<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Software AG Systems, Inc.
--------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
--------------------------------------------------------
(Title of Class of Securities)
834025 10 8
--------------------------------------------------------
(CUSIP Number)
Robert B. Ott, Esq.
Arnold & Porter
555 Twelfth Street, N.W.
Washington, DC 20004-1202
(202) 942-5008
--------------------------------------------------------------
(Name, Address, and Telephone Number of Persons Authorized to
Receive Notices and Communications)
November 18, 1997
-------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3), or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
CUSIP No. 834025108 13D Page 2 of 16 Pages
- --------------------------------------------------------------------------------
1) Name of Reporting Person
I.R.S. Identification No. of Above Person (entities only)
Thayer Equity Investors III, L.P.
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group:
(a) [ x ]
(b) [ ]
- --------------------------------------------------------------------------------
3) SEC Use only
- --------------------------------------------------------------------------------
4) Source of Funds: OO
- --------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e): [ ].
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: Delaware
- --------------------------------------------------------------------------------
Number of Shares Beneficially Owned by Each Reporting Person with:
7) Sole Voting Power: 17,125,940
- --------------------------------------------------------------------------------
8) Shared Voting Power: - 0 -
- --------------------------------------------------------------------------------
9) Sole Dispositive Power: 17,125,940
- --------------------------------------------------------------------------------
10) Shared Dispositive Power: - 0 -
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 17,125,940
- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares: [ ]
- --------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11): 59.2%
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14) Type of Reporting Person: PN
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<PAGE>
CUSIP No. 834025108 13D Page 3 of 16 Pages
- --------------------------------------------------------------------------------
1) Name of Reporting Person
I.R.S. Identification No. of Above Person (entities only)
TC Equity Partners, L.L.C.
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group:
(a) [ x ]
(b) [ ]
- --------------------------------------------------------------------------------
3) SEC Use only
- --------------------------------------------------------------------------------
4) Source of Funds: OO
- --------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e): [ ].
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: Delaware
- --------------------------------------------------------------------------------
Number of Shares Beneficially Owned by Each Reporting Person with:
7) Sole Voting Power: 17,125,940
- --------------------------------------------------------------------------------
8) Shared Voting Power: - 0 -
- --------------------------------------------------------------------------------
9) Sole Dispositive Power: 17,125,940
- --------------------------------------------------------------------------------
10) Shared Dispositive Power: - 0 -
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 17,125,940
- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares: [ ]
- --------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11): 59.2%
- --------------------------------------------------------------------------------
14) Type of Reporting Person: OO
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<PAGE>
CUSIP No. 834025108 13D Page 4 of 16 Pages
- --------------------------------------------------------------------------------
1) Name of Reporting Person
I.R.S. Identification No. of Above Person (entities only)
TC Co-Investors, LLC
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group:
(a) [ x ]
(b) [ ]
- --------------------------------------------------------------------------------
3) SEC Use only
- --------------------------------------------------------------------------------
4) Source of Funds: OO
- --------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e): [ ].
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: Delaware
- --------------------------------------------------------------------------------
Number of Shares Beneficially Owned by Each Reporting Person with:
7) Sole Voting Power: 92,985
- --------------------------------------------------------------------------------
8) Shared Voting Power: - 0 -
- --------------------------------------------------------------------------------
9) Sole Dispositive Power: 92,985
- --------------------------------------------------------------------------------
10) Shared Dispositive Power: - 0 -
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 92,985
- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares: [ ]
- --------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11): 0.3%
- --------------------------------------------------------------------------------
14) Type of Reporting Person: OO
- --------------------------------------------------------------------------------
<PAGE>
CUSIP No. 834025108 13D Page 5 of 16 Pages
1) Name of Reporting Person
I.R.S. Identification No. of Above Person (entities only)
TC Management Partners, L.L.C.
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group:
(a) [ x ]
(b) [ ]
- --------------------------------------------------------------------------------
3) SEC Use only
- --------------------------------------------------------------------------------
4) Source of Funds: OO
- --------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e): [ ].
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: Delaware
- --------------------------------------------------------------------------------
Number of Shares Beneficially Owned by Each Reporting Person with:
7) Sole Voting Power: 92,985
- --------------------------------------------------------------------------------
8) Shared Voting Power: - 0 -
- --------------------------------------------------------------------------------
9) Sole Dispositive Power: 92,985
- --------------------------------------------------------------------------------
10) Shared Dispositive Power: - 0 -
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 92,985
- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares: [ ]
- --------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11): 0.3%
- --------------------------------------------------------------------------------
14) Type of Reporting Person: OO
- --------------------------------------------------------------------------------
<PAGE>
CUSIP No. 834025108 13D Page 6 of 16 Pages
- --------------------------------------------------------------------------------
1) Name of Reporting Person
I.R.S. Identification No. of Above Person (entities only)
Carl J. Rickertsen
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group:
(a) [ x ]
(b) [ ]
- --------------------------------------------------------------------------------
3) SEC Use only
- --------------------------------------------------------------------------------
4) Source of Funds: PF, OO
- --------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e): [ ].
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: U.S.
- --------------------------------------------------------------------------------
Number of Shares Beneficially Owned by Each Reporting Person with:
7) Sole Voting Power: 8,000
- --------------------------------------------------------------------------------
8) Shared Voting Power: 17,218,925
- --------------------------------------------------------------------------------
9) Sole Dispositive Power: 8,000
- --------------------------------------------------------------------------------
10) Shared Dispositive Power: 17,218,925
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 17,226,925
- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares: [ ]
- --------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11): 60.0%
- --------------------------------------------------------------------------------
14) Type of Reporting Person: IN
- --------------------------------------------------------------------------------
<PAGE>
CUSIP No. 834025108 13D Page 7 of 16 Pages
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1) Name of Reporting Person
I.R.S. Identification No. of Above Person (entities only)
Paul G. Stern
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group:
(a) [ x ]
(b) [ ]
- --------------------------------------------------------------------------------
3) SEC Use only
- --------------------------------------------------------------------------------
4) Source of Funds: OO
- --------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e): [ ].
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: U.S.
- --------------------------------------------------------------------------------
Number of Shares Beneficially Owned by Each Reporting Person with:
7) Sole Voting Power: - 0 -
- --------------------------------------------------------------------------------
8) Shared Voting Power: 17,218,925
- --------------------------------------------------------------------------------
9) Sole Dispositive Power: - 0 -
- --------------------------------------------------------------------------------
10) Shared Dispositive Power: 17,218,925
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 17,218,925
- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares: [ ]
- --------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11): 60.0%
- --------------------------------------------------------------------------------
14) Type of Reporting Person: IN
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<PAGE>
CUSIP No. 834025108 13D Page 8 of 16 Pages
- --------------------------------------------------------------------------------
1) Name of Reporting Person
I.R.S. Identification No. of Above Person (entities only)
Frederic V. Malek
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group:
(a) [ x ]
(b) [ ]
- --------------------------------------------------------------------------------
3) SEC Use only
- --------------------------------------------------------------------------------
4) Source of Funds: OO
- --------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e): [ ].
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: U.S.
- --------------------------------------------------------------------------------
Number of Shares Beneficially Owned by Each Reporting Person with:
7) Sole Voting Power: - 0 -
- --------------------------------------------------------------------------------
8) Shared Voting Power: 17,218,925
- --------------------------------------------------------------------------------
9) Sole Dispositive Power: - 0 -
- --------------------------------------------------------------------------------
10) Shared Dispositive Power: 17,218,925
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each
Reporting Person: 17,218,925
- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares: [ ]
- --------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11): 60.0%
- --------------------------------------------------------------------------------
14) Type of Reporting Person: IN
- --------------------------------------------------------------------------------
<PAGE>
CUSIP No. 834025108 13D Page 9 of 16 Pages
ITEM 1. SECURITY AND ISSUER.
-------------------
This statement relates to shares of Common Stock, par value $.01 per
share ("Shares"), of Software AG Systems, Inc. (the "Issuer"), a Delaware
corporation, which has its principal executive offices at 11190 Sunrise Valley
Drive, Reston, Virginia 20191.
ITEM 2. IDENTITY AND BACKGROUND.
-----------------------
(a)-(c), (f). This statement is filed on behalf of the persons named
in paragraphs 1 through 7 below (collectively, the "Reporting Persons") and
their written agreement to the joint filing of this statement is attached hereto
as Exhibit A. The following information is furnished with respect to each of the
Reporting Persons:
1. THAYER EQUITY INVESTORS III, L.P.
---------------------------------
Thayer Equity Investors III, L.P. ("Thayer") is a Delaware limited
partnership whose principal office address is 1455 Pennsylvania Avenue, N.W.,
Washington, DC 20004. Thayer is a private equity fund and its principal
business is making investments in the information technology and services,
travel and leisure services, telecommunications, and consumer products
industries. Paragraph 2 of this Item 2 contains information regarding the
general partner of Thayer and paragraphs 5 through 7 of this Item 2 contain
information regarding the persons controlling such general partner.
2. TC EQUITY PARTNERS, L.L.C.
--------------------------
TC Equity Partners, L.L.C. ("TC Equity") is a Delaware limited
liability company whose principal office address is 1259 Crest Lane, McLean,
Virginia 22101. TC Equity is the sole general partner of Thayer and
its principal business is making investments in the information technology and
services, travel and leisure services, telecommunications, and consumer products
industries. Paragraphs 5 through 7 contain information regarding the principal
members of TC Equity.
3. TC CO-INVESTORS, LLC
--------------------
TC Co-Investors, LLC ("TC Co-Investors") is a Delaware limited
liability company whose principal office address is 1455 Pennsylvania Avenue,
<PAGE>
CUSIP No. 834025108 13D Page 10 of 16 Pages
N.W., Washington, DC 20004. TC Co-Investors is a private investment company
and its principal business is making investments in the information technology
and services, travel and leisure services, telecommunications, and consumer
products industries. Paragraph 4 of this Item 2 contains information
regarding the managing member of TC Co-Investors and paragraphs 5 through 7 of
this Item 2 contain information regarding the persons controlling such managing
member.
4. TC MANAGEMENT PARTNERS, L.L.C.
------------------------------
TC Management Partners, L.L.C. ("TC Management") is a Delaware limited
liability company whose principal office address is 1455 Pennsylvania Avenue,
N.W., Washington, DC 20004. TC Management is the managing member of TC Equity
and TC Co-Investors and its principal business is managing the business affairs
of TC Equity and TC Co-Investors. Paragraphs 5 through 7 contain information
regarding the members of TC Management.
5. CARL J. RICKERTSEN
------------------
Mr. Rickertsen, a United States citizen, is one of the principal
members of TC Equity and of TC Management. Mr. Rickertsen is also the Chairman
of the Board of the Issuer. His business address is 1455 Pennsylvania Avenue,
N.W., Washington, DC 20004.
6. PAUL G. STERN
-------------
Dr. Stern, a United States citizen, is one of the principal members of
TC Equity and of TC Management. Dr. Stern is also a director of the Issuer. His
business address is 1455 Pennsylvania Avenue, N.W., Washington, DC 20004.
7. FREDERIC V. MALEK
-----------------
Mr. Malek, a United States citizen, is one of the principal members of
TC Equity and of TC Management. His business address is 1455 Pennsylvania
Avenue, N.W., Washington, DC 20004.
(d) and (e). During the last five years, none of the Reporting
Persons, has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or was a party to a civil proceeding of a
<PAGE>
CUSIP No. 834025108 13D Page 11 of 16 Pages
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
-------------------------------------------------
Mr. Rickertsen used personal funds to acquire 8,000 Shares on November
18, 1997 in the initial public offering of the Issuer's common stock (the
"IPO") for an aggregate purchase price of $80,000, or $10.00 per Share.
Pursuant to an agreement by and among the Issuer, Thayer, Software AG,
a German corporation, and certain officers of the Issuer (the "Recapitalization
Agreement"), a copy of which is attached hereto as Exhibit B, Thayer used
investment capital contributed by its general and limited partners and their
respective members, as the case may be, to acquire the Shares held of record by
it from the Issuer on March 31, 1997 in connection with the recapitalization of
the Issuer (the "Recapitalization") at an aggregate purchase price of
$25,175,131.80, or $1.47 per share.
TC Co-Investors used investment capital contributed by its members to
acquire the Shares held of record by it from Thayer on June 30, 1997 at an
aggregate purchase price of $136,687.95, or $1.47 per share.
ITEM 4. PURPOSE OF TRANSACTION.
----------------------
Except for the 92,985 Shares held of record by TC Co-Investors and the
8,000 Shares acquired by Mr. Rickertsen on November 18, 1997, all of the
Reporting Persons acquired their Shares in connection with the Recapitalization
for purposes of exerting a controlling influence over the Issuer. TC Co-
Investors acquired its Shares for investment purposes. Mr.
<PAGE>
CUSIP No. 834025108 13D Page 12 of 16 Pages
Rickertsen acquired 8,000 Shares on November 18, 1997 in the IPO for investment
purposes. Mr. Rickertsen and Dr. Stern currently serve as directors of the
Issuer.
None of the Reporting Persons has any present plans, proposals or
intentions that relate to or would result in any of the following actions: (a)
the acquisition or disposition of securities of the Issuer; (b) any
extraordinary corporate transactions involving the Issuer or any of its
subsidiaries, such as a merger, reorganization or liquidation; (c) selling or
transferring a material amount of assets of the Issuer or any of its
subsidiaries; (d) merging or consolidating the Issuer or any of its subsidiaries
with any person; (e) changing the current board of directors or management of
the Issuer; (f) materially changing the Issuer's capitalization, dividend
policy, business or corporate structure; (g) making any change in the Issuer's
charter or bylaws; (h) taking any other action which might impede the
acquisition of control of the Issuer by any person; (i) causing the Shares to be
delisted from the New York Stock Exchange; (j) causing any class of the Issuer's
equity securities to become eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities Exchange Act of 1934 or (k) taking any action
similar to any of those enumerated above. In their capacity as controlling
persons with respect to the Issuer, the Reporting Persons (other than TC Co-
Investors and TC Management) may pursue such or similar actions in the future.
<PAGE>
CUSIP No. 834025108 13D Page 13 of 16 Pages
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
------------------------------------
(a)-(b) The aggregate number and percentage of outstanding Shares
beneficially owned by each of the Reporting Persons are set forth below. Except
as otherwise indicated, each Reporting Person has the sole power to vote and to
dispose of the Shares listed opposite his or its name.
<TABLE>
<CAPTION>
NAME OF NUMBER OF PERCENT OF
BENEFICIAL SHARES BENE- OUTSTANDING
OWNER FICIALLY OWNED SHARES OWNED/*/
----------- -------------- ----------------
<S> <C> <C>
Thayer Equity
Investors III, L.P. 17,125,940 59.2%
TC Equity
Partners, L.L.C./(1)/ 17,125,940 59.2%
TC Co-Investors, LLC 92,985 0.3%
TC Management Partners, L.L.C./(2)/ 92,985 0.3%
Carl J. Rickertsen/(3)(4)/ 17,226,925 60.0%
Paul G. Stern/(3)/ 17,218,925 60.0%
Frederic V. Malek/(3)/ 17,218,925 60.0%
Reporting Persons
as a Group 17,226,925 60.0%
</TABLE>
_______________________________________________________
* Based upon the 28,937,500 Shares outstanding upon completion of the IPO
on November 21, 1997.
(1) TC Equity is the sole general partner of Thayer and beneficially owns,
and has sole voting and investment power with respect to, the Shares
held of record by Thayer.
(2) TC Management is the managing member of TC Co-Investors and
beneficially owns, and has sole voting and investment power with
respect to, the Shares held of record by TC Co-Investors.
(3) Includes 17,125,940 Shares held of record by Thayer and 92,985 Shares
held of record by TC Co-Investors. Messrs. Malek and Rickertsen and
Dr. Stern are the members of TC Management and the principal members
of TC Equity and may be deemed to be the beneficial owners of, and to
have shared voting and investment power with respect to, the Shares
held of record by each of Thayer and TC Co-Investors.
(4) Consists of (i) 8,000 Shares held of record by Mr. Rickertsen, with
respect to which Mr. Rickertsen has sole voting and investment power
and (ii) 17,125,940 Shares held of record by Thayer and 92,985 Shares
held of record by TC Co-Investors, with respect to which Mr.
Rickertsen has shared voting and investment power.
<PAGE>
CUSIP No. 834025108 13D Page 14 of 16 Pages
(c) Except for Mr. Rickertsen's acquisition of 8,000 Shares on November
18, 1997 in the IPO at a price of $10.00 per Share, the Reporting Persons did
not purchase any Shares during the past sixty days.
(d) Not Applicable.
(e) Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS
OR RELATIONSHIPS WITH RESPECT TO SECURITIES
OF THE ISSUER.
-------------------------------------------
In connection with the IPO, each of Thayer, TC Co-Investors, Mr.
Rickertsen and Dr. Stern (collectively, the "Lock Up Parties") entered into a
lock-up agreement in favor of BancAmerica Robertsen Stephens and Donaldson,
Lufkin & Jenrette Securities Corporation, the representatives of the
underwriters for the IPO (the "Representatives"), each of which provides that
the Lock Up Party may not sell or otherwise dispose of any Shares until May 17,
1998 without the prior written consent of the Representatives. Copies of the
lock-up agreements are attached hereto as Exhibit C and are incorporated herein
by reference.
Thayer and the Issuer have entered into a Registration Rights
Agreement, dated as of September 26, 1997, a copy of which is attached hereto as
Exhibit D, for the benefit of all holders as of September 26, 1997 of
"restricted securities" of the Issuer within the meaning of Rule 144 of the
Securities and Exchange Commission, and certain transferees of such holders.
Pursuant to this agreement, a majority-in-interest of such holders has the right
to require the Issuer to register their restricted securities for resale under
the Securities Act of 1933, as amended, on up to five occasions and such holders
have been granted certain "piggy-back" registration rights with regard to
certain securities offerings initiated by the Issuer.
Other than as described above, the Reporting Persons do not have any
contracts, arrangements, understandings or relationships with any person with
respect to any securities of the Issuer.
<PAGE>
CUSIP No. 834025108 13D Page 15 of 16 Pages
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
--------------------------------
Exhibit A Joint Filing Agreement, dated as of December 2, 1997.
Exhibit B Recapitalization Agreement, dated as of March 18, 1997.
Exhibit C Lock-Up Agreements of certain of the Reporting Persons.
Exhibit D Registration Rights Agreement, dated as of September 26, 1997.
Exhibit E Powers of Attorney
<PAGE>
CUSIP No. 834025108 13D Page 16 of 16 Pages
SIGNATURES
After reasonable inquiry and to the best of the knowledge and
belief of each of the undersigned, each of the undersigned certifies that
the information set forth in this statement is true, complete and correct.
Dated: December 2, 1997
THAYER EQUITY INVESTORS III, L.P. TC CO-INVESTORS, LLC
By: TC Equity Partners, L.L.C. By: TC Management Partners, L.L.C.
its General Partner its Managing Member
By: /s/ Carl J. Rickertsen By: /s/ Carl J. Rickertsen
----------------------- ----------------------
Carl J. Rickertsen Carl J. Rickertsen
Member Member
TC EQUITY PARTNERS, L.L.C. TC MANAGEMENT PARTNERS, L.L.C.
By: /s/ Carl J. Rickertsen By: /s/ Carl J. Rickertsen
----------------------- -----------------------
Carl J. Rickertsen Carl J. Rickertsen
Member Member
By: /s/ Carl J. Rickertsen By: *
----------------------- ---------------------
Carl J. Rickertsen Paul G. Stern
By: *
-----------------------
Frederic V. Malek
*By: /s/ Carl J. Rickertsen
-----------------------
Carl J. Rickertsen
Attorney-In-Fact
<PAGE>
Exhibit A
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the Securities Exchange Act of 1934,
as amended, the persons named below hereby agree to the joint filing on behalf
of each of them of a Statement on Schedule 13D (including amendments thereto)
with respect to the common stock of Software AG Systems, Inc. and further agree
that this Joint Filing Agreement be included as an Exhibit to such statement.
IN WITNESS WHEREOF, the undersigned have executed this Joint Filing
Agreement as of December 2, 1997.
THAYER EQUITY INVESTORS III, L.P. TC CO-INVESTORS, LLC
By: TC Equity Partners, L.L.C. By: TC Management Partners, L.L.C.
its General Partner its Managing Member
By: /s/ Carl J. Rickertsen By: /s/ Carl J. Rickertsen
----------------------- ----------------------
Carl J. Rickertsen Carl J. Rickertsen
Member Member
TC EQUITY PARTNERS, L.L.C. TC MANAGEMENT PARTNERS, L.L.C.
By: /s/ Carl J. Rickertsen By: /s/ Carl J. Rickertsen
----------------------- ----------------------
Carl J. Rickertsen Carl J. Rickertsen
Member Member
By: /s/ Carl J. Rickertsen By: /s/ Paul G. Stern
---------------------- ---------------------
Carl J. Rickertsen Paul G. Stern
By: /s/ Frederic V. Malek
---------------------
Frederic V. Malek
<PAGE>
EXHIBIT B
EXECUTION COPY
RECAPITALIZATION AGREEMENT
This RECAPITALIZATION AGREEMENT (this "Agreement") is made as of March
18, 1997, by and among Software AG, a German corporation with its principal
place of business in Darmstadt, Germany (the "Seller"), Software AG Systems,
Inc., a Delaware corporation (the "Company"), Thayer Equity Investors III, L.P.,
a Delaware limited partnership ("Thayer"), and the managers of the Company
listed on Exhibit A hereto (collectively, such managers are referred to herein
as the "Managers" and together with Thayer are referred to herein as the
"Buyers").
W I T N E S S E T H:
WHEREAS, the Company has 200,000 shares of authorized common stock, par
value $.0l per share, (the "Common Stock") of which, at the date hereof, 100,000
shares have been issued and are outstanding and all of which issued and
outstanding shares are owned by the Seller;
WHEREAS, subject to the terms and the conditions specified herein, the
Buyers desire to purchase from the Company, and the Seller and the Company
desire that the Company issue to the Buyers, 78,000 shares of Common Stock (such
shares are referred to herein as the "Shares"); and
WHEREAS, simultaneously with such purchase and sale of the Shares, the
Company desires to repurchase 90,000 shares (the "Repurchase Shares") of the
Common Stock shares owned by Seller;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations, warranties and covenants contained herein and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE 1.
DEFINITIONS
1.1. "Claim" shall mean all actions, causes of action, suits,
Liabilities, amounts due, sums of money, accounts, reckonings, bonds, bills,
controversies, trespasses, damages, judgments, executions, claims, and demands
whatsoever, in law or equity.
<PAGE>
- 2 -
1.2. "Closing" shall mean the closing described in Article 7 hereof at
which the Parties shall consummate the transactions contemplated hereby.
1.3. "Closing Date" shall mean the date that the Closing occurs.
1.4. "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.5. "Cooperation Agreement" shall mean the Cooperation Agreement
between Seller and SAGA substantially in the form attached hereto as Exhibit B.
1.6. "Damages" shall mean any and all Liabilities, losses, damages,
fines, penalties, costs, fees and expenses of every kind, nature or description
(including without limitation interest which may be imposed in connection
therewith, court costs, costs resulting from any judgments, orders, awards,
decrees or equitable relief, and reasonable fees and disbursements of counsel,
consultants and expert witnesses).
1.7. "Encumbrance" shall mean any title defect, conflicting claim of
ownership, order, decree, judgment, stipulation, settlement, attachment,
restriction, lien, pledge, right of first refusal, option, charge, security
interest, mortgage, reservation, lease or any other encumbrance of any nature
whatsoever.
1.8. "Environmental Claims" shall mean any claim, action, suit,
proceeding, investigation, order, demand, obligation, duty or government
directive or like matter, based on any Environmental Law, which is pending or
asserted (or unasserted but considered probable of assertion) or threatened
against the Company or any Subsidiary or to which the Company or any Subsidiary
is subject, including, without limitation, claims for reimbursement,
contribution, fines, penalties and punitive damages.
1.9. "Environmental Laws" shall include all United States federal, state
and local laws, regulations, standards, rules, ordinances, binding governmental
requirements, binding judicial or administrative orders, regulatory permits, and
common law legal obligations pertaining to environmental concerns, or to
employee and occupational health and safety, or to public health, including
without limitation the federal Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. (S) 9601 et seq., the federal Resource
Conservation
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and Recovery Act, 42 U.S.C. (S) 6901 et seq., the federal Clean Water Act, 33
U.S.C. (S) 1251 et seq., the federal Clean Air Act, 42 U.S.C. (S) 7401 et seq.
and analogous state and local laws.
1.10. "Environmental Properties" shall mean all property currently or
formerly owned, leased or used by the Company or any Subsidiary, including
without limitation any property not owned by the Company or any Subsidiary but
used or affected by any of their off-site waste disposal and similar practices,
and including without limitation all surface water, ground water, subsurface
soils, and air associated with such properties.
1.11. "Equity Contribution" shall mean, with respect to each Buyer, the
dollar amount set forth opposite such Buyer's name on Exhibit A hereto.
1.12. "Financial Statements" shall mean (i) the audited consolidated
balance sheets of the Company as of December 31, 1994, and 1995 and the related
audited consolidated statements of income, cash flows and changes in
stockholders' equity (including related notes, if any) for the years ended
December 31, 1994, and 1995; and (ii) as Previously Disclosed, the consolidated
balance sheets of the Company as of December 31, 1996 and the related
consolidated statements of income, cash flows and changes in stockholders'
equity (including related notes, if any) for the year ended December 31, 1996.
1.13. "Governmental Entity" shall mean any federal, state, local or
foreign legislative authority, court, governmental agency or other regulatory,
judicial or administrative authority.
1.14. "Hazardous Substances" shall mean uncontained petroleum products
and wastes and those materials designated or defined as hazardous substances,
toxic pollutants, toxic substances, hazardous pollutants, hazardous wastes or
other similar terms in any Environmental Laws, or any other substance which by
law or regulation requires special handling in its collection, storage,
treatment, disposal or transportation.
1.15. "Intellectual Property" shall mean all of the following,
throughout the universe that is owned by, controlled by, used by, licensed by
third parties to or registered in the name of, the Company or any Subsidiary:
(i) patents and patent applications and all forms and equivalents thereof,
including divisions, continuations,
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continuations-in-part, utility patents or models, design patents, extensions,
reissued and reexamined patents, patents of addition, confirmation patents,
importation patents, registration patents, and inventor's certificates; (ii)
rights to file patent applications and other interests in inventions and
discoveries, whether reduced to practice or not, on which no patent application
has been filed; (iii) copyrights and all related and equivalent rights,
including copyright registrations, applications for copyright registration,
moral rights, and neighboring rights; (iv) common law and other trademarks,
trade names, trade dress, and service marks, and registrations and applications
for registration thereof; (v) rights in industrial designs, mask works, and the
like, and registrations and applications for registration thereof; (vi) trade
secrets; (vii) methods, processes, computer software, designs, drawings,
laboratory notebooks, technical data, research and development data, know--how,
market reports, consumer investigations, product surveys, distribution methods,
and customer lists, whether or not secret and whether or not reduced to writing;
(viii) other proprietary rights; (ix) licenses to or under and shop rights in
any of the foregoing; and (x) all other factual and proprietary information,
whether or not secret and whether or not reduced to writing.
1.16. "Liabilities" shall mean any liabilities, debts or obligations,
whether accrued, absolute, contingent or otherwise, known or unknown.
1.17. "Material Adverse Effect" shall mean, with respect to any Person,
a material adverse effect on (i) the consolidated business, results of
operations, financial condition or prospects of such Person or (ii) the ability
of such Person to consummate the transactions contemplated hereby.
1.18. "Materials of Environmental Concern" shall mean Hazardous
Substances and other chemicals, pollutants, contaminants, or wastes that present
an identifiable risk to human health or the environment.
1.19. "Parties" shall mean Seller, the Company, and each of the Buyers.
1.20. "Per Share Price" shall mean the dollar amount (rounded to two
decimal points) equal to the Purchase Price divided by 78,000.
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1.21. "Permits" shall mean permits, licenses, orders, authorizations,
certificates or approvals of any Governmental Entity
1.22. "Person" shall mean an individual, partnership, corporation,
trust, unincorporated organization, government or any department or agency
thereof and any other entity.
1.23. "Previously Disclosed" shall mean disclosed in a schedule attached
hereto.
1.24. "Purchase Price" shall mean the greater of (i) $29,035,000 or (ii)
the sum of the Equity Contributions of each Buyer as set forth on Exhibit A
hereto.
1.25. "Properties" shall mean all properties (real or personal) and
other assets (tangible or intangible) owned, leased or used by the Company or
any Subsidiary.
1.26. "Related Agreements" shall mean the Cooperation Agreement, Release
and Tax Matters Agreement.
1.27. "Release" shall mean the Release executed by Seller, substantially
in the form attached hereto as Exhibit C.
1.28. "Rights" shall mean warrants, options, rights, convertible
securities and other arrangements or commitments which obligate an entity to
issue or dispose of any of its capital stock, and stock appreciation rights,
performance units, repurchase rights and other similar stock-based rights
whether they obligate the issuer thereof to issue stock or other securities or
to pay cash.
1.29. "SAGA" shall mean Software AG Americas, Inc., a Virginia
corporation that is a wholly-owned subsidiary of the Company.
1.30. "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.31. "Tax Matters Agreement" shall mean the Tax Matters Agreement
between Seller, the Company and Thayer substantially in the form attached hereto
as Exhibit D.
Other capitalized terms used herein are defined in the preamble and the
recitals to this Agreement and in the other Articles hereof.
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ARTICLE 2.
PURCHASE AND SALE; REPURCHASE
At the Closing, on the terms and subject to the conditions set forth
herein, the following actions shall occur simultaneously:
(i) The Company shall issue and sell to the Buyers, and each Buyer
shall purchase severally and not jointly, at a purchase price per
Share equal to the Per Share Price, the number of Shares equal to
(x) the Equity Contribution of such Buyer, divided by (y) the Per
Share Price, provided, however, that any fractional Share to which
any Buyer (other than Thayer) would otherwise be entitled to
hereunder shall be purchased by Thayer instead of such Buyer;
(ii) The Company shall deliver to each Buyer stock certificates
representing the Shares purchased by such Buyer and shall take and
cause to be taken all actions necessary to transfer to each Buyer
good and valid title to the Shares purchased by such Buyer and to
record the issuance of such Shares to such Buyer on the books and
records of the Company;
(iii) Each Buyer shall pay his, her or its Equity Contribution (adjusted
for each Buyer to account for Thayer's purchase of any fractional
Shares pursuant to clause (i) of this Article) to the Company in
immediately available funds by wire transfer to the account
designated by the Company in writing at least two business days
prior to the Closing; and
(iv) The Company shall repurchase from Seller the Repurchase Shares for
an aggregate price of Fifty--Seven Million (57,000,000) Deutsche
Marks. The Company shall pay the amount owed to Seller pursuant to
this clause (iv) in immediately available funds by wire transfer to
the account designated by Seller in writing at least two business
days prior to the Closing. Seller shall deliver to the Company
stock certificates representing the
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Repurchase Shares, and the Company shall take and cause to be taken
all actions necessary to cancel such shares.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as Previously Disclosed, Seller represents and warrants to the
Buyers as follows:
3.1. Capital Structure of the Company
The authorized capital stock of the Company (the "Capital Stock")
consists solely of (i) 200,000 shares of Common Stock, of which 100,000 shares
are issued and outstanding and no shares are held in treasury and (ii) 50,000
shares of preferred stock, $.0l par value per share (the "Preferred Stock"), of
which none are issued and outstanding. No shares of Capital Stock are reserved
for issuance. All outstanding shares of Common Stock have been duly authorized
and issued and are validly outstanding, fully paid and nonassessable. The
Company does not have and is not bound by any Rights which are authorized,
issued or outstanding with respect to the Capital Stock, and there are no
agreements, understandings or commitments relating to the right of Seller to
vote or to dispose of any of such Capital Stock. None of the shares of the
Company's Capital Stock has been issued in violation of the preemptive or other
rights of any Person. Seller owns all of the outstanding shares of Common Stock,
with good and marketable title thereto free and clear of all Encumbrances.
3.2. Organization, Standing and Authority
Each of Seller and the Company and each Subsidiary is a duly organized
corporation, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each of Seller and the Company and each
Subsidiary (i) has full corporate power and authority to carry on its business
as now conducted and (ii) is duly licensed or qualified to do business in all
jurisdictions of the United States and foreign jurisdictions where its ownership
or leasing of property or the conduct of its business requires such licensing or
qualification, except where the failure to be so licensed or qualified would not
have a Material Adverse Effect on the Company.
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3.3. Subsidiaries and Related Interests
The Company owns, directly or indirectly, all of the outstanding capital
stock or other voting securities or interests of the corporations listed on
Exhibit E hereto (collectively the "Subsidiaries" and individually a
"Subsidiary"). The Company does not own, directly or indirectly, any capital
stock or other voting securities or interests of any other corporation,
partnership, limited liability company or other organization or entity. The
outstanding shares of capital stock or other voting securities or interests of
each Subsidiary are duly authorized and issued and are validly outstanding,
fully paid and nonassessable; all such shares are directly or indirectly owned
by the Company with good and marketable title thereto free and clear of all
Encumbrances. No Subsidiary has or is bound by any Rights which are authorized,
issued or outstanding with respect to the capital stock of any Subsidiary and
there are no agreements, understandings or commitments relating to the right of
the Company to vote or to dispose of any such capital stock. None of the shares
of capital stock of any Subsidiary has been issued in violation of the
preemptive rights of any Person.
3.4. Authorized and Effective Agreement
(a) Each of Seller, the Company and SAGA has all requisite corporate
power and authority to enter into and perform all of its obligations under this
Agreement and the Related Agreements to which it is a party. The execution and
delivery of this Agreement and the Related Agreements to which Seller, the
Company or SAGA is a party, and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of Seller, the Company
and SAGA. This Agreement has been, and each of the Related Agreements to which
Seller, the Company or SAGA is a party when executed and delivered by Seller,
the Company or SAGA, as the case may be, shall be, executed and delivered by a
duly authorized agent of Seller, the Company or SAGA, as the case may be. The
Shares, when issued, sold and delivered in accordance with this Agreement, shall
be duly authorized, validly issued, fully paid and nonassessable and will not
have been issued in violation of any preemptive rights. Upon consummation of the
purchase of the Shares, Buyers will acquire from the Company good and marketable
title to the Shares, free and clear of all Encumbrances.
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(b) Assuming the accuracy of the representations contained in Sections
4.2(a) and 4.2(c) hereof, this Agreement and the Related Agreements to which
Seller, the Company or SAGA is a party, constitute legal, valid and binding
obligations of Seller, the Company and SAGA, as the case may be, enforceable
against it in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization, bulk sales, or similar laws from time to time in effect which
affect the enforcement of creditors' rights generally and by general equity
principles.
(c) Neither the execution and delivery of this Agreement or any of the
Related Agreements, nor consummation of the transactions contemplated hereby or
thereby, nor compliance by Seller, the Company or SAGA with any of the
provisions hereof or thereof shall (i) conflict with or result in a breach of
any provision of the certificate of incorporation or bylaws (or similar charter
documents) of Seller, the Company or any Subsidiary, (ii) constitute or result
in a breach of any term, condition or provision of, or constitute a default
under, or give rise to any right of termination, cancellation or acceleration
with respect to, or result in the creation of any Encumbrance upon any property
or asset of the Company or any Subsidiary pursuant to, any note, bond, mortgage,
indenture, license, lease, contract, agreement or other instrument or
obligation, or (iii) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Seller, the Company or any Subsidiary, except (in
the case of clauses (ii) and (iii) above) for such violations, rights, breaches,
Encumbrances or defaults which, either individually or in the aggregate, will
not have a Material Adverse Effect on the Company or any Subsidiary.
(d) No consent, approval or authorization of, or declaration, notice,
filing or registration with, any Governmental Entity or any other Person, is
required to be made or obtained by Seller, the Company or any Subsidiary in
connection with the execution, delivery and performance of this Agreement or the
Related Agreements or the consummation of the transactions contemplated hereby
or thereby, other than (i) any applicable filings under federal or state
securities laws or state anti-takeover laws and (ii) filings required pursuant
to the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act").
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3.5. Constitutive Documents
Seller has delivered to Buyers complete and correct copies of the
Company's and each Subsidiary's certificate of incorporation and bylaws (or
similar charter documents), each as amended as of the date hereof, and all
resolutions of the boards of directors of the Company and any Subsidiary (or any
committees thereof) relating to this Agreement or any Related Agreement or any
of the transactions contemplated hereby or thereby. The minute book of the
Company, a copy of which has been delivered to Buyers, contains a complete,
correct and current record of all meetings and other corporate actions of the
stockholders and the board of directors (and any committee thereof) of the
Company since its incorporation.
3.6. Compliance with Laws; Regulatory Filings
The Company and each Subsidiary is in compliance in all material respects
with all statutes and regulations applicable to the conduct of its business. The
Company and each Subsidiary has filed all reports required by statute,
regulation or other requirement to be filed with any Governmental Entity, except
where the failure to so file would not have a Material Adverse Effect on the
Company, and such reports were prepared in all material respects in accordance
with the applicable statutes, regulations and instructions in existence as of
the date of filing of such reports. Neither the Company nor any Subsidiary has
received notification from any Governmental Entity (i) asserting a violation of
any, statute, regulation or other requirement or (ii) restricting or in any way
limiting its operations. Neither the Company nor any Subsidiary is subject to
any regulatory or supervisory order, agreement, directive, memorandum of
understanding, commitment or similar requirements and none of them has received
any communication requesting that it enter into any of the foregoing.
3.7. Financial Statements; Books and Records
(a) The Financial Statements fairly present the financial position of the
Company as of the dates indicated and the results of operations, changes in
stockholders' equity and cash flows of the Company for the periods presented,
all in conformity with U.S. generally accepted accounting principles applied on
a consistent basis except as disclosed therein. The books and records of the
Company fairly reflect in all material respects the transactions to which it is
a party or by which its Properties are subject or bound. All accounts receivable
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included in the Financial Statements dated as of December 31, 1996 (the "1996
Financial Statements") are valid and enforceable and, to the knowledge of
Seller, the Company and the Subsidiaries (collectively, the "Seller's
Knowledge"), collectible net of reserves. Such reserves have been established in
accordance with U.S. generally accepted accounting principles.
(b) Seller's Previously Disclosed consolidated balance sheet as of
December 31, 1996 and its related, Previously Disclosed consolidated statement
of income (including related notes, if any) for the year ended December 31,
1996, fairly present Seller's financial position as of the date indicated and
the results of operations of Seller for the period presented, all in conformity
with generally accepted accounting principles applied on a consistent basis
except as disclosed therein.
3.8. Material Adverse Change
The Company has not, on a consolidated basis, suffered any material
adverse change in its financial condition, results of operations, business or
prospects since December 31, 1996.
3.9. Absence of Undisclosed Liabilities
Except as disclosed in the 1996 Financial Statements, neither the
Company nor any Subsidiary has any Liability that is material to the Company on
a consolidated basis, or that, when combined with all similar Liabilities, would
be material to the Company on a consolidated basis; to the Seller's Knowledge,
no set of circumstances exist that are reasonably likely to give rise to any
such Liability.
3.10. Properties
The Company or a Subsidiary has good title, free and clear of all
Encumbrances, to all of the Properties which, individually or in the aggregate,
are material to the business of the Company and its Subsidiaries taken as a
whole, and which are reflected on the 1996 Financial Statements or acquired
after December 31, 1996, except (i) liens for taxes not yet due and payable for
which adequate reserves have been established on the books of the Company and
(ii) such imperfections of title as are not material in character, amount or
extent. All leases pursuant to which the Company or any Subsidiary, as lessee,
leases Properties which, individually or in the aggregate, are material to the
business of the Company and
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its Subsidiaries taken as a whole (x) have been Previously Disclosed and (y) are
valid, in full force and effect and enforceable in accordance with their
respective terms.
3.11. Permits
Seller has Previously Disclosed a list and description of all material
Permits which are issued to, held or used by the Company or any Subsidiary, or
for which the Company or any Subsidiary has applied. There are no other required
Permits which are material to (i) the operation of the Company's or any
Subsidiary's business as now conducted or (ii) the ownership or use of any of
the Properties. All Permits Previously Disclosed by Seller are in good standing
and are valid and effective in accordance with their respective terms; such
Permits will continue in effect after the Closing. The Company and its
Subsidiaries are in material compliance with all Permits Previously Disclosed by
Seller, and no governmental proceedings or investigations are pending or, to the
Seller's Knowledge, threatened against Seller, the Company or any Subsidiary
relating to noncompliance with such Permits.
3.12. Employment Benefit Plans
Seller has Previously Disclosed true and complete copies of all qualified
pension or profit-sharing plans, any deferred compensation, consulting, bonus or
group insurance contract or any other incentive, welfare or employee benefit
plan or agreement maintained for the benefit of employees or former employees of
the Company or any Subsidiary (collectively, the "Plans"). No liability under
Title IV of the Employment Retirement Income Security Act of 1974, as amended
("ERISA") has been incurred by the Company or any of its Subsidiaries that has
not been satisfied in full, and no condition exists that presents a material
risk of the Company or any Subsidiary incurring any such liability. With respect
to each Plan that is subject to Title IV of ERISA, the present value of accrued
benefits under such Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared with respect to such Plan,
did not, as of the valuation date used in such report, exceed the current value
of such Plan's assets allocable to such accrued benefits, and no material
adverse change in the funded status of any such Plan has occurred since such
valuation date. Full payment has been made of all amounts that the Company or
any of its Subsidiaries is required to pay under section 412 of the
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Code or under the terms of the Plans. To the Seller's Knowledge, each Plan that
is intended to be "qualified" within the meaning of section 401(a) of the Code
is so qualified and each Plan that is intended to satisfy the requirements of
section 125 or 501(c) (9) of the Code satisfies such requirements. Each of the
Plans has been operated and administered in all material respects in accordance
with its terms and applicable laws. There are no actions, suits, claims, or
actions pending, or, to the Seller's Knowledge, threatened or anticipated (other
than routine claims for benefits) against any Plan or any related trust or
against the Company or any of its Subsidiaries. None of the Plans is the subject
of an audit, investigation, or examination by the IRS, Pension Benefit Guaranty
Corporation, Department of Labor or any other Governmental Entity. None of the
Plans is a multiemployer plan within the meaning of section 3(37) of
ERISA.
3.13. Certain Contracts
Neither the Company nor any Subsidiary is a party to, or is bound by, (i)
any material contract or any other contract pursuant to which any party thereto
has an obligation or commitment of greater than $3,000,000, (ii) any agreement
restricting the nature or geographic scope of its business activities in any
material respect, other than the Cooperation Agreement (iii) any agreement,
indenture or other instrument relating to the borrowing of more than $1,000,000
by the Company or any Subsidiary or the guarantee by the Company or any
Subsidiary of any such obligation, (iv) any agreement, arrangement or commitment
relating to the employment of a consultant who was formerly a director or
executive officer or the employment, election, retention in office or severance
of any present or former director or officer, or (v) any agreement, contract or
other instrument relating to or involving any swap, hedge or other similar off-
balance sheet transaction. Neither the Company nor any Subsidiary is in default
under any material agreement, commitment, arrangement, lease, insurance policy
or other instrument whether written or oral, and there has not occurred any
event (including the execution, delivery and performance of this Agreement or
any of the Related Agreements) that, with the lapse of time or giving of notice
or both, would constitute such a default, except for such defaults which would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
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3.14. Legal Proceedings
There are no actions, suits or proceedings instituted, pending or, to the
Seller's Knowledge, threatened (or unasserted but considered probable of
assertion) against the Seller, Company or any Subsidiary or against any asset,
interest or right of Seller, the Company or any Subsidiary which could have a
Material Adverse Effect on the Company and, to the Seller's Knowledge, there are
no other such actions, suits or proceedings instituted, pending or threatened
(or unasserted but considered probable of assertion). To the Seller's
Knowledge, there are no instituted, pending or threatened actions, suits or
proceedings that present a claim to restrain or prohibit the transactions
contemplated in this Agreement or any of the Related Agreements or to impose any
material liability in connection therewith.
3.15. Labor and Related Matters
Neither the Company nor any Subsidiary is a party to, or is bound by, any
contract, agreement or understanding with any labor union, organization, group
or association, and none of them has engaged in any unfair labor practice. Since
January 1, 1995, neither the Company nor any Subsidiary has experienced any
attempt by organized labor or its representatives to make the Company or any
Subsidiary conform to demands of organized labor relating to employees of the
Company or any Subsidiary or enter into a binding agreement with organized labor
that would cover employees of the Company or any Subsidiary. There is no pending
or threatened charge of unfair labor practice or any other action, complaint or
investigation by or before any Governmental Entity brought by or on behalf of
any employee, prospective employee or former employee of the Company or any
Subsidiary. There is no labor strike or labor disturbance pending against the
Company or any Subsidiary; and neither the Company nor any Subsidiary has
experienced any organized work stoppage or other labor difficulty since January
1, 1995. Neither the Company nor any Subsidiary is a party to or affected by or
threatened with any dispute or controversy with any supplier, subcontractor, or
customer, the outcome of which could have a Material Adverse Effect on the
Company.
3.16. Brokers and Finders
None of Seller, the Company, the Subsidiaries or any of their respective
officers, directors or employees, has employed any broker, finder or financial
advisor or
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incurred any Liability for any brokerage or finders fees or commissions in
connection with the transactions contemplated in this Agreement or the Related
Agreements.
3.17. Environmental Matters
(a) Except as disclosed in the 1996 Financial Statements, and except for
liabilities incurred in the ordinary course of business subsequent to December
31, 1996, neither the Company nor any Subsidiary has any material Liability
arising under any Environmental Law, nor, to the Seller's Knowledge, is there
any basis for the assertion of any such Liabilities.
(b) There is no pending or threatened (or unasserted but considered
probable of assertion) Environmental Claim against or otherwise involving the
Company or any Subsidiary or any of their officers, directors, businesses or
assets nor, to the Seller's Knowledge, does any valid basis for such a claim or
controversy exist. There is no judgment, order, injunction, award or consent
decree outstanding against or affecting the Company or any Subsidiary which
arises from or relates to an Environmental Claim.
(c) The Environmental Properties are free from any and all contamination
by Materials of Environmental Concern for which material remedial action is
required under Environmental Laws.
(d) Neither the Company nor any Subsidiary has conducted, engaged in or
permitted others to conduct or engage in any business, operation or activity on
or at the Environmental Properties that involved the manufacture, treatment,
processing or on-site disposal of any Materials of Environmental Concern.
(e) The Company and the Subsidiaries are in compliance with all
Environmental Laws in all material respects.
(f) Seller has Previously Disclosed a true and complete list of all
environmental permits, authorizations and licenses required under all
Environmental Laws for the conduct of the business of the Company or the
Subsidiaries (collectively, the "Authorizations") and the expiration dates, if
any, of such Authorizations. All Authorizations necessary for the Company or
the Subsidiaries to continue to conduct their business in compliance with all
Environmental Laws are in full force and effect.
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(g) Neither the Company nor any Subsidiary has received or anticipates
receiving any notice, letter, citation, order, warning, complaint, inquiry,
claim or demand alleging or asserting that: (a) the Company or any Subsidiary
has violated, or is about to violate, any Environmental Laws; (b) there has been
a release or there is a threat of a release of any Material of Environmental
Concern at, from or onto any of the Environmental Properties; (c) the Company or
any Subsidiary may be or is liable, in whole or in part, for the costs of
cleaning up, remediating, removing or responding to a release or threat of a
release of any Material of Environmental Concern at, from or onto any of the
Environmental Properties or, as a result of its operation of such Environmental
Properties, at, from or onto any other property wherever located; or (d) any of
the Environmental Properties are subject to a lien in favor of any Governmental
Entity for any Damages, under Environmental Laws, arising from costs incurred by
such Governmental Entity.
3.18. Intellectual Property
(a) Seller has Previously Disclosed (i) all of the Intellectual Property
that has been registered in, filed in or issued by the United States Patent and
Trademark Office or the United States Copyright Office or any similar office in
any country and (ii) all Intellectual Property that is not so registered, filed
or issued, but the use of which is material to the ability of the Company to
operate the business of the Company and the Subsidiaries, taken as a whole. The
Company or a Subsidiary is the sole and exclusive owner of the entire right,
title and interest in and to the Intellectual Property; neither the Company nor
any Subsidiary has granted, nor does there exist by implication or operation of
law, any license or other right in respect thereof which does or which will,
subsequent to the Closing, permit or enable any Person other than the Company
and the Subsidiaries to use the Intellectual Property, except for software
licenses granted by the Company or a Subsidiary to a distributor or an end user
customer in the ordinary course of business. None of the Intellectual Property
is subject to any outstanding order, decree, judgment, stipulation, settlement,
lien, charge, encumbrance or attachment. There is no pending or, to the
Seller's Knowledge, threatened (or unasserted but considered probable of
assertion) Claim (A) asserting that any of the Intellectual Property, or that
the past, present or contemplated future conduct of the Company's or its
Subsidiaries' business, infringes or violates the intellectual property rights
of any third parties,
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(B) asserting that any third parties have any rights to use any of the
Intellectual Property or (C) which could, if adversely determined against the
Company or any Subsidiary, adversely affect the Company's ability to use any of
the Intellectual Property upon consummation of the transactions contemplated
hereby or thereafter, and to the Seller's Knowledge, there is no basis for any
claim of the foregoing types. Neither Seller nor the Company nor any Subsidiary
has given any notice to any third parties asserting infringement by such third
parties of any of the Intellectual Property. Neither the Company nor any
Subsidiary is subject to any bars or other restrictions with respect to its
rights to utilize any of the Intellectual Property, and, to the Seller's
Knowledge, no bars or other restrictions on such rights will be created by the
consummation of the transactions contemplated herein.
(b) Seller has Previously Disclosed a list of all Intellectual Property
owned by third parties and licensed to the Company or any Subsidiary (the
"Licensed Intellectual Property"). All of the Licensed Intellectual Property is
licensed pursuant to valid written agreements (the "License Agreements"),
enforceable in accordance with their terms, except as may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally and by general principles of
equity. There is no pending or, to the Seller's Knowledge, threatened claim
that the Company, any Subsidiary or any licensor is in breach of any of the
License Agreements and, to the Seller's Knowledge, no basis for any such claim
exists. There is no pending or, to the Seller's Knowledge, threatened claim
against the Company, any Subsidiary or the licensor of any Licensed Intellectual
Property asserting that any of the Licensed Intellectual Property infringes or
conflicts with the rights of third parties, or that the present, past or
contemplated future conduct of the business of the Company and its Subsidiaries
infringes or violates the rights of third parties, and to the Seller's
Knowledge, no basis for any such claim exists.
3.19. Insurance
The Company and each Subsidiary currently maintains insurance in amounts
reasonably necessary for its operations. Such policies (i) are valid and
enforceable in accordance with their terms with financially sound and reputable
insurance companies and are in full force and effect, (ii) are sufficient for
compliance with all requirements of law and all agreements to which the
<PAGE>
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Company or any Subsidiary is a party or is subject, and (iii) provide insurance
coverage of the Properties, operations and employees of the Company and its
Subsidiaries generally comparable in type and amount to that which is
customarily carried by other corporations engaged in similar businesses. Neither
the Company nor any Subsidiary has received any notice of a premium increase or
cancellation with respect to any of its insurance policies or bonds, and within
the last three years, neither the Company nor any Subsidiary has been refused
any insurance coverage sought or applied for. The Company and the Subsidiaries
have no reason to believe that existing insurance coverage cannot be renewed as
and when the same shall expire, upon terms and conditions as favorable as those
presently in effect, other than possible increases in premiums or unavailability
in coverage that have not resulted from any extraordinary loss experience of the
Company or any Subsidiary.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF BUYERS
Except as Previously Disclosed, each Buyer hereby severally represents
and warrants (but only with respect to the representations and warranties in
this Article applicable to him, her or it) to Seller as follows:
4.1. Organization, Standing and Authority of Thayer
Thayer is duly organized, validly existing and in good standing under the
laws of Delaware. Thayer (i) has all requisite partnership power and authority
to carry on its business as now conducted or proposed to be conducted and (ii)
is duly licensed or qualified to do business in all jurisdictions of the United
States and foreign jurisdictions where its ownership or leasing of property or
the conduct of its business requires such licensing or qualification, except
where the failure to be so licensed or qualified would not have a Material
Adverse Effect on Thayer.
4.2. Authorized and Effective Agreement
(a) Each of the Managers has the legal capacity to enter into and perform
all of his or her obligations under this Agreement and the Related Agreements to
which he or she is a party. Upon execution and delivery by each Manager of this
Agreement and each of the Related Agreements to which such Manager is a party,
assuming the accuracy of the representations contained in
<PAGE>
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Section 3.4(b) hereof, the Agreement and each such Related Agreement shall
constitute the legal, valid and binding obligations of such Manager, enforceable
against him or her in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization, bulk sales, or similar laws from time to time in effect which
affect the enforcement of creditors' rights generally and by general equity
principles.
(b) Thayer has all requisite partnership power and authority to enter
into and perform all of its obligations under this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary partnership action
in respect thereof on the part of Thayer. This Agreement, when executed and
delivered by Thayer, shall be executed and delivered by a duly authorized agent
of Thayer.
(c) Assuming the accuracy of the representations contained in Sections
3.4(b) hereof, this Agreement constitutes a legal, valid and binding obligation
of Thayer, enforceable against it in accordance with the terms thereof, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization, bulk sales, or similar laws from time to time in
effect which affect the enforcement of creditors' rights generally and by
general equity principles.
(d) Neither the execution and delivery of this Agreement nor consummation
of the transactions contemplated hereby, nor compliance by Thayer with any of
the provisions hereof, shall (i) conflict with or result in a breach of Thayer's
charter documents, (ii) constitute or result in a breach of any term, condition
or provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any Encumbrance upon any property or asset of Thayer pursuant to,
any note, bond, mortgage, indenture, license, lease, contract, agreement or
other instrument or obligation, or (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Thayer, except (in the
case of clauses (ii) and (iii) above) for such violations, rights, breaches,
Encumbrances or defaults which, either individually or in the aggregate, will
not have a Material Adverse Effect on Thayer.
(e) No consent, approval or authorization of, or declaration, notice,
filing or registration with, any
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Governmental Entity or any other Person, is required to be made or obtained by
Thayer in connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby, other
than (i) any applicable filings under federal or state securities laws or state
anti-takeover laws and (ii) filings required pursuant to the HSR Act.
4.3. Brokers and Finders
Thayer has not employed any broker, finder or financial advisor or
incurred any Liability for any brokerage or finders fees or commissions in
connection with the transactions contemplated in this Agreement or the Related
Agreements, other than payments made or to be made to MLC Group, Inc.
4.4. Access; Sophistication
Seller has provided to each Buyer copies of the Financial Statements and
each Buyer has reviewed such documents. Each Buyer acknowledges that all
documents, books and records requested by such Buyer pertaining to the Company
or the Shares have been made available for inspection by such Buyer and his, her
or its agents and representatives; that such Buyer and his, her or its agents
and representatives have had a reasonable opportunity to ask questions of and
receive answers from Seller, the Company or officers or employees acting on
behalf of the Company and Seller, concerning the terms and conditions of the
offering of the Shares and the business and prospects of the Company. Each
Buyer is an "accredited investor," as such term is defined in Rule 501 under the
Securities Act. Each Buyer and his, her or its respective agents and
representatives have such knowledge and experience in financial and business
matters as to enable them to utilize the information made available to them in
connection with the transactions contemplated hereby, to evaluate the merits and
risks of an investment in the Shares and to make an informed decision with
respect thereto, and such an evaluation and informed decision have been made.
The questionnaires Previously Disclosed to Seller relating to each of the
Managers are accurate and complete in all material respects.
4.5. Investment Representation
Each Buyer is acquiring the Shares to be received by such Buyer at the
Closing for such person's own account for investment only and not with a view to
<PAGE>
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making a distribution thereof within the meaning of the Securities Act. Each
Buyer agrees not to sell or transfer such Shares, except in accordance with the
terms of the legend set forth below. Each Buyer is aware that the Shares have
not been registered under the Securities Act or any state or other
jurisdiction's securities laws, and that the Shares must be held indefinitely
unless subsequently registered or an exemption from such registration is
available. Each Buyer acknowledges that investment in the Shares involves
substantial risks, including the risk of total loss of his, her or its
investment in the Shares. Each Buyer represents that he, she or it (i) is able
to hold the Shares for an indefinite period of time; (ii) has adequate means,
other than the Shares or funds invested therein, of providing for his, her or
its current and foreseeable needs; (iii) has no foreseeable need to sell or
otherwise dispose of any of the Shares; and (iv) has sufficient net worth to
sustain a loss of his, her or its entire investment in the Shares in the event
such loss should occur. Each Manager is a bona fide resident of Virginia,
Maryland, or the District of Columbia and has no present intention of changing
his or her residence. Each Buyer understands and agrees that the certificate or
certificates representing the Shares to be received by such Buyer will bear a
legend substantially to the effect set forth below and that a stop transfer
order may be placed with respect thereto.
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE SECURITIES LAW OF ANY JURISDICTION AND MAY NOT BE TRANSFERRED
UNTIL (A) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH
APPLICABLE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD
THERETO OR (B) IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE
COMPANY, REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE
SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED
TRANSFER.
<PAGE>
- 22 -
ARTICLE 5.
COVENANTS
5.1. Conduct of the Company's Business
(a) Prior to the earlier of termination of this Agreement or the Closing
Date, and except as otherwise provided for by this Agreement or as consented to
or approved by Thayer in writing, Seller and the Company shall cause the Company
and each Subsidiary to, use its best efforts to preserve its Properties,
business and relationships with customers, employees, suppliers, licensors,
licensees, advertisers, distributors and other Persons.
(b) Prior to the earlier of termination of this Agreement or the
Closing Date, Seller and the Company shall cause the Company and each Subsidiary
only to carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted. Prior to the earlier of
termination of this Agreement or the Closing Date, Seller and the Company shall
not permit the Company Or any of the Subsidiaries to, except with the prior
written consent of Thayer or except as expressly contemplated or permitted by
this Agreement:
(i) declare, set aside, make or pay any dividend or other
distribution in respect of its capital stock;
(ii) issue any shares of its capital stock or permit any treasury
shares to become outstanding;
(iii) enter into any swap, hedge or other similar off-balance
sheet transaction;
(iv) incur any additional debt obligation or other obligation for
borrowed money or guarantee any indebtedness of another Person;
(v) fail to comply with any of the representations, warranties,
covenants, conditions or other terms of any existing obligation for borrowed
money;
(vi) make any loans, advances or capital contributions to, or
investments in, any other Person, other than to any of the Subsidiaries;
(vii) issue, grant or authorize any Rights or effect any
recapitalization, reclassification, stock
<PAGE>
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dividend, stock split or like change in capitalization, or redeem, repurchase or
otherwise acquire any shares of its capital stock;
(viii) amend its certificate of incorporation or bylaws (or similar
charter documents); impose, or suffer the imposition, on any share of its
capital stock or stock held by it, of any Encumbrance, or permit any such
Encumbrance to exist;
(ix) merge with any other Person, permit any other Person to merge
into it, consolidate with any other Person, acquire control over any Person, or
create any subsidiary;
(x) waive, transfer or release any material right, modify or
change in any material respect any material agreement, or cancel, settle or
compromise any material debt, claim or litigation;
(xi) enter into any material contract, agreement or other
arrangement that is not terminable at will, with less than 30 days notice,
without payment or penalty, except in the ordinary course of business consistent
with past practice;
(xii) liquidate, sell, license, mortgage, lease or otherwise
encumber or dispose of any material assets, except sales of inventory in the
ordinary course of business; or acquire any material assets;
(xiii) increase the rate of compensation of, pay or agree to pay any
bonus to, or provide any other employee benefit or incentive to, any of its
directors, officers or employees, except as Previously Disclosed; enter into or
modify any employment or severance contract; or enter into or substantially
modify (except as may be required by applicable law) any pension, retirement,
stock option, stock purchase, stock appreciation right, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement related thereto;
(xiv) change its methods of accounting in effect at December 31,
1996, except as required by changes in U.S. generally accepted accounting
principles concurred in by its independent certified public accountants, or
change any of its methods of reporting income and deductions for U.S. federal
income tax purposes from those employed in the preparation of its federal income
tax
<PAGE>
- 24 -
returns for the year ended December 31, 1995, except as required by law; or
(xv) agree to do any of the matters specified in clauses (i)
through (xiv) of this Section 5.1(b).
5.2. Other Offers.
Neither Seller nor the Company shall solicit or encourage inquiries or
proposals with respect to, furnish any information relating to, participate in
any negotiations or discussions concerning, or enter into any transaction
involving, (i) any acquisition or purchase of all or a substantial portion of
the assets of, or a substantial equity interest in, the Company or any
Subsidiary, or (ii) any business combination with the Company or any Subsidiary,
except as contemplated in this Agreement. Each of Seller and the Company will
instruct its officers, directors, agents, subsidiaries and other affiliates to
refrain from doing any of the above. Seller and the Company will notify Thayer
if any such inquiries or proposals are received by, any such information is
received from, or any such negotiations or discussions are sought to be
initiated with Seller, the Company or any of the other persons or entities
referred to above. Seller and the Company will promptly inform Thayer in
writing of all of the relevant details with respect to the foregoing. Each of
Seller and the Company acknowledges and agrees that any remedy at law for breach
of the foregoing covenant will be inadequate, and in addition to any other
relief which may be available, Buyers will be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damages and
without regard to the adequacy of any remedy at law.
5.3. Buyer's Access
Following the execution and delivery of this Agreement, and prior to the
Closing, Seller and the Company will (a) continue to provide to Buyers and their
authorized representatives reasonable access during normal business hours to the
Company's books, records and Properties, (b) make reasonably available to Buyers
and their authorized representatives, during normal business hours and at their
normal places of work, additional personnel of the Company having knowledge of
any matters to be investigated by Buyers and (c) furnish to Buyers promptly upon
request such generally available financial and operating data and other
information relating to the Company's business and Properties as Buyers or their
<PAGE>
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authorized representatives may reasonably request. Buyers shall conduct their
investigations in such a manner as to minimize any disruption of the Company's
normal business operations.
5.4. Compliance
The Parties covenant and agree that between the date hereof and the
Closing, none of them shall take any action that would cause their
representations and warranties made herein not to be true and correct, in all
material respects, as of such Closing. Seller and the Company shall promptly
inform Thayer in writing of (i) any matter that has caused the representations
and warranties of Seller to become untrue or incorrect in any material respect
or (ii) any materially adverse change in the Company's financial condition,
results of operations, business or prospects since December 31, 1996. Each
Buyer shall promptly inform Seller and the Company in writing of any matter that
has caused the representations and warranties of such Buyer to become untrue or
incorrect in any material respect.
5.5. Best Efforts
Subject to the terms and conditions of this Agreement, each Party shall
use its reasonable best efforts and shall cooperate with the other Parties as
promptly as practicable to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations or otherwise to consummate, as soon as practicable, the
transactions contemplated hereby and by the Related Agreements. Seller and the
Company shall use all reasonable efforts to secure approvals and consents of any
Person necessary to the consummation of the transactions contemplated by this
Agreement and by the Related Agreements and to obtain any consent or approval
required for the continued effectiveness after the Closing of any contract,
agreement or customer relationship to which the Company or any Subsidiary is a
party.
5.6. Right of First Refusal
(a) Before any Common Stock shares (or securities convertible into or
exercisable or exchangeable for such shares) owned or controlled by Seller
("Seller Shares") may be sold or otherwise disposed or transferred
(collectively, "Transferred"), Thayer and the Company shall be offered the
following rights with respect to such shares:
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(i) Seller shall first deliver a written notice (a "Seller
Notice") to Thayer and the Company stating (i) the number of Seller Shares that
Seller proposes to Transfer and (ii) the price and other material terms of the
proposed Transfer. The Seller Notice shall be accompanied by a certificate of
the Seller certifying that it has received from a third party (the "Third
Party") a bona fide offer to acquire such Seller Shares at such price and on
such terms as are set forth in the Seller Notice and shall identify such Third
Party.
(ii) Within thirty (30) days after receipt of a Seller Notice (the
"Company Period"), the Company may elect, by delivering to Seller and Thayer a
written notice of its election, to purchase all or any part of the Seller Shares
to which the Seller Notice refers, on the same terms and conditions specified in
such notice. In the event that the Company does not elect to purchase any of
such shares, the Company shall send a notice to such effect to Seller and Thayer
prior to the end of the Company Period.
(iii) In the event that the Company does not elect during the
Company Period to purchase all of the Seller Shares to which the Seller Notice
refers, then Thayer may elect, by delivering to Seller a written notice (a
"Thayer Notice") of its election, within forty-five (45) days after receipt of
the Seller Notice (the "Thayer Period"), to acquire on the same terms and
conditions specified in the Seller Notice, any of the Seller Shares to which the
Seller Notice refers that are not acquired by the Company.
(iv) In the event that the Company and/or Thayer elects to acquire
Seller Shares pursuant to this Section 5.7, the Company, Thayer and Seller shall
consummate the sale and purchase of such shares within ninety (90) days after
the date that the Company and Thayer have received the Seller Notice.
(v) To the extent the Company and Thayer do not exercise their
respective rights under this Section 5.7 within the specified time periods,
Seller may Transfer the Seller Shares specified in the Seller Notice (and not
purchased by the Company or Thayer) to the Third Party specified in such Seller
Notice at the price and on the terms specified in such notice, provided that (i)
such Transfer is consummated within one hundred twenty (120) days of the date of
delivery of such Seller Notice and (ii) prior to the Transfer, such Third Party
agrees in
<PAGE>
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writing, in a form satisfactory to the Company and Thayer and as a condition of
the Transfer, that such Third Party shall receive and hold such shares subject
to the rights of first refusal of the Company and Thayer set forth in this
section.
(b) Seller agrees that all certificates representing shares of Common
Stock owned or controlled by Seller will contain the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED
AS TO TRANSFER IN ACCORDANCE WITH AN AGREEMENT DATED AS OF
MARCH 18, 1997 AMONG SOFTWARE AG, SOFTWARE AG SYSTEMS, INC.
(THE "COMPANY"), THAYER EQUITY INVESTORS, III, L.P., AND
CERTAIN MANAGERS OF THE COMPANY, A COPY OF WHICH MAY BE
OBTAINED FROM THE COMPANY.
(c) The rights and obligations set forth in this Section 5.7 shall
terminate upon consummation of an underwritten public offering of Common Stock
pursuant to an effective registration statement under the Securities Act that is
underwritten by one or more nationally-recognized investment banking firms.
ARTICLE 6.
INDEMNIFICATION
6.1. Indemnification by Seller
Subject to the limitations set forth in Sections 6.4 and 6.5 hereof,
Seller hereby indemnifies and holds harmless Buyers and their respective
affiliates, directors, officers, employees and agents from and against any and
all Damages (other than consequential and punitive damages that do not result
from third party Claims) arising out of, based upon or with respect to:
(i) any breach of any representation or warranty made by Seller in
this Agreement or the Related Agreements or any material misrepresentation
in or omission from any certificate, schedule, exhibit or other document
delivered to Buyers pursuant to this Agreement or the Related Agreements;
or
(ii) any failure, on the part of the Company prior to the Closing
and on the part of
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Seller at any time, to perform any material covenant, agreement or
undertaking contained in this Agreement or the Related Agreements.
6.2. Indemnification By Buyers
Subject to the limitations set forth in Sections 6.4 and 6.5 hereof,
Buyers hereby jointly and severally indemnify and hold harmless Seller and each
of its affiliates, directors, officers, employees and agents from and against
any and all Damages (other than consequential and punitive damages that do not
result from third party Claims) arising out of, based upon or with respect to:
(i) any breach of any representation or warranty made by Buyers in
this Agreement or the Related Agreements or any material misrepresentation
in or omission from any certificate, schedule, exhibit or other document
delivered to Seller pursuant to this Agreement or the Related Agreements;
or
(ii) any failure of Buyers to perform any material covenant,
agreement or undertaking of Buyers contained in this Agreement or the
Related Agreements.
6.3. Indemnification Procedures
(a) Promptly after the occurrence of any event or the discovery of any
facts which could give rise to a right to indemnification under this Article 6,
the person who may be entitled to indemnification (the "Indemnified Person")
shall promptly give notice to the Party required to indemnify the Indemnified
Person (the "Indemnitor"), in writing, describing in reasonable detail the facts
and circumstances giving rise to the claim for indemnification, the Damages
suffered or incurred, including the amount of such Damages, if known, or as
estimated, and the provisions of this Agreement relating to such claim for
indemnification. The failure of an Indemnified Person to give prompt notice in
the manner provided herein shall not relieve the Indemnitor of its obligations
under this Article 6, except to the extent that the Indemnitor is actually
prejudiced by such failure to give prompt notice. Upon receipt of a notice of a
claim for indemnification, the Indemnitor shall promptly pay to the Indemnified
Person the amount of such Damages in accordance with and subject to the
provisions of this Article 6; provided, however, that no such payment shall
<PAGE>
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be due during any period in which the Indemnitor is contesting in good faith
either its obligation to make such indemnification or the amount of Damages
payable.
(b) If any Claim is instituted by a third party with respect to which an
Indemnified Person intends to, or may be entitled to, claim a right to
indemnification under this Article 6, the Indemnified Person shall promptly
notify the Indemnitor of such Claim. The failure of an Indemnified Person to
give notice in the manner provided herein shall not relieve the Indemnitor of
its obligations under this Article 6, except to the extent that the Indemnitor
is actually prejudiced by such failure to give notice. The Indemnitor shall
have the right to control, at its expense and through counsel of its choosing,
the defense of any such third party Claim, but may compromise or settle the same
only with the consent of the Indemnified Person, which consent shall not be
unreasonably withheld. The Indemnified Person shall cooperate fully with the
Indemnitor and its counsel in the defense of any such third party Claim and
shall make available to the Indemnitor any books, records or other documents
within its control that are necessary or appropriate for such defense. After
providing notice of its intent to exercise its right to control such defense,
the Indemnitor shall not be responsible for any legal or other expenses
subsequently incurred by the Indemnified Person in connection therewith;
provided, however, that an Indemnified Person shall have the right to control
its defense of any such third party Claim and retain its own counsel, with the
reasonable fees and expenses to be paid by the Indemnitor, if such Indemnitor
shall have consented to such retention of counsel or the Indemnified Party shall
have reasonably concluded that representation of such Indemnified Person by the
counsel retained by the Indemnitor would be inappropriate due to actual or
potential differing interests between such Indemnified Person and any other
party represented by such counsel in such proceeding.
(c) At no time may an Indemnitor assert as a defense to its obligation
to provide indemnification as set forth in this Article 6 that, prior to the
Closing, the Indemnified Person or any of its employees, agents or affiliates
had any knowledge of the matter to which the claim for indemnification relates,
or conducted any investigation relating thereto, and each Party hereby
irrevocably waives all such defenses.
<PAGE>
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6.4. Limitations on Recoveries
Notwithstanding anything to the contrary contained herein, no
indemnification claim under this Article 6 shall be (i) enforced against any
Indemnitor to the extent any insurance proceeds or other recoveries actually are
received by the Indemnified Person with respect to any Damages otherwise payable
by the Indemnitor or (ii) valid against an Indemnitor unless a written notice
pursuant to Section 6.3 of this Agreement (a "Claims Notice") has been delivered
to such Indemnitor with respect to such claim.
6.5. Remedies for Damages
The right to indemnification under this Article 6 constitutes an
Indemnified Person's sole remedy for damages with respect to the breach of any
representation or warranty contained in this Agreement. In circumstances where
Seller is the Indemnitor, an Indemnified Person shall have the right to seek
indemnification under this Article either (i) directly from Seller or (ii)
indirectly from Seller by causing the Company to (x) pay such indemnification
claim and (y) make a corresponding deduction in the amount payable or to be paid
by the Company to Seller pursuant to the Cooperation Agreement. In circumstances
where the Seller is the Indemnitor, the Indemnified Person shall specify in its
Claims Notice the indemnification source from which the Indemnified Person
intends to recover.
ARTICLE 7.
CLOSING; CONDITIONS
7.1. Closing
The transactions contemplated by this Agreement shall be consummated at a
Closing to be held at the offices of Arnold & Porter, 555 Twelfth Street, N.W.,
Washington, D.C. 20004 or at such other place as Seller and Thayer shall agree,
at the close of business on the first business day following satisfaction of the
conditions set forth in Sections 7.2 and 7.3 hereof or such later date within 14
days thereafter as shall be specified by Thayer. All actions taken at the
Closing shall be deemed to occur simultaneously, and no document shall be deemed
to be delivered until all documents are delivered. Unless otherwise indicated,
each document delivered at the Closing shall be dated as of the date of the
Closing.
<PAGE>
- 31 -
7.2. Conditions to the Obligations of Buyers
The obligations of Buyers under this Agreement are subject to the
satisfaction at or prior to Closing of the following conditions, but compliance
with any such conditions may be waived by Thayer:
(a) The representations and warranties of Seller contained in this
Agreement shall be true and correct, in all material respects, at and as of the
Closing, and Seller and the Company shall have performed and complied with all
the covenants and agreements and satisfied all the conditions, in all material
respects, required by this Agreement to be performed or complied with or
satisfied by Seller and the Company at or prior to the Closing. Thayer shall
have received a certificate signed by Dr. Erwin Koenigs and Daniel Gillis
stating that, to the best of their knowledge, the conditions specified in this
Section 7.2(a) have been satisfied.
(b) No order, judgment or decree shall have been issued restraining or
prohibiting the consummation of the transactions contemplated by this Agreement
or any of the Related Agreements. No inquiry, action or proceeding which, in
the opinion of Thayer, is material shall have been instituted to restrain or
prohibit the consummation of the transactions contemplated by this Agreement or
any of the Related Agreements, or to challenge the validity of such transactions
or any part thereof, or seeking damages on account or as a result thereof.
(c) There shall have been no material adverse change in the financial
condition, results of operations, business or prospects of the Company since
December 31, 1996.
(d) All required consents and approvals shall have been obtained, all
other requirements prescribed by law which are necessary to the consummation of
the transactions contemplated hereby or by any Related Agreement shall have been
satisfied, and all statutory waiting periods in respect thereof shall have
expired or been terminated.
(e) Buyers shall have received one or more opinions from counsel to
Seller and the Company, in form and substance reasonably satisfactory to Thayer
addressing the matters set forth in Exhibit F hereto.
(f) Seller and SAGA shall have executed and delivered the Cooperation
Agreement.
<PAGE>
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(g) The Company shall have received the resignations of (i) all of the
directors of the Company, other than Dr. Erwin Koenigs and Daniel Gillis, (ii)
all of the officers of the Company, other than Daniel Gillis, and (iii) all of
the directors of SAGA, other than Daniel Gillis, in each case effective as of
the Closing.
(h) Seller shall have executed and delivered to the Company and Thayer
the Release.
(i) Seller and the Company shall have executed and delivered to Thayer
the Tax Matters Agreement.
(j) The Products and Research and Development Operations Transfer
Agreement dated as of December 5, 1993 between Seller and SAGA shall have been
amended in a manner satisfactory to Thayer.
(k) Buyers shall have received from Seller and the Company such other
documents confirming the accuracy and completeness of the representations and
warranties of Seller as Buyers may reasonably request.
7.3. Conditions to the Obligations of Seller
The obligations of Seller under this Agreement are subject to the
satisfaction at or prior to Closing of the following conditions, but compliance
with any such conditions may be waived by Seller:
(a) The representations and warranties of Buyers contained in this
Agreement shall be true and correct, in all material respects, at and as of the
Closing, and Buyers shall have performed and complied with all the covenants and
agreements and satisfied all the conditions, in all material respects, required
by this Agreement to be performed or complied with or satisfied by Buyers at or
prior to the Closing.
(b) No order, judgment or decree shall have been issued restraining or
prohibiting the consummation of the transactions contemplated by this Agreement
or any of the Related Agreements .
(c) All required consents and approvals shall have been obtained, all
other requirements prescribed by law which are necessary to the consummation of
the transactions contemplated hereby or by any Related Agreement shall have been
satisfied, and all statutory
<PAGE>
- 33 -
waiting periods in respect thereof shall have expired or been terminated.
(d) Seller shall have received from Buyers such other documents
confirming the accuracy and completeness of the representations and warranties
of Buyers as Seller may reasonably request.
ARTICLE 8.
TERMINATION
8.1. Termination
This Agreement may be terminated and the transactions contemplated hereby
abandoned at any time prior to the Closing Date, only as follows:
(a) By the mutual consent in writing of Seller and Thayer;
(b) By Thayer in writing, if Seller or the Company has, or by Seller in
writing, if any Buyer has, in any material respect, breached (i) any covenant or
agreement contained herein or (ii) any representation or warranty contained
herein, and in either case if such breach has not been cured by the earlier of
15 business days after the date on which written notice of such breach is given
to the Party committing such breach or the Closing Date;
(c) By any party hereto in writing, if the Closing Date has not occurred
by the close of business on May 1, 1997, unless the failure of the Closing to
occur by such date shall be due to the failure of the Party seeking to terminate
this Agreement to perform or observe the covenants and agreements set forth
herein; or
(d) By Seller or Thayer in writing, if any Governmental Entity of
competent jurisdiction shall have issued a final non-appealable order enjoining
or otherwise prohibiting the transactions contemplated hereby.
8.2. Effect of Termination
In the event this Agreement is terminated pursuant to Section 8.1 hereof,
this Agreement shall become void and have no effect, provided, however, that
nothing herein shall relieve any Party from liability for the breach of any
representations or warranties or the breach of, or failure to perform, any
covenant made by it herein.
<PAGE>
- 34 -
ARTICLE 9.
MISCELLANEOUS
9.1. Survival of Representations and Warranties
The representations, warranties and covenants contained in this Agreement
shall survive the Closing and any and all investigations and inquiries by the
Parties made prior to the Closing Date in connection with this Agreement and the
transactions contemplated hereby. The representations, warranties, covenants
and agreements of the Parties contained in this Agreement and the Related
Agreements shall not be affected by or diminished in any way by any
investigation (or failure to investigate) made at any time by or on behalf of
the Party for whose benefit such representations, warranties, covenants and
agreements were made.
9.2. Amendment
This Agreement may be amended or supplemented at any time by the mutual
agreement in writing of Seller, the Company and Thayer. Seller and the Company
agree to approve, execute and deliver any amendment to this Agreement and any
additional plans and agreements requested by Thayer to modify the structure of,
or to substitute parties to, the transactions contemplated hereby; provided,
however, that no such change shall (i) alter or change the amount or kind of
consideration to be delivered to the Seller in connection with the transactions
contemplated hereby, or (ii) materially impede or delay the consummation of the
transactions contemplated by this Agreement. Notwithstanding anything to the
contrary herein, Thayer shall have the right, at any time prior to the Closing,
to modify or amend Exhibit A hereto without the consent of any other party
hereto, provided that (x) Thayer shall provide notice of any such amendment or
modification to all the other parties hereto and (y) no such amendment or
modification shall increase the Equity Contribution of any Manager without such
Manager's consent.
9.3. No Waiver of Rights
No failure or delay on the part of any Party in the exercise of any power
or right hereunder shall operate as a waiver thereof. No single or partial
exercise of any right or power hereunder shall operate as a waiver of such right
or of any other right or power. The waiver by any Party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or
<PAGE>
- 35 -
subsequent breach hereunder. Except as otherwise expressly provided herein, all
rights and remedies existing under this Agreement are cumulative with, and not
exclusive of, any rights or remedies otherwise available.
9.4. Expenses
Each Party hereto shall bear and pay all costs and expenses incurred by
it in connection with the transactions contemplated in this Agreement, including
fees and expenses of its own financial consultants, accountants and counsel.
9.5. Entire Agreement; Successors; Third Parties
This Agreement and the Related Agreements contain the entire agreement
between the Parties with respect to the transactions contemplated hereunder and
thereunder and supersede all prior arrangements or understandings with respect
thereto, written or oral, other than documents referred to herein or therein.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the Parties hereto and their respective successors and permitted
assigns. Except as specifically set forth herein or in any Related Agreement,
nothing in this Agreement or any Related Agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto and thereto,
and their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities.
9.6. No Assignment
No Party hereto may assign any of its rights or obligations under this
Agreement to any other Person, except that Thayer may assign its rights and/or
obligations to an affiliate of Thayer.
9.7. Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally, by
facsimile or sent by overnight express or by registered or certified mail,
postage prepaid, addressed as follows:
<PAGE>
- 36 -
If to Seller to:
Software AG
Uhlandstrasse 12, D-64297
Darmstadt, Germany
Attention: Dr. Erwin Koenigs
Facsimile: 49-6151-921868
with a required copy to:
Software AG
Uhlandstrasse 12, D-64297
Darmstadt, Germany
Attention: Christine Schwab
Facsimile: 49-6151-921600
If to the Company:
Software AG Systems, Inc.
11190 Sunrise Valley Drive
Reston, VA 20191
Attention: Harry Mccreery
Facsimile: 703-391-6504
If to Thayer:
Thayer Equity Investors, III, L.P.
1455 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Attention: Robert E. Michalik
Facsimile: (202) 371-0391
With a required copy to:
Arnold & Porter
555 Twelfth Street, N.W.
Washington, D.C. 20004
Attention: Robert B. Ott, Esq.
Facsimile: (202) 942-5999
If to any of the Managers, to the address set forth beneath the signature of
such Manager on the signature page hereof.
All such deliveries shall be deemed effective when received by the Persons
entitled to such receipt or when delivery has been attempted but refused by such
Person or Persons. Any Party may change the Persons or addresses to which such
deliveries shall be made with respect to such Party by delivering notice thereof
to the other Parties hereto in accordance with this Section 9.7.
<PAGE>
- 37 -
9.8. Captions
The captions contained in this Agreement are for reference purposes only
and are not part of any such agreement.
9.9. Counterparts
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
9.10. Governing Law and Venue
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of Virginia
applicable to agreements made and entirely to be performed within such
jurisdiction. The Party bringing any action under this Agreement shall only be
entitled to choose the federal or state courts in the Commonwealth of Virginia
as the venue for such action, and each Party consents to the jurisdiction of the
court chosen in such manner for such action.
9.11. Severability
The provisions of this Agreement are severable, and the unenforceability
of any provision of this Agreement shall not affect the enforceability of the
remainder of this Agreement. The parties acknowledge that it is their intention
that if any provision of this Agreement is determined by a court to be invalid,
illegal or unenforceable as drafted, that provision should be construed in a
manner designed to effectuate the purpose of that provision to the greatest
extent possible under applicable law.
9.12. Specific Performance
The rights of the Parties under this Agreement and the Related Agreements
are unique and the failure of a Party to perform its obligations hereunder or
thereunder would irreparably harm the other Parties hereto. Accordingly, the
Parties shall, in addition to such other remedies as may be available at law or
in equity, have the right to enforce their rights hereunder by actions for
specific performance to the extent permitted by law.
<PAGE>
- 38 -
9.13. Further Assurances
Subject to the terms and conditions herein provided, each of the Parties
hereto shall use reasonable efforts to take, or cause to be taken, such action,
to execute and deliver, or cause to be executed and delivered, such additional
documents and instruments and to do, or cause to be done, all things necessary,
proper or advisable under the provisions of this Agreement and the Related
Agreements and under applicable law to consummate and make effective the
transactions contemplated by this Agreement and the Related Agreements.
9.14. Publicity
Any general notices, releases, statements or communications to employees,
suppliers, distributors, licensees or customers of the Company or Seller, or to
the general public or the press, relating to the purchase price of either the
Shares or the Repurchase Shares pursuant to this Agreement, shall be made only
at such times and in such manner as may be mutually agreed upon by Seller and
Thayer.
<PAGE>
- 39 -
IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed as of the day and year first
above written.
SOFTWARE AG
By:
----------------------------------
Dr. Erwin Koenigs
Chairman of the Board
and
By:
----------------------------------
Volker Dawedeit
Board Member
SOFTWARE AG SYSTEMS, INC.
By:
----------------------------------
Dr. Erwin Koenigs
President
THAYER EQUITY INVESTORS, III, L.P.
By: TC Equity Partners, L.L.C.,
its General Partner
By: /s/ Rick Rickertsen
------------------------------
Rick Rickertsen
Member
<PAGE>
- 40 -
MANAGERS:
/s/ Daniel Gillis
-----------------------------------
Daniel Gillis
9513 Fox Hollow Drive
Potomac, MD 20854
Facsimile: (703) 391-6782
/s/ Harry McCreery
-----------------------------------
Harry McCreery
10727 Midsummer Drive
Reston, VA 20191
Facsimile: (703) 391-6504
/s/ James Daly
-----------------------------------
James Daly
2606 Barnside Ct.
Herndon, VA 20171
Facsimile: (7O3) 391-6980
/s/ Derek Brigden
-----------------------------------
Derek Brigden
11317 Bright Pond Lane
Reston, VA 20194
Facsimile: (703) 391-6504
/s/ Gary Hayes
-----------------------------------
Gary Hayes
7924 Longridge Ct.
Cabin John, MD 20818
Facsimile: (7O3) 391-8111
/s/ Thomas Gorley
-----------------------------------
Thomas Gorley
12801 Cross Creek Lane
Oak Hill, VA 20171
Facsimile: (703) 391-6760
<PAGE>
- 39 -
IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed as of the day and year first
above written.
SOFTWARE AG
By: /s/ Dr. Erwin Koenigs
-------------------------------
Dr. Erwin Koenigs
Chairman of the Board
and
By: /s/ Volker Dawedeit
-------------------------------
Volker Dawedeit
Board Member
SOFTWARE AG SYSTEMS, INC.
By: /s/ Dr. Erwin Koenigs
-------------------------------
Dr. Erwin Koenigs
President
THAYER EQUITY INVESTORS, III, L.P.
By: TC Equity Partners, L.L.C.,
its General Partner
By:
---------------------------
Rick Rickertsen
<PAGE>
AMENDED EXHIBIT A
Equity
Contribution
Buyers ($)
- ----------------------------------- ------------
Thayer Equity Investors III, L.P. 30,392,662.86
Managers
Daniel Gillis 299,908.98
Harry McCreery 299,908.98
Gary Hayes 124,894.71
James Daly 159,655.05
Derek Brigden 99,834.93
Thomas Gorley 149,954.49
----------
Total Equity Contributions: 31,526,820.00
<PAGE>
Exhibit C
BancAmerica Robertson Stephens
Donaldson, Lufkin & Jenrette Securities Corporation
As Representatives of the several Underwriters
Named in Schedule A to the Underwriting Agreement
c/o BancAmerica Robertson Stephens
555 California Street, Suite 2600
San Franciso, California 94104
Daniel F. Gillis
Software AG Systems, Inc.
11190 Sunrise Valley Drive
Reston, Virginia 20191-5424
Re: Restrictions on Sales of Common Stock
-------------------------------------
Ladies and Gentlemen:
Software AG Systems, Inc., a Delaware corporation (the "Company"), and
certain of its stockholders propose to sell 7,700,000 shares (the "Shares") of
Common Stock, $.01 par value per share (the "Common Shares") of the Company, in
a public offering (the "Public Offering") underwritten by BancAmerica Robertson
Stephens and Donaldson, Lufkin & Jenrette Securities Corporation (the
"Representatives") and several other underwriters (the Representatives and
several other underwriters are collectively referred to as the "Underwriters").
The Underwriters have indicated that the prospect of sales of shares of
Common Stock by existing stockholders prior to six months after the Public
Offering would be detrimental to their underwriting effort. They have requested
that the undersigned agree not to sell any shares of Common Stock for a period
ending 180 days after the effective date of the Registration Statement on Form
S-1 (the "Registration Statement") filed by the Company relating to the Shares.
The undersigned recognizes that it is in the best financial interests of
the undersigned, as a holder of shares of Common Stock, preferred stock,
warrants, options or convertible securities of the Company, that the Company
complete the proposed Public Offering.
The undersigned further recognizes that the undersigned's shares of Common
Stock are, or may be, subject to certain restrictions on transferability,
including those imposed by the securities laws of the United States of America
or other jurisdictions. Notwithstanding these restrictions, the undersigned has
agreed to enter into this letter agreement to further assure the Underwriters
that the undersigned's shares of Common Stock, now held or hereafter acquired,
will not enter the public market at a time that might impair the underwriting
effort.
<PAGE>
BancAmerica Robertson Stephens
Donaldson, Lufkin & Jenrette Securities Corporation
Page 2
The undersigned, therefore, hereby acknowledges and agrees that the
undersigned will not, directly or indirectly, without the prior written consent
of BancAmerica Robertson Stephens, offer, sell, contract to sell, grant any
option to purchase, pledge or otherwise dispose of or transfer (collectively, a
"Disposition") any shares of Common Stock or any securities convertible into or
exchangeable for, or any rights to purchase or acquire, shares of Common Stock
held by the undersigned, acquired by the undersigned during the Lock-up Period
(as hereinafter defined) or which may be deemed to be beneficially owned by the
undersigned pursuant to the Rules and Regulations promulgated under the
Securities Exchange Act of 1934, as amended (the "Lock-up Shares"), other than
pursuant to the underwriting agreement to which the Underwriters are parties and
which is described in the definitive Prospectus prepared in connection with the
Public Offering, for a period commencing on the date hereof and ending 180 days
after the effective date of the Registration Statement (the "Lock-up Period").
The foregoing restriction is expressly agreed to preclude the holder of Lock-up
Shares from engaging in any hedging or other transaction which is designed to or
reasonably expected to lead to or results in a Disposition of Lock-up Shares
during the Lock-up Period, even if such Lock-up Shares would be disposed of by
someone other than such holder. Such prohibited hedging or other transactions
would include, without limitation, any short sale (whether or not against the
box) or any purchase, sale or grant of any right (including, without limitation,
any put or call option) with respect to any Lock-up Shares or with respect to
any security (other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from the Lock-up Shares.
Notwithstanding the foregoing, the undersigned may transfer any or all of
the Lock-up Shares (i) as a bona fide gift or gifts or (ii) as a distribution to
limited partners or shareholders of such person; provided the transferee or
transferees thereof agree(s) in writing as a condition precedent to such
transfer to be bound by the terms hereof. The transferor shall notify
BancAmerica Robertson Stephens in writing prior to the transfer, and there shall
be no further transfer of such Lock-up Shares except in accordance with this
letter agreement. Moreover, notwithstanding any other provision of this letter
agreement, the undersigned may exercise during the Lock-up Period any option to
purchase shares of Common Stock, provided, however, that any shares so acquired
-------- -------
shall constitute Shares for the purposes of this letter
agreement.
It is understood that, if the Underwriting Agreement between the
Representatives and the Company (the "Underwriting Agreement") does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which
<PAGE>
BancAmerica Robertson Stephens
Donaldson, Lufkin & Jenrette Securities Corporation
Page 3
survive termination) shall terminate or be terminated prior to payment for and
delivery of the Shares, the undersigned will be automatically released from its
obligations under this letter agreement.
The undersigned further agrees to permit all certificates evidencing the
Lock-up Shares to be stamped with an appropriate restrictive legend, and will
cause the transfer agent for the Company to note such restriction on the
transfer books and records of the Company.
The undersigned recognizes that you are relying on the representations and
agreements of the undersigned contained herein in entering into underwriting
arrangements with respect to the Public Offering contemplated by the
Registration Statement.
Executed as an instrument under seal in accordance with the laws of the
Commonwealth of Massachusetts, United States of America.
Very truly yours,
/s/ Carl J. Rickertsen
-----------------------------------
Signature of Securityholder
___________________________________
Signature of Co-Securityholder, if
applicable
___________________________________
Carl J. Rickertsen, Member Securityholder (please print)
for TC Management, Partners, L.L.C.
as General Partner of
Thayer Equity Investors III, L.P. ___________________________________
Co-Securityholder (please
print)
<PAGE>
BancAmerica Robertson Stephens
Donaldson, Lufkin & Jenrette Securities Corporation
As Representatives of the several Underwriters
Named in Schedule A to the Underwriting Agreement
c/o BancAmerica Robertson Stephens
555 California Street, Suite 2600
San Francisco, California 94104
Daniel F. Gillis
Software AG Systems, Inc.
11190 Sunrise Valley Drive
Reston, Virginia 20191-5424
Re: Restrictions on Sales of Common Stock
-------------------------------------
Ladies and Gentlemen:
Software AG Systems, Inc., a Delaware corporation (the "Company"), and
certain of its stockholders propose to sell 7,700,000 shares (the "Shares") of
Common Stock, $.01 par value per share (the "Common Shares") of the Company, in
a public offering (the "Public Offering") underwritten by BancAmerica Robertson
Stephens and Donaldson, Lufkin & Jenrette Securities Corporation (the
"Representatives") and several other underwriters (the Representatives and
several other underwriters are collectively referred to as the "Underwriters").
The Underwriters have indicated that the prospect of sales of shares of
Common Stock by existing stockholders prior to six months after the Public
Offering would be detrimental to their underwriting effort. They have requested
that the undersigned agree not to sell any shares of Common Stock for a period
ending 180 days after the effective date of the Registration Statement on Form
S-1 (the "Registration Statement") filed by the Company relating to the Shares.
The undersigned recognizes that it is in the best financial interests of
the undersigned, as a holder of shares of Common Stock, preferred stock,
warrants, options or convertible securities of the Company, that the Company
complete the proposed Public Offering.
The undersigned further recognizes that the undersigned's shares of Common
Stock are, or may be, subject to certain restrictions on transferability,
including those imposed by the securities laws of the United States of America
or other jurisdictions. Notwithstanding these restrictions, the undersigned has
agreed to enter into this letter agreement to further assure the Underwriters
that the undersigned's shares of Common Stock, now held or hereafter acquired,
will not enter the public market at a time that might impair the underwriting
effort.
<PAGE>
BancAmerica Robertson Stephens
Donaldson, Lufkin & Jenrette Securities Corporation
Page 2
The undersigned, therefore, hereby acknowledges and agrees that the
undersigned will not, directly or indirectly, without the prior written consent
of BancAmerica Robertson Stephens, offer, sell, contract to sell, grant any
option to purchase, pledge or otherwise dispose of or transfer (collectively, a
"Disposition") any shares of Common Stock or any securities convertible into or
exchangeable for, or any rights to purchase or acquire, shares of Common Stock
held by the undersigned, acquired by the undersigned during the Lock-up Period
(as hereinafter defined) or which may be deemed to be beneficially owned by the
undersigned pursuant to the Rules and Regulations promulgated under the
Securities Exchange Act of 1934, as amended (the "Lock-Up Shares"), other than
pursuant to the underwriting agreement to which the Underwriters are parties
and which is described in the definitive Prospectus prepared in connection with
the Public Offering, for a period commencing on the date hereof and ending 180
days after the effective date of the Registration Statement (the "Lock-up
Period"). The foregoing restriction is expressly agreed to preclude the holder
of Lock-up Shares from engaging in any hedging or other transaction which is
designed to or reasonably expected to lead to or results in a Disposition of
Lock-up Shares during the Lock-up period, even is such Lock-up Shares would be
disposed of by someone other than such holder. Such prohibited hedging or other
transactions would include, without limitation, any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any Lock-up Shares or with
respect to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from the
Lock-up Shares.
Notwithstanding the foregoing, the undersigned may transfer any or all of
the Lock-up Shares (i) as a bona fide gift or gifts or (ii) as a distribution to
limited partners or shareholders of such person; provided the transferee or
transferees thereof agree(s) in writing as a condition precedent to such
transfer to be bound by the terms hereof. The transferor shall notify
BancAmerica Robertson Stephens in writing prior to the transfer, and there shall
be no further transfer of such Lock-up Shares except in accordance with this
letter agreement. Moreover, notwithstanding any other provision of this letter
agreement, the undersigned may exercise during the Lock-up Period any option to
purchase shares of Common Stock, provided, however, that any shares so acquired
-------- -------
shall constitute Lock-up Shares for the purposes of this letter agreement.
It is understood that, if the Underwriting Agreement between the
Representatives and the Company (the "Underwriting Agreement") does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which
<PAGE>
BancAmerica Robertson Stephens
Donaldson, Lufkin & Jenrette Securities Corporation
Page 3
survive termination) shall terminate or be terminated prior to payment for and
delivery of the Shares, the undersigned will be automatically released from its
obligations under this letter agreement.
The undersigned further agrees to permit all certificates evidencing the
Lock-up Shares to be stamped with an appropriate restrictive legend, and will
cause the transfer agent for the Company to note such restriction on the
transfer books and records of the Company.
The undersigned recognizes that you are relying on the representations and
agreements of the undersigned contained herein entering into underwriting
arrangements with respect to the Public Offering contemplated by the
Registration Statement.
Executed as an instrument under seal in accordance with the laws of the
Commonwealth of Massachusetts, United States of America.
Very truly yours,
/s/ Carl J. Rickersen
-----------------------------------
Signature of Securityholder
___________________________________
Signature of Co-Securityholder, if
applicable
___________________________________
Carl J. Rickertsen, Member Securityholder (please print)
for TC Management, L.L.C.
as Managing Member of ___________________________________
TC Co-Investors, LLC Co-Securityholder (please print)
<PAGE>
BancAmerica Robertson Stephens
Donaldson, Lufkin & Jenrette Securities Corporation
As Representatives of the several Underwriters
Named in Schedule A to the Underwriting Agreement
c/o BancAmerica Robertson Stephens
555 California Street, Suite 2600
San Francisco, California 94104
Daniel F. Gillis
Software AG Systems, Inc.
11190 Sunrise Valley Drive
Reston, Virginia 20191-5424
Re: Restrictions on Sales of Common Stock
-------------------------------------
Ladies and Gentlemen:
Software AG Systems, Inc., a Delaware corporation (the "Company"), and
certain of its stockholders propose to sell 7,700,000 shares (the "Shares") of
Common Stock, $.01 par value per share (the "Common Shares") of the Company, in
a public offering (the "Public Offering") underwritten by BancAmerica Robertson
Stephens and Donaldson, Lufkin & Jenrette Securities Corporation (the
"Representatives") and several other underwriters (the Representatives and
several other underwriters are collectively referred to as the "Underwriters").
The Underwriters have indicated that the prospect of sales of shares of
Common Stock by existing stockholders prior to six months after the Public
Offering would be detrimental to their underwriting effort. They have requested
that the undersigned agree not to sell any shares of Common Stock for a period
ending 180 days after the effective date of the Registration Statement on Form
S-1 (the "Registration Statement") filed by the Company relating to the Shares.
The undersigned recognizes that it is in the best financial interests of
the undersigned, as a holder of shares of Common Stock, preferred stock,
warrants, options or convertible securities of the Company, that the Company
complete the proposed Public Offering.
The undersigned further recognizes that the undersigned's shares of Common
Stock are, or may be, subject to certain restrictions on transferability,
including those imposed by the securities laws of the United States of America
or other jurisdictions. Notwithstanding these restrictions, the undersigned has
agreed to enter into this letter agreement to further assure the Underwriters
that the undersigned's shares of Common Stock, now held or hereafter acquired,
will not enter the public market at a time that might impair the underwriting
effort.
<PAGE>
BancAmerica Robertson Stephens
Donaldson, Lufkin & Jenrette Securities Corporation
Page 2
The undersigned, therefore, hereby acknowledges and agrees that the
undersigned will not, directly or indirectly, without the prior written consent
of BancAmerica Robertson Stephens, offer, sell, contract to sell, grant any
option to purchase, pledge or otherwise dispose of or transfer (collectively, a
"Disposition") any shares of Common Stock or any securities convertible into or
exchangeable for, or any rights to purchase or acquire, shares of Common Stock
held by the undersigned, acquired by the undersigned during the Lock-up Period
(as hereinafter defined) or which may be deemed to be beneficially owned by the
undersigned pursuant to the Rules and Regulations promulgated under the
Securities Exchange Act of 1934, as amended (the "Lock-up Shares"), other than
pursuant to the underwriting agreement to which the Underwriters are parties and
which is described in the definitive Prospectus prepared in connection with the
Public Offering, for a period commencing on the date hereof and ending 180 days
after the effective date of the Registration Statement (the "Lock-up Period").
The foregoing restriction is expressly agreed to preclude the holder of Lock-up
Shares from engaging in any hedging or other transaction which is designed to or
reasonably expected to lead to or results in a Disposition of Lock-up Shares
during the Lock-up Period, even if such Lock-up Shares would be disposed of by
someone other than such holder. Such prohibited hedging or other transactions
would include, without limitation, any short sale (whether or not against the
box) or any purchase, sale or grant of any right (including, without limitation,
any put or call option) with respect to any Lock-up Shares or with respect to
any security (other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from the Lock-up Shares.
Notwithstanding the foregoing, the undersigned may transfer any or all of
the Lock-up Shares (i) as a bona fide gift or gifts or (ii) as a distribution to
limited partners or shareholders of such person; provided the transferee or
transferees thereof agree(s) in writing as a condition precedent to such
transfer to be bound by the terms hereof. The transferor shall notify
BancAmerica Robertson Stephens in writing prior to the transfer, and there shall
be no further transfer of such Lock-up Shares except in accordance with this
letter agreement. Moreover, notwithstanding any other provision of this letter
agreement, the undersigned may exercise during the Lock-up Period any option to
purchase shares of Common Stock, provided, however, that any shares so acquired
-------- -------
shall constitute Lock-Up Shares for the purposes of this letter agreement.
It is understood that, if the Underwriting Agreement between the
Representatives and the Company (the "Underwriting Agreement") does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which
<PAGE>
BancAmerica Robertson Stephens
Donaldson, Lufkin & Jenrette Securities Corporation
Page 3
survive termination) shall terminate or be terminated prior to payment for and
delivery of the Shares, the undersigned will be automatically released from its
obligations under this letter agreement.
The undersigned further agrees to permit all certificates evidencing the
Lock-up Shares to be stamped with an appropriate restrictive legend, and will
cause the transfer agent for the Company to note such restriction on the
transfer books and records of the Company.
The undersigned recognizes that you are relying on the representations and
agreements of the undersigned contained herein in entering into underwriting
arrangements with respect to the Public Offering contemplated by the
Registration Statement.
Executed as an instrument under seal in accordance with the laws of the
Commonwealth of Massachusetts, United States of America.
Very truly yours,
/s/ Carl J. Rickertsen
------------------------------
Signature of Securityholder
______________________________
Signature of Co-Securityholder,
if applicable
CARL J. RICKERTSEN
------------------------------
Securityholder (please print)
______________________________
Co-Securityholder (please
print)
<PAGE>
BancAmerica Robertson Stephens
Donaldson, Lufkin & Jenrette Securities Corporation
As Representatives of the several Underwriters
Named in Schedule A to the Underwriting Agreement
c/o BancAmerica Robertson Stephens
555 California Street, Suite 2600
San Francisco, California 94104
Daniel F. Gillis
Software AG Systems, Inc.
11190 Sunrise Valley Drive
Reston, Virginia 20191-5424
Re: Restrictions on Sales of Common Stock
-------------------------------------
Ladies and Gentlemen:
Software AG Systems, Inc., a Delaware corporation (the "Company"), and
certain of its stockholders propose to sell 7,700,000 shares (the "Shares") of
Common Stock, $.01 par value per share (the "Common Shares") of the Company, in
a public offering (the "Public Offering") underwritten by BancAmerica Robertson
Stephens and Donaldson, Lufkin & Jenrette Securities Corporation (the
"Representatives") and several other underwriters (the Representatives and
several other underwriters are collectively referred to as the "Underwriters").
The Underwriters have indicated that the prospect of sales of shares of
Common Stock by existing stockholders prior to six months after the Public
Offering would be detrimental to their underwriting effort. They have requested
that the undersigned agree not to sell any shares of Common Stock for a period
ending 180 days after the effective date of the Registration Statement on Form
S-1 (the "Registration Statement") filed by the Company relating to the Shares.
The undersigned recognizes that it is in the best financial interests of
the undersigned, as a holder of shares of Common Stock, preferred stock,
warrants, options or convertible securities of the Company, that the Company
complete the proposed Public Offering.
The undersigned further recognizes that the undersigned's shares of Common
Stock are, or may be, subject to certain restrictions on transferability,
including those imposed by the securities laws of the United States of America
or other jurisdictions. Notwithstanding these restrictions, the undersigned has
agreed to enter into this letter agreement to further assure the Underwriters
that the undersigned's shares of Common Stock, now held or hereafter acquired,
will not enter the public market at a time that might impair the underwriting
effort.
<PAGE>
BancAmerica Robertson Stephens
Donaldson, Lufkin & Jenrette Securities Corporation
Page 2
The undersigned, therefore, hereby acknowledges and agrees that the
undersigned will not, directly or indirectly, without the prior written consent
of BancAmerica Robertson Stephens, offer, sell, contract to sell, grant any
option to purchase, pledge or otherwise dispose of or transfer (collectively, a
"Disposition") any shares of Common Stock or any securities convertible into or
exchangeable for, or any rights to purchase or acquire, shares of Common Stock
held by the undersigned, acquired by the undersigned during the Lock-up Period
(as hereinafter defined) or which may be deemed to be beneficially owned by the
undersigned pursuant to the Rules and Regulations promulgated under the
Securities Exchange Act of 1934, as amended (the "Lock-up Shares"), other than
pursuant to the underwriting agreement to which the Underwriters are parties and
which is described in the definitive Prospectus prepared in connection with the
Public Offering, for a period commencing on the date hereof and ending 180 days
after the effective date of the Registration Statement (the "Lock-up Period").
The foregoing restriction is expressly agreed to preclude the holder of Lock-up
Shares from engaging in any hedging or other transaction which is designed to or
reasonably expected to lead to or results in a Disposition of Lock-up Shares
during the Lock-up Period, even if such Lock-up Shares would be disposed of by
someone other than such holder. Such prohibited hedging or other transactions
would include, without limitation, any short sale (whether or not against the
box) or any purchase, sale or grant of any right (including, without limitation,
any put or call option) with respect to any Lock-up Shares or with respect to
any security (other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from the Lock-up Shares.
Notwithstanding the foregoing, the undersigned may transfer any or all
of the Lock-up Shares (i) as a bona fide gift or gifts or (ii) as a distribution
to limited partners or shareholders of such person; provided the transferee or
transferees thereof agree(s) in writing as a condition precedent to such
transfer to be bound by the terms hereof. The transferor shall notify
BancAmerica Robertson Stephens in writing prior to the transfer, and there shall
be no further transfer of such Lock-up Shares except in accordance with this
letter agreement. Moreover, notwithstanding any other provision of this letter
agreement, the undersigned may exercise during the Lock-up Period any option to
purchase shares of Common Stock, provided, however, that any shares so acquired
-------- -------
shall constitute Lock-Up Shares for the purposes of this letter agreement.
It is understood that, if the Underwriting Agreement between the
Representatives and the Company (the "Underwriting Agreement") does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which
<PAGE>
BancAmerica Robertson Stephens
Donaldson, Lufkin & Jenrette Securities Corporation
Page 3
survive termination) shall terminate or be terminated prior to payment for and
delivery of the Shares, the undersigned will be automatically released from its
obligations under this letter agreement.
The undersigned further agrees to permit all certificates evidencing the
Lock-up Shares to be stamped with an appropriate restrictive legend, and will
cause the transfer agent for the Company to note such restriction on the
transfer books and records of the Company.
The undersigned recognizes that you are relying on the representations and
agreements of the undersigned contained herein in entering into underwriting
arrangements with respect to the Public Offering contemplated by the
Registration Statement.
Executed as an instrument under seal in accordance with the laws of the
Commonwealth of Massachusetts, United States of America.
Very truly yours
/s/ Paul G. Stern
---------------------------------
Signature of Securityholder
_________________________________
Signature of Co-Securityholder,
if applicable
Paul G. Stern
----------------------------------
Securityholder (please print)
__________________________________
Co-Securityholder (please print)
<PAGE>
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of September 26, 1997, by and between Software AG Systems, Inc., a
Delaware corporation (the "Company"), and Thayer Equity Investors III, L.P., a
Delaware limited partnership, for the benefit of all holders of Registrable
Shares (as defined herein).
The parties hereby agree as follows:
1. Definitions. For purposes of this Agreement:
-----------
(a) "Common Stock" means shares of the Company's common stock, par
value $0.01 per share;
(b) "Investors" means the holders of Registrable Shares on the date
hereof and any person or entity that acquires any shares of Common Stock from
any of such Investors after the date hereof in a transaction as a result of
which such shares constitute "restricted securities" under Rule 144 under the
Securities Act;
(c) "IPO Event" means the consummation of an underwritten public
offering pursuant to an effective registration statement under the Securities
Act that is underwritten by one or more nationally-recognized investment
banking firms;
<PAGE>
(d) "Majority-in-Interest" means Investors who in the aggregate
hold more than 50% of the Registrable Shares as the time of determination;
(e) "Register," "registered," and "registration" refer to an
underwritten registration effected by preparing and filing with the Securities
and Exchange Commission (the "Commission") a registration statement or similar
document in compliance with the Securities Act, and the declaration or ordering
by the Commission of effectiveness of such registration statement or document;
(f) "Registration Expenses" means all expenses in connection with the
Company's performance of or compliance with its obligations under this
Agreement, including, without limitation, all (i) registration, qualification
and filing fees; (ii) fees, costs and expenses of compliance with securities or
blue sky laws (including reasonable fees, expenses and disbursements of counsel
for the underwriters in connection with blue sky qualifications of the
Registrable Shares under the laws of such jurisdictions as the managing
underwriter or underwriters in a registration may designate, subject to the
limitation as set forth in subsection (h) of Section 5 hereof); (iii) printing
expenses; (iv) messenger, telephone and delivery expenses;
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<PAGE>
(v) fees, expenses and disbursements of counsel for the Company and of all
independent certified public accountants retained by the Company (including the
expenses of any special audit and "cold comfort" letters required by or incident
to such performance); (vi) Securities Act liability insurance if the Company so
desires; (vii) fees, expenses and disbursements of any other individuals or
entities retained by the Company in connection with the registration of the
Registrable Shares; (viii) fees, costs and expenses incurred in connection with
the listing of the Registrable Shares on each national securities exchange or
automated quotation system on which the Company has made application for the
listing of its Common Stock; and (ix) internal expenses of the Company
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties and expenses of any annual
audit). Registration Expenses shall not include selling commissions, discounts
or other compensation paid to underwriters or other agents or brokers to effect
the sale of Registrable Shares, or counsel fees and any other expenses incurred
by Investors in connection with any registration that are not specified in the
immediately preceding sentence;
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<PAGE>
(g) "Registrable Shares" means shares of Common Stock held by any of
the Investors that cannot be sold by such Investor to the public without
registration under the Securities Act, including shares that may be sold under
Rule 144 if the total number of shares desired to be sold by such Investor
cannot be sold by such Investor under Rule 144 in a single transaction; and
(h) "Securities Act" means the Securities Act of 1933, as amended.
2. Demand Registrations.
--------------------
(a) Request for Registration. If a Majority-in-Interest submits a
------------------------
written request (a "Demand Notice") to the Company subsequent to an IPO Event
that the Company register Registrable Shares under and in accordance with the
Securities Act (a "Demand Registration"), then the Company shall:
(i) within 5 business days after receipt of such Demand
Notice, give written notice of the proposed registration to all other Investors;
and
(ii) as soon as practicable, use reasonable diligent efforts to
effect such registration as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Registrable
Shares as are specified in such request,
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<PAGE>
together with all or such portion of the Registrable Shares of any Investors
joining in such request as are specified in written requests received by the
Company within 10 business days after the date the Company sends the written
notice referred to in clause (i) above.
Notwithstanding the foregoing, however, the Company shall not be
obligated to take any action to effect any such registration under this Section
2 within six months immediately following the effective date of any registration
statement pertaining to securities of the Company in which the Investors were
given the right to register Registrable Shares pursuant to the registration
rights described in Section 3 hereof and the number of Registrable Shares
included in such registration was not reduced from the number of Registrable
Shares requested to be included pursuant to Section 3(b). Nor shall the Company
be obligated to complete more than five Demand Registrations or more than one
Demand Registration on Form S-1 (or any successor form).
In addition, if the Company shall furnish to the Majority-in-Interest
under this Section 2 a certificate signed by the president of the Company
stating that in the good faith judgment of the board of directors of the
Company, it would be seriously detrimental to the
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<PAGE>
Company or its stockholders for a registration statement to be filed on or
before the date filing would be required in connection with any Demand
Registration and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for a reasonable period not to exceed an additional ninety (90) days provided
that such right shall not be exercised more than once with respect to a request
for registration hereunder; and in any such event, the Majority-in-Interest will
be entitled to withdraw their request for registration hereunder. If any such
request is withdrawn as provided in the immediately preceding sentence, such
registration will not be considered a permitted Demand Registration hereunder,
and the Company will pay all Registration Expenses in connection with such
withdrawn request for registration.
(b) Underwriting. In connection with any registration under this
------------
Section 2, if so requested, the Company shall enter into an underwriting
agreement with one or more underwriters selected by the Majority-in-Interest
having terms and conditions customary for such agreements.
3. Company Registration.
--------------------
(a) Notice of Registration. If at any time or from time to time, the
----------------------
Company shall determine to
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<PAGE>
register any of its Common Stock, whether or not for its own account, other than
a registration relating to employee benefit plans or a registration relating to
a Rule 145 transaction, the Company shall:
(i) provide to each Investor written notice thereof at least
10 business days prior to the filing of the registration statement by the
Company in connection with such registration; and
(ii) include in such registration, and in any underwriting
involved therein, all those Registrable Shares specified in a written request by
each Investor received by the Company within 5 business days after the Company
sends the written notice referred to above, subject to the provisions of Section
3(b) below.
(b) Underwriting. The right of any Investor to registration pursuant
------------
to this Section 3 shall be conditioned upon the participation by such Investor
in the underwriting arrangements specified by the Company in connection with
such registration and the inclusion of the Registrable Shares of such Investor
in such underwriting to the extent provided herein. All Investors proposing to
distribute their Registrable Shares through such underwriting shall (together
with the Company) enter into an underwriting agreement in
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<PAGE>
customary form with the managing underwriter selected for such underwriting by
the Company and take all other actions, and deliver such opinions and
certifications, as may be reasonably requested by such managing underwriter.
Notwithstanding any other provision of this Section 3, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the number of
Registrable Shares to be included in such registration. The Company shall so
advise all Investors distributing Registrable Shares through such underwriting,
and there shall be excluded from such registration and underwriting, to the
extent necessary to satisfy such limitation, first shares held by the Investors
and, thereafter, to the extent necessary, shares which the Company wishes to
register for its own account. As among the Investors as a group, the number of
Registrable Shares that may be included in the registration and underwriting
shall be allocated among them in proportion, as nearly as practicable, to the
respective amounts of Registrable Shares required to be included (determined
without regard to any requirement of a request to be included in such
registration) in such registration held by all Investors at the time of filing
the registration statement. To
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<PAGE>
facilitate the allocation of shares in accordance with the above provisions, the
Company may round the number of shares allocated to any Investor to the nearest
100 shares.
(c) Right to Terminate Registration. The Company shall have the right to
-------------------------------
terminate or withdraw any registration initiated by it under this Section 3
prior to the effectiveness of such registration whether or not any Investor has
elected to include Registrable Shares in such registration.
4. Expense of Registration. All Registration Expenses incurred in
-----------------------
connection with the registration and other obligations of the Company pursuant
to Sections 2, 3 and 5 shall be borne by Company; provided, however, that
Company shall not be required to pay for expenses of any registration begun
pursuant to Section 2, the request for which has been subsequently withdrawn by
the Majority-in-Interest, in which case such expenses shall be borne by the
Majority-in-Interest pro rata in accordance with the number of Registrable
Shares initially sought to be registered, unless the Majority-in-Interest
withdraw their request for registration hereunder as a result of a deferral of
the filing of such registration statement at the request of
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<PAGE>
the Company, in which case, the Company will pay all Registration Expenses in
connection with such registration.
5. Registration Procedures. If and whenever the Company is required by
-----------------------
the provisions of this Agreement to effect the registration of Registrable
Shares, the Company shall:
(a) promptly prepare and file with the Commission a registration
statement with respect to such Registrable Shares, and use its reasonable
diligent efforts to cause such registration statement to become effective as
promptly as practicable and remain effective thereafter as provided herein,
provided that prior to filing a registration statement or prospectus or any
amendments or supplements thereto, including documents incorporated by reference
after the initial filing of any registration statement, the Company will furnish
to each of the Investors whose Registrable Shares are covered by such
registration statement, their counsel and the underwriters copies of all such
documents proposed to be filed sufficiently in advance of filing to provide them
with a reasonable opportunity to review such documents and comment thereon;
(b) prepare and file with the Commission such amendments (including
post-effective amendments)
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<PAGE>
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and current and to comply with the provisions of the Securities Act
with respect to the sale or other disposition of all Registrable Shares covered
by such registration statement, including such amendments (including post-
effective amendments) and supplements as may be necessary to reflect the
intended method of disposition by the prospective seller or sellers of such
Registrable Shares, but (except for a shelf registration) for no longer than 120
days subsequent to the effective date of such registration statement;
(c) provide customary indemnity and contribution arrangements to any
qualified independent underwriter or qualified independent pricer as defined in
Schedule E of the Bylaws of the National Association of Securities Dealers, Inc.
(a "Qualified Independent Underwriter/Pricer"), if requested by such Qualified
Independent Underwriter/Pricer, on such reasonable terms as such Qualified
Independent Underwriter/Pricer customarily requires;
(d) subject to receiving reasonable assurances of confidentiality, for
a reasonable period after the filing of such registration statement, and
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<PAGE>
throughout each period during which the Company is required to keep a
registration effective, make available for inspection by the selling holders of
Registrable Shares being offered, and any underwriters, and their respective
counsel, such financial and other information and books and records of the
Company, and cause the officers, directors, employees, counsel and independent
certified public accountants of the Company to respond to such inquiries as
shall be reasonably necessary, in the judgment of such counsel, to conduct a
reasonable investigation within the meaning of Section 11 of the Securities Act;
(e) promptly notify the selling holders of Registrable Shares and any
underwriters and confirm such advice in writing, (i) when such registration
statement or the prospectus included therein or any prospectus amendment or
supplement or post-effective amendment has been filed, and, with respect to
such registration statement or any post-effective amendment, when the same has
become effective, (ii) of any comments by the Commission, by the National
Association of Securities Dealers Inc. ("NASD"), and by the Blue Sky or
securities commissioner or regulator of any state with respect thereto or any
request by any such entity for amendments or supplements to such registration
statement or
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<PAGE>
prospectus or for additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of such registration
statement or the initiation or threatening of any proceedings for that purpose,
(iv) if at any time the representations and warranties of the Company cease to
be true and correct in all material respects, (v) of the receipt by the Company
of any notification with respect to the suspension of the qualification of the
Registrable Shares for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose, or (vi) at any time when a prospectus is
required to be delivered under the Securities Act, that such registration
statement, prospectus, prospectus amendment or supplement or post-effective
amendment, or any document incorporated by reference in any of the foregoing,
contains an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading;
(f) furnish to each selling holder of Registrable Shares being
offered, and any underwriters, prospectuses or amendments or supplements
thereto, in
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<PAGE>
such quantities as they may reasonably request and as soon as practicable, that
update previous prospectuses or amendments or supplements thereto;
(g) in the case of a registration under Section 3 hereof, permit
selling holders of Registrable Shares to rely on any representations and
warranties made to any underwriter of the Company or any opinion of counsel or
"cold comfort" letter delivered to any such underwriter, and indemnify each such
holder to the same extent that it indemnities any such underwriter;
(h) use reasonable diligent efforts to (i) register or qualify the
Registrable Shares to be included in a registration statement hereunder under
such other securities laws or blue sky laws of such jurisdictions within the
United States of America as any selling holder of such Registrable Shares or any
underwriter of the securities being sold shall reasonably request, (ii) keep
such registrations or qualifications in effect for so long as the registration
statement remains in effect and (ii) take any and all such actions as may be
reasonably necessary or advisable to enable such holder or underwriter to
consummate the disposition in such jurisdictions of such Registrable Shares
owned by such holder; provided, however, that the Company shall not be required
-------- -------
for any such purpose to
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<PAGE>
(x) qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not otherwise be required to qualify but for the
requirements of this Section 5(h), (y) subject itself to taxation in any such
jurisdiction or (z) consent to general service of process in any such
jurisdiction;
(i) cause all such Registrable Shares to be listed or accepted for
quotation on each securities exchange or automated quotation system on which the
Company's Common Stock then trades; and
(j) otherwise use reasonable diligent efforts to comply with all
applicable provisions of the Securities Act, and rules and regulations of the
Commission, and make available to its security holders, as soon as reasonably
practicable, an earning statement covering a period of at least twelve months
which shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder.
6. Indemnification. In the event any of the Registrable Shares are
---------------
included in a registration statement under this Agreement:
(a) the Company will indemnify each Investor who participates in such
registration, each of its officers and directors and partners and such
Investor's separate legal counsel and independent
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<PAGE>
accountants, and each person controlling such Investor within the meaning of
Section 15 of the Securities Act, and each underwriter, if any, and each person
who controls any underwriter within the meaning of Section 15 of the Securities
Act, against all expenses, claims, losses, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company in connection
with any such registration, qualification or compliance, and the Company will
reimburse each such Investor, each of its officers and directors and partners
and such Investor's separate legal counsel and independent accountants and
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<PAGE>
each person controlling such Investor, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Investor or underwriter and stated to be specially for use
therein.
(b) Each Investor will, if Registrable Shares held by such Investor
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers and its legal counsel and independent accountants, each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act, and each other such Investor, each of its
officers and directors and each
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<PAGE>
person controlling such Investor within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statement therein not misleading, and will reimburse
the Company, such Investors, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Investor and
stated to be specifically for use therein.
(c) Each party entitled to indemnification under this Section 6 (the
"Indemnified Party") shall
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<PAGE>
give notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought provided that failure to give such prompt
notice shall not relieve the Indemnifying Party of its obligations hereunder
unless it is materially prejudiced thereby, and shall permit the Indemnifying
Party to assume the defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall conduct
the defense of such claim or litigation, shall be approved by the Indemnified
Party (whose approval shall not unreasonably be withheld). Such Indemnified
Party shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be that of such Indemnified Party unless (i) the Indemnifying Party has
agreed to pay such fees and expenses or (ii) the Indemnifying Party shall have
failed to assume the defense of such action or proceeding and employ counsel
reasonably satisfactory to such Indemnified Party in any such action or
proceeding or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both such Indemnified Party and the
Indemnifying Party
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<PAGE>
and such Indemnified Party shall have been advised by counsel that there may be
one or more legal defenses available to such Indemnified Party which are
different from or additional to those available to the Indemnifying Party (in
which case, if such Indemnified Party notifies the Indemnifying Party in writing
of an election to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the defense of
such action or proceeding on behalf of such Indemnified Party, it being
understood, however, that the Indemnifying Party then shall have the right to
employ separate counsel at its own expense and to participate in the defense
thereof, and shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for all Indemnified Parties, which firm shall be
designated in writing by a majority of the Indemnified Parties who are eligible
to select such counsel). No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any
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<PAGE>
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. No
Indemnified Party may consent to entry of any judgment or enter into any
settlement without the prior written consent of the Indemnifying Party.
(d) If the indemnification provided for in this Section 6 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage or expense referred to herein,
then the Indemnifying Party, in lieu of indemnifying the Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party with
respect to such loss, liability, claim, damage or expenses in the proportion
that is appropriate to reflect the relative fault of the Indemnifying Party and
the Indemnified Party in connection with the statements or omissions that
resulted in such loss, liability, claim, damage, or expense, as well as any
other relevant equitable considerations. The relative fault of the Indemnifying
Party and the Indemnified Party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of material fact or the
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<PAGE>
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
7. Information by Investors. Investors whose Registrable Shares are
------------------------
included in any registration shall furnish to the Company such information
regarding themselves and the distribution proposed by them as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.
8. Rule 144 Reporting. With a view to making available the benefits of
------------------
certain rules and regulations of the Commission which may at any time permit the
sale of the Registrable Shares to the public without registration, after such
time as a public market exists for the Common Shares and until five years from
the date thereof, the Company shall use reasonably diligent efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, beginning 90 days
after (i) an IPO Event, or (ii) the Company registers a class of securities
under Section 12 of the Securities Exchange Act of 1934, as amended; or
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<PAGE>
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
Exchange Act of 1934, as amended (at any time after it has become subject to
such reporting requirements);
(c) Furnish to any Investor promptly upon request a written statement
as to its compliance with the reporting requirements of Rule 144 (at any time
after 90 days after an IPO Event), and of the Securities Act and the Securities
Exchange Act of 1934 (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company and other
information in the possession of or reasonably obtainable by the Company as an
Investor may reasonably request in availing itself of any rule or regulation of
the Commission allowing an Investor to sell Registrable Shares without
registration.
9. Termination of Registration Rights. No Investor shall be entitled to
----------------------------------
exercise any right provided for in this Agreement after 7 years following an IPO
event.
10. Miscellaneous.
-------------
(a) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this
- 23 -
<PAGE>
sentence, may not be amended, modified or supplemented, and waivers or consents
to depart from the provisions hereof may not be given unless the Company has
obtained the written consent of a Majority-in-Interest. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof with
respect to a matter which relates exclusively to the rights of Investors whose
Registrable Shares are being sold pursuant to a registration statement and which
does not directly or indirectly affect the rights of other Investors may be
given by the holders of majority of the Registrable Shares being sold by such
holders.
(b) Notices. All notices or communications which are required or
-------
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by facsimile transmission or by reputable overnight express delivery
service. Communications to an Investor shall be sent to such Investor at its
address set forth in the security register or other records of the Company.
Communications to the Company shall be sent as follows:
Software AG Systems, Inc.
11190 Sunrise Valley Drive
Reston, VA 20191
Attention: Secretary
Facsimile No.: 703-391-6980
- 24 -
<PAGE>
(c) Descriptive Headings. The descriptive headings of the several
--------------------
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
(d) Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with, and the rights of the parties shall be governed by, the law of
the State of New York as applied to agreements entered into and wholly performed
in New York, without giving effect to the choice of law or conflicts principles
thereof.
(e) Entire Agreement. This Agreement contains the entire agreement
----------------
among the parties with respect to the subject matter hereof and supersedes all
prior and contemporaneous arrangements or understandings with respect thereto.
(f) Severability. Any provisions of this Agreement that is prohibited
------------
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
- 25 -
<PAGE>
(g) Counterparts. This Agreement may be executed simultaneously in two
------------
or more counterparts, each of which shall be deemed as original, and it shall
not be necessity in making proof of this Agreement to produce or account for
more than one such counterpart.
(h) Successors and Assigns; Third Party Beneficiaries. All the terms
-------------------------------------------------
and provisions of this Agreement shall be binding upon, shall inure to the
benefit of and shall be enforceable by the respective successors and the
permitted assigns of the parties hereto. In addition, the terms and provisions
of this Agreement shall also inure to the benefit of and be enforceable by the
Investors who are not signatories to this Agreement, each of whom is an intended
third party beneficiary hereof, provided however that each such Investor who
registers Registrable Shares pursuant to the terms of this Agreement shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement.
- 26 -
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SOFTWARE AG SYSTEMS, INC.
By: /s/ Harry K. McCreery
----------------------------------
Harry K. McCreery
Vice President, Treasurer and
Chief Financial Officer
THAYER EQUITY INVESTORS III, L.P.
By: TC Equity Partners, LLC,
its General Partner
By: /s/ Rick Rickertsen
------------------------------
Rick Rickertsen
- 27 -
<PAGE>
Exhibit E
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Thayer Equity
Investors III, L.P., a limited partnership organized under the laws of the State
of Delaware (the "Partnership"), hereby constitutes and appoints Carl J.
Rickertsen, Paul G. Stern and Frederic V. Malek, and each of them (with full
power to each of them to act alone), its true and lawful attorneys-in-fact and
agents for it and on its behalf and in its name, place and stead, in all cases
with full power of substitution and resubstitution, in any and all capacities,
to sign, execute and affix its seal to and file with the Securities and Exchange
Commission (or any other governmental or regulatory authority) a Schedule 13D
and/or Schedule 13G under the Securities Exchange Act of 1934, as amended, or
any other appropriate form and all amendments thereto with all exhibits and any
and all documents required to be filed with respect thereto, relating to the
Partnership's beneficial ownership of shares of the common stock of Software AG
Systems, Inc., a corporation organized under the laws of the State of Delaware,
and grants to each of them full power and authority to do and to perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully to all intents and purposes as
the Partnership itself might or could do, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, a duly authorized member of the Partnership's general
partner has hereunto set his hand and seal, as of the date specified.
DATED: December 2, 1997 THAYER EQUITY INVESTORS III, L.P.
BY: TC Equity Partners, L.L.C.
its General Partner
By: /s/ Carl J. Rickertsen
----------------------------
Carl J. Rickertsen
Member
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned TC Equity Partners,
L.L.C., a limited liability company organized under the laws of the State of
Delaware (the "Company"), hereby constitutes and appoints Carl J. Rickertsen,
Paul G. Stern and Frederic V. Malek, and each of them (with full power to each
of them to act alone), its true and lawful attorneys-in-fact and agents for it
and on its behalf and in its name, place and stead, in all cases with full power
of substitution and resubstitution, in any and all capacities, to sign, execute
and affix its seal to and file with the Securities and Exchange Commission (or
any other governmental or regulatory authority) a Schedule 13D and/or Schedule
13G under the Securities Exchange Act of 1934, as amended, or any other
appropriate form and all amendments thereto with all exhibits and any and all
documents required to be filed with respect thereto, relating to the Company's
beneficial ownership of shares of the common stock of Software AG Systems, Inc.,
a corporation organized under the laws of the State of Delaware, and grants to
each of them full power and authority to do and to perform each and every act
and thing requisite and necessary to be done in and about the premises in order
to effectuate the same as fully to all intents and purposes as the Company
itself might or could do, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, a duly authorized member of the Company has hereunto
set his hand and seal, as of the date specified.
DATED: December 2, 1997 TC EQUITY PARTNERS, L.L.C.
By: /s/ Carl J. Rickertsen
----------------------------
Carl J. Rickertsen
Member
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned TC Co-Investors,
LLC, a limited liability company organized under the laws of the State of
Delaware (the "Company"), hereby constitutes and appoints Carl J. Rickertsen,
Paul G. Stern and Frederic V. Malek, and each of them (with full power to each
of them to act alone), its true and lawful attorneys-in-fact and agents for it
and on its behalf and in its name, place and stead, in all cases with full power
of substitution and resubstitution, in any and all capacities, to sign, execute
and affix its seal to and file with the Securities and Exchange Commission (or
any other governmental or regulatory authority) a Schedule 13D and/or Schedule
13G under the Securities Exchange Act of 1934, as amended, or any other
appropriate form and all amendments thereto with all exhibits and any and all
documents required to be filed with respect thereto, relating to the Company's
beneficial ownership of shares of the common stock of Software AG Systems,
Inc., a corporation organized under the laws of the State of Delaware, and
grants to each of them full power and authority to do and to perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully to all intents and purposes
as the Company itself might or could do, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, a duly authorized member of the Company's managing
member has hereunto set his hand and seal, as of the date specified.
DATED: December 2, 1997 TC CO-INVESTORS, LLC
By: TC Management Partners, L.L.C.
its Managing Member
By: /s/ Carl J. Rickertsen
--------------------------
Carl J. Rickertsen
Member
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned TC Management
Partners, L.L.C., a limited liability company organized under the laws of the
State of Delaware (the "Company"), hereby constitutes and appoints Carl J.
Rickertsen, Paul G. Stern and Frederic V. Malek, and each of them (with full
power to each of them to act alone), its true and lawful attorneys-in-fact and
agents for it and on its behalf and in its name, place and stead, in all cases
with full power of substitution and resubstitution, in any and all capacities,
to sign, execute and affix its seal to and file with the Securities and Exchange
Commission (or any other governmental or regulatory authority) a Schedule 13D
and/or Schedule 13G under the Securities Exchange Act of 1934, as amended, or
any other appropriate form and all amendments thereto with all exhibits and any
and all documents required to be filed with respect thereto, relating to the
Company's beneficial ownership of shares of the common stock of Software AG
Systems, Inc., a corporation organized under the laws of the State of Delaware,
and grants to each of them full power and authority to do and to perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully to all intents and purposes as
the Company itself might or could do, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, a duly authorized member of the Company has
hereunto set his hand and seal, as of the date specified.
DATED: December 2, 1997 TC Management Partners, L.L.C.
By: /s/ Carl J. Rickertsen
------------------------------
Carl J. Rickertsen
Member
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned members of
TC Equity Partners, L.L.C., a limited liability company organized under the laws
of the State of Delaware ("TC Equity"), and TC Management Partners, L.L.C., a
limited liability company organized under the laws of the State of Delaware ("TC
Management," and together with TC Equity, the "Companies"), hereby constitutes
and appoints Carl J. Rickertsen, Paul G. Stern and Frederic V. Malek, and each
of them (with full power to each of them to act alone), his true and lawful
attorneys-in-fact and agents for him and on his behalf and in his name, place
and stead, in all cases with full power of substitution and resubstitution, in
any and all capacities, to sign, execute and affix his seal to and file with the
Securities and Exchange Commission (or any other governmental or regulatory
authority) a Schedule 13D and/or Schedule 13G under the Securities Exchange Act
of 1934, as amended, or any other appropriate form and all amendments thereto
with all exhibits and any and all documents required to be filed with respect
thereto, relating to his and/or either of the Company's beneficial ownership of
shares of the common stock of Software AG Systems, Inc., a corporation organized
under the laws of the State of Delaware, and grants to each of them full power
and authority to do and to perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as he himself might or could do if
personally present, hereby ratifying and confirming all that said attorneys-in-
fact and agents, or any of them, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his hand
and seal, as of the date specified.
DATED: December 2, 1997 By: /s/ Carl J. Rickertsen
------------------------------
Carl J. Rickertsen
DATED: December 2, 1997 By: /s/ Paul G. Stern
------------------------------
Paul G. Stern
DATED: December 2, 1997 By: /s/ Frederic V. Malek
------------------------------
Frederic V. Malek
