EXHIBIT 3
TRANSACTION OPTION AGREEMENT
THIS TRANSACTION OPTION AGREEMENT (this "Agreement") is entered into as of
March 20, 2001, by and between Citrix Systems, Inc., a Delaware corporation
("Parent"), and Sequoia Software Corporation, a Maryland corporation (the
"Company").
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Company, Parent and Merger Sub, a Delaware corporation and a newly-formed,
wholly-owned direct subsidiary of Parent ("Merger Sub"), are entering into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides, among other things, for a business combination
between Parent and the Company to be effected by the merger of Merger Sub with
and into the Company upon the terms and subject to the conditions of the Merger
Agreement; and
WHEREAS, as a condition to Parent's willingness to enter into the Merger
Agreement, Parent has requested that the Company agree, and the Company has
agreed, to grant the Option (as hereinafter defined) to Parent upon the terms
and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein and in the Merger Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereby agree
as follows:
SECTION 1. Grant of Option. The Company hereby grants to Parent an
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to a number of shares (the "Option Shares") of fully paid and nonassessable
common stock, par value $0.001 per share, of the Company ("Company Common
Stock"), equal to 19.9% of the number of shares of Company Common Stock issued
and outstanding (before giving effect to the exercise of the Option) in
accordance with Section 2 of this Agreement at a purchase price per share (the
"Option Price") equal to the Offer Consideration (as defined in the Merger
Agreement). The number and type of Option Shares and the Option Price are
subject to adjustment as set forth herein.
SECTION 2. Exercise of Option.
(a) Parent may exercise the Option, in whole or in part and from
time to time on or after the Appointment Time if, after giving effect to the
exercise, of the Option and as a result of such exercise, the number of Shares
then owned by Parent and Merger Sub represents at least 90.1% of the Shares
outstanding on a fully-diluted basis.
(b) In the event that Parent desires to exercise the Option on the
terms and conditions set forth in Section 2(a) hereof, it shall deliver to the
Company a written notice (such notice being herein referred to as an "Exercise
Notice" and the date of issuance of an Exercise Notice being herein referred to
as the "Notice Date") specifying (i) the total number of Option Shares it
desires to purchase pursuant to such exercise and (ii) a place and date, not
earlier than
three (3) business days nor later than ten (10) business days from
the Notice Date, for the closing of such purchase (the "Option Closing Date");
provided, that if the closing of the purchase and sale pursuant to the Option
(the "Option Closing") cannot be consummated, by reason of any applicable
decree, injunction or order, the period of time that otherwise would run
pursuant to this Section 2(b) shall run instead from the date on which such
restriction on consummation has expired or been terminated; and provided
further, without limiting the foregoing, that if, in the reasonable opinion of
Parent, prior notification to or approval of any regulatory agency is required
in connection with such purchase, the Company or Parent, as the case may be,
shall promptly file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals have been
obtained and any requisite waiting period or periods shall have passed.
(c) At the Option Closing, Parent shall pay to the Company the
aggregate Option Price for the number of shares of Company Common Stock or other
securities being purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by the Company;
provided that failure or refusal of the Company to designate such a bank account
shall not preclude Parent from exercising the Option.
(d) At the Option Closing, simultaneously with the delivery of
immediately available funds as provided in Section 2(c) hereof, the Company
shall deliver to Parent a certificate or certificates representing the number of
Option Shares purchased by Parent and, if the Option should be exercised in part
only, a new agreement substantially similar to this Agreement evidencing the
rights of Parent thereof to purchase the balance of the Option Shares
purchasable hereunder. If at the time of issuance of any Option Shares pursuant
to an exercise of all or part of the Option hereunder, the Company shall have
issued any rights or other securities which are attached to or otherwise
associated with the Company Common Stock, then each Option Share issued pursuant
to such exercise shall also represent such rights or other securities with terms
substantially the same as and at least as favorable to Parent as are provided to
stockholders generally and, if applicable, under any stockholder rights
agreement or similar agreement of the Company then in effect.
(e) Certificates for Option Shares delivered at an Option Closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESALE RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED."
It is understood and agreed that the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "Securities Act"), in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if Parent shall have delivered to the Company a copy of a letter from
the staff of the Securities and Exchange Commission (the "SEC"), or an opinion
of counsel reasonably satisfactory to the Company, to the effect that such
legend is not required for purposes of the Securities Act.
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(f) Upon the delivery by Parent to the Company of the Exercise
Notice, and the tender of the applicable Option Price in immediately available
funds, Parent shall be deemed to be the holder of record of the Option Shares
issuable upon such exercise, notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such Option
Shares shall not then be actually delivered to Parent or the Company shall have
failed or refused to designate the bank account described in Section 2(d). The
Company shall pay all expenses that may be payable in connection with the
preparation, issuance and delivery of stock certificates under this Section 2 in
the name of Parent. Parent shall pay all expenses that may be payable in
connection with the issuance and delivery of stock certificates or a substitute
option agreement in the name of any assignee, transferee or designee of Parent.
SECTION 3. Covenants of the Company. In addition to its other agreements
and covenants herein, the Company agrees (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but unissued or
treasury shares of Company Common Stock (and other securities of the Company)
issuable pursuant to this Agreement so that the Option may be exercised without
additional authorization of Company Common Stock after giving effect to all
other options, warrants, convertible securities and other rights to purchase
Company Common Stock; (ii) that it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulation or conditions to be observed or performed
hereunder by the Company; (iii) promptly to take any and all action as may from
time to time be required (including complying with all premerger notification,
reporting and waiting requirements under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder) in order to permit Parent to exercise the Option and the Company to
duly and effectively issue Option Shares pursuant hereto; and (iv) promptly to
take all action provided herein to protect the rights of Parent against
dilution.
SECTION 4. Exchange; Replacement. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Parent, upon
presentation and surrender of this Agreement at the principal office of the
Company, for other agreements providing for Options of different denominations
entitling the holder thereof to purchase, on the same terms and subject to the
same conditions as are set forth herein, in the aggregate the same number of
shares of Company Common Stock purchasable hereunder. The terms "Agreement" and
"Option" as used herein include any agreements and related options for which
this Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, the Company will execute and
deliver a new Agreement of like tenor and date.
SECTION 5. Adjustments. The number of shares of Company Common Stock
purchasable upon the exercise of the Option shall be subject to adjustment from
time to time as provided in this Section 5. In the event of any change, or
distributions in respect of, in Company Common Stock by reason of stock
dividends, splits, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares or other similar transactions, then that which
is then purchasable upon exercise hereof shall be appropriately adjusted so that
Parent shall receive
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upon exercise of the Option and payment of the aggregate Option Price hereunder
the number and class of shares or other securities or property (including cash)
that Parent would have owned or been entitled to receive after the happening of
any of the events described above if the Option had been exercised immediately
prior to such event, or the record date therefor, as applicable. Whenever the
number of shares of Company Common Stock subject to this Option is adjusted
pursuant to this Section 5, the Option Price shall be appropriately adjusted in
such manner as shall fully preserve the economic benefits provided hereunder and
proper provision shall be made in any agreement governing any such transaction
to provide for such proper adjustment and the full satisfaction of the Company's
obligations hereunder.
SECTION 6. Representations and Warranties of the Company. The Company
hereby represents and warrants to Parent as follows:
(a) The Company has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Company Common Stock equal to the maximum number of shares of Company
Common Stock at any time and from time to time issuable hereunder, and all such
shares of Company Common Stock, upon issuance pursuant hereto, will be duly
authorized, validly issued, fully paid, nonassessable, and will be delivered
free and clear of all liens and not subject to any preemptive rights.
(b) No "fair price", "moratorium", "control share acquisition" or
other similar anti-takeover statute or regulation enacted under state or federal
laws applicable to the Company or any of its subsidiaries will apply to this
Agreement or the transactions contemplated hereby. The Company has taken, and
will in the future take, all steps necessary to irrevocably exempt the
transactions contemplated by this Agreement from any other applicable state
takeover law and from any applicable charter provision containing change of
control or anti-takeover provisions.
SECTION 7. Representations and Warranties of Parent. Parent hereby
represents and warrants to the Company that it is entering into this Agreement
and is acquiring and/or will acquire the Option Shares for its own account and
not with a view to resale or distribution of all or any part of the Option
Shares in violation of applicable law.
SECTION 8. Assignment. Neither of the parties hereto may assign any of its
rights or obligations under this Agreement or the Option created hereunder to
any other person without the express written consent of the other party.
SECTION 9. Best Efforts. Each of Parent and the Company will use its
reasonable best efforts to make all filings with, and to obtain consents of, all
third parties and Governmental Entities necessary to the consummation of the
transactions contemplated by this Agreement, including without limitation making
application to list the shares of Company Common Stock issuable hereunder on the
Nasdaq National Market of The Nasdaq Stock Market upon official notice of
issuance.
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SECTION 10. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties hereto shall be enforceable
by either party hereto through injunctive or other equitable relief.
SECTION 11. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule or law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
SECTION 12. Notices. All notices, claims, demands and other communications
hereunder shall be deemed to have been duly given or made when delivered in
person, by registered or certified mail (postage prepaid, return receipt
requested), by overnight courier or by facsimile at the respective addresses ofa
the parties set forth in the Merger Agreement,
SECTION 13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 15. Definitions. Capitalized terms used and not defined herein
shall have the meanings set forth in the Merger Agreement.
SECTION 16. Expenses. Each of the parties hereto shall bear and pay all
costs and expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, as set forth in the Merger Agreement.
SECTION 17. Termination. This Agreement shall terminate upon the earlier
of the Effective Time or termination of the Merger Agreement for any reason.
SECTION 18. Entire Agreement. Except as otherwise expressly provided
herein or in the Merger Agreement, this Agreement contains the entire agreement
between the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereof,
written or oral. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any party, other than the parties hereto, and their
successors and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein. Any provision of this Agreement may be waived only in writing at any
time by the party that is entitled to the benefits of such provision. This
Agreement may not be modified,
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amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
SECTION 19. Further Assurances. In the event of any exercise of the Option
by Parent, the Company and Parent shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary to
the fullest extent permitted by law in order to consummate the transactions
provided for by such exercise. Nothing contained in this Agreement shall be
deemed to authorize the Company or Parent to breach any provision of the Merger
Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Transaction
Option Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
CITRIX SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Chief Financial Officer,
Treasurer, Senior Vice President,
Finance and Administration
and Assistant Secretary
SEQUOIA SOFTWARE CORPORATION
By: /s/ Xxxxxxx X. Faint, Jr.
---------------------------------
Name: Xxxxxxx X. Faint, Jr.
Title: Chief Executive Officer
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