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EXHIBIT A
AGREEMENT OF MERGER
AGREEMENT OF MERGER ("Agreement"), dated as of May 22, 2000, by and
among BMC Software, Inc., a Delaware corporation ("BMC"), Hansen Acquisitions
Ltd., an Israeli corporation and a wholly owned subsidiary of BMC ("Merger
Sub"), and OptiSystems Solutions, Ltd., an Israeli corporation ("OptiSystems").
W I T N E S S E T H:
WHEREAS, BMC, Merger Sub and OptiSystems intend to effect a merger of
Merger Sub into OptiSystems (the "Merger") in accordance with this Agreement and
the Israeli Companies Law-5759-1999 (the "Companies Law") pursuant to which
Merger Sub will cease to exist, and OptiSystems will become a wholly owned
subsidiary of BMC;
WHEREAS, the respective boards of directors of BMC, Merger Sub and
OptiSystems deem the Merger desirable and in the best interests of their
respective corporations and their respective stockholders, and have proposed,
declared advisable, and approved the Merger pursuant to this Agreement, which
has been duly approved by resolutions of the respective boards of directors of
BMC, Merger Sub and OptiSystems;
WHEREAS, in order to induce BMC to enter into this Agreement and to
consummate the Merger, concurrently with the execution and delivery of this
Agreement: Noah Perlman and Gerry Frankel (collectively, the "Stock Option
Shareholders") have entered into Stock Option Agreements (the "Stock Option
Agreements") with BMC; and
WHEREAS, in order to induce BMC to enter into this Agreement and to
consummate the Merger, concurrently with the execution and delivery of this
Agreement: Noah Perlman and Gerry Frankel (collectively, the "Significant
OptiSystems Shareholders") are delivering certain undertakings to BMC (the
"OptiSystems Shareholder Undertakings").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, and in order to set forth the terms
and conditions of the Merger, the mode of carrying the same into effect, the
manner and basis of converting the rights of the current holders of the
presently outstanding ordinary shares, par value NIS 0.05 per share (the
"OptiSystems Shares"), of OptiSystems into the right to receive the Merger
Consideration (as defined herein), and such other details and provisions as are
deemed necessary or proper, the parties hereto agree as follows:
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ARTICLE I
MERGER
1.1. The Merger. Subject to and in accordance with the terms and
conditions of this Agreement, at the Effective Time (as hereinafter defined)
Merger Sub (as the target company (Chevrat Ha'Yaad) in the Merger) shall be
merged with and into OptiSystems (as the absorbing company (HaChevra Ha'Koletet)
in the Merger), the separate existence of Merger Sub shall cease, and
OptiSystems (i) shall continue as the surviving corporation (sometimes referred
to herein as the "Surviving Corporation"), (ii) shall be governed by the laws of
the State of Israel, (iii) shall maintain a registered office in the State of
Israel, and shall (iv) succeed to and assume all of the rights, properties and
obligations of Merger Sub and OptiSystems in accordance with the Israeli
Companies Law.
1.2. Closing Date. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Vinson & Elkins
L.L.P., 2300 First City Tower, 1001 Fannin, Houston, Texas 77002 on a date to be
designated by BMC (the "Closing Date"), which shall be no later than the second
business day after the later to occur of (i) the satisfaction or waiver of the
conditions set forth in Article V or (ii) the 70th day after the delivery of the
Merger Proposal (as hereinafter defined) to the Companies Registrar.
1.3. Effective Time. As soon as practicable on the Closing Date, Merger
Sub shall deliver to the Companies Registrar a notice (the "Merger Sub Notice")
informing the Companies Registrar that the Merger was approved by the general
shareholders meeting of Merger Sub. The Merger shall become effective at the
time of the delivery of the Merger Sub Notice to the Companies Registrar (the
"Effective Time") in the manner provided in Section 323 of the Israeli Companies
Law.
1.4. Material Adverse Effect. "Material Adverse Effect" or "Material
Adverse Change" means any effect, change, event, circumstance or condition which
when considered with all other effects, changes, events, circumstances or
conditions could reasonably be expected to materially adversely affect the
business, results of operations or financial condition of BMC or OptiSystems, in
each case including its respective subsidiaries together with it taken as a
whole, as the case may be. In no event shall any of the following constitute a
Material Adverse Effect or a Material Adverse Change: (i) a change in the
trading prices of either of BMC's or OptiSystems' equity securities between the
date hereof and the Effective Time, in and of itself; (ii) effects, changes,
events, circumstances or conditions generally affecting the industry or markets
in which either BMC or OptiSystems operate or arising from changes in general
business or economic conditions; (iii) effects, changes, events, circumstances
or conditions directly attributable to (A) out-of-pocket fees and expenses
(including without limitation legal, accounting, investigatory, investment
banking, and other fees and expenses) incurred in connection with the
transactions contemplated by this Agreement or (B) the payment by OptiSystems of
all amounts due to any officers or employees of OptiSystems under employment
contracts, non-competition agreements, employee benefit plans or severance
arrangements described in the OptiSystems Disclosure Schedule (as defined
herein); (iv) any effects, changes, events, circumstances or conditions
resulting from any change in law or
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generally accepted accounting principles, which affect generally entities such
as BMC and OptiSystems; (v) any effect resulting from compliance by BMC or
OptiSystems with the terms of this Agreement; and (vi) any loss of revenues or
sales and support personnel during the period from the date hereof to the
Effective Time attributable to the announcement or pendency of the Merger;
provided that in order to rely on the exception contained in this clause (vi)
OptiSystems shall be required to prove with clear and convincing evidence that
the loss of such revenues or sales and support personnel is directly
attributable to the announcement or pendency of the Merger.
1.5. Conversion of Securities upon Merger. The manner and basis of
converting the issued and outstanding shares of the capital stock of OptiSystems
into the Merger Consideration shall be as hereinafter set forth in this Section
1.5.
1.5.1. Conversion of OptiSystems Shares. At the Effective
Time, by virtue of the Merger and without any further action on the
part of BMC, Merger Sub, OptiSystems or any shareholder of OptiSystems
or Merger Sub:
(a) any OptiSystems Shares then held by OptiSystems
or any wholly owned subsidiary of OptiSystems (or held in
OptiSystems' treasury) shall remain outstanding, and no
consideration shall be delivered in exchange therefor;
(b) any OptiSystems Shares then held by BMC, Merger
Sub or any other wholly owned subsidiary of BMC shall remain
outstanding, and no consideration shall be delivered in
exchange therefor;
(c) each other holder of OptiSystems Shares then
issued and outstanding, shall automatically be deemed to have
transferred such OptiSystems Shares to BMC in return for the
right to receive $10.00 in cash, without interest thereon (the
"Per Share Merger Consideration") for each such OptiSystems
Share, upon surrender, in accordance with Section 1.5.2
hereof, of certificates theretofore evidencing OptiSystems
Shares. The aggregate amount of cash to be paid in the Merger
is hereinafter referred to as the "Merger Consideration;"
(d) each OptiSystems Share that has been converted
into the right to receive the Per Share Merger Consideration
shall be registered in the name of BMC; and
(e) all shares of Merger Sub shall be converted into
shares of OptiSystems and shall be registered in the name of
BMC.
1.5.2. Exchange of Certificates Representing OptiSystems
Shares. In accordance with the provisions of this Agreement,
immediately prior to the Effective Time, BMC shall pay an amount equal
to the Per Share Merger Consideration multiplied by the number of
OptiSystems Shares outstanding as of the Effective Time, and the amount
required to be paid to the holders of OptiSystems Warrants, by wire
transfer of immediately available funds to
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an exchange agent designated by BMC (the "Exchange Agent"). Commencing
on the Effective Time, each holder of an outstanding certificate or
certificates theretofore representing OptiSystems Shares may surrender
the same to the Exchange Agent, and such holder shall be entitled upon
such surrender to receive in exchange therefor payment of $10.00 per
OptiSystems Share (without interest thereon) represented by the
certificate or certificates so surrendered. However, before surrender,
each outstanding certificate representing issued and outstanding
OptiSystems Shares shall be deemed, for all purposes, only to evidence
the right to receive the amount of cash into which such shares have
been so converted in accordance with Section 1.5.1.
1.5.3. Unclaimed Merger Consideration; No Escheat. Subject to
any contrary provision of governing law, all consideration deposited
with the Exchange Agent or held by BMC for the payment of the
consideration into which the outstanding OptiSystems Shares shall have
been converted, and remaining unclaimed for one year after the
Effective Time, shall be paid or delivered to BMC; and the holder of
any unexchanged certificate or certificates which before the Effective
Time represented OptiSystems Shares shall thereafter look only to BMC
for exchange or payment thereof upon surrender of such certificate or
certificates to BMC.
1.5.4. Withholding. BMC (or any affiliate thereof) shall be
entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any former holder of OptiSystems
Shares such amounts as BMC (or any affiliate thereof) is required to
deduct and withhold with respect to the making of such payment under
any applicable federal, state, local or foreign tax law. To the extent
that amounts are so withheld by BMC, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the
former holder of OptiSystems Shares in respect of which such deduction
and withholding was made by BMC.
1.5.5. OptiSystems' Transfer Books Closed. Upon the Effective
Time, (a) the stock transfer books of OptiSystems shall be deemed
closed, and no transfer of any certificates theretofore representing
the OptiSystems Shares shall thereafter be made or consummated; and (b)
all holders of certificates representing OptiSystems Shares that were
outstanding immediately prior to the Effective Time shall cease to have
any rights as shareholders of OptiSystems. No further transfer of any
such OptiSystems Shares shall be made on such share transfer books
after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any OptiSystems Shares (a
"OptiSystems Share Certificate") is presented to the Exchange Agent or
to the Surviving Corporation or BMC, such OptiSystems Share Certificate
shall be canceled and shall be exchanged as provided in Section 1.5.2.
1.6. Further Action. Merger Sub and OptiSystems shall take all such
reasonable and lawful action as may be necessary or appropriate in order to
effectuate the Merger as promptly as possible. If, at any time after the
Effective Time, any further action is determined by BMC to be necessary or
desirable to carry out the purposes of this Agreement or to vest the Surviving
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Corporation with full right, title and possession of and to all rights and
assets of Merger Sub and OptiSystems, the officers and directors of the
Surviving Corporation and BMC shall be fully authorized (in the name of Merger
Sub, in the name of OptiSystems and otherwise) to take such action.
1.7. Treatment of Stock Options. On the Effective Time, each of the
then outstanding options to purchase OptiSystems Shares, excluding the
OptiSystems Warrants (as defined herein) (collectively, the "OptiSystems
Options")(which includes all outstanding options granted under OptiSystems'
stock option plans (the "OptiSystems Option Plans") and OptiSystems' stock
option agreements (the "OptiSystems Option Agreements")) will and without any
further action on the part of any holder thereof (herein, an "Optionholder"), be
terminated immediately prior to the Effective Time solely in exchange for the
right to receive, promptly upon the surrender of such OptiSystems Option an
amount in cash equal to the product of (i) the number of OptiSystems Shares
subject to such OptiSystems Option and (ii) the amount, if any, by which the Per
Share Merger Consideration exceeds the exercise price per OptiSystems Share
subject to such OptiSystems Option.
1.8. Treatment of Warrants. Commencing on the Effective Time and
continuing until the expiration of, each of the then outstanding warrants to
purchase OptiSystems Shares (collectively, the "OptiSystems Warrants"),
OptiSystems Warrants will and without any further action on the part of any
holder thereof (herein, a "Warrantholder") be treated as follows: (a) with
respect to OptiSystems Warrants that are not Underwriters Warrants (as defined
below) ("Public Warrants"), such Public Warrants shall represent the right to
receive, promptly upon the surrender to the Exchange Agent of such Public
Warrants, and without any further action on the part of the holder thereof, an
amount in cash equal to the product of (i) the number of OptiSystems Shares
subject to such Public Warrant and (ii) the amount, if any, by which the Per
Share Merger Consideration exceeds the exercise price per OptiSystems Share
subject to such Public Warrant and (b) with respect to the OptiSystems Warrants
that were issued pursuant to that certain Representatives Warrant Agreement
dated as of June 12, 1997 between OptiSystems and National Securities
Corporation (the "Underwriters Warrants"), such Underwriters Warrants shall
represent the right to receive, promptly upon the surrender to the Exchange
Agent of such Underwriters Warrants, and without any further action on the part
of the holder thereof, (x) the number of Public Warrants into which such
Underwriters Warrant is convertible pursuant to the terms of such Underwriters
Warrant upon payment of the exercise price therefore, which Public Warrants so
issued shall be treated as set forth in clause (a) of this Section 1.8 and (y)
an amount in cash equal to the product of (i) the number of OptiSystems Shares
subject to the Underwriters Warrant and (ii) the amount, if any, by which the
Per Share Merger Consideration exceeds the exercise price per OptiSystems Share
subject to such Underwriters Warrant. At the Effective Time, BMC shall execute
and deliver to the holders of the Underwriters Warrants a supplemental warrant
agreement providing for the treatment of the Underwriters Warrant as set forth
above.
1.9. Right to Change Structure. Notwithstanding anything to the
contrary contained in this Agreement, if the Merger cannot be consummated in the
structure contemplated by this Agreement, then the Merger shall be restructured
to the extent possible as an "arrangement" within the meaning of Section 351 of
the Israeli Companies Law; provided, however, that no restructuring
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of the Merger pursuant to this Section 1.9 shall change the Per Share Merger
Consideration, materially delay consummation of the Merger or have a material
adverse effect on the ability of the parties to satisfy the conditions to the
Closing or on the anticipated tax consequences to the parties of the Merger. In
the event the Merger is restructured as an "arrangement" pursuant to this
Section 1.9, the parties shall (i) execute such documents as BMC may reasonably
determine to be appropriate for the purpose of reflecting the restructuring of
the Merger as an "arrangement" and (ii) make such applications and filings and
take such other actions as are appropriate in order to implement such
"arrangement."
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF VISION
OptiSystems represents and warrants as follows:
2.1. Organization and Standing. OptiSystems is a corporation duly
organized and validly existing under the laws of the State of Israel, has all
requisite power and authority to carry on its business as it is currently
conducted and to own and operate the properties currently owned and operated by
it, and is duly qualified or licensed to do business and is in good standing as
a foreign corporation authorized to do business in all jurisdictions in which
the character of the properties owned or the nature of the business conducted by
it would make such qualification or licensing necessary, except where the
failure to be so qualified or licensed could not reasonably be expected to have
a Material Adverse Effect on OptiSystems. OptiSystems has delivered to BMC
accurate and complete copies of its memorandum of association and articles of
association and other charter documents, including all amendments thereto.
2.2. Agreement Authorized and its Effect on Other Obligations.
2.2.1 Authorization and Enforceability. OptiSystems has all
requisite power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and, subject to the Required
OptiSystems Shareholder Vote (as hereinafter defined), to consummate
the transactions contemplated hereby and thereby. The execution and
delivery by OptiSystems of this Agreement and the performance by
OptiSystems of its obligations hereunder have been duly and validly
authorized by all necessary corporate action on the part of OptiSystems
(other than with respect to the Merger, the receipt of the Required
OptiSystems Shareholder Vote). This Agreement has been duly executed
and delivered by OptiSystems and (assuming due authorization, execution
and delivery hereof by the other parties hereto) constitutes a legal,
valid and binding obligations of OptiSystems, enforceable (subject to
normal equity principles) against OptiSystems in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, debtor relief or similar laws affecting the
rights of creditors generally. Assuming neither BMC nor Merger Sub, nor
any of their affiliates, vote any shares they own, the affirmative vote
of 75% of the voting power of OptiSystems present and voting at the
OptiSystems General Meeting
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(the "Required OptiSystems Shareholder Vote") is the only vote of the
holders of any shares of OptiSystems necessary to approve the Merger.
The quorum required for the OptiSystems General Meeting is two
shareholders who hold at least 51% of the voting rights of the issued
share capital of OptiSystems. No vote or approval of (i) any creditor
of OptiSystems, (ii) any holder of any option or warrant granted by
OptiSystems, or (iii) any shareholder of any of OptiSystems'
subsidiaries is necessary in order to approve or permit the
consummation of the Merger.
2.2.2. Approvals. No consent, approval, order or authorization
of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality ("Governmental Entity"), is required by or with respect
to OptiSystems or any of its subsidiaries in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except (a) the consent of the Israeli
Investment Center of the Israeli Ministry of Trade & Industry (the
"Investment Center"), (b) the consent of the Office of the Chief
Scientist of the Israeli Ministry of Trade & Industry ("OCS"), (c) the
approval of the Israeli Commissioner of Restrictive Trade Practices, if
necessary and (d) such other consents, approvals, orders,
authorizations, registrations, declarations and filings, the failure of
which to be obtained or made would not have, individually or in the
aggregate, a Material Adverse Effect on OptiSystems. OptiSystems is its
own "ultimate parent entity" as such term is defined in regulations
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act") at 16 C.F.R. 801.1(a)(3) and does not meet the
size of person test set forth in the HSR Act at 15 U.S.C. 18a(a).
2.2.3. No Violation. Assuming the receipt of all consents,
approvals, orders or authorizations of, and the registration,
declaration or filing with, any Governmental Entity contemplated by
Section 2.2.2, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i)
conflict with or result in a violation or breach of any term or
provision of, nor constitute a default under, the articles of
association or memorandum of association of OptiSystems; (ii)
contravene, conflict with or result in a violation or breach of, or
result in a default under, any obligations, indenture, mortgage, deed
of trust, lease, contract or other agreement to which OptiSystems or
any of its subsidiaries is a party or by which any of them or their
properties are bound, (iii) contravene, conflict with or result in a
violation of, or give any Governmental Entity or other Person the right
to challenge the Merger or to exercise any remedy or obtain any relief
under, any legal requirement or any order, writ, injunction, judgment
or decree to which OptiSystems, or any of the assets owned or used by
OptiSystems, is subject, (iv) contravene, conflict with or result in a
violation of any of the terms or requirements of, or give any
Governmental Entity the right to revoke, withdraw, suspend, cancel,
terminate, modify or exercise any right or remedy or require any refund
or recapture with respect to, any Grant (as hereinafter defined) given
by any Governmental Entity (or any benefit provided or available
thereunder) or other permit, license, consent, authorization, grant,
benefit, right that is held by OptiSystems or that otherwise relates to
the business or assets of OptiSystems, (v) result in the imposition,
creation or crystallization of any Encumbrance upon or with respect
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to any asset owned or used by OptiSystems, or (vi) with the passage of
time, the giving of notice, or the taking of any action by a third
person, have any of the effects set forth in clauses (i) through (v) of
this Section; in each case (other than clause (i) hereof) other than
such violations, breaches or defaults as could not reasonably be
expected to have a Material Adverse Effect on OptiSystems. Section 2.2
of the OptiSystems Disclosure Schedule lists all holders of any
material indebtedness of OptiSystems, the lessors of any material
property leased by OptiSystems and the other parties to any material
agreements to which OptiSystems is a party in each case whose consent
to the Merger is required.
2.3. Capitalization. The authorized share capital of OptiSystems
consists of NIS 10,000,000 divided into 20,000,000 ordinary shares, par value
NIS .05 per share, of which as of the date hereof 6,060,080 shares are issued
and outstanding, an additional 1,880,000 shares are reserved for issuance in
conjunction with OptiSystems Options (of which 1,536,000 OptiSystems Options are
issued and outstanding as of the date hereof) and an additional 2,640,000 shares
are reserved for issuance in conjunction with the OptiSystems Warrants. All of
such outstanding shares are validly issued, fully paid and non-assessable, and
were not issued in violation of any preemptive rights of any stockholder.
Section 2.3 of the OptiSystems Disclosure Schedule delivered by OptiSystems to
BMC dated the date hereof (the "OptiSystems Disclosure Schedule") sets forth a
complete list as of the date of this Agreement of all outstanding options,
warrants or obligations of any kind to issue any shares of capital stock of
OptiSystems, the owners thereof and the amounts owed. Other than as set forth in
Section 2.3 of the OptiSystems Disclosure Schedule, OptiSystems has no
outstanding options, warrants or obligations of any kind to issue any shares of
its capital stock. Except as set forth in Section 2.3 of the OptiSystems
Disclosure Schedule: (i) none of the outstanding OptiSystems Shares, OptiSystems
Options or OptiSystems Warrants, and no holder of any OptiSystems Shares,
OptiSystems Options or OptiSystems Warrants, is entitled or subject to any
preemptive right, right of participation, right of maintenance or similar right;
(ii) to the knowledge of OptiSystems, none of the outstanding OptiSystems
Shares, OptiSystems Options or OptiSystems Warrants, and no holder of
OptiSystems Shares, OptiSystems Options or OptiSystems Warrants, is subject to
any right of first refusal; and (iii) to the knowledge of OptiSystems, there are
no contracts, undertakings or agreements relating to the voting or registration
of, or restricting any Person from purchasing, selling, pledging or otherwise
disposing of (or granting any option or similar right with respect to), any
OptiSystems Shares, OptiSystems Options or OptiSystems Warrants. Other than the
OptiSystems Warrants, OptiSystems is not under any obligation, or bound by any
contract pursuant to which it may become obligated, to repurchase, redeem or
otherwise acquire any OptiSystems Shares, OptiSystems Options or OptiSystems
Warrants. The treatment of the OptiSystems Options and the OptiSystems Warrants
in accordance with Sections 1.7 and 1.8 of this Agreement will not violate or
conflict with the terms of the OptiSystems Option Plans, OptiSystems Option
Agreements, the applicable warrant agreements governing the terms of the
OptiSystems Warrants or any other agreement or plan governing the terms of the
OptiSystems Options or the OptiSystems Warrants.
2.4. Subsidiaries. Section 2.4 of the OptiSystems Disclosure Schedule
lists the subsidiary corporations of OptiSystems existing at the date hereof,
and shows as to each of such subsidiary corporations the percentage of the total
outstanding stock thereof which is owned by OptiSystems.
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All outstanding shares of capital stock of the subsidiary corporations owned by
OptiSystems are validly issued, fully paid, and non-assessable, and OptiSystems
has good and valid title thereto free and clear of any mortgage, pledge, lien,
charge, security interest, option, right of first refusal, preferential purchase
right, defect, encumbrance or other right or interest of any other person
(collectively, an "Encumbrance"). Each such subsidiary is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction under which it is incorporated and has full requisite corporate
power and authority to own its property and carry on its business as presently
conducted by it and is duly qualified or licensed to do business and is in good
standing as a foreign corporation authorized to do business in all jurisdictions
in which the character of the properties owned or the nature of the business
conducted makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed could not reasonably be expected to have
a Material Adverse Effect on OptiSystems. As used in this Article II, the term
"OptiSystems" also includes any and all of its directly and indirectly held
subsidiaries, except where the context indicates to the contrary; provided,
however, that for purposes of Sections 2.7.1 and 2.20, the term "OptiSystems"
further includes any corporation, trade, business or entity under common control
with OptiSystems within the meaning of Section 414(b), (c), (m) or (o) of the
Code or Section 4001 of ERISA.
2.5. Reports and Financial Statements. OptiSystems has previously
furnished to BMC true and complete copies of (a) all annual reports filed with
the Securities and Exchange Commission (the "Commission") pursuant to the
Exchange Act since December 31, 1996, (b) all other reports filed with the
Commission since December 31, 1996, and (c) any registration statements declared
effective by the Commission since December 31, 1996. The consolidated financial
statements of OptiSystems and its subsidiaries included in OptiSystems' most
recent report on Form 20-F and any other reports filed with the Commission by
OptiSystems subsequent thereto, including reports on Form 6-K (collectively, the
"OptiSystems Reports") were, or (if filed after the date hereof) will be,
prepared in accordance with the published regulations of the Commission and in
accordance with Israeli generally accepted accounting principles ("Israeli
GAAP") applied on a consistent basis during the periods involved and fairly
present, or will present, the consolidated financial position for OptiSystems
and its subsidiaries as of the dates thereof and the consolidated results of
their operations and changes in financial position for the periods then ended
(except with respect to interim period financial statements, for normal year-end
adjustments which are, individually or in the aggregate, not material in
amount); the OptiSystems Reports were prepared in all material respects in
accordance with the requirements of the Securities Act of 1933, as amended (the
"Securities Act") and the Exchange Act, as the case may be, and applicable rules
and regulations of the Commission thereunder; and, as of the time of filing or
on the date that an amendment or supplement thereto was filed, the OptiSystems
Reports, as amended or supplemented, did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under whey they were made, not misleading. Since December 31,
1996, OptiSystems has filed with the Commission all reports required to be filed
by OptiSystems under the Exchange Act and the Securities Act and the rules and
regulations promulgated by the Commission thereunder. OptiSystems is a "foreign
private issuer" as such term is defined under Rule 3b-4(c) promulgated by the
Commission under the Exchange Act.
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2.6. Liabilities. OptiSystems does not have any liabilities or
obligations, either accrued, absolute, contingent, or otherwise, or have any
knowledge of any potential liabilities or obligations, which could reasonably be
expected to have a Material Adverse Effect on OptiSystems, other than those (i)
disclosed in the OptiSystems Reports or (ii) set forth in Section 2.6 of the
OptiSystems Disclosure Schedule.
2.7. Additional OptiSystems Information. Set forth in Section 2.7 of
the OptiSystems Disclosure Schedule are true, complete and correct lists of the
following items, and OptiSystems agrees that upon the request of BMC, it will
furnish to BMC true, complete and correct copies of any documents referred to in
such lists:
2.7.1. Employee Compensation Plans. All bonus, incentive
compensation, stock option, deferred compensation, profit-sharing,
retirement, pension, welfare, severance pay, supplemental income, group
insurance, death benefit, or other fringe benefit plans, arrangements
or trust agreements covering active, former or retired employees of
OptiSystems (collectively, "OptiSystems Plans"), together with copies
of the related summary plan descriptions, if any, the most recent
reports, if any, with respect to such plans, arrangements, or trust
agreements filed with any governmental agency and all Internal Revenue
Service determination letters that have been received with respect to
such plans;
2.7.2. Certain Salaries. The names and salary rates of all
present officers and employees of OptiSystems whose current regular
annual salary rate is $100,000 or more, together with any bonuses paid
or payable to such persons for the fiscal year ended December 31, 1999,
or since that date, and, to the extent existing on the date of this
Agreement, all arrangements with respect to any bonuses to be paid to
them from and after the date of this Agreement (including compensation
payable pursuant to bonus, deferred compensation or commission
arrangements or in connection with any manager's insurance, education
fund and health fund), and such employee's employer, date of employment
and position;
2.7.3. Employee Agreements. Any collective bargaining
agreements of OptiSystems with any labor union or other representative
of employees, including amendments, supplements, and understandings,
and all employment and consulting agreements of OptiSystems in effect
on the date hereof;
2.7.4. Guaranties. All third party indebtedness, liabilities
and commitments of others as to which OptiSystems is a guarantor,
endorser, co-maker, surety, or accommodation maker, or is contingently
liable therefor (excluding liabilities as an endorser of checks and the
like in the ordinary course of business) and all letters of credit,
whether stand-by or documentary, issued by any third party; and
2.7.5. Environmental. All environmental orders and decrees
material to current operations conducted by OptiSystems and all
environmental audits, assessments,
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investigations and reviews conducted within the last five years on any
property owned or used by OptiSystems.
2.8. No Undisclosed Contracts or Defaults. Except as may be specified
in the OptiSystems Reports or Section 2.8 of the OptiSystems Disclosure
Schedule, OptiSystems is not a party to, or bound by, any material contract or
arrangement of any kind to be performed after the Effective Time, nor is
OptiSystems in default in any material obligation or covenant on its part to be
performed under any material obligation, lease, contract, order, plan or other
arrangement.
2.9. Absence of Certain Changes and Events. Except as set forth in the
OptiSystems Reports or in Section 2.9 of the OptiSystems Disclosure Schedule,
since December 31, 1999, there has not been:
2.9.1. Financial Change. On or prior to the date hereof, any
adverse change in the financial condition, operations, assets,
liabilities or business of OptiSystems which could reasonably be
expected to have a Material Adverse Effect on OptiSystems;
2.9.2. Property Damage. Any damage, destruction, or loss to
the business or properties of OptiSystems (whether or not covered by
insurance) that could reasonably be expected to have a Material Adverse
Effect on OptiSystems;
2.9.3. Dividends. Any declaration, setting aside, or payment
of any dividend or other distribution in respect of the OptiSystems
Shares, or any direct or indirect redemption, purchase or any other
acquisition by OptiSystems of any such stock;
2.9.4. Labor Disputes. Any labor dispute (other than routine
grievances);
2.9.5. Employment Arrangements. Any increase in compensation,
bonus, deferred compensation, stock options or other consideration of
any employee or director other than in the ordinary course of business
consistent with past practice;
2.9.6. Securities. Any sale, issue or grant of (i) any share
or other security (except for OptiSystems Shares issued upon the valid
exercise of outstanding options in accordance with the terms of
OptiSystems Plans or the OptiSystems Option Agreements or the exercise
of the OptiSystems Warrants), (ii) any option, warrant or right to
acquire any share or any other security, or (iii) any instrument
convertible into or exchangeable for any share or other security; or
2.9.7. Amendments to Charter Documents. Any amendment to the
memorandum of association, articles of association or other charter or
organizational documents of OptiSystems; the consummation of any
merger, consolidation, amalgamation, arrangement, share exchange,
business combination, recapitalization, reclassification of shares,
stock split, division or subdivision of shares, stock dividend,
issuance of bonus shares, reverse stock split, consolidation of shares
or similar transaction involving OptiSystems.
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2.10. Taxes.
2.10.1. Tax Returns Filed; Taxes Paid. Except as set forth in
Section 2.10.1 of the OptiSystems Disclosure Schedule, (i) all returns,
declarations, claims for refund, information returns and reports ("Tax
Returns") of or with respect to any and all taxes, charges, fees,
levies, assessments, duties or other amounts payable to any federal,
state, local, foreign or other taxing authority or agency, including,
without limitation, (x) income, franchise, profits, gross receipts,
minimum, alternative minimum, estimated, ad valorem, value added,
sales, use, service, real or personal (tangible and intangible)
property, environmental, capital stock, leasing, lease, user, license,
registration, payroll, withholding, disability, employment, social
security (or similar), workers compensation, unemployment compensation,
utility, severance, excise, stamp, windfall profits, transfer and gains
taxes, (y) customs, duties, imposts, charges, levies or other similar
assessments of any kind, and (z) interest, penalties and additions to
tax imposed with respect thereto ("Tax" or "Taxes") which are required
to be filed on or before the Closing by or with respect to OptiSystems
have been or will be duly and timely filed, (ii) all items of income,
gain, loss, deduction and credit or other items required to be included
in each such Tax Return have been or will be so included and all such
information and any other information provided in each such Tax Return
is true, correct and complete, (iii) all Taxes owed by OptiSystems
which have become or will become due have been or will be timely paid
in full, (iv) all Tax withholding and deposit requirements imposed on
or with respect to OptiSystems have been or will be satisfied in full
in all respects, (v) no penalty, interest or other charge is or will
become due with respect to the late filing of any such Tax Return or
late payment of any such Tax, and (vi) there are no Encumbrances on any
of the assets of OptiSystems that arose in connection with any failure
(or alleged failure) to pay any Tax.
2.10.2. Open and Closed Returns Disclosed. Section 2.10.2 of
the OptiSystems Disclosure Schedule lists all federal, state, local and
foreign income Tax Returns (excluding information returns) filed with
respect to OptiSystems for the six taxable years ending prior to the
date hereof, indicates those Tax Returns that have been audited,
indicates those Tax Returns that are currently the subject of audit,
and indicates those Tax Returns whose audits have been closed.
2.10.3. Extensions Disclosed. Except as set forth in Section
2.10.3 of the OptiSystems Disclosure Schedule, there is not in force
any extension of time with respect to the due date for the filing of
any Tax Return of or with respect to OptiSystems or any waiver or
agreement for any extension of time for the assessment or payment of
any Tax of or with respect to OptiSystems.
2.10.4. Claims Disclosed. There is no outstanding written
claim from any governmental taxing authority against OptiSystems for
any Taxes, and no assessment, deficiency or adjustment has been
asserted, proposed or threatened in writing by any governmental taxing
authority with respect to any Tax Return of or with respect to
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OptiSystems with respect to any period for which the statute of
limitations on the assessment of tax deficiencies has not expired other
than those disclosed (and to which are attached true and complete
copies of all audit or similar reports) in Section 2.10.4 of the
OptiSystems Disclosure Schedule. No written claim has ever been made by
a governmental taxing authority in a jurisdiction where OptiSystems
does not file Tax Returns that it is or may be subject to taxation in
that jurisdiction with respect to any period starting after December
31, 1994.
2.10.5. Scheduled Tax Liabilities Sufficient. The total
amounts set up as liabilities for current and deferred Taxes in the
financial statements referred to in Section 2.5 of this Agreement are
sufficient to cover in all material respects the payment of all Taxes,
whether or not assessed or disputed, which are, or are hereafter found
to be, or to have been, due by or with respect to OptiSystems up to and
through the periods covered thereby.
2.10.6. Tax Allocation Agreements. OptiSystems has previously
delivered to BMC true and complete copies of each written Tax
allocation or sharing agreement and a true and complete description of
each unwritten Tax allocation or sharing arrangement affecting
OptiSystems. No payments are due or will become due by OptiSystems
pursuant to any such agreement or arrangement or any Tax
indemnification agreement except as set forth in Section 2.10.6 of the
OptiSystems Disclosure Schedule.
2.10.7. No Tax Liens. Except for statutory liens for current
Taxes not yet due, no material liens for Taxes exist upon the assets of
OptiSystems.
2.10.8. Change of Accounting Method. OptiSystems will not be
required to include any amount in income for any taxable period
beginning after the Closing Date as a result of a change in accounting
method for any taxable period ending on or before the Closing Date or
pursuant to any agreement with any Tax authority with respect to any
such taxable period.
2.10.9. Partnerships; Foreign Corporations. Except as set
forth in Section 2.10.9 of the OptiSystems Disclosure Schedule, none of
the property of OptiSystems is held in an arrangement that is
classified as a partnership for Tax purposes, and OptiSystems does not
own any interest in any controlled foreign corporation (as defined in
section 957 of the Code), foreign personal holding company (as defined
in section 552 of the Code), passive foreign investment company (as
defined in section 1297 of the Code) or other entity the income of
which is required to be included in the income of OptiSystems.
2.10.10. Safe Harbor Leases; Tax-Exempt Use Property. Except
as set forth in Section 2.10.10 of the OptiSystems Disclosure Schedule,
none of the property of OptiSystems is subject to a safe-harbor lease
(pursuant to section 168(f)(8) of the Internal Revenue Code of 1954 as
in effect after the Economic Recovery Tax Act of 1981 and before the
Tax Reform Act of 1986) or is "tax-exempt use property" (within the
meaning of section 168(h) of the Code) or "tax-exempt bond financed
property" (within the meaning of section 168(g)(5) of the Code).
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2.10.11. Section 341(f) Election. OptiSystems has not made an
election under section 341(f) of the Code.
2.10.12. Business Attributes. Intentionally omitted.
2.10.13. Activity Limitations. OptiSystems has not entered
into any agreement or arrangement with any taxing authority that
requires it to take any action or to refrain from taking any action,
except for the undertaking in connection with the grant of an "approved
enterprise" status as described in Section 2.27 of the OptiSystems
Disclosure Schedule and the undertaking in connection with the grant of
options under Section 102 of the Israeli Income Tax Ordinance.
2.10.14. Franchise Taxes. Notwithstanding anything to the
contrary herein, any franchise Tax paid or payable with respect to
OptiSystems shall be allocated to the taxable period during which the
income, operations, assets or capital comprising the base of such Tax
is measured, regardless of whether the right to do business for another
taxable period is obtained by the payment of such franchise Tax.
2.10.15. Golden Parachute Payments. Except as set forth in
Section 2.10.15 of the OptiSystems Disclosure Schedule, OptiSystems has
not made any payments, is not obligated to make any payments, or is not
a party to any agreements that under certain circumstances could
obligate it to make any payments that would not be deductible under
section 280G of the Code.
2.10.16. Affiliated Groups. Except as set forth in Section
2.10.16 of the OptiSystems Disclosure Schedule, OptiSystems (i) has not
been a member of an affiliated group filing a consolidated federal
income Tax Return or (ii) does not have any liability for Taxes of any
person under Treasury Regulations section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise.
2.10.17. United States Real Property Holding Corporation.
OptiSystems has not been a United States real property holding
corporation within the meaning of section 897(c)(2) of the Code since
December 31, 1994.
2.10.18. Tax Incentives. Section 2.10.18 of the OptiSystems
Disclosure Schedule, together with OptiSystems' annual report on Form
20-F for the year ended December 31, 1998, lists each tax incentive
granted to OptiSystems and its subsidiaries under the laws of the State
of Israel, the period for which such tax incentive applies, and the
nature of such tax incentive. OptiSystems has complied with all
material requirements of Israeli law to be entitled to claim all such
incentives. Subject to the receipt of the approvals set forth in
Section 2.2.2 below and compliance by the Surviving Corporation with
the applicable requirements and conditions, the consummation of the
Merger will not adversely affect the remaining duration of the
incentive or require any recapture of any previously claimed
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<PAGE> 15
incentive, and no consent or approval of any governmental authority is
required, other than as contemplated by Section 2.21, prior to the
consummation of the Merger in order to preserve the entitlement of
OptiSystems or its subsidiaries to any such incentive.
2.11. Intellectual Property.
2.11.1. Ownership. Section 2.11.1 of the OptiSystems
Disclosure Schedule accurately identifies all software programs
currently being marketed by OptiSystems and all software products or
programs under development by OptiSystems but not currently marketed
(collectively, the "Software Programs"). OptiSystems owns full and
unencumbered right and good and valid title to the Software Programs
listed in Section 2.11.1 of the OptiSystems Disclosure Schedule, all
patents, trademarks, service marks, trade names, domain names and
copyrights (including registrations and applications pertaining thereto
and extensions, continuations, renewals or divisions of any such
registrations or applications) and all other intellectual property
rights, trade secrets, processes, formulas, know-how and other
confidential or proprietary information, processes and formulae used in
its businesses or otherwise necessary for the conduct of its businesses
(the "Intellectual Property"), free and clear of all mortgages,
pledges, liens, security interests, conditional sales agreements,
encumbrances or charges of any kind. Section 2.11.1 of the OptiSystems
Disclosure Schedule contains a complete list of all registered
trademarks and service marks, all reserved trade names, all registered
copyrights and all filed patent applications and issued patents used
in, or otherwise necessary for the conduct of, the business of
OptiSystems as heretofore conducted.
2.11.2. Notices. Section 2.11.2 of the OptiSystems Disclosure
Schedule sets forth the form and placement of the proprietary legends
and copyright notices displayed in or on the Software Programs. In no
instance has the eligibility of the Software Programs for protection
under applicable copyright law been forfeited to the public domain by
omission of any required notice or any other action.
2.11.3. Protection. OptiSystems has in force the trade secret
protection program set forth in Section 2.11.3 of the OptiSystems
Disclosure Schedule. There has been no violation of such program by any
person or entity. Except with respect to the distribution of source
code of the Software Programs that can only be distributed in source
code (such Software Programs being listed by name in Section 2.11.3 of
the OptiSystems Disclosure Schedule) pursuant to license agreements
listed in Section 2.13.1 of the OptiSystems Disclosure Schedule, the
source code and related technical system documentation for the Software
Programs (i) have at all times been maintained in strict confidence and
(ii) have been disclosed by OptiSystems only to employees and
contractors who have had a "need to know" the contents thereof in
connection with the performance of their duties to OptiSystems and who
have executed written agreements requiring the recipient to keep the
information in strict confidence.
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2.11.4. Personnel. All personnel who now, or during the past
five years have been employees, agents, consultants and contractors of
OptiSystems, who have contributed to or participated in the conception
and development of the Software Programs, technical documentations, or
Intellectual Property on behalf of OptiSystems have executed
nondisclosure agreements in form provided by OptiSystems to BMC and
either (1) have been a party to a "work-for-hire" arrangement or
agreements with OptiSystems in accordance with applicable national and
state law that has accorded OptiSystems full, exclusive and original
ownership of all tangible and intangible property thereby arising, or
(2) have executed appropriate instruments of assignment in favor or
OptiSystems as assignee that have conveyed to OptiSystems, effective,
and exclusive ownership of all tangible and intangible property thereby
arising.
2.11.5. Software Performance. The Software Programs have
performed in accordance with the warranties set forth in the standard
end-user agreements listed in Section 2.13 of the OptiSystems
Disclosure Schedule.
2.11.5.1. No Infringement. Neither the existence nor
the sale, license, lease, transfer, use, reproduction,
distribution, modification or other exploitation by
OptiSystems of any Software Program or Intellectual Property,
as such Software Program or Intellectual Property, as the case
may be, is or was, or is currently contemplated to be, sold,
licensed, leased, transferred, used or otherwise exploited by
such persons (i) infringes on any patent, trademark, copyright
or other right of any person, (ii) constitutes a misuse or
misappropriation of any trade secret, know-how, process,
proprietary information or other right of any other person, or
(iii) entitles any other person to any interest therein, or
right to compensation from OptiSystems, its successors or
assigns.
2.11.5.2. OptiSystems has not received any notice of
any lawsuit, claim, demand, proceeding, threat or allegation
or otherwise has notice of any lawsuit, claim, demand,
proceeding or investigation involving matters of the type
contemplated by the immediately preceding sentence or is aware
of any facts or circumstances that could reasonably be
expected to give rise to any valid lawsuit, claim, demand,
proceeding or investigation. There are no restrictions on
OptiSystems' ability to sell, license, lease, transfer, use,
reproduce, distribute, modify or otherwise exploit any
Software Products or Intellectual Property.
2.11.5.3. OptiSystems is not aware of any
infringement, misappropriation or other violation of any
Software Product or Intellectual Property, and no lawsuit,
claim, demand, proceeding or investigation brought by
OptiSystems with respect to the Software Programs and
Intellectual Property is pending against any third party.
2.11.6. Integrity. Except with respect to demonstration or
trial copies, no portion of the Software Programs contains or will
contain any "back door," "time bomb," "Trojan horse," "worm," "drop
dead device," "virus" or other software routines or hardware
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<PAGE> 17
components designed to permit unauthorized access; to disable or erase
software, hardware, or data; or to perform any other such actions.
2.11.7. Contract Performance. OptiSystems has observed all
material provisions of, and performed all of its material obligations
under, the Licenses, including, but not limited to, the performance of
its product maintenance obligations. OptiSystems has not taken any
action that could cause, or failed to take any action, the failure of
which could cause, (i) any material source code, trade secret or other
Intellectual Property relating to the Software Programs to be released
from an escrow or otherwise made available to any person or entity
other than those persons described in Section 2.11.3, dedicated to the
public or otherwise placed in the public domain or (ii) any other
material adverse affect to the protection of the Software Programs
under trade secret, copyright, patent or other intellectual property
laws.
2.11.8. Year 2000. The Software Programs (i) are year 2000
compliant and compatible, which shall include, but is not limited to,
date data century recognition, and calculations that accommodate same
century and multi-century formulas and data values; (ii) operate or
will operate in accordance with their specifications prior to, during
and after the calendar year 2000 A.D.; and (iii) shall not end
abnormally or provide invalid or incorrect results as a result of date
data, specifically including date data which represents or references
different centuries or more than one century.
2.12. Adequacy of Technical Documentation. The technical documentation
of the Software Programs (the "Technical Documentation") includes the source
code (with comments) for all Software Programs, as well as any pertinent
comments by or explanation that may be necessary to render such materials
understandable and usable. The Technical Documentation also includes any
programs (including compilers), "workbenches," tools and higher level (or
"proprietary") languages necessary for the development, maintenance and
implementation of the Software Programs.
2.13. Software Contracts.
2.13.1. End-User Agreements. Section 2.13.1 of the OptiSystems
Disclosure Schedule sets forth a complete list of all material licenses
and sublicenses of the Software Programs in effect on the date hereof
and of all current customer trial agreements for the Software Programs
granted by OptiSystems to other parties (the "Licenses"). All contracts
identified in Section 2.13.1 of the OptiSystems Disclosure Schedule
constitute only end-user agreements, each of which grants the end user
thereunder principally the nonexclusive right and license to use an
identified Software Program and related user documentation, for
internal purposes only and only in the form of software object code.
Section 2.13.1. sets forth the general product licensing and pricing
policies of OptiSystems by categories of Software Programs. Section
2.13.1 of the OptiSystems Disclosure Schedule accurately identifies
each customer which generated 10% or more of OptiSystems' revenues
during the preceding four fiscal quarters.
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2.13.2. Marketing Agreements. Section 2.13.2 of the
OptiSystems Disclosure Schedule sets forth a complete list of all
contracts, agreements, licenses, or other commitments or arrangements
in effect with respect to the marketing, remarketing, distribution,
licensing or promotion of (i) the Software Programs or any other
Technical Documentation or the Intellectual Property by any independent
salesperson, distributor, sublicensor or other remarketer or sales
organization or (ii) any third party's software products by OptiSystems
(collectively the "Marketing Agreements"). OptiSystems has observed all
material provisions of, and performed all its material obligations
under, the Marketing Agreements. Section 2.13.2 of the OptiSystems
Disclosure Schedule accurately identifies each marketing arrangement
which generated 10% or more of OptiSystems' revenues during the
preceding four fiscal quarters.
2.14. Third Party Rights.
2.14.1. In General. Other than the Licenses and the Marketing
Agreements, no person other than OptiSystems has any right or interest
of any kind or nature in or with respect to the Software Programs, the
Technical Documentation or Intellectual Property.
2.14.2. No Royalties. The sale, license, lease, transfer, use,
reproduction, distribution, modification or other exploitation by
OptiSystems or any of its successors or assigns of any version or
release of any computer program included in the Software Programs does
not and will not obligate OptiSystems or its successors or assigns to
pay any royalty, fee or other compensation to any other person.
2.14.3. Third-Party Components in Software Programs. The
Software Programs and Technical Documentation contain no programming or
materials in which any third party may claim superior, joint or common
ownership, including any right or license. The Software Programs and
Technical Documentation do not contain derivative works of any
programming or materials not owned in their entirety by OptiSystems.
2.14.4. Third-Party Tools. OptiSystems has a valid license to
use each of the material software libraries, compilers and other
third-party software used in the development of the Software Programs.
2.15. Title to Properties. Except for merchandise and other property
sold, used or otherwise disposed of in the ordinary course of business for fair
value, OptiSystems has good and valid title to all its properties and assets,
real and personal, reflected in the most recent balance sheet of OptiSystems
included in the OptiSystems Reports, free and clear of any Encumbrance of any
nature whatsoever, except (i) liens and Encumbrances reflected in the most
recent balance sheet of OptiSystems included in the OptiSystems Reports, (ii)
liens for current taxes not yet due and payable, and (iii) such imperfections of
title, easements and Encumbrances, if any, as are not substantial in character,
amount, or extent and do not and will not materially detract from the value, or
interfere with the present use, of the property subject thereto or affected
thereby, or otherwise materially impair business operations. All leases pursuant
to which OptiSystems leases (whether
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as lessee or lessor) any substantial amount of real or personal property are in
good standing, valid and effective; and there is not, under any such leases, any
existing or prospective default or event of default or event which with notice
or lapse of time, or both, would constitute a default by OptiSystems and in
respect to which OptiSystems has not taken adequate steps to prevent a default
from occurring. The buildings and premises of OptiSystems that are used in its
business are in good and sufficient operating condition and repair for the
continued conduct of OptiSystems' business on a basis consistent with past
practice, subject to ordinary wear and tear. All major items of equipment of
OptiSystems are in good and sufficient operating condition and in a state of
reasonable maintenance and repair for the continued conduct of OptiSystems'
business on a basis consistent with past practice, ordinary wear and tear
excepted, and are free from any known defects except as may be repaired by
routine maintenance and such minor defects as do not substantially interfere
with the continued use thereof in the conduct of normal operations.
2.16. Litigation. Except to the extent set forth in the OptiSystems
Reports or in Section 2.16 of the OptiSystems Disclosure Schedule, there is no
suit, action, or legal, administrative, arbitration, or other proceeding or
governmental investigation pending, or to the knowledge of OptiSystems,
threatened, against or effecting OptiSystems at law or in equity, or before any
federal, state, foreign, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, which would involve a liability in
excess of $100,000 or could reasonably be expected to prevent, interfere with or
delay consummation of the transactions contemplated hereby, nor is any change in
the zoning or building ordinances directly affecting the real property or
leasehold interests of OptiSystems, pending or, to the knowledge of OptiSystems,
threatened.
2.17. Environmental Compliance. Except as set forth in Section 2.17 of
the OptiSystems Disclosure Schedule;
2.17.1. Environmental Conditions. There are no environmental
conditions or circumstances, such as the presence or release of any
hazardous substance, on any real property owned by OptiSystems as a
result of the actions of OptiSystems or, to its knowledge, of any third
party or otherwise, that could reasonably be expected to have a
Material Adverse Effect on OptiSystems.
2.17.2. Permits, etc. OptiSystems has in full force and effect
all environmental permits, licenses, approvals and other authorizations
required to conduct its operations and is operating in material
compliance thereunder.
2.17.3. Compliance. OptiSystems' operations and use of its
assets do not violate any applicable foreign, federal, state or local
law, statute, ordinance, rule, regulation, order or notice requirement
(collectively, the "Applicable Environmental Laws") pertaining to (a)
the condition or protection of air, groundwater, surface water, soil,
or other environmental media, (b) the environment, including natural
resources or any activity which affects the environment, or (c) the
regulation of any pollutants, contaminants, waste, substances (whether
or not hazardous or toxic), except for violations which, either singly
or in the
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aggregate, could not reasonably be expected to have a Material Adverse
Effect on OptiSystems.
2.17.4. Environmental Claims. No notice has been served on
OptiSystems from any entity, governmental agency or individual
regarding any existing, pending or threatened investigation or inquiry
related to alleged violations under any Applicable Environmental Laws,
or regarding any claims for remedial obligations or contribution under
any Applicable Environmental Laws, other than any of the foregoing
which, either singly or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on OptiSystems.
2.17.5. Renewals. OptiSystems does not know of any reason it
would not be able to renew any of the permits, licenses, or other
authorizations required pursuant to any Applicable Environmental Laws
to operate and use any of OptiSystems' assets for their current
purposes and uses.
2.18. Compliance with Other Laws. Except as set forth in the
OptiSystems Reports or in Section 2.18 of the OptiSystems Disclosure Schedule,
OptiSystems is not in violation of or in default with respect to, or in alleged
violation of or alleged default with respect to, any applicable law or any
applicable rule, regulation, or any writ or decree of any court or any
governmental commission, board, bureau, agency, or instrumentality, or
delinquent with respect to any report required to be filed with any governmental
commission, board, bureau, agency or instrumentality, except for violations
which, either singly or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on OptiSystems.
2.19. Finder's Fee. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by OptiSystems and its
counsel directly with BMC and its counsel, without the intervention of any other
person as the result of any act of OptiSystems, and so far as is known to
OptiSystems, without the intervention of any other person in such manner as to
give rise to any valid claim against any of the parties hereto for a brokerage
commission, finder's fee or any similar payments, other than financial advisory
fees to be paid by OptiSystems to Soundview Technology Group, Inc. in connection
with the transaction under financial arrangements disclosed to BMC.
2.20. Employment Matters. OptiSystems is not a party to any collective
bargaining contract, collective labor agreement or other contract or arrangement
with a labor union, trade union or other organization or body involving any of
its employees, or is otherwise required (under any legal requirement, under any
contract or otherwise) to provide benefits or working conditions beyond the
minimum benefits and working conditions required by law to be provided pursuant
to rules and regulations of the Histadrut (General Federation of Labor), the
Coordinating Bureau of Economic Organization and the Industrialists'
Association. OptiSystems has not recognized or received a demand for recognition
from any collective bargaining representative with respect to any of its
employees. Except as set forth in Section 2.20 of the OptiSystems Disclosure
Schedule, OptiSystems does not have and is not subject to, and no employee of
OptiSystems benefits from, any
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extension order (tzavei harchava) or any contract or arrangement with respect to
employment or termination thereof. All of the employees of OptiSystems are "at
will" employees subject to the termination notice provisions included in
employment agreements or applicable law.
2.20.1. Except for the employment agreements described in
Section 2.20.1 of the OptiSystems Disclosure Schedule, there is no
contract between OptiSystems and any of its employees or directors that
cannot be terminated by OptiSystems upon less than three months' notice
without giving rise to a claim for damages or compensation (except for
statutory severance pay).
2.20.2. Except as set forth in Section 2.20.2 of the
OptiSystems Disclosure Schedule, there is no claim or complaint that is
pending or, to the knowledge of OptiSystems, has been threatened
against OptiSystems by any person who is or has been an employee or
director of OptiSystems. Without limiting the generality of the
foregoing, there are no unfair labor practice claims or charges that
are pending, or to the knowledge of OptiSystems, have been threatened
against OptiSystems.
2.20.3. Since December 31, 1996, (i) there has been no labor
strike, slowdown or stoppage pending (or, to the best knowledge of
OptiSystems, threatened) against or affecting OptiSystems, (ii) there
has been no dispute between OptiSystems and any group of its employees,
and (iii) no event has occurred and no circumstance or condition exists
that could reasonably be expected to give rise to any such labor
strike, slowdown, stoppage or dispute.
2.20.4. OptiSystems' obligations to provide severance pay to
its employees are fully funded or have been properly provided for in
the OptiSystems Reports in accordance with Israeli GAAP. All other
liabilities of OptiSystems relating to its employees (excluding
liabilities for illness pay) were properly accrued in the OptiSystems
Reports in accordance with Israeli GAAP. Except as set forth in Section
2.20.4 of the OptiSystems Disclosure Schedule, OptiSystems is not aware
of any circumstance that could give rise to any valid claim by a
current or former employee of OptiSystems for compensation on
termination of employment (beyond the statutory severance pay to which
employees are entitled).
2.20.5. All amounts that OptiSystems is legally or
contractually required either (i) to deduct from its employees'
salaries or to transfer to such employees' pension or provident, life
insurance, incapacity insurance, continuing education fund or other
similar fund or (ii) to withhold from their employees' salaries and pay
to any Governmental Entity as required by the Israeli Tax Ordinance
have, in each case, been duly deducted, transferred, withheld and paid,
and OptiSystems does not have any outstanding obligation to make any
such deduction, transfer, withholding or payment.
2.20.6. OptiSystems is in compliance in all material respects
with all applicable legal requirements and contracts relating to
employment, employment practices, wages, bonuses and other compensation
matters and terms and conditions of employment. All obligations
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of OptiSystems with respect to statutorily required severance payments
have been fully satisfied or have been funded by contributions to
appropriate insurance funds.
2.20.7. OptiSystems has good labor relations, and OptiSystems
has no knowledge of any facts indicating that (i) the consummation of
the Merger or any of the other transactions contemplated by this
Agreement will have a material adverse effect on the labor relations of
any of OptiSystems, or (ii) any of the employees of OptiSystems intends
to terminate his or her employment with OptiSystems.
2.20.8. (i) Each OptiSystems Plan has been maintained and
administered in material compliance with its terms and with the
requirements prescribed by any and all applicable statutes, orders,
rules and regulations, and is, to the extent required by applicable law
or contract, fully funded without having any deficit or unfunded
actuarial liability; (ii) all required contributions under any such
plans have been made and the applicable funds have been funded in
accordance with the terms thereof and no past service funding
liabilities exist thereunder; (iii) each OptiSystems Plan that is
required or intended to be qualified under applicable law or registered
or approved by a governmental agency or authority has been so
qualified, registered or approved by the appropriate governmental
agency or authority, and, to the knowledge of OptiSystems, nothing has
occurred since the date of the last qualification, registration or
approval to materially and adversely affect, or cause, the appropriate
governmental agency or authority to revoke such qualification,
registration or approval; (iv) to the extent applicable, the
OptiSystems Plans comply, in all material respects, with the
requirements of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Code, and any OptiSystems Plan intended to
be qualified under Section 401(a) of the Code has been determined by
the Internal Revenue Service to be so qualified and, to the knowledge
of OptiSystems, nothing has occurred to cause the loss of such
qualified status; (v) no OptiSystems Plan is covered by Title IV of
ERISA or Section 412 of the Code; (vi) there are no pending or, to the
knowledge of OptiSystems, anticipated material claims against or
otherwise involving any of the OptiSystems Plans and no suit, action or
other litigation (excluding claims for benefits incurred in the
ordinary course of OptiSystems Plan activities) has been brought
against or with respect to any OptiSystems Plan; (vii) all material
contributions, reserves or premium payments, required to be made as of
the date hereof to the OptiSystems Plans have been made or provided
for; (viii) OptiSystems has not incurred any liability under subtitle C
or D of Title IV of ERISA with respect to any "single-employer plan,"
within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by OptiSystems or any corporation, trade, business,
or entity under common control with the Company, within the meaning of
Section 414(b), (c) or (m) of the Code or Section 4001 of ERISA
("Commonly Controlled Entity"); (ix) OptiSystems has not incurred any
withdrawal liability under Subtitle E of Title IV of ERISA with respect
to any "multiemployer plan," within the meaning of Section 4001(a)(3)
of ERISA, currently or formerly maintained by OptiSystems or any
Commonly Controlled Entity; (x) OptiSystems has substantially performed
all obligations, whether arising by law or by contract, required to be
performed by it in connection with the OptiSystems Plans; (xi) to the
knowledge of OptiSystems, no act, omission or transaction has occurred
which
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would result in imposition on OptiSystems of (a) a civil penalty
assessed pursuant to subsections (c), (i) or (l) of Section 502 of
ERISA, (b) breach of fiduciary duty liability damages under Section 409
of ERISA or (c) a tax imposed pursuant to Chapter 43 of Subtitle D of
the Code; (xii) in connection with the consummation of the transactions
contemplated by this Agreement, no payments have or will be made
hereunder, under the OptiSystems Plans or otherwise by OptiSystems
which, in the aggregate, would result in imposition of the sanctions
imposed under Sections 280G and 4999 of the Code; and (xiii)
OptiSystems has no obligations for retiree health and life benefits
under any OptiSystems Plan, except as set forth on Section 2.20 of the
OptiSystems Disclosure Schedule, and there are no restrictions on the
rights of OptiSystems to amend or terminate any such OptiSystems Plan
without incurring any liability thereunder.
2.21. Product Warranty. There are no existing liabilities or, to the
knowledge of OptiSystems, potential liabilities, arising from claims regarding
the performance or design of the products and services sold by OptiSystems
either in the past or at present for which adequate reserves have not been
established on the most recent balance sheet in the OptiSystems Reports that in
the aggregate could reasonably be expected to have a Material Adverse Effect on
OptiSystems.
2.22. Information for Proxy Statement. None of the information and data
(including financial statements) concerning OptiSystems which will be included
in a proxy statement to be sent to the shareholders of OptiSystems in connection
with the OptiSystems General Meeting to be held to obtain the OptiSystems
Shareholder Vote in accordance with applicable Israeli law (the "Proxy
Statement") will, at the time the Proxy Statement is mailed to the shareholders
of OptiSystems or at the time of the OptiSystems General Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading and the
Proxy Statement will comply with applicable Israeli law.
2.23. Investment Company. OptiSystems is not an "investment company,"
or an "affiliated person of" or "promoter" or "principal underwriter" of an
investment company, as those terms are defined in the Investment Company Act of
1940, as amended (the "Investment Company Act").
2.24. Inapplicability of Certain Statutes. Other than the Companies
Law, OptiSystems is not subject to any takeover law that might apply to the
Merger or any other transaction contemplated by this Agreement.
2.25. Relationships with Related Persons. Except as disclosed in the
OptiSystems Reports filed with the Commission prior to the date hereof and
except as set forth and identified in Section 2.25 of the OptiSystems Disclosure
Schedule and except for this Agreement and the transactions contemplated hereby,
there are no, and since December 31, 1996, there have not been any, undischarged
contracts or agreements or other material transactions between OptiSystems or
any of its subsidiaries, on the one hand, and any director or executive officer
of OptiSystems or any of their respective Related Persons (as defined below), on
the other hand, and no director or executive officer of OptiSystems or any of
their respective Related Persons have any interest in any of the assets of
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OptiSystems or any of its subsidiaries. No executive officer, director of
OptiSystems or any of their respective Related Persons has any claim, charge,
action or cause of action against OptiSystems or any of its subsidiaries, except
for claims for accrued vacation pay, accrued benefits under OptiSystems' benefit
plans, claims for compensation, expense reimbursement and similar obligations
and similar matters and agreements, which have been disclosed in the OptiSystems
Disclosure Schedule. For purposed hereof, the term "Related Persons" shall mean:
(a) each other member of such individual's Family; and (b) any person or entity
that is directly or indirectly controlled by any one or more members of such
individual's Family. For purposes of this definition, the "Family" of an
individual includes (i) such individual, (ii) the individual's spouse, siblings,
or ancestors (iii) any lineal descendent of such individual, or their siblings,
or ancestors or (iv) a trust for the benefit of any of the foregoing.
2.26. Restrictions on Business Activities. Except as set forth in the
OptiSystems Disclosure Schedule, there is no agreement, judgment, injunction,
order or decree binding upon OptiSystems or its subsidiaries or their properties
(including, without limitation, their Intellectual Property) which has or could
reasonably be expected to have the effect of prohibiting or materially impairing
any material acquisition of property by OptiSystems or any of its subsidiaries
or the conduct of the business by OptiSystems or any of its subsidiaries
including any exclusive distribution or licensing agreements which cannot be
terminated on less than 30 days notice without any cost or expense to
OptiSystems or its subsidiaries.
2.27. Grants, Incentives and Subsidies. Section 2.27 of the OptiSystems
Disclosure Schedule provides a complete list of all pending and outstanding
grants, incentives and subsidies (collectively, "Grants") from the Government of
the State of Israel or any agency thereof, or from any foreign governmental or
administrative agency, granted to OptiSystems, including, without limitation,
(i) Approved Enterprise Status from the Investment Center and (ii) grants from
the OCS. OptiSystems has made available to BMC, prior to the date hereof,
correct copies of all documents evidencing Grants submitted by OptiSystems and
of all letters of approval, and supplements thereto, granted to OptiSystems.
Section 2.27 of the OptiSystems Disclosure Schedule details all material
undertakings of OptiSystems given in connection with the Grants. Without
limiting the generality of the above, Section 2.27 of the OptiSystems Disclosure
Schedule includes the aggregate amounts of each Grant, and the aggregate
outstanding obligations thereunder of OptiSystems with respect to royalties, or
the outstanding amounts to be paid by the OCS to OptiSystems and the composition
of such obligations or amount by the product or product family to which it
relates. OptiSystems is in compliance, in all material respects, with the terms
and conditions of their respective Grants and, except as disclosed in Section
2.27 of the OptiSystems Disclosure Schedule hereto, have duly fulfilled, in all
material respects, all the undertakings relating thereto. OptiSystems is not
aware of any event or other set of circumstances which might lead to the
revocation or material modification of any of the Grants.
2.28. No ownership of BMC Stock. OptiSystems does not own, beneficially
or of record, any shares of common stock of BMC.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BMC AND MERGER SUB
BMC and Merger Sub represent and warrant as follows:
3.1. Organization and Standing. Each of BMC and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and the State of Israel, respectively, has all
requisite power and authority to carry on its business as it is currently
conducted and to own and operate the properties currently owned and operated by
it and is duly qualified or licensed to do business and is in good standing as a
foreign corporation authorized to do business in all jurisdictions in which the
character of the properties owned or the nature of the business conducted by it
would make such qualification or licensing necessary, except where the failure
to be so qualified or licensed could not reasonably be expected to have a
Material Adverse Effect on BMC. As hereinafter used in this Article III, the
term "BMC" also includes any and all of its directly and indirectly held
subsidiaries, except where the context indicates to the contrary.
3.2. Agreement Authorized and its Effect on Other Obligations.
3.2.1. Authorization and Enforceability. Each of BMC and
Merger Sub has all requisite power and authority to execute and deliver
this Agreement and, in the case of BMC, the Stock Option Agreement and
to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution and
delivery by each of BMC and Merger Sub of this Agreement and, in the
case of BMC, the Stock Option Agreement, and the performance by each of
BMC and Merger Sub of its obligations hereunder and, in the case of
BMC, thereunder have been duly and validly authorized by all necessary
corporate action on the part of each of BMC and Merger Sub. This
Agreement has been duly executed and delivered by each of BMC and
Merger Sub and the Stock Option Agreement has been duly executed and
delivered by BMC and (assuming due authorization, execution and
delivery hereof by the other parties hereto) this Agreement constitutes
the legal, valid and binding obligation of BMC and Merger Sub and the
Stock Option Agreement constitutes the legal, valid and binding
obligation of BMC, each enforceable (subject to normal equity
principles) against BMC and, with respect to this Agreement, against
Merger Sub in accordance with their terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, debtor relief or
similar laws affecting the rights of creditors generally.
3.2.2. Approvals. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to BMC or any of its subsidiaries
in connection with the execution and delivery of this Agreement or the
Stock Option Agreement or the consummation of the transactions
contemplated hereby or thereby, except (a) any filings required to be
made under Section 13 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (b) filings with the
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Investment Center, (c) consent of the OCS, (d) consent of and approval
of the Israeli Commissioner of Restrictive Trade Practices, if
necessary and (e) such other consents, approvals, orders,
authorizations, registrations, declarations and filings, the failure of
which to be obtained or made would not have, individually or in the
aggregate, a Material Adverse Effect on BMC.
3.2.3. No Violation. Assuming the receipt of all consents,
approvals, orders or authorizations of, and the registration,
declaration or filing with, any Governmental Entity contemplated by
Section 3.2.2, neither the execution and delivery of this Agreement or
the Stock Option Agreement, nor the consummation of the transactions
contemplated hereby will (i) conflict with or result in a violation or
breach of any term or provision of, nor constitute a default under, the
organizational documents of BMC or Merger Sub; (ii) contravene,
conflict with or result in a violation or breach of, or result in a
default under, any obligations, indenture, mortgage, deed of trust,
lease, contract or other agreement to which BMC or any of its
subsidiaries is a party or by which any of them or their properties are
bound; (iii) contravene, conflict with or result in a violation of, or
give any Governmental Entity or other Person the right to challenge the
Merger or to exercise any remedy or obtain any relief under, any legal
requirement or any order, writ, injunction, judgment or decree to which
BMC, or any of the assets owned or used by BMC, is subject; or (iv)
with the passage of time, the giving of notice, or the taking of any
action by a third person, have any of the effects set forth in clause
(ii) and (iii) of this Section, in each case other than such
violations, breaches or defaults as could not reasonably be expected to
have a Material Adverse Effect on BMC.
3.3. Sufficient Funds. BMC has sufficient funds available (either in
the form of cash currently held by BMC or current commitments from third parties
to provide such cash to BMC, or a combination of both) to consummate the Merger
and the transactions contemplated hereby in accordance with the terms of this
Agreement.
3.4 Capitalization. The authorized share capital of Merger Sub is NIS
39,100 divided into 39,100 ordinary shares, par value NIS 1 per share ("Merger
Sub Ordinary Shares"), of which as of the date hereof, 100 shares are issued and
outstanding and none are reserved for issuance. As of the date hereof and as of
the Effective Time, all of the outstanding Merger Sub Ordinary Shares are and
will be, validly issued, fully paid and nonassessable, free of preemptive rights
and owned free and clear of any liens, claims or encumbrances by BMC.
3.5 Liabilities. BMC does not have any liabilities or obligations,
either accrued, absolute, contingent or otherwise, or have any knowledge of any
potential liabilities or obligations, which could reasonably be expected to have
a Material Adverse Effect on BMC other than those (i) disclosed in any reports
filed by BMC with the Commission or (ii) set forth in Section 3.5 of the
Disclosure Schedule delivered by BMC to OptiSystems dated the date hereof.
Merger Sub is a newly incorporated company incorporated on April 5, 2000. Except
in connection with this Agreement and the transactions contemplated hereby,
Merger Sub has not conducted any operations,
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has not entered into any agreements and has no liabilities or obligations,
either accrued, absolute, contingent or otherwise.
3.6. Information for Proxy Statement. None of the information and data
(including financial statements) concerning BMC to be furnished by BMC to
OptiSystems for use in the Proxy Statement will, at the time the Proxy Statement
is mailed to the shareholders of OptiSystems or at the time of the OptiSystems
General Meeting contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading.
ARTICLE IV
OBLIGATIONS PENDING EFFECTIVE TIME
4.1. Agreements of OptiSystems. OptiSystems agrees that from the date
hereof to the Closing Date, it will:
4.1.1. Maintenance of Present Business. Other than as
contemplated by this Agreement, operate its business only in the usual,
regular, and ordinary manner so as to maintain the goodwill it now
enjoys and, to the extent consistent with such operation, use all
reasonable efforts to preserve intact its present business
organization, keep available the services of its present officers and
employees, and preserve its relationships with customers, suppliers,
licensors, licensees, jobbers, distributors, and others having business
dealings with it, and in connection therewith it shall not
substantially deviate from its licensing and pricing practices;
4.1.2. Maintenance of Properties. At its expense, maintain all
of its property and assets in customary repair, order, and condition,
reasonable wear and use and damage by fire or unavoidable casualty
excepted;
4.1.3. Maintenance of Books and Records. Maintain its books of
accounts and records in the usual, regular, and ordinary manner, in
accordance with Israeli GAAP applied on a consistent basis;
4.1.4. Compliance with Law. Duly comply with all laws
applicable to it and to the conduct of its business; except where the
failure to comply with such laws would not have a Material Adverse
Effect on OptiSystems;
4.1.5. Compliance with Agreement. At its expense, take all
commercially reasonable actions as may be necessary (i) to insure that
the representations and warranties made by it herein are true and
correct at the Effective Time, (ii) to fully perform all covenants made
by it herein and (iii) to satisfy timely all other obligations imposed
upon it by this Agreement;
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4.1.6. Inspection. Permit BMC and its officers and authorized
representatives, during normal business hours, to inspect upon
reasonable prior notice its records and to consult with its officers,
employees, attorneys, and agents for the purpose of determining the
accuracy of the representations and warranties hereinabove made and the
compliance with covenants contained in this Agreement; and
4.1.7. Maintenance of Intellectual Property. Not take any
action that would, or fail to take any action the failure of which
would, cause directly or indirectly any of its Intellectual Property to
enter the public domain or that could otherwise adversely affect its
Intellectual Property.
4.2. Agreements of BMC and OptiSystems. BMC and OptiSystems agree to
take the following actions after the date hereof:
4.2.1. Merger Proposal. Immediately after the execution and
delivery of this Agreement, (a) OptiSystems and Merger Sub shall cause
a merger proposal (in the Hebrew language) in the form of Exhibit A
(the "Merger Proposal") to be executed in accordance with Section 316
of the Israeli Companies Law, (b) OptiSystems shall call the
OptiSystems General Meeting (as hereinafter defined), and (c)
OptiSystems shall deliver the Merger Proposal to the Companies
Registrar. OptiSystems and Merger Sub shall cause a copy of the Merger
Proposal to be delivered to each of their secured creditors, if any, no
later than three days after the date on which the Merger Proposal is
delivered to the Companies Registrar, and shall promptly inform their
non-secured creditors of the Merger Proposal and its contents in
accordance with Section 318 of the Companies Law and the regulations
promulgated thereunder. Promptly after OptiSystems and Merger Sub shall
have complied with the preceding sentence, OptiSystems and Merger Sub
shall inform the Companies Registrar, in accordance with Section 317(b)
of the Companies Law, that notice was given to their creditors under
Section 318 of the Israeli Companies Law and the regulations
promulgated thereunder.
4.2.2. Proxy Statement.
4.2.2.1 As promptly as practicable after the date of
this Agreement, BMC and OptiSystems shall cooperate in the preparation
of a Proxy Statement that complies with all requirements of Israeli
law.
4.2.2.2 OptiSystems shall cause the Proxy Statement to
be mailed to OptiSystems' shareholders as promptly as practicable after
the date of this Agreement. If any event relating to OptiSystems
occurs, or if OptiSystems becomes aware of any information, that should
be disclosed in an amendment or supplement to the Proxy Statement, then
OptiSystems shall promptly inform BMC thereof and shall cooperate with
BMC in mailing an appropriate amendment or supplement to the
shareholders of OptiSystems.
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4.2.3. OptiSystems General Meeting.
4.2.3.1 OptiSystems shall take all action necessary under all
applicable legal requirements to call (immediately after the execution
and delivery of this Agreement), give notice of and hold a meeting of
the holders of OptiSystems Shares to vote on the proposal to approve
the Merger (the "OptiSystems General Meeting"). Subject to the notice
requirements of the Israeli Companies Law and the Articles of
Association of OptiSystems, the OptiSystems General Meeting shall be
held (on a date selected by OptiSystems in consultation with BMC) as
promptly as practicable after the date hereof. OptiSystems shall ensure
that all proxies solicited in connection with the OptiSystems General
Meeting are solicited in compliance with all applicable legal
requirements. In the event that BMC shall cast any votes in respect of
the Merger, BMC shall disclose to OptiSystems its interest in such
shares so voted.
4.2.3.2 The Proxy Statement shall include a statement to the
effect that the board of directors of OptiSystems recommends that
OptiSystems' shareholders vote to approve the Merger at the OptiSystems
General Meeting (the recommendation of OptiSystems' board of directors
that OptiSystems' shareholders vote to approve the Merger being
referred to as the "OptiSystems Board Recommendation"). The OptiSystems
Board Recommendation shall not be withdrawn or modified in a manner
adverse to BMC, and no resolution by the board of directors of
OptiSystems or any committee thereof to withdraw or modify the
OptiSystems Board Recommendation in a manner adverse to BMC shall be
adopted or proposed.
4.2.3.3 OptiSystems' obligation to call, give notice of and
hold the OptiSystems General Meeting in accordance with this Agreement
shall not be limited or otherwise affected by the commencement,
disclosure, announcement or submission of any OptiSystems Transaction
Proposal (as hereinafter defined).
4.2.3.4 No later than three days after the approval of the
Merger by OptiSystems' shareholders at the OptiSystems General Meeting,
OptiSystems shall (in accordance with Section 317(b) of the Companies
Law) inform the Companies Registrar of the decision of the OptiSystems
General Meeting with respect to the Merger.
4.2.4. Merger Sub General Meeting. Promptly after the approval of the
Merger by the OptiSystems General Meeting and no later than the Closing Date,
Merger Sub shall call and hold its general meeting, and BMC (as the sole
shareholder of Merger Sub) shall approve the Merger at such general meeting. No
later than three days after the approval of the Merger by Merger Sub's
shareholders at the Merger Sub General Meeting, Merger Sub shall (in accordance
with Section 317(b) of the Companies Law and the regulations thereunder) inform
the Companies Registrar of the decision of Merger Sub's General Meeting with
respect to the Merger.
4.2.5. Israeli Approvals.
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4.2.5.1 Each party to this Agreement shall use all reasonable
efforts to deliver and file, as promptly as practicable after the date
of this Agreement, each notice, report or other document required to be
delivered by such party to or filed by such party with any Israeli
Governmental Entity with respect to the Merger. Without limiting the
generality of the foregoing:
(a) as promptly as practicable after the date of this
Agreement, BMC and OptiSystems shall prepare and file the
notifications required under the Israeli Restrictive Trade
Practices Law in connection with the Merger;
(b) BMC and OptiSystems shall respond as promptly as
practicable to any inquiries or requests received from the
Israeli Restrictive Trade Practices Commissioner for
additional information or documentation; and
(c) OptiSystems shall use all reasonable efforts to
obtain, as promptly as practicable after the date of this
Agreement, the following consents, and any other consents that
may be required in connection with the Merger: (i) approval of
the OCS; and (ii) approval of the Investment Center.
4.2.5.2 Each party to this Agreement shall (i) give the other
parties prompt notice of the commencement of any legal proceeding by or
before any Israeli Governmental Entity with respect to the Merger, (ii)
keep the other parties informed as to the status of any such legal
proceeding and (iii) promptly inform the other parties of any
communication to the Israeli Restrictive Trade Practices Commissioner,
the OCS, the Investment Center, the Companies Registrar or any other
Israeli Governmental Entity regarding the Merger or any of the other
transactions contemplated by this Agreement. The parties to this
Agreement will consult and cooperate with one another, and will
consider in good faith the views of one another, in connection with any
analysis, appearance, presentation, memorandum, brief, argument,
opinion or proposal made or submitted in connection with any Israeli
legal proceeding relating to the Merger. In addition, except as may be
prohibited by any Israeli Governmental Entity or by any Israeli legal
requirement, in connection with any such legal proceeding under or
relating to the Israeli Restrictive Trade Practices Law or any other
Israeli antitrust or fair trade law, each party hereto will permit
authorized representatives of the other party to be present at each
meeting or conference relating to any such legal proceeding and to have
access to and be consulted in connection with any document, opinion or
proposal made or submitted to any Israeli Governmental Entity in
connection with any such legal proceeding.
4.2.6. Further Action. BMC and OptiSystems shall use all
reasonable efforts to cooperate with each other in the taking of such
action reasonably necessary to consummate the Merger and make effective
the other transactions contemplated by this Agreement. Notwithstanding
anything to the contrary contained in this Agreement, BMC shall not
have any obligation under this Agreement: (i) to dispose or transfer or
cause any of its subsidiaries to dispose of or transfer any assets, or
to commit to cause OptiSystems to dispose of any
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assets; (ii) to discontinue or cause any of its subsidiaries to
discontinue offering any product or service, or to commit to cause
OptiSystems to discontinue offering any product or service; (iii) to
license or otherwise make available, or cause any of its subsidiaries
to license or otherwise make available, to any person, any technology,
software or other proprietary asset, or to commit to cause OptiSystems
to license or otherwise make available to any Person any technology,
software or other proprietary asset; (iv) to hold separate or cause any
of its subsidiaries to hold separate any assets or operations (either
before or after the Closing Date), or to commit to cause OptiSystems to
hold separate any assets or operations; (v) to make or cause any of its
subsidiaries to make any commitment (to any Governmental Entity or
otherwise) regarding its future operations or the future operations of
OptiSystems; or (vi) to contest any legal proceeding relating to the
Merger if BMC determines in good faith that contesting such legal
proceeding might not be advisable.
4.2.7. Notice of Material Development. Each of BMC and
OptiSystems will promptly notify the other party in writing of (i) any
event occurring subsequent to the date of this Agreement which would
render any representation or warranty of such party contained in this
Agreement untrue or inaccurate in any material respect, (ii) any
Material Adverse Effect on such party and (iii) breach by such party of
any covenant or agreement contained in this Agreement.
4.2.8. Resignation of Directors. OptiSystems shall use all
reasonable efforts to obtain and deliver to BMC prior to the Closing
Date the resignation of each officer and director of OptiSystems,
effective as of the Effective Time.
4.3. Additional Agreements of OptiSystems. OptiSystems agrees that from
the date hereof to the Closing Date, it will:
4.3.1. Prohibition of Certain Employment Contracts. Not enter
into any contracts of employment which (i) cannot be terminated on
notice of 14 days or less for United States employees, 30 days for
Israeli employees and 90 days for European employees, without the
payment of additional compensation or (ii) provide for any increase in
compensation including, without limitation, any modification of any
stock option agreements, outside the ordinary course of business
consistent with past practice, severance payments or benefits covering
a period beyond the termination date except as contemplated by this
Agreement or as may be required by law;
4.3.2. Prohibition of Certain Loans. Not incur any borrowings
except (i) the prepayment by customers of amounts due or to become due
for goods sold or services rendered or to be rendered in the future,
(ii) trade payables incurred in the ordinary course of business, (iii)
other borrowings incurred in the ordinary course of business to finance
normal operations or (iv) as is otherwise agreed to in writing by BMC;
4.3.3. Prohibition of Certain Commitments. Not enter into
commitments of a capital expenditure nature or incur any contingent
liability which would exceed $250,000,
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in the aggregate, except (i) as may be necessary for the maintenance of
existing facilities and equipment in good operating condition and
repair in the ordinary course of business, (ii) as may be required by
law or (iii) as is otherwise agreed to in writing by BMC;
4.3.4. Disposal of Assets. Not sell, dispose of, or encumber,
any property or assets, except (i) in the ordinary course of business
or (ii) as is otherwise agreed to in writing by BMC;
4.3.5. Maintenance of Insurance. Maintain insurance (or self
insurance reserves) upon all its properties and with respect to the
conduct of its business of such kinds and in such amounts as is
customary in the type of business in which it is engaged, but not less
than that presently carried by it, which insurance (or self insurance
reserves) may be added to from time to time in its discretion;
4.3.6. No Solicitation. Not directly or indirectly authorize
or permit any of its respective agents to: (i) solicit, initiate,
encourage (including by way of furnishing information) or take any
other action to facilitate, any inquiry or the making of any proposal
which constitutes, or may reasonably be expected to lead to, any
acquisition or purchase of a substantial amount of assets of, or any
equity interest in, OptiSystems or any merger, consolidation, business
combination, sale of substantially all assets, sale of securities,
recapitalization, liquidation, dissolution or similar transaction
involving OptiSystems (other than the transactions contemplated by this
Agreement) or any other material corporate transactions the
consummation of which would, or could reasonably be expected to,
impede, interfere with, prevent or materially delay the Merger
(collectively, "OptiSystems Transaction Proposals") or agree to or
endorse any OptiSystems Transaction Proposal or (ii) propose, enter
into or participate in any discussions or negotiations regarding any of
the foregoing, or furnish to another person any information with
respect to its business, properties or assets or any of the foregoing,
or otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, an effort or attempt by any other person to do
or seek any of the foregoing; If OptiSystems receives an Acquisition
Proposal, then OptiSystems shall immediately inform BMC of the terms
and conditions of such proposal and the identity of the person making
it and shall keep BMC fully informed of the status and details of any
such Acquisition Proposal and of all steps it is taking in response to
such Acquisition Proposal.
4.3.7. No Amendment to Articles of Association, etc. Without
the consent of BMC, not amend its Articles of Association or Memorandum
of Association or other organizational documents or merge or
consolidate with or into any other corporation or change in any manner
the rights of its capital stock or the character of its business;
4.3.8. No Issuance, Sale, or Purchase of Securities. Without
the consent of BMC, not issue or sell, or issue options or rights to
subscribe to, or enter into any contract or commitment to issue or sell
(upon conversion or otherwise), any shares of its capital stock or
subdivide or in any way reclassify any shares of its capital stock, or
acquire, or agree to
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acquire, any shares of its capital stock; provided, that nothing in
this Section 4.3.8 shall restrict or prohibit the issuance by
OptiSystems of OptiSystems Shares upon exercise of options previously
granted under existing benefit plans or any OptiSystems Warrant; or
without the consent of BMC, not amend or elect to redeem any
OptiSystems Warrant;
4.3.9. Prohibition on Dividends. Without the consent of BMC,
not declare or pay any dividend on shares of its capital stock or make
any other distribution of assets to the holders thereof;
4.3.10. Supplemental Financial Statements. Deliver to BMC,
within 45 days after the end of each fiscal quarter of OptiSystems
beginning March 31, 2000 and through the Effective Time, unaudited
consolidated balance sheets and related unaudited statements of income,
retained earnings and cash flows as of the end of each fiscal quarter
of OptiSystems, and as of the corresponding fiscal quarter of the
previous fiscal year. OptiSystems hereby represents and warrants that
such unaudited consolidated financial statements shall (i) be complete
in all material respects except for the omission of notes and schedules
contained in audited financial statements, (ii) present fairly the
financial condition of OptiSystems as at the dates indicated and the
results of operations for the respective periods indicated (except for
normal year-end adjustments which are not material), (iii) shall have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis, except as noted therein and
(iv) shall contain all adjustments which OptiSystems considers
necessary for a fair presentation of its results for each respective
fiscal period;
4.3.11. Notice of Material Developments. Promptly furnish to
BMC copies of all communications from OptiSystems to its stockholders
and all OptiSystems Reports. OptiSystems shall give prompt notice to
BMC of (i) the occurrence or non-occurrence of any event the occurrence
or non-occurrence of which would cause any OptiSystems representation
or warranty contained in this Agreement to be untrue or inaccurate at
or prior to the Effective Time and (ii) any material failure of
OptiSystems to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section
4.3.11 shall not limit or otherwise affect the remedies available
hereunder to BMC;
4.3.12. Employment Agreements. OptiSystems shall use its best
efforts to obtain on or prior to the Effective Time, employment
agreements with such employees of OptiSystems as reasonably requested
by BMC; and
4.3.13. Union Contracts and OptiSystems Plans. Except as
required by law, without the written consent of BMC, not directly or
indirectly (i) enter into or modify any collective bargaining agreement
with any labor union or other representative of employees, (ii)
increase the compensation or benefits of any employee of OptiSystems or
any of its subsidiaries, (iii) amend or terminate any OptiSystems Plan,
or (iv) enter into or adopt any new employee benefit plan, policy or
arrangement; and
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4.3.14. Transaction Expenses. Prior to the Closing Date,
OptiSystems will provide BMC with a good faith estimate of all expenses
to be paid by OptiSystems in connection with the transactions
contemplated by this Agreement to any legal, financial, investment
banking, accounting or other professional advisor, including any
agreement relating to the foregoing.
4.3.15. Licensing Practices. Observe all provisions of, and
perform all its obligations under, any Marketing Agreements.
4.3.16. Termination of 401(k) Plan. Prior to the Effective
Time, OptiSystems shall terminate its 401(k) plan.
4.4. Additional Agreements of BMC. BMC agrees that from the
date hereof to the Effective Time, it will:
4.4.1. Notice of Material Developments. Give prompt notice to
OptiSystems of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would cause any BMC
representation or warranty contained in this Agreement to be untrue or
inaccurate at or prior to the Effective Time and (ii) any material
failure of BMC to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section 4.4.1
shall not limit or otherwise affect the remedies available hereunder to
OptiSystems; and
4.4.2. Compliance with Agreement. At its expense, take all
commercially reasonable actions as may be necessary (i) to insure that
the representations and warranties made by it herein are true and
correct in all material respects at the Effective Time, (ii) to fully
perform all covenants made by it herein and (iii) to satisfy timely all
other obligations imposed upon it by this Agreement.
4.5. Business Attributes. Prior to the Effective Time OptiSystems shall
provide to BMC a schedule setting forth the following information with respect
to each of OptiSystems and its subsidiaries (or, in the case of clause (ii)
below, with respect to each of the subsidiaries) as of the most recent
practicable date: (i) the basis of OptiSystems and its subsidiaries in their
assets, with depreciable property combined and grouped according to class lives;
(ii) the basis of the stockholder(s) of the subsidiaries in their stock; (iii)
the amount of any net operating loss, net capital loss, unused investment or
other credit, unused foreign tax, or excess charitable contribution allocable to
OptiSystems or its subsidiaries; and (iv) the amount of any deferred gain or
loss allocable to OptiSystems or its subsidiaries arising out of any
intercompany transaction, as defined in Treasury Regulations section 1.1502-13.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
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5.1. Conditions Precedent to Obligations of OptiSystems. The
obligations of OptiSystems to consummate and effect the Merger shall be subject
to the satisfaction of the following conditions, or to the waiver thereof by
OptiSystems in the manner contemplated by Section 6.4 before the Closing Date:
5.1.1. Representations and Warranties of BMC True at Closing
Date. The representations and warranties of BMC herein contained shall
be, in all material respects, true as of and at the Closing Date with
the same effect as though made at such date, except for those
representations and warranties that address matters only as of a
particular date (which shall remain true and correct as of such
particular date); BMC shall have performed and complied, in all
material respects, with all covenants required by this Agreement to be
performed or complied with by BMC before the Closing Date; and BMC
shall have delivered to OptiSystems a certificate, dated the Closing
Date and signed by its chairman of the board and by its chief financial
or accounting officer to both such effects.
5.1.2. No Order. No temporary restraining order, preliminary
or permanent injunction or other order preventing the consummation of
the Merger shall have been issued by any court of competent
jurisdiction and remain in effect, and there shall not be any legal
requirement enacted or deemed applicable to the Merger that makes
consummation of the Merger illegal.
5.1.3. Opinion of BMC Counsel. OptiSystems and the Significant
OptiSystems Shareholders shall have received a favorable opinion, dated
as of the Closing Date from (a) Vinson & Elkins L.L.P., counsel for
BMC, to the effect that (i) BMC has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Delaware; (ii) all corporate proceedings required to be
taken by or on the part of BMC to authorize the execution of this
Agreement and the implementation of the Merger have been taken; (iii)
this Agreement and the Stock Option Agreement have been duly executed
and delivered by BMC; and (iv) this Agreement constitutes the legal,
valid and binding obligation of BMC, enforceable in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity and
public policy and (b) Herzog, Fox & Neeman, counsel for BMC and Merger
Sub, to the effect that (i) Merger Sub has been duly incorporated and
is validly existing as a corporation in good standing under the laws of
Israel; (ii) all corporate proceedings required to be taken by or on
the part of Merger Sub to authorize the execution of this Agreement and
the implementation of the Merger have been taken; (iii) this Agreement
has been duly executed and delivered by Merger Sub; (iv) this Agreement
constitutes the legal, valid and binding obligation of Merger Sub,
enforceable in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity and public policy; and (v) the
Merger has been approved by the requisite vote of the shareholders of
Merger Sub and has been consummated in accordance with Israeli law. In
rendering such opinion, such counsel may rely upon (i) certificates of
public officials and of officers of
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BMC and Merger Sub as to matters of fact and (ii) the opinion or
opinions of other counsel, which opinions shall be reasonably
satisfactory to OptiSystems, as to matters other than federal or Texas
law with respect to opinions rendered by Vinson & Elkins L.L.P. and as
to matters other than Israeli law with respect to opinions rendered by
Herzog, Fox & Neeman.
5.1.4. OptiSystems Shareholder Approval. The Merger shall have
been duly approved by the shareholders of Merger Sub and the Required
OptiSystems Shareholder Vote.
5.1.5. Approvals. All material consents, permits and approvals
of all Governmental Entities required to be obtained in connection with
the Merger and the other transactions contemplated by this Agreement
shall have been obtained and shall be in full force and effect.
5.2. Conditions Precedent to Obligations of BMC. The obligations of BMC
and Merger Sub to consummate and effect the Merger shall be subject to the
satisfaction of the following conditions, or to the waiver thereof by BMC in the
manner contemplated by Section 6.4 before the Closing Date:
5.2.1. Representations and Warranties of OptiSystems True at
Closing Date. The representations and warranties of OptiSystems herein
contained shall be, in all respects, true as of and at the Closing Date
with the same effect as though made at such date, except for those
representations and warranties that address matters only as of a
particular date (which shall remain true and correct as of such
particular date), provided that any inaccuracies in such
representations and warranties will be disregarded if the circumstances
giving rise to all such inaccuracies (considered collectively) do not
constitute, and are not reasonably expected to result in, a Material
Adverse Effect (it being understood that any materiality qualifications
contained in such representations and warranties shall be disregarded
for this purpose); OptiSystems shall have performed and complied, in
all material respects, with all covenants required by this Agreement to
be performed or complied with by OptiSystems before the Closing Date;
and OptiSystems shall have delivered to BMC a certificate, dated the
Closing Date and signed by its chairman of the board and by its chief
financial or accounting officer to both such effects.
5.2.2. No Order. No temporary restraining order, preliminary
or permanent injunction or other order preventing the consummation of
the Merger shall have been issued by any court of competent
jurisdiction and remain in effect, and there shall not be any legal
requirement enacted or deemed applicable to the Merger that makes
consummation of the Merger illegal.
5.2.3. Opinion of OptiSystems' Counsel. BMC shall have
received a favorable opinion, dated as of the Closing Date, from
Meitar, Liquornik, Geva & Co., counsel to OptiSystems to the effect
that (i) OptiSystems has been duly incorporated and is validly existing
as a corporation under the laws of Israel; (ii) all outstanding
OptiSystems Shares have been validly issued and are fully paid
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and nonassessable; (iii) all corporate proceedings required to be taken
by or on the part of OptiSystems to authorize the execution of this
Agreement and the implementation of the Merger have been taken; (iv)
this Agreement has been duly executed and delivered by OptiSystems; (v)
this Agreement constitutes the legal, valid and binding obligation of
OptiSystems; (vi) the Merger has been approved by the requisite vote of
the shareholders of OptiSystems and has been consummated in accordance
with Israeli law, (vii) the treatment of the OptiSystems Options in
accordance with Section 1.7 of this Agreement will not violate or
conflict with the terms of the OptiSystems Option Plans, OptiSystems
Option Agreements or any other agreement or plan identified to such
counsel governing the terms of the OptiSystems Options and (viii)
except as specified by such counsel, such counsel does not know of any
material litigation, proceedings or governmental investigation, pending
against or relating to OptiSystems or its properties or businesses in
which it is sought to restrain, prohibit or otherwise affect
consummation of the transactions contemplated by this Agreement;
provided that the opinions described in clause (viii), an opinion that
this Agreement is enforceable in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity and public policy
and an opinion that the treatment of the OptiSystems Warrants in
accordance with Section 1.8 of this Agreement will not violate or
conflict with the terms of the applicable warrant agreements governing
the terms of the OptiSystems Warrants or any other agreement or plan
governing the terms of the OptiSystems Warrants shall also be rendered
by McDermott, Will & Emery. In rendering such opinion, such counsel may
rely upon (i) certificates of public officials and of officers of
OptiSystems as to matters of fact and (ii) on the opinion or opinions
of other counsel, which opinions shall be reasonably satisfactory to
BMC, as to matters other than federal or New York law with respect to
opinions rendered by McDermott, Will & Emery. and as to matters other
than Israeli law with respect to opinions rendered by Meitar,
Liquornik, Geva & Co.
5.2.4. OptiSystems Shareholder Approval. The Merger shall have
been duly approved by the Required OptiSystems Shareholder Vote.
5.2.5. Approvals. All material consents, permits and approvals
of all Governmental Entities required to be obtained in connection with
the Merger and the other transactions contemplated by this Agreement
shall have been obtained and shall be in full force and effect.
5.2.6. Consent of Certain Parties in Privity with OptiSystems.
The holders of any material indebtedness of OptiSystems, the lessors of
any material property leased by OptiSystems, and the other parties to
any other material agreements to which OptiSystems is a party, whose
consent to the Merger is required as set forth in the OptiSystems
Disclosure Schedule, shall, when and to the extent necessary in the
reasonable opinion of BMC, have consented to the Merger.
5.2.7. Tax Opinion. Herzog, Fox & Neeman shall have delivered
to BMC its written opinion (which may be based on such representations,
warranties and certificates it deems reasonable and appropriate under
the circumstances) as of the date that the Proxy
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Statement is first mailed to OptiSystems' shareholders that the Merger
will not constitute a taxable event to OptiSystems, and such opinion
shall not have been withdrawn or modified in any material respect.
5.2.8. Employees. None of the individuals identified on
Section 5.2.8(a) of the OptiSystems Disclosure Schedule shall have
ceased to be employed by OptiSystems or shall have expressed an
intention to terminate his or her employment with OptiSystems or to
decline to accept employment with BMC.
5.2.9. No Material Adverse Effect. Since the date of this
Agreement, there shall not have occurred any Material Adverse Effect on
OptiSystems, and no event shall have occurred or circumstance shall
exist that, in combination with any other events or circumstances,
could reasonably be expected to have a Material Adverse Effect on
OptiSystems; provided, however, for purposes of this Section 5.2.9 a
Material Adverse Effect shall not include any loss of revenues or sales
and support personnel during the period from the date hereof to the
Effective Time other than losses of revenues or sales and support
personnel attributable to an event the occurrence or existence of which
would result in a representation or warranty made by OptiSystems in
this Agreement being untrue or would result in the breach of a covenant
made by OptiSystems in this Agreement.
5.2.10. Burdensome Condition. There shall not have been any
action taken by any Governmental Entity, and there shall not have been
any legal requirement or order enacted, entered, enforced or deemed
applicable to the Merger, that imposes or that seeks to impose any
restriction, condition or obligation upon BMC or OptiSystems that could
reasonably be expected to adversely impact, in any material respect,
any of the anticipated benefits to BMC of the Merger.
ARTICLE VI
TERMINATION AND ABANDONMENT
6.1. Termination. Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated and the Merger abandoned at
any time (whether before or after the approval and adoption thereof by the
stockholders of OptiSystems) before the Effective Time:
6.1.1. By Mutual Consent. By mutual consent of BMC and
OptiSystems.
6.1.2. By BMC Because of Conditions Precedent. By BMC, if
there has been a breach by OptiSystems of its representations,
warranties, covenants, or agreements set forth in this Agreement if, as
a result of such breach, the conditions set forth in Section 5.2 would
not be satisfied, and OptiSystems fails to cure such breach within 15
business days after written notice thereof from BMC (except that no
cure period shall be provided for any breach by OptiSystems which by
its nature cannot be cured).
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6.1.3. By BMC Because of Material Adverse Change. By BMC, if
there has been since December 31, 1999, a Material Adverse Change with
respect to OptiSystems which condition or event shall not have been
ameliorated such that it no longer constitutes a Material Adverse
Change within fifteen (15) business days following receipt by
OptiSystems of notice from BMC (except that no cure period shall be
provided for any Material Adverse Change which by its nature cannot be
cured); provided, however, for purposes of this Section 6.1.3 a
Material Adverse Change shall not include any loss of revenues or sales
and support personnel during the period from the date hereof to the
Effective Time other than losses of revenues or sales and support
personnel attributable to an event the occurrence or existence of which
would result in a representation or warranty made by OptiSystems in
this Agreement being untrue or would result in the breach of a covenant
made by OptiSystems in this Agreement.
6.1.4. By OptiSystems Because of Conditions Precedent. By
OptiSystems, if there has been a breach by BMC of any of its
representations, warranties, covenants or agreements set forth in this
Agreement if, as a result of such breach, the conditions set forth in
Section 5.1 would not be satisfied, and BMC fails to cure such breach
within 15 business days after written notice thereof from OptiSystems
(except that no cure period shall be provided for any breach by BMC
which by its nature cannot be cured).
6.1.5. By BMC or OptiSystems Because of Legal Proceedings. By
BMC or OptiSystems if (i) a statute, rule, regulation or executive
order shall have been enacted, entered or promulgated prohibiting the
consummation of the Merger substantially on the terms contemplated
hereby or (ii) an order, decree, ruling or injunction shall have been
entered permanently restraining, enjoining or otherwise prohibiting the
consummation of the Merger substantially on the terms contemplated
hereby and such order, decree, ruling or injunction shall have become
final and non-appealable; provided, that the party seeking to terminate
this Agreement pursuant to this Section 6.1.5 shall have used its
reasonable best efforts to remove such injunction, order or decree.
6.1.6. By BMC or OptiSystems if Merger not Effective by
December 31, 2000. By either BMC or OptiSystems, if all conditions to
consummation of the Merger shall not have been satisfied or waived on
or before December 31, 2000, other than as a result of a breach of this
Agreement by the terminating party.
6.2. Termination by Board of Directors. An election of BMC to terminate
this Agreement and abandon the Merger as provided in Section 6.1 shall be
exercised on behalf of BMC by its board of directors. An election of OptiSystems
to terminate this Agreement and abandon the Merger as provided in Section 6.1
shall be exercised on behalf of OptiSystems by its board of directors.
6.3. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to and in accordance with the provisions
of Section 6.1 hereof, this Agreement shall become void and have no effect,
without any liability on the part of any party hereto (or its
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stockholders or controlling persons or directors or officers), except (i) the
provisions of Section 6.5 shall survive such termination and abandonment and
(ii) neither party shall be released or relieved from any liability arising from
the willful breach by such party of any of its representations, warranties,
covenants or agreements as set forth in this Agreement.
6.4. Waiver of Conditions. Subject to the requirements of any
applicable law, any of the terms or conditions of this Agreement may be waived
at any time by the party which is entitled to the benefit thereof, by action
taken by its board of directors.
6.5. Expense on Termination. If this Agreement is terminated pursuant
to and in accordance with the provisions of Section 6.1.6 and the shareholders
of OptiSystems shall have failed to approve the Merger by the Required
Shareholder Vote, OptiSystems shall pay to BMC simultaneously with termination
by OptiSystems or within two business days of termination by BMC (by wire
transfer of immediately available funds to an account designated by BMC for such
purpose), a fee (the "Termination Fee") in an amount equal to $3,000,000.
Notwithstanding the foregoing, if this Agreement is terminated by BMC as a
result of a willful breach of any representation, warranty, covenant or
agreement by OptiSystems, BMC may pursue any remedies available to it at law or
in equity and shall be entitled to recover such additional amounts as BMC may be
entitled to receive at law or in equity.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Exchange of Options. Promptly after the Effective Time, BMC will
notify in writing each holder of an OptiSystems Option of the consummation of
the Merger, the effect of Section 1.7 of this Agreement on such holder and the
manner in which such holder shall exchange such holders OptiSystems Option for
cash in accordance with the terms of Section 1.7 of this Agreement.
7.2. Indemnification of Directors and Officers. (a) On and after the
Effective Time, BMC shall indemnify and hold harmless each present and former
director and officer of OptiSystems, determined as of the Effective Time,
against any claims, losses, liabilities, damages, judgments, fines, fees, costs
or expenses, including without limitation attorneys' fees and disbursements
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters existing or occurring at or prior to the
Effective Time (including, without limitation, the Merger, the preparation and
mailing of the Proxy Statement and the other transactions and actions
contemplated by this Agreement), whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent that OptiSystems would have been
permitted, under applicable law, indemnification agreements existing on the date
hereof, the articles of incorporation or memorandum of association of
OptiSystems in effect on the date hereof, to indemnify such person (and BMC
shall also advance expenses as incurred to the fullest extent permitted under
applicable law provided the person to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification).
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(b) For a period of six (6) years after the Effective Time, BMC shall
maintain (to the extent available in the market) in effect a directors' and
officers' liability insurance policy covering those persons who are currently
covered by OptiSystems' directors' and officers' liability insurance policy (a
copy of which has been heretofore delivered to BMC) with coverage in amount and
scope at least as favorable as OptiSystems' existing coverage (which coverage
may be an endorsement extending the period in which claims may be made under
such existing policy); provided that in no event shall BMC be required to expend
per year for such coverage more than an aggregate of 150% of the current annual
premium expended by OptiSystems to provide such coverage.
(c) The provisions of this Section 7.2 are intended to be for the
benefit of, and shall be enforceable by, each indemnified party and his or her
heirs and representatives, and nothing herein shall affect any indemnification
rights that any indemnified party and his or her heirs and representatives may
have under the bylaws of OptiSystems or any of its subsidiaries, any contract or
applicable law.
7.3. Employee Benefit Plans of OptiSystems. BMC shall take all actions
necessary or appropriate to permit the employees of OptiSystems and its
subsidiaries ("OptiSystems Employees") to continue to participate from and after
the Closing Date in the OptiSystems Plans maintained by OptiSystems and its
subsidiaries immediately prior to the Closing Date. Notwithstanding the
foregoing, BMC may permit or cause any such OptiSystems Plan to be terminated or
discontinued on or after the Closing Date, provided that BMC shall take all
actions necessary or appropriate to permit the OptiSystems Employees
participating in such OptiSystems Plan to immediately thereafter participate in
the comparable BMC Plan maintained by BMC or any of its subsidiaries for their
similarly situated employees. If the OptiSystems Plan that is terminated or
discontinued by BMC is a group health plan, then BMC shall permit each
OptiSystems Employee participating in such group health plan to be covered under
a BMC Plan that (i) provides medical and dental benefits to each such
OptiSystems Employee effective immediately upon the cessation of coverage of
such individuals under such group health plan, (ii) credits such OptiSystems
Employee, for the year during which such coverage under such BMC Plan begins,
with any deductibles and copayments already incurred during such year under such
group health plan, and (iii) waives any preexisting condition restrictions to
the extent necessary to provide immediate coverage and to the extent such
restrictions were not applicable under such group health plan. BMC and the BMC
Plans shall recognize each OptiSystems Employee's years of service and level of
seniority with OptiSystems and its subsidiaries for purposes of terms of
employment and eligibility, vesting and benefit determination under the BMC
Plans (other than benefit accruals under any defined benefit pension plan).
ARTICLE VIII
MISCELLANEOUS
8.1. Entirety. This Agreement, the attachments and Schedules thereto
and the Stock Option Agreement embody the entire agreement between the parties
with respect to the subject
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matter hereof, and all prior agreements between the parties with respect thereto
are hereby superseded in their entirety.
8.2. Counterparts. Any number of counterparts of this Agreement may be
executed and each such counterpart shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one instrument.
8.3. Notices and Waivers. Any notice or waiver to be given to any party
hereof shall be in writing and shall be delivered by courier, sent by facsimile
transmission or first class registered or certified mail, postage prepaid.
IF TO BMC:
<TABLE>
<S> <C> <C>
Addressed to: With copies to:
BMC Software, Inc. Vinson & Elkins L.L.P. Herzog, Fox & Neeman
2101 CityWest Blvd. 1001 Fannin, Suite 2300 Asia House
Houston, Texas 77042 Houston, Texas 77002 4 Weizmann Street
Attention: Robert H. Whilden, Jr. Attention: John S. Watson 64239 Tel Aviv
Facsimile: (713) 918-7306 Facsimile: (713) 615-5236 Israel
Attention: Alan Sacks
Facsimile: 972 (3) 696-6464
</TABLE>
IF TO OPTISYSTEMS:
<TABLE>
<S> <C> <C>
Addressed to: With copies to:
OptiSystems Solutions, Ltd. McDermott Will & Emery Meitar, Liquornik, Geva & Co.
3 B Netanyahu Street 50 Rockefeller Plaza 16 Abba Hillel Silver Rd.
Or-Yehuda 60376, Israel New York, New York 10020 52506 Ramat-Gan
Attention: Gerry Frankel Attention: Mark S. Selinger Israel
Facsimile: 972-3-533-2521 Facsimile: 212-547-5444 Attention: Dan Shamgar
Facsimile: 972 (3) 610-3111
</TABLE>
Any communication so addressed and mailed by first-class registered or
certified mail, postage prepaid, shall be deemed to be received on the fifth
business day after so mailed, and if delivered by courier or facsimile to such
address, upon delivery during normal business hours on any business day.
8.4. Termination of Representations, Warranties, etc. The respective
representations and warranties contained in Articles II and III shall expire
with, and be terminated and extinguished by, the Merger at the time of the
consummation thereof on the Effective Time. This Section 8.4 shall not limit any
covenant or agreement of the parties hereto which by its terms contemplates
performance after the Effective Time or after termination of this Agreement.
8.5. Table of Contents and Captions. The table of contents and captions
contained in this Agreement are solely for convenient reference and shall not be
deemed to affect the meaning or interpretation of any article, section, or
paragraph hereof.
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8.6. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the successors and assigns
of the parties hereto.
8.7. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void,
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
8.8. Applicable Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware; provided,
however, that (a) any matter involving the internal corporate affairs of
OptiSystems or any party hereto shall be governed by the provisions of the
jurisdictions of its incorporation and (b) the form and content of the Merger
and the consequences of the filing thereof shall be governed by the Companies
Law.
8.9. Public Announcements. The parties agree that before the Effective
Time that they shall consult with each other before the making of any public
announcement regarding the existence of this Agreement, the contents hereof or
the transactions contemplated hereby, and to obtain the prior approval of the
other party as to the content of such announcement, which approval shall not be
unreasonably withheld. However, the foregoing shall not apply to any
announcement or written statement which, upon the written advice of counsel, is
required by law to be made, except that the party required to make such
announcement shall, whenever practicable, consult with and solicit prior
approval from such other party concerning the timing and content of such legally
required announcement or statement before it is made.
8.10. Definitions. The following terms are defined in the indicated
place:
<TABLE>
<S> <C>
TERM SECTION
---- -------
Agreement Premises
Applicable Environmental Laws 2.17.3.
BMC Premises
Closing 1.2.
Closing Date 1.2.
Companies Law Premises
Commission 2.5.
Effective Time 1.3.
Encumbrance 2.4.
ERISA 2.20.8.
Exchange Act 3.2.2.
Exchange Agent 1.5.2.
Governmental Entity 2.2.2.
Grants 2.27.
HSR Act 2.2.2.
</TABLE>
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<PAGE> 44
<TABLE>
<S> <C>
Intellectual Property 2.11.1.
Investment Center 2.2.2.
Investment Company Act 2.23.
Israeli GAAP 2.5.
Licenses 2.13.1.
Marketing Agreements 2.13.2.
Material Adverse Effect or Material Adverse Change 1.4.
Merger Premises
Merger Consideration 1.5.1.(c)
Merger Proposal 4.2.1.
Merger Sub Premises
Merger Sub Notice 1.3.
OCS 2.2.2.
Optionholder 1.7.
OptiSystems Premises
OptiSystems Board Recommendation 4.2.3.2
OptiSystems Disclosure Schedule 2.3.
OptiSystems Employees 7.3.
OptiSystems General Meeting 4.2.3.1
OptiSystems Option Agreements 1.7.
OptiSystems Options 1.7.
OptiSystems Option Plans 1.7.
OptiSystems Reports 2.5.
OptiSystems Plans 2.7.1.
OptiSystems Share Certificate 1.5.4.
OptiSystems Shareholder Undertakings Premises
OptiSystems Shares 1.5.5.
OptiSystems Transactional Proposals 4.3.6.
OptiSystems Warrants 1.8.
Per Share Merger Consideration 1.5.1(c)
Proxy Statement 2.22
Required OptiSystems Shareholder Vote 2.2.1.
Securities Act 2.5.
Significant OptiSystems Shareholders Premises
Software Programs 2.11.1.
Stock Option Agreements Premises
Stock Option Shareholders Premises
Tax or Taxes 2.10.1.
Tax Returns 2.10.1
Technical Documentation 2.12.
Underwriter Warrants 1.8.
Warrantholder 1.8.
</TABLE>
[Signature page follows]
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<PAGE> 45
IN WITNESS WHEREOF, the parties hereto have caused this Agreement of
Merger to be duly executed as of the date first above written.
BMC SOFTWARE, INC.
By:
----------------------------
Name:
Title:
HANSEN ACQUISITIONS LTD.
By:
----------------------------
Name:
Title:
OPTISYSTEMS SOLUTIONS, LTD.
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
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