(iii) the date which is one year after the date on which
the Merger Agreement is terminated pursuant to Section 8.1
thereof, if on or after such termination Emerald may be
entitled to receive the termination fee described in
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Section 8.3(c) of the Merger Agreement, including upon the
occurrence of certain events;
provided that, with respect to clause (iii) above, if the Stock Option
cannot be exercised as of such date by reason of any applicable judgment,
decree, law, regulation or order, or by reason of the waiting period under
the HSR Act, then the Termination Date shall be extended until fifteen
days after such impediment has been removed or such waiting period has
expired.
(d) Dragon shall notify Emerald in writing as promptly as
practicable, and in any event within 24 hours, of the occurrence of any
Exercise Event, it being understood that the giving of such notice by
Dragon shall not be a condition to the right of Emerald to exercise the
Stock Option or for an Exercise Event to have occurred.
(e) In the event Emerald is entitled to and wishes to exercise the
Stock Option, Emerald shall send a written notice (an "Exercise Notice")
to Dragon specifying the total number of Option Shares Emerald wishes to
purchase, the denominations of the certificate or certificates evidencing
such Option Shares which Emerald wishes to receive, a date (a "Closing
Date"), which shall be a business day which is at least five business days
after delivery of such notice, and place for the closing of such purchase
(a "Closing").
(f) Upon receipt of an Exercise Notice, Dragon shall be obligated to
deliver to Emerald the number of Option Shares specified therein, in
accordance with the terms of this Agreement, on the later of (i) the
Closing Date and (ii) the first business day on which the conditions
specified in Section 1.3 hereof shall be satisfied.
(g) If, at any time during the period commencing on an Exercise
Event and ending on the Termination Date, Emerald sends to Dragon an
Exercise Notice indicating Emerald's election to exercise its right (the
"Cash-Out Right") pursuant to this Section 1.2(g), then Dragon shall pay
to Emerald, on the Closing Date, in exchange for the cancellation of the
Option with respect to such number of Option Shares subject thereto as
Emerald specifies in the Exercise Notice, an amount in cash equal to such
number of Option Shares multiplied by the difference between (i) the
higher of (A) the average closing price, for the 10 trading days
commencing on the 12th trading
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day immediately preceding the Closing Date, per share of Dragon Common
Stock as reported on The New York Stock Exchange (or, if not listed on The
New York Stock Exchange, as reported on any other national securities
exchange or national securities quotation system on which Dragon Common
Stock is listed or quoted, as reported in THE WALL STREET JOURNAL
(Northeast edition), or, if not reported thereby, any other authoritative
source) and (B) the highest price per share of Dragon Common Stock paid
pursuant to any Acquisition Proposal (as defined in the Merger Agreement)
or proposed to be paid pursuant to any agreement relating to an Acquisition
Proposal and (ii) the Purchase Price. Notwithstanding the termination of
the Stock Option, Emerald will be entitled to exercise its rights under
this Section 1.2(g) if it has exercised such rights in accordance with the
terms hereof prior to the termination of the Stock Option.
(h) (i) Notwithstanding any other provision
of this Agreement or any provision of the Merger
Agreement, in no event shall the sum of (x) the
Total Option Profit (as hereinafter defined) and
(y) the termination fee payable under Section
8.3(c) of the Merger Agreement (the "Termination
Fee") exceed in the aggregate $61,363,000 and, if
the total amount that otherwise would be received
by Emerald would exceed such amount, Emerald, at
its sole election, shall either (a) reduce the
number of shares of Dragon Common Stock subject
to the Option, (b) deliver to Dragon for
cancellation shares of Dragon Common Stock
previously purchased by Emerald, (c) pay cash to
Dragon or (d) take any action representing any
combination of the preceding clauses (a), (b) and
(c), so that Emerald's actually realized Total
Option Profit, when aggregated with such
Termination Fee so paid to Emerald, shall not
exceed $61,363,000 after taking into account the
foregoing actions.
(ii) Notwithstanding any other provision of this
Agreement or any provision of the Merger Agreement, this Stock
Option may not be exercised for a number of shares as would,
as of the date of exercise, result in a Notional Total Option
Profit (as hereinafter defined) which, together with any
Termination Fee theretofore paid to Emerald, would exceed in
the aggregate $61,363,000; provided, however, that nothing in
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this clause (ii) shall restrict any exercise of the Option
permitted hereby on any subsequent date if exercise at such
time would otherwise be permitted by this clause (ii).
(iii) As used herein, the term "Total Option Profit"
shall mean the aggregate amount (before taxes) of the
following: (A) the amount received by Emerald pursuant to
Section 1.2(g), (B)(x) the amount received by Emerald pursuant
to the sale of Option Shares to any unaffiliated party
(including pursuant to Section 3.2(e)), valuing any non-cash
consideration at its fair market value, less (y) Emerald's
purchase price for such Option Shares, and (C) any equivalent
amount resulting from the adjustments contemplated under
Section 1.5.
(iv) As used herein, the term "Notional Total Option
Profit" with respect to any number of shares of Dragon Common
Stock as to which Emerald has delivered an Exercise Notice
shall be the Total Option Profit determined as of the date of
deliver of such Exercise Notice assuming that the Stock Option
were exercised on such date for such number of shares of
Dragon Common Stock and assuming that such shares, together
with all other Option Shares held by Emerald and its
affiliates as of such date, were sold for cash at the closing
market price for the Dragon Common Stock as of the close of
business on the preceding trading day (less customary
brokerage commissions or underwriting discounts).
Section 1.3 Conditions to Delivery of Option Shares. The obligation of
Dragon to deliver Option Shares upon any exercise of the Stock Option is subject
to the satisfaction of the following conditions:
(a) All waiting periods, if any, under the HSR Act applicable to the
issuance of Option Shares hereunder shall have expired or been terminated;
and
(b) There shall be no preliminary or permanent injunction or other
order issued by any court of competent jurisdiction preventing or
prohibiting
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such exercise of the Stock Option or the delivery of the Option Shares in
respect of such exercise.
Section 1.4 Closings. At each Closing, simultaneously with the delivery by
Emerald of the aggregate Purchase Price for Option Shares being acquired, Dragon
will deliver to Emerald a certificate or certificates evidencing the number of
Option Shares specified in Emerald's Exercise Notice, registered in the name of
Emerald or its nominee, and, if the Stock Option should be exercised in part
only, a new Stock Option evidencing the rights of Emerald thereof to purchase
the balance of the shares (or other securities) purchasable hereunder. All
payments made by Emerald to Dragon pursuant to this Section 1.4 shall be made,
at the option of Emerald, (a) by wire transfer of immediately available funds,
or (b) by delivery to Dragon of a certified or bank check or checks payable to
or to the order of Dragon.
Section 1.5 Adjustments Upon Share Issuances, Changes in Capitalization,
etc.
(a) In the event of any change in Dragon Common Stock or in the
number of outstanding shares of Dragon Common Stock by reason of a stock
dividend, split-up, recapitalization, combination, exchange of shares or
similar transaction or any other change in the corporate or capital
structure of Dragon (including, without limitation, the declaration or
payment of an extraordinary dividend of cash, securities or other
property), the type and number of shares or securities to be issued by
Dragon upon exercise of the Stock Option, and the Purchase Price thereof,
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction or change, so that Emerald shall
receive upon exercise of the Stock Option the number and class of shares
or other securities or property that Emerald would have received in
respect to Dragon Common Stock if the Stock Option had been exercised
immediately prior to such transaction or change, or the record date
therefor, as applicable.
(b) In the event that Dragon shall enter into an agreement (i) to
consolidate with or merge into any person, other than Emerald or one of
its Subsidiaries, and shall not be the continuing or surviving corporation
of such consolidation or merger, (ii) to permit any person, other than
Emerald or one of its Subsidiaries, to merge into Dragon and Dragon shall
be the continuing or surviving corporation, but, in connection with such
merger, the then outstanding shares of Dragon Common Stock shall be
changed into or
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exchanged for stock or other securities of Dragon or any other person or
cash or any other property, or then outstanding shares of Dragon Common
Stock shall after such merger represent less than 5% of the outstanding
shares and share equivalents of the surviving corporation or (iii) to sell
or otherwise transfer all or substantially all of its assets to any
person, other than Emerald or one of its Subsidiaries, then, in each such
case, proper provision shall be made in the agreements governing such
transaction so that Emerald shall receive upon exercise of the Stock
Option the number and class of shares or other securities or property that
Emerald would have received in respect of Dragon Common Stock if the Stock
Option had been exercised immediately prior to such transaction, or the
record date therefor, as applicable.
(c) No adjustment made in accordance with this Section 1.5 shall
constitute or be deemed a waiver of any breach of any of Dragon's
representations, warranties, covenants, agreements or obligations
contained in the Merger Agreement.
(d) The provisions of this Agreement, including, without limitation,
Sections 1.1, 1.2, 1.4 and 3.2 shall apply with appropriate adjustments to
any securities for which the Stock Option becomes exercisable pursuant to
this Section 1.5.
Section 1.6 Restrictive Legend. Each certificate representing Option
Shares issued to Emerald hereunder shall include a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY
IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF DRAGON
Section 2.1 Representations and Warranties of Dragon. Dragon represents
and warrants to Emerald that (a) Dragon is a corporation duly organized, validly
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existing and in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, (b) the execution
and delivery by Dragon of this Agreement and the consummation by Dragon of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of Dragon, (c) this Agreement has been
duly executed and delivered by Dragon and constitutes the valid and binding
obligation of Dragon, enforceable against Dragon in accordance with its terms,
(d) Dragon has taken all necessary corporate action to authorize and reserve and
permit it to issue, and at all times from the date hereof through the
Termination Date shall have reserved, all the Option Shares issuable pursuant to
this Agreement, and Dragon will take all necessary corporate action to authorize
and reserve and permit it to issue all additional shares of Dragon Common Stock
or other securities which may be issued pursuant to Section 1.5 hereof, all of
which, upon their issuance and delivery in accordance with the terms of this
Agreement, shall be duly authorized, validly issued, fully paid and
nonassessable, shall be delivered free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal, agreements,
limitations on Emerald's voting rights, charges and other encumbrances of any
nature whatsoever (other than this Agreement) and shall not be subject to any
preemptive rights, and (e) the execution and delivery of this Agreement by
Dragon does not, and the consummation by Dragon of the transactions contemplated
by this Agreement will not, (i) conflict with, or result in any violation or
breach of any provision of the Certificate of Incorporation, as amended to date,
or Bylaws, as amended to date, of Dragon, (ii) result in any violation or breach
of, or constitute (with or without notice or lapse of time, or both) a default
(or give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any benefit) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, contract or other
agreement, instrument or obligation to which the Dragon or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound, or (iii) conflict or violate any permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Dragon or any of its Subsidiaries or any of its or
their properties or assets, except in the case of (ii) and (iii) for any such
violations, breaches, defaults, terminations, cancellations, accelerations or
conflicts which would not be reasonably likely to have a Material Adverse Effect
(as defined in the Merger Agreement) on Dragon and its Subsidiaries, taken as a
whole, or impair the ability of Dragon to consummate the transactions
contemplated by this Agreement. The provisions of Section 203 of the General
Corporation Law of the State of Delaware will not, prior to the termination of
this Agreement, apply to this Agreement or the transactions contemplated hereby.
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Dragon has taken, and will in the future take, all steps necessary to
irrevocably exempt the transactions contemplated by this Agreement from any
other applicable state takeover law and from any applicable charter or
contractual provision containing change of control or anti-takeover provisions.
Dragon has taken all action so that the entering into of this Agreement, the
acquisition of shares of Dragon Common Stock hereunder and the other
transactions contemplated hereby do not and will not result in the grant of any
rights to any person under the Rights Agreement or enable or require the Dragon
Rights to be exercised, distributed or triggered.
ARTICLE III
COVENANTS OF DRAGON
Section 3.1 Listing; Other Action.
(a) Dragon shall, at its expense, use reasonable best efforts to
cause the Option Shares to be authorized for listing on the New York Stock
Exchange (the "NYSE"), upon official notice of issuance, as promptly as
practicable following an Exercise Event, and will provide prompt notice to
the NYSE of the issuance of each Option Share, unless the delivery of the
Option Shares is satisfied with shares of Dragon Common Stock held in
treasury by Dragon then listed on the NYSE.
(b) Dragon shall use its reasonable best efforts to take, or cause
to be taken, all appropriate action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
hereunder, including, without limitation, using its reasonable best
efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental entities.
Without limiting the generality of the foregoing, Dragon shall when
required in order to effect the transactions contemplated hereunder make
all filings and submissions under the HSR Act as promptly as practicable.
Section 3.2 Registration.
(a) As used in this Agreement, "Registrable Securities" means each
of the Option Shares issued to Emerald hereunder and any other
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securities issued in exchange for, or issued as dividends or otherwise on
or in respect of, any of such Option Shares.
(b) At any time or from time to time within three years of the first
Closing, Emerald may make a written request to Dragon for registration
under and in accordance with the provisions of the Securities Act with
respect to all or any part of the Registrable Securities (a "Demand
Registration"). A Demand Registration may be, at the option of Emerald, a
shelf registration or a registration involving an underwritten offering.
As soon as reasonably practicable after Emerald's request for a Demand
Registration, Dragon shall file one or more registration statements on any
appropriate form with respect to all of the Registrable Securities
requested to be so registered; provided that Dragon will not be required
to file any such registration statement during any period of time (not to
exceed 60 days after such request in the case of clause (i) below or 90
days in the case of clauses (ii) or (iii) below) when (i) Dragon is in
possession of material non-public information which it reasonably believes
would be detrimental to be disclosed at such time and, in the written
opinion of outside counsel to Dragon, such information would have to be
disclosed if a registration statement were filed at that time, (ii) Dragon
is required under the Securities Act to include audited financial
statements for any period in such registration statement that are not yet
available for inclusion therein, or (iii) Dragon determines, in its
reasonable judgment, that such registration would interfere with any
financing, acquisition or other material transaction involving Dragon or
any of its affiliates. Dragon shall use its best efforts to have the
Demand Registration declared effective as soon as reasonably practicable
after such filing and to keep the Demand Registration continuously
effective for a period of at least ninety days following the date on which
the Demand Registration is declared effective, in the case of an
underwritten offering, or at least six months following the date on which
the Demand Registration is declared effective, in the case of a shelf
registration; provided that, if for any reason the effectiveness of any
Demand Registration is suspended, the required period of effectiveness
shall be extended by the aggregate number of days of each such suspension;
and provided, further, that the effectiveness of any Demand Registration
may be terminated if and when all of the Registrable Securities covered
thereby shall have been sold. Emerald shall be entitled to two Demand
Registrations. If any Demand Registration involves an underwritten
offering, (i) Emerald shall have the right to select the managing
underwriter, which shall be reasonably acceptable to Dragon (it
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being agreed by Dragon that Xxxxxx Brothers Inc. would be acceptable to
Dragon) and (ii) Dragon shall enter into an underwriting agreement in
customary form.
(c) If at any time within three years of the first Closing, Dragon
proposes to file a registration statement under the Securities Act with
respect to any shares of any class of its equity securities to be sold for
the account of Dragon (other than a registration statement on Form S-4 or
Form S-8 or any successor form), and the registration form to be used may
be used for the registration of Registrable Securities, then Dragon shall
in each case give written notice of such proposed filing to Emerald at
least twenty days before the anticipated filing date, and Emerald shall
have the right to include in such registration such number of Registrable
Securities a Emerald may request (such request to be made by written
notice to Dragon within fifteen days following Emerald's receipt from
Dragon of such notice of proposed filing). Dragon shall use its best
efforts to cause the managing underwriter of any proposed underwritten
offering to permit Emerald to include in such offering all Registrable
Securities requested by Emerald to be included in the registration for
such offering on the same terms and conditions as any similar securities
of Dragon included therein. Notwithstanding the foregoing, if the managing
underwriter of such offering advises Emerald that, in the reasonable
opinion of such underwriter, the amount of Registrable Securities which
Emerald requests to be included in such offering would materially and
adversely affect the success of such offering, then the amount of
Registrable Securities to be offered shall be reduced to the extent
necessary to reduce the total amount of securities to be included in such
offering to the amount recommended by such underwriter; provided, however,
that if the amount of Registrable Securities shall be so reduced, Dragon
shall not be permitted to include in such registration any securities of
Dragon other than securities to be issued by Dragon and Registrable
Securities.
(d) In the event that Registrable Securities are included in a
"piggyback" registration statement pursuant to Section 3.2(c) hereof,
Emerald agrees not to effect any public sale or distribution of the issue
being registered or a similar security of Dragon, or any securities
convertible into or exchangeable or exercisable for such securities,
including a sale pursuant to Rule 144 under the Securities Act, during the
ten business days prior to, and during the 90-day period beginning on, the
effective date of such registration statement (except as part of such
registration), if and to the extent timely
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notified in writing by Dragon, in the case of a non-underwritten public
offering, or by the managing underwriter, in the case of an underwritten
public offering. In the event that Emerald requests a Demand Registration
or if Registrable Securities are included in a "piggyback" registration
pursuant to Section 3.2(c) hereof, Dragon agrees not to effect any public
sale or distribution of the issue being registered or a similar security
of Dragon, or any securities convertible into or exchangeable or
exercisable for such securities, during the period from such request until
90 days after the effective date of such registration statement (except as
part of such registration or pursuant to a registration of securities on
Form S-4 or Form S-8 or any successor form).
(e) Notwithstanding anything to the contrary contained herein, in
the event that Emerald requests a Demand Registration or a "piggyback"
registration of Registrable Securities pursuant to Section 3.2(b) or
3.2(c) hereof, respectively, Dragon shall have the right to purchase all,
but not less than all, of the Registrable Securities requested to be so
registered, upon the terms and subject to the conditions set forth in this
Section 3.2(e). If Dragon wishes to exercise such purchase right, then
within two business days following receipt of a request for a Demand
Registration or a "piggyback" registration, Dragon shall send a written
notice (a "Repurchase Notice") to Emerald specifying that Dragon wishes to
exercise such purchase right, a date for the closing of such purchase,
which shall not be more than five business days after delivery of such
Repurchase Notice, and a place for the closing of such purchase (a
"Repurchase Closing"). Upon delivery of a Repurchase Notice, a binding
agreement shall be deemed to exist between Emerald and Dragon providing
for the purchase by Dragon of the Registrable Securities requested to be
registered by Emerald, upon the terms and subject to the conditions set
forth in this Section 3.2(e). The purchase price per share or other unit
of Registrable Securities (the "Repurchase Price") shall equal the average
per share or per unit closing price as quoted on the NYSE (or if not then
quoted thereon, on such other exchange or quotation system on which the
Registrable Securities are quoted) for the period of five trading days
ending on the trading day immediately prior to the day on which Emerald
requests a Demand Registration or a "piggyback" registration of the
Registrable Securities which Dragon subsequently elects to purchase.
Emerald's obligation to deliver any Registrable Securities at a
Repurchasing Closing shall be subject to the condition that, at such
Repurchase Closing, Dragon shall have delivered to Emerald a certificate
signed on behalf of
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Dragon by Dragon's chief executive officer and chief financial officer,
which certificate shall be satisfactory in form and substance to Emerald,
to the effect that the purchase by Dragon of such Registrable Securities
(i) is permitted under applicable Delaware corporate law and under the
fraudulent conveyance provisions of the federal bankruptcy code and (ii)
does not violate any material agreement to which Dragon or any of its
subsidiaries is a party or by which any of their properties or assets is
bound. At any Repurchase Closing, Dragon shall pay to Emerald the
aggregate Repurchase Price for the Registrable Securities being purchased
by wire transfer of immediately available funds or by delivering to
Emerald a certified or bank check payable to or on the order of Emerald in
an amount equal to such aggregate Repurchase Price, and Emerald will
surrender to Dragon a certificate or certificates evidencing such
Registrable Securities. No purchase of Registrable Securities by Dragon
pursuant to this Section 3.2(e) shall reduce or otherwise modify Dragon's
registration obligations under this Section 3.2 (including, without
limitation, the number of Demand Registrations which Dragon is obligated
to effect) with respect to any Registrable Securities held by Emerald
following such purchase.
(f) The registrations effected under this Section 3.2 shall be
effected at Dragon's expense except for underwriting commissions allocable
to the Registrable Securities. Dragon shall indemnify and hold harmless
Emerald, its affiliates and controlling persons and their respective
officers, directors, agents and representatives from and against any and
all losses, claims, damages, liabilities and expenses (including, without
limitation, all out-of-pocket expenses, investigation expenses, expenses
incurred with respect to any judgment and fees and disbursements of
counsel and accountants) arising out of or based upon any statements
contained in, or omissions or alleged omissions from, each registration
statement (and related prospectus) filed pursuant to this Section 3.2;
provided, however, that Dragon shall not be liable in any such case to
Emerald or any affiliate or controlling person of Emerald or any of their
respective officers, directors, agents or representatives to the extent
that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon an untrue
statement or omission or alleged omission made in such registration
statement or prospectus in reliance upon, and in conformity with, written
information furnished to Dragon specifically for use in the preparation
thereof by Emerald such affiliate, controlling person, officer, director,
agent or representative, as the case may be.
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ARTICLE IV
COVENANTS OF EMERALD
Section 4.1 Distribution. Emerald shall acquire the Option Shares for
investment purposes only and not with a view to any distribution thereof in
violation of the Securities Act, and shall not sell any Option Shares purchased
pursuant to this Agreement except in compliance with the Securities Act.
ARTICLE V
MISCELLANEOUS
Section 5.1 Expenses. Except as otherwise provided herein or in the Merger
Agreement, all costs and expenses incurred in connection with the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses.
Section 5.2 Further Assurances. Dragon and Emerald will execute and
deliver all such further documents and instruments and take all such further
action as may be necessary in order to consummate the transactions contemplated
hereby.
Section 5.3 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement is
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 5.4 Entire Agreement. This Agreement and the Merger Agreement
(together with the documents referred to therein) constitute the entire
agreement between the parties and supersede all prior agreements and
understandings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof.
Section 5.5 Assignment. This Agreement shall not be assigned by either
party without the prior written consent of the other party.
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Section 5.6 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
or shall confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
Section 5.7 Amendment; Waiver. This Agreement may not be amended except by
an instrument in writing signed by the parties hereto. Either party hereto may
with respect to the other party (i) extend the time for the performance of any
obligation or other act, (ii) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto or
(iii) waive compliance with any agreement or condition contained herein. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
Section 5.8 Severability. If any term or other provision of this Agreement
is held by a court or other competent authority to be invalid, illegal or
incapable of being enforced by any rule of law, 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 to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
Section 5.9 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given as of the date delivered, sent or
transmitted if delivered, sent or transmitted in accordance with the Merger
Agreement.
Section 5.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts,
without giving effect to the principles of conflicts of law thereof.
Section 5.11 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15
Section 5.12 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which shall constitute one and the same agreement.
IN WITNESS WHEREOF, Emerald and Dragon have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
XXX XXXXXXXXXXX
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and
Chief Executive Officer
DATA GENERAL CORPORATION
By: /s/ Xxxxxx X. Skates
--------------------------------
Name: Xxxxxx X. Skates
Title: President and
Chief Executive Officer
