<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 4, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
INTERNATIONAL BUSINESS MACHINES CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NEW YORK 3570 13-0871985
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer Identification Number)
Classification Code Numbers)
</TABLE>
NEW ORCHARD ROAD
ARMONK, NEW YORK 10504
(914) 499-1900
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
LAWRENCE R. RICCIARDI, ESQ.
SENIOR VICE PRESIDENT & GENERAL COUNSEL AND CHIEF FINANCIAL OFFICER
INTERNATIONAL BUSINESS MACHINES CORPORATION
NEW ORCHARD ROAD
ARMONK, NEW YORK 10504
(914) 499-1900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
ALLEN FINKELSON, ESQ. JEFFREY D. SAPER, ESQ.
CRAVATH, SWAINE & MOORE HERBERT P. FOCKLER, ESQ.
825 EIGHTH AVENUE WILSON SONSINI GOODRICH & ROSATI
NEW YORK, NY 10019 650 PAGE MILL ROAD
(212) 474-1000 PALO ALTO, CA 94304
(650) 493-9300
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As promptly as practicable after the effective date of this Registration
Statement, which relates to the merger of Unison Software, Inc. ("Unison") with
and into a subsidiary of International Business Machines Corporation.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED SECURITY PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, par value $1.25 per share... N/A(1) N/A(1) $206,146,299(2) $27,542.57(3)
</TABLE>
(1) Pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the
"Securities Act"), only the title of the class of securities to be
registered, the proposed maximum aggregate offering price for such class of
securities and the amount of registration fee need appear in the
"Calculation of Registration Fee" Table.
(2) The proposed maximum aggregate offering price has been estimated solely for
purposes of calculating the registration fee required by Section 6(b) of the
Securities Act and calculated pursuant to Rule 457(f) under the Securities
Act. Pursuant to Rule 457(f)(1) under the Securities Act, the proposed
maximum aggregate offering price was calculated in accordance with Rule
457(c) under the Securities Act as: (a)14.53125, the average of the high and
low sales prices per share of Unison common stock on October 30, 1997 as
reported on the Nasdaq National Market, multiplied by (b) 14,186,412, the
aggregate number of outstanding shares of Unison common stock (assuming the
exercise of all Unison stock options (including options issuable in
accordance with the Merger Agreement)).
(3) Pursuant to Rule 457(b) under the Securities Act, the total registration fee
of $62,468.57 has been reduced by $34,926, which was paid on October 2, 1997
in connection with the filing of preliminary proxy materials of Unison. The
registration fee payable upon filing of this Registration Statement is
therefore $27,542.57.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION
8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[LOGO]
November 5, 1997
Dear Unison Stockholder:
As most of you are aware, Unison Software, Inc. ("Unison") has entered into
an Agreement and Plan of Merger dated as of September 12, 1997, as amended (the
"Merger Agreement"), among International Business Machines Corporation ("IBM"),
New Orchard Corp., a wholly owned subsidiary of IBM ("Merger Sub"), and Unison,
pursuant to which Unison will be merged with and into Merger Sub upon the terms
and subject to the conditions of the Merger Agreement (the "Merger"). Merger Sub
will be the surviving corporation in the Merger (the "Surviving Corporation")
and, following the Merger, will succeed to and assume all the rights and
obligations of Unison.
As described in the enclosed Proxy Statement/Prospectus, at a Special
Meeting of Stockholders to be held on December 8, 1997, you will be asked to
consider and vote upon the approval and adoption of the Merger Agreement.
Pursuant to the Merger Agreement, each share of common stock, par value $.001
per share, of Unison ("Unison Common Stock") issued and outstanding at the
effective time of the Merger will be converted into the right to receive, at
your election, either cash in an amount equal to $15 (subject to proration) or a
number of shares of common stock of IBM equal to the number obtained by dividing
$15 by the average per share closing price of IBM common stock during the 10
consecutive trading days preceding the second trading day prior to the effective
time of the Merger, as such prices are reported on the New York Stock Exchange,
Inc. Composite Transactions Tape or, in certain circumstances relating to a cash
election, a combination of cash and IBM common stock. Tax consequences to
holders of Unison Common Stock will differ depending on whether cash, stock or a
combination of cash and stock is received.
Your Board has received an opinion of Goldman, Sachs & Co., Unison's
financial advisor, that, as of the date of such opinion, the merger
consideration to be received by holders of Unison Common Stock pursuant to the
Merger Agreement was fair to such holders. Such opinion was provided for the
information and assistance of Unison's Board in connection with the transaction
contemplated by the Merger Agreement and does not constitute a recommendation as
to how any holder of shares of Unison Common Stock should vote with respect to
such transaction. The full text of the written opinion of Goldman, Sachs & Co.,
which sets forth assumptions made, matters considered and limitations on the
review undertaken in connection with the opinion, is attached as Annex III to
the enclosed Proxy Statement/Prospectus. Holders of shares of Unison Common
Stock are urged to read such opinion in its entirety.
The approval and adoption of the Merger Agreement requires the affirmative
vote of holders of at least a majority of the outstanding shares of Unison
Common Stock. AFTER CAREFUL CONSIDERATION, YOUR BOARD HAS UNANIMOUSLY APPROVED
THE MERGER AND THE MERGER AGREEMENT, HAS UNANIMOUSLY DETERMINED THAT THE MERGER
IS FAIR TO, AND IN THE BEST INTERESTS OF, UNISON AND ITS STOCKHOLDERS, AND
UNANIMOUSLY RECOMMENDS THAT HOLDERS OF SHARES OF UNISON COMMON STOCK VOTE FOR
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. Pursuant to a stockholder
agreement with IBM, the two largest stockholders of Unison (who hold
approximately 30% of the outstanding shares of Unison Common Stock and who are
also Unison directors and officers) have agreed to, among other things, vote (or
cause to be voted) their shares of Unison Common Stock in favor of approval and
adoption of the Merger Agreement.
Stockholders are urged to review carefully the information contained in the
enclosed Proxy Statement/ Prospectus prior to deciding how to vote their shares
at the Special Meeting.
All stockholders are cordially invited to attend the Special Meeting in
person. However, whether or not you plan to attend the Special Meeting, please
complete, sign and date the accompanying proxy card and return it promptly in
the enclosed postage-prepaid envelope. Failure to return a properly executed
proxy card or to vote at the Special Meeting would have the same effect as a
vote against the Merger Agreement and the Merger.
Sincerely,
/s/ Don H. Lee
Don H. Lee
CHIEF EXECUTIVE OFFICER
<PAGE>
UNISON SOFTWARE, INC.
5101 PATRICK HENRY DRIVE
SANTA CLARA, CA 95054
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 8, 1997
A special meeting of Stockholders (the "Special Meeting") of Unison
Software, Inc., a Delaware corporation ("Unison"), will be held at The Embassy
Suites Hotel, 2885 Lakeside Drive, Santa Clara, California on Monday, December
8, 1997 at 9:30 a.m., local time, to consider and act upon the following
matters:
To consider and vote upon a proposal to approve and adopt the Agreement
and Plan of Merger dated as of September 12, 1997, as amended (the
"Merger Agreement"), among International Business Machines Corporation,
a New York corporation ("IBM"), New Orchard Corp., a Delaware
corporation and wholly-owned subsidiary of IBM ("Merger Sub"), and
Unison, pursuant to which, among other things, (a) Unison will be merged
with and into Merger Sub (the "Merger"), which will be the surviving
corporation, and Merger Sub will, following the Merger, succeed to and
assume all the rights and obligations of Unison and (b) as explained
more fully in the accompanying Proxy Statement/Prospectus, each
outstanding share of common stock, par value $.001 per share, of Unison
issued and outstanding at the effective time of the Merger will be
converted into the right to receive, at the stockholder's election,
either cash in an amount equal to $15 (subject to proration) or a number
of shares of common stock of IBM equal to the number obtained by
dividing $15 by the average per share closing price of IBM common stock
during the 10 consecutive trading days preceding the second trading day
prior to the effective time of the Merger, as such prices are reported
on the New York Stock Exchange, Inc. Composite Transactions Tape or, in
certain circumstances relating to a cash election, a combination of cash
and IBM common stock.
A copy of the Merger Agreement is attached as Annex I to the accompanying
Proxy Statement/ Prospectus.
Stockholders of record at the close of business on October 24, 1997, will be
entitled to notice of and to vote at the Special Meeting or any adjournment or
postponement thereof.
By Order of the Board of Directors
Santa Clara, California
November 5, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE
PROXY IS MAILED IN THE UNITED STATES.
<PAGE>
UNISON SOFTWARE, INC.
PROXY STATEMENT
INTERNATIONAL BUSINESS MACHINES CORPORATION
PROSPECTUS
This Proxy Statement/Prospectus is being furnished to the stockholders of
Unison Software, Inc. ("Unison" or the "Company") in connection with the
solicitation of proxies by the Board of Directors of Unison (the "Unison Board")
for use at the special meeting of stockholders of Unison to be held on December
8, 1997 at 9:30 a.m., local time, at The Embassy Suites Hotel, 2885 Lakeside
Drive, Santa Clara, California, including any adjournments or postponements
thereof (the "Special Meeting").
At the Special Meeting, the holders of common stock of Unison, par value
$.001 per share ("Unison Common Stock"), will consider and vote upon the
approval and adoption of the Agreement and Plan of Merger dated as of September
12, 1997, as amended (the "Merger Agreement"), among International Business
Machines Corporation ("IBM"), New Orchard Corp., a wholly owned subsidiary of
IBM ("Merger Sub"), and Unison providing for the merger of Unison with and into
Merger Sub upon the terms and subject to the conditions of the Merger Agreement
(the "Merger"). Merger Sub will be the surviving corporation in the Merger (the
"Surviving Corporation") and, following the Merger, will succeed to and assume
all the rights and obligations of Unison.
Pursuant to the Merger Agreement, each share of Unison Common Stock issued
and outstanding at the effective time of the Merger will be converted into the
right to receive, at the stockholder's election, either cash in an amount equal
to $15 (subject to proration) or a number of shares of common stock of IBM, par
value $1.25 per share ("IBM Common Stock"), equal to the number obtained by
dividing $15 by the average per share closing price of IBM Common Stock during
the 10 consecutive trading days preceding the second trading day prior to the
effective time of the Merger, as such prices are reported on the New York Stock
Exchange, Inc. Composite Transactions Tape (the "NYSE Tape") or, in certain
circumstances relating to a cash election, a combination of cash and IBM Common
Stock. Because the effective time of the Merger may occur at a later date than
the date of the Special Meeting, stockholders of Unison will not be able to
determine the Exchange Ratio (as defined herein) at the time of the Special
Meeting. See "SUMMARY--The Merger--Certain Considerations". Tax consequences to
holders of Unison Common Stock will differ depending on whether cash, stock or a
combination of cash and stock is received.
THE UNISON BOARD HAS UNANIMOUSLY APPROVED THE MERGER AND THE MERGER
AGREEMENT, HAS UNANIMOUSLY DETERMINED THAT THE MERGER IS FAIR TO, AND IN THE
BEST INTERESTS OF, UNISON AND ITS STOCKHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT
HOLDERS OF SHARES OF UNISON COMMON STOCK VOTE FOR APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT.
This Proxy Statement/Prospectus also serves as a prospectus of IBM under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
shares of IBM Common Stock issuable in connection with the Merger.
This Proxy Statement/Prospectus and the accompanying form of proxy are first
being mailed to stockholders of Unison on or about November 6, 1997.
------------------------
THE SECURITIES TO BE ISSUED IN THE MERGER HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Proxy Statement/Prospectus is November 5, 1997.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS,
IN CONNECTION WITH THE SOLICITATION AND THE OFFERING MADE BY THIS PROXY
STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY OR AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, ANY SECURITIES IN ANY
JURISDICTION IN WHICH SUCH SOLICITATION OR OFFERING MAY NOT LAWFULLY BE MADE.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION
OF SECURITIES MADE HEREUNDER SHALL IMPLY THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF IBM OR UNISON SINCE THE DATE
HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information................... 4
Incorporation of Certain Documents by
Reference............................. 4
Summary................................. 6
Special Meeting....................... 6
Vote Required......................... 6
The Merger............................ 7
Market Price Data..................... 12
Certain Financial Data................ 13
The Special Meeting..................... 16
Special Meeting....................... 16
Record Date; Shares Entitled to Vote;
Vote Required....................... 16
Proxies; Proxy Solicitation........... 17
The Merger.............................. 18
Background of the Merger.............. 18
Recommendation of the Unison Board and
Reasons for the Merger.............. 22
Opinion of Financial Advisor.......... 23
Effective Time........................ 27
Merger Consideration.................. 27
Election Procedure; Exchange
Procedures.......................... 29
Stock Exchange Listing................ 31
Expenses.............................. 31
Certain Federal Income Tax
Considerations...................... 31
Interests of Certain Persons in the
Merger.............................. 34
Appraisal Rights...................... 35
Accounting Treatment.................. 38
Resale of IBM Common Stock............ 38
The Merger Agreement.................... 39
The Merger............................ 39
Representations and Warranties........ 39
Business of Unison Pending the
Effective Time of the Merger........ 40
Effect on Unison Benefit Plans and
Stock Options....................... 42
Conditions to the Consummation of the
Merger.............................. 43
No Solicitation....................... 44
Right of Unison Board to Withdraw
Recommendation...................... 45
Termination, Amendment and Waiver..... 45
Termination Fee....................... 47
The Stockholder Agreement............. 47
Noncompetition Agreements............. 49
Management and Operations After the
Merger................................ 50
Comparative Stock Prices and
Dividends............................. 51
Business of IBM......................... 52
Business of Unison Software, Inc........ 52
Comparison of Rights of Common
Stockholders of IBM and Unison........ 53
Other Matters........................... 56
Regulatory Approvals Required......... 56
Legal Matters........................... 56
Experts................................. 57
ANNEXES
Annex I Agreement and Plan of Merger, as
amended
Annex II Stockholder Agreement
Annex III Opinion of Goldman, Sachs &
Co.
Annex IV Section 262 of the Delaware
General Corporation Law
</TABLE>
3
<PAGE>
AVAILABLE INFORMATION
IBM and Unison are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In accordance
with the Exchange Act, IBM and Unison file proxy statements, reports and other
information with the Securities and Exchange Commission (the "SEC"). This filed
material can be inspected and copied at the public reference facilities
maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following Regional Offices of the SEC: the Midwest Regional
Office (Suite 1400, Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661) and the Northeast Regional Office (Seven World Trade
Center, 13th Floor, New York, New York 10048). The filed material also is
available to the public from commercial document retrieval services and at the
web site maintained by the SEC at "http://www.sec.gov." Copies of such material
also can be obtained by mail from the Public Reference Section of the SEC, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition,
such material can be inspected at the offices of the New York Stock Exchange,
Inc. ("NYSE"), 20 Broad Street, New York, New York 10005, in the case of IBM,
and the National Association of Securities Dealers, Inc. (the "NASD"), 1935 K
Street, N.W. Washington, D.C. 20006, in the case of Unison.
IBM has filed a Registration Statement on Form S-4 (the "Registration
Statement") with the SEC under the Securities Act with respect to the IBM Common
Stock to be issued upon consummation of the Merger. This Proxy
Statement/Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits thereto, certain portions of which have
been omitted as permitted by the rules and regulations of the SEC. Copies of the
Registration Statement are available from the SEC, upon payment of prescribed
rates. For further information, reference is made to the Registration Statement
and the exhibits filed therewith. Statements contained in this Proxy
Statement/Prospectus or in any document incorporated by reference in this Proxy
Statement/Prospectus relating to the contents of any contract or other document
referred to herein or therein are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement or such other document, each such
statement being qualified in all respect by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following IBM documents are incorporated by reference in this Proxy
Statement/Prospectus: (i) IBM's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, (ii) IBM's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997, (iii) IBM's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, (iv) IBM's Current Reports on Form 8-K dated
January 21, 1997 (filed January 23, 1997), January 28, 1997 (filed January 29,
1997), April 23, 1997 (filed April 24, 1997), April 29, 1997 (filed May 8,
1997), July 21, 1997 (filed July 21, 1997), July 30, 1997 (filed August 1,
1997), and October 20, 1997 (filed October 22, 1997), and (v) the description of
IBM Common Stock set forth in IBM's registration statements filed pursuant to
Section 12 of the Exchange Act, and any amendment or report filed for the
purpose of updating any such description.
The following Unison documents are incorporated by reference in this Proxy
Statement/Prospectus: (i) Unison's Amendment No. 1 on Form 10-K/A to its Annual
Report on Form 10-K for the fiscal year ended May 31, 1997, (ii) Unison's Annual
Report on Form 10-K for the fiscal year ended May 31, 1997, (iii) Unison's
Quarterly Report on Form 10-Q for the quarter ended August 31, 1997, and (iv)
the description of Unison Common Stock set forth in Unison's registration
statement filed pursuant to Section 12 of the Exchange Act, and any amendment or
report filed for the purpose of updating any such description.
A COPY OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE (EXCLUDING EXHIBITS
UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO THE
INFORMATION INCORPORATED HEREIN) THAT ARE NOT PRESENTED HEREIN OR DELIVERED
HEREWITH WILL BE PROVIDED BY FIRST-CLASS MAIL WITHOUT CHARGE TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS
DELIVERED, UPON ORAL OR WRITTEN REQUEST OF
4
<PAGE>
ANY SUCH PERSON. WITH RESPECT TO IBM DOCUMENTS, REQUESTS SHOULD BE DIRECTED TO
MORROW & CO., INC., 909 THIRD AVENUE, 20TH FLOOR, NEW YORK, NY 10022 (TELEPHONE
(212) 754-8000; TOLL FREE (800) 662-5200). WITH RESPECT TO UNISON DOCUMENTS,
REQUESTS SHOULD BE DIRECTED TO RICHARD ARMITAGE, UNISON SOFTWARE, INC., 5101
PATRICK HENRY DRIVE, SANTA CLARA, CALIFORNIA 95054 (TELEPHONE (408) 988-2800).
IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS IN ADVANCE OF THE SPECIAL
MEETING TO WHICH THIS PROXY STATEMENT/PROSPECTUS RELATES, ANY SUCH REQUEST
SHOULD BE MADE BY NOVEMBER 28, 1997.
All reports filed by IBM and Unison and all definitive proxy or information
statements filed by IBM and Unison pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Proxy
Statement/Prospectus and prior to the date of the Special Meeting shall be
deemed to be incorporated by reference into this Proxy Statement/Prospectus from
the dates of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated in this Proxy Statement/Prospectus
shall be deemed to be modified or superseded for purposes of this Proxy
Statement/ Prospectus to the extent that a statement contained herein or in any
other subsequently filed document that also is or is deemed to be incorporated
by reference modifies or supersedes such statement.
All information contained in this Proxy Statement/Prospectus relating to IBM
has been supplied by IBM, and all information relating to Unison has been
supplied by Unison.
5
<PAGE>
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROXY STATEMENT/PROSPECTUS. REFERENCE IS MADE TO, AND THIS SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION CONTAINED ELSEWHERE
IN THIS PROXY STATEMENT/PROSPECTUS, IN THE ATTACHED ANNEXES AND IN THE DOCUMENTS
INCORPORATED HEREIN BY REFERENCE. UNISON STOCKHOLDERS ARE URGED TO READ
CAREFULLY THIS PROXY STATEMENT/PROSPECTUS AND THE ATTACHED ANNEXES IN THEIR
ENTIRETY.
SPECIAL MEETING
This Proxy Statement/Prospectus is being furnished to Unison stockholders in
connection with the solicitation of proxies by the Unison Board for use at the
Special Meeting to be held on December 8, 1997 at 9:30 a.m., local time, at The
Embassy Suites Hotel, 2885 Lakeside Drive, Santa Clara, California. Only holders
of record of Unison Common Stock at the close of business on October 24, 1997
(the "Record Date"), will be entitled to notice of, and to vote at, the Special
Meeting. At the Special Meeting, holders of Unison Common Stock will be asked to
consider and vote upon the approval and adoption of the Merger Agreement, a copy
of which is attached as Annex I to this Proxy Statement/Prospectus, pursuant to
which Unison will be merged with and into Merger Sub. Merger Sub will be the
Surviving Corporation in the Merger and, following the Merger, will succeed to
and assume all the rights and obligations of Unison. See "THE SPECIAL
MEETING--Special Meeting."
VOTE REQUIRED
The close of business on October 24, 1997 has been fixed as the Record Date
for determining the holders of Unison Common Stock who are entitled to receive
notice of and to vote at the Special Meeting. As of the Record Date, there were
11,973,878 shares of Unison Common Stock outstanding, of which 3,917,174 shares
(approximately 32.7% of the outstanding shares of Unison Common Stock) were
beneficially owned by directors and executive officers of Unison and their
affiliates. The holders of record of shares of Unison Common Stock on the Record
Date are entitled to one vote per share of Unison Common Stock on each matter
submitted to a vote at the Special Meeting. The presence in person or by proxy
of the holders of shares representing a majority of the shares of Unison Common
Stock issued and outstanding and entitled to vote is necessary to constitute a
quorum for the transaction of business at the Special Meeting. Under the
Delaware General Corporation Law (the "DGCL"), the affirmative vote of holders
of a majority of the outstanding shares of Unison Common Stock is required for
approval and adoption of the Merger Agreement ("Stockholder Approval"). An
abstention from voting or a broker non-vote will have the practical effect of a
vote against approval and adoption of the Merger Agreement, since a vote to
abstain or a broker non-vote represents one fewer vote in favor of such approval
and adoption. See "THE SPECIAL MEETING--Record Date; Shares Entitled to Vote;
Vote Required."
Pursuant to the terms of a Stockholder Agreement dated as of September 12,
1997 (the "Stockholder Agreement") among IBM, Mr. Don H. Lee and Mr. Michael A.
Casteel (who are both Unison directors and officers and who are the two largest
holders of Unison Common Stock), such stockholders have agreed (in their
capacities as stockholders), among other things, to vote (or cause to be voted)
their shares of Unison Common Stock, without limiting any such stockholder's
right to vote such shares on other matters that may be submitted to a
stockholder vote, (i) in favor of approval and adoption of the Merger Agreement,
approval of the Merger and the approval of the other transactions contemplated
by the Merger Agreement and (ii) against any alternative transactions or any
amendment of the Unison Certificate of Incorporation or By-laws or any
transaction that would frustrate, impede, prevent or nullify the Merger
Agreement, the Merger or any of the other transactions contemplated by the
Merger Agreement. Together, such stockholders held on the Record Date 3,608,388
shares (approximately 30.1% of the outstanding shares) of Unison Common Stock.
The general effect of the Stockholder Agreement is to increase the likelihood
that Stockholder Approval will be obtained. In addition, IBM may, subject to
market conditions, make open market purchases of up to such number of additional
shares of Unison
6
<PAGE>
Common Stock as will constitute, when taken together with the shares of Unison
Common Stock subject to the Stockholder Agreement, 40% of the fully diluted
number of shares of Unison Common Stock. IBM held on the Record Date 330,784
shares (approximately 2.8% of the outstanding shares) of Unison Common Stock.
IBM, Mr. Don H. Lee, and Mr. Michael A. Casteel held in the aggregate on the
Record Date approximately 32.9% of the outstanding shares of Unison Common
Stock. Consequently, Stockholder Approval will be obtained if holders of
additional shares of Unison Common Stock representing approximately 17.11% of
the outstanding shares of Unison Common Stock vote in favor of approval and
adoption of the Merger Agreement. See "THE MERGER--Interests of Certain Persons
in the Merger" and "THE MERGER AGREEMENT--The Stockholder Agreement."
No approval by stockholders of IBM is required to effect the Merger.
THE MERGER
THE PARTIES. IBM, a New York corporation, develops and manufactures
advanced information technologies, including computer systems, software,
networking systems, storage drives and microelectronics. IBM translates these
advanced technologies into value for its customers through its professional
solutions and services businesses worldwide.
In 1996, IBM acquired Tivoli Systems, Inc. ("Tivoli"), a systems/network
management framework company. Unison's distributed system management utility
products work closely with Tivoli's TME 10 systems/network management framework.
Following the effective time of the Merger (the "Effective Time"), IBM intends
to operate Unison as a part of Tivoli.
The principal executive offices of IBM are located at New Orchard Road,
Armonk, NY 10504. The telephone number is (914) 499-1900.
Merger Sub, a Delaware corporation, is a wholly owned subsidiary of IBM
formed solely for the purposes of the Merger.
Unison Software, Inc., a Delaware corporation, develops, markets and
supports networked systems management software utility products for distributed,
heterogeneous computing environments. Unison's work-load management, storage
management and output management utility products support the deployment of
business critical applications in client/server environments and integrate with
systems/network management frameworks. Unison focuses principally on the UNIX
and Windows NT markets, where it is leveraging its experience as a leading
supplier of networked systems management tools.
Unison's principal executive office is located at 5101 Patrick Henry Drive,
Santa Clara, California 95054, and its telephone number is (408) 988-2800.
MERGER CONSIDERATION. At the Effective Time, each Outstanding Unison Share
(as defined below) will be converted into the right to receive cash (subject to
proration), shares of IBM Common Stock or, in certain circumstances relating to
a Cash Election (as defined below), a combination of both cash and IBM Common
Stock (the "Merger Consideration"). Each Unison stockholder will have the
opportunity to indicate, on an election form (the "Election Form"), whether such
stockholder wishes to make a Stock Election (as defined below) or a Cash
Election with respect to each share of Unison Common Stock held by such
stockholder. If a holder of Unison Common Stock does not make a Cash Election or
a Stock Election, or properly revokes an Election Form without timely submitting
a revised, properly completed Election Form, such stockholder will be deemed to
have made a Cash Election. If the aggregate amount of cash requested by
stockholders of Unison pursuant to effective or deemed Cash Elections exceeds
the Cash Cap (as defined below), the allocation of cash and shares of IBM Common
Stock that a stockholder of Unison may receive for each share that is subject to
a Cash Election will depend on the proration procedures to be applied as
described below.
7
<PAGE>
Stockholders of Unison who make an effective "Stock Election" will receive
(collectively, "Stock Consideration"), without any proration or other similar
limitation, for each share of Unison Common Stock for which such election is
made, a number of shares of IBM Common Stock equal to a fraction, the numerator
of which is $15 and the denominator of which is the IBM Common Stock Price (the
"Exchange Ratio"). The "IBM Common Stock Price" is an amount equal to the
average of the closing sales price of IBM Common Stock on the NYSE Tape on each
of the 10 consecutive trading days immediately preceding the second trading day
prior to the Effective Time. Stockholders of Unison who make a "Cash Election"
will receive (subject to the proration procedures described below) for each
share of Unison Common Stock for which such election is made, or deemed to have
been made, an amount in cash equal to $15 (the "Cash Consideration").
In the event that the aggregate amount of cash requested by stockholders of
Unison pursuant to effective or deemed Cash Elections (the "Requested Cash
Amount") exceeds the Cash Cap, each such holder will receive, for each share of
Unison Common Stock for which a Cash Election has been made or deemed to have
been made, (x) cash in an amount equal to the product of (1) the Cash
Consideration and (2) a fraction, the numerator of which is the Cash Cap and the
denominator of which is the Requested Cash Amount (such product, the "Prorated
Cash Amount") and (y) a number of shares of IBM Common Stock equal to a
fraction, the numerator of which is equal to the Cash Consideration minus the
Prorated Cash Amount and the denominator of which is the IBM Common Stock Price.
The "Cash Cap" is equal to the product of (x) $15 and (y) the number of
Outstanding Unison Shares and (z) 0.5. The "Outstanding Unison Shares" are the
shares of Unison Common Stock outstanding immediately prior to the Effective
Time, other than, in each case at such time, (i) shares of Unison Common Stock
owned by Unison or its subsidiaries and (ii) two times the sum of the number of
shares of Unison Common Stock owned by IBM and the number of shares of Unison
Common Stock with respect to which appraisal rights have been properly demanded
pursuant to Section 262 of the DGCL ("Dissenting Shares").
An Election Form is being mailed together with this Proxy
Statement/Prospectus. Record holders of Unison Common Stock will have the right
to submit Election Forms specifying the number of shares of Unison Common Stock
that such holders desire to have converted into Stock Consideration and the
number of shares of Unison Common Stock that such holders desire to have
converted, subject to the proration procedures described above, into Cash
Consideration.
The exchange agent for the payment of the Merger Consideration in connection
with the Merger (the "Exchange Agent") will be First Chicago Trust Company of
New York. IN ORDER FOR A STOCK ELECTION TO BE EFFECTIVELY MADE, A PROPERLY
COMPLETED AND SIGNED ELECTION FORM MUST BE RECEIVED BY THE EXCHANGE AGENT,
TOGETHER WITH THE CERTIFICATES FOR SHARES OF UNISON COMMON STOCK TO WHICH SUCH
ELECTION FORM RELATES, AT THE EXCHANGE AGENT'S DESIGNATED OFFICE (AS SET FORTH
IN THE ELECTION FORM ENCLOSED HEREWITH), BY 5:00 P.M., NEW YORK CITY TIME, ON
DECEMBER 5, 1997, THE BUSINESS DAY NEXT PRECEDING THE DATE OF THE SPECIAL
MEETING (THE "ELECTION DATE"). SEE "THE MERGER--ELECTION PROCEDURE; EXCHANGE
PROCEDURES" AND "THE MERGER--MERGER CONSIDERATION."
CERTAIN CONSIDERATIONS. In considering whether to vote in favor of the
adoption of the Merger Agreement and whether to make a Stock Election, Unison
stockholders should consider the following: (i) the number of shares to be
received by such stockholders will be determined based on the average closing
price of IBM Common Stock on each of the 10 consecutive trading days immediately
preceding the second trading day prior to the Effective Time and (ii) the market
price of a share of IBM Common Stock at the Effective Time can be expected to
vary from its price as of the date of this Proxy Statement/ Prospectus and the
dates during such 10-day period due to changes in the business, operations or
prospects of IBM, general market and economic conditions and other factors.
The number of shares of IBM Common Stock that a stockholder of Unison will
receive for each share of Unison Common Stock for which an effective Stock
Election has been made will be equal to the Exchange Ratio (($15), DIVIDED BY
the IBM Common Stock Price (the average of the closing sale prices of
8
<PAGE>
IBM Common Stock on the NYSE Tape on each of the 10 consecutive trading days
immediately preceding the second trading day prior to the Effective Time)). By
way of example only, if the Effective Time had occurred on November 5 (the date
of this Proxy Statement/Prospectus), the Exchange Ratio would be equal to $15
divided by $98.81, the IBM Common Stock Price for an assumed period ending two
trading days prior to November 5, or 0.1518. Accordingly, if the Effective Time
had occurred on November 5, Unison stockholders would receive 0.1518 shares of
IBM Common Stock for each share of Unison Common Stock subject to an effective
Stock Election. Unison stockholders who wish to receive further examples based
upon IBM Common Stock prices as of a more recent date may call 1-800-662-5200.
BECAUSE OF MARKET FLUCTUATIONS AND OTHER FACTORS DESCRIBED ABOVE, THE IBM COMMON
STOCK PRICE USED IN CALCULATING THE ACTUAL EXCHANGE RATIO WILL VARY FROM THE
EARLIER PRICES USED IN THE EXAMPLE SET FORTH ABOVE OR ANY SUCH SUBSEQUENT
EXAMPLE. ACCORDINGLY, THE ACTUAL EXCHANGE RATIO WILL DIFFER FROM THE EXCHANGE
RATIO CONTAINED IN ANY SUCH EXAMPLE.
Subject to the satisfaction of the conditions of each party to consummate
the Merger set forth in the Merger Agreement, IBM and Unison intend to
consummate the Merger as soon as practicable following the Special Meeting.
Although IBM and Unison have no reason to believe that the Effective Time will
not occur promptly after the Special Meeting, there can be no assurance as to
when the Merger will be consummated. If, for example, Unison and/or IBM receive
requests for additional information from the Antitrust Division of the United
States Department of Justice (the "Antitrust Division") under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") (see
"OTHER MATTERS--Regulatory Approvals Required"), the consummation of the Merger
could be delayed. Because the Effective Time may occur at a later date than the
date of the Special Meeting, there can be no assurance that the price of IBM
Common Stock on the date of the Special Meeting (or the average price during the
period prior to the date of the Special Meeting) will be indicative of the
average closing prices of IBM Common Stock over the 10 trading days immediately
preceding the second trading day prior to the Effective Time, which is the
period during which the Exchange Ratio is calculated.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS. A stockholder of Unison who
makes an effective Stock Election for all such stockholder's Unison Common Stock
generally will not recognize taxable gain or loss for U.S. Federal income tax
purposes (except for cash received in lieu of fractional shares). A stockholder
of Unison who makes (or is deemed to make) an effective Cash Election for all
such stockholder's Unison Common Stock generally will recognize capital gain or
loss equal to the difference between the stockholder's tax basis in the shares
of Unison Common Stock surrendered and the amount of cash received, unless such
stockholder receives IBM Common Stock as a result of the proration procedures
described above. A stockholder of Unison who receives a combination of IBM
Common Stock and cash in exchange for Unison Common Stock (as a result of
proration or by reason of making an effective Cash Election with respect to some
of such stockholder's Unison Common Stock and a Stock Election with respect to
the rest of such stockholder's Unison Common Stock) generally will recognize
taxable gain (but will not recognize taxable loss) for U.S. Federal income tax
purposes, calculated separately for each block of Unison Common Stock
surrendered, in an amount equal to the lesser of (i) the amount of gain realized
in respect of such block and (ii) the amount of cash received that is allocable
to such block. See "THE MERGER-- Certain Federal Income Tax Considerations" for
a more detailed description of the above matters and information with respect to
the applicability of the foregoing to certain taxpayers subject to special
treatment. The actual U.S. Federal income tax consequences to each Unison
stockholder of making a Cash Election will not be ascertainable at the time the
election is made because stockholders of Unison will not know at such time if,
or to what extent, the proration described above will apply. See "THE MERGER--
Certain Federal Income Tax Considerations." ALL STOCKHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS.
RECOMMENDATION OF THE UNISON BOARD AND REASONS FOR THE MERGER. THE UNISON
BOARD HAS UNANIMOUSLY DETERMINED THAT THE TERMS OF THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN THE BEST INTERESTS OF,
UNISON STOCKHOLDERS. ACCORDINGLY, THE UNISON BOARD HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF UNISON VOTE
FOR
9
<PAGE>
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. In reaching its decision to
approve the Merger Agreement and recommend the Merger, the Unison Board
considered a number of factors. See "THE MERGER-- Background of the Merger" and
"THE MERGER--Recommendation of the Unison Board and Reasons for the Merger." For
a discussion of the interests that certain directors and executive officers of
Unison have with respect to the Merger that are different from, or in addition
to, the interests of stockholders of Unison generally, see "THE
MERGER--Interests of Certain Persons in the Merger." Such interests, together
with other relevant factors, were considered by the Unison Board in making its
recommendation and approving the Merger Agreement. See "THE MERGER--Background
of the Merger" and "THE MERGER--Recommendation of the Unison Board and Reasons
for the Merger."
OPINION OF FINANCIAL ADVISOR. On September 12, 1997, Goldman, Sachs & Co.
("Goldman Sachs") delivered its oral opinion to the Unison Board that, as of
such date, the Merger Consideration to be received by holders of Unison Common
Stock pursuant to the Merger Agreement was fair to such stockholders. Goldman
Sachs subsequently confirmed its oral opinion by delivery of a written opinion
dated September 12, 1997.
The full text of the written opinion of Goldman Sachs dated September 12,
1997, which sets forth assumptions made, matters considered and limitations on
the review undertaken in connection with the opinion, is attached hereto as
Annex III and is incorporated herein by reference. HOLDERS OF SHARES OF UNISON
COMMON STOCK ARE URGED TO READ SUCH OPINION IN ITS ENTIRETY. See "THE
MERGER--Opinion of Financial Advisor."
INTERESTS OF CERTAIN PERSONS IN THE MERGER. As of the Record Date,
directors and executive officers of Unison and their affiliated entities owned
(i) 3,917,174 shares of Unison Common Stock, for which they will receive the
same consideration as other Unison stockholders and (ii) unexercised options to
acquire 179,376 shares of Unison Common Stock, which will be treated as
described below under "--UNISON STOCK OPTIONS." IBM also has agreed to cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
Unison pursuant to certain indemnification agreements currently in effect
between Unison and certain persons, and pursuant to the indemnification
provisions contained in Unison's Certificate of Incorporation (the "Unison
Certificate of Incorporation") and By-laws (the "Unison By-laws"). See "THE
MERGER--Interests of Certain Persons in the Merger."
UNISON STOCK OPTIONS. Under the terms of the Merger Agreement, each
outstanding stock option granted under any plan or arrangement providing for the
grant of options to purchase shares of Unison Common Stock (a "Stock Option")
will 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
IBM Common Stock (rounded down to the nearest whole share) determined by
multiplying the number of shares of Unison Common Stock subject to the Stock
Option by the Exchange Ratio, at a price per share of IBM Common Stock (rounded
up to the nearest whole cent) equal to (a) the aggregate exercise price for the
shares of Unison Common Stock otherwise purchasable pursuant to the Stock Option
divided by (b) the number of shares of IBM Common Stock deemed purchasable
pursuant to such Stock Option.
APPRAISAL RIGHTS. Holders of record of Unison Common Stock who comply with
the applicable statutory procedures summarized in "THE MERGER--Appraisal Rights"
may be entitled to appraisal rights under Section 262 of the DGCL. Unison
reserves the right to challenge any assertion by any stockholder of Unison that
appraisal rights under Section 262 are applicable to the Merger. A holder of
Unison Common Stock electing to demand such an appraisal must deliver to Unison,
before the date of the Special Meeting and in accordance with the procedures
described herein, a written demand for appraisal of such holder's shares of
Unison Common Stock. Any such holder will not be entitled to make a Cash
Election or Stock Election with respect to such holder's Dissenting Shares. See
"THE MERGER-- Appraisal Rights."
10
<PAGE>
REGULATORY APPROVALS REQUIRED. The consummation of the Merger is subject to
the expiration or termination of the relevant waiting period under the HSR Act.
Both IBM and Unison had filed notification and report forms under the HSR Act by
October 8, 1997. Unless extended by a request for additional information or
unless early termination is granted, the waiting period under the HSR Act will
expire at 11:59 P.M. on November 7, 1997. See "OTHER MATTERS--Regulatory
Approvals Required."
CONDITIONS TO THE MERGER. The obligations of IBM and Unison to consummate
the Merger are subject to various conditions, including, without limitation,
obtaining Stockholder Approval and regulatory approvals, approval for listing
(subject to official notice of issuance) on the NYSE of the IBM Common Stock to
be issued in connection with the Merger, receipt of certain tax opinions and the
absence of any injunction or other legal restraint preventing the consummation
of the Merger. See "THE MERGER AGREEMENT--Conditions to the Consummation of the
Merger."
NO SOLICITATION. Under the Merger Agreement, Unison has agreed that it will
not nor will 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 defined
herein) 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.
However, if the Unison Board 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 stockholders of Unison under applicable law, Unison may,
prior to the receipt of Stockholder Approval, in response to a Takeover Proposal
that was unsolicited and subject to compliance with Unison's responsibility to
keep IBM informed in all material respects of the status of, and the identity of
the person making, any Takeover Proposal or certain other inquiries and subject
to certain other conditions, furnish information with respect to Unison to any
person pursuant to a customary and reasonable confidentiality agreement and
participate in negotiations regarding a Takeover Proposal. See "THE MERGER
AGREEMENT--No Solicitation."
RIGHT OF THE UNISON BOARD TO WITHDRAW RECOMMENDATION. Under the Merger
Agreement, neither the Unison Board nor any committee of the Unison Board may
(i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to
IBM or Merger Sub, the approval or recommendation by the Unison Board or any
such committee of the Merger Agreement or the Merger, (ii) approve or recommend,
or propose to approve or recommend, any Takeover Proposal or (iii) cause Unison
to enter into any agreement with respect to any Takeover Proposal. However, the
Unison Board, 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 Unison stockholders under applicable law, may, prior to
receipt of Stockholder Approval, withdraw or modify its approval or
recommendation of the Merger Agreement or the Merger, approve or recommend any
Superior Proposal (as defined in the Merger Agreement and described under "THE
MERGER AGREEMENT--Right of the Unison Board to Withdraw Recommendation") or
terminate the Merger Agreement, in each case subject to notice to IBM that
Unison has received a Superior Proposal, certain waiting periods and, in certain
circumstances, the obligation to pay the Termination Fee (as defined herein).
See "THE MERGER AGREEMENT--Right of Unison Board to Withdraw Recommendation."
TERMINATION. The Merger Agreement may be terminated, and the Merger
contemplated thereby may be abandoned, at any time prior to the Effective Time,
whether before or after receipt of Stockholder Approval, (i) by mutual written
consent of IBM, Merger Sub and Unison; (ii) by either IBM or Unison, (a) if the
Merger is not consummated by March 15, 1998 (subject to certain exceptions), (b)
if certain legal restraints or prohibitions are in effect resulting from any
suit, action or proceeding by any Governmental Entity (as defined in the Merger
Agreement), (c) if Stockholder Approval is not obtained at the Special
11
<PAGE>
Meeting, (d) if there are certain breaches of, or inaccuracies contained in, the
other party's representations, warranties, covenants or agreements and such
breaches or inaccuracies are not cured by the breaching party in all material
respects within 45 days or (e) if the Unison Board determines that a proposal
received by Unison constitutes a Superior Proposal, subject to certain
conditions or (iii) by IBM, if the Unison Board withdraws or modifies or, upon
request, fails to reconfirm its approval or recommendation of the Merger or the
Merger Agreement, subject to certain conditions. See "THE MERGER
AGREEMENT--Termination, Amendment and Waiver."
TERMINATION FEE. In the event that the Merger Agreement is terminated by
any party pursuant to a determination by the Unison Board, in accordance with
the provisions described under "THE MERGER AGREEMENT--Right of Unison Board to
Withdraw Recommendation", that a proposal constitutes a Superior Proposal, the
Merger Agreement requires Unison to promptly pay to IBM a fee equal to $6
million (the "Termination Fee"). If, at the time of any termination of the
Merger Agreement by any party pursuant to the conditions described in clauses
(ii)(a), (ii)(c) or (iii) of the preceding paragraph, a Takeover Proposal has
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 the Merger Agreement, Unison either (x) consummates a Unison Acquisition (as
defined herein) or (y) enters into a written Acquisition Agreement providing for
a Unison Acquisition, then Unison will pay to IBM the Termination Fee in
immediately available funds, in the case of clause (x), concurrently with the
consummation of such Unison 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 the Merger
Agreement, but only in the event that such transaction subject to such
Acquisition Agreement is in fact consummated); PROVIDED, HOWEVER, that no
Termination Fee will be payable pursuant to the provision described in this
sentence if the Merger Agreement is terminated because the Stockholder Approval
is not obtained and a material adverse change with respect to IBM had occurred
and had not been cured prior to the date of the Special Meeting. See "THE MERGER
AGREEMENT--Termination Fee."
ACCOUNTING TREATMENT. The Merger will be treated as a "purchase" for
financial reporting and accounting purposes, in accordance with generally
accepted accounting principles. After the Merger, the results of operations of
Unison will be included in the consolidated financial statements of IBM. The
purchase price (i.e., the aggregate Merger Consideration) will be allocated
based on the fair values of the assets acquired and the liabilities assumed. Any
excess of cost over fair value of the net tangible assets of Unison acquired
will be recorded as goodwill and other intangible assets. Such allocations will
be made based upon valuations and other studies that have not yet been
finalized.
MARKET PRICE DATA
IBM Common Stock (symbol: IBM) is listed for trading on the NYSE, and Unison
Common Stock (symbol: UNSN) is quoted on the Nasdaq National Market.
The following table sets forth the last reported sales prices per share of
IBM Common Stock on the NYSE Tape and of Unison Common Stock on the Nasdaq
National Market on September 12, 1997, the last trading day before announcement
of the Merger Agreement, and on November 3, 1997, the last trading day prior to
the date of this Proxy Statement/Prospectus:
<TABLE>
<CAPTION>
IBM UNISON
COMMON COMMON
STOCK STOCK
--------- -----------
<S> <C> <C>
September 12, 1997........................................................................... $ 97.50 $ 14.00
November 3, 1997............................................................................. $ 101.63 $ 14.56
</TABLE>
12
<PAGE>
CERTAIN FINANCIAL DATA
The Merger will not have a material impact, on a pro forma basis, on the IBM
financial data presented below.
The following tables present selected historical financial data for each of
IBM and Unison. The selected historical financial data for IBM are derived from
the historical financial statements of IBM that are incorporated by reference in
this Proxy Statement/Prospectus. The information set forth below for IBM should
be read in conjunction with such historical financial statements and the notes
thereto. The historical consolidated financial statements of IBM have been
audited by Price Waterhouse LLP, independent public accountants, for each of the
five fiscal years in the period ended December 31, 1996. The historical
consolidated interim financial statements of IBM as of and for the six months
ended June 30, 1997 and June 30, 1996 are unaudited; however, in IBM's opinion,
such statements reflect all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of IBM's financial position and
results of operations for such periods. The unaudited results of operations for
the six-month period in 1997 may not be indicative of results of operations to
be expected for a full year.
The selected historical financial data for Unison are derived from the
historical financial statements of Unison that are incorporated by reference in
this Proxy Statement/Prospectus. The information set forth below for Unison
should be read in conjunction with such historical financial statements and the
notes thereto. The historical financial statements of Unison have been audited
by Coopers & Lybrand L.L.P., independent certified public accountants, for each
of the five fiscal years in the period ended May 31, 1997. The historical
financial statements of Unison as of and for the three months ended August 31,
1996 and August 31, 1997 are derived from the unaudited historical financial
statements of Unison that are incorporated herein by reference, and in the
opinion of management of Unison, reflect all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the information for
such periods. The unaudited results of operations of Unison for the three months
ended August 31, 1997 may not be indicative of the results of operations for
fiscal 1998.
13
<PAGE>
INTERNATIONAL BUSINESS MACHINES CORPORATION
SELECTED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE FIGURES)
EARNINGS DATA*
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
-------------------------------------------------------------------- --------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1992** 1993** 1994 1995 1996 1996 1997
------------ ------------ ------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
Revenues..................... $ 64,523 $ 62,716 $ 64,052 $ 71,940 $ 75,947 $ 34,742 $ 36,180
Costs and expenses........... 73,549 71,513 58,897 64,127 67,360 31,021 32,148
Earnings (loss) before
taxes...................... (9,026) (8,797) 5,155 7,813 8,587 3,721 4,032
Net earnings (loss).......... (4,965) (8,101) 3,021 4,178 5,429 2,121 2,641
Net earnings (loss) per
share...................... $ (4.35) $ (7.11) $ 2.51 $ 3.61 $ 5.12 $ 1.96 $ 2.64
Cash dividend per share...... $ 2.42 $ 0.79 $ 0.50 $ 0.50 $ 0.65 $ 0.30 $ 0.375
</TABLE>
- ------------------------
* All per share data for periods ended prior to June 30, 1997 adjusted to
reflect a two-for-one stock split effected in 1997.
** Includes effect of accounting changes in 1992 for income taxes and 1993 for
post-employment benefits.
BALANCE SHEET DATA
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 30,
1992 1993 1994 1995 1996 1997
------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
Assets............................... $ 86,705 $ 81,113 $ 81,091 $ 80,292 $ 81,132 $ 78,819
Long-term debt....................... 12,853 15,245 12,548 10,060 9,872 11,675
Stockholders' equity................. 27,624 19,738 23,413 22,423 21,628 20,109
</TABLE>
14
<PAGE>
UNISON SOFTWARE, INC.
SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE FIGURES)
STATEMENTS OF OPERATIONS DATA*
<TABLE>
<CAPTION>
THREE MONTH
FISCAL YEAR ENDED PERIOD ENDED
------------------------------------------------------- ------------------------
MAY 31, MAY 31, MAY 31, MAY 31, MAY 31, AUGUST 31, AUGUST 31,
1993 1994 1995 1996 1997 1996 1997
--------- ----------- --------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
Net revenues:
License fees................................ $ 9,213 $ 8,812 $ 12,260 $ 20,924 $ 27,109 $ 4,546 $ 6,032
Services.................................... 5,391 6,271 7,426 9,091 12,727 3,033 4,308
--------- ----------- --------- --------- --------- ----------- -----------
Total net revenues...................... 14,604 15,083 19,686 30,015 39,836 7,579 10,340
--------- ----------- --------- --------- --------- ----------- -----------
Costs and expenses:
Cost of license fees........................ 501 559 562 853 1,185 195 277
Cost of services............................ 719 969 1,186 2,052 3,254 699 1,043
Sales and marketing......................... 5,789 7,070 9,998 13,598 17,822 3,783 5,149
Research and development.................... 2,559 3,003 2,985 3,969 5,498 1,092 1,720
General and administrative.................. 2,357 1,943 2,205 2,741 4,273 801 1,186
Nonrecurring charges........................ 4,583 628
--------- ----------- --------- --------- --------- ----------- -----------
Total operating expenses................ 16,508 14,172 16,936 23,213 32,032 6,570 9,375
--------- ----------- --------- --------- --------- ----------- -----------
Income from operations........................ (1,904) 911 2,750 6,802 7,804 1,009 965
Interest and other income, net................ (270) (57) (68) 720 948 232 284
Income before provision for (benefit from)
income taxes.............................. (2.174) 854 2,682 7,522 8,752 1,241 1,249
Provision for (benefit from) income taxes..... (554) 228 982 2,855 3,370 478 481
--------- ----------- --------- --------- --------- ----------- -----------
Net income (loss)......................... $ (1,620) $ 626 $ 1,700 $ 4,667 $ 5,382 $ 763 $ 768
--------- ----------- --------- --------- --------- ----------- -----------
--------- ----------- --------- --------- --------- ----------- -----------
Net income (loss) per share................... $ (0.19) $ 0.07 $ 0.19 $ 0.40 $ 0.45 $ 0.06 $ 0.06
--------- ----------- --------- --------- --------- ----------- -----------
--------- ----------- --------- --------- --------- ----------- -----------
Shares used in per share calculation.......... 8,462 8,786 8,925 11,775 12,092 12,158 12,121
--------- ----------- --------- --------- --------- ----------- -----------
--------- ----------- --------- --------- --------- ----------- -----------
</TABLE>
- ------------------------
* All data for periods prior to May 31, 1997 adjusted to reflect a
three-for-two stock split effected January 1997.
BALANCE SHEET DATA
<TABLE>
<CAPTION>
MAY 31, MAY 31, MAY 31, MAY 31, MAY 31, AUGUST 31,
1993 1994 1995 1996 1997 1997
----------- ----------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
Cash, cash equivalents and marketable securities......... $ 3,413 $ 3,846 $ 5,217 $ 20,448 $ 26,498 $ 26,851
Working capital.......................................... 1,201 1,348 2,923 21,670 23,619 24,082
Total assets............................................. 9,304 9,058 11,829 34,221 43,432 41,987
Long-term liabilities, net of current portion............ 3,476 2,752 2,077 872 535 520
Total stockholders' equity (deficit)..................... (757) 263 2,561 23,027 29,886 30,869
</TABLE>
15
<PAGE>
THE SPECIAL MEETING
SPECIAL MEETING
This Proxy Statement/Prospectus is being furnished to Unison stockholders in
connection with the solicitation of proxies by the Unison Board for use at the
Special Meeting to be held on December 8, 1997 at 9:30 a.m., local time, at The
Embassy Suites Hotel, 2885 Lakeside Drive, Santa Clara, California. Only holders
of record of Unison Common Stock at the close of business on the Record Date
will be entitled to notice of, and to vote at, the Special Meeting. At the
Special Meeting, holders of Unison Common Stock will be asked to consider and
vote upon the approval and adoption of the Merger Agreement, a copy of which is
attached as Annex I to this Proxy Statement/Prospectus, pursuant to which Unison
will be merged with and into Merger Sub. Merger Sub will be the Surviving
Corporation in the Merger and, following the Merger, will succeed to and assume
all the rights and obligations of Unison. Holders of Unison Common Stock will
also transact such other business as may properly come before the Special
Meeting.
THE UNISON BOARD HAS UNANIMOUSLY APPROVED THE MERGER AND THE MERGER
AGREEMENT, HAS UNANIMOUSLY DETERMINED THAT THE MERGER IS FAIR TO, AND IN THE
BEST INTERESTS OF, UNISON AND ITS STOCKHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT
HOLDERS OF SHARES OF UNISON COMMON STOCK VOTE FOR APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT.
The IBM Board of Directors (the "IBM Board") has approved the Merger and the
issuance of IBM Common Stock in the Merger. IBM, as the sole stockholder of
Merger Sub, and the Board of Directors of Merger Sub have each approved the
Merger Agreement. No approval by stockholders of IBM is required to effect the
Merger.
RECORD DATE; SHARES ENTITLED TO VOTE; VOTE REQUIRED
The close of business on October 24, 1997 has been fixed as the Record Date
for determining the holders of Unison Common Stock who are entitled to notice of
and to vote at the Special Meeting. As of the Record Date, there were 11,973,878
shares of Unison Common Stock outstanding, of which 3,917,174 shares
(approximately 32.7% of the outstanding shares of Unison Common Stock) were
beneficially owned by directors and executive officers of Unison and their
affiliates. The holders of record of shares of Unison Common Stock on the Record
Date are entitled to one vote per share of Unison Common Stock on each matter
submitted to a vote at the Special Meeting. The presence in person or by proxy
of the holders of shares representing a majority of the shares of Unison Common
Stock issued and outstanding and entitled to vote is necessary to constitute a
quorum for the transaction of business at the Special Meeting. Under the DGCL,
the affirmative vote of holders of a majority of the outstanding shares of
Unison Common Stock is required for Stockholder Approval. An abstention from
voting or a broker non-vote will have the practical effect of a vote against
approval and adoption of the Merger Agreement, since a vote to abstain or a
broker non-vote represents one fewer vote in favor of such approval and
adoption. A "broker non-vote" occurs when brokers who hold shares in street name
for customers who are the beneficial owners of such shares do not vote such
customers' shares because the customers have failed to give the broker specific
instructions concerning the voting of the customers' shares.
Pursuant to the terms of the Stockholder Agreement among IBM, Mr. Don H. Lee
and Mr. Michael A. Casteel (who are both Unison directors and officers and who
are the two largest holders of Unison Common Stock), such stockholders have
agreed (in their capacities as stockholders), among other things, to vote (or
cause to be voted) their shares of Unison Common Stock, without limiting any
such stockholder's right to vote such shares on other matters that may be
submitted to a stockholder vote, (i) in favor of approval and adoption of the
Merger Agreement, approval of the Merger and the approval of the other
transactions contemplated by the Merger Agreement, and (ii) against any
alternative transactions or any amendment of the Unison Certificate of
Incorporation or By-laws or any transaction that would frustrate, impede,
prevent or nullify the Merger Agreement, the Merger or any of the other
transactions contemplated by the Merger Agreement. Together, such stockholders
held on the Record Date 3,608,388
16
<PAGE>
shares (approximately 30.1% of the outstanding shares) of Unison Common Stock.
The general effect of the Stockholder Agreement is to increase the likelihood
that Stockholder Approval will be obtained. In addition, IBM may, subject to
market conditions, make open market purchases of up to such number of additional
shares of Unison Common Stock as will constitute, when taken together with the
shares of Unison Common Stock subject to the Stockholder Agreement, 40% of the
fully diluted number of shares of Unison Common Stock. IBM held on the Record
Date 330,784 shares (approximately 2.8% of the outstanding shares) of Unison
Common Stock. IBM, Mr. Don H. Lee, and Mr. Michael A. Casteel held in the
aggregate on the Record Date approximately 32.9% of the outstanding shares of
Unison Common Stock. Consequently, Stockholder Approval will be obtained if
holders of additional shares of Unison Common Stock representing approximately
17.11% of the outstanding shares of Unison Common Stock vote in favor of
approval and adoption of the Merger Agreement. See "THE MERGER--Interests of
Certain Persons in the Merger" and "THE MERGER AGREEMENT--The Stockholder
Agreement."
PROXIES; PROXY SOLICITATION
Shares of Unison Common Stock represented by properly executed proxies
received at or prior to the Special Meeting that have not been revoked will be
voted at the Special Meeting in accordance with the instructions contained
therein. Shares of Unison Common Stock represented by properly executed proxies
for which no instruction is given will be voted FOR approval and adoption of the
Merger Agreement. Unison stockholders are requested to complete, sign and return
promptly the enclosed proxy card in the enclosed postage-prepaid envelope to
ensure that their shares are voted at the Special Meeting. A Unison stockholder
may revoke a proxy by submitting at any time prior to the vote on the approval
and adoption of the Merger Agreement a later dated proxy with respect to the
same shares, by delivering written notice of revocation to the Secretary of
Unison at any time prior to such vote or by attending the Special Meeting and
voting in person. Mere attendance at the Special Meeting will not in and of
itself revoke a proxy. If a Unison stockholder is not the registered direct
holder of his or her shares, such stockholder must obtain appropriate
documentation from the registered holder in order to be able to vote the shares
in person.
If the Special Meeting is postponed or adjourned for any reason, at any
subsequent reconvening of the Special Meeting all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the meeting (except for any proxies which have theretofore effectively been
revoked or withdrawn), notwithstanding that they may have been effectively voted
on the same or any other manner at a previous meeting.
In addition to solicitation by mail, directors, officers and employees of
IBM and Unison may solicit proxies by telephone, telegram or otherwise. Such
directors, officers and employees of IBM and Unison will not be additionally
compensated for such solicitation but may be reimbursed for out-of-pocket
expenses incurred in connection therewith. Brokerage firms, fiduciaries and
other custodians who forward soliciting material to the beneficial owners of
shares of Unison Common Stock held of record by them will be reimbursed for
their reasonable expenses incurred in forwarding such material.
17
<PAGE>
THE MERGER
BACKGROUND OF THE MERGER
Over the last four years, Unison and Tivoli have cultivated a strategic
business relationship, with Unison's distributed systems management utility
products (particularly Unison's scheduling and workload management products)
working closely with Tivoli's TME 10 systems/network management framework. In
1996, IBM acquired Tivoli. Since its acquisition, Tivoli has operated as a
division of IBM. Unless otherwise indicated or the context indicates otherwise,
IBM and Tivoli are collectively referred to as IBM.
In July 1995, Unison consummated its initial public offering. From time to
time over the last 18 months, Unison has held preliminary discussions with
several entities regarding potential strategic business relationships and
business combinations.
In April 1997, representatives of IBM contacted representatives of Unison
for the purpose of setting up a meeting between Mr. Frank Moss, the Chief
Executive Officer of Tivoli, and Mr. Don Lee, the Chief Executive Officer of
Unison. The purpose of this meeting was to discuss establishing a closer working
relationship between IBM and Unison. On May 2, 1997, Mr. Moss and Mr. Lee and
two other representatives of IBM and Unison met in Austin, Texas and discussed
the possibility of a business combination between IBM and Unison.
On July 9, 1997, Unison and IBM executed an agreement for the exchange of
confidential information. On August 18, 1997, this agreement was amended to add
certain provisions.
On July 16 and 17, 1997, Unison and IBM conducted business and technical due
diligence meetings in Austin, Texas. In addition to Mr. Lee and other members of
Unison's management, Mr. Jan Lindelow, the Chief Operating Officer of Tivoli,
and other members of Tivoli's management, along with Mr. Archie Colburn,
Business Development Executive of IBM, were present. During these discussions,
IBM indicated, among other things, that it was interested in acquiring Unison.
On August 4, 1997, Mr. Lee and Mr. Jeffrey Saper, a member of Wilson Sonsini
Goodrich & Rosati ("WSGR"), outside legal counsel to Unison, and a director of
Unison, met in Dallas, Texas with Mr. Lee Dayton, Vice President, Corporate
Development and Real Estate of IBM, and Messrs. Lindelow and Colburn. These
discussions focused primarily on structural issues relating to a proposed
combination of Unison and IBM, IBM's desire to retain key Unison management and
employees if a combination were to take place and a possible price range at
which a combination might occur. Although discussions were inconclusive as to
price, IBM indicated that it would be necessary to conduct legal and financial
due diligence with respect to Unison before reaching any decision on price. The
Unison representatives indicated their preference for a transaction that would
offer Unison stockholders the ability to receive IBM Common Stock, so that the
transaction would be tax-free to Unison's stockholders. The IBM representatives
indicated that IBM would require agreements from the principal stockholders of
Unison to vote in favor of any transaction with IBM.
On August 6, 1997, Mr. Dayton called Mr. Lee and requested him to review
with the Unison Board a price range of $13 to $15 per share.
On August 8, 1997, Mr. Lee called Messrs. Dayton, Colburn and Lindelow and
confirmed that the Unison Board had agreed to proceed with discussions with IBM.
He also said that Unison planned to retain Goldman Sachs as its financial
advisor and suggested that IBM contact Goldman Sachs and WSGR to make
arrangements for IBM's legal and financial due diligence.
On August 11, 1997, at the direction and with the consent of the Unison
Board, Unison retained Goldman Sachs as its financial advisor to assist it in
the negotiation of a potential business combination between Unison and IBM and
to render a fairness opinion in respect of the financial consideration to be
received by Unison's stockholders in any such transaction.
18
<PAGE>
On August 13, 1997, the Unison Board met with representatives of WSGR and
Goldman Sachs at WSGR's offices in Palo Alto, California. During the meeting,
the Unison Board reviewed the acquisition discussions held with representatives
of IBM. The Unison Board also discussed IBM's desire to conduct legal and
financial due diligence with respect to Unison. At this meeting, the Unison
Board requested that Goldman Sachs prepare valuation and other materials to
assist it in any negotiations regarding a potential business combination between
Unison and IBM.
On August 18, 1997, counsel for IBM circulated draft documentation for a
cash-election merger, including a proposed stockholder agreement and
noncompetition agreements for certain key employees, to WSGR. IBM's
documentation provided for, among other things, (i) a proposed stockholder
agreement which included the agreement of Unison's principal stockholders to
vote in favor of the transactions and (ii) the approval by the Unison Board, for
purposes of Section 203 of the DGCL, of the proposed stockholder agreement and
the acquisition by IBM in open market purchases of such number of additional
shares of Unison Common Stock as would constitute (when taken together with the
shares of Unison Common Stock subject to the stockholder agreement) a majority
of the fully diluted number of shares of Unison Common Stock.
On August 18, 19 and 20, 1997, representatives of IBM (including its
internal legal counsel) met at WSGR's offices in Palo Alto, California with
members of Unison's management and representatives of WSGR and Goldman Sachs to
conduct legal and financial due diligence on Unison.
On August 20, 1997, the Unison Board met with representatives of WSGR and
Goldman Sachs at WSGR's offices in Palo Alto, California. At the request of the
Unison Board, Goldman Sachs made a presentation with respect to a potential
business combination with IBM. During this presentation, Goldman Sachs, among
other things, reviewed trends in the systems management software industry;
discussed the strategic rationale for the potential combination; discussed
valuation analyses of selected software companies and reviewed selected computer
software transactions; discussed other potential business combination partners
for Unison; reviewed various valuation analyses of Unison based on a variety of
assumptions; and reviewed tax and other structural issues relating to a possible
business combination with IBM.
At this meeting, the Unison Board and representatives of WSGR and Goldman
Sachs also discussed, among other things, the viability of remaining an
independent entity and the possible interest certain potential business
combination partners (including those with whom conversations had taken place
during the prior 18 months) might have regarding Unison. The Unison Board
determined that it was unlikely that any of the identified potential business
combination partners, in light of their respective situations and past contacts
with Unison, would be interested in consummating a business combination
transaction with Unison. In addition, the Unison Board noted the possible
material adverse competitive, employee retention and other consequences
(including the potentially adverse reaction on IBM's willingness to continue
negotiations) that could result if Unison were the subject of an auction or if
Unison contacted other potential business combination partners at that point in
time. The Unison Board also discussed the status of its ongoing search for a new
Chief Executive Officer and the recent loss of certain employees. At the end of
this meeting, the Unison Board directed Goldman Sachs to meet with
representatives of IBM to further negotiate the consideration that IBM would be
willing to pay in a potential business combination.
On August 22, 1997, representatives of Goldman Sachs met in New York City
with Mr. Colburn to negotiate the terms of a potential business combination. At
the direction of the Unison Board, the Goldman Sachs representatives advised Mr.
Colburn that Unison was not comfortable with a price range of $13 to $15 per
share.
Unable to reach agreement as to price, on August 23, 1997, Mr. Lindelow
telephoned Mr. Lee and indicated that IBM had determined to end negotiations.
19
<PAGE>
On August 24, 1997, the Unison Board and representatives of WSGR and Goldman
Sachs met by telephone. During this meeting, Mr. Lee reviewed with the Unison
Board the results of his conversations with Mr. Lindelow. The Unison Board
requested that Goldman Sachs reengage other representatives of IBM to gather
information as to, among other things, any reasons other than price resulting in
IBM discontinuing negotiations and the other alternatives being considered by
IBM.
During the period from August 25 through 27, 1997, a representative of
Goldman Sachs and Mr. Colburn discussed by telephone IBM's reasons for
terminating negotiations, and representatives of Goldman Sachs indicated
Unison's desire to keep the channel of communications open and to meet again
after the Labor Day weekend.
During the period from August 26 through September 5, 1997, at the direction
of the Unison Board, Goldman Sachs contacted two potential business combination
partners for Unison. These parties were selected based on the likelihood that
they would be the most interested in consummating a business combination
transaction with Unison, might be willing and in a position to offer a higher
purchase price than IBM and that they would maintain the confidentiality of the
process. For strategic and other reasons, neither of the potential business
combination partners expressed an interest in pursuing a business combination
transaction with Unison.
During the period from September 2 through September 4, 1997, several
conversations took place among a representative of Goldman Sachs and Messrs.
Colburn, Lee and Lindelow in order to schedule a meeting, which occurred on
September 6, 1997.
On September 5, 1997, the Unison Board and representatives of WSGR and
Goldman Sachs met by telephone. Goldman Sachs updated the Unison Board as to the
results of their conversations with the two potential business combination
partners approached by them. Mr. Lee also informed the Unison Board that there
was a meeting scheduled for the following day between Mr. Lee and a
representative of Goldman Sachs with Messrs. Lindelow, Dayton and Colburn. It
was agreed that the primary purpose of the meeting was to establish whether a
possibility for a transaction between IBM and Unison existed and whether IBM had
any issues with respect to a potential acquisition other than price.
On September 6, 1997, Mr. Lee and a representative of Goldman Sachs met in
San Francisco, California with Messrs. Lindelow, Dayton and Colburn. During this
meeting, IBM's representatives discussed IBM's financial criteria for
acquisitions and IBM's requirement for a stockholder agreement from the
significant Unison stockholders who were "insiders". During its term, the
proposed stockholder agreement would, among other things, require those
stockholders to vote in favor of the proposed transaction and against any
competing transaction. These discussions were inconclusive.
On the morning of September 7, 1997, Mr. Lee received two telephone calls
from Mr. Dayton. During the first call, Mr. Dayton indicated that IBM was
comfortable offering $14.00 per share subject to satisfactory resolution of
other transaction terms. Mr. Lee responded that $14.00 a share was not a price
that the Unison Board would likely accept. During the second call, Mr. Dayton
indicated that IBM might entertain a price in excess of $14.00 per share. During
each call, Mr. Dayton indicated that IBM would require that the proposed
stockholder agreement be entered into by each of Mr. Lee and Mr. Casteel and
possibly other key Unison stockholders.
On September 7, 1997, the Unison Board and representatives of WSGR and
Goldman Sachs met by telephone. Mr. Lee and a representative of Goldman Sachs
updated the Unison Board as to the results of their meeting with Messrs.
Lindelow, Dayton and Colburn. Mr. Lee also advised the Unison Board of his
conversations earlier that day. The representative of Goldman Sachs informed the
Unison Board of a conversation that day with Mr. Colburn during which they
discussed the general parameters of IBM's proposed merger agreement and IBM's
desire to obtain the proposed stockholder agreement from at least Messrs. Lee
and Casteel (both Unison directors and officers and the two largest holders of
Unison Common Stock). The Unison Board then discussed the status of the
negotiations and possible alternatives.
20
<PAGE>
During these discussions, among other things, the Unison Board discussed Mr.
Lee's concern that Unison could face significant difficulty in retaining its
employees in the event a transaction with IBM or a third party was not
consummated in the near term and that the ongoing search for a new Unison Chief
Executive Officer had yet to generate an acceptable candidate. After discussion,
the Unison Board then determined that it would propose a price of $15.00 per
share to IBM, subject to satisfactory negotiation of the terms and conditions of
a proposed merger agreement, with the proposed stockholder agreement and the
non-competition agreements to be executed at the time the proposed merger
agreement was executed.
During the period from September 9, 1997 to September 12, 1997,
representatives of Unison and IBM met together with their respective legal
advisors and Goldman Sachs to continue due diligence and to negotiate definitive
agreements providing for the proposed merger. In particular, IBM maintained that
stockholders representing approximately 40% of the outstanding shares of Unison
Common Stock should enter into the proposed stockholder agreement and that key
members of Unison management should enter into non-competition agreements with
IBM. Representatives of Unison informed representatives of IBM that Messrs. Lee
and Casteel (the two largest Unison stockholders, with approximately 31% of the
outstanding Unison Common Stock) were willing to execute the proposed
stockholder agreement. It was tentatively agreed that the Unison Board would
approve, for purposes of Section 203 of the DGCL, the proposed stockholder
agreement and the acquisition by IBM in open market purchases of such number of
additional shares of Unison Common Stock as would constitute (when taken
together with the shares of Unison Common Stock subject to the proposed
stockholder agreement) 40% of the fully diluted number of shares of Unison
Common Stock (the "Open Market Purchases").
On the afternoon of September 12, 1997, the Unison Board and representatives
of WSGR and Goldman Sachs met at WSGR's offices in Palo Alto, California. At
this meeting, representatives of WSGR reviewed with the Unison Board the
principal terms of the proposed merger agreement and the related agreements
including, without limitation, the likely tax treatment of the proposed merger,
the conditions to the proposed merger, the termination rights of the parties
under the merger agreement and the situations under which a breakup fee would be
payable by Unison. Representatives of WSGR also reviewed the provisions of the
proposed stockholder agreement (including, without limitation, the requirement
that such agreement be executed by both Messrs. Lee and Casteel) and the
proposed agreement with respect to the Open Market Purchases. A discussion of
the foregoing terms, the circumstances under which they would be relevant and
the implications thereof followed.
At that afternoon meeting, the Unison Board and representatives of WSGR and
Goldman Sachs reviewed the history of the negotiations between IBM and Unison.
Among other things, the Unison Board also discussed Unison's results for the
most recently ended fiscal quarter and the challenges that Unison might face in
the future in achieving its internal revenue and income plan, particularly if
Unison were unable to attract and retain sufficient numbers of sales and
marketing and technical personnel. The Unison Board also noted that Unison had
yet to identify a suitable replacement candidate for Chief Executive Officer.
Following this discussion, Goldman Sachs also discussed certain information
concerning the potential acquisition.
On the evening of September 12, 1997, representatives of IBM and Unison
reached agreement as to the form of the definitive Merger Agreement, Stockholder
Agreement and Noncompetition Agreements (as defined herein) for presentation to
the Unison Board. At this time, the Unison Board, together with representatives
of WSGR and Goldman Sachs, held a telephonic board meeting with all directors
present. At this meeting, Goldman Sachs delivered its oral opinion that as of
such date the Merger Consideration to be received by holders of Unison Common
Stock pursuant to the Merger Agreement was fair to such stockholders (which
opinion was subsequently confirmed in writing). The Unison Board then
unanimously voted to approve the Merger Agreement, the Merger, the Stockholder
Agreement, the Open Market Purchases and the Noncompetition Agreements and the
transactions contemplated thereby.
21
<PAGE>
As of September 12, 1997, representatives of IBM, Merger Sub and Unison
executed the Merger Agreement, the Stockholder Agreement and the Noncompetition
Agreements.
Prior to the opening of the market on September 15, 1997, Unison and IBM
issued a joint news release announcing the Merger.
RECOMMENDATION OF THE UNISON BOARD AND REASONS FOR THE MERGER
THE UNISON BOARD HAS UNANIMOUSLY APPROVED THE MERGER AND THE MERGER
AGREEMENT, HAS UNANIMOUSLY DETERMINED THAT THE MERGER IS FAIR TO, AND IN THE
BEST INTERESTS OF, UNISON AND ITS STOCKHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT
HOLDERS OF SHARES OF UNISON COMMON STOCK VOTE FOR APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT.
The Unison Board's decision to approve the Merger and the Merger Agreement
was based in significant part upon the Board's view that a business combination
with IBM offered the best alternative to its stockholders. Unison's products
consist of utility products which integrate with systems/network management
frameworks, such as Tivoli's TME 10 product. The Unison Board expects that
Unison will face increasing competition in an already competitive environment as
systems/network management framework vendors (such as Tivoli and Computer
Associates) expand their suite of offered products through acquisition and/or
internal development to include utility products (such as workload scheduling
management and storage management) and as customers increasingly seek to
purchase total solutions from a limited number of vendors. Many of these
systems/network management framework vendors and other Unison competitors have
greater resources than Unison. In addition, Unison's continued growth,
particularly as an independent entity, would be contingent on, among other
things, its ability to attract and retain qualified senior management and
sufficient levels of sales and marketing and technical personnel. In recent
periods, Unison has had difficulty in attracting and retaining senior management
candidates and adequate levels of other employees. Tivoli and Unison have a
historical strategic relationship, and Tivoli and IBM are viewed by Unison as
well managed companies.
In addition to the foregoing, Unison identified several other potential
strategic benefits of the Merger that Unison believes will contribute to the
success of the Merger. The Unison Board believes that many of these benefits are
unique to a combination with IBM/Tivoli. These potential benefits include:
(i) the similar cultures of Unison and Tivoli;
(ii) the opportunity for Unison to leverage IBM's significantly greater
financial resources and IBM's reputation;
(iii) the potential to provide a broader and more complete product
offering of systems management and other utility products;
(iv) the ability to enter the customer's purchasing cycle sooner
(selection of utility products in most cases occurs after selection of the
systems/network management framework);
(v) the potential realization of synergies and cost savings associated
with combining the underlying technologies of Unison and Tivoli;
(vi) the opportunity to greatly increase the available sales force to
market Unison's products by marketing such products through IBM/Tivoli's
extensive sales force;
(vii) the opportunity to broaden and expand Unison's international
distribution channels by using IBM/Tivoli's extensive sales and distribution
presence; and
(viii) the opportunity to market Unison's products to a larger and
generally different installed base of Tivoli customers.
22
<PAGE>
Unison further evaluated the merits of a transaction which offers its
stockholders a choice of cash or shares of IBM Common Stock in a tax-free
reorganization. With respect to IBM's Common Stock, Unison also concluded that
it represents a more liquid investment than Unison Common Stock and is followed
by a much greater number of stock analysts.
In the course of its deliberations, the Unison Board reviewed a number of
other factors relevant to the Merger. In particular, the Unison Board
considered, among other things: (i) the proposed terms of the Merger and the
Merger Agreement, (ii) the likelihood of realizing superior benefits through
alternative business strategies; (iii) the likelihood of consummating a business
combination with a third party that would yield value to Unison's stockholders
in excess of the value that Unison's stockholders would receive in the Merger
(which factor, together with the factor described in clause (iv), the Unison
Board evaluated in light of, among other things, the effect of the Stockholder
Agreement on the likelihood of an alternative transaction); (iv) Unison's right
under the Merger Agreement to terminate the Merger Agreement in the event that
it receives a takeover proposal superior to the Merger; (v) information
concerning IBM's and Unison's respective businesses, historical financial
performances, operations and products, including public SEC and analysts'
reports and the due diligence reports from Unison's management and financial
advisors; (vi) an analysis of trading prices for Unison Common Stock as compared
to certain other system management software companies; (vii) the compatibility
of the management and businesses of Unison and Tivoli; and (viii) the detailed
financial analysis presented by Goldman Sachs, including the opinion of Goldman
Sachs that as of the date of such opinion the Merger Consideration to be
received by Unison's stockholders pursuant to the Merger Agreement was fair to
such stockholders.
The Unison Board also considered certain risks arising in connection with
the Merger, including (i) the potential disruption of Unison's business that
might result from employee and customer uncertainty and lack of focus following
announcement of the Merger and in connection with integrating the operations of
Unison and Tivoli; (ii) the possibility that the Merger might not be
consummated; (iii) the effects of the public announcement of the Merger on
Unison's sales and operating results and its ability to attract and retain key
management, marketing and technical personnel; (iv) the risk that the
announcement of the Merger could result in decisions by customers to cancel or
delay purchases of Unison products; and (v) the risk that the other benefits
sought to be achieved by the Merger will not be achieved. In the view of the
Unison Board, these considerations were not sufficient, either individually or
in the aggregate, to outweigh the advantages of the Merger.
The foregoing discussion of the information and factors considered by the
Unison Board is not intended to be exhaustive but is believed to include all
material factors considered by the Unison Board. In view of the wide variety of
factors, both positive and negative, considered by the Unison Board, the Unison
Board did not find it practical to, and did not, quantify or otherwise assign
relative weights to the specific factors considered. After taking into
consideration all of the factors set forth above, the Unison Board continues to
believe that the Merger is in the best interests of Unison and its stockholders
and continues to recommend approval and adoption of the Merger Agreement and
approval of the Merger.
OPINION OF FINANCIAL ADVISOR
On September 12, 1997, Goldman Sachs delivered its oral opinion to the
Unison Board that, as of such date, the Merger Consideration to be received by
holders of Unison Common Stock pursuant to the Merger Agreement was fair to such
holders. Goldman Sachs subsequently confirmed its oral opinion by delivery of a
written opinion dated September 12, 1997.
THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS DATED SEPTEMBER 12,
1997, WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON
THE REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED HERETO AS
ANNEX III AND IS INCORPORATED HEREIN BY REFERENCE. HOLDERS OF SHARES OF UNISON
COMMON STOCK ARE URGED TO, AND SHOULD, READ SUCH OPINION IN ITS ENTIRETY. SUCH
OPINION WAS PROVIDED FOR THE INFORMATION AND ASSISTANCE OF THE UNISON BOARD IN
CONNECTION WITH THE TRANSACTION
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CONTEMPLATED BY THE MERGER AGREEMENT AND DOES NOT CONSTITUTE A RECOMMENDATION AS
TO HOW ANY HOLDER OF SHARES OF UNISON COMMON STOCK SHOULD VOTE WITH RESPECT TO
SUCH TRANSACTION.
In connection with its opinion, Goldman Sachs reviewed, among other things,
(i) the Merger Agreement; (ii) the Stockholder Agreement; (iii) Annual Reports
to Stockholders and Annual Reports on Form 10-K of Unison for the two fiscal
years ended May 31, 1997; (iv) Annual Reports to Stockholders and Annual Reports
on Form 10-K of IBM for the five years ended December 31, 1996; (v) certain
interim reports to stockholders and Quarterly Reports on Form 10-Q of Unison and
IBM; (vi) certain other communications from Unison and IBM to their respective
stockholders; and (vii) certain internal financial analyses and forecasts (the
"Forecasts") for Unison prepared by its management. Goldman Sachs also held
discussions with members of the senior managements of Unison and IBM regarding
the past and current business operations, financial condition and future
prospects of their respective companies. In addition, Goldman Sachs reviewed the
reported price and trading activity for the shares of Unison Common Stock and
the shares of IBM Common Stock, compared certain financial and stock market
information for Unison and IBM with similar information for certain other
publicly traded companies, reviewed the financial terms of certain recent
business combinations in the software industry and performed such other studies
and analyses as it considered appropriate.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information reviewed by it and assumed such accuracy and
completeness for purposes of rendering its opinion. The Unison Board advised
Goldman Sachs, and for purposes of rendering its opinion Goldman Sachs assumed,
that Unison faces significant risks and uncertainties in achieving the
Forecasts. In addition, Goldman Sachs did not make an independent evaluation or
appraisal of the assets and liabilities of Unison and was not furnished with any
such evaluation or appraisal.
The following is a summary of certain of the financial analyses used by
Goldman Sachs in connection with providing its oral opinion to the Unison Board
on September 12, 1997 and its written opinion dated September 12, 1997.
(i) STOCK PRICE AND TRADING VOLUME HISTORY. Goldman Sachs reviewed the
daily historical closing prices and trading volumes for the shares of Unison
Common Stock from July 21, 1995 to September 10, 1997, the daily historical
closing prices and trading volumes of shares of IBM Common Stock from September
10, 1996 to September 10, 1997 and the weekly historical closing prices and
trading volumes of shares of IBM Common Stock from September 9, 1994 to
September 5, 1997. Goldman Sachs also reviewed the volume of shares of Unison
Common Stock traded at various prices during the periods one month, six months
and one year prior to September 10, 1997 and for the period from July 21, 1995
to September 10, 1997. In addition, Goldman Sachs reviewed the relationship
between movements in the price of shares of Unison Common Stock and a composite
index comprised of the following systems management software companies: Axent
Technologies, Inc., Legato Systems, Inc., New Dimension Software Ltd., Platinum
Technology, Inc. and Veritas Software Corporation.
(ii) ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES. In order to provide
contextual data and comparative market information, Goldman Sachs reviewed and
compared selected financial information relating to Unison to corresponding
financial information, ratios and public market multiples for seven publicly
traded systems management applications software companies: Axent Technologies,
Inc., BMC Software, Inc., Boole & Babbage, Inc., Legato Systems, Inc., New
Dimension Software Ltd., Platinum Technology, Inc. and Veritas Software
Corporation (the "Selected Companies").
Goldman Sachs calculated and compared various financial multiples and ratios
for Unison and the Selected Companies, including the growth rate in latest
quarter revenue as compared to one year prior, market capitalization as a
multiple of annualized latest quarter revenue (the "Revenue Multiple"), net
margins for the most recent fiscal quarter, estimated earnings per share ("EPS")
for calendar years 1997 and 1998, estimated five-year growth rates in EPS as
compiled by the Institutional Broker's Estimate Service ("IBES"), price-earnings
ratios calculated based on estimated 1997 and 1998 earnings and the ratio
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of estimated 1998 price-earnings ratios to the estimated five year EPS growth
rate compiled by IBES. The multiples and ratios for Unison were calculated using
a price per share of Unison Common Stock of $12.00 (the closing price of the
Unison Common Stock on September 8, 1997) and the Forecasts provided by its
management as well as earnings estimates made by research analysts and compiled
by IBES, and the multiples and ratios for each of the Selected Companies were
calculated based on the most recent publicly-available financial information for
such companies and earnings estimates made by research analysts and compiled by
IBES.
Goldman Sachs' analysis yielded a median growth rate in latest quarter
revenue from one year prior for the Selected Companies of 35.8% (with a range of
from 10.8% to 82.1%) compared to 23.8% for Unison and a median net margin for
the Selected Companies of 19.2% (with a range of from 2.7% to 29.5%) compared to
15.2% for Unison. Goldman Sachs' analysis of the Selected Companies yielded
Revenue Multiples with a median of 7.0x (and a range of from 2.6x to 11.6x),
compared to 2.9x for Unison. Goldman Sachs' analysis of estimated price-earnings
ratios for the Selected Companies for calendar year 1997 yielded a median of
46.1x (and a range of from 21.1x to 77.3x) and for calendar year 1998 yielded a
median of 27.5x (and a range of from 17.0x to 51.1x), compared to estimates for
Unison of 24.2x and 15.1x for calendar years 1997 and 1998, respectively, based
on estimates provided by Unison's management, and estimates for Unison of 24.5x
and 18.2x for calendar years 1997 and 1998, respectively, based on IBES
estimates. Estimated forward five-year EPS growth rates for the Selected
Companies had a median of 30.0% (and a range of from 23.0% to 50.0%) compared to
30.0% for Unison. The ratio of the 1998 estimated price-earnings ratio
(calculated using 1998 earnings estimates compiled by IBES) to the IBES
estimated five year growth rate for the Selected Companies had a median of 0.9x
(and a range of from 0.6x to 1.2x) compared to 0.6x for Unison.
(iii) PRESENT VALUE OF FUTURE SHARE PRICE ANALYSIS. Goldman Sachs
calculated the present value of the potential future price of shares of Unison
Common Stock as of August 15, 1998 discounted one year at discount rates of from
10% to 60%. The potential future share price as of August 15, 1998 was
calculated based on estimated calendar year 1999 EPS (as estimated utilizing
IBES compilations and estimates by Unison's management) and assumed forward
price-earnings multiples of between 14.0x and 24.0x. Goldman Sachs utilized IBES
compilations of research analysts' estimates to estimate 1999 EPS by increasing
the IBES median 1998 EPS estimate of $0.66 at the IBES median five year growth
rate of 30.0%. Goldman Sachs calculated present values of potential future share
prices ranging from $9.98 to $24.87 (using Unison management's estimate of
calendar year 1999 EPS) and from $7.53 to $18.76 (using the estimate based on
the IBES compilations).
(iv) SELECTED TRANSACTIONS ANALYSIS. Goldman Sachs analyzed information
relating to 44 selected transactions in the computer software industry since
1991 (the "Selected Transactions"). Goldman Sachs reviewed the premium paid over
the market value of the stock of the acquired company and the aggregate
consideration paid for the acquired company as a multiple of sales and earnings
before interest and taxes ("EBIT") and the equity consideration paid for the
acquired company as a multiple of net income and projected net income, each for
the latest reported twelve months.
For the Selected Transactions, the median of the premium paid over the
market value of the stock was 36.2%, with a high of 124.0% and a low of a 5.7%
discount to the market price. The premium represented by the Stock Consideration
and Cash Consideration is 7.1%, 16.1%, and 21.1% over the market price of Unison
Common Stock one day, one week and one month prior to the announcement of the
transaction.
For the Selected Transactions the medians of the aggregate consideration
paid as a multiple of sales and EBIT and the equity consideration paid as a
multiple of net income and projected net income were 6.5x (with a range of from
0.6x to 29.1x), 45.4x (with a range of from 13.9x to 237.8x), 65.9x (with a
range of from 9.5x to 193.5x) and 34.2x (with a range of from 11.5x to 103.3x),
respectively.
(v) PRO FORMA MERGER ANALYSIS. Goldman Sachs considered pro forma analyses
of the effect of the Merger on estimated 1997 and 1998 EPS of IBM. Goldman Sachs
performed such analyses using a price
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per share of IBM Common Stock of $97.00 (the closing price on September 10,
1997), estimates published by Goldman Sachs research analysts of 1997 and 1998
EPS for IBM and estimates of 1997 and 1998 EPS for Unison prepared by Unison's
management and converted to a calendar-year basis. At a transaction price per
share of Unison Common Stock of $15.00, the pro forma analyses indicated that
the Merger would result in estimated dilution of 0.2% and 0.1% in IBM's
estimated 1997 and 1998 EPS, respectively, and that pre-tax synergies of $14.2
million and $9.8 million would be required to eliminate such dilution in 1997
and 1998, respectively, compared to estimates provided by Unison's management of
potential pre-tax synergies of $51.3 million annually from incremental sales of
Unison's products through IBM's salesforce.
(vi) ANALYSIS AT VARIOUS PRICES. Goldman Sachs calculated alternative
values for the aggregate equity consideration based upon an aggregate
transaction consideration ranging from $12.00 to $18.00 per share of Unison
Common Stock and assuming the exercise of all outstanding stock options. Those
calculations yielded aggregate equity consideration values ranging from $146.8
million to $224.0 million for Unison, with a value of $185.4 million assuming
transaction consideration of $15.00 per share of Unison Common Stock, and
aggregate enterprise values (defined as aggregate equity value plus debt less
cash and marketable securities) of from $120.9 million to $198.1 million, with a
value of $159.5 million assuming transaction consideration of $15.00 per share.
Goldman Sachs considered enterprise value as a multiple of actual fiscal 1997
and estimated fiscal 1998 revenues and operating income and equity value as a
multiple of actual fiscal 1997 and estimated fiscal 1998 net income. The
multiples and ratios for Unison for fiscal 1997 were based on publicly available
information, and for fiscal 1998 were based on estimates provided by Unison's
management.
Such analysis indicated that for a transaction consideration of $15.00 per
share of Unison Common Stock, multiples of enterprise value to actual fiscal
1997 and estimated fiscal 1998 revenues were 4.0x and 2.7x, respectively;
multiples of enterprise value to actual fiscal 1997 and estimated fiscal 1998
operating income were 20.3x and 12.5x, respectively; and multiples of equity
value to actual fiscal 1997 and estimated fiscal 1998 net income were 34.2x and
21.6x, respectively.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its fairness determination,
Goldman Sachs did not attribute any particular weight to any analysis or factor
considered by it; rather, Goldman Sachs made its determination as to fairness on
the basis of its experience and professional judgment, after considering the
results of all such analyses. No company or transaction used in the above
analyses as a comparison is identical to Unison or IBM or the contemplated
transaction. The analyses were prepared solely for purposes of Goldman Sachs
providing its opinion to the Unison Board as to the fairness to holders of
Unison Common Stock of the Merger Consideration to be paid by IBM pursuant to
the Merger Agreement and do not purport to be appraisals or necessarily reflect
the prices at which businesses or securities actually may be sold. Analyses
based upon forecasts of future results are not necessarily indicative of actual
future results, which may be significantly more or less favorable than suggested
by such analyses. Because such analyses are inherently subject to uncertainty,
being based upon numerous factors or events beyond the control of the parties or
their respective advisors, none of Unison, IBM, Goldman Sachs or any other
person assumes responsibility if future results are materially different from
those forecast.
As described above, Goldman Sachs' opinion to the Unison Board was one of
many factors taken into consideration by the Unison Board in making its
determination to approve the Merger Agreement. The foregoing summary does not
purport to be a complete description of the analyses performed by Goldman Sachs
and is qualified by reference to the written opinion of Goldman Sachs set forth
in Annex III hereto.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and
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valuations for estate, corporate and other purposes. Unison selected Goldman
Sachs as its financial advisor because it is a nationally recognized investment
banking firm that has substantial experience in transactions similar to the
Merger.
Goldman Sachs provides a full range of financial, advisory and brokerage
services and in the course of its normal trading activities may from time to
time effect transactions and hold positions in the securities or options on
securities of Unison and/or IBM for its own account and for the account of
customers. Goldman Sachs is familiar with Unison having acted as its financial
advisor in connection with, and having participated in certain of the
negotiations leading to, the Merger Agreement. Goldman Sachs has also provided
certain investment banking services to IBM from time to time, including having
acted as lead agent for certain public offerings of debt securities of IBM, and
may provide investment banking services to IBM in the future. In the course of
its trading activities, Goldman Sachs accumulated a net long position as of
September 12, 1997 of 182,041 shares of IBM Common Stock. In addition, Goldman
Sachs has extended revolving credit to an affiliate of IBM in the amount of $200
million.
Pursuant to a letter agreement dated August 8, 1997 (the "Engagement
Letter"), Unison engaged Goldman Sachs to act as its financial advisor in
connection with the possible sale of all or a portion of Unison to IBM or any of
its affiliates or to another purchaser. Pursuant to the terms of the Engagement
Letter, Unison agreed to pay Goldman Sachs a fee upon the consummation of a
transaction resulting in the sale of 50% or more of Unison's outstanding Common
Stock (including such a sale accomplished through a merger) of (i) $625,000,
plus (ii) 7.50% of any incremental aggregate consideration paid as a result of
the price per share paid for Unison Common Stock being in excess of $15.00 and
up to $16.00, plus (iii) 5.00% of any incremental aggregate consideration paid
as a result of the price per share paid for Unison Common Stock being in excess
of $16.00. As a result of the Merger, the fee payable to Goldman Sachs will be
$625,000. Unison has agreed to reimburse Goldman Sachs for its reasonable
out-of-pocket expenses, including attorneys' fees, and to indemnify Goldman
Sachs against certain liabilities, including certain liabilities under the
federal securities laws.
EFFECTIVE TIME
The Merger will become effective at such time as a Certificate of Merger is
duly filed with the Secretary of State of the State of Delaware, or at such
later time as is specified in such Certificate of Merger. The Merger Agreement
provides that IBM and Unison will cause a Certificate of Merger to be filed as
soon as practicable on or after the Closing Date. See "THE MERGER AGREEMENT--
Conditions to the Consummation of the Merger."
MERGER CONSIDERATION
At the Effective Time, each Outstanding Unison Share will be converted into
the right to receive cash (subject to proration), shares of IBM Common Stock,
or, in certain circumstances relating to a Cash Election, a combination of both
cash and IBM Common Stock. Each Unison stockholder will have the opportunity to
indicate, on an Election Form, whether such stockholder wishes to make a Stock
Election or a Cash Election with respect to each share of Unison Common Stock
held by such stockholder. If a holder of Unison Common Stock does not make a
Cash Election or a Stock Election, or properly revokes an Election Form without
timely submitting a revised, properly completed Election Form, such Unison
stockholder will be deemed to have made a Cash Election. If the aggregate amount
of cash requested by stockholders of Unison pursuant to effective or deemed Cash
Elections exceeds the Cash Cap, the allocation of cash and shares of IBM Common
Stock that a stockholder of Unison may receive for each share that is subject to
a Cash Election will depend on the proration procedures to be applied as
described below.
Stockholders of Unison who make an effective "Stock Election" will receive,
without any proration or other similar limitation, for each share of Unison
Common Stock for which such election is made, a
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number of shares of IBM Common Stock equal to a fraction, the numerator of which
is $15 and the denominator of which is the IBM Common Stock Price. The "IBM
Common Stock Price" is an amount equal to the average of the closing sales price
of IBM Common Stock on the NYSE Tape on each of the 10 consecutive trading days
immediately preceding the second trading day prior to the Effective Time.
Stockholders of Unison who make a "Cash Election" will receive (subject to the
proration procedures described below) for each share of Unison Common Stock for
which such election is made, or deemed to have been made, an amount in cash
equal to $15.
In the event that the Requested Cash Amount exceeds the Cash Cap, each such
holder will receive, for each share of Unison Common Stock for which a Cash
Election has been made or deemed to have been made, (x) cash in an amount equal
to the product of (1) the Cash Consideration and (2) a fraction, the numerator
of which is the Cash Cap and the denominator of which is the Requested Cash
Amount and (y) a number of shares of IBM Common Stock equal to a fraction, the
numerator of which is equal to the Cash Consideration minus the Prorated Cash
Amount and the denominator of which is the IBM Common Stock Price. The Cash Cap
is equal to the product of (x) $15 and (y) the number of Outstanding Unison
Shares and (z) 0.5. The Outstanding Unison Shares are the shares of Unison
Common Stock outstanding immediately prior to the Effective Time, other than, in
each case at such time, (i) shares of Unison Common Stock owned by Unison or its
subsidiaries and (ii) two times the sum of the number of the shares of Unison
Common Stock owned by IBM or its subsidiaries and the number of Dissenting
Shares.
An Election Form is being mailed together with this Proxy
Statement/Prospectus. Record holders of Unison Common Stock will have the right
to submit Election Forms specifying the number of shares of Unison Common Stock
that such holders desire to have converted into Stock Consideration and the
number of shares of Unison Common Stock that such holders desire to have
converted, subject to the proration procedures described above, into the Cash
Consideration. The Exchange Agent for the payment of the Merger Consideration in
connection with the Merger will be First Chicago Trust Company of New York. In
order for a Stock Election to be effectively made, a properly completed and
signed Election Form must be received by the Exchange Agent, together with the
certificates for shares of Unison Common Stock to which such Election Form
relates, at the Exchange Agent's designated office (as set forth in the Election
Form enclosed herewith), by 5:00 p.m., New York City time, on the Election Date.
See "THE MERGER--Election Procedure; Exchange Procedures."
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ELECTION PROCEDURE; EXCHANGE PROCEDURES
ANY ELECTION TO RECEIVE THE STOCK CONSIDERATION WILL HAVE BEEN PROPERLY MADE
ONLY IF THE EXCHANGE AGENT HAS RECEIVED AT ITS DESIGNATED OFFICE (AS SET FORTH
IN THE ELECTION FORM ENCLOSED HEREWITH), BY 5:00 P.M., NEW YORK CITY TIME, ON
THE ELECTION DATE, AN ELECTION FORM PROPERLY COMPLETED AND SIGNED AND
ACCOMPANIED BY THE CERTIFICATES FOR THE SHARES OF UNISON COMMON STOCK (THE
"CERTIFICATES") TO WHICH SUCH ELECTION FORM RELATES, DULY ENDORSED IN BLANK OR
OTHERWISE IN FORM ACCEPTABLE FOR TRANSFER ON THE BOOKS OF UNISON (OR BY AN
APPROPRIATE GUARANTEE OF DELIVERY OF SUCH CERTIFICATES AS SET FORTH IN SUCH
ELECTION FORM 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).
Any holder of Unison Common Stock who has made an election by submitting an
Election Form to the Exchange Agent may, at any time prior to (i) 5:00 p.m., New
York time, on the Election Date or (ii) 60 days after the date the Proxy
Statement/Prospectus is first mailed to holders of Unison Common Stock, if the
Effective Time has not yet occurred by such date, change such holder's election
by submitting a revised Election Form, properly completed and executed and
received by the Exchange Agent prior to the Election Date or revoke his election
by written notice to the Exchange Agent and withdraw his Certificates
representing shares of Unison Common Stock deposited with the Exchange Agent. In
addition, all Election Forms will be automatically revoked if the Exchange Agent
is notified in writing by IBM and Unison that the Merger has been abandoned. If
an Election Form is revoked, the Certificate or Certificates (or guarantees of
delivery, as appropriate) for the shares of Unison Common Stock to which such
Election Form relates will be promptly returned to the Unison stockholder
submitting the same to the Exchange Agent.
The good faith determination of the Exchange Agent as to whether or not
elections to receive the Stock Consideration have been properly made or revoked
pursuant to the election provisions described above with respect to shares of
Unison Common Stock and when elections and revocations were received by it will
be binding. If no Election Form is received with respect to shares of Unison
Common Stock, or if the Exchange Agent determines that any election to receive
Stock Consideration was not properly made with respect to any shares of Unison
Common Stock, a Cash Election will be deemed to have been made with respect to
such shares and such shares will be exchanged in the Merger for Cash
Consideration (subject to proration). In addition, for purposes of calculating
the Requested Cash Amount, each holder of shares of Unison Common Stock who has
delivered a demand for appraisal of such holder's shares will be deemed to have
made a Cash Election with respect to such shares. The Exchange Agent will also
make all computations as to the proration provisions relating to the Cash
Consideration (which computation will be made as soon as practicable following
the third NYSE trading day after the Election Date), and absent manifest error
any such computation will be conclusive and binding on the holders of shares of
Unison Common Stock. The Exchange Agent may, with the mutual agreement of IBM
and Unison, make such rules as are consistent with the provisions described in
the foregoing paragraphs for the implementation of the elections described
herein and as are necessary or desirable fully to effect such elections.
If, after the Effective Time, a holder of Dissenting Shares has failed to
perfect or has effectively withdrawn or lost his right to appraisal and payment,
such holder's shares will 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 IBM
Common Stock), without interest, that a holder of a share (a "Non-dissenting
Share") of Unison Common Stock who had made or had been deemed to have made a
Cash Election with respect to such Non-dissenting Share prior to the Election
Date would have received with respect to such Non-dissenting Share (PROVIDED
that no adjustment will 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).
DIVIDENDS. No dividends or other distributions with respect to IBM Common
Stock with a record date after the Effective Time will be paid to the holder of
any unsurrendered Certificate with respect to the
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shares of IBM Common Stock represented thereby and no cash payment in lieu of
fractional shares will be paid to any such holder until the holder of record of
such Certificate surrenders such Certificate. Following surrender of any such
Certificate, there will be paid to the record holder of the certificate
representing whole shares of IBM Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of IBM Common Stock to which such holder
is entitled and the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole shares
of IBM 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 IBM Common Stock.
NO FURTHER OWNERSHIP RIGHTS IN UNISON COMMON STOCK. The Merger
Consideration issued upon the surrender for exchange of shares of Unison Common
Stock in accordance with the terms of the Merger Agreement (including any cash
paid) will be deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to such shares of Unison 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 Unison on such shares of Unison Common Stock in accordance
with the terms of the Merger Agreement or prior to the date of the Merger
Agreement and which remain unpaid at the Effective Time, and there will be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Unison Common Stock which 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 will be canceled and exchanged as described herein.
NO FRACTIONAL SHARES. No certificates or scrip representing fractional
shares of IBM Common Stock will 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 IBM. Each holder of shares
of Unison Common Stock exchanged pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of IBM Common Stock (after taking
into account all Certificates delivered by such holder) will 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 fraction of a
share of IBM Common Stock multiplied by the IBM Common Stock Price.
EXCHANGE PROCEDURES. As of the Effective Time, IBM will deposit with the
Exchange Agent for the benefit of the holders of shares of Unison Common Stock,
for exchange in accordance with the Merger Agreement, through the Exchange
Agent, the cash and certificates representing the shares of IBM Common Stock
constituting the Merger Consideration issuable in exchange for outstanding
shares of Unison Common Stock.
Following the Effective Time, the Exchange Agent will send a transmittal
form to each holder of a Certificate (other than holders of Certificates who
have properly submitted Election Forms to the Exchange Agent). The transmittal
form will contain instructions with respect to the surrender of the Certificates
in exchange for the Merger Consideration. EXCEPT FOR CERTIFICATES SURRENDERED
WITH AN ELECTION FORM AS DESCRIBED ABOVE, UNISON STOCKHOLDERS SHOULD NOT FORWARD
CERTIFICATES TO THE EXCHANGE AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL FORMS.
Each holder of an outstanding Certificate or Certificates will, 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 IBM Common Stock, if any, and the amount of cash,
if any, into which the aggregate number of shares of Unison Common Stock
previously represented by such Certificate or Certificates surrendered have been
converted pursuant to the Merger Agreement. The Exchange Agent will accept
surrendered Certificates upon compliance with such reasonable terms and
conditions as the Exchange Agent may impose in accordance with normal exchange
practices. If any certificate for IBM 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
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registered, the Certificate so surrendered must be properly endorsed, with
signature guaranteed, or otherwise in proper form for transfer and the person
requesting such exchange must pay to IBM or its transfer agent any transfer or
other taxes required by reason of the issuance of Certificates for IBM Common
Stock in a name other than that of the registered holder of the Certificate
surrendered, or establish to the satisfaction of IBM or its transfer agent that
such tax has been paid or is not applicable. Until surrendered, each Certificate
will be deemed at any time after the Effective Time to represent only the right
to receive the Merger Consideration upon effective surrender as described above.
No interest will be paid or will accrue on any cash payable as Merger
Consideration or in lieu of any fractional shares of IBM Common Stock.
STOCK EXCHANGE LISTING
It is a condition to each party's obligation to effect the Merger that the
shares of IBM Common Stock issuable to Unison stockholders pursuant to the
Merger Agreement have been approved for listing on the NYSE, subject to official
notice of issuance. To the extent the shares of IBM Common Stock issued pursuant
to, and as a result of the transactions contemplated by, the Merger Agreement
are treasury shares, such shares have been approved for listing on the NYSE.
EXPENSES
The Merger Agreement provides that all fees and expenses incurred in
connection with the Merger and the Merger Agreement and the transactions
contemplated by the Merger Agreement will 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 this Proxy
Statement/Prospectus and the Registration Statement will be shared equally by
IBM and Unison.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the material U.S. Federal income tax
considerations of the Merger generally relevant to holders of Unison Common
Stock assuming that the Merger is consummated as contemplated by this Proxy
Statement/Prospectus. This discussion is based upon interpretations of the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations
promulgated thereunder, judicial decisions and administrative rulings as of the
date hereof, all of which are subject to change or differing interpretations,
including changes and interpretations with retroactive effect. The discussion
below does not address all Federal income tax consequences or any state, local
or foreign tax consequences of the Merger. The tax treatment of a stockholder
may vary depending upon the stockholder's particular situation, and certain
stockholders (including dealers in securities or foreign currency, holders who
acquire their Unison Common Stock pursuant to the exercise of employee stock
options or otherwise as compensation, tax-exempt entities, banks, thrifts,
insurance companies, persons that hold Unison Common Stock as part of a
"straddle", a "hedge", a "constructive sale" transaction or a "conversion
transaction", persons that have a "functional currency" other than the U.S.
dollar, investors in pass-through entities and persons who are neither citizens
or resident of the United States or that are foreign corporations, foreign
partnerships or foreign estates or trusts as to the United States) may be
subject to special rules not discussed below. This discussion also does not
address the U.S. Federal income tax consequences of the Merger to holders of
Unison Common Stock that do not hold such common stock as a capital asset within
the meaning of Section 1221 of the Code.
EACH UNISON STOCKHOLDER IS URGED TO CONSULT HIS, HER OR ITS OWN TAX ADVISOR
AS TO THE PARTICULAR TAX CONSEQUENCES TO HIM, HER OR IT OF THE MERGER, INCLUDING
THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN LAWS AND CHANGES IN
APPLICABLE TAX LAWS.
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. Consummation of the Merger
is conditioned upon the receipt of opinions of Wilson Sonsini Goodrich & Rosati,
counsel to Unison, and Cravath, Swaine & Moore, counsel to IBM, as to the
qualification of the Merger as a reorganization under Section 368(a) of
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the Code. Such opinions will be subject to various limitations and
qualifications, and are based in part on certain representations made by IBM,
Unison and certain Unison stockholders.
No rulings have been or will be requested from the Internal Revenue Service
(the "IRS") with respect to any of the matters discussed herein, and the
opinions of counsel described above are not binding on the IRS.
EXCHANGE OF UNISON COMMON STOCK SOLELY FOR IBM COMMON STOCK. Except as
discussed below under "--CASH IN LIEU OF FRACTIONAL SHARES," a holder of Unison
Common Stock who receives solely IBM Common Stock in exchange for Unison Common
Stock will not recognize gain or loss upon such exchange. The aggregate tax
basis of the IBM Common Stock received by such holder will be equal to the
aggregate tax basis of the Unison Common Stock surrendered (excluding any
portion of the holder's basis allocated to fractional shares) and the holding
period of the IBM Common Stock will include the holding period of the Unison
Common Stock surrendered.
EXCHANGE OF UNISON COMMON STOCK SOLELY FOR CASH. Subject to the discussion
below under "--ADDITIONAL CONSIDERATIONS--RECHARACTERIZATION OF GAIN AS A
DIVIDEND," a holder of Unison Common Stock who receives solely cash in exchange
for IBM Common Stock in the Unison Merger or pursuant to the exercise of
appraisal rights under the DGCL will recognize capital gain or loss equal to the
difference between the tax basis of the Unison Common Stock surrendered and the
amount of cash received therefor. Gain or loss must be calculated separately for
each block of Unison Common Stock (I.E., shares of Unison Common Stock acquired
at the same time in a single transaction).
EXCHANGE OF UNISON COMMON STOCK FOR A COMBINATION OF IBM COMMON STOCK AND
CASH. Except as discussed below under "--CASH IN LIEU OF FRACTIONAL SHARES" and
"--ADDITIONAL CONSIDERATIONS-- RECHARACTERIZATION OF GAIN AS A DIVIDEND," a
holder of Unison Common Stock who receives a combination of IBM Common Stock and
cash in exchange for Unison Common Stock (by reason of making a Cash Election
with respect to some of such holders' Unison Common Stock and a Stock Election
with respect to the rest or the application of proration to an effective Cash
Election, including a deemed Cash Election) generally will recognize any capital
gain realized in the transaction but will not recognize any loss realized in the
transaction. The amount of capital gain that is recognized will be calculated
separately for each block of Unison Common Stock surrendered, in an amount equal
to the lesser of (i) the amount of gain realized in respect of such block (I.E.,
the excess of (a) the sum of the amount of cash and the far market value of IBM
Common Stock received that is allocable to such block of Unison Common Stock
over (b) the tax basis of such block) and (ii) the amount of cash received that
is allocable to such block. The tax basis of the IBM Common Stock received in
exchange for a block of Unison Common Stock will be equal to the tax basis of
such surrendered block of Unison Common Stock, decreased by the amount of cash
received in respect of such block and increased by the amount of gain recognized
in respect of such block. The holding period of the IBM Common Stock will
include the holding period of such block of Unison Common Stock surrendered.
ADDITIONAL CONSIDERATIONS--RECHARACTERIZATION OF GAIN AS A DIVIDEND. With
respect to a holder of Unison Common Stock that receives cash in connection with
the Merger, it is possible that some or all the gain recognized by such holder
could be treated as a dividend if the receipt of such cash in connection with
the Merger has the effect of a dividend. In that case, the amount of cash
received by such holder in connection with the Merger will be treated first, as
a dividend to the extent of the such holder's allocable portion of accumulated
earnings and profits; next, as a non-taxable return of capital to the extent of
the holder's tax basis in its shares; and thereafter as a capital gain. To the
extent such amount is taxable as a dividend, such dividend will be includable in
the holder's gross income as ordinary income in its entirety, without reduction
for the tax basis of the shares exchanged for cash, and no loss will be
recognized. To the extent that cash received in exchange for shares is treated
as a dividend to a corporate holder, (i) it may be eligible for a
dividend-received deduction to the extent of any dividends received from IBM
(subject to applicable limitations) and (ii) it will be subject to the
"extraordinary dividend" provisions of the Code.
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Corporate holders should consult their tax advisors concerning the availability
of the dividend-received deduction and the application of the "extraordinary
dividend" provisions of the Code.
For purposes of determining whether the receipt of cash by a holder of
Unison Common Stock in connection with the Merger has the effect of the
distribution of a dividend, such holder should be treated for U.S. Federal
income tax purposes as if he exchanged all his Unison Common Stock solely for
IBM Common Stock and then IBM immediately redeemed (the "Deemed IBM Redemption")
a portion of such IBM Common Stock in exchange for the cash such holder actually
received in connection with the Merger. Generally, under that analysis, the
receipt of cash by a holder in connection with the Deemed IBM Redemption will
not be treated as a dividend if such Deemed IBM Redemption (i) results in a
"complete termination" of such holder's equity interest in IBM, (ii) results in
a "substantially disproportionate" redemption with respect to such holder or
(iii) is "not essentially equivalent to a dividend" with respect to such holder.
Section 302 applies attribution rules pursuant to which a holder is deemed to
own any stock (i) owned by certain family members (except that in the case of a
"complete termination" a holder may, under certain circumstances, waive
attribution from family members), (ii) owned directly or indirectly by a
partnership, estate or trust in proportion to such holder's partnership or
beneficial interest, (iii) owned directly or indirectly by a corporation, if
such holder owns, directly or indirectly, 50% of the value of the stock of such
corporation, in proportion to such ownership and (iv) that the holder has the
right to acquire by exercise of an option. Further, contemporaneous transactions
(E.G., open market sales and purchases and employee stock option grants) may be
taken into account.
The Deemed IBM Redemption will result in a substantially disproportionate
redemption with respect to a holder if the percentage of the then outstanding
IBM Common Stock owned by such holder immediately after the Deemed IBM
Redemption is less than 80% of the percentage of the IBM Common Stock owned by
such holder immediately before the Deemed IBM Redemption. If the Deemed IBM
Redemption fails to satisfy the "substantially disproportionate" test, the
holder may nonetheless satisfy the "not essentially equivalent to a dividend"
test. An exchange of IBM Common Stock for cash in connection with the Deemed IBM
Redemption will satisfy the "not essentially equivalent to a dividend" test if
it results in a "meaningful reduction" of the holder's equity interest in IBM.
An exchange of IBM Common Stock for cash pursuant to the Deemed IBM
Redemption that results in a reduction of the proportionate equity interest in
IBM of a holder whose relative equity interest in IBM is minimal (an interest of
less than 1% should satisfy this requirement) and who does not exercise any
control over or participate in the management of the corporation's corporate
affairs should be treated as "not essentially equivalent to a dividend."
Because the application of the above-described tests depends upon each
stockholder's particular circumstances, stockholders are urged to consult their
own tax advisors regarding the tax consequences of the Deemed IBM Redemption.
FEDERAL INCOME TAX CONSIDERATIONS IN CHOOSING AN ELECTION. If a stockholder
of Unison who makes (or is deemed to make) an effective Cash Election for all
such stockholder's Unison Common Stock receives IBM Common Stock as a result of
the proration procedures, the tax consequences will be the same as those for a
stockholder who makes a Cash Election with respect to some of its shares of
Unison Common Stock and a Stock Election with respect to the rest.
The actual Federal income tax consequences to each Unison stockholder of
making a Cash Election will not be ascertainable at the time the election is
made because stockholders of Unison will not know at such time if, or to what
extent, the proration procedures described above will apply. Accordingly,
stockholders are urged to consult their own tax advisors before making an
election in connection with the Merger.
CASH IN LIEU OF FRACTIONAL SHARES. A holder of Unison Common Stock who
receives cash in lieu of fractional shares of IBM Common Stock will be treated
as having received such fractional shares pursuant to the Merger and then as
having exchanged such fractional shares for cash in a redemption by IBM. Any
gain or loss attributable to fractional shares generally will be capital gain or
loss. The amount of such gain
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or loss will be equal to the difference between the ratable portion of the tax
basis of the Unison Common Stock surrendered in the Merger that is allocated to
such fractional shares and the cash received in lieu thereof.
CAPITAL GAIN OR LOSS. Any capital gain or loss recognized by a stockholder
in connection with the transfer of Unison Common Stock pursuant to the Merger
generally will constitute long-term capital gain or loss if such Unison Common
Stock has been held by such stockholder for more than 12 months as of the
Effective Time. Generally, long-term capital gain will be subject to U.S.
Federal income tax at a 28% rate if the underlying Unison Common Stock has been
held for more than 12 months but not more than 18 months as of the Effective
Time. If the underlying Unison Common Stock has been held for more than 18
months as of the Effective Time, however, any long-term capital gain generally
will be subject to U.S. Federal income tax at a 20% rate.
REPORTING REQUIREMENTS. Each holder of Unison Common Stock that receives
IBM Common Stock in the Unison Merger will be required to retain records and
file with such holder's U.S. Federal income tax return a statement setting forth
certain facts relating to the Merger.
BACKUP WITHHOLDING. Unless a stockholder complies with certain reporting
and/or certification procedures or is an exempt recipient under applicable
provisions of the Code and Treasury regulations promulgated thereunder, such
stockholder may be subject to a 31% backup withholding tax with respect to any
cash payments received pursuant to the Merger. Stockholders should consult their
brokers to ensure compliance with such procedures.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO CASH
PAYMENTS TO CERTAIN STOCKHOLDERS IN CONNECTION WITH THE MERGER, EACH STOCKHOLDER
MUST PROVIDE THE EXCHANGE AGENT WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER AND CERTIFY THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP
FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE W-9 IN THE ELECTION
FORM. IF BACKUP WITHHOLDING APPLIES WITH RESPECT TO A STOCKHOLDER, THE EXCHANGE
AGENT IS REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS MADE TO SUCH STOCKHOLDER.
THIS FEDERAL INCOME TAX DISCUSSION IS FOR GENERAL INFORMATION ONLY AND MAY
NOT ADDRESS ALL TAX CONSIDERATIONS THAT MAY BE SIGNIFICANT TO A HOLDER OF UNISON
COMMON STOCK. ALL UNISON STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER, INCLUDING ALL
FOREIGN, STATE AND LOCAL TAX CONSEQUENCES.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Unison Board with respect to the
approval and adoption of the Merger Agreement and the transactions contemplated
thereby, stockholders of Unison should be aware that certain members of the
management of Unison and the Unison Board may have certain interests in the
Merger that are different from, or in addition to, the interests of Unison
stockholders generally.
GENERAL. Merger Sub will be the Surviving Corporation in the Merger and,
following the Merger, will succeed to and assume all the rights and obligations
of Unison. The officers of Unison will be the officers of the Surviving
Corporation. Following the Merger, the current directors of Unison will not be
directors of the Surviving Corporation. As of the Record Date, directors and
executive officers of Unison and their affiliated entities owned (i) 3,917,174
shares of Unison Common Stock for which they will receive the same consideration
as other Unison stockholders and (ii) unexercised Stock Options to acquire
179,376 shares of Unison Common Stock, which will be treated as described below
under "--UNISON STOCK OPTIONS."
UNISON STOCK OPTIONS. Under the terms of the Merger Agreement, each
outstanding Stock Option will 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 IBM Common Stock (rounded down to the
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nearest whole share) determined by multiplying the number of shares of Unison
Common Stock subject to the Stock Option by the Exchange Ratio, at a price per
share of IBM Common Stock (rounded up to the nearest whole cent) equal to (a)
the aggregate exercise price for the shares of Unison Common Stock otherwise
purchasable pursuant to the Stock Option divided by (b) the aggregate number of
shares of IBM Common Stock deemed purchasable pursuant to such Stock Option.
Pursuant to the terms of the Merger Agreement, all outstanding Stock Options
granted under Unison's Stock Plans will be assumed by IBM on the same terms and
conditions as the original grants, except that the number of shares and exercise
price shall be adjusted as set forth in the preceding paragraph.
Pursuant to the terms of the 1993 Director Stock Option Plan and the 1995
Stock Option Plan, all outstanding Stock Options held by current directors of
Unison granted under such plans will become fully vested and exercisable
following the Effective Date. At the Record Date, Stock Options to purchase an
aggregate of 179,376 shares were outstanding under such plans.
STOCKHOLDER AGREEMENT. Don H. Lee and Michael A. Casteel, in their
capacities as stockholders, have entered into the Stockholder Agreement. The
general effect of the Stockholder Agreement is to increase the likelihood that
Stockholder Approval will be obtained. See "THE MERGER AGREEMENT--The
Stockholder Agreement."
INDEMNIFICATION PURSUANT TO THE MERGER AGREEMENT. IBM has agreed that, from
and after the consummation of the Merger, IBM will, and will cause the Surviving
Corporation to, fulfill and honor in all respects the obligations of Unison
pursuant to (i) each indemnification agreement in effect at such time between
Unison and each person who is or was a director or officer of Unison at or prior
to the Effective Time and (ii) any indemnification provisions under the Unison
Certificate of Incorporation or Unison By-laws as each was in effect on the date
of the Merger Agreement (such persons to be indemnified are referred to as,
individually, the "Indemnified Party"). The Certificate of Incorporation and
By-laws of the Surviving Corporation will contain the provisions with respect to
indemnification and exculpation from liability set forth in the Unison
Certificate of Incorporation and Unison By-laws on the date of the Merger
Agreement, which provisions will 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, except that IBM
will not be required to maintain the Surviving Corporation's existence as a
separate legal entity. Until the earlier to occur of (i) six years from the
Effective Time and (ii) the expiration of the current term of Unison's
directors' and officers' liability insurance policy (the "Unison Policy"), IBM
will maintain in effect the Unison Policy (or, in lieu of maintaining such
insurance, cause coverage to be provided under any policy maintained for the
benefit of IBM or any of its subsidiaries or otherwise obtained by IBM, so long
as the terms thereof are no less advantageous to the intended beneficiaries
thereof than those of the Unison Policy), provided that in no event will IBM be
required to expend in any one year, or maintain coverage in any one year costing
an amount greater than, an amount in excess of 200% of the annual premiums most
recently paid by Unison for such insurance.
APPRAISAL RIGHTS
Holders of record of Unison Common Stock who comply with the applicable
statutory procedures summarized herein may be entitled to appraisal rights under
Section 262 of the DGCL ("Section 262"). Unison reserves the right to challenge
any assertion by any stockholder of Unison that appraisal rights under Section
262 are applicable to the Merger.
A person having a beneficial interest in shares of Unison Common Stock held
of record in the name of another person, such as a broker or nominee, must act
promptly to cause the record holder to follow the steps summarized below
properly and in a timely manner to perfect appraisal rights.
The following discussion is not a complete statement of the law pertaining
to appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 which is reprinted in its entirety as Annex IV to this Proxy
Statement/Prospectus. All references in Section 262 and in this summary to a
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"stockholder" or "holder" are to the record holder of the shares of Unison
Common Stock as to which appraisal rights may be asserted.
Under the DGCL, holders of shares of Unison Common Stock who follow the
procedures set forth in Section 262 may be entitled to have their Dissenting
Shares appraised by the Delaware Chancery Court and to receive payment in cash
of the "fair value" of such Dissenting Shares, exclusive of any element of value
arising from the accomplishment or expectation of Merger, together with a fair
rate of interest, if any, as determined by such court.
Under Section 262, where a proposed merger is to be submitted for approval
at a meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, must notify each of its stockholders who was such on the record
date for such meeting with respect to shares for which appraisal rights are
available, that appraisal rights are so available, and must include in such
notice a copy of Section 262.
This Proxy Statement/Prospectus constitutes such notice to the holders of
Dissenting Shares and the applicable statutory provisions of the DGCL are
attached to this Proxy Statement/Prospectus as Annex IV. Any stockholder who
wishes to assert such appraisal rights or who wishes to preserve his right to do
so should review the following discussion and Annex IV carefully, because
failure to timely and properly comply with the procedures specified will result
in the loss of appraisal rights under the DGCL.
A holder of Dissenting Shares wishing to exercise any appraisal right such
holder may have must deliver to Unison prior to the vote on the Merger Agreement
at the Special Meeting to be held on December 8, 1997, a properly executed
written demand for appraisal of such holder's Dissenting Shares. Any such holder
will not be entitled to make a Cash Election or Stock Election with respect to
such holder's Dissenting Shares. A holder of Dissenting Shares wishing to
exercise such holder's appraisal rights must be the record holder of such
Dissenting Shares on the date the written demand for appraisal is made and must
continue to hold such Dissenting Shares of record through the effective date of
the Merger. Accordingly, a holder of Dissenting Shares who is the record holder
of Dissenting Shares on the date the written demand for appraisal is made, but
who thereafter transfers such Dissenting Shares prior to the consummation of the
Merger, will lose any right to appraisal in respect of such Dissenting Shares.
Only a holder of record of Dissenting Shares is entitled to assert appraisal
rights for the Dissenting Shares registered in that holder's name. A demand for
appraisal should be executed by or on behalf of the holder of record, fully and
correctly, as such holder's name appears on such holder's stock certificates. If
the Dissenting Shares are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, execution of the demand should be made in that
capacity, and if the Dissenting Shares are owned of record by more than one
person as in a joint tenancy or tenancy in common, the demand should be executed
by or on behalf of all joint owners. An authorized agent, including one or more
joint owners, may execute a demand for appraisal on behalf of a holder of
record; however, the agent must identify the record owner or owners and
expressly disclose the fact that, in executing the demand, the agent is agent
for such owner or owners. A record holder such as a broker who holds Dissenting
Shares as nominee for several beneficial owners may exercise appraisal rights
with respect to the Dissenting Shares held for one or more beneficial owners
while not exercising such rights with respect to the Dissenting Shares held for
other beneficial owners; in such case, the written demand should set forth the
number of Dissenting Shares as to which appraisal is sought. When no number of
Dissenting Shares is expressly mentioned the demand will be presumed to cover
all shares held in the name of the record owner. If a stockholder holds
Dissenting Shares through a broker who in turn holds the shares through a
central securities depositary nominee, such as Cede & Co., a demand for
appraisal of shares must be made by or on behalf of the depositary nominee and
must identify the depositary nominee as record holder. Stockholders who hold
their Dissenting Shares in brokerage accounts or other nominee forms and who
wish to assert appraisal rights are urged to consult with their brokers to
determine the appropriate procedures for the making of a demand for appraisal by
such a nominee.
All written demands for appraisal should be sent or delivered to Unison
Software, Inc. at 5101 Patrick Henry Drive, Santa Clara, CA 95054, Attention:
Secretary.
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Within 10 days after the consummation of the Merger, the Surviving
Corporation will notify each stockholder who has properly asserted appraisal
rights under Section 262 of the date the Merger became effective.
Within 120 days after the consummation of the Merger, but not thereafter,
the Surviving Corporation or any stockholder who has complied with the statutory
requirements summarized above may file a petition in the Delaware Chancery Court
demanding a determination of the fair value of the Dissenting Shares. The
Surviving Corporation is under no obligation to and has no present intention to
file a petition with respect to the appraisal of the fair value of the
Dissenting Shares. Accordingly, it is the obligation of the stockholders to
initiate all necessary action to perfect their appraisal rights within the time
prescribed in Section 262.
Within 120 days after the consummation of the Merger, any stockholder who
has complied with the requirements for exercise of appraisal rights may be
entitled, upon written request, to receive from the Surviving Corporation a
statement setting forth the aggregate number of Dissenting Shares with respect
to which demands for appraisal have been received and the aggregate number of
holders of such Dissenting Shares. Such statements must be mailed within ten
days after a written request therefor has been received by the Surviving
Corporation.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Chancery Court will determine the stockholders entitled
to appraisal rights, if any, and will appraise the "fair value" of their
Dissenting Shares, exclusive of any element of value arising from the
accomplishment or expectation of the Merger, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value.
Stockholders considering seeking appraisal should be aware that the fair value
of their Dissenting Shares as determined under Section 262 could be more than,
the same as or less than the value of the consideration they would receive
pursuant to the Merger Agreement if they did not seek appraisal of their
Dissenting Shares and that investment banking opinions as to fairness from a
financial point of view are not necessarily opinions as to fair value under
Section 262. The Delaware Supreme Court has stated that "proof of value by any
techniques or methods which are generally considered acceptable in the financial
community and otherwise admissible in court" should be considered in the
appraisal proceedings.
If a petition for an appraisal is timely filed, at the hearing on such
petition the Delaware Chancery Court will determine which stockholders are
entitled to appraisal rights. The Delaware Chancery Court may require the
stockholders who have demanded an appraisal for their shares and who hold stock
represented by certificates to submit their certificates of stock to the
Register in Chancery for notation thereon of the pendency of the appraisal
proceedings. If any stockholder fails to comply with such direction, the
Delaware Court may dismiss the proceedings as to such stockholder.
The Delaware Chancery Court will determine the amount of interest, if any,
to be paid upon the amounts to be received by persons whose Dissenting Shares
has been appraised. The costs of the action may be determined by the Delaware
Chancery Court and taxed upon the parties as the Delaware Chancery Court deems
equitable. The Delaware Chancery Court may also order that all or a portion of
the expenses incurred by any stockholder in connection with an appraisal,
including, without limitation, reasonable attorneys' fees and the fees and
expenses of experts utilized in the appraisal proceeding, be charged pro rata
against the value of the all of the Dissenting Shares entitled to appraisal.
Any holder of Dissenting Shares who has duly demanded an appraisal in
compliance with Section 262 will not, after the consummation of the Merger, be
entitled to vote the Dissenting Shares subject to such demand for any purpose or
be entitled to the payment or dividends or other distributions on those
Dissenting Shares (except dividends or other distributions payable to holders of
record of Dissenting Shares as of a record date prior to the consummation of the
Merger).
If any stockholder who properly demands appraisal of his Dissenting Shares
under Section 262 fails to perfect, or effectively withdraws or loses, his right
to appraisal, as provided in the DGCL in the Dissenting Shares of such
stockholder will be converted in the right to receive the consideration
receivable with respect to such Dissenting Shares in accordance with the Merger
Agreement. A stockholder will fail to
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perfect, or effectively lose or withdraw, his right to appraisal if, among other
things, no petition for appraisal is filed within 120 days after the effective
date of the Merger, or if the stockholder withdraws his demand for appraisal.
Any withdrawal attempted more than 60 days after such effective date will
require the written approval of the Surviving Corporation. Notwithstanding the
foregoing, no appraisal proceeding pending in the Court of Chancery shall be
dismissed as to any stockholder without the approval of the Court, and any such
approval may be conditioned upon such terms as the Court deems just.
Failure to follow the steps required by Section 262 for perfecting appraisal
rights may result in the loss of such rights. If, after the Effective Time, a
holder of Dissenting Shares has failed to perfect or has effectively withdrawn
or lost his right to appraisal and payment, such holder's shares will 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 IBM Common Stock), without
interest, that a holder of a Non-dissenting Share of Unison Common Stock who had
made or had been deemed to have made a Cash Election with respect to such
Non-dissenting Share prior to the Election Date would have received with respect
to such Non-dissenting Share (provided that no adjustment will 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).
ACCOUNTING TREATMENT
The Merger will be treated as a "purchase" for financial reporting and
accounting purposes, in accordance with generally accepted accounting
principles. After the Merger, the results of operations of Unison will be
included in the consolidated financial statements of IBM. The purchase price
(i.e., the aggregate Merger Consideration) will be allocated based on the fair
values of the assets acquired and the liabilities assumed. Any excess of cost
over fair value of the net tangible assets of Unison acquired will be recorded
as goodwill and other intangible assets. Such allocations will be made based
upon valuations and other studies that have not yet been finalized.
RESALE OF IBM COMMON STOCK
The IBM Common Stock issued pursuant to the Merger will be transferable
under the Securities Act except for shares issued to any Unison stockholder who
may be deemed to be an affiliate of Unison (an "Affiliate") for purposes of Rule
145 under the Securities Act. An Affiliate is defined generally as including,
without limitation, directors, certain executive officers and beneficial owners
of 10% or more of a class of common stock of a company. Unison has agreed to use
its reasonable efforts to cause each Affiliate to deliver to IBM on or prior to
the Closing Date, a written agreement providing, among other things, that such
Affiliate will not transfer any IBM Common Stock received in the Merger, except
in compliance with the Securities Act, and the Merger Agreement provides that
IBM's obligation to consummate the Merger is subject to IBM receiving such
written agreements from such Affiliates. This Proxy Statement/Prospectus does
not cover resales of shares of IBM Common Stock received by any person who may
be deemed to be an Affiliate.
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THE MERGER AGREEMENT
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN PROVISIONS OF THE MERGER
AGREEMENT, WHICH IS ATTACHED AS ANNEX I TO THIS PROXY STATEMENT/PROSPECTUS AND
IS INCORPORATED HEREIN BY REFERENCE. SUCH SUMMARY IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE MERGER AGREEMENT.
THE MERGER
THE MERGER. The Merger Agreement provides that, following the approval and
adoption of the Merger Agreement by the stockholders of Unison and the
satisfaction or waiver of the other conditions to the Merger, Unison will be
merged with and into Merger Sub (with Merger Sub being the Surviving
Corporation). The Effective Time will occur upon the filing with the Secretary
of State of the State of Delaware of a duly executed Certificate of Merger or at
such later time as is specified in such Certificate of Merger.
CERTIFICATE OF INCORPORATION AND BY-LAWS. The Merger Agreement provides
that the Certificate of Incorporation of Merger Sub, as in effect immediately
prior to the Effective Time, will be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law, except that the name of the Surviving Corporation will be
changed to be "Unison Software, Inc." in such Certificate of Incorporation. The
By-laws of Merger Sub as in effect immediately prior to the Effective Time will
be the By-laws of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law. The Merger Agreement provides that IBM
will cause the Surviving Corporation to fulfill and honor and maintain certain
indemnification provisions of the Unison Certificate of Incorporation and Unison
By-laws. See "THE MERGER--Interests of Certain Persons in the Merger."
CONVERSION OF UNISON COMMON STOCK IN THE MERGER. At the Effective Time,
each issued and outstanding share of Unison Common Stock, other than shares of
Unison Common Stock owned by IBM or Unison, all of which will be canceled, will
be converted into the right to receive the Merger Consideration. Cash will be
paid to Unison stockholders in lieu of fractional shares of IBM Common Stock.
See "THE MERGER--Election Procedure; Exchange Procedures."
REPRESENTATIONS AND WARRANTIES
The Merger Agreement includes various customary representations and
warranties of the parties thereto. The Merger Agreement includes representations
and warranties by Unison as to, among other things, (i) the organization,
standing and corporate power of Unison and each of its subsidiaries; (ii) the
absence of subsidiaries of Unison other than Unison Software Texas, Inc., Unison
Software U.K. Limited and Unison Software International; (iii) the capital
structure of Unison and its subsidiaries; (iv) the authorization, execution,
delivery, performance and enforceability of the Merger Agreement and related
matters, the Merger Agreement's non-contravention of any agreement, law, or
charter or by-law provision of Unison or any of is subsidiaries and the absence
of the need for governmental or third-party filings, consents, approvals or
actions with respect to any transaction contemplated by the Merger Agreement
(except for certain filings specified in the Merger Agreement); (v) compliance
as to form of, and the accuracy of information contained in, documents filed
with the SEC; (vi) the accuracy of information supplied by Unison in connection
with this Proxy Statement/Prospectus and the Registration Statement; (vii) the
absence of certain material changes or events since the date of the most recent
financial statements filed with the SEC (except as disclosed in documents filed
with the SEC and publicly available prior to the date of the Merger Agreement),
including the absence of any material adverse change in Unison, any declaration,
setting aside or payment of a dividend on or other distribution (whether in
cash, stock or property) (subject to certain exceptions) in respect of any
capital stock of Unison or any of its subsidiaries, or any purchase, redemption
or acquisition of any such capital stock (subject to certain exceptions) or any
options, warrants or rights to acquire any such capital stock or other
securities, any split, combination or reclassification of capital stock of
Unison or any of its subsidiaries or any issuance or the
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authorization of any issuance of any securities in respect of, in lieu of or in
substitution for, shares of capital stock of Unison or any of its subsidiaries,
certain increases in compensation, severance or termination pay, entry into
certain employment, severance, indemnification, consulting or termination
agreements, any materially adverse damage, destruction or loss, any change in
accounting methods, principles or practices not required by generally accepted
accounting principles, any materially adverse tax election or settlements or
compromises of any material income tax liability, any revaluation of any
material assets and entry into certain agreements with respect to any material
intellectual property; (viii) absence of material litigation or investigations;
(ix) disclosure of material contracts; (x) compliance with laws applicable to
the business of Unison and its subsidiaries; (xi) the absence of certain changes
in the Benefit Plans (as defined in the Merger Agreement) or labor relations;
(xii) the compliance with applicable laws relating to the Benefit Plans and
certain other matters relating to the Employee Retirement Income Security Act of
1974, as amended; (xiii) the filing of tax returns and payment of taxes, the
absence of certain audits, examinations, liens, agreements and parachute
payments with respect to tax obligations; (xiv) good and valid title to, or
valid leasehold interests in, all material property and assets used or useful in
the conduct of Unison business; (xv) ownership or the right to use, and no
infringement of others' rights to, the absence of any claim by any employee or
certain other persons or certain agreements or licenses or certain conflicts,
violations or defaults, in each case with respect to any intellectual property
which is material to the conduct of Unison's business; (xvi) the voting
requirements for the approval of the Merger; (xvii) compliance with applicable
state takeover statutes (including the inapplicability of such statutes to
certain open market purchases of Unison Common Stock by IBM); (xviii) certain
broker's or advisor's fees; and (xix) the receipt of an opinion of Goldman
Sachs.
The Merger Agreement also includes representations and warranties by IBM and
Merger Sub as to, among other things, (i) the corporate organization, standing
and power of IBM and Merger Sub; (ii) the authorization, execution, delivery,
performance and enforceability of the Merger Agreement and (in the case of IBM)
the Stockholder Agreement and related matters, the Merger Agreement's and (in
the case of IBM) the Stockholder Agreement's non-contravention of any agreement,
law, or charter or by-law provision and the absence of the need for governmental
or third-party filings, consents, approvals or actions with respect to any
transaction contemplated by the Merger Agreement or the Stockholder Agreement
(except for certain filings specified in the Merger Agreement); (iii) compliance
as to form of, and the accuracy of information contained in, documents filed
with the SEC; (iv) the accuracy of information supplied by IBM or Merger Sub in
connection with this Proxy Statement/Prospectus and the Registration Statement;
(v) the absence of certain material changes or events since the date of the most
recent financial statements filed with the SEC (except as disclosed in documents
filed with the SEC and publicly available prior to the date of the Merger
Agreement) including the absence of any material adverse change in IBM, any
declaration, setting aside or payment of any dividend on or other distribution
(other than regular quarterly cash dividends), any split, combination or
reclassification of capital stock or any issuance or the authorization of any
issuance of any securities in respect of, in lieu of or in substitution for
shares of capital stock; (vi) the absence of prior activities of Merger Sub; and
(vii) the authorization, valid issuance, absence of certain statutory rights
relating to and compliance with applicable laws of the IBM Common Stock.
BUSINESS OF UNISON PENDING THE EFFECTIVE TIME OF THE MERGER
Unison has agreed that, prior to the Effective Time, it will, and will cause
its subsidiaries to, carry on their respective businesses in the ordinary course
consistent with prior conduct, use reasonable efforts to comply in all material
respects with all applicable laws and regulations, 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. Unison
has also agreed that, prior to the Effective Time, without IBM's consent, it
will not, and it will not permit any of its subsidiaries to, among other things:
(i) (x) declare, set aside or pay any dividends on, or make any other
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distributions (whether in cash, stock or property) (subject to certain
exceptions), in respect of, any of capital stock, (y) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of other
securities in respect of, in lieu of or in substitution for shares of capital
stock or (z) purchase, redeem or otherwise acquire any shares of capital stock
or any other securities of Unison or any of 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 Unison Common Stock upon
the exercise of Stock Options outstanding on the date of the Merger Agreement
and in accordance with their then present terms or as contemplated by the Merger
Agreement, (y) the issuance of shares of Unison Common Stock to participants in
Unison's 1995 Employee Stock Purchase Plan in accordance with its current terms
and (z) grants of Stock Options to purchase up to 250,000 shares of Unison
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
Unison Common Stock on the date of grant, and the issuance of shares of Unison
Common Stock upon exercise of such Stock Options); (iii) amend its Certificate
of Incorporation or By-laws (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 (as defined in the Merger Agreement) 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; (vi) (x) 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 Unison, guarantee any debt
securities of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person, 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 (y) 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 Unison or any direct or indirect wholly owned subsidiary of
Unison or (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 Unison filed with the SEC
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 Unison 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 Unison or any of its
subsidiaries is a party or waive, release or assign any material rights or
claims thereunder; (x) enter into any contracts, agreements, or obligations
relating to the (A) distribution, sale, license or marketing by third parties of
Unison's products or products licensed by Unison or (B) material intellectual
property (other than in the ordinary course of business consistent with past
practice), it being understood that Unison 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
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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 (A) and (B) above, pursuant to
any such contracts, agreements, or obligations currently in place in accordance
with their terms as of the date of the Merger Agreement; (xi) except as
otherwise contemplated by the Merger Agreement or as required to comply with
applicable law or agreements, plans or arrangements existing on the date of the
Merger Agreement, (A) terminate, adopt, enter into, or amend any collective
bargaining agreement or Benefit Plan (except that the Director Plan (as defined
in the Merger Agreement) may be amended to permit the Stock Options outstanding
thereunder to be assumed by IBM 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 agreement 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 Unison of the nature contemplated by the
Merger 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 by the Merger Agreement, (G) take any action to fund or in any
other way secure the payment of 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 existing on the date of the Merger
Agreement, take any action to accelerate the vesting of payment of any
compensation or benefit under any Benefit Plan; (xii) except as otherwise
contemplated by the Merger 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 Unison's products in the ordinary course
of business; (xiii) form any subsidiary of Unison; (xiv) revalue any of its
material assets or, except as required by generally accepted accounting
principles, 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.
Unison has agreed to, and to cause each of its subsidiaries to, (i) 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) timely pay all
taxes due and payable with respect to such Post-Signing Returns that are so
filed; (iii) accrue a reserve in its books and records and financial statements
in accordance with past practice for all taxes payable by Unison or any of its
subsidiaries for which no Post-Signing Return is due prior to the Effective
Time; (iv) promptly notify IBM of any suit, claim, action, investigation,
proceeding or audit (collectively "Actions") pending against or with respect to
Unison 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 Unison's or any of its subsidiaries' tax liabilities
or tax attributes, and not to settle or compromise any such Action without IBM's
consent; and (v) not make any material tax election without IBM's consent, which
consent will not be unreasonably withheld.
EFFECT ON UNISON BENEFIT PLANS AND STOCK OPTIONS
The Merger Agreement provides that as soon as practicable following the date
of the Merger Agreement, the Unison Board (or, if appropriate, any committee
administering the Stock Plans, as defined below) will adopt such resolutions or
take such other actions, if any, as may be reasonably required to (i) adjust the
terms of all outstanding Stock Options granted to current or former officers,
directors, employees or consultants of Unison (the "Stock Plans"), whether
vested or unvested, as necessary to
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provide that, at the Effective Time, each Stock Option outstanding immediately
prior to the Effective Time will 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 IBM Common Stock (rounded down to the nearest
whole share) determined by multiplying the number of shares of Unison Common
Stock subject to the Stock Option by the Exchange Ratio, at a price per share of
IBM Common Stock (rounded up to the nearest whole cent) equal to (A) the
aggregate exercise price for the shares of Unison Common Stock otherwise
purchasable pursuant to the Stock Option divided by (B) the aggregate number of
shares of IBM Common Stock deemed purchasable pursuant to such Stock Option and
(ii) make such other changes to the Stock Plans as Unison and IBM may agree are
appropriate to give effect to the Merger.
With the exception of the provisions described above, the Merger will not
affect Unison's benefit plans.
See "THE MERGER--Interests of Certain Persons in the Merger."
CONDITIONS TO THE CONSUMMATION OF THE MERGER
CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER. The respective
obligations of each party to effect the Merger is subject to the satisfaction or
waiver of the following conditions: (i) the Merger Agreement having received
Stockholder Approval; (ii) the shares of IBM Common Stock issuable to Unison
stockholders pursuant to the Merger Agreement having been approved for listing
on the NYSE, subject to official notice of issuance; (iii) the waiting period
(and any extensions thereof) under the HSR Act applicable to the Merger having
expired or having been terminated; (iv) there not being in effect any temporary
restraining order, preliminary or permanent injunction or other order of any
court of competent jurisdiction or statute, rule or regulation (collectively,
"Restraints") preventing the consummation of the Merger; (v) the Registration
Statement having become effective under the Securities Act and not being the
subject of any stop order or any proceeding seeking such a stop order; and (vi)
the opinions of Wilson Sonsini Goodrich & Rosati, counsel to Unison, and
Cravath, Swaine & Moore, counsel to IBM, having been delivered to Unison and
IBM, respectively, in form and substance reasonably satisfactory to Unison and
IBM, 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 IBM, Merger Sub and Unison will each be a party to
that reorganization within the meaning of Section 368(b) of the Code.
CONDITIONS TO THE OBLIGATIONS OF IBM AND MERGER SUB. The respective
obligations of each of IBM and Merger Sub to effect the Merger is further
subject to the following conditions: (i) the representations and warranties of
Unison contained in the Merger Agreement being true and correct as of the date
of the Merger Agreement and as of the Closing Date except (A) to the extent such
representations and warranties expressly relate to an earlier date (in which
case as of such earlier date) and (B) for breaches of representations and
warranties as to matters that, individually or in the aggregate, would not have
a material adverse effect on Unison (with, for purposes of clause (B), all
representations and warranties of Unison qualified as to materiality deemed not
to be so qualified); (ii) Unison having performed in all material respects all
material obligations required to be performed by it under the Merger Agreement
at or prior to the Closing Date; (iii) IBM having received from each affiliate
of Unison for purposes of Rule 145 under the Securities Act an executed letter
in the form of Exhibit A to the Merger Agreement; and (iv) there being no
pending suit, action, investigation or proceeding by any Governmental Entity,
(A) challenging the acquisition by IBM or Merger Sub of any shares of Unison
Common Stock, seeking to restrain or prohibit the consummation of the Merger or
seeking to place material limitations on the ownership of shares of Unison
Common Stock (or shares of common stock of the Surviving Corporation) by IBM or
Merger Sub, (B) seeking to prohibit or materially limit the ownership or
operation by Unison, IBM or any of IBM's subsidiaries of any material portion of
any business or of any assets of Unison, IBM or any of IBM's subsidiaries, or to
compel Unison, IBM or any of IBM's subsidiaries to dispose of or hold separate
any material portion of any business or of any assets of Unison, IBM or any of
IBM's subsidiaries,
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as a result of the Merger or (C) seeking to prohibit IBM or any of its
subsidiaries from effectively controlling in any material respect the business
or operations of Unison.
CONDITIONS TO THE OBLIGATIONS OF UNISON. The obligation of Unison to effect
the Merger is further subject to the following conditions: (i) the
representations and warranties of IBM and Merger Sub contained in the Merger
Agreement being true and correct as of the date of the Merger Agreement and as
of the Closing Date except (A) to the extent such representations and warranties
expressly relate to an earlier date (in which case as of such earlier date) and
(B) for breaches of representations and warranties as to matters that,
individually or in the aggregate, would not have a material adverse effect on
IBM (with, for purposes of clause (B), all representations and warranties of IBM
qualified as to materiality deemed not to be so qualified); and (ii) IBM and
Merger Sub having performed in all material respects all obligations required to
be performed by them under the Merger Agreement at or prior to the Closing Date.
Under the Merger Agreement, none of Unison, IBM or Merger Sub may rely on
the failure of any condition to such party's obligation to effect the Merger 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 the Merger Agreement.
NO SOLICITATION
The Merger Agreement provides that Unison will not, nor will 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 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 Unison Board 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 Unison's stockholders under applicable law,
Unison may, in response to a Takeover Proposal that was unsolicited or that did
not otherwise result from a breach of the terms described in this paragraph, and
subject to compliance with certain notification requirements, (x) furnish
information with respect to Unison to any person pursuant to a customary and
reasonable confidentiality agreement and (y) participate in negotiations
regarding such Takeover Proposal. Under the Merger Agreement, any violation of
the restrictions set forth in the preceding sentence by any officer, director or
employee of Unison or any investment banker, attorney or other advisor or
representative of Unison or any of its subsidiaries will be deemed to be a
breach of the no solicitation provisions of the Merger Agreement by Unison.
Under the Merger 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 Unison or any of its subsidiaries (other
than the purchase of Unison's products in the ordinary course of business) or
more than a 20% interest in the total voting securities of Unison 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 Unison or any merger, consolidation, business combination, sale of
substantially all the assets, recapitalization, liquidation, dissolution or
similar transaction involving Unison or any of its subsidiaries, other than the
transactions contemplated by the Merger Agreement or the Stockholder Agreement.
Under the Merger Agreement, Unison has also agreed that it will promptly
advise IBM orally and in writing of any request for non-public information which
Unison reasonably believes would lead to a Takeover Proposal or of any Takeover
Proposal, or any inquiry with respect to or which Unison 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.
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Unison will keep IBM informed in all material respects of the status and details
(including material amendments or proposed amendments) of any such request,
Takeover Proposal or inquiry.
Nothing contained in the Merger Agreement prohibits Unison 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
Unison's stockholders if, in the good faith judgment of the majority of the
members of the Unison Board, after consultation with independent counsel,
failure to so disclose would be inconsistent with applicable laws; PROVIDED that
none of Unison nor the Unison Board nor any committee thereof will, except in
accordance with the provisions of the paragraphs below under "--RIGHT OF UNISON
BOARD TO WITHDRAW RECOMMENDATION," withdraw or modify, or publicly propose to
withdraw or modify, its position with respect to the Merger or the Merger or
approve or recommend, or publicly propose to approve or recommend, a Takeover
Proposal.
RIGHT OF UNISON BOARD TO WITHDRAW RECOMMENDATION
Except as expressly permitted by the terms of the Merger Agreement described
in this paragraph, neither the Unison Board nor any committee thereof will (i)
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to IBM or Merger Sub, the approval or recommendation by the Unison Board
or any such committee of the Merger Agreement or the Merger, (ii) approve or
recommend, or publicly propose to approve or recommend, any Takeover Proposal or
(iii) cause Unison to enter into any Acquisition Agreement with respect to any
Takeover Proposal; PROVIDED, HOWEVER, that prior to receipt of the Stockholder
Approval, the Unison Board, 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 Unison's stockholders under applicable law,
may withdraw or modify its approval or recommendation of the Merger Agreement or
the Merger, approve or recommend any Superior Proposal (as defined below) or
cause Unison to terminate the Merger Agreement in accordance with the
termination provisions of the Merger Agreement (and concurrently with or after
such termination, if it so chooses, cause Unison to enter into an Acquisition
Agreement with respect to a Superior Proposal), in each case at any time after
the third business day following IBM's receipt of written notice (a "Notice of
Superior Proposal") advising IBM that the Unison Board 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 will
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 the Merger 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 Unison Common Stock or all or substantially all the assets of
Unison and otherwise on terms which the Unison Board determines in its good
faith judgment (after consultation with a financial advisor of nationally
recognized reputation) to be more favorable to Unison'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 Unison Board, is capable of being
obtained by such third party.
TERMINATION, AMENDMENT AND WAIVER
The Merger Agreement may be terminated, and the Merger contemplated thereby
may be abandoned, at any time prior to the Effective Time, whether before or
after receipt of Stockholder Approval, (i) by mutual written consent of IBM,
Merger Sub and Unison; (ii) by either IBM or Unison: (A) if the Merger shall not
have been consummated by March 15, 1998 for any reason; PROVIDED, HOWEVER, that
the right to terminate the Merger Agreement pursuant to the provision in the
Merger Agreement described in this clause (A) will 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
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constitutes a breach of the Merger Agreement; (B) if any Restraint having any of
the effects described above in clause (iv) of "--CONDITIONS TO THE CONSUMMATION
OF THE MERGER--CONDITIONS TO THE OBLIGATIONS OF IBM AND MERGER SUB," is in
effect and has become final and nonappealable, (C) if the Stockholder Approval
has not been obtained at the Special Meeting or (D) if the Unison Board has made
the determination that a proposal constitutes a Superior Proposal; PROVIDED,
HOWEVER, that Unison may not terminate the Merger Agreement pursuant to the
provision described in this clause (D) unless and until Unison has complied with
the notice and waiting period procedures set forth in the Merger Agreement and
no later than two days after such determination Unison pays to IBM the
Termination Fee (as defined below); (iii) by IBM, if the Unison Board or any
committee thereof withdraws or modifies in a manner adverse to IBM its approval
or recommendation of the Merger or the Merger Agreement or fails to reconfirm
its recommendation within 15 business days after a written request to do so, or
approves or recommends any Takeover Proposal or resolves to take any of the
foregoing actions; (iv) by Unison, upon a breach of any representation,
warranty, covenant or agreement on the part of IBM set forth in the Merger
Agreement, or if any such representation or warranty of IBM has become
inaccurate, in either case such that the conditions described above in clause
(i) or (ii) under "--CONDITIONS TO THE CONSUMMATION OF THE MERGER--CONDITIONS TO
THE OBLIGATIONS OF UNISON," would not be satisfied as of the time of such breach
or as of the time such representation or warranty has become inaccurate;
PROVIDED, that if such inaccuracy in IBM's representations and warranties or
breach by IBM is curable by IBM through the exercise of its reasonable efforts,
then (A) Unison may not terminate the Merger Agreement pursuant to the provision
in the Merger Agreement described in this clause (iv) with respect to a
particular breach or inaccuracy prior to or during the 45-day period commencing
upon delivery by Unison of written notice to IBM describing such breach or
inaccuracy, PROVIDED IBM continues to exercise reasonable efforts to cure such
breach or inaccuracy and (B) Unison may not, in any event, terminate the Merger
Agreement pursuant to the provisions described in this clause (iv) if such
inaccuracy or breach has been cured in all material respects during such 45-day
period; and, PROVIDED FURTHER THAT Unison may not terminate the Merger Agreement
pursuant to the provisions described in this clause (iv) if it has wilfully and
materially breached the Merger Agreement; or (v) by IBM, upon a breach of any
representation, warranty, covenant or agreement on the part of Unison set forth
in the Merger Agreement, or if any such representation or warranty of Unison has
become inaccurate, in either case such that the conditions described above in
clause (i) or (ii) under "--CONDITIONS TO THE CONSUMMATION OF THE
MERGER--CONDITIONS TO THE OBLIGATIONS OF IBM AND MERGER SUB," would not be
satisfied as of the time of such breach or as of the time such representation or
warranty has become inaccurate; PROVIDED, that if such inaccuracy in Unison's
representations and warranties or breach by Unison is curable by Unison through
the exercise of its reasonable efforts, then (I) IBM may not terminate the
Merger Agreement pursuant to the provisions described in this clause (v) with
respect to a particular breach or inaccuracy prior to or during the 45-day
period commencing upon delivery by IBM of written notice to Unison describing
such breach or inaccuracy, PROVIDED Unison continues to exercise reasonable
efforts to cure such breach or inaccuracy and (II) IBM may not, in any event,
terminate the Merger Agreement pursuant to the provisions described in this
clause (v) if such inaccuracy or breach has been cured in all material respects
during such 45-day period; and PROVIDED FURTHER THAT IBM may not terminate the
Merger Agreement pursuant to the provisions described in this clause (v) if it
has wilfully and materially breached the Merger Agreement.
Subject to applicable law, (i) the Merger Agreement may be modified or
amended by written agreement executed and delivered by the respective duly
authorized officers of IBM, Merger Sub and Unison (except that after Stockholder
Approval has been obtained, no amendment may be made which requires the approval
by Unison stockholders without the further approval of such stockholders) and
(ii) the parties, by written agreement signed by each party, may extend the time
for performance of any of the obligations or other acts of the other parties to
the Merger Agreement, waive inaccuracies in representations and warranties or
(subject to the proviso of clause (i) of this paragraph) waive compliance with
any of the agreements or conditions of the other parties contained in the Merger
Agreement.
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TERMINATION FEE
In the event that the Merger Agreement is terminated by any party pursuant
to a determination by the Unison Board, in accordance with the provisions
described under "--Right of Unison Board to Withdraw Recommendation," that a
proposal constitutes a Superior Proposal, Unison will promptly pay to IBM a fee
equal to $6 million (the "Termination Fee"). If, at the time of any termination
of the Merger Agreement by any party pursuant to the conditions described in
clause (ii)(A) or (C) or clause (iii) under "--Termination, Amendment and
Waiver," a Takeover Proposal has 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 the Merger Agreement Unison either (x)
consummates a Unison Acquisition (as defined below) or (y) enters into a written
Acquisition Agreement providing for a Unison Acquisition, then Unison will pay
to IBM the Termination Fee in immediately available funds in the case of clause
(x) concurrently with the consummation of such Unison 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 the Merger
Agreement, but only in the event that such transaction subject to such
Acquisition Agreement is in fact consummated); PROVIDED, HOWEVER, that no
Termination Fee will be payable pursuant to the provision described in this
sentence if the Merger Agreement is terminated pursuant to the condition
described in clause (ii)(C) under "--Termination, Amendment and Waiver" and a
material adverse change with respect to IBM had occurred and had not been cured
prior to the date of the Stockholders Meeting. Under the Merger Agreement,
Unison acknowledges that the agreements described in this paragraph are an
integral part of the transactions contemplated by the Merger Agreement, and
that, without such agreements, IBM would not enter into the Merger Agreement;
accordingly, if Unison fails promptly to pay the Termination Fee when due
pursuant to the provisions described in this paragraph, and, in order to obtain
such payment, IBM commences a suit which results in a judgment against Unison
for the Termination Fee, Unison will pay to IBM its reasonable costs and
expenses (including attorneys' fees and expenses) in connection with such suit,
together with interest on the Termination Fee. For purposes of the Merger
Agreement, "Unison Acquisition" means any of the following transactions or
series of related transactions: (i) a merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving Unison pursuant to which the stockholders of Unison 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 the Merger
Agreement); (ii) a sale by Unison 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 Unison'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 Unison), 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 Unison.
THE STOCKHOLDER AGREEMENT
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN PROVISIONS OF THE STOCKHOLDER
AGREEMENT, WHICH IS ATTACHED HERETO AS ANNEX II AND INCORPORATED HEREIN BY
REFERENCE; SUCH SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
STOCKHOLDER AGREEMENT.
On September 12, 1997, IBM entered into the Stockholder Agreement with
certain affiliated stockholders of Unison (the "Stockholder Parties"). The
Stockholder Parties are listed on Schedule A of the Stockholder Agreement,
including certain directors (in their capacity as stockholders) and officers (in
their capacity as stockholders) of Unison. Together, the Stockholder Parties
held at the Record Date 3,608,388 shares (approximately 30.1% of the outstanding
shares) of Unison Common Stock. The general effect of the Stockholder Agreement
is to increase the likelihood that Stockholder Approval will be obtained. IBM
held on the Record Date 330,784 shares (approximately 2.8% of the outstanding
shares) of Unison Common Stock. IBM, Mr. Don H. Lee, and Mr. Michael A. Casteel
held in the aggregate on the
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<PAGE>
Record Date approximately 32.9% of the outstanding shares of Unison Common
Stock. Consequently, Stockholder Approval will be obtained if holders of
additional shares of Unison Common Stock representing approximately 17.11% of
the outstanding shares of Unison Common Stock vote in favor of approval and
adoption of the Merger Agreement.
Pursuant to the terms of the Stockholder Agreement, each Stockholder Party
has agreed, among other things, (i) to vote (or cause to be voted) his shares of
Unison Common Stock (together, the "Subject Shares"), without limiting such
Stockholder Party's right to vote the Subject Shares on other matters that may
be submitted to a stockholder vote, in favor of approval and adoption of the
Merger Agreement, approval of the Merger and approval of the other transactions
contemplated by the Merger Agreement, at the Special Meeting or in any other
circumstances upon which a vote, consent or other approval with respect to the
Merger and the Merger Agreement is sought; (ii) at any meeting of stockholders
of Unison or at any adjournment thereof or in any other circumstances upon which
the Stockholder Party's vote, consent or other approval is sought, to vote (or
cause to be voted) such Stockholder Party's Subject Shares against (A) any
merger agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by Unison or any
other Unison Acquisition (collectively, "Alternative Transactions") or (B) any
amendment of Unison's Certificate of Incorporation or By-laws or other proposal
or transaction involving Unison or any of its subsidiaries, which amendment or
other proposal or transaction would in any manner impede, frustrate, prevent or
nullify the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement (collectively, "Frustrating Transactions");
(iii) not to (A) transfer (including any sale, gift, pledge or other
disposition), or consent to any such transfer of, any or all of such Stockholder
Party's Subject Shares or any interest therein, except pursuant to the Merger,
(B) enter into any contract, option or other agreement, arrangement or
understanding with respect to any or all of such Subject Shares or any interest
therein, (C) grant any proxy, power-of-attorney or other authorization in or
with respect to such Subject Shares, except for the Stockholder Agreement or (D)
deposit such Shares into a voting trust or enter into a voting agreement or
arrangement with respect to such Shares; PROVIDED, HOWEVER, that any such
Stockholder Party may so transfer such Subject Shares to any other Stockholder
Party who was party to the Stockholder Agreement on the date of such Agreement,
or to any family member of a Stockholder Party or beneficiary of a trust for
which such Stockholder Party is trustee or charitable institution which prior to
the Special Meeting and prior to such transfer becomes, a party to the
Stockholder Agreement; (iv) to waive any rights of appraisal, or rights to
dissent from the Merger and to make a Stock Election with respect to at least
85% of such Stockholder Party's Subject Shares; (v) during the term of the
Stockholder Agreement, not to authorize or permit any officer, director,
partner, employee or agent or any investment banker, attorney or other advisor
or representative of the Stockholder Party to, directly or indirectly, (A)
solicit, initiate or encourage the submission of any Takeover Proposal or (B)
participate in any discussions or negotiations regarding, or furnish to any
person any 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, unless otherwise expressly
permitted by, and subject to the conditions of, the Merger Agreement; and (vi)
until after the Merger is consummated or the Merger Agreement is terminated, 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 expeditions manner practicable, the Merger and the other
transactions contemplated by the Merger Agreement, unless otherwise expressly
permitted by, and subject to the conditions of, the Merger Agreement.
In the event that the Merger Agreement is terminated under circumstances
where IBM is or may become entitled to receive the Termination Fee, each
Stockholder Party will pay to IBM on demand an amount equal to all Stockholder
Party Profit (as defined below) of such Stockholder Party from the consummation
of (i) any Unison Acquisition consummated within 12 months following the
termination of the Merger Agreement pursuant to the termination provisions
thereof or (ii) any Unison Acquisition that
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results in Unison being obligated to pay the Termination Fee in accordance with
the Merger Agreement. For purposes of the Stockholder Agreement, "Stockholder
Party Profit" of any Stockholder Party from any Unison Acquisition means an
amount equal to (x) (i) the aggregate consideration received by such Stockholder
Party pursuant to such Unison Acquisition, valuing any non-cash consideration
(including any residual interest in Unison) at its fair market value (as defined
in the Stockholder Agreement) on the date of such consummation plus (ii) the
fair market value, on the date of disposition, of all Subject Shares of such
Stockholder Party disposed of after the termination of the Merger Agreement and
prior to the date of such consummation less (y) the fair market value of the
aggregate consideration that would have been issuable or payable to such
Stockholder Party if such Stockholder Party had received the merger
consideration set forth in the Merger Agreement in effect on the date thereof
(the "Original Merger Consideration"), valued as of the close of business on the
last full trading day prior to the first public announcement by Unison of its
intention to terminate the Merger Agreement as if the Merger had been
consummated on the date of such public announcement, net of any taxes paid or
payable by such Stockholder Party in respect of or otherwise attributable to
such Profit.
Each Stockholder Party also has irrevocably granted to, and appointed, IBM
and two IBM executives, in their capacities as designees of IBM, and each of
them individually, such Stockholder Party's proxy and attorney-in-fact (with
full power of substitution), for and in the name, place and stead of such
Stockholder Party, to vote such Stockholder Party's Subject Shares, or grant a
consent or approval in respect of such Subject Shares, (i) in favor of approval
and adoption of the Merger Agreement, approval of the Merger and approval of the
other transactions contemplated by the Merger Agreement and (ii) against any
Alternative Transaction or Frustrating Transaction.
The Stockholder Agreement will terminate on the earliest to occur of (v)
March 15, 1999; (w) the Effective Time; (x) the termination of the Merger
Agreement by (A) mutual consent of IBM and Unison, (B) IBM or Unison if certain
legal restraints or prohibitions are in effect resulting from any suit, action
or proceeding by any Governmental Entity, or (C) Unison in connection with
certain breaches of, or inaccuracies contained in, IBM's representations,
warranties, covenants or agreements and such breaches or inaccuracies are not
cured in all material respects within 45 days; (y) the termination of the Merger
Agreement by IBM or Unison if the Merger has not been consummated by March 15,
1998 or if the Stockholder Approval is not obtained unless, in either case, a
Takeover Proposal has been publicly announced or otherwise publicly disclosed
and not publicly withdrawn prior to such termination; or (z) September 12, 1998
if the Merger Agreement is otherwise terminated in accordance with its terms.
See "-- Termination, Amendment and Waiver."
NONCOMPETITION AGREEMENTS
On September 12, 1997, IBM entered into four separate noncompetition
agreements (each, a "Noncompetition Agreement") with the following employees of
Unison: Messrs. Michael A. Casteel, Don H. Lee, Richard Heal and E. Charles
Stern (collectively, the "Noncompeting Employees"). Pursuant to the terms of
their respective Noncompetition Agreements, each of the Noncompeting Employees
has agreed that, during the applicable Noncompetition Period (as defined below),
such Noncompeting Employee will not have any Relationship (as defined in the
applicable Noncompetition Agreement) with any Business Entity (as defined in the
applicable Noncompetition Agreement) in the course of which Relationship the
Noncompeting Employee engages in or assists such Business Entity with respect to
the development, marketing or sales of systems management products or services
(with respect to Richard Heal and E. Charles Stern) or workload, storage or
output management products or services (with respect to the other Noncompeting
Employees) for use in host-based or distributed environments or on the Internet
or that are in competition within the United States of America, Canada or the
European Union with any products or services which are then being offered by, or
contemplated to be offered by, certain business units of IBM or are then being
offered by Unison or are contemplated by Unison's then current business plan, in
each case during the Noncompetition Period. The "Noncompetition Period" with
respect to Don H. Lee and
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Michael A. Casteel will be the longer of (i) a period of three years following
the Effective Time and (ii) a period of two years following the termination of
his engagement by IBM or a subsidiary of IBM as a consultant or as an
independent contractor. The "Noncompetition Period" for Richard Heal and E.
Charles Stern will be the longer of (i) a period of two years following the
Effective Time and (ii) a period of nine months following the termination of his
employment by IBM or a subsidiary of IBM, if such termination occurs on or
before September 1, 2002.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
DIRECTORS AND OFFICERS. The directors of Merger Sub immediately prior to
the Effective Time will become the directors of the Surviving Corporation until
their respective successors have been duly elected and qualified or until their
earlier resignation or removal. As a result, the current directors of Unison
will not be directors of the Surviving Corporation. The officers of Unison at
the Effective Time will be the officers of the Surviving Corporation until their
respective successors have been duly appointed and qualified or until their
earlier resignation or removal.
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COMPARATIVE STOCK PRICES AND DIVIDENDS
IBM Common Stock (symbol: IBM) is listed for trading on the NYSE, and Unison
Common Stock (symbol: UNSN) is quoted on the Nasdaq National Market. The
following table sets forth, for the periods indicated, the high and low sale
prices per share of IBM Common Stock on the NYSE Tape and of Unison Common Stock
on the Nasdaq National Market and the quarterly cash dividends per share paid by
IBM on shares of IBM Common Stock. Unison Common Stock was not publicly traded
prior to the third calendar quarter of 1995 (corresponding to the first quarter
of Unison's fiscal 1996), and Unison has never declared or paid any cash
dividends on its Common Stock. In addition, the Merger Agreement restricts
Unison's ability to pay cash dividends between the date of the Merger Agreement
and the Effective Time.
<TABLE>
<CAPTION>
UNISON IBM
COMMON STOCK(1) COMMON STOCK(2) CASH DIVIDENDS
-------------------- -------------------- IBM
HIGH LOW HIGH LOW COMMON STOCK(2)
--------- --------- --------- --------- -------------------
<S> <C> <C> <C> <C> <C>
CALENDAR 1994(3)
First Quarter........................................ N/A N/A $ 30.00 $ 25.69 $ .125
Second Quarter....................................... N/A N/A 32.50 25.69 .125
Third Quarter........................................ N/A N/A 35.69 27.25 .125
Fourth Quarter....................................... N/A N/A 38.19 33.69 .125
CALENDAR 1995
First Quarter........................................ N/A N/A 42.56 35.13 .125
Second Quarter....................................... N/A N/A 49.69 41.13 .125
Third Quarter(4)..................................... $ 10.00 $ 7.42 57.31 45.81 .125
Fourth Quarter....................................... 11.83 7.83 51.19 43.88 .125
CALENDAR 1996
First Quarter........................................ 15.50 9.33 64.44 41.56 .125
Second Quarter....................................... 21.50 14.00 60.44 48.06 .175
Third Quarter........................................ 18.33 11.33 63.94 44.56 .175
Fourth Quarter....................................... 20.67 16.00 83.00 61.56 .175
CALENDAR 1997
First Quarter........................................ 21.00 4.25 85.06 65.00 .175
Second Quarter....................................... 9.25 4.75 93.75 63.50 .175
Third Quarter........................................ 14.75 6.38 109.44 90.13 .20
Fourth Quarter (through November 3, 1997)............ 14.81 14.25 107.25 88.63 --
</TABLE>
- ------------------------
(1) Per share amounts for Unison Common Stock have been restated to
retroactively reflect a three-for-two stock split effected on January 31,
1997.
(2) Per share amounts for, and cash dividends paid on, IBM Common Stock have
been restated to retroactively reflect a two-for-one stock split effected on
May 27, 1997.
(3) Unison has a fiscal year ending on May 31 of each year. The information set
forth above is presented based on calendar year quarters which do not
correspond to Unison's fiscal quarters.
(4) High and low prices for Unison for the third calendar quarter of 1995 were
obtained since July 20, 1995, the date Unison Common Stock commenced trading
on the Nasdaq National Market.
The following table sets forth the last reported sales prices per share of
IBM Common Stock on the NYSE Tape and of Unison Common Stock on the Nasdaq
National Market on September 12, 1997, the last trading day before announcement
of the Merger Agreement, and on November 3, 1997, the last trading day prior to
the date of this Proxy Statement/Prospectus:
<TABLE>
<CAPTION>
IBM UNISON
COMMON STOCK COMMON STOCK
-------------- ---------------
<S> <C> <C>
September 12, 1997................................................................ $ 97.50 $ 14.00
November 3, 1997.................................................................. $ 101.63 $ 14.56
</TABLE>
UNISON STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR IBM
COMMON STOCK AND UNISON COMMON STOCK.
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BUSINESS OF IBM
IBM, a New York corporation, develops and manufactures advanced information
technologies, including computer systems, software, networking systems, storage
drives and microelectronics. IBM translates these advanced technologies into
value for its customers through its professional solutions and services
businesses worldwide. See "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
In 1996, IBM acquired Tivoli, a systems/network management framework
company. Unison's distributed system management utility products work closely
with Tivoli's TME 10 systems/network management framework. Following the
Effective Time of the Merger, IBM intends to operate Unison as a part of Tivoli.
The principal executive offices of IBM are located at New Orchard Road,
Armonk, NY 10504. The telephone number is (914) 499-1900.
BUSINESS OF UNISON SOFTWARE, INC.
Unison develops, markets and supports networked systems management software
utility products for distributed, heterogeneous computing environments. Unison's
work-load management, storage management and output management utility products
support the deployment of business critical applications in client/server
environments and integrate with systems/network management frameworks. Unison
focuses principally on the UNIX and Windows NT markets, where it is leveraging
its experience as a leading supplier of networked systems management tools.
Unison was incorporated in California in 1980 and reincorporated in Delaware in
July 1995. See "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE."
Unison's principal executive office is located at 5101 Patrick Henry Drive,
Santa Clara, California 95054, and its telephone number is (408) 988-2800.
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COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS OF
IBM AND UNISON
The rights of IBM stockholders are governed by IBM's Restated Certificate of
Incorporation (the "IBM Certificate of Incorporation"), its By-laws (the "IBM
By-laws") and the New York Business Corporation Law (the "NYBCL"). The rights of
Unison stockholders are governed by the Unison Certificate of Incorporation, the
Unison By-laws and the DGCL. After the Effective Time, the rights of Unison
stockholders who become IBM stockholders will be governed by the IBM Certificate
of Incorporation, the IBM By-laws and the NYBCL.
The following is a summary of the material differences between the rights of
IBM stockholders and rights of Unison stockholders. This summary is not intended
to be complete and is qualified in its entirety by reference to applicable
provisions of the NYBCL and the DGCL and to the Certificate of Incorporation and
By-laws of each of IBM and Unison.
SIZE OF IBM AND UNISON BOARDS.
IBM. The IBM Certificate of Incorporation provides that the total number of
IBM directors shall be not less than nine nor more than 25 as provided in the
IBM By-laws. IBM currently has 12 directors. Directors are elected at each
annual meeting of stockholders to serve until the next annual meeting. The IBM
Board is not classified.
UNISON. Unison's Certificate of Incorporation provides that the number of
directors which constitutes the whole Unison Board shall be designated in the
Unison By-laws. The Unison By-laws currently provide that the Unison Board shall
consist of five directors. The Unison Board is not classified.
CUMULATIVE VOTING.
IBM. Neither the IBM Certificate of Incorporation nor the IBM By-laws
provide for cumulative voting with respect to the election of directors.
UNISON. Unison's By-laws provide that at a stockholders' meeting at which
directors are to be elected, a stockholder will be entitled to cumulate votes
(I.E., cast for any candidate a number of votes greater than the number of votes
which such stockholder normally is entitled to cast) if the candidates' names
have been placed in nomination prior to commencement of the voting and the
stockholder has given notice prior to commencement of the voting of the
stockholder's intention to cumulate votes. If any stockholder has given such a
notice, then every stockholder entitled to vote may cumulate votes for
candidates in nomination either (i) by giving one candidate a number of votes
equal to the number of directors to be elected multiplied by the number of votes
to which that stockholder's shares are normally entitled or (ii) by distributing
the stockholder's votes on the same principle among any or all of the
candidates, as the stockholder thinks fit. The candidates receiving the highest
number of affirmative votes, up to the number of directors to be elected, will
be elected.
REMOVAL OF DIRECTORS.
IBM. Pursuant to the NYBCL, any or all of the IBM directors may be removed
for cause by vote of the stockholders. Neither the IBM Certificate of
Incorporation nor the IBM By-laws provide for the removal of any or all of the
IBM directors without cause.
UNISON. The Unison By-laws provide that any or all of the directors of
Unison may be removed, with or without cause, by the holders of a majority of
the outstanding shares of Unison then entitled to vote at an election of
directors; PROVIDED, HOWEVER, that if and so long as stockholders of Unison are
entitled to cumulative voting, if less than the entire Unison Board is to be
removed, no director may be removed without cause if the votes cast against his
removal would be sufficient to elect him if then cumulatively voted at an
election of the entire Unison Board.
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SPECIAL MEETING OF STOCKHOLDERS; ACTION BY WRITTEN CONSENT.
IBM. Under the IBM By-laws, a special meeting of the stockholders may be
called at any time by the Chairman of the IBM Board or by the IBM Board.
Pursuant to the NYBCL, any action required or permitted to be taken at a
meeting of the IBM stockholders generally may be taken without a meeting if all
the stockholders entitled to vote thereon consent thereto in writing.
UNISON. Under the Unison By-laws, a special meeting of stockholders may be
called at any time by the Unison Board, by the Chairman of the Unison Board, by
the President or by one or more stockholders holding shares in the aggregate
entitled to cast not less than 10 percent of the votes at such meeting.
Pursuant to the Unison Certificate of Incorporation, Unison stockholders may
not take any action by written consent in lieu of a meeting.
STOCKHOLDER INSPECTION RIGHTS; STOCKHOLDER LISTS.
IBM. Pursuant to IBM By-laws, a list, certified by the Secretary of IBM, of
the stockholders of IBM entitled to vote shall be produced at any meeting of the
stockholders of IBM upon written notice pursuant to the NYBCL, the IBM
Certificate of Incorporation or the IBM By-laws. With respect to the inspection
of stockholder lists, the NYBCL provides a right of inspection on at least five
days' written demand to (i) any person who shall have been a stockholder for at
least six months immediately preceding the demand or (ii) any person holding, or
authorized in writing by, at least 5% of any class of outstanding shares.
UNISON. Pursuant to the DGCL and Unison's By-laws, any stockholder, in
person or by attorney or other agent, may, upon written demand given under oath
and stating the purpose thereof, inspect for any proper purpose Unison's stock
ledger, a list of its stockholders and its other books and records. A proper
purpose is a purpose reasonably related to such person's interest as a
stockholder. A list of stockholders is to be open to the examination of any
stockholder, for any purpose germane to a meeting of stockholders, for a period
of at least 10 days prior to such meeting. The list is also to be produced and
kept at the place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
AMENDMENT OF GOVERNING DOCUMENTS.
IBM. Under the NYBCL, IBM may amend its Certificate of Incorporation if
such amendment contains only such provisions as might be lawfully contained in
an original certificate of incorporation. Amendment or change of the IBM
Certificate of Incorporation may be authorized by the IBM Board, followed by
vote of the holders of a majority of all outstanding IBM shares entitled to vote
thereon at a meeting of shareholders.
Pursuant to the IBM By-laws, the provisions of the IBM By-laws may be
amended or repealed or new By-laws may be adopted by the IBM stockholders at any
annual or special meeting if notice of the proposed amendment is contained in
the notice of such meeting. The IBM By-laws, subject to the NYBCL, may also be
amended or repealed or new By-laws may be adopted by the affirmative vote of a
majority of the IBM Board, if proper notice is made.
UNISON. Pursuant to the DGCL, a proposed amendment to a corporation's
certificate of incorporation requires a resolution adopted by the Unison Board
and, unless otherwise provided in the certificate of incorporation, the
affirmative vote of the holders of a majority of the outstanding stock entitled
to vote thereon and the affirmative vote of the holders of a majority of the
outstanding stock of each class entitled to vote thereon as a class. If any such
amendment would adversely affect the rights of any holders of shares of a class
or series, the vote of the holders of a majority of all outstanding shares of
such class or series, voting as a class, is also necessary to authorize such
amendment.
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The DGCL provides that a corporation's by-laws may be adopted, amended or
repealed by the stockholders, and if authorized in the corporation's certificate
of incorporation or by-laws, by such corporation's board of directors. The
Unison Certificate of Incorporation provides that the Unison Board may amend,
alter, change or repeal the Unison By-laws. The Unison By-laws provide that the
stockholders of Unison entitled to vote or the Unison Board may adopt, amend or
repeal Unison By-laws.
CORPORATION'S BEST INTEREST.
IBM. Under the NYBCL, a director of a New York corporation, in taking
action, including any action which may involve a change in control of the
corporation, is entitled to consider both the long-term and short-term interests
of the corporation and its shareholders and the effects that the corporation's
actions may have in the short-term or long-term upon any of the following: (i)
the prospects of growth and development of the corporation; (ii) the
corporation's current employees; (iii) the corporation's retired employees and
others receiving retirement, welfare or similar benefits from or pursuant to any
plan sponsored, or agreements entered into, by the corporation; (iv) the
corporation's customers and creditors; and (v) the ability of the corporation to
provide, as a going concern, goods, services, employment opportunities and
employment benefits and otherwise contribute to the communities in which it does
business.
UNISON. The DGCL does not include a comparable provision.
REQUIRED VOTE FOR AUTHORIZATION OF CERTAIN ACTIONS.
IBM. Under the NYBCL, the consummation of a merger, consolidation,
dissolution or disposition of substantially all of the assets of a New York
corporation such as IBM, requires the approval of such corporation's board of
directors and the affirmative vote of the holders of two-thirds of all
outstanding shares of the corporation entitled to vote thereon and, in certain
situations, the affirmative vote by the holders of a majority of all outstanding
shares of each class or series of shares.
UNISON. The DGCL requires the affirmative vote of a majority of the board
of directors of a Delaware corporation and at least a majority of such
corporation's outstanding shares entitled to vote thereon to authorize a merger
or consolidation, unless (i) such corporation is the surviving corporation, (ii)
such corporation's certificate of incorporation is not amended, (iii) each share
of stock of such corporation outstanding immediately prior to the effective date
of the merger is to be an identical outstanding share of such corporation after
the effective date of the merger and (iv) either no shares of common stock of
such corporation and no shares, securities or obligations convertible into such
stock are to be issued or delivered under the plan of merger, or the authorized
unissued share or the treasury shares of common stock of such corporation to be
issued or delivered under the plan of merger plus those initially issuable upon
conversion of any other shares, securities or obligations to be issued or
delivered under such plan, do not exceed 20% of the shares of common stock of
such corporation outstanding immediately prior to the effective date of the
merger. A sale of all or substantially all of a Delaware corporation's assets or
a voluntary dissolution of a Delaware corporation requires the affirmative vote
of a majority of the board of directors and at least a majority of such
corporation outstanding shares entitled to vote thereon.
BUSINESS COMBINATIONS.
IBM. The NYBCL prohibits any "business combination" (as defined by the
NYBCL) between a domestic corporation and an "interested stockholder" for five
years after the date that the interested stockholder became an interested
stockholder unless prior to that date the board of directors of the domestic
corporation approved the business combination or the transaction that resulted
in the interested stockholder becoming an interested stockholder. After five
years, such a business combination is permitted only if (a) it is approved by a
majority of the shares not owned by, or by an affiliate of, the interested
stockholder or (b) certain statutory fair price requirements are met. An
"interested shareholder" is any
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person who beneficially owns, directly or indirectly, 20% or more of the
outstanding voting shares of the corporation.
UNISON. In general, Section 203 of the DGCL prohibits an interested
stockholder (generally, a 15% or greater stockholder) of a Delaware corporation
from engaging in a "business combination" (as defined in the DGCL) with such
corporation for three years following the date such person became an interested
stockholder.
The provision is not applicable when (i) prior to the date the stockholder
became an interested stockholder, the board of directors of the corporation
approved either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder, (ii) upon consummation of the
transaction that resulted in the stockholder becoming an interested stockholder,
such interested stockholder owned at least 85% of the outstanding voting stock
of the corporation, not including shares owned by directors who are also
officers and by certain employee stock plans or (iii) on or subsequent to the
date that stockholder becomes an interested stockholder, the business
combination is approved by the board of directors of the corporation and
authorized at a meeting of stockholders, and not by written consent, by the
affirmative vote of the holders of at least two-thirds of the outstanding voting
stock entitled to vote thereon, excluding shares owned by the interested
stockholder.
The restrictions of Section 203 generally do not apply to business
combinations with an interested stockholder that are proposed subsequent to the
public announcement of, and prior to the consummation or abandonment of, certain
mergers, sales of a majority of a corporation's assets or tender offers for 50%
or more of a corporation voting stock.
The DGCL allows corporations to elect not to be subject to the provisions of
the DGCL. Unison has not made such an election.
OTHER MATTERS
REGULATORY APPROVALS REQUIRED
Under the HSR Act and the rules promulgated thereunder by the Federal Trade
Commission (the "FTC"), certain acquisition transactions may not be consummated
unless notice has been given and certain information has been furnished to the
Antitrust Division and the FTC and specified waiting period requirements have
been satisfied. Both IBM and Unison had filed with the Antitrust Division and
the FTC a Notification and Report Form with respect to the Merger by October 8,
1997. Unless extended by a request for additional information or unless early
termination is granted, the waiting period under the HSR Act will expire at
11:59 p.m. on November 7, 1997. At any time before or after the Effective Time,
the FTC or the Antitrust Division could take such action under the antitrust
laws as it deems necessary or desirable in the public interest, including
seeking to enjoin the Merger or seeking the divestiture of Unison by IBM, in
whole or in part, or the divestiture of substantial assets of IBM, Unison of
their respective subsidiaries. State Attorneys General and private parties may
also bring legal action under Federal or state antitrust laws in certain
circumstances. Based on an examination of information available to IBM and
Unison relating to the businesses in which IBM, Unison and their respective
subsidiaries are engaged, IBM and Unison believe that the consummation of the
Merger will not violate the antitrust laws.
IBM and Unison do not believe that any other material governmental approvals
or actions will be required for consummation of the Merger. See "THE MERGER
AGREEMENT--Conditions to the Consummation of the Merger."
LEGAL MATTERS
The validity of the shares of IBM Common Stock offered hereby will be passed
upon for IBM by David S. Hershberg, Vice President and Assistant General Counsel
of IBM. Mr. Hershberg is paid a salary
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by IBM, is a participant in various employee benefit plans offered to employees
of IBM generally, and owns and has options to purchase shares of IBM Common
Stock.
Cravath, Swaine & Moore, counsel for IBM, and Wilson Sonsini Goodrich &
Rosati, Professional Corporation, counsel for Unison, have delivered opinions
concerning certain Federal income tax consequences of the Merger. See "THE
MERGER--Certain Federal Income Tax Considerations" and "THE MERGER
AGREEMENT--Conditions to the Consummation of the Merger."
EXPERTS
The consolidated financial statements of IBM and its subsidiaries as of
December 31, 1996 and December 31, 1995 and for each of the three fiscal years
in the period ended December 31, 1996 incorporated in this Proxy
Statement/Prospectus by reference in IBM's Annual Report on Form 10-K for the
year ended December 31, 1996 have been so incorporated in reliance on the report
of Price Waterhouse LLP, independent accountants, given the authority of said
firm as experts in auditing and accounting.
The consolidated balance sheets as of May 31, 1997 and 1996 and the
consolidated statements of income, stockholders' equity and cash flows for the
three years in the period ended May 31, 1997, incorporated by reference in this
Proxy Statement/Prospectus, have been incorporated herein in reliance of Unison
on the report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
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ANNEX I
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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............................................................................. 1
SECTION 1.02. Closing................................................................................ 1
SECTION 1.03. Effective Time......................................................................... 1
SECTION 1.04. Effects of the Merger.................................................................. 2
SECTION 1.05. Certificate of Incorporation and By-Laws............................................... 2
SECTION 1.06. Directors.............................................................................. 2
SECTION 1.07. Officers............................................................................... 2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock................................................................ 2
SECTION 2.02. Exchange of Certificates............................................................... 3
SECTION 2.03. Elections.............................................................................. 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Company.......................................... 7
SECTION 3.02. Representations and Warranties of Parent and Sub....................................... 15
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. Conduct of Business.................................................................... 19
SECTION 4.02. No Solicitation........................................................................ 21
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Preparation of the Form S-4 and the Proxy Statement; Stockholders Meeting.............. 22
SECTION 5.02. Letters of the Company's Accountants................................................... 23
SECTION 5.03. Letters of Parent's Accountants........................................................ 23
SECTION 5.04. Access to Information; Confidentiality................................................. 23
SECTION 5.05. Reasonable Efforts; Notification....................................................... 23
SECTION 5.06. Stock Options.......................................................................... 24
SECTION 5.07. Indemnification........................................................................ 25
SECTION 5.08. Fees and Expenses...................................................................... 26
SECTION 5.09. Public Announcements................................................................... 27
SECTION 5.10. Affiliates............................................................................. 27
SECTION 5.11. Stock Exchange Listing................................................................. 27
SECTION 5.12. Stockholder Agreement Legend........................................................... 27
SECTION 5.13. Tax Treatment.......................................................................... 27
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ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation to Effect the Merger............................. 29
SECTION 6.02. Conditions to Obligations of Parent and Sub............................................ 29
SECTION 6.03. Conditions to Obligation of the Company................................................ 30
SECTION 6.04. Frustration of Closing Conditions...................................................... 30
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination............................................................................ 30
SECTION 7.02. Effect of Termination.................................................................. 31
SECTION 7.03. Amendment.............................................................................. 32
SECTION 7.04. Extension; Waiver...................................................................... 32
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties.......................................... 32
SECTION 8.02. Notices................................................................................ 32
SECTION 8.03. Definitions............................................................................ 33
SECTION 8.04. Interpretation......................................................................... 33
SECTION 8.05. Counterparts........................................................................... 34
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries......................................... 34
SECTION 8.07. Governing Law.......................................................................... 34
SECTION 8.08. Assignment............................................................................. 34
SECTION 8.09. Enforcement............................................................................ 34
SECTION 8.10. Severability........................................................................... 34
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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:
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 & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, N.Y.
10019, 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").
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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 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.
(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
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<PAGE>
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
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 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.
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(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 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.
(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
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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 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
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such holder's election to receive the Stock Consideration shall have been
properly made only if the Exchange Agent 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 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).
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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 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 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,
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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 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 Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), (2) the filing 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
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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 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 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
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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 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 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
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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 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 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.
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(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 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 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.
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(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 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 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.
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(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 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 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.
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(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 sue 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 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 Goldman, 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
Goldman, Sachs & 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.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB. Parent and
Sub represent and warrant to the Company as follows:
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(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 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 documents with
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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 (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
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of Parent's capital stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for shares
of its capital stock.
(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.
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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 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;
(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
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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, 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 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
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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.
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 propose publicly to withdraw or modify, in a
manner adverse to Parent or Sub, the approval or
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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, 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
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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 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 & Lybrand 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 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 & Lybrand 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
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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 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
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
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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.
(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) 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
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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 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,
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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 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 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 Wilson Sonsini Goodrich & Rosati, counsel to the Company, and
Cravath, Swaine & Moore, 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
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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.
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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 Wilson Sonsini Goodrich & Rosati, counsel
to the Company, and Cravath, Swaine & Moore, 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
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.
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(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.
(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.
(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
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<PAGE>
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
(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
(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
31
<PAGE>
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.
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
New Orchard Road
Armonk, NY 10504
Attention: Lee A. Dayton
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Allen Finkelson, Esq.
32
<PAGE>
if to the Company, to:
Unison Software, Inc.
5101 Patrick Henry Drive
Santa Clara, CA 95054
Attention: Don Lee
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: Larry Sonsini, Esq.
Jeffrey Saper, Esq.
Marty Korman, 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 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
33
<PAGE>
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 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.
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.
34
<PAGE>
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.
<TABLE>
<S> <C> <C>
INTERNATIONAL BUSINESS MACHINES CORPORATION
By: /s/ LEE A. DAYTON
------------------------------------------
Name: Lee A. Dayton
Title: Vice President,
Corporate Development
& Real Estate
NEW ORCHARD CORP.
By: /s/ LEE A. DAYTON
------------------------------------------
Name: Lee A. Dayton
Title: Vice President,
Corporate Development
& Real Estate
UNISON SOFTWARE, INC.
By: /s/ DON H. LEE
------------------------------------------
Name: Don H. Lee
Title: President and Chief
Executive Officer
</TABLE>
35
<PAGE>
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 Wilson Sonsini Goodrich & Rosati 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
<PAGE>
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
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:
2
<PAGE>
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 Unison Software, Inc. with and into
New Orchard Corp., a Delaware corporation.
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.]
<PAGE>
EXECUTION COPY
FIRST AMENDMENT, dated as of October 1, 1997 (the "First Amendment"), to the
Agreement and Plan of Merger dated as of September 12, 1997 (the "Merger
Agreement') 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 Parent, Sub and the Company each desire to amend the Merger
Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Section 2.01(d)(i) of the Merger Agreement is hereby amended and restated
to read in its entirety as follows:
"(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 owned by the Company or any of its
subsidiaries immediately prior to the Effective Time and (B) two times the
sum of (1) the number of shares of Company Common Stock owned by Parent or
any of its subsidiaries immediately prior to the Effective Time and (2) the
number of Dissenting Shares and (z) 0.5."
2. Section 5.06 of the Merger Agreement is hereby amended to delete
paragraph (h) thereof.
3. Section 5.08(a) of the Merger Agreement is hereby amended and restated to
read in its entirety as follows:
"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 (i) 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 and (ii) all transfer taxes arising as a
result of or otherwise in connection with any of the transfers contemplated by
this Agreement shall be paid by Parent."
4. This First Amendment 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.
5. This First Amendment 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.
6. Except as expressly modified and amended by this First Amendment, the
Merger Agreement shall continue in full force and effect and is hereby ratified
and confirmed in all respects.
<PAGE>
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this First
Amendment to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
<TABLE>
<S> <C> <C>
INTERNATIONAL BUSINESS MACHINES CORPORATION
By: /s/ LEE A. DAYTON
------------------------------------------
Name: Lee A. Dayton
Title: Vice President,
Corporate Development
& Real Estate
NEW ORCHARD CORP.
By: /s/ LEE A. DAYTON
------------------------------------------
Name: Lee A. Dayton
Title: President
UNISON SOFTWARE, INC.
By: /s/ DON H. LEE
------------------------------------------
Name: Don H. Lee
Title: President and Chief
Executive Officer
</TABLE>
2
<PAGE>
ANNEX II
STOCKHOLDER AGREEMENT dated as of September 12, 1997, among INTERNATIONAL
BUSINESS MACHINES CORPORATION, a New York corporation ("Parent"), and the
individuals and other parties listed on Schedule A attached hereto (each, a
"Stockholder" and, collectively, the "Stockholders").
WHEREAS, Parent, New Orchard Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("Sub"), and Unison Software, Inc., a Delaware
corporation (the "Company"), propose to enter into an Agreement and Plan of
Merger dated as of the date hereof (as the same may be amended or supplemented,
the "Merger Agreement"; capitalized terms used but not defined herein shall have
the meanings set forth in the Merger Agreement) providing for the merger of the
Company with and into Sub (the "Merger"), upon the terms and subject to the
conditions set forth in the Merger Agreement; and
WHEREAS, as of the date hereof each Stockholder owns the number of shares of
common stock, par value $.001 per share, of the Company ("Company Common Stock")
set forth opposite his or its name on Schedule A attached hereto (such shares of
Company Common Stock, together with any other shares of capital stock of the
Company acquired by such Stockholder after the date hereof and during the term
of this Agreement (including through the exercise of any stock options, warrants
or similar instruments), being collectively referred to herein as the "Subject
Shares"); and
WHEREAS, as a condition and inducement to its willingness to enter into the
Merger Agreement, Parent has requested that each Stockholder enter into this
Agreement;
NOW, THEREFORE, to induce Parent to enter into, and in consideration of its
entering into, the Merger Agreement, and in consideration of the
representations, warranties, covenants and agreements contained in this
Agreement, the parties hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER. Each Stockholder
hereby, severally and not jointly, represents and warrants to Parent as of the
date hereof in respect of himself or itself as follows:
(a) AUTHORITY. The Stockholder has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation of
the Stockholder enforceable against the Stockholder 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, (i) conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, any provision of any trust agreement, loan or credit agreement, bond,
debenture, note, mortgage, indenture, lease or other contract, commitment,
agreement, arrangement, obligation, undertaking, understanding, instrument,
permit, concession, franchise, license, statute, law, ordinance, rule,
regulation, judgment, order, notice or decree, applicable to the Stockholder or
to the Stockholder's property or assets, (ii) require any registration,
declaration or filing with, or consent, approval, order or authorization of, any
Federal, state or local, domestic or foreign, government or any court,
administrative agency or commission or other governmental or regulatory
authority or agency, domestic or foreign or (iii) violate any judgment, order,
writ, injunction, decree, statute, law, ordinance, rule or regulation applicable
to the Stockholder or any of the Stockholder's properties or assets, including
the Stockholder's Subject Shares. If the Stockholder is a natural person and is
married, and the Stockholder's Subject Shares constitute community property or
otherwise need special or other approval for this Agreement to be legal, valid
and binding, this Agreement has been duly authorized, executed and delivered by,
and constitutes a valid and binding agreement of, the Stockholder's spouse or
the person giving such approval, enforceable against such spouse or person in
accordance with its terms. No trust of which such Stockholder is a trustee
requires the consent of any beneficiary to the execution and delivery of this
Agreement or to the consummation of the transactions contemplated hereby. The
Stockholder, together with the other Stockholders, constitutes all the trustees
of any trust of which such Stockholder is a trustee, and such trustees have all
requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby on behalf of such trust.
<PAGE>
(b) THE SUBJECT SHARES. The Stockholder is the record and beneficial owner
of, or is trustee of a trust that is the record holder of, and whose
beneficiaries are the beneficial owners of, and has good and marketable title
to, the Subject Shares set forth opposite his or its name on Schedule A attached
hereto. As of the date hereof, the Stockholder does not own, of record or
beneficially, any shares of capital stock of the Company other than the Subject
Shares set forth opposite his or its name on Schedule A attached hereto.
(c) ENCUMBRANCES. The Stockholder's Subject Shares and the certificates
representing such Shares are now, and at all times during the term hereof will
be, held by such Stockholder, or by a nominee or custodian for the benefit of
such Stockholder, free and clear of all pledges, claims, liens, security
interests, proxies, voting trusts or agreements, arrangements or understandings
or any other encumbrances whatsoever, except for any such encumbrances or
proxies arising hereunder or under the existing terms of a trust of which such
Stockholder is the trustee.
2. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent hereby represents and
warrants to each Stockholder that Parent has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by Parent and constitutes a valid and binding obligation
of Parent enforceable against Parent 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, any provision of the
Certificate of Incorporation or By-laws of Parent, any trust agreement, loan or
credit agreement, bond, debenture, note, mortgage, indenture, lease or other
contract, commitment, agreement, arrangement, obligation, understanding,
instrument, permit, concession, franchise, license, statute, law, ordinance,
rule, regulation, judgment, order, notice or decree applicable to Parent or to
Parent's property or assets.
3. COVENANTS OF EACH STOCKHOLDER. Until the termination of this Agreement in
accordance with Section 8, each Stockholder, severally and not jointly, agrees
as follows:
(a) Without in any way limiting the Stockholder's right to vote the Subject
Shares in its sole discretion on any other matters that may be submitted to a
stockholder vote, consent or other approval (including by written consent), at
any meeting of stockholders of the Company called to vote upon the Merger and
the Merger Agreement or at any adjournment thereof or in any other circumstances
upon which a vote, consent or other approval (including by written consent) with
respect to the Merger and the Merger Agreement is sought, the Stockholder shall,
including by initiating a written consent solicitation if requested by Parent,
vote (or cause to be voted) such Stockholder's Subject Shares (and each class
thereof) in favor of the Merger, the adoption by the Company of the Merger
Agreement and the approval of the other transactions contemplated by the Merger
Agreement.
(b) At any meeting of stockholders of the Company or at any adjournment
thereof or in any other circumstances upon which the Stockholder's vote, consent
or other approval is sought, such Stockholder shall vote (or cause to be voted)
such Stockholder's Subject Shares against (i) any merger agreement or merger
(other than the Merger Agreement and the Merger), consolidation, combination,
sale of substantial assets, reorganization, recapitalization, dissolution,
liquidation or winding up of or by the Company or any other Company Acquisition
(collectively, "Alternative Transactions") or (ii) any amendment of the
Company's Certificate of Incorporation or Bylaws or other proposal or
transaction involving the Company or any of its subsidiaries, which amendment or
other proposal or transaction would in any manner impede, frustrate, prevent or
nullify the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement (collectively, "Frustrating Transactions").
(c) Such Stockholder shall not (i) transfer (which term shall include,
without limitation, for the purposes of this Agreement, any sale, gift, pledge
or other disposition), or consent to any transfer of, any or all of such
Stockholder's Subject Shares or any interest therein, except pursuant to the
Merger, (ii) enter
2
<PAGE>
into any contract, option or other agreement, arrangement or understanding with
respect to any or all of such Subject Shares or any interest therein, (iii)
grant any proxy, power-of-attorney or other authorization in or with respect to
such Subject Shares, except for this Agreement or (iv) deposit such Shares into
a voting trust or enter into a voting agreement or arrangement with respect to
such Shares; PROVIDED, HOWEVER, that any such Stockholder may transfer (as
defined above) any of the Subject Shares to any other Stockholder who is on the
date hereof, or to any family member of a Stockholder or beneficiary of a trust
for which Stockholder is trustee or charitable institution which prior to the
Stockholders Meeting and prior to such transfer becomes, a party to this
Agreement bound by all the obligations of a "Stockholder" hereunder.
(d) Such Stockholder hereby waives any rights of appraisal, or rights to
dissent from the Merger, that such 5 Stockholder may have and hereby irrevocably
agrees to make a Stock Election with respect to at least 85% of such
Stockholder's Subject Shares.
(e) During the term of this Agreement, the Stockholder shall not, nor shall
it authorize or permit any officer, director, partner, employee or agent or any
investment banker, attorney or other advisor or representative of the
Stockholder to, directly or indirectly, (i) solicit, initiate or encourage the
submission of any Takeover Proposal or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any 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. The foregoing sentence shall not prohibit the Stockholder from taking
any action that would be permitted under Section 4.02 of the Merger Agreement
and in no event shall the Stockholder be liable for any action taken by the
Company or the Stockholder in compliance with, or that would be permitted under,
Section 4.02 of the Merger Agreement; provided, however that this sentence shall
not limit the obligations of the Stockholder under Sections 3(a), 3(b) and 3(j)
and 4 hereof.
(f) Until after the Merger is consummated or the Merger Agreement is
terminated, the Stockholder shall 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 expeditions manner
practicable, the Merger and the other transactions contemplated by the Merger
Agreement. The foregoing sentence shall not prohibit the Stockholder from taking
any action that would be permitted under Section 4.02 of the Merger Agreement
and in no event shall the Stockholder be liable for any action taken by the
Company or the Stockholder in compliance with, or that would be permitted under,
Section 4.02 of the Merger Agreement; PROVIDED, HOWEVER that this sentence shall
not limit the obligations of the Stockholder under Sections 3(a), 3(b) and 3(j)
and 4 hereof.
(g) If, at the time the Merger Agreement is submitted for approval to the
stockholders of the Company, a Stockholder is an "affiliate" of the Company for
purposes of Rule 145 under the Securities Act, such Stockholder shall deliver to
Parent on or prior to the Closing Date a written agreement substantially in the
form attached as Exhibit A to the Merger Agreement.
(h) The Stockholder, and any beneficiary of a revocable trust for which such
Stockholder serves as trustee, shall not take any action to revoke, terminate or
amend such trust or take any other action which would restrict, limit or
frustrate in any way the transactions contemplated by this Agreement, including
withdrawing any Subject Shares from such trust or replacing any trustees of such
trust. The Stockholder, on behalf of each such beneficiary, hereby acknowledges
and agrees to be bound by the terms of this Agreement applicable to it.
(i) Each Stockholder shall cause this Agreement to be filed with the
Secretary of the Company.
(j) (i) In the event that the Merger Agreement shall have been terminated
under circumstances where Parent is or may become entitled to receive the
Termination Fee, each Stockholder shall pay to Parent on demand an amount equal
to all profit (determined in accordance with Section 3(j)(ii)) of such
Stockholder
3
<PAGE>
from the consummation of (A) any Company Acquisition consummated within 12
months following the termination of the Merger Agreement pursuant to Section
7.01(b)(iv) thereof or (B) any Company Acquisition that results in the Company
being obligated to pay the Termination Fee in accordance with the Merger
Agreement.
(ii) For purposes of this Section 3(j), the profit of any Stockholder from
any Company Acquisition shall equal (A) the aggregate consideration received by
such Stockholder pursuant to such Company Acquisition, valuing any non-cash
consideration (including any residual interest in the Company) at its fair
market value on the date of such consummation plus (B) the fair market value, on
the date of disposition, of all Subject Shares of such Stockholder disposed of
after the termination of the Merger Agreement and prior to the date of such
consummation less (C) the fair market value of the aggregate consideration that
would have been issuable or payable to such Stockholder if such Stockholder had
received the Merger Consideration set forth in the Merger Agreement in effect on
the date hereof (the "Original Merger Consideration"), valued as of the close of
business on the last full trading day prior to the first public announcement by
the Company of its intention to terminate the Merger Agreement as if the Merger
had been consummated on the date of such public announcement. In addition, it is
agreed that for purposes of this Section 3(j), the profit of any Stockholder
from any Company Acquisition shall be net of any taxes paid or payable by
Stockholder in respect of or otherwise attributable to such profit (after taking
into account the present value of any tax benefits in respect of or otherwise
attributable to any payment of such profit pursuant to Section 3(j)(i)); it
being understood that any such Stockholder shall deliver to Parent a written
opinion of a nationally recognized accounting firm as to the amount of any such
net tax adjustments at the time of the payment of any profits pursuant to
Section 3(j)(i).
(iii) For purposes of this Section 3(j), the fair market value of any
non-cash consideration consisting of:
(A) securities listed on a national securities exchange or traded on the
Nasdaq Stock Market shall be equal to the average closing price per share of
such security as reported on such exchange or Nasdaq Stock Market for the five
trading days before the date of determination; and
(B) consideration that is other than cash or securities of the form
specified in clause (A) of this Section 3(j)(iii) shall be determined by a
nationally recognized independent investment banking firm mutually agreed upon
by Parent and the Stockholders within 10 business days of the event requiring
selection of such banking firm; PROVIDED, HOWEVER, that if Parent and the
Stockholders are unable to agree within two business days after the date of such
event as to the investment banking firm, then Parent and the Stockholders shall
each select one firm, and those firms shall select a third investment banking
firm, which third firm shall make such determination; provided further, that the
fees and expenses of such investment banking firm shall be borne equally by
Parent, on the one hand, and the Stockholders, on the other hand. The
determination of the investment banking firm shall be binding upon the parties.
(iv) Any payment of profit under this Section 3(j) shall be paid in the same
form as the consideration received from the Company Acquisition or disposition
(and, if the consideration received from the Company Acquisition or disposition
was received in more than one form, in the same proportion as the forms of
consideration received) and (x) to the extent paid in cash, shall be paid by
wire transfer of same day funds to an account designated by Parent and (y) to
the extent paid through a transfer of securities, shall be paid through delivery
of such securities, suitably endorsed for transfer.
4. GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY. (a) Without in any way
limiting the Stockholder's right to vote the Subject Shares in its sole
discretion on any other matters that may be submitted to a stockholder vote,
consent or other approval (including by written consent), each Stockholder
hereby irrevocably grants to, and appoints, Parent and Lee Dayton and Archie
Colburn, in their respective capacities as designees of Parent, and any
individual who shall hereafter succeed to any such office of Parent, and each of
them individually, such Stockholder's proxy and attorney-in-fact (with full
power of substitution), for and in the name, place and stead of such
Stockholder, to vote such Stockholder's Subject
4
<PAGE>
Shares, or grant a consent or approval in respect of such Subject Shares, (i) in
favor of the Merger, the adoption by the Company of the Merger Agreement and the
approval of the other transactions contemplated by the Merger Agreement, and
(ii) against any Alternative Transaction or Frustrating Transaction. The proxy
set forth in this Section 4 shall terminate upon the termination of this
Agreement.
(b) Such Stockholder represents that any proxies heretofore given in respect
of such Stockholder's Subject Shares are not irrevocable, and that all such
proxies are hereby revoked.
(c) Such Stockholder hereby affirms that the irrevocable proxy set forth in
this Section 4 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of the Stockholder under this Agreement. Such Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked. Such Stockholder hereby ratifies and confirms
all that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 212(e) of the DGCL.
5. FURTHER ASSURANCES. Each Stockholder will, from time to time, execute and
deliver, or cause to be executed and delivered, such additional or further
consents, documents and other instruments and take such other actions as Parent
may reasonably request for the purposes of effectively carrying out the
transactions contemplated by this Agreement.
6. CERTAIN EVENTS. (a) Each Stockholder agrees that this Agreement and the
obligations hereunder shall attach to such Stockholder's Subject Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of such Subject Shares shall pass, whether by operation of law or
otherwise, including such Stockholder's heirs, guardians, administrators or
successors. In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital structure of the
Company affecting the Company Common Stock, or the acquisition of additional
shares of Company Common Stock or other voting securities of the Company by any
Stockholder, the number of Subject Shares listed in Schedule A beside the name
of such Stockholder shall be adjusted appropriately and this Agreement and the
obligations hereunder shall attach to any additional shares of Company Common
Stock or other voting securities of the Company issued to or acquired by such
Stockholder.
(b) Each Stockholder agrees that such Stockholder will tender to the
Company, within 10 business days after the date hereof (or, in the event Subject
Shares are acquired subsequent to the date hereof within 10 business days after
the date of such acquisition), any and all certificates representing such
Stockholder's Subject Shares in order that the Company may inscribe upon such
certificates the legend in accordance with Section 5.12 of the Merger Agreement.
7. 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 Stockholder, on the one hand, without the prior written
consent of Parent nor by Parent, on the other hand, without the prior written
consent of the Stockholders, except that Parent may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to any
direct or indirect wholly owned subsidiary of Parent. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
8. TERMINATION. This Agreement shall terminate, and the provisions hereof
shall be of no further force or effect, upon the earliest to occur of (v) March
15, 1999, (w) the Effective Time, (x) the termination of the Merger Agreement
pursuant to Section 7.01(a), Section 7.01(b)(ii) or Section 7.01(d), (y) the
termination of the Merger Agreement pursuant to Section 7.01(b)(i) or Section
7.01(b)(iii) unless in either case a Takeover Proposal shall have been publicly
announced or otherwise publicly disclosed and not publicly withdrawn prior to
such termination or (z) one year after the date the Merger Agreement is
otherwise terminated in accordance with its terms. Notwithstanding the
foregoing, Section 3(j) and the last sentence of Section 4(a) shall survive the
termination of this Agreement.
5
<PAGE>
9. GENERAL PROVISIONS.
(a) AMENDMENTS. This Agreement may not be amended except by an instrument in
writing signed by each of the parties hereto.
(b) NOTICE. 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 Parent in
accordance with Section 8.02 of the Merger Agreement and to the Stockholders at
their respective addresses set forth on Schedule A attached hereto (or at such
other address for a party as shall be specified by like notice).
(c) INTERPRETATION. When a reference is made in this Agreement to a Section
or Schedule, such reference shall be to a Section of or Schedule to this
Agreement unless otherwise indicated. 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. Wherever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
(d) 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 of the counterparts have been signed by
each of the parties and delivered to the other parties.
(e) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
(including the documents and instruments referred to herein) (i) constitutes the
entire agreement, and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (ii) is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
(f) GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
(g) VOIDABILITY. If prior to the execution hereof, the Board of Directors of
the Company shall not have duly and validly authorized and approved by all
necessary corporate action, this Agreement, the Merger Agreement and the
transactions contemplated hereby and thereby, so that by the execution and
delivery hereof Parent or Sub would become, or could reasonably be expected to
become, an "interested stockholder" with whom the Company would be prevented for
any period pursuant to Section 203 of the DGCL from engaging in any "business
combination" (as such terms are defined in Section 203 of the DGCL), then this
Agreement shall be void and unenforceable until such time as such authorization
and approval shall have been duly and validly obtained.
10. ENFORCEMENT. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in a Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any court of the United States located in the State of
Delaware or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (ii) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court, (iii) agrees that such party
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 and (iv)
waives any right to trial by jury with respect to any claim or proceeding
related to or arising out of this Agreement or any of the transactions
contemplated hereby.
6
<PAGE>
11. PUBLIC ANNOUNCEMENTS. Except as required by law, no Stockholder shall
issue any press release or other public statement with respect to the
transactions contemplated by this Agreement or the Merger Agreement without the
prior written consent of Parent.
12. 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 has caused this Agreement to be signed by its
authorized signatories and each Stockholder has signed this Agreement, all as of
the date first written above.
<TABLE>
<S> <C> <C>
INTERNATIONAL BUSINESS MACHINES CORPORATION
By:
------------------------------------------
Name:
Title:
Stockholders:
------------------------------------------
Don H. Lee
------------------------------------------
Michael A. Casteel
</TABLE>
7
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMPANY
NAME AND COMMON STOCK
ADDRESS OF OWNED OR TO BE
STOCKHOLDER * OWNED OF RECORD
- ----------------------------------------------------------------------------------------------- -----------------
<S> <C>
Don H. Lee(1).................................................................................. 2,240,952
Michael A. Casteel(2).......................................................................... 1,482,649
</TABLE>
- ------------------------
* Unless an address is otherwise set forth below, the address for such
stockholder shall be the address of the Company set forth in Section 8.02 of
the Merger Agreement.
(1) Includes 12,000 shares issuable under stock options exercisable within 60
days of August 29, 1997.
(2) Includes 18,000 shares issuable under stock options exercisable within 60
days of August 29, 1997.
8
<PAGE>
ANNEX III
[LOGO]
PERSONAL AND CONFIDENTIAL
September 12, 1997
Board of Directors
Unison Software, Inc.
5101 Patrick Henry Drive
Santa Clara, CA 95054
Gentlemen:
You have requested our opinion as to the fairness to the holders of the
outstanding shares of Common Stock, par value $0.001 per share (the "Shares"),
of Unison Software, Inc. (the "Company") of the Merger Consideration (as defined
below) to be received for the Shares pursuant to the Agreement and Plan of
Merger dated as of September 12, 1997 among International Business Machines
Corporation ("IBM"), New Orchard Corp., a wholly-owned subsidiary of IBM
("Sub"), and the Company (the "Agreement"). Pursuant to the Agreement, the
Company will be merged with Sub (the "Merger") and each outstanding Share not
owned by IBM will, subject to certain procedures and limitations contained in
the Agreement (as to which procedures and limitations we are expressing no
opinion), be converted into the right to receive, at the election of holders of
Shares, one of the following: (i) a number of shares of Common Stock, par value
$0.50 per share, of IBM (the "IBM Shares") equal to a fraction, the numerator of
which is $15.00 and the denominator of which is the average of the closing sales
prices of IBM Shares on the New York Stock Exchange 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 (as defined in the
Agreement) as set forth in the Agreement (the "Stock Consideration") or (ii)
$15.00 per Share in cash from IBM (the "Cash Consideration"). The aggregate
consideration in the form of Stock Consideration and Cash Consideration to be
paid to the holders of the Shares is referred to herein as the "Merger
Consideration".
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company having acted as its financial advisor in connection
with, and having participated in certain of the negotiations leading to, the
Agreement. We also have provided certain investment banking services to IBM from
time to time, including having acted as lead agent for certain public offerings
of medium-term notes of IBM and as co-managing underwriter of certain public
offerings of debt securities of IBM, and may provide investment banking services
to IBM in the future. In the course of the trading activities of Goldman, Sachs
& Co., we have accumulated a net long position of 182,041 IBM Shares. In
addition, we have extended revolving credit to an affiliate of IBM in the amount
of $200 million.
[LOGO]
<PAGE>
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Stockholder Agreement dated as of September 12, 1997 among IBM
and the parties listed on Schedule A thereto; Annual Reports to Stockholders and
Annual Reports on Form 10-K of the Company for the two fiscal years ended May
31, 1997 and of IBM for the five years ended December 31, 1996; certain interim
reports to stockholders and Quarterly Reports on Form 10-Q of the Company and
IBM; certain other communications from the Company and IBM to their respective
stockholders; and certain internal financial analyses and forecasts (the
"Forecasts") for the Company prepared by its management. We also have held
discussions with members of the senior management of the Company and IBM
regarding the past and current business operations, financial condition and
future prospects of their respective companies. In addition, we have reviewed
the reported price and trading activity for the Shares and the IBM Shares,
compared certain financial and stock market information for the Company and IBM
with similar information for certain other companies the securities of which are
publicly traded, reviewed the financial terms of certain recent business
combinations in the software industry and performed such other studies and
analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial
and other information reviewed by us and have assumed such accuracy and
completeness for purposes of rendering this opinion. You have advised us, and
for purposes of rendering this opinion we have assumed, that the Company faces
significant risks and uncertainties in achieving the Forecasts. In addition, we
have not made an independent evaluation or appraisal of the assets and
liabilities of the Company or IBM or any of their subsidiaries and we have not
been furnished with any such evaluation or appraisal. Our advisory services and
the opinion expressed herein are provided for the information and assistance of
the Board of Directors of the Company in connection with its consideration of
the transaction contemplated by the Agreement and such opinion does not
constitute a recommendation as to how any holder of Shares should vote with
respect to such transaction.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that as of the date hereof the Merger
Consideration to be received by the holders of the Shares pursuant to the
Agreement is fair to such holders.
Very truly yours,
/s/ Goldman, Sachs & Co.
GOLDMAN, SACHS & CO.
2
<PAGE>
ANNEX IV
APPRAISAL RIGHTS.--(A) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to Section228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of the stockholder's shares of stock under
the circumstances described in subsections (b) and (c) of this section. As used
in this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section251 (other than a merger effected pursuant to
Section251(g) of this title), Section252, Section254, Section257, Section258,
Section263 or Section264 of this title:
(1) Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of Section251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under
this section shall be available for the shares of any class or series of stock
of a constituent corporation if the holders thereof are required by the terms of
an agreement of merger or consolidation pursuant to SectionSection251, 252, 254,
257, 258, 263 and 264 of this title to accept for such stock anything except;
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock (OR DEPOSITORY RECEIPTS IN RESPECT
THEREOF) or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash in
lieu of fractional shares or fractional depository receipts described in the
foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation party
to a merger effected under Section253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal rights shall be available
for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of
<PAGE>
incorporation contains such a provision, the procedures of this section,
including those set forth in subsections (d) and (e) of this section, shall
apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for such meeting
with respect to shares for which appraisal rights are available pursuant to
subsections (b) and (c) hereof that appraisal rights are available for any or
all of the shares of the constituent corporations, and shall include in such
notice a copy of this section. Each stockholder electing to demand the appraisal
of his shares shall deliver to the corporation, before the taking of the vote on
the merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to demand
the appraisal of his shares. A proxy or vote against the merger or consolidation
shall not constitute such a demand. A stockholder electing to take such action
must do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent corporation who
has complied with this subsection and has not voted in favor of or consented to
the merger or consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved pursuant to Section228 or
Section253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval of
the merger or consolidation and that appraisal rights are available for any or
all shares of such class or series of stock of such constituent corporation, and
shall include in such notice a copy of this section; provided that, if the
notice is given on or after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting corporation to all such
holders of any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the merger
or consolidation notifying each of the holders of any class or series of stock
of such constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or within 10
days after such effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first notice, such second
notice need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required to give either notice that
such notice has been given shall, in the absence of fraud, be prima facie
evidence of the facts stated therein. For purposes of determining the
stockholders entitled to receive either notice, each constituent corporation may
fix, in advance, a record date that shall be not more than 10 days prior to the
date the notice is given, provided, that if the notice is given on or after the
effective date of the merger or consolidation, the record date shall be such
effective date. If no record date is fixed and the notice is given prior to the
effective date, the record date shall be the close of business on the day next
preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise
2
<PAGE>
entitled to appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be
3
<PAGE>
enforced as other decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
4
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The By-Laws of the Registrant, in Article VI, Section 6, provide the
following:
The Corporation shall, to the fullest extent permitted by applicable law as
in effect at any time, indemnify any person made, or threatened to be made,
a party to an action or proceeding whether civil or criminal (including an
action or proceeding by or in the right of the Corporation or any other
corporation of any type or kind, domestic or foreign, or any partnership,
joint venture, trust, employee benefit plan or other enterprise, for which
any director or officer of the Corporation served in any capacity at the
request of the Corporation), by reason of the fact that such person or such
person's testator or intestate was a director or officer of the Corporation,
or served such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees actually and necessarily incurred as a result of
such action or proceeding, or any appeal therein. Such indemnification shall
be a contract right and shall include the right to be paid advances of any
expenses incurred by such person in connection with such action, suit or
proceeding, consistent with the provisions of applicable law in effect at
any time. Indemnification shall be deemed to be "permitted" within the
meaning of the first sentence hereof if it is not expressly prohibited by
applicable law as in effect at any time.
The Certificate of Incorporation of the Registrant, in Article Eleven,
provides the following:
Pursuant to Section 402(b) the Business Corporation Law of the State of New
York, the liability of the Corporation's directors to the Corporation or its
stockholders for damages for breach of duty as a director shall be
eliminated to the fullest extent permitted by the Business Corporation Law
of the State of New York, as it exists on the date hereof or as it may
hereafter be amended. No amendment to or repeal of this Article shall apply
to or have any effect on the liability or alleged liability of any director
of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal.
With certain limitations, Sections 721 through 726 of the New York Business
Corporation Law permit a corporation to indemnify a director or officer who is
made a party to an action (i) by a corporation in its right in order to procure
a judgment in its favor unless he shall have breached his duties, or (ii) other
than an action by or in the right of the corporation in order to procure a
judgment in its favor, if such director or officer acted in good faith and in a
manner he reasonably believed to be in or, in certain cases, not opposed to such
corporation's interest and additionally, in criminal actions, had no reasonable
cause to believe his conduct was unlawful.
In addition, the Registrant maintains directors' and officer's liability
insurance policies.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<C> <S>
2.1 Agreement and Plan of Merger dated as of September 12, 1997, among the Registrant,
New Orchard Corp., and Unison Software, Inc. (attached as Annex I to the Proxy
Statement/Prospectus which is a part of this Registration Statement on Form S-4).
2.2 Stockholder Agreement dated as of September 12, 1997, among the Registrant and
certain affiliated stockholders of Unison Software, Inc. (attached as Annex II to
the Proxy Statement/ Prospectus which is a part of this Registration Statement on
Form S-4).
3.1* Certificate of Incorporation of IBM, Exhibit 3(i) to Form 8-K filed on May 8, 1997
(File No. 1-2360), is hereby incorporated by reference.
3.2 By-laws of IBM as amended through July 29, 1997.
4.1* Instruments defining the rights of the holders of the 6- 3/8% Notes due 1997 and the
7- 1/4% Notes due 2002 are Exhibits 4(a) through 4(l) to the Registration Statement
on Form S-3 filed on February 22, 1990 (Registration No. 33-33590), and are hereby
incorporated by reference.
4.2* Instruments defining the rights of the holders of the 6- 3/8% Notes due 2000 and the
7- 1/2% Debentures due 2013 are Exhibits 4(a) through 4(l) to the Registration
Statement on Form S-3 filed May 24, 1993 (Registration No. 33-49475(1)), and are
hereby incorporated by reference.
4.3* Instruments defining the rights of holders of the 8- 3/8% Debentures due 2019 are
Exhibits 4(a), (b), (c) and (d) to the Registration Statement on Form S-3 filed on
October 24, 1989 (Registration No. 33-31732), and are hereby incorporated by
reference.
4.4* Instruments defining the rights of holders of the 7% Debentures due 2025 and the 7%
Debentures due 2045 are Exhibits 2 and 3 to Form 8-K filed on October 30, 1995 (File
No. 1-2360), and are hereby incorporated by reference.
4.5* Instruments defining the rights of holders of the 7- 1/8% Debentures due 2096 are
Exhibit 2 to Form 8-K/A filed on December 6, 1996 (File No. 1-2360), and are hereby
incorporated by reference.
5.1 Opinion of David S. Hershberg, Esq.
8.1 Form of opinion of Cravath, Swaine & Moore regarding certain tax matters.
8.2 Form of opinion of Wilson Sonsini Goodrich & Rosati regarding certain tax matters.
10.1* IBM 1994 Long-Term Performance Plan, a management compensatory plan, is contained in
the Registration Statement on Form S-8 filed on May 24, 1994 (Registration No.
33-53777), and is hereby incorporated by reference.
10.2* The description of the Board of Directors compensatory plans, under "Director's
Compensation" on pages 10 and 11 of IBM's definitive Proxy Statement dated March 18,
1997 (File No. 1-2360), is incorporated herein by reference.
10.3* IBM Board of Directors Deferred Compensation and Equity Award Plan is Exhibit X to
Form 10-K for the year ended December 31, 1995 (File No. 1-2360), and is hereby
incorporated by reference.
10.4* Employment agreement for L.V. Gerstner, Jr. is Exhibit 19 to Form 10-Q dated March
31, 1993 (File No. 1-2360), and is hereby incorporated by reference.
10.5* Amendment to Employment Agreement for L.V. Gerstner, Jr. dated as of January 1, 1996
is Exhibit XI to Form 10-K for the year ended December 31, 1995 (File No. 1-2360),
and is hereby incorporated by reference.
10.6* IBM Supplemental Executive Retirement Plan is Exhibit IX to Form 10-K for the year
ended December 31, 1994 (File No. 1-2360), and is hereby incorporated by reference.
10.7* IBM Extended Tax Deferred Savings Plan as amended and restated effective January 1,
1996, is Exhibit 10 to Form 10-Q for the quarter ended March 31, 1996 (File No.
1-2360), and is hereby incorporated by reference.
10.8* IBM Tax Deferred Savings Plan as amended and restated as of June 15, 1996, is
Exhibit 4 to the Registration Statement on Form S-8 filed on July 29, 1996
(Registration No. 333-09055), and is
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
hereby incorporated by reference.
11.1* Computation of Fully Diluted Earnings Per Share is Exhibit I to Form 10-K for the
year ended December 31, 1996 (File No. 1-2360), and is hereby incorporated by
reference.
12.1* Computation of Ratio of Earnings to Fixed Charges and Earnings to Combined Fixed
Charges and Preferred Stock Dividends is Exhibit II to Form 10-K for the year ended
December 31, 1996 (File No. 1-2360), and is hereby incorporated by reference.
21.1* Subsidiaries of Registrant is Exhibit III to Form 10-K for the year ended December
31, 1996 (File No. 1-2360), and is hereby incorporated by reference.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Price Waterhouse LLP.
23.3 Consent of David S. Hershberg, Esq. (included in Exhibit 5.1).
23.4 Consent of Cravath, Swaine & Moore (included in Exhibit 8.1).
23.5 Consent of Wilson Sonsini Goodrich & Rosati (included in Exhibit 8.2).
23.6 Consent of Goldman, Sachs & Co.
24.1 Powers of Attorney.
24.2 Certified copy of a resolution adopted by the Registrant's Board of Directors
authorizing execution of the registration statement by power of attorney.
99.1 Form of Proxy.
99.2 Election Form.
</TABLE>
- ------------------------
* Incorporated by Reference.
II-3
<PAGE>
ITEM 22. UNDERTAKINGS
(1) The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through the use of
a prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(2) The Registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(4) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by a registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ARMONK, STATE OF NEW
YORK, ON THE 4TH DAY OF NOVEMBER, 1997.
INTERNATIONAL BUSINESS MACHINES
CORPORATION
(REGISTRANT)
<TABLE>
<S> <C> <C>
By: /s/ JOHN E. HICKEY
------------------------------------------
John E. Hickey
VICE PRESIDENT AND SECRETARY
</TABLE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE 4TH DAY OF NOVEMBER, 1997.
SIGNATURE TITLE
- ------------------------------ --------------------------
Chairman of the Board and
* Chief Executive Officer
- ------------------------------ (Principal Executive
Louis V. Gerstner, Jr. Officer)
Senior Vice President &
* General Counsel and
- ------------------------------ Chief Financial Officer
Lawrence R. Ricciardi (Principal Financial
Officer)
Vice President and
* Controller
- ------------------------------ (Principal Accounting
John R. Joyce Officer)
*
- ------------------------------ Director
Cathleen Black
*
- ------------------------------ Director
Harold Brown
*
- ------------------------------ Director
Juergen Dormann
*
- ------------------------------ Director
Nannerl O. Keohane
*
- ------------------------------ Director
Charles F. Knight
*
- ------------------------------ Director
Lucio A. Noto
*
- ------------------------------ Director
John B. Slaughter
*
- ------------------------------ Director
Alex Trotman
II-5
<PAGE>
SIGNATURE TITLE
- ------------------------------ --------------------------
*
- ------------------------------ Director
Lodewijk C. van Wachem
*
- ------------------------------ Director
Charles M. Vest
*By: /s/ JOHN E. HICKEY
-------------------------
John E. Hickey
ATTORNEY-IN-FACT
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger dated as of September 12, 1997, among the Registrant, New Orchard Corp.,
and Unison Software, Inc. (attached as Annex I to the Proxy Statement/ Prospectus which is a part of
this Registration Statement on Form S-4).
2.2 Stockholder Agreement dated as of September 12, 1997, among the Registrant and certain affiliated
stockholders of Unison Software, Inc. (attached as Annex II to the Proxy Statement/ Prospectus which
is a part of this Registration Statement on Form S-4).
3.1* Certificate of Incorporation of IBM, Exhibit 3(i) to Form 8-K filed on May 8, 1997 (File No. 1-2360),
is hereby incorporated by reference.
3.2 By-laws of IBM as amended through July 29, 1997.
4.1* Instruments defining the rights of the holders of the 6- 3/8% Notes due 1997 and the 7- 1/4% Notes
due 2002 are Exhibits 4(a) through 4(l) to the Registration Statement on Form S-3 filed on February
22, 1990 (Registration No. 33-33590), and are hereby incorporated by reference.
4.2* Instruments defining the rights of the holders of the 6- 3/8% Notes due 2000 and the 7- 1/2%
Debentures due 2013 are Exhibits 4(a) through 4(l) to the Registration Statement on Form S-3 filed
February 22, 1990 (Registration No. 33-49475(1)), and are hereby incorporated by reference.
4.3* Instruments defining the rights of holders of the 8- 3/8% Debentures due 2019 are Exhibits 4(a), (b),
(c) and (d) to the Registration Statement on Form S-3 filed on October 24, 1989 (Registration No.
33-31732), and are hereby incorporated by reference.
4.4* Instruments defining the rights of holders of the 7% Debentures due 2025 and the 7% Debentures due
2045 are Exhibits 2 and 3 to Form 8-K, filed on October 30, 1995 (File No. 1-2360), and are hereby
incorporated by reference.
4.5* Instruments defining the rights of holders of the 7- 1/8% Debentures due 2096 are Exhibit 2 to Form
8-K/A, filed on December 6, 1996 (File No. 1-2360), and are hereby incorporated by reference.
5.1 Opinion of David S. Hershberg, Esq.
8.1 Form of opinion of Cravath, Swaine & Moore regarding certain tax matters.
8.2 Form of opinion of Wilson Sonsini Goodrich & Rosati regarding certain tax matters.
10.1* IBM 1994 Long-Term Performance Plan, a management compensatory plan, is contained in the Registration
Statement on Form S-8 filed on May 24, 1994 (Registration No. 33-53777), and is hereby incorporated
by reference.
10.2* The description of the Board of Directors compensatory plans, under "Director's Compensation" on
pages 10 and 11 of IBM's definitive Proxy Statement dated March 18, 1997 (File No. 1-2360), is
incorporated herein by reference.
10.3* IBM Board of Directors Deferred Compensation and Equity Award Plan is Exhibit X to Form 10-K for the
year ended December 31, 1995 (File No. 1-2360), and is hereby incorporated by reference.
10.4* Employment agreement for L.V. Gerstner, Jr. is Exhibit 19 to Form 10-Q dated March 31, 1993 (File No.
1-2360), and is hereby incorporated by reference.
10.5* Amendment to Employment Agreement for L.V. Gerstner, Jr. dated as of January 1, 1996 is Exhibit XI to
Form 10-K for the year ended December 31, 1995 (File No. 1-2360), and is hereby incorporated by
reference.
10.6* IBM Supplemental Executive Retirement Plan is Exhibit IX to Form 10-K for the year ended December 31,
1994 (File No. 1-2360), and is hereby incorporated by reference.
10.7* IBM Extended Tax Deferred Savings Plan as amended and restated effective January 1, 1996, is Exhibit
10 to Form 10-Q for the quarter ended March 31, 1996 (File No. 1-2360), and is hereby incorporated by
reference.
10.8* IBM Tax Deferred Savings Plan as amended and restated as of June 15, 1996, is Exhibit 4 to the
Registration Statement on Form S-8 filed on July 29, 1996 (Registration No. 333-09055), and is hereby
incorporated by reference.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------
<C> <S>
11.1* Computation of Fully Diluted Earnings Per Share is Exhibit I to Form 10-K for the year ended December
31, 1996 (File No. 1-2360), and is hereby incorporated by reference.
12.1* Computation of Ratio of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and
Preferred Stock Dividends is Exhibit II to Form 10-K for the year ended December 31, 1996 (File No.
1-2360), and is hereby incorporated by reference.
21.1* Subsidiaries of Registrant is Exhibit III to Form 10-K for the year ended December 31, 1996 (File No.
1-2360), and is hereby incorporated by reference.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Price Waterhouse LLP.
23.3 Consent of David S. Hershberg, Esq. (included in Exhibit 5.1).
23.4 Consent of Cravath, Swaine & Moore (included in Exhibit 8.1).
23.5 Consent of Wilson Sonsini Goodrich & Rosati (included in Exhibit 8.2).
23.6 Consent of Goldman, Sachs & Co.
24.1 Powers of Attorney.
24.2 Certified copy of a resolution adopted by the Registrant's Board of Directors authorizing execution
of the registration statement by power of attorney.
99.1 Form of Proxy for Special Meeting of Shareholders of Unison Software, Inc.
99.2 Election Form
</TABLE>
- ------------------------
* Incorporated by Reference.
<PAGE>
Exhibit 3.2
BY-LAWS
of
INTERNATIONAL BUSINESS MACHINES CORPORATION
Adopted April 29, 1958
As Amended Through
July 29, 1997
[July 29, 1997]
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
Definitions............................................................... 1
ARTICLE II
MEETINGS OF STOCKHOLDERS
SEC. 1. Place of Meetings............................................... 1
SEC. 2. Annual Meetings................................................. 1
SEC. 3. Special Meetings................................................ 2
SEC. 4. Notice of Meetings.............................................. 2
SEC. 5. Quorum.......................................................... 2
SEC. 6. Organization.................................................... 3
SEC. 7. Items of Business............................................... 3
SEC. 8. Voting.......................................................... 3
SEC. 9. List of Stockholders............................................ 4
SEC. 10. Inspectors of Election.......................................... 4
ARTICLE III
BOARD OF DIRECTORS
SEC. 1. General Powers.................................................. 5
SEC. 2. Number; Qualifications; Election; Term of Office................ 5
SEC. 3. Place of Meetings............................................... 5
SEC. 4. First Meeting................................................... 5
SEC. 5. Regular Meetings................................................ 5
SEC. 6. Special Meetings................................................ 5
SEC. 7. Notice of Meetings.............................................. 5
SEC. 8. Quorum and Manner of Acting..................................... 6
SEC. 9. Organization.................................................... 6
SEC. 10. Resignations.................................................... 6
SEC. 11. Vacancies....................................................... 6
SEC. 12. Retirement of Directors......................................... 6
[July 29, 1997]
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ARTICLE IV
EXECUTIVE AND OTHER COMMITTEES
SEC. 1. Executive Committee.............................................. 7
SEC. 2. Powers of the Executive Committee................................ 7
SEC. 3. Meetings of the Executive Committee.............................. 7
SEC. 4. Quorum and Manner of Acting of the Executive Committee........... 8
SEC. 5. Other Committees................................................. 8
SEC. 6. Changes in Committees; Resignations; Removals; Vacancies......... 9
ARTICLE V
OFFICERS
SEC. 1. Number and Qualifications........................................ 9
SEC. 2. Resignations..................................................... 9
SEC. 3. Removal.......................................................... 10
SEC. 4. Vacancies........................................................ 10
SEC. 5. Chairman of the Board............................................ 10
SEC. 6. Vice Chairman of the Board....................................... 10
SEC. 7. President........................................................ 10
SEC. 8. Designated Officers.............................................. 11
SEC. 9. Executive Vice Presidents, Senior Vice Presidents and
Vice Presidents................................................ 11
SEC. 10. Treasurer........................................................ 11
SEC. 11. Secretary........................................................ 12
SEC. 12. Controller....................................................... 13
SEC. 13. Compensation..................................................... 13
ARTICLE VI
CONTRACTS, CHECKS, DRAFTS,
BANK ACCOUNTS, ETC.
SEC. 1. Execution of Contracts........................................... 13
SEC. 2. Loans............................................................ 13
SEC. 3. Checks, Drafts, etc.............................................. 14
SEC. 4. Deposits......................................................... 14
SEC. 5. General and Special Bank Accounts................................ 14
SEC. 6. Indemnification.................................................. 14
[July 29, 1997]
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ARTICLE VII
SHARES
SEC. 1. Stock Certificates............................................... 15
SEC. 2. Books of Account and Record of Stockholders...................... 15
SEC. 3. Transfers of Stock............................................... 15
SEC. 4. Regulations...................................................... 16
SEC. 5. Fixing of Record Date............................................ 16
SEC. 6. Lost, Destroyed or Mutilated Certificates........................ 16
SEC. 7. Inspection of Records............................................ 17
SEC. 8. Auditors......................................................... 17
ARTICLE VIII
OFFICES
SEC. 1. Principal Office................................................. 17
SEC. 2. Other Offices.................................................... 17
ARTICLE IX
Waiver of Notice........................................................... 17
ARTICLE X
Fiscal Year................................................................ 18
ARTICLE XI
Seal....................................................................... 18
ARTICLE XII
Amendments................................................................ 18
[July 29, 1997]
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<PAGE>
BY-LAWS
OF
INTERNATIONAL BUSINESS
MACHINES CORPORATION
________
ARTICLE I
DEFINITIONS
In these By-laws, and for all purposes hereof, unless there be something
in the subject or context inconsistent therewith:
(a) "Corporation" shall mean International Business Machines
Corporation.
(b) "Certificate of Incorporation" shall mean the restated Certificate
of Incorporation as filed on May 27, 1992, together with any and all
amendments and subsequent restatements thereto.
(c) "Board" shall mean the Board of Directors of the Corporation.
(d) "stockholders" shall mean the stockholders of the Corporation.
(e) "Chairman of the Board", "Vice Chairman of the Board", "Chairman of
the Executive Committee", "Chief Executive Officer," "Chief Financial
Officer", "Chief Accounting Officer", "President", "Executive Vice
President", "Senior Vice President", "Vice President", "Treasurer",
"Secretary", or "Controller", as the case may be, shall mean the person at
any given time occupying the particular office with the Corporation.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meetings. Meetings of the stockholders of the
Corporation shall be held at such place either within or outside the State of
New York as may from time to time be fixed by the Board or specified or fixed
in the notice of any such meeting.
SECTION 2. Annual Meetings. The annual meeting of the stockholders of
the Corporation for the election of directors and for the transaction of such
other business as may properly come before the meeting shall be held on
the last Tuesday of April of each year, if not a legal holiday, or, if such
day shall be a legal holiday, then on the next succeeding day not a legal
holiday. If any annual meeting shall not be held on the day designated
herein, or if the directors to be elected at such annual
[July 29, 1997]
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meeting shall not have been elected thereat or at any adjournment thereof,
the Board shall forthwith call a special meeting of the stockholders for the
election of directors to be held as soon thereafter as convenient and give
notice thereof as provided in these By-Laws in respect of the notice of an
annual meeting of the stockholders. At such special meeting the stockholders
may elect the directors and transact other business with the same force and
effect as at an annual meeting of the stockholders duly called and held.
SECTION 3. Special Meetings. Special meetings of the stockholders, unless
otherwise provided by law, may be called at any time by the Chairman of the
Board or by the Board.
SECTION 4. Notice of Meetings. Notice of each meeting of the
stockholders, annual or special, shall be in writing and given in the name of
the Chairman of the Board, a Vice Chairman of the Board or the President or a
Vice President or the Secretary. Such notice shall state the purpose or
purposes for which the meeting is called and the date and hour when and the
place where it is to be held. A copy thereof shall either be served
personally upon, or sent by mail, postage prepaid, to all stockholders of
record entitled to vote at such meeting, and all stockholders of record who,
by reason of any action proposed to be taken at such meeting, would be
entitled to have their stock appraised if such action were taken, not less
than ten or more than fifty days before the day on which the meeting is
called to be held. If mailed, such copy shall be directed to each stockholder
at the address listed on the record of stockholders of the Corporation, or if
the stockholder shall have filed with the Secretary a written request that
notices be mailed to some other address, it shall be mailed to the address
designated in such request. Nevertheless, notice of any meeting of the
stockholders shall not be required to be given to any stockholder who shall
waive notice thereof as hereinafter provided in Article IX of these By-laws.
Except when expressly required by law, notice of any adjourned meeting of the
stockholders need not be given nor shall publication of notice of any annual
or special meeting thereof be required.
SECTION 5. Quorum. Except as otherwise provided by law, at all meetings
of the stockholders, the presence of holders of record of a majority of the
outstanding shares of stock of the Corporation having voting power, in person
or represented by proxy and entitled to vote thereat, shall be necessary to
constitute a quorum for the transaction of business. In the absence of a
quorum at any such meeting or any adjournment or adjournments thereof, a
majority in voting interest of those present in person or represented by
proxy and entitled to vote thereat, or, in the absence of all the
stockholders, any officer entitled to preside at, or to act as secretary of,
such meeting, may adjourn such meeting from time to time without further
notice, other than by announcement at the meeting at which such adjournment
shall be taken, until a quorum shall be present thereat. At any adjourned
meeting at which a quorum shall be present any business may be transacted
which might have been transacted at the meeting as originally called.
[July 29, 1997]
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SECTION 6. Organization. At each meeting of the stockholders, the
Chairman of the Board, or in the absence of the Chairman of the Board, the
President, or in the absence of the Chairman of the Board and the President, a
Vice Chairman of the Board, or if the Chairman of the Board, the President,
and all Vice Chairmen of the Board shall be absent therefrom, an Executive
Vice President, or if the Chairman of the Board, the President, all Vice
Chairmen of the Board and all Executive Vice Presidents shall be absent
therefrom, a Senior Vice President shall act as chairman. The Secretary, or,
if the Secretary shall be absent from such meeting or unable to act, the
person whom the Chairman of such meeting shall appoint secretary of such
meeting shall act as secretary of such meeting and keep the minutes thereof.
SECTION 7. Items of Business. The items of business at all meetings of
the stockholders shall be, insofar as applicable, as follows:
- Call to order.
- Proof of notice of meeting or of waiver thereof.
- Appointment of inspectors of election, if necessary.
- A quorum being present.
- Reports.
- Election of directors.
- Other business specified in the notice of the meeting.
- Voting.
- Adjournment.
Any items of business not referred to in the foregoing may be taken up
at the meeting as the chairman of the meeting shall determine. The chairman
of the meeting shall determine all matters relating to the efficient conduct
of the meeting, including but not limited to the maintenance of order and
decorum.
SECTION 8. Voting. Except as otherwise provided by law, each holder of
record of shares of stock of the Corporation having voting power shall be
entitled at each meeting of the stockholders to one vote for every share of
such stock standing in the stockholder's name on the record of stockholders
of the Corporation:
(a) on the date fixed pursuant to the provisions of Section 5 of Article
VII of these By-laws as the record date for the determination of the
stockholders who shall be entitled to vote at such meeting, or
[July 29, 1997]
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(b) if such record date shall not have been so fixed, then at the close
of business on the day next preceding the day on which notice of such meeting
shall have been given, or
(c) if such record date shall not have been so fixed and if no notice of
such meeting shall have been given, then at the time of the call to order of
such meeting.
Any vote on stock of the Corporation at any meeting of the stockholders
may be given by the stockholder of record entitled thereto in person or by
proxy appointed by an instrument in writing, subscribed by such stockholder
or by stockholder's attorney thereunto duly authorized and delivered to the
secretary of such meeting at or prior to the time designated in the order of
business for turning in proxies. At all meetings of the stockholders at which
a quorum shall be present, all matters (except where otherwise provided by
law, the Certificate of Incorporation or these By-laws) shall be decided by
the vote of a majority in voting interest of the stockholders present in
person or represented by proxy and entitled to vote thereat. Unless required
by law, or determined by the chairman of the meeting to be advisable, the
vote on any question need not be by ballot. On a vote by ballot, each ballot
shall be signed by the stockholder voting, or by the stockholder's proxy as
such, if there be such proxy.
SECTION 9. List of Stockholders. A list, certified by the Secretary, of
the stockholders of the Corporation entitled to vote shall be produced at any
meeting of the stockholders upon the request of any stockholder of the
Corporation pursuant to the provisions of applicable law, the Certificate of
Incorporation or these By-laws.
SECTION 10. Inspectors of Election. Prior to the holding of each annual
or special meeting of the stockholders, two inspectors of election to serve
thereat shall be appointed by the Board, or, if the Board shall not have made
such appointment, by the Chairman of the Board. If there shall be a failure to
appoint inspectors, or if, at any such meeting, any inspector so appointed
shall be absent or shall fail to act or the office shall become vacant, the
chairman of the meeting may, and at the request of a stockholder present in
person and entitled to vote at such meeting shall, appoint such inspector or
inspectors of election, as the case may be, to act thereat. The inspectors of
election so appointed to act at any meeting of the stockholders, before
entering upon the discharge of their duties, shall be sworn faithfully to
execute the duties of inspectors at such meeting, with strict impartiality
and according to the best of their ability, and the oath so taken shall be
subscribed by them. Such inspectors of election shall take charge of the
polls, and, after the voting on any question, shall make a certificate of the
results of the vote taken. No director or candidate for the office of
director shall act as an inspector of an election of directors. Inspectors
need not be stockholders.
[July 29, 1997]
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<PAGE>
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the Corporation
shall be managed by the Board. The Board may exercise all such authority and
powers of the Corporation and do all such lawful acts and things as are not
by law, the Certificate of Incorporation or these By-laws, directed or
required to be exercised or done by the stockholders.
SECTION 2. Number; Qualifications; Election; Term of Office. The number
of directors of the Corporation shall be twelve, but the number thereof may
be increased to not more than twenty-five, or decreased to not less than
nine, by amendment of these By-laws. The directors shall be elected at the
annual meeting of the stockholders. At each meeting of the stockholders for
the election of directors at which a quorum is present, the persons receiving
a plurality of the votes at such election shall be elected. Each director
shall hold office until the annual meeting of the stockholders which shall be
held next after the election of such director and until a successor shall
have been duly elected and qualified, or until death, or until the director
shall have resigned as hereinafter provided in Section 10 of this Article III.
SECTION 3. Place of Meetings. Meetings of the Board shall be held at
such place either within or outside State of New York as may from time to
time be fixed by the Board or specified or fixed in the notice of any such
meeting.
SECTION 4. First Meeting. The Board shall meet for the purpose of
organization, the election of officers and the transaction of other business,
on the same day the annual meeting of stockholders is held. Notice of such
meeting need not be given. Such meeting may be held at any other time or
place which shall be specified in a notice thereof given as hereinafter
provided in Section 7 of this Article III.
SECTION 5. Regular Meetings. Regular meetings of the Board shall be held
at times and dates fixed by the Board or at such other times and dates as the
Chairman of the Board shall determine and as shall be specified in the notice
of such meetings. Notice of regular meetings of the Board need not be given
except as otherwise required by law or these By-laws.
SECTION 6. Special Meetings. Special meetings of the Board may be called
by the Chairman of the Board.
SECTION 7. Notice of Meetings. Notice of each special meeting of the
Board (and of each regular meeting for which notice shall be required) shall
be given by the Secretary as hereinafter provided in this Section 7, in which
notice shall be stated the time, place and, if required by law or these
By-laws, the purposes of such meeting. Notice of each such meeting shall be
mailed, postage prepaid, to each director, by first-class mail, at least four
days before the day on which such meeting is to be held, or shall be sent by
facsimile transmission or comparable medium, or be delivered personally or by
telephone, at least twenty-four hours before the
[July 29, 1997]
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<PAGE>
time at which such meeting is to be held. Notice of any such meeting need not
be given to any director who shall waive notice thereof as provided in
Article IX of these By-laws. Any meeting of the Board shall be a legal
meeting without notice thereof having been given, if all the directors of the
Corporation then holding office shall be present thereat.
SECTION 8. Quorum and Manner of Acting. A majority of the Board shall be
present in person at any meeting of the Board in order to constitute a quorum
for the transaction of business at such meeting. Participation in a meeting
by means of a conference telephone or similar communications equipment
allowing all persons participating in the meeting to hear each other shall
constitute presence in person at a meeting. Except as otherwise expressly
required by law or the Certificate of Incorporation and except also as
specified in Section 1, Section 5, and Section 6 of Article IV, in Section 3
of Article V and in Article XII of these By-laws, the act of a majority of
the directors present at any meeting at which a quorum is present shall be
the act of the Board. In the absence of a quorum at any meeting of the Board,
a majority of the directors present thereat may adjourn such meeting from
time to time until a quorum shall be present thereat. Notice of any
adjourned meeting need not be given. At any adjourned meeting at which a
quorum is present, any business may be transacted which might have been
transacted at the meeting as originally called. The directors shall act only
as a Board and the individual directors shall have no power as such.
SECTION 9. Organization. At each meeting of the Board, the Chairman of
the Board, or in the case of the Chairman's absence therefrom, the President,
or in the case of the President's absence therefrom, a Vice Chairman, or in
the case of the absence of all such persons, another director chosen by a
majority of directors present, shall act as chairman of the meeting and
preside thereat. The Secretary, or if the Secretary shall be absent from such
meeting, any person appointed by the chairman, shall act as secretary of the
meeting and keep the minutes thereof.
SECTION 10. Resignations. Any director of the Corporation may resign at
any time by giving written notice of resignation to the Board or the Chairman
of the Board or the Secretary. Any such resignation shall take effect at the
time specified therein, or if the time when it shall become effective shall
not be specified therein, then it shall take effect immediately upon its
receipt, and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 11. Vacancies. Any vacancy in the Board, whether arising from
death, resignation, an increase in the number of directors or any other
cause, may be filled by the Board.
SECTION 12. Retirement of Directors. The Board may prescribe a retirement
policy for directors on or after reaching a certain age, provided, however,
that such
[July 29, 1997]
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retirement shall not cut short the annual term for which any director shall
have been elected by the stockholders.
ARTICLE IV
EXECUTIVE AND OTHER COMMITTEES
SECTION 1. Executive Committee. The Board, by resolution adopted by a
majority of the Board, may designate not less than four of the directors then
in office to constitute an Executive Committee, each member of which unless
otherwise determined by resolution adopted by a majority of the whole Board,
shall continue to be a member of such Committee until the annual meeting of
the stockholders which shall be held next after designation as a member of
such Committee or until the earlier termination as a director. The Chief
Executive Officer shall always be designated as a member of the Executive
Committee. The Board may by resolution appoint one member as the Chairman of
the Executive Committee who shall preside at all meetings of such Committee.
In the absence of said Chairman, the Chief Executive Officer shall preside at
all such meetings. In the absence of both the Chairman of the Executive
Committee and the Chief Executive Officer, the Chairman of the Board shall
preside at all such meetings. In the absence of the Chairman of the Executive
Committee and the Chief Executive Officer and the Chairman of the Board, the
President shall preside at all such meetings. In the absence of all such
persons, a majority of the members of the Executive Committee present shall
choose a chairman to preside at such meetings. The Secretary, or if the
Secretary shall be absent from such meeting, any person appointed by the
chairman, shall act as secretary of the meeting and keep the minutes thereof.
SECTION 2. Powers of the Executive Committee. To the extent permitted by
law, the Executive Committee may exercise all the powers of the Board in the
management of specified matters where such authority is delegated to it by
the Board, and also, to the extent permitted by law, the Executive Committee
shall have, and may exercise, all the powers of the Board in the management
of the business and affairs of the Corporation (including the power to
authorize the seal of the Corporation to be affixed to all papers which may
require it; but excluding the power to appoint a member of the Executive
Committee) in such manner as the Executive Committee shall deem to be in the
best interests of the Corporation and not inconsistent with any prior specific
action of the Board. An act of the Executive Committee taken within the scope
of its authority shall be an act of the Board. The Executive Committee shall
render in the form of minutes a report of its several acts at each regular
meeting of the Board and at any other time when so directed by the Board.
SECTION 3. Meetings of the Executive Committee. Regular meetings of the
Executive Committee shall be held at such times, on such dates and at such
places as shall be fixed by resolution adopted by a majority of the Executive
Committee.
[July 29, 1997]
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of which regular meetings notice need not be given, or as shall be fixed by
the Chairman of the Executive Committee or in the absence of the Chairman of
the Executive Committee the Chief Executive Officer and specified in the
notice of such meeting. Special meetings of the Executive Committee may be
called by the Chairman of the Executive Committee or by the Chief Executive
Officer. Notice of each such special meeting of the Executive Committee (and
of each regular meeting for which notice shall be required), stating the time
and place thereof shall be mailed, postage prepaid, to each member of the
Executive Committee, by first-class mail, at least four days before the day
on which such meeting is to be held, or shall be sent by facsimile
transmission or comparable medium, or be delivered personally or by
telephone, at least twenty-four hours before the time at which such meeting
is to be held; but notice need not be given to a member of the Executive
Committee who shall waive notice thereof as provided in Article IX of these
By-laws, and any meeting of the Executive Committee shall be a legal meeting
without any notice thereof having been given, if all the members of such
Committee shall be present thereat.
SECTION 4. Quorum and Manner of Acting of the Executive Committee. Four
members of the Executive Committee shall constitute a quorum for the
transaction of business, and the act of a majority of the members of the
Executive Committee present at a meeting at which a quorum shall be present
shall be the act of the Executive Committee. Participating in a meeting by
means of a conference telephone or similar communications equipment allowing
all persons participating in the meeting to hear each other shall constitute
presence at a meeting of the Executive Committee. The members of the
Executive Committee shall act only as a committee and individual members
shall have no power as such.
SECTION 5. Other Committees. The Board may, by resolution adopted by a
majority of the Board, designate members of the Board to constitute other
committees, which shall have, and may exercise, such powers as the Board may
by resolution delegate to them, and shall in each case consist of such number
of directors as the Board may determine; provided, however, that each such
committee shall have at least three directors as members thereof. Such a
committee may either be constituted for a specified term or may be
constituted as a standing committee which does not require annual or periodic
reconstitution. A majority of all the members of any such committee may
determine its action and its quorum requirements and may fix the time and
place of its meetings, unless the Board shall otherwise provide.
Participating in a meeting by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other shall constitute presence at a meeting of such other
committees.
In addition to the foregoing, the Board may, by resolution adopted by a
majority of the Board, create a committee of indeterminate membership and
duration and not subject to the limitations as to the membership, quorum and
manner of meeting and acting prescribed in these By-laws, which committee, in
the event of a major disaster or catastrophe or national emergency which
renders the Board
[July 29, 1997]
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incapable of action by reason of the death, physical incapacity or inability
to meet of some or all of its members, shall have, and may exercise all the
powers of the Board in the management of the business and affairs of the
Corporation (including, without limitation, the power to authorize the seal
of the Corporation to be affixed to all papers which may require it and the
power to fill vacancies in the Board). An act of such committee taken within
the scope of its authority shall be an act of the Board.
SECTION 6. Changes in Committees; Resignations; Removals; Vacancies. The
Board shall have power, by resolution adopted by a majority of the Board, at
any time to change or remove the members of, to fill vacancies in, and to
discharge any committee created pursuant to these By-laws, either with or
without cause. Any member of any such committee may resign at any time by
giving written notice to the Board or the Chairman of the Board or the
Secretary. Such resignation shall take effect upon receipt of such notice or
at any later time specified therein; and, unless otherwise specified therein,
acceptance of such resignation shall not be necessary to make it effective.
Any vacancy in any committee, whether arising from death, resignation, an
increase in the number of committee members or any other cause, shall be
filled by the Board in the manner prescribed in these By-laws for the
original appointment of the members of such committee.
ARTICLE V
OFFICERS
SECTION 1. Number and Qualifications. The officers of the Corporation
shall include the Chairman of the Board, and may include one or more Vice
Chairmen of the Board, the President, one or more Vice Presidents (one or
more of whom may be designated as Executive Vice Presidents or as Senior Vice
Presidents or by other designations), the Treasurer, the Secretary and the
Controller. Officers shall be elected from time to time by the Board, each to
hold office until a successor shall have been duly elected and shall have
qualified, or until death, or until resignation as hereinafter provided in
Section 2 of this Article V, or until removed as hereinafter provided in
Section 3 of this Article V.
SECTION 2. Resignations. Any officer of the Corporation may resign at any
time by giving written notice of resignation to the Board, the Chairman of
the Board, the Chief Executive Officer or the Secretary. Any such resignation
shall take effect at the time specified therein, or, if the time when it
shall become effective shall not be specified therein, then it shall become
effective upon its receipt, and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
[July 29, 1997]
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SECTION 3. Removal. Any officer of the Corporation may be removed, either
with or without cause, at any time, by a resolution adopted by a majority of
the Board at any meeting of the Board.
SECTION 4. Vacancies. A vacancy in any office, whether arising from
death, resignation, removal or any other cause, may be filled for the
unexpired portion of the term of office which shall be vacant, in the manner
prescribed in these By-laws for the regular election or appointment to such
office.
SECTION 5. Chairman of the Board. The Chairman of the Board shall, if
present, preside at each meeting of the stockholders and of the Board and
shall perform such other duties as may from time to time be assigned by the
Board. The Chairman may sign certificates representing shares of the stock of
the Corporation pursuant to the provisions of Section 1 of Article VII of
these By-laws; sign, execute and deliver in the name of the Corporation all
deeds, mortgages, bonds, contracts or other instruments authorized by the
Board, except in cases where the signing, execution or delivery thereof shall
be expressly delegated by the Board or these By-laws to some other officer or
agent of the Corporation or where they shall be required by law otherwise to
be signed, executed and delivered; and affix the seal of the Corporation to
any instrument which shall require it. The Chairman of the Board, when there
is no President or in the absence or incapacity of the President, shall
perform all the duties and functions and exercise all the powers of the
President.
SECTION 6. Vice Chairman of the Board. Each Vice Chairman of the Board
shall assist the Chairman of the Board and have such other duties as may be
assigned by the Board or the Chairman of the Board. The Vice Chairman may
sign certificates representing shares of the stock of the Corporation
pursuant to the provisions of Section 1 of Article VII of these By-laws;
sign, execute and deliver in the name of the Corporation all deeds,
mortgages, bonds, contracts or other instruments authorized by the Board,
except in cases where the signing, execution or delivery thereof shall be
expressly delegated by the Board or these By-laws to some officer or agent of
the Corporation or where they shall be required by law otherwise to be
signed, executed and delivered; and affix the seal of the Corporation to any
instrument which shall require it.
SECTION 7. President. The President shall perform all such duties as from
time to time may be assigned by the Board or the Chairman of the Board. The
President may sign certificates representing shares of the stock of the
Corporation pursuant to the provisions of Section 1 of Article VII of these
By-laws; sign, execute and deliver in the name of the Corporation all deeds,
mortgages, bonds, contracts or other instruments authorized by the Board,
except in cases where the signing, execution or delivery thereof shall be
expressly delegated by the Board or these By-laws to some other officer or
agent of the Corporation or where they shall be required by law otherwise to
be signed, executed and delivered, and affix the seal of the Corporation to
any instrument which shall require it; and, in general, perform all duties
incident to the office of President. The President shall in the absence or
incapacity of the Chairman of the Board, perform all the duties and functions
[July 29, 1997]
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and exercise all the powers of the Chairman of the Board.
SECTION 8. Designated Officers. (a) Chief Executive Officer. Either the
Chairman of the Board, or the President, as the Board of Directors may
designate, shall be the Chief Executive Officer of the Corporation. The
officer so designated shall have, in addition to the powers and duties
applicable to the office set forth in Section 5 or 7 of this Article V,
general and active supervision over the business and affairs of the
Corporation and over its several officers, agents, and employees, subject,
however, to the control of the Board. The Chief Executive Officer shall see
that all orders and resolutions of the Board are carried into effect, be an ex
officio member of all committees of the Board (except the Audit Committee,
the Directors and Corporate Governance Committee, and committees specifically
empowered to fix or approve the Chief Executive Officer's compensation or to
grant or administer bonus, option or other similar plans in which the Chief
Executive Officer is eligible to participate), and, in general, shall perform
all duties incident to the position of Chief Executive Officer and such other
duties as may from time to time be assigned by the Board. (b) Other
Designated Officers. The Board of Directors may designate officers to serve
as Chief Financial Officer, Chief Accounting Officer and other such
designated positions and to fulfill the responsibilities of such designated
positions in addition to their duties as officers as set forth in this
Article V.
SECTION 9. Executive Vice Presidents, Senior Vice Presidents and Vice
Presidents. Each Executive and Senior Vice President shall perform all such
duties as from time to time may be assigned by the Board or the Chairman of
the Board or a Vice Chairman of the Board or the President. Each Vice
President shall perform all such duties as from time to time may be assigned
by the Board or the Chairman of the Board or a Vice Chairman of the Board or
the President or an Executive or a Senior Vice President. Any Vice President
may sign certificates representing shares of stock of the Corporation
pursuant to the provisions of Section 1 of Article VII of these By-laws.
SECTION 10. Treasurer. The Treasurer shall:
(a) have charge and custody of, and be responsible for, all the funds and
securities of the Corporation, and may invest the same in any securities, may
open, maintain and close accounts for effecting any and all purchase, sale,
investment and lending transactions in securities of any and all kinds for
and on behalf of the Corporation or any employee pension or benefit plan fund
or other fund established by the Corporation, as may be permitted by law;
(b) keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation;
[July 29, 1997]
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<PAGE>
(c) deposit all moneys and other valuables to the credit of the
Corporation in such depositaries as may be designated by the Board or the
Executive Committee;
(d) receive, and give receipts for, moneys due and payable to the
Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the investment
of its funds, taking proper vouchers therefor;
(f) render to the Board, whenever the Board may require, an account of
all transactions as Treasurer; and
(g) in general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned by the
Board or the Chairman of the Board or a Vice Chairman of the Board or the
President or an Executive or Senior Vice President.
SECTION 11. Secretary. The Secretary shall:
(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board, the Executive Committee
and other committees of the Board and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and
affix and attest the seal to all stock certificates of the Corporation and
affix and attest the seal to all other documents to be executed on behalf of
the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly kept
and filed; and
(e) in general, perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned by the
Board or the Chairman of the Board or a Vice Chairman of the Board or the
President or an Executive or Senior Vice President.
[July 29, 1997]
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<PAGE>
SECTION 12. Controller. The Controller shall:
(a) have control of all the books of account of the Corporation;
(b) keep a true and accurate record of all property owned by it, of its
debts and of its revenues and expenses;
(c) keep all accounting records of the Corporation (other than the
accounts of receipts and disbursements and those relating to the deposits of
money and other valuables of the Corporation, which shall be kept by the
Treasurer);
(d) render to the Board, whenever the Board may require, an account of
the financial condition of the Corporation; and
(e) in general, perform all the duties incident to the office of
Controller and such other duties as from time to time may be assigned by the
Board or the Chairman of the Board or a Vice Chairman of the Board or the
President or an Executive or Senior Vice President.
SECTION 13. Compensation. The compensation of the officers of the
Corporation shall be fixed from time to time by the Board; provided, however,
that the Board may delegate to a committee the power to fix or approve the
compensation of any officers. An officer of the Corporation shall not be
prevented from receiving compensation by reason of being also a director of
the Corporation; but any such officer who shall also be a director shall not
have any vote in the determination of the amount of compensation paid to such
officer.
ARTICLE VI
CONTRACTS, CHECKS, DRAFTS,
BANK ACCOUNTS, ETC.
SECTION 1. Execution of Contracts. Except as otherwise required by law
or these By-laws, any contract or other instrument may be executed and
delivered in the name and on behalf of the Corporation by any officer
(including any assistant officer) of the Corporation. The Board or the
Executive Committee may authorize any agent or employee to execute and
deliver any contract or other instrument in the name and on behalf of the
Corporation, and such authority may be general or confined to specific
instances as the Board or such Committee, as the case may be, may by
resolution determine.
SECTION 2. Loans. Unless the Board shall otherwise determine, the
Chairman of the Board or a Vice Chairman of the Board or the President or any
Vice President, acting together with the Treasurer or the Secretary, may
effect loans and advances at any time for the Corporation from any bank,
trust company or other
[July 29, 1997]
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<PAGE>
institution, or from any firm, corporation or individual, and for such loans
and advances may make, execute and deliver promissory notes, bonds or other
certificates or evidences of indebtedness of the Corporation, but in making
such loans or advances no officer or officers shall mortgage, pledge,
hypothecate or transfer any securities or other property of the Corporation,
except when authorized by resolution adopted by the Board.
SECTION 3. Checks, Drafts, etc. All checks, drafts, bills of exchange or
other orders for the payment of money out of the funds of the Corporation,
and all notes or other evidences of indebtedness of the Corporation, shall be
signed in the name and on behalf of the Corporation by such persons and in
such manner as shall from time to time be authorized by the Board or the
Executive Committee or authorized by the Treasurer acting together with
either the General Manager of an operating unit or a nonfinancial Vice
President of the Corporation, which authorization may be general or confined
to specific instances.
SECTION 4. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositaries as the Board or the Executive
Committee may from time to time designate or as may be designated by any
officer or officers of the Corporation to whom such power of designation may
from time to time be delegated by the Board or the Executive Committee. For
the purpose of deposit and for the purpose of collection for the account of
the Corporation, checks, drafts and other orders for the payment of money
which are payable to the order of the Corporation may be endorsed, assigned
and delivered by any officer, employee or agent of the Corporation.
SECTION 5. General and Special Bank Accounts. The Board or the Executive
Committee may from time to time authorize the opening and keeping of general
and special bank accounts with such banks, trust companies or other
depositaries as the Board or the Executive Committee may designate or as may
be designated by any officer or officers of the Corporation to whom such
power of designation may from time to time be delegated by the Board or the
Executive Committee. The Board or the Executive Committee may make such
special rules and regulations with respect to such bank accounts, not
inconsistent with the provisions by these By-laws, as it may deem expedient.
SECTION 6. Indemnification. The Corporation shall, to the fullest extent
permitted by applicable law as in effect at any time, indemnify any person
made, or threatened to be made, a party to an action or proceeding whether
civil or criminal (including an action or proceeding by or in the right of
the Corporation or any other corporation of any type or kind, domestic or
foreign, or any partnership, joint venture, trust, employee benefit plan or
other enterprise, for which any director or officer of the Corporation
served in any capacity at the request of the Corporation), by reason of the
fact that such person or such person's testator or intestate was a director
or officer of the Corporation, or served such other corporation, partnership,
joint
[July 29, 1997]
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<PAGE>
venture, trust, employee benefit plan or other enterprise in any capacity,
against judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees actually and necessarily incurred as a result of
such action or proceeding, or any appeal therein. Such indemnification shall
be a contract right and shall include the right to be paid advances of any
expenses incurred by such person in connection with such action, suit or
proceeding, consistent with the provisions of applicable law in effect at any
time. Indemnification shall be deemed to be "permitted" within the meaning of
the first sentence hereof if it is not expressly prohibited by applicable law
as in effect at the time.
ARTICLE VII
SHARES
SECTION 1. Stock Certificates. The shares of the Corporation shall be
represented by certificates, or shall be uncertificated shares. Each owner
of stock of the Corporation shall be entitled to have a certificate, in such
form as shall be approved by the Board, certifying the number of shares of
stock of the Corporation owned. To the extent that shares are represented by
certificates, such certificates of stock shall be signed in the name of the
Corporation by the Chairman of the Board or a Vice Chairman of the Board or
the President or a Vice President and by the Secretary and sealed with the
seal of the Corporation (which seal may be a facsimile, engraved or printed);
provided, however, that where any such certificate is signed by a registrar,
other than the Corporation or its employee, the signatures of the Chairman of
the Board, a Vice Chairman of the Board, the President, the Secretary, and
transfer agent or a transfer clerk acting on behalf of the Corporation upon
such certificates may be facsimiles, engraved or printed. In case any
officer, transfer agent or transfer clerk acting on behalf of the Corporation
ceases to be such officer, transfer agent, or transfer clerk before such
certificates shall be issued, they may nevertheless be issued by the
Corporation with the same effect as if they were still such officer, transfer
agent or transfer clerk at the date of their issue.
SECTION 2. Books of Account and Record of Stockholders. There shall be
kept at the office of the Corporation correct books of account of all its
business and transactions, minutes of the proceedings of stockholders, Board,
and Executive Committee, and a book to be known as the record of
stockholders, containing the names and addresses of all persons who are
stockholders, the number of shares of stock held, and the date when the
stockholder became the owner of record thereof.
SECTION 3. Transfers of Stock. Transfers of shares of stock of the
Corporation shall be made on the record of stockholders of the Corporation
only upon authorization by the registered holder thereof, or by an attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary or with a transfer agent or transfer clerk, and on surrender of the
certificate or certificates for such shares properly endorsed, provided such
shares are represented by a certificate, or accompanied by a duly executed
stock transfer power and the payment of all taxes thereon. The person in
whose names shares of stock shall stand on the
[July 29, 1997]
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<PAGE>
record of stockholders of the Corporation shall be deemed the owner thereof
for all purposes as regards the Corporation. Whenever any transfers of shares
shall be made for collateral security and not absolutely and written notice
thereof shall be given to the Secretary or to such transfer agent or transfer
clerk, such fact shall be stated in the entry of the transfer.
SECTION 4. Regulations. The Board may make such additional rules and
regulations as it may deem expedient, not inconsistent with these By-laws,
concerning the issue, transfer and registration of certificated or
uncertificated shares of stock of the Corporation. It may appoint, or
authorize any officer or officers to appoint, one or more transfer agents or
one or more transfer clerks and one or more registrars and may require all
certificates of stock to bear the signature or signatures of any of them.
SECTION 5. Fixing of Record Date. The Board shall fix a time not
exceeding fifty nor less than ten days prior to the date then fixed for the
holding of any meeting of the stockholders or prior to the last day on which
the consent or dissent of the stockholders may be effectively expressed for
any purpose without a meeting, as the time as of which the stockholders
entitled to notice of and to vote at such meeting or whose consent or dissent
is required or may be expressed for any purpose, as the case may be, shall be
determined, and all persons who were holders of record of voting stock at
such time, and no others, shall be entitled to notice of and to vote at such
meeting or to express their consent or dissent, as the case may be. The Board
may fix a time not exceeding fifty days preceding the date fixed for the
payment of any dividend or the making of any distribution or the allotment of
rights to subscribe for securities of the Corporation, or for the delivery of
evidences of rights or evidences of interests arising out of any change,
conversion or exchange of capital stock or other securities, as the record
date for the determination of the stockholders entitled to receive any such
dividend, distribution, allotment, rights or interests, and in such case only
the stockholders of record at the time so fixed shall be entitled to receive
such dividend, distribution, allotment, rights or interests.
SECTION 6. Lost, Destroyed or Mutilated Certificates. The holder of any
certificate representing shares of stock of the Corporation shall immediately
notify the Corporation of any loss, destruction or mutilation of such
certificate, and the Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it which the owner thereof
shall allege to have been lost or destroyed or which shall have been
mutilated, and the Corporation may, in its discretion, require such owner or
the owner's legal representatives to give to the Corporation a bond in such
sum, limited or unlimited, and in such form and with such surety or sureties
as the Board in its absolute discretion shall determine, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss or destruction of any such certificate, or the issuance of such
new certificate. Anything to the contrary notwithstanding, the Corporation,
in its absolute discretion, may refuse to issue any such new certificate,
except pursuant to legal
[July 29, 1997]
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<PAGE>
proceedings under the laws of the State of New York.
SECTION 7. Inspection of Records. The record of stockholders and minutes
of the proceedings of stockholders shall be available for inspection, within
the limits and subject to the conditions and restrictions prescribed by
applicable law.
SECTION 8. Auditors. The Board shall employ an independent public or
certified public accountant or firm of such accountants who shall act as
auditors in making examinations of the consolidated financial statements of
the Corporation and its subsidiaries in accordance with generally accepted
auditing standards. The auditors shall certify that the annual financial
statements are prepared in accordance with generally accepted accounting
principles, and shall report on such financial statements to the stockholders
and directors of the Corporation. The Board's selection of auditors shall be
presented for ratification by the stockholders at the annual meeting.
Directors and officers, when acting in good faith, may rely upon financial
statements of the Corporation represented to them to be correct by the
officer to the Corporation having charge of its books of account, or stated
in a written report by the auditors fairly to reflect the financial condition
of the Corporation.
ARTICLE VIII
OFFICES
SECTION 1. Principal Office. The principal office of the Corporation
shall be at such place in the Town of North Castle, County of Westchester and
State of New York as the Board shall from time to time determine.
SECTION 2. Other Offices. The Corporation may also have an office or
offices other than said principal office at such place or places as the Board
shall from time to time determine or the business of the Corporation may
require.
ARTICLE IX
WAIVER OF NOTICE
Whenever under the provisions of any law of the State of New York, the
Certificate of Incorporation or these By-laws or any resolution of the Board
or any committee thereof, the Corporation or the Board or any committee
thereof is authorized to take any action after notice to the stockholders,
directors or members of any such committee, or after the lapse of a
prescribed period of time, such action may be taken without notice and
without the lapse of any period of time, if, at any time before or after such
action shall be completed, such notice or lapse of time shall be waived in
writing by the person or persons entitled to said notice or entitled to
[July 29, 1997]
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<PAGE>
participate in the action to be taken, or, in the case of a stockholder, by
an attorney thereunto authorized. Attendance at a meeting requiring notice by
any person or, in the case of a stockholder, by the stockholder's attorney,
agent or proxy, shall constitute a waiver of such notice on the part of the
person so attending, or by such stockholder, as the case may be.
ARTICLE X
FISCAL YEAR
The fiscal year of the Corporation shall end on the thirty-first day of
December in each year.
ARTICLE XI
SEAL
The Seal of the Corporation shall consist of two concentric circles with
the IBM logotype appearing in bold face type within the inner circle and the
words "International Business Machines Corporation" appearing within the
outer circle.
ARTICLE XII
AMENDMENTS
These By-laws may be amended or repealed or new By-laws may be adopted
by the stockholders at any annual or special meeting, if the notice thereof
mentions that amendment or repeal or the adoption of new By-laws is one of
the purposes of such meeting. These By-laws, subject to the laws of the State
of New York, may also be amended or repealed or new By-laws may be adopted by
the affirmative vote of a majority of the Board given at any meeting, if the
notice thereof mentions that amendment or repeal or the adoption of new
By-laws is one of the purposes of such meeting; provided, however, that if
any By-law regulating an impending election of directors is adopted or
amended or repealed by the Board, there shall be set forth in the notice of
the next meeting of the stockholders for the election of directors the By-law
so adopted or amended or repealed, together with a concise statement of the
changes made.
[July 29, 1997]
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<PAGE>
INTERNATIONAL BUSINESS
MACHINES CORPORATION
I, the undersigned, Secretary of International Business Machines
Corporation, do hereby certify that the foregoing is a true and complete copy
of the By-laws of said Corporation, including all amendments thereto, and the
same is in force at the date hereof.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of said Corporation, this __ day of ___________ 19__.
__________________________________
Secretary
[July 29, 1997]
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<PAGE>
EXHIBIT 5.1
[Letterhead of]
International Business Machines Corporation
November 4, 1997
International Business Machines Corporation
New Orchard Road
Armonk, NY 10504
Ladies and Gentlemen:
I am Vice President and Assistant General Counsel of International
Business Machines Corporation, a New York corporation (the "Company"), and I
am familiar with the Registration Statement on Form S-4 (the "Registration
Statement") being filed by the Company with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to the
proposed issuance of shares of the Company's Common Stock, par value $1.25
per share, in connection with the merger of Unison Software, Inc., a Delaware
Corporation ("Unison"), with and into New Orchard Corporation, a wholly owned
subsidiary of IBM ("New Orchard"), pursuant to the terms of an Agreement and
Plan of Merger dated as of September 12, 1997, as amended (the "Merger
Agreement"), among the Company, Unison and New Orchard.
I have reviewed the Company's Restated Certificate of Incorporation,
as amended, and By-laws and such other corporate records of the Company and
documents and certificates of public officials and others as I have deemed
necessary as a basis for the opinion hereinafter expressed.
Based on the foregoing and having regard for such legal
considerations as I deem relevant, I am of the opinion that the shares of
Common Stock covered by the Registration Statement, when delivered in
exchange for shares of Unison common stock pursuant to the Merger Agreement,
will be duly authorized, validly issued, fully paid and nonassessable.
I hereby consent to the use of my name under the caption "Legal
Matters" in the Proxy Statement/Prospectus constituting a part of the
Registration Statement and to the
<PAGE>
use of this opinion as an Exhibit to the Registration Statement.
Very truly yours,
/s/ David Hershberg, Esq.
David S. Hershberg, Esq.
<PAGE>
EXHIBIT 8.1
[LETTERHEAD OF CRAVATH, SWAINE & MOORE]
November 4, 1997
AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 12, 1997,
AMONG INTERNATIONAL BUSINESS MACHINES CORPORATION,
NEW ORCHARD CORP. AND UNISON SOFTWARE, INC.
Ladies and Gentleman:
We have acted as counsel for International Business Machines
Corporation, a New York corporation ("Parent"), in connection with the proposed
merger (the "Merger") of Unison Software, Inc., a Delaware corporation (the
"Company"), with and into New Orchard Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("Sub"), pursuant to an Agreement and Plan of Merger,
dated as of September 12, 1997, and amended as of October 1, 1997, by and among
Parent, Sub and the Company (the "Merger Agreement"). The Merger and certain
proposed transactions incident thereto are described in the Registration
Statement on Form S-4 of Parent (the "Registration Statement"), which includes
the Proxy Statement/Prospectus of Parent and the Company (the "Proxy
Statement/Prospectus"). This opinion is being rendered pursuant to the
requirements of Item 21(a) of Form S-4 under the Securities Act of 1933, as
amended (the "Securities Act"). Unless otherwise indicated, any capitalized
terms used herein that are not otherwise defined have the meaning assigned to
such terms in the Proxy Statement/Prospectus.
In providing our opinion, we have examined the Merger Agreement, the
Proxy Statement/Prospectus and such other documents and corporate records as we
have deemed necessary or appropriate for purposes of our opinion. In addition,
we have assumed that (i) the Merger will be consummated in accordance with the
provisions of the Merger Agreement and the Proxy Statement/Prospectus, (ii) the
statements concerning the Merger set forth in the Merger Agreement and the Proxy
Statement/Prospectus are true, correct and
<PAGE>
2
complete in all material respects and will continue to be true, correct and
complete in all material respects as of the Effective Time (as defined in the
Merger Agreement), (iii) the representations made by Parent, the Company and
certain stockholders of the Company in their respective letters to be delivered
to us (the "Representation Letters") are true, correct and complete in all
material respects and will remain true, correct and complete in all material
respects at all times up to and including the Effective Time (as defined in the
Merger Agreement) and (iv) any representations made in the Representation
Letters "to the best knowledge of" or similarly qualified are correct without
such qualification. If any of the above described assumptions are untrue for
any reason or if the Merger is consummated in a manner that is inconsistent with
the way in which the Merger is described in the Merger Agreement, the Proxy
Statement/Prospectus or the Representation Letters, our opinions as expressed
below may be adversely affected and may not be relied upon.
Based upon the foregoing, the discussion contained in the Registration
Statement under the caption "Certain Federal Income Tax Considerations," subject
to the limitations and qualifications described therein and herein, expresses
our opinion with respect to the material Federal income tax consequences of the
consummation of the Merger. This opinion merely reflects our best judgment and,
as noted in the Proxy/Statement Prospectus, is not binding on the Internal
Revenue Service (the "IRS"). The IRS is not precluded from successfully
adopting a contrary position. Moreover, because this opinion is being delivered
substantially prior to the Effective Time of the Merger, it must be considered
prospective and dependent upon future events. There can be no assurance that
changes in the law (or interpretations of the law) will not take place that
could adversely affect the Federal income tax consequences of the Merger.
This opinion is being provided solely for use in connection with the
Registration Statement. We hereby consent to your filing this opinion as an
exhibit to the Registration Statement. We also consent to the reference to our
firm name wherever appearing in the Registration Statement with respect to the
discussion of the material Federal income tax consequences of the Merger,
including the Proxy/Statement Prospectus constituting a part thereof, and any
amendment thereto. In giving this consent, we do not admit that we are within
the category of persons whose consent is required under Section 7 of the
Securities Act or the General Rules and Regulations of the Securities and
Exchange Commission (the "SEC"), nor do we admit that we are experts with
respect to any part of such Registration
<PAGE>
3
Statement within the meaning of the term "experts" as used in the Securities Act
or the General Rules and Regulations of the SEC.
Sincerely,
/s/ Cravath, Swaine & Moore
International Business Machines Corporation
New Orchard Road
Armonk, New York 10504
<PAGE>
Exhibit 8.2
[LETTERHEAD OF WILSON SONSINI GOODRICH & ROSATI]
November 4, 1997
Unison Software, Inc.
5101 Patrick Henry Drive
Santa Clara, California 95054
RE: MERGER AMONG INTERNATIONAL BUSINESS MACHINES CORPORATION, NEW ORCHARD
CORP. AND UNISON SOFTWARE, INC.
Ladies and Gentlemen:
We have acted as counsel to Unison Software, Inc., a Delaware corporation
("Unison") in connection with the proposed merger (the "Merger") of New Orchard
Corp. ("Sub"), a Delaware corporation and a wholly-owned subsidiary of
International Business Machines Corporation, a Delaware corporation ("IBM"),
with and into Unison pursuant to an Agreement and Plan of Merger dated as of
September 12, 1997 as amended as of October 1, 1997 (the "Merger Agreement"), by
and among IBM, Sub and Unison. The Merger and certain proposed transactions
incident thereto are described in the Registration Statement on Form S-4 (the
"Registration Statement") of IBM which includes the Proxy Statement/Prospectus
of IBM and Unison (the "Proxy Statement/Prospectus"). This opinion is being
rendered pursuant to the requirements of Item 21(a) of Form S-4 under the
Securities Act of 1933, as amended. Unless otherwise indicated, any capitalized
terms used herein and not otherwise defined have the meaning ascribed to them in
the Proxy Statement/Prospectus.
In connection with this opinion, we have examined and are familiar with
the Merger Agreement, the Registration Statement, and such other presently
existing documents, records and matters of law as we have deemed necessary or
appropriate for purposes of our opinion. In addition, we have assumed (i)
that the Merger will be consummated in the manner contemplated by the Proxy
Statement/Prospectus and in accordance with the provisions of the Merger
Agreement and (ii) the truth accuracy and completeness (as of the date hereof
and as of the Effective Time) of the representations, warranties statements
made by IBM, Unison and Sub in the Merger Agreement, or set forth in the
Proxy Statement/Prospecuts, (iii) the truth, accuracy and completeness (as of
the date hereof and as of the Effective Time) of the certificates of
representations to be provided to us by IBM, Unison, Sub and certain
shareholders of Unison, and (iv) any representations, warranties or
statements made "to the best knowledge of" or any other knowledge or other
qualification, is true, correct and complete without such qualification.
<PAGE>
Unison Software, Inc.
November 4, 1997
Page 2
If any of the assumptions upon which we have relied are untrue our
opinion as expressed below may be adversely affected and may not be relied
upon.
Based upon and subject to the foregoing, the discussion contained in the
Registration Statement under the caption "Certain Federal Income Tax
Considerations," subject to the limitations and qualifications described
therein and herein, expresses our opinion as to the material Federal income
tax consequences if the Merger is effected in accordance with the terms of
the Merger Agreement. This opinion merely reflects our best judgement and,
as noted in the Proxy Statement/Prospectus, is not binding on the Internal
Revenue Service ("IRS"). The IRS is not precluded from successfully adopting
a contrary position. Moreover, because this opinion is being delivered
substantially prior to the Effective Time of the Merger, it must be
considered prospective and dependent on future events. There can be no
assurance that changes in the law (or interpretations of the law) will not
take place which could adversely affect the Federal income tax consequences
of the Merger.
This opinion is the sole opinion furnished to you solely for use in
connection with the Registration Statement. It may not be used or relied
upon for any other purpose. We hereby consent to the filing of this opinion
as an exhibit to the Registration Statement. We also consent to the
reference to our firm name wherever appearing in the Registration Statement
with respect to the discussion of the material Federal income tax
consequences of the Merger, including the Proxy Statement/Prospectus
constituting a part thereof, and any amendment thereto. In giving this
consent, we do not thereby admit that we in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange
Commission thereunder, nor do we thereby admit that we are experts with
respect to any part of such Registration Statement within the meaning of the
term "experts" as used in the Securities Act of 1933, as amended, or the
rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTS
We consent to the incorporation by reference in this registration statement
on Form S-4 of our reports dated July 3, 1997, on our audits of the financial
statements and financial statement schedule of Unison Software, Inc. as of
May 31, 1997 and 1996, and for each of the three years in the period ended
May 31, 1997. We also consent to the reference to our firm under the caption
"Experts."
/S/ COOPERS & LYBRAND L.L.P.
San Jose, California
October 31, 1997
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of International
Business Machines Corporation of our report dated January 20, 1997, which
appears on page 43 of International Business Machines Corporation's 1996
Annual Report to Shareholders, which is incorporated by reference in its
Annual Report on Form 10-K for the year ended December 31, 1996. We also
consent to the incorporation by reference of our report on the Financial
Statement Schedule, which appears on page 8 of such Annual Report on Form
10-K. We also consent to the reference to us under the heading "Experts" in
such Prospectus.
/S/ PRICE WATERHOUSE LLP
New York, New York
November 3, 1997
<PAGE>
EXHIBIT 23.6
October 31, 1997
Board of Directors
Unison Software, Inc.
5101 Patrick Henry Drive
Santa Clara, CA 95054
Re: Registration Statement of International Business Machines Corporation
("IBM") relating to its Common Stock, par value $0.50 per share, being
registered in connection with the merger of Unison Software, Inc. and New
Orchard Corp., a wholly-owned subsidiary of IBM.
Gentlemen:
Reference is made to our opinion letter (the "Opinion Letter") dated
September 12, 1997 with respect to the fairness to the holders of the Shares
(as defined in the Opinion Letter) of Unison Software, Inc. (the "Company")
of the Merger Consideration (as defined in the Opinion Letter) to be received
for the Shares pursuant to the Agreement (as defined in the Opinion Letter).
The foregoing opinion letter is provided solely for the information and
assistance of the Board of Directors of the Company in connection with its
consideration of the transaction contemplated therein and is not to be used,
circulated, quoted or otherwise referred to for any other purpose, nor is it
to be filed with, included in or referred to in whole or in part in any
registration statement, proxy statement or any other document, except in
accordance with our prior written consent. We understand that the Company has
determined to include the Opinion Letter in the above-referenced Registration
Statement.
In that regard, we hereby consent to the reference to the opinion of our Firm
in the letter to the stockholders of the Company in the Proxy Statement
included in the above-mentioned Registration Statement and under the captions
"Summary -- Opinion of Financial Advisor", "The Merger -- Background of the
Merger", "The Merger -- Recommendation of the Unison Board and Reasons for
the Merger" and "The Merger -- Opinion of Financial Advisor" and to the
inclusion of the Opinion Letter in the Proxy Statement included in the
above-mentioned Registration Statement. In giving such consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Goldman, Sachs & Co.
- -----------------------------
GOLDMAN, SACHS & CO.
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY OF LOUIS V. GERSTNER, JR.
-------------------------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Chairman of
the Board of Directors and Chief Executive Officer of International Business
Machines Corporation, a New York corporation (the "Corporation"), which is to
file with the Securities and Exchange Commission (the "SEC") under the
provisions of the Securities Act of 1933, as amended, one or more
Registration Statements on Form S-4, or other appropriate Form, for shares of
capital stock of the Corporation to be issued in connection with the
acquisition by the Corporation of Unison, hereby constitute and appoint
Lawrence R. Ricciardi, John E. Hickey, John R. Joyce and Jeffrey D. Serkes,
and each of them, my true and lawful attorneys-in-fact and agents, with full
power to act, together or each without the others, for me and in my name,
place and stead, in any and all capacities, to sign, or cause to be signed
electronically any and all of said Registration Statements and any and all
amendments to the aforementioned Registration Statements and to file said
Registration Statements and amendments thereto so signed with all exhibits
thereto, and with any and all other documents in connection therewith, with
the SEC, hereby granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform any and all acts and things
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as I might or could do in person, hereby ratifying and
conforming all that said attorneys-in-fact and agents or any of them may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 29th day of July, 1997.
/s/ Louis V. Gerstner, Jr.
------------------------------
Louis V. Gerstner, Jr.
Chairman of the Board and
Chief Executive Officer
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY OF LAWRENCE R. RICCIARDI
------------------------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Senior Vice
President and Chief Financial Officer of International Business Machines
Corporation, a New York corporation (the "Corporation"), which is to file
with the Securities and Exchange Commission (the "SEC") under the provisions
of the Securities Act of 1933, as amended, one or more Registration
Statements on Form S-4, or other appropriate Form, for shares of capital
stock of the Corporation to be issued in connection with the acquisition by
the Corporation of Unison, hereby constitute and appoint Louis V. Gerstner,
Jr., John E. Hickey, John R. Joyce and Jeffrey D. Serkes, and each of them,
my true and lawful attorneys-in-fact and agents, with full power to act,
together or each without the others, for me and in my name, place and stead,
in any and all capacities, to sign, or cause to be signed electronically any
and all of said Registration Statements and any and all amendments to the
aforementioned Registration Statements and to file said Registration
Statements and amendments thereto so signed with all exhibits thereto, and
with any and all other documents in connection therewith, with the SEC,
hereby granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform any and all acts and things
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as I might or could do in person, hereby ratifying and
conforming all that said attorneys-in-fact and agents or any of them may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 29th day of July, 1997.
/s/ Lawrence R. Ricciardi
------------------------------
Lawrence R. Ricciardi
Senior Vice President
and Chief Financial Officer
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY OF JOHN R. JOYCE
----------------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Vice
President and Controller of International Business Machines Corporation, a
New York corporation (the "Corporation"), which is to file with the
Securities and Exchange Commission (the "SEC") under the provisions of the
Securities Act of 1933, as amended, one or more Registration Statements on
Form S-4, or other appropriate Form, for shares of capital stock of the
Corporation to be issued in connection with the acquisition by the
Corporation of Unison, hereby constitute and appoint Louis V. Gerstner, Jr.,
Lawrence R. Ricciardi, John E. Hickey and Jeffrey D. Serkes, and each of
them, my true and lawful attorneys-in-fact and agents, with full power to
act, together or each without the others, for me and in my name, place and
stead, in any and all capacities, to sign, or cause to be signed
electronically any and all of said Registration Statements and any and all
amendments to the aforementioned Registration Statements and to file said
Registration Statements and amendments thereto so signed with all exhibits
thereto, and with any and all other documents in connection therewith, with
the SEC, hereby granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform any and all acts and things
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as I might or could do in person, hereby ratifying and
conforming all that said attorneys-in-fact and agents or any of them may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 29th day of July, 1997.
/s/ John R. Joyce
------------------------------
John R. Joyce
Vice President and Controller
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY OF IBM DIRECTOR
---------------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which is to file with the Securities and Exchange Commission
(the "SEC") under the provisions of the Securities Act of 1933, as amended,
one or more Registration Statements on Form S-4, or other appropriate Form,
for shares of capital stock of the Corporation to be issued in connection
with the acquisition by the Corporation of Unison, hereby constitute and
appoint Louis V. Gerstner, Jr., Lawrence R. Ricciardi, John E. Hickey, John
R. Joyce and Jeffrey D. Serkes, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each
without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically any and all of said
Registration Statements and any and all amendments to the aforementioned
Registration Statements and to file said Registration Statements and
amendments thereto so signed with all exhibits thereto, and with any and all
other documents in connection therewith, with the SEC, hereby granting unto
said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform any and all acts and things requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as I
might or could do in person, hereby ratifying and conforming all that said
attorneys-in-fact and agents or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 29th day of July, 1997.
/s/ Cathleen P. Black
------------------------------
Director
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY OF IBM DIRECTOR
---------------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which is to file with the Securities and Exchange Commission
(the "SEC") under the provisions of the Securities Act of 1933, as amended,
one or more Registration Statements on Form S-4, or other appropriate Form,
for shares of capital stock of the Corporation to be issued in connection
with the acquisition by the Corporation of Unison, hereby constitute and
appoint Louis V. Gerstner, Jr., Lawrence R. Ricciardi, John E. Hickey, John
R. Joyce and Jeffrey D. Serkes, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each
without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically any and all of said
Registration Statements and any and all amendments to the aforementioned
Registration Statements and to file said Registration Statements and
amendments thereto so signed with all exhibits thereto, and with any and all
other documents in connection therewith, with the SEC, hereby granting unto
said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform any and all acts and things requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as I
might or could do in person, hereby ratifying and conforming all that said
attorneys-in-fact and agents or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 29th day of July, 1997.
/s/ Harold Brown
------------------------------
Director
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY OF IBM DIRECTOR
---------------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which is to file with the Securities and Exchange Commission
(the "SEC") under the provisions of the Securities Act of 1933, as amended,
one or more Registration Statements on Form S-4, or other appropriate Form,
for shares of capital stock of the Corporation to be issued in connection
with the acquisition by the Corporation of Unison, hereby constitute and
appoint Louis V. Gerstner, Jr., Lawrence R. Ricciardi, John E. Hickey, John
R. Joyce and Jeffrey D. Serkes, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each
without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically any and all of said
Registration Statements and any and all amendments to the aforementioned
Registration Statements and to file said Registration Statements and
amendments thereto so signed with all exhibits thereto, and with any and all
other documents in connection therewith, with the SEC, hereby granting unto
said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform any and all acts and things requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as I
might or could do in person, hereby ratifying and conforming all that said
attorneys-in-fact and agents or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 29th day of July, 1997.
/s/ J. Dormann
------------------------------
Director
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY OF IBM DIRECTOR
---------------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which is to file with the Securities and Exchange Commission
(the "SEC") under the provisions of the Securities Act of 1933, as amended,
one or more Registration Statements on Form S-4, or other appropriate Form,
for shares of capital stock of the Corporation to be issued in connection
with the acquisition by the Corporation of Unison, hereby constitute and
appoint Louis V. Gerstner, Jr., Lawrence R. Ricciardi, John E. Hickey, John
R. Joyce and Jeffrey D. Serkes, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each
without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically any and all of said
Registration Statements and any and all amendments to the aforementioned
Registration Statements and to file said Registration Statements and
amendments thereto so signed with all exhibits thereto, and with any and all
other documents in connection therewith, with the SEC, hereby granting unto
said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform any and all acts and things requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as I
might or could do in person, hereby ratifying and conforming all that said
attorneys-in-fact and agents or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 29th day of July, 1997.
/s/ Nannerl O. Keohane
------------------------------
Director
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY OF IBM DIRECTOR
---------------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which is to file with the Securities and Exchange Commission
(the "SEC") under the provisions of the Securities Act of 1933, as amended,
one or more Registration Statements on Form S-4, or other appropriate Form,
for shares of capital stock of the Corporation to be issued in connection
with the acquisition by the Corporation of Unison, hereby constitute and
appoint Louis V. Gerstner, Jr., Lawrence R. Ricciardi, John E. Hickey, John
R. Joyce and Jeffrey D. Serkes, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each
without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically any and all of said
Registration Statements and any and all amendments to the aforementioned
Registration Statements and to file said Registration Statements and
amendments thereto so signed with all exhibits thereto, and with any and all
other documents in connection therewith, with the SEC, hereby granting unto
said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform any and all acts and things requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as I
might or could do in person, hereby ratifying and conforming all that said
attorneys-in-fact and agents or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 29th day of July, 1997.
/s/ Charles F. Knight
------------------------------
Director
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY OF IBM DIRECTOR
---------------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which is to file with the Securities and Exchange Commission
(the "SEC") under the provisions of the Securities Act of 1933, as amended,
one or more Registration Statements on Form S-4, or other appropriate Form,
for shares of capital stock of the Corporation to be issued in connection
with the acquisition by the Corporation of Unison, hereby constitute and
appoint Louis V. Gerstner, Jr., Lawrence R. Ricciardi, John E. Hickey, John
R. Joyce and Jeffrey D. Serkes, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each
without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically any and all of said
Registration Statements and any and all amendments to the aforementioned
Registration Statements and to file said Registration Statements and
amendments thereto so signed with all exhibits thereto, and with any and all
other documents in connection therewith, with the SEC, hereby granting unto
said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform any and all acts and things requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as I
might or could do in person, hereby ratifying and conforming all that said
attorneys-in-fact and agents or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 29th day of July, 1997.
/s/ Lucio A. Noto
------------------------------
Director
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY OF IBM DIRECTOR
---------------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which is to file with the Securities and Exchange Commission
(the "SEC") under the provisions of the Securities Act of 1933, as amended,
one or more Registration Statements on Form S-4, or other appropriate Form,
for shares of capital stock of the Corporation to be issued in connection
with the acquisition by the Corporation of Unison, hereby constitute and
appoint Louis V. Gerstner, Jr., Lawrence R. Ricciardi, John E. Hickey, John
R. Joyce and Jeffrey D. Serkes, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each
without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically any and all of said
Registration Statements and any and all amendments to the aforementioned
Registration Statements and to file said Registration Statements and
amendments thereto so signed with all exhibits thereto, and with any and all
other documents in connection therewith, with the SEC, hereby granting unto
said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform any and all acts and things requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as I
might or could do in person, hereby ratifying and conforming all that said
attorneys-in-fact and agents or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 29th day of July, 1997.
/s/ John B. Slaughter
------------------------------
Director
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY OF IBM DIRECTOR
---------------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which is to file with the Securities and Exchange Commission
(the "SEC") under the provisions of the Securities Act of 1933, as amended,
one or more Registration Statements on Form S-4, or other appropriate Form,
for shares of capital stock of the Corporation to be issued in connection
with the acquisition by the Corporation of Unison, hereby constitute and
appoint Louis V. Gerstner, Jr., Lawrence R. Ricciardi, John E. Hickey, John
R. Joyce and Jeffrey D. Serkes, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each
without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically any and all of said
Registration Statements and any and all amendments to the aforementioned
Registration Statements and to file said Registration Statements and
amendments thereto so signed with all exhibits thereto, and with any and all
other documents in connection therewith, with the SEC, hereby granting unto
said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform any and all acts and things requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as I
might or could do in person, hereby ratifying and conforming all that said
attorneys-in-fact and agents or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 29th day of July, 1997.
/s/ Alex Trotman
------------------------------
Director
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY OF IBM DIRECTOR
---------------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which is to file with the Securities and Exchange Commission
(the "SEC") under the provisions of the Securities Act of 1933, as amended,
one or more Registration Statements on Form S-4, or other appropriate Form,
for shares of capital stock of the Corporation to be issued in connection
with the acquisition by the Corporation of Unison, hereby constitute and
appoint Louis V. Gerstner, Jr., Lawrence R. Ricciardi, John E. Hickey, John
R. Joyce and Jeffrey D. Serkes, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each
without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically any and all of said
Registration Statements and any and all amendments to the aforementioned
Registration Statements and to file said Registration Statements and
amendments thereto so signed with all exhibits thereto, and with any and all
other documents in connection therewith, with the SEC, hereby granting unto
said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform any and all acts and things requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as I
might or could do in person, hereby ratifying and conforming all that said
attorneys-in-fact and agents or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 29th day of July, 1997.
/s/ Lodewijk C. van Wachem
------------------------------
Director
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY OF IBM DIRECTOR
---------------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which is to file with the Securities and Exchange Commission
(the "SEC") under the provisions of the Securities Act of 1933, as amended,
one or more Registration Statements on Form S-4, or other appropriate Form,
for shares of capital stock of the Corporation to be issued in connection
with the acquisition by the Corporation of Unison, hereby constitute and
appoint Louis V. Gerstner, Jr., Lawrence R. Ricciardi, John E. Hickey, John
R. Joyce and Jeffrey D. Serkes, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each
without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically any and all of said
Registration Statements and any and all amendments to the aforementioned
Registration Statements and to file said Registration Statements and
amendments thereto so signed with all exhibits thereto, and with any and all
other documents in connection therewith, with the SEC, hereby granting unto
said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform any and all acts and things requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as I
might or could do in person, hereby ratifying and conforming all that said
attorneys-in-fact and agents or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 29th day of July, 1997.
/s/ Charles M. Vest
------------------------------
Director
<PAGE>
Exhibit 24.2
RESOLUTIONS REGARDING THE ACQUISITION OF UNISON
RESOLVED that the transaction with Unison, on substantially the terms and
conditions presented to the Board of Directors at this meeting (the
"Proposed Acquisition") be, and it hereby is, authorized and approved, and
that the Chairman, any Senior Vice President, any Vice President and the Vice
President, Corporate Development and Real Estate be, and each of them
individually hereby is, authorized and empowered to execute and deliver in
the name and on behalf of the Corporation any agreements, instruments and
other documents (and any amendments thereto) necessary or appropriate in
connection with the Proposed Acquisition or any of the other matters or
transactions related thereto, including without limitation the assumption of
any stock, option or other plans of Unison; and
RESOLVED that the Board of Directors of the Corporation hereby authorize
the issuance or delivery of shares of Capital Stock, $.50 par value, of the
Corporation (the "Shares"), in payment of all or a portion of the
consideration for the Proposed Acquisition; and
RESOLVED that the proper officers of the Corporation be, and hereby are,
authorized and empowered to prepare for filing with the Securities and
Exchange Commission (the "SEC") under the provisions of the Securities Act
of 1933, as amended, one or more registration statements on Form S-4, Form
S-3 or other appropriate Form, relating to the Shares, and that each of Louis
V. Gerstner, Jr., Lawrence R. Ricciardi, John E. Hickey, John R. Joyce and
Jeffrey D. Serkes be, and each of them hereby is, vested with full power to
act, together or each without the others, in any and all capacities, in the
name and on behalf of the Corporation to sign or cause to be signed
electronically, such registration statements and any and all amendments to the
aforementioned registration statements, and to file said registration
statements and amendments thereto so signed with all exhibits thereto, and any
and all other documents in connection therewith, with the SEC, and all actions
in connection with the preparation, execution and filing of said registration
statements with the SEC on behalf of and as attorneys for the Corporation are
hereby ratified, approved and adopted in all respects; and
RESOLVED that the proper officers of the Corporation be, and they hereby
are, authorized in the name and on behalf of the Corporation, to take any and
all action which they may deem necessary or advisable in
<PAGE>
order to effect the registration or qualification (or exemption therefrom) of
the Shares for issue, offer, sale or trade under the Blue Sky or securities
laws of any of the States of the United States of America as well as in any
foreign jurisdiction and political subdivisions thereof, and in connection
therewith to execute, acknowledge, verify, deliver, file or cause to be
published any applications, reports, consents to service of process and other
papers and instruments which may be required under such laws, and to take any
and all further action which they may deem necessary or advisable in order to
maintain any such registration, qualification or exemption for as long as
they deem necessary or as required by law, and that the execution by such
officers of any such paper or document, or the doing by them of any act in
connection with the foregoing matters shall conclusively establish their
authority therefor from the Corporation and the ratification by the
Corporation of the papers and documents so executed and the actions so taken;
and
RESOLVED that the Corporation is hereby authorized to list the Shares on
any public exchanges, and that the proper officers of the Corporation are
hereby authorized on behalf of the Corporation to execute all listing
applications, fee agreements and other documents in connection with the
foregoing; and
RESOLVED that the proper officers of the Corporation be, and they
hereby are, authorized to take all such further action and to execute all
such further instruments and documents in the name and on behalf of the
Corporation and under its corporate seal or otherwise, and to pay all fees,
expenses and taxes as in their judgement shall be necessary, proper or
advisable in order fully to carry out the intent and accomplish the purposes
of the foregoing Resolutions; and
RESOLVED that the proper officers of the Corporation shall have the
authority to further delegate, in whole or in part, the authority provided in
these Resolutions to any other officer or employee of the Corporation.
<PAGE>
PROXY UNISON SOFTWARE, INC. PROXY
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 8, 1997
The undersigned, having received notice of the meeting and the proxy
statement therefor, and revoking all prior proxies, hereby appoint(s) Don H.
Lee and Richard J. Armitage, and each of them, attorney or attorneys of the
undersigned (with full power of substitution) for and in the name(s) of the
undersigned to attend the Special Meeting of Stockholders of Unison Software,
Inc. (the "Company"), to be held at The Embassy Suites Hotel, 2885 Lakeside
Drive, Santa Clara, California on December 8, 1997 at 9:30 a.m. and any
adjourned or postponed sessions thereof, and to vote and act upon the
following matters in respect of all shares of stock of the Company that the
undersigned will be entitled to vote or act upon, with all powers the
undersigned would possess if personally present.
Attendance of the undersigned at the meeting or at any adjourned or
postponed sessions thereof will not be deemed to revoke this proxy unless
the undersigned shall affirmatively indicate at the meeting the intention of
the undersigned to vote said shares in person. If the undersigned is not the
registered direct holder of his or her shares, the undersigned must obtain
appropriate documentation from the registered holder in order to be able to
vote the shares in person. If the undersigned hold(s) any of the shares of
the Company in fiduciary, custodial or joint capacity or capacities, this
proxy is signed by the undersigned in every such capacity as well as
individually.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THE PROXIES
SHALL VOTE "FOR" PROPOSAL 1.
This proxy is solicited on behalf of the Board of Directors of the Company.
PLEASE VOTE AND SIGN ON THE OTHER SIDE AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
DETACH CARD DETACH CARD
UNISON SOFTWARE, INC.
Dear Stockholder:
Please take note of the important information enclosed with this Proxy
Ballot. You are encouraged to read carefully the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your
right to vote your shares.
Please mark the boxes on the proxy card to indicate how your shares
shall be voted. Then sign the card, detach it and return your proxy vote in
the enclosed postage paid envelope.
Your vote must be received prior to the Special Meeting of Stockholders
on December 8, 1997.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Unison Software, Inc.
<PAGE>
- --------------------------------------------------------------------------------
PLEASE MARK
YOUR VOTES AS /X/
INDICATED IN
THIS EXAMPLE
Please sign this Proxy exactly as your name appears on the books of the
Company. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capcity in which they sign, and, where more
than one name appears, a majority must sign. If a corporation, this signature
should be that of any authorized officer, who should state his or her title.
1. To adopt and approve the Agreement and FOR AGAINST ABSTAIN
Plan of Merger dated as of September 12,
1997, as amended, among International / / / / / /
Business Machines Corporation, New
Orchard Corp., and Unison Software, Inc.
IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE
SPECIAL MEETING OR ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF.
A VOTE FOR PROPOSAL 1 IS RECOMMENDED BY
THE BOARD OF DIRECTORS.
RECORD DATE SHARES:
SIGNATURE__________________DATE________ SIGNATURE__________________DATE________
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
ELECTION FORM
TO ACCOMPANY CERTIFICATES REPRESENTING COMMON STOCK
OF UNISON SOFTWARE, INC. WHEN SUBMITTED IN CONNECTION
WITH THE ACQUISITION OF UNISON SOFTWARE, INC. BY
INTERNATIONAL BUSINESS MACHINES CORPORATION
This Form is to accompany certificates for shares of common stock, par value
$.001 per share ("Unison Common Stock"), of Unison Software, Inc. ("Unison")
when submitted in order to make an election as to the form of consideration to
be received by you (cash and/or shares of common stock, par value $1.25 per
share ("IBM Common Stock"), of International Business Machines Corporation
("IBM")) in connection with the proposed merger ("Merger") of Unison with and
into New Orchard Corp., a wholly owned subsidiary of IBM. To be effective, an
election pursuant to the terms and conditions set forth herein, on this Form or
a facsimile hereof, accompanied by the certificates representing shares of
Unison Common Stock described in Box I below, or a proper guarantee of delivery
thereof, must be received by the Exchange Agent, at the address set forth below,
no later than 5:00 p.m., New York City time, on December 5, 1997.
TO: First Chicago Trust Company of New York, EXCHANGE AGENT AND TRANSFER AGENT
FACSIMILE (FOR ELIGIBLE INSTITUTIONS ONLY):
(201) 222-4720
or
(201) 222-4721
CONFIRM BY TELEPHONE:
(201) 222-4707
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
IBM Team ATTN: IBM Team Tenders & Exchanges
P.O. Box 2523 c/o The Depository Trust Company 14 Wall Street, 8th Floor
Suite 4688 -- UNI 55 Water Street, DTC TAD Suite 4688 -- UNI
Jersey City, NJ 07303-2523 Vietnam Veterans Memorial Plaza New York, NY 10005
New York, NY 10041
</TABLE>
Delivery of this Form to an address, or transmission of instructions via a
telecopy facsimile number, other than as set forth above, does not constitute a
valid delivery.
Dear Sirs:
In connection with the merger (the "Merger") of Unison Software, Inc.
("Unison"), with and into New Orchard Corp., a wholly owned subsidiary of
International Business Machines Corporation ("IBM"), the undersigned hereby
submits the certificates for shares of common stock, par value $.001 per share
("Unison Common Stock"), of Unison listed below and elects to have each share of
Unison Common Stock represented by such certificates converted into the right to
receive (a) a number of shares of common stock, par value $1.25 per share ("IBM
Common Stock"), of IBM equal to a fraction, the numerator of which is $15 and
the denominator of which is the IBM Common Stock Price (the "Exchange Ratio"),
pursuant to a "Stock Election" (the "Stock Consideration") or (b) $15 in cash,
subject to proration as described in Instruction B, pursuant to a "Cash
Election" (the "Cash Consideration") as set forth herein. The "IBM Common Stock
Price" is an amount equal to the average of the closing sales price of IBM
Common Stock on the New York Stock Exchange Composite Transactions Tape on each
of the 10 consecutive trading days immediately preceding the second trading day
prior to the effective time of the Merger.
<PAGE>
It is understood that the following election is subject to (i) the terms,
conditions and limitations set forth in the Proxy Statement/Prospectus, dated
November 4, 1997, relating to the Merger (the "Proxy Statement"), receipt of
which is acknowledged by the undersigned, (ii) the terms of the Agreement and
Plan of Merger, dated as of September 12, 1997, as the same may be amended from
time to time (the "Merger Agreement"), a conformed copy of which appears as
Annex I to the Proxy Statement and (iii) the accompanying Instructions.
The undersigned authorizes and instructs you, as Exchange Agent, to deliver
such certificates of Unison Common Stock and to receive on behalf of the
undersigned, in exchange for the shares of Unison Common Stock represented
thereby, any check for cash or any certificate for shares of IBM Common Stock
issuable in the Merger pursuant to the Merger Agreement. If certificates of
Unison Common Stock are not delivered herewith, there is furnished below a
guarantee of delivery of such certificates representing shares of Unison Common
Stock from a member of a national securities exchange, a member of the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
having an office in the United States.
The undersigned represents and warrants (and if more than one, each
undersigned represents and warrants jointly and severally) that the undersigned
has full power and authority to assign and transfer the certificate(s)
surrendered and that IBM will acquire good title to such certificate(s), free
and clear of all liens, restrictions, charges, encumbrances, pledges, security
interests or other obligations affecting the assignment or transfer of the
certificate(s) and will not be subject to any adverse claim. All authority
conferred or agreed to be conferred in this Election Form shall not be affected
by, and shall survive, the death or incapacity of the undersigned, and any
obligation of the undersigned under this Election Form shall be binding upon
successors, assigns, heirs, executors, administrators, and legal representatives
of the undersigned.
Upon request, the undersigned agrees to execute and deliver any additional
documents deemed necessary or desirable by IBM or the Exchange Agent to complete
the exchange of the certificate(s). If required by Instruction D7, the
certificate(s) submitted with this Election Form are duly endorsed in blank or
otherwise in a form acceptable for transfer on the books of Unison.
Unless otherwise indicated under Special Payment Instructions below, please
issue any check and/or any certificate for shares of IBM Common Stock issuable
in exchange for the shares of Unison Common Stock represented by the
certificates submitted hereby in the name of the registered holder(s) of such
Unison Common Stock. Similarly, unless otherwise indicated under Special
Delivery Instructions, please mail any check and/or any certificate for shares
of IBM Common Stock issuable in exchange for the shares of Unison Common Stock
represented by the certificates submitted hereby to the registered holder(s) of
the Unison Common Stock at the address or addresses shown in Box I below.
2
<PAGE>
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS
BOX I: CERTIFICATES SURRENDERED
Please list in Box I all the Certificates representing Unison Common Stock
that you hold (all of which should be submitted with this Election Form)
regardless of which Election you make. If there is not enough space below to
list all of your Certificates, please attach a separate sheet. Use Box II to
specify how many shares, if any, are covered by each Election. A separate
Election Form should be submitted for shares registered in different names (see
Instruction D4).
<TABLE>
<S> <C> <C>
Name(s) and address of Registered Holder(s)
(Please fill in or make corrections needed if label
is affixed) Certificates Enclosed
Certificate
Number(s) Number of Shares
Total Shares shs.
</TABLE>
BOX II: ELECTION FORM
Check only one of the boxes below. You may make a Stock Election or a Cash
Election as to any share or combination of shares of Unison Common Stock that
you hold. If you wish to make multiple elections, check the "Multiple Election"
box below and indicate in the space provided below the number of shares of
Unison Common Stock for which a Stock Election or a Cash Election is being made.
If you fail to make an effective Election prior to the Election Date, you will
be deemed to have made a Cash Election.
/ / The STOCK ELECTION (a number of shares of IBM common stock equal to the
Exchange Ratio per share) is made as to all of the shares of Unison Common
Stock held by the undersigned.
/ / The CASH ELECTION ($15 in cash per share, subject to possible proration) is
made as to all of the shares of Unison Common Stock held by the undersigned.
/ / Multiple elections are made as to the shares of Unison Common Stock held by
the undersigned, in the following proportions:
<TABLE>
<CAPTION>
NUMBER OF SHARES AND CERTIFICATE NUMBERS AS
NUMBER OF SHARES AND CERTIFICATE NUMBERS AS TO WHICH CASH
TO WHICH STOCK ELECTION IS MADE ELECTION IS MADE
- --------------------------------------------- ---------------------------------------------
<S> <C>
------------------------------------ ------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
BOX III: SPECIAL PAYMENT INSTRUCTIONS BOX IV: SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS D(6) AND D(7)) (SEE INSTRUCTION D(8))
To be completed ONLY if the checks are To be completed ONLY if the checks or the
to be made payable to or the certificates certificates for shares of IBM Common
for shares of IBM Common Stock are to be Stock are to be sent to an address other
registered in the name of someone other than the address of the registered
than the registered holder(s) of shares of holder(s) set forth in Box I above, or if
Unison Common Stock. Box III is completed, to an address other
than the address appearing in Box III.
Name Name
(Please Print) (Please Print)
(Please Print) (Please Print)
Address Address
(Including Zip Code) (Including Zip Code)
(Tax Identification or
Social Security Number)
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
BOX V: SIGN HERE AND HAVE SIGNATURES GUARANTEED
(SEE INSTRUCTIONS D(1) AND D(7) CONCERNING SIGNATURE GUARANTEE)
Name(s):
(Please Print)
Name(s):
(Please Print)
Name(s):
(Signature of Owner(s)) (Please Print)
Must be signed by registered holder(s)
exactly as name(s) appear(s) on stock
certificate(s) or by person(s) authorized to (Area Code and Telephone Number(s))
become registered holder(s) by certificates
and documents transmitted herewith. If
signature is by a trustee, executor, (Tax Identification or
administrator, guardian, officer of a Social Security Number(s))
corporation, attorney-in-fact or any other
person acting in a fiduciary capacity, set
forth full title in such capacity and see
Instruction D(3).
Signature(s)
Guaranteed: Dated: 1997.
(See Instruction D(7))
</TABLE>
<TABLE>
<S> <C>
BOX VI: GUARANTEE OF DELIVERY
(TO BE USED ONLY IF CERTIFICATES ARE NOT SURRENDERED HEREWITH)
The undersigned is:
- - a member of a national securities exchange,
- - a member of the National Association of (Firm--Please Print)
Securities Dealers, Inc., or
- - a commercial bank or trust company in the (Authorized Signature)
United States;
and guarantees to deliver to the Exchange
Agent the certificates for shares of Unison
Common Stock to which this Form relates, duly (Address)
endorsed in blank or otherwise in form
acceptable for transfer on the books of (Area Code and Telephone Number)
Unison, no later than 5:00 P.M. New York City
time on the third New York Stock Exchange (Contact Name)
trading day after the date of execution of
such guarantee of delivery.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C>
SUBSTITUTE Part 1--PLEASE PROVIDE YOUR Social Security Number
FORM W-9 TIN IN THE BOX AT THE RIGHT OR
AND CERTIFY BY SIGNING AND Employer Identification Number
DATING BELOW.
Department of the Treasury Part 2--Please check the box at the right if you have applied
Internal Revenue Service for, and are awaiting receipt of, your TIN. / /
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN)
Certification--under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been notified by the
IRS that I am subject to backup withholding as a result of a failure to report all
interests or dividends, or the IRS has notified me that I am no longer subject to backup
withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by
the IRS that you are subject to backup withholding because of underreporting of dividends on
your tax return. However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see Certification under Specific
Instructions in the enclosed Guidelines.)
SIGNATURE DATE , 1997
</TABLE>
IF YOU CHECKED THE BOX IN PART 2 OF THE SUBSTITUTE FORM W-9, YOU MUST SIGN AND
DATE THE FOLLOWING CERTIFICATION:
CERTIFICATION OF PAYEE AWAITING TAXPAYER IDENTIFICATION NUMBER
I CERTIFY, UNDER PENALTIES OF PERJURY, THAT A TAXPAYER IDENTIFICATION NUMBER
HAS NOT BEEN ISSUED TO ME, AND THAT I MAILED OR DELIVERED AN APPLICATION TO
RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE IRS CENTER OR SOCIAL
SECURITY ADMINISTRATION OFFICE (OR I INTEND TO MAIL OR DELIVER AN APPLICATION IN
THE NEAR FUTURE). I UNDERSTAND THAT IF I DO NOT PROVIDE A TAXPAYER
IDENTIFICATION NUMBER TO THE PAYER, 31 PERCENT OF ALL PAYMENTS MADE TO ME
PURSUANT TO THIS MERGER SHALL BE RETAINED UNTIL I PROVIDE A TAXPAYER
IDENTIFICATION NUMBER TO THE PAYER AND THAT, IF I DO NOT PROVIDE MY TAXPAYER
IDENTIFICATION NUMBER WITHIN SIXTY (60) DAYS, SUCH RETAINED AMOUNTS SHALL BE
REMITTED TO THE IRS AS BACKUP WITHHOLDING AND 31 PERCENT OF ALL REPORTABLE
PAYMENTS MADE TO ME THEREAFTER WILL BE WITHHELD AND REMITTED TO THE IRS UNTIL I
PROVIDE A TAXPAYER IDENTIFICATION NUMBER.
SIGNATURE ________________________________ DATE ________________________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE ELECTION, PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
6
<PAGE>
INSTRUCTIONS
A. SPECIAL CONDITIONS.
1. TIME IN WHICH TO ELECT. To be effective, an election pursuant to the
terms and conditions set forth herein (an "Election") on this Form or a
facsimile hereof, accompanied by the above-described certificates representing
shares of Unison Common Stock or a proper guarantee of delivery thereof, must be
received by the Exchange Agent, at the address set forth above, no later than
5:00 P.M. New York City time on December 5, 1997 (the "Election Date"). Holders
of Unison Common Stock whose stock certificates are not immediately available
may also make an effective Election by completing this Form or facsimile hereof,
having the Guarantee of Delivery box (Box VI) properly completed and duly
executed (subject to the condition that the certificates the delivery of which
is thereby guaranteed are in fact delivered to the Exchange Agent, duly endorsed
in blank or otherwise in form acceptable for transfer on the books of Unison, no
later than 5:00 P.M. (New York City time) on the third New York Stock Exchange
trading day after the date of execution of such guarantee of delivery). EACH
SHARE OF UNISON COMMON STOCK WITH RESPECT TO WHICH THE EXCHANGE AGENT SHALL HAVE
NOT RECEIVED AN EFFECTIVE ELECTION PRIOR TO THE ELECTION DATE WILL BE CONVERTED
INTO THE RIGHT TO RECEIVE THE CASH CONSIDERATION (SUBJECT TO POSSIBLE
PRORATION). SEE INSTRUCTION B.
2. REVOCATION OF ELECTION. Any Election may be revoked by the person who
submitted this Form to the Exchange Agent and the certificate(s) for shares
withdrawn by written notice duly executed and received by the Exchange Agent
prior to the Election Date. Such notice must specify the person in whose name
the shares of Unison Common Stock to be withdrawn had been deposited, the number
of shares to be withdrawn, the name of the registered holder thereof, and the
serial numbers shown on the certificate(s) representing the shares to be
withdrawn. If an Election is revoked, and the certificate(s) for shares
withdrawn, the Unison Common Stock certificate(s) submitted therewith will be
promptly returned by the Exchange Agent to the person who submitted such
certificate(s).
3. TERMINATION OF RIGHT TO ELECT. If for any reason the Merger is not
consummated or is abandoned, all Forms will be void and of no effect.
Certificate(s) for Unison Common Stock previously received by the Exchange Agent
or converted by the Transfer Agent and thereafter held by the Exchange Agent
will be returned promptly by the Exchange Agent to the person who submitted such
stock certificate(s).
B. ELECTION AND PRORATION PROCEDURES.
This Election Form provides for your election as to the form of
consideration to be received by you in exchange for your shares of Unison Common
Stock. You may indicate, on this Form, whether you wish to make a Stock Election
(as defined below) or a Cash Election with respect to each share of Unison
Common Stock held by you. If you do not make a Cash Election or a Stock
Election, or properly revoke this Form without timely submitting a revised,
properly completed Election Form, you will be deemed to have made a Cash
Election. If the aggregate amount of cash requested by stockholders of Unison
pursuant to effective or deemed Cash Elections exceeds the Cash Cap (as defined
below), the allocation of cash and shares of IBM Common Stock that a stockholder
of Unison may receive for each share that is subject to a Cash Election will
depend on the proration procedures to be applied as described below.
Stockholders of Unison who make an effective "Stock Election" will receive
(collectively, "Stock Consideration"), without any proration or other similar
limitation, for each share of Unison Common Stock for which such election is
made, a number of shares of IBM Common Stock equal to a fraction, the numerator
of which is $15 and the denominator of which is the IBM Common Stock Price (the
"Exchange Ratio"). The "IBM Common Stock Price" is an amount equal to the
average of the closing sales price of IBM Common Stock on the New York Stock
Exchange Composite Transactions Tape on each of the 10 consecutive trading days
immediately preceding the second trading day prior to the effective time of the
Merger. Stockholders of Unison who make a "Cash Election" will receive (subject
to the proration procedures described below) for each share of Unison Common
Stock for which such election is made, or
7
<PAGE>
deemed to have been made, an amount in cash equal to $15 (the "Cash
Consideration"). You may make a Stock Election or a Cash Election as to any
share or combination of shares of Unison Common Stock that you hold.
In the event that the aggregate amount of cash requested by stockholders of
Unison pursuant to effective or deemed Cash Elections (the "Requested Cash
Amount") exceeds the Cash Cap, each such holder will receive, for each share of
Unison Common Stock for which a Cash Election has been made or deemed to have
been made, (x) cash in an amount equal to the product of (1) the Cash
Consideration and (2) a fraction, the numerator of which is the Cash Cap and the
denominator of which is the Requested Cash Amount (such product, the "Prorated
Cash Amount") and (y) a number of shares of IBM Common Stock equal to a
fraction, the numerator of which is equal to the Cash Consideration minus the
Prorated Cash Amount and the denominator of which is the IBM Common Stock Price.
The "Cash Cap" is equal to the product of (x) $15 and (y) the number of
Outstanding Unison Shares and (z) 0.5. The "Outstanding Unison Shares" are the
shares of Unison Common Stock outstanding immediately prior to the effective
time of the Merger, other than, in each case at such time, (i) shares of Unison
Common Stock owned by Unison or its subsidiaries and (ii) two times the sum of
the number of shares of Unison Common Stock owned by IBM and the number of
shares of Unison Common Stock with respect to which appraisal rights have been
properly demanded pursuant to Section 262 of the Delaware General Corporation
Law.
IN CONNECTION WITH MAKING ANY ELECTION, A UNISON STOCKHOLDER SHOULD READ
CAREFULLY, AMONG OTHER MATTERS, THE DESCRIPTION OF THE ELECTION AND PRORATION
PROCEDURES SET FORTH IN THE PROXY STATEMENT UNDER "THE MERGER--ELECTION
PROCEDURE; EXCHANGE PROCEDURES," AND THE INFORMATION CONTAINED IN THE PROXY
STATEMENT UNDER "THE MERGER--CERTAIN FEDERAL INCOME TAX CONSIDERATIONS."
AS A RESULT OF THE PRORATION PROCEDURES, HOLDERS OF UNISON COMMON STOCK WHO
MAKE A CASH ELECTION MAY RECEIVE IBM COMMON STOCK OR CASH IN AMOUNTS WHICH VARY
FROM THE AMOUNTS SUCH HOLDERS ELECT TO RECEIVE. SUCH HOLDERS WILL NOT BE ABLE TO
CHANGE THE AMOUNTS OF IBM COMMON STOCK OR CASH ALLOCATED TO THEM PURSUANT TO
SUCH PROCEDURES.
C. RECEIPT OF CHECKS OR IBM COMMON STOCK.
As soon as practicable after the effective time of the Merger and after the
Election Date, the Exchange Agent will mail cash payments by check and/or
certificate(s) for shares of IBM Common Stock to the holders of Unison Common
Stock with respect to each share of Unison Common Stock which is included in any
effective Election. HOLDERS OF UNISON COMMON STOCK WHO DECLINED TO MAKE AN
ELECTION, OR FAILED TO MAKE AN EFFECTIVE ELECTION, PRIOR TO THE ELECTION DATE
WITH RESPECT TO ANY OR ALL OF THEIR SHARES WILL RECEIVE THE CASH CONSIDERATION
(SUBJECT TO POSSIBLE PRORATION) FOR EACH SUCH SHARE AS SOON AS PRACTICABLE AFTER
THE CERTIFICATE(S) REPRESENTING SUCH SHARE OR SHARES HAVE BEEN SUBMITTED
(TOGETHER WITH A TRANSMITTAL FORM THAT WILL BE MAILED TO ALL HOLDERS OF UNISON
COMMON STOCK (OTHER THAN HOLDERS OF UNISON COMMON STOCK WHO HAVE PROPERLY
SUBMITTED ELECTION FORMS TO THE EXCHANGE AGENT)) FOLLOWING THE EFFECTIVE TIME OF
THE MERGER.
No fractional shares will be issued in connection with the Merger. In lieu
thereof, the Exchange Agent, as agent for the holders of Unison Common Stock who
become entitled to a fraction of a share of IBM Common Stock, shall promptly
sell the aggregate of the fractional share interests of such holders and remit
the net proceeds thereof (after commissions, costs and expenses incurred in
connection with such sale) to such holders according to their respective
interests therein.
D. GENERAL.
1. EXECUTION AND DELIVERY. This Form or a facsimile hereof must be properly
completed, dated and signed in Box V, and must be delivered, together with stock
certificates representing the shares of Unison
8
<PAGE>
Common Stock as to which the election is made (or with a duly signed guarantee
of delivery of such certificates) to the Exchange Agent at the appropriate
address set forth above.
THE METHOD OF DELIVERY OF ALL DOCUMENTS IS AT THE OPTION AND RISK OF THE
STOCKHOLDER, BUT IF SENT BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS SUGGESTED.
2. INADEQUATE SPACE. If there is insufficient space on this Form to list all
your stock certificates being submitted to the Exchange Agent, please attach a
separate list.
3. SIGNATURES. The signature (or signatures, in the case of certificates
owned by two or more joint holders) on this Form should correspond exactly with
the name(s) as written on the face of the certificate(s) submitted unless the
shares of Unison Common Stock described on this Form have been assigned by the
registered holder(s), in which event this Form should be signed in exactly the
same form as the name of the last transferee indicated on the transfers attached
to or endorsed on the certificates.
If this Form is signed by a person or persons other than the registered
owners of the certificates listed, the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered owner(s) appear on the certificates.
If this Form or any stock certificate(s) or stock power(s) are signed by a
trustee, executor, administrator, guardian, officer of a corporation,
attorney-in-fact or any other person acting in a representative or fiduciary
capacity, the person signing must give such person's full title in such capacity
and appropriate evidence of authority to act in such capacity must be forwarded
with this Form.
4. SHARES REGISTERED IN DIFFERENT NAMES. If shares of Unison Common Stock
are registered in different names on several certificates, it will be necessary
to complete, sign and submit a separate Form for each different registration.
For example, if some certificates are registered in your name, some are
registered in your spouse's name and some are registered jointly, three separate
Forms should be submitted.
5. LOST OR DESTROYED CERTIFICATES. If your stock certificate(s) has been
either lost or destroyed, please make note of this fact on the front of this
Form opposite your name and address and the appropriate forms for replacement
will be sent to you. You will then be instructed as to the steps you must take
in order to receive a stock certificate(s) representing IBM Common Stock and any
checks in accordance with the Merger Agreement.
6. CHECKS AND NEW CERTIFICATES IN SAME NAME. If any stock certificate(s)
representing shares of IBM Common Stock or any checks in respect of cash to be
paid are to be registered in, or payable to the order of, exactly the same
name(s) that appears on the certificate(s) representing shares of Unison Common
Stock submitted with this Form, no endorsement of certificate(s) or separate
stock power(s) is required.
7. CHECKS AND NEW CERTIFICATES IN DIFFERENT NAME. If any stock
certificate(s) representing shares of IBM Common Stock or any checks in respect
of cash to be received are to be registered in, or payable to the order of,
other than exactly the name that appears on the certificate(s) representing
shares of Unison Common Stock submitted for exchange herewith, such exchange
shall not be made by the Exchange Agent unless the certificates submitted are
endorsed, Box III is completed, and the signature is guaranteed in Box IV by a
member of a national securities exchange, a member of the National Association
of Securities Dealers, Inc. or a commercial bank (not a savings bank or a
savings & loan association) or trust company in the United States.
8. SPECIAL DELIVERY INSTRUCTIONS. If the checks or the certificates for the
shares of IBM Common Stock are to be sent to an address other than the address
of the registered holder set forth in Box I, or if Box III is completed, to an
address other than the address appearing in Box III, it will be necessary to
indicate such address in Box IV.
9. MISCELLANEOUS. A single check and/or a single stock certificate
representing shares of IBM Common Stock will be issued.
9
<PAGE>
All questions with respect to this Form and the Elections (including,
without limitation, questions relating to the timeliness or effectiveness of
revocation of any election and computations as to proration) will be determined
by Unison and IBM, which determinations shall be conclusive and binding.
10. BACKUP FEDERAL INCOME TAX WITHHOLDING AND SUBSTITUTE FORM W-9. Under the
"backup withholding" provisions of Federal income tax law, the Exchange Agent
may be required to withhold 31% of the account of any payments made to holders
of Unison Common Stock pursuant to the Merger. To prevent backup withholding,
each holder should complete and sign the Substitute Form W-9 included in this
Form and either: (a) provide the correct taxpayer identification number ("TIN")
and certify, under penalties of perjury, that the TIN provided is correct (or
that such holder is awaiting a TIN), and that (i) the holder has not been
notified by the Internal Revenue Service ("IRS") that the holder is subject to
backup withholding as a result of failure to report all interest or dividends,
or (ii) the IRS has notified the holder that the holder is no longer subject to
backup withholding; or (b) provide an adequate basis for exemption. If the box
in Part 2 of the substitute Form W-9 is checked, the Exchange Agent shall retain
31% of cash payments made to a holder during the sixty (60) day period following
the date of the Substitute Form W-9. If the holder furnishes the Exchange Agent
with his or her TIN within sixty (60) days of the date of the Substitute Form
W-9, the Exchange Agent shall remit such amounts retained during the sixty (60)
day period to the holder and no further amounts shall be retained or withheld
from payments made to the holder thereafter. If, however, the holder has not
provided the Exchange Agent with his or her TIN within such sixty (60) day
period, the Exchange Agent shall remit such previously retained amounts to the
IRS as backup withholding and shall withhold 31% of all payments to the holder
thereafter until the holder furnishes a TIN to the Exchange Agent. In general,
if a holder is an individual, the TIN is the Social Security Number of such
individual. If the certificates for Unison Common Stock are registered in more
than one name or are not in the name of the actual owner, consult the Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report. If the Exchange Agent is not
provided with the correct TIN or an adequate basis for exemption, the holder may
be subject to a $50 penalty imposed by the IRS and backup withholding at a rate
of 31%. Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to the backup withholding and reporting
requirements. In order to satisfy the Exchange Agent that a foreign individual
qualifies as an exempt recipient, such holder must submit a statement
(generally, IRS Form W-8), signed under penalties of perjury, attesting to that
individual's exempt status. A form for such statements can be obtained from the
Exchange Agent.
For further information concerning backup withholding and instructions for
completing the Substitute Form W-9 (including how to obtain a TIN if you do not
have one and how to complete the Substitute Form W-9 if Stock is held in more
than one name), consult the Guidelines of the IRS for Certification of Taxpayer
Identification Number on Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause
Unison Common Stock to be deemed invalidly tendered, but may require the
Exchange Agent to withhold 31% of the amount of any payments made pursuant to
the Merger. Backup withholding is not an additional Federal income tax. Rather,
the Federal income tax liability of a person subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.
Additional copies of this Form may be obtained from Morrow & Co. (whose
telephone number is (1-800-662-5200)).
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