<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Boole & Babbage, Inc.
- --------------------------------------------------------------------------------
(Name of the Issuer)
Common Stock, par value $0.001 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
098586100
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(CUSIP Number)
M. Brinkley Morse
c/o BMC Software, Inc.
2101 CityWest Blvd.
Houston, Texas 77042
713/918-8800
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 31, 1998
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(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 [ ].
<PAGE> 2
<TABLE>
<S> <C>
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1 NAMES OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
BMC Software, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)
(b) x
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS [ ]
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
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NUMBER 7 SOLE VOTING POWER
OF None
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED 2,747,935 (see Item 5(a))
BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING None
PERSON
WITH 10 SHARED DISPOSITIVE POWER
None
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,747, 935
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.93%
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14 TYPE OF REPORTING PERSON
CO
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</TABLE>
EXPLANATORY NOTE:
As a result of executing the voting agreements dated as of
October 31, 1998, a form of which is filed herewith as Exhibit 3 and is
incorporated herein by reference (the "Voting Agreements") with BMC Software,
Inc. ("BMC"), Johannes S. Bruggeling, Raymond E. Cairns, Franklin P. Johnson,
Jr., Terry R. McGowan, Paul E. Newton, David B. Wright, James E.C. Black,
Richard A. Harrit, Arthur F. Knapp, Jr., Saverio Merlo, Catherine H. Johnson
and Asset Management Partners, L.P. (holders of an aggregate of 2,747,935
shares of common stock of the Issuer) (the "Stockholders") and BMC may be
deemed, for the purposes of Section 13(d) of the Securities Exchange Act of
1934 (the "Exchange Act"), to have formed a "group."
<PAGE> 3
ITEM 1. SECURITY AND ISSUER.
This Statement on Schedule 13D relates to shares of Common Stock,
$0.001 par value per share (the "Shares") of Boole & Babbage, Inc., a Delaware
corporation (the "Issuer"). The address of the principal executive offices of
the Issuer is 3131 Zanker Road, San Jose, California 95134.
ITEM 2. IDENTITY AND BACKGROUND.
BMC is a Delaware corporation with its principal business offices
located at 2101 CityWest Blvd., Houston, TX 77042.
(d) and (e). During the last five years, BMC has not been (i)
convicted in a criminal proceeding or (ii) a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to the Voting Agreements, BMC has been granted a proxy by
each of the Stockholders to vote in favor of the transactions contemplated by
the Merger Agreement (as defined below). Execution and delivery of the Voting
Agreements was a condition to the execution of the Merger Agreement.
ITEM 4. PURPOSE OF TRANSACTION.
On October 31, 1998, each of the Stockholders entered into a Voting
Agreement. Pursuant to the terms of the Voting Agreement, each Stockholder has
agreed to vote in favor of the Merger Agreement (as defined herein) and the
Merger (as defined herein) and has agreed to appoint BMC as his attorney and
proxy for such purpose.
The purpose of the transactions under the Voting Agreements is to
enable BMC and the Issuer to consummate the transactions contemplated under the
Agreement and Plan of Reorganization (the "Merger Agreement") dated as of
October 31, 1998 by and among BMC, Ranger Acquisition Corp. ("Merger Sub") and
the Issuer. Pursuant to the terms of the Merger Agreement and the related
Agreement and Plan of Merger, Merger Sub will merge (the "Merger") with and
into the Issuer, and the Issuer will be the surviving corporation.
Except as otherwise set forth in the Merger Agreement and the Voting
Agreement, BMC has no present plans or proposals which relate to or would
result in (i) the acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer; (ii) an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Issuer or any of its subsidiaries; (iii) a sale or transfer of a
material amount of assets of the Issuer or any of its subsidiaries; (iv) any
change in the present Board of Directors or management of the Issuer; (v) any
material change in the present capitalization or dividend policy of the Issuer;
(vi) any other material change in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition or
control of the Issuer by any person; (viii) causing the Shares to cease to be
authorized to be quoted on the Nasdaq National Market; (ix) the Shares becoming
eligible for termination of registration pursuant to Section 12(g)(4) of the
Exchange Act; or (x) any action similar to any of those actions set forth in
this Paragraph.
<PAGE> 4
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) and (b). BMC may be deemed to beneficially own 2,747,935 Shares
and has shared voting power with respect to such shares. Pursuant to the terms
of the Voting Agreements, each of the Stockholders has agreed to vote, at any
meeting of the Issuer's stockholders or any adjournment or postponement thereof
or pursuant to any consent in lieu of a meeting, in favor of the Merger
Agreement and the Merger. In addition, each of the Stockholders has agreed to
appoint BMC as its attorney and proxy for such purpose.
(c). No transactions in the Shares have been effected during the past
60 days by BMC.
(d). The right to receive dividends with respect to the Shares to
which this Schedule 13D relates, and the power to direct the receipt of
dividends from, or the proceeds of the sale of, such Shares held by each
Stockholder are held by such respective Stockholder.
(e). Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
See Items 3 and 4 hereof.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Agreement and Plan of Reorganization dated as of October 31,
1998, by and among BMC, Ranger Acquisition Corp. and the
Issuer
2. Stock Option Agreement dated as of October 31, 1998, by and
between BMC and the Issuer
3. Form of Voting Agreement.
<PAGE> 5
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.
BMC SOFTWARE, INC.
By: /s/ M. Brinkley Morse
-------------------------------
Name: M. Brinkley Morse
Title: Senior Vice President
Date: November 6, 1998
The original statement shall be signed by each person on whose behalf
the statement is filed or his authorized representative. If the statement is
signed on behalf of a person by his authorized representative (other than an
executive officer or general partner of this filing person), evidence of the
representative's authority to sign on behalf of such person shall be filed with
the statement, provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by reference.
The name and any title of each person who signs the statement shall be typed or
printed beneath his signature.
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE
FEDERAL CRIMINAL VIOLATIONS
(SEE 18 U.S.C. 1001)
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
99.1 Agreement and Plan of Reorganization dated as of October 31, 1998, by and among
BMC, Ranger Acquisition Corp. and the Issuer
99.2 Stock Option Agreement dated as of October 31, 1998, by and between BMC and the
Issuer
99.3 Form of Voting Agreement.
</TABLE>
<PAGE> 1
EXHIBIT 1
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of
October 31, 1998, by and among BMC Software, Inc., a Delaware corporation
("BMC"), Ranger Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of BMC ("Merger Sub"), and Boole & Babbage, Inc., a Delaware
corporation ("Boole").
W I T N E S S E T H:
WHEREAS, the respective boards of directors of BMC and Boole deem it
desirable and in the best interests of their respective corporations and their
respective stockholders that Merger Sub be merged with and into Boole, pursuant
to the provisions of Section 251 of the Delaware General Corporation Law
("DGCL"), in exchange for the consideration provided for in the Plan and
Agreement of Merger attached hereto as Exhibit A ("Plan of Merger"), and have
proposed, declared advisable, and approved such merger pursuant to this
Agreement and the Plan of Merger, which have been duly approved by resolutions
of the respective boards of directors of BMC and Boole;
WHEREAS, for federal income tax purposes, it is intended that the
merger qualify as a reorganization under the provisions of Section 368(a) of
the United States Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the parties hereto acknowledge the execution and delivery of
that certain Stock Option Agreement of even date herewith between Boole (as
grantor) and BMC (as grantee) (the "Stock Option Agreement") concurrently with
the execution and delivery of this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, and in order to set forth the terms
and conditions of the Merger (as hereinafter defined), the mode of carrying the
same into effect, the manner and basis of converting the presently outstanding
shares of common stock, par value $.001 per share ("Boole Common Stock"), of
Boole into shares of common stock, par value $.01 per share ("BMC Common
Stock"), of BMC, and such other details and provisions as are deemed necessary
or proper, the parties hereto agree as follows:
ARTICLE I
MERGER
1.1. The Merger. Subject to and in accordance with the terms and
conditions of this Agreement and pursuant to the Plan of Merger, at the
Effective Time (as hereinafter defined) Merger
<PAGE> 2
Sub shall be merged with and into Boole (the "Merger"), the separate existence
of Merger Sub shall cease, and Boole (i) shall continue as the surviving
corporation (sometimes referred to herein as the "Surviving Corporation") under
the corporate name "Boole & Babbage, Inc.", (ii) shall be governed by the laws
of the State of Delaware, (iii) shall maintain a registered office in the State
of Delaware at 1209 Orange Street, Wilmington, Delaware 19801 and shall (iv)
succeed to and assume all of the rights, properties and obligations of Merger
Sub and Boole in accordance with the DGCL. Subject to the terms and conditions
of this Agreement and the Plan of Merger, BMC agrees, at or prior to the
Closing (as hereinafter defined), to cause Merger Sub to execute and deliver
the Plan of Merger in form and substance substantially similar to the form
attached hereto as Exhibit A. Subject to the terms and conditions of this
Agreement and the Plan of Merger, Boole agrees, at or prior to the Closing, to
execute and deliver the Plan of Merger in form and substance substantially
similar to the form attached hereto as Exhibit A.
1.2. Closing Date. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Vinson &
Elkins L.L.P., 2300 First City Tower, 1001 Fannin, Houston, Texas 77002, on a
date to be specified by the parties, which shall be no later than the second
business day after the satisfaction or waiver of the conditions set forth in
Article V or at such other time and place and on such other date as BMC and
Boole shall agree; provided that the conditions set forth in Article V shall
have been satisfied or waived at or prior to such time. The date on which the
Closing occurs is herein referred to as the "Closing Date."
1.3. Effective Time. As soon as practicable on the Closing Date,
the parties hereto will cause the Merger to become effective by filing with the
Secretary of State of the State of Delaware, a certificate of merger in such
form as required by, and executed in accordance with, the relevant provisions
of the DGCL (the time of filing the certificate of merger with the Secretary of
State of the State of Delaware being the "Effective Time").
1.4. Material Adverse Effect. "Material Adverse Effect" or
"Material Adverse Change" means any effect, change, event, circumstance or
condition which when considered with all other effects, changes, events,
circumstances or conditions would reasonably be expected to materially
adversely affect the business, results of operations or financial condition of
BMC or Boole, in each case including its respective subsidiaries together with
it taken as a whole, as the case may be. In no event shall any of the
following constitute a Material Adverse Effect or a Material Adverse Change:
(i) a change in the trading prices of either of BMC's or Boole's equity
securities between the date hereof and the Effective Time, in and of itself;
(ii) effects, changes, events, circumstances or conditions generally affecting
the industry in which either BMC or Boole operate or arising from changes in
general business or economic conditions; (iii) effects, changes, events,
circumstances or conditions directly attributable to (a) out-of-pocket fees and
expenses (including without limitation legal, accounting, investigatory,
investment banking, and other fees and expenses) incurred in connection with
the transactions contemplated by this Agreement, or (b) the payment by BMC or
Boole of all amounts due to any officers or employees of Boole under employment
contracts, non-competition agreements, employee benefit plans or severance
arrangements; (iv) any effects, changes, events, circumstances or conditions
resulting from any change in law or generally accepted accounting principles,
which affect generally entities such as BMC and Boole; (v) any effects,
changes, events, circumstances or conditions (including, without limitation,
non-governmental
<PAGE> 3
litigation, delays in customer orders, a reduction in sales, a disruption in
supplier, distributor or similar relationships or a loss of employees)
resulting from the announcement or pendency of any of the transactions
contemplated by this Agreement; and (vi) any effects, changes, events,
circumstances or conditions resulting from compliance by BMC or Boole with the
terms of, or the taking of any action contemplated or permitted by, this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF BOOLE
Boole represents and warrants subject to the exceptions specifically
described in writing in the respective sections of the disclosure schedule
delivered by Boole to BMC and dated the date hereof (the "Boole Disclosure
Schedule") as follows:
2.1. Organization and Standing. Boole is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has full requisite corporate power and authority to carry on its
business as it is currently conducted, and to own and operate the properties
currently owned and operated by it, and is duly qualified or licensed to do
business and is in good standing as a foreign corporation authorized to do
business in all jurisdictions in which the character of the properties owned or
the nature of the business conducted by it would make such qualification or
licensing necessary, except where the failure to be so qualified or licensed
could not reasonably be expected to have a Material Adverse Effect on Boole.
2.2. Agreement Authorized and its Effect on Other Obligations.
Upon approval and adoption of this Agreement and approval of the Merger by the
stockholders of Boole, the consummation of the transactions contemplated hereby
will have been duly and validly authorized by all necessary corporate action on
the part of Boole, and this Agreement will be a valid and binding obligation of
Boole enforceable against Boole in accordance with its terms, except as
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
debtor relief or similar laws affecting the rights of creditors generally, and
(ii) general principles of equity. The Stock Option Agreement and the
consummation of the transactions contemplated thereby have been duly and
validly authorized by all necessary corporate action on the part of Boole, and
the Stock Option Agreement is a valid and binding obligation of Boole
enforceable against Boole in accordance with its terms, except as
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
debtor relief or similar laws affecting the rights of creditors generally, and
(ii) general principles of equity. The Stock Option Agreement and the
consummation of the transactions contemplated thereby do not conflict with or
cause a violation, breach or default of any term or provision of (i) the
certificate of incorporation or bylaws of Boole or (ii) any indenture,
mortgage, deed of trust, lease, contract or other agreement to which Boole or
any of its subsidiaries is a party or by which any of them or their properties
are bound, other than such violations, breaches or defaults as could not
reasonably be expected to have a Material Adverse Effect on Boole. At the
Effective Time, the consummation of the Merger will not conflict with or result
in a violation or breach of any term or provision of, nor constitute a default
under, (i) the certificate of incorporation or bylaws of Boole or (ii) any
indenture, mortgage, deed of trust, lease, contract or other agreement to which
Boole or any of its subsidiaries
<PAGE> 4
is a party or by which any of them or their properties are bound, other than
such violations, breaches or defaults as could not reasonably be expected to
have a Material Adverse Effect on Boole. Section 2.2 of the Boole Disclosure
Schedule lists all holders of any material indebtedness for borrowed money of
Boole as of the date of this Agreement, the lessors of any material property
leased by Boole and the other parties to any Material Contract (as defined in
Section 2.9) to which Boole is a party as of the date of this Agreement in each
case whose consent to the Merger is required.
2.3. Capitalization. The authorized capitalization of Boole
consists of 2,000,000 shares of preferred stock, par value $.001 per share, of
which as of the date hereof no shares were issued and outstanding and
45,000,000 shares of common stock, par value $.001 per share (the "Boole Common
Stock"), of which at September 30, 1998, 27,667,249 shares were issued and
outstanding, and an additional 8,453,000 shares were reserved for issuance in
conjunction with various employee benefit plans; at September 30, 1998,
3,065,930 shares of Boole Common Stock were held in Boole's treasury. All of
such outstanding shares are validly issued, fully paid and nonassessable, and
were not issued in violation of any preemptive rights of any stockholder.
Section 2.3 of the Boole Disclosure Schedule sets forth a complete list as of
the date of this Agreement of all outstanding options, warrants or obligations
of any kind to issue any shares of capital stock of Boole, the owners thereof
and the amounts owned.
2.4. Subsidiaries. Section 2.4 of the Boole Disclosure Schedule
lists the subsidiary corporations of Boole existing at September 30, 1998, and
shows as to each of such subsidiary corporations the percentage of the total
outstanding stock thereof which is owned by Boole at such date. All
outstanding shares of stock of the subsidiary corporations owned by Boole are
validly issued, fully paid, and nonassessable, and Boole has good and valid
title thereto free and clear of any mortgage, pledge, lien, charge, security
interest, option, right of first refusal, preferential purchase right, defect,
encumbrance or other right or interest of any other person (collectively, an
"Encumbrance"), except for shares of capital stock or other similar ownership
interests of certain subsidiaries of Boole that are owned by certain nominee
equity holders as required by the applicable law of the jurisdiction of
organization of such subsidiaries. Each such subsidiary is a corporation duly
organized, validly existing, and in good standing (or equivalent concept with
respect to jurisdictions that do not recognize such concept) under the laws of
the jurisdiction under which it is incorporated and has full requisite
corporate power and authority to own its property and carry on its business as
presently conducted by it and is, or on the Effective Time will be, duly
qualified or licensed to do business and is, or on the Effective Time will be,
in good standing (or equivalent concept with respect to jurisdictions that do
not recognize such concept) as a foreign corporation authorized to do business
in all jurisdictions in which the character of the properties owned or the
nature of the business conducted makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed could not
reasonably be expected to have a Material Adverse Effect on Boole. As
hereinafter used in this Article II, the term "Boole" also includes any and all
of its directly and indirectly held subsidiaries, except where the context
indicates to the contrary; provided, however, that for purposes of Sections
2.7.1 and 2.20, the term "Boole" further includes any corporation, trade,
business or entity under common control with Boole within the meaning of
Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA.
<PAGE> 5
2.5. Reports and Financial Statements. Boole has previously
furnished or made available (including through the SEC EDGAR system) to BMC
true and complete copies of (a) all annual reports filed by Boole with the
Securities and Exchange Commission (the "Commission") pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), since
September 30, 1995, (b) Boole's quarterly and other reports filed with the
Commission since September 30, 1995, (c) all definitive proxy solicitation
materials filed by Boole with the Commission since September 30, 1995, and (d)
any registration statements of Boole declared effective by the Commission since
September 30, 1995. The consolidated financial statements of Boole and its
subsidiaries included in Boole's most recent report on Form 10-K and most
recent report on Form 10-Q, and any other reports filed with the Commission by
Boole under the Exchange Act subsequent thereto (collectively, the "Boole
Reports") were, or (if filed after the date hereof) will be, prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved and fairly present, or will fairly
present, the consolidated financial position for Boole and its subsidiaries as
of the dates thereof and the consolidated results of their operations and
changes in financial position for the periods then ended (except with respect
to interim period financial statements, for normal year-end adjustments which
are not material and for the absence of footnotes). The Boole Reports did not
at the time each of the Boole Reports was filed with the Commission (or, if
amended or superseded by a subsequent filing, then on the date of such filing),
and (if filed after the date hereof) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
whey they were made, not misleading. Since September 30, 1995, Boole has filed
with the Commission all reports required to be filed by Boole under the
Exchange Act and the rules and regulations of the Commission.
2.6. Liabilities. Boole has no liabilities of the type required to
be disclosed in the consolidated financial statements of Boole prepared in
accordance with generally accepted accounting principles applied on a
consistent basis, except for: (i) liabilities disclosed in the financial
statements (including any related notes) contained in the Boole Reports and
(ii) liabilities incurred in the ordinary course of business consistent with
past practices.
2.7. Additional Boole Information. Set forth in Section 2.7 of the
Boole Disclosure Schedule are true, complete and correct lists of the following
items, and Boole agrees that upon the request of BMC, it will furnish to BMC
true, complete and correct copies of any documents referred to in such lists:
2.7.1. Employee Compensation Plans. All bonus, incentive
compensation, stock option, deferred compensation, profit-sharing,
retirement, pension, welfare, severance pay, supplemental income,
group insurance, death benefit, or other fringe benefit plans,
arrangements or trust agreements that are in effect as of the date of
this Agreement covering active, former or retired employees of Boole
(collectively, "Boole Plans"), together with copies of the most recent
Internal Revenue Service determination letters that have been
received, if any, with respect to such plans;
2.7.2. Certain Salaries. The names and salary rates as of
the date of this Agreement of all officers and employees of Boole as
of the date of this Agreement whose regular annual
<PAGE> 6
base salary rate as of the date of this Agreement is $125,000 or more,
together with any bonuses paid or payable to such persons for the
fiscal year ended September 30, 1998, or since that date, and, to the
extent existing on the date of this Agreement, all arrangements with
respect to any bonuses to be paid to such employees from and after the
date of this Agreement;
2.7.3. Employee Agreements. Any collective bargaining
agreements of Boole as of the date of this Agreement with any labor
union or other similar representative of employees, including
amendments, supplements, and understandings, and all employment and
consulting agreements of Boole as of the date of this Agreement with
employees whose regular annual base salary exceeds $125,000 and with
consultants whose annual compensation from Boole exceeds $125,000; and
2.7.4. Guaranties. All material third party indebtedness,
liabilities and commitments of others as to which Boole is a
guarantor, endorser, co-maker, surety, or accommodation maker
(excluding liabilities as an endorser of checks and the like in the
ordinary course of business) and all letters of credit, whether
stand-by or documentary, issued by any third party.
2.8. Certain Agreements. The consummation of the transactions
contemplated by this Agreement will not cause or result in the acceleration or
vesting of any benefits, payments or rights covering active, former or retired
employees of Boole under (i) any Boole Plans or (ii) any other agreements to
which Boole is a party.
2.9. No Undisclosed Contracts or Defaults. Except as may be
specified in the Boole Reports, Boole is not a party as of the date of this
Agreement, to, or bound as of the date of this Agreement by, any material
contract or arrangement of a nature required to be filed as an exhibit to an
annual report filed by Boole under the Exchange Act which is to be performed
after the Effective Time (a "Material Contract"), nor is Boole in default in
any material obligation or covenant on its part to be performed under any lease
or other contract that is material to the business of Boole and its
subsidiaries taken as a whole.
2.10. Absence of Certain Changes and Events. Except as set forth in
the Boole Reports, other than as a result of the transactions contemplated by
this Agreement, between June 30, 1998 and the date of this Agreement, there has
not been:
2.10.1. Financial Change. Any adverse change in the
financial condition, backlog, operations or business of Boole which
could reasonably be expected to have a Material Adverse Effect on
Boole;
2.10.2. Property Damage. Any damage, destruction, or loss to
the business or properties of Boole (whether or not covered by
insurance) that could reasonably be expected to have a Material
Adverse Effect on Boole;
<PAGE> 7
2.10.3. Dividends. Any declaration, setting aside, or
payment of any dividend or other distribution in respect of the Boole
Common Stock, or any direct or indirect redemption, purchase or any
other acquisition by Boole of any such stock, except pursuant to
Boole's publicly announced stock repurchase program;
2.10.4. Labor Disputes. Any labor dispute (other than
routine grievances); or
2.10.5. Employment Arrangements. Any increase in
compensation, bonus, deferred compensation, stock options or other
consideration of any employee or director other than in the ordinary
course of business consistent with past practice.
2.11. Taxes.
2.11.1. Tax Returns Filed; Taxes Paid. Except with respect
to failures which, in the aggregate, could not reasonably be expected
to have a Material Adverse Effect on Boole, (i) all returns and
reports ("Tax Returns") of or with respect to any and all taxes,
charges, fees, levies, assessments, duties or other amounts payable to
any federal, state, local or foreign taxing authority or agency,
including, without limitation, (x) income, franchise, profits, gross
receipts, minimum, alternative minimum, estimated, ad valorem, value
added, sales, use, service, real or personal property, capital stock,
license, payroll, withholding, disability, employment, social
security, workers compensation, unemployment compensation, utility,
severance, excise, stamp, windfall profits, transfer and gains taxes,
(y) customs, duties, imposts, charges, levies or other similar
assessments of any kind, and (z) interest, penalties and additions to
tax imposed with respect thereto ("Tax" or "Taxes") which are required
to be filed on or before the Closing by or with respect to Boole have
been or will be duly and timely filed, (ii) all Taxes which have
become or will become due with respect to the period covered by each
such Tax Return have been or will be timely paid in full, (iii) all
withholding Tax requirements imposed on or with respect to Boole have
been or will be satisfied in full in all respects, and (iv) no
penalty, interest or other charge is or will become due with respect
to the late filing of any such Tax Return or late payment of any such
Tax.
2.11.2. Open Returns Disclosed. All federal and state income
and franchise Tax Returns of or with respect to Boole with unexpired
or extended statutes of limitations which have been audited by the
applicable governmental authority are set forth in Section 2.11 of the
Boole Disclosure Schedule.
2.11.3. Extensions Disclosed. As of the date of this
Agreement, there is not in force any extension of time with respect to
the due date for the filing of any federal or state income or
franchise Tax Return of or with respect to Boole or any waiver or
agreement for any extension of time for the assessment or payment of
any federal or state income or franchise Tax of or with respect to
Boole.
2.11.4. Claims Disclosed. There is no claim against Boole
for any Taxes, and no assessment, deficiency or adjustment has been
asserted or proposed in writing with respect
<PAGE> 8
to any Tax Return of or with respect to Boole other than those which
could not reasonably be expected to have a Material Adverse Effect on
Boole.
2.11.5. Scheduled Tax Liabilities Sufficient. The total
amounts set up as liabilities for current and deferred Taxes in the
financial statements referred to in Section 2.5 of this Agreement are
sufficient to cover in all material respects the payment of all Taxes,
whether or not assessed or disputed, which are, or are hereafter found
to be, or to have been, due by or with respect to Boole up to and
through the periods covered thereby.
2.11.6. Tax Allocation Agreements. There are no Tax
allocation or sharing agreements other than between or among Boole and
its wholly owned subsidiaries.
2.11.7. No Tax Liens. Except for statutory liens for current
Taxes not yet due, no material liens for Taxes exist upon the assets
of Boole.
2.11.8. Change of Accounting Method. Boole will not be
required to include any amount in income for any taxable period
beginning after September 30, 1997 as a result of a change in
accounting method for any taxable period or pursuant to any agreement
with any Tax authority with respect to any such taxable period.
2.11.9. Partnerships; Foreign Corporations. As of the date
of this Agreement, none of the property of Boole is held in an
arrangement for which partnership Tax Returns are being filed, and as
of the date of this Agreement, Boole does not own any interest in any
controlled foreign corporation (as defined in section 957 of the
Code), passive foreign investment company (as defined in section 1296
of the Code) or other entity the income of which is required to be
included in the income of Boole.
2.11.10. Safe Harbor Leases; Tax-Exempt Use Property. As of
the date of this Agreement, none of the property of Boole is subject
to a safe-harbor lease (pursuant to section 168(f)(8) of the Internal
Revenue Code of 1954 as in effect after the Economic Recovery Tax Act
of 1981 and before the Tax Reform Act of 1986) or is "tax-exempt use
property" (within the meaning of section 168(h) of the Code) or
"tax-exempt bond financed property" (within the meaning of section
168(g)(5) of the Code).
2.11.11. Section 341(f) Election. Boole has not made an
election under section 341(f) of the Code.
2.11.12. Actions Preventing Treatment as a Reorganization.
Neither Boole nor, to the knowledge of Boole, any of its affiliates
has taken or agreed to take any action that would prevent the Merger
from constituting a reorganization qualifying under the provisions of
Section 368(a) of the Code.
<PAGE> 9
2.12. Intellectual Property. For purposes of this Section 2.12 and
Section 2.14, "Third Party Distributed Software" means the third party software
programs currently being distributed by Boole, whether as integrated or bundled
with any of Boole's software products or as a separate stand-alone product, and
"Internally Developed Software" means all software programs developed for or on
behalf of Boole and currently being distributed by Boole and all software
products or programs under development by Boole but not currently distributed,
other than Third Party Distributed Software. Third Party Distributed Software
and Internally Developed Software shall collectively be referred to as the
"Software Programs."
2.12.1. Ownership. Boole exclusively owns all Internally
Developed Software, including without limitation those Software
Programs listed on Section 2.12.1 of the Boole Disclosure Schedule,
free and clear of all mortgages, pledges, liens, security interests,
conditional sales agreements, encumbrances or charges of any kind
(other than object code end-user licenses in the ordinary course of
business and Marketing Agreements). Boole exclusively owns all
material patents, trademarks, service marks, trade names and
copyrights (including registrations, licenses and applications
pertaining thereto) and all other material intellectual property
rights, trade secrets and other confidential or proprietary
information, processes and formulae embodied in the Internally
Developed Software (the "Intellectual Property"), free and clear of
all mortgages, pledges, liens, security interests, conditional sales
agreements, encumbrances or charges of any kind (other than object
code end-user licenses in the ordinary course of business and
Marketing Agreements). Section 2.12 of the Boole Disclosure Schedule
contains a complete list of all registered trademarks and service
marks, all reserved trade names, all registered copyrights and all
filed patent applications and issued patents relating to the
Internally Developed Software.
2.12.2. Notices. In no instance has the eligibility of the
Internally Developed Software for protection under applicable
copyright law been forfeited to the public domain by omission of any
required notice or any other action.
2.12.3. Protection. The source code and related technical
system documentation for the Internally Developed Software are
protected by Boole as trade secrets in accordance with trade secret
protections sufficient to maintain trade secret status under
applicable law. The source code and related technical system
documentation for the Internally Developed Software have been
disclosed by Boole only to (i) employees and contractors who have had
a "need to know" the contents thereof in connection with the
performance of their duties to Boole and who have executed
nondisclosure agreements substantially in the form provided by Boole
to BMC, and (ii) third parties under source code escrow agreements.
2.12.4. Personnel. All personnel who during the three years
prior to the date hereof have been employees, agents, consultants and
contractors of Boole and who (on behalf of Boole) have contributed to
or participated in the conception and development of Internally
Developed Software and related technical documentation that is
material to the operation of Boole's business have executed
nondisclosure agreements substantially in the form provided by Boole
to BMC and have executed appropriate instruments of assignment in
favor of
<PAGE> 10
Boole as assignee that have conveyed to Boole, effective, and
exclusive ownership of all tangible and intangible property thereby
arising.
2.12.5. Third-Party Software. Section 2.12.5 of the Boole
Disclosure Schedule contains a complete list of material Third Party
Distributed Software. Section 2.12.5 of the Boole Disclosure Schedule
lists all license agreements for the use of all such material Third
Party Software and, if any such software is not licensed, the basis of
the use of such software by Boole. Boole has not taken any action
that could, or failed to take any action, the failure of which could,
reasonably be expected to (i) give rise to the termination by a
licensor of Boole's license to distribute any material Third Party
Distributed Software or (ii) materially restrict Boole's right of use
of any material Third Party Distributed Software under any license
agreement or other right of use, in each case subject to any right
Boole may have to receive notice of and/or cure or remedy such action
or failure to act.
2.12.6. No Infringement. The Internally Developed Software
and, to Boole's knowledge as of the date of this Agreement, the Third
Party Distributed Software do not infringe and will not infringe any
copyright or trade secret of any person or entity, and, to Boole's
knowledge, no part of the Internally Developed Software nor the use
thereof for their intended purposes (and to Boole's knowledge as of
the date of this Agreement, no part of the Third Party Distributed
Software nor the use thereof for their intended purposes) infringes or
will infringe any valid and subsisting patent or other exclusionary
right of any third party. As of the date of this Agreement, no
written claims have been asserted against Boole by any person or
entity as to the use of any of the Intellectual Property.
2.12.7. Integrity. Except with respect to demonstration or
trial copies, no portion of the Internally Developed Software or, to
Boole's knowledge as of the date of this Agreement, the Third Party
Distributed Software contains any "back door," "time bomb," "Trojan
horse," "worm," "drop dead device," "virus" or other software routines
or hardware components designed to permit unauthorized access or to
disable or erase software, hardware, or data without the consent of
the user.
2.12.8. Year 2000. The Software Programs are Year 2000
Compliant. As used in this Section 2.12.8 and Section 3.15, "Year
2000 Compliant" means that (a) the performance of the software will
not be adversely affected by any date change involving dates in the
20th and 21st century and (b) use of the software will not end
abnormally or provide invalid or incorrect results as a result of date
data, specifically including date data which represents or references
different centuries or more than one century, provided that such date
data is in the correct format for such software as specified in the
applicable documentation for such software.
2.13. Intentionally omitted.
2.14. Software Contracts.
<PAGE> 11
2.14.1. End-User Agreements. Section 2.14.1 of the Boole
Disclosure Schedule sets forth a complete example of each of Boole's
current standard end user license agreements with respect to the
Internally Developed Software (the "Standard Licenses"). Section
2.14.1 of the Boole Disclosure Schedule accurately identifies each
license transaction (with customer name redacted if desired) which
generated $200,000 or more of revenues during the fiscal year ended
September 30, 1998.
2.14.2. Marketing Agreements. Section 2.14.2 of the Boole
Disclosure Schedule sets forth a complete list of all contracts,
agreements, licenses, or other commitments or arrangements in effect
with respect to the marketing, remarketing, distribution, licensing or
promotion of the Software Programs or any other Technical
Documentation or the Intellectual Property by any independent
salesperson, distributor, sublicensor or other remarketer or sales
organization (the "Marketing Agreements"), which generated 5% or more
of Boole's revenues during the preceding four fiscal quarters.
2.15. Title to Properties. With minor exceptions which in the
aggregate are not material, and except for merchandise and other property and
assets sold, used or otherwise disposed of in the ordinary course of business
for fair value or no longer necessary for the operation of Boole's business,
Boole has good and valid title to or valid leasehold interests in all its
properties, interests in properties and assets, real and personal, reflected in
the most recent balance sheet of Boole included in the Boole Reports, free and
clear of any Encumbrance of any nature whatsoever, except (i) liens and
Encumbrances reflected in the most recent balance sheet of Boole included in
the Boole Reports, (ii) liens for current taxes or other governmental charges
or levies not yet due and payable, (iii) Encumbrances that are created, arise
or exist under or in connection with any leases or other contracts or other
matters referred to in the Boole Disclosure Schedule, (iv) Encumbrances that
relate to or are created, arise or exist in connection with, any legal
proceeding that is being contested in good faith, and (v) such imperfections of
title, easements and Encumbrances, if any, as do not and will not materially
detract from the value of the property subject thereto or affected thereby, or
otherwise materially impair business operations. All leases pursuant to which
Boole leases (whether as lessee or lessor) any substantial amount of real or
personal property are in good standing, valid and effective, except as validity
or effectiveness may be limited by (i) bankruptcy, insolvency, reorganization,
debtor relief or similar laws affecting the rights of creditors generally, and
(ii) general principles of equity; and there is not, under any such leases, any
existing or prospective default or event of default or event which with notice
or lapse of time, or both, would constitute a default by Boole and in respect
to which Boole has not taken reasonable steps to prevent a default from
occurring. The buildings and premises of Boole that are used in its business
are in good and sufficient operating condition and repair for the continued
conduct of Boole's business on a basis consistent with past practice, subject
to ordinary wear and tear. All major items of equipment of Boole are in good
and sufficient operating condition and in a state of reasonable maintenance and
repair for the continued conduct of Boole's business on a basis consistent with
past practice, ordinary wear and tear excepted, and are free from any known
defects except as may be repaired by routine maintenance and such minor defects
as do not substantially interfere with the continued use thereof in the conduct
of normal operations.
2.16. Intentionally omitted.
<PAGE> 12
2.17. Environmental Compliance.
2.17.1. Environmental Conditions. There are no materials or
substances that are regulated by Applicable Environmental Laws (as
defined in Section 2.17.3) on any real property owned by Boole as a
result of the actions of Boole or, to its knowledge, of any third
party or otherwise, that could reasonably be expected to have a
Material Adverse Effect on Boole.
2.17.2. Permits, etc. Boole has in full force and effect all
environmental permits, licenses, approvals and other authorizations
required under Applicable Environmental Laws to conduct its operations
and is operating in material compliance thereunder.
2.17.3. Compliance. Boole's operations and use of its assets
do not violate any applicable federal, state or local law, statute,
ordinance, rule, regulation, order or notice requirement pertaining to
(a) the condition or protection of air, groundwater, surface water,
soil, or other environmental media, (b) the environment, including
natural resources or any activity which affects the environment, or
(c) the regulation of any pollutants, contaminants, waste, substances
(whether or not hazardous or toxic), including, without limitation,
the Comprehensive Environmental Response Compensation and Liability
Act (49 U.S.C. Section 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 1609 et seq.), the
Clean Water Act (33 U.S.C. 1251 et seq.), the Clean Air Act (42 U.S.C.
Section 7401 et seq.), the Toxic Substances Control Act (17 U.S.C.
Section 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. Section
201 and Section 300f et seq.), the Rivers and Harbors Act (33 U.S.C.
Section 401 et seq.), the Oil Pollution Act (33 U.S.C. Section 2701
et seq.) and analogous state and local provisions, as any of the
foregoing may have been amended or supplemented from time to time
(collectively the "Applicable Environmental Laws"), except for
violations which, either singly or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on Boole.
2.17.4. Environmental Claims. No written notice has been
served on Boole from any entity, governmental agency or individual
regarding any existing, pending or threatened investigation or inquiry
related to alleged violations under any Applicable Environmental Laws,
or regarding any claims for remedial obligations or contribution under
any Applicable Environmental Laws, other than any of the foregoing
which, either singly or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on Boole or which have been
cured or corrected in all material respects.
2.17.5. Renewals. Boole does not know of any reason it would
not be able to renew any of the permits, licenses, or other
authorizations required pursuant to any Applicable Environmental Laws
to operate and use any of Boole's assets for their current purposes
and uses.
2.17.6. Environmental Documents. There are no environmental
orders or decrees material to current operations conducted by Boole
and there have not been any environmental
<PAGE> 13
audits, assessments, investigations or reviews conducted within the
last five years on any property owned or used by Boole.
2.18. Compliance with Other Laws. Except as set forth in the Boole
Reports, Boole is not in violation of or in default with respect to the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.) as amended
("OSHA"), or any other applicable law or any applicable rule, regulation, or
any writ or decree of any court or any governmental commission, board, bureau,
agency, or instrumentality, or delinquent with respect to any report required
to be filed with any governmental commission, board, bureau, agency or
instrumentality, except for violations or defaults which, either singly or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect on Boole.
2.19. Finder's Fee. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by Boole and its
counsel directly with BMC and its counsel, without the intervention on behalf
of Boole of any other person as the result of any act of Boole, and so far as
is known to Boole, without the intervention on behalf of Boole of any other
person in such manner as to give rise to any valid claim against any of the
parties hereto for a brokerage commission, finder's fee or any similar
payments, other than financial advisory fees to be paid by Boole to Morgan
Stanley & Co. in connection with the transaction under financial arrangements
disclosed to BMC.
2.20. Compliance with ERISA. Boole has made available to BMC a copy
of each Boole Plan, any related summary plan description, trust agreement and
annuity or insurance contract, if any, and each plan's most recent annual
report filed with the Internal Revenue Service, if any, and: (i) each Boole
Plan has been maintained and administered in material compliance with its terms
and with the requirements prescribed by any and all applicable statutes,
orders, rules and regulations, and is, to the extent required by applicable law
or contract, fully funded without having any deficit or unfunded actuarial
liability; (ii) all required contributions under any such plans have been made
and the applicable funds have been funded in accordance with the terms thereof
and no past service funding liabilities exist thereunder; (iii) each Boole Plan
that is required or intended to be qualified under applicable law or registered
or approved by a governmental agency or authority has been so qualified,
registered or approved by the appropriate governmental agency or authority,
and, to the knowledge of Boole, nothing has occurred since the date of the last
qualification, registration or approval to materially and adversely affect, or
cause, the appropriate governmental agency or authority to revoke such
qualification, registration or approval; (iv) to the extent applicable, the
Boole Plans comply, in all material respects, with the requirements of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the
Code, and any Boole Plan intended to be qualified under Section 401(a) of the
Code has been determined by the Internal Revenue Service to be so qualified
and, to the knowledge of Boole, nothing has occurred to cause the loss of such
qualified status; (v) no Boole Plan is covered by Title IV of ERISA or Section
412 of the Code; (vi) there are no pending or, to the knowledge of Boole,
anticipated material claims against or otherwise involving any of the Boole
Plans and no suit, action or other litigation (excluding claims for benefits
incurred in the ordinary course of Boole Plan activities) has been brought
against or with respect to any Boole Plan; (vii) all material contributions,
reserves or premium payments, required to be made as of the date hereof to the
Boole Plans have been made or provided for; (viii) Boole has
<PAGE> 14
not incurred any liability under subtitle C or D of Title IV of ERISA with
respect to any "single-employer plan," within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by Boole; (ix) Boole has
not incurred any withdrawal liability under Subtitle E of Title IV of ERISA
with respect to any "multiemployer plan," within the meaning of Section
4001(a)(3) of ERISA; (x) Boole has substantially performed all obligations,
whether arising by law or by contract, required to be performed by it in
connection with the Boole Plans; (xi) to the knowledge of Boole, no act,
omission or transaction has occurred which would result in imposition on Boole
of (a) a civil penalty assessed pursuant to subsections (c), (i) or (l) of
Section 502 of ERISA, (b) breach of fiduciary duty liability damages under
Section 409 of ERISA or (c) a tax imposed pursuant to Chapter 43 of Subtitle D
of the Code; (xii) in connection with the consummation of the transactions
contemplated by this Agreement, no payments have or will be made hereunder,
under the Boole Plans or otherwise by Boole which, in the aggregate, would
result in imposition of the sanctions imposed under Sections 280G and 4999 of
the Code; and (xiii) Boole has no obligations for retiree health and life
benefits under any Boole Plan, except as set forth on Section 2.20 of the Boole
Disclosure Schedule, and there are no restrictions on the rights of Boole to
amend or terminate any such Boole Plan without incurring any liability
thereunder.
2.21. Investigations; Litigation. Except as required pursuant to
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and
regulations promulgated thereunder (collectively, "HSR") and any applicable
comparable foreign laws and regulations, (i) no investigation or review by any
governmental entity with respect to Boole or any of the transactions
contemplated by this Agreement is pending or, to Boole's knowledge is, as of
the date of this Agreement, threatened, nor, as of the date of this Agreement,
has any governmental entity indicated to Boole an intention to conduct the
same, and (ii) except as set forth in the Boole Reports, as of the date of this
Agreement, there is no action, suit or proceeding pending or, to Boole's
knowledge, threatened against or affecting Boole at law or in equity, or before
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, which either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on
Boole.
2.22. Product Warranty. There are no existing liabilities or, to
the knowledge of Boole, likely liabilities, arising from claims regarding the
performance or design of the products and services sold by Boole either in the
past or at present for which adequate reserves have not been established on the
most recent balance sheet in the Boole Reports that in the aggregate could
reasonably be expected to have a Material Adverse Effect on Boole.
2.23. Information for Proxy Statement. All information and data
(including financial statements) concerning Boole which is or will be furnished
by Boole and included in the registration statement and proxy statement
(collectively, the "Proxy Statement") issued in connection with the
transactions contemplated by this Agreement will not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements contained therein, in light of the circumstances
in which they were made, not misleading.
<PAGE> 15
2.24. Investment Company. Boole is not an "investment company," or
an "affiliated person of" or "promoter" or "principal underwriter" of an
investment company, as those terms are defined in the Investment Company Act of
1940, as amended (the "Investment Company Act").
2.25. Pooling. Neither Boole, nor to the knowledge of Boole, any of
its affiliates has taken or agreed to take any action that would prevent Boole
from being a "poolable entity" in accordance with generally accepted accounting
principles and the Regulations of the Securities and Exchange Commission.
2.26. Article IX of Boole's Certificate of Incorporation and Section
203 of the Delaware General Corporation Law. As of the date hereof and at all
times on or prior to the Effective Time, neither the provisions of Section A of
Article IX of Boole's Certificate of Incorporation nor Section 203 of the DGCL
are or will apply to this Agreement, the Stock Option Agreement, the Merger or
the transactions contemplated hereby and thereby, including the purchase of
shares of Boole by BMC under the Stock Option Agreement, and the Board of
Directors of Boole, has unanimously approved such transactions.
2.27. Inapplicability of Certain Statutes. Boole is not subject to
any state takeover law that might apply to the Merger or any of the other
transactions contemplated by this Agreement. Boole is not subject to Section
2115 of the California Corporations Code.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BMC AND MERGER SUB
BMC and Merger Sub represent and warrant subject to the exceptions
specifically described in writing in the respective sections of the disclosure
schedule delivered by BMC to Boole and dated the date hereof (the "BMC
Disclosure Schedule") as follows:
3.1. Organization and Standing. Each of BMC and Merger Sub is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, has full requisite corporate power and authority
to carry on its business as it is currently conducted, and to own and operate
the properties currently owned and operated by it and is duly qualified or
licensed to do business and is in good standing as a foreign corporation
authorized to do business in all jurisdictions in which the character of the
properties owned or the nature of the business conducted by it would make such
qualification or licensing necessary, except where the failure to be so
qualified or licensed could not reasonably be expected to have a Material
Adverse Effect on BMC. As hereinafter used in this Article III, the term "BMC"
also includes any and all of its directly and indirectly held subsidiaries,
except where the context indicates to the contrary; provided, however, that for
purposes of Section 3.9, the term "BMC" further includes any corporation,
trade, business or entity under common control with BMC within the meaning of
Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA.
3.2. Agreement Authorized and its Effect on Other Obligations. The
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary
<PAGE> 16
corporate action on the part of BMC and Merger Sub, and this Agreement is a
valid and binding obligation of BMC and Merger Sub enforceable against BMC and
Merger Sub in accordance with its terms, except as enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, debtor relief or similar
laws affecting the rights of creditors generally, and (ii) general principles
of equity. At the Effective Time and except as specified in Section 3.2 of the
BMC Disclosure Schedule, the consummation of the Merger will not conflict with
or result in a violation or breach of any term or provision of, nor constitute
a default under (i) the certificate of incorporation or bylaws of BMC or Merger
Sub or (ii) any indenture, mortgage, deed of trust, lease, contract or other
agreement to which BMC or any of its subsidiaries is a party or by which any of
them or their properties are bound, other than such violations, breaches or
defaults as could not reasonably be expected to have a Material Adverse Effect
on BMC.
3.3. Capitalization. (a) The capitalization of BMC consists of
1,000,000 shares of preferred stock, par value $.01 per share, of which at
September 30, 1998 no shares were issued or outstanding; and 600,000,000 shares
of BMC Common Stock, par value $.01 per share, of which at September 30, 1998,
217,259,162 shares were issued and outstanding, an additional 36,756,693 shares
were reserved for issuance in connection with various BMC benefit plans and an
additional 5,966,100 shares were reserved for issuance upon exercise of
outstanding warrants; at September 30, 1998, 1,531,279 shares of BMC Common
Stock were held in BMC's treasury. Other than as set forth above, BMC has no
outstanding options, warrants or obligations of any kind to issue shares of its
capital stock.
(b) The capitalization of Merger Sub consists of 1,000 shares of
common stock, par value $.01 per share ("Merger Sub Common Stock"), of which as
of the date hereof, 100 were issued and outstanding and none were reserved for
issuance. As of the date hereof, all of the outstanding shares of Merger Sub
Common Stock are owned free and clear of any liens, claims or encumbrances by
BMC.
3.4. Reports and Financial Statements. BMC has previously
furnished or made available (including through the SEC EDGAR system) to Boole
true and complete copies of (a) all annual reports filed by BMC with the
Commission pursuant to the Exchange Act, since September 30, 1995, (b) BMC's
quarterly and other reports filed with the Commission since September 30, 1995,
(c) all definitive proxy solicitation materials filed by BMC with the
Commission since September 30, 1995, and (d) any registration statements of BMC
declared effective by the Commission since September 30, 1995. The
consolidated financial statements of BMC and its subsidiaries included in BMC's
most recent report on Form 10-K and most recent report on Form 10-Q, and any
other reports filed with the Commission by BMC under the Exchange Act
subsequent thereto (the "BMC Reports") were, or (if filed after the date
hereof) will be, prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved and fairly
present, or will fairly present, the consolidated financial position for BMC
and its subsidiaries as of the dates thereof and the consolidated results of
their operations and changes in financial position for the periods then ended
(except with respect to interim period financial statements, for normal
year-end adjustments which are not material and for the absence of footnotes).
The BMC Reports did not at the time each of the BMC Reports was filed with the
Commission (or, if amended or superseded by a subsequent filing, then on the
date of such filing), and (if filed after the date hereof) will not
<PAGE> 17
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Since September 30, 1995, BMC has filed with the Commission all reports
required to be filed by BMC under the Exchange Act and the rules and
regulations of the Commission.
3.5. Liabilities. BMC has no liabilities of the type required to
be disclosed in the consolidated financial statements of BMC prepared in
accordance with generally accepted accounting principles applied on a
consistent basis, except for: (i) liabilities disclosed in the financial
statements (including any related notes) contained in the BMC Reports and (ii)
liabilities incurred in the ordinary course of business consistent with past
practices.
3.6. No Undisclosed Defaults. Except as may be specified in the
BMC Reports, BMC is not in default in any material obligation or covenant on
its part to be performed under any lease or other contract that is material to
the business of BMC and its subsidiaries taken as a whole.
3.7. Absence of Certain Changes and Events in BMC. Except as set
forth in the BMC Reports, other than as a result of the transactions
contemplated by this Agreement, between June 30, 1998 and the date of this
Agreement, there has not been:
3.7.1. Financial Change. Any adverse change in the
financial condition, operations, or business of BMC which could
reasonably be expected to have a Material Adverse Effect on BMC;
3.7.2. Property Damage. Any damage, destruction, or loss to
the business or properties of BMC (whether or not covered by
insurance) that could reasonably be expected to have a Material
Adverse Effect on BMC;
3.7.3. Dividends. Any declaration, setting aside, or
payment of any dividend or other distribution in respect of BMC's
capital stock, or any direct or indirect redemption, purchase or any
other acquisition of such stock; or
3.7.4. Labor Disputes. Any labor dispute (other than
routine grievances).
3.8. Finder's Fee. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by BMC and its
counsel, directly with Boole or its counsel, without the intervention on behalf
of BMC of any other person as the result of an act of BMC and, so far as known
to BMC, without the intervention on behalf of BMC of any other person in such
manner as to give rise to any valid claim against any of the parties hereto for
a brokerage commission, finder's fee, or any similar payments, other than
financial advisory fees to be paid by BMC to Goldman, Sachs & Co. in connection
with the merger contemplated by this Agreement.
3.9. Compliance With ERISA. BMC will make available to Boole a
copy of all bonus, incentive compensation, stock option, deferred compensation,
profit-sharing, retirement, pension, welfare, severance pay, supplemental
income, group insurance, death benefit, or other fringe benefit
<PAGE> 18
plans, arrangements or trust agreements covering active, former or retired
employees of BMC (collectively, the "BMC Plans"), any related summary plan
description, trust agreement and annuity or insurance contract, if any, and
each plan's most recent annual report filed with the Internal Revenue Service,
if any, the most recent reports with respect to such plans, trust agreements
and annuity or insurance contracts filed with any governmental agency, all
Internal Revenue Service determination letters that have been received with
respect to such plans and: (i) each BMC Plan has been maintained and
administered in material compliance with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules and regulations,
and is, to the extent required by applicable law or contract, fully funded
without having any deficit or unfunded actuarial liability; (ii) all required
contributions under any such plans have been made and the applicable funds have
been funded in accordance with the terms thereof and no past service funding
liabilities exist thereunder; (iii) each BMC Plan that is required or intended
to be qualified under applicable law or registered or approved by a
governmental agency or authority has been so qualified, registered or approved
by the appropriate governmental agency or authority, and nothing has occurred
since the date of the last qualification, registration or approval to adversely
affect, or cause, the appropriate governmental agency or authority to revoke
such qualification, registration or approval; (iv) to the extent applicable,
the BMC Plans comply, in all material respects, with the requirements of ERISA
and the Code, and any BMC Plan intended to be qualified under Section 401(a) of
the Code has been determined by the Internal Revenue Service to be so qualified
and nothing has occurred to cause the loss of such qualified status; (v) no BMC
Plan is covered by Title IV of ERISA or Section 412 of the Code; (vi) there are
no pending or anticipated material claims against or otherwise involving any of
the BMC Plans and no suit, action or other litigation (excluding claims for
benefits incurred in the ordinary course of BMC Plan activities) has been
brought against or with respect to any BMC Plan; (vii) all material
contributions, reserves or premium payments, required to be made as of the date
hereof to the BMC Plans have been made or provided for; (viii) BMC has not
incurred any liability under subtitle C or D of Title IV of ERISA with respect
to any "single-employer plan," within the meaning of Section 4001(a) of ERISA,
currently or formerly maintained by BMC; (ix) BMC has not incurred any
withdrawal liability under Subtitle E of Title IV of ERISA with respect to any
"multiemployer plan," within the meaning of Section 4001(a)(3) of ERISA; (x)
BMC has substantially performed all obligations, whether arising by law or by
contract, required to be performed by it in connection with the BMC Plans; (xi)
no act, omission or transaction has occurred which would result in imposition
on BMC of (a) a civil penalty assessed pursuant to subsections (c), (i) or (l)
of Section 502 of ERISA, (b) breach of fiduciary duty liability damages under
Section 409 of ERISA or (c) a tax imposed pursuant to Chapter 43 of Subtitle D
of the Code; (xii) in connection with the consummation of the transactions
contemplated by this Agreement, no payments have or will be made hereunder,
under the BMC Plans or otherwise by BMC which, in the aggregate, would result
in imposition of the sanctions imposed under Sections 280G and 4999 of the
Code; and (xiii) BMC does not have any obligations for retiree health and life
benefits under any BMC Plan, except as set forth on Section 3.9 of the BMC
Disclosure Schedule, and there are no restrictions on the rights of BMC to
amend or terminate any such BMC Plan without incurring any liability
thereunder.
3.10. Investigations; Litigation. Except as required pursuant to
HSR and any applicable comparable foreign laws and regulations, (i) no
investigation or review by any governmental entity with respect to BMC in
connection with any of the transactions contemplated by this Agreement is
<PAGE> 19
pending or, to BMC's knowledge is, as of the date of this Agreement,
threatened, nor, as of the date of this Agreement, has any governmental entity
indicated to BMC an intention to conduct the same and (ii) except as set forth
in the BMC Reports, as of the date of this Agreement, there is no action, suit
or proceeding pending or, to BMC's knowledge, threatened against or affecting
BMC or its subsidiaries at law or in equity, or before any federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, which either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on BMC.
3.11. Information for Proxy Statement. All information and data
(including financial statements) concerning BMC which is or will be furnished
by BMC and included in the Proxy Statement to be issued in connection with the
transactions contemplated by this Agreement will not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements contained therein, in light of the circumstances
in which they were made, not misleading.
3.12. Actions Preventing Treatment as a Reorganization. Neither BMC
nor, to the knowledge of BMC, any of its affiliates has taken or agreed to take
any action that would prevent the Merger from constituting a reorganization
qualifying under the provisions of Section 368(a) of the Code. Merger Sub was
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement, has engaged in no other business activities and has conducted
its operations only as contemplated by this Agreement.
3.13. Pooling. Neither BMC, nor to the knowledge of BMC, any of its
affiliates has taken or agreed to take any action that would prevent the Merger
from being treated as a "pooling of interests" in accordance with generally
accepted accounting principles and the Regulations of the Commission (a
"Pooling Transaction").
3.14. BMC Common Stock. The BMC Common Stock to be issued in
connection with the Merger has been duly authorized by all necessary corporate
action, and when issued in accordance with this Agreement, will be validly
issued, fully paid and nonassessable and not subject to preemptive rights.
3.15. Year 2000. All software programs currently being marketed by
BMC are Year 2000 Compliant.
ARTICLE IV
OBLIGATIONS PENDING EFFECTIVE TIME
4.1. Agreements of Boole. Boole agrees that from the date hereof
to the Effective Time, except (i) to the extent BMC shall otherwise consent in
writing (which consent shall not be unreasonably withheld or delayed) or (ii)
as set forth or referred to in the section of the Boole Disclosure Schedule
corresponding to the respective section of this Article IV, it will:
<PAGE> 20
4.1.1. Maintenance of Present Business. Other than as
contemplated by this Agreement, operate its business only in the
usual, regular, and ordinary manner in an effort to maintain the
goodwill it now enjoys and, to the extent consistent with such
operation, use all reasonable efforts to preserve intact its present
business organization, keep available the services of its present
officers and employees, and preserve its relationships with customers,
suppliers, jobbers, distributors, and others having business dealings
with it, and in connection therewith it shall not substantially and
adversely deviate from its licensing and pricing practices;
4.1.2. No Delay. Not take any action or enter into any
transaction which would materially affect the ability of Boole to, or
materially delay Boole's ability to, complete the transactions
contemplated by this Agreement;
4.1.3. Maintenance of Books and Records. Maintain its books
of accounts and records in the usual, regular, and ordinary manner, in
accordance with generally accepted accounting principles applied on a
consistent basis;
4.1.4. Compliance with Law. Duly comply with all laws
applicable to it and to the conduct of its business, except where the
failure to comply with such laws would not have a Material Adverse
Effect on Boole;
4.1.5. Compliance with Agreement. At its expense, take all
commercially reasonable actions as may be necessary, advisable or
proper (i) to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated
by this Agreement, (ii) to insure that the representations and
warranties made by it herein are true and correct at the Effective
Time such that the condition contained in Section 5.2.1 would be
satisfied, (iii) to fully perform all covenants made by it herein and
(iv) to satisfy timely all other obligations imposed upon it by this
Agreement;
4.1.6. Inspection. Upon reasonable advance notice, permit
BMC and its officers and authorized representatives, during normal
business hours, to inspect its records and to consult with its
officers, employees, attorneys, and agents for the purpose of
determining the accuracy of the representations and warranties
hereinabove made and the compliance with covenants contained in this
Agreement; provided, however, that Boole shall not be required to
permit any inspection, or to disclose any information, that in the
reasonable judgment of Boole would (i) result in the disclosure of any
trade secrets of third parties, (ii) violate any obligation of Boole
with respect to confidentiality, (iii) jeopardize protections afforded
Boole under the attorney-client privilege or the attorney work product
doctrine, or (iv) materially interfere with the conduct of Boole's
business; and
4.1.7. Maintenance of Intellectual Property. Not take any
action that would, or not fail to take any action the failure of which
would, materially and adversely affect its Intellectual Property.
<PAGE> 21
4.2. Agreements of BMC and Boole. Each party agrees to take (or
not to take, as the case may be) the following actions after the date hereof:
4.2.1. Hart-Scott-Rodino. Each party shall promptly file
such materials as are required under HSR with respect to the
transactions contemplated hereby and shall cooperate with the other
party to the extent necessary to assist the other party in the
preparation of such filings. Each party shall promptly make and
effect all other registrations, filings and submissions required to be
made or effected by it pursuant to the Securities Act, the Exchange
Act and any other applicable legal requirements with respect to the
Merger. Without limiting the generality of the foregoing, each party
agrees to (i) promptly provide all information requested by any
governmental entity in connection with the Merger or any of the other
transactions contemplated by this Agreement; (ii) promptly take, and
cause its affiliates to take, all actions and steps necessary to
obtain any antitrust clearance or similar clearance required to be
obtained from the Federal Trade Commission, the Department of Justice,
any state attorney general, any foreign competition authority or any
other governmental entity in connection with the transactions
contemplated by this Agreement; (iii) give the other party prompt
notice of the commencement of any investigation, action or legal
proceeding by or before any governmental entity with respect to the
Merger or any of the other transactions contemplated by this
Agreement; (iv) keep the other party informed as to the status of any
such investigation, action or legal proceeding, and (v) promptly
inform the other party of any communication to or from the Federal
Trade Commission, the Department of Justice or any other governmental
entity regarding the Merger. Each party will consult and cooperate
with the other parties and will consider in good faith the views of
the other parties in connection with any analysis, appearance,
presentation, memorandum, brief, argument, opinion or proposal made or
submitted in connection with any investigation, action or legal
proceeding under or relating to HSR or any other federal or state or
foreign antitrust, competition or fair trade law. In addition, except
as may be prohibited by any governmental entity or by any law, rule or
regulation, in connection with any investigation, action or legal
proceeding under or relating to HSR or any other federal or state or
foreign antitrust, competition or fair trade law or any other similar
investigation, action or legal proceeding, each party hereto will
permit authorized representatives of the other party to be present at
each meeting or conference relating to any such investigation, action
or legal proceeding and to have access to and be consulted in
connection with any document, opinion or proposal made or submitted to
any governmental entity in connection with any such investigation,
action or legal proceeding;
4.2.2. Proxy Statement. Each party shall cooperate in the
preparation and prompt filing of the Proxy Statement with the
Commission with respect to the meeting of Boole's stockholders called
for the purpose of, among other things, securing stockholder approval
of the Merger. Each party shall use all reasonable efforts to have
the Proxy Statement declared effective by the Commission as promptly
as practicable after it is filed with the Commission;
4.2.3. Notice of Material Development. Each party will
promptly notify the other party in writing of (i) any event occurring
subsequent to the date of this Agreement which
<PAGE> 22
would render any representation or warranty of such party contained in
this Agreement untrue or inaccurate and which would reasonably be
expected to result in a Material Adverse Effect, (ii) any Material
Adverse Effect on such party and (iii) any material breach by such
party of any covenant or agreement contained in this Agreement;
4.2.4. Pooling. Each party shall use all reasonable efforts
to cause the Merger to be treated for financial accounting purposes as
a Pooling Transaction, and shall not take, and shall use all
reasonable efforts to prevent any affiliate of such party from taking,
any actions which could prevent the Merger from being treated for
financial accounting purposes as a Pooling Transaction; and
4.2.5. Tax Treatment. Neither party shall (before or after
the Effective Time) take any action or fail to take any action which
action or failure to act would prevent, or would reasonably be likely
to prevent, the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code. Each party shall use all
reasonable efforts to obtain the opinions of counsel referred to in
Sections 5.1.8 and 5.2.4, respectively.
4.3. Additional Agreements of Boole. Boole agrees that from the
date hereof to the Effective Time, except (i) to the extent BMC shall otherwise
consent in writing (which consent shall not be unreasonably withheld or
delayed) or (ii) as set forth or referred to in the section of the Boole
Disclosure Schedule corresponding to the respective section of this Article IV,
it will:
4.3.1. Prohibition of Certain Employment Contracts. Not
enter into any contracts of employment which (i) cannot be terminated
on notice of 14 days or less without the payment of severance
compensation or (ii) provide for any increase in compensation,
including, without limitation, any modification of any stock option
agreements, outside the ordinary course of business consistent with
past practice, or severance payments or benefits covering a period
beyond the termination date (other than those which BMC has previously
approved) except as contemplated by this Agreement or as may be
required by law;
4.3.2. Prohibition of Certain Loans. Not incur any
indebtedness for borrowed money except for borrowings incurred in the
ordinary course of business consistent with past practices;
4.3.3. Prohibition of Certain Commitments. Not enter into
commitments of a capital expenditure nature which would exceed
$1,000,000, in the aggregate, except as may be necessary for the
maintenance of existing facilities and equipment in good operating
condition and repair in the ordinary course of business and except as
may be required by law;
4.3.4. Intentionally omitted;
4.3.5. Maintenance of Insurance. Maintain insurance (or
self insurance reserves) on its properties and with respect to the
conduct of its business of such kinds and in such substantially
similar amounts as presently carried by it, which insurance (or self
insurance reserves) may be added to from time to time in its
discretion; provided, that if during the
<PAGE> 23
period from the date hereof to and including the Effective Time any of
its property or assets are damaged or destroyed by fire or other
casualty, the obligations of BMC and Boole under this Agreement shall
not be affected thereby (subject, however, to the provision that the
coverage limits of such policies are adequate in amount to cover the
replacement value of such property or assets and loss of profits
during replacement, less commercially reasonable deductibles, if of
material significance to the assets or operations of Boole) but it
shall promptly notify BMC in writing thereof and proceed with the
repair or restoration of such property or assets in such manner and to
such extent as may be approved by BMC, and upon the Effective Time all
proceeds of insurance and claims of every kind arising as a result of
any such damage or destruction shall remain the property of Boole;
4.3.6. Boole Acquisition Proposals.
4.3.6.1. No Solicitation. Not directly or
indirectly, or authorize or permit any of its respective
agents to: (i) solicit, initiate, facilitate or knowingly
encourage (including by way of furnishing information) any
inquiry or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any acquisition or
purchase by a third party (other than BMC or an affiliate of
BMC) of a substantial amount of assets of, or any equity
interest in, Boole or any merger, consolidation, business
combination, sale of securities, recapitalization,
liquidation, dissolution or similar transaction involving
Boole (in each case, other than as permitted by Section 4.1.1,
Section 4.3.8 or any other provision of this Agreement)
(collectively, "Boole Transaction Proposals") or agree to or
endorse any Boole Transaction Proposal or (ii) propose, enter
into or participate in any discussions or negotiations
regarding any Boole Transaction Proposal, or furnish to
another person (other than BMC or a representative of BMC) any
information with respect to its business, properties or assets
for the purpose of facilitating any Boole Transaction
Proposal, provided, however, that nothing contained in this
Section 4.3.6.1 or elsewhere in this Agreement shall prohibit
Boole from (A) furnishing information pursuant to an
appropriate confidentiality letter concerning Boole and its
businesses, properties or assets to a third party who has made
a Superior Boole Transaction Proposal (as defined below), (B)
engaging in discussions or negotiations with a third party who
has made a Superior Boole Transaction Proposal or (C)
following receipt of a Superior Boole Transaction Proposal,
taking and disclosing to its stockholders a position
(including a positive recommendation) with respect thereto or
changing, withdrawing or withholding the approval or
recommendation by Boole's board of directors of this Agreement
or the Merger, but in each case referred to in the foregoing
clauses (A) through (C) only after the board of directors of
Boole concludes in good faith following advice of its outside
counsel, represented by a written opinion, that such action is
reasonably necessary in order for the board of directors of
Boole to comply with its fiduciary obligations to Boole's
stockholders under applicable law. If the board of directors
of Boole receives a Boole Transaction Proposal, then Boole
shall immediately inform BMC of the terms and conditions of
such proposal and the identity of the person making it and
shall keep BMC fully informed of the status and details of any
such Boole Transaction Proposal and of all
<PAGE> 24
steps it is taking in response to such Boole Transaction
Proposal; provided that nothing contained in this Section
4.3.6.1 or elsewhere in this Agreement shall prohibit Boole or
its board of directors from (i) making such disclosure to
Boole's stockholders or taking any action which, in the good
faith judgment of Boole's board of directors based on a
written opinion of its outside counsel, may be required under
applicable law, including Rules 14d-9 and 14e-2 promulgated
under the Exchange Act, or (ii) filing with the Commission a
report on Form 8-K with respect to this Agreement and, only in
the event BMC shall have previously filed a copy of this
Agreement with the Commission, filing a copy of this Agreement
and any related agreements as an exhibit to such report. For
purposes of this Agreement, the term "Superior Boole
Transaction Proposal" shall mean a bona fide Boole Transaction
Proposal that the board of directors of Boole determines in
good faith after consultation with (and based in part on the
advice of) its independent financial advisors to be more
favorable to Boole and Boole's stockholders than the Merger,
is reasonably capable of being financed and is not subject to
any material contingencies relating to financing.
4.3.6.2. Acceptance of Superior Boole Transaction
Proposals. If (i) this Agreement is terminated by BMC or
Boole pursuant to Section 6.1.5 hereof and there shall not
have occurred a Material Adverse Effect on BMC, or (ii) (A)
prior to the time of the meeting of Boole's stockholders at
which a final vote is taken by such stockholders on a proposal
to approve and adopt this Agreement and to approve the Merger,
there is publicly announced by a third party (other than BMC
or an affiliate of BMC) a proposal for Another Boole
Transaction (as defined below); (B) the adoption and approval
of this Agreement and the approval of the Merger by the
holders of a majority of the shares of Boole Common Stock
outstanding as of the record date for such meeting of
stockholders shall not have been obtained at such meeting; (C)
at or prior to the time of such meeting of Boole's
stockholders, there shall not have occurred a Material Adverse
Effect on BMC; and (D) Boole enters into an acquisition
agreement which provides for Another Boole Transaction or
Another Boole Transaction is consummated (in each case with
any third party which after the date of this Agreement and
before termination of this Agreement has publicly announced a
proposal for Another Boole Transaction), in either case within
twelve months after the date of termination of this Agreement,
then, in any such event unless this Agreement has been
terminated by Boole pursuant to Section 6.1.4, Section 6.1.6,
Section 6.1.8 or Section 6.1.9, Boole shall pay to BMC
simultaneously with termination by Boole in the case of the
occurrence of any of the events specified in clause (i) above,
and immediately upon the first to occur of the entering into
an agreement providing for, or the consummation of, Another
Boole Transaction in the case of clause (ii) above (by wire
transfer of immediately available funds to an account
designated by BMC for such purpose), a fee (the "Break-Up
Fee") in an amount equal to $30.0 million. For purposes of
this Paragraph 4.3.6.2, the term "Another Boole Transaction"
shall mean any transaction pursuant to which (1) any person,
entity or group (within the meaning of Section 13(d)(3) of the
Exchange Act) (other than BMC or any affiliate of BMC) (each,
a "Third Party") acquires 50% or
<PAGE> 25
more of the outstanding Boole Common Stock, (ii) a Third Party
acquires 25% or more of the total assets of Boole taken as a
whole, (iii) a Third Party merges, consolidates or combines in
any other way with Boole other than in a transaction in which
holders of Boole Common Stock continue to own at least 75% of
the equity of the surviving corporation, or (iv) Boole
distributes or transfers to its stockholders, by dividend or
otherwise, assets constituting 25% or more of the market value
or earning power of Boole on a consolidated basis (it being
understood that stock of subsidiaries constitute assets of
Boole for purposes of this Paragraph 4.3.6.2).
4.3.7. No Amendment to Certificate of Incorporation, etc.
Not amend its certificate of incorporation or bylaws or other
organizational documents or merge or consolidate with or into any
other corporation or change in any manner the rights of its capital
stock;
4.3.8. No Issuance, Sale, or Purchase of Securities. Not
issue or sell, or issue options or rights to subscribe to, or enter
into any contract or commitment to issue or sell (upon conversion or
otherwise), any shares of its capital stock or subdivide or in any way
reclassify any shares of its capital stock, or acquire, or agree to
acquire, any shares of its capital stock; provided, that nothing in
this Section 4.3.8 or elsewhere in this Agreement shall restrict or
prohibit (a) the issuance by Boole of shares of Boole Common Stock
upon exercise of options previously granted under existing benefit
plans or the issuance of Boole Common Stock under the Boole Employee
Stock Purchase Plan ("ESPP"), (b) the issuance of options to purchase
up to 100,000 shares of Boole Common Stock per calendar quarter so
long as such options (i) are granted at fair market value on the date
of grant, and (ii) vest over four years in accordance with Boole's
normal vesting schedule, (c) the issuance of shares of Boole Common
Stock upon the exercise of the options referred to in clause "(b)" of
this sentence, or (d) Boole from formally issuing option agreements in
connection with option grants approved by Boole's board of directors
or a committee thereof prior to the date of this Agreement;
4.3.9. Prohibition on Dividends. Not declare or pay any
dividend on shares of its capital stock or make any other distribution
of assets to the holders thereof;
4.3.10. Supplemental Financial Statements. Deliver to BMC,
within 90 days after the end of the fiscal year ended September 30,
1998 the audited consolidated financial statements of Boole included
in its report on Form 10-K. Deliver to BMC, within 45 days after the
end of each fiscal quarter of Boole beginning December 31, 1998 and
through the Effective Time, unaudited consolidated balance sheets and
related unaudited statements of income, retained earnings and cash
flows as of the end of each fiscal quarter of Boole, and as of the
corresponding fiscal quarter of the previous fiscal year;
4.3.11. Stockholders' Meeting. Call and hold a meeting of
stockholders as soon as practicable, but in any event no later than 60
days after the Commission has indicated that it has no further
comments on the Proxy Statement for the purpose of considering and
acting upon a proposal to approve this Agreement and the Merger;
provided, however, that if Boole shall fail to hold a meeting of
stockholders by the 60-day deadline solely because of a delay
<PAGE> 26
directly caused by BMC or because of an event outside of the control
of Boole, such 60-day deadline shall be extended by the number of days
by which BMC or the event outside of the control of Boole shall have
been responsible for delaying the Boole stockholders' meeting; and
4.3.12. Union Contracts and Boole Plans. Not (i) enter into
or modify any collective bargaining agreement with any labor union or
other similar representative of employees, (ii) increase the
compensation or benefits of any employee of Boole or any of its
subsidiaries other than in the ordinary course of business, (iii)
except as contemplated by this Agreement, amend or terminate any Boole
Plan, or (iv) enter into or adopt any new employee benefit plan,
policy or arrangement.
4.4. Additional Agreements of BMC. BMC agrees that from the date
hereof to the Effective Time, it will:
4.4.1. Maintenance of Present Business. Other than as
contemplated by this Agreement, operate its business in the usual,
regular, and ordinary manner;
4.4.2. No Delay. Not take any action or enter into any
transaction which would materially affect the ability of BMC to, or
materially delay BMC's ability to, complete the transactions
contemplated by this Agreement;
4.4.3. No Amendment to Certificate of Incorporation, etc.
Except as otherwise provided herein, not amend its certificate of
incorporation or bylaws or other organizational documents or merge
into any other corporation or change in any manner the rights of its
Common Stock;
4.4.4. Inspection. Upon reasonable advance notice, permit
Boole and its officers and authorized representatives, during normal
business hours, to inspect its records and to consult with its
officers, employees, attorneys and agents for the purpose of
determining the accuracy of the representations and warranties
hereinabove made and the compliance with covenants contained in this
Agreement; provided, however, that BMC shall not be required to permit
any inspection, or to disclose any information, that in the reasonable
judgment of BMC would (i) result in the disclosure of any trade
secrets of third parties, (ii) violate any obligation of BMC with
respect to confidentiality, (iii) jeopardize protections afforded BMC
under the attorney-client privilege or the attorney work product
doctrine, or (iv) materially interfere with the conduct of BMC's
business;
4.4.5. No Issuance, Sale, or Purchase of Securities. Not
issue or sell, or issue options (other than (i) options previously
authorized by the compensation committee of BMC's board of directors,
(ii) options granted to new personnel upon commencement of employment
or (iii) options granted in the ordinary course of business as to
three percent (3%) of the outstanding BMC Common Stock) or rights to
subscribe to, or enter into any contract or commitment to issue or
sell (upon conversion or otherwise), any shares of its capital stock
or subdivide or in any way reclassify any shares of its capital stock,
or acquire,
<PAGE> 27
or agree to acquire, any shares of its capital stock; provided, that
nothing in this Section 4.4.5 shall restrict or prohibit the issuance
by BMC of shares of BMC Common Stock upon exercise of options
previously granted under existing employee benefit plans, the issuance
of shares of BMC Common Stock upon exercise of outstanding warrants,
or the issuance of up to 2,000,000 shares of BMC Common Stock in the
acquisition of other businesses in "non-dilutive" (for financial
reporting purposes) transactions if such acquired businesses would not
individually or collectively constitute a "significant subsidiary" of
BMC;
4.4.6. Prohibition on Dividends. Not declare or pay any
dividend on shares of its capital stock or make any other distribution
of assets to the holders thereof;
4.4.7. Issuance of BMC Common Stock. Take all action
reasonably necessary to register the "issuance" of BMC Common Stock to
the stockholders of Boole in connection with the Merger under the
Securities Act of 1933, as amended (the "Securities Act"). BMC also
shall take any action reasonably required to be taken under state blue
sky or securities laws and under other applicable laws, rules and
regulations in connection with the issuance of the BMC Common Stock
pursuant to the Merger and pursuant to all assumed Boole Options;
4.4.8. Listing of BMC Stock. Take such steps as are
required to accomplish, as of the Effective Time, the Notification of
Additional Listing of the shares of BMC Common Stock to be issued
pursuant to this Agreement and pursuant to all assumed Boole Options
on the Nasdaq National Market; and
4.4.9. Compliance with Agreement. At its expense, take all
commercially reasonable actions as may be necessary, advisable or
proper (i) to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated
by this Agreement, (ii) to insure that the representations and
warranties made by it herein are true and correct at the Effective
Time such that the condition contained in Section 5.1.1 would be
satisfied, (iii) to fully perform all covenants made by it herein and
(iv) to satisfy timely all other obligations imposed upon it by this
Agreement.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1. Conditions Precedent to Obligations of Boole. The obligations
of Boole to consummate and effect the Merger shall be subject to the
satisfaction of the following conditions, or to the waiver thereof by Boole in
the manner contemplated by Section 6.4 before the Effective Time:
5.1.1. Representations and Warranties of BMC True at
Effective Time. The representations and warranties of BMC herein
contained shall be, in all respects, true as of and at the Effective
Time with the same effect as though made at such date, except as
affected by transactions permitted or contemplated by this Agreement
and except for those
<PAGE> 28
representations and warranties that address matters only as of a
particular date (which shall remain true and correct as of such
particular date), provided that any inaccuracies in such
representations and warranties will be disregarded if the
circumstances giving rise to all such inaccuracies (considered
collectively) do not constitute, and are not reasonably expected to
result in, a Material Adverse Effect on BMC (it being understood that
any materiality qualifications contained in such representations and
warranties shall be disregarded for this purpose); BMC shall have
performed and complied, in all material respects, with all covenants
required by this Agreement to be performed or complied with by BMC
before the Effective Time; and BMC shall have delivered to Boole a
certificate, dated the Effective Time and signed on behalf of BMC by
its chairman of the board and by its chief financial or accounting
officer to both such effects.
5.1.2. No Material Litigation. No suit, action or other
legal proceeding shall have been commenced by any United States
federal or state, or any European country, governmental entity with
respect to the Merger and shall be pending, before any court or
governmental agency of competent jurisdiction which would reasonably
be expected to have a Material Adverse Effect on BMC.
5.1.3. Stockholder Approval. At the meeting of stockholders
of Boole to be held before the Effective Time, the holders of a
majority of the shares of Boole Common Stock outstanding as of the
record date for such meeting of stockholders shall have approved the
Merger and this Agreement.
5.1.4. Hart-Scott-Rodino, etc. All waiting periods required
by HSR and any applicable comparable European and Japanese laws and
regulations shall have expired with respect to the transactions
contemplated by this Agreement, or early termination with respect
thereto shall have been obtained without the imposition of any
governmental request or order requiring the sale or disposition or
holding separate (through a trust or otherwise) of particular assets
or businesses of BMC, its affiliates or any component of Boole or
other actions as a precondition to the expiration of any waiting
period or the receipt of any necessary governmental approval or
consent.
5.1.5. Registration of BMC Common Stock. At or prior to the
Effective Time the Proxy Statement shall have become effective under
the Securities Act.
5.1.6. Stock Options. BMC shall have made effective
provision for the assumption or substitution at the Effective Time of
all stock options outstanding under plans maintained by or agreements
entered into by Boole.
5.1.7. Ancillary Matters. Boole shall have received a
favorable opinion from Morgan Stanley & Co. for inclusion in the Proxy
Statement as to the fairness, from a financial point of view, to the
Boole stockholders of the Merger Consideration, which opinion shall
not have been withdrawn at the Effective Time.
<PAGE> 29
5.1.8. Tax Opinion. Cooley Godward LLP shall have delivered
to Boole its written opinion (which may be based upon such
representations, warranties and certificates it deems reasonable and
appropriate under the circumstances) as of the date that the Proxy
Statement is first mailed to Boole stockholders substantially to the
effect that (x) the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code, (y) BMC, Merger Sub and Boole
will each be a party to that reorganization within the meaning of
Section 368(b) of the Code, and (z) no gain or loss for U.S. federal
income tax purposes will be recognized by the holders of Boole Common
Stock upon receipt of shares of BMC Common Stock in the merger, except
with respect to any cash received in lieu of a fractional share
interest in BMC Common Stock, and such opinion shall not have been
withdrawn or modified in any material respect; provided, however, that
if Cooley Godward LLP does not render such opinion or withdraws or
modifies such opinion, this condition shall nonetheless be deemed to
be satisfied if counsel to BMC renders such opinion to Boole.
5.2. Conditions Precedent to Obligations of BMC. The obligations
of BMC to consummate and effect the Merger shall be subject to the satisfaction
of the following conditions, or to the waiver thereof by BMC in the manner
contemplated by Section 6.4 before the Effective Time:
5.2.1. Representations and Warranties of Boole True at
Effective Time. The representations and warranties of Boole herein
contained shall be, in all respects, true as of and at the Effective
Time with the same effect as though made at such date, except as
affected by transactions permitted or contemplated by this Agreement
and except for those representations and warranties that address
matters only as of a particular date (which shall remain true and
correct as of such particular date), provided that any inaccuracies in
such representations and warranties will be disregarded if the
circumstances giving rise to all such inaccuracies (considered
collectively) do not constitute, and are not reasonably expected to
result in, a Material Adverse Effect on Boole (it being understood
that any materiality qualifications contained in such representations
and warranties shall be disregarded for this purpose); Boole shall
have performed and complied, in all material respects, with all
covenants required by this Agreement to be performed or complied with
by Boole before the Effective Time; and Boole shall have delivered to
BMC a certificate, dated the Effective Time and signed on behalf of
Boole by its chief executive officer and by its chief financial or
accounting officer to both such effects.
5.2.2. No Material Litigation. No suit, action or other
legal proceeding shall have been commenced by any United States
federal or state, or any European country, governmental entity with
respect to the Merger and shall be pending before any court or
governmental agency of competent jurisdiction which would reasonably
be expected to have a Material Adverse Effect on Boole.
5.2.3. Hart-Scott-Rodino, etc. All waiting periods required
by HSR and any applicable comparable European and Japanese laws and
regulations shall have expired with respect to the transactions
contemplated by this Agreement, or early termination with respect
thereto shall have been obtained without the imposition of any
governmental request or order
<PAGE> 30
requiring the sale or disposition or holding separate (through a trust
or otherwise) of particular assets or business of BMC, its affiliates
or any component of Boole or other actions as a precondition to the
expiration of any waiting period or the receipt of any necessary
governmental approval or consent.
5.2.4. Tax Opinion. Vinson & Elkins L.L.P. shall have
delivered to BMC its written opinion (which may be based upon such
representations, warranties and certificates it deems reasonable and
appropriate under the circumstances) as of the date that the Proxy
Statement is first mailed to Boole stockholders substantially to the
effect that (x) the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code, (y) BMC, Merger Sub and Boole
will each be a party to that reorganization within the meaning of
Section 368(b) of the Code, and (z) BMC, Merger Sub and Boole will not
recognize any gain or loss for U.S. federal income tax purposes as a
result of the Merger, and such opinion shall not have been withdrawn
or modified in any material respect; provided, however, that if Vinson
& Elkins L.L.P. does not render such opinion or withdraws or modifies
such opinion, this condition shall nonetheless be deemed to be
satisfied if counsel to Boole renders such opinion to BMC.
ARTICLE VI
TERMINATION AND ABANDONMENT
6.1. Termination. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated and the Merger
abandoned at any time (whether before or after the approval and adoption
thereof by the stockholders of Boole) before the Effective Time:
6.1.1. By Mutual Consent. By mutual written consent of BMC
and Boole.
6.1.2. By BMC Because of Conditions Precedent. By BMC, if
(i) there has been a breach by Boole of its representations,
warranties, covenants, or agreements set forth in this Agreement if,
as a result of such breach, the conditions set forth in Section 5.2.1
would not be satisfied, and (ii) Boole fails to cure such breach
within 30 business days after written notice thereof from BMC (except
that no cure period shall be provided for any breach by Boole which by
its nature cannot be cured).
6.1.3. By BMC Because of Material Adverse Change. By BMC,
if there has been since September 30, 1998, a Material Adverse Change
with respect to Boole which condition or event shall not have been
ameliorated such that it no longer constitutes a Material Adverse
Change within ten (10) business days following receipt by Boole of
notice from BMC (except that no cure period shall be provided for any
Material Adverse Change which by its nature cannot be cured).
6.1.4. By Boole Because of Conditions Precedent. By Boole,
if (i) there has been a breach by BMC of any of its representations,
warranties, covenants or agreements set forth in this Agreement if, as
a result of such breach, the conditions set forth in Section 5.1.1
<PAGE> 31
would not be satisfied, and (ii) BMC fails to cure such breach within
30 business days after written notice thereof from Boole (except that
no cure period shall be provided for any breach by BMC which by its
nature cannot be cured).
6.1.5. By Boole or BMC Due to a Superior Boole Transaction
Proposal. By Boole or BMC if, before the Effective Time, Boole's
board of directors shall have withdrawn, withheld or modified in a
manner adverse to BMC its approval of this Agreement or the Merger
solely to the extent permitted by the terms, conditions and procedures
set forth in Section 4.3.6.1.
6.1.6. By Boole Because of Material Adverse Change. By
Boole, if there has been since September 30, 1998, a Material Adverse
Change with respect to BMC which condition or event shall not have
been ameliorated such that it no longer constitutes a Material Adverse
Change within ten (10) business days following receipt by BMC of
notice from Boole (except that no cure period shall be provided for
any Material Adverse Change which by its nature cannot be cured).
6.1.7. By BMC or Boole Because of Statute or Order. By BMC
or Boole if (i) a statute, rule, regulation or executive order shall
have been enacted, entered or promulgated after the date of this
Agreement (and shall remain in effect) prohibiting the consummation of
the Merger substantially on the terms contemplated hereby or (ii) an
order, decree, ruling or injunction shall have been entered by a court
of competent jurisdiction after the date of this Agreement (and shall
not have been vacated, withdrawn or overturned) permanently
restraining, enjoining or otherwise prohibiting the consummation of
the Merger substantially on the terms contemplated hereby and such
order, decree, ruling or injunction shall have become final and non-
appealable; provided, that the party seeking to terminate this
Agreement pursuant to this Section 6.1.7 shall have used its
reasonable best efforts to remove such order, decree, ruling or
injunction.
6.1.8. By BMC or Boole if Merger not Effective by June 30,
1999. By either BMC or Boole, if all conditions to consummation of
the Merger shall not have been satisfied or waived on or before June
30, 1999, other than as a result of a breach of this Agreement by the
terminating party.
6.1.9. By BMC or Boole if Merger Cannot be Accounted for as
a Pooling. By BMC or Boole if the Merger cannot for financial
reporting purposes be accounted for as a "pooling of interests";
provided, however, this provision shall not be available to a party
which has taken or has permitted any of its affiliates to take any
action or which has failed to take or has permitted any of its
affiliates to fail to take any action, that either alone or in
combination with actions previously taken, disqualifies the Merger
from such accounting treatment.
6.1.10. By BMC or Boole if Merger Not Approved by Boole
Stockholders. By either BMC or Boole if (i) a meeting of the
stockholders of Boole (including any adjournments thereof) shall have
been held and completed and Boole's stockholders shall have taken a
final vote on a proposal to approve and adopt this Agreement and to
approve the Merger, and
<PAGE> 32
(ii) the adoption and approval of this Agreement and the approval of
the Merger by the holders of a majority of the shares of Boole Common
Stock outstanding as of the record date for such meeting of
stockholders shall not have been obtained.
6.2. Termination by Board of Directors. An election of BMC to
terminate this Agreement and abandon the Merger as provided in Section 6.1
shall be exercised on behalf of BMC by its board of directors. An election of
Boole to terminate this Agreement and abandon the Merger as provided in Section
6.1 shall be exercised on behalf of Boole by its board of directors.
6.3. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to and in accordance with the provisions
of Section 6.1 hereof, this Agreement shall become void and have no effect,
without any liability on the part of any party hereto (or its stockholders or
controlling persons or directors or officers), except (i) the provisions of
Section 4.3.6.2 shall survive such termination and abandonment and (ii) neither
party shall be released or relieved from any liability arising from any willful
breach by such party of any of its representations, warranties, covenants or
agreements as set forth in this Agreement.
6.4. Waiver of Conditions. Subject to the requirements of any
applicable law, any of the terms or conditions of this Agreement may be waived
at any time by the party which is entitled to the benefit thereof, by action
taken by its board of directors.
6.5. Expense on Termination. If the Merger is abandoned pursuant
to and in accordance with the provisions of Section 6.1 hereof, all expenses
will be paid by the party incurring them.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Assumption of Options. Promptly after the Effective Time, BMC
will notify in writing each holder of a Boole Option of the assumption of the
Boole Option and that such option will become an option to purchase BMC Common
Stock in accordance with Section 1.10 of the Plan of Merger. Promptly after
the Effective Time, BMC shall cause all shares of BMC Common Stock issuable
upon exercise of the assumed Boole Options to be registered under an effective
Form S-8 Registration Statement (or other comparable form) filed with the
Commission.
7.2. Indemnification of Directors and Officers. (a) From and after
the Effective Time, BMC shall (and BMC shall cause the Surviving Corporation
to) indemnify and hold harmless each present and former director and officer of
Boole, determined as of the Effective Time, against any claims, losses,
liabilities, damages, judgments, fines, fees, costs or expenses, including,
without limitation, attorneys' fees and disbursements, incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of or pertaining to
matters existing or occurring at or prior to the Effective Time (including,
without limitation, the Merger, the preparation, filing and mailing of the
Proxy Statement and the other transactions and actions contemplated by this
Agreement), whether asserted or claimed prior to, at or after the Effective
Time, and BMC shall (and BMC shall cause the Surviving Corporation to)
<PAGE> 33
fulfill and honor in all respects the obligations of Boole pursuant to all
indemnification agreements existing on the date hereof and the certificate of
incorporation and bylaws of Boole in effect on the date hereof (and BMC shall
also advance expenses as incurred to the fullest extent permitted under
applicable law provided the person to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification).
(b) For a period of six (6) years after the Effective Time, BMC
shall maintain (to the extent available in the market) in effect a directors'
and officers' liability insurance policy covering those persons who are
currently covered by Boole's directors' and officers' liability insurance
policy (a copy of which has been heretofore delivered to BMC) with coverage in
amount and scope at least as favorable as Boole's existing coverage (which
coverage may be an endorsement extending the period in which claims may be made
under such existing policy); provided that (i) in no event shall BMC be
required to expend per year for such coverage more than an aggregate of 200% of
the current annual premium expended by Boole to provide such coverage; (ii) if
the annual premiums of such insurance coverage exceed such amount, BMC shall be
obligated to obtain a policy with the greatest coverage available for a cost
not exceeding such amount; and (iii) if a policy of the type described in this
Section 7.2(b) is not available in the market, BMC shall obtain a policy that
is as close as possible to being as favorable as Boole's existing coverage.
(c) The provisions of this Section 7.2 are intended to be for the
benefit of, and shall be enforceable by, each person who is entitled to
indemnification under this Section 7.2 and his or her heirs and
representatives, and nothing herein shall affect any indemnification rights
that any such indemnified party and his or her heirs and representatives may
have under the bylaws of Boole or any of its subsidiaries, any contract or
applicable law. BMC and the Surviving Corporation jointly and severally agree
to pay all expenses, including attorneys' fees, that may be incurred by any
person entitled to indemnification under this Section 7.2 who is the prevailing
party in an action seeking to reinforce the indemnity and other obligations
provided for in this Section 7.2.
7.3. Affiliate Agreements.
7.3.1. Boole Affiliates. To insure that the Merger will be
treated as a "pooling of interests" and to insure compliance with Rule
145 of the rules and regulations promulgated by the Commission and the
Securities Act, each of Boole's directors, executive officers and
beneficial owners of 10% or more of Boole's Common Stock identified as
possible "affiliates" (as such term is used in Rule 145 under the
Securities Act) has concurrently signed and delivered to BMC the Boole
affiliate agreements in the form attached as Exhibit C.
7.3.2. BMC Affiliates. To insure that the Merger will be
treated as a "pooling of interests," each of BMC's directors,
executive officers and beneficial owners of 10% or more of BMC's
Common Stock identified as possible "affiliates" (as such term is used
in Rule 145 under the Securities Act) has concurrently signed and
delivered to BMC the BMC affiliate agreements in the form attached as
Exhibit D.
<PAGE> 34
7.4. Employee Benefit Plans of Boole. BMC shall take all actions
necessary or appropriate to permit the employees of Boole and its subsidiaries
("Boole Employees") to continue to participate from and after the Closing Date
in the Boole Plans maintained by Boole and its subsidiaries immediately prior
to the Closing Date. Notwithstanding the foregoing, BMC may permit or cause
any such Boole Plan to be terminated or discontinued on or after the Closing
Date, provided that BMC shall take all actions necessary or appropriate to
permit the Boole Employees participating in such Boole Plan to immediately
thereafter participate in the comparable BMC Plan maintained by BMC or any of
its subsidiaries for their similarly situated employees. If the Boole Plan
that is terminated or discontinued by BMC is a group health plan, then BMC
shall permit each Boole Employee participating in such group health plan to be
covered under a BMC Plan that (i) provides medical and dental benefits to each
such Boole Employee effective immediately upon the cessation of coverage of
such individuals under such group health plan, (ii) credits such Boole
Employee, for the year during which such coverage under such BMC Plan begins,
with any deductibles and copayments already incurred during such year under
such group health plan, and (iii) waives any preexisting condition restrictions
to the extent necessary to provide immediate coverage and to the extent such
restrictions were not applicable under such group health plan. BMC and the BMC
Plans shall recognize each Boole Employee's years of service and level of
seniority with Boole and its subsidiaries for purposes of terms of employment
and eligibility, vesting and benefit determination under the BMC Plans (other
than benefit accruals under any defined benefit pension plan).
7.5. Boole ESPP. As of the Effective Time, the ESPP shall be
terminated. The rights of participants in the ESPP with respect to any
offering period underway under the ESPP immediately prior to the Effective Time
shall be determined by treating the last business day prior to the Effective
Time as the last day of such offering period and by making such other pro-rata
adjustments as may be necessary to reflect the reduced offering period but
otherwise treating such offering period as a fully effective and completed
offering period for all purposes of such Plan. Prior to the Effective Time,
Boole may take all actions (including, if appropriate, amending the terms of
the ESPP) that are necessary to give effect to the transactions contemplated by
this Section 7.5.
ARTICLE VIII
MISCELLANEOUS
8.1. Entirety. This Agreement, the attachments and Schedules
thereto, the Plan of Merger, those certain confidentiality letter agreements
dated September 18, 1998, that certain confidentiality letter agreement dated
October 14, 1998 and the Stock Option Agreement embody the entire agreement
among the parties with respect to the subject matter hereof, and all prior
agreements among the parties with respect thereto are hereby superseded in
their entirety.
8.2. Counterparts. Any number of counterparts of this Agreement
may be executed and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
instrument.
<PAGE> 35
8.3. Notices and Waivers. Any notice or waiver to be given to any
party hereto shall be in writing and shall be delivered by overnight courier,
sent by facsimile transmission or first class registered or certified mail,
postage prepaid.
IF TO BMC
Addressed to: With a copy to:
BMC Software, Inc. Vinson & Elkins L.L.P.
2101 Citywest Blvd. 2300 First City Tower
Houston, TX 77042-2827 1001 Fannin
Attention: Tim Shen Houston, TX 77002-6760
Facsimile: (713) 918-8000 Attention: John S. Watson
Facsimile: (713) 615-5236
IF TO BOOLE
Addressed to: With a copy to:
Boole & Babbage, Inc. Cooley Godward LLP
3131 Zanker Road 3000 El Camino Real
San Jose, CA 95134-1933 Palo Alto, CA 94306
Attention: Paul Newton Attention: Alan Mendelson and Keith Flaum
Facsimile: (908) 526-3056 Facsimile: (650) 857-0663
Any communication so addressed and mailed by first-class registered or
certified mail, postage prepaid, shall be deemed to be received on the fifth
business day after so mailed, and any communication so addressed and if
delivered by overnight courier or facsimile to such address shall be deemed to
be received (i) in the case of delivery by overnight courier, on the second
business day after such communication is delivered to the overnight courier
service, and (ii) in the case of delivery by facsimile, upon delivery during
normal business hours on any business day.
8.4. Termination of Representations, Warranties, etc. The
respective representations, warranties, covenants and agreements contained in
this Agreement shall expire with, and be terminated and extinguished by, the
Merger at the time of the consummation thereof on the Effective Time; provided,
however, that this Section 8.4 shall not limit or otherwise effect any covenant
or agreement of the parties hereto which by its terms contemplates performance
after the Effective Time or after termination of this Agreement.
8.5. Table of Contents and Captions. The table of contents and
captions contained in this Agreement are solely for convenient reference and
shall not be deemed to affect the meaning or interpretation of any article,
section, or paragraph hereof.
8.6. Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of and be enforceable by the successors and
assigns of the parties hereto.
<PAGE> 36
8.7. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
8.8. Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
without regard to applicable principles of conflicts of law.
8.9. Public Announcements. The parties agree that before the
Effective Time they shall consult with each other before the making of any
public announcement regarding the existence of this Agreement, the contents
hereof or the transactions contemplated hereby, and to obtain the prior
approval of the other party as to the content of such announcement, which
approval shall not be unreasonably withheld. However, the foregoing shall not
apply to any announcement or written statement which, upon the written advice
of counsel, is required by law, rule or regulation to be made, except that the
party required to make such announcement shall, whenever practicable, consult
with and solicit prior approval from such other party concerning the timing and
content of such legally required announcement or statement before it is made.
8.10. Definitions. The following terms are defined in the indicated
place:
<TABLE>
<CAPTION>
Section or
Term Paragraph
---- ---------
<S> <C>
Agreement Premises
Boole Common Stock Premises
Boole Employees 7.4
Boole Options 1.10 of the Plan of Merger
Boole Option Plans 1.10 of the Plan of Merger
Boole Plans 2.7.1
Boole Reports 2.5
Boole Transaction Proposals 4.3.6.1
Another Boole Transaction 4.3.6.2
Applicable Environmental Laws 2.17.3
Break-Up Fee 4.3.6.2
Code Premises
Commission 2.5
DGCL Premises
Effective Time 1.3
Encumbrance 2.4
ERISA 2.20
Exchange Act 2.5
HSR 2.21
Intellectual Property 2.12
Investment Company Act 2.24
</TABLE>
<PAGE> 37
<TABLE>
<CAPTION>
Section or
Term Paragraph
---- ---------
<S> <C>
BMC Common Stock Premises
BMC Plans 3.9
BMC Reports 3.4
BMC Shares 1.9.2 of the Plan of Merger
Material Adverse Effect 1.4
Merger Consideration 1.9.2 of the Plan of Merger
Merging Corporations Premises
OSHA 2.18
Proxy Statement 2.23
Securities Act 4.4.4
Superior Boole Transaction 4.3.6.1
Proposal
</TABLE>
<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Reorganization to be duly executed as of the date first above written.
BMC SOFTWARE, INC.
By: /s/ Max P. Watson Jr.
--------------------------------
Name: Max P. Watson Jr.
Title: Chairman, President and
Chief Executive Officer
RANGER ACQUISITION CORP.
By: /s/ Max P. Watson Jr.
--------------------------------
Name: Max P. Watson Jr.
Title: President
BOOLE & BABBAGE, INC.
By: /s/ Paul E. Newton
--------------------------------
Name: Paul E. Newton
Title: President and Chief
Executive Officer
<PAGE> 39
EXHIBIT A
PLAN AND AGREEMENT OF MERGER
Merging Merger Sub into Boole
THIS PLAN AND AGREEMENT OF MERGER, dated as of October 31, 1998 (this
"Plan of Merger"), is by and between Ranger Acquisition Corp., a Delaware
corporation ("Merger Sub") and a wholly owned subsidiary of BMC, Inc., a
Delaware corporation ("BMC"), and Boole, Inc., a Delaware corporation
("Boole"). Merger Sub and Boole are hereinafter sometimes referred to as the
"Merging Corporations."
PRELIMINARY STATEMENT
This Plan of Merger is being entered into pursuant to an Agreement and
Plan of Reorganization dated as of October 31, 1998 (the "Agreement") among
BMC, Merger Sub and Boole.
The authorized capital stock of Merger Sub consists of 1,000 shares of
common stock, par value $.01 per share ("Merger Sub Common Stock"), of which
100 shares are outstanding, all of which are owned by BMC. The authorized
capital stock of Boole consists of 2,000,000 shares of preferred stock, par
value $.001 per share, of which no shares are issued and outstanding and
45,000,000 shares of common stock, par value $.001 per share ("Boole Common
Stock"), of which 27,667,249 shares are issued and outstanding and an
additional 8,453,000 shares are reserved for issuance in conjunction with
various employee benefit plans, and 3,065,930 shares are held in Boole's
treasury.
The Boards of Directors of each of the Merging Corporations,
respectively, have approved the Agreement and this Plan of Merger.
Accordingly, in consideration of the premises, and the mutual
covenants and agreements herein contained, the parties hereto hereby agree,
subject to the terms and conditions hereinafter set forth, as follows:
<PAGE> 40
ARTICLE I
THE MERGER
1.1. Surviving Corporation. Subject to the adoption and approval
of this Plan of Merger by the requisite vote of the stockholders of each of the
Merging Corporations and to the other conditions hereinafter set forth, Merger
Sub and Boole shall be, upon the Effective Time (as defined in Section 1.3
hereof), merged into a single surviving corporation, which shall be Boole (the
"Surviving Corporation"), one of the Merging Corporations, which shall continue
its corporate existence and remain a Delaware corporation governed by and
subject to the laws of that state.
1.2. Stockholder Approval. This Agreement shall be submitted for
adoption and approval by the stockholders of each of the Merging Corporations
in accordance with their respective certificates of incorporation and the
applicable laws of the State of Delaware.
1.3. Effective Time. The merger of Merger Sub with and into Boole
(the "Merger") shall become effective upon the filing of a Certificate of
Merger with the Secretary of State of the State of Delaware in accordance with
Section 251 of the Delaware General Corporation Law. The time at which the
Merger shall become effective is referred to in this Agreement as the
"Effective Time."
1.4. Name and Continued Corporate Existence of Surviving
Corporation. At the Effective Time, the identity, existence, purposes, powers,
objects, franchises, rights, and immunities of Boole shall continue unaffected
and unimpaired by the Merger, and the corporate identity, existence, purposes,
powers, objects, franchises, rights, and immunities of Merger Sub shall be
wholly merged into Boole and Boole shall be fully vested therewith.
Accordingly, at the Effective Time, the separate existence of Merger Sub shall
cease.
1.5. Governing Law and Certificate of Incorporation of Surviving
Corporation. The laws of the State of Delaware shall continue to govern the
Surviving Corporation. At the Effective Time, the Certificate of Incorporation
of Merger Sub shall be the certificate of incorporation of the Surviving
Corporation until further amended in the manner provided by law, provided that
at the Effective Time the certificate of incorporation of the Surviving
Corporation shall be amended so that the name of the Surviving Corporation
shall be "Boole & Babbage, Inc.".
1.6. Bylaws of Surviving Corporation. Effective as of the
Effective Time, the bylaws of Merger Sub shall be the bylaws of the Surviving
Corporation until altered, amended, or repealed, or until new bylaws shall be
adopted in accordance with the provisions of law, the certificate of
incorporation and the bylaws.
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<PAGE> 41
1.7. Directors of Surviving Corporation
1.7.1. Directors of Surviving Corporation. The names and
addresses of the persons who, upon the Effective Time, shall
constitute the board of directors of the Surviving Corporation, and
who shall hold office until the first annual meeting of stockholders
of the Surviving Corporation next following the Effective Time, are as
follows:
<TABLE>
<CAPTION>
NAME ADDRESS
<S> <C>
Max P. Watson Jr. 2101 Citywest Blvd.
Houston, TX 77042
William M. Austin 2101 Citywest Blvd.
Houston, TX 77042
M. Brinkley Morse 2101 Citywest Blvd.
Houston, TX 77042
</TABLE>
1.7.2. Vacancies. At or after the Effective Time, if a
vacancy shall exist for any reason in the board of directors of the
Surviving Corporation, such vacancy shall be filled in the manner
provided in the certificate of incorporation and/or bylaws of the
Surviving Corporation.
1.8. Capital Stock of Surviving Corporation. The authorized number
of shares of capital stock of the Surviving Corporation, and the par value,
designations, preferences, rights, and limitations thereof, and the express
terms thereof, shall be as set forth in the certificate of incorporation.
1.9. Conversion of Securities upon Merger
1.9.1. General. The manner and basis of converting the
issued and outstanding shares of the capital stock of Boole into
shares of the capital stock of BMC shall be as hereinafter set forth
in this Section 1.9.
1.9.2. Conversion of Boole Common Stock. At the Effective
Time, each share of Boole Common Stock issued and outstanding
immediately prior to the Effective Time, without any action on the
part of the holders thereof, shall automatically become and be
converted into a fraction of a fully paid and nonassessable share of
issued and outstanding BMC Common Stock equal to 0.675 (the "Exchange
Ratio"). The shares of BMC Common Stock to be issued in connection
with the Merger (the "BMC Shares") are hereinafter referred to
collectively as the "Merger Consideration."
A-3
<PAGE> 42
1.9.3. Exchange of Boole Common Stock Certificates. Prior
to the Effective Time, BMC (after consultation with and approval of
Boole) shall select a reputable bank or trust company to act as the
exchange agent under the Agreement and this Plan of Merger. As of the
Effective Time, BMC shall deposit with the exchange agent, for the
benefit of holders of shares of Boole Common Stock, for exchange in
accordance with the Agreement and this Plan of Merger, certificates
representing shares of BMC Common Stock issuable pursuant to the
Agreement and this Plan of Merger and cash sufficient to make payments
in lieu of fractional share interests. Promptly after the Effective
Time, BMC shall cause the exchange agent to mail to each person who
was, immediately prior to the Effective Time, a holder of record of
Boole Common Stock a form of letter of transmittal (mutually agreed to
by BMC and Boole) and instructions for use in effecting the surrender
of stock certificates that, prior to the Effective Time, represented
shares of Boole Common Stock, in exchange for certificates
representing shares of BMC Common Stock and a cash payment in lieu of
fractional share interests. Commencing at the Effective Time, each
holder of an outstanding certificate or certificates theretofore
representing shares of Boole Common Stock may surrender the same to
the exchange agent, and such holder shall be entitled upon such
surrender to receive in exchange therefor a certificate or
certificates representing the number of whole BMC Shares into which
the shares of Boole Common Stock theretofore represented by the
certificate or certificates so surrendered shall have been converted
as aforesaid, cash in lieu of fractional share interests and any
unpaid dividends payable in accordance with the Agreement or this Plan
of Merger. However, before surrender, each outstanding certificate
representing issued and outstanding Boole Common Stock shall after the
Effective Time be deemed, for all purposes, only to evidence ownership
of the number of whole BMC Shares into which such shares have been so
converted. In the event of a transfer of ownership of Boole Common
Stock which is not registered in the transfer records of Boole, a
certificate representing the appropriate number of shares of BMC
Common Stock may be issued to a person other than the person in whose
name the certificate so surrendered is registered, if, upon
presentation to the exchange agent, such certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person
requesting such issuance shall pay any transfer or other taxes
required by reason of the issuance of shares of BMC Common Stock to a
person other than the registered holder of such certificate or
establish to the reasonable satisfaction of BMC that such tax has been
paid or is not applicable. Unless and until such outstanding
certificates formerly representing Boole Common Stock are so
surrendered, no dividend payable to holders of record of BMC Common
Stock as of any date after the Effective Time shall be paid to the
holders of such outstanding certificates in respect thereof. Upon
surrender of such outstanding certificates, however, there shall be
paid to the holders of BMC Shares represented thereby the amount of
dividends, if any, which theretofore (but after the Effective Time)
became payable with respect to such BMC Shares. No interest shall be
payable with respect to the payment of such dividends on surrender of
outstanding certificates. The holder of fractional share interests,
as such, shall not be entitled to any dividends in respect thereof or
to any distribution in respect thereof in the event of liquidation or
to any voting or other privileges in respect thereof of a stockholder
of BMC.
A-4
<PAGE> 43
If any stock certificate that, prior to the Effective Time,
represented shares of Boole Common Stock shall have been lost, stolen
or destroyed, then, upon the making of an affidavit of that fact by
the person claiming such stock certificate to be lost, stolen or
destroyed (and, if required by BMC, the posting by such person of a
bond in such reasonable amount as BMC may direct as indemnity against
any claim that may be made against it with respect to such stock
certificate), BMC shall cause the exchange agent to issue in exchange
for such lost, stolen or destroyed stock certificate a certificate
representing the appropriate number of shares of BMC Common Stock,
cash in lieu of any fractional share interests and any unpaid
dividends, issuable or payable in accordance with the Agreement and
this Plan of Merger.
1.9.4. BMC Fractional Shares. No certificates for
fractional share interests of BMC Common Stock will be issued, but, in
lieu thereof, BMC will settle all such fractional share interests in
cash on the basis of the closing price for BMC Common Stock on the
Nasdaq National Market (as reported in The Wall Street Journal) on the
last trading day before the Effective Time.
1.9.5. Boole's Transfer Books Closed. Upon the Effective
Time, the stock transfer books of Boole shall be deemed closed, and no
transfer of any certificates theretofore representing the shares of
Boole shall thereafter be made or consummated.
1.9.6. Conversion of Merger Sub Common Stock. At the
Effective Time, each share of Merger Sub Common Stock then issued and
outstanding, without any action on the part of the holder thereof,
shall automatically become and be converted into one share of Boole
Common Stock.
1.10. Treatment of Stock Options. At the Effective Time, each
option to purchase Boole Common Stock outstanding immediately prior to the
Effective Time (collectively, the "Boole Options") (which includes all
outstanding options granted under Boole's stock option plans other than the
ESPP (the "Boole Option Plans")) will and without any further action on the
part of any holder thereof (herein, an "optionholder"), be assumed by BMC and
become an option to purchase that number of shares of BMC Common Stock
determined by multiplying the number of shares of Boole Common Stock subject to
such Boole Option immediately prior to the Effective Time by the Exchange
Ratio, at an exercise price per share of BMC Common Stock equal to the exercise
price per share of such Boole Option divided by the Exchange Ratio. If the
foregoing calculation results in an assumed Boole Option being exercisable for
a fraction of a share of BMC Common Stock, then the number of shares of BMC
Common Stock subject to such option will be rounded down to the nearest whole
number of shares, and the total exercise price for the option will be reduced
by the exercise price of the fractional share. The term, exerciseability,
vesting schedule, and all other terms and conditions of the Boole Options will
otherwise be unchanged by the provisions of this Section 1.10 and shall operate
in accordance with their terms. All shares of BMC Common Stock issued upon
exercise of the assumed Boole Options shall be registered under an effective
Form S-8 Registration Statement (or other comparable form) filed with the
Securities and Exchange
A-5
<PAGE> 44
Commission (the "Commission") in accordance with Section 7.1 of the Agreement.
Except as provided in the Agreement or this Plan of Merger or as otherwise
agreed to by the parties, each of the Boole Option Plans providing for the
issuance or grant of Boole Options shall be assumed as of the Effective Time by
BMC with such amendments thereto as may be required to reflect the Merger.
1.11. Assets and Liabilities
1.11.1. Assets and Liabilities of Merging Corporations Become
Those of Surviving Corporation. At the Effective Time, all rights,
privileges, powers, immunities, and franchises of each of the Merging
Corporations, both of a public and private nature, and all property,
real, personal, and mixed, and all debts due on whatever account, as
well as stock subscriptions and all other choses or things in action,
and all and every other interest of or belonging to or due to either
of the Merging Corporations, shall be taken by and shall be vested in
the Surviving Corporation without further act or deed, and all such
rights, privileges, powers, immunities, and franchises, property,
debts, choses or things in action, and all and every other interest of
each of the Merging Corporations shall be thereafter as effectually
the property of the Surviving Corporation as they were of the
respective Merging Corporations, and the title to any real or other
property, or any interest therein, whether vested by deed or
otherwise, in either of the Merging Corporations, shall not revert or
be in any way impaired by reason of the merger, provided, however,
that all rights of creditors and all liens upon any properties of each
of the Merging Corporations shall be preserved unimpaired, and all
debts, liabilities, restrictions, obligations, and duties of the
respective Merging Corporations, including without limitation all
obligations, liabilities and duties as lessee under any existing
lease, shall thenceforth attach to the Surviving Corporation and may
be enforced against and by it to the same extent as if such debts,
liabilities, duties, restrictions and obligations had been incurred or
contracted by it. Any action or proceeding pending by or against
either of the Merging Corporations may be prosecuted to judgment as if
the merger had not taken place, or the Surviving Corporation may be
substituted in place of either of the Merging Corporations.
1.11.2. Conveyances to Surviving Corporation. The Merging
Corporations hereby agree, respectively, that from time to time, as
and when requested by the Surviving Corporation, or by its successors
and assigns, they will execute and deliver or cause to be executed and
delivered, all such deeds, conveyances, assignments, permits, licenses
and other instruments, and will take or cause to be taken such further
or other action as the Surviving Corporation, its successors or
assigns, may deem necessary or desirable to vest or perfect in or
confirm to the Surviving Corporation, its successors and assigns,
title to and possession of all the property, rights, privileges,
powers, immunities, franchises, and interests referred to in this
Paragraph 1.11.2 and otherwise carry out the intent and purposes of
this Agreement.
1.11.3. Accounting Treatment. The assets and liabilities of
the Merging Corporations shall be taken up on the books of the
Surviving Corporation in accordance with generally
A-6
<PAGE> 45
accepted accounting principles, and the capital surplus and retained
earnings accounts of the Surviving Corporation shall be determined, in
accordance with generally accepted accounting principles, by the board
of directors of the Surviving Corporation. Nothing herein shall
prevent the board of directors of the Surviving Corporation from
making any future changes in its accounts in accordance with law.
1.11.4. Unclaimed Merger Consideration; No Escheat. Subject
to any contrary provision of governing law, all consideration
deposited with the exchange agent or held by BMC for the payment of
the consideration into which the outstanding shares of Boole Common
Stock shall have been converted, and remaining unclaimed for one year
after the Effective Time, shall be paid or delivered to BMC; and the
holder of any unexchanged certificate or certificates which before the
Effective Time represented shares of Boole Common Stock shall
thereafter look only to BMC for exchange or payment thereof upon
surrender of such certificate or certificates to BMC.
1.12. Taking of Necessary Action; Further Action. Merger Sub and
Boole shall take all such reasonable and lawful action as may be necessary or
appropriate in order to effectuate the Merger as promptly as possible. If, at
any time after the Effective Time, any such further action is necessary or
desirable to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of Boole or Merger Sub, such
corporations shall direct their respective officers and directors to take all
such lawful and necessary action.
ARTICLE II
MISCELLANEOUS
2.1. Counterparts. This Plan of Merger 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 each of the other parties.
2.2. Governing Law. This Plan of Merger shall be governed by and
construed in accordance with the laws of the State of Delaware.
2.3. Waiver and Amendment. Any provision of this Plan of Merger
may be waived at any time by the party that is, or whose stockholders are,
entitled to the benefits thereof. This Plan of Merger may not be amended or
supplemented at any time, except by an instrument in writing signed on behalf
of each party hereto. The waiver by any party hereto of any condition or of a
breach of another provision of this Plan of Merger shall not operate or be
construed as a waiver of any other condition or subsequent breach. The waiver
by any party hereto of any of the conditions precedent to its obligations under
this Plan of Merger shall not preclude it from seeking redress for breach of
this Plan of Merger other than with respect to the condition so waived.
A-7
<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have caused this Plan of Merger
to be duly executed as of the date first above written.
RANGER ACQUISITION CORP.
By: /s/ Max P. Watson Jr.
----------------------------
Name: Max P. Watson Jr.
Title: President
BOOLE & BABBAGE, INC.
By: /s/ Paul E. Newton
----------------------------
Name: Paul E. Newton
Title: President and Chief Executive Officer
A-8
<PAGE> 1
EXHIBIT 2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (the "Agreement"), dated as of October 31,
1998, by and between Boole & Babbage, Inc., a Delaware corporation (the
"Company"), and BMC Software, Inc., a Delaware corporation (the "Grantee").
RECITALS
The Grantee, the Company and Ranger Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Grantee ("Merger Sub"), propose to
enter into an Agreement and Plan of Reorganization providing, among other
things, for the merger of Merger Sub with and into the Company (the "Merger")
with the Company as the surviving corporation.
The Board of Directors of the Grantee has approved the Agreement and
Plan of Reorganization, the Merger and this Agreement.
The Board of Directors of the Company has approved the Agreement and
Plan of Reorganization, the Merger and this Agreement and has recommended
approval of the Agreement and Plan of Reorganization and the transactions
contemplated thereby, including the Merger, by holders of common stock, par
value $.001 per share, of the Company (the "Company Common Stock").
As a condition and inducement to the Grantee's willingness to enter
into the Agreement and Plan of Reorganization, the Grantee has requested that
the Company agree, and the Company has agreed, to grant the Grantee the Option
(as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Agreement and Plan of Reorganization, the Company and the Grantee agree as
follows:
1. Capitalized Terms. Capitalized terms used but not defined
herein are defined in the Agreement and Plan of Reorganization and are
used herein with the same meanings as ascribed to them therein;
provided, however, that, as used in this Agreement, "Person" shall
have the meaning specified in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act.
2. Grant of Option. Subject to the terms and conditions set
forth herein, the Company hereby grants to the Grantee an irrevocable
option (the "Option") to purchase, out of the authorized but unissued
Company Common Stock, a number of shares equal to up to 19.0% of the
shares of Company Common Stock outstanding as of the date hereof (as
adjusted as set forth herein) (the "Option Shares"), at a purchase
price per Option Share equal to the lesser of (i) $32.44 and (ii) the
product of (x) 0.675 times (y) the average of the closing sales prices
per share of BMC Common Stock, rounded to the nearest thousandth
(.0005 being
<PAGE> 2
rounded to .001), as reported by the Nasdaq National Market on each of
the three (3) trading days immediately preceding the exercise of the
Option by the Grantee (the "Exercise Price").
3. Term. The Option shall become exercisable following the
occurrence of an Exercise Event (as hereinafter defined) and shall
remain in full force and effect until the earliest to occur of (i) the
Effective Time, (ii) the first anniversary of the receipt by the
Grantee of written notice from the Company of the occurrence of an
Exercise Event or (iii) termination of the Agreement and Plan of
Reorganization prior to the occurrence of an Exercise Event (the
"Option Term"). The rights and obligations set forth in Sections 7,
8, 9, 10 and 13 shall not terminate at the expiration of the Option
Term, but shall extend to such time as is provided in those Sections.
4. Exercise of Option.
a. The Grantee may exercise the Option on one occasion
only, in whole or in part, at any time during the Option Term
following the occurrence of an Exercise Event; provided,
however, that (i) the Grantee may exercise the Option
following the occurrence of the Exercise Events set forth in
Section 4(b)(i) and 4(b)(ii) below only if (A) a meeting of
the Company's stockholders at which a final vote is taken by
such stockholders on a proposal to approve and adopt the
Agreement and Plan of Reorganization and to approve the Merger
shall have been held, and (B) the adoption and approval of the
Agreement and Plan of Reorganization and the approval of the
Merger by the holders of a majority of the shares of Company
Common Stock outstanding as of the record date for such
meeting of stockholders shall not have been obtained at such
meeting; and (ii) notwithstanding the provisions set forth in
(A) above, the Grantee may also exercise the Option following
the occurrence of the Exercise Event set forth in Section
4(b)(i) below if the Company fails to recommend rejection of
any tender offer or exchange offer of the type referred to in
Section 4(b)(i) within the time period prescribed by Rule
14e-2 under the Exchange Act. Notwithstanding the expiration
of the Option Term, the Grantee shall be entitled to purchase
those Option Shares with respect to which it has exercised the
Option in accordance with the terms hereof prior to the
expiration of the Option Term.
b. As used herein, an "Exercise Event" shall mean any of
the following events:
(i) any Person (other than the Grantee or any
affiliate of the Grantee) shall have commenced (as such term
is defined in Rule 14d-2 under the Exchange Act) a tender
offer or exchange offer to purchase any shares of Company
Common Stock such that, upon consummation of such offer, such
Person would own or control 20% or more of the then
outstanding Company Common Stock;
(ii) any Person (other than the Grantee, the
Company or any of their subsidiaries) shall have, subsequent
to the date of this Agreement, acquired beneficial ownership
(as such term is defined in Rule 13d-3 under the Exchange Act)
or the right to acquire beneficial ownership of, or any
"Group" (as such term is defined in
<PAGE> 3
Rule 13d-3 under the Exchange Act) shall have been formed that
beneficially owns, or has the right to acquire beneficial
ownership of, 20% or more of the then outstanding Company
Common Stock; or
(iii) any event giving rise to a right of
termination under the Agreement and Plan of Reorganization
under (A) Section 6.1.2 (breach) solely relating to a breach
of Section 4.3.11 (Stockholders' Meeting), (B) Section 6.1.5
(change of recommendation) or (C) Section 6.1.10 (failure to
obtain stockholder approval) if prior to the time of the
meeting of the Company's stockholders at which a final vote is
taken by such stockholders on a proposal to approve and adopt
the Agreement and Plan of Reorganization and to approve the
Merger, there is publicly announced by a third party (other
than the Grantee or an affiliate of the Grantee) a proposal
for Another Boole Transaction.
c. If the Grantee wishes to exercise the Option, it
shall send a written notice (the date of which being herein
referred to as the "Notice Date") to the Company specifying
(i) the total number of Option Shares it intends to purchase
pursuant to such exercise and (ii) a place and a date not
earlier than three business days nor later than 15 business
days from the Notice Date for the closing of such purchase
(the "Closing Date"); provided, however, that, if the closing
of the purchase and sale pursuant to the Option (the
"Closing") cannot be consummated by reason of any applicable
law, regulation or order, the period of time that otherwise
would run pursuant to this sentence shall run instead from the
date on which such restriction on consummation has expired or
been terminated; and, provided, further, that, without
limiting the foregoing, if prior notification to, or
authorization of, any governmental authority is required in
connection with such purchase, the Grantee and, if applicable,
the Company shall promptly file the required notice or
application for authorization and shall expeditiously process
the same (and the Company shall cooperate with the Grantee in
the filing of any such notice or application and the obtaining
of any such authorization), and the period of time that
otherwise would run pursuant to this sentence shall run
instead from the date on which, as the case may be, (i) any
required notification period has expired or been terminated or
(ii) such authorization has been obtained and, in either
event, any requisite waiting period has passed.
d. Notwithstanding Section 4(c), in no event shall any
Closing Date be more than 12 months after the related Notice
Date, and, if the Closing Date shall not have occurred within
12 months after the related Notice Date due to the failure to
obtain any required authorization of a governmental authority,
the exercise of the Option effected on the Notice Date shall
be deemed to have expired. If (i) the Grantee receives
official notice that an authorization of any governmental
authority required for the purchase of Option Shares will not
be issued or granted or (ii) a Closing Date shall not have
occurred within 12 months after the related Notice Date due to
the failure to obtain any such required authorization of a
governmental authority, (A) the Grantee (to the extent that a
Repurchase Event shall have occurred) shall be entitled to
exercise its right as set forth in Section 7 or (B) to the
extent permitted by
<PAGE> 4
applicable law, the Grantee shall be entitled to exercise the
Option in connection with the resale of the Company Common
Stock or other securities pursuant to a registration statement
as provided in Section 9. The provisions of this Section 4
and Section 5 shall apply with appropriate adjustments to any
such exercise in connection with such a resale.
5. Payment and Delivery of Certificates.
a. On each Closing Date, the Grantee shall pay to the
Company in immediately available funds by wire transfer to a
bank account designated by the Company an amount equal to the
Exercise Price multiplied by the Option Shares to be purchased
on such Closing Date.
b. At each Closing, simultaneously with the delivery of
immediately available funds as provided in Section 5(a), the
Company shall deliver to the Grantee a certificate or
certificates representing the Option Shares to be purchased at
such Closing, which Option Shares shall be duly authorized,
validly issued, fully paid and nonassessable and free and
clear of all Encumbrances, and Grantee shall deliver to the
Company its written agreement that the Grantee will not offer
to sell or otherwise dispose of such Option Shares in
violation of applicable law or the provisions of this
Agreement.
c. Certificates for the Option Shares delivered at each
Closing shall be endorsed with a restrictive legend that shall
read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO RESTRICTIONS ARISING
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT
DATED AS OF OCTOBER 31, 1998. A COPY OF SUCH
AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE COMPANY OF A
WRITTEN REQUEST THEREFOR.
A new certificate or certificates evidencing the same number of shares
of the Company Common Stock will be issued to the Grantee in lieu of
the certificate bearing the above legend, and such new certificate
shall not bear such legend, insofar as it applies to the Securities
Act, if the Grantee shall have delivered to the Company a copy of a
letter from the staff of the Commission, or an opinion of counsel in
form and substance reasonably satisfactory to the Company and its
counsel, to the effect that such legend is not required for purposes
of the Securities Act.
<PAGE> 5
6. Adjustment Upon Changes in Capitalization, Etc.
a. In the event of any change in the Company Common
Stock by reason of a stock dividend, split-up, combination,
recapitalization, exchange of shares or similar transaction,
the type and number of shares or securities subject to the
Option, and the Exercise Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the
agreements governing such transaction, so that the Grantee
shall receive upon exercise of the Option the same class and
number of outstanding shares or other securities or property
that Grantee would have received in respect of the Company
Common Stock if the Option had been exercised immediately
prior to such event, or the record date therefor, as
applicable. If any additional shares of Company Common Stock
are issued after the date of this Agreement (other than
pursuant to an event described in the first sentence of this
Section 6(a)), the number of shares of Company Common Stock
then remaining subject to the Option shall be adjusted so
that, after such issuance of additional shares, such number of
shares then remaining subject to the Option, together with
shares theretofore issued pursuant to the Option, equals 15.9%
of the number of shares of the Company Common Stock then
issued and outstanding; provided, however, that the number of
shares of Company Common Stock subject to the Option shall
only be increased to the extent the Company then has available
authorized but unissued and unreserved shares of Company
Common Stock.
b. If during the Option Term the Company shall enter
into an agreement (i) to consolidate, exchange shares or merge
with any Person, other than the Grantee or one of its
affiliates, and, in the case of a merger, shall not be the
continuing or surviving corporation, (ii) to permit any
Person, other than the Grantee or one of its affiliates, to
merge into the Company and the Company shall be the continuing
or surviving corporation, but, in connection with such merger,
the then outstanding shares of Company Common Stock shall be
changed into or exchanged for stock or other securities of the
Company or any other Person or cash or any other property, or
the shares of Company Common stock outstanding immediately
before such merger shall after such merger represent less than
50% of the common shares and common share equivalents of the
Company outstanding immediately after the merger or (iii) to
sell, lease or otherwise transfer all or substantially all of
its assets to any Person, other than the Grantee or one of its
affiliates, then, and in each such case, proper provisions
shall be made in the agreement governing such transaction so
that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth
herein, become exercisable for the stock, securities, cash or
other property that would have been received by the Grantee if
the Grantee had exercised this Option immediately prior to
such transaction or the record date for determining
stockholders entitled to participate therein, as appropriate.
c. The provisions of Sections 7, 8, 9, 10, 11 and 13
shall apply with appropriate adjustments to any securities for
which the Option becomes exercisable pursuant to this Section
6.
<PAGE> 6
7. Repurchase at the Option of Grantee.
a. At any time during the Option Term, at the request of
the Grantee made at any time after the first Repurchase Event
(as hereinafter defined) and ending on the first anniversary
thereof (the "Put Period"), the Company (or any successor
thereto) shall repurchase from the Grantee (i) that portion of
the Option that then remains unexercised and (ii) all (but not
less than all) the shares of Company Common Stock purchased by
the Grantee pursuant hereto and with respect to which the
Grantee then has beneficial ownership. The date on which the
Grantee exercises its rights under this Section 7 is referred
to as the "Grantee Request Date." Subject to Section 7(e),
such repurchase shall be at an aggregate price (the "Section 7
Repurchase Consideration") equal to the sum of:
i. the aggregate exercise price paid (or, in the
case of Option Shares with respect to which the
Option has been exercised but the Closing Date has
not occurred, payable) by the Grantee for any Option
Shares as to which the Option has theretofore been
exercised and with respect to which the Grantee then
has beneficial ownership;
ii. the excess, if any, of the Applicable Price
(as defined below), over the Exercise Price (subject
to adjustment pursuant to Section 6) paid (or, in the
case of Option Shares with respect to which the
Option has been exercised but the Closing Date has
not occurred, payable) by the Grantee for each Option
Share as to which the Option has been exercised and
with respect to which the Grantee then has beneficial
ownership, multiplied by the number of such shares;
and
iii. the excess, if any, of (x) the Applicable
Price for each share of Company Common Stock over (y)
the Exercise Price (subject to adjustment pursuant to
Section 6), multiplied by the number of Option Shares
as to which the Option has not been exercised.
b. If the Grantee exercises its rights under this
Section 7, the Company shall (to the extent permitted by law),
within five business days (or as soon as permitted thereafter
under applicable law) after the Grantee Request Date, pay the
Section 7 Repurchase Consideration to the Grantee in
immediately available funds, and the Grantee shall surrender
to the Company the Option and the certificates evidencing the
shares of Company Common Stock purchased thereunder with
respect to which the Grantee then has beneficial ownership,
and the Grantee shall warrant to the Company that, immediately
prior to the repurchase thereof pursuant to this Section 7,
the Grantee had sole record and beneficial ownership of such
shares and that such shares were then held free and clear of
all Encumbrances.
<PAGE> 7
c. For purposes of this Agreement, the "Applicable
Price" means the highest of (i) the highest purchase price per
share paid pursuant a tender or exchange offer made for shares
of Company Common Stock after the date hereof and on or prior
to the Grantee Request Date, (ii) the price per share to be
paid by any third Person for shares of Company Common Stock,
in each case pursuant to an agreement for a merger or other
business combination transaction with the Company entered into
on or prior to the Grantee Request Date, or (iii) the highest
bid price per share of Company Common Stock as quoted on The
Nasdaq National Market (or if Company Common Stock is not
quoted on The Nasdaq National Market, the highest bid price
per share as quoted on any other market comprising a part of
The Nasdaq Stock Market or, if the shares of Company Common
Stock are not quoted thereon, on the principal trading market
(as defined in Regulation M under the Exchange Act) on which
such shares are traded as reported by a recognized source)
during the 60 Business Days preceding the Grantee Request
Date. If the consideration to be offered, paid or received
pursuant to either of the foregoing clauses (i) or (ii) shall
be other than in cash, the value of such consideration shall
be determined in good faith by an independent nationally
recognized investment banking firm selected by the Grantee and
reasonably acceptable to the Company, which determination
shall be conclusive for all purposes of this Agreement.
d. As used herein, a "Repurchase Event" means the
occurrence of any Exercise Event specified in Section
4(b)(iii)(B) or 4(b)(iii)(C), in each case only if a Break-Up
Fee has been paid or would be payable under Section 4.3.6.2 of
the Agreement and Plan of Reorganization.
e. Notwithstanding any provision to the contrary in this
Agreement, the Grantee may not exercise its rights pursuant to
this Section 7 in a manner that would result in the cash
payment to the Grantee of an aggregate amount under this
Section 7 of more than $30.0 million, including the amount, if
any, paid to the Grantee pursuant to Section 4.3.6.2 of the
Agreement and Plan of Reorganization; provided, however, that
nothing in this sentence shall limit the Grantee's ability to
exercise the Option in accordance with its terms.
8. Repurchase at the Option of the Company.
a. Unless the Grantee shall have previously exercised
its rights under Section 7, at the request made by the Company
at any time during the six-month period commencing at the
expiration of the Put Period (or, if no Repurchase Event shall
have occurred, at the expiration of one year from the date on
which the Option was first exercised) (the "Call Period"), the
Company may repurchase from the Grantee, and the Grantee shall
sell to the Company, all (but not less than all) the shares of
Company Common Stock acquired by the Grantee pursuant hereto
and with respect to which the Grantee has beneficial ownership
at the time of such repurchase at a price per share equal to
the Exercise Price per share in respect of the shares so
acquired (such price per share multiplied by the number of
shares of Company
<PAGE> 8
Common Stock to be repurchased pursuant to this Section 8
being herein called the "Section 8 Repurchase Consideration").
The date on which the Company exercises its rights under this
Section 8 is referred to as the "Company Request Date."
Notwithstanding the first sentence of this Section 8(a), the
Grantee, within 30 days following the Company Request Date,
may deliver (i) an Offeror's Notice pursuant to Section 10, in
which case the provisions of Section 10 and not those of this
Section 8 shall control (unless the sale to a third Person
contemplated thereby is not consummated) or (ii) a
Registration Notice pursuant to Section 9 and sell the shares
of Company Common Stock acquired or acquirable by the Grantee
pursuant hereto pursuant to Section 9, in which case the
provisions of Section 9 and not those of this Section 8 shall
control (unless the sale under Section 9 is not consummated
within 180 days after the effectiveness of such registration
statement, which effectiveness shall have been continuous
during the period) and the Grantee shall not have been
required to discontinue any disposition of any shares as
provided in Section 9. The Company's rights under this
Section 8 shall be suspended (and the Call Period shall be
extended accordingly) during any period when the exercise of
such rights would subject the Grantee to liability pursuant to
Section 16(b) of the Exchange Act by reason of the issuance of
the Option, any adjustment pursuant to Section 6 hereof, the
Grantee's purchase of shares of Company Common Stock hereunder
or the Grantee's sale of shares pursuant to Section 7, 8, 9 or
10.
b. If the Company exercises its rights under this
Section 8 and the Grantee does not deliver an Offeror's Notice
or, having delivered an Offeror's Notice, the Grantee does not
sell the shares to a third Person pursuant thereto, the
Company shall, within five business days after the expiration
of the Grantee's right to deliver an Offeror's Notice or to
sell the shares subject to an Offeror's Notice to a third
Person, pay the Section 8 Repurchase Consideration in
immediately available funds, and the Grantee shall surrender
to the Company certificates evidencing the shares of Company
Common Stock purchased hereunder, and the Grantee shall
warrant to the Company that, immediately prior to the
repurchase thereof pursuant to this Section 8, the Grantee had
sole record and beneficial ownership of such shares and that
such shares were then held free and clear of all Encumbrances.
9. Registration Rights.
a. The Company shall, if requested by the Grantee (a
"Registration Notice") at any time and from time to time
within two years of the first exercise of the Option (the
"Registration Period"), as expeditiously as practicable,
prepare, file and use reasonable efforts to cause to be made
effective up to two registration statements under the
Securities Act if such registration is necessary or desirable
in order to permit the offering, sale and delivery by Grantee
of any or all shares of Company Common Stock or other
securities that have been acquired by or are issuable to the
Grantee upon exercise of the Option in accordance with the
intended method of sale or other disposition stated by the
Grantee, including, at the sole discretion of the Company, a
"shelf" registration statement under Rule 415 under the
Securities Act
<PAGE> 9
or any successor provision, and the Company shall use all
reasonable efforts to qualify such shares or other securities
under any applicable state securities laws; provided, however,
that notwithstanding anything to the contrary contained in
this Agreement, the Company shall in no event be required to
(i) qualify to do business as a foreign corporation in any
jurisdiction wherein it would not otherwise be required to
qualify, or (ii) consent to service of process in any such
jurisdiction. Without the Grantee's prior written consent
which will not unreasonably be withheld, no other securities
may be included in any such registration. The Company shall
use all reasonable efforts to cause each such registration
statement to become effective, to obtain all consents or
waivers of other parties that are required therefor and to
keep such registration statement effective for such period not
in excess of 180 days from the day such registration statement
first becomes effective as may be reasonably necessary to
effect such sale or other disposition. The obligations of the
Company hereunder to file a registration statement and to
maintain its effectiveness may be suspended for one or more
periods of time not exceeding 90 days in the aggregate in any
one year period if the Board of Directors of the Company shall
have determined in good faith that the filing of such
registration or the maintenance of its effectiveness would
require disclosure of nonpublic information that would
materially and adversely affect the Company. Upon receipt of
notice of the happening of any event as a result of which any
registration statement, prospectus, prospectus supplement, or
any document incorporated by reference in any of the
foregoing, contains any untrue statement of material fact or
fails or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not
misleading, the Grantee shall forthwith discontinue the
disposition of any shares or other securities under such
registration statement, prospectus or prospectus supplement
until the Grantee receives from the Company copies of an
amended or supplemented registration statement, prospectus or
supplement so that, as thereafter delivered to purchasers of
such shares or other securities, such registration statement,
prospectus or prospectus supplement shall not contain any
untrue statement of material fact or fail or omit to state any
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they are made, not misleading. For purposes of
determining whether two requests have been made under this
Section 9, only requests relating to a registration statement
that has become effective under the Securities Act and
pursuant to which the Grantee has disposed of all shares
covered thereby in the manner contemplated therein shall be
counted.
b. The expenses associated with the preparation and
filing of any such registration statement pursuant to this
Section 9 and any sale covered thereby (including any fees
related to blue sky qualifications and filing fees in respect
of the National Association of Securities Dealers, Inc.)
("Registration Expenses") shall be for the account of the
Company except for underwriting discounts or commissions or
brokers' fees in respect to shares to be sold by the Grantee
and the fees and
<PAGE> 10
disbursements of the Grantee's counsel; provided, however,
that the Company shall not be required to pay for any
Registration Expenses with respect to such registration if the
registration request is subsequently withdrawn at the request
of the Grantee unless the Grantee agrees to forfeit its right
to request one registration; and provided further that, if at
the time of such withdrawal the Grantee has learned of a
material adverse change in the results of operations,
condition (financial or other), business or prospects of the
Company from that known to the Grantee at the time of its
request and has withdrawn the request with reasonable
promptness following disclosure by the Company of such
material adverse change, then the Grantee shall not be
required to pay any of such expenses and shall retain all
remaining rights to request registration.
c. The Grantee shall provide all information reasonably
requested by the Company for inclusion in any registration
statement to be filed hereunder. If during the Registration
Period the Company shall propose to register under the
Securities Act the offering, sale and delivery of Company
Common Stock for cash for its own account (other than any
registration on Form S-8 or any successor form or in
connection with any offering to employees of the Company or
in connection with any employee, director or consultant
benefit or compensation plan) or for any other stockholder of
the Company pursuant to a firm underwriting, it shall, in
addition to the Company's other obligations under this Section
9, allow the Grantee the right to participate in such
registration provided that the Grantee participates in the
underwriting; provided, however, that, if the managing
underwriter of such offering advises the Company in writing
that in its opinion the number of shares of Company Common
Stock requested to be included in such registration exceeds
the number that can be sold in such offering, the Company
shall, after fully including therein all securities to be sold
by the Company, include the shares requested to be included
therein by the Grantee pro rata (based on the number of shares
intended to be included therein) with the shares intended to
be included therein by Persons other than the Company. In
connection with any offering, sale and delivery of Company
Common Stock pursuant to a registration statement effected
pursuant to this Section 9, the Company and the Grantee shall
provide each other and each underwriter of the offering with
customary representations, warranties and covenants, including
covenants of indemnification and contribution.
10. First Refusal. At any time after the first occurrence of an
Exercise Event, if the Grantee shall desire to sell, assign, transfer
or otherwise dispose of all or any of the Option Shares or other
securities acquired by it pursuant to the Option, it shall give the
Company written notice of the proposed transaction (an "Offeror's
Notice"), identifying the proposed transferee, accompanied by a copy
of a bona fide binding offer, which is not subject to financing or
other material conditions other than regulatory approvals, to purchase
such shares or other securities signed by such transferee and setting
forth the terms of the proposed transaction. An Offeror's Notice
shall be deemed an offer by the Grantee to the Company, which may be
accepted, in whole but not in part, within ten business days of the
receipt of such Offeror's Notice, on the same terms and conditions and
at the same price at which the
<PAGE> 11
Grantee is proposing to transfer such shares or other securities to
such transferee. The purchase of any such shares or other securities
by the Company shall be settled within ten business days of the date
of the acceptance of the offer (or such later date on which any
conditions of such offer would have been reasonably satisfied or
waived had the offer not been accepted by the Company) and the
purchase price shall be paid to the Grantee in immediately available
funds. If the Company shall fail or refuse to purchase all the shares
or other securities covered by an Offeror's Notice, the Grantee may,
within sixty days from the date of the Offeror's Notice, sell all, but
not less than all, of such shares or other securities to the proposed
transferee at no less than the price specified and on terms no more
favorable than those set forth in the Offeror's Notice; provided,
however, that the provisions of this sentence shall not limit the
rights the Grantee may otherwise have if the Company has accepted the
offer contained in the Offeror's Notice and wrongfully refuses to
purchase the shares or other securities subject thereto. The
requirements of this Section 10 shall not apply to (a) any disposition
as a result of which the proposed transferee (together with the
proposed transferee's affiliates) would own beneficially not more than
2% of the outstanding voting power of the Company, (b) any disposition
of Company Common Stock or other securities by a Person to whom the
Grantee has assigned its rights under the Option with the consent of
the Company, (c) any sale by means of a public offering registered
under the Securities Act or (d) any transfer to a wholly owned
subsidiary of the Grantee which agrees in writing to be bound by the
terms hereof.
11. Listing. If the Company Common Stock or any other securities
then subject to the Option are then listed on The Nasdaq National
Market (or if Company Common Stock is not quoted on The Nasdaq
National Market, on any other market comprising a part of The Nasdaq
Stock Market or, if the shares of Company Common Stock are not quoted
thereon, on another trading market or exchange), the Company, upon the
occurrence of an Exercise Event, shall promptly file an application to
list on The Nasdaq National Market, such other market comprising a
part of The Nasdaq Stock Market or such other trading market or
exchange, as applicable, the shares of the Company Common Stock or
other securities then subject to the Option and will use all
reasonable efforts to cause such listing application to be approved as
promptly as practicable.
12. Replacement of Agreement. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Agreement, if mutilated, the
Company will execute and deliver a new Agreement of like tenor and
date. Any such new Agreement shall constitute an additional
contractual obligation of the Company, whether or not the Agreement so
lost, stolen, destroyed or mutilated shall at any time be enforceable
by anyone.
13. Standstill. Other than pursuant to the Agreement and Plan of
Reorganization, following the occurrence of an Exercise Event and
prior to the first anniversary of the date on which the Option is
first exercised (the "Standstill Period"), without the prior written
consent of the Company, the Grantee shall not, nor shall the Grantee
permit its affiliates to, directly or indirectly, along or in concert
or conjunction with any other person or group, in
<PAGE> 12
any manner acquire, agree to acquire or make any proposal to acquire,
any Company Common Stock (other than pursuant to this Agreement or the
Agreement and Plan of Reorganization) for a price per share of Company
Common Stock that is less than $32.44; provided, however, that should
any event that would be an Exercise Event under Section 4(b)(i) or
(ii) or otherwise be a proposal for Another Motel Transaction occur
during the Standstill Period, the restrictions on Grantee pursuant to
this Section 13 shall not apply.
14. Miscellaneous.
a. Expenses. Except as otherwise provided in the
Agreement and Plan of Reorganization or in Sections 7, 8 or 9
hereof, each of the parties hereto shall bear and pay all
costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
b. Waiver and Amendment. Any provision of this
Agreement may be waived at any time by the party that is
entitled to the benefits of such provision. This Agreement
may not be modified, amended, altered or supplemented except
upon the execution and delivery of a written agreement
executed by the parties hereto.
c. Entire Agreement; No Third Party Beneficiary;
Severability. Except as otherwise set forth in the Agreement
and Plan of Reorganization, this Agreement (including the
Agreement and Plan of Reorganization and the other documents
and instruments referred to herein and therein) (i)
constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between
the parties with respect to the subject matter hereof and (ii)
is not intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder. If any term,
provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected,
impaired or invalidated.
d. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
Delaware, regardless of the laws that might otherwise govern
under applicable principles of conflicts of law; provided,
however, that any matter involving the internal corporate
affairs of any party hereto shall be governed by the
provisions of the state of its incorporation.
e. Descriptive Headings. The descriptive headings
contained herein are for convenience or reference only and
shall not affect in any way the meaning or interpretation of
this Agreement.
f. Notices. Any notice to be given to any party hereto
shall be in writing and shall be delivered by overnight
courier, sent by facsimile transmission or first class
registered or certified mail, postage prepaid.
<PAGE> 13
If to the Company to:
Boole & Babbage, Inc.
3131 Zanker Road
San Jose, CA 95134-1933
Attention: Paul Newton
Facsimile: (908) 526-3056
with a copy to:
Cooley Godward LLP
3000 El Camino Real
Palo Alto, CA 94306
Attention: Alan Mendelson and Keith Flaum
Facsimile: (650) 857-0663
If to Grantee to:
BMC Software, Inc.
2101 Citywest Blvd.
Houston, TX 77042-2827
Attention: Tim Shen
Facsimile: (713) 918-8000
with a copy to:
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin
Houston, TX 77002-6760
Attention: John S. Watson
Facsimile: (713) 615-5236
Any communication so addressed and mailed by first-class
registered or certified mail, postage prepaid, shall be deemed to be
received on the fifth business day after so mailed, and any
communication so addressed and if delivered by overnight courier or
facsimile to such address shall be deemed to be received (i) in the
case of delivery by overnight courier, on the second business day
after such communication is delivered to the overnight courier
service, and (ii) in the case of delivery by facsimile, upon delivery
during normal business hours on any business day.
g. Counterparts. This Agreement and any amendments
hereto may be executed in two counterparts, each of which
shall be considered one and the same agreement and shall
become effective when both counterparts have been signed by
each of the
<PAGE> 14
parties and delivered to the other party, it being understood
that both parties need not execute the same counterpart.
h. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder or under the Option
shall be assigned by either of the parties hereto (whether by
operation of law or otherwise) without the prior written
consent of the other party, except that the Grantee may assign
this Agreement to a wholly owned subsidiary of the Grantee;
provided, however, that no such assignment shall have the
effect of releasing the Grantee from its obligations
hereunder. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and
assigns.
i. Further Assurances. In the event of any exercise of
the Option by the Grantee, the Company and the Grantee shall
execute and deliver all other documents and instruments and
take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such
exercise.
j. Specific Performance. The parties hereto hereby
acknowledge and agree that the failure of any party to this
Agreement to perform its agreements and covenants hereunder
will cause irreparable injury to the other party to this
Agreement for which damages, even if available, will not be an
adequate remedy. Accordingly, each of the parties hereto
hereby consents to the granting of equitable relief (including
specific performance and injunctive relief) by any court of
competent jurisdiction to enforce any party's obligations
hereunder. The parties further agree to waive any requirement
for the securing or posting of any bond in connection with the
obtaining of any such equitable relief and that this provision
is without prejudice to any other rights that the parties
hereto may have for any failure to perform this Agreement.
<PAGE> 15
IN WITNESS WHEREOF, the Company and the Grantee have caused this Stock
Option Agreement to be signed by their respective officers thereunto duly
authorized, all as of the day and year first written above.
BOOLE & BABBAGE, INC.
By: /s/ Paul E. Newton
----------------------------------
Name: Paul E. Newton
Title: President and Chief
Executive Officer
BMC SOFTWARE, INC.
By: /s/ Max P. Watson Jr.
----------------------------------
Name: Max P. Watson Jr.
Title: President
<PAGE> 1
EXHIBIT 3
VOTING AGREEMENT
This Voting Agreement dated as of October __, 1998 is between BMC
Software, Inc., a Delaware corporation ("BMC"), and
_____________________________ (the "Stockholder").
WHEREAS, BMC, Ranger Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of BMC ("Merger Sub"), and Boole & Babbage, Inc., a
Delaware corporation ("Boole"), are entering into an Agreement and Plan of
Reorganization dated as of the date hereof (as amended from time to time
pursuant thereto, the "Reorganization Agreement");
WHEREAS, the Stockholder owns the number of issued and outstanding
shares of Common Stock, par value $0.001 per share, of Boole (the "Boole Common
Stock), set forth opposite his name on Schedule A attached hereto; and
WHEREAS, as a condition to the willingness of BMC to enter into the
Reorganization Agreement, and as an inducement to it to do so, the Stockholder
has agreed for the benefit of BMC as set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises set forth above, the
mutual promises set forth below, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows (terms defined in the Reorganization Agreement and used but not
defined herein having the meanings assigned to such terms in the Reorganization
Agreement):
ARTICLE 1.
COVENANTS OF THE STOCKHOLDER
Section 1.01. Agreement to Vote. At any meeting of the stockholders of
Boole held after the date of this Agreement and prior to the Termination Date
(as defined hereinafter), however called, and at every adjournment or
postponement thereof after the date of this Agreement and prior to the
Termination Date, or in connection with any written consent of the stockholders
of Boole given after the date of this Agreement and prior to the Termination
Date, the Stockholder shall vote or cause to be voted all Subject Shares (as
defined below) in favor of the approval of the Merger and each of the other
transactions contemplated by the Reorganization Agreement and in favor of the
approval and adoption of the Reorganization Agreement, and any actions required
in furtherance hereof and thereof. For purposes of this Agreement, "Subject
Shares" shall mean all issued and outstanding shares of Boole Common Stock owned
(i) of record by the Stockholder or (ii) beneficially by the Stockholder, where
such Stockholder has sole voting power of such stock without consideration of
any duty (fiduciary or otherwise) to another person, in either case, as of the
record date fixed for such meeting or consent. Notwithstanding anything to the
contrary contained in this
<PAGE> 2
Agreement, the "Subject Shares" shall not include, and the Stockholder shall not
be deemed to be the beneficial owner of, any shares of Boole Common Stock that
the Stockholder may acquire upon exercise of any stock options (unless such
option has been exercised and such shares have been issued to the Stockholder
and are held by the Stockholder as of such record date). From the date of this
Agreement through the Termination Date, the Stockholder hereby grants BMC an
irrevocable proxy coupled with an interest to vote the Subject Shares in favor
of the Merger and each of the other transactions contemplated by the
Reorganization Agreement and in favor of the approval and adoption of the
Reorganization Agreement, and any actions required in furtherance hereof and
thereof.
Section 1.02. Proxies and Voting Agreements. Except as described in
Section 1.01, the Stockholder hereby revokes any and all previous proxies
granted with respect to matters set forth in Section 1.01. Prior to the
Termination Date, the Stockholder shall not enter into any agreement or
understanding with any person other than BMC prior to the Termination Date,
directly or indirectly, to vote, grant any proxy or give instructions with
respect to the voting of any Subject Shares in any manner inconsistent with this
Agreement. This Agreement is intended to bind Stockholder only with respect to
the specific matters set forth herein. Stockholder will retain at all times the
right to vote the Stockholder's Subject Shares, in Stockholder's sole
discretion, on all matters other than those set forth in this Section 1.02 which
are at any time or from time to time presented to Boole's stockholders
generally.
Section 1.03. Transferee of Subject Shares to be Bound by this
Agreement. The Stockholder agrees that, during the period from the date of this
Agreement through the Termination Date, Stockholder shall not cause or permit
any transfer, assignment, conveyance or other disposition of any of the Subject
Shares to be effected unless each person to which any Subject Shares, or any
interest in any of such Subject Shares, is or may be transferred shall have: (a)
executed a counterpart of this Agreement; and (b) agreed to hold such Subject
Shares (or interest in such Subject Shares) subject to all of the terms and
provisions of this Agreement.
For purposes hereof, the "Termination Date" means the first to occur of
(i) the Effective Time of the Merger and (ii) the date the Reorganization
Agreement is terminated pursuant to the provisions thereof.
ARTICLE 2.
REPRESENTATIONS, WARRANTIES AND ADDITIONAL COVENANTS
OF THE STOCKHOLDER
The Stockholder represents, warrants and covenants as of the date
hereof to BMC that:
Section 2.01. Ownership. The Stockholder is as of the date hereof the
beneficial owner of the shares of Boole Common Stock set forth opposite his name
on Schedule A attached hereto. The Stockholder has the sole right to vote such
shares, none of such shares are subject to any voting trust or other agreement,
arrangement or restriction with respect to the voting of such shares, and no
<PAGE> 3
proxy, power of attorney or other authorization has been granted with respect to
any of such shares other than as set forth herein.
Section 2.02. Authority and Non-Contravention. The Stockholder has the
right, and capacity, to execute, deliver and perform this Agreement and
consummate the transactions contemplated hereby.
Such actions by the Stockholder (a) require no action by or in respect
of, or filing with, any governmental entity by the Stockholder on or before the
Termination Date, other than any required filings under the Exchange Act or
under the HSR Act, and (b) do not and will not contravene or constitute a
default under any provisions of applicable law or regulation or any agreement,
judgment, injunction, order, decree or other instrument binding on the
Stockholder or result in the imposition of any lien, pledge, security interest,
charge or other encumbrance or restriction on any of the Subject Shares (other
than as provided in this Agreement with respect to Subject Shares).
Section 2.03. Binding Effect. This Agreement has been duly executed and
delivered by the Stockholder and is the valid and binding agreement of the
Stockholder, enforceable against the Stockholder in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights generally and by equitable
principles to which the remedies of specific performance and injunctive and
similar forms of relief are subject.
ARTICLE III
MISCELLANEOUS
Section 3.01. Expenses. Each party hereto shall pay its own expenses
incident to preparing for entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.
Section 3.02. Further Assurances. From time to time, at the request of
the other party, each party shall execute and deliver or cause to be executed
and delivered such additional documents and instruments and take all such
further reasonable action as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
Section 3.03. Specific Performance. The Stockholder on the one hand,
and BMC, on the other, acknowledge and agree that irreparable damage would occur
if for any reason the Stockholder fails to perform any of the Stockholder's
obligations under this Agreement, and that BMC would not have an adequate remedy
at law for money damages in such event. Accordingly, BMC shall be entitled to
seek specific performance and injunctive and other equitable relief to enforce
the performance of this agreement by the Stockholder without any requirement for
the securing or posting of any bond. This provision is without prejudice to any
other rights that BMC may have against the Stockholder for any failure to
perform its obligations under this Agreement.
<PAGE> 4
Section 3.04. Notices. Any notice or communication required or
permitted hereunder shall be in writing and shall be delivered by overnight
courier, sent by facsimile transmission or first class registered or certified
mail, postage prepaid. Any communication so addressed and mailed by first-class
registered or certified mail, postage prepaid, shall be deemed to be received on
the fifth business day after so mailed, and any communication so addressed and
if delivered by overnight courier or facsimile to such address shall be deemed
to be received (i) in the case of delivery by overnight courier, on the second
business day after such communication is delivered to the overnight courier
service, and (ii) in the case of delivery by facsimile, upon delivery during
normal business hours on any business day.
(a) if to BMC or Merger Sub, to:
BMC Software, Inc.
2101 City West Blvd.
Houston, TX 77042
Attention: Tim Shen
Facsimile: 713/918-1110
with a copy to:
Vinson & Elkins L.L.P.
2300 First City Tower
Houston, Texas 77002
Attention: John S. Watson
Facsimile: 713/615-5236
(b) if to Stockholder, to:
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with a copy to:
Cooley Godward L.L.P.
3000 El Camino Real
Palo Alto, California 94306
Attention: Alan Mendelson and Keith Flaum
Facsimile: 650/857-0663
Section 3.05. Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of 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
<PAGE> 5
interpretation of this Agreement. Whenever the work "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." Unless the context otherwise requires, "or" is
disjunctive but not necessarily exclusive, and words in the singular include the
plural and in the plural include the singular.
Section 3.06. Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
all parties need not sign the same counterpart.
Section 3.07. Entire Agreement; No Third Party Beneficiaries. This
Agreement (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereto and (b) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 3.08. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
Section 3.09. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) except as permitted herein
without the prior written consent of the other party. 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. All
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense.
Section 3.10. Amendments; Terminations. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto.
Section 3.11. No Effect on Acting as a Director. Nothing in this
Agreement shall, and nothing in this Agreement shall be deemed to, prevent the
Stockholder from taking actions permitted by Section 4.3.6.1 of the
Reorganization Agreement.
<PAGE> 6
IN WITNESS WHEREOF, BMC and the Stockholder have caused this Agreement
to be duly executed as of the day and year first above written.
STOCKHOLDER:
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Name:
BMC:
BMC SOFTWARE, INC.
By:
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Name: M. Brinkley Morse
Title: Senior Vice President
