Preview | Agreement and Plan of Merger | International Business Machines Corp.; Barron Acquisition Corp.; Rational Software Corp.

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ARTICLE I

The Merger

SECTION 1.01.	The Merger	1
SECTION 1.02.	Closing	1
SECTION 1.03.	Effective Time of the Merger	2
SECTION 1.04.	Effects of the Merger	2
SECTION 1.05.	Certificate of Incorporation and Bylaws	2
SECTION 1.06.	Directors	2
SECTION 1.07.	Officers	2

ARTICLE II

Conversion of Securities

SECTION 2.01.	Conversion of Capital Stock	3
SECTION 2.02.	Exchange of Certificates	4

ARTICLE III

Representations and Warranties

SECTION 3.01.	Representations and Warranties of the Company	6
SECTION 3.02.	Representations and Warranties of Parent and Sub	33

ARTICLE IV

Covenants Relating to Conduct of Business

SECTION 4.01.	Conduct of Business	34
SECTION 4.02.	No Solicitation	40

ARTICLE V

Additional Agreements

SECTION 5.01.	Preparation of the Proxy Statement; Stockholders Meeting	43
SECTION 5.02.	Access to Information; Confidentiality	45
SECTION 5.03.	Commercially Reasonable Efforts; Notification	47
SECTION 5.04.	Equity Awards	48
SECTION 5.05.	Indemnification, Exculpation and Insurance	52
SECTION 5.06.	Fees and Expenses	53
SECTION 5.07.	Benefits Matters	54
SECTION 5.08.	Public Announcements	54
SECTION 5.09.	Sub Compliance	55
SECTION 5.10.	Delivery of Material Contracts	55
SECTION 5.11.	Convertible Notes	55
SECTION 5.12.	Exchangeable Shares	56

ARTICLE VI

Conditions Precedent

SECTION 6.01.	Conditions to Each Partys Obligation to Effect the Merger	56
SECTION 6.02.	Conditions to Obligations of Parent and Sub	57
SECTION 6.03.	Conditions to Obligation of the Company	58
SECTION 6.04.	Frustration of Closing Conditions	58

ARTICLE VII

Termination, Amendment and Waiver

SECTION 7.01.	Termination	59
SECTION 7.02.	Effect of Termination	60
SECTION 7.03.	Amendment	60
SECTION 7.04.	Extension; Waiver	60

ARTICLE VIII

General Provisions

SECTION 8.01.	Nonsurvival of Representations and Warranties	60
SECTION 8.02.	Notices	61
SECTION 8.03.	Definitions	62

SECTION 8.04.	Interpretation	63
SECTION 8.05.	Counterparts	63
SECTION 8.06.	Entire Agreement; No Third-Party Beneficiaries	63
SECTION 8.07.	Governing Law	64
SECTION 8.08.	Assignment	64
SECTION 8.09.	Consent to Jurisdiction	64
SECTION 8.10.	Waiver of Jury Trial	64
SECTION 8.11.	Enforcement	65

AGREEMENT AND PLAN OF MERGER dated as of December 6, 2002 (this Agreement), by and among INTERNATIONAL BUSINESS MACHINES CORPORATION, a New York corporation (Parent), BARRON ACQUISITION CORP., a Delaware corporation and a wholly owned subsidiary of Parent (Sub), and RATIONAL SOFTWARE CORPORATION, a Delaware corporation (the Company).

WHEREAS the Board of Directors of each of the Company, Parent and Sub deems it in the best interests of their respective stockholders to consummate the merger (the Merger), on the terms and subject to the conditions set forth in this Agreement, of Sub with and into the Company in which the Company would become a wholly owned subsidiary of Parent, and such Boards of Directors have approved this Agreement and declared its advisability (and, in the case of the Board of Directors of the Company, recommended that this Agreement be adopted by the Companys stockholders);


Exhibit A		Amended and Restated Certificate of Incorporation of the Surviving Corporation