EXHIBIT 99.4
[Option from East to West]
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT dated as of June 6, 1996 (the "Agreement") is
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entered into by and between Pure Software Inc., a Delaware corporation ("West"),
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and Atria Software, Inc., a Massachusetts corporation ("East").
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RECITALS
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WHEREAS, concurrently with the execution and delivery of this Agreement,
West, East and CST Acquisition Corporation, a Massachusetts corporation and a
wholly owned subsidiary of West ("Sub"), are entering into an Agreement and Plan
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of Reorganization (the "Merger Agreement"), which provides that, among other
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things, upon the terms and subject to the conditions thereof, Sub will be merged
with and into East (the "Merger") with East continuing as the surviving
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corporation and as a wholly owned subsidiary of West; and
WHEREAS, as a condition to West's and Sub's willingness to enter into the
Merger Agreement, West has requested that East agree, and East has so agreed, to
grant to West an option to acquire shares of East's Common Stock upon the terms
and subject to the conditions set forth herein;
AGREEMENT
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NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and in the Merger Agreement and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. Grant of Option
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East hereby grants to West an irrevocable option (the "Option") to acquire
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up to 2,149,038 shares (the "Option Shares") of the Common Stock, par value $.01
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per share, of East ("East Shares") in the manner set forth below (i) by
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exchanging therefor shares of the Common Stock, par value $.0001 per share, of
West ("West Shares") at a rate of 1.544615 West Share for each Option Share (the
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"Exercise Ratio") and/or, at West's election, (ii) by paying cash at a price
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determined in accordance with Section 4 below. Capitalized terms used in this
Agreement but not defined herein shall have the meanings ascribed thereto in the
Merger Agreement.
2. Exercise of Option
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The Option may only be exercised by West, in whole or in part, at any time
or from time to time, upon the occurrence of (i) the commencement of a tender or
exchange offer for 25% or more of any class of East's capital stock, or (ii) any
of the events specified in Section 7.3(b)(x) of the Merger Agreement (any of the
events specified in clauses (i) or (ii) of this sentence being referred to
herein as an "Exercise Event"). In the event West wishes to exercise the
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Option, West shall deliver to East a written notice (an "Exercise Notice")
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specifying the total number of Option Shares it wishes to acquire and the form
of consideration to be paid. Each closing of a purchase of Option Shares (a
"Closing") shall occur on a date and at a time designated by West in an Exercise
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Notice delivered at least five business days prior to the date of such Closing,
which Closing shall be held at the offices of counsel to East. The Option shall
terminate upon the earlier of (i) at the Effective Time, (ii) 180 days following
the termination of the Merger Agreement pursuant to Article VII thereof, if an
Exercise Event shall have occurred on or prior to the date of such termination,
and (iii) the date on which the Merger Agreement is terminated pursuant to
Article VII thereof if an Exercise Event shall not have occurred on or prior to
such date; provided, however, with respect to the preceding clause (ii) of this
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sentence, that if the Option cannot be exercised by reason of any applicable
government order or because the waiting period related to the issuance of the
Option Shares under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), if applicable, shall not have expired or been
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terminated, then the Option shall not terminate until the tenth business day
after such impediment to exercise shall have been removed or shall have become
final and not subject to appeal. Notwithstanding the foregoing, the Option may
not be exercised if West is in breach in any material respect of any of its
covenants or agreements contained in the Merger Agreement.
3. Conditions to Closing
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The obligation of East to issue Option Shares to West hereunder is subject
to the conditions that (a) any waiting period under the HSR Act applicable to
the issuance of the Option Shares hereunder shall have expired or been
terminated; (b) all consents, approvals, orders or authorizations of, or
registrations, declarations or filings with, any Federal, state or local
administrative agency or commission or other Federal state or local governmental
authority or instrumentality, if any, required in connection with the issuance
of the Option Shares hereunder shall have been obtained or made, as the case may
be; and (c) no preliminary or permanent injunction or other order by any court
of competent jurisdiction prohibiting or otherwise restraining such issuance
shall be in effect.
4. Closing
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At any Closing, (a) East shall deliver to West a single certificate in
definitive form representing the number of East Shares designated by West in its
Exercise Notice, such certificate to be registered in the name of West and to
bear the legend set forth in Section 10 hereof, and (b) West shall pay to East
the aggregate purchase price for the East Shares so designated and being
purchased by delivery of (i) a single certificate in definitive form
representing the number of West Shares being issued by West in consideration
therefor (based on the Exercise Ratio), such certificate to be registered in the
name of East and to bear the legend set forth in Section 10 hereof, and/or, at
West's
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election, (ii) a certified check or bank check, as the case may be. If West has
elected to deliver cash in payment for any East Shares, the price to be paid by
West in cash to East at any Closing in respect of such East Shares shall be
$62.75 per share (the "Exercise Price").
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5. Representations and Warranties of East
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East represents and warrants to West that (a) East is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has the corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder; (b) the
execution and delivery of this Agreement by East and consummation by East of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of East and no other corporate proceedings on the
part of East are necessary to authorize this Agreement or any of the
transactions contemplated hereby; (c) this Agreement has been duly executed and
delivered by East and constitutes a legal, valid and binding obligation of East
and, assuming this Agreement constitutes a legal, valid and binding obligation
of West, is enforceable against East in accordance with its terms, except as
enforceability may be limited by bankruptcy and other laws affecting the rights
and remedies of creditors generally and general principles of equity; (d) except
for any filings as may be required under the HSR Act, East has taken all
necessary corporate and other action to authorize and reserve for issuance and
to permit it to issue upon exercise of the Option, and at all times from the
date hereof until the termination of the Option will have reserved for issuance,
a sufficient number of unissued East Shares for West to exercise the Option in
full and will take all necessary corporate or other action to authorize and
reserve for issuance all additional East Shares or other securities which may be
issuable pursuant to Section 9(a) upon exercise of the Option, all of which,
upon their issuance and delivery in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable; (e) upon delivery of the
East Shares and any other securities to West upon exercise of the Option, West
will acquire such East Shares or other securities free and clear of all material
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever, excluding those imposed by West; (f) the execution and
delivery of this Agreement by East do not, and the performance of this Agreement
by East will not, (i) violate the Articles of Organization or By-Laws of East,
(ii) conflict with or violate any order applicable to East or any of its
subsidiaries or by which they or any of their property is bound or affected or
(iii) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give rise to
any right of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or encumbrance on any of the property or assets of
East or any of its subsidiaries pursuant to, any contract or agreement to which
East or any of its subsidiaries is a party or by which East or any of its
subsidiaries or any of their property is bound or affected, except, in the case
of clauses (ii) and (iii) above, for violations, conflicts, breaches, defaults,
rights of termination, amendment, acceleration or cancellation, liens or
encumbrances which would not, individually or in the aggregate, have a Material
Adverse Effect on East; (g) the execution and delivery of this Agreement by East
does not, and the performance of this Agreement by East will not, require any
consent, approval, authorization or permit of, or filing with, or notification
to, any Governmental Entity except pursuant to the HSR Act, if applicable; and
(h) any
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West Shares acquired pursuant to this Agreement will not be acquired by East
with a view to the public distribution thereof and East will not sell or
otherwise dispose of such shares in violation of applicable law or this
Agreement.
6. Representations and Warranties of West
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West represents and warrants to East that (a) West is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder; (b) the execution and
delivery of this Agreement by West and the consummation by West of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of West and no other corporate proceedings on the
part of West are necessary to authorize this Agreement or any of the
transactions contemplated hereby; (c) this Agreement has been duly executed and
delivered by West and constitutes a legal, valid and binding obligation of West
and, assuming this Agreement constitutes a legal, valid and binding obligation
of East, is enforceable against West in accordance with its term, except as
enforceability may be limited by bankruptcy and other laws affecting the rights
and remedies of creditors generally and general principles of equity; (d) except
for any filings that may be required under the HSR Act, West has taken (or will
in a timely manner take) all necessary corporate and other action to authorize
and reserve for issuance and to permit it to issue upon exercise of the Option
and will take all necessary corporate or other action to authorize and reserve
for issuance all additional West Shares or other securities which may be
issuable pursuant to Section 9(b) upon exercise of the Option, all of which,
upon their issuance and delivery in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable; (e) upon delivery of West
Shares to East in consideration of any acquisition of East Shares pursuant
hereto, East will acquire such West Shares free and clear of all material
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever, excluding those imposed by East; (f) the execution and
delivery of this Agreement by West do not, and the performance of this Agreement
by West will not, (i) violate the Certificate of Incorporation or By-Laws of
West, (ii) conflict with or violate any order applicable to West or any of its
subsidiaries or by which they or any of their property is bound or affected or
(iii) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give rise to
any right of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or encumbrance on any of the property or assets of
West or any of its subsidiaries pursuant to, any contract or agreement to which
West or any of its subsidiaries is a party or by which West or any of its
subsidiaries or any of their property is bound or affected, except, in the case
of clauses (ii) and (iii) above, for violations, conflicts, breaches, defaults,
rights of termination, amendment, acceleration or cancellation, liens or
encumbrances which would not, individually or in the aggregate, have a Material
Adverse Effect on West; (g) the execution and delivery of this Agreement by West
does not, and the performance of this Agreement by West will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity except pursuant to the HSR Act, if applicable; and
(h) any East Shares acquired upon exercise of the Option will not be acquired by
West with a view to the public distribution thereof and West will not sell or
otherwise dispose of such shares in violation of applicable law or this
Agreement.
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7. Certain Rights
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(a) West Put. At the request of West at any time during the period
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during which the Option is exercisable pursuant to Section 2 (the "Purchase
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Period"), East (or any successor entity thereof) shall purchase from West the
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Option, to the extent not previously exercised, at the price set forth in
subparagraph (i) below (as limited by subparagraph (iii) below), and the Option
Shares, if any, acquired by West pursuant thereto, at the price set forth in
subparagraph (ii) below (as limited by subparagraph (iii) below):
(i) The difference between the "Market Price" for East Shares as
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of the date West gives notice of its intent to exercise its rights
under this Section 7(a) (defined as the highest closing sale price of
East Shares on the Nasdaq National Market during the five (5) trading
days ending on the trading day immediately preceding such date) and the
Exercise Price, multiplied by the number of East Shares purchasable
pursuant to the Option, but only if the Market Price is greater than
the Exercise Price.
(ii) The Exercise Price paid by West for East Shares acquired
pursuant to the Option plus the difference between the Market Price and
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such Exercise Price (but only if the Market Price is greater than the
Exercise Price) multiplied by the number of East Shares so purchased.
(iii) Notwithstanding subparagraphs (i) and (ii) above, pursuant
to this Section 7 East shall not be required to pay West in excess of
an aggregate of (x) $40,000,000 plus (y) the Exercise Price paid by
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West for East Shares acquired pursuant to the Option minus (z) any
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amounts paid to West by East pursuant to Section 7.3(b) of the Merger
Agreement.
(b) Redelivery of West Shares. If West has acquired East Shares
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pursuant to exercise of the Option by the issuance and delivery of West Shares,
then East shall in fulfillment of its obligation pursuant to the first clause of
Section 7(a)(ii) with respect to the Exercise Price paid in the form of West
Shares only, redeliver all of the applicable certificate(s) for such West Shares
to West free and clear of all claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever, other than those imposed by West.
(c) Payment and Redelivery of Option or Shares. In the event West
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exercises its rights under Sections 7(a) and (b), East shall, within ten
business days after West delivers notice pursuant to Section 7(a), pay the
required amount to West in immediately available funds (and West Shares, if
applicable) and West shall surrender to East the Option and the certificates
evidencing the East Shares purchased by West pursuant thereto, and West shall
represent and warrant that such shares are then free and clear of all claims,
liens, charges, encumbrances and security interests of any kind or nature
whatsoever.
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(d) Restrictions on Transfer. Until the expiration of the Purchase
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Period, East shall not sell, transfer or otherwise dispose of any West Shares
acquired by it pursuant to this Agreement.
8. Registration Rights
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(a) Following the termination of the Merger Agreement, each party
hereto (a "Holder") may by written notice (a "Registration Notice") to the other
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party (the "Registrant") request the Registrant to register under the Securities
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Act all or any part of the shares acquired by such Holder pursuant to this
Agreement (the "Registrable Securities") in order to permit the sale or other
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disposition of such shares pursuant to a bona fide firm commitment underwritten
public offering in which the Holder and the underwriters shall effect as wide a
distribution of such Registrable Securities as is reasonably practicable and
shall use reasonable efforts to prevent any person or group from purchasing
through such offering shares representing more than 1% of the outstanding shares
of Common Stock of the Registrant on a fully diluted basis; provided, however,
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that any such Registration Notice must relate to a number of shares equal to at
least 2% of the outstanding shares of Common Stock of the Registrant on a fully
diluted basis and that any rights to require registration hereunder shall
terminate with respect to any shares that may be sold pursuant to Rule 144(k)
under the Securities Act.
(b) The Registrant shall use all reasonable efforts to effect, as
promptly as practicable, the registration under the Securities Act of the
Registrable Securities; provided, however, that (i) neither party shall be
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entitled to more than an aggregate of two effective registration statements
hereunder and (ii) the Registrant will not be required to file any such
registration statement during any period of time (not to exceed 40 days after a
Registration Notice in the case of clause (A) below or 90 days after a
Registration Notice in the case of clauses (B) and (C) below) when (A) the
Registrant is in possession of material non-public information which it
reasonably believes would be detrimental to be disclosed at such time and, in
the written opinion of counsel to such Registrant, such information would have
to be disclosed if a registration statement were filed at that time; (B) such
Registrant is required under the Securities Act to include audited financial
statements for any period in such registration statement and such financial
statements are not yet available for inclusion in such registration statement;
or (C) such Registrant determines, in its reasonable judgment, that such
registration would interfere with any financing, acquisition or other material
transaction involving the Registrant. If consummation of the sale of any
Registrable Securities pursuant to a registration hereunder does not occur
within 180 days after the filing with the SEC of the initial registration
statement therefor, the provisions of this Section 8 shall again be applicable
to any proposed registration, it being understood that neither party shall be
entitled to more than an aggregate of two effective registration statements
hereunder. The Registrant shall use all reasonable efforts to cause any
Registrable Securities registered pursuant to this Section 8 to be qualified for
sale under the securities or blue sky laws of such jurisdictions as the Holder
may reasonably request and shall continue such registration or qualification in
effect in such jurisdictions; provided, however, that the Registrant shall not
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be required to qualify to do business in, or consent to general service of
process in, any jurisdiction by reason of this provision.
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(c) The registration rights set forth in this Section 8 are subject to
the condition that the Holder shall provide the Registrant with such information
with respect to such Holder's Registrable Securities, the plan for distribution
thereof, and such other information with respect to such Holder as, in the
reasonable judgment of counsel for the Registrant, is necessary to enable the
Registrant to include in a registration statement all material facts required to
be disclosed with respect to a registration thereunder.
(d) A registration effected under this Section 8 shall be effected at
the Registrant's expense, except for underwriting discounts and commissions and
the fees and expenses of counsel to the Holder, and the Registrant shall provide
to the underwriters such documentation (including certificates, opinions of
counsel and "comfort" letters from auditors) as are customary in connection with
underwritten public offerings and as such underwriters may reasonably require.
In connection with any registration, the parties agree (i) to indemnify each
other and the underwriters in the customary manner and (ii) to enter into an
underwriting agreement in form and substance customary for transactions of this
type with the underwriters participating in such offering.
9. Adjustment Upon Changes in Capitalization
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(a) In the event of any change in the East Shares by reason of stock
dividends, split-ups, mergers (other than the Merger), recapitalizations,
combinations, exchanges of shares and the like, the type and number of shares or
securities subject to the Option, the Exercise Ratio and the Exercise Price
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction so that West shall receive, upon exercise
of the Option, the number and class of shares or other securities or property
that West would have received in respect of the East Shares if the Option had
been exercised immediately prior to such event or the record date therefor, as
applicable.
(b) In the event of any change in the West Shares by reason of stock
dividends, split-ups, mergers (other than the Merger), recapitalizations,
combinations, exchanges of shares and the like, the type and number of shares or
securities which West can deliver to East pursuant to Section 4 hereof in full
payment for any East Shares to be purchased and the Exchange Ratio shall be
adjusted appropriately.
10. Restrictive Legends
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Each certificate representing Option Shares issued to West hereunder, and
each certificate representing West Shares delivered to East at a Closing, shall
include a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD
ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
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TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF JUNE 6,
1995, A COPY OF WHICH MAY BE OBTAINED FROM [NAME OF COMPANY].
11. Listing and HSR Filing
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East, upon the request of West, shall promptly file an application to
list the East Shares to be acquired upon exercise of the Option for quotation on
the Nasdaq National Market and shall use its best efforts to obtain approval of
such listing as soon as practicable. West, upon the request of East, shall
promptly file an application to list the West Shares issued and delivered to
East pursuant to Section 4 for quotation on the Nasdaq National Market and shall
use its best efforts to obtain approval of such listing as soon as practicable.
Promptly after the date hereof, each of the parties hereto shall promptly file
with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice all required premerger notification and report
forms and other documents and exhibits required to be filed under the HSR Act,
if any, to permit the acquisition of the East Shares subject to the Option at
the earliest possible date.
12. Binding Effect
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This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Nothing
contained in this Agreement, express or implied, is intended to confer upon any
person other than the parties hereto and their respective successors and
permitted assigns any rights or remedies of any nature whatsoever by reason of
this Agreement. Any shares sold by a party in compliance with the provisions of
Section 8 shall, upon consummation of such sale, be free of the restrictions
imposed with respect to such shares by this Agreement and any transferee of such
shares shall not be entitled to the rights of such party. Certificates
representing shares sold in a registered public offering pursuant to Section 8
shall not be required to bear the legend set forth in Section 10.
13. Specific Performance
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The parties recognize and agree that if for any reason any of the
provisions of this Agreement are not performed in accordance with their specific
terms or are otherwise breached, immediate and irreparable harm or injury would
be caused for which money damages would not be an adequate remedy. Accordingly,
each party agrees that in addition to other remedies the other party shall be
entitled to an injunction restraining any violation or threatened violation of
the provisions of this Agreement. In the event that any action shall be brought
in equity to enforce the provisions of the Agreement, neither party will allege,
and each party hereby waives the defense, that there is an adequate remedy at
law.
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14. Entire Agreement
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This Agreement and the Merger Agreement (including the appendices
thereto) constitute the entire agreement between the parties with respect to the
subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
15. Further Assurances
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Each party will execute and deliver all such further documents and
instruments and take all such further action as may be necessary in order to
constitute the transactions contemplated hereby.
16. Validity
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The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of the other provisions of this
Agreement, which shall remain in full force and effect. In the event any
Governmental Entity of competent jurisdiction holds any provision of this
Agreement to be null, void or unenforceable, the parties hereto shall negotiate
in good faith and shall execute and deliver an amendment to this Agreement in
order, as nearly as possible, to effectuate, to the extent permitted by law, the
intent of the parties hereto with respect to such provision.
17. Notices
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All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally or by commercial delivery service,
or sent via telecopy (receipt confirmed) to the parties at the following
addresses or telecopy numbers (or at such other address or telecopy numbers for
a party as shall be specified by like notice):
(1) if to West, to:
Pure Software Inc.
1309 South Mary Avenue
Sunnyvale, CA 94087
Attention: President
Telephone No.: (408) 720-1600
Telecopy No.: (408) 720-9200
with a copy at the same address to the
attention of the General Counsel, and
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with a copy to:
Wilson, Sonsini, Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Larry W. Sonsini, Esq.
Telephone No.: (415) 493-9300
Telecopy No.: (415) 493-6811
(2) if to East, to:
Atria Software, Inc.
20 Maguire Road
Lexington, MA 02173
Attention: President
Telephone No.: (617) 676-2400
Telecopy No.: (617) 676-2445
with a copy at the same address to the
attention of the General Counsel, and
with a copy to:
Testa, Hurwitz & Thibeault, LLP
High Street Tower, 125 High Street
Boston, Massachusetts 02110
Attention: Mark J. Macenka, Esq.
Telephone No.: (617) 248-7000
Telecopy No.: (617) 248-7100
18. Governing Law
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This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware applicable to agreements made and to be performed
entirely within such State.
19. Counterparts
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This Agreement may be executed in two counterparts, each of which shall be
deemed to be an original, but both of which, taken together, shall constitute
one and the same instrument.
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20. Expenses
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Except as otherwise expressly provided herein or in the Merger Agreement,
all costs and expenses incurred in connection with the transactions contemplated
by this Agreement shall be paid by the party incurring such expenses.
21. Amendments; Waiver
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This Agreement may be amended by the parties hereto and the terms and
conditions hereof may be waived only by an instrument in writing signed on
behalf of each of the parties hereto, or, in the case of a waiver, by an
instrument signed on behalf of the party waiving compliance.
22. Assignment
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Neither of the parties hereto may sell, transfer, assign or otherwise
dispose of any of its rights or obligations under this Agreement or the Option
created hereunder to any other person, without the express written consent of
the other party, except that West may assign its rights and obligations
hereunder to Sub.
[Remainder of Page Intentionally Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
PURE SOFTWARE INC.
By: ___________________________________
Name:
Title:
ATRIA SOFTWARE, INC.
By: ___________________________________
Name:
Title:
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