<PAGE>
As filed with the Securities and Exchange Commission on July 27, 1999
Registration No. 333-[ ]
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________
Form S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
________________________________
Unisys Corporation
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 3570 38-0387840
(State or other jurisdiction of (Primary Standard Industrial Classification (IRS Employer Identification No.)
incorporation or organization) Code Number)
</TABLE>
________________________________
Unisys Corporation
Unisys Way, Blue Bell, Pennsylvania 19424
Tel. (215) 986-4011
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Harold S. Barron
Senior Vice President,
General Counsel and Secretary
Unisys Corporation
Unisys Way
Blue Bell, Pennsylvania 19424
(215) 986-5299
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
________________________________
Copies to:
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<S> <C> <C>
Charles M. Nathan B. Robert Suh Brian G. Cartwright
Fried, Frank, Harris, Shriver & Jacobson Vice President, Chief Financial Officer Latham & Watkins
One New York Plaza and Corporate Secretary 633 West Fifth Street, Suite 4000
New York, New York 10004 PulsePoint Communications Los Angeles, California 90071
(212) 859-8000 6307 Carpinteria Avenue (213) 485-1234
Carpinteria, California 93013
(805) 566-2000
</TABLE>
________________________________
Approximate date of commencement of proposed sale of securities to the public:
As soon as practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.[_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[_]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------------
Title of Each Class Proposed Maximum Proposed Maximum
of Securities Offering Price Aggregate Amount of
to be Registered Amount to be Registered Per Unit Offering Price Registration Fee
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value 2,364,135/(2)/ Not Applicable Not Applicable $ 26,104/(3)/
$0.01 per share /(1)/
===============================================================================================================================
</TABLE>
(1) Includes Preferred Share Purchase Rights ("Rights"). The rights are
associated with and trade with the Unisys Common Stock. The value, if any,
attributable to the Rights is reflected in the market price for the Unisys
Common Stock.
(2) Based on 15,252,480 shares of common stock, no par value, of PulsePoint
Communications, which is the maximum number of shares of PulsePoint common
stock that may be outstanding immediately prior to the consummation of the
transactions herein, assuming conversion of all outstanding preferred stock
and exercise of all outstanding options and warrants to purchase shares of
PulsePoint common stock. Based also on an assumed exchange ratio of 0.155
shares of Unisys Common Stock for each share of PulsePoint common stock.
(3) Pursuant to Rules 457(f)(1) and 457(c) under the Securities Act of 1933, as
amended, the registration fee has been calculated based on a price of
$6.1563 per share of common stock of PulsePoint (the average of the high
and low price per share of common stock of PulsePoint as reported on the
Nasdaq National Market on July 23, 1999), and the maximum number of shares
of such common stock that may be outstanding immediately prior to the
consummation of the transactions contemplated hereby as set forth in
footnote 2 above. Pursuant to Rule 457(b) the registration fee is to be
reduced by $18,255, which is the fee paid pursuant to Section 14(g) of the
Securities Exchange Act of 1934 in connection with the filing on June 28,
1999 of the preliminary proxy statement for the transaction. The remaining
$7,849 is being paid upon the filing hereof.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
PROXY STATEMENT/PROSPECTUS
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
The board of directors of PulsePoint Communications has unanimously
approved a merger agreement that contemplates the merger of a wholly owned
subsidiary of Unisys Corporation into PulsePoint. As a result of the merger,
PulsePoint will become a wholly owned subsidiary of Unisys.
If we complete the merger, each share of PulsePoint common stock will be
converted into the right to receive a fraction of a share of Unisys common stock
equal to an exchange ratio. Holders of a majority of the outstanding shares of
PulsePoint preferred stock have agreed to cause the conversion of all shares of
preferred stock into shares of PulsePoint common stock immediately prior to the
merger. Accordingly, no PulsePoint preferred stock will be outstanding
immediately prior to the merger. The exchange ratio is calculated based on the
average stock price of Unisys common stock over the 20 consecutive trading days
ending on the fourth trading day prior to the shareholder meeting to vote on
this proposal. The exchange ratio is briefly described below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
If the average stock price of
Unisys common stock is: The exchange ratio will be:
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
. Greater than $33.00 $6.60 / average Unisys common stock price
- --------------------------------------------------------------------------------------------------------------------
. Between $33.00 and $27.00 (inclusive) 0.2
- --------------------------------------------------------------------------------------------------------------------
. Less than $27.00 $5.40 / average Unisys common stock price
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The following table sets forth examples of the number of shares of Unisys
common stock each share of PulsePoint common stock would be entitled to receive
if the average Unisys common stock price during the 20 trading day period is
$45.00, $39.00, $33.00, $30.00, $27.00 and $24.00:
Average stock price No. of shares of Unisys common stock
------------------- ------------------------------------
$45.00........................ 0.147
$39.00........................ 0.169
$33.00........................ 0.200
$30.00........................ 0.200
$27.00........................ 0.200
$24.00........................ 0.225
We estimate that Unisys will issue approximately 2.4 million shares of
Unisys common stock to PulsePoint shareholders in the merger. Those shares will
represent less than one percent of the outstanding Unisys common stock after the
merger. The Unisys common stock trades on the New York Stock Exchange under the
symbol "UIS."
We cannot complete the merger unless holders of PulsePoint common stock and
preferred stock, voting as separate classes, vote to approve it. We have
scheduled a special meeting of PulsePoint shareholders to vote on the merger
agreement. We have included in the attached proxy statement/prospectus detailed
information about the time, date and place of the special shareholders meeting.
This document gives you detailed information about the meeting and the
proposed transaction. We encourage you to read this document carefully. IN
PARTICULAR, YOU SHOULD READ THE "RISK FACTORS RELATING TO THE MERGER" SECTION
BEGINNING ON PAGE 1 FOR A DESCRIPTION OF VARIOUS RISKS YOU SHOULD CONSIDER IN
EVALUATING THE PROPOSED TRANSACTION.
We are very enthusiastic about this merger and the strength and
capabilities we expect from the combined company.
/s/ Mark C. Ozur
President and Chief Executive Officer
PulsePoint Communications
- -------------------------------------------------------------------------------
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED
THE SECURITIES TO BE ISSUED UNDER THIS PROXY STATEMENT/PROSPECTUS OR DETERMINED
IF THIS PROXY STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
This proxy statement/prospectus is dated July 29, 1999, and is first being
mailed to shareholders on July 29, 1999.
<PAGE>
[PULSEPOINT LOGO]
_________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held On August 26, 1999
_________________
To the Shareholders of PulsePoint Communications:
A special meeting of the shareholders of PulsePoint Communications will be
held at PulsePoint's headquarters at 6307 Carpinteria Avenue, Carpinteria,
California 93013 on August 26, 1999, at 10:00 a.m., local time, for the
following purposes:
1. To consider and vote on a proposal to adopt and approve an Agreement
and Plan of Merger, dated as of June 14, 1999, between Unisys and PulsePoint
under which, among other things, Shellco Inc., a wholly owned subsidiary of
Unisys, will merge into PulsePoint and PulsePoint shareholders will receive
for each share of PulsePoint stock owned by them, a fraction of a share of
Unisys common stock, as described in the attached proxy statement/prospectus.
A copy of the merger agreement is attached to the proxy statement/prospectus
as Annex A.
2. To act on any other matters that may properly be brought before the
special shareholders meeting or any adjournment or postponement.
Only shareholders of record at the close of business on July 23, 1999 are
entitled to notice of, and to vote at, the meeting or any adjournment or
postponement. Holders of PulsePoint common stock and PulsePoint preferred stock
will vote separately to approve the merger.
You are cordially invited to attend the special shareholders meeting. Whether
or not you plan to attend, please act promptly to vote your shares with respect
to the proposals described above. You may vote your shares by completing,
signing, dating and returning the enclosed proxy card as promptly as possible in
the enclosed postage-paid envelope.
If you attend the special shareholders meeting, you may vote your shares in
person even if you have previously submitted a proxy.
By Order of the Board of Directors,
/s/B. Robert Suh
Corporate Secretary
Carpinteria, California
July 29, 1999
<PAGE>
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TABLE OF CONTENTS
<S> <C>
SUMMARY................................................................. 4
The Companies........................................................ 4
Reasons for the Merger............................................... 4
The Special Shareholders Meeting..................................... 4
Recommendation to Shareholders....................................... 4
Votes Required....................................................... 4
Record Date; Voting Power............................................ 5
Voting Agreements.................................................... 5
Share Ownership by PulsePoint Management............................. 5
What Shareholders will Receive in the Merger......................... 5
Accounting Treatment of the Merger................................... 6
Tax Consequences of the Merger to PulsePoint Shareholders............ 6
Appraisal and Dissenters' Rights..................................... 6
Opinion of Financial Advisor......................................... 6
The Merger Agreement................................................. 6
The Stock Option Agreement........................................... 7
Interests of Certain Persons in the Merger........................... 8
Your Rights as a Shareholder will Change............................. 8
Comparative Market Data.............................................. 9
Selected Historical Consolidated Financial Data...................... 9
Selected Historical Consolidated Financial Data of Unisys............ 10
Selected Historical Consolidated Financial Data of PulsePoint........ 11
Comparative Per Share Data........................................... 12
RISK FACTORS RELATING TO THE MERGER..................................... 13
Operational Risks.................................................... 13
Transaction Risks.................................................... 15
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS.............. 16
THE MERGER.............................................................. 17
General.............................................................. 17
Background of the Merger............................................. 17
PulsePoint Reasons for the Merger.................................... 21
Unisys Reasons for the Merger........................................ 22
Considerations of the PulsePoint Board............................... 22
PulsePoint Board Recommendation...................................... 24
Accounting Treatment................................................. 24
Pro Forma Data....................................................... 24
Material Federal Income Tax Consequences............................. 24
Regulatory Matters................................................... 26
Appraisal and Dissenters' Rights..................................... 26
Federal Securities Laws Consequences; Stock Transfer Restrictions.... 29
FINANCIAL INFORMATION................................................... 30
Selected Historical Consolidated Financial Data...................... 30
Selected Historical Consolidated Financial Data of Unisys............ 31
Selected Historical Consolidated Financial Data of PulsePoint........ 32
Comparative Per Share Data........................................... 33
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION............. 34
OPINION OF FINANCIAL ADVISOR............................................ 35
THE MERGER AGREEMENT.................................................... 42
General.............................................................. 42
Structure of the Merger.............................................. 42
Closing; Effective Time.............................................. 42
Consideration to be Received in the Merger........................... 42
Cancellation of Shares............................................... 43
Procedures for Surrender of Certificates; Fractional Shares.......... 43
Warrants............................................................. 43
Representations and Warranties....................................... 44
Covenants............................................................ 45
Additional Agreements................................................ 47
Conditions to the Consummation of the Merger......................... 48
Termination, Amendment and Waiver.................................... 49
Amendments........................................................... 50
MATERIAL TERMS OF THE STOCK OPTION AGREEMENT............................ 51
General.............................................................. 51
Terms of the Option.................................................. 51
Substitute Option.................................................... 51
Exchange at the Option of Unisys..................................... 51
Limitation of Profit................................................. 52
Effect of Stock Option Agreement..................................... 52
MATERIAL TERMS OF THE VOTING AGREEMENTS................................. 52
THE SPECIAL SHAREHOLDERS MEETING........................................ 53
Date, Time and Place................................................. 53
Matters to be Considered at the Special Shareholders Meeting......... 53
Record Date; Stock Entitled to Vote; Quorum.......................... 53
Votes Required....................................................... 54
Share Ownership of Management........................................ 54
Voting of Proxies.................................................... 54
Solicitation of Proxies; Expenses.................................... 55
INTERESTS OF CERTAIN PERSONS IN THE MERGER.............................. 55
COMPARISON OF SHAREHOLDER RIGHTS........................................ 57
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
DESCRIPTION OF UNISYS CAPITAL STOCK...................................... 64
General............................................................... 64
Common Stock.......................................................... 64
Dividend Limitations.................................................. 64
Unisys Preferred Stock................................................ 64
Preferred Share Purchase Rights and Junior Participating
Preferred Stock................................................... 64
WHERE YOU CAN FIND MORE INFORMATION...................................... 65
EXPERTS.................................................................. 68
LEGAL MATTERS............................................................ 69
INDEPENDENT PUBLIC ACCOUNTANTS........................................... 69
</TABLE>
LIST OF ANNEXES
ANNEX A Agreement and Plan of Merger.............................. A-1
ANNEX B Stock Option Agreement.................................... B-1
ANNEX C Opinion of Morgan Stanley & Co. Incorporated.............. C-1
ANNEX D Dissenters' Rights under the California Corporations Code. D-1
-ii-
<PAGE>
This document incorporates important business and financial information
about our companies from documents we have filed with the SEC that we have not
included in or delivered with this document. Unisys will provide you with copies
of this information relating to Unisys, without charge, upon written or oral
request to:
Unisys Corporation
Unisys Way
Blue Bell, Pennsylvania 19424
Attention: Financial Communications
Telephone number: (215) 986-5777
PulsePoint will provide you with copies of this information relating to
PulsePoint, without charge, upon written or oral request to:
PulsePoint Communications
6307 Carpinteria Avenue
Carpinteria, California 93013
Attention: Office of Investor Relations
Telephone number: (805) 566-2000
IN ORDER TO RECEIVE TIMELY DELIVERY OF THE DOCUMENTS IN ADVANCE OF THE
SPECIAL STOCKHOLDERS MEETING, YOU SHOULD MAKE YOUR REQUEST NO LATER THAN AUGUST
19, 1999.
For more information on the matters incorporated by reference in this
document, see "Where You Can Find More Information" on page 65.
-1-
<PAGE>
Q: Why am I receiving these materials?
A: PulsePoint's board of directors has approved the acquisition of PulsePoint
by Unisys in the merger. The merger now requires the approval of
PulsePoint's shareholders. We are sending you these materials to help you
decide whether to approve the merger.
Q: What will I receive in the merger?
A: You will receive shares of Unisys common stock, which is publicly traded on
the New York Stock Exchange under the symbol "UIS."
Q: What do I need to do now?
A: After you have carefully read this document, just indicate on your enclosed
proxy card how you want to vote. Sign and mail the proxy card in the
enclosed prepaid return envelope as soon as possible. You should indicate
your vote now even if you expect to attend the special shareholders meeting
and vote in person. Indicating your vote now will not prevent you from
later canceling or revoking your proxy right up to the day of the special
shareholders meeting and will ensure that your shares are voted if you
later find you cannot attend the special shareholders meeting.
Q: What do I do if I want to change my vote?
A: You may change your vote:
. by sending a written notice to the corporate secretary of PulsePoint
prior to the special shareholders meeting stating that you would like
to revoke your proxy;
. by signing a later-dated proxy card and returning it by mail prior to
the special shareholders meeting; or
. by attending the special shareholders meeting and voting in person.
Q: What vote is required to approve the merger?
A: In order for us to complete the merger, holders of a majority of the
outstanding shares of PulsePoint common stock and holders of a majority of
the outstanding shares of PulsePoint preferred stock, each voting as a
separate class, must approve the merger agreement. If you do not vote your
PulsePoint shares, the effect will be a vote against the merger agreement.
Q: If my shares are held in "street name" by my broker, will my broker vote my
shares for me?
A: If you do not provide your broker with instructions on how to vote your
shares held in "street name," your broker will not be permitted to vote
them on the proposals being presented at the special shareholders meeting.
You should therefore be sure to provide your broker with instructions on
how to vote your shares.
Q: Should I send in my stock certificates at this time?
A: No. After we complete the merger, Unisys will send PulsePoint shareholders
written instructions for exchanging their stock certificates.
Q: When do you expect to complete the merger?
A: We are working toward completing the merger as quickly as possible. We must
first obtain the approval of PulsePoint shareholders at the special
shareholders meeting. We hope to complete the merger in the third quarter
of 1999. However, we cannot assure you as to when or if the merger will
occur.
Q: Where can I find more information about the companies?
A: Both companies file reports and other information with the SEC. You may
read and copy this information at the SEC's public reference facilities.
Please call the SEC at 1-800-SEC-0330 for information about these
facilities. This information is also available at the Internet site the SEC
maintains at www.sec.gov and, for information about Unisys, at the offices
of the New York Stock Exchange. You can also request copies of these
documents from us. See "Where You Can Find More Information" on page 65.
Also, you can get information about our companies from our Internet sites
located at:
. www.unisys.com and
. www.plpt.com
-2-
<PAGE>
WHO CAN ANSWER YOUR QUESTIONS?
If you have additional questions, you should contact:
PulsePoint Communications
6307 Carpinteria Avenue
Carpinteria, California 93013
Attention: Office of Investor Relations
Telephone Number: (805) 566-2000
or
MacKenzie Partners, Inc.
156 Fifth Avenue PH3
New York, New York 10010-70002
Attention: Edith Lohman
Telephone Number: (212) 675-0524
If you would like additional copies of this
proxy statement/prospectus you should contact:
U.S. Stock Transfer Corporation
1745 Gardenia Avenue
Glendale, California 91204
Banks and Brokers call collect (818) 502-1404
Call Toll Free: 1-800-835-8778
-3-
<PAGE>
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus. It does not contain all of the information that is
important to you. To understand the proposed transactions fully and the
consequences to you, we urge you to read carefully the entire proxy
statement/prospectus and the documents we refer to in this document. See "Where
You Can Find More Information" on page 65. We have included page references
directing you to a more complete description of each item presented in this
summary.
The Companies
UNISYS CORPORATION
Unisys Way
Blue Bell, Pennsylvania 19424
(215) 986-4011
Unisys is a worldwide information services and technology company that
provides systems and solutions to help customers apply information technology to
solve their business problems. Unisys is the successor by merger to Burroughs
Corporation. In November 1986, Sperry Corporation was merged into Burroughs, and
the company's name was changed to Unisys Corporation.
PULSEPOINT COMMUNICATIONS
6307 Carpinteria Avenue
Carpinteria, California 93013
(805) 566-2000
PulsePoint Communications develops carrier-grade solutions for
telecommunications network service providers. PulsePoint's new product lines are
Internet-ready, open-system solutions based on Microsoft Windows NT Server
Operating System, using an architecture that integrates voice, fax and e-mail
messaging applications on a single platform to provide unified messaging.
Unified messaging allows end users to manage their messages using telephones,
cellular phones, fax machines or screen-based devices, such as desktop or
portable personal computers.
Reasons for the Merger (page 21)
We believe that the merger will provide the combined company with
substantially greater resources necessary to:
. compete effectively in the rapidly growing and changing global
telecommunications equipment business;
. offer a comprehensive range of products, services and technical
solutions for its customers; and
. cultivate a more diverse customer base with broader geographic
coverage.
We also believe that the merger will allow PulsePoint to achieve economies
of scale that are currently beyond the independent capability of PulsePoint and
access to a broader customer base, resulting in less revenue volatility.
To review the reasons for the merger in greater detail, see "The
Merger--PulsePoint Reasons for the Merger" on page 21 and "The Merger--Unisys
Reasons for the Merger" on page 22.
The Special Shareholders Meeting (page 53)
We will hold the special meeting of PulsePoint shareholders on August 26,
1999 at 10:00 a.m., local time, at PulsePoint's headquarters at 6307 Carpinteria
Avenue, Carpinteria, California 93013. At the special shareholders meeting, we
will ask you to approve the merger agreement.
Recommendation to Shareholders (page 24)
The PulsePoint board believes that the merger is fair to you and in the
best interests of both you and PulsePoint and unanimously recommends that you
vote FOR the approval of the merger agreement.
Votes Required (page 54)
Holders of PulsePoint common stock and holders of PulsePoint preferred
stock will vote separately on the proposal to approve the merger agreement.
Approval of the merger agreement requires the favorable vote of both (i) a
majority of the outstanding shares of PulsePoint common stock, and (ii) a
majority of the outstanding shares of PulsePoint preferred stock. Holders of 89%
of the outstanding shares of PulsePoint preferred stock and 38% of the
outstanding shares of PulsePoint common stock have agreed to vote their shares
in favor of approval of the merger agreement. See "Material Terms of the Voting
Agreements" on page 52.
-4-
<PAGE>
Record Date; Voting Power (page 53)
PulsePoint shareholders may vote at the special shareholders meeting if
they owned shares of either common stock or preferred stock at the close of
business on July 23, 1999.
Common Shareholders. At the close of business on July 23, 1999,
approximately 8,043,384 shares of PulsePoint common stock were outstanding.
For each share of PulsePoint common stock that you owned as of the close of
business on that date, you will have one vote in the vote of common shareholders
at the special shareholders meeting on the proposal to approve the merger
agreement.
Preferred Shareholders. At the close of business on July 23, 1999,
approximately 2,222,271 shares of PulsePoint preferred stock were outstanding.
For each share of preferred stock that you owned as of the close of business on
that date, you will have one vote in the vote of preferred shareholders at the
special shareholders meeting on the proposal to approve the merger agreement.
Voting Agreements (page 52)
Some of PulsePoint's principal shareholders have entered into voting
agreements with Unisys and PulsePoint that commit those shareholders to vote all
their shares in favor of the merger. The effect of the voting agreements is
that, at the date of the special shareholders meeting, holders of:
. 38% of the outstanding common stock; and
. 89% of the outstanding preferred stock
will have committed to voting in favor of the merger.
See "Material Terms of the Voting Agreements" on page 52.
Share Ownership by PulsePoint Management (page 54)
At the close of business on July 23, 1999, the directors and executive
officers of PulsePoint and their affiliates were entitled to vote approximately
1,798,869 shares of PulsePoint common stock and approximately 933,335 shares of
PulsePoint preferred stock. These shares represent approximately 22.36% of the
outstanding shares of PulsePoint common stock and approximately 42% of the
outstanding shares of PulsePoint preferred stock. Of these directors and
executive officers, Bandel Carano and Frederick Warren are parties to the voting
agreements and accordingly have agreed to vote their shares of PulsePoint common
stock and preferred stock in favor of the merger. The shares held by Messrs.
Carano and Warren represent 1.83% of the votes of the PulsePoint common stock
and 2.00% of the votes of the PulsePoint preferred stock on the record date.
Affiliates of the directors and executive officers were entitled to vote
approximately 1,629,947 shares of PulsePoint common stock and 1,333,334 shares
of PulsePoint preferred stock at the close of business on July 23, 1999. These
shares represent approximately 20.26% of the outstanding shares of PulsePoint
common stock and approximately 60% of the outstanding shares of PulsePoint
preferred stock. All of these shares are subject to the terms of the voting
agreements and accordingly will be voted in favor of the merger. See "Material
Terms of the Voting Agreements" on page 52.
What Shareholders will Receive in the Merger (page 42)
Common Shareholders. At the time of the merger, each outstanding share of
PulsePoint common stock will be automatically converted into the right to
receive a fraction of a share of Unisys common stock. That fraction (called the
"Exchange Ratio") is calculated based on the average stock price of Unisys
common stock over the 20 consecutive trading days ending on the fourth trading
day prior to the special shareholders meeting.
The Exchange Ratio is calculated as follows. If the average stock price of
Unisys common stock is greater than $33.00 then the Exchange Ratio will be $6.60
divided by the average stock price of Unisys common stock. If the average stock
price falls between $33.00 and $27.00 (inclusive) then the Exchange Ratio will
be 0.2. If the average stock price is less than $27.00 then the Exchange Ratio
will be $5.40 divided by the average stock price.
Preferred Shareholders. Holders of a majority of the PulsePoint preferred
stock have agreed to cause the conversion of all shares of PulsePoint preferred
stock into shares of PulsePoint common stock immediately prior to the merger
pursuant to the terms of the voting agreements. Accordingly, holders of
PulsePoint preferred stock will receive their merger consideration on an
as-converted basis.
-5-
<PAGE>
Accounting Treatment of the Merger (page 24)
We expect the merger to be treated as a pooling of interests for accounting
purposes, which means that the recorded assets and liabilities of Unisys and
PulsePoint will be carried forward to the books of the combined company at their
recorded historical amounts. See "The Merger Agreement--Conditions to the
Consummation of the Merger" on page 48.
Tax Consequences of the Merger to PulsePoint Shareholders (page 24)
The merger has been structured as a reorganization for United States
federal income tax purposes. Accordingly, PulsePoint shareholders generally will
not recognize any gain or loss for United States federal income tax purposes on
the exchange of their PulsePoint shares for shares of Unisys common stock in the
merger, except for any gain or loss recognized in connection with the receipt of
cash instead of a fractional share of Unisys common stock.
Tax matters are very complicated, and the tax consequences of the merger to
each PulsePoint shareholder will depend on the facts of that shareholder's
situation. You are urged to consult your tax advisor for a full understanding of
the tax consequences of the merger to you.
Appraisal and Dissenters' Rights (page 26)
California law permits holders of PulsePoint common stock and PulsePoint
preferred stock to dissent from the merger and to have the fair value of their
stock appraised and paid to them in cash. To do this, the holders of these
shares must file notices with PulsePoint and follow other procedures and vote
against the merger. If you hold shares of PulsePoint stock and you dissent from
the merger and follow the required formalities, your shares will not become
shares of Unisys common stock. Instead, your only right will be to receive the
appraised value of your shares in cash. If holders of less than five percent of
the outstanding PulsePoint common stock demand dissenters' rights, California
law does not recognize any dissenters' rights for the PulsePoint common stock.
No percentage threshold applies with respect to the PulsePoint preferred stock.
Neither Unisys nor PulsePoint will be obligated to consummate the merger if
the aggregate cash payable to dissenting PulsePoint shareholders, plus the cash
payable in lieu of fractional shares, equals 10% or more of the value of the
total merger consideration paid at the effective time of the merger. Total
merger consideration includes the aggregate value of the Unisys shares delivered
at the effective time plus any cash to be paid for dissenters' shares and cash
to be paid in lieu of fractional shares.
See "The Merger Agreement--Appraisal and Dissenters' Rights" on page 26.
The full text of the applicable provisions of the California Corporations Code
is reprinted as Annex D.
Opinion of Financial Advisor (page 35)
PulsePoint retained Morgan Stanley & Co. Incorporated as its financial
advisor and agent in connection with the merger to render a financial fairness
opinion to the PulsePoint board of directors.
In deciding to approve the merger, the PulsePoint board considered this
opinion, which stated that as of its date and subject to the considerations
described in it, the consideration to be received in the merger by holders of
PulsePoint common stock is fair from a financial point of view to these holders.
We have attached this opinion as Annex C to this proxy statement/prospectus.
The Merger Agreement (page 42)
We have attached the merger agreement as Annex A to this proxy
statement/prospectus. We encourage you to read the merger agreement because it
is the legal document that governs the merger.
Conditions to the Merger
We will complete the merger only if a number of conditions are satisfied or
waived including:
. PulsePoint common shareholders and PulsePoint preferred shareholders
approve the merger agreement;
. no law or court order prohibits the transaction;
. our independent auditors issue letters regarding the appropriateness of
pooling of interests accounting treatment for the merger;
. the representations and warranties of the parties to the merger agreement
are materially accurate as of closing;
. the aggregate cash payable to dissenting PulsePoint shareholders, plus the
cash payable
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<PAGE>
in lieu of fractional shares, will not constitute 10% or more of the total
merger consideration to be paid;
. all other necessary regulatory approvals are received without conditions
that would be materially adverse to Unisys' or PulsePoint's businesses,
financial condition or results of operations; and
. attorneys for Unisys and PulsePoint issue opinions that the merger will be
a reorganization for United States federal income tax purposes.
In addition, Unisys' obligation to complete the merger is subject to the
condition that each party to a voting agreement complies with its terms in all
material respects.
Termination of the Merger Agreement
PulsePoint and Unisys can jointly agree to terminate the merger agreement
at any time without completing the merger. In addition, either PulsePoint or
Unisys can terminate the merger agreement if any of the following occurs:
. we do not complete the merger on or before December 31, 1999;
. PulsePoint's shareholders fail to approve the merger at the special
shareholders meeting; or
. a governmental authority prohibits the merger or makes it illegal.
Unisys can terminate the agreement if any of the following occurs:
. the PulsePoint board or any of its committees no longer recommends that
PulsePoint shareholders vote to approve the merger agreement or modifies
its recommendation or approval in any manner adverse to Unisys or approves
or recommends any proposal from a third party which is a Company
Acquisition Proposal (defined below); or
. any of the parties to the voting agreements other than Unisys violates any
of the terms of the voting agreements in any material respect.
PulsePoint has agreed that it will pay Unisys a $4 million termination fee
and reimburse Unisys for expenses incurred in connection with the merger
agreement if:
(1) PulsePoint receives a Company Acquisition Proposal and
. the merger agreement is terminated because the merger is not completed
by December 31, 1999 or because the PulsePoint shareholders do not
approve the merger agreement; and
. PulsePoint enters into or completes a Company Acquisition Proposal
transaction within 18 months after termination of the merger
agreement; or
(2) Unisys terminates the merger agreement because the PulsePoint board or any
of its committees no longer recommends that PulsePoint shareholders vote to
approve the merger agreement or modifies its recommendation or approval in
any manner adverse to Unisys or approves or recommends any Company
Acquisition Proposal.
A "Company Acquisition Proposal" means an inquiry, proposal or offer from a
third party relating to a merger, tender offer, recapitalization, or a purchase
of more than 25% of PulsePoint's assets or stock or a business of PulsePoint
which constitutes more than 25% of its consolidated net revenues, net income or
assets.
The Stock Option Agreement (page 51)
PulsePoint has signed a stock option agreement in which it granted Unisys
an option to purchase up to 1,109,937 shares of PulsePoint common stock for
$6.60 per share. The option will become exercisable only if PulsePoint becomes
obligated to pay a termination fee to Unisys. The stock option agreement,
however, limits the total amount Unisys is permitted to receive from the
termination fee and as a result of the exercise of the option to $4 million.
If the option becomes exercisable another acquiror of PulsePoint may be
precluded from accounting for the acquisition as a pooling of interests. This
may limit the number of other companies willing to merge with PulsePoint.
We have attached a copy of the stock option agreement as Annex B to this
proxy statement/prospectus.
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<PAGE>
Interests of Certain Persons in the Merger (page 55)
When you consider the merger agreement and the recommendation of the
PulsePoint board that you vote in favor of the merger, you should be aware that
a number of PulsePoint officers and directors may have interests in the merger
that may be different from, or in addition to, yours. See "Interests of Certain
Persons in the Merger" on page 55.
Your Rights as a Shareholder will Change
Your rights as a PulsePoint shareholder are determined by California law
and by PulsePoint's articles of incorporation and by-laws. When the merger is
completed, your rights as a Unisys stockholder will be determined by Delaware
law and by the Unisys certificate of incorporation and by-laws. See "Comparison
of Shareholders Rights" beginning on page 57.
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<PAGE>
Comparative Market Data
The following table presents trading information for Unisys common
stock and PulsePoint common stock on June 14, 1999 and July 23, 1999. June 14,
1999 was the last full trading day prior to our announcement of the signing of
the merger agreement. July 23, 1999 was the last practicable trading day for
which information was available prior to the date of this proxy
statement/prospectus. You should read the information presented below in
conjunction with "Comparative Per Share Data" on page 12.
<TABLE>
<CAPTION>
Unisys Common Stock PulsePoint Common Stock
------------------------------ ------------------------------
High Low Closing High Low Closing
-------- -------- --------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
June 14, 1999............................... $38.125 $37.313 $37.438 $5.875 $5.313 $5.50
July 23, 1999............................... $42.6875 $41.125 $42.6875 $6.1875 $6.125 $6.125
--------- ------- ----------- -------- ------- ---------
</TABLE>
The market prices of shares of Unisys common stock and PulsePoint
common stock fluctuate. As a result, you should obtain current market
quotations.
Selected Historical Consolidated Financial Data
How We Prepared the Financial Statements
We are providing the following information to aid you in your analysis of
the financial aspects of the merger. We derived this information from the
audited consolidated financial statements of Unisys for the years 1994 through
1998 and the unaudited consolidated financial statements of Unisys for the six
months ended June 30, 1999 and 1998, and from the audited consolidated financial
statements of PulsePoint for the years 1994 through 1998 and the unaudited
consolidated financial statements of PulsePoint for the six months ended June
30, 1999 and 1998. The information is only a summary and you should read it
together with our historical financial statements and related notes contained in
the annual reports, quarterly reports and other information that we have filed
with the SEC and incorporated by reference. See "Where You Can Find More
Information" on page 65.
Pooling of Interests Accounting Treatment
We expect that the merger will be accounted for as a "pooling of
interests." This means that, for accounting and financial reporting purposes,
the recorded assets and liabilities of Unisys and PulsePoint will be carried
forward to the books of the combined company at their historical recorded
amounts. For a more detailed description of pooling of interests accounting, see
"The Merger--Accounting Treatment" on page 24.
-9-
<PAGE>
Selected Historical Consolidated Financial Data of Unisys
The following selected historical consolidated financial data for each
of the years ended December 31, 1994 through 1998 have been derived from Unisys'
audited consolidated financial statements. The selected historical consolidated
financial data for the six months ended June 30, 1999 and 1998 have been derived
from Unisys' unaudited interim consolidated financial statements, which
financial statements, in the opinion of management, reflect all adjustments
necessary for the fair presentation of the data. These adjustments consist only
of normal recurring accruals. Because of seasonal and other factors, results for
interim periods are not necessarily indicative of the results to be expected for
the full year. This information is only a summary and you should read it
together with Unisys' historical consolidated financial statements and related
notes contained in the annual reports, quarterly reports and other information
that we have filed with the SEC and incorporated by reference. See "Where You
Can Find More Information" on page 65.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
------------------ -----------------------------------------------------
1999 1998 1998 1997(1) 1996 1995(1) 1994(1)
-------- -------- -------- --------- ------- ------- --------
(In millions, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Results of Operations Data:
Revenue.................................. $3,698.8 $3,378.2 $7,208.4 $6,636.0 $6,370.5 $6,342.3 $6,095.5
Income (loss) from continuing operations
before income taxes................... 355.2 238.8 604.7 (729.8) 86.7 (781.1) 14.6
Income (loss) from continuing operations
before extraordinary items............ 230.9 152.8 387.0 (834.5) 57.2 (627.3) 12.1
Net income (loss) ....................... 230.9 152.8 387.0 (834.5) 45.1 (624.6) 100.5
Dividends on preferred shares............ 34.8 53.3 106.5 111.1 120.8 120.3 120.1
Earnings (loss) on common shares......... 196.1 99.5 280.5 (945.6) (75.7) (744.9) (19.6)
Earnings (loss) from continuing
operations per common share
Basic............................... 0.73 0.40 1.11 (5.20) (0.37) (4.37) (0.63)
Diluted............................. 0.70 0.38 1.06 (5.20) (0.37) (4.37) (0.63)
Balance Sheet Data:
(as of the end of the period)
Total assets............................. $5,451.4 $5,437.0 $5,577.7 $5,591.3 $6,967.1 $7,113.2 $7,193.4
Long-term debt .......................... 1,088.8 1,431.4 1,105.2 1,438.3 2,271.4 1,533.3 1,864.1
</TABLE>
- -------------------------------------------
(1) Includes special pretax charges of $1,039.2 million, $846.6 million, and
$186.2 million for the years ended December 31,1997, 1995, and 1994,
respectively.
-10-
<PAGE>
Selected Historical Consolidated Financial Data of PulsePoint
The following selected historical consolidated financial data for each of
the years ended December 31, 1994 through 1998 have been derived from
PulsePoint's audited consolidated financial statements. The selected historical
consolidated financial data for the six months ended June 30, 1999 and 1998 have
been derived from PulsePoint's unaudited interim consolidated financial
statements, which financial statements, in the opinion of management, reflect
all adjustments necessary for the fair presentation of the data. These
adjustments consist only of normal recurring accruals. Because of seasonal and
other factors, results for interim periods are not necessarily indicative of the
results to be expected for the full year. This information is only a summary and
you should read it together with PulsePoint's historical consolidated financial
statements and related notes contained in the annual reports, quarterly reports
and other information that we have filed with the SEC and incorporated by
reference See "Where You Can Find More Information" on page 65.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
---------------- -------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- ---------- -------- -------- ---------- ---------
(In millions, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Results of Operations Data:
Revenue............................. $ 14.6 $ 11.0 $ 25.4 $ 20.6 $ 22.3 $ 23.2 $ 31.7
Net income (loss)................... (3.6) (6.8) (11.9) (18.9) (6.8) (5.2) 2.5
Earnings (loss) on common shares.... (3.6) (6.8) (11.9) (18.9) (6.8) (5.2) 2.5
Earnings (loss) per common share
Basic ........................... (.67) (1.31) (2.29) (3.72) (1.36) (1.04) .52
Diluted.......................... (.67) (1.31) (2.29) (3.72) (1.36) (1.04) .48
Balance Sheet Data:
(as of the end of the period)
Total assets........................ 26.2 32.1 30.5 37.4 33.3 38.9 44.0
Long-term debt...................... 1.6 0.0 1.5 0.0 0.0 0.0 0.1
</TABLE>
-11-
<PAGE>
Comparative Per Share Data
Set forth below are the earnings (loss) before extraordinary items and book
value (common stockholders' equity) per common share data separately for Unisys
on an historical basis, for the combined company on a pro forma combined basis,
for PulsePoint on an historical basis and for the combined company on a pro
forma combined basis per PulsePoint equivalent share. The exchange ratio for the
merger is assumed to be 0.155 shares of Unisys common stock for each share of
PulsePoint common stock, which is based on the closing price of Unisys common
stock on July 23, 1999. The pro forma earnings per share data presented below
assumes conversion of PulsePoint preferred stock into common stock for all
periods presented. The PulsePoint historical book value data also assumes
conversion of PulsePoint preferred stock into common stock for all periods
presented.
The unaudited pro forma combined data below is for illustrative purposes
only. The companies may have performed differently had they always been
combined. You should not rely on this information as being indicative of the
historical results that would have been achieved had the companies always been
combined or the future results that the combined company will experience after
the merger.
You should read the information below together with our respective
historical financial statements and related notes contained in the annual
reports and information that we have filed with the SEC and incorporated by
reference. To obtain copies of these documents, see "Where You Can Find More
Information" on page 65.
<TABLE>
<CAPTION>
Six Months
Ended June 30, Years Ended December 31,
------------- --------------------------------
1999 1998 1997 1996
------------ -------- -------- --------
<S> <C> <C> <C> <C>
Unisys Historical per Common Share Data:
Earnings (loss) before extraordinary items....................... $ .73 $ 1.11 $ (5.20) $ (.37)
Earnings (loss) before extraordinary items--assuming dilution ... .70 1.06 (5.20) (.37)
Book value....................................................... 3.25 .38
Unisys Pro Forma Combined per Unisys Common
Share Data:
Earnings (loss) before extraordinary items....................... $ .71 $ 1.06 $ (5.23) $ (.47)
Earnings (loss) before extraordinary items--assuming dilution ... .69 1.00 (5.23) (.47)
Book value....................................................... 3.18 .34
PulsePoint Historical per Common Share Data:
Earnings (loss).................................................. $ (.67) $ (2.29) $ (3.72) $ (1.36)
Earnings (loss)--assuming dilution .............................. (.67) (2.29) (3.72) (1.36)
Book value....................................................... .91 1.16
Unisys Pro Forma Combined per PulsePoint
Equivalent Common Share Data:
Earnings (loss) before extraordinary items....................... $ .11 $ .16 $ (.81) $ (.07)
Earnings (loss) before extraordinary items--assuming dilution ... .11 .16 (.81) (.07)
Book value....................................................... .49 .05
</TABLE>
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<PAGE>
RISK FACTORS RELATING TO THE MERGER
In addition to the other information included and incorporated by reference
in this proxy statement/prospectus, you should carefully read and consider the
following factors in evaluating the proposals to be voted on at the special
shareholders meeting.
OPERATIONAL RISKS
UNISYS FACES AGGRESSIVE COMPETITION AND RAPID TECHNOLOGICAL CHANGE IN THE
INFORMATION SERVICES AND TECHNOLOGY MARKETPLACE.
Unisys operates in an industry characterized by aggressive competition,
rapid technological change, evolving technology standards and short product life
cycles. Unisys' competitors include computer hardware manufacturers, software
providers and information services companies, many of which have greater
financial and other resources and are substantially less leveraged than Unisys.
Unisys competes primarily on the basis of product performance, service,
technological innovation, and price. Its future operating results will depend on
its ability to:
. design, develop, introduce, deliver or obtain new and innovative
products and services on a timely and cost-effective basis;
. mitigate the effects of competitive pressures and volatility in the
information services and technology market on revenues, pricing and
margins;
. effectively manage the shift of its business mix away from high margin
proprietary products and maintenance to lower margin open systems and
services offerings; and
. attract and retain highly skilled personnel.
UNISYS HAS EXPERIENCED PROBLEMS IN PROFITABLY PERFORMING SOME SYSTEMS
INTEGRATION CONTRACTS.
Some of Unisys' systems integration contracts are fixed-price contracts
under which it assumes the risk for the delivery of the contracted services and
products at an agreed-upon fixed price. At times Unisys has experienced problems
in performing some of these fixed-price contracts on a profitable basis and has
provided periodically for adjustments to the cost to complete them. In the
fourth quarter of 1995, Unisys recorded a pretax charge for contract losses of
$129.0 million, primarily relating to a few large multi-year, fixed-price
systems integration contracts. In the first quarter of 1997, Unisys recorded
charges of approximately $25 million for additional estimated contract costs
identified during that quarter. Unisys could experience contract performance
problems in the future, which could affect its results of operations.
UNISYS IS SUBJECT TO THE RISKS OF DOING BUSINESS INTERNATIONALLY.
Approximately 56% of Unisys' total revenue derives from international
operations. There is no material concentration of revenues in any particular
country outside the United States. Due to its foreign operations, Unisys is
exposed to the effects of foreign exchange rate fluctuations on the U.S. dollar.
Unisys uses foreign exchange forward contracts and options, generally
having maturities of less than nine months, to reduce this exposure. It uses
these contracts and options for the sole purpose of hedging transactional
exposures. It does not hold or issue financial instruments for speculative
trading purposes. In addition to fluctuations in foreign currency exchange
rates, many other factors beyond Unisys' control could affect its international
business. These include instability of foreign economies, U.S. and foreign
government laws and policies affecting trade and investment, and governmental
changes.
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<PAGE>
THERE COULD BE UNANTICIPATED NEGATIVE CONSEQUENCES AND COSTS ASSOCIATED WITH THE
YEAR 2000 READINESS OF UNISYS' PRODUCT OFFERINGS AND INTERNAL SYSTEMS
Many computer systems and embedded technology may experience problems
handling dates beyond the year 1999 and therefore may need to be modified before
the year 2000 in order to remain functional. Unisys has been taking actions to
ensure both the readiness of its product offerings to customers and the
readiness of its internal systems for handling dates beginning in the year 2000.
Although Unisys does not believe that it will incur material costs or experience
material disruptions in its business associated with the year 2000, it could
experience serious unanticipated negative consequences and/or material costs.
These could include increased customer satisfaction costs related to year 2000,
potential litigation, changing customer spending patterns, and undetected errors
or defects associated with year 2000 date functions in its current product
offerings.
UNISYS IS HIGHLY LEVERAGED AND HAS SUBSTANTIAL CASH REQUIREMENTS
. Debt was approximately $1.2 billion at December 31, 1998 and
approximately $1.7 billion at December 31, 1997.
. Total interest expense was $171.7 million for 1998 and $233.2 million
for 1997.
. Unisys' debt-to-capital ratio was 43% at December 31, 1998 and 58% at
December 31, 1997.
. Unisys has called all of its approximately 13.4 million outstanding
shares of series A convertible preferred stock for redemption on
August 2, 1999 at a redemption price of $50.1849 per share. Holders of
this preferred stock may elect to convert their shares of preferred
stock into shares of Unisys common stock prior to the redemption date
at a conversion price of $29.93 per share, or approximately 1.67
shares of common stock for each preferred share converted. The closing
price for Unisys common stock on July 23, 1999 was $42 11/16 per
share. If preferred holders do not elect to convert their shares into
common stock, Unisys could be required to pay up to $672 million in
payment of the aggregate redemption price.
. Unisys expects its total cash requirements associated with the
restructuring actions discussed below to be approximately $67 million
in 1999 and $35 million thereafter.
. During 1998, cash provided by operations was $650.0 million, cash used
for investing activities was $275.0 million, and cash used for
financing activities (primarily early repayments of debt) was $570.7
million. In 1997, cash provided by operations was $383.5 million, cash
used for investing activities was $291.6 million, and cash used for
financing activities (primarily redemption of preferred stock) was
$274.1 million.
At December 31, 1998, Unisys' cash balance was $604.3 million.
Nevertheless, Unisys may require continued access to financing sources to meet
its cash requirements. This access may not always be available to it.
UNISYS HAS INCURRED SPECIAL CHARGES AND EXPERIENCED NET LOSSES IN THE PAST
Unisys operates in an industry characterized by ongoing dramatic changes,
including a shift from higher margin mainframe products to lower margin products
and services. In order to improve its operating results, Unisys has moved
aggressively to realign its operations to reflect the rapidly changing market
for information processing products and services.
. In the fourth quarter of 1997, Unisys took a one-time charge of $1.0
billion against net income. After this charge, it reported a net loss
of $834.5 million for the full year. The charge included:
- $103.7 million principally related to its decision to discontinue
the manufacturing and assembly of personal computers and low-end
servers and to dispose of a small, non-strategic technology
product;
- the write-off of $883.6 million in goodwill principally related
to the 1986 merger of Burroughs Corporation and Sperry
Corporation; and
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<PAGE>
- $42.0 million related to the conversion, in December 1997, of
$271.2 million of Unisys' 8 1/4% convertible subordinated notes
due 2006.
. In the fourth quarter of 1996, Unisys took charges of $84 million
relating to the refocusing and discontinuance of certain products and
programs. After the charges and an extraordinary item, Unisys reported
net income of $45.1 million for the full year.
. In 1995, Unisys reported a net loss of $624.6 million. The loss
included a fourth quarter pretax restructuring charge of $717.6
million, primarily relating to its internal realignment into three
operating units and covering work force reductions, product and
program discontinuances and consolidation of office facilities and
manufacturing capacity.
. Unisys recorded special pretax charges of $186.2 million in 1994, $1.2
billion in 1991, and $181.0 million in 1990. Principally due to these
special charges, it had net losses of $1.4 billion in 1991 and $436.7
million in 1990.
Although Unisys recorded no special charges in 1998, it could incur special
charges and/or experience losses in the future.
UNISYS DOES NOT PAY DIVIDENDS ON ITS COMMON STOCK
Unisys has not declared or paid any cash dividends on its common stock
since 1990 and does not anticipate declaring or paying dividends on it in the
foreseeable future.
TRANSACTION RISKS
VALUE OF UNISYS COMMON STOCK TO BE RECEIVED IN THE MERGER MAY FLUCTUATE
The number of shares of Unisys common stock that PulsePoint shareholders
receive in the merger will be fixed as of the date which is four trading days
prior to the date of the PulsePoint special shareholders meeting. The merger is
expected to occur within two business days after the date of the meeting. The
market price of Unisys common stock may change during the period between the
special shareholders meeting and the actual day the merger occurs. There can be
no assurance as to the fair market value of the Unisys common stock at the time
of the merger.
THE TERMINATION FEE, STOCK OPTION AGREEMENT AND THE MERGER STRUCTURE MAY
DISCOURAGE OTHER COMPANIES FROM TRYING TO COMBINE WITH PULSEPOINT
If the merger is not consummated because of a competing transaction, Unisys
may receive a termination fee from PulsePoint and may exercise an option to
purchase PulsePoint common stock. These arrangements could discourage other
companies from trying to combine with PulsePoint even if the terms they propose
are superior to the terms of the merger.
If the termination fee were to be paid or the option exercised, the cost to
PulsePoint could have a material negative effect on its financial condition and
results of operations. This could discourage other companies from trying to
combine with PulsePoint. The option could, for a period of time, prevent a third
party from acquiring PulsePoint in a transaction that qualifies for pooling of
interests accounting treatment. This also could discourage other companies from
trying to combine with PulsePoint.
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<PAGE>
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this document and in documents
that are incorporated by reference in this document that are subject to risks
and uncertainties. Forward-looking statements include information concerning
possible or assumed future results of operations of PulsePoint and Unisys
generally, and other statements and information more specifically regarding
assumptions about earnings per share, capital and other expenditures, financing
plans, cash flow, capital structure, pending legal proceedings and claims,
future economic performance, operating income, management's plans, goals and
objectives for future operations and growth and markets for stock of Unisys and
PulsePoint.
The sections of this document which contain forward-looking statements
include "Questions and Answers About the Merger, " . "Summary," . "The
Merger--Background of the Merger," . "The Merger--PulsePoint Reasons for the
Merger," . "The Merger--Unisys Reasons for the Merger," . "Financial
Information--Comparative Per Share Data," and . "Opinion of Financial Advisor."
Our forward-looking statements are also identified by words such as "believes,"
"expects," "anticipates," "intends," "estimates" or similar expressions. You
should understand that these forward looking statements are necessarily
estimates reflecting the judgment of Unisys and PulsePoint, not guarantees of
future performance. They are subject to a number of assumptions, risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied in the forward-looking statements.
For those statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995.
You should understand that the following important factors, in addition to
those discussed in "Risk Factors Relating to the Merger" and elsewhere in this
document and in the documents which are incorporated by reference, could affect
the future results of Unisys and PulsePoint, and of Unisys after the closing,
and could cause those results or other outcomes to differ materially from those
expressed or implied in our forward-looking statements:
Economic and Industry Conditions
. materially adverse changes in economic and industry conditions and
customer demand generally or in the markets served by our companies
. supply and demand for and pricing of supplies and components
. changes in demographics and consumer preferences or demands for
Unisys' and PulsePoint's goods and services
. fluctuations of foreign currencies
Operating Factors
. supply disruptions
. technical difficulties, including the ability of material customers
and suppliers, to replace, modify or upgrade computer programs in
order to adequately address Year 2000 concerns
. acquisitions or divestitures
. changes in operating conditions and costs
. risks relating to performance of contracts, including dependence on
performance of third parties
Transaction Factors
. the risk that we may not fully realize the benefits expected to result
from the merger
Competitive Factors
. availability of intellectual property rights for newly developed
products
. the actions of competitors
. new technologies
. industry consolidation
-16-
<PAGE>
Accordingly, you should not place undue reliance on forward-looking
statements, which speak only as of the date of this proxy statement/prospectus,
or, in the case of documents incorporated by reference, the date of those
documents.
All subsequent written and oral forward-looking statements
attributable to Unisys or PulsePoint or any person acting on their behalf are
expressly qualified in their entirety by the cautionary statements contained or
referred to in this section. Neither Unisys nor PulsePoint undertakes any
obligation to release publicly any revisions to these forward-looking statements
to reflect events or circumstances after the date of this proxy
statement/prospectus or to reflect the occurrence of unanticipated events.
THE MERGER
GENERAL
The PulsePoint board of directors is using this proxy statement/prospectus
to solicit proxies from the holders of PulsePoint common stock and preferred
stock for use at its special shareholders meeting.
At the special shareholders meeting to be held on August 26, 1999,
PulsePoint common shareholders and preferred shareholders, voting as separate
classes, will be asked to approve the merger agreement. The merger agreement
provides for the merger of Shellco Inc., a wholly owned subsidiary of Unisys,
into PulsePoint. Upon consummation of the merger, PulsePoint will become a
wholly owned subsidiary of Unisys. In the merger, PulsePoint shareholders will
receive shares of Unisys common stock. See "The Merger Agreement" on page 42.
BACKGROUND OF THE MERGER
In June, 1998, PulsePoint's six senior executives undertook a review of
PulsePoint's position within the voice processing and messaging industry. From
this review, PulsePoint senior management determined that the carrier-class
reliability of PulsePoint's modular and integrated suite of messaging and
communication management applications and its state of the art technology
effectively positioned it to compete for customers within its industry. The
executive team further determined, however, that to enhance its probability for
success, PulsePoint should enter into a strategic alliance with a significant
industry participant for the following reasons:
. There was a growing consolidation of companies within the voice
processing and networking industry and the relative size of
PulsePoint's competitors was increasing. In particular, the executive
team noted the acquisition of Octel Corporation by Lucent Technology,
the acquisition of Boston Technology by Comverse Technology, and the
acquisition of Summa Four Inc. by Cisco Systems Inc.
. Voice messaging was becoming a principal service offering of large
network service providers who were PulsePoint's target customers. As a
result, these customers appeared to be more inclined to make purchases
from suppliers who were larger than PulsePoint.
. In order to compete more effectively, PulsePoint would need to engage
more development engineers and commit additional resources to sales,
marketing and other areas.
On July 30 and July 31, 1998, PulsePoint's board of directors and executive
management team conducted a two-day, long-term planning session. At that
meeting, the management team updated the board on consolidation trends in the
voice processing and networking industry and recommended that PulsePoint explore
its alternatives and options in connection with potential strategic alliances.
The PulsePoint board agreed with the executive team's conclusions and authorized
the executive team to identify potential alliances. The board also authorized
the executive team to identify a financial advisor to assist in the
identification of candidates and the structuring of a transaction. The board
further determined to form a Strategic Partners and Alliances Committee
comprised of three directors: Frederick Warren, Bandel Carano and Mark Ozur, who
is also the President and Chief Executive Officer of PulsePoint. The parameters
of a strategic alliance authorized by the board ranged from a complete sale of
PulsePoint to the formation of a strategic sales and marketing alliance,
including either a minority investment in PulsePoint or minimum purchase
commitments of significant value.
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On August 12, 1998, the PulsePoint board engaged Morgan Stanley to act as
its financial advisor in connection with potential strategic alternatives.
Beginning in September, 1998 Morgan Stanley began contacting various parties
which had been identified by Morgan Stanley and PulsePoint as potential
strategic alliance candidates for PulsePoint.
Representatives of Unisys first contacted PulsePoint on October 7, 1998, to
express an interest in pursuing some form of business combination. The companies
determined they should engage in an exchange of information to evaluate the
propriety of pursuing a transaction. To facilitate the exchange, PulsePoint and
Unisys entered into a confidentiality agreement on October 12, 1998.
On October 16, 1998, the PulsePoint board held a regularly scheduled
meeting attended by members of PulsePoint's senior management and
representatives of Morgan Stanley. At that time, the PulsePoint board discussed
a variety of strategic transactions with companies that had products and
technologies that were complementary to those of PulsePoint. Morgan Stanley
informed the board that in coordination with the executive team, it had
approached 16 potential candidates regarding a potential strategic business
combination or alliance with PulsePoint. Members of the executive team also
reported that they had participated in various presentations made to these
candidates and as a result of these presentations, four of the candidates,
including Unisys, had expressed some interest in conducting preliminary
discussions with PulsePoint, six had indicated that they would not be interested
in conducting any discussions and the remaining six required additional time to
consider the executive team's proposals. The executive team further reported
that while preliminary discussions had been held with those candidates that had
expressed interest, none had advanced to a formal stage of negotiation. Although
the PulsePoint board did not determine that the company was then for sale, the
board requested that Morgan Stanley and the executive team, on behalf of
PulsePoint, continue discussions with these companies. The PulsePoint board
further authorized management to continue to explore other potential strategic
transactions, including business combinations.
From September through December, 1998, members of management and
representatives of Morgan Stanley met with each of the four interested parties
to discuss business opportunities associated with PulsePoint in order to assist
them in evaluating their interest in a strategic transaction.
From the last week of October 1998 through November 1998, a number of
representatives from Unisys and PulsePoint met on a number of occasions to
explore potential strategic advantages of a business combination transaction.
Representatives of Morgan Stanley attended some of these meetings.
On December 2, 1998, Morgan Stanley, on behalf of PulsePoint, requested
written proposals from four parties, including Unisys. Each party indicated that
it was not prepared to submit a formal proposal at that time.
At a regular meeting of the PulsePoint board on December 11, 1998, Mr. Ozur
briefed the board on the history and state of discussions with Unisys regarding
a possible business combination transaction. Representatives of Morgan Stanley
made a presentation regarding the status of various contacts with potential
PulsePoint strategic partners, and noted that two more potential candidates,
making a total of 18, had been approached about a possible strategic alliance or
business combination with PulsePoint. The PulsePoint board authorized the
executive team to continue their discussions with all interested parties.
On January 6, 1999, Unisys indicated to Morgan Stanley that it would
consider offering Unisys common stock valued at approximately $4.00 per
PulsePoint share to acquire PulsePoint in a transaction which would be accounted
for as a pooling of interests. Morgan Stanley indicated that this value was not
acceptable to the PulsePoint board. Unisys indicated that it would need to
conduct further due diligence in order to consider making a higher proposal.
On January 13, 1999, representatives of Unisys, PulsePoint and Morgan
Stanley met. Mr. Carano represented the Strategic Partners and Alliances
Committee at the meeting to discuss preliminary valuation. At that meeting,
Unisys confirmed it wished to pursue the acquisition of PulsePoint in a
transaction that would qualify for pooling
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of interests accounting treatment. The companies began to discuss the parameters
of a transaction, including a preliminary discussion of value.
At a special meeting on January 22, 1999, the PulsePoint board reviewed the
status of strategic alliance efforts. Morgan Stanley informed the PulsePoint
board that only two potential candidates were interested in pursuing further
discussions, Unisys and a second unrelated company.
Discussions with the second company regarding a potential joint venture
ensued over the next few weeks with several meetings taking place. Mr. Carano
represented the Strategic Partners and Alliances Committee at some of these
meetings to discuss valuation on a preliminary basis. This second company
initiated a due diligence review of PulsePoint and the companies exchanged term
sheets outlining a possible minority investment in PulsePoint and the terms of a
strategic sales and marketing agreement. On February 16, 1999, however, the
second company ended discussions.
In late February, 1999, representatives of Unisys continued to discuss the
valuation of PulsePoint with representatives of Morgan Stanley on behalf of
PulsePoint. Unisys also requested that PulsePoint enter into an agreement to
negotiate exclusively with it. Negotiations related to the scope of this
exclusivity agreement and the scope of information to be disclosed by PulsePoint
to Unisys continued through the middle of March, 1999.
On March 1, 1999, Morgan Stanley delivered a term sheet to Unisys on behalf
of PulsePoint. This term sheet proposed an agreement by PulsePoint to terminate
discussions with other candidates, the execution of a sales and marketing
agreement prior to the companies entering into a transaction and a valuation of
PulsePoint in the range of $5.00 to $10.00 per share of common stock based on
the achievement of a series of technical milestones prior to the merger. This
proposal was not accepted by Unisys.
On March 3, 1999, Unisys submitted a non-binding preliminary indication of
interest to acquire PulsePoint in a stock-for-stock merger qualifying for
pooling of interests accounting treatment. Unisys indicated it would be willing
to consider an aggregate price of $75 million, plus the value of PulsePoint's
cash on hand after deducting its fees and expenses related to the transaction.
Unisys indicated that it would expect the PulsePoint preferred stockholders to
convert their preferred shares to common stock prior to the merger and to agree
to vote their shares in favor of the merger. Unisys also asked PulsePoint to
provide it immediate access to its major customers to perform due diligence and
to agree to deal with Unisys for 30 days on an exclusive basis. The terms set
forth by Unisys also included a stock purchase option and provisions restricting
the ability of PulsePoint to solicit other parties.
The next day, the PulsePoint board held a special meeting to review these
terms. Representatives of Morgan Stanley assisted in this review. Following this
meeting, Morgan Stanley communicated to Unisys proposed modifications to the
financial terms. These modifications included a valuation of PulsePoint common
stock in a range of $5 to $7 based on a Unisys common stock price collar of $25
to $35 per share. Morgan Stanley indicated that the PulsePoint board had
rejected the other terms of the Unisys proposal. On March 8, 1999, Unisys
indicated that it would be prepared to modify the financial terms of the
proposal to value PulsePoint at $5.40 to $6.60 per share based on a Unisys stock
price collar of $27 to $33.
On March 8, 1999, PulsePoint executed a confidentiality agreement with
another company so that PulsePoint and this company could freely exchange
information and evaluate a possible strategic combination. The PulsePoint board
also met at a special meeting to consider a proposal by this company. Following
this board meeting, however, PulsePoint terminated discussions with this company
because it believed that Unisys was a more attractive candidate and anticipated
entering into an exclusivity agreement with Unisys in the near term.
On March 9, 1999, the PulsePoint board met again to further review the
revised terms of the Unisys proposal. At that meeting, the board authorized
PulsePoint to enter into an agreement with Unisys that would provide for
exclusive negotiations with Unisys for a limited period of time.
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On March 15, 1999, Unisys and PulsePoint executed a letter agreement
whereby (i) PulsePoint authorized Unisys to contact one of its major customers
to perform due diligence on the relationship, and (ii) PulsePoint and its
representatives agreed for a three-week period to deal exclusively with Unisys
with respect to a possible acquisition.
Between March 15 and March 24, 1999, representatives of Unisys conducted a
further review of PulsePoint's technology, business, and finances at
PulsePoint's headquarters in Carpinteria. The parties began preparing the
definitive documentation and through the first two weeks of April the parties
were engaged in negotiating the terms of the documentation.
On April 16, 1999, the PulsePoint board held a regular meeting. Morgan
Stanley and PulsePoint senior management updated the board regarding the status
of discussions with Unisys.
On April 26, 1999, PulsePoint received an indication of interest from a
third party. During the period from April 26 to May 18, 1999, this third party
performed limited due diligence of PulsePoint and a term sheet was exchanged. On
May 18, 1999, this third party ended discussions with PulsePoint.
On April 29, 1999, at a regularly scheduled meeting, the Unisys board,
following a presentation by senior Unisys executives, unanimously approved the
merger. The Unisys board authorized Lawrence Weinbach, its Chairman, President
and Chief Executive Officer, and Robert Brust, its Senior Vice President and
Chief Financial Officer, to approve the final terms of the merger agreement and
related documentation.
On May 5, 1999, Morgan Stanley on behalf of PulsePoint proposed that the
collar on Unisys stock be eliminated from the Unisys proposal or that the collar
range be increased to $30 to $36 per share of Unisys common stock. Unisys
indicated that it was unwilling to proceed with any discussions regarding a
change in the initial collar range.
Between May 20 and May 31, 1999, discussions between PulsePoint and Unisys
representatives and legal counsel continued toward resolving open issues. These
discussions focused on the representations and warranties of each party, voting
lock-ups, conditions to closing and no solicitation provisions.
At special meetings of the PulsePoint board held on June 2 and June 4,
1999, Morgan Stanley, Latham & Watkins, counsel to PulsePoint, and members of
PulsePoint senior management advised the board of the status of discussions with
Unisys and indicated that the parties were close to resolving all of the open
issues. At the June 4, 1999 meeting, Latham & Watkins and Morgan Stanley
discussed with the PulsePoint board the continuing Unisys request that a
majority of PulsePoint's voting securities be contractually obligated to support
the merger.
From June 7 to June 14, 1999, representatives of Unisys, PulsePoint, their
legal advisors and Morgan Stanley continued discussions to resolve the open
issues concerning the amount of PulsePoint common stock and PulsePoint preferred
stock committed to vote in favor of the merger upon signing of the merger
agreement. Representatives of PulsePoint contacted Oak Investment Partners,
Microsoft Corporation, Moore Capital Management, Inc., INVESCO Private Capital
and Frederick Warren to determine whether these preferred shareholders and their
affiliates would agree to convert their shares of PulsePoint preferred stock
into common stock in order to increase the amount of PulsePoint common stock
that would be committed to vote in favor of the merger. Discussions continued
with these holders through June 11, 1999. On June 11, 1999 the PulsePoint board
held a special meeting to review the progress of the discussions. At this
meeting, Morgan Stanley again reviewed with the board the financial terms of the
proposal and Latham & Watkins again provided the board with a summary of the
terms of the transaction.
On June 12, 1999, the parties agreed to the final issues concerning the
voting agreements. On June 13, 1999, Mr. Weinbach approved the final terms of
the transaction and representatives of the two companies and their counsel
finalized the documentation on June 14, 1999.
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At a special meeting of the PulsePoint board held on June 14, 1999 to
consider the merger, Latham & Watkins reviewed with the board the resolution
that the parties had reached with regard to the voting agreements. Morgan
Stanley reviewed the principal economic terms of the proposed transaction and
delivered its opinion that, as of the date of its opinion and subject to the
considerations described in its opinion, the consideration to be received by
holders of PulsePoint common stock pursuant to the merger agreement was fair
from a financial point of view to these holders. Latham & Watkins again reviewed
the other terms of the merger with the board. Following this presentation, the
PulsePoint board unanimously voted to approve the merger agreement and the stock
option agreement and determined to recommend that PulsePoint shareholders
approve the merger agreement and the merger.
On June 14, 1999, Unisys and PulsePoint signed the merger agreement and the
stock option agreement. Those PulsePoint preferred shareholders that PulsePoint
had approached delivered signed voting agreements. PulsePoint and Unisys
publicly announced the signing of the agreements at the opening of business on
June 15, 1999.
PULSEPOINT REASONS FOR THE MERGER
The PulsePoint board has identified various potential benefits of the
merger that it believes will contribute to the success of the combined company,
including the following:
Enhanced capability to compete worldwide. The merger will provide the
combined company with the substantially greater resources necessary to compete
effectively in the rapidly growing and changing global telecommunications
equipment business. This rapid worldwide growth and changes in the regulatory
and competitive environment involving factors such as increased privatization of
service providers, consolidation of vendors, emerging technologies and
alternatives for delivery of services, require equipment vendors to have the
resources necessary to respond rapidly to changing market conditions, to develop
and market new products in response to changing market needs and to provide
global service and support to customers. The merger will permit the combined
company to provide greater resources dedicated to this and other emerging
opportunities.
Ability to provide full range of products and technical solutions for
customers. The PulsePoint board believes that the merger will enable the
combined company to offer a broader range of products, product features and
technical solutions for customers, enhancing the competitive strength of the
combined company and increasing its ability to satisfy the requirements of
existing and new customers in a cost-effective manner.
More diverse customer base. There are significant differences in the
customer bases of PulsePoint and Unisys and the allocation of their respective
sales and marketing resources. The current characteristics of PulsePoint's
products are well suited for wireline and wireless service providers in small to
medium sized markets or with distributed network deployments. Unisys' customers
are primarily large wireline and wireless service providers who provide service
offerings to large concentrated subscriber populations and who require larger
messaging solutions. The PulsePoint board believes that the merger will combine
the highly complementary customer bases of the two companies, resulting in more
diverse and stronger revenue sources and an enhanced ability to market new
products to both prospective and existing customers of the respective companies.
Broader geographic coverage. PulsePoint has enjoyed its greatest success in
selling to domestic network service providers. GTE Corporation, SBC
Communications Inc., and NEXTLINK Communications have some of the largest
deployments of PulsePoint's products and collectively represented nearly 80% of
PulsePoint's total revenue in 1998. PulsePoint has had limited success in its
selling efforts outside of the United States and dedicates only modest resources
toward this effort. Unisys provides communications solutions on a global basis
and has been particularly successful in Europe and Latin America. The combined
company will have significantly greater geographic coverage than PulsePoint does
currently, with sales, marketing and support infrastructure in major markets
around the world, leaving it well positioned to respond to customers'
requirements and to stimulate new market opportunities worldwide.
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Economies of scale. The PulsePoint board believes that the merger should
enable the combined company to achieve long-term economies of scale,
particularly in the future growth of its worldwide operations, that would not
have been available to PulsePoint separately.
Research and development efficiencies. The PulsePoint board believes that
the merger will position the combined company to leverage its research and
development activities and resources, thus permitting it to market and sell
PulsePoint products without disproportionate costs.
Enhanced services. The merger has the potential to improve PulsePoint's
competitive position in the enhanced services sector, which it believes will be
characterized by increasing consolidation and by large companies seeking to meet
customer needs through an increasingly comprehensive set of product offerings.
Reduced Volatility. The PulsePoint board believes that the combined company
will be less subject to material quarterly fluctuations and the uncertainties
associated with the dependence upon a limited number of customers, because the
customer base of the combined company will be more diverse than that of
PulsePoint standing alone.
Payment of Premium. The merger consideration represents a premium of
approximately 20% over the closing sales price of $5.50 per share of PulsePoint
common stock on June 14, 1999, the last trading day prior to the announcement of
the merger, a premium of approximately 21% over $5.46, the average closing sales
price of PulsePoint common stock for the 30 day period preceding June 10, 1999
and a premium of approximately 32.6% over $4.98, the average closing sales price
of PulsePoint common stock for the 90 day period preceding June 10, 1999.
UNISYS REASONS FOR THE MERGER
The Unisys board of directors has identified several potential benefits of
the merger that it believes will contribute to the success of the combined
company. These potential benefits include the ability to:
. provide wireless, internet ready solutions to a wider segment of the
total marketplace;
. add skilled software developers with experience in designing and
deploying Microsoft NT based carrier-grade voice and unified messaging
systems;
. introduce PulsePoint's customers to Unisys complete solutions
offerings; and
. avoid time consuming and costly internally developed alternatives.
Additionally, the Unisys board considered the pro forma contribution of
PulsePoint to the net income of Unisys in the near term. Although based on the
pro forma analyses the Unisys board believes the merger will not be accretive in
the near term, the board, for the strategic reasons stated above, has determined
that the merger is in the best interest of Unisys and its stockholders and that
Unisys should proceed with the merger.
CONSIDERATIONS OF THE PULSEPOINT BOARD
In the course of its deliberations during board meetings referred to under
"The Merger--Background of the Merger" on page 17, the PulsePoint board reviewed
with management a number of factors relevant to the merger. The PulsePoint board
also considered, among other factors:
. information concerning PulsePoint's and Unisys' respective technology,
management and competitive position;
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. the financial condition, results of operations and prospects of the
respective businesses of PulsePoint and Unisys before, and after
giving effect to, the merger;
. current financial market conditions and historical market prices,
volatility and trading information with respect to PulsePoint common
stock and Unisys common stock;
. a comparison of selected recent acquisition and merger transactions in
the telecommunications and other technology industries;
. Unisys' per share reported earnings, earnings before interest and
taxes and other measures;
. the belief that the terms of the merger agreement, including the
parties' mutual representations, warranties and covenants, and the
conditions to their respective obligations, are reasonable;
. the ability of Unisys to devote management time and energy to the
integration and assimilation of PulsePoint's business and organization
should the merger be consummated;
. the fact that the merger is expected to be a reorganization for
federal income tax purposes;
. the fact that the merger is expected to be accounted for as a pooling
of interests and that no goodwill is expected to be created on the
books of Unisys as a result of the merger; and
. a financial presentation by Morgan Stanley, including the oral opinion
of Morgan Stanley rendered on June 14, 1999 that, as of June 14, 1999
and subject to the considerations described in its opinion, the
consideration to be received by the holders of shares of PulsePoint
common stock was fair from a financial point of view to such holders.
See "Annex C--Fairness Opinion of Morgan Stanley."
The PulsePoint board also considered negative factors relating to the
merger, including:
. the risk that the benefits sought in the merger would not be fully
achieved;
. the risk that the merger would not be consummated and the effect of
the public announcement of the merger on PulsePoint's sales and
operating results;
. the impact of the proposed merger on certain key customer
relationships;
. the loss of control over the future operations of PulsePoint following
the merger; and
. all of the other factors listed above under "Risk Factors Relating to
the Merger."
The PulsePoint board concluded that these factors were outweighed by the
potential benefits to be gained by the merger.
In view of the wide variety of factors considered by the PulsePoint board,
the board did not find it practicable to quantify, rank or otherwise assign
relative weights to the specific factors considered. In addition, the PulsePoint
board did not undertake to make any specific determination as to whether any
particular factor, or any aspect of any particular factor, was favorable or
unfavorable to the PulsePoint board's ultimate determination, but rather the
PulsePoint board conducted an overall analysis of the factors described above,
including discussions with PulsePoint's management and legal, accounting and
financial advisors. In considering the factors described above, individual
members of the PulsePoint board may have given different weight to different
factors.
After taking into account all of the factors set forth above, however, the
PulsePoint board determined that in light of the size and diversity of the
marketplace and the competitive positions of both PulsePoint and Unisys, the
merger represents the best long-term strategy for PulsePoint. As a result, the
PulsePoint board unanimously determined that the merger agreement and merger
were in the best interests of PulsePoint and its shareholders and that
PulsePoint should proceed with the merger and the transactions contemplated by
the merger agreement.
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PULSEPOINT BOARD RECOMMENDATION
THE PULSEPOINT BOARD HAS DETERMINED THAT THE MERGER IS FAIR TO AND IN THE
BEST INTERESTS OF ITS SHAREHOLDERS, HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE MERGER AND UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" APPROVAL OF THE MERGER AGREEMENT.
ACCOUNTING TREATMENT
We expect the merger to be treated as a pooling of interests for accounting
and financial reporting purposes. Under this method of accounting, the recorded
assets and liabilities of Unisys and PulsePoint will be carried forward to the
books of the combined company at their historical recorded amounts, subject to
any adjustments required to conform the accounting policies of the two
companies. Since the effect on Unisys' financial statements for all prior
periods is not material, Unisys will record the merger by restating its retained
earnings in the period that the merger occurs without restating prior periods'
financial statements.
PRO FORMA DATA
In light of the respective total assets and net income of Unisys and
PulsePoint, pro forma financial statements are not included in this proxy
statement/prospectus. Pro forma financial information giving effect to the
merger is deemed to be immaterial.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The income tax discussion below represents the opinion of Fried, Frank,
Harris, Shriver & Jacobson, tax counsel to Unisys, and Latham & Watkins, tax
counsel to PulsePoint, on the material federal income tax consequences of the
merger. This discussion is not a comprehensive description of all of the tax
consequences that may be relevant to you. For example, we have not described tax
consequences that arise from rules that apply generally to all taxpayers or to
some classes of taxpayers. We have also not described tax consequences that are
generally assumed to be known by investors. This discussion is based upon the
Internal Revenue Code, the regulations of the U.S. Treasury Department and court
and administrative rulings and decisions in effect on the date of this proxy
statement/prospectus. These laws may change, possibly retroactively, and any
change could affect the continuing validity of this discussion.
This discussion also is based upon certain representations made by
PulsePoint and Unisys. We refer you to the full texts of the tax opinions of
Fried, Frank, Harris, Shriver & Jacobson and Latham & Watkins. The
representations made by PulsePoint and Unisys are attached to those opinions,
which are filed as exhibits to Unisys' registration statement of which this
proxy statement/prospectus forms a part. This discussion also assumes that the
merger will be effected pursuant to applicable state law and otherwise completed
according to the terms of the merger agreement. You should not rely upon this
discussion if any of these factual assumptions or representations is, or later
becomes, inaccurate.
This discussion also assumes that shareholders hold their shares of
PulsePoint common stock as a capital asset and does not address the tax
consequences that may be relevant to a particular shareholder receiving special
treatment under some federal income tax laws. Shareholders receiving this
special treatment include:
. banks;
. tax-exempt organizations;
. insurance companies;
. dealers in securities or foreign currencies;
. PulsePoint shareholders who received their PulsePoint common stock
through the exercise of employee stock options or otherwise as
compensation;
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. PulsePoint shareholders who are not U.S. persons; and
. PulsePoint shareholders who held PulsePoint common stock as part of a
hedge, straddle or conversion transaction.
The discussion also does not address any consequences arising under the
laws of any state, locality or foreign jurisdiction. No rulings have been or
will be sought from the Internal Revenue Service regarding any matters relating
to the merger.
The discussion does not address the tax consequences to holders of
PulsePoint preferred stock of converting their shares of PulsePoint preferred
stock into PulsePoint common stock prior to the merger. The discussion does not
discuss the tax consequences of an exchange or conversion of the PulsePoint
stock options or warrants into stock options or warrants for Unisys common
stock.
Based on the assumptions and representations above, it is the opinion of
Fried, Frank, Harris, Shriver & Jacobson, tax counsel to Unisys, and Latham &
Watkins, tax counsel to PulsePoint, that:
If we complete the merger:
. it will qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code;
. no gain or loss will be recognized by Unisys or PulsePoint;
. no gain or loss will be recognized by the shareholders of PulsePoint
who exchange their PulsePoint common stock solely for Unisys common
stock (except with respect to cash received instead of a fractional
share of Unisys common stock);
. the aggregate tax basis of the Unisys common stock received by
PulsePoint shareholders who exchange all of their PulsePoint common
stock for Unisys common stock in the merger will be the same as the
aggregate tax basis of the PulsePoint common stock surrendered in
exchange (reduced by any amount allocable to a fractional share of
Unisys common stock for which cash is received);
. the holding period of the Unisys common stock received will include
the holding period of shares of PulsePoint common stock surrendered in
exchange;
. a holder of PulsePoint common stock that receives cash instead of a
fractional share of Unisys common stock will, in general, recognize
capital gain or loss equal to the difference between the cash amount
received and the portion of the holder's tax basis in shares of
PulsePoint common stock allocable to the fractional share; this gain
or loss will be long-term capital gain or loss for federal income tax
purposes if the holder's holding period in the PulsePoint common stock
exchanged for the fractional share of Unisys common stock is more than
one year; and
. any PulsePoint shareholder who dissents from the merger and who
receives cash in exchange for the holder's PulsePoint shares generally
will be treated as if the shareholder sold the shares in a taxable
transaction and will recognize gain or loss equal to the difference
between the cash received and the shareholder's tax basis in the
PulsePoint shares surrendered. A dissenting shareholder may be
required to recognize any resulting gain or loss in the year the
merger closes, irrespective of whether the dissenting shareholder
actually receives payment for his or her shares in that year.
Completion of the merger is conditioned on PulsePoint and Unisys each
receiving another tax opinion from its tax counsel that the merger qualifies as
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code. These opinions will be based upon updated representations of PulsePoint
and Unisys contained in the certificates described above and will assume that
the merger will be effected pursuant to applicable state law and otherwise
completed according to the terms of the merger agreement. The tax opinions are
not binding upon the Internal Revenue Service or the courts.
TAX MATTERS ARE VERY COMPLICATED, AND THE TAX CONSEQUENCES OF THE MERGER TO
YOU WILL DEPEND ON YOUR PARTICULAR SITUATION. YOU ARE ENCOURAGED TO CONSULT YOUR
OWN TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE MERGER, INCLUDING
TAX RETURN REPORTING REQUIREMENTS, THE APPLICABILITY OF FEDERAL, STATE, LOCAL
AND FOREIGN TAX LAWS AND THE EFFECT OF ANY PROPOSED CHANGE IN THE TAX LAWS.
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REGULATORY MATTERS
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the
rules promulgated under the Act by the Federal Trade Commission, we cannot
complete the merger until we have given notification and furnish information
relating to the competitive nature of the PulsePoint and Unisys businesses and
the industries they operate in to the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice, and a specified waiting
period expires or is terminated. Unisys and PulsePoint filed notification and
report forms under the Hart-Scott-Rodino Act with the Federal Trade Commission
and the Antitrust Division on June 25, 1999 and June 29, 1999, respectively. The
companies were notified on July 15, 1999 that early termination of the waiting
period was granted. Even after the waiting period expires or is terminated, the
Federal Trade Commission and the Antitrust Division retain the authority to
challenge the merger on antitrust grounds. In addition, each state in which
Unisys or PulsePoint operates may also seek to review the merger. It is possible
that some of these authorities may seek to challenge the merger.
Under the merger agreement, we have both agreed to use our "reasonable best
efforts" to take all actions to obtain all necessary regulatory and governmental
approvals necessary to complete the merger and to address concerns of regulators
and governmental officials.
Unisys and PulsePoint both conduct business outside the United States.
Although the merger does not require notification to or approval of regulatory
authorities outside the United States, those regulatory authorities could seek
to challenge the merger. We do not expect the closing of the merger to be
delayed by any challenge by these regulatory authorities.
It is a condition to the merger that the shares of Unisys stock to be
issued pursuant to the merger agreement be approved for listing on the New York
Stock Exchange, subject to official notice of issuance. An application will be
filed to list these shares. Following the merger, PulsePoint stock will no
longer be registered under the Securities Act or traded on the Nasdaq National
Market.
APPRAISAL AND DISSENTERS' RIGHTS
THE REQUIRED PROCEDURE FOR ACQUIRING AND EXERCISING DISSENTERS' RIGHTS SET
FORTH IN CHAPTER 13 OF THE CALIFORNIA CORPORATIONS CODE MUST BE FOLLOWED EXACTLY
OR ANY DISSENTERS' RIGHTS MAY BE LOST. The rights of PulsePoint common and
preferred shareholders to dissent from the merger and demand payment for their
shares are governed by Chapter 13 of the California Corporations Code, the full
text of which is reprinted as Annex D. The summary of these rights set forth
below is not intended to be complete and is qualified in its entirety by
reference to Annex D.
Under the California Corporations Code, holders of PulsePoint common stock
will not have any dissenters' rights with respect to the merger unless demands
for payment are duly filed with respect to five percent or more of the
outstanding shares of PulsePoint common stock. If the holders of five percent or
more of the outstanding shares of PulsePoint common stock duly file demands for
payment and fully comply with Chapter 13 of the California Corporations Code,
they will have dissenters' rights to be paid in cash the fair market value of
their shares. Holders of PulsePoint preferred shares are not subject to a
similar five percent threshold in order to be able to assert dissenters' rights
with respect to PulsePoint preferred stock.
Under the California Corporations Code, "fair market value" is determined
as of June 14, 1999, the day before the first announcement of the terms of the
merger agreement, excluding any appreciation or depreciation as a consequence of
the merger. If the parties are unable to agree on a fair market value, the
dissenting shareholder may request the Superior Court for the County of Santa
Barbara to determine the fair market value of the shares. The court's decision
would be subject to appellate review.
The terms of the merger agreement were publicly announced on June 15, 1999.
On June 14, 1999, the last trading day prior to the public announcement, the
high and low sales prices for PulsePoint common stock were $5.875 and $5.313,
respectively.
DISSENTERS' RIGHTS CANNOT BE VALIDLY EXERCISED BY PERSONS OTHER THAN
SHAREHOLDERS OF RECORD REGARDLESS OF THE BENEFICIAL OWNERSHIP OF THE SHARES.
Persons who are beneficial owners of shares held of record by another
-26-
<PAGE>
person, such as a broker, a bank or a nominee, should instruct the record holder
to follow the procedures outlined below if the beneficial owners wish to dissent
from the approval of the merger.
As described more fully below, in order to perfect their dissenters'
rights, shareholders of record must:
. make written demand for the purchase of their dissenting shares to
PulsePoint or its transfer agent on or before the date of the special
shareholders meeting;
. vote their dissenting shares against approval of the merger; and
. within 30 days after the mailing to shareholders by PulsePoint of
notice of approval of the merger, submit the certificates representing
their dissenting shares to PulsePoint or its transfer agent, for
notation thereon that they represent dissenting shares.
Failure to follow any of these procedures may result in the loss of
statutory dissenters' rights.
As a condition to the parties' obligations to consummate the merger,
effective demands for payment under Chapter 13 of the California Corporations
Code must not be made with respect to PulsePoint stock so that cash would be
payable with respect to that stock and payable in respect of fractional shares
in an aggregate amount equal to 10% or more of the value of the total merger
consideration paid at the effective time of the merger. The total consideration
includes the aggregate value of the Unisys shares delivered at the effective
time together with any cash to be paid for dissenters' shares and cash to be
paid in lieu of fractional shares.
Demand for Purchase
A shareholder of PulsePoint electing to exercise dissenters' rights must
also make written demand upon PulsePoint at its principal office, 6307
Carpinteria Avenue, Carpinteria, California 93013, Attn: Corporate Secretary or
upon PulsePoint's transfer agent, U.S. Stock Transfer Corporation at 1745
Gardenia Avenue, Glendale, California 91204 to purchase the dissenting shares
and to pay the shareholder their fair market value in cash.
The notice must state the number and class of shares held of record which
the shareholder demands to be purchased and the amount claimed to be the "fair
market value" of those shares on June 14, 1999. That statement of fair market
value will constitute an offer by the dissenting shareholder to sell his or her
shares at that price. A demand will not be effective unless it is received by
not later than the date of the special shareholders meeting.
Dissenting shareholders may not withdraw their demand for payment without
the consent of the PulsePoint board. The rights of dissenting shareholders to
demand payment terminate:
. if the merger is abandoned (although dissenting shareholders are
entitled upon demand to reimbursement of expenses incurred in a good
faith assertion of their dissenters' rights);
. if the shares are transferred prior to submission for endorsement as
dissenting shares; or
. if PulsePoint and the dissenting shareholders do not agree upon the
status of the shares as dissenting shares or upon the purchase price,
and neither files a complaint or intervenes in a pending action within
six months after the date on which notice of approval of the merger
was mailed to the shareholders.
No shareholder who has a right to demand payment of cash for his or her
shares will have any right to attack the validity of the merger or have the
merger set aside or rescinded, except in an action to test whether PulsePoint
has received the number of shares required to approve the merger.
Vote Against Approval of the Merger
Dissenting shareholders must vote their dissenting shares against approval
of the merger. Record shareholders may vote part of the shares that they are
entitled to vote in favor of the merger or abstain from voting a part of these
shares without jeopardizing their dissenters' rights as to other shares;
however, if record shareholders vote part of the shares they are entitled to
vote in favor of the merger and fail to specify the number of shares they are so
voting, it is conclusively presumed under California law that their approving
vote is with respect to all shares that they are entitled to vote. Voting
against the merger will not of itself, absent compliance with the provisions of
Chapter 13 of the California Corporations Code summarized herein, satisfy the
requirement of the California
-27-
<PAGE>
Corporations Code for exercise and perfection of dissenters' rights. However,
any shareholder desiring to exercise dissenters' rights must vote against
approval of the merger.
Notice of Approval
If shareholders have a right to require PulsePoint to purchase their shares
for cash under the dissenters' rights provisions of the California Corporations
Code, PulsePoint will mail to each of these shareholders a notice of approval of
the merger within ten days after the date of shareholder approval, stating the
price determined by it to represent the "fair market value" of the dissenting
shares. The statement of price will constitute an offer to purchase any
dissenting shares at that price.
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<PAGE>
Submission of Stock Certificates
Within 30 days after the mailing of the notice of approval of the merger,
dissenting shareholders must submit to PulsePoint or its transfer agent, at the
address set forth above, the certificates representing the dissenting shares to
be purchased, to be stamped or endorsed with a statement that the shares are
dissenting shares or are to be exchanged for certificates of appropriate
denomination so stamped or endorsed. The notice of approval of the merger will
specify the date by which the submission of certificates for endorsement must be
made, and a submission made after that date will not be effective for any
purpose.
Purchase of Dissenting Shares
If a dissenting shareholder and PulsePoint agree that the shares are
dissenting shares and agree upon the price of the shares, PulsePoint will, upon
surrender of the certificates, make payment of that amount (plus interest
thereon at the legal rate on judgments from the date of the agreement) within 30
days after the agreement on price. Any agreement between dissenting shareholders
and PulsePoint fixing the "fair market value" of any dissenting shares must be
filed with the Secretary of PulsePoint.
If PulsePoint denies that the shares are dissenting shares, or PulsePoint
and a dissenting shareholder fail to agree upon the "fair market value" of the
shares, the dissenting shareholder may, within six months after the date on
which notice of approval of the merger was mailed to the shareholder, but not
thereafter file a complaint (or intervene in a pending action, if any) in the
Superior Court for Santa Barbara County, State of California, requesting that
the Superior Court determine whether the shares are dissenting shares and the
"fair market value" of the dissenting shares. The Superior Court may determine,
or appoint one or more impartial appraisers to determine the "fair market value"
per share of the dissenting shares. The costs of the action, including
reasonable compensation to the appraisers to be fixed by the court, will be
assessed or apportioned as the Superior Court considers equitable, but if the
"fair market value" is determined to exceed the price offered to the shareholder
by PulsePoint, then PulsePoint will be required to pay these costs (including,
in the discretion of the Superior Court, attorneys' fees, fees of expert
witnesses and interest at the legal rate on judgments). A dissenting shareholder
must bring this action within six months after the date on which notice of
approval of the merger was mailed to the shareholder whether or not the
corporation responds within that time to the shareholder's written demand that
it purchase for cash shares voted against the approval of the merger.
FEDERAL SECURITIES LAWS CONSEQUENCES; STOCK TRANSFER RESTRICTIONS
This proxy statement/prospectus does not cover any resales of the Unisys
common stock you will receive in the merger, and no person is authorized to make
any use of this proxy statement/prospectus in connection with any such resale.
All shares of Unisys common stock you will receive in the merger will be
freely transferable, except that if you are deemed to be an "affiliate" of
PulsePoint under the Securities Act of 1933 at the time of the special
shareholders meeting, you may resell those shares only in transactions permitted
by Rule 145 under the Securities Act or as otherwise permitted under the
Securities Act. Persons who may be affiliates of PulsePoint for those purposes
generally include individuals or entities that control, are controlled by, or
are under common control with, PulsePoint, and would not include shareholders
who are not officers, directors or principal shareholders of PulsePoint.
The merger agreement requires PulsePoint not less than 45 days prior to the
closing date to deliver to Unisys a letter identifying all persons who may be,
as of the date the merger agreement is submitted for approval by PulsePoint
shareholders, an affiliate of PulsePoint and use reasonable best efforts to
cause each person who is identified as an affiliate in the letter described
above to deliver to Unisys, at least 30 days prior to the merger, an executed
letter agreement from each affiliate to the effect that the affiliate will not
offer, sell or otherwise dispose of any of the shares of Unisys common stock
issued to that affiliate in the merger or otherwise owned or acquired by that
affiliate:
(1) for a period beginning 30 days prior to the merger and continuing
until financial results covering at least 30 days of post-merger
combined operations of Unisys and PulsePoint have been publicly filed
by Unisys; or
(2) in violation of the Securities Act.
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<PAGE>
FINANCIAL INFORMATION
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
How We Prepared the Financial Statements
We are providing the following information to aid you in your analysis of
the financial aspects of the merger. We derived this information from the
audited consolidated financial statements of Unisys for the years 1994 through
1998 and the unaudited consolidated financial statements of Unisys for the six
months ended June 30, 1999 and 1998, and from the audited consolidated financial
statements of PulsePoint for the years 1994 through 1998 and the unaudited
consolidated financial statements of PulsePoint for the six months ended June
30, 1999 and 1998. The information is only a summary and you should read it
together with our historical financial statements and related notes contained in
the annual reports, quarterly reports and other information that we have filed
with the SEC and incorporated by reference. See "Where You Can Find More
Information" on page 65.
Pooling of Interests Accounting Treatment
We expect that the merger will be accounted for as a "pooling of
interests." This means that, for accounting and financial reporting purposes,
the recorded assets and liabilities of Unisys and PulsePoint will be carried
forward to the books of the combined company at their historical recorded
amounts. For a more detailed description of pooling of interests accounting, see
"The Merger--Accounting Treatment" on page 24.
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<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF UNISYS
The following selected historical consolidated financial data for each
of the years ended December 31, 1994 through 1998 have been derived from Unisys'
audited consolidated financial statements. The selected historical consolidated
financial data for the six months ended June 30, 1999 and 1998 have been
derived from Unisys' unaudited interim consolidated financial statements, which
financial statements, in the opinion of management, reflect all adjustments
necessary for the fair presentation of the data. These adjustments consist only
of normal recurring accruals. Because of seasonal and other factors, results for
interim periods are not necessarily indicative of the results to be expected for
the full year. This information is only a summary and you should read it
together with Unisys' historical consolidated financial statements and related
notes contained in the annual reports, quarterly reports and other information
that we have filed with the SEC and incorporated by reference. See "Where You
Can Find More Information" on page 65.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
------------------ -----------------------------------------------
1999 1998 1998 1997(1) 1996 1995(1) 1994(1)
-------- -------- -------- -------- -------- --------- --------
(In millions, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Results of Operations Data:
Revenue.................................... $3,698.8 $3,378.2 $7,208.4 $6,636.0 $6,370.5 $6,342.3 $6,095.5
Income (loss) from continuing operations
before income taxes..................... 355.2 238.8 604.7 (729.8) 86.7 (781.1) 14.6
Income (loss) from continuing operations
before extraordinary items.............. 230.9 152.8 387.0 (834.5) 57.2 (627.3) 12.1
Net income (loss) ......................... 230.9 152.8 387.0 (834.5) 45.1 (624.6) 100.5
Dividends on preferred shares.............. 34.8 53.3 106.5 111.1 120.8 120.3 120.1
Earnings (loss) on common shares........... 196.1 99.5 280.5 (945.6) (75.7) (744.9) (19.6)
Earnings (loss) from continuing operations
per common share
Basic................................. 0.73 0.40 1.11 (5.20) (0.37) (4.37) (0.63)
Diluted............................... 0.70 0.38 1.06 (5.20) (0.37) (4.37) (0.63)
Balance Sheet Data:
(as of the end of the period)
Total assets............................... $5,451.4 $5,437.0 $5,577.7 $5,591.3 $6,967.1 $7,113.2 $7,193.4
Long-term debt ............................ 1,088.8 1,431.4 1,105.2 1,438.3 2,271.4 1,533.3 1,864.1
</TABLE>
- -------------------------------------------
(1) Includes special pretax charges of $1,039.2 million, $846.6 million, and
$186.2 million for the years ended December 31, 1997, 1995, and 1994,
respectively.
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<PAGE>
Selected Historical Consolidated Financial Data of PulsePoint
The following selected historical consolidated financial data for each of
the years ended December 31, 1994 through 1998 have been derived from
PulsePoint's audited consolidated financial statements. The selected historical
consolidated financial data for the six months ended June 30, 1999 and 1998 have
been derived from PulsePoint's unaudited interim consolidated financial
statements, which financial statements, in the opinion of management, reflect
all adjustments necessary for the fair presentation of the data. These
adjustments consist only of normal recurring accruals. Because of seasonal and
other factors, results for interim periods are not necessarily indicative of the
results to be expected for the full year. This information is only a summary and
you should read it together with PulsePoint's historical consolidated financial
statements and related notes contained in the annual reports, quarterly reports
and other information that we have filed with the SEC and incorporated by
reference See "Where You Can Find More Information" on page 65.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
---------------- -------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- ---------- -------- -------- ---------- ---------
(In millions, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Results of Operations Data:
Revenue............................. $ 14.6 $ 11.0 $ 25.4 $ 20.6 $ 22.3 $ 23.2 $ 31.7
Net income (loss)................... (3.6) (6.8) (11.9) (18.9) (6.8) (5.2) 2.5
Earnings (loss) on common shares.... (3.6) (6.8) (11.9) (18.9) (6.8) (5.2) 2.5
Earnings (loss) per common share
Basic ........................... (.67) (1.31) (2.29) (3.72) (1.36) (1.04) .52
Diluted.......................... (.67) (1.31) (2.29) (3.72) (1.36) (1.04) .48
Balance Sheet Data:
(as of the end of the period)
Total assets........................ 26.2 32.1 30.5 37.4 33.3 38.9 44.0
Long-term debt...................... 1.6 0.0 1.5 0.0 0.0 0.0 0.1
</TABLE>
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<PAGE>
COMPARATIVE PER SHARE DATA
Set forth below are the earnings (loss) before extraordinary items and book
value (common stockholders' equity) per common share data separately for Unisys
on an historical basis, for the combined company on a pro forma combined basis,
for PulsePoint on an historical basis and for the combined company on a pro
forma combined basis per PulsePoint equivalent share. The exchange ratio for the
merger is assumed to be 0.155 shares of Unisys common stock for each share of
PulsePoint common stock, which is based on the closing price of Unisys common
stock on July 23, 1999. The pro forma earnings per share data presented below
assumes conversion of PulsePoint preferred stock into common stock for all
periods presented. The PulsePoint historical book value data also assumes
conversion of PulsePoint preferred stock into common stock for all periods
presented.
The unaudited pro forma combined data below is for illustrative purposes
only. The companies may have performed differently had they always been
combined. You should not rely on this information as being indicative of the
historical results that would have been achieved had the companies always been
combined or the future results that the combined company will experience after
the merger.
You should read the information below together with our respective
historical financial statements and related notes contained in the annual
reports and information that we have filed with the SEC and incorporated by
reference. To obtain copies of these documents, see "Where You Can Find More
Information" on page 65.
<TABLE>
<CAPTION>
Six Months
Ended June 30, Years Ended December 31,
-------------- --------------------------------
1999 1998 1997 1996
------------- -------- -------- --------
<S> <C> <C> <C> <C>
Unisys Historical per Common Share Data:
Earnings (loss) before extraordinary items...................... $ .73 $ 1.11 $ (5.20) $ (.37)
Earnings (loss) before extraordinary items--assuming dilution .. .70 1.06 (5.20) (.37)
Book value...................................................... 3.25 .38
Unisys Pro Forma Combined per Unisys Common
Share Data:
Earnings (loss) before extraordinary items...................... $ .71 $ 1.06 $ (5.23) $ (.47)
Earnings (loss) before extraordinary items--assuming dilution .. .69 1.00 (5.23) (.47)
Book value...................................................... 3.18 .34
PulsePoint Historical per Common Share Data:
Earnings (loss)................................................. $ (.67) $ (2.29) $ (3.72) $ (1.36)
Earnings (loss)--assuming dilution ............................. (.67) (2.29) (3.72) (1.36)
Book value...................................................... .91 1.16
Unisys Pro Forma Combined per PulsePoint
Equivalent Common Share Data:
Earnings (loss) before extraordinary items...................... $ .11 $ .16 $ (.81) $ (.07)
Earnings (loss) before extraordinary items--assuming dilution .. .11 .16 (.81) (.07)
Book value...................................................... .49 .05
</TABLE>
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<PAGE>
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
At the close of business July 23, 1999, the record date for the PulsePoint
special shareholders meeting, there were approximately 357 holders of record of
PulsePoint common stock and approximately 20 holders of record of PulsePoint
preferred stock.
Market Prices and Dividends
Unisys common stock is listed on the New York Stock Exchange under the
symbol "UIS". PulsePoint common stock is listed on the Nasdaq National Market
under the symbol "PLPT".
The table below sets forth, for the periods indicated, the high and low
sale prices of Unisys common stock and PulsePoint common stock as reported on
the New York Stock Exchange Composite Transaction Tape and on the Nasdaq
National Market, respectively, in each case based on published financial
sources. Neither Unisys nor PulsePoint pays dividends on its common stock.
<TABLE>
<CAPTION>
Unisys Common Stock PulsePoint Common Stock
----------------------------- ----------------------------
High Low High Low
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
1997:
First Fiscal Quarter $ 7 5/8 $ 6 1/4 $ 7 3/8 $5
Second Fiscal Quarter 8 5 3/4 6 1/2 2 1/2
Third Fiscal Quarter 15 3/4 7 3/8 7 1/2 3 1/2
Fourth Fiscal Quarter 16 1/2 11 1/8 6 3/4 3 1/4
1998:
First Fiscal Quarter 20 3/16 13 5/16 10 6 1/8
Second Fiscal Quarter 28 3/8 17 1/4 10 5/8 5 1/4
Third Fiscal Quarter 30 11/16 17 5/8 8 1 5/8
Fourth Fiscal Quarter 35 3/8 18 1/8 4 15/16 2 3/16
1999:
First Fiscal Quarter 36 3/8 27 5/8 5 1/8 2 13/16
Second Fiscal Quarter 39 5/16 27 3/8 6 5/8 3 7/8
Third Fiscal Quarter (through 46 3/16 38 5/8 6 3/8 5 7/8
July 23, 1999)
</TABLE>
On June 14, 1999, the last full trading day prior to the public
announcement of the proposed merger, the closing prices of Unisys common stock
reported on the New York Stock Exchange Composite Transaction Tape and of
PulsePoint common stock reported on Nasdaq National Market were $37.4375 and
$5.50 per share, respectively. On July 23, 1999, the most recent practicable
date prior to the printing of this proxy statement/prospectus, the closing
prices of Unisys common stock reported on the New York Stock Exchange Composite
Transaction Tape and of PulsePoint common stock reported on the Nasdaq National
Market were $42 11/16 per share and $6 1/8 per share, respectively. Shareholders
should obtain current market quotations prior to making any decision with
respect to the merger.
On April 10, 1998, the shareholders of PulsePoint approved and on April 20,
1998, PulsePoint effected a 1 for 4 reverse stock split of PulsePoint's common
stock. The PulsePoint stock prices above have been adjusted to reflect the
reverse stock split.
Post-Merger Dividend Policy
Unisys has not paid dividends on its common stock since 1990 and does not
expect to do so following the merger.
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<PAGE>
OPINION OF FINANCIAL ADVISOR
Under an engagement letter dated August 12, 1998, PulsePoint retained
Morgan Stanley to provide financial advisory services and a financial fairness
opinion in connection with the merger. The PulsePoint board selected Morgan
Stanley to act as PulsePoint's financial advisor based on Morgan Stanley's
qualifications, expertise and reputation and its knowledge of the business and
affairs of PulsePoint. At a telephonic meeting of the PulsePoint board on June
14, 1999, Morgan Stanley rendered its oral opinion, subsequently confirmed in
writing, that, as of June 14, 1999, based upon and subject to the various
considerations set forth in the opinion, the consideration to be received
pursuant to the merger agreement by the holders of PulsePoint common stock who
hold such shares of PulsePoint common stock immediately prior to the merger is
fair from a financial point of view to such holders.
The full text of the written opinion of Morgan Stanley dated June 14, 1999
is attached as Annex C to this proxy statement/prospectus and sets forth, among
other things, the assumptions made, procedures followed, matters considered and
limitations on the scope of the review undertaken by Morgan Stanley in rendering
its opinion. PulsePoint shareholders are urged to, and should, read the opinion
carefully and in its entirety. Morgan Stanley's opinion is directed to the
PulsePoint board and addresses only the fairness from a financial point of view
of the consideration received pursuant to the merger agreement as of the date of
the opinion. It does not address any other aspect of the merger and does not
constitute a recommendation to any holder of PulsePoint common stock or
PulsePoint preferred stock as to how to vote at the special shareholders
meeting. The summary of the opinion of Morgan Stanley set forth in this document
is qualified in its entirety by reference to the full text of the opinion.
In connection with rendering its opinion, Morgan Stanley, among other
things:
. reviewed certain publicly available financial statements and other
information of PulsePoint;
. reviewed certain internal financial statements and other financial and
operating data concerning PulsePoint prepared by the management of
PulsePoint;
. analyzed certain financial projections prepared by the management of
PulsePoint;
. discussed the past and current operations and financial condition and the
prospects of PulsePoint with senior executives of PulsePoint;
. reviewed certain publicly available financial statements and other
information of Unisys;
. discussed the past and current operations and financial condition and the
prospects of Unisys with senior executives of Unisys;
. reviewed the reported prices and trading activity for PulsePoint common
stock and Unisys common stock;
. compared the financial performance of PulsePoint and Unisys and the prices
and trading activity of PulsePoint common stock and Unisys common stock
with that of certain other comparable publicly traded companies and their
securities;
. reviewed the financial terms, to the extent publicly available, of certain
comparable acquisition transactions;
. participated in discussions and negotiations among representatives of
PulsePoint and Unisys and certain other parties and their financial and
legal advisors;
. reviewed a draft of the merger agreement and certain related documents; and
. performed such other analyses and considered such other factors as Morgan
Stanley deemed appropriate.
Morgan Stanley assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by it for the purposes of
its opinion. With respect to the financial projections provided to Morgan
Stanley by the management of PulsePoint, Morgan Stanley understood that such
projections were reasonably prepared on bases reflecting management's best
currently available estimates and judgments of the future financial performance
of PulsePoint. In addition, Morgan Stanley assumed that the merger would be
consummated in accordance with the terms set forth in the merger agreement,
including, among other things, that the merger would be accounted for as a
pooling of interests business combination in accordance with U.S. generally
accepted accounting principles and the merger would be treated as a
reorganization and/or exchange, each pursuant to the Internal Revenue Code of
1986.
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<PAGE>
Morgan Stanley noted that the PulsePoint preferred stock will receive that
number of shares of Unisys common stock equal to the applicable exchange ratio
pursuant to the merger agreement multiplied by the number of shares of
PulsePoint common stock issuable upon conversion of the PulsePoint preferred
stock. Morgan Stanley's opinion assumes that the PulsePoint preferred stock is
converted into PulsePoint common stock immediately prior to the consummation of
the merger and accordingly Morgan Stanley expresses no opinion as to the
fairness of the consideration to be received by the current holders of
PulsePoint common stock relative to the fairness of the consideration to be
received by the current holders of PulsePoint preferred stock. Morgan Stanley
did not make any independent valuation or appraisal of the assets or liabilities
of PulsePoint nor was Morgan Stanley furnished with any such appraisals. Morgan
Stanley's opinion is necessarily based on financial, economic, market and other
conditions as in effect on, and the information available to Morgan Stanley as
of, the date of its opinion.
The following is a brief summary of certain of the analyses performed by
Morgan Stanley in connection with its oral opinion and the preparation of its
opinion letter dated June 14, 1999. Certain of these summaries of financial
analyses include information presented in tabular format. In order to understand
fully the financial analyses used by Morgan Stanley, the tables must be read
together with the text of each summary. The tables alone do not constitute a
complete description of the financial analyses.
Historical PulsePoint Stock Price and Premium Analysis
Morgan Stanley reviewed the historical price performance of PulsePoint
common stock during the twelve month period preceding the signing of the merger
agreement. Morgan Stanley observed that over the period from June 10, 1998 to
June 10, 1999, the closing price per share of PulsePoint common stock ranged
from $2.00 per share to $8.38 per share and during the six month period
preceding June 10, 1999, the closing price per share of PulsePoint common stock
ranged from $2.94 per share to $6.56 per share. The following table presents the
premium of the implied current value of the merger consideration, as of June 14,
1999, of $6.60 per share (the "Current Offer Value") to the PulsePoint share
price as of June 14, 1999, the PulsePoint share price as of June 10, 1999, the
PulsePoint average share price over the 30-day period preceding June 10, 1999
and the PulsePoint average share price over the 90-day period preceding June 10,
1999.
<TABLE>
<CAPTION>
PulsePoint Current Offer
Stock Price Value Premium
----------- -------------
<S> <C> <C>
June 14, 1999.................... $ 5.50 20.0%
June 10, 1999.................... $ 5.94 11.2%
30 Days Ended June 10, 1999...... $ 5.46 21.0%
90 Days Ended June 10, 1999...... $ 4.98 32.6%
</TABLE>
Morgan Stanley also noted that the Current Offer Value exceeded the closing
share price for all days during the six month period preceding June 10, 1999.
PulsePoint Comparable Company Analysis
Morgan Stanley analyzed certain publicly available information for the
following telecommunications systems and software companies: Comverse
Technology, Inc., Intervoice Inc., Glenayre Technologies, Inc., Centigram
Communications Corporation and Syntellect, Inc.
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<PAGE>
For this analysis Morgan Stanley calculated the revenue valuation multiples
for these companies for calendar years 1999 and 2000 based on revenue estimates
from securities research analysts. The following table presents, as of June 10,
1999, the revenue multiples for these companies as calculated by Morgan Stanley:
<TABLE>
<CAPTION>
Aggregate Value as a Multiple of Revenues
-----------------------------------------
CY1999E CY2000E
--------------- ------------------
<S> <C> <C>
Comverse Technology, Inc........ 6.3x 5.3x
Intervoice, Inc................. 2.4 2.0
Glenayre Technologies........... 0.4 0.3
Centigram Communications
Corporation................ 0.2 0.2
Syntellect, Inc................. 0.2 0.2
Mean............................ 1.9x 1.6x
Median.......................... 0.4 0.3
</TABLE>
In analyzing the above range of revenue multiples, Morgan Stanley observed
that Comverse Technologies was significantly larger than PulsePoint and operated
with higher margins than PulsePoint. Morgan Stanley applied a range of multiples
of 0.5x to 2.5x to projected 1999 revenues for PulsePoint, and applied a range
of multiples of 0.4 to 1.7x to projected 2000 revenue for PulsePoint. The
average of these two analyses implied a reference range of $1.90 to $6.20 per
share of PulsePoint. Morgan Stanley noted that the Current Offer Value was
higher than the implied reference range and that the transaction collar range of
$5.40 to $6.60 per share of PulsePoint was within or above the implied reference
range.
No company utilized in the comparable company analysis is identical to
PulsePoint. In evaluating the comparable companies, Morgan Stanley made
judgments and assumptions with regard to industry performance, general business,
economic, market and financial conditions and other matters, many of which are
beyond the control of PulsePoint, such as the impact of competition on the
business of PulsePoint and the industry generally, industry growth and the
absence of any material adverse change in the financial condition and prospects
of PulsePoint or the industry or in the financial markets in general.
Mathematical analysis (such as determining the average or median) is not in
itself a meaningful method of using comparable company data.
Precedent Transactions Analysis
Morgan Stanley reviewed three transactions in the telecommunications
systems and software industry:
. the acquisition of Brite Voice Systems, Inc. by Intervoice
Inc.
. the acquisition of Boston Technology, Inc. by Comverse
Technology Inc.
. the acquisition of Octel Communications Corporation by
Lucent Technologies, Inc.
For each transaction, Morgan Stanley calculated a revenue valuation
multiple based on the ratio of aggregate value to latest twelve months ("LTM")
revenues. The mean LTM revenue multiple was 2.4x while the median was 2.8x.
Morgan Stanley observed that the LTM revenue multiples for the precedent
transactions ranged from 1.1x to 3.4x. Morgan Stanley applied a range of
multiples of 1.5x to 3.0x to the LTM revenues for PulsePoint, which implied a
reference range of $3.50 to $6.30 per share of PulsePoint. Morgan Stanley noted
that the Current Offer Value was above the implied reference range and that the
transaction collar of $5.40 to $6.60 per share of PulsePoint was within or above
the implied reference range.
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<PAGE>
Morgan Stanley also analyzed the premiums paid in the precedent
transactions. The following table presents the mean and median for the above
transactions of the premium paid to the share price one day prior and one month
prior to the announcement of the transaction.
Price Premium Paid
-----------------------------------
1 Month Prior 1 Day Prior
to Announcement to Announcement
--------------- ---------------
Comparable Transactions:
Mean 40.5% 14.1%
Median 49.8% 15.9%
Morgan Stanley applied a range of premiums of 15% to 35% to the PulsePoint
stock price on June 10, 1999 and a range of premiums of 10% to 50% to 30-day and
90-day average trading prices for PulsePoint. This analysis implied a reference
range for PulsePoint of between $6.10 and $7.90 per share. Morgan Stanley noted
that the Current Offer Value was within the implied reference range.
No transaction utilized as a comparison in the precedent transactions
analysis is identical to the merger. In evaluating the transactions listed
above, Morgan Stanley made judgments and assumptions with regard to industry
performance, general business, economic, market and financial conditions and
other matters, many of which are beyond the control of PulsePoint and Unisys,
such as the impact of competition on PulsePoint or Unisys and the industry
generally, industry growth and the absence of any adverse material change in the
financial condition and prospects of PulsePoint or Unisys or the industry or in
the financial markets in general. Mathematical analysis (such as determining the
average or median) is not in itself a meaningful method of using comparable
transaction data.
PulsePoint Discounted Equity Value Analysis
Morgan Stanley performed an analysis of the implied present value per share
of PulsePoint based on the implied future equity value of PulsePoint. Using a
discount rate of 15.5% and a range of calendar year 2003 earnings per share
multiples of 10x to 20x, Morgan Stanley calculated the net present value per
share of PulsePoint. Morgan Stanley analyzed both conservative and aggressive
management estimates of financial performance and also assumed an incremental
interim investment of $20 million in equity financing. The following table
presents the resulting range of net present values per share of PulsePoint based
on the earnings per share multiple used:
Net Present Value Per Share
without Incremental Investment
-------------------------------------
Calendar Year 2003E Price/Earnings
-------------------------------------
10.0x 15.0x 20.0x
------- ------- -------
Aggressive Case........ $ 6.56 $ 9.83 $ 13.11
Conservative Case...... $ 3.05 $ 4.58 $ 6.11
Net Present Value Per Share
with Incremental Investment
-------------------------------------
Calendar Year 2003E Price/Earnings
-------------------------------------
10.0x 15.0x 20.0x
Aggressive Case........ $ 5.26 $ 7.89 $ 10.51
Conservative Case...... $ 2.45 $ 3.67 $ 4.90
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Historical Unisys Stock Price Analysis and Exchange Ratio Analysis
Morgan Stanley reviewed the recent price performance of Unisys common stock
during the twelve month period preceding the signing of the merger agreement.
Morgan Stanley observed that over the period from June 10, 1998 to June 10, 1999
the closing price per share of Unisys common stock ranged from $18.06 per share
to $38.88 per share.
Morgan Stanley analyzed the ratio of the closing share price of PulsePoint
common stock to the closing share price of Unisys common stock during the twelve
month period from June 10, 1998 to June 10, 1999. The following table presents
the exchange ratio as of June 10, 1999, the average exchange ratio over the
30-day period preceding June 10, 1999 and the average exchange ratio over the
90-day period preceding June 10, 1999.
Period Ending June 10, 1999 Exchange Ratio
--------------------------------------- --------------
As of June 10, 1999................. 0.1552
Prior 30-day Average................ 0.1557
Prior 90-day Average................ 0.1445
Morgan Stanley noted that the exchange ratio of 0.200 Unisys shares per
PulsePoint share (the ratio that would be received if the Unisys average closing
price pursuant to the merger agreement was between $27 and $33 per share)
exceeded the exchange ratio for the periods analyzed. Morgan Stanley also noted
that if the Unisys stock price stayed above $33 per share, PulsePoint would
receive the maximum consideration of $6.60 per share.
Unisys Comparable Company Analysis
Morgan Stanley compared certain financial information of Unisys with
publicly available information for the following comparable high-end server
companies: Compaq Computer Corporation, Data General Corporation,
Hewlett-Packard Company, IBM Corporation, NCR Corporation, Sun Microsystems,
Inc. Morgan Stanley also compared certain financial information of Unisys with
publicly available information for the following comparable services companies:
American Management Systems, Inc., Computer Sciences Corporation and Electronic
Data Systems Corporation.
For this analysis Morgan Stanley calculated various valuation multiples
based on a range of securities research analysis estimates. The following table
presents, as of June 10, 1999, the mean and median of the ratio of price per
share to earnings per share ("P/E Multiple") over the last twelve months and for
earnings estimates for calendar years 1999 and 2000.
<TABLE>
<CAPTION>
Price/Earnings Multiple
-----------------------------------------
Last Twelve Months CY1999E CY2000E
------------------ ------- -------
<S> <C> <C> <C>
High-End Server Companies
Mean...................... 32.8x 27.3x 21.8x
Median.................... 33.2 25.5 22.1
Services Companies
Mean...................... 31.9x 26.0x 21.9x
Median.................... 31.4 25.6 21.6
Unisys......................... 30.3x 25.5x 21.1x
</TABLE>
No company utilized in the comparable company analysis is identical to
Unisys. In evaluating the comparable companies, Morgan Stanley made judgments
and assumptions with regard to industry performance, general business, economic,
market and financial conditions and other matters, many of which are beyond the
control of Unisys, such as the impact of competition on the business of Unisys
and the industry generally, industry growth and the absence of any material
adverse change in the financial condition and prospects of Unisys or the
industry
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<PAGE>
or in the financial markets in general. Mathematical analysis (such as
determining the average or median) is not in itself a meaningful method of using
comparable company data.
Unisys Discounted Equity Value Analysis
Morgan Stanley performed an analysis of the implied present value per share
of Unisys based on the implied future equity value of Unisys. Morgan Stanley
based its analysis on implied equity research analyst estimates of financial
performance through calendar year 2002. Using a discount rate of 15.5%, Morgan
Stanley calculated the net present value per share of Unisys based on a range of
multiples of estimated calendar year 2001 earnings per share and estimated
calendar year 2002 earnings per share. The following table presents the
resulting implied net present value per share of Unisys:
Estimated EPS Implied Value
EPS Multiple Per Unisys Share
--------- -------- ----------------
Calendar Year 2000 $2.14 18.0x - 24.0x $33.27 - $44.35
Calendar Year 2001 $2.52 18.0x - 24.0x $33.97 - $45.30
Analyst Price Targets
Morgan Stanley reviewed equity research analysts' twelve month price
targets for Unisys stock and noted that those targets ranged from $30.00 to
$49.00 per share.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. In arriving
at its opinion, Morgan Stanley considered the results of all of its analyses as
a whole and did not attribute any particular weight to any analysis or factor
considered by it. Furthermore, Morgan Stanley believes that selecting any
portion of its analyses, without considering all analyses, would create an
incomplete view of the process underlying its opinion. In addition, Morgan
Stanley may have given various analyses and factors more or less weight than
other analyses and factors, and may have deemed various assumptions more or less
probable than other assumptions, so that the ranges of valuations resulting from
any particular analysis described above should not be taken to be Morgan
Stanley's view of the actual value of PulsePoint or Unisys. In performing its
analyses, Morgan Stanley made numerous assumptions with respect to industry
performance, general business and economic conditions and other matters, many of
which are beyond the control of PulsePoint or Unisys. Any estimates contained in
Morgan Stanley's analyses are not necessarily indicative of future results or
actual values, which may be significantly more or less favorable than those
suggested by the estimates.
The analyses performed were prepared solely as part of Morgan
Stanley's analysis of the fairness from a financial point of view of the
consideration to be received pursuant to the merger agreement by the holders of
shares of PulsePoint common stock who hold such shares of PulsePoint common
stock immediately prior to the merger, and were conducted in connection with the
delivery of Morgan Stanley's opinion. The analyses do not purport to be
appraisals or to reflect the prices at which PulsePoint or Unisys might actually
be sold.
The consideration to be received pursuant to the merger agreement was
determined through arm's-length negotiations between PulsePoint and Unisys and
was approved by the PulsePoint board. Morgan Stanley provided advice to
PulsePoint during those negotiations; however, Morgan Stanley did not recommend
any specific form or amount of consideration to PulsePoint or that any specific
form or amount of consideration constituted the only appropriate form or amount
of consideration in connection with the merger.
In addition, Morgan Stanley's opinion and presentation to the
PulsePoint board was one of many factors taken into consideration by
PulsePoint's board in making its decision to approve the merger. Consequently,
the Morgan Stanley analyses as described above should not be viewed as
determinative of the opinion of the PulsePoint
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<PAGE>
board with respect to the merger or of whether the PulsePoint board would have
been willing to agree to a transaction with a different form or amount of
consideration.
The PulsePoint board retained Morgan Stanley based upon Morgan
Stanley's qualifications, experience and expertise. Morgan Stanley is an
internationally recognized investment banking and advisory firm. Morgan Stanley,
as part of its investment banking business, is continuously engaged in the
valuation of businesses and securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate, estate and other purposes. In the past, Morgan Stanley
and its affiliates have provided financing and advisory services for Unisys and
have received fees for the rendering of these services. In the ordinary course
of Morgan Stanley's trading and brokerage activities, Morgan Stanley or any of
its affiliates may at any time hold long or short positions, may trade or
otherwise effect transactions, for its own account or for the account of
customers in the equity securities of PulsePoint, Unisys or any of the other
parties to the transaction.
Under the engagement letter, Morgan Stanley provided financial
advisory services and a financial fairness opinion in connection with the
merger, and PulsePoint agreed to pay Morgan Stanley a fee of $2.5 million. In
addition, PulsePoint has agreed to indemnify Morgan Stanley and its affiliates,
their respective directors, officers, agents and employees and each person, if
any, controlling Morgan Stanley or any of its affiliates against certain
liabilities and expenses, including certain liabilities under the federal
securities laws, related to or arising out of Morgan Stanley's engagement.
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<PAGE>
THE MERGER AGREEMENT
GENERAL
The following summary of the merger agreement is qualified by reference to
the complete text of the merger agreement, which is incorporated by reference
and attached as Annex A to this document. We encourage you to read the merger
agreement because it is the legal document that governs the merger.
STRUCTURE OF THE MERGER
Under the merger agreement, Shellco Inc., a wholly owned subsidiary of
Unisys, will merge into PulsePoint. As a consequence of the merger, PulsePoint
will become a wholly owned subsidiary of Unisys.
CLOSING; EFFECTIVE TIME
We will close the merger at 10:00 a.m., Eastern Time, on the second
business day after the conditions set forth in the merger agreement have been
satisfied or waived, unless:
. the second business day after the satisfaction or waiver would be
September 1, 1999, in which case we will use our reasonable best
efforts to ensure that the closing takes place on August 31, 1999; or
. we agree to another date and time.
On the date of the closing of the merger, we will file a certificate of
merger and other appropriate documents with the Secretary of State of California
in accordance with the relevant provisions of California law. The merger will
become effective when the certificate of merger is filed with the Secretary of
State of California, or at such later time as we specify in the certificate of
merger.
CONSIDERATION TO BE RECEIVED IN THE MERGER
PulsePoint common stock. At the time of the merger, each outstanding
share of PulsePoint common stock will be automatically converted into the right
to receive a fraction of a share of Unisys common stock. That fraction (called
the "Exchange Ratio") is calculated based on the last reported sale price of
Unisys common stock as reported on the NYSE Composite Transaction Tape over the
20 consecutive trading days ending on the fourth trading day prior to the
shareholder meeting to vote on this proposal (the "Average Stock Price"). The
Exchange Ratio is briefly summarized below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------- -----------------------------------------------------------
If the Average Stock Price of
Unisys common stock is: The Exchange Ratio will be:
- ------------------------------------------------------------- -----------------------------------------------------------
<S> <C>
. Greater than $33.00 $6.60 divided by Average Stock Price of Unisys common stock
- ------------------------------------------------------------- -----------------------------------------------------------
. Between $33.00 and $27.00 (inclusive) 0.2
- ------------------------------------------------------------- -----------------------------------------------------------
. Less than $27.00 $5.40 divided by Average Stock Price of Unisys common stock
- ------------------------------------------------------------- -----------------------------------------------------------
</TABLE>
PulsePoint preferred stock. Holders of a majority of the PulsePoint
preferred stock have agreed to cause the conversion of all shares of PulsePoint
preferred stock into shares of PulsePoint common stock immediately prior to the
merger pursuant to the terms of the voting agreements. See "Material Terms of
the Voting Agreements" on page 52. Accordingly, holders of PulsePoint preferred
stock will be entitled to receive an amount of Unisys common stock equal to the
Exchange Ratio multiplied by the number of PulsePoint common shares into which
their PulsePoint preferred shares were converted.
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<PAGE>
CANCELLATION OF SHARES
Any share of PulsePoint common stock owned by Unisys, held by PulsePoint as
treasury stock or owned by their respective subsidiaries will be automatically
canceled and retired in the merger and will cease to exist. We will not exchange
those shares for any securities of Unisys or other consideration.
PROCEDURES FOR SURRENDER OF CERTIFICATES; FRACTIONAL SHARES
As soon as reasonably practicable after the effective time of the merger,
the exchange agent for the merger will send you a letter of transmittal. The
letter of transmittal will contain instructions with respect to the surrender of
your PulsePoint stock certificates. YOU SHOULD NOT RETURN STOCK CERTIFICATES
WITH THE ENCLOSED PROXY.
Commencing immediately after the effective time of the merger, upon
surrender by you of your stock certificates representing PulsePoint shares in
accordance with the instructions in the letter of transmittal, you will be
entitled to receive stock certificates representing shares of Unisys common
stock into which those PulsePoint shares have been converted, together with a
cash payment in lieu of fractional shares, if any.
After the merger, each certificate that previously represented shares of
PulsePoint stock will represent only the right to receive the shares of Unisys
common stock into which shares of PulsePoint stock were converted in the merger,
and the right to receive cash in lieu of fractional shares of Unisys common
stock as described below.
You will not be paid any dividends or distributions on the Unisys common
stock into which your PulsePoint shares have been converted with a record date
after the merger, and will not be paid cash in lieu of fractional shares, until
your PulsePoint certificates are surrendered to the exchange agent. When those
certificates are surrendered, any unpaid dividends and any cash in lieu of
fractional shares of Unisys common stock payable as described below will be paid
without interest.
We will close PulsePoint's transfer books at the effective time of the
merger and no further transfers of shares will be recorded on the transfer
books. If a transfer of ownership of PulsePoint stock that is not registered in
the records of PulsePoint's transfer agent has occurred, then, so long as the
PulsePoint stock certificates are accompanied by all documents required to
evidence and effect the transfer, as set forth in the transmittal letter and
accompanying instructions, and by evidence of payment of any applicable stock
transfer taxes, a certificate representing the proper number of shares of Unisys
common stock will be issued to a person other than the person in whose name the
certificate so surrendered is registered, together with a cash payment in lieu
of fractional shares, if any, and payment of dividends or distributions, if any.
No fractional share of Unisys common stock will be issued upon surrender of
certificates previously representing PulsePoint shares. Instead, the exchange
agent will pay you an amount in cash determined by multiplying the fractional
share interest to which you would otherwise be entitled by the closing price for
a share of Unisys common stock on the NYSE Composite Transaction Reporting Tape
on the trading day immediately preceding the closing date of the merger.
WARRANTS
PulsePoint has issued a number of warrants to acquire shares of PulsePoint
common stock to some of its lenders and customers. The merger agreement provides
that Unisys must negotiate in good faith with each of the warrant holders a new
form of warrant and a new warrant agreement between Unisys and each warrant
holder. Each new warrant and warrant agreement is to be on substantially the
same terms as the existing warrant and warrant agreement, but is to provide that
upon exercise instead of receiving shares of PulsePoint common stock the holder
will receive shares of Unisys common stock calculated as follows:
. the number of shares of Unisys common stock to which the warrant
holder is entitled will be:
- the number of shares of PulsePoint common stock to which the
holder was entitled immediately prior to the merger
multiplied by
- the Exchange Ratio (see "--Consideration to be Received in
the Merger" on page 42); and
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<PAGE>
. the exercise price per share of Unisys common stock acquired
under the warrant will be:
- the exercise price per share of PulsePoint common stock
immediately prior to the merger divided by
- the Exchange Ratio.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains representations and warranties by PulsePoint
relating to, among other things:
. corporate organization, qualification, standing and power;
. capitalization;
. authorization, execution, delivery, performance and enforceability of,
required consents, approvals, orders and authorizations of
governmental authorities relating to, and non-contravention of
agreements as a result of, the merger agreement;
. documents filed with the SEC;
. absence of specified material changes or events since December 31,
1998;
. compliance with applicable laws and litigation;
. employee benefit and labor matters;
. environmental matters;
. tax matters;
. required shareholder votes in connection with the merger;
. intellectual property matters;
. material contracts and debt instruments;
. related party transactions;
. treatment of the merger as a pooling of interests for accounting
purposes;
. opinions of financial advisors; and
. "Year 2000" compliance.
The merger agreement contains representations and warranties by Unisys,
relating to, among other things:
. corporate organization, qualification, standing and power;
. capitalization;
. authorization, execution, delivery, performance and enforceability of,
required consents, approvals, orders and authorizations of
governmental authorities relating to, and non-contravention of
agreements as a result of, the merger agreement;
. documents filed with the SEC;
. absence of specified material changes or events since December 31,
1998;
. compliance with applicable laws and litigation;
. treatment of the merger as a pooling of interests for accounting
purposes; and
. validity of Unisys shares to be issued in the merger.
The representations and warranties do not survive the closing of the merger or
termination of the merger agreement.
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<PAGE>
COVENANTS
Conduct of Business
Pursuant to the merger agreement, each party must comply with
agreements relating to the conduct of its business, except as permitted or
contemplated by the merger agreement or as consented to by the other party,
during the period from the date of the merger agreement to the effective time of
the merger.
PulsePoint has agreed that it will:
. conduct its business in the ordinary course consistent with past
practice and in compliance in all material respects with all
applicable laws and regulations;
. use reasonable best efforts to preserve its business organization; and
. use reasonable best efforts to maintain its existing relations and
goodwill with customers, suppliers, regulators, distributors,
creditors, lessors and others having business dealings with it.
The merger agreement prohibits each of Unisys and PulsePoint from taking
any action outside of the parameters specified in the merger agreement relating
to the following matters:
. repurchasing shares of its capital stock, except Unisys may repurchase
shares of its series A convertible preferred stock;
. declaring or paying dividends, other than regular quarterly dividends,
or recapitalizing its capital stock;
. taking any action which would prevent the merger from qualifying for
pooling of interests accounting treatment;
. taking any action which would prevent the merger from being a
reorganization under the Internal Revenue Code; and
. taking any action that would be reasonably likely to result in any of
the conditions to the merger not being satisfied or that would impair
its ability to complete the transactions contemplated by the merger
agreement.
In addition, the merger agreement prohibits PulsePoint from taking any
action outside of the parameters specified in the merger agreement relating to
the following matters:
. amending its organizational documents;
. issuing, selling, encumbering, splitting, combining, subdividing or
reclassifying any shares of capital stock or options to acquire any
shares of capital stock;
. selling, transferring or otherwise disposing of, or purchasing or
otherwise acquiring, assets or properties or other business by merger,
consolidation, transfer or acquisition of shares of capital stock or
otherwise;
. changing its accounting policies, practices or methods, except as may
be required by generally accepted accounting principles or by the
rules or regulations of the SEC;
. taking any action to render inapplicable, or to exempt any third party
from any provision of its articles of incorporation or releasing any
third party from, or amending, modifying or waiving any
confidentiality or standstill agreement;
. taking any action to change employee rights and benefits, except for
the issuance, in the ordinary course of business consistent with past
practice, of a specified number of stock options;
. forgiving loans to employees;
. taking any action to amend any options, warrants or stock option
plans;
. incurring or guaranteeing additional debt;
. changing terms of its outstanding securities;
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<PAGE>
. taking any action to modify current tax elections;
. paying, discharging or satisfying any claims, liabilities and
obligations;
. taking any action which would result in a change to the conversion
price or exercise price of any warrant or preferred stock; and
. taking any action to cause its shares of common stock to cease to be
listed on the Nasdaq National Market.
No Solicitation
The merger agreement provides that PulsePoint may not, and may not
authorize or permit any of its subsidiaries to, and will use its reasonable best
efforts to cause all of PulsePoint's and its subsidiaries' respective officers,
directors, employees or representatives not to, directly or indirectly:
. solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed to facilitate, any
inquiries or the making of any Company Acquisition Proposal, which is
defined below; or
. participate in any discussions or negotiations regarding any Company
Acquisition Proposal or accept any Company Acquisition Proposal.
However, in response to an unsolicited written offer or proposal with
respect to a potential or proposed superior proposal, as defined below, if the
PulsePoint board determines, upon advice from outside legal counsel to
PulsePoint, that the failure to engage in the negotiations or discussions would
result in a breach of the fiduciary duties of the PulsePoint board, PulsePoint
may:
. furnish information to any person making a superior proposal pursuant
to a customary confidentiality and standstill agreement; and
. participate in discussions or negotiations regarding the superior
proposal.
A "Company Acquisition Proposal" is any inquiry, proposal or offer from any
person relating to any:
. direct or indirect acquisition or purchase of a business that
constitutes 25% or more of the consolidated net revenues, net income
or assets of PulsePoint and its subsidiaries;
. direct or indirect acquisition or purchase of 25% or more of any class
of equity securities of PulsePoint or any of its subsidiaries whose
business constitutes 25% or more of PulsePoint's consolidated net
revenues, net income or assets;
. tender offer or exchange offer that if consummated would result in any
person beneficially owning 25% or more of the capital stock of
PulsePoint; or
. merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving PulsePoint
or any of its subsidiaries whose business constitutes 25% or more of
PulsePoint's consolidated net revenues, net income or assets.
In addition, PulsePoint must promptly advise Unisys orally and in writing
of any Company Acquisition Proposal or any inquiry with respect to or that could
reasonably lead to any Company Acquisition Proposal, the identity of the person
making the proposal or inquiry and the material terms of the proposal.
In the event the PulsePoint board has determined that a potential or
proposed Company Acquisition Proposal constitutes a superior proposal, (i)
PulsePoint shall promptly notify Unisys and (ii) for a period of five business
days after delivery of that notice, PulsePoint, if requested by Unisys, shall
negotiate in good faith with Unisys to make such adjustments to the terms and
conditions of the merger agreement as would enable PulsePoint and Unisys to
proceed with the merger on such adjusted terms. After that five business day
period, the PulsePoint board may then (and only then) withdraw or modify its
approval or recommendation of the merger and the merger agreement and recommend
the superior proposal.
Except as described above, neither the PulsePoint board nor any committee
of the PulsePoint board may (i) withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to Unisys, its approval or
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<PAGE>
recommendation of the merger agreement or the merger, or (ii) approve or
recommend, or propose publicly to approve or recommend, any company acquisition
proposal.
A "superior proposal" is any bona fide written offer made by a third party
to acquire, directly or indirectly, for consideration consisting of cash and/or
securities, all of the shares of PulsePoint common stock then outstanding or all
or substantially all the assets of PulsePoint (i) on terms that the PulsePoint
board determines in its good faith judgment (after consultation with a financial
advisor of nationally recognized reputation and taking into account all the
terms and conditions of the offer deemed relevant by the PulsePoint board,
including any break-up fees, expense reimbursement provisions, conditions to
consummation, and the ability of the party making the proposal to obtain
financing for the offer) are materially more favorable from a financial point of
view to its shareholders than the merger; and (ii) that constitutes a
transaction that, in the PulsePoint board's judgment, is reasonably likely to be
consummated on the terms set forth, taking into account all legal, financial,
regulatory and other aspects of the proposal.
ADDITIONAL AGREEMENTS
Stock Option Plans and Employee Stock Purchase Program
All unexpired and unexercised options to purchase shares of PulsePoint
common stock outstanding at the effective time of the merger that were granted
under PulsePoint's 1983 Stock Option Plan or its Directors Stock Option Plan
will be converted automatically into options to acquire Unisys common stock at
the effective time of the merger. These options will become exercisable for a
number of shares of Unisys common stock determined by multiplying the number of
shares of PulsePoint common stock subject to the stock option by the Exchange
Ratio, rounded to the nearest whole share. The exercise price per share of
Unisys common stock will be the exercise price of the PulsePoint option divided
by the Exchange Ratio and rounded to the nearest one one-hundredth of a cent
except, in the case of a PulsePoint stock option that is an incentive stock
option under Section 422 of the Internal Revenue Code, the conversion formula
may be adjusted by Section 424(a) of the Internal Revenue Code.
The PulsePoint board will select a date, not less than twenty days before
the special shareholders meeting, on which any stock option granted pursuant to
PulsePoint's Employee Stock Purchase Program that is outstanding but not yet
exercisable will become immediately exercisable. On that date, PulsePoint will
notify all affected option holders that they have a period of twenty days in
which to exercise their options, and that their options will terminate upon the
expiration of the twenty day period. At the time of the merger PulsePoint will
cancel any options under this Program that have not been exercised, and holders
will no longer be able to exercise these options.
Transfer of Employee Benefits
Unisys will use its reasonable best efforts to permit PulsePoint's
employees to participate in Unisys' employee benefit plans as soon as is
reasonably practicable after the completion of the merger. Under each of Unisys'
benefit plans in which PulsePoint employees become eligible to participate as a
result of the merger, each employee will be given full credit for their service
with PulsePoint for eligibility and vesting purposes, but not for benefit
accrual or early retirement subsidies.
Except where PulsePoint's employees are already subject to limitations or
waiting periods under their existing PulsePoint welfare or fringe benefit plans,
Unisys will waive all limitations as to preexisting conditions, exclusions and
waiting periods with respect to participation and coverage requirements for
Unisys' welfare and fringe benefit plans. If a PulsePoint employee becomes
eligible to join a Unisys welfare plan, that employee will be credited with any
co-payments or deductibles paid by him or her for the current plan year prior to
the merger under corresponding welfare plans maintained PulsePoint.
Nothing in the merger agreement limits the power of Unisys to amend or
terminate any particular employee benefit plan, program, agreement or policy.
Nor is Unisys required to offer to continue (other than as required by its
terms) any written employment contract. However, without the employee's consent,
no such amendment or termination may impair the rights of any person with
respect to benefits or any other payments already accrued as of the time of the
termination or amendment.
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Insurance and Indemnification
For six years after the merger, Unisys will maintain in effect PulsePoint's
current directors' and officers' liability insurance (or policies containing
substantially similar coverage) covering acts or omissions occurring prior to
and as of the effective time of the merger. Unisys and its subsidiaries will not
be required to pay, in total, an annual premium for the insurance described in
this paragraph in excess of 175% of the current annual premium paid by
PulsePoint for its existing coverage prior to the merger. However, if the annual
premiums of that insurance coverage exceed that amount, Unisys will be obligated
to obtain a policy with the best coverage available for a cost up to but not
exceeding that amount.
From and after the effective time of the merger, Unisys will cause the
surviving corporation, to the fullest extent permitted under PulsePoint's
articles of incorporation as in effect on June 14, 1999, to indemnify each
person who is, or has been an officer, director or employee of PulsePoint or any
of its subsidiaries against all losses and damages in connection with any
lawsuit, claim or investigation arising out of or pertaining to matters existing
or occurring at or prior to the effective time of the merger.
The indemnified parties will, for a period of six years after the effective
time of the merger, be entitled to the benefit of the provisions of PulsePoint's
articles of incorporation and by-laws relating to indemnification, limitation of
liability and advancement of expenses of officers and directors.
Fees and Expenses
Whether or not the merger is completed, we will each pay our own costs and
expenses incurred in connection with the merger and the merger agreement subject
to the expense reimbursement provisions described in "--Termination, Amendment
and Waiver." We will, however, split on a 50-50 basis the costs of (a) the
filing fees in connection with Unisys Form S-4 registration statement and this
proxy statement/prospectus, (b) the filing fees in connection with any filing,
permits or approvals obtained under applicable state securities and "blue sky"
laws, (c) the expenses in connection with printing and mailing of the Unisys
Form S-4 registration statement and this proxy statement/prospectus, and (d) all
other expenses not directly attributable to any one of the parties.
New York Stock Exchange Listing
Unisys will promptly prepare and submit to the NYSE a listing application
with respect to the maximum number of shares of Unisys common stock issuable to
PulsePoint shareholders in the merger, and Unisys must use reasonable best
efforts to obtain approval for the listing of Unisys common shares on the New
York Stock Exchange.
Tax Treatment
We must both use reasonable best efforts to ensure that the merger
qualifies as a reorganization under Section 368(a) of the Internal Revenue Code.
Pooling of Interests
We have each agreed that during the period between the date of the merger
agreement and the effective time of the merger, we will use our reasonable best
efforts to cause the merger to be accounted for as a pooling of interests and
will not take any action that would cause that accounting treatment not to be
obtained.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
PulsePoint's and Unisys' obligations to complete the merger are subject to
the satisfaction or waiver of various conditions on or before the date on which
the merger is completed, which include, in addition to other customary closing
conditions, the following:
. approval by the PulsePoint shareholders of the merger agreement and
the merger;
. expiration or termination of the waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976;
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. governmental and regulatory authorities having issued all other
approvals necessary to complete the transactions, unless the failure
to obtain those approvals would not have a material adverse effect on
PulsePoint or Unisys, as the case may be;
. no court having issued an order and no law having been enacted which:
- materially restricts, prevents or prohibits the completion
of the merger and the other transactions contemplated by the
merger, or
- would make the consummation of the merger illegal, or
- would impair the ability of Unisys to own the shares of
PulsePoint or operate PulsePoint's businesses after the date
of the merger;
. the SEC having declared effective the Unisys Form S-4 registration
statement, of which this proxy statement/prospectus forms a part, and
Unisys having received all material approvals necessary under state
securities or "blue sky" laws to the issuance of shares in the merger;
. the shares of Unisys common stock issuable in the merger having been
approved for listing on the NYSE;
. Unisys and PulsePoint having received letters from their respective
independent auditors, dated the date of the merger, regarding the
appropriateness of pooling of interests accounting for the merger; and
. the aggregate value of the cash to be paid to PulsePoint shareholders
who exercise their dissenters rights under Chapter 13 of the
California Corporations Code together with the cash to be paid to
PulsePoint shareholders in lieu of fractional shares does not exceed
10% or more of the total value of the consideration to be paid by
Unisys in the merger.
In addition, each of our obligations to effect the merger is subject to the
satisfaction or waiver of the following additional conditions:
. the representations and warranties made by the other in the merger
agreement that are qualified by materiality being true and correct on
the date of the merger and each of the representations and warranties
that are not qualified by materiality being true and correct in all
material respects on the date of the merger, in each case as if they
were made on that date (unless they were by their express provisions
made as of a specific date, in which case they need be true and
correct only as of that specific date);
. the other party to the merger agreement having performed in all
material respects all agreements and covenants required to be
performed by it under the merger agreement on or before the date of
the merger; and
. our having received from our legal counsel opinions to the effect that
the merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code.
The obligation of Unisys to complete the merger is further subject to the
condition that each of the parties to the voting agreements has complied in all
material respects with their obligations under the voting agreements.
TERMINATION, AMENDMENT AND WAIVER
The merger agreement may be terminated:
. by mutual written consent of Unisys and PulsePoint;
. by either Unisys or PulsePoint:
- if we do not complete the merger on or before December 31,
1999, except that a party may not terminate the agreement if
its failure to fulfill its obligations is the cause of the
merger not being completed by December 31, 1999;
- if PulsePoint shareholders fail to approve the merger at
PulsePoint's special shareholders meeting;
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- if a court issues a final non-appealable order, decree or
injunction that makes the merger illegal or permanently
prohibits the completion of the merger, unless the party
seeking to terminate the merger agreement has not used
reasonable best efforts to prevent the court order from
being lifted or vacated;
- if there has been a breach by the other of any of the
other's representations, warranties, covenants or agreements
contained in the merger agreement, which breach would result
in the failure to satisfy one or more of the conditions to
the merger, and that breach is incapable of being cured or,
if capable of being cured, has not been cured within 30 days
after written notice was received by the party alleged to be
in breach;
. by Unisys, if the PulsePoint board or any of its committees (a)
withdraws or modifies in any manner adverse to Unisys its approval or
recommendation of the merger; (b) fails to reaffirm its recommendation
that the merger be approved within 15 days of Unisys' request; or (c)
approves or recommends any Company Acquisition Proposal or acquisition
transaction involving PulsePoint; or
. by Unisys, if any of the parties to the voting agreements other than
Unisys shall have violated any of the terms of the voting agreements
in any material respect.
PulsePoint has agreed that it will pay Unisys a $4 million termination fee
and reimburse Unisys for expenses incurred in connection with the merger
agreement if:
. (a) a Company Acquisition Proposal is made to PulsePoint or its
shareholders, and the merger agreement is terminated because the
merger is not completed by December 31, 1999, or because the
PulsePoint shareholders fail to approve the merger agreement, and (b)
within 18 months after the termination of the merger agreement,
PulsePoint enters into or completes a transaction relating to a
Company Acquisition Proposal; or
. Unisys terminates the merger agreement because the PulsePoint board or
any of its committees (a) fails to reaffirm its recommendation that
the merger be approved within 15 days of Unisys' request, (b)
withdraws or modifies in any manner adverse to Unisys its approval or
recommendation of the merger, or (c) approves or recommends any
Company Acquisition Proposal involving PulsePoint.
PulsePoint will reimburse Unisys for its expenses if a Company Acquisition
Proposal is made to PulsePoint or its shareholders and:
. the merger agreement is terminated because the merger is not completed
by December 31, 1999 or because the PulsePoint shareholders fail to
approve the merger agreement; or
. Unisys terminates the merger agreement because the PulsePoint board or
any of its committees (a) fails to reaffirm its recommendation that
the merger be approved within 15 days of Unisys' request, (b)
withdraws or modifies in any manner adverse to Unisys its approval or
recommendation of the merger, or (c) approves or recommends any
Company Acquisition Proposal or acquisition transaction involving
PulsePoint.
AMENDMENTS
We may amend the merger agreement at any time before or after shareholder
approval of the merger agreement. After shareholder approval of the merger
agreement, we may not make any amendment that, by law or in accordance with the
rules of any stock exchange, requires further approval by PulsePoint
shareholders or approval by Unisys shareholders without the approval of those
shareholders.
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MATERIAL TERMS OF THE STOCK OPTION AGREEMENT
GENERAL
As an inducement and condition to entering into the merger agreement,
PulsePoint granted to Unisys an option to purchase 1,109,937 shares of
PulsePoint common stock, which would represent approximately 19.9% of its common
stock outstanding on June 14, 1999, the date the stock option agreement was
signed, without giving effect to the shares issued under the stock option
agreement. We have attached the stock option agreement as Annex B to this
document. We encourage you to read this agreement, which may contain terms
important to you. In this section of the proxy statement/prospectus we describe
the material provisions of the stock option agreement.
TERMS OF THE OPTION
Number of Shares and Exercise Price
PulsePoint has granted to Unisys an option to purchase up to 1,109,937
shares of PulsePoint common stock at a price per share equal to $6.60. The
number and type of securities subject to the option and their exercise price
will be adjusted to preserve the economic benefit of the option if there is any
change in or distribution in respect of PulsePoint's common stock by reason of a
merger, recapitalization, stock dividend, split-up, combination, exchange of
shares or any similar event.
Exercise Rights
Unisys may exercise its option in the event that the merger agreement is
terminated under circumstances which entitle Unisys to receive a termination
fee, as described above in "The Merger Agreement" on page 42.
Expiration
To the extent an option has not been exercised, it will expire upon the
earlier of:
. completion of the merger, and
. nine months after the occurrence of one of the events entitling Unisys
to receive a termination fee as described in the previous paragraph.
SUBSTITUTE OPTION
If PulsePoint enters into an agreement to:
. consolidate with or merge into any person in a transaction in which it
is not the surviving corporation or in which its common stock
represents less than 50% of the voting securities of the surviving
corporation; or
. sell all or substantially all of its assets,
then the option will be converted into or exchanged for an option with
identical terms appropriately adjusted to acquire the number and class of
shares or other securities, cash or property that Unisys would have
received if Unisys had exercised the option immediately prior to the
consolidation, merger or sale.
EXCHANGE AT THE OPTION OF UNISYS
The stock option agreement provides that, if PulsePoint enters into any
agreement (x) providing that all of its shares are to be purchased for, or
converted into the right to receive, cash or (y) with respect to any merger,
consolidation or sale of substantially all assets described in "--Substitute
Option" above, PulsePoint is required to make a proper provision in the
agreement to provide that, if the option has not yet been exercised, then upon
the completion of any of these transactions, if the option is then exercisable,
Unisys will have the right, at its election, to receive in exchange for the
cancellation of the option an amount in cash equal to:
. the number of shares subject to the option, multiplied by
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. the difference between the exercise price for the options and the
market value of those shares before the transaction is entered into or
the market value of the shares before the transaction is completed,
whichever is greater.
LIMITATION OF PROFIT
Unisys' total profit under the stock option agreement may not exceed $4
million. The total profit under the stock option agreement is the sum of:
. any termination fees received by Unisys under the merger agreement;
. any net cash proceeds from the exchange of the option pursuant to the
stock option agreement as described in "--Exchange at the Option of
Unisys" on page 51; and
. any net cash proceeds from the sale of the option shares to a third
party.
EFFECT OF STOCK OPTION AGREEMENT
The stock option agreement is intended to increase the likelihood that the
merger will be consummated in accordance with the terms of the merger agreement.
The stock option agreement would have the effect of making an acquisition or
other combination of PulsePoint with a third party more costly because of the
need in any such transaction to acquire or otherwise provide for the shares of
PulsePoint common stock purchased by Unisys pursuant to the option. Moreover,
following consultation with each of their respective independent accountants,
the management of Unisys and PulsePoint believe that if the option becomes
exercisable another acquiror of PulsePoint may be precluded from accounting for
the acquisition by using the pooling of interests accounting method.
Accordingly, the stock option agreement may discourage a third party from
proposing another transaction, including one that might be more favorable to
PulsePoint shareholders than the merger.
MATERIAL TERMS OF THE VOTING AGREEMENTS
As an inducement and condition to Unisys' willingness to enter into the
merger agreement, holders of PulsePoint common and preferred stock listed below
have entered into voting agreements with Unisys. The form of the voting
agreements signed by these holders is set out as Exhibit B to the merger
agreement and is available upon request.
Shareholders who have signed voting agreements are:
. Frederick J. Warren and Robin G. Warren
. Citiventure 96 Partnership Fund, L.P.
Chancellor Private Capital Offshore Partners II, L.P.
Chancellor Private Capital Partners III, L.P.
Chancellor Private Capital Offshore Partners I, C.V.
. Microsoft Corporation
. Oak Investment Partners III, L.P.
Oak Investment Partners VII, L.P.
Oak VII Affiliates Fund, L.P.
Oak Investment Partners V, L.P.
Oak V Affiliates Fund, L.P.
Bandel L. Carano
. Moore Global Investments, Ltd.
Remington Investment Strategies, L.P.
As of the close of business on July 23, 1999, these shareholders own
approximately 38% of the common stock and 89% of the preferred stock of
PulsePoint. Under the voting agreements, each shareholder has:
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. agreed to vote all of the shares of PulsePoint common stock and
preferred stock owned by them or over which they exercise voting
control in favor of the merger agreement;
. agreed to force the conversion of all preferred stock into common
stock immediately after the approval of the merger at the special
shareholders meeting;
. granted to Unisys an irrevocable proxy such that if any of the
Holders fail to appear at the special shareholders meeting or
fail to vote in favor of the merger, then Unisys may do so on
their behalf as their proxy;
. agreed not to sell or dispose of any PulsePoint common stock,
PulsePoint preferred stock or options to acquire PulsePoint
common stock which are owned by them without first obtaining the
written consent of Unisys, unless the purchaser agrees to be
bound by the terms of the voting agreement; and
. agreed not to solicit or encourage a Company Acquisition Proposal
or engage in discussions with anyone who has made or to their
knowledge is interested in making a Company Acquisition Proposal.
The voting agreements expire when the merger has been approved or upon
termination of the merger agreement, whichever comes first.
THE SPECIAL SHAREHOLDERS MEETING
DATE, TIME AND PLACE
The special shareholders meeting will be held at 6307 Carpinteria Avenue,
Carpinteria, California 93013 at 10:00 a.m., local time, on August 26, 1999.
MATTERS TO BE CONSIDERED AT THE SPECIAL SHAREHOLDERS MEETING
At the special shareholders meeting, holders of PulsePoint common stock and
preferred stock, voting as separate classes, are each being asked to approve the
merger agreement. See "The Merger" and "The Merger Agreement" on pages 17 and 42
respectively.
RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM
Holders of record of PulsePoint common stock and preferred stock at the
close of business on July 23, 1999, the record date for the special shareholders
meeting, are entitled to receive notice of and to vote at the special
shareholders meeting. At the close of business on the record date, approximately
8,043,384 shares of PulsePoint common stock were issued and outstanding and held
by approximately 357 holders of record and approximately 2,222,271 shares of
PulsePoint preferred stock were issued and outstanding and held by approximately
20 holders of record.
A majority of the shares of each of PulsePoint common stock and preferred
stock issued and outstanding and entitled to vote on the record date must be
represented in person or by proxy at the special shareholders meeting in order
for a quorum of each class of stock to be present for purposes of transacting
business at the meeting. In the event that a quorum of either common stock or
preferred stock is not represented at the special shareholders meeting, it is
expected that the meeting will be adjourned or postponed to solicit additional
proxies. Holders of record of PulsePoint common stock and preferred stock on the
record date are each entitled to one vote per share with respect to approval of
the merger at PulsePoint's special shareholders meeting.
PulsePoint does not expect any other matters to come before the special
shareholders meeting. However, if any other matters are properly presented at
the special meeting for consideration, the persons named in the enclosed form of
proxy, and acting thereunder, will have discretion to vote or not vote on those
matters in accordance with their best judgment, unless authorization to use that
discretion is withheld. If a proposal to adjourn the special meeting is properly
presented, however, the persons named in the enclosed form of proxy will not
have discretion to vote in favor of the adjournment proposal any shares which
have been voted against the proposal(s) to be presented at the special meeting.
PulsePoint is not aware of any matters expected to be presented at the special
meeting other than as described in the notice of special meeting.
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VOTES REQUIRED
The approval of the merger agreement requires the affirmative vote of both
(i) the holders of record of a majority of the shares of PulsePoint common stock
outstanding on the record date and (ii) the holders of record of a majority of
the shares of PulsePoint preferred stock outstanding on the record date, in each
case voting separately as a class. Abstentions and broker non-votes will have
the same effect as a vote against the proposal to approve the merger agreement.
Principal holders of PulsePoint common and preferred stock have already
entered binding agreements that they will vote all their shares in favor of the
merger. See "Material Terms of the Voting Agreements" on page 52.
SHARE OWNERSHIP OF MANAGEMENT
As of the close of business on July 23, 1999, the directors and executive
officers of PulsePoint and their affiliates were entitled to vote approximately
1,798,869 shares of PulsePoint common stock and approximately 933,335 shares of
PulsePoint preferred stock. These shares represent approximately 22.36% of the
outstanding shares of PulsePoint common stock and approximately 42% of the
outstanding shares of PulsePoint preferred stock. Of these directors and
executive officers, Bandel Carano and Frederick Warren are parties to the voting
agreements and accordingly have agreed to vote their shares of PulsePoint common
stock and preferred stock in favor of the merger. These shares represent 1.83%
of the votes of the PulsePoint common stock and 2.00% of the votes of the
PulsePoint preferred stock on the record date.
Affiliates of the directors and executive officers were entitled to vote
approximately 1,629,947 shares of PulsePoint common stock and 1,333,334 shares
of PulsePoint preferred stock at the close of business on July 23, 1999. These
shares represent approximately 20.26% of the outstanding shares of PulsePoint
common stock and approximately 60% of the outstanding shares of PulsePoint
preferred stock. All of these shares are subject to the terms of the voting
agreements and accordingly will be voted in favor of the merger. See "Material
Terms of the Voting Agreements."
VOTING OF PROXIES
Submitting Proxies
You may vote by attending the special shareholders meeting and voting your
shares in person at the meeting, or by completing the enclosed proxy card,
signing and dating it and mailing it in the enclosed postage pre-paid envelope.
If you sign a written proxy card and return it without instructions, your shares
will be voted for each of the proposals presented at the special shareholders
meeting.
If your shares are held in "street name" (i.e., in the name of a broker,
bank or other record holder), you must either direct the record holder of your
shares as to how to vote your shares or obtain a proxy from the record holder to
vote at the special shareholders meeting.
Shareholders who submit proxy cards should not send in any stock
certificates with their proxy cards. A transmittal form with instructions for
the surrender of certificates representing shares of PulsePoint stock will be
mailed by Unisys to former PulsePoint shareholders shortly after the merger is
completed. See "The Merger Agreement--Procedures for Surrender of Certificates;
Fractional Shares" on page 43
Revoking Proxies
If you are a shareholder of record, you may revoke your proxy at any time
prior to the time it is voted at the special shareholders meeting. Proxies may
be revoked by written notice, including by telegram or telecopy, to the
Corporate Secretary of PulsePoint, by a later-dated proxy signed and returned by
mail or by attending the special shareholders meeting and voting in person.
Attendance at PulsePoint's special shareholders meeting will not in and of
itself constitute a revocation of a proxy. Any written notice of a revocation of
a proxy must be sent so as to be delivered before the taking of the vote at the
special shareholders meeting to:
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PulsePoint Communications
6307 Carpinteria Avenue
Carpinteria, California 93013
Telecopy: (805) 684-1005
Attention: Corporate Secretary
If you require assistance in changing or revoking a proxy, you should
contact MacKenzie Partners, Inc. at the address or phone number provided in this
proxy statement/prospectus under the caption "Who Can Answer Your Questions."
General Information
Brokers who hold shares in street names for customers who are the
beneficial owners of those shares are prohibited from giving a proxy to vote on
non-routine matters, such as the proposal to be voted on at the special
shareholders meeting, unless they receive specific instructions from the
customer. These so-called broker non-votes will have the same effect as a vote
against the proposal to adopt the merger agreement.
Abstentions may be specified on all proposals. If you submit a proxy with
an abstention, you will be treated as present at the special shareholders
meeting for purposes of determining the presence or absence of a quorum for the
transaction of all business. An abstention will have the same effect as a vote
against the proposal to adopt the merger agreement.
SOLICITATION OF PROXIES; EXPENSES
PulsePoint will pay the cost of solicitation of proxies. In addition to
solicitation by mail, the directors, officers and employees of PulsePoint may
also solicit proxies from shareholders by telephone, telecopy, telegram or in
person. Arrangements will also be made with brokerage houses and other
custodians, nominees and fiduciaries to send the proxy materials to beneficial
owners; and PulsePoint will, upon request, reimburse those brokerage houses and
custodians for their reasonable expenses in so doing.
PulsePoint has retained MacKenzie Partners, Inc. to aid in the solicitation
of proxies and to verify records related to the solicitation. MacKenzie
Partners, Inc. will receive a fee of $6,500 as compensation for its services and
reimbursement for its related out-of-pocket expenses. PulsePoint has agreed to
indemnify MacKenzie Partners, Inc. and its employees against liabilities arising
out of or in connection with its engagement that are not the result of bad faith
or willful misconduct on the part of MacKenzie Partners, Inc. or its employees.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the merger and the recommendation of the PulsePoint
board with respect to the merger agreement, PulsePoint shareholders should be
aware that certain members of management and directors have interests in the
merger that are different from, or in addition to, their interests as PulsePoint
shareholders generally.
Change In Control Agreements
Each of Mark C. Ozur, B. Robert Suh, Pamela J. Thompson, and Benn L.
Schreiber has an agreement with PulsePoint that provides for severance payments
to the executive officer if his or her employment is terminated as a result of a
change in control of PulsePoint or a loss of corporate officer status other than
for cause. Under those agreements, if the executive's employment is terminated
as a result of a change in control of PulsePoint, the executive will continue to
receive his or her base salary and group health benefits for a period of one
year, provided the executive does not then accept employment with any of a list
of specified competitors. Mr. James C. Eby also has a similar agreement with
PulsePoint, however, his agreement provides that in the event of a change of
control in PulsePoint that results in the termination of Mr. Eby's employment,
he will continue to receive his base salary and one-half his annual bonus for a
period of one year.
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On September 26, 1997, the PulsePoint board adopted a severance policy
which provides that PulsePoint will provide severance benefits of 6 months of
compensation for officers of PulsePoint, unless the officer is subject to a
written agreement with PulsePoint that provides otherwise. As Keith M. Beckwith
does not have an employment agreement with PulsePoint, this severance policy
would apply to Mr. Beckwith if his employment were to be terminated as a result
of the merger.
Mr. Ozur's, Mr. Suh's, Ms. Thompson's, Mr. Schreiber's, Mr. Beckwith's
and Mr. Eby's annual salary is currently $286,193, $212,305, $211,095, $211,654,
$210,000, and $175,880 respectively. The merger will constitute a change in
control of PulsePoint within the meaning of the foregoing agreements.
Each of Messrs. Schreiber, Beckwith and Eby has entered into an
employment agreement with Unisys that is conditioned upon, and will become
effective following, the consummation of the merger. These employment agreements
will supercede the executive's current employment agreement with PulsePoint and,
as to Mr. Beckwith, PulsePoint's severance policy. Under the new agreements, the
executive will receive an annual salary. The executive will also participate in
Unisys' annual bonus program, with a target award set at a percentage of his
base salary in effect on October 1 of each year. Unisys has guaranteed that the
executive will receive a minimum bonus for the remainder of 1999, provided he is
employed by Unisys on the payment date for such bonus, which will occur in March
2000. Under each employment agreement, the executive will participate in a
two-year retention plan. Under this plan the executive will receive a retention
bonus on each of the first and second anniversaries of the merger, provided he
continues to be employed by Unisys on those dates. If Unisys terminates the
executive's employment without cause at any time prior to the first anniversary
of the merger, the executive will be entitled to continue to receive his salary
for a period of twelve months following the termination of his employment. If
the executive terminates his employment or is terminated by Unisys for cause at
any time, however, he will not be entitled to any further payments, except for
the amount of his base salary earned through his termination date. Upon
commencement of his employment, each executive will be recommended for a stock
option grant under the 1990 Unisys Long-Term Incentive Plan. The option price
for this grant will be the fair market value of Unisys common stock on the
effective date of the grant. This option will vest 25% per year starting with
the first anniversary following the date of grant. The following table provides
the terms of each executive's employment agreement as discussed above:
<TABLE>
<CAPTION>
Guaranteed Recommended
Target Bonus Bonus Minimum Retention Number of
Executive Annual Salary Percentage for 1999 Bonus Options
- ----------------- ------------- ----------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Keith Beckwith $ 210,000 40% $ 42,000 $ 50,000 19,000
Benn Schreiber $ 211,656 35% $ 37,000 $ 60,000 21,250
James Eby $ 175,920 35% $ 30,000 $ 50,000 13,600
</TABLE>
Mr. Ozur, Mr. Suh and Ms. Thompson are currently in the process of
negotiating employment agreements with Unisys governing the period after the
merger.
PulsePoint Stock Options
As of the close of business on July 23, 1999, PulsePoint's executive
officers held stock options to purchase an aggregate of 762,227 shares of
PulsePoint common stock. 712,324 of these options were issued pursuant to the
PulsePoint Communications 1983 Stock Option Plan as set out below:
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No. of Options Not
No. of Options Currently Weighted average
Name Held Exercisable exercise price
--------------- -------------- ------------------ ----------------
Mark Ozur 229,868 195,494 6.60
B. Robert Suh 107,248 77,561 6.05
Keith Beckwith 94,623 65,874 6.32
Benn Schreiber 106,250 85,939 6.04
James Eby 68,085 56,781 6.21
Pamela Thompson 106,250 85,939 6.04
The PulsePoint Communications 1983 Stock Option Plan provides that in the
event of a merger in which PulsePoint is not the surviving corporation, and the
acquiring corporation assumes the options, each outstanding option,
notwithstanding the terms and limitations on exercise of such option, will
accelerate and become exercisable on a pro rata basis based on the ratio of (a)
the number of months that have lapsed between the grant of the option and the
consummation of the merger and (b) the number of months between the grant of the
option and the date it would otherwise become exercisable in full. The
remaining portion of each outstanding option that is not exercisable immediately
following the merger will vest and become exercisable at the rate of one-third
of the shares at six-month intervals following the consummation of the merger.
The merger agreement provides that each unexpired and unexercised outstanding
option to acquire PulsePoint common stock will be assumed by Unisys and
converted automatically into an option or right to acquire Unisys common stock.
Accordingly, the foregoing acceleration provisions of the 1983 Stock Option Plan
will apply.
Directors' and Officers' Liability Insurance; Indemnification Agreements
Under the merger agreement, Unisys has agreed to maintain in effect for a
period of six years after the merger PulsePoint's current directors' and
officers' insurance policies to the extent Unisys is not required to pay an
annual premium in excess of one hundred and seventy-five percent (175%) of the
current annual premium paid by PulsePoint for its existing coverage. Following
the merger, Unisys will also cause the surviving corporation to indemnify each
present and former director and officer of PulsePoint against liabilities or
expenses incurred in connection with claims relating to matters occurring prior
to the closing of the merger. See "The Merger Agreement--Additional Agreements-
- -Insurance and Indemnification" on page 48.
COMPARISON OF SHAREHOLDER RIGHTS
As a result of the merger, holders of shares of PulsePoint stock will
become holders of shares of Unisys common stock. The following chart summarizes
the material differences between the rights of PulsePoint shareholders (left
column), and the rights of shareholders of Unisys (right column). This summary
is not intended to be complete and is qualified by reference to Delaware and
California law as well as to PulsePoint's articles of incorporation and by-laws
and Unisys' certificate of incorporation and by-laws, copies of which are on
file with the SEC.
Summary of Material Differences Between Current Rights of PulsePoint
Shareholders and Rights Those Shareholders Will Have Following the Merger
<TABLE>
<CAPTION>
PulsePoint Unisys
---------- ------
Corporate Governance
<S> <C>
The rights of PulsePoint shareholders are currently The rights of Unisys shareholders are currently
governed by California law and the charter and by-laws governed by Delaware law and the charter and by-
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PulsePoint Unisys
---------- ------
<S> <C>
of PulsePoint. Upon completion of the merger, the rights laws of Unisys. Upon completion of the merger,
of PulsePoint shareholders who become Unisys shareholders in the rights of Unisys shareholders will continue to
the merger will be governed by Delaware law, the Unisys be governed by Delaware law, the Unisys charter and
charter and Unisys by-laws. the Unisys by-laws.
Authorized Capital Stock
50,000,000 shares of common stock, no par value. 720,000,000 shares of common stock, par value $.01
per share.
15,000,000 shares of preferred stock, no par value.
3,373,334 shares of this preferred stock is 40,000,000 shares of preferred stock, par value $1
designated Series B Convertible Preferred Stock. per share.
1,500,000 shares of this preferred stock is
designated Junior Participating Preferred Stock.
30,000,000 shares of this preferred stock is
designated Series A Cumulative Convertible
Preferred Stock.
Voting Rights
Holders of common stock are generally entitled to Holders of common stock are entitled to one vote
one vote for each share held at all meetings of for each share held on all matters on which
shareholders. shareholders are generally entitled to vote.
Holders of preferred stock are entitled to that Holders of preferred stock are not entitled to vote
number of votes for each share which is equal to except under certain circumstances.
the number of shares of common stock into which a
share of preferred stock could then be converted.
Except as provided by law, the holders of common
stock and holders of preferred stock vote
together and not as separate classes.
The California Corporations Code requires voting
by separate classes with respect to amendments to
a corporation's articles of incorporation (in
most circumstances), mergers, share exchanges,
reorganizations and similar transactions.
Size of the Board of Directors
PulsePoint's by-laws provide that the number of The Unisys certificate of incorporation and by-laws
directors shall be not less than five nor more provide that the number of directors may not be
than nine, with the exact number of directors to less than 10 nor more than 20. The actual number
be fixed by approval of the board or the of directors is determined from time to time by
PulsePoint shareholders. The PulsePoint board resolution of the board of directors adopted by a
has set the number of authorized directors at six. majority of the entire board. The Unisys board
currently consists of 10 directors.
Election and Classification of the Board of Directors
The PulsePoint board of directors is not The Unisys board of directors is divided into three
classified and, accordingly, all members of the classes as nearly equal in number as possible. One
board are elected at the annual meeting of shareholders. class is elected each year for a three year term.
PulsePoint directors are elected on a cumulative Unisys does not have cumulative voting for the
voting basis if at least one shareholder has given
</TABLE>
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<TABLE>
<CAPTION>
PulsePoint Unisys
---------- ------
<S> <C>
notice of an intention to cumulate its election of directors.
votes. In an election of directors under
cumulative voting, each share of stock normally
having one vote is entitled to a number of votes
equal to the number of directors to be elected.
A shareholder may then cast all his or her votes
for a single candidate or may allocate them among
as many candidates as the shareholder may choose.
Under cumulative voting the candidates who receive
the highest number of votes of shares up to the
number of directors to be elected by such shares
will be elected.
Removal of Directors; Filling Vacancies
Section 303(a) of the California Corporations Code Unisys directors may be removed from office only
provides that any director or the entire board of for cause and only by the affirmative vote of
directors may be removed, with or without cause, holders of 80% or more of the voting power of the
with the approval of a majority of the outstanding shares entitled to vote generally in
outstanding shares entitled to vote. No director, the election of directors, voting as a single
however, may be removed (unless the entire board class. A vacancy among the directors is filled for
is removed) if the number of shares voted against the unexpired term only by the vote of a majority
the removal would be sufficient to elect the of the remaining directors in office.
director under cumulative voting. A vacancy
among the directors is filled for the remaining
term by a majority of the remaining directors in
office unless the vacancy results from the
removal of a director by the shareholders in
which case, the vacancy may only be filled by the
approval of the shareholders.
If after the filling of a vacancy by the
directors, the number of directors then in office
who have been elected by the shareholders
constitutes less than a majority of the directors
then in office, any holder of 5% or more of the
total number of shares outstanding that have the
right to vote for such directors may call a
special meeting of the shareholders to elect the
entire board of directors.
Special Meetings of Shareholders
A special meeting of the shareholders of The Unisys certificate of incorporation and by-laws
PulsePoint may be called by at least two members provide that special meetings of the Unisys
of the PulsePoint board, the President or the stockholders may be called only by resolution of
holders of shares entitled to cast not less than the board of directors adopted by a majority of the
10% of the votes at such meeting. entire board.
Shareholder Action by Written Consent
The PulsePoint by-laws provide that any action The Unisys certificate of incorporation and by-laws
which may be taken at any annual or special provide that any action by its stockholders must be
meeting of shareholders may be taken by written taken at a duly held annual or special stockholder
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PulsePoint Unisys
---------- ------
<S> <C>
consent. meeting, and not by written consent of the
stockholders.
Advance Notice Provision
PulsePoint does not have advance notice provisions. For a stockholder to properly nominate a person for
election as a director, the corporate secretary
must receive written notice of the stockholder's
intent to do so, containing certain information
about the nominee, not less than 90 days before the
annual meeting of stockholders, or not more than 7
days following the date of notice of a special
meeting called to elect directors.
For a stockholder to properly bring business other
than director nominations before a stockholder
meeting, the matter must be a proper matter for
stockholder action under the Delaware General
Corporation Law and the corporate secretary must
receive written notice of the stockholder's intent
to do so, containing certain information about the
proposal, not less than 90 days before the first
anniversary of the preceding year's annual meeting,
or if the date of the annual meeting is more than
30 days before or more than 60 days after such
anniversary date, notice by the stockholder must be
received by not earlier than 90 days prior to that
annual meeting or later than 7 days following the
day notice of the date of that meeting is first
given.
Liability of Directors; Indemnification of Directors and Officers; Insurance
The PulsePoint by-laws provide that liability of The Unisys certificate of incorporation provides
the directors for monetary damages is indemnified that a director shall not be personally liable to
to the fullest extent permissible under the Unisys or its stockholders for monetary damages for
California Corporations Code. breach of fiduciary duty as a director except for
liability:
The California Corporations Code provides that a
corporation (1) has the power to indemnify a . for any breach of the director's duty of loyalty
director against expenses, judgments, fines and to Unisys or its stockholders,
settlements if that person acted in good faith
and in a manner the person reasonably believed to . for acts or omissions not in good faith or which
be in the best interest of the corporation and, involve intentional misconduct or a knowing
in the case of a criminal proceeding, had no violation of law,
reasonable cause to believe the conduct of the
person was unlawful, and (2) has the power to . for paying a dividend or approving a stock
indemnify, with exceptions, any person who is a repurchase in violation of Section 174 of the
party to any action by or in the right of the Delaware General Corporation Law, or
corporation, against expenses actually and
reasonably incurred by the person in connection . for any transaction from which the director
with the defense or settlement of the action if derived an improper personal benefit.
the person acted in good faith and in a manner
the person believed to be in the best interests The Unisys certificate of incorporation also
of the corporation and its shareholders. provides that Unisys shall indemnify its present
and former directors and officers (and any person
serving as an officer, director, employee or agent
of another entity at the request of Unisys) to the fullest
</TABLE>
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<TABLE>
<CAPTION>
PulsePoint Unisys
---------- ------
<S> <C>
The PulsePoint by-laws further provide that extent authorized by the Delaware General
PulsePoint is to advance to such director or Corporation Law or, to the extent an amendment to
officer expenses incurred in defending any such the Delaware General Corporation Law permits
proceeding to the maximum extent permissible broader indemnification rights, as it may be
under the California Corporations Code. amended. Unisys must advance the expenses incurred
by a director or officer in defending any
proceeding; provided, that, if required by the
Delaware General Corporation Law, the person
seeking those advances provides an undertaking to
Unisys to repay all amounts so advanced if it is
ultimately determined that the person receiving
those advances is not entitled to be indemnified.
The Unisys certificate of incorporation provides
that Unisys may maintain insurance, at its expense,
to protect itself and any other person against any
liability, whether or not Unisys would have the
power to indemnify that person against that
liability under the Delaware General Corporation
Law.
Amendment of By-laws
The PulsePoint by-laws may be amended by the Generally, the Unisys by-laws may be changed by the
affirmative vote or written consent of holders of affirmative vote of the majority of shares present
a majority of the voting power of the outstanding in person or by proxy at a duly held annual or
shares of PulsePoint common stock and preferred special stockholder meeting, or by a vote of a
stock entitled to vote or by the PulsePoint majority of the board. However, the affirmative
board. However, a bylaw or an amendment to the vote of holders of 80% or more of the voting power
articles of incorporation reducing the number of of the shares of the outstanding Unisys voting
directors or reducing the minimum number stock, voting as a single class, is required to
directors to a number less than five cannot be change the by-laws relating to:
adopted if the votes cast against its adoption
are equal to more than 16 2/3% of the total . special meetings of the stockholders,
number of votes authorized to be cast. Except
for by-laws specifying or changing a fixed number . stockholder action by written consent,
of directors, changing the maximum or minimum
number of directors or changing whether the board . the size, classification and removal of members
is fixed or variable, by-laws may be adopted by of the Unisys board, and
the PulsePoint board of directors.
. newly created directorships and vacancies, and
the procedure for nominating candidates to the
Unisys board.
Amendment of Certificate of Incorporation
The PulsePoint articles of incorporation may be Generally, the Unisys certificate of incorporation
amended by the holders of a majority of the may be changed by the affirmative vote of the
outstanding voting power of common stock and holders of a majority of the outstanding shares of
preferred stock, voting together, upon the common stock. However, the affirmative vote of
approval of the PulsePoint board of directors. holders of 80% or more of the voting power of the
shares of the outstanding Unisys voting stock,
The PulsePoint articles of incorporation may not voting as a single class, is required to change the
be amended, however, in any manner which would sections of the certificate of incorporation
materially and adversely alter or change the relating to:
powers, preferences or special rights of the
outstanding PulsePoint preferred stock, without
the affirmative vote of 67% of such shares voting . the vote required for certain business
on an
</TABLE>
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<TABLE>
<CAPTION>
PulsePoint Unisys
---------- ------
<S> <C>
as converted basis. combinations,
. the board of directors,
. special meetings of stockholders,
. stockholder action by written consent,
. certain bylaw amendments, and
. certain amendments to the certificate of
incorporation.
Business Combinations
The California Corporations Code requires that an The Unisys certificate of incorporation provides
"Interested Party" (defined below) of PulsePoint that any Business Combination with an Interested
provide PulsePoint's shareholders with copies of Stockholder of Unisys requires, in addition to any
a fairness opinion if the Interested Party and vote required by law, the affirmative approval of
PulsePoint enter into various forms of at least 80% of the voting power of the outstanding
transactions, including a merger transaction. shares of voting stock, voting together as a single
class unless either:
An "Interested Party" for purposes of the
California Corporations Code means a person who . a majority of disinterested directors, as
is a party to the transaction and (1) directly or defined in the Unisys charter, have expressly
indirectly controls the corporation, (2) is, or approved the Business Combination, or
is directly or indirectly controlled by, an
officer or director of the corporation or (3) is . certain fair price criteria and disclosure
an entity in which a material financial interest obligations are satisfied.
is held by any director or executive officer of
the corporation. "Business Combination" is defined in the Unisys
certificate of incorporation, and generally
The California Corporations Code also provides includes a merger, significant asset sales,
that contracts or transactions between a significant stock issuances, and certain other
corporation and (1) any of its directors or (2) a significant transactions. "Interested Stockholder"
company in which a director has a material is also defined in the Unisys certificate of
financial interest are not void or voidable if incorporation and generally means a 20% stockholder
the material facts as to the transaction and as of Unisys.
to the director's interest are fully disclosed
and the disinterested directors or a majority of
the disinterested stockholders represented and
voting at a duly held meeting approve or ratify
the transaction in good faith, or the person
asserting the validity of the contract or
transaction sustains the burden of proving that
the contract or transaction was just and
reasonable as to the corporation at the time it
was authorized, approved or ratified.
</TABLE>
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<TABLE>
<CAPTION>
PulsePoint Unisys
---------- ------
State Law Takeover Legislation
<S> <C>
The California Corporation Code does not provide Unisys is subject to Section 203 of the Delaware
for any antitakeover provisions applicable to General Corporation Law. It provides that, if a
PulsePoint. person acquires 15% or more of the stock of a
Delaware corporation without the approval of the
board of directors of that corporation, thereby
becoming an "interested stockholder", that person
may not engage in certain transactions with the
corporation for three years unless:
. the board of directors approved the acquisition
of stock or the transaction prior to the time that
the person became an interested stockholder,
. the person became an interested stockholder and
85% owner of the voting stock of the corporation in
the transaction, excluding voting stock owned by
directors who are also officers and certain
employee stock plans, or
. the transaction is approved by the board of
directors and by the affirmative vote of two-thirds
of the outstanding voting stock which is not owned
by the interested stockholder.
Shareholder Rights Plan
PulsePoint does not have a shareholder rights plan. Unisys has entered into a Rights Agreement, dated
as of March 7, 1986 and amended February 22, 1996,
pursuant to which it has issued rights to purchase
its Junior Participating Preferred Stock. See the
"Description of Unisys Capital Stock--Preferred
Share Purchase Rights and Junior Participating
Preferred Stock" on page 64.
</TABLE>
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<PAGE>
DESCRIPTION OF UNISYS CAPITAL STOCK
GENERAL
The authorized capital stock of Unisys consists of 720,000,000 shares of
common stock and 40,000,000 shares of preferred stock. As of June 30, 1999,
there were approximately 283.0 million shares of common stock and approximately
13.4 million shares of Series A Cumulative Convertible Preferred Stock
outstanding. All of the series A preferred stock has been called for redemption
on August 2, 1999. The Unisys board has also authorized the issuance of 1.5
million shares of Junior Participating Preferred Stock, none of which is
currently outstanding.
COMMON STOCK
Subject to the rights of the holders of shares of preferred stock, holders
of shares of Unisys common stock:
. are entitled to receive dividends when and as declared by the Unisys
board from legally available funds,
. except as otherwise may be required by law, have the exclusive right
to vote,
. are entitled, upon any liquidation, dissolution or winding up of
Unisys, to a pro rata distribution of the assets and funds available
for distribution to shareholders,
. are entitled to one vote per share on all matters on which
shareholders generally are entitled to vote and
. do not have preemptive rights to subscribe for additional shares of
Unisys common stock or securities convertible into shares of Unisys
common stock.
The Unisys common stock is listed on the New York Stock Exchange under the
symbol UIS. Harris Trust Company of New York is the transfer agent for the
Unisys common stock.
DIVIDEND LIMITATIONS
Unisys has not declared or paid any cash dividends on the common stock
since 1990 and does not anticipate declaring or paying dividends on the common
stock in the foreseeable future.
UNISYS PREFERRED STOCK
Unisys has called all of the outstanding shares of series A convertible
preferred stock for redemption on August 2, 1999. Holders of this preferred
stock may elect to convert their shares of preferred stock into shares of Unisys
common stock prior to the redemption date at a rate of approximately 1.67 shares
of Unisys common stock for each preferred share converted.
The Unisys board of directors may, from time to time, create one or more
new series of Unisys preferred stock in addition to the junior preferred stock
and the series A preferred stock. When, and if, any new series of Unisys
preferred stock is issued, it could affect the dividend, voting and liquidation
rights of the Unisys common stock.
PREFERRED SHARE PURCHASE RIGHTS AND JUNIOR PARTICIPATING PREFERRED STOCK
Unisys has distributed to its shareholders one Preferred Share Purchase
Right (the "Rights") for each outstanding share of common stock pursuant to a
Rights Agreement dated as of March 7, 1986 and amended February 22, 1996. Each
Right entitles its holder, until the earlier of March 17, 2001 or the redemption
of the rights, to buy one three-hundredth of a share of the junior preferred
stock at an exercise price of $75. The Rights are represented by the
certificates for shares of common stock until the earlier of the tenth day after
the announcement that a person or group has acquired beneficial ownership of 20%
or more of the shares of common stock (a "20% holder") or the tenth day after a
person commences, or announces an intention to commence, an offer, the
consummation of which would result in a person beneficially owning 30% or more
of the shares of
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common stock as of such date (the earlier of these dates being called the
"Distribution Date"). The Rights could then begin trading separately from the
shares of common stock.
If Unisys is acquired in a merger or other business combination
transaction, each Right will entitle its holder to purchase, at the exercise
price of the right, that number of shares of common stock of the surviving
company which, at the time of the transaction, would have a market value of two
times the exercise price of the Right. Alternatively, if a 20% holder were to
acquire Unisys by means of a reverse merger in which Unisys and its stock
survive, or were to engage in certain "self-dealing" transactions, each Right
not owned by the 20% holder would become exercisable for the number of shares of
common stock which, at that time, would have a market value of two times the
exercise price of the Right.
The Rights are redeemable at $.01 2/3 per Right at any time prior to the
time that a person or group becomes a 20% holder. The Rights will expire on
March 17, 2001 (the "Final Expiration Date"), unless Unisys extends the Final
Expiration Date or redeems the Rights earlier. At no time will the Rights have
any voting rights.
The shares of junior preferred stock purchasable upon exercise of the
Rights will be nonredeemable. Each share of junior preferred stock will have a
minimum preferential quarterly dividend of $15 per share, but will be entitled
to a dividend of 300 times the aggregate dividend declared per share of common
stock. In the event of liquidation, the holders of the shares of junior
preferred stock will receive a preferred liquidation payment of $100 per share,
but will be entitled to receive an aggregate liquidation payment per share equal
to 300 times the payment made per share of common stock. Each shares of the
junior preferred stock will have 300 votes, voting together with the shares of
common stock. In the event of any merger, consolidation or other transaction in
which shares of common stock are exchanged, each share of the junior preferred
stock will be entitled to receive 300 times the amount received per share of
common stock. The junior preferred stock has customary antidilution provisions
to protect the dividend, liquidation and voting rights described above.
The purchase price payable, and the number of shares of junior preferred
stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution in the event of
certain dividends on, reclassification of, or distributions to the holders of,
junior preferred stock. The percentage of a share of junior preferred stock for
which a Right is exercisable and the number of Rights outstanding are also
subject to adjustment in the event of dividends on the shares of common stock
payable in shares of common stock or subdivisions, combinations or
consolidations of the shares of common stock, occurring, in any case, before the
Rights become exercisable or transferable apart from the shares of common stock.
One Right is presently associated with each issued and outstanding share of
common stock. Unisys will issue one Right with each share of common stock
issued prior to the Final Expiration Date unless, prior to the issuance, the
Rights are redeemed or become exercisable and transferable apart from the shares
of common stock.
The Rights have anti-takeover effects. The Rights may cause substantial
dilution to a person or group that attempts to acquire Unisys on terms that the
Unisys board determines are not in the best interests of Unisys shareholders.
The Rights should not interfere with any merger or other business combination
approved by the Board of Directors since the Rights may be redeemed at $.01 2/3
per Right prior to the time that a person or group has acquired beneficial
ownership of 20% or more of the shares of common stock.
WHERE YOU CAN FIND MORE INFORMATION
Unisys has filed a registration statement on Form S-4 to register with the
SEC Unisys common stock to be issued to PulsePoint shareholders in the merger.
This proxy statement/prospectus is a part of that registration statement and
constitutes a prospectus of Unisys in addition to being a proxy statement of
PulsePoint for the meeting. As allowed by SEC rules, this proxy
statement/prospectus does not contain all the information you can find in the
registration statement or the exhibits to the registration statement.
In addition, we file reports, proxy statements and other information with
the SEC under the Exchange Act. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. You may read and copy this
information at the following locations of the SEC:
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Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. The SEC also maintains an Internet world wide
web site that contains reports, proxy statements and other information about
issuers, including Unisys and PulsePoint, who file electronically with the SEC.
The address of that site is www.sec.gov. You can also inspect reports, proxy
statements and other information about Unisys at the offices of the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005 and about
PulsePoint at the offices of the National Association of Securities Dealers,
1735 K Street, N.W., Washington, D.C. 2006.
The SEC allows us to "incorporate by reference" information into this
document. This means that the companies can disclose important information to
you by referring you to another document filed separately with the SEC. The
information incorporated by reference is considered to be a part of this
document, except for any information that is superseded by information that is
included directly in this document.
This document incorporates by reference the documents listed below that we
have previously filed with the SEC. They contain important information about
our companies and their financial condition. Some of these filings have been
amended by later filings, which are also listed.
<TABLE>
<CAPTION>
Unisys SEC Filings Description or
(File No. 1-8729) Period/As of date
- ----------------------------------------------------- --------------------------------------------------------------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1998
Amendment No. 1 on Form 10-K/A, dated June 28, 1999 Year ended December 31, 1998
Amendment No. 2 on Form 10-K/A, dated July 14, 1999 Year ended December 31, 1998
Current Report on Form 8-K, dated April 1, 1999 Discloses settlement of litigation
Current Report on Form 8-K, dated June 15, 1999 Discloses the entering into of the merger agreement and
related matters
Current Report on Form 8-K, dated July 15, 1999 Selected Second Quarter Results
Quarterly Report on Form 10-Q Quarter ended March 31, 1999
Registration Statement of Burroughs Corporation on Description of Unisys common stock
Form 8-B, dated May 22, 1984, as amended on Form 8
dated May 7, 1991
Registration Statement of Burroughs on Form 8-A dated Description of the Rights
March 11, 1986, as amended on Forms 8 dated April 16,
1986, July 8, 1987 and May 7, 1991 and on Form 8-A/A
dated February 26, 1996
Definitive Proxy Statement on Schedule 14A Definitive proxy statement relating to the 1999 annual
meeting of Unisys shareholders on April 29, 1999
</TABLE>
<TABLE>
<CAPTION>
Description or
PulsePoint's SEC Filings (File No. 000-18280) Period/As of date
- ----------------------------------------------------- --------------------------------------------------------------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1998
</TABLE>
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<TABLE>
<S> <C>
Current Report on Form 8-K, dated June 14, 1999 Discloses the entering into of the merger agreement and
related matters
Current Report on Form 8-K/A, dated June 14, 1999 Amendment to disclosure concerning the merger agreement
Quarterly Reports on Forms 10-Q Quarters ended March 31, 1999 and June 30, 1999
Definitive Proxy Statement on Schedule 14A Definitive proxy statement relating to the 1999 annual
meeting of PulsePoint shareholders on April 23, 1999
</TABLE>
We incorporate by reference additional documents that either company may
file with the SEC between the date of this document and the date of the special
shareholder meeting. These documents include periodic reports, including Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K, as well as proxy statements.
You can obtain any of the documents incorporated by reference in this
document through Unisys or PulsePoint, as the case may be, or from the SEC
through the SEC's web site at the address provided above. Documents
incorporated by reference are available from the companies without charge,
excluding any exhibits to those documents unless the exhibit is specifically
incorporated by reference as an exhibit in this proxy statement/prospectus. You
can obtain documents incorporated by reference in this proxy
statement/prospectus by requesting them in writing or by telephone from the
appropriate company at the following addresses:
<TABLE>
<S> <C>
Unisys Corporation PulsePoint Communications
Unisys Way 6307 Carpinteria Avenue
Blue Bell, Pennsylvania 19424 Carpinteria, California 93013
Attention: Financial Communications Attention: Office of Investor Relations
Telephone No.: (215) 986-5777 Telephone No.: (805) 566-2000
</TABLE>
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY AUGUST 19, 1999 TO
RECEIVE THEM BEFORE THE SPECIAL SHAREHOLDERS MEETING. If you request any
incorporated documents from us, we will mail them to you by first class mail, or
another equally prompt means, within one business day after we receive your
request.
We have not authorized anyone to give any information or make any
representation about the merger of our companies that differs from, or adds to,
the information in this document or in our documents that are publicly filed
with the SEC. Therefore, if anyone does give you different or additional
information, you should not rely on it.
If you are in a jurisdiction where it is unlawful to offer to exchange or
sell, or to ask for offers of exchange or buy, the securities offered by this
proxy statement/prospectus or to ask for proxies, or if you are a person to whom
it is unlawful to direct these activities, then the offer presented by this
proxy statement/prospectus does not extend to you.
The information contained in this proxy statement/prospectus speaks only as
of its date unless the information specifically indicates that another date
applies. Information in this document about Unisys has been supplied by Unisys,
and information about PulsePoint has been supplied by PulsePoint.
EXPERTS
The consolidated financial statements of Unisys at December 31, 1998 and
1997, and for each of the three years in the period ended December 31, 1998,
incorporated by reference in this proxy statement/prospectus, which is made a
part of Unisys' Form S-4 registration statement, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report incorporated by
reference in Unisys' annual report on Form 10-K, as amended on Forms 10-K/A
dated June 28, 1999 and July 14, 1999, which is incorporated by reference in
this proxy statement/prospectus, and are included in reliance upon such report
given on the authority of such firm as experts in accounting and auditing.
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The consolidated financial statements of PulsePoint at December 31, 1998
and 1997, and for each of the three years in the period ended December 31, 1998,
incorporated by reference in this proxy statement/prospectus, which is made a
part of Unisys' Form S-4 registration statement, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report included in
PulsePoint's annual report on Form 10-K, which is incorporated by reference in
this proxy statement/prospectus, and are included in reliance upon such report
given on the authority of such firm as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters relating to the validity of the shares of Unisys
common stock offered by this proxy statement prospectus will be passed upon for
Unisys by Harold S. Barron, Senior Vice President, General Counsel and Secretary
of Unisys. As of June 30, 1999, Mr. Barron owned 50,361 shares of Unisys common
stock and held options to acquire 314,000 shares of such stock. Certain
federal income tax matters relating to the merger will be passed upon for Unisys
by Fried, Frank, Harris, Shriver & Jacobson, a partnership including
professional corporations, New York, New York. Certain federal income tax
matters relating to the merger will be passed upon for PulsePoint by Latham &
Watkins, San Diego, California.
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of Ernst & Young LLP will be present at the special
shareholders meeting. These representatives will have the opportunity to make a
statement if they desire to do so and are expected to be available to respond to
appropriate questions.
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ANNEX A
--------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF
June 14, 1999
BY AND AMONG
UNISYS CORPORATION,
SHELLCO INC.,
AND
PULSEPOINT COMMUNICATIONS
--------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE I THE MERGER.............................................................................................2
Section 1.1 The Merger...................................................................................2
Section 1.2 The Closing; Effective Time..................................................................2
Section 1.3 Subsequent Actions...........................................................................3
Section 1.4 Articles of Incorporation; Bylaws; Directors and Officers of the Surviving Corporation.......3
ARTICLE II EFFECT OF THE MERGER..................................................................................4
Section 2.1 Treatment of Capital Stock...................................................................4
Section 2.2 Conversion of Company Common Stock...........................................................4
Section 2.3 Conversion of Company Preferred Stock........................................................5
Section 2.4 Cancellation of Excluded Shares..............................................................5
Section 2.5 Conversion of Common Stock of Merger Sub.....................................................5
Section 2.6 Exchange Agent; Exchange Procedures..........................................................5
Section 2.7 Transfer Books...............................................................................6
Section 2.8 No Fractional Share Certificates; Termination of Exchange Fund...............................7
Section 2.9 Dissenting Shares............................................................................7
Section 2.10 Dividends...................................................................................8
Section 2.11 Certain Adjustments.........................................................................8
Section 2.12 Withholding Rights..........................................................................8
Section 2.13 Lost, Stolen or Destroyed Certificates......................................................9
Section 2.14 Options to Purchase Company Shares..........................................................9
Section 2.15 Warrants to Purchase Company Shares........................................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................................11
Section 3.1 Organization and Qualification; Subsidiaries................................................11
Section 3.2 Articles of Incorporation and Bylaws........................................................12
Section 3.3 Capitalization..............................................................................12
Section 3.4 Power and Authority; Authorization; Valid & Binding.........................................13
Section 3.5 No Conflict; Required Filings and Consents..................................................14
Section 3.6 SEC Reports; Financial Statements...........................................................15
</TABLE>
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<TABLE>
<S> <C> <C>
Section 3.7 Absence of Certain Changes..................................................................16
Section 3.8 Litigation and Liabilities..................................................................17
Section 3.9 No Violation of Law; Permits................................................................17
Section 3.10 Benefit Plans..............................................................................18
Section 3.11 Labor Matters..............................................................................19
Section 3.12 Environmental Matters......................................................................20
Section 3.13 Vote Required; Options.....................................................................22
Section 3.14 Opinion of Financial Advisor...............................................................22
Section 3.15 Brokers....................................................................................22
Section 3.16 Tax Matters................................................................................23
Section 3.17 Intellectual Property......................................................................24
Section 3.18 Title to Property..........................................................................25
Section 3.19 Contracts and Commitments..................................................................25
Section 3.20 Proxy Statement/Prospectus; Registration Statement.........................................26
Section 3.21 Pooling of Interests; Reorganization.......................................................26
Section 3.22 Restrictions on Business Activities........................................................26
Section 3.23 Related Party Transactions.................................................................27
Section 3.24 Insurance..................................................................................27
Section 3.25 Year 2000..................................................................................27
Section 3.26 Foreign Corrupt Practices, etc.............................................................28
ARTICLE IV REPRESENTATIONS & WARRANTIES OF PARENT AND MERGER SUB................................................28
Section 4.1 Organization and Qualification; Subsidiaries................................................28
Section 4.2 Certificate of Incorporation and Bylaws.....................................................29
Section 4.3 Capitalization..............................................................................29
Section 4.4 Power and Authority; Authorization; Valid & Binding.........................................30
Section 4.5 No Conflict; Required Filings and Consents..................................................30
Section 4.6 SEC Reports; Financial Statements...........................................................31
Section 4.7 Absence of Certain Changes..................................................................32
Section 4.8 Litigation and Liabilities..................................................................32
Section 4.9 No Violation of Law; Permits................................................................33
</TABLE>
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<TABLE>
<S> <C> <C>
Section 4.10 Proxy Statement/Prospectus; Registration Statement.........................................33
Section 4.11 Pooling of Interests; Reorganization.......................................................33
Section 4.12 Merger Sub.................................................................................34
Section 4.13 Valid Issuance.............................................................................34
Section 4.14 Brokers....................................................................................34
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS.............................................................34
Section 5.1 Interim Operations of the Company...........................................................34
Section 5.2 Interim Operations of Parent................................................................37
Section 5.3 No Solicitation.............................................................................38
ARTICLE VI ADDITIONAL COVENANTS.................................................................................41
Section 6.1 Meeting of Shareholders; Record Date........................................................41
Section 6.2 Filings; Other Actions......................................................................41
Section 6.3 Publicity...................................................................................42
Section 6.4 Registration Statement......................................................................42
Section 6.5 Listing Application.........................................................................42
Section 6.6 Further Action..............................................................................43
Section 6.7 Expenses....................................................................................43
Section 6.8 Notification of Certain Matters.............................................................43
Section 6.9 Access to Information.......................................................................44
Section 6.10 Review of Information......................................................................44
Section 6.11 Insurance; Indemnity.......................................................................45
Section 6.12 Employee Benefits..........................................................................46
Section 6.13 Options....................................................................................46
Section 6.14 Affiliates.................................................................................47
Section 6.15 Takeover Statutes..........................................................................47
Section 6.16 Pooling of Interests.......................................................................47
Section 6.17 Tax-Free Reorganization....................................................................48
Section 6.18 Accountant's Comfort Letters...............................................................48
Section 6.19 Accountant's Pooling Letters...............................................................48
Section 6.20 Warrants...................................................................................48
ARTICLE VII CONDITIONS TO MERGER................................................................................49
</TABLE>
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<TABLE>
<S> <C> <C>
Section 7.1 Conditions to Obligations of the Parties to Consummate the Merger...........................49
Section 7.2 Additional Conditions to Obligations of Parent and Merger Sub...............................50
Section 7.3 Additional Conditions to Obligations of the Company.........................................51
ARTICLE VIII TERMINATION AND AMENDMENT..........................................................................52
Section 8.1 Termination.................................................................................52
Section 8.2 Effect of Termination.......................................................................53
Section 8.3 Amendment...................................................................................54
ARTICLE IX GENERAL PROVISIONS...................................................................................54
Section 9.1 Non-Survival of Representations, Warranties and Agreements..................................54
Section 9.2 Notices 55
Section 9.3 Certain Definitions; Interpretation.........................................................56
Section 9.4 Headings....................................................................................60
Section 9.5 Severability................................................................................60
Section 9.6 Entire Agreement; No Third-Party Beneficiaries..............................................60
Section 9.7 Assignment..................................................................................60
Section 9.8 Governing Law; Jurisdiction.................................................................60
Section 9.9 Trial by Jury...............................................................................61
Section 9.10 Enforcement................................................................................61
Section 9.11 Obligations of Subsidiaries................................................................61
Section 9.12 Counterparts...............................................................................61
</TABLE>
Exhibits
Exhibit A -- List of Persons Executing Voting Agreements
Exhibit B -- Form of Voting Agreements
Exhibit C -- Articles of Incorporation of Surviving Corporation
Exhibit D -- Form of Affiliate Letter
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INDEX OF DEFINED TERMS
DEFINED TERM Page No.
Action........................................................................45
affiliate.....................................................................56
Agreement......................................................................1
Agreement of Merger............................................................2
Average Stock Price............................................................4
Benefit Agreement.............................................................18
Benefit Plan..................................................................56
Cap Amount....................................................................45
CGCL...........................................................................2
Closing........................................................................2
Closing Date...................................................................2
Code...........................................................................1
Company........................................................................1
Company Acquisition Proposal..................................................39
Company Acquisition Transaction...............................................40
Company Capital Stock Disclosure Date.........................................12
Company Common Shares..........................................................1
Company Common Stock...........................................................1
Company Disclosure Letter.....................................................56
Company Equity Rights.........................................................56
Company Financial Advisor.....................................................22
Company Material Adverse Effect...............................................56
Company Options................................................................9
Company Preferred Stock or Company Preferred Shares...........................57
Company SEC Reports...........................................................15
Company Shareholder Meeting...................................................41
Company Shares................................................................57
Company Stock Option Plans.....................................................9
Confidentiality Agreement.....................................................57
Consents......................................................................50
Contracts.....................................................................25
control.......................................................................57
Daily Per Share Price..........................................................4
Debt Instrument...............................................................26
December 1998 Company Balance Sheet...........................................57
December 1998 Parent Balance Sheet............................................57
E&Y...........................................................................48
Effective Time.................................................................3
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Employee......................................................................57
Environmental Claim...........................................................21
Environmental Laws............................................................21
Environmental Permits.........................................................20
ERISA.........................................................................57
ERISA Affiliate...............................................................57
ERISA Benefit Plan............................................................57
ESPP..........................................................................47
ESPP Option...................................................................47
Exchange Act..................................................................10
Exchange Agent.................................................................5
Exchange Fund..................................................................5
Exchange Ratio.................................................................4
Excluded Shares...............................................................57
Filings.......................................................................50
Form S-4......................................................................42
GAAP...........................................................................1
Governmental Entity...........................................................15
Hazardous Materials...........................................................21
HSR Act.......................................................................15
Imperial Bank Warrants........................................................58
Indebtedness..................................................................26
Indemnified Party.............................................................45
Intellectual Property Rights..................................................58
Joint Proxy Statement/Prospectus..............................................42
Junior Preferred Stock........................................................58
Knowledge.....................................................................58
Merger.........................................................................1
Merger Sub.....................................................................1
Nasdaq........................................................................58
NEXTLINK Warrants.............................................................58
Nondisclosure Agreement.......................................................58
NYSE..........................................................................58
Other Warrants................................................................58
Parent.........................................................................1
Parent Common Stock............................................................4
Parent Disclosure Letter......................................................58
Parent Equity Rights..........................................................58
Parent Material Adverse Effect................................................59
Parent Rights Agreement.......................................................59
Parent SEC Reports............................................................31
Parent Shares..................................................................4
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Parties........................................................................1
Party..........................................................................1
PCBs..........................................................................21
Person........................................................................59
Preferred Holders..............................................................1
Related Party.................................................................27
Release.......................................................................22
Representative................................................................38
Requisite Conversion..........................................................53
SEC............................................................................1
Securities Act................................................................15
Series A Preferred Stock......................................................29
Shareholder Meeting Date......................................................59
Stock Option Agreement.........................................................1
Subsidiary....................................................................59
Substitute Option..............................................................9
Superior Proposal.............................................................40
Surviving Corporation..........................................................2
Tax...........................................................................59
Tax Return....................................................................59
Termination Date..............................................................52
Termination Fee...............................................................54
Third Party...................................................................38
Total Merger Consideration....................................................50
Trigger Date..................................................................53
Voting Agreements..............................................................1
Warrants......................................................................60
Year 2000 Compliant...........................................................27
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 14, 1999 (this
"Agreement"), by and among UNISYS CORPORATION ("Parent"), a Delaware
corporation, SHELLCO INC. ("Merger Sub"), a California corporation and a wholly-
owned subsidiary of Parent, and PULSEPOINT COMMUNICATIONS (the "Company"), a
California corporation. Parent, Merger Sub and the Company are sometimes
referred to herein, individually, as a "Party," and, together, as the "Parties."
Certain capitalized terms used herein are defined in Section 9.3.
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have each determined that the merger of Merger Sub with and into the
Company (the "Merger") upon the terms and subject to the conditions set forth in
this Agreement is advisable, fair to and in the best interests of their
respective corporations and shareholders and have approved the Merger;
WHEREAS, it is intended that, for federal income tax purposes, the
Merger will qualify as a tax-free reorganization under Section 368 of the
Internal Revenue Code of 1986, as amended and the rules and regulations
promulgated thereunder (the "Code");
WHEREAS, it is intended that, for accounting purposes, the Merger will
be accounted for as a pooling-of-interests under United States generally
accepted accounting principles ("GAAP") and applicable rules and regulations of
the Securities and Exchange Commission (the "SEC");
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to Parent's willingness to enter
into this Agreement, Parent and the Company have executed and delivered a Stock
Option Agreement, dated as of the date hereof (the "Stock Option Agreement"),
pursuant to which the Company is granting to Parent an option to purchase, under
certain circumstances, up to a number of shares of common stock, no par value,
of the Company (the "Company Common Stock" or "Company Common Shares") equal to
19.9% of the outstanding shares of Company Common Stock with an exercise price
per share equal to $6.60; and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to Parent's willingness to enter
into this Agreement, certain persons listed on Exhibit A (the "Preferred
Holders") have entered into Voting Agreements with Parent dated as of the date
of this Agreement in the form attached hereto as Exhibit B (the "Voting
Agreements"), pursuant to which such persons have agreed, among other things, to
vote all voting securities of the Company beneficially
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owned by such persons in favor of approval and adoption of this Agreement and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained in this Agreement, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. At the Effective Time and subject to and upon the
terms and conditions of this Agreement and in accordance with the California
General Corporation Law (the "CGCL"), Merger Sub shall be merged with and into
the Company and the separate corporate existence of Merger Sub shall cease. The
Company shall continue as the surviving corporation (sometimes referred to
herein as the "Surviving Corporation") in the Merger and as of the Effective
Time shall be a wholly-owned subsidiary of Parent. The Merger shall have the
effects specified in the CGCL. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all properties, rights, privileges,
powers and franchises of Merger Sub and the Company shall vest in the Surviving
Corporation, and all debts, liabilities and obligations of Merger Sub and the
Company shall become the debts, liabilities and obligations of the Surviving
Corporation.
Section 1.2 The Closing; Effective Time. (a) The closing of the Merger
(the "Closing") shall take place (i) at the offices of Fried, Frank, Harris,
Shriver & Jacobson, One New York Plaza, New York, New York, 10004, at 10:00 A.M.
local time, on the second business day following the date on which the last to
be satisfied or waived of the conditions set forth in Article VII (other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the satisfaction or, where permitted, waiver of those conditions)
shall be satisfied or waived in accordance with this Agreement unless that
second business day would be September 1, 1999 in which case the Parties shall
use reasonable best efforts to ensure that the closing shall take place on
August 31, 1999 or (ii) at such other place, time and/or date as Parent and the
Company shall agree (the date of the Closing, the "Closing Date").
(b) On the Closing Date, Parent, the Company and Merger Sub shall
cause a merger agreement in such form as is required by Sections 1101, 1102 and
1103 of the CGCL (the "Agreement of Merger") to be properly executed and
acknowledged, and filed with the Secretary of State of the State of California
as provided in the CGCL. The Merger shall become effective at such time at
which such Agreement of Merger shall be duly filed with the Secretary of State
of the State of California or at the time specified in
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the Agreement of Merger, if any (the time that the Merger becomes effective, the
"Effective Time").
Section 1.3 Subsequent Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to continue, vest, perfect or confirm of record or otherwise the
Surviving Corporation's right, title or interest in, to or under any of the
rights, properties, privileges, franchises or assets of either of its
constituent corporations acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger, or otherwise to carry out the
intent of this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of either of the constituent corporations of the Merger, all such deeds,
bills of sale, assignments and assurances and to take and do, in the name and on
behalf of each of such corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties, privileges,
franchises or assets in the Surviving Corporation or otherwise to carry out the
intent of this Agreement.
Section 1.4 Articles of Incorporation; Bylaws; Directors and Officers of
the Surviving Corporation. Unless otherwise agreed by Parent and the Company
prior to the Closing, at the Effective Time:
(a) the Articles of Incorporation of the Company shall be amended to
read in their entirety as set forth on Exhibit C hereto, and as so amended shall
constitute (until amended as provided by applicable law and such Articles of
Incorporation, as applicable) the articles of incorporation of the Surviving
Corporation;
(b) the Bylaws of Merger Sub as in effect immediately prior to the
Effective Time shall be at and after the Effective Time (until amended as
provided by law, its Articles of Incorporation and its Bylaws, as applicable)
the Bylaws of the Surviving Corporation;
(c) the officers of Merger Sub immediately prior to the Effective Time
shall continue to serve in their respective offices of the Surviving Corporation
from and after the Effective Time, until their successors are elected or
appointed and qualified or until their resignation or removal; and
(d) the directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation from and after the
Effective Time, until their successors are elected or appointed and qualified or
until their resignation or removal.
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ARTICLE II
EFFECT OF THE MERGER
Section 2.1 Treatment of Capital Stock. The manner and basis of
converting the Company Shares and the shares of common stock of Merger Sub, by
virtue of the Merger and without any action on the part of any holder thereof,
shall be as set forth in this Article II.
Section 2.2 Conversion of Company Common Stock. (a) Subject to Section
2.8, each share of Company Common Stock issued and outstanding immediately prior
to the Effective Time (other than the Excluded Shares), and all rights in
respect thereof, shall at the Effective Time, without any action on the part of
any holder thereof, forthwith cease to exist and be converted into the right to
receive an amount of validly issued, fully paid and nonassessable shares of
Parent's Common Stock, $.01 par value per share (the "Parent Common Stock" or
"Parent Shares"), which is equal to the Exchange Ratio and including
corresponding rights to purchase shares of Junior Preferred Stock pursuant to
the Parent Rights Agreement. Prior to the Distribution Date (as defined in the
Parent Rights Agreement), all references in this Agreement to Parent Common
Stock or Parent Shares to be received in accordance with the Merger shall be
deemed to include such associated rights under the Parent Rights Agreement.
(b) The "Exchange Ratio" means a fraction (expressed as a decimal and
rounded to the nearest one-thousandth), such fraction to be in the ratio
provided below. If the Average Stock Price (as defined below) is:
(i) greater than $33.00, the Common Stock Exchange Ratio shall be
equal to $6.60 divided by the Average Stock Price;
(ii) equal to or greater than $27.00 and less than or equal to $33.00,
the Common Stock Exchange Ratio shall be fixed at 0.20; and
(iii) less than $27.00, the Common Stock Exchange Ratio shall be
equal to $5.40 divided by the Average Stock Price.
"Average Stock Price" means the average of the Daily Per Share Prices for the
twenty consecutive trading days ending on the fourth trading day prior to the
Company Shareholder Meeting. The "Daily Per Share Price" for any trading day
means the last reported sale price per share of Parent Common Stock as reported
on the NYSE Composite Transaction Tape for that day.
(c) Except as otherwise provided herein, commencing immediately after
the Effective Time, each certificate which, immediately prior to the Effective
Time, represented issued and outstanding shares of Company Common Stock shall
evidence the
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right to receive shares of Parent Common Stock on the basis set forth in Section
2.2(a) above (and cash in lieu of any fractional shares pursuant to Section
2.8.)
Section 2.3 Conversion of Company Preferred Stock.
(a) Subject to Section 2.8, each share of Company Preferred Stock
issued and outstanding immediately prior to the Effective Time (other than the
Excluded Shares), and all rights in respect thereof, shall at the Effective
Time, without any action on the part of any holder thereof, forthwith cease to
exist and be converted into the right to receive an amount of validly issued,
fully paid and nonassessable shares of Parent Common Stock, which is equal to
the product of (i) the Exchange Ratio and (ii) the number of shares of Company
Common Stock issuable upon conversion of a share of Company Preferred Stock
immediately prior to the Effective Time.
(b) Except as otherwise provided herein, commencing immediately after
the Effective Time, each certificate which, immediately prior to the Effective
Time, represented issued and outstanding shares of Company Preferred Stock shall
evidence the right to receive shares of Parent Common Stock on the basis set
forth in Section 2.3(a) above (and cash in lieu of any fractional shares
pursuant to Section 2.8).
Section 2.4 Cancellation of Excluded Shares. At the Effective Time, each
Excluded Share, by virtue of the Merger and without any action on the part of
the holder thereof, shall forthwith cease to be outstanding, shall be canceled
and retired, and no shares of stock or other securities of Parent or the
Surviving Corporation shall be issuable, and no payment or other consideration
shall be made or paid, in respect thereof.
Section 2.5 Conversion of Common Stock of Merger Sub. At the Effective
Time, each share of common stock of Merger Sub issued and outstanding
immediately prior to the Effective Time, and all rights in respect thereof,
shall, without any action on the part of Parent, forthwith cease to exist and be
converted into one validly issued, fully paid and nonassessable share of common
stock of the Surviving Corporation.
Section 2.6 Exchange Agent; Exchange Procedures. (a) Subject to the terms
and conditions of this Agreement, at or prior to the Effective Time, Parent
shall appoint a bank or trust company selected by Parent and reasonably
acceptable to the Company (the "Exchange Agent"), to effect the exchange of
Company Shares for shares of Parent Common Stock in accordance with the
provisions of this Article II. From time to time following the Effective Time
upon the requisition by the Exchange Agent, Parent shall deposit, or cause to be
deposited, with the Exchange Agent certificates representing the shares of
Parent Common Stock to be issued in the Merger, any cash payable in respect of
fractional shares in accordance with Section 2.8 and the amount of any dividends
or distributions in accordance with Section 2.6(b) (the "Exchange Fund").
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(b) As soon as reasonably practicable after the Effective Time, Parent
shall instruct the Exchange Agent to mail to each record holder of a certificate
or certificates which immediately prior to the Effective Time represented
Company Shares (other than the Excluded Shares) (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to such certificates shall pass, only upon delivery to the Exchange Agent and
shall be in such form and have such other provisions as Parent shall reasonably
specify) and (ii) instructions for use in effecting the surrender of
certificates which immediately prior to the Effective Time represented Company
Shares for certificates representing shares of Parent Common Stock and cash in
lieu of fractional shares, if any. Commencing immediately after the Effective
Time, upon the surrender to the Exchange Agent of such certificate or
certificates, together with a duly executed and completed letter of transmittal
and all other documents and other materials required by the Exchange Agent to be
delivered in connection therewith, the holder thereof shall be entitled to
receive a certificate or certificates representing the number of whole shares of
Parent Common Stock into which the Company Shares which immediately prior to the
Effective Time were represented by the certificate or certificates so
surrendered shall have been converted in accordance with the provisions of
Section 2.2 or Section 2.3 as appropriate, together with a cash payment (net of
any applicable tax withholdings) in lieu of fractional shares, if any. Unless
and until any certificate or certificates which immediately prior to the
Effective Time represented Company Shares are so surrendered, no dividend or
other distribution, if any, payable to the holders of record of shares of Parent
Common Stock as of any date subsequent to the Effective Time shall be paid to
the holder of such certificate or certificates in respect thereof. Except as
otherwise provided herein, upon the surrender of any certificate or certificates
which immediately prior to the Effective Time represented Company Shares, the
record holder of the certificate or certificates representing shares of Parent
Common Stock issued in exchange therefore shall be entitled to receive (i) at
the time of surrender, the amount of any dividends or other distributions (net
of any applicable tax withholdings) having a record date after the Effective
Time and a payment date prior to the surrender date, payable in respect of such
shares of Parent Common Stock and (ii) at the appropriate payment date, the
amount of dividends or other distributions (net of any applicable tax
withholdings) having a record date after the Effective Time and a payment date
subsequent to the date of such surrender, payable in respect of such shares of
Parent Common Stock. No interest shall be payable in respect of the payment of
dividends or distributions pursuant to the immediately preceding sentence.
Section 2.7 Transfer Books. The stock transfer books of the Company shall
be closed at the Effective Time and no transfer of any Company Shares will
thereafter be recorded on any of such stock transfer books. In the event of a
transfer of ownership of any Company Shares that is not registered in the stock
transfer records of the Company at the Effective Time, a certificate or
certificates representing the number of full shares of Parent Common Stock into
which such Company Shares shall have been converted in the Merger shall be
issued to the transferee together with a cash payment (net of any
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applicable tax withholdings) in lieu of fractional shares, if any, in accordance
with Section 2.8, and a cash payment in accordance with Section 2.6(b) of
dividends or distributions, if any, only if the certificate or certificates
which immediately prior to the Effective Time represented such Company Shares
are surrendered as provided in Section 2.6, accompanied by all documents
required to evidence and effect such transfer and by evidence of payment of any
applicable stock transfer taxes.
Section 2.8 No Fractional Share Certificates; Termination of Exchange
Fund. (a) No scrip or fractional share certificate for Parent Common Stock will
be issued upon the surrender for exchange of a certificate or certificates which
immediately prior to the Effective Time represented Company Shares, and no
outstanding fractional share interest will entitle the holder thereof to vote or
receive dividends or distributions or any other rights of a shareholder of
Parent with respect to such fractional share interest. Each holder entitled to
receive a fractional share of Parent Common Stock but for this Section 2.8(a)
shall be entitled to receive an amount of cash (net of applicable tax
withholdings) equal to the product obtained by multiplying (i) the fractional
share interest to which such holder would otherwise be entitled (after taking
into account all Company Shares held immediately prior to the Effective Time by
such holder) by (ii) the closing price for a share of Parent Common Stock on the
NYSE Composite Transaction Tape on the trading day immediately prior to the
Closing Date. No interest shall be payable in respect of any cash payment for
fractional share interests.
(b) Any portion of the Exchange Fund which remains undistributed one
year after the Effective Time shall be delivered to Parent upon demand, and each
holder of Company Shares who had not theretofore surrendered certificates or
certificates which immediately prior to the Effective Time represented Company
Shares in accordance with the provisions of this Article II shall thereafter
look only to Parent for satisfaction of such holder's claims for shares of
Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock and any dividends or distributions payable in accordance with Section
2.6(b). Notwithstanding the foregoing, none of Parent, the Surviving
Corporation, the Exchange Agent or any other Person shall be liable to any
former holder of Company Shares for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
Section 2.9 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, Company Shares which are "dissenting shares" (as defined in
Section 1300(b) of the CGCL), if any, shall not be converted into or represent a
right to receive any shares of Parent Common Stock, but the holders thereof
shall be entitled only to such rights as are granted by the CGCL. Each holder of
dissenting shares who becomes entitled to payment therefor pursuant to the CGCL
shall receive payment from the Surviving Corporation in accordance with the
CGCL; provided, however, that (i) if any such holder of dissenting shares shall
have failed to establish his entitlement to appraisal rights as provided in the
CGCL, (ii) if any such holder of dissenting shares shall have
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effectively withdrawn his demand for appraisal thereof or lost his right to
appraisal and payment therefor under the CGCL or (iii) if, as to the Company
Common Shares, neither any holder of dissenting shares which are shares of
Company Common Stock nor the Surviving Corporation shall have filed a petition
demanding a determination of the fair value of all dissenting shares of Company
Common Stock within the time provided in the CGCL, such holder or holders (as
the case may be) of Company Common Stock shall forfeit the right to appraisal of
such shares of Company Common Stock, and if, as to the Company Preferred Shares,
neither any holder of dissenting shares which are shares of Company Preferred
Stock nor the Surviving Corporation shall have filed a petition demanding a
determination of the fair value of all dissenting shares of Company Preferred
Stock within the time period provided by the CGCL, such holder or holders (as
the case may be) of Company Preferred Stock shall forfeit the right to appraisal
of such shares of Company Preferred Stock and, in either case, such shares shall
thereupon be deemed to have been converted, as of the Effective Time, into and
represent shares of Parent Common Stock, without interest thereon, as provided
in Section 2.1(a).
Section 2.10 Dividends. Parent and the Company shall coordinate with each
other the declaration of, and the setting of record dates and payment dates for,
dividends (if any) in respect of their respective common stock so that, in
respect of any fiscal quarter, holders thereof (i) do not receive dividends in
respect of both (x) Company Shares and (y) shares of Parent Common Stock
received pursuant to the Merger in respect thereof or (ii) fail to receive a
dividend in respect of both (x) Company Shares and (y) the shares of Parent
Common Stock received pursuant to the Merger in respect thereof.
Section 2.11 Certain Adjustments. If between the date of this Agreement
and the Effective Time, the outstanding shares of Company Common Stock or Parent
Common Stock shall be changed into a different number of shares by reason of any
stock split or combination of shares, or any dividend payable in stock shall be
declared thereon with a record date within such period, the Exchange Ratio shall
be appropriately adjusted to provide the holders of Company Shares the same
economic effect as contemplated by this Agreement prior to such event.
Section 2.12 Withholding Rights. Each of Parent and the Company shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of certificates which prior to the
Effective Time represented Company Shares such amounts as Parent or the Company
is required to deduct and withhold with respect to the making of such payment
under the Code or any provision of state, local, or foreign Tax law. To the
extent that amounts are so withheld by Parent or the Company, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Company Shares in respect of which such deduction and
withholding was made by Parent or the Company, as the case may be.
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Section 2.13 Lost, Stolen or Destroyed Certificates. In the event any
certificates representing Company Shares shall have been lost, stolen or
destroyed, the Exchange Agent shall pay in exchange for such lost, stolen or
destroyed certificates, upon the making of an affidavit of that fact by the
holder thereof, shares of Parent Common Stock and cash in lieu of fractional
shares thereof as may be required pursuant to Sections 2.2, 2.3 and 2.8;
provided, however, that Parent may in its discretion, and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificates to deliver a bond in such sum as it may reasonably direct
as indemnity against any claim that may be made against Parent, the Surviving
Corporation or the Exchange Agent with respect to the certificates alleged to
have been lost, stolen or destroyed.
Section 2.14 Options to Purchase Company Shares. (a) Effective at the
Effective Time, each unexpired and unexercised outstanding option or stock
purchase right, whether or not then vested or exercisable in accordance with its
terms, to purchase shares of Company Common Stock (the "Company Options")
previously granted by the Company or any of its Subsidiaries under the Company's
1983 Stock Option Plan, as amended, or its Directors Stock Option Plan, as
amended (such plans, as amended, are collectively referred to herein as the
"Company Stock Option Plans"), shall be converted automatically into an option
or right to acquire the number of shares of Parent Common Stock (a "Substitute
Option"), rounded to the nearest whole share, determined by multiplying (i) the
number of shares of Company Common Stock subject to such Company Option
immediately prior to the Effective Time by (ii) the Exchange Ratio. The exercise
price per share of Parent Common Stock subject to each Substitute Option shall
be equal to the exercise price per share of Company Common Stock subject to the
relevant Company Option divided by the Exchange Ratio and then rounded to the
nearest one one-hundredth of a cent; provided, however, that, in the case of any
Company Option which is qualified as an incentive stock option under Section 422
of the Code, the conversion formula (both as to number of shares to be subject
to the related Substitute Option and the exercise price of the related
Substitute Option) shall be adjusted, if necessary, to comply with Section
424(a) of the Code. After the Effective Time, each Substitute Option shall be
exercisable upon the same terms and conditions as were applicable to the related
Company Option immediately prior to the Effective Time (including those terms
which may have caused such Company Option/Substitute Option to become
exercisable in full in connection with the consummation of the transactions
contemplated by this Agreement). As soon as practicable after the Effective
Time, Parent shall deliver to the holders of the Substitute Options appropriate
notice setting forth such holders' rights pursuant thereto. Parent shall take
all corporate action necessary to reserve for issuance a sufficient number of
shares of Parent Common Stock for delivery under the Company Stock Option Plans,
which shall be assumed in accordance with this Section 2.14.
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(b) As soon as is reasonably practicable after the Effective Time,
Parent shall file a registration statement on Form S-8 (if available and
required) (or any successor or other appropriate forms) with respect to the
shares of Parent Common Stock subject to such options and rights and shall use
its reasonable best efforts to maintain the effectiveness of such registration
statement (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options remain outstanding. The Company
(or, if appropriate, any committee administering the Company Stock Option Plans)
shall use its reasonable best efforts, prior to or as of the Effective Time, to
take all necessary actions, pursuant to and in accordance with the terms of the
Company Stock Option Plans and the instruments evidencing the Company Options,
to provide for the conversion of the Company Options into options and rights to
acquire Parent Common Stock in accordance with this Section 2.14. The Board of
Directors of the Company shall, prior to or as of the Effective Time, take
appropriate action to approve the cancellation of the Company Options for
purposes of Section 16(b) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Parent shall, prior to or as of the Effective Time, take
appropriate action to approve the acquisition of options and rights to purchase
Parent Common Stock under the Company Options (as converted pursuant to Section
2.14(a)) for purposes of Section 16(b) of the Exchange Act.
Section 2.15 Warrants to Purchase Company Shares.
(a) Prior to the Effective Time, the Company and Parent together
shall use reasonable best efforts to take all action necessary with respect to
the Warrants such that as of and after the Effective Time each Warrant shall
entitle the holder thereof to purchase such number of shares of Parent Common
Stock as is equal to the product of (x) the number of shares of Company Common
Stock subject to such Warrant immediately prior to the Effective Time and (y)
the Exchange Ratio; and the exercise price per share of Parent Common Stock
subject to such Warrant shall be equal to (A) the exercise price per share of
Company Common Stock immediately prior to the Effective Time divided by (B) the
Exchange Ratio. The Company shall take no action to cause any Warrant which
pursuant to its terms as in effect as of the date hereof would not become
exercisable by reason of the transactions contemplated by this Agreement to
become exercisable in connection herewith, and nothing contained in this
Agreement shall be interpreted as causing any such Warrant to become
exercisable, except as provided currently under the terms of the Warrants
(subject to the adjustments required by this Section 2.15 after giving effect to
the Merger).
(b) Notwithstanding the foregoing, the number of shares of Parent
Common Stock deliverable upon exercise of each Warrant at and after the
Effective Time as contemplated by paragraph (a) above shall be rounded, if
necessary, to the nearest whole share, and the exercise price with respect
thereto shall be rounded, if necessary, to the nearest one one-hundredth of a
cent. Other than as provided in Section 2.15(a) and in the prior sentence of
this Section 2.15(b), as of and after the
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Effective Time, each Warrant shall be subject to substantially the same terms
and conditions as in effect immediately prior to the Effective Time, but giving
effect to the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Letter or the Company
SEC Reports filed with the SEC prior to the date hereof, the Company hereby
represents and warrants to Parent and Merger Sub as follows:
Section 3.1 Organization and Qualification; Subsidiaries. (a) The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of California. The Company has the requisite corporate power
and authority to own, operate or lease its properties and to carry on its
business as it is now being conducted. Each of the Subsidiaries of the Company
is a corporation or other business entity duly organized and validly existing
under the laws of its jurisdiction of incorporation or organization. Except as
would not, individually or in the aggregate, have a Company Material Adverse
Effect, (i) each of the Subsidiaries of the Company has the requisite corporate
or other organizational power and authority to own, operate or lease its
properties and to carry on its business as it is now being conducted, is in good
standing under the laws of its jurisdiction of incorporation or organization;
and (ii) each of the Company and its Subsidiaries is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned, operated or leased or the nature of its
activities makes such qualification necessary.
(b) Section 3.1(b) of the Company Disclosure Letter contains a list of
all Subsidiaries of the Company together with the jurisdiction of incorporation
or organization of each such Subsidiary and the number of shares and percentage
of each class of each Subsidiary's capital stock or other equity securities
owned directly or indirectly by the Company. All of the outstanding shares of
capital stock and other equity securities of the Subsidiaries of the Company
have been validly issued and are fully paid and nonassessable and all of such
shares and securities owned, directly or indirectly, by the Company are owned
free and clear of all liens, pledges, security interests or other encumbrances.
Except as set forth in Section 3.1(b) of the Company Disclosure Letter, there
are no subscriptions, options, warrants, calls, commitments, agreements,
conversion rights or other rights of any character (contingent or otherwise)
entitling any Person to purchase or otherwise acquire from the Company or any of
its Subsidiaries at any time, or upon the happening of any stated event, any
shares of capital stock or other equity securities of any of the Subsidiaries of
the Company. There are no outstanding obligations, contingent or otherwise, of
the Company or any of its Subsidiaries to repurchase, redeem of otherwise
acquire any shares of capital stock or
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other equity securities, or any securities convertible, exchangeable or
exercisable for or into shares of capital stock or other equity securities, of
any Subsidiary of the Company. Except as disclosed in the Company SEC Reports
filed prior to the date of this Agreement, the Company does not directly or
indirectly own any interest (debt, equity or otherwise) in any corporation,
partnership, limited partnership, joint venture, limited liability company or
other business association or entity that is not a Subsidiary of the Company, or
have any obligation, commitment or undertaking to acquire any such interest or
invest in any such corporation, partnership, joint venture, limited liability
company or other business association or entity.
(c) Except for interests in its Subsidiaries, neither the Company nor
any of its Subsidiaries owns directly or indirectly any material equity interest
in any Person or has any obligation or has made any commitment to acquire any
such interest or make any such investment.
Section 3.2 Articles of Incorporation and Bylaws. The Company has
furnished to Parent a complete and correct copy of the Articles of Incorporation
and Bylaws, as amended to the date of this Agreement, of the Company. Such
Articles of Incorporation and Bylaws and all similar organizational documents of
the Subsidiaries of the Company are in full force and effect. The Company is not
in violation of any of the provisions of its Articles of Incorporation or Bylaws
and, except as would not, individually or in the aggregate, have a Company
Material Adverse Effect, none of the Subsidiaries of the Company is in violation
of any similar organizational documents of Subsidiaries of the Company.
Section 3.3 Capitalization. (a) The authorized capital stock of the
Company consists of 50,000,000 shares of Company Common Stock and 15,000,000
shares of preferred stock, of which 3,373,334 are designated as Series B
Convertible Preferred Stock. No classes or series of preferred stock have been
designated other than such Series B Convertible Preferred Stock. At the close of
business on May 25, 1999 (the "Company Capital Stock Disclosure Date"), (i)
5,577,572 shares of Company Common Stock and 3,208,534 shares of Company
Preferred Stock were issued and outstanding, and (ii) no shares of Company
Common Stock and no shares of Company Preferred Stock were held by the Company
in its treasury. Section 3.3(a) of the Company Disclosure Letter lists the
number of shares of Company Common Stock and Company Preferred Stock reserved
for issuance as of the Company Capital Stock Disclosure Date under each of the
Benefit Plans or otherwise (including shares of Company Common Stock reserved
for future grants of options or rights under the Company Stock Option Plans as
of the date hereof and securities issuable upon exercise of the Warrants). Since
the Company Capital Stock Disclosure Date, no shares of Company Common Stock or
Company Preferred Stock have been issued or reserved for issuance, except for
(i) shares of Company Common Stock issued in respect of the exercise, conversion
or exchange of Company Equity Rights outstanding as of the Company Capital Stock
Disclosure Date
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(ii) shares of Company Common Stock issued or reserved for issuance in
connection with the Stock Option Agreement or (iii) shares of Company Common
Stock reserved for issuance in connection with options granted in accordance
with Section 5.1(viii). Section 3.3(a) of the Company Disclosure Letter sets
forth the number and type of Company Equity Rights (including the number and
class of the Company Shares for or into which such Company Equity Rights are
exercisable, convertible or exchangeable and any Benefit Plan pursuant to which
such Company Equity Rights were granted or issued) outstanding as of the Company
Capital Stock Disclosure Date. As of the date hereof, the conversion price per
share of the Company Preferred Stock is $3.00 per share of Company Common Stock,
entitling the holder thereof to acquire 2.5 shares of Company Common Stock upon
conversion of one Company Preferred Share.
(b) There are no outstanding obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Company Shares or
any Company Equity Rights (except in connection with the exercise, conversion or
exchange of outstanding Company Equity Rights). There are no bonds, debentures,
notes or other indebtedness issued and outstanding having the right to vote
together with the Company's shareholders on any matter in respect of which the
Company's shareholders are entitled to vote. Except for the Voting Agreements,
no shareholders of the Company are party to any voting agreement, voting trust
or similar arrangement with respect to Company Shares to which the Company or
any Subsidiary of the Company is a Party. All of the issued and outstanding
shares of Company Common Stock and Company Preferred Stock are validly issued,
fully paid, nonassessable and free of preemptive rights. The Company has not
repurchased Company Shares since December 31, 1995.
(c) Section 3.3(c) of the Company Disclosure Letter sets forth the
following information for each of the Warrants: (i) the exercise price in
effect as of the date hereof, (ii) the identity of the holder(s), (iii) the
number of shares of Company Common Stock into which such Warrants are
exercisable, and (iv) a list of all amendments to the terms of such Warrants and
a list of any agreements entered into in connection therewith. The Company has
provided Parent with true and correct copies of the Warrants and such agreements
as may have been amended.
Section 3.4 Power and Authority; Authorization; Valid & Binding. (a) The
Board of Directors of the Company, at a meeting duly called, duly adopted
resolutions approving this Agreement and the Merger, determining that this
Agreement is advisable and that the Merger is fair to, and in the best interests
of, the Company's shareholders, and recommending that the Company's shareholders
adopt this Agreement. The Company has the necessary corporate power and
authority to enter into and deliver this Agreement and the Stock Option
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby and thereby, except that the Merger is subject
to the adoption and approval of this Agreement and the Merger by the holders of
Company Common Stock and Company Preferred Stock as required by the CGCL.
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The execution and delivery of this Agreement and the Stock Option Agreement by
the Company, the performance by it of its obligations hereunder and thereunder
and the consummation by the Company of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate action on the part
of the Company (other than with respect to the Merger, the adoption and approval
of this Agreement and the Merger by the holders of Company Common Stock and
Company Preferred Stock as required by the CGCL and the Articles of
Incorporation of the Company). Each of this Agreement and the Stock Option
Agreement has been duly executed and delivered by the Company and assuming the
due authorization, execution and delivery by Parent and Merger Sub of the
Agreement, and by Parent of the Stock Option Agreement, each of the Agreement
and the Stock Option Agreement constitutes a legal, valid and binding obligation
of the Company enforceable against it in accordance with the terms hereof or
thereof, subject to bankruptcy, insolvency, fraudulent transfer, moratorium,
reorganization and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 3.5 No Conflict; Required Filings and Consents. (a) The execution
and delivery of this Agreement and the Stock Option Agreement by the Company
does not, and the performance by the Company of its obligations hereunder and
thereunder and the consummation by the Company of the transactions contemplated
hereby and thereby will not, (i) violate or conflict with the Articles of
Incorporation or Bylaws of the Company, (ii) subject to obtaining or making the
notices, reports, filings, waivers, consents, approvals or authorizations
referred to in Section 3.5(b), conflict with or violate any law, regulation,
court order, judgment or decree applicable to the Company or any of its
Subsidiaries or by which any of their respective property is bound or affected,
or (iii) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, cancellation, vesting, modification, alteration or
acceleration of any obligation under, result in the creation of a lien, claim or
encumbrance on any of the properties or assets of the Company or any of its
Subsidiaries pursuant to, result in the loss of any material benefit under
(including an increase in the price paid by, or cost to, the Company or any of
its Subsidiaries), require the consent of any other party to, or result in any
obligation on the part of the Company or any of its Subsidiaries to repurchase
(with respect to a bond or a note), any agreement, contract, instrument, bond,
note, indenture, permit, license or franchise to which the Company or any of its
Subsidiaries is a party or by which the Company, any of its Subsidiaries or any
of their respective property is bound or affected, except, in the case of
clauses (ii) and (iii) above, as would not, individually or in the aggregate,
have a Company Material Adverse Effect, or materially impair the ability of
Parent to own all of the equity of the Surviving Corporation, or operate its or
any of its Subsidiaries' businesses (including the businesses of the Surviving
Corporation and its Subsidiaries), following the Effective Time.
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(b) Except for applicable requirements under the premerger
notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the filing of the Agreement of Merger pursuant
to the CGCL, filings with the SEC under the Securities Act of 1933, as amended
(the "Securities Act") and the Exchange Act and any filings required pursuant to
any state securities or "blue sky" laws, neither the Company nor any of its
Subsidiaries is required to submit any notice, report or other filing with any
Governmental Entity in connection with the execution, delivery, performance or
consummation of this Agreement, the Stock Option Agreement or the Merger except
for such notices, reports or filings that, if not made, would not, individually
or in the aggregate, have a Company Material Adverse Effect, or materially
impair the ability of Parent to own all of the equity of the Surviving
Corporation, or operate its or any of its Subsidiaries' businesses (including
the businesses of the Surviving Corporation and its Subsidiaries), following the
Effective Time. Except as set forth in the immediately preceding sentence, no
waiver, consent, approval or authorization of any governmental or regulatory
authority, court, agency, commission or other governmental entity or any
securities exchange or other self-regulatory body, domestic or foreign
("Governmental Entity"), is required to be obtained by the Company or any of its
Subsidiaries in connection with its execution, delivery, performance or
consummation of this Agreement, the Stock Option Agreement or the transactions
contemplated hereby except for such waivers, consents, approvals or
authorizations that, if not obtained or made, would not, individually or in the
aggregate, have a Company Material Adverse Effect, or materially impair the
ability of Parent to own all of the equity of the Surviving Corporation, or
operate its or any of its Subsidiaries' businesses (including the businesses of
the Surviving Corporation and its Subsidiaries), following the Effective Time.
Section 3.6 SEC Reports; Financial Statements. (a) The Company has timely
filed all forms, reports and documents (including all Exhibits, Schedules and
Annexes thereto) required to be filed by it with the SEC since January 1, 1996,
including any amendments or supplements thereto (collectively, including any
such forms, reports and documents filed after the date hereof, the "Company SEC
Reports"), and, with respect to the Company SEC Reports filed by the Company
after the date hereof and prior to the Closing Date, will promptly deliver or
make available, to Parent all of its Company SEC Reports in the form filed with
the SEC. The Company SEC Reports (i) complied (and any Company SEC Reports filed
after the date hereof will comply) in all material respects in accordance with
the applicable requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations promulgated thereunder, and (ii) as
of their respective filing dates (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing), did not (and
any Company SEC Reports 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 in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
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(b) The financial statements, including all related notes and
schedules, contained in the Company SEC Reports (or incorporated therein by
reference) fairly present in all material respects (or, with respect to
financial statements contained in the Company SEC Reports filed after the date
hereof, will fairly present in all material respects) the consolidated financial
position of the Company and its consolidated Subsidiaries as of the respective
dates thereof and the consolidated results of operations, retained earnings and
cash flows of the Company and its consolidated Subsidiaries for the respective
periods indicated, in each case in accordance with GAAP applied on a consistent
basis throughout the periods involved (except for changes in accounting
principles disclosed in the notes thereto) and the rules and regulations of the
SEC, except that interim financial statements are subject to normal and
recurring year-end adjustments which are not and are not expected to be,
individually or in the aggregate, material in amount and do not include certain
notes which may be required by GAAP but which are not required by Form 10-Q of
the SEC. The financial statements included (or which will be included after the
date of this Agreement) in the Company SEC Reports are (or will be) in all
material respects in accordance with the books and records of the Company and
its Subsidiaries.
(c) Notwithstanding the foregoing, no representation or warranty is
being made in this Section 3.6 with respect to information or statements
(including financial information and statements) that are provided by Parent and
set forth in any Company SEC Report filed after the date hereof or with respect
to any Parent SEC Reports incorporated therein by reference.
Section 3.7 Absence of Certain Changes. Except pursuant to the terms of
this Agreement, the Stock Option Agreement and the transactions contemplated
hereby and thereby, since December 31, 1998, (a) the Company and each of its
Subsidiaries has conducted its business in all material respects in the ordinary
and usual course of its business consistent with past practice and there has not
been any change in the business, assets, liabilities, results of operation or
condition (financial or otherwise) of the Company and its Subsidiaries, or any
development or combination of developments that, individually or in the
aggregate, has had or would have a Company Material Adverse Effect and (b) there
has not been (i) any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of the Company; (ii) any
change by the Company to its accounting policies, practices or methods (except
for immaterial changes required by a change in GAAP); (iii) any (x) incurrences
of indebtedness for borrowed money by the Company and its Subsidiaries except
for indebtedness incurred after the date hereof as permitted by Section 5.1(xi);
(y) transfers, sales or other dispositions of, or encumbrances placed on, assets
or properties by the Company and its Subsidiaries outside of the ordinary course
of business consistent with past practice; or (z) damage, destruction or other
casualty loss of assets or properties of the Company and its Subsidiaries,
whether or not covered by insurance which has had, or would have, a Company
Material Adverse Effect; (iv) any change or amendment to the
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terms of any outstanding securities or material indebtedness of the Company or
any of its Subsidiaries; (v) any redemption, repurchase or re-pricing or
amendment to the exercise or conversion price of any Company Equity Rights and,
except as required by applicable law or pursuant to a contractual obligation in
effect as of the relevant date, (A) any execution, adoption or amendment of any
agreement or arrangement relating to severance or any employee benefit plan or
employment or consulting agreement (including Benefit Plans) or (B) any grant of
any stock options or other equity related award except for stock option grants
after the date hereof as permitted by Section 5.1(iv); (vi) any amendments to
the Company's Articles of Incorporation or Bylaws or similar organizational
documents, (vii) any acquisition of any business or assets, other than
transactions that were in the ordinary course of business consistent with past
practice; (viii) any capital expenditures in excess of $2,000,000 in the
aggregate; (ix) any settlement of any threatened or pending material litigation,
suit, action, proceeding or investigation; (x) any material tax election made or
changed, any material audit settled or any material amended Tax Returns filed;
or (xi) any agreement or commitment entered into with respect to any of the
foregoing.
Section 3.8 Litigation and Liabilities. (a) Except as disclosed in the
Company SEC Reports filed prior to the date hereof, there are no civil, criminal
or administrative actions, suits or claims, proceedings (including condemnation
proceedings) or, to the Knowledge of the Company, hearings or investigations
pending or, to the Knowledge of the Company, threatened against or otherwise
adversely affecting the Company or any of its Subsidiaries or any of their
respective properties and assets, except for any of the foregoing which would
not, individually or in the aggregate, have a Company Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries has or is
subject to any liabilities (absolute, accrued, contingent or otherwise) other
than liabilities (a) adequately reflected on the December 1998 Company Balance
Sheet (including any related notes thereto) or (b) which would not, individually
or in the aggregate, have a Company Material Adverse Effect or (c) permitted to
be incurred pursuant to Section 5.1.
Section 3.9 No Violation of Law; Permits. The business of the Company and
each of its Subsidiaries is being conducted in accordance with all applicable
law, ordinances, regulations, judgments, orders or decrees of any Governmental
Entity, and not in violation of any permits, franchises, licenses,
authorizations or consents granted by any Governmental Entity, and the Company
and each of its Subsidiaries has obtained all permits, franchises, licenses,
authorizations or consents necessary for the conduct of its business, except, in
each case, as would not, individually or in the aggregate, have a Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is (i)
subject to any cease and desist or other order, judgment, injunction or decree
issued by any Governmental Entity, or (ii) is a party to any written agreement,
consent agreement or memorandum of understanding with any Governmental Entity,
or (iii) is a party to any
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commitment letter or similar undertaking to any Governmental Entity, or (iv) to
the Knowledge of the Company, is subject to any order or directive by any
Governmental Entity, or (v) has adopted any board resolutions at the request of
any Governmental Entity that in the case of any of the foregoing clauses (i)
through (v) materially restricts the conduct of its business (whether the type
of business, the location thereof or otherwise) and which, individually or in
the aggregate, would have a Company Material Adverse Effect, nor to the
Knowledge of the Company, has the Company been advised in writing that any
Governmental Entity has proposed issuing or requesting any of the foregoing.
Section 3.10 Benefit Plans. (a) Section 3.10(a) of the Company Disclosure
Letter contains a list of all Benefit Plans and employment, consulting,
severance or termination agreements between the Company or any of its
Subsidiaries and any Employee (a "Benefit Agreement"). Neither the Company nor
any of its Subsidiaries has adopted or amended in any material respect any
Benefit Plan since the date of the most recent audited financial statements
included in the Company SEC Reports filed prior to the date hereof.
(b) With respect to each Benefit Plan and Benefit Agreement, the
Company has made available to Parent true, complete and correct copies, where
applicable and to the extent that they exist as of the date of this Agreement,
of (i) the current plan document or agreement, (ii) the two most recent annual
reports on Form 5500 filed with the Internal Revenue Service, (iii) the two most
recent actuarial reports, (iv) the most recent summary plan description, (v)
the most recent determination letter issued by the Internal Revenue Service, and
(vi) the two most recent audited financial reports concerning such Benefit Plans
or Agreements, and any trusts related thereto.
(c) None of the Company, any of its Subsidiaries, any officer of the
Company or any of its Subsidiaries or any of the ERISA Benefit Plans or Benefit
Agreements has on or before the date of this Agreement engaged in a "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
with respect to any ERISA Benefit Plan or Benefit Agreement that could
reasonably be expected to subject the Company, any of its Subsidiaries or any
officer of the Company or any of its Subsidiaries to any tax on prohibited
transactions imposed by Section 4975 of the Code or to any liability under
ERISA. None of the Company, its Subsidiaries or any ERISA Affiliate has at any
time during the five-year period preceding the date hereof contributed to any
ERISA Benefit Plan that is a "multiemployer plan" (as defined in Section 3(37)
of ERISA) or maintained any ERISA Benefit Plan that is subject to Title IV of
ERISA or Section 412 of the Code.
(d) As of the date of this Agreement there is no pending dispute,
arbitration, claim, suit or grievance involving a Benefit Plan or Benefit
Agreement (other
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than routine claims for benefits payable under any such Benefit Plan) that would
have a Company Material Adverse Effect.
(e) Each Benefit Plan and Benefit Agreement has been established and
maintained in all material respects in accordance with its terms and in
compliance with all applicable laws, statutes, orders, rules and regulations,
including without limiting the foregoing, the timely filing of all required
reports, documents and notices.
(f) Neither the Company, any of its Subsidiaries nor any ERISA
Affiliate (i) maintains or contributes to any Benefit Plan which provides, or
has any liability to provide, life insurance, medical, severance or other
employee welfare benefits to any Employee upon or after his retirement or
termination of employment, except as may be required by Section 4980B of the
Code or Title I, subtitle B, part 6 of ERISA; or (ii) has ever represented,
promised or contracted (whether in oral or written form) to any Employee (either
individually or to Employees as a group) that such Employee(s) would be provided
with life insurance, medical, severance or other employee welfare benefits upon
or after their retirement or termination of employment, except to the extent
required by Section 4980B of the Code or Title I, subtitle B, part 6 of ERISA.
(g) The execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence of
any additional or subsequent events) (i) constitute an event under any Benefit
Plan, Benefit Agreement, trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee, or (ii) result in the triggering or
imposition of any restrictions or limitations on the right of the Company or
Parent to amend or terminate any Benefit Plan and Benefit Agreement. No payment
or benefit agreed to by the Company or any of its Subsidiaries which will or may
be made by the Company, any of its Subsidiaries, Parent or any of their
respective affiliates with respect to any Employee may or will be characterized
as an "excess parachute payment," within the meaning of Section 280G(b)(1) of
the Code.
(h) The Company and each of its Subsidiaries (i) has withheld all
material amounts required by law or by agreement to be withheld from the wages,
salaries and other payments to Employees; (ii) is not liable for any material
arrears of wages or any Taxes or any penalty for failure to comply with any of
the foregoing; and (iii) is not liable for any material payment to any trust or
other fund or to any governmental or administrative authority, with respect to
unemployment compensation benefits, social security or other benefits for
Employees.
Section 3.11 Labor Matters. (a) Except for those matters that would not,
individually or in the aggregate, have a Company Material Adverse Effect, no
work stoppage, slowdown, lockout or labor strike against the Company or any
Subsidiary of the
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Company by Employees (or any union that represents them) (i) is pending or, to
the Knowledge of the Company, threatened or (ii) has occurred since December 31,
1996.
(b) Except as, individually or in the aggregate, would not have a
Company Material Adverse Effect, as of the date of this Agreement, neither the
Company nor any Subsidiary of the Company is involved in or, to the Knowledge of
the Company, threatened with any labor dispute, grievance, or arbitration or
union organizing activity (by it or any of its Employees) involving any
Employees.
Section 3.12 Environmental Matters. (a) Except as would not have a Company
Material Adverse Effect:
(i) the Company and each of its Subsidiaries has at all times
been operated, and is, in compliance with all applicable Environmental Laws, and
neither the Company nor any of its Subsidiaries has received any written
communication from any Person or Governmental Entity that alleges that the
Company or any of its Subsidiaries is not in compliance with applicable
Environmental Laws;
(ii) the Company and each of its Subsidiaries has obtained or
has applied for all applicable environmental, health and safety permits,
licenses, variances, approvals and authorizations required under Environmental
Laws (collectively, the "Environmental Permits") necessary for the construction
of its facilities or the conduct of its operations, and such Environmental
Permits are in effect or, where applicable, a renewal application has been
timely filed and is pending agency approval, and the Company and its
Subsidiaries are in compliance with all terms and conditions of such
Environmental Permits;
(iii) there is no Environmental Claim pending or threatened (i)
against the Company or any of its Subsidiaries, (ii) against any Person whose
liability for any Environmental Claim has been retained or assumed contractually
by the Company or any of its Subsidiaries, or (iii) against any real or personal
property or operations which the Company or any of its Subsidiaries owns, leases
or operates, in whole or in part;
(iv) there have been no Releases of any Hazardous Materials
that would be reasonably likely to form the basis of any Environmental Claim
against the Company, any of its Subsidiaries or any predecessor thereof, or
against any Person whose liability for any Environmental Claim has been retained
or assumed contractually by the Company or any of its Subsidiaries;
(v) there are, and have been, no underground or aboveground
storage tanks, incinerators or surface impoundments, at, on, under or within any
real property currently or formerly owned, leased or operated by the Company,
its Subsidiaries or any predecessor thereof, that would be reasonably likely to
form the basis
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of any Environmental Claim against the Company, its Subsidiaries or any
predecessor thereof, or against any Person whose liability for any Environmental
Claim has been retained or assumed contractually by the Company or any of its
subsidiaries; and
(vi) none of the properties currently or formerly owned, leased
or operated by the Company, its Subsidiaries or any predecessor thereof, are
now, or were in the past, listed on the National Priorities List of Superfund
Sites or any analogous state list.
(b) For purposes of this Agreement:
(i) "Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, information
requests, directives, claims, liens, investigations, proceedings or notices of
noncompliance, violation or status as a potentially responsible person or
otherwise liable party (written or oral) by any person (including any federal,
state, local or foreign governmental authority) relating to or alleging
potential liability (including, without limitation, potential responsibility for
or liability for enforcement, investigatory costs, cleanup costs, governmental
response costs, removal costs, remedial costs, natural resources damages,
property damages, personal injuries or penalties) arising out of, based on or
resulting from (A) the presence, or Release or threatened Release into the
environment, of any Hazardous Materials at any location, whether or not
currently or formerly owned, operated, leased or managed by the Company, any of
its Subsidiaries or any predecessor thereof; or (B) circumstances forming the
basis of any violation or alleged violation of any Environmental Law; or (C) any
and all claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
the presence or Release of any Hazardous Materials.
(ii) "Environmental Laws" means all applicable foreign,
federal, state and local laws, rules, requirements, regulations and judicial or
administrative opinions relating to pollution, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or protection of human or employee health or safety
including, without limitation, laws and regulations relating to Releases of
Hazardous Materials, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials or relating to management of Hazardous Materials in
buildings.
(iii) "Hazardous Materials" means (A) any petroleum or any by-
products or fractions thereof, asbestos or asbestos-containing materials, urea
formaldehyde foam insulation, any form of natural gas, explosives,
polychlorinated biphenyls ("PCBs"), radioactive materials, ionizing radiation,
electromagnetic field radiation or microwave transmissions; (B) any chemicals,
materials or substances, whether waste materials, raw materials or finished
products, which are now defined as or
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included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous substances," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "pollutants," "contaminants,"
or words of similar import under any Environmental Law; and (C) any other
chemical, material or substance, whether waste materials, raw materials or
finished products, regulated or forming the basis of liability under any
Environmental Law.
(iv) "Release" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the environment (including without limitation ambient air, atmosphere, soil,
surface water, groundwater or property).
Section 3.13 Vote Required; Options. (a) No state takeover or similar
statute or regulation of any state in which the Company or any of its
subsidiaries is organized, incorporated or qualified to do business applies to
the Merger, this Agreement, the Stock Option Agreement (including the purchase
of shares of Company Common Stock thereunder), the Voting Agreements or any of
the transactions contemplated hereby or thereby.
(b) The Board of Directors of the Company has duly adopted (and not
withdrawn) a resolution rescinding any authorization previously granted
permitting the Company to repurchase Company Shares.
(c) The affirmative votes at the Company Shareholder Meeting of (i)
the holders of a majority of the outstanding shares of Company Common Stock and
(ii) the holders of a majority of the outstanding shares of Company Preferred
Stock, in each case voting as a separate class, are the only votes of the
holders of any class or series of the Company's capital stock necessary to
approve and adopt this Agreement, the Merger and the transactions contemplated
hereby.
Section 3.14 Opinion of Financial Advisor. The Company or its Board of
Directors has received the written opinion of Morgan Stanley & Co. Incorporated
(the "Company Financial Advisor"), dated as of the date hereof, to the effect
that, as of the date hereof, the consideration to be received in the Merger by
the holders of Company Common Shares who hold such Company Common Shares
immediately prior to the Effective Time is fair to the holders of Company Common
Shares from a financial point of view. The Company has been authorized by the
Company Financial Advisor to permit, subject to prior review and consent by such
Company Financial Advisor, the inclusion of such opinion (and appropriate
references thereto) in the Joint Proxy Statement/Prospectus.
Section 3.15 Brokers. The Company and its Subsidiaries have not engaged
any broker, finder, investment banker or other Person (other than the Company
Financial Advisor) entitled to any brokerage, finder's, investment banking or
other similar fee or
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commission in connection with the transactions contemplated by this Agreement.
The expected amounts of such fees and commissions have been disclosed in writing
to Parent based upon arrangements made by or on behalf of the Company or any of
its Subsidiaries. The Company has previously provided to Parent copies of any
agreements giving rise to any such fee or commission.
Section 3.16 Tax Matters.
(a) All material Tax Returns required to be filed by the Company and
each of its Subsidiaries either on a separate or combined or consolidated basis
have been or will be prepared in good faith and timely filed with the
appropriate Governmental Entity on or prior to the Effective Time or by the due
date thereof including extensions granted by a Government Entity;
(b) all such Tax Returns are complete and accurate in all material
respects;
(c) all Taxes owed by any of the Company and its Subsidiaries (whether
or not shown on any Tax Return) have been paid;
(d) no deficiencies for any Taxes have been either (A) asserted in
writing, proposed in writing or assessed in writing against the Company or any
of its Subsidiaries or (B) as to which the Company has Knowledge based upon
personal contact with any agent of a taxing authority;
(e) none of the Company and its Subsidiaries has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency and no written requests for waivers of the
time to assess any Taxes of the Company or its Subsidiaries are pending;
(f) none of the Company and its Subsidiaries currently is the
beneficiary of any extension of time within which to file any Tax Return;
(g) the Company has delivered or made available to Parent correct and
complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against, or agreed to by any of the Company
and its Subsidiaries since December 31, 1994;
(h) the unpaid Taxes of the Company and its Subsidiaries (A) did not,
as of the month ended April 30, 1999, exceed by any material amount the reserve
for Tax liability (rather than any reserve for deferred Taxes established to
reflect timing differences between book and tax income) set forth on the face of
the balance sheet as of and for the months ended April 30, 1999 (rather than in
any notes thereto) and (B) will not exceed by any material amount that reserve
as adjusted for operations and
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transactions through the Closing Date in accordance with the past customs and
practice of the Company and its Subsidiaries in filing their income Tax Returns;
(i) the Company has not distributed the stock of a "controlled
corporation" (within the meaning of that term as used in section 355(a) of the
Code) in a transaction subject to section 355 of the Code within the past two
years;
(j) no written claim, and to the Knowledge of the Company, no claim,
has ever been made by an authority in a jurisdiction where any of the Company
and its Subsidiaries does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction;
(k) none of the Company and its Subsidiaries has any unrecognized
gains relating to deferred intercompany transactions;
(l) there are no excess loss accounts, as defined in Reg. (S) 1.1502-
19, between or among any members of the affiliated group of corporations of
which Company is the common parent; and
(m) Section 3.16 of the Company Disclosure Letter lists all federal,
state, local and foreign Tax Returns filed with respect to any of the Company
and its Subsidiaries for taxable periods ending on or after March 31, 1996,
indicates those Tax Returns that have been audited, and indicates those Tax
Returns that currently are subject of an audit.
Section 3.17 Intellectual Property. Neither the Company nor any of its
Subsidiaries currently utilizes, or to the Knowledge of the Company, including
the general counsel and members of the legal department of the Company involved
in intellectual property and the Company's chief technology officer, has in the
past utilized, any existing or pending Intellectual Property Rights, except for
those which are owned, possessed or lawfully used by the Company or its
Subsidiaries in their business operations, and neither the Company nor any of
its Subsidiaries infringes upon or unlawfully uses any Intellectual Property
Right owned or validly claimed by another Person except, in each case, as would
not, individually or in the aggregate, have a Company Material Adverse Effect.
The Company and its Subsidiaries own free and clear of all liens and
encumbrances, have a valid license to use or have the right validly to use all
existing and pending Intellectual Property Rights necessary to carry on their
respective business substantially as currently conducted except the failure of
which to own, validly license or have the right validly to use, individually or
in the aggregate, would not have a Company Material Adverse Effect. To the
Knowledge of the Company after due inquiry, no person is infringing the rights
of the Company or any of its Subsidiaries with respect to any Intellectual
Property Right in a manner that would result in a Company Material Adverse
Effect.
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Section 3.18 Title to Property. (a) The Company and each of its
Subsidiaries have good title to all of their real properties and other material
assets, free and clear of all liens, charges and encumbrances, except liens for
taxes not yet due and payable and such liens or other imperfections of title, if
any, as do not materially interfere with the marketability or the present use of
the property affected thereby or which would not, individually or in the
aggregate, have a Company Material Adverse Effect, and except for liens which
secure indebtedness reflected in the December 1998 Company Balance Sheet; and,
to the Company's Knowledge, all leases pursuant to which the Company or any of
its Subsidiaries lease from others material real or personal property are in
good standing, valid and effective in accordance with their respective terms,
and there is not, to the Knowledge of the Company, under any of such leases, any
existing default or event of default (or event which with notice or lapse of
time, or both, would constitute a default), except where the lack of such good
standing, validity and effectiveness, or the existence of such default or event
of default would not, individually or in the aggregate, have a Company Material
Adverse Effect.
(b) Section 3.18(b) of the Company Disclosure Letter identifies all
real property owned by the Company and its Subsidiaries and all material real
property leased or operated by the Company and its Subsidiaries.
Section 3.19 Contracts and Commitments. (a) Section 3.19(a) of the
Company Disclosure Letter contains a complete and accurate list of all material
contracts (written or oral), leases, plans, undertakings, commitments or
agreements which involve (or are reasonably likely to involve) payments or
receipts by the Company or any of its Subsidiaries in excess of $750,000 for a
period of two years from the date of this Agreement ("Contracts") to which the
Company or any of its Subsidiaries is a party or by which any of them is bound
as of the date of this Agreement. As of the date of this Agreement, (i) each of
such Contracts is valid and binding upon the Company or the applicable
Subsidiary (and, to the Company's Knowledge, on all other parties thereto) in
accordance with its terms and is in full force and effect, (ii) neither the
Company nor any of its Subsidiaries is in breach or violation of or in default
in any material respect, or in breach or violation of or in default under, in
any material respect, any Debt Instrument to which it or any of its Subsidiaries
is a party (in each case whether or not such breach, violation or default has
been waived), (iii) to the Knowledge of the Company, no counter-party is in
breach or violation of or in default under, in any material respect, any
Contract to which the Company or any of its Subsidiaries is a party, and (iv) no
event has occurred with respect to the Company or any of its Subsidiaries which,
with notice or lapse of time or both, would constitute a material breach,
violation or default, or give rise to a right of termination, modification,
cancellation, foreclosure, imposition of a lien, prepayment or acceleration
under any of such Contracts or Debt Instruments.
(b) Section 3.19(b) of the Company Disclosure Letter sets forth a list
of each loan or credit agreement, note, bond, mortgage, indenture and any other
agreement
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and instrument pursuant to which any Indebtedness in excess of
$750,000 of the Company or any of its Subsidiaries (other than such Indebtedness
payable to the Company or any of its Subsidiaries) is outstanding or may be
incurred (any of the foregoing, a "Debt Instrument"). "Indebtedness" shall mean
(i) indebtedness for borrowed money, whether secured or unsecured, (ii)
obligations under conditional sale or other title retention agreements relating
to property purchased by such person, (iii) capitalized lease obligations, (iv)
obligations under interest rate cap, swap, collar or similar transactions or
currency hedging transactions (valued at the termination value thereof), and (v)
guarantees of any such indebtedness of any other person.
Section 3.20 Proxy Statement/Prospectus; Registration Statement. None of
the information to be supplied by the Company or its Subsidiaries for inclusion
or incorporation by reference from the Company SEC Reports in the Joint Proxy
Statement/Prospectus to be sent to the shareholders of the Company in connection
with the Company Shareholder Meeting or any amendment thereof or supplement
thereto, will, on the date it becomes effective with the SEC, at the time of the
mailing of the Joint Proxy Statement/Prospectus or any amendment or supplement,
at the time of the Company Shareholder Meeting or at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. None of the information to be supplied by the Company or its
Subsidiaries for inclusion or incorporation by reference from the Company SEC
Reports in the Form S-4 pursuant to which shares of Parent Common Stock issued
in the Merger will be registered under the Act, of which the Joint Proxy
Statement/Prospectus will form a part, will, at the time the Registration
Statement is declared effective by the SEC, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Section 3.21 Pooling of Interests; Reorganization. The Company intends
that the Merger be accounted for under the "pooling of interests" method under
the requirements of Opinion 16 of the Accounting Principles Board of the
American Institute of Certified Public Accountants, the Financial Accounting
Standards Board, and the rules and regulations of the SEC. Neither the Company
nor any of its affiliates has taken or agreed to take any action, nor does the
Company have any Knowledge of any fact or circumstance with respect to the
Company, which would prevent the business combination to be effected pursuant to
the Merger from being accounted for as a "pooling of interests" under GAAP or
the rules and regulations of the SEC or prevent the Merger from qualifying as a
"reorganization" within the meaning of Section 368 of the Code.
Section 3.22 Restrictions on Business Activities. Except for this
Agreement, there is no judgment, injunction, order or decree or material
agreement (including, without limitation, agreements containing provisions
restricting the Company or any of its
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Subsidiaries from entering or engaging in any line of business, agreements
containing geographic restrictions on the Company's or any of its Subsidiaries'
ability to operate their respective businesses and agreements containing rights
of first refusal, rights of first offer, exclusivity, "requirements" or similar
provisions) binding upon the Company or any of its Subsidiaries which has or
would have the effect of materially prohibiting or impairing the conduct of the
businesses of the Company or any of its Subsidiaries or, after the Effective
Time, Parent or any of its Subsidiaries.
Section 3.23 Related Party Transactions. Neither the Company nor any of
its Subsidiaries is party to a Contract involving consideration of more than
$100,000 for any individual Contract or series of related Contracts with any
Related Party which are currently in effect or which, to the Knowledge of the
Company, were in effect or were consummated at any time on or after December 31,
1998. For the purpose of this Agreement, "Related Party" means (i) any officer,
director or greater than 5% shareholder of the Company or any of its
Subsidiaries, (ii) any spouse, former spouse, child, parent, parent of a spouse,
sibling or grandchild of any of the persons listed in clause (i), and (iii) any
affiliate of any of the persons listed in clauses (i) and (ii) other than the
Company or any of its Subsidiaries.
Section 3.24 Insurance. All current material insurance policies are in
full force and effect, all premiums with respect thereto covering all periods up
to and including the Closing Date have been paid or will be paid prior to the
Closing, and no notice of cancellation or termination has been received with
respect to any such policy. Such policies (i) are sufficient for compliance with
all requirements of law and of all Contracts to which the Company or any of its
Subsidiaries is a party, (ii) provide insurance coverage for the assets and
operations of the Company and each of its Subsidiaries consistent with the
coverage customarily maintained by similarly situated companies, and (iii) will
not in any material way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement. To the Knowledge of the Company,
during the last three years neither the Company nor any of its Subsidiaries has
been refused any insurance with respect to its assets or operations, nor has its
coverage been limited, by any insurance carrier to which it has applied for any
such insurance or with which it has carried insurance.
Section 3.25 Year 2000. (a) All products and services currently provided
by the Company or its Subsidiaries and all products currently supported by the
Company or its Subsidiaries are (i) able to receive, record, store, process,
calculate, manipulate and output dates from and after January 1, 2000, time
periods that include January 1, 2000 and information that is dependent on or
relates to such dates or time periods, in the same manner and with the same
accuracy, functionality, data integrity and performance as when dates or time
periods prior to January 1, 2000 are involved and (ii) able to store and output
date information in a manner that is unambiguous as to century ("Year 2000
Compliant") or can be freely modified by the Company to be made Year 2000
Compliant
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(without breaching any third party license agreements or otherwise infringing
any Intellectual Property Rights of any third party), except where such failure
to be Year 2000 Compliant would not have a Company Material Adverse Effect. The
Company has the capacity to provide Year 2000 Compliant substitute products to
its and its Subsidiaries' customers for any products which cannot be so freely
modified to be made Year 2000 Compliant (without breaching any third party
license agreements or otherwise infringing any Intellectual Property Rights of
any third party), except where such failure to have such capacity would not have
a Material Adverse Effect. Except as disclosed in Section 3.25 of the Company
Disclosure Letter, all agreements by the Company and its Subsidiaries with
clients that represent that the Company's (or its Subsidiaries') products and/or
services are Year 2000 Complaint contain provisions excluding consequential,
incidental and similar damages.
(b) All systems owned by, licensed to or operated or used by the
Company or any of its Subsidiaries are Year 2000 Compliant or can freely be
modified to be made Year 2000 Compliant without breaching any third party
license agreements or otherwise infringing any intellectual property rights of
any third party, except where such failure to be Year 2000 Compliant would not
have a Company Material Adverse Effect.
(c) The Company has the capacity to effect any of the modifications
referred to in this Section 3.25 and the remaining costs of such modifications
in the aggregate will not have a Company Material Adverse Effect.
Section 3.26 Foreign Corrupt Practices, etc. None of the Company, any of
its Subsidiaries nor any directors, officers, agents or employees of the Company
or any of its Subsidiaries has (i) used any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to political activity,
(ii) made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (iii)
made any other unlawful payment.
ARTICLE IV
REPRESENTATIONS & WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the Parent Disclosure Letter or the Parent SEC
Reports filed with the SEC prior to the date hereof, Parent and Merger Sub
hereby represent and warrant to the Company as follows:
Section 4.1 Organization and Qualification; Subsidiaries. (a) Parent is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
Each of Parent and Merger Sub has the requisite corporate or other
organizational power and authority to own, operate or
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lease its properties and to carry on its business as it is now being conducted,
and is duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
operated or leased or the nature of its activities makes such qualification
necessary, in each case except as would not, individually or in the aggregate,
have a Parent Material Adverse Effect.
(b) All of the outstanding shares of capital stock of Merger Sub have
been validly issued and are fully paid and nonassessable. All of the
outstanding shares of capital stock of Merger Sub are owned by Parent free and
clear of all liens, pledges, security interests or other encumbrances. There
are no subscriptions, options, warrants, calls, commitments, agreements,
conversion rights or other rights of any character (contingent or otherwise)
entitling any Person to purchase or otherwise acquire from Parent or Merger Sub
at any time, or upon the happening of any stated event, any shares of capital
stock or other equity securities of Merger Sub.
Section 4.2 Certificate of Incorporation and Bylaws. Parent has
furnished, or otherwise made available, to the Company a complete and correct
copy of the Certificate of Incorporation and Bylaws, as amended to the date of
this Agreement, of each of Parent and Merger Sub. Such Certificate of
Incorporation and Bylaws of each of Parent and Merger Sub are in full force and
effect. Neither Parent nor Merger Sub is in violation of any of the provisions
of its respective Certificate of Incorporation or Bylaws.
Section 4.3 Capitalization. (a) The authorized capital stock of Parent
consists of 720,000,000 shares of Parent Common Stock and 40,000,000 shares of
Preferred Stock, par value $1.00 per share, of which 1,500,000 are designated as
Junior Participating Preferred Stock and 30,000,000 are designated as Series A
Cumulative Convertible Preferred Stock ("Series A Preferred Stock "). At the
close of business on April 30, 1999, (i) 271,478,652 shares of Parent Common
Stock, no shares of Junior Preferred Stock and 19,741,630 shares of Series A
Preferred Stock were issued and outstanding and (ii) 1,848,901 shares of Parent
Common Stock, and no shares of Junior Preferred Stock and no shares of Series A
Preferred Stock, were held by Parent in its treasury. As of April 30, 1999,
28,212,136 shares of Parent Common Stock were reserved for issuance upon
exercise of Parent Equity Rights (other than the Series A Preferred Stock) and
38,364,212 shares of Parent Common Stock were reserved for issuance upon
conversion of the Series A Preferred Stock.
(b) There are no outstanding obligations of Parent or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of Parent
Common Stock or any Parent Equity Rights (except in connection with the
exercise, conversion or exchange of outstanding Parent Equity Rights and except
for redemptions or repurchases of shares of Series A Preferred Stock). All of
the issued and outstanding shares of Parent Common Stock are validly issued,
fully paid, nonassessable and free of preemptive rights. As of the date of this
Agreement, there are no bonds, debentures, notes or other
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indebtedness issued and outstanding having the right to vote together with
Parent's shareholders on any matter in respect of which the Parent's
shareholders are entitled to vote. Except as disclosed in the Parent SEC
Reports, no shareholders of Parent are party to any voting agreement, voting
trust or similar arrangement with respect to Parent Shares to which Parent or
any Subsidiary of Parent is a party.
Section 4.4 Power and Authority; Authorization; Valid & Binding. Each of
Parent and Merger Sub has the necessary corporate power and authority to deliver
this Agreement and to perform its obligations hereunder, as applicable, and to
consummate the transactions contemplated hereby, as applicable. The execution
and delivery by each of Parent and Merger Sub of this Agreement and, in the case
of Parent, the Voting Agreements and the Stock Option Agreement, the performance
by it of its obligations hereunder and thereunder, as applicable, and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
and thereby, as applicable, have been duly authorized by all necessary corporate
action on the part of Parent and Merger Sub. No vote of the shareholders of
Parent is required to approve the Merger, this Agreement or the transactions
contemplated hereby. Each of this Agreement, the Voting Agreements and the Stock
Option Agreement has been duly executed and delivered by Parent and Merger Sub
and, assuming the due authorization, execution and delivery by the other parties
thereto, constitutes a legal, valid and binding obligation of Parent and Merger
Sub enforceable against such parties in accordance with the terms hereof or
thereof, subject to bankruptcy, insolvency, fraudulent transfer, moratorium,
reorganization and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 4.5 No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by each of Parent and/or Merger Sub and
the Voting Agreements and Stock Option Agreement by Parent does not, and the
performance by each of Parent and Merger Sub of its obligations hereunder and
thereunder and the consummation by each of Parent and Merger Sub of the
transactions contemplated hereby and thereby will not, (i) violate or conflict
with the Certificate of Incorporation or Bylaws of Parent or Merger Sub, (ii)
subject to obtaining or making the notices, reports, filings, waivers, consents,
approvals or authorizations referred to in paragraph (b) below, conflict with or
violate any law, regulation, court order, judgment or decree applicable to
Parent or any of its Subsidiaries (including Merger Sub) or by which any of
their respective property is bound or affected, (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
cancellation, vesting, modification, alteration or acceleration of any
obligation under, result in the creation of a lien, claim or encumbrance on any
of the properties or assets of Parent or any of its Subsidiaries
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(including Merger Sub) pursuant to, result in the loss of any material benefit
under (including an increase in the price paid by, or cost to, Parent or any of
its Subsidiaries (including Merger Sub), require the consent of any other party
to, or result in any obligation on the part of Parent or any of its Subsidiaries
(including Merger Sub) to repurchase (with respect to a bond or a note), any
agreement, contract, instrument, bond, note, indenture, permit, license or
franchise to which Parent or any of its Subsidiaries (including Merger Sub) is a
party or by which Parent or any of its Subsidiaries (including Merger Sub) or
any of their respective property is bound or affected, except, in the case of
clauses (ii) and (iii) above, as would not, individually or in the aggregate,
have a Parent Material Adverse Effect.
(b) Except for applicable requirements under the premerger
notification requirements of the HSR Act, the filing of the Agreement of Merger
pursuant to the CGCL, filings with the SEC under the Securities Act and the
Exchange Act, and any filings required pursuant to any state securities or "blue
sky" laws, neither Parent nor any of its Subsidiaries (including Merger Sub) is
required to submit any notice, report or other filing with any Governmental
Entity in connection with the execution, delivery, performance or consummation
of this Agreement, the Voting Agreements, the Stock Option Agreement or the
Merger except for such notices, reports or filings, that, if not made, would
not, individually or in the aggregate, have a Parent Material Adverse Effect.
Except as set forth in the immediately preceding sentence, no waiver, consent,
approval or authorization of any Governmental Entity is required to be obtained
by Parent or any of its Subsidiaries (including Merger Sub) in connection with
its execution, delivery, performance or consummation of this Agreement, the
Voting Agreements, the Stock Option Agreement or the transactions contemplated
hereby and thereby except for such waivers, consents, approvals or
authorizations that, if not obtained or made, would not, individually or in the
aggregate, have a Parent Material Adverse Effect.
Section 4.6 SEC Reports; Financial Statements. (a) Parent has timely
filed all forms, reports and documents (including all Exhibits, Schedules and
Annexes thereto) required to be filed by it with the SEC since January 1, 1996,
including any amendments or supplements thereto (collectively, including any
such forms, reports and documents filed after the date hereof, the "Parent SEC
Reports"), and, with respect to the Parent SEC Reports filed by Parent after the
date hereof and prior to the Closing Date, will deliver or make available, to
the Company all of its Parent SEC Reports in the form filed with the SEC. The
Parent SEC Reports (i) complied (and any Parent SEC Reports filed after the date
hereof will comply) in all material respects with the applicable requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations promulgated thereunder, and (ii) as of their respective filing dates
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing), did not (and any Parent SEC Reports 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 in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
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(b) The financial statements, including all related notes and
schedules, contained in the Parent SEC Reports (or incorporated therein by
reference) fairly present in all material respects (or, with respect to
financial statements contained in the Parent SEC Reports filed after the date
hereof, will fairly present in all material respects) the consolidated financial
position of Parent and its consolidated Subsidiaries as at the respective dates
thereof and the consolidated results of operations, retained earnings and cash
flows of Parent and its consolidated Subsidiaries for the respective periods
indicated, in each case in accordance with GAAP applied on a consistent basis
throughout the periods involved (except for changes in accounting principles
disclosed in the notes thereto) and the rules and regulations of the SEC, except
that interim financial statements are subject to normal and recurring year-end
adjustments which are not and are not expected to be, individually or in the
aggregate, material in amount and do not include certain notes which may be
required by GAAP but which are not required by Form 10-Q of the SEC. The
financial statements included (or which will be included after the date of this
Agreement) in the Parent SEC Reports are (or will be) in all material respects
in accordance with the books and records of Parent and its Subsidiaries.
(c) Notwithstanding the foregoing, no representation or warranty is
being made in this Section 4.6 with respect to information or statements
(including financial information and statements) that are provided by the
Company and set forth in any Parent SEC Report filed after the date hereof or
with respect to any Company SEC Reports incorporated therein by reference.
Section 4.7 Absence of Certain Changes. Except pursuant to the terms of
this Agreement, the Stock Option Agreement and the transactions contemplated
hereby and thereby (a) since December 31, 1998, there has not been any change in
the business, assets, liabilites, results of operations or condition (financial
or otherwise) of Parent or any development or combination of developments that,
individually or in the aggregate, has had or would have a Parent Material
Adverse Effect and (b) since December 31, 1998 until the date hereof, there has
not been (i) any declaration, setting aside or payment of any dividend or other
distribution in respect of the capital stock of Parent, other than cash
dividends on the Series A Preferred Stock consistent with past practice and
payment of the redemption price of shares of Series A Preferred Stock and other
amounts paid to induce conversion of Series A Preferred Stock, (ii) any split,
combination or reclassification of any of its capital stock, or (iii) any change
by Parent to its accounting policies, practices or methods materially affecting
its assets, liabilities or business, except insofar as may have been required by
a change in GAAP.
Section 4.8 Litigation and Liabilities. There are no civil, criminal or
administrative actions, suits or claims, proceedings (including condemnation
proceedings) or, to the Knowledge of Parent, hearings or investigations pending
or, to the Knowledge of Parent, threatened against, or otherwise adversely
affecting Parent or any of its Subsidiaries or any of their respective
properties and assets, except for any of the
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foregoing which would not, individually or in the aggregate, have a Parent
Material Adverse Effect.
Section 4.9 No Violation of Law; Permits. The business of Parent is being
conducted in accordance with all applicable law, ordinances, regulations,
judgments, orders or decrees of any Governmental Entity, and not in violation of
any permits, franchises, licenses, authorizations or consents granted by any
Governmental Entity, and Parent has obtained all permits, franchises, licenses,
authorizations or consents necessary for the conduct of its business, except, in
each case, as would not, individually or in the aggregate, have a Parent
Material Adverse Effect. Parent (i) is not subject to any cease and desist or
other order, judgment, injunction or decree issued by any Governmental Entity,
(ii) is not a party to any written agreement, consent agreement or memorandum of
understanding with any Governmental Entity, (iii) is not a party to any
commitment letter or similar undertaking to any Governmental Entity, (iv) is not
subject to any order or directive by any Governmental Entity, (v) has not
adopted any board resolutions at the request of any Governmental Entity, that in
the case of any of clauses (i) - (v) materially restricts the conduct of its
business (whether the type of business, the location thereof or otherwise) and
which, individually or in the aggregate, would have a Parent Material Adverse
Effect, nor to the Knowledge of Parent, has Parent been advised in writing that
any Governmental Entity has proposed issuing or requesting any of the foregoing.
Section 4.10 Proxy Statement/Prospectus; Registration Statement. None of
the information to be supplied by Parent or its Subsidiaries for inclusion or
incorporation by reference from the Parent SEC Reports in the Joint Proxy
Statement/Prospectus or any amendment thereof or supplement thereto, will, on
the date it becomes effective with the SEC, at the time of the mailing of the
Joint Proxy Statement/Prospectus or any amendment or supplement, at the time of
the Company Shareholder Meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. None of the
information to be supplied by Parent or its Subsidiaries for inclusion or
incorporation by reference from the Parent SEC Reports in the Form S-4, of which
the Joint Proxy Statement/Prospectus will form a part, will, at the time the
Form S-4 is declared effective by the SEC, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Section 4.11 Pooling of Interests; Reorganization. Parent intends that the
Merger be accounted for under the "pooling of interests" method under the
requirements of Opinion 16 of the Accounting Principles Board of the American
Institute of Certified Public Accountants, the Financial Accounting Standards
Board and the rules and regulations of the SEC. Neither Parent nor any of its
affiliates has taken or agreed to take
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any action, nor does Parent have any Knowledge of any fact or circumstance with
respect to Parent or Merger Sub, which would prevent the business combination to
be effected pursuant to the Merger from being accounted for as a "pooling of
interests" under GAAP or the rules and regulations of the SEC or prevent the
Merger from qualifying as a "reorganization" within the meaning of Section 368
of the Code.
Section 4.12 Merger Sub. Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.
Section 4.13 Valid Issuance. The Parent Common Stock to be issued in the
Merger, when issued in accordance with the provisions of this Agreement will be
validly issued, fully paid and nonassessable.
Section 4.14 Brokers. Parent has not engaged any broker, finder or
investment banker or other Person entitled to any brokerage, finder's,
investment banking or other similar fee or commission in connection with the
transactions contemplated by this Agreement.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.1 Interim Operations of the Company. Between the date of this
Agreement and the Effective Time, the Company shall, and shall cause each of its
Subsidiaries to (unless Parent shall otherwise provide its prior written consent
or except as otherwise contemplated by this Agreement):
(i) conduct its business in all material respects in the ordinary
course consistent with past practice and, to the extent consistent therewith,
use reasonable best efforts to (x) preserve intact its business organization,
and (y) maintain its existing relations and goodwill with customers, suppliers,
regulators, distributors, creditors, lessors, and others having business
dealings with it;
(ii) not (A) amend the Articles of Incorporation or Bylaws of the
Company or enter into any agreement with any of its shareholders or other
holders of equity interests in their capacity as such; (B) split, combine,
subdivide or reclassify its outstanding shares of capital stock or other equity
securities; (C) declare, set aside or pay any dividend or distribution payable
in cash, stock or property in respect of any of its shares of capital stock or
other equity securities, or securities convertible, exercisable or exchangeable
for, any of its shares of capital stock or other equity securities, other than
dividends and distributions by wholly owned Subsidiaries of the Company; or (D)
repurchase, redeem or otherwise acquire or permit any of its Subsidiaries to
purchase,
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redeem or otherwise acquire, any shares of its capital stock or other equity
securities, or securities convertible, exercisable or exchangeable for, any of
its shares of capital stock or other equity securities (it being understood that
this clause (D) shall not prohibit the exercise, or conversion at the election
of the holder thereof of Company Equity Rights outstanding on the date of this
Agreement);
(iii) not take any action that would prevent the business combination
to be effected pursuant to the Merger from qualifying for "pooling of interests"
accounting treatment under GAAP and the rules and regulations of the SEC and not
take any action that would prevent the business combination to be effected
pursuant to the Merger from qualifying as a "reorganization" within the meaning
of Section 368 of the Code;
(iv) except as required by applicable law or pursuant to contractual
obligations in effect as of the date of this Agreement, not (A) execute,
establish, adopt or amend, or accelerate rights or benefits under, any Benefit
Agreement, any Benefit Plan, or any collective bargaining agreement, (B) grant
any severance or termination pay to any Employee, (C) grant any stock options or
other equity related compensation awards or (D) increase the salary or wages
payable or to become payable to its Employees (other than salary or wage
increases in the ordinary course of business consistent with past practice);
provided, that in the ordinary course of business consistent with past practice
and after giving prior or concurrent notice thereof to Parent, the Company may
grant stock options to employees of the Company (other than those persons
identified on Section 5.1 of the Company Disclosure Letter) in connection with
(x) newly hired employees (up to 30,000 Company Common Shares), (y) retaining
existing employees (up to 20,000 Company Common Shares) and (z) to employees on
certain anniversaries of their employment with the Company (up to 10,000 Company
Common Shares) except if the Effective Time has not occurred prior to September
1, 1999, the Company may thereafter grant options to purchase up to 40,000
additional Company Common Shares pursuant to this proviso, such shares to be
allocated among such three categories in the Company's discretion and provided
further that the exercise price of any such options granted pursuant to this
proviso may not be less than the fair market value of the Company Common Stock
as of the date of grant;
(v) not forgive any loans to Employees, except as required by the
terms thereof as of the date hereof;
(vi) not make any material capital expenditures or acquisitions of
any business (whether by merger, purchase of stock or assets or otherwise) or
other acquisition outside of the ordinary course of business consistent with
past practice, except as contemplated by the Company's capital budget set forth
in Section 5.1 of the Company Disclosure Letter;
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(vii) other than with respect to inventory and services in the
ordinary course of business consistent with past practice, not transfer, lease,
license, sell, mortgage, pledge, encumber or otherwise dispose of any of its
material property or assets;
(viii) not issue, pledge or sell, or authorize or propose the
issuance, pledge or sale of any shares of capital stock of any class (other than
(A) upon exercise of the Company Options upon payment of the exercise price
thereof, (B) upon conversion of shares of Company Series B Preferred Stock in
accordance with the terms of such Company Series B Preferred Stock or (C)
pursuant to and in accordance with the terms of the instruments creating the
Imperial Bank Warrants, the NEXTLINK Warrants and the Other Warrants), or (D) as
permitted by Section 5.1(iv);
(ix) not accelerate, amend, waive or otherwise modify any of the
terms of any option, warrant or stock option plan of the Company or any of its
Subsidiaries, including, without limitation, the Company Options or the Company
Stock Option Plans, or authorize cash payments as a result of or in connection
with the execution, delivery or performance of this Agreement or the
transactions contemplated hereby or in exchange for any options or rights
granted under any such plans except as required by the terms of such plans or
any related agreements (including severance agreements) in effect as of the date
of this Agreement;
(x) not change its accounting policies, practices or methods except
as required by GAAP or by the rules and regulations of the SEC;
(xi) other than borrowings in the ordinary course of business
consistent with past practice under lines of credit existing as of the date of
this Agreement (including extensions thereof), not incur, assume or guarantee
any additional indebtedness for borrowed money in excess of $2,000,000 greater
than the amount of current borrowing capacity;
(xii) not release any third party from, or amend, modify or waive any
provisions or terms of, or grant any exemption under, any confidentiality or
standstill agreement except as provided in Section 5.3(e);
(xiii) not change or amend the terms of any of its outstanding
securities;
(xiv) not make, change or revoke any Tax election under federal,
state, local or foreign tax law;
(xv) not pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)
other than the payment, discharge or satisfaction in the ordinary course of
business consistent with past practice of liabilities reflected or reserved
against in the December 1998 Company
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Balance Sheet or incurred in the ordinary course of business and consistent with
past practice since December 31, 1998 and in accordance with the terms hereof;
(xvi) not (x) take any action (other than pursuant to this
Agreement) to cause the Company Shares to cease to be listed on the Nasdaq Stock
Market, (y) take any action to render inapplicable, or to exempt any third party
from, any provision of the Articles of Incorporation of the Company or any
statute referred to in Section 6.15 or (z) take any action which would result in
an adjustment to the conversion price or exercise price of any Warrant or of the
Company Preferred Stock;
(xvii) not take any action that would be reasonably likely to result
in any of the conditions to the Merger set forth in Article VII of this
Agreement not being satisfied or that would impair the ability of the Company to
consummate the Merger in accordance with the terms hereof or delay such
consummation; and
(xviii) not enter into any commitments or agreements to do any
of the foregoing.
Section 5.2 Interim Operations of Parent. Between the date of this
Agreement and the Effective Time, Parent shall (unless the Company shall
otherwise provide its prior written consent or except as otherwise expressly
contemplated by this Agreement):
(i) not take any action that would be reasonably likely to result
in any of the conditions set forth in Article VII hereof not being satisfied or
that would impair the ability of Parent or Merger Sub to consummate the Merger
in accordance with the terms hereof or delay such consummation;
(ii) not (A) declare, set aside or pay any dividend or distribution
payable in cash, stock or property in respect of any of its capital stock, other
than cash dividends on the Series A Preferred Stock in amounts consistent with
past practice or dividends payable in stock of Parent or any of its Subsidiaries
and payment of the redemption price of shares of Series A Preferred Stock and
other amounts paid to induce conversion of Series A Preferred Stock; or (B)
repurchase, redeem or otherwise acquire, any shares of its capital stock or
other equity securities other than repurchases of shares of its capital stock or
other equity securities in the ordinary course of business and redemptions or
repurchases of shares of the Series A Preferred Stock (it being understood that
this provision shall not prohibit the exercise, exchange or conversion of
outstanding Parent Equity Rights);
(iii) not take any action that would prevent the business
combination to be effected pursuant to the Merger from qualifying for "pooling
of interests" accounting treatment under GAAP and the rules and regulations of
the SEC and not take any action that would prevent the business combination to
be effected pursuant
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to the Merger from qualifying as a "reorganization" within the meaning of
Section 368 of the Code;
(iv) not take any action to cause the shares of Parent Common
Stock to cease to be listed on the NYSE; and
(v) not enter into any commitments or agreements to do any of the
foregoing.
Section 5.3 No Solicitation. (a) The Company shall immediately cease and
terminate any existing solicitation, initiation, encouragement, activity,
discussion or negotiation with any Persons conducted heretofore by the Company,
its Subsidiaries or any of their respective Representatives with respect to any
proposed, potential or contemplated Company Acquisition Proposal.
(b) From and after the date hereof, without the prior written consent
of Parent, the Company will not, will not authorize or permit any of its
Subsidiaries to, and shall use its reasonable best efforts to cause all of its
and their respective officers, directors, employees, financial advisors, agents
or representatives (each a "Representative") not to, directly or indirectly,
solicit, initiate or encourage (including by way of furnishing information) or
take any other action to facilitate any inquiries or the making of any proposal
which constitutes or may reasonably be expected to lead to a Company Acquisition
Proposal from any Person (a "Third Party"), or engage in any discussion or
negotiations relating thereto or accept any Company Acquisition Proposal.
(c) Notwithstanding the provisions of paragraph (b) above, (i) the
Company may, in response to an unsolicited written offer or proposal with
respect to a potential or proposed Company Acquisition Proposal engage in
negotiations or discussions with, or provide information or data to, any Third
Party relating to any Company Acquisition Proposal if (i) the Company
Acquisition Proposal is a Superior Proposal and (ii) the Company's Board of
Directors determines, upon advice from outside legal counsel to the Company,
that the failure to engage in the negotiations or discussions or provide the
information would result in a breach of the fiduciary duties of the Board of
Directors of the Company under applicable law. Any information furnished to any
Third Party in connection with any Company Acquisition Proposal shall be
provided pursuant to a confidentiality and standstill agreement on customary
terms (including without limitation prohibitions on unsolicited tender offers,
acquisitions of equity interests in the Company, proposals to acquire stock or
assets, formation of Section 13(d) groups, public request for release from the
standstill, actions that would require the Company to make a public
announcement, engaging in proxy contests, etc.). Subject to all of the
foregoing requirements, the Company will immediately notify Parent orally and in
writing if any discussions or negotiations are sought to be initiated, any
inquiry or proposal is made, or any information is requested by any Third Party
with respect to any Company
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Acquisition Proposal or which could lead to a Company Acquisition Proposal and
immediately notify Parent of all material terms of any Company Acquisition
Proposal, including the identity of the Third Party making the Company
Acquisition Proposal or the request for information, if known, and thereafter
shall inform Parent on a timely, ongoing basis of the status and content of any
discussions or negotiations with a Third Party, including immediately reporting
any changes to the terms and conditions of the Company Acquisition Proposal.
(d) In the event the Board of Directors of the Company has determined
that a potential or proposed Company Acquisition Proposal constitutes a Superior
Proposal, (i) the Company shall promptly notify the Parent thereof and (ii) for
a period of five business days after delivery of such notice, the Company and
its Representatives, if requested by Parent, shall negotiate in good faith with
Parent to make such adjustments to the terms and conditions of this Agreement as
would enable the Company to proceed with the Merger on such adjusted terms.
After such five business day period, the Board of Directors of the Company may
then (and only then) withdraw or modify its approval or recommendation of the
Merger and this Agreement and recommend such Superior Proposal.
(e) The Company agrees not to release any Third Party from, or waive
any provision of, any standstill agreement to which it is a party or any
confidentiality agreement between it and another Person who has made, or who may
reasonably be considered likely to make, a Company Acquisition Proposal, or who
the Company or any of its Representatives have had discussions with regarding a
proposed, potential or contemplated Company Acquisition Transaction unless the
Company's Board of Directors shall conclude, in good faith, that such action
will lead to a Superior Proposal and after considering applicable provisions of
state law, and upon advice from outside legal counsel to the Company, with
respect to whether such action is required for the Board of Directors to act in
a manner consistent with its fiduciary duties under applicable law.
(f) For purposes of this Agreement:
(i) "Company Acquisition Proposal" shall mean, with respect to
the Company, any inquiry, proposal or offer from any Third Party relating
to any (A) direct or indirect acquisition or purchase of a business of the
Company or any of its Subsidiaries, that constitutes 25% or more of the
consolidated net revenues, net income or assets of the Company and its
Subsidiaries, (B) direct or indirect acquisition or purchase of 25% or more
of any class of equity securities of the Company or any of its Subsidiaries
whose business constitutes 25% or more of the consolidated net revenues,
net income or assets of the Company and its Subsidiaries, (C) tender offer
or exchange offer that if consummated would result in any person
beneficially owning 25% or more of the capital stock of the Company, or (D)
merger, consolidation, business combination, recapitalization,
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liquidation, dissolution or similar transaction involving the Company or
any of its Subsidiaries whose business constitutes 25% or more of the
consolidated net revenues, net income or assets of the Company and its
Subsidiaries.
(ii) Each of the transactions referred to in clauses (A)-(D) of
the definition of Company Acquisition Proposal, other than any such
transaction to which Parent or any of its Subsidiaries is a party, is
referred to herein as a "Company Acquisition Transaction."
(iii) "Superior Proposal" means any bona fide written offer made
by a Third Party to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, all of the shares of Common Stock
then outstanding or all or substantially all the assets of the Company (i)
on terms that the Board of Directors of the Company determines in its good
faith judgment (after consultation with a financial advisor of nationally
recognized reputation and taking into account all the terms and conditions
of the offer deemed relevant by such Board of Directors, including any
break-up fees, expense reimbursement provisions, conditions to
consummation, and the ability of the party making such proposal to obtain
financing for such offer) are materially more favorable from a financial
point of view to its stockholders than the Merger; and (ii) that
constitutes a transaction that, in such Board of Directors' judgment, is
reasonably likely to be consummated on the terms set forth, taking into
account all legal, financial, regulatory and other aspects of such
proposal.
(g) Except as expressly permitted by Section 5.3(d), neither the Board
of Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors of this
Agreement or the Merger, or (ii) approve or recommend, or propose publicly to
approve or recommend, any Company Acquisition Proposal or Company Acquisition
Transaction. Nothing contained in this Section 5.3 shall prohibit the Company
from taking and disclosing to its shareholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act.
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ARTICLE VI
ADDITIONAL COVENANTS
Section 6.1 Meeting of Shareholders; Record Date. (a) The Company will
take all action necessary in accordance with applicable law and its Articles of
Incorporation and Bylaws to, and will, convene a meeting of its shareholders as
promptly as practicable to consider and vote upon the approval of this Agreement
and the Merger (such meeting, the "Company Shareholder Meeting"). Subject only
to Section 5.3(d), the Company shall, through its Board of Directors, recommend
that its shareholders vote in favor of such approval and such recommendation
shall be included in the Joint Proxy Statement/ Prospectus. The Company shall
take all lawful action necessary or advisable to solicit such approval
including, without limitation, timely mailing the Joint Proxy Statement/
Prospectus.
(b) In the event that the Registration Statement of Form S-4 has not
been declared effective by the SEC as of the close of business on July 30, 1999,
the Company shall select a record date for determining the holders of Company
Shares entitled to vote at the Company Shareholders Meeting which is not more
than seven calendar days before (i) the date agreed upon by Parent and the
Company as the likely date upon which the Registration Statement on Form S-4
will be declared effective by the SEC, or (ii) after the date on which the
Registration Statement on Form S-4 is declared effective by the SEC, in each
case, unless otherwise agreed by the Company and Parent.
Section 6.2 Filings; Other Actions. Subject to the terms and conditions
herein provided, the Company and Parent shall:
(i) within 20 business days from the date hereof, make their
respective filings under the HSR Act with respect to the Merger and thereafter
shall promptly make any other required submissions under the HSR Act;
(ii) use their reasonable best efforts to cooperate with one another
in (A) determining which filings are required to be made prior to the Effective
Time with, and which consents, approvals, permits or authorizations are required
to be obtained prior to the Effective Time from, Governmental Entities in
connection with the execution and delivery of this Agreement and the
consummation of the Merger and the transactions contemplated hereby; (B) timely
making all such filings and timely seeking all such consents, approvals, permits
or authorizations; and (C) as promptly as practicable responding to any request
for information from such Governmental Entities; and
(iii) furnish the other party with such necessary information and
reasonable assistance as such other Party and its affiliates may reasonably
request in connection with their preparation of necessary filings,
registrations, or submissions of
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information to any Governmental Entities with respect to the Merger, including
without limitation, any filings necessary or appropriate under the provisions of
the HSR Act.
Section 6.3 Publicity. The Parties agree that the initial press release
with respect to the Merger shall be a joint press release. Thereafter, subject
to their respective legal obligations (including requirements of stock exchanges
and other similar regulatory bodies), the Parties shall consult with each other,
and use reasonable best efforts to agree upon the text of any press release,
before issuing any such press release or otherwise making public statements with
respect to the Merger and in making any filings with any federal or state
governmental or regulatory agency or with any national securities exchange with
respect thereto.
Section 6.4 Registration Statement. The Parties shall cooperate and
promptly prepare and Parent shall file with the SEC as soon as practicable a
Registration Statement on Form S-4 (the "Form S-4 -") under the Securities Act
with respect to the Parent Common Stock issuable in the Merger, a portion of
which Registration Statement shall also serve as the joint proxy statement with
respect to the meeting of the shareholders of the Company to approve the
transactions contemplated hereby (the "Joint Proxy Statement/Prospectus"). The
Parties will use their respective reasonable best efforts to cause the Joint
Proxy Statement/Prospectus to be filed no later than July 6, 1999. The Parties
will cause the Joint Proxy Statement/Prospectus and the Form S-4 to comply as to
form in all material respects with the applicable provisions of the Securities
Act, the Exchange Act and the rules and regulations thereunder. Parent shall use
its reasonable best efforts to, and the Company will cooperate with Parent to,
have the Form S-4 declared effective by the SEC as promptly as practicable
(taking into account the circumstances described in the Parent Disclosure
Letter). Parent shall use its reasonable best efforts to obtain, prior to the
effective date of the Form S-4, all necessary state securities law or "blue sky"
permits or approvals required to carry out the Merger (provided that Parent
shall not be required to qualify to do business in any jurisdiction in which it
is not now so qualified). Each of the Parties agree that the information
provided by it for inclusion in the Joint Proxy Statement/Prospectus and each
amendment or supplement thereto, at the time it is filed or becomes effective at
the time of mailing thereof, and at the Shareholder Meeting Date, will not
include an 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.
Section 6.5 Listing Application. Parent shall as soon as practicable
prepare and submit to the NYSE and all other securities exchanges on which the
shares of Parent Common Stock are listed a listing application with respect to
the shares of Parent Common Stock issuable in the Merger, and shall use its
reasonable best efforts to obtain, prior to the Effective Time, approval for the
listing of such Parent Common Stock on such exchange, subject to official notice
of issuance.
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Section 6.6 Further Action. Each of the Parties shall, subject to the
fulfillment at or before the Effective Time of each of the conditions of
performance set forth herein or the waiver thereof, use its reasonable best
efforts to perform such further acts and execute such documents as may be
reasonably required to effect the transactions contemplated hereby. Each of the
Parties will comply in all material respects with all applicable laws and with
all applicable rules and regulations of any Governmental Entity in connection
with the execution, delivery and performance of this Agreement and the Stock
Option Agreement and the transactions contemplated hereby and thereby. Each of
the Parties agrees to use its reasonable best efforts to obtain in a timely
manner all necessary waivers, consents, approvals and opinions and to effect all
necessary registrations and filings, and to use its reasonable best efforts to
take, or cause to be taken, all other actions and to do, or cause to be done,
all other things necessary, proper or advisable to consummate and make effective
as promptly as practicable the Merger.
Section 6.7 Expenses. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated thereby, including the Merger shall be paid by the Party hereto
incurring such expenses except as expressly provided elsewhere herein (including
Section 8.2) and except that (a) the filing fees in connection with the filing
of the Form S-4 and the Joint Proxy Statement/Prospectus with the SEC, (b) all
filing fees in connection with any filings, permits or approvals required under
applicable state securities or "blue sky" laws, and (c) the expenses incurred in
connection with printing and mailing of the Form S-4 and the Joint Proxy
Statement/Prospectus shall be shared by Parent and the Company equally.
Section 6.8 Notification of Certain Matters. Each Party shall give prompt
notice to the other Party of the following:
(a) the occurrence of or failure to occur of any event the occurrence
or failure to occur of which would be likely to result in (i) any representation
or warranty of such Party being untrue or inaccurate in any material respect at
the date of this Agreement and at the Effective Time (or with respect to any
representation or warranty made as of a specific date such representation or
warranty being untrue or inaccurate in any material respect as of such specific
date), (ii) any condition set forth in Article VII being incapable of being
satisfied or (iii) a Company Material Adverse Effect or a Parent Material
Adverse Effect;
(b) any failure of such Party to comply in any material respect with
any of its covenants or agreements hereunder;
(c) the status of matters relating to completion of the Merger,
including promptly furnishing the other with copies of any notice or other
communication received by any Party or any of its respective Subsidiaries from
any Governmental Entity or other
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third party with respect to this Agreement or the transactions contemplated
hereby, including the Merger; and
(d) any facts relating to that Party which would make it necessary or
advisable to amend the Joint Proxy Statement/Prospectus or the Form S-4 in order
to make the statements therein not misleading or to comply with applicable law;
provided, however, that the delivery of any notice pursuant to this Section 6.8
shall not limit or otherwise affect the remedies available hereunder to the
Party receiving such notice.
Section 6.9 Access to Information. (a) From this date to the Effective
Time, each of the Parties shall, and shall cause its officers, directors,
employees, auditors, counsel and agents to afford the officers, employees,
auditors, counsel and agents of the other Party reasonable access at reasonable
times upon reasonable notice to each of the Party's officers, employees,
auditors, counsel, agents, properties, offices and other facilities and to all
of their respective books and records, and shall furnish the other Party with
all financial, operating and other data and information as such other Party may
reasonably request, in each case only to the extent, in the judgment of counsel
to such Party, permitted by law, including antitrust law, and provided no Party
shall be obligated to make any disclosure which would cause forfeiture of
attorney-client privilege or would violate confidentiality agreements (so long
as such Party shall have used commercially reasonable efforts to obtain a
release or waiver from the applicable confidentiality agreement in respect of
such disclosure).
(b) Each of Parent and the Company agrees that all information so
received from the other party shall be deemed received pursuant to the
Confidentiality Agreement, and that party shall, and shall cause its affiliates
and each of its and their Representatives to, comply with the provisions of the
applicable Confidentiality Agreement with respect to such information.
(c) From this date to the Effective Time, Parent and its
representatives (including without limitation any environmental consultant
engaged by Parent) shall have the right at reasonable times and upon reasonable
notice to the Company to (i) inspect all data and information relating to
environmental matters in the possession of the Company or any of its
subsidiaries and (ii) conduct such environmental assessments and investigations
(including without limitation any soil or groundwater sampling relating thereto)
of the Company or any of its Subsidiaries as Parent or its representatives shall
deem appropriate.
Section 6.10 Review of Information. Subject to applicable laws relating
to the exchange of information, each Party shall have the right to review in
advance, and to the extent practicable each will consult the other on, all the
information relating to it, or any of its respective Subsidiaries, that appear
in any filing made with, or written materials submitted to, any third party
and/or any Governmental Entity in connection with the
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Merger. In exercising the foregoing right, each of the Parties shall act
reasonably and as promptly as practicable.
Section 6.11 Insurance; Indemnity. (a) Parent shall, or shall cause the
Surviving Corporation to maintain in effect for a period of six years after the
Effective Time the Company's current directors' and officers' insurance policies
(or policies containing substantially similar coverage) with respect to acts or
failures to act prior to or as of the Effective Time (other than to the extent
the available limit of any such insurance policy may be reduced or exhausted by
reason of the payment of claims thereunder); provided, however, that in order to
maintain or procure such coverage, neither Parent nor the Surviving Corporation
shall be required to pay an annual premium in excess of 175% of the current
annual premium paid by the Company for its existing coverage (the "Cap Amount");
and provided, further, that if equivalent coverage cannot be obtained, or can be
obtained only by paying an annual premium in excess of the Cap Amount, Parent
and the Surviving Corporation shall only be required to obtain as much coverage
as can be obtained by paying an annual premium equal to the Cap Amount. From and
after the Effective Time, Parent shall, and shall cause the Surviving
Corporation to, indemnify and hold harmless to the full extent permitted under
the Articles of Incorporation of the Company as in effect on the date hereof,
each person who is a current or former officer or director of the Company, or
its Subsidiaries (each, an "Indemnified Party") against all losses, claims,
damages, liabilities, costs or expenses (including reasonable attorneys' fees),
judgments, fines, penalties and amounts paid in settlement in connection with
any claim, action, suit, proceeding or investigation arising out of or
pertaining to matters existing or occurring at or prior to the Effective Time,
whether asserted or claimed prior to, at or after the Effective Time (and Parent
and the Surviving Corporation shall also advance expenses as incurred to the
fullest extent permitted under the Articles of Incorporation of the Company as
in effect on the date hereof provided the Indemnified Party to whom expenses are
advanced provides an undertaking to repay such advances if it is ultimately
determined that such Indemnified Party is not entitled to indemnification). In
the event of any such claim, action, suit, proceeding or investigation (an
"Action"), the indemnifying party shall control the defense of such Action with
counsel selected by it; provided, however, that the Indemnified Party shall be
permitted to participate in the defense of such Action through counsel selected
by it at the Indemnified Party's expense.
(b) Parent and the Surviving Corporation agree that the provisions of
the Company's Articles of Incorporation and Bylaws in effect as of the date of
this Agreement affecting the Indemnified Parties' rights to indemnification and
limitation of liability existing in favor of the Indemnified Parties as provided
in the Company's Articles of Incorporation and Bylaws as in effect as of the
date of this Agreement shall survive the Merger and shall continue in full force
and effect, without any amendment thereto (unless required by the CGCL or
federal law), for a period of six years from the Effective Time.
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(c) In the event that Parent or any of its successors or assigns
consolidates with or merges into any other person and is not the continuing or
surviving corporation or entity of such consolidation or merger proper provision
shall be made so that the successors and assigns of Parent assume the
obligations set forth in this Section 6.11.
Section 6.12 Employee Benefits. (a) Parent shall take all necessary
action so that, for eligibility and vesting purposes under each Benefit Plan
(but not benefit accrual or early retirement subsidies) maintained by Parent or
any of its Subsidiaries in which Employees of the Company and its Subsidiaries
become eligible to participate upon or after the Effective Time, each such
person shall be given credit for all service with the Company and its
Subsidiaries (or all service credited by the Company or its Subsidiaries) to the
same extent as if rendered to Parent or any of its Subsidiaries. Parent shall
use reasonable best efforts to permit participation by the Employees in Parent's
employee benefit plans as soon as is reasonably practicable after the Effective
Time.
(b) Except as otherwise provided in this Section or in Section 6.13,
nothing in this Agreement shall be interpreted as limiting the power of Parent
or Surviving Corporation to amend or terminate any particular Benefit Plan,
Benefit Agreement or any other particular employee benefit plan, program,
agreement or policy or as requiring the Parent or the Surviving Corporation to
offer to continue (other than as required by its terms) any written employment
contract; provided, however, that no such termination or amendment may impair
the rights of any person with respect to benefits or any other payments already
accrued as of the time of such termination or amendment without the consent of
such person.
(c) Parent shall, or shall cause the Company and the Surviving
Corporation to, (i) waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Employees of the Company and its Subsidiaries
under any welfare or fringe benefit plan in which such Employees may be eligible
to participate after the Effective Time, other than limitations or waiting
periods that are in effect with respect to such Employees and that have not been
satisfied under the corresponding welfare or fringe benefit plan maintained by
the Company for the Employees prior to the Effective Time, and (ii) provide each
Employee with credit under any welfare plans in which such Employee becomes
eligible to participate after the Effective Time for any co-payments and
deductibles paid by such Employee for the then current plan year under the
corresponding welfare plans maintained by the Company prior to the Effective
Time.
Section 6.13 Options. (a) Prior to the Effective Time, the Board of
Directors of the Company or the committee of the Board of Directors
administering the Company Stock Option Plans and the ESPP shall adopt such
resolutions or shall take such other actions as are required to approve the
transactions contemplated by this Section 6.13
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and Section 2.14. The Company shall use reasonable best efforts to obtain any
necessary consents of the holders of Company Options issued pursuant to the
Company Stock Option Plans and the ESPP to effect this Section 6.13 and
Section 2.14.
(b) The Company shall cause each Company stock option granted pursuant
to the Employee Stock Purchase Program (such program, the "ESPP" and any such
option, the "ESPP Option") which is outstanding but not yet exercisable to
become immediately exercisable for a period of twenty (20) days preceding the
Company Shareholder Meeting. The Company shall notify all participants twenty
(20) days prior to the anticipated Company Shareholder Meeting that the option
shall be fully exercisable for a period of twenty (20) days from the date of
such notice, and the option will terminate upon the expiration of such period.
At the Effective Time, the Company shall cause any ESPP Option (to the extent
that such ESPP Stock Option has not yet been exercised) to be terminated and
cancelled, and shall ensure that no ESPP Option shall be exercisable for Company
Common Stock following the Effective Time.
Section 6.14 Affiliates. Not less than 45 days prior to the Closing Date,
the Company (i) shall have delivered to Parent a letter identifying all Persons
who may be, as of the Shareholder Meeting Date, the Company's "affiliates" for
purposes of Rule 145 under the Securities Act, and (ii) shall use its reasonable
best efforts to cause each Person who is identified as an "affiliate" of the
Company in such letter to deliver, as promptly as practicable but in no event
later than 35 days prior to the Closing (or after such later date as the parties
may agree), a signed agreement to the Company and Parent substantially in the
form attached as Exhibit D hereto. The Company shall notify Parent from time to
time after the delivery of the letter described in the prior sentence of any
Person not identified on such letter who then is, or may be, an "affiliate" of
the Company and use reasonable best efforts to cause each additional Person who
is identified as an "affiliate" to execute a signed agreement as set forth in
this Section 6.14.
Section 6.15 Takeover Statutes. If any "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
is or may become applicable to the transactions contemplated hereby, each of the
parties hereto and its board of directors shall grant such approvals and take
all such actions as are legally permissible so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate or minimize the effects of
any such statute or regulation on the transactions contemplated hereby.
Section 6.16 Pooling of Interests. Each of the Parties will use its
reasonable best efforts to cause the Merger to be accounted for as a pooling of
interests in accordance with GAAP and the rules and regulations of the SEC.
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Section 6.17 Tax-Free Reorganization. Each of the Parties will use its
reasonable best efforts to cause the Merger to qualify as a tax-free
"reorganization" under Section 368 of the Code.
Section 6.18 Accountant's Comfort Letters. Each Party shall use its
reasonable best efforts to cause to be delivered to the other Party two letters
from its independent public accountants, one dated a date within two business
days before the date on which the Form S-4 shall become effective and one dated
the Closing Date, in form and substance reasonably satisfactory to the recipient
and customary in scope and substance for comfort letters delivered by
independent accountants in connection with registration statements similar to
the Form S-4.
Section 6.19 Accountant's Pooling Letters. (a) The Company shall use its
reasonable best efforts to cause Ernst & Young LLP ("E&Y") to issue a letter
dated as of the Effective Time addressed to the Company (and shall provide
Parent with a copy of such letter) in which E&Y concurs with the Company's
management's conclusion that no conditions exist related to the Company that
would preclude Parent from accounting for the Merger as a "pooling of interests"
in accordance with GAAP and the applicable rules and regulations of the SEC.
(b) Parent shall use its reasonable best efforts to cause E&Y to issue
a letter dated as of the Effective Time addressed to Parent (and shall provide
the Company with a copy of such letter) in which E&Y concurs with Parent's
management's conclusion that the Merger will qualify as a "pooling of interests"
in accordance with GAAP and the applicable rules and regulations of the SEC.
Section 6.20 Warrants
(a) Prior to the Effective Time, Parent shall negotiate in good faith
with each of the holders of the Warrants new forms of Warrants and warrant
agreements providing for substantially similar terms as provided for by the
terms of such Warrants and warrant agreements as in effect on the date hereof.
Each of the new forms of Warrants and new warrant agreements will provide that
the holder(s) of the Warrants will be entitled, upon exercise of such Warrants,
to receive Parent Common Shares as provided by Section 2.15 hereof.
(b) Company shall use its reasonable best efforts to facilitate the
negotiations contemplated by the foregoing clause (a) and shall cooperate with
Parent in accomplishing the foregoing.
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ARTICLE VII
CONDITIONS TO MERGER
Section 7.1 Conditions to Obligations of the Parties to Consummate the
Merger. The respective obligations of each party to consummate the Merger
shall be subject to the satisfaction or waiver of each of the following
conditions:
(a) Shareholder Approval. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the holders of the Company
Common Shares and the holders of the Company Preferred Shares in accordance with
the CGCL and the Articles of Incorporation and Bylaws of the Company.
(b) Legality. No statute, rule, regulation or other law shall have
been enacted, issued or promulgated and no order, decree or injunction shall
have been entered or issued by any Governmental Entity of competent jurisdiction
which (i) has the effect of making the consummation of the transactions
contemplated hereby illegal, (ii) materially restricts, prevents or prohibits
consummation of any of the transactions contemplated hereby or (iii) would
impair the ability of Parent to own the outstanding shares of the Surviving
Corporation, or operate its or any of its Subsidiaries' businesses (including
the businesses of the Surviving Corporation or any of its Subsidiaries),
following the Effective Time. Each Party agrees that, in the event that any
such order, decree or injunction shall be entered or issued, it shall use all
reasonable best efforts to cause such order, decree or injunction to be lifted
or vacated.
(c) HSR Act. The waiting period (or extension thereof) under the HSR
Act applicable to the Merger shall have expired or been terminated.
(d) Registration Statement Effective. The Form S-4 shall have become
effective prior to the mailing by the Company of the Joint Proxy
Statement/Prospectus to its shareholders and no stop order suspending the
effectiveness of the Form S-4 shall then be in effect and no proceedings for
that purpose shall have been initiated or, to the Knowledge of Parent or the
Company, threatened by the SEC. All necessary state securities authorizations
relating to the issuance of the Parent Common Stock shall have been received.
(e) Stock Exchange Listing. The shares of Parent Common Stock to be
issued pursuant to the Merger shall have been duly approved for listing on the
NYSE, subject to official notice of issuance.
(f) Dissenting Shareholders. Effective demands for payment under
Chapter 13 of the CGCL shall not have been received with respect to Company
Shares such that cash would be payable with respect to such Company Shares and
payable in respect of fractional shares in an aggregate amount equal to 10% or
more of the value of
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the Total Merger Consideration. "Total Merger Consideration" means the aggregate
value as of the Effective Time of the Parent Common Stock to be issued in the
Merger together with any cash to be paid in respect of such dissenters' demands
and cash to be paid in lieu of fractional shares to be issued in the Merger.
Section 7.2 Additional Conditions to Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to consummate the Merger shall also be
subject to the satisfaction or waiver of each of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company contained in this Agreement that is qualified by
materiality shall be true and correct at and as of the Effective Time as if made
at and as of the Effective Time and each of such representations and warranties
that is not so qualified shall be true and correct in all material respects at
and as of the Effective Time as if made as of the Effective Time, in each case,
except (i) as contemplated or permitted by this Agreement and (ii) to the extent
that such representations or warranties shall have been expressly made as of an
earlier date, in which case such representations and warranties shall have been
true and correct as of such earlier date.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or before the Effective
Time.
(c) Certificates. Parent shall have received a certificate of the
Company executed on its behalf by the Chief Executive Officer and the Chief
Financial Officer of the Company, certifying that the conditions set forth in
paragraphs (a) and (b) above have been satisfied.
(d) Consents. The Company shall have obtained all consents,
approvals, releases or authorizations ("Consents") from, and the Company shall
have made all filings and registrations ("Filings") to or with, any Person,
including without limitation any Governmental Entity, necessary to be obtained
or made in order for Parent and Merger Sub to consummate the Merger or issue
shares of Parent Common Stock pursuant thereto, as applicable, unless the
failure to obtain such Consents or make such Filings would not, individually or
in the aggregate, have a Company Material Adverse Effect.
(e) Tax Opinion. Parent shall have received an opinion of Fried,
Frank, Harris, Shriver & Jacobson, dated as of the Closing Date, in form and
substance reasonably satisfactory to it, substantially to the effect that, on
the basis of the facts and assumptions described in the opinion, the Merger
constitutes a reorganization within the meaning of Section 368 of the Code. In
rendering such opinion, counsel may require and rely upon representations and
covenants including those contained in this Agreement or in certificates of
officers of the Parties and others.
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(f) Accountants Letters. Parent shall have received each of the
accountants' letters contemplated by Sections 6.18 and 6.19 to be received by
it.
(g) Voting Agreements. Each of the parties to the Voting Agreements
other than Parent shall have complied in all material respects with all
agreements and covenants under the Voting Agreements required to be performed by
it on or before the Effective Time.
Section 7.3 Additional Conditions to Obligations of the Company. The
obligations of the Company to consummate the Merger shall also be subject to the
satisfaction or waiver of each of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Parent and Merger Sub contained in this Agreement that is
qualified by materiality shall be true and correct at and as of the Effective
Time as if made at and as of the Effective Time and each of such representations
and warranties that is not so qualified shall be true and correct in all
material respects at and as of the Effective Time as if made as of the Effective
Time, in each case, except (i) as contemplated or permitted by this Agreement
and (ii) to the extent that such representations or warranties shall have been
expressly made as of an earlier date, in which case such representations and
warranties shall have been true and correct as of such earlier date.
(b) Agreements and Covenants. Each of Parent and Merger Sub shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it on
or before the Effective Time.
(c) Certificates. The Company shall have received a certificate of
Parent executed on its behalf by two officers of Parent at the level of senior
vice president or above, certifying that the conditions set forth in paragraphs
(a) and (b) above have been satisfied.
(d) Consents. Parent shall have obtained all Consents from, and
Parent shall have made all Filings to or with, any Person, including without
limitation any Governmental Entity, necessary to be obtained or made in order
for the Company to consummate the Merger, unless the failure to obtain such
Consents or make such Filings would not, individually or in the aggregate, have
a Parent Material Adverse Effect.
(e) Tax Opinion. The Company shall have received an opinion of Latham
& Watkins (or other counsel reasonably satisfactory to it), dated as of the
Closing Date, in form and substance reasonably satisfactory to it, substantially
to the effect that, on the basis of the facts and assumptions described in the
opinion, the Merger constitutes a reorganization within the meaning of Section
368 of the Code. In rendering such
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opinion, counsel may require and rely upon representations and covenants
including those contained in this Agreement or in certificates of officers of
the Parties and others.
(f) Accountants Letters. The Company shall have received each of the
accountants' letters contemplated by Sections 6.18 and 6.19 hereof to be
received by it.
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.1 Termination. This Agreement may be terminated at any time
before the Effective Time (except as otherwise provided) as follows:
(a) by mutual written consent of each of Parent and the Company;
(b) by either Parent or the Company, if the Effective Time shall not
have occurred on or before December 31, 1999 (the "Termination Date"); provided,
however, that the right to terminate this Agreement under this Section 8.1(b)
shall not be available to any Party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before the Termination Date;
(c) by either Parent or the Company, if a Governmental Entity shall
have issued an order, decree or injunction having the effect of making the
Merger illegal or permanently prohibiting the consummation of the Merger, and
such order, decree or injunction shall have become final and nonappealable (but
only if such Party shall have used its reasonable best efforts to cause such
order, decree or injunction to be lifted or vacated);
(d) by either Parent or the Company, if (x) there shall have been a
breach by the other (or Merger Sub if the Company is the terminating party) of
any of its representations, warranties, covenants or agreements contained in
this Agreement, which breach would result in the failure to satisfy one or more
of the conditions set forth in Section 7.2(a) or (b) (in the case of a breach by
the Company) or Section 7.3(a) or (b) (in the case of a breach by Parent or
Merger Sub), and such breach shall be incapable of being cured or, if capable of
being cured, shall not have been cured within 30 days after written notice
thereof shall have been received by the Party alleged to be in breach;
(e) by Parent, if the Board of Directors of the Company or any
committee of the Board of Directors of the Company (w) shall withdraw or modify
in any manner adverse to Parent, its approval or recommendation of this
Agreement or the Merger, (x) shall fail to reaffirm such approval or
recommendation within 15 days of Parent's request, (y) shall approve or
recommend any Company Acquisition Proposal or
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Company Acquisition Transaction or (z) shall resolve to take any of the actions
specified in clauses (w), (x) or (y) above;
(f) by either Parent or the Company, if the required approval and
adoption of this Agreement and the Merger by the shareholders of the Company
shall not have been obtained at a duly held shareholders meeting called for the
purpose of obtaining such approval, including any adjournments or postponements
thereof;
(g) by Parent if any of the parties to the Voting Agreements other
than Parent shall have violated any of the terms of the Voting Agreements in any
material respect; or
(h) by Parent, if (x) as of the close of business on July 30, 1999,
the Registration Statement on Form S-4 has not been declared effective by the
SEC and (y) as of August 13, 1999, the Requisite Conversion has not occurred;
provided that the termination right under this clause (h) may only be exercised
by Parent prior to August 20, 1999.
The term "Requisite Conversion" means the conversion (or the written
agreement to convert on or before the Trigger Date) by one or more Preferred
Holders of such number of shares of Company Preferred Stock into shares of
Company Common Stock so that, as of the Trigger Date, at least 37.9% of the
shares of the Company Common Stock are committed to vote in favor of the Merger
at the Company Shareholder Meeting pursuant to the Voting Agreements.
The term "Trigger Date" means the record date established by the
Company for determining the holders of Company Shares entitled to vote at the
Company Shareholder Meeting.
Section 8.2 Effect of Termination. (a) In the event that
(x) (1) any person shall have made a Company Acquisition Proposal to
the Company or to its shareholders and thereafter this Agreement is
terminated (i) by either party pursuant to Section 8.1(b) or Section
8.1(h) or (ii) by either party pursuant to Section 8.1(f) and (2)
within 18 months after the termination of this Agreement any Company
Acquisition Transaction shall have been consummated or any written
agreement with respect to a Company Acquisition Transaction entered
into, or
(y) this Agreement is terminated by Parent pursuant to Section 8.1(e),
then, in any such case, the Company shall in no event later than (A) the date of
consummation of such Company Acquisition Transaction, in the case of a
termination described in clause (x), or (B) two days after such termination, in
the case of a
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termination described in clause (y), pay Parent a fee of $4,000,000 (a
"Termination Fee"), which amount shall be payable by wire transfer of same day
funds to a bank account designated by Parent.
(b) In the event that (x) any person shall have made a Company
Acquisition Proposal to the Company or its shareholders and thereafter this
Agreement is terminated (i) by either party pursuant to Section 8.1(b), or (y)
this Agreement is terminated by Parent pursuant to Section 8.1(e), or by either
party pursuant to Section 8.1(f), after any such termination, the Company shall
reimburse Parent, promptly after being requested to do so by Parent, for all
out-of-pocket costs and expenses incurred by Parent in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, fees and expenses of accountants, attorneys, financial advisors,
commercial banks, experts and consultants and fees and expenses otherwise
allocated to the Parent pursuant to Section 6.7.
(c) The Company acknowledges that the agreements contained in this
Section 8.2 are an integral part of the transactions contemplated in this
Agreement, and that, without these agreements, Parent and Merger Sub would not
enter into this Agreement; accordingly, if the Company fails to promptly pay the
amount due pursuant to this Section 8.2, and in order to obtain such payment
Parent commences a suit which results in a judgment against the Company for the
fees and expenses set forth in this Section 8.2, the Company shall pay to Parent
its costs and expenses (including attorneys' fees) in connection with such suit.
(d) In the event of termination of this Agreement pursuant to this
Article VIII, this Agreement (other than as set forth in Section 9.1) shall
become void and of no effect with no liability under the terms of the Agreement
(other than as set forth in this Section 8.2) on the part of any party hereto;
provided, however, no such termination shall relieve any party hereto from any
liability for breach of this Agreement.
Section 8.3 Amendment. This Agreement may be amended at any time before the
Effective Time, whether before or after this Agreement and the Merger shall have
been approved and adopted by the shareholders of the Company, but only pursuant
to a writing executed and delivered by Parent and the Company.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Section
8.1, as the case may be, except that (a) the agreements set forth in Sections
1.3, 6.11 and 6.12 shall
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survive the Effective Time, and (b) the agreements set forth in Sections 6.7 and
8.2 shall survive termination indefinitely.
Section 9.2 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date of receipt and shall be delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested), sent
by overnight courier or sent by telecopy, to the applicable party at the
following addresses or telecopy numbers (or at such other address or telecopy
number for a party as shall be specified by like notice):
(a) if to the Company:
PulsePoint Communications
6307 Carpinteria Avenue
Carpinteria, California 93013
Attention: Corporate Counsel
Telecopy No.: (805) 566-2000
With a copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071-2007
Attention: Paul D. Tosetti
Telecopy No.: (213) 891-8763
and
Latham & Watkins
650 Town Center Drive, Suite 2000
Costa Mesa, CA 92626
Attention: Cary K. Hyden
Telecopy No.: (714) 755-8290
(b) if to Parent or Merger Sub:
Unisys Corporation
Unisys Way
Blue Bell, Pennsylvania 19424
Attention: General Counsel
Telecopy No.: (215) 986-0624
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With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Arthur Fleischer, Jr.
Charles M. Nathan
Telecopy No.: (212) 859-4000
Section 9.3 Certain Definitions; Interpretation. (a) For purposes of this
Agreement, the following terms shall have the following meanings (such
definitions to be equally applicable to both the singular and plural forms of
the terms defined):
"affiliate" of a Person means a Person that directly or indirectly,
through one or more intermediaries, Controls, is controlled by, or is under
common control with, the first mentioned Person.
"Benefit Plan" means any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical, employee stock purchase, stock appreciation,
restricted stock or other employee benefit plan, policy, arrangement or
understanding (whether in writing or not) providing benefits to any Employees.
"Company Disclosure Letter" means the disclosure letter delivered by
the Company to Parent dated as of the date hereof.
"Company Equity Rights" means subscriptions, options, warrants, calls,
commitments, agreements, conversion rights or other rights of any character
(contingent or otherwise) to purchase or otherwise acquire from the Company or
any of its Subsidiaries at any time, or upon the happening of any stated event,
any shares of the capital stock of the Company.
"Company Material Adverse Effect" means any change in or effect (x)
that is or would be likely to be materially adverse to the business, assets,
liabilities, results of operations or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole, or (y) that will or would be
likely to prevent or materially impair or materially delay the Company's ability
to consummate the transactions contemplated by this Agreement; provided, that in
determining whether a Company Material Adverse Effect has occurred, changes or
effects relating to United States economic conditions or financial markets in
general or to the telecommunications or information technology industries in
general, shall not be considered.
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"Company Preferred Stock" or "Company Preferred Shares" means the
Series B Convertible Preferred Stock, no par value, of the Company.
"Company Shares" means Company Common Shares together with
Company Preferred Shares.
"Confidentiality Agreement" means the Mutual Non-Disclosure Agreement
between Parent and Company as of the date hereof.
"Control" (including the terms "controlled by" and "under common
control with") means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of stock, as trustee or executor, by contract or credit
arrangement or otherwise.
"December 1998 Company Balance Sheet" means the audited consolidated
balance sheet of the Company as of December 31, 1998 included in the Company's
Form 10-K for the fiscal year ended December 31, 1998.
"December 1998 Parent Balance Sheet" means the audited consolidated
balance sheet of Parent as of December 31, 1998 included in Parent's Form 10-K
for the fiscal year ended December 31, 1998.
"Employee" means each current, former, or retired employee, officer or
director of the Company or any of its Subsidiaries as of the Effective Time
(including each such person who is on vacation, layoff, approved leave of
absence, sick leave, or short term or long term disability).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with the rules and regulations promulgated thereunder.
"ERISA Affiliate" means each business or entity which is a member of a
"controlled group of corporations," under "common control" or an "affiliated
service group" with the Company within the meaning of Sections 414(b), (c) or
(m) of the Code, or required to be aggregated with the Company under Section
414(o) of the Code, or is under "common control" with the Company, within the
meaning of Section 4001(a)(14) of ERISA.
"ERISA Benefit Plan" means a Benefit Plan maintained as of the date of
this Agreement which is also an "employee pension benefit plan" (as defined in
Section 3(2) of ERISA) or which is also an "employee welfare benefit plan" (as
defined in Section 3(1) of ERISA).
"Excluded Shares" means (i) those shares of Company Common Stock and
Company Preferred Stock held in the treasury of the Company, by any of its
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Subsidiaries or by Parent or any of its Subsidiaries immediately prior to the
Effective Time and (ii) those Company Shares as to which dissenters' rights are
perfected.
"Imperial Bank Warrants" shall mean the warrants to acquire shares of
the Company Common Stock issued pursuant to that certain Warrant Purchase
Agreement dated October 30, 1997 by and between the Company and Imperial Bank.
"Intellectual Property Rights" means all intellectual property rights
worldwide, including patents, trademarks, service marks, copyrights, and
registrations and applications therefor, trade names, know-how, trade secrets,
computer software programs and proprietary information, firmware and mask works,
whether owned, used or licensed for use.
"Junior Preferred Stock" means the junior participating preferred
stock issuable pursuant to the Parent Rights Agreement.
"Knowledge" means to the knowledge of a Party, without a duty of
investigation.
"Nasdaq" means the National Association of Securities Dealers
Automated Quotation System.
"NEXTLINK Warrants" means the warrants issued and to be issued to
NEXTLINK Communications Inc. pursuant to that certain Warrant Agreement dated
June 5, 1998 by and between the Company and NEXTLINK Communications Inc.
"Nondisclosure Agreement" means the Nondisclosure Agreement between
Parent and Company dated as of October 12, 1998.
"NYSE" means the New York Stock Exchange.
"Other Warrants" means the warrants issued and to be issued to TBCC
Funding Trust II, Priority Capital Resources and Leap Wireless International,
Inc. pursuant to those certain agreements by and between the Company and those
Persons dated November 10, 1998, November 10, 1998 and January 21, 1999,
respectively.
"Parent Disclosure Letter" means the disclosure letter delivered by
the Parent to the Company dated as of the date hereof.
"Parent Equity Rights" means subscriptions, options, warrants, calls,
commitments, agreements, conversion rights or other rights of any character
(contingent or otherwise) to purchase or otherwise acquire from Parent at any
time, or upon the happening of any stated event, any shares of any capital stock
of Parent; provided that Parent Equity Rights does not include the Rights (as
defined in the Parent Rights Agreement).
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"Parent Material Adverse Effect" means any change in or effect (x)
that is or would be likely to be materially adverse to the business, assets,
liabilities, results of operations or condition (financial or otherwise) of
Parent and its Subsidiaries taken as a whole, or (y) that will or would be
likely to prevent or materially impair or materially delay Parent's ability to
consummate the transactions contemplated by this Agreement; provided, that in
determining whether a Parent Material Adverse Effect has occurred, changes or
effects relating to United States economic conditions or financial markets in
general or to the telecommunications or information technology industries in
general, shall not be considered.
"Parent Rights Agreement" means the Rights Agreement dated as of March
7, 1986 between Burroughs Corporation and Harris Trust Company of New York, as
Rights Agent, as amended.
"Person" or "person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization,
entity or group (as defined in the Exchange Act).
"Shareholder Meeting Date" means the date of the Shareholder
Meeting.
"Subsidiary" of a Person means any corporation or other legal entity
of which such Person (either alone or through or together with any other
Subsidiary or Subsidiaries) is the general partner or managing entity or of
which at least 50% of the stock or other equity interests the holders of which
are generally entitled to vote for the election of the board of directors or
others performing similar functions of such corporation or other legal entity is
directly or indirectly owned or controlled by such Person (either alone or
through or together with any other Subsidiary or Subsidiaries).
"Tax" means any federal, state, local or foreign net income, gross
income, gross receipts, windfall profit, severance, property, production, sales,
use, license, excise, franchise, employment, profits, environmental (including
Taxes under section 59A of the Code), capital stock, severance, stamp,
unemployment, disability, transfer, occupation, social security (or similar)
registration, payroll, withholding, alternative or add-on minimum or any other
tax, custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty, addition to tax or
additional amount imposed by any Governmental Entity.
"Tax Return" means any return, report or similar statement required to
be filed with respect to any tax including, without limitation, any schedule or
attachment thereto, any information return, claim for refund, amended return or
declaration of estimated tax.
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"Warrants" means collectively the Imperial Bank Warrants, the
Other Warrants and the NEXTLINK Warrants.
(b) When a reference is made in this Agreement to Articles, Sections,
or Exhibits, such reference is to an Article or a Section of, or an Exhibit to,
this Agreement, unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
understood to be followed by the words "without limitation."
Section 9.4 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.5 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any Party. Upon a determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the maximum extent possible.
Section 9.6 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Stock Option Agreement, the Voting Agreements, the Nondisclosure
Agreement and the Confidentiality Agreement constitute the entire agreement and
supersede any and all other prior agreements and undertakings, both written and
oral, among the parties hereto, or any of them, with respect to the subject
matter hereof and, except for Section 6.11, does not, and is not intended to,
confer upon any Person other than the parties hereto any rights or remedies
hereunder.
Section 9.7 Assignment. This Agreement shall not be assigned by any party
hereto by operation of law or otherwise without the express written consent of
each of the other parties.
Section 9.8 Governing Law; Jurisdiction. This Agreement shall be governed
by and construed in accordance with, the laws of the State of New York without
regard, to the fullest extent permitted by law, to the conflicts of laws
provisions thereof which might result in the application of the laws of any
other jurisdiction. (The laws of the State of California pertaining to the
fiduciary obligations of directors of a California corporation shall apply to
such directors.) Each of the parties hereto submits to the non-exclusive
jurisdiction of the state and federal courts of the United States located in the
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City of New York, County of New York, with respect to any claim or cause of
action arising out of this Agreement or the transactions contemplated hereby.
Section 9.9 Trial by Jury. Each of the Parties hereto hereby irrevocably
and unconditionally waives any right it may have to trial by jury in connection
with any litigation arising out of or relating to this Agreement, the Stock
Option Agreement, the Voting Agreements, the Nondisclosure Agreement, the
Confidentiality Agreement or Merger or any of the other transactions
contemplated hereby or thereby.
Section 9.10 Enforcement. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, such remedy being in addition to any other remedy to which
any party is entitled at law or in equity.
Section 9.11 Obligations of Subsidiaries. Whenever this Agreement requires
any Subsidiary of the Company to take any action or Merger Sub to take any
action, such requirement shall be deemed to include an undertaking on the part
of the Company to cause such Subsidiary to take such action or Parent to cause
Merger Sub to take such action, as the case may be.
Section 9.12 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different Parties in separate counterparts, each of
which when executed shall be deemed to be an original, but all of which shall
constitute one and the same agreement; it being understood that all parties need
not execute the same counterpart.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
UNISYS CORPORATION
By: /s/ Robert H. Brust
---------------------------
Robert H. Brust
President
PULSEPOINT COMMUNICATIONS
By: /s/ Mark C. Ozur
------------------------
Mark C. Ozur
President and C.E.O.
[Signature Page to Agreement and Plan of Merger]
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Annex B
STOCK OPTION AGREEMENT
----------------------
STOCK OPTION AGREEMENT, dated as of June 14, 1999 (this "Agreement"),
by and between PulsePoint Communications, a California corporation (the
"Company"), and Unisys Corporation, a Delaware corporation ("Parent").
RECITALS
--------
A. The Company and Parent have entered into an Agreement and Plan of
Merger, dated as of the date hereof (as may be amended from time to time, the
"Merger Agreement"), providing for, among other things, a business combination
between Parent and the Company.
B. As a condition and inducement to Parent's willingness to enter
into the Merger Agreement, Parent has requested that the Company agree, and the
Company has agreed, to grant Parent the option contemplated hereby.
C. Capitalized terms not defined herein shall have the meanings set
forth in the Merger Agreement.
D. This Agreement and the Merger Agreement are being entered into
simultaneously.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
Company and Parent agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth
---------------
herein, the Company hereby grants to Parent an irrevocable option (the "Option")
to purchase up to 1,109,936 (as adjusted as set forth herein) fully paid and
non-assessible shares (the "Option Shares") of the Company's Common Stock, no
par value ("Company Stock"), at a purchase price of $6.60 (as adjusted as set
forth herein) per Option Share (the "Purchase Price").
2. Exercise of Option. (a) Parent may exercise the Option, in whole
------------------
or in part, at any time or from time to time after but only after the occurrence
of any event as a result of which Parent is entitled to receive the Termination
Fee pursuant to Section 8.2 of the Merger Agreement and the Merger Agreement is
being or has been terminated (an "Exercise Event"); provided, however, that
except as provided in the last sentence of this Section 2(a), the Option shall
terminate and be of no further force and effect upon the earliest to occur of
(A) the Effective Time and (B) nine months after the first occurrence of an
Exercise Event. Notwithstanding the termination of the Option, Parent shall be
entitled to purchase the Option Shares if it has exercised the Option in
accordance with the terms hereof prior to the termination of the Option and the
termination of the Option shall not affect any rights hereunder which by their
terms do not terminate or expire prior to or as of such termination.
<PAGE>
(b) Notice of Exercise. In the event that Parent wishes to
------------------
exercise the Option, it shall send to the Company a written notice (the date of
each such notice being herein referred to as a "Notice Date") to that effect,
which notice also specifies a date not earlier than three business days nor
later than 30 business days from the Notice Date for the closing of such
purchase (an "Option Closing Date"); provided, however, that (i) if the closing
of a purchase and sale pursuant to the Option (an "Option Closing") cannot be
consummated by reason of any applicable judgment, decree, order, law or
regulation, 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 (ii) without limiting the
foregoing, if prior notification to or approval of any regulatory authority is
required in connection with such purchase, Parent and the Company shall promptly
file the required notice or application for approval and shall cooperate in the
expeditious filing of such notice or application, 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, (A) any required notification period has expired or
been terminated or (B) any required approval has been obtained, and in either
event, any requisite waiting period has expired or been terminated. Each of
Parent and the Company agrees to use commercially reasonable efforts to
cooperate with and provide information to the other, for the purpose of any
required notice or application for approval. Any exercise of the Option shall be
deemed to occur on the Notice Date relating thereto. The place of any Option
Closing shall be at the offices of Fried, Frank, Harris, Shriver & Jacobson, One
New York Plaza, New York, New York, and the time of the Option Closing shall be
10:00 a.m. (Eastern Time) on the applicable Option Closing Date.
3. Payment and Delivery of Certificates. (a) At any Option Closing,
------------------------------------
Parent shall pay to the Company in immediately available funds by wire transfer
to a bank account designated in writing by the Company an amount equal to the
Purchase Price multiplied by the number of Option Shares for which the Option is
being exercised; provided, that failure or refusal of the Company to designate a
bank account shall not preclude Parent from exercising the Option, in whole or
in part.
(b) At any Option Closing, simultaneously with the delivery of
immediately available funds as provided in Section 3(a), the Company shall
deliver to Parent a certificate or certificates representing the Option Shares
to be purchased at such Option Closing, which Option Shares shall be free and
clear of all liens, claims, charges and encumbrances of any kind whatsoever. If
at the time of issuance of the Option Shares pursuant to the exercise of the
Option hereunder, the Company shall have issued any share purchase rights or
similar securities ("Rights") to holders of Company Stock, then each Option
Share issued pursuant to such exercise shall be accompanied by a corresponding
Right or new rights with terms substantially the same as and at least as
favorable to Parent as those issued to other holders of Company Stock.
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(c) Restrictive Legend. Certificates for the Option Shares
------------------
delivered at any Option Closing shall have typed or printed thereon a
restrictive legend which shall read substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE."
It is understood and agreed that the foregoing legend shall be removed by
delivery of substitute certificate(s) without such legend upon the sale of the
Option Shares pursuant to a registered public offering or Rule 144 under the
Securities Act or any other sale as a result of which such legend is no longer
required.
4. Adjustment upon Changes in Capitalization, Etc. (a) In the event
----------------------------------------------
of any change in Company Stock by reason of a stock dividend, split-up, merger,
recapitalization, combination, exchange of shares or similar transaction, the
type and number of shares or securities subject to the Option, and the Purchase
Price therefor, shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Parent shall receive
upon exercise of the Option the number and class of shares or other securities
or property that Parent would have received in respect of Company Stock if the
Option had been exercised immediately prior to such event or the record date
therefor, as applicable.
(b) Without limiting the parties' relative rights and obligations
under the Merger Agreement, in the event that the Company enters into an
agreement (i) to consolidate with or merge into any person, other than Parent or
one of its subsidiaries, and the Company shall not be the continuing or
surviving corporation in such consolidation or merger, (ii) to permit any
person, other than Parent or one of its subsidiaries, to merge into or
consolidate with the Company and the Company shall be the continuing or
surviving corporation, but in connection with such merger or consolidation, the
shares of Company Stock outstanding immediately prior to the consummation of
such merger or consolidation 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 Stock outstanding immediately prior to the
consummation of such merger or consolidation shall, after such merger or
consolidation, represent less than 50% of the outstanding voting securities of
the merged or consolidated company, or (iii) to sell or otherwise transfer all
or substantially all of its assets to any person, other than Parent or one of
its subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option with identical terms
appropriately adjusted to acquire the
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<PAGE>
number and class of shares or other securities, cash or property that Parent
would have received in respect of Company Stock if the Option had been exercised
immediately prior to such consolidation, merger, sale or transfer, or the record
date therefor, as applicable.
(c) If, prior to the termination of the Option in accordance with
Section 2, the Company enters into any agreement (x) pursuant to which all
outstanding shares of Company Stock are to be purchased for, or converted into
the right to receive in whole or in part (other than in respect of fractional
shares) cash or (y) with respect to any transaction described in clauses (i),
(ii) and (iii) of paragraph (b) (each of (x) and (y), a "Transaction"), and, in
the case of each of clauses (x) and (y), the Option is then exercisable, the
Company covenants that proper provision shall be made in such agreement to
provide that, if the Option shall not theretofore have been exercised, then upon
the consummation of the Transaction (which in the case of a Transaction
involving a tender offer shall be when shares of Company Stock are accepted for
payment), Parent shall have the right, at its election, by not less than two
business days' prior written notice to the Company, to receive in exchange for
the cancellation of the Option an amount in cash equal to the Spread. For
purposes of this Agreement, the term "Spread" means the number of Option Shares
multiplied by the excess of (A) the higher of the closing sales price per share
of Company Stock on the principal securities exchange or quotation system on
which the Company Stock is then listed or traded, as reported by The Wall Street
---------------
Journal, on the day (i) the average of the closing prices of the shares of
- -------
Company Stock as reported by The Wall Street Journal over the ten-trading day
-----------------------
period beginning on the trading day immediately following the announcement of
such agreement or (ii) the average of the closing prices of the shares of
Company Stock as reported by The Wall Street Journal over the ten-trading day
-----------------------
period ending on the trading day immediately prior to the consummation of such
Transaction, over (B) the Purchase Price. Notwithstanding the foregoing, the
amount of the Spread, when added to any Termination Fee paid or payable to
Parent, shall not exceed $4 million.
(d) Following exercise of the Option by Parent, in the event that
Parent sells, pledges or otherwise disposes of (including, without limitation,
by merger or exchange) any of the Option Shares (a "Sale"), then:
(i) any Termination Fee due and payable by the Company
following such time shall be reduced by an amount, if any, equal to the excess
of (1) the total of (A) the Termination Fee and (B) the excess of (w) the
aggregate amounts received (whether in cash, securities or otherwise) by Parent
in all such Sales, over (x) the aggregate Purchase Price of the Option Shares
sold in such Sales (such excess in this sub-clause (B) being the "Offset
Amounts") over (2) $4 million; and
(ii) if the Company has paid to Parent the Termination Fee
prior to the Sale, then Parent shall immediately remit to the Company, as
additional
-4-
<PAGE>
Purchase Price for the Option Shares, the excess, if any, of (y) the total of
the Termination Fee and the Offset Amounts of all Sales over (z) $4 million.
(e) Notwithstanding anything to the contrary in this Agreement or
the Merger Agreement, in no event shall the aggregate of any Termination Fee,
all Offset Amounts and the Spread exceed $4 million.
5. Covenants of the Company and Parent. (a) The Company covenants
-----------------------------------
(i) to maintain, free from preemptive rights, sufficient authorized but unissued
or treasury shares of Company Stock so that the Option may be fully exercised
without additional authorization of Company Stock after giving effect to all
other options, warrants, convertible securities and other rights of third
parties to purchase shares of Company Stock; (ii) not to seek to avoid the
observance or performance of any of the covenants, agreements or conditions to
be observed or performed hereunder by the Company and not to take any action
which would cause any of its representations or warranties not to be true; and
(iii) not to engage in any action or omit to take any action which would have
the effect of preventing or disabling the Company from delivering the Option
Shares to Parent upon exercise of the Option or otherwise performing its
obligations under this Agreement.
(b) Parent covenants not to sell, assign, transfer or otherwise
dispose of the Option, any part thereof, or any of its other rights hereunder to
any third party without the prior written consent of the Company which consent
shall not be unreasonably withheld or delayed. Parent may offer or sell Option
Shares only pursuant to a registration under the Securities Act or an exemption
therefrom.
6. Listing. If Company Stock or any other securities to be acquired
-------
upon exercise of the Option are then listed on the Nasdaq Stock Market (or any
other national securities exchange or national securities quotation system), the
Company, upon the request of Parent, shall promptly file an application to list
the shares of Company Stock or other securities to be acquired upon exercise of
the Option on the Nasdaq Stock Market (and any such other national securities
exchange or national securities quotation system) and shall use reasonable best
efforts to obtain approval of such listing as promptly as practicable.
7. Loss or Mutilation. 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 shall execute and deliver a new Agreement
of like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not the Agreement so lost, stolen, destroyed, or mutilated shall at
any time be enforceable by anyone.
8. Registration Rights. The Company shall, if requested by Parent at
-------------------
any time and from time to time within two years after the date of first exercise
of the
-5-
<PAGE>
Option, as expeditiously as possible prepare and file up to two registration
statements under the Securities Act if such registration is necessary in order
to permit the sale or other disposition of any or all securities that have been
acquired by exercise by Parent of the Option, in accordance with the intended
method of sale or other disposition stated by Parent, including a "shelf"
registration statement under Rule 415 under the Securities Act or any successor
provision; and the Company shall use commercially reasonable efforts to qualify
such securities under any applicable state securities laws. Parent agrees to use
reasonable best efforts to cause, and to cause any underwriters of any sale or
other disposition to cause, any sale or other disposition pursuant to such
registration statement to be effected on a widely distributed basis. The Company
shall use reasonable best efforts to cause each such registration statement to
become effective, to obtain all consents or waivers of other parties which are
required therefor, and to keep such registration statement effective for such
period not in excess of 90 calendar 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 to file a registration
statement and to maintain its effectiveness may be suspended for one or more
periods of time not exceeding 90 calendar days in the aggregate with respect to
any registration statement if the Board of Directors of the Company shall have
determined that the filing of such registration statement or the maintenance of
its effectiveness would require disclosure of nonpublic information that would
materially and adversely affect the Company or would interfere with a planned
merger, sale of material assets, recapitalization or other significant corporate
action (other than the issuance of equity securities). Any registration
statement prepared and filed under this Section, and any sale covered thereby,
shall be at the Company's expense except for underwriting discounts or
commissions and brokers' fees, which shall be borne solely by Parent. Parent
shall provide in writing all information reasonably requested by the Company for
inclusion in any registration statement to be filed hereunder. If, during the
time periods referred to in the first sentence of this Section, the Company
effects a registration under the Securities Act of the Company's equity
securities for its own account or for any other of its stockholders (other than
on Form S-4 or Form S-8, or any successor form), it shall allow Parent the right
to participate in such registration; provided that, if the managing underwriters
of such offering advise the Company that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering on a commercially reasonable basis, priority
shall be given to the securities intended to be included therein by the Company
for its own account and, thereafter, the Company shall include the securities
requested to be included therein by Parent pro rata with the securities intended
to be included therein by other stockholders of the Company. In connection with
any registration pursuant to this Section, Parent and the Company shall provide
each other and any underwriter of the offering with customary representations,
warranties, covenants, indemnification, and contribution in connection with such
registration.
-6-
<PAGE>
9. Miscellaneous.
-------------
(a) Fees and Expenses. Except as otherwise provided in the Merger
-----------------
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be borne by the party incurring such
expenses.
(b) Amendment. This Agreement may not be amended except by an
---------
instrument in writing signed on behalf of each of the parties.
(c) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO ITS CONFLICT OF LAWS RULES OR PRINCIPLES.
(d) Notices. All notices or other communications under this
-------
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by cable, telegram, telex
or other standard form of telecommunications, or by registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:
If to the Company:
PulsePoint Communications
6307 Carpinteria Avenue
Carpinteria, California 93013
Attention: General Counsel
Telecopy No.: (805) 566-2000
With a copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071-2007
Attention: Paul D. Tosetti
Telecopy No.: (213) 891-8763
If to Parent:
Unisys Corporation
Unisys Way
Blue Bell, Pennsylvania 19424
Attention: General Counsel
Telecopy No.: (215) 986-0624
-7-
<PAGE>
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Arthur Fleischer, Jr.
Charles M. Nathan
Telecopy No.: (212) 859-4000
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section.
(e) Assignment; Binding Effect; No Third Party Beneficiaries.
--------------------------------------------------------
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be sold, assigned, disposed of or otherwise transferred by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
(f) Further Assurances. In the event of any exercise of the
------------------
Option by Parent, the Company and Parent shall execute and deliver all such
documents and instruments and take all such further action that may be
reasonably necessary in order to consummate the transactions provided for by
such exercise.
(g) Survival. All the Company's representations, warranties and
--------
covenants contained herein shall survive each Option Closing.
(h) ENFORCEMENT. THE PARTIES HERETO AGREE THAT IRREPARABLE DAMAGE
-----------
WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE NOT
PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE BREACHED.
IT IS ACCORDINGLY AGREED THAT SUBJECT TO THE NEXT SENTENCE, THE PARTIES SHALL BE
ENTITLED TO AN INJUNCTION OR INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT
AND TO ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS HEREOF IN ANY COURT OF THE
UNITED STATES OR ANY STATE HAVING JURISDICTION, THIS BEING IN ADDITION TO ANY
OTHER REMEDY TO WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY. EACH OF THE
PARTIES HERETO (I) CONSENTS TO SUBMIT ITSELF TO THE PERSONAL JURISDICTION OF ANY
FEDERAL COURT LOCATED IN THE STATE OF DELAWARE OR ANY DELAWARE STATE COURT IN
THE EVENT ANY DISPUTE ARISES OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, (II) AGREES THAT IT SHALL NOT
-8-
<PAGE>
ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL JURISDICTION BY MOTION OR OTHER REQUEST
FOR LEAVE FROM ANY SUCH COURT, AND (III) AGREES THAT IT SHALL NOT BRING ANY
ACTION RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT IN ANY COURT OTHER THAN A FEDERAL COURT SITTING IN THE STATE OF
NEW YORK OR A NEW YORK STATE COURT.
(i) Counterparts. This Agreement may be executed by the parties
------------
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
[Remainder of Page Intentionally Left Blank]
-9-
<PAGE>
IN WITNESS WHEREOF, the Company and Parent have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of the
day and year first written above.
PULSEPOINT COMMUNICATIONS
By: /s/ Mark C. Ozur
-----------------------
Mark C. Ozur
President and C.E.O.
UNISYS CORPORATION
By: /s/ Robert H. Brust
--------------------------
Robert H. Brust
Senior Vice President and
Chief Financial Officer
[Signature Page to Stock Option Agreement]
<PAGE>
Annex C
June 14, 1999
Board of Directors
Pulsepoint Communications
6307 Carpinteria Avenue
Carpinteria, CA 93013
Members of the Board:
We understand that Pulsepoint Communications ("Target" or the "Company"), Unisys
Corporation ("Buyer") and Shellco Inc., a wholly owned subsidiary of Buyer
("Acquisition Sub") propose to enter into an Agreement and Plan of Merger,
substantially in the form of the draft dated June 14, 1999 (the "Merger
Agreement"), which provides, among other things, for the merger (the "Merger")
of Acquisition Sub with and into the Company, with the Company continuing as the
surviving corporation and, in accordance with the Merger, becoming a wholly
owned subsidiary of Buyer. Pursuant to the Merger, (i) each outstanding share of
common stock, no par value per share, of the Company (the "Company Common
Stock"), other than shares of Company Common Stock held in the treasury of the
Company, held by any of the Company's wholly-owned subsidiaries or held by Buyer
or any subsidiary of Buyer, or shares of Company Common Stock as to which
dissenters' rights have been perfected, will be converted into the right to
receive a certain number (the "Exchange Ratio") of shares of common stock, par
value $0.01 per share, of the Buyer (the "Buyer Common Stock") as determined
pursuant to a certain formula set forth in the Merger Agreement, and (ii) each
outstanding share of Series B Preferred Stock, no par value per share, of the
Company (the "Company Preferred Stock"), will be converted into the right to
receive that number of shares of Buyer Common Stock equal to the Exchange Ratio
multiplied by the number of shares of Company Common Stock issuable upon
conversion of a share of Company Preferred Stock. For purposes of this opinion,
we have assumed that the Company Preferred Stock is converted into Company
Common Stock immediately prior to the consummation of the Merger and accordingly
we express no opinion as to the fairness of the consideration to be received by
the current holders of Company Common Stock relative to the fairness of the
consideration to be received by the current holders of Company Preferred Stock.
The terms and conditions of the Merger are more fully set forth in the Merger
Agreement.
You have asked for our opinion as to whether the consideration to be received
pursuant to the Merger Agreement by the holders of shares of Company Common
Stock who hold such shares of Company Common Stock immediately prior to the
Merger is fair from a financial point of view to such holders.
<PAGE>
Members of the Board of Directors
June 14, 1999
Page 2
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of the Company;
(ii) reviewed certain internal financial statements and other financial
and operating data concerning the Company prepared by the management
of the Company;
(iii) analyzed certain financial projections prepared by the management of
the Company;
(iv) discussed the past and current operations and financial condition
and the prospects of the Company with senior executives of the
Company;
(v) reviewed certain publicly available financial statements and other
information of the Buyer;
(vi) discussed the past and current operations and financial condition
and the prospects of the Buyer with senior executives of the Buyer;
(vii) reviewed the reported prices and trading activity for the Company
Common Stock and the Buyer Common Stock;
(viii) compared the financial performance of the Company and the Buyer and
the prices and trading activity of the Company Common Stock and the
Buyer Common Stock with that of certain other comparable publicly-
traded companies and their securities;
(ix) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(x) participated in discussions and negotiations among representatives
of the Company and the Buyer and certain other parties and their
financial and legal advisors;
(xi) reviewed the draft Merger Agreement and certain related documents;
and
(xii) performed such other analyses and considered such other factors as
we have deemed appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections provided to us by the
management of the Company, we understand that such projections have been
reasonably prepared on bases reflecting management's best currently available
estimates and judgments of the future financial performance of the Company. In
addition, we have assumed that the Merger will be consummated in accordance with
the terms
<PAGE>
Members of the Board of Directors
June 14, 1999
Page 3
set forth in the Merger Agreement, including, among other things, that the
Merger will be accounted for as a "pooling-of-interests" business combination in
accordance with U.S. Generally Accepted Accounting Principles and the Merger
will be treated as a tax-free reorganization and/or exchange, each pursuant to
the Internal Revenue Code of 1986.
We have not made any independent valuation or appraisal of the assets or
liabilities of the Company nor have we been furnished with any such appraisals.
Our opinion is necessarily based on financial, economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof.
We have acted as financial advisor to the Board of Directors of the Company in
connection with this transaction and will receive a fee for our services. In the
past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for the Buyer and have received fees
for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of the Company, except that this opinion may be included in its
entirety in any filing made by the Company in respect of the transaction with
the Securities and Exchange Commission. In addition, this opinion does not in
any manner address the prices at which the Buyer Common Stock will trade
following consummation of the Merger and Morgan Stanley expresses no opinion or
recommendation as to how the shareholders of the Company should vote at the
shareholders' meeting held in connection with the Merger.
Based on and subject to the foregoing, we are of the opinion on the date hereof
that the consideration to be received pursuant to the Merger Agreement by the
holders of shares of Company Common Stock who hold such shares of Company Common
Stock immediately prior to the Merger is fair from a financial point of view to
such holders.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Charles R. Cory
-----------------------------------
Charles R. Cory
Managing Director
<PAGE>
ANNEX D
DISSENTERS RIGHTS UNDER
THE CALIFORNIA CORPORATIONS CODE
Set forth below is an excerpt from the California Corporations Code regarding
dissenter's rights
CALIFORNIA GENERAL CORPORATION LAW
CORPORATIONS CODE
TITLE 1. CORPORATIONS
DIVISION 1. GENERAL CORPORATION LAW
CHAPTER 13. DISSENTERS' RIGHTS
1300. Reorganization or short-form merger; dissenting shares; corporate
-----------------------------------------------------------------------
purchase at fair market value; definitions
- ------------------------------------------
(a) If the approval of the outstanding shares (Section 152) of a corporation
is required for a reorganization under subdivisions (a) and (b) or subdivision
(e) or (f) of Section 1201, each shareholder of the corporation entitled to vote
on the transaction and each shareholder of a subsidiary corporation in a short-
form merger may, by complying with this chapter, require the corporation in
which the shareholder holds shares to purchase for cash at their fair market
value the shares owned by the shareholder which are dissenting shares as defined
in subdivision (b). The fair market value shall be determined as of the day
before the first announcement of the terms of the proposed reorganization or
short-form merger, excluding any appreciation or depreciation in consequence of
the proposed action, but adjusted for any stock split, reverse stock split, or
share dividend which becomes effective thereafter.
(b) As used in this chapter, "dissenting shares" means shares which come
within all of the following descriptions:
(1) Which were not immediately prior to the reorganization or short-form
merger either (A) listed on any national securities exchange certified by the
Commissioner of Corporations under subdivision (o) of Section 25100 or (B)
listed on the list of OTC margin stocks issued by the Board of Governors of the
Federal Reserve System, and the notice of meeting of shareholders to act upon
the reorganization summarizes this section and Sections 1301, 1302, 1303 and
1304; provided, however, that this provision does not apply to any shares with
respect to which there exists any restriction on transfer imposed by the
corporation or by any law or regulation; and provided, further, that this
provision does not apply to any class of shares described in subparagraph (A)
or (B) if demands for payment are filed with respect to 5 percent or more of the
outstanding shares of that class.
(2) Which were outstanding on the date for the determination of shareholders
entitled to vote on the reorganization and (A) were not voted in favor of the
reorganization or, (B) if described in subparagraph (A) or (B) of paragraph
(1) (without regard to the provisos in that paragraph), were voted against the
reorganization, or which were held of record on the effective date of a
D-1
<PAGE>
short- form merger; provided, however, that subparagraph (A) rather than
subparagraph (B) of this paragraph applies in any case where the approval
required by Section 1201 is sought by written consent rather than at a meeting.
(3) Which the dissenting shareholder has demanded that the corporation
purchase at their fair market value, in accordance with Section 1301.
(4) Which the dissenting shareholder has submitted for endorsement, in
accordance with Section 1302.
(c) As used in this chapter, "dissenting shareholder" means the recordholder
of dissenting shares and includes a transferee of record.
1301. Notice to holders of dissenting shares in reorganizations; demand for
---------------------------------------------------------------------------
purchase; time; contents
- ------------------------
(a) If, in the case of a reorganization, any shareholders of a corporation
have a right under Section 1300, subject to compliance with paragraphs (3) and
(4) of subdivision (b) thereof, to require the corporation to purchase their
shares for cash, such corporation shall mail to each such shareholder a notice
of the approval of the reorganization by its outstanding shares (Section 152)
within 10 days after the date of such approval, accompanied by a copy of
Sections 1300, 1302, 1303, 1304 and this section, a statement of the price
determined by the corporation to represent the fair market value of the
dissenting shares, and a brief description of the procedure to be followed if
the shareholder desires to exercise the shareholder's right under such sections.
The statement of price constitutes an offer by the corporation to purchase at
the price stated any dissenting shares as defined in subdivision (b) of Section
1300, unless they lose their status as dissenting shares under Section 1309.
(b) Any shareholder who has a right to require the corporation to purchase the
shareholder's shares for cash under Section 1300, subject to compliance with
paragraphs (3) and (4) of subdivision (b) thereof, and who desires the
corporation to purchase such shares shall make written demand upon the
corporation for the purchase of such shares and payment to the shareholder in
cash of their fair market value. The demand is not effective for any purpose
unless it is received by the corporation or any transfer agent thereof (1) in
the case of shares described in clause (i) or (ii) of paragraph (1) of
subdivision (b) of Section 1300 (without regard to the provisos in that
paragraph), not later than the date of the shareholders' meeting to vote upon
the reorganization, or (2) in any other case within 30 days after the date on
which the notice of the approval by the outstanding shares pursuant to
subdivision (a) or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder.
(c) The demand shall state the number and class of the shares held of record
by the shareholder which the shareholder demands that the corporation purchase
and shall contain a statement of what such shareholder claims to be the fair
market value of those shares as of the day before the announcement of the
proposed reorganization or short-form merger. The statement of fair market
value constitutes an offer by the shareholder to sell the shares at such price.
D-2
<PAGE>
1302. Submission of share certificates for endorsement; uncertificated
----------------------------------------------------------------------
securities
- ----------
Within 30 days after the date on which notice of the approval by the
outstanding shares or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder, the shareholder shall submit to the corporation at
its principal office or at the office of any transfer agent thereof, (a) if the
shares are certificated securities, the shareholder's certificates representing
any shares which the shareholder demands that the corporation purchase, to be
stamped or endorsed with a statement that the shares are dissenting shares or to
be exchanged for certificates of appropriate denomination so stamped or endorsed
or (b) if the shares are uncertificated securities, written notice of the number
of shares which the shareholder demands that the corporation purchase. Upon
subsequent transfers of the dissenting shares on the books of the corporation,
the new certificates, initial transaction statement, and other written
statements issued therefor shall bear a like statement, together with the name
of the original dissenting holder of the shares.
1303. Payment of agreed price with interest; agreement fixing fair market
-------------------------------------------------------------------------
value; filing; time of payment
- ------------------------------
(a) If the corporation and the shareholder agree that the shares are
dissenting shares and agree upon the price of the shares, the dissenting
shareholder is entitled to the agreed price with interest thereon at the legal
rate on judgments from the date of the agreement. Any agreements fixing the
fair market value of any dissenting shares as between the corporation and the
holders thereof shall be filed with the secretary of the corporation.
(b) Subject to the provisions of Section 1306, payment of the fair market
value of dissenting shares shall be made within 30 days after the amount thereof
has been agreed or within 30 days after any statutory or contractual conditions
to the reorganization are satisfied, whichever is later, and in the case of
certificated securities, subject to surrender of the certificates therefor,
unless provided otherwise by agreement.
1304. Action to determine whether shares are dissenting shares or fair market
-----------------------------------------------------------------------------
value; limitation; joinder; consolidation; determination of issues; appointment
- -------------------------------------------------------------------------------
of appraisers
- -------------
(a) If the corporation denies that the shares are dissenting shares, or the
corporation and the shareholder fail to agree upon the fair market value of the
shares, then the shareholder demanding purchase of such shares as dissenting
shares or any interested corporation, within six months after the date on which
notice of the approval by the outstanding shares (Section 152) or notice
pursuant to subdivision (i) of Section 1110 was mailed to the shareholder, but
not thereafter, may file a complaint in the superior court of the proper county
praying the court to determine whether the shares are dissenting shares or the
fair market value of the dissenting shares or both or may intervene in any
action pending on such a complaint.
(b) Two or more dissenting shareholders may join as plaintiffs or be joined as
defendants in any such action and two or more such actions may be consolidated.
(c) On the trial of the action, the court shall determine the issues. If the
status of the shares as dissenting shares is in issue, the court shall first
determine that issue. If the fair market value of
D-3
<PAGE>
the dissenting shares is in issue, the court shall determine, or shall appoint
one or more impartial appraisers to determine, the fair market value of the
shares.
1305. Report of appraisers; confirmation; determination by court; judgment;
---------------------------------------------------------------------------
payment; appeal; costs
- ----------------------
(a) If the court appoints an appraiser or appraisers, they shall proceed
forthwith to determine the fair market value per share. Within the time fixed
by the court, the appraisers, or a majority of them, shall make and file a
report in the office of the clerk of the court. Thereupon, on the motion of any
party, the report shall be submitted to the court and considered on such
evidence as the court considers relevant. If the court finds the report
reasonable, the court may confirm it.
(b) If a majority of the appraisers appointed fail to make and file a report
within 10 days from the date of their appointment or within such further time as
may be allowed by the court or the report is not confirmed by the court, the
court shall determine the fair market value of the dissenting shares.
(c) Subject to the provisions of Section 1306, judgment shall be rendered
against the corporation for payment of an amount equal to the fair market value
of each dissenting share multiplied by the number of dissenting shares which any
dissenting shareholder who is a party, or who has intervened, is entitled to
require the corporation to purchase, with interest thereon at the legal rate
from the date on which judgment was entered.
(d) Any such judgment shall be payable forthwith with respect to
uncertificated securities and, with respect to certificated securities, only
upon the endorsement and delivery to the corporation of the certificates for the
shares described in the judgment. Any party may appeal from the judgment.
(e) The costs of the action, including reasonable compensation to the
appraisers to be fixed by the court, shall be assessed or apportioned as the
court considers equitable, but, if the appraisal exceeds the price offered by
the corporation, the corporation shall pay the costs (including in the
discretion of the court attorneys' fees, fees of expert witnesses and interest
at the legal rate on judgments from the date of compliance with Sections 1300,
1301 and 1302 if the value awarded by the court for the shares is more than 125
percent of the price offered by the corporation under subdivision (a) of Section
1301).
1306. Prevention of immediate payment; status as creditors; interest
--------------------------------------------------------------------
To the extent that the provisions of Chapter 5 prevent the payment to any
holders of dissenting shares of their fair market value, they shall become
creditors of the corporation for the amount thereof together with interest at
the legal rate on judgments until the date of payment, but subordinate to all
other creditors in any liquidation proceeding, such debt to be payable when
permissible under the provisions of Chapter 5.
D-4
<PAGE>
1307. Dividends on dissenting shares
------------------------------------
Cash dividends declared and paid by the corporation upon the dissenting shares
after the date of approval of the reorganization by the outstanding shares
(Section 152) and prior to payment for the shares by the corporation shall be
credited against the total amount to be paid by the corporation therefor.
1308. Rights of dissenting shareholders pending valuation; withdrawal of
------------------------------------------------------------------------
demand for payment
- ------------------
Except as expressly limited in this chapter, holders of dissenting shares
continue to have all the rights and privileges incident to their shares, until
the fair market value of their shares is agreed upon or determined. A
dissenting shareholder may not withdraw a demand for payment unless the
corporation consents thereto.
1309. Termination of dissenting share and shareholder status
------------------------------------------------------------
Dissenting shares lose their status as dissenting shares and the holders
thereof cease to be dissenting shareholders and cease to be entitled to require
the corporation to purchase their shares upon the happening of any of the
following:
(a) The corporation abandons the reorganization. Upon abandonment of the
reorganization, the corporation shall pay on demand to any dissenting
shareholder who has initiated proceedings in good faith under this chapter all
necessary expenses incurred in such proceedings and reasonable attorneys' fees.
(b) The shares are transferred prior to their submission for endorsement in
accordance with Section 1302 or are surrendered for conversion into shares of
another class in accordance with the articles.
(c) The dissenting shareholder and the corporation do not agree upon the
status of the shares as dissenting shares or upon the purchase price of the
shares, and neither files a complaint or intervenes in a pending action as
provided in Section 1304, within six months after the date on which notice of
the approval by the outstanding shares or notice pursuant to subdivision (i) of
Section 1110 was mailed to the shareholder.
(d) The dissenting shareholder, with the consent of the corporation, withdraws
the shareholder's demand for purchase of the dissenting shares.
1310. Suspension of right to compensation or valuation proceedings; litigation
------------------------------------------------------------------------------
of shareholders' approval
- -------------------------
If litigation is instituted to test the sufficiency or regularity of the votes
of the shareholders in authorizing a reorganization, any proceedings under
Sections 1304 and 1305 shall be suspended until final determination of such
litigation.
D-5
<PAGE>
1311. Exempt shares
-------------------
This chapter, except Section 1312, does not apply to classes of shares whose
terms and provisions specifically set forth the amount to be paid in respect to
such shares in the event of a reorganization or merger.
1312. Right of dissenting shareholder to attack, set aside or rescind merger
----------------------------------------------------------------------------
or reorganization; restraining order or injunction; conditions
- --------------------------------------------------------------
(a) No shareholder of a corporation who has a right under this chapter to
demand payment of cash for the shares held by the shareholder shall have any
right at law or in equity to attack the validity of the reorganization or short-
form merger, or to have the reorganization or short-form merger set aside or
rescinded, except in an action to test whether the number of shares required to
authorize or approve the reorganization have been legally voted in favor
thereof; but any holder of shares of a class whose terms and provisions
specifically set forth the amount to be paid in respect to them in the event of
a reorganization or short-form merger is entitled to payment in accordance with
those terms and provisions or, if the principal terms of the reorganization are
approved pursuant to subdivision (b) of Section 1202, is entitled to payment in
accordance with the terms and provisions of the approved reorganization.
(b) If one of the parties to a reorganization or short-form merger is directly
or indirectly controlled by, or under common control with, another party to the
reorganization or short-form merger, subdivision (a) shall not apply to any
shareholder of such party who has not demanded payment of cash for such
shareholder's shares pursuant to this chapter; but if the shareholder institutes
any action to attack the validity of the reorganization or short- form merger or
to have the reorganization or short-form merger set aside or rescinded, the
shareholder shall not thereafter have any right to demand payment of cash for
the shareholder's shares pursuant to this chapter. The court in any action
attacking the validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded shall not restrain or
enjoin the consummation of the transaction except upon 10 days' prior notice to
the corporation and upon a determination by the court that clearly no other
remedy will adequately protect the complaining shareholder or the class of
shareholders of which such shareholder is a member.
(c) If one of the parties to a reorganization or short-form merger is directly
or indirectly controlled by, or under common control with, another party to the
reorganization or short-form merger, in any action to attack the validity of the
reorganization or short-form merger or to have the reorganization or short- form
merger set aside or rescinded, (1) a party to a reorganization or short- form
merger which controls another party to the reorganization or short-form merger
shall have the burden of proving that the transaction is just and reasonable as
to the shareholders of the controlled party, and (2) a person who controls two
or more parties to a reorganization shall have the burden of proving that the
transaction is just and reasonable as to the shareholders of any party so
controlled.
D-6
<PAGE>
PART II
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
for, among other things:
a. permissive indemnification for expenses, judgments, fines and amounts
paid in settlement actually and reasonably incurred by designated persons,
including directors and officers of a corporation, in the event such persons are
parties to litigation other than stockholder derivative actions if certain
conditions are met;
b. permissive indemnification for expenses actually and reasonably
incurred by designated persons, including directors and officers of a
corporation, in the event such persons are parties to stockholder derivative
actions if certain conditions are met;
c. mandatory indemnification for expenses actually and reasonably
incurred by designated persons, including directors and officers of a
corporation, in the event such persons are successful on the merits or otherwise
in litigation covered by a. and b. above; and
d. that the indemnification provided for by Section 145 shall not be
deemed exclusive of any other rights which may be provided under any by-law,
agreement, stockholder or disinterested director vote, or otherwise.
Unisys' Certificate of Incorporation provides that a director shall not be
personally liable to Unisys or its stockholders for monetary damages for breach
of fiduciary duty as a director except for liability (i) for any breach of the
director's duty of loyalty to Unisys or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for paying a dividend or approving a stock repurchase in
violation of Section 174 of the DGCL or (iv) for any transaction from which the
director derived an improper personal benefit.
The Certificate of Incorporation also provides that each person who was or
is made a party to, or is involved in, any action, suit or proceeding by reason
of the fact that he or she is or was a director or officer of Unisys (or was
serving at the request of Unisys as a director, officer, employee or agent for
another entity) shall be indemnified and held harmless by Unisys, to the fullest
extent authorized by the DGCL, as in effect (or, to the extent indemnification
is broadened, as it may be amended) against all expense, liability or loss
reasonably incurred by such person in connection therewith. The Certificate of
Incorporation further provides that such rights to indemnification are contract
rights and shall include the right to be paid by Unisys the expenses incurred in
defending the proceedings specified above, in advance of their final
disposition, provided that, if the DGCL so requires, such payment shall only be
made upon delivery to Unisys by the indemnified party of an undertaking to repay
all amounts so advanced if it shall ultimately be determined that the person
receiving such payment is not entitled to be indemnified. Persons so
indemnified may bring suit against Unisys to recover unpaid amounts claimed
thereunder, and if such suit is successful, the expense of bringing such suit
shall be reimbursed by Unisys. The Certificate of Incorporation provides that
the right to indemnification and to the advance payment of expenses shall not be
exclusive of any other right which any person may have or acquire under any
statute, provision of Unisys's Certificate of Incorporation or by-laws, or
otherwise. By resolution effective September 16, 1986, the Unisys board of
Directors extended the right to indemnification provided directors and officers
by the Certificate of Incorporation to employees of Unisys. The Certificate of
Incorporation also provides that Unisys may maintain insurance, at its expense,
to protect itself and any of its directors, officers, employees or agents
against any expense, liability or loss, whether or not Unisys would have the
power to indemnify such person against such expense, liability or loss under the
DGCL.
On April 28, 1988, at Unisys' 1988 Annual Meeting of Stockholders, the
stockholders authorized Unisys to enter into indemnification agreements
("Indemnification Agreements") with its directors, and such Indemnification
Agreements have been executed with each of the Directors of Unisys. The
Indemnification Agreements provide that Unisys shall, except in certain
situations specified below, indemnify a director against any
II-1
<PAGE>
expense, liability or loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid in settlement) incurred by the
director in connection with any actual or threatened action, suit or proceeding
(including derivative suits) in which the director may be involved as a party or
otherwise, by reason of the fact that the director is or was serving in one or
more capacities as a director or officer of Unisys or, at the request of Unisys,
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other entity or enterprise.
The Indemnification Agreements require indemnification except to the extent
(i) payment for any liability is made under an insurance policy provided by
Unisys, (ii) indemnification is provided by Unisys under the Certificate of
Incorporation or by-laws, the DGCL or otherwise than pursuant to the
Indemnification Agreement, (iii) the liability is based upon or attributable to
the director gaining any personal pecuniary profit to which such director is not
legally entitled or is determined to result from the director's knowingly
fraudulent, dishonest or willful misconduct, (iv) the liability arises out of
the violation of certain provisions of the Securities Exchange Act of 1934 or
(v) indemnification has been determined not to be permitted by applicable law.
The Indemnification Agreements further provide that, in the event of a
Potential Change in Control (as defined therein), Unisys shall cause to be
maintained any then existing policies of directors' and officers' liability
insurance for a period of six years from the date of a Change in Control (as
defined therein) with coverage at least comparable to and in the same amounts as
that provided by such policies in effect immediately prior to such Potential
Change in Control. In the event of a Potential Change in Control, the
Indemnification Agreements also provide for the establishment by Unisys of a
trust (the "Trust"), for the benefit of each director, upon the written request
by the director. The Trust shall be funded by Unisys in amounts sufficient to
satisfy any and all liabilities reasonably anticipated at the time of such
request, as agreed upon by the director and Unisys.
The Indemnification Agreements also provide that no legal actions may be
brought by or on behalf of Unisys, or any affiliate of Unisys, against a
director after the expiration of two years from the date of accrual of such
cause of action, and that any claim or cause of action of Unisys or its
affiliate shall be extinguished and deemed released unless asserted by the
timely filing of a legal action within such two year period.
The directors and officers of Unisys are insured against certain civil
liabilities, including liabilities under federal securities laws, which might be
incurred by them in such capacity.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
Exhibit No. Description
- ----------- -----------
2.1 Agreement and Plan of Merger, dated as of June 14, 1999, among
PulsePoint Communications, Shellco Inc. and Unisys Corporation
(included in the Proxy Statement/Prospectus as Annex A)
3.1 Restated Certificate of Incorporation of Unisys Corporation
(incorporated by reference to Exhibit 4.1 to the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1997)
3.2 Certificate of Amendment of Restated Certificate of Incorporation
dated April 24, 1998 (incorporated by reference to Exhibit 4.4 to
the Registrant's Registration Statement on Form S-3 (Registration
No. 333-51885))
3.3 By-laws of Unisys Corporation (incorporated by reference to
Exhibit 3 to the Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 1995)
II-2
<PAGE>
4.1 Form of Rights Agreement dated as of March 7, 1986 between
Burroughs Corporation and Harris Trust Company of New York, as
Rights Agent (incorporated by reference to Exhibit 1 to the
Registrant's Registration Statement on Form 8-A, dated March 11,
1986)
4.2 Amendment No. 1 to Rights Agreement dated as of February 22, 1996
(incorporated by reference to Exhibit 4 to the Registrant's
Current Report on Form 8-K dated February 22, 1996)
5 Opinion of Harold S. Barron, Senior Vice President, General
Counsel and Secretary of Unisys Corporation
8.1 Opinion of Fried, Frank, Harris, Shriver & Jacobson
8.2 Opinion of Latham & Watkins
23.1 Consent of Ernst & Young LLP (independent auditors for Unisys
Corporation)
23.2 Consent of Ernst & Young LLP (independent auditors for PulsePoint
Communications)
23.3 Consent of Harold S. Barron (included in Exhibit 5)
23.4 Consent of Fried, Frank, Harris, Shriver & Jacobson (included in
Exhibit 8.1)
23.5 Consent of Latham & Watkins (included in Exhibit 8.2)
23.6 Consent of Morgan Stanley & Co., Incorporated
24 Power of Attorney (included on the signature page of this
Registration Statement)
99 Form of proxy for the Special Meeting of Shareholders of
PulsePoint Communications
(b) Financial Statement Schedules included in the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1998 are
incorporated herein by reference.
All other schedules are omitted because they are not applicable
or the required information is shown in the consolidated
financial statements or notes thereto that are incorporated
herein by reference.
ITEM 22. UNDERTAKINGS.
(A) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) under the Securities
Act, if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this
registration statement or any material change to such
information in this Registration Statement; provided,
however, that the undertakings set forth in paragraphs
(1)(i)
II-3
<PAGE>
and (ii) above do not apply if the information required to
be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") that
are incorporated by reference in this registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(B) The undersigned Registrant hereby undertakes, that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(C) The undersigned Registrant hereby undertakes:
(1) That, prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
Registration Statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the issuer undertakes
that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements
of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of
an amendment to the Registration Statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(D) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(E) The undersigned Registrant hereby undertakes:
(1) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, 13 of
this Form S-4, within one business day of receipt of such request, and
to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
II-4
<PAGE>
(2) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the Registration
Statement when it became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Township of
Whitpain, Commonwealth of Pennsylvania, on July 26, 1999.
UNISYS CORPORATION
By: /s/ Lawrence A. Weinbach
-----------------------------------------------
Lawrence A. Weinbach
Chairman, President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
Harold S. Barron, Robert H. Brust, Angus F. Smith and Lawrence A. Weinbach, and
each of them, with full power of substitution and full power to act without the
other, his or her true and lawful attorney-in-fact and agent in his or her name,
place and stead, to execute in the name and on behalf of such person,
individually and in each capacity stated below, any and all amendments
(including post-effective amendments) to this Registration Statement, any
registration statements on Form 462(b) and all documents relating thereto, and
to file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, and generally to do all
such things in his or her name and on his or her behalf in his or her respective
capacities as officers or directors of Unisys Corporation to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities on July 26, 1999.
Signature Title
- ---------------------------------- -----------------------------------------
/s/ Lawrence A. Weinbach Chairman, President and Chief Executive
- ----------------------------------
Lawrence A. Weinbach Officer (principal executive officer) and
Director
/s/ Robert H. Brust Senior Vice President and Chief Financial
- ----------------------------------
Robert H. Brust Officer
(principal financial officer)
/s/ Janet M. Brutschea Haugen Vice President and Controller
- ----------------------------------
Janet M. Brutschea Haugen (principal accounting officer)
/s/ J.P. Bolduc Director
- ----------------------------------
J.P. Bolduc
/s/ James J. Duderstadt Director
- ----------------------------------
James J. Duderstadt
/s/ Henry C. Duques Director
- ----------------------------------
Henry C. Duques
II-6
<PAGE>
Signature Title
- ---------------------------------- ----------------------------------------
/s/ Gail D. Fosler Director
- ----------------------------------
Gail D. Fosler
/s/ Melvin R. Goodes Director
- ----------------------------------
Melvin R. Goodes
/s/ Edwin A. Huston Director
- ----------------------------------
Edwin A. Huston
/s/ Kenneth A. Macke Director
- ----------------------------------
Kenneth A. Macke
/s/ Theodore E. Martin Director
- ----------------------------------
Theodore E. Martin
/s/ Robert McClements, Jr. Director
- ----------------------------------
Robert McClements, Jr.
II-7
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
2.1 Agreement and Plan of Merger, dated as of June 14, 1999, among
PulsePoint Communications, Shellco Inc. and Unisys Corporation
(included in the Proxy Statement/Prospectus as Annex A)
3.1 Restated Certificate of Incorporation of Unisys Corporation
(incorporated by reference to Exhibit 4.1 to the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1997)
3.2 Certificate of Amendment of Restated Certificate of Incorporation
dated April 24, 1998 (incorporated by reference to Exhibit 4.4 to
the Registrant's Registration Statement on Form S-3 (Registration
No. 333-51885)
3.3 By-laws of Unisys Corporation (incorporated by reference to
Exhibit 3 to the Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 1995)
4.1 Form of Rights Agreement dated as of March 7, 1986 between
Burroughs Corporation and Harris Trust Company of New York, as
Rights Agent (incorporated by reference to Exhibit 1 to the
Registrant's Registration Statement on Form 8-A, dated March 11,
1986)
4.2 Amendment No. 1 to Rights Agreement dated as of February 22, 1996
(incorporated by reference to Exhibit 4 to the Registrant's
Current Report on Form 8-K dated February 22, 1996)
5 Opinion of Harold S. Barron, Senior Vice President, General
Counsel and Secretary of Unisys Corporation
8.1 Opinion of Fried, Frank, Harris, Shriver & Jacobson
8.2 Opinion of Latham & Watkins
23.1 Consent of Ernst & Young LLP (independent auditors for Unisys
Corporation)
23.2 Consent of Ernst & Young LLP (independent auditors for PulsePoint
Communications)
23.3 Consent of Harold S. Barron (included in Exhibit 5)
23.4 Consent of Fried, Frank, Harris, Shriver & Jacobson (included in
Exhibit 8.1)
23.5 Consent of Latham & Watkins (included in Exhibit 8.2)
23.6 Consent of Morgan Stanley & Co., Incorporated
24 Power of Attorney (included on the signature page of this
Registration Statement)
99 Form of proxy for the Special Meeting of Shareholders of
PulsePoint Communications
(b) Financial Statement Schedules included in the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1998 is
incorporated herein by reference.
All other schedules are omitted because they are not applicable
or the required information is shown in the consolidated
financial statements or notes thereto that are incorporated
herein by reference.
<PAGE>
Exhibit 5
July 26, 1999
Unisys Corporation
Unisys Way
P. O. Box 500
Blue Bell, PA 19424
RE: Registration Statement on Form S-4
Gentlemen:
I am the Senior Vice President, General Counsel and Secretary of Unisys
Corporation, a Delaware corporation (the "Company"). I have represented the
Company, with assistance from attorneys under my supervision in the Company's
Office of the General Counsel (the "Unisys Attorneys"), in connection with the
preparation of a Registration Statement on Form S-4 (the "Registration
Statement") registering 2,364,135 shares (the "Shares") of the Company's common
stock, par value $.01 per share, and associated preferred share purchase rights,
under the Securities Act of 1933, as amended (the "Act"), to be issued in
connection with the Company's acquisition of PulsePoint Communications.
In connection with this opinion, I, or the Unisys Attorneys, have reviewed (a)
the Registration Statement, (b) the Company's Certificate of Incorporation and
(c) the Company's By-laws. In addition, I, or the Unisys Attorneys, have
examined such corporate records of the Company, such certificates of public
officials, officers and representatives of the Company and such other
certificates and instruments and have made such investigations of law as I or
they have deemed appropriate for purposes of giving the opinions hereinafter
expressed.
Based upon the foregoing, I am of the opinion that the Shares, when issued as
described in the Registration Statement, will be validly issued, fully paid and
non-assessable.
I hereby consent to the filing of this opinion as Exhibit 5 to the Registration
Statement and to the reference to me under the caption "Legal Matters" in the
prospectus contained therein. In giving such consent, I do not thereby admit
that I am an expert with respect to any part of the Registration Statement,
including this exhibit, within the meaning of the term "expert" as used in the
Act or the rules and regulations issued thereunder.
This opinion is limited to the General Corporation Law of the State of Delaware.
Very truly yours,
/s/ Harold S. Barron
Harold S. Barron
<PAGE>
Exhibit 8.1
[Letterhead of Fried, Frank, Harris, Shriver & Jacobson]
July 27, 1999
Unisys Corporation
Unisys Way
Blue Bell, Pennsylvania 19424
Ladies and Gentlemen:
We are acting as your counsel in connection with the acquisition by Unisys
Corporation ("Unisys") of Pulsepoint Communications ("Pulsepoint") pursuant to
the proposed merger (the "Merger") of Shellco Inc., a wholly-owned subsidiary of
Unisys ("Merger Sub"), into Pulsepoint, with Pulsepoint surviving the Merger.
The Merger will be consummated pursuant to the Agreement and Plan of Merger
dated as of June 14, 1999 by and among Unisys, Merger Sub and Pulsepoint (the
"Merger Agreement"). For purposes of this opinion, capitalized terms used and
not otherwise defined herein shall have the meaning ascribed thereto in the
Merger Agreement.
Unisys has filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "1933 Act"), a registration statement on
Form S-4 (the "Registration Statement"), with respect to the common shares of
Unisys to be issued to holders of shares of common stock of Pulsepoint in
connection with the Merger. In addition, Unisys has prepared, and we have
reviewed, a Joint Proxy Statement/Prospectus which is contained in and made a
part of the Registration Statement (the "Joint Proxy Statement"), and the
Appendices thereto, including the Merger Agreement. In rendering the opinion set
forth below, we have relied upon the facts stated in the Joint Proxy Statement
and upon such other documents as we have deemed appropriate, including the
representations of Unisys and Pulsepoint referred to in the Joint Proxy
Statement and set forth in certain officer's certificates from Unisys and
Pulsepoint.
We have assumed that (i) all parties to the Merger Agreement, and to any
other documents reviewed by us, have acted, and will act, in accordance with the
terms of the Merger Agreement and such other documents, (ii) all facts,
information, statements and representations qualified by the knowledge and/or
belief of Unisys, Pulsepoint or Merger Sub will be complete and accurate as of
the effective time as though not so qualified, (iii) the Merger will be
consummated at the effective time pursuant to the terms and conditions set
<PAGE>
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
Unisys Corporation
July 27, 1999
Page 2
forth in the Merger Agreement without the waiver or modification of any such
terms and conditions, and (iv) the Merger is authorized by and will be effected
pursuant to applicable state law.
Based upon and subject to the foregoing, and to the qualifications,
limitations, representations and assumptions contained in the portion of the
Joint Proxy Statement captioned "Material Federal Income Tax Consequences," and
in certain officer's certificates from Unisys and Pulsepoint, the portion of the
Joint Proxy Statement captioned "Material Federal Income Tax Consequences"
represents our opinion as to the material U.S. federal income tax consequences
of the Merger under applicable law. No opinion is expressed on any matters other
than those specifically referred to herein.
This opinion is furnished to you for use in connection with the
Registration Statement and may not be used for any other purpose without our
prior express written consent. We hereby consent to the filing of this opinion
as an exhibit to the Registration Statement and to the use of our name in that
portion of the Joint Proxy Statement captioned "Material Federal Income Tax
Consequences." In giving such consent, we do not thereby admit that we are in
the category of persons whose consent is required under Section 7 of the 1933
Act.
Very truly yours,
FRIED, FRANK, HARRIS,
SHRIVER & JACOBSON
/s/ Fried, Frank, Harris, Shriver & Jacobson
____________________________________________
<PAGE>
Exhibit 8.2
[Letterhead of Latham & Watkins]
July 27, 1999
(File No. 025611-2)
PulsePoint Communications
6307 Carpinteria Avenue
Carpinteria, California 93103
Re: Tax Consequences of Merger of PulsePoint Communications
and Unisys Corporation
-------------------------------------------------------
Gentlemen:
You have requested our opinion with respect to certain federal income tax
consequences of the proposed merger and reorganization (the "Merger") pursuant
to the Agreement and Plan of Merger, dated as of June 14, 1999 (the
"Agreement"), among PulsePoint Communications, a California corporation
("PulsePoint"), Unisys Corporation, a Delaware corporation ("Unisys"), and
Shellco Inc., a California corporation and wholly-owned subsidiary of Unisys
("Sub"). Specifically, you have requested our opinion as to whether, for federal
income tax purposes, the Merger qualifies as a reorganization within the meaning
of section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
to which each of PulsePoint, Unisys and Sub will be a party within the meaning
of Section 368(b) of the Code. This opinion is being furnished pursuant to
Section 7.3(e) of the Agreement. For purposes of this opinion, all capitalized
terms, unless otherwise specified, have the meanings assigned to them in the
Agreement.
In rendering our opinion, we have examined and relied upon the accuracy and
completeness of the facts, information, statements and representations contained
in the Agreement and in the Form S-4 Registration Statement/Proxy
Statement/Prospectus (the "Proxy Statement") filed by Unisys with respect to the
Merger. In connection with this opinion, we have also relied upon statements and
representations made to us via certificates by Unisys, Sub and PulsePoint with
respect to certain factual matters (the "Certificates"), which statements and
representations
<PAGE>
LATHAM & WATKINS
PulsePoint Communications
July 27, 1999
Page 2
we have neither investigated nor verified. The opinions expressed herein are
conditioned on the initial and continuing accuracy of the facts, information,
statements and representations set forth in the documents, the Certificates and
filings referred to above. We have assumed that all such facts, information,
statements and representations qualified by the knowledge and belief of Unisys,
PulsePoint or Sub will be complete and accurate as of the Effective Time as
though not so qualified. In our examination, we have assumed the genuineness of
all signatures, the conformity to original documents of all documents submitted
to us as certified or photostatic copies and the authenticity of the originals
of such documents.
We hereby consent to the use of our name under the caption "Material Federal
Income Tax Consequences" in the Proxy Statement and to the filing of this
opinion with the Securities and Exchange Commission as an exhibit to the Proxy
Statement. In giving such consent, we do not admit that we are within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended.
In rendering our opinion, we have considered the applicable provisions of the
Code, the Treasury Regulations promulgated thereunder, pertinent judicial
authorities and published rulings and other pronouncements of the Internal
Revenue Service, all as of the date hereof. We express no opinion as to the tax
consequences of the Merger under any laws other than the federal income tax laws
of the United States.
We have assumed that (i) all parties to the Agreement, and to any other
documents reviewed by us, have acted, and will act, in accordance with the terms
of the Agreement and such other documents, (ii) the Merger will be consummated
at the Effective Time pursuant to the terms and conditions set forth in the
Agreement without the waiver or modification of any such terms and conditions,
and (iii) the Merger is authorized by and will be effected pursuant to
applicable state law.
Based solely on and subject to (a) the qualifications and limitations set
forth herein, and (b) the qualifications, limitations, representations and
assumptions contained in the portion of the Proxy Statement captioned "Material
Federal Income Tax Consequences" and in the Certificates, the statements in the
Proxy Statement set forth under the caption "Material Federal Income Tax
Consequences" represents our opinion as to the material United States federal
income tax consequences of the Merger under applicable law. No opinion is
expressed on any matters other than those specifically referred to herein.
Except as set forth above, we express no other opinion as to the tax
consequences of the Merger and related transactions to any party under federal,
state, local or foreign laws. Our opinion is not binding on the Internal Revenue
Service or the courts, and there is no assurance that the Internal Revenue
Service will not assert a contrary position. Furthermore, no assurance can be
given that future legislative, judicial or administrative changes, on either a
prospective or
<PAGE>
LATHAM & WATKINS
PulsePoint Communications
July 27, 1999
Page 3
retroactive basis, would not adversely affect the accuracy of the conclusions
herein. If all of the transactions described in the Agreement are not
consummated in accordance with the terms of such Agreement or if all of the
representations, warranties, statements and assumptions upon which we relied are
not true and accurate at all relevant times, our opinion might be adversely
affected and may not be relied upon.
We are furnishing this opinion solely to PulsePoint and its shareholders in
connection with the Merger, and this opinion is not to be relied upon by any
other person for any other purpose.
Very truly yours,
/s/ Latham & Watkins
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in this
Registration Statement (Form S-4) of Unisys Corporation related to the merger of
Unisys Corporation and PulsePoint Communications and to the incorporation by
reference therein of our report dated January 14, 1999 (except for the fourth
paragraph of Note 16 as to which the date is January 21, 1999), with respect to
the consolidated financial statements of Unisys Corporation, as amended,
incorporated by reference in its Annual Report on Form 10-K for the year ended
December 31, 1998, as amended on Forms 10-K/A dated June 28, 1999 and July 14,
1999, and the related financial statement schedule included therein, filed with
the Securities and Exchange Commission.
Ernst & Young LLP
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
July 26, 1999
<PAGE>
Exhibit 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in this
Registration Statement (Form S-4) of Unisys Corporation related to the merger of
Unisys Corporation and PulsePoint Communications and to the incorporation by
reference therein of our report dated January 28, 1999 with respect to the
consolidated financial statements of PulsePoint Communications included in its
Annual Report on Form 10-K for the year ended December 31, 1998, filed with the
Securities and Exchange Commission.
Our audits also included the financial data schedule listed in Item 14(a) of
the Form 10-K referred to above. This schedule is the responsibility of the
management of PulsePoint Communications. Our responsibility is to express an
opinion based on our audits. In our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the information set
forth therein.
Ernst & Young LLP
/s/ Ernst & Young LLP
Woodland Hills, California
July 26, 1999
<PAGE>
Exhibit 23.6
[MORGAN STANLEY & CO. INCORPORATED]
We hereby consent to the use in the Registration Statement of Unisys Corporation
on Form S-4 and in the Proxy Statement/Prospectus of Unisys Corporation and
PulsePoint Communications, which is part of the Registration Statement, of our
opinion dated June 14, 1999 appearing as Annex C to such Proxy
Statement/Prospectus, to the description therein of such opinion and to the
references therein to our name. In giving the foregoing consent, we do not admit
that we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended (the "Securities Act"), or
the rules and regulations promulgated thereunder, nor do we admit that we are
experts with respect to any part of such Registration Statement within the
meaning of the term "experts" as used in the Securities Act or the rules and
regulations promulgated thereunder.
MORGAN STANLEY & CO.
INCORPORATED
By: /s/ Michael F.Wyatt
---------------------------
Michael F. Wyatt
Vice President
New York, New York
July 26, 1999
<PAGE>
PULSEPOINT COMMUNICATIONS
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
To Be Held On August 26, 1999
THIS PROXY IS SOLICITED BY THE PULSEPOINT BOARD OF DIRECTORS.
The undersigned shareholder of PulsePoint Communications hereby appoints
Mark C. Ozur and B. Robert Suh, or either of them, to represent the undersigned
at the special meeting of PulsePoint shareholders to be held on August 26,
1999, at 10:00 a.m. (Pacific time), at 6307 Carpinteria Avenue, Carpinteria,
California, and at any adjournments or postponements thereof, and to vote the
number of shares the undersigned would be entitled to vote if personally
present at the meeting on the matters listed below.
When properly executed, this proxy will be voted in the manner directed
herein by the undersigned shareholder and in the discretion of the proxy holder
as to any other matter that may come before the special meeting of shareholders
and at any adjournment or postponement thereof. If no direction is given, this
proxy will be voted "FOR" the merger proposal and in the discretion of the
proxy holder as to any other matter that may properly come before the special
meeting of shareholders or any adjournments or postponements thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE URGED TO COMPLETE,
DATE, AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE MERGER.
<PAGE>
1. Proposal to approve and adopt the Agreement and Plan of Merger, dated as of
June 14, 1999 among Unisys Corporation, Shellco Inc. and PulsePoint
Communications pursuant to which Shellco Inc., a wholly owned subsidiary of
Unisys Corporation, will be merged into PulsePoint Communications and the
transactions contemplated thereby. After the merger PulsePoint will be a
subsidiary of Unisys.
[_] FOR [_] AGAINST [_] ABSTAIN
The undersigned acknowledges
receipt of the notice of the
PulsePoint special shareholder
meeting and the Proxy
Statement/Prospectus relating to
the PulsePoint special meeting.
Dated: _______________________, 1999
____________________________________
Number of Shares of Common Stock
____________________________________
Signature (and title if applicable)
____________________________________
Signature (if held jointly)
Please sign your name exactly as it
appears on your stock certificate.
When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If
a corporation, please sign in full
corporate name by the President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
