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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): MARCH 14, 2000
LHS GROUP INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 000-22409 58-2224883
(State or other jurisdiction (Commission File Number) (IRS Employer Identification No.)
of incorporation)
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Six Concourse Parkway
Suite 2700
Atlanta, GA 30328
(Address of principal executive offices)
770-280-3000
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On March 15, 2000, LHS Group Inc. ("LHS") and Sema Group plc, an
English public limited company ("Sema"), announced that they had entered into a
Plan and Agreement of Merger, dated as of March 14, 2000 (the "Merger
Agreement"). The Merger Agreement sets forth the terms and conditions of the
proposed merger of LHS and a wholly owned subsidiary of Sema, pursuant to which
LHS will become a subsidiary of Sema (the "Merger"). A copy of the Merger
Agreement is included herein as Exhibit 2.1 and a copy of the joint press
releases announcing the Merger are included herein as Exhibit 99.1.
In the Merger, each currently outstanding share of LHS common stock
will be exchanged for American Depositary Shares that represent 2.6 ordinary
shares of Sema (the "Sema ADSs"). LHS shareholders may at their option elect to
receive ordinary shares of Sema instead of Sema ADSs. Sema intends to have the
Sema ADSs quoted on the Nasdaq National Market. The ordinary shares will trade
on the London Stock Exchange and the Paris Bourse.
LHS shares held by certain German stockholders, including LHS's
Chairman of the Board, Hartmut Lademacher, will remain outstanding. In certain
circumstances, these shares may be exchanged for Sema ADSs or Sema ordinary
shares on the same terms as provided in the Merger.
Completion of the Merger is subject to the satisfaction of various
conditions contained in the Merger Agreement, including: (1) the approval of the
Merger by the stockholders of both LHS and Sema; (2) the Securities and Exchange
Commission declaring effective a registration statement relating to the Sema
ADSs and ordinary shares that LHS stockholders will receive; (3) the
authorization of the listing of the Sema ADSs on the Nasdaq National Market; (4)
the authorization of the listing on the London Stock Exchange and the Paris
Bourse of any Sema ordinary shares issued to LHS stockholders in the Merger or
upon exchange of Sema ADSs; (5) the expiration of all applicable waiting periods
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976; and (6) the
receipt of any required approval under applicable English or European Union
competition laws.
The Merger Agreement contains a $105 million termination fee, payable
to Sema upon certain circumstances described in the Merger Agreement. LHS has
also entered into an agreement granting Sema an option to purchase up to 17.5%
of its common stock (the "Stock Option Agreement"), which terminates at the
termination of the Merger Agreement. A copy of the Stock Option Agreement is
included herein as Exhibit 2.2.
Certain significant stockholders of both LHS and Sema, including
Chairman of the Board of LHS, Hartmut Lademacher, General Atlantic Partners and
France Telecom, have entered into stockholder voting agreements under which they
have agreed to vote their shareholdings in favor of the Merger.
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The Merger Agreement and the Stock Option Agreement and the joint press
releases are incorporated herein by reference into this Item 5 and the foregoing
description of such documents and the transactions contemplated therein are
qualified in their entirety by reference to such exhibits.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
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2.1 Plan and Agreement of Merger, dated as of March 14, 2000, among LHS
Group Inc, Sema Group plc and SG Acquisition Corporation.
2.2 Stock Option Agreement, dated as of March 14, 2000, among LHS Group
Inc. and Sema Group plc.
99.1 Joint press releases dated March 15, 2000 announcing the execution of
the Merger Agreement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LHS GROUP INC.
(Registrant)
Date: March 15, 2000 By:/s/ Scott A. Wharton
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Scott A. Wharton
Senior Vice President and
General Counsel
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Exhibit Index
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2.1 Plan and Agreement of Merger, dated as of March 14, 2000, among LHS
Group Inc, Sema Group plc and SG Acquisition Corporation.
2.2 Stock Option Agreement, dated as of March 14, 2000, among LHS Group
Inc. and Sema Group plc.
99.1 Joint press releases dated March 15, 2000 announcing the execution of
the Merger Agreement.
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EXHIBIT 2.1
PLAN AND AGREEMENT OF MERGER
DATED
MARCH 14, 2000
AMONG
LHS GROUP INC.,
SEMA GROUP PLC
AND
SG ACQUISITION CORPORATION
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PLAN AND AGREEMENT OF MERGER
This is a Plan and Agreement of Merger dated March 14, 2000,
among LHS Group Inc. (the "Company"), a Delaware corporation, Sema Group plc
("Sema"), an English company, and SG Acquisition Corporation ("Acquisition"), a
Delaware corporation, relating to a merger (the "Merger") of Acquisition into
the Company.
ARTICLE I
MERGER OF ACQUISITION AND THE COMPANY
1.1 The Merger. In the Merger, Acquisition will be merged into the
Company, which will be the surviving corporation of the Merger (the "Surviving
Corporation"). Except as specifically provided in this Agreement, when the
Merger becomes effective, (i) the real and personal property, other assets,
rights, privileges, immunities, powers, purposes and franchises of the Company
will continue unaffected and unimpaired by the Merger, (ii) the separate
existence of Acquisition will terminate, and Acquisition's real and personal
property, other assets, rights, privileges, immunities, powers, purposes and
franchises will be merged into the Surviving Corporation, and (iii) the Merger
will have the other effects specified in Section 259 of the Delaware General
Corporation Law (the "DGCL").
1.2 Certificate of Incorporation. From the Effective Time (described in
Paragraph 2.3) until subsequently amended, the Certificate of Incorporation of
Acquisition immediately before the Effective Time will be the Certificate of
Incorporation of the Surviving Corporation, except that the Merger will have the
effect of amending the Certificate of Incorporation so that (i) the name of the
Surviving Corporation will be as determined by Sema and set forth in the
Certificate of Merger described in Paragraph 2.2 and (ii) the authorized capital
stock of the Surviving Corporation will be 110,000,000 shares, of which
10,000,000 shares will be Company Common Stock and 100,000,000 shares will be
Class B Common Stock, par value $.01 per share (which
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will be a separate class from the Company Common Stock, but will vote together
with the Company Common Stock on all matters, as though they were shares of the
same class, except that the Class B Common Stock will entitle the holders to ten
votes per share of Class B Common Stock). That Certificate of Incorporation,
separate and apart from this Agreement, may be certified after the Merger as the
Certificate of Incorporation of the Surviving Corporation.
1.3 By-Laws. From the Effective Time until subsequently amended, the
By-Laws of Acquisition immediately before the Effective Time will be the By-Laws
of the Surviving Corporation.
1.4 Directors. The directors of Acquisition immediately before the
Effective Time will be the directors of the Surviving Corporation after the
Effective Time and will hold office in accordance with the By-Laws of the
Surviving Corporation.
1.5 Officers. The officers of the Company immediately before the
Effective Time will be the officers of the Surviving Corporation after the
Effective Time and will hold office at the pleasure of the Board of Directors of
the Surviving Corporation.
1.6 Stock of the Company. (a) Except as provided in subparagraphs (b),
(c), (d) and (e), at the Effective Time, each share of Common Stock of the
Company ("Company Common Stock"), par value $ .01 per share, which is
outstanding immediately before the Effective Time, other than shares held by the
persons listed on Schedule 1.6 (the "Large German Stockholders"), will be
converted into and become the right to receive the number of American Depositary
Shares ("Sema ADS's") which represent the right to receive 2.6 ordinary shares
of Sema ("Sema Ordinary Shares"), nominal value (pound)0.10 per share (the
"Merger Consideration"), except to the extent that, by reason of an arrangement
under Paragraph 1.9(d), Sema issues Sema Ordinary Shares to particular Company
Stockholders instead of Sema ADS's. Sema will pay all costs (including the fees
and expenses of the Depositary described in Paragraph 1.9 and
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any United Kingdom stamp duty reserve tax or similar tax) associated with the
creation of the Sema ADS's constituting the Merger Consideration and the
delivery of American Depositary Receipts ("Sema ADR's") evidencing those Sema
ADS's.
(b) At the Effective Time, in order to accommodate a request
made by the Large German Stockholders, each share of Company Common Stock which
is held by a Large German Stockholder immediately before the Effective Time will
continue to be outstanding, and will constitute one share of common stock of the
Surviving Corporation, but will be subject to an Exchange Agreement dated the
same date as this Agreement.
(c) Each share of Company Common Stock held in the treasury of
the Company, or owned by Sema or by any direct or indirect wholly-owned
subsidiary of the Company or Sema, immediately before the Effective Time will,
at the Effective Time, be cancelled and cease to exist and no payment will be
made with respect to any of those shares.
(d) Subject to the other provisions of this Agreement
(including Paragraph 4.2), if after the date of this Agreement, Sema splits,
consolidates or reclassifies its Ordinary Shares, enters into a merger or other
transaction, or makes a distribution to the holders of Sema Ordinary Shares of
additional Sema Ordinary Shares or other securities or assets (other than
payment by Sema of cash dividends), so that holders of record of Sema Ordinary
Shares on a day before the Effective Time receive additional Sema Ordinary
Shares or other securities, cash or assets, or a combination of them, instead
of, or in addition to, the Sema Ordinary Shares as they exist on the date of
this Agreement, the Merger Consideration will be converted into the securities,
cash and other assets which a person who held 2.6 Sema Ordinary Shares at the
date of this Agreement would have owned at the Effective Time or been entitled
to receive after the Effective Time because of ownership of those Sema Ordinary
Shares at and prior to the Effective Time if that person had retained the 2.6
Sema Ordinary Shares and had not disposed
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of anything the person received as a result of the split, share consolidation,
share reclassification, merger or other transaction, or distribution (or ADS's
representing some or all of those securities). The Merger Consideration will not
be affected by the payment of cash dividends by Sema, including payment of the
dividend with regard to Sema Ordinary Shares announced on February 17, 2000.
(e) The Merger Consideration will not include fractions of
Sema ADS's. If any holder of Company Common Stock would be entitled to receive a
fraction of a Sema ADS as a result of the Merger, the holder of Company Common
Stock will receive, instead of that fraction of a Sema ADS, cash equal to (i)
the fraction, times (ii) the number of Sema Ordinary Shares represented by a
Sema ADS, times (iii) the Market Value of a Sema Ordinary Share on the Merger
Date. For the purposes of this Agreement, the Market Value of a Sema Ordinary
Share on a day will be the average of the closing price of a Sema Ordinary Share
on The London Stock Exchange Limited (the "LSE") on each of the ten consecutive
LSE trading days ending with, and including, the LSE trading day before that
day.
1.7 Stock of Acquisition. At the Effective Time, each share of stock of
Acquisition ("Acquisition stock") which is outstanding immediately before the
Effective Time will be converted into and become 100,000 shares of Class B
Common Stock of the Surviving Corporation. At the Effective Time, a certificate
which represented Acquisition stock will automatically become and be a
certificate representing the number of shares of common stock of the Surviving
Corporation into which the Acquisition stock represented by the certificate was
converted.
1.8 Dissenting Shares. (a) If holders of Company Common Stock are
entitled to appraisal rights under Section 262 of the DGCL, notwithstanding any
provision of this Agreement to the contrary, Company Common Stock that is
outstanding immediately prior to
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the Effective Time which is held by stockholders who have complied with Section
262 of the DGCL (including making a timely demand for appraisal and not voting
in favor of or consenting to the Merger) will not be converted into the right to
receive the Merger Consideration. Instead, if the Merger takes place, the
Surviving Corporation will pay the holders of those shares the fair value of the
shares of Company Common Stock determined as provided in Section 262 of the
DGCL. Shares held by stockholders who fail to perfect, or who otherwise properly
withdraw or lose, their rights to receive the fair value of their shares of
Company Common Stock determined under Section 262 of the DGCL will be deemed to
have been converted, at the later of the Effective Time or the time they
withdraw or lose their rights to receive the fair value of their shares, into
the right to receive the Merger Consideration provided in Paragraph 1.6(a),
without any interest.
(b) If holders of Company Common Stock are entitled to
appraisal rights under Section 262 of the DGCL, the Company will promptly give
Sema (i) notice of any demands for appraisal received by the Company, any
withdrawals of any such demands, and any other communications required by, or
relating to, Section 262 of the DGCL which the Company receives and (ii) the
opportunity to control (but in consultation with the Company) all negotiations
and proceedings with respect to demands for appraisal under the DGCL. The
Company will not, except with the prior written consent of Acquisition,
voluntarily make any payment with respect to any demand for payment of the fair
value of shares or settle or offer to settle any such demand.
1.9 Distributions with Regard to Company Common Stock. (a) Prior to the
Effective Time, Acquisition will designate a bank or trust company to act as
Distributing Agent in connection with the Merger (the "Distributing Agent").
That designation will be subject to approval by the Company (which will not be
unreasonably withheld). At the Effective Time, Sema will cause the Depositary to
deliver to the Distributing Agent Sema ADR's evidencing the
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Sema ADS's, and any Sema Ordinary Shares, which will be distributed to holders
of Company Common Stock under Paragraph 1.6(a) as a result of the Merger.
(b) Until they are distributed, the Sema Ordinary Shares
represented by the Sema ADS's held by the Distributing Agent will be deemed to
be outstanding, but the Distributing Agent will not vote those shares or
exercise any rights of a shareholder with regard to them. If any dividends are
paid with regard to Sema ADS's while they are held by the Distributing Agent,
the Distributing Agent will hold the dividends, uninvested, until Sema ADS's are
distributed to particular former holders of Company Common Stock, at which time
the dividends which have been paid with regard to the Sema ADS's which are being
distributed will be paid, without interest, to the persons to whom the Sema
ADS's are being distributed.
(c) Promptly after the Effective Time, the Surviving
Corporation will cause the Distributing Agent to mail to each person who was a
record holder of Company Common Stock at the Effective Time, a form of letter of
transmittal for use in effecting the surrender of stock certificates
representing Company Common Stock ("Certificates") in order to receive payment
of the Merger Consideration. When the Distributing Agent receives a Certificate,
together with a properly completed and executed letter of transmittal and any
other required documents, the Distributing Agent will distribute to the holder
of the Certificate, or as otherwise directed in the letter of transmittal, the
Merger Consideration with regard to the shares represented by the Certificate,
and the Certificate will be cancelled. If the Merger Consideration is to be
distributed to a person other than the person in whose name a surrendered
Certificate is registered, the surrendered Certificate must be properly endorsed
or otherwise be in proper form for transfer, and the person who surrenders the
Certificate must provide funds for payment of any transfer or other taxes
required by reason of the distribution to a person other than the registered
holder of the surrendered Certificate or establish to the satisfaction of the
Surviving Corporation that the tax has been paid. After the Effective Time, a
Certificate which has not been surrendered will
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represent only the right to receive the Merger Consideration (and any dividends
paid after the Effective Date with regard to Sema ADS's included in the Merger
Consideration), without any interest.
(d) Sema will make arrangements prior to the Effective Time so
that any stockholder of the Company can request that the Sema ADS's to which the
stockholder is entitled as Merger Consideration be converted, before they are
delivered to the stockholder, into Sema Ordinary Shares, or Sema will make other
arrangements so those stockholders will receive Sema Ordinary Shares instead of
Sema ADS's, and Sema will pay all costs associated with those conversions or
other arrangements.
(e) If a Certificate has been lost, stolen or destroyed, the
Surviving Corporation will accept an affidavit and indemnification reasonably
satisfactory to it instead of the Certificate.
(f) At any time which is more than six months after the
Effective Time, the Surviving Corporation may require the Distributing Agent to
deliver to it any Sema ADS's which had been delivered to the Distributing Agent
and have not been distributed by way of ADR's to former holders of Company
Common Stock (including, without limitation, dividends received by the
Distributing Agent in respect of Sema ADS's it was holding), and after the Sema
ADS's have been delivered to the Surviving Corporation, the Surviving
Corporation will hold the Sema ADS's and any related dividends for the benefit
of the former stockholders of the Company and the former stockholders must look
to the Surviving Corporation for those Sema ADS's and any related dividends.
None of Sema, the Surviving Corporation or the Distributing Agent will be liable
to any former stockholder of the Company for any Merger Consideration which is
delivered to a public official pursuant to any abandoned property, escheat or
similar law.
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(g) If, after the Effective Time, Certificates are presented
for transfer, other than by Large German Stockholders, they will be cancelled
and treated as having been surrendered for the Merger Consideration.
1.10 Options and Warrants. (a) At the Effective Time, each option or
warrant issued by the Company which entitles the holder to acquire Company
Common Stock and is outstanding at the Effective Time will become the right to
receive, upon exercise, the Merger Consideration with regard to each share of
Company Common Stock (which exercise price will be payable to Sema) as to which
the option or warrant is exercised at the exercise price that would have been
payable for each share of Company Common Stock, except that if the option or
warrant specifically provides that upon exercise after a merger such as the
Merger the holder of the option or warrant will be entitled to receive something
other than what is paid or distributed as a result of the merger, the holder of
the option or warrant will be entitled to receive upon exercise what is provided
in the option or warrant. The Company and Sema agree to take all necessary steps
to effectuate the foregoing provisions of this Section 1.10(a).
(b) Sema will file before the Merger Date (or if that is not
permitted, promptly after the Merger Date) a Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act") on Form S-8 relating
to the Sema ADS's and Sema Ordinary Shares to be issued after the Effective Time
upon exercise of options issued by the Company before the Effective Time under
its stock option plans and will use its reasonable efforts to maintain the
effectiveness of that registration statement (and maintain the current status of
the prospectus or prospectuses in it) for so long as the options remain
outstanding. That Registration Statement will include a prospectus relating to
resales by persons who may be deemed to have been affiliates of the Company at
the Effective Time of Sema ADS's and Sema Ordinary Shares they receive upon
exercise of options issued by the Company before the Effective Time under its
stock option plans.
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(c) The Company will take all necessary action under its
Employee Qualified Stock Purchase Plan ("ESPP") to provide that the offering
period under the ESPP that commenced on January 1, 2000 will terminate on the
last trading date prior to the Merger Date, and to cause shares of Company
Common Stock to be purchased and allocated to participants with respect to that
offering period prior to the Effective Time.
1.11 Withholding. Sema and Acquisition may withhold from the Sema ADS's
to be distributed as a result of the Merger to any holder of Company Common
Stock a number of Sema ADS's with a Market Value equal to any amounts which Sema
or Acquisition may be (or may reasonably believe it is) required to withhold
under the United States Internal Revenue Code of 1986, as amended (the "Code"),
or any provision of United States state or local, English, or other foreign tax
law (or the Sema Ordinary Shares to which those Sema ADS's relate), and pay
those amounts to the applicable taxing authorities. Any Sema ADS's (or Sema
Ordinary Shares) which are withheld as permitted by this Paragraph will be
deemed to have been issued to the holder of Company Common Stock with respect to
whom they are withheld.
ARTICLE II
EFFECTIVE TIME OF MERGER
2.1 Date of the Merger. The day on which the Merger is to take place
(the "Merger Date") will be the first business day after the latest of (i) the
day on which this Agreement is adopted and the Merger is approved by the holders
of a majority of the outstanding shares of Company Common Stock, (ii) the day on
which holders of a majority of the Sema Ordinary Shares which are voted at a
duly convened meeting (x) authorize the acquisition of the Company, (y) increase
Sema's authorized share capital at least to the extent necessary to permit
issuance of the Sema Ordinary Shares which will be represented by the Sema ADS's
constituting the Merger Consideration and (z) approve the allotment of the
relevant Sema
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Ordinary Shares and (iii) the day on which all the other conditions set forth in
Article V (other than conditions which are contemplated to be satisfied on the
Merger Date) have been satisfied or waived. The Merger Date may be changed with
the consent of the Company and Sema.
2.2 Execution of Certificate of Merger. Not later than 3:00 P.M. on the
day before the Merger Date, Acquisition and the Company will each execute a
certificate of merger (the "Certificate of Merger") substantially in the form of
Schedule 2.2 and deliver it to Clifford Chance Rogers & Wells LLP for filing
with the Secretary of State of Delaware. If all the conditions in Article V are
satisfied or waived, Sema and the Company will cause the Certificate of Merger
to be filed with the Secretary of State of Delaware on the Merger Date or as
soon after that date as is practicable.
2.3 Effective Time of the Merger. The Merger will become effective at
11:59 P.M. on the day when the Certificate of Merger is filed with the Secretary
of State of Delaware (that being the "Effective Time").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company
represents and warrants to Sema and Acquisition as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) The Company has all corporate power and authority
necessary to enable it to enter into this Agreement and carry out the
transactions contemplated by this Agreement. All corporate actions necessary to
authorize the Company to enter into this Agreement and carry out the
transactions contemplated by it, other than adoption of this Agreement and
approval of
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the Merger by the stockholders of the Company, have been taken. This Agreement
has been duly executed by the Company and is a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms. The
Company's Board of Directors has determined that on the date of this Agreement
the Merger is fair to the Company's stockholders and has voted to recommend to
the Company's stockholders that they vote in favor of adopting this Agreement
and approving the Merger.
(c) Neither the execution and delivery of this Agreement or of
any document to be delivered in accordance with this Agreement nor the
consummation of the transactions contemplated by this Agreement or by any
document to be delivered in accordance with this Agreement will violate, result
in a breach of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, the Certificate of
Incorporation or By-Laws of the Company, any agreement or instrument to which
the Company or any subsidiary of the Company is a party or by which any of them
is bound, any law, or any order, rule or regulation of any court or governmental
agency or other regulatory organization having jurisdiction over the Company or
any of its subsidiaries, except violations, breaches or defaults which, in
total, would not have a Material Adverse Effect upon the Company or the
Surviving Corporation, would not require the Company or the Surviving
Corporation to repay a material amount of debt and would not prevent or
materially delay the Merger. As used in this Agreement, the term "Material
Adverse Effect" on a company means a material adverse effect on (i) the
consolidated financial position of that company and its subsidiaries taken as a
whole or (ii) the consolidated results of operations of that company and its
subsidiaries taken as a whole.
(d) Except as shown on Schedule 3.1-D, no governmental
filings, authorizations, approvals, or consents, or other governmental action,
other than filings and expiration or termination of waiting periods under the
HSR Act and under English, German and any other
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applicable competition laws, and filings in accordance with European Council
Regulation 2367/90, if it is applicable, are required to permit the Company to
fulfill all its obligations under this Agreement.
(e) The Company and each of its subsidiaries is qualified to
do business as a foreign corporation in each state of the United States in which
it is required to be qualified, except states in which the failure to qualify,
in the aggregate, would not have a Material Adverse Effect on the Company.
(f) The only authorized stock of the Company is 200,000,000
shares of Company Common Stock, and 225,000 shares of preferred stock, par value
$.01 per share. At the date of this Agreement, the only outstanding stock of the
Company is not more than 59,500,000 shares of Company Common Stock. All the
outstanding shares of Company Common Stock have been duly authorized and issued
and are fully paid and non-assessable. Except as shown on Schedule 3.1-F, the
Company does not have any outstanding options, warrants or convertible or
exchangeable securities, and is not a party to any other agreements, which
require, or upon the passage of time, the payment of money or the occurrence of
any other event may require, the Company to issue or sell any of its stock.
(g) Except as shown on Schedule 3.1-G, (i) each of the
corporations and other entities of which the Company owns directly or indirectly
50% or more of the equity (each corporation or other entity of which a company
owns directly or indirectly 50% or more of the equity being a "subsidiary" of
that company) has been duly organized, and is validly existing and in good
standing under the laws of the jurisdiction in which it is organized, (ii) all
the shares of stock owned by the Company or a subsidiary of each of the
Company's subsidiaries which is a corporation are duly authorized, validly
issued, fully paid and non-assessable and are not subject to any other person's
preemptive rights, and (iii) neither the Company nor any of its
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subsidiaries has any outstanding options, warrants or convertible or
exchangeable securities, or is a party to any other agreements, which require,
or upon the passage of time, the payment of money or the occurrence of any other
event may require, the Company or any subsidiary to issue or sell any stock or
other equity interests in any of the Company's subsidiaries, and there are no
registration covenants or transfer or voting restrictions with respect to
outstanding securities of any of the Company's subsidiaries.
(h) Since May 17, 1997, the Company has filed with the
Securities and Exchange Commission (the "SEC") all forms, statements, reports
and documents it has been required to file under the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or the rules
under them.
(i) The Company's Annual Report on Form 10-K for the year
ended December 31, 1998 (the "1998 10-K") and its Quarterly Report on Form 10-Q
for the period ended September 30, 1999 (the "September 10-Q") which the Company
filed with the SEC, including the documents incorporated by reference in each of
them, each contained all the material information required to be included in it
and, when it was filed, did not contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made
in it, in light of the circumstances under which they were made, not misleading.
Without limiting what is said in the preceding sentence, the financial
statements included in the 1998 10-K all were prepared, and the financial
information included in the September 10-Q was derived from financial statements
which were prepared, in accordance with United States generally accepted
accounting principles ("U.S. GAAP") applied on a consistent basis (except that
financial information included in the September 10-Q does not contain notes and
is subject to normal year end adjustments) and present fairly the consolidated
financial condition and the consolidated results of operations of the Company
and its subsidiaries at the dates, and for the periods, to which they relate.
The Company has not filed
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any reports with the SEC with regard to any period which ended, or any event
which occurred, after September 30, 1999, other than a Current Report on Form
8-K filed on October 21, 1999. The Company's revenues and net income for the
quarter ended December 31, 1999 and for the year ended December 31, 1999 were as
stated in a press release issued by the Company on February 22, 2000. When the
Company files its Annual Report on Form 10-K for the year ended December 31,
1999, it (including the documents incorporated by reference in it) will contain
all the information required to be included in it and, when it is filed, will
not contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made in it, in light of the
circumstances in which they are made, not misleading.
(j) Since September 30, 1999, (i) the Company and its
subsidiaries have conducted their respective businesses in the ordinary course
and in the same manner in which they were conducted prior to September 30, 1999,
and (ii) nothing has occurred which, individually or in the aggregate, has had a
Material Adverse Effect on the Company.
(k) The assets of the Company and its subsidiaries constitute,
in the aggregate, all the assets (including, but not limited to, intellectual
property rights) used in or necessary to the conduct of their businesses as they
currently are being conducted.
(l) The Company and its subsidiaries have at all times
complied, and currently are complying, with all applicable Federal, state, local
and foreign laws and regulations, except failures to comply which would not
reasonably be expected, in the aggregate, to have a Material Adverse Effect on
the Company.
(m) The Company and its subsidiaries have all licenses and
permits which are required at the date of this Agreement to enable them to
conduct their businesses as they currently are being conducted, except licenses
or permits the lack of which would not reasonably be expected, in the aggregate,
to have a Material Adverse Effect on the Company.
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(n) Schedule 3.1-N is a complete list of all patents, patent
applications, patent licenses, trademarks, trademark licenses, trade names and
service marks which are material to the businesses of the Company and its
subsidiaries taken as a whole. The Company and each subsidiary is entitled to
use all the patents, trademarks, trade names and service marks which it uses in
connection with its businesses, other than patents, trademarks, trade names and
service marks which the Company and the subsidiaries could stop using without
there being a Material Adverse Effect on the Company. Except as described on
Schedule 3.1-N, no executive officer of the Company has been informed of any
claim, or is aware, that the Company or any of its subsidiaries is violating any
patent, trademark or service mark, or unlawfully using any trade secret or other
intellectual property, owned by any other person or that any of them is using
any name which is confusingly similar to that of any other person. The
transactions which are the subject of this Agreement will not result in the
termination of, or otherwise require the consent of any party to, any patent
license or trademark license listed on Schedule 3.1-N.
(o) The Company and each of its subsidiaries has filed when
due (taking account of extensions) all Tax Returns (as defined below) which it
has been required to file and has paid all Taxes shown on those returns to be
due. Those Tax Returns accurately reflect all Taxes required to have been paid,
except to the extent of items which may be disputed by applicable taxing
authorities but for which there is substantial authority to support the position
taken by the Company or the subsidiary and which have been adequately reserved
against in accordance with U.S. GAAP on the balance sheet at September 30, 1999
included in the September 10-Q. Except as shown on Schedule 3.1-O, (i) no tax
lien has been filed by any taxing authority against the Company or any of its
subsidiaries or any of their assets, (ii) no Federal, state or local audits or
other administrative proceedings or court proceedings with regard to Taxes are
presently pending with regard to the Company or any of its subsidiaries, (iii)
neither the Company nor any subsidiary is a party to any agreement providing for
the allocation or sharing
15
<PAGE> 17
of Taxes (other than agreements solely between the Company and its direct or
indirect wholly owned subsidiaries or among direct or indirect wholly owned
subsidiaries of the Company), (iv) neither the Company nor any subsidiary has
participated in or cooperated with an international boycott as that term is used
in Section 999 of the United States Internal Revenue Code of 1986, as amended
(the "Code") and (v) neither the Company nor any subsidiary has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a Subsection (f) asset (as that term is
defined in Section 341(f)(4) of the Code) owned by the Company or any
subsidiary. For the purposes of this Agreement, the term "Taxes" means all taxes
(including, but not limited to, withholding taxes), assessments, fees, levies
and other governmental charges, and any related interest or penalties. For the
purposes of this Agreement, the term "Tax Return" means any report, return or
other information required to be supplied to a taxing authority in connection
with Taxes.
(p) (i) The Company and its subsidiaries have all material
environmental permits which are necessary to enable them to conduct their
businesses as they currently are being conducted without violating any
Environmental Laws, (ii) except as shown on Schedule 3.1-P, neither the Company
nor any subsidiary has received any written notice of material noncompliance or
material liability under any Environmental Law, (iii) neither the Company nor
any subsidiary has performed any acts, including but not limited to releasing,
storing or disposing of hazardous materials, there is no condition on any
property owned or leased by the Company or a subsidiary, and there was no
condition on any property formerly owned or leased by the Company or a
subsidiary while the Company or a subsidiary owned or leased that property, that
could result in material liability by the Company or a subsidiary under any
Environmental Law and (iv) neither the Company nor any subsidiary is subject to
any order of a court or governmental agency requiring the Company or any
subsidiary to take, or refrain from taking, any actions in order to comply with
any Environmental Law and no action or proceeding
16
<PAGE> 18
seeking such an order is pending or, insofar as any executive officer of the
Company is aware, threatened against the Company. As used in this Agreement, the
term "Environmental Law" means any Federal, state or local law, rule,
regulation, guideline or other legally enforceable requirement of a governmental
authority relating to protection of the environment or to environmental
conditions which affect human health or safety.
(q) Except as shown on Schedule 3.1-Q, neither the Company nor
any subsidiary is a party to any suit or proceeding in any court, or by or
before any governmental agency, nor has any executive officer of the Company
been notified that any suit or proceeding is threatened against any of those
entities, other than suits or proceedings in which the other party seeks only
money damages of less than $5 million in each instance and less than $25 million
as to all excluded suits and proceedings.
(r) Failures of items sold by the Company or its subsidiaries
to have been Y2K Compliant will not result in liabilities or costs to the
Company which, in aggregate, will have a Material Adverse Effect on the Company.
For the purposes of this Agreement, items failed to be Y2K compliant if they did
not function properly because they were not capable of recognizing that dates in
the year 2000 are subsequent to December 31, 1999 or otherwise were not able to
operate without being adversely affected by the change from the twentieth to the
twenty-first century.
(s) Except as shown on Schedule 3.1-S, there are no contracts,
agreements or other arrangements which could result in the payment by the
Company or by any subsidiary of an "Excess Parachute Payment" as that term is
used in Section 280G of the Code.
3.2 Representations and Warranties of Sema and Acquisition. Each of
Sema and Acquisition represents and warrants to the Company as follows:
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<PAGE> 19
(a) Sema is a company duly incorporated, validly existing and
in good standing under the laws of England and Wales. Acquisition is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Acquisition is a wholly owned subsidiary of Sema.
(b) Each of Sema and Acquisition has all corporate power and
authority necessary to enable it to enter into this Agreement and carry out the
transactions contemplated by this Agreement. All corporate actions necessary to
authorize each of Sema and Acquisition to enter into this Agreement and carry
out the transactions contemplated by it, other than the shareholders actions
described in Paragraph 2.1. This Agreement has been duly executed by each of
Sema and Acquisition and is a valid and binding agreement of each of Sema and
Acquisition, enforceable against each of Sema and Acquisition in accordance with
its terms.
(c) Neither the execution and delivery of this Agreement or of
any document to be delivered in accordance with this Agreement nor the
consummation of the transactions contemplated by this Agreement or by any
document to be delivered in accordance with this Agreement will violate, result
in a breach of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, the Memorandum or Articles
of Association of Sema, or the Certificate of Incorporation or By-Laws of
Acquisition, any agreement or instrument to which either Sema or Acquisition or
any other subsidiary of Sema is a party or by which any of them is bound, any
law, or any order, rule or regulation of any court or governmental agency or
other regulatory organization having jurisdiction over Sema or any of its
subsidiaries, including Acquisition, except violations or breaches of, or
defaults under, agreements or instruments which, in total, would not have a
Material Adverse Effect on Sema and would not prevent or materially delay the
Merger.
18
<PAGE> 20
(d) Except as shown on Schedule 3.2-D, no governmental
filings, authorizations, approvals, or consents, or other governmental action,
other than filings under and the expiration or termination of waiting periods
under the HSR Act and under English, German and any other applicable competition
laws, and filings in accordance with European Council Regulation 2367/90, if it
is applicable, are required to permit each of Sema and Acquisition to fulfill
all its obligations under this Agreement.
(e) The only authorized share capital of Sema is 600,000,000
Sema Ordinary Shares. At the date of this Agreement, the only issued share
capital of Sema is not more than 464,000,000 Sema Ordinary Shares. All the
issued Sema Ordinary Shares have been duly authorized and validly issued and are
fully paid and non-assessable. Except as shown on Schedule 3.2-F, Sema does not
have any outstanding options, warrants or convertible or exchangeable
securities, and is not a party to any other agreements, which require, or upon
the passage of time, the payment of money or the occurrence of any other event
may require, Sema to issue or sell any of its stock. When Sema ADS's are issued
as Merger Consideration, those Sema ADS's will be duly authorized and validly
issued, and will entitle the holders to receive Sema Ordinary Shares which have
been duly authorized and validly issued, are non-assessable, and are not subject
to any pre-emptive rights. The only authorized stock of Acquisition is 1,000
shares of common stock, par value $1 per share, all of which will be issued and
outstanding on the Merger Date.
(f) Except as shown on Schedule 3.2-G, (i) each of Sema's
subsidiaries has been duly organized, and is validly existing and in good
standing under the laws of the jurisdiction in which it is organized, (ii) all
the shares owned by Sema or a subsidiary of each of Sema's subsidiaries which
are corporations or otherwise issue shares are duly authorized, validly issued,
fully paid and non-assessable and are not subject to any other person's
preemptive rights, and (iii) neither Sema nor any of its subsidiaries has any
outstanding options,
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<PAGE> 21
warrants or convertible or exchangeable securities, or is a party to any other
agreements, which require, or upon the passage of time, the payment of money or
the occurrence of any other event may require, Sema or any subsidiary to issue
or sell any shares or other equity interests in any of Sema's subsidiaries, and
there are no registration covenants or transfer or voting restrictions with
respect to securities of any of Sema's subsidiaries.
(g) Since January 1, 1997, Sema has made all filings it has
been required to make with the Registrar of Companies in England and Wales and
the LSE. Each of those filings is complete in all material respects and none of
those filings, when it was made, contained a misstatement of a material fact or
omitted to state a material fact necessary in order to make the statements made
in it, in light of the circumstances under which they were made, not misleading.
(h) The draft dated March 6, 2000 of a Sema Registration
Statement on Form 20-F (the "Sema Draft 20-F"), contained all the material
information required to be included in a Registration Statement on Form 20-F
relating to Sema (other than Exhibits and additional information which may be
required to respond to comments from the staff of the Securities and Exchange
Commission dated January 24, 2000) and did not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made in it, in light of the circumstances under which they were made,
not misleading, except that Sema does not represent or warrant the accuracy of
information about industries or markets in which Sema or its subsidiaries have
activities or other information which does not relate to Sema or its
subsidiaries. Without limiting what is said in the preceding sentence, the
financial statements included in the Sema Draft 20-F all were prepared in
accordance with United Kingdom generally accepted accounting principles ("UK
GAAP") applied on a consistent basis and present fairly the consolidated
financial condition and the consolidated results of operations of Sema and its
subsidiaries at the dates, and for the periods, to which they relate. Sema's
consolidated
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<PAGE> 22
revenues and net income for the year ended December 31, 1999 were as stated in a
press release issued by Sema on February 17, 2000.
(i) Since June 30, 1999, (i) Sema and its subsidiaries have
conducted their businesses in the ordinary course and in the same manner in
which they were conducted prior to June 30, 1999, and (ii) nothing has occurred
which, individually or in aggregate, has had a Material Adverse Effect on Sema.
(j) The assets of Sema and its subsidiaries constitute, in the
aggregate, all the assets (including, but not limited to, intellectual property
rights) used in or necessary to the conduct of their businesses as they
currently are being conducted.
(k) Sema and each subsidiary is entitled to use all the
patents, trademarks, trade names and service marks which it uses in connection
with its businesses, other than patents, trademarks, trade names and service
marks which Sema and the subsidiaries could stop using without there being a
Material Adverse Effect on Sema. Except as described on Schedule 3.2-K, no
executive officer of Sema has been informed of any claim, or is aware, that Sema
or any of its subsidiaries is violating any patent, trademark or service mark,
or unlawfully using any trade secret or other intellectual property, owned by
any other person or that any of them is using any name which is confusingly
similar to that of any other person. The transactions which are the subject of
this Agreement will not result in the termination of, or otherwise require the
consent of any party to, any patent license or trademark license which is
material to Sema and its subsidiaries taken as a whole.
(l) Sema and its subsidiaries have at all times complied, and
currently are complying, with all applicable English and other laws and
regulations, except failures to comply which would not reasonably be expected,
in the aggregate, to have a Material Adverse Effect on Sema.
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<PAGE> 23
(m) Sema and its subsidiaries have all licenses and permits
which are required at the date of this Agreement to enable them to conduct their
businesses as they currently are being conducted, except licenses or permits the
lack of which would not reasonably be expected, in the aggregate, to have a
Material Adverse Effect on Sema.
(n) Sema and each of its subsidiaries has filed when due
(taking account of extensions) all Tax Returns which it has been required to
file and has paid all Taxes shown on those returns to be due. Those Tax Returns
accurately reflect all Taxes required to have been paid, except to the extent of
items which may be disputed by applicable taxing authorities but for which there
is substantial authority to support the position taken by Sema or the subsidiary
and which have been adequately reserved against in accordance with UK GAAP on
the balance sheet at June 30, 1999 included in the Sema Draft 20-F. Neither Sema
nor any subsidiary has, to the extent it is subject to Section 999 of the Code,
participated in or cooperated with an international boycott as that term is used
in Section 999 of the Code in any respects which, in total, could reasonably be
expected to have a Material Adverse Effect on Sema.
(o) (i) Sema and its subsidiaries have all material
environmental permits which are necessary to enable them to conduct their
businesses as they currently are being conducted without violating any
Environmental Laws, (ii) except as shown on Schedule 3.2-O, neither Sema nor any
subsidiary has received any notice of material noncompliance or material
liability under any Environmental Law, (iii) neither Sema nor any subsidiary has
performed any acts, including but not limited to releasing, storing or disposing
of hazardous materials, there is no condition on any property owned or leased by
Sema or a subsidiary, and there was no condition on any property formerly owned
or leased by Sema or a subsidiary while Sema or a subsidiary owned or leased
that property, that could result in material liability by Sema or a subsidiary
under any Environmental Law and (iv) neither Sema nor any subsidiary is subject
to any order of a court or governmental agency requiring Sema or any subsidiary
to take, or refrain from
22
<PAGE> 24
taking, any actions in order to comply with any Environmental Law, other than
orders with which Sema or its subsidiary can comply without there being a
Material Adverse Effect on Sema, and no action or proceeding seeking such an
order is pending or, insofar as any executive officer of Sema is aware,
threatened against Sema or a subsidiary.
(p) Except as shown on Schedule 3.2-P, neither the Company nor
any subsidiary is a party to any suit or proceeding in any court, or by or
before any governmental agency, nor has any executive officer of Sema been
notified that any suit or proceeding is threatened against any of those
entities, other than suits or proceedings in which the other party seeks only
money damages of less than $5 million in each instance and less than $25 million
as to all excluded suits and proceedings.
(q) Failures of items sold by Sema or its subsidiaries to have
been Y2K Compliant will not result in liabilities or costs to Sema or its
subsidiaries which, in aggregate, will have a Material Adverse Effect on Sema.
3.3 Termination of Representations and Warranties. The representations
and warranties in this Agreement will terminate at the Effective Time, and none
of the Company, Sema or Acquisition, nor any of their respective shareholders,
will have any rights or claims as a result of any of those representations or
warranties after the Effective Time.
ARTICLE IV
ACTIONS PRIOR TO THE MERGER
4.1 Company's Activities Until Effective Time. From the date of this
Agreement to the Effective Time, or such earlier time as this Agreement is
terminated in accordance with Article VI, the Company will, and will cause each
of its subsidiaries to, except with the written consent of Sema, which will not
be unreasonably withheld or delayed:
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<PAGE> 25
(a) Operate its business in the ordinary course and in a
manner consistent with the manner in which it is being operated at the date of
this Agreement.
(b) Take all reasonable steps available to it to maintain the
goodwill of its business and the continued employment of its executives and
other employees and to maintain good relationships with the vendors, suppliers,
contractors and others with which it does business.
(c) At its expense, maintain all its assets in good repair and
condition, except to the extent of reasonable wear and use and damage by fire or
other unavoidable casualty.
(d) Not make any borrowings other than borrowings in the
ordinary course of business under working capital lines which are disclosed in
the notes to the consolidated balance sheet at December 31, 1998 included in the
1998 10-K or reflected or described in the September 10-Q.
(e) Not enter into any contractual commitments involving
capital expenditures (other than acquisitions of businesses permitted by
subparagraph (j)) loans or advances, and not voluntarily incur any contingent
liabilities, except in each case in the ordinary course of business.
(f) Not redeem or purchase any of its stock and not declare or
pay any dividends, or make any other distributions or repayments of debt to its
stockholders (other than payments by subsidiaries of the Company to the Company
or to other wholly owned subsidiaries of the Company), except that the Company
may (i) pay cash dividends in an amount per share of Company Common Stock equal
to 2.6 times (as adjusted pursuant to Section 1.6(d)) the amount per Sema
Ordinary Share of any dividend which Sema pays, before or after the Merger Date,
to the persons who are holders of record of the Sema Ordinary Shares
24
<PAGE> 26
on a date between the date of this Agreement and the Merger Date (other than the
dividend with regard to Sema Ordinary Shares announced on February 17, 2000 and
payable to the holders of record of the Sema Ordinary Shares on June 5, 2000)
and (ii) carry out provisions of stock options permitting "cashless exercises"
of the stock options.
(g) Not make any loans or advances (other than advances for
travel and other normal business expenses) to stockholders, directors, officers
or employees.
(h) Maintain its books of account and records in the usual
manner, in accordance with U.S. GAAP applied on a basis consistent with the
basis on which they were applied in prior years, subject to normal year-end
adjustments and accruals.
(i) Comply in all material respects with all applicable laws
and regulations of governmental agencies.
(j) Not purchase, sell or otherwise dispose of or encumber any
property or assets, or engage in any activities or transactions, except in each
case in the ordinary course of business.
(k) Not institute any litigation, other than in the ordinary
course of business.
(l) Not enter into or amend any employment, severance or
similar agreements or arrangements, or increase the salaries of any employees,
other than employment agreements or salary increases entered into or given in
the ordinary course of business which, except as shown on Schedule 4.1-L, are
not with, or given to, people who are or become executive officers of the
Company.
(m) Not adopt, become an employer with regard to, or amend any
employee compensation, employee benefit or post-employment benefit plan, except
that the Company
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<PAGE> 27
may amend plans in order to make them comply with law or to implement changes
which were approved before the date of this Agreement.
(n) Not amend its certificate of incorporation or by-laws.
(o) Not (i) issue or sell any of its stock (except upon
exercise of options which are outstanding on the date of this Agreement or
issued in accordance with this Agreement or in accordance with the Company's
ESPP as in effect on the date of Agreement) or any options, warrants or
convertible or exchangeable securities or (ii) split, combine, or reclassify its
outstanding stock, except that the Company may, after consultation with Sema,
grant options under the stock option plans which are in effect at the date of
this Agreement entitling employees who are not executive officers of the Company
on the date of this Agreement to purchase up to 300,000 shares of Company Common
Stock, each of which options (x) will have an exercise price which is not less
than the mean of the high and low sale price of Company Common Stock reported on
the Nasdaq National Market on the day the option is granted and (y) will not
become exercisable until at least one year after the day the option is granted.
(p) Not knowingly take any action that would prevent the
Merger from qualifying as a "reorganization" under Section 368 of the Code.
(q) Not authorize or enter into any agreement to take any of
the actions referred to in subparagraphs (a) through (p) above.
4.2 Sema's Activities Until Effective Time. From the date of this
Agreement to the Effective Time, or such earlier time as this Agreement is
terminated in accordance with Article VI, Sema will, and will cause each of its
subsidiaries to, except with the written consent of the Company, which will not
be unreasonably withheld or delayed:
26
<PAGE> 28
(a) Operate its business in the ordinary course and in a
manner consistent with the manner in which it is being operated at the date of
this Agreement.
(b) Take all reasonable steps available to it to maintain the
goodwill of its business and the continued employment of its executives and
other employees and to maintain good relationships with the vendors, suppliers,
contractors and others with which it does business.
(c) At its expense, maintain all its assets in good repair and
condition, except to the extent of reasonable wear and use and damage by fire or
other unavoidable casualty.
(d) Maintain its books of account and records in the usual
manner, in accordance with UK GAAP applied on a basis consistent with the basis
on which they were applied in prior years, subject to normal year-end
adjustments and accruals.
(e) Comply in all material respects with all applicable laws
and regulations of governmental agencies.
(f) Not purchase, sell or otherwise dispose of or encumber any
property or assets, or engage in any activities or transactions, except in each
case in the ordinary course of business or as otherwise permitted by this
Paragraph 4.2.
(g) Not sell or issue Sema Ordinary Shares (other than upon
exercise of options or warrants which are outstanding on the date of this
Agreement) for a sale price which is less than 90% of the closing price of the
Sema Ordinary Shares on the LSE on the last LSE trading day before the day of
the sale.
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<PAGE> 29
(h) Not purchase or otherwise acquire, directly or indirectly,
any shares of Company Common Stock, other than through exercise of an option
granted in a Stock Option Agreement dated the same date as this Agreement
between the Company and Sema.
(i) Not knowingly take any action that would prevent the
Merger from qualifying as a "reorganization" under Section 368(a) of the Code.
(j) Not do anything within its control which is reasonably
likely to delay the Merger by more than ten business days.
(k) Not authorize or enter into any agreement to take any of
the actions referred to in subparagraphs (a) through (j) above.
4.3 Competition Law Filings. (a) The Company and Sema will each make as
promptly as practicable the filing it is required to make under the HSR Act and
any other applicable competition laws with regard to the transactions which are
the subject of this Agreement and each of them will take all reasonable steps
within its control (including providing information to the Federal Trade
Commission and the Department of Justice and any other applicable governmental
authorities) to cause the waiting periods required by the HSR Act and any other
applicable competition laws to be terminated or to expire as promptly as
practicable. The Company and Sema will each provide information and cooperate in
all other respects to assist the other of them in making its filings under the
HSR Act and any other applicable competition laws.
(b) If Sema notifies the Merger to the U.K. Office of Fair
Trading, Sema will use its best efforts to obtain as promptly as practicable
written confirmation that the Secretary of State for Trade and Industry (the
"Secretary") does not intend to refer the Merger or any other transaction
contemplated by this Agreement to the Competition Commission or, if the
Secretary
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<PAGE> 30
does make such a reference, to cause the Secretary to confirm in writing as
promptly as practicable that it is his intention to permit the Merger and the
other transactions contemplated by this Agreement to proceed. Nothing in this
subparagraph will, however, require Sema to agree to dispose of or discontinue
any business. If Sema decides to notify the Merger to the Office of Fair
Trading, the Company will cooperate in all reasonable ways, including providing
all required information about itself and its subsidiaries, to assist Sema with
regard to the notification and any subsequent proceedings resulting from it.
(c) Sema will give by the required date the notification to
the European Commission, if any, required under Council Regulation 2367/90 with
regard to the transactions which are the subject of this Agreement and will take
all reasonable steps within its control (including providing information to the
European Commission) to cause the European Commission to render a favorable
decision (and in any event not to institute proceedings) with regard to the
Merger. Nothing in this subparagraph will, however, require Sema to agree to
dispose of or discontinue any business.
4.4 Shareholders' Meetings. Each of Sema and the Company will take all
action which is necessary to convene a meeting of its shareholders (a "Merger
Shareholders Meeting") as soon as practicable at which they will, among other
things, vote upon the Merger. The proxy statement distributed by the Company,
and the circular distributed by Sema, with respect to its Merger Shareholders
Meeting will include the recommendation of its Board of Directors that its
shareholders vote in favor of approval of the Merger and of any related matters,
unless the Board of Directors of Sema or the Company determines in good faith,
after consultation with its counsel about the nature of the directors' fiduciary
duties, that it is required by its fiduciary duties to state that it no longer
recommends that the stockholders of Sema or the Company, as the case may be,
vote in favor of approval of the Merger and any related matters. Except as
provided in the preceding sentence, each of Sema and the Company will use all
commercially
29
<PAGE> 31
reasonable efforts to solicit from its shareholders votes in favor of adoption
and approval of the Merger and any related matters.
4.5 Registration Statement and Proxy Statement. (a) Sema will prepare
and file with the SEC as soon as practicable after the date of this Agreement a
registration statement on Form F-4 relating to the Sema ADS's to be issued as a
result of the Merger (the "Sema Registration Statement") and (together with the
Depositary) a registration statement on Form F-6 (the ""Form F-6") relating to
the Sema ADS's. The Sema Registration Statement will include a proxy statement
(the "Proxy Statement/Prospectus") of the Company relating to its Merger
Shareholders Meeting. Sema and the Company will cooperate to provide all
information which is required to be included in the Sema Registration Statement
or in the Proxy Statement/Prospectus in a timely manner so the Sema Registration
Statement can be filed with the SEC as soon as reasonably practicable. Sema will
cause the Sema Registration Statement and the Form F-6, and the Company will
cause the Proxy Statement/Prospectus, to comply as to form in all material
respects with the applicable provisions of the Securities Act and the Exchange
Act and the rules under them. Sema will use its best efforts, and the Company
will cooperate with Sema, to cause the Sema Registration Statement and the Form
F-6 to be declared effective by the SEC as promptly as practicable after it is
filed (including without limitation, responding to any comments received from
the staff of the SEC with respect to the Sema Registration Statement or the
Proxy Statement/Prospectus) and to keep the Sema Registration Statement and the
Form F-6 effective as long as is necessary to consummate the Merger. Each of
Sema and the Company will, as promptly as practicable, provide to the other of
them copies of any written comments received from the SEC with regard to the
Sema Registration Statement or the Proxy Statement/Prospectus and will advise
the other of them of any comments with respect to the Sema Registration
Statement or the Proxy Statement/Prospectus which are received orally from the
staff of the SEC. Sema will use its
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<PAGE> 32
best efforts to obtain, prior to the effective date of the Sema Registration
Statement, any qualifications, permits or approvals which are necessary under
any state securities laws in order to carry out the Merger.
(b) Sema will prepare and lodge with the LSE as soon as
practicable after the date of this Agreement a circular relating to the vote of
Sema's shareholders with regard to the acquisition of the Company and the
authorization of the Sema Ordinary Shares to be issued as a result of the Merger
(the "Circular"), and Sema will use all reasonable efforts to cause the Circular
to be approved as promptly as practicable.
(c) Sema and Acquisition each represents and warrants to the
Company, and the Company represents and warrants to Sema, that none of the
information supplied by it for inclusion, or included in a document filed by it
which is incorporated by reference, in the Sema Registration Statement, the
Proxy Statement/Prospectus or the Circular will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. If at any time before the Merger
Shareholders Meetings, an event occurs with respect to the Company or any of its
subsidiaries, or with respect to Sema or any of its subsidiaries, which is
required to be described in the Sema Registration Statement, the Proxy
Statement/Prospectus or the Circular, Sema will amend or supplement the Sema
Registration Statement, the Proxy Statement/Prospectus or the Circular as
promptly as practicable and, if required by law, by the staff of the SEC or by
the LSE, the Company will distribute the amendment or supplement to the Proxy
Statement/Prospectus to the Company's stockholders or Sema will distribute the
amendment or supplement to the Circular to its shareholders. Neither Sema nor
the Company will make any amendment or supplement to the Sema Registration
Statement or the Proxy Statement/Prospectus without the approval of the other of
them, which approval will not be unreasonably withheld (and will under no
circumstances be
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withheld to the extent the amendment or supplement is required to cause the Sema
Registration Statement or the Proxy Statement/Prospectus to comply with
applicable law).
(d) The Company and Sema each will cause its Merger
Shareholders Meeting to be held not later than 45 days after the day on which
the Sema Registration Statement becomes effective.
(e) The Company's Board of Directors will not take any action,
other than causing the Company to terminate this Agreement if it is entitled to
do so under Article VI, which prevents the Company's stockholders from voting
upon the Merger, and Sema's Board of Directors will not take any action, other
than causing Sema to terminate this Agreement if it is entitled to do so under
Article VI, which prevents Sema's shareholders from voting upon the Merger.
4.6 No Solicitation of Offers; Notice of Proposals from Others. (a) The
Company will not, and will not authorize or permit its, or any of its
subsidiaries', officers, directors, employees, agents or representatives
(including any investment banker, attorney or accountant retained by it or by
any of its subsidiaries) directly or indirectly to initiate, solicit, encourage
or otherwise facilitate any discussion, negotiation or inquiry or the making of
any proposal or offer with respect to a merger, reorganization, share exchange,
consolidation or similar transaction involving the Company, or any purchase of,
or tender offer for, all or any significant portion of the Company's equity
securities or any significant portion of the assets of the Company and its
subsidiaries on a consolidated basis (each of these being an "Acquisition
Proposal").
(b) Subparagraph (a) will not prevent the Company from, in
response to an Acquisition Proposal which the Company receives despite complying
with subparagraph (a) and which the Company's Board of Directors determines, in
good faith after consultation with its independent financial advisor, would
result (if consummated in accordance with its terms) in a
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transaction which would be more favorable to the Company's stockholders than the
Merger, furnishing non-public information (after receipt of an appropriate
Confidentiality Agreement) to the person, entity or group (the "Potential
Acquiror") which makes the Acquisition Proposal and entering into discussions
and negotiations with that Potential Acquiror.
(c) Subparagraph (a) will not prevent the Company from
complying with Rule 14e-2(a) under the Exchange Act.
(d) If the Company receives an Acquisition Proposal, or the
Company learns that someone intends to solicit tenders of Company Common Stock
or otherwise proposes to acquire the Company or a significant portion of its
equity securities or its and its subsidiaries' assets if the Company's
stockholders do not approve the Merger, the Company will promptly notify Sema of
that fact and provide Sema with all information in the Company's possession
which Sema reasonably requests regarding the Acquisition Proposal, solicitation
of tenders or other proposed transaction, and the Company will promptly, from
time to time, provide Sema with any additional information the Company obtains
regarding the Acquisition Proposal, solicitation of tenders or other proposed
transaction.
(e) Without limiting what is said in Subparagraph (d), if the
Company's Board of Directors makes a determination described in Subparagraph (b)
and decides to furnish non-public information to a Potential Acquiror, the
Company will promptly (and in any event within 2 business days) notify Sema of
that decision.
4.7 Sema's and Acquisition's Efforts to Fulfill Conditions and Cause
the Merger to Take Place. Sema and Acquisition each will use its best efforts
(i) to cause all the conditions set forth in Paragraph 5.1 to be fulfilled on or
before the Merger Date and (ii) to cause the Merger to take place as promptly as
practicable, and in any event on or before September 30, 2000.
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4.8 Company's Efforts to Fulfill Conditions and Cause the Merger to
Take Place. The Company will use its best efforts (i) to cause all the
conditions set forth in Paragraph 5.2 to be fulfilled on or before the Merger
Date and (ii) to cause the Merger to take place as promptly as practicable, and
in any event on or before September 30, 2000.
ARTICLE V
CONDITIONS PRECEDENT TO MERGER
5.1 Conditions to the Company's Obligations. The obligations of the
Company to complete the Merger are subject to satisfaction of the following
conditions (any or all of which may be waived by the Company):
(a) The representations and warranties of Sema and Acquisition
contained in this Agreement will, except as contemplated by this Agreement, be
true and correct in all respects on the Merger Date (except that representations
and warranties which relate expressly to a specified date or a specified period
need only have been true and correct with regard to the specified date or
period) with the same effect as though made on that date (except (i) to the
extent of failures of representations and warranties to be correct (without
taking account of any limitation in a representation and warranty as to
materiality or absence of a Material Adverse Effect) which do not in total have,
and are not reasonably likely to have in total, a Material Adverse Effect after
the Merger on Sema, and (ii) to the extent the representations and warranties
are not true and correct at the Merger Date because of occurrences or conditions
which are attributable to, or result directly from, the public announcement or
the pendency of the Merger) and Sema will have delivered to the Company a
certificate dated that date and signed by the principal executive officer or the
principal financial officer of Sema to that effect.
(b) Sema and Acquisition will have fulfilled in all material
respects all their obligations under this Agreement required to have been
fulfilled on or before the Merger Date.
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(c) Any waiting periods under the HSR Act, any applicable
English or European Union competition laws, and any other applicable competition
laws will have expired or been terminated.
(d) No order will have been entered by any court or
governmental authority and be in force which invalidates this Agreement or
restrains the Company from completing the transactions which are the subject of
this Agreement
(e) The Merger will have been approved by the holders of a
majority of the outstanding shares of Company Common Stock.
(f) The Sema Ordinary Shares which will be issued as a result
of the Merger will have been authorized for listing on the LSE and the Bourse in
Paris, and the Sema ADS's which will be issued as a result of the Merger will
have been authorized for listing on the New York Stock Exchange or will be
eligible for quotation on the Nasdaq National Market.
(g) The Registration Statement will have become effective
under the Securities Act, no stop order relating to the Registration Statement
will have been entered, and no proceeding seeking a stop order relating to the
Registration Statement will be pending.
(h) Sema will not have amended its Memorandum of Association
or Articles of Association, except as contemplated by this Agreement.
(i) Sema will not have split, combined or reclassified its
issued shares.
(j) Two persons designated by the Board of Directors of the
Company will have been elected to the Board of Directors of Sema, effective upon
completion of the Merger.
(k) The Company will have received an opinion of Alston & Bird
LLP to the effect that the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code
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and that Sema, Acquisition and the Company each will be a party to a
reorganization within the meaning of Section 368(b) of the Code.
(l) The Merger Date will be not later than September 30, 2000.
5.2 Conditions to Sema's and Acquisition's Obligations. The obligations
of Sema and Acquisition to complete the Merger are subject to the following
conditions (any or all of which may be waived by Sema):
(a) The representations and warranties of the Company
contained in this Agreement will, except as contemplated by this Agreement, be
true and correct in all respects on the Merger Date (except that representations
and warranties which relate expressly to a specified date or a specified period
need only have been true and correct with regard to the specified date or
period) with the same effect as though made on that date (except (i) to the
extent of failures of representations and warranties to be correct (without
taking account of any limitation in a representation and warranty as to
materiality or absence of a Material Adverse Effect) which do not in total have,
and are not reasonably likely to have in total, a Material Adverse Effect after
the Merger on the Surviving Corporation or Sema, or (ii) to the extent the
representations and warranties are not true and correct at the Merger Date
because of occurrences or conditions which are attributable to, or result
directly from, the public announcement or the pendency of the Merger) and the
Company will have delivered to Sema a certificate dated that date and signed by
the principal executive officer or the principal financial officer of the
Company to that effect.
(b) The Company will have fulfilled in all material respects
all its obligations under this Agreement required to have been fulfilled on or
before the Merger Date.
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(c) Any waiting periods under the HSR Act, any applicable
English or European Union competition laws or any other applicable competition
laws will have expired or been terminated.
(d) No order will have been entered by any court or
governmental authority and be in force which invalidates this Agreement or
restrains Sema or Acquisition from completing the transactions which are the
subject of this Agreement, and no action will be pending against the Company,
Sema or Acquisition relating to the transactions which are the subject of this
Agreement which presents a reasonable likelihood of resulting in an award of
damages or other relief against the Company, Sema or Acquisition which would
have a Material Adverse Effect after the Merger on the Surviving Corporation or
Sema.
(e) The acquisition of the Company, the increase in Sema's
authorized share capital which is necessary to permit the Merger Consideration
to be issued and the allotment of the relevant Sema Ordinary Shares will have
been approved by the holders of at least a majority of the Sema Ordinary Shares
which are voted at a duly convened meeting.
(f) If holders of Company Common Stock are entitled to seek
dissenters' appraisal rights under Section 262 of the DGCL, the shares of
Company Common Stock as to which holders give timely and proper notice of
intention to exercise dissenters' appraisal rights will not exceed 5% of the
outstanding shares of Company Common Stock.
(g) If the Merger requires consent of H.M. Treasury, that
consent will have been obtained.
(h) The Sema Ordinary Shares which will be issued as a result
of the Merger will have been authorized for listing on the LSE and the Bourse in
Paris, and the Sema ADS's which
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will be issued as a result of the Merger will have been authorized for listing
on the New York Stock Exchange or will be eligible for quotation on the Nasdaq
National Market.
(i) The Registration Statement will have become effective
under the Securities Act, no stop order relating to the Registration Statement
will have been entered, and no proceeding seeking a stop order relating to the
Registration Statement will be pending.
(j) The Merger Date will not be later than September 30, 2000.
ARTICLE VI
TERMINATION
6.1 Right to Terminate. This Agreement may be terminated at any time
prior to the Effective Time (whether or not the Company's or Sema's shareholders
have approved the Merger):
(a) By mutual written consent of the Company and Sema.
(b) By the Company if (i) it is determined that the
representations and warranties of Sema and Acquisition contained in this
Agreement were not complete and accurate in all respects on the date of this
Agreement, except to the extent of failures of representations and warranties to
have been correct (without taking account of any limitation in a representation
and warranty as to materiality or absence of a Material Adverse Effect) which do
not in total have, and are not reasonably likely to have in total, a Material
Adverse Effect on Sema or to the extent the representations and warranties are
not true and correct at the Merger Date because of occurrences or conditions
which are attributable to, or result directly from, the public announcement or
the pendency of the Merger, (ii) the Company's stockholders fail to approve the
merger at the Company's Merger Shareholders Meeting or (iii) any of the
conditions in Paragraph 5.1 is not satisfied or waived by the Company on or
before the Merger Date.
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(c) By Sema if (i) it is determined that the representations
and warranties of the Company contained in this Agreement were not complete and
accurate in all respects on the date of this Agreement, except to the extent of
failures of representations and warranties to have been correct (without taking
account of any limitation in a representation and warranty as to materiality or
absence of a Material Adverse Effect) which do not in total have, and are not
reasonably likely to have in total, a Material Adverse Effect on the Company,
the Surviving Corporation or Sema, or to the extent the representations and
warranties are not true and correct at the Merger Date because of occurrences or
conditions which are attributable to, or result directly from, the public
announcement or the pendency of the Merger, (ii) Sema's shareholders fail to
approve the Merger at Sema's Merger Shareholders Meeting or (iii) any of the
conditions in Paragraph 5.2 is not satisfied or waived by Sema on or before the
Merger Date.
(d) By either party if the Merger Date is not on or before
September 30, 2000.
6.2 Manner of Terminating Agreement If at any time the Company or Sema
has the right under Paragraph 6.1 to terminate this Agreement, except as
otherwise specifically provided in Paragraph 6.1, it can terminate this
Agreement by a written notice to the other of them that it is terminating this
Agreement.
6.3 Effect of Termination. If this Agreement is terminated pursuant to
Paragraph 6.1, after this Agreement is terminated, neither party will have any
further rights or obligations under this Agreement other than their obligations
under Paragraph 8.1. Nothing in this Paragraph will, however, relieve either
party of liability for any breach of this Agreement which occurs before this
Agreement is terminated.
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ARTICLE VII
ABSENCE OF BROKERS
7.1 Representations and Warranties Regarding Brokers and Others. The
Company and Acquisition each represents and warrants to the other of them that
nobody acted as a broker, a finder or in any similar capacity in connection with
the transactions which are the subject of this Agreement, except that Deutsche
Bank acted as a financial advisor to Sema and Acquisition and Goldman Sachs &
Co. acted as a financial advisor to the Company. Sema will pay all the fees and
other charges of Deutsche Bank and the Company will pay all the fees and other
charges of Goldman Sachs & Co. The Company indemnifies Sema and Acquisition
against, and agrees to hold each of them harmless from, all losses, liabilities
and expenses (including, but not limited to, reasonable fees and expenses of
counsel and costs of investigation) incurred because of any claim by anyone for
compensation as a broker, a finder or in any similar capacity by reason of
services allegedly rendered to the Company in connection with the transactions
which are the subject of this Agreement. Sema indemnifies the Company against,
and agrees to hold it harmless from, all losses, liabilities and expenses
(including, but not limited to, reasonable fees and expenses of counsel and
costs of investigation) incurred because of any claim by anyone for compensation
as a broker, a finder or any similar capacity by reason of services allegedly
rendered to Sema or Acquisition in connection with the transactions which are
the subject of this Agreement.
ARTICLE VIII
OTHER AGREEMENTS
8.1 Payments to Sema or the Company. (a) If (i) at any time prior to or
at the Company's Merger Shareholders Meeting, (x) the Company's Board of
Directors withdraws its recommendation that the Company's stockholders vote in
favor of adopting this Agreement and
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approving the Merger, and (y) the Company informs its stockholders that it or
its Board of Directors has received an Acquisition Proposal which its Board of
Directors has determined is more beneficial to the Company's stockholders than
the Merger, and (ii) at the Company's Merger Shareholders Meeting, the Merger is
not approved by holders of a majority of the outstanding shares of Company
Common Stock, promptly after the Company's Merger Shareholders Meeting, the
Company will pay Sema $105,000,000.
(b) If (i) this Agreement is terminated by Sema because the
Company breaches its obligations under this Agreement, (ii) within 6 months
after that termination, the Company enters into an agreement to carry out a
transaction which will constitute a change of control transaction and (iii) that
change of control transaction is consummated within 12 months after that
termination, within three business days after the change of control transaction
is consummated, the Company will pay Sema $105,000,000 less any amount the
Company has paid to Sema under subparagraph (c). For the purposes of this
Agreement, a "change of control transaction" means a tender offer, merger or
other transaction or series of related transactions which results in (i)
anybody's becoming the owner of 50% or more of the equity or voting power of the
Company or (ii) the common stockholders of the Company immediately prior to the
transaction owning less than 50% of the equity or voting power of the surviving
or successor entity resulting from the transaction. If Sema recovers damages
from the Company for breach of this Agreement prior to the payment provided
above, the amount recovered by Sema will be credited against the sum the Company
is required to pay Sema under this subparagraph. Any amount paid by the Company
under this Subparagraph will reduce any damages to which Sema may be entitled
because the Company breached this Agreement.
(c) If at the Company's Merger Shareholders Meeting, the
Merger is not approved by holders of a majority of the outstanding shares of
Company Common Stock (other than under the circumstances described in
Subparagraph (a) or (b) of this Paragraph 8.1),
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within three business days after the day on which the Company's Merger
Shareholders Meeting is held, the Company will reimburse Sema for all the
expenses which Sema or its subsidiaries (including Acquisition) incurred in
connection with this Agreement and the transactions contemplated by it,
including reasonable fees and expenses of professionals and other consultants,
and out of pocket costs incurred by employees in investigating the business and
financial condition of the Company and in connection with the negotiation of
this Agreement and efforts to carry out the transactions which are the subject
of this Agreement, regarding which Sema has presented reasonable documentation
to the Company and will agree in writing to reimburse Sema for all expenses of
that type for which Sema subsequently presents reasonable documentation to the
Company (up to a total reimbursement of expenses not exceeding $10 million).
(d) If at Sema's Merger Shareholders Meeting, the
authorizations of the acquisition of the Company and the issuance and allocation
of the Ordinary Shares which will be issued as a result of the Merger are not
approved by holders of the required percentage of the Sema Ordinary Shares which
are voted, within three business days after the day on which Sema's Merger
Shareholders Meeting is held, Sema will reimburse the Company for all the
expenses which the Company or its subsidiaries incurred in connection with this
Agreement and the transactions contemplated by it, including reasonable fees and
expenses of professionals and other consultants, and out of pocket costs
incurred by employees in investigating the business and financial condition of
Sema and in connection with the negotiation of this Agreement and efforts to
carry out the transactions which are the subject of this Agreement, regarding
which the Company has presented reasonable documentation to Sema and will agree
in writing to reimburse the Company for all expenses of that type for which the
Company subsequently presents reasonable documentation to Sema (up to a total
reimbursement of expenses of that type not exceeding $10 million).
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8.2 Indemnification for Prior Acts. (a) Sema will cause the Surviving
Corporation to honor, and not to amend or modify, for a period of not less than
six years after the date of this Agreement, any obligations of the Company to
indemnify present and former directors, officers or employees of the Company or
its subsidiaries with respect to matters which occurred or occur on or prior to
the Effective Time, whether arising under the Company's certificate of
incorporation or by-laws, under agreements, under the DGCL or in any other
manner. Notwithstanding anything to the contrary in this Paragraph, however, the
Surviving Corporation will not be required to indemnify any present or former
director, officer or employee to the extent that person is covered by, and
receives payments under, policies of directors and officers liability insurance
or other insurance policies.
(b) Sema will cause the Surviving Corporation to maintain in
effect for at least two years after the Effective Time the directors and
officers liability policy maintained by the Company at the date of this
Agreement, or a substantially comparable policy, except that if the annual
premium for that insurance would be more than 200% of the annual premium the
Company paid for the directors and officers liability policy in effect during
2000, Sema will only be required to cause the Surviving Corporation to obtain
the maximum amount of directors and officers liability insurance which the
Surviving Corporation can obtain for an annual premium equal to 200% of the
annual premium the Company paid for the policy which was in effect during 1999.
If the Surviving Corporation terminates the directors and insurance liability
insurance before the sixth anniversary of the Effective Time, Sema will cause
the Surviving Corporation to purchase extended reporting coverage under the
directors and officers liability insurance covering claims made within the
remainder of that period, ending on the sixth anniversary of the Effective Time,
with respect to acts which occurred prior to the Effective Time.
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(c) The provisions of this Paragraph 8.2 are intended to be
for the benefit of, and will be enforceable by, the persons who are entitled to
indemnification or insurance coverage under it and their heirs and
representatives.
(d) Sema guarantees that the Surviving Corporation will
fulfill the obligations described in this Paragraph 8.2.
8.3 Company Employees. (a) Sema acknowledges that individuals who are
employed by the Company or any subsidiary of the Company immediately prior to
the Effective Time will, by reason of the Merger, be employees of the Surviving
Corporation or one of its subsidiaries following the Effective Time (each such
employee, an "Affected Employee"); provided, however, that this Section 8.3
shall not be construed to limit the ability of the applicable employer to
terminate the employment of any Affected Employee at any time.
(b) Sema will, or will cause the Surviving Corporation to,
give each Affected Employee full credit, for purposes of eligibility (including
service and waiting period requirements), vesting, benefit accrual and
determination of the level of benefits under any employee benefit plans or
arrangements maintained by Sema, the Surviving Corporation or any subsidiary of
the Surviving Corporation, for the Affected Employee's service with the Company
or any subsidiary of the Company prior to the Effective Time to the same extent
it is recognized by the Company or any subsidiary of the Company immediately
prior to the Effective Time.
(c) Sema will, or will cause the Surviving Corporation to, (i)
waive all limitations as to pre-existing conditions, exclusions and waiting
periods and service requirements with respect to participation and coverage
requirements applicable to Affected Employees under any welfare benefit plans in
which particular Affected Employees may be eligible to participate after the
Effective Time, other than limitations, waiting periods or service requirements
that are already in effect with respect to such employees and that have not been
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satisfied as of the Effective Time under welfare plans maintained for the
Affected Employees immediately prior to the Effective Time, and (ii) provide
each Affected Employee with credit for any co-payments and deductibles paid
prior to the Effective Time (as shown on the Company's records) in satisfying
any applicable deductible or out-of-pocket requirements under any welfare plans
that such employees are eligible to participate in after the Effective Time.
(d) For a period of one year immediately following the
Effective Time, the coverage and benefits provided to Affected Employees
pursuant to employee benefit plans or arrangements maintained by Sema, the
Surviving Corporation, or subsidiaries of Sema will be, in the aggregate, not
less favorable than those provided to such employees immediately prior to the
Effective Time.
ARTICLE IX
GENERAL
9.1 Expenses. The Company and Sema will each pay its own expenses (and
Sema will pay Acquisition's expenses) in connection with the transactions which
are the subject of this Agreement, including legal fees.
9.2 Access to Properties, Books and Records. (a) From the date of this
Agreement until the Effective Time, the Company will, and will cause each of its
subsidiaries to, give representatives of Sema access during normal business
hours to all of their respective properties, books and records and cooperate in
all other respects with efforts of Sema to prepare for a smooth integration of
the Company and its subsidiaries with Sema and its other subsidiaries at the
Effective Time. Sema will, and will cause its representatives to, hold all
information it receives as a result of its access to the properties, books and
records of the Company or its subsidiaries in confidence, except to the extent
that information (i) is or becomes available to the public (other than through a
breach of this Agreement), (ii) becomes
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available to Sema or a subsidiary from a third party which, insofar as Sema is
aware, is not under an obligation to the Company, or to a subsidiary of the
Company, to keep the information confidential, (iii) was known to Sema or a
subsidiary before it was made available to Sema or its representative by the
Company or a subsidiary, (iv) otherwise is independently developed by Sema or a
subsidiary, or (v) Sema reasonably believes is required to be included in the
Registration Statement (including the Proxy Statement/Prospectus which is a part
of it) or any other filing Sema reasonably believes it is required to make with
any governmental agency, securities exchange or securities quotation system. If
this Agreement is terminated prior to the Effective Time, Sema will, at the
request of the Company, deliver to the Company all documents and other material
obtained by Sema from the Company or a subsidiary in connection with the
transactions which are the subject of this Agreement or evidence that that
material has been destroyed by Sema, except that Sema may retain (i) one copy of
all materials for the purposes of, and as long as required by, any law, court or
regulatory agency or authority and (ii) any computer records created by
automatic archiving and back-up procedures.
(b) From the date of this Agreement until the Effective Time,
Sema will, and will cause each of its subsidiaries to, give representatives of
the Company access during normal business hours to all of their respective
properties, books and records. In any event Sema will promptly advise the
Company of, and provide to the Company any and all information reasonably
requested by the Company with respect to, any activities related to any
transaction involving a possible change of control of Sema. The Company will,
and will cause its representatives to, hold all information it receives as a
result of its access to the properties, books and records of Sema or its
subsidiaries (including information related to any transaction involving a
possible change of control of Sema) in confidence, except to the extent that
information (i) is or becomes available to the public (other than through a
breach of this Agreement), (ii) becomes available to the Company or a subsidiary
from a third party which,
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insofar as the Company is aware, is not under an obligation to Sema, or to a
subsidiary of Sema, to keep the information confidential, (iii) was known to the
Company or a subsidiary before it was made available to the Company or its
representative by Sema or a subsidiary, (iv) otherwise is independently
developed by the Company or a subsidiary, or (v) the Company reasonably believes
is required to be included in a filing the Company is required to make with any
governmental agency, securities exchange or securities quotation system. If this
Agreement is terminated prior to the Effective Time, the Company will, at the
request of Sema, deliver to Sema all documents and other material obtained by
the Company from Sema or a subsidiary in connection with the transactions which
are the subject of this Agreement or evidence that that material has been
destroyed by the Company, except that the Company may retain (i) one copy of all
materials for the purposes of, and as long as required by, any law, court or
regulatory agency or authority and (ii) any computer records created by
automatic archiving and back-up procedures.
9.3 Press Releases. The Company and Sema will consult with each other
before issuing any press release or otherwise making any public statement with
respect to this Agreement or the Merger, except that nothing in this Paragraph
will prevent either party from making any statement when and as required by law
or by the rules of any securities exchange or securities quotation or trading
system on which securities of that party or an affiliate, or depositary shares
representing those securities, are listed, quoted or traded.
9.4 Entire Agreement. This Agreement and the documents to be delivered
in accordance with this Agreement contain the entire agreement among the
Company, Sema and Acquisition relating to the transactions which are the subject
of this Agreement and those other documents, all prior negotiations,
understandings and agreements between the Company and either Sema or Acquisition
are superseded by this Agreement and those other documents, and there are no
representations, warranties, understandings or agreements concerning the
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transactions which are the subject of this Agreement or those other documents
other than those expressly set forth in this Agreement or those other documents.
9.5 Effect of Disclosures. Any information disclosed by a party in any
representation or warranty contained in this Agreement (including schedules to
this Agreement) will be treated as having been disclosed in connection with each
representation and warranty made by that party in this Agreement.
9.6 Captions. The captions of the articles and paragraphs of this
Agreement are for reference only, and do not affect the meaning or
interpretation of this Agreement.
9.7 Prohibition Against Assignment. Neither this Agreement nor any
right of any party under it may be assigned.
9.8 Notices and Other Communications. Any notice or other communication
under this Agreement must be in writing and will be deemed given when it is
delivered in person or sent by facsimile (with proof of receipt at the number to
which it is required to be sent), on the second business day after the day on
which it is sent by a major international overnight delivery service, or on the
fifth business day after the day on which it is mailed by first class mail from
within the United States of America or the United Kingdom, to the following
addresses (or such other address as may be specified after the date of this
Agreement by the party to which the notice or communication is sent):
48
<PAGE> 50
If to Sema or Acquisition:
Sema Group plc
233 High Holborn
London WC1V 7DJ
England
Attention: Company Secretary
Facsimile: 44-20-7830-4206
with copies to:
Daniel Bushner
Clifford Chance Limited
Liability Partnership
200 Aldersgate Street
London EC1A 4JJ
England
Facsimile: 44-171-282-7272
and
David W. Bernstein
Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Facsimile: 1-212-878-8375
If to the Company.:
LHS Group Inc.
6 Concourse Parkway
Suite 2700
Atlanta, GA 30328
Attention: General Counsel
Facsimile: 1-770-280-3099
with a copy to:
B. Harvey Hill, Jr.
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Facsimile No.: 1-404-881-4777
9.9 Governing Law. (a) This Agreement will be governed by, and
construed under, the substantive laws of the State of Delaware in the United
States of America.
(b) Sema, Acquisition and the Company each (i) consents to the
jurisdiction of any Federal or state court sitting in the State of Delaware in
the United States of America in any
49
<PAGE> 51
action or proceeding relating to this Agreement or any of the transactions which
are the subject of this Agreement, (ii) agrees not to seek to change the venue
of any such action or proceeding, whether because of inconvenience of the forum
or otherwise (but nothing will prevent a party from removing an action or
proceeding from a state court to a Federal court sitting in Delaware), and (iii)
agrees that process in any such action or proceeding may be served upon it by
registered mail or in any other manner permitted by the rules of the court in
which the action or proceeding is brought.
9.10 Amendments. This Agreement may be amended by, but only by, a
document in writing signed by both the Company and Sema.
9.11 Counterparts. This Agreement may be executed in two or more
counterparts, some of which may be signed by fewer than all the parties or may
contain facsimile copies of pages signed by some of the parties. Each of those
counterparts will be deemed to be an original copy of this Agreement, but all of
them together will constitute one and the same agreement.
50
<PAGE> 52
IN WITNESS WHEREOF, the Company, Sema and Acquisition have executed
this Agreement, intending to be legally bound by it, on the day shown on the
first page of this Agreement.
LHS GROUP INC.
By:
------------------------------------
Title:
SEMA GROUP PLC
By:
------------------------------------
Title:
SG ACQUISITION CORPORATION
By:
------------------------------------
Title:
51
<PAGE> 1
EXHIBIT 2.2
STOCK OPTION AGREEMENT
This is a Stock Option Agreement (the "Agreement") dated March 14,
2000 between LHS Group Inc. (the "Company"), a Delaware corporation, and Sema
Group plc ("Sema"), an English company, relating to an option granted by the
Company to Sema.
The Company is granting Sema the Option which is the subject of this
Agreement in order to induce Sema to enter into a Plan and Agreement of Merger
(the "Merger Agreement") dated the same date as this Agreement among the
Company, Sema and SG Acquisition Corporation, a Delaware corporation.
The Option is granted on the following terms:
1. Grant of Options. The Company hereby grants to Sema
an irrevocable option (the "Option") to purchase up to 10,141,250 shares of
common stock, par value $.01 per share, of the Company ("Company Common
Stock"), or such other number of shares as are 17.5% of the shares of Company
Common Stock which are outstanding on the first day on which the Option is
exercised (the shares of Company Common Stock which may be purchased by
exercising the Option being "Option Shares"). The purchase price which Sema
will pay for each Option Share as to which the Option is exercised (the
"Exercise Price") will be the amount equal to the Market Value of 2.6 ordinary
shares of Sema ("Sema Ordinary Shares") on the day the Option is exercised. For
the purposes of this Agreement, the Market Value of a Sema Ordinary Share on a
day will be the average of the closing price of a Sema Ordinary Share on The
London Stock Exchange Limited (the "LSE") on each of the ten consecutive LSE
trading days ending with, and including, the LSE trading day before that day.
The Option Shares are subject to adjustment as provided in Paragraph 6.
2. Expiration of Option. Sema may exercise the Option,
in whole or in part, and from time to time, at any time prior to the time (the
"Expiration Time") which is 5:00 p.m., Atlanta, Georgia time, on the earlier of
(i) the day on which the Merger Agreement is terminated and (ii) the Effective
Time of the Merger, except that if on, or within 10 business days before, the
day on which the Option would otherwise expire, there is a judgment, order or
decree of a court or governmental agency which prevents Sema from exercising
the Option or the Company from issuing shares upon exercise of the Option, the
Expiration Time will be extended until 5:00 p.m. Atlanta, Georgia time, on the
day which is 10 business days after the day on which that impediment to
exercise or issuance has been removed.
<PAGE> 2
3. Manner of Exercise. In order to exercise the Option,
Sema must give the Company a written notice (an "Exercise Notice") prior to the
Expiration Time specifying (i) the total number of Option Shares Sema intends
to purchase through exercise of the Option and (ii) a place and date (a
"Closing Date"), not earlier than three business days nor later than ten
business days after the day on which the Exercise Notice is given, for the
closing of the purchase of the Option Shares as to which the Option is being
exercised (a "Closing"), except that if holding the Closing within that time
period would violate applicable law (including the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act")), the Closing Date will be adjourned
to the day which is the business day after the earliest day on which the
Closing could be held without violating applicable law.
4. Payment and Delivery of Certificates. (a) On each
Closing Date, (i) Sema will (x) deliver to the Company evidence that Sema has
made a wire transfer of immediately available funds to a bank account
designated by the Company in an amount equal to the par value of the Option
Shares being purchased on that Closing Date and (y) deliver to the Company a
note (a "Purchase Note"), which will mature one year after the Closing Date,
will bear interest, payable quarterly, at the rate from time to time which is
the prime rate reported in The Wall Street Journal, and will be secured by a
security interest in the Option Shares for which it is part of the payment, in
the principal amount equal to the amount by which (A) the Exercise Price
multiplied by (B) the number of Option Shares being purchased on that Closing
Date exceeds (C) the par value of those Option Shares, and (ii) the Company
will deliver to Sema certificates, registered in Sema's name, representing the
Option Shares which are being purchased at the Closing. Sema will take all
steps (including delivering to the Company the certificates representing Option
Shares) which are necessary to give the Company a perfected security interest
in the Option Shares securing a Purchase Note, which will be prior to any
security interests Sema might grant in those Option Shares.
(b) At each Closing, Sema will deliver to the
Company a letter stating that Sema is acquiring the Option Shares for
investment, and not with a view to their resale or distribution.
(c) Certificates representing the Option Shares
which are delivered at a Closing may bear a legend substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE
2
<PAGE> 3
SOLD OR TRANSFERRED OTHER THAN IN A TRANSACTION WHICH IS
REGISTERED UNDER THAT ACT OR IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THAT ACT. THE SHARES ARE ALSO SUBJECT TO THE
TERMS OF A STOCK OPTION AGREEMENT DATED MARCH 14, 2000
BETWEEN LHS GROUP INC. AND SEMA GROUP PLC.
The Company will deliver substitute certificates representing Option Shares
which do not bear a legend at any time when (i) all the Option Shares may be
sold without registration under the Securities Act of 1933, as amended (the
"Securities Act") and (ii) the Company Purchase Option described in Paragraph
13 has expired.
5. Company's Representation and Warranty. The Company
represents and warrants to Sema that (a) the Company has taken all necessary
corporate and other action to authorize the grant of the Option and has
reserved from its authorized but unissued shares the maximum number of shares
the Company may be required to issue upon exercise of the Option and (b) when
Option Shares are issued upon exercise of the Option, they will be duly
authorized, validly issued, fully paid and non-assessable shares of Company
Common Stock, and will not be subject to any liens, encumbrances, pre-emptive
rights or claims of any persons.
6. Adjustments of Option Shares. (a) If after the date
of this Agreement, the Company splits, consolidates or reclassifies the Company
Common Stock, enters into a merger or other transaction, or makes a
distribution to holders of the Company Common Stock of additional Company
Common Stock or other securities, cash or other assets (other than payment by
the Company of cash dividends permitted by the Merger Agreement), so that
holders of record of Company Common Stock on a day before the Option expires
receive additional Company Common Stock or other securities, cash or other
assets, or a combination of them, instead of, or in addition to, the Company
Common Stock as it exists on the date of this Agreement, upon exercise of this
Option after any of those occurrences, Sema will receive with regard to each
Option Share as to which the Option is exercised (upon payment of the Exercise
Price for that Option Share) the securities, cash and other assets which a
person who held a share of Company Common Stock immediately before the first of
those occurrences would have owned or been entitled to receive on the day the
Option is exercised if the person had retained the share of Company Common
Stock and had not disposed of anything the person received as a result of the
split, share consolidation, share reclassification, merger or other
transaction, or distribution.
3
<PAGE> 4
(b) If, because of this Paragraph 6, Sema
becomes entitled to receive on exercise of the Option securities, cash or other
assets in addition to, or instead of, shares of Company Common Stock, the term
"Option Shares" will be deemed to include those securities, that cash or those
other assets.
7. Sema will not, as holder of the Option, be entitled
to vote, to receive dividends or to have any other of the rights of a
shareholder of the Company, before the Option is exercised. When the Option is
exercised, the persons in whose names the Option Shares purchased through
exercise of the Option are to be issued will be deemed to be the holders of
record of those Option Shares for all purposes, and to have all the rights of
the holders of record of those Option Shares, even if certificates representing
those Option Shares are not issued.
8. Reservation and Listing of Shares. (a) The Company
will at all times reserve and keep available for issuance upon exercise of the
Option a number of shares of Company Common Stock equal to the maximum number
of shares of Company Common Stock the Company may be required to issue upon
exercise of the Option.
(b) The Company will take all steps which are
necessary so that all the shares of Company Common Stock (or other securities)
which the Company may be required to issue on exercise of the Option will, upon
issuance, be listed on each securities exchange and quoted on each automated
quotation system on which the Company Common Stock is (or those other
securities are) listed or quoted.
9. Fractional Shares. The Company will not be required
to issue any fraction of a share upon exercise of the Option. In any case in
which Sema would, except for the provisions of this Paragraph, be entitled to
receive a fraction of a share upon exercise of the Option, the Company will,
upon exercise of the Option, issue the maximum number of whole shares it is
required to issue, and the Company will pay Sema cash in lieu of the fraction
of a share based upon the last reported sale price (or if there is none, the
mean of the high bid and low asked prices) of the Company Common Stock on the
day the Option is exercised.
10. Regulatory Requirements. The Company and Sema each
will, as promptly as practicable, do all things in its power to enable the
Option to be exercised without violating any law or regulation of any
governmental agency, including making any required filings under the HSR Act
and any other applicable law, supplying as promptly as practicable any other
additional information which may be requested by the Federal Trade Commission
or the Department of Justice in connection with the filing under the HSR Act,
or by any other
4
<PAGE> 5
governmental agency in connection with any filing under any applicable law, and
taking all reasonable actions which are necessary to cause the waiting periods
under the HSR Act and any other applicable law to expire or be terminated as
soon as practicable.
11. Limitation of Profit. (a) Under no circumstances may
Sema's Total Profit (as defined below) exceed $105 million (the "Maximum
Profit"). If Sema's Total Profit would exceed the Maximum Profit, Sema will pay
to the Company in cash the difference between Sema's Total Profit and the
Maximum Profit, so that Sema's realized Total Profit will not exceed the
Maximum Profit.
(b) As used in this Agreement, the term "Total
Profit" means (i) the total of any amount by which the cash and the fair market
value of any other property received by Sema upon sale of Option Shares (or
securities into which they are converted or exchanged) exceeds (x) the total
amount paid by Sema for those Option Shares (or other securities), valuing
Purchase Notes at their principal amounts, plus (y) any amounts received by
Sema from the Company for canceling the Option in whole in part, plus (z) any
sum that is paid by the Company to Sema pursuant to Paragraph 8.1(a), (b) or
(c) of the Merger Agreement, minus (ii) any amounts previously paid by Sema to
the Company pursuant to this Paragraph 11.
(c) Nothing in this Paragraph 11, or any place
else in this Agreement, will affect Sema's right to receive, or affect the
Company's obligation to pay, any sum required to be paid under Paragraph
8.1(a), (b) or (c) of the Merger Agreement, except to the extent this Paragraph
11 would require Sema to repay to the Company the amount by which a payment
under Paragraph 8.1(a), (b) or (c) would cause the Total Profit realized by
Sema when it receives the payment, including the amount of the payment, to
exceed the Maximum Profit.
(d) For the purposes of this Agreement, the
fair market value of property other than cash will be as agreed upon by the
Company and Sema or, if they cannot agree, as determined in good faith by an
independent nationally recognized investment banking firm selected by Sema and
reasonably acceptable to the Company.
(e) This Paragraph 11 will not apply to any
sale of Option Shares (or securities into which they are converted or
exchanged) which takes place after the Company Purchase Option described in
Paragraph 12 expires.
12. Company Purchase Option. (a) the Company will have
the option (the "Company Purchase Option"), which will be exercisable by a
notice given to Sema not earlier
5
<PAGE> 6
than the date provided in Paragraph 2 on which the Option expires (whether or
not the Option has been exercised before that date) and not later than the
ninetieth day after that Option expiration date, to purchase all (but not less
than all) the Option Shares which Sema purchased through exercise of the Option
for the sum per Option Share such that Sema's Total Profit if the Company
Purchase Option were exercised with regard to all the Option Shares would be
the Maximum Profit.
(b) The Company will pay the exercise price of
the Company Purchase Option (i) by crediting it against the principal sum of,
and accrued but unpaid interest on, the Purchase Notes and (ii) to the extent
there is any excess, by wire transfer of immediately available funds to an
account specified by Sema.
(c) On a day specified by the Company in the
notice of exercise of the Company Option, which will be not fewer than three
nor more than ten business days after the day on which that notice is given,
(i) the Company will deliver to Sema a document acknowledging the credits
against the Purchase Notes, and evidence of any required wire transfers,
constituting payment of the exercise price of the Company Purchase Option, and
(ii) Sema will deliver to the Company properly endorsed certificates
representing all the Option Shares, or whatever other documents are necessary
to transfer ownership of the Option Shares to the Company.
(d) Sema will not sell or transfer any Option
Shares (other than to a subsidiary which agrees to hold the Option Shares
subject to this Paragraph 12) until the Company Purchase Option expires, except
that if somebody makes a tender offer or exchange offer for at least 50% of the
outstanding shares of Company Common Stock which is recommended by the
Company's Board of Directors, (i) Sema may tender Option Shares in response to
that tender offer or exchange offer, (ii) when the tendered Option Shares are
accepted by the person who makes the tender offer or exchange offer, they will
no longer be subject to the Company Purchase Option, and (iii) the proceeds
received by Sema as a result of the tender of Option Shares in response to the
tender offer or exchange offer will not be subject to the Company Purchase
Option (but will be subject to Paragraph 12 of this Agreement).
13. Registration. (a) The Company will, at the request
of Sema or any subsidiary of Sema which owns Option Shares (together "Owners"),
at any time or times within two years after the Closing of an exercise of
Option, as promptly as practicable prepare and file with the Securities and
Exchange Commission up to two registration statements under the
6
<PAGE> 7
Securities Act relating to Option Shares or other securities issued with regard
to them, if registration is necessary with regard to a sale or other
disposition of any or all of the Option Shares or other securities that are
held by the Owners, and the Company will use all reasonable efforts to cause
those Option Shares or other securities to be qualified under any applicable
state securities laws. The Company will use all reasonable efforts to cause
each registration statement which it files to become effective as promptly as
practicable and to keep each of those registration statements effective for at
least 90 days after the day on which it first becomes effective, or until such
earlier date as all the Option Shares or other securities which are the subject
of the registration statement have been sold. The obligation of the Company to
file a registration statement under this Paragraph and maintain its
effectiveness may be suspended for a period not exceeding 90 days in total if
the Board of Directors of the Company determines in good faith that the filing
of the registration statement or the maintenance of its effectiveness would
require a disclosure of non-public information that would materially and
adversely effect the Company (but in no event may the Company exercise this
right more than once in any 12 month period). The Company will pay all expenses
of the preparation and filing of the registration statements required by this
Paragraph, but the Company will not be required to pay any underwriting
discounts, commissions, brokers fees, or fees and disbursements of the Owners'
counsel with regard to any registration. The Owners will provide all
information reasonably requested by the Company for inclusion in any
registration statement required by this Paragraph.
(b) If at any time within two years after the
first Closing of an exercise of the Option, the Company registers any of its
Common Stock under the Securities Act (other than on Form S-4 or Form S-8, or
any successor form), it will give the Owners at least 20 days prior notice of
its intention to file the registration statement, and will permit the owners to
include Option Shares or other securities they acquire on exercise of the
Option in the securities to which the registration statement relates, except
that if the managing underwriters of an offering by the Company inform the
Company in writing that in their opinion the number of Option Shares or other
securities the owners asked to include in the registration exceeds the number
which can be sold in the offering without adversely affecting the offering
price, the owners will reduce the Option Shares or other securities which are
included in the registration statement to the maximum number the managing
underwriter believes can be included without adversely affecting the offering
price. A registration under this Subparagraph (b) will not affect the right of
the Owners to registrations under Subparagraph (a).
7
<PAGE> 8
(c) In connection with any registration of
Option Shares, the Owners and the Company will provide each other and any
underwriter with customary representations, warranties, covenants,
indemnifications and contribution.
14. Change of Meeting Record Date. If Sema exercises the
Option at any time before the latest to occur of (i) the business day after the
day on which the Registration Statement (as that term is defined in the Merger
Agreement) becomes effective, (ii) the tenth day after the day on which the
Company gives Sema a notice under Paragraph 4.6(d) of the Merger Agreement,
(iii) the tenth day after the day on which the Company gives Sema a notice
under Paragraph 4.6(e) of the Merger Agreement, (iv) the tenth day after the
day on which the Company notifies Sema that its Board of Directors has
determined that it is required by its fiduciary duties to state that it no
longer recommends that the stockholders of the Company vote in favor of the
Merger or related matters, the Company will, at Sema's request made when Sema
exercises the Option, change the record date for the Company Merger
Shareholders Meeting to a day which is not earlier than the day after the day
on which Sema becomes the record owner of the Option Shares which Sema
purchases through its first exercise of the Option.
15. Enforcement. The parties agree that irreparable
damage would occur if either of them fails to perform in all material respects
all its obligations under this Agreement, including, but not limited to, the
Company's obligations under Paragraph 14. Accordingly, each party agrees that
the other of them will be entitled to specific performance of the terms of this
Agreement, in addition to any other remedy to which it is entitled. Each party
also waives any requirement that the other party secure or post a bond in
connection with its obtaining any equitable relief.
16. Captions. The captions of the Paragraphs of this
Agreement are for convenience only, and do not affect the meeting or
interpretation of this Agreement.
17. Restrictions on Share Acquisitions. The Company
waives any restrictions in any agreement on Sema's acquiring Company Common
Stock or other securities of the Company to the extent necessary to permit Sema
to exercise the Option and purchase the Option Shares or other securities as
provided in this Agreement.
18. Assignments. Sema may not assign the Option or any
other of its rights under this Agreement, other than to a wholly owned
subsidiary of Sema, without the prior written consent of the Company, and any
attempted assignment not permitted by this Paragraph will be void. If Sema
assigns its rights under this Agreement, (i) the assignment will not be
effective
8
<PAGE> 9
until the assignee delivers to the Company a document in which the assignee
notifies the Company of the assignment and agrees to be bound by the provisions
of this Agreement, including the Company Purchase Option, and (ii) after the
assignment becomes effective, also references in this Agreement to "Sema" will
be deemed to refer to the assignee.
19. Miscellaneous. Paragraphs 9.8 through 9.11 of the
Merger Agreement will apply to this Agreement to the same extent as though they
were set forth in their entirety in this Agreement.
IN WITNESS WHEREOF, the Company and Sema have executed this Agreement,
intending to be legally bound by it, on the date set forth on the first page.
LHS GROUP INC.
By:
----------------------
Name:
Title:
SEMA GROUP plc
By:
----------------------
Name:
Title:
9
<PAGE> 1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE 15 MARCH 2000
SEMA GROUP PLC
MERGER WITH LHS GROUP INC.
SEMA TO BECOME A WORLD LEADER IN MOBILE COMMUNICATIONS SOFTWARE
LONDON and ATLANTA - Sema Group plc ("Sema", London: SEM.L) and LHS Group Inc.
("LHS", NASDAQ: LHSG.O, Neuer Markt: LHI.DE), two of the world's leading
telecommunications software and services providers, today announce that they
have agreed to join forces, creating a global powerhouse in mobile
communications software. The enlarged group will be listed in London, Paris and
on NASDAQ.
SUMMARY OF THE MERGER
- - Merger of Sema and LHS to create a world leader in mobile communications
software
- - LHS, based in Atlanta, is a leading global provider of billing and
operations support systems software with offices worldwide including
Frankfurt, Kuala Lumpur, Sao Paolo, Boston, Miami and Zurich
- - LHS shareholders to receive 2.6 new Sema ordinary shares for each LHS share,
representing a current value for each LHS share of $69.7
- - Merger terms currently value LHS at $4.7 billion (on a fully diluted basis)
- - LHS shareholders to hold some 27 per cent. of the combined group (on a fully
diluted basis)
- - Expected to be accretive to Sema earnings immediately, before taking into
account the benefits of any synergies and the amortisation of goodwill
- - In addition, the combination is expected to generate substantial
opportunities for revenue enhancement within the next two to three years
RATIONALE
- - Combination of SemaVision, Targys and the enlarged group's other software
products and services to provide its customer base with one of the strongest
and most extensive offerings of business and operational solutions for the
mobile communications industry
- - Broader geographical coverage, increased technical depth, expanded resource
pool and opportunity to leverage combined installed customer base
- - Strong position to capitalise on the expected growth of mobile commerce
products and services
- - Further cross-selling opportunities expected from systems integration,
outsourcing and messaging expertise
- - Pooling of technical expertise to aggressively drive technology leadership
- - Increased market share key to success for technology based company
<PAGE> 2
Pierre Bonelli, Chief Executive of Sema, said, "We are delighted to have
reached agreement with LHS on the terms of a merger. The combination will
assist us in achieving our stated telecoms strategy of becoming the worldwide
leader in customer care and billing, prepaid, messaging, value-added services
and mobile commerce. The ultimate prize for a technology company is market
share".
Gary Cuccio, Chief Executive of LHS, said, "The combination of LHS and Sema
will create a global telecom software and services powerhouse. The company will
also be extremely well positioned to capitalise on the wireless internet market
by leveraging its global customer base. We look forward to working together to
exploit the excellent opportunities which this merger will create for our
customers, stockholders and employees".
Shareholders representing approximately 30 per cent. of LHS's share capital,
including Mr. Hartmut Lademacher, chairman and one of the founders of LHS, and
General Atlantic Partners, have undertaken to vote in favour of the merger. In
addition, LHS has granted Sema an option to subscribe for new shares in LHS
representing up to 17.5 per cent. of the existing capital of LHS. The exercise
price per share will be the value of 2.6 shares of Sema at the time of exercise
of the option.
Mr. Lademacher and Mr. George Schmitt, currently directors of LHS, will join the
board of Sema on closing.
Details of briefings for analysts, investors and the media will be circulated
in due course. Further information on each company can be found on their
websites at www.semagroup.com and www.lhsgroup.com
SEMA GROUP PLC
Pierre Bonelli +44 207 830 4444
William Bitan +33 1 40 92 40 92
Marie-Claude Bessis
DEUTSCHE BANK
London
Jeremy Lucas +44 207 545 8000
Rory Johnston
Boston
Jerry Coughlan +1 617 737 8181
SHANDWICK
Bobby Leach +44 207 329 0096
Sarah Pascoe
GAVIN ANDERSON
Scott Tagliarino +1 212 515 1900
LHS GROUP INC. +1 770 280 3100
Gary Cuccio
Peter Chambers
Rainer Westermann
GOLDMAN SACHS & CO. +1 212 902 1000
Gene Sykes
Gregg Lemkau
All currency conversions between pounds sterling and US dollars have been made
at a rate of $1.58:(Pound)1. Please note that Sema's financials are reported
under UK GAAP and LHS's financials are quoted under US GAAP
<PAGE> 3
EXHIBIT 99.2
Deutsche Bank AG London ("Deutsche Bank"), which is regulated in the United
Kingdom by The Securities and Futures Authority Limited, is acting for Sema in
connection with the merger and for no one else and will not be responsible to
anyone other than Sema for providing the protections afforded to customers of
Deutsche Bank or for providing advice in relation to the merger.
FOR IMMEDIATE RELEASE 15 MARCH 2000
SEMA GROUP PLC
MERGER WITH LHS GROUP INC.
SEMA TO BECOME A WORLD LEADER IN MOBILE COMMUNICATIONS SOFTWARE
1. INTRODUCTION
LONDON and ATLANTA - Today, Sema and LHS announce that they have entered into a
definitive agreement for the merger of LHS with Sema. The telecoms business of
Sema will thereby be combined with LHS to create one of the world's leading
suppliers of mobile communications software. The enlarged group will provide its
customers with one of the strongest and most extensive offerings of business and
operational solutions in the communications industry.
Under the terms of the merger, LHS shareholders will be entitled to receive 2.6
new Sema ordinary shares for each LHS common share held at closing. Such new
Sema shares will be delivered in the form of Sema ordinary shares, or Sema
American Depositary Shares ("ADSs") which will be registered with the SEC and
traded on Nasdaq National Market ("NASDAQ"). The merger terms currently
represent a value of $69.7 per LHS share and value LHS at $4.7 billion (on a
fully diluted basis). Following the merger, existing Sema shareholders will own
some 73 per cent. of the combined company and LHS shareholders will own some 27
per cent. (on a fully diluted basis).
Sema expects that the transaction will be immediately accretive to earnings per
share, excluding goodwill amortisation and before taking account of synergies.
In addition Sema expects the combination to generate significant opportunities
for revenue enhancement within the next two to three years.
Sema's shares will continue to be listed on the London Stock Exchange and the
Paris Bourse. Sema will also apply for the new shares to be issued to LHS
shareholders in connection with the merger to be listed on the London Stock
Exchange and the Paris Bourse and for the ADSs to be listed on NASDAQ.
Sema and LHS intend to publish detailed information on the merger for
shareholders in approximately two months. Subject to shareholder approval and
regulatory consents, closing of the merger is expected to occur early in the
second half of 2000.
Sema is being advised by Deutsche Bank. LHS is being advised by Goldman, Sachs &
Co. HSBC is acting as broker to Sema.
<PAGE> 4
2. BACKGROUND TO AND REASONS FOR THE MERGER
Sema's stated telecoms strategy is to become the worldwide leader in customer
care and billing, prepaid, messaging, value added services and mobile commerce.
LHS, as one of the premier organisations in the field of operations support
systems, with an extensive worldwide installed customer base, was identified by
Sema as an ideal partner for furthering this strategy.
3. BENEFITS OF THE MERGER
The combination of Sema's telecoms business with LHS will establish one of the
largest suppliers of customer care, billing, messaging and pre-paid solutions to
the telecommunications industry worldwide. The enlarged operation will have, in
the mobile telecoms sector, more than:
- - 2,600 employees
- - 350 customer sites worldwide
- - 140 million subscribers
- - $400 million of revenues
In addition, LHS will strengthen the enlarged Sema Group by broadening the scope
of the services offered and expanding the depth of technical support. Sema will
also benefit from broader geographical coverage and the optimisation of the two
companies' research and development efforts.
LHS's position as a products based business will increase Sema's exposure to the
dynamic telecommunications software sector and thereby enhance its margins.
Sema also anticipates that significant opportunities will arise from offering
its systems integration, outsourcing and messaging expertise to existing LHS
customers. In addition, Sema will look to build on LHS's long experience and
excellent working relationships with its partners in the fields of systems
integration, telecommunications equipment manufacturing and service delivery.
In the internet space, the combination of Sema's recently launched SemaPortal
and both Sema's and LHS's support of wireless data (GPRS), IP and WAP services
will provide the enlarged group with comprehensive coverage. Allied to this,
Sema will be able to market its already established e-commerce business to LHS's
existing customer base.
4. PROPOSED DIRECTORS OF SEMA
On closing of the merger, Mr. Hartmut Lademacher, chairman and one of the
founders of LHS, and Mr. George Schmitt, a director of LHS, will join the board
of Sema as non-executive directors.
5. STRUCTURE OF THE TRANSACTION
The merger will be effected in accordance with the terms of an agreement and
plan of merger dated 14 March 2000 (the "Merger Agreement"). Under the terms of
the Merger Agreement, each LHS share will be exchanged for 2.6 new Sema ordinary
shares which may be delivered in the form of ADSs or Sema ordinary shares.
Under the terms of the Merger Agreement, three of the major shareholders of LHS,
including Mr. Lademacher, will retain their holdings in LHS. Sema will have full
authority to manage the business of LHS.
<PAGE> 5
6. MERGER AGREEMENT
The Merger Agreement sets out the conditions to the closing of the merger. It
also contains certain termination rights, mutual representations and warranties
and various covenants relating to the operation of the businesses of Sema and
LHS in the period until closing.
The Merger Agreement requires Sema and LHS to effect the merger unless any one
of the conditions to the implementation of the merger is not satisfied or waived
by 30 September 2000. The Merger Agreement also provides for limited termination
rights and termination fees to be paid by LHS to Sema in certain circumstances.
Principal conditions
The conditions to the implementation of the merger include necessary Sema and
LHS shareholder approvals, the admission of the new Sema ordinary shares to
listing by the London Stock Exchange, the SEC registration statement in respect
of the Sema ADSs having become effective, receipt of certain regulatory
approvals and the absence of any court or governmental order prohibiting the
merger.
Termination rights
Either party has the right to terminate the Merger Agreement if:
- - either LHS or Sema shareholders do not approve the merger and related
transactions;
- - there is a material breach of representation, covenant or warranty by
the other party; or
- - any of the other conditions to completion are not fulfilled.
Termination payments
The parties have agreed that LHS will make a payment to Sema of $105 million in
the following circumstances:
- - the directors of LHS withdraw their recommendation of the merger and notify
LHS's shareholders of an alternative transaction which LHS's directors
believe would be more beneficial to them and the LHS shareholders do not
approve the merger; or
- - Sema terminates the Merger Agreement because of a breach by LHS and within
six months LHS agrees to a transaction which will result in a change of
control of it.
7. VOTING COMMITMENTS AND OPTION AGREEMENT
General Atlantic Partners, a major shareholder of LHS, has undertaken to vote in
favour of the merger. The three shareholders who will be retaining their
holdings in LHS have given equivalent commitments. These commitments represent
approximately 30 per cent. of the share capital of LHS.
LHS has granted Sema an option exercisable up to the date of completion of the
merger, to subscribe for new shares in LHS representing up to 17.5 per cent. of
the existing capital of LHS. The exercise price per share will be the value of
2.6 shares of Sema at the time of exercise of the option. After exercise of the
option, Sema would have the ability to vote approximately 40 per cent. of the
share capital of LHS in favour of the merger.
<PAGE> 6
8. ACCOUNTING AND REPORTING IMPLICATIONS
It is intended that Sema will continue to have a December year end. The accounts
of the group will be published in pounds sterling and will be prepared in
accordance with UK GAAP, with a reconciliation to US GAAP.
9. INFORMATION ON SEMA
Sema is an information technology services company which provides its customers
with the design, provision, implementation, operation and management of
information systems and IT-related consulting services. Sema's customers include
a wide variety of businesses and government departments located in over 70
countries around the world. Sema is a FTSE 100 company, quoted on the London
Stock Exchange and the Paris Bourse. It currently has a market capitalisation of
(pound) 7.9 billion. In 1999, the group's turnover reached (pound)1.41 billion
($2.23 billion), an increase of 20 per cent. on continuing activities over 1998.
Profit before tax and goodwill amortisation was (pound) 95.9 million ($151.5
million) and net assets as at 31 December 1999 were (pound)239.7 million ($378.7
million). Over the past five years, adjusted earnings per share, based on
contiNuing activities and before goodwill amortisation, has seen a compound
annual growth rate of 30 per cent.
In terms of revenue, Sema currently ranks as the second largest European-listed
IT services company. Sema has its registered office in London, United Kingdom
and has a substantial portion of its management and operations in Paris, France
as well as other countries throughout the world. The company has approximately
20,200 employees in 25 countries. Sema's primary geographic markets are in
Western Europe, where it derived 88 per cent. of its total revenues in 1999.
Providing systems integration (44.0 per cent. of turnover), outsourcing (44.7
per cent. of turnover) and products (11.3 per cent. of turnover), Sema works
across the main sectors of the economy focusing on key growth areas such as
telecoms, mobile and electronic commerce and financial services. Sema's
customers generally require complex and highly flexible information technology
systems to run their business efficiently and maintain competitive advantage.
Sema delivers projects and services which are driven by its clients' strategic
goals and make a major impact on their business success. Approximately 20 per
cent. of turnover in 1999 was derived from each of the finance and public
sectors. The telecommunications sector accounted for approximately 16 per cent.
of turnover in the same period.
10. INFORMATION ON LHS
LHS Group is a leading global provider of billing and operations support system
software and services to the communications industry. LHS products range from
pre- and post paid billing and customer care to enhanced services and
acquisition software. They are installed at more than 300 customer sites
worldwide. LHS has 18 global and regional partners (system integrators,
international operators and equipment manufacturers) representing one of the
largest implementation and support networks in the global customer care and
billing market.
In addition to its Atlanta headquarters, LHS has major offices in Frankfurt,
Germany; Kuala Lumpur, Malaysia; Sao Paulo, Brazil; Boston, USA; Miami, USA; and
Zurich, Switzerland.
In the year ended 31 December 1999, LHS reported profits before tax of $61.6
million ((pound)39.0 million) on turnover of $262.6 million ((pound)166.2
million). Net assets as at 31 December 1999 were $208.0 million ((pound)131.7
million).
<PAGE> 7
In 1999, licence revenues accounted for 41.4 per cent. of turnover (1998 - 40.5
per cent.) and services revenues 58.6 per cent. (1998 - 59.5 per cent.).
11. PRO FORMA SUMMARISED PROFIT AND LOSS ACCOUNT AND NET ASSETS
(i) Pounds sterling
<TABLE>
<CAPTION>
PRO-FORMA
SEMA LHS COMBINED
-------- -------- ---------
YEAR ENDED 31 DECEMBER 1999 (pound)M (pound)M (pound)M
<S> <C> <C> <C>
Sales 1,410.0 166.2 1,576.2
EBITDA 152.9 42.0 194.9
Operating profit 97.1 35.9 133.0
Profit before tax 95.9 39.0 134.9
Net assets (as at 31 December 1999) 239.7 131.7 371.4
(ii) US dollars
<CAPTION>
PRO-FORMA
SEMA LHS COMBINED
-------- -------- ---------
YEAR ENDED 31 DECEMBER 1999 $M $M $M
<S> <C> <C> <C>
Sales 2,227.8 262.6 2,490.4
EBITDA 241.6 66.4 308.0
Operating profit 153.4 56.8 210.2
Profit before tax 151.5 61.6 213.1
Net assets (as at 31 December 1999) 378.7 208.0 586.7
</TABLE>
NOTES TO THE PRO FORMA FINANCIAL INFORMATION
No account has been taken of the impact of acquisition accounting on the
combined operating profit.
Financial information in respect of Sema has been extracted from the preliminary
announcement of results for the year ended 31 December 1999. Operating profit
and profit before tax have been stated before goodwill amortisation.
Financial information in respect of LHS has been extracted from the preliminary
results announcement for the year ended 31 December 1999.
No adjustments have been made to restate LHS's accounting policies to be
consistent with those of Sema.
EBITDA equals earnings before interest, taxation, depreciation and amortisation.
12. SOURCES AND BASES
LHS fully diluted shares based on 58.8 million shares and 8.1 million options in
issue. Sema fully diluted shares based on 463.5 million shares and 11.5 million
options in issue. Sema closing middle market price of (pound)16.96 on 14 March
2000. Values throughout this announcement have been translated between US
dollars and Sterling (for illustration purposes only) using an exchange rate of
$1.58:(pound)1.
The merger described in this announcement, in which LHS's shareholders would
receive shares or ADSs in Sema, requires shareholder approval of Sema and LHS
and the solicitation of such approval has not yet commenced. This announcement
is neither an offer to purchase nor the solicitation of an offer to sell any
securities. The offer of shares or ADSs in Sema, as merger
<PAGE> 8
consideration, to LHS's shareholders will be made only through a prospectus and
proxy statement which will be sent to those shareholders.
Statements in this press announcement regarding Sema's and LHS's businesses
which are not historical facts, including the potential benefits and synergies
of the merger, are "forward-looking statements" that involve risks and
uncertainties. These risks and uncertainties include the abilities of Sema and
LHS to consummate the merger and realise the benefits and synergies outlined.
IN CONNECTION WITH THE MERGER, SEMA WILL FILE A REGISTRATION STATEMENT WITH THE
U.S. SECURITIES AND EXCHANGE COMMISSION ("SEC") WHICH WILL INCLUDE A PROSPECTUS
AND PROXY STATEMENT. OTHER MATERIALS RELATING TO THE MERGER WILL ALSO BE FILED
WITH THE SEC. INVESTORS ARE URGED TO READ THE PROSPECTUS AND PROXY STATEMENT AND
OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC BECAUSE THEY WILL INCLUDE
IMPORTANT INFORMATION.
MATERIALS FILED WITH THE SEC WILL BE AVAILABLE ELECTRONICALLY, WITHOUT CHARGE,
AT AN INTERNET SITE MAINTAINED BY THE SEC. THE ADDRESS OF THAT SITE IS
HTTP:/WWW.SEC.GOV. IN ADDITION, THE PROSPECTUS AND PROXY STATEMENT FILED WITH
THE SEC WILL BE MAILED TO LHS SHAREHOLDERS AND MAY BE OBTAINED WITHOUT CHARGE
FROM SEMA OR LHS UPON REQUEST. DOCUMENTS FILED WITH THE SEC WITH RESPECT TO THE
MERGER MAY BE OBTAINED WITHOUT CHARGE FROM SEMA'S HEAD OFFICE AT 233 HIGH
HOLBORN, LONDON WC1V 7DJ.
UNLESS SEMA OTHERWISE DETERMINES, THE PROSPECTUS AND PROXY STATEMENT WILL NOT BE
SENT, DIRECTLY OR INDIRECTLY, IN OR INTO, OR BY THE USE OF THE MAILS OR ANY
MEANS OR INSTRUMENTALITY (INCLUDING WITHOUT LIMITATION, TELEPHONICALLY OR
ELECTRONICALLY) OF INTERSTATE OR FOREIGN COMMERCE, OR FACILITIES OF A NATIONAL,
STATE OR OTHER SECURITIES EXCHANGE OF CANADA, AUSTRALIA OR JAPAN AND INVESTORS
IN CANADA, AUSTRALIA OR JAPAN WILL NOT BE CAPABLE OF VOTING WITH RESPECT TO
APPROVING THE MERGER BY ANY SUCH USE, MEANS, INSTRUMENTALITY OR FACILITY AND
THIS ANNOUNCEMENT MAY NOT BE DISTRIBUTED IN ANY SUCH JURISDICTIONS.
Sema is being advised by Deutsche Bank and Clifford Chance Rogers & Wells in
this transaction. LHS is being advised by Goldman, Sachs & Co. and Alston & Bird
LLP.
