EXHIBIT 1
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
dated as of
November 1, 2000
among
SAGA SYSTEMS, INC.,
SOFTWARE AG
and
SOFTWARE AG ACQUISITION CORPORATION
TABLE OF CONTENTS
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PAGE
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ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions; Construction.....................................2
ARTICLE 2
THE MERGER
SECTION 2.01. The Merger....................................................7
SECTION 2.02. Merger Consideration..........................................7
SECTION 2.03. Conversion of Shares..........................................9
SECTION 2.04. Surrender and Payment........................................10
SECTION 2.05. Dissenting Shares............................................11
SECTION 2.06. Stock Options................................................12
SECTION 2.07. Adjustments..................................................13
SECTION 2.08. Withholding Rights...........................................13
SECTION 2.09. Lost Certificates............................................13
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.01. Certificate of Incorporation.................................14
SECTION 3.02. Bylaws.......................................................14
SECTION 3.03. Directors and Officers.......................................14
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Corporate Existence and Power................................14
SECTION 4.02. Corporate Authorization......................................15
SECTION 4.03. Governmental Authorization...................................15
SECTION 4.04. Non-contravention............................................16
SECTION 4.05. Capitalization...............................................16
SECTION 4.06. Subsidiaries.................................................17
SECTION 4.07. SEC Filings..................................................18
SECTION 4.08. Financial Statements.........................................18
SECTION 4.09. Disclosure Documents.........................................19
SECTION 4.10. Absence of Certain Changes...................................19
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SECTION 4.11. No Undisclosed Material Liabilities..........................21
SECTION 4.12. Material Contracts...........................................21
SECTION 4.13. Compliance with Laws and Court Orders........................23
SECTION 4.14. Litigation...................................................23
SECTION 4.15. Finders' Fees................................................24
SECTION 4.16. Opinion of Financial Advisor.................................24
SECTION 4.17. Taxes........................................................24
SECTION 4.18. Employee Benefit Plans.......................................27
SECTION 4.19. Environmental Matters........................................28
SECTION 4.20. Antitakeover Statutes and Rights Agreement...................29
SECTION 4.21. Licenses and Permits.........................................30
SECTION 4.22. Intellectual Property........................................30
SECTION 4.23. Sagavista Business and Other Matters.........................31
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT
SECTION 5.01. Corporate Existence and Power................................31
SECTION 5.02. Corporate Authorization......................................31
SECTION 5.03. Governmental Authorization...................................32
SECTION 5.04. Non-contravention............................................32
SECTION 5.05. Disclosure Documents.........................................33
SECTION 5.06. Finders' Fees................................................33
SECTION 5.07. Financing....................................................33
ARTICLE 6
COVENANTS OF THE COMPANY
SECTION 6.01. Conduct of the Company.......................................33
SECTION 6.02. Stockholder Meeting; Proxy Material..........................37
SECTION 6.03. No Solicitation..............................................37
SECTION 6.04. Disposition of Sagavista Business............................39
SECTION 6.05. Access to Information........................................40
SECTION 6.06. Tax Matters..................................................40
SECTION 6.07. Retention Bonuses............................................41
ARTICLE 7
COVENANTS OF PARENT
SECTION 7.01. Confidentiality..............................................41
SECTION 7.02. Obligations of Merger Subsidiary.............................42
SECTION 7.03. Voting of Shares.............................................42
ii
SECTION 7.04. Director and Officer Liability...............................42
ARTICLE 8
COVENANTS OF PARENT AND THE COMPANY
SECTION 8.01. Notices of Certain Events....................................43
SECTION 8.02. Reasonable Best Efforts......................................43
SECTION 8.03. Certain Filings..............................................44
SECTION 8.04. Public Announcements.........................................44
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.01. Conditions to Obligations of Each Party......................44
SECTION 9.02. Conditions to the Obligations of Parent and Merger
Subsidiary...................................................45
SECTION 9.03. Conditions to the Obligations of the Company.................46
ARTICLE 10
TERMINATION
SECTION 10.01. Termination.................................................46
SECTION 10.02. Effect of Termination.......................................48
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices.....................................................48
SECTION 11.02. Amendments; No Waivers......................................49
SECTION 11.03. Expenses....................................................49
SECTION 11.04. Successors and Assigns......................................50
SECTION 11.05. Governing Law...............................................50
SECTION 11.06. Jurisdiction................................................50
SECTION 11.07. WAIVER OF JURY TRIAL........................................51
SECTION 11.08. Counterparts; Effectiveness.................................51
SECTION 11.09. Entire Agreement............................................51
SECTION 11.10. Captions; Headings..........................................51
SECTION 11.11. Severability................................................51
SECTION 11.12. Specific Performance........................................52
Stockholder Agreement................................................Exhibit A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of November 1, 2000, among Saga
Systems, Inc., a Delaware corporation (the "Company"), Software AG, a stock
corporation (Aktiengesellschaft) organized under the laws of the Federal
Republic of Germany ("Parent"), and Software AG Acquisition Corporation, a
Delaware corporation and a wholly owned subsidiary of Parent ("Merger
Subsidiary").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of the Company and Merger Subsidiary and
the Management Board and Supervisory Board of the Parent have approved, and
deemed it advisable and in the best interest of their respective stockholders
to consummate, the acquisition of the Company by Parent upon the terms and
subject to the conditions set forth herein;
WHEREAS, pursuant to the terms of this Agreement, Merger Subsidiary will
merge with and into the Company, with the Company surviving the merger (the
"Merger");
WHEREAS, Xxxxxx Equity Investors III, L.P., a Delaware limited partnership
("Xxxxxx Equity"), and TC Co-Investors, LLC, a Delaware limited liability
company ("TC" and together with Xxxxxx Equity, "Xxxxxx"), and Xxxxxx X. Xxxxxx,
an individual residing in Bethesda, Maryland ("Xxxxxx X. Xxxxxx"), hold Common
Stock, or securities convertible into Common Stock; and
WHEREAS, as an inducement and a condition to Parent and Merger Subsidiary
entering into this Agreement, Xxxxxx and Xxxxxx X. Xxxxxx simultaneously with
the execution and delivery of this Agreement are entering into a Stockholder
Agreement in the form attached hereto as Exhibit A with Parent (the
"Stockholder Agreement") which provides that (i) each of Xxxxxx, Xxxxxx X.
Xxxxxx and Parent will vote all Common Stock beneficially owned by them to
approve and adopt this Agreement and the Merger and (ii) Xxxxxx will sell
immediately prior to the Merger approximately 65% of its Common Stock to Merger
Subsidiary; and
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions; Construction. (a) The following terms, as used
herein, have the following meanings:
"Acquisition Proposal" means, other than the transactions contemplated by
this Agreement and the Stockholder Agreement, any offer or proposal for, any
indication of interest in, or any submission of inquiries from any Third Party
relating to (A) any acquisition or purchase, direct or indirect, of 20% or more
of the consolidated assets of the Company and its Subsidiaries or over 20% of
any class of equity or voting securities of the Company or any of its
Subsidiaries whose assets, individually or in the aggregate, constitute more
than 20% of the consolidated assets of the Company, (B) any tender offer
(including a self-tender offer) or exchange offer that, if consummated, would
result in such Third Party's beneficially owning 20% or more of any class of
equity or voting securities of the Company or any of its Subsidiaries whose
assets, individually or in the aggregate, constitute more than 20% of the
consolidated assets of the Company, (C) a merger, consolidation, share
exchange, business combination, sale of substantially all the assets,
reorganization, recapitalization, liquidation, dissolution or other similar
transaction involving the Company or any of its Subsidiaries whose assets,
individually or in the aggregate, constitute more than 20% of the consolidated
assets of the Company or (D) any other transaction the consummation of which
could reasonably be expected to impede, interfere with, prevent or materially
delay the Merger or that could reasonably be expected to dilute materially the
benefits to Parent of the transactions contemplated hereby.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with such
Person. As used in this definition, the term "control" (including the terms
"controlling," "controlled by" and "under common control with") means
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise; provided however,
that none of the Parent and its Affiliates on the one hand and the Company and
its Affiliates on the other hand shall be Affiliates of each other for purposes
of this definition.
"Business Day" means a day, other than Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close or on which the Frankfurt Stock Exchange is authorized or required by
law to close.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Common Stock" means the common stock, $0.01 par value, of the Company.
"Company Balance Sheet" means the unaudited consolidated balance sheet of
the Company as of September 30, 2000 which will be identical to the balance
sheet contained in the Company's Form 10-Q filed with the SEC for the fiscal
quarter ended September 30, 2000.
"Company Balance Sheet Date" means September 30, 2000.
"Company 10-K" means the Company's annual report on Form 10-K for the
fiscal year ended December 31, 1999.
"Delaware Law" means the Delaware General Corporation Law.
"Environmental Laws" means any foreign, supranational, federal, state,
provincial, local or foreign law (including, without limitation, common law),
treaty, judicial decision, regulation, rule, judgment, order, decree,
injunction, permit or governmental restriction or requirement or any agreement
with any governmental authority or other third party relating to the Company or
any of its Subsidiaries and relating to human health and safety, the
environment or to pollutants, contaminants, wastes or chemicals or any toxic,
radioactive, ignitable, corrosive, reactive or otherwise hazardous substances,
wastes or materials.
"Environmental Permits" means all permits, licenses, franchises,
certificates, approvals and other similar authorizations of governmental
authorities relating to or required by Environmental Laws and affecting, or
relating in any way to, the business of the Company or any of its Subsidiaries
as currently conducted.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
"Knowledge" of any Person that is not an individual means, with respect to
any specific matter, the actual knowledge of such Person's executive officers
and other management personnel having primary responsibility for such matter.
"Lien" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
property or asset; provided, however, that the term "Lien" shall not include
(i) liens for water and sewer charges and current taxes not yet due and payable
or being contested in good faith and (ii) mechanics', carriers', workers',
repairers', materialmen's, warehousemen's and other similar liens arising or
incurred in the
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ordinary course of business. For purposes of this Agreement, a Person shall be
deemed to own subject to a Lien any property or asset that it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
property or asset.
"Material Adverse Effect" means any change, effect, event, occurrence,
state of facts or development that is materially adverse to the business,
financial condition or results of operations of the Company and its
Subsidiaries, as a whole; provided however that none of the following shall be
deemed in and of themselves, either alone or in combination, to constitute, and
(except as specified below) none of the following shall be taken into account
in determining whether there has been or will be, a Material Adverse Effect:
(a) any change in the market price or trading volume of the Common Stock after
the date hereof; (b) any failure by Company to meet internal projections or
forecasts or published revenue or earnings predictions for any period ending
(or for which revenues or earnings are released) on or after the date of this
Agreement; (c) any adverse change, effect, event, occurrence, state of facts or
development to the extent caused by the announcement or pendency of the Merger
(including any cancellations or delays in customer orders, any reduction in
sales, any disruption in supplier, distributor or similar relationships, any
loss of employees or any shareholder litigation); (d) any adverse change,
effect, event, occurrence, state of fact or development to the extent caused by
conditions affecting the industry in which the Company participates generally,
the U.S. economy as a whole or foreign economies in any locations where the
Company or any of its Subsidiaries has material operations or sales; (e) any
adverse change, effect, event, occurrence, state of facts or development to the
extent caused by (i) out-of-pocket fees and expenses (including legal,
accounting, investment banking and other fees and expenses) incurred in
connection with the transactions contemplated by this Agreement, or (ii) the
payment of any amounts due to, or the provision of any other benefits
(including benefits relating to acceleration of stock options) to, any officers
or employees under employee benefit plans, severance arrangements or other
arrangements in existence as of the date of this Agreement; (f) any adverse
change, effect, event, occurrence, state of facts or development to the extent
caused by compliance with the terms of, or the taking of any action required
by, this Agreement; (g) any mandatory change in accounting requirements or
principles; or (h) any adverse change, effect, event, occurrence, state of
facts or development to the extent caused by actions required to be taken under
applicable laws, rules or regulations or contracts or agreements that are
listed on the Company Disclosure Schedule.
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
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"Person" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof, or
group (as defined in Section 13(d) of the 1934 Act).
"SEC" means the Securities and Exchange Commission.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at any time directly or indirectly owned by such Person.
"Third Party" means any Person as defined in Section 13(d) of the 1934
Act, other than Parent or any of its Affiliates.
"Transaction Agreements" means this Agreement, the Confidentiality
Agreement and the Stockholder Agreement.
Any reference in this Agreement to a statute shall be to such statute, as
amended from time to time, and to the rules and regulations promulgated
thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Additional Merger Consideration................ 2.02
Adjusted Fully Diluted Shares.................. 2.02
Certificates................................... 2.04
Cash Balance................................... 6.07
Cash Consideration ............................ 6.04
Closing........................................ 2.01(b)
Closing Date................................... 2.01(b)
Certificate of Merger.......................... 2.01(c)
Closing Merger Consideration................... 2.02
Company........................................ Recitals
Company Disclosure Schedule.................... Article 4
Company Proxy Statement........................ 4.09
Company SEC Documents.......................... 4.07
Company Securities............................. 4.05
Company Stockholder Meeting.................... 6.02
Company Subsidiary Securities.................. 4.06
Confidentiality Agreement...................... 6.03
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Term Section
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Xxxxxx X. Xxxxxx............................... Recitals
Dissenting Shares.............................. 2.05
Effective Time................................. 2.01
Eligible Option................................ 2.06
Employee Plans................................. 4.18
End Date....................................... 10.01
ERISA.......................................... 4.18
ERISA Affiliate................................ 4.18
ESPP........................................... 2.06
Exchange Agent................................. 2.04
Exon-Xxxxxx.................................... 4.03
Fully Diluted Shares........................... 2.02
Governmental Agency............................ 4.03
Indemnified Officer/Director................... 7.04
Information.................................... 4.22
Intellectual Property Rights................... 4.22
Merger......................................... 2.01
Merger Consideration........................... 2.02
Merger Subsidiary.............................. Recitals
Parent......................................... Recitals
Payment Event.................................. 11.03
Permits........................................ 4.21
Pre-Effective Tax Period....................... 4.17
Premium........................................ 7.04
Products....................................... 4.22
Registration/Reporting......................... 2.02
Representatives................................ 6.03
Returns........................................ 4.17
Sagavista Business............................. 4.23
Sagavista Disposition.......................... 6.04
Sagavista Net Proceeds......................... 2.02
Software....................................... 4.22
Stockholder Agreement.......................... Recitals
Superior Proposal.............................. 6.03
Surviving Corporation.......................... 2.01
Tax............................................ 4.17
Tax Asset...................................... 4.17
Taxing Authority............................... 4.17
TC............................................. Recitals
Termination Fee................................ 11.03
Xxxxxx......................................... Recitals
Xxxxxx Equity.................................. Recitals
Updata......................................... 4.15
U.S. GAAP ..................................... 4.08
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ARTICLE 2
THE MERGER
SECTION 2.01. The Merger. (a) Subject to the terms and conditions of this
Agreement, at the Effective Time, Merger Subsidiary shall be merged with and
into the Company in accordance with the Delaware Law, whereupon the separate
existence of Merger Subsidiary shall cease, and the Company shall be the
surviving corporation (the "Surviving Corporation").
(b) The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Xxxxx Xxxx & Xxxxxxxx, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, as soon as practicable, but in no event
later than 10 Business Days, after the satisfaction or (subject to applicable
law) waiver of the conditions (excluding conditions that, by their terms,
cannot be satisfied until the Closing Date) set forth in Article 9 (the
"Closing Date"), or at such other time and place as the Company and Parent may
agree to in writing.
(c) As soon as practicable following the Closing, the Company and Merger
Subsidiary will file a certificate of merger (the "Certificate of Merger") with
the Delaware Secretary of State and make all other filings or recordings
required by Delaware Law in connection with the Merger in such form as is
required by and executed in accordance with the relevant provisions of Delaware
Law. The Merger shall become effective at such time (the "Effective Time") as
the Certificate of Merger is duly filed with the Delaware Secretary of State
(or at such later time as the parties hereto may agree and as may be specified
in the Certificate of Merger).
(d) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to all
of the obligations, liabilities, restrictions and disabilities of the Company
and Merger Subsidiary, all as provided under Delaware Law.
SECTION 2.02. Merger Consideration. (a) The Merger Consideration per share
of Common Stock will be the right to receive (i) $11.50 in cash, without
interest (the "Closing Merger Consideration"), and (ii) the Additional Merger
Consideration, if any (the Closing Merger Consideration together, with the
Additional Merger Consideration, if any, the "Merger Consideration").
(b) The "Additional Merger Consideration" per share of Common Stock shall
be the right to receive, following a Sagavista Disposition in compliance with
Article 6, payment in cash equal to 80% of any Sagavista Net Proceeds divided
by the number of Adjusted Fully Diluted Shares.
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"Sagavista Net Proceeds" shall mean the gross cash proceeds actually
received by Parent, the Company or any of their respective Subsidiaries on or
prior to October 31, 2002 from any Sagavista Disposition minus (i) all Taxes
payable by the Parent, the Company or any of their respective Subsidiaries as a
result of the Sagavista Disposition, (ii) all out-of-pocket expenses, fees and
costs attributable to the Sagavista Disposition incurred by Parent, the Company
or any of its Subsidiaries or any of their Affiliates after the date hereof,
(iii) any determinable liabilities which may have been retained by Parent, the
Company or any of its Subsidiaries or any of their Affiliates related in any
way to the Sagavista Business, (iv) a reserve, determined by Parent in its sole
and absolute discretion, adequate to satisfy (y) the maximum amount of
indemnity liability of the Company in connection with the Sagavista Disposition
and (z) any liability of the Company, any of its Subsidiaries, the Parent or
any Affiliate of the Parent relating in any manner to the Sagavista Disposition
or any action or inaction by the Parent, the Company or any of its Subsidiaries
or any of their Affiliates in connection with the Sagavista Disposition
(provided however that to the extent any portion of any liabilities for which a
reserve was taken has been cancelled, expired or terminated without payment
therefrom under applicable contract terms or otherwise (as determined in
Parent's sole and absolute discretion) prior to October 31, 2002, then such
portion shall be a part of the Additional Merger Consideration and will be paid
as provided in Section 2.02; provided, further that none of the items listed in
this clause (iv) shall be deducted more than once), and (v) all out- of-pocket
expenses and costs attributable to the distribution of the Additional Merger
Consideration incurred by the Parent, the Company or any of its Subsidiaries or
any of their Affiliates. Parent shall have sole and absolute discretion in
determining the direct and indirect expenses and liabilities of the Company,
any of its Subsidiaries, the Parent or any Affiliate relating to the Sagavista
Disposition and in determining the amount of any reserve (including estimating
Taxes described in clause (i) above) to be deducted in determining the
Sagavista Net Proceeds. As used in this definition, liabilities includes,
without limitation, all claims, losses, expenses, judgments and liabilities of
any type whatsoever, whether or not known and reasonable expenses of
investigation and all fees and expenses of advisors; provided, however, that
the Sagavista Net Proceeds shall be $0.00 and the right to receive Additional
Merger Consideration shall automatically terminate in the event that the SEC or
other Governmental Agency requires the registration of the Additional Merger
Consideration pursuant to the 1933 Act or state securities laws or requires one
or more undertakings by any of Parent, the Company, the Subsidiaries or any of
their Affiliates to make periodic filings with the SEC or such Governmental
Agency or other reports to the stockholders of the Company, whether pursuant
the to 1934 Act or state securities laws or otherwise (such registration or
reporting obligations is referred to as "Registration/ Reporting"), with
respect to the Additional Merger Consideration.
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"Adjusted Fully Diluted Shares" shall equal the sum of the number of
shares of Common Stock outstanding immediately prior to the Effective Time plus
the Eligible Options, in each case, including the shares owned by Parent or its
Affiliates or purchased pursuant to the Stockholder Agreement.
(c) In the event the SEC requests Registration/Reporting, Parent and
Company hereby agree to use reasonable efforts for a period of 30 days to
negotiate a mutually acceptable amendment to the terms of the Additional Merger
Consideration to the extent necessary to satisfy the SEC that the Additional
Merger Consideration is not a security as defined in the 1933 Act or the 1934
Act and that Registration/Reporting is not required with respect to the
Additional Merger Consideration provided, however, that Parent shall not be
obligated to take any action or agree to any amendment which would result in
any cost, expense or liability to the Parent, Company or any Affiliate. If
changing the period of time during which stockholders have the right to receive
Additional Merger Consideration to a date earlier than October 31, 2002 would
eliminate the need for Registration/Reporting, Parent and Company agree to
change such date as necessary.
(d) In the event that Parent has approved the terms and conditions of a
Sagavista Disposition and the Sagavista Disposition is consummated in
compliance with Article 6 at or prior to the Effective Time, any Additional
Merger Consideration shall be paid to the stockholders at the same time such
holders receive the Closing Merger Consideration.
(e) In the event a Sagavista Disposition is consummated after the
Effective Time but on or prior to October 31, 2002 in compliance with Article
6, any Additional Merger Consideration will be paid to the stockholders
entitled to receive the Closing Merger Consideration in cash as promptly as
practicable following the consummation of the Sagavista Disposition; provided,
however, that the Surviving Corporation shall not be obligated to pay any
amounts until the earliest of the time (i) that Additional Merger Consideration
to be distributed at that time would equal at least $0.25 per share of Common
Stock, (ii) the Additional Merger Consideration would be the final distribution
under this Section or (iii) within 30 days after October 31, 2002.
SECTION 2.03. Conversion of Shares. At the Effective Time:
(a) except as otherwise provided in Sections 2.03(b) and 2.05, each share
of Common Stock outstanding immediately prior to the Effective Time shall be
converted into the right to receive the Merger Consideration payable as
provided in Section 2.02 and 2.04 herein;
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(b) each share of Common Stock held by the Company as treasury stock
(other than shares in an Employee Plan of the Company) or owned by Parent or
any of its Subsidiaries (including the Note Shares purchased pursuant to the
Stockholder Agreement) immediately prior to the Effective Time shall be
canceled, and no payment shall be made with respect thereto; and
(c) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights, powers
and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
SECTION 2.04. Surrender and Payment. (a) Prior to the Effective Time,
Parent shall appoint an agent (the "Exchange Agent") for the purpose of
exchanging certificates representing shares of Common Stock (the
"Certificates") for the Merger Consideration. At or prior to the Effective
Time, Parent will make available, or cause to be made available, to the
Exchange Agent, the aggregate Closing Merger Consideration (and if Section
2.02(d) is applicable, the aggregate Additional Merger Consideration, if any)
to be paid in respect of the shares of Common Stock. Promptly after the
Effective Time, Parent will send, or will cause the Exchange Agent to send, to
each holder of shares of Common Stock at the Effective Time a letter of
transmittal and instructions (which shall specify that the delivery shall be
effected, and risk of loss and title shall pass, only upon proper delivery of
the Certificates to the Exchange Agent) for use in such exchange.
(b) Each holder of shares of Common Stock that have been converted into
the right to receive the Merger Consideration will be entitled to receive
promptly following the Effective Time, upon surrender to the Exchange Agent of
a Certificate, together with a properly completed letter of transmittal, the
Closing Merger Consideration (and if Section 2.02(d) is applicable, the
Additional Merger Consideration, if any) in respect of the Common Stock
represented by such Certificate. Until so surrendered, each such Certificate
shall represent after the Effective Time for all purposes only the right to
receive the Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a Person
other than the Person in whose name the Certificate is registered, it shall be
a condition to such payment that the Certificate so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
Person requesting such payment shall pay to the Exchange Agent any transfer or
other taxes required as a result of such payment to a Person other than the
registered holder of such Certificate or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable. Additional Merger
Consideration shall only be paid to those Persons who receive the Closing
Merger Consideration.
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(d) After the Effective Time, there shall be no further registration of
transfers of shares of Common Stock. If, after the Effective Time, Certificates
are presented to the Surviving Corporation, they shall be canceled and
exchanged for the Merger Consideration provided for, and in accordance with the
procedures set forth, in this Article.
(e) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.04(a) that remains unclaimed by the holders of
shares of Common Stock six months after the Effective Time shall be returned to
the Surviving Corporation, upon demand, and any such holder who has not
exchanged such shares for the Merger Consideration in accordance with this
Article prior to that time shall thereafter look only to the Surviving
Corporation for payment of the Merger Consideration, in respect of such shares
without any interest thereon. Notwithstanding the foregoing, neither Parent nor
the Surviving Corporation shall be liable to any holder of shares of Common
Stock for any amounts paid to a public official pursuant to applicable
abandoned property, escheat or similar laws. Any amounts remaining unclaimed by
holders of shares of Common Stock three years after the Effective Time (or such
earlier date, immediately prior to such time when the amounts would otherwise
escheat to or become property of any governmental authority) shall become, to
the extent permitted by applicable law, the property of the Surviving
Corporation free and clear of any claims or interest of any Person previously
entitled thereto, other than any such claim or interest which any Person would
otherwise have thereto under applicable law if such amounts had escheated to,
or otherwise become the property of, any governmental authority, provided such
Person establishes such claim or interest as if such claim or interest were to
be established pursuant to applicable law if such amounts had escheated to, or
otherwise become the property of, any governmental authority.
(f) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.04(a) to pay for shares of Common Stock for which
appraisal rights have been perfected pursuant to Section 2.05 hereto shall be
returned to Surviving Corporation, upon demand.
(g) Parent shall enter into an exchange agent agreement with the Exchange
Agent which shall set forth the duties, responsibilities and obligations of the
Exchange Agent consistent with the terms of this Agreement and otherwise
reasonably satisfactory to Parent and the Company.
SECTION 2.05. Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, shares of Common Stock which are issued and
outstanding immediately prior to the Effective Time and which are held by a
holder who has not voted such shares in favor of the Merger, who shall have
10
delivered a written demand for appraisal of such shares in the manner provided
by the Delaware Law and who, as of the Effective Time, shall not have
effectively withdrawn such demand or lost such right to appraisal and payment
therefor under the Delaware Law ("Dissenting Shares") shall not be converted
into a right to receive the Merger Consideration. The holders thereof shall be
entitled only to such rights as are granted by Section 262 of the Delaware Law.
Each holder of Dissenting Shares who becomes entitled to payment for such
shares pursuant to Section 262 of the Delaware Law shall receive payment
therefor from the Surviving Corporation in accordance with the Delaware Law;
provided, however, that (i) if any such holder of Dissenting Shares shall have
failed to establish his or her entitlement to appraisal rights as provided in
Section 262 of the Delaware Law, (ii) if any such holder of Dissenting Shares
shall have effectively withdrawn his or her demand for appraisal of such shares
or lost his or her right to appraisal and payment for his or her shares under
Section 262 of the Delaware Law or (iii) if neither any holder of Dissenting
Shares nor the Surviving Corporation shall have filed a petition demanding a
determination of the value of all Dissenting Shares within the time provided in
Section 262 of the Delaware Law, such holder shall forfeit the right to
appraisal of such shares and each such share shall be treated as if it had
been, as of the Effective Time, converted into a right to receive the Merger
Consideration, without interest thereon, from the Surviving Corporation as
provided in Section 2.02 hereof. The Company shall give Parent notice as
promptly as practicable of any demands received by the Company for appraisal of
shares, and Parent shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not, except with
the prior written consent of Parent, make any payment with respect to, or
settle or offer to settle, any such demands.
SECTION 2.06. Stock Options. (a) At or immediately prior to the Effective
Time, each employee stock option outstanding to purchase shares of Common Stock
under any employee stock option or compensation plan or arrangement of the
Company, whether or not vested or exercisable, shall be canceled, and the
Company shall pay each holder of any such option at or promptly after the
Effective Time for each such option surrendered (including all options which
vest or become exercisable as a result of the Merger) an amount in cash
determined by multiplying (i) the excess, if any, of the Merger Consideration
over the applicable exercise price of such option by (ii) the number of shares
such holder could have purchased had such holder exercised such option in full
immediately prior to the Effective Time. No consideration will be paid for
options which have exercise prices in excess of the Closing Merger
Consideration plus the Additional Merger Consideration, if any.
(b) The number of shares of Common Stock a holder exercising options for
less than the Merger Consideration could have purchased is referred to in this
Agreement as an "Eligible Option". After the Effective Time, if any Additional
12
Merger Consideration is to be paid pursuant to Section 2.02(e) , holders of
options shall also have the right to receive an amount in cash determined by
multiplying (i) the excess, if any, of (x) the Merger Consideration over (y)
the applicable exercise price of such option plus all Additional Merger
Consideration previously paid to such holder by (ii) such holder's Eligible
Options in the same manner and as, when and if paid by the Company pursuant to
Section 2.02(e).
(c) Prior to the Effective Time, the Company shall use its reasonable best
efforts to take any actions that the Company and the Parent mutually agree are
necessary to give effect to the transactions contemplated by Section 2.06(a).
(d) The Company agrees that it will not initiate any new Option Periods
(as defined in the Company's ESPP) under the Company's Employees Stock Purchase
Plan (the "ESPP"), and the ESPP will be terminated immediately prior to the
Effective Time.
SECTION 2.07. Adjustments. If, during the period between the date of this
Agreement and the Effective Time, any change in the outstanding shares of
Common Stock shall occur, including by reason of any reclassification,
recapitalization, stock split or combination, exchange or readjustment of
shares, or any stock dividend thereon with a record date during such period,
the Merger Consideration and any other amounts payable pursuant to this
Agreement shall be appropriately adjusted.
SECTION 2.08. Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration
otherwise payable to any Person pursuant to this Article such amounts as it is
required to deduct and withhold with respect to the making of such payment
under any provision of federal, state, local or foreign tax law. If the
Surviving Corporation or Parent, as the case may be, so withholds amounts, such
amounts shall be timely remitted to the applicable Taxing Authority and shall
be treated for all purposes of this Agreement as having been paid to the holder
of the shares of Common Stock in respect of which the Surviving Corporation or
Parent, as the case may be, made such deduction and withholding.
SECTION 2.09. Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue, in exchange for such lost, stolen or destroyed
Certificate, the Merger Consideration to be paid in respect of the shares of
Common Stock represented by such Certificate, as contemplated by this Article.
13
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.01. Certificate of Incorporation. The certificate of
incorporation of the Company in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law. The Company agrees it will use its best efforts
to take all necessary action to cause an amendment to its certificate of
incorporation to be filed immediately prior to the Merger with the Secretary of
State of the State of Delaware, which amendment will be in form and substance
satisfactory to Parent.
SECTION 3.02. Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended
in accordance with applicable law. The Company agrees it will use its best
efforts to take all necessary action to cause its bylaws to be amended
immediately prior to the Merger, which amended bylaws will be in form and
substance satisfactory to Parent.
SECTION 3.03. Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of Merger Subsidiary at the Effective Time
shall be the directors of the Surviving Corporation and (ii) the officers of
the Company at the Effective Time shall be the officers of the Surviving
Corporation.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Company's disclosure schedules attached hereto
(the "Company Disclosure Schedule") (provided however that the disclosure of
any item in one section of the Company Disclosure Schedule will not be deemed
to be disclosure of such item for the purposes of any other section of the
Company Disclosure Schedule), the Company represents and warrants to Parent and
the Merger Subsidiary that:
SECTION 4.01. Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not have, individually or in
the aggregate, a Material Adverse Effect on the Company. The Company is duly
14
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not have, individually or
in the aggregate, a Material Adverse Effect on the Company. The Company has
made available to Parent true and complete copies of the certificate of
incorporation and bylaws of the Company as currently in effect.
SECTION 4.02. Corporate Authorization. (a) The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby are within the Company's
corporate powers and, except, in the case of this Agreement, for the required
approval of the Company's stockholders in connection with the consummation of
the Merger, have been duly authorized by all necessary corporate action on the
part of the Company. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock is the only vote of the holders of any of
the Company's capital stock necessary in connection with the consummation of
the Merger. Assuming that this Agreement constitutes the valid and binding
obligation of the Parent and Merger Subsidiary, this Agreement is a valid and
binding agreement of the Company.
(b) At a meeting duly called and held, the Company's Board of Directors
has (i) unanimously resolved that this Agreement and the transactions
contemplated hereby are advisable, fair and in the best interests of the
Company's stockholders and (ii) unanimously approved and adopted this Agreement
and the transactions contemplated hereby and thereby and (iii) unanimously
resolved (subject to Section 6.03(b)) to recommend approval and adoption of
this Agreement by its stockholders.
SECTION 4.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby require no action by or in
respect of, or filing with, any governmental body, agency, official or
authority, domestic, foreign or supranational (the "Governmental Agency"),
other than (i) the filing of a Certificate of Merger with respect to the Merger
with the Delaware Secretary of State and appropriate documents with the
relevant authorities of other states in which Company is qualified to do
business, (ii) compliance with any applicable requirements of the HSR Act,
(iii) compliance with any applicable requirements of the 1934 Act, and any
other applicable securities laws, whether state or foreign, (iv) compliance
with any applicable requirements of the Exon- Xxxxxx Amendment (Section 721 of
Title VII of the Defense Production Act of 1950, as amended by section 5021 of
the Omnibus Trade and Competitiveness Act of 1988 (Pub. L. 100-418))
("Exon-Xxxxxx") and (v) such other actions, consents, approvals, orders,
authorizations, registrations, declarations and filings with any Governmental
Agency the absence of which would not be reasonably
15
expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company or materially to impair the ability of the Company to consummate
the transactions contemplated by this Agreement.
SECTION 4.04. Non-contravention. The execution, delivery and performance
by the Company of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) subject to the adoption of this
Agreement by the required vote of the stockholders of the Company, contravene,
conflict with, or result in any violation or breach of any provision of the
certificate of incorporation or bylaws of the Company, (ii) assuming compliance
with the matters referred to in Section 4.03, contravene, conflict with or
result in a violation or breach of any provision of any applicable law,
statute, ordinance, rule, regulation, judgment, injunction, order, or decree
binding upon or applicable to the Company, (iii) require any consent or other
action by any Person under, constitute a default, or an event that, with or
without notice or lapse of time or both, would constitute a default, under, or
cause or permit the termination, cancellation, acceleration or other change of
any right or obligation or the loss of any benefit to which the Company or any
of its Subsidiaries is entitled under any provision of any agreement or other
instrument binding upon the Company or any of its Subsidiaries or any license,
franchise, permit, certificate, approval or other similar authorization
affecting, or relating in any way to, the assets or business of the Company and
its Subsidiaries or (iv) result in the creation or imposition of any Lien on
any asset of the Company or any of its Subsidiaries, except for such
contraventions, conflicts and violations referred to in clause (ii) and for
such failures to obtain any such consent or other action, defaults,
terminations, cancellations, accelerations, changes, losses or Liens referred
to in clauses (iii) and (iv) that would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company or
to impair materially the ability of the Company to consummate the actions
contemplated by this Agreement.
SECTION 4.05. Capitalization. (a) The authorized capital stock of the
Company consists of 75,000,000 shares of common stock, $0.01 par value, per
share and 25,000,000 shares of preferred stock, $0.01 par value, per share. As
of October 31, 2000, there were 29,372,142 shares of Common Stock outstanding,
as well as employee stock options to purchase an aggregate of 4,317,283 shares
of Common Stock. All outstanding shares of capital stock of the Company have
been, and all shares that may be issued pursuant to the Saga Systems, Inc. 1997
Stock Option Plan and Employee Stock Purchase Plan Effective as of June 1, 1998
will be, when issued in accordance with the respective terms thereof, duly
authorized and validly issued and are fully paid and nonassessable.
(b) Except as disclosed in Section 4.05 (a) and except for changes since
October 31, 2000 resulting from the exercise of employee stock options
16
outstanding on such date, there are no outstanding (i) shares of capital stock
or voting securities of the Company, (ii) securities of the Company convertible
into or exchangeable for shares of capital stock or voting securities of the
Company or (iii) options or other rights to acquire from the Company, or other
obligation of the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company (the items in clauses (i), (ii) and (iii) being
referred to collectively as the "Company Securities"). There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any of the Company Securities.
SECTION 4.06. Subsidiaries. (a) Each Subsidiary of the Company is a
corporation duly incorporated or an entity duly organized, and is, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted, except for those licenses, authorizations,
permits, consents and approvals the absence of which would not have,
individually and in the aggregate, a Material Adverse Effect on the Company.
Each such Subsidiary is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where such qualification is
necessary, except for those jurisdictions where failure to be so qualified
would not have, individually or in the aggregate, a Material Adverse Effect on
the Company. All Subsidiaries of the Company and their respective jurisdictions
of incorporation are identified in the Company 10-K.
(b) All of the outstanding capital stock of, or other voting securities or
ownership interests in, each Subsidiary of the Company, is owned by the
Company, directly or indirectly, free and clear of any Lien and free of any
other limitation or restriction (including any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other voting
securities or ownership interests). Except for such shares of capital stock
there are no outstanding (i) securities of the Company or any of its
Subsidiaries convertible into or exchangeable for shares of capital stock or
other voting securities or ownership interests in any Subsidiary of the Company
or (ii) options or other rights to acquire from the Company or any of its
Subsidiaries, or other obligation of the Company or any of its Subsidiaries to
issue, any capital stock or other voting securities or ownership interests in,
or any securities convertible into or exchangeable for any capital stock or
other voting securities or ownership interests in, any Subsidiary of the
Company (the items in clauses (i) and (ii) being referred to collectively as
the "Company Subsidiary Securities"). There are no outstanding obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any of the Company Subsidiary Securities.
17
SECTION 4.07. SEC Filings. (a) The Company has made available to Parent
(i) the Company's annual reports on Form 10-K for its fiscal years ended
December 31, 1997, 1998 and 1999, (ii) its quarterly reports on Form 10-Q for
its fiscal quarters ended March 31, 2000 and June 30, 2000, (iii) its proxy or
information statements relating to meetings of, or actions taken without a
meeting by, the stockholders of the Company held since December 31, 1999, and
(iv) all of its other reports, statements, schedules and registration
statements filed with the SEC since December 31, 1999 (the documents referred
to in this Section 4.07(a), collectively, the "Company SEC Documents").
(b) As of its filing date, each Company SEC Document complied as to form
in all material respects with the applicable requirements of the 1933 Act and
the 1934 Act, as the case may be.
(c) As of its filing date (or, if amended or superceded by a filing prior
to the date hereof, on the date of such filing), each Company SEC Document
filed pursuant to the 1934 Act did not, and each such Company SEC Document
(except the Company Proxy Statement which shall be governed by Section 4.09)
filed subsequent to the date hereof will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading.
(d) Each Company SEC Document that is a registration statement, as amended
or supplemented, if applicable, filed pursuant to the 1933 Act, as of the date
such registration statement or amendment became effective, did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading.
SECTION 4.08. Financial Statements. (a) The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in the Company SEC Documents fairly present in all material
respects, in conformity with U.S. generally accepted accounting principles
("U.S. GAAP") applied on a consistent basis (except as may be indicated in the
notes thereto), the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and their consolidated
results of operations and cash flows for the periods then ended (subject to
normal year-end adjustments in the case of any unaudited interim financial
statements).
(b) The unaudited consolidated balance sheet of the Company as of
September 30, 2000 which has been previously provided to Parent will be
identical to the balance sheet contained in the Company's Form 10-Q for the
three months period ending September 30, 2000 when filed with the SEC.
18
SECTION 4.09. Disclosure Documents. The proxy or information statement of
the Company to be filed with the SEC in connection with the Merger (the
"Company Proxy Statement") and any amendments or supplements thereto will, when
filed, comply as to form in all material respects with the applicable
requirements of the 1934 Act. At the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to stockholders of the Company,
and at the time such stockholders vote on adoption of this Agreement and at the
Effective Time, the Company Proxy Statement, as supplemented or amended, if
applicable, will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
The representations and warranties contained in this Section 4.09 will not
apply to statements or omissions included in the Company Proxy Statement based
upon information furnished to the Company in writing by Parent or Merger
Subsidiary specifically for use therein.
SECTION 4.10. Absence of Certain Changes. Since the Company Balance Sheet
Date, the business of the Company and its Subsidiaries has been conducted in
the ordinary course consistent with past practices and, except as disclosed in
the Company SEC Documents, there has not been:
(a) any event, occurrence, development or state of circumstances or facts
that has had or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company or any of its
Subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, the Company or any of its Subsidiaries;
(c) any amendment of any material term of any outstanding security of the
Company or any of its Subsidiaries;
(d) any incurrence, assumption or guarantee by the Company or any of its
Subsidiaries of any material indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent with past
practices;
(e) any creation or other incurrence by the Company or any of its
Subsidiaries of any material Lien on any material asset other than in the
ordinary course of business consistent with past practices;
19
(f) any making of any material loan, advance or capital contributions to
or investment in any Person other than loans, advances or capital contributions
to or investments in its wholly-owned Subsidiaries (or otherwise in immaterial
amounts in the aggregate) or in the ordinary course of business consistent with
past practices;
(g) any damage, destruction or other casualty loss (whether or not covered
by insurance) affecting the business or assets of the Company or any of its
Subsidiaries that has had or would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any of its Subsidiaries relating to its assets
or business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any of its Subsidiaries of any contract or
other right, in either case, material to the Company and its Subsidiaries,
taken as a whole, other than transactions and commitments in the ordinary
course of business consistent with past practices and those contemplated by
this Agreement;
(i) any change in any method of accounting, method of Tax accounting or
accounting principles or methods or practice (other than required by U.S. GAAP)
by the Company or any of its Subsidiaries, except for any such change required
by reason of a concurrent change in U.S. GAAP or Regulation S-X under the 1934
Act;
(j) other than as permitted by Section 6.07 and for actions in the
ordinary course of business consistent with past practices, any (i) grant of
any severance or termination pay to (or amendment to any existing arrangement
with) any director, officer or employee of the Company or any of its
Subsidiaries, (ii) increase in benefits payable under any existing severance or
termination pay policies or employment agreements, (iii) entering into any
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any director, officer or employee of the
Company or any of its Subsidiaries, (iv) establishment, adoption or amendment
(except as required by applicable law) of any collective bargaining, bonus,
profit-sharing, thrift, pension, retirement, deferred compensation,
compensation, stock option, restricted stock or other benefit plan or
arrangement covering any director, officer or employee of the Company or any of
its Subsidiaries or (v) increase in compensation, bonus or other benefits
payable to any director, officer or employee of the Company or any of its
Subsidiaries;
(k) to the Knowledge of the Company, any activity or proceeding by a labor
union or representative thereof to organize any employees of the Company or any
of its Subsidiaries, which employees were not subject to a collective
20
bargaining agreement at the Company Balance Sheet Date, or any lockouts,
strikes, slowdowns, work stoppages or threats thereof by or with respect to
such employees; or
(l) other than in the ordinary course of business consistent with past
practice, any Tax election made or changed, any annual Tax accounting period
changed, any method of Tax accounting adopted or changed, any amended Returns
or claims for Tax refunds filed, any closing agreement entered into, any Tax
claim, audit or assessment settled, or any right to claim a Tax refund, offset
or other reduction in Tax liability surrendered.
SECTION 4.11. No Undisclosed Material Liabilities. There are no
liabilities or obligations of the Company or any of its Subsidiaries of any
kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, other than:
(a) liabilities or obligations disclosed and provided for in the Company
Balance Sheet or in the notes thereto or in the Company SEC Documents filed
prior to the date hereof;
(b) liabilities or obligations under this Agreement or the transactions
contemplated hereby;
(c) liabilities or obligations under contracts or Employee Plans listed on
the Company Disclosure Schedule; and
(d) liabilities or obligations that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
SECTION 4.12. Material Contracts. (a) Except as disclosed in Schedule
4.12, neither the Company nor any of its Subsidiaries is a party to or bound by
a contract in effect on the date hereof:
(i) any enterprise license agreement providing for aggregate payments
to or by the Company and the Subsidiaries of $500,000 or more;
(ii) any license agreement, maintenance agreement, technical services
agreement or professional services agreement providing for aggregate
payments to or by the Company and the Subsidiaries of $500,000 or more;
(iii) any sales, distribution or other similar agreement providing
for the sale by the Company or any of its Subsidiaries of materials,
supplies, goods, services, equipment or other assets that provides for
either
21
(A) annual payments to the Company and the Subsidiaries of $500,000
or more or (B) aggregate payments to the Company and the Subsidiaries
of $500,000 or more;
(iv) any OEM agreement or any similar agreement providing for
aggregate payments to or by the Company and the Subsidiaries of $500,000
or more;
(v) any escrow agreement pursuant to which Company or any of its
Subsidiaries has deposited any source code;
(vi) any lease (whether of real or personal property) providing for
annual rentals of $500,000 or more;
(vii) any agreement for the purchase of materials, supplies, goods,
services, equipment or other assets providing for either (A) annual
payments by the Company and the Subsidiaries of $500,000 or more or (B)
aggregate payments by the Company and the Subsidiaries of $500,000 or
more;
(viii) any agreement relating to the acquisition or disposition of
any material business (whether by merger, sale of stock, sale of assets or
otherwise) under which the Company or any of its Subsidiaries have
obligations or liabilities on or after the date hereof;
(ix) any agreement relating to indebtedness for borrowed money or the
deferred purchase price of property (in either case, whether incurred,
assumed, guaranteed or secured by any asset), except any such agreement
(A) with an aggregate outstanding principal amount not exceeding $500,000
and which may be prepaid on not more than 30 days notice without the
payment of any penalty and (B) entered into subsequent to the date of this
Agreement as permitted by Section 6.01(a)(iii);
(x) any agreement that restricts the Company or any of its
Subsidiaries from competing in any line of business or with any Person or
in any area or which would so restrict the Parent, Company or any of their
Subsidiaries after the Effective Time;
(xi) except as set forth in the Company 10-K, any agreement with (A)
the Company or any of its Affiliates, (B) any Person directly or
indirectly owning, controlling or holding with power to vote, 5% or more
of the outstanding voting securities of the Company or any of its
Affiliates, (C) any Person 5% or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held with power
to vote by the
22
Company or any of its Affiliates or (D) any director or officer of the
Company or any of its Affiliates or any "associates" or members of the
"immediate family" (as such terms are respectively defined in Rule 12b-2
and Rule 16a-1 of the 0000 Xxx) of any such director or officer; provided
however, no agreements between the Company and the Parent or its
Affiliates need not be disclosed hereunder;
(xii) except as set forth in the Company 10-K, any agreement with any
director or officer of the Company or any of its Subsidiaries or with any
"associate" or any member of the "immediate family" (as such terms are
respectively defined in Rules 12b-2 and 16a-1 of the 0000 Xxx) of any such
director or officer provided however, agreements between the Company and
the Parent or its Affiliates need not be disclosed hereunder;
(xiii) any other agreement, commitment, arrangement or plan not made
in the ordinary course of business that is material to the Company and the
Subsidiaries, taken as a whole.
(b) Each material term of each agreement, contract, plan, lease,
arrangement or commitment disclosed in any Schedule to this Agreement or
required to be disclosed pursuant to this Section is a valid and binding
agreement of the Company or a Subsidiary, as the case may be, and is in full
force and effect, and none of the Company, any of its Subsidiaries or, to the
Knowledge of the Company, any other party thereto is in default or breach in
any material respect under the terms of any such agreement, contract, plan,
lease, arrangement or commitment, and, to the Knowledge of the Company, no
event or circumstance has occurred that, with notice or lapse of time or both,
would constitute any event of default thereunder. True and complete copies of
each such agreement, contract, plan, lease, arrangement or commitment have been
delivered to Parent.
SECTION 4.13. Compliance with Laws and Court Orders. The Company and each
of its Subsidiaries is and since March 31, 1997 has been in compliance with,
and to the Knowledge of the Company is not under investigation with respect to
and has not been threatened to be charged with or given notice of any violation
of, any applicable law, statute, ordinance, rule, regulation, judgment,
injunction, order or decree, except for failures to comply or violations that
have not had and would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company.
SECTION 4.14. Litigation. Except as set forth in the Company SEC Documents
filed prior to the date hereof, there is no action, suit, investigation or
proceeding pending against, or, to the Knowledge of the Company, threatened
against or affecting (or the Knowledge of the Company , any basis therefor),
the Company, any of its Subsidiaries, any present or former officer, director
or
23
employee of the Company or any of its Subsidiaries or any Person for whom the
Company or any of its Subsidiaries may be liable or any of their respective
properties before any court or arbitrator or before or by any governmental
body, agency or official, domestic, foreign or supranational, that, if
determined or resolved adversely in accordance with the plaintiff's demands,
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company. On the date hereof, there is not any
action, suit, investigation or proceeding that in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the Merger or any of the
other transactions contemplated hereby or the Transaction Agreements.
SECTION 4.15. Finders' Fees. Except for Updata Capital, Inc. ("Updata"), a
copy of whose engagement agreement has been provided to Parent, there is no
investment banker, broker, finder or other intermediary that has been retained
by or is authorized to act on behalf of the Company or any of its Subsidiaries
who might be entitled to any fee or commission from the Company or any of its
Affiliates in connection with the transactions contemplated by this Agreement.
SECTION 4.16. Opinion of Financial Advisor. The Company has received the
opinion of Updata, financial advisor to the Company, to the effect that, as of
the date of this Agreement, the Merger Consideration is fair to the Company's
stockholders from a financial point of view.
SECTION 4.17. Taxes. (a) Filing and Payment. Except as set forth on
Schedule 4.17(a), (i) all material Tax returns, statements, reports and forms
(including estimated tax or information returns and reports) required to be
filed with any Taxing Authority with respect to any Pre-Effective Tax Period by
or on behalf of the Company or any of its Subsidiaries (collectively, the
"Returns") have, to the extent required to be filed on or before the date
hereof, been filed when due in accordance with all applicable laws, (ii) as of
the time of filing, the Returns were true and complete in all material respects
and (iii) all Taxes due and payable with respect to the periods covered by the
Returns that have been filed, and all material Taxes due to other Persons (for
example, under Tax allocation or indemnity agreements), have been timely paid,
or withheld and remitted to the appropriate Taxing Authority or such Person,
respectively.
(b) Financial Records. Except as set forth on Schedule 4.17(b), (i) the
charges, accruals and reserves for Taxes with respect to the Company and each
of its Subsidiaries for any Pre-Effective Tax Period reflected on the books of
the Company and its Subsidiaries (excluding any provision for deferred income
taxes reflecting either differences between the treatment of items for
accounting and income tax purposes or carryforwards) are adequate to cover all
material Tax liabilities accruing through the end of the last period for which
the Company and
24
its Subsidiaries ordinarily record items on their respective books, (ii) since
the end of the last period for which the Company and its Subsidiaries
ordinarily record items on their respective books, neither the Company nor any
of its Subsidiaries has engaged in any transaction, or taken any other action,
other than in the ordinary course of business, which would reasonably be
expected to result in a material Tax on the Company or any of its Subsidiaries
and (iii) all information set forth in the Company Balance Sheet (including
notes thereto) relating to Tax matters is true and complete in all material
respects.
(c) Procedure and Compliance. Except as set forth on Schedule 4.17(c), (i)
all Returns filed with respect to Tax years of the Company and its Subsidiaries
through the Tax year ended December 31, 1990 have been examined and closed or
are Returns with respect to which the applicable period for assessment under
applicable law, after giving effect to extensions or waivers, has expired, (ii)
neither the Company nor any of its Subsidiaries is delinquent in the payment of
any material Tax or has requested any extension of time within which to file
any Return and has not yet filed such Return, (iii) neither the Company nor any
of its Subsidiaries has granted any extension or waiver of the statute of
limitations period applicable to any Return, which period (after giving effect
to such extension or waiver) has not yet expired, (iv) there is no claim,
audit, action, suit, proceeding, or investigation now pending or, to the
Knowledge of the Company, threatened against or with respect to the Company or
any of its Subsidiaries in respect of any Tax or Tax Asset, (v) there are no
requests for rulings or determinations in respect of any Tax or Tax Asset
pending between the Company or any of its Subsidiaries and any Taxing
Authority, (vi) during the five-year period ending on the date hereof, neither
the Company nor any of its Subsidiaries has made or changed any Tax election,
changed any annual tax accounting period, or adopted or changed any method of
Tax accounting (to the extent that any such action may materially affect the
Company or any of its Subsidiaries), nor has it, to the extent it may have a
material effect on the Company or any of its Subsidiaries, filed any amended
Return, entered into any closing agreement, settled any Tax claim or
assessment, or surrendered any right to claim a Tax refund, and (vii) there are
no Liens for Taxes upon the assets of the Company or any of its Subsidiaries
except Liens for current Taxes not yet due.
(d) Taxing Jurisdictions. Schedule 4.17(d) contains a list of all
jurisdictions (whether foreign or domestic) to which the Company or any of its
Subsidiaries currently files any material Returns. Neither the Company nor any
of its Subsidiaries has been notified in writing by any Taxing Authority of a
jurisdiction in which it does not file Returns that it may be subject to Tax in
such jurisdiction.
(e) Certain Agreements and Arrangements. Except as set forth on Schedule
4.17(e), (i) neither the Company nor any of its Subsidiaries has been a
25
member of an affiliated, consolidated, combined or unitary group other than one
of which the Company was the common parent, or made any election or
participated in any arrangement whereby any Tax liability or any Tax Asset of
the Company or any of its Subsidiaries was determined or taken into account for
Tax purposes with reference to or in conjunction with any Tax liability or any
Tax Asset of any other Person, (ii) the Company is not a party to, or bound by,
any Tax sharing or Tax allocation agreement or arrangement, (iii) during the
five-year period ending on the date hereof, neither the Company nor any of its
Subsidiaries was a distributing corporation or a controlled corporation in a
transaction intended to be governed by Section 355 of the Code, and (iv) to the
Knowledge of the Company, neither the Company nor any of its Subsidiaries owns
an interest in real property in any jurisdiction in which a Tax is imposed, or
the value of the interest is reassessed, on the transfer of an interest in real
property and which treats the transfer of an interest in an entity that owns an
interest in real property as a transfer of the interest in real property.
(f) Definitions. The following terms, as used herein, have the following
meanings:
"Pre-Effective Tax Period" means any Tax period ending on or before the
Effective Time; and, with respect to a Tax period that begins on or before the
Effective Time and ends thereafter, the portion of such Tax period ending on
the Effective Time.
"Tax" means (i) any tax, governmental fee or other like assessment or
charge of any kind whatsoever (including, but not limited to, withholding on
amounts paid to or by any Person), together with any interest, penalty,
addition to tax or additional amount imposed by any governmental authority (a
"Taxing Authority") responsible for the imposition of any such tax (domestic or
foreign), (ii) in the case of the Company or any of its Subsidiaries, liability
for the payment of any amount of the type described in clause (i) as a result
of being or having been before the Effective Time a member of an affiliated,
consolidated, combined or unitary group, or a party to any agreement or
arrangement, as a result of which liability of the Company or any of its
Subsidiaries to a Taxing Authority is determined or taken into account with
reference to the liability of any other Person, and (iii) liability of the
Company or any of its Subsidiaries for the payment of any amount as a result of
being party to any Tax sharing agreement or with respect to the payment of any
amount of the type described in (i) or (ii) as a result of any existing express
or implied agreement or arrangement (including, but not limited to, an
indemnification agreement or arrangement).
"Tax Asset" means any net operating loss, net capital loss, investment tax
credit, foreign tax credit, charitable deduction or any other credit or tax
attribute
26
that could be carried forward or back to reduce Taxes (including without
limitation deductions and credits related to alternative minimum Taxes).
SECTION 4.18. Employee Benefit Plans. (a) Schedule 4.18 contains a correct
and complete list identifying each material "employee benefit plan", as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA"), each employment, severance or similar contract, plan, arrangement or
policy and each other material plan or arrangement (written or oral) providing
for compensation, bonuses, profit-sharing, stock option or other stock related
rights or other forms of incentive or deferred compensation, vacation benefits,
insurance (including any self-insured arrangements), health or medical
benefits, employee assistance program, disability or sick leave benefits,
workers' compensation, supplemental unemployment benefits, severance benefits
and post-employment or retirement benefits (including compensation, pension,
health, medical or life insurance benefits) which is maintained, administered
or contributed to by the Company or any ERISA Affiliate and covers any employee
or former employee of the Company or any of its Subsidiaries, or with respect
to which the Company or any of its Subsidiaries has any liability. Copies of
such plans (and, if applicable, related trust or funding agreements or
insurance policies) and all amendments thereto and material written
interpretations thereof have been furnished to Parent together with the most
recent annual report (Form 5500 including, if applicable, Schedule B thereto)
and tax return (Form 990) prepared in connection with any such plan or trust.
Such plans are referred to collectively herein as the "Employee Plans". For
purposes of this Section 4.18, "ERISA Affiliate" of any Person means any other
Person which, together with such Person, would be treated as a single employer
under Section 414 of the Code.
(b) Neither the Company nor any ERISA Affiliate nor any predecessor
thereof sponsors, maintains or contributes to, or has in the last six years
sponsored, maintained or contributed to, any Employee Plan subject to Title IV
of ERISA.
(c) A favorable determination letter is currently in effect for each
Employee Plan which is intended to be qualified under Section 401(a) of the
Code, and to the Knowledge of the Company no fact or circumstance exists giving
rise to a material likelihood that such Employee Plan would not be treated as
qualified by the Internal Revenue Service.
(d) The consummation of the transactions contemplated by this Agreement
will not (either alone or together with any other event) entitle any employee
or independent contractor of the Company or any of its Subsidiaries to
severance pay or accelerate the time of payment or vesting or trigger any
payment of funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or trigger any other material
obligation
27
pursuant to, any Employee Plan. There is no contract, agreement, plan or
arrangement covering any employee or former employee of the Company or any of
its Subsidiaries that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to the terms of
Sections 162(m) or 280G of the Code.
(e) Neither the Company nor any of its Subsidiaries has any liability in
respect of post-retirement health, medical or life insurance benefits for
retired, former or current employees of the Company or its Subsidiaries except
as required to avoid excise tax under Section 4980B of the Code.
(f) There has been no amendment to, written interpretation or announcement
(whether or not written) by the Company or any of its Subsidiaries relating to,
or change in employee participation or coverage under, an Employee Plan which
would increase materially the expense of maintaining such Employee Plan above
the level of the expense incurred in respect thereof for the fiscal year ended
December 31, 1999.
(g) Neither the Company nor any of its Subsidiaries is a party to or
subject to, or is currently negotiating in connection with entering into, any
collective bargaining agreement or other contract or understanding with a labor
union or organization.
(h) All material contributions and material payments accrued under each
Employee Plan, determined in accordance with prior funding and accrual
practices, as adjusted to include proportional accruals for the period ending
as of the date hereof, have been discharged and paid on or prior to the date
hereof except to the extent reflected as a liability on the Company Balance
Sheet.
(i) There is no action, suit or proceeding pending against or involving
or, to the knowledge of the Company, threatened against or involving, any
Employee Plan before any court or arbitrator or any state, federal or local
governmental body, agency or official.
(j) Other than pursuant to Section 6.07, no employee or former employee of
the Company or any of its Subsidiaries will become entitled to any bonus,
retirement, severance, job security or similar benefit or enhanced such benefit
(including acceleration of vesting or exercise of an incentive award) as a
result of the transactions contemplated hereby.
SECTION 4.19. Environmental Matters. (a) Except as set forth in the
Company SEC Documents filed prior to the date hereof and except as would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company:
28
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed,
no penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review (or any basis therefor) is pending or, to the
Knowledge of the Company, is threatened by any governmental entity or
other Person with respect to any matters relating to the Company or any of
its Subsidiaries relating to or arising out of any Environmental Law;
(ii) the Company is and has been in compliance with all Environmental
Laws and all Environmental Permits; and
(iii) there are no liabilities of or relating to the Company or any
of its Subsidiaries of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise arising under or relating
to any Environmental Law and there are no facts, conditions, situations or
set of circumstances that could reasonably be expected to result in or be
the basis for any such liability.
(b) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which the Company has Knowledge in
relation to the current or prior business of the Company or any of its
Subsidiaries or any property or facility now or previously owned or leased by
the Company or any of its Subsidiaries that has not been delivered to Parent at
least five days prior to the date hereof.
(c) Neither the Company nor any of its Subsidiaries owns, leases or
operates or has owned, leased or operated any real property, or conducts or has
conducted any operations, in New Jersey or Connecticut other than the sales
office in Fort Xxx, New Jersey.
(d) For purposes of this Section 4.19, the terms "Company" and
"Subsidiaries" shall include any entity that is, in whole or in part, a
predecessor of the Company or any of its Subsidiaries.
SECTION 4.20. Antitakeover Statutes and Rights Agreement. (a) The Company
has taken all action necessary to be taken by it to exempt the Merger, this
Agreement, the Stockholder Agreement and the transactions contemplated hereby
and thereby from Section 203 of Delaware Law, and, accordingly, neither such
Section nor, to the Knowledge of the Company after due inquiry of its outside
legal counsel any other antitakeover or similar statute or regulation applies
or purports to apply to any such transactions. To the Knowledge of the Company,
after due inquiry of its outside legal counsel, no other "control share
acquisition," "fair price," "moratorium" or other antitakeover laws or
regulations enacted under
29
U.S. state or federal laws apply to this Agreement and the Stockholder Agreement
or any of the transactions contemplated hereby and thereby.
(b) The Company has not entered into, and its Board of Directors has not
adopted or authorized the adoption of, a shareholder rights or similar
agreement.
SECTION 4.21. Licenses and Permits. The Company and its Subsidiaries have
all material governmental licenses, franchises, permits, certificates,
approvals or other similar authorizations affecting, or relating in any way to,
the assets or business of the Company and its Subsidiaries (the "Permits") the
absence of which, either individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the Company. Except when the
failure of the following to be true would not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect on the
Company, (i) the Permits are valid and in full force and effect, (ii) neither
the Company nor any of its Subsidiaries is in default under, and no condition
exists that with notice or lapse of time or both would constitute a default
under, the Permits and (iii) none of the Permits will be terminated or impaired
or become terminable, in whole or in part, as a result of the transactions
contemplated hereby.
SECTION 4.22. Intellectual Property.
(a) Schedule 4.22(a) contains a list of all material patents and patent
applications, trademarks, service marks, trade names, registered copyrights,
and domain names owned by or licensed to the Company or its Subsidiaries (the
"Intellectual Property Rights") and all applications for registration of
material trademarks, service marks, copyrights, and domain names, specifying as
to each such item, as applicable: (i) the owner of the item, (ii) the
jurisdictions by or in which such item has been issued or registered or in
which any application for issuance or registration has been filed, and (iii)
the respective issuance, registration, or application number of the item.
(b) The Company and its Subsidiaries have used reasonable best efforts to
ensure that the Software does not contain any virus, Trojan horse, worm, or
other disabling code.
"Software" means any computer software, including, but not limited to,
computer programs, parts thereof, documentation therefor and related materials,
that is made commercially available to third parties by the Company or any of
its Subsidiaries, including software distributed or offered for distribution by
the Company or any of its Subsidiaries, or which the Company or any of its
Subsidiaries has the right to distribute, but excluding (i) computer software
licensed to the Company by Parent or any of its Affiliates and (ii) "Shrink
Wrap"
30
software that is generally available on an off-the-shelf basis. The Software is
listed on Schedule 4.22(b).
(c) To the Knowledge of the Company, the business operations of the
Company and its Subsidiaries, including the licensing and distribution of
Software to third parties, have not infringed, diluted, or otherwise violated
the patents, trademarks, service marks, trade names, copyrights, trade secrets,
or other intellectual property rights of any third party, in any manner that
would be reasonably expected to have a Material Adverse Effect on the Company.
(d) Whenever the value to the Company or its Subsidiaries of processes and
formulae, research and development results, and other know-how (collectively,
the "Information") is contingent upon the maintenance of the confidentiality of
such Information, to the Knowledge of the Company, the Company and its
Subsidiaries have used reasonable best efforts to maintain the confidentiality
of such Information.
SECTION 4.23. Sagavista Business and Other Matters. The "Sagavista
Business" consists of the assets used exclusively in and all liabilities
relating to the Company's Sagavista product. Schedule 4.23 lists all employees,
agreements, customer contracts and real and personal property, including
Intellectual Property Rights, used exclusively in the Sagavista Business.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that:
SECTION 5.01. Corporate Existence and Power. Parent is a stock corporation
(Aktiengesellschaft) duly registered with the Commercial Register in Darmstadt,
Germany, and is validly existing under the laws of Germany. It has all
requisite power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby. Merger Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not have, individually or in
the aggregate, a material adverse effect on Parent.
SECTION 5.02. Corporate Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
31
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby are within the powers of Parent and Merger Subsidiary and have been duly
authorized by all necessary corporate action. Assuming this Agreement
constitutes the valid and binding obligation of the Company, this Agreement
constitutes a valid and binding agreement of each of Parent and Merger
Subsidiary.
SECTION 5.03. Governmental Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby require no action by or in respect of, or filing with, any Governmental
Agency other than (i) the filing of a Certificate of Merger with respect to the
Merger with the Delaware Secretary of State and appropriate documents with the
relevant authorities of other states in which Parent is qualified to do
business, (ii) compliance with any applicable requirements of the HSR Act,
(iii) compliance with any applicable requirements of the 1934 Act and any other
securities laws, whether state or foreign, (iv) compliance with any applicable
requirements of Exon-Xxxxxx and (v) such other actions, consents, approvals,
orders, authorizations, registrations, declarations and filings with any
Governmental Agency the absence of which would not be reasonably expected to
have, individually or in the aggregate, a material adverse effect on Parent or
materially to impair the ability of Parent and Merger Subsidiary to consummate
the transactions contemplated by this Agreement.
SECTION 5.04. Non-contravention. The execution, delivery and performance
by Parent and Merger Subsidiary of this Agreement and the consummation by
Parent and Merger Subsidiary of the transactions contemplated hereby do not and
will not (i) contravene, conflict with, or result in any violation or breach of
any provision of the organizational documents of Parent or Merger Subsidiary,
(ii) assuming compliance with the matters referred to in Section 5.03,
contravene, conflict with, or result in any violation or breach of any
provision of any law, rule, regulation, judgment, injunction, order or decree
binding upon or applicable to Parent or Merger Subsidiary or (iii) require any
consent or other action by any Person under, constitute a default under, or
cause or permit the termination, cancellation, acceleration or other change of
any right or obligation or the loss of any benefit to which Parent or Merger
Subsidiary is entitled under any provision of any agreement or other instrument
binding upon Parent or Merger Subsidiary, except for such contraventions,
conflicts and violations referred to in clause (ii) and for such failures to
obtain consent or other action, defaults, terminations, cancellations,
accelerations, changes or losses referred to in clause (iii) that would not be
reasonably expected to have, individually or in the aggregate, a material
adverse effect on Parent or materially to impair the ability of Parent and
Merger Subsidiary to consummate the transactions contemplated by this
Agreement.
32
SECTION 5.05. Disclosure Documents. None of the information provided by
Parent for inclusion in the Company Proxy Statement or any amendment or
supplement thereto, at the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company and at the
time the stockholders vote on adoption of this Agreement and at the Effective
Time, will contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
SECTION 5.06. Finders' Fees. Except for UBS A.G., whose fees will be paid
by Parent, there is no investment banker, broker, finder or other intermediary
that has been retained by or is authorized to act on behalf of Parent who might
be entitled to any fee or commission from the Company or any of its Affiliates
upon consummation of the transactions contemplated by this Agreement.
SECTION 5.07. Financing. Parent will have at the Effective Time sufficient
funds available to pay the aggregate Closing Merger Consideration payable upon
the consummation of the Merger and to pay all of its fees and expenses related
to the transactions contemplated by this Agreement; provided, however that
Parent shall not have funds to pay for the Note Shares (as defined in the
Stockholder Agreement).
ARTICLE 6
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 6.01. Conduct of the Company. (a) Except as otherwise specifically
provided in this Agreement or as approved in writing by Parent, from the date
hereof to the Effective Time, the Board of Directors of the Company shall not
approve or authorize any action that would allow the Company and its
Subsidiaries to carry on their respective businesses other than in the ordinary
and usual course of business and consistent with past practice or any action
that would prevent the Company and the Subsidiaries, as a whole, from (1)
preserving intact its present business organization and (2) maintaining
satisfactory relationships with its material customers, lenders, suppliers and
others having business relationships with it. Neither the Company nor its
Subsidiaries shall be deemed to be in breach of this Section if a provision of
this Section specifically permits an action to be taken by the Company or its
Subsidiaries even in the case such action may be prohibited by other provisions
of this Section which may be broader or more general in scope. Without limiting
the generality of the foregoing, and except as otherwise specifically provided
in this Agreement, without the prior
33
written consent of Parent, prior to the Effective Time, the Board of Directors
of the Company shall not, nor shall it authorize or direct the Company or any
of its Subsidiaries, directly or indirectly, to:
(i) adopt or propose any change in its certificate of incorporation
or bylaws other than pursuant to Section 3.01;
(ii) acquire (by merger, consolidation or acquisition of stock or
assets) any material corporation, partnership or other business
organization or division thereof, or sell, lease or otherwise dispose of a
material subsidiary or a material amount of assets or securities;
(iii) except pursuant to existing agreements or arrangement, (A)
acquire (in the ordinary course of business consistent with past
practices), waive, release, grant, or transfer any rights of material
value; (B) modify or change in any material respect any existing material
license, lease, contract, or other document; (C) except to refund or
refinance commercial paper, incur, assume or prepay an amount of long-term
or short-term debt in excess of $500,000 in the aggregate; (D) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
Person which, are in excess of $500,000 in the aggregate; (E) make any
loans, advances or capital contributions to, or investments in, any other
Person which are in excess of $500,000 in the aggregate, or purchase for
an amount in excess of $500,000 in the aggregate any property or assets of
any other Person; (F) authorize any new capital expenditures which,
individually, is in excess of $500,000 or, in the aggregate, are in excess
of $500,000; or (G) enter into any material interest rate, currency or
other swap or derivative transaction; (H) take any action that would make
any representations and warranties of the Company hereunder inaccurate in
any material respect at, or as of any time prior to, the Effective Time,
or omit to take any action within the reasonable control of the Company
necessary to prevent any such representation or warranty from being
inaccurate in any material respect at any such time;
(iv) enter into any agreement or commitment relating to the sale of
products if any such agreement or commitment involves the expenditure by
the Company of amounts in excess of $500,000; provided that in respect of
expenditures in excess of such amount, Parent's consent to such excess
expenditures shall not be unreasonably withheld;
(v) other than in the ordinary course of business consistent with
past practice, enter into any agreement (including enterprise license
agreements) or commitment relating to the license, maintenance or other
34
servicing of Products if any such agreement or commitment provides to the
other party to the agreement or commitment a discount to list prices which
is higher than the discounts from list prices the Company has generally
granted prior to the date hereof to similarly situated customers for an
agreement of a similar type taking into account the length and the nature
of the relationship the Company has with the counterparty, the dollar
amount of the contract, the size of the counterparty's computing
environment, the Products and services covered by the agreement and the
term and nature of the agreement;
(vi) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, other than cash dividends and distributions by a wholly
owned Subsidiary to the Company or to a Subsidiary all of the capital
stock of which is owned directly or indirectly by the Company or a cash
dividend by the Company to the holders of capital stock in an aggregate
amount equal to the net proceeds from the disposition of the Sagavista
Business, or redeem, repurchase or otherwise acquire or offer to redeem,
repurchase, or otherwise acquire any of its securities or any Subsidiary
securities;
(vii) other than as permitted by Section 6.07, adopt or amend (except
for normal increases in the ordinary course of business that are
consistent with past practices and that, in the aggregate, do not result
in a material increase in benefits or compensation expense to the Company
or any of its Subsidiaries or as otherwise required by law) any bonus,
profit sharing, compensation, severance, termination, stock option,
pension, retirement, deferred compensation, employment or employee benefit
plan, agreement, trust, plan, fund or other arrangement for the benefit
and welfare of any director, officer or employee, or (except for normal
increases in the ordinary course of business that are consistent with past
practices and that, in the aggregate, do not result in a material increase
in benefits or compensation expense to the Company or any of its
Subsidiaries or as otherwise required by law) increase in any manner the
compensation or fringe benefits of any director, officer or employee or
pay any benefit not required by any existing plan or arrangement
(including, without limitation, the granting of stock options or stock
appreciation rights or the removal of existing restrictions in any benefit
plans or agreements, except for normal increases in non-executive employee
compensation in the ordinary course of business that are consistent with
past practices and that, in the aggregate, do not result in a material
increase in benefits or compensation expense to the Company or any of its
Subsidiaries or as otherwise required by law);
35
(viii) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory in any material
manner or write-off of notes or accounts receivable in any material manner
other than as required under U.S. GAAP or in the ordinary course of
business consistent with past practice;
(ix) pay, discharge or satisfy any material claims, liabilities or
obligations (whether absolute, accrued, asserted or unasserted, contingent
or otherwise) other than the payment, discharge or satisfaction in the
ordinary course of business, consistent with past practices, of
liabilities reflected or reserved against in the consolidated financial
statements of the Company or incurred in the ordinary course of business,
consistent with past practices;
(x) take any action other than in the ordinary course of business and
consistent with past practices with respect to accounting policies or
procedures; or
(xi) agree or commit to do any of the foregoing.
(b) The Company agrees to deliver to Parent a written notice by email to
Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxx and Xxxxxxxxx Xxxxxx at
Xxxxxx.Xxxxxxxx@Xxxxxxxxxx.xxx, Xxxxxxx.Xxxxxxx@Xxxxxxxxxx.xxx and
Xxxxxxxxx.Xxxxxx@Xxxxxxxxxx.xxx email addresses, at least one Business Day
(except that for the purposes of this subsection, each of December 30, 2000 and
December 31, 2000 shall be considered a "Business Day") prior to entering into
any agreement (including enterprise license agreements) or commitment relating
to the license, maintenance or other servicing of Products (i) not entered into
in the ordinary course of business consistent with past practice or (ii) which
involves aggregate payments by or to the Company of amounts in excess of
$250,000. The notice will set forth the identity of the counterparty, the
Products and services to be provided and any applicable discounts from list
prices to be granted, the term of the agreement or commitment and all other
terms which are not in the ordinary course consistent with past practice.
Parent shall have the right to consult with the Company, and the Company will
make available the relevant personnel, during such notice period prior to
entering into such agreement.
(c) The Company agrees to use reasonable efforts in the ordinary course
consistent with past practice to retain and to keep available the services of
its key officers and employees through the Closing Date. This section will not
require the Company to pay any employee any extraordinary compensation other
than as contemplated by Section 6.07.
36
SECTION 6.02. Stockholder Meeting; Proxy Material. (a) The Company shall
cause a meeting of its stockholders (the "Company Stockholder Meeting") to be
duly called and held as soon as reasonably practicable for the purpose of
voting on the approval and adoption of this Agreement and the Merger. Subject
to Section 6.03(b), the Board of Directors of the Company shall recommend
approval and adoption of this Agreement and the Merger by the Company's
stockholders. In connection with such meeting, the Company will (i) as promptly
as practicable, prepare and file with the SEC, use its reasonable best efforts
to have cleared by the SEC and thereafter mail to its stockholders as promptly
as practicable the Company Proxy Statement and all other proxy materials for
such meeting, (ii) subject to 6.03(b), use its reasonable efforts to obtain the
necessary approvals by its stockholders of this Agreement and the transactions
contemplated hereby and (iii) otherwise comply with all legal requirements
applicable to such meeting.
(b) The Company shall deliver, and give Parent an opportunity to comment
on, prior to filing with the SEC and mailing to the Company's stockholders, the
Company Proxy Statement. Parent will be reasonably satisfied with the content
of the Company Proxy Statement dealing with it or its Affiliates prior to the
Company filing a definitive Company Proxy Statement.
SECTION 6.03. No Solicitation. (a) Except to the extent permitted by
Section 6.04 neither the Company nor any of its Subsidiaries shall, nor shall
the Company or any of its Subsidiaries authorize or permit any of its or their
officers, directors, employees, investment bankers, attorneys, accountants,
consultants or other agents or advisors (its "Representatives") to, directly or
indirectly, (i) solicit, initiate or knowingly take any action to facilitate or
encourage the submission of any Acquisition Proposal, (ii) enter into or
participate in any discussions or negotiations with, furnish any information
relating to the Company or any of its Subsidiaries or afford access to the
business, properties, assets, books or records of the Company or any of its
Subsidiaries to, otherwise cooperate in any way with, or knowingly assist,
participate in, facilitate or encourage any effort by any Third Party that is
seeking to make, or has made, an Acquisition Proposal or (iii) grant any waiver
or release under any standstill or similar agreement with respect to any class
of equity securities of the Company or any of its Subsidiaries.
(b) Notwithstanding the Section 6.02 and 6.03(a), the Board of Directors
of the Company, directly or indirectly through advisors, agents or other
intermediaries, may (i) engage in negotiations or discussions with any Third
Party that has made a Superior Proposal which did not result, in whole or in
part, from a breach of Section 6.03(a), (ii) furnish to such Third Party
nonpublic information relating to the Company or any of its Subsidiaries
pursuant to a confidentiality agreement with terms no less favorable to the
Company than those contained in the Confidentiality Agreement dated as of July
26, 2000 between the Company
37
and Parent (the "Confidentiality Agreement"), (iii) take and disclose to its
stockholders a position in compliance by Rule 14e-2(a) under the 1934 Act or
otherwise make disclosure to them, (iv) following receipt of such Superior
Proposal, fail to make, withdraw, or modify in a manner adverse to Parent its
recommendation to its stockholders referred to in Section 6.02 hereof or fail
to call the Company Stockholder Meeting in accordance with Section 6.02 hereof
and/or (v) take any non-appealable, final action ordered to be taken by the
Company by any court of competent jurisdiction, but in each case referred to in
the foregoing clauses (i) through (iv) only if the Board of Directors of the
Company determines in good faith by a majority vote, after consultation with
and based on the advice from King & Spalding, outside legal counsel to the
Company, that it must take such action to comply with its fiduciary duties
under applicable law.
(c) The Board of Directors of the Company shall not take any of the
actions referred to in clauses (i) through (iv) of the preceding subsection
unless the Company shall have delivered to Parent a prior (and if not
practicable, contemporaneously) written notice advising Parent that it intends
to take such action, and the Company shall continue to advise Parent after
taking such action. In addition, the Company shall notify Parent promptly (but
in no event later than 24 hours) after receipt by the Company (or any of its
advisors) of any Acquisition Proposal, any indication that a Third Party is
considering making an Acquisition Proposal or of any request for information
relating to the Company or any of its Subsidiaries or for access to the
business, properties, assets, books or records of the Company or any of its
Subsidiaries by any Third Party that may be considering making, or has made, an
Acquisition Proposal. The Company shall provide such notice orally and in
writing and shall identify the Third Party making, and the terms and conditions
of, any such Acquisition Proposal, indication or request. The Company shall
keep Parent informed, on as current basis as practicable, of the status and
details of any such Acquisition Proposal, indication or request. The Company
shall, and shall cause its Subsidiaries and the advisors, employees and other
agents of the Company and any of its Subsidiaries to, cease immediately and
cause to be terminated any and all existing activities, discussions or
negotiations, if any, with any Third Party conducted prior to the date hereof
with respect to any Acquisition Proposal and shall use its reasonable best
efforts to cause any such Party (or its agents or advisors) in possession of
confidential information about the Company that was furnished by or on behalf
of the Company to return or destroy all such information.
"Superior Proposal" means any bona fide, unsolicited written Acquisition
Proposal (provided that all references to 20% shall be deemed to be 50%) on
terms that the Board of Directors of the Company determines in good faith by a
majority vote, on the basis of the advice of a financial advisor of nationally
recognized reputation and taking into account all the terms and
38
conditions of the Acquisition Proposal, including any break-up fees, expense
reimbursement provisions and conditions to consummation, are more favorable and
provide greater value (considering all factors deemed relevant by the Board of
Directors) to all the Company's stockholders than as provided hereunder and for
which financing, to the extent required, is then fully committed or reasonably
determined to be available by the Board of Directors of the Company.
SECTION 6.04. Disposition of Sagavista Business. Until the Effective Time,
the Company may not, and may not permit its Representatives to, solicit
proposals for or engage in any discussions regarding the acquisition of all or
a part of the Sagavista Business (the "Sagavista Disposition") other than on a
basis which is limited to the assets used exclusively in the Sagavista Business
and requires the assumption of all liabilities relating to the Sagavista
Business and which does not result in or impose any adverse impact, financial
or otherwise, or liability on the Company, its Subsidiaries, Parent or their
Affiliates, in any case without Parent's consent in writing, which consent may
be withheld or withdrawn at any time in Parent's sole and absolute discretion.
In any case, prior to (x) soliciting any proposal from any Person for or
relating to the Sagavista Disposition, or (y) providing any information to any
Person relating to the Sagavista Business or Sagavista Disposition, the Company
shall notify Parent in writing of such proposal or information and shall not
act without the prior express written consent of Parent. The Company and its
advisors shall keep Parent fully informed on a current basis on the status,
details and progress of any negotiations and such further information as Parent
may request concerning a Sagavista Disposition. A Sagavista Disposition shall
include after the Effective Time, any transaction which transfers all or
substantially all of the rights exclusively related to the Sagavista Business
in a manner which is economically equivalent to a Sagavista Disposition (such
as the licencing of the Sagavista product to a third party to be managed by and
for the benefit of such third party, but not in the ordinary course of running
the Sagavista Business, such as entering into contracts concerning the
Sagavista product similar to those contracts the Company enters into concerning
the Parent's products). After the Effective Time and on or prior to October 31,
2002, Parent shall not, and shall not permit the Company or any of their
respective Subsidiaries to, effect any Sagavista Disposition other than in a
transaction in which the consideration due from any third party is payable
solely in cash ("Cash Consideration") prior to October 31, 2002; provided,
however, that Cash Consideration may be payable after October 31, 2002 if the
Parent agrees to extend the date in the definition of Sagavista Net Proceeds
from October 31, 2002 to such date as such Cash Consideration is received by
Parent, Company or any of their respective Subsidiaries.
As used in this Section, the term "liability" and "liabilities" include
all claims, losses, expenses, judgements and liabilities of any type
whatsoever, and whether fixed, matured or contingent, and whether or not known
(including,
39
without limitation, reasonable expenses of investigation and reasonable fees and
expenses of advisors).
SECTION 6.05. Access to Information. From the date hereof until the
Effective Time or the termination of this Agreement and subject to applicable
law and the Confidentiality Agreement, the Company shall (i) upon reasonable
notice give Parent, its counsel, financial advisors, auditors and other
authorized representatives reasonable access during business hours to the
offices, properties, books and records of the Company and the Subsidiaries,
(ii) upon reasonable notice furnish to Parent, its counsel, financial advisors,
auditors and other authorized representatives such financial and operating data
and other information as such Persons may reasonably request and (iii) instruct
the employees, counsel, financial advisors, auditors and other authorized
representatives of the Company and its Subsidiaries to cooperate with Parent in
its investigation of the Company and its Subsidiaries. Any investigation
pursuant to this Section shall be conducted in such manner as not to interfere
unreasonably with the conduct of the business of the Company and its
Subsidiaries. No information or knowledge obtained by Parent in any
investigation pursuant to this Section shall affect or be deemed to modify any
representation or warranty made by the Company hereunder.
SECTION 6.06. Tax Matters. (a) From the date hereof until the Effective
Time, the Company and its Subsidiaries shall not without prior written consent
of Parent (which consent shall not be unreasonably withheld) make or change any
Tax election, change any annual Tax accounting period, adopt or change any
method of Tax accounting, file any amended Returns or claims for Tax refunds,
enter into any closing agreement, surrender any Tax claim, audit or assessment,
surrender any right to claim a Tax refund, offset or other reduction in Tax
liability surrendered, consent to any extension or waiver of the limitations
period applicable to any Tax claim or assessment or take or omit to take any
other action, if any of the foregoing actions or omissions (i) is not in the
ordinary course of business consistent with past practice and (ii) would have
the effect of increasing the Tax liability or reducing any Tax Asset of the
Company or any of its Subsidiaries.
(b) From the date hereof until the Effective Time, the Company and each of
its Subsidiaries will establish or cause to be established in accordance with
U.S. GAAP an adequate accrual for all Taxes due with respect to any
Pre-Effective Tax Period.
(c) On or prior to the Effective Time, the Company shall deliver to Parent
a certification signed by an officer of the Company to the effect that the
Company is not nor has it been within 5 years of such date a "United States
real property holding corporation as defined in Section 897 of the Code".
40
SECTION 6.07. Retention Bonuses. In the event that the sum of the line
items "Cash and cash equivalents" and "Short-term investments" on the Company's
balance sheet calculated in accordance with U.S. GAAP applied in a manner
consistent with prior practice has increased from $56.3 million on September
30, 2000 to at least $60 million on the Company's balance sheet as of December
31, 2000 prepared in accordance with U.S. GAAP applied on a basis consistent
with past practice as certified to the Parent by the Chief Financial Officer of
the Company (which is supported by a bank certification regarding bank balances
of the Company) as a result of operating cash flow and not as a result of
financing activities or of a Sagavista Disposition (the "Cash Balance") the
Company shall be permitted to pay at the Effective Time an aggregate amount,
which amount shall not exceed $3 million, equal to the excess of the Cash
Balance over $ 60 million, to employees selected by and in individual amounts
determined in the Company's sole and absolute discretion.
ARTICLE 7
COVENANTS OF PARENT
Parent agrees that:
SECTION 7.01. Confidentiality. Prior to the Effective Time and after any
termination of this Agreement, Parent will hold, and will use its best efforts
to cause its officers, directors, employees, accountants, counsel, consultants,
advisors and agents to hold, in confidence, unless compelled to disclose by
judicial or administrative process or by other requirements of law, all
confidential documents and information concerning the Company or any of its
Subsidiaries furnished to Parent or its Affiliates in connection with the
transactions contemplated by this Agreement, except to the extent that such
information can be shown to have been (i) previously known on a
non-confidential basis by Parent, (ii) in the public domain through no fault of
Parent or (iii) later lawfully acquired by Parent from sources other than the
Company, provided that Parent may disclose such information to its officers,
directors, employees, accountants, counsel, consultants, advisors and agents in
connection with the transactions contemplated by this Agreement so long as
Parent informs such Persons of the confidential nature of such information and
directs them to treat it confidentially. Parent and its Affiliates shall
satisfy their obligation to hold any such information in confidence if they
exercise the same care with respect to such information as they would take to
preserve the confidentiality of their own similar information. If this
Agreement is terminated, Parent and its Affiliates will, and will use their
best efforts to cause their officers, directors, employees, accountants,
counsel, consultants, advisors and agents to, destroy or deliver to the
Company, upon request, all documents and other materials, and all copies
thereof, that Parent or its
41
Affiliates obtained, or that were obtained on their behalf, from the Company or
any of its Subsidiaries in connection with this Agreement and that are subject
to such confidence.
SECTION 7.02. Obligations of Merger Subsidiary. Parent will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
SECTION 7.03. Voting of Shares. Parent agrees to vote all shares of Common
Stock beneficially owned by it or any of its Subsidiaries in favor of adoption
of this Agreement at the Company Stockholder Meeting.
SECTION 7.04. Director and Officer Liability. Parent shall cause the
Surviving Corporation, and the Surviving Corporation hereby agrees, to do the
following:
(a) For six years after the Effective Time, the Surviving Corporation
shall indemnify and hold harmless the present and former officers and directors
of the Company (each an "Indemnified Officer/Director") in respect of acts or
omissions occurring at or prior to the Effective Time to the fullest extent
permitted by Delaware Law or any other applicable laws or provided under the
Company's certificate of incorporation and bylaws in effect on the date hereof,
provided that such indemnification shall be subject to any limitation imposed
from time to time under applicable law.
(b) For six years after the Effective Time, the Surviving Corporation
shall provide officers' and directors' liability insurance in respect of acts
or omissions occurring prior to the Effective Time covering each such
Indemnified Officer/Director currently covered by the Company's officers' and
directors' liability insurance policy on terms with respect to coverage and
amount no less favorable than those of such policy in effect on the date
hereof; provided that, in satisfying its obligation under this Section 7.04(b),
the Surviving Corporation shall not be obligated to pay premiums in excess of
200% of the amount per annum the Company paid in its last full fiscal year (the
"Premium"), which amount Company has disclosed to Parent prior to the date
hereof; in the event such described coverage is not obtainable at the Premium,
the Surviving Corporation shall obtain as much coverage as is available for
such Premium.
(c) The rights of each Indemnified Officer/Director under this Section
7.04 shall be in addition to any rights such Person may have under the
certificate of incorporation or bylaws of the Company or any of its
Subsidiaries, or under Delaware Law or any other applicable laws or under any
agreement of any Indemnified Officer/Director with the Company or any of its
Subsidiaries. These
42
rights shall survive consummation of the Merger and are intended to benefit,
and shall be enforceable by, each Indemnified Officer/Director.
ARTICLE 8
COVENANTS OF PARENT AND THE COMPANY
The parties hereto agree that:
SECTION 8.01. Notices of Certain Events. Each of the Company and the
Parent shall promptly notify the other of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the
transactions contemplated by the Transaction Agreements;
(b) any notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by the
Transaction Agreements; and
(c) any actions, suits, claims, investigations or proceedings commenced
or, to its knowledge, threatened against, relating to or involving or otherwise
affecting the Company or any of its Subsidiaries that, if pending on the date
of this Agreement, would have been required to have been disclosed pursuant to
Section 4.10, 4.13, 4.14, 4.17, 4.18 or 4.19, as the case may be, or that
relate to the consummation of the transactions contemplated by this Agreement.
SECTION 8.02. Reasonable Best Efforts. Subject to the terms and conditions
of this Agreement, Company and Parent will use their reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement. In furtherance and
not in limitation of the foregoing, each of Parent and Company agrees to make
an appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transactions contemplated hereby as promptly as practicable
and in any event within ten Business Days of the date hereof and to supply as
promptly as practicable any additional information and documentary material
that may be requested pursuant to the HSR Act and to take all other actions
necessary to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable. The Parent and Merger
Subsidiary are not required hereunder, or otherwise pursuant to this Agreement,
to prepare financial statements in accordance with or reconciled to U.S. GAAP.
43
SECTION 8.03. Certain Filings. The Company and Parent shall cooperate with
one another (i) in connection with the preparation of the Company Proxy
Statement, (ii) in determining whether any action by or in respect of, or
filing with, any governmental body, agency, official, or authority is required,
or any actions, consents, approvals or waivers are required to be obtained from
parties to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (iii) in taking such actions or
making any such filings, furnishing information required in connection
therewith or with the Company Proxy Statement and seeking timely to obtain any
such actions, consents, approvals or waivers.
SECTION 8.04. Public Announcements. Promptly after execution of this
Agreement, Parent and Company will together issue a joint press release, the
form and the timing of which shall have been approved by each party. None of
the parties hereto will issue any other press release or make any public
statement with respect to this Agreement or the transactions contemplated
hereby without the prior written consent of the other parties except as may be
required by applicable law or the rules of any relevant securities exchange,
and in such event will not issue any such press release or make any such public
statement prior to consultation with the other parties if feasible. None of the
Parent, its Affiliates or any of its Representatives will contact, or discuss
the terms of this Agreement or the Parent's intention with respect of the
Company and its business following the closing (except with respect to issues
concerning employee retention and strategic direction of the business with
executive officers of the Company) with, any employee of the Company without
the prior written consent of the Company which consent shall not be
unreasonably withheld.
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.01. Conditions to Obligations of Each Party. The obligations of
the Company, Parent and Merger Subsidiary to consummate the Merger are subject
to the satisfaction of the following conditions on or prior to the Closing Date
and at the Effective Time:
(a) this Agreement shall have been approved and adopted by the
stockholders of the Company in accordance with Delaware Law;
(b) any applicable waiting period under the HSR Act shall have expired;
44
(c) all consents to contracts listed in Section 4.04 of the Company
Disclosure Schedule (other than contracts with Parent) shall have been obtained
or there shall be no amounts outstanding under such contracts at the Effective
Time;
(d) no provision of any applicable law or regulation and no temporary
restraining order, preliminary or permanent injunction or other order or decree
issued by any court of competent jurisdiction or other legal restraint or
prohibition that has the effect of making the Merger illegal (where such
illegality would reasonably be expected to have a Material Adverse Effect on
the Company or a material adverse effect on Parent and its Affiliates taken as
a whole) or preventing the consummation of the Merger shall be in effect; and
(e) there shall not have been instituted or pending any action or
proceeding by any Governmental Agency, domestic, foreign or supranational,
before any court or Governmental Agency, challenging or seeking to make
illegal, to delay materially or otherwise directly or indirectly to prohibit
the consummation of the Merger.
SECTION 9.02. Conditions to the Obligations of Parent and Merger
Subsidiary. The obligations of Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following further conditions on
or prior to the Closing Date and at the Effective Time:
(a) (i) the Company shall have performed in all material respects all of
its material obligations hereunder required to be performed by it at or prior
to the Effective Time; (ii) the representations and warranties of the Company
contained in Sections 4.01, 4.02, 4.03, 4.05, 4.07, 4.08, 4.09, 4.15, 4.16,
4.18 (a) (b) (d) (e) (h) and (j), and 4.20 of this Agreement and in any
certificate delivered by the Company pursuant hereto shall be true in all
material respects (without regard to any materiality qualifier contained in
such representation or warranty) at and as of the Effective Time as if made at
and as of such time; (iii) breaches, individually or in aggregate, of all other
representations and warranties (without regard to any materiality qualifier
contained in such representations and warranties) of the Company contained this
Agreement shall not have had or would not reasonably be expected to have a
Material Adverse Effect on the Company at and as of the Effective Time as if
made at and as of such time; and (iv) Parent shall have received a certificate
signed by the chief executive officer or chief financial officer of the Company
to the foregoing effect;
(b) the holders of not more than 7.5% of the outstanding shares of Common
Stock shall have demanded appraisal of their shares in accordance with Delaware
Law;
45
(c) the purchase and sale of Xxxxxx'x Owned Shares (as defined in the
Stockholder Agreement) under the Stockholder Agreement shall have been
consummated (this condition shall be deemed satisfied if (i) Parent breaches
its obligation to purchase the Owned Shares under the Stockholder Agreement or
(ii) the purchase and sale of Xxxxxx'x Owned Shares does not occur solely
because the representations and warranties of Parent in the Stockholder
Agreement were not true in all material respects at such time); and
(d) since the Company Balance Sheet Date, there shall not have been any
event, occurrence, development or state of circumstance which, individually or
in aggregate, has had or would reasonably be expected to have a Material
Adverse Effect on the Company.
SECTION 9.03. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
condition that each of Parent and Merger Subsidiary shall have performed in all
material respects all of its obligations hereunder required to be performed by
it at or prior to the Effective Time, (i) the representations and warranties of
Parent contained in this Agreement and in any certificate or other writing
delivered by Parent or Merger Subsidiary pursuant hereto shall be true in all
material respects at and as of the Effective Time as if made at and as of such
time and (ii) the Company shall have received a certificate signed chief
executive officer or chief financial officer of Parent to the foregoing effect.
ARTICLE 10
TERMINATION
SECTION 10.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of the
Company):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if:
(i) the Merger has not been consummated on or before March 31, 2001
(or if actions required by Section 2.02(c) have been taken, April 30,
2001, the "End Date"); provided that the right to terminate this Agreement
pursuant to this Section 10.01(b)(i) shall not be available to any party
whose breach of any provision of this Agreement results in the failure of
the Merger to be consummated by such time;
46
(ii) there shall be any law or regulation that prohibits the
consummation of the Merger or any judgment, injunction, order or decree of
any court or governmental body having competent jurisdiction enjoining
Company or Parent from consummating the Merger is entered and such
judgment, injunction, judgment or order shall have become final and
nonappealable;
(iii) this Agreement shall not have been approved and adopted in
accordance with Delaware Law by the Company's stockholders at the Company
Stockholder Meeting (or any adjournment thereof); or
(iv) as permitted by Section 6.03(b), the Board of Directors of the
Company shall have failed to make or withdrawn, or modified in a manner
adverse to Parent, its approval or recommendation of this Agreement or the
Merger, or shall have failed to call the Company Stockholder Meeting in
accordance with Section 6.02; provided that (y) the Company shall
simultaneously with termination under this subsection pay any amounts due
pursuant to Sections 11.03(b) in accordance with the terms, and at the
times, specified therein, and (z) in the case of any termination by the
Company, (i) the Company notifies Parent, in writing and at least 72 hours
prior to such termination, promptly of its intention to terminate this
Agreement and to enter into a binding written agreement concerning an
Acquisition Proposal that constitutes a Superior Proposal, attaching the
most current version of such agreement (or a description of all material
terms and conditions thereof), and (ii) Parent does not make, within 72
hours of receipt of such written notification, an offer that is at least
as favorable to the shareholders of the Company as such Superior Proposal,
it being understood that the Company shall not enter into any such binding
agreement during such 72-hour period;
(c) by Parent, if (i) a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of the Company set
forth in this Agreement shall have occurred that would cause the conditions set
forth in Section 9.02 not to be satisfied, and such condition is incapable of
being satisfied by the End Date or (ii) the Company shall have made or entered
into any agreement, letter of intent or other binding document relating to a
Sagavista Disposition without the express written consent of the Parent; or
(d) by the Company, if a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of the Parent or
Merger Subsidiary set forth in this Agreement shall have occurred that would
cause the conditions set forth in Section 9.03 not to be satisfied, and such
condition is incapable of being satisfied by the End Date.
47
The party desiring to terminate this Agreement pursuant to this Section 10.01
(other than pursuant to Section 10.01(a)) shall give notice of such termination
to the other party.
SECTION 10.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 10.01, this Agreement shall become void and of no effect
without liability of any party (or any stockholder, director, officer,
employee, agent, consultant or representative of such party) to the other party
hereto, provided that, if such termination shall result from the willful (i)
failure of either party to fulfill a condition to the performance of the
obligations of the other party or (ii) failure of either party to perform a
covenant hereof, such party shall be fully liable for any and all liabilities
and damages incurred or suffered by the other party as a result of such
failure. The provisions of this Section 10.02 and Sections 7.01, 11.03, 11.05,
11.06 and 11.07 shall survive any termination hereof pursuant to Section 10.01.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given,
if to Parent or Merger Subsidiary, to:
Software AG
Xxxxxxxxxxxxx 00, X-00000
Xxxxxxxxx, Xxxxxxx
Attention: Xxxxxxxxx Xxxxxx
Fax: (00) 0000 00 0000
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
48
if to the Company, to:
Saga Systems, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxx
Fax: (000) 000 0000
with a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxx III
Xxxxxxx X. Xxxxxxx
Fax: (000) 000-0000
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m., and such day is a
Business Day, in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding Business Day in the place of receipt.
SECTION 11.02. Amendments; No Waivers. (a) Any provision of this Agreement
may be amended or waived prior to the Effective Time if, but only if, such
amendment or waiver is in writing and is signed, in the case of an amendment,
by each party to this Agreement or, in the case of a waiver, by each party
against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.03. Expenses. (a) Except as otherwise provided in this Section,
all costs and expenses incurred in connection with this Agreement shall be paid
by the party incurring such cost or expense.
(b) If a Payment Event (as hereinafter defined) occurs, the Company shall
pay Parent (by wire transfer of immediately available funds or by bank or
cashiers check), if, pursuant to (x) below, simultaneously with the occurrence
of
49
such Payment Event or, if pursuant to (y) below, within two Business Days
following such Payment Event, a fee of $13.4 million (the "Termination Fee").
"Payment Event" means (x) the termination of this Agreement pursuant to
Sections 10.01(b)(iv) or 10.01(c)(ii) or (y) the termination of this Agreement
pursuant to Section 10.01(b)(iii) if at the time of the Company Stockholder
Meeting a Superior Proposal has been publicly announced and the transaction
contemplated by a Superior Proposal has been consummated within 12 months of
such termination.
(c) The Company acknowledges that the agreements contained in this Section
11.03 are an integral part of the transactions contemplated by this Agreement
and that, without these agreements, Parent and Merger Subsidiary would not
enter into this Agreement. Accordingly, if the Company fails promptly to pay
any amount due to Parent pursuant to this Section 11.03, it shall also pay any
costs and expenses incurred by Parent or Merger Subsidiary in connection with a
legal action to enforce this Agreement that results in a judgment against the
Company for such amount.
SECTION 11.04. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Parent or Merger
Subsidiary may transfer or assign, in whole or from time to time in part, to
one or more of their Affiliates, the right to enter into the transactions
contemplated by this Agreement, but any such transfer or assignment will not
relieve Parent or Merger Subsidiary of its obligations hereunder.
SECTION 11.05. Governing Law. The validity, construction and effect of
this Agreement shall be governed by and construed enforced in accordance with
the laws of the State of Delaware, without giving effect to the principles of
conflicts of law of such state.
SECTION 11.06. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may be
brought in any federal court located in the State of Delaware or any Delaware
state court, and each of the parties hereby consents to the jurisdiction of
such courts (and of the appropriate appellate courts therefrom) in any such
suit, action or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding in any such court or that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient form. Process in any such
50
suit, action or proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court. Without limiting
the foregoing, each party agrees that service of process on such party as
provided in Section 11.01 shall be deemed effective service of process on such
party.
SECTION 11.07. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 11.08. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
Except as provided in Section 7.04, no provision of this Agreement is intended
to confer any rights, benefits, remedies, obligations or liabilities hereunder
upon any Person other than the parties hereto and their respective successors
and assigns.
SECTION 11.09. Entire Agreement. The Transaction Agreements constitutes
the entire agreement between the parties with respect to the subject matter of
this Agreement and supersedes all prior agreements and understandings, both
oral and written, between the parties with respect to the subject matter of
this Agreement.
SECTION 11.10. Captions; Headings. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof. The headings contained in this Agreement are for
convenience of reference only and shall not affect the meaning or
interpretation of this Agreement. Wherever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
SECTION 11.11. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an
51
acceptable manner so that the transactions contemplated hereby be consummated
as originally contemplated to the fullest extent possible.
SECTION 11.12. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof
in any federal court located in the State of Delaware or any Delaware state
court, in addition to any other remedy to which they are entitled at law or in
equity.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
SAGA SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
SOFTWARE AG
By: /s/ Xx. Xxxxx Xxxxxxx
--------------------------------
Name: Xx. Xxxxx Xxxxxxx
Title: Chief Executive Officer
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Chief Financial Officer
SOFTWARE AG ACQUISITION
CORPORATION
By: /s/ Xx. Xxxxx Xxxxxxx
--------------------------------
Name: Xx. Xxxxx Xxxxxxx
Title: Chief Executive Officer
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Chief Financial Officer
53
