STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of August 6, 1999 (this "Agreement"),
between Data General Corporation, a Delaware corporation ("Dragon"), and XXX
Xxxxxxxxxxx, a Massachusetts corporation ("Emerald").
WHEREAS, Dragon, Emerald and Emerald Merger Corporation, a Delaware
corporation and a wholly-owned subsidiary of Emerald ("Sub"), propose to enter
into an Agreement and Plan of Merger, of even date herewith (the "Merger
Agreement"), which provides that, among other things, upon the terms and subject
to the conditions thereof, Sub will be merged with and into Dragon, with Dragon
continuing as the surviving corporation; and
WHEREAS, as a condition to the willingness of Emerald to enter into the
Merger Agreement, Emerald has required that Dragon agree, and in order to induce
Emerald to enter into the Merger Agreement Dragon has agreed, to grant Emerald
an option to purchase certain shares of common stock, par value $.01 per share,
of Dragon ("Dragon Common Stock"), in accordance with the terms of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein and in the Merger Agreement, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
THE STOCK OPTION
SECTION 1.1 Grant of Stock Option. Dragon hereby grants to Emerald an
---------------------
irrevocable option (the "Stock Option") to purchase up to 10,177,850 shares (the
"Option Shares") of Dragon Common Stock, including the associated rights (the
"Dragon Rights") to purchase shares of Dragon capital stock pursuant to the
Rights Agreement, Renewed and Restated as of October 19, 1996, between Dragon
and The Bank of New York, as Rights Agent (the "Rights Agreement"), in the
manner set forth below and at a price of $19.58 per Option Share, as adjusted in
accordance with the provisions of Section 1.5 hereof (such price, as adjusted if
applicable, the "Purchase Price"); provided, however, that in no event
-------- -------
(including any adjustment under Section 1.5 hereof) shall the number of shares
of Dragon Common Stock for which this Stock Option is exercisable exceed 19.9%
of Dragon's issued and outstanding shares of Dragon Common Stock without giving
effect to any Option
Shares subject to or issued pursuant to the Stock Option. All references in this
Agreement to shares of Dragon Common Stock issued to Emerald hereunder shall be
deemed to include the Dragon Rights associated therewith. Capitalized terms used
herein but not defined herein shall have the meanings set forth in the Merger
Agreement.
SECTION 1.2 Exercise of Stock Option.
------------------------
(a) Subject to the satisfaction of the conditions set forth in
Section 1.3 hereof, the Stock Option may be exercised by Emerald, in whole
or in part, at any time or from time to time after the occurrence of an
Exercise Event (as defined below) and prior to the Termination Date (as
defined below).
(b) An "Exercise Event" shall occur for purposes of this Agreement
upon the occurrence of any event or circumstance which, pursuant to the
terms of Section 8.3(c) of the Merger Agreement, would entitle Emerald to
payment of the termination fee specified in Section 8.3(c) of the Merger
Agreement.
(c) The "Termination Date" shall occur for purposes of this Agreement
upon the first to occur of any of the following:
(i) the Effective Time (as defined in the Merger Agreement);
(ii) the date on which the Merger Agreement is terminated
pursuant to Section 8.1 thereof, unless on or after such termination
Emerald may have the right to receive the termination fee described in
Section 8.3(c) of the Merger Agreement, including upon the occurrence
of certain events; or
(iii) the date which is one year after the date on which the
Merger Agreement is terminated pursuant to Section 8.1 thereof, if on
or after such termination Emerald may be entitled to receive the
termination fee described in Section 8.3(c) of the Merger Agreement,
including upon the occurrence of certain events;
provided that, with respect to clause (iii) above, if the Stock Option
cannot be exercised as of such date by reason of any applicable judgment,
decree, law, regulation or order, or by reason of the waiting period under
the XXX Xxx,
0
then the Termination Date shall be extended until fifteen days after such
impediment has been removed or such waiting period has expired.
(d) Dragon shall notify Emerald in writing as promptly as
practicable, and in any event within 24 hours, of the occurrence of any
Exercise Event, it being understood that the giving of such notice by
Dragon shall not be a condition to the right of Emerald to exercise the
Stock Option or for an Exercise Event to have occurred.
(e) In the event Emerald is entitled to and wishes to exercise the
Stock Option, Emerald shall send a written notice (an "Exercise Notice") to
Dragon specifying the total number of Option Shares Emerald wishes to
purchase, the denominations of the certificate or certificates evidencing
such Option Shares which Emerald wishes to receive, a date (a "Closing
Date"), which shall be a business day which is at least five business days
after delivery of such notice, and place for the closing of such purchase
(a "Closing").
(f) Upon receipt of an Exercise Notice, Dragon shall be obligated to
deliver to Emerald the number of Option Shares specified therein, in
accordance with the terms of this Agreement, on the later of (i) the
Closing Date and (ii) the first business day on which the conditions
specified in Section 1.3 hereof shall be satisfied.
(g) If, at any time during the period commencing on an Exercise Event
and ending on the Termination Date, Emerald sends to Dragon an Exercise
Notice indicating Emerald's election to exercise its right (the "Cash-Out
Right") pursuant to this Section 1.2(g), then Dragon shall pay to Emerald,
on the Closing Date, in exchange for the cancellation of the Option with
respect to such number of Option Shares subject thereto as Emerald
specifies in the Exercise Notice, an amount in cash equal to such number of
Option Shares multiplied by the difference between (i) the higher of (A)
the average closing price, for the 10 trading days commencing on the 12th
trading day immediately preceding the Closing Date, per share of Dragon
Common Stock as reported on The New York Stock Exchange (or, if not listed
on The New York Stock Exchange, as reported on any other national
securities exchange or national securities quotation system on which Dragon
Common Stock is listed or quoted, as reported in The Wall Street Journal
-----------------------
(Northeast edition), or, if not reported thereby, any other authoritative
source) and (B) the highest price per share of Dragon Common Stock paid
pursuant to any Acquisition Proposal (as defined in the Merger Agreement)
or proposed to be
3
paid pursuant to any agreement relating to an Acquisition Proposal and (ii)
the Purchase Price. Notwithstanding the termination of the Stock Option,
Emerald will be entitled to exercise its rights under this Section 1.2(g)
if it has exercised such rights in accordance with the terms hereof prior
to the termination of the Stock Option.
(h) (i) Notwithstanding any other provision of this Agreement or
any provision of the Merger Agreement, in no event shall the sum of
(x) the Total Option Profit (as hereinafter defined) and (y) the
termination fee payable under Section 8.3(c) of the Merger Agreement
(the "Termination Fee") exceed in the aggregate $61,363,000 and, if
the total amount that otherwise would be received by Emerald would
exceed such amount, Emerald, at its sole election, shall either (a)
reduce the number of shares of Dragon Common Stock subject to the
Option, (b) deliver to Dragon for cancellation shares of Dragon Common
Stock previously purchased by Emerald, (c) pay cash to Dragon or (d)
take any action representing any combination of the preceding clauses
(a), (b) and (c), so that Emerald's actually realized Total Option
Profit, when aggregated with such Termination Fee so paid to Emerald,
shall not exceed $61,363,000 after taking into account the foregoing
actions.
(ii) Notwithstanding any other provision of this Agreement or
any provision of the Merger Agreement, this Stock Option may not be
exercised for a number of shares as would, as of the date of exercise,
result in a Notional Total Option Profit (as hereinafter defined)
which, together with any Termination Fee theretofore paid to Emerald,
would exceed in the aggregate $61,363,000; provided, however, that
nothing in this clause (ii) shall restrict any exercise of the Option
permitted hereby on any subsequent date if exercise at such time would
otherwise be permitted by this clause (ii).
(iii) As used herein, the term "Total Option Profit" shall mean
the aggregate amount (before taxes) of the following: (A) the amount
received by Emerald pursuant to Section 1.2(g), (B)(x) the amount
received by Emerald pursuant to the sale of Option Shares to any
unaffiliated party (including pursuant to Section 3.2(e)), valuing any
non-cash consideration at its fair market value, less (y) Emerald's
purchase price for such Option Shares, and (C) any equivalent amount
resulting from the adjustments contemplated under Section 1.5.
4
(iv) As used herein, the term "Notional Total Option Profit"
with respect to any number of shares of Dragon Common Stock as to
which Emerald has delivered an Exercise Notice shall be the Total
Option Profit determined as of the date of deliver of such Exercise
Notice assuming that the Stock Option were exercised on such date for
such number of shares of Dragon Common Stock and assuming that such
shares, together with all other Option Shares held by Emerald and its
affiliates as of such date, were sold for cash at the closing market
price for the Dragon Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions or
underwriting discounts).
SECTION 1.3 Conditions to Delivery of Option Shares. The obligation of
---------------------------------------
Dragon to deliver Option Shares upon any exercise of the Stock Option is subject
to the satisfaction of the following conditions:
(a) All waiting periods, if any, under the HSR Act applicable
to the issuance of Option Shares hereunder shall have expired or been
terminated; and
(b) There shall be no preliminary or permanent injunction or
other order issued by any court of competent jurisdiction preventing
or prohibiting such exercise of the Stock Option or the delivery of
the Option Shares in respect of such exercise.
SECTION 1.4 Closings. At each Closing, simultaneously with the delivery
--------
by Emerald of the aggregate Purchase Price for Option Shares being acquired,
Dragon will deliver to Emerald a certificate or certificates evidencing the
number of Option Shares specified in Emerald's Exercise Notice, registered in
the name of Emerald or its nominee, and, if the Stock Option should be exercised
in part only, a new Stock Option evidencing the rights of Emerald thereof to
purchase the balance of the shares (or other securities) purchasable hereunder.
All payments made by Emerald to Dragon pursuant to this Section 1.4 shall be
made, at the option of Emerald, (a) by wire transfer of immediately available
funds, or (b) by delivery to Dragon of a certified or bank check or checks
payable to or to the order of Dragon.
SECTION 1.5 Adjustments Upon Share Issuances, Changes in Capitalization,
------------------------------------------------------------
etc.
---
(a) In the event of any change in Dragon Common Stock or in
the number of outstanding shares of Dragon Common Stock by
5
reason of a stock dividend, split-up, recapitalization, combination,
exchange of shares or similar transaction or any other change in the
corporate or capital structure of Dragon (including, without
limitation, the declaration or payment of an extraordinary dividend of
cash, securities or other property), the type and number of shares or
securities to be issued by Dragon upon exercise of the Stock Option,
and the Purchase Price thereof, shall be adjusted appropriately, and
proper provision shall be made in the agreements governing such
transaction or change, so that Emerald shall receive upon exercise of
the Stock Option the number and class of shares or other securities or
property that Emerald would have received in respect to Dragon Common
Stock if the Stock Option had been exercised immediately prior to such
transaction or change, or the record date therefor, as applicable.
(b) In the event that Dragon shall enter into an agreement (i)
to consolidate with or merge into any person, other than Emerald or
one of its Subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any
person, other than Emerald or one of its Subsidiaries, to merge into
Dragon and Dragon shall be the continuing or surviving corporation,
but, in connection with such merger, the then outstanding shares of
Dragon Common Stock shall be changed into or exchanged for stock or
other securities of Dragon or any other person or cash or any other
property, or then outstanding shares of Dragon Common Stock shall
after such merger represent less than 5% of the outstanding shares and
share equivalents of the surviving corporation or (iii) to sell or
otherwise transfer all or substantially all of its assets to any
person, other than Emerald or one of its Subsidiaries, then, in each
such case, proper provision shall be made in the agreements governing
such transaction so that Emerald shall receive upon exercise of the
Stock Option the number and class of shares or other securities or
property that Emerald would have received in respect of Dragon Common
Stock if the Stock Option had been exercised immediately prior to such
transaction, or the record date therefor, as applicable.
(c) No adjustment made in accordance with this Section 1.5
shall constitute or be deemed a waiver of any breach of any of
Dragon's representations, warranties, covenants, agreements or
obligations contained in the Merger Agreement.
6
(d) The provisions of this Agreement, including, without
limitation, Sections 1.1, 1.2, 1.4 and 3.2 shall apply with
appropriate adjustments to any securities for which the Stock Option
becomes exercisable pursuant to this Section 1.5.
SECTION 1.6 Restrictive Legend. Each certificate representing Option
------------------
Shares issued to Emerald hereunder shall include a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY
IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF DRAGON
SECTION 2.1 Representations and Warranties of Dragon. Dragon represents
----------------------------------------
and warrants to Emerald that (a) Dragon is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, (b) the execution
and delivery by Dragon of this Agreement and the consummation by Dragon of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of Dragon, (c) this Agreement has been
duly executed and delivered by Dragon and constitutes the valid and binding
obligation of Dragon, enforceable against Dragon in accordance with its terms,
(d) Dragon has taken all necessary corporate action to authorize and reserve and
permit it to issue, and at all times from the date hereof through the
Termination Date shall have reserved, all the Option Shares issuable pursuant to
this Agreement, and Dragon will take all necessary corporate action to authorize
and reserve and permit it to issue all additional shares of Dragon Common Stock
or other securities which may be issued pursuant to Section 1.5 hereof, all of
which, upon their issuance and delivery in accordance with the terms of this
Agreement, shall be duly authorized, validly issued, fully paid and
nonassessable, shall be delivered free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal, agreements,
limitations on Emerald's voting rights, charges and other encumbrances of any
nature whatsoever (other than this Agreement) and shall not be subject to any
preemptive rights, and (e) the execution and delivery of this Agreement by
Dragon does not, and
7
the consummation by Dragon of the transactions contemplated by this Agreement
will not, (i) conflict with, or result in any violation or breach of any
provision of the Certificate of Incorporation, as amended to date, or Bylaws, as
amended to date, of Dragon, (ii) result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of any benefit) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, contract or other agreement, instrument
or obligation to which the Dragon or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound, or (iii)
conflict or violate any permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Dragon or any
of its Subsidiaries or any of its or their properties or assets, except in the
case of (ii) and (iii) for any such violations, breaches, defaults,
terminations, cancellations, accelerations or conflicts which would not be
reasonably likely to have a Material Adverse Effect (as defined in the Merger
Agreement) on Dragon and its Subsidiaries, taken as a whole, or impair the
ability of Dragon to consummate the transactions contemplated by this Agreement.
The provisions of Section 203 of the General Corporation Law of the State of
Delaware will not, prior to the termination of this Agreement, apply to this
Agreement or the transactions contemplated hereby. Dragon has taken, and will in
the future take, all steps necessary to irrevocably exempt the transactions
contemplated by this Agreement from any other applicable state takeover law and
from any applicable charter or contractual provision containing change of
control or anti-takeover provisions. Dragon has taken all action so that the
entering into of this Agreement, the acquisition of shares of Dragon Common
Stock hereunder and the other transactions contemplated hereby do not and will
not result in the grant of any rights to any person under the Rights Agreement
or enable or require the Dragon Rights to be exercised, distributed or
triggered.
8
ARTICLE III
COVENANTS OF DRAGON
SECTION 3.1 Listing; Other Action.
---------------------
(a) Dragon shall, at its expense, use reasonable best efforts
to cause the Option Shares to be authorized for listing on the New
York Stock Exchange (the "NYSE"), upon official notice of issuance, as
promptly as practicable following an Exercise Event, and will provide
prompt notice to the NYSE of the issuance of each Option Share, unless
the delivery of the Option Shares is satisfied with shares of Dragon
Common Stock held in treasury by Dragon then listed on the NYSE.
(b) Dragon shall use its reasonable best efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions
contemplated hereunder, including, without limitation, using its
reasonable best efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental
entities. Without limiting the generality of the foregoing, Dragon
shall when required in order to effect the transactions contemplated
hereunder make all filings and submissions under the HSR Act as
promptly as practicable.
SECTION 3.2 Registration.
------------
(a) As used in this Agreement, "Registrable Securities" means
each of the Option Shares issued to Emerald hereunder and any other
securities issued in exchange for, or issued as dividends or otherwise
on or in respect of, any of such Option Shares.
(b) At any time or from time to time within three years of the
first Closing, Emerald may make a written request to Dragon for
registration under and in accordance with the provisions of the
Securities Act with respect to all or any part of the Registrable
Securities (a "Demand Registration"). A Demand Registration may
9
be, at the option of Emerald, a shelf registration or a registration
involving an underwritten offering. As soon as reasonably practicable
after Emerald's request for a Demand Registration, Dragon shall file
one or more registration statements on any appropriate form with
respect to all of the Registrable Securities requested to be so
registered; provided that Dragon will not be required to file any such
registration statement during any period of time (not to exceed 60
days after such request in the case of clause (i) below or 90 days in
the case of clauses (ii) or (iii) below) when (i) Dragon is in
possession of material non-public information which it reasonably
believes would be detrimental to be disclosed at such time and, in the
written opinion of outside counsel to Dragon, such information would
have to be disclosed if a registration statement were filed at that
time, (ii) Dragon is required under the Securities Act to include
audited financial statements for any period in such registration
statement that are not yet available for inclusion therein, or (iii)
Dragon determines, in its reasonable judgment, that such registration
would interfere with any financing, acquisition or other material
transaction involving Dragon or any of its affiliates. Dragon shall
use its best efforts to have the Demand Registration declared
effective as soon as reasonably practicable after such filing and to
keep the Demand Registration continuously effective for a period of at
least ninety days following the date on which the Demand Registration
is declared effective, in the case of an underwritten offering, or at
least six months following the date on which the Demand Registration
is declared effective, in the case of a shelf registration; provided
that, if for any reason the effectiveness of any Demand Registration
is suspended, the required period of effectiveness shall be extended
by the aggregate number of days of each such suspension; and provided,
further, that the effectiveness of any Demand Registration may be
terminated if and when all of the Registrable Securities covered
thereby shall have been sold. Emerald shall be entitled to two Demand
Registrations. If any Demand Registration involves an underwritten
offering, (i) Emerald shall have the right to select the managing
underwriter, which shall be reasonably acceptable to Dragon (it being
agreed by Dragon that Xxxxxx Brothers Inc. would be acceptable to
Dragon) and (ii) Dragon shall enter into an underwriting agreement in
customary form.
(c) If at any time within three years of the first Closing,
Dragon proposes to file a registration statement under the Securities
Act with respect to any shares of any class of its equity securities
to
10
be sold for the account of Dragon (other than a registration
statement on Form S-4 or Form S-8 or any successor form), and the
registration form to be used may be used for the registration of
Registrable Securities, then Dragon shall in each case give written
notice of such proposed filing to Emerald at least twenty days before
the anticipated filing date, and Emerald shall have the right to
include in such registration such number of Registrable Securities a
Emerald may request (such request to be made by written notice to
Dragon within fifteen days following Emerald's receipt from Dragon of
such notice of proposed filing). Dragon shall use its best efforts to
cause the managing underwriter of any proposed underwritten offering
to permit Emerald to include in such offering all Registrable
Securities requested by Emerald to be included in the registration for
such offering on the same terms and conditions as any similar
securities of Dragon included therein. Notwithstanding the foregoing,
if the managing underwriter of such offering advises Emerald that, in
the reasonable opinion of such underwriter, the amount of Registrable
Securities which Emerald requests to be included in such offering
would materially and adversely affect the success of such offering,
then the amount of Registrable Securities to be offered shall be
reduced to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended
by such underwriter; provided, however, that if the amount of
Registrable Securities shall be so reduced, Dragon shall not be
permitted to include in such registration any securities of Dragon
other than securities to be issued by Dragon and Registrable
Securities.
(d) In the event that Registrable Securities are included in a
"piggyback" registration statement pursuant to Section 3.2(c) hereof,
Emerald agrees not to effect any public sale or distribution of the
issue being registered or a similar security of Dragon, or any
securities convertible into or exchangeable or exercisable for such
securities, including a sale pursuant to Rule 144 under the Securities
Act, during the ten business days prior to, and during the 90-day
period beginning on, the effective date of such registration statement
(except as part of such registration), if and to the extent timely
notified in writing by Dragon, in the case of a non-underwritten
public offering, or by the managing underwriter, in the case of an
underwritten public offering. In the event that Emerald requests a
Demand Registration or if Registrable Securities are included in a
11
"piggyback" registration pursuant to Section 3.2(c) hereof, Dragon
agrees not to effect any public sale or distribution of the issue
being registered or a similar security of Dragon, or any securities
convertible into or exchangeable or exercisable for such securities,
during the period from such request until 90 days after the effective
date of such registration statement (except as part of such
registration or pursuant to a registration of securities on Form S-4
or Form S-8 or any successor form).
(e) Notwithstanding anything to the contrary contained herein,
in the event that Emerald requests a Demand Registration or a
"piggyback" registration of Registrable Securities pursuant to Section
3.2(b) or 3.2(c) hereof, respectively, Dragon shall have the right to
purchase all, but not less than all, of the Registrable Securities
requested to be so registered, upon the terms and subject to the
conditions set forth in this Section 3.2(e). If Dragon wishes to
exercise such purchase right, then within two business days following
receipt of a request for a Demand Registration or a "piggyback"
registration, Dragon shall send a written notice (a "Repurchase
Notice") to Emerald specifying that Dragon wishes to exercise such
purchase right, a date for the closing of such purchase, which shall
not be more than five business days after delivery of such Repurchase
Notice, and a place for the closing of such purchase (a "Repurchase
Closing"). Upon delivery of a Repurchase Notice, a binding agreement
shall be deemed to exist between Emerald and Dragon providing for the
purchase by Dragon of the Registrable Securities requested to be
registered by Emerald, upon the terms and subject to the conditions
set forth in this Section 3.2(e). The purchase price per share or
other unit of Registrable Securities (the "Repurchase Price") shall
equal the average per share or per unit closing price as quoted on the
NYSE (or if not then quoted thereon, on such other exchange or
quotation system on which the Registrable Securities are quoted) for
the period of five trading days ending on the trading day immediately
prior to the day on which Emerald requests a Demand Registration or a
"piggyback" registration of the Registrable Securities which Dragon
subsequently elects to purchase. Emerald's obligation to deliver any
Registrable Securities at a Repurchasing Closing shall be subject to
the condition that, at such Repurchase Closing, Dragon shall have
delivered to Emerald a certificate signed on behalf of Dragon by
Dragon's chief executive officer and chief financial officer, which
certificate shall be satisfactory in form and substance to Emerald, to
12
the effect that the purchase by Dragon of such Registrable Securities
(i) is permitted under applicable Delaware corporate law and under the
fraudulent conveyance provisions of the federal bankruptcy code and
(ii) does not violate any material agreement to which Dragon or any of
its subsidiaries is a party or by which any of their properties or
assets is bound. At any Repurchase Closing, Dragon shall pay to
Emerald the aggregate Repurchase Price for the Registrable Securities
being purchased by wire transfer of immediately available funds or by
delivering to Emerald a certified or bank check payable to or on the
order of Emerald in an amount equal to such aggregate Repurchase
Price, and Emerald will surrender to Dragon a certificate or
certificates evidencing such Registrable Securities. No purchase of
Registrable Securities by Dragon pursuant to this Section 3.2(e) shall
reduce or otherwise modify Dragon's registration obligations under
this Section 3.2 (including, without limitation, the number of Demand
Registrations which Dragon is obligated to effect) with respect to any
Registrable Securities held by Emerald following such purchase.
(f) The registrations effected under this Section 3.2 shall be
effected at Dragon's expense except for underwriting commissions
allocable to the Registrable Securities. Dragon shall indemnify and
hold harmless Emerald, its affiliates and controlling persons and
their respective officers, directors, agents and representatives from
and against any and all losses, claims, damages, liabilities and
expenses (including, without limitation, all out-of-pocket expenses,
investigation expenses, expenses incurred with respect to any judgment
and fees and disbursements of counsel and accountants) arising out of
or based upon any statements contained in, or omissions or alleged
omissions from, each registration statement (and related prospectus)
filed pursuant to this Section 3.2; provided, however, that Dragon
-------- -------
shall not be liable in any such case to Emerald or any affiliate or
controlling person of Emerald or any of their respective officers,
directors, agents or representatives to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement or
omission or alleged omission made in such registration statement or
prospectus in reliance upon, and in conformity with, written
information furnished to Dragon specifically for use in the
preparation thereof by Emerald such affiliate, controlling person,
officer, director, agent or representative, as the case may be.
13
ARTICLE IV
COVENANTS OF EMERALD
SECTION 4.1 Distribution. Emerald shall acquire the Option Shares for
------------
investment purposes only and not with a view to any distribution thereof in
violation of the Securities Act, and shall not sell any Option Shares purchased
pursuant to this Agreement except in compliance with the Securities Act.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Expenses. Except as otherwise provided herein or in the
--------
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
SECTION 5.2 Further Assurances. Dragon and Emerald will execute and
------------------
deliver all such further documents and instruments and take all such further
action as may be necessary in order to consummate the transactions contemplated
hereby.
SECTION 5.3 Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event any provision of this Agreement is
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 5.4 Entire Agreement. This Agreement and the Merger Agreement
----------------
(together with the documents referred to therein) constitute the entire
agreement between the parties and supersede all prior agreements and
understandings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof.
SECTION 5.5 Assignment. This Agreement shall not be assigned by either
----------
party without the prior written consent of the other party.
14
SECTION 5.6 Parties in Interest. This Agreement shall be binding upon and
-------------------
inure solely to the benefit of each party hereto and its successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
or shall confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
SECTION 5.7 Amendment; Waiver. This Agreement may not be amended except
-----------------
by an instrument in writing signed by the parties hereto. Either party hereto
may with respect to the other party (i) extend the time for the performance of
any obligation or other act, (ii) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto or
(iii) waive compliance with any agreement or condition contained herein. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
SECTION 5.8 Severability. If any term or other provision of this
------------
Agreement is held by a court or other competent authority to be invalid, illegal
or incapable of being enforced by any rule of law, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect.
Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible to the fullest extent permitted by applicable law to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
SECTION 5.9 Notices. All notices and other communications hereunder shall
-------
be in writing and shall be deemed given as of the date delivered, sent or
transmitted if delivered, sent or transmitted in accordance with the Merger
Agreement.
SECTION 5.10 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the Commonwealth of Massachusetts,
without giving effect to the principles of conflicts of law thereof.
SECTION 5.11 Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 5.12 Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which shall constitute one and the same agreement.
15
IN WITNESS WHEREOF, Emerald and Dragon have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
XXX XXXXXXXXXXX
By:/s/ Xxxxxxx X. Xxxxxxxxx
___________________________
Name: Xxxxxxx X. Xxxxxxxxx
Title:President & CEO
DATA GENERAL
CORPORATION
By:/s/ Xxxxxx X. Skates
___________________________
Name: Xxxxxx X. Skates
Title:President & CEO
16
