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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of
January 31, 1998, by and among BMC Software, Inc., a Delaware corporation
("BMC"), Ranger Acquisition Corp., a Massachusetts corporation and a wholly
owned subsidiary of BMC ("Merger Sub"), and BGS Systems, Inc., a Massachusetts
corporation ("BGS").
W I T N E S S E T H:
WHEREAS, the respective boards of directors of BMC and BGS deem it
desirable and in the best interests of their respective corporations and their
respective stockholders that Merger Sub be merged with and into BGS, pursuant to
the provisions of Section 78 of the Massachusetts Business Corporation Law
("MBCL"), in exchange for the consideration provided for in the Plan and
Agreement of Merger attached hereto as Exhibit A ("Plan of Merger"), and have
proposed, declared advisable, and approved such merger pursuant to this
Agreement and the Plan of Merger, which have been duly approved by resolutions
of the respective boards of directors of BMC and BGS; and
WHEREAS, for federal income tax purposes, it is intended that the
merger qualify as a reorganization under the provisions of Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the "Code");
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 presently outstanding shares of common stock,
par value $.10 per share ("BGS Common Stock"), of BGS into shares of common
stock, par value $.01 per share ("BMC Common Stock"), of BMC, and such other
details and provisions as are deemed necessary or proper, the parties hereto
agree as follows:
ARTICLE I
MERGER
1.1. The Merger. Subject to and in accordance with the terms and
conditions of this Agreement and pursuant to the Plan of Merger between Merger
Sub and BGS, at the Effective Time (as hereinafter defined) Merger Sub shall be
merged with and into BGS (the "Merger"), the separate existence of Merger Sub
shall cease, and BGS (i) shall continue as the surviving corporation (sometimes
referred to herein as the "Surviving Corporation") under the corporate name "BGS
Systems, Inc.", (ii) shall be governed by the laws of The Commonwealth of
Massachusetts, (iii) shall maintain a registered office in The Commonwealth of
Massachusetts at 2 Oliver Street, Boston, Massachusetts 02109, and shall (iv)
succeed to and assume all of the rights, properties and obligations of Merger
Sub and BGS in accordance with the MBCL.
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Subject to the terms and conditions of this Agreement and the Plan of Merger,
BMC agrees, at or prior to the Closing, to cause Merger Sub to execute and
deliver the Plan of Merger in form and substance substantially similar to the
form attached hereto as Exhibit A. Subject to the terms and conditions of this
Agreement and the Plan of Merger, BGS agrees, at or prior to the Closing, to
execute and deliver the Plan of Merger in form and substance substantially
similar to the form attached hereto as Exhibit A.
1.2. Closing Date. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Palmer & Dodge
LLP, One Beacon Street, Boston, Massachusetts 02108, as soon as reasonably
practicable after the satisfaction or waiver of the conditions set forth in
Article V or at such other time and place and on such other date as BMC and BGS
shall agree; provided, that the conditions set forth in Article V shall have
been satisfied or waived at or prior to such time. The date on which the Closing
occurs is herein referred to as the "Closing Date."
1.3. Effective Time. As soon as practicable on the Closing Date, the
parties hereto will cause the Merger to be consummated by filing with the State
Secretary of The Commonwealth of Massachusetts, articles of merger in such form
as required by, and executed in accordance with, the relevant provisions of the
MBCL (the time of filing the agreement of merger with the State Secretary of The
Commonwealth of Massachusetts being the "Effective Time").
1.4. Material Adverse Effect. "Material Adverse Effect" or "Material
Adverse Change" means any effect, change, event, circumstance or condition which
when considered with all other effects, changes, events, circumstances or
conditions could reasonably be expected to materially adversely affect the
business, results of operations, financial condition or prospects of BMC or BGS,
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 BGS's equity securities between the date
hereof and the Effective Time, in and of itself; (ii) effects, changes, events,
circumstances or conditions generally affecting the industry in which either BMC
or BGS operate or arising from changes in general business or economic
conditions; (iii) effects, changes, events, circumstances or conditions directly
attributable to (a) out-of-pocket fees and expenses (including without
limitation legal, accounting, investigatory, investment banking, and other fees
and expenses) incurred in connection with the transactions contemplated by this
Agreement, or (b) the payment by BMC or BGS of all amounts due to any officers
or employees of BGS under employment contracts, non- competition agreements,
employee benefit plans or severance arrangements; (iv) any effects, changes,
events, circumstances or conditions resulting from any change in law or
generally accepted accounting principles, which affect generally entities such
as BMC and BGS; (v) any effect resulting from compliance by BMC or BGS with the
terms of this Agreement; and (vi) the loss of any single employee.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF BGS
BGS represents and warrants subject to the exceptions specifically
described in writing in the disclosure schedule delivered by BGS to BMC and
dated the date hereof (the "BGS Disclosure Schedule") as follows:
2.1. Organization and Standing. BGS is a corporation duly organized,
validly existing and in good standing under the laws of The Commonwealth of
Massachusetts, has full requisite corporate power and authority to carry on its
business as it is currently conducted, and to own and operate the properties
currently owned and operated by it, and is duly qualified or licensed to do
business and is in good standing as a foreign corporation authorized to do
business in all jurisdictions in which the character of the properties owned or
the nature of the business conducted by it would make such qualification or
licensing necessary, except where the failure to be so qualified or licensed
could not reasonably be expected to have a Material Adverse Effect on BGS.
2.2. Agreement Authorized and its Effect on Other Obligations. Upon
approval of this Agreement by the stockholders of BGS, the consummation of the
transactions contemplated hereby will have been duly and validly authorized by
all necessary corporate action on the part of BGS, and this Agreement will be a
valid and binding obligation of BGS enforceable against BGS (subject to normal
equitable principles) 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. At the Effective Time, the
consummation of the Merger will not conflict with or result in a violation or
breach of any term or provision of, nor constitute a default under, (i) the
articles of organization or bylaws of BGS or (ii) any obligations, indenture,
mortgage, deed of trust, lease, contract or other agreement to which BGS or any
of its subsidiaries is a party or by which any of them or their properties are
bound, other than such violations, breaches or defaults as could not reasonably
be expected to have a Material Adverse Effect on BGS. For purposes of Chapter
110F of the MBCL, the Board of Directors of BGS has approved the stockholder
agreement attached hereto as Exhibit B (the "Stockholder Agreement"), the
execution and delivery of the Stockholder Agreement by the stockholders named
therein and the transactions contemplated thereby. Section 2.2 of the BGS
Disclosure Schedule lists all holders of any material indebtedness of BGS, the
lessors of any material property leased by BGS and the other parties to any
material agreements to which BGS is a party in each case whose consent to the
Merger is required.
2.3. Capitalization. The authorized capitalization of BGS consists of
10,000,000 shares of common stock, par value $.10 per share (the "BGS Common
Stock"), of which at December 31, 1997, 6,429,698 shares were issued and
outstanding, and an additional 1,146,379 shares were reserved for issuance in
conjunction with various employee benefit plans; at the same date, 103,501
shares of BGS Common Stock were held in BGS's treasury. All of such outstanding
shares are validly issued, fully paid and nonassessable, and were not issued in
violation of any preemptive rights of any stockholder. Other than as set forth
above with respect
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to employee benefit plans, BGS has no outstanding options, warrants or
obligations of any kind to issue any shares of its capital stock.
2.4. Subsidiaries. Section 2.4 of the BGS Disclosure Schedule lists
the subsidiary corporations of BGS existing at December 31, 1997, and shows as
to each of such subsidiary corporations the percentage of the total outstanding
stock thereof which is owned by BGS. Except as specified in Section 2.4 of the
BGS Disclosure Schedule, all outstanding shares of stock of the subsidiary
corporations owned by BGS are validly issued, fully paid, and nonassessable, and
BGS 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, or on the Effective Time will be, duly qualified or
licensed to do business and is, or on the Effective Time will be, in good
standing 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 BGS. As hereinafter used in this Article II, the
term "BGS" 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 "BGS" further
includes any corporation, trade, business or entity under common control with
BGS 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. BGS 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 Securities
Exchange Act of 1934, as amended (the "Exchange Act"), since January 1, 1995,
(b) BGS's quarterly and other reports filed with the Commission since January 1,
1995, (c) all definitive proxy solicitation materials filed with the Commission
since January 1, 1995, and (d) any registration statements declared effective by
the Commission since January 1, 1995. The consolidated financial statements of
BGS and its subsidiaries included in BGS's most recent report on Form 10-K and
most recent report on Form 10-Q, and any other reports filed with the Commission
by BGS under the Exchange Act subsequent thereto (collectively, the "BGS
Reports") were, or (if filed after the date hereof) will be, prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved and fairly present, or will present, the
consolidated financial position for BGS and its subsidiaries as of the dates
thereof and the consolidated results of their operations and changes in
financial position for the periods then ended (except with respect to interim
period financial statements, for normal year-end adjustments which are not
material); and the BGS Reports 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 January 1, 1995,
BGS has filed with the Commission all reports required to be filed by BGS under
the Exchange Act and the rules and regulations of the Commission.
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2.6. Liabilities. BGS 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 BGS, other than those (i) disclosed in the BGS
Reports or (ii) set forth in Section 2.6 of the BGS Disclosure Schedule.
2.7. Additional BGS Information. Set forth in Section 2.7 of the BGS
Disclosure Schedule are true, complete and correct lists of the following items
(which will be periodically updated by BGS and delivered to BMC through the
Effective Time), and BGS 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 BGS
(collectively, "BGS Plans"), together with copies of the most recent
reports 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 BGS 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 January 31, 1997, 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;
2.7.3. Employee Agreements. Any collective bargaining agreements
of BGS with any labor union or other representative of employees,
including amendments, supplements, and understandings, and all
employment and consulting agreements of BGS;
2.7.4. Guaranties. All third party indebtedness, liabilities and
commitments of others as to which BGS 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;
2.7.5. Environmental. All environmental orders and decrees
material to current operations conducted by BGS and all environmental
audits, assessments, investigations and reviews conducted within the
last five years on any property owned or used by BGS.
2.8. No Undisclosed Contracts or Defaults. Except as may be specified
in the BGS Reports or Section 2.8 of the BGS Disclosure Schedule, BGS, in its
reasonable belief, 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 BGS 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.
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2.9. Absence of Certain Changes and Events. Except as set forth in
the BGS Reports or in Section 2.9 of the BGS Disclosure Schedule, other than as
a result of the transactions contemplated by this Agreement, since October 31,
1997, there has not been:
2.9.1. Financial Change. Any adverse change in the financial
condition, backlog, operations, assets, liabilities or business of BGS
which could reasonably be expected to have a Material Adverse Effect on
BGS;
2.9.2. Property Damage. Any damage, destruction, or loss to the
business or properties of BGS (whether or not covered by insurance)
that could reasonably be expected to have a Material Adverse Effect on
BGS;
2.9.3. Dividends. Any declaration, setting aside, or payment of
any dividend or other distribution in respect of the BGS Common Stock,
or any direct or indirect redemption, purchase or any other acquisition
by BGS of any such stock;
2.9.4. Capitalization Change. Any change in the capital stock or
in the number of shares or classes of BGS's authorized or outstanding
capital stock as described in Paragraph 2.3 (other than the issuance of
BGS Common Stock upon the exercise of outstanding options to purchase
BGS Common Stock);
2.9.5. Labor Disputes. Any labor dispute (other than routine
grievances);
2.9.6. 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; or
2.9.7. Other Material Changes. Any other event or condition
known to BGS particularly pertaining to and adversely affecting the
operations, assets or business of BGS which could reasonably be
expected to have a Material Adverse Effect on BGS.
2.10. Taxes.
2.10.1. Tax Returns Filed; Taxes Paid. Except as set forth in
Section 2.10 of the BGS Disclosure Schedule, and except with respect to
failures which, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on BGS, (i) all returns and reports
("Tax Returns") of or with respect to any and all taxes, charges, fees,
levies, assessments, duties or other amounts payable to any federal,
state, local or foreign taxing authority or agency, including, without
limitation, (x) income, franchise, profits, gross receipts, minimum,
alternative minimum, estimated, ad valorem, value added, sales, use,
service, real or personal property, capital stock, license, payroll,
withholding, disability, employment, social security, workers
compensation, unemployment compensation, utility, severance, excise,
stamp, windfall profits, transfer and gains taxes, (y) customs, duties,
imposts, charges, levies or other similar assessments of any kind, and
(z) interest, penalties and additions to tax imposed with respect
thereto ("Tax" or "Taxes") which are required to be filed on or before
the Closing by or with
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respect to BGS 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 information provided in each such Tax Return is true,
correct and complete, (iii) all Taxes which have become or will become
due with respect to the period covered by each such Tax Return have
been or will be timely paid in full, (iv) all withholding Tax
requirements imposed on or with respect to BGS have been or will be
satisfied in full in all respects, and (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.
2.10.2. Open Returns Disclosed. All Tax Returns of or with
respect to BGS with unexpired or extended statutes of limitations which
have been audited by the applicable governmental authority are set
forth in Section 2.10 of the BGS Disclosure Schedule.
2.10.3. Extensions Disclosed. Except as set forth in Section
2.10 of the BGS 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 BGS or any waiver or agreement for any
extension of time for the assessment or payment of any Tax of or with
respect to BGS.
2.10.4. Claims Disclosed. There is no claim against BGS for any
Taxes, and no assessment, deficiency or adjustment has been asserted or
proposed with respect to any Tax Return of or with respect to BGS other
than those disclosed (and to which are attached true and complete
copies of all audit or similar reports) in Section 2.10 of the BGS
Disclosure Schedule or which could not reasonably be expected to have a
Material Adverse Effect on BGS.
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 BGS up to and through the
periods covered thereby.
2.10.6. Tax Allocation Agreements. BGS 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 BGS.
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
BGS.
2.10.8. Change of Accounting Method. BGS will not be required to
include any amount in income for any taxable period beginning after
December 31, 1996 as a result of a change in accounting method for any
taxable period or pursuant to any agreement with any Tax authority with
respect to any such taxable period.
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2.10.9. Partnerships; Foreign Corporations. Except as set forth
in Section 2.10 of the BGS Disclosure Schedule, none of the property of
BGS is held in an arrangement for which partnership Tax Returns are
being filed, and BGS does not own any interest in any controlled
foreign corporation (as defined in section 957 of the Code), passive
foreign investment company (as defined in section 1296 of the Code) or
other entity the income of which is required to be included in the
income of BGS.
2.10.10. Safe Harbor Leases; Tax-Exempt Use Property. Except as
set forth in Section 2.10 of the BGS Disclosure Schedule, none of the
property of BGS is subject to a safe-harbor lease (pursuant to section
168(f)(8) of the Internal Revenue Code of 1954 as in effect after the
Economic Recovery Tax Act of 1981 and before the Tax Reform Act of
1986) or is "tax-exempt use property" (within the meaning of section
168(h) of the Code) or "tax- exempt bond financed property" (within the
meaning of section 168(g)(5) of the Code).
2.10.11. Section 341(f) Election. BGS has not made an election
under section 341(f) of the Code.
2.10.12. Actions Preventing Treatment as a Reorganization.
Neither BGS nor, to the knowledge of BGS, any of its affiliates has
taken or agreed to take any action that would prevent the Merger from
constituting a reorganization qualifying under the provisions of
Section 368(a) of the Code.
2.11. Intellectual Property.
2.11.1. Ownership. Section 2.11 of the BGS Disclosure Schedule
accurately identifies all software programs currently being marketed by
BGS and all software products or programs under development by BGS but
not currently marketed, which are or could reasonably be expected to be
material to the business of BGS (collectively, the "Software
Programs"). BGS owns full and unencumbered right and good and valid
title to the Software Programs listed in Section 2.11 of the BGS
Disclosure Schedule, all material patents, trademarks, service marks,
trade names and copyrights (including registrations, licenses and
applications pertaining thereto) and all other material intellectual
property rights, trade secrets and other confidential or proprietary
information, processes and formulae 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 of the BGS 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 BGS as heretofore conducted.
2.11.2. Notices. Section 2.11 of the BGS Disclosure Schedule
sets forth the form and placement of the proprietary legends and
copyright notices displayed in or on the Software Programs. To the
knowledge of BGS, 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.
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2.11.3. Protection. BGS has in force the trade secret protection
program set forth in Section 2.11 of the BGS Disclosure Schedule. To
the knowledge of BGS, there has been no violation of such program by
any person or entity. The source code and related technical system
documentation for the Software Programs (i) have at all times been
maintained in strict confidence, (ii) have been disclosed by BGS only
to employees and contractors who have had a "need to know" the contents
thereof in connection with the performance of their duties to BGS and
who have executed written agreements requiring the recipient to keep
the information in strict confidence.
2.11.4. Personnel. All personnel who now, or during the past
five years have been employees, agents, consultants and contractors of
BGS, who have contributed to or participated in the conception and
development of the Software Programs, technical documentations, or
Intellectual Property on behalf of BGS have executed nondisclosure
agreements in form provided by BGS to BMC and either (1) have been a
party to a "work- for-hire" arrangement or agreements with BGS in
accordance with applicable national and state law that has accorded BGS
full, effective, exclusive and original ownership of all tangible and
intangible property thereby arising, or (2) have executed appropriate
instruments of assignment in favor or BGS as assignee that have
conveyed to BGS, effective, and exclusive ownership of all tangible and
intangible property thereby arising.
2.11.5. Third-Party Software. Section 2.11 of the BGS Disclosure
Schedule contains a complete list of material software libraries,
compilers and other third-party software used in the development of the
Software Programs. Section 2.11 of the BGS Disclosure Schedule lists
all license agreements for the use of all such software and, if any
such software is not licensed, the basis of the use of such software by
BGS. To BGS's knowledge, all use of each of such Software Program by
BGS has been in full compliance with the respective license agreement
or other right of use listed in Section 2.11 of the BGS Disclosure
Schedule.
2.11.6. Software Performance. To the knowledge of BGS, the
Software Programs will perform in accordance with the warranties set
forth in the standard end- user agreements listed in Section 2.13 of
the BGS Disclosure Schedule.
2.11.7. No Infringement. The Software Programs do not infringe
and will not infringe any copyright or trade secret of any person or
entity, and, to the knowledge of BGS, no part of the Software Programs
nor the use thereof for their intended purposes infringes or will
infringe any valid and subsisting patent or other exclusionary right of
any third party. No claims have been asserted against BGS by any person
or entity as to the use of any of the Intellectual Property.
2.11.8. Integrity. Except with respect to demonstration or trial
copies, to the knowledge of BGS, no portion of the Software Products
contains or will contain any "back door," "time bomb," "Trojan horse,"
"worm," "drop dead device," "virus" or other software routines or
hardware components designed to permit unauthorized access; to disable
or erase software, hardware, or data; or to perform any other such
actions.
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2.11.9. Contract Performance. BGS has observed all material
provisions of, and performed all of their material obligations under,
the Licenses, including, but not limited to, the performance of its
product maintenance obligations. BGS 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.
2.11.10. Year 2000. The Software Programs (i) have been designed
to ensure year 2000 compatibility, which shall include, but is not
limited to, date data century recognition, and calculations that
accommodate same century and multi-century formulas and date 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 BGS
Disclosure Schedule sets forth a complete list of all material licenses
and sublicenses of the Software Programs and of all customer trial
agreements for the Software Programs granted by BGS to other parties
(the "Licenses"). All contracts identified in Section 2.13.1 of the BGS
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, at the sites specified in
each agreement. Section 2.13.1 of the BGS Disclosure Schedule
accurately identifies each customer which generated 10% or more of
BGS's revenues during the preceding four fiscal quarters.
2.13.2. Marketing Agreements. Section 2.13.2 of the BGS
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 BGS (the
"Marketing Agreements"). Section 2.13.2 of the BGS Disclosure Schedule
accurately
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identifies each marketing arrangement which generated 10% or more of
BGS's revenues during the preceding four fiscal quarters.
2.13.3. No Assignment. Other than the Licenses and the Marketing
Agreements, BGS has not granted, transferred or assigned any right or
interest in the Software Programs, the Technical Documentation or the
Intellectual Property to any person or entity.
2.14. Third-Party Components in Software Programs. Except as set forth
in Section 2.14 of the BGS Disclosure Schedule, 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. Except as set forth in Section 2.14 of the BGS Disclosure Schedule, the
Software Programs and Technical Documentation do not contain derivative works of
any programming or materials not owned in their entirety by BGS.
2.15. Title to Properties. With minor exceptions which in the
aggregate are not material, and except for merchandise and other property sold,
used or otherwise disposed of in the ordinary course of business for fair value,
BGS has good and valid title to all its properties, interests in properties and
assets, real and personal, reflected in the most recent balance sheet of BGS
included in the BGS Reports, free and clear of any Encumbrance of any nature
whatsoever, except (i) liens and Encumbrances reflected in the most recent
balance sheet of BGS included in the BGS 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 BGS leases
(whether 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 BGS
and in respect to which BGS has not taken adequate steps to prevent a default
from occurring. The buildings and premises of BGS that are used in its business
are in good and sufficient operating condition and repair for the continued
conduct of BGS's business on a basis consistent with past practice, subject to
ordinary wear and tear. All major items of equipment of BGS are in good and
sufficient operating condition and in a state of reasonable maintenance and
repair for the continued conduct of BGS's business on a basis consistent with
past practice, ordinary wear and tear excepted, and are free from any known
defects except as may be repaired by routine maintenance and such minor defects
as do not substantially interfere with the continued use thereof in the conduct
of normal operations.
2.16. Litigation. Except to the extent set forth in the BGS Reports or
in Section 2.16 of the BGS Disclosure Schedule, there is no suit, action, or
legal, administrative, arbitration, or other proceeding or governmental
investigation pending to which BGS is a party or, to the knowledge of BGS, might
become a party or which particularly affects BGS, which would involve a
liability in excess of $100,000, nor is any change in the zoning or building
ordinances directly affecting the real property or leasehold interests of BGS,
pending or, to the knowledge of BGS, threatened,
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2.17. Environmental Compliance. Except as set forth in Section 2.17 of
the BGS 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 BGS as a result of
the actions of BGS or, to its knowledge, of any third party or
otherwise, that could reasonably be expected to have a Material Adverse
Effect on BGS.
2.17.2. Permits, etc. BGS 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. BGS's operations and use of its assets do
not violate any applicable federal, state or local law, statute,
ordinance, rule, regulation, order or notice requirement pertaining to
(a) the condition or protection of air, groundwater, surface water,
soil, or other environmental media, (b) the environment, including
natural resources or any activity which affects the environment, or (c)
the regulation of any pollutants, contaminants, waste, substances
(whether or not hazardous or toxic), including, without limitation, the
Comprehensive Environmental Response Compensation and Liability Act (49
U.S.C. ss. 9601 et seq.), the Hazardous Materials Transportation Act
(49 U.S.C. ss. 1801 et seq.), the Resource Conservation and Recovery
Act (42 U.S.C. ss. 1609 et seq.), the Clean Water Act (33 U.S.C. 1251
et seq.), the Clean Air Act (42 U.S.C. ss. 7401 et seq.), the Toxic
Substances Control Act (17 U.S.C. ss. 2601 et seq.), the Safe Drinking
Water Act (42 U.S.C. ss. 201 and ss. 300f et seq.), the Rivers and
Harbors Act (33 U.S.C. ss. 401 et seq.), the Oil Pollution Act (33
U.S.C. ss. 2701 et seq.) and analogous state and local provisions, as
any of the foregoing may have been amended or supplemented from time to
time (collectively the "Applicable Environmental Laws"), except for
violations which, either singly or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on BGS.
2.17.4 Environmental Claims. No notice has been served on BGS
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 BGS.
2.17.5. Renewals. BGS 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 BGS's assets for their current purposes and uses.
2.18. Compliance with Other Laws. Except as set forth in the BGS
Reports or in Section 2.18 of the BGS Disclosure Schedule, BGS is not in
violation of or in default with
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respect to, or in alleged violation of or alleged default with respect to, the
Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.) as amended
("OSHA"), or any other applicable law or any applicable rule, regulation, or any
writ or decree of any court or any governmental commission, board, bureau,
agency, or instrumentality, or delinquent with respect to any report required to
be filed with any governmental commission, board, bureau, agency or
instrumentality, except for violations which, either singly or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect on BGS.
2.19. Finder's Fee. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by BGS and its counsel
directly with BMC and its counsel, without the intervention of any other person
as the result of any act of BGS, and so far as is known to BGS, 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 (i) by
BMC to Goldman, Sachs & Co. ("GS") in connection with the transaction and (ii)
by BGS to Broadview Associates L.L.C. ("Broadview") in connection with the
transaction under financial arrangements disclosed to BMC.
2.20. Compliance with ERISA. BGS has made available to BMC a copy of
each BGS Plan, any related summary plan description, trust agreement and annuity
or insurance contract, if any, and each plan's most recent annual report filed
with the Internal Revenue Service, if any, and: (i) each BGS 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 BGS 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
BGS, 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 BGS 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 BGS 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 BGS, nothing has
occurred to cause the loss of such qualified status; (v) no BGS Plan is covered
by Title IV of ERISA or Section 412 of the Code; (vi) there are no pending or,
to the knowledge of BGS, anticipated material claims against or otherwise
involving any of the BGS Plans and no suit, action or other litigation
(excluding claims for benefits incurred in the ordinary course of BGS Plan
activities) has been brought against or with respect to any BGS Plan; (vii) all
material contributions, reserves or premium payments, required to be made as of
the date hereof to the BGS Plans have been made or provided for; (viii) BGS 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 BGS; (ix) BGS has not
incurred any withdrawal liability under Subtitle E of Title IV of ERISA with
respect to any "multiemployer plan," within the meaning
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of Section 4001(a)(3) of ERISA; (x) BGS has substantially performed all
obligations, whether arising by law or by contract, required to be performed by
it in connection with the BGS Plans; (xi) to the knowledge of BGS, no act,
omission or transaction has occurred which would result in imposition on BGS 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 BGS Plans
or otherwise by BGS which, in the aggregate, would result in imposition of the
sanctions imposed under Sections 280G and 4999 of the Code; and (xiii) BGS has
no obligations for retiree health and life benefits under any BGS Plan, except
as set forth on Section 2.20 of the BGS Disclosure Schedule, and there are no
restrictions on the rights of BGS to amend or terminate any such BGS Plan
without incurring any liability thereunder.
2.21. Investigations; Litigation. Except as required pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and
regulations promulgated thereunder (collectively, "HSR") and any applicable
comparable foreign laws and regulations, (i) no investigation or review by any
governmental entity with respect to BGS or any of the transactions contemplated
by this Agreement is pending or, to BGS's knowledge, threatened, nor has any
governmental entity indicated to BGS an intention to conduct the same, and (ii)
there is no action, suit or proceeding pending or, to BGS's knowledge,
threatened against or affecting BGS at law or in equity, or before any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, which either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on BGS.
2.22. Product Warranty. There are no existing liabilities or, to the
knowledge of BGS, potential liabilities, arising from claims regarding the
performance or design of the products and services sold by BGS either in the
past or at present for which adequate reserves have not been established on the
most recent balance sheet in the BGS Reports that in the aggregate could
reasonably be expected to have a Material Adverse Effect on BGS.
2.23. Information for Proxy Statement. All information and data
(including financial statements) concerning BGS which is or will be included in
the registration statement and proxy statement (collectively, the "Proxy
Statement") issued in connection with the transactions contemplated by this
Agreement will be furnished by BGS for inclusion therein and will not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading.
2.24. Investment Company. BGS is not an "investment company," or an
"affiliated person of" or "promoter" or "principal underwriter" of an investment
company, as those terms are defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act").
2.25. Pooling. Neither BGS, nor to the knowledge of BGS, any of its
affiliates has taken or agreed to take any action that would prevent the Merger
from being treated as a "pooling of interests" in accordance with generally
accepted accounting principles and the Regulations of the Securities and
Exchange Commission (a "Pooling Transaction").
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15
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BMC AND MERGER SUB
BMC and Merger Sub represent and warrant subject to the exceptions
specifically described in writing in the disclosure schedule delivered by BMC to
BGS and dated the date hereof (the "BMC Disclosure Schedule") as follows:
3.1. Organization and Standing. Each of BMC and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation, has full requisite corporate power and authority
to carry on its business as it is currently conducted, and to own and operate
the properties currently owned and operated by it and is duly qualified or
licensed to do business and is in good standing as a foreign corporation
authorized to do business in all jurisdictions in which the character of the
properties owned or the nature of the business conducted by it would make such
qualification or licensing necessary, except where the failure to be so
qualified or licensed could not reasonably be expected to have a Material
Adverse Effect on BMC. As hereinafter used in this Article III, the term "BMC"
also includes any and all of its directly and indirectly held subsidiaries,
except where the context indicates to the contrary; provided, however, that for
purposes of Section 3.9, the term "BMC" further includes any corporation, trade,
business or entity under common control with BMC within the meaning of Section
414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA.
3.2. Agreement Authorized and its Effect on Other Obligations. The
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of BMC and Merger Sub,
and this Agreement is a valid and binding obligation of BMC and Merger Sub
enforceable against BMC and Merger Sub (subject to normal equitable principles)
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. At the Effective Time and except as specified
in Section 3.2 of the BMC Disclosure Schedule, the consummation of the merger
contemplated by this Agreement will not conflict with or result in a violation
or breach of any term or provision of, nor constitute a default under (i) the
certificate of incorporation or bylaws of BMC, (ii) the articles of organization
or bylaws of Merger Sub or (iii) any obligation, indenture, mortgage, deed of
trust, lease, contract or other agreement to which BMC or any of its
subsidiaries is a party or by which any of them or their properties are bound,
other than such violations, breaches or defaults as could not reasonably be
expected to have a Material Adverse Effect on BMC.
3.3. Capitalization. (a) The capitalization of BMC consists of
1,000,000 shares of preferred stock, par value $.01 per share, of which at
December 31, 1997 no shares were issued or outstanding; and 300,000,000 shares
of BMC Common Stock, par value $.01 per share, of which at December 31, 1997,
105,040,000 shares were issued and outstanding, an additional 28,507,026 shares
were reserved for issuance in connection with various BMC benefit plans and an
additional 3,023,050 shares were reserved for issuance upon exercise of
outstanding warrants; at the same date, 3,350,417 shares of BMC Common Stock
were held in BMC's treasury. Other than as set forth above, BMC has no
outstanding options, warrants or obligations of any kind to issue shares of its
capital stock.
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16
(b) The capitalization of Merger Sub consists of 1,000 shares of
common stock, par value $.01 per share ("Merger Sub Common Stock"), of which as
of the date hereof, 100 were issued and outstanding and none were reserved for
issuance. As of the date hereof, all of the outstanding shares of Merger Sub
Common Stock are owned free and clear of any liens, claims or encumbrances by
BMC.
3.4. Reports and Financial Statements. BMC has previously furnished
to BGS true and complete copies of (a) all annual reports filed with the
Commission pursuant to the Exchange Act, since January 1, 1995, (b) BMC's
quarterly and other reports filed with the Commission since January 1, 1995, (c)
all definitive proxy solicitation materials filed with the Commission since
January 1, 1995, and (d) any registration statements declared effective by the
Commission since January 1, 1995. The consolidated financial statements of BMC
and its subsidiaries included in BMC's most recent report on Form 10-K and most
recent report on Form 10-Q, and any other reports filed with the Commission by
BMC under the Exchange Act subsequent thereto (the "BMC Reports") were, or (if
filed after the date hereof) will be, prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved and fairly present, or will present, the consolidated financial
position for BMC and its subsidiaries as of the dates thereof and the
consolidated results of their operations and changes in financial position for
the periods then ended (except with respect to interim period financial
statements, for normal year-end adjustments which are not material); and the BMC
Reports 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 which they were
made, not misleading. Since January 1, 1995, BMC has filed with the Commission
all reports required to be filed by BMC under the Exchange Act and the rules and
regulations of the Commission.
3.5. Liabilities. BMC does not have any liabilities or obligations,
either accrued, absolute, contingent, or otherwise, or have any knowledge of any
potential liabilities or obligations, which would have a Material Adverse Effect
on BMC, other than those (i) disclosed in the BMC Reports or (ii) set forth in
Section 3.5 of the BMC Disclosure Schedule hereto.
3.6. No Undisclosed Defaults. Except as may be specified in the BMC
Reports or in Section 3.6 of the BMC Disclosure Schedule, BMC is not 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.
3.7. Absence of Certain Changes and Events in BMC. Except as set
forth in the BMC Reports or in Section 3.7 of the BMC Disclosure Schedule
hereto, other than as a result of the transactions contemplated by this
Agreement, since September 30, 1997, there has not been:
3.7.1. Financial Change. Any adverse change in the financial
condition, operations, assets or business of BMC which could reasonably
be expected to have a Material Adverse Effect on BMC;
3.7.2. Property Damage. Any material damage, destruction, or
loss to the business or properties of BMC (whether or not covered by
insurance);
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3.7.3. Dividends. Any declaration, setting aside, or payment of
any dividend or other distribution in respect of BMC's capital stock,
or any direct or indirect redemption, purchase or any other acquisition
of such stock;
3.7.4. Capitalization Change. Any change in the capital stock or
in the number of shares or classes of BMC's authorized or outstanding
capital stock as described in Paragraph 3.3;
3.7.5. Labor Disputes. Any labor dispute (other than routine
grievances); or
3.7.6. Other Material Changes. Any other event or condition
known to BMC particularly pertaining to and adversely affecting the
operations, assets or business of BMC which could reasonably be
expected to have a Material Adverse Effect on BMC.
3.8. Finder's Fee. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by BMC and its
counsel, directly with BGS or its counsel, without the intervention of any other
person as the result of an act of BMC and, so far as known to BMC, 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
(i) BMC to GS and (ii) BGS to Broadview in connection with the merger
contemplated by this Agreement.
3.9. Compliance With ERISA. BMC will make available to BGS a copy of
all bonus, incentive compensation, stock option, deferred compensation,
profit-sharing, retirement, pension, welfare, severance pay, supplemental
income, group insurance, death benefit, or other fringe benefit plans,
arrangements or trust agreements covering active, former or retired employees of
BMC (collectively, the "BMC Plans"), any related summary plan description, trust
agreement and annuity or insurance contract, if any, and each plan's most recent
annual report filed with the Internal Revenue Service, if any, the most recent
reports with respect to such plans, trust agreements and annuity or insurance
contracts filed with any governmental agency, all Internal Revenue Service
determination letters that have been received with respect to such plans and:
(i) each BMC Plan has been maintained and administered in material compliance
with its terms and with the requirements prescribed by any and all applicable
statutes, orders, rules and regulations, and is, to the extent required by
applicable law or contract, fully funded without having any deficit or unfunded
actuarial liability; (ii) all required contributions under any such plans have
been made and the applicable funds have been funded in accordance with the terms
thereof and no past service funding liabilities exist thereunder; (iii) each BMC
Plan that is required or intended to be qualified under applicable law or
registered or approved by a governmental agency or authority has been so
qualified, registered or approved by the appropriate governmental agency or
authority, and nothing has occurred since the date of the last qualification,
registration or approval to adversely affect, or cause, the appropriate
governmental agency or authority to revoke such qualification, registration or
approval; (iv) to the extent applicable, the BMC Plans comply, in all material
respects, with the requirements of ERISA and the Code, and any BMC Plan intended
to be qualified under Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified and nothing has occurred to cause
the loss of such qualified status; (v) no BMC Plan is covered by Title IV of
ERISA or Section 412 of the Code; (vi) there are no pending or anticipated
material claims against or
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otherwise involving any of the BMC Plans and no suit, action or other litigation
(excluding claims for benefits incurred in the ordinary course of BMC Plan
activities) has been brought against or with respect to any BMC Plan; (vii) all
material contributions, reserves or premium payments, required to be made as of
the date hereof to the BMC Plans have been made or provided for; (viii) BMC has
not incurred any liability under subtitle C or D of Title IV of ERISA with
respect to any "single-employer plan," within the meaning of Section 4001(a) of
ERISA, currently or formerly maintained by BMC; (ix) BMC has not incurred any
withdrawal liability under Subtitle E of Title IV of ERISA with respect to any
"multiemployer plan," within the meaning of Section 4001(a)(3) of ERISA; (x) BMC
has substantially performed all obligations, whether arising by law or by
contract, required to be performed by it in connection with the BMC Plans; (xi)
no act, omission or transaction has occurred which would result in imposition on
BMC of (a) a civil penalty assessed pursuant to subsections (c), (i) or (l) of
Section 502 of ERISA, (b) breach of fiduciary duty liability damages under
Section 409 of ERISA or (c) a tax imposed pursuant to Chapter 43 of Subtitle D
of the Code; (xii) in connection with the consummation of the transactions
contemplated by this Agreement, no payments have or will be made hereunder,
under the BMC Plans or otherwise by BMC which, in the aggregate, would result in
imposition of the sanctions imposed under Sections 280G and 4999 of the Code;
and (xiii) BMC does not have any obligations for retiree health and life
benefits under any BMC Plan, except as set forth on Section 3.9 of the BMC
Disclosure Schedule, and there are no restrictions on the rights of BMC to amend
or terminate any such BMC Plan without incurring any liability thereunder.
3.10. Investigations; Litigation. Except as required pursuant to HSR
and any applicable comparable foreign laws and regulations, (i) no investigation
or review by any governmental entity with respect to BMC in connection with any
of the transactions contemplated by this Agreement is pending or, to the best of
BMC's knowledge, threatened, nor has any governmental entity indicated to BMC an
intention to conduct the same and (ii) there is no action, suit or proceeding
pending or, to the best of BMC's knowledge, threatened against or affecting BMC
or its subsidiaries at law or in equity, or before any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, which either individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect on BMC.
3.11. Information for Proxy Statement. All information and data
(including financial statements) concerning BMC which is or will be included in
the Proxy Statement to be issued in connection with the transactions
contemplated by this Agreement will be furnished by BMC for inclusion therein
and will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein not
misleading.
3.12. Actions Preventing Treatment as a Reorganization. Neither BMC
nor, to the knowledge of BMC, any of its affiliates has taken or agreed to take
any action that would prevent the Merger from constituting a reorganization
qualifying under the provisions of Section 368(a) of the Code.
3.13. Pooling. Neither BMC, nor to the knowledge of BMC, any of its
affiliates has taken or agreed to take any action that would prevent the Merger
from being treated as a Pooling Transaction.
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ARTICLE IV
OBLIGATIONS PENDING EFFECTIVE TIME
4.1. Agreements of BGS. BGS agrees that from the date hereof to the
Effective Time, 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,
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 generally accepted accounting principles applied on a
consistent basis;
4.1.4. Compliance with Law. Duly comply in all material respects
with all laws applicable to it and to the conduct of its business;
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; and
4.1.6. Inspection. Permit BMC and its officers and authorized
representatives, during normal business hours, to inspect its records
and to consult with its officers, employees, attorneys, and agents for
the purpose of determining the accuracy of the representations and
warranties hereinabove made and the compliance with covenants contained
in this Agreement; 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.
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4.2. Agreements of BMC and BGS. BMC and BGS agree to take the
following actions after the date hereof:
4.2.1. Hart-Scott-Rodino. Each party shall file such materials
as are required under the HSR Act with respect to the transactions
contemplated hereby and shall cooperate with the other party to the
extent necessary to assist the other party in the preparation of such
filings.
4.2.2. Proxy Statement. BMC and BGS shall cooperate in the
preparation and prompt filing of the Proxy Statement with the
Commission with respect to the meeting of BGS's stockholders called for
the purpose of, among other things, securing stockholder approval of
the Merger and the consummation of the transactions herein
contemplated. Each of BMC and BGS shall use all reasonable efforts to
have the Proxy Statement cleared by the Commission.
4.2.3. Notice of Material Development. Each of BMC and BGS 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.
4.2.4. Pooling. Each party hereto shall use all reasonable
efforts to cause the Merger to be treated for financial accounting
purposes as a Pooling Transaction, and shall not take, and shall use
all reasonable efforts to prevent any affiliate of such party from
taking, any actions which could prevent the Merger from being treated
for financial accounting purposes as a Pooling Transaction.
4.3. Additional Agreements of BGS. BGS agrees that from the date
hereof to the Effective Time, 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 or (ii) provide for any increase in
compensation outside the ordinary course of business consistent with
past practice, severance payments or benefits covering a period beyond
the termination date (other than those which BMC has previously
approved) except as contemplated by this Agreement or as may be
required by law;
4.3.2. Prohibition of Certain Loans. Not incur any 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
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$1,000,000, 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;
provided, that if during the period from the date hereof to and
including the Effective Time any of its property or assets are damaged
or destroyed by fire or other casualty, the obligations of BMC and BGS
under this Agreement shall not be affected thereby (subject, however,
to the provision that the coverage limits of such policies are adequate
in amount to cover the replacement value of such property or assets and
loss of profits during replacement, less commercially reasonable
deductibles, if of material significance to the assets or operations of
BGS) but it shall promptly notify BMC in writing thereof and proceed
with the repair or restoration of such property or assets in such
manner and to such extent as may be approved by BMC, and upon the
Effective Time all proceeds of insurance and claims of every kind
arising as a result of any such damage or destruction shall remain the
property of BGS;
4.3.6. BGS Acquisition Proposals. Not directly or indirectly:
4.3.6.1. No Solicitation. 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, BGS or any merger, consolidation,
business combination, sale of substantially all assets, sale of
securities, recapitalization, liquidation, dissolution or
similar transaction involving BGS (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, "BGS Transaction
Proposals") or agree to or endorse any BGS 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, provided, however,
that the foregoing clauses (i) and (ii) shall not prohibit BGS
from (A) furnishing information pursuant to an appropriate
confidentiality letter concerning BGS and its businesses,
properties or assets to a third party who has made a Superior
BGS Transaction Proposal (as
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22
defined below), (B) engaging in discussions or negotiations with
a third party who has made a Superior BGS Transaction Proposal
or (C) following receipt of a Superior BGS Transaction Proposal,
taking and disclosing to its stockholders a position with
respect thereto or changing the recommendation by BGS's board of
directors, but in each case referred to in the foregoing clauses
(A) through (C) only after the board of directors of BGS
concludes in good faith following advice of its outside counsel,
represented by a written opinion, that such action is reasonably
necessary in order for the board of directors of BGS to comply
with its fiduciary obligations to BGS's stockholders under
applicable law. If the board of directors of BGS receives a BGS
Transaction Proposal, then BGS 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 BGS Transaction Proposal and of
all steps it is taking in response to such BGS Transaction
Proposal; provided that nothing contained in this Paragraph
4.3.6.1 shall prohibit BGS or its board of directors from making
such disclosure to BGS's stockholders or taking any action
which, in the good faith judgment of BGS's board of directors
based on a written opinion of its outside counsel, may be
required under applicable law, including Rules 14d-9 and 14e-2
promulgated under the Exchange Act. For purposes of this
Agreement, the term "Superior BGS Transaction Proposal" shall
mean a bona fide BGS Transaction Proposal that the board of
directors of BGS determines in good faith after consultation
with (and based in part on the advice of) its independent
financial advisors to be more favorable to BGS and BGS's
stockholders than the Merger, is reasonably capable of being
financed and is not subject to any material contingencies
relating to financing.
4.3.6.2 Acceptance of Superior BGS Transaction Proposals.
If (i) this Agreement is terminated by BGS pursuant to Paragraph
6.1.5 hereof, or (ii) BGS enters into an agreement which
provides for Another BGS Transaction (as defined below) or
Another BGS Transaction is consummated (in each case with any
third party which after the date of this Agreement and before
termination of this Agreement has communicated to it a BGS
Transaction Proposal), in either case within twelve months after
the date of termination of this Agreement, then, in any such
event unless this Agreement has been terminated by BGS pursuant
to Section 6.1.4, Section 6.1.6, Section 6.1.8 or Section 6.1.9,
BGS shall pay to BMC simultaneously with termination by BGS in
the case of the occurrence of any of the events specified in
clause (i) above, and immediately upon the first to occur of the
entering into an agreement providing for, or the consummation
of, Another BGS Transaction in the case of clause (ii) above (by
wire transfer of immediately available funds to an account
designated by BMC for such purpose), a fee (the "Break-Up Fee")
in an amount equal to $9,000,000. BGS agrees that the Break-Up
Fee is a reasonable determination, in light of the uncertainty
and difficulty of ascertaining the exact amount thereof, of the
loss that BMC would actually sustain in respect of one of the
events described in this Paragraph 4.3.6.2. For purposes of this
Paragraph 4.3.6.2, the term "Another BGS Transaction" shall mean
any transaction pursuant to which (1) any person, entity or
group (within the meaning of Section 13(d)(3) of the Exchange
Act)
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23
(each, a "Third Party") acquires 50% or more of the outstanding
BGS Common Stock, (ii) a Third Party acquires 25% or more of the
total assets of BGS taken as a whole, (iii) a Third Party
merges, consolidates or combines in any other way with BGS other
than in a transaction in which holders of BGS Common Stock
continue to own at least 75% of the equity of the surviving
corporation, or (iv) BGS distributes or transfers to its
stockholders, by dividend or otherwise, assets constituting 25%
or more of the market value or earning power of BGS on a
consolidated basis (it being understood that stock of
subsidiaries constitute assets of BGS for purposes of this
Paragraph 4.3.6.2).
4.3.7. No Amendment to Articles of Organization, etc. Without
the consent of BMC, not amend its articles of organization or bylaws or
other organizational documents or merge or consolidate with or into any
other corporation or change in any manner the rights of its capital
stock 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 acquire, any shares of its capital stock;
provided, that nothing in this Section shall restrict or prohibit the
issuance by BGS of shares of BGS Common Stock upon exercise of options
previously granted under existing benefit plans;
4.3.9. Prohibition on Dividends. Without the consent of BMC,
not declare or pay any dividend on shares of its capital stock (other
than ordinary quarterly cash dividends in accordance with past practice
not to exceed $.30 per quarter) or make any other distribution of
assets to the holders thereof;
4.3.10. Supplemental Financial Statements. Deliver to BMC,
within 90 days after the end of the fiscal year ended January 31, 1998
the audited consolidated financial statements of BGS included in its
report on Form 10-K. Deliver to BMC, within 45 days after the end of
each fiscal quarter of BGS beginning April 30, 1998 and through the
Effective Time, unaudited consolidated balance sheets and related
unaudited statements of income, retained earnings and cash flows as of
the end of each fiscal quarter of BGS, and as of the corresponding
fiscal quarter of the previous fiscal year. BGS 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 BGS 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 BGS 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 BGS to its stockholders and all BGS
Reports. BGS shall give prompt notice to BMC of (i) the occurrence or
non-occurrence of any event the
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24
occurrence or non- occurrence of which would cause any BGS
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 BGS 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. Stockholders' Meeting. Call and hold a meeting of
stockholders within 45 days after the Commission has indicated that it
has no further comments on the Proxy Statement for the purpose of
considering and acting upon a proposal to approve this Agreement and
the Merger.
4.3.13. Employment Agreements. BGS shall use its best efforts to
obtain on or prior to the Effective Time, employment agreements with
such employees of BGS as reasonably requested by BMC.
4.3.14. Union Contracts and BGS 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 BGS or any of its
subsidiaries, (iii) amend or terminate any BGS Plan, or (iv) enter into
or adopt any new employee benefit plan, policy or arrangement.
4.4. Additional Agreements of BMC. BMC agrees that from the date
hereof to the Effective Time, it will:
4.4.1. No Amendment to Certificate of Incorporation, etc. Except
as otherwise provided herein, not amend its certificate of
incorporation or bylaws or other organizational documents or merge into
any other corporation or change in any manner the rights of its Common
Stock;
4.4.2. No Issuance, Sale, or Purchase of Securities. Not issue
or sell, or issue options (other than (i) options previously authorized
by the compensation committee of BMC's board of directors or (ii)
options granted to new personnel upon commencement of employment) or
rights to subscribe to, or enter into any contract or commitment to
issue or sell (upon conversion or otherwise), any shares of its capital
stock or subdivide or in any way reclassify any shares of its capital
stock, or acquire, or agree to acquire, any shares of its capital
stock; provided, that nothing in this Section 4.4.2 shall restrict or
prohibit the issuance by BMC of shares of BMC Common Stock upon
exercise of options previously granted under existing employee benefit
plans, the issuance of shares of BMC Common Stock upon exercise of
outstanding warrants, or the issuance of up to 2,000,000 shares of BMC
Common Stock in the acquisition of other businesses in "non-dilutive"
(for financial reporting purposes) transactions if such acquired
businesses would not individually or collectively constitute a
"significant subsidiary" of BMC;
4.4.3. Prohibition on Dividends. Not declare or pay any dividend
on shares of its capital stock or make any other distribution of assets
to the holders thereof;
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25
4.4.4. Issuance of BMC Common Stock. Take all action it deems
reasonably necessary to register the "issuance" of BMC Common Stock to
the stockholders of BGS in connection with the merger contemplated by
this Agreement under the Securities Act of 1933, as amended (the
"Securities Act"). BMC also shall take any action reasonably required
to be taken under state blue sky or securities laws in connection with
the issuance of the BMC Common Stock pursuant to the Merger;
4.4.5. Listing of BMC Stock. Take such steps as are required to
accomplish, as of the Effective Time, the Notification of Additional
Listing of the shares of BMC Common Stock to be issued pursuant to this
Agreement on the Nasdaq National Market; and
4.4.6. Notice of Material Developments. Promptly furnish to BGS
copies of all communications from BMC to its stockholders and all BMC
Reports. BMC shall give prompt notice to BGS 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 4.4.6 shall not limit or otherwise affect the remedies
available hereunder to BGS.
4.4.7 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.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1. Conditions Precedent to Obligations of BGS. The obligations of
BGS to consummate and effect the Merger shall be subject to the satisfaction of
the following conditions, or to the waiver thereof by BGS in the manner
contemplated by Section 6.4 before the Effective Time:
5.1.1. Representations and Warranties of BMC True at Effective
Time. The representations and warranties of BMC herein contained shall
be, in all respects, true as of and at the Effective Time with the same
effect as though made at such date, except as affected by transactions
permitted or contemplated by this Agreement and except for those
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
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26
being understood that any materiality qualifications contained in such
representations and warranties shall be disregarded for this purpose);
BMC shall have performed and complied, in all material respects, with
all covenants required by this Agreement to be performed or complied
with by BMC before the Effective Time; and BMC shall have delivered to
BGS a certificate, dated the Effective Time and signed by its chairman
of the board and by its chief financial or accounting officer to both
such effects.
5.1.2. No Material Litigation. No suit, action, or other
proceeding shall be pending, or to BMC's knowledge, threatened, before
any court or governmental agency in which it will be, or it is, sought
to restrain or prohibit or to obtain damages or other relief in
connection with this Agreement or the consummation of the Merger or
which could reasonably be expected to have a Material Adverse Effect on
BMC.
5.1.3. Opinion of BMC Counsel. BGS shall have received a
favorable opinion, dated as of the Effective Time from 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) the shares of BMC Common Stock which are to be
delivered in accordance with this Agreement will, when issued, be
validly issued, fully paid and nonassessable outstanding securities of
BMC; (iv) this Agreement has been duly executed and delivered by BMC;
(v) the Registration Statement on Form S-4 (which contains the Proxy
Statement relating to the merger contemplated hereby) has become
effective and no stop order has been issued by the Commission; (vi)
this Agreement has been duly executed and delivered by BMC and the
Stockholder Agreements have been duly executed by BMC; (vii) this
Agreement constitutes the legal, valid and binding obligation of BMC
and the Stockholder Agreements constitute the legal, valid and binding
obligations of BMC, each 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 (viii) except as specified by such counsel (such
exceptions to be acceptable to BGS) such counsel does not know of any
material litigation, proceedings, or governmental investigation pending
or threatened against or relating to BMC, any of its subsidiaries, or
their respective properties or businesses in which it is sought to
restrain, prohibit or otherwise affect the consummation of the
transactions contemplated by this Agreement. Such opinion also shall
cover such other matters incident to the transactions herein
contemplated as BGS and its counsel may reasonably request. In
rendering such opinion, such counsel may rely upon (i) certificates of
public officials and of officers of BMC as to matters of fact and (ii)
the opinion or opinions of other counsel, which opinions shall be
reasonably satisfactory to BGS, as to matters other than federal or
Texas law.
5.1.4. Stockholder Approval. At the meeting of stockholders of
BGS to be held before the Effective Time, the holders of two-thirds of
the outstanding shares of BGS Common Stock shall have approved the
Merger and this Agreement.
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27
5.1.5. Hart-Scott-Rodino, etc. All waiting periods required by
HSR shall have expired with respect to the transactions contemplated by
this Agreement, or early termination with respect thereto shall have
been obtained without the imposition of any governmental request or
order requiring the sale or disposition or holding separate (through a
trust or otherwise) of particular assets or businesses of BMC, its
affiliates or any component of BGS or other actions as a precondition
to the expiration of any waiting period or the receipt of any necessary
governmental approval or consent. In addition, any approvals required
under any state or foreign laws comparable to HSR shall have been
obtained.
5.1.6. Registration; Listing of BMC Common Stock. On the
Effective Time (i) the Proxy Statement shall have become effective
under the Securities Act, and (ii) the shares of BMC Common Stock
issuable at the Effective Time of the Merger shall have become eligible
for trading on the Nasdaq National Market.
5.1.7. Stock Options. BMC shall have made effective provision
for the assumption or substitution at the Effective Time of all stock
options outstanding under plans maintained by BGS.
5.1.8. Ancillary Matters. BGS shall have received a favorable
opinion from Broadview for inclusion in the Proxy Statement as to the
fairness, from a financial point of view, to the BGS stockholders of
the Merger Consideration, which opinion shall not have been withdrawn
at the Effective Time.
5.1.9. Tax Opinion. Palmer & Dodge LLP shall have delivered to
BGS its written opinion as of the date that the Proxy Statement is
first mailed to BGS stockholders substantially to the effect that (x)
the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code, (y) BMC, Merger Sub and BGS will each be a
party to that reorganization within the meaning of Section 368(b) of
the Code, and (z) no gain or loss for U.S. federal income tax purposes
will be recognized by the holders of BGS Common Stock upon receipt of
shares of BMC Common Stock in the merger, except with respect to any
cash received in lieu of a fractional share interest in BMC Common
Stock, and such opinion shall not have been withdrawn or modified in
any material respect.
5.2. Conditions Precedent to Obligations of BMC. The obligations of
BMC to consummate and effect the Merger shall be subject to the satisfaction of
the following conditions, or to the waiver thereof by BMC in the manner
contemplated by Section 6.4 before the Effective Time.
5.2.1. Representations and Warranties of BGS True at Effective
Time. The representations and warranties of BGS herein contained shall
be, in all respects, true as of and at the Effective Time with the same
effect as though made at such date, except as affected by transactions
permitted or contemplated by this Agreement and except for those
representations and warranties that address matters only as of a
particular date (which shall remain true and correct as of such
particular date), provided that any inaccuracies in such
representations and warranties will be disregarded if the
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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); BGS shall have
performed and complied, in all material respects, with all covenants
required by this Agreement to be performed or complied with by BGS
before the Effective Time; and BGS shall have delivered to BMC a
certificate, dated the Effective Time and signed by its chairman of the
board and by its chief financial or accounting officer to both such
effects.
5.2.2. No Material Litigation. No suit, action, or other
proceeding shall be pending, or to BGS's knowledge, threatened, before
any court or governmental agency in which it will be, or it is, sought
to restrain or prohibit or to obtain damages or other relief in
connection with this Agreement or the consummation of the Merger or
which could reasonably be expected to have a Material Adverse Effect on
BGS.
5.2.3. Opinion of BGS's Counsel. BMC shall have received a
favorable opinion, dated the Effective Time, from Palmer & Dodge LLP,
counsel to BGS to the effect that (i) BGS has been duly incorporated
and is validly existing as a corporation in corporate good standing
under the laws of The Commonwealth of Massachusetts; (ii) all
outstanding shares of the BGS Common Stock have been validly issued and
are fully paid and nonassessable; (iii) all corporate or other
proceedings required to be taken by or on the part of BGS 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 BGS and the Stockholder Agreements have been duly executed
and delivered by the stockholders party thereto; (v) this Agreement
constitutes the legal, valid and binding obligation of BGS and the
Stockholder Agreements constitute the legal, valid and binding
obligations of the stockholders party thereto, each 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 (vi) except as specified by
such counsel (such exceptions to be acceptable to BMC) such counsel
does not know of any material litigation, proceedings or governmental
investigation, pending or threatened against or relating to BGS or its
properties or businesses in which it is sought to restrain, prohibit or
otherwise affect consummation of the transactions contemplated by this
Agreement. Such opinion shall also cover such other matters incident to
the transactions herein contemplated as BMC and its counsel may
reasonably request. In rendering such opinion, such counsel may rely
upon (i) certificates of public officials and of officers of BGS 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 Massachusetts law.
5.2.4. Hart-Scott-Rodino, etc. All waiting periods required by
HSR shall have expired with respect to the transactions contemplated by
this Agreement, or early termination with respect thereto shall have
been obtained without the imposition of any governmental request or
order requiring the sale or disposition or holding separate (through a
trust or otherwise) of particular assets of business of BMC, its
affiliates or any component of BGS or other actions as a precondition
to the expiration of any waiting
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29
period or the receipt of any necessary governmental
approval or consent. In addition, any approvals required
under any state or foreign laws comparable to HSR shall
have been obtained.
5.2.5. Consent of Certain Parties in Privity with BGS. The
holders of any material indebtedness of BGS, the lessors of any
material property leased by BGS, and the other parties to any other
material agreements to which BGS is a party, whose consent to the
Merger is required as set forth in the BGS Disclosure Schedule, shall,
when and to the extent necessary in the reasonable opinion of BMC, have
consented to the Merger.
5.2.6. Dissenters. Holders of not more than 5 percent of the
outstanding shares of BGS Common Stock on the date of this Agreement
shall have received or be entitled to receive consideration pursuant to
the provisions of Sections 86 through 98 of the MBCL.
5.2.7. Tax Opinion. Vinson & Elkins L.L.P. shall have delivered
to BMC its written opinion as of the date that the Proxy Statement is
first mailed to BGS stockholders substantially to the effect that (x)
the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code, (y) BMC, Merger Sub and BGS will each be a
party to that reorganization within the meaning of Section 368(b) of
the Code, and (z) BMC, Merger Sub and BGS will not recognize any gain
or loss for U.S. federal income tax purposes as a result of the Merger,
and such opinion shall not have been withdrawn or modified in any
material respect.
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 BGS) before the Effective Time:
6.1.1. By Mutual Consent. By mutual consent of BMC and BGS.
6.1.2. By BMC Because of Conditions Precedent. By BMC, if there
has been a breach by BGS of its representations, warranties, covenants,
or agreements set forth in this Agreement if, as a result of such
breach, the conditions set forth in Section 5.2.1 would not be
satisfied, and BGS 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 BGS which by its nature cannot be cured).
6.1.3. By BMC Because of Material Adverse Change. By BMC, if
there has been since October 31, 1997, a Material Adverse Change with
respect to BGS which condition or event shall not have been ameliorated
such that it no longer constitutes a
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Material Adverse Change within ten (10) business days following receipt
by BGS of notice from BMC (except that no cure period shall be provided
for any Material Adverse Change which by its nature cannot be cured).
6.1.4. By BGS Because of Conditions Precedent. By BGS, 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 5.1.1 would not be
satisfied, and BMC fails to cure such breach within 15 business days
after written notice thereof from BGS (except that no cure period shall
be provided for any breach by BMC which by its nature cannot be cured).
6.1.5. By BGS or BMC Due to a Superior BGS Transaction Proposal.
By BGS or BMC if, before the Effective Time, BGS's board of directors
shall have withdrawn or modified in a manner adverse to BMC its
approval of this Agreement or the Merger under the terms, conditions
and procedures set forth in Paragraph 4.3.6.1.
6.1.6. By BGS Because of Material Adverse Change. By BGS, if
there has been since September 30, 1997, a Material Adverse Change with
respect to BMC which condition or event shall not have been ameliorated
such that it no longer constitutes a Material Adverse Change within ten
(10) business days following receipt by BMC of notice from BGS (except
that no cure period shall be provided for any Material Adverse Change
which by its nature cannot be cured).
6.1.7. By BMC or BGS Because of Legal Proceedings. By BMC or BGS
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 6.1.7 shall have used its reasonable
best efforts to remove such injunction, order or decree.
6.1.8. By BMC or BGS if Merger not Effective by September 30,
1998. By either BMC or BGS, if all conditions to consummation of the
Merger shall not have been satisfied or waived on or before September
30, 1998, other than as a result of a breach of this Agreement by the
terminating party.
6.1.9. By BMC or BGS if Merger Cannot be Accounted for as a
Pooling. By BMC or BGS if the Merger cannot for financial reporting
purposes be accounted for as a "pooling of interests"; provided,
however, this provision shall not be available to a party which has
taken any action or failed to take any action, that either alone or in
combination with actions previously taken disqualifies the Merger from
such accounting treatment.
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
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31
BMC by its board of directors. An election of BGS to terminate this Agreement
and abandon the Merger as provided in Section 6.1 shall be exercised on behalf
of BGS by its board of directors.
6.3 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to and in accordance with the provisions
of Section 6.1 hereof, this Agreement shall become void and have no effect,
without any liability on the part of any party hereto (or its stockholders or
controlling persons or directors or officers), except (i) the provisions of
Section 4.3.6.2 shall survive such termination and abandonment and (ii) neither
party shall be released or relieved from any liability arising from 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 the Merger is abandoned pursuant to
and in accordance with the provisions of Section 6.1 hereof, all expenses will
be paid by the party incurring them; provided, however, that in the event this
Agreement is terminated by BMC pursuant to Section 6.1.2 or by BMC or BGS
pursuant to Section 6.1.5, BGS shall assume and pay, or reimburse BMC for, all
reasonable fees and expenses incurred by BMC or Merger Sub (including the fees
and expenses of its counsel, accountants and financial advisors) through the
date of termination and which are specifically related to the Merger, this
Agreement and the matters contemplated by this Agreement, but in no event later
than two business days after the submission of a request for payment of the
same; and provided, further, that in the event this Agreement is terminated by
BGS pursuant to Section 6.1.4, BMC shall assume and pay, or reimburse BGS for,
all reasonable fees and expenses incurred by BGS (including the fees and
expenses of its counsel, accountants and financial advisors) through the date of
termination and which are specifically related to the Merger, this Agreement and
the matters contemplated by this Agreement, but in no event later than two
business days after the submission of a request for payment of the same. Any
amount payable by BGS under this Section 6.5 shall be credited against any
amount payable by it under Section 4.3.6.2.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Exchange of Options. Promptly after the Effective Time, BMC will
notify in writing each holder of a BGS Option of the exchange of the BGS Option
for an option to purchase BMC Common Stock in accordance with Section 1.10 of
the Plan of Merger. BMC shall cause all shares of BMC Common Stock issued upon
exercise of the exchanged BGS Options to be registered under an effective Form
S-8 Registration Statement (or other comparable form) filed with the Commission.
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32
7.2. Indemnification of Directors and Officers. (a) BMC shall
indemnify and hold harmless each present and former director and officer of BGS,
determined as of the Effective Time, against any claims, losses, liabilities,
damages, judgments, fines, fees, costs or expenses, including without limitation
attorneys' fees and disbursements incurred in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or occurring at
or prior to the Effective Time (including, without limitation, the Merger, the
preparation, filing and mailing of the Proxy Statement and the other
transactions and actions contemplated by this Agreement), whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent that BGS
would have been permitted, under applicable law, indemnification agreements
existing on the date hereof, the Articles of Organization or Bylaws of BGS 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).
(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 BGS's directors' and officers' liability insurance policy
(a copy of which has been heretofore delivered to BMC) with coverage in amount
and scope at least as favorable as BGS's 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 200% of the current annual
premium expended by BGS 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 BGS or any of its subsidiaries, any contract or
applicable law.
7.3. Affiliate Agreements.
7.3.1. BGS Affiliates. To insure that the Merger will be treated
as a "pooling of interests" and to insure compliance with Rule 145 of
the rules and regulations promulgated by the Commission and the
Securities Act, each of BGS's directors, executive officers and
beneficial owners of 5% or more of BGS's Common Stock identified as
"affiliates" has concurrently signed and delivered to BMC the BGS
affiliate agreements in the form attached as Exhibit C.
7.3.2. BMC Affiliates. To insure that the Merger will be treated
as a "pooling of interests," each of BMC's directors, executive
officers and beneficial owners of 5% or more of BMC's Common Stock
identified as "affiliates" has concurrently signed and delivered to BMC
the BMC affiliate agreements in the form attached as Exhibit D.
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33
7.4. Publication of Combined Results. BMC agrees to publicly release
a report in the form of a quarterly earnings report, registration statement
filed with the Commission, a report filed with the Commission on Form 10-K,
10-Q, or 8-K or any other public filing, statement or announcement which
includes the combined financial results (including combined sales and net
income) of BMC and BGS for a period of at least 30 days of combined operations
of BMC and BGS following the Effective Time within 45 days after the end of the
first calendar quarter which includes at least 30 days of combined operations.
7.5 Employee Benefit Plans of BGS. (a) BMC shall take all actions
necessary or appropriate to permit the employees of BGS and its subsidiaries
("BGS Employees") to continue to participate from and after the Closing Date in
the BGS Plans maintained by BGS and its subsidiaries immediately prior to the
Closing Date. Notwithstanding the foregoing, BMC may permit or cause any such
BGS 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 BGS
Employees participating in such BGS 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 BGS Plan that is terminated or
discontinued by BMC is a group health plan, then BMC shall permit each BGS
Employee participating in such group health plan to be covered under a BMC Plan
that (i) provides medical and dental benefits to each such BGS Employee
effective immediately upon the cessation of coverage of such individuals under
such group health plan, (ii) credits such BGS 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 BGS Employee's years of service and level of seniority with BGS 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).
(b) BMC agrees that during the six-month period beginning as of the
Effective Time, it will provide severance pay benefits to BGS's employees who
continue in employment with BMC or the Surviving Corporation after the Effective
Time at least as favorable as the severance pay benefits which would have been
provided to such employees under BGS's severance policy described in Section 2.7
of the BGS Disclosure Schedule in effect at the date of this Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1. Entirety. This Agreement, the attachments and Schedules thereto
and the Plan of Merger embody the entire agreement between the parties with
respect to the subject matter hereof, and all prior agreements between the
parties with respect thereto are hereby superseded in their entirety.
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34
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
Addressed to: With a copy to:
BMC Software, Inc. Vinson & Elkins L.L.P.
2101 Citywest Blvd. 1001 Fannin, Suite 2300
Houston, Texas 77042-2827 Houston, Texas 77002-6760
Attention: M. Brinkley Morse Attention: John S. Watson
Facsimile: (713) 918-8000 Facsimile: (713) 615-5236
IF TO BGS
Addressed to: With a copy to:
BGS Systems, Inc. Palmer & Dodge LLP
One First Avenue One Beacon Street
Waltham, Massachusetts 02254-9111 Boston, Massachusetts 02108
Attention: Harold Schwenk Attention: Steven N. Farber
Facsimile: (781) 890-0000 Facsimile: (617) 227-4420
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.
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.
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35
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 Texas (except
to the extent that the form and content of the Plan of Merger and the
consequences of the filing thereof shall be governed by the MBCL).
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:
Section or
Term Paragraph
---- ----------
Agreement Premises
BGS Common Stock Premises
BGS Employee 5.1.8
BGS Options 1.10 of the Plan of Merger
BGS Option Plans 1.10 of the Plan of Merger
BGS Plans 2.7.1
BGS Reports 2.5
BGS Transaction Proposals 4.3.6.1
Another BGS Transaction 4.3.6.2
Applicable Environmental Laws 2.14.3
Break-Up Fee 4.3.6.2
Claims 7.3.6
Code Premises
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Commission 2.5
DGCL Premises
Effective Time 1.3
Encumbrance 2.4
ERISA 2.20
Exchange Act 2.5
Heirs 7.3.5
HSR 2.21
Intellectual Property 2.11
Investment Company Act 2.21
BMC Common Stock Premises
BMC Plans 3.9
BMC Reports 3.5
BMC Shares 1.9.2 of the Plan of Merger
Material Adverse Effect 1.4
Merger Consideration 1.9.2 of the Plan of Merger
Merging Corporations Premises
OSHA 2.15
Proxy Statement 2.20
Registration Statement 7.3.1
Securities Act 4.4.10
Stock 7.3.1
Stockholders 7.3.1
Superior BGS Transaction Proposal 4.3.6.1
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Reorganization to be duly executed as of the date first above written.
BMC SOFTWARE, INC.
By: /s/ Max P. Watson, Jr.
--------------------------
Name: Max P. Watson, Jr.
Title: President
RANGER ACQUISITION CORP.
By: /s/ Max P. Watson, Jr.
--------------------------
Name: Max P. Watson, Jr.
Title: President
BGS SYSTEMS, INC.
By: /s/ Harold S. Schwenk, Jr.
--------------------------
Name: Harold S. Schwenk, Jr.
Title: President
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Exhibit A
PLAN AND AGREEMENT OF MERGER
Merging Merger Sub into BGS
THIS AGREEMENT AND PLAN OF MERGER, dated as of January 31, 1998 (this
"Plan of Merger"), is by and between Ranger Acquisition Corp., a Massachusetts
corporation ("Merger Sub") and a wholly owned subsidiary of BMC Software, Inc.,
a Delaware corporation ("BMC") and BGS Systems, Inc., a Massachusetts
corporation "BGS"). Merger Sub and BGS are hereinafter sometimes referred to as
the "Merging Corporations."
PRELIMINARY STATEMENT
This Plan of Merger is being entered into pursuant to an Agreement and
Plan of Reorganization dated as of January 31, 1998 (the "Agreement") among BMC,
Merger Sub and BGS.
The authorized capital stock of Merger Sub consists of 1,000 shares of
common stock, par value $.01 per share ("Merger Sub Common Stock"), of which 100
shares are outstanding, all of which are owned by BMC. The authorized capital
stock of BGS consists of 10,000,000 shares of common stock, par value $.10 per
share ("BGS Common Stock"), of which 6,429,698 shares are outstanding and an
additional 1,156,000 shares are reserved for issuance in conjunction with
various employee benefit plans, and 103,501 shares are held in BGS's treasury.
The Boards of Directors of each of the Merging Corporations,
respectively, have approved the Agreement and the Plan of Merger.
Accordingly, in consideration of the premises, and the mutual covenants
and agreements herein contained, the parties hereto hereby agree, subject to the
terms and conditions hereinafter set forth, as follows:
ARTICLE I
THE MERGER
1.1. Surviving Corporation. Subject to the adoption and approval of
this Agreement by the requisite vote of the stockholders of each of the Merging
Corporations and to the other conditions hereinafter set forth, Merger Sub and
BGS shall be, upon the Effective Time of the merger (as defined in Section 1.3
hereof), merged into a single surviving corporation, which shall be BGS (the
"Surviving Corporation"), one of the Merging Corporations, which shall
39
continue its corporate existence and remain a Massachusetts corporation governed
by and subject to the laws of that state.
1.2. Stockholder Approval. This Agreement shall be submitted for
adoption and approval by the stockholders of each of the Merging Corporations in
accordance with their respective articles of organization and the applicable
laws of The Commonwealth of Massachusetts.
1.3. Effective Time. The merger shall become effective upon the
filing by BGS of Articles of Merger with the State Secretary of The Commonwealth
of Massachusetts in accordance with Section 78 of the Massachusetts Business
Corporation Law. The date upon which the merger shall become effective is
referred to in this Agreement as the "Effective Time."
1.4. Name and Continued Corporate Existence of Surviving Corporation.
On the Effective Time, the identity, existence, purposes, powers, objects,
franchises, rights, and immunities of BGS, the Surviving Corporation of the
merger, shall continue unaffected and unimpaired by the merger, and the
corporate identity, existence, purposes, powers, objects, franchises, rights,
and immunities of Merger Sub shall be wholly merged into BGS, the Surviving
Corporation, and BGS shall be fully vested therewith. Accordingly, on the
Effective Time, the separate existence of Merger Sub, except insofar as
continued by statute, shall cease.
1.5. Governing Law and Articles of Organization of Surviving
Corporation. The laws of The Commonwealth of Massachusetts shall continue to
govern the Surviving Corporation. On the Effective Time, the Articles of
Organization of Merger Sub shall be the articles of organization of the
Surviving Corporation until further amended in the manner provided by law,
provided that at the Effective Time the articles of organization of the
Surviving Corporation shall be amended so that the name of the Surviving
Corporation shall be "BGS Systems, Inc."
1.6. Bylaws of Surviving Corporation. Effective as of the Effective
Time, the bylaws of Merger Sub shall be the bylaws of the Surviving Corporation
until altered, amended, or repealed, or until new bylaws shall be adopted in
accordance with the provisions of law, the articles of organization and the
bylaws.
1.7. Directors of Surviving Corporation
1.7.1. Directors of Surviving Corporation. The names and
addresses of the persons who, upon the Effective Time, shall constitute
the board of directors of the Surviving Corporation, and who shall hold
office until the first annual meeting of stockholders of the Surviving
Corporation next following the Effective Time, are as follows:
NAME ADDRESS
Max P. Watson Jr. 2101 Citywest Blvd.
Houston, TX 77042
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William M. Austin 2101 Citywest Blvd.
Houston, TX 77042
M. Brinkley Morse 2101 Citywest Blvd.
Houston, TX 77042
1.7.2. Vacancies. On or after the Effective Time, if a vacancy
shall exist for any reason in the board of directors of the Surviving
Corporation, such vacancy shall be filled in the manner provided in the
articles of organization and/or bylaws of the Surviving Corporation.
1.8. Capital Stock of Surviving Corporation. The authorized number of
shares of capital stock of the Surviving Corporation, and the par value,
designations, preferences, rights, and limitations thereof, and the express
terms thereof, shall be as set forth in the articles of organization.
1.9. Conversion of Securities upon Merger
1.9.1. General. The manner and basis of converting the issued
and outstanding shares of the capital stock of BGS into shares of the
capital stock of BMC shall be as hereinafter set forth in this
Section 1.9.
1.9.2. Conversion of BGS Common Stock. On the Effective Time,
each share of BGS Common Stock then issued and outstanding, without any
action on the part of the holders thereof, shall automatically become
and be converted into the right to receive certificates evidencing a
fraction of a fully paid and nonassessable share of issued and
outstanding BMC Common Stock (the "BMC Shares") equal to the Exchange
Ratio (as defined and determined below) upon surrender, in accordance
with Paragraph 1.9.3 hereof, of certificates theretofore evidencing
shares of BGS Common Stock. The BMC Shares are hereinafter referred to
collectively as the "Merger Consideration." The "Exchange Ratio" shall
be equal to the quotient of $45.00 divided by the average of the
closing sales prices of BMC Common Stock (or, if BMC Common Stock
should not trade on any trading day, the average of the bid and the
asked prices therefor on such day), rounded to the nearest thousandth
(.0005 being rounded to .001), as reported by the Nasdaq National
Market on each of the last ten consecutive trading days in the period
ending on the third trading day prior to the meeting of BGS
stockholders held for the purpose of approving the Merger.
1.9.3. Exchange of BGS Common Stock Certificates. Commencing on
the Effective Time, each holder of an outstanding certificate or
certificates theretofore representing shares of BGS Common Stock may
surrender the same to an exchange agent designated by BMC, and such
holder shall be entitled upon such surrender to receive in exchange
therefor a certificate or certificates representing the number of whole
BMC Shares into which the shares of BGS Common Stock theretofore
represented by the certificate or certificates so surrendered shall
have been converted as aforesaid. However, before surrender, each
outstanding certificate representing issued and
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outstanding BGS Common Stock shall be deemed, for all purposes, only to
evidence ownership of the number of whole BMC Shares into which such
shares have been so converted. Unless and until such outstanding
certificates formerly representing BGS Common Stock are so surrendered,
no dividend payable to holders of record of BMC Common Stock as of any
date after the Effective Time shall be paid to the holders of such
outstanding certificates in respect thereof. Upon surrender of such
outstanding certificates, however, there shall be paid to the holders
of the certificates of BMC Shares issued in partial exchange therefor
the amount of dividends, if any, which theretofore (but after the
Effective Time) became payable with respect to such full BMC Shares. No
interest shall be payable with respect to the payment of such dividends
on surrender of outstanding certificates. The holder of fractional
share interests, as such, shall not be entitled to any dividends or to
any distribution in the event of liquidation or to any voting or other
privileges of a stockholder of BMC.
1.9.4. BMC Fractional Shares. No certificates for fractional
share interests of BMC Common Stock will be issued, but, in lieu
thereof, BMC will settle all such fractional share interests in cash on
the basis of the closing price for BMC Common Stock on the Nasdaq
National Market (as reported in The Wall Street Journal) on the last
trading day before the Effective Time.
1.9.5. BGS's Transfer Books Closed. Upon the Effective Time, the
stock transfer books of BGS shall be deemed closed, and no transfer of
any certificates theretofore representing the shares of BGS shall
thereafter be made or consummated.
1.9.6. Conversion of Merger Sub Common Stock. On the Effective
Time, each share of Merger Sub Common Stock then issued and
outstanding, without any action on the part of the holder thereof,
shall automatically become and be converted into one share of BGS
Common Stock.
1.10. Treatment of Stock Options. On the Effective Time, each of the
then outstanding options to purchase BGS Common Stock (collectively, the "BGS
Options")(which includes all outstanding options granted under BGS's stock
option plans (the "BGS Option Plans")) will and without any further action on
the part of any holder thereof (herein, an "optionholder"), be exchanged for an
option to purchase that number of shares of BMC Common Stock determined by
multiplying the number of shares of BGS Common Stock subject to such BGS Option
at the Effective Time by the Exchange Ratio, at an exercise price per share of
BMC Common Stock equal to the exercise price per share of such BGS Option
divided by the Exchange Ratio; PROVIDED, HOWEVER, that with respect to BGS's
1997 Employee Stock Purchase Plan, the exercise price per share of BMC Common
Stock shall be determined pursuant to the provisions of paragraphs 7(b), 17 and
20 of such plan. If the foregoing calculation results in an exchanged BGS Option
being exercisable for a fraction of a share of BMC Common Stock, then the number
of shares of BMC Common Stock subject to such option will be rounded down to the
nearest whole number of shares, and the total exercise price for the option will
be reduced by the exercise price of the fractional share. The term,
exerciseability, vesting schedule, and all other terms and conditions of the BGS
Options will otherwise be unchanged by the provisions of this Section 1.10 and
shall operate in accordance with their terms. All shares of BMC Common Stock
issued upon exercise of the exchanged BGS Options shall be registered under an
effective
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Form S-8 Registration Statement (or other comparable form) filed with the
Securities and Exchange Commission (the "Commission").
1.11. Assets and Liabilities
1.11.1. Assets and Liabilities of Merging Corporations Become
Those of Surviving Corporation. On the Effective Time, all rights,
privileges, powers, immunities, and franchises of each of the Merging
Corporations, both of a public and private nature, and all property,
real, personal, and mixed, and all debts due on whatever account, as
well as stock subscriptions and all other choses or things in action,
and all and every other interest of or belonging to or due to either of
the Merging Corporations, shall be taken by and shall be vested in the
Surviving Corporation without further act or deed, and all such rights,
privileges, powers, immunities, and franchises, property, debts, choses
or things in action, and all and every other interest of each of the
Merging Corporations shall be thereafter as effectually the property of
the Surviving Corporation as they were of the respective Merging
Corporations, and the title to any real or other property, or any
interest therein, whether vested by deed or otherwise, in either of the
Merging Corporations, shall not revert or be in any way impaired by
reason of the merger, provided, however, that all rights of creditors
and all liens upon any properties of each of the Merging Corporations
shall be preserved unimpaired, and all debts, liabilities,
restrictions, obligations, and duties of the respective Merging
Corporations, including without limitation all obligations, liabilities
and duties as lessee under any existing lease, shall thenceforth attach
to the Surviving Corporation and may be enforced against and by it to
the same extent as if such debts, liabilities, duties, restrictions and
obligations had been incurred or contracted by it. Any action or
proceeding pending by or against either of the Merging Corporations may
be prosecuted to judgment as if the merger had not taken place, or the
Surviving Corporation may be substituted in place of either of the
Merging Corporations.
1.11.2. Conveyances to Surviving Corporation. The Merging
Corporations hereby agree, respectively, that from time to time, as and
when requested by the Surviving Corporation, or by its successors and
assigns, they will execute and deliver or cause to be executed and
delivered, all such deeds, conveyances, assignments, permits, licenses
and other instruments, and will take or cause to be taken such further
or other action as the Surviving Corporation, its successors or
assigns, may deem necessary or desirable to vest or perfect in or
confirm to the Surviving Corporation, its successors and assigns, title
to and possession of all the property, rights, privileges, powers,
immunities, franchises, and interests referred to in this Paragraph
1.11.2 and otherwise carry out the intent and purposes of this
Agreement.
1.11.3. Accounting Treatment. The assets and liabilities of the
Merging Corporations shall be taken up on the books of the Surviving
Corporation in accordance with generally accepted accounting
principles, and the capital surplus and retained earnings accounts of
the Surviving Corporation shall be determined, in accordance with
generally accepted accounting principles, by the board of directors of
the Surviving Corporation. Nothing herein shall prevent the board of
directors of the Surviving Corporation from making any future changes
in its accounts in accordance with law.
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1.11.4. Unclaimed Merger Consideration; No Escheat. Subject to
any contrary provision of governing law, all consideration deposited
with the exchange agent or held by BMC for the payment of the
consideration into which the outstanding shares of BGS Common Stock
shall have been converted, and remaining unclaimed for one year after
the Effective Time, shall be paid or delivered to BMC; and the holder
of any unexchanged certificate or certificates which before the
Effective Time represented shares of BGS Common Stock shall thereafter
look only to BMC for exchange or payment thereof upon surrender of such
certificate or certificates to BMC.
1.11.5. Dissenting Stockholders of BGS. BGS agrees that, if the
merger contemplated hereby becomes effective, it will promptly pay to
any dissenting stockholder of BGS the amount, if any, to which such
holder is entitled under the provisions of Sections 86 through 98 of
the MBCL provided such dissenter acts in strict compliance with such
provisions.
1.12. Taking of Necessary Action; Further Action. Merger Sub and BGS
shall take all such reasonable and lawful action as may be necessary or
appropriate in order to effectuate the Merger as promptly as possible. If, at
any time after the Effective Time, any such further action is necessary or
desirable to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of BGS or Merger Sub, such
corporations shall direct their respective officers and directors to take all
such lawful and necessary action.
ARTICLE II
MISCELLANEOUS
2.1. Counterparts. This Plan of Merger may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to each of the other parties.
2.2. Governing Law. This Plan of Merger shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts.
2.3. Waiver and Amendment. Any provision of this Plan of Merger may
be waived at any time by the party that is, or whose stockholders are, entitled
to the benefits thereof. This Plan of Merger may not be amended or supplemented
at any time, except by an instrument in writing signed on behalf of each party
hereto. The waiver by any party hereto of any condition or of a breach of
another provision of this Plan of Merger shall not operate or be construed as a
waiver of any other condition or subsequent breach. The waiver by any party
hereto of any of the conditions precedent to its obligations under this Plan of
Merger shall not preclude it from seeking redress for breach of this Plan of
Merger other than with respect to the condition so waived.
A-6
44
IN WITNESS WHEREOF, the parties hereto have caused this Plan of Merger
to be duly executed as of the date first above written.
RANGER ACQUISITION CORP.
By: /s/ Max P. Watson, Jr.
--------------------------
Name: Max P. Watson, Jr.
Title: President
By: /s/ M. Brinkley Morse
--------------------------
Name: M. Brinkley Morse
Title: Treasurer
BGS SYSTEMS, INC.
By: /s/ Harold S. Schwenk, Jr.
--------------------------
Name: Harold S. Schwenk, Jr.
Title: President
By: /s/ Jeffrey Buzen
--------------------------
Name: Jeffrey Buzen
Title: Treasurer
A-7
45
Exhibit B
FORM OF STOCKHOLDER AGREEMENT
This Stockholder Agreement dated as of January 31, 1998 is between BMC
Software, Inc., a Delaware corporation ("BMC"), and ___________________________
(the "Stockholder").
WHEREAS, BMC, Ranger Acquisition Corp., a Massachusetts corporation and
wholly owned subsidiary of BMC ("Merger Sub"), and BGS Systems, Inc., a
Massachusetts corporation ("BGS"), are entering into an Agreement and Plan of
Reorganization dated as of the date hereof (as amended from time to time
pursuant thereto, the "Reorganization Agreement");
WHEREAS, the Stockholder is the record and/or beneficial owner of
________ shares of Common Stock, par value $0.10 per share, of BGS (the "BGS
Common Stock") (such shares of BGS Common Stock, together with any shares of
capital stock of BGS acquired by the Stockholder after the date hereof and
during the term of this Agreement, being collectively referred to herein as the
"Stockholder Shares");
WHEREAS, as a condition to the willingness of BMC to enter into the
Reorganization Agreement, and as an inducement to it to do so, the Stockholder
has agreed for the benefit of BMC as set forth in this Agreement; and
WHEREAS, the Board of Directors of BGS has approved the Stockholder's
entering into this Agreement, the form of this Agreement and the transactions
contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained in this
Agreement, the parties hereby agree as follows (terms defined in the
Reorganization Agreement and used but not defined herein having the meanings
assigned to such terms in the Reorganization Agreement):
ARTICLE I.
THE OPTION
Section 1.01 Grant of the Option. The Stockholder hereby grants to BMC
an irrevocable option (the "Option") to purchase, on the terms and subject to
the conditions set forth herein, at a per share exercise price of $45.00 (the
"Exercise Price"), all Stockholder Shares, together with (i) any additional
shares of capital stock of BGS or any securities or other property that the
Stockholder is or becomes entitled to receive from BGS by reason of being a
record holder of such number of Stockholder Shares, (ii) any capital stock,
securities or other property into which any such number of Stockholder Shares
shall have been or shall be converted or changed, whether by amendment to the
Articles of Organization of BGS, merger, consolidation, reorganization, capital
change or otherwise, (iii) any additional BGS Common
46
Stock acquired by the Stockholder as the result of the Stockholder's exercising
an option, warrant or other right to acquire shares of capital stock from BGS
issued with respect to such number of Stockholder Shares (all of the foregoing
hereinafter collectively referred to as the "Additional Stockholder Shares"),
and (iv) any shares of capital stock, securities or property referred to in
clauses (i), (ii), and (iii) above that are issued or issuable in respect of
Additional Stockholder Shares (such Stockholder Shares, the Additional
Stockholder Shares and any shares, securities or property referred to in clause
(iv) above being collectively referred to herein as the "Option Shares").
Section 1.02 Exercise of the Option.
(a) Subject to the conditions set forth in Section 1.03, the Option
may be exercised in whole at any time, and in part from time to time, after the
occurrence of a Triggering Event but prior to the Termination Date.
(b) For purposes hereof, a "Triggering Event" means (A) the
termination of the Reorganization Agreement pursuant to Section 6.1.2, because
of the breach by BGS of Sections 4.2.1., 4.2.2., 4.2.4., 4.3.4., 4.3.6.1.,
4.3.6.2., 4.3.7., 4.3.8., 4.3.9 or 4.3.12., the effect of which in each case
would reasonably jeopardize the Merger, or pursuant to Section 6.1.5 thereof, or
(B) the failure of the holders of two-thirds of the outstanding shares of BGS
Common Stock to approve the Merger after the public announcement of, or the
disclosure to the Board of Directors of BGS of, a BGS Transaction Proposal.
For purposes hereof, the "Termination Date" means the first to occur of
(1) the Effective Time of the Merger, (2) forty-five (45) days after the
occurrence of a Triggering Event and (3) the date the Reorganization Agreement
is terminated without giving rise to a Triggering Event.
(c) In the event BMC wishes to exercise the Option, BMC will send a
written notice to the Stockholder specifying a place, date (not less than two
business days nor more than 10 calendar days after the date such notice is
given) and time for the closing of the purchase of such Option Shares (the
"Closing").
(d) The purchase price payable to the Stockholder with respect to any
exercise of the Option will be the product of (i) the Exercise Price and (ii)
the number of Option Shares to be purchased upon such exercise.
(e) In the event of any change in the number of issued and
outstanding shares of BGS Common Stock by reason of any stock dividend,
split-up, recapitalization, combination, conversion, exchange of shares or other
change in the corporate or capital structure of BGS, the number and kind of
shares subject to the Option and the Exercise Price shall be adjusted
appropriately. If, on or after the date hereof, BGS should declare or pay any
cash or stock dividend (other than ordinary quarterly cash dividends as provided
in the Reorganization Agreement) or other distribution or issue any rights with
respect to the BGS Common Stock, payable or distributable to stockholders of
record on a date prior to the transfer to the name of BMC or its nominee on
BGS's stock transfer books of the Option Shares, and the Option is exercised,
then (a) the exercise price per Option Share will be reduced by the amount of
any such cash dividend or cash distribution, and (b) the whole of any such
non-cash dividends,
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47
distribution or right which would have been payable with respect to each Option
Share purchased by BMC if such shares were outstanding on the record date for
such distribution will be promptly remitted and transferred by the Stockholder
to BMC. Upon exercise of the Option, to the extent consistent with law, pending
such remittance, BMC will be entitled to all rights and privileges as owner of
any such non-cash dividend, distribution or right with respect to each Option
Share purchased.
Section 1.03 Closing.
(a) At the Closing, the Stockholder will deliver to BMC a certificate
or certificates representing the Option Shares being purchased, duly endorsed
for transfer or accompanied by appropriate stock powers duly executed in blank,
and BMC will pay the purchase price in immediately available funds by wire
transfer to an account designated by the Stockholder. Transfer taxes, if any,
imposed as a result of the exercise of the Option and the transfer of any Option
Shares will be paid by the Stockholder.
(b) The obligations of BMC and the Stockholder to consummate the
purchase and sale of the Option Shares pursuant to this Article I will be
subject to the fulfillment of the following conditions:
(i) The expiration or termination of the waiting period
applicable to the consummation of such transactions under the HSR Act;
and
(ii) Neither of the parties hereto shall be subject to any order
or injunction of a court of competent jurisdiction which prohibits the
consummation of such transactions. Each of the parties will promptly
make and will use all reasonable efforts to cause each of their
respective affiliates to make, all such filings and take all such
actions as may be reasonably required in order to permit the lawful
exercise of the Option, as promptly as possible. The date of any
Closing may be extended, if required, to the next business day
following (1) the date that any applicable waiting period under the HSR
Act shall have expired or been earlier terminated (but not beyond sixty
(60) days after such date of Closing unless BGS shall not have complied
with its obligations under the Reorganization Agreement with respect
thereto), (2) the date that all other necessary governmental approvals
for the sale of the Option Shares for which the Option shall have been
exercised shall have been obtained, and (3) the satisfaction of any
other condition to the Closing; provided that any delay pursuant to
clauses (2) or (3) shall not exceed 10 business days.
ARTICLE II.
COVENANTS OF THE STOCKHOLDER
Section 2.01 Agreement to Vote. At any meeting of the stockholders of
BGS held prior to the Termination Date, however called, and at every adjournment
or postponement thereof prior to the Termination Date, or in connection with any
written consent of the stockholders of BGS given prior to the Termination Date,
the Stockholder shall vote or cause to be voted the Stockholder Shares in favor
of the approval of the Merger and each of the other transactions
- 3 -
48
contemplated by the Reorganization Agreement and in favor of the approval and
adoption of the Reorganization Agreement, and any actions required in
furtherance hereof and thereof. The Stockholder hereby grants BMC an irrevocable
proxy coupled with an interest to vote the Stockholder Shares in favor of the
Merger and each of the other transactions contemplated by the Reorganization
Agreement and in favor of the approval and adoption of the Reorganization
Agreement, and any actions required in furtherance hereof and thereof. The
Stockholder shall not enter into any agreement or understanding with any person
other than BMC prior to the Termination Date, directly or indirectly, to vote,
grant any proxy or give instructions with respect to the voting of the
Stockholder Shares in any manner inconsistent with the preceding two sentences.
Section 2.02 Proxies and Voting Agreements. Except as described in
Section 2.01, the Stockholder hereby revokes any and all previous proxies
granted with respect to matters set forth in Section 2.01. Prior to the
Termination Date, the Stockholder shall not, directly or indirectly, except as
contemplated hereby, grant any proxies or powers of attorney with respect to
matters set forth in Section 2.01, deposit any of the Stockholder Shares or
enter into a voting agreement with respect to any of the Stockholder Shares.
Section 2.03 No Solicitation.
(a) From and after the date hereof until the Termination Date, the
Stockholder will not, and will not authorize or permit any of its officers,
directors, employees, partners, agents, affiliates or other representatives
(collectively, "Stockholder Representatives") to, directly or indirectly,
solicit or encourage (including by way of providing information) any prospective
acquiror or the invitation or submission of any inquiries, proposals or offers
or any other efforts or attempts that constitute, or may reasonably be expected
to lead to, a BGS Transaction Proposal.
(b) The Stockholder shall immediately cease and cause to be
terminated any existing solicitation, initiation, encouragement, activity,
discussion or negotiation with any parties conducted heretofore by the
Stockholder or any Stockholder Representatives with respect to any BGS
Transaction Proposal existing on the date hereof.
(c) Prior to the Termination Date, the Stockholder will promptly
notify BMC of any requests for information made to the Stockholder or any
Stockholder Representative or the receipt of any BGS Transaction Proposal made
to the Stockholder or any Stockholder Representative, including the identity of
the person or group engaging in such discussions or negotiations, requesting
such information or making such BGS Transaction Proposal, and the material terms
and conditions of any BGS Transaction Proposal.
(d) Prior to the Termination Date, the Stockholder shall not enter
into any agreement with any person that provides for, or in any way facilitates,
a BGS Transaction Proposal.
(e) The provisions of this Section 2.03 do not prohibit any
Stockholder Representative who is also a BGS director from taking actions
permitted by Section 4.3.6.1 of the Reorganization Agreement.
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49
Section 2.04 Transfer of Option Shares by the Stockholder. Prior to
the Termination Date, the Stockholder shall not (a) subject any of the Option
Shares to, or suffer to exist on any of the Option Shares, any lien, pledge,
security interest, charge or other encumbrance or restriction, other than
pursuant to this Agreement, or (b) sell, transfer, assign, convey or otherwise
dispose of any of the Option Shares (including any such action by operation of
law), other than a disposition by operation of law pursuant to the Merger. Prior
to the record date for the BGS stockholder meeting to vote on the Reorganization
Agreement, the Stockholder will not sell, transfer, assign, convey or otherwise
dispose of any of the Stockholder Shares (including any such action by operation
of law).
Section 2.05 Other Actions. Prior to the Termination Date, the
Stockholder shall not take any action that would in any way restrict, limit,
impede or interfere with the performance of its obligations hereunder or the
transactions contemplated hereby or by the Reorganization Agreement.
ARTICLE III.
REPRESENTATIONS, WARRANTIES AND ADDITIONAL COVENANTS
OF THE STOCKHOLDER
The Stockholder represents, warrants and covenants to BMC that:
Section 3.01 Ownership. The Stockholder is as of the date hereof the
beneficial and record owner of the Stockholder Shares, the Stockholder has the
sole right to vote the Stockholder Shares and there are no restrictions on
rights of disposition or other lien, pledge, security interest, charge or other
encumbrance or restriction pertaining to the Stockholder Shares, none of the
Stockholder Shares is subject to any voting trust or other agreement,
arrangement or restriction with respect to the voting of the Stockholder Shares,
and no proxy, power of attorney or other authorization has been granted with
respect to any of the Stockholder Shares. Upon delivery of any Option Shares
upon exercise of the Option, BMC will acquire good title to such shares, free
and clear of all liens, pledges, security interests, charges or other
encumbrances or restrictions.
Section 3.02 Authority and Non-Contravention. The Stockholder is a
[__________________________]. The Stockholder has the right, power and
authority, and the Stockholder has been duly authorized by all necessary action
(including consultation, approval or other action by or with any other person),
to execute, deliver and perform this Agreement and consummate the transactions
contemplated hereby.
Such actions by the Stockholder (a) require no action by or in respect
of, or filing with, any governmental entity with respect to the Stockholder,
other than any required filings under the Exchange Act or under the HSR Act, and
(b) do not and will not contravene or constitute a default under any provisions
of applicable law or regulation or any agreement, judgment, injunction, order,
decree or other instrument binding on the Stockholder result in the imposition
of any lien, pledge, security interest, charge or other encumbrance or
restriction on any of the Stockholder Shares (other than as provided in this
Agreement with respect to Stockholder Shares).
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50
Section 3.03 Binding Effect. This Agreement has been duly executed
and delivered by the Stockholder and is the valid and binding agreement of the
Stockholder, enforceable against the Stockholder in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights generally and by equitable
principles to which the remedies of specific performance and injunctive and
similar forms of relief are subject.
Section 3.04 Total Shares. The Stockholder Shares are the only shares
of capital stock of BGS owned beneficially or of record as of the date hereof by
the Stockholder, and the Stockholder does not have any option to purchase or
right to subscribe for or otherwise acquire any securities of BGS and has no
other interest in or voting rights with respect to any other securities of BGS.
Section 3.05 Finder's Fees. No investment banker, broker or finder is
entitled to a commission or fee from BGS, BMC or Merger Sub in respect of this
Agreement based upon any arrangement or agreement made by or on behalf of the
Stockholder, except as otherwise provided in the Reorganization Agreement.
Section 3.06 Reasonable Efforts. Prior to the Termination Date, the
Stockholder shall use reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with BMC in
doing, all things necessary, proper or advisable to consummate and make
effective the Merger and the other transactions contemplated by the
Reorganization Agreement and this Agreement.
ARTICLE IV.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BMC
BMC represents, warrants and covenants to the Stockholder that:
Section 4.01 Corporate Power and Authority. BMC has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution, delivery and performance by BMC to this
Agreement and the consummation by BMC of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of BMC.
Section 4.02 Binding Effect. This Agreement has been duly executed
and delivered by BMC and is a valid and binding agreement of BMC, enforceable
against BMC in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally and by equitable principles to which the remedies of
specific performance and injunctive and similar forms of relief are subject.
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51
ARTICLE V.
MISCELLANEOUS
Section 5.01 Expenses. Each party hereto shall pay its own expenses
incident to preparing for entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.
Section 5.02 Further Assurances. From time to time, at the request of
the other party, each party shall execute and deliver or cause to be executed
and delivered such additional documents and instruments and take all such
further action as may be necessary or desirable to consummate the transactions
contemplated by this Agreement.
Section 5.03 Specific Performance. The Stockholder agrees that BMC
would be irreparably damaged if for any reason the Stockholder fails to perform
any of the Stockholder's obligations under this Agreement, and that BMC would
not have an adequate remedy at law for money damages in such event. Accordingly,
BMC shall be entitled to seek specific performance and injunctive and other
equitable relief to enforce the performance of this agreement by the Stockholder
without any requirement for the securing or posting of any bond. This provision
is without prejudice to any other rights that BMC may have against the
Stockholder for any failure to perform its obligations under this Agreement.
Section 5.04 Notices. Any notice or communication required or
permitted hereunder shall be in writing and either delivered personally,
telegraphed or telecopied or sent by certified or registered mail, postage
prepaid, and shall be deemed to be given, dated and received when so delivered
personally, telegraphed or telecopied or, if mailed, five business days after
the date of mailing to the following address or telecopy number, or to such
other address or addresses as such person may subsequently designate by notice
given hereunder.
(a) if to BMC or Merger Sub, to:
BMC
2101 Citywest Blvd.
Houston, Texas 77042-2627
Attention: M. Brinkley Morse
Facsimile: 713/918-8000
with a copy to:
Vinson & Elkins L.L.P.
2300 First City Tower
Houston, Texas 77002
Attention: John S. Watson
Facsimile: 713/615-5236
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52
(b) if to Stockholder, to:
with a copy to:
Palmer & Dodge LLP
One Beacon Street
Boston, Massachusetts 02108
Attention: Steven N. Farber
Facsimile: 617/227-4420
Section 5.05 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the work "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." Unless the context otherwise requires, "or" is
disjunctive but not necessarily exclusive, and words in the singular include the
plural and in the plural include the singular. The term "person" is to be
interpreted broadly to include any corporation, partnership, trust, limited
liability company, government or other entity and any group (as used with
respect to Section 13(d) of the Exchange Act). Section F.. Counterparts. This
Agreement may be executed in two or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when two or
more counterparts have been signed by each of the parties and delivered to the
other party, it being understood that all parties need not sign the same
counterpart.
Section 5.06 Entire Agreement; No Third Party Beneficiaries. This
Agreement (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereto and (b) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 5.07 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of The Commonwealth of Massachusetts,
without giving effect to the principles of conflicts of law thereof.
Section 5.08 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) except to the partners
of the Stockholder as permitted herein without the prior written consent of the
other party. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
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53
Section 5.09 Amendments; Terminations. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto.
Section 5.10 Certain Events. The Stockholder agrees that this
Agreement and the obligations hereunder shall attach to the Stockholder Shares
beneficially owned by such Stockholder and shall be binding upon any person to
which legal or beneficial ownership of such shares shall pass, whether by
operation of law or otherwise.
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54
IN WITNESS WHEREOF, BMC and the Stockholder have caused this Agreement
to be duly executed as of the day and year first above written.
STOCKHOLDER:
__________________________________
By: ______________________________
Name:
Title:
BMC:
BMC SOFTWARE, INC.
By: ______________________________
Name:
Title:
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55
Exhibit C
FORM OF AFFILIATE LETTER
January 31, 1998
BMC Software, Inc.
2101 Citywest Blvd.
Houston, TX 77042-2827
Gentlemen:
The undersigned acknowledges that as of the date hereof the undersigned
may be deemed to be an "affiliate" of BGS Systems, Inc., a Massachusetts
corporation ("BGS"), as the term "affiliate" is used in and for purposes of
paragraphs (c) and (d) of Rule 145 ("Rule 145") promulgated by the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"). Pursuant to the terms and subject to the
conditions of the Agreement and Plan of Reorganization dated as of January 31,
1998 (the "Agreement"), among BGS, BMC Software, Inc., a Delaware corporation
("BMC"), and Ranger Acquisition Corp., a Massachusetts corporation and a wholly
owned subsidiary of BMC ("Merger Sub"), BMC will own all of the outstanding
capital stock of BGS (the "Merger"), all of the outstanding shares of capital
stock of BGS will be exchanged for Common Stock, par value $.01 per share, of
BMC ("BMC Common Stock"), and unexpired and unexercised options to purchase
capital stock of BGS ("BGS Options") will become options to purchase BMC Common
Stock ("BMC Options"). In, or as a result of, the Merger, the undersigned will
(i) receive BMC Common Stock in exchange for all of the shares of capital stock
of BGS ("BGS Common Stock") owned by the undersigned immediately prior to the
time of the effectiveness of the Merger (the "Effective Time") and/or (ii) BMC
Options.
The undersigned further acknowledges and agrees with BMC that (i) the
undersigned has no current plan or intention to sell, exchange or otherwise
dispose of the BMC Common Stock or BMC Options (or shares issuable upon exercise
thereof) to be received by the undersigned pursuant to the Merger, (ii) no
disposition will be made by the undersigned of any shares of BMC Common Stock or
BMC Options (or shares issuable upon exercise thereof) received or to be
received pursuant to the Merger until such time as results of operations of BMC
covering 30 days of combined operations of BMC and BGS have been published and
(iii) no shares of BMC Common Stock or BMC Options (or shares issuable upon
exercise thereof) received or to be received by the undersigned pursuant to the
Merger will be sold or disposed of except pursuant to an effective registration
statement under the Securities Act or in accordance an exemption from
registration under the Securities Act.
The undersigned acknowledges and agrees that appropriate restrictive
legends will be placed on certificates representing BMC Common Stock received by
the undersigned in the Merger or held by a transferee thereof and that "stop
transfer" orders may be entered in the
56
records of the transfer agent for BMC's Common Stock. Such orders will be
removed and such legends will be removed by delivery of substitute certificates
upon receipt of an opinion in form and substance reasonably satisfactory to BMC
from independent counsel reasonably satisfactory to BMC to the effect that such
legends are no longer required to assure compliance with applicable provisions
of the Securities Act.
The undersigned acknowledges that the undersigned has carefully read
this letter and understands the requirements hereof and the limitations imposed
upon the distribution, sale, transfer or other disposition of BMC Common Stock,
BMC Options, BGS Common Stock and BGS Options.
Very truly yours,
_______________________________________
Name:
Agreed and accepted this 31st day of January, 1998
BMC SOFTWARE, INC.
By: ______________________________
Name: M. Brinkley Morse
Title: Vice President
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Exhibit D
FORM OF AFFILIATE LETTER
January 31, 1998
BMC Software, Inc.
2101 Citywest Blvd.
Houston, TX 77042-2827
Gentlemen:
The undersigned acknowledges that as of the date hereof the undersigned
may be deemed to be an "affiliate" of BMC Software, Inc., a Delaware corporation
("BMC"), as the term "affiliate" is used in and for purposes of paragraphs (c)
and (d) of Rule 145 ("Rule 145") promulgated by the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"). Pursuant to the terms and subject to the conditions of the
Agreement and Plan of Reorganization dated as of January 31, 1998 (the
"Agreement"), among BGS Systems, Inc., a Massachusetts corporation ("BGS"), BMC,
and Ranger Acquisition Corp., a Massachusetts corporation and a wholly owned
subsidiary of BMC ("Merger Sub"), BMC will own all of the outstanding capital
stock of BGS (the "Merger"), all of the outstanding shares of capital stock of
BGS will be exchanged for Common Stock, par value $.01 per share, of BMC ("BMC
Common Stock"), and unexpired and unexercised options to purchase capital stock
of BGS ("BGS Options") will become options to purchase BMC Common Stock ("BMC
Options").
The undersigned further acknowledges and agrees with BMC that (i) the
undersigned has no current plan or intention to sell, exchange or otherwise
dispose of any shares of BMC Common Stock or BMC Options (or shares issuable
upon exercise thereof) currently held by the undersigned (or hereinafter
acquired), (ii) no disposition will be made by the undersigned of any shares of
BMC Common Stock or BMC Options (or shares issuable upon exercise thereof)
currently held by the undersigned (or hereinafter acquired) until such time as
results of operations of BMC covering 30 days of combined operations of BMC and
BGS have been published.
58
The undersigned acknowledges that the undersigned has carefully read
this letter and understands the requirements hereof and the limitations imposed
upon the distribution, sale, transfer or other disposition of BMC Common Stock
and BMC Options.
Very truly yours,
_______________________________________
Name:
Agreed and accepted this ____ day of _____________, 1998
BMC SOFTWARE, INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
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