UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
UNISON SOFTWARE, INC.
-------------------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $.001 PER SHARE
------------------------------------------------------------------------
(Title of Class of Securities)
90919P105
--------------
(CUSIP Number)
Donald D. Westfall, Esq.
Associate General Counsel
International Business Machines Corporation
New Orchard Road
Armonk, NY 10504-1783
(914) 499-4478
--------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
SEPTEMBER 12, 1997
--------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purposes of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
<PAGE>
CUSIP No. 90919P105
1. Name of Reporting Person: International
Business Machines
Corporation
S.S. or I.R.S. Identification No. of Above 13-0871985
Person:
2. Check the appropriate Box if a Member of (a) [ ]
a Group
(b) [X]
3. SEC Use Only
4. Source of Funds: 00
5. Check Box if Disclosure of Legal
Proceedings is Required Pursuant to
Item 2(d) or 2(e): [ ]
6. Citizenship or Place of Organization: New York
Number of Shares Beneficially Owned by
Reporting Person With:
7. Sole Voting Power: None
8. Shared Voting Power: 3,723,601
9. Sole Dispositive Power: None
10. Shared Dispositive Power: None
11. Aggregate Amount Beneficially Owned by
Reporting Person: 3,723,601
12. Check Box if the Aggregate Amount in
Row (11) Excludes Certain Shares: [ ]
13. Percent of Class Represented by Amount
in Row (11): 31%
14. Type of Reporting Person: CO
<PAGE>
Item 1. Security and Issuer.
This statement on Schedule 13D (this "Statement") relates to the
common stock, par value $.001 per share ("Unison Common Stock"), of
Unison Software, Inc., a Delaware corporation ("Unison"). The address of
the principal executive offices of Unison is 5101 Patrick Henry Drive,
Santa Clara, California 95054.
Item 2. Identity and Background.
International Business Machines Corporation ("IBM") is a New York
corporation with its principal office and business at New Orchard Road,
Armonk, New York 10504. IBM develops, manufactures and sells advanced
information processing products, including computers and micro
electronic technology, software, networking systems and information
technology-related services.
The attached Schedule I is a list of the directors and executive
officers of IBM which contains the following information with respect to
each such person: (a) name; (b) business address; (c) present principal
occupation or employment and the name, principal business and address of
any corporation or other organization in which such employment is
conducted; and (d) citizenship.
During the last five years, neither IBM nor, to the best of IBM's
knowledge, any person named in Schedule I (i) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors)
or (ii) has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of which such
person was or is subject to a judgment, decree or final order enjoining
future violations of, or
<PAGE>
prohibiting or mandating activities subject to, Federal or state
securities laws or finding any violations with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to the Stockholder Agreement dated as of September 12,
1997 (the "Stockholder Agreement"), among IBM and certain stockholders
(the "Significant Stockholders") of Unison set forth on Schedule A
thereto, IBM may be deemed to be the beneficial owner of 3,723,601
shares of Unison Common Stock. See the response to Item 5. The
Significant Stockholders entered into the Stockholder Agreement to
induce IBM to enter into the Agreement and Plan of Merger dated as of
September 12, 1997 (the "Merger Agreement"), among IBM, New Orchard
Corp., a Delaware corporation and wholly owned subsidiary of IBM
("Sub"), and Unison.
The descriptions of the Merger Agreement and the Stockholder Agreement
contained herein are qualified in their entirety by reference to such
agreements, which are attached hereto as Exhibits 1 and 2, respectively.
Item 4. Purpose of Transaction.
The purpose of the Stockholder Agreement was to induce IBM to enter
into the Merger Agreement and to increase the likelihood that the
approval of Unison's stockholders required in connection with the merger
of Unison with and into Sub (the "Merger") pursuant to the terms of the
Merger Agreement will be obtained. In the Merger, Sub will continue as
the surviving corporation ("Surviving Corporation") and as a wholly
owned subsidiary of IBM.
In addition to providing for the Merger, the Merger Agreement
restricts Unison from, among other things, engaging in certain
transactions, including extraordinary corporate transactions (other than
the
<PAGE>
Merger), selling certain assets, changing its capitalization (including
by purchasing any of its capital stock or by issuing any capital stock
or other voting securities), amending its certificate of incorporation
or by-laws, paying dividends, incurring indebtedness, making loans or
advances to other persons, making certain acquisitions and making
certain capital expenditures, and otherwise requires Unison to operate
in the ordinary course of business.
Pursuant to the Merger Agreement, in connection with the Merger the
directors of Sub immediately prior to the effective time of the Merger
(the "Effective Time") will be the directors of the Surviving
Corporation and the certificate of incorporation and the by-laws of Sub,
as in effect immediately prior to the Effective Time, will become the
certificate of incorporation and the by-laws, respectively, of the
Surviving Corporation.
In connection with the Merger, it is expected that the Unison
Common Stock will be delisted from the NASDAQ National Market System and
will become eligible for termination of registration under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
IBM intends, subject to market conditions, to make open market
purchases of 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. Any material changes in the percentage of
Unison Common Stock beneficially owned by IBM will be reported by the
filing of an amendment to this Schedule 13D in accordance with Rule 13d-2
under the Exchange Act.
The descriptions of the Merger Agreement and the Stockholder
Agreement contained herein are qualified in their entirety by reference
to such agreements, which are attached hereto as Exhibits 1 and 2,
respectively.
<PAGE>
Item 5. Interest in Securities of the Issuer.
As of September 12, 1997, 3,723,601 shares of Unison Common Stock were
subject to the Stockholder Agreement. Such shares represented approximately
31% of Unison Common Stock issued and outstanding as of September 12, 1997.
Under the terms of the Stockholder Agreement, the Significant
Stockholders have agreed, among other things, (i) to vote (or cause to be
voted) their respective shares of Unison Common Stock in favor of (a)
approval and adoption of the Merger Agreement, (b) approval of the Merger
and (c) approval of the other transactions contemplated by the Merger
Agreement, (ii) to vote such shares against any alternative transaction or
any amendment of Unison's certificate of incorporation or by-laws or any
transaction which would frustrate, impede, prevent or nullify the Merger,
the Merger Agreement or any of the other transactions contemplated by the
Merger Agreement, (iii) subject to certain exceptions, not to transfer any
of such shares or enter into any arrangement with respect to such shares,
(iv) except as described in clause (v) below, not to grant any proxy or
authorization with respect to such shares and (v) to grant to IBM and
certain of its officers an irrevocable proxy to vote such shares as
described in clauses (i) and (ii) above. Accordingly, pursuant to the
Stockholder Agreement, IBM may be deemed to have acquired shared voting
power with respect to the Unison Common Stock subject to the Stockholder
Agreement.
The descriptions of the Merger Agreement and the Stockholder
Agreement contained herein are qualified in their entirety by reference
to such agreements, which are attached hereto as Exhibits 1 and 2,
respectively.
<PAGE>
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
The information set forth under Items 3, 4 and 5 above are
incorporated herein by reference.
Item 7. Material to Be Filed as Exhibits.
Exhibit 1: Agreement and Plan of Merger dated as of
September 12, 1997, among IBM, Sub and Unison.
Exhibit 2: Stockholder Agreement dated as of September 12,
1997, among IBM and the Significant Stockholders.
<PAGE>
(Signature)
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true,
complete and correct.
Dated: September 22, 1997
INTERNATIONAL BUSINESS
MACHINES CORPORATION
By:
/s/ LEE A. DAYTON
------------------
Lee A. Dayton
Vice President, Corporate
Development and Real Estate
<PAGE>
SCHEDULE I
Name, business address, and present
principal occupation or employment of
the directors and executive officers of
International Business Machines
--------------------------------------------------------
<TABLE>
NAME, BUSINESS ADDRESS PRINCIPAL OCCUPATION CITIZENSHIP
<S> <C> <C> <C>
Louis V. Gerstner, Jr. Chairman of the Board and United States of
International Business Machines Chief Executive Officer of America
Corporation IBM since 1993.
New Orchard Road
Armonk, NY 10504
Cathleen Black President, Hearst Magazines, United States of
Hearst Magazines a division of The Hearst America
959 8th Avenue Corporation
New York, NY 10019
Harold Brown Counselor, Center for United States of
Center for Strategic and Strategic and International America
International Studies Studies, Washington, D.C.,
Suite 400 and general partner in
1800 K Street, N.W. Warburg, Pincus & Company.
Washington, D.C. 20006
Juergen Dormann Chairman of the Germany
Hoechst AG Management Board of
Frankfurt G65926 Hoechst AG.
Germany
Nannerl O. Keohane President and professor of United States of
Office of the President political science at Duke America
207 Allen Building University.
Box 90001
Duke University
Durham, NC 27708-0001
Charles F. Knight Chairman, Chief Executive United States of
Emerson Electric Co. Officer and President of America
8000 West Florissant Avenue Emerson Electric Co.
P.O. Box 4100
St. Louis, MO 63136-8506
Lucio A. Noto Chairman and Chief United States of
Mobil Corporation Executive Officer of Mobil America
3225 Gallows Road Corporation.
Fairfax, VA 22037
John B. Slaughter President of Occidental United States of
Office of the President College. America
Occidental College
1600 Campus Road
Los Angeles, CA 90041
<PAGE>
NAME, BUSINESS ADDRESS PRINCIPAL OCCUPATION CITIZENSHIP
Alex Trotman Chairman and Chief United States of
Ford Motor Company Executive Officer of the Ford America
American Road Motor Company.
Dearborn, MI 48121-1899
Lodewijk C. van Wachem Chairman of the supervisory Netherlands
Royal Dutch Petroleum Company board of Royal Dutch
P.O. Box 162 Petroleum Company.
2501 AN The Hague
Netherlands
Charles M. Vest President and professor of United States of
Massachusetts Institute of mechanical engineering at America
Technology the Massachusetts Institute
President's Office of Technology.
Room 3-208
77 Massachusetts Avenue
Cambridge, MA 02139
Minoru Makihara President of Mitsubishi Japan
Mitsubishi Corporation Corporation
6-3 Marunouchi 2-Chome
Chiyoda-Ko
Tokyo 100-86
Japan
J. Thomas Bouchard Senior Vice President, United States of
International Business Machines Human Resources of IBM America
Corporation since 1994.
New Orchard Road
Armonk, NY 10504
Nicholas M. Donofrio Senior Vice President and United States of
International Business Machines Group Executive of IBM. America
Corporation
New Orchard Road
Armonk, NY 10504
Paul M. Horn Senior Vice President, United States of
International Business Machines Research of IBM. America
Corporation
New Orchard Road
Armonk, NY 10504
J. Bruce Harreld Senior Vice President, United States of
International Business Machines Strategy of IBM. America
Corporation
New Orchard Road
Armonk, NY 10504
Ned C. Lautenbach Senior Vice President and United States of
International Business Machines Group Executive of IBM. America
Corporation
New Orchard Road
Armonk, NY 10504
<PAGE>
NAME, BUSINESS ADDRESS PRINCIPAL OCCUPATION CITIZENSHIP
Lawrence R. Ricciardi Senior Vice President and United States of
International Business Machines General Counsel and Chief America
Corporation Financial Officer of IBM.
New Orchard Road
Armonk, NY 10504
Robert M. Stephenson Senior Vice President and United States of
International Business Machines Group Executive of IBM. America
Corporation
New Orchard Road
Armonk, NY 10504
John M. Thompson Senior Vice President and Canada
International Business Machines Group Executive of IBM.
Corporation
New Orchard Road
Armonk, NY 10504
John E. Hickey Vice President, Assistant United States of
International Business Machines General Counsel and America
Corporation Secretary of IBM.
New Orchard Road
Armonk, NY 10504
John R. Joyce Vice President and Controller United States of
International Business Machines of IBM. America
Corporation
New Orchard Road
Armonk, NY 10504
Jeffrey D. Serkes Vice President and Treasurer United States of
International Business Machines of IBM. America
Corporation
New Orchard Road
Armonk, NY 10504
Samuel J. Palmisano Senior Vice President and United States of
International Business Machines Group Executive of IBM. America
Corporation
New Orchard Road
Armonk, NY 10504
Dennie M. Welsh Senior Vice President and United States of
International Business Machines Group Executive of IBM. America
Corporation
New Orchard Road
Armonk, NY 10504
</TABLE>
===========================================================
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
Dated as of September 12, 1997
Among
INTERNATIONAL BUSINESS
MACHINES CORPORATION,
NEW ORCHARD CORP.
And
UNISON SOFTWARE, INC.
===========================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger....................................... 2
SECTION 1.02. Closing.......................................... 2
SECTION 1.03. Effective Time................................... 2
SECTION 1.04. Effects of the Merger............................ 2
SECTION 1.05. Certificate of Incorporation and By-Laws......... 2
SECTION 1.06. Directors........................................ 3
SECTION 1.07. Officers......................................... 3
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock.......................... 3
SECTION 2.02. Exchange of Certificates......................... 6
SECTION 2.03. Elections........................................ 9
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties
of the Company.................................. 11
SECTION 3.02. Representations and Warranties
of Parent and Sub............................... 29
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business.............................. 33
SECTION 4.02. No Solicitation.................................. 38
<PAGE>
Page
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the Proxy
Statement; Stockholders Meeting................ 40
SECTION 5.02. Letters of the Company's Accountants............ 41
SECTION 5.03. Letters of Parent's Accountants................. 41
SECTION 5.04. Access to Information; Confidentiality.......... 41
SECTION 5.05. Reasonable Efforts; Notification................ 42
SECTION 5.06. Stock Options................................... 43
SECTION 5.07. Indemnification................................. 45
SECTION 5.08. Fees and Expenses............................... 46
SECTION 5.09. Public Announcements............................ 48
SECTION 5.10. Affiliates...................................... 48
SECTION 5.11. Stock Exchange Listing.......................... 48
SECTION 5.12. Stockholder Agreement Legend.................... 48
SECTION 5.13. Tax Treatment................................... 49
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to
Effect the Merger.............................. 50
SECTION 6.02. Conditions to Obligations of Parent
and Sub........................................ 51
SECTION 6.03. Conditions to Obligation of the Company......... 52
SECTION 6.04. Frustration of Closing Conditions............... 53
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination..................................... 53
SECTION 7.02. Effect of Termination........................... 55
SECTION 7.03. Amendment....................................... 55
SECTION 7.04. Extension; Waiver............................... 56
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties..................................... 56
SECTION 8.02. Notices......................................... 56
SECTION 8.03. Definitions..................................... 57
SECTION 8.04. Interpretation.................................. 58
SECTION 8.05. Counterparts.................................... 58
<PAGE>
Page
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries................................. 58
SECTION 8.07. Governing Law.................................. 59
SECTION 8.08. Assignment..................................... 59
SECTION 8.09. Enforcement.................................... 59
SECTION 8.10. Severability................................... 60
<PAGE>
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 represen
tations, warranties, covenants and agreements contained in
this Agreement, the parties hereto agree as follows:
<PAGE>
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").
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
<PAGE>
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.
<PAGE>
(c) Conversion of Company Common Stock. (i) Except
as otherwise provided in Section 2.01(d) and subject to
Sections 2.01(b) and 2.01(c)(iii), each issued and
outstanding share of Company Common Stock, shall be
converted into the right to receive, at the election of
the holder thereof, one of the following (as adjusted
pursuant to Section 2.01(d), the "Merger
Consideration"):
(A) for each such share of Company Common
Stock with respect to which an election to receive
Parent Common Stock ("Stock Consideration") has
been effectively made, and not revoked or lost,
pursuant to Section 2.03 (a "Stock Election"), the
right to receive a number of shares of Parent
Common Stock equal to a fraction (the "Exchange
Ratio"), the numerator of which is $15 and the
denominator of which is the Parent Common Stock
Price. The "Parent Common Stock Price" means the
average of the closing sales prices of Parent
Common Stock on the New York Stock Exchange
("NYSE") Composite Transactions Tape on each of
the ten consecutive trading days immediately
preceding the second trading day prior to the date
of the Effective Time; and
(B) for each such share of Company Common
Stock with respect to which an election to receive
cash consideration (the "Cash Consideration") has
been effectively made, and not revoked or lost, or
deemed to have been made, pursuant to Section 2.03
(a "Cash Election"), the right to receive cash
from Parent, in an amount equal to $15.
(ii) As of the Effective Time all shares of
Company Common Stock shall cease to be outstanding and
shall be canceled and retired and shall cease to exist,
and each holder of a certificate that immediately prior
to the Effective Time represented any such shares of
Company Common Stock (a "Certificate") shall cease to
have any rights with respect thereto, except the right
to receive the Merger Consideration and cash in lieu of
fractional shares of Parent Common Stock in accordance
with Section 2.02(e) upon the surrender of such
Certificate in accordance with Section 2.02, without
interest.
(iii) Notwithstanding anything in this Agreement
to the contrary, shares of Company Common Stock that
are issued and outstanding immediately prior to the
<PAGE>
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
<PAGE>
minus the Prorated Cash Amount and the denominator of
which is the Parent Common Stock Price. The "Cash
Proration Factor" shall be a fraction, the numerator of
which is the Cash Cap and the denominator of which is
the Requested Cash Amount.
SECTION 2.02. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent shall
deposit with the Exchange Agent (as defined in Section
2.03(b)), for the benefit of the holders of shares of
Company Common Stock, for exchange in accordance with this
Article II, through the Exchange Agent, the cash and
certificates representing the shares of Parent Common Stock
constituting the Merger Consideration (such cash and shares
of Parent Common Stock, together with any dividends or
distributions with respect thereto with a record date after
the Effective Time and any cash payments in lieu of any
fractional shares of Parent Common Stock, being hereinafter
referred to as the "Exchange Fund") issuable pursuant to
Section 2.01 in exchange for outstanding shares of Company
Common Stock.
(b) Exchange Procedures. Following the Effective
Time, each holder of an outstanding Certificate or
Certificates shall, upon surrender to the Exchange Agent of
such Certificate or Certificates and acceptance thereof by
the Exchange Agent, be entitled to a certificate or
certificates representing the number of full shares of
Parent Common Stock, if any, and the amount of cash, if any,
into which the aggregate number of shares of Company Common
Stock previously represented by such Certificate or
Certificates surrendered shall have been converted pursuant
to this Agreement. The Exchange Agent shall accept such
Certificates upon compliance with such reasonable terms and
conditions as the Exchange Agent may impose to effect an
orderly exchange thereof in accordance with normal exchange
practices. If any certificate for such Parent Common Stock
is to be issued in, or if cash is to be remitted to, a name
other than that in which the Certificate surrendered for
exchange is registered, it shall be condition of such
exchange that the Certificate so surrendered shall be
properly endorsed, with signature guaranteed, or otherwise
in proper form for transfer and that the person (as defined
in Section 8.03) requesting such exchange shall pay to
Parent or its transfer agent any transfer or other taxes (as
defined in Section 3.01(m)) required by reason of the
issuance of Certificates for such Parent Common Stock in a
name other than that of the registered holder of the
Certificate surrendered, or establish to the satisfaction of
Parent or its transfer agent that such tax has been paid or
is not applicable. Until surrendered as contemplated by
<PAGE>
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.
<PAGE>
(e) No Fractional Shares. (i) No certificates or
scrip representing fractional shares of Parent Common Stock
shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a
stockholder of Parent.
(ii) Notwithstanding any other provision of this
Agreement, each holder of shares of Company Common Stock
exchanged pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of Parent
Common Stock (after taking into account all Certificates
delivered by such holder) shall receive, in lieu thereof,
cash (without interest) in an amount, less the amount of any
withholding taxes which may be required thereon, equal to
such fractional part of a share of Parent Common Stock
multiplied by the Parent Common Stock Price.
(f) Termination of Exchange Fund. Any portion of
the Exchange Fund that remains undistributed to the holders
of the Certificates for six months after the Effective Time
shall be delivered to Parent, upon demand, and any holders
of the Certificates who have not theretofore complied with
this Article II shall thereafter look only to Parent for,
and Parent shall remain liable for, payment of their claim
for Merger Consideration, any cash in lieu of fractional
shares of Parent Common Stock and any dividends or
distributions with respect to Parent Common Stock.
(g) No Liability. None of Parent, Sub, the Company
or the Exchange Agent shall be liable to any person in
respect of any shares of Parent Common Stock (or divi dends
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
<PAGE>
Exchange Agent will issue in exchange for such lost, stolen
or destroyed Certificate the Merger Consideration and any
cash in lieu of fractional shares, and unpaid dividends and
distributions on shares of Parent Common Stock deliverable
in respect thereof, pursuant to this Agreement.
(j) Withholding Rights. Parent, Sub or the
Exchange Agent shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock
such amounts as Parent, Sub or the Exchange Agent is
required to deduct and withhold with respect to the making
of such payment under the Code, or any provision of state,
local or foreign tax law. To the extent that amounts are so
withheld and paid over to the appropriate taxing authority
by Parent, Sub or the Exchange Agent, such withheld amounts
shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Company
Common Stock in respect of which such deduction and
withholding was made by Parent, Sub or the Exchange Agent.
SECTION 2.03. Elections. (a) Each person who, on
or prior to the Election Date referred to in (c) below, is a
record holder of shares of Company Common Stock shall be
entitled, with respect to all or any portion of such shares,
to make a Stock Election or a Cash Election on or prior to
such Election Date, on the basis hereinafter set forth.
(b) Prior to the mailing of the Proxy Statement
(as defined in Section 3.01(d)), Sub shall appoint a bank or
trust company reasonably acceptable to the Company to act as
exchange agent (the "Exchange Agent") for the payment of the
Merger Consideration.
(c) Parent shall prepare and mail a form of
election, which form shall be subject to the reasonable
approval of the Company (the "Form of Election"), with the
Proxy Statement to the record holders of Company Common
Stock as of the record date for the Stockholders Meeting (as
defined in Section 5.01(b)), which Form of Election shall be
used by each record holder of shares of Company Common Stock
who wishes to elect to receive the Stock Consideration or
the Cash Consideration for any or all shares of Company
Common Stock held by such holder. The Company will use its
best efforts to make the Form of Election and the Proxy
Statement available to all persons who become record holders
of Company Common Stock during the period between such
record date and the Election Date referred to below. Any
such holder's election to receive the Stock Consideration
shall have been properly made only if the Exchange Agent
<PAGE>
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
<PAGE>
Election with respect to such shares. The Exchange Agent
shall also make all computations as to the proration
contemplated by Section 2.01(d) (which computation shall be
made as soon as practicable following the third NYSE trading
day after the Election Date), and absent manifest error any
such computation shall be conclusive and binding on the
holders of shares of Company Common Stock. The Exchange
Agent may, with the mutual agreement of Parent and the
Company, make such rules as are consistent with this
Section 2.03 for the implementation of the elections
provided for herein as shall be necessary or desirable fully
to effect such elections.
(f) If, after the Effective Time, a holder of
Dissenting Shares shall have failed to perfect or shall have
effectively withdrawn or lost his right to appraisal and
payment, such shares shall thereupon be deemed to have been
converted into and to have become exchangeable for, at the
Effective Time, the right to receive for each such share the
amount in cash (and, if applicable, the number of shares of
Parent Common Stock (subject to Section 2.02(e))), without
interest, that a holder of a share (a "Nondissenting Share")
of Company Common Stock who had made or had been deemed to
have made a Cash Election with respect to such Nondissenting
Share pursuant to Section 2.03 prior to the Election Date
would have received with respect to such Nondissenting Share
(it being understood that no adjustment shall be made to the
proration computation (if any) made following the Election
Date to give effect to the withdrawal of, or the failure to
perfect, the demand for appraisal with respect to such
Dissenting Shares).
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company. Except as set forth on the disclosure schedule
delivered by the Company to Parent prior to the execution of
this Agreement (the "Company Disclosure Schedule"), the
Company represents and warrants to Parent and Sub as
follows:
(a) Organization, Standing and Corporate Power.
The Company and each of its subsidiaries is a corpora
tion 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
<PAGE>
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
<PAGE>
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, agree
ments, arrangements, obligations or undertakings of any
kind to which the Company or any of its subsidiaries is
a party, or by which the Company or any of its
subsidiaries is bound, obligating the Company or any of
its subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of
capital stock or other voting securities of the Company
or any of its subsidiaries or obligating the Company or
any of its subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call,
right, contract, commitment, agreement, arrangement,
obligation or undertaking. There are not any
outstanding contractual obligations (i) of the Company
or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of the
Company or (ii) of the Company to vote or to dispose of
any shares of the capital stock of any of its
subsidiaries.
(d) Authority; Noncontravention. The Company has
the requisite corporate power and authority to execute
and deliver this Agreement and, subject to receipt of
the Stockholder Approval (as defined in Section
3.01(q)), to consummate the transactions contemplated
by this Agreement. The execution, delivery and
performance of this Agreement by the Company and the
consummation by the Company of the transactions
contemplated by this Agreement have been duly
authorized by all necessary corporate action on the
part of the Company and no other corporate proceedings
on the part of the Company are necessary to authorize
this Agreement or to consummate the transactions
contemplated hereby, subject, in each case, to receipt
of the Stockholder Approval. This
<PAGE>
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 contem
plated 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
<PAGE>
with the Securities and Exchange Commission (the "SEC")
of a proxy statement relating to the approval by the
Company's stockholders of this Agreement (as amended or
supplemented from time to time, the "Proxy Statement")
and such reports under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement and the
transactions contemplated by this Agreement, (3) the
filing of the Certificate of Merger with the Delaware
Secretary of State and appropriate documents with the
relevant authorities of other states in which the
Company is qualified to do business and (4) such other
consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of
which to be obtained or made individually or in the
aggregate would not have a material adverse effect on
the Company, impair in any material respect the ability
of the Company to perform its obligations under this
Agreement or prevent or materially delay the
consummation of any of the transactions contemplated by
this Agreement.
(e) SEC Documents. The Company has filed with the
SEC, and has heretofore made available to Parent true
and complete copies of, all reports, schedules, forms,
statements and other documents required to be filed
with the SEC by the Company since July 1, 1995 (the
"SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the
requirements of the Securities Act of 1933, as amended
(the "Securities Act") or the Exchange Act, as the case
may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents at the time
they were filed contained any untrue statement of a
material fact or omitted to state a material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the
circumstances under which they were made, not
misleading. Except to the extent that information
contained in any SEC Document has been revised or
superseded by a later-filed SEC Document, none of the
SEC Documents at the time they were filed contained any
untrue statement of a material fact or omitted to state
any material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances under which they were made,
not misleading. The financial statements of the Company
included in the SEC Documents complied as to form in
all material respects with applicable accounting
requirements and the published rules and
<PAGE>
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 adjust
ments 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 informa tion
supplied or to be supplied by the Company specifi cally
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
<PAGE>
supplied by Parent or Sub specifically for inclusion or
incorporation by reference in the Proxy Statement.
(g) Absence of Certain Changes or Events. Except
as disclosed in the SEC Documents filed by the Company
and publicly available prior to the date of this
Agreement (the "Filed SEC Documents"), since the date
of the most recent financial statements included in the
Filed SEC Documents, the Company and its subsidiaries
have conducted their respective businesses only in the
ordinary course consistent with past practice, and
there has not been (i) any material adverse change (as
defined in Section 8.03) with respect to the Company,
(ii) any declaration, setting aside or payment of any
dividend on, or other distribution (whether in cash,
stock or property) in respect of, any of the Company's
or any of its subsidiaries' capital stock except for
dividends by a wholly owned subsidiary of the Company
to its parent, or any purchase, redemption or other
acquisition of any of the Company's capital stock or
any other securities of the Company or its subsidiaries
or any options, warrants, calls or rights to acquire
any such shares or other securities except for
repurchases from employees following their termination
pursuant to the terms of their existing stock option or
purchase agreements, (iii) any split, combination or
reclassification of any of the Company's or any of its
subsidiaries' capital stock or any issuance or the
authorization of any issuance of any other securities
in respect of, in lieu of or in substitution for shares
of the Company's or any of its subsidiaries' capital
stock, (iv) (x) any granting by the Company or any of
its subsidiaries of any increase in compensation or
fringe benefits, except for normal increases of cash
compensation in the ordinary course of business
consistent with past practice, or any payment by the
Company or any of its subsidiaries of any bonus, except
for bonuses made in the ordinary course of business
consistent with past practice, in each case to any
officer, director or employee, (y) any granting by the
Company or any of its subsidiaries to any officer or
employee of any increase in severance or termination
pay or (z) any entry by the Company or any of its
subsidiaries into (A) any currently effective employ
ment, 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
<PAGE>
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
<PAGE>
material adverse effect on the Company. Neither the
Company nor any of its subsidiaries has entered into
any contract, commitment, agreement, arrangement or
understanding with any affiliate (as defined in Section
8.03) of the Company that is currently in effect other
than agreements that are (i) disclosed in the Filed SEC
Documents or (ii) not of a nature required to be
disclosed in the SEC Documents. Neither the Company nor
any of its subsidiaries is a party to or otherwise
bound by any agreement or covenant not to compete or by
any agreement or covenant restricting in any material
respect the development, marketing or distribution of
the Company's products or services.
(j) Compliance with Laws. The Company and its
subsidiaries are in compliance with all statutes, laws,
ordinances, rules, regulations, judgments, orders and
decrees of any Governmental Entity applicable to their
businesses or operations, except for instances of
possible noncompliance that individually or in the
aggregate would not have a material adverse effect on
the Company, impair in any material respect the ability
of the Company to perform its obligations under this
Agreement or prevent or materially delay the
consummation of any of the transactions contemplated by
this Agreement. The Company and its subsidiaries have
in effect all Federal, state and local, domestic and
foreign, governmental consents, approvals, orders,
authorizations, certificates, filings, notices,
permits, franchises, licenses and rights (collectively
"Permits") necessary for them to own, lease or operate
their properties and assets and to carry on their
businesses as now conducted and there has occurred no
violation of, or default under, any such Permit, except
for the lack of Permits and for violations of, or
defaults under, Permits which lack, violation or
default individually or in the aggregate would not have
a material adverse effect on the Company. The Merger,
in and of itself, would not cause the revocation or
cancelation of any such Permit, which revocation or
cancelation would have a material adverse effect on the
Company.
(k) Absence of Changes in Benefit Plans;
Employment Agreements; Labor Relations. Except as
disclosed in the Filed SEC Documents, since the date of
the most recent financial statements included in the
Filed SEC Documents and until the date hereof, there
has not been any termination, adoption, amendment or
agreement to amend in any material respect by the
Company or any of its subsidiaries of any collective
<PAGE>
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
<PAGE>
has made available to Parent true, complete and correct
copies of (1) each Benefit Plan (or, in the case of any
unwritten Benefit Plans, descriptions thereof), (2) the
most recent annual report on Form 5500 required to be
filed with the Internal Revenue Service (the "IRS")
with respect to each Benefit Plan (if any such report
was required), (3) the most recent summary plan
description for each Benefit Plan for which such
summary plan description is required and (4) each trust
agreement and group annuity contract relating to any
Benefit Plan. Each Benefit Plan has been administered
in accordance with its terms, except where the failure
to so administer would not, individually or in the
aggregate, have a material adverse effect on the
Company. The Company and its subsidiaries and all the
Benefit Plans are all in compliance with applicable
provisions of ERISA and the Code, except for instances
of possible noncompliance that would not, individually
or in the aggregate, have a material adverse effect on
the Company.
(ii) All Pension Plans have been the subject of
determination letters from the IRS to the effect that
such Pension Plans are qualified and exempt from United
States Federal income taxes under Sections 401(a) and
501(a), respectively, of the Code, and no such
determination letter has been revoked nor has any event
occurred since the date of its most recent
determination letter or application therefor that would
adversely affect its qualification or materially
increase its costs.
(iii) Neither the Company nor any Commonly
Controlled Entity has maintained, contributed to or
been obligated to contribute to any Benefit Plan that
is subject to Title IV of ERISA.
(iv) With respect to any Benefit Plan that is an
employee welfare benefit plan, there are no
understandings, agreements or undertakings, written or
oral, that would prevent any such plan (including any
such plan covering retirees or other former employees)
from being amended or terminated without material
liability to the Company or any of its subsidiaries on
or at any time after the Effective Time.
(v) Section 3.01(l)(v) of the Company Disclosure
Schedule lists all Stock Options (excluding under the
1995 Employee Stock Purchase Plan (the "ESPP"))
outstanding as of the date hereof, indicating for each
such option (1) the number of shares issuable, (2) the
<PAGE>
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
<PAGE>
completed audit or examination that can reasonably be
expected to recur in a later taxable period. No
Federal, state or local, domestic or foreign, tax
return or report of the Company or any of its
subsidiaries has ever been under audit or examination
by the IRS or other relevant taxing authority. The
relevant statute of limitations is closed with respect
to the United States Federal tax returns of the Company
and its subsidiaries for all years through 1991.
(iii) There is no currently effective agreement
or other document extending, or having the effect of
extending, the period of assessment or collection of
any taxes and no power of attorney with respect to any
taxes has been executed or filed with any taxing
authority.
(iv) No material Liens for taxes exist with
respect to any assets or properties of the Company or
any of its subsidiaries, except for statutory Liens for
taxes not yet due.
(v) None of the Company or any of its
subsidiaries is a party to or bound by any tax sharing
agreement, tax indemnity obligation or similar
agreement, arrangement or practice with respect to
taxes (including any advance pricing agreement, closing
agreement or other agreement relating to taxes with any
taxing authority).
(vi) None of the Company or any of its
subsidiaries will be required to include in a taxable
period ending after the Effective Time taxable income
attributable to income that accrued in a prior taxable
period but was not recognized in any prior taxable
period as a result of the installment method of
accounting, the completed contract method of
accounting, the long-term contract method of
accounting, the cash method of accounting or
Section 481 of the Code or comparable provisions of
state or local tax law, domestic or foreign, or for any
other reason.
(vii) No amount or other entitlement that could
be received (whether in cash or property or the vesting
of property) as a result of any of the transactions
contemplated by this Agreement by any officer, director
or employee of the Company or any of its affiliates who
is a "disqualified individual" (as such term is defined
in proposed Treasury Regulation Section 1.280G-1) under
any Benefit Plan or other compensation arrangement
<PAGE>
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
<PAGE>
or in the aggregate would not have a material adverse
effect on the Company. The Company and its
subsidiaries enjoy peaceful and undisturbed possession
under all such material leases, except for failures to
do so that individually or in the aggregate would not
have a material adverse effect on the Company.
(p) Intellectual Property. (i) The Company has
made available to Parent true and correct copies of all
license agreements relating to Intellectual Property to
which the Company or any of its subsidiaries is a
party.
(ii) Except to the extent that any of the
following (or the circumstances giving rise to such
inaccuracy) would not have a material adverse effect on
the Company:
(A) the Company and each of its subsidiaries owns,
or is licensed or otherwise has the right to use (in
each case, free and clear of any Liens), all
Intellectual Property used in or necessary for the
conduct of its business as currently conducted;
(B) there is no suit, claim, action, investigation
or proceeding pending or, to the knowledge of the
Company, threatened that the Company or any of its
subsidiaries is infringing on or otherwise violating
the rights of any person with regard to any
Intellectual Property owned by, licensed to and/or
otherwise used by the Company or its subsidiaries;
(C) to the knowledge of the Company, no person is
infringing on or otherwise violating any right of the
Company or any of its subsidiaries with respect to any
Intellectual Property owned by, licensed to and/or
otherwise used by the Company or its subsidiaries;
(D) to the knowledge of the Company, none of the
former or current members of management or key
personnel of the Company or any of its subsidiaries,
including all former and current employees, agents,
consultants and contractors who have contributed to or
participated in the conception and development of
computer software or other Intellectual Property of the
Company or any of its subsidiaries, have any valid
claim against the Company or any of its subsidiaries in
connection with the involvement of such persons in the
conception and development of any computer software or
other Intellectual Property of the Company or any of
<PAGE>
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
<PAGE>
infringement. For purposes hereof, a Derivative Work
shall also include any compilation that incorporates
such a preexisting work as well as translation from one
human language to another and from one type of code to
another.
(iii) For purposes of this Agreement,
"Intellectual Property" shall mean trademarks
(registered or unregistered), service marks, brand
names, certification marks, trade dress, assumed names,
trade names and other indications of origin, the
goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications
in any jurisdiction to register, the foregoing,
including any extension, modification or renewal of any
such registration or application; inventions,
discoveries and ideas, whether patented, patentable or
not in any jurisdiction; trade secrets and confidential
information and rights in any jurisdiction to limit the
use or disclosure thereof by any person; writings and
other works, whether copyrighted, copyrightable or not
in any jurisdiction; registration or applications for
registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; any similar
intellectual property or proprietary rights and
computer programs and software (including source code,
object code and data); licenses, immunities, covenants
not to 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
<PAGE>
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.
<PAGE>
SECTION 3.02. Representations and Warranties of
Parent and Sub. Parent and Sub represent and warrant to the
Company as follows:
(a) Organization, Standing and Corporate Power.
Each of Parent and Sub is a corporation duly organized,
validly existing and in good standing under the laws of
the jurisdiction in which it is incorporated and has
all requisite corporate power and authority to carry on
its business as now being conducted. Each of Parent
and Sub is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which
the nature of its business or the ownership, leasing or
operation of its properties makes such qualification or
licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed or be
in good standing individually or in the aggregate would
not have a material adverse effect on Parent. Parent
has delivered to the Company complete and correct
copies of its Certificate of Incorporation and By-Laws
and the Certificate of Incorporation and By-Laws of
Sub, in each case as amended to the date hereof.
(b) Authority; Noncontravention. Parent and Sub
have the requisite corporate power and authority to
execute and deliver this Agreement (and, in the case of
Parent, the Stockholder Agreement), and to consummate
the transactions contemplated by this Agreement (and,
in the case of Parent, those contemplated by the
Stockholder Agreement). The execution, delivery and
performance of this Agreement by Parent and Sub (and,
in the case of Parent, the Stockholder Agreement) and
the consummation of the transactions contemplated by
this Agreement (and, in the case of Parent, those
contemplated by the Stockholder Agreement) have been
duly authorized by all necessary corporate action on
the part of Parent and Sub and no other corporate
proceedings on the part of Parent or Sub are necessary
to authorize this Agreement (and, in the case of
Parent, the Stockholder Agreement) or to consummate the
transactions contemplated hereby (or, in the case of
Parent, those contemplated by the Stockholder
Agreement). This Agreement (and, in the case of
Parent, the Stockholder Agreement) has been duly
executed and delivered by Parent and Sub, as
applicable, and constitutes a valid and binding
obligation of Parent and Sub, as applicable,
enforceable against Parent and Sub, as applicable, in
accordance with its terms. The execution and delivery
of this Agreement and the Stockholder Agreement do not,
and the consummation of the transactions contemplated
<PAGE>
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 Govern
mental 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
<PAGE>
documents with the relevant authorities of other states
in which the Company is qualified to do business,
(4) filings with the NYSE and (5) such other consents,
approvals, orders, authorizations, registrations,
declarations and filings (i) as may be required under
the "blue sky" laws of various states or (ii) the
failure of which to be obtained or made individually or
in the aggregate would not have a material adverse
effect on Parent, impair in any material respect the
ability of Parent or Sub to perform its obligations
under this Agreement or prevent or materially delay the
consummation of any of the transactions contemplated by
this Agreement.
(c) Parent SEC Documents. Parent has filed with
the SEC all reports, schedules, forms, statements and
other documents required to be filed with the SEC by
Parent since January 1, 1996 (the "Parent SEC
Documents"). As of their respective dates, the Parent
SEC Documents complied in all material respects with
the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such
Parent SEC Documents, and none of the Parent SEC
Documents at the time they were filed contained any
untrue statement of a material fact or omitted to state
a material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances under which they were made,
not misleading. Except to the extent that information
contained in any Parent SEC Document has been revised
or superseded by a later-filed Parent SEC Document,
none of the Parent SEC Documents at the time they were
filed contained any untrue statement of a material fact
or omitted to state any material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading. The financial
statements of Parent included in the Parent SEC
Documents complied as to form in all material respects
with applicable accounting requirements and the
published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly
presented the consolidated financial position of Parent
and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their
operations and cash flows for the periods then ended
<PAGE>
(subject, in the case of unaudited statements, to
normal year-end audit adjustments and the absence of
footnotes).
(d) Information Supplied. None of the
information supplied or to be supplied by Parent or Sub
specifically for inclusion or incorporation by
reference in (i) the Form S-4 will (except to the
extent revised or superseded by amendments or
supplements contemplated hereby), at the time the
Form S-4 is filed with the SEC, at any time it is
amended or supplemented or at the time it becomes
effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary to make the statements therein, in light of
the circumstances under which they are made, not
misleading or (ii) the Proxy Statement will (except to
the extent revised or superseded by amendments or
supplements contemplated hereby), at the date it is
first mailed to the Company's stockholders or at the
time of Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances under which they are made,
not misleading. The Form S-4 will comply as to form in
all material respects with the requirements of the
Securities Act and the rules and regulations
thereunder, except that no representation is made by
Parent or Sub with respect to statements made or
incorporated by reference therein based on information
supplied by the Company specifically for inclusion or
incorporation by reference in the Form S-4.
(e) Absence of Certain Changes or Events. Except
as disclosed in the Parent SEC Documents filed by
Parent and publicly available prior to the date of this
Agreement ("Filed Parent SEC Documents"), since the
date of the most recent financial statements included
in the Filed Parent SEC Documents, Parent has conducted
its business only in the ordinary course consistent
with past practice, and there has not been (i) any
material adverse change with respect to Parent,
(ii) any declaration, setting aside or payment of any
dividend on, or other distribution (whether in cash,
stock or property) in respect of, any of Parent's
capital stock (except for regular quarterly cash
dividends) or (iii) any split, combination or
reclassification of any of Parent's capital stock or
any issuance or the authorization of any issuance of
<PAGE>
any other securities in respect of, in lieu of or in
substitution for shares of its capital stock.
(f) Interim Operations of Sub. Sub was formed
solely for the purpose of engaging in the transactions
contemplated hereby, has engaged in no other business
activities and has conducted its operations only as
contemplated hereby.
(g) Parent Common Stock. The shares of Parent
Common Stock to be issued in connection with the
Merger, when issued in accordance with the terms and
provisions of this Agreement, will be duly authorized,
validly issued, fully paid and non-assessable and will
not be subject to any preemptive or other statutory
right of stockholders and will be issued in compliance
with applicable United States Federal and state
securities laws.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct
of Business by the Company. During the period from the date
of this Agreement to the Effective Time, the Company shall
and shall cause its subsidiaries to, carry on their
respective businesses in the ordinary course consistent with
the manner as heretofore conducted and use reasonable
efforts to comply in all material respects with all
applicable laws, rules and regulations and, to the extent
consistent therewith, use commercially reasonable efforts to
preserve intact their current business organization, keep
available the services of their current officers and
employees and preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others
having business dealings with them. Without limiting the
generality of the foregoing, except as set forth in
Section 4.01 of the Company Disclosure Schedule, during the
period from the date of this Agreement to the Effective
Time, the Company shall not, and shall not permit any of its
subsidiaries to:
(i) (x) declare, set aside or pay any dividends
on, or make any other distributions (whether in cash,
stock or property) in respect of, any of its capital
stock except for dividends by a wholly owned subsidiary
of the Company to its parent, (y) split, combine or
reclassify any of its capital stock or issue or
authorize the issuance of any other securities in
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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 ven
ture, 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;
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(vi) (y) incur any indebtedness for borrowed money
or guarantee any such indebtedness of another person,
issue or sell any debt securities or options, warrants,
calls or other rights to acquire any debt securities of
the Company, guarantee any debt securities of another
person, enter into any "keep well" or other agreement
to maintain any financial statement condition of
another person or enter into any arrangement having the
economic effect of any of the foregoing, except for
short-term borrowings incurred in the ordinary course
of business consistent with past practice or (z) make
any loans, advances or capital contributions to, or
investments in, any other person, other than (I) as
provided for under any current Benefit Plan in the
ordinary course of business consistent with past
practice, (II) to the Company or any direct or indirect
wholly owned subsidiary of the Company and (III) for
advances to customers and employees, in each case in
the ordinary course of business consistent with past
practice;
(vii) make or agree to make any new capital
expenditure or expenditures which, individually, is in
excess of $50,000 or, in the aggregate, are in excess
of $250,000;
(viii) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the
payment, discharge, settlement or satisfaction in the
ordinary course of business consistent with past
practice or in accordance with their terms, of claims,
liabilities or obligations reflected or reserved
against in the most recent financial statements (or the
notes thereto) of the Company included in the Filed SEC
Documents or incurred since the date of such financial
statements in the ordinary course of business
consistent with past practice, or waive any material
benefits of, or agree to modify in any materially
adverse respect, any confidentiality, standstill or
similar agreements to which the Company or any of its
subsidiaries is a party;
(ix) except in the ordinary course of business,
modify, amend or terminate any material contract or
agreement to which the Company or such subsidiary is a
party or waive, release or assign any material rights
or claims thereunder;
(x) enter into any contracts, agreements, or
obligations relating to (i) the distribution, sale,
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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
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compensation or benefits under any employee plan,
contract, agreement or arrangement or Benefit Plan or
(H), except to the extent required under any Benefit
Plan on the date hereof, take any action to accelerate
the vesting of payment of any compensation or benefit
under any Benefit Plan;
(xii) except as otherwise contemplated by this
Agreement, enter into any contract or agreement that is
of a nature required to be filed as an exhibit to
Form 10-K under the Exchange Act and the rules and
regulations promulgated thereunder, other than
contracts for the sale or licensing of the Company's
products in the ordinary course of business;
(xiii) form any subsidiary of the Company;
(xiv) revalue any of its material assets or, except
as required by GAAP, make any change in accounting
methods, principles or practices; or
(xv) authorize any of, or commit or agree to take
any of, the foregoing actions.
(b) Certain Tax Matters. During the period from
the date of this Agreement to the Effective Time, (i) the
Company and each of its subsidiaries will timely file all
Federal, state and local, domestic and foreign, income and
franchise tax returns and reports ("Post-Signing Returns")
required to be filed by each such entity (after taking into
account any extensions); (ii) the Company and each of its
subsidiaries will timely pay all taxes due and payable with
respect to such Post-Signing Returns that are so filed;
(iii) the Company will accrue a reserve in its books and
records and financial statements in accordance with past
practice for all taxes payable by the Company or any of its
subsidiaries for which no Post-Signing Return is due prior
to the Effective Time; (iv) the Company and each of its
subsidiaries will promptly notify Parent of any suit, claim
action, investigation, proceeding or audit (collectively,
"Actions") pending against or with respect to the Company or
any of its subsidiaries in respect of any tax where there is
a reasonable possibility of a determination or decision
which would have a material adverse effect on the Company's
or any of its subsidiaries' tax liabilities or tax
attributes and will not settle or compromise any such Action
without Parent's consent; and (v) none of the Company or any
of its subsidiaries will make any material tax election
without Parent's consent, which consent shall not be
unreasonably withheld.
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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
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propose publicly to withdraw or modify, in a manner adverse
to Parent or Sub, the approval or recommendation by such
Board of Directors or any such committee of this Agreement
or the Merger, (ii) approve or recommend, or publicly
propose to approve or recommend, any Takeover Proposal or
(iii) cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other
similar agreement (an "Acquisition Agreement") with respect
to any Takeover Proposal. Notwithstanding the foregoing,
prior to receipt of the Stockholder Approval, the Board of
Directors of the Company, to the extent it determines in
good faith, after consultation with outside counsel, that it
is necessary to do so in order to comply with its fiduciary
duties to the Company's stockholders under applicable law,
may withdraw or modify its approval or recommendation of
this Agreement or the Merger, approve or recommend any
Superior Proposal (as hereinafter defined) or cause the
Company to terminate this Agreement in accordance with
Section 7.01(b)(iv) (and concurrently with or after such
termination, if it so chooses, cause the Company to enter
into an Acquisition Agreement with respect to a Superior
Proposal), in each case at any time after the third business
day following Parent's receipt of written notice (a "Notice
of Superior Proposal") advising Parent that the Board of
Directors of the Company has received a Superior Proposal,
specifying the material terms and conditions of the Superior
Proposal and identifying the person making such Superior
Proposal (it being understood that any amendment to the
price or material terms of a Superior Proposal shall require
an additional Notice of Superior Proposal and an additional
one business day period thereafter to the extent permitted
under applicable law). For purposes of this Agreement, a
"Superior Proposal" means any bona fide proposal made by a
third party to acquire, directly or indirectly, including
pursuant to a tender offer, exchange offer, merger,
consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more
than 50% of the voting power of the Company Common Stock or
all or substantially all the assets of the Company and
otherwise on terms which the Board of Directors of the
Company determines in its good faith judgment (after
consultation with a financial advisor of nationally
recognized reputation) to be more favorable to the Company's
stockholders than the Merger and for which financing, to the
extent required, is then committed or which, in the good
faith judgment of the Board of Directors of the Company, is
capable of being obtained by such third party.
(c) In addition to the obligations of the Company
set forth in paragraphs (a) and (b) of this Section 4.02,
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the Company promptly shall advise Parent orally and in
writing of any request for non-public information which the
Company reasonably believes would lead to a Takeover
Proposal or of any Takeover Proposal, or any inquiry with
respect to or which the Company reasonably believes would
lead to any Takeover Proposal, the material terms and
conditions of such request, Takeover Proposal or inquiry,
and the identity of the person making any such request,
Takeover Proposal or inquiry. The Company will keep Parent
informed in all material respects of the status and details
(including material amendments or proposed amendments) of
any such request, Takeover Proposal or inquiry.
(d) Nothing contained in this Section 4.02 or
elsewhere in this Agreement shall prohibit the Company from
(i) taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under
the Exchange Act or (ii) making any disclosure to the
Company's stockholders if, in the good faith judgment of the
majority of the members of the Board of Directors of the
Company, after consultation with independent counsel,
failure to so disclose would be inconsistent with applicable
laws; provided that none of the Company nor its Board of
Directors nor any committee thereof shall, except in
accordance with the provisions of Section 4.02(b), withdraw
or modify, or publicly propose to withdraw or modify, its
position with respect to this Agreement or the Merger or
approve or recommend, or propose to approve or recommend, a
Takeover Proposal.
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the
Proxy Statement; Stockholders Meeting. (a) As soon as
practicable following the date of this Agreement, the
Company and Parent shall prepare and the Company shall file
with the SEC the Proxy Statement and Parent shall prepare
and file with the SEC the Form S-4, in which the Proxy
Statement will be included as a prospectus. Each of the
Company and Parent shall use all reasonable efforts to have
the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing. The Company will
use its reasonable efforts to cause the Proxy Statement to
be mailed to the Company's stockholders as promptly as
practicable after the Form S-4 is declared effective under
the Securities Act. Parent shall also take any action
(other than qualifying to do business in any jurisdiction in
which it is not now so qualified) required to be taken under
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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; Confiden
tiality. 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
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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 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
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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 consum
mate 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
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providing for the grant of options to purchase shares
of Company Common Stock to current or former officers,
directors, employees or consultants of the Company (the
"Company Stock Plans"), whether vested or unvested, as
necessary to provide that, at the Effective Time, each
Stock Option outstanding immediately prior to the
Effective Time shall be amended and converted into an
option to acquire, on the same terms and conditions as
were applicable under the Stock Option, the number of
shares of Parent Common Stock (rounded down to the
nearest whole share) determined by multiplying the
number of shares of Company Common Stock subject to
such Stock Option by the Exchange Ratio, at a price per
share of Parent Common Stock equal to (A) the aggregate
exercise price for the shares of Company Common Stock
otherwise purchasable pursuant to such Stock Option
divided by (B) the number of shares of Parent Common
Stock deemed purchasable pursuant to such Stock Option
(each, as so adjusted, an "Adjusted Option"); provided
that such exercise price shall be rounded up to the
nearest whole cent; and
(ii) make such other changes to the Company Stock
Plans as Parent and the Company may agree are
appropriate to give effect to the Merger.
(b) The adjustments provided herein with respect
to any Stock Options that are "incentive stock options" as
defined in Section 422 of the Code shall be and are intended
to be effected in a manner which is consistent with Section
424(a) of the Code.
(c) At the Effective Time, by virtue of the
Merger and without the need of any further corporate action,
Parent shall assume the Company Stock Plans, with the result
that all obligations of the Company under the Company Stock
Plans, including with respect to Stock Options outstanding
at the Effective Time, shall be obligations of Parent
following the Effective Time.
(d) No later than the Effective Time, Parent
shall prepare and file with the SEC a registration statement
on Form S-8 (or another appropriate form) registering a
number of shares of Parent Common Stock equal to the number
of shares subject to the Adjusted Options. Such
registration statement shall be kept effective (and the
current status of the prospectus or prospectuses required
thereby shall be maintained) at least for so long as any
Adjusted Options may remain outstanding.
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(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)
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and (ii) of this Section 5.07(a), the "Indemnified
Parties"). The Certificate of Incorporation and By-laws of
the Surviving Corporation shall contain the provisions with
respect to indemnification and exculpation from liability
set forth in the Company's Certificate of Incorporation and
By-laws on the date of this Agreement, which provisions
shall not be amended, repealed or otherwise modified for a
period of six years after the Effective Time in any manner
that would adversely affect the rights thereunder of any
Indemnified Party; provided, however, that Parent shall not
be required to maintain the Surviving Corporation's
existence as a separate corporation. Until the earlier to
occur of (i) six years from the Effective Time and (ii) the
expiration of the current term of the Company's directors'
and officers' liability insurance policy (the "Company
Policy"), Parent shall maintain in effect the Company Policy
(or, in lieu of maintaining such insurance, cause coverage
to be provided under any policy maintained for the benefit
of Parent or any of its subsidiaries or otherwise obtained
by Parent, so long as the terms thereof are no less
advantageous to the intended beneficiaries thereof than
those of the Company Policy), covering those persons who are
covered by the Company Policy; provided, however, that in no
event shall Parent be required to expend in any one year an
amount in excess of 200% of the annual premiums most
recently paid by the Company for such insurance, and,
provided, further, that if the annual premiums of such
insurance coverage exceed such amount, Parent shall only be
obligated to obtain the greatest coverage available under
such policy for a cost not exceeding such amount.
(b) This Section 5.07 shall survive the
consummation of the Merger at the Effective Time, is
intended to be for the benefit of the Company, Parent, the
Surviving Corporation and each Indemnified Party and such
Indemnified Party's heirs and representatives, and shall be
binding on all successors and assigns of Parent and the
Surviving Corporation.
SECTION 5.08. Fees and Expenses. (a) All fees
and expenses incurred in connection with the Merger, this
Agreement, the Stockholder Agreement and the transactions
contemplated by this Agreement and the Stockholder Agreement
shall be paid by the party incurring such fees or expenses,
whether or not the Merger is consummated, except that
expenses incurred in connection with filing, printing and
mailing the Proxy Statement and the Form S-4, shall be
shared equally by Parent and the Company.
(b) In the event that this Agreement is
terminated by any party hereto pursuant to
<PAGE>
Section 7.01(b)(iv), the Company shall promptly, but in no
event later than two days after the date of such
termination, pay Parent a fee equal to $6 million in
immediately available funds (the "Termination Fee"). If, at
the time of any termination of this Agreement by any party
hereto pursuant to Section 7.01(b)(i), 7.01(b)(iii) or
7.01(c), a Takeover Proposal shall have been publicly
announced or otherwise publicly disclosed and not publicly
withdrawn and prior to the date 12 months following the date
of the termination of this Agreement the Company shall
either (x) consummate a Company Acquisition (as hereinafter
defined) or (y) enter into a written Acquisition Agreement
providing for a Company Acquisition, then the Company shall
pay to Parent the Termination Fee in immediately available
funds in the case of clause (x) concurrently with the
consummation of such Company Acquisition or in the case of
clause (y) concurrently with the consummation of the
transaction subject to such Acquisition Agreement (whether
or not such transaction is consummated prior to the date
12 months following the date of the termination of this
Agreement, but only in the event that such transaction
subject to such Acquisition Agreement is in fact
consummated); provided, however, that no Termination Fee
shall be payable pursuant to this sentence if this Agreement
is terminated pursuant to Section 7.01(b)(iii) and a
material adverse change with respect to Parent had occurred
and had not been cured prior to the date of the Stockholders
Meeting. The Company acknowledges that the agreements
contained in this Section 5.08(b) are an integral part of
the transactions contemplated by this Agreement, and that,
without these agreements, Parent would not enter into this
Agreement; accordingly, if the Company fails promptly to pay
the amounts due pursuant to this Section 5.08(b), and, in
order to obtain such payment, Parent commences a suit which
results in a judgment against the Company for the amounts
set forth in this Section 5.08(b), the Company shall pay to
Parent its reasonable costs and expenses (including
attorneys' fees and expenses) in connection with such suit,
together with interest on the amounts set forth in this
Section 5.08(b) at the prime rate of The Chase Manhattan
Bank in effect on the date such payment was required to be
made. "Company Acquisition" shall mean any of the following
transactions or series of related transactions: (i) a
merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar
transaction involving the Company pursuant to which the
stockholders of the Company immediately preceding such
transaction or series of related transactions hold less than
60% of the equity interests in the surviving or resulting
entity of such transaction or transactions (other than the
transactions contemplated by this Agreement); (ii) a sale
<PAGE>
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
<PAGE>
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 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.
<PAGE>
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 juris
diction 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
<PAGE>
requested by such counsel and made by Parent, Sub,
Company and certain Company stockholders. The opinions
shall be dated the date that is two business days prior
to the date the Proxy Statement is first mailed to
stockholders of the Company and shall not have been
withdrawn or modified in any material respect.
SECTION 6.02. Conditions to Obligations of Parent
and Sub. The obligations of Parent and Sub to effect the
Merger are further subject to the satisfaction or waiver on
or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The
representations and warranties of the Company contained
in this Agreement shall be true and correct as of the
date of this Agreement and as of the Closing Date as
though made on the Closing Date except (i) to the
extent such representations and warranties expressly
relate to an earlier date (in which case such
representations and warranties shall be true and
correct on and as of such specific date) and (ii) for
breaches of representations and warranties as to
matters that, individually or in the aggregate, would
not have a material adverse effect on the Company.
Solely for the purpose of the application of
clause (ii) above, all representations and warranties
of the Company set forth in this Agreement that are
qualified as to materiality (including without
limitation by the word "material" in the phrases
"material adverse change" or "material adverse effect")
shall be deemed to be not so qualified. Parent shall
have received a certificate signed on behalf of the
Company by the chief executive officer and the chief
financial officer of the Company to such effect.
(b) Performance of Obligations of the Company.
The Company shall have performed in all material
respects all material obligations required to be
performed by it under this Agreement at or prior to the
Closing Date, and Parent shall have received a
certificate signed on behalf of the Company by the
chief executive officer and the chief financial officer
of the Company to such effect.
(c) Letters from Company Affiliates. Parent
shall have received from each person named in the
letter referred to in Section 5.10(a) an executed copy
of an agreement substantially in the form of Exhibit A
hereto.
<PAGE>
(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.
<PAGE>
(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 contem
plated by this Agreement, as required by and subject to
Section 5.05.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be
terminated, and the Merger contemplated hereby may be
abandoned, at any time prior to the Effective Time, whether
before or after the Stockholder Approval:
(a) by mutual written consent of Parent, Sub and
the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been
consummated by March 15, 1998 for any reason;
provided however, that the right to terminate this
Agreement under this Section 7.01(b)(i) shall not
be available to any party whose action or failure
to act has been a principal cause of or resulted
in the failure of the Merger to occur on or before
such date and such action or failure to act
constitutes a breach of this Agreement;
(ii) if any Restraint having any of the
effects set forth in Section 6.01(d) shall be in
effect and shall have become final and
nonappealable;
(iii) if the Stockholder Approval shall not
have been obtained at the Stockholders Meeting
duly convened therefor or at any adjournment or
postponement thereof or by written consent; or
<PAGE>
(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
<PAGE>
(e) by Parent, upon a breach of any represen
tation, 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 Sec
tion 6.02(b), as the case may be, would not be
satisfied as of the time of such breach by the Company
or as of the time such representation or warranty shall
have become inaccurate; provided, that if such breach
by the Company or inaccuracy in the Company's
representations and warranties is curable by the
Company through the exercise of its reasonable efforts,
then (i) Parent may not terminate this Agreement under
this Section 7.01(e) with respect to a particular
breach or inaccuracy prior to or during the 45-day
period commencing upon delivery by Parent of written
notice to the Company describing such breach or
inaccuracy, provided the Company continues to exercise
reasonable efforts to cure such breach or inaccuracy
and (ii) Parent may not, in any event, terminate this
Agreement under this Section 7.01(e) if such inaccuracy
or breach shall have been cured in all material
respects during such 45-day period; and provided
further that Parent may not terminate this Agreement
pursuant to this Section 7.01(e) if it shall have
wilfully and materially breached this Agreement.
SECTION 7.02. Effect of Termination. In the
event of termination of this Agreement by either the Company
or Parent as provided in Section 7.01, this Agreement shall
forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the
Company, other than the provisions of Section 3.01(s), the
last sentence of Section 5.04, Section 5.08, Section 5.09,
this Section 7.02 and Article VIII and except to the extent
that such termination results from the wilful and material
breach by a party of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be
amended by the parties hereto at any time before or after
any required approval of matters presented in connection
with the Merger by the stockholders of the Company;
provided, however, that after any such approval, there shall
be made no amendment that by law requires further approval
by such stockholders without the further approval of such
stockholders. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the
parties hereto.
<PAGE>
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.
<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
<PAGE>
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 indi
rectly 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. When
ever 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
<PAGE>
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.
<PAGE>
SECTION 8.10. Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable
of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law
in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
IN WITNESS WHEREOF, Parent, Sub and the Company
have caused this Agreement to be signed by their respective
officers thereunto duly authorized, all as of the date first
written above.
INTERNATIONAL BUSINESS MACHINES
CORPORATION,
by
--------------------------------
Name:
Title:
NEW ORCHARD CORP.,
by
---------------------------------
Name:
Title:
UNISON SOFTWARE, INC.,
by
---------------------------------
Name:
Title:
<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
<PAGE>
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 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
<PAGE>
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:
<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 New Orchard
Corp., a Delaware corporation, with and into Unison
Software, Inc.
Based upon the most recent report or statement
filed by Parent with the Securities and Exchange Commission,
the Securities sold by the undersigned were within the
prescribed limitations set forth in paragraph (e) of
Rule 144 promulgated under the Securities Act of 1933, as
amended (the "Securities Act").
The undersigned hereby represents that the
Securities were sold in "brokers' transactions" within the
meaning of Section 4(4) of the Securities Act or in
transactions directly with a "market maker" as that term is
defined in Section 3(a)(38) of the Securities Exchange Act
of 1934, as amended. The undersigned further represents
that the undersigned has not solicited or arranged for the
solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the
offer or sale of the Securities to any person other than to
the broker who executed the order in respect of such sale.
Very truly yours,
[Space to be provided for description of the Securities.]
EXHIBIT 2
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.
<PAGE>
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.
(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
<PAGE>
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
<PAGE>
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 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
<PAGE>
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.
<PAGE>
(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 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
<PAGE>
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
<PAGE>
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 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.
<PAGE>
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
<PAGE>
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.
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
<PAGE>
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.
11. Public Announcements. Except as required by
law, no Stockholder shall issue any press release or other
public statement with respect to the transactions
<PAGE>
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
<PAGE>
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.
INTERNATIONAL BUSINESS MACHINES
CORPORATION,
By:----------------------------
Name:
Title:
Stockholders:
--------------------------
Don H. Lee
--------------------------
Michael A. Casteel
<PAGE>
SCHEDULE A
Number of Shares
of Company
Name and Common Stock
Address of Owned or to be
Stockholder* Owned of Record
2,240,952
Don H. Lee 1
Michael A. Casteel 2 1,482,649
- --------
* 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.
