UNCA Unica (MM)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

(RULE 14a-101)

 

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

 

Filed by the Registrant  þ

 

Filed by a Party Other than the Registrant  o

 

Check the appropriate box:

 

o   Preliminary Proxy Statement

o   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ   Definitive Proxy Statement

o   Definitive Additional Materials

o   Soliciting Material under §240.14a-12

 

UNICA CORPORATION

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

 

Common stock, par value $.01 per share, of Unica Corporation

 

 

21,609,541 shares of Unica common stock, 2,478,255 shares of Unica common stock underlying outstanding stock options and 1,368,705 shares of Unica common stock subject to settlement of restricted stock units, each outstanding as of August 19, 2010

 

 

The filing fee was determined based on the sum of (a) 21,609,541 shares of Unica common stock multiplied by $21.00 per share; (b) 2,478,255 shares of Unica common stock underlying outstanding stock options with exercise prices less than $21.00 per share multiplied by $15.15 (which is the difference between $21.00 per share and the weighted average exercise price per share); and (c) 1,368,705 shares of Unica common stock subject to settlement of restricted stock units multiplied by $21.00 per share. The filing fee was determined by multiplying $0.00007130 by the sum of the preceding sentence.

 

 

$520,088,729

 

 

$37,083

 

 

 

Amount Previously Paid:

 

 

 

 

 

 

 

 

UNICA CORPORATION
Reservoir Place North
170 Tracer Lane
Waltham, Massachusetts 02451-1379

 

September 2, 2010

 

Dear Stockholder:

 

You are cordially invited to attend a special meeting of stockholders of Unica Corporation (“Unica”) to be held on October 5, 2010, at 10:00 a.m., local time, at the offices of Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109.

 

At the special meeting, you will be asked to consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of August 12, 2010, by and among International Business Machines Corporation (“IBM”), Amaroo Acquisition Corp., a wholly-owned subsidiary of IBM, and Unica, as such agreement may be amended from time to time. Pursuant to the merger agreement, Amaroo Acquisition Corp. will merge with and into Unica and as a result, under Delaware law, Unica will become a wholly-owned subsidiary of IBM. We are also asking that you grant the authority to vote your shares to adjourn the special meeting to a later date, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes in favor of adoption of the merger agreement at the time of the special meeting.

 

If the merger is completed, Unica stockholders will be entitled to receive $21.00 in cash, without interest and less any applicable withholding taxes, for each share of Unica common stock owned by them as of the date of the merger.

 

Our board of directors unanimously determined that the merger agreement and the terms and conditions of the merger and the merger agreement are fair to and advisable and in the best interests of Unica and its stockholders. Our board of directors has unanimously approved the merger agreement, the merger and the other transactions contemplated thereby. Our board of directors unanimously recommends that you vote “FOR” the adoption of the merger agreement at the special meeting.

 

Our board of directors considered a number of factors in evaluating the transaction and consulted with our legal and financial advisors. The enclosed proxy statement provides detailed information about the merger agreement and the merger. We encourage you to read this proxy statement carefully in its entirety.

 

Your vote is very important, regardless of the number of shares you own.   The proposal to adopt the merger agreement must be approved by the holders of a majority of the outstanding shares of our common stock entitled to vote at the special meeting. Therefore, if you do not return your proxy card in the mail, submit a proxy via the Internet or telephone or attend the special meeting and vote in person, then your decision not to respond will have the same effect as if you voted “AGAINST” adoption of the merger agreement. Only stockholders who owned shares of Unica common stock at the close of business on August 31, 2010, the record date for the special meeting, will be entitled to vote at the special meeting. To vote your shares, you may return your proxy card, submit a proxy via the Internet or telephone or attend the special meeting and vote in person. Even if you plan to attend the meeting, we urge you to promptly submit a proxy for your shares via the Internet or telephone or by completing, signing, dating and returning the enclosed proxy card.

 

If you sign, date and return your proxy card or submit a proxy via the Internet or telephone without indicating how you wish to vote, your proxy will be voted “FOR” the adoption of the merger agreement and “FOR” the adjournment of the special meeting to a later date, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes in favor of adoption of the merger agreement at the time of the special meeting. If you fail to submit a proxy, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting. If you attend the special meeting and wish to vote in person, you may revoke your proxy and vote in person.

Thank you for your continued support of Unica.

 

Sincerely,

 

 

Yuchun Lee

Chief Executive Officer, President and Chairman

 

This proxy statement is dated September 2, 2010 and is first being mailed to stockholders of Unica on or about September 3, 2010.

UNICA CORPORATION

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT

 

To the Stockholders of Unica Corporation:

 

Unica Corporation, a Delaware corporation (“Unica”), will hold a special meeting of stockholders at the offices of Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109, at 10:00 a.m., local time, on October 5, 2010, for the following purposes:

 

 

Unica may also conduct such other business as may properly come before the special meeting, or any adjournment or postponement thereof, by or at the direction of the board of directors. Only record holders of Unica common stock at the close of business on August 31, 2010 are entitled to receive notice of, and will be entitled to vote at, the special meeting, including any adjournments or postponements of the special meeting. Your vote is important. The affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote at the special meeting is required to adopt the merger agreement, and the affirmative vote of the holders of a majority in voting power of the shares of our common stock present or represented by proxy at the special meeting and voting on such matter is required to approve the proposal to adjourn the special meeting, provided that a quorum is present. If a quorum is not present at the special meeting, then the special meeting may be adjourned with the affirmative vote of the holders of a majority of the shares present in person or by proxy and entitled to vote on such matter.

 

Under Delaware law, if the merger is completed, holders of Unica common stock who do not vote in favor of adoption of the merger agreement will have the right to seek appraisal of the fair value of their shares as determined by the Delaware Court of Chancery. In order to exercise your appraisal rights, you must submit a written demand for an appraisal of your shares prior to the stockholder vote on the merger agreement, not vote in favor of adoption of the merger agreement and comply with other Delaware law procedures explained in the accompanying proxy statement. See “The Merger — Appraisal Rights” beginning on page 38 of the proxy statement and Annex D to the proxy statement.

 

We urge you to complete, sign, date and return your proxy card as promptly as possible by mail or by faxing the card to the attention of Jason W. Joseph at (781) 207-5834, whether or not you expect to attend the special meeting. If you are unable to attend in person and you properly complete, sign and return your proxy card, your shares will be voted at the special meeting in accordance with your proxy. You may also submit a proxy by telephone by calling 1-800-PROXIES (1-800-776-9437) in the United States and 1-718-921-8500 from foreign countries or through the Internet at www.voteproxy.com using the control number on your proxy card. If your shares are held in “street name” by your broker or other nominee, only such broker or other nominee can vote your shares unless you obtain a valid legal proxy from such broker or nominee. You should follow the directions provided by your broker or nominee regarding how to instruct such broker or nominee to vote your shares.

 

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” adoption of the merger agreement and “FOR” adjournment of the special meeting, if necessary or appropriate, to permit solicitations of additional proxies. If you fail to return your proxy card and do not submit your proxy via the Internet or by telephone, your shares will effectively be counted as a vote against adoption of the merger agreement, will not be counted for purposes of determining whether a quorum is present at the special meeting and will have no effect on the proposal to adjourn the special meeting to a later date, if necessary or appropriate, to permit solicitations of additional proxies, if a quorum is present. If you do attend the special meeting and wish to vote in person, you may revoke your proxy and vote in person. You

may revoke your proxy in the manner described in the enclosed proxy statement at any time before it has been voted at the special meeting.

 

Our board of directors unanimously recommends that you vote “FOR” adoption of the merger agreement and “FOR” adjournment of the special meeting to a later date, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes in favor of adoption of the merger agreement at the time of the special meeting.

 

The merger is described in the accompanying proxy statement, which we urge you to read carefully. A copy of the merger agreement is attached as Annex A to the proxy statement.

 

Waltham, Massachusetts

September 2, 2010

 

By Order of the Board of Directors,

 

 

Jason W. Joseph
Vice President, General Counsel & Secretary

YOUR VOTE IS IMPORTANT.

 

Whether or not you plan to attend the special meeting, please complete, sign and date the enclosed proxy card and return it promptly in the envelope provided or by faxing it to the attention of Jason W. Joseph at (781) 207-5834, or submit a proxy by telephone by calling 1-800-PROXIES (1-800-776-9437) in the United States and 1-718-921-8500 from foreign countries or through the Internet at www.voteproxy.com. Giving your proxy now will not affect your right to vote in person if you attend the special meeting.

 

UNICA CORPORATION

 

SPECIAL MEETING OF STOCKHOLDERS

 

TABLE OF CONTENTS

 

 

The following Q&A is intended to address some commonly asked questions regarding the special meeting of stockholders and the merger. These questions and answers may not address all questions that may be important to you as a Unica stockholder. We urge you to read carefully the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents we refer to in this proxy statement.

 

Except as otherwise specifically noted in this proxy statement, “we,” “our,” “us” and similar words in this proxy statement refer to Unica Corporation. In addition, throughout this proxy statement, we refer to Unica Corporation as “Unica,” to Amaroo Acquisition Corp. as “merger sub” and to International Business Machines Corporation as “IBM.”

 

The Special Meeting

 

 

The Proposed Merger

 

 

Voting and Proxy Procedures

 

 

 

 

 

 

Unica Corporation

Attn: Investor Relations

Reservoir Place North

170 Tracer Lane

Waltham, Massachusetts 02451-1379

(781) 839-8514

 

or

 

Morrow & Co., LLC

470 West Avenue - 3rd Floor

Stamford, CT 06902

Stockholders please call: (800) 607-0088

Banks and Brokers please call: (800) 662-5200

 

Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the merger, passed upon the merits or fairness of the merger or passed upon the adequacy or accuracy of the disclosures in this proxy statement. Any representation to the contrary is a criminal offense.

 

This proxy statement contains “forward-looking statements,” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act that are based on our current expectations, assumptions, beliefs, estimates and projections about our company and our industry. The forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “plan,” “project,” “should” and similar expressions. Factors that may affect those forward-looking statements include, among other things:

 

 

We caution you that reliance on any forward-looking statement involves risks and uncertainties and that, although we believe that the assumptions on which our forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions could be incorrect. In light of these and other uncertainties, you should not conclude that we will necessarily achieve any plans and objectives or projected financial results referred to in any of the forward-looking statements. We do not undertake to release the results of any revisions of these forward-looking statements to reflect future events or circumstances.

 

The Companies (page 15)

 

Merger Consideration (page 46)

 

Treatment of Stock Options and Other Equity-Based Awards (page 41)

 

Market Prices and Dividend Data (page 12)

 

Material United States Federal Income Tax Consequences of the Merger (page 43)

 

Recommendation of Unica’s Board of Directors and Reasons for the Merger (page 20)

 

Opinion of Unica’s Financial Advisor (page 23)

 

The Special Meeting of Unica’s Stockholders (page 12)

	•	adoption of the merger agreement, and
	•	adjournment of the special meeting to a later date, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes in favor of adoption of the merger agreement at the time of the special meeting.

 

Interests of Unica’s Executive Officers and Directors in the Merger (page 32)

	•	each of these executive officers will initially receive the following annual base salaries: Mr. Lee — $415,000; Mr. Cousins — $270,000; Mr. Hogan — $270,000; Mr. Keane — $210,000; Mr. McNulty — $250,000; Mr. Sweet — $270,000; and Ms. Vitale — $225,000;
	•	upon the closing of the merger, each of these executive officers will be entitled to the vesting of 50% of such executive’s then unvested options, and the remaining 50% of such executive’s then unvested options will be converted into options to acquire IBM stock and will continue to vest in accordance with their original vesting schedules;
	•	upon the closing of the merger, each of these executive officers will be entitled to the vesting of 50% of such executive’s then unvested restricted stock units, and the remaining 50% of such executive’s then unvested restricted stock units will be converted into the right to receive cash payments based on the value of the merger consideration on each subsequent vesting date of the restricted stock units;
	•	any options that remain unvested and any cash payments with respect to restricted stock units that are unpaid, in each case, as of the second anniversary of the closing of the merger (with respect to Messrs. Lee, Cousins, Hogan, Keane, McNulty, and Sweet) or the first anniversary of the closing of the merger (with respect to Ms. Vitale), will vest or be paid in full as of such anniversary date;
	•	subject to the execution of IBM’s standard release of claims, if any of these executive officers is terminated by IBM without “cause” (as such term is defined in the executive officer’s employment arrangement with IBM) prior to the second anniversary of the closing of the merger (with respect to Messrs. Lee, Cousins, Hogan, Keane, McNulty, and Sweet) or the first anniversary of the closing of the merger (with respect to Ms. Vitale), any options held by such executive officer that are unvested as of such termination will vest in full, and any cash payments with respect to restricted stock units that are unpaid as of such termination will be paid, as of such termination;
	•	Messrs. Lee, Cousins, Hogan, Keane, McNulty, and Sweet will be entitled to participate in a retention program pursuant to which each such executive officer will be eligible to receive the following aggregate amounts (with payments under such program made following each of four six-month milestone periods through the second anniversary of the closing of the merger): Mr. Lee — $1,100,000; Mr. Cousins — $600,000; Mr. Hogan — $600,000; Mr. Keane — $550,000; Mr. McNulty — $575,000; and Mr. Sweet — $600,000;
	•	Ms. Vitale will be entitled to participate in a retention program pursuant to which she will be eligible to receive a cash payment equal to $440,000 on the first anniversary of the closing of the merger; and
	•	if the employment of any of these executive officers is terminated by IBM without “cause” (as such term is defined in the executive officer’s employment arrangement with IBM) prior to the first anniversary of the closing of the merger, such executive officer will be entitled to a lump sum cash payment equal to the sum of the executive’s highest base salary in effect during the 12-month period preceding the closing of the merger and the executive officer’s then current target annual cash bonus, provided that the executive officer executes IBM’s standard release of claims and satisfies all conditions to make the release effective.

	•	Accelerated vesting of (i) 75% of the executive’s unvested equity awards (inclusive of any accelerated vesting provided for in our 2005 stock incentive plan) if the executive has been employed by us for at least one year but less than two years or (ii) 100% of the executive’s unvested equity awards if the executive has been employed by us for at least two years, except that the agreement with Mr. Shone provides for 100% vesting if Mr. Shone has been employed for at least one year;
	•	Cash severance payments equal to the sum of the executive’s highest base salary in effect during the 12-month period preceding the change-in-control and the executive’s target annual cash bonus in effect at the time of the change-in-control;
	•	Continuation of health care benefits for the executive and his family for a period of 12 months following termination of employment; and
	•	Payment in cash of accrued but unpaid salary and unused vacation accrued through the termination date and a pro rata portion of the executive’s previous year’s bonus based on the termination date.

 

Stockholders Agreement (page 62)

 

Conditions to the Closing of the Merger (page 58)

	•	the adoption of the merger agreement by our stockholders;
	•	the expiration or termination of any waiting period applicable to the merger required under the HSR Act;
	•	the receipt of any other approval or the termination or expiration of any waiting period under any other applicable competition, merger control, antitrust or similar law that is applicable to the merger; and
	•	the absence of any temporary restraining order, preliminary or permanent injunction, or other judgment, order or decree issued by a court of competent jurisdiction or other legal restraint or prohibition that has the effect of preventing the consummation of the merger.

	•	each of our representations and warranties contained in the merger agreement is true and correct, to the extent required under the merger agreement, as of the date of the merger agreement and as of the closing date of the merger, as described below under the heading “The Merger Agreement — Conditions to the Closing of the Merger” beginning on page 58;
	•	our performance, in all material respects, of all obligations required to be performed by us under the merger agreement at or prior to the closing date of the merger;
	•	the absence of any claim, suit, action or proceeding brought or threatened by a governmental entity:

	•	challenging or seeking to restrain or prohibit the consummation of the merger or challenging the merger agreement;
	•	seeking to obtain damages from IBM or its subsidiaries that are material, individually or in the aggregate, in relation to the value of Unica and its subsidiaries, taken as a whole;
	•	seeking to prohibit or limit in any respect, or place conditions on, the ownership or operation by us, IBM or our or its respective affiliates of all or any portion of the business or assets or any product, or requiring any such party to dispose of, license or hold separate all or any portion of the business or assets or any product of us, IBM or any of our or its subsidiaries;
	•	seeking to impose limitations on the ability of IBM or any of its affiliates to acquire or hold, or exercise full rights of ownership of, our common stock or the common stock of the surviving corporation or any of IBM’s subsidiaries;
	•	seeking to prohibit IBM or any of its affiliates from effectively controlling any of the business or operations of us or our or IBM’s subsidiaries; or
	•	seeking to prevent us or our or IBM’s subsidiaries from operating our or their respective businesses in substantially the same manner as operated by us or them prior to the date of the merger agreement;

	•	the absence of any temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by a court of competent jurisdiction that could reasonably be expected to result, directly or indirectly, in any of the effects described in the immediate preceding condition;
	•	IBM shall have received evidence, in form and substance reasonably satisfactory to it, that IBM or we have obtained all material consents, approvals, authorizations, qualifications and orders of all governmental entities legally required to effect the merger, and all consents, licenses, approvals and waivers agreed to by us, IBM and merger sub; and
	•	a material adverse effect has not occurred with respect to us since the date of the merger agreement.

	•	each of the representations and warranties of IBM and merger sub contained in the merger agreement is true and correct, to the extent required under the merger agreement, as of the date of the merger agreement and as of the closing date of the merger, as described below under the heading “The Merger Agreement — Conditions to the Closing of the Merger” beginning on page 58; and
	•	IBM’s and merger sub’s performance, in all material respects, of all obligations required to be performed by them under the merger agreement at or prior to the closing date of the merger.

 

No Solicitation of Acquisition Proposals by Unica (page 54)

	•	solicit, initiate or knowingly encourage, or take any other action to knowingly facilitate, any takeover proposal or any inquiries or the making of any proposal that could reasonably be expected to lead to a takeover proposal (as defined in the merger agreement and described below under the heading “The Merger Agreement — Covenants — Board Recommendation” beginning on page 55); or
	•	enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any person any information with respect to, or otherwise cooperate with any person with respect to, any takeover proposal.

	•	furnish information to a person making such a takeover proposal (and its representatives) pursuant to a confidentiality agreement which contains terms that are no less restrictive than those contained in the confidentiality agreement between us and IBM, provided that all such information has been provided, or is concurrently provided, to IBM; and
	•	participate in discussions or negotiations with, and only with, the person making such takeover proposal (and its representatives) regarding such takeover proposal.

 

Termination of the Merger Agreement (page 59)

	•	by our, IBM’s and merger sub’s mutual written consent;

	•	by either IBM or us if:

	•	the merger is not consummated by the date that is six months from the date of the merger agreement, but this right to terminate the merger agreement will not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the merger to occur on or before such date and such action or failure to act constitutes a breach of the merger agreement;
	•	any temporary restraining order, preliminary or permanent injunction, or other judgment, order or decree issued by a court of competent jurisdiction or other legal restraint or prohibition having the effect of preventing the consummation of the merger is in effect and has become final and nonappealable; or
	•	our stockholders do not adopt the merger agreement at the stockholders meeting (or at any adjournment or postponement thereof) that we have called and held for such purpose;

	•	by us if IBM breaches a representation or warranty or fails to perform a covenant or other agreement contained in the merger agreement so that the related closing conditions cannot be satisfied and such breach or failure to perform cannot be cured by IBM or merger sub within 30 business days after such breach or failure to perform, or if such breach or failure to perform is curable by such date, IBM or merger sub, as the case may be, does not commence to cure such breach or failure to perform within 10 business days after receipt of written notice from us and diligently pursue such cure thereafter; or
	•	by IBM if:

	•	we deliver a notice to IBM that our board of directors has withdrawn or modified its recommendation that the merger agreement or the merger or both are advisable in a manner adverse to IBM or merger sub or such an adverse recommendation change has occurred;
	•	we breach a representation or warranty or fail to perform a covenant or other agreement contained in the merger agreement so that the related closing conditions cannot be satisfied and such breach or failure to perform cannot be cured by us within 30 business days after such breach or failure to perform, or if such breach or failure to perform is curable by such date, we do not commence to cure such breach or failure to perform within 10 business days after receipt of written notice from IBM and diligently pursue such cure thereafter; or
	•	any legal restraint is in effect and has become final and nonappealable that has one of the effects set forth in the merger agreement and described below under the heading “The Merger Agreement — Termination of the Merger Agreement” beginning on page 59.

 

Termination Fee and Expenses (page 60)

	•	a takeover proposal has been made to us or our stockholders, or any person has announced an intention to make a takeover proposal, or a takeover proposal otherwise becomes known to us or generally known to our stockholders and thereafter:

	•	the merger agreement is terminated by either us or IBM because the merger has not been consummated by the date that is six months from the date of the merger agreement or the merger agreement is terminated by either us or IBM because our stockholders did not adopt the merger agreement at the stockholders meeting (or at any adjournment or postponement thereof) that we have called and held for such purpose; and
	•	within 12 months after such termination of the merger agreement, either we or one of our subsidiaries enters into an acquisition agreement with respect to any takeover proposal or any takeover proposal is consummated (solely for purposes of this provision, all references to 10% in the definition of

		“takeover proposal,” as described below under the heading “The Merger Agreement — Covenants — Board Recommendation” beginning on page 55, are deemed to be references to 35%); or

	•	IBM terminates the merger agreement because we deliver a notice to IBM that our board of directors has withdrawn or modified its recommendation that the merger agreement or the merger or both are advisable in a manner adverse to IBM or merger sub or such an adverse recommendation change has occurred.

 

Regulatory Matters (page 45)

 

Appraisal Rights (page 38)

MARKET PRICES AND DIVIDEND DATA

 

Our common stock is listed on The NASDAQ Global Market under the symbol “UNCA.” This table shows, for the periods indicated, the range of intraday high and low per share sales prices for our common stock as reported on The NASDAQ Global Market.

 

 

The following table sets forth the closing price per share of our common stock, as reported on The NASDAQ Global Market on August 12, 2010, the last full trading day before the public announcement of the merger, and on September 1, 2010, the latest practicable trading day before the printing of this proxy statement:

 

 

You are encouraged to obtain current market quotations for our common stock in connection with voting your shares of common stock. If the merger is consummated, there will be no further market for our common stock and our common stock will be delisted from The NASDAQ Global Market and deregistered under the Securities Exchange Act.

 

Dividends

 

We did not declare or pay any cash dividends on our common stock during the three most recent fiscal years. In the event that the merger is not consummated, we would expect to retain earnings, if any, to fund the development and growth of our business and would not anticipate paying cash dividends on our common stock in the foreseeable future. In such event, our payment of any future dividends would be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, cash needs and growth plans.

 

The enclosed proxy is solicited on behalf of the board of directors of Unica for use at the special meeting of stockholders or at any adjournment or postponement thereof.

 

We will hold the special meeting at the offices of Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109, at 10:00 a.m., local time, on October 5, 2010.

 

At the special meeting, we will ask the holders of our common stock to adopt the merger agreement, as it may be amended from time to time, and, if there are not sufficient votes in favor of adoption of the merger

agreement, to adjourn the special meeting to a later date, if necessary or appropriate, to solicit additional proxies.

 

Only holders of record of our common stock at the close of business on August 31, 2010, the record date, are entitled to notice of, and to vote at, the special meeting. On the record date, 21,627,510 shares of our common stock were issued and outstanding and held by approximately 86 holders of record. Holders of record of our common stock on the record date are entitled to one vote per share at the special meeting on the proposal to adopt the merger agreement and the proposal to adjourn the special meeting to a later date, if necessary or appropriate, to solicit additional proxies.

 

A quorum of stockholders is necessary to hold a valid special meeting. Under our by-laws, a quorum is present at a meeting if the holders of a majority in voting power of the shares of our common stock issued and outstanding and entitled to vote at the meeting are present in person or represented by proxy. In the event that a quorum is not present at the special meeting, it is expected that the special meeting will be adjourned to solicit additional proxies. For purposes of determining the presence of a quorum, abstentions will be counted as shares present and broker non-votes (where a broker or nominee does not exercise discretionary authority to vote on a matter), if any, will also be counted as shares present. If a quorum is not present at the special meeting, then the special meeting may be adjourned with the affirmative vote of the holders of a majority of the shares present in person or by proxy and entitled to vote on such matter. For purposes of such vote with respect to adjournment, abstentions will have the same effect as a vote against such matter, but broker non-votes will have no effect on such matter.

 

The adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote at the special meeting. Adoption of the merger agreement is a condition to the closing of the merger.

 

Approval of the proposal to adjourn the special meeting to a later date, if necessary or appropriate, in order to solicit additional proxies from our stockholders requires the affirmative vote of the holders of a majority in voting power of the shares of our common stock present or represented by proxy at the special meeting and voting on such matter, provided that a quorum is present.

 

Under a stockholders agreement dated as of August 12, 2010, our chairman and chief executive officer, and certain trusts affiliated with our chairman and chief executive officer, who collectively are the beneficial owners of approximately 20% of the outstanding shares of our common stock as of August 12, 2010, have agreed to vote their Unica shares in favor of adoption of the merger agreement.

 

At the close of business on the record date, our directors and executive officers (other than our chairman and chief executive officer) and their affiliates owned and were entitled to vote shares of our common stock, which represented approximately 1% of the shares of our outstanding common stock on that date. We expect that these directors and executive officers will vote all of their shares of our common stock “FOR” adoption of the merger agreement and “FOR” the proposal to adjourn the special meeting to a later date, if necessary or appropriate, to solicit additional proxies.

 

If your shares are registered in your name, you may cause your shares to be voted at the special meeting by returning a signed proxy card or voting in person at the meeting. Additionally, you may submit a proxy authorizing the voting of your shares via the Internet at www.voteproxies.com or by telephone by calling 1-800-PROXIES (1-800-776-9437) in the United States or 1-718-921-8500 from foreign countries. You must

have the enclosed proxy card available, and follow the instructions on the proxy card, in order to submit a proxy via the Internet or telephone.

 

If your shares are registered in your name and you plan to attend the special meeting and wish to vote in person, you will be given a ballot at the meeting. If your shares are registered in your name, you are encouraged to submit a proxy even if you plan to attend the special meeting in person.

 

Voting instructions are included on your proxy card. All shares represented by properly executed proxies received in time for the special meeting will be voted at the special meeting in accordance with the instructions of the stockholder. Properly executed proxies that do not contain voting instructions will be voted “FOR” the adoption of the merger agreement and “FOR” the proposal to adjourn the special meeting to a later date, if necessary or appropriate, to solicit additional proxies, provided that no proxy that is specifically marked “AGAINST” the proposal to adopt the merger agreement will be voted “FOR” the adjournment proposal unless it is specifically marked “FOR” the adjournment proposal.

 

If your shares are held in “street name” through a broker or other nominee, you may provide voting instructions by completing and returning the voting form provided by your broker or nominee or via the Internet or by telephone through your broker or nominee, if such a service is provided. To provide voting instructions via the Internet or telephone, you should follow the instructions on the voting form provided by your broker or nominee. If you plan to attend the special meeting, you will need a proxy from your broker or nominee in order to be given a ballot to vote the shares. If you do not return your broker’s or nominee’s voting form, provide voting instructions via the Internet or telephone through your broker or nominee, if possible, or attend the special meeting and vote in person with a proxy from your broker or nominee, it will have the same effect as if you voted “AGAINST” the adoption of the merger agreement.

 

Any proxy you give pursuant to this solicitation may be revoked by you at any time before it is voted. Proxies may be revoked as follows:

 

If you have sent a proxy directly to Unica , you may revoke it by:

 

 

If you have instructed a broker or nominee to vote your shares , you may revoke your proxy only by following the directions received from your broker or nominee to change those instructions.

 

Revocation of a proxy will not affect any vote taken prior to revocation. Attendance at the special meeting will not in itself constitute the revocation of a proxy; you must vote in person at the special meeting to revoke a previously delivered proxy.

 

Our board of directors has unanimously approved the merger agreement and determined that the merger agreement and the merger are fair to and advisable and in the best interests of Unica and its stockholders. Our board of directors unanimously recommends that Unica stockholders vote “FOR” the proposal to adopt the merger agreement and also unanimously recommends that stockholders vote “FOR” the proposal to adjourn the special meeting to a later date, if necessary or appropriate, to permit the solicitation of

additional proxies in the event there are not sufficient votes in favor of adoption of the merger agreement at the time of the special meeting.

 

Stockholders that abstain from voting on a particular matter and shares held in “street name” by brokers or nominees who indicate on their proxies that they do not have discretionary authority to vote such shares as to a particular matter will not be counted as votes in favor of such matter. For purposes of determining the presence of a quorum, abstentions will be counted as shares present and broker non-votes (where a broker or nominee does not exercise discretionary authority to vote on a matter), if any, will also be counted as shares present. Abstentions and broker non-votes will have the same effect as votes against the adoption of the merger agreement and will have no effect on the proposal to adjourn the special meeting to a later date, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes in favor of adoption of the merger agreement at the time of the special meeting, provided that a quorum is present.

 

The expense of soliciting proxies in the enclosed form will be borne by Unica. We have retained Morrow & Co., LLC, a proxy solicitation firm, to solicit proxies in connection with the special meeting at a cost of approximately $7,500 plus expenses. We may reimburse brokers, banks and other custodians, nominees and fiduciaries representing beneficial owners of shares for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may be solicited by certain of our directors, officers and employees, personally or by telephone, facsimile or other means of communication. No additional compensation will be paid for such services.

 

A list of our stockholders entitled to vote at the special meeting will be available for examination by any Unica stockholder at the special meeting. For ten days prior to the special meeting, this stockholder list will be available for inspection by any stockholder for any purpose germane to the special meeting during ordinary business hours at our corporate offices located at Unica Corporation, Reservoir Place North, 170 Tracer Lane, Waltham, Massachusetts 02451-1379.

 

 

Unica Corporation is a global provider of enterprise marketing management, or EMM, software designed to help businesses increase their revenues and improve the efficiency and measurability of their marketing operations. Focused exclusively on the needs of marketers, Unica’s software delivers key capabilities to track and analyze online and offline customer behavior, generate demand and manage marketing processes, resources and assets. Unica’s software streamlines the entire marketing process for relationship, brand and Internet marketing — from analysis and planning, to budgeting, production management, execution and measurement. As the most comprehensive EMM suite on the market, Unica’s suite of products delivers a marketing “system of record” — a dedicated solution through which marketers capture, record and easily manage marketing activity, information and assets, rapidly design campaigns, and report on performance.

 

Unica was incorporated in December 1992 in Massachusetts and reincorporated in Delaware in June 2003 and its principal executive offices are located at Reservoir Place North, 170 Tracer Lane, Waltham, Massachusetts 02451-1379. Unica’s website is located at http://www.unica.com. Additional information regarding Unica is contained in our filings with the Securities and Exchange Commission. See “Where You Can Find More Information” beginning on page 66.

 

IBM, a New York corporation, creates business value for clients and solves business problems through integrated solutions that leverage information technology and deep knowledge of business processes. IBM

solutions typically create value by reducing a client’s operational costs or by enabling new capabilities that generate revenue. These solutions draw from an industry leading portfolio of consulting, delivery and implementation services, enterprise software, systems and financing.

 

IBM’s principal executive offices are located at New Orchard Road, Armonk, New York 10504 and its telephone number is (914) 499-1900. Additional information regarding IBM is contained in IBM’s filings with the Securities and Exchange Commission. See “Where You Can Find More Information” beginning on page 66.

 

Amaroo Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of IBM, was organized solely for the purpose of entering into the merger agreement and completing the merger and the other transactions contemplated by the merger agreement. Merger sub’s principal executive offices are located at New Orchard Road, Armonk, New York, 10504 and its telephone number is (914) 499-1900. Merger sub has not conducted any business operations other than in connection with the transactions contemplated by the merger agreement.

 

Upon consummation of the merger, merger sub will cease to exist, and Unica will continue as the surviving corporation.

 

The following discussion summarizes the material terms of the merger. We urge you to read carefully the merger agreement, which is attached as Annex A to this proxy statement.

 

We have had a commercial relationship with IBM for over five years. Commencing in December 2009, we and IBM had conversations from time to time with respect to strengthening our commercial relationship, including by integrating certain of our products with certain products of IBM.

 

On February 5, 2010, Mr. Yuchun Lee, our Chief Executive Officer, received a telephone call from Mr. Craig Hayman, General Manager, Application & Integration Middleware, of IBM. During the call, Mr. Hayman stated that IBM was interested in exploring ways for IBM to strengthen its commercial relationship with us.

 

On February 18, 2010, Mr. Lee met with Mr. Hayman and Mr. Archie Colburn, Managing Director of Corporate Development for IBM, at our offices. Messrs. Hayman and Colburn discussed various possible commercial relationships, including a possible business combination.

 

On March 5, 2010, Mr. Colburn called Mr. Lee and suggested that we consider a possible business combination with IBM.

 

On March 8, 2010, following up on previous discussions that had taken place from time to time since 2006 regarding possible commercial relationships, representatives of Unica and Company X met to explore a commercial relationship. During this meeting, Company X raised the possibility of considering an acquisition of Unica and suggested that a meeting between the chief executive officers of the two companies be scheduled to further explore possible commercial relationships.

 

On March 9, 2010, Mr. Lee informed Mr. Ain, the lead director of our board of directors, of the possible interest of IBM and Company X in a potential acquisition of Unica.

 

On March 22, 2010, representatives of Deutsche Bank, the financial advisor to IBM, met with Mr. Lee and discussed our financial performance and generally how we and IBM valued our business.

 

On March 30, 2010, Mr. Colburn called Mr. Lee and communicated that IBM would be interested in acquiring Unica for $17 per share in cash.

On April 1, 2010, at an informational meeting of our board of directors, Mr. Lee communicated to the directors the offer of IBM. It was the consensus of the directors that we should engage a financial advisor to assist in the evaluation of IBM’s offer.

 

From April 9 to April 12, 2010, we interviewed prospective financial advisors and discussed the results of the interviews with Mr. Ain, our lead director.

 

On April 13, 2010, at an informational meeting of our board of directors, Mr. Lee updated the directors as to the interviews with prospective financial advisors and the board of directors determined to engage Jefferies as financial advisor.

 

On April 14, 2010, we engaged Jefferies as our financial advisor.

 

On April 23, 2010, our board of directors held a meeting at which the directors discussed the $17 per share verbal offer made by IBM to acquire Unica. Representatives of WilmerHale, our legal counsel, reviewed for the directors their fiduciary responsibilities. Representatives of Jefferies provided their views regarding the offer. The board discussed various sales processes that might be followed if the board were to determine that it was advisable to pursue a sale of Unica. The board determined not to pursue a sale of Unica at the $17 per share price proposed by IBM and instructed Jefferies to communicate to IBM that it would be willing to engage in further discussions with IBM only if IBM were to increase its price to a level that the board determined would merit further consideration. The board also determined to establish a special committee comprised of Messrs. Aron Ain (Chairman), Robert Schechter and Gary Haroian with the power and authority to monitor and direct the processes and procedures related to the review and evaluation of any strategic transaction, including a possible sale of Unica.

 

On April 27, 2010, representatives of Jefferies communicated to Mr. Colburn of IBM and Deutsche Bank that the $17 price proposed by IBM was not acceptable to our board of directors.

 

From April 27 to May 18, 2010, representatives of Jefferies and representatives of Deutsche Bank met from time to time (either in person or by phone) to discuss the valuation of Unica. During this same period, Mr. Lee and Mr. Colburn continued to discuss the possible acquisition of Unica by IBM.

 

On May 7, 2010, representatives of Jefferies met with Mr. Colburn in IBM’s offices to discuss their valuation analysis of Unica.

 

On May 13, 2010, at a regularly scheduled meeting of our board of directors, there was discussion regarding the possible sale of Unica.

 

On May 19, 2010, we received a letter from IBM in which IBM offered to acquire us at a price of $19 per share, subject to our granting to IBM exclusivity for a period of time during which we would not be able to discuss an acquisition with any other party.

 

On May 20, 2010, the special committee met to discuss the increased offer from IBM. Representatives of Jefferies and WilmerHale participated in the meeting. The special committee determined that they would need further time to evaluate the offer and scheduled a follow-up meeting for May 24, 2010.

 

On May 24, 2010, the special committee met to further review the increased offer by IBM. Representatives of Jefferies reviewed the increased offer. The special committee, after discussion, instructed Mr. Lee to contact representatives of IBM and explore IBM’s willingness to increase its acquisition price.

 

On May 24, 2010, following the special committee meeting, Mr. Lee called Mr. Colburn and discussed IBM’s willingness to increase its offer price. Mr. Colburn declined to increase the offer price.

 

On May 25, 2010, at a meeting of the special committee, Mr. Lee updated the special committee as to his conversations with Mr. Colburn. A representative of WilmerHale reviewed for the special committee the board’s fiduciary responsibilities, and discussed different approaches that might be followed if the board were ultimately to determine to pursue a sale of Unica. The committee instructed Mr. Lee to contact IBM, and Jefferies to contact Deutsche Bank, to communicate the need for IBM to increase its price. The committee

also scheduled a meeting for later that day to consider the results of the discussions between representatives of Unica and IBM.

 

Subsequently, on May 25, 2010, Mr. Lee communicated to Mr. Colburn the need for IBM to increase its price in order for the board to consider the possible sale of Unica. Mr. Colburn again declined to increase the offer price.

 

Later on May 25, at a meeting of the special committee, Mr. Lee and representatives of Jefferies both reported that IBM and Deutsche Bank had each confirmed that IBM was not willing to increase its $19 per share offer. Representatives of Jefferies presented their view regarding the offer. After discussion, the special committee determined to recommend that the board of directors reject the $19 per share offer by IBM, as well as its request for exclusivity.

 

On May 25, 2010, Mr. Lee had dinner with the chief executive officer of Company X to explore possible commercial relationships. At the dinner, Company X expressed general interest in considering a possible acquisition of Unica; there was no discussion as to the price at which Company X might be interested.

 

On May 27, 2010, at a meeting of our board of directors, Mr. Lee and members of the special committee reviewed for the board the events that had taken place since the last meeting of the board of directors. A representative of WilmerHale reviewed for the board their fiduciary responsibilities. Representatives of Jefferies reviewed the $19 per share offer. Representatives of Jefferies also reviewed other potentially interested buyers of Unica, including Company X and Company Y, which had in 2009 expressed general interest in considering an acquisition of Unica. The directors concluded that, given the inadequacy of the price proposed by IBM and the risk of potential harm to the business that might result if the possibility of an acquisition became known to customers or competitors, potentially interested parties should not yet be approached and that the issue would be reconsidered if and when we were to receive an offer from IBM at a price that the board of directors viewed as sufficient to warrant exploration of possible alternatives. The board determined to reject the $19 per share offer made by IBM on May 19, 2010 as well as IBM’s request for exclusivity and directed representatives of Jefferies to communicate that decision to representatives of Deutsche Bank.

 

On May 27, 2010, representatives of Jefferies communicated to representatives of Deutsche Bank the decision of the board to not accept IBM’s $19 per share offer.

 

From May 27 to June 16, there were from time to time discussions between representatives of Jefferies and Deutsche Bank as to the acquisition price.

 

On June 16, 2010, Mr. Colburn called Mr. Lee and communicated that IBM would be willing to increase its offer price to $20 per share. We then received a letter from IBM in which IBM offered to acquire us at a price of $20 per share, subject to a grant of exclusivity for a period of time.

 

On June 17, 2010, at a meeting of the special committee, the increased offer by IBM was discussed. Representatives of Jefferies and Mr. Lee reviewed the increased offer. The directors then discussed whether, in light of the revised offer, we should approach other potentially interested acquirors. Representatives of Jefferies reviewed other potentially interested acquirors. A representative of WilmerHale reviewed the board’s fiduciary duties, as well as the types of “deal protection” provisions that would likely be included in any definitive merger agreement. The committee reviewed, for each identified potentially interested acquiror, the potential strategic fit, financial capability, acquisition history and likelihood that it would be willing or able to offer a price higher than that offered by IBM. The committee also discussed the potential harm that could be inflicted on its business if the possibility of an acquisition of Unica became public or otherwise known to customers and competitors. The committee requested that Jefferies contact Company X and Company Y with respect to their interest in a possible acquisition of Unica. The committee determined that no other parties should be contacted at that time in view of its assessment that it was unlikely that any of them would make a higher offer and that such contacts would create potential risk to our business.

 

On June 17, 2010, representatives of Jefferies contacted Company X and Company Y and inquired as to their possible interest in acquiring Unica.

On June 21, 2010, at a meeting of the special committee, the committee again considered the increased offer by IBM, as well as the inquiries made by Jefferies. Representatives of Jefferies reported that Company Y had responded that it was not interested in considering an acquisition at the price level provided by Jefferies and that Company X had responded that it was not in a position to initiate a process to consider an acquisition of Unica. Representatives of Jefferies again reviewed, and the committee discussed, other potential acquirors. The committee also discussed the request by IBM for a period of exclusivity during which we would not be able to discuss an acquisition with any third party. The committee directed Jefferies to seek an improved offer from IBM before it would consider any grant of exclusivity.

 

On June 22, 2010, representatives of Jefferies called Mr. Colburn to discuss the need for IBM to increase its price in order for the board to consider exclusivity.

 

On June 22, 2010, IBM submitted a revised offer for the purchase of Unica at a price of $21 per share, subject to a grant of exclusivity by that evening.

 

On June 22, 2010, at a meeting of our board of directors, the directors considered the increased $21 per share offer by IBM. Representatives of WilmerHale reviewed the board’s fiduciary duties in connection with the possible sale of Unica. Jefferies presented its preliminary financial analyses of the increased offer made by IBM. Representatives of Jefferies also reviewed the likely level of interest of other potential acquirors, as well as the previous discussions with Company X and Company Y. After consideration of the alternatives, it was the consensus of the board that we should seek to negotiate a definitive merger agreement with IBM at the $21 per share price. The board then discussed the grant of exclusivity required by IBM as a condition to its offer. Representatives of WilmerHale then discussed the types of provisions likely to be included in any definitive merger agreement that relate to our ability to respond to a superior acquisition proposal. It was the consensus of the board that, under the circumstances, it would be in the best interests of stockholders to grant the exclusivity required by IBM as a condition to its $21 per share offer.

 

On June 22, 2010, we and IBM entered into an agreement under which we agreed to grant exclusivity to IBM until August 20, 2010, subject to earlier termination after August 6 if IBM were to reduce its offer below $21 per share.

 

On June 30, 2010, we and IBM entered into a new confidentiality agreement with respect to the proposed transaction.

 

In early July 2010, representatives of IBM began their due diligence review of Unica, including a review of an electronic data room of documents established by us.

 

On July 16, 2010, Cravath Swaine & Moore LLP, legal counsel to IBM, sent to WilmerHale an initial draft of a definitive merger agreement.

 

During the second half of July and early August, 2010, IBM conducted its legal, financial and business due diligence, and we and IBM, and our respective legal counsel, negotiated the terms of a definitive merger agreement, the stockholders agreement and the offer letters.

 

On August 9, 2010, at a meeting of the special committee, the committee reviewed the status of the negotiations of the definitive merger agreement and the related stockholders agreement. Representatives of WilmerHale reviewed the terms of the proposed agreements, including, in particular, the provisions relating to our ability to respond to, and ultimately accept, a superior acquisition proposal and the termination fee payable by us if our board were to withdraw its recommendation of the merger. The committee also reviewed the terms of the proposed retention agreements with certain members of management.

 

On August 11, 2010, at a meeting of our board of directors, the directors considered the proposed merger agreement with IBM. Representatives of Jefferies presented to the board of directors its financial analyses of the proposed merger. Representatives of WilmerHale and Morris, Nichols, Arsht & Tunnell LLP, our Delaware counsel, reviewed, and discussed with the directors, the terms of the merger agreement and stockholders agreement and their impact on any potential future transaction. The board then reviewed with representatives of Jefferies each of the other companies that had been contacted, or had expressed possible interest in an acquisition, prior to the grant of exclusivity to IBM, and the consequences of allowing exclusivity to expire,

and the board concluded that it would not be advisable to allow that exclusivity to expire and re-contact any such parties. The directors also reviewed the terms of the proposed retention agreements with certain members of management.

 

On August 12, 2010, our board of directors met to consider and vote upon the merger agreement with IBM, which had been previously distributed to them. Representatives of Jefferies presented updated financial analyses to the board of directors and then rendered to the board of directors its oral opinion, subsequently confirmed in writing, that, as of August 12, 2010, and subject to the factors and assumptions set forth in the opinion, the $21 per share to be paid to the holders of shares of Unica common stock pursuant to the merger agreement was fair from a financial point of view to such holders. The full text of the opinion of Jefferies, dated as of August 12, 2010, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations of the review undertaken by Jefferies in connection with such opinion, is attached hereto as Annex C. Following such presentation and after further review and discussion, our board of directors resolved to approve the merger agreement and related matters and resolved to recommend that our stockholders adopt the merger agreement, which is attached hereto as Annex A.

 

Following the adjournment of the meeting of our board of directors on August 12, 2010, the parties signed the merger agreement. The signing of the merger agreement was publicly announced on August 13, 2010, prior to the opening of trading of our common stock on the Nasdaq Global Select Market.

 

At a meeting of our board of directors on August 12, 2010, our board of directors unanimously determined that the merger agreement and the merger are fair to and advisable and in the best interests of Unica and its stockholders. Our board of directors unanimously approved the merger agreement. Our board of directors unanimously recommends that you vote “FOR” the adoption of the merger agreement and “FOR” the proposal to adjourn the special meeting to a later date, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes in favor of adoption of the merger agreement at the time of the special meeting.

 

In the course of reaching its decision to approve the merger agreement, to declare that the merger agreement and the merger are fair to and advisable and in the best interests of Unica and its stockholders and to recommend that Unica’s stockholders vote to adopt the merger agreement, our board of directors consulted with our senior management and our financial advisor Jefferies & Company, Inc. Our board of directors also consulted with outside legal counsel regarding its fiduciary duties and the terms of the merger agreement, the stockholders agreement and related matters. The following discussion includes the material reasons and factors considered by our board of directors in making its recommendation, but is not, and is not intended to be, exhaustive:

 

Merger Consideration.   Our board of directors considered the following with respect to the merger consideration to be received by Unica’s stockholders:

 

 

 

Prospects in Remaining Independent.   Our board of directors considered the possibility of continuing to operate Unica as an independent public company, including the perceived risks and uncertainties of remaining an independent public company. In considering the alternative of pursuing growth as an independent company, our board of directors considered the following factors:

 

 

Potential Alternative Acquisition by IBM.   Our board of directors considered the possibility that, if we were not to combine with IBM at this time, IBM would acquire another company in the industry and, in such event, there would be less likelihood that IBM would be an interested acquirer of us in the future.

 

Opinion of Jefferies.   Our board of directors considered the financial analysis presented by representatives of Jefferies, as well as the opinion of Jefferies to our board of directors that, as of August 12, 2010 and based upon and subject to the factors and assumptions set forth in such opinion, the $21.00 per share in cash to be paid to the holders of shares of Unica common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders, as more fully described in the section entitled “— Opinion of Unica’s Financial Advisor” beginning on page 23.

 

Financial Forecasts.   Our board of directors considered the financial forecasts prepared by Unica’s management and summarized below under “— Financial Forecasts” beginning on page 30. These financial forecasts were also provided to Jefferies for purposes of the opinion described in the preceding paragraph.

 

Terms of the Merger Agreement.   Our board of directors considered the terms and conditions of the merger agreement and the course of negotiations thereof, including:

 

 

 

In the course of its deliberations, our board of directors also considered a variety of risks and factors weighing against the merger, including:

 

Risks of Announcement and Closing.   Our board of directors considered:

 

 

Limitations on Unica’s Business.   Our board of directors considered the potential limitations on Unica’s pursuit of business opportunities due to pre-closing covenants in the merger agreement whereby Unica agreed that it will carry on its business in the ordinary course of business consistent with past practice and, subject to specified exceptions, will not take certain actions related to the conduct of its business without the prior written consent of IBM.

 

Solicitation of Interest.   Following receipt of proposed terms for the merger from IBM, our board of directors, with the assistance of Jefferies, considered other potential acquirers and solicited interest from other parties that might be potentially interested in a business combination with Unica.

 

Cash Transaction.   Our board of directors considered that the merger consideration is cash and, as a result, our stockholders will forego any potential future increase in our value that might result from our possible growth, and that income realized as a result of the merger generally will be taxable to our stockholders.

 

Stockholder Vote.   Our board of directors considered the requirement that the merger agreement obligates Unica to submit the merger agreement for adoption by Unica’s stockholders even if our board of directors withdraws its recommendation to our stockholders to adopt the merger agreement.

 

Stockholders Agreement.   Our board of directors considered that our chairman and chief executive officer, and certain trusts affiliated with our chairman and chief executive officer, who collectively beneficially own shares that represent approximately 20% of the outstanding shares of our common stock as of August 12, 2010, would be entering into a stockholders agreement, which contains an agreement by them to vote in favor of adoption of the merger agreement and against any other takeover proposal.

 

Termination Fee and Other Alternative Acquirers.   Our board of directors considered the possibility that the $14.25 million termination fee payable to IBM under the circumstances set forth in the merger agreement might discourage a competing proposal to acquire Unica or reduce the price of any such proposal.

 

Interests of Directors and Officers.   Our board of directors considered the interests that certain of our directors and executive officers may have with respect to the merger in addition to their interests as Unica

stockholders generally, as described in “— Interests of Unica’s Executive Officers and Directors in the Merger” on page 32.

 

The foregoing discussion is not intended to be exhaustive, but we believe it addresses the material information and principal factors considered by our board of directors in its consideration of the merger.

 

In light of the variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, our board of directors did not find it practicable to, and did not, quantify or otherwise attempt to assign relative weights to the various factors considered in reaching its determination, and individual directors may have given different weight to different factors. In addition, our board of directors did not reach any specific conclusion with respect to any of the factors or reasons considered. Instead, our board of directors conducted an overall analysis of the factors and reasons described above and determined that, in the aggregate, the potential benefits considered outweighed the potential risks or possible negative consequences of approving the merger agreement and accordingly recommends that our stockholders vote “FOR” the adoption of the merger agreement.

 

Unica retained Jefferies to act as a financial advisor to Unica in connection with the merger and to render to the Unica board of directors an opinion as to the fairness to the holders of Unica common stock of the consideration of $21.00 per share in cash to be received by such holders. At the meeting of the Unica board of directors on August 12, 2010, Jefferies rendered its oral opinion to the Unica board of directors, subsequently confirmed in writing, to the effect that, as of August 12, 2010 and based upon and subject to the various considerations set forth in its opinion, the consideration of $21.00 per share in cash to be received by holders of Unica common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders.

 

The full text of the written opinion of Jefferies, dated as of August 12, 2010, is attached hereto as Annex C. Jefferies’ opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken by Jefferies in rendering its opinion. Unica encourages its stockholders to read Jefferies’ opinion carefully and in its entirety. Jefferies’ opinion was directed to the Unica board of directors and addresses only the fairness from a financial point of view of the consideration of $21.00 per share of Unica common stock, as of the date of the opinion. It does not address any other aspects of the merger and does not constitute a recommendation as to how any holder of Unica common stock should vote on the merger or any matter related thereto. The summary of the opinion of Jefferies set forth below is qualified in its entirety by reference to the full text of the opinion.

 

In arriving at its opinion, Jefferies, among other things:

 

 

In Jefferies’ review and analysis and in rendering its opinion, Jefferies assumed and relied upon, but did not assume any responsibility to independently investigate or verify, the accuracy and completeness of all financial and other information that was supplied or otherwise made available by Unica to it or that was publicly available (including, without limitation, the information described above), or that was otherwise reviewed by it. In its review, Jefferies relied on assurances of the management of Unica that management was not aware of any facts or circumstances that would make such information inaccurate or misleading. In its review, Jefferies did not obtain any independent evaluation or appraisal of any of the assets or liabilities of, nor did Jefferies conduct a physical inspection of any of the properties or facilities of, Unica. Jefferies was not furnished with any such evaluations or appraisals of such physical inspections and did not assume any responsibility to obtain any such evaluations or appraisals.

 

With respect to the financial forecasts provided to and examined by Jefferies, Jefferies’ opinion noted that projecting future results of any company is inherently subject to uncertainty. Unica informed Jefferies, however, and Jefferies assumed, that such financial forecasts were reasonably prepared on bases reflecting the then best currently available estimates and good faith judgments of the management of Unica as to the future financial performance of Unica. Jefferies expressed no opinion as to Unica’s financial forecasts or the assumptions on which they were made.

 

Jefferies’ opinion was based on economic, monetary, regulatory, market and other conditions existing and which could be evaluated as of the date of its opinion. Jefferies expressly disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting Jefferies’ opinion of which Jefferies became aware after the date of its opinion.

 

Jefferies made no independent investigation of any legal or accounting matters affecting Unica, and Jefferies assumed the correctness in all respects material to Jefferies’ analysis of all legal and accounting advice given to Unica and its board of directors, including, without limitation, advice as to the legal, accounting and tax consequences of the terms of, and transactions contemplated by, the merger agreement to Unica and its stockholders. In addition, in preparing its opinion, Jefferies did not take into account any tax consequences of the transaction to any holder of Unica common stock. In rendering its opinion, Jefferies assumed that the final form of the merger agreement would be substantially similar to the last draft reviewed by it. Jefferies also assumed that in the course of obtaining the necessary regulatory or third party approvals, consents and releases for the merger, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on Unica, IBM or the contemplated benefits of the merger.

 

Jefferies’ opinion was for the use and benefit of the Unica board of directors in its consideration of the merger, and Jefferies’ opinion did not address the relative merits of the transactions contemplated by the merger agreement as compared to any alternative transaction or opportunity that might be available to Unica, nor did it address the underlying business decision by Unica to engage in the merger or the terms of the merger agreement or the documents referred to therein. Jefferies’ opinion does not constitute a recommendation as to whether any holder of Unica common stock should vote on the merger or any matter related thereto. In addition, Jefferies was not asked to address, and its opinion did not address, the fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of Unica, other than the holders of Unica common stock. Jefferies expressed no opinion as to the price at which Unica common stock will trade at any time. Jefferies did not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation to be payable or to be received by any of Unica’s officers, directors or employees, or any class of such persons, in connection with the merger relative to the consideration to be received by holders of Unica common stock. Jefferies’ opinion was authorized by the Fairness Committee of Jefferies.

 

In preparing its opinion, Jefferies performed a variety of financial and comparative analyses. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant quantitative and qualitative methods of financial analysis and the applications of those methods to the particular circumstances and, therefore, is not necessarily susceptible to partial analysis or summary description. Jefferies believes that its analyses must be considered as a whole. Considering any portion of Jefferies’ analyses or the factors considered by Jefferies, without considering all analyses and

factors, could create a misleading or incomplete view of the process underlying the conclusion expressed in Jefferies’ opinion. In addition, Jefferies may have given various analyses more or less weight than other analyses, and may have deemed various assumptions more or less probable than other assumptions, so that the range of valuations resulting from any particular analysis described below should not be taken to be Jefferies’ view of Unica’s actual value. Accordingly, the conclusions reached by Jefferies are based on all analyses and factors taken as a whole and also on the application of Jefferies’ own experience and judgment.

 

In performing its analyses, Jefferies made numerous assumptions with respect to industry performance, general business, economic, monetary, regulatory, market and other conditions and other matters, many of which are beyond Unica’s and Jefferies’ control. The analyses performed by Jefferies are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than suggested by such analyses, and neither Jefferies nor we assume any responsibility if future results differ materially from those suggested herein. In addition, analyses relating to the per share value of Unica common stock do not purport to be appraisals or to reflect the prices at which shares of Unica common stock may actually be sold. The analyses performed were prepared solely as part of Jefferies’ analysis of the fairness, from a financial point of view, of the consideration of $21.00 per share in cash to be received by holders of Unica common stock pursuant to the merger, and were provided to the Unica board of directors in connection with the delivery of Jefferies’ opinion.

 

The following is a summary of the material financial and comparative analyses performed by Jefferies in connection with Jefferies’ delivery of its opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand Jefferies’ financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data described below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Jefferies’ financial analyses.

 

Transaction Overview

 

Based upon the approximately 24.6 million shares of Unica common stock that were outstanding as of August 2, 2010, assuming the vesting of in-the-money stock options (calculated using the treasury stock method) and restricted stock units, Jefferies noted that the consideration of $21.00 per share implied an equity value of approximately $517.5 million. Net of approximately $43.1 million of cash and cash equivalents (as of June 30, 2010), Jefferies noted that the consideration implied an enterprise value of approximately $474.4 million. Jefferies also noted that the consideration of $21.00 per share of Unica common stock represented:

 

 

Comparable Public Company Analysis

 

Using publicly available information and information provided by Unica’s management, Jefferies analyzed the trading multiples of Unica and the corresponding trading multiples of the following license model enterprise application vendors and software as a service (“SaaS”) companies with estimated revenues between $100 million and $500 million for fiscal year 2010, which are collectively referred to as the “Unica Selected Comparable Companies”:

 

 

 

 

 

 

In its analysis, Jefferies derived and compared multiples for Unica and the Unica Selected Comparable Companies, calculated as follows:

 

 

This analysis indicated the following:

 

Comparable Public Company Multiples
License Model Enterprise Application Vendors

 

Comparable Public Company Multiples
SaaS Companies

 

 

Using the reference ranges for the benchmarks set forth below, Jefferies determined implied enterprise values for Unica, then added cash and cash equivalents to determine implied equity values. In determining the number of shares outstanding for purposes of calculating implied values per share of Unica common stock, Jefferies assumed the vesting of in-the-money stock options (using the treasury stock method) and restricted stock units. These analyses indicated the ranges of implied values per share of Unica common stock set forth opposite the relevant benchmarks below, compared, in each case, to the consideration of $21.00 per share:

 

Comparable Public Company Reference Ranges and Implied Price Ranges
License Model Enterprise Application Vendors

 

 

Comparable Public Company Reference Ranges and Implied Price Ranges
SaaS Companies

 

 

No company utilized in the comparable company analysis is identical to Unica. In evaluating the selected companies, Jefferies made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond Unica’s and Jefferies’ control. Mathematical analysis, such as determining the median, is not in itself a meaningful method of using comparable company data.

Comparable Transactions Analysis

 

Using publicly available information and other information, Jefferies examined the following nine transactions involving application software companies announced since January 1, 2009. The transactions considered and the month and year each transaction was announced were as follows:

 

 

Using publicly available estimates and other information for each of these transactions, Jefferies reviewed the enterprise value as a multiple of the target company’s:

 

 

This analysis indicated the following:

 

Comparable Transactions Multiples

 

 

Using the reference range of 3.5x to 4.5x Unica’s Enterprise Value/LTM Revenue, Jefferies determined implied enterprise values for Unica, then added cash and cash equivalents to determine implied equity values. After assuming the vesting of in-the-money stock options (using the treasury stock method) and restricted stock units, these analyses indicated the ranges of implied values per share of Unica common stock of approximately $17.76 to $22.18 using Enterprise Value/LTM Revenue, compared to the consideration of $21.00 per share.

 

Using the reference range of 20.0x to 30.0x Unica’s Enterprise Value/LTM EBITDA, Jefferies determined implied enterprise values for Unica, then added cash and cash equivalents to determine implied equity values. After assuming the vesting of in-the-money stock options (using the treasury stock method) and restricted stock units, these analyses indicated the ranges of implied values per share of Unica common stock of approximately $16.01 to $22.88 using Enterprise Value/LTM EBITDA, compared to the consideration of $21.00 per share.

 

No transaction utilized as a comparison in the comparable transaction analysis is identical to the merger. In evaluating the merger, Jefferies made numerous judgments and assumptions with regard to industry performance, general business, economic, market, and financial conditions and other matters, many of which are beyond Unica’s and Jefferies’ control. Mathematical analysis, such as determining the median, is not in itself a meaningful method of using comparable transaction data.

Premiums Paid Analysis

 

Using publicly available information, Jefferies analyzed the premiums offered in all North American software merger and acquisition transactions since January 1, 2008 having equity consideration between $100 million and $1 billion.

 

For each of these transactions, Jefferies calculated the premium represented by the offer price over the target company’s closing share price one trading day and twenty trading days prior to the transaction’s announcement. This analysis indicated the following premiums for those time periods prior to announcement:

 

Premiums Paid
Multiples

 

 

Using a reference range of 13.7% to 41.1% premium for August 11, 2010, Jefferies performed a premiums paid analysis using the closing prices per share of Unica common stock on such date. This analysis indicated a range of implied values per share of Unica common stock of approximately $10.91 to $13.55, compared to the consideration of $21.00 per share.

 

Using a reference range of 19.1% to 56.4% premium for July 16, 2010, Jefferies performed a premiums paid analysis using the closing prices per share of Unica common stock on such date. This analysis indicated a range of implied values per share of Unica common stock of approximately $10.73 to $14.09, compared to the consideration of $21.00 per share.

 

Discounted Cash Flow Analysis

 

Jefferies performed a discounted cash flow analysis to estimate the present value of the free cash flows of Unica through the fiscal year ending September 30, 2015 using Unica management’s financial projections, discount rates ranging from 12.0% to 16.0%, and terminal growth rates of free cash flow after fiscal year 2015 ranging from 3.0% to 5.0%. To determine the implied total equity value for Unica, Jefferies added cash and cash equivalents to the implied enterprise value for Unica. After assuming the vesting of in-the-money stock options (using the treasury stock method) and restricted stock units, this analysis indicated a range of implied values per share of Unica common stock of approximately $17.28 to $30.26, compared to the consideration of $21.00 per share of Unica common stock.

 

General

 

Jefferies’ opinion was one of many factors taken into consideration by the Unica board of directors in making its determination to approve the merger and should not be considered determinative of the views of the Unica board of directors or management with respect to the merger or the consideration.

 

Jefferies was selected by the Unica board of directors based on Jefferies’ qualifications, expertise and reputation. Jefferies is an internationally recognized investment banking and advisory firm. Jefferies, as part of its investment banking business, is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements, financial restructurings and other financial services.

 

In the ordinary course of business, Jefferies and its affiliates may trade or hold securities of Unica or IBM and/or their respective affiliates for its own account and for the accounts of its customers and, accordingly, may at any time hold long or short positions in those securities.

 

Pursuant to an engagement agreement between Unica and Jefferies dated April 14, 2010, Unica has agreed to pay Jefferies a fee for its services of approximately $5.2 million, $500,000 of which was paid upon delivery of Jefferies’ opinion and the remainder of which is payable contingent upon consummation of the

merger. In addition, Unica has agreed to reimburse Jefferies for expenses incurred. Unica also has agreed to indemnify Jefferies against liabilities arising out of or in connection with the services rendered and to be rendered by it under its engagement. Jefferies has, in the past, provided financial advisory services to IBM and may do so in the future and has received, and may receive, fees for the rendering of such services. In addition, Jefferies may seek to, in the future, provide financial advisory and financing services to Unica, IBM or entities that are affiliated with Unica or IBM, for which it would expect to receive compensation.

 

Our management made available to IBM certain non-public business and financial information about Unica as a stand-alone company, including financial forecasts for the fiscal years ending September 30, 2010, 2011, 2012, 2013, 2014 and 2015. These forecasts did not give effect to the merger. The financial forecasts were based on numerous assumptions made by our management, including assumed annual growth rates with respect to subscriptions and licenses, assumed annual renewal rates with respects to subscriptions and maintenance and assumed rates of our cost of goods sold margins.

 

The adjustments to net income and earnings per share in the forecasts excluded all stock-based compensation expense. Free cash flow is calculated by adding back to net income depreciation and amortization, adding or subtracting changes in working capital, including deferred revenue, and subtracting capital expenditures and other income. Adjusted net income, adjusted earnings per share, earnings before interest, taxes, depreciation and amortization, or “EBITDA,” and free cash flow are non-GAAP measures that are used by management as supplemental financial measurements to evaluate our operational trends and should not be considered as alternatives to net income, earnings per share or cash flow as indicators of our operating performance. Adjusted net income, adjusted earnings per share, EBITDA and free cash flow are not defined under GAAP and, accordingly, they may not be comparable measurements to those used by other companies.

 

The financial forecasts for Unica’s 2010 through 2015 fiscal years made available to IBM were as follows:

 

 

For the financial forecasts that were provided to Jefferies, for fiscal year 2010, Unica’s management adjusted the forecasts summarized above to include the full-year impact of the Pivotal Veracity acquisition by Unica completed on January 12, 2010 and to adjust for the write-down of deferred revenue that occurred in conjunction with that acquisition. In addition, Unica’s management also adjusted projections for fiscal year 2010 to reflect the then most current state of Unica’s business based on three quarters of actual performance and to include pro forma free cash flow forecasts for fiscal years 2010 through 2015. The financial forecasts for fiscal years 2011 through 2015 were unchanged. These adjustments, along with the unchanged financial forecasts for fiscal years 2011 through 2015, were presented to the board of directors of Unica. The following tables include these adjustments made by Unica’s management and presented to the board of directors of Unica:

 

 

 

Unica’s as adjusted financial forecasts presented above were reviewed with our board of directors and were used by Jefferies in connection with its financial analysis of the merger consideration.

 

The financial forecasts shown above are included in this proxy statement to provide our stockholders access to certain nonpublic information considered by our board of directors during its evaluation of the merger, provided to Jefferies in connection with its opinion to our board of directors, as more fully described in the section entitled “Opinion of Unica’s Financial Advisor” beginning on page 23, and provided to IBM for the purpose of allowing it to evaluate the merger. The inclusion of this information should not be regarded as an indication to any stockholder that our board of directors or any other recipient of this information considered, or now considers, it to be predictive of actual future results, and they should not be relied on as such. The forecasts reflect numerous estimates and assumptions with respect to industry performance, general business, economic, regulatory, market and financial conditions, as well as matters specific to our business, all of which are difficult to predict and many of which are beyond our control. As a result, there can be no assurance that the forecasted results will be realized or that actual results will not be significantly higher or lower than such forecasts. As the forecasts cover multiple years, such information by its nature becomes less predictive with each successive year. Also, the economic and business environments can and do change quickly, which adds a significant level of unpredictability, unreliability and execution risk. These factors create significant doubt as to whether the forecasts for fiscal years 2010 and beyond are likely to be achieved. As a result, the forecasts are not necessarily indicative of future results. In addition, our management prepared the forecasts prior to the execution of the merger agreement and, accordingly, the forecasts do not reflect the effects of the merger, which may cause results to differ materially. Accordingly, readers of this proxy statement are cautioned not to place undue reliance on the financial forecasts.

 

The financial forecasts stated above were prepared for internal use in connection with the merger and not with a view toward public disclosure or toward complying with generally accepted accounting principles in the United States, or GAAP, the published guidelines of the Securities and Exchange Commission regarding forecasts or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The forecasts included in this proxy statement were prepared by, and are the responsibility of, our management. We do not assume any responsibility to update these forecasts. Neither our independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the financial forecasts contained herein, nor have they expressed any opinion or any other form of assurance on such forecasts or their achievability, and assume no responsibility for, and disclaim any association with, the financial forecasts. Furthermore, the financial forecasts do not take into account any circumstances or events occurring after the date the forecasts were prepared that were unforeseen by our management at the time of preparation. We have made publicly available our actual results of operations for the quarter ended June 30, 2010. Our stockholders should review our Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 to obtain this information. See “Where You Can Find More Information” beginning on page 66.

 

None of Unica or our affiliates, advisors, officers, directors or representatives has made or makes any representation to any stockholder or other person regarding the ultimate performance of Unica compared to the information contained in the forecasts or that forecasted results will be achieved.

 

BY INCLUDING IN THIS PROXY STATEMENT A SUMMARY OF ITS INTERNAL FINANCIAL FORECASTS, UNICA UNDERTAKES NO OBLIGATIONS TO UPDATE, OR PUBLICLY DISCLOSE ANY UPDATE TO, THESE FINANCIAL FORECASTS TO REFLECT CIRCUMSTANCES OR EVENTS, INCLUDING UNANTICIPATED EVENTS, THAT MAY HAVE OCCURRED OR THAT MAY OCCUR AFTER THE PREPARATION OF THESE FORECASTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE FINANCIAL FORECASTS ARE SHOWN TO BE IN ERROR OR CHANGE.

 

When considering the recommendation of our board of directors, you should be aware that members of our board of directors and our executive officers have interests in the merger in addition to their interests as Unica stockholders generally, pursuant to certain agreements between such directors and executive officers and us and, in the case of certain of the executive officers, pursuant to employment arrangements with IBM. These interests are described below and may be different from, or in conflict with, your interests as a Unica stockholder. The members of our board of directors were aware of the material facts as to these additional interests, and considered them, when they approved the merger agreement.

 

Overview

 

Prior to our entering into the merger agreement, each of our executive officers was party to an executive retention agreement pursuant to which he or she would be entitled to certain payments and benefits if a “change-in-control” (as defined in such agreements) occurs and the executive’s employment with us or our successor is terminated by us or our successor, other than for “cause, disability or death,” or by the executive for “good reason” (as those terms are defined in the agreements) within 12 months following a change-in-control of us, in addition to those benefits set forth in our 2005 stock incentive plan. The merger will constitute a change-in-control, and IBM will constitute our successor under each executive retention agreement.

 

Each of Messrs. Yuchun Lee, Peter Cousins, John Hogan, Kevin Keane, Paul McNulty, and David Sweet and Ms. Vivian Vitale have entered into employment arrangements with IBM. These employment arrangements will supersede and replace the executive retention agreements that they are currently party to with us, and they will not be entitled to any of the benefits under their existing executive retention agreements or to any extra acceleration of vesting of equity-based awards upon termination of employment under the generally applicable terms of our 2005 stock incentive plan as a result of the merger. The employment arrangements with IBM will be effective upon the closing of the merger and will provide certain retention/severance payments and equity compensation benefits to such individuals. In addition, Mr. Lee has entered into a new non-competition and non-solicitation agreement that will supersede and replace the non-competition and non-solicitation arrangements that he is currently bound by with us, effective upon the closing of the merger. The remaining executive officers will continue to be bound by their current non-competition and non-solicitation arrangements.

 

The executive retention agreements with Messrs. Kevin P. Shone, James Fieger and Jason W. Joseph will remain in effect following the merger because they have not entered into employment arrangements with IBM.

 

Our non-employee directors and certain of our executive officers are entitled to certain other payments and benefits in connection with the merger, as described below in “Other Compensation and Benefit Arrangements.”

 

Unica Executive Retention Agreements

 

In December 2008, our compensation committee adopted a form of executive retention agreement, the provisions of which establish benefits to our executive officers in the event of a termination of employment following a change-in-control of us. Each of our executive officers entered into an executive retention agreement in substantially that form, except for the material differences noted herein. The agreements are primarily intended to reinforce and encourage the continued employment and dedication of our key personnel without distraction from the possibility of a change-in-control and related events and circumstances.

 

In general, the retention agreements provide that if a “change-in-control” (as defined in such agreements) occurs and the executive’s employment with us or our successor is terminated by us or our successor, other than for “cause, disability or death,” or by the executive for “good reason” (as those terms are defined in the

agreements) within 12 months following a change-in-control of us, then the executive would be entitled to, in addition to those benefits set forth in our 2005 stock incentive plan, the following benefits:

 

 

The merger will constitute a change-in-control, and IBM will constitute our successor under these agreements.

 

The executive retention agreements with Mr. Shone, Mr. Feiger and Mr. Joseph will remain in effect following the merger because they have not entered into employment arrangements with IBM.

 

IBM Employment Arrangements

 

Each of Messrs. Yuchun Lee, Peter Cousins, John Hogan, Kevin Keane, Paul McNulty, and David Sweet and Ms. Vivian Vitale has entered into an employment arrangement with IBM that is conditioned upon the closing of the merger and the executive officer’s continued employment with Unica through the closing of the merger. Upon closing of the merger and the effectiveness of these employment arrangements, the executive retention agreements entered into between Unica and these executive officers will terminate, and they will no longer be entitled to any payments or benefits under those agreements or to any extra acceleration of vesting of equity-based awards upon termination of employment under the generally applicable terms of our 2005 stock incentive plan as a result of the merger. Each executive officer’s employment by IBM is “at will” and may be terminated at any time for any reason, subject to the obligations described below and applicable law.

 

Salary.   The employment arrangements between IBM and each of Messrs. Lee, Cousins, Hogan, Keane, McNulty and Sweet provide that the base salary to which each executive officer will be entitled to receive from IBM will be the same as the base salary to which each was entitled to receive from Unica. The employment arrangement between IBM and Ms. Vitale provides for a specified salary. Under their employment arrangements with IBM, the executive officers initially will receive the following annual base salaries: Mr. Lee — $415,000; Mr. Cousins — $270,000; Mr. Hogan — $270,000; Mr. Keane — $210,000; Mr. McNulty — $250,000; Mr. Sweet — $270,000; and Ms. Vitale — $225,000.

 

Treatment of Unica Equity Awards.   The employment arrangements between IBM and each of the executive officers provides that, upon the closing of the merger, each executive officer will be entitled to the vesting of 50% of such executive’s then unvested options, and the remaining 50% of such executive’s then unvested options will be converted into options to acquire IBM stock and will continue to vest in accordance with their original vesting schedules. In addition, the employment arrangement between IBM and each of the executive officers provides that, upon the closing of the merger, each executive officer will be entitled to the vesting of 50% of such executive’s then unvested restricted stock units, and the remaining 50% of such executive’s then unvested restricted stock units will be converted into the right to receive cash payments based on the value of the merger consideration on each subsequent vesting date of the restricted stock units. The general treatment of options and restricted stock units in the merger, including such awards held by our executive officers, is described below under “— Treatment of Options Outstanding Under Our Stock Plans” and “— Treatment of Restricted Stock Units Outstanding Under Our Stock Plans” beginning on page 41.

Any options that remain unvested, and any cash payments with respect to restricted stock units that are unpaid, in each case, as of the second anniversary of the closing of the merger (with respect to Messrs. Lee, Cousins, Hogan, Keane, McNulty, and Sweet) or the first anniversary of the closing of the merger (with respect to Ms. Vitale), will vest or be paid in full as of such anniversary date. In addition, subject to the execution of IBM’s standard release of claims, if an executive officer is terminated by IBM without “cause” (as such term is defined in the executive officer’s employment arrangement with IBM) prior to the second anniversary of the closing of the merger (with respect to Messrs. Lee, Cousins, Hogan, Keane, McNulty, and Sweet) or the first anniversary of the closing of the merger (with respect to Ms. Vitale), any options held by such executive officer that are unvested as of such termination will vest in full, and any cash payments with respect to restricted stock units that are unpaid as of such termination will be paid, as of such termination. If an executive officer’s employment terminates for any reason other than by IBM without “cause,” such executive officer will forfeit any unvested options and any unpaid cash payments with respect to resticted stock units.

 

Retention Program.   Under the terms of the employment arrangements between IBM and each of Messrs. Lee, Cousins, Hogan, Keane, McNulty, and Sweet, each such executive officer will be entitled to participate in a retention program pursuant to which each such executive officer will be eligible to receive cash payments following each of four six-month milestone periods through the second anniversary of the closing of the merger, subject to continued employment through the applicable payment dates and the achievement of certain milestones set forth in the employment arrangements. The following are the aggregate amounts payable pursuant to this retention program: Mr. Lee — $1,100,000; Mr. Cousins — $600,000; Mr. Hogan — $600,000; Mr. Keane — $550,000; Mr. McNulty — $575,000; and Mr. Sweet — $600,000. If any of the executive officers are terminated by IBM without “cause” (as such term is defined in the executive officer’s employment arrangement) prior to the second anniversary of the closing of the merger, the executive officer will be entitled to receive the retention payment for the then-applicable six-month milestone period, subject to the execution of IBM’s standard release of claims.

 

Transition Program.   Under the terms of the employment arrangement between IBM and Ms. Vitale, Ms. Vitale will be entitled to participate in a transition program pursuant to which she will be entitled to receive a cash payment equal to $440,000 on the first anniversary of the closing of the merger, subject to continued employment through the applicable payment date and the achievement of certain milestones set forth in her employment arrangement. If Ms. Vitale is terminated without “cause” by IBM prior to the first anniversary of the closing of the merger, she will be entitled to the full amount of her cash payment under the transition program, subject to the execution of IBM’s standard release of claims.

 

Termination Payments.   The employment arrangements with IBM provide that, if the executive officer’s employment is terminated by IBM without “cause” (as such term is defined in the executive officer’s employment arrangement with IBM) prior to the first anniversary of the closing of the merger, such executive officer will be entitled to a lump sum cash payment equal to the sum of the executive’s highest base salary in effect during the 12-month period preceding the closing of the merger and the executive’s then current target annual cash bonus, provided that the executive officer executes IBM’s standard release of claims and satisfies all conditions to make the release effective. This is the same termination payment the executive officers would have been entitled to receive from us pursuant to the executive retention agreements currently in effect.

 

Definition of “Cause.”   “Cause” is defined in each such employment arrangement as cause, as determined by IBM in accordance with its standard policies and procedures, which includes, among other things, any violation of IBM policy and/or failure to perform satisfactorily, and without regard to how “cause” is defined in any plan, policy or program, any offer letter, any agreement between the executive and Unica, or any amendment thereto.

 

Non-Competition Agreements

 

Mr. Lee has executed a related noncompetition agreement, which provides that for certain periods following termination of employment and following the closing of the merger, Mr. Lee will be subject to restrictive covenants that generally prohibit him, in any capacity, directly or indirectly, from participating or engaging in the design, development, manufacture, production, marketing, sale or servicing of any product, or

the provision of any service, that directly relates to marketing automation (including without limitation, systems and tools for behavioral marketing), marketing resource management, campaign management, lead management, marketing or sales analytics, web analytics or product recommendations. This noncompetition agreement replaces his existing agreements with us.

 

Any executive officer not entering into a noncompetition agreement with IBM will continue to be bound by the terms of the executive officer’s existing noncompetition agreement with Unica, which provides for restrictions during the one-year period after his or her employment ends.

 

Other Compensation and Benefit Arrangements

 

Special Transaction Bonuses

 

In connection with the execution of the merger agreement, we have awarded a special transaction bonus of $100,000 in cash to each of Mr. Joseph and Mr. Shone, which will be paid contingent upon the closing of the merger to recognize their significant contribution to the due diligence and merger process. These bonuses do not constitute severance for any purpose.

 

Cash Payments for Option Cancelation

 

It is expected that each of our executive officers will enter into agreements with us that will provide, contingent on the closing of the merger, for the cancelation of the portions of the options granted to them under our 2005 stock incentive plan that are vested or vest in connection with the merger, in exchange for a cash payment equal to the product obtained by multiplying the number of shares subject to the vested portion of such option by the difference between the per share merger consideration and the exercise price of such option, less applicable withholding taxes.

 

Treatment of Equity Awards Held by Our Non-Employee Directors

 

In connection with the execution of the merger agreement, we have accelerated, contingent on the closing of the merger, the vesting of all of the stock options and restricted stock units granted under our 2005 stock incentive plan in February 2010 to each of our non-employee directors. As a result, an option to purchase 5,000 shares of our common stock will become immediately exercisable and an award of 5,000 restricted stock units will become fully vested at the closing of the merger for each of Aron J. Ain, Gary E. Haroian, Carla Hendra, Louis Hernandez, Jr., James A. Perakis and Robert P. Schechter.

 

The general treatment of options and restricted stock units in the merger, including such awards held by our directors, is described below under “— Treatment of Options Outstanding Under Our Stock Plans” and “— Treatment of Restricted Stock Units Outstanding Under Our Stock Plans” beginning on page 41.

 

Compensation Summary

 

The following table sets forth the following cash compensation for each of our executive officers:

 

 

 

 

The table below sets forth, as of August 9, 2010, for each of our directors and executive officers, the number of stock options whose vesting will accelerate at the closing of the merger and the dollar value of such accelerated stock options, as well as the number of all vested and unvested stock options held (including the stock options whose vesting will accelerate at the closing of the merger) and the dollar value of all such vested and unvested stock options held, pursuant to the terms of the executive officer’s employment arrangement with IBM, in the case of Messrs. Yuchun Lee, Peter Cousins, John Hogan, Kevin Keane, Paul McNulty, and David Sweet and Ms. Vivian Vitale, or the executive retention agreements with Unica, in the case of Messrs. Shone, Fieger and Joseph, as in effect as of August 9, 2010, and assuming that each director and executive officer exercises all vested in-the-money stock options and receives $21.00 per share of common stock pursuant to the merger. The table below does not take into account any additional acceleration of vesting of options that could occur upon termination of employment under certain specified circumstances pursuant to the employment arrangements with IBM or the executive retention agreements with Unica.

 

 

 

The table below sets forth, as of August 9, 2010, for each of our directors and executive officers, the number of restricted stock units whose vesting will accelerate at the closing of the merger and the dollar value of such restricted stock units, as well as the number of all restricted stock units held (inclusive of those vesting at the closing of the merger) and the dollar value of all such restricted stock units held, pursuant to the terms of the executive officer’s employment arrangement with IBM, in the case of Messrs. Yuchun Lee, Peter Cousins, John Hogan, Kevin Keane, Paul McNulty, and David Sweet and Ms. Vivian Vitale, or the executive retention agreements with Unica, in the case of Messrs. Shone, Fieger and Joseph, as in effect as of August 9, 2010. The table below does not take into account any additional acceleration of vesting of restricted stock units that could occur upon termination of employment under certain specified circumstances pursuant to the employment arrangements with IBM or the executive retention agreements with Unica.

 

 

 

 

Indemnification and Insurance

 

The surviving corporation will assume, and IBM will cause the surviving corporation to comply with and honor, all rights to indemnification, advancement of expenses and exculpation from liabilities for acts or omissions occurring at or prior to the effective time of the merger existing in favor of our and our subsidiaries’

current or former directors or officers as provided in our and their respective certificates of incorporation or bylaws (or comparable organizational documents) and any indemnification or other agreements as in effect on the date of the merger agreement. We have entered into indemnification agreements with each of our directors and executive officers. Each indemnification agreement provides that we will indemnify the director or executive officer to the fullest extent permitted by law for claims arising in his or her capacity as our director, officer, employee or agent, provided that he or she acted in good faith and in a manner that he or she reasonably believed to be in, or not opposed to, our best interests and, with respect to any criminal proceeding, had no reasonable cause to believe that his or her conduct was unlawful. In the event that we do not assume the defense of a claim against our director or executive officer, we are required to advance his or her expenses in connection with his or her defense, provided that he or she undertakes to repay all amounts advanced if it is ultimately determined that he or she is not entitled to be indemnified by us.

 

In addition, IBM will obtain or will cause to be obtained a “tail” insurance policy with a claims period of six years from the effective time of the merger with respect to directors’ and officers’ liability insurance covering those persons who were, as of the date of the merger agreement, covered by our directors’ and officers’ liability insurance policy for acts or omissions occurring prior to the effective time of the merger, on terms that are no less favorable than our policies in effect on the date of the merger agreement. Prior to the closing of the merger, IBM will prepay such insurance for the six-year period, but in no event will IBM or the surviving corporation be required to pay, with respect to the entire six-year period following the effective time of the merger, premiums for insurance which in the aggregate exceed 300% of the aggregate premiums paid by us for the period from September 30, 2009 to, and including, September 30, 2010.

 

If you do not vote for the adoption of the merger agreement at the special meeting and otherwise comply with the applicable statutory procedures of Section 262 of the DGCL, summarized herein, you may be entitled to appraisal rights under Section 262 of the DGCL. In order to exercise and perfect appraisal rights, a record holder of our common stock must follow the steps prescribed in Section 262 of the DGCL and summarized below properly and in a timely manner.

 

Section 262 of the DGCL is reprinted in its entirety as Annex D to this proxy statement. Set forth below is a summary description of Section 262 of the DGCL. The following summary describes the material aspects of Section 262 of the DGCL, and the law relating to appraisal rights and is qualified in its entirety by reference to Annex D. All references in Section 262 and this summary to “stockholder” are to the record holder of the shares of our common stock immediately prior to the effective time of the merger as to which appraisal rights are asserted. Failure to comply strictly with the procedures set forth in Section 262 of the DGCL will result in the loss of appraisal rights.

 

ANY UNICA STOCKHOLDER WHO WISHES TO EXERCISE APPRAISAL RIGHTS OR WHO WISHES TO PRESERVE HIS, HER OR ITS RIGHT TO DO SO SHOULD REVIEW ANNEX D CAREFULLY AND SHOULD CONSULT HIS, HER OR ITS LEGAL ADVISOR, SINCE FAILURE TO TIMELY COMPLY WITH THE PROCEDURES SET FORTH THEREIN WILL RESULT IN THE LOSS OF SUCH RIGHTS.

 

Under the DGCL, holders of our common stock who follow the procedures set forth in Section 262 of the DGCL will be entitled to have their shares appraised by the Delaware Court of Chancery, or the Delaware Court, and to receive payment in cash of the “fair value” of those shares, exclusive of any element of value arising from the accomplishment or expectation of the merger.

 

Under Section 262 of the DGCL, where a merger agreement relating to a proposed merger is to be submitted for adoption at a meeting of stockholders, as in the case of the special meeting, the corporation, not less than 20 days prior to such meeting, must notify each of its stockholders who was a stockholder on the record date with respect to shares for which appraisal rights are available, that appraisal rights are so available, and must include in each such notice a copy of Section 262 of the DGCL. This proxy statement constitutes such notice to the holders of our common stock and Section 262 of the DGCL is attached to this proxy statement as Annex D. Any stockholder who wishes to exercise such appraisal rights or who wishes to

preserve his right to do so should review the following discussion and Annex D carefully and should consult his, her or its legal advisor, because failure to timely and properly comply with the procedures specified will result in the loss of appraisal rights under the DGCL.

 

If you wish to exercise appraisal rights you must not vote for the adoption of the merger agreement and must deliver to Unica, before the vote on the proposal to adopt the merger agreement, a written demand for appraisal of such stockholder’s shares of our common stock. If you sign and return a proxy card or vote by submitting a proxy by telephone, through the Internet or by fax, without expressly directing that your shares of our common stock be voted against the adoption of the merger agreement, you will effectively waive your appraisal rights because such shares represented by the proxy will be voted for the adoption of the merger agreement. Accordingly, if you desire to exercise and perfect appraisal rights with respect to any of your shares of common stock, you must either refrain from executing and returning the enclosed proxy card and from voting in person or by submitting a proxy by telephone, through the Internet or by fax, in favor of the proposal to adopt the merger agreement or check either the “against” or the “abstain” box next to the proposal on such card or vote in person or by submitting a proxy by telephone, through the Internet or by fax, against the proposal or register in person an abstention with respect thereto. A vote or proxy against the adoption of the merger agreement will not, in and of itself, constitute a demand for appraisal.

 

A demand for appraisal will be sufficient if it reasonably informs Unica of the identity of the stockholder and that such stockholder intends thereby to demand appraisal of such stockholder’s shares of common stock. This written demand for appraisal must be separate from any proxy or vote abstaining from or voting against the adoption of the merger agreement. If you wish to exercise your appraisal rights you must be the record holder of such shares of our common stock on the date the written demand for appraisal is made and you must continue to hold such shares through the effective time of the merger. Accordingly, a stockholder who is the record holder of shares of common stock on the date the written demand for appraisal is made, but who thereafter transfers such shares prior to the effective time of the merger, will lose any right to appraisal in respect of such shares.

 

Only a holder of record of shares of our common stock on August 31, 2010, the record date for the special meeting, is entitled to assert appraisal rights for such shares of our common stock registered in that holder’s name. A demand for appraisal should be executed by or on behalf of the holder of record, fully and correctly, as the holder’s name appears on the stock certificates and must state that such person intends thereby to demand appraisal of his, her or its shares. If the shares are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, execution of the demand for appraisal should be made in that capacity, and if the shares are owned of record by more than one person, as in a joint tenancy or tenancy in common, the demand should be executed by or on behalf of all joint owners. An authorized agent, including one for two or more joint owners, may execute the demand for appraisal on behalf of a holder of record; however, the agent must identify the record owner or owners and expressly disclose the fact that, in executing the demand, he or she is acting as agent for such owner or owners.

 

A record holder such as a broker who holds shares as nominee for several beneficial owners may exercise appraisal rights with respect to the shares of our common stock held for one or more beneficial owners while not exercising such rights with respect to the shares held for other beneficial owners; in such case, the written demand should set forth the number of shares as to which appraisal is sought. Where the number of shares of our common stock is not expressly stated, the demand will be presumed to cover all shares held in the name of the record owner. If you hold your shares in brokerage accounts or other nominee forms and wish to exercise your appraisal rights, you are urged to consult with your broker to determine the appropriate procedures for the making of a demand for appraisal.

 

All written demands for appraisal of shares must be mailed or delivered to: Unica Corporation, Reservoir Place North, 170 Tracer Lane, Waltham, Massachusetts 02451-1379, Attention: Jason W. Joseph, Secretary.

 

Within ten days after the effective time of the merger, we will notify each stockholder of the effective time of the merger who properly asserted appraisal rights under Section 262 and has not voted for the adoption of the merger agreement. Within 120 days after the effective time of the merger, but not thereafter, we or any

stockholder who has complied with the statutory requirements summarized above may commence an appraisal proceeding by filing a petition in the Delaware Court demanding a determination of the fair value of the shares held by such stockholder. If no such petition is filed, appraisal rights will be lost for all stockholders who had previously demanded appraisal of their shares. We are not under any obligation, and we have no present intention, to file a petition with respect to appraisal of the value of the shares. Accordingly, if you wish to exercise your appraisal rights, you should regard it as your obligation to take all steps necessary to perfect your appraisal rights in the manner prescribed in Section 262 of the DGCL.

 

Within 120 days after the effective time of the merger, any stockholder who has complied with the provisions of Section 262 of the DGCL will be entitled, upon written request, to receive from us a statement setting forth the aggregate number of shares of our common stock not voted in favor of adoption of the merger agreement and with respect to which demands for appraisal were received by us, and the number of holders of such shares. Such statement must be mailed within ten days after the written request therefor has been received by us or within ten days after expiration of the period for delivery of appraisal demands, whichever is later. A person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file an appraisal petition or request from us the statement described in this paragraph.

 

If a petition for an appraisal is timely filed and a copy thereof served upon us, we will then be obligated, within 20 days after such service, to file with the Delaware Register in Chancery a duly verified list containing the names and addresses of the stockholders who have demanded appraisal of their shares and with whom agreements as to the value of their shares have not been reached. After notice to the stockholders as required by the Delaware Court, the Delaware Court is empowered to conduct a hearing on such petition to determine those stockholders who have complied with Section 262 and who have become entitled to appraisal rights thereunder. The Delaware Court may require the stockholders who demanded appraisal rights of our shares of common stock to submit their stock certificates to the Register in Chancery for notation thereon of the pendency of the appraisal proceeding; and if any stockholder fails to comply with such direction, the Delaware Court may dismiss the proceedings as to such stockholder.

 

After the Delaware Court determines which stockholders are entitled to appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Delaware Court, including any rules specifically governing appraisal proceedings. Through such proceeding the Delaware Court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Delaware Court shall take into account all relevant factors. Unless the Delaware Court in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. If you are considering seeking appraisal, you should be aware that the fair value of your shares as determined under Section 262 of the DGCL could be more than, the same as or less than the consideration you are entitled to receive pursuant to the merger agreement if you did not seek appraisal of your shares and that investment banking opinions as to the fairness from a financial point of view of the consideration payable in a merger are not necessarily opinions as to fair value under Section 262 of the DGCL.

 

The Delaware Court will direct the payment of the fair value of the shares of our common stock to those stockholders who have perfected appraisal rights, together with interest, if any. The Delaware Court will determine the amount of interest, if any, to be paid on the amounts to be received by persons whose shares of our common stock have been appraised. The costs of the action (which do not include attorneys’ or expert fees or expenses) may be determined by the Delaware Court and taxed upon the parties as the Delaware Court deems equitable. The Delaware Court may also order that all or a portion of the expenses incurred by any stockholder in connection with an appraisal, including without limitation reasonable attorneys’ fees and the fees and expenses of experts utilized in the appraisal proceeding, be charged pro rata against the value of all of the shares entitled to appraisal. In the absence of such determination or assessment, each party bears its own expenses.

Any stockholder who has duly demanded and perfected an appraisal in compliance with Section 262 of the DGCL will not, after the effective time of the merger, be entitled to vote his or her shares for any purpose or be entitled to the payment of dividends or other distributions thereon, except dividends or other distributions payable to holders of record of shares of our common stock as of a date prior to the effective time of the merger.

 

At any time within 60 days after the effective time of the merger, any stockholder will have the right to withdraw his or her demand for appraisal and to accept the cash payment for his or her shares pursuant to the merger agreement. After this period, a stockholder may withdraw his or her demand for appraisal only with our written consent. If no petition for appraisal is filed with the Delaware Court within 120 days after the effective time of the merger, a stockholder’s right to appraisal will cease and he or she will be entitled to receive the cash payment for his or her shares pursuant to the merger agreement, as if he or she had not demanded appraisal of his or her shares. No petition timely filed in the Delaware Court demanding appraisal will be dismissed as to any stockholder without the approval of the Delaware Court, and such approval may be conditioned on such terms as the Delaware Court deems just; provided, however, that any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party may withdraw his, her or its demand for appraisal and accept the merger consideration offered pursuant to the merger agreement within 60 days after the effective date of the merger.

 

If you properly demand appraisal of your shares of our common stock under Section 262 and you fail to perfect, or effectively withdraw or lose, your right to appraisal, as provided in the DGCL, your shares will be converted into the right to receive the consideration receivable with respect to such shares in accordance with the merger agreement. You will fail to perfect, or effectively lose or withdraw, your right to appraisal if, among other things, no petition for appraisal is filed within 120 days after the effective time of the merger, or if you deliver to us a written withdrawal of your demand for appraisal. Any such attempt to withdraw an appraisal demand more than 60 days after the effective time of the merger will require our written approval.

 

If you desire to exercise your appraisal rights, you must not vote for the adoption of the merger agreement and must strictly comply with the procedures set forth in Section 262 of the DGCL.

 

Failure to take any required step in connection with the exercise of appraisal rights will result in the termination or waiver of such rights.

 

THE PROCESS OF DEMANDING AND EXERCISING APPRAISAL RIGHTS REQUIRES STRICT COMPLIANCE WITH TECHNICAL PREREQUISITES. THOSE INDIVIDUALS OR ENTITIES WISHING TO EXERCISE THEIR APPRAISAL RIGHTS SHOULD CONSULT WITH THEIR OWN LEGAL COUNSEL IN CONNECTION WITH COMPLIANCE UNDER SECTION 262 OF THE DGCL. TO THE EXTENT THERE ARE ANY INCONSISTENCIES BETWEEN THE FOREGOING SUMMARY AND SECTION 262 OF THE DGCL, THE DGCL SHALL GOVERN.

 

At the effective time of the merger, each outstanding option to acquire our common stock granted under our 1993 stock option plan and our 2003 stock option plan will be cancelled and will be converted into the right of the holder thereof to receive an amount in cash, without interest and less any applicable withholding taxes, equal to the product of the number of shares of our common stock that are subject to such option and the excess, if any, of the merger consideration of $21.00 per share over the exercise price per share of the common stock subject to such option.

 

Holders of outstanding options to acquire our common stock granted under our 2005 stock incentive plan that are vested or that are vesting in connection with the merger will be offered the opportunity to have their options treated as described above for the options outstanding under our 1993 and 2003 stock option plans, which we refer to as being “cashed out.” Each outstanding option to acquire our common stock granted under our 2005 stock incentive plan that is vested or that is vesting in connection with the merger whose holder chooses not to have cashed out and any other option not being cancelled in the manner described in the prior paragraph, whether or not vested, will be converted into an option to acquire, on substantially the same terms

and conditions as were applicable to such option prior to the effective time of the merger, the number of shares of common stock of IBM equal to the product of the number of shares of our common stock that are subject to such option and the exchange ratio, rounded down to the nearest whole IBM share. The exchange ratio is a fraction, the numerator of which is the merger consideration of $21.00 per share and the denominator of which is the average closing price per share of the common stock of IBM on the New York Stock Exchange Composite Transactions Tape on the 20 trading days immediately prior to the closing date of the merger. The exercise price per share of common stock of IBM as of immediately following such conversion will be equal to the per share exercise price for the shares of our common stock otherwise purchasable pursuant to such option divided by the exchange ratio, rounded up to the nearest whole cent.

 

Our 2005 stock incentive plan provides that, except to the extent otherwise provided in an agreement evidencing any option, in the event of a change-in-control of us, 25% of the then unvested options held by any individual will become vested as of such change-in-control. In addition, under the plan, if an option holder’s employment is terminated for good reason (as defined in our 2005 stock incentive plan and as described below) by the individual or without cause (as defined in our 2005 stock incentive plan and as described below) by us or the acquiring entity or our or its affiliates within 12 months after the change-in-control, an additional 25% of the number of options that were unvested immediately prior to the change-in-control (but not more than the total unvested number) will become vested, with the number in the increase adjusted as the awards have themselves adjusted for purposes of the change-in-control and any later event. The merger will constitute a change-in-control, and IBM will constitute an acquiring entity under the terms of our 2005 stock incentive plan. Our 2005 stock incentive plan defines “good reason” as any significant diminution in an individual’s title, authority, or responsibilities from and after the change-in-control, or any reduction in the annual cash compensation payable to the individual from and after such change-in-control. Our 2005 stock incentive plan defines “cause” as any willful failure by the individual, which failure is not cured within 30 days of written notice to the individual, to perform his or her material responsibilities, or willful misconduct by the individual that affects the business reputation of the company.

 

IBM will pay to each holder of our restricted stock units, following each applicable date after the closing date of the merger on which any restricted stock unit held by such holder at the effective time of the merger would have vested (each such date is referred to herein as a “lapse date”) pursuant to the terms of our stock plans or the terms of any such restricted stock unit as in effect immediately prior the effective time, an amount in cash, equal to the product of the merger consideration of $21.00 per share and the number of restricted stock units held by the holder at the effective time of the merger that, on any particular lapse date, would have so vested, provided that if such holder’s employment with IBM terminates for any reason on or before any such lapse date, IBM will have no obligation to pay such amount with respect to such lapse date or any subsequent lapse date, other than with respect to restricted stock units that vest pursuant to our stock plans or the terms of any such restricted stock units as in effect immediately prior to the effective time or any provisions for acceleration of vesting contained in an offer letter or other individual agreement that IBM enters into with such holder.

 

Our 2005 stock incentive plan provides that, except to the extent otherwise provided in an agreement evidencing any restricted stock unit, in the event of a change-in-control of us, 25% of the then unvested restricted stock units held by any individual will become vested as of such change-in-control. In addition, under the plan, if a restricted stock unit holder’s employment is terminated for good reason by the individual or without cause by us or the acquiring entity or our or its affiliates within 12 months after the change-in-control, an additional 25% of the number of restricted stock units that were unvested immediately prior to the change-in-control (but not more than the total unvested number) will become vested, with the number in the increase adjusted as the awards have themselves adjusted for purposes of the change-in-control and any later event. The merger will constitute a change-in-control, and IBM will constitute an acquiring entity under the terms of our 2005 stock incentive plan.

 

The merger will become effective upon the filing of a certificate of merger with the Secretary of State of the State of Delaware or at such later time as is agreed upon by IBM and us and specified in such certificate of merger. The filing of the certificate of merger will occur as soon as practicable on or after the closing, which will take place on a date to be specified by IBM, merger sub and us and which will be no later than the second business day after satisfaction or waiver of the conditions to the closing of the merger set forth in the merger agreement and described in this proxy statement, unless IBM and we agree to hold the closing at a different time. We currently anticipate the merger to be completed in the fourth quarter of calendar year 2010.

 

If the merger is completed, our common stock will be delisted from and will no longer be traded on The NASDAQ Global Market and will be deregistered under the Securities Exchange Act. Following the closing of the merger, we will no longer be an independent public company.

 

The following discussion summarizes the material U.S. federal income tax consequences of the merger to holders of Unica common stock. This discussion is based upon the provisions of the Internal Revenue Code of 1986, as amended, which we refer to as the Code, the U.S. Treasury Regulations promulgated thereunder and judicial and administrative rulings, all as in effect as of the date of this proxy statement and all of which are subject to change or varying interpretation, possibly with retroactive effect. Any such changes could affect the accuracy of the statements and conclusions set forth herein.

 

This discussion assumes that holders of Unica common stock hold their shares as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all aspects of U.S. federal income taxation that may be relevant to a holder of Unica common stock in light of such holder’s particular circumstances, nor does it discuss the special considerations applicable to holders of our common stock subject to special treatment under the U.S. federal income tax laws, such as, for example, financial institutions or broker-dealers, mutual funds, partnerships or other pass-through entities and their partners or members, tax-exempt organizations, insurance companies, dealers in securities or foreign currencies, traders in securities who elect mark-to-market method of accounting, controlled foreign corporations, passive foreign investment companies, U.S. expatriates, holders who acquired their Unica common stock through the exercise of options or otherwise as compensation, holders who hold their Unica common stock as part of a hedge, straddle, constructive sale or conversion transaction, U.S. holders whose functional currency is not the U.S. dollar, and holders who exercise appraisal rights. This discussion does not address any aspect of foreign, state, local, alternative minimum, estate, gift or other tax law that may be applicable to a U.S. holder.

 

We intend this discussion to provide only a general summary of the material U.S. federal income tax consequences of the merger to holders of Unica common stock. We do not intend it to be a complete analysis or description of all potential U.S. federal income tax consequences of the merger. The U.S. federal income tax laws are complex and subject to varying interpretation. Accordingly, the Internal Revenue Service may not agree with the tax consequences described in this proxy statement.

 

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds Unica common stock, the tax treatment of a partner in such partnership generally will depend on the status of the partner and activities of the partnership. If you are a partner of a partnership holding Unica common stock, you should consult your own tax advisor.

 

All holders should consult their own tax advisor to determine the particular tax consequences to them (including the application and effect of any state, local or foreign income and other tax laws) of the receipt of cash in exchange for shares of Unica common stock pursuant to the merger.

 

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of Unica common stock that is, for U.S. federal income tax purposes:

 

 

 

A “non-U.S. holder” is a beneficial owner (other than a partnership) of Unica common stock that is not a U.S. holder.

 

U.S. Holders.

 

The conversion of shares of Unica common stock into cash pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. A U.S. holder generally will recognize gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received pursuant to the merger and such U.S. holder’s adjusted tax basis in the shares converted into cash pursuant to the merger. Such gain or loss generally will be capital gain or loss, and will be long-term capital gain or loss if the holder’s holding period for such shares exceeds one year as of the date of the merger. Long-term capital gains for certain non-corporate U.S. holders, including individuals, are generally eligible for a reduced rate of federal income taxation. The deductibility of capital losses is subject to limitations. If a U.S. holder acquired different blocks of Unica common stock at different times or different prices, such U.S. holder must determine its tax basis, holding period, and gain or loss separately with respect to each block of Unica common stock.

 

A U.S. holder may, under certain circumstances, be subject to information reporting and backup withholding at the applicable rate (currently, 28%) with respect to the cash received pursuant to the merger, unless such holder properly establishes an exemption or provides its correct tax identification number and otherwise complies with the applicable requirements of the backup withholding rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules can be refunded or credited against a payee’s U.S. federal income tax liability, if any, provided that such U.S. holder furnishes the required information to the Internal Revenue Service in a timely manner.

 

Non-U.S. Holders.

 

Any gain recognized on the receipt of cash pursuant to the merger by a non-U.S. holder generally will not be subject to U.S. federal income tax unless:

 

 

A non-U.S. holder will be subject to information reporting and, in certain circumstances, backup withholding (currently, at a rate of 28%) will apply with respect to the cash received by such holder pursuant to the merger, unless such non-U.S. holder certifies under penalties of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that the holder is a United States person as

defined under the Code) or such holder otherwise establishes an exemption from backup withholding. Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules may be refunded or credited against a non-U.S. holder’s U.S. federal income tax liability, if any.

 

Appraisal Rights

 

Under specified circumstances a holder may be entitled to appraisal rights in connection with the merger. If a holder of Unica common stock receives cash pursuant to the exercise of appraisal rights, such holder generally will recognize gain or loss, measured by the difference between the cash received and such holder’s tax basis in such stock. Interest, if any, awarded in an appraisal proceeding by a court would be included in such holder’s income as ordinary income for U.S. federal income tax purposes. Holders of Unica common stock who exercise appraisal rights are urged to consult their own tax advisors.

 

THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT A COMPLETE ANALYSIS OR DISCUSSION OF ALL POTENTIAL TAX CONSEQUENCES RELEVANT TO UNICA STOCKHOLDERS. THE TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON THE PARTICULAR CIRCUMSTANCES OF EACH STOCKHOLDER. YOU SHOULD CONSULT YOUR TAX ADVISOR CONCERNING THE FEDERAL, STATE, LOCAL, FOREIGN OR OTHER TAX CONSEQUENCES OF THE MERGER TO YOU.

 

HSR Act

 

The closing of the merger is subject to expiration or termination of the applicable waiting periods under the HSR Act and the rules thereunder. Under the HSR Act and the rules thereunder, the merger may not be completed unless certain information has been furnished to the Antitrust Division of the U.S. Department of Justice and to the Federal Trade Commission and applicable waiting periods expire or are terminated. The HSR Act requires the parties to observe a 30-day waiting period (the “initial 30-day waiting period”), during which time the merger may not be consummated, unless that initial 30-day waiting period is terminated early. If, before the expiration of the initial 30-day waiting period, the Antitrust Division of the U.S. Department of Justice or the Federal Trade Commission issues a request for additional information, the parties may not consummate the transaction until 30 days after Unica and IBM have each substantially complied with such request for additional information (unless this period is shortened pursuant to a grant of earlier termination). Unica and IBM filed their respective notification and report forms pursuant to the HSR Act with the Antitrust Division of the U.S. Department of Justice and the Federal Trade Commission on August 24, 2010.

 

At any time before the effective time of the merger, the Federal Trade Commission, the Antitrust Division of the U.S. Department of Justice, state attorneys general, or private parties can file suit under the antitrust laws to enjoin consummation of the merger or to impose conditions on the merger. There can be no assurance that the merger will not be challenged on antitrust grounds or, if such a challenge is made, that the challenge will not be successful.

 

Other Jurisdictions

 

The completion of the merger is also subject to comparable notifications and review under the antitrust laws of various foreign jurisdictions, including Austria, Brazil and Italy. Unica and IBM have filed or intend to file notifications with the appropriate governmental entities in each of those jurisdictions. Some of these jurisdictions do not require regulatory approval, consent or agreement prior to completing the merger. With respect to jurisdictions that do require regulatory approval, consent or agreement prior to completing the merger, Unica and IBM expect to observe the applicable waiting periods prior to completing the merger. It is possible that any of the governmental entities with which notifications are filed may seek, as conditions for granting approval of the merger, various regulatory concessions. There can be no assurance that Unica and IBM will be able or willing to satisfy or comply with these conditions.

 

The following summary describes certain material provisions of the merger agreement. This summary is not complete and is qualified in its entirety by reference to the complete text of the merger agreement, which is attached to this proxy statement as Annex A and incorporated into this proxy statement by reference. We urge you to read carefully the merger agreement in its entirety because this summary may not contain all the information about the merger agreement that is important to you.

 

The merger agreement and the following description have been included to provide you with information regarding the terms of the merger agreement. It is not intended to provide any other factual information about Unica or IBM. Such information can be found elsewhere in this proxy statement and in the other public filings we and IBM make with the SEC, which are available, without charge, at http://www.sec.gov.

 

The representations and warranties described below and included in the merger agreement were made for the purposes of the merger agreement by Unica and IBM to each other as of specific dates. The assertions embodied in those representations and warranties were made solely for purposes of the merger agreement and may be subject to important qualifications and limitations agreed to by Unica and IBM in connection with negotiating the terms of that agreement. Moreover, the representations and warranties may be subject to a contractual standard of materiality that may be different from what may be viewed as material to stockholders, or may have been made for the purpose of allocating risk between Unica and IBM rather than establishing the matters addressed by such representations and warranties as facts. The merger agreement is described in this proxy statement and included as Annex A only to provide you with information regarding its terms and conditions, and not to provide any other factual information regarding Unica and IBM or their respective businesses.

 

Subject to the terms and conditions of the merger agreement and in accordance with Delaware law, at the effective time of the merger, merger sub, a wholly-owned subsidiary of IBM and a party to the merger agreement, will merge with and into us. We will survive the merger as a wholly-owned subsidiary of IBM and the separate corporate existence of merger sub will cease.

 

The merger will become effective upon the filing of a certificate of merger with the Secretary of State of the State of Delaware or at such later time as is agreed upon by IBM and us and specified in the certificate of merger. The filing of the certificate of merger will occur as soon as practicable on or after the date of closing, which will take place on a date to be specified by IBM, merger sub and us and which will be no later than the second business day after satisfaction or waiver of the conditions to the closing of the merger set forth in the merger agreement and described in this proxy statement, or at such other time as is agreed upon by IBM and us. Although we expect to complete the merger as soon as possible following the special meeting of our stockholders (if our stockholders adopt the merger agreement), we cannot specify when or assure that we and IBM will satisfy or waive all of the conditions to the closing of the merger. See “— Conditions to the Closing of the Merger” beginning on page 58.

 

The merger agreement provides that each share of our common stock outstanding immediately prior to the effective time of the merger (other than shares held by us, IBM, merger sub or by holders properly exercising appraisal rights under Delaware law) will be converted at the effective time of the merger into the right to receive $21.00 in cash, without interest and less any applicable withholding taxes.

 

If any of our stockholders perfect appraisal rights with respect to any of our shares of common stock, then we will treat those shares as described under “The Merger — Appraisal Rights” beginning on page 38.

 

Stock Options

 

At the effective time of the merger, each outstanding option to acquire our common stock granted under our 1993 stock option plan and our 2003 stock option plan will be cancelled and will be converted into the right of the holder thereof to receive an amount in cash, without interest and less any applicable withholding taxes, payable at or as soon as practicable following the effective time of the merger, equal to the product of:

 

 

Holders of outstanding options to acquire our common stock granted under our 2005 stock incentive plan that are vested or that are vesting in connection with the merger will be offered the opportunity to have their options treated as described above for the options outstanding under our 1993 and 2003 stock option plans, which we refer to as being “cashed out.” Each outstanding option to acquire our common stock granted under our 2005 stock incentive plan that is vested or that is vesting in connection with the merger whose holder chooses not to have cashed out and any other option not being cancelled in the manner described in the prior paragraph, whether or not vested, will be converted into an option to acquire, on substantially the same terms and conditions as were applicable to such option prior to the effective time of the merger, the number of shares of common stock of IBM equal to the product of:

 

 

The exchange ratio is a fraction, the numerator of which is the merger consideration of $21.00 per share and the denominator of which is the average closing price per share of the common stock of IBM on the New York Stock Exchange Composite Transactions Tape on the 20 trading days immediately prior to the closing date of the merger. The exercise price per share of common stock of IBM as of immediately following such conversion will be equal to the per share exercise price for the shares of our common stock otherwise purchasable pursuant to such option divided by the exchange ratio, rounded up to the nearest whole cent.

 

Restricted Stock Units

 

IBM will pay to each holder of our restricted stock units, promptly (but in no event later than 20 business days) after each applicable date after the closing date of the merger on which any restricted stock unit held by such holder at the effective time of the merger would have vested (each such date is referred to herein as a “lapse date”) pursuant to the terms of our stock plans or the terms of any such restricted stock unit as in effect immediately prior the effective time, an amount in cash equal to the product of:

 

 

provided that if such holder’s employment with IBM terminates for any reason on or before any such lapse date, IBM will have no obligation to pay such amount with respect to such lapse date or any subsequent lapse date, other than with respect to restricted stock units that vest pursuant to our stock plans or the terms of any such restricted stock units as in effect immediately prior to the effective time or any provisions for acceleration of vesting contained in an offer letter or other individual agreement that IBM enters into with such holder.

Purchase Rights

 

Pursuant to the merger agreement, the next offering/purchase period under our 2005 employee stock purchase plan will not begin until further action is taken by our board of directors and if the merger is consummated, our 2005 employee stock purchase plan will terminate, effective upon the effective time of the merger.

 

Prior to the effective time of the merger, IBM will designate a paying agent and, from time to time after the effective time of the merger, IBM will make available to the paying agent funds in amounts as necessary for the payment of the merger consideration.

 

As soon as reasonably practicable after the effective time of the merger, the paying agent will mail to each person who was a holder of record of our common stock immediately prior to the effective time of the merger a letter of transmittal containing instructions for exchanging certificates representing such shares of our common stock. Such letter of transmittal will be accompanied by a substitute IRS Form W-9 or the applicable IRS Form W-8. After the effective time of the merger, each holder of a certificate previously representing such shares of our common stock will, upon surrender to the paying agent of a certificate, together with a properly completed letter of transmittal, be entitled to receive the merger consideration of $21.00 in cash, less any applicable withholding taxes, for each share of our common stock represented by such certificate.

 

No interest will be paid or shall accrue on the cash payable upon surrender of any such certificate. The cash paid upon surrender of any such certificate will be deemed to have been paid in full satisfaction of all rights pertaining to the shares of our common stock formerly represented by such certificate.

 

If any such certificate has been lost, stolen, defaced or destroyed, the paying agent or the surviving corporation, as the case may be, will pay the merger consideration with respect to each share of our common stock formerly represented by such certificate upon the making of an affidavit of that fact by the person claiming such certificate to be lost, stolen, defaced or destroyed and, if required by the surviving corporation, the posting by such person of a bond in an amount as the surviving corporation may direct as indemnity against any claim that may be made against the surviving corporation with respect to such certificate.

 

At any time following the six-month anniversary of the closing date of the merger, the surviving corporation may require the paying agent to deliver to it any funds previously made available to the paying agent that have not been disbursed to holders of certificates that formerly represented shares of our common stock. After that point, stockholders will no longer be able to receive the merger consideration from the paying agent. Instead, they will be required to seek to obtain the merger consideration only from IBM and the surviving corporation and in so doing will be treated as general creditors with respect to the payment of any such merger consideration, without any interest thereon.

 

The merger agreement provides that merger sub’s directors and officers immediately prior to the effective time of the merger will be the directors and officers, respectively, of the surviving corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

 

We have made a number of representations and warranties to IBM and merger sub in the merger agreement regarding aspects of our business and other matters pertinent to the merger. The topics covered by these representations and warranties include the following:

 

 

 

 

 

 

Some of our representations and warranties are qualified by a material adverse effect standard. The merger agreement provides that a material adverse effect is any state of facts, change, development, event, effect, condition, occurrence, action or omission that, individually or in the aggregate, is reasonably likely to:

 

 

 

provided that none of the following will be deemed either alone or in combination to constitute, and none of the following will be taken into account in determining whether there has been or would be, a material adverse effect:

 

 

IBM and merger sub have made a number of representations and warranties to us regarding various matters pertinent to the merger. The topics covered by these representations and warranties include the following:

 

 

 

The representations and warranties of each of the parties to the merger agreement will expire upon the consummation of the merger.

 

Conduct of Our Business Prior to the Merger

 

In the merger agreement, we have agreed that before the effective time of the merger, subject to certain exceptions, we will carry on our, and we will cause each of our subsidiaries to carry on their, business in the ordinary course consistent with past practice and use commercially reasonable efforts to comply with all applicable laws and, to the extent consistent therewith, use commercially reasonable efforts to keep available the services of present officers, software developers and other employees, to preserve assets and technology and relationships with customers, suppliers, licensors, licensees, distributors and others having material business dealings with us and our subsidiaries and to maintain franchises, rights and permits.

 

In addition, we have agreed, with specified exceptions, to various restrictions, including restrictions on our and our subsidiaries’ ability to:

 

 

 

 

 

 

No Solicitation of Acquisition Proposals

 

We have agreed that we will not, and will not authorize or permit any of our subsidiaries to, nor will we authorize or permit any of our or our subsidiaries’ directors, officers or employees or any of our or their investment bankers, attorneys, accountants or other advisors or representatives to, directly or indirectly:

 

 

Despite these general prohibitions, at any time prior to the adoption of the merger agreement by our stockholders and subject to the conditions described below, we may, and may permit and authorize our subsidiaries and our and our subsidiaries’ representatives to:

 

 

We may only take these actions if:

 

 

 

 

Board Recommendation

 

The merger agreement provides that neither our board of directors nor any committee of our board will, or will agree or resolve to:

 

 

Notwithstanding the foregoing, subject to the conditions described below, our board of directors may, at any time prior to the adoption of the merger agreement by our stockholders, in response to a superior proposal or an intervening event (as defined in the merger agreement and as described below under this heading), effect an adverse recommendation change. Our board of directors may only effect an adverse recommendation change if:

 

 

 

The covenant in the merger agreement generally prohibiting us from soliciting takeover proposals does not prevent us from complying with Rule 14d-9 and 14e-2(a) promulgated under the Securities Exchange Act or from making any disclosure to our stockholders if our board of directors determines in good faith that failure to so disclose would be inconsistent with applicable law; provided, however, that in no event will we or our board of directors take, agree or resolve to take any action with respect to an adverse recommendation change that is prohibited by the merger agreement.

 

A “takeover proposal” means any inquiry, proposal or offer from any person (other than IBM or merger sub or their affiliates) relating to, or that could reasonably be expected to lead to, in one or a series of transactions, any merger, consolidation, business combination, recapitalization, liquidation or dissolution involving us or any direct or indirect acquisition, including by way of merger, consolidation, tender offer, exchange offer, stock acquisition, asset acquisition or similar transaction, of:

 

 

A “superior proposal” means any binding bona fide written offer of any person (other than IBM or merger sub or their affiliates) which did not result from a breach of the non-solicitation covenants contained in the merger agreement and that, if consummated, would result in such person or its stockholders acquiring:

 

 

which offer, in the good faith judgment of our board of directors, after consulting with a financial advisor of national reputation and outside legal counsel, (i) provides consideration which is more favorable to our stockholders than the consideration provided in the merger (taking into account all of the terms and conditions of such offer and the merger agreement (including any changes to the terms of the merger agreement proposed by IBM in response to such superior proposal or otherwise)) and (ii) is reasonably capable of being completed, taking into account all financial, legal, regulatory and other aspects of such proposal.

 

An “intervening event” is an event, circumstance, fact or other information unknown to our board of directors as of the date of the merger agreement which becomes known before our stockholders adopt the merger agreement and which causes our board of directors to reasonably conclude in good faith, after consultation with its outside legal counsel and a financial advisor of nationally recognized reputation, that its failure to effect an adverse recommendation change is reasonably likely to result in a breach of its fiduciary duties to our stockholders under applicable law. The term “intervening event” does not include the receipt, existence or terms of a takeover proposal or any matter relating to a takeover proposal or any consequence of a takeover proposal.

 

We have agreed, subject to any applicable legal restraints, to convene and hold a stockholders meeting, for the purpose of the adoption of the merger agreement by our stockholders, on the 30th calendar day (or first business day thereafter) immediately following the date of mailing of the definitive proxy statement to our stockholders. Notwithstanding the foregoing, we may:

 

 

We are required to hold the stockholders meeting regardless of whether our board of directors determines prior to the date of such meeting that the merger agreement is no longer advisable, recommends that our stockholders reject the merger agreement or makes any other adverse recommendation change. Further, our obligation to hold the stockholders meeting will not be affected by the commencement, public proposal, public disclosure or communication to us or any other person of any takeover proposal.

 

We, IBM and merger sub have each agreed to use commercially reasonable efforts to take, or cause to be taken, all actions that are necessary, proper or advisable to consummate the merger, including using commercially reasonable efforts to accomplish the following:

 

 

However, IBM is not required to agree to, or offer to, divest or hold separate, or enter into any licensing, business restriction or similar arrangement with respect to, any assets or any portion of its or its subsidiaries’ businesses and we have also agreed not to agree to, or offer to, divest or hold separate or enter into any such arrangement with respect to our or our subsidiaries’ assets or any portion of our or our subsidiaries’ businesses without the prior written consent of IBM. Furthermore, IBM and its subsidiaries are not obligated to litigate or participate in the litigation of any suit, claim, action or proceeding brought by any governmental entity which:

 

 

 

Our, IBM’s and merger sub’s obligations to effect the merger are subject to the satisfaction or waiver of the following conditions:

 

 

IBM’s and merger sub’s obligations to effect the merger are further subject to the satisfaction by us or waiver by them of the following conditions:

 

 

 

 

 

Our obligations to effect the merger are subject to the further satisfaction by IBM and/or merger sub or waiver by us of the following conditions: